Run the Numbers
These Savvies explore the topic of Run the Numbers in more detail —
Your Financial Plans are the parts of a business plan that tend to be least considered by speakers. And that’s a shame, because your financial plan is possibly the most important section of your entire plan.
Quite simply, your budget should address two questions — First, what are your primary sources of income? And second, what are your major expenditures? The answers to these questions will help in determining the success of your business.
The previous session shows the importance of having a budget. But there are many questions that this simple budget cannot answer. For instance, how much work does it take the speaker to earn the $25,000 from giving keynote presentations? If that’s one twenty-five-thousand-dollar speech, that’s one thing; if it comes from giving fifty five-hundred-dollar speeches, that’s something else entirely.
As you've seen, a budget offers a good overview of where your business stands financially. Properly done, it contains a wealth of valuable information. But, as you’ll see now, a budget can also be horribly misleading if used alone.
Pricing your services too high — or, even worse, too low — is a formula for disaster. Learn how to determine the right price for your speeches, products and services.
One of the biggest mistakes that pro speakers can make is to assume that the "obvious" answer is the correct one. As it turns out, when it comes to numbers, the "obvious" answer is not only often not true, it can be horribly wrong!
The previous example is an excellent example of an “obvious truth” that is absolutely wrong. Now let’s apply the “obvious is not always correct” principle to something a bit closer to home for professional speakers — product sales.
What about the objection that even if sales rise, your profits fall? After all, although a “twofer” profit of $6 per sale is better than a “half off” profit of $3 per sale, you’re still better off making $8 per sale when you sell them at their normal retail price, aren’t you?
Let’s summarize what we’ve determined in the example used in the preceding sessions. In this example....
Before we continue, let’s consider inventory for a moment. Just what is “inventory”? For our purposes, it’s simply the stacks or boxes of your products that you’ve printed, recorded, or burned… but you haven’t sold yet. But how you feel about inventory is more complex.