The Boss of You

One of the questions we were asked after our SXSW Panel was one that rang so true and strong for me that I couldn’t help stepping outside my role as moderator to give it a quick answer. The question, if I may paraphrase was along the lines of:

I think I might be ready to hire someone to help me out, I’ve got lots of work — too much in some ways — but I’m worried about having to pay to support someone else. Am I ready to hire someone? Or what should I do?

My gut reaction to this question is cribbed entirely from my very wise grandfather who is among my most treasured business confidants: “Raise your rates.” For the first 4 years of our business (after that first ramp up year) whenever I went to visit my grandpa our conversation would follow the same pattern:

G’pa: “How’s business?”
Me (in exhausted voice): “Good. Busy. Really busy. Too busy maybe? But I shouldn’t complain right?”
G’pa: “Nope. But you should raise your rates.”
Me: “Ha, right. Ya. I should.”
G’pa: “Raise your rates. Now.”

Doing a lot of work with non-profit groups, small businesses and arts organizations, raising our rates always seems tricky to be honest and bundle that with all kinds of predictable but very real baggage about women under valuing their worth and simply raising our rates was often not that easy. That said, it was sage advice.

The math is pretty simple when you break it down: if you’re market (ie. your customer base) is lapping up your services at your current pricing structure and you’ve got more work than you know what to do with raise your rates a bit to see if your market will bear an increase. Scenario 1: you might lose some clients who can’t afford you* and then you’re doing less work for more money and perhaps you no longer need to hire help due to the drop in workload. Scenario 2: Your clients/customers are happy to pay more for services they value very highly and you’ve not got extra income to pay that staff person to help you. Scenario 3: Everyone balks at your increased pricing and you have to go back where you started, not really the end of the world.

Regardless of what happens the lesson holds true. If you have more work than you know what to do with, but aren’t sure you can afford to pay someone to help you, you need to increase your income so that you can. And don’t think for even one second missy that the best way to increase your income is for you to work extra hours that’s the problem we’re trying to get out of remember?

* If the losing clients that can’t afford you scenario freaks you out because a few of those are particularly near and dear beloved folks, calm down. We faced this each time we evaluated raising our rates and realized that as the bosses we could make the rules work for us. Some clients that we really adored working with who we knew couldn’t afford increases we simply “grandfathered” in at our lower rate structure. Other times when we’ve raised our rates we’ve decided to do it only for new projects, not exisiting. So there are ways to mitigate the risk factors, just find one that works for you.