I have a small business for 2 years , and im just learning this , I have created a job and now it’s time to get back to the drawing board I appreciate this video 💯💫
The good thing is you are not alone! Most folks wake up and discover they accidentally did this. The important thing is you realize it and are now taking the steps to fix it! Your got this!!! - Tammy
If it is provided for the customer as part of your service, then I'd do as a COGs, the hosting for your company would be expenses for example. Good question. Tammy
I assume these are sales commissions you pay out? Some folks put them under COGS and some expenses. However, most put them under expenses. It really comes down to "WHY" you are paying them. If it is just part of base compensation, then COGS makes sense, if it is for finding or creating business, then it is more like an advertising/marketing item and it will be an expense. Why do you pay them? Is the best place to start. - Tammy
Great question. The first thing I usually ask is, is there anything that you GIVE to the client or customer? Is so, that will be COGS even if minor. If not, then you would only have your "employee" labor time. I still think it is best under COGS as they are paying for the service and the only way to deliver the service is to use labor. So just put a fair wage in there for each service you provide this way you still have it to set good pricing. Hope this helps. Tammy
@@BadassBusinessOwners thank you, I’m so glad I found your channel. If I don’t have sales because I am just getting started to use the formula do I estimate how much amount of $ in sales I would like to achieve per year?
@@MusicaErika I'm glad you are finding it helpful. :-). Yes, you will need to estimate. So first you want to work on the right pricing. Figure out the hourly wage and any estimated costs and expenses the business will have. Then figure out what you realistically can do in the next year. This will help you get a rough estimate of the percentage of those expenses will run. Once you start getting some sales under your belt, you just come back and adjust as needed. It might take a good year to get into the sweet spot. Keep me posted on how it goes! Tammy
Great video. I've been calculating my profit using our calculation and have been getting a profit of around 23%. What is considered a good profit %? I know most folks would say it depends on the industry but is there a general profit % we should be aiming for? Thank you.
If your profit is after expenses, then 23% isn't bad at all. Unfortunately, it does depend on the industry but for most, anything in the 20s isn't bad at all but I'd still look for opportunities. But it is great that you did the exercise which puts you ahead of most in your industry! - tammy
*What is the Biggest Mistake You Think You Make When Setting Your Prices? - Tammy*
Super breakdown thanks Tammy!
I have a small business for 2 years , and im just learning this , I have created a job and now it’s time to get back to the drawing board I appreciate this video 💯💫
The good thing is you are not alone! Most folks wake up and discover they accidentally did this. The important thing is you realize it and are now taking the steps to fix it! Your got this!!! - Tammy
Ready for this one!!
we are service-based business. if COGS is what you hand over to the client/customer and we prebuy hosting. is that a COGS or Op Exp? thanks
If it is provided for the customer as part of your service, then I'd do as a COGs, the hosting for your company would be expenses for example. Good question. Tammy
Excellent thank you for the help!
glad you found it helpful! :-). Tammy
Thank you for this video 👍
This content is gold!!
Glad it is helping! Thanks for the feedback! - Tammy
How do you properly capture your time as an employee of the business spent in admin/marketing/sales? Would that be under expenses?
Great question. Yes. I’d capture my “employee” time as an operational expense in this case. 👍. - Tammy
@@BadassBusinessOwners Thank you!
Where would you list sales commission? Cost of goods or expenses?
I assume these are sales commissions you pay out? Some folks put them under COGS and some expenses. However, most put them under expenses. It really comes down to "WHY" you are paying them. If it is just part of base compensation, then COGS makes sense, if it is for finding or creating business, then it is more like an advertising/marketing item and it will be an expense. Why do you pay them? Is the best place to start. - Tammy
What if you’re just starting a service and you don’t have materials/ingredients cost?
Great question. The first thing I usually ask is, is there anything that you GIVE to the client or customer? Is so, that will be COGS even if minor. If not, then you would only have your "employee" labor time. I still think it is best under COGS as they are paying for the service and the only way to deliver the service is to use labor. So just put a fair wage in there for each service you provide this way you still have it to set good pricing. Hope this helps.
Tammy
@@BadassBusinessOwners thank you, I’m so glad I found your channel. If I don’t have sales because I am just getting started to use the formula do I estimate how much amount of $ in sales I would like to achieve per year?
@@MusicaErika I'm glad you are finding it helpful. :-). Yes, you will need to estimate. So first you want to work on the right pricing. Figure out the hourly wage and any estimated costs and expenses the business will have. Then figure out what you realistically can do in the next year. This will help you get a rough estimate of the percentage of those expenses will run. Once you start getting some sales under your belt, you just come back and adjust as needed. It might take a good year to get into the sweet spot. Keep me posted on how it goes! Tammy
Great video. I've been calculating my profit using our calculation and have been getting a profit of around 23%. What is considered a good profit %? I know most folks would say it depends on the industry but is there a general profit % we should be aiming for? Thank you.
If your profit is after expenses, then 23% isn't bad at all. Unfortunately, it does depend on the industry but for most, anything in the 20s isn't bad at all but I'd still look for opportunities. But it is great that you did the exercise which puts you ahead of most in your industry! - tammy
@@BadassBusinessOwners Thank you Tammy. Your videos have really helped me a lot.
I have been looking for this answer for years!