Today we’re delighted to welcome Bernadette Chapman, owner of the UK Alliance of Wedding Planners and long-time Hive collaborator! Many of you will already have met Bernadette at our HiveLive events in 2017 and 2018, where she shared some of the vast wealth of industry insight and knowledge she has gained over her fifteen years as a wedding planner, and founder of the UKAWP since 2004. She has successfully trained hundreds of wedding planners, and helped guide them and other wedding professionals in building their own financially viable businesses. So there was really no-one better to call on to give us insight into profitability!
The biggest mistake I see new businesses make is incorrect pricing. Many enter the wedding industry because they have a need to serve; to help couples have the most amazing day. And that’s great, but often they forget they are running a business. I also see new businesses put more time and effort into beautifully curated social media feeds than they do on the profitability of their business, and it just doesn’t make sense to me. Would you rather be the most socially popular wedding business or the one that is making money?
The key is to have profitable pricing. It’s essential for any business to know their bottom line, i.e. what you need to make to cover your costs and make a profit. If you’re juggling a part-time job alongside your wedding business, then you also need to know how to get to the level where you can work for yourself full-time. Your fee needs to reflect the time spent providing the service, as well as your knowledge and experience.
Do the figures work for you and the growth of your business? Here are my seven steps to profitability.
STEP 1: CREATE A BUDGET
First you need to create a budget of your projected costs for the year. Include estimates for what you will spend on insurance, telephone and Wifi, office equipment, self-development, subscriptions and memberships, insurance, marketing materials, PR, and staff.
Then work out what it costs to run each of your services. In doing so, ask yourself:
- Does the service involve a consultation? If so, how many meetings?
- How much general admin is involved?
- What is the cost of any materials (if applicable)?
- How many hours will you spend providing the actual service or product? Don’t forget any hours you’ll spend at the wedding itself.
- Are there are staff costs?
- Is travel involved? If so, include an estimate for mileage.
STEP 2: SET A PROFITABILITY TARGET
Decide what figure you need to bring into the business. Will this cover your projected costs? Work out how you can make this happen. Which services and how many do you need to provide?
STEP 3: KEEP TRACK
Create a profit and loss spreadsheet and track income and outgoings through the year.
STEP 4: REVIEW REGULARLY
Once a quarter, analyse your outgoings. It can be so easy to subscribe to different services and memberships, and they soon add up. What about advertising? Are your advertising placements seeing a return on investment? Whenever you get a new client, always ask where they found you as this helps with your marketing planning.
STEP 5: PAY YOURSELF
So many businesses don’t even pay themselves regularly, but it’s important that you are earning. Set up a standing order, even if it’s for £100 per month to start with. You can keep increasing your salary as the business grows.
STEP 6: SAVE FOR TAXES
I would recommend setting up a business savings account or second account, which is primarily used for your taxes. Every time you receive money, put 25% of this into the second account to cover your end-of-year tax bill.
STEP 7: SET BOUNDARIES
Be crystal clear what is and isn’t included in a service. If the client wants additional support or products, then charge accordingly. Do not add on support for free! Many in the wedding industry make this very simple mistake. Practice saying “yes of course I can do X for you, but that is outside of your package so this is what the cost will be”.
It’s ok that you love your career, and it’s ok to love your clients, but for most of us, we need to be paid for that love. This is a business after all!
Need more help with your pricing? Our HiveTribe members’ library includes podcasts and action plans for financing and budgeting, pricing products and services, and help with money mindset and selling confidence. Find out about these and other HiveTribe membership benefits HERE.