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.