It was the end of 2012 and we had both just moved back to our hometown from opposite sides of the coast. Jenna was returning from Washington state as a married woman and stay-at-home mom looking to pursue an endeavor that would help provide for her family. Shannon returned from New York engaged and planning her wedding and completely burnt out from a corporate sales and marketing career. Needless to say, we were both motivated to find a path that inspired us and allowed us to express ourselves creatively, but we weren’t really sure where to start.
During this time we were both planning all the details for Shannon and Bobby’s wedding, so we were spending lots of time together. We shared our aspirations and named all the appealing business ventures we would love to chase after. (Fun fact: we tossed around the idea of starting a business of refurbishing old chairs and naming the company, Chair-io, but that’s a story for another day...) One day, while we were working on wedding planning to-do’s and dreaming of future business endeavors together, we looked up from our checklists and said “THIS! THIS IS IT!”. We’d been planning for quite some time, but hadn’t realized just how good of a fit an event planning and design business would be for us. It would not only allow us to utilize our individual strengths, but also stretch our creative muscles while serving others from a place of passion. A passion we both had shared from an early age.
When we finally set out on our entrepreneurial journey, we made one big mistake that ultimately limited our profitability potential. A mistake we didn’t realize until almost three years in. Like many new business owners, we researched the market and got an idea of what others in the field were charging. We gained a general idea based on some rates Shannon received from local wedding coordinators for her own wedding (while we planned all the details leading up to the big weekend, Shannon hired a professional coordinator to take the lead for the main festivities so she could be fully engaged with family and friends and not worry about the behind the scenes) and also asked around what was perceived as a fair value for the type of services we wanted to provide.
Like we shared in How to Build a Profitable Wedding Planning Business Part 1, we initially set our rates low but planned to increase them as we built our portfolio. Sounds like a good plan, right? Well, what we did wrong was follow the industry standard and set our pricing based on what others were charging in the market, without truly understanding their cost of doing business. So, in today’s post, How to Build a Profitable Wedding Planning Business Part 2, we are sharing how to Set a Goal for Profitability, so you can begin setting your own rates that account for the hours you are dedicating to each client as well as your business.
Set a Goal for Profitability.
When it comes to planning anything in business, it is important to set goals. When it comes to building a sustainable wedding planning business, it is imperative to set financial and time management goals. That’s what will ultimately keep your business thriving for years to come.
When it comes to building a sustainable wedding planning business, it is imperative to set financial and time management goals. That’s what will ultimately keep your business thriving for years to come.
The formula is rather simple once it’s broken down, but many new wedding planners feel more comfortable understanding what others charge first and basing their fees off of those numbers. The problem with this practice is someone else’s fees may not account for all the services you are providing to your clientele. Plus, you don’t always have a clear understanding of how many hours they are dedicating to their packaged services or even what kind of overhead they are responsible for. Instead, there are a series of questions you should be asking yourself before deciding what you will charge for your services, as outlined below.
1. How much do I want to make per year?
The most important question to ask yourself is how much money you would like to take home each year. This number will not only help you determine how much you need to work but also how you budget your expenses and determine your offerings.
2. How many hours do I want to work per week?
Let’s be honest, those of us who choose to build our own businesses never said we wanted to work around the clock. However, we often do. We are not only responsible for serving our clients but we also have to market ourselves, maintain our bookkeeping, remain active on social media, build our referral network, manage a sales funnel, etc. etc. Because business ownership comes with an array of business related tasks, it is important to know how many hours per week you want to work so you know exactly how many hours you can dedicate to each task.
3. How many weeks do I want to work each year?
One of the biggest perks of being your own boss is being able to determine how much vacation time you take each year. As a wedding planner though, taking time off often means lessening your income (unless you’ve created a business that also provides passive income). Essentially, if you’re not working, you’re not making money. Therefore, knowing exactly how many weeks you want to work per year will help you set your pricing to ensure you meet your annual income goals.
Once you’ve taken the time to answer these three questions honestly and really pinpoint how much time you are willing to dedicate to this dream day after day, week after week, you will be ready for Part 3 of our Building a Profitable Wedding Planning Business series. While we don’t want to leave you hanging by not sharing the formula to pricing yourself for profitability just yet, we do want you to take some time to understand what you’re willing to put in to reach your financial goals. The clearer you are now, the better you will be at building a profitable wedding planning business that serves you and your clients well.
With that, stay tuned for Part 3 of Building a Profitable Wedding Planning Business: Understand and Outline Your Overhead, and while you’re setting those profitability goals, be sure to check out our 5 Easy Steps for Successful Business Goal Setting.