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New year's resolution: I will get paid for my work
Whether the result of generosity, competing priorities or just good ol’ fashioned imposter syndrome, small business owners aren’t always the best at collecting what they deserve for their hard work.
Without the backing of a large organization, transactions between small business owners and their clients can often feel casual than business-oriented, but it’s extremely important that they’re still taken seriously. Unless they’re doing work that is explicitly pro bono, like for a charitable organization or someone truly in need, entrepreneurs need to be firm in their demand for compensation.
Here are a few ways you can ensure you’re earning what you deserve as a small business owner in the new year.
Don’t succumb to imposter syndrome
When launching a business, especially as a freelancer, creative, tradesperson, or small business owner, it’s not uncommon to devalue your own skillset. Commonly known as “imposter syndrome,” it may sound foreign to those who aren’t used to working independently, but is actually quite normal—feeling guilty to ask for compensation for a task that comes naturally to you or knowledge that feels like second-nature. As a result, many small business owners don’t feel they’re entitled to the compensation they’ve rightfully earned, and aren’t as firm in their demand for payment. This year, make it a goal to overcome imposter syndrome and confidently demand the compensation that you’re entitled to.
Besides not asking for payment, entrepreneurs also often undervalue their skillset, and undercharge for their services. Someone that was previously accustomed to earning an hourly rate is likely going to base their rates as a new entrepreneur on their previous compensation, without taking into account the wide range of additional costs that come with small business ownership. Be mindful of this transition from salary to invoice, and set your rates accordingly. This year, you should strive to charge what you truly deserve, not what your most recent employer offered.
Don’t give your services away for free
The earliest clients for many small business owners are friends and family, further amplifying the guilt that comes with charging for your services. While offering a few free perks to those closest to you every once in a while won’t make a big impact, making a habit of giving away expertise free of charge can take a big chunk out of your bottom line. This year, be upfront with friends and family about the cost of products and services you provide, and don’t be scared to charge them after doing business with them. This can be an uncomfortable transition, but asking for payment is important in establishing your business, and tactics like offering a friends and family discount can help everyone move forward.
Keep your books organized
Another common factor of non-payment is a simple lack of organization, which is easy to understand when you’re just starting a new business. After all, the day-to-day management of a small business is more than a full time job, and staying on top of every dollar owed can be a burdensome task. Fortunately, Wave offers a suite of financial services for small business owners that can keep you on track of your invoices, and help you collect the money you earn on time. We’ve also gathered some sage advice from a bookkeeper on how to stay on top of your invoices and bills.
Send invoice reminders
Let’s be honest, asking for money is just plain uncomfortable, even when that money is rightfully owed. Crafting a letter requesting payment can be difficult, and staying on top of forgetful customers is time-consuming. That’s why it’s so important not to ignore unpaid invoices, as the longer you wait, the less likely you’ll receive the expected funds. Instead, consider using automated invoice reminders and other tactics that take the onus of nudging off your back, and give you time back to run your business.
Looking for more tips on getting paid? Check out our guide on receiving payments and setting yourself up for success as a paid entrepreneur.
How to get started
It’s impossible to operate a successful small business if you’re not being compensated properly for the work you’re doing, but the reality is that it happens all the time. One of the best resolutions you can make for the coming year is to stop making excuses and start ensuring that you’re getting paid for your work; it’s very easy to do that by making a few simple tweaks to your workflow, and by giving your customers what they need to pay you easily.
Hungry for more ways to succeed easily in 2020? Check out resolution #3.