Introduction
What is one thing that you didn’t necessarily think about when you decided to become an entrepreneur, when you decided that you’d like to have a digital course? What is one thing that you rarely hear people talking about out in the open?
Money and the debt that being an entrepreneur can bring with it. That debt adds up fast, but still it is something that we keep hidden, kind of like that chocolate bar you have secreted away in a cabinet away from your kids and spouse.
Just like it isn’t healthy to hide food away and sneak it, neither is it healthy to hide talk about money as an entrepreneur.
Today I’m going to talk candidly about money, entrepreneurship, and the risk of debt. I feel strongly that everyone should be fully informed. If this is not something that you want to acknowledge in your business yet or with your entrepreneur friends, that’s ok. This episode will be here when you are ready. If you are ready to talk about money, then stick around.
Does Entrepreneurship = Debt or Profit?
I was talking with a friend about debt and profit, and the fact that as entrepreneurs, this is not something we talk enough about. We don’t talk about money. In fact on this podcast, which is now up to 206 episodes, we’ve only truly talked about money in a handful of episodes, including episode 202 where we discussed the difference between profit and revenue.
This has to change, so I thought I’d give you a little glimpse into some of the financial decisions that have impacted my business over the years.
When I first got started as an entrepreneur and was setting up my business, my husband was, thankfully, helping me figure everything out. We had lengthy discussions about what I needed to have for my business and how I could keep my costs low.
We were successful in finding ways to save money, we used a WordPress site, plugins that were free, the lowest tier of ActiveCampaign, and AWS for our file storage which cost just pennies a month. I had everything I needed and realized that as long as I cleared about $2,000 for the entire year, my business would be neutral in the first year. I thought, ah, this is fantastic. And quickly the thought followed that even if I don’t make $2,000, because things get off to a slow start our family is lucky enough to be able to absorb that with my paycheck as a college professor.
That is when it all changed. Just a few months into business the emails started to roll in as I signed up for free resources to learn and implement ideas on my own.
That first set of marketing emails was for a $2,000 course that was going to change everything. It was going to make my business so easy. I had already started a membership and I was thinking, ah, but I’ve got to be missing some things because. These are experts. These people know what they’re doing, and I’m just here getting started. Yes, I’m a college professor with nearly 15 years of experience teaching, I’m board certified as a health and wellness coach, and I’ve been training coaches for years BUT here I am doing this membership thing. So I quickly bought into the $2,000 course. After all, my top strength is Learner. This was right up my alley.
THis course was truly filled with great ideas and processes. Things I would never have thought of as quickly as I could go through the course. I saved time. In fact, I still go back to some of those lessons today, several years later.
But here’s the thing. The moment that I entered my credit card to buy that course, my nice $2k budget for the year was now $4k. I needed to sell $4,000 worth of services to break even. That was still my goal.
What most people don’t realize is that once you buy one thing, you get targeted via email, ads, and text messages with the next piece of the puzzle. In fact, all of the messaging and marketing is so well-designed that it truly feels like the next piece of the puzzle that you need to have in place to be a success.
I was busy implementing things and quickly realized that although I had a good, solid idea, my messaging was NOT working. People didn’t understand what I had to offer, how it could help them, or why they should spend $19.99/month with me. It was crystal clear in my head, but definitely not in anyone else’s.
So I started getting ads for this messaging program that is really neat. It was different, I liked the vibe, the sales mechanism was polished and my husband and I decided not to just invest in the $2,000 course, but to upgrade because I’m the kind of person that needs additional help with marketing. So I upgraded. That $2,000 budget I started out with was not $14,000 for the year.
Can you relate to this at all? The marketing is just very seamless and it convinces you that you need it in order to be successful. , but all too often it leaves an entrepreneur in debt in a way that they never anticipated.
1: The Problem
The problem with all of these great programs that exist is not just that they are all in the neighborhood of $2,000 and that adds up quickly if you decide that you want to have a digital course, a membership that comes off the backend of that, and you want to launch effectively with webinars, or speak from stages to build your audience.
I see this all the time when I’m talking with digital course creators who are feeling stuck. When we get on a call I hear, “I can’t spend any more money until I make some course sales, I’ve already spent $40, $50, or $60,000 trying to get my business up and running and my course isn’t even done yet.” They go on to tell me that they can’t figure out how to build their audience in a way that works faster than one new person on their email list every 5 months, and they don’t have a lead magnet that they love.
This is why we are here today, to talk about the problem of entrepreneur debt that we experience as course creators. It is easy to buy into the hype that there is an easy solution. That you only need a few hours a week to be successful, that $10,000 months are a reality for you right from the start.
2: The Reality
The reality is that entrepreneurship is difficult, it is a long game, definitely not a get rich quick kind of pathway, and there is debt involved.
Even if you have money trees in your house, and we have 3 – they don’t grow money, but the cat loves them, and you have flexibility in your budget to absorb business costs, you still have to be mindful of the reality that business growth takes time, energy, and a considerable amount of effort.
We are too often sold a vision of what can be. The entrepreneur industry is full of success stories like Carrie Green, Lewis Howes, Brendan Burchard, Jeff Walker, Amy Porterfield, Dean Graziosi,and Stu McLaren. They are all fantastic people who have built amazing businesses for themselves.
We see their success, but we’re not seeing the debt that can easily accrue even if you are extremely budget minded. Let me just give you a few examples of how those costs can add up. Say you go with an all-in-one platform for your course and business that costs about $200/month and then you have videos that you’ll be putting into your course that need to be stored somewhere. Let’s say that is $99/month and you may also need a service that allows you to host live video calls and that might cost $150/year. You can see that the costs are adding up now. We are already a little over $3700. This doesn’t count the business books that you buy, the audio book subscriptions you purchase, the domain registration fees, the business insurance that you carry, or any certifications that you have to maintain.
3: The Solution
I do not want you to be. The digital course creator who gets on the zoom call with me and says, I have already spent $40,000 and I have not made a single dollar yet. What I want for you to do is get on that zoom call with me and say, all right. I have spent $3,000. And I have made $3,500. So I’m in the clear. Right now I’ve got 500 extra, how can I use that effectively for where I’m at and still remain neutral or in the positive?
What can I do right now that’s going to amplify my efforts? I want those kinds of conversations. I don’t want these conversations where you’re already $40,000 in debt without a clear path forward, without a strategy to get to a place where your family finances are not being impacted (or are impacted negatively).
The solution isn’t clear cut because for every digital course creator, every entrepreneur this will look different. For some, accumulating $40,000 in debt isn’t an issue. For others, that means that there isn’t enough for groceries, rent, and medical care. Regardless of where you fall on that continuum, my best advice for you is to look at every single cost you assign to your business and assess it for importance, criticality, and feasibility.
Is the cost important to the running of your business? In other words, is it just something fun that you’d like to test or try out?
Second, this grows out of the importance question, is the cost critical to the profitability of your digital course and business as a whole?
And finally, is it feasible given your current financial situation?
I actually have a resource that can walk you through decision making about financial decisions in your business that I’ll share with you in just a bit.
Action Item
Today, I just want this to be a reminder, kind of a wake-up call. To look at the debt that is being accrued inside your business. What are you doing to bring in money now? I often recommend taking a few 1:1 clients to build revenue and breathing room so that you can build your course. Ask yourself what you can cut from your costs. For instance, if you have a course platform that is $200 a month, yet you have not yet created a course, is there some other solution that you could use that is free or lower cost until your course is up and running and bringing in money that can support that $200 a month fee? Are there things that you purchased thinking, oh my gosh, I’m getting this deal. It’s so good right now, but you’re just not at a place yet in your business where you can use it? Is that something you could cancel and come back to later?
The idea here is not to keep increasing your debt while you’re working toward getting some revenue. We want to minimize the debt and maximize opportunities to get revenue in the door.
Although we don’t talk about money often enough as entrepreneurs, I hope that you feel like this is a conversation that you can begin having more frequently with your fellow course creators and entrepreneurs.
So what kind of action can you take this week?
If you are currently considering an expense – maybe a course, new piece of software, membership, or purchase – run the decision through this process. Now, if you are more of a flow chart kind of person, I’ve got you covered.
Head over to Instagram or Facebook and DM me the word, “Decision” and I’ll send you the link to grab the PDF that walks you through a multi-faceted decision process designed to help you make an informed decision about your expenses.
Where to Go Next?
And if you want to learn more about assessing costs inside your business, check out Episode 121: Let’s Talk Money where I walk you through 7 steps to making a sound financial decision inside your business.
And if you are looking at tools for your business, check out Episodes 180 and 181 where I share the 6 top tools that I recommend for creating and selling your digital course.
Until next time, happy creating!
