If you’ve been in this business a while then it’s no surprise to you that most of your money is made during a few months of the year. If you’re new to this business, then hang on, because you’re about to get a big surprise. And a crash course in money management!
In my event planning company, I make most of my money for the year from mid-March to mid-May and from October to November. In fact, I would estimate that about 75% of my yearly earnings happen during these four months. So, as you can imagine, I’ve learned how to budget appropriately so that mama can bring home the bacon all year long, even when no bacon is in sight.
Some of you may have businesses in this industry that bring in the bacon all year long, and that’s great! But what I have found is that most people in this industry work the hardest IN their business during a few short months each year and spend the rest of their year working ON their business.
I’d like to give you a tip that I’ve learned that can help you avoid feeling the financial pinch of the low season – you should consider allowing your clients to structure their payments.
Let’s face it – most people (especially creatives) aren’t good with budgeting their money and this is one of the easiest way to start chipping away at this issue.
What does structuring payments for your clients look like?
Basically, instead of having your client give you a 50% deposit when they book you, and 50% (or the remaining balance) two weeks before their event, you structure their payments so that they give you some type of large down payment – 25%, for example – and every month you automatically charge their credit card for a portion of the balance. This way, you have a guaranteed payment every month that you can rely on.
Structured payments from clients work really well if you’re the kind of person that has a tendency to “spend it because it’s there”. Or if you’re the kind of person that gets really stressed about finances if you don’t see money coming in every month.
A great added benefit to having structured payments from clients is that it’s often what makes your client happiest as well. Instead of large lump sums, they’re able to stretch out their payments over a longer period of time, which feels a little less painful.
It can also help you book larger (or more expensive) services. When a client isn’t feeling the sting of large lump sum payments, and they’re able to make smaller monthly payments throughout the duration of time leading up to their wedding, they often feel more comfortable with adding upgraded services.
Let’s get real here – I often see floral bills equivalent to the price of a brand-new car! How do you pay for your car? Did you write one big check or do you send a payment to the loan company every month?
But just like the title to your car, you don’t get it until that final payment is made. I would treat the payments for wedding services the same. Always make for sure that final payment comes before the event date.
One last benefit that I think you really receive from offering structured payments to your clients is that it helps calm you down. If you know that you have checks coming in or credit cards that you process every month then you’re less likely to get stressed out over finances. It’s clearly more of a mental benefit than anything else but it’s still a benefit! Having your own business is very much a mental game at times. Have you ever noticed that it’s harder to close a sale when you’re stressed or really need the money? But when business is good everything just seems to flow your way?
Guys, desperation stinks! And your potential clients can smell it. If you’re stressed over money, you’re going to reek of desperation and you’re going to grasp at every penny that’s dangled in front of your face. But when you’ve given yourself some breathing room by structuring payments with your clients you’re going to feel more secure in saying no to the wrong client. Because booking the wrong clients can tank a business just as fast as not having any clients at all.
We want to know – do you already use structured payments in your business? If so, how do you structure the payments with your clients.
We will be discussing this topic on Periscope today (9/8/15) at 4 pm CST. You can find me as @thecherylbailey.
If you don’t have the Periscope app, you can download it here for free (there are versions for both iPhone and Android).
I love this concept. I have been teaching it to my planner for years. I love the way you explained it. I will be reposting it (of course, giving you all proper credits) Thank you for your confirmation this I was on the right track! Thank you also for your commitment to helping to improve the wedding industry through education.
Hope to see you at WMBA.
That’s great to hear Deborah! I think it’s a great way to accept payments – and clients love it too.
I’ll be at Wedding MBA all week but speaking on Monday. Come see me!
This is the first article I’ve read as I’ve just subscribed. I can tell already, that the time I spend learning from WIR will pay off! GREAT info geared toward creatives.