This week’s issue of The Portable Business ezine is out. Today’s edition focuses on administrative partnering with an article for clients on “How to Choose an Administrative Consultant.”
Check it out here (and be sure to subscribe so you don’t miss an issue) >>
Man, how time flies. I’ve been so focused on getting the new Administrative Consultants Association site done that I had to completely abandon the ol’ blog here (which will undergo its own metamorphosis soon as well). I have a zillion draft posts, too, that I could have been posting, but I just couldn’t spare the attention span needed to clean them up and get them posted. But you know, I just don’t sweat that kind of stuff.
I’m so excited about finally moving forward on the new direction. It’s been a long time coming. I actually started the site design last year, but got mentally blocked and had to put it on ice until I got some clarity again. And one I did, it started moving like gangbusters!
I’ve still got a few loose ends to take care so the site isn’t officially done, but do take a look and let me know whatcha think: Administrative Consultants Association.
I also want to ask for your help. I’d like to spotlight a few stories from those of you who have embraced the new Administrative Consultant term and how it has helped you in your business.
For example, I recently received a note from a member who related how much easier it’s been for her in talking with potential clients and in networking situations since she began using the term Administrative Consultant. She said she doesn’t get any more of the eyes-glazing-over/deer-in-the-headlights thing that she would always get when she called herself a Virtual Assistant.
And I know of several people(myself included) who have experienced a dramatic shift in how clients and business people at networking events treat them… getting rid of the word “assistant” from the equation makes all the difference in the world.
So if you have converted over or are still trying out the term Administrative Consultant, please email me your positive anecdotes and experience in using the term. My goal is to share these on our home page or a dedicated pate on the new site and will include your name and backlink to your site.
Looking forward to hearing from you!
I am so excited! We are very close to completing the new Administrative Consultants Association website. I can’t wait to unveil everything and give the official word. I’ve been very busy with that work the last couple months. Since we’ll also have a new ezine design, I thought it might be a good idea to reevaluate the publishing day as well. Normally, we publish every Monday, but I’d like to know from you if that’s the best day for you. So please take a quick second today to complete the poll below and let me know. I thank you muchly!
You know, it’s so sad when those in our biz who self-identify as Virtual Assistants have to close their doors because they just couldn’t make enough money.
What strikes me is that there doesn’t seem to be anyone anymore out there (except me) who is trying to help them actually be financially successful as an administrative support business.
It seems that everyone is jumping ship to become something else other than an administrative support biz, or teaching folks everything else EXCEPT how to be financially successful in an administrative support biz.
THAT’S what I find sad… everyone is always trying to dig into their pockets to teach them everything else BUT how to be financially successful as an admin expert.
And then you have all these self-proclaimed industry “experts” who aren’t even VAs telling those in our industry how to be successful. They don’t know the first thing.
Hey, if someone doesn’t want to be in the admin support biz, that’s their prerogative. Everyone should be and do and have the kind of business they love.
But don’t try to pass yourself off as an expert in the admin support biz if that’s not what you actually are.
One of the very first things you have to do to become financially successful is get clear about exactly WHAT you are. Most don’t really know. They just have some vague notion that they “assist” “virtually.” That isn’t a definition of anything.
If you really want to start earning well in the administrative support business, you have to stop being a gopher and an “assistant” and get really clear about what admin support is.
And the reason that’s important is because administrative support comes with a host of unique challenges. We have to battle against unique client mindsets and misconceptions, particularly when it comes to thinking of us as replacement employees. It’s too easy to actually become a substitute employee in this business, which will actually keep you in the working poor. Which is why I’m always, always trying to educate on this topic.
I find it interesting that some of these VA training programs have so many graduates who aren’t actually doing anymore the thing the training program was supposed to help them become successful at–because they couldn’t be financially successful doing it. They had to become another kind of business entirely to become financially successful. And that’s because no one taught them how to be financially successful in THIS business.
I’m not saying folks shouldn’t do something else or move onto another business entirely if that’s what their heart wants to do. What I’m sad about is that those who actually love being in the admin support business and really would rather just do that, but are compelled to look elsewhere because they just didn’t get the right guidance to be financially successful in THIS business.
One of the things we have to battle in our industry to our financial detriment is this idea that VAs do anything and everything. That’s not a definition of anything… that’s merely being a gopher. And people don’t view gophers as experts, they view them as lackeys. You simply will not be able to command professional fees if you allow people to view you as merely as gopher/lackey.
The other subsequent thing that happens when you allow people to perceive you as merely a gopher/lackey and because you have no clear-cut expertise (as in Administrative Support as an expertise) is that they have you chasing your tail around all over the place. They think you should be doing this and that and everything else ON TOP of administrative assistance. That’s because you yourself haven’t defined for them exactly what you are in business to do. And because they don’t view you as any kind of professional expert in anything (“I’m a this, that and the other” isn’t an expertise of any kind), they don’t want to pay you for it, at least not well. You become merely a servant, an order-taker, in their eyes.
This is where you frequently hear me saying “why are you asking a plumber to fix your car?” Because we get these clients who are expecting you to not only provide admin support, but to also be a bookkeeper, a website designer, a graphic designer, a this and a that and so on and so forth. And so, so many VAs are giving this stuff away for free when they should be saying, “I’m in the administrative support business. If you want a web designer, you need to hire a web designer.”
That’s why it’s so important to get clear exactly what you are and what you do in your business. And if you are ALSO something else in your business, to clearly differentiate and denote those dividing lines in your business so you can still be considered an expert in those additional areas (and not merely a gopher/flunky/lacky) and charge separately for them. Because web design and admin support are not the same thing. Because bookkeeping and admin support are not the same thing. Because graphic design and admin support are not the same thing. Because completing a project and providing ongoing administrative support are not the same thing.
Don’t understand? Ask me your questions! I really want to help you get clear on what this means.
Dear Gritty VA:
I am always curious and have asked lots of people. I am wondering just how you pay yourself. Do you pay yourself sick/annual leave? Aside from overhead costs, do you deduct taxes? What kind of taxes do you face, ie, self-employment, FICA, etc? Your help is greatly appreciated. –SH
Seems like such a simple question, doesn’t it?
You don’t mention what your business formation is and that’s going to be very relevant to how you pay yourself and what your tax and reporting legal obligations are.
The very, very first and most important advice I can give you is that you need to get yourself–quick–to an accountant or bookkeeper. And I don’t want to hear any whining about how that would cost you money. Yeah. Business costs money and you are simply going to have to spend money on important professionals and advice if you want to be successful. Not doing so now could end up costing you far more later. And given how you’ve asked the question, I can tell there are some significant gaps in your business knowledge that will do you great harm if you don’t get the right professional guidance and advice.
In the meantime, here is some general information when it comes to paying yourself in business (and, understand, this is for U.S. based business; you’ll have to bone up on your own country’s laws and taxing requirements if you reside and operate elsewhere)…
The first thing people need to understand is that they are either an employee or they are a business. I see so many people who decide to “work from home” or “freelance on the side” or become an “independent contractor” who don’t realize this. There is no third classification. If you are working for yourself, no matter what you call it, you are a business. Even if you might have an actual job as an actual employee somewhere, whenever you are wearing the hat of “freelancer” or “independent contractor” or whatever you want to call it, you are operating a business during those times. You MUST understand this because there are legal implications and obligations.
So that’s the first thing to understand, and the reason I mention it is because the way you ask the question, I’m not sure you entirely understand that.
If someone doesn’t have this understanding, it’s pretty safe to bet that they haven’t done any official or intentional business formation. When that’s the case, they are by default running a sole proprietorship. In a sole proprietorship, which is the simplest and most common business formation to operate, you simply take money when you want and how much you want. For bookkeeping purposes, these are recorded as “owner’s draws.”
The question about sick leave and vacation pay is moot in this circumstance. You simply pay yourself when you want and how much you want (well, that is, if the money is there, lol).
I would always advise you to keep separate accounts for your business. (In fact, there are some circumstances where you are required by law not to comingle your business and personal funds). Either way, at some point, you will want to “pay” yourself from the monies you have earned in your business. All that is entailed is simply withdrawing funds like you would any other account. So, for example, if you went to the ATM and took out $X dollars for your personal use, you would simply record that as an owner’s draw. Same thing if you transferred funds from your business bank account to your personal bank account or if you wrote a check for something for personal use. Anything that goes out of the biz accounts that is not related to the business is recorded as an owner’s draw.
That said, being in a sole proprietorship doesn’t mean you are exempt from paying employment taxes. It’s just that you pay and report them differently than you would if you were an employee, where actual paycheck processing is required by law. In a sole proprietorship, you will pay what are called “self-employment taxes” and they are to be estimated and paid/reported at certain, specific intervals. You’re going to want to set aside a percentage of funds every time you receive client monies so that you have enough when it becomes time to pay these taxes. Here again is where an accountant or other kind of financial advisor can give you guidance. (For more info on U.S. based self-employment tax reporting, start here)
While a sole proprietorship is the simplest/easiest business formation to operate, it also is the one that puts you at the greatest legal liability should a client sue you for any reason. All your personal income and assets are at risk in a sole proprietorship. This is why many folks opt to go into some kind of corporate business formation where personal assets are not at risk (or are, at least, at less risk). There are many kinds of corporations which also involve varying complexities: corporation, LLC, PLLC, S-Corp, and partnerships to name just a few (consult with a business attorney to get the right guidance in selecting the formation that is best for you and your business circumstances).
This is where paying yourself becomes more complicated and where you will definitely want to seek the advice and guidance of some kind of accountant or financial advisor.
For example, in some corporate formations, you are required to pay yourself as an employee or as an owner/operator. When that’s the case, formal employment payment processing is required which entails a whole host there is a whole host of accounting, processing, reporting and taxing obligations you must abide by and be knowledgeable of. There may be some minimal salary requirements you must payself as an owner/operator. You may be required to pay out profits to partners and shareholders in dividends. Or you may need to know how to record reinvested profits back into the business. In other formations, while you report otherwise as a corporation, you may be allowed to elect to pay yourself in owner’s draw instead of with an actual employment check.
See how much knowledge is involved? And if you do things incorrectly according to your particular business formation, it could cost you big time later. So this is why it’s always, always best to seek the services of the right qualified professional–not other Admin Consultants or VAs–when it comes to these kind of matters. And if you do go with one of the corporate business formations and don’t have a thorough understanding of bookkeeping yourself, hire a bookkeper (one that also has paycheck processing knowledge for your state/locale) to handle that work for you. It’s just too important.
I do hope this helps you get going down the right paths though. 
If you put yourself in the position that you are forced to rely on volume of business in order to make ends meet (often because you simply are not charging properly), you will also be forced necessarily into a bigger and different kind of model entirely, one that you perhaps don’t want and didn’t bargain for.
And that’s not necessarily an easier or more profitable business. In fact, it will automatically reduce your profit margins, increase your administration, overhead, costs and expenses, and require you to become a people and quality assurance manager, among other things.
Finally getting around to reading Freakonomics by Steven D. Levitt and Stephen J. Dubner. Fascinating read.
Interesting anecdote:
“The economist Richard Thaler, in his 1985 Beer on the Beach study, showed that a thirsty sunbather would pay $2.65 for a beer delivered from a resort hotel, but only $1.50 for the same beer if it came from a shabby grocery store.”
How does this relate to your professional services business? They might be talking about beer, but it harkens to a fundamental truth in business: “image is everything.”
What that means is that clients and customers are influenced by your professional image. They’re led to believe or make assumptions about how good (or bad) the service/skill/product is based on nothing more than the professional image that is presented. They directly correlate the quality of your skills, services and products with how things “look.” Very often, it’s the only thing they have on which to base their decisions, and it’s not entirely conscious.
This is especially true with professional services. Clients can’t pick up and hold in their hand a “service” like they could with an actual product. A service is intangible. It’s invisible. Because of this, it could be argued that your professional image is even more important in a service-based business.
The look and feel of your website, your writing and communications, the experience of dealing with you–literally everything that prospective clients have any contact with–make up your professional image. It’s going to be one of the most important ingredients in shaping clients’ perception of you and the value, quality and skill you help them believe and see demonstrated.
What that means is that if you are trying to command the higher professional level fees you want and need, you have to “look the part.” If you say you are worth $X a month, but your website and other marketing collateral appears like the “shabby grocery store,” you’re going to have a hard time convincing anyone you’re worth it. Because you haven’t showed up dressing the part of the successful, competent, qualified expert. The incongruency between your words and the “environment” of all those things that make up your professional image will block them.
Often, prospective clients don’t have any other way of judging how you might be better than the next person who says the same thing. But when they see an image that backs up what you say you are about, you are giving them visual proof to believe you. The “environment” of that top-notch professional image sends a message of congruency and instills confidence.
Your copy, too, is part of your professional image. If you write about yourself and your services in lowly terms, as if you are merely a peon or gopher and that the work is only “grunt” work, people will accordingly only view–and pay–you as such. If you don’t respect the work and understand its value and importance, clients won’t respect or value it either.
Your words also shape how clients treat you. So if you are wanting to command professional fees and be treated as an equal partner, a skilled professional with an expertise to share, you’ve got to also re-image your words. You aren’t some lowly peon. You are not a “generalist.” You are an expert and specialist in the art of administrative support and you have an expertise to share that truly does change the lives of your clients.
Take a look at this quick, 3-minute video. It explains exactly why billing by the hour is keeping you broke.
Let me know what you think. Are you having any “aha!” moments? I’d love to hear your thoughts and questions so please do comment or email me privately.
Dear Gritty VA:
Is it possible to start a business like this nights and weekends if you are totally self-supporting and work Monday through Friday, 9-5? Thanks for your advice! –JN
Well, anything is possible. It’s just that there are some practical things as well as some caveats to consider.
First, you want to get clear about your goals and intentions for having a business. Are you looking to create a real business, one that will earn well, take care of you and your family, and support your dreams, goals and lifestyle? Or are you just looking to earn a little bit of a side income while you continue to work as an employee?
Either way is perfectly fine, but the former will require some real work, effort, education and commitment while the other is more of a hobby. Understand that running a real business and freelancing on the side are two completely different things.
And, of course, my advice is always focused on those who are looking to create real businesses. So when that’s the case, the other thing to consider is the client. How much of a commitment do you have to offer clients if you are working part-time? How much time and energy will you have left over for them during the evenings and weekends after you’ve already put in a full work day and week? How long do you think you can sustain that pace? What will you have left over for yourself and your family, friends and other interests? How might the lack of time for self-care impact the quality of your support and ability to grow your business successfully?
I’m not saying it’s impossible. But peoples’ stuff is important to them. And it can be really, REALLY difficult, not to mention overly stressful and exhausting, to provide a professional level of service and care to clients if you are still working a full-time, or even part-time, job. It really depends on how badly you really want this and how smart you go about it.
So here’s what I recommend…
1. While you are still working, set up the foundation of your business. That means, a) getting clear about what you intend to be in business to do and b) who you intend to work with (your target market and ideal client), c) start establishing your policies and procedures and d) getting your contracts and other forms together. All of this will be honed and adjusted over time, but you’ve got to at least get the start first.
2. Start working on your website. The more professional the better. Your business website is THE most important marketing piece in your business so don’t be penny wise and pounds foolish. Clients equate the professionalism of your site with the level of your skill and competence. If you aren’t the right person to design your professional site, hire a professional to do it.
3. Simultaneously, begin working out your job exit plan. This endeavor will affect your whole family so make sure you discuss the decision/goal with your spouse or partner and have their buy-in. There is nothing more difficult than starting a business when you have to also battle a resentful, unsupportive family.
Imagine your life while supporting a full roster of clients and how you will establish boundaries for clients, family and even yourself. The goal is to help everyone understand when it’s business time and when it’s family time. And for yourself, the goal is to honor your standards and boundaries–because we have equal culpability when we resent others by allowing them to step over those things in the first place. So those are going to be really important.
At some point, once you have your foundations in place, there will come a time when you simply have to make the leap and decide to commit to the business. But you never want to start broke. Magical thinking doesn’t pay the bills. So you want to figure out now how you will finance the business until it becomes self-sustaining and profitable. Do you have another income in the household you can live on while the business gets established? Do you have savings (or perhaps a severance) you can use to finance the business? Where else can you get capital for the business?
You want to understand that generally it takes any business about 5 years to get there and most fail in the first three years. This is probably the biggest mistake new business owners make. They don’t calculate what they need to earn and they don’t realize that they MUST not only earn a living, but actually a PROFIT, in order for the business to survive. I can’t stress this enough.
You want to go in with no illusions that you’re going to become an overnight millionaire sensation. Hey, I won’t say that’s impossible, but it’s not likely. It simply takes time. Go into it with your eyes wide open about that fact and you’ll be far better prepared for your success.
The good news is that the need for what we do as administrative experts has no shelf life. EVERY single business requires administrative so there will always be a need for what we do. And it’s one of the most inexpensive kinds of service businesses to operate because the overhead is so low.
I was so thrilled to receive a video testimonial from Annette Pedersen. I had put a video challenge out to my members on Facebook and Annette stepped right up to the plate. I can’t thank you enough, Annette, for your heartfelt words. This really means a lot to me, and I am so happy to have played a part in helping your business be the best it can be. xoxo
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Thanks for commenting. Yeah, the virtual assistant term is really completely idiotic to...
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