We get this question from clients quite a bit – generally using the exact words “It just feels like I’m hemorrhaging money, and I don’t know what to do.”
(To be completely honest, we often hear this from other people who don’t even have an ittybiz, so it’s probably safe to say that this feeling falls under “the human condition” rather than just those who decide to join the ranks of the self-employed.)
Having been in the position of hemorrhaging money myself at one time or another, I have some advice for you when you find yourself in this unenviable – but not uncommon – position.
1. Honestly assess your resources.
Check to see if the language you’re using truly matches the situation you find yourself in. It might be on the money (oh, bad pun), but it might not. The average busy person says they have “no time”, when that’s generally not the case. The same goes with money.
If you’re telling yourself you’re broke and losing money hand over fist, look at how much money you do have. The number of times someone has told us they’re broke when they have three months savings in the bank or in some financial vehicle is legion. The number of times people have told us that they’re losing money left and right when what they really mean is they’re not hitting the numbers they’d hoped they’d make, equally so.
That may not be the case for you. You may be about to lose your house, or your spouse, if you don’t start bringing in the money. But the first thing you have to do is look at how you’d describe your situation if you were only allowed to use numbers and not dramatic metaphors. You might realize you have a lot more than you’re saying you do and a lot more wiggle room than you think.
That might not make your situation better, but it can get you to stop making it scarier and more intimidating than it needs to be, and hell, that’s a start.
2. Honestly assess your internal capacity.
This is very similar to point number one.
Running your ittybiz is very much like running your life. It’s more demanding than you may have ever signed up for. There will be times when it feels like you have been worn down to a raw and painful little nub and you have nothing left.
But do you have nothing left, or do you have almost nothing left?
Do you have nothing left, or do you feel like you have nothing left?
Maybe you really do have nothing left. That happens, and there’s no shame in that. A lot of very smart and successful people have let go of a business or a life situation that’s drained them down to nothing, only to rest and heal and recover and start fresh with something or someone else.
Maybe that’s you. But you need to make the distinction between truly having nothing left to give, and feeling like you have nothing left to give. Once you do, you can make peace with whatever you do next, whether it’s ending things gracefully or doubling down and giving it your all.
3. Look at your old fallback and ask why you’re not doing them.
Everyone has their old fallback, that thought of, “If it ever gets really bad, then I’ll do X”.
X may be getting a second job. X may be getting a second mortgage. X may be selling off your furniture and going to live with your mother. We all have a worst-case-scenario plan for when things get so dramatically bad that something drastic has to be done.
And we come back to language again. If the problem you’re saying you’re having – in this case, hemorrhaging money – is truly that bad, then the time has come to do X, whatever your X is, to save your business.
If you haven’t done X, then you have to ask yourself why not. Desperate times call for desperate measures. If you’re unwilling to engage in desperate measures, either times aren’t desperate or your heart’s not in it.
(Incidentally, if your heart isn’t in it that doesn’t mean that you’re not trying hard enough. It usually means that you don’t actually want this business anymore. There’s no shame in that, either.)
But if things feel really, really bad, like the ship is sinking, and you’ve been putting off doing those things you said you’d do if the ship started sinking, then you have to ask yourself why. Or, at least, talk to someone you trust and get them to help you figure that out.
4. Consider what you’d do if you didn’t have an ittybiz.
This is kind of like number 3, but a little different. Pretend you didn’t have an ittybiz in the first place. You’re just a regular person, who finds themselves hemorrhaging money because of medical bills or a lawsuit or because you lost your job six months ago and there’s not another one on the horizon.
If that happened to you, you’d probably know exactly what to do. You wouldn’t be thinking about your “business” or your “dream” or your “passion”, you’d be thinking about your cashflow, and you’d do whatever you needed to do, whether it was call a relative for a bailout or put everything you own on eBay and find the nearest couch to stay on.
But for some reason, people running their ittybiz think that financial emergency is different when you have a business than it is when you don’t. It’s still financial emergency. When things get so bad that they’re really, really bad, you don’t sit around waiting for things to get better like you would if you were just having a slump. You hustle your ass off.
Sometimes just taking your mind off your business and thinking about what you’d do about money if you didn’t have it will open up things for you.
5. Pick a basket, and put all your eggs in it.
This means “hustle.” In the vast majority of situations where a client has hit serious financial trouble, the problem boils down to being spread out too thin to get traction.
Marketing activities are taking place across the board – some frantic social media action here, a few blog posts there, some scattershot schmoozing and guest posting, et cetera.
The problem with this is the same problem you’d find yourself in Vegas if you were running out of money. Spreading your last cask between the blackjack table and the slots and the scratch tickets at the corner store isn’t going to help you recover anything. Sometimes you’ve just got to put the house on red. You’re losing anyway.
When fully executed, we’ve never seen this fail. If you pick just one marketing channel and work that with every ounce of hustle you have, you’re bound to get traction. You’re going to pay extremely close attention to your results, and you’re going to be doing it so much and so often that you’ll rapidly see what works and what doesn’t, and you’ll simply get a hell of a lot better at it.
And that might just turn things around.
There are no easy answers. But there are answers.
If you feel like you’re hemorrhaging money, then you need to figure out why you feel that way first and what you’re going to do about it second. But as long as you let that feeling just float around as a feeling, you’re going to bleed out.
Get out of your head. Talk to someone about all five of the points above. Sell your Firefly DVDs and hire someone if you have to.
At least then you can get some peace about it.
Naomi writes more things like this in The Letter. Get it for free today. (It also comes with free marketing courses. You can’t move for free here.)
Here’s a question we’ve had a lot over the last few weeks. (Fellow blogger writer consultant types – have you noticed how these things tend to cluster? Is that just me?)
Somebody with a small to moderate following and a small to moderately popular blog has something happen in their personal life. Experience says this is almost always a divorce, but this month’s examples also include a pregnancy and a significant change in personal direction.
Because this event seems like – and in reality, often is – the biggest thing to happen in recent memory, we want to tell the people we know. This is what a few million years of living in tribes will do to you. When you get pregnant, every other cave woman wants to know why she hasn’t been told already.
When you run an online business, there’s a very good chance that a large part of your social interaction comes from the internet. The intimacy you have with your clients, your customers, and even your blog readers or newsletter subscribers often surpasses the intimacy you share with people you know locally.
Because of this, holding on to a “secret” feels… weird.
Adding to that, we are often pseudo-social with people, online or otherwise, in ways that are not particularly authentic. If you haven’t seen somebody around in a while, you’re likely to ask where they’ve been, regardless of whether or not you’re actually interested. We were raised to believe it is the polite thing to do.
You, to group: Hi.
Relative stranger in group: Oh my GOD!!! I haven’t seen you in forever! Where have you been? What’s going on?
If this is your best friend from high school, they probably do actually care about where you’ve been and what’s going on in your life. But in most cases, we say these things to people whether we have an affection for them or not. It’s a social contract.
Because of all of this, if you leave social media for a few days, or you stop blogging as frequently for a few months, you’re going to get emails or Facebook notifications that read something like this:
“Oh my GOD!!! I haven’t seen you in forever! Where have you been? What’s going on?”
As you go through this significant change in your life – your divorce, your crisis of faith, your infertility treatments and subsequent pregnancy, whatever – you’re going to get a handful of those emails. And then, the next time you and I are on the phone, you’re going to ask me…
“When should I tell my list?”
Here is the answer.
Tell your list when there is a valid business reason to do so.
It is a nearly inescapable facet of human nature, the thinking that others really want, or need to know what’s going on in our lives. We think this way not because we are selfish and solipsistic beings – well, not only because we are selfish and solipsistic beings, anyway. We think this way because other people tell us outright that they want or need to know what’s going on in our lives.
The challenging thing to realize as an ittybiz owner is that while your email list is friendly, they are not your friends.
And while a small percentage of them are extremely friendly, the rest of them you couldn’t pick out of a police line-up. They’re not even kind of your friends.
You only hear from the 1% that are extremely friendly. This, naturally, gives you a distorted view of the list as a whole. The 99% who just read your blog or subscribe to your newsletter are people whose names you will probably never know.
Other than the small handful of people you know online who are legitimately your friends – these are the people whose home phone numbers are in your iPhone contacts and would not think it was weird in the slightest for you to call them on a weekend – none of these people are friends. They are not granted the same access as your friends, no matter how friendly they are.
Think of it like this. When you work in an office, there might be a few people who are your genuine friends. Those people get told you’re having a baby or getting divorced or engaged in a crisis of faith when you would tell your friends. This probably means right away, and privately. They get the drama, the blow-by-blow, the dirty details.
Then there are the people who are friendly to you, but not remotely your friends. Your direct supervisor, your contact in HR or billing. You laugh and joke in the break room, but they’re not friends. Those people get told when they need to know, and when any drama has passed.
Then there are the people who you don’t really know at all. You know their name, but only because it’s written on the sign on their desk. Those people are never told outright, but pick it up through contextual evidence after the fact. When you haven’t been to the office for a year and come back bleary-eyed, they assume you had a baby.
The media has conditioned us to believe that the public needs to know. We can thank the National Enquirer for that one.
The time to tell your list when there is a valid business reason to do so.
If you’re running a business, the public only needs to know when they need to know. That is usually never if the news is bad, and after the fact if the news is good.
If you’re on your chiropractor’s mailing list and they’re going to be off from September to December because they had a baby, this is something you need to know.
If you’re on your chiropractor’s mailing list and their mother died, or they got divorced, or they rediscovered their Jewish heritage – or, God help us, they’re wondering if chiropractic is really for them after all – you never need to know.
So, since you’re not a chiropractor, what should you do?
- If you are running a pure personality brand – you’re a mommy blogger, for example – then yes, tell people as soon as you want. They’re reading to get a behind-the-scenes look at your life, and only to get a behind-the-scenes look at your life. If that’s you, though, you probably knew that already.
- If you’re not going to be running the workshop you always run because you’re going to be on maternity leave, by all means, tell them that. They need to know that the workshop schedule is changing, and babies are nice.
- If you’re not going to be running the workshop you always run because you’re too messed up after your divorce, tell them that the December workshop is cancelled and for the love of God, leave it at that. Resist the urge to give any reason at all. Nobody cares.
- If you have something that nobody needs to know but they might find interesting and you feel like working the information into existing communications as an interesting side note, feel free.
- If you can’t figure out how to work the information into existing communications without it looking awkward, that’s because it’s awkward, and you probably shouldn’t do it.
The public only needs to know when they need to know.
A number of questions came up this week on the topic of open and click-through rates.
If you’re new, open rate refers to the percentage of people who open an email you send.
Click-through rate refers to the percentage of people who click on a link in that email.
First, and you need to be aware of this, both of these numbers are completely unreliable in any kind of absolute way. If your newsletter says your open rate is 50%, that’s not actually even kind of true. It cannot be accurately measured, no matter what song and dance routine your autoresponder software goes through to convince you otherwise.
The only reason we care about open rate and click-through rate is in a relative way. Are your open rates generally going down, going up, or staying the same?
Is your click-through rate is usually 4% but today it was 2%? Well, it looks like you missed the mark on today’s email.
Is it usually 4% but today it was 12%? More like this one, sweetie!
With me so far? Percentage rates = relative. Cool? Cool.
Now that’s all well and good, but it leads to a very natural problem.
If Monday’s click-through rate was 4% and Tuesday’s was 3% and Wednesday’s was 2% – that looks bad, right? Houston, we have a problem?
Well, yes and no.
Usually, yes. It’s bad. If you send an email with a link to Monday’s blog post and 4% of your people click, and then you send an email linking to Tuesday’s blog post and 3% of your people click, and then Wednesday gets 2% – well, yeah. It’s looking like people kind of hate your blog. Sorry, dude.
That’s not when it usually happens.
The most common time for a sliding drop in open rate or click-through rate is during an active promotion.
Let’s say you’re having a sale.
On Monday, you send a big ol’ hoopla email with a killer subject line saying NOM NOM NOM SALE or some such thing. I, having never heard of this sale, say, “Sale? I like sales. Maybe I should open this email.”
Once inside, I see your delightful copywriting antics and say, “Maybe I’ll click.”
I click, I look around, I decide I’ll think about it later. (That’s foreshadowing, by the way.)
So that counts as an open and a click.
On Tuesday, you send a medium hoopla email with a medium killer subject line. I, being distracted, absent-mindedly open it anyway, forgetting that I already know what’s inside. Once I open it, I remember that I already know what’s inside, and I do not click.
My brother, on the other hand, wasn’t in his inbox on Monday, and this is the first HE has heard of it. He opens and he clicks, just like I did on Monday.
As the week goes on, more and more people have already opened and clicked, meaning they’re NOT going to open again, or they’re not going to click again.
By Thursday, only a few people are opening and clicking anything – generally those who are thinking very hard about buying, or those who have been on vacation all week.
Nearing the end of your promotional period, your open rate and your click-through rate drop like a rock.
“OK, Naomi. Hang on just a second here. You always say everybody buys at the end. How can they buy if they don’t click?”
Well, aren’t YOU clever for asking such an insightful question?
After all of this Monday Tuesday business happens, we come to the end of the sale and you send an email saying, “Today is the last day.”
Everyone who is even marginally interested opens AND clicks. It’s get-it-or-regret-it time, baby. Open rate and click-through rate shoot back up. Yay!
So your open and click-through rates start moderately high, they go down, they go down more, they go down to the point where you’re well and truly terrified, and then they spike.
So if your open and click-through rates are dropping in the middle of a promotion, that is TOTALLY normal and there’s nothing you should do about it. Who clicks on the same link four days in a row? Nobody, that’s who.
So don’t worry about it. Just be damn clear that the last day is the last day, and your open and click-through rates will go right back up again.