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Time to add it up, women entrepreneurs

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October is Women’s Small Business Month. In observance of this month, I’ve got an unusual request for women who own small businesses or are thinking of getting in to business.

Because I desperately want you to succeed, I’d like to ask you to sit down and do something very important. I want you to do the math.

While there are lots of measures of business success, clearly the most important is: Are you actually making money? Do you really know?

Most of us are like gamblers  —  we tend to concentrate on what we win rather than what we lose.

To find out whether you’re actually making money, you have to figure out ALL your expenses as well as your income.

I especially want you to do the math if you’re in the following types of businesses:

1Gig economy gigs  —  driving for Lyft or Uber, doing gigs on Task Rabbit, renting out rooms on Airbnb. Once you figure out the costs of gas, car washes, added insurance, wear-and-tear, renting a newer car (which you often need to do), cleaning, losses, you may find you’re making only a few dollars an hour at best.

2Multi-level marketing programs. Whatever you call these — direct marketing, network marketing, referral marketing — the basic business model is predicated on a pyramid of distributors all buying lots of inventory from the parent company.  While MLM programs tout that your earning potential is up to you, studies have repeatedly shown that fewer than 1% of those in MLM programs make any profit.

I understand the appeal of such ‘opportunities. Typically, these are turn-key  —  everything is all set up for you to start immediately. You can set your own hours, so you can work around your family, work or school schedule. There’s often a lot of communal, emotional and business support  —  especially from multi-level programs. These typically provide lots of sales training, social media messages and confidence-building acknowledgement of even small accomplishments.

But whatever you’re selling, making, providing  —  I want you to see whether what you’re doing is profitable. Not just profitable in a personally satisfying way, but in a bottom-line, is there more money in my bank account way.

And you should also consider the cost of:

► Taxes  —  If you are fortunate enough to make a profit, you’ll be paying income tax on your earnings. The good news: if you keep track of all your expenses, you’ll be able to deduct those and pay lower taxes.

► Your time  —   Whether driving 40 hours a week for Lyft or selling MLM cosmetics through social media and house parties, track how much time you are putting in. You might discover your hourly rate is quite abysmal.

► The cost to friends and family  —  Trust me, your friends are tired of seeing your MLM posts in your Facebook or Instagram feed. And are you missing time with your kids  because weekends are the best time to drive for Uber?

That doesn’t mean you shouldn’t start or run a small business. I’ve been running my own business for over 20 years, and I love it. But I remember what I told myself the very first year in business  —  after six months, if I wasn’t making more money than I was spending, I’d look for a job.

So right from the start, I kept track of all my income and all my expenses. I got a ledger from the office supply store and wrote everything down  —  my billings, my expenses, my income. Most of all: I didn’t fool myself. That’s probably one reason I’m still in business after all these years.

To help you do the math in your business,

► Get an app. Having an app on your phone helps you keep track of your expenses.  A couple to look at:

► Overestimate expenses and under-estimate income. If you’re doing financial forecasting or can’t remember what you spent or how much you earned, be conservative.

► Be cautious. Whether it’s an online platform or MLM program touting high earning potential or a service or consultant promising to save you thousands of dollars, do  your homework and be skeptical. Don’t spend your money quickly.During Women’s Small Business Month and throughout the year, one way to prove you’re a real business owner is to do the math so you can see just how well you are doing and be justly proud of your success.

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