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Are You Calculating the "Soft Costs" of Your Business?

July 02, 2014

DailyWorth Expert

Customer-obsessed business strategist for people who want to do more with less

taragentile.com

Why did you start your business? If you’re like some business owners or freelancers, you started working for yourself to spend more time with family, have a more flexible schedule and work more in accordance with your own strengths. 

Yet, what I see so often is business owners struggling more on those exact fronts than ever before. They’re working longer hours, giving less to their families and compromising their own strengths to get paid. The reason this happens is that these business owners have forgotten to take into account the “soft costs” of their businesses.

What are soft costs?

They’re the costs that can’t be measured in money. Soft costs can be felt in time, energy or reputation. Soft costs are the ones that eat away at your lifestyle, your relationships, and your personal satisfaction. While the work you produce might be profitable financially, is it profitable energetically? Relationally? Temporally?

You know you need to account for the cost of your office, web hosting and payroll. But have you accounted for the cost of working outside your zone of genius, your ideal schedule or your preferred client relationship? While you may not be able to measure these things in dollars and cents, they’re absolutely affecting the health of your business and your life outside the business.

And, when you get down to it, that means they’re affecting your bottom line, too.

In my business coaching program, we work to make sure each business is investing in creating products and services that are profitable across the board. We measure all the costs. We consider whether revenue streams are really worth the soft costs they demand.

Soft costs often add up when a revenue stream demands you to exercise one of your (or your business’s) weaknesses instead of leveraging one of your strengths. That happens when you try to create a service that doesn’t fit the way you like to work or when you create a product that’s popular but not suited to your creation style.

Do you have a product or service that demands you or your business do something you’re not great at? Do you have an offer that doesn’t capitalize on the way you work best?

  • Trim draining products or services from your offerings. 
  • Examine the systems behind your offers to make sure they’re capitalizing on your business’s strengths.
  • Let go of tasks that don’t suit your working style and hire to fill those holes.

Soft costs also accrue when you make a decision that’s either out of integrity or out of alignment with your brand or big idea. It doesn’t even have to be a “bad” decision, as a soft cost could just be unexpected or a little confusing for your customer base.

Have you taken a wrong turn or made a misstep that’s set your reputation back? What safeguards could you put in place to avoid that soft cost in the future?

  • Do a brand audit to see where your messaging might not line up completely.
  • Look for marketing opportunities that highlight your brand’s differentiators.
  • Make a list of business “constraints” that help you make decisions in line with the brand story you’re telling about your business.

Underestimating the soft costs of your business will leave you frustrated, burnt out and likely broke in the end. Figure out how to maximize your energy, style and reputation by minimizing your soft costs and maximizing your strengths.

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