Eleanor Beaton, the founder of Safi Media, is committed to advancing global gender equity through her education and coaching programs for women entrepreneurs. She has inspiring insights on what strategies women entrepreneurs can use to close the gender wage gap.
The gender wage gap is an unfortunate reality for many women entrepreneurs, and it is important to use strategies to close this gap. Women entrepreneurs often face a number of unique challenges and obstacles that can make it difficult for them to succeed financially. By utilizing strategies to close the gender wage gap, women entrepreneurs can ensure that they are being compensated fairly and adequately for their work, and they can also help to create a more equitable business environment for all. Closing the gender wage gap is an important step towards achieving gender parity in the workplace. Women entrepreneurs who use strategies to close this gap will be able to demonstrate their worth, and their businesses will benefit from the increased opportunities that come with equal pay. By utilizing strategies to close the gender wage gap, women entrepreneurs can also set an example for other businesses and help to create a more equitable business environment for everyone. This can lead to increased opportunities for all, and it can help to create an environment where everyone is respected and valued.
With her experience as the former chair of the Visiting Women’s Executive Exchange Program at the Yale School of Management, Eleanor has explored the deeper root of the gender wage gap. Tune in to learn how to close the gender wage gap and get the tools and resources to help you be a successful female entrepreneur.
Pamela Slim
00:00:04
Welcome to another episode of the Widest Net Podcast. I’m your host, Pamela Slim. And today I’m joined by my guest, Eleanor Beaton. Eleanor Beaton is the founder of SafiMedia, an education and coaching company for women entrepreneurs. SafiMedia is committed to advancing global gender equity one woman owned business at a time. Together with her colleagues, Eleanor is on a mission to double the number of women entrepreneurs who scale past $1 million in revenue by 2030. She hosts the Anchored Intelligence Podcast, a top ranked podcast for female founders with over 1.5 million downloads to date. The former chair of the visiting women’s executive exchange program at the Yale School of Management, Eleanor has been featured in publications including the Globe and Mail, the Atlantic, CBC, Chateau Lane and more. I am lucky enough to know you, call you a friend, and have worked with you. So welcome to the podcast.
Eleanor Beaton
00:01:04
It’s so much fun to be here.
Pamela Slim
00:01:07
So we hear a lot about the pay gap for women employees of companies. What do you see in the pay gap for women entrepreneurs?
Eleanor Beaton
00:01:18
FreshBooks, which is a software as a service tool that is essentially like an accounting tool, did a survey of 3700, I believe was the number of entrepreneurs, and they found that women entrepreneurs generally paid themselves about 70% the take home salary that their male counterparts did. So the evidence seems to indicate that that gender gap is also true when we cross over from the field of working women who are working inside organizations to women who are running their own businesses and compensating themselves, which is very interesting because it really brings into question one of the kind of things that we hear a lot about why the pay gap exists, which is a lack of transparency in salaries. Women sometimes potentially not advocating for themselves and are asking for the money of their employers. Interesting when we sort of layer that on top of what’s happening with women entrepreneurs.
Pamela Slim
00:02:22
And it does make me think and thanks for having that research right at the ready, because I often shy away from sociological assumptions. Women entrepreneurs do this and male do that, because very often it’s not grounded actually in science and research. It does sound like I’m imagining there’s this combination, as you said, of patterns that women who have come from corporate could continue in their own life. But also, I’m curious about your take on systemic inequities. When we look, for example, at just the 2% of women that get funded by venture capitalists relative to 98% of men, or our access to capital and all of these things, how do you see that intersection?
Eleanor Beaton
00:03:07
Oh, my gosh, I love this question, and I think there’s a number of ways that we can look at it. So let’s look at one aspect of the inequity, and it’s just one. It’s literally just one aspect of the inequity. So even before we get to VC, I’d love to focus, venture capital and women entrepreneurs going out to get other people’s money to fund their businesses or even going to apply for other people’s money in terms of things like bank loans. So I definitely want to talk about that. I have to make notes of what we need.
Pamela Slim
00:03:42
I’ll make them too. Don’t worry.
Eleanor Beaton
00:03:44
That’s right.
Pamela Slim
00:03:44
Yeah.
Eleanor Beaton
00:03:45
So let’s start at a basic level. I have been doing a lot of research into where the gender wage gap really comes from because it’s interesting, to a degree, we have made progress quickly. If you look at longitudinal studies of how dramatically things have changed for women over the course of the last hundred years, which feels like dog’s ears for most of us, but actually signifies a rapid pace of social change in the big context, women have made significant change. So, for instance, in the women who were born at around 900, if you had a career, you basically chose between having a career or having a family. Those were your two choices. You could not do both. Today that looks very, very different. Women today are capable and in fact, we’re encouraged to have both. And yet the gender wage gap exists. So a woman named Dr. Claudia Goldin, who is one of the sort of leading researchers on this topic, she is an economist at Harvard. What she uncovered is that the gender wage gap is driven primarily by the relative cost of flexibility. And the relative cost of flexibility means that there’s two kinds of jobs. There’s basically greedy jobs that take up a lot of time, and they require that you’re on. And there are flexible jobs that allow for a lot more flexibility. What she uncovered is that as you start to look at where gender wage inequity comes from, it actually comes from couple inequity. So it has everything to do with this question, who’s going to look after the kids? So that means that inside couples, kids take time. Big careers take time. So couples who have children, there is always going to be, or often is going to be, one who has the greedier job and one who has the more flexible job. Now, in same sex couples, they have couple inequity. But inside a same sex couple, it doesn’t actually drive the gender wage gap. So inside heterosexual couples, it does drive the gender wage gap because primarily still to this day, it is the father who has the greedy job and it is the mother who has the flexible job. And what Claudia Goldin argues actually in her work is that even if you took away managers who try to pay women less, the MeToo movement, all these things are real and they exist. The biggest part of the gender wage gap comes from this gender inequity, which drives the cost of what it means to have a flexible job. So it’s complicated. And so I think in a lot of the work that we are doing with women entrepreneurs is looking at how do we structure our companies such that you can have a big job but also have that flexibility. So that’s one piece I’m going to pause because I just dropped a lot.
Pamela Slim
00:07:04
But yeah, that’s so deep and interesting because I always think of contextual analysis about what’s causing the situation. What can you do about it? There is a strong piece about it. I know I’ve lived in my life of having lots of conversation with your spouse, of challenging some of those assumptions and looking at different ways in which you can be active parents at the same time focus on the kind of work that you want at different stages. So that’s just really interesting. Jumping to the area of solutions, which I see sometimes that I have the assumption that you can have some more control when you are an entrepreneur over the way that you do design your life to be inclusive of things like your availability for loved ones, whether they be parents or children or dogs. Right?
Eleanor Beaton
00:07:56
Yeah.
Pamela Slim
00:07:56
Many of my clients love their dogs and make time for them. I have other days where I’m like it really is sometimes more challenging to work for yourself, where you can never really take time off or just take a paid vacation that somebody else is paying. How do you look at the equation? Do you see that women do have more flexibility to design things differently as an entrepreneur?
Eleanor Beaton
00:08:20
I absolutely think so. And it’s interesting because there have been organizations that have done research into why women start businesses. We know women are starting more independent businesses than ever before and sometimes it’s because there could be potentially a lack of meaningful job opportunities. But sometimes they’re starting businesses because they want to ensure that they don’t have to make the same kinds of trade-offs between flexibility and income potential or between flexibility and the ability to do meaningful, creative, challenging work. And so I absolutely see that. And in fact, it’s why I became an entrepreneur. I can remember in my early twenties and people who loved Sheryl Sandberg’s Lean In, when Sheryl Sandberg wrote Lean In, which is now kind of out of fashion, I must say, some of the advice that she made. But I can remember feeling a little horrified because she was talking about how she was talking to women in their 20s who were really focused on how are they going to make it work, family and career. And that kind of horrified her. But I was one of those women. I can remember having a conversation with my mom. I was in my early 20s. She was visiting me in Toronto. I was working in advertising and she was feeling frustrated at the time. And she was like, sometimes I feel like we need to talk to young women more if they want to have families, to really think through carefully about the kind of career that they create for themselves. So it’s one that they are capable of having both. I don’t know if her advice was wrong or right or the question, but I took it seriously and that’s actually why I decided to start my own business early on. I started my business because I thought that I would have control over my time. Now, I have for sure missed a lot of things. And in our household, I have the greedy job. So my husband and I are busy. The way that we’ve solved this couple in equity thing is we are business partners. I am the CEO and I have the greedy job. He has the flexible job. But we actually both make the same amount of money and we both co own this asset. I own the majority of it, but still and to me, it’s a way that we have looked at in the context of a business, how we create equity. Because according to Dr. Goldin’s research, one core to solving the gender wage gap is to have couple equity and what that actually looks like. Again, this is not advice, but that’s how we did it. And I think it’s working pretty well so far.
Pamela Slim
00:11:04
Yeah, well, I think, as you know, that’s really what Darryl and I have done. And at this particular stage, it’s maybe been the last five or six years when he retired from his construction business. So it’s so interesting. I feel like we could do the entire episode just on that. So maybe there’s a follow up to that because it’s really interesting and all the dimensions of it, just making sure everybody feels engaged and connected and navigate sociological roles, sometimes that can have an impact, even though we’re super clear as to money coming in for the family and for the business that I know. Sometimes for Darryl, it’s like, am I really doing enough? Should I be doing more? So that’s really fascinating. So that’s one piece, as you were saying, of really looking at both the cause and the solution for what can begin to narrow the gap. Let’s talk just for a second about some of the systemic issues like around going into a bank to get a loan. So let’s say somebody is excited their business is growing. They want to be using some other people’s money in order to expand their practice. What do you see is this combination between ways in which they might approach it and ways the system is designed that either gives them success or not in getting what they need financially?
Eleanor Beaton
00:12:21
This is interesting because I’ve spoken to so many bankers and people who are lenders, essentially, and they say it’s really hard because sometimes we feel we’re working for organizations who have a mandate that we’re going to be more equitable and diverse in terms of how we lend money. But they don’t change the lending criteria to reflect that. So a couple of examples, for instance, let’s talk about commercial loans and banks. So commercial loans and banks are often handed out to help entrepreneurs grow. And they want some hardcore asset as collateral. And many women are starting service based companies, and they don’t have hardcore collateral to borrow against, or they are potentially using that capital to invest, like maybe it’s a working capital loan or something like that, to give them working capital to be able to really invest in growth. And so they don’t have collateral to lend against, unlike an entrepreneur who might come in with a construction business. And again, not to stereotype, there are tons of women who have construction based businesses. And so they’re going out and they want a loan to finance a piece of $200,000 piece of equipment. Well, now the bank has something that they can take. So that dynamic. I have to have something hardcore that I can take from you in order to lend to you puts women owned businesses who are running service based businesses at critical disadvantage. But the thing is, like, hello, ding dong, it’s 2023. And the place where business valuation happens has changed. You know, in the 1970s, maybe 20% of a company’s value was in its intangible assets. Today, it’s over 90% of a company’s value is typically in its intangible assets. But banks still aren’t really lending on those. So that’s like one example. Here are some other things that you see when we look at, especially for women of color, where I have spoken to bankers who are very active and doing a lot of internal advocacy to increase the amount of commercial lending that is happening for Black entrepreneurs, let’s say. And one of the big things that they run into are things like a part of the evaluation that is like looking at leadership experience, looking at character, and how these organizations evaluate character and leadership ability, which is often very sort of cultural specific. It’s often very and so it becomes impossible. And they’re like, look, these are incredible businesses and under the existing criteria, we cannot lend to them. So it’s really interesting, the lens at which we evaluate. So, for instance, who’s your family? Who is your family? What’s your family background? What’s your socioeconomic background? That’s the language often through the lens through which we’re looking at things like character, which I don’t know about you, but I know a ton of, quote unquote good families who have horrible characters. I mean, has anybody seen the Murdoch murders on Netflix?
Pamela Slim
00:15:52
I know people are listening, but my face was twisted up in a huge scrunch. This is not too hard to imagine for frequent listeners to this podcast, but yes, problematic questions that are just perpetuating inaccuracies in terms of how we evaluate folks character, potential, et cetera.
Eleanor Beaton
00:16:11
Yeah, and I think there’s this other part recently in my world, there’s a lot of conversation because in my world so we work directly with women entrepreneurs. But you shared the goal that we have, which is to double the number of women entrepreneurs who sustainably scale past a million by 2030. Look, that’s an ambitious goal. There ain’t no way that we can do that on our own. So it really involves partners. And that’s why I came to work with you. Like, you are the queen of understanding ecosystems, understanding partnership ecosystems, and really understanding how to work inside them. And your work has been so influential to me in terms of understanding how do we work inside an ecosystem. Like, before, I was a little bit like a bull in a china shop and now I feel like I understand better and that side of our business has really taken off. I need to update you by the way that side of our business has really taken off, which I’m so delighted about because it helps us kind of meet our mission. But inside the ecosystem, there’s a lot of awareness. Let’s say, hey, we need to lend more. We need to make sure that women have more access to capital. They don’t need more mentoring. They need access to capital. But I sometimes find or let’s do a pitch competition and we’re going to have this pitch competition for women. I’m like, dudes number one. Anybody who works with women understands that basically women start dropping out of competitive sports at age twelve. And so you think the way to get them access to capital is to do a pitch competition. It’s not that that’s the dumbest idea in the world, and it’s not that they haven’t proven to be successful, but that tells me that it’s more pinkwashing. You’re kind of approaching the challenge without a gender lens and certainly without an intersectional lens. And so there’s that. But what I have seen, I did an experiment where I was working with my clients and we were brainstorming, hey, if you had to boost working capital in 30 days, how would you do it? And we brainstormed a ton of awesome ideas, but 95% of those ideas had to do with their labor. Only 5% of the ideas had to do with using other people’s money. And that would be things like I would incentivize pay in full. I would talk to my vendors about seeing if I can delay payments on certain things. I would get a loan or a line of credit. I would get somebody to invest in this. And so what I have seen is that very often, and again, I don’t want to stereotype, but what I have observed is that we tend to have a money labor bias, that the way to get money is to work for it versus the way to get money is to find investors to back my dream. So I think if we don’t look at that, then all the access to capital we have to normalize this process of using other people’s money to grow.
Pamela Slim
00:19:14
It’s so true. I often tell the story of walking in New York with a friend of mine who is a business partner for another client. And he was like, I only know rich people who have just all this money that they’re just looking for people to give it to, basically to invest in. And I was like, that is so funny because I only know people who are sitting around. If only they had money, they would do something with it. But it is an example of where the ceiling opens sometimes and you look and realize, wait a minute. There are so many people, and I think particularly men, who wouldn’t even think about an expansive business idea without using other people’s money. That’s what my friend was saying. It’s like, that’s the way to do it. Why would I ever risk my own money? Whereas, as you said, because of socialization or just exposure to ideas, there is opening the door to that possibility. And I’m curious because you’ve talked so well about some of the areas that have contributed to the structural inequities of just ways in which people are screened, et cetera. Is there anything that you’ve seen knowing that women are navigating an imperfect system, but if they are looking for other people’s money, be it from financial institutions, from angel investors is there any advice that you give your clients? That are doing that just for them to feel as clear and powerful as possible and to present the best foot forward for those people or institutions.
Eleanor Beaton
00:20:39
Yeah, absolutely. So there are a couple of things. I think the first thing is, again, to really normalize the process of asking for money. So that’s number one. Number two is at the core, it’s what is the opportunity in your idea? And so how is this investment worthy? What’s the opportunity here? And even when you’re going, like, it could be friends and family. It could be friends and family. It could be a bank, like a line of credit or loan, that kind of thing. Like, I’ve talked to a lot of bankers who say that very often they see that women owned businesses are under capitalized. They don’t actually have access to enough capital to be able to grow. They might not have lines of credit, et cetera. So in all of those cases, I think it’s really important to be able to communicate fairly confidently about the opportunity in the market that you’re tapping into the size of this market, the potential of the market and what’s in it for either the lender or the investor. So I think those things are really important.
Eleanor Beaton
00:22:02
And that’s sort of so number one, even recognizing that other people’s money is key and that sometimes the riskiest thing you can do is to not have enough capital. I can remember back before I was a business coach and a communications consultant, I was a journalist. And so I covered high growth companies. And I can remember interviewing a woman named Kelsey Ramsden, she was running a high growth company. She was like Canada’s top. She had one of Canada’s fastest growing companies for a couple of years and was certainly the fastest woman going to business in Canada for several years. And she was like cash. A business needs fuel to grow and that fuel is cash. And she said it so simply, you know what I mean? But a lot of times it’s funny, we don’t think about a business being an engine that burns cash and so then it just becomes a question of where is cash and how do I get it to fuel the growth of the company. We think about rather cash as the reward that we get on the back end. But remember, it’s cash flow. It moves through the business as a way to grow. And I think just part of it also is having these conversations differently about money and understanding that I think so many of us as women entrepreneurs are hungry for those conversations. So that’s number one, that knowledge and that ability to speak with confidence and smoothness about what the opportunity is. That’s sort of baseline. A lot of times I find that people jump directly into here’s how you present to a VC without realizing there is groundwork that has to happen before those conversations happen. So I think that’s key. There are folks like Dr. Ellen Farrell who is an expert in venture capital and she has an organization that actually prepares women founders in particular for the Q and A. So if you are pitching for VC, it’s all the decisions are made in the question and answer and women are asked different questions. So that’s what her research and I would pretty confidently extend that to people of color or ask different questions too. Yes, right. So if you’re in that, I would really suggest looking very specifically for training that focuses around how you answer the questions. And that’s kind of above my pay grade, but I know about it. And so I think it’s important like there’s contact because there’s places that you can be steered or if there are organizations, ask them. Do you have specific training on the Q and A? Because that’s where so many of the decisions are made. Asking for introductions. A lot of times with investors it’s about who, you know, just like you said with your friend. I mean, there are people who can tap into networks and the power of an introduction is everything. And that’s how really wealthy people do business through the power of introduction. So I think those like tapping into these invisible networks through one connection and relationship at a time.
Pamela Slim
00:25:10
Yeah, I love that. And I do find, as you said, that it is so relatively few entrepreneurs who actually get to the stage of having formal venture capital, even angel funding. What are some of the foundational things that you might see with folks at an earlier stage of business? And I just want to qualify. Saying that doesn’t necessarily mean the amount of years in business, because I do see some folks that have been in business for a long time that have tremendous impact with what they’re doing. They might even be bringing in big dollars. But they don’t necessarily have either an understanding and clarity in the foundation of their money operations, nor do they necessarily have a healthy relationship with money. So I’m curious what advice you give to the clients that you work within your programs about establishing those things.
Eleanor Beaton
00:26:04
Yeah. Oh, my gosh, I love this so much. So I’m just going to share a few things. Like, I take this idea of being properly financed and properly capitalized very seriously because, for instance, I can remember when I first started my business, my very first business in 2003. So I decided I was an accidental entrepreneur. Again, I really became an entrepreneur because I wanted to have freedom and flexibility, especially when I had a family. And so go, and I realized, oh, there’s these organizations that support women entrepreneurs. This is amazing. So I go and I can remember sprinting across the city where I lived at the time to a meeting. I get there, I’m completely out of breath. She’s like, do you have a business plan? I’m like, what’s a business plan? So anyhow, what I did at the time was one of the first things I did when I started my business was I applied for a $3,000 loan, business loan, because I wanted to have my business have an established credit history. So I did that. I used it to buy a fax machine, business cards that had the horrible name of my first company, which was called Wise Words Writing and Editing. Okay, that listen. And PS, if someone’s listening and that’s their company name, change it.
Pamela Slim
00:27:31
I thought you were going to say, just keep it. It’s good for you. You were like a horrible name. We all got to start.
Eleanor Beaton
00:27:37
We all got to start somewhere. So I got business cards and a fax machine, and then I basically used the rest of the loan to pay off the loan. But it was just this, hey, my business is an independent entity. It’s going to have its own credit history later. I got a line of credit. A lot of businesses don’t even have a line of credit. And again, no shame, no harm, no foul of that for you. But I would suggest get access to capital so that you have it when you need it. We’re going through weird times right now in terms of rising costs and all of that. Yes, because of interest rates, you probably want to minimize debt. But a line of credit is a beautiful thing because if you’re not spending it, if it’s not full, you just have access to money to grow. So I think those kinds of things like if, let’s say you are turning over 200 $300,000 a year. Do you have a line of credit that if you need it, you can access it? So I think things like that and to me those are all things that start having people be comfortable with money as a tool. But two other things I notice a lot of times it’s very easy to outsource power to your bookkeeper or to your accountant. And I think that ability to really sit down, to look at your numbers month after month, how much came in, how much profit did I make? How much business did I close? How much money did we collect? And what am I going to do with this profit? Knowing the difference between gross profit and net profit, things like that. And these are all available when you sort of read some simple books. But to your point, I think a lot of entrepreneurs, I will have people come into my programs who have been very successful in established in corporate and sometimes they’ll be a little surprised at what they would consider to be sort of a lack of financial literacy in hardcore entrepreneurs. And I can relate to that. I spent years not having the kind of financial literacy I probably needed and it’s never too late. And it just starts with that willingness to look at money as a tool and just spend some time looking at numbers.
Pamela Slim
00:29:52
Yeah, I really relate to watching sometimes what happens for deferring your own sovereignty to somebody like a bookkeeper or CPA. And I encourage people 100% to hire professionals to help do the things that may not feel as comfortable or that are not your area of genius, which is fine, but I notice sometimes a dynamic that once somebody does that, their CPA ends up being the main person who’s really pushing back hard on their vision for the business. I see it as a dialectic that’s always how I like to be working with people. I like to be challenged my assumptions because I tend to just dream big, risk be damned, which has served me and not served me at different times in my life. So it’s really good to have the dialogue and to always remember that you really are the person who is leading your vision for the business. So first you do want to choose partners who understand your business, who might understand specifics around identity, gender, race, how the world sees you, where they may not have a nuanced understanding in terms of advice. So that I just think it’s really interesting to see that. The other thing that I always like to normalize is that we don’t always make assumptions the first time in business that you would know everything about marketing if you’ve never been in a marketing function. For some reason as a society, we tend to put more shame and more judgment on somebody’s lack of knowledge around financial processes and things like that. And it’s just a thing you. Can have great relationship skills. You can be an amazing creator and create life changing IP. You can do great marketing and sales. And so if that happens to be your area to focus on, it’s just a thing. There’s nothing higher or lower from a morality perspective. And that is something, I think, that sociologically, we get our credit score and you have somebody like looking across the table like, how could you not know how to read a PNL? And you’re like, what’s a PNL? So what do you know? Details about how to set up an SEO campaign? I don’t, but I’d be like, I haven’t learned that yet. Share more. How can I know more? So that not making it so precious, I think, can be part of it as well.
Eleanor Beaton
00:32:15
I so agree with you. And one of the things that I have found, that I have found just so fascinating is what happens when inside these communities, we start to have very real, practical conversations about money. So, for example, the session that I was saying, the brainstorming session on working capital, we’re not the money place. Like, we’re not the CPA place. When people are coming, they’re looking at growth strategy, but we’re not the place where we’re analyzing your financial statements. However, as we started to have these conversations, you could see the eyes of the participants lighting up as we really started to have nitty gritty conversations about money, there was another session where we were looking at sort of key numbers. So we’re looking at look, when you’re looking at your numbers, you want to look at your gross sales, and then you take away your cost of goods sold, and then that’s going to give you your gross margins, and then you take away your overhead, and then that’s going to give you your net margins. And when you start to look at these numbers, when you look at these numbers for a business, that can really help explain what’s going on, and now you can start to move them to create the kind of business results that you want. So it’s almost like speaking a different language. So we started just to talk about that, and again, people like, their eyes lit up, you know what I mean? It was, I think, because of the shame associated when we’re finally in spaces where we just start to equip each other again with very basic conversations about money. And this is where I sometimes worry because I see different types of language. So I see the language of tech programming, machine learning, AI. So that is this type of language that if you don’t speak it, if you’re not comfortable with it, it becomes increasingly challenging to find your place, and you don’t have to be an expert, but do you understand this major language that’s shaping the culture? But money is another part. And I think where again, what I see is when we start talking about capital, we very quickly get into jargon that excludes I’ve been around so many tables where the discussion is around things, about venture capital. It might be about funding and investing. And I have had to be this voice saying, look, I am a smart person. I don’t know what the hell you just said. And my concern is the language that’s getting used here is the language of exclusion. And that is a huge issue that I see. And it just makes capital inaccessible to people because even saying that when you say something around a table and your heart starts pumping because you know that you have revealed to people what you don’t know, you suspect that those guys probably know a lot more than you do on the subject. They may be judging you, but you have to say it. And so these are all issues. So the more that we have these conversations where we’re normalizing it, we’re breaking it down, we’re making it okay to have beginner mindset. It’s so important and powerful for equity in entrepreneurship generally.
Pamela Slim
00:35:50
I so appreciate that. Thanks for being that person. I was that person the other day who spoke up like that and I had that awkward like, oh, what have I done? And it’s so important. I was like, I will be the lightning rod in this case to be the one who says it. Because I can feel around me that other people are feeling it. And that’s the way to support the collective in terms of just demystifying things. I love it. And providing education in a way where people can understand it the same way they learn about other parts of their business that they didn’t know before.
Eleanor Beaton
00:36:20
Yeah.
Pamela Slim
00:36:21
I did want to ask you something that is probably one of the hottest topics around my clients in whatever kind of work that we’re doing, solo printers or people who are selling programs into B to B, and that is pricing. So how do you think about and how do you advise your clients around how to structure their pricing?
Eleanor Beaton
00:36:43
Oh, this is such a good question. So I’m going to sort of share my story around it because I think this is really common. So I was an underpricer and early in my business, and I say early, but to your point, it wasn’t actually early. Like, I’d been in business for a decade and I was still kind of under pricing, meaning that I was pricing. It was sort of pricing based on how much I was making an hour. And comparing that to when I was an employee and being like, wow, this is a lot more not taking into account taxes and not take into account all of the things, the expenses that I had to pay for. So I was an underpricer. Then I got into I got some coaching and I started hearing about things like values based price, the transformation. And then it was really like just charge a lot, just charge a lot and put some magical value on the transformation and price it that way. Which honestly still wasn’t that. I know that that’s very helpful to some people, but it was not that helpful to me. It wasn’t sort of practical or tactical enough. So to a degree, pricing is still instinctive. There’s a few things that I look at. So there is still a huge part of what we do that is in my business, that is anchored around the delivery of a service. So it’s leveraged. There’s aspects of it that are very scalable, but there’s some aspects of it that are unscalable that you’ve requires that a service is being delivered by somebody. And what you often see in service based businesses is that the market leaders are the most expensive because it costs money to maintain the quality workforce to deliver a service. And so I think that’s just really key. So first of all, really understanding there’s nothing wrong with being a price leader. Not in terms of being the cheapest, but in terms of being the most expensive. So there is like a part around that that I think is really key. As I have moved from more of an instinctive with a numbers person. Now what I really look at is I try to get a pretty good handle on two things. What’s my overhead? So these are costs that are going to just be there. No matter if I sell zero units or ten units, my overhead is going to be the same. And so that could be things like marketing costs usually. You know what I mean? Marketing, some admin, that type of thing is usually overhead. Then I think about what is my cost to deliver this? And so to do that, you’re usually figuring out how many hours would it take a team member and what’s their kind of functional hourly rate. So I figure out what’s my cost, what’s my overhead? And then you get this number of what it’s going to cost you to deliver it. And then I ask myself, how much profit do I want? And then I add that on top of it. I look at the number and then I gut check it. Yeah, so that’s how I do it. And it’s a mix of sort of evidence based inorganic. But it’s not just that. And this is the thing with pricing that I think is so key. It’s like you’re constantly watching it. So we keep watching. How does what are our margins looking like? Do we need to put the price up? There is one thing with pricing that I think people don’t think about. Like Jeff Bezos has his option one. Or I think it’s type one decisions and type two decisions. So type one decisions are easy to get out of. It’s kind of like a revolving door. You can get out of it. If you make the wrong decision, no problem. We’ll just do over pricing is different. Pricing is a type two decision. It’s hard to undo a price raise. So an example is we had a program and we almost doubled the price point of that program. And in doing so, and I’ve certainly raised prices where there was no impact, but in doing so, it fundamentally signaled to the market, this offer is for a different type of customer. And there was a quarter where our sales on that offer plunged, right, because it’s like now the market had to respond, and then they went back up to where we wanted them, and they were so much better because they were so much more profitable. So I think that’s something to think about. Again, there’s a comprehensive piece that you’re looking at here, and that was a very long winded answer, but that’s how I feel.
Pamela Slim
00:41:36
It’s so helpful. And just hearing your own example, I think is super helpful. This is the one area, and I will share everything I learned because we’re in the ecosystem together. I am actively this year seeking out especially service businesses, which tend to be my focus, like pricing experts, and beginning to build this combination, as you said, of data about how you can look at what’s happening competitively in the market how you can understand your numbers and look at things like profit and then make value based decisions for yourself and your business about where you want to land in the market. I react the same way you do when somebody’s like, just charge as much as possible. And I’m just thinking that doesn’t make any sense. If I’m the customer of that kind of business, I want to see a correlation between how somebody has thought about the pricing. It doesn’t mean I won’t pay top dollar if I truly understand that the way in which they’re working with me or to the depth or the outcomes are going to be such that give me many returns for what I’m investing. But I think it’s very one sided just to say, charge as much as you can, or my least favorite thing that you charge what you’re worth, like.
Eleanor Beaton
00:42:48
Nothing to do with it.
Pamela Slim
00:42:50
One has nothing to do with the other. So we can uncouple that and look at it differently. So that was extremely helpful.
Eleanor Beaton
00:42:56
The last can I share a resource? Can I share the resource? There’s a wonderful resource. It’s written by a guy, and I’m just going to find it because I found this to be such a useful I believe it’s a book called Pricing Innovation. Pricing Innovation. And essentially it’s a guy from Silicon Valley who helped to create the pricing structures for, It’s Monetizing Innovation by Madhavan Ramanujam and George Tacke. Monetizing Innovation published by Wiley. But it’s obviously written primarily for software as a service and tech. But what they look at is pricing as a model. So a lot of people look at pricing as a price point. You want to look at it as a model. You want to really understand what your customers will pay for, what’s not valuable. They talk about the pricing mistakes. One of the biggest pricing mistakes is that including a lot of things that people don’t want. It’s very interesting. And so I absolutely love that book and really strongly recommend it to folks who are curious at looking more broadly at pricing.
Pamela Slim
00:44:23
We will make sure to link to it in the notes. Thank you for that.
Eleanor Beaton
00:44:26
No problem.
Pamela Slim
00:44:27
I’m curious for you. What are you excited about building in your own body of work around this topic of money as we look forward?
Eleanor Beaton
00:44:36
Well, so many things. So we are really excited right now because we are partnering with a number of organizations like Ecosystem Partners, people like the Center for Women in Business. This is through the government of Canada, actually the Center for Women in Business, the Diversity Institute out of Toronto, Metropolitan University, the Black Business Professional Association up in Canada as well to put together a powerful, we’re delivering a powerful training on what we call capital skills. So it’s really intended for women who are not necessarily experienced founders trying to go the VC route. There is support for them. But how we start to broaden the scope of women who see themselves as owners of companies that are worthy of other people’s money. So we’re doing that, which we’re really excited about. And the other thing that I’m really starting to look at is this. We talked about like being the person who is in the room where you’re one of the only or you are standing up for something, really putting yourself out there. I think there’s a lot of support that we can give to diverse founders in that space to really give them that internal support to do that. So we’re looking at doing work there, which we’re really excited about. But for me too, it always comes back to conversations create. And so there’s conversations like this, conversations on our podcast Anchored Intelligence with women who have gotten big money. We have another one coming out next month with a founder who went from a service based business to becoming the CEO of several venture backed tech startups. What that was like, making that shift, asking for the money. I think the more we normalize and we see each other in people’s stories and it creates space for us to start imagining what it could look like for us. So I think those are the things that I’m most excited about.
Pamela Slim
00:46:38
I love that. Well, I look forward to reading and learning about it all. For people who want to connect with you, where is the best place for them to do that?
Eleanor Beaton
00:46:48
I love it. So I would say you can check out our podcast Anchored Intelligence, which is all about building a world class business culture in life. You can check out and connect with me on LinkedIn or instagram at Eleanor Beaton. Easy to find, but I’d love to connect with you there.
Pamela Slim
00:47:05
Thanks so much for joining us.
Eleanor Beaton
00:47:07
It was my pleasure.
Pamela Slim
00:47:09
For those who are listening, make sure to check out the show notes at Pamela Slim.com. We’ve had some new additions through this conversation I can’t wait to add. And I want to say thank you to my 31 Marketplace production team La’Vista Jones, Tanika Lothery, Jose Arboleda, and the award-winning voice of God narrator for our intro and outro, Andia Winslow.
Until next time, be sure to subscribe to the show and enjoy building partnerships, organizations and communities that grow our ecosystem.
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