Your Doula Business Finances: Strategies for Success
One of the things I wish someone talked candidly about during my doula training is the business side to being a doula. There was so much focus on the ins and outs of supporting clients with non-biased care and the like and virtually zero information on the practicalities of running a business. The lack of business education left me floundering after my training. I honestly did not know where to start, particularly when it came to setting up a legitimate business and keeping it running smoothly. That’s a big reason why National Baby Co. exists and why we are so passionate about supporting birthworkers through the business side of this job.
Here’s what I wish someone would have shared with me about the nitty gritty of running my own business as a doula.
Set up a legitimate business from the start
Regardless of what your goals are for doula work and regardless of how much money you hope to make, getting your business set up from the get-go will save you a lot of confusion and frustration down the line. Research your state’s requirements for setting up a legal business. Many states require you to file paperwork through the secretary of state or to set up an LLC. Costs are going to vary by the state, but keep your receipts (more on this later!).
You don’t need to invest a ton of money on a logo or a website to begin with - those are things you can build on as you start learning about your ideal client and how you want to serve your community. Start with the basics like picking a business name, registering your business, getting a business bank account, and purchasing liability insurance.
Have several business checking/savings accounts
Open dedicated business bank accounts and credit card to keep your business and personal finances separate. This not only simplifies record-keeping but also adds a layer of professionalism to your doula business, making it easier to identify business-related transactions.
Doula work, like any business, can have fluctuations in income. By opening multiple accounts it can help you stay organized and plan for unforeseen circumstances, like a slow month or having to unexpectedly refund a client. Many small business owners have several different business accounts. Consider a checking account for regular day-to-day business expenses, a savings account for future trainings or workshops, a savings account with an emergency fund, and a checking account for profit. Your profit is what you will plan to pay yourself. Establishing and consistently contributing percentages to your various accounts can safeguard your financial stability and help you stay organized and plan ahead.
When considering these various funds, allot a percentage each month per category. For example: 20% of each client payment will go to your business expenses, 10% to savings for future trainings, 15% for emergencies, and 55% goes towards paying yourself. If you have high self-employment taxes in your state, you may also want to stash some away for tax time.
Set Competitive Rates
Determining your fees requires careful consideration of your expertise, experience, cost of living and the unique services you offer. Research local market rates, factor in your training and certifications, monthly personal and business expenses, and set a competitive yet fair rate that reflects the value you bring to your clients. I also recommend periodically assessing your rates and adjusting them based on changes in your circumstances or the overall market demand. Keeping your rates competitive while reflecting the value you provide ensures that your doula business remains financially sustainable and aligned with industry standards.
Track Expenses and Deductible Items
Keep meticulous records of your business expenses, including training, certification fees, travel (keep a mileage log!) and business supplies. Understanding your deductible items can optimize your tax return and minimize your tax liability. Additionally, you’ll want to maintain detailed records of income, expenses, and receipts, organized in a way that facilitates easy access during tax season. This not only simplifies the filing process but also provides a clear financial overview of your doula business.
Consult with a Tax Professional
Given the unique tax considerations for self-employed individuals, as many doulas and newborn care specialists are, it's recommended to consult with a tax professional or accountant familiar with doula businesses or self-employment in general. They can provide guidance on deductible expenses, tax credits, and help you navigate any specific tax regulations applicable to your location.
They can also help you stay informed about changes in tax laws and regulations. This awareness allows you to adapt your financial practices accordingly and ensures compliance with tax obligations.
Invest in professional development wisely
While continuing education is incredibly important, as is staying up-to-date on blossoming evidence-based information in the birth/postpartum field, I encourage you to be mindful of your budget when investing in workshops, certifications, and conferences. It can be REALLY tempting (and is quite common) to want to take ALL the trainings and do ALL the things. But adding too much to your plate, too soon, can increase your risk of burnout and make it harder for you to focus on establishing your business. Start off by prioritizing continuing education opportunities that align with your business goals and offer tangible benefits, ensuring a return on your educational investment. Then as you grow, you can always add additional certifications and services that benefit your community.
Diversify Income Streams
Explore additional ways to diversify your income within the doula field. This could include offering virtual support services, creating online courses or webinars, writing e-books, or collaborating with local businesses for promotional partnerships. Diversification helps mitigate financial risks and adds versatility to your revenue streams. I went into this in more depth a few weeks ago - check it out here.
There’s obviously way more that goes into running a successful business than the items listed here and maybe I’ll do a part 2 one day, but I don’t want to overwhelm you! To be frank, running your own business is continuous journey of learning and tweaking things to make sure your systems work well for you, your business, and your life. But by starting with these financial tips, you can cultivate a thriving doula business that not only supports your passion for birth work but also ensures long-term financial and business success.