Do you charge by the project or hour and find yourself underestimating how much time you will put into the job? Does it seem like you’re always working? Does your bank balance suffer from low self-esteem? You're not alone.
Start up entrepreneurs and well-established businesses alike suffer from cashflow instability. It can be really tough to balance time and revenue, especially in the early years. It's likely that unless you learn to overcome this obstacle to profitability, you could be doomed to walking the thin line between overwhelm and poverty forever.
Few are born with an entrepreneurial gene that allows them to run a profitable business. Profitability means that you have plenty of dough to pay the bills, both business and personal, and enough left over to really enjoy yourself. So how can you learn to be profitable? We’ll discuss a few strategies that every entrepreneur can put into practice.
Real World Examples:
You're a Public Relations professional. You quote a price to write and distribute a Press Release about an Interior Designer’s Open House. You think “I’ve got plenty of relevant contacts in this niche industry. This should be easy and should take me no more than two hours.” It ends up taking you twice as long which reduces your fee substantially.
You’re an Architect. You estimate it will take you three hours to create a basic kitchen rendering for a new client and you quote her a reasonable fee. Both of you are happy until you begin the job and realize it’s more technical than you’d assumed. You want to do the job with your customary high integrity and work ethic and ten hours later you finish.
You’re a CPA just starting out in the business. You quote a client a fee to do his monthly accounting only to realize later that this client needs more hand holding than usual which forces your hourly down the drain. Between doing the work and meetings with the client, you decide you’ll never make any money.
Big AHA #1: The first step to profitability is to realize that you must be paid for ALL your time. Make sure you factor in time for client and vendor meetings. Time for research. Time for travel (yes, you need to be paid for this too – your time is not free.) You may need to double your fees to make any real money. If that’s what it takes, that’s what you need to do.
Big AHA #2: Slow down! Don’t rush to quote a fee. If your instinct is to quote a fee, stop and reassess, take a breath, and then tell the client you’ll get back to them. Putting a quote together takes time and if you rush into it, you’ll always lose. There’s nothing wrong with telling a prospect that you’ll get back to them. Things ALWAYS take longer than you think. Make sure you understand the requirements of the project. Delineate what the project includes and what it doesn't include. There are always follow up tasks, revisions, and busy work you didn’t plan on. If you’re concerned that you’ll lose jobs because your price is too high, then you may not be ready for this step. You may need to ease into raising your fees.
Big AHA #3: Increase your worth in your own eyes! Many entrepreneurs have a subconscious voice that doesn't believe they are worth higher fees. Take stock of your true worth as a professional. Do you have enough experience? Do you need to learn more? Do you provide a quality service? Are your fees on the low end? Is there a gap between where you are and where you should be? If you change nothing, nothing will change.
What now?
Truly examine who you are and where you are as an entrepreneur and independent professional. Then, give your bank balance a boost and take a risk to raise your fees. To take it a step further, think about how you could create passive revenue so that your income and time are not tied up in your business output. Create time to live your life on your own terms.
Start up entrepreneurs and well-established businesses alike suffer from cashflow instability. It can be really tough to balance time and revenue, especially in the early years. It's likely that unless you learn to overcome this obstacle to profitability, you could be doomed to walking the thin line between overwhelm and poverty forever.
Few are born with an entrepreneurial gene that allows them to run a profitable business. Profitability means that you have plenty of dough to pay the bills, both business and personal, and enough left over to really enjoy yourself. So how can you learn to be profitable? We’ll discuss a few strategies that every entrepreneur can put into practice.
Real World Examples:
You're a Public Relations professional. You quote a price to write and distribute a Press Release about an Interior Designer’s Open House. You think “I’ve got plenty of relevant contacts in this niche industry. This should be easy and should take me no more than two hours.” It ends up taking you twice as long which reduces your fee substantially.
You’re an Architect. You estimate it will take you three hours to create a basic kitchen rendering for a new client and you quote her a reasonable fee. Both of you are happy until you begin the job and realize it’s more technical than you’d assumed. You want to do the job with your customary high integrity and work ethic and ten hours later you finish.
You’re a CPA just starting out in the business. You quote a client a fee to do his monthly accounting only to realize later that this client needs more hand holding than usual which forces your hourly down the drain. Between doing the work and meetings with the client, you decide you’ll never make any money.
Big AHA #1: The first step to profitability is to realize that you must be paid for ALL your time. Make sure you factor in time for client and vendor meetings. Time for research. Time for travel (yes, you need to be paid for this too – your time is not free.) You may need to double your fees to make any real money. If that’s what it takes, that’s what you need to do.
Big AHA #2: Slow down! Don’t rush to quote a fee. If your instinct is to quote a fee, stop and reassess, take a breath, and then tell the client you’ll get back to them. Putting a quote together takes time and if you rush into it, you’ll always lose. There’s nothing wrong with telling a prospect that you’ll get back to them. Things ALWAYS take longer than you think. Make sure you understand the requirements of the project. Delineate what the project includes and what it doesn't include. There are always follow up tasks, revisions, and busy work you didn’t plan on. If you’re concerned that you’ll lose jobs because your price is too high, then you may not be ready for this step. You may need to ease into raising your fees.
Big AHA #3: Increase your worth in your own eyes! Many entrepreneurs have a subconscious voice that doesn't believe they are worth higher fees. Take stock of your true worth as a professional. Do you have enough experience? Do you need to learn more? Do you provide a quality service? Are your fees on the low end? Is there a gap between where you are and where you should be? If you change nothing, nothing will change.
What now?
Truly examine who you are and where you are as an entrepreneur and independent professional. Then, give your bank balance a boost and take a risk to raise your fees. To take it a step further, think about how you could create passive revenue so that your income and time are not tied up in your business output. Create time to live your life on your own terms.
Grow Your Business and Prosper!
Suzanne Muusers
Business Coach for Entrepreneurs and Financial Advisors
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