OK, corny “I, Robot” references aside, I want to talk about the money in your business.
Money makes a business tick. And if you’re screaming at me because your business is “different” – that you’re an artist, a creator, or that you’re not in it just for the money – then I’m right there with you.
I’m not in it just for the money either, but the money allows us to do all of those other things that we want. Whether that’s family time, giving back, or just enjoying our business knowing we’re providing fantastic service and great value.
I have a friend, let’s call her Lydia (not her real name), and about nine months ago she started a virtual assistant business. She’s a smart cookie. She knew she loved connecting with people and helping them organize, and she could see a viable business in it. She worked out that if she landed five clients in the first three months, she’d be off to a good start.
She went to business networking meetings, she put up a Twitter page, a website, and I’m sure you know this story – she waited for it all to happen for her. And waited. And slowly (very slowly) those clients trickled in, but it seemed like a lot of hard work to get them and then, a lot of hard work to make it pay.
So, she ran a few special offers, bonus deals, and added more time to her service packages. Another couple of clients trickled in, but overall, she wasn’t making as much money as she expected. She told herself that it was the recession and that people don’t have a lot of money to spend.
She kept on going to those networking meetings and she kept tweeting.
Now, she’s starting to get a bit desperate and she’s thinking about slashing her prices. That’s why she calls me in. “I have such a good service,” she moans, “What can I do? How about I run a free trial? How about I do a 25% off special?”
Lydia runs what I call a “Commission-based” business model. She prices her services on a monthly fee for a set number of hours. In fact, she often does more than she’s paid for – she wants to keep her clients happy after all!
But she’s in the money trap, the trap where you think the only way to make more money in your business is to get more clients. So, the question she really asked me is how to get more clients.
I told her that’s the wrong question. So, what’s the right question?
Well, before you go about networking like crazy and slashing prices, stop for a minute and look at your business model.
Servicing more clients takes up more of your time (which, by default, is limited). And at some point, you’re going to hit your income ceiling. Now, I know you hear a lot about changing your business model, leveraging your time – but maybe you like running your service business just the way it is? So, how can you grow your income without just adding more clients?
The first step is that you need to understand what your clients want and what they really value about what you do.
The second step is to ask what I call “the million dollar question” – how can you add more value to what you do now?
What can you do to make your experience special, more valuable, or more exclusive, so that you can charge more? How you can create a higher value experience? Or can you position yourself in a more exclusive, highly lucrative corner of the market where you will be in higher demand?
Rather than adding more clients, focus on growing your income by raising your fees.
Go ahead and ask yourself what you can do immediately that will make the experience 10% more valuable, 20% more valuable, or even twice as valuable?
Typically when I take on a new client, the first thing we do is work towards doubling their fees. Maybe not all in one go – I know this is a scary step and also your service might not be worth double the value right now. So, look at incremental changes, add more value piece by piece – and then raise your prices as you add value.
Because the more value you can add, the more you can charge.
So don’t ask “How can I get more clients?” Instead ask, “How can I add more value?”
Follow these three steps:
1. Understand what your clients value
2. Offer it to them
3. Charge a fee that gives great value for them and creates a great business for you
You’ll find that this is the basis for a much firmer foundation in your business. Your clients will love you because you’re providing a fabulous service, and of course, you’ll be happier because you have more money and more time to create more of what YOU value!
Have you considered adding value and raising your prices? What successful strategies have you used in the past regarding pricing your services. Please share in the comments below!