Dump low-paying clients and increase your business profits
Learn 4 ways to boost your business profits easily
A quick way to assess whether you're making enough money in your business is to tie your prices to some important payment you regularly make - like your rent or bond.
This is one of the fastest ways to improve what you offer and raise your fees.
For example, if you're paying R10k for your rent or bond, think about how many products or services you'd need to sell to make one month's payment.
Are you able to cover your entire rent in under 3 deals?
Or do you find yourself needing to make 20 sales just to keep a roof over your head - before even covering other expenses?
This mentality forces you to phase out low-paying clients and aim for more lucrative opportunities.
Get to a point where you're saying things like "This deal makes bond" or "That invoice is half-rent."
Ideally, you should be covering your rent or bond in 1-2 deals per month (or less, which means one deal covers multiple months of your bond or rent).
If you can't, revisit your strategy and:
Raise your prices
Target more lucrative clients
Sell to your existing customers
Add high-ticket products to your portfolio
#1 Raise your prices
This is the easiest and fastest way to make an impact on your bottom line. Every 1% increase in your prices results in 10-12% added to your profits. If you do nothing else, do this - and review your prices every year (or even after every client).
#2 Aim for more lucrative clients
There's always someone willing to pay more for more value. And while these clients have a high bar for working with you, they’re not impossible to land.
Bear in mind that the more lucrative the target audience, the higher the competition, so be prepared to level up your offering and service delivery.
#3 Sell to your existing customers
It's 5 times easier to retain a customer than to acquire a new one.
One of the easiest ways to make more money without doing more marketing is to mine your previous customer list.
If you sold them photography before, do they need graphic design?
If you placed them in a job, do they need career coaching?
If you sold them a car, do they need new rims or upgrades?
If they've bought from you before, they can buy from you again.
#4 Add high-ticket products to your portfolio
Consulting has high margins, as does anything tech or digital.
Move away from holding stock (you can delegate/outsource it) and start relying on intellectual property or specialized knowledge.
For example, selling makeup kits is limited by the price of raw materials, but a private fashion consultant can raise their prices forever while the cost of their knowledge remains effectively zero.
Gain from your brain, not your hands.
Lastly, remember that money is infinite. Swing upwards, always.
Till next time,
Mo