My first business was in manufacturing.
I was 10.
I used to make all sorts of dazzling arts and crafts and sell them at the local Sunday markets. I remember the table being so huge I could barely see over top of it to talk to my customers; then again, everything seems huge when you’re 3 feet tall.
By the end of each market day, I’d pack up what was left, assess the best sellers, count my earnings and go home feeling exhilarated, ready to do it all again the following week.
I’d always reinvest some of my profits back into my business with a shiny new glue gun or some swanky new fabrics but, all in all, I had money in my pockets and life was bliss.
I didn’t realise it at the time but I was learning some pretty valuable lessons early on.
My second business began some 14 years later. I was older, wiser, and a little taller. Yep I was now 5 feet and 8 inches of freelancing passion. I had just launched my design business and I was ready to conquer the world. This is where I first met and fell in love with ‘Hours for Dollars’.
It was love at first sight… in the beginning.
It was bliss when jobs ran on time, changes didn’t blow out and clients didn’t get unreasonable.
It was like the best Sunday market ever! But after a few years of building my list of clients, it dawned on me: I charge by the hour and I only had 24 hours a day. It was like a knife had been plunged deep into my entrepreneurial heart; I was never going to afford that tropical island I always wanted (you think I’m joking!). After a brief period of mourning I started thinking of ways to diversify my earning potential.
I went back into manufacturing and started a canvas art company but I later sold that when I realised that web was my true passion.
The challenge was to create the perfect business model where cash rolls in automatically every month, clients pay upfront and I could make money while I slept.
Not a bad dream, huh?
That dream became Web123 and, four years later, things are pretty sweet. We’re not ready to go island shopping just yet, but we’re well on our way!
So, how would you like to achieve the same? I’ve got good news…. you can!
But before you can innovate, you need to analyse.
Here are 3 simple research steps you must complete before you can innovate and create your dream business.
Note: You will need all these steps completed before you can dive into the innovation stage in Part II (below).
If you stick with me and follow my advice, I know you can remove yourself and your business from the hourly grind. You’ll be free to rise to a whole new level, super fast. I promise it won’t hurt a bit, and who knows, you might even feel an overwhelming sense of empowerment!
Hint: Today’s post is all about laying down the right foundation and doing proper groundwork. In the second part of this post, I reveal the secret recipe contained within the 4 innovation steps that complete my 7-step process. Keep reading cos you’ll see just how easy it can be!
Step 1: Analyse your current income streams.
First up, you need to know exactly where your numbers are at right now. It’s time to take a snapshot.
Hopefully you already use a good accounting software. It will make this stage a lot easier if you’ve allocated all your different products and services as separate accounting items so you can easily export your sales figures in detail and analyse. I know this bit isn’t fun, but please don’t let your eyes glaze over, push on designer, your business needs you!!
The top things you need to look at first:
Analyse a break up of all your products or services. What are they?
What are your top 5 sellers in terms of total turnover?
Where’s all your revenue coming from?
What’s profitable? What’s not? Do you know your margins for each?
What’s a drain for you? What do you hate doing?
What’s the cheapest product you sell?
And what would happen if you cut it from your offering altogether?
Okay, by now you have a good idea of what’s profitable, what to keep, what to cull and you may even be able to see some untapped opportunities.
For example, you may discover you’re doing a lot of minor website updates for minimal invoice amounts and they simply aren’t profitable. Rather than lose the business altogether, why not upsell? Offer your clients an ongoing maintenance contract for 12 months (when you sell the website initially) therefore slashing your less profitable hourly services; in it’s place you’ve just created a product that puts money into your pocket every month. It’s better for your bank balance and it’s better for your work scheduling too.
See how easy this can be?
Step 2: Go deep, not wide.
Don’t try and spread yourself over tons of different industries. Pick your mark, know your niche and go deep. What do I mean by this? Read on…
You’ve no doubt heard the buzz about the great profits you can make in a niche area. Well, it’s true. Why go fishing in a big lake teeming with piranha when you can fish happily (and safely) in a small one?
Are you trying to focus on too many services across too many industries or specialities? That’s what I mean when I say ‘don’t go wide’.
Instead, go deep. Look at how you can maximise the profit potential of your existing clients. How can you further exploit the niche you’re in? Nicely of course! :) Oh, and if you’re not marketing to a niche yet, I’d advise you start thinking about it. I feel another blog idea coming on, look out!
So now is the time to ask yourself some tough questions:
Are you trying to do too many things at once?
Do you have too many products and services?
Do you have more than one business? (I used to have three at once and it’s not easy or healthy! You spread yourself too thin and end up just scraping by with all of them.)
Do you have lots of different pricing models to suit all different price points?
If you answered ‘yes’ to any of the above, you need to focus on the most profitable, hungriest segments that actually have the cash to spend NOW, and go fish in that pond.
Then, it’s time to find out what else they’d like to buy from you. How? By asking them.
That’s called going deep and not wide.
It’s much easier to sell to existing clients than find new ones so don’t waste your precious time diversifying into other markets, client types or industries, just go deep into the one that will bring you the most money.
Step 3: Less clients, more money.
Next, you need to look at your current client list. Export the last 1-3 years of financials from your accounting software. Pay special attention to each client’s total annual spend with you.
Then sort your clients from highest to lowest spenders and then have the total spend for all clients combined at the bottom. Cast your eyes down that list. What do you see? Interesting huh?
Now ask yourself this question:
“What would happen if you got rid of the bottom 50% of spenders from your business?”
I bet your total turnover would probably only reduce by 10-15%. And guess what, if you concentrated on just your top clients, I know you could easily pick up the difference in maybe only a week or two AND you’d have a lot more time on your hands to service them. Win for you, win for your clients. A loss for those bottom 50% clients, but hey, this is business!
Here’s a tip to make up the lost 15%. Call your top 10 clients and offer bulk buy discounts, ongoing design packages, retainers, maintenance packages etc to pick up the slack from your top clients whilst not having to deal with the headaches the bottom ones cause.
Okay, so all you need to do for now is crunch those numbers, ask yourself some tough questions, sort those clients and sit tight.
If you have good bookkeeping files, these tasks shouldn’t take you longer than a few hours. So pencil some ‘business time’ into your diary over the next few days and get ready for the next part of the equation. In the next part of this post I reveal all the ‘hows’.
I’ll share with you the remaining 4 steps in the 7-piece puzzle to higher profits, positive cash-flow and better clients. And it may not be what you think!
So stay tuned because the secret sauce is all in Part II below.
If you have any questions or suggestions, leave me a comment. Otherwise take a minute to bookmark this page and come back when you’ve got all the info you need.
I’ll wait. :)
• • • • •
If you did your groundwork from Part 1 of this post, you now have a really good understanding of:
The makeup of your current income, including your top 5 sellers.
The most profitable (and enjoyable) products/services you offer.
Whether you’re spreading yourself too wide, and need to instead go a little deeper.
If you’re offering too many products/services, plus
Exactly how much each client spends with you, from highest to lowest.
I also got you to think about what would happen if you stopped taking work from your bottom 50% of clients and instead focussed on the top 50%. How did that go for you by the way?
Now that you’ve identified what you enjoy doing, what actually makes you money and you have a list of clients who are already good spenders, it’s time to get innovative.
This is my favourite part!
The 4 innovation steps to escape the ‘hours for dollars’ grind
Here’s the secret sauce I promised you in Part 1. But remember they only come together if you’ve done your homework so if you haven’t, go and do it now and I’ll wait for you…
Innovation 1: Sell in bundles.
People don’t like choices.
Gordon Ramsay’s restaurant makeover show ‘Kitchen Nightmares’ is a perfect example. The first thing he does with every restaurant on the show is cut back the menu to simplify the choice.
Choices mean thinking. And thinking means indecision. And indecision is bad!
When you give people too many choices they get overwhelmed and the indecision causes them to get cold feet and they don’t buy as much, if any, as what they would have with fewer choices.
More choice = Less sales.
So what products and services could you bundle and upsell with others to make them more profitable and enjoyable? An obvious example would be a logo design package which includes the logo design, business card and letterhead design and perhaps an email signature.
If you’ve got a product that’s not hugely profitable but you don’t want to cull it, maybe you can bundle it with a higher ticket item?
Could you bundle everything you sell into 2 or 3 packages? How would that affect your business? I think you’d be impressed at what that could do for your business.
Innovation 2: Look for the repeat.
Why doesn’t every hairdresser out there book in all our hair appointments 12 months in advance and just send us SMS reminders ahead of time to make sure we’re in the loop?
They could have a guaranteed flow of business booked all year round. I just don’t get it!
As creative designers, we need to be creative with business too.
Get innovative. Don’t fall into the trap of designing just a logo or website design and wave the client goodbye wishing them good luck and waiting for them to knock on your door again 2 years later. Instead, look at how you can lock in repeat business NOW, whilst you’re talking to them.
Here are some ideas to get your juices flowing:
Offer a discount for clients if they prepay blocks of time at the beginning of the month.
Schedule (and even part invoice) design projects around promotional calendars.
Obviously, if you’re in web your clients need traffic strategies like PPC & SEO.
Conversion rate optimisation maybe every quarter.
Landing page setup, copywriting, design and ongoing reporting / analysing / optimising.
Regular website updates or blog content uploads.
Ongoing maintenance packages for print and web.
Hosting services for your website clients bundled with support ticket allocation each month.
Refresh website banners and/or display ads every month.
Take care of your clients’ email marketing campaigns on a daily/weekly/monthly basis. You could organise copywriting, design, delivery & even reporting afterwards.
Regular website reviews with recommendations for improvements. Guess who will be asked to do the improvements? Yep, that’s right, YOU!
Website makeovers every 1-2 years. Instead of your client coughing up one big lump sum for a new site design, why not offer an ongoing package where they can pay you by the month instead? I know a lot of small business clients would jump at the opportunity if they’re happy with your service and you blow their socks off early on.
Sell them a Facebook post planner with one month of content already planned for them, and you’ll probably find they want to pay you to do it every month.
Google Analytics setting up goals and regular reporting. The list goes on!
My goal by the end of 2014 is to generate enough revenue on the 1st of every month with our website ongoings that it pays our entire expenses (including wages) for the month ahead. The rest then would be pure profit. And I’d truly be living the stress-free life I know is possible…. and then I’ll focus on my dream of my own tropical island!
Remember this: Repeat income is where it’s at. Please look for repeat. Would you rather build websites or host them? Would you rather build pools or clean them?
I know what I’d rather and I’m doing it. You can too!
Innovation 3: Earn while you sleep.
I bet when you read the title of this post you probably thought I was just going to bang on about info products and membership sites huh?
Well truth be told, I was. ;)
I’ve created both. But that wouldn’t be all that innovative now would it?
Having said that, I can’t leave it uncovered, but I’ll keep it brief. The beauty of business in 2013/14 is that you’ve never been more connected with the rest of the world… ever. It blows my mind when you think about how far we’ve come in just 10 short years.
Right now, billions of people all around the world are buying online. Come on, there’s so many people out there surely you can grab a few hundred or even a thousand who wants what you have. If you do this right, you can even sell in your sleep. Don’t doubt your value. You are special and unique, don’t forget that.
Just remember what I said earlier about niching up before you brainstorm ideas on this one. The smaller the niche, the more money you’ll likely make. But it goes without saying you still need to ensure enough demand also.
You can create any number of:
Courses or online educational programs for clients (think social media!)
Write a book
Compile a book of your most successful blogs and sell it
Membership site etc.
If you sell Facebook design as a service, why not also sell access to a ‘Facebook For Business Beginner’s’ video course you just happen to have prepared earlier?
There is so much opportunity still out there for us to teach our clients how to market themselves online so don’t be intimidated. Just because Amy Porterfield has amazing Facebook courses doesn’t mean there’s no room left for yours!
Think about it this way… If you have a product, what service can you attach? If you have a service, what product can you attach?
Innovation 4: Build your team.
Lastly, you need to find your dream team to successfully pull all the pieces together.
Don’t try and do it all on your own, it’ll be a slow climb to the top because it will literally take you f..o..r..e..v..e..r..! And don’t panic, they can be freelancers or marketers or social media experts on a contract basis, I’m not talking about hiring full-time staff here.
For example, if you’re not a Facebook guru but you want to offer Facebook post plans or management on an ongoing basis, team up with a social media expert who has a proven track record. I don’t outsource ours but I know if I wanted to I could get an amazing, top-end social media manager in Manila through an agency for about $12 per hour.
If you suffer from “nobody can do it like me syndrome” then perhaps you need to go back to the drawing board and revisit your vision for your business. After all, we’re in business to make money right?
So let’s innovate beyond hours for dollars and make hay for a better business with bigger profits. We owe it to ourselves as designers and we owe it to our next generation.
That is true innovation, my friend.
What have you done to innovate yourself beyond the hours for dollars grind? I’d love to hear it!