Business is hard right? But, there are two types of people. Those who struggle to implement tactics thinking that’s how to grow your business. And those who focus on growing their MINDSET. At Fearless Business we focus on 3 core pillars: 1. First we nail your PRODUCT/OFFER, we teach you how to build a sustainable business doing something you love. 2. We fix your PRICING - this is mostly mindset, learning how to charge 2-3 times your current prices. 3. And finally LEAD FLOW, we show you how to get leads and convert them at your higher price point. For more information visit: https://fearless.biz and https://www.robinwaite.com
Tuesday Feb 28, 2023
Why £1 Saved Means £2 Less to Earn
Tuesday Feb 28, 2023
Tuesday Feb 28, 2023
Most business owners I know are stuck in the “sales cycle of doom” meaning that they are constantly having to market, sell and deliver their services just to get by. Rarely do I see successful small businesses producing any level of profit.
Growing a sustainable small business requires the owner to:
- Save up for a rainy day fund - we recommend saving 6 months of operating expenses should the worst case happen and you are unable to work, at least your business has a small survival fund while you get back on your feel. This might take 2-3 years to save up.
- Reinvest in your business - business requires investment in order to grow, if you’re sucking all the profits out of your business by way of a salary, it is never going to grow.
- Create profit - Turnover is vanity but profit is sanity. The goal in business is not to collect customers. It is to make profit. It is much better to run a business that has a turnover of £150k and profit of £80k rather than a £1m revenue business making a loss of £80k.
Why is it important to watch your costs?
For every £1 you bring into the business you will have:
- Direct costs of sales
- VAT to pay (if you’re over the threshold)
- Staff to pay (if you employ people)
- Corporation tax to pay
- Other overheads and expenses
By the time you deduct all of those it means your £1 is probably worth more like £0.50 or even less in many cases.
Therefore every saving of £1 you can create in your business means you have to bring in £2-3 less in revenue on the top line. Which means you need FEWER clients. Not more.
This is a more sustainable business.
Imagine a coaching business which has a group coaching programme which it sells for £4,500 per seat.
And that coaching practice has several subscription softwares which it pays for every month. If that coaching business can cut it’s subscription costs by just £200/mth, when you extrapolate that out over the course of a year, £2,400.
Based on the maths of £1 saved leads to £2 less in required revenue this means that coach can afford to NOT HAVE TO enrol one additional client that year. £200 doesn’t sound like a lot, however the effort required to enrol a coaching client might require:
- 5 few consultations to be sat per year - that’s potentially 5 hours plus the admin saved.
- 35 fewer conversations with prospects needed - we have a rule in Fearless Business called 70-10-2. 70 conversations leads to 10 consultations which leads to 2 client enrolments. How much time needs to be invested into each one of those prospect conversations? 20 minutes each perhaps, so that’s another 12 hours saved.
- All of the extra marketing efforts which go into creating those initial conversations.
So, you can see, a saving of just one client per year frees up at least 17 measurable hours for that coach, consultant or freelancer and countless amounts of energy in marketing.
* as a side note, you may be looking at that thinking a 20% conversion rate is low for a business coach. Not if they’re qualifying prospects and only taking on the best clients. 20% is a typical conversion rate for a coaching business.
But I need to do marketing which costs money
Yes…and no…if you’ve listened to other episodes of the Fearless Business Podcast you’ll have heard me talk about Marketing Assets. If you build marketing assets such as:
- Writing a book
- A podcast
- YouTube channel
To name just four assets, you can create these assets and they will start conversations for you while you sleep.
When you’re next tempted to buy a “shiny” marketing thing for $5k from a hipster bro-marketer who wows you with “guaranteed” results…think twice.
Most people miscalculate the ROI required for that investment to make sense, and think they just need to recover a single client (if they’re worth $5k to you) to make an ROI.
You will need at least 2-3 clients just to BREAK EVEN and probably more like 8-10 clients over the following year to justify the investment. As generally these investments become rolling payments that you need to make month in and month out irrespective of the results. They will also blame you should they not produce the results they promised you.
That’s a podcast episode for another day.
The moral of the story is:
Keep your costs low and your income high.
To find out more about Fearless Business:
Join our amazing community of Coaches, Consultants and Freelancers on Facebook:
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