People who have never been business owners, often assume that being a business owner means that you are rich, but let’s be honest… Most of the time, it’s the other way around. In this quick tips episode, Mari-Liis Vaher shares 5 ways to increase your income as a small business owner.
How to earn more money? I don’t think there is a single person who wouldn’t like to earn a bigger income, right? As a small business owner, lack of money is often the obstacle that stops you from investing into growing your business. As a human, you also have basic needs that need to be met - you need a roof over your head, food on your table, clothes to wear, you need to get to places and it would also be nice to afford some nice things from time to time, right?
But to be able to sustain your business and your lifestyle as a business owner, you need reasonable compensation. So, today I want to talk about possible ways for you to increase your income with the current services and products that you have.
So, today I want to talk about possible ways for you to increase your income with the current services and products that you have:
- Step number one is to create a simple audit - understand which services and which products are most profitable for you. If you offer services, write next to your service fee the hours you spend on a client each month. That way you can calculate your average hourly rate per client. Can you notice some patterns? For example, do you have certain types of clients that require less time from you and therefore enable you to earn more per hour? Or vice versa, are there clients whose hourly rate is too low? Those clients whose hourly rate is below your average are the ones you should focus on first.
- So, once you know who these clients are, the next step is to figure out if there’s a way to make your work more efficient and productive. Research if there are ways for you to offer the same service with 20% or even 50% less time. Are there processes you could set up? Could you automate some things? Could you switch from in-person meetings to virtual meetings? Could you automate their payments instead of having to create an invoice each month? Even if you can save 10 minutes per task, it will eventually add up to saving you a lot of time! Also, could you package your services so that they wouldn’t be 100% custom-made for each client but are all based on the same processes and systems?
- Step number three is to identify the possibilities for up-selling. Could you provide more value by adding something to your service? For example if you offer social media management, could you also take care of your clients’ newsletters and blog posts? Try to put yourself in your client’s position - if they have been working with you already for a while and you know their business and they know your style, then expanding your service would take the load off their table.
- Step number four is to find new clients. That is quite obvious, right? But once you have created the audit that I mentioned in step one, it can become apparent for you that there are some clients who you may need to let go to make room for bigger clients. Or if you are able to improve the efficiency by 50% on your existing clients, you will also make room for new opportunities.
- Step number five is to increase prices for your existing clients. But with this step you need to be careful. You do not want to rock the boat and break good relationships. Approach it with care and negotiate ahead of time. Also be prepared to illustrate the value that you’ve created and give a legitimate reason to your price increase. It cannot just be that the prices are increasing because of inflation.
And that is it. Of course, it is important to also analyze your existing costs and identify if there are ways for you to cut back on some things, for example different program subscriptions.