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It's easy to think that any business can be successful if you
work hard enough, but there are many situations where this just isn't so.
Consultants, coaches, and other service professionals often start a business
believing that all they need to do is charge a "reasonable" fee and sell
"enough" of their time. But unless you do the math to prove or disprove your
assumptions, you may be creating a business that can never succeed. Here's
what can happen:
- Impossible
Business #1 -
My client Molly was selling her services as an image
consultant to individuals who wanted an updated or more professional look.
She charged $50 per hour, which she thought was the most anyone would
realistically pay to work with her. In most cases, she traveled to a
client's home or went shopping with her client.
Including travel time and lunch meant that Molly could only
make two appointments in one day. The average appointment was two hours
long. So the maximum amount Molly could earn in one day turned out to be
$200. But in order to earn that amount five days per week, Molly would have
to schedule ten different clients, all of whose schedules were able to adapt
to whatever times she had available.
This was hopelessly unrealistic. Even if Molly had been able
to make the scheduling work, when would she have had the time to do the
marketing required to land that many clients? It turned out that the maximum
Molly could really earn using this model was about $500 per week. After
paying her taxes, she couldn't even cover her monthly living expenses.
- Impossible
Business #2 -
Fred was a student of mine who worked as a software
consultant for midsize corporations. He typically charged $75 per hour, and
when he landed a contract, it often consisted of 20-100 billable hours.
Because Fred's earning capacity was so high and he disliked
marketing, he spent a lot of money on marketing himself indirectly. He
purchased display ads in industry journals and directories, mailed expensive
brochures to large lists of prospects, paid to exhibit at trade shows, and
hired a telemarketer to prospect for him. Fred also worked on contracts that
came through agencies, who often took 20-30% of his earnings as their
percentage.
Fred was earning as much as $80,000 per year, but he was
losing about $10,000 per year in agency commissions, and spending $20,000
per year on marketing. In return for all his hard work, he was earning
considerably less than he had at his last job.
- Making the
Impossible Possible -
New consultants, coaches, and other professionals almost
always overestimate how much they can earn and underestimate the amount of
time and money required to successfully market themselves. They also forget
that they will have to cover not only their living costs and business
expenses, but pay self-employment tax, buy their own health insurance,
provide for their own retirement, and allow for unpaid vacation and sick
time.
If Molly or Fred had taken the time to sit down with a
calculator before starting out in business, they would have quickly
discovered that they were on the wrong track. But both of these businesses
were able to be rescued.
Molly began selling her time by the day instead of by the
hour. She offered her clients a full-day package that consisted of a
wardrobe review and consultation in the morning and a shopping trip in the
afternoon. By charging $395 per day and scheduling three clients per week,
she could earn more than double than she did previously.
She also began offering a monthly one-day image workshop as a
way of bringing in more income while giving prospective clients a chance to
experience her work. The workshop became her main source of new clients, and
marketing the workshop turned out to be easier than marketing her personal
services.
Fred learned how to market himself less expensively through
networking, speaking, and writing articles. Instead of buying booths at
trade shows, he was showcased there as a presenter, and spent time
networking with the other attendees. The same publications where he used to
run ads now ran his articles. Rather than paying a telemarketer, he started
picking up the lunch tab for people he thought could refer him some
business.
As a result, his expenses for marketing and commissions
dropped from $30,000 per year to $10,000. At the same time, his income rose
to $100,000 per year, because as his visibility and reputation grew, his
services were more in demand and he could command higher rates.
If earning a decent living as a self-employed professional
sometimes seems impossible to you, start asking how it could be possible.
What can you change about how you are marketing yourself, how much you are
charging, and how you are packaging your services? While it could be that
success will come if you just work a little harder, it's more likely that
you first need to start working a little differently.
C.J. Hayden is the author of Get Clients NOW! Thousands of business owners
and salespeople have used her simple sales and marketing system to double or
triple their income. Get a free copy of "Five Secrets to Finding All the
Clients You'll Ever Need" at
http://www.getclientsnow.com
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