For small businesses, the ending of another year presents a great opportunity to take stock and set goals for the year ahead. If increasing revenue in 2014 is one of your goals, there are a few business practice adjustments that will go a long way to creating big returns.
Here are three simple tips to earn more money in the New Year:
1. Become an investment, not an expense.
- If what your business offers is positioned as simply a service, your service is viewed as an additional expense and nobody likes expenses. People will always haggle over price, but everyone understands the importance of an investment. Position your product or service as an investment that will benefit the buyer, not only in the present moment but in the long-term.
- When discussing your business let people know you offer indispensable skills, experiences or features. When cost is discussed avoid the term price, instead, refer to it as an investment. Another hint when dealing with the financial component is to know your customers' goals and take them into account when positioning the cost of the work you do and the value you provide.
2. Price for value, not time spent.
- It's common practice to charge based on the time spent on a project, however, it often means you're devaluing your work in the process. Some projects take longer to complete but deliver the same value. Does that mean you charge one client more for what in the end is the same deliverable?
- Customers care about the bottom line and the value you provide to them. Let's say a client is very confident a redesign of their website will help generate an extra $100,000 in revenue per year. If you bill at your hourly rate that project might cap out at $5,000. On the other hand, if you market your service as an investment that will generate additional revenue, putting a price tag of let's say $20,000 looks quite reasonable when positioned against the long-term value of the project.
3. Get your books in order.
- Many business owners are passionate about what they do and have little interest or time for balance sheets. Few things are more tedious than the administrative tasks of running your business but tracking cash flow and profit and loss statements are a must for learning from your mistakes.
- For instance, profit and loss statements show where you're going wrong and where you should be focusing more time. Paying attention to these numbers can make the difference between a business that is thriving or barely surviving. Profit and loss statements can also help you identify areas where you can and should increase the value of your projects.
- There are valuable financial tools and programs available to business owners who are looking to better monitor what's working and what's not within their business.
Money matters are often at the top of the list when looking at the year in review, so why not use this time of reflection to make a few tweaks to the way you structure your business practices in the new year.
Once your customers see the value of investing in you, you're on your way to becoming a trusted partner. When the impact of your work is understood, your services begin to sell themselves.
If you have questions about this article, contact Paul Thares at the Lemmon Regional Center at 605.374.4177