You wouldn’t be in business if it weren’t for your customers . But, sometimes we almost forget that we are ultimately in business to receive a salary and to make a profit. In a large company, a balance must be maintained between serving customers and serving the shareholders. In your small business, the shareholder is YOU, so the pull is between you and your customers.
Are you winning? Are your customers winning? Or is there a balance? Here are some tips to see if your business is out of balance, and if it is, how to get back in balance.
1. Pay yourself first.
This might sound very basic, but it’s surprising how many small business owners will pay everyone else first and then have nothing left over for themselves.
An example – a business owner realizes how much her employees and assistants were cutting into her business margins on one particular service line. She cut back on her assistants’ time and employee hours, stopped doing some tasks that weren’t generating a return, and had more profit left over for her own paycheck.
The solution is to remember to always pay yourself first, literally, by cutting your payroll check or taking a regular draw from your business before you pay anyone else.
2. Price your services carefully.
Be sure that not only your costs and overhead are covered when you price, but that also a fair profit margin is left over for all your time and trouble. Too many people are pricing for the short term in this economy. Price for the long term, and emphasize the value you bring to your clients.
One example is to ask yourself whether you’ve made an adjustment for the higher gasoline rates. If not, you’ve just given yourself a pay cut. You probably wouldn’t work as an employee for someone else who gives you a pay cut; why tolerate it in your own business?
We can help you determine whether your pricing is adequately covering your expenses. Check with us if you want help in this area.
3. Maintain excellent time boundaries with clients.
If you charge by the hour, be sure you charge what you are worth. It’s typical not to charge for learning curve time, and writing off some of that time is fair. However, if you are constantly writing off time that you work on a client’s account, something is wrong.
Whenever you write off time that truly deserves to be billed, you are cheating your family out of your hard-earned money, taking time away from them, and spending your money and time on a customer instead. You are also misleading your customer too, who will be expecting you to be cheap in the future. I think we do this because we love pleasing our customers, but do our priorities lie with our customers or with our family?
This includes answering emails and phone calls for free and not writing down that time, giving bonus products, and other freebies. It’s one thing to make a conscious decision to be competitive and consistent across all customers and another to be sloppy in our recordkeeping or to say yes when we really meant to say no but didn’t have the courage. If you need help with setting up better time tracking or billing systems, give us a call.
4. Don’t try to do it all yourself.
There is power in numbers. Here are a couple of options when hiring a team to help you get everything done:
- Delegate the tasks that you do that are worth the lowest hourly rate on the market. For example, what are you doing that someone earning minimum wage could learn to do? This will free up your time for more strategic tasks or more billable time.
- Hire someone that you can receive at least a 4 to 1 return on salary. Your employee then becomes a profit center for you that is billable.
In either case, you are maintaining the balance by freeing up time and/or generating additional revenue as you incur additional costs.
5. Get a life outside work.
Unfortunately, our society is perfectly designed to promote workaholism. With devices we can access 24 /7, some of us can’t resist peeking to see what emails and text messages have come in even though it’s off hours.
Leave work behind during the evenings and weekends (or take time off regularly). Everyone needs to re-charge with social events, hobbies, and interests outside of work. You’ll be refreshed, well-rounded, and more creatively able to do your best work when you are serving customers.
Do any of these five tips speak to you about getting your business back in balance? If so, take the step toward making some changes. When you do, you’ll start to feel more in control, less burned out, and back in balance.