Why Aren't You Earning More?C.J.Hayden
In a recent survey of
independent professionals, almost 50% of the consultants, coaches, and other
professionals declared that they were currently not earning enough to meet
their expenses. This result shouldn't be surprising, since according to the
U.S. Small Business Administration, more than half of all small businesses fail
in the first year and 95% fail within the first five years. But it made me
curious. How can that many professionals be operating businesses that are not
turning a profit?
Looking into the issue a
bit further, I made an enlightening discovery. Many of these businesses ARE
profitable -- the business revenues exceed their costs. The businesses are
operating in the black, but there isn't enough left over for the owner to pay
their living expenses. The business owners are living off their savings,
working an outside job, being supported by family members, or going into debt. So these independent
professionals are doing something right. They are reaching clients, making
sales, and turning a profit. But it seems that what they have left out of the
picture is earning enough to pay themselves. Without enough of a profit margin
for an owner's draw, these businesses are ultimately going to fail. Can they be
saved? Perhaps, if the owners are willing to make drastic changes of the most
difficult kind -- changes in themselves. If you are one of these
struggling professionals, you must ask yourself what you are willing to do to
make your business succeed. To break out of under earning, you will need to do
more, learn more, or charge more, and it may not be easy. Doing more may mean
working more hours. The average small business owner works more than 40 hours
per week in their business. You may feel like you are working hard, but have
you actually kept track? Many entrepreneurs are surprised to discover that they
are putting in fewer hours than they thought. It's usually unrealistic to
expect a full-time income from a part-time business. Or you may be putting in
plenty of time, but not putting it in the right place. How many hours per week
are you spending on marketing? And is some of your marketing time devoted to
actively reaching out to clients and referral sources through networking and
phone calls, or are you limiting yourself to more passive strategies like
building a website and placing ads? Doing more about your
business or about marketing may require not only a change of habits, but a
change of attitude. You may be avoiding a full-time commitment to the business
because you are afraid of failing, or holding back from marketing because you
fear rejection. If these thoughts sound familiar, notice that your fear of
failure may be causing you to fail! Successful entrepreneurs
take risks. Many small business owners fail multiple times before they
eventually succeed. Successful salespeople hear "no" many more times
than they hear "yes." If you want to follow in the footsteps of
people who succeed at business, you must be willing to risk failure to get
there. Perhaps doing more is not
the answer in your situation. You may be working hard already in your business
and marketing actively. But you may need to learn more. Almost half of new
business owners say they did no prior investigation or learning about business
ownership before they started. You may know everything
you need to about delivering the professional service you offer, but there is
plenty left to learn about not only marketing and selling, but pricing,
negotiating, contracts, financial management, and more. In fact, one of the
biggest gaps between success and failure may lie in these not-so-minor details.
You may need to charge more. Do you know exactly how much you need to charge in
order to earn a decent living from your business? Not the amount you believe
your clients will pay, but what you really need to earn? Total up all of your
regular living expenses, including housing, food, clothing, health care, family
care, transportation, and entertainment. Add to that required payments for your
debts, income tax, and self-employment tax, and an allowance for vacation, sick
time, and emergencies. Now include a budget for savings and your eventual
retirement. What do these numbers
tell you about how much you should be charging for each hour, day, program, or
project? If you're not currently
charging this much, don't wait until your business becomes successful to raise
your rates. Unless you start earning a living, your business will never
succeed. If you find that the people you have been marketing to are unable to
pay more for your services, it may be time to focus on a different market. This is where more learning comes in. There must be other professionals with businesses like yours who are succeeding. What can you learn from them? Who are their clients? What marketing strategies are they using? What business practices of theirs can you emulate? Whatever challenges you are facing, it's likely that those who have gone before you have the answers. But you have to be willing to listen to the experience of others and act on it. Your business isn't going to improve without help from you. You need to make changes now in how you are working, marketing, or pricing yourself in order to avoid failure. If your business isn't earning enough to sustain you, the business itself isn't sustainable. Copyright © 2007, C.J.
Hayden |
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