Easy Fixes To Make More Money Than 99% of Your Industry

So I'm guessing you're running a small business. However, there's a few challenges which you're experiencing. I'm imagining that you're an incredibly bright human being, really smart. You get amazing results for the clients that you get to work with, and that you really enjoy the work which you're doing. However, each and every week you seem like you're really stretched in terms of time, and then you scratch your head at the end of every month wondering where all of the money's gone. Some of the challenges of running a small business mean that you've got to wear multiple different hats. And I think a lot of people miscalculate how much money they have the potential to earn because, well, there should be 20, 21 days in the average month where you get to work if you're thinking about Monday to Friday, 9 to 5, for example. However, the reality is though that probably out of that, you're only doing paid work, i.e., client fulfillment work, which you get paid for, maybe 2 to 3 days a week, absolute maximum. The rest of the time is most likely spent doing admin, doing marketing, doing sales calls, doing networking meetings. Picking the kids up from school and maybe looking after them when they're sick and taking holidays and things like that. So your earnings potential is naturally quite limited as a small business owner, especially in a service client business like a lot of the coaches, consultants, and freelancers which I get to work with. So what I'm going to be talking about in this video though is how you can make more profit than 99% of the people out there running a small business. And there's some really simple ways to start to bring in more money. Too many business owners, and I hear this all the time, say that they have a cash flow problem. And the issue is isn't cash flow because the money flows in, it flows straight back out again. So it's definitely not cash flow. There's 2 other challenges at play here. One is making more money, and the second one is keeping that money so that you can then put it to work for you and hopefully earn some elements of maybe passive income or much more highly leveraged income once you started to be able to put some of that money to one side. So one of the first things I'm going to talk about is around raising your prices, because this is something which a lot of small business owners really struggle with. It might be that the concept of putting your prices up raises quite a lot of fear, for example, because you're worried that if you raise your prices, that lots of your clients will leave, or that it won't attract the right sorts of clients into your business, or maybe you'll just struggle to sell to new people because your prices are too high. One of the concepts I want you to remember is that if you look at any other coach or consultant or freelancer, anybody else in your industry, you'll notice that there is always one person who is always the most expensive. And yet they've probably typically been around for the longest amount of time. They've probably got the most amount of reviews and case studies and testimonials written up on their websites. They're the most expensive, but yet they're still able to get clients, which is a clue that you too could potentially be one of the most expensive in your market, if not the most expensive, and still be able to get clients. But there is a certain way to put prices up. However, before I go into that, I want to explain to you the mechanics of it. So I'll tell you a little story about one of my first coaching clients who happened to be an accountancy firm based locally to me, a large accountancy firm. They were doing about £2.2 million in revenue, so very large accountancy firm, and they had a significant number of clients. When we started coaching together, the concept of them putting up their prices they were very fearful of because the specific type of clients they worked with were very hamstrung in terms of the amount of money which they could spend on their expenses side of their, their profit and loss. So we managed to get them to a point whereby they were considering doing a 20% price rise However, one of the goals which they set out was that they didn't want any attrition at all. They didn't wanna lose a single client through this process. And we were talking here around about 2,500 clients. So that was quite a challenge that they set for me. Behind my back, they did agree to a price rise, but only 10%, which was fine. But the reality was this business was doing £2.2 million in revenue, but they were only pushing out £100,000 worth of net profit. So they weren't very profitable, weren't very leveraged at all in terms of the amount of money they were able to keep. But we did the 10% price rise. They didn't lose a single client in the process. And the reality was none of their expenses went up either because it was the same number of clients they were serving. It's just we'd increased the prices. So the extra £220,000 worth of cash that they then brought in over the following 12 months pretty much dropped straight down to the bottom line in terms of net profit. And it ended up tripling their net profit. They went from £100K to £300K worth of net profit. So a pricing, a small pricing decision of just 10% can make a really significant impact on your ability to, to make and collect and keep cash. And I, I do say to people quite often, service client businesses massively underestimate their value and undersell themselves. And we do go through a process where in some cases we'll double, treble— I've even had a client where we quintupled their prices, and yet they were still able to sell their products or services, um, from that point forward. And you can do the same here, but you don't have to double your prices. I get that that could be quite scary, but what you want to do is try and just introduce incremental price increases maybe 2 or 3 times throughout the year so that you're slowly building up the value of the work which you're doing. I don't know who it was who created this stupid rule that you could only put your prices up once a year and by 10%. All hell would break loose if actually we did anything, you know, more than that or more drastic than that. From my experience as well, when you put up your prices, a lot of people assume, well, if they lose 10% of their clients, you know, they can justify that because they make 10% more up here. Well, I can lose 10% of clients here and you still make the same net profit. The reality is actually you can work with as much as 14% fewer clients on, on just a 5% price increase. So let me just go through that again. So if you increase your prices by 5%, you can actually have 14% fewer clients. If you go to a 10% price increase, you can actually work with 22% fewer clients than you've got, and you'll still make the same net profit that you're currently making. So you can afford to lose a few clients. It's also worthwhile remembering you have 2 different types of clients as well. You have your existing clients. Now they have been anchored in, you've kind of trained them that this is how much they pay and this is the value they get. So they're going to be harder to, you know, more less receptive of a price rise, for example. And you will get some people who will stamp their feet and have a little bit of a tantrum over it. So you can expect that, that's fine. What I always recommend with existing clients and a price increase, just give them notice, give them fair warning. Don't just do an email blast either, actually try and speak to each of them individually if you can. If you've got— if your client base is of the size that you're able to do that. And maybe give them 2 or 3 months notice that prices will be going up. If they ask why, just say, you know, this is just business, this is, this is what we've got to do. So don't feel you have to justify that price increase and give them fair warning. They've always got a choice, they can go elsewhere if they want to. But the other type of client alongside your existing clients are new clients, new prospects. Now these people don't know about your service, how you work, they don't know what results they're going to get, they don't know what it's going to feel like when they work with you. So there's a lot of unknowns in there and they're not anchored to a specific price point. They might have an idea about what— how much things should cost, but that's your greatest opportunity. And I always say to people, even if with existing clients you're going to grandfather them in for a period of time and then raise their prices, if you're going to do a price rise, implement it immediately for new clients because they don't know any of this information. And trust me, within 30 days of doing a pricing increase like this, you'll start to see the results on your profit and loss account in terms of either more revenue or greater levels of profit. And that's what we're aiming for here, twofold. We're looking to make more money, and we're looking for creative ways to keep and invest that money further down the line. So do look to increase your prices. That's massively important. The second thing which I want to speak to you about is something called customer lifetime value. And this was a very important lesson which I learned possibly a bit too late in my agency days. So for those who don't know, I used to run a marketing agency doing web design and branding, predominantly web design. It was the latter part of the business where we're doing more branding projects, but specifically around customer lifetime value. There was one particular summer where I all of a sudden had this huge, like, insight into what it meant around customer lifetime value. So what is customer lifetime value? Customer lifetime value is the amount that somebody pays upfront for a product or service, plus then any extra orders or income which you earn from that client on an ongoing basis every month or year after their initial order. So we have things called first order value— what's that offer on the front end, how much does that cost? But then you also have repeat purchase? How often do they come back, and how much on average do they spend each time they come back? And these 2 things combined equal customer lifetime value. So you need to work out what is the average amount of customer lifetime value that each customer you've got in your business holds. And then we're gonna get creative and find interesting ways to try and increase customer lifetime value over a period of 6 months, a year, 2 years, 3 years, and further down the line. What was interesting in my web design business, we had clients who joined on day 1, and they were still with us at the end of year 12 when we sold the agency. So we were quite fortunate, we had a very sticky business, but we're also really good at customer service and keeping those clients happy. And so our customer lifetime value was quite extraordinary. But let me give you an example, and this is how I discovered it. So I'm going to round the numbers just to make it a bit easier, but something that I discovered one summer is we released a load of projects all at the same time to our clients, and we had 3 fairly big projects in the 5-figure sum. Let's call them £10K, £10,000. And then we had a whole number of smaller projects that were probably in the region of, say, £1,000, and we had about a dozen of them. Now, what was interesting is, irrespective of whether it's a big project or a small project, we used to charge the same amount for hosting and care plans once the site went live, unless they asked for a load of extra stuff. So we used to charge £50 a month. Now, what was interesting is, so imagine you had 10 £10,000 websites, and then what a single £10,000 website— well, the initial upfront fee is the same whether it's 10 sites or one site. For £10K, 10 sites for £10K, same upfront fee. But what was interesting is then when you look at the average order value after that every month— so for those 10 sites, we had 10 lots of £50 a month coming in each and every month, whereas the other one big site only had one lot of £50 a month coming in. So I was looking at this going, well, actually this one produces £6K a year, this one only produces £600 a year. And then if you amortize it over the course of 3 years, you know, all of a sudden like the lifetime value of these 10 smaller projects has grown to like £28,000, whereas this one's languishing at about £11,800 because of the impact of like the customer lifetime value, the repeat purchase. So that was like a lightbulb moment and we pivoted the business to focus much more heavily on smaller brochure-style websites, which then brought in lots of £50 a month. And ultimately that was the thing which then made our business much more attractive for somebody to come in and buy it. The customer lifetime value was extraordinary when it was just lots of little incremental charges each and every month. So I would look at your business model and query, well, okay, we can raise the prices on the front end, but how are we also going to get people to come back and have some element of subscription or membership model or care plans or something so that we can increase that customer lifetime value? And what was really remarkable about it was because we did such a good job with the websites, once they were set up, there was very little for us to do. And actually, many of the clients we didn't hear from from one year to the next. So that £600 a client we used to collect in, you know, in annual billing was really money for old rope. We didn't have to do a great deal of work for that money. And that just that baseline revenue meant that we could then hire people in to manage the clients and, you know, hire in a couple of developers and things like that, knowing that each and every month all of our baseline bills, you know, rent and electricity and all that sort of stuff was covered. That was a nice comfortable place to be in for the last 3 or 4 years of the business. We never had to worry about money at the end of the month. It was just we knew that it was going to be collected via direct debit. And it's very predictable. So customer lifetime value is absolutely key for starting to build more profitability in your business. The businesses which stick around the longest, the 5% of businesses that last 10 years, they've got this sorted out. They're the most expensive in the market. They've understood what customer lifetime value means, and they're basically collecting cash. That's what the end goal is. The 3rd principle I want to talk about here came to me from a book called Profit First by a really fantastic author called Mike Michalowicz. I'll make sure there's a link to it in the description below. But the principles of Profit First are around like, how do we create and design a business that enables us as a business owner to get paid first out the business, knowing that everything else is going to be covered as well? And part of this revolves around ensuring that you make— you're keeping tabs on all of your expenses in your business. Like, we're really fortunate in 2024 that we've got all these great pieces of software and online tools and AI and these fantastic amazing things that we can sign up to and subscribe to. But all of them, you know, add up. They all cost money on a monthly basis. And I looked at my subscriptions recently and realized that for all these pieces of software that I'm signed up to, I'm spending somewhere in the order of about £1,000 a month. And I was like, whoa, that's a heck of a lot of money. Because by the time that sort of, you know, you rationalize, amortize that over the course of a year, well, that's £12,000 I'm spending on software. For a small one-person coaching practice. Now, I have got good profitability, I have got good revenue coming in, but even still, it's really smart just to make sure that you keep on top of your overheads to make sure that they're not creeping up without you realizing it. And I know this is hard for a lot of business owners because I speak to my own clients. We've got 165 members in the Fearless Crew. I speak to hundreds of business owners every year with events and things like that which I speak at. And what comes as a really common thread in the conversations we have is that I don't understand I don't understand numbers. I don't understand bookkeeping. I don't know how much profit I've got in my business. I don't know how much dividends I can pay myself. And these are really common threads. And I think just a little bit of financial nous in your business, just a little bit of understanding of kind of what's going on within your business and oversight is hugely important in being able to eke out that extra bit of profitability within your business. So ultimately you can pay yourself more or have money to invest. So such a valuable lesson which I've learned. It's taken me 20 bloody years to get to this point where I feel confident around money and investing and just pulling little levers here or there just to eke out a bit of extra profitability. So simple things which I did in my business— so once a quarter, I now go through all of my subscriptions and overheads and expenses in the business, and I evaluate each and every single line of that meticulously. There was a couple of things which I found. So there was a bit of software I'd signed up for, I think it was repurpose.io, that squirts like short from one platform to another. I wasn't really using it to the best of its abilities, and I was kind of like conflicted— should I be posting that content natively? But it was costing me £20 a month. Cancelled that. So that means I've saved myself £240 a year. Um, there's plenty of tools now where you can— which you can use to edit content and build websites and, and various things like that. I've got the Adobe Suite, and I'm thinking, I've used it for years, but how much am I actually really using it? and for the, the bit of inconvenience of finding another piece of free software now to edit my content, my videos, I might as well cancel that. Well, that's £45 a month, so, you know, close to £1,000 a year I'm spending on Adobe. £1,200 across those 2 pieces of software combined. And so these things kept on, kept on rolling on. I then looked at— I had my savings account set up in my banking app, and I realized that the bank I use is a paying any interest on the savings which I've got, and that's really stupid. I don't know why, but for a very long time I've had this blind spot when it comes to businesses and business savings accounts, possibly in part because our interest rates have been so woeful in the UK of late and many other countries. There wasn't really any benefit to kind of having your money set aside and inaccessible for the sake of half a percent or 1% worth of interest. And I possibly I've never had the cash to be able to to justify and actually make a decent sort of amount of money from it. So I've just left it there. But interest rates over the last nine to nine ten months have gone up quite dramatically. They've kind of stabilized, and so there are now really good business savings accounts. So the money which I kind of hold is typically things like corporation tax and VAT. I have a rainy day fund. I have a PAYE savings pot. I have a fun pot as well. But all of this money could be working better. So that now I've invested into a savings account, and what it means is that now that's bringing in an extra, I don't know, £125 a month in interest, which otherwise previously I wasn't getting. Now it doesn't sound like a lot, but again, all of a sudden if you have £1,200 a year saving here, and then all of a sudden you're making an extra £1,500, you know, passive income, let's face it, with those savings, well, now all of a sudden I've created £2,700 worth of savings. of extra profitability within the business. Believe it or not, that is 1% of my revenue in extra profit. That is a huge chunk of money. And imagine this in terms of if, if I only, let's say for example, had a profit margin in my practice of maybe 10%. Well, if I can eke out an extra 1%, that's just added or increased my net profit by 10%. That is huge. And imagine in 12 months' time now with that extra £2,700, I add that into the kitty, into my savings pot, and now that's earning me interest. So you can really start to build up a good amount of cash and start to make it work for you if you're sensible. Quarterly review your accounts, look at your profit and loss, look at where you can make some savings, maybe look at where you can make some bigger investments and things like that. There's probably other ways if I go into it in more detail where I've been able to save quite significant amounts of money. There's another one which I've just thought of, which is a hosting plan which I've got again, which is about £25 a month. So there's another £300 there. And I always think of these things, you can look at it in monthly terms, well, £20 a month, whatever, that's neither here nor there. But over the course of a year, if you just forget about it and let it roll on, that's quite a significant amount of money which is starting to accrue and add up. Now I also, and this hopefully this will make sense, I also, when I'm thinking about these big chunks of extra profitability in my business and building up that rainy day fund just in case things, you know, don't work out for whatever reason, I need to slow my my business down. I don't, you know, I can't think of a specific scenario. Maybe I get ill and now all of a sudden I can't work, I can't coach. But if there's some money in there in a rainy day fund, it means that actually I can draw down on those savings as well and carry on paying myself even when I'm not actually working. That's just sense of something sensible to do. But I think of those, those extra chunks of profitability in terms of clients. With that extra £2,700 that I've just found there, and, and that, you know, if I could do the same again, the average client for me is, um, starts at about £5K. Now all of a sudden if I can out an extra $5K worth of profitability in my business, I now need one fewer client to enroll each year. It just takes the pressure off a little bit. So I'm not out there having to like market so hard and sell so hard and constantly enroll clients, which creates extra admin and overhead and expense in its own right. So focusing on profitability is such a wise and sensible thing to do. Don't get me wrong, a lot of people find it really boring. I love the numbers. I love helping my clients understand understand profitability and have open up their blind spots to where I can help them be more profitable. And like I said, there's 3 sides to business: turnover is vanity, profit is sanity, and cash is king. Make more money, keep that money in terms of net profit, and then invest that cash. If you've got cash in your business, it gives you a heck of a lot of security. One of the greatest fears that many of the business owners I work with is around a client saying no. Oh my gosh, If they say no, I can't put food on my table, I can't pay my bills. But if you had $10K, $20K, $30K, $50K sat in a rainy day fund, would you be worried about whether that client says yes or no? You'd probably be looking at it more so as to, is this client best fit? Can I get that client great results? And if the answer's no, ethically, morally, the right thing to do is say, I'm really sorry, I can't help you, but I know somebody who can, and let that client go. But you can't really do that without having that extra security somehow saved up for yourself. So if you want to know a little bit more about it, like I said, I would jump on and read Profit First by Mike Michalowicz. You're welcome as well if you've got any money-related questions for me. Do drop them into the comments below this video. And also, one of the things which I've got as a gift for you is a copy of my book Take Your Shot, which you can jump onto fearless.biz/TYS. Again, we'll make sure that we share a link to that in the comments below, and I'll happily send that out to you wherever you are in the world. But please try and make more profit than 99% of the people out there. Give yourself that security of cash. It makes a huge difference, not least to your mindset, to have that extra security.