The ability of a business to generate income through the various products and services offered, determines how long the business becomes operational. A business will eventually close down if it does not generate enough profit to be sustainable.
So, the most important question that an entrepreneur will ask themselves is ‘How can I generate more income for my business?’ Essentially, there are 5 money rules that enable you to generate more income. More income means the business becomes sustainable in the long run and you are able to scale the business.
The five rules include the following:
- Delegate responsibilities
In most of the service businesses, you are going to trade your time and skill for money and this is what enables businesses to grow. However, there is a finite amount of time you can commit to your business before you eventually begin to burn out. Thus, as one individual in the business, you are limited in the number of projects and clients you can handle effectively at any given time, which further limits the amount of income you can generate.
The best way to scale beyond being a soloprenuer, is to delegate some of the work and responsibilities to other members in your staff/team. This enables you to create opportunities for others while also scaling your capacity as a business.
- Change your Pricing Model
It is beneficial to shift from hour-based pricing to project-based pricing model. When you are pricing based on the amount of hours you take to finish a project, time becomes your essential unit. However, most clients do not care about the time you take, they only care about the quality of the product/service you give to them.
So when you sell units of time, you are inviting the client to manage your time. Since they will want a top quality output at the shortest possible time. This leads to stress and burnout. Thus, it is crucial to shift to project and value based pricing.
You can’t be a jack of all trades and succeed in all. Offering so many products/services at once makes it difficult to gain expertise in these services.You need to make the difficult business decision and focus on a niche product/service that you will focus your attention on.
- Learn how to have the Money Conversation
Talking about money is mostly uncomfortable to most people. When we talk about money, it seems like we are bragging or greedy. So in most cases when talking to clients, you delay talking about money/price.
Whenever there is a transaction between a buyer and seller, you both need to talk upfront about the price. Provide either price bracketing (range from minimum to maximum price) or price options (pricing plans) to the client in order to gauge what price fits their budget. If the project has an undefined scope and will grow with time, then there is no way to come up with prices upfront. Doing so earlier on, is like shooting yourself on the foot. Thus, it will be better to price based on each milestone/target reached
In order to make money, you have to spend money. Being an entreprenuer means taking on risks. All profits come from taking on risks. Invest the profit in people by hiring, training the staff. Invest in the best equipment useful in running your business.
Do not forget to invest in yourself. Learn new skills crucial in running your business. This enables you build your net worth.
As the lifeline for any business, generating more income becomes one of the biggest aspirations for any business owner. The points above will help you tackle the money problem and generate more income to scale your business.