in: Business Strategy
by: Melissa Wildstein
Okay, all you service entrepreneurs out there, I know you’re listening to this one! After all, what service entrepreneur doesn’t struggle with how to get paid?!? I can’t tell you how many times I’ve spoken with other people in the service industry who complain that they’re spending all of their time writing proposals or answering random questions from potential clients via email but that time and effort rarely turns into real dollars.
At a large advertising agency (my background), it’s all about billable hours. If you aren’t billable, you aren’t profitable. And if you aren’t profitable, you won’t have a job for long. As an entrepreneur the same rule applies, right – if we aren’t profitable, we can’t sustain our businesses. And if we can’t sustain our businesses we fold and then have to go back to work for someone else and once you’ve gotten a taste of working for yourself, working for someone else just isn’t all that appealing!
So here are five tips that I’d like to share with you:
- People value what they pay for. Have you ever received a question from a potential client that you actually spent some real time answering only to have it backfire and the potential client completely dismisses your recommendation, moves on and hires someone else? It’s not necessarily that the other company made better recommendations. In fact, they may have made no recommendations at all! There’s an element of consumer behavior that makes us value what we pay for – and often the more we pay for something, the more we’ll value it. Because it’s expensive, it must be good. Click here to read more about how to get people to stop picking your brain for free.
- Don’t write a proposal. Create a deliverable – clients pay for reports, for analysis, for recommendations, clients don’t pay for proposals. So, look at their business objectives and make a couple of solid recommendations for WHAT you could do, but don’t tell them HOW. That’s your secret sauce, so don’t give them your best thinking for free. Instead, start your recommendation with an ‘audit’ – maybe that’s a site audit, a competitive audit, a brand audit, a financial audit, whatever. This is how you’ll be able to do that ‘deep dive’ into their business AND get paid while you’re doing it.
- Don’t let your clients hold you hostage. I know this sounds crazy, but I was talking to my Dad today. Yes, my Dad. He does some web work for a guy in our neighborhood back home. The owner of the business hasn’t paid him in over six months. But now my Dad’s going to do a new campaign for him because this new campaign should lead to more sales which will increase profits and there will be money in the bank and he’ll be able to pay my Dad for the work that was done six months ago. I’m sorry, say again? You want me to do more work to be able to pay me for the work that you haven’t paid me for yet? Stop. I’m sure that you love your clients and you want for them to succeed – but you need to succeed too. Instead of spending your time and energies on this old deadbeat client in the hopes that they’ll come around – find a new client.. But, keep sending the old client invoices. If they have any hopes of ever working with you again, they’ll pay.
- Choose your clients carefully. You should ONLY work with clients who fit at least two of the following criteria: they’re profitable, they’re strategic or they’re really fun and you just love working with them. Choose clients that you can create success for, who will be profitable AND who are going to recommend you to someone else. Here’s a hint – there are usually some red flags for the types of people who you don’t want as clients. Pay attention to the different potential clients that you come in contact with and look for those types of patterns. And yes, it's okay to fire a client.
- Pricing - do the numbers. In most cases, our best clients are the ones that pay the most (see tip #1). They value what we bring to the table and they’re willing to pay for that. If you charged more for your service, how many fewer clients would you ‘need’? How much more time could you afford to spend then on the individual clients that you did have? AND, how much more valuable would you become to them? It’s a vicious circle! So consider raising your prices and raising your value.
- Bonus Tip Time: Don't forget to invoice and make sure that you manage that whole process. For bookkeeping services or Quickbooks help - check out some of the financial wizards in our business directory.
