Strategies for Earning Revenue as an Owner of a Service-Oriented Business
Kate Toon will lead a webinar offering tips on social media strategy, scheduled for September 6th at 8am (Australian Eastern Standard time). Don’t miss out, register now!
Being a small entity—whether a startup, agency, or a freelancer—shouldn’t stop you from aiming high. Innovation isn’t reserved only for the giants in the industry. Yet, many operating in service-oriented businesses believe it’s all about that one groundbreaking idea.
The game-changer.
The next big thing in innovation.
The launch that takes the market by storm.
The hit that makes a splash.
The common belief is that discovering that one revolutionary concept will tip the scales in their favor, unlocking a torrent of revenue.
However, I see it differently. The path to surpassing the six-figure mark for me was paved with numerous minor victories, not a singular monumental idea.
It involved overcoming small setbacks and seizing every chance for betterment.
While it may appear less glamorous and somewhat anti-entrepreneurial, focusing on the incremental gains instead of chasing the grand illusion has proven effective for me.
Here are several strategies I’ve found useful for service-based businesses to enhance their financial performance:
Tip 1: Increase Your Rates
It might seem straightforward: raise your prices to boost your revenue. But, many business owners struggle to implement price hikes. Often, their pricing strategies are hastily crafted, barely glancing at their competitors’ prices or pondering over profit margins.
They establish their fees without considering if these will sustain their living costs or ensure a healthy profit margin.
I suggest adjusting your prices annually to account for inflation, besides contemplating larger increments as your expertise and skill set expand.
A 10% price rise is generally unnoticeable to most clients or customers. Jumping to 20% is a bigger challenge, hence I advocate for gradual increases rather than abrupt spikes.
Tip 2: Specialize
It’s a well-known fact: people are prepared to spend more on specialists than generalists.
I’d happily wait three months and pay extra for a session with a celebrated neurosurgeon, yet waiting a mere ten minutes for a budget-friendly family physician frustrates me.
By specializing, you can:
- Enhance your expertise in your chosen field
- Cultivate a market reputation for your unique services
- Refine your marketing efforts towards your primary clientele
- Optimize your pricing and operational procedures.
Choosing to specialize doesn’t have to be limiting. Rather than saying, “We exclusively cater to these clients,” consider framing it as, “We specialize in offerings for x, y, and z, with a particular focus on y.” This approach provides the flexibility to serve a broad clientele while also commanding higher fees for your specialized services.
Tip 3: Establish Recurring Revenue
Many business owners I talk to aim to match or exceed their previous employment income through their business. That’s entirely logical. While the independence of self-employment is rewarding, the consistency of a regular paycheck is often missed.
A predictable income stream can provide a sense of financial security, covering essential expenses like rent or mortgage payments.
Here are a couple of recurring revenue models that have proven effective for myself and my clients.
Retainers
Agreeing to a predefined price for a specific quantity of hours or output, invoiced at the start of each month. Offering a discount, say 10%, as an incentive can be beneficial. This not only secures the client’s status as a priority but also guarantees you a steady income source, allowing for strategic planning and opportunity seeking with peace of mind.
It can be challenging to pitch retainers initially but presenting this option after a successful project could persuade the client to continue engaging your services at a VIP level for a regular fee.
Maintenance Plans
Maintenance agreements, similar to retainers, are applicable across various service sectors, from tech development to accounting. Instead of committing to a fixed number of hours, you pledge to complete specific tasks.
This arrangement permits you to charge a monthly fee for a predetermined service level, or to spread an annual fee across several months.
For instance, rather than facing a large bill from your accountant at year-end, you might prefer a monthly payment plan to spread the cost.
Memberships and Subscriptions
For service-oriented businesses, providing support through memberships or groups for a monthly charge can make your expertise more accessible while maximizing efficiency. This model can also be appealing for ecommerce platforms, where subscription boxes offer both practical and luxury items delivered directly to customers, creating a steady source of income.
Easy Add-ons
Generating additional steady income could be as simple as offering advertising space on your website or creating a business directory with paid listings. This strategy not only supplements your revenue but also fosters loyalty among your current clientele.
Tip 4: Foster Contras and Partnerships
Contras and partnerships might not directly influence your revenue stream, but they can significantly reduce marketing expenses and enhance service exchanges without impacting your budget.
Collaborating with other businesses broadens your client base and leverages existing trust.
Tip 5: Promote Referrals
Promoting other businesses is commendable, but financial incentives are preferable to thank-you gestures. Assess how often your recommendations convert and consider establishing a formal referral program.
While these insights are just the tip of the iceberg, I delve deeper into strategies for improving productivity and profitability in my book Six Figures in School Hours. Hopefully, these suggestions kick-start your journey to greater earnings.
Success in business is about more than simple transactions; it requires creativity, cost management, and selling your expertise instead of your time.
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