Why £1 Saved Means £2 Less to Earn
Most business owners I know are stuck in the “sales cycle of doom” meaning that they are constantly having to market, sell and deliver their services just to get by. Rarely do I see successful small businesses producing any level of profit.Growing a sustainable small business requires the owner to:
For every £1 you bring into the business you will have:
By the time you deduct all of those it means your £1 is probably worth more like £0.50 or even less in many cases.
Therefore every saving of £1 you can create in your business means you have to bring in £2-3 less in revenue on the top line. Which means you need FEWER clients. Not more.
This is a more sustainable business.
Imagine a coaching business which has a group coaching programme which it sells for £4,500 per seat.
And that coaching practice has several subscription softwares which it pays for every month. If that coaching business can cut it’s subscription costs by just £200/mth, when you extrapolate that out over the course of a year, £2,400.
Based on the maths of £1 saved leads to £2 less in required revenue this means that coach can afford to NOT HAVE TO enrol one additional client that year. £200 doesn’t sound like a lot, however the effort required to enrol a coaching client might require:
So, you can see, a saving of just one client per year frees up at least 17 measurable hours for that coach, consultant or freelancer and countless amounts of energy in marketing.
* as a side note, you may be looking at that thinking a 20% conversion rate is low for a business coach. Not if they’re qualifying prospects and only taking on the best clients. 20% is a typical conversion rate for a coaching business.But I need to do marketing which costs money
Yes…and no…if you’ve listened to other episodes of the Fearless Business Podcast you’ll have heard me talk about Marketing Assets. If you build marketing assets such as:
To name just four assets, you can create these assets and they will start conversations for you while you sleep.
When you’re next tempted to buy a “shiny” marketing thing for $5k from a hipster bro-marketer who wows you with “guaranteed” results…think twice.
Most people miscalculate the ROI required for that investment to make sense, and think they just need to recover a single client (if they’re worth $5k to you) to make an ROI.
You will need at least 2-3 clients just to BREAK EVEN and probably more like 8-10 clients over the following year to justify the investment. As generally these investments become rolling payments that you need to make month in and month out irrespective of the results. They will also blame you should they not produce the results they promised you.
That’s a podcast episode for another day.
The moral of the story is:
Keep your costs low and your income high.To find out more about Fearless Business:
Join our amazing community of Coaches, Consultants and Freelancers on Facebook:
And check out my personal business coaching website.
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