Do you feel like you just can’t earn enough money in your business to fully support yourself? It could be that you’ve been running a business for a while, but your personal income isn’t keeping up with your company’s increase in sales.
Or maybe you’re considering taking your long-term side hustle full time, but not sure if it can replace your day job’s income.
Or perhaps you’re just a couple months into being a freelancer and you don’t know whether you should spend money to get more clients, raise your prices … or both.
But changing your financial strategy is irrelevant until you have a positive relationship with money. That means you need to know how to make money work for you and for your customers, how much money you need for yourself, and what exactly what your business earns – and spends – every month.
Wondering how to get there? It all starts with a better understanding of your customer (don’t worry, I’ll explain).
First, A Quick Background
In 2010 I started a business with less than $200 and turned it into 6-figure revenue by its second full operating year. To say I was bootstrapping is an understatement. I have been exactly where you are now, trying to figure out how to make the most of very little capital and grow a business as quickly as possible.
For my first couple of years, I benefited very little from the growing revenue my company was producing. Even when I crossed the $100,000 revenue mark in December 2012, I had very little left over, and I didn’t pay myself much out of that. I believed in the adage “you gotta spend money to make money,” but I was doing it all wrong.
I was telling my clients to pay themselves first, while putting off my own paycheck at the expense of my personal financial health.
My relationship with money – that it was scarce, that I didn’t deserve more of it and that I would always have to work my butt off to the point of desperation in order to have “earned it” – was stifling the growth of my business.
At the time, I didn’t realize that by improving my services for my customers and making their experience better, the money I needed to pay myself well and grow my business would start flowing.
How My Money Mindset Changed
I used to talk, talk, talk about how successful my business would be some day, but I was too focused on earning more revenue when I needed to be focused on costs – specifically costs that affected my customers’ experiences. In my third full year of business, my revenue was up another 50%, but I still couldn’t pay myself what I needed to support my personal life and obligations. For 2014, revenue is pretty steady, but I’ve cut $4,000 a month in expenses.
Yes. Four thousand dollars every single month.
That’s what I was spending on things I thought I needed instead of what my customers needed.
I shifted almost all of my marketing dollars over to Facebook ads, closed my office to work virtually, let go of my (amazing, fantastic) Public Relations guy, and more. My existing customers barely noticed, because they didn’t need to come to my office and my media attention was irrelevant to them. Besides, most of my leads were coming from internet search and referrals – this was not the time for traditional PR.
My new customers are tuned in to the way I operate right from the start of our projects, and I can give them better service than ever because I’m free of both financial worry and unnecessary expenses.
How to Shift Your Money Mindset
If you’re caught in the cycle of money scarcity and exhausting yourself trying to earn more, and more and more, try these two steps to start shifting your money mindset.
Step 1: Learn to see money as a tool and a resource – not a burden or something that will always be scarce
This was a very difficult shift for me. I grew up in a home where money was scarce, and it seems like we’d never have enough. The problem was I didn’t know what “enough” was. I only knew I needed more of it in order to stop worrying about it. This mindset gets you stuck in a cycle of money going out as fast as it comes in, and it also forces you to put yourself last (I can function on less; I can live on less; others need it more than me).
Every dollar you spend out of your business needs to be consciously and deliberately focused on your clients (see Step 2 for more examples). That includes paying yourself enough so that your own personal financial concerns don’t affect the way you work with customers.
With that burden gone, you can do better work for your clients, and give them better service. You can come to them from a place of abundance and satisfaction. Your customers will notice the difference.
Step 2: Spend money only on things that will help you serve your best customers better
An important lesson here is that if you expect to grow your business faster than I did, you’ll most likely have to spend more than I did. But you also have to spend smart. Review your spending at least quarterly and look for places you can reallocate money to help your customers.
Example 1: I first hired staff to take on overload because I felt I was too busy. I didn’t do it because it would allow me to give my clients more one-on-one attention and follow up with them at critical times in their business development – even though that is a far better reason to add staff. What I needed at that time was better systems, not more people.
Example 2: I bought advertising on business web sites because I thought it would help me reach more people and therefore earn more money. But few people responded to the advertising at all, and most of them weren’t my ideal clients. So instead of advertising, I created better follow-up communication with my previous clients, which boosted my referrals and shortened my sales cycle.
In both cases, better systems improved the customer experience. Spending a little money on a CRM to track referrals and follow-ups was much, much less expensive than hiring and advertising, but it served the same customer-focused goal.
The Bottom Line
Now, this doesn’t mean you should spend as little as possible. You can instead decide that every penny you spend on your business – including on yourself (see Step 1) – will help improve the experience for your customers.[tweet_dis]Your customers deserve the best, so put yourself in the best place to serve them.[/tweet_dis] If that means paying yourself more so you can stop worrying about paying the bills, do it. If it means hiring a Virtual Assistant so you can stop filling out intake forms or invoicing and instead send a personalized follow-up to your recent clients, do it. If it means using a more expensive supplier that delivers consistent quality so you can always produce the best product, do it. Spend wisely and attract greater abundance for yourself and your customers. [tweet_dis]Your 6-figure business awaits. It’s just a matter of deciding that you deserve to build it.[/tweet_dis]
Are your business expenses customer-focused? What costs can you cut – or introduce – to make sure you’re giving your customers exactly what they need? Share your experiences with me – and the Firepole community – in the comments below.