They’re many points failure in business. But most more times than not the smaller points of failure are much more dramatic than the big ones. Because when something dramatic happens you notice it on the spot and take care of it. But when something small starts germinating in your business you don’t always notice it. At least not until it’s too late. The point of this post is to show you one of those small points of failure that destroy most businesses, and teaches you how to avoid it or at least correct it.
Business owners that have failed will tell you that the problem was cash flow. But cash flow is a broad term. It’s a specific part of the cash flow that killed those businesses. There was one thing specifically that they were doing wrong. If they just paid more attention to that point their business would have survived.
I’m talking about discounts, or to be more precise discounts that cross the profitability line. When you price your products you know exactly when you’re not profitable anymore. You know how big of a discount you can give your client before you start losing money. Understandably your Salesforce doesn’t know that, neither does your retention or customer service. It’s your job to make sure that there are clear lines that cannot be crossed.
But we’re talking about smaller businesses, businesses with only the owner and one maybe two employees. Those business owners are trying to get clients by any means necessary and sadly more times than not the competition comes down to price. Let me just make one thing clear, if the competition comes down to the price you’ve already lost. You either lost a client because your competition is giving a lower price or you lost your profit margins because you priced too low either way you lose.
It sounds like something simple, something small but it’s not. I have no known businesses that have failed after 12 to 20 years of service to their clients because of this little loss. This little leak has grown throughout the years to a point where it’s an unstoppable boulder crushing your business.
I’m not saying not to give any discounts what I am saying is pay more attention. If you do things right you can give those discounts and still be profitable.
How do you do that?
Calculate the bare minimum, how much do you need to charge to Simply break even. Add 30% to that as your minimum profit. this is the bottom line This is as low as you can go. add another 30 to 40% to that. This little modification provides you with two important tools. One it will provide your starting point from which your client can Haggle you down from. And two it provides a safety cushion just in case too many clients are asking for that discount the few that won’t and will pay full price will cushion your profits and make sure your business services.
As you’ve seen these discounts can increase your sales but they might also destroy your business. Marking up your prices will provide you with a needed cushion for the loss your mistakes will cause. Until you learn to distinguish between good clients and bad clients.
We are all good at setting goals. I’m going to lose this much weight, I’m going to make this much money, etc. But most of us fall short when it comes time to do the work.
Nothing comes easy, and if you are determined to get a certain goal, you have to be ready for the hard times. I have a friend who is a structural engineer, and he told me once that when you build a bridge you have to take into account twice the maximum amount of weight that bridge will ever have to carry. That’s the only way to assure that bridge will not collapse.
That’s how you should view your goals. I know that’s how I view mine. When I calculate sales funnel I go all out. If I want to sell 100 units, I calculate it as 3% of the total leads I get (the lowest percentage I have ever seen converted). That brings me to 3,333 leads, And I don’t stop there. I calculate the leads as 3% of the traffic I need, which brings me to 111,111 visitors. And then I double that to 222,222 visitors.
There’s a saying here in Israel. Hard time in training results in an easy war. If you got 222,222 visitors to your site, I’m willing to bet you would have more than 100 sales (if your site converts correctly). But my point is, there is almost no way you won’t reach your goal with those numbers.
Yes, I understand that those numbers are hard to reach. But as Larry Page once said, when you aim really high it’s impossible to fail completely. Meaning if you only get 10% of those visitors you will still have 22,222 visitors. Maybe you won’t make 100 sales but you will get close.
No matter how good you are there is always a limit to every strategy. Eventually, you’re going to hit a glass ceiling. But that doesn’t mean you have to accept it. The fact that there is a limit your current strategy doesn’t mean you’re at a dead end.
You have some experience now so just throwing a hail Mary isn’t going to cut it. Now that you have a working system you can deconstruct it and rebuild another one including the parts that worked well and tweaking its limitations. Notice that I don’t replace the current system, I just add another one.
In any business, you should have at least three income streams. Take John Morris for example. The three income streams I know he uses are Youtube ad revenue, PHP courses, and website design. He likely has a few more that I didn’t notice, and that exactly the way you should work. There will always be times when one part of your business is outperforming the others. And it’s going to rotate, some months are better for one aspect while others are bad.
Let’s get back to issue, rebuilding a system that already works but has hit a glass ceiling. Let’s assume you’re in John’s shoes, and the website design aspect of your business has hit a glass ceiling, not allowing you to grow it any longer. The bottleneck is you because you’re selling your time. The could easily happen to any other part I’m just taking this one because it’s more obvious.
You wouldn’t want to outsource an entire website to a freelancer because that wouldn’t be your work and people who have worked with you in the past would notice. But you could start getting a team together and have them take on parts of the creation process. You could hire someone to take care of marketing allowing you to focus more on your art. You could always have elements of the site prebuilt to make the construction easier.
You see where I’m going with this? The only limits you have are in your head. If you find yourself hitting a glass ceiling, you can always add another income stream or repurpose a working one.
Let’s face it, every once in awhile you’re going to have a day so bad you wonder why you even woke up in the morning. A day when everything seems hopeless, when you feel like no matter what you do, you’re still going to fail. In this post, I will tell you how I deal with those days.
The first thing I do is accept the fact that those days are part of being in business and I’m glad to have another one of those days behind me. The more good days I have in a row the more I’m worried because I know a shitty day is right around the corner. But after one has passed I know I have a few good ones coming.
The second and probably most important thing I do is go over my actions. How many phone calls did I make? How many flyers have I given out? How many people did I talk to? If I see my KPI’s have declined I know how to fix it, get back on course. If you numbers are as they should be I know that this day was just an anomaly and tomorrow will make up for it.
After going through those two steps, I load world of warcraft. Join a PVP queue and dot the alliance like there’s no tomorrow. (Only wow junkies will understand this part).
Everyone gets pissed off at their job from time to time, but that doesn’t mean you have to quit. There is, however, a time when you should. That’s the focus of this post, explaining logical reasons to leave your job.
Your job is taking up most of your time and should at least cover your living expenses. Your job does not have to cover an upgrade to your car or home that’s on you. But it has to cover your bases, rent, food, bills, and transportation with a little left over. The problem is that most jobs don’t do that. Not only that but they take up so much time you can’t start another cash flow stream, A side business, another job, whatever.
Let me be clear, you boss only cares about his bottom line, not your well being. If you can’t pay your rent or get evicted he can’t care less, that’s your responsibility.
So what do you do?
You diversify. Your time is a currency like any other and spending it on a job that doesn’t cover your expenses is a poor use of it. Start off by calculating exactly what your expenses are, then find a job that will cover the bigger part of them. As for the rest, you can either find another job or start a side hustle (side business).
Why would you do that?
There are many things that happen behind closed doors in every business, and yes even in your job. Those things dramatically affect your earning potential. In good months you’ll do fine the problem in that your expenses are not taking into account that you have some bad months. So the best thing you can do is split your time between two income generators. That way when one is having a good month the other might not be having as good of a month.
Every business is seasonal so make sure not to choose the exact same field for both of your income streams.
Not everyone gets your point the first time. It doesn’t mean their slow, or stupid. It just means that their brain works differently than yours. I wrote a post about how to come up with new ideas a while back. This is just another process our brain goes through.
We attribute too much to “coming up” with something new, when the truth is we had the information in us all along. But having the information is not enough we have to have it accessible, something that is not always the case.
More times than not we have to hear about something again and again to have it “fresh” in our thoughts. Fresh enough to combine it with something else. I bring this up because I just had that experience first hand. I just had a great idea that combines a few things I learned. I got the idea when re-reading ‘the four hour work week’. I’ll let you guy know how it goes when I start.
Hopefully I will be able to document the process to show you how a new business is borne and how to grow it.
If you want extraordinary people working for you. You’re going to have to pay for it, but not as much as you might think. You don’t have to go overboard getting into debt, all you have to do is use your competitor’s greed against them.
Most people are not looking to buy expensive cars or homes, they just want peace of mind. And to be able to cover their expenses. If you allow them to live with a basic level of self-respect they will love you and will stay loyal to you for years.
By doing that you position your team in a way that they just won’t be able to leave you. If they go to someone else they will most likely not be able to cover their bills. That’s because most business owners see employees as chess pawns. Paying them the minimum the law allows. By paying them enough to cover their bills and provide for their families you put them in a cage of solid gold.
If you’re really smart you can take it a step further. Give them enough to cover their living expenses and bonuses for results. That way you’re not only eliminating your competition ability to steal them away from you, but also giving them a reason to care about the business as much as you do.
At the end of the day, we’re talking about money that will either go to your employees or to taxes. So the ball is in your court, what are you going to do?