Working really hard but not making the profit you should?
When you run a service business it’s incredibly easy to give away your time for free.
The classic time drains are:
- Attending extra client meetings above & beyond the ones you had anticipated,
- Having to do more revisions on a design than you budgeted for,
- The most classic of them all…the client increasing the scope of the work but you can’t really change the price because you hadn’t given them a detailed enough breakdown of what was included in the 1st place.
Have you fallen in to any of those traps?
The good news is they are incredibly easy to fix, especially for new clients.
It all comes down to managing the scope of delivery.
Each time you are commissioned to do a new piece of work you need to specify what is, and what isn’t, included. This needs to cover meetings, reports, revisions and any other “thing” that tends to cause you issues.
It also needs to specify the fee for additional meetings, reports, revisions etc so it enables you to charge when the client truly believes they need the extra work.
One of my clients estimated that she was losing ~50% of her time to issues similar to those I’ve mentioned. 50%!!
By putting the “scope” strategy in place that client can either increase her revenue by 100% as they are now able to bill the extra time, or reduce her workload by 50% as the clients will now realise there’s a cost implication and are far less likely to ask for the meeting/report etc.
Either way, it’s happy days!
How to move existing clients on to the new approach
It’s a little tricker to make these changes with your existing clients so here’s what I suggest you do…
Draft up your new standard Terms & Conditions which include the number of meetings, reports, revisions etc.
Send an email, including the new Ts & Cs, to your existing clients and say the new Ts & Cs will enable you to deliver an enhanced service and will come into effect in X months (I usually suggest 3 months).
If you have signed contracts or Ts & Cs already in place with your existing clients then you need to consider when it would be appropriate to make the changes.
If it’s a rolling contract then it’s definitely reasonable to do it at the 12 month anniversary.
For your new clients
Start how you mean to carry on.
Show them that you respect & value your time and you expect the same in return.
Remember… your time becomes chargeable when you decide it does so resist the temptation to throw in another few hours even though you haven’t included that in the scope.
Clearly, if you need to do the extra hours because you missed judged the work invoiced then I’m afraid you probably do need to just eat that up, but if the client has changed their scope then you have every right to let them know the new scope will require a bigger budget and more time.
Stop haemorrhaging time & money
You can implement these changes almost overnight and it can have a dramatic impact on your profit so you really can make good money with a service business.