Many business owners I work with start out with a similar story: You're working longer hours than you like, making less than you should, and not able to prioritize things like family-time, self-care or knock things off your bucket list.
Let's face it! Issues like these make us SERIOUSLY reconsider why we even became a business owner in the first place.
Low profitability leads to soo many problems: burnout, inability to hire, hiring unqualified or troublesome employees, debt, more debt...
This week on The Six Figure Biz Show I'm breaking down for you 5 strategies I use to rescue business owners who are going under, operating unprofitably, or just burning out because you have to spend too much time in your business to make things go right.
So, as always, let’s pull this problem apart.
The Ultimate Guide to increasing your profitability without increasing your hours or the days you work...for Women of Wellness! Get my Girl! Get Paid Guide with step-by-step instructions sent right to your inbox.
With every episode of The Six Figure Biz, I like to empower you with a POWERFUL free resource that goes with the episode which you can implement right away to create some of the same results, if not better, in your business.
As women in the health & wellness space, we have to be economical about our time.
Maybe you're a mompreneur, or have multiple locations, or maybe you're just like me with many hobbies, interests and charitable works you'd like to do and a busy work schedule would only hold you back.
Somehow, you need to find a way to ethically make more income without working harder than you already do!
I created this guide for you because I'm really DONE with watching women of wellness struggle to get paid - and sacrificing your family life, self-care, and bucket list to plod along in a business model that doesn't serve you. You can download it right away by clicking on the button above 👆
Before you can have success implementing any of these 5 strategies for increasing profitability, you need to understand a few rules. These are my Two Golden Rules of Money:
Number one - a business or activity, or even an individual, will tend to make only as much as they think they need. That means the number you have in your head? If you're thinking to yourself, "This is how much I need to make this month..."
That number is a limiting belief.
So when I sit down with a business owner, one of the first things I do is expand their idea of how much money they actually need to make.
There are a lot of different ways we do this.
One of them is to look at retirement: do they hope to retire early? Owning a business can help you do that, but only if you first calculate and face head on how much your business actually needs to be making if you're going to retire early.
If you want to retire 10 years early, then that means you need to make a lot more money every month and you can be putting aside that money or investing it in retirement vehicles, etc, etc.
So that's one of the first things we do is start cracking that limiting belief of how much you think you need to be making.
The other thing, the other Golden Rule I have with money in a business is that any person, organization, or business will tend to spend every dollar it makes if they're allowed to!
So we have to find ways to save money that SEEM like an expense, or seem impossible to wiggle out of if we want to make the business more profitable.
Okay, that being said - let's take a look at these 5 strategies:
The way businesses approach pricing is a critical part of business success. Pricing impacts both your clients’ decisions about your offer, and the financial viability of your business.
So doing periodic fee increases is a necessity.
The Federal Open Market Committee (FOMC), in its latest meeting on March 17, forecasted that the Personal Consumption Expenditures (PCE) inflation rate in the United States will average at 2.4% in 2021.
This means without at least matching the current inflation rate, your business will LOSE money this year. (This loss will not be evident in your Total Production graph...but it may appear as a decrease in your Net Profit).
What most business owners do when trying to decide what to charge is they take a look at what their competitors are doing...and then try to offer the same or better service for less. This is called "competitive pricing". That is a big reason why they fail to create a good profit margin.
Think about it!
Who wins when you price your services competitively (meaning: lower than your competition)?
Let's be totally honest here.
Your clients certainly don't win. Because the cheaper your services are, the more rapidly you have to get them moved in and out, which means you're being stingy with your time, materials, labor, and the help you can give, right?
You don't win, either. You have such a tiny profit margin that you can't afford to hire at all, so you're doing all your yourself. Or you can only afford to hire people at minimum wage or just above - people who have nothing to lose by going to work elsewhere! So you get high turnover, an incompetent or uncaring team, and still have low profitability!
And your service to clients, your customer service, tends to suffer. That drives clients away. So there's another dwindling spiral down to zero income, zero profit, right?
When you out-price your competition, only your competition wins.
Because all they have to do is get better at sales than you and then they can charge more than you and do the same amount of work but keep more money!
So the solution is not to price competitively, but instead to implement what we call value-based pricing.
Value-Based Pricing is when we price a product or service HIGHER than any of the competition, and deliver way better results than any of your competition can, so the client gets such better results that they feel they got a deal.
Let's talk about this and the sales mindset behind it.
What EXACTLY does your ideal client want to achieve? Sometimes this outcome gets lost in the noise of explaining to them the features of your services, the scheduling, etc.
By identifying precisely what your client hopes will be the outcome of saying "yes" to you, we can take one step closer to making them wildly enthusiastic about it!
And the more wildly enthusiastic they are, the more likely they are to be willing to pay a premium price.
Now you have to understand something about sales mindset in order to really see the importance of this.
Take a look at the image below:
Let us say you have an offer that is $20.
If the client FEELS it is worth $25, they will "know" they are getting a deal. But what if the person feels it is only worth $15? Or $5?
The principle of value-based pricing is based on this idea of increasing the PERCEIVED value of the offer to be greater than whatever price you put on it.
How does this affect the service you offer, and your ability to get results for your clients?
A study was done to determine whether pricing affects a buyer's enjoyment and experience of a product. Three wine bottles were used in a blind taste-test. The only thing the judges knew was the price of the wines. In the study, each person admitted that the most expensive wine was the most enjoyable...
The punch line? It was the same wine in all three bottles!
The more committed your client is to treatment, the more likely they are to get the best results. The more you charge, the more emotional investment the client has to make, and the better the enjoyment they get from the result.
The more you charge, the better staff you can hire and therefore the better care you can deliver!
The ONLY one who loses when you charge more is your competition.
You can find four more strategies on Episode 59 of my podcast - The Six Figure Biz Show. Go listen now!
Want a step-by-step guide to implement these 5 strategies in your business?
Check out the freebie that goes with this episode: Girl! Get Paid: The Ultimate Guide To Increasing Your Profitability WITHOUT Increasing Your Hours Or The Days You Work...for Women of Wellness!
Sarah Nicole Nadler is a business + balance coach for 6 & 7-figure business owners who want to build a dream team & profitable biz so they can spend more time on the things that matter. A digital nomad, she currently calls Tampa Bay, Florida home.