Mo' clients mo' problems
“I need more clients!!”
I fell prey to it, too. When I was struggling financially in my business, all I could focus on was where am I going to get my next client. Always needing to get more clients and bigger clients, with deeper pockets, which meant that I was constantly trying to look and act bigger than I was to be taken seriously.
I hustled, hard, looking for people who would want to hire a talented, spunky Brooklyn agency to brand their business. I did a song and dance for anyone that would listen. I constantly thought my problem was that I didn’t have enough clients. That I didn’t have big enough clients. That I wasn’t good enough to get the big, awesome clients that I needed for this business to work.
I was working all the time and falling deeper and deeper into debt...
But my problem WASN’T that I needed more or bigger clients. My problem was that, unbeknownst to me, each new client I got was costing me money. How is that possible? They were paying me, weren’t they?
They were giving me money, yes, but I wasn’t making money.
Let me explain!
The problem with more.
No matter how much the projects were bringing in, we were always working way more than we were getting paid. We were not only spending more hours than we could afford on the projects themselves, but we were also spending dozens of hours before the project trying to land the client, and we were spending even more time trying to land other projects that often wouldn’t pan out.
You might be thinking: sure, but if those clients did pan out then you would have had more money.
But the problem was that our business wasn’t set up to close more clients than we were closing (if it were, we would have closed those clients!) And the problem was that we were charging for the time the project was supposed to take, not including the time it would actually take, plus all that time we spent pitching them and everyone else.
This made our business completely UNPROFITABLE.
So while we were spinning our wheels trying to get more clients because we thought that was our issue, we were ignoring the actual issue: that we were never going to be able to get “enough” clients to sustain our business.
Profit solves problems.
We needed to make our business model profitable first, and then look for the clients.
Without doing that, we would always be stuck in the freelancer’s grind of pitching, hunting for clients, over working, trying to rein in projects that went way over time/budget, and basically just living in a constant state of fear that even when things were kind of OK for the moment, next month could be terrible again. We would never be OK.
Here’s what I’ve learned since then: when you have an unprofitable business model, and you try to expand it you’re just going to be more unprofitable. By a stroke of luck (only in retrospect) we went so far into debt at one point we were forced to change our business model overnight, and went from going after $30,000 clients to going after $3,000 clients.
Well it turned out our $3,000 business model was WAY. MORE. PROFITABLE.
So profitable that we raised that price to $4,000 the next month, and kept closing clients.
Then we raised it to $5,0000 the following month.
And a year later we were charging $10,000, and a year after that we were charging $15,000!
Now we’re charging up to $35,000 for our clients.
We had come full circle in price (and then some!), except this time we did it with a profitable business model. Now when clients pay our fee we get to keep that money. Before, we didn’t have any of it and, in fact, we went deeper into debt with each project we worked.
So the question is: if you are struggling in your business, are you trying to solve your problem with more clients? Because it’s more than likely that that will never solve your problem.
Instead, you might want to consider that your business has no chance of succeeding with your current model and strategy. I’ve found that most solopreneurs, freelancers and consultants are operating in a dollar-for-hours model, which leads to this unprofitable model because you are charging for your time, not for your value.
You may have the goal of building a large company with employees, and if you know that’s what you really want, more power to you. But even if that’s your goal, I still know that you are ten times more likely to achieve it if you first get your business profitable, and then scale up.
Your magic number.
I speak from personal experience here! More clients, and hiring employees to handle the work will only run you ragged if you don’t first make your business super profitable. A profitable business is one where, when it’s just you or you and a partner, you can make all the income you need and then some working for clients a maximum of 50% of your time.
This requires you to know your magic number, i.e. the price you must charge to run a profitable business.
There’s a teeny tiny bit of math involved so to make it really easy I put together a mini-course to show you how to do it. Inside the course there is an excel document which asks you to fill in a few key numbers and it will spit your magic price for freedom and profit out for you.
Click here to grab my free mini-course and find out your magic number that you need to charge in order to have a profitable business.