Why £1 Saved for Coaches Equals £2 Less to Earn

Most business owners I know are stuck in the “sales cycle of doom” meaning that they are constantly having to market, sell and deliver their services just to get by. Rarely do I see successful small businesses producing any level of profit.

Growing a sustainable small business requires the owner to:

• Save up for a rainy day fund - we recommend saving 6 months of operating expenses should the worst case happen and you are unable to work, at least your business has a small survival fund while you get back on your feel. This might take 2-3 years to save up.
• Reinvest in your business - business requires investment in order to grow, if you’re sucking all the profits out of your business by way of a salary, it is never going to grow.
• Create profit - Turnover is vanity but profit is sanity. The goal in business is not to collect customers. It is to make profit. It is much better to run a business that has a turnover of £150k and profit of £80k rather than a £1m revenue business making a loss of £80k.

Why is it important to watch your costs?

For every £1 you bring into the business you will have:

• Direct costs of sales
• VAT to pay (if you’re over the threshold)
• Staff to pay (if you employ people)
• Corporation tax to pay
• Other overheads and expenses

By the time you deduct all of those it means your £1 is probably worth more like £0.50 or even less in many cases.

Therefore every saving of £1 you can create in your business means you have to bring in £2-3 less in revenue on the top line. Which means you need FEWER clients. Not more.

This is a more sustainable business.

Imagine a coaching business which has a group coaching programme which it sells for £4,500 per seat.

And that coaching practice has several subscription softwares which it pays for every month. If that coaching business can cut it’s subscription costs by just £200/mth, when you extrapolate that out over the course of a year, £2,400.

Based on the maths of £1 saved leads to £2 less in required revenue this means that coach can afford to NOT HAVE TO enrol one additional client that year. £200 doesn’t sound like a lot, however the effort required to enrol a coaching client might require:

1. 5 few consultations to be sat per year - that’s potentially 5 hours plus the admin saved.
2. 35 fewer conversations with prospects needed - we have a rule in Fearless Business called 70-10-2. 70 conversations leads to 10 consultations which leads to 2 client enrolments. How much time needs to be invested into each one of those prospect conversations? 20 minutes each perhaps, so that’s another 12 hours saved.
3. All of the extra marketing efforts which go into creating those initial conversations.

So, you can see, a saving of just one client per year frees up at least 17 measurable hours for that coach, consultant or freelancer and countless amounts of energy in marketing.

* as a side note, you may be looking at that thinking a 20% conversion rate is low for a business coach. Not if they’re qualifying prospects and only taking on the best clients. 20% is a typical conversion rate for a coaching business.

But I need to do marketing which costs money

Yes…and no…if you’ve listened to other episodes of the Fearless Business Podcast you’ll have heard me talk about Marketing Assets. If you build marketing assets such as:

• Writing a book
• A podcast
• Brochures
• YouTube channel

To name just four assets, you can create these assets and they will start conversations for you while you sleep.

When you’re next tempted to buy a “shiny” marketing thing for $5k from a hipster bro-marketer who wows you with “guaranteed” results…think twice.

Most people miscalculate the ROI required for that investment to make sense, and think they just need to recover a single client (if they’re worth $5k to you) to make an ROI.

WRONG!

You will need at least 2-3 clients just to BREAK EVEN and probably more like 8-10 clients over the following year to justify the investment. As generally these investments become rolling payments that you need to make month in and month out irrespective of the results. They will also blame you should they not produce the results they promised you.

That’s a podcast episode for another day.

The moral of the story is:

Keep your costs low and your income high.

To find out more about Fearless Business:

Join our amazing community of Coaches, Consultants and Freelancers on Facebook:
>> https://facebook.com/groups/ChargeMore

And check out my personal business coaching website.

If you're a small business owner, you know that good financial health is key to running a successful company. Business owners who don't think about finances and plan for the future can find themselves in trouble when unexpected costs arise or opportunities come along.

Save money to help your business grow

The next step is to think about how you can use the money you're saving. If all goes according to plan and your business succeeds, what will be your next step? Will it be hiring more employees? Investing in new equipment or technology? Or expanding into new markets?

Whatever it is that helps grow your business, saving money will help make those dreams a reality.

Save money to invest in your business

In order to grow your business, it's important that you save money. There are many ways to do this:

• Investing in your business. The best way to grow your company is by reinvesting profits into the business itself. You can do this with small amounts of money--for example, buying supplies or hiring a new employee--that will help keep costs down and allow you to expand without taking on debt or increasing expenses unnecessarily.
• Avoiding debt as much as possible by saving up before making purchases (like buying new equipment) instead of taking out loans from banks or credit cards; this will ensure that the investment is worth it because there won't be any additional costs associated with paying back these loans later on down the line!

Save money to avoid debt

If you're a small business owner, it's important to save money. Saving money is one of the best ways to avoid taking on debt and getting yourself into trouble with creditors.

You should avoid taking on any type of debt if at all possible. If you have to borrow money, make sure that whatever you're borrowing it for is going to improve your business and help get it off the ground--not just provide some extra cash for things like vacations or expensive dinners out with friends. You also shouldn't take out loans unless there's no other way for you get what you need without putting yourself at risk financially (like when starting up a new business).

Save money to be financially healthy in the future

As a small business owner, it's important to save money so you can be financially healthy in the future. You might want to use your savings for any number of things:

• To take risks like hiring more employees or buying inventory
• To expand your business by opening another location or starting up an additional product line

Saving money can improve your business's financial health

Saving money can improve your business's financial health by putting off debt, investing in the business and being ready for future needs and opportunities.

If you're running a small business, there may be times when it's tempting to take out a loan or use credit cards to pay for things that would otherwise require cash on hand. But saving money is important because it allows you to avoid taking on debt and gives you more flexibility with how much cash flow goes toward expenses versus other things like investments or emergencies that might arise down the road.

Having some savings also makes sense from an investment perspective; if something comes up unexpectedly--like having to fix an expensive piece of equipment at the last minute--having some extra cash on hand could help prevent having to shut down operations due to lack of resources (or worse). Even if nothing bad happens during this time period, having some extra funds available gives owners peace of mind knowing they have options available should something unexpected occur during those months when they may not have been able to save anything at all

Conclusion

Savings are an important part of any small business. By saving money for your business, you're able to make smart decisions about how it grows, invests and prepares for the future. Saving money also helps you avoid debt so that you can focus on building a strong foundation instead of worrying about paying off loans every month.