I am writing a daily blog series on how to start a business. If you’d like to review previous posts on this series, you can find them here:
Yesterday, I wrote about estimating hourly rates. Hourly rates will be used to calculate your revenue based on how many hours you can charge your client. While getting paid for your time is great, it is somewhat limiting. If you decide to start a business on your own as a consultant or sole proprietor; and you get paid by the hour from your clients, you may run into a trap. You can hire more workers, but they may not have your expertise and so you will not be able to just plug people in to bill more hours. Even when you hire others to bill hours, eventually, they will understand they can start their own company and make their own profits.
So, at some point, you will want to think about developing products that do not require you to invest every hour to earn income for your small company. The best way to do this is by packaging your expertise. You can do this many ways:
Write a Book: Take your expertise and develop a book that clients can read to understand entire ways of self-help; or why the services you provide are so valuable.
Create Groups of Clients: It depends on the nature of your business, but if you can spend the same amount of time and communicate to multiple clients at one time, clients will pay much less for your services; and you will earn much more per hour for your work.
Speaking Engagements: Very similar to working with groups of clients, you can package your expertise into speaking engagements or workshops to earn more revenue and save your clients money at the same time.
Packaged Systems: If you have been doing what you do for any period of time, it is likely that you have developed systems for accomplishing tasks quickly. Most of your clients can benefit from your systems rather than re-inventing the wheel. Packaged Systems can be spreadsheets that are well-explained and easy to use to crunch a lot of numbers; or processes that you have used to make a blog post; or anything that can give anyone an advantage by purchasing such a system from you.
I covered calculating hourly rates yesterday, and have talked about creating other products you can sell that do not rely on every waking hour invested with paying clients. These two topics together will complete the revenue section in the financial forecast I described a few days ago.
I will cover the direct costs portion of our financial forecast in the next few days. After that I will show you an actual financial forecast that you can copy for your own business startup.