Not all meaningful changes require months of planning.
Sometimes you decide to act and then you actually just do it!
Here are 3 actions to take in Oct-Nov-Dec 2023 to end the year on an upswing.
- Change your Terms and Conditions (T&C). If your T&Cs require anything less than payment in advance, change them immediately.
You control T&C completely. Not your buyers, your industry, or the competition, not your accountant or CFO, YOU!
Write new T&C requiring payment upon acceptance of your offer before work commences. If you offer an annual service, your T&C will require monthly payment in advance. Set up recurring payments with your invoicing system and the client’s payment method. It can be by credit card or direct deposit from their bank.
Don’t let simple tech prevent you from doing this! Every payment processor can help you; bookkeepers can help you, just do it.
- Adopt a pricing model that allows you to quote a final project/engagement fee or price in your offers. I obviously prefer IMPACT Based pricing but that can take some time to adopt.
An effective immediate step is to charge fixed fees. Do this by looking at typical or frequent client work and the fees you usually invoice after the work is complete, and use those numbers for your fixed fees.
Pricing is an art more than a science. And it can be changed. To make Q4 better than ever, do your best with your fixed prices. Then track them and adjust as needed.
- Raise your fees and prices by 5-10% starting today. For every new client or new project with an existing client, increase the fee by 5-10%.
Why am I so adamant about this?
Because your firm is delivering more IMPACT today than ever before.
Each client project you’ve worked on this year increased your ability to deliver more significant IMPACTs this quarter.
It’s up to you to articulate these with clients. If you only ever talk about your tasks, or worse, your costs, you’ll have a hard time with this increase. When you talk about how your firm changes people’s lives, the increases are easy.
BTW, I don’t recommend making a formal announcement of this increase. The higher fees become your new normal. You can talk about life changing differences if someone asks.
What’s your most important job?
The most important work as the Owner and/or CEO of your professional or business services firm is to grow the firm’s revenue and profit.
It’s not client acquisition, processes and procedures or operations, and it’s not personally delivering life changing IMPACTs to clients.
Your most important job is to think bigger and more creatively all the time.
These 3 Q4 actions fulfill that requirement.
Profitable but no money
Rich, Owner of a fractional Chief Marketing Officer firm, called me in June because he felt stuck. The firm had a steady stream of client work and was bringing in a decent (his words) amount of revenue.
But Rich’s firm struggled with having enough money in the bank—cash flow—every month to cover all expenses, including payroll. He would often delay his own salary when the bank balance was low.
It was a classic “we’re profitable on paper but we have no money” situation.
I asked Rich about his pricing strategy and pricing model.
“It’s simple,” he said. “We have hourly rates for our different associates. We track the time that each person spends on a client’s project and send an invoice every two weeks. Our T&C are 30 days, with a 10% discount if they pay within 10 days.”
I asked if he was open to making some immediate changes that would quickly increase cash in the bank. He said yes.
We started with these 3 steps.
- New T&C requiring payment in advance for all new work starting immediately.
- Fixed fees using the fees charged for recent client projects as the starting point. We’d start there and then adopt IMPACT Based Pricing.
- Increase all fees by 7% for new work. He would apply this 7% increase to the fixed fees they were starting with. I reminded Rich that with true IMPACT Based Pricing fees would be proportional to the IMPACT delivered which would always be greater than any fixed fee.
Results for Q3?
Rich changed his discovery conversations to focus on the life changing differences clients were looking for. This allowed him to talk about fixed fees and their T&C. A few prospects balked and he let them go.
The others loved the promise that they’d get what they were looking for and know the full cost in advance. A few wanted to make a partial payment to start which he negotiated to be 70%, with the rest due in 10 days. Those are quite good terms for both parties.
By the end of September Rich had more money in the bank than ever before. Time sheets were a thing of the past. His associates loved not tracking every minute and worrying about what they missed. Clients loved getting progress reports and being able to talk to their associate without fear of an additional charge.
Now we’re working on fully adopting IMPACT Based Pricing. Rich anticipates a strong finish to 2023 and an even better 2024.
Rich’s story could be your story.
Start with this quarter by taking these 3 steps.
Curious how to make these work for your firm?
Text Q4 to 703-801-0345.