As the featured Guest speaker at the E-Suite Summit last week I gave three tips for “Redirecting Your Business for 2023.”
I thought, “hey, this is great for every knowledge services business owner.”
So here we go.
There are about three weeks left in this year.
Make them count for next year with these three tips.
What’s redirecting?
Every firm, company, organization, or sole proprietor needs to adjust to new and changed realities of their market.
- Stick to what you’ve always done, and soon enough, you’ll fade away.
- Doing a “180” is usually not wise either. Why leave behind your strengths and what’s working just to make changes?
Redirecting means shifting, revising, or eliminating in some parts of the company.
Judicious use of the pruning shears and the fertilizer will help you grow a healthier, more robust company next year.
Tip #1
Refresh your strategy.
This is not the overwhelming “strategic planning” that takes days!
Strategy is ONE SENTENCE:
“We deliver X IMPACT to Y buyers for Z profit.”
What is the IMPACT your firm delivers? Not inputs, services, task, marketing, sales, operations, and so on. Be crystal clear about the IMPACT you deliver.
IMPACT means how you change people’s lives.
You need one umbrella IMPACT for your strategy.
Example for a web designer:
We deliver qualified prospects to e-commerce business owners for 17% profit.
Next are your buyers. We’re talking about the BEST FIT clients—not the whole world.
Be strict about who your best fit clients are (e-commerce business owners). Best fit clients want the changes you deliver, they’re happy to pay accordingly, and they collaborate with you.
Profit (17%) is your compensation for your investment, your risk, and your ownership. I include the profit goal in your strategy to make it clear that every client engagement must generate a profit.
BTW-this is the hardest one for far too many knowledgeable experts. They feel “funny” thinking about profit when they’re “just trying to help.”
If you want to fund your savings, retirement, or a future dream, make sure you make a profit with every client engagement.
Tip #2
Choose your pricing model/approach.
The pricing model is HOW you calculate the fees you charge. If you’re really going to redirect your business to take advantage of new opportunities, you can’t just keep doing what you’ve been doing.
The three most common pricing models for knowledge services firms are time based (“hourly rates”), fixed fee, and IMPACT based.
I’ve written extensively about why hourly rates are completely wrong for knowledge services firms.
Fixed fees are useful for services that you can routinize. There should only be a few.
The greatest advantage of knowledge services is that you are always increasing your capability to deliver IMPACT.
Therefore IMPACT Based Pricing is the correct pricing model for most of your work.
Tip #3
Once you’ve chosen IMPACT Based Pricing, you’ll benefit from spending some time writing down the IMPACTs you deliver.
It goes like this: benefit –> IMPACT. People do not make this connection themselves.
The time spent doing this offers two advantages:
- You see on paper how you change people’s lives. You gain confidence. When you assign descriptive IMPACTs to recent past client engagements you build a framework for future engagements.
- You see the range of IMPACTs you’ve delivered. Not all IMPACTs have the same significance to clients. Internalizing the range of significances will help you talk with your clients about IMPACTs. You can use my Issue Chart and Continuum of IMPACTs for these conversations.
One easy way to accomplish this exercise is with my 60 Minute Pricing Makeover Mini Course. 3 of the 5 timed segments focus on IMPACT, fees, and using the Issue Chart and Continuum of IMPACT.
Redirecting is critical so that next year is not a replica of this year.
Companies that don’t grow eventually die.
You can do it alone or you can do it with help.
A ton of help, a moderate amount of help, or a small amount. DIY is the most expensive choice–reinventing the wheel, difficulty implementing, delaying revenue.
Whether it’s me or others, make the decision to get outside help if you want to redirect your business for next year.
If you’re curious how I might help you, email, or text 2023 to 703-801-0345.
Look, you can change your clients’ lives,
But if you charge by the hour,
You will never be appropriately compensated for those changes.
