How much more cash could you bring into your business if you stopped working for free? You may think you never work for free, and maybe you’re right, but I can almost guarantee that you do, even a teeny bit.…..you just haven’t realized it yet.
Working for free can come in a number of guises, secretly hidden and not obvious until the end of a week, month, quarter or year when you look back on how busy you were yet your cash flow is still crap, you are using your credit card to pay your bills and you feel exhausted.
One of the easiest ways of making money is to charge for your services (yes that’s obvious), however let me show you three common traps we get into that counteract this:
Being on call for your clients
While it’s important to exercise a bit of flexibility, have boundaries and educate your clients about them. I believe that a call here and there from a client is fine but beware of those clients who call you often and expect you to drop everything and ‘discuss’ an issue or solve a problem on the spot. This may be a 5-minute conversation that possibly leads to you emailing or finding info and then you have to get your head back into what you were doing before you were interrupted. You have lost, at a minimum, 15 minutes of your time.
If you charge $70 per hour and lose 15 minutes three times per week in the above scenario you have lost the following revenue:
3 interruptions per week 3 x $17.50 = $52.50
If this happened every week each month $52.50 x 4 = $210
Over one year = $2,520 of lost cash
- Organize a paid session with these clients and deal with all the issues at once.
- Put them on a retainer where they get a certain number of calls per month with you. Speculate that these calls must be between certain times and days.
- Stop working with them if they do not want to work by your terms.
Not recording your time
If you contract out on an hourly basis how do you record your time? Do you casually look at the clock and make a mental note of the time you commenced but forget? Do you write down your hours on a piece of paper or notebook but often can’t find them when you are preparing your invoice? Are you guessing the actual work hours spent on certain jobs? By working this way is it easy to lose 1 – 2 hours per week of cash.
If you miss recording 1.5 hours of work per week you have lost the following revenue:
$70 x 1.5 = $105 lost per week
If this happened every week each month $105 x 4 = $420
Over one year = $5,040 of lost cash
- Implement project management software. There are some great programs out there that are cost effective or even free.
Entering into contra deals
When cash flow is a little tight and you can’t afford a service you really want it may be very tempting to enter into a contra deal. This can be a brilliant and resourceful way to access something you may not have been otherwise able to pay for, but beware.
If you end up delivering 1-hour work over and above what you are receiving in your contra you have lost the following revenue:
$70 x 1 = $70 lost per week
If this happened every week each month $70 x 4 = $280
Over one year = $3,360 of lost cash
- Make sure that the contra is fair to both parties involved, the time/money equation is equal and if, for some reason your end of the contra involves doing more work than originally agreed that you get paid in cash or additional value.
- Have a written agreement.
I’m not encouraging you to be completely anal with your time but to be the one in control of it. To chose when you are happy to gift your time and when you want to be paid for it. If you were unwillingly giving away time and money using the three examples above, over one year you would have lost $10,920 (that will get you to New York first class or return business!!), over three years it adds up to $32,760, over five years $54,600 and we can continue to multiply until you decide that you would like to have this money in your bank account.
About our Ausmumpreneur Expert :
Marisa Garra-Punshon helps small business owners make, manage and multiply their money by working with them to increase their cash flow, understand their finances and create accountability for their own success. She is passionate about streamlining financial and administrative systems via cloud solutions, which lead to greater efficiency, productivity and profits.
Marisa runs two businesses, Miss Moneypenny Presents and Orbit Accounts. She is a Xero consultant, designs online financial and software training programs, a speaker, Dream Builder Coach, MindPT Certified Master and a mum to two gorgeous teenagers.
Her consulting methods are unique as she provides a holistic combination of teaching small business finance principles and cloud implementation with strategies to achieve life goals and create and maintain a positive mindset.