I’ll cut to the chase. I’ve noticed there’s a “scaling back” energy a-brewing.
It’s been going on for some time now, but like a lot of people I only tend to notice these things when they start hitting me where they hurt – chiefly, my pocketbook.
What do I mean by “scaling back,” exactly?
Well, with the end of the year fast approaching, plenty of business owners are taking a look at their revenue and comparing it to their bank balance, and wondering, where the hell did all my money go?
It’s a question I’ve asked myself plenty of times. I know my clients and colleagues have asked this of themselves, too.
In situations where you’re hemorrhaging money the “obvious” solution would be to slash expenses.
And there’s nothing wrong with that.
But it’s also not as simple as that, I’m afraid.
The next step in correcting this problem is to determine why you’re hemorrhaging money.
Some people would be quick to say it’s because you’re not paying attention to your numbers.
I’d say that response is a bit of a cop-out.
It’s hard to pay attention to your numbers when you don’t even know “what” you should be spending your money on.
I’m not gonna pretend to have the answers for you – I don’t know you or your biz. But I will tell you about this book I read called Profit First, by Mike Michalowicz. I believe it should be required reading for anyone who owns or is thinking of starting a business. (Find it on Amazon or in your local bookstore)
Since reading it at the beginning of October, I’ve done my own “scaling back” of expenses.
Some of the things I’ve scaled back on are subscriptions, licenses for various software that all do more or less the same thing, add-ons to services that I wasn’t actually using, that sort of thing.
Cutting expenses is one thing – but money is energy and it needs somewhere to flow. That’s why it’s so easy for your expenses to creep back up again. You get used to having money in the bank and then spending it. Before you know it, you’re back at square one!
That’s where the Profit First system comes into play. It’s not gonna tell you what to spend your money on, but it’ll teach you a new way of managing your cash, so you end up with more of it in your bank account.
Now sometimes, as service providers, we are the expense that gets cut!
That is the nature of being in business for yourself. Contracts and business relationships come and go, and it’s important not to let it get to you. Sure, be bummed. I’m always a little sad to see a client go, but I also know it’s not the end of the world.
To keep up with this “scaling back” energy that I’ve begun to recognise in the marketplace, I’ve recently shifted my service offerings to be, for the majority, project-based. This means clients only bring me on for a few months at a time, to help them with a specific need, rather than having me on retainer all year round.
It does mean I need to spend more time prospecting and networking – which isn’t necessarily a bad thing – but it’s also allowing me better control of my workload, which I consider the ultimate win.
I’m curious to know if you’ve noticed this same “scaling back” energy recently. Have you been looking at ways to cut back your expenses as you head into the new year? Are your clients cutting back on their services with you? Leave me a comment!