This sounds like a great idea and will help create cash in the business to cover expenses and provide a living for you. Watching the dollars roll in may well be a great thing to see as you progress in your business but if you are looking at this being the key element to your success – think again.
When we just chase the idea of lots of clients, we lose the refinement of choosing who we want to work with. We ignore the niche we want to work with, or we become a place that will take all comers. “Try to speak to everyone and you speak to no one.”
Sol Price the owner of Costco listed one of the reasons they don’t chase just any old customer as:
“Second, dealing exclusively with selected groups makes it possible to communicate with your customers effectively. Instead of communicating with the whole world, you communicate one-on-one with the people you want to reach. Finally, someone who pays for a membership in an organisation makes a form of commitment. They have a built-in reason to come back,” he added.
Costco have a membership fee for all those wanting to walk through their doors. This creates a small barrier to entry that some will not be willing to pay – this technique instantly separates the tyre kickers from the serious customers. Is this something you have thought about in your business? Could it work?
Price went on to say, "A store that tries to be all things to all people will end up being nothing to anyone. A retailer reflecting honesty, credibility, and a definite direction that can be understood by its customers and vendors will have a good chance to make it."
Two other companies at either ends of the spectrum have found the same approach can be profitable, take Apple and Southwest Airlines.
“The principle of not chasing customers has also fueled the success of Southwest Airlines, which knows open seating and lack of premium class service won't endear its brand to travelers who want to be pampered -- and Apple, whose closed operating system deters users who prefer more flexibility. By not chasing customers, great brands usually end up attracting more profitable, loyal ones.”
In addition, you may think that enough customers and I don’t have to worry so much about the other elements of my business. To an extent that may be true, the better your top line (sales) the easier it is to achieve your expenses goals and possibly your profit goals. But what if your sales numbers were masking an issue in your business you happen to be ignoring? What if your sales dropped over night and these issues were then exposed and came back to bite you on the bank balance?
Having as broader view of the total business means you will have a greater handle on all the elements of your business that create your profit at the end of the month/year. Is your business so dependent on it’s cash flow that any deviation to the ‘norm’ and you are in trouble very quickly?
Monitoring cash flow by having a forecast set up at the beginning of your year means you can track it against this plan to see if you are heading towards your goals.
Setting up a profit and loss statement at the start of the year means you are setting yourself some decent goals both from a sales perspective as well as an expenses point of view.
Finally – if you have a tool to track your sessions per week you can then relate that back to your planning tools mentioned above to have a far broader perspective on the business than one simply ‘looking for more clients’.
Rich Ellis runs a course called ‘Business Bootcamp’. This helps you put these tools together to have a more holistic business from a financial perspective.
Text “PTMentor” to 9090 (normal txt fee applies) to view the course or click here for the non-Kiwis.