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Today’s talking points:

I'm sharing how you can break free from the feast or famine cycle by creating consistent income in your business, ensuring you're paid even when you're not working, and offering a strategic shift from the time-for-money model.

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Welcome to the second instalment of “The Path to Predictable Income” series!

Over the next 5 episodes, I am going to walk you through 5 steps to help you create steady, consistent income in your business, so you can get out of the feast or famine cycle for good.

Have you ever found yourself with a family emergency, something that needed your immediate attention and suddenly you had no choice but to completely rearrange your calendar?

Or maybe you just wanted to enjoy a few weeks without worrying about your inbox or your clients.

You love the idea of being able to take a week or two or more off throughout the year in your business, but the same problem exists which is this: if you're not working, you're not getting paid.

I know this is something that's incredibly common, especially for those of you who are value-led service providers. Maybe you're a coach or a trainer or a teacher and you're running your business by offering one-on-one work with clients by offering services.

While that is an amazing first step, it can create a bottleneck in your business where if you're not working, you're not getting paid.

So in today's episode, I want to break down a simple strategy that can start to free you from this time-for-money trap that is pulling you back from being able to take sick days or holidays and help you start thinking more strategically about your business.

a common mistake I see time and time again

First of all, I have a little story to share with you. A few months ago, I got a voucher for my birthday to go to a salon and get a pregnancy massage. Now, I'm the perfect ideal client for a massage therapist - I know the benefits of massage, I love to get massages on a regular basis, and I invest in self-care. I'm literally a dream client for any massage therapist who wants to build a client base with regular committed clients.

But when I was finished with that massage, they made a big mistake that I see all the time in the one one-on-one service world. All they offered me was an option to book the next session. So basically, they were only focused on selling one hour of massage at a time, they didn't offer me any sort of massage therapy membership, or a package that would really address the underlying needs that I had at the time with my pregnancy, to help me stay healthy and pain-free on a more consistent regular basis. This is such a huge missing opportunity, especially for those of you who are in the transformational space, which let's face it, we can all offer a transformation to our clients and customers. Because the honest truth is that people don't get the benefits in a one off session. It's the continuous sustained commitment to the work that gets your clients where they want to go. And the honest truth is that when you make this shift that I'm about to share with you, not only will it be beneficial to you as the business owner but it will help you to get paid each and every month. But it is so much more beneficial to your clients and customers because it helps them to see real results. You might be realising that when your clients are only booking an hour here or now or there, they don't get to where they want to go, they don't hit the goals as easily, they don't see the results that they're hoping for. But when you shift your approach to working through a signature offer or signature process, it becomes a true win win for you and your clients. Your clients will start to see those results faster because they have committed to working with you on a more regular basis and you you are able to stop selling your services hour by hour, because you have an offer in place that helps you to get paid every single month. So we are going to dive into what I like to call your baseline revenue plan to help you get paid every single month in your business. Because too many people that I have worked with say, I don't pay myself, I don't pay anything yet. After this episode boss that is going to change.

It’s all about the numbers

The first thing I want you to ponder when you're laying out this strategy is the numbers. Yes, we're going to crunch some numbers, but by now, you probably know I like to run my business using data, not guesswork. We're not winging it; we're looking at the numbers. Let me break it down for you because this is the fundamental bedrock for reaching your goals.

Question 1)

First, ask yourself, what's your take-home salary goal? How much do you really want to make and pay yourself in your business? Imagine you were out there working for someone else; you'd likely have a clear salary goal in mind. It's the figure you're willing to accept, factoring in holidays, sick days, pension contributions – the whole shebang.

Now, here's a common pitfall: many business owners mistakenly assume their salary goal is the same as their revenue goal. But that's not the case. When you run a business, you've got to work those numbers based on your total revenue, not just what you take home.

Here's the good news: we can reverse engineer this, and I absolutely adore the straightforward formula from the book "Profit First." It's one of my favourites to recommend. For businesses generating under $250,000 a year, the breakdown goes like this: 50% of revenue goes to the owner's pay, 30% to operations, 15% to taxes, and 5% to profit.

Once you've got this formula, you'll see that, to achieve your salary goal, your revenue needs to be roughly double your desired salary. Now, I get it; this can be a real eye-opener for many. But I find this breakdown tremendously helpful because it considers not only a healthy owner's salary but also the actual cost of running a business. Even if it's a low-overhead setup, especially if you're running things from home without employees or freelancers on your team. Even in an ultra-lean operation, you still have expenses to cover. And when you're not budgeting for running and growing your business, it's all too easy to find yourself unable to pay yourself enough. That's when you tumble into that dreaded downward spiral, making it tough to sustain a living from your business. So, let's be sure we're clear on that number.

Question 2)

Second question, how many sick days and holidays do you need to add in? Consider what you'd be willing to give yourself as part of your salary package. You wouldn't accept a job with no sick days or holidays, so factor this into your baseline revenue plan. Remember, you don't want to work 52 weeks a year without time off, as that's not a sustainable or enjoyable approach. Your plan should include paid time off. To determine the number of revenue-generating weeks, subtract your desired paid time off from 52 weeks. For example, if you take four weeks of paid time off, you have 48 revenue-generating weeks. If you take eight weeks off, you have 44 revenue-generating weeks.

Your baseline revenue plan

With these numbers in mind, let's move on to part three, where we'll design your baseline revenue plan. You need to know those two numbers first: your salary goal and how many sick days and holiday days you want to have.

It's crucial to align your financial goals with reality. Here's a common mistake: setting a top-line revenue goal like £100,000 for the year. With the Profit First model, this would mean £50,000 as your take-home salary, £30,000 for business operations, £15,000 for taxes, and £5,000 for profit. This looks simple, but when you break it down, the idea of making 1,000 sales a year is daunting and stressful.

Building your business solely on a time-for-money model can be overwhelming and unpredictable. Hustling to fill every available hour on your calendar is exhausting and unsustainable. If your business relies on selling hours, it can become a true time-for-money trap. Cancellations, client holidays, or inconsistent attendance result in lost income. Moreover, this model doesn't provide the best results for your clients as lasting change usually requires ongoing work, not just one-off sessions. Transitioning to a more sustainable model is essential for your well-being and your clients' success.

redesign how you do business

So how can we redesign the way that you are approaching your business? Instead of thinking about how much does it cost to hire you for an hour? I want you to start thinking about how can you truly get the best results for your clients. What does that really look like? How much time will it take? What kind of commitment do they really need to make to themselves?

When you shift from just being available for hire by the hour to now focusing 100% on the results that you deliver, you're making a huge step towards delivering real results to your clients and making a shift to more predictable income in your business. This shift will not only serve your clients because they're going to see you more consistently and begin to get those results, but it helps you because now you're setting yourself up with an income plan that gets you paid every single month.

Now, let's dive into the numbers. Consider this example: your goal is £100,000 in annual revenue. You offer a £2,500 six-month coaching program. To achieve this goal, you need 40 clients. This approach simplifies your business; instead of a frantic pursuit to fill hours, you concentrate on making those 40 essential sales. It is so much easier to book 40 clients over the course of a whole year than to try and sell 1000 spots on your calendar. Do you see the difference?

Maybe you're wondering if £2,500 is too much to charge for a coaching program. I really want you to dig deep on this one. For this example, we're sticking with £2,500 to ensure you value your services appropriately. Your program involves clients paying £500 per month for six months. To reach your £100,000 goal, you need 20 clients at any given time—20 clients in the first six months, and 20 in the second. This setup allows you to see 10 clients every other week, equating to two days of client calls per week. You're creating a sustainable plan for you and a valuable, accountable experience for your clients.

Now, let's consider a scenario where your service is worth even more. Suppose it's £5,000 instead of £2,500. In this case, you'd only need 20 clients to reach your £100,000 annual revenue goal. Offering a higher-priced service means you can over-deliver and save time. If you think you can't charge £5,000, remember to reflect on the value you're providing. It might be worth extending the program to 12 months or offering a retainer. This approach benefits both your clients and your business by ensuring long-term success.

Let’s recap

This is why I find immense value in delving into the numbers with my clients and assisting them in creating this strategic framework. It's such a crucial part of our quarterly planning retreats, which will be a central element of my upcoming signature offer in 2024. The truth is, you can't truly grasp the possibilities until you start crunching those numbers.

I hope this has ignited some thoughts. If you've been grappling with inconsistent income, consider shifting from hourly services to a structured program, a systemised offer, or a productized service. It could be a game-changer for you.

If you've had trouble getting clients to commit, a focus on delivering results, accountability, and support can transform their experience.

If you're eyeing the next stage of business growth, implementing this strategy sets the stage for a recurring revenue stream, securing your needs and those of your clients. It also opens up the space you require to develop the next facet of your business.

That's why we're covering this topic early in the series; it's the foundational step before introducing any other elements. Many of my clients, especially in service-based industries, have contemplated expanding their income streams and product offerings to attain greater peace of mind, more time, and enhanced financial security. And upon examination, it all comes back to this - your core offering and baseline revenue plan.

In case you missed it, here is last weeks podcast and episode 1 of the Path to Predictable Income series - How to feel confident in knowing what to focus on to grow your business