Optimising your income: mindset matters when setting up your business
You’ve done your research, positioned your product and worked out your marketing strategy, but don’t forget about your mindset, says London accountant and business adviser Surekha Aggarwal in the third part in a series of articles looking at optimising income.
If you’re setting up your own accountancy or consultancy practice, or even a business selling other products, hopefully you’ll have done market research, looked at competitors to determine where your product or service is best positioned and decided what marketing approach will work for you. These are all necessary preliminaries for optimising revenue and creating a sustainable business success.
But a key ingredient that should not be overlooked is your mindset. Mindset matters.
1. Pricing and self-worth
Too often, professionals see their work as an extension of themselves and their price or fee rates become a statement of self-worth. The result can be either under-charging or over-charging, neither of which is helpful to your business.
Recognise that there is a difference between who you are and what you do. Who you are is priceless, quite literally. What you do has a price, which is determined by a market. This distinction will help bring some objectivity to negotiations.
2. Take the business
Getting paying customers validates your offering, builds your track record and confidence. Even if it’s a small piece of work or at a discounted price, start there. You will establish credibility and build relationships, which will bring more work. As you pick up new customers, incrementally raise your price.
3. Cash matters
It is not enough to have high billings and profits. Remember that more businesses fail because they run out of cash, than because they are inherently unprofitable.
Creating a healthy cash flow requires discipline. When you take on new work, actively think about the cash flow implications. Discuss payment terms with new clients and be clear in contracts.
4. Be risk aware
Risk in business is inevitable. Identify the risks in your business and strategy. Do you understand each risk? At what point does a risk you’re comfortable with take you outside your comfort zone? This will enable you to think about what actions you could take to manage and mitigate the risk.
For example, if you take on a large contract accounting for a third of your revenue, your cash flow and profitability could be wholly dependent on your customer’s cash flow and success. Do you have enough headroom in your banking facilities for any delays? Could you get invoice factoring and what would be the cost? Under what circumstances would it not be worthwhile taking on the contract?
5. Work on your business, not in your business
It is too easy to get sucked into the day-to-day running of a business and to lose sight of the bigger picture. Stepping back regularly is crucial.
Use a business coach to help you review progress and your direction of travel. Create a support team of trusted friends and/or mentors that you can call on for advice, support, challenge and objectivity.
Surekha Aggarwal is a chartered accountant. Find out more at www.carnelian.biz
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