The Power of Permission

April 19, 2012 · Posted in Business Development, Business Tips, Decision-Making Tips · Comment 

What have you been wanting to do in your business for a really long time?  Perhaps you’ve been wanting to raise your prices.  Maybe you want to hire an assistant or another team member but haven’t gotten around to it.  Or maybe you want to work less and focus on personal time, but you haven’t taken action for one reason or another.

Ask yourself what project you’ve been thinking about forever but haven’t taken action on.  We all have a wish list.  The question is, why are we waiting?

What causes us to put these important, yet inconvenient or uncomfortable items on the back burner?  In many cases, there’s a really simple answer.  Here are three questions you can ask yourself if you would like to get unstuck and move forward with your list of items.

  1.  What’s it costing me to delay this decision?  In six months, will I be better off or worse off having done nothing?  This helps you bring a sense of urgency to an item.
  2.  Do I simply need to give myself permission?  It’s surprising how this simple revelation can create the shift you need to gain momentum.  Going deeper, this can be a deservability issue, i.e., do I deserve to charge a higher fee?  If that’s the case, working on your confidence is something that will help you get unstuck.
  3.  Am I getting stuck because I don’t feel like I have the skills, or is it possibly a mindset issue?  Making the distinction between the need to build skills and the need to work on your mindset can help you determine the next logical step to take.  Often, however, it can be both, and in that case, start by parsing out the skills you feel like you need.  When you do that, often the mindset will take care of itself.

By habit, we wait for other people’s approvals since we’ve done this all our lives.  We’re used to getting the approvals of teachers, parents, professors, bosses, spouses, and relatives, but when we’re in business for ourselves, we don’t need to ask anyone!

Is there something you’ve been delaying that you need to give yourself permission for?

  •  Giving your business or yourself a long-wanted gift?
  • Starting a long-awaited project?
  • Hiring someone or making a staffing change?
  • Launching a new product?
  • Raising prices?
  • Making a purchase?
  • Working less?
  • Taking your business to the next level?

If there is, ask yourself what you’re waiting for.  The power of permission might just set you free.

Do You Know the Lifetime Value of Your Client?

How much is the average client worth to your business?  Not just per project or even per year, but for the lifetime of your business.  Calculating the lifetime value of a client is an eye-opening exercise I recommend to every small business owner.

Repeat business

Let’s take several examples.  A client who eats a $15 lunch at your restaurant every Monday is worth $780 for one year and $2,340 for three years.  It really adds up, doesn’t it?

A personal services business, such as a chiropractor, massage therapist, manicurist, or hair stylist has a similar business model where hopefully they can attract repeat clients.  A client who gets a $20 manicure once every two weeks is worth $520 per year and $2,600 in five years, and that does not include the tips.  Grocery stores, hardware stores, clothing stores, and office supply stores are just a few industries with similar models.

Large purchase with add-ons

Some businesses rely on a larger but less frequent purchase than some of the industries listed above.  This may include furniture stores, airlines, and computer sales.  Many of these larger purchases can be increased by adding service contracts, delivery charges, financing charges, and by selling more items.

Some businesses will benefit from becoming aware of the lifetime value of their vendors, partners, and employees.  For example, contractors are often reliant on their subcontractors to deliver great services so they can complete the construction projects.  Landscaping firms make great partners with nurseries and bring them much business.  And employees who sell and close large contracts can have a lifetime value to your business of millions in some cases.

Referrals

One way all businesses can increase the lifetime value of a customer is by counting the amount of referrals the customer sends you.  Let’s say Marni bought $500 and was so impressed with you that she sent three clients your way.  They each bought $1,000.  Marni is now worth seven times what she originally purchased from you:  $3,500.  When each of these new clients refer more people and buy more in subsequent years, Marni’s value to your business gets bigger.

This might just have you treating your clients like Marni with a lot more respect!

Multiple service lines

The more products and services you offer, the greater your opportunities for increasing the lifetime value of your customers.   Let’s say Katie buys a $500 product from you in January.  In May, she comes back and wants the $2000 service you talked about in a newsletter you sent her.  She’s so happy she refers two clients to you that buy $1,000 apiece.  What can start out as a $500 client has now morphed into a $4,500 client and can easily mushroom into a five-figure client by the end of the year.  I’m sure it’s happened to you over and over again.

Take some time next week to create a spreadsheet that shows you the lifetime value of your clients.    I’ll think you’ll be pleasantly surprised to see how valuable your current clients really are.  If you need help with the calculations, let us know.  We’re here to help.

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