#152 2 Simple Changes All Business Owners Can Make To Increase Profit
Today, I'm going to share with you two simple changes that can make a significant impact on your business's profit. These changes are easy to implement and I’ve seen them work time and time again.
My first tip for increasing your profit is to ensure you’re reading and understanding your legal documents. This includes your client service agreements, design agreements, terms and conditions, and any other agreements you have with your clients. Ask yourself: Do you operate in alignment with these documents? Are you following through on what you've committed to in your agreements?
By being knowledgeable about your legal documents, you can manage client expectations, effectively issue invoices, and eliminate scope creep. This ultimately leads to smoother client relationships, faster payment, and increased profit.
My second recommendation is to make sure you’re being strategic with payment terms. Even if your current methods are working for you, they may carry unnecessary risks. It’s important to review your invoicing process and payment terms. Think about the deposit you take and whether it is refundable or not. Also, determine the frequency of your invoicing – is it at the end of each stage or phase, monthly, or according to a specific timing?
Whatever you decide, ensure that your invoicing process aligns with what you communicate in your legal documents. Clients appreciate knowing what to expect and are more likely to pay invoices promptly when you have set clear guidelines from the beginning.
These two simple changes may seem small, but they can have a significant impact on your business's profit. By reading and using your legal documents effectively and being strategic with payment terms, you can improve client relationships, reduce payment delays, and ultimately increase your profit.
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[00:00:00] Tracey: Hello everyone. Welcome back. And thank you as always for joining me for another episode of the rise up in business podcast. Today, I'm going to be talking to you about a topic that you might think, huh? I didn't expect that from you, Tracy. And that is. Making more money. and because I talk to clients so often about this, I wanted to share this with you on here because I know how valuable these conversations are, and I'm sure you're going to find this valuable too.
[00:00:49] When it comes to making more money. Straight away, business owners will think accountants and bookkeepers, as rightly you should, and business coaches to help you set up the infrastructure in your business and to work out what you're selling and your offers. Absolutely. What doesn't often come to mind though, is your business lawyer and how can your business lawyer help you make more money?
[00:01:11] I'm going to share with you in this episode, exactly what it is that I focus on with my clients to help make them more money in their business. Let me ask you this.
[00:01:22] What makes money in a business? The context of this conversation is. Satisfied clients, really happy clients who are not only keen and pay swiftly when you issue your invoices, but they're busting to pay you because they're so happy. And they're so satisfied because their expectations have been met or even better, their expectations have been exceeded.
[00:01:46] This is what's going to make a business. More money.
[00:01:51] How do you achieve that? Tracy, how do you achieve satisfied clients? It's all about managing expectations. And this is something I talk about so much with clients. Imagine this, you have a scenario. Let's just go through the onboarding process. You have a scenario where you have an initial call with a client.
[00:02:09] Whether it's a discovery call or whatever it might be, someone's been referred to you or they've seen your website, they follow you on socials. You can solve their problem. They want to work with you. So they reach out and you have a chat, you have a conversation and they are excited. You then issue them with your proposal document or your scope of work document.
[00:02:26] It's completely consistent with what you talked about. It's on brand. The language is consistent. It's a continuation of their experience with you. They love it. They say yes. They then get your client service agreement, or you've issued your terms and conditions with your proposal. Either way, you've done it properly because you've got a stellar business lawyer on your side, and so you know that everything's set up properly.
[00:02:50] When they read your terms and conditions, or when they read your client service agreement, they understand it. They know that you get them. They know that this process is consistent and so far it's so super professional because all the touch points they've had so far with your business have been consistent and to a high standard.
[00:03:07] So they say yes and they sign on, they get your first invoice for your deposit or whatever it is that you might require. They pay it and they're in your workflow, you do the work, you conduct yourself consistent with what's in your documents, all of your milestones, all of your touch points, all of your deliveries, it's on point.
[00:03:25] So you deliver a really quality service, just like you said you would. So you're delivering on your promises. You're doing what you said you were going to be doing. You issue your invoices in accordance with your proposal. So clients know when to expect invoices, they get invoices when they expect them and they pay, and they pay swiftly.
[00:03:46] That is, they pay on time every time because they're so happy and their experience is such a positive one. So their customer journey or their client journey with you is of such a high standard. That they are happy along the way. You've got everything just where it needs to be in terms of your processes and systems.
[00:04:09] You get to the end, you have a beautiful off boarding process. And then not only have they paid your final invoice or they've left your review, they are referring you other people and they're also going to come back and be a repeat client. All of this is how it should be, how it can be. It's not difficult.
[00:04:29] It just takes attention to detail and it takes working with the right team to make sure you get this set up properly and that it's executed consistently. So there you are. Imagine that scenario. Now imagine this scenario. Someone reaches out, you get back to them, you have a conversation, you issue them with some form of proposal at some point, probably a little delayed.
[00:04:52] You're so under the pump and it's a little delayed and it's probably not necessarily what they were expecting. And there's a little bit of back and forth to, to clear it up so that they make sure that they're getting what it is that. And then you send out your agreement, if you've got one, or your terms and conditions and it's kind of on point and they go, yeah, all right.
[00:05:09] And they have a think about it and they come back to you, but you're really busy. And then they've got to follow you up a few times and they get into your workflow. And you do the work, but there's a bit of delay because hey, you know, life and business owner and all the things, and you know, they want a bit extra, or they're a little confused about that, or there was a lack of clarity about this.
[00:05:27] And because you're so busy loving what you do, but not really thinking about the client experience here, nothing's really consistent. It's all a bit clunky and invoices go out when you remember, and they're a little disgruntled because it wasn't necessarily what they thought. Or there was something extra on there that wasn't covered in your client agreement or your terms and conditions.
[00:05:46] And they go, Oh, okay. And so there's a lot of back and forth, but by the end, it's a bit lackluster for them. And you might get paid. You might not, there might be a bit of argy bargy there about that last invoice to do with variations or something additional that they thought they were getting and you didn't think they were getting it anyway, they finish and yeah, it's all right.
[00:06:05] And they're not overly in love and they're not overly happy, but Hey, you know, they got something and something's better than nothing. There's issues there potentially with whether or not you're going to get paid everything you're entitled to, or whether there's any write offs or whether there's any overruns.
[00:06:20] They're certainly not going to refer other people to you because their experience wasn't stellar and people do take referrals very seriously. And they may or may not be a repeat client, probably not because they weren't really ecstatic or particularly happy with even with how they felt at the end. So they just go on their merry way on their business journey and you just get back to the grind.
[00:06:44] That feels very different. And that is the scenario that clients often come to me with because they've forgotten to issue invoices because they've been really busy because there was a miscommunication around who'd be supervising what, or how many revisions they were getting, or whether this was actually something that they were going to get, there is confusion, miscommunication around a variation or an add on, the client didn't think that they were going to have to pay for it, but you've issued an invoice for it.
[00:07:13] Objecting to that. So this is where clients will reach out to ask me for help to navigate that. And yes, we can navigate that, but you can already see how this is costing money. So it's costing money here, in the scenario that you need to reach out to your lawyer, you're paying your lawyer now, that's the scenario.
[00:07:31] Not always the case, but if it happens, there's that also though your eyes off the ball in terms of revenue generation in your business or growing your business because you're dealing with these icky issues with clients and chasing up things that's costing you money, my friend, because you should be in the business, growing the business or engaging in revenue generation.
[00:07:50] That's your role as the business owner. So that's costing you money. If it's the case that the client's objecting to something. You're going to need to reach agreement with them at some point. And usually you're gonna have to cut it down the middle or make some type of compromise in order to get them to pay because, Hey, something's better than nothing that's costing you money.
[00:08:10] So that's very general what's costing you money. And this is something that business owners don't often appreciate either because they haven't been in that situation with a client before, or because if they are, they're so thick in the weeds, they're not seeing the forest for the trees.
[00:08:26] And they don't appreciate the actual real cost to the business here. Then of course, we get into things like cost overruns or contractors. And what happens too often is if you've engaged a third party contractor and your client then takes issue with the work that they've done or the work that you've done, and they refuse to pay, You're liable to pay that third party contractor and you need to try to recoup from the client.
[00:08:54] That is costing you money, not just in terms of eye off the ball and the time it's taking you to deal with it, but it's your contractual relationship with that third party contractor. And so you've got to pay that you're out of pocket until you can recoup it from the client. And chances are, as soon as you get here, you're not going to recoup it at all or in full.
[00:09:11] So again, that's costing money. So that is the lackluster. Experience. We don't want that and it doesn't have to be that way. The work I do with business owners is to avoid that and set up that process right from onboarding through to offboarding because everyone should have an offboarding process. If you don't now might be the time to think about it, but I work with clients to set all of that up and have really solid legal documents in place that integrate really beautifully.
[00:09:45] With a business as processes and systems to support the business owner to support the business and to set the business and the client up for success right from the very beginning, because what should be happening is a scenario I led with the beautiful discovery call connection call the issuing of the proposal or the scope of work or someone buying your package off your website.
[00:10:07] The terms and conditions or the client service agreement or the design agreement being issued and accepted in really clear terms, because that's managing expectations and everyone knows. What they're getting, what they're doing, what they're not getting and what they're not doing. Invoices issue and services are provided and everybody is doing exactly what it is that they promised to do and that they should be doing.
[00:10:30] And you get to the end and the outcome is stellar. Invoices are paid, word of mouth is positive, repeat clients and referrals. That's what it should be. So when it comes to the cost of not having those legal documents tailored for your business and of not having. The knowledge and support to get those legal documents incorporated in your processes and systems, that cost is significant and you don't necessarily know it until you get into the hot water or a tricky situation with a client.
[00:11:00] And you realize, holy dooly, I now have to refund this, or this person's not going to pay that. And now I've got to engage my lawyer and now my team have to help me sort this out. And there's three proposals I should have sent out and I haven't got to them yet because this is taking up all my time and it's really stressful.
[00:11:16] There is a cost to all of that, that can be avoided. So when we're in business and we want to make more money, having absolute crystal clear clarity on what it is that you're delivering, how you're onboarding, what you're promising, how you're delivering that, how you're off boarding and making sure that everything's happening as it should be.
[00:11:40] That is the way that I support clients to make more money cashflow. As we know, we all know cashflow is the cornerstone of every business. We may not be in it driven by money. We may, you might be thinking, Tracy, it's not all about the money. No, of course it's not. And I say that a lot, it's not all about the money, but we do need to make money to be able to serve more clients and have more impact.
[00:12:08] And we want to focus on profit. So it might be that you think, Oh, it'll be right. I'm just going to refund them or I don't care or gosh, I wouldn't get caught up in that. I just write it off. That's fine. But when you start looking at your profit, not your revenue, but your profit, this is where businesses come undone and it's no secret.
[00:12:29] The businesses fail because they run out of money or businesses fail because they have no money. They can't pay their debts. Cashflow is vital. Profit is the number we need to be looking at. So we can't afford to be writing off 5k, 10k because we didn't issue it properly. And now I've got to refund this.
[00:12:45] And now there's allegations of that. And now I've got to engage the lawyer that all comes off your profit. And if there's no profit, sorry to be blunt, but if there's no profit, there's no business. so by focusing on the things that you need to be focusing on, which I've shared in this episode, it sets you up for success.
[00:13:01] It sets you up to ensure that you're delivering in your soul led beautifully aligned way in your business and you're making more money.
[00:13:09] the takeaway that I really want you to have here is that the secret source to making more money in your business when you're working with a business lawyer is knowing how to use your legal documents, knowing how to ensure they're implemented properly into processes and systems that support yourbusiness.
[00:13:28] I'm going to share this with you for context so you can see just how significant this can be. I recently had a client reach out. She was in a pickle because she had a really unhappy client. They were really disgruntled with delays and costs overruns. She didn't think there were delays and she didn't think there were costs overruns.
[00:13:47] And she poured her beautiful heart and soul into supporting these particular clients. They had personal issues going on themselves, which meant anything that she was doing, they were focusing on rather than focusing on their own personal issues. But what that meant was they got to a point where for whatever reason, They've launched into her and made a claim against her for tens of thousands of dollars saying, we want you to refund this because you didn't do what you said you were going to do.
[00:14:12] And I didn't ask for that. And you promised this, and this is what we said. And that's not right. And I didn't want that and take that off and refund it and return it and all the things. It was a mess. And she was so stressed. Heartbreaking because a beautiful person, heartbreaking. And she bent over backwards to service these particular clients.
[00:14:31] But because she was busy and she's busy because she's so good, but because she was so busy, she didn't issue her terms and conditions in the way that she should have. And what that meant was they weren't enforceable and these particular difficult clients took advantage of that. They lawyered up and their lawyer went to town and it was nasty and it was stressful.
[00:14:55] And at the end of the day, all I could do. To best support her was to mitigate her loss, which was basically reduce as much as I could, the amount she had to repay. And it was extraordinarily stressful for her. And what it meant was she wasn't engaging with new clients. She wasn't meeting with new clients to issue new proposals.
[00:15:15] So then, so now there's a real lull in her business and a massive hole in her cashflow because she had to pay to get rid of this other issue because they were threatening to go to court. This is the problem when we talk about business owners being too busy and not taking the time to set up solid foundations when it comes to legal documents and processes and systems.
[00:15:34] That's an example of what can go wrong. That's a significant example. It happens on different scales. Sometimes it's a 5, 000 request. Sometimes it's 50. Sometimes it's 10. It doesn't matter. But the time that it takes for that business owner to get their head out of their business to deal with it. To then have to reach into their pocket and pay this money and or pay me or their own lawyer to deal with it and the downtime in their business, and then the time it takes to build the momentum.
[00:16:03] And we all know wearing so many hats in business, there's no easy feat at the best of times. But when you've got things like this, it makes it even harder and that costs money. Big time, but the kicker here is it can be avoided. It can be avoided by just pausing and taking the time to get that framework, right?
[00:16:24] And once you've got it, right, the legal documents, they're tailored, the processes and the systems it's almost set and forget it just rolls then because you've got those processes in place. So situations like that can be avoided spending money, having that type of cost to your business can be avoided and should be avoided.
[00:16:44] That's what I wanted to share with you today. I hope that's been helpful. It is not designed to scare you. It's really not like all of my podcast episodes. It's designed to share context with you, to share experience and stories with you so that you can work out what resonates for you, where your business is at.
[00:17:00] What you need help with and then take proactive steps to reach out and get that help and support to get those things done for your business. So you're not reaching out later when things go wrong. You know where to find me. If you need me, the links are in the show notes. Email me directly. Send me a DM on Instagram.
[00:17:19] I answer all of those myself. Please don't hesitate to reach out and have the conversation, even if it's just to work out whether or not what you've got in place is okay. That is what I'm here for as always. Thank you so much for listening. I'll catch you next week.
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