Paul talks about the importance of generating guaranteed, recurring, monthly income for your business or freelancing operation. What can you do today to improve your monthly income? Tune in to find out!
Here is the full transcript:
Episode 30 design your business for the power of monthly income. Hi there. I’m Paul Urwin and welcome to the freelancers and entrepreneurs Podcast, where freelancing meets entrepreneurship and business. We discuss clients sales, marketing, outsourcing, mindset, and much, much more. Find out more at freelancersandentrepreneurs.com Hi there. This is Paul Urwin and welcome to Episode 30 of the freelancers and entrepreneurs Podcast, where we try and help you as much as possible to succeed as a freelancer or as an entrepreneur. And in this episode, it’s all about monthly income, the power of monthly income, so we’ll be getting on to that in just a second. First of all, I have a quick question for you. Very, very simple. Are you in the freelancers and entrepreneurs Facebook group If the answer is yes, then Well, great. I’d love to hear your your comments there on this particular episode. And if not, the question is very, very simple, why not? There’s some great stuff going on over in their Facebook group. So I’d really love to see you there. The link is on the homepage of the website that is www dot freelancers and entrepreneurs.com of course, so I hope to see you there in the Facebook group. We’ve got posts every single day two or three videos each week, lots and lots of great content. So, so yeah, hope to see you there. Also, before we get into today’s main topic, just a quick reminder of the other podcasts in the design your business series episode. One of design your business is in Episode 18 back in Episode 18 of the podcast as an introduction number two is in Episode 27. That’s all about Location independence. Number three, Episode 28. Weather weather to scale your business all about scaling your business and growth and design your business for is this Episode Episode 30 the power of monthly income. So let’s get straight on to that now. Well, monthly income is incredibly, incredibly powerful. And it really can provide an incredible foundation for your business moving forward that is receiving a certain amount of income on a monthly basis, steady monthly income. And I started to realize this. When I when I looked at other companies, when I looked at for example, mobile phone or cell phone companies that charge you they charge me every single month, every single month, every year, and it’s just month after month after month and it doesn’t matter whether I use the phone a lot or Little obviously I have a certain plan has a certain limit on it. But I never usually get to that.
So it doesn’t really matter how much I use the phone how many calls I make or how much I use the internet. I get charged the same every single month. It also doesn’t matter. If I go on holiday, if I go away for two weeks or three weeks or four weeks, I’ve been away for long periods of time sometimes and I don’t, I don’t use my my phone or I don’t use the same plan. I take the SIM card out when I travel and just use the wireless, the wireless connections or the Wi Fi Wi Fi connections. But I’m still getting charged every every single month for that cell phone. So I started thinking well hang on a minute and that’s one of the reasons why these companies do so well is because they they receive that income from everyone of course not just for me every single month. It also became apparent to me when when people are in debt So when someone is in debt, and they have to pay a monthly repayment, or loan repayment to the bank, or to an individual or to some kind of organization, then again, that’s that’s a powerful indication of how things work on a on a monthly basis, it can be quite draining to pay a debt on a monthly basis, and you realize that the person who’s receiving the money every single month is in is in quite a good position, especially if they’re, they’re receiving interest on that loan. And also, if you miss a loan repayment, what happens? Well, I mean, apart from potentially getting into some kind of trouble, you have to then pay double the next month, it doesn’t, it doesn’t go away, it just keeps going. It keeps going. So this monthly, monthly meter keeps ticking and that’s another example of how monthly payments can be really, really powerful. And finally, one final example is my my accountant, great guy, great chap, very, very good at what he does. But again, we have an agreement where I pay him monthly. And I know that some months he’s so much busier than than other months and because we have this monthly agreement, I mean, he does have to do certain certain figures every every month, but at the same time, if he, if he chooses to travel or if he doesn’t work quite as much in a particular month, then he still gets paid. So again, he’s got monthly income set up. I am of course not his only client. So he has a series of monthly income streams set up very, very good. He does a great job thoroughly deserves it. I’m not criticizing him in that sense, but I I think it just again indicates the power of monthly income. So what kind of income are you receiving? are you receiving a kind of some kind of monthly income or is it per job or Is it per sale or port or per piece, if you like the problem with that approach that I think many of us have been through, and I’m still in that I’m still in that mode to a large degree, is that sometimes when you get to the end of the month and you look at your your sales figures for a particular month, they can really feel like you’re starting again, at the beginning of each month, you’ve kind of got to go out there and sell
More pieces or sell more jobs in order to get your income together for the next month. And as I said, that can become that can become quite quite draining and quite challenging. Because it definitely gives you that feeling of of having to start again at the beginning of each month. It can also lead to massive income fluctuations because if you are selling per job or per piece, then sometimes you will just get so you’ll just be so much more successful in a particular month compared to another So you will end up with these really significant income fluctuations. And that can cause a few problems in your business and in your personal finances as well. So that’s not an ideal situation to be in. So that’s really my view on on monthly income. in general. This, of course, is part of the design your business series. So where do we go from here? Can we design our businesses in a way in which we can stabilize that monthly income and set up some sort of monthly income on a recurring basis much in this in the same way as the the mobile phone or the cell phone company or much in the same way as the accountant? Is that possible in your business? Is there anything that you can do in order to make it more constant now This kind of depends a little bit on the business, there’s not always an easy way to convert jobs or being paid per job or per piece into monthly recurring income. But I’m going to give you a few suggestions. And I’d like you to analyze these and see if they can be applied to your business. Because I think you would agree before we go any further, that it would be nice to have a certain level of guaranteed monthly income, it would really give you a certain stability, a certain foundation upon which to build your business. And then if you take one off jobs on top of that, then then then great, but if you only have the one off jobs, then you’re subject to the income fluctuations and the frustration of starting again, each month and so on. So what are a few of the things that you might be able to do in order to make it more constant? Can you charge your clients a retainer? In other words, can you charge them some Kind of pre paid fee, where they might your services might cost $100 an hour and you charge them $500 a month and for the first five hours that they they use up, they, they they’ve already paid and then thereafter they’re charged on top of that, that’s how a retainer normally works. So can you charge some kind of retainer? Can you set up an agreement with your client, where you have a certain base level of monthly income? Can you productize your service? My favorite example in this along these lines is a company called design pickle a really really interesting company. So design pickle, they they offer unlimited graphic design, and you pay a monthly fee. I think it’s about 300 and $380 a month, but you can have unlimited graphic design. For that fee, and how does it How does it work? Well, you actually, you ask for the them to design, let’s say a flyer for you, and they go away and they design that they might come back a couple of days later. And then you can ask them to design a logo. And they go and design that and they come back a couple of days later. And you can’t actually order the next
piece of graphic design work until they have completed the first piece. So that kind of limits it in a way if you like, is not completely unlimited. It’s unlimited in the sense that they do one one graphic design at a time but I still think it’s a very, very interesting concept because they’ve moved away from someone asking them for a job. I mean, I presume most graphic designers work in this way where someone asked asked for a job they quote the job so well that you know it’ll be this much for logo be this much for to design a brochure. And then once that quote is approved, they They get to work and they work in that kind of traditional way. Well, design pickle has really changed the way in which they offer graphic design services by offering this monthly productized service if you like. So they have a, an income of $380 per client. And they have lots of clients. And then they they they carry out the the graphic design work. So the actual work hasn’t changed. The actual work is still graphic design, but the way that they’ve set it up is, is very, very different. And of course, that puts a lot of people off as well. They lose lots and lots of clients, perhaps they could have more clients if they if they had a lower fee. And if they if they had, let’s say they offered people the opportunity to buy one piece from them. But but they’re not worried about that because they’ve set up a business that I think really, really works. I think it’s a really successful company, from what I can, from what I can can see. Another one would be to establish some kind of long term contract, can you establish some kind of long term contract with your clients with some kind of monthly minimum in there? Can you charge a monthly management fee? Even if you let’s say aren’t doing any significant work or there isn’t any significant work to be done in a particular month? Can you still charge some kind of base fee for your product or for your services? Can you charge a monthly minimum independent of the amount used or the amount the amount consumed? So again, not easy questions to answer, but I’d love for you to have a think about these in terms of your your own business. So let me give you an example in the in in tutoring and shoot in a tutoring business. You might say to a client Well, I would expect you normally
to have four hours of classes per week, and that would be 16 hours of class per month, depending on the length of the month. And I but I am going to charge you a minimum of 10 classes. So whether you take classes or not, I’m going to charge you a minimum of 1010 hours you know, that would be one way of of doing it because in the tutoring world, let’s say people might not take enough classes they might not be constant enough and that might totally be down to them. You might have the availability and and that’s the argument if you’re if you’re giving someone availability if you’re giving someone space in your diary, then perhaps you should charge a minimum I think that would work for for coaching as well. So if you’re coaching a particular a particular client, you might say well, look, you know, I’m really happy to be coaching you. The minimum is two hours a week and you will get charged that that minimum on a monthly basis. Whether you whether you Use it or not, whether you use that that or not, you might allow some kind of rollover from one month to the next. That’s That’s all. That’s all down to you. Of course, this is your business. And this is all about designing your business.
But you can design some of these things. And you can put some of these, these restrictions or these conditions in place. And I think most clients will understand I think most clients will be quite accepting of, you know, as long as you’re free, as long as you’re fairly reasonable. I think most clients will will be happy with that. And the ones that aren’t, well, perhaps they’re not the ideal clients for you.
So, something for you to think about. Can you design your business in the way in such a way that you can increase your monthly income and stabilize your business and stabilize your business a little bit as I said, it’s not always possible depends on your business, but it is highly recommended and can be hugely valuable. A friend once told me that the value of a company should be based on The current value of future contracts that are already in place I guaranteed future income. So what kind of guaranteed future income? do you have? If you stopped looking for new clients today? What would your income be? What your income be? Like next month? So if you stop looking for clients today, I think this is a really key question. If you stopped looking for and or taking on new clients today, what would your income look like next month?
In other words, would it drop suddenly and sharply towards zero? Or do you have a number of ongoing contracts and ongoing agreements in place? That means that even if you aren’t out there actively looking for new business, do you have some income coming in next month and I think that’s a really a good way of reflecting upon your own freelancing operation or your own company and actually evaluating how strong it really is because if you have nothing coming in Next month, if you don’t sell more than I think that’s something that you really should consider and something that you really should, you really should look at. Why are so many tech companies valued so highly, even though they don’t make a profit? Well, because they have guaranteed revenue, or constant revenue that is normally increasing revenue. So they have lots and lots of users, lots and lots of revenue. And even if they aren’t making a profit just yet, and that’s what tends to give them or has historically, given a lot of tech companies a really high valuation, even without a significant profit. So shows again, the power of monthly income. So that’s pretty much what I wanted to say. on that subject. Final question for you. What can you do today to improve your monthly income? What can you do today to improve your monthly income? To answer that question, please come along to the Facebook group which you can Find a link to from our website, www.freelancersandentrepreneurs.com once you’re in the Facebook group, you will see this podcast, the post for this podcast and you can post your answer to that question in the comments. What can you do today to improve your monthly income? I’m Paul Urwin. Thank you so much for listening, all the very best, and until next time, bye bye.