When I first started my business as a coach, I was incredibly optimistic.
After 16 years of service in the military, I was finally free to do things my way. No boss, no bureaucratic red tape to navigate. The only thing between me and serving my customers would be me.
I had no idea how true that statement would be. I’ll explain what I mean in a minute.
My first year I earned about $23K in revenue. Nothing special. Certainly Forbes wouldn’t be calling for an interview on how I did it.
But you know what? I was thrilled.
To create money, any money, out of nothing but my own hard work and ideas was amazing to me. If you’ve ever had any experience selling, even if just a lemonade stand or Girl Scout cookies as a kid, you might have an appreciation for how difficult it is to create that much money all by yourself.
The problem was that I’d also spent about $28K on various courses and programs, learning how to start a blog and an online business. Ouch.
“No problem!” I assured myself. I was confident I would make that money back over the years to come.
I did earn more, but not a lot more. In fact, over the next couple of years, I would fail to earn enough to pay myself regularly. I had high expenses due to education and outsourcing, and only meager profits. It hurt both my bank account and my ego.
What made it all the worse was that my clients kept telling me how great my coaching was, how I had made a real impact on their lives and careers. I had one glowing testimonial after another.
I kept asking myself: what’s wrong with me? Why can’t I make this work?
When good marketing produces bad results
I’m embarrassed to admit that I continued to pour yet more money down the drain on conferences, online marketing courses, and various contractors over those years, thinking the answer to my problems was my lack of knowledge or skill. Every time I made more, I spent more. My frustration grew.
It wasn’t until I hired a coach myself that it all became clear: my prices were too low to ever get my business to the place I wanted to reach. I didn’t have an information problem, I had a mindset problem.
To put it another way, you can be a master of marketing, but if you don’t master your “inner game,” you’ll continually struggle to achieve your business goals.
And that’s true at every level of business.
The simplest definition of money mindset is how you think about money. It’s how adept you are at pricing your products and services, your willingness to charge what they’re worth, and how capable you believe yourself to be when it comes to creating both revenue and value for your clients and customers.
Like many entrepreneurs, I’d assumed the hard part was finding people to pay me. I focused on blogging and marketing to make sure there were plenty of people coming in the door.
But if you haven’t figured out how to charge for your services appropriately, more people coming in the door just means exhaustion.
The classic solution to this overwork issue, if you follow the online marketing gurus, is to turn to passive income streams. You have this idea that you’ll coach during the day and magically make money while you sleep.
But marketing, good marketing, takes time. A lot of time.
I knew things had taken a seriously wrong turn when I began to resent the coaching calls on my calendar, because they kept me from all the work I needed to do to create online sales funnels. That’s right, my core business felt like a distraction from my marketing, rather than the other way around.
How screwed up is that?
The secret to my (mind-blowing) success
Several years ago I was taking a long walk with a friend, and he challenged me to generate six figures in revenue that year. I said I wasn’t interested.
“I don’t need that much money,” I told him.
“But wouldn’t it be nice to have it,” he asked incredulously.
“I guess. But I don’t need it,” I protested.
This was the first sign that my money mindset issues ran deep. You see, a part of me thought it was wrong to make more money than you needed. So perhaps it was no real surprise that as long as I didn’t need money, I didn’t make money.
Admittedly, there was also a part of me that thought a goal like that wasn’t within my reach. I was scared to try because I was scared to fail.
Once I gave myself permission to earn more, I had to tackle my scarcity mindset. This meant intentionally taking fewer clients, so I could serve those I did sign more deeply and powerfully. I set a capacity of never taking more than 6 clients at a time.
This set me up for the scariest proposition of all, because to earn more with fewer clients, there was really only one option: I had to raise my prices. Significantly.
That forced me to re-evaluate the true value of what I was already doing and how I could raise the bar. I listened more carefully to the dreams and fears of my potential clients, and then got creative with what I felt was the perfect, VIP solution to help them.
The results were beyond my wildest expectation.
I went from paying myself pitiful wages to billing over $174K so far this year. In full transparency, I offer the majority of my clients payment plans, so not all of that revenue has been deposited into my bank account yet. I’ve never had a client fail to pay what they agreed to, so I feel comfortable reporting that as revenue, but as per this article, I also believe it’s important to be as transparent as possible about what these numbers actually represent.
Even better, I was able to accomplish those results by taking clients who inspire and amaze me, while also making time for the important things in life like family, friends, and my health. These rather simple changes have made an enormous impact.
For one thing, I’ve become a lot more confident in my ability to find and sign clients whenever I need to. The scarcity mindset is gone. That means I am detached from the outcome of any one potential client–I never pressure anyone to sign with me and there’s never any desperation to my pitches.
As my prices have gone up, the number of people wanting to work with me has gone up too. This was completely counter intuitive, until I realized that low prices unconsciously signaled to my clients that my services must not be worthwhile. Let’s face it, if you’re really offering to transform someone’s life or business, who expects to get that at a bargain?
Moreover, those low prices encourage people to sign up for work they aren’t totally committed to and thus never fully get the benefit from. You don’t want to sell to someone who’s still kicking the tires, so to speak. It results in a “poor” experience for everyone.
What I discovered is that changing your mindset about money changes your mindset about everything: about what you do, your capacity to deeply serve your clients, the lifestyle your business can enable, and the amount of satisfaction you enjoy in your business.
A successful business requires courage
No one sets out to create an unsustainable business.
People know they’ll have to work hard to get a new business off the ground, but they tell themselves that eventually they’ll hit a tipping point and everything will get easier.
But that’s not what happens when your prices are too low. At some point you realize you can’t keep taking on new clients without sacrificing the quality of your work (and your lifestyle). While I see the benefit of selling information products to increase your reach and revenue, calling their creation and marketing “passive” is a cruel joke.
That’s not to say online marketing isn’t something you should invest in. Just don’t kid yourself.
Effective online marketing is incredibly time intensive. But in my experience, so is mediocre online marketing, which is all you can expect if you’re trying to squeeze your efforts around your client based business.
So if you’re a coach, consultant, or freelancer, hear this: the fastest way to grow your business is to raise your prices.
There is a right way and a wrong way to go about it of course.
There’s a limit to what you can charge for certain products and services for specific clientele. The question you should be asking yourself: how do you know when you’ve hit the price ceiling for your services and what could you tweak to raise that ceiling once you hit it?
There are 3 reasons you probably have trouble answering that question:
- you don’t fully understand the needs and desires of your clients
- you don’t understand the full breadth and value of services you can provide
- you have assumptions about what customers will and won’t pay, assumptions you’ve probably never tested
These stories we make up about how much people are willing to pay for our services are the #1 reason so many entrepreneurs are overworked and underpaid.
Does it take courage to override those voices in your head that say you can’t charge more? Sure.
But you know what, hiring you probably requires some courage on the part of your client too. If you want your potential clients to overcome their skepticism and potential disappointment, you need to be willing to do the same.
Make hiring you the scariest and most committed thing either of you have ever done.
Then make it worth it.