Working too hard for too little income? Check your business hasn’t been taken over by the “neighbourhood wino” model

So you’re at an extended family wedding. It’s late in the day, the sun is going down, and for the first time that day you notice a man you don’t quite recognise. He’s the one wearing a shiny suit, with a terrible comb-over, necking leftover drinks in the corner.

Is he a distant cousin? guests whisper to one another. He’s got Uncle Rob’s nose don’t you think? Who is he?

Well, if this were Jo Over-Worked and Pat Under-Pricing’s wedding, then odds are, that possibly-a-cousin-in-a-wrinkled-suit sniffing the inside of used plastic cups?  The one who people are trying to pretend isn’t there?

Is the crappy business model.

Oh yes, I said it. Business Model. The two words most people try to ignore as it lurks in the corner necking the dregs of your drinks (setting the tone for the room, even though no one wants to admit it’s there).

But here’s the thing.

Your business model isn’t a blood relation.

It’s something you choose to let in the room, or you don’t.

Does yours fit you? If not, it might be time to politely show it the door.

I know, I know: business models are that thing that we sometimes avoid thinking about, but if you’re running your own thing then, whether you are aware of it or not, you have one (read on to find out!).

The thing is, if you don’t think about yours? It can easily spiral into the hidden killer of that free range career that started with so much potential.

One of the common ways this happens is with what I call the “neighborhood wino” business model

This is the way of doing things in your business that seems fun enough the start of the day…. but ends up pissing your income and time up the wall by nightfall.

Then, it does the same thing the next day. And the next week. Until both your time and income seem in short supply.

(In this model it’s not uncommon to end up being followed around by a small smelly dog that the client promised would be ‘no hassle’ (You love dogs! He’s cute!) but turned out to be a ball of fleas and neuroses who just chewed up your last dollar/pound/peso note).

Without a real clue what he’s doing, this sad, rootless business model bumbles around the same streets day in, day out, always needing more of his currency of choice (wine) but never really figuring out how to get a consistent source.

Voila. The neighbourhood wino business model. Like traipsing through your career with a giant hangover.

To be clear, I don’t want to belittle this for a minute. Not knowing how to leave the stuckness cycle is not a nice place to be. This message is about another way.

Because, I’ve got to be honest: NO ONE has ever come to me and said “I’d like to start my own business and I’d like the neighbourhood wino model, thanks!”

Freedom? Yes please. Wino business model? Not so much. This is not the place anyone wants to, or should, end up.

So how in the name of all things chocolatey does this happen to smart, well-intentioned own-bossers?

The truth is, there are several ways it can start (clichéd marketing that fails to speak your customers’ language being one…) but today I want to hone in on one of the most common wino-creation-moments, which is also one of the simplest to fix.

This one is all about numbers.

How to go from ‘great idea’ to this (and back up again)

Let’s look at the case of Charlie.

Charlie has her own business, run from her laptop at home. That side of it is all lovely, but she needs to sell 50 of her widgets/tickets/cat-pee-training sessions a month just to break even.

In reality it’s a stretch for Charlie to sell 5 or 10.

Charlie feels secret shame about where she is in her business. She can’t admit to her friends she is only selling 5 things a month, and living off some freelance work on the side… but the truth is she is: and even that is a stretch.

Worse, Charlie has been looking at other people with products like hers who price in the way she prices – why are their businesses working when hers is not?

This seems crazy, because the catch is, Charlie has people who LOVE what she does. She knows the problem in her case isn’t that her marketing is off the mark (it’s way better than many others, and it’s not like she’s sold nothing!). It’s also not that she’s selling something people don’t want (people are definitely buying this sort of thing elsewhere).

By now, Charlie is exhausted. She feels like a failure. She wonders if she should be doing this.

What should she do now?

Well, common wisdom might say Charlie just isn’t well known enough yet. Common wisdom might say she needs to put her all into increasing her numbers 10-fold (!) and until then, she has to just, well, wait it out and keep doing what she’s doing.

Nice in theory…  but this is why Mr Com N. Wisdom (and his chatty cousin, Mrs Evri Wan-Saez) went out of business.

Growing the numbers of people knowing you + wanting what you have to offer is darn important, of course it is… but the good news is that giant numbers are not a pre-requisite to a great full time free range income. Not with the right model. So let’s get realistic about your timeframe and your needs this decade:

A ten-fold growth is a big thing to wait for before you can even pay your bills without burning yourself out every week. (Did I mention Charlie hates selling? Well there’s that. She hates selling and has to sell to – once again  – 50 people a month. WTF? When did a business model that makes her have to constantly sell lots of low priced things connect with Charlie creating a life where she does what she loves?).

Here’s what I’d say to Charlie: if you have spare money to live off for a year or so? If you don’t need to make any real income from this for that period? Or if you have a growth plan that you’re kid-in-a-candy-shop excited about? (And that does not end in the words “and in 10 years time Google will buy us out for 10 million bitcoins!”)?

Awesome. Do it.

However… if you need to make this work sooner rather than later?

Then you need to work with what you have. And what Charlie has is a business model that’s not right for her.

So if you were Charlie? Taking aside possibilities about improving your marketing + attraction (which is a whole other blog post in itself), at this point you’d have two choices:

  1. Raise. Your. Damn. Prices. (in other words charge more for the same thing) or
  2. Change your business model so you don’t need to sell much in order to make what you need.

Let’s look at both of these:

1. Check your pricing (aka stop trying to be a supermarket, when you’re really a boutique).

Under-pricing… it’s insanely common. Which seems odd at first glance, doesn’t it? After all, why on earth would someone price too low to be able to live off what they do (without exhausting themselves in the process) ? Well, usually it’s that people don’t think they can price well.

Maybe someone else in their field can charge more, they say, but not them, not now.

The funny thing is this assumption is often not related to questions of quality. It’s often more a vague feeling that you are not “allowed” to price at (or above) market rate until you hit a magic level (such as being very well known in your market).

When you reach that point, common wisdom says, well then you will be “allowed” to charge well. Then people will let you.

Until then, common wisdom agrees you have to under price.

Once again – this is why “common wisdom” didn’t stay free range for very long. Under-pricing is a key killer of many potentially amazing businesses:

Because that theory? Has it the wrong way around.

Staying around won’t let you price well. Pricing well is what will let you stay around.

The local boutique doesn’t stay in business by competing on price with the large clothing retailer in the city. They simply don’t have the volume of customers to pull that off. Instead they grow their business on relationship and quality for a specific group of people who they really care about and who they can really serve.

Luckily, those elements are a pretty big deal, and are things that plenty of people buy on.

Which is perfect, because when you’re a boutique you don’t need ‘everyone’ to buy: you may just need a handful of committed people a month. Reckon you can get a handful of smart clients a month, a handful who care about things other than rock bottom price? You bet you can.

Plus, starting out with a boutique mindset holds you in good stead as you grow. Because the boutique owner never stops caring about quality.

So when you start out thinking small and caring about your people, you’ll keep that as you grow. Even if 4 years down the line you’ve got so big you have a team to help out? You’ll pass those people-matter values on to them. Most of all, because you both cared AND priced boutique style? You’ll have a chance of still being around in 4 years.

Which is where we started this in the first place. Are you playing a supermarket’s pricing game… with boutique customer numbers?

Dear free ranger,

Raise Your Damn Prices.

Sincerely, people who want you still around doing your thing this time next year.

2. Change what you sell (or change HOW you sell it)

For some people, raising prices alone isn’t enough.

A quick way of knowing if this is the case for you is to ask: how much would you need to raise your prices by?

In Charlie’s case, she needs 50 sales a month but has realized that 5 is more her speed. If nothing else shifted she would need a 10-times increase in price. If raising prices by a factor of 10 would result in her charging $100 for a pencil… then maybe she’d be better off with the second option which is:

Change your model.

Show that embarrassing wino cousin the door:

Instead of a lower value product to 50? Create a higher value product for 5 or 10 people. Then care the actual socks of those clients (hint: this is how people get the reputation to get to the bigger levels in the first place).

If you could do that for just 6 months, focusing on lower numbers for higher value/price… how much more would you learn?

How much more secure would you feel (without that pressure of sell all the things all the time!)?

And what a better position you’d be in, 6 months down the line, than the person who sat there insisting they had to sell a bunch each month and feeling like a failure every step of the way?

Because here’s the thing. Charlie is not a failure. She is darn good at what she does. She just has a terrible business model for the place she is in, in her business, here and now.

Where can you add the most value to the world? If it isn’t where you’ve been playing, move your game.

There’s a difference between stretching yourself… vs having your next month income rely on in-a-year’s-time customer numbers. So to be clear: I am not saying “don’t step out of your comfort zone” or “give up if you don’t have it all on a plate” – neither of these are free range thinking! In fact in your first year of business, you will be finding your feet and probably working more at the start than you would be down the line (this is true of anything new you move in to, isn’t it?). But even then this advice counts. Thinking like this, whether you make this change now or keep it up your sleeve? Might be one thing that makes that future happen faster than most people imagine possible.

While we talk a lot about choosing what you do, you know what’s equally important? How you do it. And from this moment on, know that that is in your control as much as anything else.

Love,

Marianne x

 

PS: These two examples might look like a case of too-small vs too-big… but in some ways they are exactly the same. Both of them take you away from the now, and both fail to honour your needs. Both of them take away your power to make thing work and hand it over to fate. If you’ve taken back your power from an office and a boss? I know you can take it back from a shoddy business model.

I’d love to hear from you: have you ever been in a position where you were working too hard for too little? What did you do to change that?

(Or if you are in that position now  – or just want to stay out of it in the future! – drop a comment below and tell me: what ONE thing from the above most resonated with you?)

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  • Lucinda

    Marianne, once again you have taken the top off my head and exposed my guilty little secrets. I am in exactly this situation. And I kind of knew it, but didn’t know what to do, and didn’t feel I could tell any one my “shame’. After all, how could I get into this position, surely I must know better? So the sentence that resonated with me is “Charlie is not a failure. She is darn good at what she does. She just has a terrible business model for the place she is in, in her business, here and now.” A little shot of belief that this isn’t me, it’s something external, and something I can change. Thank you!

  • Alice Brock

    Umm, … this is me too (Guilty Little Secret waving its little hand and shyly saying hi). In fact, I stopped my business, got some training, and started a new day job just because I couldn’t figure out how to ask the wino to leave my house. I stopped marketing six years ago and I still have old clients who email me for sessions. So I know I have something of value to offer. I just haven’t yet figured out a better business model for my offering.

    Thanks for the crystal clear diagnosis, Marianne. I get it now. I THOUGHT I had to raise my prices. Now I KNOW I do. You have given me hope. I am going to start up my healing practice again.

  • http://sewclassic.blogspot.com/ Kristin Jones

    Thank you, this is perfect! I’m trying to price my items and “everyone” keeps telling me that I need to lower prices to compete – but I can’t compete with the larger companies and I shouldn’t try.

  • Misty Birchall

    You always seem to write about the topic that I need to hear most, when I need to hear it. I constantly undervalue myself and my products – and my friends always tell me so! I reached the end of the too much work, not enough money point two weeks ago, and am redirecting my focus. It’s scary, but things are already falling into place. Which tells me it was the right thing to do. And now that you’ve said all of this, I am going to raise my prices as well. I have that loyal following, they do follow me, and I can charge accordingly. Thank you so much…. again.

  • ladieswhoimpress

    This is brilliant and I agree – Marianne’s letter today was spot-on relevant. Well done on “re-directing your focus” – I still have to understand what kind of “higher-end” products I can actually offer…

  • ladieswhoimpress

    This is really inspiring, thank you for sharing! I must say, I am with you: I cannot figure out how to change to higher value products so I am stuck with doing other jobs to survive. The quality of my Free Range Life is not exactly high.

  • ladieswhoimpress

    Lucinda, you “stole” my sentence, now I have to pick another one! :-)

  • ladieswhoimpress

    “By now, Charlie is exhausted. She wonders if she should be doing this. This seems crazy, because the catch is, Charlie has people who LOVE what she does.”

    The trouble is, what also resonates with me is a comment below: I cannot think of higher-end products, which would also suit my personality and make the most of my strengths. That’s just it.

  • Laura

    This is just wonderful Marianne. I love it. It’s such a simple truth: that we won’t even be in business in a year if we charge too little, and we won’t be able to deliver great care or service because we aren’t even able to care for ourselves. When have we finally “arrived?” When we say we are. This article totally rocks. .I received it at the perfect moment, too. Thank you so much!

  • Jennifer Cornbleet

    What completely resonates with me is that I’ve been putting all my efforts into growing my numbers (number of people on my list and purchasing) the last couple of years. It sometimes works short-term but I can’t sustain it and end up exhausted. What if I could turn this model on its head and try the opposite?? It’s exciting to contemplate.

  • Julie

    Is there a way that you could increase the value of your current products? Maybe offer a free service with a higher-priced product you already have?

  • Julie

    I stopped giving my loyal clients 10% discount on every order…I need the extra money. No one so far has mentioned this missing from their invoices. I plan to offer my best clients a half-price product once or twice a year as a bonus for staying loyal to me. (not above bribery here) Also, I need to stay in contact with clients more regularly – not just when I need to pay my rent…ahem… Mailchimp already has a way to do this without my constant involvement.

    The idea that resonated most with me: “Raise. Your. Damn. Prices” I have been believing that I needed to offer discounts, bribes, and gifts to keep clients happy and buying. This is not necessarily true. In listening to client feedback, they consistently say they love my service, the way I remember even the once-a-year-purchasers, and my “realness”. (I often make deliveries wearing jeans and flip flops – and a smile) It is more of ME my loyal clients want…

    Thanks so much, Marianne, for always sending these love letters; they spark a bright spot in my week. Cheers!

  • ladieswhoimpress

    I don’t currently have any high value products – only freebies and tickets to events I do not feel I can price any higher. If I want to keep going, I need to think of high value products. I knew that a year ago but I wanted to grow my ‘list’ first. Now I feel stuck.

  • Tracey Lang Hart

    Pricing is something that has always held me back. I really understand the idea that the boutique model is more specialized – I shop in boutiques (quality over quantity any day). But all I can see is someone rolling their eyes and going to the supermarket version of what I might be selling. (I think I have also just been surrounded by people who always shop for the lowest price rather than the quality product – your blog has helped me see a greater variety and potential client base. Thank you for that.)

    Also, how do you go about charging market prices or above market prices if you are just starting out? People think you should sell for less. Without impressive referrals people think they should pay less, especially if you are just starting out. I’m trying to see around the road blocks. I want to be confident in what I am selling but I don’t want to be the crazy kid on the block selling lemonade for $100 a cup.

  • http://www.irateinvestment.com Paul Claireaux

    Nice one Marianne – your blogs (and your book – I have print and audible versions) have been an inspiration to me in creating a new life.
    No more beige army trousers for me.
    Paul
    And check out http://www.yourmoney-yourlife.com and http://www.irateinvestment.com

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