Have you ever heard the old saying; money goes to money? The idea behind that saying, is that people with money find it easier to make even more money.
Whilst this is true, part of the equation is not the actual money that wealthy people have behind them, but their thinking, which helps them acquire more and more wealth.
A very common example of this from the world of small business, is the way small business owners think, with regard to the clients they choose to work with and the fees they are prepared to work for.
Here’s what we see:
- Those who have little money behind them, will take on almost any new client, who comes their way.
- Those who are financially stronger, will usually cherry pick who they work with. If they think someone is a bad fit or likely to be a total pain in the butt to work with, they won’t work with them.
Under performing small businesses often struggle from year to year, because the business is run from a mindset of fear. As a result, they work for low fees and accept anything that comes their way. This then ensures they stay in that fear cycle, as they never earn enough to become more selective about who they work with or what they charge.
How to escape the cycle
We have to start by understanding that even a wealthy business owner, would soon find themselves in financial peril, if they were to apply the same thinking to their business development. No business can thrive, working for peanuts and for clients who undervalue them and their time.
The only way out of this cycle, is to become selective about who you work with and then, to offer the highest quality service you can, which you charge for accordingly. You need to do this before you become wealthy, or you will find yourself stuck in the cycle. Ironically, better quality clients are not only easier to work with, they are also happy to pay a premium for a great service.
In short: Be selective who you work with, offer great value, then charge a fee that reflects that value.
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Jim, thank you for once again providing such excellent advice. It is always how we think about what we are doing that makes the difference. Thank you for reminding us of that and encouraging us to think right up front.
Great post Jim. It can be tricky for a small business to break that cycle when they have bills to pay. You’re right, reaching more people is the answer but to do so you need to be clever with your marketing, otherwise your marketing spend will increase and you will again be forced to take any work that comes along just to cover your increased marketing expenses.
Jim,
Since the publication of your post, I’ve hesitated to add my comment but finally, here I am, with some mentions from my personal experience.
As every small business owner, I’ve been struggling since the beginnings, I’ve made mistakes like any reader here. The choices I’ve made didn’t always reach my expectations: during years, I took projects because I saw “the income more than the value”, I tried to build trust, and hardly kept on operating long term strategies with my clients. Only very few of them finally understood the issues.
Instead of a succeeding collaboration, very often it created misunderstandings, discredits, that conducted to undervalue. Last year experience told me to stop the cycle of taking every project unveiled to me and break the silence: I’ve improved the budget, the fees became higher, but I kept on struggling. Not because of the clients this time, but because of the lack of clients.
I’ve entered into a infinite cycle of prospecting, failing, spent (a lot) of money and time and almost crashed my company. But I kept on fighting, keeping in mind that I can do it.
Fortunately since a few months I’ve achieved to find people that trust in me, and give me the opportunity to express what I know the most: managing digital projects.
While looking back now I can testify about 2 (simple but singular) mistakes:
- the first is the definition of your inner value, the one you trust in, the one that motivates you every morning you wake up
- the second your external value, the one people see, the one they trust.
If you don’t want people to underestimate you and undervalue you, give them what you know and then, success will knock at your door.
Here is a simple reminder for you: “what you see is what you get” as simple as it sounds you can apply it to yourself.