Do you remember the days where not having enough work was your greatest challenge? Not knowing where the next client or project would come from was a perpetual source of stress. But now, your business is at a phase of growth in which you have a different kind of problem: too much work.
If you've grown your business to the point where there's more work coming in than you can handle, you'll need to decide what to do next. Continuing with business as usual is an unsustainable and unscalable option. So, let's take a look at how you can effectively manage the increased pressure on your business.
Having more work than you can handle is an excellent time to consider increasing your rates. "If the demand is there, the market will likely respond positively to a rate increase," says Alyssa Gregory, Founder of Small Biz Bonfire.
While raising rates is common practice, it does always come with an inherent risk that you could upset clients. Don't let that scare you. Instead, look at this as an opportunity to find the true market value of your product or service. When you have too many customers, the consequence of losing one is not as severe. This means you have more freedom to test how you price your services.
Revisiting your rates can also include reconsidering your pricing structure. Eliza De Pardo, a Senior Consultant at TD Ameritrade Institutional, explains how there are many financial advisors, for example, who could benefit from moving away from asset-based fees. When financial advisors are paid based on a percentage of their client's assets, it can expose them to certain risks. This is especially true for advisors who work with younger clients without a lot of money to manage. In these cases, De Pardo recommends introducing annual minimum fees, hourly, or even flat-fee models.
Don't rush to roll out a blanketed price increase to all of your clients. "Before raising prices across the board, try upping your rates with one of your friendlier clients first, or initiate the rate increase with new clients only," advises Elaine Pofeldt, author of The Million-Dollar, One Person Business. “If you get pushback, you may need to refine your approach.”
Raising rates is usually one of the first steps small business owners take when they find themselves with too many clients or jobs. It's a strategy that doesn't just increase short-term profitability, but one that will help set the stage for scalable growth.
Another way to deal with too much business is to hire help. As a solo service provider, you know that's easier said than done. You're the face of the company, the salesperson, the IT desk, and everything in between. However, not hiring help might be preventing you business from realizing its true potential.
Anita Campbell, CEO of Small Business Trends, admits that she should have hired help sooner when she was growing her own business. "Instead of viewing hiring as an expense, I wish I had adopted an investment mindset," she says.
Of course, most solo service providers know that hiring help is a smart move — at some point. It's knowing where to start that can be the hard part. The first step is to pinpoint where you personally bring the most value to the business, and where you might be able to pull back.
There are a few key considerations before hiring outside help.
"Identifying and honing your core competencies enables you to deliver unique value to your customers," explains Jessica Wishart, Training and Innovation Manager at Rhythm Systems, Inc. To do this, understanding what your customers value is key. For example, if you're a real estate agent, it's important to focus on the personal relationships that only you can build.
You'll also want to be careful about outsourcing tasks that open up security risks. For example, if you're running a small tech business, you might not want to outsource tasks that involve your core code. Similarly, web developers should be careful about outsourcing tasks that involve client website credentials.
The next step is to identify tasks that don't absolutely need your expertise. "Just because I can do something doesn't mean I should," says Morag Barrett, CEO and Founder of SkyeTeam. "I wish I had outsourced tasks earlier, such as bookkeeping, social media, etc., and freed my time to focus on the things that only I can do."
Generally speaking, you should consider outsourcing anything that doesn't necessitate your involvement or contribute to your business' core offering. Many entrepreneurs seek to outsource repetitive tasks first. Tasks involving accounts payable, data entry, and shipping inventory are generally easier to outsource.
However, you should consider outsourcing tasks that require specialized knowledge. For example, if you run an e-commerce shop and write your own blog posts, you might want to consider getting an SEO professional involved.
After you've determined what you can and cannot delegate, a good strategy could be to hire temporary workers. This will allow you to test how certain people can fit into your business model without the risk of hiring them full-time.
David Tal, Cofounder and CEO of Agentology, explains how real estate agents who outsource certain work actually earn higher commissions. Tal cites a study by Real Trends that found agents who outsource the photography of their properties to professionals take home double the commissions of those who don’t.
Regardless of industry or profession, outsourcing specific tasks is an excellent way to handle a backlog of clients or projects. Just be sure to keep an eye on the bottom line, as we'll discuss next.
Outsourcing can relieve the pressure you’re feeling, but it still needs to make financial sense to be worthwhile. "At the end of the day, the only reason you should outsource should be because you can make more money by outsourcing than by not outsourcing," says entrepreneur Neil Patel.
This begs the rates question again — charging the prices you have always been comfortable charging might not work when you begin outsourcing. You might need to adjust your rates to cover the costs of using a subcontractor.
In short, always make sure to evaluate the difference between completing a project in house and hiring help. If you're not making money on the projects you're outsourcing, you will want to rethink your strategy. Also, don't forget to consider long-term implications. For example, maybe you won't turn a profit on a particular project that you outsource, but outsourcing some of that work now could help you meet deadlines and retain a valuable client.
In some cases, it may also be appropriate to have a waiting list to handle the additional business. For example, some clients expect to wait weeks for their accountant's services during tax season. In situations like these, where there are seasonal demands on your business, waiting lists can help keep things running smoothly.
A waiting list can actually be a signal to your clients of how valuable your product or service is. "Leveraging your demand not only adds ethos to your offering, but it communicates the risk of scarcity as well," says e-commerce writer Kaleigh Moore. In other words, a waiting list demonstrates to your clients that you are in-demand.
If you are using a waiting list, consider adding some room for urgent projects. For example, marketing professionals often build in time for rush projects. They charge clients rush fees to compensate for the rescheduling or even the outsourced resources needed to get the job done.
"In general, you should consider charging a rush fee when a client wants faster turnaround than you could normally provide without rearranging things for them," says management consultant Karl Sakas. “At a minimum, be sure the rush fee is covering your additional hard costs.” This will let you offer some flexibility to your clients while still remaining profitable and professional.
Whether you've decided to raise rates, hire help, or create a waiting list, setting the right expectations is critical to keeping happy customers. Effectively communicating your rate change or a proper explanation of your wait times could mean the difference between retaining and losing a customer.
Change is sometimes easier to navigate when taking on new clients. "When you set boundaries as part of your client onboarding, your time, your sanity, and your schedule is protected because the client has guidelines in place to reign in their actions," says web developer Jennifer Bourn.
Just as a real estate agent would never commit to selling a client's property for twice the market value, solo service providers shouldn't cater to unrealistic time or pricing expectations. Remember that you make the rules and processes, and you have the tools you need to scale your business' growth at your own pace.