BS-Free Sustainability for Service Businesses
So many of the business strategies and tactics that we’re taught feel overwhelming. Like we need to learn something new and start over. But what if we didn’t need to constantly add new things and simply would build on the foundation we already have?
In this episode, we’re diving into how to actually build a service business that’s sustainable and cutting through all the BS around scale. I’m sharing key questions to ask, the problem with overconfidence, and how the secret of sustainability really lies in small, simple changes.
As I discussed in last week’s episode, I believe that the focus on scale is the wrong conversation for most micro-business owners.
Why? It’s simply because the data doesn’t lie. Consider these numbers:
- Small businesses with no employees in the US have an average revenue of $46,978. (Fundera)
- 86.3% of US-based small business owners make less than $100,000 a year in income. (Fundera)
- 88% of women-owned businesses earn less than $100k and only 4.2% earn over a million. (Amex State of Women-Owned Business Report 2019)
It’s a far cry from the dream we’re being sold by celebrity entrepreneurs, particularly when you consider how many small businesses fail. Data shared by Shopify (from the US Bureau of Labor Statistics) tracked the failure rate of businesses over a five-year period from 2016 to 2021. After five years only 50% of the businesses started in 2016 were still in existence. (Obviously, these numbers were impacted by COVID so should be taken with a grain of salt.)
That should give us all pause (and not in an OMG I’m going to freak out, my business is doomed kind of way) as again, the dream we’re being sold of easy, breezy entrepreneurship via Instagram ads is some real bullshit.
These unrealistic expectations for how much money we can make and how simple it’s going to be leaves us trapped in a cycle of struggling as we think we’re doing something wrong.
The only thing wrong here’s that we’ve been duped into thinking entrepreneurship is something very different than what it is.
Before we go any further, I want to be clear that I’m 100% team entrepreneurship and will be forever. I arrived on this earth with the entrepreneurship gene (if there’s such a thing) and I know how incredible an opportunity it can be. 17+ years into this, I’m the literal proof of that.
With that out of the way, the reality is that for our businesses to not just survive, but thrive, we need to shift the focus from scaling to sustainability.
Is This Really Sustainable?
As I detailed in the last two episodes, relentlessly focusing on scaling a business has the potential to harm us, along with our teams, clients, and the wider community. Because scale, especially the way it’s taught in the online business realm, sets us on a path of hustle, burnout, and exploitation.
The alternative is rooted in sustainability, and not in the way we see big businesses doing it with “corporate social responsibility” initiatives, which are often driven by brand image and creating shareholder value.
For service businesses, sustainability should be built around the pillars of your business which are marketing, sales, and service.
In my BS-Free Service Business Framework, I detail the elements of each of these pillars, but for the purposes of this conversation about sustainability, here are some specific questions to ask.
- Do I have a consistent flow of new clients?
- Do I have a predictable way of generating new leads?
- Is there a marketing plan in place to find clients?
- What’s my number one source of new leads?
- How many new leads do I get per month or year?
- Do I know my close rate with new business?
- Am I able to sell my services at my current pricing?
- Do I sign enough clients to meet my revenue goals?
- What packages or offers are my best sellers?
- Do I have opportunities to upsell to clients or am I losing money?
- Do I get referrals from current and past clients?
- Do I have repeat clients?
Beyond the core pillars of a service business, I’d encourage you to consider the other two foundational elements of every service business, your time and money.
- How much am I working each week or month?
- Do I have time to work on the business?
- Am I spending time doing work I enjoy? Does my work drain me?
- Do I regularly take time off?
- Is my time being spent on areas of the business that generate revenue?
- Is how money comes into my business consistent?
- Am I able to forecast revenue on a monthly basis?
- What is the average lifetime value of a client?
- Do I have a plan for how I spend my money?
- Am I investing in line with my values?
- Do I get ROI from the investments I do make?
Each of these questions should be asked with a sense of curiosity, and I can guarantee you that for each one of you there will be questions that make you uncomfortable. This is meant to get you thinking about simple actions you can take to make incremental improvements that lead to greater sustainability.
(And spoiler alert, there’s a couple of these I need to focus on, so you’re not alone!)
Beware the Overconfidence Trap
These may seem like basics and that’s totally the point. Sustainability for your business comes from having the basics handled and being confident about your marketing, sales, service, time, and money.
It’s not sexy, but there’s a lot of security and stability that comes from a business that’s simple and sustainable.
As you go through this exercise, it’s critical that you don’t fall into the trap of being overconfident about how sustainable your business is.
An Accenture study on business sustainability found that there was a “misalignment between business leaders and their stakeholders”. Basically, leaders thought they were doing better with sustainability performance than they actually were. Interestingly, executives scored themselves at a 71/100, while employees gave it a 67, customers a 57, and the community a 56.
This is an example of overconfidence bias in action where we overestimate our abilities or judgment, have overprecision in our knowledge, and overplacement in our standing when compared to others.
Even as a team of one, we can delude ourselves into thinking we’re doing better than we actually are. The same qualities that make us great at entrepreneurship can backfire as we’re overconfident in our chances of success.
Our overconfidence can quickly become a problem as we make decisions based on a skewed sense of reality.
The antidote to overconfidence is having actual data about what’s really going on in your business. When you know your numbers from your close rate to your average lifetime value of a client, you have what you need to not only make better decisions but to consistently work on sustainability.
BS-Free Sustainability: It’s Simpler Than You Think
Beyond having the data needed to be realistic about the current state of your business, there are several areas you can focus on that will help you get on the path to greater sustainability.
Looking at each of the five foundations of a service business that I shared above, here are some specific recommendations:
Assess how much you’re really working. If you’re not sure start tracking your time, because most of us think we’re working less than we actually are. Examine how you’re spending your work time and if you’re focused on busy work or activities that generate revenue.
For so many of my clients focusing on how they’re spending their time helps them get a handle on why they’re feeling overworked, underpaid, and on the road to burnout. Your time is critical to sustainability as you’re the most critical resource your business has.
There are two big reasons micro businesses struggle with money. They either are not bringing in enough revenue, or they’re spending too much money. (And sometimes both things are true.) The financial health of your business is essential to sustainability if your money is a mess, it’s hard to make solid decisions let alone build something that will last for years to come.
If you’re avoiding your money, this is your call to commit to getting the basics like a budget and bookkeeping handled. I’m not someone who was a natural at managing money so I resisted this for years, but it’s one of the most powerful things you can do to ensure you’re not building a business where you’re struggling and stressed out 24/7.
Service business owners often fall into the trap of thinking that getting clients is some type of magical act. No matter how that IG influencer talks about manifestation and client attraction, it’s not magic. Getting clients requires a marketing plan we’re you’re proactively making an effort to reach potential clients.
That’s not to say that you need to build a massive social media following or blog for your business, but rather that you need a plan in place where you’re consistently connecting with would-be clients. Sitting back and passively waiting for referrals isn’t a sustainable marketing or business plan.
Your sales strategy matters as much as your marketing strategy if you can’t sign clients it’s challenging to have a business that’s solid month in, month out. Honestly, sales skills from how to create packages to price your offers to writing proposals are seriously underrated skills, and they’re ones that we can all be continuously improving on.
Get clear on what’s working and what may not be working in your sales process. Very small changes can make a massive impact. In fact, I’ve seen a simple pricing change or proposal update be the thing that makes the biggest difference for my clients too many times to count.
Finally, as a service business owner, how you serve your clients contributes to your business sustainability every single day. From how you onboard your clients to how you communicate with them impact if they continue to spend with you, if they refer other clients or if they hire you for new projects.
Watch for patterns with your clients. If you’re always having communications misfires or boundary issues, those are things you can fix that make your life easier and your business more sustainable. Or if you find that your average client tenure is low (and your business isn’t designed that way), that may be another sign that you need to make some changes.
Small, Simple Changes = Greater Sustainability
As we wrap up, I hope you’re breathing a big sigh of relief that you don’t have to do all these expensive, complicated things in order to build a business that works for you.
Small, simple changes are what build a business that’s more sustainable. If you’re not convinced, I want to share the story of my client Emily who’s a B2B content writer.
When we started working together in the BS-Free Service Business Mastermind she had a heavy client load and felt like she didn’t have enough time.
With some very small changes which included a price increase and letting a couple of clients go, she’s working less and making more money. Together, we figured out what her ideal client load is and her max number of work hours per week, and by sticking to that she’s bounced back from burgeoning burnout.
As Emily shared with me “this mastermind has shown me that I really can do — and be successful at — my work on my terms.”
While that’s proof that what we do in the BS-Free Mastermind works, it’s a testament to the power of small changes that are made with sustainability in mind.
If you’re interested in the BS-Free Service Busines Mastermind, we’re opening enrollment any day now, so get on the waitlist!
You can check out the wait list page or send me a DM on Instagram @smallbusinessboss and I’ll send you the link.