“I want to make more money”
We're nearing the beginning of the New Year and it's around this time that we start to really vocalize the thought that is always at the backs of our minds: "I want to make more money". We may continually WANT to make more money as coaches but we rarely go about it as strategically as we do at this time of year. There's something about the new opportunity of a brand new year that compels us to act on our wishes.
How you go about earning more money is the challenge. Do you raise your rates? Do you increase the number of hours you work in a day? Do you create passive income?
There are lots of things you can do, but I have one starting point for you and, if you follow this, you will thank me. If you want to make more money, the first thing you need to do is know how much you made. The first number I'm talking about is annual revenue (which might still need to be estimated a bit if you're reading this before the end of the year).
But more importantly, in my opinion is your EFFECTIVE rate. Now, you probably charge by the hour (or, at least, can break down your rate into an hourly rate). But what is important to me is your effective rate: The amount of money you make in a day divided by the number of hours you work. This is what I call the "reality check" number.
Let's say you make $50/hour based on the amount that people pay you for an hour of coaching or a calculation you've derived from charging $150 for a 3 hour coaching call. And over the course of the day you make $250. So a simple calculation might suggest that you worked 5 hours ($50 x 5 hours = $250). But we both know that's not true. Maybe you put in 8. Or 10. Or 12. So rather than figuring out what your hourly rate is and being proud that you charge that amount, get a reality check and figure out what your effective rate is: If you earned $250 from 5 hours of coaching but you worked 10 hours in a day, then your effective rate is $25/hour. ($250/10 hours). Not so thrilling, is it?
But it does give you a starting point: Now you know what you're really earning per hour of work you do in a day and before you think about raising your prices or working more hours, the first thing you should think about is reducing the amount of hours in which you are not billing and increasing the number of hours in that same period in which you are billing. In other words, don't yet commit to reducing your 10 hour days (if you don’t want to). Instead, find ways of increasing the coaching time from 5 hours to 7 hours in your day while decreasing your non-revenue-generating work by the same amount (from 5 to 3 hours). Doing that will add $100/day to your revenue without changing the amount of work you do!
You can do this by creating systems, by shifting your coaching call times so you can get 2 calls in the afternoon instead of 1, by hiring an assistant, and by automating some of the work you do now.
Want to make more money? It starts with a reality check.
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