August 7, 2020

The Problem with Service Based Businesses

There have always been and always will be issues with service based businesses that are unavoidable. I have had my fair share of them over the years until I started to change what I was doing and think more about how I can work smarter, not harder.

I started out in salons where the only way to make money was to provide a service to someone in exchange for money, which meant that either I had to be doing that or I had to pay staff to do that.

If I wanted time off or they did, the income dropped.

If people didn’t show up costing me income, I still had to pay the staff member, the rent, the phone, the suppliers and the list goes on and on.

Look it wasn’t all bad, it was definitely profitable once I figured out a lot of the solutions. But it still involved a lot of hand holding of staff, dealing with a lot of customers and then not to mention all the behind the scenes work that went into it all.

It was tiring and yes I had managed to make profit, but I didn’t want to actually be in the business anymore. I wanted to work out how I could work even SMARTER than I currently was.

It wasn’t about not working ever again, even though I DID need a break, it was about how can I leverage what I know to create the next thing?

I knew I couldn’t physically keep going, I had already cut my hours back as far as I could because of the toll that the industry had taken on my physical body - so I had to find another option.

And I did.

When I finally figured it out, the first income I made that was totally working smarter was $5000 over the phone from someone that didn’t know me before that call - and I hadn’t needed to pick up any of my tools of trade in exchange for that. If I’m honest with you - I was sitting at my kitchen table with casual clothes, no shoes, no hair or makeup done.

I remember thinking - “FUCK! I just made as much money in a phone call as what I could make in a WEEK working 30 hours! FUCK this would take me 2 years to make $5000 from ONE PERSON. FUCK I JUST MADE $5000 FROM TALKING TO SOMEONE!”

I had no idea in that moment what was in store for me from that point - I started to realise I could make even larger amounts of money from there.

That year I turned over in my business $250,000 with nearly all of it profit, with me barely working at all. I was watching daytime tv, watching dvd’s (this was way back before Netflix, yes I’ve been doing this a LONG TIME), travelling and doing the shit I wanted to do when I wanted to do it.

I then went on to build it to a $2.5mil a year turnover, with me still working on average about 20 hours a week, whilst being pregnant and sick, having a baby, getting divorced and being a single mum.

The thing that I see in serviced based businesses is that the profit margins struggle to exceed around 30% at best case scenario because of all the overheads and staff that are involved in the day to day running. No matter how much you grow and build, it gets stuck percentage wise around there because of staff costs.

The best thing about what I did with working smarter not harder was I totally flipped the percentages around and instead of having 70% in COSTS, I had 70% in PROFIT. Which meant I also had a lot less people to deal with and a lot less headaches!

I get that it’s hard to believe that it can work like this - my accountant’s over the years have always questioned my figures in the beginning as it’s not “Normal” but then soon discover that it can be.

A client of mine recently switched to my new model of business after 20 years in a service based business and started selling $5000 products on the phone too, during Covid-19. This Client made herself a nice $45,000 in under a month without her needing to reach into anything from her usual toolbelt! She was pretty amazed!

If you are in a service based business and you are physically struggling with the demands on you and have been looking for how you can be working much smarter - message me and let's have a chat about what’s happening for you!

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