If your small business falls under the service based industry category and are charging by the hour, increasing profit can often present challenges. There are two aspects to profit: the first is your income, and the second is the expenses you deduct from that income to get your profit.
In the Service Based Industry Webinars I run, I spend a lot of time with service based industries on what I call a ‘Revenue Model’. This revenue model looks at marketing and moving people down your sales funnel, but also helps you determine your costs for each hour that you charge out. So rather than only looking at your charge out rate you need to look at your costs for each hour. For example, you need to consider staff that you have working with you – how much do they cost you per hour?
For example, I recently worked with a client who runs a gardening service. When looking at his revenue model, we considered the following:
- Staff costs
- Vehicle running and maintenance costs
- Machinery running and maintenance costs
By considering these additional factors we were able to determine what his ‘true costs’ were. We then looked at his hourly rate to ensure he was making a profit and that this was the best profit for his business.
Another way you may be able to increase revenue in your service based business is to look at the information and knowledge that you can share with the outside world. Sharing this information can enable you to earn passive income. Adding information marketing to your business can add a revenue stream that can be working for you 24/7, 365 days a year!
