How to increase revenue in an established service-based business

Want to know how to increase revenue in an established service-based business? There is a big difference between saying ‘I’m going to make more money this year’ or ‘I’m going to increase revenue this year’ and it actually happening. And increasing revenue when you’ve been in business for a while is different to when you are first starting out. Keep on reading to find out how to increase revenue in an established service-based business.

 

 

 

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HOW TO INCREASE REVENUE IN AN ESTABLISHED SERVICE-BASED BUSINESS

 

There are multiple ways to increase revenue in a business and if you are serious about increasing revenue you’ll decide what approach you are going to take. A tried-and-tested way to look at how you’re going to approach your business growth is the Ansoff Matrix. The Ansoff Matrix makes you consider whether in order to grow you are going to continue selling what you already have, or add in new offerings. And it also makes you consider if you are gonig to continue selling to the same target market as currently or sell to a different target market. Making those decisions will help you to categorise your business growth strategy. I absolutely love the Ansoff Matrix and have written more about how you can use it to choose your growth strategy here. But in this blog post I want to share a way to consider how to increase revenue in an established service-based business.

 

 

Question 1: Is there enough spare capacity to achieve the increased revenue goal?

 

The first thing you should look at is whether you have enough capacity for the growth you are trying to achieve in your business. If you’re a one-on-one service provider and you look back over the year and you can see you’ve worked at 50% capacity across the year and this year you want to increase revenue by 50%, then you’ve got enough capacity. The 50% increase (if pricing and amount of hours) stayed the same would mean you are operating at 75% capacity.

 

Even if you aren’t a only selling one-to-one services and already have scalable services in your business you can look at whether you are reaching your full capacity. For example, it might be that you ran an event where the space could hold 200 people, but last time you ran the event you only sold 120 tickets. Or if you have a membership that you technically you say is unlimited, but would feel comfortable have 500 people in and right now you have 300 then again there is capacity for increase revenue.

 

If you have enough spare capacity to achieve your increased revenue goal, then your focus should be on marketing. If you only operated at 50% over the last year, that means there is a mismatch between supply (your capacity) and demand (the number of people wanting to pay). If you had an event that didn’t sell out then once again there is a mismatch between supply and demand. Your focus should be on increasing demand, which means improving your marketing.

 

Knowing that you should be focused on marketing is a great starting point, but it’s just a starting point. Ideally, you want to dig deeper so you can understand where your marketing isn’t working as well as it needs to be and strengthen that aspect. For example, is it that you’re not creating enough interest and enough leads from your marketing or are people initially interested but you struggle with closing sales? Looking at past data will help you to understand if you have a marketing problem or a sales problem and what part of the buyer journey you should focus on improving. It could be that you really need to drill down on improving your sales conversion. it could be that you actually need more visibility and for more people to know that your business and your services exist. Or it could be that you need both.

 

Question 2: How could, and how would I like, to increase capacity (hours)?

If you’re an established service-based business, you easily could be operating at full capacity. So what do you do in the situation? In this situation you can look into how to increase capacity so the business can deliver more.

 

Option 1 – Free up your time for more client delivery 

If you are a one-on-one service provider responsible for all delivery, but also other aspects of your business, then the first thing you can look at how to free up more of your time for client delivery.

 

Firstly, you can ask youself “What could I be outsourcing that isn’t client delivery and that would give me back time?”. Something I do in my business, and I encourage my clients to do, is track their time. A great app for this is Toggl. If you haven’t been tracking your time to date, then set yourself the challenge of doing it for the next two weeks and then look back. Look specifically at how much time you are spending on non-client work. You could be spending hours on tasks that are admin, marketing, finance or operations. Tasks that don’t need to be done by you. Then look at those tasks and work out which ones can be delegated to a person or which ones AI could now partially take over. It might be that you are able to gain 2,4 or 6 hours of your week back. If you then used those extra 2, 4 or 6 hours to work with clients how much money would that be worth to your business across a whole year?

 

Option 2 – Hire to increase capacity

The other way you can look at increasing capacity is by using other people  for service delivery. This is very common in the world of marketing. Someone is doing all the work by themselves at once and then once they are at full capacity, they’ll hire someone else who can also do the client delivery work to increase capacity. This blog post is focused on increasing revenue, not profit, but since I’m all about profit the thing to keep in mind when increasing capacity by hiring is to ensure their is enough margin so that yes the business is able to make more money, but it makes more than it costs you to hire additional people.

 

If you decide to take on this route you’ll need to think about how to increase demand, through your marketing, to match the increased capacity. Hiring to increase capacity is one thing, but you need to ensure you can generate enough demand so you aren’t paying for someone who then isn’t doing enough work to cover their costs.

 

CREATE A STRATEGIC PLAN FOR YOUR BUSINESS OVER THE NEXT YEAR – IN JUST ONE DAY! I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here.

 

Question 3: Could the prices be increased?

Another way you can consider increaing reveneuy as an established service-based business is by increasing your prices. Given that you are running an established service-based business it might be that your prices have been the same for a number of years and there is room for your prices to be increased. When many people start their service-based business they’ll look at what others are charging in their industry and then decide to be at the lower end of the scale. It makes them feel comfortable signing their first few clients and the idea is that as they become more experienced and busier they’ll increase prices, but it doesn’t always go that way.

 

As someone who has reviewed hundreds of offer suites and pricing I’ve seen how easy it is to go years charging the same prices, or to have raised your prices for new clients, but have some old clients on old prices. So take a moment to actually look at your prices, look at what else is happening in your industry, consider the value you provide and what your ideal client is willing to pay for this type of service, and decide if you could increase your prices. And then check if that increase in prices would enable you to achieve the increased revenue you desire.

 

Now it would be lovely if you could just raise your prices and remain just as in demand, but that isn’t always the case. There is a relationship between price and demand (the technical term is price elasticity of demand). Usually, as the price goes up, demand decreases. The degree to which this happens will depend on whether your service is elastic or inelastic.

 

The biggest mistake I see businesses making is increasing their prices because they can see that competitors are charging more, but they don’t have the brand positioning or reputation to match. With pricing, it isn’t as simple as knowing your ideal client is willing to pay that much money for a service, it’s whether they are willing to pay that much money for a service from your business. That’s a completely different question. If you are going to raise your prices make sure that you are also looking at your branding, your positioning and your messaging to ensure they are all working together.

 

BE THE CEO YOUR BUSINESS NEEDS. WORK OUT WHAT IS THE BEST GROWTH STRATEGY MOVING FORWARD AND CREATE A PLAN FOR THE YEAR AHEAD. I’m the Annual Planning Queen and I specialise in helping micro service-based business owners plan for the year ahead so they can make their business better. By booking a Strategy Day with me, I’ll ensure you have a powerful and productive annual planning experience where we consider all the major elements to ensure you can achieve your goals for the year ahead. All you have to do is secure your date, block it out in your diary and get ready to be guided through my signature annual planning framework that guarantees that, by the end of the end of our time together, you’ll have a clear roadmap to achieve your goals and be excited for the year ahead. For all the information and to book a Strategy Day click here.

 

Question 4: Should I introduce scalable offers?

 

So far the focus has mainly been on doing the same thing, but seeing if you can sell more (improving marketing), sell more (increasing capacity) or charge more (raising prices). But what if you took a completely different look at your business and considered whether to add a, or multiple, scalable offers,

 

There are so many ways to repackage your expertise and your skills, and  the way you package up an offering will mean you are able to charge different amounts of money and ultimately you’re able to make different amounts of money in the same space of time.

 

For example, if you’re someone who is delivering a service one-on-one you could be charging (the equivalent of) £500 per day. You could decide to create a group offering where you charge £100 for the day, but you can easily accommodate 10, 20, even 30 people. Now you’ve gone from one day of work being worth £500 to your business, to being the potential of £3,000. That is a 6x the original value.

 

In that example, the scalable offer is still reliant on your working, but there is the potential to make vastly more from the same amount of time. But another scalable offer you can consider is a passive income product. This is something where once it is made (so there is some upfront time needed), you are required for the delivery. For example you can create a course that is sold on a webpage where people can instantly buy and access without you being involved.

Now passive income sounds fabulous but you’ve got to remember that you are going to need to set aside a chunk of time initially in order to be able to create it your passive income product, but also you’ll need to develop a way to ensure you can continually successfully market it. For many this involves running paid adverts and so whilst it can be great for increasing revenue you’ll need to keep a close eye on the costs of your ads to ensure that revenue and profit are going up.

 

There are lots of different scalable offers, so if you are intrigued by the idea of adding scalable offers to your business and aren’t sure where to start check out this blog post How to choose the right scalable offer for your business.

 

Choosing how to increase revenue in an established service-based business

 

As you’ve seen, if you are serious about increasing revenue as an established service-based business, you’ve got multiple options. Without knowing you, your business and your ultimate goals I can’t tell which is going to be best. All of them have pros and cons, and are likely to mean something else in your business needs to be improved (whether it be your branding, closing sales, paid ads, team management). There is a lot to consider when working out how to increase revenue as an established service-based business, and when you are established there is more history and more things to consider. That’s exactly why I work one-to-one with service based-business owners to work out the right business growth strategy.

If you just want help with choosing and creating the right business growth strategy for your business, and mapping out how to actively implement that strategy, then a Strategy Day is perfect for you. Click here for all the information.

If you want help with choosing and creating the right business growth strategy for your business AND the training and support for successful implementation, analysis and adjustment, then my 1:1 Business and Marketing Mentoring is perfect for you. Click here for all the information. 

 

 

That’s it. You now know how to budget to support your spending goals and your growth goals.

 

As I said right at the beginning saying you want to increase revenue and actually decide how you’ll go about that are two different things. Hopefully, now you’ve seen how there isn’t a one-size-fits-all approach. You’ve got options, but choosing your route forward is vital. If you try and do everything you’ll spend you, and your resources, to thinly. Instead, you want to focus on one or two things and commit to making your growth in that way initially and then you can also change approach in the future.

 

If you’ve found this blog post useful, please do let me know over on Instagram or LinkedIn.

And if you’d like support so that you can increase revenue, profit and what you pay yourself, then check out my services here.