In a previous post, I shared how I quickly discovered a prospect was not a good fit from learning his reluctance to pay for a $15/month CRM tool. This got some reaction from bootstrapped consultancies, so let's clarify the main issues with this kind of attitude and how it can affect your business.
A scarcity mindset, as I've shared in the post, is a result of our habits and beliefs. It will directly impact our self-talk, our expectations, our goals, our use of time. One of the easiest ways to discover someone's mindset is to look at how they invest their resources.
Your most valuable resources are your attention, your time, and your money. You choose, consciously or unconsciously, how to allocate them.
One idea that most successful consultants I know agree with is that everybody has a budget, but there's a cost of doing business.
What this means is that if all you do is look for ways to reduce costs, your business will suffer the consequences in the long term. There's a limit to how much you can cut, but not on how much you can earn. You should act accordingly.
To build a profitable practice, you need healthy margins. But there's time to save money, and time to invest it. What I often see is a huge lack of clarity, with consulting firms increasing superfluous costs and saving on initiatives that can drive growth.
I've listed what I consider to be smart investments and dumb expenses for you to reflect on, as a partner or independent consultant.
- Sales prospecting and network nurturing
- Building an inbound engine and creating new IP through writing
- Buying or hiring equipment and critical software
- Maintaining a professional website and standardizing your brand
- Documenting and outsourcing recurring processes and tasks
- Creating digital assets that produce passive income
- Personal and family time, and taking care of your health
- Insurance for health, life, and property
Be frugal in:
- Hiring people, especially full-time employees
- Technical training or formal advanced degrees
- Social media management and non-essential software
- Nurturing relationships with toxic or pessimistic people
- Investing time on 1:1 calls with nonbuyers or clearly bad fit prospects
- News and mass media consumption
Shifting the way you invest your time and budget will highly increase your productivity and profit per hour, be seen and perceived as a trusted professional in your industry, and get much more enjoyment from your work.
Do you want your business to thrive? Understand the costs of doing so.