Most of us treat our web design businesses not as a business but as a hobby. And hobbies are dealt with in a different way than businesses. Most of us don’t know the exact definition of a business; even Wikipedia says: “the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.” It definitely is.
In my opinion, as a small business owner, in order to start treating your web design business as a business you need to focus on 2 things.These two things are actually the most important parts of small businesses by many. They are something like wheels for your business to stand on. So, it is important that they be strong wheels which will carry your business without major problems. They are:
Growth mostly requires investing money. Remember the old saying “you need money to make money”. Well, that is mostly true. I say mostly because 20 years ago when internet businesses didn’t virtually exist, it was not easy to create a business without money. In fact, it was almost impossible. I’ve talked to many people who own an internet business and was surprised to see that not many of them invest more than 10-20% of their money back in their business.
So many people seem to have fallen into that dream of working from home without an effort. This is a bad approach because it is like seeking a magic bullet. Sure, when your business really develops and you start to make large amounts of money from it, you can decide easily whether it is worth it to invest in your business or not. But, in the beginning stages of your business, you must be willing to sacrifice more by investing more of your profit back into your business. This is a necessary component if you want to have your business go faster through the stages of its development.
a) Re-investing the money you made into your business. New tools, employees etc. There a lot of art and science into investing your money wisely.
There are a few books on this, however, most of them seem to be of interdisciplinary nature. That means they combine various things like psychology (how to not get tricked in spending your money on un-necessary things), simple management and some common-sense lessons. So far I haven’t found any book that promises to teach you how to invest and manage money in a truly scientific matter, if you know please write in the comments.
b) Effectively managing cash flow. One of the primary reasons small businesses fail is not a lack of profit but a lack of CASH. If you want to exactly learn why, I highly recommend this article (PDF). Cash flow is very important.
Make a cash flow prediction and have some overview of where the cash goes and from where it comes and when. You can take a look at the PDF file above for examples.
After cash flow, profitability is usually the second most important thing a business should focus on. Without profitability, there is no point in creating a business. Like we said above, you can’t also expect profitability immediately. First you have to work and to invest, and watch your profitability slowly increase. Sometimes it may increase fast. Whatever happens, it must me on you mind most of the time. You increase profitability by:
a) Lowering costs
There are probably hundreds of things you’re doing right now in your business that you can do more efficiently. For example, if you hire a virtual assistant for $600 per month, you can probably spend some time and find a cheaper virtual assistant for $300. If you have a tool you use that costs $50, you can probably find it for a cheaper price or have it custom-made so it’s cheaper in the long run. Since everything is changing so fast today, you always have to be looking for a cheaper solution. Because, if it is not here today, there is a big chance that it might be available tomorrow.
A good exercise I once heard is to spend 2-3 days of the week, 5 minutes a day brainstorming different ways I can increase your efficiency. Definitely invest time to see what you could improve so that in the end you have more leverage.
b) Increasing revenues
Getting new clients and keeping existing ones is an essential thing for a web design business. In my article, What Can Web Designers Learn from Business People I outline different ways you can keep existing clients. What about getting new ones? Don’t always focus on keeping the same clients. See what clients are worth keeping the most. The ones that seem like they are going to do more bad than good are probably not worth the effort of keeping compared to the clients that seem like they are going to be even more worthwhile in the future.
A good strategy for that is to go where your clients go. If most of your clients are internet marketers and small business owners, many of them hang out on forums (Digital point, Warrior Forum, WickedFire) which have a special section where people provide their web design services. Freelance sites are just one piece of the puzzle. Put yourself in the shoes of your clients. Try to imagine how you would think if you were them. Where would you go if you were them? Who would you contact if you were them? If you start to think like this, it will definitely help you get closer to your clients.
GET EXCLUSIVE WORDPRESS & BUSINESS TIPS
Enter your email to join with 1WD in 2016. We will send you only the best content as well as special subscriber only tips to supercharge your WordPress website and how to succeed as freelance designer!