Small Business Online: Thriving in a Virtual World

Time: The Richest Commodity - Part Two

There are unimaginable rewards to having this type of foundation solidly in place at the start of your business, especially a small business. One is that you will obviously build and KEEP a great client base – and the other is free time. Without a system, believe me, you’ll find yourself working twice as hard and for many more hours than you would otherwise, and you’ll be so busy treading water that even finding ONE day off will feel like a miracle.

Another pitfall of poorly managed time? Money! I won’t even talk about the potential money that you can’t make because you’re busy spinning your wheels ineffectively and NOT marketing in those lost hours. Let’s just talk about the inaccurately tracked project time that you can’t invoice your clients for. Or the time that is forever lost when you spend it tracking down team members and following up missing documents and unmet deadlines.

Look, when it comes to running your own business, big or small, you MUST have a time tracking system BEFORE you start invoicing. Preferably you’ll choose one with easy reporting. That will allow you to not only invoice your clients simply and correctly, it will also let you easily cross-check your incoming subcontractor’s invoices.

The POM Factor. Finally, when it comes to the business of business, NOTHING beats POM: Peace of Mind. It’s tough enough to do the work, run the show, and please everyone on every side of every equation. Putting foundational tools into place before things get crazy will allow you to focus on creating great work and marketing your services and your company. It’s extremely difficult to be mentally available for great, unexpected opportunities when you’re tracing and retracing the same issues and questions every day. Managing your time and your projects is like having a safety net under your high-wire act. It leaves you free to focus on the work directly in front of you and the other people you’re performing with (and for).

The Richest Commodity: Time

Time management is probably the number one most effective success building tool for any small business or entrepreneur. Without it, creating long-term success is like trying to catch that elusive brass ring on a merry-go round. Round and round you go, just hoping to grab that ring (and more than likely missing it over and over). If you can put a reliable time management system into place from the beginning, however, week after week you get to avoid some pretty big pitfalls. What kind of pitfalls? Let’s start with missed deadlines.

There’s no way around it, deadlines are hard to manage if you work on your own. Projects and clients can easily start to become a blur during busy times. And if you get busy enough and are lucky to have a team – or need to hire subcontractors to contribute to one or more projects – well, you get the picture. People and tasks and timing can get pretty overwhelming. The sooner you have a flexible mechanism in place to help you make sure that project benchmarks are met and things stay on track, the better.

Multiple Income Streams for Small Businesses to Weather any Economy

It can be tough to be a solo professional or a small business that relies on a single source of revenue like client projects.  In a difficult economy, your long term clients can cut back on their spending, leaving you short of the cashflow your business needs.

The concept of “multiple income streams”has become popular over the last decade with real estate gurus like Robert Allen, “wealth-building” gurus like Robert Kiyosaki, and professional slackers like Tim Ferris touting the benefits.

But as applied to your small business, it’s not about renting out your extra office space or the back corner of your home office.  It’s more about diversification, and ways to generate passive income (money that comes in without you working for every hour to generate it).

Diversifying Client Risk

A typical freelance consultant or virtual assistant might do work for 5 clients a month, and bill 40-50 hours per week (which is probably 50-60 spent in the business).   But for many, instead of each of the 5 clients representing 10 hours in a week, one client will take up the majority of the available hours (maybe 25 hours out of 40 or 50) in a given week.

The rule of thumb in business to reduce exposure is to try to limit your income from a single client to 20% of total revenue.  But this can be challenging with hourly work, especially with good clients - working with two or 3 good clients is less taxing than working with 5 or 10 in the same month for a solo professional.

The problem is that if one of your clients leaves, you’re now at risk for more than 20% reduced income for that month unless you can quickly find a replacement client.

Generating Passive Income

The other strategy for weathering any economy is build up additional sources of income that are more passive.  In other words they don’t rely on your active participation every day (although these do take some time and effort).  There are a couple of good ways to do this:

1. Offer your own monthly service or maintenance program

If you offer a service like web design, you might offer a monthly maintenance package  to your clients to update their site or monitor its uptime, or even do web hosting for them for a monthly fee.

If you are a virtual assistant, you could offer monthly retainer packages that don’t rely on hours, but on specific services rendered.  For example, if you do “social media”, your package could be to maintain a clients online presence (in whatever special way you have) for a set monthly fee.  You can list what types of things you’ll be doing, and even provide a list of what things you did, but get away from a strict hourly billing approach.

2. Become an affiliate of complementary products or services

Even simpler than creating your own services is to offer services from other companies that you commonly use and trust.  A web designer could be an affiliate for a web hosting company instead of offering their own hosting.  A virtual assistant could refer clients to affiliates who do specialized services like accounting, graphic design, or software development.

The same idea works with affiliate products as well as services.  For example, our company’s affiliates refer clients or colleagues and get a recurring commission for as long as the referred account is active.  There are many other affiliate programs available for everything from books and office supplies to seminars and coaching.

By using a strategy of client diversification (remember the 20% rule), and adding carefully chosen passive income sources, you can make your business resistant to downturns, sudden client cancellations, and whatever else life brings.