Captain’s log, stardate 20191226
At this time of year, it’s natural to look back at how things went in the past year, and how you would like them to go in the next.
But this raises the question, what do you look at to judge how things went?
Business-wise, it’s tempting to look at revenue year-over-year because it’s usually the easiest number to pull up.
But YoY revenue is only useful if all your costs stayed the same, which is probably not the case.
Did you rent an office?
Did you travel more?
Did you hire a VA?
Did you bring on a salesperson?
Did you spend a lot on professional development?
And most importantly:
Did you work more?
In my opinion, increasing your revenue by putting in more hours is not progress.
Each year you want to be creating more leverage. In other words, coming up with reliable ways to make more while working less.
This is virtually impossible to do if the bulk of your income comes from hourly billing.
Sure, you can raise your rates from time to time, and you can try to cut costs here and there, but pretty quickly both of those tactics max out.
And that’s when you find yourself stuck in the hourly trap.
You’re making good money, but to sustain it you have to work constantly. This doesn’t leave you any time or energy to create the leverage you need to get out of the trap. And even if you do find the time to work on your business, every unbillable hour that you spend feels like you’re losing money.
Your income stalls. Years go by with you basically just treading water. At some point, you start to wonder if you would have been better off financially if you had just stayed at your day job.
To avoid the hourly trap, you need to find ways to create leverage in your business (i.e., ways to make more money without working more hours).
This is why I’m always banging on about creating products, offering productized services, value pricing projects, and so on.
They’re all ways to create leverage.
So...
How will you create more leverage in the new year?
Yours,
—J