May 03 , 2018

Double Your Income Every Year – How to Unlock Consistent Growth in Your Business

Consistent Income Growth

When I first heard the saying “work smarter, not harder,” it stunned me. I just sat there slack-jawed and confused while the guy that said it casually got up and walked away.

It happened in a college class, and ever since that moment I’ve been trying to figure out what it actually means.

I remember this experience because I felt dumb – like a Neanderthal banging stones together while everyone else is driving flying cars.

I now had a big question looming over my head…”How does somebody actually work smarter instead of harder?”

Whatever the answer was, I wanted to do that.

But I didn’t realize until much later that it’s not the answer to that question that is valuable, but the question itself.

No matter what you’re doing, this question has the power to jolt you out of default mode and ask – “how can this be done faster, easier, or better?”

The answer is always different, but there is usually value in asking. You just have to remember to ask (which is surprisingly difficult). Then you need to actually take action and test the answers you come up with (even harder).d

Sometimes working smarter means challenging common assumptions like the idea that giving free quotes is required to run a handyman business. (Hint: it’s not.)

Sometimes it’s a matter of finding a mentor who can show you an easier path. And it’s almost always a matter of delaying gratification to focus on the long term.

Whatever it is, if you want to double your business (and your income) year after year, then you will certainly need to work smart – and probably hard too.

So in this article I’m going to share how to work smart to experience consistent growth in your business, year after year, without making overly risky decisions.

Maximizing Profit vs. Increasing Profit Potential

Assuming you are actively trying to make more money, there are two ways to do that: maximizing current profits and increasing profit potential.

#1 – Maximizing Current Profits

This would include obvious things like working more hours or simply raising your rates.

For example, let’s say you currently charge $50 per hour as a pro handyman. To maximize profits, you could take on more jobs and work more hours, or you could increase your rates and charge $60, $70, or even $100 per hour.

The logic here is straightforward:

More Jobs = More Money
Higher Rates = Higher Profits

And this is a worthy place to spend your time. There are plenty of ways to maximize your profits as a handyman, and you should learn them all.

However, if you only focus here, you’ll eventually hit an income ceiling because there are only so many hours in the day and there is a limit to how much you can charge. That limit is likely higher than you think it is, but there is a limit.

So unless you go beyond maximizing current profits, your income will eventually stagnate. This is not necessarily a bad thing, but the purpose of this article is to show how you can double your income year after year, so let’s talk about the second way to grow your income.

#2 – Increasing Profit Potential

This would include activities like learning new skills, hiring employees, building systems in your business that save you time or enhance your effectiveness, getting a contractors license, testing new revenue streams, or even starting a completely new business.

Increasing profit potential is all about investing your time now, probably unpaid, so you can increase your value or leverage, and therefore, potential profits.

So let’s say you’ve hit an income ceiling in your business. You’re already charging as much as customers are willing to pay and working as many hours as you can. Investing time and effort to increase your profit potential is how to break through that ceiling.

And there are infinite ways to increase profit potential. Here are a few examples:

  • Improve your marketing and target higher paying customers
  • Acquire new skills that people will pay higher rates for
  • Move to another city with a better economy
  • Start selling your extra leads to other contractors
  • Test out different pricing models
  • Build systems that automate common tasks and save you time (one of my favorites)

To use the Michael Gerber saying, this is like working “on” your business instead of “in” your business. However, increasing profit potential also includes working “on” your life and personal development as well.

So, maximizing profits is about short term strategies that pay more today. Increasing profit potential is about long term thinking and doing things now that will pay off big tomorrow.

Unlocking Consistent Growth – Year After Year After Year

The key to consistent growth is to balance your time between making money now (maximizing profits), and focusing on future growth (Increasing profit potential).

Too much time spent on either will stifle growth, so the right balance is key.

By focusing too much time on maxing out profits today, you’ll hit an income ceiling. By spending too much time on future profits, you risk running out of money and motivation. So, you need to invest enough time so that you make enough money to support your life today, and then invest the remainder into future growth.

One of the beautiful things about owning a business is that you get to decide how you spend your time, which is a unique asset that most people simply don’t have. That means you can seek that balance.

Employees are stuck being squeezed by their bosses for every ounce of productivity every day, and rarely have time to think, strategize, or develop themselves. Being free of that is a huge advantage.

Use that advantage. Here’s how…

Step #1 – Understand Your Finances

The first step is to understand how much money you need today in order to maintain your lifestyle. This is important because it helps you determine how many days or hours you need to work “in” your business right now (providing services), which also helps you figure out how much time you are able to work on increasing profit potential.

Step #2 – Schedule Time That Is Non-Negotiable

Just like you’d schedule a job for a customer, schedule time to focus on future growth – whether that is attaining new skills or knowledge, or working on your business. And ideally, that time isn’t going to be during the weekends or after hours.

Save that time for rest and recovery. Trying to do hard work that requires tough decisions when you’re already tired is ineffective (i.e. working hard and dumb). Not only does it lead to poor decision making, it’s not sustainable or enjoyable. It’s just a quick path to burning out.

Never try to do too much at once. And when you do, make sure it’s only done in short bursts because burnout sucks, and it ends up slowing you down in the long run.

So instead of trying to work more, try to work the same amount, but just spend less of that time providing services and more of it working on future growth – i.e. increasing your profit potential.

For example, once I got my handyman rates up to a certain point, I scaled back my schedule and only provided services three days per week. I was still able to generate enough profit to support my lifestyle, and the rest of my time was spent building the very website you’re reading right now.

Maybe you can only afford to spend half a day on increasing profit potential. That’s okay as long as you invest that time wisely. If you do invest it in the right things, you’re income will raise to the point where you can work fewer hours and make the same amount of money.

And that’s the beauty about this process – it’s a virtuous cycle. The more time you invest in increasing your profit potential, the more time you’ll have to spend on increasing profit potential. That’s because your income per hour will naturally grow over time and it will take fewer hours to make enough money to support your lifestyle. That allows you to invest even more time in future growth, which leads to even more growth.

If you do this consistently and with discipline, you’ll eventually be able to stop working completely, and all of your working time will be solely on increasing your potential profits. You’ll be a business owner instead of a business operator.

It’s kind of like investing money so that you have more money later, but instead you are investing time and working smart so you have more time and money later.

Why Doesn’t Everybody Do This?

This concept is easy to grasp – spend time and effort working on improving yourself and your business and your income and freedom will grow over time. But as always, implementing things in real life is much more difficult. And there are several reasons this is especially hard to do.

It Limits Current Profits

When you work on your business, you limit your current profits (assuming you can keep your schedule filled). One hour spent on improving your marketing is one less hour you can work for customers.

So, you’ll always be sacrificing a little bit of money today to make more money tomorrow.

In fact, if you consistently invest time into increasing profit potential, you will never maximize your current income. You’ll always be earning beneath your capacity. That’s a hard thing to train yourself to do.

However, when you do, you’ll always be increasing your capacity. Sure, five years from now you might be only earning 60% of your potential profits, but that’s not bad if your potential profits are $300K/year.

Results Are Rarely Guaranteed

Many of the projects you work on won’t even pay off.

Your first employee may cost you lots of time and money with nothing to show for it except a learning experience. You may not recoup your investment until the 3rd or 4th employee.

You might read five books that don’t help you at all until that sixth book changes your life.

You could try offering a new service that might pay more, but will it really work out? Is there already too much competition offering that service? Will it be worth all the effort?

You’ll never know unless you try it, and people don’t like uncertainty. They’d rather spend time on things they know will pay – like providing services.

However, many of the projects you invest time into will work, and the benefit of those will far outweigh the failed projects in the long run. You just have to think long term, which is not a natural thing to do.

The Work Is Less Enjoyable

If those first two reasons aren’t enough to deter someone from investing time to increase their profit potential, this is the one that does it.

The truth is that higher leverage work is usually less fun while you’re doing it. For example, sitting in an office working on your online marketing is much less fun than fixing stuff for people.

Spending thirty minutes to make a checklist today so you save 2 hours per month on your accounting later is boring as hell.

When you fix a customer’s home, you get instant gratification. They pay you with a smile right then and there. When you work on improving your business, the results are usually delayed. Sometimes weeks. Sometimes months. Sometimes years.

Sure, the payoff might be huge, but delaying gratification is something we humans suck at, and we certainly don’t enjoy doing it.

Then Why Does Anybody Do This?

It turns out working smart in this case is counter-instinctual – it forces you to work against your natural tendencies.

In order to break into higher earning potential, you have to sacrifice profits today, work hard on boring things that may not even work, and wait weeks, months, or even years for that effort to potentially pay off.

Who the hell wants to do that?

I don’t think anybody wants to do these things – they just want what these things will get them.

Maybe that’s social status. Maybe that’s to prove people wrong. But I’m guessing that the primary motivator is fear. Fear of falling behind. Fear of waking up 10 years from now in the same exact financial situation. Fear of never having the time to spend with their friends and family. Fear of being too old to work and living from social security check to social security check.

I know that’s what drives me to do it, and in this case I’m thankful for being motivated by fear. It’s a healthy fear because it helps me do the hard things that improve my life.

So What Should You Do?

One thing I recommend to my consulting clients is to take at least one day off each week to work “on” their business – usually a Monday or Friday. That’s often a good place to start. As time goes on and your profit potential grows, you can invest even more time into future growth.

Whatever you do, spend some time on personal and business development. Your future self will thank you.

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