John D Rockefeller, a man who commanded incredible amounts of money, once said: “Those who have leisure time to spend pursuing their passions and dreams experience the real wealth in life.”
Knowing how to spend time is a more valuable skill than knowing how to make, manage, invest and spend money. It is wise for entrepreneurs, who want to be truly successful, to master the use of their precious and irreplaceable time. What I have found most interesting is those who know how to manage, budget and save time—rather than letting it manage them—will always find it easier to make money. Learning how to lop 10 hours off a typical work week without sacrificing any income may take practice, but it’s easier and faster to accomplish than most people think with these three steps.
Step One: Fire Extraneous Customers
The first rule of any time management system is to utilise the time we are allotted most wisely. As the saying goes; ‘Time is money.’ The thief to be most wary of, is the one who steals our time. So the rather controversial first step is to eliminate wasted time on customers who tie up sales representatives with inconsequential sales, steal your valuable time with constant complaining and waste your accountant’s time chasing them for payment. You need to either get rid of them or transform them into customers who proactively feed the bottom line. While this approach may sound radical, it makes practical sense to only focus on customers who respond with profitable transactions.
Firing customers may involve deleting dead-end leads from the client database. Or it may mean sending customers or clients to a business that more appropriately matches their price demands. Or you could adjust the magnets that are attracting those unwanted customers in the first place. Examples of this are discounts, freebies or products in the business that are not related to the core business model. Concentrate solely on products and services that produce the most profit and cull the dead weight ones that don’t contribute their share to the bottom line. You could spin those lines off as stand-alone businesses and sell them to another entrepreneur or upgrade to premium versions that offer higher profit margins. Profit is always the goal and is the most important barometer of success.
Step Two: Double the Conversion Rates of Transactions
Money is a fabulous timesaver and those who know how to make money more efficiently can leverage it to carve out more time for themselves. The key to increasing profits is to convert unprofitable interactions into profitable ones. This is a foolproof formula for saving more hours each day without compromising productivity or earnings. It does not have to take slow years to make the money needed to free up an extra 10 hours a week. Bear in mind that the road may be long, but those with a faster stride arrive at the desired destination much quicker. Most people crawl toward retirement. Innovative entrepreneurs sprint there in record time.
If you invest in a mutual fund or pension plan and it may take decades to get enough of a nest egg to make it possible to semi-retire and take 10 hours off each week to play golf or spend time with family. However, increasing profits in a business can be done in a matter of days or weeks.
To prepare for your profit-boosting initiative, gather accounting data and metrics to get a clear picture of where your profits come from, how many contacts are made with customers each month and how many customers make actual purchases. An easy way to harvest such information is by using software connected to point-of-sale terminals or cash registers.
Next, launch a marketing and advertising push to generate new customer leads, to encourage existing customers to buy more and to promote the most profitable products or services.
Part of this effort should involve a new way of looking at the business model. Most entrepreneurs see the future of their companies in terms of products and services that fill a particular market need or niche. Find the right merchandise and the customers will come. Build the best resort and it will be booked a year in advance. Invent a better mousetrap and make millions. Another way to view the marketplace of opportunity is to reverse that point of view. Instead of looking for the ideal items to sell, invest in purchasing the loyalty of the perfect customer. Rather than chasing market share, chase “wallet share” or more profitable customer-based transactions. No matter what a business sells, it’s ultimately the customers and how many times they spend money that generates the profits. Invest in attracting and retaining good customers and the rest will take care of itself automatically. Instead of reinventing the wheel, find out who is buying wheels and make them your steady customers. Then sell them a premium wheel with a wider profit margin. Finally, ask clients to bring in their friends so that you can sell them a set of wheels too.
Once an expanding customer base is established, use incentives such as superior customer service, in-house financing, exclusive product lines and preferential customer perks to inspire clients to double the number of their monthly transactions.
Try up-selling customers to premium products. Cross-sell them to accessories or add-on features. Even down-sell to them by offering a more economical version of the product they can’t yet afford so that they don’t take their business to a competitor. At the same time, continually make a choreographed effort to generate fresh leads for potential new customers.
Step Three: Run Your Businesses on Auto-Pilot
Now the business owner has enviable options. One possibility is to close down the business for 10 hours each week, take time off and settle for making the same amount of money per month that was generated before boosting profits by 25 percent.
Another alternative is to leverage that newfound success for progressive changes and forward momentum. You can maintain the same hours of operation, capture the extra 25 percent in profits and then wisely reinvest those profits in greater timesaving initiatives.
By working smarter—not harder—through organized systems, cutting edge technology, innovative advertising and dynamic employee training, you can prepare to put the business into the hands of capable others – which is the next step toward personal freedom. If somebody else is running the store without any loss of productivity, it is possible for you to literally play golf all day without loss of income.