The three types of profitability every consulting business needs

Leah Neaderthal0:02

We run our businesses to solve problems for our clients, but we also do it to make money, right? But in that, we've been taught to think about profit in just one way, and that is money. But actually there are three ways, and once you know these three ways, you can start to think about how to structure your business, how to get clients, and how to do the work that can create better balance. Welcome to the smart gets paid podcast with me. Leah niedersthal, I help women land higher paying clients in their independent consulting businesses, but I've never been a salesperson. My background is in corporate marketing, and when I started my first consulting business, I learned pretty quickly that it's about 1000 times harder to sell your own stuff than it is to sell someone else's. So I taught myself how to do it, and I created the sales approach that I now share with my clients so they can feel more comfortable in the sales process, get more of the right clients and get paid way more for every client contract. So whether your client contracts are $5,000 $100,000 or more, if you want to work with more of the clients you love, do more of the work you love, and get paid more than you ever thought you could, then you're in the right place. Let's do it together. Thanks for tuning in, and don't forget to rate, review and share. You Leah, hey there. Leah, here. Thanks for tuning in. I hope that wherever you're listening to this, wherever you are right now, you're having a great week, making some good progress on your business and taking time for you. So back in April 2020, when it was, you know, early pandemic times, and we were all quarantined, and the world felt like it had been completely turned upside down. All of the women independent consultants I was working with, and the women I was talking to in the consulting community, everyone was worried about their business. They were worried that all their clients would go away, or their businesses would suffer, or their businesses wouldn't survive, and it was just like in the ether. You know, everyone was nervous about what was going to happen to their business in those uncertain times. And I had started my consulting business in 2010 2011 when there was a recession, so also an uncertain time. But I kind of felt like focus needed to hear some reassurance from someone other than me. So I got this idea to reach out to women who had been running their consulting businesses for a long time, like, longer than me, and ask for their advice on what they would tell women consultants right now, I posted something on LinkedIn, you know, just asking people to, like, raise their hands. And so many women raised their hands to offer advice. It was such an incredible outpouring of support from women who had run their businesses for a long time. So I interviewed women who had run their businesses for 10 years, 20 years and more. I talked to a woman who had started her business the day before 911 you know women who had, like, seen some things in their businesses, and who had gotten through it and learned from it, and had such incredible advice and perspective to share. And I turned those interviews into a video. You can actually still see the video on YouTube if you go to smart gets paid.com/pandemic and one of the women I talked to was a woman named Nancy Russo, who runs Russo graphics, a small and mighty graphic design firm doing design, branding and marketing. At the time I interviewed her in 2020 Nancy had run her business for, as she says in the video, 34 years and 11 months. So basically, like 35 years. And of course, now she's still going strong all these years later. So fast forward a few years, and Nancy invited me to speak for a community she runs called the creatives roundtable. And the topic of that session was the three types of profitability that every business needs. And I wanted to share it here too, because it's not just relevant to creative businesses. It's important for every consulting and every service based business, because when I talk about the three types of profitability, it's not like crunching numbers. It's a framework to look at your business and yourself in it. It's what we call the 3x profitability framework. So in this episode, you're going to hear me introduce the three types of profitability, and then we use that as kind of a rapid assessment of your business, you know, how things are going and which areas need attention, like which areas in your business to focus on. And I think it's especially timely right now because we're coming up on, you know, the end of the year, and a lot of us, if we're smart, are looking back and saying, How was this past year for me, and how do I want this next year to be? So I want to send a huge thank you to Nancy and the creatives roundtable community for having me and allowing me to share this with you. Just a couple notes. So of course, I was doing this live. I was like presenting live. And I was writing on my iPad. You know, we sort of draw a pyramid and make all these notes around it. So as you listen to this, if you want to follow along and you're in a place where you can grab a piece of paper, you can totally do that. Or if you're not in a place where you can write, you can just follow along and make some mental notes. So take a listen, and at the end, I'll come back and share a lesson you can apply to your business. You us. So you might have noticed that with the economy being as it is, things feel a little shaky. Referrals are slowing down. Budgets are getting cut, and clients, who you thought would say yes, are saying no or not right now. And here's the thing, in this economy, you can't run your business by waiting for referrals. Clients just aren't going to swim into your net. You have to be intentional. That's why the best way to protect your business today and for the future is to have the two systems that every consulting business needs, a marketing system to bring the right clients to you and fill your pipeline, and a sales system to help clients say yes and get you paid more. But it's not just about getting clients, it's about security and stability and making your business sustainable no matter what's happening out there. Smart women are doing this right now, even in this economy, they're winning their biggest contracts, filling their pipelines, and their businesses are growing, which lets them do things like build up six months of family savings a lot sooner than they had planned, or go from having one to two months of revenue booked to having eight to 10 months of revenue booked, or getting to the place where you're able to pick and choose your clients and say no to the ones that aren't perfect. These are real results from women in the academy, because this is what we do inside the Academy. We help you build the marketing and sales systems that make your business and your revenue more stable, more secure and more sustainable. So if you've been in business for at least two years, if you made at least 120k last year, and if you want your business to feel secure no matter what's happening in the economy, join us. Apply today. It's marketspay.com/academy we get started on Monday, February 9, because you can't control the economy, but you can control what you do about it. Thanks so much for having me. Thanks everybody. All right, so my goal today is to share the three types of profitability that creative businesses need so that you can run a business that serves your life, not the other way around. All right, so we're going to talk through specifically what are the three types of profitability that every creative business needs. What happens when you don't have this balance in your life between the three types of profitability and some strategies that you can start to pursue today to get there. So first, before we even get this, who am I and why am I teaching you this stuff? So I'm Leah. I'm a sales coach for women who run independent consulting businesses, and I help women run more profitable consulting businesses in our world, that means landing more of the consulting clients that they want, getting more yeses and getting paid dramatically more for every contract. The problem is that for a lot of people, running your own business doesn't look in practice the way you think it will look in theory. And so this is the stats I'm going to share. Are for women, but I think we can safely say that we can extend them to anybody who runs a creative business, in a consulting business, 34% of women small business owners reported working more than 50 hours a week. That sounds like silly, right? 50 hours is like table stakes to a lot of women business owners. 55% of women entrepreneurs reported experiencing high levels of stress due to work demands, right? Does any of this ringing true for you? Type me in the chat if any of this is running true for you.

Leah Neaderthal8:45

And 60% of women entrepreneurs reported that they felt burned out by running their business. Have you ever in the time that you've been running your business, have you felt burned out? Tell me in the chat, yes, to burn out. Totally. It's it's the nature of the beast, but it doesn't have to be. Listen, let's be honest. We run our businesses to solve problems for our clients. We run our businesses because we have a talent and a skill and a passion and a desire to use that talent and skill and passion in service of our clients, but we also do it to make money, right? We I in my world, and I hope in your world, we don't pretend like we're not in this business to make money to support our lives and the lives that we want, right? But in that we've been taught to think about profit in just one way, and that is money. But actually there are three ways, all right? And once you know these three ways, you can start to think about how to structure your business, how to get clients and how to do the work that can create better balance for what we call a 3x profitable business. All right, let's start to map out what those actually are. So everybody trying. Draw a pyramid that's big enough to write in and in the middle of the pyramid, I want you to write profitable business and just raise your hand when you are done. Okay, awesome. So there are three types of profitability. Okay, we call that 3x profitability. The first one is financial. Obviously, we can't talk about profit without talking about money. But we can't only talk about money. There are a lot of business owners, a lot of creative business owners out there who are making good money or great money and working way too hard for it, either working too hard to get it or working too hard in the relationship to earn it, and using air quotes, earn it. So we have to include money, but we can't stop there. Okay, because the second type of profitability is professional. Professional profitability doing the work you love with clients you enjoy. Professional profitability is being known for the things you want to be known for, and having clients come to you. All right. So financial, professional and now emotional. The third is emotional profitability. Emotional profitability says, Am I having fun? Is this what I thought it would be? Do I feel fulfilled? And am I feeling optimistic about the future? And we need all of these. Because think about it, if you have financial profitability, like you're making good money, and you have, you know, emotional profitability, sort of time to do what you want, or you feel optimistic about the future, but you don't have professional profitability. You're just you're taking anything that comes your way, right? Then you will have to hustle, and the work will feel empty. It's not the meaningful work that you want with the clients that you love. If you have professional profitability, right, you're doing the work with the clients you love, and you have emotional profitability, like you feel fulfilled, but you don't have financial profitability, then you'll be broke. You're not running a charity. And if you have financial profitability, you're making good money and professional profitability, you're doing the work with the clients you want. But you don't have emotional profitability, then you will feel burned out. So let's go through a stoplight assessment. We're going to go through this again, and I want you to mark whether each one of these is green, yellow or red. Green, meaning this particular one we're talking about is totally fine. I am killing it here. Nothing needs to change. I'm on top of the world in this area. Yellow says this could use some improvement. This one might need some focus to get it to green and red is okay. I just know that this part needs some work period. Okay, so let's go through this again. Financial making good money or great money to support your life on your page. Is it green, yellow or red? You can just take your marker or your digital marker, and color in that one. Okay, professional, professional profitability says, Are you doing the work you love with clients you enjoy, to Jenny's point, clients that also respect you. You feel respected. Are clients coming to you for the right things? And are they coming to you at all, green, yellow or red? And then emotional? Are you having fun? Are you feeling fulfilled? Do you have time for the things that you care about outside of business, and do you feel optimistic about the future? All right, so the question is now, as you look at this, if this was a diagnostic tool, if this was a mirror of your business, what is the mirror telling you? What is this telling you about your business. All right, this is where we had an awesome discussion where the members shared what their mirror was telling them about their business. It was so great and really insightful now that they had this language and this framework to talk about their business. All right, let's get back to it. So let's talk about what to do. What do you do? How to bring these into balance? Because ideally we want all of them to be green. That's what we're getting to that's the work that I do with my clients, and that's what we want. So if financial is an area where you need to bring it up. Are focusing on your messaging, focusing on your pricing, and doing great discovery with your clients in sales conversations, discovery is the absolute most important part of any sales process, and doing great discovery can both tell you if you're wasting your time, or if they can afford you, or if they're going to be a great client and profitable in the future, if professional is where you need to focus, getting more of the clients you want, right, the clients you love, being known for the right things, We would recommend signaling the right clients in your content, we can talk about which each of these things are. If you want being visible, greater visibility. A lot of us tell me in the chat, this is you be honest. A lot of us spend a lot of time being quietly awesome. I saw some nodding, so I know I've hit something here. A lot of us spend a lot of time being quietly awesome. If you want to bring professor, your professional profitability up, you have to get visible. And of course, lead gen. Lead Gen is different than marketing. Marketing says, show up. Lead Gen says, Let's market to bring more clients into our orbit, to nurture clients, to understand that we're the right this problem is the right problem to solve, and that we're the right people to do of it, and to have them raise their hand to work with us. So that's where you would focus, if professional profitability is an area for you. And then emotional All right, so here someone had a question about client signaling. Sure, signaling is something that is part of our the system that I teach,

Leah Neaderthal16:46

where signaling says when you show up, either in content or online or what have you in conversation, it's almost like dropping little hints that only your clients pick up on. It's like sending out a little bat signal that only your clients see and the right clients, okay? Because what we're doing is, when we talk about professional profitability, it's not just any client we want. Are the clients who value our work, the clients that are great clients for us. And so we start to essentially speak in a language that they understand. It's the difference between saying something like, let's say, in the coaching space, all right, just says bringing it out of the creative space. But in the coaching space, you might have one coach that's like, I help heart centered entrepreneurs fulfill their mission and impact the world, right? And then you might have another coach that's like, Girl, we're gonna make you some money, right? Those signal two different types of clients. And so when you think about signaling, is almost a messaging layer on top of what you do, where you start to signal your specific ideal clients. So if emotional, let's go back to this. If emotional is an area where you need to bring it up to green mindset, and specifically approaching this process of getting clients we teach is about approaching it as a peer, so that you are approaching your you're approaching it as a business owner, and you don't feel like you're asking for work, creating expertise, content. We started this business because we want to feel good, we want to feel smart, we want to feel like we're doing the right things. And it's hard for people to see that we're great when we're being quietly awesome, and we aren't reinforcing how good we are at the work we do. So creating expertise content would be an area to focus on if you want to improve your emotional profitability and then repeatable systems so that you decrease the time it takes you to do everything from selling and the different stages of the sales process to delivery to anything adopting almost like a, what we call a playbook mindset. How can we do this now so it's not so hard in the future, so that you free up your time you guys. Thank you so much for being such an incredible group and for being vulnerable and sharing and opening us up to your business. All right, so I hope that this framework gives you a way to think about your business and the success of your business in a way that's more than about money. Because the thing I want to encourage you to take away from this is that when you measure success in your business, it's not only money, and in fact, when you think about it, money is a pretty limited way of looking at your business and looking at yourself in the business, because what we want is to make great money, right? Do great work for clients you love and have time for what matters to. You. We want financial profitability, professional profitability and emotional profitability, and really to have balance between the three. I mean, sure, at one point for all of us, it might have been more about the money, but business has changed, and we've changed either because of the I don't know, tumult of the past few years, or just because maybe we're older and different things are important to us. It reminds me of something I heard from one of my clients, who said, it's not about making as much money as possible, it's about having a business I enjoy that gives me personal freedom. She goes, I've always been ambitious, but now my ambition lies in the balance. I just think that's so beautiful. My ambition lies in the balance. And in fact, another client of mine said, when we were going through this, she said, I know that if I focus on the emotional and professional, the financial will come. So what I want you to take away from this is that the way we've been taught to think about whether our business is successful, that it's just about making more and more and more money. That doesn't have to be true anymore to be truly successful. It's about your professional, emotional and your financial profitability, and I wish you a profitable business in the coming year.

Leah Neaderthal21:18

Hey, everything we're talking about in this episode is part of the system. Women like you are learning in the academy. In the Academy, we help women consultants install the two systems every B to B consultant needs a marketing system to consistently attract the right clients and a sales system to lead a sales process to a yes and get paid more for every contract. So even if you've only gotten clients through referrals or word of mouth. In the academy, you'll learn how to attract and sign clients outside your network, how to lead a sales process with confidence, and how to get paid for your value, not your time. And there's no cold calling or cold emailing involved, no changing your services or making a course, and you won't use any pushy sales tactics. That's just not our vibe. So if you like what you've heard here, the academy may be your right next step to learn how you can get these two systems in your consulting business and make progress faster and with fewer roadblocks. Head to smart gets paid.com/academy and apply and we can chat about next steps. All right. See you over there. Transcribed by https://otter.ai