Do you know how much money you need to make each month in your training business and have a plan about how to make it?
No? You’re not alone. Many freelance trainers are so busy delivering training or looking for new contracts that they often lose sight of the numbers that matter to their business. These numbers might be:
- How much money you need to make to cover the bills (your business and personal expenses)
- How many training days or training programmes you need to sell to cover your expenses
- How much each of your clients are worth – Who are your high value customers? How can you connect with them or may your offering irresistible to them?
- Where the peaks and troughs in your workload tend to fall throughout the year
Understanding your expenses
As a freelancer or small business owner, the money you earn has to cover expenses such as your annual tax bill, National Insurance contributions, insurance, marketing, advertising, your own training and development, your accountant’s fees, holidays, sick days and much, much more.
You spend hours of your time on non-billable tasks such as answering the phone and emails, invoicing, quoting and so on, and your prices should ensure that you earn enough money to cover all the hours you spend working in your business, as well as all of your expenses.
Knowing how much money you need to make each month is essential.
I think it’s incredibly helpful to have a written monthly sales target that sits on the wall in front of you as a tangible goal to work towards.
Setting your training rates
It’s also helpful to know this figure because you can work back from what you need to earn to setting your rates.
One helpful formula that freelancers often use to set their day rate is to calculate how much you want to earn per year, divide that by 52, divide it again by five, and then double that figure. That would be your base day rate.
For example, if you wanted to earn £40,000 per year, you would need to set your day rate at approximately £300 per day (£37.50/hour over an eight-hour day) or price your training so that you earn around that amount. This would enable you to work 133 days in the year and still reach your earning target. You don’t have to quote a day rate to your training clients but just having a figure in mind can help you set your pricing to a level that will give you the lifestyle you want.
Identifying profitable clients
Once you have a clear idea of what you want to earn and how much you need to charge to make it happen, the next number-related step is to identify your profitable clients and services. If you need to push your earnings up, is there something you could offer to your repeat clients that would add value to their business? Do you have systems in place to keep in touch with past clients? Could you reach out to an existing client about extending their training provision?
What are your most profitable training programmes? How many would you need to sell to reach your monthly sales target? Could you offer VIP sessions? Have you thought about ways to package your knowledge and sell it online as a source of passive income?
Identifying your highest-paying clients and most profitable services can be a fantastic way of deciding where you need to focus your efforts in your training business.
Price on value
Being the cheapest trainer isn’t guaranteed to get you more work and discounting your services is rarely the way to go.
If you know how much you need to earn, it’s easier to stop comparing yourself to other trainers and start measuring your business in terms of whether you’re meeting your own financial goals.
Although it sounds counter-intuitive, knowing the numbers in your business can actually help you step away from worrying about pricing and help you focus on your value instead. Think about where you make a difference, how your training shapes and supports teams, your years of industry experience and so on, and communicate those to your customers. You might be pleasantly surprised by the impact this makes to your sales.
Do you know the important numbers in your business? How often do you review them? What decisions do they help you make? I’d love to hear your thoughts on this topic in the Comments below.