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When I first made the move into self-employment, I was excited by the prospect of being able to run a training business according to my own strengths, values and circumstances. What I hadn’t fully anticipated was how many other hats I would have to wear in my business beyond the role of freelance trainer.
Time and again, freelance trainers tell me that their business is standing still, not because they don’t know their stuff, but because of all of the other skills required to run a business.
Of course, it’s not just freelance trainers who feel this way. In my experience, self-employed individuals the world over struggle with the same challenges – we want to do what we’re good at; many of us just didn’t realise that we’d have to become marketers, administrators, bookkeepers, debt collectors, sales people, web developers, copywriters, and negotiators too.
Three things, in particular, tend to limit the growth of small businesses. Are these affecting you? If so, how can you overcome these issues?
Poor cashflow management
A common struggle for many businesses, especially in – but not limited to – the early days, is cash flow and broader issues around financial management. The challenge is not just earning money, but ensuring that what’s coming in will cover what needs to go out at the right time.
If you frequently find yourself struggling to meet your bills or pay your overheads, or you can’t afford to invest in resources, systems or Continuing Professional Development, then your business can quickly become a source of stress and conflict. Running a business with no cash flow is very much like finding yourself up the proverbial creek without a paddle.
The three key figures you should monitor throughout the year are:
- Accounts receivable: The money your clients owe you
- Accounts payable: The money you owe to your suppliers
- Shortfalls: Where more money is going out than coming in
The aim is to prevent shortfalls from happening. If you are starting out as a freelance trainer, then a good rule of thumb is to have enough money in reserve to cover at least three months’ worth of outgoings. This gives you an emergency pot to dip into if you do face a shortfall, without having to take on debt to make a payment.
If you have been a freelance trainer for a while and you don’t have any cash in reserve, I think it’s important to make this a priority. Is there any expenditure that you can cut so you can save a little each month towards a reserve for emergencies?
You might find some of my other blogs around this topic helpful. Check out:
- How to get off the feast and famine rollercoaster
- Why it pays to know the numbers in your training business
- Five business resolutions to make for the new financial year
Another common problem small businesses face is securing timely payments from clients. In an ideal world, you would send out an invoice and the client would pay on receipt. In reality, most of us have had times when we’ve had to chase payments.
There are several things you can do to protect yourself from late payments.
- Make sure you have a clear contract in place before you deliver training for a client, including your payment terms, and that the client has agreed to this in writing.
- Consider adding 10% to your initial quote and then offering clients a 10% early payment discount if they pay within a certain number of days – that way, the client feels they’ve got a bargain and you still get paid what you would have charged. On the flipside, if the client is late paying, at least you are financially compensated in some way.
- Another option is to charge a portion of your fees before work commences or in stages throughout a project, so that both you and the client share some of the financial risk, especially if you haven’t worked together before.
- Advise clients that you will charge a late payment fee and interest in accordance with legislation if their invoice is overdue (see Pay on Time to find out more).
- If you need to enforce your payment terms, keep things polite and factual, and have a system in place for issuing reminders.
‘Spray & pray’ marketing
Arguably, attracting new clients is the area that presents the biggest challenge. As you’ve probably discovered first-hand, it isn’t enough to set up a training business; you have to let your potential clients know you’re out there in the marketplace.
But how do you do this? What if you don’t feel comfortable about putting yourself ‘out there’? Is there marketing you should be doing?
Many businesses take the ‘spray & pray’ approach to sales and marketing, advertising anywhere and everywhere in the hope that they’ll pick up a new client. The problem with this approach is that it is inefficient, time-consuming and potentially very expensive. It also means that the clients you attract aren’t a good fit for your business.
As I’ve discussed in past blogs (see How to identify your high-quality clients), it’s important to figure out who you want as your clients, as well as why they should come to you for training over your competitors? What sets you apart? How can you benefit your clients and add value to their business through your services?
Once you understand who you’re talking to when you’re marketing your business, it’s easier to determine whether new marketing opportunities will put you in front of the right people. You can also develop a tone of voice and content that speaks directly to the people you want to work with, which will help them to recognise that you can address their training needs.
When you’re self-employed, a multitude of things can crop up throughout the work week to steal your focus and take you off course. A client might email with an urgent query, a sales call might come in right when you’re working on training materials, you may have your bookkeeping to do or blogs to write.
When you have to wear several hats throughout the day, there are bound to be times when you may feel completely overwhelmed. If you have so much to do that you don’t know where to start, it can be hard getting started at all.
Over the years, I have developed a range of techniques to help me focus. These techniques cover big-picture thinking as well as the minutiae of everyday life:
- I identify my long- and short-term goals so that I am able to make decisions based on whether something will bring me closer to achieving those goals or not.
- I take time out for a regular ‘thinking day’.
- Before I finish work each day, I write a to-do list for the following day.
- I earmark specific times of the day to check my emails and make phone calls – this enables me to set my own agenda for the day rather than reacting to someone else’s agenda.
- If I have several tasks with equal priority, I eat the frog first, i.e. perform the task I least want to do, before anything else. The rest of the day feels easy afterwards.
- I take a break and go for a walk.
If you feel as though your training business is currently at a standstill, perhaps because you’re struggling to pay the bills or find new clients, then it’s worth considering whether one of these issues could be holding you back. Small changes could make a big difference.
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