for creative entrepreneurs

Episode 90: How Methodology Can Boost Profit Margins

Last time we explored the topic of creative methodologies, and how they can improve your sales and marketing. A proven methodology that focuses on solving specific problems not only boosts your sales game, but it also leads to efficiencies that enable you to increase the margins you retain from your project fees. A well-oiled methodology will make you more profitable, significantly increase client satisfaction, and improve the impact of your work.

There is an important qualifier, and prerequisite, I need to point out if a custom process is going to deliver more profits. This benefit is contingent on using a fee-based billing structure. If you bill by the hour, and invest in a process that radically improves your efficiency, you will end up delivering greater value, faster, and as a result get laid much less. That’s not exactly a winning business strategy.

So if you’re going to invest in developing a truly focused and refined methodology, make sure you’ve implemented fee-based billing first. But let’s consider some of the other benefits a refined methodology can contribute to your bottom line, besides raw production efficiency.

One such profit benefit goes right back to the sales process again. One of the overhead areas common to all creative practices is the cost of customer acquisition. Every sales opportunity has a time cost. Early stage conversations, follow up meetings, presentations, and proposal writing all take considerable time and cost you real money—whether or not you end up getting the project at all!

When you have a focused process, not only does that skip you to the head of the line in front of your competitors, but you get there faster. You already know the kinds of questions you need to ask. You will anticipate most of their questions and be prepared with solid answers. What’s more, proposal writing is so much easier, and more detailed when you can repurpose similar elements from one proposal to another.

Another area where you gain margin is during the strategy aspect of your engagement. Strategy is the most valuable part of what you deliver, it should carry a premium in your fees and pricing. And as your expertise enables you to get to fitting solutions more quickly, because your insights are focused and refined, you’ll capture even more of that most valuable part of what you deliver.

Lastly, consider the costs of making mistakes. How many times have you wished that you could get a do over when a project went off the rails? We all have plenty of war stories from the trenches. Sometimes a project slams into a wall because a client never defined a critical requirement. They just assumed you would anticipate it. There’s a treacherous gap between what a client assumes, and what you don’t know. But when every project is new to you, and the finer nuances of your client’s industry are all new to you—such failures of communication abound.

We can learn valuab;e lesson from our failures. But if you move on from such experiences, to entirely new clients, and new projects, with a whole new set of unknowns, you don’t benefit from those previous costly lessons. In fact you sign up to discover a whole new set of painful lessons. How much smoother, more effective, and more profitable would your projects be then if you parlayed your costly mistakes into a portfolio of expertise that enables you to avoid them the next time!

There are so many benefits to building upon focused expertise. All your lessons contribute to greater value, greater efficiency, more confidence, easier marketing, and more profits. But to get there you need to start by adopting PinPoint Positioning, so that you can attract sets of similar clients, and begin discovering patterns that will lead to valuable unique methodologies.

Until next week: don’t let the business of creativity overwhelm your creative business.

Are you ready to take the struggle out of finding new clients?