How to Increase Both Your Income and Your Free Time
If you are anything like most people (at least in the UK) your subconscious mind probably harbours the puritan work ethic – a belief that you have to work hard. For most of us this is coupled with a belief that unless we work really hard we do not deserve to succeed. The idea, therefore, of working less but earning more seems like a pipe dream.
But for those of us in the know this is not a pipe dream at all – it is the way we run our business.
The fundamental proposition behind this is what is known as the Pareto Principle. You should find that around 80% of your income comes from just 20% of your clients. You should also find you spend around 80% of your time dealing with just 20% of your clients. Those clients taking up most of your time are typically not the clients giving you the most income.
The secret of working less and earning more is to identify your 80 – 20 clients. Who are the 20% who are giving you the most income? These are the clients you need to ensure you keep. Obvious really, but in my experience very few advisers focus on this. Now look at the other 80%. Within this group you should find most if not all of the 20% who are taking up too much of your time.
You should now have identified two very different groups of clients – the 20% who give you 80% of your income and another 20% who take up 80% of your time.
If you were to fire that second group of clients you would now free up 80% of your working week. Think for a moment what you could do with that time! Theoretically you could work just one day a week, spending the other six days with your family, on the golf course, or doing whatever it is you really want to do.
I am not suggesting, however, that you go quite this far, as that means you would have to accept a reduction in your income. It should be a lot less than a 20% reduction, but there would still be at least some loss. If you run a large practice however, with a lot of support staff, even going this far might work and leave you with the same or even greater profit, as you will no longer need all those staff.
What I am suggesting is that you look carefully at how you are being remunerated by that bottom 20%. Clearly you are not charging them enough, as you are earning far less from them than you are from the top 20%. You therefore have to charge them a lot more. When you announce the changes, be prepared for many of these clients to leave. But it may surprise you to find not all of them will leave you. Probably some of them have wondered for years how you managed to provide them such a good service for such a small return, and will be happy to pay you more.
It is my experience, and that of many of the advisers I have coached over the years, that if you follow this exercise correctly you will end up with less work to do, but greater income.
Once you have done this, you may be concerned that there is now nothing more you can do to create even more free time and even more income. You would be quite wrong. What you now do is simply repeat the process. Find the 20% of your remaining clients who take up 80% of your time, and review your fees from those clients. This is a never ending process that will allow you to substantially increase your income and reduce the time you need to spend to create it.