How to Manage Cash Flow for New Services
Creating new practice areas at your business? Before you dive into marketing your expanded services, take a step back and analyze your pricing. Are you set up to bill and invoice as efficiently as you can be? Is your pricing accurate, or are you somewhere between undercharging and overcharging?
If you take the time to you’ll be able to budget for your business more effectively, and gain peace of mind knowing you have consistent revenue coming in.
The days of having to hustle for new projects all the time would be long gone – instead, you could focus more on strategic tasks that help you grow your business. After all, transitioning to a monthly service model means you won’t get large, one-time payments from clients anymore – you’ll get smaller, consistent payments over the long-term.
If you’re ready to learn how to manage your cash flow in a way that keeps your business in good financial shape as you transition to an as-a-service model, keep reading. Let’s use cloud services as the basis to discuss these 3 strategies you can use to make the process easier.
Package cloud licenses as one well-rounded service offering.
Much like managed services, cloud services should be packaged into one agreement. By sending your clients a single invoice for your monthly services that reflects users, instead of devices, you’ll make it easier for them to recognize where their money is being spent, and the value your business is providing theirs. Not only does this approach simplify the billing process (for any practice area, not just cloud services)–it improves a client’s overall experience and makes them more likely to stick around.
Price your new service offerings correctly.
You don’t end up being underpaid for the duration of a client’s contract, so it’s a crucial to figure out your pricing before you start offering new services. Set goals for your recurring revenue, and build them into your agile business plan. You want your pricing to be fair to your clients, and to you!
To come up with the best pricing for your services, review your competitors’ offerings, determine how long you’ll need to work with a client for your agreement to become profitable, and consider all of the expenses involved.
You may also want to offer several different service bundle options and base the pricing on the level of service included. That way, you can meet the unique needs of all of your clients, and get paid appropriately for all the services you offer.
Remember: no risk, no reward!
You may feel hesitant about revamping your billing process to better suit new practice areas. But using the tips in this post will allow you to price your services appropriately and effectively plan to manage your cash flow. That way, you can add to your service offering without suffering a financial blow.
It may be difficult at first, but over time, changing to an as-a-service model will allow you to become happier with your business model, and bring in predictable income every month!