calculating expense and return on investment

Business Coaching: Expense or Investment?

Do your clients see your services as an investment or an expense? If you are a business professional, such as a coach, consultant or accountant who provides services to small businesses, the answer to this question is key to your growth potential.

What is the difference? Aren’t those terms interchangeable? No! The underlying beliefs around expenses and investment dictate your client’s perception of YOUR value.

Expenses are a necessary evil…

Let’s explore beliefs around expenses. In the mind of a business owner, expenses are a necessary evil, something to be kept to a minimum. Expenses represent money that leaves the company, never to return again. Expenses are often on the chopping block. The client will use price as the deciding factor between competing products or services.

So who wants to be considered an expense? Not me!

When a business sees your offering as an expense, they will consistently evaluate not just whether they can find a less expensive option, but whether they can cut that product or service all together.

An investment today implies a return in the future

The word investment implies something totally different. When you make an investment today, you expect to get a return in the future that is GREATER than what you initially invested. For business coaches, consultants, strategists and other professionals, the key to receiving high value for your services is to demonstrate that your clients will get an exceptional return from their investment.

If you and your client both receive high value from the work that you do together, you have created the ultimate win/win!

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How to define your ROI

The next question you want to know the answer to is how to define the return on investment (ROI) so that your client knows what they are getting. A financial gain is very straight forward. For example, if you invest $10,000 in a coaching program and you gain $20,000 in sales as a result, you have just received a 100% return, or double, on your investment.

There are other ways that professional services can provide a return. For example, let’s say the work you do results in your client saving 2 hours of time per week, or increasing productivity by 50%, or eliminating employee headaches. Those results also have value, and you can determine what those things are worth to your client.

Another factor in determining the investment value of your offering is risk. Every investment has a risk/reward ratio. The riskier the investment, the higher the expected return.

When you offer a service, such as coaching or consulting, the results are not guaranteed and therefore the client’s perceived risk appears high. Clients might hesitate to invest if the chances of achieving their desired results (return) feel unlikely. If you can point to past or proven results, however, the investment feels less risky and the client is more likely to move forward.

“I love the Pumpkin Plan Strategy Tools. They’re fantastic. And I just continue to get more and more value out of them every time I use them.”

Christeen Era, Certified Pumpkin Plan Strategist, Founder, Core Growth Strategies

Would you like to learn more about creating and receiving high value for your business coaching/consulting services while helping your clients grow profitable businesses? Apply to get certified as a Pumpkin Plan Strategist.

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