I am just starting out in my own business. I have crunched the numbers and know what I need to charge. I have researched my target market and need to know where in the industry to focus my attention. In other words, who can afford to pay for my services? I’ve seen you use the example for the pre-qualifying process that clients must make a minimum of $75,000. How do you arrive at this number? Is there a formula for this; like a percentage of income for administrative services? I know what my bottom line is. How do I figure out where their bottom line is so I can sift through my research and refine my target. —KT
There’s no formula; $75,000 is just a benchmark that I chose. It’s based on nothing but my experience and the “sense” I’ve developed after being in business for 15 years now.
For example, a solopreneur making only $50,000 a year really is only surviving. While I might love to help them, I simply can’t take on any retained client where money is a problem. That is, I don’t want to work with anyone who is really only making enough to pay themselves, much less anyone else. If paying me comes at great difficulty, that inevitably leads to problems and I don’t like feeling like “the other shoe is going to drop” at a moment’s notice. Know what I mean? So, for me, $75,000 is a bare-bones minimum, a more comfortable income benchmark to be able to afford my support without much difficulty as it’s closer to the $100,000 a year level. It’s just a rough gauge.
You can choose whatever number you want, as well.
When it comes to prequalifying clients financially, there are lots of ways you can go about that. Maybe you come right out and ask them what their income level is in an online form on your website. Maybe you simply state that the clients you work with need to make a minimum of $X annually. You can choose whatever number you want, although the numbers may be relative to the market you’re focusing on. Maybe that’s $75,000. Maybe it’s $100,000. Maybe it’s $200,000. Some people prefer working strictly with 7 figure entrepreneurs.
There’s no right or wrong here. Just pick a number; you can change it later if you want or need to. The goal, obviously, is to focus on your ideal retainer clients who make enough of a comfortable income to where paying you for your administrative support and expertise poses no difficulty.
(Keep in mind, we’re always talking about retainer clients here on my blog, not project work unless specifically indicated as that’s a completely different animal.)
We cover prequalifying clients at length in my client consultation guide, Breaking the Ice: Your Complete, Step-by-Step System to Confidently Lead the Consultation Conversation and Convert All Your Prospects to Retained Clients (GDE-03). This guide will be of enormous benefit to you so I highly encourage you to check it out.
Don’t feel like you have to do everything exactly the same as me or anyone else, or that you have to do everything “perfectly” (like, what is “perfect” anyway, right?). Once you get started, you’ll start getting a feel for what works for you in your business and even that will change over time as you go along. You will have lots of adjustments and course corrections you make throughout the life of your business.