Dealing with the Low Profit Areas of Your Freelance Business

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Starting a freelance design business is something of an experiment. You throw all kinds of ideas out there and see what works. And, over time, you get to learn the results.

When those results are tallied, not every idea is going to come out as a winner. Some services you offer may turn out to be making you little-to-no money. In extreme cases, you might even lose revenue on them.

It may be tempting to simply wipe these types of services off your menu. But it’s not always that easy. Clients may be depending on you for these items. Not to mention the possibility that you’re contractually obligated to keep things going for a while. Then, there could also be some non-monetary value to what you’re doing as well.

Let’s shed some light on this subject. First, we’ll look at how to identify areas of your business that is not doing much for you financially. From there, we can examine these areas to see if they should stay or go.

Look at the Margins

Hopefully, the core services you provide clients are doing well (if not, that’s a whole other discussion). Those are generally the areas of business that designers should be spending most of their time on.

Quite often, it’s those surrounding products or services that are the troublemakers. Things that seemed to be a good idea at the time but perhaps never lived up to expectations.

Plus, so much depends on your niche and how it has evolved. If your business has changed direction in recent years, there could be some offerings hanging out there that are no longer relevant to you.

I’ll use myself as an example here. In the early years of my business, I tried to offer several different services beyond web design: hosting, SEO, digital advertising, social media, etc.

As the years rolled on, I found that some of the items on that list were not making me money. Some were even taking time away from more profitable services. This isn’t to say that any one of them doesn’t have the potential to become at least marginally profitable. It’s just that, given my focus and resources, they weren’t all that great for my situation.

Every business is unique, so your answers will likely be different than mine. But that’s the point. Take a look at what you’re doing and see which services may not be pulling their weight.

Determine which areas of your business are profitable.

Determining the Fate of a Service

Beyond monetary value, there are other considerations for whether a service is worth keeping around:

Relevance

If something compliments your core services, then maybe it still deserves a spot on your menu. The tricky thing here is looking at why it hasn’t been profitable.

Maybe you didn’t spend as much time on it as you planned, or had a flawed approach. There’s always the possibility to retool things to bring in some cash.

On the other hand, even a relevant service can be a resource hog. If it’s taking too much of your time and not making you money, the writing could be on the wall.

Likewise, a service that no longer fits in within your business strategy should probably be jettisoned.

Client Relations

Sometimes, it’s those little things that mean a lot to clients. Taking care of those tiny inconveniences for them (like domain renewal, for example) may be a pain to us. However, they are also a way to build some goodwill.

It’s akin to the niceties of a fancy hotel. These small gestures (the mint on the pillow, towels folded in artistic shapes) let clients know you care about their needs.

This could be worth continuing if you get a sense that your clients benefit from the service. However, that must be measured carefully against the time and responsibilities that come with such perks.

An unprofitable service may still have value to clients

Removing a Service from Your Offerings

If you have determined that a service is no longer viable, it’s time to phase it out. As mentioned previously, this isn’t necessarily an easy task.

The more clients who use the service, the more difficult it will be to discontinue. There may be situations where you’re obligated to provide a service until a specific date. Therefore, you can’t just pull the rug out from under people.

Regardless, the first step in the process is to inform clients about the impending change. Ideally, you’d provide at least a month’s notice or more. Send them a letter (electronic or otherwise) that details the discontinuation and any steps they may need to take.

In some cases, there might be an alternative service you can recommend. For instance, if you’ll no longer be hosting websites, you could offer up a list of providers. Since changes can make life more difficult for clients, it’s important to try and soften the blow in any way you can.

It’s also worth building some flexibility into your plans. Setting hard deadlines for changes may sound reasonable, but life often has other ideas. Be prepared to make a temporary exception or two on the way to removing a service.

Create a plan for discontinuing a service

All Businesses Change

The longer your freelance web design business goes on, the more likely it is that you’ll experience some significant changes. Not only do the tools and technologies evolve, but the very services you offer will change with the times.

And, despite good intentions, not every service you offer will make money. Thus, it’s important to identify what’s working and what isn’t. From there, it’s about taking action to ensure that these offerings either shape up or ship out.