BOX FOREST BUSINESS PLAN UNPLUGGED
Updated: Jun 2, 2019
One of the things I want to do with Box Forest is to explain to the world how the business works, as a business. This post lifts the bonnet to show the machinery.
Most businesses, especially professional services businesses, don’t publicise their costs, revenue plan and margins. Fair enough. But we’re claiming to offer practical and sustainable business advice, so let’s walk the talk. This is about where we make our money, where we spend our time, and how we keep the engine churning.
Business planning basics
1. An important part of sustainability is to stay in business. You’re not doing anyone any favours if you’re charging too low and have to fold up the tent.
2. At the outset, I own 100% of the business and I am the only supplier of services into the business, with a couple of colleagues likely to get on board shortly. To stay in business, I have to get enough revenue in the door to cover my (modest) costs and pay myself a wage.
3. Unlike in a salaried role, I won’t be paid for all the hours I work, so in my paid hours I need to get enough income to allow for the unpaid hours. Say I work a 40 hour week, of which 20 are chargeable work, my hourly charge-out rate needs to be 2x (plus costs) what I’m expecting to get paid per hour.
4. That hourly rate will however be lower than I’ve been paid working for others. Of that 40 hours worked, say 10 will be stuff that is a bit work-related but really I’ll treat it as my own time – reading, writing articles, chatting and general faffing around. A 25% discount for enjoying myself.
5. When I work with other advisers, their work will be provided through the business, under a contract for services (which I'll likewise sign in my personal capacity). They’re covered by my administration, invoicing and customer account management. It helps the customer to have a single point of contact, plus the work will be consistent quality and style.
6. I’ll retain a margin. The adviser won’t keep the full amount paid by the customer. But they will get paid a lot more than in a professional services firm, which might pay the fee earner 1/3 of fees earned, with 1/3 to internal cost and 1/3 profit. My take will be 25% not 65%.
7. I accept that I’ll get paid less, and the market dictates that I have to charge less, than if I were working for a full service law firm or management consultant. Price of independence.
IN A LATER POST - more on finding clients, charging differentially (commercial rate, low bono and pro bono), and alternative fee structures (sweat equity, in-kind and investing).