Building Reliability Through Service Income
As we progress through the "Raising the Floor" series, our focus is on grounding ourselves in reliable service income. Service-based income provides the stability needed to create financial certainty while offering a launchpad for exploring asymmetric opportunities. The overarching goal remains the same: to use predictability as the foundation for sustainable and exponential growth.
The CASE for Service Income
As W. Edwards Deming says, “Without data, you’re just another person with an opinion.” Similarly, without a predictable income stream, you’re left gambling with your time, effort, and resources. Reliable service income, through fees, guarantees, and service agreements, acts as the foundation that keeps your barbell balanced and your financial floor sturdy.
Consider these foundational questions to evaluate your service-based income:
- Who were your last 12 clients?
- What actions brought them to your business?
- How profitable and sustainable are these relationships?
By understanding these elements, you can refine and fortify your income streams, ensuring reliability amidst uncertainty.
Finding Your SWEET Spot
The SWEET spot represents the perfect alignment between your service business and your solvable problem. Clarity here ensures you avoid overextending or investing in areas that yield minimal returns.
Key Actions to Identify Your SWEET Spot:
- Analyze your revenue and personal income from the past 12 months.
- Identify patterns: what worked, what didn’t, and why.
- Create projections for service income in 2025, focusing on fees, guarantees, and recurring agreements.
Real-life example: One entrepreneur discovered that 80% of their reliable income came from just 20% of their clients. By focusing on this SWEET spot, they were able to scale services tailored to these high-value clients, boosting reliability and profitability.
Avoiding the Gamble
Investing without clarity is gambling, and we’re not here to play those odds. we emphasize in steering clear of "middle-of-the-bar" decisions, those that lack reliability or asymmetric upside.
Instead:
- Build your service-based business for predictable income.
- Engineer deals with clear terms, ensuring even the downside remains acceptable.
- Reserve speculative moves for calculated bets with minimal risk and maximum potential.
Example: A real estate consultant transitioned from unpredictable project-based fees to recurring service agreements, creating a predictable income floor. This shift allowed them to confidently explore opportunistic real estate investments without jeopardizing their financial stability.
Tools to Strengthen Your Floor
- Revenue Analysis: Break down your past 12 months of revenue and identify patterns.
- Client Pathway Audit: Understand how your clients discovered and engaged with your business.
- Service Projections: Develop a detailed projection for 2025, focusing on reliable income streams.
Clarity and certainty are the twin pillars of raising the floor. By centering your efforts on reliable service income, you’re not only creating a stable foundation, but also enabling yourself to explore asymmetric opportunities with confidence. This dual focus ensures that your business is resilient against market shifts and personal transitions.
Service-based income isn’t just about generating revenue—it’s about aligning your business with your life goals.
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