Knowing how much of a minefield pricing can be, I can help keep your pricing decisions as simple, stress-free and profitable as possible!
In business, managing your finances is only part of the equation, another big chunk of that equation is working on your mindset.
Investing in your self-worth and developing a success mindset is crucial to creating a profitable business and the life you’ve been dreaming about. It’s all about establishing a positive money mindset and mastering your ‘Upper Limit Issues’.
The ‘upper limit’ is a term originally coined by Gay and Kathlyn Hendricks in their awesome book, The Big Leap. It describes an astonishingly prevalent form of self-sabotage that entrepreneurs are particularly prone to develop.
It’s a peculiar quirk of the human condition that, as much as we fear failure, we’re even more terrified of becoming successful.
Since success is the name of the game in business, your upper limit can be seriously debilitating. It’s important to understand how it is holding you back in your business, and preventing you from achieving that success.
What Exactly Is An Upper Limit?
Humans are hardwired to stay in their comfort zones. There are exceptions to this – individuals who thrive in new environments and actively seek out fresh situations whenever possible – but the majority of us stay within the realms of the ‘normal’.
The unknown is unfamiliar and, consequently, a source of danger.
Since we have such a highly developed sense of self-preservation, we instinctually interpret the unfamiliar as a threat. This isn’t because it’s necessarily threatening, but simply because it has the potential to be threatening.
The fight or flight response kicks in, and we hightail it back to a situation that is more familiar and safer.
In essence an upper limit is the limit of your comfort zone. Anything beyond that point and you’re in the treacherous territory of uncertainty, and you’re very likely to take action that allows you to return to safety.
This is usually an unconscious decision, so much so that we don’t even realise we’re doing it.
The end result, however, is the same whether we’re aware of what we’re doing or not: the closer we come to achieving our goals of health, happiness, success, or wealth, the more likely we are to sabotage our efforts before we reach the goal.
If you’ve ever picked a fight with your other half simply because you’re deliriously happy with them, and it’s totally freaking you out, you will know what I mean!
It’s like winning the lottery and immediately blowing all your cash on frivolous things.
Consciously you’re kicking yourself, furious and frustrated that you could be so foolish.
Unconsciously you’re heaving a huge sigh of relief, because you are back to safety in your comfort zone.
It doesn’t seem to matter how much we hate a situation, if that situation is familiar, our bodies fight to retain the status quo to the bitter end. It’s why so many people painstakingly lose weight only to pile it all back on. You may be healthier at a lighter weight, but your body doesn’t care, it wants to get back to the state it’s used to!
How Upper Limits Affect Your Business
Upper limits are annoying enough when we encounter them in our private lives, but in business they can have a serious effect on your profitability.
Entrepreneurship is all about the new and unfamiliar.
Whether you’re founding a business for the first time, creating a new product or service for an established business, shifting your focus to a new niche, growing your client base, or increasing your revenue and profit margin, everything is new.
Business growth naturally leads to an escalation in the level at which you’re working. At the very least, that level will shift and change. If your business is entirely static and never throws new situations and challenges at you, it has stagnated.
A stagnant business is not a successful business!
So constantly facing the new and unfamiliar is a great sign you’re succeeding, but it does present a problem, and that problem is your upper limit.
Do any of these situations sound familiar?
- You’re doing everything right, but nothing is working.
- You’ve got a great idea for a new product or service, but you can’t find the time to get it done.
- You’re working hard on growing your business, but you’re stuck at the same level of profit.
- You come down with a killer case of the flu at a critical time (i.e. the middle of a big launch, or right before a huge deadline), so things don’t go as well as they could have, or you miss your deadline.
- Your lead generation is off the scale and you’re signing more clients than ever before, but suddenly your existing clients are inexplicably leaving you.
- Your revenue is growing rapidly but your expenses are escalating even faster, somehow leaving you with less profit.
Believe it or not, all these situations are caused by upper limit issues and your own (unconscious!) self-sabotaging behaviour.
Once you understand the root cause of an issue, it’s a lot easier to put a proactive plan in place to address the problem.
To that end, here are three upper limit issues preventing your success, and how to fix them…
#1 You Can’t Break Through Your Income Limit
As a Profit Pioneer and money mentor I understand better than most that a healthy business should see growth in terms of income and profit year-on-year. It might not be a massive amount of growth, but the numbers should keep growing.
You become more efficient, retain more clients, streamline and perfect your processes…even if you’re not actively trying to grow your business, a successful business model will naturally grow over time.
In the early years of a new business, growth is often quite spectacular. Sure, the first year may only show a few thousand dollars in profit, but the second year is likely to be double, or even triple that as you gain traction.
The next couple of years generally continue to see big jumps, until you settle down into comfortable revenue range. At that point, any big leaps are a result of new product or service launches, or huge changes in your business model.
Even so, if there is one thing that should be guaranteed as an entrepreneur it’s that each year you smash the income level from the year before.
It may only be by a couple of hundred dollars a month, or a few thousand a year, but it’s still more money that you were earning previously.
Now, it’s probably never occured to you that more money could ever be a problem, but money is one thing guaranteed to make people uncomfortable whenever they hit a new level, at least initially.
As you grow accustomed to earning more, and the level you are earning regularly increases, it’s not quite so terrifying. Until then, every time you come close to increasing your income you run the risk of crashing into your upper limit.
If you’re struggling to hit your income goals and, no matter how hard you work your income seems to consistently hover at the same level, the problem is not your business, your clients, or anything else. You’ve run headlong into an upper limit and it’s preventing you from creating more success in your business.
Flip The Equation To Break Through Your Upper Income Limit
This can happen to anyone, at any time, and any level of business.
It’s more likely to happen to relatively new entrepreneurs, because they don’t have as much experience dealing with it. But the longer you’re in business, the more aware you become of your upper limits and how you sabotage your success.
Even then, an upper limit can hit you out of nowhere, right when you’re trying to make a big transition. Like, for example, moving from six-figures up to seven, or seven to eight.
I’ve seen a lot of people encounter upper limit issues around income. Some of them end up feeling they’ve come so far, and can go no further. It’s particularly easy to do this if your current level of income is high – it feels greedy to want more, and that is part of the problem!
But whatever your current level of income is, there’s no reason you can increase it, it just requires a little creative thinking to navigate around that upper limit.
The method I use to help my clients with their money management is called Profit First, and for very good reason. It’s a carefully chosen name that reflects the system’s core ethos, namely that if you want to improve the profitability of your business, you need to consider your profit first, rather than making it the last thing you think about.
Look at it this way, we all use a simple equation to calculate profit:
Yes, there’s a little more to it than this, but in essence the amount of profit you have in your business is the result of subtracting your expenses from the amount of revenue you generate in sales.
The problem with looking at your money this way is that Profit becomes an afterthought.
It’s not the aspect of the equation we can control, it is the end result. The only way to affect it is to change your numbers where sales and expenses are concerned.
Or is it?
There is a behavioural principle known as the Primacy Effect, which tells us that we naturally place more significance on things that come first.
It’s not conscious, but we all do it.
How many characters on TV have you seen arguing over whose name comes first when they’re publishing a paper, or naming a new discovery? You may even have had the argument yourself.
First impressions carry more weight.
It may not be fair, but it’s human nature.
So when we view profit as the end of the equation it naturally becomes the least important element.
And this is absolutely the wrong way to look at your business.
If your profit levels are nothing but a byproduct of more significant things, you have no control over them. And as we have seen, upper limits are all about situations over which we feel we have no control!
Luckily there is a really simple mindset shift you can make that totally flips the equation round, and puts profit back on the side you can control:
By putting Profit First, it becomes our focus.
Rather than totting up our expenses, subtracting it from our sales, and settling for whatever is left over, we make a conscious decision about the amount of profit we want to earn, and subtract that from our sales revenue. The resulting number – the one you’re stuck with and have to make the best of – is the amount you can spend on expenses.
There’s another behavioural principal that’s really important to overcoming upper limits called Parkinson’s Law.
Simply put, we will always use as much of something as we have.
Demand expands to meet supply.
To put that another way, you will always feel compelled to fill your plate when you’re dishing up dinner, and then to eat all the food on your plate, even if you’re well past the point of being hungry.
The way to reduce how much you eat is to use a smaller plate!
When you are presented with a figure that has to cover all your expenses, you find a way to make it work!
#2 You’re Avoiding Hitting The Launch Button
Here’s another confounding obstacle a lot of entrepreneurs encounter: they have a great new product or service, and they’re certain it’s going to make them lots of extra money, but they keep avoiding it.
Does any of this sound familiar?
- You’re holding off on launching until you can afford that new website.
- You’re waiting until you’ve got more time to plan and execute the launch.
- Everything’s ready to go, but you’re convinced it will be far more successful six months from now once X, Y and Z have happened.
- You’re waiting until you can afford a higher ad budget.
- It’s really more of a ‘New Year’ thing, best wait until January…
- You’re worried you’ve missed something crucial so you’re doing more work on it and waiting until you’re sure you’ve nailed it.
The Parkinson’s Law Problem (And How To Fix It)
This is a very similar issue to the upper limit preventing you from smashing your income goals. Part of the problem is your awareness that your new “thing” is going to increase your income.
To overcome it, you need to first overcome the problem of making profit the end of your equation by putting profit first (honestly that’s the really big shift you have to make in order to fix a lot of things in business!).
Beyond that, you need to pay a little more attention to the conundrum presented by Parkinson’s Law.
If you’ve ever noticed that you are constantly on the last minute where deadlines are concerned, no matter how much time you allocate to a project, you will already have some idea of the issue here.
When a client calls and says they need something done, but there’s no rush, next month will do, you can all but guarantee it’s not going to get done for a month. That same client calls with exactly the same job, and tells you it’s urgent and they need it by the end of the week, and it will miraculously get done by close of business on Friday.
We take the amount of time we are given.
When we know we have a long time to work on something there’s no rush, and no incentive. On the other hand, when we have a deadline hanging over our heads, everything gets done nice and promptly.
There will always be occasions when the amount of time literally required to do something exceeds the time allotted to the task, but nine times out of ten the issue isn’t the absence of time but an overabundance of it.
When it comes to getting your own projects finished and ready to launch there are no deadlines. At least, no hard and fast deadlines. You’re the one setting the launch date, so if you decide it’s not happening for a year, it’s no issue. If you reach the date you planned to launch and nothing is ready, you simply push it back.
Nobody is angry with you or disappointed, you haven’t let anyone down. Nobody even knows this thing exists yet, so they can’t miss its absence!
Your procrastination and avoidance of launching that new offer is a classic upper limit issue.
It is the fear of the unknown causing you to avoid it. But the fact you have all the time in the world to get it done is enabling that avoidance!
Just as you can increase your revenue by putting your focus on the profit you’re trying to create, and managing your expenses with the money left over, by shifting your focus to a specific date you can avoid all that procrastination.
Get some social accountability:
- Set a launch date!
- Announce the launch on your blog and social media.
- Start your pre-launch marketing three months ahead of your launch date.
- Encouraging people to subscribe to be the first to know about your new offer.
- Share the creation process with regular updates and behind-the-scenes glimpses.
#3 The Bar Is Perpetually Out Of Reach
On a related note, the nature of entrepreneurship is to constantly push for bigger and better things. Reaching that next income goal, launching that new service, writing that book, upgrading your website.
We often have the impulse to go bigger, no matter how big we’ve grown.
It’s understandable – when you build a business from nothing you need that drive to get things off the ground, to grow to a level that creates the income you need, to grow further and create real success.
There’s nothing wrong with pushing the envelope, but there is a built-in flaw with the business mantra to ‘go big or go home’ and that is the height at which it causes us to set the bar.
Lower The Bar To Create Permanent Profitability
Given that the topic at hand is upper limits you’d be forgiven for thinking the whole point is to constantly get higher. And to some extent it is. We all want to build on the success we’ve already created.
That being said, when we set the bar so high for ourselves that it is perpetually out of reach, we create an upper limit issue of a different kind.
This inverted upper limit issue does not come from self-sabotaging to avoid achieving greater success and stepping out of your comfort zone. Instead, you are self-sabotaging by constantly pushing yourself outside your comfort zone so far and so fast that you business can’t sustain it.
The goal is not simply profitability but permanent profitability.
By lowering the bar and taking small steps up, rather than huge leaps, you reduce the risk of slamming into your upper limit. You’re taking a small, cautious step outside your comfort zone, and you’re doing it with the assurance that you can afford it.
Are your upper limits preventing your success?
Upper limit issues can be incredibly tricky to deal with, and they’re fully capable of sneaking up on you. The good news is, what’s standing between you and greater success in your business has nothing to do with your business itself. There’s nothing wrong with your business model, your marketing plan, or your products and services.
You simply have to convince your mind that it’s safe to step it up to the next level.
The more steps you take outside that comfort zone, the more you will reinforce your belief that it is safe to succeed and safe to grow.
If you’re eager to keep building on your success mindset, check out my fabulous book list of amazing resources that can help you. And if you’d like to learn more about how the Profit First principles can catapult your business to greater success, and higher profit levels, book get in touch now…
Knowing how much of a minefield pricing can be, I can help keep your pricing decisions as simple, stress-free and profitable as possible!
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