How can I scale back my business (sole proprietorship, no employees) without shutting down completely?
I'm semi-retired – that is, I've started taking Social Security payments with the intent of working fewer hours, not retiring altogether. But I'm starting to get an almost unmanageable workload and I'm concerned about making too much money. Anyone out there been in that "good problem to have" position? Any suggestions for how to scale back without shutting down?
Expert Answers
Sort by Date
Sort by Votes
Dec 23, 2015
Many people only have one income source, which means that they have no real exit strategy. You might consider taking on a mail box money product that would build with modest effort over time, so you could still work sometimes, but have more of the life you desire. With the right strategy and mindset, it would eventually build to allow you to walk away from the primary business. It would be like retiring at full pay or better.
Dec 23, 2015
Try to automate and do on-line business as much as possible. Focus on quality service rather than quantity.
Dec 22, 2015
Great opportunity to be facing. Here's something I think you might want to consider. You already own the company, if you have employees, consider offering them a ESOP or provide them with SAR's. If you don't know much about either or both of these, your financial advisor can help. The Stock Appreciation Rights is easy to set up and manage, AND you maintain complete ownership of the company. Your employees run the company according to your oversight as an Emeritus Chairperson.
In the case of Employee Stock Ownership Programs, the process is a lot more formal, but ultimately provide the reduction in time spent on the business.
Dec 22, 2015
I am in the same situation. Thank you for asking this question and thanks to all who answered.
I am doing a combination of 2 of your answers.
Come the new year, I am raising my rates 25% to existing customers, and new customers will pay about 10% more than that. I am also scheduling myself off work one week per month.
In my case it's a matter of failing health, not age ( although I'm close) so I simply don't have the strength to work my current load.
I would like to hear more details on earning through giving the work to another in my field. How would we collect?
Dec 21, 2015
Any thought to selling your business to someone who could carry on your good work with you financing the sale yourself? You can set the recurring income level any way you want in how you set up payment terms and stay on-board as a part-time consultant to make the transition more palatable to your current clients. Pick the right buyer and can be win-win all the way around. The business can then continue to provide value and grow as your income remains steady and predictable and still at a level that avoids penalty.
Dec 21, 2015
Find some good colleagues to refer extra business to. They may pay you a referral fee and you may be able to run your business just on them! Become the go-to person for connecting. Just a thought.
Dec 18, 2015
Perhaps consider the literal opposite of your imagined plan and instead train a replacement. That way you can step away and keep your stake, and scale it as needs be by shares etc.
Dec 18, 2015
Hi Carol,
What a wonderful position to be in. My advice is based on what I am in the process of doing right now, which is redirecting my company to be what I envisioned it to be rather than what it became.
First on the Social Security income- if you are over 65 (at least at this time) you can make all the income you want, under 65 you are limited and the SSA gives you pretty straight forward info online (https://www.ssa.gov/planners/retire/whileworking.html) .
One effective method for reducing workload is to raise your rates to a higher professional standard. Usually this guarantees to reduce the number of clients you have while also retaining the ones that value your services the most.
In the essence of what @AmaraRose shared: This year I realized my company will not just transition into what I meant it to be when I started it, not if I also must maintain the current status quo. If I wanted to get it there I need to research and write the business plan. In order to do that I need to make some changes and make some hard choices. I'm not closing my company; I still want to keep my company name and its reputation, years in business etc. in tact for the future.
I met with my employees a couple of months in advance and told them of my plan, I offered them the opportunity to take on our clients and their work should our clients agree. After much consideration they accepted the challenge with excitement and {fear}.. lol. Our employees already work directly with and are relied upon by our clients daily so this should be a soft landing for all involved. Clients are taken care of with someone they already know and trust, and my employees are embarking on their own journey to success with my support.
Over the next months we are in-person and individually letting our clients know about the transition, I am being wished well and they are excited for the employees and their businesses even sending referrals to them already.
Best Wishes, Terry
Dec 17, 2015
The best way to do this is to check which aspect of your business is yielding profitable results as well as the areas that are resulting in a loss. I suggest focussing only on the areas that create value.
Dec 17, 2015
You've gotten amazing advice, particularly DO Magic. I believe that creating a recurring income stream based on your work is a wise idea. Then, you could have what I call an 'accordion' business- it expands and contracts based on your needs or wants based on what's happening in your life.
How about turning to teaching. You have a ton to offer and an online course can provide a nice monthly income with modest promotion. It's an accordion business, too. Turn the volume up by adding a variety of events: speaking, a live event and private coaching or a combo. Thanks to the Internet and outsourcing online there are people who can do most of it for you.
One more new wrinkle makes being an online instructor even more exciting and potentially lucrative --Roku. Lynda.com and Roku struck a deal. You can access Lynda.com courses via Roku. Imagine doing the work once then selling the course as little or as much as you want or need. I feel very strongly that anyone over the age of 55 should have sustainable, recurring income as part of their life plan.
Dec 17, 2015
Figure out how many hours per week you want to work, then scale back your Hours of Operation accordingly...and post them in your advertising, leave them on the outgoing message on your answering machine. Better yet, employ an answering service that will interact with your customers and let them know your availability. ((What you want to try to avoid is people calling/coming in and there is no answer or you aren't available...maintain as much continuity of service as possible.))
You can make up to $15K/year without affecting your Soc Sec. So pay yourself that salary and invest any other profits back into your business, especially in areas where you will reap benefits by making improvements or increasing product availability.
Dec 17, 2015
Very simple. Just don't accept any new customers or don't renew some contracts. You probably have 20 % of your customers who represent 80 % of your business. Start to weed out some of the 80 %!
Dec 17, 2015
Without knowing your line of work, it's hard to say . . . but my first thought would be to see if there are others in the area that would be interested in taking on/taking over some of your workload. These people were formerly competitors, but as you twilight out, they can be comrades in making sure that your customers are still taken care of. Another option would be to sell your business lock, stock, and barrel, with the premise that you will stay on as an advisor/part-time employee.
As others and you yourself have said, this is a "good" problem to have, you just need to find what the best course of action is going forward. I wish you well in whatever you decide.
Dec 17, 2015
Its clear that you will not be again moving back and your scaling back is not only permanent but may even increase. Hence, you don't have to fear the market dynamics and your competitors moves. Therefore, do what really interests you. I'll give you an example. X is a freelance writer, who finds himself in your position. X deliberates all the pros and cons and takes up only those projects which interest him. He concentrates on a niche which he had always though be of potential. Like X, take up only those projects which interest you. Let your customers know why you do not want to take the work. It is in their interests too to develop alternate vendors for the day you will stop working. Increasing prices etc. will lead to loss of goodwill which you should not lose. Granted the goodwill loss does not matter to you but still deliberate goodwill loss makes me blink.
Dec 17, 2015
Partner with some other professionals in your field and send some jobs to them so that your clients feel taken care of but you can pick and choose which jobs you work on.
Dec 17, 2015
Having experienced the same issues, here is what I would suggest:
1. If you haven't already, reduce or eliminate the time you spend marketing. You will acquire sufficient work through your "pipeline" from the previous 3 years to maintain a cash flow.
2. Focus the work you accept into a limited number of areas or topics. Work that you don't want can be referred (or sub-contracted?) to others that you know.
3. Concentrate only on customers within a narrow geographic area, and eliminate travel outside of that region.
4. Depending on your age, higher earnings might cause you to "pay back" your SSI benefits, so watch it closely.
Dec 17, 2015
Yes, paying back the SSI benefits was my major concern. I should probably talk to my tax guy before the end of the year so I don't end up in that situation. Maybe I can still invest any overage in a tax-free retirement account.
Dec 17, 2015
All the suggestions have merit. However, even if you are over 70 you can sitll make a contributiion to a retirement plan to reduce your income for tax purposes. There may be other ways to reduce your taxes as well. If you have a good CPA who does your taxes she/he may be able to assist you further.
As to reducing your time working and helping your clients, you need to create a succession plan or a way to eventually sell your business to someone else.
Dec 17, 2015
Set hours and timelines. Make yourself unavailable for new projects while working on current ones. That way you will not have a queue of projects. Only take on projects that have a certain minimum to cut out the ones not worth your time.
Dec 17, 2015
If the problem is the workload raise your prices, The "pleasure" in paying taxes is that you are providing a service people will pay you for and are making money .
You can also pass your business to another in your field, keeping the first 10% of payment as your referral fee.