How a beach hut entrepreneur doubled her income by revamping her membership (and working less)
It sounds like the dream business: looking after beach huts on a picturesque beach, but for business owner Karen find out why it quickly turned into a nightmare.
It can be hard to see the wood from the trees when you run your own business, and after the initial excitement at buying her perfect lifestyle business faded, Karen was left with a grim reality: running a business that demanded all her time, seven days a week, without earning her any more.
When Karen came to me for help, she was despondent. Her husband was fed up of never seeing her, she dreaded answering her phone or checking her emails, and she was broke. Find out how we worked together to devise a way to restructure the business so that Karen could work (much!) less while finally earning the income she deserved.
Two years ago Karen bought a beach hut business on the Kent coast. The former owner was a retired carpenter and had run it as a casual, cash in hand enterprise.
Why Karen’s beach hut business was struggling
When Karen first took over the business she wisely didn’t change anything. She wanted to get the lay of the land and learn how the business worked. But after 18 months she was struggling.
Unlike the previous business owner she wasn’t a carpenter so rather than be able to do any repair work herself she needed to hire and project manage a tradesperson. This cut into her profit and was time consuming and stressful.
She also spent a considerable amount of time fielding emails and calls from beach hut owners about minor repair jobs, and finding people to work on them and source materials – for a miniscule profit. In fact, when she completed her first end of year books she was depressed. After a year of hard work and stress she’d made virtually nothing.
She’d earned far, far less than minimum wage and regretted buying the business. She even considered closing it down.
However, after reviewing her business figures she discovered that there was one part of the business that WAS profitable: building new huts, and there was significant demand from them. So rather than close the whole business, she decided to change it. And she asked me for help in working out what to do.
After going through Karen’s numbers with her, I agreed that the repair side of the business just wasn’t viable – it required too much time (and stress) for far too little money. Building new beach huts, meanwhile gave her a healthy profit margin with minimal time input from her.
But I didn’t think it was necessary to simply ditch one big part of her customer base and leave them without a service they depended on. Instead, by making some changes to the business model, I thought we could find a way to continue to provide some level of service and make more money.
When Karen and I first spoke, the business offered customers one service that cost just £15. This service gave them:
- 10% discount on beach hut insurance (worth around £25)
- Hut registration
- Free call outs and surveys for damaged beach huts
- 10% discount on any repair work organised via the business
- Key holding service
Hut registration means that if there were any problems reported with their hut – such as break-ins or damage – the beach patrol would inform Karen and she would let the owners know. And the key holding service meant that Karen kept a spare key for their hut to give to contractors if they needed access. (Many hut owners do not live locally.)
Karen was planning to cancel this service and instead just add her list of tradespeople with contact details to her website.
Karen was overlooking the value her business offered to customers
I thought this was a missed opportunity. Her list of vetted tradespeople was highly valuable (it had taken some time to build) and she shouldn’t give that information away for free. She was also overlooking the value her business offered to customers:
- The convenience of having one place to go for help
- The trust of knowing that you’re dealing with honest experts
- The reassurance of dealing with a friendly, helpful person
I felt that there was a way we could still deliver this value to customers, without Karen needing to spend so much time on the business, and earn more money.
At that time the business has 200 people who subscribed to this service, which brought in £3,000 a year. But Karen’s costs had risen as she’d registered the company as a limited business and was now VAT registered.
Karen and I discussed what was most important to hut owners, and alternative, more time-efficient ways she could deliver this to them. We also explored what elements of the current business model could be removed, while still delivering the results customers wanted.
The key service we needed to remove was the free call out and survey, and all repair work being commissioned and project managed by Karen. I liked the idea of giving beach hut owners direct contact with vetted tradespeople, but felt this should be part of a paid service, rather than just free, to reflect its value.
This would also be a benefit to hut owners, because rather than needing to go through Karen for repairs, and incurring a mark up by her for her time, they could hire the contractors directly and save money.
We devised three new service options with realistic pricing
We ended up devising three new service options, with more realistic pricing. These were:
Basic plan: £49 a year
- 10% discount on beach hut insurance (worth around £25)
- Hut registration
- Access to a vetted database of tradespeople
Key holding plan: £79 a year
- 10% discount on beach hut insurance (worth around £25)
- Hut registration
- Access to a vetted database of tradespeople
- Key holding service
Call out plan £99 a year
- 10% discount on beach hut insurance (worth around £25)
- Hut registration
- Access to a vetted database of tradespeople
- Key holding service
- 24/7 call out service
The 24/7 call out service includes someone visiting your hut within 12 hours of receiving a call to assess any damage and report back. It also includes hiring the appropriate tradesperson if you require.
This new plan covered off every service in the previous plan, but with far more appropriate pricing. It also gave customers options: those who didn’t need or value the more expensive (and time consuming) elements could opt for the basic plan, which still offers excellent value for money. (It immediately saves them £25, and the rest of the fee works out at just £2 a month.)
Karen naturally felt nervous about making such dramatic changes – especially to the pricing. But I reminded her that her customers didn’t need to choose any option if they didn’t want to. It’s a free market. I also reminded her how how little she earned from the previous set-up and demonstrated that this new pricing plan accurately reflected the value of the services, and ensured she earned what she deserved.
Surely it was better to continue to offer customers a service, than the previous alternative she’d been considering: to simply cancel it altogether. (Karen had no competition so there was no one else to step in and provide the service she offered.)
This new pricing plan brought in MORE money for much LESS work
This new pricing plan finally could finally make this part of her business viable – and profitable. It was highly unlikely all customers would move across to the new membership model. But enough probably would to give Karen the same income as before, if not more, with far less work.
Which is exactly what happened. Just two months after launching her new membership, Karen has increased her income by 146%, while reducing the number of keys she needs to hold by 670%.
And more people are joining each month.
As a bonus, thanks to the new automated sign up, payment, and welcome email system, these new memberships came in and were processed without Karen needing to do any work. The system is also set up to notify and renew memberships automatically too.
The new membership freed Karen up to earn even MORE money
As another benefit to spending less time on her membership, Karen was able to tender for a project building a number of new beach huts for a local council. This would give her a significant profit, as new builds had the highest profit margin and were expensive.
Karen won the bid, and oversaw the work as the huts were built. Because she’d reduced the amount of work generated by her previous membership model she was able to easily manage the project without stress – finally giving her the profitable, lifestyle business she’d always wanted.
Does your business model and pricing need help?
Changing Karen’s business model and pricing has completely transformed her business, and meant she can earn more money in much less time (we estimate that the new business model requires a maximum of 10 hours work a week – compared to the 60 plus hours she was previously working)
It has also helped renew her enthusiasm and faith in the business, and she finally feels excited about its potential, with no intention of closing it. Today she runs the business around her family in hours that suit her.
So just think: What changes could I help you make to YOUR business in just one hour? How much time and stress could you save? How much more money could you make – without working any harder (or even, like Karen, working less)?
From experience, there’s often just one or two things that are stopping under-performing businesses from achieving their full potential. And it’s virtually impossible to spot them yourself; you’re just too close to your business.
There’s huge value in having an outside expert run their eye across your business and identity opportunities for improvement. That’s why I too work with a business consultant every month!
If you’d like help transforming your business and identifying ways you can earn more by working less hard, you too can book an hour with me. Here’s how it works:
- You book a business transformation session with me here.
- I then email you to agree a date and send you a questionnaire.
- You return the questionnaire so I can research your business and prepare.
- We have our hour-long business transformation session.
- I email you afterwards with agreed action points for you.
- You check in with me one month later to update me on your progress.
I know few businesses that DON’T have money ‘left on the table’ – income they could be earning but are missing out on right now. Just think how much extra money I can find for you in an hour, like Karen.
So if you’re serious about earning more money and running a more efficient business, book a business transformation session with me now.
If you have any questions about the sessions, you can email me directly here.
Photo by Chen Liu
