Structure & Organize for Success
I'm glad to be back and this is not the heavy lifting part of the course it's actually the part that I think is going to relieve a lot of questions that a lot of you have about how to really set up for success. I think a lot of soul businesses solo partnerships, freelancing businesses know that they aren't structured for success, they don't know how to get there and it's kind of an overwhelming thing, so what we're going to cover is what it takes to get organized and it's really only four things your business model this session we're finally going to ask you the questions that need to be answered to establish a business model or at least to know why what you need to do to establish your business model your business name a lot of you already have a business name any established business has won a lot of freelancers air working into their own names and although they have a going business, eh don't haven't named as a business, we're going to talk about that and then we're going to answer ...
the important question that warren raised on behalf of his cut the clients in the last session how do you protect that name? What does it take to register a name protected from use by others? Make sure you're not infringing on use of someone else's name that kind of thing your business legal structure I said it's for things it's five not as easy as they made it sound your business legal structure are you going to set up as a solo preneurs? Are you going so proprietorship you're going to set up a corporation and llc whatever what are the advantages to each of those of what's involved in real quick form including when you need an attorney and then your financial framework what it takes and then I consider this is important as everything else your questions I want to hear your questions about getting your business organized the reason you have to get organized and I know I sound like a broken record because I've said it in the last two sessions I will say it again you've got to get your business out of your personal checkbook and you and that it's really for management but it's also for maxima's maximization of the money you're making you're paying too much in taxes if you're not set up to capture all your expenses and deduct them from your revenues and therefore reduce the profit that you show on your tax return there is nothing that is wrong about that that is how business should be run it's certainly true in the u s system and I'm almost sure any tax or legal adviser anywhere in the world would say it's important to capture your expenses subtract them from your revenues to arrive at the lowest necessary taxable profit, and we're going to talk about that. Also, when you get organized, you protect yourself against liability issues, and that comes down to the business structure. How you structure your business, whether you are personally liable or your corporation is liable, it makes a big difference, and at the same time how you pay the bills of your business prove whether they were business expenses or not, which also believe it or not, contributes to liability plan for tax issues and advantages. Too many freelancers are just blind sided when it comes august. I'm sorry, april in the u s when most people filed their tax returns and they learned how much they actually made and how few deductions they actually had, and the reason they had few deductions is they didn't capture them along the way. So the other reason to get organized is for tax issues and advantages. Also to provide plan, a business that grows and scales I hit it in the last session will hit it again. Businesses that are set up a cz businesses grow like businesses, they don't grow like hobbies they grow like business is that clients trust by from more readily, pay more for buy more repeatedly, talk about you, build a brand by building a structured business, and you plan and managed for profitability. So that's why? To get organized. The first thing to do is to define your business model. I promised you we'd get to this and we're going to get to it, and you're not going to get away without answering some questions. Where will the money come from? And in business plans kit for dummies, which I will give another. Um not to. Because it is a wonderful book with a whole chapter. Well, actually, multiple chapters that hit on business models. My two co authors are brilliant at this. Their business strategic play helps people really develop this kind of thing. And a lot of what is in this program comes out of this book. So this is a secondary resource. All it really is is where does the money come from? You assemble it not unlike you would assemble any other model. You put together the pieces what's in a business model. The most important element of your business plan the answer to how you will make money. And will there be enough of it? It's made it made its way into the everyday language back in the boom boom era of the tech. Well, actually, the tech boom when everybody was talking to venture capitalists and there was a while when people were more interested in eyeballs to remember that term how many eyeballs will it attract? It was all how much traffic would it generate on site and what it failed to do is really talk about where does the money come from and after the tech boom burst people all of a sudden got real serious about business plans where does it make money? How does it monetize and that entered into our lexicon the word business model and it's not going away? Is it? This is what you have to have steve blank is an entrepreneurial educator and coach and everything else in silicon valley and ac usually you'll read a lot about him even speaking against business plans as necessary. More so he says a business model is necessary and that's why I tell you that you need a business plan because it plays out your business model a startup is a temporary organization designed to search for a repeatable scaleable business model that's what he says a start up is he says once you find that model then you no longer a startup but until then all you are is a business idea in search of a scaleable repeatable business model and that's what we're talking about we talked about it with your your wonderful book idea how does it monetize ah business model describes how your company creates, delivers and captures value that's his definition I think you'd be hard pressed to find anybody who argues with that definition that's what your business model is it is designed to change rapidly based on early contact with customers so you set up your business model, you're going to charge this much money and you're going to sell it this way and you learn from customers that's not how they want to buy it you adapt your business model, it is not cast in cement. What you do is you adjust it so that it can capture more revenue based on what you're hearing from customers when you deliver it, develop your business model here's what you have to ask how does the money flow into our business? Okay, it flows in through time and our sold it flows in through training sessions sold it flows in through contracts with individuals who buy personal services. That's where to start that it flows in through a fin affiliate sales. Every time somebody buys on amazon, you get a bit whatever you figure out all the possible ways that money flows into your business. Then you say, ok, what exactly do we sell? In other words, what's the primary offering that we're selling because there may be lots of little things. For instance, when we had the ad agency, what we sold was either time on a retainer basis or projects or hourly consulting but we also had all this money flowing in from media commissions for markups on printing from mark ups on design services we would hire an illustration for a client and that illustration cost a thousand dollars and we had a fifteen percent markup on it so you figure out all the ways and you're aiming for multiple streams of revenue and then the next question in your business model is what are your sales or distribution channels? Is it all direct meaning the ad agency it was pretty much directly pitched clients they bought and that was that but then if all of a sudden you also have maybe a a product of some sort that the agency would sell maybe you sell that as a product that's another distribution channel that's going out on line or maybe you have sales reps who are outselling for you these air all your distribution channels to figure out how are we getting this into the market and again as a sole preneurs or a freelancer you try to get some of it off your own shoulders so that day when you're sick or on vacation there's still a way for your business to function and that begins to develop the kind of business that could transfer if you ever want to quit doing it yourself what's your purchase approach how will customers buy and how and when will you build and get paid your purchase approaches where does the customer go to get it do they go to a retailer do they go toe do they go to you directly do they go to your studio do they go online and sign up aa lot of hairdressers for instance they're going independent their what's their customers purchase approach are they supposed to phone? Are they supposed to use an online booking? Do restaurants want you to use open table or do they want you to call directly? These are all customer purchase approaches that you try to figure out and again you try to get a number of purchase approaches so that the customer has the utmost convenience and they're all matched to customer desire then you also have decide how and when will you bill and get paid and particularly for people in personal services you have to consider do we wait until the job is done and we send a bill because what if the customer makes you know delays goes on vacation whatever or do yourself do you bill for monthly work in progress you decide how are you going to do it to make your business successful we always billed for work in progress that was part of the contract when we sold it we sold the contract that every month you know here was the budget that the approved budget and we always got them to sign an approved budget because I always have this theory it's easier to talk about what it costs while they're buying them when they're looking at the bill. So you have the the uncomfortable conversation about what it's going to cost them clear early on, and then you get him to sign a contract in part of the contract is that we'll bill you monthly for work in progress. If your changes we'll let you know when changes incur costs, and if they incur costs, will flag you that were, you know that asking for an approval to go above budget, but these air, all decisions in your business model, how will you bill? And when, when you get paid, and then what are your costs, pricing and profit margins? You need to know that anyone supporting your business financially needs to know these answers. Money flows in what do you sell? What do you distribution channels? What's your purchase approach? How do you build and get paid? And is it enough to deliver you a profit? So how does money flowing in each of you think about this with your own? This particularly think is it possible for you to add more revenue streams? One is sale of products if you don't have a product think is there some product you could develop that people could click to buy fail of your services? This is your hourly but it might not just be your services that might be services of staff eventually, if you decide that you couldn't afford those commissions and markups on sale of third party products, services and affiliate sales, this is a pretty this is kind of frame money you're selling somebody else's stuff and getting money to do it, so if you can figure out ways to do it, and this is why blog's, this is how a lot of people monetize their blog's, everything they mentioned in it, they just saw a really cool item today that, you know, you stay within your brand image, but you hot lincoln, and it happens to go to an affiliate purchase, and you get a bit of that when it when it comes through sale of ads and sponsorships. Certainly this is how blog's monetize, and a lot of it in interviewing people with successful money making blog's, they tell me from the day they set up their blood, they set up buttons for ads, and they used it for their own messages until they could get advertisers. Therefore, when they introduced ads, they're blogged, readers didn't feel like all of a sudden the blood had gone commercial. There were always messages in those buttons, and now their ad messages so and then revenue from rant, lease or license of owned assets and brigitte eventually that's what you're talking about if you khun develop your brand into something that others air conveying for you you and and actually franchise would go in here is well so these are all examples of revenue streams does anybody here have more than one revenue stream now? Yes mentioned them what are your revenue streams I have public class is is that I teach private clients that I teach I get paid to produce videos in my studio for other teachers and then I also get paid royalties for videos that I film of myself teaching I also get paid for retreats or festivals so it's a lot including one that she's doing to wear costa rica oh my body were more limber anyway although you would probably tell me if I'm courageous I could go in a way so think about that think about ways that you can broaden your flow of money or revenue streams into your business example for a writer's business they might sell fee based copyrighting editing publicity's social media consultation this is their services that they sell by the hour they might sell books, training programs, presentations they might have a product line and the reason I put presentations under products is with luck it's a presentation that they can give repeatedly versus every time there's a presentation it's a brand new scramble which almost moves it into services and distribution and delivery which is where you would put your distributing other items and making commission ninety nine percent of all business sales small business sales in america fit in one of these three categories so what exactly do you sell? I urge you heavily list every product you sell when we had the agency we put public relations, we put advertising, we put marketing plans we put communication audits impression inventories think of everything a customer buys from you and make a list of all of them because later what you'll do is you'll say which of those our most profitable which are easiest to sell? We ended up determining that what we called the impression inventory where we are communication audit kind of combined the two together where we went in and looked at every impression a customer was the client was making they weren't even a client yet that was the first thing they bought from us and we would tell them where all the gaps where where the improvements needed to happen they never failed not the hire us to make those improvements for them. So really it was a new business strategy but it was also a product. So you look at all the products that you're serving all the services that you're selling all the product or service accessories air add ons if you're selling a warranty with your product that's an accessory or add on it's not what you sell but it's another way to make money off what you sell all commission generating offerings and if you don't have something, is there a way I could generate those and again, affiliate marketing is a good way to do it and all income generating assets and that would be licensing out, even sharing office space and getting some income from that if you have a great big place and you don't need it all, why not? I mean think about a way to do that so figure out everything I put what do you sell? I probably could also say do or can you sell and which offerings best support your business goals, which generate the fewest problems and highest profits which have the shortest sales time francis gets back toe low hanging fruit especially if you're trying to orchestrate a business turnaround or a start up without a lot of funds to handle a great big ramp up period. Where is your low hanging fruit? What can you do to bring in money now? Which of the products fit best in that which have the greatest growth potential it's one thing to be able to sell something easily, but if only ten people buy it, then you know if if if it's only a very, very minor part ofyour target audience, then you can only expect so much from it which generate easy or read occurring revenue and bridget and I were talking about this over the lunch break, and I said, why is it that you would consider private customers profitable? And you said because they pay me directly and pay for bulk classes in some ways that is recurring revenue they buy a siri's from her at once. She only has to sell it once, and she gets the money up front, I would presume, which means they make a commitment to her in some ways it's, a barrier to entry if she can sell enough of those somebody else, some other competitors is going to have a very hard time dislodging those clients who have already bought seriously into her business and which contribute best to your brand and reputation. The on ly thing I would say about the subscription or the private customers is if her goal is to build something that is more scaleable there's only so much emphasis she can afford to give to a product that relies on her own hours in the day. So I would say, fill out, this is in the slide deck when you get it, I would say, fill out something like this for your offerings list every revenue source you can think of that you have, and then go across and check is it easy to produce, easy to serve, even given a one to ten easy to scale high profit margin, short sales timeframe, recurring revenue, high growth potential brand building and every revenue source that shows up in a bunch of those categories is one really worth developing and at the same time and tomorrow morning we get into your goals. You look at your goals. If your goals are you have got to get profitability of then this would be the most important category to you if your goal is I really want to establish a much stronger brand reputation so that I can go for the big clients who are going to big name providers. Then it would be this one so you end up aligning number one you want to back the revenue sources that fit the most of these categories but then also that fit into your goals. If you just want a really quick ramp up to cash flow, you're going to want to get to these two what's easy to produce, easy to serve and I actually should have been here easy to sell. So think of this one a servant cell but it's really worth it to put your your products through that and then you ask yourself what's our sales approach is it direct to consumer brick and mortar retail, click and mortar retail, online retail on ly distributors, air wholesalers through auctions, collectives, cooperatives I know a lot of artists use a nazi type form format to get their work out through franchises through licenses so you figure out what how do you want your customers to buy and again can you create more than one sales approach so that you can get it out in more than one way and then what's your purchase approach sales approaches how you're getting it out there purchase approach is how they're getting to you are they buying one time purchase frequent purchase purchase with ongoing refills that's a nice one that's the gillette razor with the um subscriptions or memberships multiyear or annual or in your case five time whatever contracts freemium to premium and we go into freemium in a bit but that's where you give it away because you're so sure that a very small percentage of them will want the premium version of it and that that small percentage will be enough to make your whole thing monetize freemium to premium threw in some ways I could say that's what I do they go online they read a chapter I'm happy to have we need it in a very small percentage of them are going to buy the book but really freemium is a little more than that it's more lead generating and everything built into it transaction fees that every time they use it a lot of softwares so well actually software sold through per seat fees but transaction fees is each time they use it they pay something or free usage with revenue from ants or sponsorships that's what a lot of blog's our people, our monetizing bloods I'll tell you if you're trying to monetize the blood, create a blogged that you love so much you're happy just to do it for no revenue because a very, very, very minor percent monetize but those that monetize compay off college loans and make a profit beyond that worth it to follow the sight of a guy called pro blogher dot com he was a photographer first daryn rouse a lot of photographers will know his name still a photographer, but he also does pro blogger with tons of tips and advice on how to monetize and and create content and everything else for a block. So this is kind of a block approach, among others free usage with revenue from sponsorships. A lot of nonprofits used this they give their events away or whatever and then they bring in sponsors who end up creating the revenue that they need to run their nonprofits. How much revenue can you generate? And this is tara what I was asking you to think about how many hours of service can you sell and for how much? And in the pricing section I don't think it's in this section I go through really how to do the math on this how many hours can you serve and for how much does that deliver enough money that it provides you with the salary you would demand if anybody else were buying your time? How many products can you make and sell and for how much this is scale ability? If you find out that it's so labor intensive, you can only do it twice a month, you can only create two a month. Well, then, is it price that two a month they're going to pay your freight? How much can you make from commissions, mark ups, revenue and other streams? And what can you do differently to make more with less? Not to spend more to make more, but to make more with less? And that together comprises your business model? I would love it. If tonight overnight you would try to begin to write down your business model. How do you generate revenue and profit? What do you sell into whom? How does revenue flow in, preferably through multiple streams, your sales approach? How do you get it out there? Your customers purchase approach? How do they buy? And can you add more ways that they can buy? And I also put in here they're buying pattern because you might find their very seasonal, or they tend to buy with friends, they tend to buy multiple orders to give his gifts by really learning more about this? You can also learn more about how to package your product and promote your product and then your profitability projection. This is your business model, everybody, no matter how small your business, know what kind of your business, even if you're a non profit, you need to know the's issues. The only thing is for a nonprofit you wouldn't call a profit its funding. Does anybody have a question? Because this is so so, so important and it's the missing link in most small businesses. Okay, I have hammered in and everybody knows they need one. Even online people aren't asking. Not yet, okay, they're not thinking seems to be the engaged in ok, I'm following it so everybody work tonight on writing down the beginning of even if you on ly think what's one way I could expand what I am doing. Once you have a business model, you are in business. Once you have a business model, you are no longer just a hobby. You really have a business now, it's time to take the next structural step, protect and state claim to your business or product name.