No, it’s not a trick question nor am I about to launch into some passive-income, work-from-the-beach way of turning on the money tap whilst lounging back on a Caribbean sundeck.
It’s a serious question that all experts and service-based professionals need to answer at some point in their business.
Of course, the sum doesn’t have to be 6 figures. If you read my book, True Profit Business, you’ll discover that I am not a fan of pushing out the 6 figure business dream; it’s an ego-driven target because the reality is that most 6 figure businesses have an entirely different money-in-their-bank-account-sum when you take into account exactly what profit is made.
Too many people are working too hard to achieve the wrong goals.
If it is a genuine 6-figure sum you’re after, great, but the money sum could be that you simply want an extra £10,000 over the next few months.
For the sake of simplicity, the money sum I am going to use in this article is £100,000 because it’s as an easy number to work through.
First of all, why is this question important?
Knowing how you want to make your money from your business is important because it’s going to significantly impact your marketing strategy, positioning required, resources needed (advertising budget, hiring of team, cost of digital platform set up), skills to learn and how much time and effort you are required to get it all working.
Your business model – how you engage with your clients and deliver what you sell – is directly related to how well you can grow and potential scale your business. You have a choice in the way your design, set up and run your business.
But most people end up with a business model based on what everyone else in your profession is running, or a business model based on what you’ve been taught to be the most profitable or easiest to run.
In the first instance, you may have the same business model as everyone else in your profession not because of choice, but because you don’t know any better. What you don’t know, you don’t know and, as with most clients I work, I doubt you’ve gone to business school or have training in business processes and systems.
If this is the case, you may have spent a lot of time learning about marketing and how to get clients, but the topic of how to design, set up and run your business is something you’ve probably never given much thought to.
Doing what everyone else in your profession does has its upsides because you know what works already. However, there is a big problem with this. Just because most of your colleagues or competitors are running their business in a particular way, it doesn’t necessarily mean they are all doing it the right way for them.
80% of businesses are doing it wrong
If we take the Pareto Principle that statistically proves 80% of your outcome comes from 20% of your input, 80% of the success that happens in your profession comes from just 20% of the businesses.
Thus 80% of businesses in your profession are creating just 20% of the output.
Can you see why so many of your colleagues and competitors seem to be struggling when you get to see what’s really going on behind their marketing, promotional campaigns and brand presence?
You know if you are in the 80 percentile if you experience any of the following:
- You’re overwhelmed; you’re procrastinating over marketing initiatives and new product ideas because you simply don’t know what you “should” be doing to make your business work more effectively.
- You’re overworked; you are stuck in the day-to-day grind and feeling miserable that you can’t spend the time doing more of what you love
- You’re underpaid; you compete on price, charge by the hour or the time you spend with a client and often over-deliver so that you do far more than you originally promised thus dropping your value even further.
I know this paints a pretty depressing picture but there are plenty of you in this situation (you are part of the 80%!) and if you get a copy of my book, True Profit Business, you’ll discover the path out of this 80%.
What are the top 20% of your profession doing right?
There will be of course all sorts of reasons for their success but there is every chance that they are using technology to create huge growth advantage opportunities to allow them to stand out as a leading expert in your profession.
You’ve probably already seen colleagues and competitors create new ways of sharing their expertise. From expanding their offerings to serving groups of clients, large and small, through to creating digital content and artificial intelligence; the opportunities to do something “different” and grow the number of clients you work with are open to you if that’s what you want.
This leads me to the second instance where many of you may be.
Digital doesn’t necessarily mean better
The explosion in selling digital content since 2015 has led to thousands of marketing experts teaching digital ways of making money and growing a business from your laptop on the beach, particularly within the coaching, therapy and training professions. Because technology has been the reason for a lot of businesses’ success, it’s easy to get sucked into believing that digital is the only way to grow a business like yours. But that’s not simply the case.
Many marketplaces are now so flooded with digital offerings that it’s hard to break in and claim your space, especially when so much of the content can be of poor quality and your client base may have begun to distrust this form of learning or support.
Plus there are plenty of those 20% businesses in your profession who are running more traditional business models, but because you don’t get to see their marketing campaigns or brand presence on your Facebook or Instagram feed, you may not realise they exist.
And let’s get real about how it is to run a top 20% business. You may have a business that, on paper, is well within your profession’s top 20%, especially if you are measuring its success on traditional key performance indicators such as turnover. But the reality of running your business in the top 20% is that it may be burning you out.
You know if you are getting burnt out in the 20% if you experience any of the following:
- You’re overwhelmed; you’ve stepped up and created your expert status but you don’t like the visibility and constant pressure to perform.
- You’re overworked; you can’t seem to keep up what you’ve promised your clients and can’t come up for air long enough to hire the right people to help you grow.
- You’re underpaid; your turnover maybe 6 or 7 figures but there’s not much left for you once you’ve paid your team, advertising invoices and running costs.
Again, another pretty depressing picture.
But as before, you aren’t the only one to have created a business that is burning you out because this practice of growing a business based on following someone else’s formulas and business model is rife. This is why I want to open up your eyes and see the possibilities available to you on your path to creating a True Profit Business. My aim of my book is to help you to avoid following someone else’s proven business model and systems, just because they are telling you it works for them.
You have a choice
You have a choice on what business infrastructure, processes and team to have in place to give you the right business to help you achieve your creativity, purpose and money aspirations.
You can choose the design, set up, and how you run your business based on who you are and how you want to show up. It’s just the way you can decide on the right vehicle you want to drive day-to-day.
There are so many different types of vehicles on the road because each of us has a different reason for choosing our mode of transport, and at different stages of our lives. Starting out, you’ll drive any car you can afford; a small hatchback or perhaps stick to your bike, especially if you live in a city. Families may drive a big SUV. Some may like fast cars. Others choose their mode of transport based on environmental impact and may even decide they don’t want to own a vehicle but use uber or rental cars for longer journeys.
There’s no one vehicle that’s right for everyone or for a specific profession.
And so it is with your business model and revenue streams.
There are four critical decisions to make to help you decide which business model you want; your role in the business, the number of clients you want to serve and then consequently at what price point, how you deliver your service or products and which selling system you decide works best for you. In my book, True Profit Business, I take you through in detail all four of these decisions.
So for now, let me take you through a couple of examples.
The passive income dream
Someone I spoke to recently had recently spent a significant amount of her investment cash setting up a new membership website. She had read a lot about membership sites, had joined an online business mentoring programme to teach her the basics of setting up digital products and thought this would be a perfect revenue stream to have around being a mum at home with two young children. She wouldn’t have to travel anywhere and could do everything her business needed her to do from her kitchen table.
There was no questioning her passion for helping the audience she wanted to reach out; she knew they were desperate for clear signposting and easy to access advice. But 14 months in and her beautifully designed website was verging on a marketing disaster. Although visits to the site were climbing and she was good traction in the forums, database building was almost non-existent and her offer just wasn’t compelling enough.
She planned to start with the freemium model and then charge £27 monthly. She dreamed of having a 6-figure business, but to make £100,000 would mean 309 members, assuming that all 309 would stay a minimum of 12 months. That’s a whole lot of leads to get that many customers and a whole lot of customer retention strategy to keep them being members.
Of course, long term, this kind of membership model can work, but you need a big bucket of resources (advertising, customer support, time, energy and hours and hours of screen time) because your marketing strategy is focused on a high volume, low pricing model.
It’s highly unlikely that any decent profit will be made for at least a year or two (probably many more!) if you rely solely on this revenue model. And this person was burnt out after 14 months of struggling to build up her tribe on a bootstrap budget and a lack of skills in digital marketing and advertising.
Let’s go to the other end of the scale.
I recently worked with a client for many years in the publishing industry. I am sure you know the massive changes that have turned much of the publishing sector on its head. The problem was that she was still stuck in the traditional, old-school business model where very little revenue was created until a book was published and sold. For her business to make £100,000, it was all about book contracts, working hard upfront, and only seeing rewards when (and sometimes only if) the book was successful. Plus, it was a cost-heavy business, so profits were tight.
When we started diving into the process she went through with her author clients; it was apparent to me the value of what she did even before the content was written. Of course, being surrounded by the traditional – and very much outdated – publishing business model, it was a classic case of “what you don’t know, you don’t know.” But having talked through all her options and what role, client capacity and the delivery process would work for her, it was as if a searchlight was beaming through the fog, and a new path became clear.
Offering her services as a book coach and mentor at the start of the process was an obvious place to begin; charging for the 6 months run-up to get the book ready for editing was not only profitable for my client but incredibly powerful and instrumental for the success of her author clients. Again, it was not a holy grail solution to making 6-figures – there was still a lot of thinking and doing to be done around her positioning and marketing her new offerings – but she could see clearly that this additional revenue stream could be a far simpler way of growing her business revenue than sticking to what everyone else in her industry did.
And without distracting her from her core revenue base or burning herself in the process.
The price you decide to charge has much to do with your success.
Before I send you off to think about your potential revenue streams, let’s deal with the elephant in the room: the price you charge. When creating new revenue streams in your business, it’s often perceived as easier to start at the lower end of charge of the price scale. I’m sure you have seen, and perhaps even bought from, the classic product funnel that starts with a £10 introductory product, which leads into a £295 course and then takes you into a premium programme of £1,000 and more.
So what many do and are taught to do is start creating your £10 introductory offer because you believe you need to build your list. And a £10 product is so much easier and safer to create, is it not?
Coming back to the question on hand – how do you go about creating £100,000 … that’s a lot of £10 sales you need to make to build enough momentum to move people up to your next mid-level product. You’d probably need 500+ sales to get you the conversions to that £100,000. That’s exhausting (and I speak from experience!)
Again, this kind of product funnel works like the membership offer example above. There’s no doubt about it. But starting with the perceived easier end of the funnel is not always your most straightforward path to growing your business. A far quicker, simpler, and easier way to do this is to flip your funnel on its head and start at the top end of the scale. Even if you decide to start small and create a programme or service at around the £2,000 mark, it becomes obvious that you have to sell to far fewer people to get yourself to your £100,000 goal. Plus, you’ll gain valuable experience, build your credibility, and see better results for your clients at this level.
Now, of course, I’m starting to sound like the rainbow fairy.
“Just wave your wand, burn your candles and the unicorn will come and poop out those clients for you.”
You know clients aren’t going to magically appear with intention alone (don’t you?!). There is a need for focus for your overall strategy and positioning, a clear offer to be created, and an understanding of what your marketplace really wants. But I hope that you get the point I am making here and that you realise you have a choice about how you design, create and run your revenue streams in your business.
Think carefully about your pricing and offers as you grow your business.
