You may not be creating the next Facebook - you might simply want to grow your online business to a few tens of thousands of clients, but you can still take advantage of some of the principles described in the hottest book in the Silicon Valley tech scene over the last few years - The Lean Start-Up by Eric Ries.
I'll save you a couple of hours of reading and some of the more technical jargon - here are two of the principles you can implement to grow your business:
Traffic simply means visitors to your website and you are going to need traffic to your website to make your online business work.
This is where all the hype about SEO comes from because everyone wants to get traffic to her website and traffic is sometimes hard to get. Sometimes you build it, and they don't immediately come.
So what's an online entrepreneur going to do to get traffic? With millions of websites out there, how to you get people to come to yours? Well, this is the challenge faced by all online businesses whether it's Facebook or your local yoga studio or your personal coaching business.
The Basic Solution
If you simply tell your friend about your website and she types your URL into the search bar, well you just got some traffic - congratulations! But in order to have a successful business, you're going to have to get a LOT of traffic - hundreds or hopefully thousands of people coming to your website daily - and unless you have a LOT of friends and love talking to people, it's hard to talk to thousands of people every day - your going to need to do something a little bit different.
The Automated Solution
What you need to do be successful online is to take the thing you do in person and naturally and automate this process. Well how do you do that?
One of the two most effective way to do this is with Facebook Ads.
With Facebook, you can find the kinds of people who want to buy your services. Are you selling coffee mugs for left-handed, female New Yorkers? Well you can bring those people to your website with Facebook and we can show you how.
And once they are on your website, you can begin to form a relationship and move this person through the proven AIDA process of Awareness-Interest-Desire-Action to purchase your products.
Wether you're interested in getting Organic Traffic through SEO, you can structure you website in a way that your website shows up on page one of Google's Search Engine Results Pages (SERPs) or you can follow online with our Facebook tutorials and learn the art of PPC - "pay-per-click" and learn how to consistently drive people to your website 24/7 and turn it into an automated money making machine.
As a follow up to my blog post It's Not What You Make It's What You Keep, you'll hear a lot of the life coaches out there claiming to have "six-figure" businesses so I'd like to clarify this point so you have a better B.S. meter when you hear these claims and you'll know how to parse out the legitimate claims form the B.S.
The first thing you should know is that there is a vast difference between "top-line" revenues and "bottom-line" income.
On an income statement or a P&L (profit and loss statement), at the top you will see a line with your total revenues also known as total sales. This is your "top-line" (because it's on the top of the income statement). As I said in my previous article It's Not What You Make It's What You Keep, REVENUES - EXPENSES = INCOME, so even if you made $100,000 in sales at that big event, if you spent $20,000 on the meeting space. and $10,000 on food & beverage, plus your airfare to the far-off location and all your assistants cost you another $20k well your expenses just added up to $50,000. Your actual income just got halved to $50,000 about on par with the median salary in the U.S. from a corporate job, and you'll have to pay 15% self employment tax to boot.
So if you're going to want to really have a "six-figure" business, let's strategize on how to get INCOME of $100,000.
Well, how would you do that - what would your sales need to be to authentically have a "six-figure income"?
If you have margins of 30% (that's the percentage of each dollar in sales that you keep as income), then to have a six-figure business, you'll need to have NOT $100,000 in sales, but $300,000 since at 30% margins, you'll have $200,000 of expenses and keep as net income the $100,000 you didn't spend. Now that's a six-figure income.
One of the best ways to keep your expenses low is to automate your business. Code is a lot cheaper than people so anything you can automate saves you labor expense. You should also think about having a team of remote, technical specialists who can help you with design, SEO, and perhaps a virtual assistant. I'll talk about all those things in an upcoming blog entry.
One of the best reasons for automating your online business is that it reduces your costs thus increasing your net income.
In business school accounting courses we learned the basic formula R - E = I (Revenue - Expenses = Income) which translates in simple terms to "it's not what you make (revenues), it's what you keep (income or "net operating income").
What you keep is based on subtracting your expenses from your revenues (as seen in that simple formula) so if you can have a sales process that is automated and you don't need to hire an assistant to process your payments, you get to keep the salary you would have paid to the assistant or VA (virtual assistant).
Want to hold a live workshop at a hotel to launch your next program?
Well, you better be a good negotiator because hotel meeting space typically comes with a very high price tag and don't try to get out of a contract with a hotel - they mean business - even if your workshop doesn't fill, they'll want a BIG upfront deposit and their lawyers won't care if your sales are off.
Instead, consider moving some of your events online with webinars and tele-seminars - everything you can move online - whether it's just taking credit cards payments through your website rather than taking checks so you don't have to run checks to the bank or whether it's doing a live webinar rather than renting space from a hotel, remember, anywhere you automated frees up your time, reduces your expenses, and allows you to end up with higher income...
because it's not what you make....it's what you keep!
What's the difference between a website and a web application you ask?
First, the lines are being blurred more and more as technology evolves, but the best way to think about the difference is to
see the two as on a spectrum (see image, above).
The Web Application
When you think about a web application, think about GMAIL or Facebook. With each application, you have to login so that the application can authenticate who you are. Then, the application delivers customized content to you.
For example, everyone on GMAIL sees a similar menu, but all the emails are your, personal emails, not anyone else's. You'd be quite surprised if you logged in and saw the same emails that your partner saw when s/he logged in, right? In fact, that might be quite confusing or disturbing!
Similarly, with Facebook, you choose who your friends are and then you see content that is customized specifically to you. This is a key difference between a static website and a web application; in a web application, the content is customized for each user. This takes a lot of programming and a lot of very smart (and very expensive) programming talent to code and maintain the code that performs this customization and the logic upon which it works.
The Static Website
When you think about a website, think about your local bakery or yoga studio.
They have a "static" website with a lot of pages that describe their services. You might be able to send them an email through the website, but the website is similar to a printed brochure - you can think of it as simply a printed brochure that is placed into an online format that describes the products and services.
One key point to remember about static websites is that everyone sees the same site. Whether you are Tom, Dick, Susan, or Harry, when you navigate to your local bakery's website, you see the same content as everyone else. Now compare that with GMAIL - when you navigate to your GMAIL account, you'd be pretty suprised to see someone else's emails! GMAIL delivers customized content to each user. That's a key difference. When you are on Facebook, you see YOUR friends and their posts and the content is unique to you based on your list of friends.
Behind the scenes there is a staff of developers writing code, encoding the logic in a language called PHP that encodes how Facebook is showing your different friend's posts. When you build your bakery website, there is no logic necessary, so no backend coding language is needed to customize the content.
Well, what if you have a private membership area with individualized login codes?
Truthfully, when you add the ability to login to a website you are moving slowly along the spectrum of a website moving towards a web application.
Now, some users can login and see content that other users can't. However, it's still not like Facebook or GMAIL where the user sees very very customized content. If you have 100 members who have access to a members-only area of your website to watch your video tutorials, each of those 100 people are still all seeing the same video tutorials. People who can't login can't access that area, but it's basically binary - the content for members and the content for non-members separated by a pay wall (i.e. people have to pay to get on the other side of a wall to see the members-only content).
Now if you have a Wordpress website with LEARNDASH or another excellent Wordpress LMS (Learning Management System) and it is remembering which videos each person watched and marking them as watched and then emailing them a certificate of completion when they finish the course, well you are getting more and more into the realm of a custom web application since you are incorporating a PHP-based plugin that has a lot of logic and is storing information about each user in a database - these are the kinds of things that web application start to do - serve custom content by storing data about each user in a database.
For most of the clients I work with, they want a fairly simple website and they want to scale to create an automated small business that can scale, but scalability is relative and not everyone needs to scale to 1 billion users - some people are happy making high margins and serving thousands of users - there is no need to have ever online business be a VC-funded scalable startup at the scale of Twitter, GMAIL, or Facebook.
Most of my clients don't have the funds to hire a developer at $120,000+ per year to write the custom logic of their website and to keep them on staff to maintain that complex code.
The "brain" of most automated small business owners sites (i.e. the smart, customization) is coming either from a special plugin (e.g. LEARNDASH in the aforementioned LMS example or, more commonly, they are integrating a few other simple applications that can be customized - such as AWEBER which will deliver custom autoresponders at a pre-determined schedule and can be qued up and delivered in a customized way to each user, and a shopping cart that can conduct credit card transactions and send the user a link to a special area of the website or a link to a digital product download. In fact, our courses show you how to build a simple website but to incorporate a few other smart applications like AWEBER for email marketing, WEEBLY to build an e-commerce website with a great integrated shopping cart, and Facebook or Google's Adwords product to drive new customers to your website in an automated fashion.
So you're running a service-based business and your interested in creating a scalable startup?
Well, you've come to the right place - this article discusses how to turn your service-based business into a scalable startup. If you don't know what a scalable startup is, read this post entitled, What is a scalable startup? first.
Example of a NON-scalable Service Business
Before we look at a scalable business model, let's look at the counterexample of a non-scalable business.
Let's take the extreme example and say you are a freelance massage therapist. You have a foldable massage table in your car and you can drive around and meet clients at their homes. You charge $100 per hour. So let's say you do a 60 min massage, and it takes you 30 min to drive to your client's home and 30 min back to your residence and another 15 or so minutes to set up your table and break it down post-massage. All together the 60 min. massage takes about 2 to 3 hours with commute and setup time (this isn't taking into account laundering the sheets!).
Let's say you are a very popular and talented therapist and you build your business over time through word-of-mouth referrals over a few years. You even luck out and find a few clients who live close to each other so you can see 4 clients a day since your commute time between clients is reduced. Well, given a 5 day workweek and 4 clients a day with $100 price point, that's $400 each day or $2000 per week. Now that's a full week for a massage therapist - I doubt that any therapist could or would want to do that for very long. Putting aside the problem of joint pains and how hard repetitive motion and physical labor on the human body and the fact that someone couldn't keep doing this for very long, you will also come up on the problem that there are simply only so many hours in the day.
Whenever you are delivering a one-on-one service, you will come up against the inherent problem of trading hours for dollars and the fact that there are just so many hours that a service-based provider can provide services. This is true if you are a massage therapist, or a psychiatrist, a plumber or an educator - trading dollars for hours will eventually paint you into a corner because every new customer you add creates a another new demand on your time!
You have to find a way that adding a new client doesn't make a demand on your time in order to create your scalable business model. Well, how are you going to do that? I'll give you some ideas.
One option to consider is incorporating a group model. Well, you can't do massage on two people at once (although some acupuncturists have found a way to move between clients so they can see multiple clients in one hour). That's one of the reasons why being a massage therapist isn't scalable. But, you could do something that works off your expertise. Ever wonder why there are so many massage schools - running a school is a potentially very lucrative group model. One teacher can teach to a group of 10 or 20 or 200 paying students all looking to learn the modality. This is why many yoga teachers and yoga studios offer teacher trainings some which are in the many of thousands of dollars. Offering a workshop, lecture, teleseminar or anything you can deliver to a group is a great idea to create a more scalable business model.
Think of the difference, instead of performing a massage for one hour for $100, you could charge $100 for an hour class and deliver it to 10 or 20 people at once, making yourself $1,000 or $2,000 for the same hour. Now you'll have to find a hot topic that people are willing to pay $100 for, but that's possible.
Create a Product
Moving your business model from a service-based business to a product-based business can be done by creating a product.
Want to take your specialized, expert knowledge and put it into a product? How about a set of video tutorials delivered on your website or delivered via email autoresponders? How about using an LMS (learning management system) to take your teaching and put it into an online learning program which you can charge a fee to take online. These are all great ways to turn your service-based business into a product and escape from trading hours for dollars.
Imagine being on vacation in Bali and having people buy your online product while you are enjoying a massage. When you look at your email account back at the hotel, you'd simply see an email notifying you that the funds paid to your through your website will be deposited directly into your bank account! Now, I can tell you from personal experience, that when you receive your first email like that it's a very thrilling experience!
Create an App
Have you heard of SaaS - Software-as-a-service. Now, service delivery by a human isn't scalable but what if the service you are delivering is a software application. Software applications don't need paid-time-off and don't take two hour lunches. One of the coolest things about technology is that it can help you build a scalable business model. This is what allows Facebook to serve hundreds of millions of customers while earning billions of dollars - Facebook's product was a web application (now also a mobile application) - the application serves the customer and the staff just manage and optimize the application. Now, you don't need to have a team of developers build a web application for you to leverage technology - you can use other SassS applications like AWEBER and WEEBLY to put together an application that delivers YOUR custom content to your users.
So I've mentioned a few of the many ways to start thinking about moving your one-on-one service based business model into a more scalable business model and there are many others. Our series of courses will walk you step by step through the process of creating a scalable business - an automated website. If you want to learn more, check out my blog on The Four Hour Workweek - Myth or Reality? which includes a great diagram that will allow you to stop managing your customers and start optimizing your business so that you can escape 9-to-5, live anywhere, and build a scalable business model that allows you to serve more and more customers without making more demands on your time!
The term scalable startup is a hot buzzword in the tech community.
In the simplest terms, a scalable business model is one where the incremental cost of adding another new client approaches zero. This means that it costs you the same, in theory, to serve one-million clients as it does to serve one-hundred clients.
The definition is not so complicated, but thinking up a scalable business model isn't so easy.
If you're interested in how to turn your service-based business into a scalable startup, read my upcoming post entitled How to Create a Scalable Startup.
Link to purchase the book on Amazon: