In the podcast:
01:00 – The first step to starting a successful business
02:09 – Bring people in
03:48 – Crafting your offer
05:07 – Website vs. business
09:06 – Principles for success
14:33 – Is your business worth it?
15:04 – Use this formula to compute your effective hourly rate
Let James show you the next ten things you can do to grow your business HERE
James Schramko here, welcome to SuperFastBusiness.com. This podcast episode is “3 Essential Steps for Building a Business that Succeeds.”
So I’ve been helping a lot of business owners in my SilverCircle mastermind group, and there’s a few that I’ve seen over and over again that can really help a business succeed. And I’m going to cover 3 of the essential steps today in this podcast. Because having a thriving business can mean the difference between the daily grind and doing all the stuff you really don’t like versus enjoying financial and personal freedom. But how do you build the business that will yield the results you need?
Let’s start with step 1 and that is working on YOU. The first step to starting a successful business is to work on yourself. Believe it or not, if you can change your productivity habits for the better, if you can build in a routine and get the best results from yourself and get out of your inbox, and away from the television and from Facebook, you’ll be able to start your business because you’ll be doing the things that really matter.
It really is a mindset game first and foremost. So you’ve got to get into the good habits. I actually created a course called Inbox Relief, which is available to members of SuperFastBusiness in the coaching community there. Starting a business will actually require time. So you need to be very careful about where you invest your time. I actually started my business part time, after work. So I really realized the value of how critical it is to be getting forward motion.
So the first step is to be very, very honest with yourself about where you’re spending your time. I would highly recommend you install RescueTime, so that you get a weekly report on how long you’re spending at the computer and what you’re spending it on.
The next step for a successful business is bringing in other people. When I was sitting there at the desk at the 3 in the morning by myself, and in charge of every single task in the business, I quickly realized that this is not going to scale. So you probably are going to have to get some people on your team. That might mean you hire people inhouse, it might mean that you outsource, it could be a combination, but what you really want to do is get other people helping you out on all the tasks that need to be done because you just can’t have a successful business doing all of the work yourself unless you’re going to have a huge amount of hours that go towards running this business. Or your income will be capped.
So trading your time for money will limit your capacity and just make your business job-like. And I do see people like this. Some people are so slow to hire other people that they do everything themselves, and they’re always stressed out, and they’re trying to figure out how to run everything, and do everything, but they’re really not being all that they could be because they’re trying to do too many things. So you’ve got to let go of the little jobs.
Find out everything that you are doing by making an activities inventory. And then you want to put a separation between the things that only you can do and that you can do really well; you’re the world’s best level at and you love doing, and then everything else. And then you want to hire out other people to do this. Pay them to do the task so that you can focus on the highest value activities. And now you can run your business and market your business, and you’re going to get much more scale doing that. Plus, everything you’re doing is fun and enjoyable because you’re only doing the bits you want to do.
The third part here is to work on your offer. This is probably one of the most obvious things. But if you can get your conversions up, if you have an offer that is scalable that you can reach many, many people with, then you will be OK. And you want to make sure you’re in a big enough market so that you can get enough sales to propel your business.
One of the first markets that I sold in, I actually reached the limit, I ended up having a large market share of a very tiny market and I maxed it out. So just be careful about that. Some people over niche to the point where, yes they can dominate, yes they can get quick wins, but they also max out. I would rather be a smaller fish in a bigger pond these days because you can, with scaling of a team and working on yourself and getting the right offer, grow your business quite large if you pick the right market.
Ensure that when you reach people that your offer is so enticing and so relevant to them that they really want to have that because it solves their problem and they will buy that over anything else they could choose including the option of doing nothing, which I think is a Dan Kennedy reference. However, it’s a great idea to keep in mind. You have to be so compelling that it’s obvious.
The difference between a website and a business
So let’s talk about the difference between a website and a business just while we’re on this because we’ve covered the 3 essential steps and this is really the bonus component.
A website is like a sales person that works for you 24/7. It is a sales machine and most websites are used to transact sales so you have one step beyond the online brochure. You’ve got your offer there and you want to sell. So don’t make the mistake of treating your website like some big banner, or poster, or business card online about how wonderful your business is, and who you are, and when you were established, and all of that. Customers don’t really care. What they want is a solution to their problem. If you can solve their problem, they’re going to make orders with you.
So the next step with that is to make your About page work for you. A lot of About pages make out so the customer really cares about you, but it’s not really the case. Certainly say who you are and give people a flavor for that, but show them how you are proof positive positioned to be able to help the customer, how you are the bona fide expert of what you do, how you’ve been able to help other people, how you’ve got a trustworthy track record, how you have relevant experience. So make your About page less about you and more about how you can help your customer.
Engage your audience with a video or an audio, telling how you and your business are relevant to them. Let people be able to consume a good amount of content so they can find out about you without having to opt-in, and that after they’ve watched it, they feel that you are the person to help them or your business is.
Steer them towards the solutions you offer as a call to action on the About page, and then push them back into your sales area through proper funneling of links on your site. And remember, there’s no point in being on your site unless you can help them. So show them how they can get help from you.
Another thing you want to take care with your business website is to look after your site. Sale sites can be very powerful. Some of them transacting millions of dollars, or tens of millions, or hundreds of millions of dollars a year, so you’ve got to keep it up-to-date. You’ve got to follow the best optimization practices and they should be well-maintained with content that matters.
So in the case of our website at SuperFastBusiness.com, we’re constantly developing the theme. We now work with the mobile theme first, or the responsive version, which we wireframe up. That is our priority because we know that most people will be consuming our website from a portable device, at least in the future. The other thing is we make sure it’s on a fast server that it is always up, that it is easy to navigate, and it’s very obvious what you should be able to do on the site. And that’s what you really need to do.
And we update the content often. Podcasts like these are updated about 3 times a week, so with regular content updates, we’re constantly building out our asset in line with Own The Racecourse philosophy that I have. We have a free training for that. If you go to owntheracecourse.com, you’ll be able to download the Own The Racecourse training for free.
We’re focused on conversions. Once the machine is built, put your energy into converting your visitors into buyers. Conversions will always give you the best result possible. Aside from traffic or anything else, it’s much easier to increase your conversions by half a percent or a percent, which has in many cases the same effect of doubling traffic. So work on your conversions. That is the small hinge that swings the big door. If you work on your conversions, then you’re going to get the best result for your investment in time and energy. I think so many people are obsessed about traffic, they forget the little one about conversions.
Proven business principles
So here are some principles that have caused a lot of success in my business and in the people whose businesses who I work for:
Farming vs. hunting
Farm more, and hunt less. The average business owner spends a great deal of time trying to get the next customer. But with the right business model, preferably one that creates recurring income through a subscription model, then you can actually reduce the time and energy that you spend looking for customers. Instead, look after the ones you already got. It really is a difference between being the hunter that has to go out and find the next meal everyday; or the farmer tending the crop, tending that orchard, growing the fruit, getting the harvest every time, refining it. I think being a farmer is actually easier. It’s more predictable. You have stable income. You’ve got that subscription recurring wheel of income coming in every month, and that’s because you’re nurturing and growing.
And also, customers really like that from a marketer. It’s rare but it’s something that I’ve noted when I survey members of SuperFastBusiness community. In our membership, one of the things that comes up all the time is how they really appreciate that I turn up every day. I’m like the farmer tending the crops. I turn up and answer questions and I nurture the community. And what I found when I was a member of many other communities is that the founders or the owners very rarely turn up once they’ve built it. It’s like they’re off on to the next thing and they don’t show up anymore. I think that’s a huge mistake.
Know the basics
Keep in mind the basics. We’ve got all this technology that makes things complex and overwhelming. And you’ve always got new things to learn, and to read about, and understand, and train on. But even with this high tech stuff, you still need the fundamentals. You need to have your basic strategy in place; a good solid business model. And you’ve got to keep your finger on the pulse because things do move quickly. But if you are a farmer, if you’ve got this recurring income, if you’ve got a core business model that’s sustainable, if you focus on building a team, if you look after yourself with a good routine, and you block time using a scheduling tool, if you monitor where you’re spending the time with RescueTime, then what you should be able to do is sustain your income and have a reasonable effort expenditure for that income so that your effective hourly rate is quite high.
Adapt to change
You’ve also got to be able to change. I think of all the things online, the ability to be OK with change is probably the most important skill you have. If you follow my advice and question everything, that opens you up to the idea that maybe the way you’ve been doing things before could be adjusted. And I’m talking about small changes or big changes. You’ve got to get rid of this resistance and the urge to hold on to things the way they were just because that’s how they’re always done because what happens is, the landscape does change online.
If you look at some of the sites that used to be around that are no longer popular; things like MySpace for example, you’ll see that at times, there’s such fundamental shifts that if you didn’t move, you get buried. Certainly in the SEO industry, our SEO division is one of the strongest and most sustained businesses in the marketplace because we were able to respond to change. We could see what Google wanted and we responded to that. Well before they started slapping down blog networks, we stopped using any sort of blog network. And well before they started looking for tools that scrape and use automation, we stopped using automation and software. We do everything by hand now because we were able to change.
Yes, it cost a little more for us to do in labor, yes it’s more difficult, and yes it’s a little bit less profitable; however, we still have a business and most of our competitors are gone. So whilst there’s new tools, and new competitors, and new companies, what you’ve got to do is just observe what’s going on in a general level.
One of the things that we found very effective in our business is to have a research and development team. So that means there’s someone in our business who’s always tasked with observing what’s happening and adapting to the changes so we can be right on top of it. If you need help with SEO, head over to our products and services page, and tick on the option that says, “Yes, I need more traffic.”
Build your assets
It’s really important to build on your assets. At the moment, I’m seeing things like Pinterest not being happy with affiliate links. We see from time to time people lose their Facebook account, whether it’s an advertising account or a group. We’ve seen Google turn off people’s Adwords campaigns. We’ve seen Adsense publishers be banned. We’ve seen YouTube shut down video channels. These should be signs to you that it’s not safe to build your entire business on someone else’s platform. The constant change makes it all the important that you build your assets on your own platform.
You might be listening to this podcast on iTunes; however, it’s hosted on my own server or Amazon account. You build your website on your own domain, and put your best content there. Don’t host it on Facebook or YouTube. Host it somewhere else and share it on Facebook and YouTube. This will allow you to adjust and adapt your business to the environment without the rug being pulled out from under you, because who want that? If you’re a farmer, you don’t want big changes.
What’s your effective hourly rate?
So one thing to really consider, and this is something that comes up a lot with my one-on-one students in their diagnostic calls is, “Is it worth it?” After putting the time and energy, is all this work worthwhile? And it reminds me of the James Brown song, “Paid the cost to be the boss.” There’s a highly effective way of working out if your business is worthwhile, and that is to know your effective hourly rate.
You heard me mention it just before but this one’s a really good one. Now aside from your business model and if you’re positioned to sell later, etc., etc., this one is a good guideline as to what you’re actually achieving. You can see all of your existing income streams, and for each of those, you take the total income that it generates, you subtract the cost involved in generating that income; and that could be other people’s labor, it could be hosting, it could be taxes, it could be transport or shipping cost, etc. This gets you a net profit, and do this before income tax, I didn’t mean that, I just mean VAT or GST, etc. Divide that profit by the hours in personal time investment from you that it took you to earn that, and that’s your effective hourly rate for that stream of income.
Based on that information, you should be doing something different, depending on which income streams are generating you the most effective hourly rate. You can do what you need to do to increase the effective hourly rate. Things like working on your conversions will certainly help. Getting a little more traffic might help. Or you might find an income stream that you’re working on that is so low that you’d be better off to just stop doing it. Or maybe just go and get a job working part time behind the local retail store counter because I’ve seen sometimes this exercise works out at like $6 an hour. And in Australia, that’s lower than the average hourly wage for an apprentice.
So what you want to do is this effective hourly rate analysis. Do it for your entire business on a monthly basis and that gives you a good effective hourly rate. And for most of the people I’m working with, their target will be somewhere around $1,000 per hour. Now it’s not going to be achievable by everybody. A lot of people come up under $100 per hour. If you’re somewhere between $100 per hour and $1,000 an hour, then congratulations. You’re in a pretty good place. If you’re more than $1,000 an hour, then you’ve got a great business on your hands.
If you’d like some more help on this, if you want to run your business more successfully, then I do encourage you to join SuperFastBusiness membership. Head over to superfastbusiness.com/membership and join up. I’ll see you inside there, where I log in everyday, and I answer questions to coach you and help you grow your business more profitably.
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