Why I Work Towards $10,000 p/m Clusters

Entrepreneurs have the valuable gift of being able to think outside of box and the ability to generate ideas that seem like a great way to duplicate their revenues. However, for most, focus and execution rarely follow.

When I speak to business owners about my business coaching services, I almost always hear the same story.
“We offer 5 different services and we are an all-in-one solution,” and this is fine. However, it should be the end result, not the immediate focus.

I like to call these individual services (or offerings) clusters. They should all be treated separately as little mini businesses within your company.

I like to follow up with this question, “Ok, how much revenue are you generating for each cluster?” and I always hear the same thing, “Oh, well service ABC is doing OK, but we don’t really focus on service XYZ.”

My advice is to start with one cluster at a time. Offering 5 services and mastering none is the business equivalent of death.
In my opinion, before you move on to the next cluster, it should be generating at least $10,000 per month revenue.

So how do you work towards this goal?

Let me use the example of a marketing agency I have recently bought out called WebLeasing.com.au.

Currently WebLeasing.com.au offer 3 services. However, only 2 services are pitched on the website as the second service has not yet met the $10,000 per month cluster requirement.

One of those services is a Local SEO service. Continuing on, we will use this service as the case study to determine how to reach the $10,000 per month target.

First, let’s do the numbers. WebLeasing sell the SEO packages for $295 per month, so to hit the $10,000 mark they need 34 clients ($295 x 34 = $10,030).

When we look at the profit margins, I always like to work off the following formula as a guide.

If it is a service that, as the business owner, requires your involvement (i.e., my business coaching services) the profit margins should be:

10% GST + 2% Transaction Fee (Credit Card Merchant) + 8% allowable support costs = 80% profit margin

If the service works without the owner’s involvement (as in the case of the SEO service with WebLeasing), the profit margins should be:

10% GST + 2% Transaction Fee (Credit Card Merchant) + 38% allowable support costs = 50% profit margin

While this may seem like half your revenue is gone, the difference is the SEO service can be scaled to service an unlimited amount of clients, whereas the service in which the owner involvement is high is limited to how many hours there are in the day.

So, using the SEO example here as a breakdown of the profit margins for this service:

Base Price: $295.00

minus

GST: $26.82

minus

Cost of Labour: $108.00

minus

Credit Card Fee: $5.47

Total Profit = $154.71 (52.44% profit margin)

As you can see, this service is priced just above the allowable 50% profit margins for a service without the need for owner involvement.

So the next question is, how do you create a service that requires no owner involvement?

First of all, you need to know your numbers. You need to understand what it costs to service a job/contract/package. Once you understand your costs and your profit margins are above 50%, the next step is to create an onboarding process.

An onboarding process is a step-by-step guide that describes the workflow from the time a client agrees to sign up to your service to the time the job is complete.

Here is the onboarding process for WebLeasing’s SEO service.

As you will see there a few defining features in this on-boarding process.

Each step is basically broken down into three parts.

  1. The Step description
  2. Who is responsible in your team to execute
  3. The Link to System

The “Link to System” goes into deeper detail of the step.

Here is an example showing Step 6 from the onboarding process.

By creating step-by-step systems for each step in the on-boarding process, you are essentially creating a “dummies guide to running your company.”

What is the benefit of this in the long term?

First of all, this makes it much easier to scale. If you have trainable business systems like the above, when you have a new employee come on board, they are already familiar with your standards and procedures.

Secondly, if you decide to sell your business, the systems increase the value that you sell at, for multiple reasons.

  1. If the owner involvement is minimal for each service to operate, this means the owner can spend less time in the business. It’s always easier to sell a business that requires 10 hours per week than 40 hours per week. Think about it.
  2. For the same reason people buy franchises. The risk is lowered. A franchise is essentially selling you a product or service range with a system behind it and a proven method of how to sell it. You’re offering the same thing.

So what happens when you hit the $10,000 per month mark?

If you hit the $10,000 mark, then you are doing something right. This doesn’t mean stop, but let the system run the business.

If you decide you would like to offer another cluster (service) then go ahead. Repeat the above process.

If you can add 1 new cluster every 6 months to your business at a 50% profit margin, you will be adding an additional $120,000 each year.

Five years down the track, that turns into $600,000 a year.

Just remember, as the old saying goes, “Which came first, the chicken or the egg?” In business the system always comes first!

Creating business systems is my passion, it’s how I have helped numerous business owners grow their businesses. If you would like to discuss how I might be able to help grow your business, feel free to book in a complimentary business coaching session at the link below:

https://calendly.com/mitchgibson/free-business-coaching/

I currently have two spots available, on a Tuesday Morning & Tuesday Afternoon.

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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Copyright 2017 -Gibson Business Group Pty Ltd

How to Create an On-Boarding Process For Your Service

Whether you’re part of large organization or self employed as a sole trader, creating an on-boarding process for each service you provide is an important step in systemizing your business to work without you.

So what is an on-boarding process?

An on-boarding process is simply a workflow process of what needs to happen and who is responsible for doing it, from the time a new client signs the dotted line, to when the service is complete.

Sounds simple right?

Well for most business owners, especially those who work as a team of 1, they would probably already have the process in their head, so why document it?

Documenting your workflow process allows you to create a detailed system for each step of the on-boarding process.

Doing this allows you to expand your business and have a ready-built training package for when a new employee comes on board.

If you already have employees, it’s a great way to remove yourself from certain (if not all) tasks involved in servicing each client.

It also keeps everyone involved in the on-boarding process accountable for his or her roles.

So what does an on-boarding process look like?

Most on-boarding processes will have between 10-20 steps, depending on the complexity of the service being provided.

Here is an example of the on-boarding process for an “article writing service”, from one of my companies, LBD Marketing.

You will clearly see that it defines each task and assigns each individual role to the appropriate person (in this case it’s Melinda and Celeste – my champion content marketers!)

So what is the end goal?

The end goal is to create an on-boarding process for each of the services you provide. In the example above with LBD Marketing, there are 3 services, so each have a separate process.

Once you have on-boarding processes in place, your job is to start removing your name from as many individual items as possible, by delegating them to other employees or outsourcing them.

I’m sure you have heard the term “You need to work ON your business and not IN it”

This is the perfect example. Without having to spend numerous hours working on individual tasks within each on-boarding process, you can now focus on growing your business.

By growing your business, I mean having a focus on marketing and sales, to get more customers signed and delivered, creating a follow-on effect on your bottom line.

How does this affect the value of my business?

Put yourself in the position of buying someone else’s business.

On the left you have a business that has no onboarding process, and relies on the business owner to service all contracts.

Picture this as what I call a “see-saw business” – constantly up and down.

Find work, do work, find work, do work….

If the business owner wants to go on holidays, the business makes no money. He is essentially buying a job that he doesn’t have to answer to.

However, on the right, we have a business where the owner involvement isn’t required in the day-to-day operations of business.

The prospective buyer would not have to work as many hours and is buying a proven system.

Which one would you buy?

Unless you are a control freak by nature, the second option is the obvious winner.

So what happens to a business that EVERYONE wants to buy?

Supply and demand says that the price will increase.

Which means more money in your pocket!

So what are the next steps?

While this all sounds fantastic in theory, without taking ACTION and actually implementing your on-boarding process, nothing will change.

That’s where I come in…

As a business coach, it’s my job to guide you in the right direction, while providing all the tools you need to succeed.

I will also be there to keep you ACCOUNTABLE for your actions.

However, I only work with 10 people at any one time, so if you’re interested in having a chat, click on the black box below for a “FREE 45 Minute Business Coaching Session” to kick start your journey towards success.

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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Copyright 2017 -Gibson Business Group Pty Ltd

The Power of Creating Leverage Within Your Business

The power of creating leverage within your business is generally untapped.

What exactly is leverage? Remember the old saying, “Kill two birds with one stone”? That’s leverage!

Simply put, creating leverage is the process of getting more output in the same time.

So how does this apply in a business sense? It applies in many ways, but first let me give you an example.

Last week I was having a business coaching session with one of my clients who is starting his fitness business.

Like many others, he had a very similar thought pattern towards generating revenue.

In his case, it was trading his time for “one-on-one” personal training sessions for $60 an hour.

Now, on the outside, there is nothing wrong with that; many people have earned an honest income that way. However, I wanted more for my client.

This is where leverage comes in.

After running a few ideas by him, we decided to focus on two revenue streams. They included:

Group Fitness Subscription Model:  In this model, he would sell a monthly subscription for $99 to anyone looking to have unlimited access to his daily morning group fitness classes. Whether they attend 3 or 30 a month, they pay a fixed price.

This allows him a stable income, while only having to work 1 hour each morning. It also removes the lack of security from lost income due to cancellations, etc.

Once he hits 100 subscriptions, that hour each morning is now worth over $300 rather then the $60 he previously was aiming for with “one on one” personal training.

Corporate Fitness Model: The corporate fitness model again allows major leverage in the sense that he can train multiple staff at the same time for a larger fee per hour.

In this model, we have set a target to get 5 corporate fitness clients (Monday-Friday – one each day) that he can service mid morning.

His target is sales or customer services teams of up to 20 people and through this model he will generate an additional $10,000 a month for again, only an hour of his time each day.

Taking leverage to the next step…

So you might be thinking, whats next? The next step in creating leverage is to duplicate.

In this example, duplicating would involve hiring additional trainers to supplement the supply and demand from their marketing and sales efforts.

To do this, it requires the creation of multiple business systems, which is all part of my business coaching program.

So, how can you leverage your business?

Wondering how you can further leverage your business?

If you would like my personal assistance helping you create leverage in your business model, click on the FREE Consultation button in the black box below.

However, I only work with 10 clients at any one time, so be quick!

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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Copyright 2017 -Gibson Business Group Pty Ltd

Creating Your First Business System – A Step By Step Tutorial

Before we start, let me ask you this:

“Do McDonald’s make the best burgers?”

The answer, in majority, is NO.

Then why do they sell the most burgers? Because they have the best SYSTEMS!

So what exactly is a business system?

A business system is an operating procedure to ensure a particular task is done correctly to the standards of the company.

This can be as simple as a telephone script on how to answer the phone, or how to create performance reviews for your employees.

Everything in your business SHOULD run off a system.

Now, I know what your’e saying: “Oh yeah, I have hundreds of systems for my business; they are all in my head when I need them.”

Unfortunately, this is all too common in small business. I see this in nearly every business coaching client I work with.

So why is this a problem? Having all your business systems in your head is a short term solution to a long term problem.

When I coach business owners, my core aim is to reduce the amount of hours they work in the week.

The best way to do this is to have “trainable business systems” so that we can migrate or automate that task away from the owner’s workload.

What is the difference between a “Business System” and a “Trainable Business System”?

The difference between a normal business system and a trainable business system is the ability to transfer that knowledge outside of just yourself at scale.

So, for example, when I first started my marketing agency, I was scheduling Facebook posts for 30 clients a week (on my own).

I knew inside my head exactly what to do (the business system). However as I grew, I had to create a trainable business system to teach someone else to take over.

That included documenting a step-by-step process ensuring it met my standards of work.

This also meant when I was training someone how to take over that task, if they forgot a step, they had a reference point to look back on.

Over the last 5 years, I have created hundreds of individual systems for my own business. Currently I host them on a password-protected website that my staff all have logins to.

This is something I provide to all my business coaching clients at no additional charge.

Here is an idea of what it looks like.

Getting started on your first “Trainable System”

The best way to get started on building your first trainable system is to look at what task you spend most time doing or what task you dislike doing the most.

I also recommend you track your business activity for 30 days to identify what is using up most of your time.

Here is another post blog to help you out – http://mitchgibson.com.au/tracking-your-activity-as-a-business-owner/

Once you have identified what task you want to create a trainable system, your’e ready to get started.

A few things to consider:

– If possible, use a lot of imagery (screenshots are great) to visually compose each step.

– Consider who in your team you can delegate/outsource this task to once you have created the system.

– Make a commitment to yourself to create a new system each fortnight.

I always teach my business coaching clients to create a system to reduce their individual workloads in hourly blocks.

If you are currently working a 40 hour weeks and created 2 hourly systems a month, you would reduce your workload by 24 hours a week, each year.

Now we are talking!

Need Assistance?

If you would like my personal assistance helping you to create trainable business systems within your company, click on the FREE Consultation button in the black box below.

However, I only work with 10 clients at any one time, so be quick!

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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What are you paying for a new customer?

Before you spend another marketing dollar, ask yourself this question:

If you and I were sitting in a room and there were an unlimited amount of customers waiting outside the door ready to buy your product or service, what would be the maximum you would pay to let each customer through that door?

That is what marketing is all about. It’s a measured approach to buying new customers.

Finding out how much it’s worth to buy a customer is called your “allowable acquisition cost.

In plain English “allowable acquisition cost” means, “How much can you afford to pay to acquire a new customer?”

How do you figure out this number for your business? The answer to this depends on what you sell and how often your customer buys from you.

If you sell a one-off product that costs $200 at a 50% profit margin, anything under the $100 mark is profit.

If you sell a recurring product or service for $200 a month, the aim is to acquire the customer for a cost below the first month’s payment, so that in months 2, 3, 4 and 5 you start to profit on your investment.

Once you have figured out how much you can afford to pay to acquire a customer, it’s time to figure out a marketing strategy to acquire them.

During my business coaching sessions with my clients, I help them discover previously untapped marketing opoortunities to reach their ideal target market below their allowable acquisition cost.

One of my favourite strategies to acquire new customers is Pay Per Click Marketing.

I find this is the most measurable way to acquire new customers for my clients.

I suggest using rather Google Ads or Facebook Ads or a combination of both (depending on what and how you sell to)

Next, use the following mathematical equation to find the acquisition cost:

Number of Clicks (Eg: 1,000 clicks) x Cost Per Click (Eg: $2) divided by (/) the Number of Conversions (Eg: 100 conversions or 10%) = Cost Per Lead ($1000 x $2 = $2000 spend divided by 100 leads = $20 per lead)

Note: The actual amount per lead will vary depending on your offer and your industry.

Once you have your cost per lead, you then need to see how many leads it will take to convert a sale.

In this case, if we have an allowable acquisition cost of $100, we will need to convert 1 in 5 leads.

While the marketing might be doing it’s job, if your sales skills aren’t up to scratch, you could be losing a lot of potential business.

What would it mean to your business if instead of converting 1 in 5 sales, you converted 2 of 5 or even 3 of 5?

Again, during my business coaching sessions, I help you perfect your sales process, allowing you to make more sales with less effort and time.

If you think I might be able to help you, click on the FREE Consultation button in the black box below.

However, I only ever work with 10 clients at any one time, so be sure to action today!

I  look forward to working with you!

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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Copyright 2017 -Gibson Business Group Pty Ltd

Why is recurring income so important?

This probably isn’t the first time you have heard about recurring income. Whether your current business model revolves around this method of payment or you have thought about making the switch, let me run you through some of the main advantages of running your business on a recurring platform.

So first off, how does recurring income compare to an single transaction payment?

Many businesses run their company based off what I call “The Business See-Saw” – It’s constantly up and down.

Find work, do work, find work, do work – the cycle just repeats itself.

The problem with this method, is if you go through a dry spell or you want to go on a holiday – you don’t get paid.

With recurring income, you have measurable income coming in each period (usually monthly) that allows you to manage your cashflow more effectively.

So how do I make the switch?

Some products and services are easier to sell on a recurring basis than others, however the key is the “requirement frequency” – How often do customers need to repurchase your product or service?

First off, lets look at a few obvious examples, then go into some clever, less obvious recurring business models.

Obvious Examples:

Marketing Services: This is my niche. I made my bread and butter from selling recurring services such as SEO, Pay Per Click Management and Social Media Management through my company LBD Marketing

Gym Memberships: Gone are the days when you buy your gym membership on a yearly basis. The majority of gyms now price based on a weekly recurring payment, anywhere from $10-20.

Why have gyms made this switch? Lets say on average a gym charges $15 per week ($780 per year), it is much easier to convince a member to continue at just $15 a week than to cough up $780 in one sitting.

They use the “forget factor” – If the price is low enough where the customer doesn’t realise/miss the payment, they won’t flinch to cancel it.

Less Obvious Examples:

Shaving: Yes, shaving! Companies such as Dollar Shave Club have switched the industry of razors from a traditional “single transaction item” to a recurring subscription, where you are mailed a new razor each month.

If you own a business that sells a physical product, this is the future. However, before you go down this route, ask yourself:

“How often do my customers need to re-purchase my product?”

If your’e selling a car, this won’t work, because most people don’t buy a new car that frequently.

Website Design: Traditionally, website design was a “single transaction item” that was usually a one time cost of anywhere between $2000-$10,000. However, with the introduction of companies like WebLeasing.com.au – this has now changed.

WebLeasing allows you to purchase a website for a monthly recurring fee instead of a large up front single transaction. Clever thinking right!

So my question to you is, how can you change your business to focus more on recurring income?

If you think I might be able to help you, click on the FREE Consultation button in the black box below.

However, I only ever work with 10 clients at any one time, so be sure to action today!

Would you like to contact Mitch?

If you would like to contact Mitch, you can do so via phone or email.

Alternatively, you can book a FREE consultation, by clicking on the button below.

  mitch@mitchgibson.com.au

  0432 202 458

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