When I was managing BetterEdit, my proofreading company that I sold in 2007, I was knee deep learning from Rich Schefren, taking his Business Growth System course.
Rich launched that program on the back of his most successful report to date, the Internet Business Manifesto, which featured the now famous flow chart of what an Internet entrepreneur is supposed to do if he or she wants to succeed online. If you haven’t read the Manifesto, I strongly recommend you do so as soon as possible, it’s still one of the most crucial reports on Internet marketing as an entrepreneur ever written.
After reading the Manifesto it was clear I needed to make some changes, so I joined Rich’s coaching program and began going through it. The premise of what Rich teaches is the idea that no person can realistically ever get to the point where their business looks after them, rather than they look after their business, if you do everything by yourself. Rich took this idea a lot further than just outsourcing, and sees business as a machine that can be completely automated.
At that point in time BetterEdit was doing well and I did have Angela, my admin/customer service person looking after most of the day to day emailing for the business, which is the main workload to keep it going. This was great, but as a result of thinking so much about automation and studying Rich’s course, I was interested in possibly using technology to further systematize the operations and gain more leverage.
Using Software To Automate
BetterEdit has a very simple job flow process. A client submits a paper and makes payment, the admin person assigns the job and forwards the document to an editor. The editor completes the job and returns to the document to both the admin and the client. Various emails flow back and forth if there are problems, but generally that’s the basic process.
One of the key weaknesses of the system I had was no affiliate program. I saw huge potential if I could find a way to pay a commission out to websites that referred jobs to the business. Besides manually tracking things, which would be a nightmare, I just couldn’t do it.
The answer to the affiliate issue was to create some kind of software that would handle the job process, including payments, so we could automatically track affiliate referrals and credit commissions for jobs completed.
I had to be careful because between paying editors and admin, the margin on jobs wasn’t massive. This wasn’t like an information product where I could pay out 50% commissions, I’d have to be careful. This was another reason where I saw software as a help as it could reduce the amount of work admin did, meaning I could incentivize affiliates with a higher commission.
With a software system in place, including an affiliate program, I could get out there and recruit an army of websites to refer customers to my business. I liked this idea because by then I was getting pretty tired of heading out to campuses to put up posters to promote the service, although I was starting to outsource this job too (my mind was constantly thinking about how I could work less without reducing my income).
Realizing Your Concept Can Be Tough
It was clear that software could be the automation answer, so I scheduled a meeting with a local development firm and sat down with them to talk about my plan.
The idea was to have clients create user accounts by filling out a form, then when it comes time to submit a job they login, upload their paper, stipulate the time frame and word count, the system spits out the price, they make payment or choose a payment option and the job is submitted. When new jobs come in an email is sent to admin who then logs in, and assigns the job to an editor. The system then sends an email to the editor, who logs in, accepts the job and begins work. The editor would then log in to return the paper, which would trigger emails to both the admin and the client to let them know the edited document was ready for download.
The developers understood what I was trying to do, they seemed capable of creating my vision, so we agreed upon a basic plan of action and they started work on the first phase of the software.
It was about this time that things started to fall apart. The software firm had finished preliminary work on the project so I could see the basic user interface. I had emphasized the need for simplicity given my client base where not coming from a background of English as a first language (hence they needed my proofreading service for their papers). I looked at the interface and I could see all kinds of places where my customers would get lost, and that was only the first phase of the software.
I knew my business very well and I knew why it was successful. One of the keys, as for most businesses, is good customer service and clear communication. This was even more important when your clients are not great with English. What I was effectively going to do was replace a human being customer service person with a robot software program. It could be done, but I had a feeling the time and cost involved would quickly spiral out of control.
It was at that point I decided to stop the project. I paid the phase one fee and concluded that, at least with me as the owner, I wasn’t going to pursue this avenue.
I still believe the idea is sound and certainly finding a way to include an affiliate program is possibly the best way to grow the business, but I had to consider the clients first. The software could have ended up becoming a barrier for customers to submit jobs. This of course would have been a fundamental flaw, and with no jobs coming in because the clients couldn’t figure out how to use the software, they would have ended up emailing their job anyway – which was the current system – so I would have spent thousands on a software system that no one used.
Humans As Automation
I decided, in this instance with the editing service, the best form of automation was to continue to use a human being. My clients needed the understanding that only a real person at the end of an email account could provide.
I have no doubt somewhere out there a software script exists, possibly even at another proofreading company, that does what my idea planned to do, but for me, given the size of my business, I could have gone broke trying to create the program and I wasn’t convinced even then it would do the job.
This experience led me to always ask the question of whether a human is a better suited automation resource than a script or program when it came to methods of systematizing my business. There’s never a clear cut answer as to what is the best way to automate your business, but so far for me, beyond basic automation through email autoresponders like AWeber (by far the most powerful automation in my business – see Conversion Blogging for why), I’ve gone with very simple solutions backed up with human beings.
Don’t get my wrong, scripts are great and I expect I’m probably missing out on some very cost effective ways to gain more efficiency and leverage in my business (there’s always more you can systematize), but because of my experience with technology, often the cost of implementation outweighs the benefit I could gain.
Bear in mind I’m saying this from the mindset of running a business of a certain size and living a certain kind of lifestyle. I’m not looking to take on full time employees, get an office and grow to the point where I’m committed to certain things simply because the size of the machine has become more than I can handle.
I’m out to make as much money as I can, but keep operations small and fluid, so I can chase the projects I like without over committing myself. This tends to cap my overall capacity for growth, but if you can make one or two million dollars a year without ever committing to full time employees or relying on complex software solutions, that’s good enough for me! (and yes, that is a realistic goal, I expect to be there in about a couple of years, or whatever pace is comfortable).
If your ambition is grander then obviously you will need full time employees and paying thousands of dollars for computer programs that can deliver powerful automation and leverage, such as customer relations database programs (which often take a full time employee just to manage), is no doubt in your business plan. There’s no right or wrong direction here, it’s whatever you need given your goals and the speed at which you want to get there, that impacts your decision making.
Keep It Simple… Enough
Right now, in terms of technology, I use very few tools. WordPress of course, AWeber for sure, email through Gmail, forums with vBulletin, Twitter, Facebook, some servers with Knownhost and Dreamhost, domain registration with Dotster…and that’s about it.
There’s a few more odds and ends here and there of course and I make use of certain desktop applications to produce reports, video and audio, but my business relies on very little from a technology standpoint. Simplicity is beautiful (Apple understands this – that’s why their programs have so few options) and if you can create a business that relies on basic programs, that makes automation even easier.
From there, I rely on a few key people to use these basic technology resources and help manage my business. Customer service, technology implementation, graphics and copywriting, are handled by other people, more capable than myself at meeting these needs. That leaves me to do what I do best, which is teach and be creative by thinking and then communicating my ideas to you.
In the next few weeks I’m going to release a report on making money with membership sites. Inside the report in the technology chapter I relate my process of choosing the technology to run my membership sites and how despite certain advantages that some scripts can provide, I choose to forgo these options and instead build a very simple system. Again, keeping things as simple as possible and relying on human beings for the most critical tasks has proven very effective for me.
Paying People Is Expensive
It’s fairly clear that for most companies, paying people is the greatest cost.
I was looking over my accounting records for the last tax year and my number one expense was contractors, accounting for more than 25% of my margin. That cost is far above any other cost to my business (I operated that year at a little less than 70% profit margin), and that’s without any full time employees.
I was slow to initially bring on people to help me, precisely because I was so attached to keeping money in the bank, but eventually I saw the light and realized my mindset about outsourcing needed adjustment. I’ve written extensively about cash flow and outsourcing, and I’ll link to the articles at the end of this post so you have some references if you are still not comfortable with the idea of paying others to do work, especially when your cash flow is tight.
Once I got over the miser attitude, I started to experience the “dream” lifestyle that Rich talked about in the Manifesto and so many people strive for every day. True, I was spending more money and that had an impact on me short term, but I began to enjoy much more freedoms and my income eventually surpassed what it was, to the point that I could travel for most of 2008, spend $50,000+ during that time and still come home to more money in my bank account thanks to my business.
Thankfully, unlike the massive investment you might have to make upfront in a technology solution, when bringing on people you can tightly control how much you spend and how much you automate. You can start with very basic tasks, like have someone filter your email for you for an hour a day and then contract someone to install WordPress and make basic changes like adding an email opt-in form and custom header to the blog design. Most of these things cost very little, but you immediately begin to experience the effectiveness of having people do processes for your business.
Perhaps the greatest challenge once you embrace the assistance of other people, is finding good people in the first place. It’s not easy to locate people with the right skills, who are looking for the kind of work you have and who slot well into your work flow. Thankfully with more and more people looking to live the online lifestyle and the global nature of the Web, you have abundant choice, it’s only the filtering process that takes time.
Find Balance Between Technology and People
Today I barely do anything with technology. While in the past not a single day would go by without me spending hours FTP’ing up and down some files for some website that I’d been coding, today I do little of that, and it’s wonderful.
Technology of course still plays a major role in what I do, it’s just no longer something I personally deal with on my own. Instead of being a constraint (something that stopped me from succeeding), it’s now a tool I can leverage however I see fit.
The key here is to follow a learning curve that goes something like this –
- Establish a basic understanding of the general systems and processes that successful Internet businesses use online already (email marketing, seo, blogging, squeeze pages, copywriting, pay per click, etc)
- Pick a business model you want to follow
- Acquire the technology resources you will need to realize the model (web hosting, domain names, email autoresponder, etc)
- Find people to implement the technology and launch your business
- Use cash flow to reinvest in people who can handle the processes that you need to do now that you have a business (customer support and management, ongoing marketing and new product development, etc)
- Purchase more technology systems as you need them and hire more people to manage the systems
This is a very basic process and as you can see, both people and technology play a major role. As long as you are prepared to use both resources and understand the possible synergies between them, you can build a system that is effectively a money making machine that leaves you free to play whatever role in the business you want to.
People and technology are key topics when it comes to having true success online, in terms of experiencing both financial AND time freedom. Unfortunately most people who run businesses lack one or both of these elements. If you are motivated to change this, please continue your study by reading the following articles.
- When Is The Right Time To Begin Outsourcing?
- How To Establish Cash Flow When Starting A New Business
- Reputation Management: Starbucks Offers A Simple Lesson In Good Customer Service
- Growing Pains: How To Manage Customer Service As A One Person Enterprise
- Inside My Business: The Evolution Of A Customer Service System
- How To Find A Good Customer Support Person (Or Any Outsourced Staff)
When you realize business success comes down to many components, most of which all tie back into the people you work with, the technology you use to deliver your product or service, and of course you and your role as the owner, you start to see the big picture and how everything is interrelated.
Just like energy management as a human being is critical to performance, resource management as an entrepreneur is vital to business profitability. Having awareness of of all the parts that make up your business – a complete holistic approach – combined with unique insight into a few key aspects (the unique value you bring to the equation) is the formula for success.
PS. If you want to learn how to minimize your time spent on your business, you should check out my exclusive group for people who making money from their laptop.