Every day I meet people who want to be self-employed or at least want to have a side hustle related to one of their passions that brings in some passive income. When I listen to people’s stories and challenges, I hear the same issues over and over again.
This is specifically for knowledge-based entrepreneurs meaning people who have mastered or are mastering a subject or skill and now want to sell that mastery to people who also want to master that subject or skill or people who need that knowledge to get to where they’re going in life. In this information age, we are shifting to a knowledge-based economy meaning that the moment you know more about something than someone else is the moment that you can create value for them.
This is why auto mechanics make so much. People are ignorant about how their cars work, yet they need them to survive and thus a mechanic can charge an arm, leg, and transmission and they would just have to pay it because they don’t know any better.
Here’s a few things that I learned in year one of my business that I think will be useful to anyone considering starting a knowledge-based business this year.
1. Creating extreme value & solving a real problem
The best definition I heard of value is that which causes a transaction. If you can’t get people to pay for what you offer, then you haven’t created something that is perceived as more valuable than the cost or you’ve created something valuable but you haven’t connected it to the right costly problem yet. Through surveys, feedback of your products and services, and simply listening to your market through talking to people, reading, and targeted searches on Twitter. This year I discovered that the problem my work addresses is underemployment. A year ago I would have said purposelessness, but that did stick for people.
2. Develop products and services
In a knowledge-based business, you want to develop 3 kinds of products and services:
1. A free product or service that people can access to get to know you and what you have to offer. Examples include a blog, free conference call, email newsletter, online radio show, audio downloads, ebooks, etc.
2. An entry level product or service that can bring in passive income while you are sleep. Examples include a book, CD, DVD, board game, online course, etc. Check out Robert Kiyosaki and all of the products he has developed from his knowledge at http://www.richdad.com/Store/Store.aspx.
3. A product or service that requires your physical presence and in return creates and captures huge value. Examples include speaking engagements, workshops, courses, events, etc.
- Conference Calls: Freeconferencecall.com or vyew.com
- Radio: Blogtalkradio.com
- Video: Youtube.com or Vimeo.com
- Email Marketing: Mailchimp.com or iContact.com
- Publishing books: Createspace.com or Lulu.com or Blurb.com
- Publishing audio: iTunes.com or CDBaby.com
- Public Speaking: Go to Toastmasters.org or study (not just watch) Ted.com
3. Building community & credibility
Community is credibility. No matter what business you’re in, you’re trying to build a movement that grows beyond you. You can only do so much on your own. People power is necessary to spread the word about your business to people you don’t know. Read Seth Godin’s book Tribes and Malcolm Gladwell’s Tipping Point. The magic number for a movement is 150+ believers. The 200+ people that have gone through my courses this year have created more value for me than just money; they have helped with marketing, editing, event planning, and design. Money doesn’t fuel movements, people’s hearts do.
4. Developing a brand
Most people focus on logos, websites, and and business cards first, but this is actually last. For the first few months, your company (and yourself) will likely have an identity crisis, unsure of who it is and what it actually does. And you can’t build a strong brand until you know who you are and what you do best. In the meantime, use these tools to get the ball rolling.
Once you’ve got all of these taking care in place, the next step is simply refining them, refining them, refining them until you create a business model that works. Below are some other quick lessons that I’ve learned along this year.
Don’t try to sell to friends…directly
(DO NOT do this. Your friends are worth more than money.)
You may be able to squeeze out a few dollars from your friends, but they love you more than that. Before your business, they wanted to be a part of your life becaue of who you are and now that your business is part of you life, they just want to be part of it’s success as well. Your friends may or may not value what you have to offer, but I guarantee that they know 10+ people who will.
Instead of saying “Buy one of my _________!” you a better way to reach out to your friends is say “Do you know of anyone who could use a __________?” This type of ask gives your friend the opportunity to be of serive to you and another of their friends. They become a connector between you and others. It is more valuable to sale to people who truly value and need your product than it is to sale to a friend who may not need it. Don’t make them feel guilty. They are your biggest fans.
Get on the phone
The purpose of the sales process is to build an intimate relationship with the potential client. Almost every major opportunity that has come my way this year has come through a phone call. While emailing and mail merging is efficient, it doesn’t allow you express your passion and energy the way call does. Because calling can be so time intensive, it requires you to be strategic about who you call and because time is limited, you will naturally make more targeted asks and have higher conversion rates.
Email is a way to sustain a relationship, not a way to build one. If you get a voicemail, leave one and then follow up with an email saying that I left you a voicemail. People get hundreds of emails a day, but very few calls, so you automatically rise up on their priority list.
Be cost consciousness…at first
When you first start off as an entrepreneur, you are extremely cost conscious. While it’s important to have a budget and stretch your runway as long as possible, your business will not grow if you don’t invest in it with time and money. After you’ve minimized your personal expenses, you need to think of business expenses as business investments. Ask yourself, “Is paying to go to this conference going to create more value by increasing my personal, intellectual, social, or financial capital or by helping me do something more efficiently or effectively?” If the answer is “yes”, then you should buy it without hesitation, because if the answer is really “yes” that value will come back to in the form of more money or more time in the near future. Don’t abide by the law of scarcity in a world of abundance.
Entrepreneurship can be a lonely road, but it doesn’t have to be. This year, I have surrounded myself with over a dozen entrepreneurs at various stages of business development. I’ve arranged weekly calls with some of them and I’ve created 30 Day Do Its with others.
The 30 Day Do Its are monthly accountability groups where we help each other identify what’s the most important thing we can do to create value in our business in 30 days. The 5 of us make commitments to each other to either PROVE that we did it or PAY the group if we didn’t. With money and other value things on the line, most people execute and as a result we get results.
Develop a personal board of directors
Your company may have a board of directors, but you also need a personal board of directors consisting of mentors that you can reach out to more frequently. Mentors are extremely helpful in figuring out what you should do next and asking questions about things you never thought about. But oftentimes, when we meet new people that can be helpful, we have a great first conversation and then the relationship ends.
Instead of just taking someone out to lunch, make a 30 day commitment to them. For instance, before you leave their presence tell them:
“Thank you so much for this time. I really valued what you had to say, especially the part about the business plan. That’s the first thing I’m going to work on. Do you mind if I send it to you three weeks from today and then we meet again in 30 days to discuss it?”
This will give them a chance to see if you listened to what they said and it will help them decide if they want to keep investing in you. Sometimes mentors can be more valuable than financial investors.
Other tools I use
PayPal.com: It allows me to accept credit card payments easily
Mozy.com: It allows me to automatically backs up 2GB on my hard drive for free so that I don’t lose any important documents.
Hootsuite.com: It allows me to manage multiple Twitter accounts at once.
Ning.com: It allows me to create an online community where my clients can connect and help one another.
Wisestamp.com: It allows me to customize my email signature with pictures and my social sites.
Weebly.com: It allows me to create a website pretty quickly with basic information until I upgrade.
Firefox.com: It allows me to customize my web browsing experience with plug-ins.
Mint.com: It allows me to manage my personal finances.
Quickbooks.com: It allows me to manage my business finances.
Podio.com: It allows me to manage my projects and teams to keep us organized and focused.
Picasa.com: It allows me to store and organize all of my photos.
Audiojungle.net: It allows me to download musical tracks for videos.
YouTube.com: It allows me to store and organize all of my videos.
Google Voice: It allows me to have a business phone number that forwards to my cell phone and I can listen to my voicemails in my email.
Google Analytics: It allows me to analyze the traffic of my website so that I can see which post are attracting the most attention and what regions and websites visitors are coming from.
Google Docs: It allows me to access my documents anywhere and any computer.
Google Calendar: It keep me stay organized, management multiple calendar, and it syncs with my iPhone.
iWorks Keynote (Mac Only): It allows me to create amazing presentations that integrate various types of multi-media
iWorks Pages (Mac Only): It allows me to create amazing documents and proposals.
Adobe Photoshop: It allows me to create high-resolution images for the web and other documents.
MacSpeech Dictate (Mac Only): It allows me to speak to my computer and then turns it into text which saves me time and typing.
iPhone: It allows me to efficiently access the web, my email, get directions, manage calendars, record myself, and take pictures all in one place.
Flip video camera: It allows me to capture video and easily upload it to YouTube.