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This episode of the GradBlogger Podcast follows up the previous one, which replayed the first training session inside the Self-Tenure Community. Titled ‘Planning Your Road on the Self-Tenure Track,’ it covers key business strategies like the GradBlogger Business M.A.P.: mission, authority, and profit.
In the first part of the presentation, which we covered last week, we talked about:
- Aligning your business with a fantastic dream
- The GradBlogger Business M.A.P.
- Authority-based marketing and how it might be different than traditional marketing when you’re trying to build up your authority in your space and become that trusted leader
Today, we talk about profit and metrics that matter. There’s a lot of math involved but be sure to subscribe for the link to a work package you can download, which has examples of things like effective hourly rate calculations as well as a plot showing what your crossover point is, which is when your income reaches the point where you can leave your other job. We also have the Self-Tenure Progress Path cheat sheet, which is aligned with where you are today.
Let’s Talk About Profit
The profit side of the GradBlogger Business M.A.P. is a huge area. As a metric, I like monthly recurring revenue more than annual revenue because most people get paid during the month. You’re getting paid once a month or once a week or biweekly.
Your revenue annually can be the number of products you sell times the price or the number of customers you serve times the price. If you don’t have any recurring revenue coming in, just divide that by 12 and you get your estimated monthly recurring revenue.
Effective hourly rate is your monthly recurring revenue minus your monthly recurring expenses divided by your hours that you work. Some expenses are monthly, some are fixed annual expenses that you can divide by 12. This gives you a way to compare to a salary position- in other words, how much you are making for an hour of your time.
As an example, let’s look at a salaried employee making $70,000 a year and working 40 hours a week with two weeks’ vacation. They have an effective hourly rate of $35 an hour. A salaried employee at $30,000 a year who also works 2000 hours is making $15 an hour. If you climb the corporate ladder and you’re up to $100,000 annually while you’re working 50 to 55 hours a week, your effective hourly rate comes out to $36.
Let’s compare some of these rates to what online business owners make. Maybe you’re a part-time web designer. You have one client a month. They pay you $500. Maybe you work eight hours a week getting new clients into that business and serving the ones you have. Your effective hourly rate is $15.25, $15.50 an hour.
Now go with the hard-hustling content marketer. I love these guys. I was this guy for a bit! You’re working 35 hours a week with an effective hourly rate of $8.50 an hour. My second year in business, I made almost $60,000 in revenue and had $35,000 in expenses, including travel. My effective hourly rate was $16.36 an hour. As you can see, when you start your online business, your effective hourly rate is probably going to be low.
Reaching the Crossover Point
If you keep going, eventually you will reach a crossover point where you can leave your job if you wish. Perhaps you want to stay with your current employer, but it’s important to reach the point where you can choose the life you want and you’re not tied to a single employer if something goes wrong. Let’s discuss some practical aspects of this goal.
If you don’t have any offers yet or you’re building up your business, I recommend you start by building your authority-based marketing platform. We talked about the ways to do this in the previous episode: creating content, developing a community, and thinking about what kind of change you want to make in the world with that business.
Step two is collecting insights about your customers. What do they want and need and what will they pay for? Talk to them frequently. Create, sell, and test potential offers. I did this a couple of ways before I got to the advertising side, which worked really well for the companies and individuals I was working with.
The Five Ones
There’s a strategy called the Five Ones. This is by Taki Moore, who has a book called the ‘Million Dollar Coach.’ This strategy is focused on:
- One target and market or one customer
- One product or service
- One conversion tool
- One traffic source
- One year’s worth of time.
The time is arbitrary. Maybe it’s six months or maybe it’s a year and a half for you. The point is to not duck out before you’ve actually tried to figure out that traffic source or that conversion tool. You don’t want to be leaving that one offer too soon because there are a lot of nice things that happen in your business when you enjoy simplicity of only having one offer. It gets more complicated as you expand.
There are still challenges even if you only have one offer. What if it doesn’t work? What if you don’t get to the point where you’re making enough net profit to do what you want to do with your life? Maybe you need $1,500 a month or maybe you need $4,000 a month.
You have two choices here. You can decrease your expenses or increase your revenue. The problem with decreasing your expenses is that you can’t go below zero. With the revenue, you can increase indefinitely, so that’s really the area to focus on.
Framework for Success
There are three parts to the Self-Tenure Progress Path:
- Having zero offers in your business
- Having one offer in your business
- Having numerous offers
If you have zero offers, your focus should really be around building an authority-based marketing pipeline. You can do expert round-up posts or guest posts. Start to build up this content and build up your authority. The metrics you’re looking at are website visitors and number of subscribers and the gap is customer insights, as you have no offers yet. You can get those customer insights from the traffic and community you’re generating.
If you’re already at the stage where you have one offer, you should be optimizing your authority-based marketing platform. Double down on traffic and convert it to better and higher-qualified leads and prospects.
If you are at the stage where you have numerous offers, you start to focus and switch. Now you want to optimize your authority-based marketing platform and not focus so much on traffic conversions. You’re starting to get into selectors here: systems, bundles, stacking, cross-selling, upselling and downselling. The business starts getting more complex here and that’s okay. It’s actually quite powerful, especially if you’re willing to take the responsibility for it and to help it grow.
Conclusion
Ask yourself: What is your fantastic dream? Are you on a path to do that? It can feel scary and be hard to dream big. It takes practice and lessons learned to do that, but it’s more than possible. That’s why I encourage you to not hold back as you’re building your business, whatever that is.
If you have questions or feedback about this episode, please leave a comment below. If you‘re an academic who has built a successful online business, we’d love to hear your story. Please share!
