My friend, Richard Heathcote, recently announced the launch of a new aspect to his business. And that announcement will have far-reaching effects on him and his business.
Richard is a voice-over artist, his mellifluous tones adding professionalism to adverts, documentaries, corporate videos and the like. He’s brilliant at what he does – the problem is that, up until the other day, he had to do something in order to get paid.
Like so many experts, Richard has been providing his skills to his clients by exchanging his time for their money. It’s a classic business model that is probably the most frequently adopted by new entrepreneurs – what am I good at doing that I can get paid for? It comes about because most have worked previously as an employee, where the deal is you turn up and do stuff (or at least pretend to do stuff) and you get to take some money home with you.
But this model creates a number of problems:
- You can only work so many hours, therefore once that limit is reached you have to either charge more, or employ people to do more of what you do
- There will always be someone willing to exchange their time for less money than you are – so you can lose clients or have to reduce your fees to keep them
- Your business is unsellable
And that third point is a key one. If money stops coming in when you stop doing stuff, then you don’t have a business you can sell. Equally you don’t have a business that can support you while you’re away on holiday or recovering from illness. At best you have a mailing list of clients that your competitors could probably get their hands on by other means.
If your business is purely about you exchanging your time for your clients’ money then you are the business – a prospective buyer would need you to come as part of the deal for the business to continue. And my guess is you’d probably be wanting to sell either to retire, or to start a new venture, so working in your old business isn’t desirable or practical. This is particularly true in Richard’s case as his clients not only buy a voice over artist – they buy his particular voice.
So what is the new aspect to Richard’s business that has changed everything?
He’s introduced some products.
Richard has created some downloadable pre-recorded standard messages for businesses to use on their telephone systems. It may not sound like much but it has transformed Richard’s business. He now has an element of his business that is no longer about exchanging his time for clients’ money.
Having these messages available online means they can be earning for him 24 hours a day. He’s leveraged a few minutes of his time and turned it into a passive income stream that will continue to pay him for years to come – and it’s very easy for him to grow those earnings – by expanding the library of messages or by increasing awareness of the existing ones.
It also means that Richard has a business that he can sell – because that business now has assets other than him and his voice. It also means he can go away on holiday (or heaven forbid, be ill) and still have an income.
So what products can you create in your business that will generate passive income – and transform your business into a saleable asset?