How to leverage products to grow your business
Frustrated with slow growth in your business and lack of leverage to scale up? By working smarter can you leverage the impact of the time you invest and create that extra space (sometimes called “margin”) in your life and business to do the things you always wanted to?
Perhaps you are frustrated in your services business because you have limited clients, constrained resources, and weak margins? How can you have a greater impact from each hour of effort you put in? How to reach more people and how to scale up?
Leverage your consulting beyond the number of hours in a day
One of the practical ways you can work smarter is to build products, not solutions.
Let me explain why I think this is important:
A solution is offered to solve a specific problem or need.
Consultants know this well. The client has a problem, the consultant analyses it and offers a tailored solution. The client then implements the recommended solution and pays the consultant for services rendered. The client is happy, the consultant gains some experience, but aside from this nothing really substantial can be reused.
A product on the other hand solves a generic problem or need for multiple customers.
Separating out generic from the specific
Instead of analysing a specific client’s problem, the product-oriented consultant considers whether this problem is truly unique, or does it apply to a number of clients, or perhaps a whole industry. The analysis intentionally leads to the creation of a product that can then be packaged and sold to several clients.
The work is done once and then leveraged across multiple clients or an entire industry.
This type of leverage is exactly what I mean by working smarter, not harder.
By creating products you get paid multiple times for time invested. In other words, you can find a way to scale your business; whether it is in consulting, software development, training, or coaching.
When offering solutions you therefore should always be on the lookout for opportunities to take each project experience and leverage this into reusable products.
In practice, building products means understanding the generic elements of the solution and separating these out to build a platform.
The “platform” (which eventually becomes the basis of your product) therefore contains all of the generic aspects of your solution.
On top of the platform, you can bolt on the specific configuration that solves a particular client problem.
The smart part is that you plan to retain the platform and use this to “rinse and repeat” with the next customer. In other words, you create leverage for your business and the potential to scale up.
How will you leverage and scale up your business?
When starting out an information or consulting service business you really need to ask yourself questions about how the business will scale up. Do you really intend to employ more people or subcontract to sell additional hours?
Many services companies grow through doing more of the same, but their scale-up is really a linear relationship because for every additional hour a fixed margin applies.
These companies concern themselves with growing to spread their overheads costs across a larger base. “Sell while your expensive Directors sleep”. With scale comes multiple problems and new risks; such as lack of new sales or constrained services capacity, or both.
Companies that start out with a product mindset think about scale up all the time. It is in their DNA.
In the information business, the cost of making additional copies of a product are usually negligible. You can copy software, reproduce a book, a consulting template, or an eLearning course at a very low cost.
The more you can embed your expertise in your reusable product the more you are able to leverage your time to increase reach and impact. Eventually, your product sales will exceed your services revenue to the point where your customers can implement your product without needing significant time from you.
This type of business can grow and scale exponentially.
Trapped by slow growth?
I have seen a few information companies stuck in the mindset that in order to grow they need to pack more people into services roles; be they call centers, consulting teams, development groups, and so on. The problem with this business model is that you are forever constrained in your ability to grow fast. All you can do is try to sell harder to win more projects. And then when capacity runs out you end up trying to restructure and unlock operational efficiencies until everyone burns out and looks to take up more sustainable employment elsewhere. The only way to grow fast in this scenario is through acquisition.
If you build products into your business model you can prepare to scale up by focussing people on the smart work of designing and building great products. Your growth comes through entering new markets, not by increasing the headcount at home.
The rationale for a product-based business
The underlying rationale for this is straightforward. Time is a valuable and finite resource. Whether you are a “solopreneur” or a consultant in big business; you only have so many hours in a day to make an impact. By working on products that will scale and can be leveraged you will be able to multiply the hours you put in by a factor that is related to the number of copies of the product you sell.
Well designed information products can sell themselves. You are potentially able to sell these online and benefit from the scale offered by the web; potentially reaching hundreds, thousands, or more customers in an automated sales process that doesn’t require a single salesperson employed by you.
Anyone who has relied on a sales team for growth will recognise the value of also having an automated online sales channel that continues to sell products while you sleep.
But a product business does not happen without intent. There needs to be a strategic approach to create generic products as opposed to one-off solutions.
For example, as you employ new staff you will not be looking for consulting partners, you will be looking for product managers. You will not be looking for a development team leads who can release bespoke code faster, you will be looking for software architects and engineers who understand how to build platforms that scale. You will not be looking to increase the numbers of salespeople; you will be looking for ways to also sell your product to a global customer base using the web as your sales channel.
Above all, you will need to rearrange your financial model to properly recognise the asset value of the information products you create and recognise these as investments with long term returns, and then manage them accordingly. You can’t become a product business if you don’t invest in product creation.
Leverage through partnerships
The ideal scenario is that your product platform becomes the starting point for other companies to build solutions. As a smaller business, you cannot possibly hope to have a global presence of specialised consultants to configure and implement your solutions. It is far smarter to develop a channel model where the professional services that configure and implement solutions based on your platform are located in the countries where your end users are.
How to develop a product mindset
To achieve a product mindset and get this into the DNA of your company I would recommend adopting the following thinking about your information business strategy:
- Analyse every problem from the perspective of an entire market, not a specific customer instance (no matter how much the customer pays you). This will help you establish your expertise in any case, whether you want to be a product company or not.
- When solving problems identify the generic elements of your solution that can be extracted and separated into a product platform.
- Ask yourself do these generic elements lend themselves to any information or software product? For example a template, a software application, a book, or a training course.
- Can you write a clear value proposition for the generic information product? (A value proposition needs to define the target market, the pain experienced and the benefits of using your product).
- Could others build solutions using your generic product as a platform?
Practical steps to change your model:
Here are some practical steps that every consultant should be taking on each and every project with a client:
- Write templates whenever you create a new document, and make these available for reuse to the whole team.
- Write generic specifications before you write specific requirements.
- Everything about your product should be documented with the view to help someone in another country who has never met you implement their solutions based on your product.
- In the architecture of information products or software, strictly separate the generic platform from the specific customer configuration and never mix these up.
- Assign resources and investment to the development of the product platform and keep this activity separate from your specific client-facing projects. This does not mean that the platform development should not be client-led, rather that it be actively managed and protected as the most strategic underlying information asset in your business.
- Get the customers to pay you for the solutions. Make sure you have the right to own and build on the product platform. Customers usually don’t care that the platform or templates they pay for will be used by you to leverage your business to many other customers. If the customer does not want to give you ownership of the platform then rethink the relationship. Just because someone pays you does not mean that all intellectual property should belong to them, you can and should negotiate the rights to reuse.
My recommendation is that you take a moment to step back and think about your business in a new light – can you distill what you do to create products that you can leverage to make a bigger impact and scale your business up in ways you never imagined before?
By Gavin Halse
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