It’s pretty much inevitable that after the realization that “Oh my God, I’m making a ton of money” freelancing, just about every consultant I’ve met soon realizes, “But that money disappears when I stop working.”
This post is going to dive into how you, an idea-less freelance consultant, can build products of your own and develop recurring revenue streams that don’t necessarily require an ongoing commitment of your time.
Why Recurring Revenue?
Recurring revenue is much more than just “money that will come to me as I sip Mai Tais on Waikiki Beach.” Recurring revenue is (more or less) predictable revenue. The catch with consulting is that the majority of us bill for our time, and if no time is logged — either because we’re on vacation or simply just don’t have a project to work on — there’s nothing to bill for. But we still have monthly obligations. We still need to pay for our shelter, our food, and other amenities required to live comfortably.
I can’t speak for you, but if I’m on the hook for paying banks, creditors, or utility companies upwards of $10,000 for the foreseeable future, being uncertain about where I’m going to get that $10,000 is a huge weight to shoulder. Our salaried brethren understand what it feels like to be worried about getting fired and losing their paycheck; but many of us freelancers constantly face that fear, and that’s a fate that can occur despite how successful we are at the work we produce for our clients.
What attracted me to pursuing recurring revenue was that I could offset my fixed liabilities with something that I had a lot of control over. If one of my two current consulting clients bailed, my income might be cut in half by 50%. If one customer out of the thousands that have bought a book of mine ask for a refund, I might need to skip dessert tonight.
Products: An Emotional Hurdle To Overcome
I was in Las Vegas last week for MicroConf, an annual conference for bootstrapped entrepreneurs. And I noticed a trend… Everyone there was aiming to one day live entirely off of product income, but a significant majority was using consulting as a crutch to support them until they hit some critical mass of paying customers that they could cut the umbilical cord of consulting (keep in mind this is a bootstrappers conference — we don’t have the luxury of the massive amounts of cash infusion that can come through funding!)
The jump, however, between selling time for cash and selling a self-serve product to someone you’ve never met is pretty big.
The former just requires you finding a few people like you who can effectively “rent” you for a rate, either because they don’t have whatever skill they hired you for or they don’t have the time to do it themselves.
The latter can require figuring out a problem that people will pay YOU, an Internet stranger, to fix. This means marketing, writing persuasive sales copy, and building a product before anyone’s bought it (which can be a struggle for those of us conditioned to “work now, get paid soon-ish”,) and having the gumption to actually ask for the sale.
Marketing. Persuasion. Building a product. Fulfillment. These dragons are slain through research and elbow grease. But before any of this can happen, many freelancers-turned-product-people need to come up with an idea, which is where most of us stumble and give up.
The problem is the belief that ideas are special, and that “great ideas” will come given enough time (or enough showers, depending on when and where you get inspired.)
But what if you didn’t have to wait. What if you already had the great ideas you need to build up recurring revenue?
Sell What You Know
I want to talk about two different audiences you can sell to right now, and how you can go from trading your time for money to building up a product that literally sells itself while you sleep. As an added bonus, doing this can help you get more clients, which helps alleviate the “feast or famine” problem that affects a lot of freelancers.
To begin, you need to start with a little soul searching…
Why do clients pay you wads of cash? The answer isn’t necessarily “Because I write code” or “I’m good at setting up WordPress.” Most people will hire you because you’re capable of solving some sort of business problem that makes it worthwhile to cut you large checks with the assumption that you’ll deliver something worth more than the cost to hire you.
So if they’re hiring you to, say, get more walk-in customers to their retail shop by setting up some really solid stuff online, that’s at the far end of the execution spectrum (“Here’s my problem, you’re the tech guy, I’ll pay you to fix it.”) You’re consulting. You’re applying your knowledge to solve one person’s pain, which in this case is a lack of customers which is causing a bit of a problem with their cash flow.
Alternatively, the skills you possess that allow you to charge your clients to get them more walk-in customers might be desired by a more junior freelancer who also wants to become more valuable by offering this service to their clients.
How did you get to where you are today? What skills did you need to acquire before you were able to make yourself valuable enough to be hired? And before worrying that you aren’t necessarily an expert and getting the maximum amount of walk-in customers for the maximum amount of retail shops, you just need to realize that you only need to know more than the person you’re trying to teach.
The theme here is education. Consulting is just applied education, and there’s a lot of middle ground between where a client or fellow freelancer is today (“I need more walk-ins” / “I also want to help my clients get more walk-ins”) and having an expert consultant apply years of accrued wisdom to a specific problem, or becoming the go-to consultant for getting retail shops more clients.
Sell To Your Peers
Selling information to other freelancers like you can solicit two types of very vocal responses:
You’re selling tools to the miners. (The idea being that the only people who made money during the gold rush in the American West were the merchants hawking mining gear to upstart miners. The difference being that in this gold rush, the miners are actually making lots of money.)
All of this is available for free on the Internet [in existing blog posts, podcasts, forums, StackOverflow, etc.]
But for each of these minority voices there are dozens of silent doers who want what you have to teach so they can move on with their lives, becoming more valuable and charging more.
And these doers will buy the knowledge you’ve cataloged, organized, and presented for sale. Because when the doer isn’t doing, they’re not making any money. And if they’re billing $XXX an hour, spending $XX to level-up is a no brainer. They don’t have the time to hunt and peck around Google results to get to the same result that you’re offering with a shiny “Buy Now” button.
A great example of this in action is what Nathan Barry’s done with his two books, The App Design Handbook and Designing Web Applications. He’s produced two products — the former for iOS designers, the latter for designers of web apps — that can help the reader go from just a designer to being able to walk and talk like an experienced iOS or web app designer.
The best part of what Nathan’s done is that his products are sold and packaged as an easy to digest pill. Rather than wading through the good and bad of pages of Google results to figure out how to implement the perfect navigation UI, Nathan’s done that work for you and has it available for sale.
Let’s think like a CEO who hires designers for a second. Jim, an employee of yours, is a good web designer, but now he needs to design our company’s new iPhone app. Sure, he knows how to use Photoshop and splice and dice up PSD files… but Jim’s never designed an iOS app. We could think, “Jim — go and figure out the ins and outs of iOS design for a few weeks.” But Jim costs a few thousand dollars a week, and the idea of spending thousands so Jim can (hopefully) become a competent iOS designer sort of sucks. And you don’t want to hire that high price consultant and risk pissing off your in-house designer, right?
And then you discover that for $169, this guy named Nathan has a complete package of resources that help designers become awesome iOS designers. Businesses pay for things, especially when those things can reduce costs or amplify revenue.
Sell To Your Clients
Remember that spectrum, where at one end we have raw information (“The know-how to help a retail business get more walk-ins”) and at the other application (“The knowledge and the time spent to help one retail business get more walk-ins”)?
As freelancers, we’re used to being paid to apply knowledge for our clients. But we don’t always think about the value we could deliver on the lesser parts of the spectrum.
Think about it this way. To go back to our example, Mary the Business Owner wants more walk-in customers. There are actually quite a few ways to do this:
Learn and act. Mary could read a book or take a training course from someone like you who’s constructed a guide for setting up ads and a marketing site that helps convert visitors to walk-in customers. This requires Mary (or someone on staff) to take the time to do some learning and then actually execute on this new knowledge. The product Mary purchases is probably purely information: an ebook, a training course, videos, …
Get something turnkey. Mary could come across a SaaS vendor who promises a turnkey website and set of marketing campaigns that are specifically built for retail shops wanting more walk-in customers. This is significantly lower risk (and cost) for Mary, because the next option would be to hire a designer off the street and hope that he knows how to 1) build the site and the marketing campaigns and 2) know enough about retail shops and how they get walk-in customers. Chances are, most of the products you’ve wanted to build have fallen into this space. The product Mary purchases is probably a web-based, multi-tenant product that she pays for monthly.
From scratch. Mary needs her problem solved, and she lacks the technical capacity or time and energy to do it herself. So she finds someone like you, is persuaded that you have the skills to solve her problem, and then commissions you after a high-touch, possibly lengthy sales cycle. The product Mary purchases is a one-off consulting engagement with someone (an individual or agency) that she feels can help solve her problem.
An added benefit of educating your client is that you’ll increase your perceived expertise, which could end up netting you new clients who need to hire a consultant who helps retail businesses get more walk-in customers. After all, you literally wrote the book on it.
Patrick McKenzie is routinely hired by software companies to help improve their conversion rates through something called lifecycle emails. Now, Patrick lives in Japan, and just about all of his clients are located halfway around the globe from him. Hiring Patrick involves going through a proposal, possibly convincing partners or a board to hire this guy for $XX,XXX a week, accepting his proposal, negotiating contracts, getting Patrick to fly halfway around the world, getting him in your office for at least a week, and then sending him back.
All because you need Patrick to help you apply the email knowledge he has to your business.
This also limits Patrick to having just a handful of clients. He can do the grueling, cross-Pacific flight only so often, and being a newlywed tends to exponentially complicate things.
So while Patrick could just stop consulting, he could also do it at scale. He could distill his knowledge into a five hour video course, and allow people that couldn’t afford him or win a coveted spot in his consulting schedule to reap a lot of the benefits of having Patrick sit in your office for a week.
The Middle Ground Between Information and Application
Where Patrick hasn’t gone (and where, frankly, I think he and you could) is the middle ground between teaching and doing.
When Patrick is hired to write lifecycle emails for a software company, the hiring company is educated by Patrick, but he’s also going to write and put into place the application of that education (e.g., a 30 day email course.) But what happens when a company picks up his video course and takes a stab at implementing the advice contained within?
Who do you think they’re wanting to get feedback from?
Patrick. Or if it’s an ebook on getting more retail walk-in customers, from you.
And this gives you and Patrick the distinct advantage of being able to charge what might seem an exorbitant rate to spot-check or vet the end result of your customer attempting to take action on your information. And let’s face it — only one person really fits the bill to do this one-off consult… the creator of the content that gave them the skills!
Other middle grounds involve group training or workshops, monthly retainer agreements, coaching, and other services that you can price, rather than bill.
To round out the examples, Joanna Wiebe of Copyhackers offers a No-Fluff Website Review for close to $1,000. The review includes an assessment of your website’s copy and a 60 minute video review. Because Joanna’s established her foothold in teaching people who hate writing sales copy what it takes to write effective sales copy, her 1-on-1 review is a natural upsell to her books. She’d be hard pressed to sell this service of hers without the book, but again — once someone’s spent a few hours in Joanna’s head by reading her book, she’s going to be the only viable candidate that’s capable of conducting a website review.
So before you get dismayed by the amount of time and effort it takes to build a product, realize that products can be as simple as something that teaches just one thing. And instead of waiting for your Eureka moment, reflect on why people have hired you in the past. The road to selling products doesn’t need to be steep and jagged.