In today’s era, seizing the opportunity to build your ideal life and achieve rapid financial growth has never been more accessible. However, amidst the vast sea of online information, I understand the challenge of distilling actionable guidelines. In this article, I present a clear and repeatable three-step process for establishing a profitable entrepreneurial career, without the need to dwell in your garage until you catch the attention of giants like Google.
P1: Skill Acquisition
Many young individuals often ask, “Where do I begin?” Drawing inspiration from the concept of Ikigai, we can break down this age-old question into 4 vital considerations: what you love to do, what you excel at, the potential for a decent income, and your growth trajectory in that chosen path.
I hated when people answered questions with questions, too. Here's what I recommend: trust your gut instincts, seek guidance from those ahead of you in your chosen field, and don’t waste time dwelling on whether your decision is right. As you’re about to find out, the world is not a binary place. It’s not that much about making the right decision, it’s about making a decision right. Slaying the startup mojo: fail fast. It’s better to spend 3 months of your life in a lawyer's office experimenting in becoming a lawyer than waste a dozen years of formal education only to find out it sucks.
The more things you try, the more you’ll gravitate towards a place of Ikigai — a place you genuinely enjoy/are in flow, are of greatest service to others, and get paid for it.
Just try more stuff.
Your Goal here: Monetize a Skill
Now that you’ve honed your key skill, your objective is to reach a point where you offer substantial value to at least one person — someone who is willing to pay for the knowledge you’ve gained through skill acquisition. But how do you achieve this?
- Pick a niche. In order for people to deem your service valuable, you have to be adorably well-suited to solve a niche set of problems for a niche set of people. In business terms, these people are often referred to as the “target audience.” These are people that share certain characteristics/problems/demands that you can help them mitigate.
- Be wary of positioning. Ask yourself: where is the money? Who is paying what money for what services in this world? Say you’re a photographer: would you rather photograph christening events for $50/event or shoot elite weddings for $5000? Think about it. It’s a very similar skill but a vastly different offer.
- Don’t stop. For the love of god, don’t stop. Whatever you’re aiming at from personal motivation, is exactly behind the next little step. The 1st step is always the hardest. You’re in a land of unknown unknowns. You’re scared. Every consequential step is going to be easier. Additionally, the more you master the skill, the more fond of it you’ll become.
By doing so you will learn the following:
- The world is a tough place. Thousands of others have similar ideas to your own.
- However, the world is also a rather big place. There are millions of companies pledging their value openly in the job marketplace. You can grasp a tiny segment of such markets as an extension of what you love.
- It can be done! It’s hard, and you wanted to stop, but you didn’t and now you’re here! People are paying you for something you learned on your own. On to the next!
P2: Agency — Wrapping Skills into a Business
Hey, heey! You’re onto Step 2. If you’ve come so far, it means you have learned enough to provide real value to people. Step 2 represents your bridge into business. Have you wondered how to merge from skill to entrepreneurship? Allow me to dispose of the magic word: agency.
Your Goal here: Build a Profitable Agency
By definition, an agency is a company that crafts and develops customized solutions. An agency serves as an extension of your personal skill set, acting as a conduit for projects, offerings, and solutions you can provide to your clients. However, relying solely on your craft’s technical skills won’t take you to the next level. Here’s what will:
- Aim for profitability at all times. As a service business, you should be making money almost immediately with low operating expenses for software businesses.
- Start documenting your journey. Talking openly about your journey, both your problems, and your accomplishments daily will allow people to empathize with you. As a result, you will be perceived as a thought leader on the topic. People will automatically assume you know your stuff.
- Build a personal brand. People like people who stand for something. Not only do our brains feel the need to label and make sense of everything, but we will also stand out from the noise. Let your personal brand cover the specific niche you set out. Such exposure will bring attention from your designated audience. It’s time to get creative!
- Turn a one-man show into involving several other people. Start by looking at your calendar. Where are you spending most of your time that is not productive for the company, i.e., could be done by someone other than yourself to a greater extent? Don’t look for positions to fill; look for problems to solve.
- Listen, listen, and listen. What are the people you’re targeting saying? Where do their problems lie? Build relationships built on attentiveness and trust. Deliver on your promises.
By doing so you will learn the following:
- The basics of the game of business — the boring stuff — accounting, financial forecasting, HR, admin, documentation. These are golden and cannot be taught at any MBA school.
- Building an agency is a gateway into people’s problems. You will actively engage with people within the industry and attentively listen to what they are frustrated about. Building a product before understanding these issues doesn’t make sense.
- Why the emphasis on building a profitable agency? It’s because you’ll gain an appreciation for the value and lessons derived from bootstrapping a company to profitability. Not all businesses require explosive growth.
Disclaimers:
- If you’re inundated with more requests than you can handle, consider onboarding additional personnel or adjusting your pricing.
- If you find yourself spending more time chasing clients than delivering meaningful work, it may indicate stiff market competition, inadequate niche knowledge, or ineffective exposure.
- It’s worth noting that venture capital investors typically avoid investing in service-based companies due to limited growth potential.
P3: Product — Monetizing Skill Without Immediate Effort
You’ve come a long way, mastering a skill that others are willing to pay for. You’ve built a profitable agency around that skill, serving as your gateway to entrepreneurship. Now, after gaining a deep understanding of your customers’ needs and the industry’s dynamics, it’s time for the final leap. Many rush into this stage prematurely, but those who patiently work with customers over time develop a profound understanding of the industry — what it values, who pays for what, preferences, dislikes, and future trends. These true warriors can afford to build a product.
Goal: Automate Your Customers’ Needs into a Product
Products are by definition systems delivered to the customers with the intent of sale. The only way from a service type of business to a product type of business is capturing the value proposition within an automated system offering, i.e., without your immediate presence. While you can boost your inherent value doing service work by reaching monumental credibility and thus increasing your service offering, you can never truly escape exchanging time for money because quite literally, you are the offering. You see, products are the only business type that allows you to put your offer into a rocket ship and go for the moon. The chains of scalability unleash!
Man, oh, man. How in the world do I do that? Building a product requires a different kind of approach to business than your agency-building phase. In the next bullet points, I’ll be taking you through 2 examples to exemplify how to turn your service business into a product one.
- Think like they do. Take your learnings from Agency work and apply automation.
- Video Editor: If you offer video editing services to Instagram models, identify the most time-consuming and labor-intensive aspects for both you and your clients. Then, devise methods to streamline this process.
- Data Science Consultant: If you provided data science consulting services to clinical drug discovery pipelines, think about what their heaviest pain points were. What would they have liked to solve most?
- Assemble your Early Adopters. At this point, you’re going to be grateful you ran a profitable agency before starting a product line. Your early adopters are people who you’ve done great work for in the past. Start picking up the phone!
- Find the least that you could do to show a product offering. Perhaps you don’t have to go all-in on your product business just yet. You could offer half of your service as an automated product while the other half comes in the form of consulting.
- Video Editor: Establish an online interface where they get to pick which videos they like most. Instead of using email and long back-and-forth iterations with clients, you can redirect them to your online interface. Hey, that’s an automation!
- Data Science Consultant: Build a SaaS product where they could run their own experiments and ongoing analysis.
- Start Charging: Turn those early adopters into early clients. Instead of tracking custom problems, solutions, and invoices, you’ll be doing product customer support and updating the product as you go. The rest is up to you!
By doing so you will learn the following:
- Service business is catching butterflies. The product business is building a garden.
- Running a profitable service agency provides you with severe advantages to building a product, like understanding the customers’ pain points and having trust of the early adopters.
- Your potential is the moon. Products, especially software ones, have infinite horizons of scalability.
Disclaimers:
- Software businesses are the true wealth generation machines since their operating expenses remain silly low while its revenue’s potential is infinite (so is the customer base!).
- Spending too little time and effort at the agency step is going to result in faulty understanding of customer/market needs, long product cycles, and ultimately failure.
- I can perfectly understand why some people could resist building a business out of skill by staying focused on their craft. That’s perfectly fine.