Friday, November 4, 2011

A Kind of Business Plan

When I began my consulting career I didn’t have an explicit business plan. I hadn’t set particular goals for myself, let alone devised a strategy for achieving those goals. I just thought I’d see what happened and how my new career shaped up. I don’t necessarily recommend this strategy, although it worked out okay in my case.

Once I got established, I did think more about how I wanted my consulting career to evolve. I came up with a sort of rudimentary business objective: earn a nice living while I’m asleep. While that’s not a true business plan, that objective did force the question of, “How are you going to do that?” As an independent consultant with no employees, every penny of revenue I generated came through my own efforts. So the trick was to figure out how to generate as much income as possible with as little effort as possible. That is, to look for sources of unearned income. I came up with several techniques for creating ongoing revenue streams after some initial investment of effort.

You can get some great ideas about passive income from a fine book by Alan Weiss called Money Talks: How to Make $1 Million as a Speaker. I’ve never made a million dollars in a year, but my investment in this book certainly paid off. Weiss wrote another useful book titled Million Dollar Consulting: The Professional’s Guide to Growing a Practice. I recommend both of these to both aspiring and experienced consultants.

Book Royalties: Book royalties are a gift that keeps on giving, with some caveats. First, you actually need to write the book. This is not trivial. I will talk more about writing books in later posts. Second, it has to be a good book. Ideally, it will get good reviews and people will come to recognize the contribution it makes to the software practitioner. Third, the book should fill an important niche in the software literature. For several of my books, I identified perceived gaps in the literature and attempted to plug them, with generally good success. It’s best if the domain you’re writing about doesn’t have tons of competitive titles. Fourth, people need to know about the book, which generally means going with an established publisher instead of self-publishing. You won’t get as much money per copy that way, but you will probably sell more copies. And fifth, it works best if you write a book that has a long shelf life, not one that deals with the latest software fad or with a technology that will be obsolete in a couple of years.

Most technical books don’t sell zillions of copies. You’re probably not going to be able to live on your book royalties. I do know a few people who make more than $100,000 a year from software book royalties, although I’ve never approached that lofty pinnacle. Nonetheless, the royalties add up.

Licensing: Most of my work through Process Impact has involved delivering training. The revenue stream from doing training yourself is linear: if you teach two classes, you make twice as much money as if you taught one class. If you want to increase the income-to-effort ratio, you need to disrupt this linear relationship. One option is to hire other people to teach classes for you and split the revenue. I tried a different approach. For many years I have licensed my courseware to other companies, either to teach internally to their own staff or to deliver classes to their own clients or through public seminars. Licensing has worked out well for me.

Obviously, you have to have content available that other people will find to be valuable. The content must be structured and packaged such that other people can easily learn to present it. Whenever I have developed a new course for my own use, I created detailed instructor notes and supporting information with the intent of licensing it. I’ve also licensed various bits of my other intellectual property for people to incorporate into their own products, courseware, and books, charging nominal fees for that. Just this week, I made $100 by licensing three pages of content to a training company. The total effort involved consisted of a brief email exchange and a fax.

eLearning Courses: After the attacks of 9/11, it occurred to me that people might be more reluctant to travel for training. Therefore, I began exploring ways to package some of my presentations in a CD- or web-based format so people could take my classes from the convenience of their own chair. After experimenting with different approaches, I settled on an eLearning format that closely emulates my live presentations. Certainly, there are various ways you can approach eLearning, but this seemed right for me because people enjoy my live classes and conference presentations. You can see what I came up with here. I also created on-demand webinar versions of several short conference presentations in this same eLearning format.

Over the years, I’ve sold hundreds of both single-user and corporate-wide site license versions of my eLearning courses. Creating the courses in the first place is a lot of work. After that, though, the delivery cost and effort is minimal and the profit margin substantial. The eLearning courses also make great train-the-trainer aids for people who license my instructor-led courseware.

eBooks: Some years ago I wrote several handbooks approximately 70 pages in length on various topics. Today these would be called eBooks. I have sold them as PDF downloads through my website, both as single-user copies and as site licenses that allow a company to distribute the handbooks throughout their organization. These handbooks are inexpensive, but they constitute a another small revenue stream that requires little effort on my part. You might be able to sell your eBooks through online retailers like Amazon.com. You can also create versions for use with various eBook readers, such as Kindle, Nook, and Kobo.

Other Products:
I’ve sold a variety of other products over the years through my website. None of them generate a lot of revenue, but it didn’t take a great deal of work to create them and the dollars continue to trickle in. Visit ProcessImpact.com to learn more about these various kinds of products.

Affiliate Programs: Another way to get free money is to sign up for an affiliate program. When visitors to your web site click through certain links to a vendor’s site and buy products there, you get some percentage as a commission. I’ve been a member of the Amazon Affiliates program for more than a decade. If you want to see how it works, click here. This link will take you to the Amazon.com page for my latest book, a memoir of life lessons called Pearls from Sand. Even if you don’t buy the book (what?!), you may then browse around Amazon to your heart’s content and buy lots of other stuff. I will receive a certain percentage of whatever you spend, and it costs you nothing. Go ahead, try it. Buy many things. Please. Do it again later on. Tell your friends about it. I’ll let you know how well it works.

Affiliate programs can work the other way, also. I’ve enlisted several companies to resell my eLearning courses, for instance. When one of their customers buys a course, we split the revenue. Everybody wins. Of course, not all affiliate programs yield benefits, but once set up, they provide one more way to make money while you sleep. Is this a great business plan, or what?

(If you found this article helpful, please consider making a donation to the Norm Kerth Benefit Fund to help a consultant who has been disabled since 1999 with a traumatic brain injury from a car accident. You can read Norm's story or donate here. Thanks!)

2 comments:

  1. Karl, Great information. Your books, training, templates, and website have all been invaluable resources for my career as a Business Analyst. I will definitely follow your blog. --Shannon Jackson

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  2. Thanks much, Shannon. It's always great to hear from you. Please stop back every Friday for a new post.

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