How To Turn Your Service-Based Business Into A Valuable Asset
He was pretty stressed out when I met him for a Friday afternoon beer a few weeks ago. Chris was a good mate of mine, but we hadn’t caught up for a while. You could see it all over his face. The grind. The long days and the late nights. The pressure of having to provide for his family, and the exhaustion that comes when you haven’t had a holiday in a few years.
“I’m done mate. I’d be better off pouring beers at the pub than running this business of mine.”
I didn’t jump straight in. He was right. As he started to share with me about where his business was at after 5 years in the trenches, I realised that the only benefit he currently had to owning is own business was that he could say he owned his own business – which he no longer cared about.
He didn’t have the freedom he bought into when he started (you know the whole ‘I can choose my own hours’ concept), he didn’t have a lot of cash in the bank, and he certainly wasn’t able to leave the challenges at the office and come home to an enjoyable evening with his wife a kids.
What Chris had created for himself was what a lot of small business owners in Australia do on a daily basis – he had created a job for himself, and not an asset.
The Difference: A Job Or An Asset
If your business requires you to go to work every day and cannot survive if you step away from it for a week or so, what you have is not a business, it is just like Chris’s – a job. And it may even be a job that pays you less than someone else would pay you to do the same job in your area of expertise. You may even have staff working for you, it doesn’t mean you have scaled successfully.
If you do find yourself in the same position as Chris – what we call the ‘Wilderness’ – there is hope, and I would encourage you to stick at it a little longer. You see, a job at the pub doesn’t allow you to build wealth on the way that will one day pay out if you build it right. An asset will.
When your business is at the point where it can generate wealth without you in it, it becomes an asset. When it gets to the point where someone is willing to pay you a significant amount of money, it has become a valuable asset. An asset will continue to feed you long after you have stepped away from it.
And this is what I explained to John. It was time he stopped just trying to bring in next weeks’ mortgage payment and started focusing on how to build assets in his service-based business starting with a review of his tangible and intangible assets he held currently that he could maximise one.
Tangible & Intangible Assets
In service-based businesses it is often hard to figure out how you could turn your services and your good-will into an asset that is valuable in the event of a sale. Tangible assets were traditionally used as the basis for value within a company – that is the assets that are seen, can be touched like buildings, stock, equipment and so on. You can quickly take stock of these to begin with.
However, markets have moved significantly to valuing software, innovation and brand reputation – that is the intangibles, or the unseen parts that make your business what it is. Once you start maximising these areas, you will soon realise you can easily create a lot more value in your business, far beyond what the tangibles are worth.
This includes technology, trade secrets, customer relationships, trained staff, licenses, permits, trademarks, marketing and sales campaigns, collateral and proven successful funnels for client acquisition, intellectual property, and proprietary business processes – that is ‘the way things are done’.
How can you turn the intangible into valuable?
When you have been running the show, just like Chris, in your business that demands all of your time and attention, it is likely that everything that your business is, is stored in your head. No one could walk in tomorrow and know what to do, when to do, or why you do it.
Productisation of services is the first step you can take today to start developing an asset.
Chris had never heard of this concept – maybe you haven’t either. It is a life saver when it comes to scaling your business and to free yourself from trading time for money. What is productisation?
It is taking your services, your business offerings – the work you do for your clients – and creates packages out of those services that you can sell to clients like a product off the shelf. So can your sales team once you hire them ;-).
Look at what you do for your customers on a regular basis – what services do you provide on a regular basis that you could package up and sell more like a product rather than constantly ‘tailoring’ your offerings.
One of the ways you can tell if you have productised services is how long it takes you to send out a proposal? It should take you no more than about 10 minutes if you have developed service-based products.
The Next Step – Systemise everything
Systemise everything you possibly can in every area of your business, and create repeatable processes that deliver consistent outcomes, based on the products you sell.
Once you have managed to create 3 – 4 products, start with a simple procedure like client on-boarding and map out all the steps that need to happen from the time the client signs off to the time you start actually working on their account. What emails get sent. What documents need to be created. What filing process for information needs to be established? Who will manage the account, and how do they stay accountable to the tasks….
This is just one example of setting up a repeatable system in your business.
Chris seemed a lot happier once we had finished chatting. Although it felt like he had a mountain to climb in front of him, he now knew exactly what he needed to do to start building an asset he could be proud of, that turned effort into wealth generation, and would one day deliver a nest egg he could retire on. Hopefully you do too.
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