May 4, 2020

How To Productize A Service Business And Earn Recurring Income

Here’s what I’ve learned building an unlimited graphic design business for 5 years

For ten years, I had been a do-er. As a graphic design freelancer, I’ve always been working on the creative process, the technical side of things, and delivering the work to clients.

I refused to hire anyone to help, because all projects are customized to unique individuals, it’s hard to tell whom I have to hire.

Furthermore, I thought “why should I pay someone else when I can do the work myself and earn more”, “such a hassle to manage and train people”, “I love doing design work and I should only do what I love doing”, and “nobody can create what I’ve been doing, my clients will leave if it wasn’t me doing the work”.

Until I gave birth to my first kid and found it impossible to split myself up to serve my clients well and be the best mother I can be at the same time. I ended up with half a million dollars in debt because nobody would pay me to be a better mum.

That’s when I realised, I’ve been trapped in a hamster wheel, building a prison for myself.

If this is you, the solution is to productize your service business by offering one price for one set of solutions on a monthly retainer. You can sell as much as you want and hire as many experts as you need with the same set of skills to do and deliver the work.

That helps you earn a recurring income that can increase in time without worrying about not having enough time to do the work.

In 2015, I started a graphic design startup that provides unlimited graphic design service on a monthly fixed-rate. Since then, my team has worked on thousands of tasks for customers who’ve stayed with us for years.

Here’s what I’ve done and what you can do to get started:

Decide on what to offer

When you productize, you are essentially deciding the range of services you will deliver and “putting them in a box”. You don’t offer everything. You decide what’s in the box.

However, rather than starting with a solution, your best-productized idea has to come from a pressing problem you have observed experienced by as many people as possible. It also has to be painful enough for these people to outsource on repeat mode.

For example, amongst my regular clients, the most common pressing issue I saw they need help with regularly is graphic editing help. Changes always have to be made to their artwork and they can’t wait to hand them to me to save themselves time.

Hence, it makes sense to put monthly pricing to it. I’ve termed it “unlimited per month” because there’s only one price to pay for as many designs and revisions they need each month.

Another way is to join a community that’s related to the pressing problem you’ve observed. Make sure it’s buzzing with activity on a daily basis with at least 10,000 people.

Then, create a hypothesis or assumption around the problem and pose a question to get feedback on your solution to their pain point. Do give something back in return for their time.

Here’s what I’ve done before:

A Facebook Group litmus test to start a productize service business

With this post, I’ve made at least two customers who paid for the service. This proved that this offer is something people are willing to pay for.

Decide on what to offer

Be intentional to strategize who you wish to work with on a longer-term. The sooner you decide on a specific target group, the easier it is to find clients.

That’s because you are able to tailor your offers more to the target group’s needs. This also allows them to trust you as the to-go resource to solve their challenges.

For example, if I am running a church, it makes sense for me to approach a web design company who creates content revolving around designs for churches, or someone who has experience designing for other churches. It’s telling me this company knows what kind of designs make a church-goer tick.

In my case, they have to be people ready to buy graphic design services without me having to persuade them too much.

Here are the criteria of whom I’ve decided to serve:

  1. They need design work done on an ongoing basis, hence they have to outsource
  2. Their marketing budget comes from the company, not from their own pocket
  3. They are comfortable working remotely with designers
  4. They know what they want out of their marketing materials
  5. They’ve worked with graphic designers before

Create a system to deliver your offer

In the earlier days, there’s no need to be too worried about the details of the processes. You will eventually need to map out the processes to create a system so that your delivery is done in the same way every time.

Be mindful that things will change along the way. I’ve made a mistake of focusing on the processes and neglected sales. That led to slow growth and lack of funds.

You should only spend more time with the details of processes when your customer base grows to the point where you’ve got enough recurring sales to help you get by.

Here’s what I’ve mapped out in the beginning:

  1. Customer onboarding — Once a customer makes payment on my website (I use ThriveCart), an email is sent to the customer to let them know what we need from them to get started. At the same time, a Google Drive folder is created for the new customer (I use Zapier to automate this). With their requests, our designers get to work immediately.
  2. Customer support— Our team’s project manager will respond to any email enquiries, questions and concerns that customers may have while the assigned designers are at work.
  3. Customer fulfilment — Once designers have completed each task, they hand off the work to the project manager and he or she will do quality checks on the task. If there’s anything not done as required, the work is returned to the designer to revise. Otherwise, the project manager delivers it to the customer.

These steps are repeated on a day-to-day basis.

Who to hire and when to hire

When starting out, I’ve made the mistake of doing all things from the technical work to delivery of the final designs for more than a year.

In my case, I didn’t have much savings and since there were tons of advice on the importance of cash-flow, I was afraid to spend on hiring designers.

Big mistake.

With little time set aside to do sales and marketing activities, the business couldn’t grow, which was counterintuitive to my purpose.

Based on the book, The E-myth, Michael E. Gerber mentioned one of the first things to do is as a business owner is to create your organizational chart even if you don’t have a single employee yet.

The purpose is to help you have a strategic view of what areas need to be filled up to get the job done or fulfill the customer’s wishes.

Here’s what I did:

Organizational Chart by MeetAnders

In my case, customer fulfilment requires technical work and delivery. This meant I should be hiring designers to work on them from day one. Hence, I highly recommend you to hire technical experts right from the start to deliver the work without taking away your time.

Price your offer with profit projections

You may be wondering, how I can provide a low cost unlimited graphic design service and still earn a profit. The answer is to work out the sums on paper first to generate projections for the year ahead of time.

In my case, having been working from home since 2005, I’ve always wanted to help millions do the same by working from anywhere.

If I wish to grow to that point, my pricing has to be affordable enough to attract as many customers as possible. Also it has to allow me to hire as many as I need to serve these customers and make a profit.

Just by working the numbers on paper first helps you be clear on the number of customers to acquire to earn the profit you need each month.

Here are the steps to deriving the price of your offer:

  1. Decide on the profit you’d like to earn — I suggest to set a 50% profit margin and adjust from there.
  2. Decide on how many people you’d like to serve — I’ve chosen to provide an affordable service to go for a bigger volume of the customer base, rather than charging a high price with a small customer base.
  3. Decide how many customers each designer can be assigned with — like freelancing model, each designer will have a batch of customers to serve every day.
  4. Compute the estimated cost of operation — anything that incurs costs to run your business. Such as internet, web and email hosting, hiring, automation tools, taxation, your salary, etc.
  5. Add any income from personal projects — there’s no need to throw out personal customized projects, I’ve used that to help fund your productized business during the early stages.
  6. Run your projections — use your costs, assumptions and profit margin to decide your pricing as seen in the following spreadsheet:
A sample estimated projection. Resource originated from 7-Day Startup by Dan Norris

Get started now

You’ve made it this far and just getting started.

It’s high time you ditch the do-er mentality and become a strategizer.

You are now ready to promote your spanking new box of services to those you have decided to serve, grow and scale your business.

Go find your first customers!

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