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40. Making Tough Decisions On Where To Take Your Business Next · The Life-First Solopreneur

• 0:00
  Carly Ries: And remember, when it comes to marketing, this is probably one part of your business that you're gonna be changing, revising, optimizing the most. It's always test, test, test until you see results and then test upon that. So you're never done.
• 0:12
  Intro: Bigger doesn't always mean better. Welcome to the 1 person business podcast where people who are flying solo in business come for specific tips and advice to find success as a company of 1. Here are your hosts, Joe Rando and Carly Ries.
• 0:32
  Carly Ries: Welcome to the 1 Person Business podcast. I'm one of your hosts, Carly Ries
• 0:36
  Joe Rando: And I'm Joe Rando.
• 0:38
  Carly Ries: we are back with another segment of the Solopreneur Success Cycle series. Oh, I thought I was going to mess that up and I didn't.
• 0:46
  Joe Rando: A lot of S's.
• 0:47
  Carly Ries: I know, I've been practicing. Last week, we discussed refining and reimagining your business. And today, we're going to build from that brainstorming session and discuss how to decide what to do next as it relates to your business. Now remember, you can listen to these as one off episodes, but we highly recommend listening to the full series to get the most out of it. And before this, this is actually episode 40, Joe.
• 1:09
  Wow. The episodes you would listen to for this series are 26 through 38, just the evens, the odds are interviews. So 26 through 38 evens are, parts of the series, so be sure to check it out. And Joe, I am ready to dive in if you are.
• 1:23
  Joe Rando: Absolutely. So now it's time to decide if you're gonna make any changes to your business and, if so, what you're gonna change. Because in the last deck, we talked about refining and or reimagining your business, and you came up with a whole list of ideas. And some of them, may or may not be good ideas. I think it's helpful to continue this conversation in the context of a real world example.
• 1:45
  Carly Ries: As long as it has nothing to do with the ferrets, we're good.
• 1:48
  Joe Rando: Okay. No no ferrets. Let's use something a little more mainstream.
• 1:52
  Carly Ries: Well, that sounds good.
• 1:53
  Joe Rando: Imagine a business that buys and sells used vinyl records online Started by a young woman who's is the parent of a young child. Let's call her Callie. And her company is called Vinyl Ventures. And I do wanna point out that where I come from, your name and her name are very similar. She's Callie
• 2:12
  And you'd be Callie. Callie and Cahhlie.
• 2:15
  Carly Ries: There we go. There we go.
• 2:18
  Joe Rando: So Vital Ventures sells used phonograph records on consignment. She takes possessions of the product but only pays the owner when they sell.
• 2:25
  Carly Ries: Okay.
• 2:26
  Joe Rando: You okay with that? Better than the That's good. Better than the ferrets?
• 2:28
  Carly Ries: Better than the ferrets. Thank you.
• 2:30
  Joe Rando: Could do pizza in a cup if you want.
• 2:32
  Carly Ries: Nope. Let's keep going.
• 2:34
  Joe Rando: All right. Well, Cali created a list of ideas to refine and reimagine her one person business. Hopefully you have 2. So now it's time to look at those ideas and decide what to actually do. Not all these ideas are good ones, and it's possible they won't play nice together.
• 2:50
  Carly Ries: Plus, there's only so much you can do at one time while still running the business, so keep that in mind.
• 2:55
  Joe Rando: Good point. So Cali's list of ideas are, 1, add turntables and tube amps to her product offering. 2, start selling new release vinyl in addition to the used products she's currently selling on consignment. 3, create a section of her website where people can review products. 4, move her website to a more robust platform where she can collect more data about her customers and automate processes.
• 3:20
  And 5, 1 on 1 equipment consultations for customers. So those are her 5 ideas for reimagining or, you know, refining her business. So before we do that, let's review a few terms about what we're talking about here so we don't lose people that were you know, born in, the 21st century. So, you know, vinyl records are the way all music was sold to cassette tapes came around the sixties. And even then it stayed dominant until CDs pretty much replaced them.
• 3:47
  And then they made a comeback a few years ago and actually outsold CDs because the sound of vinyl is unique and awesome. So records, these vinyl records are played on a turntable and the tube amps we're talking about use vacuum tubes to amplify the sound from the turntable. They sound different than modern amplifiers and some people prefer them. And the issue with the amplification is the harmonics. There are odd and even harmonics and even harmonics sound warm.
• 4:12
  And the odd harmonics
• 4:14
  Carly Ries: Joe, I'm gonna cut you off. You could talk about music all day every day. So as somebody that was born later in 20th century, it all makes sense.
• 4:25
  Joe Rando: Oh, Okay. Just wanted to be sure people wouldn't be going, why are people doing this?
• 4:29
  Carly Ries: Yes. So No. I love it. We'll have another music 101, podcast, I think, in the future that you can run with.
• 4:36
  Joe Rando: We can talk about tube guitar amps too, actually. That'd be fun.
• 4:39
  Carly Ries: There we go. Alright. Stay tuned.
• 4:41
  Joe Rando: So the first step here is you wanna review these against your your goals. Because regardless of how good they might be for the business, if they don't align with your goals, it's really not a good idea for you. Okay. So we're gonna start there.
• 4:58
  So as we do that, we're going to do each of these ideas that she has and compare them to each of her goals. And we're going to rate them on a scale, at least I like to do it, of 1 to 5. You know, you can do 1 to 10 or whatever. But on the scale is, you know, 1 is very harmful effect on the goal. 2 is harmful on the goal.
• 5:17
  3 is no impact either way. 4 is a positive effect on the goal, and 5 is a very positive effect on the goal. Right?
• 5:23
  Carly Ries: Yeah. And I would say look really hard at the ones and twos and just ask yourself, is the cost of the goal overcome by the idea's positive effect on the other goals? Consider that.
• 5:32
  Joe Rando: So for Cali's vinyl record business, her goals are to have the flexibility with her time to be a primary caregiver for her daughter. Her first goal and her most important one. 2nd is to make enough money to be worth her time. 3rd is to do something she really enjoys. And 4 is to help people who love vinyl find what they need.
• 5:52
  Does that sound good?
• 5:54
  Carly Ries: It does.
• 5:54
  Joe Rando: For Callie, adding turntables and tube amps, as well as new vinyl records, have no long term effect on her goal of having time for her daughter because she can drop ship them from the supplier. It's effectively affiliate marketing. So this gets a 3. No impact. But they have a positive impact on her goals of making enough money to be worth her time and doing something she really enjoys and helping people who love vinyl get what they need.
• 6:18
  So it gets fives in those gold departments. There'll be some work to set it up, but it won't cost her time later. She'll make more money, and she really loves the old technology because of the way it amplifies the harmonics and
• 6:28
  Carly Ries: And I'll just stop you there. So Joe did tell me to to keep tabs on it if he went down the music train too much, and so I am keeping tabs on that.
• 6:38
  so we will continue.
• 6:40
  Joe Rando: Caught myself that time. So, anyway, adding the review section is a bit more nuanced. Okay? It could cost her some time to check the reviews, you know, to comment on them and for spam and inappropriate posts. So that one's gonna get a 2 for the time with her daughter goal. Because she's gonna spend more time doing that. However, it does get a 4, a 3, and a 4 for the remaining goals, right? Because there probably isn't a great way to sell hardware without reviews, and it will definitely engage her customers more. So it's scoring pretty well in those other departments.
• 7:09
  So she's going to keep this one in spite of the 2 score on the first goal. Moving on to a more robust platform for her website is a no brainer. It'll save her time by allowing her to automate processes that are currently manual.
• 7:22
  Carly Ries: And she could use this found time to manage the review section and answer questions about equipment and all that.
• 7:27
  Joe Rando: Yeah. So she's kinda net 0 on that. So that's that's good. And the last idea is doing 1 on 1 consultations for equipment, but it has such a large negative effect on the time with her daughter that she gives it a one and just cans the idea right there.
• 7:41
  Carly Ries: Oh, that's that's smart. I guess anytime you see a one, you have to think hard whether the benefits outweigh the costs.
• 7:48
  Joe Rando: So we've evaluated 5 ideas in the context of goals, and we've kept 4 of them, and we've gotten rid of 1. Now the next step is to take the remaining ideas and vet them with experts and customers. So, you know, every step of this process, you should consider whether you should talk to an expert in that particular area or some network of people you trust or your customers. As you consider these ideas and feedback from customers, accountants, tax planning professionals, lawyers, and anybody else, it can be very, very valuable in really deciding whether the idea has has legs and really should be pursued.
• 8:21
  Carly Ries: Also, if you know anyone who is doing what you are thinking about doing and won't be directly hurt by your competition, reach out to them even if you don't know them very well. Most people really like to help.
• 8:30
  Joe Rando: I like to help. Anyway, now we've got these these ideas. Maybe you've you've vetted you've vetted some. You may vet more later. But So the question then is, what are the implications at a large kind of 50,000 foot view?
• 8:44
  What are the implications of these ideas on your business? Start there and then we'll go into the details. You know, they may impact some aspects of your business. For Cali, the big picture is that she's gonna need to expand her content to talk about equipment as well as vinyl. So that's a change for her.
• 8:59
  She also must commit, to a minimum quarterly sales level to the equipment distributor. And that has implications for a business that we'll explore later. But she's basically guaranteeing them a certain amount of revenue every quarter.
• 9:12
  Carly Ries: And this whole process can be very specific to your business and to the changes you're considering, but we can try to give some general guidance as to how to go about it and some examples using KALI. So just take all of that with a a grain of salt.
• 9:25
  Joe Rando: Yeah. We just wanna show the thought process here because that's the best we can do for you. So starting with the strategic impacts, big picture but a little more, you know, the 5,000 foot view here. You know, how is it going to impact your strategy? So is your competition going to be different?
• 9:41
  Right? If it is, you're going to think about what this means. Cali's not gonna be competing with other companies that sell hardware related to vinyl.
• 9:47
  Carly Ries: And she'll definitely need to look at how her pricing compares.
• 9:50
  Joe Rando: Yeah. Very good point. Because if she's if she's not priced right, she's not gonna get any traction. Market positioning, my favorite topic. Right?
• 9:57
  She has positioned vinyl ventures as a place for vinyl lovers to get records. She now needs to expand that from records to equipment. This isn't a huge stretch. And a large portion of her customer base is likely into equipment as well. So not a real big change in market positioning, but something she definitely needs to consider.
• 10:14
  And her messaging has been very centered around being the place for levels of vinyl records. And again, doesn't need to drastically change, but she needs to refine it to reflect the addition of the equipment as well as the new vinyl products as opposed to the classic used records. Next, we can talk about legal and financial issues. I'm going to go through these. Some of these, you know, don't usually change a lot, but some of them do.
• 10:37
  So let's just run down real quick. So the legal structure, not likely to be something you're gonna change unless you're considering or preparing to sell your business. Then you should consider changing it to a Delaware C Corp because that's the preferred structure for most acquiring companies. They know how to deal with Delaware C Corps. The lawyers are all trained in Delaware C Corps and everything else is complicated.
• 10:58
  So it depends on, you know, if you're trying to sell it to your brother-in-law, not so much. If Google's going to buy it, you definitely want to look at that. Permits. What are the permits are you going to need for your changes? It's going to be anything that's going to change.
• 11:12
  If so, how much are they gonna cost? How long are they gonna take to get? Something to think about. Are your banking needs gonna be impacted? For example, if you decided to start taking credit cards, you're gonna need a merchant account with a bank or some other company so you can actually, you know, build people's credit cards.
• 11:27
  Bookkeeping and accounting, will your changes impact your bookkeeping and accounting needs? Cali is not changing except for booking the quarterly commitments to the equipment distributor. So that's a little change for her. She's gonna need to discuss with her accountant. Important one that I always forget about and I could tell you some horror stories, not too bad, but very important to think about, are your insurance needs going to change, right?
• 11:49
  If Callie were taking possession of the equipment, she'd need to up her insurance limits for inventory. But she's drop shipping so it doesn't she doesn't need to. But if you have something that's gonna change the value of what you are responsible for or what you own or what you owe other people for things that you have possessions of. Think really hard about it and talk to your insurance professional because there can be some really, really sad endings when people don't insure properly. Accounts receivable.
• 12:15
  How is your accounts receivable going to be impacted by your changes? That can be a big deal. Callie's not gonna see a change because she charges the credit card upon the sale. So good for her. And then tax planning.
• 12:26
  Are there any potential impacts on your taxes or opportunities for tax savings? Kelly's gonna see more income from these changes, we hope, so she should talk to her tax adviser about that and anything that she should think about. And the most important one, in my book is how is your working capital going to be affected? For Cali, she's now got minimum quarterly guarantees to the distributor of the equipment that she's selling.
• 12:49
  And she expects to miss her numbers the 1st few quarters. So she's gonna have to pay more than she actually should to make that minimum payment. But she expects to make it up in the second two quarters And since the commitment overall is based on the full year, she'll wind up selling more than she needs to overall. But she's still going to have to have enough cash to pay the shortfall in the beginning of the first half of the year.
• 13:12
  So, you know, just these kinds of things need to be thought through. And if you're planning to grow really quickly, again, think about maybe getting some kind of a revolving credit line from the bank or something because these things can sneak up on you and be really ugly. Going on to business operations, let's take a look there. Are you changing what you're doing as a business? I'd say this is a no for Cali.
• 13:34
  It's usually a no. But if you do it a full pivot, you know, lots of things are gonna be impacted by that. I think that's beyond the scope of this conversation. Maybe you wanna go back to the first unit of the solopreneur success cycle and start over. Business models.
• 13:47
  Is your business model changing? Right? Is there something new about your business model? Callie's isn't. But again, if she were taking delivery of that equipment, then you might consider that she was because she'd need to buy the equipment and then sell it, which would mean carrying the inventory, which has associated costs and risks and yada yada.
• 14:04
  Think about the growing revenue and profit. Is it going to be, a big change in your revenue or hopefully a big change in your profit? And for Cali, it's, you know, hopefully and most definitely. What about managing your time? Are you going to make any changes to how you're managing your time now, right?
• 14:18
  Callie is going to be spending less time dealing with routine customer interactions because of the workflow automation of her new platform. She's going to spend more time on the review section monitoring and responding, right? So there's a change in her time commitment. You want to build that into your thinking. Any outsourcing, right?
• 14:34
  Will you be outsourcing any of the jobs you do? This is a really common one for people making changes to their business when they're growing. It's pretty kind of, you know, depends on what you're doing and what you need to outsource. But Cali's not looking to do that right now. But if you're gonna do that, obviously, you're gonna have to think through how you're gonna do that and get specific.
• 14:52
  Now, next we really need to, now that we've decided if we're changing our messaging or changed our business model and all these things and what we're doing, we need to revisit and look at marketing and sales. And I'm gonna turn it over to the expert on that one, Carly.
• 15:05
  Carly Ries: Yeah. And I will keep it brief because, like we said, we will dive into each of these in further episodes, but I really wanna circle back to your brainstorming session from last week. And remember, when it comes to marketing, this is probably one part of your business that you're gonna be changing, revising, optimizing the most just based off the results. So you're never done. So it's always test, test, test until you see results and then test upon that.
• 15:29
  So go with your analytics, go with your gut feeling sometimes even. Sometimes your gut feeling with marketing can be a good one, even though everything is so data oriented these days. You may also find at this point, like Joe was saying, you may need to bring on contractors, and that's okay. Maybe you need to contract a social media coordinator, and I don't mean employees, I mean freelancers, other contractors that could help in the marketing efforts that you are not comfortable pursuing on your own. And maybe you need software upgrades, maybe you need new tools.
• 15:56
  Think of the the items in your brainstorming list and see what you need at this point to get that done and figure out a way both strategically and financially to do so. And actually, Joe, speaking of financially, do you want to piggyback on the sales side?
• 16:09
  Joe Rando: Sure. Well, again, when we think in terms of sales, you know, Cali should be expecting to do a little more email based hand holding for equipment buyers. Right? The price point's really different. These these tube amps, these turntables can cost 100 and 1,000 of dollars.
• 16:25
  And, you know, used vinyl records, I guess, some collector's editions might be that high. But for the most part, you're talking about, you know, tens of dollars, maybe 100. So there could be a very, very different level of, interaction. Her plan is that she get once the review page gets populated, that she can use that to mitigate this a little bit. But she needs to develop some messaging around the equipment that she can reuse.
• 16:48
  Right? So she's not reinventing email content. Every time she deals with a customer's question about a particular piece of equipment, she's got that kind of ready to go. So that's something she needs to do to efficiently manage and close sales in this new business model that she's using. Now let's look at, the way that you're organizing your business.
• 17:07
  Are there changes to your operating processes that need to be thought through and documented? We kind of noodled on that a little bit earlier. But, you know, if your business is changing, your business processes are likely changing. And you do want to make sure that you think about that a little bit and make sure that there's nothing that you need to do or to schedule in on a regular basis to run your new business. So we've kind of walked through all the different aspects that at least, you know, we can think of to talk about.
• 17:34
  And now the question is, are there any showstoppers? Is there anything here that's gonna stop you from being successful moving forward? I mean, obviously, anytime you make changes, there's risk. But is there anything here where you can just look and say, I can't do this? Is it you know, it comes usually in the the form of working capital needs or time constraints.
• 17:52
  Those are the most common. Right? But they can come from anywhere. So look carefully and ask yourself a question. The question, is there anything I'm changing here that that might cause me to not be able to handle it?
• 18:03
  So once we're here and once you've got these ideas, the remaining ideas, the ones that survived the cut here, now it's time to commit to your decisions. So you basically said, this is what I'm gonna do.
• 18:13
  Carly Ries: Yeah. And definitely write these down so that you can track your progress and just keep them in the forefront of your mind. And you've decided on these, so now you just have to make it happen.
• 18:22
  Joe Rando: Like we said in the Refinery Imagine, the last step in the solopreneur success cycle that we covered last week, you won't get through this process by listening to the podcast in your car. It requires focus.
• 18:32
  Carly Ries: Yeah. So just sit down with your computer, pen, and paper, and go through this process carefully. It may come to you quickly. It may not. Either way is okay, and just get it done.
• 18:42
  So, Joe, I actually think that is all we have for today, and this is great stuff that you put together. And listeners, thank you so much for meeting
• 18:48
  Joe Rando: One thing, Carly, before we wrap up, we should probably let people know that there's a place for them to go if they if they're going through this and they're stuck or they wanna ask questions, that we have the community that they can go to and and ask either other solopreneurs or experts questions.
• 19:04
  Carly Ries: And even us, we answer questions.
• 19:06
  Joe Rando: And us. We're there. I'm there. I love it.
• 19:10
  Sorry to interrupt. I just wanted to get that thrown in there.
• 19:13
  Carly Ries: I'm glad you said that. And that's at community.lifestarr.com. And we would love to see you there. Okay. And for real this time.
• 19:21
  If you want to listen to other episodes in this series or guest interviews, be sure to visit us at lifestarr.com/podcast or you can find us anywhere you listen to your shows and we will see you next week. You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a one person business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one person business community where you can go to meet and get advice from other solopreneurs.
• 19:55
  Be sure to join in on the conversations at community.lifestarr.com. That's community.lifestarr.com