Erin Austin: Hello, ladies.
Welcome to the Hourly to Exit podcast.
if you're wondering about the title to this episode.
When I was looking for the title, I googled the term journaling for dollars.
What I was looking for was actually there's this old saying, It's doing
something for dollars, which at the time alluded me, and by the way, still does.
I think it's digging for dollars, but I never did find out what I was looking for.
Instead, a lot of Etsy shop money journals popped up with titles like
Money Mindset Journal and Money Affirmation Journal, money Abundance.
Money manifestation journal and many more.
There were pages of them, but they all had similar promises.
Something like, are you ready to manifest abundance and attract
financial prosperity into your life?
Our digital journal is designed to help you do just that through powerful
affirmations and visual techniques.
Now, that was not what I was looking for, but sometimes you get what you
need, which was confirmation that journaling as a way to achieve not
just your personal goals, but goals for your business, is the way to.
So today we're gonna talk about IP journals.
So this episode is inspired by an amazing conversation I have with
a woman who keeps an IP journal.
Now, I wish I remembered exactly what she called it.
She might have called it an IP journal, but that's what we're
gonna call it cuz I like that.
Anyway, so she is extremely prolific.
She writes every day.
for her business, for publication, for creating new ideas.
And so she realized that she needed a process for cataloging
all of her creations and her ideas.
So what she does is that at the end of each workday, her shutdown
habit is to make a record of all the work she created that day.
And she puts it in her database, you tool of choice.
I don't remember which one she uses, but this is so.
Brilliant.
by using an IP journal, you keep a running inventory and she's keeping a
running inventory of her work, which is consistent with her business goal.
And her goal is to make sure that her business is ready to sell.
When she's ready to exit.
Yes.
That's why we have the conversation.
So she is setting up her business for success in all
stages of the hourly to exit.
Now I hope you have a copy of the Hourly to Exit Journey Self-Assessment.
If you don't have it, you can get one.
We'll link to that in the show notes, or you can find it, on
the website, think Beyond So the hourly to exit self-assessment
tracks the characteristics.
Your business at each of the four stages of building a business that is saleable.
And if you don't know that, it's between saleable and sellable.
Also, check out my website.
I have lots of conversations about that there as well.
So to create a saleable business, there are four steps on the way to, building
a business that you can sell someday.
The first step is unsustainable.
Then sustainable, then scalable, and then finally saleable.
So let's look at how IP journaling can help you move along this journey.
First, unsustainable A business is unsustainable if it is not supported with
basic assets and is insufficiently funded.
The telltale sign that your business is unsustainable, if the only way you can
make more money is to work more hours.
The freelance model is almost always in this category.
When you're freelancer, a hundred percent of the output is owned by the client.
There are no assets in the business except hopefully a bank account,
which sadly, some people don't even have separate bank accounts.
When are freelancers with no assets, there is nothing to journal about.
When you're at the sustainable stage, a sustainable business means the
business can maintain its viability by using tools and techniques that
allow for continual reuse or resources.
Progressing to a sustainable level requires a development
of one basic assets.
This means things like templates and checklists.
Two exclusivity here.
You're starting to articulate your expertise and your niche.
You're not just a generalist who does everything for everybody.
Stability.
That means you're taking your business seriously.
You're using contracts and you have insurance.
So an IP journal is the perfect starting point for building sustainability.
When you're using your IP journal, you're documenting your processes
for efficient, predictable delivery.
You're recognizing patterns that lead to deeper expertise.
You're identifying when a contract is needed for assets that you
haven't created personally.
And that is, by the way, anything that you haven't created personally,
there should be a contract attached to that making note of anything
that is owned by third parties.
And another absolute is anything you get off the internet is pretty much.
owned by somebody else.
And so you wanna make note of those things as well.
All these things go into your IP journal.
So I love this excerpt from Blair Ends.
Wonderful book, the Winning Without Pitching Manifesto, which
I encourage all of you to read.
So it really illustrates the power of an IP journal in this
chapter called Formalizing How We Work, and it goes like this.
One can reasonably assume that over time through trial and error, we will
happen upon an efficient approach that allows us to deliver at quality
and speed with consistency in almost any of our repeated endeavors.
It is the strength of our processes that drives the consistency of our outcomes.
If we want to build deep expertise, we must take pains to document how
we work, to define how we will work in the future, and to continuously
refine and improve our approach.
Working from a defined process leads to the very consistency of quality
that a potential client tries to discern late in the buying cycle.
When our role is to reassure nothing, reassures a client more than him
drawing the powerful inference, that little variability in process equals
little variability in outcomes.
Every one of the firms he's considering can demonstrate an ability great work.
But the question he once answered before he buys is, how do I know
I'm going to get their best work?
When we are able to demonstrate strong processes, the client can decide for
himself the implication of our processes and the consistency of our quality.
So in some, when we are using IP journals to help us create our systems and our
processes to create a more consistent outcome, to build deeper expertise.
These are the things that help reduce the risk in the eye of the buyer.
And we are small business solopreneurs or small entrepreneurs.
reducing risk is an essential part of making that sale.
And so that helps us create that sustainable business, by using our IP
journals to help us document how we work.
The next level is scalable.
A scalable business means the business is a stable, profitable
business that is providing predictable results for its clients.
The key to scale is figuring out how to decouple your income from your time.
In other words, we find leverage opportunities where the output is
greater than your input, and we know.
That's what a lever is.
A lever magnifies our effort.
So we give effort of X and we get a force of, two times x, And so we add leverage to
our businesses through a number of ways.
One, Through building a team that does not have to mean employees, that can
also mean independent contractors.
A lot of us start building a team by using virtual assistance,
and so we can focus on.
product development and client relations and delivery.
Another key place for a lot of people will, add to their
team is a bookkeeper as well.
number two, exclusivity.
We aren't just articulating our expertise, we are becoming the recognized expert.
We are consistently publishing, and so it's not just our clients.
Appreciate our expertise, but we are getting, recognized
within our niche as an expert.
And number three, stability.
And we do that by using repeatable, trainable processes for our services
delivery and our operations.
So I have a handout called, is there a Rembrandt in Your Attic?
You can get that on my website where I talk about a few leverage Strateg.
That really make sense in our expertise based business.
And there are, I see seven of 'em here.
First delegation.
So here you use employees who are less expensive than you because
you are the most expensive asset in your business to deliver services.
So there may be some part of, maybe onboarding or, maybe you're creating,
some sort of graphic deliverables or things like that that you can
use a less expensive employee to help you deliver the service.
automation here using technology to aid delivery.
a lot of people use automation as part of the onboarding process to make sure,
clients get their agreements and they have a way to pay and that they do whatever,
questionnaires that need to be filled out.
So automation.
Productization, customized services, very valuable, but there is a place for
that productized service that can be sold and delivered very efficiently.
Licensing, you know, I love to talk about licensing.
Here you create an IP asset that can then be licensed to multiple parties.
So you put in that effort at the front end to create the asset, and
then the lever of licensing is that it can then be exploited by multiple
parties teaching and or certification.
Here, you're teaching other professionals to use your methodology
to create, outcomes for their clients.
outsourcing and, I distinguish this from delegation.
I look at delegation as using employees, so that's internal versus outsourcing,
which is using outside sources, such as subcontractors to deliver part
of your service and subscriptions.
Oh, there's actually eight subscriptions, which.
know, selling subscriptions to your asset.
Maybe you have a database, maybe you have some research that you've
developed and that it would be of value to other people, and that you
can sell subscriptions to that asset.
And then the last one I have is selling access to your community.
So if you have a very robust community, especially one that would.
Valuable for a third party to have access to.
You can sell access to it.
I mean, the most, popular way people do that is through ad ads, but you
don't wanna sell ads to your community.
But things like, providing access to market researchers,
could be of value as well.
So that brings us to the final leg of the hourly to exit journey.
Becoming saleable.
So to be saleable, your business needs one revenue visibility.
And so here, before we're talking about your clients, now
we're talking about your buyer.
When we're talking about sales, we're talking about sellers and buyers.
So for your buyer to be interested in your business, they need revenue visibility.
They need to be able to see that your financial projections make sense.
you can say like, I think it's going to earn 1 million, 2
million, 3 million, dollars in the future, or it's going to grow.
This is the curve it's going to grow in.
But revenue visibility means that there's something that supports that projection
and, that they can feel comfortable.
with it Exclusivity is the second one, which, intellectual property development,
intellectual property is a legal monopoly.
Doesn't get any more exclusive than a monopoly, so the only way anyone
else can use your intellectual property is with your permission.
And the other way you can get exclusivity is having an authority level positioning.
That means you are at the top of the hill regarding whatever your niche or,
your specialization is, that you are at the top of that heap and therefore,
you have that exclusive positioning.
And then third, the ability to withstand due diligence.
can you support your revenue visibility or I should say, your projections?
Can you support your positioning and your intellectual property status and
so, while the IP journal is important through of the stages, of your development
from sustainability to scalability, to scalability, it is particularly
important in this due diligence stage.
So for our purposes, due diligence means an investigation or audit
of an acquisition target, which is undertaken by the prospective buyer.
And the objective is to confirm the accuracy of the seller's
information and appraise its value.
So remember that a buyer is purchasing the future of your business, so it needs to be
confident that your business will continue to flourish in its hands, so it doesn't
wanna buy you and suddenly, employees jump ship and all the customers jump ship.
It needs to know that it's the future of your business is solid,
and that's what they're looking for in that due diligence process.
So they're confirming that the financial projections are supported by the assets
and the other structures and the business.
gonna talk about seven areas that are typically audited
during the due diligence process.
Financial due diligence, which of course investigates the
accuracy of the financial records.
Human resources due diligence.
This focuses on understanding the organizational structure, the compensation
and benefits, and any possible violations.
You know, of particular importance these days is making sure that, you're not
treating employees like contractors.
So if, they really should be appropriately categorized as
employees, then we have a problem.
If you're, you're paying them like contractors.
Or treating 'em like contractors, operational due diligence, which,
evaluates, technology, assets, facilities, assuming those things
are important in your business.
business due diligence, which seems broad, but it's really about the
industry that you're in and your customers, so they can look at any
risks associated with, the industry.
What's happening in the industry.
Is it a dying industry?
And looking at your customers Also, are you serving a customer
base that's a dying customer base.
So they're gonna look at any of those risks there.
Strategy.
Due diligence.
So will it fit in what they hope to achieve?
What are their goals and objectives, and how does your
business fit into achieving them?
What are the potential synergies?
How will they merge together?
What does that look like?
And.
Legal due diligence, which is what most people think of, I think.
And so that is to make sure that you are legally compliant and they wanna
discover any potential legal issues.
Nobody wants to buy a lawsuit.
So in a world where IP is currency and the most valuable asset in your
business is an intellectual property, it should be of no surprise that IP
will be a factor in every one of.
those six due diligence areas.
So, your IP audit identifies what IP you own and what you use
determines your usefulness or, it's important to your business.
Is your IP enforceable?
Does it conflict with any third party rights?
And then these things will all funnel down into an IP valu.
Now I wanna clarify that an IP audit is not just a legal due diligence issue.
It's not just about contracts and whether or not your copyrights are registered
or even your trademarks are registered.
It is a holistic evaluation of your company.
Is there a culture of protecting and maximizing the value of
an intellectual property?
So another benefit of your IP journal, it gives you a greater understanding
of the assets in your business and it, even the relative value of those
assets, assuming they're all IP assets, they're be relative value of them.
So you can make sure that you.
Are appropriately allocating resources to them.
you wanna, allocate more resources to protecting, maybe a database
or a client list than you do to protecting your trademark, which at
the end of the day, you know, unless you're FedEx or Coca-Cola, there's
always gonna be another trademark.
I hate to say that, but.
but the things that you've developed specifically that are providing value
to your clients, those are the most valuable assets in your business.
So buyers are looking at your business from a top-down approach, how you're
protecting those assets, what kind of corporate policies you have, how are you
training your, employees about, using technology not using unlicensed software.
How are you handling copyrighted materials?
Are you using contracts?
What is your social media usage?
things like reputation is a very valuable intangible asset.
And of course you don't want to do things that can lead to data breaches.
That's why all these things are so important.
So it may sound a little bit complicated, but it can start
simply with an IP journal.
, and like a balanced checkbook, IP due diligence is easiest to do if
you do it while it's happening.
So it's, like, putting in your $25 into your investment account and the, interest
grows and it grows over the years.
So, doing your IP due diligence, creating your IP journal every day, you are.
Developing that asset that will grow with your business and will
help you grow your business.
Since you are going to increasingly rely on intellectual property, all
those leverage strategies we talked about earlier, including delegation and
outsourcing, licensing, certification, all of those, those require ip, It's very hard
to delegate when you have no processes.
It's very hard to outsource if you're not appropriately using contracts,
which will control the ownership of your intellectual property.
All these things.
when you're growing your business, you need to have that solid IP foundation.
In order to have a growth strategy that is based on IP and where
you're an expert, your growth will be based on intellectual property.
And so I like to use the analogy of a house.
And so growing your business is like adding another floor to your house.
So the foundation that was good enough for your first floor may not be strong
enough to hold your second floor.
So even if you haven't been using it in an IP journal to date,
perhaps this is the first thing I've ever heard of an IP journal.
you haven't.
It's okay because we start today, to make sure that as we're building
our businesses, that we're growing our foundation along with it.
So if you are, teaching others to do what you do, or you're creating some sort
of, d i y product for your clients, what happens when you find out that someone
took your class and now they're selling your materials for their own profit?
Or worse, someone has a lawyer and they send you a seasoned assist claiming that
your IP is actually theirs demanding an accounting and a share in your income.
Preventing you from doing any other work with it until the matter is sorted out.
These things happen all the time.
unfortunately there are very few original ideas and everyone thinks
their idea is original and then they see somebody else doing it.
I don't, I can't even account the number of times people
think, oh, that was my idea.
so you wanna make sure you can protect yourself by whipping out your IP
journal to demonstrate its origin.
Now do not discount the value of registration.
Registration is important, but most of us are not registering.
All the IP we create, we're creating IP all day every day.
You've heard me say it a million times.
IP is everywhere.
So that IP Journal provides the backup for the material that we don't register.
The goal of your IP journaling practice.
Actually pretty simple.
It's to document all asset creation . Who
when what and how Every day catalog the new content you create tracking.
When it was created, who created it, what source materials, if any, were used.
If you didn't create it, review the applicable contracts to make sure that
you own or control the rights that you need to use the deliverables in all of
the manners you can foresee, you know, and even some manners that you can foresee.
You don't wanna incorporate some third party materials in your book
that then limits you from, you know, it's going to expire someday.
Or you wanna use it in some sort of training materials
and you can't use it in that.
So you wanna make sure that if you're using third party materials, that your
rights to use them are sufficiently broad.
There are terms in contracts and in licenses, know, non-exclusive
license work made for hire.
they're kind of scary, but they're not rocket science.
I like to say the law is not rocket science.
Let's be happy for that.
and it's key to understanding these rights to make sure you understand that you
have what you need to grow your business.
And so whenever you're incorporating source materials that are owned by
a third party, read the fine print.
Cuz I will tell you that virtually every license agreement will
have some restrictions in it that you need to comply with.
So The challenge here is to maintain records of your ownership and other
rights to use IP that flows through your company so that you can protect
yourself as you scale your business and prepare it for an eventual sale.
So I hope this episode has you thinking about.
Something that you can do today to help prepare your business to scale.
hint, IP Journal.
And as we move through 2023, I will be raising additional
topics for your consideration.
But don't forget, always consult with an attorney about your specific situation.
So if you think you have reached a point in your hour lead to exit
journey where you wanna grow your business with ip, you can contact me.
Let's find out more.
Cheers.