Hello, I'm Samantha Hartley of the Profitable Joyful Consulting podcast and I want to welcome you back to this episode, which is how to create a business model for your consulting business. I have been getting the best feedback and having the most interesting chat and messenger conversation with people who've been listening to the podcast and I've been really delighted to engage on these topics like perfect clients and how to market your business in ways that feels ok and that grows and just talking about the challenges that we're facing, especially now as consultants and that has been a real delight for me and to receive your feedback about the podcast. So I would love to hear from you if you want to leave a comment on the YouTube video or send me a message through messenger or on LinkedIn anywhere and I would love it if you would leave a review on your favorite podcast provider.

Today, I'm going to be talking about the business model and one of the interesting quotes that came along in my research for this topic. Years ago, I had a buddy who said to me that he had a Sam Walton quote, and I shared that Sam Walton quote over the years since I've taught this material and have had people come back to me and say, we're looking for attribution of that, what book of his did that come from? And I said I don't know. So I went back to my friend Ted, and I said, Ted, where does Sam Walton quote come from? And he said it came from my notes at the University of Arkansas when he spoke there, and I was like wow, that's pretty amazing. We have a like straight from the horse's mouth that you can't find it anywhere else quote.

So, Sam Walton said, "if you have four, you'll never be poor" and four refers to revenue streams. If you have four, you'll never be poor. Now today, I'm going to talk about four kinds of revenue streams that you can put together in your business but just keep in mind, there should be a lot of ways for people to pay you to help them that's basically what never be poor means, make it easy for people to pay you money and get your services. A business model describes all the ways your business makes money and revenue streams refer to the products or services that you provide to your audience and so we want to be kind of creative. Today, I'm not talking about so much about specifics as about the types of revenue that I want you to create and I do this again because we're in a time when we need to get creative about serving people because some of the things we've been doing might not be working anymore and so there are other opportunities out there.

The other thing that happens is a lot of times when consultants are in their first few years of business, they're doing a lot of what I'm going to share with you, the first kind of revenue is active revenue. They're doing a lot of working one to one and in-person delivery. They're giving a lot of trading time for dollars and that can be exhausting and when I have talked in the past, I remember telling someone, you know, let's talk about maybe diversifying the store, you're not always doing one on one. One of them said, oh, I really love working, I want to have a ton of appointments, I want to have a ton of clients and a ton of appointments, and I said ok, yes, but there's going to come a time when you're not going to want that and so let's prepare for that time you want to be thinking about not just this one on one time, which is and should be if you're doing it right. It should be among the most expensive ways to work with you. You can make yourself available and accessible to others through other kinds of revenue streams. So let's just go broadly through what those are, I'll keep it concise today and then in future episodes, we can expand upon what those are. If you need to know more specifically about that and urgently feel free to get in touch with me. So the four kinds of revenue streams, the first one, as I mentioned is Active. Active revenue comes to you, you're being paid money for the time you spent, so this is consulting, coaching, working with your clients. It might be speaking, whatever it is, where your time that you are giving in real-time is compensated with money and so Active is great way a lot of us love that, you know if you like the intimacy and that connection of working one on one with your clients, then this is a good one for you. It's also where most consultants and coaches start and so it makes the most sense for us to just name this, this is a client of revenue that we have.

As I said, you can get to a burnout stage, which is what I'm always trying to avoid and also, you hit a ceiling in what you can earn from active revenue even if you're charging a hundred, million, zillion dollars per hour. There's only so many hours, so many hours in a week or a month that you're going to want to work. So let's figure out if there are other ways that you can supplement this active revenue stream, the single active revenue stream, or you might have multiple active revenue streams. You might do consulting and you might do speaking, for example, but let's just see if we can find other ones that you can add. So, the second revenue stream is leveraged. Leveraged revenue is when you are working, not one to one, but one too many. So it means you are maximizing the time that you spend by either working with numerous people. You also might work with through your team, for example, you might work with groups, so that again the combination of you working through your team and working with groups, the time that you're spending and the number of people you're impacting, the value that you are delivering, and the value they're receiving is magnified and that's why you can earn more for your time that way.

Another way that you can earn more for the time you're putting in is by codifying the work that you do. So a lot of times people will come to me and I know that when they're working with clients, they're basically doing they're kind of making it up as they get along, they're kind of reacting in a moment and what I've told them is you're following a process, whether you know it or not, there's like a process inside your head or your intuitive, your kind of gut reaction to it and that's for the ones who don't already know that they have a process. So what I've had them do is to pull out of themselves a signature approach, a proprietary system, getting this whole process, this intellectual property out of their head and on to a paper first,, right? Once you have your approach on paper many things happen. First of all, you can save time and work more efficiently with your signature approach, you are just following it yourself, it's like a recipe that you followed. The second thing that can happen is that you can bring in team members and they can follow that approach. If you can teach it, they can follow it and that way you don't have to be tied to delivery all the time, other people can come in and deliver it. Here's a great thing that can also happen is, you can get back to the client and teach the clients how to follow that. This is where a lot of knowledge transfer happens, as you are giving them this system and whether you give that to them on paper or in principle or if you actually create like an e-learning system. That's one of my favorite ways to work and one of my favorite things to do with an e-learning system isn't necessarily to sell it in retail to many people to do a home study, although you can do that. So I give my clients this e-learning and what they're able to do is on their own study it and then when I come in for meetings with them, we actively engage about it and the learning sticks better. So a much more effective way to work with them, I'm giving them a lot more value for the time, it's not just my time I'm giving them, I am giving them I.P. plus the time and they're able to learn more on their own, take more responsibility for their own learning and things like that. So I really love using e-learning and other kinds of technology to leverage my client's capacity and that's a good way for you to be able to scale your business if you've ever wondered like I can't get to where I want to be from here because I've worked all the hours I can possibly work, these kinds of things using leverage in your business is what's going to be able to help you get there.

And the third revenue stream is Passive revenue. Now, this is everyone's favorite. We all love the idea of making money while we sleep. There are really good ways that you can add passive revenue to your business, like actual realistic ways to do this. In the first one it’s with a book. There are many good reasons to have a book in your business, you know, credibility, publishing your expertise, getting the word out about you, things like that. It's also a good moneymaker and it sells on its own and that creates Passive revenue. Now, I've heard from many authors that that was not their experience of having a book, that it didn't actually make any money for them at all. I understand that there's a lot of ways to make money from it and whether you sell it for seven dollars or seventy dollars as a Kindle book or as an eBook on your Website, there are all kinds of ways to do it but a book will provide Passive revenue. You might not be able to sustain yourself on it but it is a passive, officially a passive revenue source. Other things that you can sell, home study programs, e-learnings, and things like that. Anything that you can sell in the background while you are running your business. I did have a program. It's a home study program that one year I basically toured New England and agility shows with my dog while I was selling and my work was basically my adventures were basically funded by this program that I had a self-study program, I had Facebook ads that led to an automated webinar that automatically enrolled them into the system, and that did well enough for me but I was able to spend a year doing agility on it. So keep in mind that you can create a program that will bring in sufficient revenue for it to really justify itself, justify the work that you put into that.

And then another passive revenue stream that you can create that I think is really realistic for consultants is commissions, referral revenue. Very often you'll have a circle of peers as I do and we refer business to each other. So I refer things that aren't necessarily fit for me or things that I don't do to other professionals and the referral fees on that can be usually there about 10 percent of whatever someone is charging and that can be thousands of dollars and referral commissions and I'm happy to do that, obviously, because I want to support my friends and I want to help other people who I can't necessarily help. So I definitely encourage you to set up strategic alliances. We've talked about those before and then referral agreements with them. You can also refer to technology. So anything from the software you used, your CRM, things like that. So just keep in mind that those revenue streams are passive and if you build up enough of them, then it can be, you know, a nice chunk of change each month.

Speaking of each month, all of the kinds of revenue I've described, active, leveraged, and passive can all be also recurring and recurring revenue is really great because the intention of it is to take out the peaks and valleys in your business. One of the reasons that my clients have done well during the pandemic has been that I do, and I teach them to set up recurring revenues, retainer payments in their work with clients. So recurring active revenue are going to be retainer engagements. You can also set up programs of a specific duration that have ongoing payments with them. They can be a specific duration that can be ongoing but either way, those are predictable recurring payments that come in, and that can create a lot of peace of mind in your business. Can anything go wrong and be some sort of force majeure or whatever? Yes, of course, there can be but if you set up your business this way in the beginning, then at least you have intentionally created a business which smooths out the peaks and valleys and makes things easier for you.

The leverage recurring revenue programs can be things like group coaching or webinar series that you do so workshops. Those can create, you know, those done with payment plans can offer leveraged recurring revenue and then passive recurring revenue. The program that I talked about setting up where I didn't do anything except for ran ads to it and by the way, put hours of work to create that program in the first place and set up the ads and do everything with the marketing for it but once it was set up, that was automatically enrolled in. So that was Passive recurring revenue. It was money that I made while I was on the road while I was sleeping and that was very gratifying. So that's passive recurring, other kinds of passive recurring are those subscription programs because many of them don't pay just a one-time payment, they pay ongoingly and I want to give you just one example of the way I've set up referral commissions. Some people say that if someone refers someone to you, just pay them a lump payment for that referral, but very often my clients because my programs are expensive, they'll pay in monthly installments and if they're paying in those monthly installments, I'd rather not do a lump sum payment for a couple of reasons. It's incredibly unlikely that a default will happen but in case it ever did, I don't have to claw back that money but the other thing is that I love to stay top of mind with my referral partners, and I want them to know I thank you and the next month, I thank you and I'm grateful for you every single month when they see that cheque come in from me, they'll think, oh, great, that was that one referral that I made months ago and here it is still earning for me and that keeps them top of mind it keeps them interested in referring, I believe.

So that's a way to create passive recurring revenue that is pretty realistic for a consulting business because that's probably something that you are able to set up with those referral partners. So we've talked about the kinds of revenue and then we've talked about how to create recurring revenue for each of them. The question now is, when should you begin to work on creating those new revenue streams for your business? To me, the very important thing is that you already have revenue coming in that sustains your business before you start working on these other ones, because a lot of times people will be writing the book and then intending to start the business or creating the e-learning program before they sell it or doing all of these things when the actual core consulting business is not sustaining them. Do this, setup consult your consulting business so that you've got a good flow of clients and you have good earnings coming in and then begin to add on those additional revenue streams. It's a strategic decision and your version of that may vary but for the most part, I have many times seen that someone runs out of cash before they get all of the revenue streams set up or they chase a shiny object because this revenue stream may be getting clients for their active business is a little hard or isn't really working and so they think, well, I'm going to do e-learning right now not knowing that you're going to have to market that e-learning as well. So if you put all of your efforts into first marketing your business and getting clients, you're going to have plenty of capacity later, time to think about and funding time to think about creating new revenue streams.

So I hope what we covered today was helpful for you and it sparked a lot of ideas and that you will begin to add new revenue streams to your business when they make strategic sense for you.