Are you someone who is craving more income without having to work more hours? A way to productize your services so that you can completely take yourself out of delivery? Or at least be less involved?
Enter the “magic” solution that everyone’s talking about. A solution that solves all your problems and more: passive revenue.
When service providers think about creating passive revenue they usually consider creating one of the following: a product, e-book, or course that they can sell on evergreen.
In this episode, Nicole debunks some of the “passive revenue” myths and talks about how you can create what you’re desiring with an Agency Model business.
$1M+ Agency looking for support? Email us: firstname.lastname@example.org
Hey everyone. Nicole here. Welcome to the show. This is the first episode of 2023, so happy new year everyone. And I wanted to kick off this year talking about a really popular topic that I hear from business owners that want to continue to grow their business. They have been burnt out, overwhelmed, and are trying to figure out how to move forward and create more simplicity and ease inside of their business. So if this is you, you will get a lot of value out of this episode today.
So what are we talking about? We are talking about how to create passive revenue with da, da, da da. Not a course, not a coaching program, not a product, but an agency model!
And you may be scratching your head, wondering why I’m talking about this because you probably think it’s impossible to have passive revenue with an agency model, but I want to maybe challenge you a little bit on this one.
So when people talk about creating passive revenue, typically what they mean is that they want to create consistent passive revenue in their business.
So of course you can create a product like a downloadable pdf or an ebook or a course and charge for it and have it live on your website and as people randomly come to your site and learn about it they may purchase it, they may not.
But typically when people are talking about passive revenue, they’re talking about having consistent passive revenue because what they’re actually desiring is for them to be able to have some additional income and revenue inside of their business.
So the issue with this is that when we talk about passive revenue, and we talk about consistent passive revenue.
Consistent passive revenue, it takes work and it’s actually not passive anymore. Because to create the consistency, let’s say if you create what people typically create when they think of passive revenue, like a ebook, a downloadable, a course is that you have to continuously drive traffic to that source in order for you to continue to have more and more purchases.
So that means, yes, there might not be a lot of effort and work that goes into the delivery of that product. However, I would challenge you that if you operate with integrity you would continue to look at what the contents are inside of that product to make sure that they are updated and relevant and accurate. So there might be some work that goes into that side of it, but compared to offering a done for you service, the amount of work is much less in the delivery.
However, instead of putting the work into the delivery instead, You’re putting that work and that is time and also money into the advertising, the marketing, and actually getting not only the leads in, but also getting them to purchase. And there’s work that goes into that and so it’s not really passive.
We had a, an AGENCY call the other day and one of the members does have a few products that they will sell to people, but unless they’re actively promoting it either organically or having ads behind it, it doesn’t sell right? So there has to be that work that goes into it.
So when you are a service provider offering a service like a done-for-you service. Accountants, publicists, marketing, human resources. Anyone that offers a done-for-you service for either another business or consumer. Their expertise is really in the delivery and a lot of times they have to learn more about how to do like marketing and sales lead generation warming up and converting. Okay. So a lot of their knowledge and expertise is already in the delivery.
And so if they’re looking to create a passive revenue stream, it actually becomes a lot of work because A. The audience is often different than who they’re currently delivering to. But then also they have to learn about applying these marketing strategies into their business so that they can generate the leads and traffic in order to actually sell the product.
So what I have found with agency owners that have put in a lot of work, I will say, and gone through the process of really delegating client work and management, is the one thing that I have heard from them is that once they get past a certain point and they’ve really firmed up the operations inside of their business and they have evolved those operations to where they are right now, that their agency actually starts to feel like consistent passive revenue. Because they’re not involved in the sales call, they’re not involved in the account management, they’re not involved in the client work, and so they’re really able to attract and convert and deliver to these clients, and they’re not really. involved much at all. Now, I will say they still need to put time back into running the business and leading the business, and oftentimes they do need to focus in on marketing as well.
But if you have a really good product and you have a team or a service, sorry, and you have a team to deliver that, Service and you have the management in place, you’re not really having to put a lot of work into the delivery anymore. You do need to run it. You need to make sure it’s evolving. You need to be a leader.
There’s definitely areas where you can then focus in once you’ve delegated. And removed yourself from client work and management. There’s ways like different growth opportunities for your business but there’s not like that work that goes into the delivery aspect of it.
So I want to change the way that you think about passive revenue and instead if you are a done for you service provider or if you identify as an agency owner already, I want you to think about how can I or what can I shift inside of my agency to make it feel more like passive revenue and passive delivery? What can I shift? And so we’ve talked before about what it takes to get your operations into a place that will allow you to continue to grow and scale your agency. We released a great episode at the end of last year, which was on how to scale from $200K to $1M per year.
And in that episode, I actually take you past a million dollars and talk about what you need to focus on. And the five operational components that we talked about. It was foundations, team, management, leadership, and growth. Okay, so the way that you get to having an agency that feels passive, it doesn’t happen right away, right? There is effort and work that goes into getting to that point, but once you are at that point, it starts to shift. So let’s talk about some of those things that need to happen so that you can really create passive revenue with an agency model.
The first is the foundations. So updating your foundations. This is usually if anyone is having a problem with their agency, I always have them examine their foundations first. So this is auditing their clients. And if you have a team, having your team regularly audit your clients. Because it’s very likely that there’s information that you’re going to gather over the years of working with these clients that are going to potentially give you some information on who you wanna be working with moving forward, and who works best for your team moving forward.
Talking about how to make your offerings more scalable. Talking about how to make sure your delivery process works for both your clients and your team, and then examining the financial components.
Then we have your team. So making sure that you’re delegating strategically and efficiently. So are you hiring the right people at the right time so that you get the right things off of your plate? Or potentially you can do this with your team as well as you grow your agency, you’ll start to bring in managers and you may find those managers become the bottleneck. So having them come up we have an assessment that you or your managers can take inside of my program agency. Where you actually go through and see what is our strategy when it comes to redistributing some of this workload? Do we need to hire someone new? Is there someone else that could take this work on? Do we need to reconfigure our organizational chart? What needs to happen with this? So delegating strategically, it might be delegating to somebody who’s already there. It might be hiring someone new, but making sure that you’re getting the right things off of your plate to really give you that time return on investment.
So the time that you’re putting into it, you’re going to get literally those hours and minutes back. Same thing with financial. So making sure that the people that you’re hiring are going to give you that return. It might not be immediately, but to know approximately when that return is going to happen so that you can make sure that the money that you’re investing in your team, you’re investing at the right point in your business.
And if you do wanna hire more team members, but you’re not at this place financially, you know when or what would need to happen for you to be at that. Okay, so that’s really like the team section of it. And then obviously creating processes for the team. We have level one and level two processes, which I’ve talked about before.
So not just like the step-by-step, but actually the framework for which your company makes decisions so that you can really delegate strategy and decision making tasks to your team. And this is where really where we start to shift from a team member. just doing their job every day to really owning their area, but we have to set them up for that success.
Then we have management. So creating roles and responsibilities, team expectations.
We have leadership. So as you get to a certain point in your business, you will bring on other managers and it will be your job to lead them. And this is really an identity shift for a lot of business owners. When you first start your business, if you’re the only person working with your clients, your really responsible for managing yourself and your clients, and then when you hire in a team, there’s like this, what I call the messy middle piece, where you’re responsible for managing yourself, your clients, and your team, which is why a lot of times when you first start bringing on new team members, it can feel like more work, and you may question why you’re bringing on a team at all.
But then when you shift to really owning the fact that you are running an agency, regardless of whether or not you call yourself an agency, you don’t have to call yourself an agency. But if you have team members that are doing your client work and management, that is an agency model business. So once you shift there, you’re really responsible for managing yourself and your team.
And so that team, depending on how many layers you have there, it could be you’re responsible for managing your managers, and they’re responsible for managing their team. You could be responsible for managing the full team. It depends on your configuration based at where you are in your business.
But as we move you through these identity shifts, of being the done for you service provider of being the manager of being the agency owner of being the leader, right? You shift from leading your clients to leading team. To leading leaders, right? And this is, this is a new skillset.
So you may be sitting there thinking this is a lot. This is a lot, Nicole. I don’t really, so I have to do all of this to make this a passive revenue stream. That’s not true.
So I’ve talked to several agency owners that I’ve worked with who either are clients of mine or have been clients of mine that have said to me that their agency now feels more like passive revenue. And after talking about it, what we’ve shared is that there’s a few different stages of agency evolution.
You have the build stage, you have the grow stage, and you have the scale stage. And a lot of times people really get stuck in this growth stage. The build stage is pretty straightforward. If you have a great service offering.
It’s pretty, I don’t wanna say easy, because sometimes it doesn’t feel easy. Compared to the growth states, it’s like pretty easy to get new clients and make more money and raise your rates and do all of these things. When it comes to the growth, which is really where I see agency owners bringing on more team and management support, it can be very bumpy.
And so when you start revamping some of your foundations and then start creating a better delegation strategy, it can feel challenging in the moment when you’re bringing on even a manager to manage your clients and team.
But once you get your operations upleveled to this place that supports the way you are doing business, you hit this breaking point, it’s pretty incredible where you, your business will continue to always experience some forms of challenges, but it doesn’t feel as challenging because you have systems and processes and people in place to address these challenges.
And so once you get to this breaking point again, while you still may have some challenges, it becomes a heck of a lot easier. And that’s when it starts feeling like the passive revenue that we’re talking about.
Another piece of this that sometimes I get asked is around marketing actions. And really being able to bring on that business. Part of creating passive revenue with an agency model is really making sure that your operations is going well. But what about these new leads? Because sometimes it can feel like, your operations reaches capacity and you can’t take on more clients.
But then sometimes you feel like you need more clients to hire more team members, and it’s , thinking one step ahead as to how can you improve your service? Where are there going to be problems and gaps, and how can you solve them before they become issues?
And in order for you to be able to do that, you need to have the brain capacity to do that, which is why it’s so important for you to also make sure that you’re managing the workload and hiring in the team. And maybe even a manager to be able to handle some of these things, right? So that you have the brain space to be able to think, okay, what are our strategies for retaining our clients?
Obviously offering great work, requesting feedback, sending a birthday message or note making something a little bit more personalized. Maybe there’s something that you really. Feel strongly about inside of your business and the way that you interact with your clients. I know I have one agency owner client who feels very strongly about connecting with all of her clients on Zoom every once in a while, and maintaining those relationships. So that’s what she does. Think about what’s important to you and what’s important to your clients and how can you make that happen. So that’s step number one, how you can retain your ideal clients.
Step number two is how you can leverage referrals. Because many agency owners that I know, if they’re delivering a great service to their clients and they’re thinking proactively about how they can make it better, and they’re anticipating needs and wants and desires from their clients, then those clients are going to refer them to other people.
So how can you make sure to really leverage that? So you may have more referrals than you know what to do with, and if you’re in that position, just keep doing as you’re doing, and eventually you can implement some other strategies.
But sometimes what I hear from clients is that, their business as an agency has evolved and some of the referrals that they’re getting in are not really a good match with the way that their agency has evolved. But it’s coming from clients that have been happy with their work.
And so what I recommend doing is reaching out to your best refers and saying, “Hey! You send so many great people my way. We have updated a few things internally and I wanted to make it easier for you to be able to refer us out. Here’s a one sheet on what our offers are, who they’re great for, who they’re not ideal for. That will hopefully make it easier for you to identify who we might work best with.”
You could also obviously offer other things like referral bonuses, you can connect with the people that are referring to you regularly to stay in, in contact, to be top of mind. There’s lots of different strategies to do this.
The next layer can obviously be making sure that your own presence online is updated and accurate. That people can come to a place like your website or social media channels or channel, I always say less is more. Where they can learn about you and your company, they can learn about your values, they can learn about how you support people. I know some agency owners, once they get to a certain point, start having their own podcasts or they start zoning in on a specific social media platform, either Instagram or LinkedIn or both. But again, less is more here.
And then another really helpful way to attract new audiences to your business is to pitch yourself to other people’s audiences. So it could be to somebody who has a podcast where the people who listen would be really helped by what you have to offer.
It could be guest expert opportunities different types of interviews. It could be doing a collaboration, so not just having your own social media and marketing presence, but also leveraging other people’s audiences and presence as well.
Now, I hopefully presented that in an order that’s not overwhelming.
So if you are somebody who feels very limited with capacity as it is, obviously there’s probably some things you could do on the operational side and I would love to help you with that if you are interested. But then when it comes to the marketing aspect to really work in those levels.
So it’s okay, first how do we make it a great experience for our current clients? So that they will stay and also refer. How do we leverage the referrals that we already have coming in? How do we become more present so then when people check us out, they see what we’re all about. They understand our values, which means that those clients that are applying to work with us are going to be more aligned. You really incorporate that into your marketing. And then lastly, it’s really, reaching out and seeing how you can leverage other people’s audiences. But if you are at a point right now where you are at operational capacity and you have a wait list, I would focus first on your operations , because a wait list is also, it’s a pool of people who wanna work with you too. So those are also leads that are like, they’ve signed up to work with you already. They just haven’t been able to be served by you yet. So start there and then you can work slowly in phases.
All right. So to recap, most of us don’t want passive revenue. We want consistent passive revenue. In order to have consistency, it takes work and it isn’t really passive. If you create something that is passive in delivery, it’s not going to be passive in marketing. If you create something that’s a little bit more tailored towards having your expertise be in the delivery and having the operations be in place and having it be operating like a well-oiled machine, a lot of times at first you don’t need to focus as much on marketing because your service is selling itself. And then we talked about the phases in which you can continue to add people into your services and how once you hit that breaking point, it can really feel like passive revenue.
So with that, I’m going to let you just mull this over a little bit. If you’ve been someone who’s thinking about adding passive revenue, I’m curious, have I changed your mind or are you still really wanting to create something like an ebook or a course or a certain type of product? I would love to know, reach out to me on Instagram. I’d love to know what, where your head’s at with that.
And if you’re someone who is already in the agency mode, you like what you offer, you’re passionate about what you offer. You now have some action items on what you can focus on to make that feel more passive. Okay?
So I highly recommend that you check out my episode from last year. It was episode 114: how to scale from $200K to $1M with an agency. I think that would be a great episode to check out. And then afterwards I created an episode 115: on how to decide what business support you need in 2023, which I think would also be great.
And yeah, happy New Year everyone. It was great to be here with you. It’s great to start off the new year in this way, and I will see you next week.