How To Scale Your Earnings Beyond The Limitations Of Your Time (Part 1 of 2)

There are fewer topics I get asked more about than Scalability. Let’s start by getting some clarity around what I mean by the concept.

It’s a term that I adopted into the business world from the computer industry. There are two online dictionary definitions for Scalability, both of them coming from the computer world.

The first is from the World English Dictionary which defines Scalability as “the ability of something, especially a computer system, to adapt to increased demands.”

The Computing Dictionary (yes, there is such a thing!) defines it as “how well a solution to some problem will work when the size of the problem increases.”

For example, a computer server with ten workstations all accessing files may perform adequately but with a thousand workstations it might fail to meet response time requirements.

Now think about this as it applies to you and your business: you may perform well with ten clients but if it can’t perform well with one thousand clients then you are not totally Scalable. More specifically, what I term your “value delivery” is not scalable and therefore neither are your earnings.

Which brings me to my definition of Scalability as it applies to the world of business? I define Scalability as “the ability to systematically and continually increase your income, independently of your available time”.

When I started out with my first business at age 24 I hit the problem of lack of Scalability really quick. I was only two years into my first business when I realized that I was stuck on a time=money treadmill – trapped in what I now call Phase 1 of the 3 Phases of Business Growth.

Let’s walk through the phases with Pat, a young and ambitious entrepreneur. See if you can relate to Pat’s story.

Phase 1 is where Pat starts her own graphic design business. At the start Pat’s got more time than money as evidenced by an empty bank account and a lack of schedule forward work i.e. her diary is as empty as her bank account.

But Pat notices with delight that as her diary fills up, so too does the bank account. And that’s when she begins to dream of being booked solid.

Phase 1 is also where Pat buys into the belief that “time = money” … and because she wants more money, Pat spends more time until the point comes where she’s used up all of her business time.

At this point Pat’s graduated into Phase 2 – she’s fully booked. But even though she’s now booked solid, Pat still doesn’t have enough money. She’s run out of business hours.

So in an effort to get more money flowing into her bank account she works late and begins emailing work to her private email address at home so she can work weekends.

Pat steals time from her partner and kids and from her own need for free time to balance her life and nurture herself by relaxing (she’s forgotten how) and enjoying a healthy amount of self-indulgence.

As her stress levels increase and as her needs are not being met through healthy means she finds herself drinking more to escape and unwind.

And home begins to be the place she retreats to when she’s tired of being nice to people. Ouch.

But Pat says to herself “I know I’m not balanced and I know that I need to spend more quality time with my family and I know I’m stressed … BUT … I’m only going to do this until I have enough money.”

Which turns out to be never: for two reasons. Firstly, Pat’s run out of time and that’s pretty much all she has to trade more money for. Secondly, human nature being what it is, “enough” is never enough.

And that’s when Phase 2, which was Pat’s dream, begins to turn into a nightmare.

To put it in simple terms: in Phase 1 Pat had the time but not the money. Then in Phase 2 she had the money but not the time.

In Phase Three however you get to enjoy the feeling of having it all: the time AND the money.

And of course the key to Phase Three is … drum roll … you guessed it: Scalability. This is where you have your cake (money) and get to eat it (free time) too and it’s what 90% of business owners never get to taste.

Frankly, other than having more than enough time and more than enough money, there is no Strategic plan that makes sense to me.

How about you? Does Phase 3 sound like a good idea … plenty of time for a relaxed and more enjoyable experience of both your business, personal and family life?

If so, then you need Scalability. There’s a whole ripple effect that is created when you Scale your Value Delivery (a.k.a. increase the sale and delivery of product or service volumes).

Your personal life is better because you have
the time and money to:
 Create the lifestyle that you really want
 Relax knowing that there is more than enough money coming in each and every month
 Better quality health care
 Better quality education for the kids
 Better quality housing and transport
 Enjoy more time with your partner and with kids and take more of an interest in the grandkids (believe me, they come along eventually!) and your parents (remember them?)
 Have enough time for nurturing close friendships
 Invest money and time in what I call “passion pastimes” be that travelling (love it!), sporting, artistic, cultural or philanthropic – or all of the above
 Enjoy more “big-boy” or “big-girl” toys

Your business life is better too because:
 You get to help increasing numbers of clients who benefit from your gift
 You can afford better quality customer service, thus retaining clients for longer
 Depending on the Scalability option you adopt (see below) you can offer more value at lower prices thus broadening your appeal to a wider marketplace audience
 Regardless of the above point, you can enjoy higher profit margins
 You get to relax and have more fun

So how do you do it?
The good news is that there are many ways to achieve scalability. And that’s important because we all have brains that are wired a little differently.

And very few people have a brain that works well with every one of the Scalability options. Out of the thousands of people I’ve worked with I’ve only met a handful that can exploit the potential of all the Scalability options. These are the super-achievers earning millions and it’s likely you’ve never heard of them because mostly, they are very private individuals.

Let’s explore your options and see which one/s suits your brain best and we’ll see how Pat would apply them, in order to break free from the time=money paradigm that’s she’s trapped in.

Here’s my “8 P’s of Scalability”:
1. Product
2. Pricing
3. People – your network
4. Processes
5. Promotions – product, including media
6. Promotions – publicity, including media
7. People – other’s people’s networks
8. Penetration (a.k.a. distribution channels)

1. Product
It doesn’t really matter if you have a product (e.g. yoghurt) or a service (e.g. accountancy). What I’m really talking about here is Value Delivery. As soon as you move your mind from “product” or “service” to “value” you open up to a whole new world of possibilities because your thinking shifts from “time=money” to “value=money” and you are free to create new ways to deliver that value.

Case in point: Pat thinks that the more designs she produces the more money she makes. She feels that it’s important to understand the needs of each individual client and she prides herself on customizing solutions that give her clients what they want and are also an authentic expression of her values and personality.

Which is really nice.

But she’s trading off her value of “expressing my personality” against her values of “quality relationship with life partner and children”, “lifestyle” and indeed “life purpose”. Not worth it.

What the marketplace wants is great designs. Pam can fill that need and express her creativity AND fulfill her personal value by switching her thinking to Scalability. Here’s the question Pam needs to ask:

“What would have to happen in order for me to fill the needs of 100 or 1,000 clients simultaneously while having more than enough money and free time?”

(I invite you to ask the same question and brainstorm the answers for 15 minutes minimum.)

Trelise Cooper is a fashion designer that went from time=money to an empire whilst still being totally authentic to her design values.

2. Pricing
A degree of Scalability can be achieved simply by going to the premium end of the market with your services.

Better if you combine Scalable pricing with other aspects of Scalability however for some, this is enough.

For example, Pat could choose to only do graphic design for the dealerships of luxury car franchises.

The corporate manufacturers of those cars will have in-house designers or large advertising agencies but the dealerships still need their own brand and promotions. Who’s going to pay more for a logo: the Mercedes dealer or the local lawn-mowing guy?

Which brings me to another example: this morning I hired a gardener – Marvin - to look after our grounds. He and his wife are a package and combined they charge $110 an hour.

My neighbor – a retiree on her own - offered to give me her gardener’s contact details. He charges $25 an hour. But I’ve seen his work rate and I’ve heard the stories about arriving late or on the wrong day. I don’t need it. I want fast, high quality and absolute reliability and I’m prepared to pay for it.

Chances are that people like me exist in your target market. On my last trip to the States I noticed premium home-delivered red meat steaks being sold for $400 a piece! There’s a buyer at every level of the market, recession or no recession. There’s just less of them during a recession.

Last example: my friend Karen (not her real name) earns over $350,000 as a one on one corporate coach. She doesn’t want any staff other than a part time and casual assistant plus her bookkeeper. She prices her fees really high and goes for executives on big fat packages with commensurate levels of responsibilities and budgets. Karen wants nothing to do with staff or infrastructure (she works out of a home office) and so will never get to a million a year in earnings. But hey, 350k is not too shabby!

3. People – Your Network …

“Your” network as opposed to someone else’s
(see next point). This includes staff, suppliers, clients, prospects, referrers, mentors etc but for now let’s just stick to your team of employees or contractors.

Naomi Simson started a gift company in 2001. Today she could be taking home $50,000 sitting at a desk and wrapping pressies then sending them off on behalf of clients. Instead, through the network of 900 suppliers and 30 team members that she’s built up over 10 years, she last year delivered over 300,000 gift “experiences”. Now that’s Scalability!

4. Processes
This is as simple as it is rare. You Scale your time by getting a thing to work, documenting what you did and then showing someone else (staff, contractor, supplier) how to use that document (a.k.a. system) to do the same thing. You then coach them until they’ve got it and in some cases you incentivize them to do it increasingly better.

Naturally this frees you from that task and you move your focus to tasks that offer a higher level of return on time invested where you repeat the same process. This is not do-able with everything. Innate genius is not generally “systemizable” e.g. you could never have systemized Jon Lennon’s song writing or Michael Jordan’s basketball skills (they achieved Scalability via radio and television broadcasts).