In this podcast James Reynolds is joined by James Schramko to discuss how to grow a real and sustainable internet based business. James Schramko the owner of SuperFastBusiness an Australian based information and service business consistently doubles his revenue every year without any hyped up product launches or joint ventures. This audio interview digs deep on the subject of strategy and systems as James reveals exactly what you need to do to grow a strong internet business.
Full podcast transcription;
JR: Welcome to the Internet Marketing podcast. My name is James Reynolds and today we’re joined by James Schramko from superfastbusiness.com. So it’s a James and James double header day, the JR and JS show. How are you doing James?
JS: Good day! How are you JR? I call you JR sometimes because we have the same name. It sounds silly when you talk to yourself doesn’t it?
JR: You and I speak about once a week James, and we check in with each other in fact many more times than that, exchanging ideas and discussing what’s working around the business in marketing. We actually met at Unlimited Power Online back in 2009 in Dubai and that’s the event that I’m now a co-organizer of. On that day, you were a speaker and I was a mere humble delegate. So much has changed for both of us since then, and it seems really amazing that it’s been only three years since we’ve met.
JS: Yeah, we are in a fast paced industry so it does feel like things move quickly, and I guess that’s why we’re in touch all the time because we are always checking in and swapping stories of what’s working really well. I think is the interesting thing is the things that have changed since then, and there are other things that have stayed exactly the same, which is kind of cool.
JR: You perhaps more than any other person have influenced my current business and my path online. I get to mastermind with you regularly and I get to pick your brains on all matters relating to business and marketing. I’d love to have you reveal some of that really cool business and strategies right here on today’s podcast. Does that sound like something you’d be up for James?
JS: Sounds like a great plan. Where do you want to start?
JR: I’d like you to walk us through today the various components of building a real internet based business. Both you and I have got quite established internet related marketing businesses but let’s assume now that we’re starting out again. What’s the first step?
JS: I think the first step is to realize that you’re dealing with a business. The internet is just a channel- it’s a marketing channel and I see some people think that internet marketing is some kind of business. Really the internet connects customers to your business so start with the business itself and when I really want to pull it back to basics I’d like to look at – what is the business structure? Who owns it? Do you have proper accounting and legal situation in the beginning as if you are going to grow it into a serious business? And that is the first stop for people who join my programs, I’m like- what have you got? What’s it called? How is it structured? Do you have insurance? Are you going to be able to keep some of that profit that you bring into the business? – That is the foundation, and the next step that I look for is what is the point of this business.
JR: You are in contact with over 200 plus internet marketers I guess every single day inside your Fast Web formula community- answering their questions and helping them move forward with their internet businesses. I’m sure you see a lot of mistakes being made by new internet business owners. What is the one big one that comes up time and time again?
JS: Some people make this mistake of approaching business as some kind of hobby, or you know, trying to do everything cheap but that’s not how real businesses are built. Actual businesses have a lot more structure behind them and if you think about even the businesses that we all deal with like a bank, a restaurant, they’ve got to have infrastructure, they have the cost of staff, they have cost of stock, and that’s where I look at it, who controls these things? Some people surrender all of their equity when they start a business and then they build it and then they have nothing. Other people under resource it and the business fails. So you can’t really go too far until you look at the structure of it and then have a look at the purpose or the point of that and what the strategy is going to be, and hopefully the business will be set up to solve some kind of problem, and it will be easy for people to identify your business if they have that problem and it will be easy for people to understand how you solve the problem and it will be easy for people to give you money to solve their problem. And then of course you have to deliver the solution. So a lot of the things that will determine a successful business are how they are setup, how they solve problems, how they deliver that solution. And then if they can repeatedly do it or scale or become the premium supplier of that solution in the marketplace.
JR: You have a monster of a business now, you make over $1 Million in profit and your business doubles in size most years. Have you always met success or did you have some challenges starting out James?
JS: I guess I started out with my own challenge which was simply how to build a website. That was like the big challenge. At that time when I was running the businesses, I figured the internet channel, that marketing channel is so big that would allow me to go all around the world and I could find people anywhere and do transactions online. The first challenge was how to build a website and I struggled with that to the point where I almost gave up and I just bought a software that promised to make it easy to build a website. And it didn’t and I was just like heart broken. The last ditch attempt was another software program that promised it was even easier. So I bought it and it was- it was easy to use than the one that I had already bought even though it was less expensive. And I built a website but just really to get a hold of the concept – I made a sample site to show myself all of the functions of it and it turned out that other people are having the same problem as me, trying to build a website, and I started selling copies of the software as an affiliate, in other words, I got a referral commission. That is how I first met success online- with finding other people with problems just like mine. If you would take that all the way to where my business is at now, most of it revolves around helping businesses get online or understand how to run their business properly. It is everything from information on how to do that to services where we’ll just do it for business. Inevitably, I ended up dealing with a lot of business owners who go into that sort of level where there business is growing but they want to grow up faster, they want to short cut the pathway by getting information from someone who’s already seen it, done it, tested it and put up the resources budget and I’ve ended up with the business that pretty much has the information arm and the service arm coming together into one quite large business now.
JR: How did your business evolve into what it is today? Did you always plan to have an information and service based business or did it evolved from the wants and needs of your customers?
JS: That’s exactly how it evolved because from one group of customers they ask me questions like I might use a piece of software in my business and my customers will say, what software should I use, and my answer is like, you know I had the same question so I looked at all of these software solutions, three of them sucked, one of them was awesome, these are the reasons I used this software and perhaps you should it too. And then the next question they say is how do I use it? I’ll put together some training for it, its how you use it, and then they’d say, I’m kind of busy. Is there any chance I can hire your team just to do it for me, and then I’d get people in my team and we’ll provide that service. So the natural evolution is that by always focusing on the problems and challenges that my customers have, I have been able to create product after product and service after service that addresses their needs and someone put it quite eloquently in a podcast interview once – they thought that I was at the marathon, I’m the guy at the table with the sport supplement drink. When the runner comes up and gets thirsty, I’m there holding out the next round of supplements for them that is going to get them to the next stage so hopefully for my customers, I am able to solve their problems around that particular phase. So yes, they do feed each other, and it’s exactly like the Mercedes dealership that I used to run, where we’re dealing with the same customer but in different part of the business and different things. Everything from someone buying a new Mercedes to then wanting to service the Mercedes, and of course they want to finance it half the time. And if something needs upgrading they might buy parts for it – a new key ring, or petrol cap or tires etc. So we’re able to deal with the same customer but in different parts of the business.
JR: James, it will be great to get a short checklist at this point of those considerations relating to establishing the right business structure starting out.
JS: Checklist would be the legal entity, hopefully it’s something other than just a sole trader. Then It will be do they have insurance? They would probably want to speak to an accountant and a lawyer to get the right business structure and the right legal structure. Now, you only need to do this at the point where you actually have enough business traction that you can’t afford to lose what you have in place. In the beginning maybe you don’t need this. As soon as you start making good money, you want to sort it out early, because it gets a bit shifty when you start measuring entities after you’ve accumulated wealth. So to get that going as early is practical. If you do have potential legal exposure, get insurance. But of course seek proper advice; I am not licensed to give advice. Then I want to look at things like the name of the business- see that it is appropriate and not a trademark by someone else and that they can be comfortable growing that business, something that you’ll feel good about- but this is not the point where you’ll get obsessive about business cards and stuff. That will come later, that’s a marketing device. Then they want to be clear on their strategy, what is the purpose of this business? How would they like to design this business in terms of working from home or from an office- do they want staff? Do they want stock? Are they going to operate in that country or somewhere else? And what sort of business model they’ll pursue? Do they want to be a retailer or wholesaler? This might come down to the sort of strengths they have as a business operator, or their skill set or experience level. And they might want to work strongly on their Alpha. Because ultimately, if you are in the problem solving business, it’s how you convey that to your audience that will be important and that will determine the take up rate.
James Reynolds and James Schramko
JR: Okay, so we’ve got ourselves set up with a sound business structure, I guess we must give some consideration to the business model we want to pursue. You’ve tried a few James – affiliate marketing, information, products, software, membership side services, and probably a whole lot more I missed. What are those that you consider the best for someone starting out online?
JS: There’s everything from setting up an e-bay store through to creating your own information products so the one that I currently do, a good indicator, is the ones that I like because they are self-proving.
One is to be an affiliate where you sell someone’s product services and you get a sale for everyone you introduce. The positive side: you can start at a low cost, you don’t really need a website but that’s a good strategy to do, and you don’t have to worry about creating new products, endorsing a product, dealing with the stock, managing store or complaints, or writing sales coy or any of that stuff. You can start pretty easily. The downside is you don’t really grow as much, you really growing someone else’s business and you get paid as a sales agent.
The next is to create your own products and services, or you have your own store where you reselling stock for example, but it’s your business, you’re growing it, and other people are marketing it for you – if you have affiliates and you control your own marketing. But you do have a lot more requirements, you’ve got infrastructure now, you need your own website, you do potentially need to buy stock or services, you have to manage customer service, you have to manage billing and ideally if you get it right it’s a good business model and it’s quite scalable for most people.
There are still other models where you might go heavily into that e-commerce market and have a store and that might involve you having a warehouse. You can get one in the market or you can have your own, that would depend on what kind of a market you would want to get into so the ups and downs of having either certainly depends on what market you’re operating in and how good you are with logistics. Then there’s things like wholesale service provision which is where you assemble a team of people and you actually create service and people buy that from you and resell it, or you go direct to the customer, in which case you are starting to become more a marketing business, where you are dealing more with the end consumer.
There are so many different choices even in those small sector of business models – there’s even more where you could be doing information services so you can provide how to products, you can even take that offline and use the online market to sell offline workshops or you can do virtual masterminds or virtual coaching in a forum environment. So I am doing a lot of these different models. I have not gone into things like e-bay, because I don’t want to be on their platform, I’d rather be operating from my website. And I don’t do physical stock anymore. I don’t want actual things because they generally cost more to get, they are expensive to ship and move around, and they have damages and they go disappearing sometimes. So I am mostly services or digital – that’s my thing.
JR: So what about systems? We’re probably going to need some software and equipment to run this thing, what’s in that tool kit James?
JS: In terms of systems, you’re going to need some basics like website, some hosting, a domain name, email capturing program that hopefully can be automated and send automated messages and even better if can be sequential or tagged so you can have rules and triggers because it really will help you grow the business and as you grow bigger, you’ll need things like the ability to test things, survey things and support is going to be a big one. If you are dealing with people in any form, you want to build out your support system infrastructure. These can be done at a very, very low cost and using various service providers like Zendesk and that is going to be an early consideration as you grow.
JR: None of this stuff cost a fortune, I know Zendesk you can get for as little as $20 I believe and most email broadcast software such as aweber probably cost about $20 per month. The barrier to entry is very low. With something like email broadcast software do you recommend people get started with a basic option like mailchimp or aweber or they need something more? What are you using now James?
JR: Now I’m using officeautopilot. Most people will be happy with mailchimp or aweber but I went for officeautopilot because I am able to do more automation and for me that’s important, that’s the key to growing my business. It’s probably around $300 a month and for someone starting out they would probably look at it as something expensive. As soon as you have a thousand customers I would say that this would be a better maneuver because it allows you to do more things. We also should throw in there, you are going to need at some point probably project management software if you have a team and you’ll need a shopping cart to be able to handle all of your transactions. And advanced things are the ability to have meetings with your customers and or online webinars or teleseminars with prospects.
JR: Being able to work from home or operate virtually is certainly an advantage of an internet business like ours, both you and I have teams based elsewhere, and yours is quite a large team. Tell me a little bit about how that works because the setup is quite different from a typical bricks and mortar business.
JS: Yeah, they’re in a different country and even more so, they all work from home. So we have I guess just shy of a hundred people all hanging out at their house, except for the husband and wife or partner set up that we have so we are all scattered around. But we all collaborate and that is the power of this medium is we can come together for a common purpose and that is why your business should be very clear, you should still have some of the things that work in a traditional business such as core values that drives your business so everyone understands what your business does and how they do it and why they do it. And when you’ve got that direction then that gets you a sense of purpose and it’s easy to then start setting up benchmarks and reporting. Because you need to be able to keep score as you go through. If anything of this is unclear to people on what they do online, they just see the word opportunity and get all starry eyed about the appeal of it. But when it comes to start rolling up their sleeves, you really have to get stuck on the hard core things. So yes, you got your system set up, but you’re also going to need some people and you’re probably going to have to have a deeper understanding of the mechanics of the business on the flow of getting marketing happening to bring in leads and turning those leads into customers and then helping those customers spend more money with you, and actually get to keep some of it after all your costs.
JR: And that is the intention right? To profit so you can fund the sort of lifestyle you want? So was it always your intention to build a team of 100 people and do you really need a small army powering your business? I guess that would be pretty scary for some people starting out.
JS: I’ll give you a double NO on that one. It certainly is not the intention when I left my job. When I quit my job it was me plus a part time article writer plus a part time support person. That was the entire team. And still today, half my business, and we’re talking a multi-million dollar business, runs with just me. Because two of the business models I have chosen are not very people intensive, they are very me intensive and that’s great. But the other half of my business is very people intensive, however, it doesn’t require me that much. So it’s kind of cool that I am able to balance these two business models and together they are very powerful. So no- you do not need a large team and you do not need to scale to make money, but you do have to have a business model that supports what your business is trying to do. That’s why the second step is designing your business. The type of business model that does not require a lot of people is generally going to be one that is relating to software, because the system can be leveraged- so software as a service is one, you might have things like apps as well that’s two, or kindles, or podcasting; All of these things are more leveraged in terms of the technology rather than people. They will require specialist knowledge like programmers or technical set up. But if you want to take the stage on YouTube or podcasting or run masterminds or do coaching or just write great information products you can get by with a really small team, probably one or two people to help you out here and there. It’s the other types of business models such as service provision or ecommerce that is going to be far more resource intensive.
JR: So as I can see you operate a business a little bit like a two-hulled boat with each side supporting the other. You can lose one of those hulls and your business will go along just fine.
JS: That’s what my accountant says. He says I’m in a very rare scenario. Most business owners will die to be in my position, where they have no debt, no costs that can’t be liquidated within an instant. The business keeps growing and it gets more and more profitable every single day. The metrics just keep growing, just last month we had a 15% increase in our revenue than the month prior. Some businesses will be happy with 15% increase in three years, let alone a month.
JR: You’re in a pretty happy position now James. What’s next for you? Are you planning to consolidate or should we expect more growth on superfast business?
JS: There’s always something new, and there’s always consolidation. So you know business, as it matures. In the beginning it’s just to scramble to get customers and to find anything that works. If you can make something convert, that is step one. Step two is you grow it profit-wise. Not growth for the sake of growth, so that’s an important distinction. You go through that optimization phase where you start fine tuning and then you go for innovation where you just want to radically grow it. Many years, almost every year my business has doubled until recently but I’m planning on doubling it again now. The way that I’ll do that is constantly analyzing my business, looking for the radical innovation and also optimizing.
So I’ve split my management team to two main types of managers. One is the grower and I’ve created a little incubation unit and I’ve given them project to grow. And they’ll grow it quickly, using every innovation we know to date. And they have pretty ambitious deadlines, and all of my support. Then the other type of business leaders that we have is our optimizers/ fixer. Once the new business divisions take hold and are proven, then we move in management team who can maintain and optimize that division and hold it steady. And then there are one or two divisions that will exit, where we liquidate them by selling them off and bringing the profit back in to the business and they move off to other areas. I guess like a dynamic machine where constantly making some parts of the machine redundant and replacing them with newer parts. And that whole business actually lifts up and moves every single month.
JR: One thing that always impresses me James is your level of productivity and how much you were able to achieve while still having an abundant time to do the stuff you love outside your business. So is your role now in the business purely strategic?
JS: That’s primarily my role. My role is strategy, and driving the business. And I’ve managed my team to be operational, and now they’ve reached a point that they’re getting a bit strategic. That’s where my business is at. I’ve reached a point where the top people in my business are strategic now and they have to push that operational stuff down one level. And that frees me up, instead of me trying to get into the operations and teaching them the strategy, now I can really focus on driving the business down the next stage. I can visit other countries, I can speak to people, I can spend time planning. I can literally sit here and do nothing other than read a book or sit out in the sun for an hour or two with coffee and focus and have that quality time without having a back end appointments over and over, one after the other, without getting fried with a thousand emails. I actually have that layer of perspective where, you are right, a lot of business owners are just drowning in the details in the moment.
JR: I’d like to close things out now James, what final piece of advice can you offer for people listening to this podcast? The most important thing is to keep things as simple as possible. It doesn’t matter how many people I get in the business, it doesn’t matter how many websites I have, how many services. The goal is to always have the minimum possible; I want the simplest checklist if we have tasks to do. I want the least amount of appointments in my calendar. I also want to be able to just focus on one thing at a time, and I know that I am able to say no to a lot of things and I know some things that I think are important are just not important. By letting go of a lot of stuff you can easily focus on that most important thing with the shortest amount of steps and get the best possible result. So I guess less is more is really something that has been rewarding me lately. And when I meet with my team, we actually say what can we stop doing or eliminate from the business that’s just noise or wasting our time. What are just the key important things that we must do and let’s just focus on them.
JR: James thank you so much, you’ve shared a wealth of really really cool stuff, You can check out more of what James is up to at www.superfastbusiness.com. JS I look forward to catching up with you again soon
JS: Thanks JR great to catch up again.
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