How I Built A Successful Service Business to $4k Monthly Recurring Revenue (And How You Can Too)

corporate drone to entrepreneurWith our little hustler due any minute, a number of friends have reached out to contribute content to make sure SHN stays alive and rocking while I’m at the hospital or changing diapers.

First up in this series is Tom Hunt, the Founder of Virtual Valley, a platform that connects Entrepreneurs and Rockstar Virtual Assistants.

Enter Tom:

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Corporate Drone to Remote Entrepreneur

It was a dark and wet walk home from the corporate office in London.

I had spent most of the day procrastinating and being distracted from the work I should have been doing, but to be brutally honest with you, I didn’t really care.

When I was supposed to be writing meeting minutes, I was watching Joe Rogan. 

When I was supposed to be building slides, I was reading marketing blogs.

When I was supposed to be present in meetings, I was thinking of new business ideas.

As I reached my front door, too tired and uninspired to honour my previous arrangement to meet my friend for dinner, I decided that something had to change.

Sound familiar?

Fast forward six months and I had a service business running profitably, I was getting to the office at 7:30am to have client calls (for the side hustle) and then working at home until 11pm on marketing campaigns.

Fast forward another 6 months and I am sitting in a cafe in Budapest, sipping a green smoothie and deciding which of my responsibilities within the system I should outsource next.

tom hunt digital nomad

This post will take you step-by-step through this journey from corporate drone to remote entrepreneur in 12 months.

There’s an exercise in each section to help you on your journey.

I hope this post will both inspirational and instructional. I hope it will provide fuel for the fire burning inside of you, to help you take your side hustle full-time.

WARNING: As if starting a business is not hard enough, doing so when you are still investing time and energy into a full-time job is significantly harder. This will most probably be the hardest thing you have ever done, yet also the most rewarding.

So read on… if you think you can handle it…

Step 1: Idea

It has been well documented by many business icons, blogs, and podcasts that the quality of a business idea doesn’t really count for much. I even performed a TEDx talk on the topic:

I imagine that if you are building the next Uber, you will need an awesome, scalable idea and an office of lawyers to protect it.

However, in my situation and I assume in yours also…

You are not aiming for a $1 billion exit and would be happy with $10k per month (the $1 billion exit can be saved for the next business). ;)

Thus, let’s not put too much weight on finding the perfect idea…

So when I was deciding upon the service business I was looking to start, I asked myself these 5 questions:

  • What do you enjoy doing?

I enjoy working with people, meeting with people, and being more efficient.

  • What are you good at (as confirmed by other people)?

As confirmed from feedback from the corporate world, I am good and working with, selling to, and motivating people.

  • What do you have experience in?

I had worked as the project manager of large outsourcing contracts for major telecommunications companies. I also managed to almost completely outsource my corporate role to enable me to focus on more interesting and valuable tasks.

  • What will people be prepared to pay for?

The outsourcing/virtual assistant industry has already been validated as there are tens if not hundreds of websites offering virtual assistant or freelancer services.

  • Who do you like working with?

I like people that work hard, do their own thing and are excited about their work. (Hmmmm maybe I should target startups?)

If we analyze my answers above, it would make sense for me to move forward with an outsourcing service company that targets startups in London, due to my skills, interests, and previous experience.

Nick’s Notes: I think this is a great example of Tom finding a sweet spot of his unique interests and experience.

Thus I formulated a business model (Google Spreadsheet) that would see us charge startups around 50% of the cost of an onshore employee to use one of our team of contractors that worked remotely from the Philippines.

The final point I would like to make in this section is to be on the lookout for the ability to leverage.

Here’s what I mean by leverage. I targeted startups in London. To build the business I would need to develop relationships with these startups, which could be potentially useful in the future if I wanted advice or even a job!

So if there is an option for a service business that enables you to do something that could benefit you more in the future… this should be taken into account.

Now for some homework…


Exercise 1

Answer these 5 questions for yourself and be on the lookout for any trends that may arise:

  • What do you enjoy doing?
  • What are you good at (as confirmed by other people)?
  • What do you have experience in?
  • What will people be prepared to pay for?
  • Who do you like working with?

Step 2: Speak To Potential Customers

This is the most crucial step of the journey.

Before investing any further time in the idea we need to validate that there is a need — and while we’re at it we could potentially score our first customers. ;)

As I decided to provide an outsourcing service to startups in London, I began to reach out to startup founders in London:

startup research london

If you’re wondering how I found Ian, I actually used a service called Founder Dating, though this may not be applicable for your service/target customer. But you can perform similar searches on find potential leads on LinkedIn.

Here is the new and improved structure I recommend using for your outreach (my messages have evolved and improved in the 12 months since that message):

  • Greet with their name
  • Be aware of their time by saying “I know you’re busy so will keep this brief”
  • Say how you found them
  • Say why you are reaching out (mention something they are doing/have done)
  • Briefly explain what you are doing
  • Single, clear call to action

Out of the 10 startup founders I approached, 6 responded and I met 3 for coffee in London and had one Skype call.

Though none of them eventually became customers, each offered valuable insight on the business model and remained a good connection. In fact, I was recently referred for a role at a venture capital company by one of these founders.

Whilst speaking with each potential customer it is important to understand that they may not be honest with their opinion of your business idea as people do not like crushing other people’s dreams.

So, I like to follow a questioning methodology from a book called The Mom Test:

the mom test book

Using this structure, in theory you will elicit their opinion without actually revealing your idea to them, thus removing their tendency to agree with your idea just because it’s yours and you are sitting across the table from them.

The example given in the book shows two potential customer development interviews with your Mom regarding a potential iPad recipe app:

  1. You explain to your Mom that you are building an iPad recipe app and she is delighted so tells you right away that she will use her iPad for recipes
  2. You start the conversation by asking about how your Mom uses her iPad and if she would ever consider using it for cooking. She tells you that no, she would never consider using her iPad for cooking at she doesn’t want it to get dirty.

Can you see the difference between the two approaches?

In the first example, we reveal your potential product, which then has an effect on the information you receive. In the second example, you do not reveal the potential product and thus learn about your Mom’s true behaviour and hence, validity of your product.

With the positive feedback gathered from these initial meetings, I decided to continue with the process.


Exercise 2

Use LinkedIn to target potential customers for your service, reach out to 10 people with the template above and speak to as many as possible on a video call or even better, in person and don’t forget to take notes!

Here are a few questions to use that will work across all industries:

  • What is your current solution for [[problem]]?
  • (If yes to above) What do you like/dislike about this solution?
  • What is your biggest problem regarding [[industry]]?
  • If money or time were no object, what would be the magical solution to this problem?

These questions are to be asked BEFORE you reveal the details of your product/service to the person you are interviewing.

IMPORTANT: You now have to make the decision to commit to continuing your journey with this idea or to return to Step 1. There is no hard and fast rule for this (unless you get each one of the 10 people you interview above to sign up there and then). You will have to make a decision based on the general feedback from each interviewee and advice from other people that you respect.


Step 3: Brand & Build

Ok, we have an idea AND have validated it with potential customers…

We now need to make this official ;)

Now, I am not an accountant or a lawyer, but I don’t see the need to register a Limited Company until after you have made a sale.

Nick’s Notes: US-equivalent would be an LLC.

So in order to make this side hustle “official,” all we need to do is build a web presence.

I would actually recommend being a little leaner than I was when I was building out the presence for our service company.

I hired a WordPress developer to build out a full WordPress site and a video animator produce a sales video for us before we had made our first sale.

If I were to do this again (and I did just last week!), I would throw up a quick LeadPage instead, and then invest in a full WordPress site once we had made a sale.

Coming up with a Business Name

I think it is important NOT to spend too much time naming your business, yet you should follow the following guidelines:

  1. Keywords – If you can include keywords in your name this will help with SEO in the future.
  2. Alliteration – Helps the name stick in your mind.
  3. Rhyming – Again, helps the name stick in your mind.
  4. Words Your Customer Uses – From your conversations in step 2.

I went with “StartOut Consulting” which doesn’t really hit any of these points (I learnt these criteria after naming!) and I did find that people rarely used the company name or got it wrong: “Startup Consulting” many people used.

I then applied these concepts more effectively for the next evolution of the business: Virtual Valley.

Font/Colors/Tone Of Voice

From you conversations in Step 2, you should have a good idea of your target customer and their character.

You must then translate this into a font, colors, and tone of voice for your web presence. I like to use Google Fonts for fonts (obviously), Palleton for colors and then my notes and experience from Step 2 for tone of voice.

For StartOut, I chose this color, this font and a slightly casual tone of voice for the copy on the website.

Logo

Once you have the assets above, you are ready to head to Fiverr.com and enlist a designer to create your logo. Here is the StartOut logo:

startout consulting logo

It should take a couple of days and be sure to obtain the source files so you can edit them or hand them to a designer to edit in the future.

Website

You are now ready to create your website and I recommend heading to LeadPages and creating a Standard Account for $25 month. Then select:

  • Templates
  • Sales
  • Free Consultation Page

This is a simple, one page template you can adapt for your service.

Input your font, colors, tone of voice and logo.

Then head to GoDaddy and purchase your “companyname.com” if possible. If it’s not available then you can go for .co, .net or .org.

This video will take you through this process:

Nick’s Notes: Here’s an article I wrote a couple years ago on what to do if the domain you really want is taken.

You will then need to install WordPress on the domain. We won’t be using WordPress straight away but it is likely you will use WordPress to build out your site in the future:

We will then use the LeadPages WordPress Plugin to put your page onto your domain:

Nick’s Notes: If a LeadPages subscription isn’t in the budget, here’s a super fast and cheap way to build a great looking simple site.

Unfortunately, I cannot share the website for my original outsource service business as the domain (www.startoutconsulting.com) is currently redirecting to the next evolution of that business: an online marketplace connecting Entrepreneurs and Rockstar Virtual Assistants (Virtual Valley).

Offer

OK, so here’s the most important aspect of your website: what are you going to do for your customer?

Your conversations in Step 2 should help you out with this. What did your customers say they would pay for? What problem are you going to solve?

Try to look through the eyes of your customer. What would YOU want taken off your hands and be happy to pay for?

Here is an awesome, MUST read book on the topic:

the irresistible offer

It will take you through exactly what an offer must contain and how to communicate it your your potential customers.

Here’s a quick overview of what your Irresistible Offer should contain:

  1. A High ROI Offer – How will your customer realise a return on their investment?
  2. A Touchstone – You have a very short time to address as many of these as possible:
    • What you’re selling
    • The cost
    • What’s in it for them
    • Why they should you
  3. Believability – It can’t be too good to be true so include some social proof, credibility, or awards.

The final point I would like to add is that when selling B2B (to other businesses) you are actually selling money. That is what your customers most likely want: more revenue/lower costs.

If you are able to frame your offer in such a way that you can make your service pay for itself through increased revenue or reduced costs, then it will be an Irresistible Offer.

an-offer-he-cant-refuse-gif

(image source)

For example, with StartOut Consulting, we had a prominent page on the site that outlined the difference in costs between hiring an onshore employee and an offshore SOC team member and the investment differences and thus the cost savings that could be enjoyed by the potential customer.


Exercise 3

Let’s make this happen…

  • Decide upon a name for your business using the guidelines above.
  • Decide upon the colors, font and tone of voice of your brand.
  • Head to Fiverr.com and pass this information onto a logo designer.
  • Use all of the information above and the logo to build out a one page LeadPage including the following sections:
    • Overview
    • About Us
    • Team
    • What We Do
    • Offer
    • Contact Us
  • Read The Irresistible Offer and define your offer with your potential customer in mind and communicate it in a way that suggests your service will pay for itself.
  • Make sure you provide clear call to actions for your potential customer to buy.

Step 4: Marketing

Ok, website is up and your offer is compelling, it’s time to share your site.

The first action to take is to send it to each of the potential customers your spoke with in Step 2 and any people in your network who may be interested or know people that may be interested.

I would send an email that announces your site and service is live and to provide feedback if your relationship with them is strong and would follow this structure:

  • Greet with their name
  • Be aware of their time by saying “I know you’re busy so will keep this brief”
  • Announce that your site is live
  • Request feedback
  • Thank them

Now, if they get back to you they may want to move forward straight away, WOOOO first sale!

If not, they may provide feedback, in which case I would reply and offer a discount on your main package in exchange for a testimonial (that you can later list on your site) so you can move ahead.

Your offer will become more compelling with every testimonial you are able to put on your site, so do not be afraid to offer a discount or even a service at cost to your potential customer from Step 1 or people in your network.

Furthermore, you will kick-start the word of mouth marketing around your service with every customer you acquire, so assuming you follow Step 6 to ensure an awesome experience, each customer could lead to another.

Once you have exhausted your list of potential customers from Step 1 and personal network, it is time to reach out to find “real” customers.

First step, read this book:

traction book new

It gives a simple overview of marketing channels that could potentially work for your service along with real life examples.

When I coach students one-on-one with their marketing we follow this process:

  1. Truly understand the target customer (Step 1)
  2. Define an Irresistible Offer (Step 3)
  3. Put the offer in front of the customer (Step 4)

We are now at #3, putting the offer in front of the customer.

We need to put our Irresistible Offer in front of our target customer using one of the marketing channels outlined in Traction:

19 traction channels

For SOC, I created a spreadsheet with each marketing channel and then prioritized each one and wrote notes on how it could potentially work based on my goals for the company.

You should be able to automatically rule out a number of the channels and easily prioritize the rest using your knowledge of your target customer, yourself, and your resources.

For instance, we decided to move ahead with Email Marketing … but with a twist.

As well as thinking about how you put your offer in front of your target customer, you will increase your conversion if you are able to do so at a time when your target customer is looking for a service similar to yours.

I was targeting startup founders/employees, so why not try and target them when they were looking to grow?

I decided to search for founders on this job posting site and would mail them directly, offering our service.

founder outreach

Here are the points to highlight from the email above:

  • Craft a subject line that outlines the benefit of your offer.
  • Greet by name.
  • Include benefit of your offer in first line of email.
  • Outline your service.
  • Clear, single call to action at the bottom.

This marketing channel accounted for five clients (at $500-1,500 per client per month) over the first 12 months of the business.

Though it is important to note that not all of these 5 responded to the first mail we sent, we also followed up on a weekly basis for 6 weeks.


Exercise 4

  • Select ONE marketing channel that you believe will have the greatest chance of securing customers.
  • Work on this channel every day for a month and track ALL time and money spent.
  • Review ROI (of both time and money) at the end of the month and either increase or decrease investment or select another channel.

Step 5: Outsourcing

You are all set up and maybe even have a couple of customers rolling in with your chosen marketing channel from Step 4. Now it’s time to get efficient.

You will be spending time completing tasks that have a:

  • High $/hour value to your business.
  • Medium $/hour value to your business.
  • Low $/hour value to your business.

If you are able to give some or all of the low $/hour tasks to a team member that has a low hourly rate, this will enable you to spend more time on the medium and high $/hour tasks and you will grow faster.

At first, it will seem risky, scary, and awkward, giving part of your “baby” away to someone else, but when you get started, you will want to keep going and going.

Remember, the goal is to build a system with automated and human input that will produce value for your customers whilst capturing some of that value for the business and yourself.

The more you are able to remove yourself from the system, the more time you will be able to spend improving the system to increase the efficiency of the value exchange between yourself and your customers, resulting in greater results for your customers and greater revenue AND profit for yourself.

An awesome book on this topic is The E-Myth by Michael Gerber:

e-myth revisited

Once we secured our first two customers through direct mail for SOC, I had already employed a full-time manager in the Philippines that handled all of the customer support, recruitment, and my personal admin.

This allowed me to focus the limited time I had (as I was still working full-time in the corporate world) on other marketing channels (as the direct mail campaign was also outsourced to another team member).

Here is the formula I have developed over 3 years of outsourcing in the corporate and entrepreneurial world that leads to the best results, I like to call it The Efficient Outsourcing Formula:

1. Identify – Download the Task Outsourcing Tool that will help you identify which tasks and processes within your role/business are “outsource-able.”

task outsourcing tool

2. Perform – In order to optimize the process, train your team member effectively and to understand the time requirements of each task you MUST be completely proficient in the task itself.

3. Create Working Procedures  – Document your processes in systems and checklists to create a how-to manual that any employee could pick up and understand after a brief training. For more on this, check out Work The System by Sam Carpenter.

4. Train – Since you created the Working Procedures, it is your responsibility to train the person who will be taking the handling it in the future.

I like to use Screenflow to create videos of you completing the process as I have found to be the most effective method of communication.

Nick’s Notes: I use Jing or Screencast-o-matic for screen recording. 

The training will occur in 3 distinct stages:

  1. Introduction – Talk your Team Member through the Working Procedure.
  2. Forward Job Shadowing – Perform the working procedure whilst your Team Member is watching either in person or using screen share software.
  3. Reverse Job Shadowing – Your Team Member performs the Working Procedure whilst you observe.

We went through each stage of this process with the tasks we outsourced with SOC (and also taught it to our clients!).

Now it’s your turn…


Exercise 5


Step 6: Delivery

A final note on delivery…

As mentioned above in Step 4, the most powerful and profitable marketing campaign for your business is word of mouth.

You will gain word of mouth referrals if you give ALL of your customers a great experience with your service.

Before outsourcing any of the customer service to another team member, you must operate this yourself. This will enable you to understand what your client expects and what exactly it takes to deliver excellent service.

For the first three clients to our outsourcing service at SOC, I was the salesman and recruiter, I trained the client and answered all of their questions.

Then going forward, my manager was responsible for recruiting for the client and the ongoing customer service.

As a final point, do not be afraid to ask your clients if they know of anyone that may benefit from your service after they have worked with you.

At SOC, we obtained the other 2 out of 7 monthly subscription customers through speaking with our current clients and inquiring to see if anyone in their network could benefit from our services.


Exercise 6

  • Once you have made a sale, do EVERYTHING you can to enable an awesome experience for your customer.
  • Remember to ask you customer for feedback and a testimonial once you have delivered.

What’s Next?

This post gave a step-by-step walk-through of everything I did to create a sustainable recurring revenue side hustle. The business was a win-win-win for our clients, our team, and myself.

However, when we reached 7 clients, I was too involved in the business of each client that I no longer had time to spend building our system (business).

Thus, I decided to invest the profits from StartOut Consulting into an online marketplace that would connect Entrepreneurs and Rockstar Virtual Assistants called Virtual Valley, which would be significantly more scalable, but that story is reserved for another blog post :).

virtual valley table

Of course, walking out of the corporate office for the final time was a glorious experience.

But to be brutally honest, I (and I expect you will too!) derived a greater amount of fulfillment from the “hustle” through the process of starting the business, the relationships I developed with clients and my personal development.

So as you move through the process, be sure to envision that moment as you walk out of your office for the final time, but also make sure that you enjoy the highs and lows of the journey itself.

And finally, I need a favor…

If you have a friend that you KNOW wants to leave their job, use the social icons above to send this step-by-step guide over to them NOW. Who knows where they could be in 12 months!

And if you have any questions about the process above, drop it into the comment boxes below and I will be in touch.

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tom hunt headshotTom Hunt is the Founder of Virtual Valley, a platform that connects Entrepreneurs and Rockstar Virtual Assistants with the mission of giving entrepreneurs back 1 million hours of their time by 2018.

Tom spends MOST of his time helping people like you grow their virtual business on the Virtual Valley Blog and gives free 1 on 1 marketing advice to EVERYONE that signs up here.

step by step service business

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9 thoughts on “How I Built A Successful Service Business to $4k Monthly Recurring Revenue (And How You Can Too)

  1. this are best pointers I have ever read about running own business. They helped me a lot to place focus on important things and not to be distracted and exhausted on minor things. I especially liked that part about The Efficient Outsourcing Formula.

  2. Great post! I was thinking of outsourcing my social media marketing and consulting business. Any tips on the best way to do this for my industry?

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