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Business Manifesto
Ed asked me a great question about Endurance Corner, "so let's assume you hit the plan, does that cover your family's expenses?" The quick answer is "no", the business isn't a quick fix to my personal P&L. However, that's due to my expenses more than my revenues. Ed's question got me thinking about the "why" of Endurance Corner as well as a few lessons that I've learned so far. At least a couple of these are broadly applicable so I'll run you through them in case you can apply them to your own situation. Before we kick off, a couple of announcements. Epic Camp is going to ride the length of New Zealand in January 2010 -- round numbers... a century-a-day for 14 out of 15 stages. For good measure, we'll make sure to rack up enough open water swimming to cover the equivalent of Cook Strait. The first line of the Press Release says it all, only a few athletes can say they've gone the length of New Zealand. I'll be there with Johno & Scott. To get ready for Epic, I'll be hosting a bike-focused training camp with Robbie Ventura - September 26th through October 2nd. Each day, we'll have a shorter, and longer, option. I'm building the web page over weekend so will link up next week for you to check out. Our opening photo is from the Valley of Fire, the lunch stop on Day One of Robbie Camp. The photo below is Snow Canyon -- we'll be checking that out on Day Two/Three when we explore the Ironman St George course. We've set the camp dates so, if you come a day early, then you can check out the Interbike Show in Vegas. Drop me a line for more details about any of our up-coming events.
Key Components of Endurance Corner Structure:
All of the above, taken together, will get us somewhere. Where is it that we want to get to and how will we know that we've arrived? If I had to chose one word that describes the goals of the coaches, it would be personal freedom. The team wants to maintain, increase or attain personal freedom. Freedom means different things to different people and, in my case, probably means different things on different days! Freedom to me means:
Right now, I have exchanged much of the above freedom to focus on building the team/business so that I have a good shot at the above. By the end of 2010, I want to be back in "balance" -- for me at least -- and have those six bullets stable in my life. With our athletes - well, you don't hire a coach if you want to slow down... so you'd expect athletic performance to score pretty high, and it does. However, we have an Introduce Yourself sub-forum (on the inside) and athletics is relatively balanced in the team's lives. As a coach, I've found that I may be hired for performance reasons - and will get fired for underperformance reasons (occupational hazard, easier to replace your advisers than yourself). However, if someone sticks around then there needs to be a deeper relationship than workouts. What I seek to share is techniques for personal excellence. Athletics is a great medium for us to learn these.
I'll chat through the economics of the business as it's pretty simple. We're going to pause our team size at 100 athletes (we're at 71 now). That figure includes one-on-one athletes as well as my "projects" (ultrarunning, stage racing and short course). Originally, I had thought that we'd need to broaden our offering to fill our team. In reality, we will need to innovate to retain the team. The lesson here is that good brands/products market themselves. If you have an idea/product/service with value then your customers will build the business for you... so long as you offer exceptional value to your insiders and listen to their feedback. The web side of the business is so new that I don't have a good feel for our churn rate - as a result, revenue per relationship is tough to calculate. My personal view is that every new relationship is worth $1,000 to the business. That's not our average order size, rather, it reflects the value that a team-member brings to the business when the relationship "works" and we do a good job. The ability to offer outstanding customer service, while maintaining personal freedom of the team, is why we're capping out at 100 relationships to take stock. Collectively, we feel like we could cope with more but we can't afford to overload ourselves (cramping freedom and customer service). 100 x $25 per week x 52 weeks = $130,000, theoretical max revenue With churn, void rates, discounts for full year subscriptions... // I figure EC's annualized web revenue will be closer to $75,000. With an estimated net margin of 60% - the web business could yield $45,000 per annum. It will be interesting to see where reality ends up. Add all other business lines and the net profit figure could get close to $55,000. That would represent a six-figure swing from the losses in 2008. That won't close my P&L gap but it would save considerable capital over a five year time horizon. Depending on where you live in the world, $55,000 is either a lot, or a little - and - we are not there yet. There remains a fair amount of work just to get there. For me, what makes this business a ton of fun is:
Do you price based on limited time and work only with clients that pay the highest marginal cost? That can be financially rewarding but pretty boring at times. The nice thing about a team of 100 is that there are going to be some GREAT people that become my friends. Really great people. How often do you think about your time? I think about the value of my time quite a bit - probably more than the allocation of my time, which is even more important. I also need to create space for unallocated time in my calendar. Most of us value ourselves well under what the market will pay -- that said, it's pretty painful when we get it wrong and over-value our position! What I like about our current structure is that we earn a reasonable return for offering good value. At the higher price points, I'd be taking the money, more than delivering value. The trouble with being overpaid is that we tend to convince ourselves that we deserve it and that can erode our ethical compass. But money is not the reason why I work -- if you understand the work/pay ratio in elite triathlon then you probably knew that already! As well, work doesn't impair my personal freedom. I suspect that freeing myself from work, prior to my 80th birthday, would be a disaster. I enjoy learning and being able to apply myself to interesting case studies. The concept of life being better in "retirement", or our destination being to arrive at "leisure" - culturally, we do ourselves a disservice by spreading that around. We should help each other wrap our heads around the fact that a rewarding life is built on consistent work where we can use our skills with people we like. What's Your Offer? Consider the value in the various aspects of your career and business. What's our value?
That's enough for this week. I'll keep sharing ideas as they come to me. I like to think-by-writing. All my best,
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I bumped into my buddy Ed this past week on the road to Ward - we'd been trying to catch up for a few weeks and it was an appropriate place to see him. With highly focused athletes, you either catch them training or at a meal. It's all about time management!
Back to business. To set the scene, I'll run through the business outline that I explained to Ed - and - triggered his question:
Here's something to consider within your own business -- how much of your time do you spend selling? To whom are you selling? What are you selling? Does that match what your customer is buying? Are you spending your time on the features, and business aspects, that your customers most enjoy? Do you know what your quiet customers like?
Value vs Price