Start Earning Your Second Revenue Stream

Takeaways

If you only have a minute, here are the takeaways:

• Moments in time (like a global pandemic) show us how fragile our futures are if we rely on a single source of income.
• Earning multiple sources of income is a superpower. Consulting is the best way to start.
• Consulting has two advantages over other business models: leverage and speed. Leverage = apply lessons learned from your 9-5, and vice versa. Speed = test, launch, and operate your business quickly.
• How to find your first client? Get good at something and have 10 people know. Email them and ask for referrals. Without your first paying client, building a website or email list is just procrastination.
• How to land your first gig? Give them a presentation. Show you understand their business, their challenges, and how to address those challenges.
• Offer a number of packages, anywhere from an audit of their existing work, to a full Done-for-you service.
• You can charge an upfront fee or a percentage of sales. I’d recommend both ($X upfront and Y% on the backend).
• If you’re consulting AND working your 9-5, avoid burnout. Choose your niche strategically, manage your client, and get advice if you’re stuck.

—

I did the math as Zoom loaded. The answer was 7.

If we did layoffs, 7 colleagues would be let go before me. I was Chinese lucky number 8.

Like most people, I lived in this fantasy where my future was secure. Moments in time (like a global pandemic) tug at this facade. Behind the curtain is nothing more than a harried man peddling away at his Rube Goldberg machine.

Moments like this are the best thing that can happen to you.

It’s the Inciting Incident in your Hero’s Journey. Your opportunity to re-examine the fragility of having a single source of income (your job) and explore building multiple revenue streams.

For me, it nudged me towards landing my first consulting gig.

Why consulting?

Earning side income is a vast universe. You can teach online courses, start a food blog, sell ads against your content, and much more.

I choose to consult, trading my time to work on someone else’s education company/products, in exchange for money.

Consulting is the best way to start earning additional income for two reasons: 1. Leverage. I can apply lessons from work to my consulting business (and vice versa). I chose online education because I spent 6 years thinking about how to create the ideal learning experience, how to launch courses, how to drive outcomes for students, and how to measure those outcomes. All these hard-earned lessons are like a platoon of intellectual soldiers, eager to be deployed on their next mission. 

It works the other way around, too. Lessons learned from client work can be applied back on the job.

Matt Greenberg (CTO at Reforge) had another name for leverage: cheating.

“Cheat whenever you can,” he says.

Hone your expertise. Then take it and apply it where you have an information advantage.

2. Speed. Consulting has a few speed advantages: 

• Testing your idea. The market is unambiguous: either someone wants to pay for your expertise or they don’t. Compare that to building a course or selling ads; both require building an audience before getting signal on willingness to pay.
• Launching your business. When you consult, you’re able to tap into your client’s infrastructure. You get access to their research, tooling, content, etc. You go right into value creation, rather than tooling.
• Context switching with your 9-5. This is similar to leverage. If you select a niche similar to your 9-5, you’re sharing the same mental models. That means less time wasted context switching. To avoid burning out, reduce context switching.

Finding your first client

My friend is leaving her agency to work for herself. She hired a designer to build a new website. Once that’s done, she’ll be open for business.

This is a mistake.

Perfecting your website, building an email list, getting more followers… if you don’t have your first client, this isn’t marketing, it’s procrastination.

You need two things to land your first client:

1. Be good at something
2. 10 people who know you’re good

That’s it.

If you don’t have those two things, start there. If you do, ask those 10 people for a referral. Here’s the email I used:

Hey [Name], I think I mentioned I was looking to start some consulting. Specifically looking to consult for companies building online courses, helping with strategy and course creation. 

Could you keep me in mind if you think of anyone looking for help? Would appreciate any intros.

(FWIW, things are still good at [Job]. This would be on the side. I’ve had a few people reach out cold, asking for help, and thought it’d be a good opportunity to apply my skills to other businesses/markets.)

Don’t underestimate the power of a good email. You never know where it’ll lead you.

I sent that email to 10 friends and got 3 leads.

Landing your first consulting gig

In 2005, Bob Iger wanted the CEO job at The Walt Disney Company. But landing the job required board approval. He didn’t know how to win them over.

Then he received an unexpected visit from brand consultant, Scott Miller. Miller dropped a 10-page deck on Iger’s desk.

“This is our campaign playbook.” If Iger wanted the CEO job, Miller explained, he needed to embark on a political campaign to earn it.¹

Iger assumed the CEO role in October 2005 and changed Disney forever. The unsung hero? That 10-page deck.

Dropping a presentation in front of a client is a power move. It shows:

1. You have a bias for action
2. You understand their business
3. You have a point of view

The deck needs to clearly articulate 2 and 3. It does not need to be fancy or well-designed. For each lead, I spent an hour creating a 30-page deck, covering:

• How their company grows
• The challenges facing the company
• Strategies to address those challenges
• 3-4 tactics to execute against the strategy

Your presentation is an elegant tool: it’s both a gift and a pitch.

It’s a gift because you’ve given the client something for free: your knowledge. They can take that knowledge and run with it themselves if they want.

But it’s also a pitch: if they want someone to execute the vision you laid out, who better than you?

Packaging and Pricing

After the presentation, 2 of the 3 leads wanted to move forward. But what was I actually selling (packaging)? And how much should I charge (pricing)?

Let’s start with packaging. Marketing consultant Allison Carpio has a simple framework to breakdown packaging:

• An audit. The client gets a review of a specific piece of work and strategic recommendations on how to improve it.
• An analysis. The client gets a review of a specific piece of work, how it fits into their business growth, plus the strategy and tactics on improving that work.
• End-to-end planning. The client gets the analysis plus a roadmap on how/when to execute on the tactics, metrics to hit, and how this ladders up to their strategy.
• Done for you. Everything in end-to-end planning, AND you execute the roadmap for them.

It’s possible to start with one package and shift to another. For one client, my work started in “Analysis”, and drifted towards “End-to-end planning” before landing in “Done for you.” With each shift, we revisited pricing to make sure compensation aligned with the work.

Three pricing models to consider:

Upfront aka Flat Fee. You get a one-time fee for your work. You can split up payments, for example, half upfront and half on delivery.

How should you calculate your upfront fee? You can work forwards from your hourly rate and calculate total hours of the project. Or you can work backward: take your ideal salary and divide it by duration of the project. So if you calculate your “base salary” at $120K / year, and your timeline for this course is 3 months, $40K is a ballpark fee.

Hybrid. You receive $X upfront and Y on the backend. Y could be a percentage of sales (e.g. 10% of sales) or a tiered sales bonus (e.g. if the course does $100K in sales, you get a $5K sales bonus; $200K nets you a $15K bonus; etc.)

Backend. For those who enjoy a good ole fashioned YOLO. Take nothing upfront and earn X% of sales.

The better you understand your client’s business, the better you’ll be able to evaluate pricing models. If you weigh most of your fee on the backend and the work doesn’t resonate, you make little. If you take a flat fee and the work does well, your client got a killer deal.

The safest way to hedge your bets is the hybrid approach.²

The initial work with my first client was an Analysis package, so I started at an hourly rate. When the work began looking more like End-to-end planning (then later, Done for you) we shifted towards a Hybrid pricing model.

I calculated the Upfront fee by estimating the number of weeks the project would take and number of hours I planned to work. Then I multiplied this by my hourly rate to get a ballpark lump sum.

After some negotiation, we took some of the Upfront fee and moved it to the backend, tying it to (1) on-time delivery and (2) sales performance bonuses.

How to balance consulting with your 9-5

Find the right balance to avoid burning out. Some tips:

1. Select your niche strategically. Remember: cheat whenever you can. Pick something you’re good at, aligns with your 9-5, and you can execute on quickly.

2. Manage your client. Wes Kao (Co-founder at Maven) recommends three steps to manage your boss. These can be applied to a freelancing client: 

• Offer solutions, not problems. Instead of saying “This won’t work because of X”, reframe as, “X will make this difficult, but if we do & Y, it will have a greater chance of success.”
• Make requests, not complaints. Instead of saying “I can’t do that”, reframe as, “That can work if we bring in design help. Here are two designers I recommend.” 
• Keep your client in the loop. Agree to a daily or weekly cadence for updates, then follow through.

3. Get advice. You’re paid for your output, not time spinning wheels. The fastest way to get unstuck on anything is to get advice. Chances are your client isn’t SpaceX and you’re not landing a rocket on Mars. Someone in your network has probably solved your problem before: ask them.

If I’m spinning my wheels for longer than an hour (whether it’s with pricing, content, or marketing) my next step is always to ask: “Who’s someone smart who’s solved this already?” Then I ask them.

Compounding

What is compounding? It’s a process within a closed system where an input generates an output, that gets reinvested as an input (we cover compounding a lot at Reforge).

In the context of building multiple revenue streams, it’s taking hard-earned lessons from your 9-5 job and reinvesting them into your consultancy business.

However, there’s also macro compounding happening. The whole process of finding leads, creating a pitch deck, nailing your packaging and price, and doing the work is compounding at work, too. Each time you cycle through a client, you can reinvest the learnings for the next client.

The money you earn from your first client is great. But it’s an illusion, a sleight of hand:

The real value is creating the infrastructure to build multiple revenue streams, so you never again have to calculate whether you’re going to get laid off.

It’s not the money. It’s knowing you can always make the money.

Footnotes:

1. The Ride of a Lifetime by Robert Iger
2. Many thanks to Michael Tunney (Content Director at Lost Context Media) and Kel Livson (Head of Content at Jumpcut), and Brian Spernello (Partner at Accelerated Conversions) for their guidance and advice.