#1 - PART 1 - Is it possible to build a business valued at £100,000 in 12 months
#1 - Without doing many of the “tasks” yourself? <Feb 22nd 2024>
Need a catchier title...
I decided to try this out and see how it went.
What is the core goal/idea/rules?
The main idea behind this concept is to build a business only using existing softwares, AI’s, freelancers and VA’s (virtual assistants, AKA just overseas team members), where I cannot do any/many of the daily tasks.
For anyone not aware this is kind of like the concepts outlined in “E-Myth” - a must read business book for anyone getting started. The core idea is there’s 3 roles in a start-up business; technician, manager and entrepreneur. When you start you do all three, but as you scale you delegate and train up people to replace you in the technician and manager elements.
In this project I’m happy to do all manager/entrepreneur “work” but individual technician tasks will need to be paid and outsourced.
This is for multiple reasons but also it creates quite an interesting concept.
People (including me when starting up) have a lot of time but no resources/money or skills. Nowadays I feel I have a lot of skills that can converge well, but with some holes around what I want to actually do, and the amount of time some of the technical tasks will take is not something that would be a good hourly "working rate" for me.
Why?
I’ve been meaning to find a new business model that utilizes my skill set and resources better. I’m happy to invest a lot of time but it cannot be linear (obviously), so the time input will be up-front and the earnings/value will be over-time. AKA the entire EDGE mentality I talk about.
I’ve also wanted to have a play with all the new Ai tools popping up in the market but haven’t have a specific reason to yet, so they all just seem like shiny new toys or distractions. Also, a lot of these feel like they currently lack commercial appeal, especially to my existing businesses, so starting a new project to get these integrated and simply to learn about these as well.
How?
The main idea as mentioned above, will be to use the convergence of skills; marketing, Amazon, digital products, ecommerce, system creation, new softwares/Ai, new team members and skilled freelancers to build a business that is worth at least £100,000 within 12 months.
Although there will be a lot of time, money and team member time spent on these projects, the approach will be to invest X to get Y of continual income. For example if we invest £5,000 but generate £500/month of recurring net profit, as long as that profit sticks, this is a great trade.
Judging Valuation of £100,000
Instead of a more generic “make £5k/month” type goal, I wanted to use a business valuation goal as everything should be optimised for net-worth anyway.
In this case these are pretty much aligned as these smaller businesses get valued on net profit per month. But to judge the valuation I’ll be using Empire Flippers to see how much certain businesses in (whatever area we end up doing) sell for.
For example, the 2 main potential avenues at the moment are Amazon KDP and Etsy POD/Digital products. For Amazon KDP it looks like the multiples are around 28-40X monthly net profit for the business valuation, depending on the size;
Other business models have similar multiples to these KDP options, but its good to see this rather than a lower 20-30 range that some business models have. As ours will be fairly new, we can use a conservative 30X monthly net profit figure as the valuation.
So £100k / 30 = £3.3k net profit per month to achieve this goal.
Pretty easy to understand now.
Also, I like to use daily profit goals and break everything down all the way down to net profit per day goals. So in this case, a daily profit figure of £110/day. Probably just rounding it to £100/day for simplicity.
Using these simple daily metrics has really helped streamline businesses we’ve built in recent times, including an Amazon project that started 14 months ago and crossed the 40 sales / day figure recently. This project is a bit larger and the core main goal was to hit 100 sales / day which at around £4-5 net profit per sale, would give the business valuation a strong £600,000 due to the higher multiples (around 40X) for this niche. Which we hope to hit before the end of 2024. but that's a post for another day.
All this "business maths" as I call it, just makes life easier and really really specific. "Build a 6 figure business" can be quite daunting. Make £100 profit a day, alot easier to reverse engineer.
Technical How To
So that’s all well and good but how are we actually going to build this, what are the specific steps needed?
After about 30 in-depth hours of initial research, as mentioned above, it seems like the core play is going to be utilising Amazon KDP in the UK, for 5 main reasons. 5 Core Edges.
Amazon Launch Process - We have a proven methodology for launching products on Amazon, getting initial reviews and rankings and getting to multiple real sales per day. This has worked on multiple physical products and should work similarly for digital products.
Digital product - They are quicker to produce that physical inventory and have a host of other advantages, such as less upfront time and cost, higher % profits, no physical holding of stock etc.
Research Processes & Creation - Using Ai tools both text and image based, researching and creating a lot of these digital products should be fairly straightforward.
VA integration - With 2 or 3 really good VA team members we should be able to build out the low/medium content books/digital products
Fits the goal business model - This fits perfectly into the high set-up costs (both time and money) but then very low maintenance angle we were going for as mentioned above.
Another potential angle is Etsy, selling digital products. The only downside of this is I’m brand new to the platform and although the ranking processes are likely very similar, the set-ups are all brand new and unique, but we’ll be testing some elements of this. This also seems very saturated.
All in all the main idea will be to manually test a concept (time), then if there looks like there’s traction, outsource (to both team members and freelancers), using custom built training (leveraging Ai / software where possible), to scale to £110/day net profit.
Feb 22nd 2024.