I don’t know about you, but my daydreams have a very specific format- it’s me on a beach with something strong and fruity with an umbrella while the soft chirp of payment notifications from my bank account provides the background noise (I call those notifications “money chimes”). Maybe your dream is more practical, like, you want to see your children and partner sometimes and still have a thriving business. Or you’d like to be able to take the summer off to photograph the giant Aldabra tortoises in the Seychelles and still pay all your bills.
Whatever you want the time to do more of, if you want both the time and the money, there are only two ways to get there as a business owner:
- Invest in assets that make money for you
- Hire a team that makes money for you
When you hear assets, traditionally, people’s minds go to real estate and investment accounts, but I want to talk about your intellectual property assets.
Let’s look at two business owners, Lisa and Tanya. They both offer makeup artistry services, both started their businesses at the same time and they charge the same price. I’ve made up Lisa and Tanya but they are a composite of real life examples.
In Year 1, Lisa and Tanya charge $50/hour for their services. They spend 20 hours/week in client work and makes $4,000 a month in revenue. At $48k for their first year, it’s been a good start.
Lisa and Tanya both want to make more but are afraid to raise their prices.
Lisa decides to take on more clients instead and starts working with clients 30 hours/week leading to $6k months. At an annual revenue of $72k, Lisa is feeling good.
Instead of taking on more clients, Tanya instead decides to start investing in her IP. She creates a how-to-guide for people who want to learn to do their own makeup for special events and offers it at $150 to her wait-list and others. Tanya trademarks the name of guide and her business, protects her creative work through copyright registration and requires customers to agree to Terms and Conditions which protect her creation.
Because she’s working on the guide, she doesn’t take on more clients and her revenue stays at $4k per month. She’s $24,000 behind Lisa in earnings and she’s had to spend money on lawyers to protect her brand and her creation.
Lisa is working all the time so she decides to double her hourly rate to $100. She’s approached with an opportunity to teach makeup classes. She creates the curriculum and delivers the course called “The Imprint”. Because she is working all the time, she doesn’t take the time to protect her creation- not the name, not the information, not what students can do with the information.
Lisa makes great money this year between the client work ($12k/month) and the course ($1k/month)- $156k in total.
Like Lisa, Tanya’s business is taking off and she too raises her rates to $100 per hour. She sells 10 of the guides each month and her guide helps strengthen her brand, attracting new clients. Still, she only works 25 hours/week to avoid burnout and to allow her to spend time on marketing and managing the business. This year, Tanya makes $10k a month in client work and $1500 a month from the guide. In total, she makes $138k and she’s still behind Lisa in earnings.
Lisa is burnt out from working all the time so she takes the summer off. There’s no money coming in during her time off and she comes back to find that one of her students has started giving a makeup class called “Face Imprint” using only slightly changed versions of her materials. The student charges half what she does so potential students flock to this new class and signups for her class plummet. This year, Lisa only makes $108,000 and spends $10,000 in legal fees fighting her former student.
Tanya realises she needs help with the one-on-one work and hires another makeup artist to do 25 hours of client work a week. She hires out the artist at $100 per hour and keeps 50% of that revenue ($5,000 a month). Tanya reduces her hours to 20 hours a week and puts her energy into marketing her brand so she starts selling more of the guides- now 20 per month ($3,000 in revenue). Because she protected and marketed her brand, she gets an opportunity to licence her trademarked name to a line of makeup brushes. Licence fees generate $5,000 per month. Total yearly revenue- $252,000
Lisa gives up on the legal fight after she realises how expensive it will be and stops offering her course. Because she has to work long hours all the time, her work has been suffering, leading to poor reviews, so she drops her one-on-one hours to 20 per week while increasing her hourly rate to $150 which is above market rate. She can’t take any time off and she’ll only make $144,000 this year.
Tanya hires another make-up artist and gives up one-on-one work entirely. She creates a digital course for make-up artists who want to launch their own business. She charges $1500 and sells 15 a month. Her lower priced guide is still selling 20 per month and her licensing fees have grown to $10,000 a month as her brand becomes more and more influential. As she’s not working directly with clients anymore and most of her income is coming from her team and her intellectual property, she takes the whole summer off with no impact on her income. This year, Tanya makes $546,000.
What are the key differences between these two entrepreneurs?
- Tanya was willing to step into the CEO role earlier. She thought long term and prioritized asset creation and protection over short term gain.
- Tanya’s investment in legal protection allowed her to maximize her profit from her intellectual property and avoid the costly legal fees, loss of asset and wasted time and energy that Lisa experienced.
- Taking the summer off doesn’t cost Tanya a dime, it costs Lisa around $50k
In today’s world where creativity, innovation and information reign supreme, you are leaving money on the table if you don’t develop and protect your IP assets. More importantly, you deny yourself the opportunity to drink mai tais while hearing money chimes.
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