How to generate profit from your business while you sleep
Early on in my career, I spent a lot of time working with corporate finance teams, handling the publicity for mergers and acquisitions. As this was a few decades ago, there wasn’t the luxury of videoconferencing, and generally, everyone would be ensconced in a room late into the evening thrashing out details.
It was partly thrilling to see a deal come together, with a lot of tedium while you waited for details to be agreed upon. What was most interesting was learning what was valuable to the acquiring company. And a key part of this was ‘transferability’ and the ease with which the target company was going to continue to generate profit once the founder had left the picture.
I also remember how one chartered accountant proved how well her firm could run without her by taking a sabbatical before she went on to sell the accountancy firm that she had built up and grown over a decade. By taking time out, she proved its transferability to the acquisition team – she had built a business that enabled her to earn money without her hand on the tiller.
When I set up Berners Marketing in 2004, my children were still young. Part of my motivation was to be able to have more flexibility for family commitments, which meant developing a source of income which didn’t rely solely upon me and would hopefully come in while I was doing something else (not necessarily sleeping).
Nowadays the benefits of a subscription business are clear to everyone, and numerous apps and subscription model businesses have been launched in the quest for monthly recurring revenue. Having been offering law firms subscriptions to legal content for nearly 20 years now, here are a few things that I have learned along the way.
Focus, focus, focus
Initially, the natural priority for a new business is to cover costs and generate income and it was often easier to do this by taking on marketing consultancy projects – that paid highly, but were not recurring – than by investing time into developing the subscription part of the business.
This was always a hard call, because the projects were often really interesting, and I enjoyed the intellectual challenge. The first few times I said ‘No’ to something to focus on the subscriptions was a big step, but once it started to pay dividends, I wished I’d had the confidence to be more focused sooner.
We have always been dedicated to one market niche – UK law firms – so that has meant we have been able to build up a really high-quality database of contacts and a profile in the market. I’ve often thought of branching out into other parts of the knowledge economy, but usually come back to the view that our in-depth market knowledge is part of our competitive advantage.
We always make a real note of anything which can be improved in our business. Then periodically we review this shopping list and pick off as many of the improvements that we can implement at the time – leaving the others to be carried forward.
It is rare that an improvement is not implemented, once we have spotted it. But some things are easier than others, and for the issues that seem hardest, we have found that it helps to break them down into smaller pieces and pick them off one by one.
Over the years the product has not really changed, but we have got better at communicating the benefits and the advantages. This links into the ethos of continuous improvement, but it's important to remember that subscribers are also going through change and may be receptive in different ways at different times. For example, we have had to adapt our messages during the financial crisis and the pandemic.
Law firms can be slow to change, and may take a long time to make decisions, due to the partnership structure – so building trust and showing how happy other law firms are with our service has been a really important part of our messaging.
Most marketers focus on the first three routes to growth in the standard business model (see diagram), but a successful subscription business also requires efficient and effective systems if you are to handle a high volume of identical transactions.
As the volume of subscribers grew, it became even more important to have systems which enabled new subscribers to sign up efficiently only, for payments to be collected and for content to be sent out automatically.
Testing (while you sleep)
We’d been working on the automation of various processes for a couple of years. And even though we’d been very thorough in our specifications and pilot testing of the software, it was still rather nerve-wracking the first time that we took our hands off the keypad and left the system to run the processes automatically.
The content is usually sent out at 11AM on the first day of each month, so at the moment it has not happened while I am asleep, but it's nice to know that it could do if required!
It takes time and discipline to work ‘on your business’ rather than ‘in your business’ and to get to a place where it can run without you. Whether you want to be earning whilst you sleep, watch a sports fixture, take a sabbatical or contemplate an exit, creating a subscription model takes work, but it is definitely worth the effort.