Hello and welcome to another MBA Monday, I know it’s Tuesday but let’s pretend for the sake of this post it’s still Monday! Today I wanted to discuss a very important concept that just about every Domain Investor will have to face (hopefully) at some point in time. It’s a question that I get a lot and the answer should help you better structure your business and build for scale.
When your business is just starting out you will probably find yourself with little revenue, which means you’ll be investing your time to grow your business. You might not have found a repeatable model so you’re still trying different strategies to see what works. Let’s call this Domaining Business Phase One.
During this initial phase you want to stay laser focused on finding a profitable business model. This doesn’t mean getting lucky once or twice, this means finding a way you can generate revenue in a repeatable way. There is a lot of trial and error in Phase One and those who take the time to learn from other investors can save a lot of time and money in this phase.
In Phase Two you have found a repeatable model and are starting to generate some real revenue. This usually also means you are spending more time and starting to get stretched thin. Hopefully you are staying-away from the techniques that have failed to make you a good ROI since you now know what works for you (or what you’re particularly good at). In Phase Two you should be profitable however you might not be factoring your own time into the equation, once you do this you may end-up still in the red.
The biggest mistake I see investors make in Phase Two is not including their own time when calculating profit margins. If you flip a domain for a $500 profit, but it took 10 hours to close the deal, then you’re actually breaking even at $50/hour so if you want a profit you’d have to value your time below $50/hour or make a deal like this happen in less time.
Phase Three is where your business really starts to take off, and where valuing your time becomes absolutely critical. At this stage your business should be making $50,000+/year and hopefully turning a profit when you factor your time into the equation. If you are, and you’re happy with the margins you are making, then it’s time to take the next step and begin building a team.
You see, in Phase Three you learn that running your business is not about finding more time so you can get all the things done you want to do. Instead it’s about finding the right people that can get it done for you while you stay focused on strategically running your business.
If you look at any successful Domain Investor, Frank Schilling, Michael Berkens, etc. they all have incredible people working for them. While these folks do deserve to be in a category of their own (let’s call it Phase Four!) they had to make the same decision in their business that you might be making right now.
The point here is that the key to scaling your business is realizing that you can’t do it all yourself. Once you are generating meaningful revenue you can use that money to hire great people and regain some of your time. Your time is one of the most valuable things on the planet and should be spent as much as possible working on your business, rather than in your business.
If you have a great idea that you think will make a lot of money, great! Make it happen and if you were right, and it does take-off, you can take some of your profits and use them to buy back your time and build a business. At the end of the day you should be able to walk away from your business for a month and see revenue continue to grow and the system that you setup continue to run like a finely oiled machine.
Here’s the challenge, finding good people is incredibly hard. In Phase Three you will find yourself spending a great deal of time interviewing and evaluating potential candidates, training them, and making sure they are motivated and excited to contribute.
Now is a great time to look at your business, understand what phase you are in, and do everything you can to move onto the next level. Your goal will be to build a real business so that if you decide to take a vacation, you’re business doesn’t take one too.
As always, thanks for reading and please post all of your questions, comments, or suggestions in the comment section below. Comment and let your voice be heard!