Why Having Money To Spend On Growing My Business Led To A Rookie Mistake

A few years ago I went through a ‘rebirth’ phase of my business.

I was in a unique situation. All my products had been taken off the market, so I had nothing for sale. However I still had my blog and my email list, which I continued to nurture even when I was selling nothing.

In some ways this felt like starting a new business. I had to decide what to sell, make sure my audience wanted it, and plan out what order I would do things in.

Yaro Made A MistakeHowever unlike someone starting from scratch, I began with an audience and cash in the bank from previous years running my business. This of course makes things much easier, but it creates new ways to make mistakes (which you will see in a moment, I certainly made!).

Sometimes having resources means you waste time and money doing things you wouldn’t do if you were bootstrapping and just getting started. The pressure to get cashflow (money coming in) gives you a narrow pathway towards a goal. When you have money to spend, it’s easy to waste it on things you don’t really need.

The Biggest Mistake I Made

I believe we can learn a lot from where other people go wrong, especially in hindsight when bad choices become so much more obvious over time.

In the spirit of helping you avoid my bad choices I want to share with you what I see as my biggest mistake when I went through this rebirth of my business.

Today as I write this, it is very easy to see where I went wrong. Pretty much every little mistake a made stemmed from this one big mistake…

I spent way too much money and time focusing on elements of my business that are only relevant for some time in the future.

Instead of focusing my efforts on what I needed to do immediately as the next step forward for my business, I believed if I could get a few things running at the same time, I could grow faster.

It sounds good in theory: Why not build out other parts of your business while you work on the core things you need to focus on?

Unfortunately it doesn’t work out that way, and in fact will slow you down even further, unless you do it at precisely the right time. I’ll explain when the right time is later in this article.

They Seemed Like Good Ideas At The Time…

To make this more tangible, here are some of the specific mistakes I made during this period, which I thought would speed things up, but ended up slowing me down…

I hired people to do the following for me (wasting money):

  • Write emails for email sequences I will need in the future but can’t use until other things are done (like having certain products on the market already)
  • Create new traffic assets, like a magazine and an app, so I could increase how many new people I reach
  • Manage my projects for me so I could focus on other things (but I chose a poor candidate who ended up taking more time from me than freeing up my time)

I wasted time by doing things like…

  • Studying resources that relate to things I might do in the future
  • Paid a lot of attention to other people who were teaching things that are not relevant to what I am focusing on RIGHT NOW

The thing is, all these activities are beneficial, when done correctly at the right time.

In my case I was excited about doing many different things at once, all of which I could see helping to grow my business.

Because I had cash to spend and all my time to myself, I figured it made sense to start many projects at once.

What I didn’t really understand at the time, or perhaps on some level decided to ignore and just try and push through, were some fairly significant problems…

Problem 1: You Have To Factor In Communication Time

Whenever you hire someone to do something for you, it’s never as simple as just saying “I need this problem solved or this thing created and you go do it“.

You need to communicate with them, instruct them, train them, respond to their ongoing questions and make decisions in response to their prompts.

Often these interactions serve to break your concentration and flow, because you have to stop whatever you are doing and re-focus on what they are doing.

Even the best people who can work relatively autonomously and make good decisions on their own require some initial guidance. You have to at least explain the job to them and then fill in any gaps in their knowledge as they work through your project. You won’t be able to find someone who already knows everything about what you do.

Let’s not forget the hiring process itself. You have to write criteria, put up job notices, vet applicants, run tests, do Skype interviews, and even after all this they may not be the right person, so you have to go through it all again.

Problem 2: Progress Changes Your Direction

In the example I gave of hiring a person to write emails for me, that is a great idea to gain leverage in your business, when done at the right time.

The mistake I made is hiring a person to write content that I couldn’t actually use yet because I hadn’t set up the systems that come before that content.

Then later as I go about creating the systems, I realize I need a completely different set of emails to what I paid someone else to write, so I have to re-write them.

If I hired someone to write something I can use immediately, that make sense. I know what I need for the current situation and I can immediately roll out the content and get a result.

Plus let’s not forget, as per problem one, you have to communicate and train the person you hire to write content. You need to be sure that is the best use of your time at that given stage of your business. It was not for me.

Problem 3: Bright Shiny Ideas And Cool People Distractions

There are a lot of successful people online who share what they do. Their information is great and very likely can help your business too.

The mistake is studying things that are not directly applicable to what you are doing now.

If your immediate need is sourcing traffic and the best solution for you right now to solve that problem is podcasting – then that is the only time you should focus on podcasting experts and their training. If you don’t need to know about podcasting now, don’t waste time on that subject.

You should only use your precious study time and attention on things that address your immediate needs.

Make Your Decisions Based On What Stage Your Business Is In

I have made it pretty clear that timing matters.

Deciding your immediate next step should only relate to what you need to do immediately. That makes sense.

But how do you know what you need to do immediately?

This decision ties into the stage of development your business is in.

Here are the stages:

Stage 1: Momentum Creation

At this stage everything is about attracting customers to establish cashflow.

If you are running a startup, you might get investment funds as your initial cash source, but bloggers and information marketers do not follow the angel/venture capital startup path. It’s smarter to bootstrap a blogging business.

Your only goal at this stage, which is your immediate problem to solve, is…

How can you get customers so you have cash to keep growing?

(Plus you learn more from customers than any other form of research.)

You can’t reach the next phase without cashflow to spend on things like better technology and hiring people.

At this stage it’s always a smarter decision for you to do most of the work yourself because it will be a quicker path to income. You don’t have to train anyone, just get out there and serve customers. Chances are you won’t have the funds to hire people anyway.

Of course you have a cap on your capacity if you do most of the work yourself and it’s not the ideal business model long term, but it’s the right one short term.

Your key first goal is to generate enough initial cashflow to quit your job, which will immediately increase your capacity without increasing your costs, since without a job you don’t have to work on anything other than your business.

You will hit a ceiling at some point working by yourself, but you can make six figures a year without hiring help.

Once you reach a point of positive cashflow, you can focus on stage two activities…

 

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Stage 2: Tighten Up Processes And Automate With Technology

Once you have some income from your business powered by a system that is reliable, your next job is to reduce friction, optimize and automate parts of your system.

Technology is key at this point.

This is when you might upgrade from a system like AWeber to something like Ontraport, giving you more automation power and advanced segmentation.

However you don’t purchase a more advanced tool like Ontraport just because you think you should. You will know the advanced things you want to do, and you will already have a working business. A tool like Ontraport will enhance what you already do, it’s not something you get ‘just to have’.

Phase two has a lot less ambiguity than phase one.

Phase one is about learning about your customers and generating some income streams as a result. Phase two is about taking what you learned and gaining leverage through technology and selective outsourcing.

At this stage you can hire people to do tasks that are mandatory parts of your business, but not areas you should focus on personally.

Jobs like customer service, web design, setting up and maintaining membership platforms, editing and formatting documents, graphic design – all the ancillary parts of your business that make your core value proposition better, but are not critical parts of it – can be given to other people to do.

For example as an information marketer, your core values are the ideas you create and teach. That is what people pay for.

How you deliver those ideas in terms of formatting, content distribution platforms and use of graphics can enhance your product, but it’s not the core value.

In phase two you can hire people to help make what you already do present better and reach more people. You enhance your core value, not try and create completely new core values.

You shouldn’t focus on tightening up in phase one, because it slows you down from reaching cashflow. If you spend too much time tweaking your blog design, or learning about which is the absolute perfect membership script to use, you are not focused on what matters most for that stage. You are slowing down everything.

Phase two is when you can review how you make money and start to automate certain parts of the process.

For example, during phase one you might have done a lot of sales manually, sending emails back and forth on the fly, making phone calls, private messaging through social media and apps, all to communicate with potential customers.

In this phase you begin to tap into the power of automation so these sales related communications are structured.

In phase 2 you use more advanced automated marketing process like this front end product offer sequence I teach in Blog Mastermind 2.0.

In phase 2 you use more advanced automated marketing process like this front end product offer sequence I teach in Blog Mastermind 2.0.

In phase two you set up more detailed marketing processes that occur automatically, so customers come to you more qualified. For example, creating a three part video series to presell your product, or creating a one week email sequence designed to upsell a customer on a next level product.

Now instead of relying on constantly producing new things like podcasts, blog posts or videos, or doing product launches, you can create a system that keeps selling for you all the time. You guide all your new visitors through that process using technology. This in turn frees you up from having to work so hard to close a sale.

You can realistically make multiple six figures and up to a million dollars a year with just you and a handful of contractors and a good system. This might be as far as you want to go.

If you want to grow further, you move on to phase three…

Phase 3: Exponential Growth Through Full Time Employees

Phase three is when you move away from being a product and content creator and change your focus to being a great manager and hirer of people.

Hiring A-Players multiplies everything you do well already and gives you leverage to open up new channels of marketing. You can hire full time copywriters, designers, developers, content creators, marketers and ad buyers.

This extra capacity allows you to not only tighten up everything you do to the extreme, but you can replicate it horizontally, taking your existing marketing channels and rolling them out in new places, creating new products and attracting new customers.

In Phase 3 your business is no longer YOU, it has become US, a team of people each working a specific role that helps the overall business grow exponentially quicker.

In Phase 3 your business is no longer YOU, it has become US, a team of people each working a specific role that helps the overall business grow exponentially quicker.

For example, you can implement campaigns on YouTube, podcasts, blogging, affiliate marketing, CPC ads, retargeting, display media, press – everything you can think of.

In phases one and two it’s impossible to do this because you don’t have the capacity. Once you have the cashflow and a dependable money making system with metrics you know convert, you can open up any channel you want to and potentially bring in thousands of new customers.

However it’s a mistake to move to this phase before truly mastering the previous two phases. Hiring is a full time job and if you still spend a lot of your own time doing things to keep cashflow coming in, you are not ready to make this change.

Phase three can take you from a million dollars up to hundreds of millions and even billions if your market is large enough.

Bear in mind, your job significantly changes at this stage – you are not doing the same things you do in phase one and phase two. You go from creative content creator, to CEO, overseeing a team who does a lot of the jobs you used to do.

You may never want to enter phase three, but if you have ambition to create a seven or eight figure business, chances are you have to.

Make The Right Choice For Today’s Business Goal

Many of the choices I made when I was recreating my business were mistakes because I was going after things prematurely.

For example, I learned that you shouldn’t attempt to open up new channels of traffic unless you can profit from them, and don’t hire people to create content for you that you can’t leverage immediately.

These problems stem from mindset and strategy issues.

If you’re not clear on your target market or what you should sell you are going to have some latency (gaps) as you test things to figure out what works.

Latency results in making mistakes to figure out what is not a mistake.

One of the reasons I made the mistakes I did is I had money to spend. Having money meant I felt like I should use it to expand my business. However I didn’t do it in the right way, so I ended up wasting money.

Sometimes it’s better when you don’t have money because it forces you to focus on only what immediately delivers what you need — money!

As a result of these experiences, in recent years my focus became much more simple. I stopped trying to expand in ways I didn’t need to. Instead I focused on what was already working and looked for ways to grow there.

I also used this strategy when hiring people, focusing on finding help to solve immediate problems and leverage what already works in my business, and not hire people just because I want to do something new.

In hindsight this seems so obvious.

Over the years I’ve read many books that reinforce the idea of focusing on your strengths or core competency (Jim Collin’s Good To Great and the Hedgehog Concept for example). I teach this idea myself in much of my writing and programs, yet even so it’s still hard not to be distracted by the constant desire to ‘do more’.

Hopefully through my story in this article you will find greater focus too.

Yaro Starak
Focused

About Yaro Starak

Yaro Starak is the author of the Blog Profits Blueprint, a report you can download instantly to learn how to make $10,000 a month, from only blogging 2 hours per day. You can find Yaro on Facebook, Twitter and .

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12 Comments

  • When it comes to hiring, it seems like people always want this to be the first phase when they think about “growth”. I think it’s very cool how you pointed out that it should be way further down the line.

    And when you get to the phase it’s very easy to make numerous noob mistakes.

    Eben Pagan taught me a lot about this phase and how one of the primary things you should be focused on is…

    Know The Personality Traits You’re Seeking – Seek An “Organizer” First If You Are a Creative Type

    Eben divides people he’s looking to hire into two groups – Creative People And Organizing People.

    Creative people are big idea people, they like brainstorming and they don’t mind changing things.

    Organizers like to work a plan by a list and a schedule and keep things on track and they get kind of freaked out if things don’t go according to plan.

    And because we like people like ourselves, our tendency is to hire people like ourselves.

    But if you’re a creative type, you for sure want to get an organizer in your business to help with the administrative stuff and to help keep you on track.

    These people will help you make sure you aren’t running around in circles and that things get done when they’re supposed to get done.

    One of the best ways to find an organizer is to KNOW you’re looking for one – you want a person who lives their life according to a schedule, a life plan and a to-do list that they rigidly adhere to.

    If you’re a creative person, another “big picture, go with the flow, idea person” is NOT going to help you get things done. And if you’re an organizer, there’s a bunch of this administrative stuff that can be handed off to someone else so that you can focus more of your time on products, marketing and distribution.

    Running with this advice can make all the difference in you taking your newfound wealth and either feeling like you’ve flushed it down the toilet or… feeling like it was the best money that you have ever invested into your business.

    Thank you Yaro for reminding me of lesson that I can’t be reminded of often enough.

  • PeterGjersoe

    See, I told you to stay in Brisbane, I’m sure your cat would have preferred you staying. Jokes aside; Go for Gold mate, there is a reason you are on the path you are on. All the best.

  • Hi Yaro, Thanks for sharing your experience with us. It will really help me to learn it better. My father said that people should learn from their mistakes and learning from that mistakes helps to don’t mistake next time. If do mistake then we can suggest other person to do that mistake as you have expressed here. Therefore mistake teaches us.

    You have advised very well and I have learned many things from this article of your big mistake. You have pointed very well about the difficulties of our life. But we should always fight with them. You are great “who sees the problem as opportunities”.

    Your phase 2 and phase 3 part is awesome and interesting for me.

    Thanks for sharing such precious article.
    – Ravi.

  • Thanks, Yaro. I am in the process of reinventing my offerings, and really relate to you you describe. I am doing many of the same things you describe. Doing things that aren’t immediately important and paying a lot of attention to things that could help some time in the future. plus pausing from the work at hand to consider every shiny possibility that passes by in the meanwhile. Your article made what I am doing visible to myself. Thanks for that! I appreciate it.

  • Welcome back Yaro. I’ve really missed receiving your emails so you can imagine my surprise when yours just popped up in my inbox. Great read by the way. I’m in the process of creating my blog and I totally agree with you that priority is key. If you’ve ever tried cooking many dishes at the same time, you’ll understand perfectly

    • Oh ken you might want to check your spam folder, I send at least one email a week most weeks!

      Your cooking dishes analogy is a good one.

      Yaro

  • Hi Yaro,
    How many people are on your team and what do they do?
    I assume you are in phase two? Any ambitions and your thoughts on trying for phase 3?
    (A few hundred k/year would do me just fine;)

    Cheers

    • I’ve got a podcast coming out soon regarding my current team Anthony, so look out for that.

      In terms of trying for phase 3, I don’t think I ever will (although never say never – perhaps I will try for phase 3 with a new business one day).

      I’ve always been more about the freedom and flexibility of the laptop lifestyle, and you lose that when you push to phase 3, at least initially. It might come back years later once you have a great time running everything, but you can have it a lot sooner if you stay in phase 2.

      Yaro

  • Hi yaro…I always read your post from a link that came in my email and this post is just like what i feel this year…I wonder why i always not meet my goal even i think my ideas are good or have a lot of market. Just like you, i always paid other people to do what i need and sometime i even don’t know if i really need to hire them. Very inspired post from you again!

  • Wow Yaro. Thanks so much for this. One of the 3 core things my business does is recruiting for organizations. Many times, we find a great candidate we are excited about. Then a couple of weeks later, we discover that the candidate is not a great fit for the position.

    Your blog profit ebook has helped me to start and build my blog. I play the audio version whenever I need to get inspired to keep writing.

    Thanks a lot.

  • Thanks for sharing this Yaro.

    It’s helps to see that even seasoned professionals can suffer from bright shiny object syndrome too.

    I think my biggest takeaway is your point about focusing on what you are working on now. There are so many things to learn about – and so much great info out there -that every time there is a webinar, course, ebook, summit – you name it, it is hard to say no for fear of missing something really good.

    But all of it can serve distract as well.

    I am refocusing even now as I type this. 😉

  • Max

    Am I the only one who noticed the huuuuuge coffee/tea? Haha.

    Anyway, love the article!

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