The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future (26 page)

Principle 3: Get Paid More Than Once

The final strategy for making sure your business gets off to a good start is to ensure that your payday doesn’t come along only once—you’d much rather have repeated paydays, from the same customers, over and over on a reliable basis. You may have heard of the terms
continuity program, membership site
, and
subscriptions
. They all mean roughly the same thing: getting paid over and over by the same customers, usually for ongoing access to a service or regular delivery of a product.

Back when people read newspapers (actual paper ones), they would subscribe to have them delivered to their doorstep or office. These days, iTunes and Netflix offer subscriptions to your favorite TV show or a regular series of movies. The utility company has a recurring billing program; every month you pay it for the ability to turn the lights on and heat your water. For decades, the Book of the Month Club (in various forms) has delivered new books to its members on a recurring basis.

Almost any business can create a
continuity program
. Speaking of book clubs, there is also a Pickle of the Month Club, an Olive Oil of the Month Club, and a Dog Treat of the Month Club. In Portland, my friend Jessie operates a Cupcake of the Month club. If you like bonsai plants but aren’t able to keep them alive very long, the Bonsai of the Month Club is for you, but you’ll have to choose among four competing companies that offer different versions.
^§

Why is getting paid over and over such a big deal? First, because it can bring in a lot of money, and second, because it’s reliable income that isn’t dependent on external factors. Let’s run some quick numbers, assuming you offer a subscription service for $20 a month:

You can tweak either the number of subscribers or the price of the recurring service to see dramatic improvements. For example, adding 50 more subscribers generates $1,000 more per month, or $12,000 more per year. Raising the price to $25 a month with a subscriber base of 1,000 generates $5,000 more per month, or $60,000 more per year. Adjusting
both
options—attracting more subscribers and raising the price—generates an even greater increase.

(Note: Don’t get too hung up on the exact numbers here. The point is that in almost every case, a recurring billing model will produce much more income over time than will a single-sale model.)

Even better, after you attract customers to a recurring model
(and ensure that you keep them very happy), they are much more likely to purchase other things from you. Brian Clark is an expert at continuity programs, having created a true empire from the art of moving customers from one-time purchases into recurring subscriptions. Here’s what he has to say about this process:

The most important thing Brian says here is in the last paragraph: “It’s not market share; it’s share of the customer.” Like many of the people in this book, Brian doesn’t spend much time worrying about what other people are doing—he worries about improving his customers’ lives through helpful services. As a result, he gets paid over and over again.

Getting paid more than once is great, but be aware of a couple of concerns. First, many consumers are wary of subscriptions, because they worry that they’ll keep getting billed for the service after they stop using it or that it will be a big hassle to cancel. (To deal with the second problem, I created a “no pain in the ass” cancellation button for my site.) To encourage broad waves of initial sign-ups, many programs offer free or low-cost trials to get new prospects in the door. This works, but there is often a huge dropout rate after the trial ends. Just be aware of this, and make sure you continue to provide value as long as people are paying.

After I met Naomi Dunford in England, I saw her again a year later in Austin, Texas, where we were both in town for the South by Southwest (SXSW) Interactive Festival. Earlier that day, she had run into a money problem. The problem wasn’t a
lack
of money; her business was doing extremely well, on the way to breaking the $1 million a year barrier. The problem was
access
to money. Because Naomi is Canadian but has lived in the United States, the United Kingdom, and elsewhere, she often has issues with her PayPal account being closed as she travels the world, leaving her with plenty of funds in the account but no way to access them. In this case, she needed $900 to register for a conference that had just been announced … and would sell out quickly. What to do?

Naomi realized that although she didn’t have $900 with her, she probably knew someone in Austin willing to loan her the use of a credit card so she could register. Asking around, she found three
volunteers in the first two minutes who all said, “Sure, no problem. Here’s my card.”

As we talked about it further, we realized that most of us have access to all kinds of financial and social capital that we don’t usually think about but could call upon easily if necessary. If one guy hadn’t lent her his credit card, someone else would have. The trick was that she had to be willing to think creatively. If she had just said, “Oh, I guess I can’t register now,” she would have missed out. Being able to think of different means to achieve her goal led Naomi out of the homeless shelter a decade ago and to the highly successful IttyBiz. “Right before starting,” she said, “I was taking the bus to work, making 55 percent of a $30,000 income. My phone was cut off from lack of payment. Now I employ six people and help hundreds of others become self-employed.”

We all have more than we think. Let’s put it to good use.