In the final post of this series, we’re going to take what we’ve learned about using Upwork to build a profitable Subscription Web Design business and apply it to some very practical concerns.
As a reminder, the past two newsletters can be found here:
In Part 1, we discussed the philosophy of Upwork and how to overcome some major mindset hurdles as it relates to hiring people to work for you.
In Part 2, we looked at why I prefer to work with Filipinos when the opinion is available to me, and how best to go about hiring people for your team.
In this third and final installment, let’s talk about how you actually make “scale” start to happen.
Is it really possible to hire people when you’re charging monthly for web design work?
Yep! And once you understand what makes this possible, I’ll show why it’s less about the people you hire and more about the system you create.
Are you subscribed yet?! I would really appreciate your subscription so that I can send you awesome new content as soon as I have a bright idea!
Let’s dive in!
How to Fix the Scaling Conundrum
“Steve, this is incredible!” I heard, as I quickly jerked the phone away from my ear so as to avoid lasting damage.
My best friend Jared called with one of those smiles you can hear and a level of excitement that comes along with only the best kind of news.
“This is incredible,” he said, “I just made a nice profit and didn’t do ANY of the actual work! All I did was communicate with the musicians, make sure my client’s vision for the project was captured, and it is BETTER than I could have imagined! I definitely get it, now.”
When he said those words, my heart jumped a bit — he finally had the same “magic epiphany” that I’d had a few years before when I started hiring people for NorthMac Services.
Jared is a highly sought-after studio musician and has a dedicated roster of clients who send him consistent work.
As a multi-instrumentalist, a mild computer nerd, and with a lifetime of experience in the music industry, he has all the tools to complete projects for his clients by himself — and they sound amazing.
Is that starting to sound familiar? Do you have the skill and ability to do everything yourself…and so consign yourself to that reality?
Jared never really saw the value until he did it for himself, but the math is something quite simple to understand:
Let’s say Jared charges $400 for a recording, and it takes him 6 hours to produce it from start to finish. For that time, he will make about $66/hour.
Not bad. Not great.
However, let’s say he charges the same $400 for the song and pays someone else to do the actual work for $200.
Now, Jared’s made $200… his hourly rate? By the time he’s worked with the client and the musician…probably $200/hr! Let’s say it took him two hours of work, that’s $100/hr.
His effective hourly rate just went up big time
He made money even though he did zero of the actual work
Now—your initial thought (and his was!) is perhaps something like this: “But, in scenario 1, I made $400! I only made half in scenario 2…I can’t afford that!”
And this is the big secret of scale: If you only work two hours instead of six hours, you can do 3x the number of projects in the same amount of time.
Are you getting this?!
That means for every ONE project Jared could do before (doing all the work), he can now do THREE (simply managing the project).
In that same six hours, Jared has made $600 instead of $400 ($200 x 3 projects). And not only that, his quality of life has increased for two reasons:
It is highly doubtful that he actually spent the whole two hours working on this. In all likelihood, it was a scattered 10 minutes here and then responding to emails, taking a phone call, etc.)
Even if he did spend the whole two hours, project management/oversight is a different kind of work than sitting in front of a computer and recording music—it’s much more flexible and adaptable to the kind of life you want.
Why did I share this story?
Because you’re too close to web design! I needed you to see how this works in a different line of work so that we can apply it to what we’re doing.
Once Jared did it the first time and saw what was possible, it changed everything.
If you make a little less money per project, but you can scale up the number of projects, you can make more money for less work.
And that’s the magic.
So, how’s it work in Subscription Web Design?
Glad you asked!
The short answer is: It’s exactly the same… kind of 🙂
Here’s the long answer:
If you’re doing traditional web design, the same thinking I described above can work for you right now.
If you charge $1500 for a project, and it takes you 30 hours to complete, you’ve made $50/hr. If you paid $750 for that work be done by someone on Upwork, and you simply managed the project, you might only spend 5 hours (if that). In that case, you’ve made $150 per hour ($750 profit / 5 hours of work), and got back 25 hours of your LIFE! With that 25 hours, you can do anything you want: take on more projects, spend time with your kids, etc. Do you see the power?
Now, with Subscription Web Design, there’s one more variable we need to factor into your thinking: Playing the long game.
In business lingo, we use a metric called Time to Profit (T2P).
In the model I teach, I recommend you operate in 18-month “cycles.” If a client only stays for one cycle, you’re entitled (per your contract) to the monthly rate you charge for 18 months of payments.
That means, for the next 18 months at least, you have a consistent income to plan for.
If you’re hiring the project out (either in the same way a general contractor hires subcontractors or you have a dedicated team/employees), you will have to pay them “immediately” for their work. (I used quotes because your payment terms with them are negotiable and maybe they bill you weekly, monthly, etc.)
You will pay them during the timeframe of the initial build, which in my agency is 6-8 weeks. So, a couple of months.
That means—and this is crucial to understand: You might pay them as much or more, for their work on any given project, as you make from the client for that project while the build is active.
Let’s be practical:
If you’re receiving $250/month from a client, and you owe your team $250/month for their work (based on their hours), and it takes them 2 months to complete the project, you’ve broken even for 2 months, and not made any money.
Does that make sense?
So for the first 2 months, you’ve made zero dollars. Sounds like a bad deal so far… what gives?
Ah, but month 3 comes.
And what happens? You receive your payment from the client for $250… and for THAT project… you pay out (probably) nothing. That means you get to KEEP that $250. So your time to profit is 2 months. After two months, you are now profitable on that project.
Let’s say you do as I suggest and offer 1 hour per month of monthly maintenance for that client, and your team works for that hour. If you pay $20/hour, you owe your team $20.
$250 profit from client – $20 expenses to team = $230 profit.
And that income rolls in for the next 16 months!
That’s how it begins. After doing this for a while, the scales tip, so that some of your money coming in from other clients will go towards paying for other client projects to be actively developed, some of it is owners pay for your family, some of it is taxes, some of it is profit for the business, etc.
I call this concept “buckets of money.”
Eventually, the buckets of money will be big enough that you can be flexible and “move money around” (even if only in your brain) in order to accomplish the work that needs to be done.
As your Time to Profit becomes a predictable number with more experience, you have:
Some insight into how much money you can spend on new client acquisition
How much money you’ll need to “borrow” from other profitable projects to cover the costs of your active builds
A better idea of whether or not you should take on a certain kind of project because it might fall out of acceptable T2P ranges for you
Now—one rather obvious caveat here is that, to get started with this, you really need to have dialed in your financial runway.
For now, let’s talk about what your business needs to look like after you’re operating this way for a while.
The Service is the System — Not the People
In his modern classic, The E-Myth Revisited, author Michael Gerber pulls no punches and uses the sort of “Real Talk” that would both embarrass most web designers and have them nodding in agreement at the same time.
The “big secret” of the book is that a BUSINESS is not the same thing as a technician wearing every hat.
In effect, that is a job, except with way more stress.
He depicts what he called the “Franchise Model” using McDonald’s as his Muse.
To summarize, when Ray Kroc bought McDonald’s, there was a downtown office that had the name “McDonalds” on it—but that building didn’t have burgers, fries, shakes, or silly hats.
You see, the brick buildings with a play place, burgers, and fries make those items for the end consumer. At the downtown office, they made McDonald’s.
Put more specifically, that is where they made and refined the system that is a McDonald’s franchise.
Does that make sense? Do you see how you need to spend time working on your BUSINESS instead of on the PROJECTS your business completes?
Now—the point is not to turn your web design business into a franchise. The point is that a business can be systemized to deliver consistent, amazing results for clients.
Yes, I’m talking about Standard Operating Procedures
I highly recommend you pick up a copy of the E-Myth. It is a transformational book.
However, I don’t think you should wait another SECOND before implementing what is probably the biggest practical takeaway from the book:
You need to have Standard Operating Procedures (SOPs) for everything in your business. Even if you’re a solo shop.
This is for two primary reasons and one secondary reason:
Primary—the first person who should be delivering on your commitments consistently is YOU.
Primary—the moment you start hiring, there is no faster or better way than to hire someone who can plug right into the systems you developed.
Secondary—if you’re ever to (1) sell your business or (2) to create optionality in your life, freedom, travel flexibility, etc., you need a business that can run without your daily involvement.
(How to make SOPs are beyond the scope of this post, but the quickest way possible to is to grab a Loom account and start TODAY making videos for every process in your business. You’ll have them when you need them. It could also be as simple as checklists. Not rocket science; you just have to do it.)
And this is why I say it’s not about the people, it’s about the system.
Please, please don’t misunderstand my point: I love my people. They are high performers. They do a fantastic job. I literally couldn’t do it without them.
But people will come and go. That is life. That is business. That is reality.
And if your result ebbs and flows with each personnel change, the very soul of the work your business does will change with it.
Of course, we do creative work, so there will always be those slight differences in the end product for customers. And it does behoove you to find folks who are good at what they do.
However, FAR more important is that they are able to create an amazing, repeatable result for clients based on the directives you give them.
And by the way, as far as I’m concerned, you can take this as far as you want. If you want all of your websites to look a certain way, then either create or find a design course that will teach them that and make it a part of your onboarding that they must go through this course.
One of the most controversial (nevertheless true) statements made in the book is that if you want to hire massive talent, that often comes at a massive financial premium.
It’s hard to find, pay, and replace those types of people.
If, however, the work can be done by the person with the “minimum necessary amount of experience” you can:
Find people with reasonable salary/pay requirements
Train them to work well within your system
Develop them from the ground up
It’s a net positive, for sure.
Remember—your people matter, of course. But that is an entirely separate question from whether or not you are depending on people or the system.
People come and go. The system is there to stay and be refined over the (hopefully!) decades of a successful business.
Systems create a reputation for your business and a steady flow of happy customers that can either be your retirement plan one day or you can sell one day.
Regardless, none of this is possible if you’re doing all the work in your business.
That is why you should seriously consider scaling your Subscription Web Design business.