How Do We Create A Business Plan?
It's not enough to want to have passive income. You want to create magic, and to create that magic you need the help of the three-prong system when designing your business plan.
Businesses such as Harley Davidson, football, cricket, and of course, big organisations have the three prong system at their very core. At Psychotactics, we've used the three-prong system the moment we figured it out. It's more than a business plan, it's a long-term understanding of where you business will be for years to come.
The Transcript (Unedited)
Back in 1990 I used to work for an advertising agency and I had a great boss. Every time I ask my boss, “Can I take the day off?” She would give me the day off.
Now you would think that was an ideal situation but it wasn't for me. I didn't like to ask for the day off. So I started my own business. But that didn't really solve my problem because I was a cartoonist back then and whenever I went on vacation, I would comeback and I would meet with my clients and they would say something like, “Oh where were you?” I would say, “Oh I just was on vacation.” They'd say, “By the way we were looking out for you and we can't find you and so we gave the job to someone else.”
That could get me really stressed because now, no longer was I losing out on the jobs but I wasn't enjoying my vacations. I was always worried that I was losing out on money and I have competitors now because my client were going out and finding people while I was on vacation. I had to sit down and think about it, how do I overcome this problem? I need a proper business plan.
Interestingly, organizations that have lasted hundreds of thousands of years have a system that has worked amazingly well. I call it the Three-Prong System.
What is Three-Prong System?
Every business should have a business plan. And this plan, no matter which business you are in, should be built on The Three Prongs System.
The threeprongs are:
Let's start with consulting.
Part 1: What is consulting?
Consulting is just a fancy name for one-on-one. Effectively when you go out there and you speak to a client then what you're doing is you're physically going out there. You have to be there for the transaction to happen. That's such a pain because you have to go to meeting after meeting after meeting. And driving. It's such a pain.
There are meetings but I also enjoyed it a lot. Consulting could be something like meeting with a client for coffee or for lunch. When you physically have to go across and you have to be there in person. That is one-on-one, that's what you see, lots of trades people doing, they come to your house, they fix up the plumbing or they do some carpentry. Effectively what they're doing is consulting. They have to be there because if they're not there, they don't get paid. This is the most tedious way to get paid.
Let's move onto the second one, which is training.
Part 2: What is training?
Training is one-to-many. When you do a workshop for instance, you're one person and there are many people at the same time. Courses, webinars, anything that is live and needs you to be there at a specific time and specific place is what you call training. That is less intensive than consulting because now you are dealing with a whole bunch of people. But it's not as great as leverage.
Part 3: What is leverage?
You already know what leverage means. Leverage is just, you don't have to be there. It's an Elvis business. You've left the building as it were. You're at the beach, you're somewhere else, you are at the café or you're just asleep or on vacation.
The point is that when you have books or recorded podcast or products or services that are selling while you're not around, that is a leverage business. It's very easy to come to a conclusion that the leverage business is the best business going. It's not. It's only one of three prongs.
Let's take an example to find out just what this means.
When we look at organizations such as religious organizations, we see the best structure of the three-prong system. They have consulting where someone can meet with you one-on-one. They have training which is one -to-many. Then they have leverage, where they sell books and things that you would buy if you are part of that religion.
When we say religion, your mind automatically goes to something like a church or a mosque or a temple, wherever you come from. However, religion can mean anything.
Harley Davidson has a bunch of people called hogs, H-O-G-S.
They are part of a religion, the Harley Davidson religion. When you look at football, again it has a religion. All of these structures wherever you're part of an organization, part of a system, will have this structure in place and some structures will be better than others.
However, what you need to do is you need to figure out, how am I going to do this and how is it going to help me take more vacations? The answer for me lay in the fact that I had to less consulting. This is what you've got to think about. All of us love to consult. All of us like to work with clients.
Many of us like to work with clients. The reason why we like to work with clients is simply because it's one-on-one, it's not having to deal with the big crowd. It really helps if you're an introvert. It also helps if you're an extrovert because you're still getting to meet people.
However, once we step out of the comfort zone, we also increase our income. That leads us to training. Now training is effectively harder because now you have to deal with a group of people. However, what is happening here is pretty obvious. Instead of earning $20 an hour working with one person or $50 an hour working with one person or $150 dollar an hour working with a single person, you are earning a $150 multiplied by 10 or 20 people.
What you're starting to do is earn a much larger fee for the same amount of time and possibly the same amount of effort. When we move on to the last part which is leverage, you are now taking that information that you put in that workshop or in that webinar or in that series. You're putting it together in a format which is an information product. That gives you leverage.
But you already know this.
You've seen training and consulting and leverage. How are you going to implement the information?
You have to sit down and work out something very important. That is, how much of your business is consulting-based? How much of your business is training-based? How much of it is leverage?
You want to have the smallest slice of that pie to be consulting. Because consulting takes up the most time and effort and in most cases, brings the least result or the least income or the least impact.
You have far more impact with training and you have even more impact with a book or a workshop or a training that has been recorded and then distributed to a whole group of people. What happens as a result is, someone might read a book and then come in for consulting. Someone might read a book and then come in for training. This is what happens.
When we started out, I didn't really have this system in place but I did have a training situation. I spoke in front of a group of people and someone asked me to put it down as notes. I didn't have a name for the book but I called it, The Brain Audit. Then we started selling the book. As a result of the book, we started getting revenue from leverage which was just the book. It was just a 16-page book at that point in time but we started getting the revenue from the book.
We also started getting people coming back for training. We could have little workshops and that got us started, because we were new in New Zealand. We didn't know anyone. It was this little book that was helping us on our way. Finally, what it did was help us to create a membership site which is 5000bc. Everyone who read The Brain Audit and only those people were allowed into 5000bc. It has helped us create consulting, training and leverage and it continues to do so.
The question that arises is, why don't we just give up consulting?
Why do we bother with consulting at all? The reason is just that consulting brings up questions. When you deal with at least some people, one-on-one, they bring up questions. That helps you to develop your products and your services a lot better. Training, consulting and leverage. They all community-exist with each and they're all responsible, you can look at them as doorways.
If you have only one door that your clients can enter through and leave, then they enter and they leave. But if you have many doorways, then they kind of cross-pollinate. That is really powerful to watch.
But more than anything else it allows you that possibility of breaks after vacation. Because the information, the products, all of that stuff keeps selling while we're not around. While we're on vacation, 5000bc continues to take over. It's another story how it takes over but it continues to be a form of leverage. While we're on vacation, the books and the products and whatever we've recorded, all of that continues to sell. You're taking a paid vacation.
That is the business plan you need—Three-Prong System. It's leverage, training and consulting. One-on-one, one-to-many and once recorded and sold forever.
What's your action plan as a result of listening to this three-prong system?
The first thing you need to do is just go back, get a piece of paper, draw a circle and then divide that circle into three parts. How are you going to divide it into three parts? You're going to divide it based on how much consulting you do, how much training you do and how much leverage you have. Some of us will have nothing. Some of us are just starting out and that's what I did. You're going to determine how much you want to have. Accordingly, you're going to have to study and put things together so that you get really good at that sector.
Supposing you want to do training then you want to read books on how to do better presentations, how to do better webinars, and all those kinds of things. If you, on the other hand, want to write books, you probably want to do an article-writing course and information product course.
That is your forte at this point in time. It's not enough to just listen to people and say, “OK, I'm going to write all these books on kindle and I'm going to make a fortune.” What you've got to do is figure out where you want to go. If you're already in the business, you're already quite established, you might find that you are doing training. Whether you're spending 60%-70% of your time outside your house, you don't see your kids, you don't see your family, you don't really get a break.
You want to change that around and start moving in another direction.
That's really what the three-prong is so powerful.
It's about figuring out if you're doing too much consulting or too much training or too much leverage or if you're not doing anything, how to go about it.