FINANCIAL PUBLISHING

FP OWNER INCOME SUMMARY

The first financial target is often based upon paying yourself some level of compensation. Profit margin tends to run at about 50% in a well-refined FP business, so we take the amount you want to pay yourself and double it to establish your initial revenue target (IRT). Then, we divide IRT by ARPS (Average Annual Revenue Per Subscriber) to estimate the quantity of subscribers needed to reach your annual income goal. Here's a good variety of realistic potentials for this kind of business...

For example, if you initially want to pay yourself- say- $300,000 each year, you need revenue of about $600K to create a $300K profit. How many subscribers do you need? If your ARPS is $550, you need only 1,091 subscribers. If you set that as your initial goal, we would build your marketing plan in support of quickly acquiring 1,091 subscribers... and applying well-proven strategies to drive ARPS up to $550/yr.

Once a new FP entrepreneur achieves their initial income goal, they raise the bar... often wanting to quickly scale to the upper end of what a small FP can make. This tends to be around $3 million per year for as little as a one-person FP. $3 million in revenue at about $550 ARPS is a database of about 5,500 paid subscribers. A $3M/yr FP business can yield approximately $1.5M/yr income for its owner at typical industry margins.

It often takes adding some human infrastructure to become a mid-sized FP as the "guru" side of things will often need some more analysts/traders to run some additional products. These people are sometimes presented as "junior" gurus: often interns or less-to-moderately-experienced analysts to "take under your wing and develop." Alternatively, you could use outsourced ghostwriters & ghost-analysts to do the work for you and then make all claim to their output under your own name. Both are popular practices within the FP industry for serving a larger number of subscribers.

Some even larger FPs make in excess of $100 million per year. These typically have HR infrastructure in the dozens to low hundreds of employees to support expanding operations at those revenue levels. Yours can grow there if you want to make much more income than any of the options shown in the table. Note that pretty much ALL OF THEM started out as only one or two guys or gals with FP entrepreneurial ideas.

PROJECTING REALISTIC REVENUE FOR FP BUSINESSES

The following table shows various revenue generation possibilities at various ARPS levels based upon common industry business metrics & norms...

One last, bountiful thing that many would-be FP entrepreneurs often seem to miss or not quite "what-if" when they are thinking about building this kind of business: all subscription business owners enjoy a special benefit when it comes to their revenue... that one year's sales are likely to be mostly replicated in the following year(s) courtesy of the recurring-revenue nature of subscription models. At their core, the bounty of subscription models revolve around passage of time. They are LONG PLAY business models.

Burgeoning FP business entrepreneurs tend to plot out only a single (first) transaction or maybe their first year's revenue, somewhat ignoring one of the best and most tangible of monetary benefits for this kind of business. We encourage them/you to think beyond a myopic short-term view by including at least a second year in any "what-if" scenarios. Why?..

For example, suppose you "what-if" a 1,500-person subscriber base who- on average- pays you about $250 each for your new service (ARPS = only $250 in this scenario). You are projecting $375,000 in the first year.

The new FP entrepreneur is usually comparing what can be made in only ONE transaction against what they might spend in ONE year. That's thinking about revenue of $375K in this scenario and deducting all startup investments they make, such as their "get ready" project. What is sometimes overlooked is in the mismatched comparison: recurring revenue stream vs. the entirety of one-time costs. The better "what-if" view is through a longer-term lens, where you can see the real bounty of a good subscription model.

A subscription-minded entrepreneur knows that time is a key ally. Incorporate the second year into your own considerations and many of those same subscribers are going to pay again through their renewals. You don't have to find a separate batch of 1,500 subscribers to replace that $375K in revenue for year two: the same people are very likely to renew their subscription. You also don't have to invest in a "get ready" startup expense again in year two- the same product, website, app and other assets are ALREADY in place as you begin subsequent years.

If you only replicated the same new business acquisition results in year two, you add another batch of 1,500 subscribers. If most of the original 1,500 renew, the "what-if" is nearly 3,000 subscribers at revenue near $375,000 times 2, or $750,000. So at the end of year two, you make about twice as much as year one without much of year one's startup investments.

The further out you forecast FP revenue projections, the more the passage of time enhances the picture. For example, most of the year 1 & 2 subscribers will renew again in year 3. And you probably won't be satisfied:

• aiming for ONLY 1,500 additional subscribers again in year 3. And/or
• sticking to an ARPS about $300 BELOW a very doable industry metric (at $550/yr).

Factor in a little more subscriber growth and a higher ARPS and the forecast gets very sweet. Then, think about how those improvements impact years 4, 5 and beyond.

Unlike almost every other kind of business you could start, subscription revenue- by design- doesn't reset to zero at the end of the year. You do not have to chase brand new customers from scratch to try to beat your prior year's revenue numbers. Instead...

To properly assess the opportunity, a subscription model entrepreneur should "what-if" through a longer-term lens because that's where the meaningful profit most shows itself... over and over. You don't have to build the business assets from scratch EVERY year, only in that first year. Certain economies kick in that aren't there in year 1. Instead of reaching in your pocket for funding, there are revenue- AND RENEWAL- inflows of OPM (Other People's Money) that can be used to push the growth accelerator, fund new initiatives or taken as additional income. Etc.

NEXT STEPS

Once you are ready to engage BI to help you with this project, the next few steps are simple. BI will draft a simple engagement agreement formalizing what we will do for you, fees for those services, etc. You review the agreement, we work through any desired changes or adjustments and then finalize it. You sign and send it plus the first fee payment for services to us and we are officially engaged on your project. It's not so different than hiring a team of capable employees, except you do NOT have to also provide office space & equipment, 401K, health insurance, vacation pay, social security matches, etc.

Once underway, this project always begins with a brief discovery period in which we are collaboratively getting our brains around all that you might want to do in this business. This is commonly called a "big brain dump." You tell us about your capabilities, history, show us any examples of your work, track records (if any), etc. This is also where we are getting a sense of your unique personality, so that we can customize YOUR FP to best reflect you as the big brain driving everything. Fully respective of your schedule, we will ask many questions to help us prepare to do the various kinds of work involved in this project.

Once we feel like we have a good sense of all that you can do and all that you can become in time, we get on with the work of developing the 5-6 big "get ready" tangible deliverables so that they mesh well with your present & future self. On completion- when all is ready to go to market- we can execute that launch marketing plan you approve to initially monetize the assets and work with you to rapidly grow your new business from there.

If all this sounds fine, let us know and we can get the draft agreement started. We hope you’ll allow us to help you put your new FP business together with all of the "best of" advantages our well-proven FP industry talent can provide. If you are serious about growing a successful FP enterprise, it is wise to leverage our deep experience within this industry. Do it right the first time so you can go to market as effectively as possible. Carpe Diem!