Want to Build a Business to Last? Here’s the Secret
Editor's note: The following is an excerpt from The Age of the Platform: How Amazon, Apple, Facebook, and Google Have Redefined Business. Published by Motion Publishing (2011).
As 2011 progressed, I began to feel a compelling need to write a book about the platform as an important and new business model. As I will explain shortly, I have learned from personal experience that building a platform is not only beneficial, but also imperative for many companies' survival. I look at myself as a case in point: In a relatively short period of time, I redefined my business and launched completely new products and services. How did I do this? In short, I built my own platform.
By way of background, from 2002 until 2008 with a few brief exceptions, my entire livelihood was tied to one fairly specific type of work: enterprise resource planning (ERP) consulting.
Even that type of relatively provincial work involves a wide variety of people and technical skills. Let's just say, however, that more than 99% of all companies never considered engaging me. And probably 99.99% did not need me at any given time.
Despite this significant limitation, by 2008 I had started to come into my own. That year, I knocked the ball out of the park, making more money than at any other point in my life (nearly $250,000). I had concurrently balanced several difficult projects and had taken just one week off. For me, 2008 was the very definition of the "feast" year about which independent consultants like me dreamed—as in feast or famine. By any measure, I should have been ecstatic.
How long would the feast last?
Yet, at least professionally, I was quite concerned. At the time, I was 36 years old. As I gave my accountant my third-quarter financial statements to prepare my taxes, I told myself: I had better enjoy this while it lasts, because it just couldn't get any better. I couldn't raise my rates forever and there were only so many hours in a year. Plus, rarely does an independent consultant like me move seamlessly from one project to another for an entire year as I just did. Downtime was a given in any economy, and ours was getting worse.
I knew that I needed to diversify and establish myself in different lines of business—or face dire consequences. But somehow that didn't seem sufficient. I strongly suspected that I would have to refine my entire business model—and maybe even blow it up. In the long-term, this shift was necessary, but there was a short-term problem: No one cared. The world at large was not terribly interested in my decision to enter new lines of business—nor were many of my clients for that matter.
If I was going to be successful in diversifying and mitigating my own risk, I would have to build my own platform.
Fast forward to mid-2011. As I send my same accountant my quarterly financial reports, "Simon, Inc." barely resembles the company of less than three years ago. That same type of consulting that generated more than $200,000 in revenue for me in 2008 is now barely a line item on my P&L statement. I had completely transformed my business. In part by accident and in part by design, over the next three years I launched entirely new lines of business. I earned money via services such as website design, writing, book coaching, marketing, and other areas for which I had no formal training. I made money from book royalties and mobile app sales. I also started a publishing company and a public speaking practice. In large part, I would have not been able to pay my bills and continue working for myself if I had not built an effective platform.
However, platforms are not elixirs. You still have to do the work. In my case, I had to develop a new brand and offer services that people would want—and pay for. (For more on that, check out the book.)
For three reasons, I'm glad that I started diversifying and building my platform when I did. First, I was beginning to tire of working on the same types of highly contentious projects.
Second, I wanted to tackle new challenges and continue my own professional development. Third and most important, my shift turned out to be an economic imperative. In hindsight, my timing could not have been better. By early 2009, ERP consulting had slowed to a trickle, and many of my colleagues had either lost their jobs or could not find work.
Although I have yet to replicate the financial success of 2008 (and may never do so), my platform-based business model is much more sound and resilient to risk. I start each year with a fair amount of base income from my writing and speaking clients. What's more, book sales generate passive income for me. Unlike years past, I no longer start at zero every January. As my platform continues to evolve in new and unexpected ways, it generates new income and opportunities for me.
Have you made moves to turn your business or career into a platform? Tell us about it in the comments.