Earn More $ with a Throughput Management System

smaxor

smaxor

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Been posting on my blog again lately and thought I'd repost the articles here as well as they may help some of you. So here goes.

"Either you have money or you have time, but very rarely do you have both" Not sure who wrote this but I've heard it many times. And couldn't be closer to the truth.

If you have lots of time and no money this post is probably not for you. I'd suggest investing more time into learning how to improve your skills and make more money.

This is for you if:

Feel you've hit a plateau in your affiliate business this is definitely for you.
Have money and feel you're out of time and just can't do anymore this is definitely for you.
If have money and your work life balance is all work and no life. And you want more life this is for you.
Well if your'e still reading this must be for you.

Because of my insatiable appetite for learning, growth and building (it's really what gives me happiness) I needed to figure out a way to scale things effectively.

I now run 4 companies have 2 kids and am happily married. And everything takes and deserves time.

This is the process I use in order to create efficiencies and get more throughput out of myself as well as my staff.

I'm going to break things into a simple 4 step process.

Step 1 - Build Our List of What We Do

The first thing we need to do is sit down and figure out what in the world we do all day. I know this sounds weird but. As affiliates most often we came up doing everything ourselves. And this is amazing and what makes most of the top affiliate marketers the top marketers in the world.

But it creates a problem when we want to scale ourselves. Why you ask? Because the typical path goes like this. You reach your max you can handle on your own but continue to see more opportunities out there and feel you're losing money in opportunity cost. Then you say to yourself "maybe I should hire someone to run some more campaigns for me." Then you start to think of all the reasons that's a bad idea like they could just steal your profitable campaigns and go run them themselves. Yes this is always a risk but there's ways to build a business greatly reducing this possibility.

You do more then you know.

If you're the average affiliate marketer you:

manage servers - IT
build creatives - graphic design
write copy - copywriter
build and manage campaigns - analyst
identifying, contacting and negotiating pricing for direct buy placements - media buyer
maintain you books - finance
deal with legal compliance - legal
deal with taxes - finance
research placements, forums and blogs - analyst/researcher
and the list goes on
Then on top of this you have all your personal stuff like clean your house, take care of your kids, cook, shop, pay bills, and on and on.

Stop for a minute and think about that list above. It's quite a bit of stuff and think of how long it took you to learn it all. How many hours you spent to acquire that knowledge and skill set. I've had many employees leave because they saw the $ that the affiliates were making 95% left, tried it and failed. Why? Because it takes all those skills to be a successful affiliate marketer.

Take this time to sit down and document all the things you do. And if it were a company, what department would handle it.



I'm going to stop here for now as this is getting to long to read and digest.

Because this post got so long I'm going to break it into chunks. I'll post each piece over the next couple of days.


Posted at Earn More $ with a Throughput Management System – 1 of 3 | Insights From an Ad Network Owner & Seed Investor
 
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Step 2 - Sort our List

Now that we have our list of what we do lets rank this list by high value time spent. Meaning what items make you the most money on the list. And what amount of time does each thing take. Our goal here is to decide where we should be investing our time the most to get the greatest return.

I'd suggest putting this in a spreadsheet with column headers of

Task
Time (scale of 1-10)
Revenue generated (scale of 1-10)
Make sure you include all your personal activities, that aren't just things you love to do, in this as well. It all takes you time and your time is valuable.

Once you done this sort your spreadsheet by "revenue generated" column in ascending order. As well as Time in descending order. Whatever is on the bottom of the list is what you want to start figuring out how to make a time investment into getting someone else to do.

When I started this process my list had 120 items on it. Granted I didn't do it this way to start. This was more of a process I learned to use over time and now apply to my high value employee positions within my company. Constantly trying to get more through put out of them by building support systems.

Step 3 - Building a Plan

Depending on where you're at now in your business/career I always suggest you look 12-24 months out and decide where you want to go. As affiliate marketers we often get on the golden hamster wheel and live day to day (another post I want to write about). We really need to be planning more because if you don't know where you're going how are you ever going to get there?

With your list now sorted lets look at the high value items at the top and build a plan to only do those.

In order to do that you need to figure out how to hire or outsource people to do the other tasks. Most likely on the bottom of the list is things like shopping and cleaning the house. Now the average affiliates mindset says well I could hire a house cleaner and someone to do my grocery shopping but that's going to cost me money. If I'm making 100k/year and I pay those people, could be the same person, 10k/year part time. I'm only going to make 90k/year. This is the wrong way to look at things. Depending on how much time those things are taking it's actually costing you money because you could be doing your high value activities during that time. So stop and imagine you free up 20% of your time that should effectively allow you to make 120-130k/year. What's nice about high value activities is they often compound the added revenue that can be generated. Meaning it's not a linear growth curve typically.

Like I said I started with 120 items on my list when I was an affiliate marketer and then started A4D.

Here's my list today.

Spend time with my kids and wife
Direction of each company over the next 12-24 months.
Building financial plans/models for these trajectories
Building the project management tasks to support these models
Spend time with our largest partners
Work on improving employee moral & support systems
Spend time learning and identifying market opportunities via running small campaigns. That then the ideas get passed to account managers to give to affiliates/merchants.
Identifying properties to purchase
Networking with venture capitalist
Networking with potential high value clients
Keep in mind most of these things weren't on my list when I started with the first 120 items. We definitely don't know what we don't know and what we should be spending time on until we get a lot of the low value stuff off of our plate.
 
Step 4 - Deciding who to hire.

I break people to hire into 3 categories. Expensive high value people, support people and outsourced people.

Lets start with outsourced people. This would entail people like house cleaners and personal shoppers. Not going to talk about this one much. But what I suggest here is get referrals and if you can't do that put and ad on craigslist. Then test at least 3-5 different people. For example if we were hiring a house keeper I'd let them know that you're testing out 3-5 different house keepers to see who does the best work. Then at the end of the trial period hire the one you like the most. I know this is a little time/labor intensive but typically you only have to do it once this way.

High Value People. When I first started hiring all I focused on was hiring as cheap as possible. Because I looked at employees as an expense rather then an investment.

Employees should be thought of as an investment, not an expense!

This behavior led to me having limited roles/jobs within the company and trying to make everyone the same level/role.

What you really want to do is hire the very best person you can find for the job and then surround them with the systems and staff in order to get the most throughput out of them as possible. Does this sound familiar? Essentially you're doing for them the same thing you're doing for yourself. As the business owner you're the first high value employee of your company.

High value people cost a lot and are worth it if you hire right. Because they bring experience and connections. What you will find is that you will start learning from them how to be even better. I always believed you couldn't hire anyone amazing because they'd just start their own company. Well this is really only partially true. There's a large percentage of the population that really don't want to start their own company. Owning a company is doing a lot of what you don't love like finance, legal, etc. It's also very risky, if you pay them very well and they see a future they're more then happy to help be part of something great and help build the organization.

Lastly there's the Support People. I'm guessing in you mind these are often the hardest to justify without building the plan like we did above. But now that we have this plan we can see where their real value will come in. They allow you to free up time and create more throughput. For anything admin I like to hire book keepers/accounting people. Even if they're not going to be doing a financial role their attention to detail is usually strong and they're used to doing repetitive tasks. Always try and hire smart people.

Roundup

I hope this gives you a solid plan for increasing your throughput and in turn revenue.

In short

Make a list of things you do
Value their Time and Revenue quantifiers then sort
Build a plan & systems
Hire people
In my next post I'll talk about how I go about building plans and systems.

One last thought. I highly suggest giving no 1 person all the keys to the kingdom. Hire into roles and positions with limited scope. You don't want to hire someone and have them do everything or be able to do everything. If they're an artist to make creatives, don't have them manage the servers and/or the campaigns. Another thing I highly suggest against is hiring anyone that knows what affiliate marketing is. Present to them that you're an agency and that you have clients that you work with, then leave it at that. They don't need to know there's a whole echo system where they can go pull the link and get the offers easily. This will create a bit of a barrier because they'll think "well I can't just go get Lending Tree as a client"

Thanks for reading and sorry this got so long.

As always your questions & comments are greatly appreciated.

If your business is big and scaling A4D is always here to help you grow your business. We help people build long term, media buying, affiliate businesses. Not just try and make a couple bucks.
 
This is some really high level shit. I'd like to find myself referencing and implementing it in the next 12-24 months.

I remember watching a video where you said something like, "If I could do it again, the first person I would hire would be an operations manager." (Don't have the link.)

Can you, or do you somewhere else, cover the transition from work at home to being at an office with employees? Because I imagine recruiting quality people as just one person in an empty office would be an uphill battle. Did you find that?

What do you think about incentives? Equity, delivered over 1-3 years? Bonuses? Or do you just offer a good salary and that does it?

How do you decide who to fire?

smaxor said:
One last thought. I highly suggest giving no 1 person all the keys to the kingdom. Hire into roles and positions with limited scope.
Click to expand...

Can you clarify this? Do you mean "number one person" or "no one person."

tumblr_m93568GsT91rp6xcfo1_250.gif
 
Great read. This is something I'm actually fighting with right now, as there isn't enough time in the day to do what I need to do - and still grow/progress.

What would you say, if anything, are the things that you HAVE to do on your own. Things that can't be outsourced or cut.
 
The problem I have is this.. on the excel sheet

I can generally tell how much time something takes to do, but the revenue part for me is tricky.

Say I am doing affiliate shit. I have to make creatives, do buys, bid placements ( adwords, etc ) have good hosting. How do I accurately project revenue on that?

Sure I could say I suck at graphic design so its a 10 in Time for me, however how much revenue do I give this task? I know for a certain offer on a certain LP I make $XXXX a day, but creative ( banners and LP ) play a % of that $XXXX a day. How do I know what to assign "making new creative" at in the revenue column? I don't think its a 10, but I don't think its a 1.. I don't wanna cop at and just do 5.

Maybe I am over thinking... can you shed light on what to assign projects that dont have a direct tie with revenue, but play an assist role in it and how you handle that? How much do a assign revenue for something like "negotiating a new media buy" that I haven't tested yet with my LP's/offers?
 
eliquid said:
The problem I have is this.. on the excel sheet

I can generally tell how much time something takes to do, but the revenue part for me is tricky.

Say I am doing affiliate shit. I have to make creatives, do buys, bid placements ( adwords, etc ) have good hosting. How do I accurately project revenue on that?

Sure I could say I suck at graphic design so its a 10 in Time for me, however how much revenue do I give this task? I know for a certain offer on a certain LP I make $XXXX a day, but creative ( banners and LP ) play a % of that $XXXX a day. How do I know what to assign "making new creative" at in the revenue column? I don't think its a 10, but I don't think its a 1.. I don't wanna cop at and just do 5.

Maybe I am over thinking... can you shed light on what to assign projects that dont have a direct tie with revenue, but play an assist role in it and how you handle that? How much do a assign revenue for something like "negotiating a new media buy" that I haven't tested yet with my LP's/offers?
Click to expand...

First I'd look at separating creative into two pieces. Graphic artist & copywriting. Now that we have them broken down is one more valuable then the other? I'd say so Copy Writing is 10x's more valuable then graphics in my estimation. Good copy writers are very hard to find. Graphic artists are a dime a dozen. So in that case I might maintain the copy writing of the headlines, bodies, etc. with the goal of looking for someone to replace myself with the task over time. Good copywriters are VERY expensive tyipcally. Graphic artists are not.

Hope this helps some.
 
StackCash said:
Great read. This is something I'm actually fighting with right now, as there isn't enough time in the day to do what I need to do - and still grow/progress.

What would you say, if anything, are the things that you HAVE to do on your own. Things that can't be outsourced or cut.
Click to expand...

I think all tasks can eventually be replaced with systems, processes and people. There's no larger company where the CEO is doing a good portion of the work.

Even discovering market opportunities could be done by an analyst. Teach someone to use scrapers, monitor forums and stay in touch with the larger ad networks for new changes in features sets that could allow an opportunity.

Literally everything could and should be built into systems over time.

Is this the path to making the most money the quickest? No.

Overhead is overhead it's an investment up front and if your'e constantly growing maybe it's eating all your profits on the front end for a while. But, in my estimation that's ok because you'll end up with a strong diversified company where you can go on vacation, work on systems and strategy to scale big. Where with doing all the work yourself you just can not.
 
droplister said:
This is some really high level shit. I'd like to find myself referencing and implementing it in the next 12-24 months.

I remember watching a video where you said something like, "If I could do it again, the first person I would hire would be an operations manager." (Don't have the link.)

Can you, or do you somewhere else, cover the transition from work at home to being at an office with employees? Because I imagine recruiting quality people as just one person in an empty office would be an uphill battle. Did you find that?

What do you think about incentives? Equity, delivered over 1-3 years? Bonuses? Or do you just offer a good salary and that does it?

How do you decide who to fire?



Can you clarify this? Do you mean "number one person" or "no one person."

tumblr_m93568GsT91rp6xcfo1_250.gif
Click to expand...

I have some posts coming next week on how to figure out how to take the tasks that you do and turn them into a business model. I even put together a template media buying company business model for you so you can do some projections yourself. Build a model to the goal/outcome you want to get to.Then work that model and live by it. For me this removes all the short term concerns, I just know what has to be done and do it.

I have another company called Pixlwise which is more in the startup/game space. Being involved in that I really see the value of giving people equity within the company. They feel like they have an ownership stake and if there's a big sale one day they'll get an added bonus for their hard work. So I do absolutely believe in it. Now, with that said be cautious and do your due diligence on how to distribute things such as that.

Know this if you're just now starting to hire the people you pick to put in place there's a good chance that you're going to pick wrong. Having employees is very different and they have a very different mindset. For me I was never really a "company man" and was always and entrepreneur. Thee fore I tended to hire entrepreneurs as well. This caused a lot of issues.

Fore this reason I like a 1 year cliff with 4 year vesting period where they vest stock on an semi-annual basis. This means that they need to stay, not get fired, at least 1 year before they get any of their stock. If they can't make it 1 year they're definitely not a good long term partner.

As far as what we pay this was a big mistake I have made. Basically in our organization everyone is pretty much equal within a dept. This is a highly ineffective way to build. Why? because the reality is people are NOT equal. Some are much better at some things and some are much better at others. I do very much the same things as I do with myself. I look at each job role and decide where the real value is worth. This has lead me to turn 1 job role into 3--4 job roles in some cases. Splitting off the less valuable tasks to people with a lower skill set. This allows us to do a few things.

1. Most important - Pay the person that deserve it the most possible
2. Get the person with the highest value skills focused on doing that thing/s 100% of the time
3. Build a hierarchtical system where people see, ok that's the top and there's room for advancement

As far as who to fire. In my next set of posts we're going to build a financial model for the dept/people. Then we're going to build job descriptions and minimum expectations of those job. Who do you fire? People that don't meet the minimum expectations, people that abuse the system, people that are cancers within the organization (negative people that are not on board with the vision). If someone does hit there numbers but is a good asset to the company in other ways I often offer them a shift in position or role rather then losing them all together. Valuable people are valuable, they may just not be valuable in the seat you have them in. This is the job of a good leader to find them the right seat.

Hope this helps and let me know if you have any other questions.
 
droplister said:
This is some really high level shit. I'd like to find myself referencing and implementing it in the next 12-24 months.

I remember watching a video where you said something like, "If I could do it again, the first person I would hire would be an operations manager." (Don't have the link.)

Can you, or do you somewhere else, cover the transition from work at home to being at an office with employees? Because I imagine recruiting quality people as just one person in an empty office would be an uphill battle. Did you find that?

What do you think about incentives? Equity, delivered over 1-3 years? Bonuses? Or do you just offer a good salary and that does it?

How do you decide who to fire?



Can you clarify this? Do you mean "number one person" or "no one person."

tumblr_m93568GsT91rp6xcfo1_250.gif
Click to expand...

[ame=http://www.amazon.co.uk/gp/product/B0033TI4BW/ref=oh_d__o05_details_o05__i00?ie=UTF8&psc=1]Drive: The Surprising Truth About What Motivates Us eBook: Daniel H. Pink: Amazon.co.uk: Kindle Store[/ame]

Read that book before you think about the way you incentivise employees. Generally speaking: performance based pay, bonuses, etc are poor ways to motivate employees unless they're doing boring, monotonous tasks that they hate.

Awesome thread Smaxor.
 
smaxor said:
Thanks for the suggestion on the book. Purchased for Kindle on my iPad. Will start reading this weekend.
Click to expand...

It's a great read if you've not read much about social psychology/behavioural economics.

To summarise: people in creative roles are better motivated by vision, purpose & autonomy, than they are driven by carrot-and-stick incentives. Performance based pay results in very short term thinking, and kills creativity (as they just try to do whatever they do to hit what their target is based on, rather than do what they think is in the company's best interest).

Performance pay is based on the concept that people fundamentally hate work -- however studies show that a lot of people get a large amount of satisfaction from their work, and frequently fill most fulfilled at work. The key to productive, creative employees is giving them the autonomy to choose how/where/when they work, conveying a strong vision that the company is working towards and ensuring that each employee feels like they have a purpose within the organisation. That their work counts.

Of course, this assumes that they already have a high enough salary to feel like they're not being cheated, either in comparison to employees, or the market rate.. General solution to this is to always pay above the market rate, and not to give employees at the same level pay level/with very similar responsibilities individual pay rises/cuts. You want your organisation to have the best base pay, basically (it balances out in the long run due to the lack of performance bonuses, etc).

It's different for roles which are algorithmic in nature, though, e.g. licking envelopes where carrot-and-stick works very well. Any role which is completely algorithmic in nature often generates better results with performance based pay. This is because people can't get enjoyment/fulfillment from these tasks, and the more you pay them, the more incentivised they'll be to do all that crap they don't want to do. These roles are quickly being eliminated in any organisation though, because computers do them better than people do.

The algorithmic/creative thing explains why performance pay became the standard -- most jobs in the last century pre-information age were algorithmic. Filing papers, all that kinda stuff. Very few (proportionally) were creative in nature. This meant that as companies introduced performance pay schemes, performance improved. Now that the proportions are changing, and creative roles dominate organisations performance pay is failing, and companies need to embrace this new motivation model to beat their competitors.

The book states lots of specific examples, references all the studies, etc, and explains it in a whole lot more detail.
 
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