Natalie Franke
Welcome back to The Independent Business Podcast. Today’s episode is gold. If you are someone that has one stream of revenue, that is the primary source that feeds your bottom line and your business, or if you’re someone who has added additional revenue streams and is curious about what that looks like behind the scenes of somebody else’s business, you are in for a treat. Today we are talking about the creative economy, we are talking about the future of work, we are digging into the conditioning that so many of us have been taught about W to work and having a full time job. And we’re even getting as detailed into the minutiae of talking about cash flow. And like I mentioned revenue streams and how all of this plays into the future that we are all facing in regards to economic uncertainty and changes that are beyond our control. I’m sitting down with an extraordinary human being the one and only Jay Clouse Jay is the founder of creator science, which helps you to become a smarter creator. He previously led the community experience team for Pat Flynn and Smart Passive Income designing their paid membership community and cohort based course programs. Jay is amazing. I was on his podcast about three years ago, and I’ve been following his journey along the way, we’re going to talk about how he brought in over $300,000 in revenue last year, and what it took to get there some eye opening mindset shifts, but also the nitty gritty of where that money comes from, and what his revenue streams look like, and how many he even has, and all of that in today’s episode, you’re not gonna want to miss it. Hey, everyone, this is your host, Natalie Frank, and you’re listening to the independent business podcast, more people than ever are working for themselves and building profitable businesses in the process. So on this show, I sit down with some of the most influential authors, entrepreneurs and creators to break down the science of self made success so that you can achieve victory.
Natalie Franke
Hey, Jay, thank you so much for joining us.
Jay Clouse
Hello. Excited to be here. Natalie. I told you off air but very jealous of your studio setup. It’s beautiful.
Natalie Franke
I know. Well, I admitted off air. You know, my Airbnb that I rented for a tiny bit of quiet in the chaos with two toddlers that is my home. So I’m also enjoying it this a little bit more, you know, relaxation for my headspace to get to get rolling into the podcast. Thank you, though. And I I want to say before we dive in, I have been a huge fan of yours for a very long time I had the honor to be a guest on your podcast, I think about I looked I tried to look and see it was like three years ago,
Jay Clouse
it had been that long as possible. It’s probably one two years.
Natalie Franke
Yeah, it’s definitely more than two, I think it’s three. And at the time, I’ll never forget I you know, hopped on your podcast, we did an interview together. And I got off that interview. And I thought to myself, Wow, that was one of the best conversations I’ve ever had on a podcast, the amount of, you know, intention and preparation. And you are somebody that like you’re when I talk about being an iceberg. You’re an iceberg, J like what people see on the surface is extraordinary. But the amount of hard work you have going into everything that you produce a new share externally. It shows right I do a lot of I’ve done a lot of interviews, but I can tell and so I got up and I was like, Oh, alright, that’s a new standard for me. Like it set a standard. And we joked even before hopping on, I was like I look at all the content you’re creating how you lead how you cultivate community, the way that you show up, and for me, you’re pushing boundaries and setting new standards. And it inspires so many. But before we get into all the awesome things you’re doing today, I would love to hear from you. What was your journey like into becoming a creator and building this community of creators and equipping kind of the future of work with the tools that they need to succeed? How did you get here?
Jay Clouse
Well, I started in startups, I co founded a software company in 2014. And we did kind of the typical fundraising accelerator path. We had an exit, the company was sold in late 2015, I believe. And that was a crazy wild ride. And it was exhausting. And it didn’t have another idea that I wanted to do. So I took a job at a venture backed healthcare startup in product and really didn’t like having a boss. So I’m totally honest, I just really had a hard time adjusting to that. And so we’re going to be about a year in at that company. And I was thinking myself, I really feel like I need to get out of here and do something else. But I hadn’t figured out what that looked like yet. We had a company leadership meeting. And the company it started company, they’re basically like, Hey, we’re completely moving in this new direction. And J the product you’ve been overseeing we’re actually going to deprioritize that and you’re going to start leading this product over here. And I just had this feeling where I was like, Oh, this is the moment this is like the moment when I should go because like I don’t want to start something new and and then have to transition to somebody else. Like I should just go now. So I told him I said well, I’ll give you like up to six weeks if you want so I think we have about six weeks of work that our dev team still needs to do. And they said, Well, you’re gonna move tomorrow. So you can just, you know, clean out your desk, and we’ll pay you two weeks. And that’ll be that. So like, within a span of 48 hours, I went from thinking, I’m probably going to leave some time, the next couple of months to, I’m out, I have no responsibilities and no plan. So, you know, I spent the first month kind of figuring out what I want to do. And I started doing some freelancing, which I didn’t have the term for that at the time, but I was like, I bet I can get somebody to pay me something to do something else. And that was true. I started doing things like email marketing, and building WordPress websites. I even had one guy who paid me to name his startup, that was a really fun project. But then I started facilitating mastermind groups was essentially the business that I started was I started putting together these groups of five, I would do a cohort of like 15 to 20 people at a time. And again, we didn’t really have these words, like masterminds were around. But we didn’t talk about cohort based courses. We didn’t talk about even online community that much in 2017. Like we were using slack, I had to teach people how to download and use Zoom. And so I was doing a lot of things that a lot of people are doing today in 2017. And the the outcome of that was creating an online community. And that community was acquired and absorbed into Pat Flynn’s Smart Passive Income community. And, you know, I’ve just been kind of chugging along the whole time learning a little bit more about the online creator business model, year after year, lots of happy accidents, a couple lucky breaks, and just like consistent, hard work.
Natalie Franke
I’m telling you iceberg, I called it, I called it. But speaking of hard work, so you’ve done a lot to get to this point, and you’ve had success, I’ve been thought of a lot of success. I mean, beyond even selling the stock. I mean, just like even in the last 612 months, as I’ve been following your journey, you know, you’ve had a lot of income success, you’ve shared about that, really, transparently. You are somebody that practices what you preach around just being open and trying to kind of uplift and empower all creators right in their journey. And you’ve shared a little bit I believe you had set a goal for we’re talking last year rewinding a little bit for a quarter of a million and then you thought 300,000 And then you almost hit what Where did you end up last year? 2022.
Jay Clouse
We ended up at 338. So it wasn’t quite 350,000. But yeah, there was there was a moment where it was, I think the end of September, in we were at 225 I say we but the royal we have my company, we’re at 225,000. And I thought to myself, Wow, if I can average $25,000 per month for the next three months, I can break $300,000 This year, that’ll be crazy. And then we blew past it. So that was incredible. And you know, we’re sitting here recording this in February, February, has been far and away my best month, like almost 2x, my previous highest month. So it’s it’s been wild for the last few months. But you know, it’s also spiky sometimes, like it’s not just completely clean upwards trajectory, like you have great months. And then you inevitably like don’t hit that same mark the next month. It’s I’m already mentally and emotionally preparing myself because I know, this month was a unique month, I do not expect and really don’t even see a path where I would have the same financial success in March as I did this February. So that impacts you know, how I prepare myself emotionally. It impacts how I prepare the business financially, you know, what am I doing with those funds. But you know, all that success, it’s great to celebrate and highlight those things. But I do want to call out also that it’s not a perfect, flawless curve up into the right forever, like, you zoom out and the trend is up into the right. But there are plenty of peaks and valleys you know, all along the way.
Natalie Franke
Let’s talk about that. Let’s dig into that for a second. So people see the peaks, right people see the highlight reel, they see what we put out into the world but the valleys are often left off of right the the public, publicly shared spaces, it’s kind of we tuck it into the dark corner and I think of it like the dog hair tumbleweeds that you would find right now in my living room if you looked closely enough, but in the case of building your business, you have been more transparent about those about those valleys, you have been transparent about those learnings in getting to the point where you did you know, over $300,000 last year, what were some of those hurdles, those valleys those lessons learned that, you know, if somebody is stepping into, you know, starting an independent business, maybe scaling or growing an independent business that they should know upfront that they that you would prefer they don’t make that mistake themselves or that you kind of look back on and you’re like whew, man, I that really taught me something.
Jay Clouse
I feel like my valleys last year weren’t as painful as the valleys are Early on in the business, so I might want to talk about those instead. Because let’s, the mistakes are a little bit different. Early on the big mistakes that I made, were all related to budgeting and cashflow. Because you know, I was doing these mastermind programs, they were 12 week programs. And I had figured out the math, so that, okay, if I charge this price, which I believe was $400, at the start, if I charge $400, and get 15 people to buy that, that should pay my rent, and my expenses for the three months that this program runs, I can just keep doing that, almost that doesn’t take into account taxes, it also doesn’t take into account any type of savings, it also doesn’t take into account, seasonality, because what I learned was, I really had to plan out my calendar of programming for the year because I finished one of these 12 week programs in October of 2017. And I realized, I’m not going to be able to get 15 people to join a program that runs through Thanksgiving, Christmas, and New Year’s like it would just be a mess. So suddenly, I had three months, where there was not going to be that income. And I hadn’t planned or save for that. So that was like the real pain that I felt early on in the business that really taught me that I need to have a clear handle on what it costs for me to exist even beyond my expenses, but things like taxes, and ideally, some savings, you know, because you want to be building towards something. And I need to have a clear understanding of how cash is going to flow into the business to cover those, you know, savings and expense goals. That was the really painful thing that I tried to share with as many people as I can, because people don’t often think about like the accounting and the reporting and the cash flow side of things. And they go through these feast and famine cycles of freelancing. And they’re not thinking about, Oh, I had a really great month, I should put some of that away for the bad month that might become theirs think I have more than I can spend. And it makes a huge difference.
Natalie Franke
A lot of service based businesses experienced, even those who had been doing this for a very long time, experienced that same panic moment at the start of 2020. And I remember these conversations happening, because in that business model, again, like looking from kind of maybe more of a digital creator model to let’s say, like a service based independent business model. You can project out similar to like running a mastermind, you can sort of project out and say, Okay, I see the contracts, I can see how things are going. But it was as if, in a matter of a week, your entire roadmap for the year was just wiped off, just wiped gone. And I remember in that moment, a lot of folks who had felt very comfortable with the seasonality of their business, they had learned their cash flow, but the saving side, the emergency fund side that hadn’t been established. And so I think you know, even you know, in year one, when you’re getting started, you’re right, you get into because you’re passionate about something, you want to do something, you have that realization, and you’re craving some thing, if it’s freedom, it could be financial creative, you don’t want to boss you, you know, want to make more money, whatever it is. And then you actually get into the operationalizing of that idea and turning it into your profit. And you just start to realize, okay, there’s a lot I didn’t know, there’s a lot I didn’t realize, right? When a check for $1,000 comes in, that’s not $1,000 I get to take home and pay my bills with right it starts getting immediately dissected down into taxes and expense, all sorts of expenses, things like that. And then even then you can be five years in and something happens. 2020 was a major wake up call for a lot of us. But also, you know, it could be illness, it could be you have a kid, you know, you find out you’re having a kid like there are so many things you don’t foresee. And you know, we live in a country where all of the infrastructure has been built for W to work and corporate employees, and perhaps not so much for creators for independent businesses, which I’m hoping we can change. I’m hoping folks like you and I can bring more awareness to the future of work in this growing economy. But I’m curious to know, you know, you mentioned some of these major lessons in the beginning, as you grew, do you feel as though you know, you were able to like make the mistake once learn from it and then discover, like, built upon your knowledge base and that the lessons changed, like you mentioned, or was it something where Yeah, okay, so tell me more about as you scaled, you know, what were some of those lessons or those learnings that you had as you scaled because a lot of people think once I get through that first year, I learned what I need to know. And then you know what I’m done. I don’t have to innovate. I don’t have to keep learning. I don’t have to stay curious. But I’m curious to know Yeah, for you. What was that? Like?
Jay Clouse
I think this is this itself is a skill. Like I think about this in terms of efficiency. I want my experiences to be efficient in that I get the most out of them that I can so that I don’t need to experience the same thing. Think twice to learn it. You know, I think efficiency applies to a lot of areas of business. But in terms of, you know, growing and improving, I’m actually doing a YouTube video about this now, which by the time this airs, I’m sure it’s actually live on my channel. And it’s talking about the the advice of being consistent. And why that’s dangerous in misguides. A lot of people, because people here be consistent, and they think that means, okay, I need to publish my thing, every week, or maybe every day. They think that consistency means a fast paced schedule of how often they should publish. But really, to me, consistency applies to things like, are you creating a consistent experience when people interact with you and your work? Are you consistently providing value when you do show up? Are you consistently improving, because if you’re not, then it’s very hard to have status quo in anything, you know. So if you’re not improving, chances are you’re probably getting worse. And you’re probably losing attention by losing people. So it’s really, really important to continue to build on to things over and over and over, you know, we were just talking about budgeting and cashflow, one of the best things I did for my business was implement Profit First, and open up separate bank accounts for the different parts of my business that were funded through the Profit First allocation process. That was kind of a pain to set up. But now, like, I interact with that system, twice a month, and it takes maybe 10 minutes each time, you know, so building your own business, whether it’s a service based business or a creator based business, it’s a lot of incremental, foundational improvements that allow you to allocate more and more time to the creative work that, you know, goes out to the world. And it just takes time, it takes time that you can compress things, you can get better at that you can get help and have people walk you through how to do things, the most impactful and efficient way. But there’s still some level of time, that’s just gonna take, you know, you need to look at this whole venture as a long term experience. And you need to realize that you can either have the mindset that time is working against you, or time is working for you. And I like to think that time is working for you, if you’re planning for the long term. And you know, you get a few years and you have these systems built. And suddenly, things just feel a lot easier. You know, I tell people all the time who are just getting started, this is probably the hardest it’s going to be okay, it gets a little bit easier, all the time. In my experience, I know there there are unforeseen circumstances that pop up and life happens and things throw you curveballs but from a from a business maturity and systems and even audience perspective. Generally, things get easier,
Natalie Franke
right? I don’t even take a step and say technology to I mean, the way that I had to run a business a decade and a half ago, when I started my first truly like my first small business, when I started, were not counting lemonade stand days, you know, the amount of work I had to do manually, the amount of work that, you know, took twice, three times as long as it does. Now, not just because of the skill sets gained, right and experience gained. But because of the technological changes that have happened in that decade and a half, you know, we’re hearing about things like you know, chat GPT, hitting 100 million monthly active users in two months, becoming, you know, the fastest growing fastest growing in history. You know, tick tock took nine months, Instagram took two and a half years to hit that same metric. These these new technologies that are emerging, emerging are starting to change the landscape. They’re also really disrupting the way that we work, not just independence and creators, but the big we like all humankind. I’m curious to know, taking into account technology, your experience and you know, growing multiple different types of businesses over the years. What do you see is the like as the future of work? What do you see, you know, for creators, not just today, but going forward? Do you see it getting easier to become a creator and to build a business like the one that you’ve built? Do you see it actually becoming harder because of, you know, more saturated landscape or more challenging because of AI? Is that going to replace us? Like, I’d love to just dig into your mind a little bit as you look for it and project out and use you do that zooming that you’ve talked about,
Jay Clouse
you know, there are warring parts of my mind on this. There’s the very cynical part of me, and then there’s the optimistic part of me and you know, the truth is probably somewhere in the middle. So I’m constantly you know, on some sort of pendulum swing between the two, because the pessimistic or sent Go side of me thinks that a lot of it’s going to come down to where you live, and the culture of your society. Because I could see certain countries or cities in the world who look at this advancement of technology and say, This is great, we’re gonna set up the system so that people don’t work in order to have the resources to live, we’ve got, we’ve got that taken care of. And that would be pretty awesome. Because, you know, I think a lot of people who strive for financial independence, what they actually want is creative independence, when they get financial independence, what do they do, they spend their time doing things that they want to do to creatively express themselves. So what people really want is creative independence, they just feel like financial independence is the only way to gain that. And I think advances in technology could give people financial independence, if societally and culturally, that’s what we agreed we wanted to do. But not all countries are going to do that. I don’t think that the United States would do that. Correct. And so, you know, I see the opportunity for less work, if you live in a place that values that, or are able to set up a system for yourself that enables that, I feel like I’m in a privileged position now. Where because I’ve been building a business for six years, I’m going to be able to reap the benefits of these new things. And people who are doing a lot of Client Services, where tools are getting better and better. I would be nervous in that situation, I really would. Now I think that we’re going to see a lot of creation of new roles, like a lot of these tools require some input, still some sort of prompting, there’s probably going to be QA that’s involved in all these things. So there will be shifting of where human intervention and creativity is needed, even with really great tools. So if I were if I were still doing a service based business, I would be getting really good at those tools, like I would be reserving a lot of time to learn how to do them well to speak a language well to understand how to work with them. Because not only does that help future proof you but that’s also a huge area of opportunity right now. Because there’s a lot of people with question marks that are retweeting threads about Jack chat GPT, who have no idea how to use it, that would love somebody to come in and say, here’s how we can apply this to your business and make that great. So, you know, the future is bright, the future is scary. The people who will make it out on the other side of the people who are paying attention and getting good at it. And hopefully, you know, as a global society as a big we, we we start to have conversations around what is work? What do we do work for?
Natalie Franke
Right? Right, we’ve started I know, even in the state of Maryland, where I’m sitting right now, there have been conversations around the four day workweek, right? There have been these initiations, these, these kind of, let’s talk about it. And although we know, you know, progress is slow. I think it’s an exciting time to be alive. I, you reminded me as you were talking about when the iPhone first came out, and I was a photographer at the time, I was shooting weddings at that point, although very, very early in my career. And I remember vividly when the iPhone came out, and all of a sudden, it was as if every professional photographer was saying, well, we’re not going to have a job, there’s going to be no need for us as professional photographers, because now everyone’s going to have a camera in their pocket, everyone’s going to be able to take this camera out whenever they want, they don’t have to hire us. And as I was watching that happen, I kind of witnessed the thought leaders at the time go into sort of two camps, right? The one was doomsday and was, you know, don’t become a photographer, or have anything to do with photography, if you want a career in five to 10 years, because the iPhone is going to erase us and all this visual technology that can do our jobs will erase us. And then there was this other camp that kind of said, no, no, no, no, actually, it could go the other way. If we learn to use these tools, and people get more exposed to these technologies, the quality that will be demanded will increase. So as more people have cameras, we will expect better photographs, as we expect better photographs, and they become more available to everyone more accessible to the masses, right? Like we will actually crave higher quality, we will crave the human touch even more. And it’s been fascinating to see that some of that was right. But also there was so much we couldn’t have imagined, you know, with that iPhone being created, creators now exist, like this entire category of income, right generation, and the future of work has shifted so dramatically, because with that phone then became you know, social media platforms kind of had this ability to grow and to expand and with that, this need for more content and as marketing shifted, there’s been so many changes that came from that one moment. And so I think we’re kind of living in a similar a similar era where AI is, you know, starting to become more accessible. It’s always been there for a while. People have had access for a very, very long time. It’s getting better, right, but now it’s becoming increasingly accessible to the everyday A human with something like, you know, opening I chat GPT. And it reminds me the iPhone moment. And so I think I think there’s an opportunity here to Yeah, be cautious. And, you know, I love how you said, there’s the skeptic side of me, there’s the optimistic side of me and find find a route in the middle where you can actually learn these tools. And I’m curious to know, like, what technology as a creator? Do you lean on both AI? And then just general technology? What are you using in your business? Is there anything for you know, an independent business owner that you’re like, look, this is a must have, this is something new, I’ve started using this is something I thought I need it, but I don’t I’m so curious to know what the behind the scenes behind the curtain looks like.
Jay Clouse
At this point, it’s mostly notion, actually, most of what I do is a notion from task management that was easy to move over. But also content planning. And everything in between all my notes are in there. So a lot of the improvements that I’ve made over the last year is improving my notion hygiene. So that things are a little bit more clean and efficient and easy to find and, and tied together into single databases that are easy to be searched and related. A lot of notion. And then you have the actual production tools, things like Riverside for the podcast, things like my website, I use Ghost for that. And then there’s file sharing, you know, I use Dropbox, mostly to work with my team on that, and slack to communicate with them. Like really, that’s that’s about it. Like, of course, there’s stuff in the middle, but nothing that’s all that surprising. It’s a lot of organizing and planning and notion, producing with whatever tools help for producing, sharing and communicating.
Natalie Franke
Awesome. Awesome. Yeah, the simplicity side of it, I think it can feel overwhelming. But when you lay it out like that, it’s like, oh, yeah,
Jay Clouse
I would just do my bookkeeping today. And I pay for a lot of subscriptions. So there’s like a lot of things in there, you know, Photoshop to hype, fury, with twitter, and like all kinds of little bitty things. But those aren’t really important. They’re just things that I found, save me an incremental amount of time in the production of certain processes. And I judged that to be worth, you know, $12 a month. Yeah, so I do have a lot of software and it creeps up a little bit every month. And I go when I call some of its stuff that I’m not actually using. But at the core, you know, it’s it’s really planning, production, collaboration and communication.
Natalie Franke
Yeah, that’s awesome. Pivoting a little bit here, from tech, into your thoughts on UGC, as a whole user generated content. Earlier in the beginning of this year, I shared my own hot take on this. And I really want to get into it with you and hear a little bit of your thoughts on the matter. And my hot take was this. We are entering a new era, where we will see the decline of the influencer and the rise of the UGC content creator, just my take, and it’s a hot take. It’s not one everyone would agree with. And I define them as and I’ll explain because I think it can be easy to be like, Well, wait, what’s the difference? An influencer relies on their own platform size at scale. However, there’s a little bit of that crossover some creators do as well. But the ability for someone to actually create content for other brands, regardless of their platform size, right? Like their actual creative ability is what drives their revenue. Whereas as an influencer, it could be your creative ability, but for the most part, it’s you, right, like you are the product versus your creativity is the product and your ability to serve a company on the UGC side is the kind of offering that you have. I’d be curious to know for you like, is that something that you see happening? Also, is it something you disagree with? Do you define these two sort of perspectives differently? I’d love to know, I’m so curious.
Jay Clouse
Let me start by saying I don’t think I’ve ever actually used the term UGC. And so I’m reflecting right now and reacting. Why is that? Because I’m aware of it. So why don’t I talk about it? And I think it’s because when I think about creators, and that’s the lens I use for everything, that’s a terminology that I’ve started using and that I lean into, but even the word creator is pretty huge. In who that who that is. And I look at the Creator landscape, and I see essentially a Venn diagram between people who are focused on more entertainment based content, and people who are focused on more education based content. Of course, there’s an overlap there, but my world is the creator educators is what I call them. And I don’t think UGC as part of the revenue model is very common over there. Because the advice that I give most creators is I think your revenue model has indirect revenue. It has direct revenue. And I classify things that require a third party as indirect. And so most sponsorship, I see as indirect revenue. And that’s great when the sun is shining, and you can make hay over there, and you have that opportunity. But I try not to encourage people to build their business on it. Because it can dry up, they can go away from macro economic, correct things out of your control. It’s not all that different than the the 2020 moment we saw in services, we, I saw a very similar impact on the sponsorship I had lined up for the launch of my show, which happened in March of 2020. That sponsorship didn’t happen. And I remembered that that’s something that I think about, and you you have a more resilient business, when you’re relying on direct means of revenue, meaning that your customers are your audience. And there’s not a third party in that transaction. So again, I don’t think that there’s any problem with having that as part of the part of your revenue model, I think it’s great to diversify your revenue model when you have the opportunity. And you see that there are easy ways to tack on. So in your definition, as I’m thinking reflecting on this, I could see that, I mean, I do think that there will always be sponsorship opportunities for influencers with large platforms, because there is still so much money wrapped up in television and radio that hasn’t wised up and moved over. And, you know, these these large accounts are essentially, you know, the easy button spend for that same type of revenue. Do I also see people getting a little bit more sophisticated and understanding that they can get more bang for their buck with an aggregation of smaller creators who have an engaged audience Absolutely, takes more work, it takes more sophistication, but definitely opportunity there. And, you know, I’m sure that there’ll be technology that facilitates that aggregation of smaller UGC creators, for brands who want to put a lot of spending on something. But it’s challenging for brands who have a large amount of spend to deploy that to smaller groups, because they need large reach numbers for it to make sense. And that means a lot of UGC creators, so there needs to be some sort of marketplace, you know, in the middle, making that market.
Natalie Franke
I really love what you said, though, about direct revenue versus indirect, it’s something that, you know, as a lot of our listeners have service based businesses, they’re thinking, so when I say like influenza, you just see for them, that’s an indirect, it’s an additional aspect to their potential business, but they do, you know, work primarily with direct contract based work. Similar, but slightly different to how you define creator economy. Although there’s a lot of there’s a lot of overlap or growth into, like, we’ll see a lot of service based business owners that, you know, build a very, very, very profitable, service based business. And then they start to add on education, for example, to help train the next generation, they see gaps, and they’re like, Oh, we got to fix this, we have to teach so that we can kind of raise the tide a little bit and, you know, equip kind of future folks that do what I do in a way that they can do it better. And they’ll kind of move more into that creator, educator landscape. When you look at the layout of a healthy, you know, revenue generating business in your world. First of all, how many revenue streams? Are we talking here? Because I do think a lot of folks in my world fall into the trap of thinking, one revenue stream, is it I mean, truly, like, that’s, that’s how they generate? How many revenue streams do you have? How many do you see other creators having? Is there a sweet spot? Is there a great number? And then what percentage of that is direct and indirect? I would love to kind of understand, you know, what’s that formula into the self made success equation that creates a sustainable and resilient revenue model in your business?
Jay Clouse
These are great questions. I keep good records, I actually have pretty accurate answers for most of these things. So I’ll use I’ll use my own business as kind of a benchmark, but know that this is one example. And there are lots of different ways you could do this. And I’ll talk a little bit about that. So in 2022, I had 41 separate income sources. 26 of those were affiliate partners. So you’re really talking about 16 different sources, you know, and of those 26 affiliate partners, three of them are about 80% of my affiliate revenue. So I break down things into buckets, and I believe it’s six buckets, seven buckets, but only six of them were significant, that I count as revenue streams from last year, I had memberships digital products. sponsorship, royalties, affiliate income, patronage and services. Seven, patronage was very small patronage was literally my buy me a coffee account where people read my email and like this was great, here’s $5. So I actually cut that out of the business. So I’m down to six. The great thing about having six revenue streams is, again, I keep good records, and I look back on my year last year, and there were periods of time, where my revenue was incredibly consistent at a top line level, like there would be a three to four month period where month over month, this was around $30,000 in top line revenue. But when you look into each of those months, some of those buckets were at like zero, and some of those buckets had huge months. So it’s, it’s wild to look at this and say this is actually very consistent and easy for me to project even though the sources of income change in proportionality each month. That’s the benefit of having multiple revenue streams as you start to get that effect. And then some months everything hits, and you’re like, This is nuts, which usually follows by a month that’s kind of down. For example, the way that I track sponsorship in my business is when it actually hits my bank account. Then I say this is realized revenue for this month, and I’m counting that as revenue on my books. Most months that I book sponsorship, I don’t recognize that revenue, the month that is booked, I’ll probably recognize it a month or two later. So the months that are really high in terms of sponsorship revenue, are not even the biggest months where like the activity that happened that the activity to earn that happen. And it’s similar in services a lot of times, because depending on your payment terms, you might have this pipeline where you sign the contract today, but you might not get paid until 60 days from now. So you really want to have this is kind of going into a cash flow discussion, but I’ll try to reel it back into revenue streams. Having multiple revenue streams is good, because it makes you more resilient. However, it can also be kind of a distracting activity to try and build up six revenue streams all at the same time when none of them are working really strongly like my my recommendation is to build a direct revenue stream, make it strong, and then start to say, Okay, now what do I add on another direct revenue stream? Do I see that okay, now I have the opportunity for this indirect stream of sponsorship because the audience is there, you know, I would I would go one at a time. And again, this is where time plays in your favor is. You know, after six years, these things start to really add up.
Natalie Franke
That was a little bit of a mic drop moment, from the standpoint of a couple, couple different kind of different realms one being, again, circling back, viewing time with a mindset that it’s in your favor. Also, acknowledging that you can’t set up six slash seven revenue streams overnight. You’ve been doing this for years. So as you said, encouraging everyone, you know, start one at a time. Once you have that new revenue stream, grow it, build it, secure it, then open your eyes to the next thing, kind of taking those incremental bites out of growing that overall pool. But then also, like you mentioned, having those multiple streams means that you have multiple different ways to hit those revenue goals month over month. And so as you see those fluctuations, for some people, it seasonality for others, it’s just natural fluctuations based on timing and contracts, or timing and sponsorships or whatever it is. Right. It’s no longer such a critical blow to where you’re going who wow, I have to make up this amount of money with my one revenue stream because something fell through and I’m really stuck. No, you have these other faucets right if you think about them all pouring into the same pool. But it also reminds me a little bit of a question that I got on Tik Tok, not that long ago, around is this a terrible time to start a business? Somebody asked me, you know, with a recession conversations around economic headwinds, is this a good or bad time to start a business? To which I answered? Well, look, I think you know, you when you have a W two job, you could get laid off at any point, your job could go away tomorrow, the project you’re working on can get deprioritize like you’ve experienced, and that’s for many people, your only revenue stream, your W two job. When you start a small business. Yes, there are risks. We know this. Yes, it is hard. We know this. But what I’m hearing you say is you can build a business over time, with multiple streams coming in. And I would argue that is a safer perhaps with time, a safer path forward for financial freedom, because should one stream get shut off? If you’ve diversified strategically over time, you have the ability to grow very resiliently into the future regardless of economic climate. I’d be curious if someone were to come to you today if a creator or someone aspiring to become a creator, a service based business owner who is the getting about, you know, do I go full time I’ve been doing this thing on the side? I’m hearing in the news every day Doomsday, the economy is crashing, everything’s gonna fall apart, or people aren’t sure there’s just so much uncertainty? Should I do it? Is it a bad time to start a business? Is it a good time to start a business? Is there such a thing? I want to hear Jay’s take on this one?
Jay Clouse
Well, we’re gonna have to clear the next hour, because I’m getting out my soapbox now. Do it on top of it. I’m really glad you bring this up. Because this is another cultural thing. I think we have this conditioning to think that employment is a binary thing. You’re either employed, or you’re not. And we think that even being self employed is this completely different? Look, you are selling some amount of your time for some compensation, whether you’re employed, or whether you’re doing anything else. In a full time deputy job, you get some extra perks, and you also get extra constraints. But there’s really virtually no difference between a full time deputy job and doing client services. You know, it’s how many clients you have, and what are you being paid for it? Are you getting paid benefits? Are they taking care of your taxes and putting them aside, it’s, it’s not different, having a full time deputy job is having a full, like having one client, there’s no job security, job security is not a thing, you know, like that can go away at any time. So I do truly believe that the best job security, like my, my version of job security is that I feel secure, I could go get a job tomorrow if I wanted to. And it would be the highest paying job I’ve ever had. Because I’ve spent six years collecting a ridiculous set of skills that nobody in the job market has, and a ton of insight and a ton of discipline, I would make an incredible employee, if I were willing to do it, being a creator doing things on the side, whatever, it makes you infinitely more employable. In my opinion, you know, of course, some employers look at that and see you as a risk, maybe a flight risk. But if I’m an employer who’s looking for someone that’s really talented and can do the job, like, I’m going to take that risk if you’re available. So I do believe that one of the best things you can do is start building something that is accruing equity to you directly on the side equity, meaning like the work you’re putting in, you’re not getting a paycheck. And that’s the end of the transaction, the work you’re putting in has compounding returns over time. You know, I think back to when I was working in a job where people I know, and they got a raise of like a couple $1,000 per year, I broke that down to hourly, what raises, you just get hourly, for the amount of work you’re doing for that company this year, it’s hilariously low. Maybe I’m coming off as kind of callous in that way. But I just I just think we’ve really been conditioned to think that this is a good trade that we’re making, right? And if you’re willing to work a little bit harder, and do some of the administrative work, and some of the learning to get good at the administrative work. It’s so much more lucrative and secure. To build something of your own.
Natalie Franke
What do you think made you open your mind to that possibility? Because I don’t know about you. But did you always think you are going to be an independent or independent of the system? Did you like in terms of corporate work? Or did you stumble into that, like, what was the moment for you that you kind of realized this because a lot of people, you know, there is so much fear. And with that conditioning, it’s like I think of it like you know, a sled going down a hill. If everyone keeps going down the hill in the same same positioning, you’re gonna get these deep rivets in the snow. And so every sled keeps, you know, goes to high school goes to college is told to go get the corporate job is told to climb the career ladder is told to then get married and have kids and we’ve seen this for a very, very long time, at least again in this country. And through a specific lens. Now we’re seeing people take their sled and like completely go the other direction. These new paths are emerging, and we’re more widely aware of it. But like for you, what was the moment you realized, okay, maybe I don’t have to follow this path I’ve been conditioned and told is success. And you started to kind of carve out something for yourself.
Jay Clouse
We have to see it. Some people are lucky that when they grow up their parents or people close to them can model that type of life. And you know, before the internet was ubiquitous before we had social media, like entrepreneurs were weirdos that nobody understood what they’re doing. They didn’t have networks even communicate. So you didn’t you didn’t know that there are other people doing what you’re doing. You didn’t connect with the other person who owned a shoe store two states over. You just wanted to build your own thing. And so you made a shoe store you’re and you’re the only person you knew who was doing it, you have to get exposed to it. It’s like anything that you’re unaware of like, once you become aware of it, you start to say, oh, things are different than I thought. And it’s kind of confronting, and it takes a certain person to be willing to take that confronting new information and say, I’m going to change my model of how the world works. A lot of people just aren’t willing to do that. And they grit their teeth, and they keep walking through with their, their same narrative. And that’s okay, that’s that, like, the world needs those people. And sometimes those people are happier, because life is simpler, and that’s totally okay. But if you, you know, you need to be deconditioned. And made aware of these things. You know, it was something that I think is really transformational for me in the last year, is I became friends with Marie pulin, who has a business called notion mastery. She’s awesome. She teaches people how to use notion really well. I had her on the podcast, she told me that notion, mastery was earning $40,000 per month on the podcast. At that time, my business was doing less than $10,000 per month, and I just thought to myself, holy shit, that’s possible. And I can’t, I can’t imagine what that would look like in my business. But man, I’m gonna strive for that. And just by having my mind open to that possibility, and spending time around Marie, understanding how she thought about things, seeing that she’s not fundamentally different than me, by the end of the year, my business is in the same position now. And this month, I’m more than double that. So it’s like when you’re exposed to new things, you start to even on a subconscious level directionally move that way. And I wish that I could decondition and deprogram people, and mass to understand this, but unfortunately, we’ve built a lot of systems and institutions to deepen that conditioning. And, you know, there’s like a philanthropic angle here that you could take, there’s, you know, every time that one of the student clubs at Ohio State here in Columbus asked me to come speak, like, I take the time and do that it’s not, it’s not financially prudent for me to do that. But like, I want to help show that example to people to be like, this is a different path in the snow. And it’s not as deep, but people have done it, and they’ve survived. And it’s pretty great over here, actually,
Natalie Franke
I love that I do think once your eyes are open to the possibilities of what could be, everything starts to change. And I love that for you even just something as simple as like realizing somebody else was making a certain amount of revenue, and you went who? Wait, that would be incredible if I could do that. But before that you hadn’t even, you know, kind of set your sights that high. And that that’s part of what inspired a lot of this podcast, to be honest. You know, it’s about the science of self made success. It’s about talking about what are all the inputs that go into your unique definition of success. And figuring it out, you know, by looking at folks who have done it in their own way, who have created an incredible business, maybe multiple businesses, and what they’ve taken away from it. And so with one of our final questions here, I would love to know from you. What do you think is the biggest thing that differentiates the businesses that succeed from the ones that fail?
Jay Clouse
I think the businesses that succeed, are willing to take in new information. They’re willing to adapt. And they’re focused on constantly improving. Because if you’re willing to take an interest in new information and adapt and constantly improve, and you know, just continue, it’s kind of inevitable. You know, you set up a system where your success is basically inevitable, because you will be unwilling to fail in the same ways, you’ll have no choice but to innovate. If you’re going to continue on and you’re willing to learn, you will have no choice but to innovate and try new things. And, you know, at some point, numbers just play in your favor. And it’s just inevitable.
Natalie Franke
I love the sound of that. I absolutely love the sound of that. Jay, thank you so much for joining us today on the podcast. I have no doubt that everyone watching and listening to this will want to know more about you will want to know more about the resources that you have. I am a subscriber by the way to creator science so I want to make sure you give that a huge shout out one of the best newsletters please hear me out friends this is this is an easy yes and easy. Yes. But Jay, where can our listeners find more about you? Where can they subscribe? Give us all the details as we close this out,
Jay Clouse
you can find everything at creator science.com My goal is to help you become a smarter creator even if you’re just getting started on this path to being a creator. That will be a great place to start creator science.com You can find me Jay Klaus on whatever social media platform is your favorite.
Natalie Franke
Well, there you have it, go check out crater science.com. Jay, thank you so much again for joining us and everybody for tuning again
Natalie Franke
that ends our episode of The Independent Business Podcast. Everything that we’ve discussed today can be [email protected]. Head to our website for access to show notes, relevant links and all of the resources that you need to level up. And if you’ve enjoyed today’s episode, be sure to subscribe to the podcast so that you never miss our future content. Drop us a review and leave our guests some love on social. Thanks again for listening
Transcribed by https://otter.ai
