Why I Killed Off A 6 Figure Revenue Stream

As of December 1st, I shut down a six figure revenue stream.

I shut down all client relationships that didn’t have a 5k minimum or some sort of tie in to the revenue we generated for them. In total, that worked out as a handful of clients bringing in ~$100,000 in revenue each year that I turned off. Just like that.

*snaps*

It sounds like a lot of money (and it is), and if you’d told me two years ago that I’d do that, I’d have laughed at you, and told you I was stupid (maybe I am). But I did it. Here’s why I think it was smart decision.

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My Health Took A Backseat

My health is my number one priority, and I let it go completely over the last few months.

Work took over. My sleep schedule was jacked. I was eating like crap (I definitely wasn’t eating paleo). I was constantly exhausted, and I found all the reasons in the book to stay away from the gym.

I decided I needed some time to recalibrate and to simply focus on myself, fitness, and on getting back to where I want to be in order to do the things I’m planning on this year.

In order to do that, I had to set down a few of the balls I kept trying to juggle.

Client Work Took Priority Over My Work

Making six figures plus is great but it loses its luster when you start giving up big chunks of your life for it. That’s especially true for client projects. I found that, in many cases, I was spending more time on my clients’ projects than I was on my own.

In certain cases that’s okay. But when I realized I was personally spending 50+ hours/week on client work, and wholesale neglecting my own, I realized it was taking too much of a toll on my life.

The Opportunity Cost Was Too High

If you go to the agency site now, I have a 5k minimum monthly retainer for all new clients. If there’s no 5k retainer, I require either a tie in to the revenues or a percentage of the business.

Why?

Put simply, I don’t like to say no to clients, and this is the only way I can rationalize investing my time in other projects.

It may seem like I’m bragging here, but here are the results the agency has got recently:

  • Tripled the search traffic for a Chicago start up in the last 6 months
  • Beaten out companies with 3x our budget
  • Cut CPCs in half while increasing conversions

Honestly, for any company we work with that has a substantial marketing budget, even if we engage at the minimum retainer level, for the results achieved, we’re practically giving it away. Results are exponential in relation to the investment, so I’m working on making those client relationships reflect the performance status.

Also, at this point, the opportunity with my own projects is too great to engage in other work which brings in less than 5k.

If I have to sacrifice my time, energy, and focus for someone else’s project, I have to be tied in, so that it becomes a priority for me. Otherwise I’ve got a million other projects, including this pretty important one, that I need to focus on. On one level, 2k/month on a client project is great, but if that project keeps you from making 20k/month six months from now on a project you own completely, it might not be the smartest decision after all (and it wasn’t for me).

#AgencyScalingProblems

Agency work is tough to scale. If you dug into the numbers, you’d be amazed at how few marketing agencies actually make money. Typically, agencies run into the client-capacity conundrum. This means they’re trying to juggle clients (revenue) with capacity (expenses), i.e. employees who can handle the marketing needs of their clients. Because there’s rarely a moment when an agency is at exactly 100% capacity, anytime you increase revenue, you run the risk of having to add more personnel to handle that additional client.

Note: I think consulting is one of the best businesses to start once you quit your job. However, you’ll want to think twice before starting a full-blown agency.

That’s a crappy situation to be in, and I’ve seen way too many agencies teeter on the edge of profitability because they can’t figure it out (and even when they manage to figure it out, the agency is only modestly profitable).

It’s a tough balance to strike, and most agencies typically scale by hiring more and more people to handle more and more clients.

We avoided that from the get-go with the Impossible Agency. We’ve been profitable since Day One. But we found ourselves in a few relationships that were less profitable than others. If we had continued with them, they would have led to major opportunity cost issues on our own projects.

By coming back to only projects we own, we’re making it much, much easier to scale projects and profits.

Ownership

After two years of working for myself, I’m finally at a point where I need to only invest in projects that I own (or which I at least have a stake in).

This may or may not come back to bite me but it’s the next step I have to take. At this point in the game, if I don’t own at least a small percentage of the project, it’s very hard for me to rationalize any sort of time investment in it.

Focus

IMPOSSIBLE has been generating revenue for the last two years but I’ve essentially neglected the business aspect of it for all intents and purposes.

It’s a great brand but, in order for it to grow to the level I believe it can reach, it needs to become completely self-sufficient and systematized (it’s about 80% there right now).

The Gut Check

I took some time to myself over the last few months. I spent some time in time in Vietnam, chatting with Dan. As per usual, he asked a few questions that got me asking myself a few questions as I spent time reflecting in Hawaii and Miami.

Like most of the final decisions I make, it came down to looking myself in the mirror, and giving myself a gut-check.

That’s all it took

I knew what I had to do.

Your gut is usually right. Listen to it.

Where Things Stand

So, where do things stand? Good question.

IMPOSSIBLE AGENCY

Impossible Agency isn’t going anywhere but we are getting more selective, and we’re upping our rates. We still have a few clients who we’re tied in to, we’re super selective, and our work starts at a 5k/month retainer (unless there’s a really attractive revenue share or equity stake option available).

However, instead of focusing on clients, projects, and sites that I don’t own, I’m going to put more and more energy into ones I do own (namely IMPOSSIBLE) and a few other secondary projects I’ve built over the last few years. Essentially, we’re going to be in-housing our #1 competitive advantage rather than selling it for time. I think this is a good long-term strategy.

Side -Projects- Hustles

I’m going to be eliminating most of these and streamlining the ongoing maintenance for any existing ones. The creation and set up process for this has been almost completely automated, so I’ll still create new ones when there are opportunities, but we’re going to be more stringent about which ones we take on.

I’m also implementing strict metrics for project, and I’m going to ruthlessly cut any that don’t meet these metrics. In other words, there will be no more “side projects” – only “side hustles”.

IMPOSSIBLE

Impossible has been clipping along at a steady pace in spite of the expanded “extracurricular” projects that stole my focus. Last year alone, we built a school, launched an app, brought on a new team member, and systematized almost everything around here.

In 2014 we’ve got big plans across the board, and we’re developing our focus. Look out for more media (not just on the blog) and the most ambitious project I’m going to take on to date.

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Comments

  1. says

    Joel,

    Great to see some new content on IMPOSSIBLE HQ, as I always look forward to reading about the different projects you are taking on and reading about your never-say-die attitude in relation to obstacles in life.

    While I am just in the infant stages of building my site and business, I can empathize your frustrations about being spread too think and feeling like you don’t have time for the projects that are most important. I have a full-time career in addition to my site and another writing project that I work on, and it is sometimes frustrating not being able to tighten my focus. But I agree with you that at some point you have to cut it off and make a decision about where your focus should be so that you can be fulfilled. While I am not the best at saying no to new projects, I am getting much better, and I am learning to put my focus where I believe it best serves me.

    Thanks for all that you do and good luck with your goals for 14. I’m looking forward to hearing about your “ambitious project” as I am sure it will be an ass-kicker.

    Appreciatively,

    Jeremy

  2. says

    Joel,

    I appreciate seeing this level of transparency and learning more about you and your experiences.

    It’s got me thinking a lot about using my schooled skill set to freelance as I build my passion.

    A great post as always.

  3. says

    Great post, Joel.

    We’ve found that one of the most difficult decisions can be saying “No” to money. It feels…odd…even if you know it’s in your long-term interest.

    My business partner and I meet up for a strategy session once per quarter. Our side projects/hustles tend to build up by then and we put them all on the chopping block and hack/slash until we’re down to our core projects. It can be a painful process, but one that keeps us focused on the long-term vision for our company.

    Congrats on making that difficult decision – hoping it helps you crush it!

    • says

      For me – every 1/5 side-project seems to work out. It’s amazing what culling the ones that don’t work out can do to your focus. It’s the difference between handling 10 different projects or 2.

  4. says

    I totally resonate with this post. I also had to shut down a significant revenue stream because clients’ work was taking over my life. I couldn’t breathe. I didn’t have a life. Now I’m left to do the things I love, and travel a lot :)

    Don

  5. says

    Sounds like what I call THE NEW HONESTY is working well for you! Please continue to be a pioneer and tell it like it is for YOU and YOUR COMPANY. Be an example for others. I am a sole practitioner with a side part time job that I love which keeps a steady stream of income and gets me into a community scenario several hours a week and thus supports the energy I spend with one-on-one clients in my “other business” — or, what doesn’t FEEL like work!

  6. says

    Joel,

    Congrats on the decision to be more selective! I can see that you are being true to your essence of the Impossible in 2014 and beyond!

    Katie

  7. says

    Hey Joel:
    Great post. It’s difficult to give up immediate revenue, but can really pay off in the long run.

    My wife and I run an IT consulting company and in 2010 we were pretty burned out. We had too many clients and they were running us ragged. At the beginning of 2011, we made a list of all of our clients, sorted by revenue, and then crossed off the ones that were either too much work for the level of income, or too much of a pain in the wazzoo no matter the level of income.

    Needless to say, 2011 was virtually stress-free compared to the prior year. The surprise was that it was our best year to date for income. It seems that we could pay more attention to our favorite clients and, consequently, get more work. The old 80/20 rule in action.

    Good luck on your future endeavors! I think you’ve made an excellent decision.

    Phil

  8. says

    Thank you for sharing.
    Focus and intention are two important things. I personally, maybe because I’m a woman, I would’ve tried a way to balance, find some solution. Put things into priority ( health, workouts, sleep, impossible) and timeblock my days very effectively in order to achieve this greatness for myself.

    I do this why my business, but I’m not sure how much you had on your plate. I admire you all the same. For everything. I admire that your health is number 1 priority. I feel you did what was best for you and you are always being the best version of YOU!
    I still want to get you out to Los Angeles pretty darn bad so you can come workout with us on the beach and 150+ people.
    I’m excited for that day!
    Health and fitness <3

    Nicole

  9. says

    I just read an interview with one of my greatest creativity teachers, Julia Cameron, and she said something that reminds me of this:

    “The only time I get in trouble is if I’m not making something myself. If I’m too busy teaching to do my own art I get very sad. It’s a matter of balance for me. I must keep my artist first and my teacher second. I must be making things and then sharing out of that process. If I am only teaching what I have already learned without doing my practice in order to be learning more, I’m very desperately unhappy. It’s dangerous for me.”

    So, yeah, high fives for your gut check. :)

  10. says

    I think I can read some self doubt in between your lines; a need to justify your actions. Just remember what you’ve reached so far. Making 6 figures after just one year? Fulfilling your dream?

    You just need to realize that you already succeeded. You could go broke and lose all your achievements from one day to the other but you still have this fucking thing in you that drives you to a better self, that pushes you forward and makes you achieve whatever you want…

  11. says

    Joel,

    What a shocker!

    Most of us out here in the Blogger miasma would give up an arm or leg to be able to walk away from 100K in revenue. Heck I might even do it for 10K :)

    This change really proves everything is relative to where each of us are with what we have accomplished.

    Also it reminds me of when I was once a stockbroker. I was always told it makes much more sense to sell one person 50,000 shares than 50 people 1,000 shares. All of our time is precious. Period

    Most of us do spread ourselves to thin and accomplish far less than we could if we would just focus more.

    I look for to seeing how this change works out for you and what all of us can learn from it.

  12. Tony Spencer says

    Excellent choice and motivational to hear you espouse the value of your time.

    “Your time is limited, so don’t waste it living someone else’s life.”

  13. says

    “Essentially, we’re going to be in-housing our #1 competitive advantage rather than selling it for time.”
    This is genius and gutsy. I love it. I also loved the free ebook – beautifully done.

  14. David says

    Mr. Runyon,

    I am just doing research on personal websites for class and ran across your site. As I was scrolling through the site I decided to read this article after reading the title. I have to say your article was probably the best, and most honest one I have read over the years. It is a stark reminder that success does not have to be detrimental to ones life and health. While I may never use your service, I am not in the private business yet, I wish you luck with your new direction.

    Dave

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