Sometimes your expertise is the biggest obstacle to your business succeeding. This is true for both products and services.
I’m active in a niche that’s facing a bloodbath after the COVID-19 shutdowns. And it’s true the government-ordered shutdowns pushed them over the edge into bankruptcy.
But these businesses were zombies before the coronavirus hit. It was only a matter of when, not if, they were exposed as the walking dead.
The Hidden Curse of Expertise
Each of these entrepreneurs started their ventures because they were experts in their field. They enjoy selling their expertise but barely tolerate everything else needed to run a business.
For some, “marketing” is a dirty word. Prospects are supposed to spontaneously appear by magic at their door (or website) and buy.
For others, getting paid is undignified. They charge just enough for their expertise to put food on the table and pay the landlord on time (sometimes). And when COVID-19 hit, they didn’t insist upon getting paid by customers who were also suffering from the shutdowns.
In contrast, there’s a minority of business owners within this niche that quickly rebounded and are thriving. If anything, they’ll gobble up more market share because the majority of the competition has been wiping themselves out.
What’s made the difference?
Those committing ritualistic seppuku continue to insist their expertise only be provided on an as-needed basis with no long-term contracts.
On the other hand, those business owners who are thriving sell their expertise using contracts that are one to three years in length. Most of the customers pay on a monthly basis. Others prepay in full.
Is this a heartless way for an expert to do business? Particularly if customers are also suffering because of COVID-19 shutdowns?
Not at all. In fact, the income generated by the continuity agreements has enabled these business owners the discretion to act charitably in genuine cases of hardship. One popular method used is a contract freeze and extension. Services are suspended for 2-3 months so that the customer doesn’t have to make monthly payments. And those months are tacked onto the end of the contract extending the term.
Imagine having that type of flexibility.
It’s hard to do so when you only get paid for occasional product purchases or on an as-needed basis for services.
Examine your business model and see if continuity contracts are the way to go…at least for parts of your company. Then have an experienced business contracts lawyer prepare a custom continuity agreement that’s designed to get you paid over and over again throughout the term of the contract.
Changing Your Business Model
Just about any company can do continuity agreements.
Sell software? Turn it into an annual software-as-a-Service (SaaS) subscription or offer annual support/maintenance contracts.
Sell fashionable clothes? Have annual contracts for an “in a box” subscription service where the customer pays monthly for seasonal (quarterly) shipments of clothing.
Personal training (for just about anything)? Don’t charge per session when/if your student shows up. Sell your expertise by annual or multi-year contracts that generate income monthly whether or not your student takes advantage of your expertise.
Don’t assume it isn’t feasible just because your competition isn’t doing it.
Test and see.