Ep. 34- Erin Austin

Erin Austin: Hi, , this is Erin. , this is a long one, so I'll probably need. Stop every once in a while. Um, all right, here we go. Hello, ladies. Welcome to the Hourly to Exit podcast. You know the title, if you're wondering about the title to this episode. When I was looking for the title, I googled the term journaling for dollars.

Erin Austin: What I was looking for was actually there's this old saying, It's doing something for dollars, which at the time alluded me, and by the way, still does. I think it's digging for dollars, but I never did find out what I was looking for. Instead, a lot of Etsy shop money journals popped up with titles like Money Mindset Journal and Money Affirmation Journal, money Abundance.

Erin Austin: Money manifestation journal and many more. There were pages of them, but they all had similar promises. Something like, you know, are you ready to manifest abundance and attract financial prosperity into your life? Our digital journal is designed to help you do just that through powerful affirmations and visual techniques.

Erin Austin: Now, that was not what I was looking for, but sometimes you get what you need, which was confirmation that journaling as a way to achieve not just your personal goals, but goals for your business, is the way to. So today we're gonna talk about IP journals. So this episode is inspired by an amazing conversation I have with a woman who keeps an IP journal.

Erin Austin: Now, I wish I remembered exactly what she called it. She might have called it an IP journal, but that's what we're gonna call it cuz I like that. Anyway, so she is extremely prolific. She writes every day. You know, for her business, for publication, for creating new ideas. And so she realized that she needed a process for cataloging all of her creations and her ideas.

Erin Austin: So what she does is that at the end of each workday, her shutdown habit is to make a record of all the work she created that day. And she puts it in her database, you know, tool of choice. I don't remember which one she uses, but this is so. Brilliant. You know, by using an IP journal, you keep a running inventory and she's keeping a running inventory of her work, which is consistent with her business goal.

Erin Austin: And her goal is to make sure that her business is ready to sell. When she's ready to exit. Yes. That's why we have the conversation. So she is setting up her business for success in all stages of the hourly to exit. Now I hope you have a copy of the Hourly to Exit Journey Self-Assessment. If you don't have it, , you can get one.

Erin Austin: We'll link to that in the show notes, or you can find it, you know, on the website, think Beyond ip.com. So the hourly to exit self-assessment tracks the characteristics. Your business at each of the four stages of building a business that is saleable. And if you don't know that, it's between saleable and sellable.

Erin Austin: Also, check out my website. I have lots of conversations about that there as well. So to create a saleable business, there are four steps on the way to, to, , to building a, a business that you can sell someday. The first step is unsustainable. Then sustainable, then scalable, and then finally saleable. So let's look at how IP journaling can help you move along this journey.

Erin Austin: First, unsustainable a business is unsustainable if it is supported with basic asset. If it is, start over. A business is unsustainable if it is not supported with basic assets and is insufficiently funded. The telltale sign that your business is unsustainable, if the only way you can make more money is to work more hours.

Erin Austin: The freelance model is almost always in this category. When you're freelancer, a hundred percent of the output is owned by the. There are no assets in the business except hopefully a bank account, which sadly, some people don't even have separate bank accounts. When are freelancers with no assets, there is nothing to journal about.

Erin Austin: When you're at the sustainable stage, a sustainable business means the business can maintain its viability by using tools and techniques that allow for continual reuse or resources. Progressing to a sustainable level requires a development of one basic assets. This means things like templates and checklists.

Erin Austin: Two exclusivity here. You're starting to articulate your expertise and your niche. You're not just a generalist who does everything for everybody. Stability. That means you're taking your business seriously. You're using contracts and you have insurance. So an IP journal is the perfect starting point for building sustainability.

Erin Austin: When you're using your IP journal, you're documenting your processes for efficient, predictable delivery. You're recognizing patterns that lead to deeper expertise. You're identifying when a contract is needed for assets that you haven't created personally. And that is, by the way, anything that you haven't created personally, there should be a contract attached to that making note of anything that is owned by third parties.

Erin Austin: And another absolute is anything you get off the internet is pretty much. owned by somebody else. And , so you wanna make note of those things as well. All these things go into your IP journal. So I love this excerpt from Blair Ends. Wonderful book, the Winning Without Pitching Manifesto, which I encourage all of you to read.

Erin Austin: So it really illustrates the power of an IP journal in this chapter called Formalizing How We Work, and it goes like this. One can reasonably assume that over time through trial and error, we will happen upon an efficient approach that allows us to deliver at quality and speed with consistency in almost any of our repeated endeavors.

Erin Austin: It is the strength of our processes that drives the consistency of our. If we want to build deep expertise, we must take pains to document how we work, to define how we will work in the future, and to continuously refine and improve our approach. Working from a defined approach, Le. Working from a defined process leads to the very consistency of quality that a potential client tries to discern late in the buying cycle.

Erin Austin: When our role is to reassure nothing, reassures a client more than him drawing the powerful inference, that little variability and process. Equals little variability and outcomes. Every one of the firms he's considering can demonstrate an ability to do do great work. But the question he once answered before he buys is, how do I know I'm going to get their best work?

Erin Austin: When we are able to demonstrate strong processes, the client can decide for himself the implication of our processes and the consistency of our quality. So in some, when. Are using IP journals to help us create our systems and our processes to create a more consistent outcome, to build deeper expertise.

Erin Austin: These are the things that help reduce. Risk in the eye of the buyer. And we are small business solopreneurs or small entrepreneurs. I think that's a term. Um, you know, reducing risk is an essential part of making that sale. And so that helps us create that sustainable business, um, by using our IP journals to help us document how we work.

Erin Austin: The next level is scalable. A scalable business means the business is a stable, profitable business that is providing predictable results for its clients. The key to scale is figuring out how to decouple your income from your time. In other words, we find leverage opportunities where the output is greater than your input, and we know.

Erin Austin: That's what a lever is. A lever magnifies our effort. So we give effort of X and we get a force of, you know, two times x, right? And so we add leverage to our businesses through a number of ways. One, Through building a team that does not have to mean employees, that can also mean independent contractors. A lot of us start building a team by using virtual assistance, and so we can focus on.

Erin Austin: You know, , product development and client relations and delivery. Another key place for a lot of people will, , add to their team is a bookkeeper as well. Um, number two, exclusivity. We aren't just articulating our expertise, we are becoming the recognized expert. We are consistently publishing, and so it's not just our clients.

Erin Austin: Appreciate our expertise, but we are getting, , recognized within our niche as an expert. And number three, stability. And we do that by using repeatable, trainable processes for our services delivery and our operations. So I have a handout called, is there a Rembrandt in Your Attic? You can get that on my website where I talk about a few leverage Strateg.

Erin Austin: That really make sense in our expertise based business. And there are, I see seven of 'em here. First delegation. So here you use employees who are less expensive than you because you are the most expensive asset in your business to deliver services. So there may be some part of, you know, maybe onboarding or, um, You know, maybe you're creating, , some sort of graphic deliverables or things like that that you can use a less expensive employee to help you deliver the service.

Erin Austin: Um, automation here using technology to aid delivery. , a lot of people use automation as part of the onboarding process to make sure, um, you know, clients get their agreements and they have a way to pay and that they do whatever, , questionnaires that need to be filled out. So automat. Productization, you know, customized services, very valuable, but there is a place for that productized service that can be sold and delivered very efficiently.

Erin Austin: Licensing, you know, I love to talk about licensing. Here you create an IP asset that can then be licensed to multiple parties. So you put in that effort at the front end to create the asset, and then the lever of licensing is that it can then be exploited by multiple parties teaching and or certification.

Erin Austin: Here, , you're teaching other professionals to use your methodology to create, , outcomes for their. outsourcing and, , I, I distinguish this from delegation. I look at delegation as using employees, so that's internal versus outsourcing, which is using outside sources, um, such as subcontractors to deliver part of your service and subscriptions.

Erin Austin: Oh, there's actually eight subscriptions, which. You know, selling subscriptions to your asset. Maybe you have a database, maybe you have some research that you've developed and that it would be of value to other people, and that you can sell subscriptions to that asset. And then the last one I have is selling access to your community.

Erin Austin: So if you have a very robust community, especially one that would. Valuable for a third party to have access to. You can sell access to it. I mean, the, the most, you know, popular way people do that is through ad ads, but you don't wanna sell ads to your, to your community. But things like, , providing access to market researchers, um, could be of value as well.

Erin Austin: So that brings us to the final leg of the hourly to exit journey. Becoming saleable. So to be saleable, your business needs one revenue visibility. Revenue visibility is win the buyer. And so here, before we're talking about your clients, now we're talking about your buyer. When we're talking about sales, we're talking about sellers and buyers.

Erin Austin: So for your buyer, To be interested in your business, they need revenue visibility. They need to be able to see that your financial projections make sense. You know, you can say like, I think it's gonna earn 1 million, 2 million, 3 million, , in, in the future, or it's gonna grow. This is the curve it's gonna grow in.

Erin Austin: But revenue visibility means that there's something that supports that projection and, , that they can feel comfortable. Exclusivity is the second one, which, , you know, intellectual property development, intellectual property is a legal monopoly. Doesn't get any more exclusive than a monopoly, so the only way anyone else can use your intellectual property is with your permission.

Erin Austin: And the other way you can get exclusivity is having an authority level positioning. That means you are at the top of the hill regarding whatever your niche or, , your specialization is, that you are at the top of that heap and therefore, um, you have that exclusive positioning. And then third, the, the ability to withstand due diligence.

Erin Austin: can you support your revenue visibility or your, I should say, your projections? Can you exclude, , support your positioning and your intellectual property status through the due diligence process? And so, while the IP journal is important through all of the stages, Of your development from sustainability to scalability, to scalability, it is particularly important in this due diligence stage.

Erin Austin: So for our purposes, due diligence means an investigation or audit of an acquisition target, which is undertaken by the prospective buyer. And the objective is to confirm the accuracy of the seller's information and appraise its value. So remember that a buyer is purchasing the future of your business, so it needs to be confident that your business will continue to flourish in its hands, so it doesn't wanna buy you and suddenly, You know, employees jump ship and all the customers jump ship.

Erin Austin: It needs to know that it's the future of your business is solid, and that's what they're looking for in that due diligence process. So they're confirming that the financial projections are supported by the assets and the other structures and the business. We were talking gonna talk about seven areas that are typically audited during the due diligence process.

Erin Austin: Financial due diligence, which of course investigates the accuracy of the financial records. Human resources due diligence. This focuses on understanding the organizational structure, the compensation and benefits, and any possible violations. You know, of particular importance these days is making sure that, um, you're not treating con, , employees like contractors.

Erin Austin: So if, if they really should be appropriately categorized as employees, then we have a problem. If you're, you're, you're paying them like contractors. Or treating 'em like contractors, , operational due diligence, which, , evaluates, you know, technology, assets, facilities, assuming those things are important in your business.

Erin Austin: business due diligence, which seems broad, but it's really about the industry that you're in and your customers, so they can look at any risks associated with, you know, the industry. What's happening in in the industry. Is it a dying industry? And looking at your customers or your customers, you know? Also, are you serving a customer base that's a dying customer base.

Erin Austin: So they're gonna look at any of those risks there. Strategy. Due diligence. So will it fit in what they hope to achieve? What are their goals and objectives, and how does your business fit into achieving them? What are the potential synergies? How will they merge together? What does that look like? And.

Erin Austin: Legal due diligence, which is what most people think of, I think. And so that is to make sure that you are legally compliant and they wanna discover any potential legal issues. Nobody wants to buy a lawsuit. So in a world where IP is currency and the most valuable asset in your business is an intellectual property, it should be of no surprise that IP will be a factor in every one of.

Erin Austin: Six, I think I said seven before those six due diligence areas. So, , your IP audit identifies what IP you own and what you use determines your usefulness or, or it's important to your business. Is your IP enforceable? Does it conflict with any third party rights? And then these things will all funnel down into an IP valu.

Erin Austin: Now I wanna clarify that an IP audit is not just a legal due diligence issue. It's not just about contracts and whether or not your copyrights are registered or even your trademarks are registered. It is a holistic evaluation of your company. Is there a culture of protecting and maximizing the value of an intellectual property?

Erin Austin: So another benefit of your IP journal, it gives you a greater understanding of the assets in your business and it, even the relative value of those assets, assuming they're all IP assets, they're be relative value of them. So you can make sure that you. Are appropriately allocating resources to them. You know, you wanna, , allocate more resources to protecting, you know, maybe a database or a client list than you do to protecting your trademark, which at the end of the day, you know, unless you're FedEx or you know Coca-Cola, there's always gonna be another trademark.

Erin Austin: I hate to say that, but. Um, but the things that you've developed specifically that are providing value to your clients, those are the most valuable assets in your business. So buyers are looking at your business from a top-down approach, how you're protecting those assets, you know, what kind of corporate policies you have, how are you training your, , employees about, you know, using technology things.

Erin Austin: Um, not using unlicensed software. How are you handling copyrighted materials? Are you using contracts? What is your social media usage? You know, things like reputation is a very valuable intangible asset. And of course you don't want to do things that can lead to data breaches. That's why all these things are so important.

Erin Austin: So it's, it's a little bit, it may sound a little bit complicated, but it can start simply with an IP journal. , and you know, like a balanced checkbook, IP due diligence is easiest to do if you do it while it's happening. So it's, it's like, , you know, putting in your $25 into your investment account and the, the, , interest grows and it grows over the years.

Erin Austin: So, doing your IP due diligence, creating your IP journal every day, um, you are. Developing that asset that will grow with your business and will help you grow your business. Since you are going to increasingly rely on intellectual property, , you know, all those leverage strategies we talked about earlier, including delegation and outsourcing, um, licensing, certification, all of those, those require ip, you know, you.

Erin Austin: It's very hard to delegate when you have no processes. It's very hard to outsource if you're not appropriately using contracts, which will control the ownership of your intellectual property. All these things. Um, when you're growing your business, you need to have that solid IP foundation. In order to have a growth strategy that is based on IP and where you're an expert, your growth will be based on intellectual property.

Erin Austin: And so I like to use the analogy of a house. And so growing your business is like adding another floor to your house. So the foundation that was good enough for your first floor may not be strong enough to hold your second floor. So even if you haven't been using it in an IP journal to date, Since perhaps this is the first thing I've ever heard of an IP journal.

Erin Austin: Um, you haven't. It's okay because we start today, um, to make sure that as we're building our businesses, that we're growing our foundation along with it. Maybe it roots is another way to look at it. The roots of a tree, maybe. I wanna think about that one. So if you are, you know, teaching others to do what you do, or you're creating some sort of, you know, d i y product for your clients, you know what happens when you find out that someone took your class and now they're selling your materials for their own profit?

Erin Austin: Or worse, someone has a lawyer and they send you a seasoned assist claiming that your IP is actually theirs demanding an accounting and a share in your income. Preventing you from doing any other work with it until the matter is sorted out. These things happen all the time. You know, unfortunately there are very few original ideas and everyone thinks their idea is original and then they see somebody else doing it.

Erin Austin: I don't, I can't even account the number of times people think, oh, that was my idea. Um, so you wanna make sure you can protect yourself by whipping out your IP journal to demonstrate its origin. Now do not discount the value of registration. Registration is important, but most of us are not registering.

Erin Austin: All the IP create we create, we're creating IP all day every day. You've heard me say it a million times. IP is everywhere. So that IP Journal provides the backup for the material that we don't register. The goal of your IP journaling practice. Actually pretty simple. It's to document all asset creation poo.

Erin Austin: When what and how Every day catalog the new content, the new content you create tracking. When it was created, who created it, what source materials, if any, were used. If you didn't create it, review the applicable contracts to make sure that you own or control the rights that you need to use the deliverables in all of the manners you can foresee, you know, and even some manners that you can foresee.

Erin Austin: You don't wanna incorporate some third party materials in your book that then limits you from, you know, it's going to expire someday. Or you wanna use it in some sort of training materials and you can't use it in that. So you wanna make sure that you ha, if you're using third party materials, that your rights to use them are sufficiently broad.

Erin Austin: There are terms in contracts and in licenses, you know, non-exclusive license work made for hire. You know, they're kind of scary, but they're not rocket science. I like to say the law is not rocket science. Let's be happy for that. But, and it's key to understanding these rights to make sure you understand that you have what you need to grow your business.

Erin Austin: And so whenever you're incorporating source materials that are owned by a third party, read the fine print. Cuz I will tell you that virtually every license agreement will have some restrictions in it that you need to comply with. So your. The challenge here is to maintain records of your ownership and other rights to use IP that flows through your body, that flows through your company so that you can protect yourself as you scale your business and prepare it for an eventual sale.

Erin Austin: So I hope this episode has you thinking about. Something that you can do today to help prepare your business to scale. Hint, hint, IP Journal. And as we move through 2023, , I will be raising additional topics for your consideration. But don't forget, always consult with an attorney about your specific situation.

Erin Austin: So if you think you have reached a point in your hour lead to exit journey where you wanna grow your business with ip, you can contact me. Let's find out more. Have a great day. well instead of have a great day. Just do cheers. Cheers.