February 2, 2022

How to Start a Services Business - Ep. 30

How to Start a Services Business And Be Cashflow Positive

Here's What You Should Do

We always preach that the quickest way to be cash flow positive is to create a services-based business. So, here’s an episode on how you can start one!

Welcome to Degree Free, where we explain what you can do instead of going to college, and how to teach yourself, get work, and make good money.

In this episode, we talk about:

  • How to learn which service you can do as a business to be immediately cashflow positive.
  • Step-by-step procedure on how you can start your services business.
  • The pros and cons of High Dollar/Few Clients and Low Dollar/Many Clients.
  • How to gather information and research competitors so that you can have all the information you need.
  • What’s the difference between Sole Proprietorship and LLCs.

Ryan talks about how you can do an easy test for the demand of your service through your personal circle.

Hannah also shares their story on how they started their first successful services business in Hawaii.

Enjoy the episode!

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Links and Notes from the Episode

Episode Transcript
Please enjoy this transcript or our episode!

Please note the transcript may have a few errors. We're human. It can be hard to catch all the errors from a full length conversation. Enjoy!

Ryan: Aloha guys. And welcome back to degree free. We are your hosts, Ryan and Hannah Maruyama. On this podcast, we share the fundamentals we've discovered, the mistakes we've made while self-educating, getting work, building businesses and making money. We'll tell you how to make it happen. No degree needed.

Hannah: Welcome back everybody. We are happy to have you on the podcast as always. And again, this week we have an email that we send out that you absolutely want to get. You can get it for free. If you go to our website, which is degreefreenetwork.com and you sign up, it's our newsletter. There's a bunch of cool stuff in there that you definitely don't want to miss out on.

So run on over and sign up.

Ryan: Yup, absolutely. And if you haven't already please like, and subscribe and so you can not miss a thing.

Hannah: Spread the word.

Ryan: Yeah, definitely. Let's get into today's episode today. We are going to be talking about how to start a services business. Our favorite, yeah, this is one of the things was really, we need to talk about.

Because we're always telling people that want to start a business, that they should start a services business.

Hannah: I think too the thing that we hear a lot is people say, oh, it's risky to tell people to start businesses. It is not risky to tell people to start services businesses in a very low cost way.

Ryan: For the most part that's true, I would say there are different scenarios and where that's not true. It's not easier. It's not cheaper, but generally speaking, if you're at this stage and you're just trying to look for something to make you immediately cashflow positive, to immediately start putting you in the block right off the bat. Services businesses are usually one of the easiest to do, and it's not going to happen overnight, but usually it is the quickest and it's because you don't need much for most services.

Hannah: You don't need a product.

You just need to find somebody that needs something done.

Ryan: Yes.

And then take money for it. Yeah, that's what we're gonna be talking about today. Our first successful business was a services business.

Hannah: Yep.

Ryan: We've we tried a few different things throughout the years.

I think we started our entrepreneurial journey about six years ago. Now maybe five years ago, five or six years ago now. It was, yeah. And it wasn't until we tried to do a few products.

Hannah: I guess it was our first, it was our first original business that was successful. Books were successful. We did drop ship. Ryan drop-shipped Amazon books for a while. And that was pretty successful. Yeah.

Ryan: Very, a lot of work.

Hannah: Lot of work, but it was successful.

Ryan: Yes, that's true. Yeah. But our first business that really, took off was a services business. And so I think that's part of the reason why we're a little biased to it as well, because we did try a couple of other things, but we didn't know what we didn't know back then, which is, we didn't know how to test a market.

We did not know how to test a product.

Hannah: We didn't know how to run an online ads.

Ryan: We didn't know how to market things. We didn't know anything.

Hannah: No.

Ryan: And so something like this would have been super helpful at least I think.

Hannah: Yes. Anytime that we were given any shred of information around this topic, we immediately took it to heart because it was so valuable to us.

Ryan: Yeah. And so hopefully this episode is useful for all of you guys listening as well, and let's jump into it. I think the very first thing is choosing the service.

Hannah: Yeah. And a lot of people get hung up on this one too, because they think it has to be some really unique thing. But actually, probably, you just need to think about what people already ask you to do.

Ryan: Yeah. There are a lot of questions that you can ask yourself or ask other people in order to get an idea of what service to start or at least think of, and one of the questions that is easiest I feel is to ask that question. And all of these questions that we're going to give you. I would write them down, write them in your journal, pen and paper in a word doc and a Google doc whatever, you're going to do, but write down the questions and the answers to these questions.

And it's really going to help you get that clear train of thought of what it is you should do and why you should do it.

Hannah: Because if you can explain to someone why they should pay you to do something, then you should be able to sell your service because that's basically what that is.

Ryan: Yeah. And so , like you were saying, what do people already ask you to do that you can start possibly taking money for?

Hannah: I have ideas that I've given to people before, including things like helping with interior design and, organizing spaces, cleaning someone's house, meal prepping food for somebody being a night nurse for somebody, when they have a new baby, that's a big, that's a huge one actually really profitable.

And you just have to be good with kids, right? That's being a nanny. Dropping, dropping kids off at school, even just having a good driving record and being a safe driver and a big enough car is a good way to make some money. But there are those things too, they require an element of trust. And so if you're a trustworthy person who people already asked to do those type of things, then you're off to a great start.

Ryan: Yeah. It could also be something, so for me, personally, one of the things that I love to do on my free time is I like to learn about personal finance. I like to research whatever, anything around personal finance, money. It really interests me. It always has. Budgeting, things like that. And a good example for me is my friends always asked me for help with those types of things.

And I've, so I've had multiple coaching sessions with my friends where they've paid me in order to do a budget for them. And in order to try to figure out their life, whatever it is, whatever consulting, whatever questions that they have, I've never scaled that into a business because of so many different reasons, but that is just a good example of something that my friends, my personal circle has already asked me to do previously.

And then I was like, oh I here I'll charge you X amount of dollars an hour, or I'll charge you X amount of dollars for this task to be completed. And then, oh yeah. Okay. Sure. So I know it's a viable, I know that is a viable business option for me. Another example, you don't have to be reinventing the wheel here.

It could be something like oil changes or being a mechanic, something like that construction. Right? All of these different things that if you have a specialized knowledge already, and people are already asking you to do it, especially if they're asking you to do it for free already, maybe that's something, a string that you can, a thread that you can pull out,

Hannah: and see if you can turn it into something.

Ryan: Right. Exactly. That's just one idea. One of the next questions that I would think about is would you rather have a lower dollar amount service and a high number of clients, or would you rather have higher dollar service and a lower number of clients? Okay. In an ideal world, you would like a high dollar service and a high amount of clients.

I get it. But I'm just talking about like, if your goal is to make a thousand dollars a week, right. You have to figure out how are you going to get to that thousand dollars a week.

Hannah: Do you want to clean 10 houses for a hundred dollars? Or do you want a nanny, two children for a thousand dollars.

Ryan: Right?

Exactly.

Hannah: Like from one family.

Ryan: Yeah. Yeah. And so that's what you got. That's what you have to figure out. Which one would you rather do and different services require different amount of time. So the good thing just to, we can't answer that for you, but I'll just go over the kind of pros and cons of both real quick, and it's not an exhaustive list, but this is a good place to start.

So if you have something let's say changing oil, just because that's on my brain for some whatever reason. And you're charging $50 to change oil, right? You need what is that? Math in public is this is bad. This is bad.

Hannah: 20.

Did I just beat you out a math problem?

Ryan: Yeah.

Hannah: Glad we get this on camera. Yeah, that's good.

Ryan: And So you need 20 people a week in order to hit that thousand dollars which is definitely doable. Definitely doable, but you have to figure out too. Okay. That is 20 people that you have to schedule with, right? 20 people that you have to, okay. Either if you're doing a mobile thing, you go there.

Now you have to figure out driving time. Right. Nevermind if you're doing a stationary and you have a shop, now you have fixed expenses. Like you have a rent of the place.

Hannah: It's got to pay for it.

Ryan: Right. But that's out of the scope of what I'm talking about, but it's just mostly more clients, the more scheduling needs to happen.

The busier quote, unquote, you are. Whereas the good part of that is if one day you only have 19 clients, you've only made $50 less.

Hannah: It's not as big of an impact when you lose one.

Ryan: Right? Because I think I'm common misconception of people that have never had businesses is that like, you get to be your own boss.

And that is okay. A lot of people think that way and okay, that's inaccurate. But I think,

Really, you

Hannah: have all of the bosses now.

Ryan: I think you have many more bosses as a business owner.

Hannah: Every client is in charge of you now. Right?

Ryan: Exactly. Yeah. And so now you just spread out your risk by having a lot more clients.

Whereas if you were babysitting and if you're only babysitting for one family, one set of kids.

Hannah: No family moves.

Ryan: Exactly.

Hannah: Now you're unemployed, your business doesn't exist anymore. You lost your only client.

Ryan: Right. Yeah, exactly. So these are just types of things to think about when planning on starting your own services business.

Hannah: How weighted are you going to be to these clients?

And then how much risk do you want to mitigate by having less or more?

Ryan: Yeah, no right answer.

Hannah: No, it's very individual.

Ryan: Right.

Hannah: And only you can answer that question for yourself.

Ryan: Yeah. I will say to give you an idea of what we did, we went for a higher dollar service with fewer clients, and we're very glad that we did.

I don't think you and I are ever going to start a services business. Never say never.

Hannah: Yeah. Whenever we say never, we always end up doing it again. So, but I would say that we'd probably try to avoid it in the future just because we now have different interests that require more time, and so having a services business is a little bit too time consuming outside of those things.

But if we started another services business, it would be high dollar, low client volume, for sure. Yeah.

Ryan: Yeah.

The reason there's many reasons for that, but we'll just go over a few. One, you just need fewer yeses in order to make a living. Yes, does that mean that you are now concentrated a risk of those few people that are saying yes to you?

So what I mean by that is say in our business, a good month, six clients, what whatever. Yeah. I was just making a number up. Okay. That's only six people that we have to schedule with for the month. Right. Whereas if we were doing something that was a fraction of the cost, we would have to 10x it.

Yup. Right now we have to do 60 clients a month.

Hannah: And that's a lot.

Ryan: That's a ..Lot,

Hannah: that's a lot of people to schedule with.

Ryan: Especially with the service that we did because our service,

Hannah: multiple points of contact.

Ryan: Multiple points of contact took hours to do. We ran a scalp micropigmentation and semi-permanent makeup studio.

It's a little out of the scope of this conversation. If anybody wants to know more, we can talk about that in a future episodes. You're going to find when you're doing a business, a services business, is that you have to work on your business and you have to work in your business.

Unfortunately, that's a super big cliche and, but it's a cliche for a reason. Right? And so when you're first starting out, it's probably just going to be you doing the service and also getting business. So if you choose a business that has higher margins, which means that the cost of every client is low and you're charging a lot, that margin, that cost of versus price you're charging, that's the margin.

So if you're choosing higher margin services, you don't have to get as many clients and you don't have to constantly be scheduling. And trying to get more clients in the door because as a services business, with any business, but especially services businesses, you live in die by your phone ringing.

Hannah: Yep and it's hard.

Ryan: Yeah. So you need that phone to keep ringing or emails to come in and whatever, chat, however it is that you're acquiring customers, but you always need that to come, keep coming in, new customers, returning customers always. And it becomes a lot to deal with after you've hit some sort of a success.

It starts to get really, a lot.

Hannah: Yeah. It's just a lot of work goes out of it. Yeah.

Ryan: Good problem to have. And then now we're talking about hiring and everything like that, which is outside of the scope of this conversation. We'll talk about that another time. Right. But anyway, that's why we choose to focus on higher margin, higher dollar and less and fewer clients.

But there are so many ways to make money. There are plenty of people out there that make pennies on the dollar of profit margin, but they service millions of people and they are way more successful than we are. And so there's no right or wrong way to do it. That's just how we would do it and how we have done in the past.

So one of the next things I think you should do is you should be doing a little bit of competitor research at this point. You should be looking at, because it's a services business, you're probably looking at being local somewhere, unless you're going to be doing like online therapy or something like that.

Or like some sort of like online coaching that it's a little bit different, but most likely you're going to be in one area and you're going to want to do competitor research for that area. Even if it is online, you're still going to want to do competitor research as well. And what I mean by that, a lot of people are like, what is that?

It's literally just Googling.

Hannah: Just look up people that do the same thing.

Ryan: Yes.

Hannah: And read a little bit.

Ryan: So if you were trying to be a mechanic or something like that, something that we can all understand, just look up, mechanic, your area.

Hannah: Any idea of their pricing of what their business is doing, of how many reviews they have, all that kind of stuff.

Ryan: Exactly. You look up at their website, look at what they're doing good. Look at what they're doing wrong. A lot of times, if you want to go into, in depth with it, you can give them a call.

Hannah: Yeah you can, if you want.

Ryan: You can give him a call and you can be like, okay, you can pose as a customer if you want it to.

Hannah: We've never done that, but we've had people do it to,

Ryan: we've had people do it to us. We've never done it, but we've had people do it to us.

Hannah: No shame in the game. I don't feel, I don't feel any kind of way about people that did that. I don't really care that they did.

Ryan: It's fine.

Hannah: Yeah. I wouldn't have done it, but it's fine that they did.

Totally. Yeah. Yeah.

Ryan: And more power to them for doing it.

Hannah: Because they did better research than we did.

Ryan: Yeah, way better research. And we did very little when we first started out.

Hannah: That is true. So we didn't even take our own advice.

Ryan: Yeah. What the next thing I was going to say is instead of acting like a customer, you could call and you could ask, talk to the boss and you could ask if they're nice, you could be like, "Hey look, I'm thinking about getting into this business.

I'm thinking about doing it. I'm thinking about doing it. Do you have any tips that you would have liked to know first starting out?"

Hannah: Yeah. And I will say too, that gets you a lot further ahead. I think in general, just being open handed about things too, like as the person receiving those calls or the person giving those calls, just ask.

Yeah. Like it doesn't cost you anything. And if the person's kind, they're just gonna give you an overview and hopefully it's a good one.

Ryan: No, but what I found, we found,

Hannah: people want to help you.

Ryan: In our business is at a certain point in our business, people were asking us that exact same thing.

They were calling us. Some of them did pose as customers and asking like what kind of supplies and what kind of equipment do you use? Yeah. What are your, what is your pricing? Although our pricing was always transparent on the, on our website and everything, but there was also people that, that reached out and asked like that did exactly what I just said, which is how do I start?

I'm thinking about starting, how do I start? And when people asked us how to do it, even if it was in our own market, in our own area, we just tell them we would help them out. A lot of it has to do with at the point where we were established in our business. We weren't really concerned with a newcomer, just starting out of nowhere.

Hannah: There's usually enough people to go around for.

Ryan: Not, only is there an, is there we always, at which we always said, we did always say that there's enough people, enough clients to go around and make everybody enough money. But not only that, we had been entrepreneurs for years at that point, and we know what it takes in order to get to that level.

And I'm like, okay. Yeah, I can definitely give you some pointers. It's not going to happen overnight.

Hannah: They got years of work ahead of them.

Ryan: Right. And if I can't beat you as a competitor, three years from now.

Hannah: Then you should beat us.

Ryan: Then you should beat us. Then I shouldn't be,

Hannah: Capitalism, baby.

Ryan: Right. I shouldn't be in business anymore.

Yeah.

If you can beat me three years from now, with me giving you a little shove out the door in order to get you going, I shouldn't be a business anymore. And so I, felt like we always helped people.

Hannah: I think now that you say that, yeah, we did, because if somebody called and ask questions about Hey I'm trying to do this, I would just say, oh, that's great.

You totally should. And I would just give them an overview of whatever.

Ryan: Yeah. And rewinding the clock back even more. That is exactly how we started.

Hannah: Yes, it is. It is. Somebody else took the time to sit us down and say, this is a really good industry. You absolutely should get into it. Here's how to do it.

And they did, and they took time out of their own day to say, Hey, like I just did this. I'm super excited about getting into this industry. It's really, there's a lot of money to be made here. Here's how you do it.

Ryan: Yep. And so,

Hannah: Nothing, they gained nothing from that.

Ryan: What, happened going into the future?

We ended up in the same market as this person, we ended up being more successful than this person when we got to the point that we were so successful, we ended up having too much work. And who did we refer those people to?

Hannah: To the person who helped us in the beginning.

Ryan: Right.

Hannah: And that person made definitely thousands of dollars off of the leads that we sent their way for sure. And so it's good. It creates a symbiotic relationship. And also in general, I think small business owners really do themselves favors by helping each other out because it creates a sense of community too where there's just people that are willing to pitch in and help. And Hey, can you do this?

Hey, can you do this? And they would send us people too. Yeah,

Ryan: Definitely. Definitely. And so that's all to say. During the competitor research is definitely, I would say necessary, and it doesn't have to be completely exhaustive, but a quick Google search, a quick phone call, that's not going to hurt you, right.

Especially if you're thinking about doing this for a living. So the last thing that I want to talk about choosing the service, we have a lot more to get through. Sorry guys, this is going to be a little bit of a longer one because want it to be almost everything that you need . In order to get started.

And one of the last things amongst many other things is going to be what kind of tools, equipment, or space and supplies do you need in order to perform the service that you're thinking about doing right. And so now we're starting to think about the cost of it. Right? So before we were worried about the profit side, right?

We were talking about high dollar, low dollar, a lot of clients, fewer clients. Now we're starting to think about the cost of it. And so if you're thinking about changing oil, are you going to be doing that mobile? Like I was talking about before, or are you going to be opening a shop because those are two vastly different business models while you might be saving more money.

If you do a mobile oil change where you just go to people's garages or go to people's driveways and do it in their driveway while that might be cheaper in fixed costs, because you're not paying for rent, you could be paying for it in time, in traveling time. If you're not pricing correctly, whereas maybe doing a traveling thing, you can only get four a day because you have to travel half an hour between each people, each person.

Whereas if you get a shop, you learn how to market your shop and everything. Now you can just have people roll up.

Hannah: Come to you.

Ryan: And now you can do for an hour.

Hannah: So your efficiency's going to go way up.

Ryan: Right. And you'll be making more money, even though you're spending more money. There's no right answer here either.

Hannah: No.

Ryan: Right.

Hannah: And you may start out wanting to do mobile and then transitioning to a shop later.

Ryan: Exactly. There are plenty of businesses that require certifications as well that you're going to have to look into. So I've been thinking about a popular service right now is like the IV bags.

Hannah: Oh yeah.

Ryan: Right. Like giving people, vitamin C drips or vitamin B12 drips, whatever, whenever people are sick or hung over or whatever that is going to need different licensure in different states, in different counties because you're poking people with a needle. Right. Whereas honestly, there are some places that you need license to cut hair. There are a lot of places that there are a lot of,

Hannah: All states currently that you need a license to cut hair,

which is some ridiculous nonsense.

Ryan: It's ridiculous. But anyway, I digress.

Hannah: Yeah. That's the strong opinions on the licensure of trades that don't need to be licensed at all.

Ryan: But you have to factor this in to picking the service, right?

This is part of the equipment or part of the tools and supplies that you're going to need. We want to make sure that you're doing everything above board. You want to make sure that you doing everything legal because it just makes life easier. You don't want to be worried about breaking the law.

Hannah: You're gonna have enough stress.

Ryan: Right?

Hannah: Yeah. So one of the things, assuming that you get all the licensure and everything like that, want to give examples of a service that has a high margin, but high dollars to start but every repeat client after that is all profit basically. So one of the things is like tattoo removal, laser tattoo removal. Assuming that you have all the right licensure and everything like that.

Ryan: Okay. All you need, is pretty much all you need is the machine and a medical space to work in. And that's pretty much it. You you're going to need some supplies here and there gloves and all that. That's all negligible. Yeah. That's all pennies per client.

Hannah: Yeah. Your main cost is going to be your space and then your machine, which is a one-time cost.

Ryan: Right. And your machine some of them, go for a few hundred to up to like 30 grand.

Hannah: Yeah. There's a wide range there.

Ryan: Right. And, but as soon as that machine is paid off, Every client after that is just, you're just paying with your time really. And there's some depreciation on the machine because it can only be used so many times, but that's negligible as well, assuming that you bought a good machine.

A good example of something that doesn't require a lot of setup at all is going to be like washing cars.

Hannah: No, you need a bucket and a sponge and a chamois and a yeah, that's it.

Ryan: Right? That's it. And you go, like I said, you can go around you all around and you can go to people's driveways. And then eventually you can, if you can make enough money, you can end up getting a physical location in a Walmart parking lot or something like that.

Hannah: And that can add a vacuum and start detailing too.

Right. It's like, that's not a lot of equipment yeah. For exactly. To make money.

Ryan: Right.

Yeah. So it really depends there. You also have to remember that you need the expertise in this field, right. So like you can't just buy a laser tattoo removal machine,

Hannah: and start buzzing people.

Ryan: Yeah. You could.

Hannah: Seems risky.

Ryan: Yeah. But that doesn't make a lot of sense.

Hannah: And also that's one of those things that in the law states you need a specific license for.

Ryan: Right. You need a license and you need to be insured. So like I said, you need to have this know-how in the beginning, but let's say that you do, let's say that you do have that know-how these are just examples.

Hannah: Like you're a nurse already, right.

Ryan: Or tattoo artist or whatever you've taken a test and you've taken a few classes in order to do it in order to learn how to do it. Sure. So one of the things I want to circle back to is the competitor research.

One of quickly, if you find that nobody is doing it in the area that you are thinking about doing that service, that could be a really great thing.

Hannah: Or a really bad thing.

Ryan: Or a really bad thing. And it's your job to figure out whether or not, which one is good or bad. So what we're talking about is if nobody's doing it in your area, that means you have no competition.

If you see no competitors and you're trying to start something like really niche, like some art thing, like a color me mine or

Hannah: a wine in canvas place.

Yeah. Right.

Ryan: There's some sort of,

Hannah: yoga and goats.

Ryan: Yeah. Something like that. And you're like wow, nobody's done this, nobody's done this here. Nobody's doing it here.

That means you're going to have zero competition. And that means if somebody wants to do that in that area, they're going to go to you because it can't go anywhere else. Right. The flip side of that is you have to ask yourself why is there no competition?

Hannah: Alright. Cause sometimes the answers because there's no demand.

Ryan: Exactly.

Hannah: And that can be a timing thing too. If somebody was too early to a trend and then now it's more popular. Then you may have a better shot trying to get something up and running. But sometimes yeah, that's either a really good sign or a really bad sign most of the time.

Ryan: Yep. And it's your job to discern which one.

Hannah: Yeah. Take the gamble on whether or not you think you're right.

Ryan: Right.

And so if,

Hannah: and all entrepreneurs think they're right.

Ryan: If there is no demand for it one of the best things that you could see is like on Google, on like Google my business. If you go to Google maps and you search whatever thing in your area, and it shows up that company was there, but it's closed now.

Okay. That might give you some clues of like, why did it not work?

Hannah: If you can go read the reviews,

Ryan: if you can read the reviews, if you can possibly call that place and see if you can get in touch with the previous owner you can look through Facebook or whatever, and see if you can have a conversation about what happened.

This is what's difficult about being an entrepreneur. There's a lot of decisions that you're going to have to make, and you don't really have. You don't have complete information. And so the last thing that I want to talk about one before you completely think, okay, this is a service business that I'm going to start before you buy all the tools and you buy all the materials and everything like that.

I think the last thing that you should do for most people is you should try to see if you can make a couple of sales through family, friends, Facebook posts, whatever. This won't work for all businesses. No, if you do something like how, what you and I did, which is semi-permanent makeup or scalp micropigmentation.

Hannah: Sell it to people that actually want it.

Ryan: Yeah. You can only sell it to people that want it, or like laser tattoo removal.

Hannah: They don't have tattoos then why they don't want the tattoos removed. Right. Then why would they want it?

Ryan: Right. Yeah.

So, but if it's something like babysitting.

Hannah: Or meal prep services.

Ryan: Meal, prep services, or oil change, mechanic, that type of say delivery service.

Hannah: Tailoring.

Like if you're sewing somebody hems or something,

Ryan: if it's something like that, where you can have people buy it. Try to sell it. It doesn't have to be for a lot of money. It doesn't have to even be for the right price yet. Just see if there's demand. One of the things that we learned. And I think every entrepreneur learns is that a lot of people are going to tell you, oh, that's a good idea.

I totally would buy that. You should do that. I would totally do. I would totally be your first customer. And we've had something like that multiple times. And we were like, oh yeah, we offer that now. Like you want to buy it from us? And it'd be like, oh, I don't really need that right now or whatever. And that means they were never going to buy it from you.

They were just being nice.

Hannah: Yeah.

Ryan: And so this is a simple way of gauging demand.

Hannah: Yep.

Ryan: Super rudimentary. Right? Simple Facebook post.

Hannah: See if people will buy it.

Ryan: Yep. Asking, texting.

Hannah: See if you can get some money for it.

Family and

Ryan: friends. And if you can't, that might tell you something. If everybody was like, yeah, you should totally do that.

You should totally do, I don't know, ice cream truck. Yeah. To order sushi for catering or something like that.

Hannah: Vegan hot dogs, whatever. But then nobody wants them when it comes around to it.

Ryan: Yeah. Those are products, but those are also services too. So when push comes to shove and they're not willing to buy it from you, maybe it's not a good idea to do.

Hannah: If you can't get the people closest to you to fork out some money for it, then it's people who are not are probably not gonna do it.

Ryan: Yeah. Assuming that is a product or service that they would have bought anyway. They, and they should've bought it from you.

Hannah: I don't mean you're asking them to buy something outlandish that they would never not naturally buy, but if they're in the demographic of people that you think would purchase it and they're not interested in purchasing it, that tells you something.

Ryan: Yeah. Yeah. That is your job to figure it out.

Hannah: And then you have to assess.

Ryan: A lot of this is all basically just guessing.

Hannah: Yeah. That's really, it there's a funny Reddit post that just said, does anyone in a, it was a Reddit post in r/entrepreneur and somebody just said, is there anybody in here that actually knows what they're doing?

And the honest responses were just, absolutely not. They're just making it up, make it up. Yeah. You just, yeah we just do things and then they work or they don't. And that is the truth of entrepreneurship is you are taking a machete and you are just chopping your way through the jungle, and you hope that you don't accidentally run across a tiger or a pit, or I don't know, an evil witch in a candy house.

Ryan: Yeah. Okay. So moving on. I know this is a long one. We have a couple of more things to get through. The next thing that we're going to talk about is we're going to talk about choosing the business structure. Now this is Yanceyville we're here. This is like really boring stuff.

Hannah: What are you talking about?

Ryan: Super dry.

Hannah: The tax code is so interesting.

Ryan: Yeah, but we have to talk about it because we had a lot of questions on it and a lot of people don't know a lot, so we're just going to go over real quickly as I can. I'm going to do it as quickly as possible. So the way that you choose to structure your business is important because it, it affects the way that you're going to get taxed and we want to be lawful at all times.

And so choosing the business structure and choosing the tax structure is super important. All right. Now, when I was first looking into how to start a business. When we first didn't know anything of how to start a business at all, I spent weeks on weeks of figuring out how to structure these businesses.

Hannah: I can verify this.

Ryan: And while I'm glad that I did it, I guess it probably wasn't necessary.

Hannah: At the time, it was not.

Ryan: Yeah.

We ended up using legal zoom, which for people that don't know anything. And if you have six, $700 to throw at it, just use it. It's a lot easier. Eventually you're going to want to probably get a lawyer to look at whatever operating agreement that you come up with, especially if you're in a partnership.

Hannah: Yeah.

Ryan: Which is for those that are listening, those that is two people or more in a business. Okay. That being said, you probably don't need to do that much research. There are a couple of good resources that I'll link in the show notes degreefreenetwork.com.

And that will help you understand this stuff at a super high level. And right now in your entrepreneurial journey, that's pretty much all you need to do. Yep. So the simplest thing that I will say, if it's just you starting the business, if it's a single person that is always going to be the easiest, what you and I did is much harder because there's two people. Cause there's two people, right? And you and I are equal partners in all the businesses that we have. So that is much more difficult to accomplish because you need an operating agreement. You, have to say, if you get taxed as a partnership, when tax time comes around, you need to send out K1s, there's a whole bunch of other things.

Hannah: Ryan does a lot of stuff.

Ryan: There's a whole bunch of things involved with it and just disclaimer, everybody, this is not legal advice. This is not tax advice. Yeah. This is just for informational purposes only do whatever is easiest and make sense for you.

And is legal.

Yeah. So I'm going to assume that you're a single solo person starting a business.

Now you have a couple of choices, the easiest is going to be just a sole proprietorship. A sole proprietorship is just basically I, Ryan Maruyama, and we're going to start taking money to do whatever, to trim hedges and okay. You can pay me Ryan Maruyama. I am now a sole proprietorship business, right? I am, because I say that I am, that gives no separation between my personal assets and the business assets.

And so when tax time comes around as well, every, all the money that I make is going to be taxed as ordinary income. And I have to pay self-employment taxes and all that jazz. If you want to simply separate liability. Let's say you're doing a tattoo removal and you need to get insurance for the tattoo removal and you not likely that things are going to go wrong.

But if something does, you'd like to protect some of your personal assets, you would start an LLC, a limited liability company, and you would make sure to keep all of your business expenses separate from all your personal expenses, right. That's going to be the most, that's going to be the simplest single member, LLC.

When tax time comes around, it's still pretty simple to do. You can also incorporate your business as well. That is outside of the scope of this conversation, because if you're incorporating your business where we're assuming that you have revenue, that you've talked to lawyers that you're good to go, right?

Because that's a more complicated business structure.

Hannah: And more expensive to maintain.

Ryan: That we're not gonna, we're not going to talk about okay. If you do have two people or more, you're gonna, you're gonna probably want to start an LLC, but this LLC, it will be a limited liability company, which will protect your personal assets as long as you keep them separate.

But when tax time comes around and you're going to be taxed as a partnership, what that means is your tax preparer or anything like that is you're just, you're going to have to send people out these K1s, you have to file a 10 65. It's all a lot of , like I said, it's all boring stuff, but just know that you're going to need an operating agreement.

If there's more than two or three people and that operating agreement can be simple, you can look up plenty of them online for free, right. And just have the partners sign. My suggestion is when you get enough revenue, you have an actual lawyer look at it and put eyes on it's worth.

Hannah: Make sure everything's good.

Ryan: It's worth a couple thousand dollars just to make sure that this is all, right. It all makes sense. For the LLCs. Every state is different. You're going to have to, it's very easy. Most of them, you just look up your state, how to form an LLC and almost always you'll get pulled to a state site, and you can check whether or not the business name that you want is already in use.

Usually, if it's not, you file some paperwork and you pay them a fee, and now you have Acme, LLC in whatever state that you're at, and then when you need an employer identification number, you can just go to the federal site and look it up EIN, I'll link some stuff in the show notes as well for everybody, for all this stuff, and you can easily get a employer identification number you don't really need legal zoom or another service like that to do it for you. But it's nice if you have the money to just pay, especially if it's your first time.

Hannah: Yeah.

They just send everything to you in a nice little folder. It's really easy. It's easy. It's worth, in my opinion,

Ryan: I think for the first time we don't use them anymore.

Right. I wouldn't use them now because I know what I'm doing, but at the beginning, cause it was so much easier. Right. And could I have saved, could we have saved couple of hundred bucks to do it ourselves? Definitely. Definitely. Definitely. Definitely. But with everything else that you have going on with having to market the business and with having to learn how to do the service itself you have better things to do.

So this was just a short overview of different business structures. If you are a single person, sole proprietorship or single member LLC is the way to go.

Hannah: For sure.

Ryan: Yeah. It's just the easiest. Okay. Now we get into the meat and potatoes of it. We are going to talk, the last thing I want to talk about with you is once you have your service picked out, once you have the business structure set up, now it is time to make money.

And this is the most important part of it that you are going to have to continue forever.

Hannah: Yes, forever. As long as you keep the business.

Ryan: As long as you keep the business.

Yeah.

Hannah: You gotta market, you gotta market and get people to continue to pay you for your service. One of the things I erroneously thought, I think we both did.

Ryan: I don't me personally. I definitely did was we just thought, like, if we built the business, they would come. We thought it was field of dreams.

Hannah: Yeah, no, we both thought that we were also idiots.

Ryan: Yeah.

I remember when I built my first website, it's similar but different. Like I've built my first e-commerce site and it was like, nice.

I thought it was nice and everything.

Hannah: It was pretty nice.

Ryan: And we had a few products up there and then we like a few days went by, we'd never got any sales.

Where are the people?

I built it. What the heck?

Hannah: Cause that's not how the internet works.

Ryan: That's just not how anything works.

Yeah, some no businesses work.

Right. And so one of the things was, I thought just if I had built something successfully, then it would make it successful, which I realize is silly now that's

Hannah: dumb.

Ryan: That's dumb. Now I realized that, but I was dumb then. And I'm still dumb now, but less now. Yeah. And one of the things is you've got to consistently tell people what it is that you do.

Hannah: Yeah. Because people don't have time to remember what you do. You gotta remind them. People have a lot of things going on in their lives.

And if, they are interested in buying your product and service, you have to consistently remind them it exists in order to get them to buy from you.

Ryan: Yeah. It's one of the ongoing processes. Some businesses are easier than others, but every business you have to learn how to market, right? You have to learn, not just talking about advertising, not necessarily paid advertising but just being able to market in general, there's so many different facets and aspects of marketing, right?

There's SEO. We're talking about businesses. So that's search engine optimization for those people at listening and search engine optimization is like getting your website or your application at the top of Google. So when somebody says tree trimmer,

Hannah: you pop up.

Ryan: Yeah. Your state, your city, you pop up.

And you're a number one. And so there's also local search engine optimization, which is that there's content marketing, social media marketing, there's advertising. Right. And in the world of advertising there's print ads, there's radio ads, there's TV spot ads. There's cost ads. There's online ads, Google ads, Facebook ads.

So many. Yelp ads. Yes. Right. So many, right. I know we hate Yelp.

Hannah: Yeah. Everyone hates Yelp.

Ryan: If anybody out there works for yelp listening.

Hannah: We don't hate you.

Ryan: We don't hate you.

Hannah: We just hate Yelp.

Ryan: Yeah, we hate Yelp.

It's okay.

We actually have a good friend that works for Yelp and we like her a lot.

Hannah: We just don't like Yelp

and she's so nice.

Ryan: She is so nice.

Hannah: They don't deserve her. Yeah.

Ryan: Anyway,

Hannah: we'll go into a story for another, most small brick and mortar business owners hate Yelp.

Ryan: If you take this advice and you end up and you ended up opening a services business, you will experience the reason why we do not like Yelp. You'll see. You will see. You'll see, unless you're a restaurant in which I think you got to, a lot of people need, Yelp

Hannah: Gotta do it.

Ryan: It's a necessary evil so far.

Hannah: It's very evil.

Ryan: Yeah. And but yeah, there's like Google my business optimization. There's so much to learn in marketing, but the basics is how do I tell people that this is what I do and that you can come to me for this service. Right? That's the basics of it.

Hannah: Yeah.

Ryan: There's a lot of ways to get there.

What I was saying is some services are easier than others. All I meant was that some services don't require a lot of customer education, right? So a good example is somebody cutting grass. You don't really need to educate the client

Hannah: about the benefits of having their grass cut because everybody knows what the benefit is and it's having your grass cut.

Ryan: Exactly. Maybe your, maybe it's your job to now tell them why they should go with you,

Hannah: maybe additional landscaping.

Ryan: Exactly. Maybe teach them about additional landscaping or maybe the benefits of cutting the specific type of grass that they have in that specific area. Right. Maybe they didn't know that.

Whereas we'll just use our example. We did a service called scalp micro-pigmentation I'm not expecting anybody listening to this to know what that is. The reason why I'm not expecting anybody to know what that is, is because nobody knew what that was when we first started. And so it is, real quick. It is a alternative, it's an alternative for people experiencing hair loss and it was our job to educate people.

Scalp micro-pigmentation was a viable option for not stopping their hair loss, but dealing with hair loss in a different way. That sounds super complicated because it is, yeah. We had to educate our customers

Hannah: about everything about it.

Ryan: That's what it is. "Oh, wait, that's what we do ", and here are the benefits that it will give you here's the cost and everything like that.

And so that's what I mean by some services are easier and some services are harder. So this is an ongoing thing that you're going to need. But I know when we first started, we could have used at least a little bit of a checklist of what we should do. Right. And so real quick, a few things. Make a website, right?

There's so many different providers of websites out there now that there's no excuse, right. Even if you don't know how to code, you don't need to know how to code. Use a website builder. You can use Squarespace, you can use Wix, you can use wordpress.com. Right? You can use wordpress.org. If you know what you're doing.

Yeah. Not super difficult. That's the way that I learn how to build websites. If you're a little bit technical, if you have a brother or sister, husband, wife that's technical and they want to learn how to do it you can spin up a website and it doesn't have to be fancy, right.

Hannah: Just needs to exist.

Ryan: It just needs to exist to tell people what it is that you do, where you are and how to contact you. Right. So have your phone number on there, have a little form that they can fill out so that they can send you an email and you can email them back and just put your address of where you do business.

Right. And if you're at mobile, then you don't right.

Hannah: If applicable.

Ryan: And if you're mobile, then you don't need that. Right. But just to let them know what area, if you're in whatever, whatever town, then put that on there. Right? If you service the surrounding areas, the three surrounding towns, then put that somewhere on your website.

It's super simple. One page is fine.

Hannah: Yep.

Ryan: More pages eventually, probably better. But one page for now is fine. Get a phone number, right? There's so many different providers of voiceover internet protocol numbers now. You can just get apps on your phone. We use open phone, but there's like that's just an app.

You can use burn number second line. Yeah. Yeah. WhatsApp, whatever. Put that number on your website. And now, you know that when that thing rings,

Hannah: it's someone calling about your business.

Ryan: Somebody calling about your business.

Hannah: Yeah. For a lot of spam Be prepared for also.

Ryan: Yeah. But now you know that's a business phone call.

I need to answer that. Or I answer it by saying, hi, this is Ryan's Tree Trimmingservice. Right. Instead of saying, what do you want?

Hannah: Yeah. Our business improved a lotWhat dowhen Ryan stopped answering the phone like that.

Ryan: Yeah.

Hannah: He said, why are you calling?

What do you want?

Ryan: Yeah, exactly. Dedicated telephone number.

If you have an address, getting an address, one of the most,

Hannah: I would really advise against putting your home address there.

Ryan: I wouldn't put your home address. One of the things that you can do for very cheap, a lot of places won't accept post office boxes as their physical addresses. But if you go to like a UPS store or a FedEx or something, and you get a private mailbox, a lot of places will accept that. They just won't accept post office boxes by the United States postal service. So for, I dunno, a hundred bucks a year, whatever it is that they're charging.

Hannah: You keep a private mailbox that will, you can use as your business address.

Ryan: Exactly. I don't know. It just looks a lot more professional and you can apply to a lot more things.

And when I say things, I'm not really sure exactly what I mean right now, but you will see when you become an entrepreneur, you're going to have to put your address in for everything and you don't want your personal, at least we didn't want our home address, everywhere, right? So private mailboxes is definitely something to do.

If you're looking at doing a local business, like you're going to have a tire shop or something like that, or like how we had a studio, you're going to want to look up what Google My Business is. And you're going to want to open your business at your address. They're going to send you a postcard, snail mail in the mail, and you're going to have to put in the two factor authentication, but snail mail.

Just to mkae sure that you're a real business..

Right. You're gonna have to put in the code on the GMB app or whatever, and it'll say, okay. And then now you just put in what hours you're open, what you do and everything like that, and just look up GMB optimization. But those are definitely the first few things that I would think about doing.

Yep.

Right. There's so much more to learn that if there's interest, if we get interest on this, we can talk more about, and in a different episode, but that's going to be the basics of it right now. For marketing, when we were first starting out, we just did whatever.

Hannah: We just did. There was a lot of social media marketing.

Ryan: That wasn't really effective. No, we started to get a lot more effective when we started to take our marketing serious, we, for our business, we depended a lot on content marketing. So doing pretty much exactly what we're doing right now, which is we sat in front of cameras and microphones,

Hannah: and answered questions.

Ryan: And we answered questions.

Right. That's not going to work for everybody.

Hannah: No.

Ryan: That being said it is a perfect way to start and it's super low cost. You can start by using your phone and a cheap $10 mic on Amazon.

Hannah: It works. People respond to video.

Ryan: Exactly.

The last thing that I wanted to say about marketing your business is there's a ton of resources out there.

A ton.

Hannah: And I will say one thing that we did do at the beginning was we read a lot of stuff.

Ryan: Yes.

Hannah: We did read a lot.

Ryan: And so there are a lot of books that we read and we'll, have a list in the show notes with links to all of it, but off the top of our head, the 22 immutable laws of marketing, that was huge.

Hannah: What is it? Jack trout, Al Ries?

Ryan: Al Ries and Jack Trout. There's also zero to one by Peter Thiel was a huge,

Hannah: That book is great.

Ryan: Yeah, that's a really good book.

Hannah: That's one of my favorite books.

Ryan: Permission marketing by Seth Goden. Seth Goden also writes a daily blog. Also we can link it in the show notes as well.

Yeah, there's the four hour workweek by Tim Ferris.

Hannah: Honestly, that book was our Bible at the beginning. You guys should see how torn up that copy is.

Ryan: That's a really good book just about marketing, but just about entrepreneurship in general, or maybe not even if you're an entrepreneur, but just trying to work smarter, not harder.

Hannah: Running your life pretty much.

Ryan: Positioning by the same guys, Al Ries or whatever.

Hannah: Jack Trout.

Ryan: And Jack trout.

Yeah, there's just a whole bunch of, we'll list a more extensive list below one of the books that was interesting that I didn't think was really a marketing book. But you made me read was Rules For Radicals by Saul Alinsky. That was that's an interesting book as far as trying to get people to do something that you want them to do.

Right. And I don't agree with a lot of what's Alinsky says or stands for, but that's not really what we're talking about here.

Hannah: Yeah. He's a smart dude. He knew what he was doing. He knew how to say, Hey, look at that thing and then get people to look at it.

Ryan: Right. You can, we can separate his tactics.

Hannah: Man from the philosophy.

Ryan: From his message.

Right. But anyway, that's just a, there's a lot to learn and there's going to become a point. I want to say. I hope that everyone listening to this gets to this point, but there is going to be getting, there is going to be a point where you not only have to market your business, but you have to do the service as well.

And you're going to come to a decision point at that time. I'd hope everybody. I hope everybody gets there and it's, you can only do so much,

Hannah: You need help at a certain point.

Ryan: And so that means you have to hire. So if marketing is not, is 99% of the business and then doing the services 99% of the business,

Hannah: that means that you're doing approximately 198% of your business.

Ryan: You're doing a crap load, and so you have to, eventually you are going to want to outsource one or both of those things, right. And it can go either way or you can outsource half and half of each. Right. You can hire somebody to do the marketing for you and the administrative work and everything else.

Or you can hire somebody to do the service as well. That's a little bit outside of the scope of this, but just remember that if you market successfully, that is going to be the next problem.

Hannah: Yeah.

Ryan: Right. And then you're still going to have the problem of continue to market and continue to market and continue to market.

Hannah: Correct. Yeah.

Ryan: Yeah. I think that, that was pretty much it. I know that this is a super long one. Yeah, this is one that we've been putting off because there's so much information. And I think that if people want to hear about more of what we did in order to grow our business or how to grow businesses or whatever, we're probably gonna be talking about that more in other episodes, drop us a line, [email protected]

Hannah: Do not forget to sign up for the newsletter. There's cool stuff in there. And you want to read it, I promise.

Ryan: Yeah, definitely. We send out a weekly newsletter short it's quick, short. Sweet. Yeah. And you don't want to miss it, so yeah, you can sign up at degreefreenetwork.com for that as well. But yeah, I think that's it.

Thank you so much for listening guys. Make sure to like and subscribe.

Spreads the word.

Yeah. Share this podcast with friends and family. If you can just help us to get the word out there. But until next time guys. Aloha.

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