M & A Rainmaker

I have recently talked to a lot of Makeup Artists ( MUAs ) and what a hard working, talented bunch of ( mainly ) ladies they are.

It’s a great job – making people look great – but it is also a very time consuming job. One MUA I know was recently up at 1.30 in the morning to drive to London to get a bride ready for her wedding then back to Birmingham to attend an event and then another private client. She didn’t finish until the evening of that day. A long day and while the pay is reasonable as a freelance MUA it is not brilliant.

Time and money are definitely connected in a strong way.

I personally feel that the objective should be for an MUA to get to the point where he or she can work with the clients that they want to – not the clients that they have to.

The way to do this is to .. Add ( Income )  and Separate ( Time from Money )..

Dealing first with ADD..

At the moment most MUAs only charge an hourly rate or a rate for their art/handiwork. Of course top MUAs can and do charge premium rates.

MUAs have a collection of product that they have assembled over time and know work. This might be in a suitcase or makeup carrier or at their salon. The client might not be aware of the products used – only the end result. If the client is inclined to buy the products that the MUA uses and recommends then it probably means a trip to the shops.

Whilst such a trip might not be an issue it might also be inconvenient and would have a cost to the client in time and money. ( Whether that matters to someone who can afford an MUA is another matter).

It could be that the easy provision of the products used to the client is actually an enhanced service.

If the client goes and buys those products from the shops then there is nothing in that for the MUA in financial terms.

If on the other hand the MUA could make say 30-50% profit on the products sold then this will have added to the income from any particular client appointment. In fact the product profit might be more than the hourly or set rate.

The MUA would need to have the product on hand in order to sell it or have some sort of online shop ( <<<Link here ) where the client can go. Having the product on hand is ok if you have a salon ( although stock is an overhead ) but means that you have to carry it around if you are mobile.

An online shop ( <<< Link ) is definitely preferable especially if it has rapid delivery times ( eg 24-48 hour delivery ).

Talking to MUAs recently I noted that many of them gave the client a summary of what they had done for them during that appointment and what products they used and also kept a record for themselves.

I took this idea and developed the idea of the Online Beauty Prescription ( <<< Link – thanks to a friend who is a Beauty Blogger for that description ) which is a blog post that can be written up afterwards and can be anonymous or name the client and will direct them straight to the place in the online shop where they can buy these products. ( Posting a blog actually has many potential benefits to the MUAs online marketing but I will not go into that now ).

Now, at the time that the client purchases these products the MUA may well be working with another client i.e. the MUA has begun to separate time from money or multiply the effect of that time.

We can imagine the client coming back again and again and the only time that the MUA will be aware of this is when they get an email saying ” You have another order placed from ( whoever ) , Value £x “.

Here’s another great thing about this.. If you have not already got the clients email address you will have when they register and buy from your shop.

That email address can be used to communicate with the client on an ongoing basis. The MUA can email them ” special deals ” or ” new products or services “. Such communication can be automated in an appropriate and tailored manner.

Once you have your own shop you will obviously be able to buy certain products at a ” Wholesale ” price yourself. With some companies ( e.g. Motives and Shop.com ) you can buy more than just beauty and cosmetics products at wholesale prices, You could for example buy multivitamins and isotonic products. Such purchases represent a clear saving to you on products that you are already going to buy. This is the online equivalent of having a Costco or Makro account in the UK.

Lets add another dimension to this.. Some of the MUAs friends, business contacts and work colleagues e.g. Hairdressers, Nail Technicians, Manicurists, Masseurs also recommend products off of the MUAs’ online site that are relevant to them. Again these sales come in without any direct effort from the MUA and they come in alongside the MUAs other work.

One or two of the MUAs friends decide that they would also like to have their own online shop and the MUA helps them set that up and guides them on it’s use. The MUA and the friend both get commission on the sales.

Time goes on and more and more friends are selling products off of the websites or have their own websites. The result is a substantial income for many of them that is independent of the number of hours that they put in and which allows them to select which clients they actually want to spend their time with.

Take a look at this video:

Which is about a product range that originated in the U.S. ( in 2010 ) and was conceived by Loren Ridinger and enhanced by LaLa Anthony ( if you are fans of The Kardashians then you may of heard of them ).

This is a high quality, affordable cosmetics and beauty product range which is endorsed by many Celebrity MUAs globally. ( <<< Link )  It is being sold direct via MUAs, Salon and Spa owners and other beauty related professionals. The reason that you can have high quality product at mid range pricing and give high commissions to resellers is that NO money is being spent on advertising or corporate fatcats – the profit goes to the people that deserve it – the MUAs and their business partners. There is a sophisticated 24 -72 hour global delivery system to support sales from the Online sites though.

The Motives business system is a turnkey system that accomplishes EXACTLY what I have said above. Retail profit is added to time for money ( the appointment itself )  and in addition there is profit sharing for group sales.

N.B. We have built a financial model spreadsheet ( mini business plan ) to support this blog. See what happens when you add this to your normal MUA income !!!!

Contact me @cwindley, skype chris.windley email chris.windley@gmail.com  or phone 07881 500002 to discuss this opportunity in greater detail.

Building business value is one way, building recurring income streams another. Using digital sales and marketing to automate income is also key

School 

When are we first taught that to get money we have to put time in ?? Maybe in school where they give you maths questions like ” If Joe got paid £4 per hour for 10 Hours work and Jane got paid £3 per hour for 12 Hours work how much did they get in total”.

Early Work

Maybe it was when I worked at the Spar supermarket for whatever it was per hour and I knew that the more hours I worked the more I got paid.

Later Work

That equation got a bit altered when I joined the Navy – we never really thought much about how much we got paid and we also didn’t think much about how many hours we put in. We just did what had to be done and we got paid what we got paid. In the end one of the reasons why I left the Navy was because  I realised that although I was always going to be ok – actually, well off – as a middle to high ranking officer I was never going to be a millionaire !!

After the Navy I went into High Tech. sales. Salespeople don’t get paid by the hour – aside of a basic salary they get paid on results. Obviously you have to put time in to meet your targets and get your commissions but there are the beginnings of a disconnect between time and money.

Of course we all also become aware that you can get paid more money for time depending on what you do – doctors earn more than supermarket workers and military people. People that work in the City get paid telephone number salaries that are largely related to the profits that their firms make. Of course doctors and City types work long hours and it is very demanding work.

Your Own Business

We started LanSwitch ( a computer networking company )   in the early 90′s with £2000 ( £6000 total )  on each of our credit cards and we sold it for £65 Million !!! We only paid ourselves a modest salary for the 7 years that we had LanSwitch ( became Voyager Networks and Internet ) but if you divide £65 Million by 7 I guess that is a pretty good annual/monthly/weekly/daily salary !!

It was probably after the sale of Voyager ( to Ronald S. Lauder Communications ) that the concept of the P.I.G. ( Passive Income Generator ) became clearer to me and it became so from the voice side of the telecommunications business.

Part of Voyager’s value was it’s pretty secure, recurring income stream. ( From e.g. Maintenance, Line and call revenue ). However when we started attending the Board Meetings of RSL Communications we learnt about the income that their voice resellers were earning from fixed line and mobile rental and calls. The way this works is that once you sign up a customer as a reseller of a telecommunications companies services ( eg BT or some other Telco ) then you get a small but recurring revenue as commission from those customers for as long as you keep them as customers. As a reseller you don’t have to go and build a telecommunications infrastructure – the Telco already did that. So you don’t have a massive capital outlay but you get an income which, aside from your time and effort involved in getting the sale, is all profit.

Let me just go back to the £6000 becoming £65 Million. This is, in some ways,  fairly common. Early investors in e.g. Google, Apple, Cisco, Facebook and Twitter all ” leveraged ” their investment so that e.g. a $10,000 investment became worth a $Million or even more. To achieve it you must have ” risked ” some money by investing in a company whose value might grow from nothing to something considerable. Everyone who starts their own business probably hopes that one day it might be worth a lot of money. Of course not everyone succeeds in this.

Certainly there was a lot of time that went into this – along with skill, knowledge and innovation. However the value created is not directly related to time. Although over the years I have found that typically it takes around 7 years from starting something to it becoming valuable and I have tested this with other investors and looked at a variety of companies to check its validity.

The telecommunications resellers also put a lot of time ( effort, skill etc etc ) into getting their customers as well. However once they got them they could go lie on a beach, sleep, race cars or whatever and the money kept rolling in.

Many of these resellers have ” sold their book ” to other, usually larger, resellers and Telco’s but you can bet that they never forgot about the PIG’s that they built and which they finally sold for some number times the revenue or profit that they made.

Of course these PIG’s were pre-Internet to some extent. ( Actually the same basic model still exists today and I have friends and business colleagues that still operate it ). I suppose I mean that the money comes in in a traditional way – you send out a bill and it get’s paid. It is not money from an ” Internet ” business although it may be money from the ( telecommunications ) infrastructure of many businesses.

Let us think about other PIG’s …… People write songs and the royalties from those songs come in forever no matter what. Authors write books and the royalties from those also come in forever. ( Think Harry Potter !! ). People invent things and the licence fees last forever. How did the richest people in the world make their money ?? There’s an overview HERE . Typically they built High Tech. businesses; they invested in property; they provided products or services to millions of people.

Even small amounts of money from millions of people are millions of dollars, pounds or whatever.

Some Internet Marketing companies and specialists ( sometimes called Online Marketing or Digital Marketing ) know how to get many people to purchase products and/or information online.  Companies like the Six Figure Mentors ( also called the Digital Experts Academy and PRO U in the USA ) automate the process of acquisition of products from being found or discovered on the Internet to placing an order with eg a credit card. They know that the best formula is to get small amounts of money from lots of people ( say $20 for an entry fee ), slightly larger amounts from fewer people ( eg a monthly $100 membership fee ) and then larger amounts from a few ( eg $2-20,000 for Internet Marketing Training ).

Other companies like Market America / Market United Kingdom combine income from online portals – with huge arrays of products at different prices ( e.g. Motives and Shop.com online shops ) – with multiple membership and training fees. This combines automated  online purchasing with physical recurring income from many people.

The person that helped me create this blogsite ( Nikki Pilkington ) recently posted a blog herself about an email that she received from someone ( who will be getting famous soon ) here  http://networkedblogs.com/p16363780.

The email asked