JOURNALING FOR DOLLARS

SUMMARY: Today’s newsletter is a dozy. ?? In case of TL;DR, here is a quick summary: Keeping a journal of all of your content and ideas as you create them is something you can start today to accelerate your Hourly to Exit journey. Building a scalable and saleable business requires the development and ownership of assets, whether you grow through products or services. From methodologies created to ensure dependable results for your clients to trainings that teach others what you know—IP, IP, IP. The best way to develop, protect and maximize your move valuable assets is to habitually record and regularly take stock of your "IP inventory". From now until Sunday, I am offering a gratis beta version of The IP Journal for your feedback. Click here for your copy. Read on for more about the benefits of IP journaling.

When I was looking for a title for this piece, I Googled “Journaling for Dollars”. I was hoping it would remind me of that old saying about dollars, which eluded me (and still does; is it “digging for dollars”?). Instead, a lot of Etsy shop money journals popped up: Money Mindset Journal, Money Affirmation Journal, Money Abundance Journal, Money Manifestation Journey (and many more) with similar promises.

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 power of affirmations and visualization techniques.

Not what I was looking for but sometimes you get what you need. Confirmation that journaling is a way to achieve not just for your personal goals, but also the goals for your business.

The IP Journal

This post was inspired by an amazing conversation I had with a woman who keeps an IP journal. Extremely prolific, she realized that she needed a process for cataloging all of her creations and ideas. At the end of each work day, her shutdown habit is to make a record of the work she created that day. So brilliant!

Using an IP Journal to keep a running inventory of her work is consistent with her business goal—to make sure her business is ready to sell when she is ready to exit.

She is setting herself up for success in all stages of the Hourly to Exit Journey.

The Hourly to Exit Journey

I hope you have your copy of the Hourly to Exit Self-Assessment. If you don’t, get a copy here.

The Hourly to Exit Self-Assessment tracks the characteristics of businesses at each of the four stages of building a saleable business: unsustainable, sustainable, scalable and finally saleable. Let’s look at how IP journaling can move you along the journey.

Unsustainable

A business is "unsustainable" if it is not supported with basic assets and is insufficiently funded. The tell-tale sign that your business is unsustainable: the only way to make more money is for you to work more hours. A freelancer model is almost always in this category. 100% of the output is owned by the client. There are no assets in the business except, hopefully, the bank account. With no assets, there is nothing to journal about. ??

Sustainable

A "sustainable" business means the business can maintain its viability by using tools and techniques that allow for continual reuse of resources. Progressing to a sustainable level requires the development of:

1. Basic Assets, including templates and checklists
2. Exclusivity by starting to articulate your expertise and niche
3. Stability, including contracts and insurance

An IP journal is the perfect starting point to building sustainability. Documenting processes for efficient, predictable delivery. Recognizing patterns that lead to deeper expertise. Identifying when a contract is needed for assets that aren’t created by you personally. Making note of anything that is owned by third parties, (Including anything that you get off of the internet).

The potential benefits of your IP journal are wonderfully expressed in this excerpt from Blair Enns’ The Winning Without Pitching Manifesto, entitled Formalizing How We Work:

One can reasonably assume that over time, through trial and error, we would happen upon an efficient approach that allows us to deliver at quality and speed with consistency. In almost any of our repeated endeavors, it is the strength of our processes that drives the consistency of our outcomes.

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 process leads to the very consistency of quality that a potential client tries to discern late in the buying cycle when our role is to reassure. Nothing reassures a client more than him drawing the powerful inference that little variability in process equals little variability in outcomes. Every one of the firms he is considering can demonstrate an ability to do great work, but the question he wants answered before he buys is: "How do I know I'm going to get their best work?" When we are able to demonstrate strong processes, the client can decide for himself the implications of our processes on the consistency of our quality.

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, finding leverage opportunities where the output is greater than your input. You can add leverage through:

1. Building a team, which may include contractors instead of employees.
2. Exclusivity by becoming the recognized expert in your niche.
3. Stability using repeatable, trainable processes for services delivery and operations.

A few leverage strategies, which are also described in my Is There a Rembrandt In Your Attic? handout, include:

Delegation Use employees who are less expensive that you to deliver the service

Automation Use technology to aid delivery

Productization Create a productized service that can be sold and delivered efficiently

Licensing Create an IP asset that can be licensed to multiple third parties

Teaching/Certification Teach other professionals to use your assets

Outsourcing Use subcontractors to deliver a part of the services

Subscriptions Sell subscriptions to your asset

Access Sell access to your community

This brings us to the final leg of the Hourly to Exit Journey.

Saleable

To be saleable, your business needs:

1. Revenue visibility, including financial projections that are strongly supported by the structures in the business.
2. Exclusivity through intellectual property development and/or authority-level positioning.
3. Ability to withstand due diligence.

While the IP journal is important for every step of the journey, it’s value is magnified at the due diligence stage.

Due Diligence

For our purposes, due diligence means an investigation or audit of an acquisition target undertaken by the prospective buyer. The objective is to confirm the accuracy of the seller’s information and appraise its value.

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. It does this by confirming, through the due diligence process, that the financial projections are supported by the assets and other structures in the business. Areas to be audited include:

• Financial due diligence investigates the accuracy of the financial records.
• Human Resources due diligence focuses on understanding the company's organizational structure, compensation and benefits and any possible violations.
• Operational due diligence evaluates the condition of technology, assets, and facilities.
• Business due diligence identifies who the company’s customers/industry to forecast the impact and associated risks that the transaction may pose on retaining the target’s current customers.
• Strategic fit due diligence assesses whether the target company will help them achieve their goals and objectives, including potential synergies and how well the two entities would merge together.
• Legal due diligence determines whether the target company is legally compliant and discover any potential legal issues.

In a world where IP is currency and the most valuable asset in your business, it should be of no surprise the IP will be a factor in each and every one of these six due diligence areas.

An IP audit will:

1. Identify what IP you own and use
2. Determine your IP’s usefulness, whether it is enforceable, and whether it conflicts with any third-party IP rights
3. Conduct an IP valuation

An IP audit doesn’t fit neatly into the legal due diligence category. It is not just about contracts and trademark registrations; it is a holistic evaluation of the company and its cultural focus on protecting and maximizing the value of its intellectual property. Another benefit of the IP journal:

By having a greater understanding of the value of their intangible

assets compared to their tangible assets, organizations will adjust

their allocation of resources accordingly to insure what’s most

valuable to them – their intangible assets.

Buyers will be looking at the target’s top down approach to protecting its most valuable assets, including corporate policies and training in areas such as:

A. Use of technology

B. Prohibitions of unlicensed software

C. Handling of copyrighted materials and contracts

D. Social media usage

E. Use of company email (no outside media).

I know that sounds complicated, but it starts with an IP journal.

Why Does This Matter?

Like a balanced checkbook, IP due diligence is easier to do as it is happening. As you grow and scale your business, you are going to rely increasingly on IP.

All of those leverage strategies we discussed earlier—IP, IP, IP. Having a solid IP foundation before implementing an IP-based growth strategy is essential. Increased visibility means increased scrutiny. Growing your business is like adding another floor to your house. The foundation that was good enough for your first floor may not be strong enough to hold your second floor.

You may be teaching others to do what you do, or offering a self-directed, simpler way for clients to access your IP. So what happens when you find out that someone took your class, and now they’re selling your materials for their own profit? Or someone else has a lawyer send you a cease and desist letter, claiming that your IP is actually theirs, demanding an accounting and share in the income you’ve earned from your work, and insisting that you can’t do any further work until the matter is sorted out? These two scenarios happen all the time, and one way to protect yourself is by whipping out your IP journal to demonstrate its origin.

This is not to discount the value of registration. Registration is important. But most of us are not going to register all of the IP we create. As you’ve heard me say a million times—IP is everywhere. So the IP journal provides the back up for the material that we don’t register.

How Does One Do It?

The goal of your IP journaling practice is to document all asset creation, including who, when, what and how.

Every day, catalog new content when it was created, who created it and what source materials, if any, were used. If you didn’t create it, review the applicable contracts to make sure you own or control the rights you need to use the deliverables in all manners you can foresee (and then some). Terms like “non-exclusive license,” “work made for hire,” or other IP-related references are a bit scary but they contain the keys to understanding your rights. When incorporating source materials owned by third party materials, read the fine print of the license or usage agreement. There will surely be restrictions that you need to comply with.

The challenge and the point are to maintain records of your ownership and other rights to use IP so that you can protect yourself as you scale your business and prepare it for an eventual sale.

If I’ve done my job, you are thinking about what you can do today to help prepare your business to scale through an IP-based leverage strategy or for sale. A great first step is starting your IP Journal. To help you, I have created a beta version of a journal that I would love to get your feedback on. Click here to get a gratis copy of the beta IP journal. I’d love to hear your thoughts.

As we move through 2023, I will be raising additional topics for your consideration, but you should always consult with an attorney about your specific situation. If you think you have reached a point in your Hourly to Exit Journey where you think you are ready to grow your business with IP, contact me to learn more.