NINJA MOVES: Turning a service-based business to a product
Published on 18 February 2021
There generally comes a time in every service provider’s business life, when they look ahead at how to evolve and scale.
So, how can you scale a service business and turn it into a product, and create a business that is more than a trade between time and money?
Meryl Johnston CEO of Bean Ninjas, joins Smart Hub Business Manager Elize Hattin, to share how she took her service-based business, productised it, and transitioned from operator to business owner and beyond.
When it comes to scaling a service-based business, Meryl Johnston understands the challenge business owners face; that the service they are selling is their craft, their trade and/or, their profession.
“They have part of their identity tied up in that, so how do they transition out of delivering those services, to acting more like a business owner and thinking about scaling and marketing, rather than being involved in all aspects of the service delivery?” she asks.
This is a question Meryl had to examine herself, in her own business journey with Bean Ninjas, which she has been running for six years.
Prior to starting Bean Ninjas, Meryl was a qualified chartered accountant with mid-tier international firm, BDO.
After ten years in the industry and wanting to run a business, Meryl began the transition from leaving full-time employment by starting a consulting business.
While she admits it was a great transition for her, giving more flexibility and freedom to do what she wanted, Meryl found it was hard to replace herself.
“It was difficult to build a team around what I was doing, because a lot of it really was based around my accounting systems expertise. It was then that I came across this term productised service.
“I learned about how other service business owners were scaling their businesses, which really caused me to rethink what criteria did I have around a business?” she questioned.
Realizing she wanted to build something with global potential, that was scalable, and did not require Meryl to be one delivering the service, she realized her offering needed to be something quite defined, that could be repeated over and over.
“I wanted to build a brand rather than having my name in the title of the business, and there were some other criteria around wanting to have recurring revenue… knowing that there was money coming in every month, and wanting to have systems and scale,” Meryl recalls.
THE PRODUCT OF SERVICE
So how do business owners make that transition from being service-based business to product-based business; entering an international market, being scalable, plus having the right processes and procedures in place to ensure recurring revenue?
The way Meryl did it was to start a completely new business.
“I had the consulting business, and I started a completely new brand and business with a business partner.
“From the beginning, we tried to shape it as a productised service, or package services into a product.
“Bean Ninjas now is positioned as e-commerce growth accountants, but at the time we started, we did fixed-fee bookkeeping, and we just had three packages on our website.
“So, we tried to think about how we could package this up in a way that someone could see a price, a set of deliverables, and then buy it similar to buying a product,” Meryl explains.
Meryl suggests another approach could be looking at the suite of services and the problems you solve for your existing service business customers, and then think a product or prototype service you could create from an element of that.
“If you were running a design and branding business, you might be able to create a product just around the initial conception of a logo, or you might have a fixed fee to create a website with a clear set of deliverables,” she offers.
While Meryl says the choice to productize her bookkeeping services was based largely on her own skill set, she knows of other business colleagues who saw a market need, and created a product-based business, without necessarily having the skills to start with.
Meryl gives an example of a video editing business run by a founder who is not a video editor.
“He wouldn't know how to do that, but he saw that there was an opportunity in the market that YouTubers need regular video editing, so, he hired video editors and then built a productised service around that, where they pay a set monthly fee for a series of videos.
“I think what's key is how can other people deliver these to a consistently high standard or the standard that you're promising to customers in a repeatable way?” Meryl says.
In the transition of service-based business to product-based business, how do you manage staff or get a team to consistently deliver your services?
How does your customer acquisition change from being a service-based business, with so much emphasis on one-to-one relationships with your customers or clients?
In the early days of Bean Ninjas, Meryl says customer acquisition was still very much relationship based, because the brand was unknown, and she did not know much about digital marketing.
“I was doing the hustle in the first few years of building a lot of relationships, adding value and through networks…that's how we found our first set of customers, but that's not scalable.
“We needed a lot more customers to achieve the same revenue when we weren't doing high price consulting, we were selling much cheaper monthly retainers. So, we started with digital marketing, specifically content marketing that we launched Bean Ninjas.
“We started a blog. We started an email list, and SEO was actually one of our primary sources of new customers outside of referrals,” Meryl explains.
Being in the finance industry meant there was a lot of trust-based purchasing.
“I like to think about channels that we own, such as our email list. Whereas if we were on something like Facebook running ads, we are not necessarily owning all of that. It is easy for it to be taken away because someone else, Facebook owns the platform.
“With us, it's really being content specifically around writing useful articles about accounting, but also around productised services and building teams, and then adding value to our email lists with a weekly newsletter,” she says.
At the beginning of each quarter, Bean Ninjas prepare a content strategy; undertaking a lot of keyword research around what the company wants to rank for in Google, before considering which search terms have high volume and how competitive they are.
Based on that analysis, Meryl’s team then figures out a list of articles they are going to write, and then write long form guides.
They also try and do a lot of guest posts where we can link back to the articles and guides on other websites.
“That's the core part of the strategy. We also promote new articles to our email list, and then we are quite active on social media.
“I aim to write a LinkedIn post most days, and my business partner and others in our team normally we'd have, at least me and someone else posting every day on LinkedIn, and we also are on Twitter,” Meryl shares.
The tool Meryl and team uses for keyword research is Ahrefs and Google Analytics.
BUILDING THE BEAN TEAM
Before starting Bean Ninjas, Meryl says she had to hire people, but not many. When she worked as an employee, Meryl worked with staff, but was not involved in recruiting them.
“I was managing people other people had hired. I was not building teams from scratch. The way we approached it was I wanted to remove myself from every seat in the business.
“So, if you look at an organizational chart, my goal from day one was I didn't want my name to be in the bookkeeping doing the bookkeeping service delivery. I did not want to be doing onboarding. I did not want to be doing sales.
“But in the beginning, my name was in every box. It was me or my co-founder. From there, we worked on service delivery first, so hiring bookkeepers, and then we built a management layer within the bookkeeping team.
“And then gradually focused on other areas of the business, until eventually I was able to have my name just in that CEO box,” she reflects.
Like many startups, Bean Ninjas was a bootstrap business, meaning every dollar that we wanted to spend, had to be earned first.
Meryl acknowledges building her team was quite a slow process, as they were not able to hire full-time accountants in the beginning.
“We had to work with part-time and contract accountants, and we ended up with something like ten and then hit a tipping point.
“It was quite hard managing ten different part-time contract bookkeepers, all working different hours, all working different schedules and training was becoming difficult.
“It was difficult having management structures in place, or when the managers are working different hours to the bookkeeper.
“We really hit a lot of pain at about the two-year mark of the business, where we've grown really quickly, we had lots of new customers, we'd hired lots of people.
“When our quality started going down, our bookkeepers weren't happy, so we made couple of changes; one was to reduce the number of staff we had, by hiring full-time people and not have so many contractors and part-time staff where we weren't their number one focus,” Meryl explains.
While this was a game changing move for the business, Meryl admits they could not have done it sooner due to lack of resources.
The move also marked the beginning of the establishment of a leadership team.
Meryl says she wanted to have senior people within the business who were running a department and were solely focused on that.
“We wanted the key people in our business when they're in the shower, we wanted them thinking about our business, not their side hustle or something else.
“To do that, we needed to find the right people, but we also needed to look after them and create the right environment, and the right renumeration for them,” Meryl advocates.
Meryl and team started down the path of building a management team two years into the business, starting in the bookkeeping area, before hiring an operations manager; another game changer in terms of taking a lot off Meryl’s plate.
“The transition from using contractors to full-time employees was important, and then we focused on hiring people wanting leadership roles and to step up and act almost like owners in the business.
“It was a gradual transition; we went to one full-time and then gradually reduced part-time and then we hired another full-time team member, and that eventually we decided to build a team in the Philippines, and we've got six team members now in the Philippines and reporting into a manager,” Meryl explains.
A PASSAGE TO INDIA
In the first year of the business, Bean Ninjas had two team members in India, after Meryl travelled there with her consulting business where she met some accountants and built relationships. And it did not work.
“The reason it didn’t work was because we didn't have the right systems and processes.
“We were trying to handover work to our accountants in India, and we didn't have checklists, we didn't have standardised ways of doing things, so it was a complete failure, and we scrapped that within a couple of months and went the local hire route,” Meryl says.
Over a period of years, Meryl’s team refined and standardised their systems checklists, with more than 100 procedures now documented in SweetProcess.
Having that meant Bean Ninjas were then able to test hire in the Philippines, knowing there were clear procedures and the right guard rails in place to make sure quality was high.
“We had the right review process and our Australian team had time to do the quality review and training that was needed.
“We just tried it, tested it out with one team member, gradually assess how that went and then over time continued to hire over there.
“That's been really helpful for us in, again, building out a full-time team, so all of our team are working 40 hours a week with us and we're the primary focus, which really helps in running a service business,” Meryl says.
KEEPING FOCUS IN A PANDEMIC
Like many, Meryl’s team made significant changes to the business with the emergence of the COVID pandemic.
“I think one of the challenges many entrepreneurs have is that they've got lots of different ideas.
“They've always getting great ideas and it's easy to lose focus, and I think concentrating on what's working and continuing to keep on marching in that direction is really important,” Meryl proposes.
She admits she too veered off-tangent, exploring potential online courses.
“I could see having digital products and doing group coaching was more scalable than running a service business, which is why I invested quite a lot of time and money into building online courses.
“We'd been working on a two-month launch, which our launch week was right when the pandemic hit Australia…so that fell flat.
“Our launch in hindsight could have been better, but really it was a distraction from our core business, which was bookkeeping and now accounting.
“It's quite different selling information to selling services and we didn't have that skill set, and we didn't have an audience of people interested in that.
“I really should have been focused more on what our ideal customers needed, and it wasn't a course they needed, or we didn't create the right course for them,” she admits.
During the pandemic, Meryl’s team really thought through the business and who their key customers were.
They asked themselves where did they add the most value? Who were their most profitable customers, and who do they like working with?
Realising it was e-commerce businesses, Bean Ninja repositioned to focus on that market segment, last year during lockdown.
“I can see we can now repurpose the online courses for e-commerce, so it’s super specific, it's solving clear pain points, so while it wasn't a complete waste of time, in hindsight, venturing down the online course path was a distraction from me focusing on our core business,” she accepts.
TOUGH DECISION MAKING
So, when the world is in a state of flux and you know your business needs to adapt, how do you make decisions and make yourself feel comfortable with those decisions?
Meryl says depending on the decision, she goes with her gut and being an accountant, wraps numbers around things where possible.
“Most CEOs or business owners’ decisions are really about resource allocation…where are you going to reallocate scarce resources, such as time or money? What kind of return on investment do you want or expect to get?
“So, if it is a prioritisation resource allocation decision, I would put it in a spread sheet and weigh up the likelihood of something happening, the resources required and then the return on investment, which is a very accounting way of looking at it.
“However, a lot of business decisions also relate to people, emotion or things that are harder to measure, or that may be difficult to put numbers around.
“If it was something like a marketing experiment, then I try and test things gradually. In startup methodology, you will try and create an MVP, you will test and iterate, you will learn from the experiment and then you will adapt course slightly.
“That's actually how I like to do things…I think moving fast in business is super important,” she advises.
SYSTEMS FOR THE PEOPLE
When Bean Ninjas was a smaller operation, Meryl says she knew most of their customers, even though she may not have been handling their accounts personally.
Meeting them conferences, connected by Facebook groups, or catching up for a coffee, made it easy for Meryl to check in on customer satisfaction.
“I'd often ask the question. "Is there anything we could do better or anything that would make you happier with what we're doing?"
“Now we are much bigger, there is lots of customers I have never met, never interacted with. And so there we needed to put a system in place for that.
“We have account managers and depending on the package, there's a check-in frequency. We have a gap analysis call, which might be once a quarter.
“Our goal as accountants is to help our clients achieve their goals, so we'll sit down and have a chat to see if there are things we can do better or is there anything we can do to make their life easier?” Meryl says.
Bean Ninjas also sends a net promoter score (NPS) as an easy way to get customer feedback.
“If someone is really unhappy with us, then they could give us a two and say the reason why, so we know we really need to get on a call with this person and understand what's happened.
“On the flip side, it's really nice to share wins with our team, so if we're regularly getting 10 out of 10 and nice comments, then that's something we share in our team's Slack channel in our wins and gratitude channel so that we can feed that back to the team that they're doing great work,” Meryl explains.
With a team spread across different continents and time zones, Meryl says corporate culture is important.
“I think you have to be more proactive about it as a remote team, because if you're in an office, then the culture can just evolve because you're chatting with each other every day, going out for Friday drinks and the like.
“We had to think about how do we encourage our team members to build relationships? How do we make sure that when someone new joins the business, that they do not feel isolated, and until we put things in place like an onboarding process for new employees and buddies, so they have a one-on-one buddy that can help them along the way?
“Things like development plans and talking about careers, lunch and learns, just trying to create opportunities where the team members are coming together and not always talking about work, that they can have some fun,” she says.
BUSINESS BUILDING FOUNDATIONS
So, what does Meryl consider as the most valuable information, insights, lessons, and/or rules someone who wants to transition from service to product-based, is looking to build their business should follow?
She says it is vital to get clear about personal goals first.
“It's easy to see what other entrepreneurs are doing, and that might not be the right fit for you, or even be what you want.
“I see in business circles there's pressure to grow revenue, there's pressure to build the next big thing or to have a tech startup, and that's not always the best thing either.
“It should be individual about building a business that really fits with what you actually want. Think about what would your perfect day look like in 10 years' time?
“How would you spend that time? Who would you be with? What would you be doing? What kind of work do you like? What does financial freedom mean to you and putting in place all of that, but getting really clear about it, because if you are clear, then it is easy to say no to things too.
“For me, I really wanted to run a service business where I was not doing the delivery, which was something I strived for almost five years working towards, yet that all aligned with the goals, how I wanted to spend my time and where I wanted to be financially.
“I know lots of people who do love their craft as well, and they love copywriting, or they love taking photographs.
“My path was building a productised service and it might well be the right path for other people. But I also think that is fine, that if you love doing the copywriting, then keep doing that and you can still build a business around that as well,” Meryl encourages.
Meryl Johnston launched Bean Ninjas in 2015 with $1000 and a dream of changing the global bookkeeping game.
It has since grown from Meryl’s kitchen table into the multi-national, award-winning business it is today.
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