SOP 146 — Make the first money — monetize

1. The stage at a glance

Item	At this stage
Stage	Monetize, stage one; the stage before it is improvise, stage zero
Headcount	One. It is still just you
Your role	Starter. Before, you were a researcher gathering information and feedback; now you start
Leadership structure	Still just you
How many companies are here	By the time you graduate you are an official company. The count given is 30 million at least in the US, of companies that generate at least a dollar of revenue

For context: only 9% of people own a business, so starting one and making a dollar of revenue already puts you in the top 10%. Figures like these probably amaze people, and they are very different from how social media portrays success.

Flag: what the two counts measure. Here the 30 million, at least, are companies, and the 9% are people who own a business. SOP 183, section 5, also carries about 30 million people reaching the stage, and 9% of people starting a business. This page does not settle which reading is right.

2. The functions: what holds you back, and what graduates you

Function	Its job	What holds you back	What graduates you
Product	What you deliver: goods, services, results	Your product is not good enough to sell	Fix it until it is good enough to sell, and release your first version
Marketing	How you tell people about your paid stuff	Nobody knows you have paid stuff to sell	Tell them you have paid stuff; sign up for free ad credits; collect proof along the way
Sales	How people come to give you money	You still do not know how to sell	Use good results from free people to sell paid people, and offer to solve their problems for money
Customer service	How you get customers to refer, retain, review and resell	Free customers do not like it or use it	Find out, by talking to them, the hidden costs behind why
IT	How you gather, store, analyze and display information	You have no basic software tools or social media	Find the free software you need by joining free groups and reading online forums
Recruiting	How you find and hire people to work for you	You do not know how to do something, or lack the time: a skill deficiency	Reach out to people you know who can help, or use freelancer platforms
Human resources	How you lower the chance that employees or regulators sue you	You pay freelancers and do not get what you want	Create basic vendor agreements and expectations
Finance	How you report and manage your money	You have no way to collect money	Set up ways to get paid, run a payment, and watch it land

3. Product: find the hidden costs, then fix it

The product fails to sell because of hidden costs: the non-monetary costs that make somebody not buy. Ask people why they do not buy: why won't you pay, what makes it a no, what would turn it into a yes, what would it take?

Example: selling weight loss. Why do people 50 pounds overweight not buy personal training? Driving 40 minutes to the gym, 5 minutes finding parking, eating less, changing how they live when they eat out every night. None of it concerns the session itself; all of it makes yes harder.

"What would it take?" When someone says no, ask what it would take. In one practice here it is a favorite question, asked all the time. The example given: would picking them up at home, training them, and having dinner with them every night make it a yes? Whether you would do that is a separate question; the point is to find the largest areas of friction.

The magic question, which adds a price. It comes in a first form and a restated form, and this page keeps both:

Say I asked for $3,000 for us to work together over three months toward your goal of losing 20 pounds: what would that need to look like for you to be excited to go ahead? They paint the ideal state; you work backwards to what you can do to make yes as easy as possible.
Working together for $3,000 over the next year to reach the goal: what would you need to see for it to be exciting? "What would it take" assumes the purchase and works back into features; this one adds the price, so the price is already set when they answer.

Price decides what you are willing to do. Would you drive to pick someone up for $1,000 a session? Probably. People decide what they will not do divorced of price, but there probably is a price at which you would, and sometimes it is what someone will pay you to remove another hidden cost. That is why, in one practice here, the advice at the start is charging a premium and going higher than most of the market, so you can give a different and more valuable service. If you worry about serving ten clients like that, you have none yet; make money first, then use it to make the business more scalable.

The value drivers. They are on SOP 3 — Diagnose an offer on its value drivers. They are called probably one of the most important things to understand when you are starting a business of any kind; they were set out because so many people talk about creating value without putting it into practice. The idea under it: you create value and trade it for money, and the more value you create, the more money you can get for it. The example given here, for a dream outcome of relaxing:

A pill. Perceived likelihood is high: you probably feel relaxed almost immediately. The time delay is almost nothing, 15 minutes; effort and sacrifice are basically zero. That is why such a drug sells in the billions.
Meditation, which could reach the same outcome. Your belief you will succeed is lower, so risk rises. A seller has to show their method makes success more likely; shrink the time (relaxed in 5 minutes and proficient in a few weeks, against months to get good or 20 minutes to relax); and cut effort and sacrifice: what you must start doing that you hate, and give up that you love. Maybe it is phone time; you could try to keep that alongside meditating, probably not, but the idea is to think through every variable that creates value.

The four-word shorthand given: good, fast, risk-free and easy. Make it easier, faster, risk-free and consistent, and the result is a very valuable product.

4. Marketing: proof over promise

Proof beats promise. Show the results of the free people you worked for to sell to paying people. The natural question from a prospect is who else you have worked with, and whether they can see testimonials or reviews. Two Mexican restaurants on the same street, one with a single five-star review and one at 4.4 stars with 20,000 reviews: you probably go to the second. You make a promise, but how likely they are to believe it rests on your proof.

In one practice here, no selling starts before there are 10 or more testimonials, for two reasons: it is far easier to sell, and it gives conviction that the thing is good. If you cannot get a testimonial for free, you will not get one for money.

Not all proof is equal. The comparisons, stronger side first. SOP 109 sets out a related list of its own, which differs in places:

Stronger	Weaker	The note given
In person	Virtual	Selling door to door or in person, a person there who got the result (sometimes one of your staff, who lost 100 pounds, say) is very compelling
Live	Recorded	A person giving the testimonial live is more compelling than a recording
Raw	Processed	iPhone selfies sometimes convert much better than heavily processed footage, because they are more believable
Show	Tell	Show the before and the after rather than state the result
Other people say it is great	You say it is great	Others praising your stuff is more compelling than you praising it
Identical to the prospect	Opposite	Startup founders buying IT services, shown testimonials only from plumbing, HVAC and roofing businesses, ask whether it applies to them
Personal	Generic	Specific to the outcome: "[name] got me 25 appointments a week for the last 6 months", not "highly recommend"
Big and small results	Bad or no results	Show both big and small, because sometimes people will not believe the big ones; a mix helps. SOP 109, section 3.8, adds that a bigger result is more compelling, so use any big one wherever you can
New	Old	People assume your last testimonial is your last good result. That may not be true, and you might just not have captured recent ones, but if your latest is from two years ago, people assume you are not that good anymore; a brand-new one beats an amazing one 10 years old
Lots of proof	One	Overwhelming social proof: for a physical location, screenshot every five-star review on Facebook, Yelp and Google, put them in cheap frames, and line the walls floor to ceiling
Numbers	No numbers	More numbers, more specificity
Brand trust	No track record	You will not have a track record at the start

The worst proof, by these comparisons: one generic, text-only "recommend" testimonial, 10 years old, from a business unlike theirs, about an unrelated outcome, with no result and no numbers. It is said that many websites use exactly that, and then wonder why people do not opt in.

Free ad credits. The ad platforms give free credit to start: Google Ads, Bing Ads, Pinterest, Snapchat, LinkedIn and TikTok. Almost all of them give $50 to $500 of credit; there are some qualifications to meet, and "overall" $500 of spend is the figure offered. Offers like these change. These businesses benefit from you getting into business, and more people will help than you think.

5. Sales: sell with the free results, and step the price

Use the results of the free people to sell paid people, and offer to solve their problems for money. The warm-outreach offer is the free one on SOP 18 — Work warm outreach end to end, section 6, with the price changed. Its gist: you are taking only five people, so each gets the attention needed for results worth bragging about, at 80% off, as long as they use it, give feedback and leave a strong review if they think it earns one; does that sound fair? It works because you already hold results from the free work.

Step the price every five sales. In one practice here, every five sales you raise the price by 20%: free, then 80% off, 60% off, 40% off, 20% off, then full price, and then keep raising prices by 20%. The same ladder is on SOP 18, section 8, which adds that past full price the raise might come every ten or every twenty customers, depending on what you sell. Keep raising to find the threshold: the price that brings the most customers with the highest lifetime value, raising on how each run sells.

The arithmetic, stated plainly. Up to full price, each step takes 20 points off the discount, measured against the full price, so what the buyer pays goes 20%, 40%, 60%, 80%, then 100% of full price. Those are rises of 100%, 50%, 33% and 25% on the previous price, not 20% each. Only after full price is each step a 20% rise. SOP 128 — Test price with a step size and a cadence, section 5, gives a different cadence: 20 percent every 10 sales or so. Every five finds the ceiling sooner; every ten gives each price more sales to judge it by. This page does not settle which reading is right.

If they will not buy at 80% off, check two things. Do you have the proof to support your claim, and are you showing it? Are you really asking for the sale: following the script, asking the right way, with conviction?

6. Customer service: find out why the free customers do not use it

This overlaps with product because at the start they are often closely linked and it is just you. Talk to the free customers, do not feel above it, do not worry about scale, and list every problem they show.

Sort each problem. Is it a result issue (they did not get what they wanted) or an experience issue (not the way they wanted it)? Most people will be more likely to stay when the experience is good and the result bad than the reverse. The novice's advantage: you do not have to be the best at first, but you want to show you are working very hard to fix results.

Fix it:

Expectations, set better during the sale; this is the experience side: how you will talk, how often, your response time, your hours.
Goals, matched: the result side, what will be accomplished.
Workflow: the communication cadence in between, and the milestones or objectives along the way.

To fix the experience, ask how to make it easier, faster and more pleasant: the value drivers again.

7. IT: find the free tools

With no basic software tools or social media, find the free software you need by joining free groups and reading online forums; in other words, use the internet and Google.

8. Recruiting: fill gaps with freelancers

You lack a skill, or the time. Reach out to people you know who can help, or use freelancer platforms such as Upwork, Fiverr and 99designs, where help can be very cheap, for just a few hundred dollars; your first website is an example. The purpose is to fill knowledge, skill or time gaps without the commitment or fixed cost of a full-time employee: minimize risk, and use specialists to clear small bottlenecks you might not know how to handle. Freelancers suit this point because your needs will change very quickly, and the chance you would hire the right full-time person now is very low.

9. Human resources: basic vendor agreements

Create expectations so what a freelancer builds or delivers is what you want, and an agreement to uphold them. The agreement should answer: who is involved and who does what; where; by when; how much it costs; for how long; who says it is good; and what happens if it is not.

Most people assume vendors can read their minds. Set expectations and discuss them. In most cases an agreement is not there to sue anyone; it clarifies, before you start, what you do, what they do, and what happens if it goes wrong. The example given: a friend hired a videographer to film her and deliver a set number of videos a month; one month none came, and with no agreement nobody had decided what happens then. If you have no agreement, at minimum draft a document covering these points and both agree to it before work starts.

Two tips given:

When you are starting out, people often skip these talks because they do not know what they want, and hope the vendor will decide. You have to decide. You are often afraid to be accountable, but it is your money; waiting for someone to create a unicorn, so you can say they did a good job, sets you both up to fail.
If a vendor has no contract, they are a beginner too: the blind leading the blind, such as a friend who is handy with tech and cheap. Both of you avoid the awkward talk (if you do not deliver on time, I will not pay you) and end up sacrificing the friendship. That talk is how business is done.

Contract law is not covered on this page.

10. Finance

The constraint is in the table in section 2. Setting up payment is on SOP 150 — Set up the finances stage by stage.

11. The bottom line

The problem at this stage is that your business makes no money. You graduate by making your first paid sale. The next stage is advertise.

Flag: what graduates this stage. SOP 183, section 5, also carries a reading that asks for more than one sale: consistent first sales to different customers. Moving on at the first sale gets you to advertising sooner; waiting for consistent sales first proves people will pay for what you offer. This page does not settle which reading is right.

12. What this page does not decide for you

The magic question's term and price wording. Three months, or over the next year (section 3). This page does not settle which reading is right.
Whether to over-index on result or on experience. Not established on this page.
The price-step cadence. Every five sales here; every 10 sales or so on SOP 128. This page does not settle which reading is right.

13. What this page does not cover

Paid advertising beyond the free credits is SOP 147 — Make new customers consistent — advertise, section 4. Hiring employees is not covered on this page.