I’ve written about this before, my father gave me a simple piece of advice when we started our first business nearly twenty years ago.
“Make sure that you get paid,” was his direct advice.
It sounded too simple. But as time has gone on, that statement has aged particularly well. Recently, I learned about a company that was so fed up with not receiving payment for work rendered, that they figured out a creative way to finally get their money.
A scaffolding company had repeatedly requested payments from a customer after completion of their work. For three weeks, the company continually tried to collect payment, to no avail.
One day, they had enough.
The customer walked out of his place of work only to realize that he wouldn’t be able to drive his car. The company placed a boundary of well constructed scaffolding around the perimeter of the car. There was no chance of the car going anywhere without the company taking it down.
The customer, now angry, insisted that he had already paid. The workers from the company calmly stated that he hadn’t paid. They then explained that they had tried for weeks to contact him, but their emails were ignored.
The customer, realizing that he was boxed in (pun intended), then tried all different verbal ways of getting the business owners to take the scaffolding down, including telling them that they were trespassing. They responded by telling him to call the police.
Defeated, the customer asked how much was owed, and then reluctantly paid the remainder of the balance.
“I don’t know how you have time to do this,” the irritated customer groaned.
“We haven’t,” the business owner responded. “That’s the sad thing about it. I’m tired of dealing with people like you. I’m sick to death of people not paying. If you would have taken care of this three weeks ago like we asked, we wouldn’t have to do this.”
This was exactly what my father warned me about. Throughout his long history in the construction business, the one complaint that I have heard over and over involved how long and difficult of a process it is to get paid.
Our job is to not just learn from our struggles, but from others’ struggles as well.
After seeing what my father went through, and hearing the same thing from so many others, I knew this was an area of business I needed to study and improve upon.
And I learned a simple fact along the way. A service and a product are viewed very differently in the business world.
If what you sell is a service, there is a much higher likelihood that you will get paid after the work is completed. There is an expectation by some customers that payment comes after the service is rendered. Yet, if what you sell is a product, the customer generally pays before they receive the product.
Many of us start businesses with a service. We did as well. But you can learn the hard way that receiving payments for the work you do can be a major headache. As we learn, grow and evolve as business owners, it’s common to figure out how to create a product as opposed to a service for many reasons- including the reduced hassle that comes with not chasing down customers for payments.
That’s why we focused on the world of memberships. I thought about all of the memberships that I was a part of and paid for. And I could not avoid the reality that I paid for the membership before any access was given. And more importantly, I never expected them to give me anything before I paid. Why would they? The only exception would be a trial, but I knew the parameters around that.
Once we realized that this membership model led to the smoothest, easiest and most collaborative form of payment, we knew before the business even began that we would eliminate one of its biggest struggles. That’s why we’re such advocates for creating memberships (products) as opposed to services as our baselines in business. Some of the things we do are services, but they are not the cornerstones of anything we do.
That change alone gave us a big leg up on creating the freedom that we long desired.
Have an AMAZING week!
Here’s a question for you. If you could create a membership on any topic, what would it be about? Allow yourself to dream a bit. Would it be from a hobby that you have? A skill that you possess? A niche community that you would like to bring together? I would LOVE to hear your ideas! Please share them with me at email@example.com.