Team Alpha 375

"Hell, there are no rules here; we are trying to accomplish something."

Thomas Edison

Break the Rules, Grow Your Business?
By Roy Furr

Could it be that what's stopping you from making your next big business breakthrough is that you haven't broken the right rule?

Most successful entrepreneurs I know are perpetual rule breakers. In fact, I find it hard to come up with even one who's played by others' rules and still managed to come out on top.

An acquaintance of mine in the music biz is a good example.

Stuart Davis is a quirky, talented musician who has developed a strong following with his blend of "Sex, God, and Rock 'n' Roll." It's an ear-catching mix, to be sure. But what I guarantee will be far more interesting to you is how he's breaking the rules.

Stuart has been remarkably successful in the music business for over a decade, with no major label, no distribution, and no radio play. He's done it by selling his music his way -- including self-publishing his albums.

That created a bit of a problem, though. It's expensive to produce albums.

Well, Stuart had a brilliant idea. He has a rabid, devoted fan base. So he decided to give them a chance to be his record label.

Here's how Stuart's fans-as-record-label system works:

• The budget for a new album is $100,000.

• 100 percent of album revenue rights are made available to fans. Fans can participate with micro-loans in $1,000 increments. Each $1,000 gives a fan/partner 1 percent of revenue rights.

• When the album is released, 100 percent of revenue goes to fan/partners until they double their money. After they double their money, profits are split 50/50 between Stuart and the fan/partners according to their percentage.

• Stuart retains all copyrights and creative control. (Fan/partners acquire the rights to profits, not to the music.)

As you can see, Stuart has completely rewritten the rules for funding the cost of producing an album. By structuring non-conventional loans from his fans, he gives them the opportunity to share the risks and rewards of the music business. And because he already has 15 successful albums under his belt, it's not hard for his fans to make the decision to invest in the next one.

How can you take advantage of the "rule-breaking" approach in your business? To give you some ideas, let's take a look at a few ways it has been successfully done.

1. Break the rules by adding VIP services.

Amazon.com started making waves in the online retail world a couple of years back with its Amazon Prime Membership service -- which gives customers unlimited 2-day shipping for a flat annual fee. This rule-breaking VIP service has no doubt been part of Amazon's rapid growth. I know my Prime Membership keeps me going back to Amazon over and over again.

Is there some way that you could offer a VIP service to your customers? Would they pay a premium for special treatment? Faster shipping? Exclusive offers? First access to new programs or merchandise?

2. Break the rules by using new technologies.

The "rule" that most traditional publishers follow is to sell their programs as complete packages and deliver them via the mail. It was always the most cost effective way to get the material to customers. But then the Internet -- and digital delivery -- came along.

One publisher I worked with took advantage of this new technology immediately and gave customers the option of getting the material via e-mail, as a monthly subscription service. Subscribers also had online access to their entire catalog, including all new releases and updates. The result? The subscription service now brings in 50 percent of their profits, giving them a steady stream of guaranteed revenue every month in the hundreds of thousands of dollars. And because subscribers have such easy access to their online catalog, but sales of additional products have doubled.

How can you use the Internet to give your customers more ways to spend money with you? What rules can you break in product delivery to change the way customers consume your products?

3. Break the rules by making your biz a big-time supporter of a cause.

Many businesses donate big chunks of money to charities in order to get a tax write-off. But it doesn't have to cost you a penny to support a worthwhile cause -- and get lots of attention and respect in the process.

Teleseminar guru Alex Mandossian, for example, is the single biggest fundraiser for Kiva.org. (Kiva provides microfinance loans to entrepreneurs in developing countries.) He does it through regular fundraising teleseminars that inspire many of his customers to donate. Each one may donate only a small amount, but it adds up to a significant sum. Alex also runs an annual event where all profits are automatically passed through to Kiva.

Do you have a favorite cause that you could support through your business? Could you offer services to them for free? Sponsor special events and donate all the profits? How can use get your customers enthusiastically involved in supporting the cause with you?

Now, to help you come up with your first rule-breaking business breakthrough, I'm going to give you a quick exercise. The whole thing should take about 15 minutes...

In general there are five rules that can be broken in any industry:

• How you source your products or services
• How you market and sell your products or services
• How you take payments
• How your business is financed
• How you communicate with your customers

So grab five sheets of paper. At the top of each, write one of the five rules listed above. Draw a line down the center of each sheet. On the left, write "How we do it." On the right, write "Other ways to do it."

Under "How we do it," quickly jot down the rules you currently follow. On the "How you take payments" sheet, for example, you might write, "All orders paid in advance."

Then give yourself one or two minutes per sheet to come up with ways to break the rules. On the "How you take payments" sheet, you might write "Bill in 30 days," "Offer $1 trial," and "Offer installments" under "Other ways to do it."

Many of the ideas you come up with won't be worth implementing. But all it takes is one good one to generate a profit and growth breakthrough that will astound you.