SPI 832: The SCALE Framework for Passive Income

SPI 832: The SCALE Framework for Passive Income

Announcer: You’re listening to the Smart Passive Income Podcast, a proud member of the Entrepreneur Podcast Network, a show that’s all about working hard now, so you can sit back and reap the benefits later. And now your host, he thinks storytelling is the number one most powerful skill anyone could learn, Pat Flynn.

Pat Flynn: So today I want to introduce you to something that I’ve been thinking a lot about because, you know, the title of this podcast and the name of our brand is Smart Passive Income. And the passive part of this has always kind of been interesting and a talking point for people, right? When I started the website and blog back in 2008, the sole reason why I selected it was because it was the word that really encompassed the idea of putting hard work in and getting a lot more out of it later and continuously over time, right?

The revenue component of this, you, maybe you don’t make a lot upfront because you’re trading, you know, a lot of time for what seems like nothing, but you’re investing that time. So it comes back later and that’s where the passive part comes in. However, the passive part of this is kind of the last part of the process, right?

If and only if you create something of value and if that thing of value continues to be able to serve more people without you having to be there or without you being the person to do that, to deliver that value, then things can become automated and scale and ultimately become passive. So it actually starts with a lot of active income in order to then generate passive income.

So the passive part of it is in fact, the last step of the process. So I wanted to introduce a framework about the sort of passive component, whether you’re starting out or you’ve been doing business for a while, this will help you wrap your head around, well, what is required in fact, to passify. Not pacify, but passivify, passivify? To make passive your business.

And I call this the scale framework, right? Cause that’s kind of where we want to scale. But oftentimes when we think of scaling, we think of put more time into the thing to put more effort and energy, which is kind of the opposite of what we want to do, right? We want to play smart. I often tell this story about when I was in karate.

I took taekwondo. I mean, I’m talking I was 10, 11 years old, right? So I was in the dojo and walked into the dojo and there were these piles of pieces of wood that weren’t there any other day before. So, apparently there was going to be some demonstration of breaking wood by some of the black belts that were in the school.

And then we were going to be able to get to attempt to break these pieces of wood too. So these are, you know, pieces of wood that are maybe a quarter inch thick and kind of in the square, right? Maybe 12 by 12 quarter inch thick, 12, 12 inches by 12 inches. And then we They did the demonstration and there was like shrapnel flying everywhere.

It was so cool, especially as a 10 year old boy, kind of seeing people smash pieces of wood to bits and they break and they make noise. And, you know, when they, they’re like, ah, like, they just kind of like yell while they’re going through. It’s like, I want to do that too. So that’s exactly what we got to do.

And I remember I had a partner and I handed him. A piece of wood and I was like hold this for me I want to I want to go first because I was always very wanting to go first as a kid and just very excited about this whole idea And I would punch and punch and I even tried kicking it and it just would not break at all, and I just thought I wasn’t strong enough So I went in for even an even harder punch and it just wasn’t working I was getting so frustrated that even with more energy I was not able to break these pieces of wood and then the sensei the teacher came over and watched me struggle. And I was about to punch the piece of wood one more time when he stopped me and he rearranged my partner’s hands on the board.

He just moved them to the other side. So where he was holding them sort of at the top and bottom by keeping the wood in the same place, he changed his hands to the sides. And I was like, okay, what, what’s that going to have to do with anything? And then the next punch. I just cracked right through it. And apparently what we were doing was we were trying to break the piece of wood against the grain, which is very, very hard to do.

However, when you, like, if you imagine the grains in a pattern of going up and down this entire board, and then you’re holding on the side so that, you know, it’s when you break it, it breaks with the grain. It’s so much easier. I mean, I don’t know how much easier, but it was much easier when I was doing this.

And so. A lot of times in our business, especially when we get to a point where we start to see some success, we feel like that in order to break through into the next phase of our business, we have to put more energy. We have to put more time. We have to put more power behind it. But a lot of times it doesn’t require more power or more energy.

It requires being smart around how you might want to break through and it might require just a different or repositioning of things. And that’s exactly what it takes to passivify or make passive your business. So the SCALE framework, S C A L E stands for Systematize, Consolidate, Automate, Leverage, and then Evaluate.

So let’s go through each of these one at a time. I will be expanding on this more later. Especially come 2025, but I wanted to share just sort of the overview here and sort of get a gauge of a, of a reaction to this process. Even just the exercise of coming up with this framework is helpful for me and for my team, but sharing it with you for the first time, I always love feedback.

So if you see this in an email or if you happen to catch this right now and want to tag me on Instagram at Pat Flynn or on X preferably, that’s where I’m very active, that would be great. Systematize. So in the systematized framework, I mean, again, I’m just going to go over these at a, in sort of a quick manner.

This is where you want to create your SOPs, right? And this is the first step before you start hiring people, which is often what people want to do. The trouble is if you start hiring people before you systematize the things you’re doing before you create SOPs, right? Standard operating procedures.

Literally a step by step checklist or how to to do the things that you need to do to run your business if you hire a team before you have those laid out where you’re going to kind of have to be forced to build those things out while training this person or training these team members that you hire the wrong order you want to start with building the standard operating procedures for all recurring tasks for the things that you know have to happen over and over again.

You do them yourself, but you might be able to do that by just capturing the step by step process in a list format, a checklist, or potentially even in something like a, a recorded video. So that by the time you get to that point where you are leveraging other team members, which is the L in scale you’ll be able to easily share.

This is how we do it. Go watch or read this SOP. This is how we publish blog posts. This is how we take our podcast episodes and put them on the website or how we share clips onto social media, et cetera. Right? So be sure to document your processes and you might want to spend at least, I would say a month to do this, right?

Because some things are repeated on a day to day basis. Some things are repeated on a weekly basis, and some things are repeated on a monthly basis, and even beyond then, you might go through a launch two times a year. Well, the next time you do a launch, which might be months from now, consider how you might be able to systematize this.

And the cool thing is when you start to write these checklists, when you start to write all these things out, you begin to actually see whether or not there’s actually extra steps that you don’t need, right? Which is where you can get into the C part of scale, which is to consolidate. You group similar tasks together to improve efficiency.

You can eliminate the redundancies. You might even utilize other people. Over mastermind members to say, Hey, this is how I do X. How do you do it? And do you find that there are other ways to do it more efficiently or in a better way? So group similar tasks together. This is consolidate. So we’ve systematized, right?

And this is where you write things down. You see at a high level all the things that you do and how they’re done. And then you can consolidate. Could you accomplish the same end result by combining some of the how to’s and steps that you already do? Yeah.

Next is A, which is Automate. So this is where, through the things that you now know you need to do, are there tools, are there pieces of software, that you can use, after identifying what these tasks are, to automate the this is where you get to remove yourself from the process a little bit more, or at least cut the time by a significant amount that it would normally be required to take to do certain things. And you know what tool that automates a lot of this stuff right now? AI. So a lot of especially brainstorming or writing.

A lot of this stuff can be now automated in a way where you can use AI for a lot of this stuff. Hence you know, artificial intelligence, but the a also, in my opinion, could stand for automate because it can definitely help you do that or at least speed up that process or make, make these processes just more organized for you.

And this helps free up your time to do much more higher level activities. If there is a tool that can do it, that is where I would start before you have a person do it for you have these tools and automation set up. And you might not know if these tools exist, and this is where you leverage your network.

This is where you go around and ask. This is where you search for things. There’s reddits, there’s YouTube videos, there’s social media posts about the things that you’re doing too. I promise you, you’re probably not the first one to consider automating certain processes in your business. Now, mind you, some of these tools may be expensive, but you also have to consider how much time are you saving and how much time are you getting back or as Dan Martell says how much time are you buying back by investing in these tools. I would only invest in these tools if you know and can actually see the ROT the return on time that you get from this. There’s a lot of tools out there that claim certain things or that are really cool, on the surface could save time, but also just kind of bog things down.

So I don’t want you to just pull the trigger on purchasing these things until you know, and I’ve done the research. So that’s, that’s what I’ll say about the automate thing is there’s a lot of tools that can automate, but there’s also a lot of tools that can automate that can actually work against you or just become a more complicated part of the process.

Right? So we talked about systematize, consolidate, automate. Now we leverage. This is the L where you hire and delegate tasks to team members or contractors and you want to start small. You want to start with the higher leverage things, the things that will be the things that you can let go of that will give you the most return again, thinking about what’s coming back to you as a result of this.

Now, hiring people can be very scary. I would recommend starting with contractors so that you don’t have to worry about the employee part of that. It could be a business expense, et cetera. I’m not going to go into depth on this right now. And like I said, we’re going to have a lot more information and even workshops and things inside of the community come 2025 on a lot of these topics.

And this is a big one for sure. Hiring team, getting your time back with other people, but managing people, first of all, finding people is one thing. And it really depends on what it is that you’re asking them to do. And like I said, if you have these systems in place, it’s going to be a lot easier because you can potentially just find like a VA from the Philippines, for example, and have them do the tasks that you were already doing. But there might be some higher level team members that you might have on board to help with other things. And you want to try to maximize their strengths as much as possible. Yeah, team building, we’re going to go a lot more deeply into we have a team of nine full time people right now.

And it’s been a blessing, for sure, but it’s not been easy. Managing people is, I mean, there’s so much to it, right? You don’t want to become a micromanager because then it’s kind of works against you. You’re spending more time making sure people are doing things the right way than when you could have done it yourself.

But when you get it done right, you can get so much more time back and free up so much more, not just your time, but your headspace to do, like I said, these higher level things that only you can do. And that’s important. Right? You want to eventually get there. If you do want to take a crack at a book that will help you with this, I would highly recommend my good friend, Chris Ducker’s book, Virtual Freedom, Virtual Freedom is the name of the book.

It’s about 10 years old, but oh my gosh, it’s still so helpful, especially the lists of freedom exercise in that book that will help you determine, okay, of all the things that I do, what should be the first things that I hand off? So I’m not going to go too much deeper into that right now, but we’ll get more into that later.

And then finally. E, so we have systematize, consolidate, automate, leverage, and then lastly, evaluate. So this is where you want to regularly check in and assess the effectiveness of the systems. Of the automation and the team that you’ve hired and make sure that the things that they’re working on are the higher leverage things what got you here won’t get you there.

So it is important to I would at least recommend once per quarter kind of doing a higher level audit of your own business on the systems that are supposed to be making your business more passive and whether or not that is where that energy time, potentially money should go. It is something that you can always improve on, but at some point you’ll have to, just like a artist with a canvas, you know, you could continue to automate.

Every little brushstroke, you know, how do you know when to stop painting? Well, eventually you just have to go, okay, it’s done. And then I’ll move on and then come back to it later with your business. So continuously refining and improving your processes is what you want to do. So this is the five step framework, the SCALE framework for making your business passive.

Now, of course, this is the final step of the process. But once you get your business going. A lot of this stuff can happen sooner than later. You should be building systems for the things that you’re doing over and over again. You should be consolidating those things that are maybe stacking on each other that could be brought into one or two tasks instead of five or six.

Automating things with tools and investing in tools and people to help you get more time back. And if anything, not so that you can just do more things, but so that you can do more of what you want to do. Do more family time, have some breathing room from your business. Don’t just think that the hours that you get back from all this, you should just put more things in that’ll eventually, you know, just stack on top of each other and weigh you down even more.

So thank you. I hope you enjoy the SCALE framework and I look forward to more just understanding of this crazy online business world. We’re really leaning into, into 2025. Making things so easy to understand that you could follow a step by step process to get you to where you want to go. So hopefully this is a little taste of that and I look forward to serving you in the next episode.

Cheers everybody. Thank you so much.

Thank you so much for listening to the Smart Passive Income podcast at SmartPassiveIncome.com. I’m your host, Pat Flynn. Sound editing by Duncan Brown, and our executive producer is Matt Gartland. The Smart Passive Income Podcast is a production of SPI Media and a proud member of the Entrepreneur Podcast Network. Catch you next week!