The Hub Model: The Solopreneur's Secret Weapon
I spent 3 years and $130K to learn the painful lesson that led me to developing The Hub Model: a business model that ultimately provided me the life of freedom I enjoy today. Let me save you that pain so you can implement the model and thrive in a fraction of the time for free.
I started my creative business in August 2006 with just $3,000 of savings and a dream of building a Real Business™ empire - a cool brick-walled office downtown filled with energy and creative employees.
Fast forward to October 2022. I now charge $3,000 PER DAY and I follow my powerful model that allows me to be 100% committed to never having employees.
Funny how life works.
I've experienced every high and low that running a business has to offer. After starting slowly and leveraging my network for table scraps, I caught traction and moved in the right direction. By the end of 2007, I was non-stop busy with great work, paying myself fairly well, and had saved up around $30K in the business.
I was also maxed out on time, feeling the pressure from clients to scale, and craving a relief from all the work.
Must be time to scale, right? Now I can take that first step toward building the Real Business™!
In early 2008, I hired my first employee.
Fast-forward to the end of 2010, when I had fired my last employee.
This stretch between these two points looked like this:
Going from $30K in liquid capital to $100K in debt - A $130K loss
Constant stress and anxiety
All time was spent dealing with clients, vendors, and employees
Never missing the employees' payrolls, but not paying myself for months
Feeling miserable about the entire situation and that something was very wrong
Considering bankruptcy toward the end
I'm going to assume that none of this sounds fun to you. I'm also going to assume that you're not deterred by it. I, too, had an irrational belief in myself back in 2006, and wouldn't be dissuaded by anyone.
Fortunately, I'm not here to dissuade you. I'm here to help you learn why I almost failed and how you can avoid this nightmare scenario of near business death.
Business is a tough ride
First, let's take a look at your odds, according to the Bureau of Labor Statistics. The list below is the failure rate over time of small business:
18.4% within 1 year
30.6% after 2 years
37.9% after 3 years
44.5% after 4 years
49.7% after 5 years
53.6% after 6 years
56.8% after 7 years
60.5% after 8 years
63.4% after 9 years
65.5% after 10 years
So, over a 10-year timeframe, 2 out of 3 small businesses fail.
But, these numbers don't tell the whole story. They don't describe the painful, horrid, terrifying pathway to the failure. If you look at my timeline above, my brush with failure took 3 fiscal years to play out.
Like me, these other businesses aren't just arriving back to $0 and going, "Well, better luck next time." People generally will do all they can to keep their business running, yet the majority are going to end in some form of crushing debt or outright bankruptcy. These sorts of experiences have long-term physical and psychological effects.
I'm here to save you from these. But, I want you to first understand the reality.
In fact, in my experience, it took me several more years to climb out of the pit of debt that I had created. All-told, the trough in my balance sheet lasted about 6 years.
What kept me from total failure?
Finally realizing that I was building something completely different than what I actually wanted to build.
Toward the end of 2010, was hitting rock-bottom on a number of fronts in my life. It was clearly showing me that what I was doing was not working. I needed to discover a path forward that would get me out of my messes. With the love, guidance, and support of a few key people in my life, I was able to land on one key question that helped me untangle the ball of yarn that was my life:
What was the last thing that worked?
It was such a simple question, but one that wasn't presented to me simply until that point. "Well," I thought, "I sure as hell know what DOESN'T work." In regards to my business, I recalled the end of 2007, when I had a stockpile of cash and was bravely thinking about scaling a business empire into the future.
I realized that I was happiest working alone. I don't like the idea of having others depend on me or to need things from me. I basically hated managing employees. And, they were good people who have done fine work. I just didn't realize that I really wanted one thing more than anything else. What was it?
Freedom.
Full stop. I thought that I could build a business that would set me free. I even paid thousands for a course called, "How to Build a Business That Runs Without You." I was convinced that this was, indeed, the ONLY reason to start a business.
We're so dumb when we're young.
I wanted freedom. With money. With my time. With my choices. With my lifestyle. I didn't realize that the best-case scenario for a Real Entrepreneur™ means being a slave to the business for 10+ years, until you can finally trick a partner or someone else into buying it. And, that's IF there's even something to buy.
Remember, 2/3 of these businesses fail by the 10-year mark. Others arrive, hoping to sell, only to learn that there's nothing of value to sell (for a variety of reasons, as many as 9/10 businesses NEVER sell).
I locked down the idea that freedom was my primary goal. I carved it into stone. Then, I continued to examine the question "What was the last thing that worked?"
I remembered that there were only a few reasons why I was pressured into scaling in the first place:
Pressure from clients to get work done faster
The idea of Entrepreneurial Glory
The false belief that I'd run the empire from a Golden Throne while the peasants did the labor
I had already learned that Entrepreneurial Glory and Golden Throne concepts were myths peddled by headlines about venture capitalists and their seed rounds. I learned enough about business systems to recognize that they were the only way to build a sellable business, and that it could take a decade of doing what I hated to get there.
After crossing off two of the three items on the list, I arrived at the last one: the pressure from the clients to get more done.
I still had a very real problem here. There's only so much time in the day, and a couple of my larger clients were happy to soak up most of that time in emails and phone calls. I was elated when 5PM arrived and my clients left me alone. I would constantly work until 2AM to get the actual work done.
The difference this time was that we were in 2010 instead of 2006. Remember, when I first started in 2006, the iPhone wasn't even released yet. By 2010, people were developing entire app ecosystems that dramatically simplified the ability to work with remote teams. Oh, and I had gained a lot of experience by carrying the soul-crushing weight of despair for a couple years. I wasn't putting my hand back on that burner.
After years of suffering, learning the hard way, and clinging to whatever sanity I had left, all of my questions finally helped me discover the foundation for the model that transformed my business.
What was this foundation?
Well, bear with me. I have a little explaining to do.
How I arrived at a my powerful business model
For over 35 years, my dad has built houses for a living. He's not one of those giant, publicly-traded homebuilders. Nope. It's just him and my younger brother. They work together to build a couple quality homes for a small market each year. They love it, and it shows. They make a great living and are quite happy people.
I grew up working on these job sites with my dad, and credit virtually all of my work ethic and business approach to what I learned from him. It just took me a while to learn the one fundamental approach that I needed to adopt in my own business.
See, the home-building process works something like this:
Excavation
Foundation
Framing
Plumbing
Electrical
HVAC
Siding
Roofing
Drywall
Painting
Trim and doors
Flooring
Hardware and fixtures
Landscape
99% of the time, the houses you see being built are managed by a large corporation. They oversee individual teams who perform each of these tasks every day. The plumber does plumbing every day. The electrician does electrical work every day. You get the idea. They're super-targeted and niched down to ONE trade.
These teams can be in-house with the large building companies. Most of the time, though, they're independent contractors who specialize in their trade.
Smaller companies, like my dad's, can hire any of these specialists at any time. While my dad and brother can handle any of these jobs, they often bring in these specialists to speed up the process or because they trust them to do the job well.
They're simply called Subcontractors.
Subcontractors specialize in one of these services. Essentially, they're project partners who help contribute to the final outcome. My dad and brother are the Contractors - the ones who oversee the entire project and perform whatever tasks they want - while the Subcontractors ebb and flow in and out of the project as needed.
It's a common model in the building industry, and provides concrete examples of how the process works.
Now, back to 2010, where my realization hit me like a Mack truck.
I was writing about options for how to solve my scaling problem, but without the need for employees on my payroll. Everyone around me was screaming at me, telling me employees were the only way to scale a business. "If you don't intend to scale and sell your business and ultimately sell it, you don't have a business. You have a HOBBY!"
I knew I was building more than a hobby, and I knew they were wrong about something. I just had to figure it out. So, I started to list whoever I could think of in my space that wasn't an outright freelancer or an agency owner. I couldn't think of any. I thought, "Are there ANY people I know who seem free and flexible, but can handle bigger projects?"
Then, the lightbulb went off.
Right off the bat, my dad popped into my head. "Idiot!" I thought. "How could you overlook your own father!" I wrote frantically, describing the subcontractor model he used to build houses. A house project was way more complex, time-consuming, and expensive than my projects.
I made apples-to-apples comparisons between the subcontractors he used and the dozens of talented independent creators I knew. I mapped them to my projects and how they would fit in perfectly. I drew diagrams for the workflows from start to finish.
"Holy shit, I have it."
I'll never forget that feeling.
I decided then and there that I would commit to being what we now call a Solopreneur. I drafted an outline for what became The Hub Model™, where I was the center of the wheel, and my project partners would be the spokes.
Suddenly, I had the solution to my scaling problem without the requirement of hiring the people full-time.
Implementing the model
I began to leverage my network of designers, programmers, photographers, videographers, animators, writers, artists, and anyone else who could help with projects. I built systems to help them frame their involvement in the project. I brought on younger creators who could handle simple tasks and gain experience.
I focused on building out my network of creators who could help me get the jobs done when the jobs required more than what I could physically perform.
Soon, I began to learn each person's strengths. I learned to target people who:
Were better than me
Worked well with others
Were positive and enthusiastic
Were effective
Within just a few months, I made a profound discovery. My original intent was to find a loophole in running my business. I just wanted to solve the acute pain of needing to scale without the need for employees.
Soon, I learned that The Hub Model was not only effective for solving my problems, but that it had significant strategic advantages over the Real Business™ model. After using this model for more than a decade, I can confidently say that most small service businesses would witness the same advantages in this model over the employee model.
Here's what I discovered:
Unlike employees, my project partners had:
Skin in the game
Broad experiences
Self-sufficiency
An eagerness to please
Loyalty
Each of these attributes were critical to the success of The Hub Model. Let's take a look at the impact of each.
Skin in the game
As a business owner, I fully understood skin in the game. Remember, I tap-danced with bankruptcy while making sure my past employees never missed a paycheck. I felt the full brunt of the stress and anxiety around my business and did everything I could to shelter them from it.
As I started building The Hub Model, I found others who knew exactly what it was like to run their own show. They understood all the pressures I was facing. In every step of the process, from budgeting to production to client correspondence, they spoke the same language as me. They had a massive incentive to work hard, provide value, and get the job done within the described terms. After all, they wanted to be a partner on as many of my projects as possible.
I cannot overstate the positive effects this brought to each project. I found hungry, energetic, creative people operating from a state of growth. Compare that to employees, whose primary driver is to not get fired—a reactive, defensive, fear-based state.
Broad experiences
One thing that became clear to me when running the employee model was how quickly my team became pigeon-holed. It wasn't their fault. It happens in businesses of all sizes. An employee is put onto a particular account. Over time, that account shapes the way they perform their work. Their styles and outlooks, they way they see problems and solutions, and the way they communicate all begin to funnel into their small number of accounts.
With my partners in The Hub Model, I was getting people who had maybe a dozen clients from all sorts of backgrounds. I found out quickly just how important it was to work with someone who had a broad array of experiences. Their styles were broader, they quickly adapted to unique challenges, and they could communicate in different ways to suit the clients. They could bring much more to the table than the average employee.
Self-sufficiency
People who have the guts to start their own business are a different breed. They have a different drive. They bring a different energy. They often have a stronger work ethic. I found this with every single project partner.
This really sank in for me when I noticed my past employees moving on to do their own things. Once each of them were out providing their own services, with their own skin in the game, they did just fine. I've since seen this time and again. The same person who might struggle or underperform as an employee can transform themselves when it's their own butt on the line. It's cool to see.
Eagerness to please
It didn't sink in for me at first, but I eventually realized that I was, in fact, the client. I was writing checks to my project partners the way my clients wrote checks to me. It's silly in retrospect. But, it sank in when I noticed my partners getting after it to make sure I had what I needed, and their behaviors mimicked how I approached my own clients. I just wasn't used to that attitude with someone else on the project.
I had programmers who stayed up with me until 4AM, troubleshooting server configurations to make sure the launch went well. I've had artists who painstakingly built their own teams in order to scale to the needs of my large projects. I've had photographers give up their Saturdays because that's the only day that worked for the weather needed on that particular shoot.
They behave exactly how I behave when I tell a client I'm going to get something done. If I say it's going to happen, then it's going to happen.
Loyalty
There's a really cool effect of bringing a project partner into an awesome project that they may not otherwise be able to access. This is especially true for the younger, talented people who spend more time serving people like me than directly serving clients. Many of these people have formed their entire solo business models around their access to me, my approach, and my guidance.
A W-2 employee can bounce the second they find a job they think is better. A young, hungry, talented Solopreneur, on the other hand, will crawl into the muddy trenches with you, soaked and chilled to the bone, terrified and uncertain, but confident of one thing: They will fight with you to the death.
I love my project partners. They love me.
Ultimate Flexibility
Lastly, one of the fundamentally beautiful things about The Hub Model is your flexibility. If you find yourself with an underperforming W-2 employee, the whole process is messy and sucks. Firing someone is one of the worst feelings in the world, and I'll never understand those mid-level managers who brag about firing people. I rank it as one of the Top 5 worst experiences of my life.
Yet, I've discontinued work with several project partners over the years, and none of those were painful. The entire relationship was different. You keep the ones that are awesome for you, and you let the ones who aren't drift off to somewhere that works better for them.
Even within an individual project, I'm able to decide who I need and who I don't. Unlike W-2 employees, there's literally no unnecessary overhead. I simply bake my project partner budgets into my overall client budget.
So, everything is roses, right?
While the benefits of The Hub Model are plenty, I also learned about the trade-offs. After all, life is about trade-offs. Understand what you're getting with this model, though, and you'll be in a great spot to leverage it.
Management
Relying on anyone else to get something done requires management. There's simply no way around this. I mentioned before how I hated management in my Real Business™ model. Well, The Hub Model has a couple hints of management pain. First, there are hiccups. Project partners misunderstand something or make a mistake. It happens. I've made mistakes too.
The big difference is due to the other factors I mentioned earlier. The game is completely different for these folks. They have a massive incentive to correct anything that's off course. They generally will do anything they have to do to make things right. Of course, if they don't, your solution is simple: Just find a better partner. While only a handful of times over the years, I've had instances where I've literally pivoted within 24 hours to a far better solution.
Cost
You might be surprised to find out that most of my project partners are actually CHEAPER than their W-2 counterparts. Remember, if an employee's salary is $75,000, the cost to a business is much greater due to payroll taxes, insurances, facilities, etc. In fact, most accountants recommend calculating 2x-3x the salary amount for the ACTUAL cost of an employee. Plus, there's the downtime. An employee gets paid for time off, vacations, and when they're not performing at 100%.
In contrast, the project partners simply provide me a fixed budget. As long as the scope doesn't change, that's what they get paid. Pretty simple.
Nevertheless, over time, I have shifted away from younger and often cheaper partners to experienced and more expensive partners. It's now common for me to bring on a partner who is every bit as expensive, if not more, than what I would be for the equivalent tasks. There are projects that simply demand the highest quality. In these cases, the budgets to my client are going to increase. There are even times when I'm willing to cut into my budgets simply because I demand the absolute best for the final product.
In general, you're going to find that lower-cost partners need more managing, but result in more profit for you. Higher-cost partners require less managing, but can result in less profit for you. Either way, you have the flexibility to decide what you want on a per-project basis.
Finally, you need to make sure that you have the cash available to provide for your partners. There are corporate clients who pay on a Net 30 or greater timescale. Most project partners want paid within 30 days at the very latest. Some vendors require deposits. Make sure you have the liquid capital available to pay your partners while you're still awaiting payment from your client.
Contracts
I'm working on some detailed resources about contracts that I'll share in the coming months. In the meantime, remember this one principle that I have adopted in regards to contracts:
Signature lines preserve friendships
NEVER do handshake deals. If you have a feeling that contracts are icky, please, I beg you, do not go into business. You WILL get screwed. This is especially true if you serve corporate clients who have legal teams on staff. They have all day to think of ways to screw you over if they see fit.
Working with project partners requires solid contracts that everyone understands. Work must be accurately scoped, payment terms specifically defined, and legal obligations clearly spelled-out.
You'll need to develop a contract framework that protects you and your project partners. But, don't worry. This is more simple than setting someone up as a W-2 employee.
Availability
Because your project partners are busy getting after it with clients and building their portfolios, there will be times when they're booked. Indeed, they are only one person, just like you.
The best approach is to have multiple project partners in each service segment. It helps to have backup options when possible.
Otherwise, your best bet is to plan ahead and communicate the schedule as early as possible. There's a tendency to think only about your own timelines as a Solopreneur. Then, you ask too late for the partner's help, and they're not available. Plan ahead and communicate with the client accordingly.
Remote Arrangements
I have project partners who I've never physically met. This is not nearly as big of a deal as it was for me when I was first developing The Hub Model. Today, most people are comfortable with the idea of working remotely.
Still, it presents unique challenges. Make sure that you use workflow and communication apps to keep your projects organized and all partners fully-informed. Remember: Solopreneurs love freedom, which often lends itself to running their businesses out of their heads. This is problematic even when it is just you, but downright disastrous when you build out teams.
The Force-Multiplying Effect of Collaboration
All of these trade-offs add up to a fraction of the headaches that a traditional, employee-based company present. Once you build your team, you'll begin to experience a collaborative energy that develops into something much stronger than you alone. It helps to solve the loneliness that some Solopreneurs experience, it makes you more valuable to clients, and it often leads to opportunities for new clients through your partners. I've had a number of them bring ME into a project that they landed.
Win-win.
Out-Leverage the Big Guys
After 12 years of committing to The Hub Model, I've met and collaborated with tons of other talented Solopreneurs. Many of them, myself included, use this model to land massive clients and outperform the traditional agencies. I have to admit, it's a fun side effect when you run into some agency-types who simply cannot fathom how you could handle the large clients that they feel solely entitled to serve.
The ultimate strategy of this approach is to stay small, lean, and nimble. This allows you to pivot and take opportunities as you find them. It also allows you to provide high-quality deliverables for a lower price than the aforementioned agencies. You might be surprised to learn that many client reps I've met are quite unimpressed with the agencies, and would bail on them if given a viable alternative.
Well, The Hub Model will help you become the viable alternative.
Stay Tuned
As I continue to share more about the strategies I have developed over 16+ years in business, I'll expand much more on The Hub Model and its implementation. We'll get into setting up subcontractors, 1099 requirements, tax considerations, workflows, file sharing, scheduling, and much more.
Until then, start thinking about how you could utilize this model in your own Solopreneur adventure. Make a list of people you know now, and begin building a powerful network. It's the critical piece that will help you outperform the competition.
There is nothing that excites me more than being able to help other Solopreneurs who have the opportunity to live how my family and I live now.
In the meantime, feel free to check out my other articles if you haven't yet, and don't hesitate to reach out to me. Just DM me on Twitter.
I look forward to the chat.