90. How Solopreneurs Can Maximize Effectiveness Using Automation and Outsourcing with Xan Hong

Show Notes

Since it's the first episode of the new year, we thought it'd only be fitting that we re-publish our first episode of season two. It also just happened to be one of the most popular.

So, on today's episode, you'll learn about:

• Advantages and disadvantages of automation
• Examples of how to use automation to improve efficiency in your business
• Recommended tools for automation
• Pros and cons of outsourcing
• Recommended areas to outsource in your business to save time

Plus so much more! It's such a gem of an episode. Be sure to tune in!

Of course, if you find value in the show, please leave us a 5-star review (hey, gotta make the ask, right?)!

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Xan Hong (00:00):
Time is your most precious resource, right? Whether you're an entrepreneur or not, but as a solopreneur, that's even more true.
Intro (00:09):
Welcome to the One-Person Business podcast. The show for solopreneurs, consultants and contractors who are ready to take charge of their business and reclaim their freedom. Join us as we bring you inspiring stories, invaluable insights and practical strategies from successful solopreneurs and industry experts, empowering you to create a thriving business that aligns with your unique goals and allows you to live life on your own terms. Here are your hosts, Joe Rando and Carly Ries.
Carly Ries (00:39):
Welcome to the One-Person Business podcast. I am one of your hosts, Carly Ries
Joe Rando (00:44):
And I'm Joe Rando. We are so excited to be back after a very long break. We are finally here for the first episode of Season Two. We're very excited because we have Xan Hong on the podcast today. We're going to be talking about automation and outsourcing for solopreneurs, how to make your lives more efficient and everything. It's gonna be a great episode. Before I get into that, I am going to give a little background for you, Xan, but anything I missed, just feel free to chime in. You can add to it at the end. If it looks like I'm reading during this part, it's because I am, because you have such robust background, I don't want to miss anything. So, Xan has been an entrepreneur for over 15 years in a variety of industries, including real estate development, food and beverage, e-commerce, insurance, financial services, marketing, communications, and technology.
(01:33):
What have you not done is the real question. During this time, his companies have generated $15 million in revenue, and his expertise now is in digital marketing and no code development. He is currently the founder of Drive Face Consulting, a digital acceleration agency that helps small businesses scale through automation. A large percentage of the revenue comes from building custom web and mobile applications, leveraging no-code platforms that allows drive face consulting to deliver custom solutions affordably and quickly. He is also an investor in principal and an independent insurance agency and owns an e-commerce business. That is a lot, Xan. We are so excited and welcome to the show.
Xan Hong (02:14):
Glad to be here. Thanks for having me.
Carly Ries (02:15):
Yeah. Did I miss anything or did I do okay?
Xan Hong (02:18):
I think you're fine.
Carly Ries (02:20):
Okay. Good. Well, let's just dive in. We have quite a few questions for you today just because automation and outsourcing are so big for solopreneurs and can be so helpful. You gave a recent presentation to a group of solopreneurs, and you mentioned that the way you view success now is different from when you started your career. Can you kind of build on that a little bit?
Xan Hong (02:42):
Yeah, so, I won't go through the full story, but, I am an accidental entrepreneur. I got into entrepreneurship by getting laid off, probably in my mid twenties, and I didn't know anything about entrepreneur getting into it. I think I had this vision of what an entrepreneur should be, right? There were a couple things that I really got fixated on. Number one was I felt like entrepreneurs had to hire a lot of people. The more people I had on my team, the more successful I was. That was really kind of a badge of courage for me. I wanted to keep kind of bringing on people I brought on interns and additional employees.
(03:30):
The other other badge of courage, and I think it wasn't just me, but like other entrepreneurs I network with is, we talked about how hard we were working. We were doing these late nights and, and working really hard. I think those were kind of two data points I took as what a successful entrepreneur should be. I had two life-changing events probably three-four years ago that really changed my whole perception. One was I had a business that I'd raised money for that failed. I spent a lot of my time and heart and blood, sweat and tears trying to get that business off the ground. We raised money for it and failed.
(04:12):
And shortly within that time period, my dad, who I hadn't spoken to, in probably close to 10 years, passed away before I could go out and talk to him. My daughter had never met my dad. She wanted to meet my dad. So we weren't able to. I think the biggest takeaway from that was, time is your most precious resource. Whether you're an entrepreneur or not, but as a solopreneur, that's even more true. So it just reshaped my entire line of thinking. Obviously I applied that towards being an entrepreneur. Now I look at, the less I have to do, the better. The more successful my business is, and the less employees I have.
(04:56):
Really the metric that I tell people is, the more revenue you're making per employee, in this case if you're solopreneur, one, that's really successful. If you've got a hundred employees, but you're making a hundred thousand dollars then that's not the sign of successful business. So, really the more you can generate with less employees, that's the sign of a true successful business. Those are really the two things that I've shaped pretty dramatically, obviously, really literally 180 from where I was.
Joe Rando (05:25):
Xan, I have a question on that. You're talking about your definition of success, and it makes complete sense in terms of defining it as how few employees you have and how little you have to work. But let me just ask, why is that success? What are you getting from that strategy that you weren't getting from the other one? Is it that you're making more money for the amount of effort you're doing? Is it something beyond that about your quality of life?
Xan Hong (05:54):
Yeah, great question. It really comes back to that incident, probably more so with what happened to my dad. Now with a 10 year old daughter, it really is about quality of life. Being successful as an entrepreneur and then not being able to enjoy any time with your family, that to me defeats the purpose. So, really, it's exactly what you said, Joe. It's about having a quality of life. And maybe it's not completely passive, but kind of the end goal is if you can generate passive streams of income, that's really financial freedom. Because my definition of happiness is really morphed into about choice.
(06:46):
If you choose to do things versus having to do things, that to me is true happiness. Because you're choosing to work, you're choosing to do something that you love, and if it's making money great. And really without financial freedom, that's hard to make those choices. You have to make money to live. If you can be in a position where you can make enough money to support yourself, and then from there you can kind of be in the position where you can make choices. How do you want to make your money? How do you want to live? And then if you love what you're doing, then great, so be it. And then you can kind of do things that you love to make money, if that makes sense. It's really about quality of life, and really sharing it with the people that you care about versus spending it and trying to make money to live.
Carly Ries (07:39):
Xan, one of the ways that you do that for your businesses is through automation. That's how you get some of that time back. For people new to the concept of automation, can you explain some of the advantages and disadvantages?
Xan Hong (07:50):
Absolutely. Let me start with the advantages. Number one is gonna be cost. In most businesses, people are going to be your most expensive resource. So if you can automate things and then you can save cost on kind of human resources. Number two is variability. Humans are great, but the reality is, humans have bad days, not good days. So, the quality of the work will vary. You know, they'll get a phone call, they'll get a text while they're doing important things and they'll be distracted. So you're gonna have ebbs and flows in the quality of work. With automation, for the most part, I'm not gonna say you're not gonna have any variability, but for the most part, you can eliminate a lot of variability because you're having a machine do the work.
(08:47):
And generally speaking, you're gonna have the same thing over and over and over again. Machines are really good at doing the same thing over and over and over again. So you can save on the cost of paying a human. Also for something that's really repetitive, you can have a machine do it with a little bit more accuracy. Then the final piece is probably speed as well. If you have a computer doing it, usually 9 out of 10 times it is gonna do something faster than a human would. Now, for the downsides, especially now, there are certain ways I think artificial intelligence may change some of these things, but, for the most part, machines operate in black and white.
(09:29):
You know, if this, then do this. So what you lose in that is the ability to make a judgment call. For customer service for instance, there are customers that are pushing and pushing. No matter what, unless you give them exactly what they want, they're writing you that one star review. You just know from talking to them. AI probably can't make that judgment call versus a human that's been doing customer service for a while. They're used to interacting with other humans, they can make that judgment call. So when you lose that judgment call you can't make decisions on the fly based on a lot of variables that are happening in that situation.
(10:14):
So with automation, you lose some of those things. Number Two is there is usually an upfront cost to build that automation. Usually if there's some program involved, there's something like that. For a lot of solopreneurs that that might be cost prohibitive. With no code tools, that's really lowering the bar, and that's why I'm so excited about no code. But, that can lower the bar and make it more accessible to more. Then the other piece is really with that black and white scenario, if you don't make that automation quite right and you turn it on, you can have some unintended effects of that. So sometimes it's not so easy to turn it off once you turned it on.
Joe Rando (11:02):
Has anybody seen the TV show The Bear? It's fantastic. It's about a restaurant. The guy inherits a restaurant from his brother who dies, and at one point they decided to take orders to go, and they turn on the machine, but I don't know what the heck, I can't remember what happened, but this thing starts spitting out orders and they're like, we don't have enough food. And it was just a complete disaster.
Xan Hong (11:30):
I've had those complete disasters.
Joe Rando (11:32):
I cannot wait for the second season.
Xan Hong (11:36):
It's probably an exaggerated example, but that's exactly what I'm talking about. If you haven't considered every single use case, and that use case happens and you don't have a way to account for it, it can create a mess very quickly.
Joe Rando (11:51):
I do disagree with it though. I think AI can make judgment calls. They just aren't always good judgment calls, but they'll make the call.
Xan Hong (12:01):
Yeah, fair enough.
Carly Ries (12:04):
Xan, how are you using automation in your current businesses?
Xan Hong (12:08):
Yeah, so probably the best example is the one I gave in the session. I actually have another piece I'm adding onto it right now that I'm actually super excited about. One of my best performing businesses is e-commerce business that sells paint by number kits. Real quickly, if you're not friendly with Paint by Numbers, 80% of what we sell are custom paint by numbers where people send us a photo, we convert it into a canvas. We basically vectorize the photo and it spits out a canvas with a a bunch of different shapes and numbers attached to it. And basically each number corresponds to a different color. Someone paints the canvas, and it comes out to this beautiful rendition of the photo that is sent in.
Carly Ries (12:52):
That's the only way you get the beautiful painting out of me, by the way.
Xan Hong (13:03):
It's a cool concept that really blew up over the pandemic. Because so much of what we sold were custom kits, what we did that not every company does, is we send a proof to the customer. But, we basically had to send the photo to the vendor. They would send us back a proof, we would have the customer approve it, and then we would let the vendor know, Hey, go ahead and produce this kit. So that process of downloading the photo, sending the vendor, having the vendor send back the proof, sending to the customer, and then sending the proof approval back to the vendor, that took about five minutes per order.
(13:45):
The last few years, we've done about five to 8,000 orders per year. So when you do the math, that is between 750 thousand hours a year. So basically, using a no-code tool called Bubble, we basically created a dashboard that allowed the vendor to import the photo automatically. The vendor could access it from a dashboard where we created it, they would upload the proof, which would automatically send an email and text to the customer. Then they would get a link with an approval form that could send out. The other piece we threw in there was if they approved it, we asked them if we could post to our social media. If they said yes, it would automatically post that proof to all our social media channels. That cut a five minute per order process down to zero.
(14:31):
So if you do the math, we literally cut out 500 to 1,000 hours a year in our time. That really made a massive difference in that business. The other piece though that we added recently, a combination I'm really excited about is artificial intelligence and no code where we're now moving production of those kits in house. I just got a shipment that's coming in tomorrow. We're getting 41,000 pods of paint, 1400 different colors of paint, 500 boxes of brushes. So, one of the things that I was really concerned about was managing inventory for that. 41,000 pods of paint, 1400 colors. That's a nightmare. Well, what we did was the software we're using to create the Paint by Number kits spits out a color card that has 24 colors, the code for each color, and then how many pods we need to put in,
(15:41):
So we actually are using an AI tool to scan that color card, and what it'll do is it'll search for that code and automatically update the inventory for that particular code. It solved a massive problem for us. And again, it's gonna be a lot more accurate and a lot quicker than having a human do it, which I'm not even sure, it probably wouldn't even be worth hiring someone to do that job just because it would eat into all our profits. So, those are two examples of how automation's a game changer for us.
Carly Ries (16:14):
For people that are interested, you mentioned Bubble as a tool that you use. Are there any other automation tools out there that you'd recommend for people who are just getting starated?
Xan Hong (16:21):
Yeah, Bubble has a steep learning curve, so that's a tough one. That's tough to come off right off the streets and learn Bubble. I think the ones that are more user friendly where people that are not as maybe tech savvy or don't have a tech background are gonna be Zapier, or there are a few other ones that are like Zapier. Make is one, where you can take one tool, like Google Drive or Gmail, you can pull information from that, and you can add what's called a trigger so when this happens, do this, and then you can send information to another tool to do another step in the process. Then you can take information from there. So you can connect Google Drive with Instagram, with Gmail, with all these different tools and it's pretty user friendly. So Zapier and all of the iterations and copycats of Zapier are probably the easiest ones for most solopreneurs to use right off the bat.
Carly Ries (17:30):
Well, and as you said, sometimes they can be pricey depending on solopreneur budget, but it's an investment.
Xan Hong (17:37):
But you know, Carly, I'll say something real quick. Going back to my original point, time is your most precious resource. Everything costs something. People forget to put a price tag on their time. If they're just solely focused on dollar and cents, then they end up doing everything. But if you're a solopreneur, if you're doing everything, it's gonna be hard to scale. So again, there is a price to everything. I think people forget to value the the price of their time.
Carly Ries (18:09):
That is a great point and such a good segway into my next question. So automation is big for you, but if people want to scale and they've exhausted all of their automation capabilities, then it's time to outsource. As a solopreneur, people sometimes think they're cheating if they're outsourcing, but it's not. We actually highly recommend it. So let's go through what outsourcing is and some pros and cons to that as well.
Xan Hong (18:34):
Yeah, with outsourcing, and I think it's important to note that there's kind of onshore and offshore outsourcing. Onshore is gonna be based in the US, offshore is based in a country that's not the US. So when people refer to outsourcing, probably 90% of the time they're referring to offshore outsourcing. I don't know the exact Webster's definition of outsourcing, but essentially you're using a virtual assistant who's not an employee. And typically if you're using offshore outsourcing, you're using a virtual assistant in another country. Hands down, the biggest advantage and why most people would do it, if it didn't have this advantage, then you probably wouldn't be using outsourcing, is the cost difference. In most countries that are big for outsourcing, such as Central and South American countries, Philippines, India, Pakistan, one of the biggest advantages is the cost of living in those countries is significantly lower than in the US. So you're able to hire someone to do a job in those countries for significantly less than if you were to hire someone to do the same job in the US. That's a big deal! Especially as a solepreneur. That comes with some disadvantages though, as well. Usually the big ones are going to be language. A lot of times there's a language difference. But because so much of their economy relies on virtual assistants, language is not as big of an issue as it as it used to be.
(20:29):
Time difference is going to be another one, especially for the Asian countries. that's why outsourcing to Central American and South American countries are increasing because you don't have that time difference. The biggest one that I've seen, and there are ways to address this, but just covering disadvantage right now is, in a lot of cases you're paying for the virtual assistant $10 an hour or less. And usually if that's through a company, then you're not paying the virtual assistant that. You're paying a company that, and there's profit in there, so now the virtual assistant is probably getting a small percentage of that. Even in the lower cost of living countries, you're getting someone who is not as skilled as someone you're paying much more.
(21:23):
So if you're not aware of that and you're treating that virtual assistant as someone that's a college educated graduate, making 50 K a year and you're giving them tasks in the same way you would that person, you're going to be unpleasantly surprised. I've talked to enough people that have been unpleasantly surprised to know that that's a thing. So, they'll come away from, it as, "oh, outsourcing doesn't work". If you do it correctly, it does. And if you outsource the right stuff, it does. But if you try and outsource and work as if they're employees, then you're gonna run into some challenges.
Joe Rando (22:11):
Yeah. I've got contractors. I mean, Carly basically is my outsource young, friendly person.
Carly Ries (22:22):
That just happens to do marketing sometimes.
Joe Rando (22:25):
Yeah, I'm not a marketing person. I've never pretended to be. And it was like, "I'm not gonna learn it now." So, Carly came on board. But she's a contractor. I wouldn't call her a virtual assistant in the sense that, sometimes I'm helping her as opposed to her helping me, but she's doing that. I've got a community manager, I've got people doing accounting, bookkeeping. I've got kind of a more standard virtual assistant. So yeah, it's really powerful, but there are lots of ways to do it. It really does help you scale.
Xan Hong (23:00):
You bring up a good point Joe, that I failed to mention as one of the advantages. One of the advantages is again, if you do it correctly, you can have experts, a bunch of different experts doing a small piece as opposed to one person or yourself who may not be an expert in a certain area. You're gaining a whole bunch of expertise with outsourcing that you wouldn't be able to gain if you tried to do everything your own.
Joe Rando (23:29):
I put a spreadsheet together of called Hire A Pro or No, and basically takes all that stuff into account. Whatever job it is, can you hire somebody that's better at it than you? Can you hire somebody that can do it cheaper than you? And there are all these different combinations and it weighs in on whether you should consider hiring somebody else or do it yourself.
Carly Ries (23:49):
Solopreneurs helping solopreneurs, we just talked about that. Joe, you mentioned where you kind of look for help. Xan, where do you outsource within your business? What areas can people outsource? Because a lot of times people think it's just like accounting or actual assistant tasks, but what kinds of things can be outsourced?
Xan Hong (24:09):
I suspect a lot of them are gonna be similar to Joe. I have a bookkeeping team, one cuz I hate bookkeeping. Then the problem bookkeeping is if you don't do it consistently, it gets to be a big mess in a hurry. Now I can get bookkeeping so inexpensively that it doesn't make sense not to do that. So bookkeeping is definitely one. The other one that I've had a lot of success with, especially on the e-commerce side is customer service. With my customer service team, I have a 24/7 customer service team. I've got two customer service teams. One is a chat and email team. That one is based in Pakistan and then I have another one that is phone call based and that is based in the US just because people are biased against talking to people with accents.
(25:00):
So having a US team is helpful there. I used to have one single virtual assistant do that. I went from a situation where I had one virtual assistant that did everything for me, including customer service, and she wasn't the best at customer service, to now I get 24/7 coverage but it's a shared team. I'm actually paying significantly less to get 24/7 coverage and I have a team that all they do is provide customer service for e-commerce businesses. And they're really good at it. A lot of times when there are difficult situations, they'll come back and say, Hey, this is how we handle it. We've handled this type of situation like this for other customers.
(25:47):
And so you've got someone with all that expertise coming to you with recommendations versus your virtual assistant is coming to you with everything, "what do I do here? What do I do here? What do I do here?" So that really kind of expert in a very specific thing, has been really successful. I have some outsourced developers as well. I've got an outsourced digital marketing teams, they build funnels for me. They set up campaigns for me. I'll oversee the campaigns, but as you know, Carly, I know you're in digital marketing and I'm sure Joe you've done a little bit as well, those campaigns can be very tedious to set up. So, providing someone with a framework of a campaign say, "Hey, go build these campaigns., that saves me just a ton of time. I'm sure there are a few more. I have an Amazon store where I've got a team that handles ordering the products, customer service returns and stuff like that. I think that's most of my teams that I have.
Carly Ries (26:51):
With that, what are some tips for finding the right team or the right VA or whoever? I imagine it's not always roses and butterflies every single time you sign on. How can people go about finding the right person to work with?
Xan Hong (27:07):
So high level, the first thing that you have to do before you outsource is you look at the total universe of all the tasks that you have and just break 'em down into the absolute simplest pieces that you possibly can. I think that's the part that most people fail to do. Cause it's the hardest. Most people don't want to do the hardest task and usually breaking those tasks down. A friend of mine that I was talking to about virtual assistants, he didn't listen to me and he didn't do that, and he just kind of handed a bunch of stuff to a VA team. He's like, oh yeah, that didn't work for me. I was like, well, yeah, the reason why is you didn't do the heavy lifting on the front end.
(27:46):
So just breaking that down into the smallest level tasks that you possibly can. Then from there you're gonna identify. Now that you've broken down those tasks, you need to figure out, okay, what expertise do I need for these tasks? And then it's about finding outsourcing teams for that. I generally like to go after teams versus individual virtual assistants or freelancers. Just because there are some redundancies in there. From there, I think the most successful tip I can give for someone as they're vetting out vendors for outsourcing is have a test project to work with them on. Something that's relatively small. It helps because I know enough about all the things I outsourced that I know what I'm looking for.
(28:39):
That's the only caveat. Make sure you know enough to know what's good versus bad. I think that's a challenge that some solopreneurs run into. You do have to do some education of yourself as far as knowing what's a good bookkeeping team supposed to do? What's a good digital marketing team supposed to do? And part of that could be in your vetting process, talking to enough vendors that you kind of educate yourself that way. But once you narrow it down, I definitely recommend working with a really small test project. Nothing too big, but enough for someone to hang themselves. Where you can see if they're not gonna work from a communication style standpoint, or they clearly don't know what they're talking about. A project that really brings some of that out. Because what I've learned over the years between interviewing and working with vendors is people can sound really good and competent during an interview, and they can suck when it actually comes to doing what you need 'em to do. So you want to have a real life "trial by fire" type of interview process. I think a test project is the best way to do that.
Carly Ries (29:45):
Yeah, that's a great answer and I think would be super helpful for our listeners. I cannot believe we're already near the end of this episode, but we have a curve ball question that we ask every guest, at least we did in the first season. Do you have a favorite quote about success?
Xan Hong (30:05):
I absolutely do. Every year there was a program and I used to talk to high school students in West Philadelphia that were learning about financial literacy and entrepreneurship. I would always share this, and it's funny, I heard them starting to use the same quote in some of their presentations. So it's pretty cool. My favorite quote is, "Luck is when opportunity meets preparation." I'm a big fan of that because really my interpretation of that is you can create your own luck. You can create your own luck by just outworking everyone else and educating yourself. And by doing that, you just put yourself in a lot more opportunities than your competitors do and that's really how you create luck. So that's by far for probably 15-20 years now has been my favorite quote for success.
Carly Ries (31:00):
We have an ebook on Lifestarr.com, shameless blog, but it's all about inspiration and motivation. It has a lot of quotes in there, and that's one of them. It was one of my favorite quotes in that ebook, so I'm glad you brought that up.
Xan Hong (31:13):
Absolutely.
Carly Ries (31:14):
So Xan, this is the conclusion of the episode. If people want to learn more about you, your businesses, social channels, whatever, where can they find you?
Xan Hong (31:23):
The website is drivephase.co, not.com. All the social channels are drivephase.co and they're actually on my website as well. I would be happy to chat with everyone on the site. You can schedule a free consultation. I'm always happy to talk to anyone and if we can't help you directly, I always try and have them walk away with something of value from those consultations, whether they're working with me or not.
Carly Ries (32:05):
Great. And we will include all of that in our show notes where people can access you as well as the rest of your bio. Cause it was so extensive. I didn't want to say all of it here, but, that was it.
Joe Rando (32:17):
Thank you Xan, it's a pleasure as always. Love interacting with you and the LifeStarr Community, shameless plug again, community.lifestarr.com. We'll catch you there. We'll probably have other fun stuff coming up. I'll see you at some of the events. Thanks so much for doing this.
Xan Hong (32:37):
Thanks for having me, happy to help out.
Carly Ries (32:40):
It's been so fun. And listeners, thank you so much for tuning in. If you like what you hear or you see now we're finally doing video podcasts, be sure to subscribe in any of your podcast locations or on YouTube. I don't know where the subscribe thing is from my screen, but you subscribe on YouTube in this video. We will see you next time.
Closing (33:01):
You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes running a one person business and figuring it out as they go. So why not connect with them and learn from each other's successes and failures? At Lifestarr, we're creating a one-person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.