How I Started A Scrum And Agile Training Business With 90% Profit Margin
My name is Robb Pieper and I am the CEO and Founder of Responsive Advisors. Our primary business is Professional Scrum training and Agile Advisory services. We educate professionals to adapt their products the fastest in a rapidly changing world.
We do so through our various Agile workshops and professional Scrum courses for individuals and teams. We also use Scrum to deliver software for our development shop clients. We do like to eat our dog food!
In terms of our training business, during the first year, we taught 1 class with just 6 students. In our 2nd year, we worked a lot harder on building the training business and taught 250 students in 40 classes. Today we teach about 800 people per year from all over the world in just over 90 classes. An increase of 280% over 5 years! It’s an honor to have become one of the most popular Scrum.org Professional Training Network partners in the world.
What's your backstory and how did you come up with the idea?
Electronics and software have always been a passion of mine. I would spend my spare time upgrading my PCs and creating ways to make them better. That’s where my interest in computer programming was born, so I ended up going to school for a degree in Electrical Engineering with an added focus on software development.
In one of my later engineering roles, the company was starting to go through an Agile transformation as an entire IT group of a couple hundred. That was the first time I was introduced to this concept of Agile development, and I was intrigued. I watched my company go from being in chaos to running pretty efficiently. From that moment I knew that I wanted to be part of those kinds of changes in my professional career.
Fast forward a few years and I joined a small consulting firm as a Scrum trainer and consultant. I got to see many good and bad ways to run an “Agile practice” as we were called. I thought there must be a better way to run a profitable practice while still having engaged team members and happy customers. We ended up with a revolving door of leadership and senior people leaving and eventually, I found my time had come to try my ideas.
With my first consulting client came the need to travel to do the work for several months before seeing the payment for services. This meant I needed to take a big risk and use my life savings and credit cards to pay for travel with the hopes the client’s payment came in on time. So I started with about $20K and hit the road. After getting close to burning up my savings the payment finally came in. I was relieved, but also realized I needed to start doing something else to earn revenue if I were going to ever get past being an independent consultant. I had the idea of running small public Scrum classes in Chicago while at the consulting firm but “small” was not something they wanted to do.
I thought getting a few students here and there would build relationships and possibly help us find new clients. So we started doing that after hiring my first employee who would help manage the logistics of classes. They were very small at first, I'd run numerous 2 - 3 person classes over the first couple of years, even a 1-person class. It helped keep the lights on and eventually, we found some additional work through the relationships we built.
Eventually, we scaled and started running courses in not just Chicago, but also New York City, Seattle, and Los Angeles.
Be prepared to not take a vacation for 6 years. That’s how long it was until I had my first.
When the pandemic hit I was freaking out for a month since ALL of our work came from human interaction, which was completely shut off by governments and companies alike. All of our contracts to do work at that time were canceled.
Ultimately we were forced to pivot into online-only classes and consulting. We thought that would be a poor substitute, however, we found the opposite. It was far better! It was more convenient for students to take whatever class they want without paying extra personal or company money for travel and we trainers got a bit more work-life balance by not spending 10 hours a week traveling. Moreover, we were able to use all kinds of digital tools to make the classroom experience even better than we could with whiteboards in a classroom. Some things cannot be known without trying them out and validating the hypothesis.
Take us through the process of designing your service.
We primarily offer a service to educate people in a variety of ways, topics, and settings. I started with the things I did before at a prior consulting firm. I earned a license to teach professional Scrum and added additional licenses to that after I went solo. This curriculum was standardized so I mainly just added my flavor to how I taught the course based on how former students responded to my analogies and examples.
I learned to listen to the customers and identify their top problems in class. We create custom workshops and advisory services based on the problems our clients have. We’ve been known to build full-day workshops with just a few days' notice. It's a few intense days and nights but we always pull it off and have a happy customer. We’re able to reuse some of the workshops we build when we find other clients have the same problems.
Every time we run a workshop we improve things to make the activities better and the lessons clear.
In general, we’re always looking for problems to solve and when a client has one, we have an opportunity to solve it but also to package that solution and sell it again. Right now we’re on a path to building a software product we’ve been developing to solve the problems that we believe will help others like us. More on that to come!
In terms of design, I'd hate to leave this unanswered. We do focus a ton on visuals and polish. I am the type that will form an opinion on a business if they look sloppy in presentation. They may have the best product or service in the world, but if you walk into their store and it looks like a mess, you think it also reflects in their offering. We focus a lot on our website, our class listings, our profiles, our YouTube videos, and every element a customer may see and make sure it’s polished as best as we can get it.
Here’s an example of Youtube content we’ve created:
First impressions can make a big difference and our business requires a huge amount of trust from the customer. We do all we can to build that trust, including the design of our marketing materials. We brought on a marketing firm a few years ago to help us take SEO and that visual polish to the next level and they’ve been great! Thanks AxleEight! We get lots of positive feedback on our proposals, website, and videos so we know it has an impact.
In terms of startup costs, our primary cost is labor. But that labor is very hard to find when it comes to teaching what we teach. Not only do they need a rare blend of experience building products but also the ability to speak to customers and a license to teach. Like many consulting businesses, the primary barrier to entry is not money, it's marketable expertise.
Describe the process of launching the business.
Our launch was small and gradual. It started with one advisory customer, then one training class with a new employee, then another advisory customer found while hiring a new trainer, and building it one piece at a time while careful not to overspend and lose money while so small, new and fragile. The whole trick to business is making more money than you lose, or the score goes negative and you lose the game. Just like SimCity.
We’re a trust-based business and as we built a reputation, a network, loyal customers, etc, the business started to grow. The pandemic threw a huge wrench into things. All the big companies we were working with stopped all non-essential investments, including training, and we relied only on public training, individuals coming on their own to get certified.
The pandemic hit us fairly early. We were only around three and a half years at that point. But after doing only public online classes for a while, creating more trust-building content for advertising purposes, and building more relationships, more people started to come.
The public training side of what we do grew rapidly at the end of 2020 and held strong through 2021. At this point, it seems the world is getting somewhat back to where it was in 2019 based on the numbers but all our numbers are higher than they were before. Our growth has been slow but steady even with all that’s happened in the world. We’re very thankful that we didn’t suffer the same fate as countless other businesses have, especially in my neighborhood of Chicago.
Since launch, what has worked to attract and retain customers?
One word. Trust. People put their trust in us that we have the knowledge and experience to help them be successful. In college, I would choose a professor based on the ratings they received and reviews of former students. I didn’t want to get an instructor that bored students or gave students bad experiences because I aimed to get the highest grades possible. Being bored or working with unfair grading practices would work against that goal.
Our students are the same. They want to learn, they want to be interested in the material and they want to earn the certification that comes with many of our classes after passing a test.
So what works? Amazing our students and asking for their reviews. Just being amazing has the effect that some will come back for a different class or even tell their friends. We ask every student why they choose us in a pre-class survey, so we can see the results of our efforts. Many choose us because of referrals or content we have given away freely that helps people decide if we’re the right fit.
We’ve tried lots of things to find more business and found lots of things that have not worked. Students do not impulse buy a class. They choose carefully. Many pay with their company’s dollars, so promotional discounts and coupons don’t seem to work either. The only thing we’ve found that consistently helps is building trust. And unfortunately for a business owner, this means it takes a lot of time and patience to build the business. I have no illusions that one day we’ll see hockey stick growth and go viral.
We’re on social media and focus most on LinkedIn and Instagram. We tend to see the most engagement on LinkedIn which makes sense to us as it’s more of a professional networking platform. We focus our efforts on building “likable” social media posts and less on just advertising services. Anything about us personally seems to get the most attention.
In terms of SEO, our marketing team has got us on the first page of google search results for every city we focus on. No small feat. But this may shock you, in over a year of being on the first page, we have only got one customer from it so far. But that doesn’t mean being on the first page isn’t valuable. You need to be findable, but you also need people looking for you. You have to know how people shop for your services and focus efforts there as a primary, other avenues should exist, but the lesson here is to set your expectations appropriately for channels used less often and when you’re new you have no idea what channels work best. We tried a lot of different things over the years and trust-based approaches still work best for us.
I’ve learned as a consultant how important it is to stay in touch with the students and corporations that have entrusted their learning through Responsive Advisors. I want to be a resource for them for years to come, that’s why our Responsive Alumni community is so unique. We have a digital community going, a newsletter, a meetup in Chicago and NYC, and other touchpoints that have resulted in many returning students.
How are you doing today and what does the future look like?
We’ve been profitable since we started. I had several very small businesses as a child and early adult plus I loved playing SimCity. I earned an MBA concentrating on finance so I knew what I was doing to some degree. Maintaining profitability seemed the only option to bootstrap a company. I didn't have investors or family money to play with so I had to ensure we remained profitable or get ready to lay off my employees.
Post Covid I don’t have to focus too heavily on our P&L as our gross margin is very high (like 90%) because we have such low COGS. We have some costs associated with royalties on the curriculum that isn’t ours, but that’s about it for COGS. Our primary expenses are fixed and related to labor for my team and marketing. What I do focus on is student numbers and aiming to increase them over time. We have a breakeven cost for running a class but it’s pretty much all profit after that. The goal is to maximize the number of students in a class without putting so many in the class isn’t engaging. So of all the interesting numbers in google analytics, I could be looking at, the only one that matters is the number of students that are served per year. If I could make a recommendation for a book here related to metrics, it would be Principles of Product Development Flow by Donald G. Reinertsen.
In terms of sales, a lot of it comes online through our partnership with Scrum.org and that is post-pandemic. Pre-pandemic we saw a lot more, perhaps 50% coming from existing customers, our networks, etc. I expect 2022 will shift back to what 2019 looked like in terms of the balance as companies start investing in their teams again.
Don’t be that owner who takes on tons of debt, buys a Ferrari/second home, and can’t make payroll if you lose a client, or even worse, most of your clients for a while.
We plan on growing our training and consulting offers as we find highly qualified trainers that are a team fit. We’re also currently expanding into software development services and software product development this year which will bring a whole new set of challenges related to how we find work, how we price, who we hire, and how we deliver…all while remaining profitable. We’re looking forward to it!
Long-term goals are around growing a business that could still live without me. I never wanted to make this the “Robb show” and at some point hope my baby grows wings and lives on long after I’m too old to do it anymore. Short-term goals include reduced reliance on any one stream of new business. Offering products and services that don’t require rare talent (there are only 350 people in the world right now that can teach what we teach). Even smaller goals include launching MVP of our new software product and kicking off our development center efforts.
Through starting the business, have you learned anything particularly helpful or advantageous?
For anyone who eventually wants to go out on their own and be a consultant or own their own business, I would strongly stress the importance of networking. This is something I had to work double-time on when I started Responsive Advisors, as I didn’t have a strong network established when I broke off on my own.
The pandemic, although a challenge, really allowed me to practice what I preach as far as agility goes. We had to adapt the way we were doing things overnight – from in-person classes to online, which allowed us to have a larger reach of students. So my biggest takeaway I’ve learned over the last two years is that only the businesses that are willing to try new things will survive.
And another thing, a business can be very fragile if you don’t have access to capital. If you want to be super-robust, that capital is your own and in the form of cash. I always knew a major market shift could disrupt my business. I was always afraid the next great depression could come on my watch. So I have always been very careful to keep a strong balance sheet. Well, the pandemic came. Without access to resources, I might have done more drastic things out of fear and lost my business. While I had a rough April thinking about what I would do, I didn’t have to worry about making my next payroll. Don’t be that owner who takes on tons of debt, buys a Ferrari/second home, and can’t make payroll if you lose a client, or even worse, most of your clients for a while.
What platform/tools do you use for your business?
We use a lot of digital tools and build some of our own:
- Zoom: because we’ve always been a remote team and with the pandemic, all our work is too.
- Azure DevOps: we primarily use the Microsoft stack and this tool comes with our hosting plan. We use it for requirements management
- Jetbrains Rider: and IDE for software development, we like Macs and Jetbrains makes reshape, which I used as a developer in the past. Rider is just like IntelliJ but for C#
- We use mostly Google productivity tools and host our email there. We like its collaborative nature
- We also use Office 365just because you can’t get away from that standard format
- For a CRM we use insightly, but at this point, it's too complicated and powerful. We prefer simpler tools for CRM including Trello and our homegrown solution
- Quickbooks online for accounting, it’s not super cheap but I found the tooling way better than the free option I used the first year
- Stripe only for online payments.
What have been the most influential books, podcasts, or other resources?
Books include:
- Drive by Dan Pink. is a great lesson on what motivates knowledge workers
- How to win friends and Influence People by Dale Carnegie. All of what I do is influencing and building a network. A super important book for those reasons
- Start with Why by Simon Sinek: telling people what to do doesn't always get the results you were hoping for
Advice for other entrepreneurs who want to get started or are just starting out?
Transparency is important – especially during challenging times. Build your team to handle transparency and expect transparency. Telling everyone all the secrets isn't what I mean. But the truth goes a long way.
Once you start to grow your team, it’s important that as a leader you are your team’s biggest advocate, but at the same time be realistic.
Be prepared to not take a vacation for 6 years. That’s how long it was until I had my first.
If you like what you do, working crazy amounts of hours, nights, weekends, and holidays don’t seem as bad as it sounds. If you hate what you do, you won’t last long.
Value your time. Put a number on it. Know when to hire or outsource. If you’re worth $100 per hour to your business don’t do work that can be delegated, hired out at $25/hour, or just not done at all.
Hire smart people and have them tell you what to do. Not the other way around. (a Steve Jobs paraphrased quote).
Where can we go to learn more?
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
