Be Your Own Boss

Chicago, IL
By A.B. Dada
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There’s an old adage people are familiar with about getting services from others: “You have 3 options: get it done fast, get it cheap, get it high quality. Pick two.” I have my own law on income that tilts this adage: “You have 3 options to making money: make it fast, make a lot, make it with little work. Pick 2.” I call it Dada’s Law on Income, although I’m sure someone else coined the phrase before me and already gave it a name. Props to those who can find it.

If you want to make money fast and and with little work, you’ll probably make little to no money. You may even eventually lose more than you spend to get it. Not a good solution. The lottery is one of these areas. So are ponzi schemes.

If you want to make a lot of money with little work, it won’t come quickly. Blogging for advertising income is one way you can do little over a long period of time and generally do fairly well.

If you want to make a lot of money and do it quickly, it will take a LOT of work. Go out and get 4 jobs and you’ll see what I mean. Not easy, but it can be done.

So if you asked me how to make money, quickly, and with little work, this is all you needed to know. I even included examples of how to do it. Just pick two!

Zion, IL
By A.B. Dada
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Someone at a church I work for asked me this weekend “How can I make money fast?” It’s the third most common question I’ve heard this year. My fast respond is: “Learn how to spend it slow” but that doesn’t help people who are in dire straights. As far as I can tell, there is no way to help yourself when you get to the point that you become desperate for money. My recommendation for most is “Get a second job” right after “Stop spending.” Yet I hear so many ridiculous schemes for making fast money, that I realized I had to write something quick — and email the link to everyone who has asked me the magic question.

Before we can even look into opportunities in making money, fast or otherwise, we need to look at the four primary ways one can make money. I say primary as there are other ways to receive an income, such as gifts and inheritances. Those are rare enough that they’re more a bonus than something you can aggressively find a way to receive.

The four primary ways are the title of this article, and I will define each one:

Jobs: A job is a process at which you exchange labor for income. You work, you get paid. Jobs can vary, of course, in amount ofpay, speed of pay, and security/consistency of pay. I prefer high commission/low salary types of jobs that are tied to my performance. Many people prefer consistent pay so that they can budget based on expected future income. In my experience, a good performer on commission has better job security than a wage earner, but many people have no opportunity for performance-evaluated commissions or bonuses since their jobs don’t have a way to gauge their performance. Some of the other income sources may have a portion of their income produced through work, so they might partially be considered a job.

Investments: An investment is a process where you put up your own capital, usually money, in exchange for a share of future profits. In order for a process to truly be an investment, it MUST return portions of the profits on a regular basis (quarterly or yearly is common). Profits are usually called dividends, and if they are not issued, the process you put money or capital into is not an investment, it is a gamble. An investor is properly seen as a co-owner of a business or venture.

Gambling: Gambling is a process where you risk money in hopes that you will receive more money after the process than you risked. Gambling can come in the form of casino wagering and lottery tickets, but the process of gambling is also common in most processes we mislabel “investing.” Gambling inherently has more risk, and less reward, than investing.

Savings: Savings are safe investments, with insurance or a guarantee product that protects the future value of the savings process, without adding the benefit of an upside reward. If an investment has a guaranteed upside, and no downside possibility, it is savings, not investing. Insured CDs, money markets and savings accounts are typical savings processes. Uninsured savings is an investment, and in some cases it is a gamble.

The primary focus I have in recent years is to stop using the term “investment” for most stock and bond market deposits. Every month I’ll receive an email asking me about the latest “get rich quick” stock scheme, which historically have made someone else rich, but the “investor” poor. The reason why most stock investments are gambles is because they are not truly investments. I have reviewed numerous stocks over the past 15 years, and very few of them are investments. Almost all of them are gambles, especially stocks that have the potential for fast money (and fast losses). Why is this? Most stocks don’t issue a realistic dividend or profit-share. If you buy a portion of a company, you should have a direct payment in positive performance of that company (profit) or you may have to pay a direct payment in a negative performance (loss). Stocks today rarely issue dividends of any value. If the company you own makes a 20% profit at year’s end, you should get an equal portion of this profit based on how many shares you own versus how many shares are outstanding. If you own 1 share out of 100, and the company makes $500 profit in a year, you should receive a $5 dividend as income. This is an investment. Instead, if the company generates $500 in profit and you receive nothing, but your stock value goes up slightly, this is a gamble. You are looking for someone else to buy the stock from you, but that is more risk than reward.

Many people explain that companies that don’t issue dividends ARE worth more money over time because they reinvest their dividends to grow the company. This is true — and a good reason why the gamble of investing in them can pay off. Yet the only way a company that continuously reinvests will ever pay you a profit share is if it is liquidated (usually in bankruptcy, pushing the value to zero), or if they change their policy towards slower growth and higher profit sharing. I won’t touch companies that don’t issue profits/dividends on a regular basis. I don’t gamble in that market as there is too little transparency in running the company.

That doesn’t mean I won’t gamble. I take gambles when I risk my own capital to enter a new market for a business that can’t possibly pay a profit early. As soon as the company becomes profitable, the process switches from a gamble to an investment. Before the first profit, it is a pure gamble. I also like low house edge games at the casinos on a rare basis, such as craps. This is pure entertainment value, though, and I know that mathematically there is no possible way to beat the house after infinite hands of play. The entertainment value is not financial income, but it is a profit in terms of increasing my enjoyment. I prefer wagering in craps than buying a stock that is assumed to go up in value (but not pay dividends). I don’t recommend casino gambling for people who want to get rich, though, as the longer you play, the more likely you are to lose everything. There is only one way to bet in a casino that decreases your long term chance of loss, and gives you the only chance for a bit win: double or nothing on your entire stake. Betting $5/hand out of a $500 bankroll in a casino will generally get you to $0 over the long run, as the small house edge chips away at your wins. Betting $500 on one hand gives you the best opportunity to making money, since the house edge only comes up on the one bet. Mathematically, it doesn’t matter much either way, but it is far wiser to take the big risk for the big reward than take the little risk/little reward with the same grinding edge. Again, I don’t recommend any form of gambling to make money fast — neither stocks nor the craps or blackjack table.

Savings, to me, are a way to save your money without risk. Most savings have a negative result, though, as the interest rate paid is far lower than the cost of inflation (inflation being the process at which our government prints more money over time, making your money worth less, so the price of products goes up). Even a 5% CD is a negative investment if the cost of goods in your house go up 10% a year. It would be far wiser to take a risk and buy a lifetime to toilet paper today than invest that money in a CD and buy less toilet paper as prices go up over your life. Of course storage is an issue, but it’s just an example of bad savings.

So how do you make money quickly? In my experience, the fastest way to make money is to find a target audience with a strong need that they won’t do themselves. That target audience should be wealthy, and their need should be easy to close a deal on. There are many examples of strong need in the wealthy homeowner market, but penetrating that market is difficult, so the risk is high.

I’m always surprised at how well some young ladies I know do just by petsitting and petwalking, but this is a job that is sold more easily by an attractive young adult than by a 30-something dad. I have many pets, and I can tell you that they’re a pleasure, but a money pit. People will feed their dogs and cats with food that is more expensive than the human food they consume. Some wealthy households spend 5 figures a year on veterinary care for their pets. The labors of taking care of a pet can be a worthwhile form of income, but they’re very time consuming. It’s a tough market to penetrate.

Of course, before you can focus on monetary growth, you need to focus on cutting spending. Reducing spending is the easiest thing a person can do to see an instant return on their time and income. The hardest part about quitting spending is your pride, but I found there is more pride in being financially stable and owning less than being a financial wreck but living rich. When I sold my Land Rover and started to drive a 10 year old Nissan, my respect from my wealthy friends went up, not down, as they were amazed that I would accept an old car that cost me nearly 1/10th the maintenance cost of the expensive one. That savings alone allows me to travel almost 5 weeks more per year! No one asks me about my car, but they ask about my trips. That’s clout, and something to be proud of, I feel.

How about MLMs, or so-called pyramid schemes? I do believe they work, but only for a rare few who are really aggressive and dedicated to the program. I own and run an MLM myself (currently in the testing stage, but about 6 weeks from going public) that I think many of you may actually be interested in, because it is a “no-sell, no pressure, low risk” style MLM. The 18 week trial run as shown that over 90% of the people who invested early have made their money back and at least 200% more in return over that time frame. I was shocked at the simplicity of the program, and the low risk and seriously zero work needed to generate an income. I was also shocked that no one else thought of it. I will post details to the MLM in coming weeks, so stay tuned (and subscribe to our RSS feed or email updates).

I do believe that there are get-rich-quick schemes that are legal and relatively safe, but they require a huge commitment. They’re better suited for the unemployed but cash-rich. In order to make money, you have to have some money to live on, to purchase hardware or software, and to market your product or service. If you have no money, your own solution, honestly, is to get a job. Get two jobs. If you don’t have kids, get three jobs.

Many people ask me about how to make money on the Internet. I want to dig deeper into the programs and tactics I use to generate a reasonable amount of money on my websites. Lately, though, my sites barely break 5 figures annually, so the time spent working on them pays less than minimum wage. I do believe they’re a net positive, though, and they’re a huge profit in terms of information I learn from comments and emails. They’re also a form of entertainment for me, better than watching the telly most times.

So I’m sorry to say that there is my answer to how to get rich quick:

1. Cut spending to the bare minimum. I’m serious about the bare minimum. That means no cable, switch to dial-up Internet, reduce your cell phone minutes to the minimum and cut out text messaging (changing your number if you have to), stop eating out, stop driving far for useless pleasures, and quit drinking and smoking if possible.

2. Increase the amount of time you spend working. If your boss won’t give you more work, get a second job. I know one friend who earns over $80,000 per year at his primary job, but works two more jobs for less than $14 per hour each. He is deep in debt.

3. Make savings a priority over paying off debt if you don’t have a nest egg. Having some money in the bank now versus putting it all to paying off debt is required if you want to take some of the edge off of how you will survive a short term problem.

4. Consider selling assets you have and don’t need, even if you take a big loss. I find that getting rid of extraneous televisions, video game systems, and even books results in freeing up some of your time for a temporary second job. The number one reason why people seem to not want a second job when they’re cash poor is laziness. Take away the things you do that make you lazy, and you may find yourself driven to acquiring that second job.

Zion, IL
By A.B. Dada
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I’ve always loved working in the United States, but lately there is a great fear I hear about from other consultants, employees and business owners: will be enter a heavy recession?

The games that the Federal Reserve has played with money supply growth and interest rate mangling is leading us in the direction of a bad recession. Historically, recessions were staved off artificially with an increase in available credit and a lowering of interest rates to instill consumer confidence in spending. Easy money, at low price, gives people a reason to buy today and pay tomorrow. This cycle might push off small recessions, but the piper eventually has to be paid. As the dollar’s value is destroyed slowly over time, foreign competitors are able to produce goods cheaper than we can at home, which gives us more reason to buy foreign than locally. Manufacturing and industrial labor in the U.S. is dying faster than ever, and even health care services are being outsource to foreigners (MRIs being read by Indian doctors at a fraction of the price of local doctors, for example).

For me, the best thing to do is to present your services internationally, even at a discount rate over your local rate. If you value your time at $35 an hour here, you might only command $10 or $15 an hour internationally, but it builds your client base and your portfolio. I worked for a foreign company for close to 6 months at an 85% discount over my local rate, but I was able to build on that opportunity to get myself to a place where I can work internationally at a 40% haircut. Over time, as the dollar devalues, I believe I’ll find myself able to work at a profit over my local rate, only because of the falling value of the dollar versus the international currency I bill in. It may take 10 more years, but the progress is good.

The biggest step you have to take before presenting yourself internationally is to have good reason to work internationally. The first good reason to make an international submittal for your services is to have a good savings and a low debt. When you’re sitting on dollars in the bank (not invested, just savings or money market), you have to protect those dollars from inflationary concerns. Ridding yourself of debt makes those dollars even more valuable to protect against inflation. If we should see deflation (the falling of prices with the dollar being progressively more valuable), you’re in good shape as a saver because your dollars will grow in true value. But if we should see inflation, you have to protect yourself by finding what you can do to have a marketable product or service that is worth more over time, not less.

In an inflationary economy, you may see a 3-4% raise annual, but inflation might rob value by 5-10% or more annually, meaning your “raise” is really a pay cut versus what you can purchase. By providing services in an international currency, one that is rising in value versus the dollar, you will protect yourself from inflation by being paid in a currency that you can convert to dollars and secure your value by taking in more dollar-value than you can by selling your services, or products, locally.

People with strong English skills (grammar, spelling, communication, etc) are VERY marketable internationally. I’ve seen an increased demand for workers in the elite travel industry to communicate with elite Americans, English, South Africans and Europeans who primarily speak English. The job is mostly “home based” meaning you do most of your work on a PC and over the phone rather than in an office. It isn’t work I would particularly like doing, but the market is there — and growing.

I’ve also found a huge amount of work available to help translate products sold internationally into English. I contacted 45 eBay sellers who sell more than US$20,000 a month online to English speakers but use horrible English to explain their listing. 5 of the sellers contacted me back asking for help in redesigning their massacred English, at a rate that I would almost accept. For them, having their marketing and advertising material make sense to English readers is a HUGE benefit, that can increase their sales significantly. I also contacted a few foreign cell phone and electronics manufacturers who also had badly designed websites, marketing material and advertisements, and I was suprised at the 7-9% response I received showing interest in English translations.

Finding foreign employers is not an easy task, and requires a lot of time and investment to contact and follow through with interested parties, but the Internet makes this job easier. Contract work might be short lived, and at a significantly lower rate than you can find today, but you definitely will build a portofolio over time that increases your value especially to employers who will have a currency that is stronger than the dollar, meaning you are cheap to them, but they are profitable to you. Ignoring the international service market is a big mistake — we’re globalizing every day, and to miss this opportunity ahead can place you at the back of the pack, after all the intelligent consultants, service providers and laborers are already in the game and way ahead of the pack.

Sponsored Post:

GURNEE, IL

By A.B. Dada
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The Global Unanimocracy Network was accepted into a new advertising/review co-op called ReviewMe.com today, and I’m looking into it as a way to combine realistic reviews (of sites and products) as an additional income source for the network.

I’ve battled the debate as to how to produce an income that is equitable for the time I spend, but not be annoying to the visitors and regular readers. While I’ve been happy with Google’s AdSense and Text-Link-Ads’s system, I’ve always considered that the best profit is the information I get from people who share their opinions on the blog posts over at the Unanimocracy forums. Your views (agreements and disagreements) help format future opinions and help me challenge debates better — this is the best form of profit for the network. Yet every site also needs a financial income just to stay afloat, and I’ve looked at various ways to reduce the “spamminess” of our network. Things will be changing a lot in the coming year as the network ventures into the second year of writing.

Over the years, I have been paid often to review products and campaigns for various large and medium-sized corporations. My reviews have not always been positive, but it has helped manufacturers rewrite campaigns or redesign certain aspects of their products. The difficult task of being paid for reviews is one that has hounded the print media for years — can a paid reviewer be neutral? More often than not, the answer is no. Reviewers who give positive reviews often get rehired for future reviews: in the history of the printed tech journal, more than one journal has collapsed after it was found to be biased towards those who buy advertising.

This isn’t the case at the Global Unanimocracy Network. I prefer to give reviews as unbiased as possible — even if it means giving negative reviews and possibly losing the ability to get paid for future work from the same advertiser group. Yet I also feel that this gives the advertisers or manufacturers better insight into how their product or campaign will fair with the tech/nerd entrepreneur, a group that is growing in the States as people switch from hardware-oriented businesses to more service-oriented ones. My history has always revolved around community building online — my first venture was in building a large multi-node BBS back in the late 80s when I was a teenager. That was a huge success, and I was able to sell off the business for a good profit just before the Internet boom. My only mistake was not venturing into the ISP arena (mostly due to my parents talking me out of it).

In my late teens and early 20s, I spent a lot of time in various review groups helping to determine if a product or advertising campaign is worthy of the market it was penetrating. More often than not I reviewed products that were edgy or new to the industry (the Apple Newton, the first portable inkjet printer, the first line of inexpensive switching hubs, early LCD monitors, car stereos that went beyond the knob and the tape cassette, and portable business projectors, to list just a few). I know that some of my negative reviews were concerning enough that changes were made, and the cash that I was paid for reviewing these products often times didn’t cease because I made a negative review.

That being said, I also gave many positive reviews from the perspective of the self-employed entrepreneur. Many times a product may not get good penetration into the market for people who were “just” employees of a big machine, but I found ways to use the product or service within my own businesses. This usually gave the manufacturer a more vertical channel to sell or advertise in, and I know it made a difference as my reviewing income grew when my name was associated with that growing new market.

I’ll be trying ReviewMe.com in coming months to see if i can challenge the average boring review with one that gives some notably differences of opinion — both good and bad. I will definitely mention if a review I am doing is one procured through ReviewMe.com’s website, and I hope that other bloggers who read the Global Unanimocracy Network blogs regularly signs up their own blogs for the service (it only took 5 minutes) at ReviewMe.com. I’d also appreciate your own opinion on the reviews, and even the idea of ReviewMe.com, over at our discussion forum. This will give me better insight into whether or not I am being unbiased, as well as what you think of the product.

The idea behind ReviewMe.com is that advertisers can take advantage of the blogging community by offering their website or product for paid review by different blogs that cover their subject. Bloggers review the product on their blogs, and get paid from the advertiser for doing so. Of course this may seem to lead to biased posts, but since bloggers are required to tell their readers that it is a sponsored post, we will see how blog readers challenge biased posts in the comments sections in the future.

I’m excited to try something new — especially something that can expand the power of the blogosphere and balance the power of the mainstream media and talking heads. Maybe this will drive more readers here to start their own blogs!

Discuss this over at the enterpreneurship forum.

MILWAUKEE, WI

By A.B. Dada
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I’m really amazed with Skype — the quality tends to be terrible, the software is buggy, the delay over their VoIP to POTS network is significant. Yet the upside is that it not only works, but it tends to make me more productive — as well as my staff and my volunteers. I’m amazed that more small offices haven’t embraced Skype for their “on the go” consultants or sales staff.

My favorite thing about Skype is SkypeIn: the ability to receive phone calls from the POTS network. Not only can you get a phone number for around $2 a month, but you can get multiple phone numbers. Since I do business in various states AND countries, I can get a local number in every market I’m in for less than $20 a month — that’s 10 numbers. I can also pick the numbers I want so I can get something vanity and memorable. I snagged 312-HAT-HEAD for $2 a month (I’m known as the guy who always wears hats and beanies). All the numbers can point to the same Skype accounts.

The other thing I love about Skype is ability to forward all phone calls to a variety of other numbers. I can put my cell phone on that list, as well as the cell phones of employees that can take calls. If no one is at the main Skype PC, the call automatically rings all the other phones as well. Very cool feature.

I run Skype on my PDA at home — Skype’s PDA support is actually pretty decent, and it works great over WiFi. The latency isn’t terrible. It really makes life easier for me since I don’t have to keep my laptop near me all the time, I can just toss my PDA on the nightstand if I’m reading in bed (I get a lot of late night phone calls) or on the lamp stable in the reading room. With Skype logged in on my PDA, I can answer the calls just as quickly as if I was at a PC or if they were transfered to my cell phone.

I even have some customers who we transitioned to Skype at their desktop, so the ability to communicate quickly this way is really impressive. We skip the POTS system entirely, and our calls come through fairly clearly. If a customer of mine decides to go with Skype as a backup system, I usually supply them with a $10 USB phone (basically a speaker and a microphone shaped like a phone that plugs into the USB port) for free. That $10 invested is a huge return over the long-haul.

There are a lot of downsides to using Skype — it really isn’t perfect, and the lack of caller-ID when a call is forwarded to cell phones is a bit of a pain (we do some billing based on call logs in the cell phones). We also can’t use Skype to dial out (they’re offering free calls within the US and Canada) because they don’t pass caller ID information to who we call — no one answers “Caller Unknown” calls anymore, it seems.

Skype says it works over 3G/EDGE internet connections, but the latency is terrible (250 ms sometimes). They’re working on it, but since I can find open WiFi routers about 30% of the places I work, I don’t really care much for it. The fact that I can whip out my PDA, find a WiFi router, and receive calls without a phone line amazes me — and must frighten the telephony companies who still want to charge a flat rate or a per-minute rate.

If you run a small business, consider testing out Skype — especially for your most important customers and inter-employee communications. Give it a try and I’m sure you’ll be amazed at how much time (and money!) you save.

Discuss this article at the Be The Boss forum.

WAUKEGAN, IL

By A.B. Dada
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In a Slashdot article titled (Mis)Tracking Web Traffic, I made this post titled General traffic figures are useless.:

I’m not sure it matters. I advertise my own businesses on the web, and I accept advertising on my sites. I’ve sold numerous ads just for my site for repeat customers who realize I give them more than they pay out of supporting my site. I support some sites repeatedly because those sites make me a profit for what I invest.

If you’re a big company, you gauge your profits NOT on what others say but what you actually witness through numbers paid and profits made. If you don’t make a profit, the traffic reports mean NOTHING. If you make MORE profits than you were expecting, the traffic reports mean NOTHING.

Most advertisers already know this. If they’re complaining about false traffic statements, they’re not working hard enough. They basically are trying to automate something that still needs human intervention — for now.

Facebook and MySpace and YouTube are terrible places to advertise, in my experience. The visitors you get are completely worthless (in my businesses) because they don’t convert to sales. On the other hand, that whole “long tail” idea works for me — I advertise on the smallest blogs, the tiniest forums, the most niche communities, and those consumers thank me for supporting their communities by buying my products and services. I look at the traffic figures of the largest sites and realize “These numbers do not tell the truth about convertibility.”

My link below takes you to my sites, and some slashdot readers say I am a spamming troll. I’m not. MOST slashdot readers who come back to my sites already block my ads (as I request that they do!). I post my links for a different kind of profit — the profit of gained information my my readers and sharers, including those who oppose my views. The ads on my sites are for people who find me via search engines, who are looking for products, and who get those products from the advertisers. The advertisers who target me directly aren’t concerned that I only have an Alexa rank of 200,000-400,000 and a PageRank of 5-6. They care about my targetted market, people who are interested in what I talk about, and what my ads sell.

My advertisers (and readers) are also free to look at my site statistics (sitemeter is open on my sites). This tells them who is coming — google searches, not MySpace losers. This makes my sites more valuable to products that are in-line with what I “preach” daily.

General traffic figures are useless.

Discuss this article at the Be The Boss forum.

ARLINGTON HEIGHTS, IL

By A.B. Dada
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I helped two friends this summer who run very large companies — companies that have been grossing 8 figures annually each. Both are companies that grew slowly over many years, doing what they did best: meeting the current needs of their customer base, but learning new efficiencies to bring their cost-per-output down for everyone over time. When your gross figures rise, you’ll see them rise higher if you continue to make yourself more efficient and cheaper. That’s a simple fact in any economy where supply of your item or service keeps going up. Others will find ways to do it cheaper: there is no reason why you can not find ways to make yourself cheaper and reach more customers.

I came across a bunch of suppliers that competed with my friends’ businesses with that reasoning: they were smaller, or newer, or had deeper pockets for whatever reason. The reason why I was able to win the deals wasn’t because of size or age or financial capability — it was because I sold the companies based on a realistic evaluation of what the companies were able to do right now.

Pie in the sky. Pipe dreams. Best intentions. These are common factors in businesses looking to grow: finding the answer to “what can we do if we only had XYZ.” XYZ could mean more money, or more employees, or more machinery, or more profit to take risks with. It is also a common way that businesses sell themselves: we’ll be even better tomorrow! To me, its almost fraudulent because it is never the truth.

When we came up against competitors with flashier bids, we sealed the deal by selling the current business exactly as it is: stable, more efficient today than yesterday, able to prioritize tasks quickly when problems arise, and a realistic ideal to focus on today’s needs so that tomorrow’s emergencies will either be avoided, or handled properly by preparing for them today.

I see so many companies hurting because they want to take jobs at a minimal profit just to keep the doors open and the lights on. I see many employees of stable companies go off on their own because they can do something cheaper or faster or higher quality. What people seem to refuse to see is that today is much more important than tomorrow: put away the pies in the skies, empty your mind of the pipe dreams, and stop having the best intentions when the only intention to have is “what can I do to finish my responsibilities and then do them just a little better than expected?” If a job is due in 6 weeks, don’t try to finish it in 4 weeks at a 10% savings along with a 10% over-run. Finish it in 6 weeks at a 5% savings, or finish it in 5 weeks with no savings, or finish it in 6 weeks at the right price but make a little over-run for the customer. They’ll be pleased at the goals met: not at the gains. The gains are only important if EVERYTHING ELSE is done right.

When I win bids, I do it in the final meetings. I’m often asked why someone else can do the job cheaper: I’ll always answer that we focus on doing the job for what we bid it for, without trying to find sneaky ways to tack on additional charges later. My bids always show a list of what we’re not expecting to do: customers are pleased to see that we’re thinking about what we need to do the job right from day one, and making a list of what we can’t do for our price is impressive to them because they can see that we want to do it right, at the price we promised. I’m often asked why we can’t do a job quicker: I’ll always answer that we consider how efficient we are today, not how efficient we hope to be now that we have a new job and can hire more staff or buy better machinery. Customers are impressed because we focus on getting today done right so that tomorrow is just a continuation of today.

I find that selling who we are today, rather than who we want to be, is the most honest and realistic way to win jobs. I’m never the cheapest (actually, I’ve been the most expensive a few times). I’m not the fastest (but I do get the job done on time or a little earlier). I’m not the highest quality (I sell exactly what I can do so that expectations are met, rather than try to push the envelope and end up with a mass of problems to overcome). Meet expectations by setting those expectations based on what you CAN do — not what you COULD do.

Discuss this article at the entrereneurship forum.

I was talking to a long time friend and entrepreneur last night for hours over the change in the markets we chase. We’ve known each other for half my life, about 16 years, and we’ve both seen incredible profits and incredible losses over those times. His company is on the verge of falling apart, even though it has a strong calling in its market — business promotions.

His market has been cut up and spit out by deep discount web providers who can handle much more work in a much more efficient way — his personal attention and long term follow through don’t seem to be as valuable as they were a decade ago. Our conversation for many of those hours was mostly him telling me about what he thinks he needs to do to fix the downturn and save his business. My end of the conversation came in the last half hour, and I told him that he was wrong about his direction for saving his business.

He believed that he needed to keep innovating in order to reach new customers and grow his market, especially in the regions that his businesses exist (on the west and east coasts as well as in the midwest where be both live). He said that the reason why he wasn’t able to compete with the online service providers is because they were doing a better job of innovating, and he was focusing on the full service market rather than the up-and-coming market. He relied on a book he purchased in the last year, titled Dealing With Darwin: How Great Companies Innovate at Every Phase of Their Evolution, by Geoffrey A. Moore.

I’ve read Moore’s book, and I actually like a lot of what he has to say. The problem with Moore’s book and my friend’s business is that they’re covering two different subjects, in my opinion. Moore’s book is very successful at looking at the market of commodity goods: items that can be considered “daily use” items — computers, clothes, fast food, and the rest. My friend’s business is definitely not a commodity product, even if competition tries to offer it at commodity profit margins (slim to none).

I’m the founder of an innovation company, Deep Labs, which is a company that has to be an innovator since its market caters to other companies that require innovation. The likelihood of this market becoming a commodity-margin company is slim-to-nil: when your customers always innovate, you have to do the same. The risk taking at Deep Labs is incredibly high, but the rewards can be high as well. In the business promotion market, innovation is not as important as meeting expectation, and this is where my friend should focus his future.

When I explained to him that focusing only on innovation is too risky for the rewards he’d get, he asked me how I’d describe my solution for his market in just a few words. I told him that the most basic description is also the most in-depth one, too: downsell your solutions as time-savers and efficiency-increasers for his marketplace. Show them that what he does is not complicated or innovative in 90% of the work his firm will perform, but what differentiates his business from the online service providers is that he’s there to save his customer time while taking care of their promotional needs.

When I said those bold-faced words to him, I saw the light bulb go off in his head. Before I even had time to ask the question I was intending to ask, he answered it without a single word or prompting from me: “Is it possible that my customers are wasting time doing work they don’t have to when they deal with online service providers?” Are they cutting off their nose to spite their face? Are they wasting a few hours a week in order to save a few dollars, and how many hours a year would they save if they re-hired his firm over the online service providers?

I asked him if he ever went hours out of his way to save a few dollars on a high-end retail sale or for a coupon for a seemingly expensive item. He said he definitely did for a while, but he learned his lesson and stopped. This is a great example of a business trying to innovate (through savings promotions), but failing to focus on what their customers wanted: savings. Saving a few dollars but giving up hours to get that savings may end up costing the customers in the market more, and once they make that realization, they’ll likely not fall for the innovative promotion again. In his market, many of his customers, ex-customers and future customers are wasting hundreds of hours of year doing a job that he used to do — and they’re wasting those hours in order to save themselves a few hundred dollars.

This is one of those areas that many businesses fail to realize — and also fail to use as a selling point. My better half used to own a web design company for years that she let close up because she failed to compete properly with others in the market. Her service was top notch and her customers were always happy, but she had lost a few customers to incredibly cheap companies. Within a year of her closing up shop she started to get phone calls from her ex-clients who wanted to work with her again. I told her to take the contracts but raise her prices: the demand was back and the penalty was paid by those who tried to save a dime without realizing the long term costs to themselves. She didn’t want to get back into the market, already hurt by the few who didn’t see that businesses charge what they have to charge in order to provide the service that is expected by the customers.

My main job in all of my businesses is to be the innovator and the risk taker — but I would never do that unless I knew that I had the responsible follow-through employees or partners who could handle the other important side of any business. If you can save your customers time and money by providing your service cheaper and faster than they can do it themselves, you should never have to worry about the competition that only provides it cheaper. If you lose some customers to the cheapest competitors, always offer them that exit from your services but remind them that you’ll be available should their new service provider require that they invest more of their time in finishing the project. I’ve lost customers over the years, but very few of them have disappeared for good. I’m always surprised at the ones that come knocking on my door when they realize that cost-savings is not effective if they lose time over the deal.

Don’t innovate if you market is about saving people time and money. If someone else can save your customers as much time and money as you can, only then do you have to focus on innovating as the key element of your research and development in your market.

Discuss this article at the Be the Boss forum.

For those families with my political sites, I’m a fairly extreme capitalist of the anarchist variety — I believe in unrestricted markets because I feel that people won’t make transactions unless they see value in what they’re getting for what they’re giving. Sure, there are suckers in the world, maybe many, but I believe that all the laws and regulations that supposedly protect consumers do nothing of the sort — they just make it harder for the average Joe to start a business or grow one.

Lately I’ve been getting a lot of advice from what I call gentlefolk — I used to call them lefty treehuggers but it wasn’t the kindest label. These gentlefolk are all about living in what I consider a dreamworld — trying to make big corporations care more about the consumer than about their own bottomline, trying to force everyone to live 100% post-consumer-recycled, trying to only buy organic or fairtrade or the rest. It is very annoying to me that these “gentle” people want to do all of this by way of force — let’s create laws to force people to be “good” rather than be personally involved. For me, my own “greed” has helped more people around me (employees, customers, suppliers, family, friends and those I don’t even know) because I know that treating someone well means a better relationship in the future. Those who run cut-throat businesses that harm more than help their customers or their market are quickly destroyed — bankruptcy comes very quickly if you don’t know what your customers want and how they want it. The market corrects itself for bad companies and individuals!

The advice I’m getting from the gentlefolk in my life is often wrong to the extreme — they just don’t understand that running a business is all about watching your own bottomline today and in the future. If you can’t keep the cash flowing, you won’t be around. That is pretty simple. For most businesses, keeping the cash flowing means keeping your customers happy so that they return for more and so that they’ll tell their friends so your market grows. It is such a “duh” statement that I always get frustrated when the gentlefolk can’t seem to graps the basics.

With the explosion of blogs and OpEd sites, I’m seeing the gentlefolk advice market grow every day. Entrepreneurs and people with absolutely no understanding of the business cycle are starting to be read — in huge amounts. Their opinions are starting to be regarded as fact, and I’m amazed at how often a pro-business attitude is shut down by the masses who think that wanting a profit is a bad thing. Here’s a little secret: profits are the only way to gauge if a company is successful because it means that others are willing to give up their cash for a product or service that saves them more time and money than just sitting on that money. Profits are also the only way for a company to work hard to develop new and better technologies and ways to save themselves more money, which then allows prices to fall as these new efficiencies and market competition butt heads to drive prices lower.

One such site that seems to offer gentlefolk advice for a business failure is Next Generation. They had an article that was linked to on slashdot yesterday titled Five That Fell.¹ The article is about 5 gaming companies that are now gone, no longer in business. While the article has a great topic and the coverage is spot-on in terms of which 5 gaming companies are missed the most (in my opinion), they’re completely wrong in how they’re covering the failures. Instead of realizing why the companies are gone, they use business terms that seem to portray the market itself as evil and wrong.

Here’s one line from their first part of the multipage article:

As it happens, in 1989 – the year of Tetris – Time-Life bought out Warner, forming the first of our modern way-too-big media conglomerates.

Way-too-big media conglomerate? This sentence reads as a negative, but we have to look at the reality in the market. The company that was bought out was Atari, a company that repeatedly made horrible business choices. They didn’t adapt, they didn’t modernize, and they didn’t give the market what it wanted. In the beginning days of the video game market, Atari was the Microsoft of its day — the gentlefolk would have been crying about how Atari was a big-bad-monopoly if they had a forum to complain back then. The way-too-big media conglomerate that bought Atari did those employees a favor; no one else really wanted to take a financial risk on a company that had no real hope of rewarding them. If it wasn’t for Time-Warner, the company would have been gone. Why didn’t the gentlefolk who wrote the article just offer their normally favorite solution for a failing business — the employee buyout? Maybe it is because Atari was owned by their employees since 1986 and the employees had no business sense for 8 years — leading to the buyout and saving of the business why “big-media-conglomerate” Time-Warner.

Their next article segment also slaughters any hope that a business-savvy writer was speaking:

The first game was such a success that Origin nearly went bankrupt acquiring enough floppy discs to meet demand.

If a company has a product that is under huge demand, there is absolutely zero chance of bankruptcy in the proper business cycle. Why? Because the only way demand can be considered a successful demand is if the product is being supplied at a profit! If you’re selling items below cost and people are buying the item only at the discount price, you’re really not seeing a demand for the product at its true market price. Low prices can create a real demand for a cheap product, but in no way can you consider this a feasible demand — it would never hold up over time. There are companies that use loss leaders in order to drive traffic to their business in hopes of selling a profitable product in addition to the loss leader, but again we can’t look at the product by iteself as a financial success. If you’re selling your item at a loss but you’re gaining profitable traffic from it, you can look at the demand for that item as a success in terms of marketing, but the item itself is definitely not a success on your bottomline. If you go bankrupt because of a high demand for a loss leader, you’re not looking at the big picture.

The same article continues:

Until money came into the picture, Origin was almost a dream come true – for Garriott, for his employees, and for the game industry as a whole.

What are they talking about, a dream come true before money was involved? How is it a dream come true as a business if there is no money? The open source “work for nothing” market is pretty amazing, but it is no different than shareware was 20 years ago — these are hobbyists, not business people. You have yet to see any “work for cheap” companies succeed over the long run, and Origin was definitely not a success before money came into the picture. On very rare occasions you’ll see a shareware product explode in popularity, but almost always you’ll find that the hobbyist can’t maintain good service and support unless they focus on the bottomline — making sure that people are willing to compensate you for your time.

I’ll make a big forecast here — open source and free software won’t make a dent in the proprietary and costly software market. I use Wordpress, which is free, but none of my customers that hire me to support their blogs use it. They don’t want free software with zero on-time support. I wouldn’t want it for my company if my income relied on it. Companies that want to succeed pay for what they use because they want support if things go wrong. You can hope and think that the business world would change, but it won’t. I’ve watched for 20 years how businesses repeatedly will “over” pay for an item that they could get free or cheaper from another supplier, but the choice ends up making sense when there is a crisis. Origin would never have made the games they made, in the long run, if they were a hobbyist co-op that made games. How would the hobbyists spend the 60-100 hours a week each perfecting the games if they couldn’t eat? Money is not the cause of Origin’s failure — it was the lack of money from people who were sick of waiting for a game that continuously promised but never released on time. EA attempted to set deadlines on the programmers, but this ended up causing EA to release games that were buggy and imperfect. Guess what? That means that the games were never meant to be — the programmers were not able to create a product that the market demanded, so the programmers were out of a job. Simple supply and demand here, nothing more.

The article portion on Origin finishes with this:

Our industry has switched leaders from a man who dresses up in a cape and crown to men with shiny shoes who “do lunch”. If videogames today seem like they’re lacking something, perhaps there’s good reason.

I really can’t even comment on this ridiculous statement. When a market of customers wants something, they want a product that works, in the right time frame and at the right price. Origin under the “man in a cape and crown” could not meet the market’s needs. Origin under men who “do lunch” could not meet the market’s needs. There is no conspiracy here, there were just a bunch of programmers who had no business sense — they tried to create a market that would never exist no matter what they did. Markets are created ONLY when the 3 demands are met TOGETHER — timeframe, price and quality. If any are missing, the market may never exist.

The next part of the article focuses on Sierra, a company that made games that occupied much of your early teens:

They started the fads, they grew fenced in by them, then they got blinded by their own self-importance and snookered by the hype of the mid-’90s. Even so, it’s a real shame they never found salvation.

This is actually very good business sense for once. Many companies believe that the market caters to them, not the other way around (which is the reality). There are no monopolies (not Microsoft, not Comcast, no one) that exist for long in any business market — except when they’re mandated by law (like your electric company or your water company). If a market is not mandated by law to only be one company, other companies will constantly bite and tear at the biggest company’s market. Eventually there is a shift. Sierra failed because they kept doing what they were good at during one small period of the gaming market’s existence. This is proof that you should always be developing for the future markets — no company can stay the same and continue to exist. Not even Microsoft or Google. You either grow or you shrink, even if your income seems to stay the same over a long period of time.

I’ll wrap things up with one last line in the article:

Everyone fired; years of hard work up to the highest bidder.

It happens. The reason that everyone gets fired is because a business had no market to sell their items to. We usually call it “junk” when a company can’t release something that anyone wants. In this case, the market corrects by making sure that no one gets paid, and then people get fired. Years of hard work are meaningless if you aren’t making something productive and profitable. Why don’t we all just move bricks around a yard for 5 years and complain about it? These programmers were the equivalent of people moving bricks around for no reason - they wasted their time, and the market gave them exactly what they were worth: nothing.

In the end, the article lists 5 companies that all made big mistakes of trying to chase a market that didn’t exist. I could sit here and start charging $500 for every article I publish, but no one would pay it. That means the market doesn’t exist. We see business failures every day, but if we let gentlefolk tell us why the businesses failed, we’ll never learn the realities of the business cycle. The business cycle is met only if the following items magically cross paths:

1. An item is made at the time it is needed
2. An item is priced in such way that a buyer of the item sees a money or time savings from the item’s use
3. An item is made to last as long as the buyer needs it, and the item works as the buyer expects it to

In the gaming market or any entertainment market, we buy products in order to save ourselves the time and money we’d have to spend in order to create our own entertainment. I’ve been called a funny guy, but telling jokes to myself is a huge waste of time. I would rather pay US$50 for a game that is available when I want it if the game can entertain me and not aggravate me. None of these companies met that magical cycle that we call success. All were failures because they wasted their time without offering value for it to others. Don’t let the gentlefolk fool you into believing anything else.

Discuss this article at the Be The Boss forum.

NewsFactor Magazine had an interesting article over the 4 day weekend titled Does Anyone Get Rich on eBay?¹ The article goes into great depth on the money that has been made on eBay, the mega-auction site, and also gives some examples on who is actually making the millions that seem to be sold by every “make it rich” guide on the Internet. I believe that the best money made online seems to be to sell make-it-rich guides to suckers (which is why I never charge for my published information and only charge on a face-to-face basis).

I’ve played the eBay game for years — sometimes making very good money, and other times losing my shirt. In my experience, the best money made is in unique and custom items sold to a hungry clique or fanbase of buyers. For about a year I helped one of my employees sell a few thousand sets of custom “punk pins” — those unbiquitous pins that alternative music fans seem to stick everywhere on their clothes. My young employee made about 1000 pins a week that he was selling at various local music shows and at school. At 20 cents profit each he was bringing in about US$200 per week in profit, but he was spending almost 50 hours a week making pins — not a very good income at US$4 per hour. Once he took it to the web, though, he made big strides in selling at a bigger margin, and was seeing US$30 or so an hour average. Then the competition came in and his market collapsed, but he covered his end for over a year before it fell apart. His market was small initially, but the suppliers were smaller. Once it became a big buying market, the suppliers grew in number and everyone lost out except the few companies that specialized in making the trinkets.

My favorite way to make money on eBay was always to help retailers and wholesalers sell their overstock. For years this was an hourly gig for me — I’d send cold-call letters to hundreds of local retailers and wholesalers offering to help move their overstock for a flat hourly fee. For almost 2 years I could count on getting at least 5 calls a week from people holding too much inventory and wanting to move things. These customers would see a net loss on the goods they sold, but they sold them in order to recoup from old stock so that they could sell new stock to their retail customers. Paying me hourly meant they didn’t have to navigate the market. My secret was finding which items in the same market sold the best and taking those item profiles and making them better. It isn’t always how well written your description is, but I found that more pictures and a cheaper starting price always brought a better selling price in the end. Starting a US$500 lawnmower at US$0.99 often times sold better than starting it at US$100. Yet even this market has quickly been swallowed up by full-time retail stores that focus on helping others liquidate their overstock and even clutter at home. Their commissions are high — 30% of the selling price — and they generally don’t even allow any sort of reserve to be made (meaning your US$500 lawnmower might sell for US$30), but people are more willing to trust a retail reseller than a consulting one, it seems. I left that market over 18 months ago and won’t look back.

When my friends and relatives ask me about eBay today, I tell them to forget about using it to make a consistent profit. There are too many people out there working way too hard for very little money — the wonder of competition in a free market. This is good for buyers and terrible for sellers — I don’t think the average reader will want to invest the thousands of hours of labor in order to make a few dollars an hour during that time period. The outlook for eBay is more and more foreign and local competition driving profits down — again a great thing for the consumer. The eBay market isn’t saturated, but it is much more work to try to find a profitable direction, and the only winner is he that is the hardest working with the most luck — not the greatest market to be in.

Another thing that many eBay experts fail to realize is the reality behind much of where eBay is heading — the insider game. I know of a few warehouse employees and managers from large distribution networks that have started their own eBay business — they get to buy well below wholesale cost, and get to ship right from their office. One of my own retail businesses a few years ago was shut down by someone selling at 30% below our cost on eBay, and some meticulous spying on my part made the discovery that my supplier’s warehouse manager was doing it. Over time, expect distributors and manufacturers to go to eBay directly and avoid the mall, the retailers and the small online sellers. Why do they even need the old system when the new system gives them more power and more profits?

I don’t believe eBay is a lost cause, but I think it is one area that the new entrepreneur should avoid. You need quite a bit of cash, you need a ton of time and you need a very good supply of inventory just to build your base foundation. I’d skip it and focus locally on making ends meet before dreaming of untold quick millions that only a lucky and hard working few will ever see.

Discuss this article at the Be The Boss forum.