I have my goals and you have yours. But unless your goal is to be a monk, then you are going to need money to make it happen. Money isn’t everything, but it enables everything.
Of all the things money can buy, the most valuable is time. Merely trading your hours for a wage, working for someone else, and doing something that you aren’t excited about, is a bad deal all around.
It prevents you from full immersion into more meaningful endeavors that call to your interest and passion… bigger things that could potentially lead you to great fortune and perfect happiness.
Financial independence means freeing your time and head-space from monotonous money-getting to support your basic living expenses. It doesn’t mean you stop working or earning. It just means that you do the things you want to do when you want to do them.
The best way to be truly independent is to be an entrepreneur and start a business.
Millennials are quite obsessed with the idea of a ‘start-up’ business. Everywhere I look these days are trendy little apps with cutesy little names.
The consensus amongst the start-up crowd is that in order to be financially successful, an entrepreneur has to come up with a remarkable idea, and create something so spectacular that it ‘disrupts’ industries and ‘changes the world’.
While I agree that creating a business that is meaningful and interesting is better than creating one that is trivial and boring, an aspiring entrepreneur would do best to get his ambitions straight before over-complicating things.
Do you want to create a cool company with a snazzy brand and lots of employees?
Or do you want to build a simple lifestyle business that you can automate while you work on something else?
Do you want a company to define your life’s mission?
Or do you just want a money machine to support your ideal lifestyle and hobbies?
Are you going for that one BIG WIN and cashing out?
Or are you trying to build something small and sustainable that will pay out for years?
Narrow your focus by defining your goals
The big obstacle of entrepreneurship is not a scarcity of good ideas, but rather an overabundance of them. There are so many niches and angles to play, that we easily get lost in analysis paralysis… wasting our time reading volumes and contemplating different hypothetical courses of action.
Endless research and planning is a crafty way of avoiding hard work. Eventually, one has to roll up his sleeves, get out there and try to make a sale.
If you want to learn to swim, no frame of mind on dry-land is going to help you. You have to get in the water and figure it out.
If we can define our goals more specifically than ‘quit my day job’ or ‘get rich’, then we can limit our options and make the selection process easier in deciding which business to execute.
For example, say these are my goals:
- Freedom from the traditional workday and commute to an office.
- Most of my daily/weekly time free to make art and climb mountains.
- Flexibility to work wherever and whenever I want.
From those three points, I know that my business must fill the following criteria:
- Internet based. Can be fully operated from a laptop computer.
- 80%+ of business functions can be automated or outsourced. Once the infrastructure is in place and target revenue is steady (i.e. shipping, fulfillment, customer service etc.)
- Cannot be a consulting or service-based business. As that requires a revolving time commitment for income to be sustained.
- Must generate $5,000 / month in profit. Hypothetical lifestyle expense per month; could be split up into two small businesses generating $2,500 each, or five micro-businesses generating $1,000 each etc.
Now, to further narrow our idea search, we take a cue from Tim Ferris’ seminal work the 4HWW where he describes the ideal traits of a lifestyle business (paraphrased and altered from memory):
- Product must be priced between $20 and $200. Generally speaking, above and below this threshold you are dealing with a high volume of customer issues. Issues that will either cost you time (answering calls and e-mails), or money in your virtual assistants clocking long hours on your debit.
- Market for product can be tested for less than $500. The most critical part of executing a business idea is to test the market for viability BEFORE you actually manufacture the product. Read that again. If we cannot test the market on a budget, we risk losing a lot of capital trying to prove the viability of bad ideas.
- Product is either light-weight or digital. Shipping and freight costs will eat your profit alive if your product is heavy. Better if it be digital (i.e. information product, software etc.) or, if a physical product, be as light-weight as possible.
- Product cannot be mass-market or easily replicable. Lack of differentiation is probably #2 on the list of business killers after #1 – lack of sales. Long-tail niches is where you need to find your customers. If you are trying to compete with Wal-Mart and Costco in selling kitchen gadgets or electronics, you are setting yourself up for failure.
- Product should be simple. When people see the product, they should get it right away and not have to ask a lot of questions regarding it’s usefulness.
There now, I’ve limited my options for starting a lifestyle business to a handful of general parameters. I don’t have a computer science knowledge to program apps and such, so what are my basic options?
- Invent a new physical product and have it manufactured in China.
- Invent an improvement or unique accessory for an existing product that has proven market demand (i.e. selfie stick).
- Licensing an idea with a provisional patent, and have the manufacturer do everything while I collect royalties.
- Create an informational product on a niche topic that is useful and proven high interest (i.e. How To Save Money at Disney World E-book). Blogging is also an option, if you can make yourself an authority.
- Affiliate marketing of niche products made by others for a cut of their sales profit. Alternatively, SEO ranking a website for a key-phrase reaching a niche market, and then renting or selling it to companies targeting that customer profile. Or creating a leads list from a landing page on said website and selling it to interested parties.
There are other clever ideas that fit the parameters above I am sure, but these are the most obvious ones that are tried and true for a business that is high cash-flow and requires a low renewing time-investment.
Probably the #1 reason that want-a-preneurs never become entrepreneurs, is that they get hung up on having a ‘big idea’.
The truth is that an idea doesn’t have to be ‘big’ to make money. It is actually preferable that it be small and simple, if we are going to make a lifestyle business out of it. We want to scale and grow revenue quickly, so the less time and money we have to invest in product development in the onset, the better off we’ll be.
All that matters is that our idea is confirmed by market trends and that we are able to compete.
If we can confirm that, then success is only a matter of proper execution.
When brainstorming ideas, a few key mind-sets have proven to be most fruitful for entrepreneurs:
- Solving a real problem.
Think about stuff that annoys you during the day, or stuff that seems to take way more time and effort than it should. What is something that everyone complains about? What do you see around you that is popular, but could be done better?
- Saving people money or cutting costs for business.
Think about things that you feel guilty or annoyed spending money on, because they are overpriced or require a distasteful financial commitment. What personal finance hacks have you used to save money? Is there a physical or informational product that you can create to eliminate or reduce a recurring cost that effects many consumers or businesses?
- Expensive hobbies.
If you’ve ever picked up a boating, golfing or hunting magazine, you may have noticed the galaxy of accessory products that fill the ad space in-between the articles. People who are obsessed with a hobby will spend big $$$ on all kinds of knick-knacks to make their hobby experience more enjoyable. For obvious reasons, the more expensive the hobby is, the more potential there is for profit.
4. Lead or sales generation for businesses.
Marketing, driving traffic and lead generation is extremely valuable to businesses if you can deliver results. Other business owners will cut you a generous share of the profits if you can drive sales for them.
- Wealth, Health and Relationships.
Although these markets are highly-competitive and saturated with junk, people spend gazillions of dollars every year on products and information relating to these topics. They are evergreen and will always welcome a new angle.
Investigating The Market
Brainstorming new ideas requires nothing but a pad of paper and a bic-pen. But to be a little more intentional about it, we can go to the source and actually look at what is selling today. Three ways to do this:
- Amazon bestsellers. Amazon publishes a list of their bestselling items in every category and sub-category you can imagine. You can study the list for free, but there are also paid apps like Jungle Scout and AMZ Tracker that make product research a breeze, and offer a bit more insight into trends.
You can also use Amazon to see what competition is like for different products by looking at the reviews. If you see three or more products on the first search page with hundreds of 4 ½ star+ reviews each, you know it may be difficult to compete in that niche.
- If you are registered with Ebay, you can see a list of recently completed transaction. You can see what is selling in different niches and where bids are at for products. Notice trends or hot topics?
- Search trends. Using tools like SEMRush, Google Keyword Planner and Google Trends, you can look at what frequencies people are searching for products or questions relating to problems they are having. Then, you can see what pages are ranking for those searches. Are they polished and current? Are they selling anything? Are people finding solutions to their problems and answers to their questions when they search? What does the market for those products look like from search perspective?
- Niche magazines. You can call a magazine relating to an expensive hobby and tell them that you are thinking of advertising. Request a stack of back-issues and observe which items are renewing their ads year-over-year. If they are buying new ads every year, then it probably means they are making sales. Can you create a similar product that has a significant differentiation?
Testing The Business
To be absolutely sure that our product has demand in the market, and that we are able to compete in that market, we are going to sell it before we actually make it. Read that again.
Before we dedicate any time and resources to development, manufacturing, logistics etc., we are going to market and take customers through the entire sales process up until the point where we ask for their credit card number.
This is a critical first step, because asking someone if they are interested and if they would buy a product is different than asking for their money.
We can simultaneously A/B test different ads, sales pages and calls to actions to see what (if anything) is working best.
How do we do this?
Run a Google Adword and/or Facebook ad campaign.
- A $500 ad campaign should give you a good enough sample size.
- Run two different ads, each with the message and visual tweaked.
- Have the ad click-through reach a POLISHED landing page with a FAQ, company info and a well-written sales letter.
- Have the button at the bottom of the sales letter reach an order form for basic contact information – name, e-mail etc.
- Have a button at the bottom of that form say something like ‘click here to enter billing info’
- Have the last page have a nice message something like: ‘sorry, we are backlogged with our manufacturer – we will contact you when this product is available’
- Track everything using app tools: how many people clicked through to each page.
- If most people clicked through the ad and then bounced, your sales letter needs work.
- Anyone who clicked through to the last page, count as a sale.
- This should give you an approximation of how hot the market is for your product and whether it is worth pursuing.
If you’ve spent many hours researching the market and have thoroughly tested the viability of your product idea, then all you have to do now is execute.
Make a prototype and find a manufacturer, write your e-book, or make your instructional video…
Take care to make it well, but don’t obsess to make it perfect. You’ll have plenty of time to make improvements when you are up and running.
Also, don’t get hung up on perfecting your logistics to save you money and time. Again – do that stuff later. You cannot start to automate duties or stock inventory until your business is humming.
And for that humming sound to be heard, you’ll have to be individually addressing issues that come up every day… until you can predict and resolve those regular issues quite easily.
Instead – just start making real sales as soon as possible.
Get the revenue flowing so you can observe the weaknesses in your business.
If your testing was done accurately, sales should happen right away. Use Google and Facebook ads to start… then, you can expand your marketing to other channels and get creative.
There are millions of tools on the internet to help make your business fly. But none of them are worth a damn if the demand isn’t there.
Take away: Don’t spend time developing a product or building a business, and then go to find your buyer in the market. Do the opposite. Find the buyers first, and create your business around their market demand.
The rest is up to you…