Ciarnan Lee sent me over a clip of a presentation by David Hanmeir Hanson. David (or DHH as the cool kids call him) has a wonderful approach to making business online. Revolutionary.
David keeps it real and explains how all you really need is the first million to keep yourself happy. Interestingly – he also professes to just 2 hours of productivity each day. For someone who generates about $450k a month from one of his products alone – that is amazing productivity. It also highlights something of an elephant in the room. Concentrating that hard for 8 hours a day is neigh on impossible. You can do it for a bit – but keeping on track is really difficult. His solution? Don’t try. Focus on results and budget your time. Don’t try to fill 8 hours. Just work for 2 and head home for the rest.
Who is not in favour of automated income. Much like motherhood and apple pie – it has an universal charm. Automating your income however is not nearly as straightforward as you may think. There are three headings you have to consider. One tricky, one easy and one which is damn difficult. The first is:
Automating value delivery: This might sound intimidating. It is really just code for ‘giving your customers what they want’. An ebook author is delivering information. A web-app developer is providing a service. Websites and information products are a great way of delivering value in this way.
Automating administration: Another code. This time around I mean – collecting the money and doing your taxes. Much as I’ve considered various approaches to justifying not handing over VAT reciepts – there is no way around it. If you are going to be the governments tax collector – it is your job to have it done as efficiently as possible. This means that your payment system should be able to pull out reports for your accountant in a format they can deal with. Another clump of effort needs to go into providing good financial ‘real time’ information. Dependant on what type of service you provide – the ability to demonstrate how well the business is doing in real time will really help when its time to sell up shop. Believe me – you will want to sell up shop – so start with the end in mind on this front.
Automating sales: This is the kicker. Achieving step one and two is easy peasy compared to finding an automated sales channel. There are of course plenty out there. “Google advertising” is the popular refrain of teams of eager young (and old) entrepreneurs. You need customers to find you in a predictable manner without you haveing to turn into a used car salesman. Selling an online service can me far, far and I mean far more time consuming that putting it together in the first place. Each hour you spend selling gets divided into your total returns. It is very easy to end up working for less that you’d get at your local Supermacs in no time flat.
I just had a phone conversation with one of the attendees at our last Automated Income Mastermind session. We were chatting about how the session went and we were bemoaning the lack of ‘decent’ sales people. We have all heard of the proverbial smooth tongued flash harry that could sell ice to an eskimo and finding one for your business is just about as hard. For a start – great sales people are in great demand and they will ultimately only pick your company if they feel they can make the most commission with the least amount of effort. This puts you up against the biggest hitters in business. From phone operators to concrete suppliers – everyone wants these guys. As someone who struggles with selling myself – this is one reason why I’m attracted to the world of automating income. You see – an good automated income business doesn’t just collect money automatically – it collects customers automatically. Easier said than done. I’m not sure if there is any business which really fits this bill. There are however plenty of tips for building an automated pipeline. Here are some of my tips on how to build one.
Create Information Products: Ebooks and cds are looked for by their very nature. Someone with a problem will sometimes head to the web to see if they can find a solution for it. If you can manage to find the sweet spot between demand and your expertise – you are on to a winner. Once you have created a successful information product, fed by a steady feed of visitors, your product can continue to be bought ad-infinitum, or at least as long as your information stays current. One of the big mistakes made by authors who do author books is to focus on a topic which may prove topical at the time but soon loses favour. Recently while listening to The Java Posse, I heard Ed Burns bemoan the short life cycle of his first book which was focused on a particular type of web technology that had since gone by the wayside. His second title was far more long-lived and instead offered tips on how to become a super-star programmer in your career. I’m guessing that he should still be raking in the cash for years to come no matter how technology changes.
Scale is your friend – price low. The fantastic thing about the web is – you can offer at scale and because your offering doesn’t consume your time – you can afford to apportion it out in little pieces for peanuts. In a conversation with Darina Loakman last week she told me how one email subscription list she had subscribed to had changed it price from 10 dollars to 20 and back to 10 again in the space of a month. The falloff rate from charing the 20 dollar fee was such that the owner was better off setting the price back to 10. This tells me something very interesting. If you can price your product under 10 euro on a subscription basis – it falls under the “I’ll give it a go” bracket of expenditure. At this price point you don’t need a super slick sales guy to call around and show you the roaps. You would rather they did not waste your time. If you can see enough value – blow the tenner and if it doesn’t work out – just unsubscribe the following week. Its a modified puppy dog close for the 21st century.
Keep your proposition simple. At the risk of repeating myself, I can’t emphasise how important it is to keep the benefit simple. It has to be clear as day in the first 10 words or you had better go start looking for that sales guy. In a world where attention is the real currency we trade in – you need to have a super simple proposition which gets you to a buying decision by the end of the first 10 words. Piehole “lets advertising copywriters find actors for their radio ads. We charge actors to be on the site.”. Thats it. If you are an actor – you need to know the price. (Admittedly that is 15 words but we’re getting there with it).
Tele-sell: Once you have a simple proposition good value – you are now in a position to be a bit more aggressive with your channels. Most people still don’t source most of what they need on line. This is why telesales is a fantastic mechanism for pushing your message directly to the customer. 4 well scripted sales calls can bag a customer. They can use the web to look at the offering and if the price is right – you don’t need to be flash harry to close the deal. All you need is a good telesales team – which are available on tap.
Niche: If you are in a niche and you really do understand the problems being experienced by customers – you are in a great position to identify what you would pay for the service. There doesn’t need to be a convoluted sales routine. Think of the services we consume online without ever talking to a soul. Tickets, books, cds, music, DVD rentals. They all have a simple proposition (entertainment) for a reasonable cost (10 – 100 euro). I know what I’m going to get out of the box and there isn’t too much to it.
We are in the middle of Tim Ferris’ 4 hour work week right now. Tim puts a lot of emphasis on trying out some mini-retirements before you commit to the real thing. He has a good point. Why work for 40 odd years straight so that you can ‘do nothing’ when doing nothing might drive you crazy. Rather try retirement out for size before you get there. He talks about renting flash cars and buying the stuff you want on HP. Not what your average financial guru would proclaim – especially if that financial guru is hawking a pension product.
The book has us thinking though. Right now – we could up sticks and move to a lower cost economy and get by just fine thanks very much. In particular we looked at moving to a little known town in the Eastern Cape of South Africa. Priscilla’s folks are there and we could manage to live from the fruits of our online en devour there. From this perspective – it made me realise in a way we are already financially free. We can afford to retire. Its just a question of whether or not we want to give up the life-style we enjoy right now. In a way -our job now is to increase the number of places in the world we could retire in. Right now we’re limited to some fairly remote – but not at all unattractive options. The Finfacts cost of living index gives you a feel for what options are on the cards. If your monthly financial target is 5k / month – you can use the index to figure out what that translates to in other parts of the world. For example, 3k a month in Dublin translates to 2.5k in Algeria.
There isn’t much that impresses as much as someone casually dropping references into their conversation such as ‘in my first book … blah blah blah’. The thought of countless hours alone in front of a PC – banging away on the keyboard is daunting and anyone who manages to do it gets instant kudos in my book. Becoming an author is not quiet what it used to be however. The great unwashed have been blogging for years now. The recently held Irish Blog Awards was populated by a wide range of people from all walks of life. All of whome could confidently consider themselves to be authors.
Similarly – writing a book – or ebook – doesn’t need to be the chore it once was. While I was preparing for the first automated income mastermind session I realised it at first hand. I had trecked off to google and typed in ‘how to run an automated income’. First up in the list came Passion 4 Business – and an ebook on exactly the material I was looking for. The initial landing page contained some outline information and tips which were useful enough. Crucially however – there were one or two tips which were held back – including such fascinating topics such as ‘how to price your mastermind’ and ‘how to resolve conflicts’. “Conflicts” – I hadn’t even thought there might be any. I shelled out the $19 dollars or so for the book and bought the book.
Now is where things get interesting. The resultant ebook was 22, fairly sparse, pages long – six of which were contents tables, bios and other superflous bits of information. Did I feel hard done by? Not at all. The advice offered wasn’t anything that I would have not copped on to myself but it was comforting to realise that I had at least not forgotten anything major. It made me realise that I was happy to pay 20 dollars for a little peace of mind. Compare that to the relative value of a book in a traditional book store: I would expect a hard copy book to contain at least 200 pages. Not so online. A hard copy book would see about 5% of the cover price go to the author. Not so online. Instead 100% goes to the author. I would expect the hardcopy book to have professional artwork etc. Not so online. In a way – for whatever reason – our expectations are just different when it comes to buying ebooks . This is great news for anyone who feels like they have something to publish – but don’t want to spend years of they life typing it all up.
The second fully fledged automated income session convened last night. The format was less school-room like this time around and there was more opportunity to learn from people in the room. In particular, Simona Rusnakova from 3R Sales and Marketing presented on how to write an ebook. While I had bought the odd ebook online – it wasn’t something I knew a whole lot about but it set more than a few cogs whirling away in my head. In particular – it is something we will kick off in relation to the piehole project over the next six months.
