Wealth Building

When I first decided to start my own business a few years ago I was pretty much broke. I was a moderately good painter and writer, but I had never done anything very remarkable.

I am happy to say things have changed in some very big ways. The spark first started when I helped a stranger out. A quick thank you note the next saying my suggestion had already made him $100. Thats when I realised where my future would be.

Here are a few of the critical lessons I’ve learned, and I think you should too:

1. Take your business seriously. Scrap the dreams of making six figures working an hour a day 5 days a week. That day can come, but until then, set your goals and work, sleep, work until they happen. Everything else takes a back seat. A perfect quote from Quadzilla — “You’re in the right industry. You’re in it at the right time. You’re in it while search is still in its infancy.” Don’t pass up on the biggest opportunity of generations because your school guidance counselor says this isn’t real.

2. Read between the lines, but don’t read into them. In other words, try to figure out what is really there, but don’t fantasize things that aren’t really there. In your mind you want an accurate and functioning image of how all the other companies in your industry (and outside of it) function and make their profits.

3. Test, test, and test some more. My first 3 businesses were flops. The next few were pretty mediocre. I’ve tested different industries, business partners, monetization methods and so on. The more you test the more you understand what works and what doesn’t. Sometimes you discover those things that didn’t work, actually work really well, you just had a few things wrong with the technical implementation. If you insist on believing its luck, then its the testing which tips the odds in your favor.

4. Scale up and scale out. The difference between the guy making $70,000 a year and the guy making $7,000,000 a year is scale. Additionally you can stretch your knowledge into different markets to magnify your profits through redundant systems.

5. Read a lot, but more importantly test what you read. Warren Buffet likes to read, but I’m guessing Rich Dad Poor Dad isn’t on his bedstand. All of these marketing business self-help e-book, seminars, and so on are great — once. Too many people are addicted to them and they never get anywhere. This leads into number 6.

6. Diversify your knowledge base. Contacts are critical. Many of those 20 page sales-letter people are have created a closed sub-culture. Its asphyxiating your future by being around them all day. Go to conferences for unrelated industries, network with entrepreneurs in NYC, find out what businesses are doing in the Southern hemisphere, talk to outsourced workers in Manila. Instead of reading just Business 2.0, go pick up a copy of the Economist. You can make a damn good living just knowing the right people.

7. You have to like doing it. If you hate it, you look for reasons not to work rather than reasons to work. Life is too short to be miserable. If you are miserable it is not because your don’t have enough money — it is because you don’t do what you love.

The approach of 2007 can no be counted in hours. Time is rapidly running out to finalize your taxes and complete goals you set for yourself at the beginning of the year.

Just before Christmas last year I dropped a bunch of money on a premium domain name, developed it, and built a pretty sizable forum around it. In terms of members, and content goals this project was a success. In terms of numbers, its at break even.

However, 2006 brought suprise opportunities that more than made up for this. If there was one big lesson I’ve learned its that sometimes small things can bring in very big numbers. The scalability the internet allows can create windfall profits from virtually nothing.

Again this year, just before Christmas I made another big move. I am bringing on board my first full time programmer. Imagine that, had I remained in college I would be graduating in one semester. Instead of sending out my own resume in 5 months, today I am looking other people’s resumes.

This is the one message I try to get across to all of my readers — take your business seriously. If you want to succeed you need to be willing, and able, to live on virtually nothing. When you are 18 or 19, or even into your 20s, doing this is easy. When you have a family to support and mortgage bills to pay the rat race sucks you in fast. This is the reason why many Americans want to own their own business, and most that do fail.

If you are not happy with 2006, ask yourself why. Then, instead of feeling sorry about it, figure out what you need to do to be successful in 2007 — and start doing it today!

With an exploading multi-billion dollar internet advertising industry on top of a multi-trillion dollar global economy, scarcity and competition is not your biggest challenge. Your biggest challenge is yourself. The things you do tommorow and perhaps even a year from now may not give you a six figure income or make you a millionaire. It doesn’t matter. What matters is that by immersing yourself in the internet business world right now you will build skills, connections, and assets that will one day pay off exponentially.

Two months ago I made a post about giving a try at affiliate marketing. I surpassed the goals I set in August by a long shot.

Today I have decided to venture into another territory — viral marketing. I am going to spend next week building a web site specifically for the purpose of attracting viral traffic. Its going to be detailed, yet simplified for its intended audience. Its controversial enough that it will probably piss a lot of people off, yet true.

The last blog post I know really helped people involved goals. I said make handwritten lists of specific tasks, keep it right in front of you and cross tasks off as you finish them. I could give you the details about my affiliate marketing successes or what viral marketing strategies I am going to use. Forget it; you can find out all the information on any number of forums or blogs.

Here is what I am going to tell you: How to set a performance goal.

First, look at what you are doing right now. Are you making $10 a day? You can make $30. Are you making $100 a day? You can make $300. Are you making $0 a day? You sure as hell can make $10.

Now, do a hard analysis of what has worked best for you. One of my biggest weaknesses has been abandoning what works getting caught up in low-to-no-profit projects. If you find something that is making you $50 a day, do it again and again and again until it doesn’t work anymore.

There is a downside to this. Some people with large exposure to the poker industry are learning this. Take a page out of investment strategy and diversify those windfall profits — when you get them.

Whether you choose PPC arbitrage, affiliate marketing, viral marketing, or running a content site, I want to hear some success stories from you in 2 months.

For clarification, my last post was about thinking, planning, and action, not about killing people. I know not all of my readers understand these concepts.

In war you have two or more competing actors. Variables of environment, rules, technology, and diplomacy all determine who the winner is. Business is not linear and variables are not fixed.

Myspace exploited Friendster’s weaknesses to rise to the top of the social networking game. Player who choose to ignore their customers, trends, and their competition end up as the losers.

For beginners it may feel like you are on your hands and knees crawling through the darkness. You are still trying to understand the basics, may be doing a little made-for-adsense publishing or PPC arbitrage. You are in a “fog of war.” The pieces and players remain hidden from view.

The longer you “play” the more you will understand about how the system works.

What is your 5 year and 10 year plan? Can you answer that? You need one. Even though it might change, thats fine. Think strategically, act tactically.

No, this is not about the military-industrial complex, politics, Google, or the Whitehouse. There is no axe grinding or personal attacks. This post is about applying universal concepts to business.

Business is a lot like warfare.

There is something that makes wargaming more appealing to me than traditional sports. New terrain, varied and changing makes for a more interesting game then a fixed and finite empty field.

To be successful at war, game or real, you have to both think and execute strategic and tactical actions. In business, strategy and tactics are what seperate long time winners from short term burn outs.

As an employee you sometimes are forced to take action on the tactical level. This might mean performing a successful sales routine or convincing a lead to learn more about your product. Unless you make it to the upper ranks you will have little involvement on the strategic level.

As a business owner you are thrown in to strategic and tactical decision making immediately.

If you are having trouble understanding all of this, let me give you a few examples.

Few wargames operate on both the strategic and the tactical level. Strategic games involve moving large groups of forces. You may place a battalion of tanks, but nothing smaller. At the tactical level you move individual units. Tactical is clearing a room, stopping an ambush, or exiting Mogadishu.

As an internet publisher or marketer you are making both strategic and tactical decisions daily.

Strategic — should I focus on this long term publishing project that will make me money 5 years from now, or should I venture into affiliate marketing in hopes that I can pump the profits in to my publishing project? Tactical — a webmaster rejected my link request, what action am I going to take to ensure that my link is on his website?

What really makes this interesting is that the rules are constantly changing.

Chess is set. The rules, the pieces, the board, they never change. In real warfare things change. Staying a step ahead can mean the difference between winning and losing. Despite having pathetic “armies” Islamic militants in the Middle East have put up one hell of a fight. Right now, in 2006, we are witnessing an evolution of warfare.

World War I looked much different than World War II. I venture to guess this was not simply because of technology but because there was a realisation that there were better ways to fight. In fact, it could be argued that those understandings influenced the techonology of warfare.

As a internet business owner you need to understand the basic concepts of humans. Why does someone tell their friends about something? How do you convince a person you are trustworthy?

At the same time, understand what pieces of technology are going to change the game — and be prepared to take advantage of them, or to evolve if they don’t include you. There are a lot of businesses out there that really don’t understand how search engines can benefit them.

I don’t enjoy static environments full of limitations. I do enjoy learning, growing, and ultimately evolving. If you are the same, you are in the right businesses.

Has any industry moved as fast and evolved as rapidly as this one has? Whether you are blackhat, whitehat, a publisher, or an affiliate marketer you must stay on your toes if you want to keep making money online. Fortunately new opportunities are plenty and under served niche markets are virtually limitless. Right now the web is like the wild west, but this time around the gold rush is minting new millionaires on almost a daily basis.

Will this always be the land of opportunity? I would like to believe so. But, sometimes its worth thinking about a rainy day.

I think that there are two different elements to making money online — making money through assets, or earning money through work. Huh?

Think about it this way — ad inflation. Ad cost inflation means that the price of advertising rises, either because of new buyers or because two competitors want the same inventory. As an ad seller ad cost inflation is great. You make more money on the same, or even less traffic. As an ad buyer, not so great. Ad cost inflation may mean you are out of business.

So, how do you make sure you are still earning an income 5, or even 10 years from now?

First, think about having a project or two that is more on the asset side of things. That means being more independent and less dependant on someone else (like ranking in Google, for example.) This could mean building a community through a forum, an e-mail newsletter, having a great generic domain that gets type-in traffic. Short term, these projects typically aren’t too profitable — but that’s not always true.

On the other side, you have short term profit projects. This may include PPC arbitrage or affiliate sites. A distinguishing factor here usually is your visitors come to your site and leave, never to return.

Sometimes it makes a lot more sense to do the short term stuff. If solely focusing on building affiliate sites makes you enough money to retire within 2 or 3 years, trying to build a forum could be very costly.

Here is the bottom line — don’t think that you are going to be doing the exact same thing for the next 30 years. Your not. Plan accordingly.

One of the biggest stopping points that causes small website owners to not commit is the concern that they do not have the ability to make it online. Many people live their entire life setting a low bar for goals because they think that if everyone can’t do it its not worth trying for.

Consider this, in 2005 online consumer spending was estimated at 143.2 billion dollars. Advertising spending, close to $4 billion. Sure thats not all profit, and its not just going to fall in your lap. However, that does give you an idea of what we are dealing with.

An attitude of failure is curling up in to the corner and playing it safe. Safe is a commodity. A good union job at GM looked like a safe bet for decades. Today that “safe” company is losing millions of dollars a day.

I challange you to take a serious look at your life and evaluate your own personal goals. If you don’t do it, someone else willl.

What makes the human brain so hard to copy is its ability to recognize patterns. We are able to see patterns both visually and conceptually in what would otherwise appear to be unrelated bits of data. To a great degree your ability to be open and understand patterns will determine how successful you are at what you do.

Search engine optimizers pick out patterns in test sites to see what works and what doesn’t. Programmers recognize patterns in chunks of buggy code. Cinematographers know what will put the audience to sleep and what will pick them up by the seat of their pants.

The American Heritage Dictionary defines the word pattern as “A model or original used as an archetype.” Archetype as “An ideal example of a type; quintessence” And Quintessense, what the heck does that mean? “The pure, highly concentrated essence of a thing.”

When you see the world around you is it a world of chaos or order? Is the conflict in the Middle East an example of nonsensical mindlessness or the consequence of very real events that have happened in the past?

The way you view the world will determine who you are and what you become.

For thousands of years religions pointed to lighting as a powerful force of the gods. Lighting that hit buildings resulted in explosions of fire, death, and destruction. Benjamin Franklin said nonsense and invented the lighting rod.

When your eyes are new to the world of making money online everything appears as if it is complete chaos. All of this jaron is like a foreign language. Even as things begin to make sense the pathway between failure and your goal appears non-existant.

To the uninitiated paranormal events are viewed as a force of magic and success is seen as luck.

Pattern recognition in this industry is the ability to see what works, what doesn’t, and then apply that information to yourself and your projects. Once you have a successful site, just being lucky seems a little silly.

The unexplained is always explainable. Recognize patterns of both success and failure and you can master any element of this business or life in general. This is the quintessense of reality.

There was a web designer who was very skilled. He could charge above the market rate and his clients were more than willing to pay for it. For several years he made very good money. He was not afraid to spend it and lived a very comfortable lifestyle.

Unfortunately the good times did not last forever. As time progressed his competitor’s skills grew and his rates started feeling the squeeze. Not only did he have to work harder but he also had to work longer. He was no fool, he realised he would not be able to do this forever. He made the decision to scale back his lifestyle and start saving.

Yes, that is a true story.

Today not just the web, but the entire world is changing and growing at an unbelievably rapid pace. I encourage you to take a serious look at outside threats to your business model. Instead of giving up, this designer could have started a design outsourcing firm. Where some see an end to their livelihood, others see new oppurtunities.

I am predicting that independent publishers are soon going to begin feeling the same pressures that the web designer did. Why? Pick up a recent issue of Business 2.0. The profitability of this industry is no secret, nor is search engine optimization.

This is great news for those who are building powerful sites, but very bad news for those who have hesitently pushed out mediocre projects for years.

Where do you stand?

I suspect that every single reader here has some objective they are chasing, be it $10 a day, $310 a day, selling a business for a few million, or something more.

I think that measuring time in years hurts us. Why? Because a year is a long time. Despite being an exact measurement we use it to seperate large periods of time. Next year seems like a long ways away, when it can actually be counted in days. Right now we are 42% of the way to 2007 — that is almost half way there!

Its a cliche, but every person has the same amount of hours in every day. It is how we use them that turns those hours into money (including while we sleep.)