Monetize Yourself

July 15, 2010

I’m moving!

Filed under: Uncategorized — Amanda P. @ 5:56 pm

I’m pleased to announce that this blog has done better than I expected when I started it back in March, enough to warrant its own domain name and more features. You can find all the same information, along with updated posts and resources, at

http://howtomonetize.me

You can subscribe to that feed at
http://feeds.feedburner.com/howtomonetize/tqfa

Look forward to seeing you there!

-Amanda

July 12, 2010

Getting Started: Finding Customers

Filed under: Getting Started,The Very Basics — Amanda P. @ 6:27 pm

So you’ve decided what to do, you’ve planned a monetization mix, and perhaps even written a business plan. Now what?

If you’re in the business of selling products, you need to figure out how to get your products made, and how to get them to customers. But if you’re selling your time, you can’t even really do that; the first thing you need is for a customer to tell you what they want so that you can get started on making it happen. And for that, you need a customer.

This is a place where my bias my affect how useful my advice is: I’ve only ever seen this done in a US suburb, and these methods may not work as well in other settings. If that’s the case, hopefully this will at least give you ideas.

Make it possible to find you

Sometimes you’ll talk to exactly the right person at exactly the time they most need you. This is awesome… but rare. It’s more likely that you talk to someone who may need you in the future, or someone who doesn’t need you now, but knows someone who does, or someone who knows someone who might need you in the future.

In these cases, you have to give them some way to get back to you. The traditional method for handling this is the business card: you give it to them, and they file it in their call-when-we’re-redecorating file, or give it to someone they know. Your business may be better suited to brochures, or magnets, or tiny DVDs, but you need to give them some way of finding you again when they want to. And it’s probably a good idea to have a couple of business cards anyway, because it’s so very much the standard of business interaction.

Tell People

Tell everyone…

Now that you don’t have to rely on telling exactly the right people at exactly the right time, it’s time to tell everyone you know. If you’re already involved in social media, then post a twitter update, write a blog post, and share a note in Facebook. Tell everyone what you’re doing, and why (people feel more comfortable saying, “I have a friend who started her own design business because she wanted to give better service than her boss was letting her give” than saying, “You should use my friend’s design business because… um… she’s m friend.. and.. she’s… really cool.”)

You may not be comfortable telling everyone… I understand, and I sympathize. Whether your friends think you should keep your nice respectable job, or your parents think you’re not really qualified to run a business (though they’d never say it out loud), or your wacko uncle thinks all capitalists are evil manipulative bastards, there can be reasons that telling everyone would make your life very uncomfortable. Use your best judgement, but know that the more people who know of your business, the more people can send you customers.

…with special attention for the important people

This is not “important” people in the sense of people with highfalutin’ titles or political sway. This is the people who are most likely to tell other people about you.

Do you have a friend who starts up a conversation with everyone they meet? They’d be perfect. Do you know a dentist, or a hairdresser, or someone else who has to make conversation with their customers while they’re working? Also good. Is there someone in your circle who’s the go-to guy whenever someone needs a recommendation for a plumber or a new dishwasher? Try to get on his recommendation list.

Set up a time to meet with them — maybe over coffee, or at their shop, or whatever’s convenient for them. Tell them what you do, what kinds of problems you can help with, and what kinds of customers you’re looking for. Emphasize that you’re not asking them to sell for you, and certainly don’t want them to recommend you to anyone who couldn’t benefit from your services. You only want to let them know what you do so that they can help out anyone who would benefit by knowing you. If it makes sense, you could offer them a discount or a free service so that they can judge for themselves how good you are. Answer any questions they have, and leave them some business cards. Offer to help them in some way by taking their business cards and promoting their services, by giving them some free consulting, or just ask them what they’d like.

Look for people who need you

Check out Craigslist employment ads and gig ads. Look for people who want someone to do what you’re already doing. Contact them and see if they’d be interested in your services.

My cousin works as a virtual assistant; many people on Craigslist are looking to hire personal assistants for their business, but many would prefer someone who works from home, doesn’t require regular or guaranteed hours, and isn’t asking for benefits. A perfect match!

My partner’s computer-repair business got started when he found an existing computer-repair business that was overwhelmed with customers and needed someone to whom to send the overflow. He got a chance to build up his business and find clients, and they got to please their customers without having to hire a full-time employee.

Start looking at your promotional budget

All of that was stuff that costs only time, and hopefully has gotten you started. If you have some money, there are a couple more options to examine.

Join a networking group

In my area anyway, networking groups are run by the Chamber of Commerce, and you must be a member of the chamber to join. This can be a worthwhile expense because the networking groups are full of people who meet the criteria described above: they meet and talk to a lot of people, and they’re looking for ways to help their clients out.

Buy some advertising

What kind of advertising depends on your business, your area, and your monetization mix. If you have a good website, you may do best with pay-per-click ads from Google; restaurants like billboards; and many plumbers are still doing well with the Yellow Pages. It will take some experimentation to find what works for you. Do some research on what your clients read, where they drive, and how they do research; pick something that looks likely and fits your budget, and give it a shot.

Work on your other monetization methods

In my monetization mix case study, I talked about how your monetization methods should all reinforce and support each other. Once you’ve handed out business cards and everyone knows what you do, and until it’s time to check in again for a periodic update, the best thing you can do to get customers is to get your blog up and running, or your ebook ready to sell, or you YouTube videos ready for viewing.

July 9, 2010

Monetize Yourself Case Study

Filed under: Business Models,The Very Basics — Amanda P. @ 2:28 pm
Tags: , , , ,

The last 3 posts have talked about specific ways you can monetize yourself: by selling your time and expertise, by selling your expertise directly, and by giving your expertise away. But in actuality, these categories are not so clear-cut, and the applications get a bit messier. So I thought it would be helpful to look at an example of someone trying to plan out a monetization mix.

    Jargon Alert: in marketing, a “mix” is the list of things that you’re going to do for a particular purpose. So a product mix is the products you intend to sell; a promotional mix indicates how much of your budget is going towards TV ads, how much towards radio ads, and so on. In this case, a monetization mix is a list of which monetization methods you wish to use, and to what extent you intend to use them.

Case Study: Andrea the Accountant

Andrea is in her mid-20s, with a bachelor’s degree and a few years of work experience. She’s determined that, although jobs have their uses under certain circumstances, she doesn’t want to have a job as a long-term solution; her independent and creative spirit will be happier without a boss, and she feels she can provide more and better value to the world by sharing her expertise directly.

Andrea has an interest in personal finance, and a talent for organization and practicality. Over the last few years she’s done a lot of research on budgeting, investing, and getting out of debt. From what she’s learned, she’s created a few spreadsheets to help keep an eye on her family’s finances. Lately she’s found that she has enough knowledge and information to be able to help others out: she’s taught college friends about debt management techniques, and helped her grandmother create a monthly budget.

Andrea’s Monetization Mix

Sell your time
Although Andrea doesn’t want a job long-term, she has bills to pay right now, and she doesn’t want to have to worry about whether or not her business will be able to support her instantly. She calculates that she needs to bring in $900/month to supplement her husband’s income and keep the family budget running smoothly, so she’s going to get a part-time job while her business is getting started.

She also is going to sell her services as a consultant to anyone who wants help with setting up a budget or making a financial management plan. Because she wants to be affordable to those who need help, and because she doesn’t have a lot of experience as a consultant, she decides to charge $25/hour.

Sell Your Expertise
Andrea’s done a lot of reading about personal finance, and she has noticed that some books on personal finance are too theory-oriented, with not enough information on how to actually use those theories.

She’s written an e-book with practical tips on how to actually track your expenses and calculate your cash flow. It includes example categories of spending, ideas on how to figure out how much you’re spending in each category, and the equations you need to do the necessary financial calculations. It also includes a link to a spreadsheet that Andrea made, that will do the calculations for you. She plans to sell this ebook, but she hasn’t decided on the price yet.

Share Your Expertise For Free
Andrea still has student loan payments, and remembers how hard it is to manage your money when you’re not sure what to do. So she wants to make sure that she’s providing free resources as well. She’s going to set up a website and a blog, where she can provide information on personal finance, and keep it up-to-date with whatever she finds during the week.

Since the goal is to create a free resource, Andrea doesn’t want to charge for access. Instead, she’ll monetize her website through ads and affiliate programs. Companies that want to reach personal-finance audiences will pay Andrea to advertise on her site (she’ll weed out the ones that she doesn’t want to be associated with). When someone clicks on those ads, Andrea will get paid. Products that are particularly good, Andrea will review and recommend. She’ll set up an affiliate program with those products, and whenever they’re sold, Andrea will get a share of the money.

A Harmonious Mix

Notice that none of Andrea’s monetization methods is operating in isolation, but that they all support each other:

  • Her website is easy to find, and a free resource for those who want help with their finances. It helps Andrea’s customers feel comfortable with her before they purchase: they know that she’s competent, and they know what kind of advice they’ll be getting. With ads and affiliate programs, it’s also a source of revenue.
  • Her ebook is a way for Andrea’s customers to get a little more information than is on the website, without having to go “all the way” and hire her as a consultant. It builds on the information found on the website, and again establishes her competence in the minds of anyone who reads it. It provides another way to monetize the website, and it helps her reach potential consulting customers. She can price it medium-high ($5-$10) to maximize revenue out of it, or she can price it very low ($.99) if she wants to use the ebook primarily as a marketing tool for her consulting.
  • Her consulting service gives Andrea with a way to provide personalized, timely information to her customers. It lets her give a boost to people who have read the ebook but still need a little more help. It also gives her another way to monetize the website, and it lets her practice her financial management skills. Although this is owning a job, because she has to spend time to get money, what she has to spend time on is
    1. helping people
    2. working with money, and
    3. organizing things

    — three things she loves to do.

Also notice that Andrea can add other monetization methods as she has time, resources, or desire to do so. As interest grows in her services, she could set up a class on personal finances at the local library or community college. She could start creating a podcast to complement her blog. If she gets enough traffic, a publisher may approach her with a book deal. She might want to make videos on personal finance: she could post them for free on YouTube, and sell them bundled on a DVD for anyone who’s interested. None of these are critical to start right now, but they leave Andrea plenty of room for development in the future.

Summary: Lessons Learned

You don’t have to pick a single method of monetization — in fact, a diversified income stream is better. And your monetization methods will usually work together in mutual support.

This list of options I gave is neither comprehensive nor exclusive. Use my ideas to get ideas of your own, and experiment with what works for you. My goal is not to make you try to fit into my pre-ordained categories, but to give you as many options as possible to express your creativity.

July 7, 2010

Monetize Yourself Media – Share Your Expertise For Free

Filed under: Business Models,The Very Basics — Amanda P. @ 12:28 pm
Tags: , , , , ,

This post is part a series on specific media for monetizing yourself. Today I’m going to talk about another category of potential media: sharing your expertise for free.

That Doesn’t Sound Like Monetizing Myself

This is the least intuitive category, so let’s take a moment to examine it. As I discussed in Distillery Tours and Alternate Monetization, “free” doesn’t necessarily mean that you’re not making money. That post used the example of Maker’s Mark Bourbon, who will let you tour their facilities for free, and make a lot more money selling you souvenirs than they ever could have made on the tour itself.

Free is the newest craze, and it works really well in some cases. The best example is our favorite search engine: Google doesn’t charge you for the use of its amazing search technology. They make their money “through the side door”, as Jeff Jarvis would say.

You, too, can open a side door.

Share your expertise…

Make a website

A website is actually just another form of Information Product: a way to provide information to those who need it. It can be less daunting than writing a book, and may be a better fit for the information you want to provide, since it lets readers easily browse information in whatever order is useful to them. It’s also easier to edit and update than a book, which is great if your area of expertise is expected to change itself in your lifetime.

Start a blog

Blogs are another way to share what you know. Since the days when they began, as a way for teenage girls to keep each other constantly updated on their social lives, blogs have evolved into a great source of information for whatever you may be interested in — from fantasy football to making money. And whatever you’re an expert in, you could write one, too.

…or site-blog

Blogs are great because you can keep them constantly up-to-date, and can write about whatever comes to mind. But websites are really nice because your readers can find the information they’re looking for (without digging through years of chronological posts). A compromise that’s coming into vogue is the site-blog: a blog that has all its posts in chronological order, so you may read back issues to your heart’s content, but also has the posts sorted into categories like a website, so that you can find specific, targeted information.

Make a podcast

Does your area of expertise lend itself better to audio or visual media than to text? Make a podcast or a video podcast. It’s not as hard as you think, and it can probably be done with free software.

Check out my first YouTube video.

You can do better than that. So why don’t you? You get to talk about your favorite stuff once a week, and you can call your mom and tell her you’re in a video.

… and monetize

If you make good stuff — a website with good information, a podcast that’s entertaining, or a blog that keeps people up-to-date in your industry — people will enjoy receiving it. And then all you have to do is monetize. Do this by

  • Selling ads
  • creating premium content, available for a fee
  • selling your services as a consultant
  • selling related products through an affiliate program
  • creating an information product you can sell to people who want more
  • selling t-shirts and coffee mugs related to your work

Low Risk… So Why Not?

All of the above can be done for free, or for very low cost. So why not try it out?

Resources For Further Reading
Site Build It! (A great resource for making a website – but the only resource on this list that isn’t free.)
WordPress (This is where I host my blog)
How to Podcast: 4 Basic Steps
How To Make Money From Your Blog

July 5, 2010

Monetize Yourself Media – Sell Your Expertise Directly

This post is part a series on specific media for monetizing yourself. Today I’m going to talk about another category of potential media: selling your expertise directly through books or information products.

Sell your expertise in products

Write a book

Yes, you can write a book. It used to be that writing a book involved a huge mess. You had to get an agent, who had to convince a publisher that you could sell 1000 copies, so as to find a book deal, then negotiate an advance, and so on. Big deal, big mess, and contingent on the approval of people you don’t know and probably don’t like.

Not any more. It’s now easy to

  • write a book (word processing! No more white-out!),
  • publish a book (you can publish an ebook for free, or get someone to publish it for you for less than $100. Paper books can be printed in lots as small as a dozen, so publishing houses are far less concerned with selling 1000 copies), and
  • market a book (it’s hard to get on the shelves of Barnes And Noble or Borders, but almost trivial to get on the “shelves” of Amazon.com).

Now all you have to do is figure out what to write a book on. What have you found yourself wishing you could find a book about? What have you had to experiment and develop mostly through trial and error, because there are no books on it? What do your family and friends call you to get help with? Don’t tell me that there isn’t anything; see the story below.

Create Information Products

A book is actually a subset of information products, but I gave it its own category because it’s by far the best-known information product.

An information product is just what it sounds like: a product that provides information. A book is one example. Other examples include (but are not limited to):

  • a DVD on how to use your new exercise equipment, or
  • a 1-page checklist of things to pack on your vacation, or
  • a spreadsheet that sorts your expenses into budget categories, or
  • a deck of flash cards, or
  • a comic book on how to play this board game, or….

Information products are great because they’re so flexible, and it’s entirely possible that your expertise doesn’t fit well into a book. Someone whose gift is in designing and assembling awesome carpentry projects would be far better off selling how-to videos. If your gift is organizing things, you may be better off selling mini e-books like “101 Things To Take on Vacation” or “Everything to Do To Get Your House Clean Enough For Your Mother-In-Law”.

But I Don’t Have Expertise

Judy Murdoch tells a story of a teacher who said she couldn’t make an information product, because she wasn’t an expert on anything. Judy challenged this statement, said she was sure the teacher knew something worth $50. Intrigued, they started discussing.

Turns out…
this teacher, having years of experience with 7-year-olds, knew how to get first graders to pick up after themselves.
Wouldn’t you pay to know that?

The lesson?
Everyone undervalues what they know. You undervalue what you know how to do, just because you know how to do it.

We’re all experts at something. You just have to find your market.

Resources For Further Reading
Information Product Development from Highly Contagious Marketing
Buy The Book Marketing: Internet Marketing for Authors

July 2, 2010

Monetize Yourself Media – Sell Your Time and Expertise

Filed under: Business Models,The Very Basics — Amanda P. @ 6:53 am
Tags: , , , ,

I’ve talked a lot about the theory behind monetizing yourself: what it means, broad categories of making money, how to provide value, how to identify value you could provide, and so on.

But I haven’t discussed how to actually deliver that value. What do you do in the day-to-day to monetize yourself? How do you get started?

Steve Pavlina distinguishes between the medium with which you present your message, and the message itself. The crux of the article is that the message is the most important thing, because it’s what people care about. So if you’re new to this blog, and thinking about monetizing yourself, I strongly recommend going back and thinking about your talents and skills, what value you can provide, and what you wan to accomplish.

But if you’ve been with me for a while (thank you!) you’re thinking, “Enough with this theory already! Tell me what to do!”

Disclaimer

Part of the reason I’ve been avoiding this is because it’s such a huge project. There’s so much to talk about: not just the individual media you can use, but for each medium there’s how to use it, what to do with it, what your options are, and so on. Not to mention keeping up with changes in each area.

So this is, by necessity, a really broad, high-level picture. I’ll try to at least keep it coherent, but I certainly can’t cover everything. Help me out by leaving a comment or sending me an email, telling me what questions you still have.

Ways You Can Monetize Yourself

There are a bunch of different routes for monetizing the value you provide, at a bunch of different levels. I’ve broken it up into three broad categories, to avoid overload and really long blog posts. So today I’m going to discuss monetizing yourself and your expertise with your time.

Sell your time and expertise

Freelance

If there’s something you can do that others can’t, you can charge people to do it for them. You can do this on evenings and weekends, in your free time, to get a little extra spending money.

Start your own business

This is kind of an ambiguous term, and the line between this and freelancing is pretty blurry. Generally people call it “freelancing” if you do it in your spare time, and “running a business” if it’s your primary income source.

There’s also an important distinction between “owning a business” and “owning a job”. Details are here, but Michael Gerber defines it this way:

    Go out to the lobby and call your secretary. Tell them you’re not coming back for a year. If they panic, you own a job. If they’re cool with it, you own a business.

(If they celebrate, you need to rethink how you treat your staff.)
Owning a business is more fun and more lucrative (I think). But owning a job is faster to set up and easier to get started on, so if you’re new to the monetizing yourself thing, I recommend starting there.

There’s also a terminology ambiguity about what’s involved in “starting a business”. Usually this term means that you’re starting what’s called a “small business”, which is actually owning your own job. But as I said in Annual Planning, I recommend you treat it as a business regardless of your monetization selection. Freelancing? I recommend you set up a business and handle the money separately. Selling a book? I recommend you think of it as a business with one product. You don’t necessarily have to legally set it up as a business, but the attitudes of a business person (What’s my ROI? Who’s the target market? How is my product perceived?) will help you monetize yourself more effectively.

On Monday I’ll discuss monetizing yourself by selling your expertise, writing a book or selling information products.

June 28, 2010

Don’t Miss the Layups

Filed under: Personal Development,Time Management — Amanda P. @ 10:54 am
Tags: , , ,

Jeffrey Gitomer, in his Sales Bible, tells the story of asking for advice from a basketball coach.

The coach walked out onto the court, dribbled a couple of times, and threw a basic, easy layup.

Then he turned to Gitomer and said, “95% of basketball games are won with that shot. Don’t miss it.” And left.

At first, Gitomer says, he felt kind of ripped off. But the more he thought about it, the more he realized how fantastic the advice was.

The Pareto Principle Strikes Again

The Pareto Principle says that 80% of your results come from 20% of your efforts (and, contrariwise, 80% of your efforts contribute only 20% of your results).

But we often get caught up in improving the 80% of our work that doesn’t contribute as much: practicing bank shots, 3-point shots, and so on. And if you get the opportunity to make those shots, it’s great that you’ve improved them.

But most of what life is going to offer you is layups. Following up with clients to ensure they’re happy. Doing the same installation job you did last week, and that you’re going to do tomorrow. Writing an article. Making a bacon cheeseburger. And because those things are “boring” and “overdone”, we don’t practice them. And we screw them up.

That’s where most of your business is. It’s where your money comes from. And when you mess it up, your customer says to themselves (and all of their twitter followers) “Really? You can’t handle the most basic, fundamental part of your business?”

Don’t miss the layups.

June 26, 2010

Distillery Tours and Alternate Monetization

Since I’m in Kentucky right now with my family, in the heart of Bourbon country, we decided to take a tour of a distillery. We toured the grounds at Maker’s Mark in Loretto, Kentucky, and it was pretty cool. We got to walk down the bottling assembly line, stand in the room where they cook down the corn at 212 degrees Fahrenheit (not actually very appealing on a day when the ambient temperature was 98 Fahrenheit), and look at the 500-lb barrels of White Dog Liquor aging itself into Bourbon. And best of all? It was all free, even the two servings of bourbon at the end of the tour.

There are other ways to monetize

A lot of people have come up with ways to make value. I mean, there’s always something you’re better at than other people, by talent or training, or both. It’s not that hard to come up with something that other people like.

But then, many times, they insist on charging for it.

Now that’s OK. If you’re providing value, you should be able to get people to pay for it. But it’s not the only way to monetize.

“Free” doesn’t mean you’re not making money

Take the distillery tour. They let me into their factory, gave me an education on bourbon, and let me drink some of their product, for no charge. Suckers, right? Giving away their product for nothing. Providing value for free when they could have charged.

Well, let’s look at the “nothing” they got in return.

Shoppers

The tour, naturally, ended in the gift shop. Where, it happens, you can buy their bourbon. Or any number of other souvenir items, most dipped in red wax (the signature style of Maker’s Mark). Since a single bottle of bourbon probably pays the tour guide’s wages, and there were 15 of us on the tour, they’re certainly not losing money. The probably could have charged $5/person for the tour, for a total of $45 in revenue. But by not charging, they made us feel appreciated, and that we were getting something for free, and like we had money to spare. And at $20 per bottle, with 5 bottles sold (that I saw), they made $100 in revenue.

Educated bourbon drinkers

Bourbon is different from beer, and should be drunk differently. Appreciating the distinctions between bourbons, and recognizing a fine bourbon, is much easier when you know how to appreciate the scent, the taste, and the aftertaste. The tour guide educated us on the correct glassware, where the bourbon should be placed on the tongue, and other notes for proper bourbon appreciation. This education won’t make a difference in dedicated abstainers like me, but it could well make the difference between an indifferent bourbon drinker like my father and an enthusiastic bourbon drinker like my brother, which can in turn make the difference between a bottle every few years and a bottle every few months.

Brand Loyalty

People like familiarity. They like stuff they know about. I now have a relationship with Maker’s Mark: I’ve met their people, walked their grounds, learned about their signature red wax. When I walk into a liquor store, there’s only one bourbon I’ll recognize. Which am I most likely to buy?

Product Exposure

As I mentioned, we each got two servings of bourbon at the end of the tour. Glass #1 was the standard, original Maker’s Mark. This glass would be worth giving away just for the benefits mentioned above. But we also received, in Glass #2, the new pre-mixed Maker’s Mark Mint Julep. This product (dipped instead in green wax), is fairly new, and relatively few people are even aware of its existence. By offering it to everyone who goes on tour, they have an effective way of spreading the word about a new product for way less than the cost of a Superbowl Ad.

Think about your monetization

Does this mean you should never charge people for your value? Of course not. Even in the above example, the distillery is charging for their bourbon. The goal is simply to get the proper mix of direct and alternative monetization.

Don’t just slap a price tag on everything you create. Look at everything you do, and ask yourself.

  • Is this of value to my customers? Why is it of value to them?
  • How much would someone pay for this?
  • How else could I monetize this? Sell ads? Advertise my own products? Affiliate marketing? Lead customers towards high-margin products?
  • What other benefits could I derive from this? Traffic increases? Education? Buzz in social media?
  • What is the best way to derive maximum benefit from this value I’m providing?

Resources for Further Reading
Free: The Future of a Radical Price
What Would Google Do

June 23, 2010

How to Invest

In a forum I hang out in, I recently received a private message from another user, asking about investing. He had $100/month to spare, and wanted to make good use of it. My advice to him follows:

Hey, John:

Sorry about the delay; I haven’t logged into the forums much this week. I’m not a certified financial advisor and I don’t know the details of your situation, so just be aware that what follows is generic rather than specific advice, and you should ignore anything that doesn’t sound like it applies to you.

Stock Market

How best to invest depends a lot on what your goals are for yourself and for your money. When most people think of investing, they think of the stock market. There are 2 smart ways (and a whole bunch of stupid ways) to invest there:

1) You don’t want to have to mess with it. If you invest $100/month at (an average of)10% interest for 30 years, you’ll have invested $36,000 but you’ll have an account worth $226,000. If you’re just looking for something to keep you off the street in your old age, this is a good method. You set up an account to automatically withdraw $100 from your checking account and invest it some index fund — it really doesn’t matter which — and forget about it.

2)You think business and finance is awesome, you love analyzing financial statements, and you have several hours per week to spend on analysis. In that case, you may enjoy investing in individual stocks. The stock market is full of stupid and emotional people, and there are plenty of stocks out there that are massively over- or under-priced. But you have to be willing to read — really read — a document 1/4″ thick, look at all the numbers, compare them to the numbers from last year, figure out how the company’s doing, keep up on news and trends that might affect this company, etc…. for every company you want to invest in. It can be cool, but it can also be a full-time job that takes training. If it interests you, I’d recommend investing the first several months’ worth of money in books on accounting and business and stock-market terminology. You can call any company and get their prospectus — that’s the 1/4″ document with lots of small print — for free, so look it over and practice your business analysis.

Anything between these two extremes, I’m going to say is stupid. I’m willing to entertain suggestions on what someone thinks isn’t stupid, but unless and until I see it, I feel pretty comfortable calling them all stupid. If you aren’t willing to put in your hours of analysis, it’s dangerous and risky to buy stocks & bonds; you’re putting your money into something with no safeguards, with no idea what’s actually going on. If you’re going to go in mutual funds anyway, then any time spent analysing is a waste: mutual funds all go up and down together, in sync with the market, and professionally-managed mutual funds often under-perform monkey-with-a-dartboard-manged mutual funds. Pick one with low fees and forget about it.

Real Estate Investing

Another place people often think of is real estate. Real estate investing can also be very cool, and your analysis doesn’t necessarily have to involve long columns of tiny numbers. There are lots of ways to make money in real estate: buy-rent-hold, fix-and-flip, short sales, lease-option, etc. Short sales and lease option are making good money in this market; if you have the credit to afford a property right now, you can get good deals for buy-rent-hold. Again, if this interests you, I would invest the first several months’ worth of money in education, and I would see if I could find a current real estate investor to help me out.

Invest In Yourself

Next possibility: invest in your own brand. The internet has made it totally possible for people to make a living doing things they (at least kinda) enjoy. You might want to start your own business, or make crafts and sell them online, or run a website on a topic that interests you, or write a blog, or make videos, or whatever. If you have something that you’ve been thinking of doing, use your money to buy business cards or a domain name or materials for your business. (If I had $100/month to invest, I would use it to try assorted advertising campaigns for my partner’s business, to figure out which are the most effective.)

If you don’t have an idea of what you’d like to do, but the build-my-monetization-potential sounds good, then I’d put the money into something low-risk/low-yield, like a short-term CD, a government I-bond, or just an interest-bearing Paypal account. My extra monthly money goes into my Paypal account, and I just save it up for use when I want to develop a new income stream; that’s what made it possible for me to start up my website when Steve Pavlina pointed out SBI as a good method. So save it up while you study possible monetization plans and make decisions about what you want to do.

Another possibility in the investing-in-yourself line is to look at what you want to do. Would you like to get into management in your company, but don’t have the necessary degrees? Go back to school. Would you like another career entirely, but don’t have the necessary skills? Look into workshops or training-style classes you can take. Do you have a hobby that you think you could make a business? Read some books on starting a small business.

Investing Summary

So, I realize that it’s probably not the “Go here, do this” answer you were looking for, but the long and the short of it is that step 1 has to be deciding what you want. I would put the money in a savings account until you know what your goal is, and then you’ll have it ready and waiting for you.

June 22, 2010

All You Need Is Time

Starting a business is hard. Any new monetization method is hard. Actually, come down to it, any new anything is hard. In large part because, well, you don’t know how to do it. You don’t even know how to start figuring out how to do it.

In Outliers, Malcom Gladwell discusses the 10,000-hour rule: that all amazing people, in any field, got to where they are by practicing for 10,000 hours: hockey players who make pro put in 10,000 hours of hockey practice; Bill Gates spent 10,000 hours playing with computers, and no virtuoso has ever gotten away with much less than 10,000 hours of practicing violin. You have to have a minimum amount of talent, sure, but beyond that, the only correlation to success is how much time you put in.

That’s all very well for geniuses and athletes — for outliers — but what about the rest of us? What if I don’t want to be an amazing business person? What if I just want to be a competent one?

Actually, the answer is the same. Naomi of IttyBiz just wrote a brilliant post on learning new skills called Mastery and the Average Factory Worker, pointing out that putting in time works just as well for beginners as for experts.

    “Don’t get marketing? Give it a month of 42.5 hours a week.

    Aren’t sure how to find your blogging voice? 20 full working days, baby.

    Need more clients? Make it your full time job, one from which you could get fired for not meeting your quota.

    Want more people to stop by your store? Devote 10,200 minutes to nothing but bringing them.”

The bad news? I don’t have a shortcut.
The good news? I have an answer that will work for anything you want to learn.

“Work more hours than the average factory worker.”

Resources for Further Reading
Mastery and the Average Factory Worker
Itty Biz
Outliers

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