Moving on… and buying stocks.

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I’ve still had limited success with my first attempt at business online.  I like to say “limited success” instead of “complete failure” for a couple reasons:

  1. Positive thinking.
  2. I did actually have a customer, and many more with whom I interacted but ended up not purchasing anything. So, even though I didn’t make any money after counting hosting expenses (not to mention personal time spent), at least I have some kind of income for my personal balance sheet.
  3. It’s not dead, it’s just not taking off as quickly as I hoped. I’ll keep updating things occasionally, placing some low-cost Adwords ads, and fulfilling the orders of any customers who happen to show up at my virtual door. It costs me virtually nothing to do this, and may eventually lead to me getting a good enough online marketing pitch, smart enough Adwords ads, and high enough search engine ranking to have a profitable company.
  4. I’ve learned a lot (and I’m not just saying that). As far as technical subject matter, I’ve learned a ton about making websites, using a blog/content management package (like WordPress) vs. manually coding my own site, making online submission forms (hint: use FormMail!), navigating Adwords, search engine optimization (SEO)*, etc. These are all things that would be useful for just about any business owner to know something about, even for a business that isn’t based on the internet.

I’ve also learned some valuable lessons about business in general. For one thing, there are some serious downsides to offering a discount product. Beyond the obvious fact that you don’t make as much money per unit, you also aren’t leaving yourself much room for “cost-of-sale”** expenses. Expenses that aren’t associated with each sale (like a billboard or a Super Bowl ad) can be covered by a high volume of sales, but not so with cost-of-sale expenses. In my case, the big cost-of-sale expense was pay-per-click advertising (Google Adwords); ads with good placement just plain cost too much to make any sense for a really affordable product.  This may seem obvious, but I didn’t really think about it, and I should have considered it much earlier in my planning of a low cost product. Now I know first hand, and I won’t forget it.

I also got to see first hand that low risk tends to equal low reward. I didn’t really risk much, so it’s not really surprising that I didn’t gain much.

Then there’s the important matter of persistence. I’m learning to learn from mistakes without discouragement, which could be one of the most important things a person can learn. I believe Winston Churchill said something along the lines of, “Success is facing one failure after another with no loss of enthusiasm.” Wise words. If nothing else, you’ll have more fun if you stay enthusiastic.

So, anyway, I’m keeping this first business running on low-input mode, but I’m also moving on (thus the first part of the title of the post). Specifically, I’ve moved to the next thing on my idea list. As with my first business, I’m going to be vague about what I’m doing, both to keep my idea safe and to keep my anonymity at least a little bit. Here’s how this idea compares and contrasts with the first one:

  1. This  is also a mainly “internet business”, meaning that there will be no point of sale.
  2. It’s also offering a service, meaning that there is no physical inventory or thing to ship.
  3. Unlike the first idea, this is something that I’m really an expert in from my previous career, so I’m able to offer something unique.
  4. Also unlike the first idea, this is something that I feel strongly about (namely corporate responsibility and environmental sustainability). I would consider doing this even if I didn’t have to make money, so I’m bringing a lot more passion to this.
  5. This will take a lot more time and effort to get started, but there’s also the chance that I’m building something big here.

I’ve already been laying the ground work for months, including before and after work while I was still working a “normal” job. (Like I said, I’m passionate about this idea.) I’m hoping to have something in place within about a month.

Besides trying to start companies, I’ve decided to buy a little bit of some companies that already exist. In other words, I bought a couple stocks. I’ll talk more about my learning process and how I’m trying to choose stocks later. It’s exciting stuff!

* I haven’t applied any of that SEO knowledge to this blog yet, but it might be interesting to actually have readers (and maybe I could make a buck or two off of ads), so I might do that later. And of course, when I do that, I’ll write about it on the blog. :)

** I’ve also been reading up on accounting a little bit. I’m far from being an expert, or really even understanding most of what accountants do, but I think I’m picking up the important concepts for any business owner. I’ll have to post about that, too.

The income gap

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I was just reading a series of articles in Slate (I’ll post a link when I’m not typing on my phone) about the income gap in the US and how it has grown since the seventies. In short, the top 10% has steadily gotten richer, while the middle class isn’t doing as well, at least relatively. It’s as if all of our economic growth is going to the wealthy.

I’m certainly not an economist, and I really am not able to judge the economic arguments except to the degree to which they fit with common sense (although, depending on who you ask, a lot of economics is just common sense veiled in jargon and mathematical models). As an individual, though, part of what I take from this is that you need to take responsibility for your own situation. If the problem is that the money isn’t being passed on to you (in the middle class) by employers, maybe you should reconsider your choice to be middle class. I’m trying to show that, at least for me, that’s possible. But that doesn’t fix the greater societal problems caused by income disparities.

But, I think there is both individual responsibility and societal resposibility. Even if it’s theoretically possible for each individual to strike out on his or her own and become an entrepreneur (and that’s a tenuous assumption), it’s not possible or desireable to have every single person trying to build a business. Most people are always going to be employees, not owners, and it needs to be that way. We need factory workers, farm workers, call center employees, restaurant servers, nurses, etc., etc. So even if, as an individual, it were theoretical possible to avoid a career working a ‘normal’ job, it’s definitely not possible for everybody to do that. The people, who make up the majority of society’ who survive directly by their wages (rather than by owning profitable assets, as the the truly rich do) should benefit from economic growth.

In other words, I don’t think arguments about personal responsibility and the ability of the individual to change his or her situation (of which this blog is one) negate the societal responsibility to ensure the welfare of the average person.

‘How to Think and Grow Rich’ is @*!?ing with my head

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When I started my reading list for my little quest for money, an obvious choice was the the self-help classic ‘How to Think and Grow Rich’ by Napolean Hill. The author of the book researched many of the super rich of his time (post-Great Depression, pre-WWII, I believe) including Heny Ford, Carnegie, etc. If I had to summarize my take-home message from the book in one line, it would be this: rich people think differently from other people.

Of course, the book is a little more complicated than that. It starts out by talking about things like the importance of ‘DESIRE’ and ‘FAITH’ other words written in all caps. It comes across as a little melodramatic to a modern reader (the capitalized words don’t help), but I really think there’s truth to what he’s saying in the book. Essentially, he believes that the subconsious mind is behind much of our actions, thoughts, and creativity; that because of this, your actions and thus your reality will ultimately be shaped by your subconsious; and that you can ‘program’ your subconsious so that it is working to achieve your goals (in this case monetary goals) instead of undermining you as subconsious doubts often do.

(He follows up on this will all sorts of crazy about vibrations in the ether, how science was supposedly proving the existence of ESP, etc., but in my opinion you don’t really need to believe in this aspect of the book to buy into the importance of the subconsious mind. )

So, a couple months ago I started doing a couple of the mental exercises he describes. These include writing out your goals in detail, what you are willing to sacrifice to acheive them, and other things designed to build up the idea in your subconscious that you will find a way to make a lot of money and carry it out.

I haven’t really been following the instructions (I have trouble taking myself seriously reading out loud to myself twice a day), but I think its starting to work nonetheless. Its not working in the sense that I’m not rich yet, but its not supposed to work like that instantly. However, I am constantly thinking of business ideas, as if my subconsious is at work trying to make my goals real. Along with this is a sort of confidence that I will eventually achieve my goals, as if it were inevitable. It sometimes feels like I’m a rich person who just temporarily doesn’t have that much cash on hand.

This is really good if it works. I’ve already started convincing my subconsious that it will.

A website by any other name…

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After the rather unimpressive results I’ve had with my first business attempt, it occurred to me again tonight (in one of my frequent bouts with insomnia) that perhaps one of my areas for improvement was the name of the company and the corresponding web address. I kind of thought that my name was clever, but my customers might not get it, and I could definitely do a better job of reflecting what the company does with a name change.

I’m going to set up a parallel site with the same ads and a different name and keep track of numbers to quantify the difference. If nothing else, I should get better search rankings with a name including more search terms, but I also think I might make more sales from the customers who have already found the site. We shall see…

What do GMAT test scores mean?

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Since I’ve decided that maybe business school would be a worthwhile investment after all, I’ve started studying for the ‘general mangement apptitude test’, or GMAT. As I try to remember how to do factorials and quadratic equations and other things that I barely learned and then promptly forgot after middle school, I can’t help but wonder, ‘What the @#*! does this have to do with business or being a manager?’

It’s specifically not testing any subject matter related to business, so is it just another version of an IQ test? Or is it more of a test of whether you’re driven enough to study (since really algebra, geometry, etc. are subject matter, just not subject matter that’s directly related to business that nobody would know without studying at some point in their lives)? Or, I suppose, is it meant to be a test of both?

My current theory is that it’s essentially an expensive IQ test that also tests a few basic competencies (writing and the ability to learn math).

I’m not complaining, especially because I think the test scores in my case will help with my admissions, but you do have to wonder. And if the test scores really do correlate with success in business school, it just changes the question to, ‘What really determines success in b-school?’

My daily and weekly checklists

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I’ve come to the realization that a lot of the most important truths in life sound cheesy and cliche. Things like setting goals and “Thinking positive!” might be the most important things for you to do in life, but it’s easy to be cynical and dismiss things. Most of the self-improvement advice out there falls in this category; it’s obvious and/or simple, but most people don’t follow it, and they’d be much better off if they did.

Yesterday I stumbled upon a list of titled “the Six Figure Code” by Fit Business Insider.com, a group that has been ridiculously successful not only at making money from the fitness business, but also by giving advice on how to make money in the fitness business. This “Six Figure Code” is sort of a poster with a bunch of things that you’re supposed to do each day, week, and as “extra credit” to build your business (in this case a personal training business). At first I thought, “This is ridiculously cheesy!” And I was right, it is cheesy. The subtitle is “Unlock the long-term secrets to financial success as a fitness professional!” (in all caps), and there’s a picture of the Mona Lisa’s eyes to invoke the DaVince Code, which probably dates when they wrote this thing.

But then I looked at all of the specific advice, and realized that as simple as obvious as most of the things are (e.g. “Send out an email newsletter”), I realized that they would almost certainly work. I’ve worked as a “fitness professional” before, and if somebody actually followed those things to the letter there’s no doubt they’d be successful. The things you need to do are very simple, and yet people don’t do them (myself included).

Inspired by this “Six Figure Code” I created my own list of things to do each week and each day for this Fall. My tasks are partly inspired by the items from the Fit Business Insider.com, but are mostly different because I have different goals. It’s also inspired by some of the “Questions and Actions” from The 4-Hour Workweek (especially the part where I’m making sure that I challenge myself by making phone calls). I wrote up the following in a Google document that I’m checking up on each day to make sure that I’m staying on course:

I will do these things at least once a week:

  1. Call at least one stranger. If it’s somebody for business, it’s even better, but come up with somebody even if there aren’t any calls I need to make. The more important or scarier the person, the better. I want to get over fear of calling people.
  2. Make at least one business offer. This doesn’t include making a sale to a private customer, but could include making a contract with an individual to provide services for a business, marketing with another website, importing a product, etc. I want to become a deal-maker.
  3. Contact at least one person just to say, “Hi.” This can be a former coworker, boss, friend, or anybody that I haven’t been in touch with for a long time. I want to stay in touch with people, not just for business but also personally.
  4. Write at least one article for each of my sites. I have three business (or potentially business) related blogs, and one purely personal blog. I want to improve my writing skills, and also build up my internet presence.
  5. Have an adventure. Try something new, go somewhere I’ve never been, join a new group or club, or do anything different that expands my life. I don’t want to just go through the motions.
I will do these things every day:
  1. Review my goals each day. Check the weekly checklist to see where I am and focus on what I need to most to get what I want. I need to focus my efforts and make sure I’m actually moving forward.
  2. Read/listen to at least one article/chapter/podcast. This can be from books, people, websites, magazines, etc., relating either to general business and life success or to a specific topic relevant to one of my businesses (I’m taking the GMAT soon, so I’m going to count GMAT prep towards this.) I need to keep learning.
  3. Contact at least one current, past or potential customer. Every day I’m going to at least send an email to a person or business that is a potential customer or business partner. I need to build and maintain contacts and market my businesses.
  4. Write something for my book. I’m working on a book, and it’s one of those things that’s never urgent (even though it’s important),so it never gets done. Even if it’s just a sentence, I’m going to write a little bit each day. I want to become a better writer, share my stories, and finish my book.
  5. Exercise. Run, lift weights, go for a walk or stretch if it’s a rest day. I want to be active every day.

“Live Life as an Experiment”

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I was amused and pleased to see a blog post titled “Living Life as an Experiment” on the Harvard Business Review. I just had to share that; it’s too perfect. I think the author kind of misses the point, though; he talks about doing little experiments in day-to-day life, not seeing larger parts of your life as an experiment.

I guess I’m sort of skeptical of “management consultants” in general. I tend to think, “If you’re so good at management, why aren’t you the executive yourself instead of the person advising him or her? What are you going to tell them?” Maybe it reinforces the idea of success by luck that these executives got where they are, even though a consultant knows more about how to run a company then they do? It also seems kind of circular to be an expert on management because you manage a company that advises people on management. It’s like authors who write success books who weren’t really successful until their book was published, or like books about making money by people who didn’t have any until they wrote the book.

I guess it would would be similar if I made money off of my blog, although a) I’m not making any money and b) I’m not claiming to know how to make money, just that I’m trying to find out. It would still be pretty ironic or something.

In any case, I’ll try to post something more substantial soon, but in the meantime I’m too busy living my own experience. I’ve had a couple potential customers for my first business, although nothing has turned into money yet. I’ll keep updating with what I’m learning.

In other news, I’m signed up to take the GMAT, and vacillating over whether I should get an MBA after all. Every day I have the distinct feeling that I don’t know what I’m doing (which is true), but I’m not really sure that anybody else does, either. Is an MBA valuable to an entrepreneur, or more precisely, is it a good investment? I’ll have to figure that out. We’ll also see if I’m smart or not from that GMAT, in which case I’ll add “smart” to my list of strengths.

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