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The Shocking Reality of Scale (“How much can I make in an online business?”)

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HowMuch-Header
It’s two thirty in the morning, and you’ve woken up from your sleep to feel the bedside table vibrating ever so slightly. A notification on your phone is making a white shadow dance across the wall next to your bed. You know you should go back to sleep, but on impulse, you grab your phone and flick your groggy fingers across the touch screen.

It’s a Gmail notification bubble. Normally this could wait until later—who the hell has time to respond to emails at two thirty? Then, you read the subject line of the email:

Subject: You just received $1,297

You realize this is not spam; it’s real. Holy shit! You just made almost $1,300 without lifting a finger.

What would it be like to have this happen every single night? How would it change your life to know that you have a business that pays you automatically every single day, whether or not you decide to “clock in” for work that day, no matter what country you’re in, for the rest of your life?

How would your life change if you had the ultimate security of knowing that you had an army of salespeople working around the clock to make you money and you didn’t have to pay them a dime?

To some people, this might sound like science fiction—or worse yet, a sleazy late-night infomercial. If you’re rolling your eyes all the way to the back of your head right now, I get it. Trust me, I do. I thought the same thing. Then I discovered the power of starting an online business. And I can tell you one thing: All this, and much more, is possible.

Want to learn how I created the life of my dreams (and nearly unlimited income) building online products? Of course you do.

If you’re reading this right now, there’s a good chance you want to start a business. Or you already have. And if so, you’re probably doing some agonizing about how the hell this whole “online business thing works.”

Businesses that were unheard of even a few years ago are making BILLIONS. Despite the consumption of these new products and services, hardly anybody actually knows how to go from consumer to producer. In other words, we are happy to spend our money online, but we have no idea how to make money online.

That ends now.

I feel you! I have spent an incredible amount of time during the past five years planning, strategizing, and growing my own company Rich20Something. So I know a thing or two about what it’s like to be in your shoes.

While I was working on my new book (plug!), I laid out in painstaking detail how businesses make money online (including all the tech, integration, sales process, content creation, product creation, etc.). Here’s a taste of how it works.

The Shocking Reality of Scale (aka, “How Much Money Can I Make?”)

I think the number one thing that surprises most people about info products is how much money you can make with a relatively small email list and halfway-decent marketing.

Here’s a quick example: Let’s say you’re a bomb-ass photographer who wants to teach beginners how to get started in the industry. You decide to create a relatively inexpensive mini-course that will teach step-by-step instructions for taking great wedding photos and booking your first job. Simple enough, right?

You set up a blog and start writing about your photography ideas, and slowly, people start signing up for your email list. It doesn’t happen overnight, but as the months roll by and you keep writing, the subscribers trickle in. After six months, you have your first thousand subscribers.

You make the course and price it at two hundred dollars, then promote it to your list.

The reality of any sales situation (not just online sales) is that only a fraction of people will end up being buyers. And that’s OK. You don’t need everyone to buy; you only want people who are engaged and interested.

Assume that of the thousand people on your list, you get a conversion rate of 5 percent, which is not unrealistic for a small, engaged list:

5% of 1,000 = 50 sales
50 sales at $200 = $10,000

That’s ten thousand dollars from a small email list, after sending out just a few emails! I don’t know about you, but that’s a LOT of money to me. It’s more than most people make in several months, and you’ve done it all automatically from your laptop. You didn’t need a lot of customers, and there’s not a ton of support needed to keep them happy.

But let’s play with the numbers a bit.

Perhaps you want to turn your course into premium, all-inclusive flagship training in the photography business. It will have everything from how to turn the camera on, to how to become a full-time photographer making six figures. A program of this depth is going to require a lot more time on your part, and it’s going to offer a lot more value to the customer, so you’re going to charge more.

This course is going to be priced at two thousand dollars (with an option for payment plans to make it easier on people). Assume that since the price is much higher, the conversion rate is going to go down from a healthy 5 percent to 1 percent, which is industry standard for a course of this price. Look at what happens:

1% of 1,000 = 10 sales
10 sales at $2,000 = $20,000

After tweaking your prices, even with drastically reduced conversion, you’ve still doubled your money. Twenty thousand dollars is a significant fraction of most people’s yearly income—and you’ve managed to make that by simply creating a product that people need and finding ten customers somewhere in the world that are willing to pay for that value.

As your email list grows from one thousand to ten thousand, to a hundred thousand, so will your profits. But it’s all based on the same basic model of giving value up front for free with content, directing people to your email list, and offering them something else.

It’s not magic; it’s just math.

Imagine that you took the same photography product and made it into a recurring product where new content was continually added and users paid fifty dollars per month to access it—similar to the Netflix model. Now, assume that your email list continues to grow and you’re able to continually get people to buy this product. Some people will drop off and more will sign up as the year progresses since it’s a monthly payment, but your average retention rate is about six months. Since the barrier to entry is considerably lower at fifty dollars per month, let’s assume that you can keep a hundred people in the membership program at any given time.

Here’s what those numbers look like for the year:

100 people x $50/month = $5,000 per month
$5,000/month x 12 months = $60,000 per year

Do you see what just happened there? By creating a fifty-dollar product, you’ve just made a NICE yearly salary with only one hundred people. Imagine if you got two hundred people! This is why creating information products is so powerful: It allows you to scale your knowledge and make incredible amounts of money with a small handful of customers in very small niches. This is a POWERFUL business model. (As I write this, I’m also beginning to realize why some pastors are driving Bentleys. If every member of the congregation gives twenty dollars per week . . .)

Note: I’m purposely simplifying the math here so that you can understand the opportunity at hand and the general process for creating an information product business. This isn’t some late-night infomercial where you just set it and forget it—at least not in the beginning. It’s going to take a lot of hard work to get everything set up—but so will any business.

Hell, it’s hard to clock into work every day and work for someone else, isn’t it? If you’re going to be working on something, doesn’t it make sense to create something with this type of flexibility and unlimited potential?

*******

Starting a business is one of the hardest things you can do—and as some of these examples should demonstrate, the answers can often be quite counterintuitive. But you don’t have to do this alone.

If you thought the strategies I shared for how an online business works were helpful, you’re going to love my new book Rich20Something: Ditch Your Average Job, Start An Epic Business, Score The Life You Want.

When I first started my journey into entrepreneurship five years ago, this is the book I wanted to read. Turns out I was destined to write it instead.

I have to tell you guys … it’s taken me an incredible amount of effort to get this work into the world. From the very seedling of an idea three years ago, through the grueling process of pitching agents and publishers, to the actual writing process. I truly left everything on the page with this one—and I’m hoping you’ll benefit from it.

The great thing about this book is that I’ve distilled all the critical parts of figuring out what you want to do with your life, developing your business and leaving the 9-to-5 forever.

(Including the process of scaling your money from 5 to 6 to 7 figures.)

A small sampling of the topics covered in the book:

  • -Why most people can never think of a profitable business idea, and how to become an idea machine
  • -How to completely destroy your fear of failure and pounce on the most important opportunities
  • -Hustling 101: How to make your first $100,000 on the side
    -Why you should never network again, and how to befriend powerful influencers who will gladly help you
    -From freelancer to entrepreneur: How to create an online business that prints money while you sleep
  • -How to eliminate distractions, get laser focused, and crush your goals
  • -The mental tools and daily strategies I use to consistently create world-class work

In total, the book has more than 300 pages of detailed strategies, crazy anecdotes and larger-than-life personalities—including case studies from over a dozen wildly successful entrepreneurs who will tell you exactly how they did it.

Grab it here. Consume it. Start your dream business. Live an incredible life.

Email me from the beach.

Yoda Is Full of Shit: Everyday I'm Trying

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Struggle

 

Struggle

The other day I had the absolute pleasure of sitting down with a local entrepreneur in the ideation stage of her business. She’s working out details about her target market and to a certain extent her offerings.

At one point she said, “I’m going to take the next year to try to get this idea off the ground…” And then she paused and started apologizing for using the word “try”. We all know what Yoda says, right?

“Do or do not. There is no try.”

Well, I’m here to tell you that Yoda is full of shit. Read More

Hitting The Reset Button: What To Do When Things Are Falling Apart

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Reset

Reset

 

Sometimes being an entrepreneur is actually really easy. Things just sort of roll in. You just get clients and you do jobs and you send invoices and they pay you and you have a beer and you post a testimonial and everything is really great.

Sound familiar? Yeah. I didn’t think so.

I don’t know many entrepreneurs who would identify with the above statement. But there’s an interesting thing that I see when I’m talking to entrepreneurs or when I’m reading their posts on whatever medium; people act like everything is going great. And I don’t know why.

A couple days ago I received an email from an entrepreneur that I respect immensely. She’s the CEO of a platform designed to mentor and support women entrepreneurs. These are entrepreneurs that are more likely, statistically, to be successful because they have a woman on their co-founding team but are less likely to be VC funded…for the very same reason. Don’t get me started. Read More

3 Social Media Productivity Tools That Every Entrepreneur Needs

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You know what’s hard about running a business?

You will never have enough time.

It’s the one thing you’re constantly up against.

Whether it’s having enough time to finish a project or enough time to spend with family; the balance of your schedule when running a business is one of the hardest things. We’ve written before about some of the tools that we use to run Hustle & Grind but this time, I wanted to talk specifically about social.

I wanted to talk about a few tools that are both easy to use and cost efficient for managing your social media accounts. In this blog post, I’m going to share a few tools that have helped us be more effective in managing our social media accounts.

These tools have saved us lots of time and money. We’re confident that they’ll be able to do the same for you.  Let’s get to it shall we…

Read More

Why Productivity is Over-rated

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Productivity

Productivity

 

A young woman sort of screeches into my office. She’s a high-performance athlete with a massive social media following and a couple of businesses running on the side.

She sits down, actually, she perches on the edge of my couch like she’s not staying long. She’s a little breathless, she talks rapidly; her eyes dart everywhere, one of her legs jiggles constantly up and down.

She’s here for some help with anxiety and she’s making ME nervous.

I don’t tell her this for I am supposed to be the epitome of calm; a person most qualified to Walk the Talk.

“How can I help you?” I say, as evenly as I can. Read More

Five Side Businesses You Could Start While Working Your 9 to 5

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Failure | Hustle & Grind

So you want to be an Entrepreneur, well guess what?

You’re not alone. In a recent study conducted amongst 18 – 30 year olds, more than 60% of the respondents expressed that they’d like to work for themselves. Yet in reality, most of these people will continue working away in their nine to five jobs and never make the jump into entrepreneurship. For them, they’ll someday die with a big what if stamped on their forehead instead of being able to look back and say they gave it a shot.

Every day people around the globe are embracing the power of entrepreneurship.

The power to make your own hours. The power to set your own goals. The power to work on projects you care about. The power to walk away from a 9 to 5 that isn ’t rewarding and do meaningful work in a place you love with people you trust. That’s the power of entrepreneurship and the power I’m hoping this blog post can help you unlock.

Here are five great side businesses that you could start today:

Read More

Fall From Perfect | How perfectionism is crippling your productivity

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perfectionism

perfectionism

I was watching a recent episode of Shark Tank, when I heard something that struck a nerve. This was more than mere conviction, it was like catching a punch straight to the face. Occasionally, I will hear someone talking to an undesignated audience, yet I feel that he or she is speaking directly to me. As if I had been the star of the Truman Show with the whole world watching and learning the little idiosyncrasies that make me tick on prime-time TV, and now the producer had created a show to specifically tell me that I’d been messing up and it’s time for a change. The Sharks saw something in the man’s pitch and they would have seen it in myself had I been there. They ultimately chose not to partner with the man for one reason: he was a PERFECTIONIST. Read More

Time-Management Success Checklist

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time-management-success

time-management-success

Last week I started work every morning at 4 a.m. One day I was in Denver, the next day I was in Chino Hills, California, the day after that I was in Orange County, and then I finished my work week in beautiful Santa Monica in a hotel room overlooking the ocean.

Even though I bounced around SoCal from hotel to hotel, I never missed a morning of GAI (Getting After It). That’s because I have powerful morning rituals in place that have been part of my success routine for over fifteen years.

These rituals started me on the path to true freedom in my life. It began with me waking up each day at 4:30 a.m. in my tiny apartment in Toronto back in 2003. I’d focus on my number one priority in life (building my online business) before catching the 5:25 a.m. bus to take me downtown to the rich Rosedale neighborhood where I’d train CEOs, professional athletes, and stay-at-home moms from 6 am to 6 pm.

Like you, I had (and have) a busy, seemingly overwhelming schedule. But I conquered the daily grind when I put into place a time management success checklist that started with accomplishing one major victory first thing in the morning. Read More

How To Accomplish Anything in 24 hours

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Manwithlaptop

Manwithlaptop

As a work-at-home Mom, I have mastered the art of finishing things very quickly. But, despite the fact that tasks have to be completed in a short amount of time, my chosen professions require that I am very detail-oriented and error-free with my results.

I am meticulous and calculated in every minute of my day. From the time I wake up until the time I fall into my bed at night, I have my goal for that day in mind and I plan to finish most tasks in 24 hours.
Here are my tips on how to get almost anything done in 24 hours. Read More

Tools of Titans 52 Week Challenge: Introduction and January Review

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ToolsofTitans

 

ToolsofTitans

It is safe to say that the writing of Tim Ferriss has had a major positive impact on my life.
After reading The 4-Hour Workweek, I was inspired to book my dream trip to Nepal to do a 12-day trek through the Himalayan mountains to Mount Everest Base Camp.

After reading The 4-Hour Workweek, I was inspired to book my dream trip to Nepal to do a 12-day trek through the Himalayan mountains to Mount Everest Base Camp (see below for an image of the peak of Mount Everest towering above my head)
Read More

Your $10,000 Product File…(Hint: You already have it)

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Students Working
Students Working

 

You have an information product that people want, you just need to find it, package it and sell it. Trust me, it’s easier than you think.

For example, what do your friends or family tell you’re good at? What challenges have you faced and conquered? Over time have you learned new skills?

These are all products… Finished products. Just sitting in your computer or in your mind, waiting to be shared.

Products created from your personal experience are the best because you know the frustration your clients are going through. Read More