Getting To $100,000 – Bootstrapping A Successful Business Is Easier Than You Think
You’d like to start a business – a successful business. But you don’t know how. Replacing your salary and your boring job with a successful business seems impossible. But it’s not impossible. In fact, it’s easier than you think – if you do it right.
I used to think that starting a business was impossible until I did it. Even though my business is still young and growing, it’s on track to perform extremely well this year. Of course, I have the benefit of a monthly salary that keeps me from having to sell, but that’s a safety net, not an excuse.
Here is my strategy to go from zero to hero and earn $100,000 a year from my business.
Why niches don’t work
Just about every business book you ever read says “find a niche and sell to them!” On paper, this sounds like a great strategy, but in the real world it rarely works.
Of course, niche businesses can make lots of money – in the physical space. Someone who makes a physical product for a specific group of people can usually command a monopoly on that item for a long time. They may even be able to patent it.
In the web space, however, this is not true. That’s because online businesses are as much a numbers game as anything else. If your product is in a niche, you’ve unnecessarily shrunk the audience for your product.
That’s not to say you should sell a general product that appeals to everyone – far from it.
A specific audience beats a niche every time
The plan I have doesn’t involve niches. It involves audiences. There’s a huge difference between the two.
The definition of an audience is a group of people that, when asked at a party what they do, would respond with the audience they’re in. For example, if you ask me at a party what I do, I’ll say “I’m a web developer.” That’s an audience (a vast audience at that).
Digging down I’m a PHP web developer and a Python web developer. These are smaller audiences but still have sizable constituencies. These audiences are large enough to support a product.
On the other hand, “web developers between the ages of 25 and 35, who love cats” is a niche. Sure, there may be a few thousand of these folks, yet reaching all of them is impossible. This niche is too small to support a product or a business, at least online.
Consulting isn’t a magic bullet
Most developers think that when they want to go out on their own they’ll simply do what they’re doing now: writing code, in exchange for money, at an hourly rate higher than their present rate, for people who need to have code written.
Bzzt. Wrong. Sorry.
Developers who think this way forget a few important details. First, when you write code for someone else, you’re at the bottom of the food chain, not the top. Someone hired you to create value for them. They hired you to help them make money. They’re taking the lion’s share of the revenue, not you.
I recently did a small consulting project for a businessman who sells diet information. I earned $2,500 for my few hours of work. He earned a quarter of a million dollars.
Which one of us would you rather be?
Another drawback of consulting is that when you stop working, the money stops flowing. Want to take a vacation? You can’t lie on a beach and be in a conference call at the same time (you can, but it’s not pleasant). Get sick? The bills pile up, but the money doesn’t.
And don’t even get me started on chasing down deadbeat customers. Sure, signing a $20,000 contract might feel great but signing a contract and collecting are different stories. I’d much rather sell something that collects money in exchange for value up front.
Getting to $100,000
The theory is nice, but how does that get you to $100,000? After all, talking about making money is one thing; actually making it is quite another.
So far, my book has earned on average $2,500 a month. While I can expect that sales will drop off to some degree (that’s inevitable as the book ages), I have several new products in the works. I’m in the process of launching a class, and I’m working on a couple SaaS projects. Plus, I’m working on my third book.
All of this adds up. Running a product business is about getting multiplication to work for you: product price x sales = revenue.
A SaaS business that charges $29 a month and has 70 monthly customers earns $2,030 a month, or $24,360 a year.
A book that has three pricing options at $49, $99 and $199 and sells 300 copies at an average sales price of $79 earns $23,700.
A class that sells 25 seats at $599 and repeats four times a year earns $59,900.
Accounting for residual sales of existing products (as they age out) at $1,000 a month that’s $119,960 a year in revenue.
I can’t do that! You have X advantage!
I have an advantage you say? 1,400 Twitter followers? 20,000 monthly blog readers? 1,000 mailing list subscribers?
I didn’t have any of that until I started producing valuable content. The key word there is valuable. After all, you didn’t read this blog post so far down because it was useless, did you? Q.E.D.
The key to success is to provide a good value to whoever is consuming your product. This blog post is a product – a free product – but it still has value to the people who read it. Of those people, a certain number will click the link to one of my products. They’ll see value there too and they’ll buy.
I’m focused on providing great value because that’s the only true competitive advantage that I have. Producing a crappy product isn’t how you succeed. Competing on price isn’t how you make it. An old sales joke says “sure we lose money on every sale, but we can make it up on volume!” That’s no way to run a business.
Creating a business that earns $100,000 a year isn’t the hard part. Creating solid value is the hard part. That has to be the focus or the business won’t succeed. Which is why audience selection is such an important part of creating your business.
So how do you get started?
Believe it or not, I’m not selling anything in this blog post. Other than convincing you that you can succeed. If you want to succeed, you can.
The place that all of this made sense for me is in Amy Hoy’s 30×500 class. She teaches a system for creating predictable success, but beyond that she rewires your brain to think differently about business. It’s not about ideas it’s about audience. Research first. Make it about them, not you!
I might sound like an ad for Amy’s class, but that’s not my goal. Amy isn’t paying me to advertise for her; I’m simply sharing my “secret”, which is no secret at all. 30×500 changed my life. It can change yours too.
What are you waiting for?
Businesses don’t start themselves. What are you doing today that can get you from $0 to $100,000? The final number isn’t the goal: success is about small wins, not big ones. Every day that you move forward on a business, you’re making a small win. Every day you write a chapter, put some code down, do some research on an audience, talk to a customer or write a blog post, you’re building up small wins. Pretty soon, these small wins turn into big numbers. You can do it!
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