Building an Online Business | Finch Sells

The Entrepreneur’s Survival Instinct: Got It?

Jun 15 2011

Running an online business works in stages. Those stages are typically bemusement, survival and once in a blue moon, the luxury of thriving.

The majority of enterpreneurs are stuck in survival mode. Not because surviving is any easier than winding up bemused, but because most people give up not long after bemusement sets in.

So that leaves the rest of us. Surviving or thriving. What is it for you?

Many people believe their online businesses are thriving, but in reality, they are prospering on the edge of a cliff. Just one stiff breeze from falling in to the oblivion. It’s difficult to determine what distinguishes thriving from surviving, but in my opinion, the ability to take several setbacks in your stride is a decisive factor.

I know many affiliate marketers who are producing profits of five figures on a monthly basis, but I stop short of calling them thrivers. Why? Because they’re surviving in a marginal market. Their methods are the business equivalent of whoring out a one trick pony. If the products they sell change, or the advertisement methods they use disintegrate, it’s very difficult to recover. Such is the pain in the arse that follows any middleman in a volatile industry.

This isn’t to knock affiliate marketers (I am one), but to get to the bottom of the most important quality in a successful online entrepreneur – the ability to survive, at all costs, in rapidly changing markets.

We have to adapt to new methods of generating income, or fall by the wayside as yesterday’s dotcom optimists.

If you are based solely online, you are running a fluid business. By doing away with the brick and mortar, your rent becomes the price of staying aware of how the online space is changing – and how you can affect it.

I remember hating web programming because I resented the endless evolving technologies attached to the craft. Learn one language and I’d find it out of date, or the poorer cousin of a brand new language. In reality, all online businesses are prisoners to the chains of technology. The quicker technology develops, the more proactive you have to be to stay on top of your competition.

For that reason, I always say that it’s wise to build a business on flexible foundations. You don’t want to be so rooted in what you offer that the evolution of technologies predates you before you’ve even started. There’s simply no good in forming a belief system that Money Making Method X will always work, when Money Making Method Y is already the next hot shit.

Adapting to new technology is one requirement for survival, and it could also be linked to the second requirement: Never get lazy.

For the same reason that a World Champion boxer one day finds it difficult to hang with a younger, hungrier opponent, you too have to deal with your own motivations if you want to stay on top. Can you hear that sound? That is the sound of a thousand keyboards being mashed by would-be entrepreneurs all around the world. Everybody wants a slice of the online riches pie, and just because you’ve had a taste, doesn’t mean you have a right to the next bite.

Dealing with laziness and those mornings where the brain just doesn’t want to cooperate are fundamental to enjoying lasting success.

I think the difference between a successful entrepreneur and a persistent failboat is not the output when they’re both hyped and happy to work. The difference shows in the output when direct motivation is hard to come by.

The people I see thriving with the most successful online businesses do not work in bursts. We all love the rush of a sudden motivational kick up the arse to get some work done, but these kicks cannot help you every day. If it takes reading a blog post, or tearing through a self-help book, to spur you in to action, then you are prone to working in bursts.

We can all achieve excellence when we’re motivated and at the height of our games. But retaining that burning motivation as success arrives can be a difficult trait to master. But you must succeed. There are plenty of other entrepreneurs waiting to fill your spot if you don’t match them for work ethic.

Personally, my favourite method for combating laziness is to engage in projects where money isn’t my sole motivation. It’s the only way I can ensure that when money arrives, I won’t relent and consider my job done. Surround yourself in enough reasons to go that extra mile and laziness should never be a problem.

Listen to Bill Gates:

“I never took a day off in my twenties. Not one.”

This type of commitment – besides being practically unhealthy – simply isn’t possible if money is your only driving force.

Recommended This Week:

Check out Filthy Rich Mind, a brand new project I’m collaborating on with a couple of other writers in the self-improvement market. It’s a fun project and if you like off-the-wall advice for improving your lifestyle, subscribe here for updates.
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What You Can Learn From Microsoft And Starbucks

May 30 2011

Pricing our products, services and time can be a tricky business. I’ve spent many hours scratching my head and wondering what a “fair price” would be for my latest products. In reality, there is no such thing as a fair price.

It’s impossible to set a price point that satisfies the maximum amount each of your customers would be willing to pay. You are always going to have customers who scoff at the price. And you are always going to lose money by failing to ask enough of those who have personal valuations higher than yours.

Most of us try to find a middle ground.

We have to balance the advantages of securing many low value sales against making fewer sales at a much healthier margin. The conventional persuasion suggests that more sales is better business. So we lower the prices. This may produce the increased sales, but how many of those customers would have paid much more had we simply asked them to do so?

If the answer is “too many”, it’s time to start taking price targeting seriously. Price targeting is the art of setting different prices for different markets to maximise profits and increase sales in one efficient swoop.

Sounds Pretty Cool, But Who Else Is Price Targeting?

One of my favourite examples comes courtesy of The Undercover Economist, an excellent must-have book that really sheds some light on the relationship between consumers and their purchases.

The book dissects price-targeting by using the example of a cup of coffee.

How much is a cup of coffee worth? Some people will pay $2, others will happily hand over $3. The difficult decision is how to price the coffee in such a way that it’s cheap enough to attract maximum sales at a profitable margin, but expensive enough to milk maximum profit from those who are less money-conscious about their caffeine fix.

Price the coffee too high and you’ll lose sales. Price it too low and you’re leaving money on the table. To find the middle ground, they would have to establish a price that balances the best of both worlds. But there’s actually a much better way of doing business.

So what does the coffee house do?

Take a look at the drinks menu and you’ll see exactly what they do. They use a staggered pricing model.

An ordinary no thrills latte can be picked up for a couple of dollars. This satisfies the customers who would go elsewhere if the coffee became too expensive. And then you have the shit that my girlfriend orders. The premium chilled white mochawhatever blend at over $3. These drinks appeal to the luxury seekers. Those who can justify spending more because they place a higher value on good coffee, and will pay the premium to get their fix.

Many of us assume that because the lavish coffee at the bottom of the menu costs twice as much as a regular latte, it must be twice as expensive to produce. This is actually a textbook demonstration of price targeting.

Realistically, it only costs a few extra cents to produce the luxury drink. But the mark up value could have you believe that the shop is sourcing ingredients from a distant organic paradise. This is rarely ever the case.

The lavish coffee shows how much the shop WANTS to charge, and the budget coffee is what it can AFFORD to charge. The shop has the means to sell the luxury coffee at a few cents more than the ordinary latte and still make the same margin of profit. But to do so would be to set a uniform price for all coffee lovers, when some are quite happy to pay the premium.

How Price Targeting Can Work For You

How can we spin the coffee example in to something that an online entrepreneur would be familiar with? Well how about we start with the notorious “full support” upgrade that comes with many online services?

How many times have you compared prices for a digital product only to find that the biggest price hiker is 24/7 support?

Your web server might only cost $50/month with the regular plan. This is a price point that is designed to attract the budget brigade. But your hosting provider knows full well that not every professional is budget conscious when it comes to his web hosting. For those who are prepared to pay more, why leave the money on the table?

If throwing in unlimited 24/7 support allows the provider to charge $75/month instead of $50, they have found a way of appealing to both those who are happy to pay more (extra value, peace of mind), and those who can only justify the budget option.

But then you have to ask yourself; What is the true cost of providing 24/7 customer support? Most of the companies who offer this upsell ALREADY provide 24/7 support for their budget customers. But it doesn’t make sense to campaign on this information. You can’t expect your premium customers to pay the extra $25/month if the budget customers are enjoying the same quality of service for less money.

Many companies will actually make a conscious effort to devalue their “starter packages”, knowing full well that they can’t allow the difference in service to become so marginal that a high paying customer would realise there is little to gain in paying more.

Is there really a need for so many different versions of Windows? We have Home, Professional and Ultimate. Microsoft could quite easily bundle all the capabilities of Ultimate in to EVERY installation. But if my Home edition were as powerful as the Ultimate edition, how could Microsoft possibly charge corporate companies through the nose for the same product? So, of course, Microsoft takes it’s carefully designed software and sabotages it.

They remove enough features to create three very different markets that price themselves accordingly. Crazily enough, the cost of rolling out the weaker product is often greater than the premium version. The additional effort of stripping away functionality can incur extra costs. But it’s worth it for Microsoft because the cream of the crop will be handing over an extra $100 per installation.

When you board an airplane in economy class, do you really think your legs are cramped because the massive profit spinning airline couldn’t afford to specify a few extra cms of room when designing the aircraft? The experience is designed to be marginally uncomfortable so that these companies can still milk money from the picky flyers who are willing to pay extra for first class.

Examples of effective price targeting are all around you. From the trains you board, to the groceries you buy, to the clothes you wear. We make decisions everyday on the value of these items. You should give your own customers every opportunity to find a deal they agree with.

Price Targeting Is Just Plain Smart

When you look at your own products and services, ask yourself what could you be doing differently to effectively price target your customers. Developing a fantastic solution gives you enormous control. You may be selling your product at $150 and attracting sales from both the budget spenders and the corporate ties and suits.

Think about what could be added to the product that would allow you to charge $250. And what could be removed that would allow you to capture more customers at $100?

Structured price targeting gives you the ability to place the ball in the customer’s court and ask: “How much are you willing to pay?” If you never ask this question, you will never realise your maximum sales OR your maximum profit margins.

Recommended This Week:

Check out Filthy Rich Mind, a brand new project I’m collaborating on with a couple of other writers in the self-improvement market. It’s a fun project and if you like off-the-wall advice for improving your lifestyle, subscribe here for updates.
And, of course, don’t forget to subscribe to this blog too if you haven’t already done so. Love you long time. C’est vrai, c’est vrai.

Time Management And The Million Dollar Mistake

May 22 2011

If a business is centered around your individual talents, the need for good time management should be as obvious as a slap in the face. Running a business as the solo brains can be a grueling ordeal at the best of times. It becomes a nightmare if you are guilty of mismanaging time.

How often do you use time as an excuse for failing to meet the targets you set for yourself? Anybody who uses the phrase “there simply aren’t enough hours in the day” needs to realise that time is always at their disposal, and the only thing lacking is personal drive. Yes, even for those with four kids, demanding wives and multiple jobs. Good time management backed by decisive action is an unstoppable recipe for success.

I have dozens of websites in my portfolio. Some are fully realised and highly successful, others are half baked, while the rest resemble hilariously ill-conceived brainfarts that never should have seen the light of a GoDaddy domain checkout cart.

Finding time for so many projects can be an enormous headache, particularly when your attention is divided even further by a hyperactive affiliate marketing career.

It’s very easy to label the successful projects as the best ideas, but in the purest sense, they’re simply the areas you chose to spend your most valuable time. If you’re spending all your time on websites that have reached their peak and still don’t provide the monetary return you need to run a successful business, you’re stumping your own growth.

I only started making money online when I established that the correlation between websites I enjoyed building, and websites I made money from, wasn’t as strong as I first imagined. While you should always pursue your passions and aim for something genuine (it gives you a competitive advantage over the majority of Internet Marketers), you have to balance your time accordingly and work where the money is.

The biggest time management mistake, in my opinion, is the tendency to overestimate how long a task will require through to completion.

Before I grasped the error of my ways, I would assign myself task lists that looked like this:

1 hour: Write a new blog post on…
30 mins: Bookmark, update on Twitter, post on Facebook etc…

Now, what is wrong with that schedule? It’s always so tempting to divide our goals in to neat hourly chunks, but it would be foolish to do so. I would typically spend longer than an hour writing the blog post. But my “social bookmarking” spree would spiral in to 25 minutes of bitching on Twitter over nothing in particular. My schedule suggested that 30 minutes was necessary, and my attitude made it so.

You will naturally increase how long each task takes if you assign a longer time frame than is necessary. Doing so invites the draining twin sisters of procrastination and indecision in to your day. Work to a tighter deadline and you will often get a job done to the same quality in shorter time.

Deadlines are often seen in a negative light. They loom on the horizon as threatening confirmations of failure. But enormous power goes to the entrepreneur who can use the power of deadlines to control all he needs to be. I believe deadlines should be worshipped as the necessary milestones for turning our best kept ideas in to something physical.

In those calm moments where we sit down and sketch the steps required to reach our goals, we are using perfect logic. You can often find a great sense of clarity and expectation by scribbling what it is that you have to do. Your brain never betrays you. The steps you write are typically accurate blueprint plans for creating the success you desire. It’s the refusal to set a deadline that stops the plan from coming to fruition.

If your office storage is anything like mine, you already have a notepad tucked away somewhere with a foolproof idea worth millions of dollars. The moment you confined it to the back of your memory by refusing to set a deadline, you said goodbye to those riches. For your best planned ideas to be worth more than the paper they’re written on, they need to be set in to action with a definitive deadline.

Surely deep down, you understand that great achievers are never found guilty of underestimating what they can achieve in an hour’s work. If you spend day after day sending your brain in to a stupor while setting time aside for chores like linkbuilding and commenting on articles, how do you expect it to develop a winning mentality that aspires to be more than just a slave labourer?

But, I hear you say, those small stupor-inducing tasks add up. We need to build backlinks for our websites, and we need to share updates over Twitter. And I can’t deny that it’s often necessary, but it should never be the backbone of your working day. Making it so is time management gone severely wrong.

People forget how the skill of managing time encompasses more than simply assigning scheduling tasks. It also means delegating or outsourcing the simple work. Anything that distracts you from being the creative and innovative brains at the helm of your business is a burden you should do without.

Likewise, cluttered to-do lists are a sign of poorly planned scheduling and short term thinking. A stressed looking businessman with seventeen items on his to-do list usually only has himself to blame. Half of those items should have been done yesterday, and the other half could be done tomorrow. Assigning too many meaningless tasks is the best way to ensure you’re left feeling unsatisfied at the end of the day, and unmotivated throughout it.

When allowed to degenerate, poor time management becomes a vicious cycle. We create new problems and then burden ourselves with enormous stress by losing the clarity of our original plans.

Many entrepreneurs persistently undervalue their time and by doing so, fail to realise the true potential of their businesses. It may start with a notepad scribble, but all achievement has to be nursed through deadlines and bouts of self-discipline.

Being too busy for a moment of inspiration could turn in to your million dollar mistake.

Recommended This Week:

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