Thursday, January 20, 2005

Organizing Your Way to Money

The Norwegian Biochemical Society (NBS) have for 41 years organized a so-called "contact meeting" where invited speakers and NBS members share their research, chat, eat a lot of excellent food, and drink throughout the nights.

This year, the meeting was held in Tromsø -- a city so far north in Norway, they have the midnight sun. Unfortunately, this is only during summer; in winter, there is no sun whatsoever. Until January 21, this is the land of the midday dark.

By a twist of fate, I'm attending this meeting, listening to talks with intriguing titles like Sir Phillip Cohen's lecture: "Protein Kinase Inhibitors; The Major Drug of the 21st Century?" and Rudolf Amann's "Exploring Unknown Microbial Diversity by Environmental Genomics".

Now, the reason why I'm telling you about a meeting organized by the Norwegian Biochemical Society in this blog, which is supposed to be about programmers and money, is because it got me thinking of one very important aspect about how to make, yes, money.

The NBS's 41st Contact Meeting has 427 participants, which includes members, invited speakers, and exhibitors. It lasts from Thursday to Sunday, in a city far away from most of us. So we all need accommodation and food. In fact, there are so many of us that lunch is spread over two hotels and one restaurant -- because none of them have to capacity to cater for all of us. And the point is, all of this is running smoothly, it is, in one word, very well organized.

Now, being able to organize stuff is one excellent way of making money. A very basic example: You are young and at a school trip, and everybody wants to order pizza. So you locate the pizza place, you do the maths on how many pizzas you need, how much that will cost, and how much that is per person. Then you add a little bit per person, collect the money before you buy the pizzas, and, like almost out of thin air, you've created some money for yourself (and probably some free pizza).

Now, you may not be comfortable making money of your friends like that, but what if these people were not your friends? Isn't that was a lot of business is about -- organizing stuff for many people, and then charging them a little bit extra, for the organizing?

Of course, if you do something like this, you create a business. But at the same time, you create a job. A job that ties up your time. And this is not good in the long run. You want to be free, and have more time, not less. A job that stops paying you when you stop working it is no good, if you want your financial freedom. You don't want to end up trapped in a job, even though you created it yourself. That isn't much better than being trapped in a job somebody else created, is it?

So you do this. You work on your business, not in it. Yes, you do the job yourself, many times, but all that time you figure out better ways of doing that stuff you're doing, more efficient ways, less expensive ways. And you create a step-by-step manual, rules, so that anyone following those rules will end up with the same excellent results. And when you've got steps that work so well that this brings you enough income to live well on -- you give the job to someone else.

What? Am I saying that after you've done all that tedious work and created a nice income for yourself, you shouldn't stay exactly where you are, and make all those dollars?

Let's see what happens if you do. You employ someone to follow your step-by-step instructions, and that creates the money, and you give that person a salary -- something he or she can live on, let's say 80% of the income. What happens then? Hey, you've created a passive income stream for yourself. You hardly do anything anymore, and yet, the money is still deposited into your bank account.

You've organized your way into money. And because you have to step-by-step guide, you can, quite easily, duplicate that income stream, let's say in another city or maybe even another country -- or just in another suburb.

If you also realize that what you've created isn't only a step-by-step guide, but a money-making machine, you can sell that guide for a very high price, to many people, effectively franchising your business.

And what, I hear you say, has this to do with us programmers? Maybe I don't like go into the real world and do all that stuff you're talking about. It sounds a bit scary. I'm happy right here by my keyboard, thank you very much.

Well, the answer is: everything! Most programmers I know are great at organizing -- their code, that is. This means that they are are also very good at problem solving and creating systems that solve problems. And that is exactly what I've been talking about -- that step-by-step guide is an algorithm, it is, in effect, a system that solves a problem. And hey, there are a lot of unsolved problems that you can solve by creating code!

So I know you can make systems that solve problems. The question then is, can you sell it? We don't like to sell, do we? But it doesn't have to be difficult, and that will be the topic for an upcoming blog entry.

The northern lights, the Aurora Borealis, is really beautiful up here in Tromsø. It waves quickly across the skies at night, pouring it's magnificent colors across the dark heavens. And that sight is worth more than any money. If you're following this blog, you know what I'm talking about.

Frozen hugs,
Sten, Rica Ishavshotell, Tromsø, Jan. 14th 2005

Wednesday, January 12, 2005

Make Money on the Web without a webpage - Revisited & Killed

People have been playing the GoogleCash game for a while now, and I've spoken about it before. It's all about finding an affiliate-program that converts well and pays well, and then placing ads on Google with AdWords to the affiliate-link.(If you didn't quite follow that, you may want to read this post.)

Some people have been making money this way, others have lost a bit to Google. I mentioned in an earlier post that I'd rather go make myself a cup of coffee -- it didn't seem to me to be a good way of making any money.

Well, now it seems Google doesn't like this either, because, when you searched for a term, often all the ads you got would be to the same merchant - through different affiliates. Now this is bad for Google, because it makes the ads less interesting to surfers. So last week, Google changed their policy. Now, only two ads to the same merchant will show at any one time, and those will be the best performing ones! So it will hardly pay to play the GoogleCash game anymore.

This is good news for affiliates who aren't afraid of a bit of work. If, instead of trying to set up an "instant-business" like GoogleCash, you provide your own information through your website or your email newsletter, you add value for your visitor - and you get the click that makes you money.

You could use Google AdWords to buy traffic to your website, if it converted really well (that is, a lot of your visitors became paying customers). Or you could do the best thing, and create several content-laden info pages, that the search engines would find and rank highly, and your visitors would love.

Now, I know I'm jumping into the deep end of affiliate marketing here, and this post isn't really about affiliate marketing. I just wanted to say that when you see something that looks like easy money, it is often too good to be true! I bet most people who tried this, lost their money anyway, and that only people who knew how to do proper keyword-research could get low enough prices per click to actually break even. Now, if you had this knowledge, I see no reason why you wouldn't play the game. You can make money on a lot of things if you know what you're doing! Which I guess is the whole message of this rather whimsical post:

Knowledge is key.

And love, of course, but you knew that,
Sten, Oslo, Jan. 12th 2005

Tuesday, January 04, 2005

Online Niches, Toys, and Lady Luck

I've a couple of programmer friends down in Melbourne, Australia, who have mixed their technical skills with a bit of real world savvy to create a new income stream for themselves. Spending time instead of money, they've customized the open source Zen Cart, which is free shopping cart software for Internet merchants. It is nice to be a programmer.

But let's step back for a sec, and look at what comes before you open that store.

Even more so than in the real world, finding a profitable niche is key to making money. In the real world, location is the primary factor. If you're located somewhere there are lots of people, some of them will come into your shop, and some of them will buy your stuff. It's a number's game. How many people can you get into your shop? How many of these again wil buy something? What will they spend, on average? If you know these things, you can calculate how much you will make, and thence also how much you can afford to pay for the location. Calculating estimates of these numbers for several locations will give you a good idea of what location would be profitable for you, in the real world.

On the net, nobody just happens to pass buy your store, look in your window, and see something they need. People on the net are searching for information! This is why it is so important to find yourself a niche.

If you find a profitable niche, and populate your site with good, relevant information, surfers will find your site through the web engines - and love it!

If you're looking to start a whole new business, and you want it to be online, you're in a very good position. People who already have a business and need to take it online, have a big disadvantage. It is this:

They are stuck in their niche.

Now, if that niche just happens to be one with a high demand and low supplies, then that's not bad at all. They're lucky. No problem.

But you don't need to, and you should not, rely on lady luck to run your business. You don't need luck. You need knowledge and skills (which is why you're reading this blog, I presume).

If you have some ideas on what you want to do, there are some wonderful research tools to tell you, before you start putting all that effort into creating something, how well your efforts are likely to pay off.

You see, there are several factors determining whether or not your online venture will be successfull. But luck is not one of them.

You need most of your web site visitors to come from the search engines. It is okay to pay for some traffic if your site converts well - that is, if it turns a sufficient percentage of your visitors into paying customers.

To get the free visitors from the search engines, you need to be in the right niche.

Finding a niche boils down to this:

You need there to be a lot of people searching for what you'll offer. Having 100% of all customers in the world isn't worth much if there are only 2 of them.

You need there to be not too much competition. Some competition is good, it means that there is some money in this niche. But if there are hundreds or thousands of websites trying to service your niche, there is just too much competition.

So you need to find a niche where lots of people are searching for something (a solution to a problem), and where not too many websites are providing what they are searching for (the solution). If you can find a niche like this, then your chances of success are greatly enhanced.

There are several good tools out there for looking up niches. My favourite is Wordtracker, which helps you brainstorm your topic, and then shows you how profitable your keywords seem to be, using a calculation where each keyword (or search phrase) gets a score called a KEI score. A high KEI score (in the hundreds), indicate a lucrative niche.

So now you know about a niche that has a high demand and a low supply, you can start creating something for which you know there is a market! Now, that's quite a head start on most businesses!

Well, back to my friends in Melbourne, I think they were more lucky than talented when they chose their niche, but as it happens, they've found a niche that seems to work very well for them. They started out selling Transformers figurines, and with time have grown to sell other figurines and dvds and that sort of stuff as well. They're starting to get some traffic from the search engines, and the site is converting well. This is something they couldn't have done in a more competitive niche, or in a niche with fewer customers. So the store works out great, you can check it out at TransfigureToys.

But do not take a lesson from my Ozzy friends. Don't rely on luck for your own business! Do your research before you start building anything. The work you do here will pay you many, many times over in the time that comes.

Then again, all you need is love.

Sten, Oslo, Jan. 4th 2005