My plan of action to accomplish this will be to continue some research I started last year as a part of a Software Roundtable I’m participating in.  This involves calling businesses up and literally getting into conversation with people to find out what their problems are and whether those problems could be solved with software (in particular a “software as a service” web app).  I’ve chosen to focus on medical practices mainly because they’ll always have ‘customers’ and they always seem to have problems.

The process of finding a good idea isn’t easy, and definitely won’t happen overnight, but after talking to dozens of practice managers, I’m definitely beginning to recognize some recurring problems.  Hopefully, at least one of these problems will turn into a good software product I can sell for a monthly fee.

Of course, a business will need to make more than $1k/month in order to really be considered successful, but in my experience, New Years resolutions never seem to be successful if you aim too high (to date, my only real success as far as New Years resolutions are concerned was to start drinking tea!).  So although the bar is set reasonably low to start off with, I definitely hope to build things further once I reach that initial milestone.

That’s all I’ve got to say for now, but I’ll be updating this blog frequently to keep myself accountable, so please feel free to follow along!

Pyjamas aside, starting an e-commerce store is exciting and yes, in some cases does have the possibility of making you rich. Of course in reality the greater likelihood is never making more than milk money and averaging one sale per year (or less), but with Shopify it’s so easy and cheap to get set up, you may as well take the risk. You don’t need to worry about bandwidth, security, bugs – it’s all taken care of by Shopify so that you can concentrate on marketing and selling your products.

Big get-off-your-backside incentive: Start a Shopify store and you could be in to win!

Fancy wining $100,000? How about a trip for two to New York to meet Seth Godin, Gary Vaynerchuk and then a trip back to San Francisco to meet Tim Ferriss? Shopify are giving a fantastic incentive to first time e-commerce entrepreneurs, all you have to do is open your own Shopify store, sell anything you want and if you make the most revenue in any 2 months this year you’ll be in for the top prize.

DODOcase entered the competition last year and ended up winning the $100k prize. At that time they were just selling a single product (check out their story here) and have since become even more successful with annual sales reaching $4-5 million dollars.

“But there’s no way I can win this contest…”

Not with that attitude there isn’t! Seriously though, let’s imagine you compete and the winning store does two $100k months compared to your two best months at $10k. Sure you lose, but you’re left with an $100k/per year e-commerce business, so who really cares?

I’m joining, are you?

My wife and I have been sitting on a smallish idea, and this year’s Shopify competition has made us decide to give it a shot. We’ll do it as a hobby project in our spare time to start off with and if it takes off, well that’ll make things interesting won’t it?

I’ll reveal more details about our new store soon, till then why not sign up to Shopify and join the contest?

Here are my reasons;

I want to support a start up

I’m hoping to build a few apps of my own and even on the outset I can see how much work is involved.  In sticking with SkyClerk I can help support another start up.  Something I hope others in the industry do as well.
“But Xero’s a start up too isn’t it?”  No, not in my books.  A start up doesn’t start with millions of dollars of investors money to play with.  Xero has been a fully fledged business from the start, funding by successful New Zealand businessman.

It’s not bloated

Some people love Xero’s UI but I’m not one of them.  It took me ages to figure out how to do something as simple as add an expense in my trial account.  It shouldn’t be that hard to use!  It’s plethora of features is probably very handy for larger business, but for a one-man band it is absolute overkill.

On the other hand SkyClerk is designed very nicely (I believe Josh Hemsley is behind the original design) and is simple and easy to use.  They are adding features, but so far they have been conscious not to move away from the pure minimalist approach (and I hope it stays that way).

It’s cheaper

I think I’ve got a grandfathered account which is costing me $5/month, but even their current price of $9/month is a lot cheaper than what I’d have to pay if I switched to Xero.The automatic bank feed through Xero is nice though, and in some ways worth the extra money…but my previous 2 reasons still stand.

If you’re a smaller business I’d recommend seriously considering SkyLedger for your accounting/bookkeeping purposes.  It’s what accounting software would look like if 37Signals built it.

*I’m told SkyClerk will offer invoicing by the end of April.

I don’t want this to turn into a RoR vs. Django discussion, but just so people are aware, for the following reasons I’ve decided to change course and learn Python and then the Django framework.

1. If I know people face-to-face who know the language I’m in a lot better position to get help if I’m stuck (provided they don’t get sick of me asking).
2. My boss recommended it which could possibly mean I can spend some time at work learning it (can’t beat getting paid to learn in work time)!
3. While it seems both communities are pretty vibrant at the moment, more people know how to code in Python than Ruby (Python has been around for almost 2 decades longer than Ruby has).  This means they’ll be a wider group of people online who can answer my annoying beginner questions (Nai Chng mentions in this article that there are far more Python questions being asked on Stackoverflow than Ruby questions).
4. With all the random coincidences of being recommended Django over Rails, it just seems like I’m being led towards the Django framework!
5. There’s no reason why I can’t switch again and go back to learning Ruby on Rails if need be.

I’ll put up periodic updates on my learning progress and hope to post a link to my first web app in a couple of months or so.

P.S.  Please don’t start a Django vs. Rails argument!

The start up costs are higher and unlike selling digital products you may end up being left with a garage full of unsold stock as a reminder of your failed attempt.  However, if you find the right niche and manage to structure your business to run hands off, you’ll be onto a winner.

Sell a hot seasonal product

Food businesses can sometimes be the most successful small businesses.  In fact, I’ve heard of some Fish ‘n Chip shops in holiday towns in my home country that are so successful in the busy holiday months they can bascially close up shop for the other months of the year and still enjoy annual incomes in the low to mid 6 figure range (with the majority of it earned in 2 or 3 months).

Sell a product with high markup

Selling a product with low profit margins is no fun (unless it sells for millions).  If you can sell products with 6-8x markup however, you can break even a lot sooner and sell a lot less product.  Gelato shops are one example of this.  They often sell nothing more than a single product which is sold for a premium price even though it’s made up of ice more than anything else.

Sell accessories

Selling accessories to hot selling products can be very successful.  People buy their new iPhone, or new HDTV and all of a sudden they’re looking for accessories they ‘need’ to go with it.  Cases, brackets, screen protectors – all of these are able to be sold at high markups, especially after someones spent hundreds or thousands buying the main product.

Patrick Buckley is one guy who used the buzz of Apple’s new iPad product to create his own million dollar business:

How An iPad Case Generated Close To $1 Mil In Revenue Within 3 Months

Test market demand using eBay or Google AdWords

Although testing physical products can be expensive, there are ways to test market demand without risking your entire savings.  Getting a small lot of products and selling them on eBaby is one method, then there’s the tactic made famous by Tim Ferriss in the 4 Hour Work Week where you set up a simple ecommerce website, put ads up on Google and then see how many people clicking on the ad will go ahead and buy the product (you can show a ‘Sorry, out of stock’ message to avoid having to actually ship the product).

Justin D’Angelo managed to avoid getting a ‘real job’ by selling items on eBay and eventually tapping into a growing market of selling poof chairs:

24-year-old takes in $150,000 annually selling poof chairs (note, this article was published back in 2005)

Should you sell a physical product?

Sure, if you’ve got an idea that you’re passionate about.  These days there are ways to test demand and viability without spending all your money.  Just be aware you’ll be dealing with ongoing costs that sellers of digital products are avoiding – shipping, stock insurance, product returns, warehousing costs (as you get bigger) to name a few.

This is very common advice these days.  We obviously all have limited time available to us and if you’re not a programmer but you need some code written, the best plan is to outsource it, right?  It makes sense and it could mean your project gets off the ground 6 months sooner than you would have if you’d decided to learn to code yourself.

I’m not denying the virtues of outsourcing tasks you are less competent at, especially if it saves time and improves quality.  I’ve outsourced a number of technical jobs in the past, from graphic design to getting some PHP code written, and while sure I’ll continue to outsource in the future, I’d like to give you a few reasons why learning to code yourself is a good idea.

1. It’s hard

It’s not rocket science, but it does have a step learning curve you need to get over.  If you want to be successful in business you need to be able to step up to whatever challenge comes your way.  Learning a programming language is like learning a spoken language – it stretches your brain and makes you think logicially.  It also teaches you to solve problems (kind of like hard core Sudoku).

2. You should do every task in your business at least once

It doesn’t mean you need to do it well, but the idea is you’ll have a far greater understanding of your business if you done all tasks from cleaning the coffee machine, to answering support emails.  This doesn’t mean you need to code an entire application from scratch but you should get to the point where you do some damage and at least vaguely understand the source code.

3. It’s a valuable skill

Once you’ve mastered the basics of a programming language you’ll have added another notch to your skill set.  Even if your business idea fails you can always go and use this skill.  You’ll have taught yourself what is possible but also how long it takes and why people can easily miscomunicate tasks when a non-programmer asks a programmer to do a task.

And hey, you might even be able to get yourself a job as a programmer!

4. You won’t be at the mercy of your technical person

Even if you never get to learn a scripting language you should at least know how to work with HTML/CSS.  Not knowing how to change a simple thing on your website (like adding a sidebar or changing the way a footer looks) is crippling in my opinion.

5. It allows you to build your Minimum Viable Product

The biggest reason that I recommend everyone learns to code is because you’ll (eventually) be able to execute your ideas extremely quickly.  You may never get to the point where you can do everything yourself as quickly as a professional programmer would – but it’s a powerful thing to be able to build a bare bones working version of your idea without needing to hire a programmer.  You’ll very quickly have feedback from beta users and then be able to make a decision of whether it’s worth it to invest more time and money into the idea.

Suddenly you’ll be able to test your ideas a lot faster and without needing to risk investing large amounts of money.  Instead of brain storming your idea all the way through to the last problem, you’ll be able to put something out there and get feedback to find out if there really is a market and it really does solve a problem.

Of course I’m not saying you wouldn’t be doing market research or a $20 Starbucks Test, but in some instances if you see a need in an industry in which you already have an audience, it may just be worth throwing something against the wall and seeing if it sticks.   That can throw can be expensive and messy if you’ve had to hire a programmer, but if all it’s cost you is a few late nights you really haven’t lost much.

So… I’ve decide to learn Ruby on Rails

I’ve taught myself web design and from building a few WordPress themes I’ve learnt some PHP.  However over the next few months I’ve decided to learn the Ruby on Rails framework which is known for being friendly to quickly building prototypes by never having to reinvent the wheel.

I’m going to write about my progress learning Ruby and the Ruby on Rails framework and will give regular updates on this blog.  Who knows, maybe I’ll regret writing this blog post!  Either way though, I’ll be sure to have learnt a lot.

Although learning to code and building software by yourself isn’t strictly an entrepreneurial success story, it is definitely classed in a very similar category (at least in my books).  The captivating thing about entrepreneurs is that they can start with nothing, recognize a problem, figure out a solution and create a business that generates income, creates jobs and builds up the economy.

In the same token, learning to code is something anyone can do.  There are near unlimited resources on the Internet (a large majority of them free) which teach you how to design, build and program a website.  As long as you have access to a computer and the Internet you’re on a level playing field with everyone else.

Of course once you’ve established your skills as a programmer it doesn’t guarantee you’ll become a millionaire.  But these days, with the Internet being the biggest marketplace in the world (and one that’s continually growing), being able to code and implement your ideas is a very powerful thing even if later on you choose to pay someone else to do the coding for you.

In this account, Tracy explains how she executed her idea for a website, how she learnt to program, how she generated the first user base and also how she plans to monetize the site later on.

Check it out:  I’m a designer who learned Django and launched her first webapp in 6 weeks

There’s a lot of business advice out there saying you shouldn’t learn to program but instead hire people to do it for you.  In some instances I’m sure that is the right advice.  But there are also plenty of examples where people have made the decision to learn to code themselves and the payoff has made it worth it.

Footnotes:

1. I personally plan (when I have the time) to write my own books and stories with rags to riches storylines.  Yes, they’ll have predictable endings, but then that’s what makes many stories so enjoyable.
2. Regarding entrepreneural movies, make sure to check out Atlas Shrugged when it comes out later this year.

First level:  Sell raw materials

Selling raw materials is easy.  Grow the trees, harvest the crops, mine or extract the minerals, chuck them onto a truck, train or boat and sell them to some other company (often in a different country).  There’ll always be demand for raw materials like wood, stone, coal or raw food products but the problem with this industry is the return on investment will always be at it’s lowest.  The best way for a raw materials company to make a lot more money is to go to the next level.

Second level: Adding value before selling the raw materials

Even-length planks of wood are worth a lot more than tree trunks that have just been chopped down.  Businesses that originally start by selling logs will soon learn to go the extra mile and cut the wood into more usable pieces which allow them to sell their products for many times more than they’d get for raw logs.  This applies to any raw material – take it to the next step of the product creation chain and you’ll make more money selling it (usually exponentially more).

What you see in developing countries is that they’ll slowly move from selling raw materials, onto manufacturing and end up selling the actual consumer products.  The amount of wood used to build a nice table or desk is tiny compared to the price at which you can sell the furniture.

Third level: Selling information/data

The amount of profit a company would pocket by selling desks instead of planks of wood doesn’t compare to the profit levels available to companies that are selling information instead of physical products.  The world’s leading economies are no longer selling raw materials or even finished consumer goods.  The money is now in selling information.

Creating a good software product may take many months of development, but once that has been done the finished product can be sold on CD/DVD or downloaded off the Interent for almost 100% profit (yes, there are still overhead costs but the thing to realise is it’s information that’s being purchased, not physical goods which require raw materials and labor for each and every sale).

Take-home message: Start selling information products!

More and more successful businesses are being started these days on the Internet by selling information not physical products.  The start up costs are low, the scalability is huge and the market is only growing larger as more and more countries enter this new sphere.

NOTE: Information products can be software as mentioned, but they can also be text, audio or video – anything that can be transmitted via the Internet and requires absolutely no raw materials.

Ideas that are not executed and shipped are useless!

I’m coming up with ideas every day, but none of those ideas are changing the world (or even earning me any money) because without execution and  actually shipping a working product they remain just that, ideas.  I’ve got dozens of domain names, heaps of blogs and websites just sitting there, having been started with the best intentions and then left to die a slow and lonely death because I haven’t had the fortitude to see my ideas through to the end.  I’m too quick to stop half way and then move onto some new opportunity that might come my way.

I wonder what would have happened if I’d stuck to just one of my ideas and saw it through?  It reminds me of the story Napoleon Hill tells in his book Think and Grow Rich about a gold miner turned insurance salesmen.  He bought a patch of land with a mine on and had some initial success in finding a vien of gold.  Unfortunately after scaling things up and investing more money into the mine, the vien of gold ended and after much digging and searching for more, he eventually gave up, sold the equipment and land and took the train back home.

The person he sold it to hired the services of an engineer who was able to identify a fault line which meant the gold was actually just 3 feet further in.  Yep, this man stopped 3 feet short of millions of dollars worth of gold!

The story does have a good ending however as Hill goes on to explain how the man learned from his mistake;

Remembering that he lost a huge fortune, because he STOPPED three feet from gold, Darby profited by the experience in his chosen work, by the simple method of saying to himself, “I stopped three feet from gold, but I will never stop because men say ‘no’ when I ask them to buy insurance.”

Darby is one of a small group of fewer than fifty men who sell more than a million dollars in life insurance annually. He owes his “stickability” to the lesson he learned from his “quitability” in the gold mining business.

- Napoleon Hill, Think and Grow Rich

Just think, those ideas you started to action and then let fall by the wayside as your enthusiasm dropped may actually have been 3 feet short of success!  I think after you’ve got the fundamentals right (market research, promotion, business models etc) your success boils down to whether or not you’re going to stick at it long enough.

“Failure cannot cope with persistence.”

- Napoleon Hill

And most successful entrepreneurs out there will always add that caveat whenever they talk about how to build your own business.  You’ll often hear online marketers talk about their new money-making process where you can supposedly earn $10,000 a month in just 30 days time – but there’ll always be the warning at the end not to quit your day job just yet.

And of course they’ll say that.  No one is going to tell you, you can quit your job.  Self-employment or starting your own business is a risky endeavor  no matter what the economic climate is like.  Don’t expect anyone to give you permission to put your house, family and professional reputation on the line.  When it comes to quitting your job and going out on your own, the decision is all up to you.

What will I be doing?

Initially my focus will be on freelance website design, that’s something I know (even though I’m still a student at it, I know enough to do it for money).  At the same time I’ll be pursuing some business ideas and projects I’ve been meaning to invest time in for a while but just haven’t had the chance.  I’ve got the time now – so no more excuses!

Which leads me to leave some final advice for you.  Sometimes you can feel trapped in a job or career.  Maybe you’ve got a great business idea but you just haven’t got enough solid chunks of time in the day to bring the idea to fruition.   My suggestion is to think outside the square about the skills you already have (which may or may not be related to your day job).  Are there any skills you’ve got which people would pay money for?  If so, there just may be a way to softly quit your existing job even before you have consistent cash flow with your ‘big idea’.

Suggested reading:

Jobs Are Filthy Habits That You Should Kick As Soon As Possible! written by Eric Graham

Hate Your Job? You Are In A Dark Place written by Mike Mahler