5

What Are All the Ways to Be Self-employed?

Living in the world of abstraction, it is easy to think that making decisions about the direction of your business will be straightforward and simple if you have done the hard work of setting life priorities, choosing a business idea, identifying a market, and creating a business plan.

Reality is much more complex.

Choosing Between a Crack Pipe and Wheatgrass Juice

One day, I had a jolt of adrenaline which I would only imagine could be equated with the rush felt by crack addicts. I was asked to facilitate a meeting of high-powered female executives, politicians, and movie stars all in support of a really good cause. It is the kind of opportunity that is the consultant’s version of a P. Diddy video, elbow-rubbing with Gucci-clad female executives and exchanging gold-plated business cards.

My social self, driven by status, power, and external validation, was in overdrive as I considered the long-range implications of the experience. Then I learned that in order to do it, I would have to devote a big chunk of time organizing the event. And I would have to fly to Washington, D.C., for two long trips. And I would be in the ultimate support role for movers and shakers.

Thankfully, my essential self spoke up. None of the activities described above were related to my life plan or business vision of helping oppressed corporate employees escape Cubicle Nation. Spending weeks of time away from my baby, then under a year old, not only would have been a logistical nightmare, it would have made me feel like a crappy mom. I didn’t wait thirty-eight years to have a baby to spend it whispering goodnight through a phone. And taking time away from the current steps to build my business would have delayed my goals and dreams. What I really needed to do was to back away from the crack pipe and take a big swig of wheatgrass juice.

Wheatgrass juice, for those who don’t know, is a soupy green liquid made by grinding blades of wheatgrass together. It is full of vitamins and turbocharges your blood with antioxidants and other life-enhancing nutrients. I love the taste, although I have heard others equate it to chewing cud.

Keeping clear with my life purpose and business vision, which I call drinking wheatgrass juice, will give me long-term physical, emotional, and spiritual satisfaction. It is not a fast high, it is a lifetime of making smart, healthy choices.

Succumbing to the seduction of a high-powered consulting lifestyle, which I call smoking crack, will give me a short-lived euphoric high, shortly followed by a rapid descent into the meaningless pursuit of wealth and power for its own sake. I will lose touch with myself and my family and find my life spinning out of control. Not to mention losing my teeth and many other decidedly unpleasant experiences.

Evaluating the business opportunity from my corner of suburbia in Mesa, Arizona, I realized I was meant to be at home writing blog posts, changing diapers, and slowly chipping away at my dream business. I told the client no, tossed the crack pipe in the trash, and took a big swig of wheatgrass juice.

Life First, Business Second

My “crack pipe” story is meant to illustrate a very important point: if you don’t consider your life as a key part of your business model, you may find yourself outwardly successful and inwardly miserable.

The way to avoid this is to create a plan that outlines in great detail the kind of life that will make you happy and healthy. Over time, as your life changes you can adjust the plan. The important thing is to think about your ideal life before you make any serious decisions about your business plan.

So pull out the notes you made in the last chapter on your ideal life (you knew I made you work on it then for a reason, didn’t you?) and read on. Or take some time now to turn back to page 64 and explore the possibilities.

Your life plan lays out the specific ways that your life would be structured to provide for maximum enjoyment and productivity. When done well, it is not a pie-in-the-sky vision; it is a blueprint for designing a great business.

In the process of designing a business, you will find that you may not be able to meet every single criterion of your life plan when you first start out. But you can use it as a way to prioritize, and make sure that you have clear decision guidelines for putting together your business model.

May the Force Be with You

When I recently asked successful entrepreneurs what they thought was the critical ingredient in business models, every last one of them answered: passion.

This overused word may annoy some of you because it seems very motivational speaker-ish, but truly, it is the key ingredient of business success.

• When you really, really love what you do, your enthusiasm rubs off on others. You don’t have to “work yourself up” to talk to a new client, or the press or a potential partner. You come across as committed and enthusiastic, because you are! The more you work on your venture, the more energy you feel because you see the results of your efforts and they mean something to you.

• If you are only doing something for the money, the honeymoon wears off very fast. When you aren’t inherently excited about the work you are doing, you must create energy to do it. Key activities like marketing and sales will feel awkward and forced, even downright slimy. If you are just going to work for money, why go through the hassle of working for yourself? You are better off feigning enthusiasm at a faceless corporation that will pay you retirement benefits and a steady paycheck.

A Note About Passion and Energy: Depleted vs. Spent

What many people don’t realize is that when you force yourself to do something you don’t want to do, you have to deplete the energy from your body to do it. When you make it through a week where you have forced yourself to do work you don’t enjoy, you will feel exhausted, drained, and in need of martinis, industrial-strength aspirin, and/or face-planted-in-pillow rest.

When you do things you love, your body generates energy naturally. You may work an equal number of hours, or more, than when doing work you don’t enjoy, but the difference is you will feel spent, not depleted.

Experiment with this concept in your own life and notice how much more quickly you bounce back from “work I love spent tired” than from “work I hate depleted tired.”

Components of a Business Model

Now that you have taken a stab at defining your ideal life and understand why it is important to care about which business you choose, let’s look at the key components of your business model.

What Do You Do?

This is a bit of a trick question, because the further you get into understanding your business and the value you provide, you may find, for example, that while your service is coaching, people are actually paying you for increased time, or more freedom, or reduced stress. But let’s not complicate things. Start by defining “the thing” that people will trade you money for:

• Coaching

• Consulting

• Writing code

• Making ceramic pots

• Organizing rooms

• Taking pictures

• Writing

• Teaching

• Giving massages

• Walking pets

• Cooking

Why Do You Do It?

Your motivation for being in business is a key ingredient in your business model. This is a benefit that reaches beyond the immediate result of your product or service. Examples:

If you are a coach, you may do it to: help people remove mental blocks that keep them from realizing dreams.

If you are a computer programmer, you may do it to: help people work at top speed, with no bugs or crashes.

If you are an organic chef, you may do it to: encourage people to eat nutritive, healthy foods.

If you are a masseuse, you may do it to: release tension in the body so that the natural immune system can fight disease without drugs.

How Do You Do It?

Today’s small business environment has many incredible advantages over prior decades. There are cheap and pervasive Internet tools and services that connect you with millions of potential customers at the click of a mouse. There are many ways to deliver services, besides meeting with live people in physical spaces. There are distribution models like eBay that allow you to sell physical products easily without investing in a brick-and-mortar storefront. Some examples of how you can deliver your services or products:

• In person

• Over the phone

• At a conference

• On video

• On the computer, using voice and video (also called a webinar)

• On television, on a home shopping network

• On the World Wide Web, via a Web site or blog

Where Do You Do It?

You certainly do not have to have your own office if you work for yourself. Home-based offices can be a great way to save costs while you get started up. There are also options for delivering your services using “third party” locations, like working at your client site, or renting a conference room at a hotel to deliver a workshop.

Whom Do You Do It With?

Defining your ideal customers is an absolutely critical part of creating your business plan. It will drive everything about your business model, as well as your brand and marketing plan. Chapter 9 will give you many specific tools for defining your ideal client. At a high level, when choosing your business model, you will want to define:

• Do you work with companies or individuals?

• If you work with companies, what is the typical size?

• What are the particular demographics of your client base? (age, income, affiliations, etc.)

• Are you planning on working by yourself, or hiring a team to work with you?

• Do you intend to have employees, or just work with independent contractors?

Answering these basic questions about your business structure is a great way to develop a foundation for your business model, as well as clearly delineate what you do and do not want to do. It is very easy to get swayed by big money or flashy clients (crack pipe!), so strengthen your resolve by defining your ideal situation first.

Ways to Sprinkle a Little More Money in Your Business Model

Would You Like Fries with That?

One of my very first clients was the computer networking company 3Com. Back in the days of the technology boom in Silicon Valley, the company was thriving and hiring scores of new employees.

I coordinated a program that taught networking basics to new employees, many of whom did not have a background in technology products. So you can imagine that eight hours of learning about the flow of data packets, Ethernet, switches, and routers would be about the equivalent of . . . purgatory.

Until I listened to a fantastic presenter named John Fritz, who liked to use colorful analogies from pop culture like fast food, the Three Stooges, and Monty Python to explain the different hardware and software associated with networking technology.

While explaining the “dangly cord thingies,” otherwise known as “dongles,” that were used to connect stacks of routers together, he said, “the way to think of these is French fries.” When a customer buys a router, ask, “Would you like fries with that?” and watch them add ten dongles to their order.

For some reason, this analogy has stuck in my head ever since, and is an excellent way to think about making it easy to sell complementary services and products to your customers.

Some examples of ways business owners can “add fries” to their offerings:

• A coach offers a transcript of a recorded teleseminar.

• A construction contractor offers to add a few outdoor plants in addition to building a deck.

• A sales trainer offers CDs of key material covered in class for each student.

• A fitness trainer offers monthly access to a Web site with nutrition tips and meal planning in addition to one-on-one sessions at the gym.

• A conference organizer offers DVDs of presentations after workshops.

The key here is to come up with truly useful add-ons that won’t be a huge price burden on your customer, but will extend and enhance the work you are hired to do. Not to mention bringing in a few extra bucks with each sale, which is never a bad thing.

Lichen as a Business Strategy

There are few things that I remember well from high school biology. For some reason, I have always remembered the lesson covering lichen:

Lichens are composite, symbiotic organisms made up from members of as many as three kingdoms. The dominant partner is a fungus. Fungi are incapable of making their own food. They usually provide for themselves as parasites or decomposers.¹

I was struck by the topic of lichen as a useful business strategy as I was sitting in a packed International House of Pancakes (IHOP) one Sunday morning. I was there with my own family and some friends, and between us there were four small children.

I saw a jovial man at the next table with large suspenders who was making balloon creatures for the kids at the table. He would walk around from packed table to packed table, making a sale at virtually every stop that had children. Watching him effortlessly market his services, it dawned on me:

This man has chosen a lichen business model! He has selected the perfect environment to symbiotically sell his services. The restaurant was so full that waiters took awhile to get to each table. It took some time to get food. Given unstructured time to wait, what do most small children do? Either terrorize their parents, try to run screaming through the room, eat ketchup, take the top off the salt shaker, or a thousand other disruptive things. (Those were just what my twenty-month-old son did in fifteen minutes.) What is the perfect antidote? Colorful, fancy balloon creatures!

Just imagine how much work he would have to do to sell his balloon creatures in a busy mall or park. If he was lucky, he would get one out of twenty people interested in what he was selling. That would waste his time, money, and effort.

So how can you learn from this wise IHOP balloon man and find your own lichen business model?

• Look for businesses that are serving your target market with everything but what YOU offer. If you are a prosperity coach, look for a multifaceted financial planning company that could offer your coaching services to its clients. If you are a massage therapist, look for places where people have to sit down and wait a long time. (If the government would participate, we could have a whole host of businesses just to support the Department of Motor Vehicles! Stress and anger management consultants, therapists, and psychologists. And that is just for the employees!)

• Make sure that you are enhancing the experience of your “host” business, not competing with it. If you are looking to sell your homemade jewelry in a crafts store, you may be seen as competition, not a friendly entrepreneurial parasite (if that is not an oxymoron).

• Check out the viability of your potential business partner. Do they have only seasonal crowds? How is their market changing? If it is an online environment, do they have a steady base of users and a good plan to continue growing? If you are going to put effort into developing the partnership, you should make sure it has a chance of surviving more than a few months.

• Aim for exclusivity through a good agreement. If all of a sudden IHOP allowed jugglers, clowns, and magicians into their restaurants, the balloon man would see his business rapidly decline. See if you can negotiate a business agreement that ensures you are one of the only, or few, lichen partners.

• Subvert pure biology and make sure you offer something to your host in return. In the scientific world of lichen, “parasites” can suck life from the hosts without giving anything tangible in return. This will most likely not fly in the human business world. Make sure you clearly articulate how your making money from your host’s vast and eager market of customers will benefit them as well.

If you closely analyze lichen behavior, there are some less than glamorous attributes. Then again, is there a better description of an entrepreneur?

Lichens grow in the leftover spots of the natural world that are too harsh or limited for most other organisms. They are pioneers on bare rock, desert sand, cleared soil, dead wood, animal bones, rusty metal, and living bark. Able to shut down metabolically during periods of unfavorable conditions, they can survive extremes of heat, cold, and drought.²

Mix and Match Business Models

Once you understand the core parts of your business model, you can begin to mix and match the parts to come up with a sample configuration. Here is a snapshot of the business model of a home-based entrepreneur:

Bob Walsh, 47 Hats

WHAT HE OFFERS

• Consulting

• E-books

• Hard-copy books (Micro ISV: From Vision to Reality and Clear Blogging)

• Freelance writing

• Software (Master List Professional, from his Micro ISV Safari Software)

• Training programs

WHERE HE WORKS

• Home—Sonoma, California

HOW HE WORKS

• Phone

• Webinars

• In-person for some consulting gigs

• Internet

WHOM HE SERVES

• “Micro-Independent Software Vendor” programmers who want support designing, developing, and delivering software programs

• Web sites that serve an audience focused on productivity and technology

• Large corporations (like Microsoft) that serve the Micro ISV community

• Website: www.47hats.com

Profile: Real-Life Business Model

L. P. Neenz Faleafine, Pono Media

Here is a little more detailed profile of a business model used by Hawaiian entrepreneur/social media aficionado/mother/volunteer L. P. Neenz Faleafine. You can see that she has some common themes in her work, but does a number of different activities. This model can sit well with “slash careerists,” a term coined by New York Times writer Marci Alboher in her book One Person/Multiple Careers: How the Slash Effect Can Work for You.³

WHAT DO I DO?

Chief evangelist for Alltop.com—Handle all of the online administrative duties.

Blogger—Share my thoughts and experiences with my life, family, and living in Hawai’i via photos, text, and video.

Founder of Pono Media—Implement social media strategies for organizations and individuals.

New and social media speaker to audiences new to the Internet, Web 2.0. Volunteer:

• social media and new media services for local tech radio show

• support at Hawai’i Public Radio

• teach middle school aged children about utilizing new media tools

• coach youth basketball

WHY DO I DO IT?

 

 

Following in the footsteps of my father, my background is in property management and community building—this industry is in my blood. I have learned, and being true to myself, social and new media is in my soul.

I evangelize Alltop because it’s a great resource for the majority of Internet users who do not have the time to gather feeds to build their own custom feed readers or have the time to understand how to do this at all. I am passionate about social and new media. I realize it’s the future of communication, not as a replacement for traditional media—traditional media will be with us, but the two combined make a bigger impact—this is my passion, my kuleana as we say in Hawai’i.

 

 

WHERE DO I DO IT?

 

 

I work out of my home office and therefore much of my in-person meetings are done elsewhere. The founders of Nononina, Inc., the owners of Alltop—Guy Kawasaki, Kathryn Henkens, and Will Mayall—live in California. I live in Hawai’i, and rounding out the Alltop team is Electric Pulp, based in South Dakota. The bulk of my communications with all of them are via e-mail—and it works! My work with Pono Media is based primarily in my home office and I utilize many different forms of communication: e-mail, Skype (video, voice, and text), GTalk, Twitter, telephone, and more important, especially in building new relationships—in person!

Usually, I schedule my meetings following my morning workout in the café of the Honolulu Club. It’s centrally located in Honolulu, and the risk of getting sand in my laptop protects me from the temptation of meeting at the beach!

Speaking engagement locations are set by the client (haven’t been asked to have one at the beach—yet!), teaching in the classroom, and basketball practice is at the local public parks.

(Read more at ponomedia.com.)

Profile: Real-Life Business Model

Sohaib Athar, Really Virtual

Sohaib got his first computer in 1992 and has been working in the software market professionally since 1999. He considers himself lucky to be among the people who do what they love. He has been freelancing/consulting in parallel with his regular job since he started working. He has lived in Lahore, Pakistan, most of his life, though he has worked very briefly in China and the United States. He says:

More than 80 percent of my classmates from college/university have moved out of Pakistan for good and joined the corporate rat race. After weighing the pros and cons, I decided to stay in my hometown instead of going abroad to pursue a career, or a PhD.

From 2004 to 2006, I was part of the founding team of a biotech start-up—OrthoClear—and led its technology R&D team. After the OrthoClear acquisition in 2006, I decided to take a break/go solo for a few months instead of jumping immediately to a new job—probably because I was looking for the excitement of a start-up subconsciously. I rediscovered the freedom that I had given up after university and got addicted to it, and have been consulting since then.

WHAT DO YOU DO?

 

 

As a solo freelancer, a few of the areas that I enjoy working in are:

• 3D graphics programming (though it is a very tiny niche)

• Web development (I have been involved with Web-based projects for the last ten years, one way or the other)

• Optimization for performance (Web sites, databases, and complex software systems/processes)

• Desktop applications development

• Project management consulting

• R&D

• Technology planning and implementation (for clients who need to define a technology path to solve a problem, but don’t have a dedicated team for it)

• Software engineering process development and implementation (for newly established small software firms)

The professional network that I have managed to develop over the years also helps me in taking up projects that require larger teams, or a different expertise, for example, designing projects for the Web, products, or the print media.

 

WHY DO YOU DO IT?

 

 

I have always thought of the software industry as a huge puzzle that needs to be solved—I work with computers and software mainly to help solve that puzzle, and because it is a lot of fun, and getting paid for it doesn’t hurt.

I freelance because it allows me to maintain my own schedule (when allowed, my work hours tend to gravitate toward the graveyard shift), and so that I may spend time with my family when I want, and not when I am allowed.

By managing my own time, I can work on a few personal technology projects that I couldn’t start with a “regular” job, and have been networking a lot more with the local technology community. For example, I have recently started writing on a couple of Pakistan-centric technology blogs. I get to work with a much larger mix of technologies, problems, and people than a typical job in a corporate culture could offer me. When I think of it, not knowing what I will be doing next month is actually exciting too.

When a project I work on contributes to making life better for people directly, or helps further our scientific knowledge, that is always an intellectually gratifying experience.

 

WHERE DO YOU WORK?

 

 

The Blue Brain Project, one of the larger projects that I have worked on (construction of a simulated brain to study the brain’s structure; the project is a collaboration between IBM and Henry Markram’s Brain and Mind Institute at the École Polytechnique), had multidisciplinary teams spread around the globe. The BBP was handled offsite by us, the client was in Switzerland, with communication taking place via Skype, phone, e-mail. We had the option to visit and meet the Swiss team if required, but it was never needed.

For the last couple of years, I have been working from home mostly. For a couple of consulting assignments recently, I did work at the clients’ office twice a week for a few months, to coordinate and interact with their in-house teams and manage them, with the rest of the work done from home.

 

WHOM DO YOU WORK WITH?

 

 

I have worked for both large and small entities. With large companies, it is usually as a part of their in-house teams. Most of my clients have been international businesses/research institutes, though a few local clients/companies are there in the list. There are medium- to large-sized local firms that lack expertise in a particular technology but do not want to hire new resources, then there are larger multinational firms that do have the expertise but want to parallel process some projects through outsourcing.

Many of my client relationships started out on an individual level and evolved from there. I do find myself logging on to this Web site www.liveperson.com after every few months as an exercise in handling individual clients—it also helps in staying up-to-date with technologies that I may not get to work with otherwise.

(Read more at reallyvirtual.com.)

 

There are obviously endless varieties of businesses you can start. What I hope you gather from these profiles are ways to think creatively about how to structure your business so that it gives you the kind of life you want.

StartupNation, a resource-rich site for entrepreneurs, breaks down business models in seven different categories:

1. Home-based Drawing upon technology, you can create a legitimate and competitive business from home. It’s part of our culture now, accounting for more than half of all businesses. Home-based businesses can be run full-time or part-time, and may or may not be Web-based.

2. Brick-and-mortar This is a business with a classic physical location outside of the home. It involves a dedicated facility—whether retail, wholesale, service, or manufacturing.

3. e-Commerce In this model, you don’t have foot traffic in your business, only traffic to your Web site. You sell your product through your Web site to consumers or to other businesses.

4. eBay A subcategory of e-commerce, but one big enough to consider on its own, eBay can serve as a location for your online store, and allow you to tap into its huge marketplace.

5. Franchising When you choose a franchise business model, you use someone else’s proven business concept as your entrepreneurial roadmap. Typically you pay an upfront fee, as well as a portion of revenues over time, to the franchiser. (To learn more about franchising options, visit the International Franchise Association’s Web site, franchise.org.)

6. Licensing your product If you’re working a day job and don’t want to start a business, you can still take advantage of your great product idea by licensing the product to another company that has the entire infrastructure in place to properly manufacture, market, and sell the product.

7. Multilevel marketing Multilevel marketing (MLM) is a marketing and distribution structure. People at the top sell to those below them, who in turn sell to those below them. The higher up you are in this structure, the more money you can make. The challenge with MLM businesses is that people at the top are frequently the winners. The vast majority of people at the bottom end up spending money and time to get involved and end up losing whatever they put in. If you’re determined to choose a business with an MLM model, be sure to check with at least a handful of other people who’ve entered at your level, and see what they have to say. Find out their perspectives on how—and if it’s possible—to be successful.

These broad categories are very helpful for understanding the broad structure of your business. But obviously, within each category there are a lot of different options. Read through the description of each of these models carefully, and highlight the one that feels the best for you. You may find that you choose more than one, such as “Home-based,” “e-Commerce,” and “Licensing your product.” You can find information about the upside and downsides of each of these models at www.startupnation.com.

A Few Horror Stories for Good Measure

I spend a lot of time in this book telling you that you don’t have to be totally terrified of starting a business, nor are you crazy for wanting more out of life than your unfulfilling job.

You can see in some of the examples I used above that it is possible to earn a good living and accomplish meaningful things by executing a carefully designed business model that supports your preferred lifestyle.

But I would be remiss if I didn’t remind you of the people who have suffered at the hands of unscrupulous marketers and shaky business partners. There are literally hundreds of thousands of hucksters, shucksters, and slimebuckets on the Internet and off who view frustrated corporate employees as perfect shark bait for their nefarious schemes.

Empty Promises and Amway Dreams

Of all the business models that scare people, multilevel marketing (MLM) or network marketing has to top the list. Many, many people have reservations about participating in this business model, which often promises huge profits for very little work.

For those of you who work in multilevel marketing and have always been ethical, what I am about to say may make you angry. I truly do not mean to offend or present an exceptionally lopsided analysis, I just want to share some words of warning to overeager entrepreneurs who might get themselves into something that will not feel good at the best, and may affect family and friend relationships at the worst.

Here is an example from a longtime blog reader who was kind enough to share his own personal story about living with a parent who got involved with Amway:

My father was a creative, intelligent, hardworking man with an entrepreneurial dream. When I was ten, his union struck the shipyard where he had worked for seventeen years. He was out of a job as the strike continued indefinitely until his job was replaced. He found work as a welder in a paper mill and built a stump-grinding machine that he used on the weekends to make extra money. Eventually, he became reemployed in the shipbuilding industry, but always as a contract employee.

A coworker introduced him to Amway. It was much more than a business opportunity; it was a chance to realize our family’s dream of financial freedom. For Amway we made lists . . . lists of all our friends and acquaintances that my mom was to call and invite over to our house. We were under strict instructions not to tell them it was Amway. She couldn’t do it—it was humiliating and dishonest. My dad retired to his study to read endless motivational books and listen to tapes (purchased from our upline sponsor) full of people talking about their successes. He was inspired, but translating theory into practice eluded us.

We attended many meetings—my dad tape-recorded many of them for later study. The meetings were a never-ending parade of people who had made their $50,000/year, quit their jobs, and bought expensive cars and jewelry. It was the 1980s and these people were living a materialist dream—while underneath them, hundreds, like my parents, struggled to change their mindsets, to “think and grow rich,” to believe in the “magic of thinking big.”

As a child, I was aware of the conflict this created between my parents but I did not fully understand the costs. It was an exciting sort of game and the books were inspiring. I wanted my dad to succeed. But the business is fundamentally based on using your personal connections not only to sell a product, but to enlist those you know into a get-rich scheme where compromising your values (using people) is a fundamental prerequisite to success. It has affected my view of the world to this day—I am deeply suspicious of personal networking and have a distrust of wealth. My father’s obsession with MLMs destroyed his marriage (my parents divorced during my freshman year away at college) and left him a lonely man who died alone at sixty-three with years of accumulated motivational books and tapes that I was left to literally shovel into the trash as I cleaned his house to attempt to sell it to cover his medical bills.

The Fatal Assumption

Michael Gerber has written a whole series of books based on his original book The E-Myth, which describes “Why most small businesses don’t work and what to do about it.” A cornerstone of the book is what he calls “the fatal assumption”:

In the throes of your Entrepreneurial Seizure, you fell victim to the most disastrous assumption anyone can make about going into business.

It is an assumption made by all technicians who go into business for themselves, one that charts the course of a business—from Grand Opening to Liquidation—the moment it is made.

The Fatal Assumption is: if you understand the technical part of the business, you understand a business that does technical work.

And the reason it’s fatal is that it just isn’t true.

In fact, it’s the root cause of most small business failures!

The technical work of a business and a business that does that work are two totally different things!

To the technician suffering from an Entrepreneurial Seizure, a business is not a business but a place to go to work.

So the carpenter, or the electrician, or the plumber becomes a contractor.

The barber opens up a barbershop.

The technical writer starts a technical writing business.

The hairdresser starts a beauty salon.

The engineer goes into the semiconductor business.

The musician opens up a music store.

All of them believe that by understanding the technical work of the business they are immediately and eminently qualified to run a business that does that kind of work.

And it’s simply not true!⁴

Gerber explains throughout the rest of The E-Myth Revisited that you must study business models, learn to work on your business, not in it, and develop specific skills to run your business. I consider it required reading for anyone considering starting a business.

Passive-aggressive Revenue Streams

I mentioned earlier that there are a number of things you can do to supplement your “sell yourself by the hour” time, by creating e-books, or audio programs, or DVDs.

Often, these types of products are called “passive revenue streams,” with the idea that once they are created and launched, they continue to bring in a stable, predictable income each month without a lot of additional effort.

Unfortunately, I think this is an incomplete picture, since there can still be a significant amount of ongoing work involved in supporting an online product.

Here is what you need to keep in mind with “passive revenue products”:

• Typically, most products are sold with a big sales push or “launch” where most of the sales happen in a relatively short window of time.

• It takes time, effort, and energy to maintain interest in the product. You must continually drive new visitors to your site, and this takes marketing effort that is not “passive.”

• Some products can become outdated quickly, especially if they have to do with technology. You need time to edit and update material.

• People will not automatically buy e-products. It takes a lot of skill and effort to create compelling marketing copy and a smooth sales process.

These kinds of products can be a fantastic part of your business model. Just make sure you plan and budget for the work it will take to sustain them.

For the Last Time, Blogging Is Not Passive Revenue!

A few months back, I wrote an article describing my feelings about certain myths associated with passive income.

Okay, so I pretty much called the whole “get rich from passive-income” thing a big, fat scam!

It is directly controverted by a bunch of research, including a fascinating study that showed how very few U.S. pentamillionaires made their money passively or inherited it. For the most part, they worked their butts off trying to solve a problem that affected a huge number of people. And, their success came after years or decades in a relatively short burst or event.

Well, I’m getting kind of tired of clicking onto websites and blogs that report online income, especially from blogging, as passive income.

Advertising income that is derived from any form of online content that needs to be created on a regular basis, whether through blogging, updating websites, populating or moderating forums or anything else is NOT passive income.

We don’t need data and studies to know this. Hey, here’s an interesting study, go find me 10 bloggers who earn a living blogging without working on their blogs. Okay, strike that, find me one!

Every year, millions of blogs are abandoned after 4 months. Creating and moderating content that is good enough to attract and grow a substantial readership may be fun, but . . .

Creating online content that is compelling enough to drive advertising or other revenue is hard friggin’ work.

It’s not even moderately passive.

What if you hire someone to manage and write your job? Still not passive, now you’re not a writer, but you are a manager and employer.

What if you take a bigger step back and launch a blog-network, so you can have someone else run everything all the time. Hmmm, I wonder what Darren Rowse, Wendy Piersall or Penelope Trunk would say if you told them starting, managing, and growing a blog-network was passive?

There is no such thing as set-it-and-forget-it online content-driven revenue.

And, if there is, it comes only after an intensive, often extended “hard-work” effort to create content that is not only massively valuable, but so evergreen that its value and impact will endure. Listen . . .

I’m all for everyone earning as much as they need to be comfortable in the world.

But, if you wanna sell a fundamental philosophy, how about this one . . .

Find something you’re madly passionate about, surround yourself with people you love to be around, work your buns off and make a ton of money . . . as a byproduct of the fact that you’re having the time of your life and contributing value to the world along the way!⁵

 

Jonathan Fields, Awake at the Wheel

The Reality of Working from Home

Much ado is made about the wonders of working from home, especially for corporate employees tired of being stuck for hours in commuter gridlock.

There are some real advantages to working from home. But the model is not for everyone, especially people who think that they can be super-parent to three kids while working full-time from home.

Here are some lessons for the entrepreneur-to-be who is fantasizing about the work-at-home lifestyle:

• If you have young kids, you most likely will have to get a babysitter during your working hours. Sometimes it is possible to fire out e-mails or write in short bursts with kids around, but anything requiring careful detail or professional phone demeanor needs your dedicated time. Kids deserve full attention, as do your clients. Factor this cost into your start-up plans.

• Many of you in corporate jobs may work from home one day a week or so and relish the relaxed environment. (I was always delighted to attend long, tedious conference calls from home so that I could fold laundry, making the meeting semiproductive.) But you may forget how easy it is to crank out a lot of work at the office when you have no home distractions. When you work from home all the time, you need to develop routines and discipline; otherwise you will never get anything done.

• If you are married or live with someone, your non-work-at-home spouse might make the assumption that since you are at home, you don’t mind taking care of a lot of tasks around the house. This will lead to either low productivity on your part because you will do all those tasks instead of working on what you are supposed to, or resentment as you feel the injustice of a lopsided pile of domestic work. To plan for this, agree on the division of chores before you give up your office job.

So before you fall for the “You can raise five small kids at home and start your business at the same time” pitch, make sure you have really thought about what it entails.

I swear I am not trying to scare the daylights out of you by highlighting some of the potential pitfalls of self-employment. I just want you to go into the experience with your eyes open, and to understand both the opportunities and potential snake pits.

I am sure that the people highlighted in this chapter would agree that if you learn from their mistakes without risking your family, reputation, or bank account, their pain somehow served a purpose.

Keep these ideas about business models at the top of your mind as you jump into the next chapter, and try to figure out what kind of business you actually want to start.