While time for money exchanges are not the way to get rich and never will be (something we have explained hundreds of times on this blog) the one question that never gets asked is “what is the opportunity cost”. While we emphasize that it won’t make you rich, doing some tasks when you have free time or “double booking your income” is the easiest way to step your toes into the water. For example, if we look at your typical office worker, they spend a large amount of time doing meaningless things like watching YouTube clips and mainstream media reading. The first step is sitting down and “double earning” on your time. While we went all out internet business from the start some individuals need to start even smaller to realize the opportunity even exists.
Being Proactive: Before listing off various ways to generate some fast income, think back to times when you were in a bad spot financially. Typically you’re forced to 1) ask around for a quick freelance job, 2) sell something you don’t need anymore, 3) do something that pays less than you are worth or 4) ask a friend for a few bucks. Now this is not something you should be doing ever again but we realize it happens to a lot of people and the four items above are the typical ways to make a few bucks. We’ll create a general guideline here: 1) if you’re worth under $100,000 you have to be proactive every working day, 2) if you’re worth over $100,000 but under $500,000 you have to be proactive on both freelance work and selling, 3) if you’re worth over $500,000 you can focus entirely on selling and 4) if you’re a millionaire or better you’re focusing on simply scaling your ideas as the average millionaire has around 4-7 streams of income. This is a good way to think about how “active” you should be and when you should work “hard” and avoid kidding yourself that working smart is the way to go (without being rich yet). Notice, we try to avoid asking people for money entirely as this teaches bad habits, causes you to obtain something for “free” at the expense of your reputation. Not a good idea.
Freelance Work: This is a general time for money exchange at first. No one likes it. But it can be done at practically any hour of the day depending on what it is. You can start as low as a virtual assistant while concurrently working your desk job to as high as software coding for others while working at Google. The game of life always works in the same manner, the faster you create momentum (the Google engineer example), the faster you fall into other higher end money making opportunities. We’ve mentioned this before but physics applies to personal finance: objects in motion stay in motion.
Ideas for freelance work: 1) review people’s resumes, 2) offer them mock interviews on the phone as well – this works particularly well for highly competitive industries, 3) virtual assistants always have some income, 4) tutoring and anything educational could also work remotely depending on the topic and 5) the classic “finding accounts” for anyone in affiliate marketing or an industry with the need for many IPs and addresses (there are a ton of these).
Are any of these positions sexy? No. That said, we know several people who do this when they graduate college. They work at a solid company or investment bank and can’t think of a good way to make money instantly. So they go down the freelance work route for the first 6-12 months. This results in around $1,500 a month (so we’ve seen) after taxes. For those that are already rich, this isn’t much, but if you’re a college graduate an extra $1,500 is around 30% to your monthly income (quite a lot). Generally, speaking $100,000 in base is really ~$5,000-5,000 a month after taxes since you’ll be contributing to some sort of 401K plan with a match attached to it.
Before moving on this is one of the worst ways to make money but the trade off is clear. If you’re doing something like this and it targets an extremely high-end niche (like software engineering interview help) you make a lot more money per “hour” but it’s incredibly difficult to outsource. That’s the trade-off. If you do something like work as a virtual assistant, that pays less but it is possible to train someone else to do it (future VA business potential). Keep this in mind when you decide which route to go. Unsurprisingly, those VA positions you see on Fiverr or other “individuals” helping you out… are outsourced to someone else! The main account just leverages his high quality reviews to get new tasks and takes a cut as someone else does it for him. (surprisingly, not a bad business model if you’re willing to build up a reputation over a long period of time)
Reselling and General Mark Ups: Think back to when the internet came out and the main reselling market was a place called eBay and eventually something called craigslist. While these are still around, it was interesting to watch as some individuals turned them into full on businesses while others never really “put it together” and only made money during hot product seasons (most common was reselling video game consoles like the latest Nintendo product, believe this also worked for Sega Genesis as well if anyone remembers that old console)
Simple examples today include reselling physical coins, stamps, some sports cards, sneakers (very popular) and Legos. In the future we have no doubt this idea of “scarcity” value will continue in a large number of industries and could expand into digital items as well. Either way there are several ways to make money here all it takes is a little bit of proactive behavior: 1) reselling hot products – the laziest and easiest way, 2) learning about a specific niche and collecting items that should be of value in the future, 3) taking the time to actually search for items and 4) creating or selling popular products yourself by holding inventory on the books – clear business model in the future.
Normally we would only talk about the last one, something that scales. But. Everyone has to start somewhere. Maybe you only have a few hundred dollars or a few thousand dollars to try and create a return. In that case, in rank order you want to do 1) hot products, 2) collecting items you can already put a price tag on and then 3) deciding it is something you want to do, so you search and scale. Now before we move on here, there is no need to have an “interest” in the item you’re selling. This is feel good nonsense as we know many people who have made a living off of reselling collectables with no true interest in them. In fact, being extremely interested in something could hurt your numbers. If you’re interested in something you are more likely to attach personal bias to the value of the item and over value it relative to the real market number. Instead, the key to going down this route is simply having the knowledge base to learn about the product and scale it up in the future.
Rough estimate on how much you can make? We’d say if you simply look for hot products and never take the time to specialize you’ll make around $10,000 a year pretty easily. This is lower risk, lower time commitment as well. The downside? By doing this (and nothing else), you’re not going to scale it up in the future. If you decide to learn about a topic and scale it (purchasing or holding inventory) then it’s an actual business that we will now cover as well.
Scaling Up: Now we’ve reached the fun part of the post, scaling up your basic idea into something recurring or sustainable. We’ll go ahead and use the collectable/hot product idea as they can be combined into one idea (so the concepts all stick). The first one is acquiring larger amounts of the hot products through your classic VPN and email hoarding technique.
For those familiar with affiliate marketing, one of the issues for the black hatters is that they run out of accounts. According to recent reports even white hat accounts are being banned frequently (luckily our stuff is extremely clean at this point due to long-term reputations – a topic for another day). We’ll go ahead and say the vast majority of affiliate marketing is “grey hat” at best. Either way, if you have your Facebook or google account banned over and over again, you need to go and find a new account which is a hassle. New IP address new email etc. that is not tainted with a bad reputation/background.
How does this relate to buying hot products? It. Is. The. Same. Thing. You go ahead and create a bunch of bots (or pay someone to do it) and collect thousands of different IP addresses and emails. Why? Simple, now you can buy a lot more of the hot product (versus doing it yourself which will only get you a few units). You automate the process and simply hold a small amount of inventory at a time. This is also less risky as a new product with “limited edition numbers” will unlikely break the bank and it will have a 100% return policy.
Assuming you’ve got this down then there is basic supply chain management. This sounds fancier and more complicated than it is. If you scale up your niche you simply need to know where to ship the product to reduce your costs and improve your margins (taxes, shipping costs etc.). This one is a lot more complicated and is industry specific as we don’t know what product you’ll be buying, shipping or selling. The long-story short is that as you scale you can actually expand margins a bit by doing everything in a tax efficient manner.
Great news here… How much can you make? A lot. Since all of this can be run with a computer and a bunch of online logistics you could make more than $100,000 per year. We know, $100,000 a year doesn’t sound like a lot given that everyone online makes “millions”. That said making six figures is a substantial windfall for you… tax breaks!
Take a step back and look at it from a bird’s eye view. If you were making around $100,000 from your regular job and now make $100,000 from your online business, we’ll bet practically everything we have that the online business will out-earn your job on an after tax basis. You can now deduct costs from your cell phone, wireless bill, part of your rent, your travel in certain cases, gas mileage etc. This is a huge deal as W-2 income is taxed based on the income while your online business is taxed based on your profit which has a lot more wiggle room associated with it. Simplistically, a W-2 is taxed immediately while in a business you receive all of the money, deduct expenses and are then taxed on the net amount. A huge difference financially.
Before moving on, we’ve never done a people management business but the concept there is the same. If for some reason you’re great at hiring and training virtual assistants, it would result in the same benefits. You get to receive money up front, pay your employees and then get taxed on the net amount. Unfortunately, no matter how much we can “describe” these high-people management roles, we’ve never done them so we simply leave it at that. It’s an arbitrage on what people are willing to pay and how efficiently you can train someone to do it for slightly less (collecting a spread)
View This as a Game: One reason why people don’t enjoy going to work is that they are going to get the same result regardless of how hard they work. You work in investment banking and do 50 page decks and this changes to 100 page decks? You get paid the same assuming your ranking in the firm is in the same tier.
Now in this new game, the VA scaling game or the product sales game, you are getting what you kill. It’s an exciting feeling that you should view as a video game and not view as a “job”. It isn’t a job because you’re collecting income based on your ability to think creatively and find mis-priced items in a market place. For people who grew up playing video games it’s pretty similar to those old school RPG games. You kill a few low level monsters (like the hot product sales), then graduate to fight the medium level monsters (dealing with multiple accounts at the same time) and then finally go to the final stage of managing a large number of sales with transportation logistics across the USA (or your country).
Fun Side Note: The odd thing about this whole process is that once you get to a point where you’re earning money yourself while you’re sleeping, the “a ha” moment kicks in. That’s one thing we’ve noticed. Many people get stuck in the in-between part where they are working hard to make money (but have to put in tons of their own effort). Hopefully this post clears that mis-conception up. You can start at the absolute bottom (doing it yourself) and remember that this is just the start. Within 5-years you should have outsourced a ton of the work to see income in your accounts when you wake up in the morning.