When I first started a “real” business I was already in a position of positive cash flow, but it wasn’t because I had inherited money or because my parents had funded my business project, it was because of two reasons…
- I had successfully generated a few hundred dollars a month from hobby projects – these were not things I considered real businesses, just websites I loved to work on that made a trickle of money.
- I had a casual job.
I was 19 when I first became interested in computers (before that it was all about console gaming) and by my early twenties I was capable of putting together a website. My sites were not well designed, but functional, just text wrapped inside a few tables and basic graphics. My beginner training was with the free hosting service Geocities, so just getting text and pictures to appear were you want them to on a page was a challenge.
What I did have during this period was ample time, and that was definitely my biggest advantage. I lived at home, had minimal expenses and was attending university. As many college students understand, your university days can be very flexible depending on how good your work ethic is, and my work ethic was not directed at my textbooks or assignments, it was focused on the Internet.
After a few years playing around online, I settled on a few projects long enough that I made money. As people who have read my business timeline know, my first “cash cow” website was MTGParadise.com. I used the income from this site, plus money from my casual job at a computer helpdesk at my university, to fund my next business, BetterEdit.
During this period I started several other businesses, including an English school called Aussie Tutor, and plenty of different website projects, all of which failed in a traditional sense – they cost more money than they made. I never borrowed money to fund any projects, I used my energy and creativity, income from my job and the steadily increasing cash flow from my website and went from project to project.
You Must Have Something You Can Leverage
If you are considering starting a business you have two resources you can leverage –
- Time
- Money
If you have money but no time, you use that money to hire people. Contractors and employees use their time to get things done for your business in exchange for cash.
If you have time and no money, then you go to work to build cash flow off the sweat of your back. Nothing happens without cash flow, so your primary concern at the beginning is to generate money using your labor.
If you are considering starting a business you must have access to at least one of these resources. If you don’t, you have to create or free up one or both resources.
Get a casual job, do contract work, borrow money or find a partner with money it you need cash. If none of these are options, then sit down, think about what you need to make your business generate cash, and start putting it all together using your spare time.
If you have no time and no money and you have obligations that cannot be met without using every ounce of your income and time, then you my friend, are stuck!
No one, in my opinion, is really stuck and if you think you are, it’s because you are too afraid to change. You can reduce expenses in many ways and get creative with how you use your time. Most people can free up time and money resources, if they learn how to control the elements that reduce them.
If you need help in this area, start with my Interview with Tim Ferriss of The 4-Hour Workweek.
I’m going to assume you can generate a little extra cash and a little extra time to work on your business. Nothing to extravagant, just a few hours a day and a few hundred dollars a month, that’s all you need to begin. Let’s look at how you can build a business using limited time and money.
Early Cash Flow Generation
When you start a business the greatest challenge is cash flow generation and that usually ties into a customer acquisition issue. It’s not difficult to set up a website, a phone line, email address and all the other back-end resources you need to create value for other people. Product creation or service provision is usually not the problem for a start-up, it’s finding and then convincing people to buy what you have that causes a new entrepreneur the most grief.
Finding customers was certainly the greatest challenge when I started BetterEdit. When the website went online we had no customers. I totally understood why that was – no one knew the site existed unless we found ways to tell them about it. It’s funny how many people start a website expecting business as soon as you hit the “on” switch. I knew from running my other sites that it takes months, even years, to drive traffic.
I immediately began the process of marketing and optimizing my website. Here’s a sample of the things I did –
- Submitted the site to DMOZ (I also submitted it to various directories, but that is a dated practice that doesn’t really work today)
- Found relevant websites and requested link exchanges
- Did keyword searches and found top ranking sites that targeted my market and offered them original articles in exchange for links
- Optimized my website internal linking structure and general SEO
Inside my Blog Profits Blueprint you will find other basic Internet marketing ideas along this line. Much of the advice I provide in the Blueprint is based on my experience during this early period in my Internet business career.
Understandably, I didn’t get many customers from the Internet during the first few months, in fact it would take about three years before direct web referrals accounted for a big chunk of customers, and that was primarily from Google search traffic. It was because of the basic things I did early on and the fact that I kept at it for years, that the site began to rank very well, though today I think I could speed up the result – I didn’t leverage my resources very well back then.
Most of the techniques I used on my site during this time are dated today and won’t bring in amazing results quickly. However, when you target a market with limited competition – and certainly not competition that understands Internet marketing – you can rise to the top given enough time. The websites I started in the early 2000s dominate search results today because of the work I did back then.
Quick SEO Tip
One of the main reasons the sites I created back then rank so well now and keep the competition at bay, is because of the age of the domains. If you are considering starting a new business and it’s something you plan to be in for a long time and organic search results are an important part of your strategy, I suggest buying an aged domain. If you can get a domain at least five years old that is a distinct advantage.
Low Cost Customer Acquisition
It was clear that search results were not going to bring business quickly, so I had to look for other ways to attract customers. Pay per click was an option, but it cost money and I didn’t know much about it, so I wasn’t going down that path just yet.
I thought like a marketer and brainstormed where my target audience was. Instead of hoping they would come to me through the Internet, I decided to go to them. I brainstormed all kinds of ideas, including billboard advertising near where my prospective customers went every day, ads inside buses – even radio! After inquiring with all of these different media it was clear – I didn’t have the money to invest in this type of advertising.
I eventually found a low cost means of marketing my business, which I continued to use for many years – poster advertising. I’ve talked a lot about using posters to market your business on this blog before, so I won’t go into detail here. In the case for my business, posters were the perfect low cost, solid return-on-investment means to attract an initial customer base, which I built on year after year.
The amount of clients I attracted did not generate a fast or substantial return, but it did provide a steadily increasing cash flow source. The drain on my resources to use this marketing method was minimal – a few hours a week of my time and a few hundred dollars for poster production. Compounding over time, with new customers joining repeat customers from previous years, meant my business grew organically, but it was a very slow growth curve. It didn’t make me rich, but it was the cash flow kickstart I needed.
In your case, you need to brainstorm ideas on how you can reach customers at low cost. If you need ideas, search around for Guerrilla Marketing advice. This form of marketing is taught in many places. I used my head and my understanding of the target market to come up with ideas. Here’s a few more you might consider –
- Classified ads are cheap and can work for certain businesses
- On the Internet there are countless methods that take work but cost nothing, like promotion at social networking sites, blogging, article marketing, etc
- Handing out flyers or a letterbox drop (I did both of these)
- Doing “stunts” in public to capture media attention
Reinvest For The Future
The need for cash flow is something that never stops, however it gets easier with each project.
A key understanding new entrepreneurs must take on board is the importance of reinvesting your earnings back into your business, or if you sell your business, the profits back into new projects.
In my case I leap frogged from one project to the next, using cash flow from previous projects to fund the next. With each new successful project I could start a new one with an even grander outlook than the previous. I had more money for staff, more money for websites and I could just do more of a better quality.
At the start I had to build websites myself, market the projects myself and work a part time job to stay afloat. I built cash flow, started another business, quit my job, sold a website and started a few more. As time progressed my access to the two key resources – money and time – increased, thus I could do more and make more money.
For most entrepreneurs this will be the path you take, unless you hit a really big idea that is super profitable, or you attract major funding so you can shoot for big outcomes early on. It suit my personality and lifestyle to progressively improve from project to project, but to make this work, I knew I had to use some of my money for reinvestment. You can’t just blow profits on living the good life as soon as you make your first sale.
If you are in a situation that forces you to work to a budget, understand that cash flow is your lifeblood, time and money are your key tools – so use them wisely, and reinvest for the future knowing that each sale is a step forward. Eventually, with ample cash flow and loads of time, you can pick and choose which projects to chase and do so on your own terms with a much bigger budget.
Good luck!
Yaro
Still budgeting
Been a while brother, hope you’re very well.
Yeah, postering has been a windfall in the poetry business as well, highly recommended.
Hey Yaro,
what a great article. This is exactly the kind of information newbies need. Going to give you and your article a plug in my newsletter.
Also, buying an aged domain – since you’re a new owner, wouldn’t a lot of old linkpartners stop linking – and old visitors walk away?
-Dave
This is so relevant to me right now. Thank you for the tips and the inspiration, I will take them on board immediately.
Good, good, good.. Good article Yaro. I like your style to write long and useful articles.
Yeah, I agree with what you say. It is important to understand what it means if you want to become an entrepreneur. By this I mean that people might not always remember that building a business requires time, time and money and time. I just calculated growth estimations for my tomorrow’s business incubator meeting and it seems that I will be able to leave my day job in the end of 2008. It also mean I need to continue working every night for the whole year..
I am over 30 now and I have a pretty good day job and three kids. It is not easy to take time and money from this situation but my passion to become a full-time entrepreneur is just too strong to forget my own business and concentrate on career.
For those who are willing to build own business, I recommend planning your business, estimating growth and running it as a project with goals and tight deadlines. You gotta work on it, most probably hard.
Oh, almost forgot to say that even though building my business is very hard right now and I don’t even sleep well, I enjoy every moment!
Great entry Yaro,
You have to take the first step if you are going to make it and that is the most difficult part for most people. You do a great job of offering practical experience to help those trying to get started.
As a new blogger myself, I find that you have to put time and effort to get it running. Then you have to market your blog to get the word out about your blog so you can have traffic, but each one of the task requires you to have a technical skills and some experience of marketing. I just don’t have the cashflow to outsource some of the task to enable me to focus more on managing my own blog.
Great post Yaro,
Great advice about purchasing an aged domain to get the benefits that come with age. Wouldn’t it be great to find a PR8 domain that is 5+ years old that you could pick up for next to nothing. Ah, we can all dream!
I can certainly appreciate this article. I have a very limited budget for Wildheart’s Works, but I do make sure that I have the money to pay my hosting each month. Even if it has to come out of my pocket at times. I have wanted to get it off of blogger for a very long time and be able to do more with it than what I was doing.
I still need to get around to getting business cards and other things together for offline promotional tools,but it will come in time.
For the moment I am continuing to build my credibility on the internet to the serious blogging community and internet business community and the rest will follow.
What a great post! Seriously, I am a fan of Yaro because he is an entrepreneur since he is very young and it is very admirable. I am 32 and now I have this venturesome spirit, but I would wish to have this knowledge when I was in the University.
Ha! I think about that all the time, Omar. What if I had known then what I know now? How much further along would I be? (And how much more would I have paid attention in class? 😀 )
Hi Yaro,
Nice post! I currently run a small business in the Caribbean but my mind is already on to the next project. I have ideas for MANY online projects that I would like to undertake.
I would also like to apply some of these techniques to help non-profit humanitarian agencies.
Reading your thoughts keeps me inspired! Thanks for the fantastic content 🙂
Regards,
Mark
Thanks Dave.
With aged domains you do have to be careful when you take over not to change the whois details to quickly or all at once. Google monitors these things.
I’m talking about aged domains purely for SEO purposes, so most of the links will stay, especially the ones that have been there for years, which are the ones that really count.
Links from aged domains are great – nothing better than having an aged domain with plenty of links coming in from aged domains that have been in place for well…ages!
I totally agree that we have to manage our resources well in order to start a business. Most of the time, we have either one or the other but not both. Right now for me, I am holding on to a day job while leveraging on my partner to run a brick and mortar restaurant business. The day job gives me my income and my investment capital while I leverage on my partner’s time to build this business running. Of course, out of work, I still contribute whatever ideas and time I have to help grow the business. Its tough going now, but one day, I hope to build up multiple streams of cash flow to replace the main one coming from my job!
Yaro,
I definitely agree with you the two main resources for a business are time and money. If you have that you will be successful. I always like your blog post with good detail information and case study. I really love your style of writing too.
Thomson
Yeah, I do agree on the aged domain parts. It’s really make a differences. An old domain that I don’t promote as much with a new domain that I put all my soul into it, the old one fare better.
How I wish I have buy more domains a few years ago. 🙂
Peter
Hi Yaro, I like your writing style and when I begin to read of your article even if it is long, I always to reat it completely. However, I have on questions about this article :
On one of your previous post, you said that the best we can do if we have a business idea to transform in project is to outsource from the day 1 and to not wait because to resume time is money. But now, in this article, I understood that it took you a while before concretizing your business and you advise us to do most of things by ourselves. Have I miss something or maybe I don’t understand the message? Could you enlighten me?
You are very right about Aged Domains, I can’t beleive the difference it makes! Google must have changed their ranking criteria and placed LARGE authority to aged domains! It makes sense. Also, another great tip is to register your domain for the maximum timeframe, something like 8 or 10 years…Google will think your are in for the long run and give your site more authority!!
Nabil – It’s all about cash flow. If you have the cash from the start, then definitely, outsource as much as it makes sense to do so.
I didn’t follow this rule in the beginning, so I decided to spend my “time” rather than my money, hence it took 7 years to really make good money on the Internet.
I write about the curative properties of everyday foods and weight-loss and many people ask me ‘What is the secret to weight-loss?’ There is no secret. Just a willingness to acknowledge reality and do what it takes. Yaro’s post essentially echoes the same thing but in the business world – and that is why I can identify strongly with it.
This post, IMHO, is really worth emailing to your other friends. ‘Cause it puts the simple reality right on your face and not waste time looking for some magic that isn’t there.
Yes some very good tips Yaro! I think in first steps of owning your business you should invest most of your money to expand more adn more and more.. Dont waste all your money u earned but invest in some other business to generate muliple streams of cashflow. Then you are set and can start marketing on new level.
Actually, I haven’t seen much difference with aged domains. How old do they have to be? My domain, infoloft.com is old but has a very low PR. Why is that?
Yaro – these are great tips. And what you say is so true. If people really want to start a business, they will find a way to raise the cash, or make more time.
Now, how do you go about buying an aged domain? Would you just buy one through GoDaddy that somebody hasn’t bothered to renew, or would you get it elsewhere?
Catherine – I would brainstorm domain name ideas that suit your project, then go looking to buy them from places like SEDO.com.
There are plenty of afternic sites that deal in old domains, it’s finding one you can afford that is the challenge.
I’m certain that most people that begin Internet Marketing don’t think of it as a business. They spend a lot of time and effort chasing after the elusive pot of gold at the end of the cyber rainbow with little understanding about the the real cost of doing business. It’s very good to talk about the practical aspects of doing business online – especially starting on a limited budget. If more people considered this idea there would be fewer who started only to fail.
Great post, Yaro. I speak with small business owners all the time who are DESPERATELY looking for ways to grow the budget without breaking the bank.
I’d love to hear what your readers say about their biggest marketing challenges. What do they wrestle with? What are the hurdles? How have they overcome their marketing challenges? What success tips can they share?
Keep up the good stuff!