Thursday, 1 September 2011

Earnings, Cookie Cutters, and Online Programmes

I was reading through some material from Yuwanda Black and it occurred to me that people often make a fundamental mistake when evaluating business opportunities and products claiming to enable them to make a serious income - be it online or off.

Now, let's get one thing clear from the outset : it is perfectly possible to follow a sequence of steps and build (replicate) a business. This is, after all, partly how franchises work, and a good part of why brands are so powerful. 

I recently received an email from Tiffany Dow, in which se quotes visionary Simon Sinek:

"If you sell what you do, you're a vendor. If you
sell why you do it, you're a brand."

What about "If you sell how you do it, you're a franchise." Or, in internet business parlance - cookie cutter. Admittedly, that phrase has some negative connotations, but it works for some people, some of the time. The trick is picking the right one - i.e. getting the balance of cost, income and available time right.

Part of why a lot of people don't have success with these programmes is that:
  • their expectations (income, effort, etc.) are unrealistic;
  • the resources required (time, money, etc.) become greater than the reward.
Which brings us to the point of this post - people often make a single, important, fundamental mistake when calculating the time/reward ratio. Some sales letters encourage this, by starting out with a perfectly reasonable figure, say 1,000 (dollars, Pounds, Yen, etc.) per month, and then working back to claim that this is possible with only a few hours work per day, which means you'll be earning over $80 per hour!

Who wouldn't want that? After all, $80 per hour, 5 days per week (7 hours per day), is over $130,000 per year. Wow!

In planning a start-up, people often make the same mistake - they forget that, even if they do charge $80-100 per hour, they will never, ever, be able to work 5 days per week, 7 hours per day, all year round. Work, in this case, means performing the tasks that directly earn income.

For a start, as an online entrepreneur, you will spend upwards of 30% of your time marketing, whether that be creating newsletters, contacting prospects, setting up advertising programmes, or just following up emails.
So, to work for 7 hours, you'll probably spend 2 more marketing. That's already a 9 hour day, which, as many entrepreneurs will tell you, is a luxury. Mostly it's 12 hours plus.

On the other hand, when working out expected income from any plan, it pays to factor in the marketing time required, and certainly when establishing a price for services, that cost (along with any travel, research time, etc.) also needs to become a component of what you charge.

The conclusion? Don't forget that working and working are two different things. Only one earns money, and the other needs to become part of the charging cycle, or at least you have to remember that if a piece of work takes two hours, and earns $100, there has been a cost involved in getting that work, and so you've not really made $50 per hour.

Until the next time : earn and learn!

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