The Six-Figure Second Income: How to Start and Grow a Successful Online Business Without Quitting Your Day Job (5 page)

monster tree to make a dam with. Instead it looks for branches and limbs it can

conveniently find, fashioning each one to fit.

At first the dam isn’t much to look at, but with steady effort it begins to work. Once the

beaver dam is built the main effort is done and now only a bit of maintenance is needed

to keep things working.

By al means keep your eyes open for the next technology that can make your life

easier—whatever that might be. Then, instead of dumping everything else in favor of that

shiny object, simply look for how it might fit into what you already have in place in that

money-dam of yours.

Whew! We’ve succeeded in busting through lots of false barriers to your success and

then making sure you’re aware of the biggest real dangers to that second income we’re

about to build for you.

Can you see why this opportunity is not too good to be true? It takes some effort to

ignore the false barriers and avoid the real dangers. I’l say it again: Al these barriers

and dangers are great for you because they mean less competition.

I hope you had your pen out and have underlined the sections of this chapter that had

particular relevance to you, because I suggest you review those sections regularly. It’s so

easy to be lul ed back into thinking in those old, counterproductive ways.

The next chapter is the opposite of counterproductive—I’m going to turn you into a

product machine so that you see opportunity and potential profits just about everywhere

you look.

How to Build a Quick and Profitable Product

Did you get a chance to watch the TV show Pitchmen on The Discovery Channel before

it was cancel ed? If not, maybe you can find episodes on the Internet. I suggest you

watch a few shows because it wil make you feel so very good about what you’re about

to discover in the book you’re holding.

The show starred two long-time marketers or pitchmen, Bil y Mays and Anthony “Sul y”

Sul ivan. (The show was canceled after Bil y unexpectedly died.) You probably have seen

Bil y pitch stuff like cleaners and gadgets on television for years. He was very

entertaining and sold a ton.

Though the show was entertaining, it was also sad in a way. Here’s how a typical

segment of the show worked:

An inventor whom we’l cal Gus worked for years designing a new-and-improved

gizmo like a cup holder for the car or perhaps a pocket fishing rod. He sank his life-

savings into designing the product and having it manufactured. Now pal et after pal et of

them sits in a warehouse. It seems that his own version of Uncle Moe had plenty of

advice on how to sel them but nothing worked.

Through hit and miss, Gus became aware of the Pitchmen show and he wrangled an

appointment. He got to stand at one end of a conference table while he demonstrated

his cup holder to Bil y and Sul y for perhaps 60 seconds. The guys asked two or three

questions and formulated an instant impression of the product.

In the vast majority of cases both Bil y and Sul y looked at each other—then, as politely

as they could, they thanked Gus for his interesting product and ushered him out of the

room. Another inventor’s dreams dashed. In a handful of cases Bil y and Sul y took on

the new product and cut a deal where they financed the next phase in exchange for a

very healthy cut of the profits.

The next phase involved making sure the product didn’t infringe on someone else’s

trademark or patent, and they reviewed how easily and cheaply it could be mass-

produced. Final y, they made a test commercial and ran it in several markets.

The cost of this next phase was always in the five figures and sometimes into six

figures. Judging from comments on the show only a fraction of those product candidates

ever broke even, never mind making a substantial profit.

I found the process sad because the odds were so stacked against these people

making it to the Big Time. They usual y mortgaged their houses and sank their life-

savings into the project, in most cases only to be rejected by Bil y and Sul y.

Even when they made it to the final test round, their chances of breaking even were

slim and the chances of realizing their dreams and making a fortune seemed to be

about as likely as winning the lottery.

In my opinion, that’s no way to build a second income. You’re betting too much money

and time against too many factors that are way out of your control. Let’s look at al the

bad things about this approach:

• You toil for years to perfect your product in secret with no income to show for it.

• You must spend more money to try to protect your idea through patents,

nondisclosure agreements, memorandums of understanding, and contracts, while

your lawyer’s bil ing clock spins and spins.

• You must pray that you know someone who knows someone who can get you

an introduction to someone.

• Then you must pray that your 60-second presentation goes wel .

• When it most likely does not go wel , you lick your wounds. If the honchos like

your product you gulp as you sign away most of your future profits.

• Now you pray some more that the product does wel .

Look, if you’re a hobbyist/tinkerer and just enjoy making gadgets, then more power to

you. Obviously a few people do get their inventions to market from time to time and

maybe even make a nice profit from them.

My point is that, if you’re going down that route, do it for the excitement of the unknown

or for the miniscule chance that you’l be on television someday. Don’t do it because you

think that’s the only way to make money from sel ing a product.

THE TYPICAL DREAM IS USELESS

We met Uncle Moe in the last chapter. He has an ego even bigger than his beer bel y

and is a know-it-al when it comes to your life and everyone else’s. Moe likes you and

tel s you that this whole idea of sel ing stuff is for the birds. He’s tried it and it simply

won’t work.

Believe it or not, in one sense I agree with Uncle Moe. That’s because the typical

dream of making it big is so extremely unrealistic, as people pitching the Pitchmen

usual y discovered. Here are the underlying requirements that make this conventional

approach so very difficult to pul off:

1. I must have a fortress to protect my idea from knockoff artists.

2. I must reach mil ions of people.

3. I want to be famous.

4. I want to be as rich as King Midas from this first invention of mine.

5. I need to invent something revolutionary.

6. Inventions are things that are manufactured in factories.

I would agree with Uncle Moe that you, or I, or anyone else are exceedingly unlikely to

meet al six requirements in a lifetime.

Fortunately, a far superior method exists for building a substantial income. Let’s look

at each of those requirements and replace it with something better:

“I Must Have a Fortress to Protect My Idea from Knockoff Artists”

Unless you want to pay for an army of lawyers, it’s unrealistic to expect effective

protection. Even if you prevailed in the United States, what are you going to do about

Asian countries where intel ectual-property piracy has been rampant, despite even U.S.

government actions? You’re much better off remembering the quote in the last chapter

about what McDonald’s chairman Ray Kroc said: “We can invent faster than they can

steal.”

Did I just hear you think to yourself, “My situation’s different and I don’t have the

resources
of Ray Kroc
”? That wasn’t you? Oh good. That must have been someone

else thinking that, because you now know better. Besides, even if you didn’t invent faster

than the thieves could knock you off, you could always claim to be the genuine article, the

first-ever, and urge customers to accept no substitutes.

“I Must Reach Millions of People”

No, Proctor and Gamble must reach mil ions of people for a new toothpaste to be

profitable. You only need to find hundreds or perhaps a few thousand people worldwide

for your product to make you a very nice pile of dough, as you’l soon see.

“I Want to Be Famous”

Okay, if that’s what you’re after, I can’t argue with that. But you can work up to being

famous, can’t you? First, make a bunch of money with a product and then you’l have

plenty of resources to go after fame.

“I Want to Be as Rich as King Midas from the First Invention of Mine”

Again, think more about the trajectory you’re on than the ultimate destination. You’re

setting yourself up for failure if every time you are at bat in a basebal game, you must

uncork a grand slam or you regard it as a failure. Even the mighty Mississippi River

starts as a few trickles and then combines over time to become something impressive.

“I Need to Invent Something Revolutionary”

No, you don’t. Think back to your last 10 purchases. How many of them are one-of-a-

kind revolutionary, versus products you just liked? If you bought light bulbs, then yes the

invention of the light bulb was revolutionary, but you bought Acme brand because they

were a good value. Acme got your business even though dozens of other companies

make light bulbs. It’s the same with coffee, computers, cars, and almost al other

products. You can make a bundle of money by carving out your corner of an existing

product category.

“Inventions Are Things that Are Manufactured in Factories”

Of course it’s true that some inventions fit that description, but it doesn’t mean yours has

to be one of them. When I think of factories, al I see are employees, buildings, rules,

regulations, red tape, headaches, and big expenses.

Similar to the fame discussion above, let’s start smal , nimble, and cheap, and, after

you have a pile of money in front of you, only then think about building that giant plant

with your name over the door.

We’ve just talked about the classic, slow, painful, and costly way of making money with

a product. Now let’s talk about the superior way.

YOUR FIRST PRODUCT SHOULD BE ONE OF THESE

Your first moneymaker should be an information product. I’m not saying that al other

types of products are bad or unworkable—I’m simply focused on getting you the most

money in the shortest time for the least amount of effort on your part. Here’s how an

information product stacks up against the classic type of product we just discussed.

You may be reading this book while you already have a physical product and just want

to know how to market it more effectively. That’s fine, and I’l definitely boost your

marketing power in later chapters. But if you do not yet have a product, I hope you see

that the choice is clear—go for the information product, or info product for short.

TABLE 2.1 Physical Products or Information Products: Which sounds better to you?

CHARACTERISTIC

PHYSICAL PRODUCTS

INFORMATION PRODUCTS

Relatively long process to

Time it takes from

design and manufacture

Relatively short process. Can be

idea to first sale

—typical y months or even

as short as days.

years.

Ability of someone

Pretty good.

Pretty good. Pretty good.

to swipe your idea

Ability to come out

with another

Relatively difficult.

Relatively easy.

product quickly

Not bad if you like lawyers,

Hoops to jump

paperwork, contracts,

Very few hoops.

through

permits, and red-tape.

Maybe okay if you’re a

cottage industry, but slim if

Large when you start out and large

Profit margin

you try to scale to the bigtime,

as you grow.

because your investment wil

go way up.

Likelihood of a

first- timer pulling

Relatively slim.

Relatively good.

it off

No prestige to speak of, and your

Great feeling of having your

relatives won’t understand what

name on the door, but you’l

Prestige

business you’re in. They’l just

pay big bucks for that honor.

know you have more money you

than

than

did before.

John Lennon, the Beatles band member, once said, “I’m going to write a swimming

pool.” He understood that he was in the info product business. If he sat down and wrote a

single song, he could pay for a swimming pool. Now don’t you go saying, “Oh, my

situation’s different—John Lennon was a world-famous musician.” Yes, he was, and

perhaps from a standing start you can only put something together that can buy a bicycle

or a dinghy. So what? Lennon’s first song wouldn’t have earned himself a swimming