I am continuing to learn amazing principles for finding financial/life freedom within the pages of 4-Hour Workweek by Timothy Ferris. In Chapter 9, Income Autopilot I: Finding the Muse, he shares the story of an entrepreneur he knows who created an online source of income…his business generates $10,000 with the click of a few buttons and creative thought. Read closely for inspiration:
Douglas Price was waking up to another beautiful summer morning in his Brooklyn brownstone. First things first: coffee. The jet lag was minor, considering he had just returned from a two-week jaunt through the islands of Croatia. It was just one of six countries he had visited in the last 12 months. Japan was next on his agenda….
Two years earlier in June of 2004, I was in Doug’s apartment checking e-mail…he was finally extricating himself from a venture-funded Internet start-up that had once been a cover story and his passion but now it was just a job…he made a decision — enough complicated stuff. It was time to return to the basics.
(Ferris writes that Doug has access to a huge collection of) sound libraries and CDs that film producers, musicians, video game designers , and other audio professionals use to add hard-to-find sounds–whether the purr of a lemur or an exotic instrument–to their own creations. These are Doug’s products, but he doesn’t own them, as that would require a physical inventory and upfront cash. His business model is more elegant than that. Here is just one revenue stream:
1. A prospective customer sees his Pay-Per-Click (PPC) advertising on Google or other search engines and clicks through to his site, www.prosoundeffects.com.
2. The prospect orders a product for $325 (the average purchasing price) on a Yahoo shopping cart, and a PDF with all their billing and shipping information is automatically e-mailed to Doug.
3. Three times a week, Doug presses a single button in the Yahoo management page to charge all his customers’ credit cards and put cash in his bank account. Then he saves the PDFs as Excel purchase orders and e-mails the purchase orders to the manufacturers of the CD libraries. Those companies mail the products to Doug’s customers–this is called drop-shipping–and Doug pays the manufacturers as little as 45% of the retail price of the products up to 90 days later (net-90 terms).
Let’s look at the mathematical beauty of his system for full effect.
For each $325 order at his cost of 55% off retail, Doug is entitled to $178.75. If we subtract 1% of the full retail price (1% of $325 = $3.25) for the Yahoo store transaction fee and 2.5% for the credit card processing fee (2.5$ of $325 = $8.13), Doug is left with a pretax profit of $167.38 for this one sale.
Multiply this by 10 (say he processes 10 orders at a time) and we have $1673 in profit for 30 minutes of work. Doug is making $3,347.60 per hour and purchases no products in advance. His initial start-up costs were $1,200 for the Webpage design, which he recouped in the first week. His Pay Per Click advertising costs approximately $700 per month and he pays Yahoo $99 per month for their hosting and shopping cart.
He works for less than two hours a week, often pulls in more than $10,000 per month, and there is no financial risk whatsoever. Now Doug spends his time making music, traveling and exploring new businesses for excitement. Prosoundeffects.com is not his end-all-be-all, but it has removed all financial concerns and freed his mind to focus on other things.
What would you do if you didn’t have to think about money? If you follow the advice in this chapter, you will soon have to answer this question.
It’s time to find your muse.
Another reason to buy this book!! If you are looking to stop being a slave to your heavy workload, there are ways to leap beyond it all. I shared the above story/scenario to get the wheels in your head churning.
I’m learning that one of the sure keys to bold living is automating our lives — using our creative minds to figure out a way to offer something to the world in a way that allows for us to breathe, laugh and enjoy our lives.
Thanks for reading!!
More to come on my search for boldness tomorrow :-D
– Jen Engevik of Project BE Bold