My Advice to You

As I sat with my coaching client (let's call him Mike), I sensed an energetic frustration. He knew what he wanted to do and he was excited for the journey, but he didn't know how to get there. However, he also knew that he could no longer be just expensive manual labor, trading his time for money in his business of training professional athletes.

Unfortunately, in addition to not knowing exactly how to get started, he also suffered from a case of perfectionism, which I know also stops a lot of Early to Rise readers from brining their products to market. So I shared with him my story of how I got started online.

It all began in 2001 in my bedroom. I was sharing a house in the High Park area of Toronto with my best friend since childhood and a girl we knew from our hometown. At the time I was a personal trainer and I'd started to dabble in creating workout programs and selling them online to clients who found me through the Menshealth.com website.

However, I was just selling programs manually through paypal. A prospect would email me with interest, I'd recommend the best program for them, they'd send me a paypal payment, and I would email the program in return. Eventually I created a cheap, ugly website that automated this system and I was off to the races with my Turbulence Training for Fat Loss program.

But I wasn't making a lot of money at first. Here's why. I've always been impatient, and in this case, my vice was a blessing. When my ugly, automated site was created, I immediately began selling Turbulence Training for $9.95. That's not a typo. It was just nine dollars and ninety-five cents. But it was an incredible value and some of the people who bought in those first few weeks remain customers to this very day.

I should mention though, that the product lacked several key features, such as exercise photos and detailed explanations. For many people, not having these elements would be a good enough reason to procrastinate on selling the product. However, I truly believe that getting my product out there at a low price - even though it was incomplete - was the right thing to do.

By doing so, I built momentum. The day I launched this cheap product, I received 20-30 orders in just a few hours. Imagine how that would feel to a 27-year old kid just getting started online. It was like I had won the lottery. In hindsight, I wouldn't have changed anything. I truly believe it is essential to get your product to market as fast as possible, even if you sell it at a ridiculously low price as I did.

Years later my actions were validated by Internet Marketing legend, Yanik Silver. As a member of Yanik's mastermind group, he sent me a copy of his book, "34 Maverick Business Rules", and this rule in particular really hit home:

"Get your idea out there as fast as possible even if it's not quite ready by setting your must-hit deadlines. Let the market tell you if you have a winner or not. If not - move on and fail forward fast! If it's got potential - then you can make it better." - Yanik Silver, Maverick Business Rule #10
Eventually, I added in all of the missing elements (from photos to videos) and increased the price of my product gradually up to $39.95. Each time a major update was done, the new version would be shipped to all past customers and I'd increase the price by ten dollars. This also allowed me to re-launch the product to my non-buyer list as a new and improved version of Turbulence Training.

Each time I did so, I made sure to stick to another rule that Yanik would later share with me, and this was:

"Strive to create 10x - 100x in value for any price you charge. Your rewards are always proportionate to the value you provide." - Yanik Silver, Maverick Business Rule #2
Being impatient, cheap, and eager to please served me well during the first 18 months of my online business. I continued to get the products out there as fast as possible, with minimal expense, all while giving my customers a great value. I still, to this day use the same $200 desk purchased at Ikea, even though it's wobbly and some of the drawers don't shut, I run my business by one more of Yanik's rules:

"Seek to minimize start-up risk but have maximum upside potential." - Yanik Silver, Maverick Business Rule #8

As I finished up the tale of my online startup, the big picture seemed much clearer to my client. His goal was to create a front-end product as fast as possible, making sure it delivered 10-100 times the value to his customers, and to get it out as soon as he could, whereby letting his customers give him feedback and point out any errors or omissions.

He doesn't need to wait on making it perfect.

We all know Microsoft doesn't. Even Apple products come with a few glitches. And no product is ever really perfect.

So get your product finished. Bring it to the market. Fail forward fast if necessary. Improve it and re-release version 2.0.

After all, there's someone out there in pain because you haven't released your solution for their problem. Each day you wait for perfection means only pain and problems for them.

I think you'll agree that it's more important to help someone the best you can right now, then to wait until the help you can offer is perfect. Because if you wait, that day will never come.

Get started now,

Craig Ballantyne
Editor
Early to Rise

"It's got to be a big idea that you, your team and your customers can "get" in seconds." - Yanik Silver, Maverick Business Rule #1

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My Advice to Young People

By Robert Murphy
Over the last few years I've been freely dispensing financial advice to young people. I usually preface my remarks by saying, "I feel funny telling you what to do with your life, but since I'm bald you know I'm older and that I worry a lot." In the present article I'll summarize my recommendations. I am comfortable reproducing them for wide distribution, because they are conservative tips that would be appropriate in any setting, but are particularly important given my dire views on the Western economies.

Save More
It's common knowledge that if a person has the wisdom and discipline to save for the future, then he or she can eventually enjoy a permanently higher standard of living. However, it's useful to look at a numerical example -- such as the one I detail in chapter 10 of my introductory textbook -- to see just how significant a higher savings rate can be, on a person's future income. As Albert Einstein reputedly remarked, the most powerful force in the universe is compound interest.

Incidentally, people shouldn't feel guilty about saving more, notwithstanding the handwringing coming from mainstream economists. As I explain in my book, everybody can increase his or her standard of living through saving. In other words, it's not the case that if Alice makes a better future for herself by saving a higher fraction of her income, then there must be some Bruce out there who is going deeper into debt and will suffer a lower standard of living in the future. Society really can save and invest "on net", in the sense that everybody can obtain claims to a growing stockpile of capital goods that make workers more productive.

In the current recession, it's actually more important than ever that people save more. Contrary to Keynesian warnings, if households and firms save more, they will actually speed the general economic recovery.

Develop Multiple Streams of Income
When people hear the advice to save more, they typically think that they should stop going out to lunch, and instead bring a bologna sandwich to work or school. Although one obvious way to save more each month is to reduce frivolous expenditures, that's not the main thing I have in mind.

If a person really wants to start socking away a lot more each month, the best avenue is to boost his income, not cut spending. Particularly for young people (my target audience), there may not be that much room to cut. However, there's no limit on how much (in principle) someone can earn.
Don't misunderstand me. By all means, if a 22-year-old with no steady income is making huge payments on a sports car and rent in a posh neighborhood, then obviously it would be very prudent to move to a cheaper place and to switch to a boring vehicle with 80,000 miles on it. Yet even after plucking such low-hanging fruit, everybody -- especially young people -- should start brainstorming about how to bring in more income.

Notice here that I don't simply mean someone who currently works in an office should consider working nights as a waitress. In fact, that's not primarily what I have in mind. Instead, I think young people should consider a host of entrepreneurial ventures. Rather than looking for other bosses, young people should become their own bosses, at least in a few limited areas.

To some people this suggestion may sound intimidating. But notice that plenty of young people are entrepreneurs and they don't even realize it: Anybody who babysits or cuts lawns for neighbors is an entrepreneur. Such kids have to find customers (usually through word-of-mouth) and provide a service for which they get directly paid. That's what an entrepreneur does.

When I have mentioned this recommendation in public settings, sometimes students ask me what sorts of businesses they should start. The short answer is, "I don't know; that's what you need to figure out." The entrepreneur looks around and identifies a product or service that people currently lack but would be willing to pay for, in such amounts as it would be worth the entrepreneur's money and effort to provide it.

The reader should keep in mind that I'm not saying a person needs to brainstorm until finding "it," the fantastic idea that will eventually make someone rich. On the contrary, it's worthwhile doing all sorts of different ventures, so long as each one is self-contained and doesn't threaten to absorb too much time. It may take a lot of trial and error to gain the skills, confidence, and knowledge of customer demand before finding something really profitable.

As with all of my recommendations in this article, generating multiple sources of income is always a wise thing. However, in the present environment it is critical. Even someone who currently has a "good, steady job" can't be sure of his position even a year from now. A young person who inculcates that weekend business now, can expand the business in the unfortunate event of a layoff. But if that same young person, who has always (say) thought of starting a dog-walking service, tries to do so next year when the unemployment rate shoots up to 12 percent, she will be competing with that many more people. It's much better to get a fledgling business established now, during the weekends or other days off, so that the owner will already have a solid base of customers when the economy slumps again.

To reiterate, my advice is not to try to save more by looking at the monthly budget and saying, "Well, this is how much I make, and so if I cut back here, here, and here, then I can afford to put aside $250 more per month." No, I would much rather a person say, "If I cut back here, I can free up another $100 per month. And if I cleaned three houses every Saturday, then after expenses and treating myself to a nice dinner every weekend, I could save an additional $600 per month."

Sell Your TVs
The most succinct tip I can give, in order to find ways of generating new income, is to sell every TV in the house. I got rid of my TV during one of my frequent moves in grad school. At first I went through psychological withdrawal, but now it would sicken me if someone put a TV in my house. I can't imagine how much it would destroy my productivity. People can still watch their favorite shows on the computer.

Build Up at Least a Month's Worth of Expenses in Cash
Now if a person is saving more each month, the obvious question is: How should those savings be used? I think the first step -- and no I'm not trying to sound like Dave Ramsay -- is to accumulate at least a month's worth of cash. (Depending on the person's preferences and habits, it could be best to put this cash in a can in the closet, in a bank checking account, or in a bank savings account.)

The point of doing this is to get out of the habit of living paycheck to paycheck. Such a lifestyle is bad for (at least) three reasons: Most obvious, it leaves a person vulnerable to even a minor setback. If there is an unexpected expense, or if the person gets laid off, then obviously a small cushion of cash would be crucial.

Yet beyond this obvious justification, there are two other reasons that building up at least a one-month window of cash balances is a vital, immediate step. First, it frees up more time, especially for a person who has followed the earlier steps and is now earning income from several sources. Rather than having to run to the bank every time a new check comes in the mail, and rather than having to go online and check the bank balance every other day to make sure nothing is going to bounce, a person with at least a one-month cushion can better afford to let the paychecks and bills accumulate, then deal with them in one fell swoop. This allows for the person to spend more time focusing on the business(es), rather than stressing out about cash flow.

The other main reason the paycheck-to-paycheck mentality is destructive for the entrepreneurial person, is that the person is more prone to goof off whenever he's done enough to "get through the month." But once that critical threshold has been extended past the one-month barrier, there is little difference between having enough to pay for one month versus two or three months. Once a person takes it for granted that he will have money left in his checking account even after paying all his bills for the month, that surplus will mysteriously begin to drift upwards with each passing month.

Tithe or Give to Charity
It seems counterintuitive, but when a religious person tithes (or when a nonreligious person gives to charitable causes) there is somehow more money each month to work with. For tithing -- where a person is supposed to give a specific percentage of income to the church -- I think it's because the practice forces a person to stay on top of his finances.

More generally, by focusing attention away from oneself, things become clearer and it's easier for a person to do the "responsible" things like avoiding impulse purchases and doing the extra work needed to bring in more income.

This last point is crucial for people who are suffering from depression and are in a financial hole. Part of what keeps them there is that, deep down, they don't think they deserve to live stress free like the other people they see around them, who somehow have their act together and don't let bills pile up on the kitchen table. By bringing in the church (or a charity that the person really respects), the depressed and financially beleaguered person can stop dwelling on self-loathing and instead focus on helping others.

Eliminate Variable-Rate Debt as Quickly as Possible
If a person already has a decent amount of cash on hand, I think the next goal should be to eliminate variable-rate debt as quickly as possible. The most obvious example is credit-card debt rolling over at an APR that moves with the prime rate. If the dollar crashes as many Austrian economists fear, we can expect massive jumps in interest rates. This will wipe out many people who thought they were doing just fine the month before.

Note that "eliminating" variable-rate debt doesn't have to mean paying off the balances. Using a new balance-transfer promotional offer, for example, might allow a person to lock in a fixed rate for a year or more.

I have written on these pages about the pros and cons of credit-card use. Unlike my other suggestions, this particular one -- namely to get out of variable-rate debt quickly -- is based on our current situation, where I believe there is a real danger of interest rates spiking with little warning.

Acquire Some Physical Gold and Silver Coins
Once a young person has accumulated at least a month's window in cash and has neutralized variable-rate debts, I think an excellent outlet for some of the saving each month is the acquisition of gold and silver coins. These don't need to be collector's items; in fact my favorite thing is "junk silver", because if the Big One comes it will be easy for other Americans to recognize US coins that were minted before the 1960s and have an easily verifiable silver content.

From an Austro-libertarian perspective, the other great benefit of buying at least some physical gold and silver is educational: This is what genuine, market-produced commodity money feels like.

Conclusion
The above tips are mostly common sense. Except for the warning about variable-rate debt, they are good ideas in any setting. Yet they are particularly important, especially for young people, in our present environment.

In closing, I want to stress that I am by no means a role model in this arena. I can write with confidence on the above matters precisely because I have seen firsthand what happens when you don't follow those guidelines. If you want to keep your hair, you will give serious consideration to my recommendations.