How I Plan to Revolutionize My Online Business [In 3 Steps]

Photo Credit: Turkey Travel Planner

Photo Credit: Turkey Travel Planner

I arrived back from a week long vacation in Turkey on Wednesday. As per usual, my time away from my business was hugely inspiring and although I had an awesome time, I couldn’t wait to get back and start putting my new plans into action.

The causes of my inspiration this time around were two books: The 80/20 Principle and The 4-Hour Workweek. Reading those books led me to formulate a new plan for my ongoing business interests centred around three principles.

In this post I will name those three principles, explore how they have completely changed the way I think about my business, and reflect upon how I feel my business may develop in the coming months as a result.

The Three Principles That May Revolutionize My Business

Books

Although I am delighted with what I have managed to achieve in the last two years or so, there has remained a nagging feeling at the back of my mind that I could be achieving so much more. A voice in my head tells me that the success I have experienced so far only represents a scratching of the surface of what is truly possible.

During my vacation the reading I did revealed what I believe to be three principles that clearly demonstrate that the voice in my head is right. Having spent a lot of time thinking about how I have been running my business in the past week or so, I believe that a huge shift in my approach could lead to a far greater income in the relative short term (three to six months).

That shift will be led by three principles. Let’s take a look at each in turn.

1. Optimize

Conventional wisdom is not to put all your eggs in one basket. 80/20 wisdom is to choose a basket carefully, load all your eggs into it, and then watch it like a hawk. ~ Richard Koch (tweet this)

The word “optimize” is used in a lot of contexts, but for the purposes of this post I intend for its literal definition to be used:

To make the best or most effective use of (a situation or resource)

The 80/20 Principle has shown me that I am not making the best or most effective use of my situation and resources — not even close. Furthermore, it has demonstrated to me that I have not leveraged the most obvious potential sources of income in order to build my business further.

Consider for example the contrasting success of my freelance writing guide and my authority site. Since the guide launched in November 2012 it has made me over $10,000 in net income. As a first foray into information products I consider it a success. On the other hand, I have poured countless hours into my authority site since September 2012 and have nothing to show for it.

So here’s the blindingly obvious question that I have managed to avoid asking myself for the past eight months or so: with my first information product having been such a success, why haven’t I been working on another one? Why have I chosen to ignore developing what has to date been the most profitable passive income stream I have been able to produce?

Then there is my freelance writing business. I have never had a problem finding clients — since I landed my first two through online job boards, they have all come to me. For the past several months I have been hovering at capacity with my freelance work and have even turned prospective clients away. Anyone with half a brain should spot an opportunity there, and yet I have refused to entertain the idea of building my freelance business on the basis that it would be too much hassle. I had dismissed the prospect out of hand and continued to focus on other projects that don’t show nearly as much promise.

In terms of optimization, I have been spending way too much time making no money on untested projects when the potential to make thousands of extra dollars per month has sat on the sidelines. That has to change.

2. Eliminate

The height of cultivation always runs to simplicity ~ Bruce Lee (tweet this)

This is a concept straight out of The 4-Hour Workweek. I should say first of all that I had actually read this book before, around two years ago. It turns out that I had a lot more to gain from reading it second time around.

The principle of elimination as described by Tim Ferriss is simple: be effective, not efficient (or to put it another way, focus more on what you do, not how you do it). He says you should forget “time management” and focus instead on eliminating all tasks that do not lead to the greatest possible opportunities.

Ferriss’ wisdom came to me at a perfect time as I had tracked all the time I spent on my business in June. This was the outcome:

Time

Do you know what I see? A hell of a lot of wasted time, and even more time that could have been better spent.

Here are some areas in which I can look to eliminate at least part of my time commitment (i.e. areas that offer little to no return):

  • Emails (17 hours)
  • My authority site (19 hours)
  • Admin (3 hours)
  • Social Media (3 hours)
  • P90X Journal (4 hours)
  • Non-billable client work (4 hours)
  • Miscellaneous (3 hours)

That’s fifty-three hours in June (or nearly fifty percent of my total working hours) that could benefit from elimination. And here’s the clincher: the less time spent on tasks that offer little to no return, the more time I can spent on building a more successful business.

But it’s not just about elimination. Once I have done that I can transition into the third principle.

3. Automation

I not only use all the brains that I have, but all that I can borrow ~ Woodrow Wilson (tweet this)

This is Ferriss at work again, with a simple piece of advice: if you can outsource something for a fraction of what it costs you, there is no reason why you shouldn’t.

Let’s explore this principle in detail. My equivalent hourly freelancing rate in June was $161. As such, it is reasonable to say that my time, professionally speaking, is worth $161 per hour. Therefore, every hour that I spend on work that doesn’t make me $161 represents a loss on my highest possible earnings.

If I can outsource a relatively menial task for $20 and use that saved hour to earn an additional $161, my net profit is $141. That’s the simple math. The less time I spend on the less profitable aspects of running my business, the more time I have to spend working on the more profitable aspects.

This comes back to the 80/20 principle. In this context the theory would be that I only spend 20% of my time working on the tasks that create 80% of the benefit. Therefore, if I can outsource various tasks so that I am able to spend 80% of my time on the high-benefit work, the result could be a 400% increase in gross profits.

That is all theory of course, but compelling theory nonetheless. Let’s look at it a different way — I worked six hours per day on average in June. That’s as much as I would like to work (in fact, I’d ideally work less). If I can outsource three of those hours each day at a cost of $60 per hour on average, I can potentially make an additional $423 per day (net) by focusing on high-return tasks with the increased time that I have available. That’s an extra $9,000+ per month, or a 100%+ increase in net profit. Automation can be a real money spinner when employed correctly.

Putting It All Into Practice

I have already started putting the wheels in motion regarding my plans to optimize, eliminate and automate. However, I am going to be making big changes and will have to tread carefully. The last thing I want to do is unravel so much of the good work I have done to date.

Optimization

There’s a lot to do on this front and I’m really excited about what it could mean for my business.

First of all there is the freelancing side of things. Finding writers for my authority site was a huge wakeup call as to the depth and breadth of writing talent out there. As such, I think I would be crazy not to consider scaling my writing business.

I am still in the preliminary stages of figuring out exactly how my new business will be structured, but the basic business model will be the subcontracting of vetted freelance writers to clients (along with editing services). I’ll be writing more about this on Leaving Work Behind very soon.

Then there’s my next information product. You may know that I am currently working on the Leaving Work Behind book, and the more I think about it, the more it makes sense for it to be a guide/course in the information product mould. This has been a gradual evolution of what was originally to be a manifesto. My most recent thoughts are to create a compressed version (say 5,000 words) of the guide as a freely downloadable manifesto and create an entirely separate and comprehensive premium guide. I am really excited about taking the book to a completely new level in terms of providing a step-by-step, highly actionable guide to leaving work behind.

Those two projects will be enough to keep me busy for the time being!

Elimination and Automation

This is where I could get into sticky ground. Consider for example the amount of time I spend responding to Leaving Work Behind emails and comments. These extremely time-consuming activities offer me no direct return and are prime candidates for elimination and/or automation. However, my propensity to respond to reader emails and comments are in part why I have been able to build what I consider to be a pretty well-liked brand over the past couple of years.

The last thing I want to do is alienate you guys (besides, I like talking to you!). It’s a tricky situation — ultimately my time is not scalable and I have to draw the line somewhere in terms of how much time I spend on interaction.

So I am in search of suitable compromises. For instance, I am considering the idea of not responding to all reader emails individually, but instead picking the best questions and presenting my answers in periodical posts published here on the blog. The best questions would get answers, those answers could benefit a wider audience, and I would get through them quicker by batching my responses.

Also, an idea I have for comments is to implement guidelines such as these and these. I could then outsource basic comments management to ensure that (a) only worthwhile comments remain on the blog and (b) I was sent a list by my virtual assistant of only the comments that require responses.

I’m already working on a bunch of less problematic methods of elimination and automation, including:

  • Using TweetAdder
  • Scheduling Facebook updates
  • Managing blog comments for clients
  • Research/planning/etc for freelance work
  • Link building for my authority site

I’ll probably get into the specifics of my experiences with elimination, automation and outsourcing when I have fine-tuned my approach.

Conclusion

This has been a bold post — I have publicly declared my expectation that I will be making far more money within the next three to six months. If I fail in my endeavours then I will end up with egg on my face, but I am confident of my plans. I am hopeful that my new writing business in addition to the release of my Leaving Work Behind guide and manifesto will boost my income considerably.

Of course, only time will tell but I am extremely excited for my prospects through the second half of 2013. Although I was hardly dragging my feet before, I feel like I have a new lease on life and I can’t wait to see my new plans come to fruition!

I’d love to know what you think about any and all of the above, so please share your thoughts and questions with us in the comments section below!

Comments

  1. says

    Man, I’m really admiring your work ethic – keep it up!

    4 Hr. Workweek was truly inspiring for me and a top 10 book for me. It’s one of very few books that I continually go back to for reference.
    In fact, I just lent it to a friend and am now beginning to harass him in order to get it back sooner ;)

    His example of effective vs. efficient shot off a light bulb in my head.
    A door to door salesmen that can quickly make his rounds can be extremely efficient at what he does, but it still may not be the most effective way to do it.
    Makes total sense.

    I can’t wait to follow what comes next!

    • says

      hey Brooks

      I’ve checked your blog, and heard you were selling candies back in the “business” days… so what did you learn from that experience and did you make any irresistible offers then?

      I’m sure some of Tom’s readers would love to hear what you have to share next…

      Thank you!

  2. Randy says

    Don’t reply to this post!! LOL I think it is a good approach that you will be taking in regard to responding to emails. You are right though — it is a fine line to walk. It’s a thrill for any of us to receive a personal reply from you, or response to a post. But you can still maintain that connection in the manner you described above, even though it will be slightly different.

    This recent post is so full of information, it needs to be read several times — like a good novel. Thanks so much for sharing, and for all of your help in my endeavor as well.

    Best.

    • says

      Hey Randy,

      I’m glad you like the suggestion — the aim is still to respond to all worthwhile questions, but perhaps filter out those ones that are far too generic (“I want to make money online, can you help?”). Those questions are always so frustrating! Whatever I choose to do, my intention is never to simply disappear behind a wall like so many successful bloggers do.

      Cheers,

      Tom

  3. Nuno says

    Hi Tom,
    I hope you enjoyed your vacation. In regard to the post, let me say to you that I am a little bit desapointed in relation to the response to emails. One of the things that make me feel part of your community is the fact that I know there is a person on the other side, and that person reads my comments and my emails, and personalize a response. I’ve purchase a product through your site, because you had the time to respond to a question I’ve made by email. I buyed from you instead of pat Flynn becAuse pat no longer responds to emails.
    I admired Pat, but his attitude let me a little bit disappointed.

    I understand your need to have more time, but I think you must be carefully where you cut and how you cut.

    Best regards

    Nuno

    • says

      Hey Nuno,

      Thanks for being honest with your feedback.

      I have no intention of stopping reading or replying to emails any time soon, but my thoughts are to streamline the process somewhat to make it more efficient. Hence the idea of a periodical post in which I answer questions.

      It’s not about ignoring you guys — it’s about responding to you in a manner that still keeps us connected, but is more efficient for me. I am aware that Pat no longer replies to emails (it’s not only you; he hasn’t responded to any of the four emails I’ve sent in the last eight months or so) and that’s not a path I want to go down, no matter how popular the blog becomes.

      At the very least I think anyone who takes the time to email should be met with an autoresponder saying that it may not be possible to respond (not that I want to go down that road either, but I’m sure you get my point).

      My readers will never be ignored — I will always find a way to get a response to them, one way or another.

      Cheers,

      Tom

      • says

        I’ve noticed that Pat does reply to Facebook comments from time to time. I recently commented on the fact that his comment icon bursts off the screen with the amount of comments he has on each post and I got a swift reply from Pat. He is also pretty much permanently glued to the Niche Site dual project at the moment which is neck deep with contributors at the moment and his large empire including his original site still require maintenance.

        I thought of this an alternative way, if the “experts” do get bogged down and no longer respond that is your “opportunity” and eventually you’ll be the guy or gal who’s tripping over bundles of cash and unable to answer the 50,000 emails per day.

        There’s always a silver lining. :)

      • says

        Wow, is it serious, Pat isn’t answering emails anymore?

        I plan to do/launch an interview style product, and Pat was on the “target” list… maybe there’s still a way to connect with him, would Facebook be the way to go about it, or is this guy totally busy counting the cash he’s making from his blog? LOL

  4. says

    Looking forward to seeing how you can evolve your business. It definitely seems like you are on the right track with your thoughts. Since you are looking to grow, you are going to have to leverage other people’s time to do that. Will be interesting to see where you go with that. I would caution on how you determine what actions give you a “return on investment” however. The time you spend on e-mails and responding to comments may very well be one of the drivers behind your information product sales. You are establishing trust. Trust translates into sales.

    Best of luck as you make these giant steps.

    • says

      I totally agree Joe — I am aware that measuring ROI is not as straightforward as some would have you believe. As I said to Nuno in another comment, it’s about managing the volume of emails and comments so that people still get a response but my time is used most efficiently.

  5. says

    You really are an inspiration Tom.

    I appreciate your honesty and willingness to share your thoughts. I know I’ve said this before but you do have an uncanny knack of writing about what I and others are thinking. There’s a saying:

    “When the student’s ready the teacher will appear”

    You’ve gone and done it again!

    Best of luck

    Rob

  6. says

    Both great books that I haven’t read in a few years – you’ve inspired me to go back and read both again actually. It sounds like you know what you’re doing Tom. At the end of the day nobody knows your business like you do and I’m sure you’ll never become one of those bloggers who thinks responding to comments and emails is totally beneath you. Your most loyal readers will understand if you need to step back a bit I’m sure – particularly if you remain as open and honest with them as you have always been.

    Good on you, I say!

  7. says

    Hi Tom. You speak of the 80/20 rule! Do you actually know who originated that term? Vilfredo Pareto, the 80/20 rule is actually derived from this Italian’s observations. I mention a bit more in a blog post I wrote a while ago: http://wp.me/p3DXUw-24 I kind of agree with where you are going with your blogging ideas now, you’ve pretty much honed a great deal of what you are doing and turning people away isn’t a good idea because you are going to lose money by following that path. There is a business studies commentator named Williamson who in laymen’s terms suggests that when you get to a point where it is more cost effective to outsource that you shouldn’t think twice.

    I’m not going to wish you good luck because I know you will do it :) I will wish you good fortune instead!

  8. says

    Hi Tom,
    Its really interesting getting to know of the plans you have for your business in the coming months. The plans are quite practical and one can learn a lot from it.

    The principle of optimization, elimination, and automation as described in this post are most telling of how one can actually leverage on what he has and make the most from it.

    That said, I hope to read the books by Richard Koch and Timothy Ferris for more inspiration!

    The above comment was left in kingged.com – the IM social site where this post was ‘kingged’ and shared.

    Sunday – kingged.com contributor
    http://www.kingged.com/how-i-plan-to-revolutionize-my-online-business-in-3-steps/

  9. says

    Way to apply 4HWW principles, Tom! Your post just made me realize that my business is due for another reassessment. I need to take a long, hard look at my projects and client base and determine the ones that are putting more money in my pocket (so I can double down on them) and the ones that are just taking up my time (so I can either eliminate or delegate them).

    Good luck with your endeavors. It’ll take quite a bit of work to set up all those systems, but it’ll be worth it once you pull it off. :)

    BTW, I never read The 80/20 Principle. Thanks for mentioning it here, I just added it to my reading list.

  10. says

    I would say that focusing on automation and outsourcing would be your best bet. If you haven’t already, check out the empire flippers (formerly adsense flippers) guys. They have basically created an empire of outsourced website creation and are making good money at it. You could apply that principle to the paid article writing for sure. That would leave you more time to interact with emails and comments from your audience :) It definitely isn’t a good idea to ignore your fans, I might think twice about that one.

    • says

      I know Justin and Joe, they’ve done an awesome job with Empire Flippers.

      I really must have not explained myself well in the post because you’re not the first to comment on the prospect of me “ignoring” my fans. I have no intention of doing that whatsoever! It’s about “suitable compromise”, not ignoring readers. One thing’s for sure — I’m not planning on doing anything drastic soon.

      Cheers,

      Tom

      • says

        No you DID explain yourself perfectly well. I get it and totally agree- email especially is the thief of everyone’s time these days.

        People don’t always read everything – or only pay attention to sentences here and there. Nothing you can do about that.

        I’m amazed you bother to reply at all to people who still email in with generic ‘how do i make money on-line’ questions. Generic questions deserve generic answers! ie- “stop being so lazy, actually read my blog and then get back to me with a REAL question” (said in the nicest possible way of course..:-).

        • says

          That’s actually exactly what I tend to do, but sometimes it’s tempting to not be so polite, especially when they reply with an equally generic question ;-)

  11. says

    Hey Tom,

    Daryl here.

    I think that you should go on more vacations, because you always seem to come back revitalised and seeing things from a totally different perspective.

    I definitely think another product is in order – though in my view, it would be even more lucrative to produce a short e course where you offer pre packaged information, along with a few hours of personal contact time weekly. With your knowledge and background, I’m sure that you can get quite a few persons to enroll for a reasonable price.

    I definitely agree with scaling up your freelance writing business (and hope I’m somewhere in the pile of prospective writers :) Funny how you started this whole thing with the idea of passive income but then “stumbled” onto an equally lucrative but completely different field!

    If I were you I personally wouldn’t worry about each and every single wasted minute – you’re doing quite well with the time that you DO have allotted.

    Regarding the authority site…

    If you don’t mind me asking, what is your strategy for monetization of your authority site? I keep getting the idea that you seem to think that it has “failed” (please correct me if I’m wrong) but that idea seems to be simply based on it’s low Google rankings. As I’m sure you know, there are plenty of ways to make a profit without needing the site to be ranked highly. I’m not sure if you’re really contemplating all the ways that the site could be a success apart from rankings.

    I’d also ask, what efforts have been done to build relationships within the particular niche for your authority site? What marketing have you done in terms of promoting the site and associated products?

    Cheers,

    Daryl

    • says

      Hey Daryl,

      I don’t need any more excuses to go on more vacations — it’s definitely my plan ;-)

      The problem with the e-course model you have described is that it requires my direct time involvement. That’s exactly what I’m trying to avoid. It is a good idea though.

      I do not think the site has “failed” — I don’t think it’s yet had a big enough chance to succeed. And I appreciate that Google rankings do not mean everything in this world, but it is an issue of traffic — i.e. the site doesn’t have any. While you can make money with a relatively small amount of traffic in certain niches, you can’t make anything more than pennies with only a handful.

      I’m only just kicking into gear regarding the promotion of the site this past week or so. There’ll be a post on it soon!

      Cheers,

      Tom

  12. Melissa Nott says

    I’m just getting started with freelance writing as a business, and you are one of the icons I’ve been studying. Glad to see you’re not going into seclusion (yet!) I admire your positive attitude and hope to emulate it.

  13. says

    This all sounds great, Tom. Speaking of productivity, you mentioned somewhere which billing/accounting software you use, and I can’t seem to find it. If you happen to see this post, if you could remind me of the name I’d sure appreciate it.

    Also, a book recommendation is Blue Ocean Strategy. It’s given me a new way of thinking about my freelance copywriting business, even though it’s geared toward companies. The principles are the same.

    Congrats on taking these steps!

      • says

        Freshbooks! Thank you! And yes, Blue Ocean Strategy is great. It’s about leaving the sharks to keep fighting for the same scraps (red ocean) while you create your own non-competitive space (blue ocean). It also talks about innovation related to value, and offering it in new and different ways that people may never have even considered before. Because now they’re in your blue ocean. :-)

  14. says

    I’m getting the 80/20 book from audible now! I’ve read 4-hour workweek and love it.

    Thanks for your boldness. We all look forward to playing a part in that new freelance gig you’re thinking about, btw!

  15. says

    Hi Tom, thanks for this incredibly comprehensive and positive post! Lots to chew on here. I also just wrote about the 4 Hour Workweek on my blog because he is a big inspiration to me in my freelance, global nomad lifestyle, and I think other people really need to know about his ideas and that anything is possible!

  16. says

    I applaud you for looking so deeply into your day/week/month/year/career and having the guts to admit that even though you might have enjoyed a certain aspect of what you do it’s a time-suck since it isn’t making you the income stream you deserve for the time spent.

    This is one of the main reasons I really enjoy reading your blog & newsletters – you are fully transparent in what you do and how you got to where you’re at today. Your story has been inspiring! I’m just a few months into this world of freelancing and already I can see a shift in my income because I shifted some priorities.

    One of my favorite recent (ish) phrases is a principle I follow daily:
    FOCUS – follow one course until successful.

    But of course the reverse is true, like you said here if you’ve been following that course but you aren’t sucessful (in fact are wasteful instead) it’s fully worth re-evaluating and busting it open to start all over.

    I wish you tons of success as you venture out on your new journey and look forward to reading all about it!

  17. Lee K. says

    Another great post, Tom. I love your work ethic. You have inspired me to pick up those books today. Keep up the fabulous posts!

  18. says

    I am truly inspired. I am excited to see where a career in freelance writing will take me. I would love to devote my life to mission/relief work and writing may just give me that opportunity. I am excited to learn all I can from you and order your resources. Thanks for sharing your experiences and dreams.

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