Dateline: Okinawa, Japan
I’m writing this article from the subtropical island of Okinawa out in the East China Sea. I have fiber internet and sweeping views of the ocean from my office balcony.
Yes, life is good. But, like you, I was never taught how to get here. I learned the “benefits” of a stable middle-class career. Graduating in the 1990s, I was perhaps the last generation to believe in its virtues.
Today, however, it’s different. We have financial meltdown. We have governments raiding pension schemes and capital controls. The system is broken.
We do have the internet though. With it comes a world of opportunity, like the idea you can become “location independent.”
What if you could live and work anywhere in the world? Why not take advantage of global differences in costs of living? Imagine living in South East Asia, selling to America and outsourcing to India.
Sound crazy? Twenty years ago, yes. But today it’s a reality lived by an increasing number of entrepreneurs.
It’s a reality that allows startups to thrive in low-cost environments and established business owners to live the millionaire lifestyle (even when they’re not).
In writing guides on how to become location independent I get a lot of inquiries. So here is a quick primer on Location Independence 101.nbsp;
Defining location independence
Short definition of location independence: the ability to live and work anywhere in the world. The three most common types of location independent lifestyles:
Digital nomad: These are entrepreneurs who travel long term, often freelancing or servicing clients online.
Good digital infrastructure, lax visa controls and favorable costs of living make places in South East Asia like Chiang Mai and Ho Chi Minh City popular destinations.
Visa requirements and their general sense of wanderlust make nomads true to their name.
Some are on the move (e.g. “50 countries 50 weeks”) while others opt for the “hub and spoke” model. In this model they set up in a “hub” e.g. Ho Chi Minh and use that convenient base to explore the region (“spokes”) e.g. South East Asia.
Home-based traveler: You can also be location independent without leaving home.
I have interviewed several entrepreneurs who travel a lot but are still based in their home country.
For many, it’s the best of both worlds: you’re not tied to an office job but can go see the world on your terms.
Location-independent entrepreneur: I’d put myself in this category. We are entrepreneurs who travel, rather than travelers who are entrepreneurs.
The nub of being a location independent entrepreneur is creating a business you can take anywhere.
In 2010, I started making my publishing business location independent, which meant closing offices and releasing staff. By 2012, I streamlined the business such that we could travel, choosing to live in the Canary Islands in Europe then Japan, where we are today.
Creating a location-independent business
Most location independent businesses have a significant online element. If you’re going to succeed you need to leave the old school industrial model behind.
You’ll need to learn internet marketing and terms that didn’t exist in the 20th century like “conversion rate optimization.”
Sounds complicated? Well, the good news is that the internet based model offers far more upside.
You could set up business in Hong Kong selling watches to America from a warehouse in China while living in Kuala Lumpur.
Better still, take the whole thing online and sell digital goods like Ebooks freeing you up from most geographical restrictions. There are countless business models, many of which even I haven’t heard of yet.
The best way to learn is to network with other entrepreneurs. They’ll open your eyes to possibility. We’re all learning in this space.
Finances and location independence
From selling WordPress plugins to online health advice, there are many entrepreneurs making money from location independence without building their business around travel.
As James Clark of Nomadic Notes says, it’s more sustainable to build a business that allows you to travel rather than one based on travel itself.
A common entry point for digital nomads is start a travel blog, attract audience, try to monetize.
It’s possible to make money this way, and entrepreneurs like Clelia Mattana are, through a combination of advertising and affiliate sales.
Some would-be nomads believe they need a cache of money before beginning their journeys, or enough to finance their new lifestyle once they settle in their new country.
But if your business is cash positive, you don’t need any money to start.
The key isn’t how much money you save but which direction your account is heading. Focus less on saving money and more on creating cash flow.
Money management is the same no matter where you live.
What we paid for a luxury villa with pool overlooking the sea in the Canary Islands would (just about) rent a 1 bedroom apartment in the suburbs of London.
By reducing outgoings 50 percent, we gave ourselves a raise of 100 percent overnight. How many years would that take in a “normal” job?
It’s not only cost of living. Infrastructure can be better too.
Living in Kuala Lumpur, you could fly to most cities in Asia for $100. And who’d have thought you could also rent a house in Bucharest with internet three-times faster than back home in the US?
Taxes and location independence
Not exciting, but there’s nothing less exciting than getting caught out by ignorance.
I know entrepreneurs who got hit by aggressive tax offices with crippling tax bills. They were unaware (or ignorant).
Best policy? Be informed. I’ll offer this advice:
- Your tax liability extends further than where you live (or where you say is your home).
- It’s better to be in the system somewhere than pay no tax nowhere.
Fortunately, you can reduce your tax liability by making the good choices: Hong Kong, Singapore and Malaysia, for example, don’t tax residents on foreign income. You can set up a company in Hong Kong for $1,000.
Location independence and family
I am often asked by entrepreneurs or successful professionals whether they can have location independence and a family. They’ve spent years building a business only to ask “what’s next?” You can have both.
Do it because it’s the best education you can give your children. The markets of tomorrow will demand a different type of problem-solver.
As Jim Rogers says, we won’t need more MBAs or lawyers, but entrepreneurs who can speak Mandarin, Russian and Spanish.
I put my son into Spanish and Japanese schools to give him the skills any “normal” school couldn’t: the ability to think without boundaries.
Nobody taught me this, but if there’s anything current events are teaching us, it’s this: you have to question the rules and think for yourself.
“Reality is negotiable” – Tim Ferriss.