Dateline: Kuala Lumpur, Malaysia
I’ve spent most of my life running businesses offline, yet people who read this site know me best as someone running an “online business”.
While it’s true that Nomad Capitalist has grown to become quite successful – something most in the industry never expected (they rarely do) – I’ve always preferred to think that business doesn’t have “online” and “offline” components.
Being in business is being in business is being in business.
A generation of well-meaning digital nomads eager to escape the rat race has often set up what I consider false distinctions between an online business and an offline business.
So much so that most people now think that starting a location independent business – one that can be managed from anywhere in the world, or nowhere in particular – must have some kind of e-commerce shopping cart attached to it.
I’ve even suffered from that myself, eventually deciding to host the first-ever Passport to Freedom conference that would go on to be keynoted by Peter Schiff.
These days, Nomad Capitalist has branched out beyond just selling e-books and into stuff we fulfill offline. In a sense, we’re still an “online business” as well as a location independent business; neither I nor anyone on my team is required to be in one specific location because we can collaborate and fulfill our products and services using the internet.
However, as I get dozens of emails each month asking for help on quitting the rat race and starting a portable business, I wanted to share a few suggestions.
Again, I am not the internet business guru, and quite frankly, I wouldn’t want to be as it’s an incredibly crowded market. However, as someone who has run location independent businesses before Tim Ferriss introduced the concept in The Four Hour Workweek, here are a few tips…
Don’t limit yourself to e-commerce
One of the biggest trends I see in digital marketing these days is the fact that someone from just about every business is getting in on it. Heck, I regret that I was not the “online business expert” some think I am back when I was running traditional businesses.
The world does not need more videos on how to lose weight or articles on the best sex positions. If you’re going to start a location independent business, you need to tweak an offline need to work online.
When I invested in a home services company before leaving the United States, I told my manager to make heavy use of websites like Craigslist to get leads. In a low-end, unsexy business (the kind I usually recommend), Craigslist was enough.
I realize now that we could have done even better by controlling our own lead flow by using a well-optimized website, collecting our own leads, and dripping on them until they were ready to buy.
In essence, I should have run an “online business” merely to generate leads for an offline business.
On a similar note, I’ll never forget being 22 or 23, making calls to clients and vendors, and thinking “I could be doing this from anywhere in the world”.
An internet business could be extended to any business that allows you to make cheap phone calls using VOIP; that means consultants and anyone else that can use technology to work remotely can have a location independent business. Why people think you are required to have a blog to make money online is beyond me.
However, blogs, podcasts, and other online tools can be used as a cheap and targeted way to generate leads for a business that has no other ties to the online world. While I doubt my friend who is launching his own line of men’s wallets would attract much interest to a podcast about wallets, he could certainly use a blog or podcast to establish himself as a fashion expert.
Similarly, I helped one of my former business partners start his own retirement podcast, and later convinced him to do business in 15 US states rather than just one. While he hasn’t moved, he could. The fact that his podcast drives leads to his phone, rather than to an office, means he could live anywhere.
The rules of business haven’t changed
For some reason, entrepreneurs often think that when an online business involved, the rules of business have to change.
In any offline business, the rules are simple: charge the highest price possible to attract the greatest number of your target customers. When I was consulting in the broadcast business, we frequently charged a premium for our services because we added more value than anyone else.
The goal isn’t to have a sexy business; the goal is to have a profitable business. Every once in a while, my team has to remind even me that all the website traffic in the world doesn’t necessarily equal sales (as I discovered when 112,000 people viewed this article in three days… and less than $100 was made).
In the same way, we’ve made the decision here at Nomad Capitalist to charge what many would consider a high price for our digital products. When I started giving all of our e-books away to Members of The Nomad Society, I received a lot of feedback that our books were among the best they’d seen.
Just as my American Express Platinum card costs more to carry than the no-frills Capital One credit card I had in university, there may be a reason for you to charge more in your business. Too many entrepreneurs associate online business with $5 Kindle books.
If you have something of value, don’t think the model has to change just because you’re doing business online. My father used to spend thousands of dollars a year buying investment research before e-commerce even existed. Unless you run a non-proprietary business like The New York Times, the fact that something can be distributed online does not mean it should be cheaper.
Heck, I still buy banking reports online for hundreds of dollars each as part of the research I do for this site.
Now, this doesn’t mean that there aren’t times when lowering prices isn’t the best strategy. Real-world examples of this include the likes of Ryan Air that compete on purely cost. However, that generally isn’t the best strategy when building on online business, because…
Online business is no reason to be stupid
I’ve been reading about the launch of Jet.com, a new US e-commerce store that hopes to put a serious dent in Amazon’s business by undercutting them on almost everything. The company has raised $200 million in financing from the Silicon Valley investors who seem to throw money at just about anything.
There’s only one problem: the media has reported that Jet is losing money on a large number of its orders. In fact, a recent article suggested that Jet lost more than $200 on the author’s $500 order by sourcing products it didn’t keep in its warehouse directly from more expensive business-to-consumer outlets.
If you can raise $200 million in capital from investors who don’t mind if you flush it down the toilet with a hope and a prayer, all the best to you. If, however, you are merely attempting to provide a great lifestyle for yourself and practice flag theory with a portable business, don’t fall for some high-flying scheme like this.
As they say, you’ll never be wealthy by losing money on every sale and making it up in volume.
As a disciplined, investment-minded entrepreneur, I’ve started every one of my businesses with minimal capital and proven the concept before I plunked down more cash. The good news is that it’s easier than ever to do this by using online technologies like Facebook Ads to test what people want… and what they don’t.
Your goal with any online business is to be as profitable as possible. As a kid from Ohio, I come from a world where your word is your bond and responsibility and respect are crucial ingredients in business.
Even so, I can’t get over the new generation of entrepreneurs who brag about “changing the world”. The goal of a business isn’t to change the world; the goal is to make money. Changing the lives of your customers is the natural side effect of running a business the free market smiles upon.
I’ve spent my entire life building businesses from zero; it’s what I do. The important thing to remember when starting a business you can run from anywhere is that the mechanisms of how you sell are unimportant.
Sending a direct mail campaign doesn’t require you to be physically present in one location, and can be accomplished with similar ease as sending an email campaign. Yet many online business owners have burned the bridge back to anything outside of the digital realm, as if out of spite.
Don’t do that. Remember that first and foremost, a business is a business, no matter where it starts.
