Making Money

Consulting and Advising – Combining Blogging and your Career

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Teaching: It isn’t all about grammar and vocabulary!

I’ve been a teacher of ESL (if you’re American) or EFL (if you’re not) for more than years now than I have fingers and toes, and in that capacity, I’ve been privileged to teach people in Taipei City and Taipei County from all walks of life: business men and women, clerks, company workers, pc engineers, sales staff, students of all ages, bankers, doctors, nurses, etc. Despite teaching English, I often find myself advising and consulting with my clients on learning English rather than just simply teaching vocabulary and grammar (or other prescriptions of language learning).

New Vistas: New Paths

It was still a surprise when I found myself in the role of consultant for someone I’d never met, and in a field that I was less familiar with: blogging. Recently, I’ve been involved with setting up, administering and writing for a blog as a supplement to a static website. Naturally, this is a market that is going to grow leaps and bounds in the coming few years, until Web3.0 takes over. Since I’ve been involved in computers for many years, and been working in blogging on and off since 2004 pretty much as my passion, I found that I’ve come to learn and know a little in a wider range of areas: blogging, marketing online, online tools, wordpress software, writing, etc.

Consulting: Opportunities in All Areas

I’ll be revealing more about the project as I work away on it, and as it’s going to be a challenge coming up with refreshing and interesting posts. Something I’m looking forward to doing. For those of you looking into creating online income, consulting is an option that is open to many bloggers though it may not be easy to go head to head with the big guys out there. If you have experience in a professional or business field that is much more specific, you could still find many opportunities to put your blogging skills to good use online and offline in the field of consulting, but particular to your specialty whatever that may be.

Did this happen to you, too?

But it isn’t the first time I’ve found that people are interested in what I have to say about a range of subjects; nor is it the first time someone has suggested directly or indirectly that consulting may be a career choice for me? In fact, one of the reasons I started InvestorBlogger dot com was because I found that many people were struggling with the same financial problems I was. While I hadn’t found the ANSWERS per se, I had found some ways that worked for some situations, and I was eager to share those successes.

Blogging: Opening New Paths?

It was only when I started blogging that I began to discover the core of my interests, and for me, blogging became not a didactic process (me telling you WHAT to do) but a dynamic and very personal process that helped me to further my interests in a number of areas, as well as help my readers. Too often when I read other blogs in the field of money & finance I hear the voice of the blogger shouting: “Do this” or “Don’t do that!” … as if it were the 10 Commandments… and I am repelled because I KNOW it isn’t like that.

There are more ways to peel a potato or cook an egg than one. It’s only by accepting and understanding that that we can begin to see alternatives: new ways to write, new ways to learn, new ways to share, and new ways to make money. It’s not a cookbook or a book of instructions, rather it’s a pantry with ingredients, some raw, some part-cooked, some chilled… We’re the chef whose job it is to combine, create and re-create what is there.

(ed. Post backdated to fill space in yesterday’s calendar!)

The 80/20 Principle: It’s just a rule of thumb

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not one of the ten commandments… Read on.

Ade’s blog just recently posted about the 80/20 rule and how it applies to bloggers. In this post, I would like to point out some of the reasons why I think the 80/20 rule may be flawed, and you’d be wise to consider NOT applying it to your blog’s readers.

An introduction: What is 80/20?

Wikipedia has a great article on the 80/20 otherwise known as Pareto’s principle. The principle was greatly popularized by a recent book called: The 80/20 Principle by Richard Koch. Good book, good reading. In summary, 80/20 states that the majority of results will come from the minority of inputs. In particular, 80% of sales in a bookstore will come from 20% of customers. There are many examples that you can find. While the numbers 80/20 are approximate, other variations have been seen, too, including 90/10, 70/30, etc. It is now being treated as a rule of thumb in many industries, and being applied in a number of diverse situations.

It’s a rule of thumb, not a rule!

The recording companies, principally the big 4, have been adopting this principle over the last few years with their back catalogues which have shrunk somewhat as artists have been eliminated who don’t reach certain mass market metrics. Now I was thinking about the 80/20 rule and it may or may not be true in some circumstances, but I would argue that in some situations, esp. like the CD industry, it’s a bad idea for a number of reasons.

Let’s examine CD purchases: logic dictates that you should only stock the top 20% of CDs. In some situations this may be fine if there’s limited stock space or some other important limitation. BUT a significant number of purchasers would probably buy a top 20% CD AND another CD of a lesser known artist. You then lose the CD sale for BOTH CDs not just one. Why? Well, as the CD companies are discovering: shoppers tend to buy multiple CDs at one time, and may shop frequently. With the top 20% of CDs on sale, such frequent shoppers would quickly buy the top 20% and then not have any more to buy. Result: they begin to shop elsewhere, where they buy the CDs that they can’t get in the bigger shop, and at the same time they’ll buy the popular CDs too.

For the shop, this is bad business: they lose the top quality purchasers who buy multiple CDs at a time. They therefore have to start increasing their advertising to attract those shoppers who only buy the top 20% of CDs, and those shoppers may only shop occasionally, may be more price sensitive, and may not be loyal to any particular CD store or chain of stores. Worse comes when even the marginally popular CDs are dropped as the store further refines its stock of CDs. Previously when third-tier CDs were dropped, sales may have risen incrementally, as some customers bought more second- and first-tier CDs. This effect would have been temporary as regular purchasers would soon find not much new to buy as most new artists would start out as third-tier or lower before being ‘discovered’ by shoppers.

So the store decides that with deteriorating sales in its CDs it has to boost its margins by shifting more copies of the top tier artists. It increases promotions, cuts second-tier CDs, and lo and behold, the sales and margins rise magically again. But worse is to come: customers begin buying fewer CDs (they either already have the ones they want or they don’t care for some of the artists) and regular customers become scarce. After the promotions are over, it’s difficult to get regular customers to come back, and the top spenders are now going elsewhere for their CDs.

So, it looks like the CDs/music market is declining, and the management is left with little choice but to scale back the CDs even more or close the store.

Of course, downloading (legal and otherwise) came along at a time when the CD industry was already in bad shape. Downloading and alternative mediums for music (online radio, ringtones, etc.), not to mention alternative sources for entertainment, all coincided to make things really difficult for CD companies. But to cut your catalogues and reduce your roster of artists is now looking to be one of the ways in which the big four cut their own throats.

The 80/20 principle sounds like a logical way of thinking until you realize that if you start to pursue the top 20, you will quickly lose a lot more incidental sales. And some of the incidental sales MAY just turn out to be the top 20% of purchasers in the future…

And for bloggers: should you follow the lead?

While the principle may be in principle correct, ignoring the 80% of your readers may lead to erosion of your blog income. Why? Because when readers click away from your blog, it’s usually through an advertisement. Hence, to maximize your blog’s income, you need to encourage your readers to love it, enjoy it (briefly) then click away to a Google Ad, affiliate link or other advertising. It’s likely that if you just focus on the 20% of your readers, your expenses will rise as a result of increasing usage your server’s power power, and your income will go down as regular readers become ad/affiliate link blind.

There are many people who do not seek to make any money out of their blogs at all. Power to them! Well done! There are bloggers like me who started before making money on a blog was possible, but have found the dollar signs an additional benefit. However, for both kinds, increasing readers is a great benefit, if the blogger can afford to pay for the hosting costs. If you cut into your revenue streams, then you’ll find that you will be paying the costs for your regular readers. If you are doing it as a hobby, perhaps that is appropriate for you. But perhaps not.

Overall, I am becoming a very anti-80/20 activist. I think focusing on such goals really doesn’t help much. I can cite several examples in Taiwan, where such short-term thinking led to very poor short-term results, muddied business plans, and withdrawal from the local market with a sullied reputation.

So I believe that the principle as a business principle is flawed, in many instances. I do recognize instances where it is a valuable ‘rule of thumb’ but it should not be treated as a law or rule in the absolute sense of the word. For the business world, which seems to be focused on the next quarter or next business year, it may seem to be a ‘golden rule’. In reality, it’s likely to prove to be fool’s gold. Unfortunately the 80/20 principle is fast becoming one of the canons of western business principles.

A Man With A Plan: Ways to create additional income

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(ed. Backdated post to January 31st. Written February 2nd.)

Have you read yesterday’s post?

At that time, though, I developed a plan to create a number of streams of income from a number of sources iotending that it become a regular and sizeable amount of income which would allow me to spend time on much profitable and rewarding work rather than just working the typical salt-mine routine that most people follow. Perhaps it was the vulnerability of some kinds of income that made me think that spreading the risk would make it worthwhile to pursue each one.

I decided that if I could, I’d try to create ten sources of income that would leave me less vulnerable to any problems. Of course, it would be great if I could generate income in equal portions and that it would be a steady income. In reality, that turned out to be impossible. Life just doesn’t work that way. The other problem is that it would require a lot of time to complete the plan, but without making a start, I wouldn’t be any closer to the end.

So I set my goal: To generate one month’s salary (in NT$) at about US$1500 from about ten different sources of income as a minimum. I’m going to list the ten different sources (some passive/some active) and identify some of them and how they are doing in relation to my original goal. Currently, I’m approaching a longer term average of about 30% of the total. You’ll see why.

The Ten Sources of Income

The following list of ten sources includes estimates and amounts all in US$ and they are MONTHLY amounts, as well as our own personal feelings about them.

1. Bank Interest: I had a lot of cash saved for my emergency fund stashed away in demand accounts (with interest rates of about 0.4%). So I decided to maximize that return to create the first of ten sources. It still isn’t the biggest, but it is the steadiest. On average it now adds about $25 to my monthly income.

2. Dividend Income: I had read a lot about dividend investing but had up until 2005 looked only at growth stocks and tech stocks (neither of which did well for me). So I switched to dividend paying stocks and have benefited much more than ever. Typically these are generating about $90.

3. Rental Income: My wife and I have talked about renting out our current apartment to generate additional income. But we encountered three problems that have so far prevented us from making any success on this: 1. we like it here and we don’t want to move yet; 2. we still wouldn’t make any residual profit from renting our house out without paying off part of the mortgage principal (something we don’t have enough cash yet to do); and 3. we can’t decide where we’d like to live other than here. Contribution $0. Potential contribution estimated at $100.

4. Private or Part-Time Work: We’ve both thought of switching our current full-time jobs to part-time jobs, working only a few hours a week as tutors. Naturally, we wouldn’t make much gross income but we might enjoy working MUCH more. I had to take an estimate and say both of us would work only 4 hours a week, and we’d earn about $125 per week or about $500 per month from two jobs. Current $0.

5. Online Income: Since I’m a blogger, and I enjoy the experience very much, (as you can hopefull tell) I’d be happy to continue earning money online in a number of ways. My primary blog (this one) earns money from advertising, hosting, and support. While each of these doesn’t add up to much, together and over a year, they do account for about $250 per month. NOW. I’m planning to extend the amount of blogs, services, and options I have so this amount could rise. Potential Income: $300~$30,000.

6. Personal Business: We’ve been business owners for quite a while, and right now we’re also 100% full-time workers in our business (in essence, we’ve bought ourselves a job for the time being). Of course, as owners we occasionally reward ourselves for our hard work and commitment to the business (way and above the regular employees’ schedule!) with owners type benefits. Last year that was a minimal amount: $60 each. This has HUGE potential as passive income source, and we could easily double that amount should we choose. But this remains a potential increase. Right now, it’s pitiful.

7. Consulting: Steve, my good friend from AgentsChat dot com, suggested recently that since my wife and I have been in business nearly 8 years (with varying degrees of success) we might find a ready market for our ‘advice’ or consulting experience: How to Set Up or Manage a Language School. We’d never thought of that as a potential source, but here in Taiwan where people are always looking for an edge, we’d have a market of some unknown potential. Current: $0. This could be a separate business for us, if we had the time.

8. Affiliate Marketing: I’ve not really had much success yet, despite having joined Commission Junction several times. This is unknown potential and depends on my own personal skills. Current $0. Potential $???. We’ve also considered commission sales, but we felt that we didn’t have the skills or motivation to sell Amway products yet. Worse, to do it successfully would need quite a commitment. It might be worth it to see how the entire system works. Current $0. Potential: $0 (until we decide to do it).

9. Lending Money: This is a new option and one for those looking to really diversify their income portfolio. There are many ways to lend: privately (to friends and people you know – loans are made on a personal basis), through agents, and now through organisations like Zopa.com. I’ve currently got a loan extended to a private client that produces about $25.60 per month in residual income. For those of you who can, lending through Zopa or one of the online lending companies (there are several now) could be a good way to add to your portfolio. Unfortunately, due to my residence, this is not something I can do right now.

10. Develop a niche business: GeniusTypes website describes how the author took a lowly business (candy machines) and was able to produce a regular income from the machines he bought with very little additional work. He only had to tend to the machines a few times a month, stock them, repair them when necessary and purchase supplies. It’s well worth reading his post on this. We’ve been looking at ways to make such niche income ourselves, but so far we’ve not really had the time to experiment with this. Contribution $0. Potential $???.

Build your BS detector: Beware the fraud, cons and sinks

There are a huge number of fakers out there: ways that entice people to ‘make money and get rich in three easy steps’. Beware, beware, beware: That’s my advice. You’ll know a deal from a steal (steal your money, that is) easily once you develop your BS detector. I didn’t have one before, but it’s getting more effective now. Here’s what happened to me when I didn’t have one:

At that time, I was just experimenting with income, and I had come across StudioTraffic of which I was a member for a few months before the whole thing came crashing down. For those of you who don’t know, StudioTraffic was a get-paid autosurf type scheme where members would earn money by buying a membership and earning cash by surfing a number of websites on their surf-TV type system daily. It turned out to be a huge waste of time and money for most people, much like Agloco was just recently, because it was a HUGE ponzi scheme.

And the results…

I’ve managed to create a total of about 36% of my initial target. We’ve held back in some areas, not had time to push in other areas, and are unfamiliar with yet others, but with a little more effort, I could start to see results pushing much closer to my own personal target of $1500 from ten diversified sources. In fact, $1500 may be too unambitious. What do you say?