Thursday, January 31, 2013

Making Money

One thing I do know is that making money is not the same as starting a business.
For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer in the world. But if you don't know how to make money, you're never going to have much of a business or a whole lot of autonomy.

It took me a long time to figure out how to make money. Here's how the lessons unfolded.

1. Understanding the buyer is the key to being a strong seller
Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can't get good at making money unless you get good at selling.

2. Sell only things you'd want to buy for yourself
Cos if you want them for yourself, your friends probably want it too.You could sell stuff below what they'd pay in the store and still make a profit.

3. How, and why, to charge real money for real products
People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love. Charging for something makes you want to make it better. I've found this to be really important. It's a great lesson if you want to learn how to make money.

4. There are many pathways to the same dollar
Don't just charge. Try as many different pricing models as you can. Remove the fear, and people will be more willing to pay you. People don't like uncertainty—especially when they have to pay for it. A week and a fixed price is certain.

5. The true value of bootstrapping
Whether you're starting your first business or your next one, my advice is to bootstrap it. Bootstrapping forces you to think about making money on Day One. There's a fundamental difference between a bootstrapped business and a funded business. It's all about which side of the money you're on. From Day One, a bootstrapped business has no choice but to make money. There's no cushion in the bank and not much in the pockets. It's make money or go home. To a bootstrapped business, money is air. Anyone can spend money. Making it is the hard part, and being forced to do it early is one of the best ways to get better at it later.

6. A word about practicing
So here's a great way to practice making money: Buy and sell the same thing over and over Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it. See how much profit you can make off 10 transactions. Start tweaking the headline. Then start fiddling with the product description. Vary the photographs. Take some pictures of the thing for sale; use other photos with other items, or people, in them. Shoot really high-quality shots, and also post crappy ones from your cell-phone camera. Try every variation you can think of.

Credit - if you want to read the full article.

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