publication date: Jun 11, 2008

author/source: Miles Galliford

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Introduction

The New York Times bestseller, “The 4-Hour Work Week”, is getting a lot of press coverage.

For those that haven’t heard about the book, the author, Tim Ferriss, explains how he has designed his lifestyle around a business that takes him just four hours a week to run. He spends the rest of his life travelling and pursuing his hobbies.

Heaven!

But is it realistic?

The Challenge

I decided to set myself the challenge of ‘designing’ a business that could:

• Be run in just 4 hours a week

• Provide an income of $60,000 a year

This is a very tough ask. After all if it was easy there would be thousands or even millions of people doing it.

However the web is changing fast and there are many ways of greatly reducing workload. This challenge was a great opportunity to think about how they could be pulled together to create the perfect automated business.

The Only Way To Eat an Elephant…

….is one mouthful at a time!

To create a business that requires only 4 hours a week to run will require very careful planning.

•    Automation - Every task that can be automated has to be automated

•    Outsourcing – Tasks that can’t be automated, because they need some human input, need to be outsourced

•    Systemization – Anything that needs the site owners personal attention, needs to be systemized to minimize the time it takes to deal with it

•    Manual Tasks – some one-off tasks will need to be dealt with as they arise

Painting the Picture

To illustrate the example, I will use the story of Jane Peterson:

“Jane Peterson’s 3-year old son got very sick when he drank some cleaning bleach he found in a cupboard at home. This frightening incident led Jane to research all the things that could harm children in a normal home.

Her research revealed a lot of hazards from staircases to chemicals, drowning risks to electric shocks.

She tried to find a single book which both highlighted the hazards AND provided solutions for minimizing the risks.

To her surprise she could not find a good resource.

There were a lot of commercial products available to address most the problems in a typical home. But there was no easy way to assess the risks.

Jane decided to create a “Parents Safety Checklist”, that would enable new parents to do a home audit, to ensure every room was as safe as possible for young children.

Once written, she put it on a website for $9.95 a copy.

To her great disappointment she sold only 48 copies in the first 4 months.

So she decided to give it away for free. To her surprise the book was downloaded thousands of times… and was mentioned in many magazines and newspapers

…but she made no money.

Then one day, out of the blue, a big baby products retailer wrote to her to ask if they could sponsor the book and offer their products for sale via her website.

And this is where Jane finds herself today".

The question she is asking herself is “could I turn this website into a business which could earn $60,000 a year but take less than 4 hours per week to run?”

The Business Basics

To earn $60,000 a year, Jane would need to generate $5,000 a month, plus costs.

If we assume the monthly costs, including outsourcing, are:

Advertising:            $1,000
Content creation:    $1,500
Website:                $500
TOTAL                       $3,000

Jane would need to generate $8,000 a month after costs.

Or $267 a day.

The children’s product supplier has offered her a sales arrangement which would enable Jane to make 40% profit on any sales.

At 40% Jane would need to sell $667 worth of products every day.

The average order value is estimated to be $35 so Jane would need 19 sales per day to hit her target.

If 3 out of every 100 visitors to her website bought something she would need 627 visitors every day… or 18,800 a month.

This is challenging goal, but not impossible.

Turning a Free Book Into a Revenue Generating Website

The way that I would convert Jane’s book into a revenue generating website, is to turn each of the room checklists into a printable webpage. Alongside the checklist, I would recommend products that could reduce risks in the home.

For example, for the kitchen checklist page, the recommended products could include cupboard locks, a lockable storage box for dangerous liquids, electric socket covers, a fire extinguisher, a first aid kit, etc.

I would link each product to the shopping cart so they could be ordered from the checklist. Ordered products would drop into the shopping cart and be listed on the single checkout page ready for payment.

The orders would be paid for on the site and then automatically emailed to the retailer for shipping direct to the client.

The retailer would then invoice Jane electronically.

This sounds complicated but every good shopping cart application does this stuff.

To ensure this process would not require any human input it would have to be fully automated.

Automating the Website

The first step in the process is to automate the website as much as possible.

•    Use a Managed Service – This is a website platform which is managed by a third party in exchange for a monthly fee. It will avoid Jane having to look after hosting, bandwidth, monitoring and maintenance. This can be a time consuming and frustrating job

•    Turn Jane’s book into the pages of the website. Alongside each safety recommendation, I would list the products that could solve the problem

•    The website would have an shopping cart, where products that a customer selects are listed prior to checkout

•    The checkout process should be fully automated:
      o    Postage and packing and tax should be added to the order
      o    Payment should be taken via PayPal or credit card
      o    An email should be automatically sent to the customer listing what they have bought and when it will be dispatched
      o    At the same time, the order should be emailed to the supplier, ready for posting
      o    Sales figures should be automatically downloaded into an accounts package such as Quicken

•    To build a relationship with clients there should be an automatically generated email newsletter which anyone can sign up to (e.g. FeedBlitz and Nouri.sh)

Outsourcing

To drive traffic to the website, new content will need to be continually added to the website. To get 18k visitors to the site it needs to be updated five times a week.

To avoid Jane needing to spend a lot of time writing these articles, content creation will need to be outsourced.

A contract to India will get 20 good articles a month written for $1,500. These can be a mixture of product reviews and safety articles. (Try eLance or oDesk) . These articles can both be published on the site and syndicated via SubmitYourArticle to boost their impact on traffic.

The site must have a good content management solution so that non technical people can easily add text and images.

Adding relevant comments to forums, social media sites and blogs to drive traffic to the site can be outsourced for a further $250 a month to a company like Submit Comfort.

If you have a customer support requirement, this can be outsourced too. In Jane’s case the product supplier will deal with questions, returns and product issues. This is the ideal situation.

Systemization

To monitor the businesses performance, Jane will need to have weekly access to all the important information.

The reports she receives should include:

•    Website statistics – number of visitors, pageviews, most popular pages, etc (Use the excellent free Google Analytics - www.google.com/analytics)

•    Sales figures – total sales, profit, conversion rate, what products sold, etc. (This information should be available from the products supplier. When setting up the deal, establish how frequently they will provide sales reports)

•    Outsourcing activity – what content has been created and published. Make sure you build reporting into the contract

Jane should put aside an hour a week to do this analysis. Based on the results the website should be continually improved and the outsourcing company updated.

The Manual Stuff

With every business there is manual stuff which cannot be automated, outsourced or systemized.

This could include:

•    Dealing with unhappy clients
•    Negotiating with suppliers
•    Creating partnerships
•    Updating the accountant
•    Website design and improvements briefs
•    Etc.

Time would need to be set aside to do this stuff. If the business owner does not do it, it won’t get done.

Dividing the Time

Instead of sticking to the 4 hours a week, I would suggest that Jane thinks about allocating work across 16 hours a month.

Here is a rough breakdown of tasks and times for a typical month:

1.5 hours per week on email and dealing with queries = 6 hours

1 hour per week on analyzing reports and data = 4 hours

2 hours a month on revising strategy = 2 hours

2 hours a month on admin, bill paying, accounts = 2 hours

2 hours for one off manual tasks = 2 hours

Total = 16 hours!

Every month will vary and some months will need additional time (e.g. end of year accounts), but this breakdown seems like a good goal.

Starting the Business

No significant business can be built from scratch doing just 4 hours a week.

Getting the business up and running will either be a full-time job or it will take some time doing it part-time.

Some of the things that will need to be done:

•    Create business - name, registration, legal forms, setup bank account, etc
•    Identify suppliers
•    Identify outsourcers
•    Negotiate contracts
•    Identify managed website platform
•    Write web design brief
•    Create content for the website (about us page, contact information, product pages, etc.)
•    Set up reports (website statistics, income reports, outsource reports, etc.)
•    Etc.

Running the Business

If Jane set the business up and then handed it straight over to an outsource company, asking them to grow it for her, it will fail.

Outsourcers follow instructions. They are not creative business owners. If they were, they would be running their own company!

In order to outsource a business in a way that maintains or increases sales, you need to get the business running smoothly first.

If you run the business yourself until it is successful, you can then turn all the daily tasks into bite sized chunks. An outsourcer should be then able to undertake these tasks within the rules you give them.

You may have to grow and run the business for six to twelve months before it reaches the income level and stability that can be handed over to someone else.

Tim Ferriss acknowledges in his book that he spent years working 12 hours a day to get his business established. Only once it was making good money did he outsource it.

I know this is not what a lot of entrepreneurs want to hear, but it is the unavoidable truth!

Income Potential

For Jane to reach her income target of $60,000, plus costs or $8,000 a month, she would need to focus on building the traffic to her website.

Our traffic target is 18,800/month with a 3% conversion rate to give her $8k income.

It is always difficult to predict traffic growth. One article in a newspaper can suddenly generate several thousand visitors in a day.

If Jane set her target at $8k a month, by month six, she would need to consistently grow traffic at the rate of 3k people per month.

This is possible, but challenging.

Jane would need to create great content that would build a loyal audience. She would also need to have a newsletter to ensure she encouraged this core audience to keep returning.

On top of this she would need to participate in the online community for parents and mothers to get them to the site.

Once the core audience is established these marketing activities (content creation and community activity) can be outsourced.

Conclusion

From doing this exercise and understanding how our most successful clients work, I believe it would be possible to reduce the time spent working on a website business down to 4 hours per week.

However, I also know that a business is unlikely to grow if left to outsource partners. Therefore the site owner will need to take responsibility for getting the business working efficiently and profitably before getting others to do the work.

A good lesson you should take away from this analysis, is that at every stage of your online businesses development you should be asking yourself what can you automate and outsource.

You should be continually try to make the business less dependant on your input. Only by doing this will you release time for family, friends and hobbies, which after all, is probably the reason why you want to run your own business in the first place!

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