This month's money magazine had an article about a business person who traded in her "suit" for a hot-dog stand - now she nets about $20,000/Yr. Plus her husband's salary, it's a living. She gets to be her own boss, (to some extent) set her own hours, and work outdoors.
In economic terms, she traded a single customer for lots of lots of customers - many of them recurring. In her old job, if the customer stopped buying, she would have lost 100% of revenue. (IE: Layoff means you lose 100% of your income.)
In her new job, if she loses 10 of her best customers, she's probably down something like 1% of revenue. Who knows, maybe 2 or 3 ...
The point is that moving to self-employment makes it possible to have lots and lots of customers, and that can create less risk. (Think diversification in an investment portfolio.)
Yet when Computer Programmers go "independent", we often mess this up. We generally sell ourselves to one business at a time, with no hope of real recurring revenue.
This creates even more risk than being a full-time employee!. The market even recognizes that, by generally giving greater hourly compensation to contractors and consultants.
What does this mean for you and me?
The big $$ and small risk in independent programming will be in marketing products and services to the mass consumer market. To do this, start by finding something you can automate - to generate revenue for you. (Think the guys who sell the same PDF on eBay time and time and time again. Some perl scripts with www::mechanize could automate that pretty easy. But we'll have to do one better and offer a product with actual, you know, value.)
Three ways:
1) Find a niche market, where people will buy your product again and again and again. (Think: $2/each, 200 customers/week ... that's a nice alternative revenue source, isn't it?)
2) Find a product with universal appeal that everyone will buy at least once.
Or, if you really want to be rich ...
3) Find a product with universal appeal that everyone will buy many times. (Dell, Gilette, Ford, Gates - this is how they did it.)
The common objection to all this is that: If it's on the internet, people will think it should be free. (Especially if you can automate it ... then it really is free to you.)
Along the way, you'll have to think about Marketing and overcome a few hurdles.
This is the general idea, though. If it seems inherently obvious, well, it is; yet in our industry, many of the smartest guys are out chasing corporate customers, to help them create .cgi scripts to make millions. Hmm..
(Don't get me wrong, if you can create a training business from the ground-up and walk away while it generates millions for you, you've got my respect. That's one way to do it, but corporations can only bear a finite number of those ...)
But
Please, don´t even mention large sums and low risk together. Except if you say they don´t go together any more since the bubble burst.
If you want to create some software that you can distribute more than once and charge money for that you are in for either an investment (in time and money) or you have to copy the work of someone else. In either case you have high risk.
You also seem to put less emphasize on the 20/80 rule. In every business 80% of the revenue will come from 20% of the customers. Sometimes it is even 5/95. While you might try to avoid this it seems to be a fact of life.
Re:Large sums and low risk ?
heusserm on 2003-08-26T11:37:09
Please, don´t even mention large sums and low risk together
I guess my wording sucks.:-)
The main point of the article was -supposed- to be about how to build a 20K/year business in the mass consumer market. This "diversifies" your revenue (Day Job + Own Business + ? Wife's Job or Investments?)
That way, if one goes sour, you have a parachute.
The "big bucks" option - #3 on my list - well, that's an entirely different discussion. Perhaps I shouldn't have brought it up... but it's the only way to be a Dell or a Gates, IMHO.
