This is a guest post by Ramit Sethi, founder of I Will Teach You To Be Rich and a new course on earning more money.
Ever since I started writing about how to earn more money, I’ve been getting questions like this over and over:
“What service should I offer? How much should I charge? Where can I find clients? But I’m already so busy…how can I manage my time?”
It turns out that out everyone who wants to earn more money has a very similar set of barriers holding them back. Kind of like people who want to lose weight — it’s usually the same set of 5-10 mental and physical barriers holding them back. Interestingly, everyone thinks they’re unique…but of course, we almost ALL have similar questions and barriers.
But there’s another important question that few people ever ask: What SHOULDN’T I be spending my time on?
When I tell people they SHOULD spend money on lattes, they get confused
When I talk about the basics of personal finance, people are shocked to hear that I advocate spending extravagantly on the things you love. Whaaa…?? SPENDING? But I thought personal finance was all about making budgets, cutting back, locking up all your extra money for 40 years, making your own detergent, and checking your bank account 5 times a day???
Some people get so hung up on the idea of spending extravagantly that they never hear the second part of my philosophy — cutting costs ruthlessly on the things you don’t care about.
You want to buy that $500 pair of boots? Ok, if you really want them, go ahead. But the flip side of extravagant spending is cutting back on the things you just don’t care about and won’t miss (take a closer look and you’ll see there are actually a LOT of things in your life that fit this) — some people don’t care about cable, but forget that they’re spending on it every month, others could be saving $50/ month on their cellphone bill but never bother to check if they’re on the right plan.
So now let’s talk about how this relates to earning more money.
Just like personal finance, earning more is within everyone’s reach. But there’s a slight difference:
With earning more, time is your currency. Where will you spend it extravagantly, and where will you cut costs ruthlessly?
Stop wasting time on worthless activities
Time is your most precious currency when it comes to earning more real money. Spending it on the wrong thing will slow you to a standstill.
Why, then, do all the standard ‘How to start a business’ tips tell us to do everything under the sun?
Just as big brands are out there trying to market their products — giving you more and more options of where to spend your money — most of the standard ‘How to start a business’ tips are simply marketing ideas so you’ll keep reading… and reading… and reading…
Reading tips can be fun, but earning more money is even better.
Check out this list of “essential” tasks that you MUST do before starting your business, taken from one popular book on freelancing:
- Set up Twitter and FB page!
- Start a blog and website
- Get business cards and logos designed
- Register your DBA (Doing Business As) name
- Prepare a press kit
- Draft contracts and other legal forms for use with clients
THESE ARE ALL WORTHLESS WHEN YOU’RE FIRST EARNING MONEY. In fact, in my Earn1k course, I ONLY focus on helping my students get their first 3 paying clients. Anything else is not important right now. Once you have consistent cashflow of $500/month extra, $1,000/month, or even $5,000/month, you can afford to focus on other aspects of your business.
Why you should ruthlessly ignore typical advice about starting a business
You’ll hear people recommending these same old tired, pointless tasks (like setting up a Twitter page to earn money) because (1) that’s what they know, and (2) it’s easy to describe. It’s much more difficult to explain the important of deep customer research or pricing. But some novice weirdo can say, “You REALLY need to set up a Twitter account” and wipe his hands because he thinks he’s helped you. (I have over 13,000+ followers on Twitter and carefully measure where I generate revenue from. I can tell you from quantitative analysis that Twitter is one of the LAST things you should set up, if your goal is to earn more money.)
Here are some reasons why you should ignore this kind of advice.
1. They’re endless time sinks. None of the above to-dos are technically wrong, and some of them might even seem like no-brainers. But little things that can be constantly tweaked (“Oooh, maybe my logo should be a little more like THIS!”) add up rapidly until minutes become hours and hours become days. Meanwhile, you’re still at $0 profit. But, you perfected that logo!
Until you’ve started earning money consistently, you don’t have a business. Nobody cares about your logo, Twitter/FB page, or anything else. Those are simply goals to get you to earning money…so why not skip over them and go directly to earning money?
2. They drain your energy. In a perfect world, everybody would do all of the above and still have plenty of time and motivation left over for actual work. In reality, we’re cognitive misers and have limited willpower, so people get lazy and feel like doing nothing a LOT OF THE TIME. You know what I’m talking about. Your motivation is finite, and that’s normal. But, know that if you don’t spend your limited motivation on the most important tasks — the tasks that are directly connected to getting clients and getting paid — then the real work will never get done.
Be ruthlessly protective of your time and energy. Scrutinize every task and consider, “Is this EARNING essential or am I just doing it to put off what’s important?”
3. You might not even need them. Remember, you’re earning money on the side — not starting the next Google. Resist the urge to think you need certain things in order to look like a “real” business.
Real businesses make money. Case in point: I paid one of my freelancers over $12,000 last month, and he has no business cards, no blog and virtually no web presence whatsoever. And he works exclusively with online businesses!
Barring a few truly important exceptions (e.g. basic legal and tax issues which are can easily be outsourced to experts and should NOT take up most of your focus), it’s time to start ignoring what most people say you need to do to start a business. No clients, no business.
How do you get those clients? Focus on what’s truly important: Crafting an irresistible offer, figuring out who’s willing to buy, and closing your first three clients. Everything else is just details.
* * * * *
Ramit Sethi is the author of the best-selling personal finance book I Will Teach You To Be Rich. His new program, Earn1k, is designed to help regular people earn money while keeping their full-time jobs. Sign up here to get a free preview course on finding a profitable idea, marketing, sales, and advanced techniques.
Editor’s note: Ramit REALLY really knows his stuff! I’ve blogged about it plenty before, but if you’re seriously trying to get your hustle on, checkin’ out his free preview might be a great start. You should also read his book, it’s literally my #1 favorite PF book out there. And I’ve met him in real life too – pretty chill guy :)
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So “pay attention”, “focus”, “be intentional in your actions”. Did I get it? I think so. I’m heading to that free preview right now; sounds like good stuff. Thanks, both of you.
I’ve heard about this 1k course before, and it seems interesting. I agree that things like twitter, etc… aren’t too important when you are just trying to build up. Taking this example to the blogging world, the first priority should be content, and without that, none of the other stuff will matter! The base has to be there first, then you can build upon it.
I think this advice is fine IF you are providing a service that needs clients. What if you are selling a specific small scale product? My sister makes homemade paintings for kids (www.holdthebroccoli.com) – how does it help her to get “three clients”? The stuff she sells is a one, or two time, purchase. Having three ‘clients’ might get her $250 and some word of mouth, and thats about it. Whereas advertising her business through FB and a website has gotten her tons of orders. If you are someone who provides and ongoing, expensive service, then yes, this makes sense. But it certainly isn’t the case for EVERY start up business.
This is probably one of the best posts that I have ever read in regards to starting a business. I have done all of the “essentials” and still have no clients. It makes a lot of sense that the focus should be on making the money first, then everything else falls into place. I have spent countless hours “perfecting” the backend and no time on the client side.
Thank you!
I think also that some people don’t use Facebook and Twitter properly.
When I see 10 tweets in a row saying, “Making a cup of hot chocolate”, “Time to go grocery shopping”, etc…..I cringe. And usually unfollow them- who has time to read (or write) useless dribble?
I recently dropped a business associate- they were so busy playing farmville on FB that they didn’t see my email- I actually had a paying client for them- they lost that job, and any future jobs from me.
FB & twitter are useful tools- at the right time and used correctly.
I love my wife SO MUCH for sharing this post with me. This has seriously changed my whole perspective on business and has kicked my dreams into full gear again. I was so frustrated about wanting to start a business but didn’t make a move because of all the red tape I “thought” I had to cut through first. This has help me so much and I’m making my move right now.
This was a great post! Especially for me because I started a side business (financial advising) that has really spilled over into the web (blogging). I work full-time and I serve as Treasurer for an orphanage that’s located in Haiti, so I need to be very efficient with my time!
I started my own accounting services business approximately 1.5 years ago. My website, which was initially quite elementary (i.e. crappy), proved to be invaluable in getting new clients. That being said, I did invest money in business cards, which sadly I have almost never used.
@the Dad, Climbing Out – Great! I think you’ll really like his stuff. I know it lights a fire under my a$$ each time :)
@Kevin@InvestItWisely – Exactly – content is king! If no one wants to read your stuff they surely won’t stick around for the graphics or sharp template. I will say, however, that Twitter can really get you out there and networking incredibly fast though. You just have to pump out smart tweets and use it as a networking tool in order to get anythint out of it.
@Rachel211 – Yeah, FB & twitter can work better in some businesses than others for sure. Guess the key is to know what to really focus on and what to hold off on when starting out. But if you’ve found something that goes against any advice or theories or anything like that, then by all means keep it up!
@Juscelino M. Acevedo – Yessir – money is important when making a business :)
@Carolee – Agreed 100%, well said. 5 substantial tweets a day can get you MUCH farther in business than 100 randoms, and you can even get future clients/contacts through them!
@Greg – DO IT!! DO IT!!!! And then report back to us and tell everyone how easy/hard/fruitful it’s been so far :) We love real-life stories!
@Khaleef @ KNS Financial – Yup! And here’s to Wyclef Jean making a difference too if he wins ;) (btw, do you buy into his stuff? or think he’s out of his mind?)
@ronika – It really does depend on how you’re trying to garget new clients. If you’re solely web-based then yeah it makes total sense to have somewhat of a site up (and no business cards), but if you’re a physical storefront then maybe the opposite is true – at least starting out. If you’re successful though at some point of this venture, a decent website & social media acumen is HIGHLY important! And yes, I just used an S.A.T. word ;)
i started reading down the post and thought, this really sounds like Ramit…and scrolled back up and realized i missed the guest post by-line :) so true though. it’s all about paying your dues and honing your craft. so many clients will pay top $$$ for quality so just focus on being a great asset and worry about the perfect logo later
Thank you! Excellent. I have tried the other way before and know that you are exactly right.
I hope you don’t take this the wrong way but . . . I love you! Your blog is so fun and so informative. You have a gift and thank you for sharing it!
Hey Jay, here is my reaction to Wyclef’s candidacy: http://knsfinancial.com/wyclef-jean-for-president-publicity-hound-or-political-inspiration/
@danielle – Haha, VERY Ramit ;)
@Carol@inthetrenches – Glad you got something out of this!
@Carmie of the Single Nester – I love you too! Unless ofcourse you’re talking about Ramit here – since he wrote this? ;) In which case, HE loves you too!
@Khaleef @ KNS Financial – Rock on brotha! Going over now to check out… excited to see how you feel about one of my fave hip hoppers e-v-e-r :)