Our city faced a pretty bad storm last week. What makes it worse is that it was the first storm to hit Chennai (my city) in 22 years, which basically means that it’s the first storm I’ll be witnessing in my conscious life.
It was a scary, but fascinating situation. Our trees took the worst hit, naturally. We had no power, no network. We were basically stranded, with no means of communication or information.
Since I couldn’t use my phone or laptop, or go online for that matter, for close to 3 days, I resorted to good old paperback books. I brushed up some programming languages, read some marketing books, etc. It was pretty fun (I’m a nerd, I accept).
That’s when I realized how blessed I was, or maybe cursed? I made my own money. I didn’t have a boss whom I’d have to beg for a day off. But, I didn’t have the comfort of a monthly pay check despite of natural calamities. I didn’t have the support or security that comes with a 9-5 job.
But that’s what I chose. I purposely went after the business life, despite having enough qualifications to land a cushy job pretty much anywhere I wanted (if I’d tried hard enough for it).
The thing is, people rave about making your own money. They rave about setting your working hours, being your own boss, making as much money as you want, being rich. That’s all well and good, but running a business isn’t all that. There are pitfalls.
If you chose the wrong business model.
That’s what it comes down to, ultimately. If I’d chosen the wrong business model, I’d have spent those 3 days terrified of what I’ll face when I finally open my inbox. I’d have been terrified of where my next payment was coming from, of bad reviews on my service thread, of pissed off clients and outsourcers. The list goes on.
I’d have been terrified of losing my entire business. But I wasn’t. I was pretty content. I wasn’t even irritated at the lack of electricity. It was pretty cold anyway, I had no use for air conditioner. The perfect climate for a tropical city.
2 years ago, I wouldn’t have been as care-free as I am now. Because, 2 years ago, a BIG chunk of my money came from “services”.
That’s right, it all this is a post on services vs products. Or, passive vs active income.
I made a ton of money with services. Hell, I bought my apartment with the money I made from offering high ticket services, so I’m the last person who’s going to say it’s a bad way to make money.
It’s not, far from it. There are people who are living upper class lives just from offering services. But is it the best business model? Hardly.
So, that was my main train of thought when I was sitting at home with no contact with the outside world. I’d always thought I made a mistake, that I should have retained my services along with my passive/product-based businesses. I especially thought that during the early days, when I wasn’t getting the easy cash flow I usually do with services.
Products take time to set up. It takes time to get your blog off the ground, to create your software, to record your videos. It also takes time to set up the marketing channels. That’s not the case with services. You can be making money pretty much the same week as you set up your service, if you know what you’re doing.
So, I thought I chose the wrong path.
After all, I was being paid 4 figures for EVERY project with services, and I did multiple projects in a month sometimes. It was a pretty good way to make money, and the work involved wasn’t too hard either. I had virtual assistants to fulfill my projects.
But the thing is, I couldn’t take day offs, at all. Of course, clients understand if I take the weekend offs, coz they do as well. And of course, they probably wouldn’t have been bothered with me taking day offs because of a natural calamity, even though it would have been inconvenient for them.
But I didn’t have the freedom to do what I wanted, when I wanted it.
When I sell a product, or make money through a website/blog of mine, I set it, and the traffic source up, and it runs like a well-oiled machine. There is a TON of initial work involved of course, but I can take a week off without worrying about coming back to refund requests on PayPal from angry clients who couldn’t contact me.
I didn’t have to be online 24X7 to talk to my clients and outsourcers, because I couldn’t let them interact directly without fear of them cutting me out of the deal. Products sell even if I’m not online. Even if I take a month off, my blog/website would still be getting traffic and would still make money from me. I’d still be making sales.
That’s the kind of business I want to run, because that’s why I gave up my 9-5 path. Not because I couldn’t make good money with a job, I could, but I valued my freedom too much to get tied down to the whims and fancies of a “boss”.
So, for the past 2 years, I’ve been beating myself up about giving up a proven cash-cow to focus completely on my products and websites, but the storm cleared my mind.
So, I want to ask you something. What’s your goal? You’re here because you want to run a successful business, but how do you want to run it?
I for one don’t want to be tied to my business 24X7 and die off because of a stress-induced heart attack when I hit 50. I mean, who would want that, right?
Services are a GREAT way to start off in the business world. You get upfronts, big paychecks, and you can outsource the fulfillment of said service if you don’t have the skills or time to fulfill it yourself. It’s the perfect business model for a newbie, for someone with little to no budget.
But, once you’ve immersed yourself in the business, once you have enough money saved up in the bank account to stay afloat for a few months with no cash flow, go after a passive business model.
Start the blog you’ve always wanted to start, but couldn’t because you needed money to live, and blogs don’t make money immediately. Create and sell your first product. Build and launch your first startup.
That’s where the real money is. That’s where you’ll become rich, when you start making money in your sleep.
1000 sales from a $10 product is $10,000. For a $100 product, that’s’ $100,000. And you could make all of this while you’re on a vacation, that’s the beauty of a passive business.
You could hire marketers to bring you those sales, or recruit affiliates to promote your product. You can hire customer service reps to handle customer service requests. You can even hire assistants to hire refund requests. You can also hire product creators to create your product, be it a course or software.
There are businesses that are 100% outsourceable. But the only problem? They take a bit more work upfront than services do, and you’ll have to work a little more before you see your first dollar with them. But stick to it, and you’ll thank yourself in the future.