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Business 101 – budgeting [basic expenses; soccer, and info products]

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A business must be scalable. According investors like Warren Buffet, businesses with strong competitive advantage have similar proportions of expenses to revenue. If these are true, then even if you only have $100, you should be able to start a profitable business as long as you cover the cost to enter the market.

While your business model is your method for shaping your customers into buyers, your budget is your best defense against people trying to sell products to you, including your competitors.

Bellow, I model proportioning expenses and growing as a business from $12 in revenue per year, to $1,200,000,000 [1.2 billion dollars] per year. In addition, I model expense organization for R&D, Manufacturing, Distribution, and Marketing.

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Taking my Business to a New Level

You’ve seen the budget levels from 0 to 9. You’ve seen the basics. The question is, “What separates each level?” In the process of finding the answer I looked into the limitations of my business and the limitations of other businesses.

First of all, anyone can start a business. All you need is a market and a niche. If you have those two things, then you have a way of making money. If you have no money, you basically belong to someone else if you are still alive. In my case, I belong to my parents, but slowly I’m buying my freedom. I will consider myself free when I bring my business up to level 5, making 10,000 a month. Where half of that belongs to me. The other half consists of business expenses.

Right now, My business is at level 1. I make $10 a month for sure. If I work hard I can make $20, but I push my limits. To make $100 a month I would need enough infrastructure to support either more people or more value. I can support maybe 1 or 2 people at the moment. In order to do 5 to 10 times more, I need to have 5 to 10 times more materials, and I need to have 5 to 10 times more deliverability, 5 to 10 times more marketing. I can barely handle double. This means that I need 2 to 5 more people. If I decide to hire 5 people it would be 1 person for each aspect of my budget, fees, R&D, Manufacturing, Distribution, and marketing. If I decide to hire 2 people, both people need to handle 2, and I will handle two.

This improves my business without increasing my expenses. When I delegate some of my tasks, the employee has to find an economical way of providing me a service, otherwise they won’t be able to make a profit.

In order to make a profit, the people I hire will already have a market, and a niche. They have the option to sell to me, the market, and I’ve already demonstrated the behavior of spending money on this. So the only thing that the employees I hire don’t have is a budget. If they can find materials for cheaper, pay fewer fees, learn more effective methods, set up a smaller distribution network with more services, and spend less on marketing, then the employee will make money. For example, If I hire someone for R&D, then to make money, he or she needs to learn find more effective lessons, and he needs to find cheaper research methods. The difference will result in profits, but if all 5 areas are there plus the 57% profit margin, then they have a clear competitive advantage. If I do this with 5 people, not only do I have higher quality goods and services, but I could afford to do it cheaper if I did it myself, if I had time. It’s incredibly powerful, and should I find someone who doesn’t want to work for $1 – $2.30 a month, then I would set up a business for this employee so they make more than $10 to $23 an extra per month. Should I go from  level 2 to level three, their  profits go up as well.

Site Traffic

The biggest problem I see people have on the Warrior Forums, a forum devoted to making money online is “How do I get traffic?!”

This is the first question you should ask. In Business, you need to have a market before you can begin. If you have a market, the next question is to ask, “What is my niche?” The last question to ask is “What is my budget?”

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How I learned Business as a kid

Money, when I was young, was something that I used to get things I wanted. When I was young, I didn’t understand that I could trade the things I didn’t want for things that I did want. I started learning money when my teachers gave us stickers on our homework and tests. These were little gold stickers that she gave us for doing a good job. Most of the time, I earned stickers for getting a perfect score on my spelling tests. At the end of the week, we could use the star points we racked up to purchase things like novelty pencils, small notebooks, folders, and crayons.

This is probably how most people understand money. You do something good and you get money in return. As time goes on, you get used to the prices of things and you make choices for what you want. You can purchase either a Reese’s peanut butter cup, or you can purchase a Hearshy’s milk chocolate bar. Both cost about the same. You also use the money to buy food, pay rent, taxes, and utilities. Because you probably haven’t updated your concept of money since you started paying rent, you probably think of your “income” as all the money you make from your job. You’re considering your revenue as your income. Governmental agencies substantiate this monetary concept by making you list your annual income on many forms such as applications for financial aid, and other organizations have you list your annual income because they’re interested in your socio-economic status. However, I could make $100,000 a year, and be broke if I spend $100,000 a year on rent. Keep in mind, that money is gone. It’s not mine. If I’m renting an apartment, I don’t own the apartment, and I don’t have the right to rent it to someone else to earn an income. While it is important to know how much you make per year to keep track of how much tax you pay, if you think that your total annual income is yours, then you should update your concept of money.

Income is not wealth. If you want make more money per year, you may still be just as poor as before. Income is the amount of money you bring in, and bringing in more money does not mean that you enjoy more freedom. Without ownership over the things in your life, you can’t change your life as easily. If you’re like most Americans, you’re living with some amount of debt. You have your car, your apartment, your furniture, and your entertainment. if you decide to spend more money per month, it’s probably in extra services like better cable channels, faster internet, better food, a nice piece of furniture. It’s all just there to make you feel better about your life, but when it comes time to pay for it, you get frustrated because you have to find some extra money for it.

Wealth is the profit you have. In the past month, I debated with my parents about changing some of our household policies so that I can start to understand money a little bit more. I couldn’t afford rent. The room I currently live in is worth $1,500, which is what I’d probably make in 6 months. I couldn’t afford food other. Just paying for food would be 75% of my budget per week. Before I had a job, they were paying me an allowance of $20 per week. In exchange I did things around the house. After I came up with my theory on budgets, I started paying my parents every time I got a paycheck. about 10% of what I make belongs to them. Another 33% doesn’t belong to me either. I use that to improve my life, make sure I can survive, and get to where I need to be. 57% of everything I make belongs to me. this means I have a wealth of $57 per $100 in revenue. I use that money to develop businesses I want to have. I use that money reward my friends for behavior I like, and I use that money to make more money.

In the process of doing business with my wealth percentage, I can ask people if they would like anything. My mom asked me to pick something up while I was at the fabric store. The cost came out of the money I would normally pay her. On top of that, I charged her for delivery. In the process of exerting my wealth, I can save other people effort or money. While exerting my wealth, I can get a bulk discount, I can get custom work done like get custom fabrics or custom clothing designs, and I can deliver a finished product, saving time and effort for the people close to me.

While this may not make sense, it does improve my life. Reading this, you’re probably thinking, I should just keep my money. If my mom’s not asking for it, why should I give it to her? Wouldn’t I be more wealthy if I just kept all of it and used it to start a business? In a way you’re right. If I used all of my money, I could start an actual business. I could rent out a little tiny stall, and maybe start bringing in some cash. While you’re right, I want you to think of businesses as scalable, rather than a big lump sum. Notice that I brought back in some of the money that wasn’t mine. If I was like most Americans, I probably would never have seen the money I paid for rent and utilities again, but in the process of exerting my wealth, I made back some of the money I gave out. If everyone I knew took advantage of the service that I offered, I would generate a profit without using any extra money. I live on less than half the amount I could, but in the process, I do things that other people could only dream of. Furthermore, by paying them for their contribution to my basic needs I encourage them to continue to offer me services. When I bring them a service, which I am going to do anyway, I make some of that money back and have the opportunity to make extra money when I offer it to a larger group of people. While I could use all of my money, it doesn’t bring me any closer to people who would pay me for things I’m good at. This process creates a market without having to have a super amazing product, without having to convince people to purchase, and without having to pay for a store front.

I’ll be talking more about this in the future. Look out for it.

I start changing the world

There is a quote I live by.

I wanted to change the world, but it was too big. I wanted to change my country but no one could hear my little voice. I wanted to change my state, but the laws were too strong. I wanted to change my city, but I didn’t have enough money. I wanted to change my neighborhood but my neighbors slammed the door in my face. I wanted to change my house, but I did not own the land. I wanted to change myself by my body wouldn’t listen. So how does anything change? I rewarded myself when I watched things I wanted, and I started to change. I rewarded my family when they watched me do things I wanted, and they gave me the house. I rewarded my neighbors when they watched my family do things I wanted, and the would gladly open the doors when I came by. I rewarded my city when they watched my neighbors do the things I wanted, and soon, I had money enough to change the city. I rewarded my state when they watched my city. The laws changed every day they watched. The laws changed when the nation watched our state. The world changed as they watched our nation.

This is beginning of my guide to changing the world.

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Affiliate Marketing

Affiliation

You have hobbies, interests, and activities. With the invention of the internet, you can spend a whole lot more time doing things you love. For example, if you love pets, and you have an internet connection, you’ll probably develop an affiliation (a connection or relationship) to pets and pet products. As you go around, meeting new people, they will take a greater interest in these hobbies, increasing the demand for this type of product.

Marketing

There are two types of marketing: direct marketing, and indirect marketing. Direct marketing is also called CTA marketing or Call To Action. An example is “Buy this product”, or “Sing up for your Free Trial Today”. They Focus on the product and how it feels to have the product, and then suggest a plan to take action. The second type of marketing is indirect because you make no money promoting products indirectly. In exchange, you reduce the cost to market your products. An example of indirect marketing is “Visit Las Vegas,” or “Visit Texas.” Sure, you’re presenting something material. Texas is a place. Someone owns and controls Texas. You could go to Texas and touch it. But if Texas was a barren wasteland, telling someone to go to Texas makes no one any extra cash. Now If tell you to got Las Vegas, when you arrive, you will see billboards, and casinos, and restaurants, and television programs and radio advertisements, and people handing out fliers on the street. Indirect marketing brings the audience closer to the products the advertisements promote. This both increases the effectiveness of the advertisements, and decreases the overall cost.

Consider the cost for a 30 second commercial during the super bowel. One of these commercials can cost well over $1,000,000 in airtime alone, not to mention the fees associated with hiring a nationally recognized actor (actor/ brand recognition boosts ad effectiveness). Pretend that this is an Ad for a City, Santa Cruz, CA. There are thousands of stores in this town. If all of them wanted a space in 30 second commercials, none of them would have the same effectiveness they could have if they just sent out flyers around the country. Instead, for $1,000,000 the city should display the city (the market) as a beautiful place worth having or visiting. People then travel to the Market, and Each of these several thousand companies can advertise more effectively, and for a lower price. They can grab more than a millisecond of the consumer’s attention, and the product is easier to reach.

What is a Market?

With the increase in globalization, and the dependence on the internet, the term “market” has a general meaning. The term Market, now refers to the group of people who share a demographic: The young market, the married market, the retired market, the male market, the female market.

Instead of general concepts, a market should refer to a specific place with people. This makes direct marketing easier, and makes indirect marketing relevant. If you don’t know who you’re reaching with your advertisements, you cannot control who purchases your product. If you can’t reliably make people purchase using an advertisement, then attracting people into the market to listen to more advertisements is redundant and irrelevant.

A market is a place with people and the option to sell a product or present an advertisement.

Affiliate Marketing

Combine what you’ve learned with Affiliation and Marketing. You know that as you meet people your affiliation coupled with your friendship drives demand for products such as “How to get your ex back,” or “How to make money online.” It also drives up demand for products such as diet supplements, subscriptions to magazines or other services, and really anything that you could enjoy. You also know that a market is a place with people and the option to sell or promote a product. Finally, you know that marketing is about selling a product directly or attracting people to a market. This means, you want to pick something you enjoy with lots of products, you want to define your market, and promote products and attract people to your market.

To make money, you sell AD or retail space in your market, and you sell products yourself. When you sell ad space in your market, you’ll generally charge either per click, per visitor, or per day. Some instances you will charge per lead. I should point out that you’ll probably think the person placing ad as giving you money, instead of you charging them. If you maintain this tendency to think people are giving you money, you will feel less entitled for the products you offer. Event though you still get money, hold the belief that people are taking something from you, and you are charging them, rather than people are giving you money, and you’re giving them services in return. This is because you want them to believe they already have the product. If you assume they already have the product, then you will seek payment relentlessly and make more money.

When creating a product, make sure you can maintain a competitive advantage. The indication that you have a competitive advantage is at least a 40% profit margin, and proportionate expenses. If you stick to your areas of expertise, you should be able to maintain a competitive advantage.

As an affiliate, you can charge anywhere from 50 to 100% commissions for every sale. Considering the products you find in the beginning do not negotiate commissions, it will feel like they’re giving you money. Still remind yourself that you’ll charge and you are charging 50 to 100% commissions.

Finding a Market

Pick a place with people with the option to sell. Rank each market by profit.

TotalSalesVolume X Price – (marketing+fees)

This is your Standard sales volume for the total market. Some people will buy less, and some people will buy more. you can’t know if a market will love purchasing your product until they purchase your product.

Pick your top 3, and test them for a trial period

Focus on your top market after the trial period ends

Finding a Niche

A niche is a group of people WITHIN A MARKET who’ve already purchased one unit or more, and are capable and willing to buy a similar product. The best advice I’ve received about marketing is about people with over $10 million dollars. “Selling a house to someone who has 8 boats is ridiculous, sell that person another boat.” If a person is rich, and can buy anything he wants, the number of them he has indicates he is likely to buy more. I a person more likely to buy a pencil if he has 99 of them or a house if he has 1 house. In that case you should sell the person a pencil.

The most common mistake people make is an over generalization. They forget that a niche exists within a market. If you start your training listening to a guru, you’ll hear a lot about their favorite niches. What they aren’t teaching you is that their niches may not exist outside of that market. Of course, if you can reach the markets that contain the niches these gurus talk about, then you can make as much money as they have given you face the same amount of competition.

To find your own niche, find a market, and start selling. People who’ve purchased your product form your niche. When you find a niche, sell to them again.

Resources

Online Markets 

  • the landing page of any website
  • The footer of any blog post
  • The header of any blog post
  • the right/ left column of any blog post
  • The content of a blog post
  • Old Domain name
  • E-mail Inbox
  • Facebook Feed
  • Forum Post
  • Amazon
  • Ebay
  • Clickbank
  • JVzoo

IRL Markets

  • your house
  • your street
  • your corner
  • your neighborhood
  • your school
  • your work
  • the mall
  • the mailbox
  • TV
  • Radio

Autoresponders

  • Aweber
  • MailChimp
  • ReachMail
  • Iconnect

Hosting

  • HostGator
  • GoDaddy
  • 1&1
  • WordPress
  • Weebly

PLR/MLR (upsell and lead magnet products)

Publishing

  • lulu.com

Lead Magnet

A lead magnet is a product people will give out their e-mail address to get. Usually, you offer this for free. They then give you their e-mail address to sing up for more e-mails in exchange for giving you their e-mail. If you send them material related to the product you gave away for free, they are more likely to buy than if you sent them material about something else. You are more than welcome to test the different demands within your market, but if you bring people into your market who’ve already given you their e-mail address in return for something their interested in, your entire market is a niche. if you want to sell to them, sell them a similar product.

Automation

Over the course of doing business you will figure out the best order to sell products. First people want something simple. Then they want something more valuable. Then they want a subscription, and they will finally ask for private coaching or other private services. The closer to the beginning of the list a type of product is, the less it costs. You will generally sell more of those products than anything else. If you decide you want to sell more valuable products, you first have to automate the sales at the lower levels.

use autoresponders, websites, Frequenlty asked question’s pages, and computer programs to deal with simple tasks.

Simplify the process. If you have 1,000 purchases every month, and you need to buy inventory, purchase all the inventory from one place, even if it costs a little more. The only exception is if you compromise your profit margin more than the next product can make up for. If you sacrifice 2% of your margin to purchase all at once, you then have to add an additional 2% to your margin on your higher end product.

After you use systems to automate, assign tasks to employees, freelancers, and other workers.

Begin work on the next level within your income funnel.

Trouble Shooting

I don’t have any traffic to my website – Find a market with people in it. Create an advertisement.

People aren’t buying – there are several reasons. Usually, you put the wrong offer in front your audience. The easiest solution is to find a product people have already purchased and sell it to them. To improve the quality of a product, adjust either aesthetics, functions, or message. The more beautiful a product is, the easier it is to market. The more functions it has, the more you can charge for it, and the clearer and louder the message, the more people will buy it. However, they build off each other, so if you want to sell a similar product, improve one of these areas and the perceived quality of a product improves. A plastic water bottle made of thicker plastic is easier to sell than a water bottle made of flimsy plastic because it is more aesthetically pleasing.

People aren’t opening my e-mails – Step 1 find a market, step 2 find an existing niche within that market, Step 3 – talk to the people within the niche, Step 4 – send them e-mails about topics within the niche (these will be the same conversations you’ve had with one or more people within this niche)

I’m not making any money – create a budget. Commit to always spending the amount of money in your budget, only on the designated expense. Never spend more, never spend less than what you commit. You will make a profit if you designate a section in your budget called “Profit”. Mine is $57/$100

I have a low conversion rate (30% or lower) – Look for people who’ve already purchased a product before. Put a similar product in front of them. Improve one aspect of the product aesthetics, functions, messages. — alternatively, your problem could be your sales page, or your purchasing page.

My advertising isn’t working but I know people will buy – this only applies if people who’ve bought from you before complain that they want to buy again but couldn’t figure out how.

Simplify your design. Use a maximum of three colors, three fonts, and three points. Your most important point should take up 2/3 of the design. Include a Call to action as either your most important or second most important point.

You’re laughing, but I’ve seen some terrible designs. This happens.

 

E-books [why write one, and how]

Why write an e-book to make money online.

Low cost

The main feature of an e-book is the low-cost to make. Depending on how fast you can type, you can finish an e-book in under a week. You can also find a freelance writer to create an e-book for you. Freelancer.com is a great place to start.

You should create an e-book when you plan to offer a bonus for something you’re selling. Let’s say you intend to offer a series of videos. You can offer a ten page PDF, as a free bonus.

When writing a short e-book keep in mind the product your e-book accompanies. The better you relate the PDF to the product the higher your customer satisfaction will be. If you have a five-part video series on dating and attraction, then you should either go into detail on a single subject, such as one of the subjects of the videos, or you can use the book to outline important points from the videos. The final option is to write about something related but not offered in the videos. I subscribed to a year-long series of how to attract women. Every month, there would be a new PDF, 20 pages long that talked about specific things to say along with the conclusions of the research. Each video only focused on one type of woman, but the PDF focused on one skill for all 8 types of women.

High value.

I found the PDF more valuable than the video content. I recommend keeping your videos simple, and general and using PDFs or e-books to create long, single subject pieces. The video content were hour-long interviews with these girls. They would release only part of the video every week, and it was frustrating. If they put that content into a book, emphasizing important points, and creating a bonus page on their website offering the full interviews, it would have been a lot more enjoyable. I stayed for about 4 months.

How to write an E-book

Freelance

Freelancer.com is a great place to start

If you intend to hire someone to write for you, make sure you know the topic and subtopics. Find some samples you’d like the writer to model. You can send samples that represent the style you’d like to capture. You can send samples that represent the information you’d like to capture. You can also send samples that represent the organization you’d like to capture.

Style is a large topic. Some of the things within style are syntax, diction, literary tools. Syntax is word order. For example, you can say either, “the great book was exciting,” or “It, the great book,” was exciting. Diction is word choice. In the same example, I would use stronger diction when using an appositive (a phrase that defines a noun or pronoun using a or the),. “The great book was exciting” is fine, but I would say “It, the greatest book of all time, was exciting.” seems like a familiar style. On example of a literary tool, hyperbole, is like exaggeration. It’s common in satire. Using hyperbole like “the greatest book of all time,” starts to clue the reader in on sarcasm. Because mimicking a piece is complex, make sure to include samples of what you’re hoping to copy.

You’ll probably have to send your writer a couple samples of information you’d like to include. At the very least you can send your writer a couple PDFs containing some of the information you’d like to represent. If you’d like to reduce the cost in cash, you can invest your own time instead, and do research on your own. You can gather about 10 pages of notes, and send this off to the writer, asking him to take the information and write something that has a similar style. If you can specify the stylistic elements you’d like the writer to mimic, it will improve the overall quality of the writing tremendously.

Finally, organization matters, i.e. How many chapters do you want to have, what needs to come first. Make sure to specify chapter and subchapter organization as well as content and style in order to ensure high quality content. You can also specify how paragraphs are structured. In school, my teachers focused on supporting a thesis. Each sentence made a more specific statement. The order was, Thesis, topic, evidence, topic, evidence, conclusion. If you don’t know how to organize your content and you don’t have any examples, you can rely on the simple model. Topic [such as e-books]: Subtopic 1[such as how to write; types of e-books; where to get them]; thesis [ such as the best place to get e books is a PLR marketplace], point 1 [your reason] evidence [factual information], conclusion: Subtopic 2; thesis, point, evidence, conclusion; etc.; Conclusion. Structure is important to supporting your claims, so your audience believes you. If your audience believes your statements, they will pay you more money in the future.

If you specify syntax, diction, and literary tools, you can more accurately match a popular style you’re looking for. If you specify the information you’d like in your book, you can simplify the process for your writer and maybe even reduce the monetary cost. If you specify the  organization, your content will make more sense to your audience, inspiring them to buy more in the future.

Do it yourself

I only recommend this if you’ve taken writing classes in college and have experience writing 1,000 words on a single topic. 1,000 words is about 4 letter sized pages. If you’ve taken a college writing course. you’ll write about 2,500 words for your final paper, building off of 3 smaller papers between 2 and 6 pages. All together, you’ll have between 16 and 28 pages. You should be able to create one within 1 32 days if you work about 2 – 4 hours every day, finishing one piece every 3- 6 days.

Tips

If you do have some experience, here are some tips that will help you.

Drafting

Your first draft should be a collection of simple sentences creating a single paragraph. The more specific you are, the shorter your pieces will be. The more general you, the longer your pieces will be. In your first draft, avoid statements about the world, because those turn into 400-500 pages, and require more than 32 days of research. Instead focus on a topic with a little more detail. For example, making money online is a broad topic worth several thousand pages. You could either focus on a subtopic within making money online, or you could focus on making money online for mothers, or making money online when you’re broke. That would cut down on the number of pages at the end.

Your second draft should elaborate. Your first sentence will probably be your Thesis. If you read through your first draft, each sentence should remind you of one book, article, video, or conversation, you’ve come across. When you elaborate, you should go back to the original work and review the information and organization. You should summarize the content, and give specific examples, quoting your source. If you intend to sell your book, you should quote at least 1 source per subtopic.

Other Rough Drafts

Each draft between your second draft and your final draft will either be an experiment with style, or it will further elaborate. If you choose to change the style, make sure it is consistent throughout the piece. If you intend to use a particular style, write down when you intend to use that particular style or stylistic element. When you’re finished, send this document off when you get it edited, and your editor will make sure you didn’t miss anything.

Final Draft

Your final draft Should be proofread by an editor. If you intend to sell your work, you should figure out how many you can sell at a particular price. If you’ve taken business calculus, you should be able to figure out the price that maximizes profit after you’ve gathered data to create the demand equation. If you haven’t taken business calculus, pick a price similar to other books in your market. Divide the total revenue you expect to make, and divide this number by 30, and you get the total amount you should spend on editing. The more copies you intend to sell, the more money you can spend on editing. Your editor will make notes in the margins, and you should fix the errors in style, spelling, punctuation, and organization.  If you can find an editor who specializes in the kind of book your writing, such as making money or fitness, your editor will also make notes about errors in you information, as well as missing quotes and missing concepts. It is a good idea to use an editor with a specialty in your topic, but if you can’t find one, take it to an expert in the field and get their opinion on your book. Make sure to ask if they felt like you left anything out.

If you did leave something out, make sure to write it separately, and go through the drafting process again, sending it to your editor one last time.

 

 

My mom learns to make money

My mom and dad fight all the time about how much she’s lost trying to make money. So it should come as a relief to you that you can learn how to make money. If you’re like me, and you’ve been following to power of positive thinking movement, you probably have been telling people you make a lot more money than you do, and you’ve probably been taking more risks with your money than the people around you are comfortable with. So I’m happy to give you the good news: the budget theory works.

First I set up a budget. $10 per month. “What can we do with that?” one thing that came to mind was stop sings. While I work, I see tons of near accidents at this cross walk by my work. I thought there should be a stop sign. So I told my mom.

Standard budget $10

savings $5.70

expenses $4.3

  • taxes and fees $2.30
  • R&D $1.00
  • manufacture $0.50
    • // note: signs cost $0.46 to make per person
  • Distribution $0.40
  • Marketing $0.10

Keep these in mind. Every single person crossing the street was interested in buying a sign; however, $10 is a lot for a little 5×5 stop sign. It’s about the size of your hand.

altered budget $5 per person

Savings $2.85

Expenses $2.15

  • Taxes $1.15
  • R&D $0.50
  • manufacturing $0.25
  • Distribution $0.20
  • Marketing $0.05

Altered budget $5 per person (proportion of expenses altered)

savings $2.85

expenses $2.15

  • taxes and fees $0.43
  • R&D $0.43
  • Manufacturing $0.43
  • Distribution $0.43
  • marketing $0.43

In order to start selling immediately, we made the proportion more even. Each expense is 8.6% of the total revenue. This brings us closer to the cost to manufacture each stop sign. If we use 3c from R&D or we include 3c per item for shipping, or we put our logo and contact info on the sign, we can split the expense, and purchase the signs.

As we increase in volume, we plan to distribute expenses closer to the original budget model. Should people not want our product, we have the budget to alter it. If even that doesn’t sell, then we got to do what we wanted, and we made some money doing it, hopefully.

The next step after the budget and market testing, is to make one. The cost to make and sell one, using our new budget is $2.15.  Which means, if it succeeds, then we have enough money to make and sell a second one. Notice that this budget model offers a second chance.

 

Budgeting 101 [time]

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Complete Outsourcing Employee labor guide

  • R&D – 60%
  • Manufacture – 20%
  • Distribution – 15%
  • marketing – 5%

1 hour/ month

  • R&D – 36 minutes
  • Manufacture – 12 minutes
  • Distribution – 9 minutes
  • Marketing – 3 minutes

total cost $9

2 hours/ month

  • R&D – 72 minutes
  • Manufacture – 24 minutes
  • Distribution – 18 minutes
  • Marketing – 6 minutes

total cost $18

3 hours/ month

  • R&D – 108 minutes
  • Manufacture – 36 minutes
  • Distribution – 27 minutes
  • Marketing – 9 minutes

total cost $27

5 hours/ month

  • R&D – 180 minutes
  • Manufacture – 60 minutes
  • Distribution – 45 minutes
  • Marketing- 15 minutes

total cost $45

8 hours/ month

  • R&D – 288 minutes
  • Manufacture – 96 minutes
  • Distribution – 72 minutes
  • Marketing -24 minutes

total cost $72

10 hours/ month

  • R&D – 360 minutes
  • Manufacture – 120 minutes
  • Distribution – 90 minutes
  • Marketing – 30 minutes

total cost $90

15 hours/ month

  • R&D – 540 minutes
  • Manufacture – 180 minutes
  • Distribution – 135 minutes
  • Marketing – 45 minutes

total cost $135

30 hours/ month

  • R&D – 18 hours
  • Manufacture- 6 hours
  • Distribution – 4.5 hours
  • Marketing – 1.5 hours

total cost $270

40 hours/ month

  • R&D – 24 hours
  • Manufacture – 8 hours
  • Distribution – 6 hours
  • Marketing – 2 hours

6 days a week

  • R&D – 4 hours/day
  • Manufacture – 1 hour and 20 minutes/ day
  • Distribution – 1 hour/ day
  • Marketing 20 minutes/ day
  • total cost $360/ month

80 hours/ month

2weeks/month

6 days a week

  • R&D – 4 hours/day
  • Manufacture – 1:20 hours/ day
  • Distribution – 1 hour/ day
  • marketing – 20 minutes/ day

total cost $720 per month

120 hours/month

3weeks/month

6days/week

total cost $1080 per month

full time

160 hours/month

4weeks/month

6days/week

total cost $1440 per month. Not including overtime, and benefits

Labor guide per stage

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How much you can afford to pay people. This guide is also useful for how much people can afford to pay you. When designing products and services for people with budgets, you need to keep in mind how much you can offer them personally.

Log all the hours you spend. This includes watching TV, indulging your addiction, commuting, and “doing nothing”. This is a guide for what you should be making off of your work.

I mostly use this guide to figure out how much time I should be spending per customer. I also use it to figure out how much time I should let my employees spend per customer.

Stage 0

R&D – $0.10

  • 36 seconds

Manufacture – $0.05

  • 18 seconds per month

Distribution – $0.04

  • 15 seconds per month

Marketing – $0.01

  • 2 seconds per month

for example- in 3 seconds, there are anywhere between 0 and 20 cars on a street I do marketing. If I was offering market space, you could afford one promotion to 0 and 20 people. Keep in mind that I’m paid about $18 per day already. So I’m out there whether you pay me or not. But if you offer me one cent to blast your message to 20 people. Then I’d be more likely to work for you in the future because of the operant conditioning effect.

Stage 1

R&D – $1

  • 6 minutes per month

Manufacture – $0.50

  • 3 minutes per month

Distribution – $0.40

  • 2.46 minutes per month

Marketing – $0.10

  • 36 seconds per month

Through google adwords, you can get some key words for 10 cents. In this case, you’ll capture about 36 seconds of their time. Another option is to print a page someone else designed for you for free. This will cost about $0.10 for the paper and ink. If you give this to someone you think will purchase from you, then it’s worth the price. Demographics are key to successful advertising.

Note: you may not see immediate sales unless you target your marketing to family and friends. Your product should be valuable to the people close to you.

Stage 2

R&D – $10

  • 1 hour per month

Manufacture – $5

  • 30 minutes per month

Distribution – $4

  • 24.6 minutes per month

Marketing – $1

  • 6 minutes per month

You can ask one of your friends to tell people about you. The total time exclusively dedicated to you is about 6 minutes per month, usually around when you first ask, and when you promise to pay.

2 man hours = 1 day

Stage 3

R&D – $100

  • 10 hours/ month

Manufacture – $50

  • 5 hours per month

Distribution – $40

  • 4.1 hours per month

Marketing – $10

  • 1 hour per month

People with a small list of 40 people or so can send out a solo ad for about $10

20 man hours = 1 week

Stage 4

R&D – $1,000

  • 100 hours/ month

Manufacture – $500

  • 50 hours per month

Distribution – $400

  • 41 hours per month

Marketing – $100

  • 10 hours per month

200 man hours = 5 weeks.

For more advanced stages, you take the budget per customer in budgeting 101, and compare it to the amount of time you can spend per customer. It equates to about $10 per hour.

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