In the online world, for the first time ever the “little guy” like you actually has advantages over the big corporations, Harvard MBAs, and technology wizards. Here are three reasons why:
1. Lower costs mean higher profits for you. Big companies must do things BIG—they have lots of employees making generic products that appeal to general audiences. Because you are smaller with less overhead and personnel costs to cover, you can afford to specialize your products to directly meet the needs of your target market. Specialty products usually mean higher profit margins, too.
In addition, because the Net allows small business owners like you to reach consumer audiences worldwide, you can find and serve niche market needs that the big corporations are not even aware of yet. You can also react more quickly than big companies (with their big, bureaucratic management structures) to update and refine your products to serve your audience better.
2. Worldwide customer reach is yours through the Web. The biggest difference between successful mega-corporations and small home-based businesses is often simply the size of the audience that they reach with their products. In other words, if you can get the word out widely enough, you can get your share of sales—even if your competitors are much bigger corporations.
The Internet lets you extend your customer reach inexpensively worldwide. Part 4 of this book, the marketing section, will show you specific “secrets” of how to do it cost effectively, too.
3. Enterprise software is available for pennies per day. Online you can often turn the tools of the large companies against them. Major corporations use “enterprise software” to run their businesses. These multimillion-dollar software packages are developed for big companies to help manage their large and complex business operations. While this may sound like an insurmountable obstacle to you, it is in fact great news!
Why? Because to recoup some of their costs, many software providers today are offering consumer or small-business versions of their enterprisegrade software for mere dollars per month. On top of that, they are spending millions more in development costs to make the software as easy to use as possible in hopes of attracting entrepreneurs (like you) as new customers.
The wonderful thing about e-businesses is that they can be profitable at lower volumes than big companies and with less capital investment. The increased efficiency of a successful e-business (as compared to a traditional big business) also means that even sales of less than $1 million can be dramatically profitable for their owners. That’s because on the Internet, you can inexpensively combine specialized products (advantage 1) with the ability to reach a worldwide customer audience cheaply (advantage 2) and outsource your technology needs (advantage 3) with the low overhead costs of working out of your home. In other words, your fixed costs (e.g., office space, parking, equipment) can be much lower, and your variable costs (e.g., inventory, customer service help, and especially advertising) can also be lower, and more easily managed, limited to increasing in proportion to your growth.
My experience and research prove that e-commerce offers exactly this combination of low production costs with wide reach. Combine that with the many tax advantages of owning your own business and it means that small entrepreneurs actually have a competitive advantage versus big corporations when using the Internet. Taking advantage of this can make you rich or at least change your lifestyle so dramatically that you’ll be able to live more like you’re rich. Then, when you factor in the use of outsourced service providers (which I’ll explain more about shortly), you can build a highly profitable online business cheaply—even if you know little about technology!
By owning your own successful e-business, you can make good money with a higher profit margin than bigger companies, plus enjoy your work more, set your own hours, and probably even work from home. Even an e-business that grosses “only” $100,000/year can change your life for the better and leave you feeling and living like a “millionaire” every day!
INTERNET MILLIONAIRE SECRET:
The Law of Large Numbers
An important secret that I want to share with you is called the Law of Large Numbers. It’s how the big boys of banking make their money. I want you to learn about this technique because it can help you evaluate business opportunities and recognize their potential correctly.
I learned this principle on Wall Street, in my first job out of college. I was recruited by the blue-chip banking firm of J. P. Morgan & Company in New York City. This very highly respected, old-school bank spent a lot of time and money training its young bankers, and I still remember many of the lessons.
WHAT IS THE LAW OF LARGE NUMBERS?
It is a simple formula that says that:
[A Really Small Number] 5 [A Really Large Number]
= A Big Number!
This concept sums up the idea that if you can reach enough potential customers with a profitable usiness offer, you can make serious money even if only a very small percentage of them purchase it.
This Wall Street banker secret helps explain why the Internet can be the answer to your dreams of owning your own business. The Internet is the perfect example of this principle in action. Here’s an example: If there are 100 million people online and you can just get one percent of them to consider your offer, then only one-tenth of those people to buy it, that means you sold 100,000 units of your product! If you charged $10 for your product that means you have created a million-dollar business
just like that!
While these numbers are not necessarily realistic for every business, the concept remains true: A small profit potential multiplied by millions and millions and millions of potential customers can create serious revenues very quickly.
If you have a business that can reach all these people inexpensively, you can be extremely profitable without much cash investment. The Internet is perfect for this kind of approach and it is just one of the many reasons why Internet-based businesses are my sole focus.
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