Some people get rich by way of genius. They invent something, or they invent a better way of doing something. Unfortunately for most of us, we are pretty content using the inventions of others.
But that doesn’t mean serious wealth is out of reach. And, I don’t mean 6 figures or 7 figures. If all you want is a cool million, go hire some overseas web designers to create database driven sites that generate millions of pages every day, place Adsense on those pages, along with a ton of affiliate links, and voila, you’re a millionaire.
But I’m not talking about one million dollars. Money is easy to come by. Most persons with even a modicum of intellectual depth do not find fulfillment in the simple possession of money. For most of us, the fun is in creating wealth while at the same time matching wits with competitors. It’s the challenge that’s fun. Respect of peers, ETC.
So the magic number, for the sake of this discussion, is $33.5 million. That’s what a Gulstream G450 costs. If you can afford that, you have a major league business.
Now, think. How do we create a business model that is profitable to the point of the G450? Think. Think. Think. Thinking? Sure, we can all sell stuff on the Internet. I didn’t know the first thing about hosting when I started Quality-Web-Hosting.net (now V7 Inc). All I knew is that too many hosting companies had crappy service or lacked credibility altogether. So I started V7, and I sell hosting. We get new subscribers everyday, and we pride ourselves in the level of quality of our connections, or features and our customer service.
But V7 isn’t rich-rich. We’re not anywhere near to buying a private jet.
These are generic services. Anybody can get into hosting. I mean, seriously, anybody can get into hosting. A while back I was reading the WebHostingTalk forums, and was surprised at the number of “web hosts” owned by kids aged 17 and under. Even one 13 year old. And you’re not going to get rich competing on price against 13 year olds who are selling web hosting for $1.99 per month.
It is worth noting that pretty much 99.9% of all dot coms are dealing in generic services. That is to say, 99.9% of Internet based businesses are providing services that can easily be duplicated without a serious financial investment.
Hosting. SEO. Web design. These are industries which can be gotten into for less than a thousand dollars in start up cash. Which is precisely why every Tom, Dick and Harry is in the web design hosting, design, SEO, domain name business.
They are generic businesses!
Same for most other dot coms. One of the most popular business types is the mature audience DVD retailer business. Why? Because these people put up a cheap website for $500, and drop ship the product directly from the wholesaler. No inventory. No huge cash outlay. No leasing of retail space.
Also, no success. Why? Because it’s too damn competitive. It would be like 5,000,000 p0rn shops on one street. Too many shops competing for a limited number of consumer dollars.
Drop Ship: verb drÃ¤p ship The shipping of a product directly from the manufacturer to the customer without requiring inventory carrying by the retailer.
These words – drop ship – are like honey to the ears of impoverished trailer trash everywhere. No need for a respectable capital investment. Just take the orders, and then buy the product. Yup. We’re all going to be billionaires in two weeks. Okay, two months, tops.
Here’s a rule of thumb for you:
If the business model you are considering requires little or no capital investment, and little or no specialized education, you will most likely fail.
Reason being, if it requires little capital investment, all your trailer trash neighbors are already doing it. Chances are, it’s going to be an oversaturated, highly competitive market with razor-thin margins.
Yeah, that’s right, you’re not the only one who wants to get rich without actually doing any work.
In case you’re missing the point, let me spell it out for you. Generic businesses are easy to get into. This means a lot of competition. Oversaturated market. Razor thin margins. No millions of dollars in profits.
So how do you break free from the competition? How do you increase your margins? This is where brand comes into play.
Amazon is perfect example of a generic business that has trumped its competition with a strong brand. Amazon can charge more than the competition because of the added value of brand. No-name generic book sellers can offers the same selection at lower prices until the cows come home, but as long as the consumer equates books with Amazon, the competition’s low price strategy will fall on deaf ears.
See, in the arena of generic dot com business types, it’s either low price strategy and razor-thin or non-existent margins, or it’s branding. Your choice.