Are you building a business or a job?

Merry Christmas and a Happy New Year to all Warriors.

My gift to you this holiday season is to share with you some of the great lessons I've learned (usually the hard way) in the hopes that some of you who read this will be able to learn from my mistakes and live a more profitable 2011.

In the beginning...

The first advice most newbies (here after referred to as Bob) receive on this forum is to setup a service to start earning money. This is fantastic advice because it's something you can do RIGHT NOW and be profiting tomorrow. You can see that it's possible and it cuts through the slow feedback loop so many other opportunities come with.

But what we don't tell Bob (because if we did he wouldn't start) is that providing a service is just creating a job for yourself by any other name.

So Bob sets up shop as an article writer or a backlink builder or a hamster farmer (hey Kevin has to get them from somewhere)...

And all is good...

As a successful service provider Bob is soon inundated with orders. People know he does good work so word quickly spreads. He's simply the best hamster farmer in all the land. One testimonial from Kevin later and he's not just over worked but having to actively turn away business.

Bob is making good money. As well as his full time job, Bob is comfortably banking a thousand dollars a month from his hamster farm. It's good but it's not enough to get him out of his day job and into the full time hamster farming business.

Whatever is Bob to do?

One evening, after a long day at work followed by a couple of gruelling hours of hamster farming, Bob discovers a post about outsourcing.

"Of course", he says to himself, "I'll pay someone else to hamster farm for me. I'll be able to take on more work and I'll make more money."

So Bob heads off to SourceOfCheapLabour.com (no, that's not a real site, come on stay with the story)

And quickly discovers the source of his success...

He's been hamster farming for less than the going rate.

He can't pay someone else to do it and take the profits because he'd be paying them more than he'd be earning.

One small price hike (which his customers have been asking him why he didn't do all along) later and he's at least earning the going rate for hamster farming. But he's still no closer to his new goal of being the boss of other hamster farmers.

So what went wrong?

What happened was Bob joined the race to the bottom. A game played by bad marketers the world over. Who only know how to sell based on the simple premise of "the same but cheaper".

It's a premise that works for Walmart because they lose a couple of cents on everything sold and somehow seem to make it up on volume. (I'm sorry, it's an economics joke, so sue me).

But why doesn't it work for Bob?

It doesn't work because Bob isn't charging for all the work he does.

He does 2 hours a night of hamster farming during the week and an additional 4 hours each of Saturday and Sunday. At $15 an hour, it's a nice little earner, or so he thinks...

But that $15 an hour doesn't include everything else that is involved in running the business.

Out of that he has to pay for his banner ads over at HamstersMonthly.com

And he doesn't earn anything for all the hours of forum posting he does on HamstersForever.co.uk nor the additional time spent in his support desk handling questions about malnourished hamsters.

When you add in all the other time he spends on his business and take away expenses. His hourly rate drops from $15 down to $5 and it's no wonder he can't profitably hire someone.

So what's the moral of the story?

The astute reader may have figured out that Bob isn't actually real. It turns out there is even less money in hamster farming than this story may have lead you to believe. The real Bob has actually retired to the Bahamas after getting into the profitable bizop fraud business.

But the real moral of this story is that your time isn't free. If you wouldn't do it for someone else for free. Don't do it for yourself for free either.

And further. Your job isn't to farm hamsters. You job is to build a business that does. Until you understand all the parts that go into a hamster farming business all you have done is created a low paying job as a hamster farmer.

I hope a few people learned something from the ramblings of this madman.

Merry Christmas,

Andy

PS: No hamsters were harmed in the writing of this post.