Living Like A Millionaire And Applying It To Your Business

I like the book “The Millionaire Next Door”.  It is a book that everyone should read.  And if you want to act like a millionaire truly acts, you’ll check it out from the library.  However, I’ve included a link to the book here in case you would like a permanent copy.  It is one of those books that you might want a permanent copy to study over and over again.

I am not going to go into great detail about what the book says, but generally millionaires live frugal lives because being a millionaire is about having a high net worth, not just having a big income.  Many millionaires make six figure incomes and more but spend very little of it, which contributes to their net worth.  They also avoid taxes by deferring their compensation when they can.  For instance, they contribute heavily to retirement plans such as 401k’s and IRA’s.

Millionaires can teach us a lesson about how to approach our business.  Mainly we want to get as much as we can and spend as little as we can.  There are all sorts of opportunities for business people to spend money out there, but the frugal business leader finds the same services for little or nothing.  For instance, you can buy time on an email server or you can use gmail, which is free.  You can get business cards for next to nothing if you accept an advertisement on the back.  You can have a website for free.  Yes, free.  Look at blogger.com for blogs or webs.com for web pages, or do your own search for free web sites.

New business people can fall into a trap of thinking they need stuff to do business.  What do you actually need? Business cards maybe.  Do you need stationary with company letterhead?  Find a friend with an ink jet printer.  Do you need coffee mugs (or other promos) with your company information?  I don’t think so.  Do you need catalogs, samples, or other stuff from your MLM company?  My opinion is that you don’t need them until you need them.  Wait until you have a request for a catalog.  Buy one instead of 50 if possible.  Or better yet, send the the customer to the company website to look at your product.

The objective is to find ways to do business for less.  At first you may have a hard time keeping your costs down but over time you will find cheaper ways of doing things.  Just keep working in that direction.  The reason we want to keep our costs down is so that we don’t run out of money before the business starts making us money.

The Danger Of Spending Money On Advertising

You can promote your web site in many ways for free on the internet and off the internet.  You can give out business cards, put a sign in your yard or on your car, put an ad in the free classifieds, get listed on search engines, and so forth.  Advertising for free has one thing in common no matter how you do it: Any business you get from your effort is free from expense.  And by expense I mean actual outlays of cash.  Advertising always has a cost and for free advertising, the cost is usually your time.  Still, you can spend gobs of time advertising for free and you won’t worry about paying your mortgage payment, you just won’t get to watch as much TV or do things outside of your business as much.

When you start spending money on advertising one thing will be perfectly clear: You will get business but there is a cost that you will feel.  And sometimes your paid advertising will get you less business than your free advertising.  Yes that’s right, often you will get business that will not match what you were able to generate for free.  So why spend money on advertising?  Because eventually you will want to do things bigger than you are able to do with free advertising.

Paid advertising is not cheap.  Some advertising is more effective than other advertising though.  For instance, you can spend 25 to 50 cents per click through for google advertising, but I notice that visitors from google will spend more time on the site than visitors from stumbleupon.  Still, you will pay only 5 cents per click from stumbleupon so you can get 5 – 10 more click throughs with them than google.  And stumbleupon could actually be more effective per click because some people that visit will link to the site by giving it a thumbs up.

It is always good to test advertising, both media and format, before going larger with it.  Usually I’ll spend $100 – $200 on a test to see what kind of results I get.  If the test works well, the sky is the limit on how much you can spend.  I used to have a contract with Excite to spend $3000 per month on banner advertising.  You can go much larger than this though.  You usually spend this kind of money after you start making at least this much money with your business, by the way, because advertising will not give you an immediate return on your investment.

In fact, it is probably a good idea to plan out your advertising, to see what your return on investment probably will be and how long it will take you to make money from your efforts.  You can usually figure this out based on your current marketing results if you can gather the right kind of data.  Mainly you want to know what an average customer spends over what period of time, and what kind of dropout rate you have.

In our past business, we tried advertising in many different ways.  I used card decks, small display advertising in magazines, a full-page ad, banner advertising, and several other forms.  Magazines have good hang times, as they stick around for long periods of time.  Banner advertisements are better over time but die quickly.  So there are different advertising strategies that can be used with different effects.  Overall we found that our best advertising was what we could get for free, it just took a lot of time to get it.

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