This is a guest post by Ramit Sethi, founder of I Will Teach You To Be Rich and a new course on earning more money.
Ever since I started writing about how to earn more money, I’ve been getting questions like this over and over:
“What service should I offer? How much should I charge? Where can I find clients? But I’m already so busy…how can I manage my time?”
It turns out that out everyone who wants to earn more money has a very similar set of barriers holding them back. Kind of like people who want to lose weight — it’s usually the same set of 5-10 mental and physical barriers holding them back. Interestingly, everyone thinks they’re unique…but of course, we almost ALL have similar questions and barriers.
But there’s another important question that few people ever ask: What SHOULDN’T I be spending my time on?
When I tell people they SHOULD spend money on lattes, they get confused
When I talk about the basics of personal finance, people are shocked to hear that I advocate spending extravagantly on the things you love. Whaaa…?? SPENDING? But I thought personal finance was all about making budgets, cutting back, locking up all your extra money for 40 years, making your own detergent, and checking your bank account 5 times a day???
Some people get so hung up on the idea of spending extravagantly that they never hear the second part of my philosophy — cutting costs ruthlessly on the things you don’t care about.
You want to buy that $500 pair of boots? Ok, if you really want them, go ahead. But the flip side of extravagant spending is cutting back on the things you just don’t care about and won’t miss (take a closer look and you’ll see there are actually a LOT of things in your life that fit this) — some people don’t care about cable, but forget that they’re spending on it every month, others could be saving $50/ month on their cellphone bill but never bother to check if they’re on the right plan.
So now let’s talk about how this relates to earning more money.
Just like personal finance, earning more is within everyone’s reach. But there’s a slight difference:
With earning more, time is your currency. Where will you spend it extravagantly, and where will you cut costs ruthlessly?
Stop wasting time on worthless activities
Time is your most precious currency when it comes to earning more real money. Spending it on the wrong thing will slow you to a standstill.
Why, then, do all the standard ‘How to start a business’ tips tell us to do everything under the sun?
Just as big brands are out there trying to market their products — giving you more and more options of where to spend your money — most of the standard ‘How to start a business’ tips are simply marketing ideas so you’ll keep reading… and reading… and reading…
Reading tips can be fun, but earning more money is even better.
Check out this list of “essential” tasks that you MUST do before starting your business, taken from one popular book on freelancing:
- Set up Twitter and FB page!
- Start a blog and website
- Get business cards and logos designed
- Register your DBA (Doing Business As) name
- Prepare a press kit
- Draft contracts and other legal forms for use with clients
THESE ARE ALL WORTHLESS WHEN YOU’RE FIRST EARNING MONEY. In fact, in my Earn1k course, I ONLY focus on helping my students get their first 3 paying clients. Anything else is not important right now. Once you have consistent cashflow of $500/month extra, $1,000/month, or even $5,000/month, you can afford to focus on other aspects of your business.
Why you should ruthlessly ignore typical advice about starting a business
You’ll hear people recommending these same old tired, pointless tasks (like setting up a Twitter page to earn money) because (1) that’s what they know, and (2) it’s easy to describe. It’s much more difficult to explain the important of deep customer research or pricing. But some novice weirdo can say, “You REALLY need to set up a Twitter account” and wipe his hands because he thinks he’s helped you. (I have over 13,000+ followers on Twitter and carefully measure where I generate revenue from. I can tell you from quantitative analysis that Twitter is one of the LAST things you should set up, if your goal is to earn more money.)
Here are some reasons why you should ignore this kind of advice.
1. They’re endless time sinks. None of the above to-dos are technically wrong, and some of them might even seem like no-brainers. But little things that can be constantly tweaked (“Oooh, maybe my logo should be a little more like THIS!”) add up rapidly until minutes become hours and hours become days. Meanwhile, you’re still at $0 profit. But, you perfected that logo!
Until you’ve started earning money consistently, you don’t have a business. Nobody cares about your logo, Twitter/FB page, or anything else. Those are simply goals to get you to earning money…so why not skip over them and go directly to earning money?
2. They drain your energy. In a perfect world, everybody would do all of the above and still have plenty of time and motivation left over for actual work. In reality, we’re cognitive misers and have limited willpower, so people get lazy and feel like doing nothing a LOT OF THE TIME. You know what I’m talking about. Your motivation is finite, and that’s normal. But, know that if you don’t spend your limited motivation on the most important tasks — the tasks that are directly connected to getting clients and getting paid — then the real work will never get done.
Be ruthlessly protective of your time and energy. Scrutinize every task and consider, “Is this EARNING essential or am I just doing it to put off what’s important?”
3. You might not even need them. Remember, you’re earning money on the side — not starting the next Google. Resist the urge to think you need certain things in order to look like a “real” business.
Real businesses make money. Case in point: I paid one of my freelancers over $12,000 last month, and he has no business cards, no blog and virtually no web presence whatsoever. And he works exclusively with online businesses!
Barring a few truly important exceptions (e.g. basic legal and tax issues which are can easily be outsourced to experts and should NOT take up most of your focus), it’s time to start ignoring what most people say you need to do to start a business. No clients, no business.
How do you get those clients? Focus on what’s truly important: Crafting an irresistible offer, figuring out who’s willing to buy, and closing your first three clients. Everything else is just details.
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Ramit Sethi is the author of the best-selling personal finance book I Will Teach You To Be Rich. His new program, Earn1k, is designed to help regular people earn money while keeping their full-time jobs. Sign up here to get a free preview course on finding a profitable idea, marketing, sales, and advanced techniques.
Editor’s note: Ramit REALLY really knows his stuff! I’ve blogged about it plenty before, but if you’re seriously trying to get your hustle on, checkin’ out his free preview might be a great start. You should also read his book, it’s literally my #1 favorite PF book out there. And I’ve met him in real life too – pretty chill guy :)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!