I read a fantastic post by Jed @ the Newly Rich called “Our 4HWW Workflow, Part I“. Without stealing his thunder (and idea), I encourage you to take a look at the post that diagrams a ludicrously simple, but very effective way of looking at your tasks.

Here’s a quick thumbnail of the flow. Click on it to view it at the original post location:

Thanks, Jed!

Sorry for the pause in content. I’ve been working hard as well as I’ve embarked on my MADFUN exercises. Plus, I haven’t really had much to write about. Maybe I should write anyways?

In any case, thanks for the feedback I’ve gotten from you all on my eLance and Time Management posts. I hope they have helped. On the 4HWW front, I’m looking at writing and publicizing some eBooks as a passive income source. Has anyone else had any experience in successfully doing that? Ironically, if I come across some great techniques, I’ll publish them as an eBook so that you all can learn from me!

I often listen to NPR and other Public Radio stations. Do you? Doesn’t it annoy you when they have to interrupt their broadcasting to make an appeal to their audiences for donations and support?

Just like you, I find it annoying that those pledge drives interrupt the shows I like to listen to you, but at the same time, I understand why they do that. They have to somehow fund their activities, and since they don’t barrage you with advertisements, the pledge drive is the only way to make their financial ends meet. It’s actually good that they don’t rely heavily on advertisements as the non-public radio stations do, since that could also taint their independent perspective.

Like public radio stations, I write in this blog mostly for my amusement and for the information and pleasure of those who read it. While I do have many advertisements placed throughout the site, the truth is that they really don’t result in much, if any, revenue for me.

I posted a while back on the topic of blog revenue as a passive source of income, but until this blog reaches a significant traffic level, it’s pretty much all a pipe dream.

In that vein, I come to you, my faithful readers. Like NPR, I’d like to take this opportunity to pass the Tip Jar and ask for donations. I am working as hard as I can to turn this blog into a Muse and thus a Passive Income source. But until then, it’s hard for me to focus on the blog when there are other pressing financial concerns.

As such, I’d like to ask you to donate whatever you can to my cause. On the right side of the screen, you might notice a donation widget from a website called ChipIn that allows you to contribute to my Muse. If you can’t find it, I’ve also included it below:

Thank you so much and keep tuning into this station!

But on to my point.

I finally understand now why Tim says that he always used to shrug off the “What do you do?” question by babbling about selling drugs. Because “I sell a weightlifting supplement over the internet and through magazine ads” is a little… well… cheesy. It’s not really something to write home about, or brag about. No wonder he was relieved to publish 4HWW so that he could start answering, “I’m a published author”! And after months of trying to think up muses of my own, I’m beginning to suspect that they’re all like that, sort of inherently.

I think that’s part of why I and probably other entrepreneurs like myself have had trouble redirecting our existing businesses towards creating muses. Our original business ideas had more inherent value… they had more depth and substance. We had goals like “Become the best-known technology consulting company in North America” or “Dominate the content management system market with the most useful and best-priced system.” We were, to use Guy Kawasaki’s phrase, “making meaning.” We were trying to create something BIG that other people would want to get on board to do, with ideals and dreams we could recruit with. And we wouldn’t have gotten as far as we have if we didn’t believe in what we were doing.

Muses, on the other hand, are just there to make some cash. They’re cotton-candy businesses, all artificial color and sugar and no nutritional value. They’re small by definition. If you’re an ambitious and idealistic person, it’s almost embarrassing to tell people what you’re doing. It feels like a big letdown from your original purpose. You don’t even want to recruit for it, and the goal is to be a one-man outfit with an outsourced army anyway.

So what’s the solution? What if your dream IS owning your own business… and it’s important to you to be contributing something of significant value to society? (Granted, I’m sure it isn’t impossible to create muses with inherent social value, depth, and substance… I just haven’t been able to think of any yet!)

Well, my theory is that even if you’re embracing 4HWW wholeheartedly, you can still end up being the president of your own company doing the exciting & worthwhile work you originally set out to do. Naturally, as president, you’ll make the executive-level decisions while other people do the hands-on work. But since you’re creating your own company culture, you can build in 4HWW values like freedom of time and location for everyone, including yourself. Sounds nice, doesn’t it?

The trick is getting there. I think you can “DEAL” your way out of working on the business fulltime (assuming you’re working fulltime now) without reducing income, then use your spare time to build muses which generate cash you can then use to expand the company (by hiring, automating, and outsourcing, not by getting sucked back into working longer hours). Building your own one-man outfit into a “real” company is always a challenge, but you’ll have muses to carry you through the expansion, and even get you through outright failure if that should happen. And, with this in mind, building cheesy muses is a backburner activity… not something you even have to tell people about (unless you’re blogging about it – LOL).

If what you’re doing as an entrepreneur right now is pretty cheesy already, then you probably don’t really get what I’m talking about -grins-. You’ll just “DEAL” your way out of it, like you would a day job you dislike, while you’re building muses and picking out your dreamline activities – which also makes total sense.

Thoughts and opinions? I’ll pay attention to the comments here and respond.

Getting a bit more practical, one of the themes in the Four Hour Work Week is the idea that you can have a nice source of passive income from a short investment in time called a Muse. Hilarycat posted recently on what constitutes a Muse (or in her words, a Passive Income Generator [PIG]). But the gist is that it’s not necessarily your main “day job”, but rather something that allows you to earn the income needed so that your main job doesn’t consume you. You can be free to pursue the things you want because the lights can stay on and the kids can stay fed.

As a way to get things started, blogs themselves can be nice sources of revenue and could potentially be muses if they turned into something bigger. That does not mean that it has to consume lots of time, but you should definitely thing about all the ways to generate revenue from a blog and related media. Here’s what I’ve come up with so far. If you know of other ways to turn blogging and writing activity into muse-worthy income, let everyone know by posting some feedback in the comments.

Advertising

Most folks who think about generating revenue from their blog think of the advertising business model where you post ads on your site and get paid for every click through. This is certainly one of the best ways to generate passive income from a blog, since you’re simply leveraging the traffic that comes whether you are working (or even awake) or not. The general formula for increasing advertising revenue is: Increased profit = increased traffic + increased visibility/placement of ads + increased quality / pay-out of ads + increased relevancy of ads.

• Google AdSense — The Obvious One. Of all the advertising brokers on the web, Google is the King of them all – with over 60% of total context-based advertising around. It’s hard to beat, and so that’s why most bloggers use Google AdSense for their advertising revenue base. The problem is that making money on Google Ads has been getting harder recently. There are thousands, if not millions, of sites that place ads, meaning that you’re sharing in a very small percentage of the total ad traffic. Some more comments and thoughts on Google ad revenue for bloggers here.

• Text-link-Ads — Another possibility for advertising revenue is getting paid to put text links into your blog. Not quite the same as Google Ads,but Google definitely frowns on it and penalizes sites that use it, so see it as as no-go if you want to use Google AdSense and Text-Link-Ads together
• Chitika,WidgetBucks, Azoogle Ads, Intelli Txt, DoubleClick, Tribal Fusion, Adbrite, Clicksor, AdHearUs, Kanoodle, Pheedo, TextAds, Bidvertiser, Fastclick, Value Click,MSN Adcenter, YPN, and BlogAds . Yes there are a bazillion ways to get ads on your site and get paid on a per-click or per-results basis. Much has been said about the above, but given that most are sharing the remaining 35-40% of the market amongst each other, you’ll be sacrificing the visibility that Google has for the wider base of potential advertisers. That being said, I don’t have much experience with the above. Can someone in the blogging world point me to a comparison of the above and state whether or not they can happily co-exist with each other and/or Google AdSense?
• Kontera — Another contextual ad system, but this one is different. It finds keywords on your page and automatically creates an advertising link that becomes a pop-up “ContentLink” that refers readers to additional opportunities. There’s some conflicting evidence as to whether Google allows it or not, but I’ll try it on this blog and let you know.
• Feedburner RSS ads — As you might already know, FeedBurner powers this site’s RSS feed. It not only syndicates it for wider distribution through a variety of formats, but also allows me to manage, audit, publicize, and even monetize the feed. FeedBurner now allows you to insert ad links into your RSS feeds and collect when they’ve been clicked. I’m trying it, so let me know if it annoys you.
• Blog Networks — A blog network is a group of blogs that team up to increase their mutual traffic and thus share in the increased ad revenue. I haven’t really done much research here, but I hear this can be quite lucrative. Anyone have any feedback?
• Sell your own advertising — Who says you need to get your ads thrown at you by a third party? If you think you can get significant traffic, sell your ads direct! Offer a permanent spot on your blog for a 125×125 ad (or whatever size you like) and sell it for whatever you think you can get. This will really only work for high-traffic blogs, but it really is a better way to go. You have to promise a certain amount of visibility, but you’re getting a fixed monthly income without any surprises or variability. I suggest this is something you can do when you get a few hundred thousand hits per month or a tens of thousands of dedicated readers. Not as hard as you would imagine…
• Get your site sponsored –Another take is to have your site be exclusively sponsored by someone. The same tack as selling your own advertising, but perhaps you offer to brand your site in a specific way or do some joint activities with the sponsor. Either way, a nice way to make some real passive income.

Merchandising

If you have merchandise closely affiliate with your site, then you can sell it online as a way of earning passive income.

• Cafepress — One of the most widely known merchandising site. Allows you to sell shirts, mugs, hats, books, bags, baby clothing, lingerie, lots of stuff emblazoned with your key IP and identifying marks. I’ve tried to put together some DHFW related items and merchandise here, but of course, the quality of the goods will determine how well they sell!
  
• Write eBooks – Another way to earn passive income is to sell content online. Write an eBook about a topic related to the blog or something else that suits your fancy and sell it on your blog, eBay, and even Amazon. Another possibility is to turn the blog itself into an eBook and sell that. How’s that for passive income? I’ll try writing a few eBooks myself and I’ll let you know how it goes!

Affiliate Programs

Have products that you are genuinely happy with and want to refer others to? Would you like to make a commission helping to sell products and/or services that you already support? Affiliate programs are there to help reward referrals for sales. I would suggest doing this only if you would have made the recommendation for those products and services anyways. Why ruin the reputation of your blog (and thus your traffic) pitching stuff that doesn’t interest you or your readership? But if the products do indeed help and stuff you are legitimately using already or supporting, then why not? Get the passive income that comes from easy referrals.

• Amazon Associates — Probably the best-known affiliate program is Amazon Associates, which rewards you from 4% to over 6% for selling books and other items on your site. I have been running Amazon Affiliate advertising on this site since I started to promote the FHWW book and the shredder that I love so much. It’s a great way of generating passive income, especially if you’re already recommending the products!
• Commission Junction — One of the largest networks of affiliate-based revenue streams and offers. From their site: “Commission Junction’s network, the CJ Marketplace, provides publishers with opportunities to partner with leading advertisers while having access to millions of links and offers. The publisher is paid a commission by the respective advertiser when a visitor takes a specific action such as filling out a form, subscribing to a service (both lead examples) or making a purchase (a sale).” I am not sure how to use CJ effectively, but I am sure I will learn soon.
• Linkshare — Similar to CJ, LinkShare “runs the largest pay-for-performance affiliate marketing network on the Internet” and coordinates the relationship between advertisers and publishers (that’s you, the blogger).
• Clickbank — Similar to the above affiliate programs, but with one big difference — the products that you are referring visitors to are exclusively digital products. So, if you want to make referrals to music, eBooks, etc. that are available for immediate purchase and download, or if you have an eBook that you want to promote, ClickBank might be the way to go. I’ll let you know if it works with my eBook ideas!
• Affiliate Sensor — This one is a unique idea which combines the way Google Ads work (automatically placed ads based on contextual relevance) with the revenue generation of Affiliate links. So, you’re getting random affiliate links placed on your site that you will get paid on a Click-per-Action (CPA) basis. Hmm, not the best idea if you want to control your content. And, I’m not sure what Google will think of another context-based ad/revenue generation system on your site.
• ShoppingAds — Monetize your site with live merchant listings that display (supposedly) relevant products and pay you through good click-through rates. Because the ads are non-contextual, they don’t compete with or violate any Google Adsense Terms of Service. However, there have been a number of complaints about their business practices and timeliness of pay-outs.
• Roll-Your-Own — There are literally thousands of affiliate programs out there. If you have a product you like, see if they have an affiliate program, and go forth, promote and profit. But be careful and remember to promote only that which you’d recommend anyways!

Get Paid to Blog

Just like the affiliate programs, you can seek revenue for posting on blog topics that are of interest to you and your readership. There are a number of programs that will pay you to write about stuff. But, just like the affiliate programs, you have to be careful with these. The small amount of money you can make in posting a paid advertisement can be counter-productive to ad revenue since it could drive away readers. No one likes obvious advertising shills, and you’ll ruin your credibility, which means reduced readership, which means reduced advertising revenue and all the other sources of revenue. So, post only on what your readers will legitimately care about so that the little bit of revenue from posting itself doesn’t bite you in the end. You should post only on things that compliment existing writing and make it clear that while the post is sponsored, you support the content and are responsible for the results.

• PayPerPost — A somewhat controversial concept in which advertisers will pay you to post a topic on your blog. If the topic is of legitimate interest to your readers anyways and you can write it in a way that’s genuine then go for it. I believe it’s potetna revenue for work you are already planning on doing. But if it’s going to be clearly advertorial content that edges on authenticity, don’t risk your traffic and diminish all the other revenue streams for a few bucks. I’m undecided on this one. Thoughts?
• ReviewMe -A slightly different twist on the get-paid-to-blog concept. This site will pay you at least $25 per post to review advertiser’s products. Supposedly you can be quite candid and honest (even negative) in your reviews without penalty. But a word of mention here — ReviewMe will only accept blogs and websites that already have significant traffic and visibility. My site got rejected as being too lowly in the Blogosphere. So, the paradox is that if you already have plenty of traffic, you’re probably getting it without having to be paid to post. And you’re probably already making tons of $$ through other revenue sources. So, why would you want to sacrifice your traffic and ad earnings for earning just a few bucks on reviews? ReviewMe should see their opportunity to help fledgling bloggers get a market and traffic, not help the already well-established blog players.
• Blogsvertise, SponsoredReviews, BloggerWave — The same ideas as PayPerPost and ReviewMe. A review of all these pay-to-blog providers can be found here. You can also see a more comprehensive list of pay-to-blog sites here. I might give Blogsvertise a try, but they require you to post about them on your blog (interesting marketing technique), so you might see a post on that shortly. I’ll let you all know the results of these activities!
• Blogging for Hire — Finally, there are a number of sites that will pay you to post on their blogs. Now, I don’t really consider this as passive income cause you’re basically doing the writing for someone else and getting paid for your work. Maybe in that regard, all of these pay-to-blog services aren’t really passive income either. And if you’re working to get paid, you have to really see how much time it’s taking up. In which case, is it really a muse? It’s only worth it if you can generate significant income for very short amount of time. I’d only consider being paid to write a new blog post if I can do it in 10-15 minutes and get paid at least $25 for the effort. This makes my time worth $125 an hour (do the math – 12 minutes or 1/5 of an hour – for $25). So, in general, I wouldn’t really consider any of this section truly passive income.
• Another key consideration: Google is really smacking down pay-t0-blog sites. This might serve as warning to folks who want to get paid for posting. Since it doesn’t really back up the idea of passive income (it’s just another way to get paid for work), I’m not sure that it’s going to be a good idea in the long haul for folks looking at blogs as muse-worthy businesses.

Blog Applications

Perhaps better and more valuable to readers than being paid to blog stuff you might not otherwise post is the idea of creating applications that run on the blog and are automated. These little applications can generate one-time or recurring revenue that requires little, if any, upkeep.

• Job Boards — If you are in a business niche that can attract job seekers as well as job posters, then running a job board on your site makes a lot of sense. You can automate both the posting functions as well as the seeking functions and charge a few hundred dollars for the post, and provide it for free to job seekers.
• Personals – Some high-traffic blogs that cater to a specific personality / cultural niche can do the personal equivalent of the job-board: personals. A few blogs generate hundreds of thousands of dollars this way, charging either for the post or a recurring fee for retrieval of messages, etc. If your blog caters to such audiences, then this might be a good idea for passive income generation.
• Other ideas – Do you have other application ideas that can generate one-time or recurring fees? If so, let me know and I’ll post it for a future update.

Other Forms of Passive Income

• Vizu — Make money by posting polls. There’s the free polls that cost nothing and generate no revenue, and then there’s the Vizu Power Polls that allow you to earn money by posting market-research type questions. I’m going to give it a try. Let me know what you think.

Donations

Say you don’t want to blatantly advertise but still want to turn your blog into a muse. Say you advertise, but you would rather get the support of your community. Yes, your readers might have sympathy (or support) for you and want to support your efforts. If you have a blog that champions a cause or is worthy of support, you can simply ask for money. In fact, the only reason I’m running this blog myself is to turn it into a muse so that I can focus my time on other things. Indeed, if I can generate $150k a year from this blog, I can focus my efforts (and time) on things that are not so urgently related to making money. If you want to see what a donation page looks like and donate to the Help Rex Get a Muse Fund, please check it out on the sidebar to your right. If you want to download and install your own, check out ChipIn, the one I’m using on this site.

Of course, the key to any of the above revenue streams is traffic. No one will come to your blog and thus allow you to monetize that traffic if it isn’t interesting. And without traffic, there’s no revenue. So, how do you get traffic? The best way to do that is to make your site interesting. Increase the quality of the content and make it remarkable (in the words of Seth Godin) and you’ll see the results come in. All the rest of the above is just gravy. After all, your muse should be fun. If it’s just work, it ain’t a muse. But then again, if it’s not making money, it ain’t a muse either.

There are a few ways to go about increasing blog traffic organically (that is, without pulling shenanigans). One way is to keep writing good content and encouraging your readers to share it with others. Another way is to make your blog more search-engine friendly (where most of the readership will first come from) as well as make it easier to allow people to share content. This means never delete old posts, archive individual posts, incorporate the title of the post into the tags of the post, link a lot externally and allow people to link in a lot, make your blog slim and trim (something I probably have to do), and wrap hypertext around words. Another thing you can do to increase your blog traffic is to register it on blog registries like Blogowogo, Blogshares, Globe of Blogs, Eaton Web, and other places.

Other methods are to have Forums / Discussion Boards, Chat Rooms, Polls, Guest Maps, and Newsletters. Each serves as a way of either increasing the amount of good content or spreading the good content you already have. I might start a few forums and newsletters for Four Hour a Weekers if I can do it in a way that is passive and contributes to the overall value and traffic of the site.

To help with the above, getting accurate figures on how your blog is performing is key. I suggest Google Analytics as a key step to getting the sort of ongoing traffic numbers you need to determine if your blog is a PIG or just a Hog.

I’ll let you know how it all turns out, but you can’t beat that for a muse bank account.

Now I need a place to put the incoming funds. As you all know, you need to use a business bank account for your revenue — no mixing personal and business revenue streams. I’ve recently been banking with Bank of America, but not out of pleasure — just convenience. Since my new muse doesn’t require me to be physically close to my bank account (almost all incoming funds are electronically deposited), I am open to better options. BofA fees you to death. And their service is sorely lacking. If it weren’t for their omni-present branches and ATMs, I wouldn’t have even bothered. But then again, I didn’t bother in the first place — they just kept buying all the banks I actually did do business with!

So, let’s leverage the power of the Internet and networking– have any of you had good experiences with a bank that caters well to the Small Business? One that is low in fees, high in service, makes it easy to do the odd in-person deposit (or allows you to do e-deposits like K-Bank does), has low or no balance minimums, allows you do to things like ACH Debits and Credits as well as online banking and has a decent online web experience? Would love your thoughts and help!

Updated: I just checked out the First National Bank of Nevada… While it’s no where near where I live, I’m intrigued by: * free business checking and *e-deposits that allow you to deposit physical checks without ever having to leave the office. A 4HWW-ers dream? I’m not sure if they’ll do business with me in my state, but I’m wondering if there’s anything similar somewhere else or if anyone has experience with something like that?

But, let’s take another twist. Let’s keep the price constant and instead think of how the numbers of customers change when we move to monthly, or any repeated sale per year.

What makes this interesting is that consumable products… that is, products that provide only a short term value that then need to be replenished have excellent prospects.

To make $5M in revenue, all one needs to do, for example:

1. Find 10,000 customers and sell them something for $500 once,or…
2. Find 100,000 customers and sell them something for $50 once, or …
3. Find 100,000 customers and sell them something $17 three times in a year, or…
4. Find 8,333 customers and sell them something for $50 a month, or…
5. Find 20,000 customers and sell them something for $21 a month, or..

You can see how that goes. Play with the numbers and use them to help determine whether your bought product strategy makes sense. Next step: figure out what product to sell, whether it’s a consumable or a one-time sale, or a monthly recurring revenue source. Personally, I like the 10,000 customers $500 a pop or 20,000 customers $21 a month plan… Hmm.

First, the revenue target. Let’s say for the sake of example that we want to run a $5M a year gross revenue business (that’s just top-line, not including the cost of goods, overhead, taxes, etc.).

There are lots of ways we can make $5M in a year, if we’re selling products (remember, we don’t want to sell services if we want to be a four-hour-a-weeker):

Now, this might seem like a trivial, brain-dead exercise. So, what am I proving, that I know how to multiply? Well, I think the insight is a bit more profound than that.

First, we can achieve $5M a number of ways, but some might be easier than others. Selling one thing for $5M will get us there fast, but just how much work will it take and how much will that $5M item cost? If it’s a physical item, there might not be much margin left after all is said and done. If it’s a service being provided, forget it, you’re talking 35% margins at best.

On the flip side, selling 5,000,000 things at $1 each also doesn’t make sense. First, to actually sell 5 million of anything you need to reach a much larger audience, which means significant marketing and distribution costs, not to mention the cost of fulfillment. $1 items are sold retail and probably in mass markets. That means that the distributors take their cut, not to mention the cost of the product, so you’re also down near 35% margins at the end of the day.

For product based companies that have products that are sold, not bought, I think the sweet spot is in the green zone above.

Anywhere from selling 1,000 products at $5,000 a pop to 100,000 products at $50 a pop seems to be the best area to target. Although at the edges (in yellow) are a bit tougher. It’s harder to develop bought-products that sell for $5k than it is $1k. I can think of plasma/LCD TVs that are in this range.

But I think for our purposes, finding products in the $100-$500 range that are bought seems to be sweeter. In fact, selling 10,000 of something at $500 a pop seems pretty realistic. And there might be products that have low cost of goods and low cost of delivery and distribution that can keep us in the 50% margin or better area.

So, I am going to focus my efforts on building a business where I can sell 10,000-50,000 of something for $100-$500 a pop. And do it as a “bought” not sold business focusing the efforts on marketing and low-cost distribution.

It gets even better… monthly revenue.

Where the dollar analysis gets better is if we think of the $5m figure as an annual figure divided by month. What if instead of selling individual products for $100-$500 a pop we instead sold a monthly subscription for those products. Then, instead of selling 50,000 $100 items, one can instead sell 50,000 $9-a-month subscriptions. Do the math. It actually is even better than $5M. Or, 10,000 $42-a-month subscriptions. Or somewhere in between, like 25,000 $19-a-month subscriptions.

What makes subscriptions or monthly revenue better is that it’s continuous and predictable. That means sales can be self-sustaining as long as the products continue to provide value.

The key now to figure is what market has a reachable audience of around 100,000-500,000 so that achieving a 10% penetration with bought-products that sell for $100-$500, whether one at a time or on a monthly basis. Then, come up with a compelling product for that market and an effective means to market and distribute to that market, and the $5m business is not that far away…. all for four hours a week.