ShoeMoney’s 12 Week Course To Internet Success

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With
the
recent
advances
in
technology,
the
“American
dream”
has
transformed
from
thoughts
of
white
picket
 fences
and
a
well‐paying
nine
to
five
job
into
the
idea
of
having
a
lucrative,
work‐from‐ home
and
make‐money‐while‐you‐sleep
type
career.
You
make
your
own
hours
and
have
yourself
as
a
boss!
T hat’s
the
dream
of
today.

 Most
people
think
that
just
because
you’re
able
to
 home
and
at
your
own
computer
means
it’s
going
 easy.
Unfortunately,
while
it’s
certainly
possible
to
 substantial
income
from
home,
it
requires
hard
 dedication
and
an
unyielding
desire
to
succeed…
 every
other
successful
endeavor!

 do
it
from
 to
be
 earn
a
 work,
 just
like


No
matter
where
you’re
at
in
your
Internet
 marketing
career,
it
is
both
beneficial
and
 to
not
only
build
a
solid
foundation
of
the
basics,
but
expound
upon
this
as
well.
Without
this
 founda

Week 12

necessary


Launch Day: How To Kick Start Your Business And Manage Your Projects
ocument
here.
The
abstract
is
typically
a
short
summary
of
the
co tio n,
 you ’ll
 be
 lost
 and
 con fus ed.
 Tha t’s
 where
this
guide
comes
in.
This
12
Week
Course
contains
the
information
you
need
to
be
knowledgeable
 about
the
industry
while
also
learning
the
best
ways
to
use
different
tools
found
online.
W hile
you
don’t
ne ed
to
be
an
expert
in
all
of
the
fields
we’ll
talk
about,
you
will
at
least
become
a
“Jack
of
all
trades”
(so
keep
this 
in
mind
throughout
the
training).



]


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Welcome to the final week...
Do you know how well your company is actually doing? Most new business owners have no clue how much money they really have. Sure, perhaps you just got paid $50k from an affiliate network, but have you accounted for the $35k bill from Google AdWords that is coming due, $5k for freelance work you haven’t paid for yet, and $10k for all those new toys you’re just bought—for which monthly payments are coming due? What if you’re not sure what bills you’ve already paid or new expenses you need to cover? Use credit cards to solve this problem and they will kill you.

I’ve seen many affiliate marketers get in trouble by trying to wing it when it comes to their finances. They never had a system to begin with and don’t know that you’re supposed to do things like: • Separate your personal from your business expenses—having separate bank accounts for each and even setting up a separate company. • Creating a monthly financial review process—even if you are just one person, you need to do this. We will cover why and how. • Set aside part of your profits for taxes— Uncle Sam will catch up to you, it’s just a matter of when. Same is true for state governments, when it comes to payroll taxes, unemployment, and whatever else. And like with the cops, you can’t plead ignorance.

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These Internet marketers THINK they must be profitable, just because they are generating a lot of revenue. I am friends with one guy who runs a network doing over $100k a day who has no contracts in place, no accounting, isn’t sure whether he got paid from various advertisers, has the IRS after him and is about to go broke—begging me for a loan. Yet, he’s maintaining this high-class lifestyle—hoping people won’t find out the truth.

There are many like him. Don’t fall into the same trap. Accounting vs. Finance We’re a small company, but even still we have a lot of projects to track— each with their own cost and revenues. You may THINK you know what is making or costing your company money, but you’d be surprised when you actually keep track. If you remember the first month you had a credit card or the first time you had a cell phone—then saw the bill at the end of the month, you know what I mean. Let’s talk about the difference between accounting and finance, then talk about simple processes you can set up for both types of systems. If you don’t have an MBA, you’re in luck, since you’re about to get $100k worth of learning without having to pay tuition and sit in class for 2 years.

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And if you think this is boring or have bad memories of sitting in class, then consider how interesting things can get when you’re about to go out of business for not having enough money, not being able to pay your taxes, and not being sure what’s actually happening in your company. You can also hire people to do this for you— but you still have to understand the concepts needed to be a CEO.

Keeping track of the past is accounting, while looking forward is finance. One is about precision, the other is about estimating. You need both: • Accounting is for making sure you pay your taxes, can track and bill your clients or sources of revenue, and can operate payroll. Any more than you’d drive a car by looking the rearview mirror, you wouldn’t use accounting tools to plan your business. • Finance is for planning what projects you can realistically take on, how many people you need to hire, and how much money you need. You’re estimating here, so the numbers are not exact. Let’s start with financial planning… We keep an Excel spreadsheet for financial planning-- it has our estimated P&L (Profit and Loss) and matrix of people by project. That's a rough grid to estimate general buckets of cost and revenue-- it's not something we can actually use to drive invoices from. It's a financial model, where I'm changing allocations here and there. And it's not going to have line items with timecard level detail-- that's operations.

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Warning: the exercise below will frustrate most people, but is absolutely necessary if you want to operate like a business with on-going operations versus a one-man show. If you ever want to sell your company, you will have to go through this exercise. And even if you don’t, the understanding you gain here is invaluable. If you don’t do this already: • Create a spreadsheet—name it “your_biz_financial_operations_2009.xls” (replacing “your_biz” with your company name). • Name the first sheet pro_forma: A pro forma is Latin for “future”—we’re going to estimate your revenue, cost, and profit. Call it “forecast”, if you like. • For the columns, list out each project you have—one column per project. Not sure what a project is? It’s a mini-business, which has cost and revenue associated with it. If you have more than 8 of these, you likely have too many. If you’re just one or two people, you should keep it down to 3-4 projects.  Have one row per expense category—for example, the name of a programmer, PPC expense, software, domains, servers, and anything that would make a significant impact to your profit.  Fill in the rows with estimated expense—if you have full-time people, then make sure that their full labor cost is allocated among the projects in that row. Make sure that the full labor cost includes more than what you pay them—especially if you have to pay W2 (full-time) wages (social security), insurance, benefits, payroll filing, and so forth. If it’s just 1099 work (hourly or project-based), then it’s easier. If your projects are one-off’s—meaning that they’re not lasting more than a month, then just estimate as best you can. If you have on-going profits or some element or stability (for example, if you’re doing local campaigns), then you can estimate what your current average month looks like.  Fill in expected revenue—this is tricky, especially if you don’t have any data. If you’re doing consulting, then it’s easy to estimate what you’re going to bill. If you’re running affiliate campaigns that fluctuate a lot, then this exercise

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

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might not be so helpful for you. In that case, you’re not really running a business, but operating a series of projects that are constantly dying and need to be replenished. But if you have on-going projects that last several months, then you can have multiple rows here--- one for each network that pays you, a row for client revenue, a row for billed PPC fees, and so forth. Use the minimum rows needed for you to manage your business—only you know what the right categories are. Calculate totals and subtotals—Insert two blank rows under the expense rows and subtotal. Same thing for revenue. At the bottom of the sheet—you should be about 30 rows by now, create a line for “gross margin”, which is revenue minus expense. Format the cells such that negative numbers are in red and round to the nearest dollar. Determine your project-level profitability: For the far right column, create a grand total, so that you can summarize expense, revenue, and margin by project. If you’ve never done this exercise before, it can be an eye-opener. The projects that drive the most revenue are not necessarily the most profitable—in fact, you might even be losing money. You should be focusing your effort based on profit, not revenue. Insert overhead expense: The gross margin figure we just calculated is your project-level profit before subtracting shared expenses related to rent, travel, telecom, computer equipment, marketing, and so forth. Even credit card expense and loans should be included here if they are significant. Now include below gross margin a few lines for overhead. Place one line for each shared expense. Since it’s not allocated expense, you are filling in Column A only and not for all project columns. If your company is large enough—more than 6 employees—then you’re likely a manager and your cost goes into the overhead category. Subtotal that category. Overall business profitability: The last row should be the overall gross margin across all projects (the last column) minus your overhead subtotal. This gives you the overall profitability of your business.

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If you’ve actually gone through these steps—they are tedious at first—then congratulations to you! You’re probably in the 10% of people who have actually made the effort to mess around in Excel and go through these steps to truly tell how their businesses are doing. And with that, you can troubleshoot how your business is doing—where you’re making money, what projects you should be focusing more time and resource on, what you should be cutting, how much cash you need, and how much you can expect to earn next year.

Play with the numbers—it’s an estimating tool—so it’s made for playing “what if” scenarios  See what happens if your estimate for revenues are off by a certain amount. How does that affect your overall business?  What happens if you add a couple more projects—do you have enough people and if not, what will it cost to be able to do these extra projects?  Are you running with too much overhead expense? If you’re over 15% of overall revenues, then you’re likely too high.  What about your business’ overall gross margins and net margins? Are you perhaps profitable on a gross basis, but not a net (after subtracting overhead) basis? What do your numbers look like if you don’t include your PPC expense? How much are you really “making”—with the emphasis on profit versus gross revenue? Do this right and you’ll not get caught shorthanded at the end of the month. You’ll not need to worry about being able to pay the bills. You can even hire a bookkeeper to do this for you each month once you understand how this works, are keeping receipts in order, and have your finances cleanly separated from your personal expenses.

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The THREE types of financial statements you must look at each month Don’t read this part if you don’t want to grow into a larger business. At some point, you will need a bookkeeper to keep track of where the money is flowing, whether you’ve been paid, how much in salaries you’re paying, and so forth. At the end of each month, you’ll want to ask for these three statements and you’ll also want to know how to use these tools. Let’s explain how they work together to give you a financial health of your business. By the way, even if you’re a one person show, you’ll want to do this—it’s critical for planning. Balance sheet This is how much you have in each of your asset and liability categories. Thus, your assets are likely the cash that you have in the bank and in your pocket, plus pending payments from affiliate networks and clients. Then you have assets such as your computer equipment, software, or anything you could sell for money. Your liabilities are what you owe—credit card debt, loans, and even shareholder equity (if some folks invested in your company). The assets will equal liabilities plus shareholder equity—it’s one of the first things you learn in first semester Accounting. The concept of double-entry bookkeeping is that any time you have a credit (the left side of the equation), you have a debit, too (the right side of the equation)— thus, you’re always in balance. We won’t go into a ton of detail, but one example: if you buy a computer, you are subtracting from your cash and then adding it to an equipment category—thus, two entries at once so that accounts are balanced. We’ll talk about why this is important a bit later.

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Profit and Loss (also called P&L) The Balance Sheet covers a snapshot in time—what your particular assets and liabilities looked like on a particular date. Your P&L is what happened over the course of a month or year. The “top line” is your gross revenue—how much money you collected from various projects you have going on. You then subtract various expenses to get to a margin—then subtract overhead (often called SG&A for sales, general and administrative) to get to your profit. For folks who have a finance degree, you’re probably noting that we should be calling it EBIT or EBITDA (earnings before interest, taxes, depreciation, and amortization)—but for the purposes of internet marketers, it doesn’t really matter, since we’re not dealing with leverage and debt. The P&L statement is quite like the forecast that we did, except that the forecast is what we are expecting to happen, while the P&L is what actually happened. Each month, compare how you did against your goals and you’ll learn a lot. Then adjust your forecasts (pro forma) statements. If you’re really clever, you’ll set up the P&L and pro forma as separate sheets inside the same Excel workbook, then subtract the like rows to determine a variance. In other words, determine what dollar amount and percentage you were off each month. The whole point of the planning exercises is not to generate a set of documents to show people (such as your board of directors, if you have one), but to continually update the plan based on how you’re actually performing. Your profit is also called your “bottom line”, in the same way that your gross revenue is called your “top line”.

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For entrepreneurs with growing businesses, the biggest unexpected challenge—the one that puts them out of business-- is one of running out of money from being too successful. You see, the faster you grow, the more you appear profitable on paper, but the more cash you need. For example, if you’re spending money on PPC campaigns and are getting paid AFTER you’re spending the money, then you have a financial gap. You need money to float while waiting to get paid and that’s called working capital. Same is true if you’re running a local business – if you’re having to spend money on building websites or running campaigns before you’re paid. Large clients often will pay net 30 or net 60. If you have a client spending $10k a month with you and are on net 60, that means you’re billing them at the end of the first month and then having to wait another 60 days to get paid. Thus, it’s 90 days to get paid and you’re having to float $30k on that one client. You’ll never get that money back unless you lose the client. So working capital is tied up in a business, so long as you’re “working”. Now try that with 10 clients—you’re looking at $300k in working capital. Do you have the money in the bank to float that? What if your business is wildly successful and you have 50 clients each spending $10k a month? You now need $1.5 million in working capital at the minimum, else you go out of business. Most entrepreneurs don’t understand working capital. They think, “I get paid X and I charge Y and the difference is Z”. The timing of payments will literally kill you and your business. Usually, by the time the business owner (you) realizes what’s going on, it’s too late. Anyone who would have the money can see your situation and can take advantage of the

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situation. Often, the entrepreneur’s credit card is already maxed out and the bank is not willing to lend money. That’s how successful businesses, who are making money on a P&L basis, go under—happens all the time. The last financial document you need to look at each month is the Statement of Cash Flows. You start with how much cash you had at the beginning of the month and end with how much cash you have in the bank at the end of the month. You have a series of transactions that add money to your bank account (deposits, payments, clients pre-paying, etc…) and transactions the take money out (paying bills, your labor, various expenses, paying down debt). The net effect of that tells you whether your bank account balance is going up or down and why. The Statement of Cash Flows ties together your P&L (also called “income statement”) with your Balance Sheet. See how these 3 documents must go together for you to understand the financial health of your company? Look at these tools carefully to spot problems early—if you’re expenses are running out of control, if you’re going to be out of cash soon, what projects are actually losing you money, and so forth.

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Now assuming you have your money situation under control, let me leave you with some final tips on your journey to a successful Internet Marketing career:  Be a LAZY marketer. Outsource anything that is not critical.  Use credit cards to your advantage. Earn miles on your PPC spend, but NEVER carry a balance. If you can, get the plum card via AMEX, which gives you up to 2% cash back. If you have any debt, pay it off first before speculating on other projects.  Hire slow, fire fast. If you’re not sure if someone is a good fit—don’t hire. If it’s anything except for an absolute complete “YES” from everyone, the answer is “NO”. There is no maybe. Poor performers—get rid of them quickly, for their sake and yours. Hiring mistakes are the most expensive mistakes in a company. Don’t let them linger.  Hire for attitude, train for skill. You’re looking for intelligence, not knowledge. You can teach the rest.  Surround yourself with mentors. Find the most successful people in your field, whether you know them or not. Don’t be afraid of rejection— they’ll often agree to mentor you if you respect their time. Most folks are tickled pink that you’d reach out to ask for help.  Ditch the losers and “yabbuts”. Not to be mean, but you wouldn’t ask a fat person how to lose weight, nor would you ask an unsuccessful Internet marketer how to get rich. Don’t let well-meaning friends pull you down with bad advice— they LOVE to give you advice.  Don’t hire your friends. They may be great folks, but they’ll expect special favors and this will piss off your other folks who aren’t friends and family.  Don’t take on friends or family as clients. They will expect a discount and higher priority. You are running a business, not a charity.

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 Don’t screw over your business partners. It will come back to you, no matter how sneaky you think you are. Your reputation is the most important asset you have. Isn’t that why you’ve signed up for my Xtreme Internet Marketing Guides, as opposed to some random Joe? The world is small—be known for being a man of your word.  Fire your worst clients. If you follow the 80/20 rule, there are a couple projects that are making you all your money and a bunch that are total duds. Cut those—especially if they’re bad clients. As you become more successful, you’ll likely outgrow the clients that you started with. Find other fledgling business that you can pass your clients to, leaving you room to bring in bigger and better deals.  If someone offers to pay, let them. Don’t play the game of “no, let ME pay for dinner!” If they insist, let them pay. People won’t remember later anyway. It’s courteous to offer once to pay—if they insist, then you’re saving money. As a small business, you’re going to need all your cash to grow your company. Let others show off.  Don’t waste time on gossip. Who cares what new car or kind of watch so-and-so has? Focus on obtaining information that will make you money. Let those groupies who stare at pictures of fake checks continue to drool over their internet porn—while you’re busy building your business.  Operate like a business—have an office, even if it’s one room in your apartment. Keep regular office hours. Be on top of your email and projects—not letting the “pimp” lifestyle get in the way of getting stuff done. Most affiliates I’ve seen will make money at first, then get lazy on their new earnings and lose it all.

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 Don’t fly first class. Unless you get a free upgrade. This shows people you care about you—as opposed to conveying that you live a bountiful lifestyle. If all of your people are flying first class, then you can. Your people come first.  Focus on your personal brand— What are you wanting to be known for? You can’t be everything—so choose one thing that you want folks to regard you as the expert in. For example, local Internet marketing, stay at home dads, or something as niche as free funeral advice.  Put your picture on your business card. Maybe even get a caricature made for $75 on elance or rentacoder. Place your AIM, phone, email, and Facebook profile. Make yourself very available for contact. At the same time, quickly and graciously terminate contact with folks who are wasting your time.  Don’t forget to say thank you. Stunningly obvious, isn’t it? You’d be surprised at how few do it. A hand written card on birthdays and any occasion is rare enough to make folks remember you. Keep a stack of thank you cards with you all the time. While standing in line at the airport (or wherever you have a free moment), fill them out, cycling through your entire list once every 3 months.  Blog about your experiences. You’ll want to remember when you’re old and too senile. As young as you are, someday you’ll be an old fogey, too— the creepy old man at the back of the movie theater.  Don’t take yourself too seriously. People do business with friends. So take some time here and there to enjoy life. Even if you’re busy traveling, you can still manage to squeeze in time for sightseeing. Else your memories of cities will be a blur of hotels and airports. Sad.  Help out others along the way. By sharing your knowledge and network, others will remember and good karma will flow back to you in amazing

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ways. Plus, you never know who will be the next gazillionaire, remembering your help when they were nobody. Congratulations on completing my 12 week Xtreme Internet Marketing Guide! What do you think? Please feel free to share this guide if you found it helpful!


				
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posted:11/14/2009
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Description: With the recent advances in technology, the “American dream” has transformed from thoughts of white picket fences and a well‐paying nine to five job into the idea of having a lucrative, work‐from‐home and make‐money‐while‐you‐sleep type career. You make your own hours and have yourself