How to Start an Online Business with No Money

Guest Blog: Sandy Gum, Insurance and Private Equity Advisor

These days, starting an online business is trending. A quick Google search and you’ll find hundreds of ideas for online businesses that you could be starting to potentially make a side income or make you wealthy. Some options cost a lot to start while others cost very little. Which one should you choose?

Before you decide, I’m going to show you how the type of income you generate from your business directly affects how much work you have to put in. Then I’m going to show you how you can start a highly profitable online business without any money.

Types of Income from Online Businesses

If you’re going to look at how to build a business online, you first need to understand the definition and the concept of a business. Next, you need to ask yourself if you are looking for active income, residual income, or passive income.

Let’s start with defining the different types of businesses. The first is an active income business. With this type, you are trading your time for money. For example, operating a marketing agency requires you to be involved in the daily operations. You’re making money, but you are also putting in your time.

When you have a residual income business, you are able to earn some money with minimal involvement in the daily management of it. You’re earning income from paid subscriptions and royalties. At the beginning, you put in more work, but later, you’re mostly involved in just the management of the business.

With the third type, a passive income business, you can completely remove yourself from the daily operations and it will keep running without you. You can disappear for years and it will continue to run itself. For example, you have e-commerce that does not require you to do daily operations and customers come to your shop regardless of your presence. We’ll look at an example of this later.

Everyone wants to go from step 1 to step 10, starting from active income, and slowly building their residual income until they achieve passive income. But is there an online business that will get you to that goal? Let’s take a look at an example.

Examples of Online Businesses that Make You an Income

An online business that you may have come across that’s very popular is e-commerce. You may think it’s a type of passive income business, but I’ve discovered it’s not really passive at all if you don’t have a solid vendor to partner with.

When I was a seller on Amazon, I discovered that you need to learn many things, source products, talk to vendors, negotiate to find products, calculate the shipping cost, and put everything in management. 

Amazon is an active income business. You’re involved in all the details and you’re getting orders that you’re handling physically. You’re managing each of these transactions.

However, if you’re able to hire someone to do the work for you, then you have transitioned your business to a residual income business. Now you’re just supervising your employees. You still can’t be completely hands off in case an employee makes a mistake. You’re not yet making passive income, but you’re able to free up some of your time.

Starting an Online Business Without Any Money

So what are some types of passive income businesses that you can do? Instead of building up an e-commerce business from the ground up or using platforms like Amazon, you can actually partner with a vendor directly without any upfront set up costs. This vendor will do product research, produce products, and provide the logistics, payment, and systems exclusively for you, so you focus only on building clientele. 

Once you have built up a clientele that buys products from you on their own without any further marketing effort on your part, that’s when you generate passive income. Costco or Walmart doesn’t keep reminding their customers to buy their chicken or veggies. When customers need their food, they will go back to them. You want to achieve this level of hands-off customer retention.

Once you reach this level, you have achieved passive income in business. Marketing is what attracts new clients; good products is what retains your clients.

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Skills Insight of the Day #10 Job Opportunity Beware

During the pandemic, many people are looking for “work from home opportunities” and starting a “side business” as ways to make an income. Unfortunately, many MLM (multi-level marketing) and networking marketing companies right now are using these same terms to entice new recruits to join them.

Their selling point is appealing at a time when thousands of people are losing their jobs and people are being encouraged to stay at home.

For example, you may read about a sales opportunity that is commission based, with opportunities for advancement into management positions. You get to work at your own schedule and training is provided. Then you send in your resume, get invited for what you think is a job interview at an insurance company, and then you discover you’re being invited into an MLM.

It sounds like a dream to “be your own boss” and work at “your own schedule” and “no experience is necessary” because training “will be provided.” But what they don’t tell you is that many associates make it through training at these sales jobs, which aren’t paid, and barely make enough in commissions to replace a livable, full-time salary.

There are associates who do make five and six figure salaries from their commissions. They are the ones celebrated at company awards ceremonies. However, for every one of these superstars, there are ten trainees who graduate, make it out in the field selling a product such as insurance, and then fade away, never to be seen again at a team meeting.

If you’re actively job searching at the moment, be aware of these types of “job opportunities.” Understand the lingo, and answer the ad if you’re sure you can become one of those sales superstars.

5 Tips for an Effective Networking Meeting

If you’ve attended a networking event, you’ve likely connected with other business owners and entrepreneurs who later said, “Let’s meet over coffee.” Seems like a good idea, but what if you don’t know what to talk about at that follow up business meeting?

Whether it’s in person or at an online virtual meeting, you can make that follow up to the networking event a successful one by having clear objectives meeting again. Are you looking for opportunities and clients or just building connections?

Here are five tips to help you make meaningful connections and create effective business opportunities.

1 Be clear about who you are and what you do so the right people will connect

At every in person networking meeting, they say you should bring some business cards in case you make connections. It’s also highly effective if you have a succinct, 15 to 30 second description of yourself. When each person is given a chance to introduce themselves, you should prepare an intro that states your name, the name of your business, what you do, and restate your business name again.

If you are clear about who you are and what you do, you will help those in the audience decide if they want to work with you or if they know someone to connect with you. (More about this in tip 3.)

These days, with Zoom and virtual business meetings, having your contact information typed out and double checked for spelling and punctuation saves time. You can copy and paste your information in the chat. In some cases, they invite you to share your contact information in the comments of a Facebook post about the networking event.

2 Attend networking business meetings that attract the type of people you want to meet

Another tip for a successful networking meeting is to learn as much as you can about the event prior to attending. What industries or niches do the attendees represent? Are these attendees new to their career? Do they have a newly-minted business or have they been in business for a while?

These questions are important because if you command a high price tag, a new business may not have the means to hire you. Similarly, if you are just starting to build your skills and your client network, a five-year old business may prefer to hire someone with an established success record.

If you are in a marketing business specializing in marketing for tech companies with 50 or more employees, going to an event for small business owners may not be the best use of your time. To make the connections you’re looking for, do your research on the event prior to attending.

3 Understand that networking is not the same as building a purposeful connection

After attending a networking meeting, you might have a list of contacts to follow up on. You might also be approached by someone who wants to meet with you and learn more about your business over coffee (or virtual coffee these days). Be cautious about such an invitation.

If you’re a new business owner, freelancer, or entrepreneur, meeting someone for coffee and getting to know each other’s business sounds like a great idea. You’ll build up your contact list and even if you don’t do business together, you’ll know who to recommend for (insert their business product or service here).

However, if time is valuable to you, this type of meeting may not be worth your time for two main reasons. First, many MLM (multi-level marketing and network marketing) associates start their conversations this way. They pretend to be interested in what you do so that you meet with them one on one, and then they gradually work their way into pitching you to buy their products or join their team.

Second, general getting-to-know-you chats don’t usually lead into any business. You already introduced yourself and what you do at the networking event. If someone truly is interested in bringing you business, they will say something specific such as, “I heard you say you were looking for copywriting clients in the investing niche. My company is looking for more experienced copywriters. Let’s talk over coffee.” 

If the other party just wants to know your business more, they don’t have any specific business leads for you. It’s not even clear if they bothered to take notes on why they want to meet with you in the first place.

4 Research the person or business prior to the meeting

The person initiating a meeting with you might be upfront about their business. It’s also possible that they didn’t have time to tell you much about the details of their business (there is only so much you can fit into a group Zoom meeting, even with breakout rooms). If either is the case, do your own research.

For a new business, the person you are meeting is probably looking for a trade or a collaboration. They aren’t likely to be spending a lot on your products or services. For example, if you are photographer and they are looking for some products to be photographed. Depending on their priorities, it is possible they have set aside a decent budget for photography.  

There is always a possibility that the other party will have more to offer you in the business meeting than you expected. However, in most cases, most sole proprietors and small business owners are working with a limited budget. They are looking to meet with others who are in a similar situation and want to support each other to expand their business through a mutual trade.

5 Be clear about your expectations for the business meeting

Always be clear about your expectations prior to the meeting. Most in person or virtual meetings are about an hour. If the other person says they want to “chat and get to know you and what you do,” expect that you’ll be working on building a connection. The connection might lead somewhere, or it might not.

A more specific objective, such as working on details about whether you can help them build their website if they offer you graphic design and branding will more likely result in business being exchanged.

Summary

Networking is an important part of growing your business. A follow up meeting after attending a networking event will be more effective if you are clear about your goals for the business meeting, whether you just want to make a connection or work on a business deal.

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How to Invest In Pre-IPO Stock

Guest Blog by Sandy Gum, Insurance and Private Equity Advisor for Moneyshield

You may have been hearing about the terms IPO and pre-IPO and you`re wondering if you should invest in it. You might also be wondering if you can participate and if you should be aware of any risks. Let’s take a closer look at pre-IPOs and whether this type of investment is for you.

What is an IPO, pre-IPO, and how do you invest in pre-IPO?

An IPO, or initial public offering, is the process of offering a private company’s share to the public, allowing regular investors the opportunity to purchase a share in a new stock insurance.

A DPO, or direct public offering, on the other hand, is when the business sells shares directly to the public without the help of any intermediaries.

Both IPO and DPO methods allow a company to raise capital by listing shares on a public exchange. 

A pre-IPO is when a company issues their shares to the public before they become a stock company. It’s a bit more of a late-stage opportunity to buy a private share of a company. Whether you can buy these shares depends on the people who have the licence to sell them.

There are two types of markets. One is the public market where everyone can trade and it’s open for the public and for retail. The other market is the private market. All companies that first started in the private market are able to sell their shares through, for example, a lawyer doing the transactions.

Once a company becomes an initial public offering (new shares are created, underwritten and sold to the public) or direct public offering (no new shares are created and only existing, outstanding shares are sold with no underwriters involved), it will be on the platform where it is issuing shares to the public market. This allows everyone the chance to participate in the companies that they believe in. There will be future returns in this company in terms of growth and you will have the return.

How can you qualify for a pre-IPO?

When it comes to the private market, there are two types of people. Some private market investments are open to retail investors and some open only to accredited investors.

Pre-IPO is open mostly for accredited investors. Accredited investors are those with an individual income of $200K per year, or a household income of $300K per year. Another qualification is financial assets that total $1 million or a net worth of $5 million. If you qualify through one of these factors, then you are eligible for a pre-IPO.

What are some benefits to buying a pre-IPO?

There are a lot of benefits but the greatest benefit to participating in a pre-IPO is you can buy these shares at a good, discounted rate, typically more than 30 to 40 percent. By the time a share becomes an IPO/DPO, it is usually double, or at least a good 30 to 40 percent growth from what you initially bought it for.

If you’ve been watching the stock market, you may have heard of startup companies, especially in the tech sector, that went on IPO/DPO in 2020.

Two companies, Palantir and AirBNB, went public offering successfully in 2020. Some people missed it because they didn’t qualify. Palantir is currently trading between $25 to $26 per share in the public sector. At first, Palantir was trading in the private sector at $4 to $6 a share. Now imagine if you had participated in the pre-IPO. You would have gotten a huge discount at $4 a share compared to now. It’s a huge jump in comparison.

AirBNB was supposed to be an IPO price of $55 to $60 a share. The pre-IPO price was supposed to be $45 to $50 a share. It is currently trading at $160 to $170 a share. You can see a huge difference! Now at the time of pre-IPO, what retail investors need to understand is on the day of the IPO or DPO, you don’t necessarily get the price published on the news. At the time of the IPO or DPO, these prices are prioritized to financial institutions and institutional investors. 

If the news says it will be issued at $65 a share, pre-IPO could be $10 or $20 less than that, depending on the situation. During the interval that they allow you to get in, it will probably jump to 100. This is the pattern that I have noticed for Palantir, AirBNB, and other companies.

Who is best suited for buying these IPOs?

These IPOs/DPOs are suitable for those with a strong knowledge in investments, an understanding of investment risk, and a portfolio diversified in different sectors, whether in the private or public sectors. The pre-IPO investments will only be one part of their portfolio.

Who do you contact to buy pre-IPO?

Depending on where you come from, there are different regulations in the USA. You are able to trade on some platforms, but you do need the accredited investor status.

In Canada there isn’t yet a platform to be able to trade pre-IPO at this point. You need to look for an advisor who is licenced to be able to promote or offer private markets. These types of advisors may have access to pre-IPO. You will need to double check with the advisor because each firm has a different relationship with the companies that buy pre-IPOs. Not all private market advisors have access to pre-IPOs.

What are the risks of participating in a pre-IPO?

The risks in private equity, particularly in pre-IPO, is that these investments are illiquid, as opposed to stocks that you can sell off or buy pretty much immediately. If the volume is high, you can exit out the next second and have cash in hand. Compared to the private market, it takes time to trade it off or it could be completely illiquid at this point.

The main risk will be the time. For example, for the past few years we have been raising capital for AirBNB and only in 2020 did it become IPO.

Consider the time it takes for a company to go public and be publicly traded. There could be a delay. You could be potentially running a risk that the company never becomes a stock company. It’s also hard for this to become a liquid investment. If the company doesn’t become public, you will have to keep your cash inside the company or somehow privately sell it yourself.

For example, SpaceX, which is not going IPO anytime, is privately traded. You can buy it, but it’s unknown when it will go public. However, if you like Elon Musk and you want to participate in SpaceX, and you don’t care how long you will have to wait to buy it, then yes, you can trade and sell it at a price that you agree on with another party. 

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Should You Go to College If You Can’t Get a Job

Ever since your earliest days at school, you’ve been told to attend college after high school graduation. You were told it will land you a great job, but the path to a college degree is expensive. Exact figures vary, but it can be over $5000 a year, and the cost is only going to rise!

Is a college degree worth it, however? Should you go to college if you can’t get a job after graduation? Let’s take a closer look at whether a college degree is worth it and if it’s possible to get a high paying income with only a high school diploma.

A College Degree Teaches You Valuable Soft Skills

One of the strongest reasons to go to college is the valuable soft skills you will learn. Soft skills are the communication skills and social skills that are a part of a person’s social intelligence and emotional intelligence.

Examples of soft skills include critical thinking, organization, communication, leadership, creativity, work ethic, and time management. Employers advertise what hard skills they want from a prospective employee, such as reading, writing, math, and computer skills, but they also consider your soft skills.

When you attend college, you coordinate deadlines, work on group projects, and complete written assignments. All of these aspects of college involve working on your verbal and written communication skills, and critical thinking and problem-solving skills.

Your time in college is also an opportunity to make connections with other people who may even work in the same industry someday. These connections may help you to find unadvertised job opportunities in their companies.

Depending on the source, from 15% and as high as 30% of jobs are advertised. That means at least 70% of jobs are in the hidden job market. Your connections could help you to find jobs that you didn’t know existed. These people may even become your job references.

Higher Income and Employment Stability

Another reason to go to college is that statistics show those with a college degree have a higher income earning potential. Those with college and graduate degrees have lower rates of unemployment.

In 2019, those with a doctorate degree had a 1.1% unemployment rate, compared to a 5.4% unemployment rate for those holding less than a high school diploma.

The same study about full-time wage earners found that those who had a bachelor’s degree made a median of $1248 in weekly earnings compared to a median of $746 in weekly earnings for someone with a high school diploma.

Having a college degree is not a guarantee that you will get a job, but you are statistically more likely to be employed than someone without one.

A College Degree is Required for Some Careers

Going to college is a necessity if you want a career that requires a degree. For example, a post secondary education is necessary if you want to be a doctor or lawyer. Also, a degree may be required for jobs in a specific field of expertise. In these cases, your choice of career has already made the college decision for you.

Generally, a bachelor’s degree is expected for most entry level jobs. It may even be the minimum qualification to apply for one. For some jobs advertised, the degree may not seem relevant to the skills required in the job description, but it is the minimum level of education.

A college degree also helps with career advancement, particularly if you are looking for a role in management.

A High Income Can be Achieved Without a College Degree

If you can’t get a job and you don’t have a college degree (and you aren’t interested in getting one), you have another option.

This path involves a lot of ambition and thinking outside of the box. You may need to take risks to try something most people won’t do.

Your income will be similar to a roller coaster ride, with no guarantees of stability, but if you persist and you’re successful, your income will have no limits. One path is entrepreneurship. You’re selling a product or service that people want. Another path is developing your knowledge or skills so you are highly successful or highly in demand, such as excelling in investments or your talent.

Bill Gates, Mark Zuckerberg, Li Ka-Shing, Richard Branson, Jay-Z, Catherine Zeta-Jones, and Uma Thurman are just a few entrepreneurs, musicians, and actors who either dropped out of high school or college and became household names.

Achieving their level of success is not easy. You’ll need to be a self starter and invest in your own education and skills. It also helps to have a good mentor. Many entrepreneurs either didn’t get a college degree or built a successful business in spite of their college degree.

Summary

Going to college has its advantages. You can go to college to work on your soft skills and build connections that will be valuable later in life. Another reason to go to college is to get a degree as a first step to a career. A degree generally increases your income level and chance of employment, but it doesn’t guarantee employment. If you’re willing to work hard and develop a high income skillset, you can be financially successful without a college degree.

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