ETR: Shoestring Businesses

Saturday - October 10, 2009

"Jack," one of the regulars at Joe's cigar bar, found out I was in the info-publishing business. He bought me a cigar and told me he intended to go into it too. He said he had put together an "amazing" business plan. And that he was now looking for "venture capital." I congratulated Jack on selecting a great industry. Information products are easy to produce, cheap to store and deliver, and have high profit margins. And the market is booming. But why, I asked him, was he looking for funding? Why not build the business on a shoestring? The thought never occurred to him. So I introduced him to my concept of Chicken Entrepreneurship. "Keep your day job," I told him. (He's a research analyst for a local brokerage.) "Work at night and on weekends. Do some Internet research to discover what niche you want to be in. Find out if others are making money in that niche. In other words, find out if there's a market for doing what you want to do. "If there is, develop an information product in your niche. Write some copy. Sell it online. If it sells well, move forward. If it doesn't, go back to the drawing board. Once you find a winning product-promotion combination, money will start coming in. First a little. Then more and more every month. When sales are averaging about $10,000 a month, then and only then should you even consider outside funding." At this point, he will have a working model to build on (without having wasted a small fortune in the process). And now he can use outside capital to safely ramp up his business -- with more products, a better website, better equipment (only if he needs it), and a few employees. How fast he moves would partly depend on how much money he raises. But the most important criterion would have to be profitability. Staying profitable is key during this -- the second stage -- of entrepreneurial growth. The biggest problem with getting outside funding too early is that it allows you to make sloppy marketing decisions. It's easy to invest money on a mediocre idea if the money isn't coming from your own bank account. Entrepreneurs can't afford to invest in mediocre ideas. Working from a personal, shoestring budget is the way I like to build a business. And that's true even now when I have access to all the money I could ever need. Jack liked my idea of Chicken Entrepreneurship. He asked me how I thought he should get started with information publishing. I told him the best program I know of is ETR's own Internet Money Club: Independent Learner Edition. It's specifically designed for beginners like Jack who don't have a ton of money and experience. And it's comprehensive. Jack will learn everything he needs -- from website design to e-mail list building to search engine optimization. It's all in the Internet Money Club: Independent Learner Edition. Melanoma, the kind of skin cancer that kills, is on the rise. So you'd better visit your dermatologist ASAP. At least, that's the opinion of many people in the cancer business -- a business that makes billions of dollars a year by detecting and treating skin cancers. Advice like this scares people. And stimulates them to spend extra money on medical care. If that money were keeping people alive, I'd have no gripe. But there is a flaw in the logic behind it that you need to be aware of. Let me explain. A recent study, published in the September issue of the British Journal of Dermatology, examined 3,971 cases of skin cancer. Based on their data, the researchers determined that the incidence of potentially deadly melanoma had increased 48 percent from 1991 to 2004. A similar study, this one from the Centers for Disease Control and Prevention, reported an increase of 44 percent. But in studying the data, Dr. Nick Levell at Norwich University in the UK recognized an error made by both studies: The increases they identified were in early-stage melanoma. There were no significant increases in later-stage melanoma. Does that matter? Yes, indeed. Here's why. In the early stages, it is difficult to distinguish between a malignant lesion and a benign mole. Also, some early-stage lesions grow very, very slowly. By testing people earlier, doctors are detecting more of these moles and slow-growth lesions. But many of them are not and never will be fatal. So when the researchers concluded that the number of deadly melanoma cases was on the rise, they were wrong. What is happening here is the same thing that has happened with other forms of cancer. Doctors have become more adept at "early diagnosis." As a result, the incidence of reported cases goes up. And that, as I said, is great for people in the cancer business --dermatologists, pharmaceutical companies, surgeons, and hospitals. At the same time, the "survival" rate after a diagnosis of early-stage cancer naturally goes way up. And the industry uses that statistic to sell more chemicals, radiation, and surgery -- without proof that it does any good. Just because someone has an impressive medical degree doesn't mean you should pay attention to what they say. Dr. Julide Celebi, an associate professor of dermatology at Columbia, told the press that the afore-mentioned studies signal a real increase in deadly melanoma that is the result of "environmental exposure" -- specifically, exposure to the sun. But Dr. Levell disagreed. "Squamus and basal cell carcinomas are no doubt caused by sunlight," he said. "And those cancers [which are easily treatable and rarely fatal] are concentrated on the face and neck. "But the diagnoses of melanoma in the registry were mostly on the back, trunk, and limbs, areas not consistently exposed to the sun. This means that exposure to sunlight cannot explain the increased number of lesions reported as malignant." Just imagine if you were one of Dr. Celebi's patients. You'd believe that exposure to the sun causes melanoma. You'd be slathering on sunblock and spending lots of money to have perfectly innocent moles dug out of your face and arms. In my jaundiced view, the whole thing is a scam. The truth is that sunlight actually helps prevent melanoma. And sunblock might increase your chances of getting skin cancer because most have three or four active carcinogenic ingredients, some of which are activated by the sun. To find out more about one of the most widespread medical frauds in our generation -- and what you can do about it -- check out the premier book on the subject by Dr. Al Sears and ETR's own Jon Herring. It's called Your Best Health Under the Sun. Jay White is an e-mail and autoresponder specialist who writes copy for some of the biggest names in the online marketing world. They include Rich Schefren, Jeff Walker, Stephen Pierce, Alex Mandossian, and many more. Recently, Jay revealed his "plug-and-play e-mail copywriting system." He tells me it is the same system that has brought in millions of dollars for his A-list clients. If you have an online marketing business (or are thinking of starting one), you should check it out. Our own Internet marketing expert, Edwin Huertas, says that Jay's system is a "quick and easy way to craft killer e-mails that get opened, get read, and get click-thrus." For more information, go HERE now! The five primary asset classes are stocks, bonds, cash, real estate, and commodities. You should have a well-diversified portfolio that includes all five of these asset classes. If you're older, you need more bonds and cash for the income and safety. If you're younger, you need more stocks and real estate. You have more time and can afford to speculate.  And no matter how old you are, you should own some commodities. These are hard assets that can protect your wealth as the dollar is devalued by the government printing press. You should start with physical gold and silver, in your possession. And there should also be an energy component to your commodities holdings. I don't see the economy recovering quite yet. But when it does, there will be a significant increase in the demand for energy - particularly oil. This will cut into the weakening supplies and drive prices up. I don't try to predict the markets. But I do my best to take part in the biggest long-term trends. The ultimate demise of the dollar and rising demand for energy are two trends you can bank on. The corporations that bring oil to the markets are finding it in harder to extract. And they are having to go farther afield to find it. This increases production costs. And it results in even higher oil prices. IDE's Ted Peroulakis follows these companies closely. And he's delivered sizable gains as a result of those efforts. In the last few months Ted has recommended four trades in the energy patch that have achieved 100% returns, or higher. He believes the deepwater oil drilling outfits will continue to be quite busy for the foreseeable future. The top company on his radar has the capability to drill in incredibly deep ocean waters, and they are booked solid for more than a year. So they are largely immune to the economic downturn. Ted just recommended a set of call options on this stock. And they're still considered a "Buy." If you're interested in intelligent speculations on both the long and short side of the market, I encourage you to check out Ted's service, Options Power Trader. What Have You Done for Me Lately? Reader J.C.T. was happy to skim through ETR, until now... "I receive such a horrendous avalanche of e-mail that although I don't want to unsubscribe to most of what I receive (pack rat), I also do not have the time to read it all. "I had started glossing over ETR, not reading it very often or very thoroughly. Today's issue has made me rethink this, though... because ETR IS JUST FAR TOO GOOD. Today's ETR was just the right length (not excessively long). I will make the time to read something of this quality and this length -- definitely. "ETR's consistent content and commentary are just outstanding. As I said, I am going to make the time to read ETR in the future. Michael Masterson is a blooming, frickin' genius! How can one man say so much... so often... and still be so relevant, meaningful, and substantive? Quite a feat." [Ed. Note: Michael Masterson welcomes your questions and comments. Send him a message at AskMichael@ETRFeedback.com.]

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