The 4-Hour Workweek: Chapter Summary (Chapter 9: Income Autopilot I)
The purpose of Chapters 9, 10, and 11 is to set up what Ferriss calls the “muse,” a fully-automated “cash cow” that needs minimal maintenance and brings in enough to cover whatever goals you have set for yourself—your dreamlining TMI/TDI. Having already established that services, with rare exceptions, are too unwieldy, Ferriss uses Chapter 9 to focus on first choosing the right product for the “muse.” The real-life examples that he gives at the beginning of the chapter are worth reading simply because they give us valuable hints about what to do and what not to do. The nitty-gritty of the chapter is as follows:
Finding Your Product
1. Find a niche market.
· Find your market before deciding on your product. As Ferriss says, it is easier to supply a demand than to create it.
· Make sure your market is small and narrow enough. According to Ferriss, it is more profitable to be a big fish in a small pond than the other way around. It’s also easier to advertise to your buyers because you will be honing in on specific interests and needs.
Here are some of his main recommendations for deciding on your target group and product:
· Be a member of your target group so that you know firsthand what they want and need. Examine your life in detail and then try to connect it to a niche group.
· Of those groups, choose a small number that have their own trade or interest-specific magazines with at least 15,000 readers.
· Call the magazines to find out advertising prices, which should be no more that $5000 for a full page ad.
2. Brainstorm Products
Ferriss is very specific about how to go about this and what parameters the product should adhere to. Right now, the goal is to brainstorm products without spending anything on product creation. The guidelines he recommends are:
· A one-line sentence or phrase to capture the main idea
· A cost of between $50 to $200. Ferriss recommends higher-end pricing for:
§ less product management due to lower quantities
§ less customer management—fewer complaints, returns, and hassles
§ higher profit margins
· No more than a 3- to 4-week, and preferably a 1- to 2-week, manufacturing lead time. Ferriss gives very specific advice on how to set this up, such as how to contact the appropriate contract manufacturers and what questions to ask about pricing.
· An online FAQ explaining what the product is all about so that you can forget about it without “spending a fortune on call center operators.”
Ferriss warns, though, that if the price is too high, it works against the concept of a low-maintenance business because customers then feel the need to speak to a live person.
Three Approaches to Products
There are three basic ways to deal with the product issue:
· Re-selling – This is the fastest way but has the least potential because it has the greatest competition.
· Licensing – According to Ferriss, though it can be profitable, licensing carries its own set of pitfalls if you’re new at it and is a science in itself.
· Creation – Contrary to what most might think, Ferriss considers this the “least complicated and most profitable option open to most people.” He does not, however, recommended “ingestibles” even though he started with them, mostly because they raise too many questions for people. Instead, he recommends information products as a viable and potentially profitable alternative.
This, of course, brings up the subject of being an expert, which Ferriss addresses next. As with choosing products, there are several ways of developing “expert” status quickly. In short, they are:
· Content creation
· Repurposing content from the public domain
· Licensing content or paying someone else to create it
For those who go with either the first or second choice, Ferriss presents a series of questions and recommendations for brainstorming information products, such as pinpointing your personal skills, interests, and expertise or interviewing other experts. He also recommends using a variety of formats that match the pricing parameters given above, such two CDs.
For those still concerned about their lack of expertise, Ferriss gives crash course advice on how to accrue the necessary credibility in just four weeks. The main points he lists are:
· joining appropriate trade organizations
· reading the three bestselling books
· offering to give introductory classes at the nearest university and nearby companies
· offering to write articles for trade magazines
· joining ProfNet, used by professional journalists to find experts to interview.
The chapter ends, as usual, with the Questions and Actions sections (in this case, a reminder to do as the chapter says), a Comfort Challenge (finding Yoda), the Lifestyle Design case studies, and the always highly useful Tools and Tricks section. The focus for most of these sections is the same as the rest of the chapter, and the book is worth getting for the detailed Tools and Tricks sections alone—as well as for the humor.