Arbitrage: Get Paid in Dollars, Live on Rupees
Money
Are You Taking Advantage of the Global Economy?
Any seasoned traveler can stretch their dollar (or Pound, or Euro). Places such as Southeast Asia, India and South America have been backpacker havens for decades, and will continue so long as the price of a private hotel room is roughly equivalent to a cappuccino in developed countries.
The notion of arbitrage- taking advantage of price differences- is as old and powerful as the laws of supply and demand.
However, most people fail to use arbitrage to its full potential. They spend years slaving away… sorry, saving away enough money to take their dream vacation to Thailand, only to realize those two weeks abroad would be a lot cheaper if they didn’t have the mortgage and car payments back home. I should know; I used to work 50 weeks a year in a town I hated in order for my wife and I to take two weeks and visit somewhere else.
The key phrase here is “used to.”
About a year ago we realized that this approach to a work life balance was in fact a false economy. We started to ask ourselves what we really wanted for ourselves, and found traveling around the world at the top of the list (as it is for many people).
Since that fateful day, we’ve gone into business for ourselves, on our own terms. While many people chase fame and fortune, we opted for the freedom of time and location. Though we didn’t realize it at the time, it became apparent that the ability to work whenever and where ever we wanted allowed us to travel the world at a slower pace, and lead a higher quality of life than we ever could have imagined back in the states. It’s much easier to reach your financial goals when you get paid in dollars and live on rupees…
This, my friends, is the true power of arbitrage.
Simple… But Not Easy
Enclosed is the roadmap for traveling the world with positive cash flow. It’s really a simple process, though certainly not easy. Distractions lie in wait at every turn, self-doubt creeps in, and loved ones may find it difficult to understand not only what you are doing, but why you are doing it. Still, if you have the drive and determination, one day you’ll find yourself in a foreign land and realize that you can go anywhere and do whatever you want, without risking financial security.
The Blueprint For Online Success: T.R.I.P.
I’ve spelled-out the process we will be following using a simple four letter acronym: TRIP, which stands for:
Think
Research
Implement
Perpetuate
Since online businesses are run by a wide variety of personalities, I’ve chosen to include two very different characters, Wynand and Roark, to illustrate how you can achieve the same ends using different means.
Think
Before working on a business model, ask yourself the following questions:
What do I like to do?
What am I interested in?
Do I see myself burning out on this subject?
It is imperative to base your business on a topic you’re interested in. I cannot stress this enough; your desire is the fuel upon which the engine of your business runs on. It’s really that simple. I’ve known several people who have built businesses simply because they thought it would be profitable… a few were, but the vast majority died on the vine when their creators lost interest (besides, if you’re building a business just for the money, why did you leave your job in the first place?).
Let’s take a look at our two aspiring escape artists in more detail.
Wynand is a born businessman willing to take a financial risk in hopes of greater profit. After asking himself the previous three questions, he decides to create an information product showing people how to make money in the seminar business (having taught numerous seminars himself, he has both the expertise and passion needed).
Roark has never been interested in business, and can’t stand the idea of advertising, marketing and sales. However, he is a talented writer with an interest in conducting seminars as well. Rather than creating a product and selling it, Roark decides to create a website providing information on conducting seminars.
As you can see, the business model is predicated upon personality. If you’re interested in sales, then by all means sell something! If you were risk-averse, and want to create a revenue stream using as little money as possible, then create something and give it away for free. Provided people are interested, you can always charge advertising on your site, sell your own merchandise, or recommend other products and receive a commission on each sale.
Research: The Law of Demand and Supply
If you’ve ever gone fishing, you know how important it is to find the right fishing hole. After all, even bass masters can’t catch fish in an empty pond. The same principle applies to your business; most people create a product and then go off in search of a market to sell it to. Experienced marketers choose to follow the law of demand and supply, where they search for a market that is underserved and then create a product to fill the demand.
Wynand and Roark research their market using a tool called Wordtracker, which records the number of times per day a specific keyword is searched for online. Wynand starts with the phrases “seminar business,” “get paid for speaking” and “make money with seminars.” Using Wordtracker, Wynand creates a list containing hundreds of keywords that he feels represents his market. After adding up the daily search totals for each keyword, Wynand concludes that thousands of people are searching for information on making money and seminars every day. Now that he is determined there is a sufficient market size, it’s time to assess the competition.
Wynand chooses the 20 to 30 most popular phrases, and searches for them on Google. He makes sure to note how many paid advertisers there are for each term (paid advertisers are on the top and right-hand sides of Google’s search results, under the “sponsored links” heading). This will be his direct competition.
You can learn all about Google’s advertising program, known as Adwords, at www.adwords.google.com.
Roark uses Wordtracker as well, but in an entirely different way. Whereas Wynand searches for the most popular terms and pays to advertise with Adwords (known as Pay-Per-Click), Roark decides he doesn’t want to pay for advertising, and sets out to receive free traffic from the search engines themselves (known as search engine optimization).
So if Roark is going after free traffic, why in the world would Wynand pay for it? The answer lies in the business model: Wynand’s website is nothing more than a sales letter and an order form. Since search engines love large sites loaded with information, it will be very difficult for Wynand to obtain any traffic without paying for it.
Also, search engine optimization can take months if not years to see results, whereas Pay-Per-Click brings visitors to a website within a matter of minutes. Remember Wynand is interested in building a revenue stream as quickly as possible, and is more interested in the sales and marketing aspects. Roark, on the other hand, is a talented writer, and is more than happy to create a huge authority site that will attract the search engines.
Implement (Option #1: Wynand)
Once you’ve determined you can profitably enter into a niche market, it’s time to set your plans in motion. Wynand creates a sales page highlighting his experience in the seminar industry, and includes testimonials from people who have attended his seminars in the past. He includes several benefits in his sales letter, a strong call to action such as “Buy Now and Receive a Free E-book on the Highest Paying Seminar Courses!” and offers a money-back guarantee to remove any risk a prospect might have.
Wynand purchases dictation software called Dragon Naturally Speaking, which allows him to speak directly into a microphone and dictate into a Word document. This step alone allows him to write his 75 page e-book in a quarter of the time. He then purchases an e-book cover for his product (you can also have this done for free at http://www.ebookcovercreator.com/, though you get what you pay for).
With the sales letter and product picture in place, he then opens a PayPal account in order to accept payments from customers. The fees for this are very reasonable: free installation and generally 2- 3% commission for each product sold. Refunds are easily issued with a few clicks.
In addition to the sales page, Wynand creates another page offering a free report containing his 10 best tips for making money in the seminar business. He signs up an account with an auto responder service such as Aweber, which will automatically send the prospect this free report when they enter their contact information and click submit. This is an important step for two reasons: firstly, it’s easier to make a sale after you’ve provided value, and secondly, you now have an ever-increasing list of leads to follow up with indefinitely. This page, known as a “landing” or “opt-in” page, will be the first page prospects arrive on. Once they submit their contact information, they are redirected to the sales page.
The process looks like this:
Prospect clicks on Adwords ad > Prospect signs up for free report > Prospect arrives on the sales page > Prosepect buys now or later after reading the report > Prospect is sent the ebook via email.
Delivery of the product can be automated with a service such as Ejunkie for as little as five dollars per month.
Wynand creates an Adwords campaign (much too broad a subject to discuss here) and drives traffic to his site. At this point, the system is fully automated, and Wynand monitors his results to determine which ads/keywords are profitable. He deletes the rest and sets the system to run itself.
Implement (Option #2: Roark)
Roark is averse to spending any money at all, so he declines to purchase the dictation software. He does pay for Wordtracker, and searches for keywords that are searched for at least ten times a day, with less than 1,000 competing sites. He also reads Google’s guide to Search Engine Optimization (www.google.com/webmasters/docs/search-engine-optimization-starter-guide.pdf) and makes sure his website is properly optimized (the guide explains this is in great detail).
For each keyword, Roark writes a 400-600 word article, and includes the keyword in the title, the intro paragraph and the conclusion (but no more than that!). For example, Roark writes an article around “best locations for seminars” and calls it “The Best Locations For Seminars: Where They Are And How To Rent Them For Cheap.”
He creates a website using Dreamweaver (or nvu.com or XSitePro, it’s really up to you) and writes ten articles a day, one for each keyword. This takes him about six hours a day. Once the articles are uploaded to his site, Roark rewrites the articles and submits them to article directories such as Go Articles and Ezine Articles, and includes a link back to his site.
At first, he receives traffic from people reading the articles he submitted and clicking over to his site. Over time, his search engine results will improve as he continues to add new content and build more backlinks to his site.
Why do backlinks help? In the short term, you receive more traffic from people clicking on those links. While this is certainly a benefit, the real value of a backlink is that it helps you move up in the search engines. Backlinks are like votes for your site, and search engines operate on the theory that if thousands of sites link to your site, then it must be useful. Therefore, your pages will rank higher for the keywords you’ve optimized for.
Rather than sell a product like Wynand, Roarks charges advertising on his growing, content-rich site. At first, he uses Google Adsense due to its simplicity. He signs up for free, chooses the design format, and adds the code Google provides to his website. Now, when someone visits his page on the best locations for seminars, they’ll see ads for seminar businesses, seminar locations, and people teaching others how to make money giving seminars (such as Wynand). If they click on an ad, Roark gets paid.
Roark also visits Clickbank and chooses several products he feels would be valuable to his visitors. He creates affiliate links to them (which takes about seven seconds to do) and adds them in his articles. Now, when someone clicks on this link and purchases the product, Roark receives a commission.
Keep in mind Wynand could add his product to Clickbank for people like Roark to review on their website. In the end, with a very similar market, both have created completely different business models around them.
In summary, Wynand’s model is fast, costly, and provides for a quick buck. Roark’s method is slow, almost free, and practically risk-free.
I’ve used both in the past, with varying degrees of success. In the end, it boils down to your risk tolerance and the time you’re willing to spend building the business model.
Funding Assistance
Perpetuate
The beauty of both these business models lie in their simplicity. They are both systems that run themselves. While Roark may have to work hard on his site for six to eight months, he will eventually follow Wynand and enjoy passive income for years to come.
However, if you’re smart, you wouldn’t let the business be. You would outsource projects committed to continue growing the business. Wynand could put an ad on Craigslist looking for Pay-Per-Click experts to further refine his campaign. He could also hire a search engine optimization (SEO) consultant to help him get free traffic like Roark.
Roark could continue to choose keywords with Wordtracker (which takes perhaps an hour a week) and outsource the article writing. This way, his site continues to grow (along with his earnings) with limited output on his part.
Minimal Time, Minimal Resources
Working online while living overseas allows you to take full advantage of arbitrage, and the effects are incredible. Using nothing more than a laptop, you can build either of the business models outlined above, and set it to run into perpetuity.
Here are a list of additional resources that will help you make the leap:
Nvu: Free web authoring tool
Cnet: Search for digital products you can repackage and sell
Review Me: Get your product reviewed
Google Analytics: Track your visitors details (how they found your site, how long they stay, number of pages viewed, and much more)
Quantcast: add a snippet of code to your homepage, and gather demographic data about your visitors
EzineArticles: submit articles with links to your website
Survey Monkey: create surveys and gain deeper insights into your market
Google Adwords: bid on keywords to get your website noticed today
Google Adsense: Offer relevant advertising on your content rich site
Clickbank: Find products to recommend, or submit your own product
Wordtracker: The definitive resource for keyword research
Working In Paradise Is Still Work… But It’s Still Paradise!
Trust me, fortunes are not made overnight. However, it’s easier to make a fortune when earning thousands of dollars while spending thousands of rupees. It’s also a great way to add excitement to your life. Here’s a quick real life example for my wife and I…
Per month expenses living in Santa Clara, California
Rent (all included) : $1455
Gas: $120
Car insurance: $35
Cell phones: $100
Groceries: $450 (including the occasional meal out)
Total: $2160
Per month traveling through Southeast Asia: $1500
Not only did we free up our location, we also reduced our monthly expenses by over $600. We also traded a suburban apartment for bungalows on the beach, go snorkeling several times a week, and continue to have a lifestyle that is vastly superior to the one we were living before.
All thanks to the power of arbitrage.
