I talked about the subject of jumping in the deep end and how immersing yourself enables you to understand a product or service quickly and easily compared to merely trying to understand it.

I did briefly mention my attempt to explain Twitter and my consequent failure. I just wanted to talk a little bit more about Twitter and the effect immersing myself in it has had. I’m not talking about the effect it has had on a profitable level or whether it’s an effective tool or not, I am yet to determine this. I am talking about the effect it has had which is more subtle than direct results however much more significant than that too.

After I began using Twitter I became much more perceptive to any mention of Twitter. Previously I would not concern myself with articles or stories about Twitter so therefore I would barely notice them. As my knowledge improved my awareness increased exponentially and now I see information about Twitter everywhere! How can you miss it? It’s growing at a yearly rate of 1382%! I can’t browse any blog or news site without seeing the mention of Twitter. This was never the case previously as I subconsciously tuned out whenever Twitter was mentioned and it remained relatively unnoticed.

What does this mean? Who cares? Why should you spend 2 minutes reading such a rubbish insight? Well I want to point out that this article is not about Twitter. It’s about knowledge and understanding and the paths and opportunities they can open. I have used Twitter as a metaphor to anything that you have neglected to understand. The more knowledge you possess the more you will become consciously aware and the more opportunities will come your way. Try new things, learn new concepts and open new doors. You never know what you might be missing.

(oh and by the way feel free to ad me on Twitter: http://twitter.com/bakhos)

Exactly what does an online business cycle look like? Traditional bricks and mortar businesses are very much subject to traditional forces such as that outlined in a standard business cycle. You start off, a few people buy your product. These people like your product tell their friends and also come back for some more. You make money, spend it on more promotion, getting more quality customers and your business grows. Simple, straightforward and organic. More growth will occur when people start to recognise you with your goodwill improving considerably the longer you have been around and the more happy people you have served. You serve a local area and this level of goodwill and familiarity are key factors in helping you grow a successful business.

Then came the Internet. For an online business I take the view that there are no set rules and online businesses can’t simply be defined by the rules of yesteryear.You are no longer local. Your goodwill can simply come in the form of a well designed website. You have moved into the world of anonymity.

For example if you were to set up a business selling t-shirts online you may begin making sales immediately through online advertising such as Google Adwords to drive traffic to your site. Now here is the point I’m interested in. People coming to your site have no idea you opened yesterday. They have no idea who bought from you previously or whether they were happy or not. All they can see is your site, your product and a need that can be met if they purchase from you. What if they love your product? Then their testimonial is displayed in large font in your sales letter. What if they don’t like your product? Well then you have one unhappy, anonymous customer. In any traditional business environment, an unhappy customer spreading the word would have dealt a major blow. In the online world, its (usually) relatively insignificant. You have elasticity and an element of customer satisfaction lee-way. This is the extraordinary power of anonymity.

By adopting an online business model, a marketer and entrepreneur can effectively skip a very large portion of the traditional business cycle instantly. It is the catalyst for the multitude of online scams out there as well the many online success stories. It gives people the advantage of starting out with very little yet provide a vehicle of growth for great returns. It allows first time business people to make mistakes and learn without the risk of putting their business into disrepute.

But there is a catch. I believe in the power of anonymity however only to an extent. Used to weed out any flaws in your offering it can be useful especially when adopting a “fire ready aim” approach, not uncommon when your trying to get into a particular market segment quickly. However it can never be used as a unique proposition in itself. I liken it to a “business muzzle”. It does not foster viral promotion, it does not cause excitement and its suffocating if it cloaks your business for too long. A company hiding under anonymity will never provide as much value as a company that is transparent. Anonymous entities will always succumb to competition and alternatives. Interestingly, as I was writing this blog post I received a blog update from Seth Godin which is related to this very topic. I strongly recommend a read of this post as it brings to light some pitfalls of anonymity.

Your online business may well take advantage of the power of anonymity. However if it is used as a means to drive the business forward then it will form a restrictive and negative force. It’s your business muzzle. It’s there to effectively refine the rough edges rather than act as a profound mechanism for online growth.

Just quickly, have you ever tried to explain to someone the concept of Facebook? Sound like an easy task? Well my challenge to you is to visit anyone over the age of 70 and try to explain the concept. Reddit? Digg? Twitter? (the inspiration behind this short post after trying to explain the ‘Twitter’ concept… and failed)

I remember my first attempt to understand blogging. It took me an age to figure out what a Blog actually was. Was it a website? A type of small blob like widget? What’s a widget? No matter how many times someone tried to explain the ‘blog’ concept, it never really registered. That was until I downloaded Wordpress and set one up. It became clear and wasn’t as confusing as my head made it out to be. I swam.

Setting up a company is really difficult… until you actually do it. It’s simply a piece of paper stating that you are officially a big scary company. Not much more than that. I don’t feel so scary.

There are many things in life and in business which make very little sense until you take the plunge and jump in. I am a strong believer that if you don’t jump in the deep end, you’ll never really learn how to swim. Why? Because you will play it too safe. Force yourself to learn and you will.

People fear failure and that’s perfectly understandable. What stops people going into business for themselves? Most commonly, it’s the risk of not having a steady income which to them is a bi-product of failing. So it’s safe to assume that there is always an element of fear of failure which turns people off chasing their dream.

I like failure and I get excited about big flops. I love set backs and obstacles that present themselves and really enjoy losing a lot of money.

Well the previous sentence may not be entirely true but there is an element of truth to it. Every entrepreneur tackles a certain business or project with the aim of succeeding and inevitably if you don’t succeed you may get a bit bummed out. However what you also must (try to) remember is that to every action there is an equal and opposite reaction (Newton’s law). Even better, when applied to the business world it should read “for every action there is an equal or greater reaction”. If you take one step backwards it will usually be superseded by 1, possibly 2 or 3 steps forward. The key is to embrace this powerful concept. When something goes wrong sit back and think about what this failure is trying to tell you. Remember that with your failure there will come a greater benefit in the future.

This brings me to my next question: why would you want small failures? What’s the point of thinking small and losing small? The key is to think BIG. Put yourself out there and if your going to fail, make sure it is BIG. With BIG (preferably Public!) failures will come even BIGGER rewards. The best businessmen understand how to think big and many along the way have also lost big. During these tough times they have been able to bounce back, not just breaking even but launching themselves into their next level of business success.

The problem with small successes and small failures is that they keep you complacent. Limiting yourself to making small gains is the catalyst to settling with what you have. You have not lost much so who cares? Big failures force you to learn, understand and analyse to ensuring your next move is wiser, better and more effective. If your stuck with insignificant small gains and small losses then that will define your business life and it will be just that, insignificant. No one will really notice your losses and no one is going to notice your gains. I know your not this type of person, why else would you be reading this?

The aim here is not to get you to go out and try to fail or lose a lot of money but rather to help you understand that failing is something that should be embraced rather than frowned upon. It makes you stronger and wiser. Take sport as a great example. If you play a sport the only way you’ll improve is to play people better than you and who will beat you. Your failures and losses will point out the areas where you need to improve so you can come back better and stronger until you eventually can win. The you go up another level and start the process again. Playing people far lesser skilled than you does nothing for your skills and you will miss out on the chance to improve your abilities. This is no different in your business life. Set yourself up to play with the big boys and play tough but fair. You will lose and fail along the way, but it will make you stronger and the rewards will be greater.

Looking back at my own experiences I am always been able to find a positive to come out of every negative. Each of these positives have far outweighed any losses initially incurred. In my mobile business I initially paid upwards of $10,000 per mobile application and this left me and my company financially debilitated. Now I manage to get it done for under $1000 which is a massive saving. It enables me to create 10 applications for the cost it used to cost me to make just 1. This was mainly due to being forced back and challenged to find opportunities which provided greater value. This was done without me even acknowledging it and it was only in hindsight that I realised that I overcome that obstacle, ten-fold. I learnt from my negative experiences in outsourcing which cost me many thousands of dollars in programming as well as cost in time. What I learned from these failures has enabled me to increase efficiency far beyond any monetary loss that I once thought was wasted.

What to take note in these examples is that if I didn’t lose I’d still be in the same situation.If I had won a little then why would I change? What would tell me there was a much better way to do things? Nothing. Use your failures to your advantage and remind yourself that big failures manifest into even bigger returns, you only just need to embrace it.

When you walk into a McDonald’s you know what it will look like. Even when your interstate you know exactly what to expect even before you take your first bite. There are no surprises here, nothing to say “wow that was fantastic” or “how horrible was that?” Your expectations are met day in day out without fail and that’s brilliant.

This consistency is what makes places like McDonald’s so successful. It may not be the quality of the food but the fact that your expectations are met every time, no exceptions. This is the McDonald’s value offering which is taken for granted, something that McDonald’s actually  expects and wants you to do. Don’t think about it, eat, enjoy, leave and come back soon.

For McDonald’s without this consistency they would not be who they are today. The product is not exceptional enough to allow for slack or lee-way when it comes to the output. The day you walk into a McDonald’s and there are no napkins available, the food tastes oddly different to what you expect and a sign is a bit torn and tattered, you run for the hills. That establishment has lost you as it did not meet your expectations even though it may only be that one time. That’s all it takes. Why do you think they have such strict measures and processes? McDonald’s understand the power of expectation.

The advantage that entrepreneurs have is that if you can provide a product which is extraordinary, these small idiosyncrasies will not be as prevalent as long as it does not affect the quality of your output. For example when you buy an exceptional car such as a Ferrari you know that each Ferrari is hand build and each one will differ slightly. You expect it and almost want it. If you want mass market expectation then go Toyota, it’s non exceptional, purposeful and will meet your expectation day in day out. Its brilliant, just like McDonald’s. Do professional sportsman use run of the mill equipment? No, they need exceptional so they require variation and customisation.

So what is your offering? Do you really need to meet mass market expectation and leverage the power of expectation? It is extremely difficult to master however if you offer an exceptional product which appeals to the set few of early adopters and hardcore industry fanatics then luckily, you may not have to. Keep it specialised, keep it exceptional and allow yourself some invaluable elasticity among your followers.

How much do you want to make this year? $50,000? $100,000? $500,000? $1,000,000? Whatever it may be you get to some point where it just doesn’t seem achievable. It seems too hard, too out there and too big of a number for little you to fathom. Well that’s the first and most important step to not reaching your financial goals, believing you won’t. What if the goal seems so far fetched, so hard to believe that you feel your only kidding yourself when you set yourself the target?

The reason it feels so overwhelming is that your focusing too much on the bigger picture, that big number which right now, is just a little bit too big. I believe it is vitally important to focus on the bigger picture and set yourself a target but there is something you can do that will make this goal much easier to get your head around. Break it down.

Thinking of big numbers can get overwhelming so try thinking about little numbers, little numbers that make up your big number. You often hear people discuss what they need to earn monthly to achieve their desired level of income or that target financial goal. I think a month is way too long and that number in itself can get a little too big for comfort. Want a million bucks? Well get prepared to set yourself a target of over $80,000 per month and that’s a lot of cash. Then financial vertigo kicks in and you revise that number down to $10,000… no actually make that $5,000.. ah that’s better.

Well before you start culling your dreams try breaking it down a little more. I mean right down, not per week or day, even per hour. Go right down to the moment, try breaking it down per second. To make a million dollars a year it will require you to make about 3.17c per second. Wouldn’t you say this is much easier to imagine that saying you need to make $100,000 per month? With today’s automated business systems it’s quite standard to set up a revenue stream 24hrs per day so that part is not really a big deal.

For example, If you have a website where revenue is generated through Adsense ads or similar, try to imagine a visitor clicking every 5-6 seconds (15cents per click roughly?). Aim for those clicks, not the monthly $100,000 or yearly million. Bring it right down to basics and immediately the task ahead won’t seem so daunting, shifting your mindset from being totally overwhelmed to saying “hang on, that’s not so bad”. Even 1c per second which is about 1 click every 10-15 seconds equates to $864 per day, $25,920 per month or $315,360 per year. That’s only 1c per second or a click every 15 seconds or so. If you get a click every few minutes then it’s not so hard to imagine building the traffic to eventually hitting your broken down goal.

This can be used for any business. If you sell ice-cream. Sit down and work out the profit margin for each ice-cream sold. Set yourself your yearly or monthly profit target then break it down. How many ice-creams do you need to sell per hour? Once you have worked that out it may seem a little easier to build a marketing strategy and business model to support your broken down target.

Remember what your are doing here is shifting your mindset and taking a different perspective of your desired outcome to tell yourself it is achievable. This will lead to the genuine belief that it can be done and that’s the biggest step you can take towards achieving any goal.

Today the world is shrinking. We are becoming so intimate with those around us that pulling a face may be spotted in Bulgaria. Outsourcing is now big business and the most successful entrepreneurs understand the positives of outsourcing and anyone looking to get into business simply can’t overlook the benefits.

I have used plenty of outsourced freelancers and some experiences have been great and other had been disasters. Today I have a good understanding on when to outsource, who to outsource to and how to manage it. So I thought I would share my top 5 tips to make sure you get the most out of it.

1. Low Level – I personally wouldn’t recommend using outsourcing for value added tasks if you have not developed any prior relationship with the freelancer. If the project is a direct influence on value added for your clients or consumers then I’d keep it local. The reason for this is that when it comes to value, you always need to be accountable, now. When something urgently needs to be changed it is very difficult to jump back to your freelancer who is 8 hrs behind and say “hey, please change”. It might not matter if the project is relatively low level however playing with your value offering and not being accountable in a timely and efficient manner can be detrimental to your business. Go back to the 80-20 principle and outsource the 80… not the 20.
2. Geography - The word on the street is that if your going to outsource, to get the best value you need to head to China or India. I disagree. China and India are becoming more accustomed to people requiring freelance labor from the US, UK, Australia and Western Europe. Freelances in these two traditional outsourcing nations are now taking advantage of the fact that even if they triple their fees their clients still believe they are getting great value. When in reality, they are asking 3x the price for the same average quality. The emerging nations in outsourcing are coming from the Eastern European block as well as my favorite, South America. The reason I would recommend these regions is because they provide excellent value. They may not be the cheapest, which should never be the aim, but I believe these nations provide the best value. Value when it comes to outsourcing means less back and forth and more time your new project or development can spend bringing back a return. If you have spent 30% less yet had it completed 1 week later, how much was that week worth to you? Probably more than that 30%.
3. Secret deadlines - You need to remember that freelancers will do what it takes to get the job. Unfortunately this also means they will give you unachievable deadlines for project completion just to get the deal. You can never underestimate this so factor in a 150% deadline margin. 150%!?!?! Yes 150% (like how I read your mind there?). If you want a project completed for use in 2 weeks (this is your secret deadline), give the programmer a deadline of about 5 days and it may be done in time for your (secret) deadline. I once had a job that needed to be competed in 30 days and it was done in 90 days. This cost me time, money as well as reduced the perceived value from my client. I also have another designer I use for web banner designs and presentation designs etc who I factor in a 400-500% deadline delay margin for. He does a fantastic job but never meets a deadline so I just factor it in and never have any more issues.
4. Stick to the systems – There are many current online outsourcing facilitators such as elance.com, ifreelance and guru.com (among many others) and they have procedures in place to ensure safety and assurance for both the freelancer as well as you the buyer. These include measures such as using escrow, safe payment methods and arbitration services if your not happy with the job. Most importantly the freelancers and the buyer rate each other at the completion of the project. Freelancers consider this as one of the most important marketing tools available to them. A bad reference means a loss of business. This is good for the buyer as there is a level of commitment from the programmer to get a good job done within the deadline. You need to beware of a programmer trying to do work off the sites and going privately through email or Skype. The primary reason they will do this is to avoid paying commission fees to the facilitator but this also can enable them to slack off as they are no longer made accountable for their work. Doing this is a sure fire way for your deadlines to be missed (Im talking about the ’secret’ deadlines!) and crappy work to be submitted. Resist the temptation of working off the structured sites, even if the freelancer give you a better rate. Remember the above example of my programmer taking 90 days instead of 30, well this is how it happened.
5. Work History - Always read through a freelancers history and ask for previous work. Resist the temptation to go for the cheapest price straight away as the quality may reflect what you paid for it. This is pretty basic common sense but extremely vital to get the best out of outsourcing. However I do have a trick that I use which I will share so don’t dismiss the ridiculously cheap ones just yet. Using the main freelancer websites, put up a job offering for a very low level task such as data entry or CMS content submissions. You will most likely get many offers for these jobs and some very cheap deals. For the uber cheap deals, have a look at their history and when they joined the site. If they have no history and have just become a site member, it may mean that they are trying to build up a reputation and will work for next to nothing just so that they have some feedback to display. Think of Ebay sellers who buy $1 ear plugs to get their feedback levels up so that they can be taken more seriously to start selling. The best bargains are in this market as they will do high quality work for cheap in return for your positive feedback. There are always people like this and they can represent the best bargains. If its a low level task you have very little to lose and you never know, you may just find yourself another gun freelancer.

I hope these tips help. As the world continually gets smaller outsourcing will only continue to boom and by giving yourself the best possible understanding you can prepare yourself to enjoy benefits and of course, avoid the pitfalls.