Let’s face it. At the end of the day, you just want to make some money. But there’s a thousand different things you could do. You could buy a franchise, start drop shipping, get a vending machine, Shopify, start a blog, a YouTube channel. Yeah, it gets overwhelming.
Which is why today, I’m going to take you in the backyard office. We’re going to talk about the rule of three. This is a business rule that you got to follow if you want to put money in your pocket. But the problem is, most people are doing it wrong. So come on inside, and I’m going to show you how to do this the right way.
This is a hundred thousand dollars. More about this in just a minute. When I first started my business over 22 years ago, I was obsessed with these small business opportunity magazines, and these entrepreneur magazines, and all these different resources to help me learn how to make money online, offline, and basically become financially independent.
And I noticed that on all of these, they had different franchises and different businesses that you can join. And I was always confused as to what to do. I mean, some of these cost like a hundred thousand dollars. And back then, I didn’t have a hundred thousand dollars to my name. I didn’t even have a thousand dollars to my name. So what was I to do?
Do I call one of these guys that guarantee $10,000 a week? Do I endlessly comb through these startup and franchise magazines, trying to find something that’s affordable but will also put money in my pocket right away? Average income, $70,000 a year, startup cost 210 grand. 80,000 startup cost, $4,000 startup costs, but I got to get all the equipment and actually do the work of being a janitor? What happened to all this easy money stuff?
Okay. Now pay very close attention to this part, because this is where many people who want to make money get it wrong. First, if you are going to invest in a business, let’s say you take $100,000 to invest in your new business. Now, if you don’t have a hundred thousand dollars, don’t worry. I’m going to show you a zero-cost, zero-risk method in just a minute.
But just for illustration purposes, let’s say you do invest that a hundred thousand dollars in your new business. Once you invest it, the hundred thousand dollars is gone, and you now have hopefully a profitable business. Your first year in business, you could expect to make about $33,000. Your second year in business, you’re probably going to make another $33,000. And your third year in business, you are going to make another $33,000. Bringing the total profit after three years to equal the exact amount of your investment.
Wait a minute. Does that mean that no matter what I do, I’m not going to see any profit for three years? Well, yes and no. Let’s talk about a few key phrases here that you need to know in order to understand how this business works, and how you can start with zero money and zero risk.
The first thing we need to look at here is what we are actually investing in. Many times when you have a new business, you are investing in a certain thing. If you were to buy a McDonald’s, you’re investing in all of their hard work, and advertising, and systems and everything like that. Basically you open your doors and you get sales. But that also costs a pretty penny to get into.
Now there’s some cheaper options, like subways and bowling alleys, and other things like that. But again, nine times out of 10, you’re not going to see any profit for about three years. But there is something that you can invest in that doesn’t cost a lot of money, and doesn’t require a three year rate of return.
And that is something simple that you control. Think service-based businesses. My cousin actually started a blinds business where he got in for a couple of thousand bucks, they gave him the system. He had to go out and hustle and get business, but it paid off like crazy. So the second investment type is going to be in something that you have to work to build.
Obviously, the McDonald’s is done. You put the M on the building and people line up. That’s why it’s like $2 million. However, if you go for something less expensive that takes a little bit more work on your part, then you can invest what we call sweat equity, or your actual doing the work.
And there’s a couple other things we can invest in as well. First, let’s take a look at a customer list. This is where you’re actually investing in a list of customers that bought something. Or maybe you’re going to be someone in a regional area and the company does marketing, and you get that customer list.
Now, customer lists are very expensive, which is why lead generation businesses make so much money. More about that in just a minute. The next thing we’re going to look at investing in is actually really risky because it requires you to actually sell the stuff to get your money back and turn a profit. And this is investing in inventory.
This is where, if you were to buy an old business, let’s say you’re buying a vitamin supplement store and it comes with hundreds of thousands of vitamins and supplements, those would be your inventory that you can now go sell and make profit. Now, this is actually very risky because you don’t know if the stuff’s actually going to sell at the amounts that you hope it sells for, which means your money’s tied up ’til you figure it out. I would much rather focus on no-cost digital inventory. More about that in just a second.
And the problem here is that most people want the McDonald’s-type investment that’s hands off, it’s all done for you, but they don’t want the McDonald’s-sized investment. Which means, what are they going to do? Do you just go out there and start a business and voila, you’re going to get rich? Do you call one of the shysters in the magazines that promises money overnight? Or is there a better way?
First of all, you need to understand the valuation of what you want. Let’s say you want to make $10,000 each and every month. Well, using our rate of return, what we need to do is get our yearly figure, which would be $120,000, times that by three, and your little idea of, I just want to make 10 grand a month is actually a business that would cost $360,000 to purchase.
So when someone comes to me and says, “I’m not greedy, I just want 10 grand a month.” You got to look at these numbers and it needs to make sense based on what you’re going to do. So let’s go ahead and define some of these terms, and then talk to you about zero money invested, zero risk method to making this work.
The first thing we’re going to look at is SDE or Sellers Discretionary Earnings. This is basically the profit margin the seller has at the end of the year.
Next we have ROI, or return on investment. This is the amount that you make on your investment. If you invest a hundred thousand dollars and make $8,000 a year off of it, you’re getting an 8% per-year return on your investment.
And lastly, we have the term multiple. This is your SDE times a certain amount to arrive at the number the business is valued at. If you are making $120,000 a year at a 3X multiple, you’re at $360,000. So our multiple would be 3X.
Pay close attention to this next part.
So, since most of us don’t have huge amounts of money to invest in these businesses, maybe we have a little bit of money or no money at all, here’s what we want to do. We want to use leverage.
Leverage allows us to use less money and more of our work, and our brain power, to make something work in a really simple way. For example, if I have zero money, what I can do is build something of value. Now, it might take a little bit more time. But again, even if you’re investing all this money in these businesses, you still got to wait three years to get an ROI or a return on your investment.
So what we’re going to do is, we’re going to do like a 90 day plan. Where we go out there and do something very, very specific. Maybe I’m going to go out there and build a YouTube channel, or I’m going to build a blog, or I’m going to get traffic to a TikTok or a whatever it is. And we’re going to use that traffic to make money.
This is something very simple. Because otherwise we would need to go out there and build something that is a brick and mortar business that’s going to cost us some money. Which adds a lot of risk into the equation. And what I’ve been doing for the last 22 years is build sites from scratch, or either take over sites that people don’t know how to use or make money with.
Let’s say, for example, I want to build a website about ponds. Maybe people that want to put backyard ponds, or need pumps for ponds, or plumbing or whatever it is. Gardening-type stuff. I’m going to go out there and find all the different things. People are searching for, like pond kit, patio pond, pond pump, pond supplies, and on and on we go. And we could see that a lot of these terms get lots of search traffic.
I can also see that there’s lots of products on Amazon, Home Depot and many other places related to ponds. And since Amazon, Home Depot, and other pond stores have affiliate programs, I can get paid for generating traffic for free.
I can also see that on ClickBank, there’s several different guides teaching people how to set these ponds up. We even have various different hydroponic gardening courses, and all kinds of things like that. So as you can see, there’s lots of ways to make money in this niche.
So if I had no money, I could go out there and start a YouTube channel and start talking about ponds, or whatever niche I go into. Or if I have a little bit of money, I can get a domain name like pondspecialguy.com, or howtostartyourownpond.com, or something like that. Or if I have a little bit more money to invest, I can actually find domain names that are expired or at auction that have to do with this niche.
Just like this one I found, pondtastic.com. I bought this one less than a week ago for $356. And not only is the domain name worth more than I paid for it, I can also see that this domain ranks for all different kinds of words related to ponds; koi pond cost, fountain installation, water features, waterfall cost, and on and on we go. So this domain quite literally has traffic right now. Which means that for less than 500 bucks, I’m in business with traffic that can be making me money tomorrow.
So now all I need to do is build this site up, build the rankings, get the traffic, point them to the things that make me money, and boom I’m in business. And of course later down the road I can do drop shipping, I can find different products, I can do all kinds of things to put more money in my pocket.
And just to give you an example, here’s another website in this niche that’s got over $84,000 a month worth of traffic going to their website. Which means the potential of this market is huge. And this is something I do all the time. Here’s a website I bought for expecting mothers and new mothers that want different things about bottles and stuff like that. All kinds of traffic, tons of potential, tons of rankings. And I just bought this one today for 250 bucks.
Here’s another one. I got, sadlight.com. This one cost me about 1200 bucks, but the potential is huge. All I have to do is talk about different therapy lights and point to the things that make me money, and boom, I’m off to the races. And these are the kind of sites and niches people are using every day to make thousands, hundreds of thousands, and even millions of dollars each and every year.
And you could start with zero money by doing a YouTube channel, a medium, a free blog or something like that. Or, if you have a little bit of money, you can use my method and get domain names and get hosting and set this up the right way.
And the idea is very simple. While other people are out there spending thousands of dollars on venting machines, and franchises, and things like that to make a little bit of money, like $5,000 a month, I’m out there setting these sites up and lots of them make me tons of money each and every day.
And that’s the idea behind building simple little websites that put big profits in your pocket. Smash that like button and check out the videos in the description if you want to learn more about this method.