Brainstorming
I started brainstorming ideas for a passive income business. I actually tried out a few businesses without too much success. Here were some particularly bad ones:
Candy vending machine. I’ve been a longtime fan of Brian’s blog over at geniustypes. In fact his argument for starting up a candy vending machine is so persuasive that I decided to try it myself. I didn’t immediately invest and buy machines; I started by calling around to about 10 local spots to see if I could negotiate a deal with the store-owners to place a vending machine on their property. Candy vending hot spots include: laundromats, shopping centers, restaurants…basically anyplace where people are standing around waiting for an extended period of time. But take a look at some of these locations and you’ll be amazed at the multiple candy vending machines already present. I was completely taken aback by how saturated the candy vending market is in Los Angeles. Plus, during my negotiation conversations, I was notified that several Sweet Factories were going to be opening up in hot spot areas. This pretty much burst my bubble and any aspirations I had to become the Willy Wonka.
- Electronic importing. There was a period of time when it seemed like everybody and and their mom were importing goods from overseas to distribute in America. This was right at the height of the market craze in 2007; people was flush with cash and I wanted to get in on a piece of the action. I decided to start small again and test the market. I contacted a friend who was studying in China, and he managed to locate a quality name brand memory card manufacturer. We partnered up to procure a small quantity ~20. He shipped them over and I started shopping around on ebay and various other retail outlets to see if people would be interested in buying them. The interest existed; however, we made several crucial mistakes.
- In order to maintain higher profit margins, we selected cheaper shipping methods, and basically cheap = slow. The memory cards took longer than 3 weeks to reach me.
- I learned that the dynamics of the electronics industry change incredibly fast. In retail, timing is just as important as price. During the three weeks I was waiting for delivery, other generic brands popped onto the market, chips with greater memory capacity were released, and this depressed the price I was able to sell at.
- The electronics market is unbelievably competitive. With sites like amazon and eBay, competition is cutthroat. In our case, since we were selling a relatively inexpensive item, competitors were willing to settle for razor thin profit margins. If you want to sell low cost items, you really need to buy and sell in large bulk quantities because the profit generated from a few pieces is simply not worth the effort. Needless to say, after several weeks of stress and frustration, we sold all of our stock and pocketed maybe only 20 dollars in profit. My partner and I discussed looking for high end luxury items to push on the retail front, but then the economy turned sour and we ended up parting ways.
- EBay. Ask anyone and eBay is usually the first step for the budding entrepreneur. EBay allows anyone to sell practically anything, and you’d be surprised that there exists a market for essentially everything you currently own. It’s quick, it’s easy, and provides a great way to make some extra cash. I started by gathering up all of my old unwanted items. This included: books, electronics, and even clothes. I basically tried to sell anything the that I either didn’t want anymore or hadn’t used in a long long time. And I actually made several hundred dollars selling things that I would have otherwise just thrown away. An good strategy for long term ebay selling is to just drive around and rummage through your local garage sale listings. There are a lot of hidden gems at these sales. With practice, you can develop an eye for value, and you actually get quite good at spotting deals that might be turned for a profit online. The main downside to that this business is that it’s hardly passive at all because you’re physically going out scouting for products. It involves a lot of work, and as the months progressed, I eventually just got too busy lazy.
Look Within
The key to brainstorming good business ideas is really just to evaluate yourself. This process can be intensely personal, but I think you’ll find that it yields the most original and effective ideas. Ask yourself: What am I good at? What do I want? What niche markets am I interested in? What difficulties and “pains” have I recently encountered? More importantly, how did I overcome said obstacles and how can I help other do the same?
There are a lot of different techniques and tools that you can use to aid this process, such as: brain writing, brainstorming, mental mapping etc. Experiment with them all and use whatever tool you feel the most comfortable with. I actually favor traditional brainstorming because I’m a pretty simple minded person and I like things clean and easy. Just get a piece of paper and starting writing things down. Whether your ideas are related or not, thoughts may be a bit slow forthcoming at first, but ideas build on each other and soon you will have a fat list of prospective business ideas.
It was around this time that I stumbled upon Pat’s blog at Smart Passive Income. He offers a really inspiring story about how turned a chance layoff into a massively successful internet business.
My big idea is going to be revealed really soon, so keep checking back for updates!
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