Since I wrote my post about setting goals for quitting my day job, I’ve been working feverishly to increase my “non-day job” income. I’m very serious about handing in my resignation by year’s end, and if I can meet the financial goals I have set up for myself, there will be no reason to keep working for someone else.

Having a concrete goal and timetable for quitting my day-job has changed the way I prioritize things. The old me would look at my list of to-do’s and cherry-pick items to work on (I love writing code, so that usually gets done first). But now I ask myself “What things on the list will help me reach my financial goals the quickest?” - and I focus on those first.

So after I set my goal for quitting my day job, I created a list of my ideas, and merged it with a list of my on-line assets to figure out what would make money. Here’s how it went:

iKollect.com
At the top of the list was iKollect.com, my online inventory management system for coin collectors. It’s the same site that hosts this blog, and pretty much where I’ve spent most of my spare time this past year.

I created the application from scratch, pretty much by myself. I’ve spent as little money as possible everywhere I could, but I really believed in my little idea - and it has gone well. Lots of people have registered for an iKollect.com account and I get lots of hits daily.

The growth over the past year for iKollect.com has been pretty steady, and I receive at least one email a week from a user telling me how much they love the system and/or how to make it better. It’s all good! It feels good knowing that I made a decent system that people like. And all the kind words from iKollect’s users help to stroke my ego regularly. I can’t complain!

What’s that you say? How much money do I pull in from that venture? Well you should sit down because here comes the funny part. Believe it or not, I never really came up with a plan on how to monetize this application! Wow, that doesn’t sound nearly as funny as I thought it would. A newbie mistake, right? Yes, I agree. I never should have started the project without some sort of monetization plan, and I know that now. Chalk it up as another lesson learned.

Important Note: I’d like to make it clear that I have learned so much about running a microISV, and met so many nice fellow microISV folks over the past year, it’s amazing. If you are thinking of starting a project like I did with iKollect.com, and don’t have a good plan for how to make money, you should still go ahead and do it! My only advice would be to do it “on the cheap” like I did, that way you won’t lose your shirt if it fails.

Show Me the Money!
So now here I am, ready to start cashing in. How do I make money off of this website? There are of course a couple of options, but I have unintentionally made some decisions in the past that have additionally limited how I can make money with iKollect.com.

For instance, from the beginning, my catch-phrase has been “Free Inventory Management for Collectors”. This has served me well in building a following. When people hear about what iKollect is, the “Free” part of the catch-phrase stands out, and they know right off the bat that they won’t be paying to use the site.

So I can’t just go and send out an email to all of my users saying that starting on March 1st, “iKollect - Free Inventory Management for Collectors” will be offering a paid option that is not, well “free”, right? I guess I shot myself in the foot a little with that part. I have a few options on how to remedy that, but it’s just not an easy fix. Yet another lesson learned! Moving on…

So it seemed the best choice for me at this point is to go with the easiest of options and slap up some Adsense ads on the site. I am really against this because I don’t really like advertising. But I do recognize that ads are everywhere, and that’s just a fact of life. So that’s what I did! I added some fairly unobtrusive Google Adsense ads on the site and crossed my fingers….

Good News!
Right away I found myself meeting my financial goal several weeks ahead of schedule. I was pleased - to say the least! I literally have some “almost-passive” income being generated (I say “almost-passive” because I still do the customer service stuff, but otherwise the site requires very little work for me to operate these days).

Bad News!
After I finished patting myself on the back, I took some time to see what kind of growth I could expect. It wasn’t awesome. Even during my best iKollect months, my number of active users was still only growing about 12% per month (I didn’t count people who sign up for an account and rarely come back).

I also expected that my haphazard placement of the ads would initially be bad since I have very little experience with advertising. So I read up on the topic and played with the placement of the ads. I also tweaked things to make sure they were displaying for content appropriately. But my ad revenue either increased marginally or went down. Ugh! (I could go on about how much work and research I put into the ad thing - but I won’t bore you with all those details). It wasn’t long before I came to a conclusion…

Conclusion on iKollect.com
My final determination is basically that iKollect.com has advertising showing up in a category (coin collecting) that really just isn’t all that lucrative (for advertising anyway). So even though I had a decent number of users on my site, and it was a growing number, the ad revenue wasn’t going to have me retiring any time soon.

And this lesson in online advertising was pretty major, yet so obvious that I am kicking myself: Either pick a type of advertising that pays well when people click on the site, or have like a jzillion users clicking on your cheap ads.

And the Summary
I spent a year building iKollect, an online application that has a decent following, requires very little time to administer, now brings in “okay” revenue, but in it’s current form, won’t grow to make me accomplish my financial goals.

But along the way I learned so much about running an online business that even if I had zero income from iKollect.com, it would still be a winner to me. But the best part is that as a bonus, running iKollect.com has introduced me to a different idea for a product that I believe I can put together fairly quickly and painlessly. Which is what I plan to write about in my next post!

Tags: iKollect, microisv, quitting

In hopes of meeting my goal of saying bye-bye to the day job by the end of the year, I’ve gone and set some crazy goals for myself lately. It’s all good, but trying to meet my goals hasn’t left me much time to blog. Many apologies!

As a fellow or aspiring microISV-er, I’m sure you’ve read over and over about how important it is to not only set goals, but to review how you’ve done so you can decide if you are headed down the best path. So a couple of weeks ago, I dedicated some time for analyzing iKollect.com’s past year (actually a little less than a year) to see how we’ve done. Here’s some of the highlights.

The History First
My wife and I came up with our plan for the iKollect.com website after some serious soul-searching. I wanted to be around my family more so we were aiming for the micro-isv lifestyle that might make that possible. We also knew that the venture needed to eventually replace (and hopefully exceed!) my day-job’s salary+benefits. So from the get-go, it was mostly going to be my baby.

The decision on what to build was made by doing lots of research, and following that with a process of elimination on the dozens of ideas we had thought were decent. After all was said and done, we had narrowed our list down to two items. A Windows based app (I’ll tell you more about that in a future post), or an online application. Because the world is being dragged towards online apps, we decided that was the way to go.

We had several web based application ideas, but in the end, we decided to build an online application for collectors to store their inventories. This decision was based on several factors including (but not limited to)

• lots of potential users
• a fragmented market
• and an inexpensive start-up model that would meet my personal needs (i.e. being able to work on it sporadically, while still having decent output on a very demanding day-job).

Designing the Application
For the day-job, I write Java code mostly against a DB2 database, but for this venture, I decided to go with the PHP-MySQL combination. I found PHP to be super easy to pick up, easy to find cheap hosting, and for my long term plans, I believe it will be easy to farm out some of the work with this technology. I have never second guessed this decision.

In designing the actual application, I did a lot of research into what other inventory applications looked like. I’m a big proponent of programs being easy to use (over adding lots of doo-dads), so I spent a while on this detail. And since I had no money to spend, I made my loved ones become be my guinea pigs (poor them).

For instance, while researching different applications, I had my grandmother tell me if she could figure out how she would enter data into a screen. For screens she could figure out, I would dissect to figure out what made them simple. It was a great process, since most of the designs I showed her easily frustrated her, and were easy to rule out.

Before long, I had a working prototype limping along on my local windows machine. When I showed it to Grammie (without her know that it was a my application, and not just some other app I wanted her to try), she said that this was “the best one yet”. I was happy, and so was Grandmother - I think she was mostly happy that it was over!

So I think my approach in designing and building the application went well, and I stand behind the decisions made in that phase too. It cost me next to nothing (I used an old laptop that I already had laying around, and development tools that were free). And from when we went live in June to date, we have received literally dozens of compliments from our users who like the system and find it easy to use. So I think these early design and build decisions were good ones as well.

Marketing
Marketing. Ahh crap. I wish I could say I’ve done something well in this area. I have tried everything I could from advertising on Google AdWords to contributing on forums to writing a bunch of articles, and lots and lots and lots of other things in between. Yet nothing has given me the results I was looking for. Sure, they all worked a little. But they all were a lot of work, with very little reward.

The only reason I’ve had a steady stream of customers being added every day is because I have a lot of great users who tell their fellow collector friends about our website. Those friends come and sign up and tell their friends, and so on. Thank God for nice people, or I would have maybe 50 people signed up for accounts (instead I have a many many times that).

My wife gives me some of the credit on this one (she tries to make me feel better). She says that it’s the easy to use application and great customer service that has our users referring others to the site. I can see her point, but I feel that all the other work I put into marketing should have paid off at least a little!

To summarize, I suck at marketing. Hey, at least it’s not as much as I used to suck! (just trying to be positive!)

Also, in my defense, unless you are hiring someone to do it for you, traditional Internet marketing (the type of marketing that you read about in every “10 tips to blah blah blah” article) really requires a lot of your time. I feel like I’m whining when I say that my defense is “it’s just sooooo hard”, but there you go. I’m a whiner.

When I was little, my grandfather said something like, “when you are just learning, every failure is worth five successes”…so I may have had several failures in this area, but I’ve had a plethora of successful learning experiences. ‘Nuff said.

Note: Although those traditional internet marketing methods haven’t worked for me, I’ve been taking some different approaches to marketing lately that have worked really well. I’ll share more about these lately, but I can certainly tell you that it’s less about the types of marketing you read about every day, and more about thinking like inspiring and wicked smart guys such as Patrick McKenzie
of Bingo Card Creator.

There’s Money…
I have been excellent about not spending much money on this venture. Even though I have a lot of things going on with this project, there are very few things that have cost me anything. If I had to just fold it up tomorrow, it would not be a big loss. Really! I feel I can pat myself on the back for this one. I didn’t want to bury myself in debt along the way, and I didn’t. In fact, just for the silly little PageRank of 4 that iKollect currently has, the site is probably worth more than I have spent on it. But hold on, it gets bad…

Then There’s Monetization…
There’s a stupid thing to have to admit. During all the early phases of planning out this project, I never thought out exactly how to make the money. I knew I wanted to make money, but I never created a plan on exactly how to monetize the site. Yup. For some reason, I figured that once I had a successful site running (success being measured by having lots of users signed up for accounts and lots of traffic), it would be easy to monetize it. At a minimum, I could slap some AdSense ads up there and be rolling in the dough, right?

What did Ben Franklin say? By failing to prepare, you are preparing to fail? Something like that…sheesh. Looking back, I can’t even begin to explain why I skimmed over this important detail. Talk about a rookie mistake!

If my time machine wasn’t broken, I’d go back to the beginning of this project and do just this one thing. I’d spend a lot of time on this task too, as it is extremely important. I’d say to myself things like:

“Okay, I’m planning on having lots of traffic, and if only a small percent of those people click on my ads, I’ll have a lot of clicks, but wait - how much profit will each click bring in? Am I going to earn an easy $5.00 from a click like some of those financial sites get, or am I going to earn just pennies with every click?”

If you are just starting out your microISV, do yourself a favor and don’t be stupid like me. Plan out how you are going to make the money, and especially, how much!

Summary: Hindsight is 20/20
I think you’ve heard enough of my lessons learned, so here’s the summary of my analysis of the past year:

I can tell you honestly now that if I had done a better analysis on the money topic, I might not have picked this project at all. Yeah, seriously. Because in a nut shell, what I have right now is a lot of users, who visit my site a lot, who tell their friends a lot, who seem to really like my site, a lot. That’s great! Except it’s not. Because when they click on the ads, I earn, well, *not* a lot. I’m obviously covering my costs, but in order to be doing really well, I’ll just need another gajillion (or so) users to sign up. Which puts me back on marketing. Did I mention that I am not so good at that?

So although in hindsight I wouldn’t have started this project in the first place, I do recognize that some good things have come out of it as well.

For example, I have learned so much it is unbelievable. No joke. Way more than any book could have ever taught me. If you are a newbie microISV-er and are hesitant about diving in, I think I could give no better advice than “Go for it!” followed by my second piece of advice “It’s okay to Be Cheap!” (sorry, I can’t help it)

Another example of a “good thing” that has come out of this is the rather large list of email addresses of users that actually like hearing from me. That’s worth something right there if I wanted to use it a certain way, right? When I sent out my bulk mailing to all my customers saying that I had made some major updates to the site, I received some outstanding replies. What an ego stroking that was!

But what’s really got me excited lately is the realization that I have a tremendous amount of data gathered about a group of a certain kind of people (data which I have been spending a bunch of time analyzing lately). Put that together with all the emails from people asking me “do you have the ability to do x?”, and you have the recipe for several, even more exciting products. Which is exactly what I’ve been spending my time on lately!

Tags: iKollect, lessons learned, microisv

Last weekend, the father of one of my daughter’s friends was standing in my kitchen.  He was obviously noticing the disaster I had created all over the counters and right out into the living room.  Papers with sketches, disassembled computers, weird glued together prototypes… he didn’t ask what the mess was all about (I’m sure he was being polite!) … but I had a strong desire to explain what was going on anyway.

You see, before he came over to get his daughter, I had just posted an entry to my iKollect.com blog outlining my goal for the year.  In that entry, I explained my year end and weekly goals, which were both aimed at my quitting my dreadful day-job.  I had posted that blog entry for one reason and one reason only; I wanted to put pressure on myself to succeed.  If I had merely told myself that I was going to quit my job by the end of the year, it would be easy for me to to make excuses for why I was failing.  But if I communicated that same goal to *the world*, then I would in some way feel the pressure of other people laughing behind my back, calling me a failure. 

But there was a problem with that plan.  Many of the people who read my little blog don’t actually know me, so I don’t hold their opinions too highly.  If they snicker at me, it hurts a little, but not a lot.  And the other readers are close family who would not make fun of me anyway (at least not *that* kind).  And in fact they might let me off the hook even easier than I would let myself off.  So although at the moment I was feeling the pressure of the outside world watching me, it wasn’t feeling like enough pressure.  I needed more pressure.

So (whether he wanted it or not) I went into a long explanation  to this dad about what my little business was doing and what my main goal was (resign from the day job by the end of the year).  This dad is someone I respect greatly and have known for a long time.  In fact, he had just finished telling me details on how he is leaving his current “safe” job for a harder and slightly riskier one, but one that had potential to benefit his family greatly if it worked out.

I even threw in the story about that Spanish Conquistador, Hernando Cortez (of course I couldn’t remember that name when I was telling the story) who ordered his men to burn the ships after arriving in Mexico in 1518, ensuring that they had to make it work.  Returning to Spain was just not an option for Cortez and his men. 

I’m pretty sure that the other dad thinks I am a nut case and a little unstable.  He’s probably right.  But just like good ole Hernando, I’m committed to this mission.  And staying at my job for another year is just not an option for me.  I won’t allow myself an easy escape route, and I’m going to continue to burn the ships!

Tags: family, iKollect, motivation

My eight year old today asked me why the iKollect website has the word “Beta” at the top. I was explaining to her how the whole software release cycle works when it dawned on me that maybe I shouldn’t be in Beta anymore. So my eight year old and I reviewed the specifics:

• There hasn’t been a new bug reported in I don’t know how long
• I’ve frozen my code as of that last release
• I have been providing full support for the application for a long time now.

So why am I still in Beta?
In building client-server applications, the alpha /beta /release-candidate stages were so much more obvious to me. It was obvious when an app was in beta, because only my beta testers would have a copy. But web apps are new for me so I need to change this way of thinking a bit. Also, I think I’ve gotten so used to seeing releases of some web applications which seem to stay in Beta forever (like Gmail), that I started ignoring the Beta tag on my own site. Whoops! So as of this evening, iKollect is out of Beta. I suppose I should be celebrating or something, but I’m up to my eyeballs in marketing stuff tonight…so I guess I’ll party later!

Tags: ikollect beta

When my wife and I started on the idea of the iKollect.com website about a year ago, we were going with the “Field of Dreams” approach to running a business. We figured that if we could build an application that people wanted to use, the traffic would start flowing in and all we would have to do would be to monetize the site. Pretty simple, right? So believe it or not, in the past year we never sat down once to plan out exactly how we would monetize the site. But things have changed so monetizing the site has moved to the top of our to-do list.

What Changed?

One year ago we had exactly one user (me). And closing out 2007, we have, well, lots of users. Mind you, it’s not “Google lots” or “iTunes lots”, but considering our niche market of “hobbyist who like to computerize their inventories”, we are doing pretty darn well. Our users seem to really be sticking with us, and they keep on sending us compliments and feature requests.

The other thing that changed was my attitude. After a relaxing holiday break with the family, I went back to the day-job and realized how much I didn’t want to be there. Nagging Boss to deal with. Time sheets to fill out. Worthless meetings to attend. All that usual big-company jazz. Yuck.

You’d think I’d be relaxed and able to deal with all that easier, right? Nope! On my first day back it was just too much and I snapped. So I looked at my list of goals for the year ahead and made a serious change. Right up at the top is now “Hand in resignation for the day-job by end of 2008″. I rolled up my sleeve and wrote that goal on my forearm. It was now official! I had a real goal that I was excited about again…and I had ink all over my arm.

From Baby-Steps to Bigfoot-Steps

After covering my arm with graffiti, I started adding up all the benefits I received from my current employer. Of course there’s the salary, but there’s lots more that they give me that have me in those corporate hand-cuffs. There’s the 401(k) match, the health insurance, the portion of the taxes they pay, the discounted car insurance, etc. etc. etc. I added it all up and went “holy crap! How am I going to go from zero to that off in less than a year?”

After calming down, I decided to break the amount down as a month to month goal, gradually increasing throughout the year. My annual goal was about $100k which is about $8300 per month before taxes or any other deductions of any sort. I made up some other guidelines for the goal which included:

1. No consulting. That’s not much different from my day job.
2. I want to be averaging the minimum of $8.3k/month for 3 months straight before giving my employer proper notice
3. I would give myself the first couple of months to get geared up, so I wouldn’t already feel behind schedule on day one

I wanted to increase the amount gradually, and not make an unreasonable goal that would have me feeling defeated straight away. So I started out gently, increasing by .2% every week for the first month and then gradually moved up from there, settling at an increase of 4% every week until I got to 100% of my goal. It looks like this:

week….% increase….$ goal
03/03………0.2%……..$17
03/10………0.4%……..$33
03/17………0.6%……..$50
03/24………0.8%……..$67
03/31………1.0%……..$75
04/07………2.0%……..$150
04/37………4.0%……..$300
04/10………8.0%……..$667
09/15……..92.0%……..$7666
09/22…….96.0%……..$8000
09/29……100.0%……..$8333

Is that a bit overzealous? Yeah, probably. But that’s my goal and now that I’ve just announced it on this blog, I am committed to making that goal a reality. And that means I need to think about how to turn a profit as my number one priority. What do you think?