In the part 1 of this article, Kate and I discussed creating content pages and generating revenue from advertising on those pages. We ended that discussion by marking the topic as “possible” and then began talking about the other option of creating an online store that sells something.

It seemed perfectly logical to start our quest in search of something to sell online, with a conversation about what we actually liked to buy online ourselves. But that method quickly went nowhere when we discovered that neither of us really liked shopping online. With the except of places like Wal-Mart, we both actually enjoy going out and buying things in person. Generally, we will only shop for things online when our time is limited, or when we cannot get the item by going to a local store. We deduced that we were not our target customer and bailed out of that whole discussion.

So we started approaching the topic from a different angle. We wondered what the different categories of things being sold online were (from our point of view), and where could we get in on that action. We came up with the following options:

1. A store to sell products that get shipped to the customer
2. An online store to sell custom software that gets delivered to the customer through downloading

We started talking about option 1 as a great idea. But the more we talked about it, the less we liked it. Sure, if we could find a great product to sell, we could be the place for people to go to get it. But what would that product be? Pretty much everything we came up with was already sold online. So our only choice for an online store would be to do a better job of selling it than the other guy. That didn’t totally turn us off (where there’s competition, at least that means there’s a demand for your product), but it didn’t seem so “magical”.

And there were certain other downsides that jumped out at us too. We would want to find a product that could be direct shipped. But finding a product that ships direct (where there’s not already a dominant on-line player) is not easy. And if we couldn’t find a product that could be direct shipped from the manufacturer or distributor, then we would need to carry an inventory, and handle the shipping & receiving ourselves. That was starting to sound like us trading our time for money once again.

On top of this, I was reading someone’s blog about this topic recently (sorry, I cannot recall where I read it). The person mentioned that he was bringing in over $600,000 annually, but he added up all his obvious and not-so-obvious costs and his expenses were $560,000. He was working his tail off for $40,000. And he lived in New York City, where $40,000 doesn’t stretch very far. He gave up the business because it was just not worth it.

Then we jumped to option 2 which was selling some kind of customized software. This option was sexy. Everything about it fit perfectly with our Financial Freedom plans. If we developed a software package that was presented on-line (via a website), was delivered on-line (via user download), and was sold on-line (via a slick store that was fully automated), then we would be developing an asset to generate cash-flow.

And if we were smart about it, we would create a store that could easily be added to. If the store was seeing decent traffic, We could even sell other people’s similar software products. I was loving this idea and so was my wife.

Of course, there were a couple of important details we would need to work out to be successful:

• it would take a lot of time to write a decent application
• what software package would we create? (I had some ideas, so this wasn’t as tough as it seemed)
• It would take a lot of time to create an automated store too

Okay, we were feeling pretty good about this idea. Enough to stop talking about it for now (even though we still wanted to talk about it more). We put a check-mark next to this one also and called it “possible”. We now had two ideas to work with and we were getting excited!

In part 3 of “Our options for obtaining Financial Freedom in Five Years”, we’ll discuss one more option we came up with while discussing the on-line store.