photo: Refracted Moments™
You’ve cut back on as much spending as you can reasonably do. You’ve eliminated extra spending on eating out. You’ve got automatic savings. You’ve got a plan to pay off debt. What else can you do?
Earn more money.
There’s a lot of advice out there on how to make more money on the side. Unfortunately, much of it is scammy things like secret SEO tactics or ineffective suggestions like taking surveys in your spare time.
In truth, the best way to actually do it has nothing to do with social media, blogs, or Twitter. It has to do with turning your skills into side income.
What would an extra $1,000/month mean to you? Could you pay off debt faster? Save up enough to quit your job? Take a vacation?
Most of us could turn our existing skills into more money in the next 60 days. And you don’t need to quit your job to start the next Google (GOOG) — you can earn it on the side while keeping your full-time job.
How do you do it? Over the past two years, I’ve been testing a new free course on earning money with thousands of students and I’d like to share some of those techniques with you.
Let’s start by learning how Chris Carter is earning $3,000/month on the side.
Find three clients willing to pay you, no matter how much… or how little
Chris Carter was terrified of pitching clients and negotiating rates. Even though he knows how to do advanced statistical modeling, Chris’s fear of talking to clients kept him from charging what he was worth. So he started by responding to a Craigslist ad looking for someone to do advanced statistical modeling for $15/hour. $15/hour! That’s way lower than he should have actually charged, but he just wanted to prove he could get three people to pay.
Key insight #1: When earning money using your existing skills, your only goal is to get three paying clients. Nothing else matters.
Chris didn’t care about how much his clients were paying him. He just wanted to prove that three people would pay for his services at all.
Once he’d secured those clients, he re-pitched the same client for 15-20 hours per week at $40/hour. Last time I checked up with him he had raised his rate again to $50/hour and is earning thousands per month.
Turn your skills into side income, no matter how niche those skills are
Everyone has skills that someone would pay you for — today. Did you get a good score on your SATs? (SAT tutor.) Are you obsessed with fashion? (Personal stylist.) Are your Powerpoint presentations always the best designed? (Freelance designer.)
I know a young woman who trains cats how to pee from a toilet seat — and she charges $500 per cat.
Key insight #2: If someone can make $500 training cats to pee from a toilet seat, you can certainly earn money on the side using your existing skills.
The Two-Qualifier Method
But who would actually pay you for your services? My so-called “two-qualifier method,” described below, should help you find your first three paying clients. The first question you should ask yourself is, Who are you trying to market to?
The average person’s response will sound something like this: “Well, you know, people who are interested in technology.” Or, “Uh…anyone who uses Facebook!”
Wrong. If you’re not crystal-clear on who you’re targeting, it will be extraordinarily difficult to reach them.
And being specific is key.
Let’s say you like steak. Where would you rather eat dinner? Acme Restaurant, where they serve Indian food, steak, asparagus, spaghetti, and Thai food? Or Jack’s Steak House, which serves only mouth-watering Angus steak served by former butchers?
Of course you’d choose the specialized restaurant. And you’d pay more, too. The same is true for how specifically you target your customer and services.
Key insight #3: Counterintuitively, the more specific you are, the more you can charge.
Targeting the right market isn’t easy. Big companies spend hundreds of millions trying to get it right, and most freelancers are no better off.
Let’s go through a quick example to set the stage. Imagine you’ve just been hired by a company that makes ski jackets and they say, “Help us reach more people.”
The first question that occurs to you is probably, “Who are you trying to reach?”
They say, “Well, anybody. We just want to reach people.” “Oh, OK, well why don’t we just go find a magazine that reaches out to ‘anybody’ and take out an ad?”
What’s wrong with this approach?
1. Customers are smart. If they can see that your ski jacket can be worn by a 16-year old girl, a 78-year-old grandma, and an active 34-year old woman, they will immediately move on. We want products made specifically for us, not products that can be used by anyone.
2. Once you know your specific customer, you can go to where they hang out and let them know about your product. But if your target market is “everybody,” there’s no easy way to reach them.
This is just one example of how going broad will hurt you. If you’re selling your services to EVERYBODY, you’ll actually sell to NOBODY.
There are a variety of ways to begin your targeting, but today’s exercise will walk you through it:
The Two-Qualifier Method takes you from one level — say, tutoring for high-school kids – and layers another qualifier on top of it — say, tutoring for private high school kids. Of course, you can take this a lot further
WHAT MOST PEOPLE DO: “I’m going to tutor math”
WHAT YOU’LL DO: Get more specific using the Two-Qualifier Method.
In essence it looks like this:
[QUALIFIER 1] — [QUALIFIER 2] who need (YOUR SERVICE)
So here are some examples:
* Affluent working parents in the San Francisco Bay area who want (tutoring for their high school kids).
* Small-business companies in the financial services industry who need (copywriting for marketing materials).
* Bloggers with 1,000 to 5,000 subscribers who want to (develop information products).
Now, how does this help you? Let’s say you live in San Francisco and you’ve decided to tutor, and based on this, you know your target from the Two-Qualifier Method is the following:
Affluent working parents in San Francisco who want tutoring for their high school kids. What do you know about this group of people?
You know that they (1) have money, (2) want their kids to be successful, and (3) don’t have a lot of free time. Indeed, they really care about their kids being successful — probably more than they care about anything else in their lives.
They live in San Francisco, so you can already start thinking through your geographic niche. You could find out where these working parents hang out. Do they read mommy blogs, specifically based for the SF area? Do they belong to certain organizations? Where do they shop? Where do they eat? What about the schools where the parents drop their kids off?
And then, of course, you’ve got your offering, which is tutoring for private high school kids. Not all high school kids — private high school kids.
The Two Qualifier Method takes your ideas for targeting your service and structures them in a way that gets you many steps closer to reaching that exact customer. Once you’ve mastered this, you can much more easily pick pricing, marketing methods and all kinds of more advanced work. But, the hard part is really getting in their heads and identifying who your niche is.
Now here’s what you need to do to “Niche It Down” yourself.
Step 1: Make A List
Create a list of ALL the different characteristics and qualifications that your potential customer might have. Start with three.
Step 2: Shape Your Customer Characteristics Pyramid
You’ve listed out all of the characteristics of your potential customer. Now, organize the customer characteristics from Step 1 into a Customer Characteristics Pyramid: What aspects of their identities are most important? What are least important?
Step 3: Define Your Niche With the “Two-Qualifier Method”
Based on the examples above, create your Target Market using the Two-Qualifier Method below:
Remember: [QUALIFIER 1] — [QUALIFIER 2] who need (YOUR SERVICE)
Many of my students struggle to find the right idea, even if they have a target market identified. If you want more help finding the right idea to earn your first $1,000 on the side, I have a free “Idea Generator Tool” to go from “no ideas for earning money” to finding a profitable idea so you can start earning money on the side.
Ramit Sethi is the author of the New York Times bestseller, I Will Teach You To Be Rich.