“The Four Hour Work Week” – Part 3

Part 3 – A is for Automation

Outsourcing Life

In this section, Tim outlines his ideas for amplifying your output through using outsourcing. I think you can apply this to a ‘real’ business though – presumably that is what you do once you get past a certain point with outsourcing.

Tim attempts to say that employees can use similar techniques. While I don’t doubt that they can, in most of the stuff I do this would violate non-disclosure agreements pretty badly.

He then goes on to talk about that it is actually about learning to manage people effectively. This I agree with, and can actually justify using as an excuse to hire a virtual assistant (VA).

However, it comes with a warning from Bill Gates, no less:

The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnifiy the inefficiency – Bill Gates

Some rules for delegation:

  • Refine rules & processes before adding people
  • Don’t automate something that can be eliminated
  • Each delegated task should be time-consuming and well-defined
  • Have fun!

The cost vs output is discussed, and then the major concern that occurs to anyone about this sort of thing: “Sweetheart, did you buy a Porsche in China?”. Some mitigations for this are listed:

  • Never use new hire
  • Prohibit small-operation VA’s from subcontracting the work
  • Higher-end firms have their reputation at stake, so are likely to be more secure
  • Don’t use debit cards; credit cards can be reversed in the event of fraud
  • If they’re accessing websites, set them up a custom login rather than using your own (especially if you use the same login/password everywhere)

Basically just, “Be Sensible”, then.

Income Autopilot 1

This chapter is packed full of useful advice for starting an outsourced business. He points out that this business is identical in structure to how most of the worlds corporations are now run (eg, Microsoft doesn’t actually produce XBoxes, Nike doesn’t actually produce shoes).

The following criteria are given for a company (termed ‘muse’ by Tim – because the outcome is maximum cashflow for minimum time input):

  • Product based (service involves too much contact)
  • Affordably reachable niche market that you understand
  • Preferably groups that have magazines with decent circulation

Brainstorm products that:

  • the benefit can be encapsulated in a single sentence
  • cost $50-200 (well, price high, with good profit margin)
  • take no longer than 3-4 weeks to manufacture
  • explainable in a good online FAQ

Tim then launches into a discussion about how the ideal product is INFORMATION – high markups, hard to copy. I think he is sailing pretty close to the wind here, because the reader suddenly realises that s/he has just bought information off Tim.

However the chapter is packed with plenty of useful links (may get less useful as time goes on) to look into for inspiration/business.

Income Autopilot 2

This chapter goes into more detail on the ‘muse’, specifically, how to test your market easily and quickly. I think this is fantastic advice for people starting businesses – but obviously it has its limitations. Essentially, the advice is to whip up a website, and start a google/yahoo advertising campaign for a week. Then measure your results and see which product is most profitable to sell.

Income Autopilot 3

The final chapter in this section is about once you have your product & proven demand, how to build a company structure as efficiently as possible to fulfill it, while minimising your time input. Again, packed with useful information and links to read.

Part 3 Summary

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