I am a huge fan of great, simple ideas. When I first heard of the TropicalMBA, I thought it was a brilliant concept with lots of potential. Just the name alone, conveys all the information you need to know. What better way to learn about business, then interning with a successful entrepreneur in an exotic country? In this interview, Dan Andrew talks about how he started the TropicalMBA, how he makes money and gives advice for aspiring entrepreneurs.

Please tell us about yourself

After studying philosophy in college, I sort of blindly jumped in to business because I assumed that business guys had a lot of freedom in terms of how they spent their time and where they can be located. I didn’t really have a plan, but in retrospect I think I was right about the business thing. Being an entrepreneur allows me a great deal of freedom in how I spend my time and I also get to be creative, which is really important to me.

It took me a little while to figure out how to get the kind of freedom I was looking for. I started my business in 2007, basically the day after I read the Four Hour Work Week. At the time I was working as the Vice President of Operations for a small manufacturing firm, and even though I was making good money, I wasn’t able to afford the kinds of adventure and freedom I wanted in my life.

At that job, I started hiring web developers and experimenting with outsourcing to improve our marketing. As I learned about things like SEO and web development it dawned on me that by becoming an expert in that stuff I could make a living from anywhere. After the business made its first few sales I quit my job and took off to travel.

I don’t want to portray it like one day I was just free and galavanting around the world. Although I can work from anywhere and do a lot of cool stuff, I still have tons of responsibilities (like payroll!) and its not all fun and games. For me, building a lifestyle business is a ton of work and freedom increases gradually and by degrees, it doesn’t just arrive overnight.

Where do you spend most of your time?

I’d describe my lifestyle as semi-nomadic. I travel a lot and generally spend about 3 months in a location. Since I quit my job in San Diego I’ve pretty much been drifting from condo to condo. I’ve spent time and done my work from San Diego, Pennsylvania, New York, Montreal, Saigon, Hanoi, Bangkok, Manila, Dumaguete, Puerto Galera, Phnom Penh, and Bali. I’ve set up offices and hired employees in Vietnam and the Philippines, and checked on our suppliers in China. This year I’ll be renting a space in Bali to meet and hang out with my TMBA interns.

Please introduce your main sites, Tropical MBA, OutsourcetothePhilippines and the LifestyleBusinessPodcast.

The TropicalMBA is basically my personal blog where I occasionally offer paid internships for aspiring digital nomads. I started the Lifestyle Business Podcast because I’m a radio nerd and wanted to have my own show, and OutsourcetothePhilippines.com started as a place where I could share my experiences setting up a business in that country.

You wrote that you had sales of more than $800,000 last year, exactly how do you earn an income?

We aren’t known for giving satisfying answers to this question. If my product were an information product I’d be showing everybody everything, but with hard goods its a zero sum market. There can be a downside to revealing how I make my money. For example: one of the products I sell is a particular kind of safe. If I start publishing on the web how much money I’m making there, and show the key terms, it really has the potential to damage my business.

In general, we basically do niche marketing but with manufactured products. My business partner @AnythingIan is a product designer. We got started in business by designing and manufacturing products for niches that we felt were under-served. We develop industrial products for hotels, restaurants, and we also have a line of consumer cat furniture.

We got two new interesting sources of revenue in 2011:
1) Contracting. We’ve started to do environmental design and contracting within the parking industry, which is really exciting because the deals can be quite large. We are currently working on securing new contracts and
2) Information products. This year I’ll be launching a private membership site for entrepreneurs, a guide to setting up a business in the Philippines, an expat living guide to Bali, and a product that helps people make money by flipping used cars.

I love the idea of the TropicalMBA, can you please tell us about that?

Starting the TropicalMBA really changed my life. Exploring the world while I work is really a dream come true for me and I’m so happy to get to help others make the same transition. I came up with the idea when I was in the Philippines looking to hire a PHP developer. I had a budget which was pretty decent. It occurred to me that when I was in a job hoping for things to change, I would have jumped at the chance to have that salary I had budgeted for a Filipino employee, provided I could earn it from anywhere and have a good learning experience out of it. So I bought the domain and put the offer up there. You can still see the first post on the site now.

The response was pretty overwhelming– I got some incredible applications for both semesters and ended up hiring two incredible guys who are now great friends of mine and still working for my business.

I’m really in love with the idea of the program, and if our business continues to do well I hope to provide many more internships in 2011.

Why did you go the podcasting route for the Lifestyle Business Podcast?

The podcast has been up until this point a 100% passion project. I’m a total radio and podcast nerd. I used to skip high school to listen to the Howard Stern show, and I still listen to tons of podcasts.

Podcasting is a lot of effort, but for me its so much fun. I feel I am learning to communicate better. I think the people who listen to our show have a more intimate and trusting relationship with us than if we were writing.

I’d say if I could do only one project for the next 5 years, it would be the podcast.

You wrote that you have more than 80 domains, can you give some advice on choosing profitable niches?

I think one thing about niche selection that isn’t talked about much is expertise, this is especially true in conversations surrounding affiliate marketing. The more you know about a niche the more likely you are going to be successful in it.

I’d also suggest that you chose niches that you love. Any way you slice it, being successful takes tons of work, so it sucks to slave away at niches you don’t care about and it’s difficult to keep up the energy for it. I’ve been successful in a few niches I don’t care about (safes?!) and I’ve handled it by hiring myself out of that role.

What country do you pay your taxes in?

We have a California S-Corp and we’ll be finalizing a corporation in the Philippines this year. We have an accounting firm, an office and warehouse in California, and we offer health insurance to our employees.

Have you had to set up a business or get any special visas or licenses to work in other countries?

Oh my! I could go on for days… Right now we’ve got people on the payroll in Vietnam, China, the Philippines, and the USA. Currently, all but our US employees are technically independent contractors. I’ve gone through all kinds of visa stuff to operate overseas, but in general, you can operate on tourist visas as long as your primary corporation is in the US and you aren’t making money in the country you are in.

Can you give some advice about outsourcing?

My favorite outsourcing site at this time is Odesk.com. My best advice about finding employees overseas is that you should treat them just like you would any other employee. I think a lot of internet marketers and online business people underestimate the time and commitment it takes to have an employee on board.

If you were new and starting today, what would you do differently?

I would find one small creative project that I could pour all of my energy in to. I have a zillion things going on right now, which is cool, but sometimes I’d like to have a little more focus. I also would not do hard goods again. It’s too tough to make a buck. I’d focus on information products and software. If I had to start form scratch, I’d just wake up every morning and do the Lifestyle Business Podcast.

Links
TropicalMBA
Lifestyle Business Podcast
Outsource to the Philippines
Follow The TropicalMBA on Twitter
Follow The Lifestyle Business Podcast on Twitter

I Can Make your Website!

There is a little nagging problem that interferes with the lives we really want to lead and that is MONEY. Most of us have to earn an income to survive and that is often the greatest barrier holding us back from moving to a new country or starting a new career. With ubiquitous internet access all over the globe, the “need to work” excuse is losing its meaning. We all have the potential to make a decent living with a computer, internet connection and our own skills and knowledge.

I think everyone should be working towards big ideas (Big Ideas Post 1, Big Ideas Post 2) with huge potential pay offs, maybe even the chance to change the world in some way. The problem is that it is also nice to eat and pay the bills along the way. One of the safest and most effective ways to earn money, improve your skills, gain experience and get noticed is to freelance; sell your skills and services online to other companies.

Almost any type of work can be outsourced now so there are no shortages of opportunities. You could be a virtual assistant, data entry clerk, language instructor, writer or editor, voice talent, musician, graphics designer, or web developer. Anything that can be done with a computer can be outsourced and completed remotely from anywhere in the world.

How much money you earn and the opportunities available depend on your skills, experience and how well you market yourself. It takes hard work and time to earn decent amounts of money, just as in any career. The faster you get started, the better off you will be.

Step 1 Focus on your skills and interests
If you are going to get good in any field it helps to love what you are doing. Some freelancers will do any type of work: article writing, graphic design, web development. This is a warning signal for hiring companies. People who say they can do anything, generally do nothing well. Choose one thing that you will put in the effort to be great at. If you need multiple skills, consider working with other freelancers to bid on projects. You could even outsource parts of the projects you are working on to other skilled professionals. For example, if you were developing WordPress blogs, you could focus on graphic design but hire  someone to do more complicated PHP edits.

If you don’t think your skills are up to par yet, start learning. There are great online tutorials and resources for anything you want to learn. The only barrier is your lack of effort.

Step 2 Start Building a Portfolio and Become an Expert
If you don’t have any experience, do some free or low cost work just to start building a portfolio. People cannot evaluate the quality of your services if you do not have anything to show them. Start doing work for others now.

Another great way to establish your professionalism is to blog about your expertise. The very act of communicating your knowledge shows that you are serious about your trade and are thinking about how to work more effectively. When I am evaluating people to hire I always check their websites. Only the most professional have quality blogs.

Step 3 Master Communication Tools
You need to become an expert at collaboration tools. Services like GoogleDocs allow you to share and collaborate on documents and spreadsheets. A good project management service like Norada’s Solve360 allow you to connect with all of your clients and share files, task lists, calendars and all information related to the project.

Step 4 Master Marketing
Competing on outsourcing sites will often put you up against low cost competition from around the world. It is possible to build up your reputation on these sites and get paying work but I believe there are better ways to stand out and get paid what you are worth. If you do remarkable things and get noticed in the press or on social media sites like Twitter, customers will come to you. That is your ultimate goal. You don’t want to spend a large chunk of your time quoting projects you will probably never get. The ideal situation is when potential customers are coming to you.

To get noticed do amazing things. Offer tips and suggestions on Twitter. Over deliver on your projects so your customers become evangelists. Join professional organizations. Write articles for industry related blogs. Get your name and your work in front of potential customers.

There certainly is no shortage of freelancers in the world, however there is a dearth of quality people who follow through on their commitments. Always do more than you promise and do it on-time with great client communications and you will never be short of work.

Here are some links to get you started.

Outsourcing Sites
Odesk Guru ELance

Freelance Sites
FreelanceSwitch

Design Sites
SmashingMagazine 2ExpertsDesign

People are Everything!

Hiring inexpensive developers and assistants in exotic countries for minuscule wages sounds very exciting and a great way to jump start your business and online ventures, and it is. Every business, blog writer or freelancer should be aggressively looking for ways to leverage their time and skills. However,  managing projects and outsourced developers is not easy. There are many problems that will arise in any outsourcing arrangement.  After hiring dozens of outsourced companies and individuals from countries all over the world I have learned some valuable lessons.

Projects are about People
Establishing relationships and connections beyond curt online communication, is essential to successful long term relationships. There will be disagreements and misunderstandings just like in any social setting.  Communicating through email, chats and even Skype is not the same as meeting people in person. Extra care needs to be taken in establishing the relationship and ensuring that both sides understand each other. Sometimes this can seem to be an inefficient use of your time, when all you want is to get projects completed quickly and cheaply. However, it is in the interests of both parties to try and develop long-term professional relationships. It is time consuming and expensive to be to be constantly looking for new developers and familiarizing them with the work you are doing. When you find good people do everything you can to encourage them to continue working with you including, many thank yous, clear and courteous communications and of course, give bonuses when the quality of work exceeds your expectations. Success is all about the people you are working with. For that reason, I recommend sites like oDesk which offer hourly billing. Project based outsourcing is too adversarial, both sides want to get as much as they can and get out. Hiring people for ongoing work shows a commitment by both sides for long-term mutual benefit.

Don’t get angry with outsourced workers, no matter how awry the project has gone. Try to end every business relationship professionally. I have found the need to go back and rehire developers that I thought I would never work with again just because other developers were far worse. No one is going to be perfect so don’t expect them to solve all of your problems. Great developers do not want to work with bullies. They want to be respected for the quality of work they do.

Great Quality Work is an Art
On any outsourcing site you will see people offering insanely cheap prices to do virtually any type of work. Most outsourcers without a track record and  reputation will offer their services at very low prices just to gain some positive feedback. Of course, you generally get what you pay for. One thing that many non-technical people don’t understand is that quality coding, design and even planning is much more an art than a science. All outsourcers are not created equal and most projects are not cumulative types of work. That means you can’t just swap out workers to continue where a previous developer has left off. Internet projects are not like building a house out of lego where anyone can come in and add the next blocks to finish it off. More often then not, if you have to change a developer the previous work will likely have to be completely redone because of problems with the way the first developer worked. A small team of talented people is far more productive than dozens of mediocre workers. Good developers generally refuse to work on edits to other coders projects for good reason, poorly written and remarked code is a nightmare to follow. It is usually faster and cheaper just to start from scratch.

Its all about Planning
The most important work in any development happens in the planning stage. Beware of developers who don’t spend a lot of time upfront clarifying exactly what you want and how it should be done. Inexpensive and inexperienced developers will want to rush into the coding and quickly try to finish the projects regardless of how poorly it works. They care far more about getting paid then being part of cool projects. Artists expect to get paid more but also want to build something beautiful that they can add to their portfolio. Artists only want to build great things they can be proud of.  Talented people will appear more expensive in terms of hourly wages, but quality work is always cheaper over time. Beware of the many novices who pretend to be artists. These are the worst people to work with. They act like artists but don’t have the skills to do the work.

Find Outsources Who Disagree With You
The best developers and designers will generally disagree with you the most in the early stages of a project. They are the experts and will generally fight with you if your ideas are weak or don’t make sense. This is exactly as it should be. You should listen to experts, that is the only way to build great things. It is the developers that agree with everything you say that you need to be leery of. Most outsourcing companies exist to pump out work quickly so that they can make as much money as possible. They are the ones that say “Yes, sir.” “Of course, ma’am.” And after a poorly hacked together solution, they are the first to ask, “You send us money now?”

With a great team, amazing things can happen. With mediocre developers all the time and money in the world will still produce lousy garbage. Always be on the lookout for great talent. When you find them do everything you can to keep them.

I have been outsourcing to lower wage countries for about 5 years now. Only recently have I started to read about people with reservations of sending work overseas, particularly when their own citizens are facing increasing unemployment levels. Some people also feel in is unethical to pay overseas workers such low fees. I would like to address some of those ideas.

First of all, anyone who establishes long term relationships with professional outsourced developers will realize that the world is not falling to some inhumane subsistence wage. Quite the contrary all talented, professional workers wherever they are located soon start to earn world class incomes. I have seen this scenario play out many times. Low cost outsourcers in countries like India or the Philippines start by offering their services at ridiculously low rates; sometimes only a few dollars per hour. Workers who consistently over-deliver quality work, on-time can steadily increase their hourly rates. There are plenty of workers living in third world countries making first world incomes. It is not unusual for a talented worker to make five to ten times their starting wage in only a couple of years. I have seen it happen with several of my developers. Western income levels are not going down as much as poorer countries’ incomes are increasing.

A few dollars per hour may seem like a criminal wage in America, or other richer countries but in many developing countries this can be well above average. Anyone who has traveled through countries like China, India, Thailand or the Philippines understands the extreme levels of poverty many people have to endure. Even professional careers often only pay $300 or $400 per month. You are not taking advantage of people, you are giving them great opportunities to earn more income and expand their skills.

Another key issue is the entire idea of the nation state. It is important to understand that the concept of nations and countries was only invented a few short centuries ago. We live in a world where it is possible to live and work anywhere. Outdated notions of national boundaries only serve as barriers to the interconnected world we live in. The idea of countries was fabricated in order to better manage trade, commerce and taxes in market oriented economies. I think it is important to start recognizing the fact that we live in a global network based world. Hiring locally or the government equivalent of industry subsidies may protect local producers temporarily but at the cost of disrupted natural trade flows and harming the poorest people of the globe. Consider the fact that in some countries parents are forced to sell their children in order to survive. They are not barbarians, they truly have no other choice. How desperate would you have to be to give up your children?

Most people have no problem buying low priced goods from Walmart, or eating a diet largely comprised of processed food made in distant countries. We all want lower prices. In fact, we demand lower prices. Where do you think those low priced goods come from? They are all produced in factories where workers are earning just dollars a day in harsh conditions relative to developed countries. Purchasing those products does far more damage to the workers, environment and your own health than outsourcing work on the Internet. Think of all the oil consumed in transportation, chemicals used in production, and generally abusive working conditions of overseas factories. I am sure that an overseas Philippine data entry clerk making $2 per hour is better off than most other workers in their own country. In fact, it is impossible to abuse overseas workers. If they are unhappy with the working conditions, all they have to do is stop answering their email.

Don’t forget that those that earn more income want to spend it as well. They buy western fashion, listen to western music and drive western cars. Economists call these multiplier effects. Every extra dollar spent actually generates about $5 in total benefit. The dollar you pay, goes towards salaries and profits of others, who in turn spend the money and generate more salaries and profits, and so on. This is basis for all the global economic stimulus packages being implemented in the world.

The outsourcing revolution is bringing millions, maybe billions of low income people onto the world stage. Teenagers in New Delhi can effectively compete for web development projects with companies in America. The Internet is truly revolutionizing how we live and work. Age, education, experience, race, and nationality no longer matter. Purchasers only care about your ability to deliver on your promises. That is amazingly liberating.

What everyone should really be angry about is all the squandering of opportunities in the world. Far too many people in richer countries have grown up in times of extreme abundance. We have become fat and lazy in an era of increasing convenience and decreasing costs. We all expected the good times to continue forever. Well they have ended. If you want to be rewarded for your work, you have to create real value for your fellow citizens. Those citizens are not limited by the artificial boundaries of nations, but by the one planet we are all fortunate enough to inhabit. Hire the inexpensive worker in the Philippines. With the money you save, strive to create more value in your own company. That will help your customers create more value in their own lives and maybe the lives of the customers they serve. We do not live in a zero sum world.

This is how to run a business!

There is a distinct difference between having a job or having a business. Many small business owners, freelance workers and professionals have built themselves good jobs with a decent income, but these types of self-employment are often not real businesses.

What is a Job?
A job is when you get paid for doing work. Your salary is generally directly proportional to the hours of work you put in.  Work more hours – make more money. Work less hours – make less money. Most people are stuck in a job for life. If they should ever fall ill, get injured or worse, income stops coming in.

What is a Business?
A business is about creating systems and processes that earn you money irrespective of the time you put in. Ideally a good business can get to the point where it almost runs itself. Ideally, an effective manager shouldn’t have to do anything, because her employees and the systems put in place practically run the business by itself.

A key factor in running a business is having people to do the work. Work online has opened fantastic opportunities to outsource almost any type of work to experts or inexpensive unskilled staff from anywhere with an internet connection. Online tools like Google Docs and services like www.norada.com make collaboration and project management with these outsourced workers sometimes better than working together in the same office.

Focus on the One
Productivity and efficiency are all about maximizing results for the least amount of effort. We all need to focus on work that will create the maximum impact on our lives. I call this, focusing on the one. Everything else should be outsourced or handed off to employees.

Sure you can design your own website, maintain your own servers, manage your own newsletter lists and answer your own emails. You can do everything. In fact most people starting out, do everything on their own out of economic necessity. However, by trying to do everything yourself, you will sacrifice output, quality or both. Get good at outsourcing to professionals and you can accomplish a magnitude more than working alone. Outsourcing is not without its pitfalls, however, you can’t become a business without getting others to assist you in your endeavors.

There are far too many mediocre businesses competing for attention. You need to do amazing things to stand out. Focus on what you do best and create systems and processes to effectively manage other outsourced professionals. That is how great businesses are built. Stop being an hourly wage slave and turn your job into a business.