Luke Barry

One of my favorite authors and one of the books that has changed my outlook on work and life is Tim Ferris and The Four Hour Work Week. In the book he presents some amazing ideas not the least of which is the idea of a muse to finance one’s lifestyle while eliminating the need to be physically present. To most this idea immediately conjures thoughts of sunny beaches and margaritas void of the financial stress that our Jones chasing neighbors struggle through. All you need is to find that great “Muse” and life’s problems go away, right? Well, in theory if one can generate a system that generates income without the need to be present one can begin trading assets for income instead of employment for income. All financial pressure then goes away. Although being debt free will do more for financial peace of mind then anything else, but that is for another post. The idea literally rings in the ears of those that come across it. It’s a breakthrough in one’s financial intelligence that could allow them to be more free than ever before. The only problem is finding that “Muse”. The muse is simply a passive income producing vehicle that is a well run system independent of your time. Finding the muse is a difficult endeavor and one that must be on the minds of most of the readers of the 4HWW so I want to devote some posts to muse finding that I hope will be helpful. This endeavor is initially a right brain process of creativity and one that will look differently for everyone, but feel free to emulate others who have found theirs. It’s important to take knowledge from a number of different sources as I have taken it from Ferris as well as Kiyosaki’s Rich Dad Poor Dad and others to come to higher financial intelligence. Your muse may not be a single entity but may be through multiple sources of income and hence be a set of systems that needs to managed with a different set of skills. The principle is the same though and that is income with out physical presence. Let me know what you guys think and I would love to hear some ideas.

Muse idea of the week: Vending

I initially came across the idea of vending as a muse for passive income from geniustype who used bulk candy vending as the vehicle. I then came across the ren men who uses knock out vending - those punching bag games seen in bars - as a source. Both have their upsides and down sides so lets go over a few that concern us.

1. Bulk Candy Vending:

   • Pros: low start up cost. Low maintenance. Locator services.
   • Cons: Diminishing returns in terms of passivity. This would be a case of managing multiple streams of income. Max out the income generating potential of this muse and start another.

Super cheap to get into. I found machines for as low as 25 dollars a piece. From what I can gather it takes about 40 machines to average $1000. While it only takes a couple of days a month to service the machines, diminishing returns can be seen with regards to ones time. The more machines the more money and the more time to service those machines. Although, the simplicity of these vending machines makes maintenance on the mechanism itself very low. There are also locator services to aid in finding high quality locations.

2. Knock Out Vending:

   • Pros: more passive than bulk candy vending. More income potential than Bulk candy vending. Locator service.
   • Cons: a little more pricy than Bulk candy. Could require some tech skills to fix if machines malfunction.

A little more costly to get into but not crazy. Packages range from $4000 for one machine to $36,000 for 10. Not to bad considering these machines can bring in close to $600 a machine. A plus side is no filling the machines with product - all profit. The mechanisms in these machine could potentially require more technical expertise to maintain though. Knockout vending has a locator service that could be a great tool if one wants to buy more machines. With fewer machines required to make the same as a bulk candy vending route this options starts to look good in terms of time. Check out this ren men show post to see how actual owners do.

I have a confession to make. I have absolutely no idea how to tell people what I do. It’s really embarrassing for me because I feel like people need to have an answer to that question. There are so many things I want to do with my time that I can’t really answer that question in a clearly defined, articulate way. But the confusion doesn’t really start there.

The problem with that question is people don’t want to know what you do with your time, they want to know how you produce an income - what you do for money.

I came across the idea of passive income from a young age. Passive income generation is way to produce income that is disconnected from your time. I’ve always been intrigued by this idea because I have so many directions I want to take with my life and so many drastically different things I want to do with my time that I really couldn’t do them unless there was a way to disconnect time from my income.

So what are some ways to do this? If you could literally only work 5 days out of the month, how would you survive? You could attack this feat from 2 opposite ends. Eliminate debt and cut down on unneeded expenses or find sources of passive income. Since I already have close to zero expenses I wanted to seek out sources of passive income, so lets go over a few.

• Dividends - Definitely the most passive source of income. This is also the most risky as you will have the least control over how much you make. And unless you really keep a close eye on the market and know the intricacies of this type of investing then you could lose big, which would undermine the whole passive idea in the first place.
• Bulk candy vending - A strange and seemingly juvenile way to produce income, but because of the passive nature of this venture I wanted to include it. We’ve all seen the small triple unit gumball machines at restaurants and hardware stores or Wal-mart. Well each machine can carry a cost as low as 100 dollars and produce 20 to 100 dollars a month depending on the location. A 10,000 dollar investment placed in high quality locations can produce 2,000 to 10,000 dollars a month. THAT IS HYYYUGE. It doesn’t sound so juvenile any more. The best part is the time commitment. With each machine needing service about twice a month, this venture is about as passive as it gets. And stay away from the drink machines as they make more money but take exponentially more maintenance time. Spend 5 days a month and visit 20 machines each day and then rake in the mula!
• Bench advertising - producing 200 to 400 dollars a bench makes advertising on park and bus stop benches a power house of passive income.
• Automated e-Commerce website - I am currently pursuing this direction and the income cap is topless. Full automation is possible and there are a number of resources out there like Doba.com to make products available through dropshipping which will make the idea of holding inventory obsolete. Find a automated check out cart like shopify and let the bank account sing!
• Rental income from residential and commercial real estate - Passive income but a huge investment. This is the end game for me. 80% of the weathly have become so through real estate investments is a statistic that can’t be ignored. The income potential is absolutely ridiculous and it will always appreciate in the long run regardless of economic activity. Every body needs and will always need a place to live or run a business.
• Rental income from storage units - also passive and a huge investment but is an end game player to invest in.
• Rental income from mobile homes - I like this idea because of the cost comparison with stick built homes. I personally know a mobile home park owner with 80 mobile homes averaging a rent income of 500 dollars a month.$40,000 a month isn’t to bad. The best part is that he has never spent more than 12,000 dollars for a trailer. 12,000 vs. the 140,000 spent on stick built house. Although the land cost and convincing the city to zone the land for mobile homes can be difficult and expensive but the income potential is amazing.
• Ice machines - Have you seen those large ice vending machines in parking lots? They produce about $25,000 a year per machine. I imagine the maintenance can be time consuming if you rack up a lot of machines but none the less this is a extremely passive venture.

I want to do a million things with my time and don’t want to sacrifice my dignity for a paycheck from the man. Passive income can be a way to take freedom back from the boss. I personally plan on pursuing each of these income tools and managing the streams of income. So if you have had any experience with these tools leave a comment and let us know how it’s going.

Recently my brother and I have started a business. We’re calling it B3 Commerce - Bodacious Barry Brothers Commerce. We are determined to find out if a profitable business can be built solely around suppliers who dropship products directly to customers. This model greatly reduces risk by allowing the retailer - B3 Commerce - to not hold inventory and only pay suppliers for product when the customer orders a product from our website. By being an online retailer with out a brick-and-mortar facility coupled with dropshiping as a distribution channel we can virtually eliminate risk and focus entirely on marketing the products and branding the website. It almost seems too good to be true. On top of the low risk model there is the ability to automate every operation in the buying decision process. For example, a customer finds the site through a search engine such as google. Search Engine Optimization can allow customers to more easily find our site. The customer then finds a product and places an order. This is where the elegance of this model comes in - in terms of automation. We and the supplier then gets an email notification of the order. The supplier dropships the product with our label on it to the said customer, notifying the customer and us of a successfully shipped product. The customer’s credit card information is given to us at the time of the order. We then charge the credit card and have up to 30 days to pay the supplier - this agreement is known as a net 30 terms agreement.

The beauty of this model is the work-to-profit ratio. As you can see very little is needed in terms of customer support, shipping, and supplier relations. Every major process is covered and automated. It seems too good to be true. We plan to find out if it really is. The model is realistic and plausible and it’s done on hundreds of sites on any given day. So what is the catch?

I’m finding more and more that what I learned in school has been sorely disconnected with the skills needed to be PERSONALLY effective and productive. In school one is given a syllabus and told to go to class and when the tests are. To be successful one simply has to play by the rules and more or less just be physically present. In other words, there was a structured way to play that game with a wrong and right answer that would signal pass or fail. In this venture of building a business, there are blurred lines that require a type of mental finesse and creativity that wasn’t required in school. These lines aren’t in most jobs where presence is demanded over productivity - jobs intended for the successful students. I’v been a student for 3/4th of my life. I have been successfully indoctrinated into this blind pursuit of the next passing answer. I am now in a new arena of education. An arena that seems to require a whole new part of the brain to operate in than what I’v been used to. Mostly, it comes down to the ability to productively manage the self. There is no authority figure to please or for that matter to let me know I’m not a pleasing student. The passing of this test seems to rest solely on the number of sales our business makes. There is no formula to fill in. No process that has been tested repeatedly. No science.

I have found something out about myself. I have a need to SEEM productive rather than actually BE productive. I genuinely believe something has gone wrong in me through upbringing, through the education system, through some need to be accepted by a vague authority figure. what ever has gone wrong has made me feel more fulfilled when I am present than when I get the job done. This leaves me in a strange position. The model I have chosen to pursue - dropshipping - has required a unique stretching of my comfort zone. In stead of the typical model of right an wrong I am given a number of answers that are all correct. A strange thing happens to someone who is given freedom to be creative when all they have ever been given is an order to regurgitate information. They freeze. It takes time to wake the creative sides of a brain that have been dormant for so long. But that is exactly what has to happen. Creativity and the ability to persist with ones direction are the criteria of success in the new approach to life. A new level of personal management has to be practiced in this persistence. With no authority figure to please and no syllabus to follow there are any number of paths that may be correct and any number of ways to fail. But one sure way to fail is to remain frozen. To not allow the creative elements that were trained out of us to wake.

Oscar Wilde said, “work is the refuge of people who have nothing better to do.”  In the end, we hope to find something better to do. Something that allows us to make an income without the need to be hyperactive but not productive. Without having to be present just for the sake of being there. We want something more from this life. We know it’s out there and we see it in the business we are pursuing and in the waking up of our creative potential. There are no wrong answers here only a lack of decisiveness.