profitable_side_project_handbook.md

The Profitable Side Project Handbook

Practice advice and inspiration to help build a profitable side project, by Rachel Andrew.

Why Side Projects?

Side projects are about more than just the money:

• opportunities to learn/develop skills as business person
• have total control on a project
• possibility of growing and freeing you from your main gig (freelancing, consulting, FTE)

Dreaming small is underrated. Develop something small, launch it, and grow it slowly. If it provides real value, it will generate revenue. Develop something small means developing an MVP that people are happy to buy.

This book is more about the infrastructure than the product. You'll need to implement: revenue strategy, sales software, marketing channels, branding, support systems, and more.

Action steps:

1. Imagine it's one year from launch, how do you define a successful one year mark for your product?
2. What features can your remove to make it simpler/quicker to launch?

Your Product

Some labels that can apply to your product:

1. Software as a Service (SAAS)
2. One-off purchase
3. Plugins, themes, and add-ons

Pros and cons of SAAS:

• recurring revenue (the biggest pro)
• control the environment (easier to debug problems when you run the server)
• easier customer support (since you have the customer's data on hand)
• control of the customer (you've got their email/info, easier to market and run A/B tests)

• you're in charge of uptime - costs more to maintain

Pros and cons of one-off purchases:

• far less infrastructure is required to sell product
• usually faster to launch
• can be sold for large up-front price
• if your site is down, customers won't hate you

• life-time-value of customer may be low

Pros and cons of plugins, themes, and add-ons:

• marketing is easier since there's usually already an established channel or marketplace
• great first step towards product portfolio

• usually sold at a smaller price - marketplace competition can be tough

Andrew brings up putting your main product on hold and developing a small product first. A small product can get out the door quicker and gives you experience creating/selling products. Some examples are: ebooks, plugins, or themes. An added bonus is that you'll be building up your audience. Perhaps customers who purchase your ebook may be interested in related software you'll release later down the line.

There's also the concierge approach - a product/service hybrid. Think about those PSD slicing services. It's a service underneath the covers, but customers purchase it like a product. You can also add a concierge service onto an SaaS or package it with an ebook. Some ebooks offer tiered packages, where the highest tier includes a 1-hour consultation.

Validate your idea before running away with it. Talk to people, ask questions, and create a landing page to capture emails. Andrew suggests sticking with a market that you're a part of. Web developer? Consider making products for other developers.

Action steps:

1. List problems your product will solve
2. Find 5 people who would be ideal customers
3. Setup meetings and find out more about the problems and run ideas past them

Productivity

It's tough working on side projects since most of your time is already focused on your job. This chapter is filled with some tips.

The Cascading To Do List by Brian Casel:

1. Decide on your six month goal like "launch my side project"
2. Determine monthly actions to accomplish goal
3. For each monthly action, determine two week sprint goals
4. For each two week sprint, determine daily tasks

Some other tools/techniques mentioned are:

• Getting Things Done (GTD) by David Allen
• Productivity software like Basecamp and OmniFocus
• Pomodoro Technique

Pomodoro Technique happens to be my favorite productivity tool. See my notes in this same directory.

Have you considered outsourcing?

1. Outsource to bring in skills you don't have (design, copywriting, marketing, etc...)
2. Outsource things you can do but shouldn't (research, bookkeeping, development, etc...)
3. Outsource small tasks to a virtual assistant (emails, research, getting quotes, etc...)

Action steps:

1. Determine how much time you can devote to your side project each week
2. Use cascading to-do lists to plan a launch
3. Determine steps you can take to improve your workflow or development environment
4. List areas where you can outsource to bring in skills you don't have
5. List areas where you can outsource to gain more time (like bookkeeping)

Pricing

Andrew discusses how they determined the pricing for their own product, Perch:

1. Determined the ideal customer: a design agency or freelance web designer who cared about markup
2. Studied their competition: similar products but none exactly the same
3. Explored possible pricing methods: free core w/ add-ons, free or inexpensive purchase with commercial support, free light version with paid full-featured edition, fully paid product
4. They opted for a simple per license all inclusive cost
5. Determined actual cost of license, keeping ideal customer in mind opted for no more than a single hourly rate of a freelancer so he/she can absorb the costs into the project

Is your product saving money? Is it getting more money into your customer's pockets? Is your customer a business that makes a good amount of money? Here are some more pricing options:

1. Freemium - free core with limits. Pay to lift limits.
2. Tiered subscription pricing
3. Per seat pricing
4. Pay as you go

Think about the customer acquisition costs and lifetime value of a customer. You'll have to spend money for advertisements and marketing to acquire customers. You want the LTV to be higher than customer acquisition to make profits.

Action steps:

1. Decide on your ideal customer
2. List possible pricing methods
3. Research competition: what pricing model, what's their ideal customer, what are people saying about their pricing on Facebook/Twitter
4. Begin a spreadsheet with the costs of selling your product

The Practicalities of Selling Products Online

Some different options for selling your products online:

1. The traditional Merchant Account and Payment Service Provider (few go this route these days)
2. All in one services - banks + merchant account + PSP
3. PayPal - it's easy to setup but people do experience frozen accounts
4. Stripe - just as easy as PayPal to setup, great UI and API

No matter what you choose, make sure the customer knows the credit card charge is coming from you! The name on their bill will be your company name or your name, not your products name. You'll have to brand your website correctly - otherwise you'll get a lot of chargebacks.

In this chapter, hosting is also discussed:

1. Shared hosting - Andrew recommends avoiding it even for a simple marketing site
2. VPS - this one is recommended since you won't share resources
3. Dedicated - this is unusual to use from the start since you pay for unnecessary resources
4. Cloud hosting - also a popular choice with ability to scale up/down quickly

Remember to keep your user's data safe, even if you're storing limited data. You don't want to leak out their email addresses. Also be sure to backup your data and run server monitoring.

Gather information about visitors and keep track of conversion rates. You'll want to track the conversion funnel to see where it leaks. Don't get carried away with analytics at first, just make sure you have analytics setup for now.

Action steps:

1. Decide how you'll take payments
2. Sign up for payment provider(s)
3. Research hosting options
4. Sign up for analytics service and add to your landing page

Identity and Brand

Andrew's product, Perch, has a strong visual identity using an illustrated bird as its mascot. They wanted Perch to be fun and the illustration reflects that.

If you aren't a designer, think about outsourcing your identity and brand. If you can't afford it, learn about visual hierarchy and simple design principles from books. Brian Casel says the biggest mistake people make on their product home page is having too many things compete for attention. Stay focused on a single pain/problem.

You can also achieve a strong identity through voice - via copywriting. Advice from Joanna Wiebe:

1. Let copy lead design
2. Have one goal per page
3. Make all fonts bigger
4. Center and bold headline just below the global nav
5. Communicate what's unique and highly desirable about your product on home page headline/subhead
6. For landing pages, keep message match on the top of your mind - match CTAs
7. Put extra effort into CTA/nav
8. Go where the eye goes to images
9. Replace "we" with "you", it's all about the customer
10. Use arrows
11. Show and tell

Check out Brian's and Joana's respective books:

• http://casjam.com/design-for-conversions/
• http://copyhackers.com/

Action steps:

1. Determine how your product should present itself: informal or formal?
2. Remember a beautiful site doesn't mean high conversions
3. Put together a document detailing your identity and tone
4. Talk to potential customers and take note in their interests/problems, reflect it in headlines

Setting Up for Support

Use support as a form of marketing. Make customers happy and they'll tell their friends.

Helping your customer will give you firsthand experience with their pains and frustrations. It gives you feedback to make your product better. Use support as product research.

Some tools for support include:

1. Ticket management system
2. Support statistics (help desk software provides this)
3. Canned responses (email templates)
4. Consider using a public forum for scaling
5. Consider using social media like Twitter or Facebook (not always viable)

Be responsive to pre-sales support. If you provide good customer support before users are customers, they'll convert.

You'll also have to deal with difficult people. Just ignore nasty comments and answer any legitimate support questions.

Action steps:

1. Keeping ideal customer in mind, determine how to support them
2. Find a 3rd party help desk
3. Check out how your competition is handling support

Planning a Launch

Always setup a pre-launch page where potential customers can sign up with their emails for more information. Do this before you start developing. Joanna Wiebe has some tips for copy:

1. Write the headline or your visitor (don't worry about making it too short)
2. Don't hide your personality, be natural
3. Don't ask for too many fields on email sign up
4. Don't use "Submit" or "Sign Up" as CTA button text, use something frictionless that completes the phrase "I want to..." like "Be the First to Try [ProductName]"
5. It's not one-way, collect data from prospective users
6. Drive a drip campaign and keep in contact with your potential customers!

Sacha Greif also recommends building your email list as the most important thing you can do for bootstrapping a side project.

Rob Walling has some advice on a slow launch:

1. Bring new customers into your application in groups and test: onboarding, support scalability, technical scalability, problem-solution fit
2. Listen to feature requests and nail down the value proposition for that first group
3. Qualify customers that you let into your application

Action steps:

1. Get a pre-launch site live
2. Make sure it has a call to action and encourages email sign ups
3. Plan a simple pre-launch email campaign, share your progress
4. Ask your list and other followers to help spread the word
5. Decide whether product is best suited for big launch or slow launch

We Launched! Now What?

After launching, your customers will have plenty of feature requests. Here are some tips:

1. Never put a date on anything
2. Collect use cases, don't implement specific features for individual customers
3. Solve customer problems (don't just mindlessly implement all requests)
4. Protect the core product use case. It's your vision! Make sure it works for your IDEAL customer, not single specific ones
5. Make frequent small releases
6. Don't be led astray by the vocal minority

Some tips on marketing your product:

1. Content marketing is great but requires a lot of work to create content. Think about what content would attract your ideal customers.
2. Consider outsourcing content marketing if you hate writing
3. Consider sponsorship
4. Consider advertisement with Adwords, Facebook, Twitter, etc...

Remember to enjoy the journey!