Make Money While You Sleep
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Vinewave doesn’t produce sexy consumer software, which is why you’ve probably never heard of the company. Its most popular piece of software, for example, is a staff directory. But it is special for a number of reasons. First, Vinewave is a South African company, despite the fact that you’d never guess it from perusing the website — all prices are in US dollars.
Another surprising aspect of the business is its client list. Users include Sony, Samsung, Harvard Business School, the United Nations and SpaceX. Most astonishingly, however is the fact that, for a very long time, it had only a single employee: Founder Lawrence Cawood. Since 2010, Lawrence has owned and operated Vinewave completely on his own, from a single computer at his home.
Although he is now looking to scale the business aggressively, his initial aim was to create a business that could provide for him and his family, without demanding 80-hour work weeks.
“I wanted to be able to spend time with my family, so my aim was to create a lifestyle business that didn’t demand crazy hours, and that would allow me to work when and where I wanted,” says Lawrence.
Vinewave ended up being exactly what he was looking for. Working on his own, Lawrence created a business that quickly boasted around R1,6 million in annual revenue, and a valuation of R10 million.
Being an online business that targeted companies all over the world, time and space was irrelevant. “I would often wake up to discover that I had made R60 000 in sales while I was sleeping,” he says.
Doing the work
Of course, that doesn’t mean that you can become a multi-millionaire while watching TV in your pyjamas. Lawrence is quick to add that launching Vinewave wasn’t easy. Sales were slow to come in and refining his software demanded hard work.
“It took me six months to make my first sale,” says Lawrence. “Also, as the only person in the business, I had to work hard. I was responsible for absolutely everything: The website, advertising, SEO, product development, and so on. However, the nature of the business allowed me to do things on my own terms.
“Where and when I did the work was irrelevant, meaning I could spend time with my family when I wanted. Even though I had to invest a lot of time and energy into the business, it provided a certain sense of freedom. Normal business limitations didn’t apply.”
As mentioned earlier, Lawrence is now working harder on the business than he did in the early days, since he is looking to scale, but Entrepreneur spoke to him about the ins and outs of creating a lifestyle business or side project that doesn’t demand absolutely all of your time.
Here’s his advice for creating a business that can make money while you sleep.
1. Product, not service
The more successful a service business is, the more time you’re likely to have to invest in the business, since you are essentially trading your time for money. For example, if you have a photography business, every new client will cost money, require more time and add complexity to the business.
Selling items online, in contrast, is easier to scale as a business, since the difference between selling ten and 12 items isn’t all that much. Easiest of all is a business that sells a digital product. The added cost and complexity that comes with every added customer of a piece of software is very small, since there is nothing to package or ship. For this reason, a company like Facebook, Dropbox and, indeed, Vinewave is hyper-scalable.
“I think it’s important to be passionate about what you do and to pursue something that you’re knowledgeable about, but you also need to be realistic about the demands of the business you have in mind. Some ideas and products demand more time and resources than others.
“If you want a business that you can run on the side, you need a product that is relatively easy to ship and sell. Software is easiest, of course, but a physical product isn’t out of the question. Just make sure that systems and processes can be put in place to streamline the process and free up time.”
2. Build a better version
Unless you’ve got a lot of time and money on your hands, reinventing the wheel isn’t a good idea. A company like Google, Apple or Amazon can gamble big on revolutionary ideas, but if you’re looking for a manageable side business, you want to instead focus on creating a better version of an existing product.
“You want to look at what is already selling, and build something similar, but better,” says Lawrence. “As always, you want to identify a burning problem, and provide an elegant solution that people are willing to pay for. The last thing you want to do when you don’t have a lot of time and money to invest is to try and create a new market on your own.”
3. Listen to customers
The best way to launch a business that scales quickly and easily is to create a product that customers are eager to buy.
“It took me half a year to make my first sale. I wanted to sell a suite of products, while customers wanted to be able to choose the products they needed. It’s important to listen to customers and give them what they want,” says Lawrence.
“Also, remember that customers are sophisticated these days. They have high expectations. Even though I am selling a B2B product, I’m cognisant of the fact that my users are also users of things like Facebook and Instagram. Ultimately, people use things that are elegant and simple and easy to use. They pick the best product.”
Unfortunately, this means that there are no shortcuts to success. A bad product won’t find traction. Lawrence suggests launching an MVP (minimum viable product) and refining it. “Listen to customers and create something they truly want,” he says.
4. Think big
Lifestyle businesses used to be small and location-specific. Thanks to the Internet, that’s no longer the case. Geography has become irrelevant.
“Just because you have a lifestyle business doesn’t mean that you have to sell to your immediate community,” says Lawrence.
“You can now sell to the whole world, which means that you can make money anywhere, at any time. You can sell around the clock. This is particularly true if you’re selling a piece of software that’s delivered instantly, but it’s also true of physical products.
“Shipping around the country and internationally is less difficult than it once was. Don’t think small. Expand your potential market as much as you can.”
5. Look and act professional
The traditional shopfront is increasingly being replaced by the website. Vinewave’s customers, for instance, had no idea that it was a small South African company with a solitary staff member. Lawrence spent time and money to create a professional website that looked great and attracted large clients, and that was all that mattered.
“The size and location of your operation doesn’t really matter, provided you appear professional at all times, and offer great service,” says Lawrence.
“As I said earlier, customers have high expectations these days, but as long as you meet those demands, everything else is irrelevant. You can sit at home and answer customer emails in your underwear, as long as your customers are satisfied with the product and service that they get from your company.
“Around 98% of my customers are from overseas, so I knew it wouldn’t work if I tried to sell in rands. Instead, I created a website that sold in US dollars. You have to respond to the demands and expectations of your customer.”
6. Marketing made easy
A lot of people are intimidated by the thought of marketing and selling a product. For many, the idea of creating a product is enticing, but they are intimidated by the thought of having to market and sell. According to Lawrence, however, marketing and selling is easier than ever, thanks to the Internet.
“I’ve almost never spoken to a customer and I rarely interact with them via email. If people are happy with your product and it does what they want it to do, you rarely hear from them. So you needn’t be put off by thoughts of difficult customer service,” says Lawrence.
“The same is true of sales and marketing. Through things like SEO and online ads, you can make customers come to you. You don’t need to cold call, just create a product people are actively searching for. Spend time and money on your website, and invest in SEO and online ads. When done properly, these things can drive your entire business.”