Maximizing Capital Efficiency – How the Virtual Economy Can Help you Succeed in Business

Estimated reading time: 4 minutes, 15 seconds

The world is your playground.... Yup,  I really mean that.  No one on this Earth is better than you..  I realize it's cliche,  but you really can do anything you set your mind to... and it has never been easier in the history of the United States...  I truly believe we are living in revolutionary times unbeknownst to a lot of people.   Do you realize how many people are actually making a living in our virtual economy.  Did you realize you most likely participate but you are on the consumption end?   We hear all this hype (crap) of working online, get rich from home, blah blah blah.   You need to be weary of this stuff,  just as you need to be weary of anything... learn to be a critical thinker.   But anyway,  back to topic...

First off I want to  be clear on what I mean by capital ....  I am not referring to capital as a physical asset in terms of this discussion.   I am referring to the cash or goods that are used to generate income by investing in different businesses (whether physically or virtually) or even an investment in a physical asset such as a house, apartment building or commercial property.  I am defining efficiency as using our available resources (namely capital) to their maximum potential and "squeezing" every penny out of each dollar spent in an effort to maximize income.  This is not the traditional definition of capital efficiency but this is the term I'm using to explain how we can leverage the power of the virtual economy, in essence  taking advantage of the nontraditional economies of scale  that the internet provides.

I am no stranger to outsourcing sites as Elance.com and Scriptlance.com.  I have been using them for a decade now..... I have used them from everything to hire someone to ghostwrite for me to develop a windows program that I resold.   Naturally,  I use them to this day.   These sites truly take advantage of  the virtual economy.   Price is driven by supply and demand and contractors are rewarded when they do a good job... when people positively critique them their demand naturally goes up which increases the price they can ask for their services.   It is a shame that these websites did not exist when I studied economics...  I just wonder if their is a class on the "virtual economy"...  It would be so interesting because it can be studied in such grave detail.   You can extract details from companies and find out their business model with one simple keystroke...  it is so much easier to find out what a company is about than it used to be.   You can easily extrapolate  their income based on studying their social reach and keywords they rank for in the major search engines.  It is now possible to do a zillion and one case studies for any business related topic you could possibly think of.

Before I go off on a "how the virtual economy" has changed peoples' lives and standard of living tangent,  I want to discuss how the virtual economy can help you save money and maximize the output of your capital.  I'm not going to go into the problems of excessive  overhead and complexities of starting a typical offline physical business,  I'm starting to do that for the first time actually myself... and I intend on blogging about my experiences.   I will focus on starting a virtual business from conception to inception...  meaning from  the day the idea is conceived to the day you open  for customers.

For illustrative purposes,  I will open a web hosting business.... a business that hosts websites....   if you want a definitive idea of what it entails, check out this Wikipedia link. So what are the steps you would take before you start?  You are attracted by the residual income aspects of the enterprise and awe struck by the number of websites that are out there...  Furthermore there is this new thing called mobile hosting....  so you are convinced you should start this business and possibly dive into the latter.     How would the internet and virtual economy help you in this endeavor?  How would you maximize your capital efficiency (remember my definition above) to increase your new company's income?  Yes, you can build your company with never doing the following:

1.  Leaving your house
2.  Actually having employees in your office and or even "seeing anyone".
3. Make sales calls
4.  Rent office space (see #1)
5.  Worry about being robbed
6.  Talk to disgruntled customers
7.  Worry about employees calling in sick

Now of course,  you can do the above,  it just depends on what you want to do and your personality.....    You can hire people to work for you all online.... and you can do it on the cheap...  but depending on your business and your level of trust,  you can scale up to have a "real" employee if you so desire.  But the cards are yours to play.... Later in the week I will discuss the  "How, When, What and Why's" of starting your virtual business under the radar of anyone who knows you physically.

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