First, some personal history for context…

At present day, after about 20 years of working online and never having a 9-5 job, I am in the privileged position of being able to live a comfortable life while working less than four hours a week.

That’s all great, but let’s see how I got here…

When I first started out designing websites, doing affiliate marketing, and myriad other little enterprises one can do online, I was overjoyed to see some money pouring in. Soon enough, instead of just pocket money, I was making a full-time living from my online work, and I was euphoric about the whole thing.

Coming from a tiny island where working online was unheard of at the time (and thus a very risky thing for me to try out) I was so happy to have my ideas and dreams validated.

Prior to embarking on my online journey, I had followed the path that all parents in my country want their children to follow; study hard and obtain a university degree. In fact, I had obtained not only one but 3 University degrees by the age of 23. At that point, however, after having spent thousands of dollars on my education, I flew off on a tangent and instead of getting a job at a local company, I decided that I’d rather do my own thing.

For a long time, my parents and friends thought I was crazy for doing so. In the end, however, it all paid off and I am where I am today only because I had the courage to take that decision back then.

Is it so easy to make money online?

As soon as I started seeing some success with my online ventures, the basic human instinct of sharing knowledge made me start trying to persuade everyone around me to do the same thing that I was doing. I couldn’t believe why my friends complained about their low salaries, terrible bosses, etc, but then wouldn’t even consider putting in some effort to try and earn some money online with the hope of leaving that dreaded job they complained so much about. Heck, they didn’t even seem one bit interested in how I made money online.

This doomed exercise of evangelization continued for several years. I thought that everyone could make money online, that it’s simple and so much better than working a 9-5 job for someone else.

In retrospect though, and after having met many other successful online workers and entrepreneurs, I’ve realized that making money online is not for everyone. It’s just as difficult (if not more so) than getting any other skilled job. It is one of the most accessible ways to generate money, as it doesn’t matter where you are, who you know, etc. All you need is your own knowledge and an internet connection. While it is definitely a very accessible path, it is not easier than the alternatives.

There are so many factors that come into play and affect whether you are successful or not in making money online. I estimate that more than 90% of those who actually try to make a living through any type of online venture actually fail. Of those who do manage to earn some money, only a fraction eventually get to the point that they can earn enough to justify doing that full-time instead of having a 9-5 job.

You see, as I came to realize, the vast majority of successful online workers, far from being the average Joe, are highly talented people. Building an online business requires an entrepreneurial spirit, lots of patience, an incredible amount of motivation, support from the people closest to you, and a fair amount of luck to boot. That’s only mentioning the few first factors that come to mind. There are many more.

Most people don’t and won’t ever have the right combination that enables them to go down this route in life. Clearly, for many people, their job is their vocation, and although they complain about their workplace, salary or colleagues, in the end, that’s what they are most suitable for and that’s how they can best give service to the rest of society.

So I’ve stopped trying to persuade everyone and their dog to start an online business and live the life of their dreams. Of course, if someone I know is really motivated to do so and asks me for help and advice, I’d more than gladly share all I know about it, but it’s not for everyone.

At the start of this post, I said that I am lucky enough to have to work very little to make a living. I am by no means rich and don’t own any real estate, but I can live anywhere I want in the world and have the liberty of doing what I want with my time while having enough income to support myself and my family from month to month.

The truth however is that I work way more than 4 hours a week. I do that because I love what I do, I don’t consider it to be work but play.

Think about your typical kid, what would he like to do on a perfect day. Play video games, or soccer with friends?

That’s the way I feel about working online most days. I wake up with a lot of energy to chase a new idea, or fine-tune an existing business. And all the successful online workers I know have that same feeling about the work they do. They’re definitely not lazing about on a beach for the rest of their lives while their websites deposit money into their accounts as they sleep.

So that doubt in me remains, are these Internet marketing blogs promoting a big lie? Are they making a ton of money off people who can never really make a living online? Are we online workers really being truthful when we say that anyone can earn money on the web? Is it time for a more mature breed of Internet marketing blog, targeted at people who already have established online businesses? What do you think?

Here are some blogs that speak the truth about making money online and don’t try to sell dreams:

• A Reality Check about Blogging for Money – Problogger.net
• Is Blogging a Good Way to Make Money? – ChrisG.com
• The Truth About Making Money While You Sleep – Copyblogger.com
• Reality check: You’re not going to make money from your blog – PenelopeTrunk.com
• The History of My First Online Business – SmartPassiveIncome.com

What any serious online marketer or blogger will tell you, is that it takes a lot of work and commitment to succeed online. No one can give you a shortcut to earning thousands or millions without any knowledge, simply because there is no shortcut to online success.

Online success = Hard work and commitment + Constant learning + Right timing + Networking

That success is the result of hard work and commitment is probably common knowledge, but I also like to add in the other three less-mentioned factors. Dedicating a lot of hours to something does not equal success unless you know what you are doing, are doing it at the right time and you’re making the effort to network with your peers.

Mastermind.fm is my first foray into podcasting, and it’s been a great ride for a number of years now.

I think podcasting is as popular as blogging now if not more so.

Podcasts have become one of my favorite ways to consume new information and keep updated on my chosen subjects. While I still love reading and will always treasure books, podcasts make it possible for me to make even better use of my time.

Before the advent of podcasts, my time at the gym and walking/traveling around was mostly dead time. Now, I just have to pop in a pair of headphones and continue consuming the best podcasts (and even audiobook versions of my favorite books).

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Remote companies like RebelCode tend to hire people from all over the world.

This sounds like a great idea to reduce the costs of having an office, as well as have a more diverse workforce and also reduce labor costs.

How is it done in practice?

Hiring Foreign Workers – Legal Implications

There are two ways: Contractor agreement or Employee agreement.

Most companies require that the people they hire set themselves up as self-employed contractors and they then bill the company once a month.

As you might expect, some countries are not very enthusiastic about such setups, as technically speaking, the company should setup a branch in every country they will be hiring in. This is very cumbersome in practice, and that’s why the self-employed route is the most straightforward way to do it.

Germany, for example, has very strict labor rules, and it’s pretty difficult to hire someone on this basis there. It is very likely that the German people you’d be interested in hiring will themselves not want to get set up in this manner. On the other hand, Eastern European countries, to cite another example, have pretty lax rules and enforcement, so it is straightforward to hire from there.

The 4 litmus tests that governments use to determine if people are contractors or actually employees are the following:

1. Control – most frequently used, this test assesses the ability, authority, or right of the payer to control the actions of the worker, including the amount, nature, location, and management of the work to be done including the right of the worker to delegate work.
2. Economic Reality – this test explores the economic practices of the worker, including whether s/he bears the ultimate responsibility for any profit or loss of the contract. An individual who faces financial risk, bears all responsibility for profit or loss, and accounts for all costs incurred in the pursuit of profit, is likely to be determined a contractor. The absence of these factors likely reflects an employment relationship.
3. Fourfold – this test incorporates elements of the Control and Economic Reality tests above. The presence of the following factors indicates an employee/employer relationship: (a) control; (b) ownership of the tools; (c) chance of profit; and (d) risk of loss. Control in itself is not always indicative.
4. Organization/Integration – this test considers an individual’s role within an organization and presupposes that integral services more accurately reflect an employee relationship. However, if the services are ancillary or separate altogether, then the individual may be better viewed as a contractor. Note however that the ever-increasing complexity and inter-dependency between businesses renders this test increasingly archaic.

In practice, most contractor-company relationships in the remote work realm would fall foul for these 4 litmus tests, hence the setup lies in a grey area.

There are ways of improving the setup to make it less of a grey area, especially if you are employing multiple people from another foreign country. Two good ways are using an EOR or POE.

How to Find The Right Fit

Here are some notes I took at a conference talk by Mads Singers on recruitment.

Needs

Focus on the needs of each person you’re interviewing. What is the role, skill set and type of personality you’re looking for? If you hire people for a role they like doing, it’ll be a success.

Essentials

Be very clear on the essential qualities and tasks that you can’t live without. Don’t make the mistake of falling in love with a prospect and consequentially waiving away the essential qualities that you were looking for as not that important after all.

Description

Take a look at the Empire Flippers job descriptions as they are some of the best around. When recruiting your job is to sell your company. Be realistic but talk about your company, who are you, and what’s your culture like. Make it very clear that it’s a tough job. You don’t want to be selling a “relaxed, work-from-home job”. Better to make it sound tougher than it really is than the other way round.

Where to look

The best people are already employed. Networking is absolutely key. The bigger your network is the more likely it is that you already know the person you want to employ. Knowing someone means you already have a good idea what you’re getting.

When contacting people on Linkedin they tend to hire one of those people’s contacts rather than the person they originally contacted. If you’re approaching someone from a competitor, you don’t need to be afraid of being seen as a poacher. You can ask: “hey we have a cool job opening, would you happen to know anyone in this field who would be a good fit for this?”

What to look for

Focus on personality and culture before skillset. You can always train the skills but the mentality is much more difficult to train and is the sum of the person’s genetics and life experiences which is very very had to change. A good rule of thumb is 10% skills, 90% personality. Unless you’re looking for highly specific roles like a programmer; there you want skills.

Focus on full-time as it costs less to train and they are much more likely to be looking for other jobs and eventually leave.

How to ask

Use job posting sites and sites like LinkedIn. If you want to hire from competitors you could ask those people whether they know anyone who would be interested in the job.

Sorting candidates

Make sure you have a good pile of candidates so you can have a full choice for filtering and choosing. Check for trust and honesty. Job hopping is a no-no. People who have lived in several countries are favored.

Interviews

Ask everyone the same questions. Ask stuff that helps understand who they are. Ask about their weaknesses. Try to understand if they’re telling you the truth or bullshitting. What you’re looking for is whether this person can be honest or not. Another good question is: “Do you prefer working by yourself or in a team? Many candidates stumble on that one.

Hire the right one

People hire the best person if they’re not good enough. This is one of the biggest mistakes in recruitment. Don’t hesitate to avoid hiring any of the candidates if none of them make you excited to work with them.

Let people know that they were not suitable for this job but leave the door open for them to apply for future jobs, if that’s what you want.
“We don’t think you are a good fit for this company” means don’t apply again.

“We don’t think you are a good fit for this role” means we might have another job that is indeed suitable.

Bonus Tips

These extra notes are based on my experience and chats with other entrepreneurs about recruitment.

• Add a recruitment page on your website.
• Call previous companies that applicants claim they worked for, especially those ones they didn’t list any references for. The ones referenced are usually going to provide a glowing review, so they are not very helpful.
• Post in targeted FB groups, for example, if you need a web developer go to web developer FB groups and post there. Communities are very powerful for this stuff.
• Tell your own team – maybe they know other people like them, you can even incentivize them with a bonus.
• Connect with people on Linkedin.

Eastern European countries are good for programming tasks. Croatia, Serbia, Ukraine, Montenegro great for design and development. It’s also very important to hire from the same culture if possible. This facilitates communication and expectations.

With incentives, I prefer not to have specific targets to unlock specific bonuses. It’s best to set business targets and KPIs, but then the decision for bonuses (which can be given in July and December) rests with the management team. You can also reward people who go above and beyond what was asked for them. Bonuses can be 0.5 to 1.5x the monthly salary.

Another interesting idea is to tie part of the salary every month to the company’s performance. For example, if employees are earning €1,500, part of that, say €300, would be tied to whether the company hits its monthly targets.

If you operate a software business (such as WordPress plugins) or a SAAS, it is important to benchmark your operating profit with that of other similar businesses.

Before we start, it’s important to clear up some definitions:

Gross Margin – Revenue minus Cost of Goods Sold (or Cost of Sales)
Operating Margin – Gross Margin minus Sales, Marketing, General and Admin expenses
Net Margin – Operating Margin minus Interest & Taxes

I’m looking at operating margin % here.

You can take a look at some open metrics over at Baremetrics for a start.

I also asked several of my friends in business and there isn’t one clear answer. The most common percentage I could identify is around 80%, but it’s not always clear what margin they are referring to.

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I spent a good part of my twenties traveling around the world during what was the start of the digital nomad movement.

A recurring theme that I used to hear about was the possibility of optimizing taxes by being a digital nomad.

Just walk in any co-working space in South-East Asia, and a 20 y.o. white guy from the EU or Canada will swear that flying circles in Thailand, Bali, and Vietnam for all year means that nobody has the right to tax his income.

At the time I had decided to keep things simple by just paying tax in my home country where I had always paid as a self-employed person.

When I started to hear all the strategies others were using, however, I started to feel a bit stupid for not having optimized things. So I embarked on a journey to learn as much as possible about all the options available for legal tax optimization.

It turns out that the strategy I had opted was actually one of the safest ways to act as a digital nomad. The “clever” tactics many others were using were grey area legal schemes at best but mostly just plain old tax evasion that would most likely lead them into trouble later.

To this day, as the digital nomad revolution has grown, I still hear many of these strategies bandied around, so I thought I’d have a go at outlining how I think a digital nomad should pay his/her taxes.

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