Get Money Online

Today, I wanted to share an interview involving a unique website business thought up, constructed by, and maintained primarily by just one person. Maury is a long-time MMB reader and e-mailed me recently about his new venture - PennyPortrait.com. There, you can purchase a kit that allows you to create a portrait of Abraham Lincoln solely out of differently-shaded pennies:

Each kit includes a poster of Abe Lincoln made from images of actual pennies. The poster is suitable for framing as is, but with a little effort, some glue, and 846 of your own pennies, you can have a unique work of art that truly shines. (No, really… it shines!)

Here’s the interview:

Where did you get the idea or inspiration?
I read an article online about a father and son who created a giant portrait of Abe Lincoln out of pennies. Their image was 24″ x 36″ and they used two shades of pennies. I thought other parents and kids might enjoy a project like this and went about trying to create an improved, easier to assemble version on my computer. Using four shades of pennies, I was able to decrease the size of the image to 18″ x 24″ (846 pennies) which seemed a bit more
manageable.

Did you set up the website yourself? Do you have previous experience in this area?
I have a background as a graphic designer, but had only created a handful of small sites previously. The trick was to use one of the various free CSS templates available on the web and go from there. For example, the Penny Portrait site is based on this free template. Using a free CSS template allows you to create an impressive site in short order. Some of the graphic
elements took a little bit longer, but the layout was a snap.

Is this your first side business?
This is my first retail business of any kind. I’ve had a lot of experience with service businesses (animator/designer/consultant), but I’d never actually sold anything tangible before. Part of the reason I wanted to do this project was to learn how a retail business works with inventory,
suppliers, sales tax, credit card processing etc. It has been extremely educational from that standpoint.

Who sorts the pennies? Are you using child labor? (You could fund your child’s IRA this way…)
I just sell the kits, so customers are responsible for supplying and sorting their own pennies to glue on the poster. I had considered selling completed portraits, but I think the real satisfaction with something like this is to have something on the wall you created yourself. (That and shipping all those pennies could get expensive!) The sorting part is surprisingly easy if you have a bunch of pennies to start off with. I was able to sort enough pennies watching TV one night for at least two portraits. As far as funding my kid’s IRA, I toyed with the idea of paying him a “talent” fee to be included in the photos, but thought I’d better not push my luck with the IRS - He is only eleven months old.
(My mistake, the buyers provide the pennies. That’s much better!)

Do you construct the kits yourself, or are they put together by a third party?
I have a little assembly line in a spare room where my wife and I put the kits together ourselves. Each tube holds a poster, a booklet with fun facts about Lincoln and coin collecting, an assembly guide and a pouch with a 1943 Steel Penny. At this point, other than marketing, that is really the only time consuming part of our business.

How did you decide on pricing, and not making it too high or too low?
Pricing was one of the toughest decisions to make. I talked to a number of people including retailers to get a general idea. It is a unique product with no competition, so I’m not forced into competing on price - which is nice. My competition ends up being other unique products you can buy for about the same amount. One thing I learned is that brick and mortar resellers of your product typically use “keystone” pricing. This means that retailers expect you to sell them products at 50% off the suggested retail price. So if the suggested retail price is $20, a retailer will want to buy them from you for $10. This only applies to bulk orders, but my suggested retail price needed to be high enough that I could still make a little profit through traditional retail channels in addition to e-commerce.

What other difficult decisions have you had to make?
The toughest decision was how many poster to purchase initially. I wanted a high quality product, so didn’t want to skimp on printing or materials, but printing can be quite expensive. There are online places like PSPrint.com, which will print posters for you at great prices, but the paper quality is lower and when you include shipping, the savings disappear. I ended up going with a respected local printer to avoid shipping costs and to oversee the quality of the product. The trick with printing a poster this size is the initial setup fee is about $1,000 whether you print one poster or one thousand. My fun little “learn about e-commerce” project suddenly got expensive! Of course, the more you order, the cheaper it is, but it was
nearly impossible to guess initially what the demand for a product like this would be.

Another tough decision involved shipping tubes. I really liked the way my product looked in a clear tube, but the cheapest supplier of clear tubes charged $1.40 per tube and had a minimum order of 500 units. Cardboard tubes cost about half that and I could order just a few at a time. I ended up breaking down and ordering 500 clear tubes, but am using those strictly
for retail. Online orders I ship in the more durable white cardboard tubes. It was a tough decision at the time because $700 is a pretty big upfront expense for shipping tubes! (Not to mention I have a garage full of them.) This is one situation where my design sense vetoed my business sense. We’ll see how it works out.

How many hours a week do you spend on this project?
I would guess we spend about 5-10 hours a week on it at the moment. I have a full time job, so I mainly work on this in the evenings or on weekends. At this point, it is simply a matter of assembling the kits, and shipping them out as we get orders. My wife recently left her job to stay at home with our first child, so she is a big help in this regard. The only other thing that takes time is marketing. I’ve found that sales are directly proportional to how much effort we put into marketing. My wife does a lot with marketing as well.

What forms of advertising are you pursuing?
We use Google Adwords which is absolutely fascinating. It allows you to run variations of ads and use different keywords to generate targeted, effective ad campaigns. Google has shown my ads thousands of times and provided me with valuable feedback on who my target market really is. At the end of the day, it is a great business model because their interests are perfectly aligned with yours. They only make money when people click on ads, so it is in their best interest to make sure your ads appear where they will be clicked. I have an advertising degree, and one of the things that stuck with me all these years is that by simply adding the words “free” or “new” to an ad will cause it to drastically improve results. I tried this theory out in Adwords, and sure enough those ad variations were my most effective. Google
Analytics has also helped me in seeing what parts of the site people visit after they hit my homepage. I’ve been so impressed by Google I actually broke my rule of only buying index funds and picked up a little GOOG after the recent market crash.

In addition to Adwords, I’ve also had success advertising in various online forums. For example, I will hop onto a coin collecting message forum and give a free kit to anyone who guesses a number I’ve chosen between 1 and 100. I end up giving away a free kit, but I typically get about 50 potential customers to look at my product and even comment on it! It has been useful as a marketing tool and also for improving my product based on comments.

Oddly, one of the most successful forms of advertising I had nothing to do with! Someone submitted my site to “Stumbleupon” and it immediately received over 1000 hits. Stumbleupon is a very cool social networking application where users give a “thumbs up” to sites they find interesting or entertaining. By installing the Stumbleupon toolbar, you can rate sites you visit or click on “stumble” to have it take you to random sites others with your same interests rated highly. I was pleased to see so many people liked my site.

What other backend tools and/or third-party systems do you use?
I use E-junkie for my shopping cart system and have been blown away by the product and support. It costs me $5 a month for a polished shopping cart system that works flawlessly. I even contacted them about a unique problem I had (Texas charges taxes on shipping & handling, many states don’t) and they were nice enough to add that ability to their system. They also have a simpler version they provide for free if you don’t need certain features.

I went with Google Checkout for the payment processor for a couple of reasons. It was really easy to setup and was cheaper than PayPal. I was worried with PayPal that people would think they needed a PayPal account when in fact, all they need is a credit card. Google charges me 2% of the purchase price + .20 cents per transaction. So I pay Google .60 for every 20 transaction which is reasonable. They have a complete system you log into that makes billing and shipping a snap. The final reason for using Google Checkout was that when I spend money via Google Adwords, they kick me back a portion of what I spend on advertising in the form of free transactions. So if I spend $50 on Adwords in a month, Google will process
$500 worth of transactions free for me that month. PayPal and other merchant processors couldn’t compete with that.

Great. So how’s business?
Business is going well! We’ve sold over 100 kits so far and are really just learning how to advertise via the internet. This week, for example, we are exploring marketing via Amazon and Yahoo in addition to Google. We are also looking at the possibility of getting in some retail catalogs and have been working with local toy and coin shops who are now stocking the product. It’s very satisfying whenever an order pops up in my inbox.

Has your businesss been affected by the economic slowdown, or is it too early to tell?
The product is pretty unique, so I think for the people who want it, the price is not prohibitive. My main problem is making sure people know my product exists! It really doesn’t fit into a traditional product category which makes it a bit tricky to advertise. As the product just launched, I’m going to miss some Christmas opportunities (e.g. catalogs and retailers) but I’m hoping 2009 will be a good year for this product. There will be four new penny designs released next year to commemorate the 100th anniversary of the penny and Spielberg is also making an Abe Lincoln movie starring Liam Neeson. I’m hoping these events might generate some interest in pennies and Abe Lincoln. They certainly can’t hurt!

– End of interview –

Recap
I want to thank Maury for letting me pick his brain and see into the “nuts and bolts” behind <a href="PennyPortrait.com“>PennyPortrait.com. I think there are a lot of us (me included) that have had their own niche ideas but haven’t gotten over the hump to making it happen, and I think he showed us some good tips to help us get a little closer.

Look for a giveaway of these neat kits soon. If you have any further questions for Maury, please leave a comment below. If you’re an entrepreneur with a unique story and would like to be interviewed here as well, please feel free to contact me.

Past Entrepreneur Interviews:

• Irina Patterson, Balloon Art Entertainer
• Dennis, sells custom Greek apparel online and locally
• Dan, sells titanium money clips online

You can apparently get a free currency trading with $25 in it when you sign up for this CNBC Portfolio Challenge, with no upfront money required from you. At first I thought it was play money but they even have a requirement before you can cash out:

You must complete five (5) round-turn trades in your new FXCM Micro account, and your account must be in good standing before you are eligible to withdraw any funds from your account. Existing FXCM account holders are not eligible to receive the promotion.

Thanks to reader Andres for the tip. I’m still in Spain so I haven’t tried it myself. I’m just happy the Euro/USD conversion rate is much better than a few months ago! (I’d just gamble with the $25 and cash out, personally.) Please share any experiences or new discoveries in the comments.

Vanguard has recently announced the details of their Individual 401(k) plan - otherwise known as Solo 401k or Self-Employed 401k. Although you can’t apply yet it seems, many of us passive investors have been waiting for Vanguard to offer this for a long time.

The Vanguard® Individual 401(k) plan is a retirement plan for self-employed individuals. This plan is available only to sole proprietors or partners in business who have no common-law employees. The only other participant allowed in this plan would be a spouse of the business owner if he or she works for the business. Business owners should not establish this plan if they have common-law employees, including their children.

There is some confusion as to whether this includes the sole owners of an S-Corporation, but I’m betting it does as it is a passthrough entity and we are essentially self-employed. Here are some more Vanguard-specific details, along with some comparison with the Fidelity Self-Employed 401(k) which I currently have:

• Seems like you can buy any Vanguard fund with no commissions, and there is “no minimum initial investment required to open most funds” (emphasis mine). It doesn’t seem like you have the option to buy ETFs through their brokerage service. At Fidelity, the Fidelity funds are also free, but I am subject to minimum initial investments. However, I do have the ability to buy any ETF with a $12-$20 commission, as well as buy individual bonds.
• The Vanguard Individual 401(k) will accept three types of employer and employee contribution sources: individual employee salary deferral contributions (pre-tax money), traditional employer contributions (pre-tax money), and Roth salary deferral contributions (post-tax money). Roth is available! Fidelity does not have this.
• Employees can move money between different Vanguard funds by phone or in writing only. This is kind of a pain. I can manage my Fidelity Self-Employed 401(k) online like a regular brokerage account, with limit trades and everything.
• There are no set-up fees charged to the employer for a Vanguard Individual 401(k) plan. Vanguard charges employees a $20 annual account service fee for each mutual fund held in an account within the Vanguard Individual 401(k). If you like to own multipole funds, that can add up quickly! (Note: If at least one participant in a Vanguard Individual 401(k) plan qualifies for Flagship™, Voyager Select™, or Voyager™ Services, the account service fee will be waived for all participants in the plan.) Fidelity has no setup fees, and no annual account fees at all.
• Rollovers are permitted out of the Vanguard Individual 401(k), but not into it. Not sure why this is the case.

This is only a superficial review, but so far I’m not planning to try and open one. It turns out that I am quite happy with my Fidelity Solo 401k, as it provides a lot of flexibility, great customer service, and reasonable costs. Vanguard has a wider array of index funds, but I can also buy the equivalent Vanguard ETFs at Fidelity. If I buy in large enough chunks, the commission is balanced out by the lower annual expense ratios. Besides, if you are at not at least Voyager ($50k in assets), the $20 fee per fund from Vanguard costs as much as two trades anyway.

The main thing going for Vanguard is the Roth option, which I must admit should be very attractive for most people. But for us, our current tax bracket is high enough that I prefer pre-tax contributions.

Via Guzzo the Contrarian and Bogleheads.

Here is another 529 account bonus, but only open to California residents. If you open a California ScholarShare 529 College Savings Plan today and sign up for automatic investing of at least $50 per month on the account, and you’ll receive a $50 Target GiftCard.

From the fine print:

To receive a $50.00 Target GiftCard (a “Gift Card”), eligible individuals must (a) open a new account under the ScholarShare Plan (a “ScholarShare Account”) within 30 days of registering for the Gift Card offer between August 15, 2008 and December 31, 2008 and (b) establish an automatic investment plan for the ScholarShare Account of at least $50 per month, with the initial $50 automatic investment contributed and invested within 90 days after the ScholarShare Account is opened. Limit: two (2) Gift Cards per person. Each ScholarShare Account must have a different designated beneficiary and be individually owned (no trust, custodial or other ownership arrangements).

The Ohio CollegeAdvantage 529 Savings Plan is currently offering a $25 refer-a-friend bonus if you open an account and deposit at least $25 by December 15, 2008. You can be a resident of any state, and there are no application or annual fees.

Is This Ohio Plan Any Good?
After doing some research on the best 529 plan for those without an in-state tax break, my opinion was that the two best overall 529s were the Ohio CollegeAdvantage and the Illinios BrightStart plans. Illinois uses Vanguard, has a decent variety of low-cost index options (average ~0.20% total annual expense ratio), and has one of the lowest fee structures around. Ohio is similar - they use Vanguard, are a bit more expensive (average ~0.30% total annual expense ratio), but have a few more investment options like inflation-protected bonds. So yes, it is a solid plan.

Collecting 529 Bonuses
We don’t have kids (yet), and yet I’ve opened a bunch of different 529 plans in different states for their bonuses or in-state resident tax advantages. The nice thing is that you can usually roll them over into another 529 plan, although some states do a tax recapture. (Oregon didn’t.) So open an account, get the bonus, and just see if you like it. If you don’t have kids yet, simply list yourself, your spouse, or even your parents as the beneficiary. You can always change it later.

For the curious, I am currently in a New Hampshire plan run with 0.50% expense ratio by Fidelity because I have a grandfathered-in 2% cash back card that deposits into the 529. Given how good the Ohio account is, one day I might be rolling everything over there.

Referral Bonus Instructions
Both the referred and referree get $25, and I’d love for you to help fund my future kid’s college. I opened the account last week and got my $25 bonus successfully and as promised:

Instructions:

1. You can enroll online or via mail. The online process was quick and easy, and I didn’t have to mail in anything.
2. The first step is to input your personal info and choose a login/password. Next, you’ll verify your e-mail and complete the application.
3. After that, you’ll choose your funding amount and select an investment fund. Your initial deposit must be a least $25, and is funded using the account/routing numbers of your bank account. At the bottom, you will need to enter a referral code to get the bonus. Enter 2437362.
4. In 1-3 days, your initial deposit will be sucked out, and in 5-7 business days you will get your $25 bonus. The $25 will be deposited directly into the 529 account, and will be invested in the same thing as your initial deposit.
5. Finally, please send me your name and e-mail address so I can request an “official” referral e-mail be sent to you. Although not mandatory, I feel that this will help if there are any issues.