Tips for operating a profitable business in SL

[April Looming]

For roughly the last year, I've been teaching a weekly class at Builders' Brewery on Operating a profitable business in SL.  Over 500 people have attended the class, with almost unanimous praise.  One of the many questions I got from attendees was "Are there any forums where people discuss economics in SL?"  I'm not sure, other than here.  So I thought I would kick off the topic and see what people have to say.

 

I'm releasing the information I shared in my classes on my blog:

http://wildstylefashions.blogspot.com/p/operating-profitable-business-in-second.html

[Dresden Ceriano]

Try here.

...Dres

[April Looming]

I followed the link and see something about ads on SL Universe, and a few threads that don't seem related to economics.

I'm thinking more in terms of basic guidelines for merchants on what works and what doesn't, what costs are associated with selling in SL, whether people are making money in SL and how they're doing it, that sort of thing.

[Dresden Ceriano]

You must not have seen the Virtual Business section... if that's not what you're looking for than I'm afraid you'll never find it.

...Dres

[Pamela Galli]

This is by far the best place to keep up with developments and news that affect businesses, which is why I monitor daily. Sometimes people do ask for business advice of different kinds, but I would say here most of the discussion is between seasoned business owners.  I used to read SLU but the business section is not usually as active as it is here, though they have more freedom to discuss things such as fraud and copybotting etc. 

[Sera Lok]

Thanks April!  I've attended your class (more than once) and really enjoyed it. Ever after years having an SL business, I learned some new things and would encourage those starting or currently running a business to attend. Interested to see what happens with this thread.

[Dresden Ceriano]

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Pamela Galli wrote:

This is by far the best place to keep up with developments and news that affect businesses, which is why I monitor daily. Sometimes people do ask for business advice of different kinds, but I would say here most of the discussion is between seasoned business owners.  I used to read SLU but the business section is not usually as active as it is here, though they have more freedom to discuss things such as fraud and copybotting etc. 

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Exactly... my point was that, besides here, SLU is really the only other forum that I've run across that has a business section that gets any sort of traffic and that is what I thought her attendees were asking.

...Dres

[Pamela Galli]

Yes I understood -- SLU businees section is worth checking into once in a while, if only for the entertaining name and shame/fraud/stolen content threads that we can't very well have here. But for "What's screwed up now" reports, this is the place.

[Pamela Galli]

April's website looks good -- my favorite for a long time has been Clover Windlow's (AKA Mistletoe Ethaniel). I think we got her site put on a sticky up there somewhere.

[Nefertiti Nefarious]

This is the only one I'm really aware of, and I've been "profitable" (paying my SL expenses, but not taking much out) for a long time.

There were a few short-lived "make a bundle in SL" forums but economic reality caught up with them.

[April Looming]

I talk to a lot of people who would be happy making a profit at all... which is part of what inspired me to put this out there.

[Rya Nitely]

I read your blog and found it interesting and useful, especially as a reminder of what is important. My business has been profitable for quite a few years.

My main tip to anyone starting out would be to try and steer clear of over-saturated markets, like clothing. It's the most popular, and therefore the most competitive area to break into. We chose to create boats, and this naturally expanded into landscaping items. I can honestly say we never struggled to get going. So, in my opinion, if you choose an over-saturated market, such as clothing or skins, then you have to be very good and/or unique to be profitable. Look for something not many people are doing. Although, boats and landscaping require a big shop, but we also have the profits to cover it.

[Nefertiti Nefarious]

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April Looming wrote:

I talk to a lot of people who would be happy making a profit at all... which is part of what inspired me to put this out there.

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I pretty much just do what your blog says ... do what I can to maximize sales and minimize expenses.

To maximize sales, you need to:

✰ Make what people want (know your customer and competition)  Low prim, inexpensive decor, and useful low-cost texture sets. I started because I couldn't find any I liked, and had the 117-prim 'free land' to decorate.

✰ Make it look good enough to buy (staging)  I have decent, but not superb pictures. Clear and well-lit makes up for lack of artistic ability. And I don't do a lot of post-processing. The in-world shop is organized and easy to navigate.

✰ Get the message to people who might want it (marketing)  I don't buy ads or featured listings. I write very clear, descriptive  listing titles for the marketplace.

I maximize my search exposure in-world by naming the vendors for the products they contain, naming the shop buildings for the type of product they contain, and making sure everything for sale is set to show in search and well-named (many people don't realize you can do this).

I used product placement instead of advertising. Very early in my business I gave away decor items to owners of sims where they would fit in ... naked lady statues to the lesbian sims, farm animals to the western sims, etc. It was effective because when someone saw the item and checked creator, there I was.  I still do it if I see a well-designed sim.  I have a few freebies. I participate in a few hunts. It's all low-key and inexpensive. 

 

There's two other important factors to consider in that first star:

✰ strive for the best possible quality  I sell cheap photo-panel images! But they start out as high-rez photos and I edit down to the pixel level to keep them looking good.

✰ be attentive to your customers and build a reputation for customer service  I unapologetically sell cheap stuff. That's my niche ... but if it gets there with the perms messed up, or doesn't get there, it gets taken care of as if it were a $900L ball gown.

 

It's amazing how many businesses don't take full advantage of all these principles.

 

Minimize every fixed expense:

✄ Minimize land expenses   I had the "free" land for a long time, until I was making enough on the marketplace to pay rent. However, my stuff doesn't need in-person inspection like houses or furniture would. I could drop the parcel and not lose sales.

✄ Minimize ad expenses    See above: no ads!

✄ Minimize employee expenses   No employees either.

✄ ADDING THIS: Minimize "tool"  expenses  For graphics editing, I use the free GIMP instead of the $$$ Adobe. I buy 3-d shapes because I suck at mesh and sculpts, so I shop carefully for parts kits that can be used in multiple products. 

 

[Rya Nitely]

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Nefertiti Nefarious wrote:

✰ be attentive to your customers and build a reputation for customer service 

I unapologetically sell cheap stuff. That's my niche ... but if it gets there with the perms messed up, or doesn't get there, it gets taken care of as if it were a $900L ball gown.

 

 

 

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Affordability - This is my strategy too. It stems from when I was exclusively a customer in SL. I didn't have the money to buy those overpriced items that I really wanted - it was so frustrating. Now, I'd rather get the sale than have a customer walk away like I did back then. When I started pricing I made sure the customer didn't need to stand there thinking about it for too long. I want them to go click happy when they come to my store because everything is affordable - and they probably forget how much it's adding up. And every item gets full life time customer service.

Listen to the customer - and this brings me to house calls. The best and most profitable ideas I have ever had have been during house calls. I have picked up so much by going to customers' homes. I cam around, see how they use my products, I usually get a tour and they talk non stop - there is often very useful info in what they say. Custom jobs - if one customer wants it then others probably do too - my experience has shown this to be true.

[April Looming]

Great point about tools.  In last night's class, one of the students mentioned that Maya and 3DS Max are better tools to learn for Mesh because you can market yourself to companies that do game design, and don't allow things to be made with Blender.  People countered that Blender is free, and he countered with "there are ways to get the others for free", to which I replied "I suggest you don't do that".  

 

Point taken - expenses outside of SL are still expenses.

[Medhue Simoni]

Yep, this is the place to discuss merchant concerns or possibly get some advice. I must say tho, that it is quite challenging, as every merchant has a different view of what is being successful in SL. This is great that we have such a mixed field. It can be problematic as myself answering a question is much different that some1 that just wants a few extra bucks every week.

I'll throw some points about being profitable out there.

*Be prolific! A handful of products aren't going to make any1 very much money. Yes, there are 1 hit wonders, but that is about as common as in RL. Release, at least, 25-50 products before you start thinking you should be profitable.

*Start an affiliate vender system for other to sell your products and earn a commission. You can't know every inch of SL, so let others that have some expertise in other areas sell your products.

*Get a thick skin and talk to your customers. Find out what they really want or need. Expect to be insulted on the rare occassion and don't let it get to you.

*If you want to earn real livable wages, then create options for products to make them higher end. 10L products might get you sales, but you would need to sell a crapload everyday for them to make you anything significant. Look at other high end products in your field, to get a feel of what people are willing to pay within a given market.

*Customer Service is probably the biggest factor that will keep your customers coming back. Yeah, not every1 can be available 24 hours a day, but make customer service a big priority and make it as good as you can.

 

Last note about tools. Yeah, If you want to work on a specific game or for a specific company, than you might need to learn 3ds Max or Maya. These programs are ridiculously overpriced tho. Blender can do almost everything that Max or Maya can do, if not more and more compatible with somethings. Technically, they all can use the same file formats, so it really shouldn't matter which you use, depending on what you are making. Personally, I'll prob be hiring model creators in the next year or so for some video and movie projects, and I really don't care at all which program they use. In my book, quality far outranks which tool you use. My last point is that if any1 is actually wanting to get into the game industry, then you better learn to make meshes ultra efficiently. 1 million polygons and 20 UV maps for 1 character is not exceptable, and few games will use more than 1 texture.

Just my thoughts.

[Medhue Simoni]

Oh, and 1 last note about tools. Recently, I was contracted for a big job. They didn't contract me because I knew 3ds Max, which I do, but because I knew DazStudio. Outside of the mega gaming corporations, not many have the capital to deal with licenses and everything else. Many smaller game companies are taking advantage of all the different tools out there. Not dealing with licenses can be a HUGE plus. I see this happening more and more. By all means, if you can learn Maya or Max, than go for it. If you can't afford them, than start out in Blender. The experience alone will be worth it.

[Rya Nitely]

Make as much use of everything MP has to offer to show your products off.

Make good use of images - Potential buyers would like to see it at different angles and showing as much detail as possible. Take close up pictures to show the texture. If it has animations then show these being used. I have often had a lift in sales after going back to improve and add more images to a listing. Even if your item is one panel - showing it at an angle would make this obvious.

Make good use of related items - This is free advertising for your other items.

Make good use of the 'See Item In Second Life' link - Customers don't want to spend time searching your inworld store for what they came for. So, if you have a big store make sure they land right next to the items, or at least within sight of it. 

All this takes extra work. But you get out of it what you put in -  effort paves the way to profitability.

[Mikki Miles]

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Rya Nitely wrote:

My main tip to anyone starting out would be to try and steer clear of over-saturated markets, like clothing.

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THIS!

But i think even in clothing market there are still some niches, like ethnic clothing. I am still looking for some nice mesh bavarian Lederhosen ;-)

[Porky Gorky]

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Mikki Miles wrote:

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Rya Nitely wrote:

My main tip to anyone starting out would be to try and steer clear of over-saturated markets, like clothing.

---

THIS!

But i think even in clothing market there are still some niches, like ethnic clothing. I am still looking for some nice mesh bavarian Lederhosen ;-)

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I think a couple of years ago there was a big problem with market over-saturation. But since mesh rolled out that is not the case at all. In some regards the markets have been leveled and we have entered a new phase where every market has the potential to be exploited again through the sale of mesh products. Take prefab buildings for example, there were/are many thousands of awesome buildings out there before mesh went mainstream. Competition was extremely tight. Nowadays if you are building in mesh then that is not the case at all, there are less than a hundred "top quality" mesh prefab buildings out there right now and the whole market is very much there for the taking. This is true for nearly all mesh markets in SL right now apart from maybe clothing which is and always has been the most actively developed market.

When I started selling content in 2005 it was easy due to the lack of competition. It feels like we have gone full circle and reached that situation again with mesh to some extent.

 

[Rya Nitely]

I agree, mesh is creating new opportunities. But people who have been in their specialised areas for years are still way ahead when it comes to creating in mesh than those starting out. I am in the process of converting many of my sculpties and standard prim items to mesh. But I already have the textures, ideas and a basic model to work with. Some items take hardly any time at all to convert into mesh. For example, a customer wanted more detail on a scupted motorboat just this week, and I converted it over to mesh in one day, with lots of lovely detail and a clearer texture than the sculptie allowed.

So, it hasn't really leveled out the platform in most areas. Experience counts for a lot too, and would put long termers way ahead of those just entering - even with mesh.

[Madeliefste Oh]

My most important tip is controversial.

Don't invest much time in marketing. Every hour spend on marketing is one hour less for creating and improving your skills.

I have made my marketing hours in the past, but after a few years I came to the conclusion that it is more profitable to spend my time on creating then on marketing. I stopped 95% of my promotional activities. It made me a happier creator and my business did not suffer from it at all.

 

 

 

[Dresden Ceriano]

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Madeliefste Oh wrote:

My most important tip is controversial.

Don't invest much time in marketing. Every hour spend on marketing is one hour less for creating and improving your skills.

I have made my marketing hours in the past, but after a few years I came to the conclusion that it is more profitable to spend my time on creating then on marketing. I stopped 95% of my promotional activities. It made me a happier creator and my business did not suffer from it at all.

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Okay, so you're saying don't spend much time marketing, after you yourself spent years doing it?  Are you saying that it never helped you to promote yourself when you were just getting started?  I mean, I can see someone, after spending years establishing themselves, deciding they're at a point where they can slack up and rely more on word of mouth, but is that truly a realistic option for someone who's just starting out?

...Dres

[Rya Nitely]

I agree with Madeliefste

Marketing has never helped me either. The only marketing that has helped me has been what the MP has to offer. Time and effort spent on your creations is what pays off, as Madeliefste says. I was involved in an expo recently - first ever. It was fun and good to see what others had to offer. But it didn't have much of an impact on my level of sales.

In my experience, word of mouth is the best marketing, and also taking full advantage of your MP listings - high quality images, related items, convenient tps to inworld store etc.

[Rya Nitely]

I will extend on this point since I really believe in it - 

If your items are very good then people will find you. This is only achieved through lots of hard work and concentrating your time on your creative skills. Keep your head down and work, list your items on MP and have an inworld store - one day you will look up and get a nice surprise as the sales automatically start rolling in. 

The most powerful marketing in SL is word of mouth.