The Incredible Secret Money Machine

In 1978, Don Lancaster — a computer and electronics geek — published a book called The Incredible Secret Money Machine. Though the title smacks of get-rich-quick schemes, The Incredible Secret Money Machine is really about starting and running a small business.

To Lancaster, a “money machine” is any venture that generates “nickels”. Nickels are small streams of revenue from individual customers. If your goal is simply to earn a comfortable income for yourself by doing something you love, then this book can help you explore the idea of business ownership. It's not going to help you launch the next Google or Microsoft, though. Lancaster is all about nickels, not about dollars.

Getting Started

Lancaster says that in order to build a money machine, you must adhere to four basic beliefs. (Note that I've left his very-1970s language as-is.)

  1. You have to be heavily into a technical or craft trip on a total lifestyle basis. “Your own trip has to be the absolute center of everything you do, everything you work with, and everything you believe in. Doing it has to be much more important to you than making money, more important than worrying about what people think, and more important than behaving, competing, or complying the way that other people think you should.”
  2. You must want to stay in control. “For your money machine to work, you have to want to spend much of your time, energy, and effort improving both yourself and the general goodness of the technical or craft trip you are into.”
  3. Your income goals should be just enough to keep going. “Getting filthy rich should be nowhere in your plans. So long as you can continue doing what you like in the direction you want to go, that's all that should matter. The great irony of your incredible secret money machine is that the less you strive for income, the more of it will come your way, and, more importantly, the more you will be able to do with what you already have.”
  4. Be gentle. “Your money machine should be forever small and decentralized. It should never compete head-on with others. It should complement and advance what others are doing. Your money machine's products should genuinely help people at a fair or more-than-fair price, never being a rip-off either to suppliers or to customers.”

This isn't the sort of advice I expect to get from a book about entrepreneurship. I expect to read grand promises, and glowing talk of profits to come. I expect money to be the object. Money isn't the object with Lancaster. It's one of the goals, to be sure, but it's more important to create a “lifestyle business”, one that you enjoy and want to pursue.

Tips for Building a Money Machine

But how do you do build your own money machine? What's the best way to start the stream of nickels? And how do you keep them coming? Though The Incredible Secret Money Machine is only 160 pages long, it's packed with strategies and tactics for building a successful business, including:

  • Have as many different sources of income as possible. By this Lancaster doesn't mean you should work multiple jobs — he means that you should have as many customers as possible. It's better to have 1,000 people each giving you a nickel a month than it is to have one person giving you $50 a month. If that one person decides to spend $50/month elsewhere, you're in trouble. But if even 100 people stop paying their nickel, you'll still earn $45/month.
  • Have complementary sources of income. Another way to keep your cash flow strong is to operate two money machines. Many entrepreneurs I've known have done this. I have a friend who is a published novelist; in his spare time, he also takes on free-lance writing projects. My aunt baked wedding cakes, did catering, and was a professional photographer. My wellness coach doesn't just counsel clients about physical fitness, but she also does stage entertainment.
  • Deal directly with the customer. If you write a book and publish it traditionally, for example, there's an entire industry designed to suck the profit out of the process before you get your nickels. Instead, content yourself with fewer sales at a higher margin by dealing directly with the customer.
  • Work toward deferred income. “What you do for your money machine should generate nickels both today and tomorrow,” Lancaster writes.

    You should work toward automatically generating yourself a long stream of future nickels that needs little or no more attention from you. This is admittedly very tricky to do, but if you can pull this off, your money machine will fly by itself, freeing you in the future to do bigger and better things.

    An obvious way to generate residual income is to assure you have satisfied customers. Satisfied customers come back for more, and they tell their friends about your services.

  • Know the difference between cold cash, imaginary money, and megabucks. Megabucks are the big jackpots you get from writing a bestseller, from winning the lottery, from inventing the next Rubik's Cube. Megabucks can make your rich, but the odds are basically zilch that you'll ever find them. Imaginary money is the kind you dream about: “If I'm able to sell my Thneed to Wal-Mart, I'll be set!” Imaginary money doesn't exist. It's potential money contingent on a lot of things. Lancaster encourages readers to focus on cash: “Cold cash is what you get when you supply a quality product to a known bunch of customers at a bargain price. It is the only type of income your money machine should seek.”
  • Separate frugality from stupidity. Know when you can cut corners to reduce costs, and know when it's important to pay for quality. (And always be sure that you deliver quality to your customers.)
  • Avoid psychic energy sinks. Anything that distracts you from your purpose is a psychic energy sink. Lancaster decries television as a prominent energy sink. But he warns that debt, divorce, and anything else that produces “bad vibes” should be avoided. Stay positive. Stay focused.

These are just a few of the strategies and tactics Lancaster shares in The Incredible Secret Money Machine. You won't find the specific details necessary to start a business here. The book doesn't give step-by-step instructions for how to form a partnership, or how to publicize your product, etc. Instead, it's filled with broad ideas and suggestions. Some of them are out-dated. All of them are enhanced by (or suffer from) Lancaster's brash style.

A Real-Life Money Machine

As I was reading The Incredible Secret Money Machine, it reminded me of another book I'd read recently. In John T. Reed's How to Write, Publish, and Sell Your Own How-To Book, the author describes his “money machine” at length (though he never calls it that).

  • Reed has self-published over 70 how-to books. He actively sells more than 30 of them from his web site. This gives him 30+ different sources of income.
  • He writes about four different subjects — real-estate investing, coaching youth sports, success, and self-publishing. This gives him four complementary audiences.
  • Reed deals directly with customers instead of with book distributors. This gives him many sources of nickels instead of just one or two sources of dollars.
  • His books give him deferred income. They keep producing income year after year.

Reed's book business seems to embody the “money machine” philosophy. I'm glad to have read his Self-Publishing book at roughly the same time that I read Lancaster's Money Machine — the latter provides the Big Picture, while the former looks at nuts and bolts.

Conclusion

Some of the advice in The Incredible Secret Money Machine (believe in biorhythms!) now seems quaint, 30 years after the book was published. (Lancaster produced a revision in 1991, but I haven't read it.) The author's “hip” language and many of his examples are outdated. But smart readers can extrapolate, and still learn a lot. You have to be able to read Lancaster's advice on letterhead, for example, and think of it as advice for web sites.

Although Lancaster believes that you must be into your money machine on a total lifestyle basis, I'm not sure that's true. I think you can have a part-time money machine. A full-time money machine will be more profitable, of course, but a part-time money machine is a great way to start. (Get Rich Slowly has been a part-time money machine for me, for example.)

Finding the Book

This book can be expensive and hard to find — it's an underground classic. My county library system doesn't have it. I bought my copy for $15 from Powell's. Amazon currently has seven copies under $10. In theory, you can order the revised edition from the author's web site. I'm going to give it a shot, but I'm wary — the site looks as if it hasn't been updated in ten years. (You can take a sneak peek at the second edition in this PDF from Lancaster's site.)

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Mike
Mike
12 years ago

Interesting. I’ve been a fan of his stuff since I was a kid because of the CMOS Cookbook and his magazine columns published in Radio-Electronics. There goes one of the used copies listed on Amazon. 🙂

TerrySprouse
TerrySprouse
12 years ago

Sounds like an enlightening read!

I self-published my book entitled “Fix em Up, Rent em Out, How to Start Your Own House Fix-up & Rental Business in Your Spare Time.” I agree that is the best way to go. If you self-publish, sell at on-line stores like Amazon, and control the printing process through printers like Lightening Press, you are in complete control, and maximize profits.

Another good book to guide you through the entire process is Aaron Shepard’s “Aiming at Amazon.”

Ryan Lynch
Ryan Lynch
12 years ago

Avoid psychic energy sinks — wait, what am I doing here?

J.D.
J.D.
12 years ago

Mike wrote: I’ve been a fan of his stuff since I was a kid because of the CMOS Cookbook As usual, there is so much more that I wrote for this entry, but which did not make the final cut. My father owned two books by Don Lancaster: The CMOS Cookbook and this one. I’m not sure which he liked more. Because he was a serial entrepreneur, Dad took a lot of Lancaster’s lessons to heart. But he also made great use of The CMOS Cookbook. I still have his copy out in my workshop. Also, my cousin (with whom… Read more »

Norman
Norman
12 years ago

Some more interesting info on Mr Lancaster:
http://en.wikipedia.org/wiki/Don_Lancaster

anne
anne
12 years ago

Thanks for a great review.

I couldn’t help thinking that society has come full circle. Lancaster’s concept of ‘nickels’ reminds me a bit of Anderson’s “The Long Tail” – where technology is enabling more of us to build small niche businesses instead of an elite few creating blockbusters.

J.D.
J.D.
12 years ago

Anne – awesome point regarding “the long tail”. I hadn’t made that connection, but now that you mention it, it’s quite clear. I haven’t read The Long Tail, but am familiar with the concept. Now I’m thinking it might be interesting to learn more about it…

Leo
Leo
12 years ago

This is exactly why I love this blog. You take a small, almost unheard-of book from the 1970s and show us some great lessons that apply to life now. You’re my hero, JD. 🙂

anne
anne
12 years ago

“The Long Tail” was an inspiring read and so is his blog, which keeps pushing the concepts well beyond the book. Uncanny how “the Secret Money Machine” really makes the connection between this blog and the long tail – who knew!

John
John
12 years ago

From what I can tell, GRS is an example of the four basic beliefs of the book.

On an unrelated note, tried Camino yet?

Jonathan
Jonathan
12 years ago

This sounds like a very interesting book that would speak to me, thanks for bringing attention to it. I miss Powell’s 🙁

I’ve always thought Reed could do even better if he just agreed to list on Amazon or something, even if he remained self-published. There was always too much mysteriousness for me to buy his book.

TosaJen
TosaJen
12 years ago

I’m glad you mentioned John T. Reed. His books aren’t cheap, and IMHO, they could use with a bit of editing (English major/tech writer here), but they’re full of info, low on BS, and well worth the money we’ve paid. His website (http://www.johntreed.com) has an area rating various real-estate gurus that is pretty fun reading. The entrepreneurial aspect of his self-publishing business is very interesting, too.

We’re looking at our real estate investing as “buying my husband a job”, or our first small business, so I’ll have to check out “The Incredible Secret Money Machine” — groovy!

Jeffeb3
Jeffeb3
12 years ago

OK, that’s it, I can’t read advice from someone who has a wellness coach. Wait. Isn’t that a logical fallacy. I think I learned that in school. Ad Hominim(sp).

Oh well, it could be worse…

david
david
12 years ago

Sounds like a very good book. I thought it was a game when I first saw the picture!

D-List 6 Figure Blogger
D-List 6 Figure Blogger
12 years ago

I think the one that gets most people is the wanting of instant riches instead of building things slowly but surely. A lot has to do with the media and how they make “instant success” look normal (lottery winners for example) instead of the long hours it really takes. Slow and surely does usually win the race.

Melsky
Melsky
12 years ago

That is kind of what I am trying to do now. I’ll have to look for a copy of that book.

I know what you mean by ignoring the dated parts of a book. I have Dale Carniegie’s How To Stop Worrying and Start Living, the original edition from the 30s, and it’s incredibly dated – sexist, racist and just bizarrely quaint in parts. But I still found it incredibly helpful in dealing with my anxiety because the core advice is spot on.

Dave Farquhar
Dave Farquhar
12 years ago

Here’s another good, down-to-earth guide:

Start Small, Finish Big: 15 Key Lessons to Start–and Run–Your Own Successful Business, by Fred DeLuca. His key argument is that you don’t need (or want) to borrow a lot of money to get started. You can pick up a copy on Amazon for less than $10 (including shipping), if you can’t find it in your library. It’s a good read.

The two best-known businesses he discusses are Subway and Kinko’s. The humble beginnings of those two companies should be very encouraging to anyone.

J.D.
J.D.
12 years ago

Dave, Lancaster also warns people against borrowing money. I’ll have to check out the DeLuca book…

chandos
chandos
12 years ago

I’ve been mulling over this review for a while now, and, although I haven’t bought the book (yet), I was inspired enough to have a go at it myself.

My plan is to put my skills as a translator to the task, and increase my “nickels” by starting a small translation firm! So far, things are just getting started, but I’m excited! (Shameless plug: I’m going to be documenting the whole process on my blog.)

mariane
mariane
10 years ago

Very useful and interesting review and great comments, thank you all! Inspired to start my own side businesses by this!

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