Monday, November 21, 2011

I just got laid off. How can I make more money?

That question is the holy grail of society. Substantial sums of money, it seems, is equated to a successful life, although the philosophical debate continues about that. I don’t think there is a person alive that hasn’t asked themselves that question at one time or another. Of course, there are unspoken extensions to that question. One or more of these adverbs could or must be added depending on the questioner’s circumstances; easily, passively, without high input costs, legally, quickly, and so on.

Primarily for me the answer lies in asking a supplementary question of context; “Where does the money come from”? I was listening to a tape of Tony Robbins and he said “Your income is in direct proportion to your contribution”. That should inspire you to say “If I contribute a lot I should earn a lot”.

Some people suggest; do what you love and the money will follow. In some respects that works. However, I don't necessarily think it is the passion for some specific idea, concept, service or product that is essential. I'm not particularly passionate about some of the problems I'm solving for my customers… I just know I can do it effectively. I think it is more about embracing a philosophy of what you're doing to contribute.

By extension of logic then the following becomes true. Since I'm not thinking about "my" issues (and for most people asking this question, "my" issue is financial), then the business focus truly is on the customer. My marketing does not need to pressure them and is more sincere. My problem solving efforts are to make the business run more effectively to help customers even more. With that approach my customers can sense the sincerity. Consequently, sales just keep growing. The growing sales have the collateral result of putting more money in my pocket. It's like an upward spiral.

I have a consulting practice, two web based service businesses, a product manufacturing/wholesale business and a real estate investment business. They are the end result of answering that question by figuring out how to contribute more.

This question usually comes up when you hit the wall. Your company just laid you off in the middle of a recession. I don't want to sound patronizing but as an employee I have been laid off in the middle of recessions… numerous times, and sometimes for a long time. I had nothing with which to start a new venture. The pressure is on and I felt so incapable of getting ahead. The only thing I can offer immediately is the knowledge that the recession will end. You will survive and you will struggle back up again.

When I was in that situation, my way out was to realize I had to start preparing for the next recession right then. I eventually got another regular employee job to put bread on the table; you will too. But the key step at that point is... immediately I started getting my first business (IT consulting) organized. Although it was fully functional for the next recession, it was still only able to partially pay me a decent living through that second recession. So then I started the second business in 2005 (an Internet based service company). This 2009 - 2011 recession hasn't impacted me at all. In fact, I've added the last two businesses (real estate business and another web service company) in 2007-2009 right into the face of a recession!

So, to answer the topic question, in order of increasing ease & cost of set-up, my suggestion for businesses fall in these categories:

1/ A website selling a service is cheap and fast - no inventory, very limited fixed assets, scaleable with additional clerical staff. You just need a superior website, intelligent advertising and solid service delivery. You can compete globally with international conglomerates if your service is a better mousetrap. My first service website was pretty rudimentary when I look back now. I am amazed that within 2 years it was doing over a million in revenue. Before you get too excited that is revenue; the net earnings were still small.

2/ For a consulting practice, you just need your educational credentials, excellent service skills and what I think is the key ingredient... the savvy to run it like a business instead of a high priced employee job. Some, and I'd say perhaps even lots of, people can convert their existing job into a consulting practice with some concerted effort. I get ecstatic when someone says their employer wants them to become a contractor. And I sigh with resignation when they don’t recognize a golden opportunity dropped in their laps. The revenue for consulting starts flowing almost immediately depending on the time lag of your invoices getting issued and paid. I’ve been doing this the longest because to move from employment to consulting is not a major contextual leap. In other words it was simple to grasp and start the additional revenue coming in. I posted earlier about why I still think this is the best first step.

3/ A product based business - This is definitely harder to do, more risk and more activities to manage. The profit margins are thinner but potential scaled-up volume can put you in the big leagues if you have designed a better mousetrap. I'd say purchasing a small one that is already operating is the practical way to get started in learning this type of business.

4/ The last and IMHO the hardest is definitely the one that attracts most people as a simple & easy solution; investing. It is a high input cost activity – both cash and brain power. I’ve traded various types of securities for 30 years, I’m an ex-stock broker, have been involved in investment clubs and taken formal courses in all sorts of sophisticated trading strategies. In the beginning it isn’t a simple passive activity. And, it requires serious money to be put in before any serious money comes out. It wasn’t until I got the earlier businesses stabilized that I had the real money to fund this stage. Many people want to jump to this stage and take on the world alone. I’ve come to the conclusion the only reliable way to get serious cash is either long term savings or creating businesses that generate good cash flow. Savings is a concept seemingly lost by today’s governments, and citizens. Everybody seems to be running a deficit. So thinking you can get ahead consistently by shuffling paper assets around is a forlorn hope. So that leaves operating a business.

In summary, my advice is to keep your eyes open; look around to see what problems people are having. Most people are incessantly complaining about something, so there is no shortage of potential ideas. If you can address just one of their problems, your whole business venture and financial outcome just falls into place. I'm not religious but I heard a biblical quote from Jim Rohn that is appropriate... "find a way to serve the many, for service to many leads to greatness".

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