Making real money online means breaking out of the limitations you have set yourself. We all constrain our earnings in our own ways. This post is how you can change your approach to earning money and break through your profit ceiling.
In the first post we looked at the three main earning styles:
For a lot of us, leaving a standard job means working for ourselves as a sole trader. We go from working for a boss we can’t stand to an even worse taskmaster (ourselves). It can be a shock going from being part of a team to being responsible for everything. Rather than getting easier our job becomes multiplied from what we do to also being secretary, bookkeeper and everything else.
As a couple of people have pointed out, if you have your own limited or corporation business but are the only person working in your business then you are still in the first category.
One of the key ideas we need to embrace about earning real money, one of the differences between the wealthy and people earning a living, is the concept of scale.
People progress from 1 to 3 both in earning potential and also in scale. Towards the top you have to put in more effort to earn less, towards the bottom you earn a major profit from doing comparatively very little.
Wealthy people do not need to work as hard to make more money.
That’s not to say wealthy people don’t work hard, more they don’t have to work quite as hard on an individual basis.
So one way to scale up is to share effort. We have all heard about delegating and subcontracting, which is the most obvious form of scale. Why is it we are all familiar with the concept but only a percentage of us actually do it?
Going from only having yourself as a resource to the efforts of many people allows you to increase the workload. This is only the start though.
Making more money involves the careful application and interplay of the following factors:
- Impact/Value – How much difference does your product or service make?
- Quantity – How many people can you reach? How much can you realistically produce?
- Profit – How much profit is made on each transaction?
You will notice that each have the possibility of earning you more money but can also be constraints too. For example if you can not keep up with orders then your quantity is capped.
So when you are a sole trader or consultant you are limited by the number of hours in a day. A lone blogger with a single blog is constrained by how many posts they can produce and more abstractly the profit potential of that one blog. Add employees or subcontractors and a business can take on more work, providing wages do not impact profitability. Hiring writers or even creating a new blog can expand your reach, and so on.
Systems and Products
When you provide an individual service you are making a big impact for few people. Because the value is high you can charge more and profit is high per transaction, but you are limited by how many people you can reach.
At the other end of the scale is the vending machine. Millions of people are served a small amount of value every day in a completely automated fashion (other than maintenance and repair).
How can we have the benefits of standardization and automation with people and not machines?
This is where systems come in. I love systems.
A good system
- reduces the number of people it takes to do a job
- makes the quality more consistent
- reduces waste
- speeds up processes
- allows you to scale more gracefully
- and allows you the potential to create a product from your service!
We are not just talking about computer systems but systems in general. Look for areas where you can create systems or automate tasks and watch your efficiency and profitability increase.
Take McDonalds. Their success is mostly down to marketing, real estate and systems.
If you go to Red Square or Regina you are going to get the same burger. The staff do not need to master complex skills. It’s a blueprint that can be replicated over and over. Talk about scale.
If you have a service business and are good at it then you will most likely have developed ways of doing things that can be turned into an efficient system. With checks and balances this keeps quality high and supervision low. More people can do the work without your time being taken up with management rather than working on growing the business.
Online we have so many opportunities for systems and automation there really ought to be no holding us back.
Once a system is put together we have our web equivalent of vending machines. Outsource the maintenance and monitor the dashboard while dreaming up new innovations. Easier than work, eh? 🙂
With a really good system you can package it up and sell it as a product. Now you can reach even more people, provide value and make good profits.
Once you have mastered systems and have a good grasp of piloting a profitable business rather than putting blood sweat and tears into it, then you have the equipment to invest and execute businesses with more confidence of success. You will also have head space to be more strategic and spot new opportunities.
Isn’t this what billionaires like Richard Branson do? You probably won’t find these guys on the coal face micro-managing. They have a vision, put a team together, oversee the launch and move on to the next project.
Is Your Earning Constrained?
Look at how you earn money. What is limiting your potential? How could you expand your reach or profits? Do you subcontract or not? Share in the comments …
Table of contents for Making Real Money
- Making Real Money Online: What Type of Earner Are You?
- Making Real Money Online: Spending to Earn
- Making Real Money Online: Expanding Your Operations
- Making Real Money Online: Making it Happen
- Making Real Money Online: Confidence and Taking the Risk
- Making Real Money Online: Your Vision
- Making Real Money Online: What is Wealth?