Want To Make More Money? How To Maximise The Worker, The Seller, The Investor, In All Of Us

20-dollar-note-security My 5 year old son asked me about money last night before bed.

His basic question was “How do we get more of it?”

Good question!

We spent a few minutes closely examining a 5 dollar note and I pointed out some of the security features like clear windows, watermarks and micro-printing that make it so hard to simply print out more for ourselves.

And then I told him the 3 basic ways to make money:

In a moment we’ll take a closer look at each one, and consider the marketing implications of each.

But first, are you more likely to ask the question “how do you earn money” or “how do you make money”?

The most common, is the latter. We use the phrase “make money” as if the stuff comes out of thin air.

Most monetary transactions these days are in fact in the thin air.

They are electronic transactions flying through the internet and phone lines. Rarely are they passed over from one human hand to another.

Anyway, the first way to make money is…

#1 Work For Someone

Exchanging an hour of your time for an hours pay. You are selling your time
If you live until your 80, that’s 700,800 hours you’ve got to sell
But you might keep a third of those for yourself for sleeping, and another third for family time, resting and playing, leaving just 233,600 to sell
This method does not scale. If you create enormous value for a business with a 60 minute phonecall with a new customer, you get paid the same as you did for that hour you spent on Facebook

Have you noticed that when you are job hunting, it feels like you are selling yourself to a potential employer? That’s exactly what you are doing
Your potential future boss is estimating your capacity to create value for their business
They know you’ll take holidays, you’ll get sick sometimes, you’ll lose focus or get distracted, but at the end of the day, they hope that you’ve created products or services that are of value to the customers of their business. They use that value to contribute to overheads, pay for the costs of doing business (including your wages/salary), and to compensate them for taking the risk on you
When that value calculation is upsidedown, that’s when redundancies are made. Redundancy really means “for the foreseeable future we can’t sell the value that you create, so the business can’t afford to pay you to stay here”
So if you are working for someone and you’re worried about redundancy, ask your boss what the most valuable outputs of your work are, and just focus on those
Go beyond KPI’s and keep asking the question “why is that important? But why is that important?” Until you find out what is truely valuable

Eg Buy items in bulk and resell them to customers in smaller quantities (eg supermarkets do this all day)
Eg Assemble an item that people want from components (eg a mobile phone is made of thousands of components)
Eg Provide a service that people pay for (eg the delivery of packages to your home or office)
Evening begging is a form of selling. You are selling the good feeling that comes from helping someone less fortunate

In this scenario it’s about asking questions that uncover peoples wants and needs (often, they are problems that they want to solve)
But better than that, it’s finding out what they are willing to pay to solve that problem
But better than that, it’s asking them to pay in advance of you delivering that solution

Eg Give your funds to a bank and earn interest
Eg Buy or build a machine that makes widgets
Eg Buy or build an asset that generates cashflow (eg a rental property)
Eg Hire an employee that creates value for your customers
Even playing the lottery or gambling is a form of investment. You are exchanging time and money for the chance to profit

The first 2 questions in this scenario are “What is the return on investment?” and “What is the risk of losing my entire investment?”
The next question is “What are my investment alternatives and how do they compare?”
Even with just 2 factors: return/reward and risk, evaluating your options can be enormously complicated
The marketing questions are “what are you really selling?” and “who will pay for it?”
For example, putting your money in a bank account is giving the bank permission to use your money for their own investments (such as issuing mortgages on property). In return you get a small fraction of their profits but with very little risk of losing your investment

In your lifetime you will dip in and out of all 3 categories all the time.

What are your thoughts on this?

Have I missed a method of making money?

Have your say in the comments section below.

Brad says:

16 June 2015 at 3:16 pm

Interesting, certainly highlights that very different skills are required for success in each of the ways to make money… Cheers