Six ways to set-up a money making system

Billionaire investor Warren Buffett has always been intrigued with systems that generate a reliable income stream. In fact Berkshire Hathaway – his multi-billion dollar conglomerate – is effectively one big money making system, made up of lots of businesses that are so dependable they could pretty much run themselves or as Buffett would say ‘could be run by a ham sandwich’.

You may or may not be striving for the same heights as Warren Buffett, but developing your career or business so that it earns you a reliable and premium income each year is a must.

Here are the key considerations for developing your own system for consistently providing a premium income…

Creating a money making system is a two stage process:

  • Stage 1 – Selling your time
  • Stage 2 – Leverage

Money making system

Stage 1 – Selling your time

For many people, Stage 1 is more than sufficient to meet their needs and financial aspirations.

Effectively you are selling your time for money; but by building a platform based around knowledge and skills, personal reputation and a decent network of contacts, you can begin to charge a premium for your time.

Here is a bit more detail about the three areas that will build your platform:

Specialist knowledge and skills

Picking your niche can be very tricky. Some lucky people know they want to be a doctor or a vet from about the age of five! For the majority of us though, it is not until we are well into our twenties (or even later) before we start to define what we are good at and enjoy doing.

The other side of the coin is finding a niche where there is a strong enough demand for certain skills and limited supply of people with them. Tap this and you will hit the sweet spot with your earning potential.

Building your personal brand

The asset that Warren Buffett treasures most is not money or stock – it is his reputation. Buffett’s reputation enabled him to close multi-billion dollar deals, but for the majority of us just being known as somebody who can be trusted to get the job done well is a major asset.

Nowadays there are many ways to augment your reputation and personal brand online through social media, blogs and forums; but don’t forget the most powerful form of marketing – word of mouth recommendations from your network of contacts.

Build your network

Nothing beats a personal recommendation from somebody in your network.  Focus on becoming a specialist in your niche, work hard to deliver results and you’ll easily yield future employment openings from former colleagues as they progress through their careers.

Remember also to expand your network by reaching out beyond your peer group of colleagues.  Networks can be developed at training events, through online forums and blogs and also through your social activities.

Look out for potential mentors and make yourself available to mentor others, if they ask for your help.

Stage 2 – Leverage

Stage 2 is the point where you make money using other people’s time and resources.

Often it requires some sort of investment (hence the need to build your financial reserves in Stage 1) or it could see you using your reputation and network, plus other people’s money to create a revenue generating entity.

Here are three common ways to gain leverage:

Creating products to sell

The problem with selling your time is that it is a limited resource. There are only so many hours in the day that you can work, so the focus has to be on maximising the money you earn during that time.

However, using your knowledge and skills to create a product that can be manufactured and sold in volume is one way to increase earnings beyond the limited number of hours you can work in a day.

Alternatively you can organise the resources, skills and intellectual capital of other people to produce a scalable product range of which you can skim a profit.

Investing in assets

Perhaps the most accessible way for people to gain earning leverage is through investment in assets like stocks and shares or property to rent out.

Neither investment is fool-proof, but by sticking to basic common-sense rules, you can build a revenue-generating system that will largely run itself.

Employing people to work for you

Similar to creating a product, becoming an employer of other people allows you to overcome the time limitation that you have in your day.

The example that springs instantly to mind is a consultancy that will charge a fixed day rate for each consultant it manages to place in a customer business.  The opportunity increases by getting more consultants embedded in a client’s business.

How will you create your own system?

Stage 1 should be considered your bread and butter.  These are the things you need to be doing to have any chance of earning a decent income.

Stage 2 is more like the jam. Not essential, but it will make the meal taste that much sweeter. Finding a way to leverage your money making is the route to significant wealth.

Doubtlessly you will adapt and refine this basic system to fit your own needs, and it is important to remember that it takes a great deal of effort to set-up and run a money making system, but the financial rewards will make it worthwhile.

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