New money. That’s what this post is about. It’s a new year and time to generate new business income.
If you’ve run a business consistently, you may have noticed an interesting trend. Your profits are great and your overheads have flatlined. You’re not taking on any new staff or making any new capital purchases. Your cost of job execution has remained steady and your margins are juicy. But despite your costs holding steady, you don’t seem to have cash in the bank at the end of each month.
The reason is simple. What you’re making barely covers your expense profile. There isn’t much left over after settling all your bills, even though those bills aren’t increasing significantly.
You’ve tried cost cutting but there’s a limit to what you can cut while still producing very high quality work. For instance, you need to pay your energy bill, no matter what.
To escape the vicious cycle where you labour but don’t enjoy the fruits, there are two things you can do:
1. More of the same
2. New strategies
More of the same means squeezing more jobs from existing clients or attracting new clients in your industry. New strategies entail income from entirely new products & services.
The first option means you must fight for market share with competitors and that requires innovation or relationship. You must provide something your competitors don’t have or do it better or cheaper. You must also forge relationships with clients who can give you new custom. The second option requires moving out of your comfort zone to create something entirely new; typically outside your current industry. This may prove necessary if your industry is already saturated and there’s no room for growth.
Whichever option you choose, an upfront investment is required: dedicated staff.
The truth is it’s hard to generate new money without someone thinking about it day and night; someone you task with driving the product or service; someone whose performance and remuneration depend on it. You can’t get something without giving something, but don’t be worried, you may not need to take on the full burden of the cost. A profit sharing arrangement when the new income source pans out may be sufficient incentive for the new business driver.
In conclusion, you will learn that finding a driver for a new business is just as important as developing a great idea for new income. In fact it’s the most important thing.
I wish you great success.