Just a few months ago, everyone seemed to be financially okay. Today, almost everyone is concerned about their finances as the world’s economy is crashing down. While it’s easy to believe that everyone is in crisis at a time like this, some people actually make more money now than before. I’m fortunate to be among those and in today’s article, I’ll be sharing with you five ways you can actually make more money as an entrepreneur at a time like this.
- Build a business that you’re not responsible for its running cost
My first successful business was an Agric-Tech company where we act as an intermediary between the farmers in my country and those who want to become farmers. We had two websites that cost us less than $300 to manage a year and nothing else except data. We had 250 partners all over the country.
We had a few courses we made once and for all and almost nothing like concurrent expenses. We connect the buyers of our service with the providers by using phones and emails. We efficiently ran this business from my apartment, and I did just that in the past.
What happened here is that all the running cost of that business were on our partners even if the economy is not stable, since almost every money we make is a profit, we’ll still be fine.
Some people might not understand how this works, so let me use popular examples of the companies that do this. Think about Uber. Think about Airbnb. Think about Google and YouTube.
There are more than 5 billion videos here on YouTube. These videos belong to YouTube, but YouTube spends zero dollars to create them. The advertisers go to YouTube and pay to reach the audience, even though YouTube didn’t spend any money to get them.
Yes, there are staff, technologies and a few marketing that YouTube might have, but if you compare these cost with the cost of running traditional businesses, it’s like a comparison between the Sky and the Earth.
This model is known as the Shared Economy. Someone stands at the middle to connect two people. The guy in the middle actually doesn’t take responsibility for the cost of production of the goods or services, so he shifts the cost on his partners while he makes most of the money.
You can create a shared Economy. You can be an intermediate between two groups of people and make your money with almost at zero running cost. I’m not saying it’s easy, but since I did it successfully, I believe you might be able to do it if you think deeply. What two groups of buyers and sellers can you connect and take a commission from the sellers without having to be responsible for the running cost or cost of production of the services to be rendered?
If you can figure this out, you can build a business that will be fine, even during a recession.
- Build a business with low running cost
I earlier talked about how you can create a business where you’re not responsible for the running cost or most of it. Now if that is not possible for you, you can create a business that has a very low running cost.
This is important because by far, the greatest enemy of business is the running cost. Nothing is even close low running cost in business. Businesses are making money. So, if you want to know the reason why businesses fail, look at the running cost.
Sometimes ago I read about a company that made as much as hundred million dollars a year yet, they had no profit, not likely because they used some cunning ways to reinvest all their earnings to dodge the IRS but because they have a company with so much running cost.
Many companies in the world spend all their money to run the company. For example, one study found that 90% of all service and manufacturing businesses with more than $700,000 in gross sales are operating at under 10% profit margin.
Imagine making a million dollars every year, and your profit is only $40,000. That’s why I said that cost of running businesses is the enemy, greatest enemy of every business so if we can figure out how to build a business with extremely low running cost, we can survive or even make more money during the time of crisis.
All my businesses have a reasonable profit margin, and there’s no magic other than that we have a low cost of running the businesses. Some of the following points will give you some ideas on how to do this.
- Excessively leverage on the internet
I spent about six years in the traditional business settings, where businesses are built on one block at a time, one location at a time, one employee at a time. It was tedious and boring, so in the year 2014 when I discovered the power of the internet, I became obsessed with the internet. Suddenly I found out that a simple application is capable of doing what 20 humans need to do.
I discovered that instead of building a block and mortal model, one at a time, I could sell my product to someone from other states and even countries.
I discovered the power of blogs, videos and social media.
I built two businesses which I’ve never worked on more than an hour a month in the last one year yet; they make me money. Just yesterday, I checked my blog and saw some of my rankings then I asked myself, “Why is Google still ranking my blog, even though I had abandoned it for about two years?”
That’s crazy. This blog still gives me money every month because Google won’t stop ranking it, even though I can’t remember posting anything on it in the last two years.
Whether you think about tools, connections, marketing or branding yourself or business, nothing beats the internet, and the reason being obsessed with the internet can make you more money during the time of crisis is because it’s often cheap compared to the traditional ways of marketing or building stuff.
- Use Remote Staff to Run Your Business
In my entire company, only about two people have an obligation to resume to the office every day. Many people never resume to the office as they work remotely, others resume only on Thursdays and the reason for this is two folds; first, people are likely to be happier with their jobs if they don’t have the burden of office time and resumption. This way, they can do their work with better minds and higher productivity.
The second reason you might want to consider remote staffing is that office space and running the office could be very expensive for a small business. There are businesses in my city paying as high as $200,000 a year to maintain their office space.
$200,000 isn’t a lot of money for big businesses but how many businesses are big? For a company that makes a million dollars a year, $200,000 is way too high for an office space alone.
Another thing you might want to consider is how you can have your office away from public or popular space, at least while you’re still small. This way, you can pay very low for rents, and this won’t affect you as long as your business can be carried out without much or no visitations by clients. I know this isn’t possible for most business, but you get my point; hire as many people as you can to work for your business without them resuming to the office, and you’ll save some cost.
- Diversify
Yes, one of my business is hard-hit with what is going on right now, but this doesn’t affect us much because our other business is doing better than before.
When starting out in the business world, you would want to keep all your eggs in a single basket and concentrate on that basket, but as you grow, you should consider diversifying because if a recession happens, a person who has three businesses in different industries will be safer than someone with a single business.
Here is the summary of everything I’ve discussed with you so far;
- Build a business that you’re not responsible for its running cost
- Build a business with low running cost
- Excessively leverage on the internet
- Use Remote Staff to Run Your Business
- Diversify
