As entrepreneurs, the one thing we want is to be as productive as possible. While it’s not always be the easiest thing to do, there are ways you can more effectively get the most out of your day.
There are only three ways to make money: your own work, overrides or profit margin on other people’s work or money making money for you. In my own business, as an example, I receive backwards commissions from a handful of vendors I generally promote and directly refer clients to. One of these is very consistent, providing about $35,000 a year, which helps me meet the expected annual income I set for myself.
But, there are other less obvious ways to leverage other people:
Other people’s money (OPM)
When companies reach a certain size, it’s often more efficient for them to use debt or investors’ capital to fund growth or expansion rather than to build from scratch. Similarly, even a solo entrepreneur can (very carefully) use debt to buy income-producing assets, the net profit from which can effectively reduce the portion of the income target he must achieve with his time. More creatively, the entrepreneur can somehow lease or license his assets and have other people investing their money and time in generating income from them.
This is the principle of franchising, as an example. The entrepreneur has succeeded with a small business that’s a replicable model. Rather than duplicating it himself by opening and operating a second location, then a third, then a fourth, probably incurring substantial debt in doing so, he instead has other independent operators invest their money in replicate outlets and takes a royalty, typically 5 percent to 7 percent of the gross revenues of every such location. In the time it might take to get to 10 company-owned shops, he may get 100 or more franchised units operating.
Other people’s resources (OPR)
Great entrepreneurs co-opt other people’s resources by all sorts of clever means, in openly collaborative or symbiotic relationships and surreptitiously as well. You should consider any resource you’re having to create, manage or maintain with your time and ask yourself who else is doing the same work and how you might get some kind of “ride along” on their efforts.
If you watch the TV show Shark Tank, start taking note of the frequency with which Kevin O’Leary, Lori Greiner and Barbara Corcoran — but especially Kevin — get interested in a product or business because they already have another product or business they’ve invested in that sells to the same customer base and/or through an ecommerce platform or other distribution channel they’ve already developed and/or someone else’s platform with whom they already have a working relationship. When they raise this issue, they’re really saying, “I can just drop this new thing into already existing, other people’s resources; there’s little new time required.”
For the inventor or entrepreneur who’s getting a deal done on Shark Tank with one or several of the sharks, the money obtained is almost inconsequential compared to the value and power and time saved by the OPR — the sharks’ connections, “been there and done that” knowledge, media, sales platforms and access to use of OPR.
Online sales platforms like Amazon, eBay, Etsy, etc. constitute OPR. You don’t need to invest time building the platform or the following, frequent visitors and traffic; you can just step in and use the already existing resources.
Other people’s customers. (OPC)
Almost without exception, the most expensive, difficult and time-consuming aspect of a business is acquiring new customers, one by one, through your own advertising, marketing and selling efforts. You’ll get incredible leverage, time savings and capital investment reduction by selling to OPC. Anytime you can get automated, autopilot access to OPC or fast access to OPC in groups rather than one by one, you want to put it into your business and be cheerfully willing to pay at least as much to the OPC provider as it costs you to get a new customer by your own devices.
Online affiliate marketing and its parent, placement of products in mail-order catalogs, is a perfect example of this concept in action. Customer-sharing is another example. The financial and investment advisor and the CPA who share clients with each other both reduce the time and money they must invest individually to grow their respective practices. The Starbucks located inside the Barnes & Noble bookstore is sharing the same customers as the bookseller in a more cost-efficient manner than if each were operating separate, stand-alone locations.
The more creative and adept you get at OPM, OPR and OPC, the less direct time and capital investment is required of you to grow your business.