What Is The Best Way To Make Money?
There are many money-making paths you can go down, but you’ll be miserable if you pick the wrong one. If the path you choose feels like drudgery, you probably won’t succeed.
I loved how Mladen Adamovic started this answer to this question, because it illustrates how we all have our own biases about business ideas. Remember the advice Dustin Hoffman got in The Graduate?
I’m going to take a different approach on answering this question. I’ll talk first about knowing yourself, then provide a path that may work for you.
So lemme ask a question: why do you want to make money?
I’m not being cute here- far from it. If you know why you want to make money- and how you’ll do it- you’ll be much happier as you work hard. After all, working isn’t easy, and there are a lot of days when we’d rather just stay in bed another hour (or 5).
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What’s driving you?
The obvious reason for wanting to make money is to create some financial stability. I get it- you don’t want to struggle to pay your bills each month. If you dig deeper, you may find that your reasons for making money are more profound and intense. Here are just a few:
- To prove people wrong
- To satisfy you ego drive
- To use your skills to help as many people as possible (probably a better than the first two)
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Ken Burns did a great documentary on Jackie Robinson. Robinson’s breakthough as the first African-American major league baseball player was brutal- far tougher than I thought, once I watched the documentary. So, what drove him?
Anger.
Anger at all of the people that wronged him along the way. That’s how he became a Hall Of Fame player.
So what’s driving you?
A self-assessment
Once you think carefully about your drive, consider what you’re good at. If you haven’t taken the Myers-Briggs self assessment, I highly recommend it. This assessment classifies your preferences into 4 specific personality types. Think introvert vs. extrovert, for example. Do you prefer to make decisions based on facts, or by using intuition and your relationships with people?
Myers-Briggs is a great indicator of who you are, and the type of work you prefer. Fortunately, many high schools and just about every college offers this assessment for students.
I’ll use myself as an example. I like explaining complex ideas, but I’m not good at doing technical work (accounting, in my case) all day everyday. I’m somewhat outgoing, but I don’t have the ego drive to close sales. I’m somebody in between- a trainer.
I have to find this out later in life, after trying a lot of careers that didn’t work. Once I took Myers-Briggs and understood who I was, I found that right type of work for me. I strongly recommend this assessment.
A path to make money
Once you who what drives you and the type of personality you have, you’re ready to start down the path of making money. Over my 32 year working life, I’ve seen people achieve financial success by using many different paths. Based on all those experiences, I think there are four steps you should take to make the most money over time:
- Get that first job: Use what you’re learned about yourself to start a career by working for someone else.
- Business plan: Use your business experience to write a formal business plan
- Test drive your idea: Start the business as a part-time venture
- Grow the business into a full time job
Let’s discuss each step.
Get that first job
Use what you’re learned about yourself to start a career by working for someone else. While you’re at that first job, learn everything that you can about your particular industry. Keep asking yourself: Is there a problem in this industry that needs to be solved- a problem that no one else is really solving?
That’s the first seed of what may be a great business idea.
Assume, for example, that Susie is a former college athlete and has a passion for outside sports. She decides to work in the outdoor sporting goods business, so she gets a job as a marketing rep at a large sporting goods manufacturer.
Write a business plan
Use your business experience to write a formal business plan. Susie notices an increasing number of bike riders who are frustrated by the bike tubes they carry to change flat tires. Sometimes, the rider can’t get the bike pump on the tire tube to properly inflate the tire. Other bikers carry CO2 equipment to inflate tires, but they often fail.
Susie sees a need to a bike tube that is attached to a inflation device.
Now, she needs to do research. Susie needs to work with experts who can design the bike tube, and she needs to talk to riders to find out what they would be willing to pay for the new bike tube. If enough riders are willing to pay a reasonable price for the new bike tube, Susie may have herself a legitimate business idea.
Important: Susie needs to write this idea down in a formal document. You can get inexpensive software that will allow you to write a comprehensive business plan, including three years to projected financial statements.
Test drive your idea
Here’s the big mistake many business owners make: they plow a bunch of money into a venture without testing the idea on a small sample of buyers. Start the business as a part-time venture, and try out your idea with a small group of consumers.
Susie decides to pay for a small production run of 100 bike tubes. She gives them away to bike riders she has met in her marketing job, and asks them what they think. Did the bike tube solve your problem? If so, how much would you be willing to pay for the tube?
Grow the business into a full time job
If Susie gets positive feedback from her small sample of customers, she can expand the experiment. Maybe she produces 500 bike tubes and sells them at bike riding events. The point here is to gradually expand the business, see how things go- then expand more. Over time, Susie may turn the venture into a full-time business.
Those are my tips, based on 30+ years of business experience. As usual, this is for educational purposes only. Contact a CPA or financial advisor for advice.
Good luck!
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Co-Founder: accountinged.com
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(you tube channel) kenboydstl
Image:
David Tarwin, Cash register close up
(CC BY-SA 2.0)