{"id":60891,"date":"2022-02-07T17:04:50","date_gmt":"2022-02-07T21:04:50","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=60891"},"modified":"2022-02-21T17:07:04","modified_gmt":"2022-02-21T21:07:04","slug":"how-to-increase-your-income-2","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/how-to-increase-your-income-2\/","title":{"rendered":"How to Increase Your Income: 7 Tips From a Millionaire"},"content":{"rendered":"\n

Do you want to know how to increase your income<\/a>? What kinds of businesses will make you rich?<\/p>\n\n\n\n

In his book, The Millionaire Fastlane, <\/em>entrepreneur and millionaire MJ DeMarco says that the fastest way to become rich is by creating a business that generates passive income\u2014and then compounding that income. However, not all businesses will make you rich.<\/p>\n\n\n\n

Here are DeMarco’s seven methods for dramatically increasing your income. <\/p>\n\n\n\n\n\n\n\n

The Active Producers\u2019 Checklist<\/strong><\/h2>\n\n\n\n

Do you want to know how to increase your income? DeMarco claims that, unless you have a realistic chance of becoming a highly-paid celebrity or professional athlete, your fastest route to wealth is to become an active producer and start a business<\/a> that has the potential to create millions of dollars in passive income. Then, invest that income so its compound interest can preserve and build your wealth. Throughout the rest of this section, we\u2019ll cover DeMarco\u2019s suggestions for finding the right type of business and investment opportunities<\/a> to dramatically increase your income.<\/p>\n\n\n\n

Create Passive Income<\/strong><\/h3>\n\n\n\n

According to DeMarco, passive income comes from businesses that offer value to customers, have the potential for growth, and only require periodic support to survive. He explains that wealthy businesses generate passive income either by selling low-priced products and services (for example, books and apps) to millions of customers, or by selling high-priced products and services (for example, property and luxury vacations) to a few customers. He explains that a less common structure is selling high-priced<\/em> products to millions<\/em> of customers\u2014the owners of these types of businesses have the potential to become billionaires.<\/p>\n\n\n\n

Value-focused business approaches that generate passive income include leasing physical and intellectual property, creating internet-based systems, selling information, and distributing products.<\/p>\n\n\n\n

DeMarco suggests seven methods to come up with your own business ideas and maximize your income:<\/p>\n\n\n\n

1) Act on Your Knowledge to Create Opportunities<\/h4>\n\n\n\n

According to DeMarco, you don\u2019t need an expensive education to come up with great business<\/a> ideas and create wealth. He argues that it\u2019s possible to become an expert<\/a> in any field without creating debts thanks to numerous free or inexpensive resources that are available online and in libraries. However, don\u2019t fall into the trap of only<\/em> consuming information: DeMarco argues that education is only valuable if you act on what you learn. Taking action is the only way to create money-making opportunities.<\/p>\n\n\n\n

Set Actionable Goals to Focus Your Research<\/strong>

In Ultralearning<\/em><\/a>, Scott Young offers three steps to focus your research so that you can quickly transition from \u201cconsuming information\u201d to \u201ctaking action.\u201d<\/a>

1. Determine a specific goal<\/strong>: What do you want to learn and why? For example, you want to learn about website design so you can create your e-commerce store.

2. Gather your resources<\/strong>: Research and collate all of the sources you intend to learn from such as books, podcasts, or software.

3. Create a schedule<\/strong>: Define how much time you\u2019re willing to devote to your research each week and set actionable<\/em> short-term goals that contribute directly to your long-term goal. For example, your first short-term goal might be to research and choose a website provider.   <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

2) Switch Your Focus From Consuming to Producing<\/h4>\n\n\n\n

To get into the mindset of a producer, DeMarco suggests that you examine everything you purchase from a producer\u2019s perspective rather than your usual consumer\u2019s perspective. Ask yourself, \u201cWhat value does this company provide and how does it market the product? What processes are involved in offering this product or service? How does this company make a profit?\u201d These questions will focus your thoughts on the wealth of opportunities available to you and provide ideas for how you can take advantage of them.<\/p>\n\n\n\n

Nine Questions to Uncover How a Business Operates<\/strong>

Osterwalder and Pigneur (Business Model Generation<\/em><\/a>) offer a more in-depth way to analyze the strategies of successful businesses<\/a>. According to them, every business strategy relies on not three, but nine<\/em> elements. The following questions give you a complete picture of how a business operates and help you come up with your own business ideas:

1. Who are its customers?<\/strong> Define what group of consumers the business targets its product to. For example, if it sells children\u2019s books, it\u2019s probably targeting parents and preschools.
2. What channels does it use to communicate, sell, and distribute its products and services? <\/strong>For example, a business might rely on online advertising, an e-commerce store, and the postal system.
3. What sort of customer relationships does it establish?<\/strong> For example, it might offer a fully personalized one-on-one service to build customer loyalty<\/a>. Or, it might offer automated services with no dedicated customer service representatives.
4. What value does it offer?<\/strong> How does its product or service benefit customers? For example, Smallpdf.com offers free and low-priced pdf services to individuals who don\u2019t want to subscribe to traditional alternatives.
5. What resources does it rely on?<\/strong> A business needs one or more of the following resources to create and deliver its products to customers: material (for example, specific equipment), <\/strong>monetary, <\/strong>intellectual (for example, copyrights or patents), and human (for example, employees or specialists). 
6. What partnerships does it rely on?<\/strong> There are four types of partnerships a business might rely on: between non-competitors (eBay and Paypal), between competitors (Apple and Microsoft\u2019s patent-licensing agreement), joint alliances (Ford and Toyota develop hybrid trucks), and buyer-supplier alliances (Samsung supplies Apple).
7. What are its core activities?<\/strong> The main tasks that a business needs to focus on to operate successfully fall into at least one of the following three categories: production, troubleshooting, and infrastructure management.
8. How does it make a profit?<\/strong> Does it deal in single transactions or recurring transactions? Does it offer fixed prices or variable prices?
9. What are its costs?<\/strong> Does the business have one-off costs to produce and distribute a product or does it have ongoing costs such as salaries and office rentals?<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

3) Consider What Value You Can Offer<\/h4>\n\n\n\n

DeMarco explains that people are only willing to pay for products that solve problems<\/a> or fulfill their needs\u2014therefore, the wealth your business generates can only reflect the amount of value that you provide to others. He suggests that you examine your skills, knowledge, or assets and think about how they can benefit others. Ask yourself questions such as, \u201cWhat problems or pain points can I resolve?\u201d or, \u201cHow can I improve upon products or services that I already use?\u201d Answering these questions will help you align your skills and abilities with money-making opportunities.<\/p>\n\n\n\n

(Shortform note: What kinds of problems and pain points should you try to resolve? Sales experts recommend looking for inconveniences that customers face throughout both their experience with an existing business<\/a> and their experience with specific products and services<\/a>. Come up with as many ideas as you can to solve these problems. For example, one business noticed that consumers are reluctant to buy electric fryers because deep-fried food is unhealthy and the machines are difficult to clean. They transformed the problem into a solution by creating Actifry, a machine that creates tasty fries with only one tablespoon of oil. Actifry converted a problem into revenue totaling \u20ac1 billion <\/strong>by addressing customer concerns.)<\/p>\n\n\n\n

4) Don\u2019t Take the Easy Route<\/h4>\n\n\n\n

According to DeMarco, businesses that are more complicated to launch stave off competition and safeguard demand for your product<\/a> or service. He explains that easy opportunities attract masses of copycat businesses that increase competition and reduce your chances of making a profit. On the other hand, businesses that provide unique products or services that aren’t easy to replicate dominate the market and receive the bulk of the profits.<\/p>\n\n\n\n

(Shortform note: How can you come up with ideas for a unique product<\/a> or service that dominates the market? In Blue Ocean Strategy<\/em><\/a>, W. Chan Kim and Ren\u00e9e Mauborgne argue that you can bypass competition by creating demand in entirely new<\/em> marketplaces<\/a>. To do so, they suggest examining how you can pursue both differentiation<\/em> (raising standards and creating new features) and low costs<\/em> (eliminating unnecessary features and cutting costs)<\/a>. For example, Cirque du Soleil<\/a> redefined circus entertainment and bypassed competition by adding elements of theater and cutting animal acts from their performances.)<\/p>\n\n\n\n

5) Control Everything in Your Business<\/h4>\n\n\n\n

DeMarco suggests that you engage only in businesses that you can fully control to avoid becoming vulnerable to other entities. He suggests that you avoid relying on other companies or organizations for logistical support or infrastructure management\u2014for example, hiring estate agents to manage your properties, or signing up to a sales platform to market and sell your products<\/a>. He explains that if you don\u2019t control every aspect of your business, from operational choices to distribution, your profits are at the mercy of others\u2014because their future decisions may negatively impact you. <\/p>\n\n\n\n