The principles behind increasing your income

If there is one thing entrepreneurs and freelancers should be focusing on this is it - how to increase your income or of more use how to increase your productivity. It amazes me how many startups and self-employed focus on aspects of their business, that whilst important to some degree, fail to concentrate on the drivers of income creation (note I say 'income' not 'revenue').

When consulting to clients there used to be the question of how to charge for work performed. That is, charge per job or charge per hour. Of course you may still charge per hour is required but your preference should be always per job. Why? Because you could (1) complete the job in fewer hours than the budget and therefore increase your per/hour rate of income or (2) give the job to a qualified associate for 80% of what you are receiving. Five such jobs will see you earning 20% more than what you could have as an individual.

But what I really want to communicate is that the wealthy do not sell hours - they sell knowledge. A motivational speaker does not speak to a single person if they can speak to hundreds. A website will not provide information to just one person - rather the same 'valued' information is presented to hundreds, thousands and millions of customers. This is the leverage of knowledge.

This is not an option for everyone but many careers and businesses can utilize the concept. Not only consulting, motivational speaking and certain web-based advice business e.g career and investment advice. However those in a trade can certainly also leverage their knowledge so they are not handicapped to work for only a particular rate per hour.

However just as important is that you have to recognize that you cannot just know something and expect huge success if no one else values that knowledge as much as you. This is the fallacy that many professionals believe to be true - that once you have a professional qualification then you're set. Unfortunately this is not the case. Firstly you have knowledge but probably cannot utilize it effectively within a working environment. Secondly many other people also have the same knowledge. So it appears the secret to business and career success is just not having knowledge and leveraging that knowledge. It's about applying the knowledge in such a way that (1) not many others can copy (2) how the knowledge is applied is valuable and (3) you can leverage across many people.

What demand is your product or service fulfilling?

If the answer makes you think for too long, you have no answer or you come up with some reasoning including the words 'consulting, strategy, development...etc' then keep reading. What we need to understand is that the level of education and savy is such in the market today amongst the masses that the fancy titles and concepts that were difficult to understand and taught at only the top business schools in the past are no longer impressive. Every fourth rate school teaches the same concepts and with such a high percentage of the western world going to college the coverage of these concepts is extremely wide.

Am I recommending not going to school and to become an inventor, internet entrepreneur, celebrity cook, athlete etc instead? Absolutely not, but actually it doesn't matter what path you take as long as you do two things. One is to work hard and the second is to be very clear (this means have proof) on what you are offering and why. The work hard is the easy bit, even the bit on being clear on what you are offering...the hard bit is to confirm the 'why'. 'Why' are you producing a product, delivering a service, studying something at school etc.

Liking what you do it extremely important (and I will get to the fact that there are different levels of 'liking or loving' your job) but more important you have to recognize a demand for your skill or knowledge. If no one is in the market for what you have to offer then what you have will go to waste. I'm not talking about the challenge of being able to 'brand' or 'market' your offering so people are interested...I am talking about no interest no matter what you do because it doesn't hit the right demographic, is out of sync with social trends etc. Likewise if you're in a flooded market you still need to ensure supply is sufficient.

So what you need to do, to ensure a meaningful career either as an employee or business person is to clarify what you have to offer, how you're going to offer it and why it will be bought. If you cannot do this now take the actions you need to in order to do so. Last word regarding liking your job...it's not always about pure enjoyment, but can be satisfaction gained from making a difference, achieving what only few can...don't confuse liking or loving the job along the same lines as loving your family or liking a gift. Make the meaning of the word whatever you need it to be to suit you.

Why small businesses and entrepreneurs fail

What is failure and why do so many business startups fail? Failure could be classified as not achieving goals such as working more hours than planned, lack of enjoyment and satisfaction, too much travel - however in vast majority of cases failure of a business is due to financial reasons. That is not making enough money to cover costs.

Why does this occur and so freqently? I have met a lot of entrepreneurs, both who have succeeded and failed in business (some many times over), and the one thing they have in common is intelligence and drive. So if this is what you think you need to have to succeed then think again. The difference between success and failure is decision making. The basis of decision making is information and insight and I believe the two go hand-in-hand in ensuring the most appropriate decision is made.

Thus failure in business is due to poor decision making because there was incorrect, lack of or inappropriate information used and that the insight of the entrepreneur was wrong. Insight itself is a cognitive process and basically a interpretation of external stimuli - so in fact decision making, both directly and indirectly, is correlated to the quality of information received.

Failure is due to making a wrong decision many times over because no effort is made to assess the decision making process. Working with a performance coach or psychologist is useful in understanding the basis for decisions made and making changes in your decision making process. If you fail once and don't assess the process for making decisions then the chances of making the goals or targets you have set are very low. You cannot assume you know how to make a right decision and the warning signs should not be ignored. Thinking you know how to make a right decision is one of those as you will not be open for change.

Small business also fails because the entrepreneur in charge of the business is not made out to work in such as environment. Making a decision to start a business is the first important decision you have to make and one of the most critical. If you get this wrong then your business may already be on the path to failure.

Starting a new business

Our world is a lot different then it was 20 years ago. Well I say different but perhaps it was the same on a larger scale...in particular I want to focus on what it takes to startup a new business these days.

Of course business startups happen all the time but even 20 years ago it was more commonplace to look to an established organisation for work rather than consider starting up your own business. However over the past twenty years it has definitely evened out, with it becoming a cultural norm to start your own business - either from the start of a career or in the middle of an established one.

That being said, when you go to start a new business these days it's like trying to find a domain name that hasn't been taken. It is EXTREMELY difficult to come up with a business idea that hasn't already been thought of or already put in place. New ideas will mostly come from extreme creatives or from people who have been impacted by an extreme event that leads them to an idea - the originality of the event is the driver of this. So where does this lead us?

I would say there are two good paths to contemplate when considering whether to startup your new business. One, can you do something more effectively then what is already being offered out in the market and two, can you operate a business that supports existing businesses? My thought is that if there are more and more businesses being started up, all of varying sizes, industries and substance (online or bricks and mortar) there is greater opportunity to start a business that supports these. One example is Crunch Accounting (www.crunchaccounting.co.uk) which was setup to service freelancers and contractors in the UK. Why was that? Because the market for independent freelancers is continuing to increase because organisations want to reduce their fixed overhead costs. These freelancers need accounting performed and Crunch provides an effective online platform. Now would this business have worked 20 years ago? No way...and probably not even 10 years ago. I'm a little surprised it has taken so long to kick-start but it is one great idea.

So when it comes to starting your new business, don't try to beat them or even join them. Perhaps it makes more sense to support the new businesses being created everyday.