I know a lot of folks reading this may not think they own a business. You're just in this to “make money”, right? That's not a business. But of course it's a business.
It's just a bad business. Probably 🙂
Now, I'm not going to go tell you to set up a corporation just to sell Kindle books (or whatever the current fad is). You may eventually get to that point, but maybe the time isn't now. And that's cool.
But what I want to impress upon you is to begin thinking like a successful business person. Think like Warren Buffett. He is one of the wealthiest men on the planet and he did it the old-fashioned way: He earned it. See, what Warren does is buy and build assets. He limits risk. He builds his company's equity by making smart acquisitions and letting the managers of those businesses run their companies. He buys and never sells. And Berkshire Hathaway keeps gaining value.
One of the first things you ought to do is list everything your business has in terms of assets. Assets can be tangible or intangible, physical or virtual, and they can appreciate or depreciate in value.
But one thing is certain: Assets ought to be making you money. They are the machines that build things in manufacturing, tools you can use to assemble widgets, and even goodwill. Yes, goodwill is an earned asset. You can't buy it (some say you can, but that's accounting trickery to make the books balance); you earn it. Run your business well, and all that that entails, and you will earn more and more goodwill; run it poorly and you can lose all your goodwill in the blink of an eye (or the making of a horrendous decision).
I like to teach people to write down everything they own that can be applied to their business. Things like “hard goods” (computers, printers, and smart phones), software, relationships, earned goodwill – write it all down. Basically, anything counts as an asset if it can help you earn revenue.
That's why you bought that software or car or new computer, right? To leverage it as an asset so you can produce more and better products and services that your customers and soon-t0-be customers will love and want more of…
So, get out a piece of paper or open up Excel or something similar, and start writing down what you own that could potentially earn your business revenue. Things to consider:
- Car or truck (if it can add to your earnings)
- Goodwill (related to relationships)
- Domains are assets
- Websites can be even more productive assets than bare domains
- Knowledge, especially specialized knowledge (you have it–you just may not realize how much)
Write everything down. If you can use it to add revenue to your business, consider it an asset for this exercise.
You have more than you think. You also are squandering most of it. If that's the case, you'll like the next step: How to save money (and maybe even earn some) by purging non-productive assets. Stay tuned.
Have any ideas on how to turn stagnant assets into money-making machines? If so, share them in the comments!