This week…6 Ways To Make More Money

• 3 ways to reduce your costs
  1. Pay less
  2. Use less
  3. Waste less
• 3 ways to increase your revenue
  1. Sell more
  2. Charge more
  3. Diversify

6 ways to make more money

What I remember most about watching "Troubleshooter" with Sir John Harvey Jones was that he only ever gave them two pieces of advice.

The BBC had come up with this brilliant wheeze of asking the ex-chairman of ICI to visit struggling companies and give them the benefit of his business advice.

The programmes followed a predictable pattern where Sir John would turn up and then reel in mock horror at what he found. There would be a shot of him deliberating in the car and then the climax when he announced his findings to the, usually slightly bemused, directors.

The thing was, he only ever told them to do two things. And he gave everybody the same two pieces of advice.

What it came down to in the end was:

1. Increase your sales revenue

2. Cut your costs

The details of what to do might have varied but what gave him such clarity in dealing with “stuck” situations was that he kept his vision firmly fixed on these two simple remedies.

So here’s a suggestion, based on this model, of 6 ways to make more money:

Keep this checklist with you and run through it about once a month - it works for your own business, for your personal finances and if you work for someone else it’s a good reminder of how to make your budget go further.

• 3 ways to cut costs
  1. Pay less for things
     
     Just today I heard a personal finance guru claim that most of us pay 30% too much for things. With two days work looking at gas, electricity, telephone and internet charges plus weekly shopping bill you could save up to 30% of your monthly spending.
     Imagine that, equivalent to a 30% pay rise in two days.
  2. Use less
     
     What can you use less of - printer ink, petrol, stationery?
  3. Waste less
     
     Where is money leaking away in your home or business?
     Where can you reduce, recycle, reuse? Even something as simple as printing on both sides of a piece of paper before you throw it away can save you money.
• 3 ways to increase revenue
  1. Sell more!
     
     My first job was selling electrical goods and the manager was always going on about the second sale - offering a pack of batteries or something small to go with the first item. He knew then, what I know now, that when someone has bought once, they will usually buy again AND it’s a lot cheaper to make a sale to an existing customer.
     
     So sell more, what would it take to increase sales?
  2. Charge more
     
     You can always nudge prices up 10% unless your business is highly price sensitive or tightly regulated.
     Always aim to be as expensive as you can - Stella rather than Tesco’s Own Brand.
  3. Diversify
     
     What else could you sell? What problems could you solve for people? What could you do that the competition can’t do? (even if that competition is another department?)

I've been giving this checklist to start-up business for two years now and we are yet to find a way of making money that does not come back to one of these six. Let me know if you think of one.

Do it regularly…

Most of us wait until there is a crisis before we take hard decisions about revenue and costs. A sudden withdrawal of resources - a take over, a key commodity price rise, losing our job etc. will suddenly energise us to review our spending.

It’s in our nature to cling to what is known and comfortable - same old processes in the same old way. You know that change is always just around the corner so why wait?

Keep the checklist with you and review it regularly - you’ll be ready for the changes when they come.

1. Pay less…
2. Use less…
3. Waste less…
4. Sell more…
5. Charge more…
6. Diversify…