There will come a time where you just cannot increase the efficiency of your current business any more than it already is. You just can’t grow it any faster, no matter what you do. Your sales are generating the cash flow you need to buy assets that strengthen your financial position, and your business is secure – but that isn’t enough. Now you need to look at additional income streams.
Until now you have earned an income based on things that you own: product to sell or knowledge to consult with. There is, however, another way. You can generate income from assets that you don’t own.
Imagine a typical scenario where the Smith family are renting a home. They are living in a property they don’t own. They have a Landlord who is paid the rent – but they might not own the property either! The Landlord’s bank most likely actually owns the property. The bank is paid the mortgage and the Landlord is paid the rent. That means the Landlord is generating an income from assets that they do not own.
Most people think it is the OWNERSHIP of an asset that enables income to be generated – it isn’t. Income is generated because of the CONTROL of an asset. By arranging a mortgage the Landlord is able to control the property, and therefore generate an income.
Maybe a business that builds homes needs a digger to establish the foundations of a new home. If the business owns the digger than once that’s done it would sit idle until the remainder of the house is built. That could mean buying one isn’t financially sensible, but hiring one for a week or two at a time every couple of months makes perfect sense.
So does arranging a loan to buy the digger and rent it out to several construction companies as required. That’s exactly the same as the Landlord does with houses. In this case the rental company doesn’t actually own the digger, yet they generate income – above the loan repayments – by being able to control access to the equipment.
Car hire companies do the same thing. You can hire aeroplanes, yachts, ships, in fact you can hire almost anything in this way, and all from someone who probably doesn’t actually own it.
What problems are you aware of that exist only because some people don’t have access to a particular resource? Are there enough people and is their need spread so that one of that resource could be shared? If those people are prepared to hire the resource then it means you now have the opportunity to acquire control via a loan and rent that resource to those that need it.
AirBNB doesn’t own any property, but by controlling access via their application that connects available rooms and people who need somewhere to sleep they generate an income. Likewise Uber and all the other ‘application based’ businesses.
What resources can you control and then use to generate an income?