Think about the way your business runs: You attract prospective clients, convert them to customers, collect their money, cultivate repeat business and encourage customers to refer other prospective clients.
Each of these steps entails specific challenges, and one of your goals as an entrepreneur should be to automate as many of these steps as possible. Automation—implementing systems that perpetuate your business without your involvement—is the key to generating income while you sleep.
Here are nine ways you can set up your business to earn a profit while you focus your attention elsewhere:
1. Turn yourself into a product.
Once you've found success—or even while you're on the road to it—you should look for opportunities to promote yourself as a brand. Position yourself as the authority in your niche, and develop products like videos or books that share your secrets of success. The beauty of a book is that once the hard work is over—it's written and edited, and a marketing plan implemented—then you simply collect proceeds while you move on to your next project. In addition to generating income directly from a book, you'll also discover that your book can dramatically improve the visibility of your brand, boosting sales for your company. Not only will you have created a new revenue stream, but you're widening your existing stream. Win-win!
2. Do fewer things.
It's impossible to automate any part of your business if you insist on doing everything personally. Stop trying to go it alone. You need to train your staff to handle certain aspects of your business, and the best way to accomplish this goal is to simplify your output.
Look at popular fast food restaurants: They basically produce five things—burgers, fries, chicken, salad and soda. They package these things differently and sell them in different combinations, but the simplicity is what allows the company to reproduce the menu in locations all over the world and sell its products without requiring highly skilled labor. Identify your strengths and streamline your offerings, focusing on the items that you can train your staff to replicate. As you cull products or services from your offerings, make sure you focus on retaining the most profitable ones. You don't want to streamline so much that you eliminate the big moneymakers in your company. The solution might be as simple as refining your product to a few basic options, with lots of pricy choices for customization. Think about cars, for example. Probably 95 percent of any given car is identical, whether you choose the basic model or the loaded version. The big bucks come from fancy add-ons.
3. Create continuity.
Billing for each product or service you supply is volatile; both your revenue and your client's expenses vary wildly. By selling a subscription at a flat rate, you create a reliable income for your company and provide your clients with predictable expenses. Both parties are invested in maximum efficiency—maximizing quality and minimizing hassle. It's the ultimate win-win for both you and your clients. And you get bonus points for automating billing. It's easier than ever to take advantage of cloud-based billing and accounting services that integrate all aspects of your company in a way that is far more efficient and cost effective. Don't spend resources on tasks that can be handled automatically. Sell your subscription, automate billing and your satisfied customers simply send you money each month.
4. Sell your system cheap and make money on the refills.
In this instance, we're talking primarily about businesses that produce tangible goods. The best two examples of this business model are single-serve coffee makers and printers. While the devices themselves are relatively cheap, the majority of the profit is in the individual refills for cups of coffee or cartridges of ink. If your machine makes a great cup of coffee or high-quality copies, once consumers own your brand of device, you're practically guaranteed their continued business. People love to feel like they're getting a deal, and by offering discounts on your system, you ensure that happy customers will stay loyal and reorder refills for years to come.
5. Become the middleman.
Find a way to broker business and let other folks do the work for you. Becoming an Amazon affiliate is a great example of this. You link to the site; when Amazon sells something from your links, you make money. There's also a fortune to be made in consolidating and coordinating the transportation of goods. Options like drop shipping—where you take orders for products you don't personally produce—or reselling on online marketplaces can be great opportunities to participate in profitable industries without the overhead of manufacturing actual products. Always be on the lookout for the opportunity to broker the goods and services you sell.
6. Become a teacher.
I'm not talking about taking a job with summer breaks and parent conferences. Look at your business, and find ways to teach other entrepreneurs how to acquire the skills necessary for opening their own business modeled on yours. Say you own a successful pizza shop. You might think you don't really have the opportunity to cash in on the educational aspects of your expertise, but you'd be flat out wrong. You could write a book or create a series of instructional videos about your family's recipes, or you could market a consumable version of your plan for opening a profitable pizza shop.
An additional benefit of this strategy is that you're positioning yourself as an authority and your name on a book enhances your brand. Use this side benefit of creating your educational product to generate greater consumer awareness for your business.
7. Become an investor.
Money makes money, but it's important that you're careful about how you invest as an entrepreneur. Here's my tip: Look at your clients, and assess their needs. Find a company (in addition to yours) that addresses those needs, and invest there. Not only will you be forging a bond between your company and others that focus on enhancing client relationships, but you're also cementing your position in your customers' minds as the business that caters to their desires. Once you've done the groundwork, you're the good guy who makes money without effort. And an added bonus of thoughtful investing is that you'll forge relationships with other entrepreneurs who may end up broadening your perspectives, giving you insight into different ways to approach running a profitable business. There's no one right way to do everything, so learning from the people you invest in makes good sense.
8. Think global.
Maybe you're a small retailer who caters to members of your community. Or perhaps you're that successful pizza shop owner. No matter what your industry or area of expertise, there's a big wide world out there with people who will buy what you're selling. Your retail shop could expand by adding a website where goods can be purchased online. That means you could literally have orders rolling in while you're sleeping. In your book about opening a successful pizza shop, you could include a chapter on customizing your pizza startup to cater to the desires of different cultures. The key is just to expand your thinking to include as many people around the world as possible. Don't limit yourself to only the clients who walk into your store.
9. Focus on what makes you unique.
As you begin to automate processes and as you begin to delegate tasks to your staff, don't forget to ensure your defining characteristics are preserved. It won't do you much good in the long run if your product gets watered down into a generic version, the sort of thing people can pick up anywhere. Assuming you've worked hard to brand yourself in a special way (you have, right?) you'll want to make sure that's baked into every automated process. You can't sacrifice quality to simply churn out more. Part of making money while you sleep depends on your existing customers remaining loyal, and the best way to ensure they do is to continue offering outstanding service.
I won't pretend that it's easy to wake up richer than you were the day before. We all know how grueling it is to start and grow a business. But there's a silver lining to the storm cloud holding all the hours you've invested in your company. Once you've grown your business to a certain point, once you're successful and thriving, you can find ways to make money while you sleep.
If you’re wondering how to make money while you sleep, it may require some out-of-the-box thinking. It may require a little more work at the outset. But it's so worth it. Once you automate some processes, once you delegate some responsibilities, once you've positioned yourself as a leader and a teacher, then you've taken critical step toward freeing yourself from the constraints that require you to personally manage everything that happens in your company. With that freedom you can explore other income-generating options. You can enjoy some well-deserved time off. Whatever you choose to do with the time you free up, you'll be able to enjoy the satisfaction of knowing that you're bringing in revenue no matter what … even if you're sound asleep.
A version of this article was originally published on January 7, 2014.
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