How to Identify Strengths and Revenue Streams
I need to make $8,000 to $10,000 (depending on what measurements, more on that later) in 2-4 weeks. This is how much I need in order to get back on my feet, financially. I have a day-job as a business analyst, but it doesn’t bring in enough to pay for my daily expenses, let alone the other events like car insurance, BMV taxes, speeding tickets, hospital visits, and car wrecks that happen along life’s path. This also leaves out any fun, gift giving, or getaways that a normal person might want to do. I decided to do something impactful on the bottom line. I needed to stop the cycle of overdrafts, late fees, and the risk of losing my cars, home, and other assets. I needed a plan.
The first thing I did was to get organized. Personally, this is how I solve every problem. I continue to organize it until there are no more problems within the problem. In essence, I create a system. The system then solves the problem. This may not be the most effective way to solve a problem, but it is how my mind works and it is one of my strengths. I feel strong whenever I am categorizing things, especially when I have to name or rename things in order to categorize them. As a side note, I encourage you to ask yourself what makes you feel strong, then to write that down. In the same way, notice what makes you feel weak (this is a weakness) and write that down too. Then, start to do more of what makes you feel strong (your strengths) and less of what makes you feel weak.
Getting back to the problem at hand, I began by simply listing out all of my daily expenses in a Google Spreadsheet (by the way, if you ever need help setting up Google Apps or using Google Docs, I am your man, just leave a comment and I’ll be able to contact you from there). Amazingly, I had not been doing this, but instead, paying bills as they came. I had no idea how much money was coming in or how much money was going out. If I wanted to know how much money I had, I logged into online banking and whatever the balance was, that was how much money I had. I’m astounded about how many people manage their finances this way, or maybe it was just the people I was hanging around (more on that later).
Once I had all of the bills, debts, and income listed out on a spreadsheet, I could start to do my analysis. It wasn’t pretty. I was getting snapped by late fees, overdue fees, and loads of interest charges. I could save a boatload of money just by getting my bills caught up and paid on time. And if I could get debt free, I could save even more on minimum payments, not to mention the interest. In general, the faster you pay something off, the less interest you pay. I had listened to enough Dave Ramsey to know that I needed to have a budget, start an emergency fund, and begin the debt snowball. The question I had was how to do all of this when your budget is already negative? One idea is to rotate the late payments so no one payment gets so late that you are either sued, leaned, garnished, or repossessed from. I noted this as a possible solution, but saw it as more feeble than just trying to increase revenue, while keeping expenses low. And that is exactly what I decided to do.
I did not wait to do anything. I knew that time was of the essence to as soon as I identified the next step, the next step was taken as soon as I was able to take it. This sounds easy, but it is highly contingent on your motivation, your energy, and your measurements. You might know what you need to do, but not want to do it. This is a motivation issue. Or you might want to do something you know you need to, but you don’t have the energy because there is only so much time in a day. Then there is measurement, which shows what you value. You can’t manage what you’re not measuring and whatever you are measuring will grow, so picking the right metrics and the right measurements is crucial to managing and growing your personal finances.
I am using a variety of sources to help motivate me towards my goal of achieving $8,000 to $10,000 in 2 to 4 weeks. One resource is TED Talks. TED is a website of inspiring videos of entrepreneurs, teachers, futurists, and writers. When I am feeling less motivated, I simply browse to ted.com and watch a video or two until I am sufficiently motivated to be more like that person, whom I view as successful. In the same way, Karl Moore videos also inspire me to take action. I discovered Karl Moore while doing the Thirty Day Challenge where he does “Mindset with Karl.” The motivational videos mention the Thirty Day Challenge, but can stand alone on their own merit as truly helpful videos. Karl Moore also writes books on happiness and self-development like The 18 Rules of Happiness and The Secret Art of Self-Development.
My children, or more specifically, my children’s desires are another source of motivation. As I wrote in 4 Steps from Wanting to Receiving, having to decide what I can and can’t buy my children at the gas station is not a good feeling for me. I would like to be able to choose what candy to buy them for health reasons rather than financial ones. For some reason, this exercise motivates me more than any late fee ever will.
We all get the same amount of time each day, but because of our body’s limitations, energy is finite. This means that energy must be spent in the most useful way as much as possible. At my day job we would call this “utilization”. While production is the sheer amount produced, utilization is production mapped against time, in other words it is how much was produced (how productive were you) in a given amount of time. That is your utilization rate, which energy (and motivation) can play a large part in. Managers wanting to more fully utilize their employees might want to invoke actions that either increase energy levels (by say rearranging a department based on strengths, not just needs) or increasing incentives (positive or negative). I have written a post on Ways to Stay Alert and Focused.
After approximately 10 hours of working and drive times, I had approximately 3 hours of energy left to do work at home or somewhere else each day. In order to be successful, I am going to use motivation in order to spend an additional hour each day in order to achieve this goal in 2 to 4 weeks. To do this, I am going to be eating more fruits in the morning, more whole grains at night, and less or no meat for supper in order to stay energetic as I can throughout the day.
The Law of Focus states that whatever you are focusing on (measuring) will grow. In Management, Measurement, and Value I note that there is a clear link between value and measurement in that what you measure you also value. You could say that a measurement of your values is in what you are measuring. If you, as a manager, are only tracking stats on whether or not your staff shows up on time or not, then your staff will probably show up on time daily. It shows that you only care (value) about whether or not they are there, but past that point, you are out of the loop. Contrast that with the manager who tracks personal performance daily to get the utilization rate of each individual staff member, which he can do after implementing the staffing model I developed for his department. Each staff member is now performing highly and if they come in late, it doesn’t matter, so long as they maintain their personal productivity numbers.
So what did I decide to measure? Remembering that what you measure will grow, I decided not to measure how much debt I owed. Instead, I measured net worth, income (revenue), profit, and savings. I also made another Google Spreadsheet which listed all of my assets, all revenue streams, the profit of each revenue stream, and savings from reducing a debt. Every day, I would log into the various websites which contained information about my metrics and update the spreadsheet with new values. Because my mind was focused on net worth, revenue, profit, and savings, I consciously and subconsciously began taking actions to increase those numbers. In the same way that a manager sees improvement in whatever he or she measures in their department, I would see improvement in my net worth, revenue, profit, and savings simply by measuring them.
Now that I have identified the problem ($8,000 to $10,000 in 2 to 4 weeks), identified the tools I have available (time, motivation, and energy), and identified what metrics we are going to use to measure success, the first phase of this goal is complete. You might call the first phase of research and discovery, “Analysis,” and this next phase, “Execution.” In the same way that an idea is first created in the mind of man, then written down, and finally designed; it does not take shape until it is developed, manufactured, or implemented. This second phase is what most people would consider the meat, the actions, the specifics. It is where you actually do what you say you are going to do. It’s the “fire” part of “ready, aim, fire.”
I began by doing a cost-benefit analysis of what activities would net the most gain in the metrics I had chosen. I identified the resources I had available (the tools), which were my day job, a business that does business consulting in Indiana, an Indianapolis web design company, an Indianapolis coworking group, a DVD conversion blog and an Indiana VHS to DVD business, a blog about query string parameters, doing Indianapolis computer repair, helping my wife with her custom hand-knit wool clothes business or her blog about breastfeeding and Motivated Moms, helping Zac with his cognitive psychology training and discussion on what it means to be human, promoting the Erich Stauffer figurines web site, getting another side job, or having a garage sale. My wife or children could also get a job or create more revenue for the family. All options would be considered in order to achieve the goal. This was a brainstorming exercise, which I’ll discuss with you later on to help you decide what activities you could do in order to achieve your goals, but first I’ll discuss how I did my cost-benefit analysis.
Costs and Benefits
It is easiest sometimes to decide what you are not going to do so I first struck the last choices having to do with my children and wife working. My wife is a stay-at-home mom, but she also home-schools our three children, is a member of La Leche League, and the president of her local Alpha Chi Omega chapter – in addition to knitting for her Cloth Beginnings business. I also decided not to help other people with their businesses because they don’t care about my goal as much as I do. This strikes out my day job, computer repair, Zac’s business, and my wife’s business. While one may want to support a business that is already doing well (defined as profitable – having more revenue than expenses) in the same way that you have the greatest chance at developing a strength you already have than by fixing a weakness, knowing the following information helped me with my decision. While my day job is a profitable business, it just gave me a raise in July for the year and so is not likely to give me another one and it is not currently allowing any overtime. Therefore, this opportunity is maxed out. If I find an opportunity that reaps more revenue than this avenue in my cost-benefit analysis, I may scrap this job altogether. The other businesses are either not profitable or are sole proprietor shops where the owner wields much influence. The time it would take to both motivate the owner and get decisions made is longer than the time I have allotted for my goal (if ever).
After striking those choices, I could then analyze what was left over much easier. This is the same technique used in the TLC show, Clean Sweep, where the first step in the organizational process is figuring out what you don’t need. In Clean Sweep, the first step was dividing everything in their house into two piles: trash or keep. This was the first sort. The next sort moved everything from the keep pile onto a keep pile or a sell pile. Only the things left in the keep pile went back into the house. Even if items did not sell, if it went to the sell pile, it didn’t come back in the house. Troubleshooting can work the same way. Let’s say you are troubleshooting a broken computer. One “pile” would be hardware problems, the other “pile” would be software problems. Once you decide the problem is hardware and not software related, you then do a fine sort to find out whether the problem is with the hard drive or RAM (memory), for example. In this case, the following choices remain, which must be analyzed using the fine sort method:
- Watershawl, Inc. – business consulting, computer (technology) consulting, Internet marketing, graphic design, web development, web design, hosting, SEO, and online advertising.
- Nook Share – a website about Nook covers.
I created two units of criteria in order to decide which pile the above revenue streams would be placed in. Remembering the goal to make $8,000 to $10,000 in 2 to 4 weeks, I made the following rules: 1) it must be currently making revenue and 2) it must have the potential to make more revenue than it is currently making. Again, we strike those activities which don’t meet the criteria. Watershawl, Inc. and Nook Share both failed the first criteria and Erich Stauffer doesn’t have enough global search traffic in order to make more revenue than it is already making so that left Watershawl, DVD Conversion, Turn Film, and Query String Parameters. The next criteria is time. What is the sales cycle on revenue? Will the money be able to come within the next 2-4 weeks? Watershawl’s sale cycle is on average, 2 months, whereas DVD Conversion, Turn Film, and Query String Parameters are all affiliate marketing businesses, which rely on pay-per-action or pay-per-click advertising for revenue. As soon as ad account levels reach certain levels ($100 on average) they pay out within 2 weeks. I had just exited the business consulting, computer repair, and web design business for the Internet marketing business.
Read part II of this series on Identifying Strengths and Revenue Streams.