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Finance tip: Income
Trade stuff online. We’ve all heard the stories about the guys who’ve made a fortune trading on eBay. While doing it full-time is not everyone’s cup of tea, it can be quite a lucrative sideline, and an enjoyable way of making extra money. The one piece of advice which comes through strongly in all the success stories is this: Identify your niche, and focus on it.
So whether your interest is in rare coins, model train sets, Victorian cutlery, or whatever, do your research on that particular area and hone in on it. Know what the items are worth, and what people are prepared to pay for them. No matter how ‘niche’ your products are, there’s bound to be someone out there willing to pay good money for it (remember, people collect the strangest things). There are a couple of ways to go about it: You could sell items that you already have (inherited anything unique from your predecessors?) You could identify things that people are struggling to track down, find them, and then sell them on to the pre-determined buyer. You could trawl pawn shops/antique stores/craft markets for good deals (people can often be sitting on a goldmine, and not have the foggiest clue), and then put them up for sale at their true value. Or you could just match up people selling and wanting the same thing, and add on your share in the middle. There’s a myriad ways to do it, and if you do it right, you could make a lot more than you’d think…
Business tip: Assets
Upfront cost vs lifetime cost. When wanting to start a new business, or expand an existing one, there’s often involved the need to purchase additional assets (plant, machinery, vehicles, etc.) Where a number of business owners make a mistake is that they only look at the purchase price when deciding which model or make they’ll buy. It’s very important to remember that this is only one part of the ‘cost’ of the asset – this is the upfront cost. The other, just as important (if not more important), cost is the lifetime cost of the asset. This is essentially looking at what the asset will cost you over its useful lifetime. As an example, let’s look at a transport company that wants to add a vehicle to its fleet: It’s options are a new truck at 100,000 bucks, or a second-hand one at 50,000. Many owners and managers would simply say that the second-hand one is much better value for money, and ties up less capital, so it would be their choice. That’s just looking at the upfront cost, though. What they haven’t looked at is the fact that the older model is going to need more maintenance (as it’s already had a hard life). Parts are harder to come by, and more expensive. And there also aren’t many mechanics around who are prepared to work on an older vehicle like that – so the ones that are, are going to charge more for their expertise. The older model is also not quite as fuel-efficient as the newer one, and this will add to everyday running costs substantially. Now, when re-looking at the whole picture – or the lifetime cost of the vehicle – the company realises that it would actually work out cheaper in the long run to buy the newer model. This is a simplified example, but I hope that it shows you how important it is to look at the lifetime cost of any assets you’re looking at acquiring. The principle does not just apply to assets either, but also to projects that you may look at getting into, new product lines you want to add, or marketing campaigns you may want to embark on…
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