In my post From Zero to Millionaire I talked about 5 phases that you work through to go from nothing to having financial freedom. The exact order varies from person to person and the amount of time each person spends in each phase varies. The phases also overlap. But anyone that reaches financial security will pass through each one. The five phases are Make More Money, Save It, Pay Off the Debt, Invest, and Create. I talked a little about each of those, but there is a lot more. It would take books and books worth of information to truly cover each one well. Perhaps I’ll do that one day. Today I want to talk about the fifth one, creating value.
In a capitalist country creating value for others is probably the most common as well as the most respected way to make money. It is also the most common way to get rich. Creating value for others is a broad subject. While it can mean everything from teach kids a valuable skill to developing a lifesaving new medicine, for the sake of this post I’m going to talk about how creating value for others as a great way to earn money and develop a strong financial future.
Everyone has problems that they want to solve. Everyone wants to make their lives easier and more fun. People are willing to pay money to have their problems solved and to improve the quality of their lives. For example, people want to talk to their family and friends far away. So they pick up the phone. Someone designed and marketed that phone. They made money by selling that phone. Solving problems like this and developing solutions and options are how you can create value and make money doing it.
Most millionaires in the US are self-made. That’s because most millionaires in the US used their skills, time or money to create solutions to other people’s problems and then market those solutions. So how do you do that? There are two ways to approach this.
Look for problems to solve.
This is sometimes the most difficult, but usually the fastest way to make money. Here you look at problems that people have. Or problems that you yourself have. Then find a solution. Develop the solution and offer to sell that solution to help others. People will pay a fair price to solve their problems.
The most common way this is seen in the real world is when someone puts up a help wanted sign. They need someone to help them in their business. This can be a great way to start making money, but will rarely make you a fortune. A better long term solution is to find a problem a lot of people have and then find a way to solve it. This might be by developing a widget that you can sell to people, like the phone example above. Or it could mean finding a way to teach people how to do something better that will save them time or money, like when people write how-to books. This could also mean going in and fixing the problem for them like when you take a car to a mechanic.
Usually it is easier to start with something that already exists instead of trying to create something totally new. Look for a process that is inefficient, or a product that you think you can make better. Then develop your solution. Then market it to the people that are having the problem. As long as you charge a reasonable fee for your solution people will be glad to pay you to solve their problem.
Look at your skills.
This is usually the easiest to start with, but may be difficult to make money from. That’s because you have to find someone willing to bay for your skills. For this look at your skill set. Are you good at doing something like fixing cars? Or do you know a lot about a subject that others would be interested in? Or do you have access to a product that others might want to buy.
Look at what you already have and find people that have a problem that you can solve. If you’re good at fixing cars offer to fix your friends and family’s cars. Ask them to recommend you to people they know. Or if you know a lot about something offer to teach people that are just getting into the subject. This is one of the easiest ways to start making money from your hobbies. This could be continuing education classes, books, or one-on-one courses that you offer.
It doesn’t have to be serious.
Solving problems is the best way to make this work. People are always looking for ways to make their lives better. But you also don’t have to solve a specific problem that people are actively trying to fix. You can also develop something fun. Movies don’t generally solve problems, but they can make money. People want to be entertained. You can meet this by creating things that entertain or improve people’s lives in other ways. You could write a novel or even help people redecorate their homes. The point is that you don’t have to find a serious problem to fix. You can make money simply by finding a way to make people’s days a little better.
Why would people give you their money?
There are several reason people will be willing to part with their money for your solutions. Take these under consideration when you develop your solution. Knowing why people would pay for it can help you market to your customers.
Make it easier.
This is where most problem solving ideas go. Here you make things easier for your customer. This is one reason the microwave is so popular. It makes things much easier and faster to cook. It’s the idea behind products like the Swiffer and washing machines. They make it easier to do the things we already are doing. Do you have a product idea or a process that is easier than what people currently do?
Do it for them.
This is the idea behind pretty much the entire service industry. We need our cars fixed, our computers fixed, our mail shipped, our roads built, our houses cleaned, our bodies healed and countless other things. No one can do all of these things themselves. People pay others to do the things that they need done that they can’t do themselves. Even if they can do it themselves they may not want to or have the time to do it. This is a great place to come in. if you can do it for them you may be able to do it faster and cheaper for them than if they tried to do it themselves. For example, I can probably fix a plumbing leak in my house. However it would take me a long time and a lot of money on special tools and parts. Especially since I know I’d mess something up along the way. However, I can hire a plumber to come in and do it. The cost in the long run would probably be less and it would be much faster. If you have a skill that other people don’t have or don’t like doing you can offer your services to do it for them.
Do it better than the competition.
Most new businesses don’t start out doing something completely new or selling a completely new product. Many of the most successful ones start out doing the same things as their competitors they just do it better. An extreme example is when Henry Ford started making cars. Other people were making cars, but Henry Ford made them using an assembly line. That let him make many more cars at the same quality for much cheaper and much faster. Do you see a current business doing something that you could do better? Offer your better method.
Put them ahead of the joneses.
People want to improve. They want status. They want access to privileged information. They want to see and do things that others can’t. An extreme example of this is people that are willing to pay to get on a waiting list to go into space. Another example is someone that owns a ranch and charges people to go hunting on the ranch. Are you an expert at something that others want to know? Do you stay up to date on the latest information in a certain industry? Do you have access to something that other people would think is cool to check out? Share that access and give others some bragging rights.
Sometimes we don’t think of the things we have as special, but others do. For example, if you live on a lake you might not think it’s special to own a boat since most of the people around you have them. But tourists coming in might find that fun. You could charge for trips out on your boat. If you have access to information, locations or toys that others might not you may be able to charge people to have that access.
There are a lot of ways to solve problems. Solutions to these problems are valuable to people. Problems could be anything from a major medical condition to simply how to have an entertaining evening. Either way, if you have a solution you may be able to find someone that has a matching problem. You can use that connection to make a bit of money. If enough people have the same problem that you can solve then you could generate a lot of money.
What kinds of things to you see in your life that you can leverage to make money? Have you already, or are you planning to put a special skill to work to help you make more money?