Money- Making It, Keeping It, Growing It Basics
With this in mind the key basic things in financial management whether we are looking at business finance or personal finance are:
To make money you should offer value. Whether you are offering a service a product the more value that one can associate with your product/service the more they will be willing to pay for it. Now, this is not always logical in reality. For example, food is of high value in the normal sense, to everyone for life but most foods will not cost much. While diamonds are not essential for a life they cost more. Why? Value is on exclusivity not wants or needs i.e. not, on whether something is essential or not.
Therefore, if you are to make money you offer either a high-value product, which sells at a high price, or an essential product, which sells to the masses people at a comfortable price. Between the two extremes, there will be different categories of products.
Any product or service can fit into either quadrant. The key thing to remember is if you are to make money and your product/service fits the left of the quadrant you need to sell to the masses. If it fits the right you have to continually work on exclusivity and new ideas.
Many businesses do not make money either because they are offering a unique service or product that requires a lot of input but want to sell it to the masses who are not able to afford it or they are selling a common product and want the prime dollar for it from very few. These two strategies just will not work and show a lack of understanding of the target market.
The rule is what comes in must be less than what goes out. You cannot keep the money if you using everything you spend. To address this you both cut your costs and live frugally so you have less going out or you increase your income. Another option is to operate like a dosing funnel. When you have more spend and when you don’t, don’t spend.
Whichever way the idea is to have money left over. People have different ways of ensuring this happens based on their strengths and weaknesses. Some save before spending, other allocate finances for specific projects before they start while other target different types of deals to finances different projects they are looking at. Either way, you pick what works for you.
To grow money you need to invest it. Two laws operate in this understand what you investing in and invest at the right time. Whether you doing this for a business, bonds, treasury bills understanding is crucial. There are investment managers who can help you understand where you putting your hard earned cash but often once they have attracted a client they may not always be motivated to keep you interested and informed. Make it your business to keep growing your understanding of what is available to you. Whether you are focusing on specific industries or diversifying understand what you getting into and ensure you get in at the right time to the best of your knowledge.
If one keeps to these basic essential rules, all other rules on money will have to align with these and you should over time be able to have a secure and healthy wallet.