Do you have one, two, three businesses? Or maybe more? You are active from morning till night. Developing new products, selling old ones, you negotiate, you bargain, you calculate. You run from one meeting to the next.
The art of managing all the resources in your own business – from human capital as an entrepreneur to the proper management of assets, inventories and, above all, risk management – it’s the most important thing in every business.
Poor inventory management, i.e., the accumulation of stock and poor inventory turnover, is dead capital, wasted money, and only creates additional costs because the stock has to be stored somewhere.
Get rid of long-term stocks
Tip: Get rid of long-term inventory at any cost: donate, give away, destroy, make write-downs, and try to return the money in the inventory in some way.
At the very least, bring it back through the income tax shield if you donate the goods to charity or to a school for children’s education or to a dormitory, college…
Consider where you might store your long-term inventory to make room for new goods that will turn over a few times and add new value.
Collect all accounts receivable
Assign a person to call the debtors. Pay attention to due dates and collection from customers, assign a person to call debtors alphabetically or send reminders every day, pay special attention to small amounts.
No one thinks about them because they are not significant individual amounts, and then we often end up deducting the line of credit with banks for the working capital or current assets that every company needs to run its business smoothly – that is, to be solvent and able to pay its obligations.
Do not wait for the moment when you read in the commercial register that your buyer has received a continuation in bankruptcy in the name.
Rye advance for large deliveries
Ask for an advance for large deliveries, ask for a security (guarantee), if you sell with deferred payment, try to ensure that the sale to the buyer is successfully realized and completed with the payment as a key moment in the deal.
The cash flow or cash flow statement sounds complicated, but it is a very simple Excel sheet with projected revenues and projected expenses.
Sometimes it is painful to look at because it tells the real truth about managing all of the above, but it is essential for accurate insight and the direction we need to choose to sleep more soundly.
Manage risks
The most important part of running a successful business, is managing all the possible risks that can occur in your business.
What are the risks? I think each of us knows it best ourselves.
Risks can be minimized through good and smart work procedures and work policies that are written and adopted by everyone in the company – management and then all employees.
The most important thing for management is to know how to prepare a business income statement, which is different from a report prepared for the needs of the state. In this way, they can plan for the future, that is, for the realization of their established strategic plans and goals.
What is passive income and what is the difference between active and passive income?
Active income is when we work and then earn, we get paid for our work and effort, i.e. when we exchange our time for money, and passive when we invest money and that money earns us new money (while we are sleeping, i.e. not working), so – we have a return.
In the case of passive income, the assets (money) themselves (partially themselves) create new assets (money).
Most often passive income is created by rental income or business (various funds, ETFs, stocks, bonds, but also copyrights/books, etc.), and there are franchises and profits from investments in other people’s businesses.
What is important to know before we list some passive income ideas?
Passive income is not our first, second or additional job. There is no such thing as completely passive income – we always have to do something, for example, the property we rent out has to be cleaned, advertised and maintained.
The idea of passive income is earning (extra) while we sleep – so that money works for us, that money creates money, not that we trade our time for money. And the ultimate idea of passive income is financial freedom, meaning that our passive income covers the cost of our desired lifestyle.
Be careful not to fall into the trap of going to work all the time so that one day you will not have to do anything, because it’s been proven that when we have good relationships, we are happiest with meaningful work, so we do what makes sense to us.
Well, it does not make sense to spend a good part of our lives working so that we do not have to work for a shorter part of our lives, and only later find and do what makes us happy.
Now let us get to the ideas.
11 ideas for extra income through passive income
How can we create passive sources of income?
- online course,
- e-book,
- real books,
- own YouTube channel,
- sale of photographs,
- affiliate program,
- renting your car for advertising space or someone driving an Uber or dealing with delivery,
- rent your apartment / property,
- franchise – create a franchise from your own business or buy ready-made and hire people,
- invest in stocks, bonds, cryptocurrencies, funds or ETFs or other people’s business,
- lend someone money.
It has somehow crystallized that entrepreneurs like to invest in their business, start another or more businesses and consider it the safest move, although all banks still perceive that this is the riskiest, then invest in other people’s businesses as business angels and invest in agriculture, for example land, food production or additional rental property.
We all agreed that it is always wisest to invest in yourself and your knowledge. No one can ever take that away from us, nor can it fail us.
And of course, don’t forget to have all your invoices in one place – Invoice Crowd is great solution for every business or for all the business that you have.
