Where step 33 described the features, (dis)advantages, and possibilities for change of an earned income, we are now going to look at profit income. A profit income is the money you get when you have a company (which can be anything from an Etsy shop where you sell handmade things to a multinational company) and are able to sell your products or services above the cost price thereby taking (some of) the profits as earnings.
Many people dream about having their own company, and although this can indeed be a lucrative project, being an entrepreneur also requires a lot of hard work, and often at least a few years before a company starts making a profit. It furthermore involves a lot of new skills, quite a bit of risk and a lot of perseverance, so the life of an entrepreneur isn’t always as rosy and making a profit income isn’t always as straight forward as it might seem. (You can take my work for this, I have some experience..).
If and when you do manage to make your company successful however, it isn’t just a great feeling of achievement, but it might also mean you can take (part of) the profits, and you might even be able to step out a little bit more from the day-to-day functioning of the business, if that is what you want (although you might not want to!), let others do the work for a wage whilst you take a profit income – turning it more into a passive income.
Depending on the type of company you have, how much profit is actually being made and how many owners and employees the company has, this can be more of less straightforward and again isn’t either guaranteed nor easily achieved. But all in all, having your own business is certainly a possible way of making (extra) money however and can give a bigger scope for earnings than a regular job.
Now many people say that they want to have their own business, but is this actually something you might want too? It is beyond the scope of this blog to talk about the ins and outs of setting up and having your own company, but from a practical point of view, is this something that might work for you to supplement or replace your current income?
There are as said many different types of companies one can have and having a bigger company isn’t necessarily better or more effective at giving you a better or more stable income and more satisfaction, so let’s weigh up some of the options.
Step 34 – Income stream 2: Profit Income – in detail:
If you consider starting your own company and feel that this might be something you want to do, to be your own boss and in control of decisions as well as of your income stream, then think about some of the following:
- Do you have any particular skill that you can make profitable? This can be anything from selling your services online, to tutoring, blogging about it, writing a book or designing courses.
- Do you like making things and could you potentially open an online shop on Etsy or somewhere else? This could be anything from jewelry, to clothes, dolls, decoration, pet supplies etc.
- Do you have a particular interest that you would like to write about or document? Could you start a blog about this and get enough traffic to generate income from adds, affiliate links and other side products? Can you become a freelancer in this field?
- Do you have creative skills that you could put to use, making art or other products that you can sell?
- Do you want to set up a bigger company that markets a particular service? Think about a small academy to a design company or a restaurant or software company.
- Let your creative ideas flow and think of possibilities based on your skills, experience and interest. Is there anything else that you can make or deliver that you can turn into a successful enterprise?
I am not actually saying that setting up your own company is something you should do as this definitely isn’t for everybody and the income might take years to start coming in. I know this first hand from setting up my own company several years ago, and even though I still thoroughly enjoy it, it is incredibly time and energy-consuming and you need to be very VERY dedicated to making it work.
Regardless of the enjoyment of being able to shape the course of your own company and seeing things become successful (hopefully), having your own company can certainly be a good way of making a living, whether that income is coming solely from your company or whether it is to supplement your current income from your paid job.
Read more about my 100 steps mission to financial independence or simply decide to take control today and join us on our step-by-step quest on how to make your finances work for you, starting with step 1.