The path to financial independence is to generate more income and invest it better, with higher returns, until we reach the point where the annual income generated by our investments equals or exceeds our annual expenses. Many times we are mentally limited in the situation of how to generate more income. For the vast majority of active adults, their main source of income is their salary, or in the case of self-employed workers, their income from professional activity.
Confronted with the question of “How to generate more income?”, many of us find ourselves facing a big question mark or, worse yet, a wall of impossibility. We hear comments like: “How am I going to generate more income if I’m an employee?”, “How are they going to pay me more?”, “Besides, if I get paid more, I’ll pay more taxes and what’s left on my payroll will be fine.” little” “At the end of the day I am dead, I have no more energy to work more”.
For self-employed workers the situation is somewhat different, although they are also faced with time and resource constraints. In their case, the limitation is the amount of overtime they can work, and the possibility of obtaining more clients or more sales per client, without adding more effort and hours of work per week.
One of the fundamental concepts when it comes to generating more income on an individual level is the concept of “monetizing our skills”. This path is especially useful for experienced managers. All of us have hidden, underutilized skills that, in the hands of the right company, can multiply that company’s revenue. And at the same time we can benefit from a part of that income. These skills are our hidden treasure, which we may not be placing value on at the moment.
The way to transform our knowledge into more income for us goes through the process of analyzing my skills with concrete value:
- What are my personal assets (experience, knowledge, skills…) that have, not only abstract value, but concrete and intrinsic value for a specific company or sector?
- What have I accomplished in my career that certain managers would value and want to use to reap the benefits in their companies?
- Who would give their right arm to know what I know, to have certain specific skills that, applied to their company, would multiply their benefits?
This is the most important exercise to do before generating more income. We all have certain knowledge or skills, which applied in the right place can multiply the income of specific companies. Note that the fundamental concept here is concrete and quantifiable value. The more we can quantify the value of our knowledge (in % savings, in % increase in sales, in increase in yield, in % fewer inputs) the easier it is to sell that skill. It is convenient to carry out this step slowly and with a lot of concentration, since only measurable and demonstrable skills can generate intrinsic value to a company or individual and be marketed.
All of us have one or more skills that, put into practice, would increase performance, generate more sales or lower the cost of a company in some sector. Examples of these skills are methods that save energy or raw materials, methods that increase sales by a specific and demonstrated percentage, examples of advertising with a greater quantifiable response, methods that reduce losses in the distribution chain, etc.
After analyzing your skills with concrete and quantifiable value, the next step is to specifically identify the potential clients that can benefit from said skill. It is also necessary to be able to quantitatively demonstrate said benefit, since the demonstration, the tests, is the most important element when it comes to closing the sale.
Finally, it will be necessary to contact the managers of these companies and make them a proposal to share the additional value generated. The compensation for the generated value can be in exchange for a single payment, or a percentage of the profit generated (savings or additional sales).
There are numerous examples of ways to monetize our skills: A manager at a wood drying plant developed a new drying method that gave better quality wood and reduced energy use by 15%. He contacted other wood dryers far from his sales area, who were not competitors, and licensed his method in exchange for a royalty.
Another example is that of a dentist who developed a cover letter that, because of the way it was written, increased his revenue from new clients by 20%. He sold the model letter to other dentists in exchange for a fixed royalty of 500 euros.
Since the collaboration proposal is based on extra income generated for the client, not currently existing, there is no need for any initial outlay for the client. This lowers their resistance when it comes to accepting the proposal. Additionally, to overcome resistance, a demonstration or test can be offered, after signing an agreement, which does not involve many resources and demonstrates the validity of our knowledge or ability.
This process can be carried out either as an employee or self-employed and during hours outside of work. Starting to generate additional income to that of the current paid job will give us satisfaction and a sense of security that will encourage us to look for more similar projects. Finally, we may dispense with work as an employee, since the income from our skills exceeds that generated from our salary.
My personal experience
In my case, for example, my specialty is the development of technology for the fruit and vegetable agribusiness. I have worked for 18 years as director of product development for multinationals in the perishable products and seed distribution sector (Chiquita, Driscolls, Syngenta).
In 2009, I contacted several production companies, mainly at industry fairs and through my existing professional contacts, to understand their main technical problems and offer a solution in the form of a research project. My argument towards them was the resolution of their problems and the savings that this would entail for their companies. The first year I got 5 contracts and I was able to become independent and work completely as a freelancer on my own.
During one of these jobs I was able to identify a key method to improve fruit quality, which I patented. At this moment I am in negotiations with several companies for the license of this patent in exchange for an annual royalty during the life of the patent.
It has not been an easy road. At the beginning many companies, especially in Spain, did not understand the concept of “value sharing” because of your knowledge. Don’t be discouraged by rejection. The most advanced companies understand that deep and applied knowledge is a more valuable asset than capital.
Today, I feel much more energetic than when I worked as an employee, always in airports and endless meetings. I have realized that it is not tiring to dedicate many hours to something, if the task makes sense, you like it and the reward is for oneself.