Don't want to read this post? Listen to the podcast instead:

So if you’ve made ‘enough’ of a profit and you’ve made some additional profit over and above what your ‘enough’ number is, what should you do with this surplus?

For a lot of business owners, the obvious thing to do is to reinvest surplus profit back into the business. You could do this by:

• Hiring more staff to increase your capacity.
• Spending money on ads to generate more leads.
• Purchasing additional stock.
• Upgrading your office space and equipment.
• Any number of things… all of which sound like good ideas.

But, do you have to invest surplus profit into your business?

As I said, it’s the obvious thing to do; If you’ve made a profit, why not reinvest some of it so you can scale and grow the business? Make sense, right?

Well, if you’ve already made ‘enough’, then do you really need to scale your business? Do you want this additional responsibility and possible stress? Is there a better option?

Instead, could you invest the surplus profit into an asset that’s going to generate a passive income or capital gain?

In his book, Rich Dad, Poor Dad (read my book summary), author Robert Kiyosaki describes three types of income: 1) Earned income (e.g. from your salary or business income) 2) Passive income (Income that doesn’t require active work to generate e.g. income from a rental property) 3) Portfolio income (e.g. capital gains from owning an asset that appreciates in value).

If you’ve earned an income from your business, you could reinvest it to grow your earned income further. But why not invest it in an asset that’s going to generate a passive income or capital gain?

I’ve been doing this with Bitcoin for the last 4 or so years. I’ve directed a portion of my surplus profit from the business into Bitcoin (don’t worry, I’m not going to try and convince you to buy Bitcoin). You could use a portion of your profit to buy some shares, commodities, bonds, property, or whatever you feel comfortable with.

Now of course, you'll want to leave at least 6 months' worth of cash in the bank to finance your operations. And maybe you should invest some profit into hiring another team member or spending money on ads if it makes sense to do this. But some of this profit, you could use to grow your portfolio or passive income.

By diversifying your income and generating passive or portfolio income, you can de-risk your business. If you receive some income that’s not generated from the earned income of your business, you have a security net to fall back on if your earned income drops off.

Plus the passive or portfolio income often doesn’t require operational overhead or work. And when you can use your profit to make more income, without the extra work, this is (I think) the path to true wealth creation.

This is how I view my business now. We offer Asana and Pipedrive support services to generate earned income for the business. The business invests the surplus earned income to generate passive/portfolio income that requires no work. I’m not against doing work; we work very hard to generate our earned income. But I am a big proponent of getting the best ROI on my time and energy. And if there’s an option to grow my income through passive means, this sounds good to me.

My goal over the coming years is to get to the point where the passive/portfolio income surpasses the earned income of the business.

If you’re a business owner who’s earning an income. Consider how you could use your profit to generate passive/portfolio income completely separate from the operations of your business.

We often show clients little features in Asana that get a big reaction. People tell us ‘WOW! I didn't know Asana could do that!'. So I asked my team, what are the features that you show people that they're most impressed by. Here's what we came up with.

Need help setting up Asana and optimising it for your business? Join my Master Asana program!

In this episode of Minor Updates, I share some of the things I've been focussing on in my business and personal life.

Don't want to watch the video? Listen to the podcast:

0:00 – Introduction
0:40 – Hiring an assistant
2:21 – Creating SOPs
3:57 – Rebranding to MinorCo
5:21 – Building our dream home
8:45 – Outro

What I need is for someone to understand my needs, talk me through a few viable options and make a recommendation on which option to go with. I want to feel confident that I’m making the right decision before I spend $500.

This illustrates precisely why I sell my services in the way that I do.

When someone enquires to work with me to get support with Asana or Pipedrive. I book them on an introductory call. On the call, I use the first 15 minutes to understand what they're trying to achieve, their challenges and what they are hoping to get out of working with me and my team. Then I go into my pitch. I explain that there are a few different ways to work with us. We often do very custom consulting projects, small hourly engagements or there’s also my Master Asana and Master Pipedrive programs. Coming from a marketing background I know how useful it can be to present a few different options to cater to different price points in the market and to anchor your higher-priced options as better value (a bit like when you purchase a drink from McDonald's, the larger size cup is perceived as the best value based on the price compared to the cheaper options).

Giving people options also changes the customer's mindset. If you give someone just one option to work with you the decision they have to make is “take it or leave it”. Whereas if you give them a couple of options to choose from, now their decision is “Which option should I go with?”. You’re changing the question from “Should I work with this person” to “Which option is best for me”. Giving people a few different options to choose from is also the best way to avoid leaving potential revenue on the table. You don't want to quote someone a price, which they accept, and potentially miss out on additional revenue you could have received if they have a higher budget. By giving them small, medium and large size options, you are more likely to maximise the revenue you can get from a customer.

So, having options is great! But you also need to tell the person which option to get…

Once I've presented my options, I’ll then say “I think you should get option A, because…” and I’ll give my reasoning. I will genuinely recommend the option that I think is best for their situation and budget and I don't try to oversell or get them to purchase the highest option. I just want them to get the best option for their situation. And what I find is that customers appreciate this.

Sometimes at the end of a sales call the prospect will say something like: “Okay, let me go away and think about it”. To which I will respond “Sure, let me know if there's any questions you have right now that I can answer for you or if you're not sure which option to get I would suggest…” and again, I’ll tell them what to do. Customers who go away and think about it on their own are less likely to purchase after the initial excitement that lead up to the sales call evaporates. Whereas if I make a recommendation right there and then, I tell them what to do and I can usually get them to the point where they say “Yeah, that sounds like a good idea let's get started”.

As long as I've taken them through a journey and explained their options first, this builds confidence in the prospect's mind. They feel confident proceeding because I’ve explored all the options with them, so they feel like they’re making an informed decision. By making a clear recommendation on which one is best and why, you’re saving the prospect time and energy as they’re not having to think about it themselves. People like being told what to do. Nobody enjoys ‘thinking about it’. This just means you haven’t given them enough information to make a confident decision.

So, next time you’re selling to someone, keep this idea in mind. Make sure you have options available (if you don’t already) and tell your prospect which option to go with and you’ll see an immediate difference.

Not sure if you need a CRM? If you're currently using your email or a spreadsheet to track your sales leads, this video outlines the benefits of using a CRM like Pipedrive (affiliate link) to track your sales opportunities.

Sign up to Pipedrive using my partner link and get an extended 30-day trial!

Need help setting up Pipedrive and optimising it for your business? Join my Master Pipedrive program!