How Small Businesses Can Make Money With By-Products & Waste

posted on Jul 22 by Tim Conley in the Entrepreneurship category

I watched a video of Jason Fried (pronounced Freed, not like Kentucky Fried) of 37Signals talk about making money from business by-products.  This is advice I have been giving clients for years when they start butting up against a ‘glass revenue ceiling.’

A by-product is something that is created while in the process of creating something else.  Even if you don’t make a physical product, everything that gets created has by-products and waste.  If you make software like Jason Fried you may develop a new knowledge base.  That knowledge is a by-product and a valuable one, too.

Let’s say you create a more efficient system to process paperwork such as a mortgage application and now your company doesn’t use any paper internally.  If this new system saves you time and money, then others will want to buy that system so they don’t have to start from scratch to do the same thing you did.  Also, you created waste with this new system–your copiers and printers are now obsolete in your company.  You now have a waste product that someone else will find valuable.

One man’s trash is another’s treasure.

I worked with a bookkeeper some time ago who liked what she did, didn’t want to manage any employees, but wanted to make more money.  Bookkeeping is a commodity and if someone charges too much, no matter how good she is, the client will go somewhere else.  The bookkeeper, let’s call her Jane to make things easier on me, raised her hourly rate some since she wasn’t charging enough.  This gave her an instant pay raise without losing any clients.

In the process of coaching Jane on her business we discovered she has been finding ways to save her clients money.  While doing her bookkeeping she found that some of her clients would accidentally double pay a bill or spend too much on a commodity.  She was pointing this out to her clients and they were thankful she was looking out for them.  Also, Jane had several clients in very similar industries and could compare what each was spending on supplies and materials–while keeping each client’s privacy.

I suggested Jane formalize this as a service and take a percentage of the savings.  Most of her clients were happy to pay her a percentage of the savings and instead of just being thankful, they started telling people how much their bookkeeper was saving them each year.  (Lesson: people find more value in things they pay for than those they get for free.)

After that suggestion, I helped Jane develop a system to get more clients and then ‘sell’ those clients to other bookkeepers.  She would cherrypick these clients for herself and get a percentage of the other bookkeepers’ revenue.  Essentially, she was selling leads, but instead of a one-time fee, she got paid monthly for as long as the company remained a client.

I guarantee you have multiple by-products in your business that could add considerable revenue to your business if you would only look for them.

Here is Jason Fried’s video that way you can get a different perspective on making money with your by-products.

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.