In an earlier article, I talk about cash machines. The cash machine is a legally structured business entity you set up to profit from your existing skill set and experience.
It generates more money to fuel your wealth cycle, the self-perpetuating cycle of asset and income. Building and sustaining a viable business, or cash machine, is how you create and support your wealth.
To recap, a cash machine will:
Feed your wealth cycle with cash flow;
potentially grow and appreciate in value;
provide you with experience in learning to earn; and
provide you with the entrepreneurial skills you need to run a successful business.
My next book, The Millionaire Maker's Guide to Creating a Cash Machine for Life, out in June, is a step-by-step guide for launching your own cash machine and for fixing one you might already have. It's a "how to" for the entrepreneur in everyone.
Most people are so focused on debt and getting out of it that they forget about building wealth. The cash machine is about expanding your life, not scrimping and saving. It's about making money first, and then managing your debt second.
Unlike traditional entrepreneurship, the cash machine is simple to start and sustain. The first step is to identify your skill set.
Your skill set is different from your dreams. Your skill set is what you already know, your fastest path to cash and the key to becoming a successful entrepreneur.
Many entrepreneurs fail because they choose to pursue a business that requires a whole set of new skills, instead of utilizing their known skills. For instance, you (like many others) might dream of opening a restaurant one day. But let's say you are a school teacher. A more successful option, using your skill set, would be to open a tutoring company to start your cash machine -- that little Italian trattoria or French bistro of your dreams can wait.
The problem is that too many budding entrepreneurs have no idea what they're doing. First, you have to learn to earn, to generate cash and to run a successful business. Then, you can move on to starting that dream business.
In my gap analysis -- one of the key building blocks of the wealth cycle that I have mentioned -- the seventh question I ask is "What are the skills you use to make money?" For some, it's obvious: "I am a chef." "I write for a newspaper." "I design Web sites."
The paths for using these skills for a cash machine are clear: A catering business, a writing-services company and a Web site design business.
For others, it is less obvious. A lot of people have trouble understanding what their skill set is. They have to dig a little deeper. What you do for a living, your job, is not your skill set. The talents you bring to executing your job are your skill set. For example, being an accountant and keeping the books is the job, but the skill set is expertise with numbers and being well-organized and detail-oriented.
I know a garage mechanic who started a handy-man service company in his community. One "retired" stay-at-home Mom -- her kids having left the nest -- launched a business helping the elderly. Her skill set? Driving, organizing households, management, communication, health care, emergency procedures, psychology -- the list goes on.
And the skill set you use for a hobby might also make a great match for a cash machine.
I once worked with a man who, when doing his gap analysis, revealed that he also fixed dune buggies in the family garage in his spare time. This was almost an afterthought in his search for his own skill set, but it eventually led to the family cash machine in producing and marketing dune buggies.
My point is: Look everywhere. Brainstorm with your friends and family. Make lists of your hobbies, what you do in your spare time, your tasks at home, what industries you are familiar with. What do your friends and business associates ask you for help with?
This all might take some time, but it is worth the effort. The success of your cash machine depends on you choosing a business idea that is in line with your skills. Once you define your skill set, do your research and build your team; you are on your way.
You will find a skill that can become a cash machine. I've never met anyone who can't.
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