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I bet many of you may be wondering what does the phrase “build money trees” means. You must have heard “Money does not grow on trees” at any point in your life. But money does and can grow on trees, figuratively speaking.
I got the idea that money can grow on a tree from the book The Millionaire Fastlane by MJ DeMarco. The book is really nicely written, not overly complicated but provides a good basis for The Millionaire Fastlane.
Money trees are business systems that survive on their own. They require periodic support and nurturing but survive on their own, creating a surrogate for your time-for-money trade.
The main premise of this is that how much wealth this “money tree” business generates is not directly tied to the time we put into it. Five such businesses are mentioned in the book. You simply plant a seedling of this tree — this of course requires some of your time. But later on, it can and will, if you do it right, grow into a beautiful “money tree” and it will provide you with passive income.
For the purpose of this article, I won’t go into too much detail with each category, but I’d like you to read the book if you like these ideas.
Individual categories are graded from A to C. The grade doesn’t reflect businesses’ income potential, but a higher grade means a higher potential for passivity.
1. Rental Systems
The first one is a rental systems with the grade A. Rental system consists in renting something you already own. Do you own a bunch of real estates? Great, you can rent them. I admit that if you have a few real estates you are probably already a rich person.
But a rental system can come from a variety of other sources if you do not wanna get involved in real estate. Especially licensing. You can do music, you can make music, take pictures, create any kind of digital art, and collect money from others using them.
2. Computer/Software systems
This comes with the grade A-. You make software once and then you charge people. Your software can be paid, you can charge monthly subscription fees, or you can be paid from ads inside your software (mainly on phone apps, but you can still make a second YouTube, Facebook…).
Once you write your code it has nearly unlimited growth potential.
3. Content Systems
Grade B+. The idea is that you create content. This is something I am doing at this moment — creating content, a blog post. You can write a book, make a YouTube video, online course, or an article for your blog.
As DeMarco said:
Content also survives time. This book might have taken me years to write, but it also survives years. If someone buys this book five years from now, I will earn a small profit on a time investment I made years earlier.
Again, as with software systems, it takes some effort to create content once but then you can still earn money five, ten years from now. This won’t you make rich fast but has a great potential of scaling.
4. Distribution Systems
Grade B. You can become a middleman, who connects people who want something with people who are supplying that thing. Or become a part of it. Amazon is a distribution system, that connects buyers with sellers. You can create a product and sell it to wholesale distributors, who then sell it to retailers like Target. In this case, you are not the middleman, like amazon, but you are on the side of the SUPPLIER.
This is greatly interbreeding with other systems. You can make an app, but chances are you won’t sell a single copy of this app without the App Store or Steam, etc.
5. Human Resource Systems
Human Resource systems come as the last one from 5 money trees mentioned in the book with a grade of C. Human Resource system is easiest to explain but hardest to run.
When you hire employees for your business part of it will be the human resource system. To make a million-dollar business, you can’t avoid this.
Now purely from my opinion, no one is claiming that creating such a “money tree” will be easy. The whole book is focused on getting rich fast, but not easily. If you want something like that you have to put the hours in it. Respectively, from my point of view, it is possible to run rental systems despite the fact that you have never dealt with how to get rich quickly before. After all, everyone even if they don’t care about finance usually if they invest, and build money tree, they invest in real estate which they then rent out. My grandfather also has several apartments that he rents out. And there were no internet options (licensing, software, or even this book) when he was young. But he got it to have some extra money in retirement, and because real estate holds its value.
Article originally published on my medium.com.
