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Apply Apple’s Strategies To Your Personal Financial Plan

17 July 2008 No Comment

As readers of this blog know, Apple is my favorite company. I love the products, the vision, the management and the stock. For years, the company has been outperforming through innovation and an incredible strategy. Today, I want to look at two major components of Apple’s strategy and what we should learn from them with regards to our individual financial plans.

Multiple Revenue Streams

First, Apple has done an amazing job of building multiple channels of revenue. There’s the iPod channel, the mac computer channel, the iPhone channel, and what I like to call the family room channel which includes Apple TV.

Why is this significant? While many companies produce a hit product, cash in on the success of the product, and fail to innovate further (see Motorola’s Razr), Apple realizes that products have life cycles and they focus on continuous innovation. This results in a stock that continues to move higher instead of moving up, flatlining, then coming back down (look at Motorola’s chart over the last 5 years).

Apple knew that the immensely popular iPod would eventually hit a mature stage and stop growing at such a high rate. Instead of figuring the iPod would drive profits for years and years, they got right to work on innovating the iPhone, easily the most anticipated cell phone ever produced. Their plan worked to perfection and the iPhone was released at about the same time the iPod hit it’s mature stage.

As the rest of the cell phone market has been reeling to produce products that can compete with the iPhone, Apple already released the second version of the iPhone. I’ve read in other reputable articles how Apple is about a year ahead of anyone in terms of innovation. Amazing.

Meanwhile, Apple is selling more mac computers and laptops than ever before. Their products help sell their other products which brings me to my next point.

Halo Effect

Apple has done a masterful job of creating a halo sales effect with its products. Their strategy has been to capitalize on the crazy popularity of the iPod by getting iPod owners into their amazing retail stores and buy other products. As I write this on my macbook, it is worthwhile to note that several years ago, I was a computer science student who owned an iPod but completely disregarded ever owning a mac. When time came to buy a new laptop, I happened to check out the Apple retail store, and I decided to make the change. Now, I’ll never go back. How many more share a similar story?

The Halo effect continues to work effectively with computers, iPods, iPhones, and even Apple TV. How many people do you know that own multiple Apple products? Probably a lot.

Your Financial Plan

Now, how can we implement these strategies in our personal financial plans? Before, we get there, I recommend you reading my four-pronged strategy towards financial prosperity. In that article, I talk about the four major aspects of my financial plan. This four part plan is an example of my “multiple revenue channels” that I am attempting to build in my life.

Many of you probably have ugly portfolios right now with the current bear market we are in. How much do you rely on your portfolio? Do you have other pieces of your financial plan that are excelling while one piece may struggle? Now may be the time to take a hard look at your financial plan. Maybe you need to add a “channel”.

What about a halo effect, is there a comparison regarding it for our personal financial plans? I believe there is. Your goal is to have your multiple channels or multiple pieces of your financial plan to work together, so that when one succeeds, it helps another succeed. For example, my blog, 20s Money, is a work in progress towards a second income stream. To make money, I need readers and traffic; to get the traffic, I need quality content. My portfolio is a separate piece of my financial plan. When I do well investing, I have more credibility and more content to provide on my blog; thus, when my portfolio does well, so will my blog.

Creating a halo effect in your financial plan is not limited to having a financial blog connected to your portfolio success. The key is simply to have your different areas work together. Maybe your current job is helping you to create a side business. Or maybe, you are a real estate agent and it allows you to easily acquire cash producing properties. Avoid projects that have nothing in common, unless there is a high success rate.

Are there aspects about your job or hobbies that could help you create a second income stream? Think creatively and pursue your ideas. And, if your like business, you can do worse than following the strategies of Steve Jobs and Apple. Oh yeah, I like their stock too. `

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