Excerpted from the book on enlightened business, Business Black Belt
“You’ll never get rich by just saving your money.”
You can make a profit from doing the right things, understanding people with the money, and applying a few simple principles.
Do you really think you’re going to join the ranks of the rich and famous by saving a few hundred or even a few thousand dollars every month (compound interest notwithstanding)? Wealth is not about saving some money and eventually getting rich. It’s about making a big, gutsy move, generally starting with just one. You see an opening and you take it. Believe me, it can be very frightening—you’re betting the farm.
Do as the big boys do
Look at the people who’ve got the big money—they did something like that, they bet the farm. Steve Jobs and Bill Gates may have started out doing smaller things, but they obviously eventually put some kind of big deal together. These super-successful people are ones like Conrad Hilton, Henry Ford, and Richard Branson. You can learn a lot from their stories and the stories of others—read them.
In my own experience, I had many clients and was developing marketing and promotional materials when I had this flash of an idea that became BizPlanBuilder. Writing business plans was slightly out of the norm of what I was doing, but this idea turned into a product I could create and sell.
When I first thought about it, I got this feeling, a tightening in my chest. No, it wasn’t a heart attack—it was excitement. I thought, “Wow, I’ve got to do this.” That is probably the single best indicator for knowing you’re doing the right thing. Whether you leave your job, develop a product, or start your own business, you have an overwhelming sense of “This is it!”
Be careful here
If your excitement comes from how much money you will make, you may be in for an ugly surprise. (At the end of this chapter, I’ll give you an experiment you can try to practice a new form of building success.) I recommend not doing anything just for the money. Let the feeling of how much you want to do something guide you. When I started my business, I made a big move, a concentrated effort to put the original version of BizPlanBuilder together. I easily worked until 3 A.M. writing and editing. I spent all the money I had on advertising. It was a one-shot deal. I didn’t go out and start a whole company at first. I just made the product, ran the ads, took the orders, and started going. No one had produced a similar product yet, at least I hadn’t seen it before. I knew I just had to do it, and not really for the money. I just thought I had a product that people could really use—it’s amazing how many poorly written business plans are out there.
The art of business
What if you were to look at your business, product, or service as an art and think about what would make it a better work of art? The industrial design that goes into most of the products around you is an obvious form of art. iPhone!?? Look a little deeper for the human touches that make things a little nicer, a little more attractive. It isn’t all science as some people might have you believe. More and more I see products and services that incorporate human touches.
More than thinking about what would make you more money, keep in mind that the overriding factor is how you can improve your product, service or business to be more artful, more human. And at the same time you’re making your product better, you can figure out a way to market it that would make money.
Sometimes you might do something that doesn’t look like it’s making money at all. But the perception of this improvement may make it worthwhile. For example, The Sharper Image catalog was known for all of its gadgets, toys, and cool things to have. At one point while I was working there, we were selling a suit of armor in the catalog. This $1,500 suit of armor took a page and a half to describe. I remember looking at a sales report with CEO Richard Thalheimer and noticing that we had only sold three of those things. Because the armor was unusual and fairly expensive, it did not sell very well. But Mr. Thalheimer, who had one in his office, liked the idea of a suit of armor. He really got off on the fact that he could even offer them for sale. Many other people did too. “Wow, you can actually buy a suit of armor? That’s amazing.”
What the suit of armor did for the company was not bring in direct money, but it helped build an image. The word on the street about The Sharper Image catalog was “Oh yeah, that’s the catalog with the suit of armor in it.” The suit of armor attracted attention. Even though the product seemed very costly in the catalog, it generated a lot of business indirectly.
I think Nieman Marcus did the same thing when they offered “His and Hers” Lear Jets on the inside cover of their catalog some years ago. I’ve never worked there, but I can only imagine it was done for high-impact image making. They also probably knew their customers would really get a kick out of it, even though they knew few people would actually buy. The product was certainly memorable and generated a lot of talk. (Remember when Victoria’s Secret offered a diamond-studded Wonder Bra™ for a million dollars? It got headlines and, I’m sure, many catalog requests!)
In my business, the good news is that we too can build much refined art into our software products. In the software business, we make that effort and investment up front. Software is very inexpensive for us to duplicate. For a very reasonable price, many people can benefit from the refined information and layout that would ordinarily cost a fortune to develop for themselves. What can you do or promote in your business that will achieve a similar result?
How to make money at something
Doing what you love tends to be the kind of thing you would do for free. Even doing a job you dislike may be worthwhile for a while when you know you’re getting paid for it. But when work is fun, it seems like you shouldn’t really get paid for it. If this is true for you, you must get past that thinking and figure out how you’re going to make money doing what you love.
To add the business component to what you love doing, you’ve got to figure out a way to get paid for it. Every time you do something in business, you’ve got to give value to your customer in some form that can be purchased. Ideas by themselves are difficult to sell so they must be converted into a tangible product or service that customers can understand and buy.
When I looked at using my sales skills to help others more effectively promote their businesses, I determined that the tangible product I would offer would be in the form of brochures and other sales tools my clients could use to increase their sales. My next problem was to figure out what I was going to charge for my services. When I first started, I looked around to see what was a reasonable hourly rate. In 1986, I started at $40 per hour.
To make money this way, set a goal of how many billable hours you need to generate the amount of money you want. Think of it as doing more of what you love, so that you can afford to continue doing what you love.
Many clients are uncomfortable with an open-ended deal, or paying an hourly rate for a project that could take forever to complete or get right. So, you could track or project how much time certain projects take and price them accordingly. Then figure out ways to be much more efficient at completing them, such as investing in better equipment. But most importantly, focus on the value the completed project provides for your customer and price it according to the value they receive. The money you make will be the difference in the value you provide and your cost for providing it. The scary/exciting part comes when you see how much money you’re making while having fun doing it.
Just because a skill or ability comes naturally to you doesn’t mean that others have or enjoy the same skill or interest. Successful people have a keen sense for what they’re good at and for what their time is worth. You’ve heard that time is money. How much time does it take to make money? Now let’s look at how much money could you make if you applied your time to the most profitable activities.
Treat your time as if you were making the money you’d like to make. Always ask yourself, “What’s the best use of my time right now?”
Let’s look at what you know about making money (I presume you intend to make money legally). Perhaps these will be familiar:
• Work really hard and the money will come because you deserve it.
• Go with a good get-rich-quick scheme that that seems easy and you’ll get rich.
• Corner and hoard valuable resources and charge high prices as long as you can.
• Invent something, get a patent on it and sell it. (One of the better ones.)
• Marry someone rich. (Probably the easiest, but there’s a catch.)
However, I believe that the secret to wealth is to:
Leverage your ability to help a lot of people
Go beyond the financial leveraging that you learn about in the get-rich books and seminars, where you borrow a lot of money against the investment you’re buying. If you can help a lot of people with the same amount of effort that you put into helping one person, that’s where real wealth is created. Look at it from the karma perspective of “What goes around, comes around.” If I help one person, I can make X amount of money, but if I help ten people enjoy the same benefit as the one I could make perhaps ten X the money.
You must find out where you are most effective. For example, I was out selling my marketing services to one client at a time. However, I knew how to sell to thousands at a time because of my marketing and advertising experience. The point here is that you must learn how to leverage yourself. Today, social networking is the new buzz for achieving this.
The very wealthy have figured out a way to leverage what they do to help a lot of people without much additional effort. (OK… some steal from as many as possible…) The magnitude of their wealth is in direct proportion to their ability to help more people. (I don’t think this was their conscious intent. Nevertheless, they efficiently provided a valuable service that generated the reward.)
Look at Bill Gates of Microsoft. He’s got one primary software product, but everybody is using his operating system in their computers. He’s managed to help a lot of people. And the beauty of the software business is that he can inexpensively duplicate the software while selling it for the full value that it provides. That’s why he’s the richest guy in the world.
Henry Ford mass-produced cars. He learned how to leverage mass production so many people could drive inexpensively.
The paradigm of working harder and making more money doesn’t work anymore. Many people have had heart attacks doing that. They don’t end up making that much more money either. The paradigm of playing dirty, holding others back, keeping resources scarce so people have to pay more for things works sometimes. But today, the greatest wealth truly comes from leveraging your ability to add quality to many people’s lives. How can you build this leverage into your business?
About people with money
Over the years, I’ve heard many people refer to a wealthy person by saying, “He’s got so much money, he could care less about the price…” That’s a big mistake. Guess what? The more money people have, the more value conscious many of them become. How do you think they got wealthy in the first place? They are extremely aware of their spending habits, cash flow, and return on investments—any investment—including social and philanthropic ventures.
The average millionaire has gone bankrupt 3 times.
What do you think they learned along the way?
To be more careful with their money!
It’s smart to want to do business with wealthy people, but don’t assume that they don’t care about the price or have money to throw away. You’ll insult them and send them to a competitor. Contrary to popular belief, most wealthy people have worked very hard for what they own, and they’re not about to watch it slip away.
The real difference between the wealthy and those who aren’t is that wealthy people place a high value on lasting quality as a good investment, convenience and on having things exactly to their liking. Wealthy people also know that they can generate more money, so they’re not afraid of investing in the best. To them, life is not static. You’re not stuck where you are, you can generate more money. (Like Jay Leno said for Doritos, “We’ll make more.”) That means they’ll more readily pay for such things as custom designs and valet parking.
Others think themselves limited—on a fixed income. There’s nothing they can do to make more money. While they focus on that thought, opportunities are whizzing right by.
I made the transition from a struggling small-business person to a successful company president with the ability to buy just about anything I want. I’m now more careful about what I spend my money on. Things I’ve wanted or have wanted to do for a long time, I choose very carefully. I spend my money on things that are functional, to my liking, and of lasting quality. Why jump into your car every day and think that it’s a piece of junk? For a few dollars more per day (a few hundred dollars per month), you could jump in your car every day and think, “This is great!” How long are you going to live? How long are you going to wait to do and have what you really want?
What do you call people who lose things? Losers.
I tend to keep and maintain things for a long time. Since I know that about myself, I’m confident enough to invest in the best. It took a while for me to give up trying to save money by buying the cheap stuff because I hate throwing away something in good condition, albeit cheap. The longer I kept it the more it reminded me of my dissatisfaction.
“Quality lasts long after the price is forgotten.”
~ Sir Henry Royce, co-founder Rolls-Royce Motorcar Company
What difference would it make today if you had spent an additional $100 on something five years ago? Don’t you squander enough cash on silly things as it is? Why not surround yourself with fewer, yet quality items you can use today, will serve you well, and hold their value and utility in the future?
Try this experiment the next time you play Monopoly®
As an experiment, the idea is to help the other players win at Monopoly. That’s right. You want to help them make money. Since this is just a game, you can afford to try this at least once. Most of us play Monopoly by trying to buy all the real estate and gloating over the rent we’ll get when someone lands on our property. What if you made deals with the other players for joint partnerships? For example, rental on all four railroads is $200, but only $25 individually. If you became partners with another player who owned two railroads ($50 rent) and combined them with your two railroads, split the combined rental, you would both have four chances to earn $100 each, not just two chances to earn $50! What if you applied this way of thinking and operating in your business?
We handle our business affairs much the same as we play the game of Monopoly. Why wouldn’t we? Our thoughts, attitudes, and knowledge of business all come from the same brain. We talk a lot about win-win situations. But when we get caught up in the heat of a business deal and a lot of money is on the table, our primal instincts take over and we get ugly, unless we’ve had a direct personal experience otherwise. I did this experiment myself with the fear that if I wasn’t my evil, aggressive business self, I would get clobbered. As it turned out, I made a ton of money and won the game! I recommend creating this direct personal experience within the safety of this simple game.
I think you’ll find that good, profitable business is not just about making a lot of money, it’s about assisting people and making people’s lives better. I’m proving this to be so at JIAN. What if everyone on Earth did that? We’d have a pretty nice place to live.
Business Black Belt Notes
• Wealthy people do watch where their money goes.
• If you want to make money, you’ve got to make gutsy moves.
• Make improvements more for your customers than for the money.
• Cash that you can earn right now is more valuable than a long-term bargain.
• Leverage yourself and your resources to help more people with the same effort.