What I’m saying here is that even if you’ve got a great business idea or have some money to invest in shares, you will only maximize your return if you work really hard at your idea or invest the money wisely and manage it carefully. You have to put the effort in before you can reap the dividends.
RULE 33
Learn the art of deal making
Deals are great. Deals make you money. Simple deal-making skills will serve you time and time again. You need to learn to be bold, to ask for more, to trade what you have for what you want.
Here is an example of successful deal making in action. Kyle MacDonald from Montreal, Canada, traded his way from one single red paperclip to a house in the space of nine months. You can read more at http://oneredpaperclip.blogspot.com, but essentially this is how he did it:
He launched his website offering to swap his one red paper clip for anything.
He swapped it for a green pen in the shape of a fish.
He swapped this for a smiley face doorknob.
He swapped this for a portable barbeque.
He swapped this for a portable generator.
He swapped this for an instant party pack and keg of beer.
He swapped this for a snowmobile.
He swapped this for a trip to British Columbia.
He swapped this for a truck.
He swapped this for a recording contract.
And finally he swapped this for a house in Phoenix, Colorado – admittedly only a year’s lease but hey...
Eleven steps. Eleven little deals. Not bad. He says he is going to keep going until he owns a house. That’s deal making.
So, lessons to be learnt from Kyle:
Never say you haven’t got anything to start with.
Always be open to opportunities.
Be adaptable and flexible.
Have a goal.
Work diligently.
Network like mad.
Take advantage of free publicity.
In my business I prefer to talk about ‘mutually profitable partnerships’. These deals, where both parties benefit, are the best deals of all. Everybody feels happy with the outcome.
What do you have that others might want? Think broadly here – not just possessions like Kyle, but also your skills and your knowledge. Your time and your ability and efforts. Who might want these and what might you be able to ask for in return?
WHAT DO YOU HAVE THAT
OTHERS MIGHT WANT?
RULE 34
Learn the art of negotiating
If you are going to deal and trade and swap, you have to learn the art of negotiating. Basically the art revolves around making the other person feel they are getting as much as you are.
I like to talk about partnerships. This is my way of making this happen. I’m genuinely not out to scupper anyone else’s plans of getting rich. I don’t need them to fail in order to make me succeed. I figure we can all go forward together and no one has to lose out. If I want someone to buy something from me I expect them to be able to make a profit on it and do well out of it. I don’t want to sell and run. I want repeat business. I want a decent reputation. I want to feel good about what I do. I want a partnership.
The art of negotiating will stand you in good stead in so many different situations – from negotiating a simple pay rise to negotiating in your relationship with your partner to negotiating with your kids over pocket money. If you learn this art, everything slips along easily and smoothly and you get what you want – and they get what they want too. Win/win.
There are a number of rules about negotiating you need to bear in mind. Here are just a few of the most important ones:
Always know your bottom line – the point beyond which you will not go.
Always know what it is you want – the goal, the end product, the target. There’s no use negotiating if you don’t know what you are negotiating for.
Always aim for win/win.
Always be prepared to give up things to secure other things – be flexible and fluid.
Always know as much as possible before you start – knowledge is power in these situations.
Go for the best deal you can possibly justify. Coming down later is easy; going up later is almost impossible.
Those are just a few of the key points, but if you don’t know this stuff backwards, buy a book, go on a course, talk to friends who really understand the skill of negotiating.
I am always stunned and horrified by how often people go into situations – anything from a job to a relationship – without first finding out what they are embarking on, what is expected of them, what they are going to get out of it, what they expect their partner (boss, business buddy, lover, offspring, whoever) to get out of it and where they expect to end up. You’ve got to discuss these things – and that really is the basic art, discussion. Bring things out into the open so there are no assumptions. Assumptions are bad.
I DON’T WANT TO SELL
AND RUN. I WANT REPEAT
BUSINESS. I WANT A DECENT
REPUTATION
RULE 35
Small economies won’t make you wealthy but they will make you miserable
Is it penny wise, pound foolish? I don’t think so. I think that trying to make small economies in order to become prosperous is doomed to failure. It won’t make you rich but it will make you miserable. And being miserable isn’t a good place to start out each day. You need a decent breakfast and a positive attitude. Cutting out your daily cappuccino might help you lose weight, and it might reduce your caffeine intake, but it isn’t going to make you rich and it might well make you feel miserable.
So what about all that penny-pinching stuff? It seems to have been invented by the puritans – if you enjoy something, it has to be wrong. Some people get satisfaction out of being frugal, but if that isn’t you, then don’t deny yourself small pleasures in the belief that that’s the way to wealth.
CUTTING OUT YOUR DAILY
CAPPUCCINO ISN’T GOING
TO MAKE YOU RICH
Hang on though. Didn’t I say in an earlier Rule that the rich are eagle-eyed and that you had to stop money leaks? Indeed. But that’s different. While getting your finances in order is a good thing, going without isn’t. Make sure you aren’t giving money away by being careless (those are the leaks) but don’t deny yourself the very small pleasures that enrich your life – just don’t go mad. If you can’t afford what you want, buy less, but buy quality. Save up by all means for those big purchases or ask if you really need them, but don’t start thinking that giving up little luxuries, little treats, little life enhancers, will somehow increase your wealth. It won’t. It will keep you trapped in the poverty cycle. Escaping from the poverty cycle and the penury mindset is your key to success, your path to prosperity.
Wealthy people don’t scrimp and save. Sure some of them are quite tightfisted and you’d have to crowbar their wallets off them. But while they watch their money carefully, they don’t cut the odd coffee or buy cheap jam in the hope it will make them more wealthy. It obviously won’t.
Like being on a diet, if you deny yourself every small pleasure, you’ll probably fail. Little indulgences are the way forward. Now who else is going to tell you that?
RULE 36
Real wealth comes from deals not fees
I’m not saying that it’s impossible to become wealthy working for someone else, because it can happen (see the next Rule). And of course you have to define wealth, as we saw in Rule 2. It may be that you have no ambition to rival Bill Gates in the wealth stakes, but would be happy with a mortgage-free house, a couple of luxury holidays a year, and a good lump sum set aside for emergencies or to pass on to the kids. In that case selling your time, which is what you’re effectively doing as an employee or a freelancer, may make you wealthy if you’re sought after enough.
Look at the professional classes – they’re a good example of what I mean. Lawyers and top doctors and successful financial advisers and so on. They all have e
xtremely comfortable lives that many of us would aspire to. But they’re none of them in the super-rich league – not unless they’ve either inherited their money, or they’re doing something else on the side.
To make real, big, serious money you have to do deals. Buy and sell. I wasn’t kidding when I told you in Rule 33 to learn the art of deal making. Because that’s the only way to make millions. Look at the wealthiest people in the world – they’re none of them employees, or even freelancers. They’re all selling stuff. Computers, aeroplane seats, banking services, cars, newspapers.
Now hang on, don’t jack in the day job just yet. I’m not saying you can’t work for someone else, at least for now. But recognize that if your ambition is to make a fortune, you’re going to have to leave the job eventually and strike out. Maybe you can wheel and deal on the side, and leave the job when you no longer need it. Or maybe you need a plan for setting up on your own. However you choose to play it, sooner or later you’ll have to start buying and selling if you’re going to become a millionaire.
YOU’LL HAVE TO START
BUYING AND SELLING IF
YOU’RE GOING TO BECOME
A MILLIONAIRE
RULE 37
Understand that working for others won’t necessarily make you rich – but it might
Most of us assume that we’ll never make it to greater prosperity while we are working for someone else; that only by being entrepreneurial will we become wealthy. And for a lot of us this may well be true – there is a limit as to how much you can earn per hour in return for your labour. However, there are some who do make it good this way.
We shouldn’t overlook the fact that being employed may be the best route for us and that we don’t have to run our own business. There are whole categories of employees that are doing quite nicely thank you. For example, a friend of mine works in corporate insurance and he’s extremely wealthy thanks to large commission payments. He says he wouldn’t be any better off working for himself.
Many people working in the computer business opted to become contractors because they assumed they would earn a lot more. Some did, but at the cost of stability. When the contracts dried up some were worse off than when employed. But for some this was indeed the best way to go and they have made handsome sums by becoming self-employed.
I guess you have to keep an open mind about this one and not be driven by assumptions. You can make yourself pretty unhappy by forcing yourself into self-employment if this isn’t the right way for you. Perhaps the stability of employment is a greater priority and you should stick with it and not feel compelled to start your own business.
The converse is true as well: understand that working for yourself might make you rich, but it might not. Nearly two-thirds of business start-ups end in failure within three years. Look around you and you will see many examples of the small business owner struggling desperately. There’s no certainty there. Working for yourself generally has higher earning potential, but not in every case. You have to look into it very closely – right business, right demand for your services, right time, enough effort and so on.
There isn’t the space or time here to go into all the pros and cons of working for yourself. Except to say it’s one hell of a lot easier and much more fun working hard for yourself than for someone else. But what we are aiming for isn’t freedom from employment but prosperity. Hence we have to be open to whichever means will hasten our achievement of that goal. Employment or going it alone? It entirely depends on which one will get us rich easiest, fastest, slickest. And your day job doesn’t have to be your route to wealth at all...
The secret is not to close your mind to any opportunity to get rich. And staying employed doesn’t mean not having a little eBay business on the side or a buy-to-let property to create a new income stream.
PERHAPS THE STABILITY OF
EMPLOYMENT IS A GREATER
PRIORITY AND YOU SHOULD
STICK WITH IT
RULE 38
Don’t waste time procrastinating – make money decisions quickly
If you are out at sea and it cuts up rough, you make for a safe harbour. Any port in a storm. You don’t spend time procrastinating over whether the harbour has shower facilities or a branch of your favourite restaurant chain or cheaper moorings. No, you just get the hell out of the storm, while there’s still space in the harbour, and be grateful it provides the one thing you really need – safety.
Making money is a bit like that. Sometimes you just need to act. As long as you get some return on your action, it’s better than doing nothing. This isn’t complicated but you’d be amazed how many people overlook this and think ‘I’ll decide how to invest that little lump sum I’ve saved up later – I can’t decide whether to buy shares or put it in a savings account’. So they do nothing and the money sits in a current account earning no interest or, worse still, gets frittered away by default and inflation.
You don’t have to think too deeply about this stuff. You don’t have to think too hard. You don’t even have to really think at all.
The samurai lived by a simple creed – no hesitation, no doubt, no surprise, no fear. It is simply the most brilliant strategy for doing anything. It basically says that once you have decided on a course of action (or battle or combat) then be committed; know everything you need to know about it, don’t be afraid and get on with it as quickly as possible. If you’ve ever seen a samurai sword fight you’ll notice they circle each other and then there is a dramatic burst of activity, a flurry of intense violence and it’s all over. One or other or frequently both opponents are dead. The circling is not preparation – that was done over years and years of training. The circling is sussing out your opponent – taking their mind. When they go into attack it is a direct, swift, no hesitation attack. And your financial plans must have the same razor-sharp incisiveness about them.
THE SAMURAI LIVED
BY A SIMPLE CREED –
NO HESITATION, NO DOUBT,
NO SURPRISE, NO FEAR
Doing something is invariably better than doing nothing – even if it’s a firm decision to stay put. And sometimes acting fast can be a lot better than holding out on a possibility. Suppose you buy and sell antiques and collectables as a money-spinning hobby. If you buy a plate for £10 and think you can sell it for £30, but somebody offers you £20 within an hour, then you take the £20 and go and buy two more plates at £10 to sell on in the same way. I’m not saying you should act blindly – far from it. Like the samurai, we’re talking about stuff you already know. Now you have to act on it. Make your decision wise and sensible and considered and thoughtful. But make it now. Quickly weigh up the odds, consider the pros and cons and then get on with it.
RULE 39
Work as if you didn’t need the money
Most of us work because we do need the money. But some of us let it show and some of us don’t. If somebody looks as though they don’t need the money, it’s for one of two reasons. Either (a) they put on a good act or (b) they genuinely enjoy their work and do it because they love it – they would do it even if they didn’t need the money.
Clearly (b) is a fantastic place to be and one we should all strive to get to. But even if that’s not the case for you yet, there’s a very good reason to act as if you would work irrespective of the financial return. If people think (or indeed know) that you need the money, it gives them power over you and that puts you in a vulnerable position; it makes you insecure. If you work as if you don’t need the money, they have no power and you have it instead.
IF PEOPLE THINK THAT YOU
NEED THE MONEY, IT GIVES
THEM POWER OVER YOU AND
THAT MAKES YOU INSECURE
Many years ago I worked in a job I hated and I was unhappy. Later on I started a business that my heart wasn’t really in and it failed. But I have always written. Am I a writer? Not really. I don’t write highbrow fiction. I wish I could but I know my limitations and stick to writing about what I see other peopl
e doing. But writing is something I have always done – whether I get paid for it or not. Whether it gets published or not. And that’s my secret; I do it because I passionately care about it. It is my heart and soul and belief and drive and ambition. It is so much a part of me that no one can touch it or have power over it or take it away. Do you know how happy that makes me? Do you know how rich that is making me?* Do you know how much power that gives me?
So what’s your secret? What makes your heart turn cartwheels? Where does your dream lie? You’ve got to be driven. Being prosperous has no room for ‘I don’t know’ or ‘I’m not sure’. You’ve got to know, you’ve got to be sure. Why? Because that is what wealthy people do. They know where they are going and what they are going to do when they get there. They have passion and drive and ambition and determination. They work because they want to.
Ah, but I hear you say, the passion and determination is something they are born with; it’s in their personality. Perhaps it is. But it’s also something you can emulate, copy, mirror. Do like them to become like them. Work as if you didn’t need the money. Aim for the point where you don’t do anything unless your heart is in it.**
* And for once I don’t mean financially happy, although that too is part of it in a big way.
The Rules of Wealth Page 6