What are most people ignorant of that prevents them becoming financially wealthy?originally appeared on Quora, the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Nobody ever got rich working for a living. –My dad, to me, frequently
What in the world can it mean that working doesn’t make you rich? Well, how many of those fabled bad guys our progressive left obsesses over, the dreaded 1 percent, punch a clock, do you think?
To be sure, you will work hard to get rich, and the harder and smarter you work, the better your chances. As my dad would explain, “It’s OK to work eight hours a day for someone else. Just work eight hours a day for yourself too, and twelve hours a day on the weekends.” And that’s exactly what he did, all his life.
Selling your time by the hour will not get you ahead. Human resources departments know to the dime what they have to pay per hour to acquire requisite talent. Even if you have a degree from a prestigious law school and catch on with a leading firm and can bill at several hundred dollars an hour, by the time the expenses are extracted, you’ll be lucky to be grossing a third. Even if you work yourself into an early grave by billing out 3,000 hours a year, you’re not, by that effort alone, putting yourself on a track to get wealthy.
So, what do you have to know to become financially wealthy?
Probably the first insight you need is that you are out to get wealthy, not financiallywealthy. Financial means pertaining to money, but you’ll need to recognize that money is simply a “parking place” for past production. The economy runs on “you buy the production of others with your production.” Land and production and equity in those things underlie wealth. Money is just a convenience for wheeling and dealing.
Here’s what you need to understand if you want to not miss the turn that gets you to the intersection of Luxury Lane and Big Bucks Boulevard.
Knowing what you are after. Having a big operating budget is not wealth. You can be “churning” millions of dollars a year, but you are only getting wealthy to the extent you are profiting on that churning. A lot of churning with little profit is actually worrisome. A huge house of cards falls just as fast as a small one.
Financial leverage (also known as other people’s money). A business acquaintance mentions he needs 200 reciprocal capacitors (or whatever) to keep his production line going. He’s desperate and willing to pay $2 each. You’ve got $100 and know where you can get such capacitors for a dollar each. You could double your money! Or, you can borrow, $100 paying back $110, and almost triple your money. Even better, you can get your acquaintance to pay in advance and clear an even bigger cut without putting your money at risk. http://onlinesecretsauce.com/?da=Blessed&t=
Labor leverage. At one point in my retail career, I took on a new window washer. The next time, he showed up in a suit, took my $20 from petty cash and left his associate behind to do the window washing. I started seeing his associates around town, at least three different ones. I idly started calculating what he could potentially make with three window washers under him while he concentrated on selling and coordinating–maybe there could be a little money in cleaning glass. When it dawned on me the guy could easily be grossing $120 an hour with a labor cost of at most $21 an hour (35 years ago) and additional overhead of at most $2 an hour, I was shocked that he was netting about four times as much as I was as a partner in a thriving retail business, and with significantly fewer headaches! and employees!
Spotting opportunity. The productivity cycle that creates all the goods that actually represent the economy begins when an enterprising person looks to the future and sees the opportunity to make a profit. Think how easy it would be to start a window-washing business. So, why then do 99 percent of all casual window washers go about it all wrong by doing all the work themselves? Understanding how to spot situations that can be turned into profit-generating opportunities is an acumen that must be cultivated. Most people don’t start their own business; they create a job for themselves in addition to which they have to function as boss, secretary and marketing person–four jobs in one, a burnout track rather than leverage.
Making money with money. How did Mark Zuckerberg make $4 billion in one day last week? How did Jeff Bezos make $6 billion in 20 minutes a couple of days ago? Was it by increasing their hourly wage? No, as you know, it was by equity. You are frail. You’ve got something like 100,000 to 150,000 working hours in your entire life (multiply that times what you can net per hour, and there’s how rich you will potentially be). Money/equity can work 24/7/365 and not break a sweat. The trick is to live as frugally as possible when starting out young, forgo every nonessential, and set aside every dime you can. Putting your money to work for you can make money for you even while you are sleeping. You can eat out at a nice restaurant and make the money to pay for the meal while you are dining. (Better yet, you can have your fellow diner who wants your business pick up the check.)
And how did it turn out for my dad?
Dad is now 94 and comfortably off. He got a bit wealthy late in life. He played the real estate game and spotted a huge opportunity back in the early 1960s. The new interstate headed through Dallas would create rapidly growing suburbs. We moved to a small town when I was 12, and he plunged his savings into buying up a couple of square blocks in the poor part of town but near the intersection of the two main roads. I can still remember how bullish he was to score such a coup.
And then all the growth took place, not in the old downtown area as he had assumed it would, but in the cattle pastures on the other side of the new highway, land he could’ve owned for a mere $50 an acre at the time (and that’s worth as much as $2 million and up now). To make matters worse, just when he realized he needed to be across the highway, interest rates went up to double digits; too high to make money. He spent 20 years feeling like a bug trapped in sap, unable to budge, and that changed him into a very sour man.
The final lesson, then, is that you have to be cut out for a life spent trying to acquire wealth. There are risks. There are pitfalls. You can get everything brilliantly right, make one deft move after another, and still end up worse off than you started.
Not everyone is cut out for such stress, strain, and uncertainty, and this makes a job working for someone else at a reasonably secure salary look pretty good.
This question originally appeared on Quora, the place to gain and share knowledge, empowering people to learn from others and better understand the world. You can follow Quora on Twitter, Facebook, and Google+. More questions:
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Opportunities in Your Online Business
Too many companies start up and find success but soon find their growth stagnating. Why is this? The truth is that there are several reasons why this could be the case. The company might not be attracting enough new clients, they might constantly run out of stock, or they aren’t introducing new products or services fast enough. Or it could be that they have simply stopped trying.
Once you have found success, it can be easy to get in the mindset that “what I’m doing now is working and will work forever.” Wouldn’t it be nice if that were true? However, the technological based world we live in is changing so quickly that in order to stay on top, you have to start finding the hidden opportunities in your business.
Consider the Jelly Belly Company as a great example of finding hidden opportunities in business. In the 1990’s, they introduced a new product called “Belly Flops.” Belly Flops consisted of strangely shaped and off colored jellybeans that appeared in the production line. They are then sold at half the price of what a normal bag would cost. While the company is privately held and doesn’t disclose financial information, the sales have been strong enough that Belly Flops are now sold in retail and online. Where most companies would toss their imperfect products, The Jelly Belly Company saw a hidden opportunity and capitalized on it.
Hidden Opportunities In Your Business
While you may not be able to sell imperfect products at a discounted price, there are likely still hidden opportunities available in your business. Take a look at some of these ideas and see if they can help your company grow.
Do Your Clients Know About All Your Services?
Do your current clients know about all of your services and products? If not, then you are missing out on potential revenue. Convincing customers to use you time and time again for multiple services is one of the biggest hidden opportunities in your business. Even though clients may have had a great experience with one of your products/services, they won’t ask if you offer more. They will simply go to someone else. Don’t let that happen.
Luckily, the fix is simple. It’s your job to make sure that your current and potential customers know about all the services/products you offer. If they have had a good experience with you and you let them know about a new product/service that will help them with another problem, they’ll be more likely to purchase from you again.
Are You Confusing Your Customers?
When you talk to your clients, what type of language do you use? Do you describe your company’s goals, products, services, and processes in business jargon? If you do, then you are probably confusing your customers. The common customer won’t know what industry-specific terms mean. Don’t get sucked into the idea that the more business language you use, the more experienced you seem. Customers don’t care about that. They just want to know how you will solve their problems.
If this is a problem you are dealing with, then simplify your language. Spell out clearly what it is that your company does and how you will help your customer. The easier you are to understand, the better.
Are You Properly Motivating Your Employees?
Knowing how to correctly motivate your employees is another hidden opportunity in your business. Your employees are an important part of determining if your business stays successful or not. That’s pretty obvious but motivating them correctly is what will keep them working hard. For some, money will be their main motivation and for others, it will be something totally different. Once you make it more beneficial to your employees to continue working for you, the harder they will work for you.
Obviously, these are just a few of the many ways to start finding hidden opportunities in your business. The important thing is to keep your eyes and ears open to find the ones specific to your industry and company. Once you find the hidden opportunities in your business, make sure to capitalize on them. Doing so will help you keep your business successful and make it even more so.