Mike McMullen is the CEO of prominences and the author of Build. rent. To sell. To repeat!
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“Being your own boss” is something many desire and few achieve. You’ve probably heard the horror stories and sobering statistics: 90% of startups fail, more than 20% in their first year of operation.
Even if it is successful, starting a business is often grueling work with no end in sight. If you’re an entrepreneur, it can feel like you have to keep your nose on the grindstone permanently. Why wouldn’t it feel that way? After all, you have to sign your own paychecks, and profit requires results.
But the answer is rarely constant work. I wrote about work-related stress in another article, but the cliff notes version is this: Entrepreneurs suffer from stress and worry at higher rates than the general population, which is bad, but also bad for business.
The trick is to work smarter, not harder. Intelligence is a river fed by many tributaries. It can be found on street corners, in the clickbait cavities of the Internet, sitting in a pew or listening to a concert; where there are people, there will be good ideas.
That said, there are few better starting points on the entrepreneur’s journey to wisdom than classic business books. The following tips and the little tomes that led me to those insights have radically changed my thinking over the years, and I go back to them constantly to remember these basics.
1. Only invest in what you know and need.
This lesson was reinforced for me after I read The richest man in Babylon by George Clason. This may be an odd title for a book about growing wealth in 21st century America. Clason’s nomenclature may seem archaic, but his advice is timeless. Told as a series of parables, the text is approachable, the wisdom, sound. Clason explains the ‘Five Laws of Gold’, which include gems like putting away a portion of the profits and investing in what one knows instead of what one thinks one knows.
While this advice may not be the best for aggressive investors, it won’t lead them astray either. Rather, it is fundamental. Obeying won’t help you catch your white whale, but it will keep your bank account from crashing in a storm.
For me, the most important conclusion for leaders is: invest in what you know, avoid buying things you don’t need, and set aside income every month. Only you know what you need.
I learned the value of this advice when my real estate businesses were just getting started. I hired more and more people to sell our growing product line. But eventually I realized I was shifting from leadership to management; both roles are valuable, but leadership – not management – is my strongest point. Instead of blowing up our frontline staff, I realized we needed less staff who should be given far? more support. That’s what we did. And it has been working for us ever since.
2. See money as a way to make more money.
Chances are you’ve heard of Robert Kiyosaki. The jury is not yet out whether he really did it earned his status as a financial guru, but one thing is certain: selling books has helped him turn words into bonds. In his rich father poor father series, Kiyosaki constantly contrasts how rich and poor see money, how one of these philosophies is superior, and what investors can learn about the difference.
If you Love or hate Kiyosaki, in my opinion you should read it. Do not take his words as gospel, but learn what gold you can find in them. In particular, focus on everything he has to say about leverage and cash flow. Following his advice means trading your poverty mentality for one that will (with skill and luck) multiply your wealth.
Remember to see money as a means of making more money and learn to distinguish between assets and liabilities. However, this is not always as easy as it sounds. An age-old advice is: “your own home is not an asset, it is an obligation.” And while this may be true, I’ve come to realize that many objects that provide comfort can assets are in context.
Your company cars may seem like a source of decadent expense (aka a liability), but the professionalism a fleet of white cars delivers can greatly increase the “appeal” of your brand and let customers know your organization means it. In a sentence: avoid falling into a poverty mentality where every resource has to yield additional resources before it can be obtained. For obvious reasons, this is a self-defeating business philosophy.
3. Don’t be stubborn.
I’ve written about Nassim Taleb’s idea of ”the black swan” elsewhere on this platform, but only in the context of the pandemic and its effects on distribution and productivity. The black swan made a big impression when it was published shortly after the housing market crash of 2007. Simply put, the book advocates a countercultural view of risk.
The title refers to the enigma of the black swan, an animal that no one in the western world believed existed until one was first found in Australia. Suddenly the impossible became possible. For Taleb, a “black swan event” is like a housing market crash. It is considered completely impossible until it happens.
Of the three books I mention in this article, The black swan is the quirky-genius cousin. Reading in a vacuum would lead an entrepreneur to make foolish decisions. However, when combined with a solid financial foundation, it can teach us a lot about risk, “experts” and taking into account the unknown (if not quantifying it).
So, don’t be cocky. The second you think you understand a market, you will be surprised. Don’t ignore suggestions just because they seem impossible. Remember that the more you learn, the more you have to learn, and for that there is always an abundance of relevant literature.
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