In Thomas Stanley’s book, The Millionaire Next Door, he points out that the profile of your average millionaire generally includes getting FIRED from his previous job and starting his own business. That’s right, the ultra-risk-taking macho entrepreneur millionaire you know generally became successful because, quite literally, he had no other option. Of course their are the guys, like me, who seemed to have everything going well but that just wasn’t enough and we had to venture out on our own and forge our own paths in business and in life. But don’t kid yourself, that give-up-something-great-to-get-something-better mentality is the VAST exception.

Keep that in mind the next time you’re reading a book or blog by a successful person who just happens to be in the minority who was just naturally programmed to never except “good enough”. If that’s not you, you need to learn how to get over your current “security” in order to venture out on a “risk”. (I put both of those in quotes because they’re often not reality, but just figments of our imagination.)

So for the majority of people who have a job, house, family, car payments and a steady income, how do you decide to make the jump and take the risk of leaving your steady paycheck behind and trying something else?

1. Risk-taking is just a lack of knowledge. – If buying a business, writing a book, starting a band, quitting your job to take a new one or just being the first one at your work to try a ground-breaking new idea seems like a risk to you, then you simply need to study more. You need to make sure you understand how to take that business to a level of profitability before you buy it. You need to know how to effectively market your book or band and develop a following. You need to know that you have options for your livelihood before you tell your boss off and walk away (something I never recommend). And if you’re simply trying to get everyone at work to get out of their rut and change, you better be able to backup your reason for the change with some hard evidence as you’ll undoubtedly be met with nay-sayers. Whatever it is, you can always trace an increase in risk to a lack of knowledge on the subject matter and vice-versa. Let me make this even more clear. If you consider a “standard” medical operation like removing an appendix as safe, would you consider the same operation under the same conditions safe if it was performed by your plumber? What’s the difference? The risk is mitigated when the procedure is undertaken by a knowledgeable doctor.
2. Hedge your bet. – One of the cardinal rules of marketing is ONLY the consumer knows if the marketing is effective or not. They vote on their choice for great marketing by spending money. The same is true in almost any venture where you’re going out on your own. You really don’t KNOW that your customers, readers, listeners or coworkers are going to love the idea until it’s out there, right? Well then, in addition to becoming knowledgeable, make sure you have a backup plan… Or 2 or 3. Of course we all know of the stories of people overcoming impossible odds to make their ideas work. Heck, the entire 3m success can be built on the concept of passionate people overcoming all odds to bring their ideas to fruition. Michael Jordan was cut from his high school basketball team as a sophomore. Albert Einstein’s first 2 graduate thesis’ were rejected. A successful business owner friend of mine told me he was turned down by 27 banks before finding one who would loan him money for his first business. My point is not to throw the towel in because of adversity. My point is that consumers are impossible to predict, so if you’re going to bet the farm on an untried idea, you better have a few tried and true ideas in your back pocket to fall back on. Most entrepreneurs you speak with will tell you about their myriad failures that were necessary before becoming successful. They always had another plan and another way to succeed. Even at 3m where a culture of risk-taking and never accepting no is programmed into the culture, everyone knows there’s little risk of losing your job for pursuing that passionate idea. In other words, 3m developed that culture with a built-in hedged bet to encourage innovation.
   
3. What is your time worth? – Though this is third item, this one is the most important. Most people grossly over-estimate what they’re capable of in a year but also grossly under-estimate what they’re capable of in 10 years. So what does that mean? We are likely to set goals for the next year that are unreachable but then either not set goals for longer-term or set drastically underestimated goals. If you always spend less than you make, you will never run out of money. But no matter what you do, you will run out of time. So how do you determine if you’re going to stay at your current job, position, or business? If you’re learning on a regular basis from those around you AND your given an opportunity to express your own talents and ideas then stay. The former is more important than the latter, but you should be able to do both. Keep in mind that you should be learning things that you couldn’t otherwise learn on your own. Notice, I did not say that you have fun at work or you have a reasonable wage with lots of perks. Those temporary benefits are important for someone who will live forever and so has plenty of time to find something better later on. However, if you’re not immortal, and you’re not learning at work on a regular basis, it’s time to move on. The reason for this is because with the knowledge you can be learning at an underpaying job, you can leverage that at your next job, business, or passion. That’s why people underestimate what they’re capable of in 10 years. It’s sometimes challenging for us to step outside of our situation today, whether good or bad, and view it as a step forward or backward in our 10 year goals because we’re just trying to make it day-to-day.

If after evaluating your situation, you’ve now determined that it’s most likely time to move-on, check out a few of my other blogs that might help you get started:

The most important life lesson, and the key to success…

Why not?

The first 3 steps to becoming wealthy

To your success, Bryan

P.S. If the concept of setting 10-year, or even 1-year, goals is a bit foreign to you, check out my blog on The 3 steps to become successful at anything…

In contrast to that, my idea is simple, quick, and easy and though it won’t get you a perfect result every time, it’s certainly better than lumping everyone (including yourself) into one category.

That being said, in Marcus Buckingham’s book First, Break All the Rules: What the World’s Greatest Managers Do Differently, he lays out the exact 12 things that every person requires to be effective at their job. I have probably recommended that book half a dozen times in my blog and if you’re a leader or manager for any business you need to read it. So let’s get a quick and simple review of what Buckingham’s exhaustive research points out. All team members require the following:

1. Vision, Mission, Culture guidelines – What’s the big picture?
2. Job Description – Obviously this will be very detailed for intrapreneurs and more flexible for entrepreneurs. Absolutely no one can
3. Positive Reinforcement – Do not underestimate this power.
4. The right tools to get the job done – Nothing can be more frustrating. Intrapreneurs will have more tactile tools while the tools of an entrepreneur may just be pointing them in the right direction.
5. Someone at work they can trust – this is universal
6. Progress reports – everyone wants to know how they’re doing and how they can do better. No one wants to suck at their job.

He has 12 items on his list. I cut it down to 6 overall so read the book to learn how to determine if your business is setup for maximum profit and productivity. The point of this exercise is to point out that no one can manage themselves. No matter how entrepreneurial someone is, if they have a boss, they need direction. Period.

Another commonality is goal-setting, though the way that goals are set can be different. According to a Yale study from 1953, the 3% of graduates who had written goals had amassed more wealth than the other 97% of classmates years after graduation. So regardless of your personality, written goals are extremely valuable.

Everyone should have written, measurable, time-sensitive goals. Those goals should include levels of education, income, savings, type of work, family matters, travel ambitions and everything in between. I’ve gone as far as to make a list of all of the motorcycles I’d like to own in my lifetime. Several are already checked off however the list seems to be growing faster than I can control at the moment.

Now most people have a general “big picture” idea of what they want. Things like, I want a family, I want a job that I love, I want my kids to respect me, I want to retire at 65 with $2 million dollars, I want to see Paris, etc. etc. etc.  Now if you have all of that written down and you reference it often that’s a BIG step in the right direction. However you can do better. Here’s a quick 3 step process to setting goals:

1. You need to put everything into Do x Be = Have perspective.
2. You need to assign time frames.
3. You need to take into account your entrepreneurial or intrapreneurial tendencies.

The 3rd item is what we’ll address right now. As an extreme entrepreneur, my goals have time frames, but they are honestly relatively vague. For instance, in my lifetime I want to own at least 5 businesses, become a “young millionaire”, and write at least one book (though I have 4 in mind at the moment). As an entrepreneur, my immediate goal is to always find the best opportunity right now. That means in the next 12 months, I may write the book, buy another business, or get more schooling to help me learn more of the things that millionaires might know that I don’t. My point is, that my personality thrives on making the most of the moment. So instead of saying “I want to write a book by 2011″, I work on all of my goals at once and then go after the opportunity that’s best today, this month, or this year. In 2010 that may be writing that first book, or it may be visiting all the countries on my goal list, or it may be the next business. I’ll be working on all 3 and choose the path that is best at the time.

So how is that different than an intrapreneur? Intrapreneurs are more of the details individuals. They need specifics and they need specific time frames and they need a specific way to get there. Whereas I just need a “big picture”, an intrapreneur needs smaller goals to help achieve the larger ones. So if we take the same example of becoming a “young millionaire”, the successful intrapreneur will have a more specific goal list to achieve those goals.

For instance, their sub-goals to achieve the goal of becoming a millionaire might look more like this:

1. Buy a business with vendor financing in the next 12 months that has the potential to double in profits within a year with only the $5,000 I can drum up from selling my stuff and from savings. I must pay no more than annual cashflow plus assets for the business. It must have the possibility of paying me enough to live on while I’m growing it.
2. Build the business for less than 12 months and relist it on the market. It must have the potential to make me $100,000 profit when sold.
3. Reinvest the $100,000 in another business under the same criteria but with the ability to potentially sell for $300,000 profit within a year.
4. Of the $300,000, put $50,000 into down payments on cash producing real estate, $50,000 into the stock market and the other $200,000 into another business with the potential to be sold for $500,000 profit within 1 year.
5. Reinvest as much as necessary into a business that can either produce sufficient cashflow to make me a millionaire within 2 years of can be sold for $1 million in profit. The rest will be split between additional real estate and securities.

Why does the intrapreneur need so many sub-goals? Because something vague like “become a millionaire” seems so daunting an unattainable however when you break it down into small steps with specific time frames and details it becomes a whole lot easier for them to accept. Entrepreneurs can often feel much more comfortable and in-their-element with goals that are more vague. The exact details can at times make us feel trapped. That being the case is a detailed list bad for an entrepreneur? Of course not. As long as he can appreciate that it’s a guideline and the numbers and time frames will never be exact.

So my last question is, how does this help leaders better lead their teams?

As leaders, it’s our responsibility to provide progress reports, to develop job descriptions, and to help develop goals for team members within your organization. By now, I hope that it makes sense that those job descriptions, review sessions, and goal-setting meetings might be quite different for the 2 basic personality types.

To you success in providing the foundations of the common ground, Bryan

P.S. If you’re curious why my steps to becoming a young millionaire are primarily contingent upon buying, building, and selling businesses check out my blog on the topic.

Now let’s clarify our goals by answering a few questions:

1. How much money do you want to make?
2. How much time do you want to spend working once your business is done?
3. How much time are you willing to spend building a business?

1. How much money do you want to make? Let’s say you want to make a million dollars per year. That’s over $83,000 per month, $19,230 per week, and $2740 per day. Would that satisfy you? If not, add your number in here. It helps to figure out and visualize EXACTLY how you’re going to spend your $2740 per day. The mind doesn’t know the difference between dreams and reality so start conditioning your mind now for that lifestyle and it’ll be a lot easier to get there.

Now that you have a target, here’s how you’re going to get it. Become a master at business and start searching for great businesses to buy and grow. If you want a million dollars, all you need to do is own a business that does $5 million in sales per year with a net profit of 20%. Twenty percent of $5 million is $1 million. Or find a business that does $10 million in sales with a net profit of 10%. Ten percent of $10 million is again $1 million.  I wouldn’t look for a business that can’t accomplish at least a 10% net profit.

2. How much time do you want to spend working once the business is done? – Some people like to work and there’s nothing wrong with that. I work extremely hard right now, but it’s not because I have an unhealthy infatuation with it. If I had a trust fund I’m sure I’d be investing in businesses but I’d also be traveling, racing, engineering, and spending a lot less time working… Eventually I’d like to work less than 10 hours a week without ever coming into the office. How about you? If you’re going to buy a business and be the service leader, sales leader, and customer service representative then you’re never going to get out from under it. The only things that can truly be done remotely are marketing and communications…  If you’re an owner taking on more then marketing and communication with your leaders then either plan to delegate or find another business. The other option is to sell your business once completed and live off of interest or rental properties…

3. How much time are you willing spend to build a business? Let’s face it, if you want to make a million dollars per year, it will probably take a bit longer than if you’re happy with $100,000. So if you’ve educated yourself, have some money saved up, have some decent connections, and already know how to negotiate, you can probably be making $100,000 per year within 2-3 years. Less if you’re really good. To turn that into a million per year will probably take another 5-7. Michael Masterson even wrote a book called Seven Years to Seven Figures: The Fast-Track Plan to Becoming a Millionaire which is worth a read. Realistically if you can do what you want with $10,000 per month, then why keep on working to make that $80,000 per month? Do you really need that much to enjoy life? If so, go for it.

There’s really only one trick to this… If you HATE business then forget about it. You’ll never be an expert at something you hate and obviously to achieve these goals you have to become an expert. If you only kinda like business then go for it. You’ll be amazed at how much more you’ll enjoy it when you start making regular deposits into your bank account.   Keep in mind, the business building doesn’t have to be your life – it’s just a means to an end if that’s what you want it to be. Determine what you want right now, though, before you get started!

Now that you have your clearly defined plan, you need to put it into action. Sell your PS3 and X-box, get rid of your television, and get to work. If you aren’t willing to make the sacrifices that provide you with the knowledge you need to make this goal a reality it’ll never happen anyway. The old fashioned way isn’t easy. It’s real work but with a real payoff. In my mind I’d rather work 80 hours per week when I’m in my 20′s so I can have some freedom later in life then work 40 hours per week for the next 40 years and have “nice” stuff all along the way. If you’re not willing to make that sacrifice, then just stop now and enjoy your 40 years in the work force. That doesn’t make you better or worse then me – just different. Granted, in my first 9 months at the businesses I’ve purchased I’ve spent over a month out of the office on trips. Some were business trips and some were vacation. I worked during all of them with the help of some technology, however I also had a lot of freedom to do other things. So, though I work really hard when I’m in town, I haven’t exactly given up my youth for the promise of a bright future. Life’s too short for all that. I have more freedom and time to enjoy life now then I have ever had while working for someone else.

Just today when I was coaching 1st and 2nd graders basketball, Andrew walked up to me and said “Coach, you should get a job like my dad.” “Oh really who does he work for?” “I don’t know but he can work whenever he wants he just has to let his boss know.” “Wow, that’s awesome Andrew, but I don’t have a boss.” His eyes got real big like only a 7 year old’s can – “So you can work whenever you want?” Laughing, I responded simply, “Sure.”  A 7 year old understands the greatest part of being your own boss is your freedom – do you?

To your success, Bryan

The first 3 steps to becoming wealthy are:

1. ALWAYS spend less than you make.
2. Understand the difference between where you are and where you want to be is EDUCATION.
3. Put your goals into the Do x Be = Have context.

If you cannot do any one of these three things, then you will either never become wealthy or your only chance of acheiving great wealth is inheritance or the lottery. For the latter, you will most likely squander whatever you’re given anyway, since you don’t know how to spend less than you make no matter how much you make.

1. Always spend less than you make. Time and time again you hear people, couples, children, etc. say if they only made another $5,000 per year or got that raise they needed everything would be fine. All the bills would be paid and they’d be out of debt in a jiffy. So what happens when they get the raise? They buy a new house, a new car, a new flat screen, etc. because they need those things and now they can afford it. Do NOT fall into that trap. If you cannot survive for the next 3-6 months with little or no income, then you have a problem. If your goal is to be wealthy, your FIRST step in that direction should be to have enough money in savings or other liquid assets to survive for 3-6 months with little or no income! If you cannot manage your own finances well, you will never be able to manage 2 or 3 or 100 times that much money for a business. Conversely, if you understand how to manage your own cashflow, translating that to business is a cinch.

Before buying my first business I had about 5 months where I only worked part time. At that time I owned 2 sports cars, a beautiful house with a 3-car garage, 1 motorcycle and the normal stuff you’d expect from a bachelor.   At the end of the 5 months I was down to 1 sports car (that I refinanced to lower my monthly payments), no motorcycle, and a whole lot fewer motorcycle and car parts then before. I needed to turn those possessions into liquid assets to pay my bills. The lawyer bills alone from the business purchase were more than I made on the sale of my car and motorcycle together! If an opportunity presented itself, would you be able to come up with the necessary cash to make the investment? Even if it’s as simple as buying and reselling a vehicle because it’s such a great deal.

2. Understand the difference between where you are and where you want to be is EDUCATION. Rich people know something that you don’t. What is it? Maybe it’s how to buy, build, and sell a business. Maybe it’s how to invest in real estate. Maybe it’s how to master the stock market. Maybe it’s negotiating skills, or public speaking talents, or simply how to find the best deals. The reason they have more money than you is because they know more than you about generating wealth. So how do you bridge that gap and learn what they know (and much more)???  Start with The Best 6 Books to Teach you how to Generate Wealth and then spend some time on my recommended reading selections. If you want the quickest (though still incomplete) lessons to get you up to speed, read my blogs. It will be worth the time and the price is right.

3. Put your goals into the Do x Be = Have context. Obviously you need to read my blog on the topic to understand the full scope of this algorithm. However, a quick summary is simply this: know what you need to Do to become who you need to Be to get what you want to Have. In other words don’t just set goals, set the correct goals!

As a quick example of this, to purchase my business I needed 2 assets:

1. The cash (including the vehicles to sell to generate the cash) to pay the lawyers and support myself.
2. The knowledge to convince someone else to lend me the rest.

Moreover, I knew becoming a business owner was putting me on the right track to become who I needed to Be to obtain what I wanted to Have. Which is ultimately why I buy, build, and sell businesses.

To your success in generating wealth, Bryan