Why, start with Why? Part 4
A four part series on how defining your why can make significant changes to career paths and business decisions.
Part Four – Some Tools for success – these are simple ideas that can be incorporated into daily routines that will make the job of success easier.
Me, Inc. – This idea comes from Col. Rolf Smith and was introduced in Part two. If you are not incorporated as a business entity you may want to consider doing that soon, but also you want to think of yourself as an incorporated entity, (whether you are incorporated or not) Use this mental concept to your advantage to find solutions and help set goals.
SWOT Analysis – Determining your Strengths, Weaknesses, Opportunities and Threats, another of the concepts that was emphasized by Jim Collins in his books Good to Great and Great by Choice that can be applied to just about every situation and will help determine what the plan of action will be. If you are not sure about your strengths you can take an online quiz for free that will help.
Creating a procedure to solve a problem – Peter Drucker, the father of modern business management, said that if you have a problem, create a procedure to deal with it and you no longer have a problem. That is a good lesson to keep in mind regardless of what you do. If you grasped the concept of Me Inc. you are going to treat yourself like a business and when you do that you can see how the lessons learned from men such as Drucker can be applied to your life regardless of what you do from a career standpoint, whether you work for someone else or if you are the entrepreneur that creates the business model and sees it to success.
Develop your business plan – The biggest hurdle for Me Inc. is going to be financing the idea. You can turn to friends and family to help and you can go to institutions such as Community Futures, BDC, Credit Unions and Chartered Banks.
The first thing they will ask you for is your business plan. This is your pro-forma of what you think your business will generate in income and what expenses you will incur and of course how you are going to pay them back for loaning you money. There are templates you can use to create these, both Community Futures and BDC have them just Google those two and they will be readily available.
Several organizations such as Community Futures provide courses for little or no cost on business management techniques and how to secure financing for projects.
Become a student of great management books – You can download for free many of Peter Drucker’s textbooks from the Drucker Institute. Others you should be reading are Jim Collins, Amanda Lang, Arianna Huffington, Chade-Meng Tan, Simon Sinek and Malcolm Gladwell to name a few. You can take free courses or sign up for free newsletters from Stanford School of Business, and other major business schools. Many top universities offer free on line courses that help develop the skills you will need, take advantage. Subscribe to Inc Magazine, you can get it in the print format or on line, another great source of material on developing business skills. Subscribe to Ted Talks, its free and you can get an amazing education at no cost.
It’s not what you earn but what you keep that is important – If you can grasp this one concept your success will be assured. Unfortunately you didn’t learn this in school. Ten percent of everything you earn is yours to keep. This should be a rule that is never broken. If you receive a paycheque, or if you are self employed it doesn’t matter, take 10% of every dollar earned and invest it. Start with a savings account and from there move to other investments. Put it somewhere where you can’t touch it. This is not an account to accumulate your Vegas holiday money; this is accumulating the wealth that you hope will allow you to not work in the future.
Ninety five percent never learn this one skill and they always work for the five percent who did. It doesn’t matter what your source of income is, you have to save the first 10% and invest it in something that will generate income for the rainy day or for your old age. Get a good advisor, advice will cost, but it is worth it, if you pay an advisor one per cent and he or she makes you seven per cent and helps you survive the inevitable rough patches along the way then that is money well spent.
Your banker is not your financial advisor – This is important, the banker is the financier of your business; their job is to make money for their employer. They do not have your best interest in mind when you borrow money from them so why would you ask them for advice?
Learn the rule of 72 – Another one of the secret formulas that you didn’t learn in school. The rule of 72 says that whatever the interest rate is, divided into 72 determines how long it takes for a dollar to double. Or conversely how long it takes to pay back one dollar borrowed. It is the principle of compound interest, what Einstein described as the eighth wonder of the world. If Einstein thought it was that important don’t you think it might be a good idea to pay attention to it as well?
Here’s an example of the impact of compound interest on Me Inc. Let’s assume for a moment you have taken my advice, you are saving 10% of everything your earn and you are earning six per cent on your investment. Therefore when we apply the rule of 72 that means that for every invested dollar to double to two dollars takes 12 years. (72/6 = 12) However it only takes six years to add another dollar and three to add another dollar and 18 months to add another dollar. That is the magic of compound interest, if you have patience, stay invested, never touch the investment, reinvest the earnings and consistently save the 10% every month, it won’t be long before your investment income will equal your earned income.
The problem and why you need an advisor is that the process is boring and you will be tempted to look for a greater rate of return which means you have to start over and instead of a nice steady growth it is more like skiing in a mogul field up and down, up and down. Having an advisor protects yourself from your own boredom.
Manage risk – Me Inc. is a money machine, you will generate income by some means. You insure your house and your car against loss, you need to also insure your money machine, i.e. You, against living too long, dying too soon or becoming disabled. This doesn’t have to be expensive but it is necessary, it provides the means for those who depend on Me Inc. to carry on. It can also means that all you have worked to achieve will remain in place even if you can’t be there.
The five list – This simple idea can make a difference, it is not a to do list. Charles Schwab, the President of US Steel, paid $5,000 for this idea in 1900. Toyoda taught it to all his executives. What works for them will be invaluable to you. At the end of the day before you leave the office, or if all else fails before you go to bed, write down the five things you are going to do tomorrow. No more than five, you can’t handle more and you don’t want to confuse your subconscious mind. It’s that simple, you will be amazed how much you get done and how many will already be solved when you wake up.
A good example of this is my own personal experience. I like to set aside a morning a week to work on my business not in my business. It doesn’t always happen but I do try to schedule it. Before the end of the previous day I always try to write down the five things that need doing the next day. One evening I wrote down that I needed to write three letters, they were important letters to be mailed to clients. I set aside the next morning to get this done, knowing I had an appointment that I had to attend at noon.
The next morning I was awake at 5:30 a.m., the letters were written by 6 a.m.! It was amazing, the words and ideas just flowed, in no time at all the drafts were done and forwarded to my two associates for comment and input. That left me with six hours free for other pursuits.
The Five Why Questions – Eiji Toyoda, the founder of Toyota Industries which is the parent company of Toyota Motors, developed a concept that he maintained would find the solution to every problem, simply by asking the question why, five times. He taught all his executives to use this problem solving method, you may want to incorporate it into your own procedures. It will have amazing results.
Asking the question “How to…” This simple idea allows you to define the relevant word in the problem and that will lead to more effective solutions. For example, “How to come up with a solution?” The “a” is the relevant word; it blocks the solution by implying that there is only one solution when in fact there may be many solutions.
Take time to smell the roses – If you are working more than 60 hours a week on Me Inc. you are sacrificing either your family time, recreation or sleep. You cannot sustain that pace without something coming apart, your health, your family or your sanity. You have to maintain a balance, it is essential and you will be more successful if you will not sacrifice these other important facets of your life. Arianna Huffington, the founder of the Huffington Report, talks about her own experience in the book Thrive, you can also find an interview with Arianna at Inc magazine where she talks about her own experience and the impact of overwork on her life.
Sharpen the saw – Take time to attend seminars, study , take courses, or just to read a good book. Staying sharp is essential to your success. The analogy is to a lumberjack, he will cut more trees in a day with a sharp saw than he will with one that is dull. The only way that he can maintain optimum performance is to take the time to sharpen the tools. This same principle applies to you regardless of what you are doing.
Be patient with yourself – There are no unrealistic goals there are only unrealistic expectations. It doesn’t matter what we decide to achieve in life the road to success will be long, filled with twists and turns and expectations will often be that more can be accomplished with the time allotted than is possible. That does not mean that the goal is not worthy it is just takes more time to achieve. The example of the Wright brothers and their determination to make absolutely sure that when they finally did demonstrate to the public their ability to fly there was no chance of failure. Despite the fact that politicians and the press were constantly maligning them as frauds and cheats for not being willing to provide proof of their achievement. The best antidote is to start with realistic expectations in the first place and to be very happy with the results.
Mindfulness– Learn to meditate, you can find a number of website’s on the subject by searching Mindfulness and by reading Search Inside Yourself by Chade-Meng Tan. It is simple as sitting quietly and focusing on how your breath for a few minutes every day.
Take the step, Start with Why and enjoy the journey.
– Colin J. Campbell, CFP, CLU, Ch.F.C. is Managing Partner of Guidance Planning Strategies Ltd. in Cranbrook; he can be reached at [email protected]