If someone is successful, often the reason is attributed to his/her ability to “think outside the box.” This adage seems to me to be greatly misunderstood! What IS the true meaning of this saying? This episode contains three powerful truths to impact the way you think about your business. Learn how to build a strong foundation for success. And live the dream of every business owner – force yourself to make good decisions and protect yourself from making stupid ones.
Often, I have heard this statement, “Oh, that person is so successful because he/she really thinks outside the box.” Therefore, we are encouraged to follow that example to ensure our success. Are successful people just living a life outside of all boundaries, rules, and constraints? Is that the meaning of “thinking outside the box?” Nothing could be further from the truth! In reality, the life of no rules or constraints, doing whatever you want whenever you want is the definition of an unsuccessful, frustrated, and unhappy person. Successful people do not think outside the box. Successful people just make a bigger box. The most important ingredient to your success is the rules and constraints you place upon yourself. Those boundaries will force you to make good decisions and protect you from making stupid ones. Here are three boundaries which I think are vital for any business to be successful.
#1. Make a conscious decision that your business is going to be profitable every single month, with one exception. To be profitable every month means:
>You are going to make profitable decisions and give up a little bit of long-term value to get short-term profit.
>You aren’t going to spend more money than you make.
>You won’t get investors who share your profit because they’re putting in equity. That will dilute your profit.
>You hire people who are gong to make you money.
>You sell people who are going to be profitable clients.
>Make profitable decisions every single day.
Then you will be profitable every single month. This is not necessarily the way big businesses are built. But it is the way you build a profitable business where your personal income is heavy six figures.
We read or hear stories of someone building a billion-dollar business. The stories relate going into big debt to get capital and investors and money to build the mega-business. However, the stories often fail to relate that the mega-business owner was making $200,000 a year at his job or built a business making $300,000 a year as a consultant or was in sales making $150,000 a year before building the billion-dollar business. Most success stories were preceded by somebody making a heavy six-figure income. That’s why they had the money and connections to build that mega-business.
The one exception I mentioned is borrowing money to spend more than you make IF using that money directly to purchase more recurring revenue with a proven marketing system. Consider this example: Reinvest the money into a Facebook marketing campaign. Pay $1000 to someone like Modeo Media to make a nice video and $300 – $400 on the video. Then run the math. Perhaps for every $160 spent, you get a lead. For every five leads, you get a sale. Thus, you pay $500 per sale. Repeat this often enough to be confident with the model. Then borrow $10,000 so you can buy forty customers. So, the exception is only if you borrow money to buy customers using a proven marketing system. In this example, the money will come in right away to pay that debt. However, don’t borrow money to pay for payroll, some new internet service you want, or new software that is cool.
#2. Work a certain number of hours every week. Work on certain things a certain number of hours every week. This is a constraint that must be in place! If I ask what hours you work tomorrow or next week, you should be able to answer that right away. There are times when you may adjust your schedule. Last summer when my wife had time off from teaching school and we had good income, I was able to take more time off myself. However, even during that time I DID have set hours; I DID have a job. My wife knew what hours I was working. Some need to take that a step further and designate the number of hours spent on each activity which is crucial to your business. For example, “I work these hours in the field. I spend this amount of time on the phone prospecting. I work 25 hours a week walking into businesses I’ve never walked into before.”
Make your box and stay inside it! To redefine the box is okay. To get outside the box is NOT okay. Learn to understand the difference. The rules and constraints protect you from making stupid decisions, losing tons of money, and ruining your relationships. Don’t think for a minute that successful people tear down all the walls and constraints in life. They just make their own rules. They create their own box.
#3. Pay yourself as an employee. Even if you are the only person in your company, create a company and pay yourself as an employee. You will be amazed what this does to your attitude! This is also one key element in knowing if your business is profitable. Some of you think, “This year I’m going to make $100,000.” That’s a great dream, but make it a goal by deciding how to accomplish it. Pick an amount of money and make that amount. Then you can pay yourself a monthly profit distribution if you have extra. If your business is very profitable, you can make the decision to pay yourself more money! Talk to your CPA about the best way to structure that for tax advantage. If you are not an employee of your own company, you are making a huge mistake and are not believing yourself enough. Eventually if you want to hire more people and build a real company, you’ve got to be set up to employ people. Get a payroll processing service. Have them pay your taxes. To be an employee is so nice!
Work a certain number of hours and decide to be profitable every single month. These are a sample of my rules which may benefit you. Perhaps you say, “James, I don’t know about those rules of yours.” That’s fine; make your own! Just be sure you have rules, constraints, boundaries. That, my friends, is the key to your success.