Most people get business wrong.
Some take it as only a tool to earn as much money as possible to fulfill their desires. These are people who, as buyers, always look for the best deals.
However, as business owners, they think people are obliged to pay them top dollar for their crappy products.
Then comes those to whom business is an absolute impossibility. It’s too risky, too hard, and ‘morally’ wrong. After all ‘money is evil,’ remember?
So they go back to their 9-to-5 jobs to earn money, working for (you guessed it) some form of business.
But why so? Why are most people trapped between over-optimism and excessive pessimism while burning their chances to ashes?
It’s not only because they get business wrong but because they get money wrong. Also, our schools not teaching us basic concepts like personal finance and critical thinking makes it even worse.
Now, that’s sad.
Especially considering you can solve most of your financial and career issues by learning how business and money really work.
It doesn’t matter whether you are an employee, business owner, or self-employed. It can change how you conduct your work.
Here are a few nuggets of wisdom from the ones who have mastered the art of business.
Trade money for time, not time for money. You’re going to run out of time first.
— Naval Ravikant
Let me ask you something. What does your money equation look like? I bet it looks like “Hard work × Time = Money”
So what’s the game plan? Work hard over for years and to save a fortune? Well, here’s what you are not seeing:
- The actual value of the money you are making= {Your gross income -(Living cost + Taxes + Loans)} / Inflation
- The actual time you are trading in= Duty hours + Overtimes + Years of studying + Recovery time from the burnout
In this equation, you are setting yourself up to fail by undervaluing the true worth of time (the only asset you can’t buy back with money).
Everyone, no matter who they are, where they are, or what gods they pray to, have 24 hours a day. Not an hour more, not an hour less.
Therefore, how do you use your time, and what kind of jobs do you prioritize to make all the difference.
Money is like a mischievous cat; if you chase it around the neighborhood, it eludes you. It hides up a tree, behind the rose bush, or in the garden. However, if you ignore it and focus on what attracts the cat, it comes to you and sits in your lap.
― M.J. DeMarco, The Millionaire Fastlane
There’s another problem with trading all your time for whatever easy, frequent, yet little rewards you can get your hands on.
In this approach, you are always chasing money instead of focusing on why you are getting paid.
As DeMarco rightly points out in this book, you don’t get paid for how hard you work. It’s more about what problems you solve for your payers.
There are two steps:
Step1. Solving problems: We all are solving problems for our respective markets. An employee is providing some solutions to their employer. On the other hand, a business solves problems for its target audience. That’s why they get paid.
Step 2. Being scalable: Solving problems isn’t enough. You also take into account the aspects of supply-demand, profit-loss. Want to make big bucks? Then, your solution needs to reach a large scale of people.
By working hard in a job or a geographically restricted business, you are not scaling your opportunities. Instead, creating some niche products and distributing them to different states or even countries is much more scalable.
Sweat equity is the most valuable equity there is. Know your business and industry better than anyone else in the world. Love what you do or don’t do it.
— Mark Cuban
Why do I love this quote? It’s because it dismisses one of the most widespread business myths.
If you haven’t noticed yet, there’s a popular opinion that your life will instantly get better by following your passion. However, that isn’t the most efficient attitude to go about things.
In fact, you are better off loving what you do instead of doing what you love for a career. Car Newport expands upon this in his book So Good They Can’t Ignore You:
Passion mindset: When you focus on your passion, you ask, “what can the world offer me in exchange for my qualities?”
Craftsman mindset: Here, you ask yourself, “what can I offer the world?” And then you acquire the necessary set of skills to be better at your job.
It ties back to the previous quote. The market doesn’t care how passionate you are. It only cares about its own needs. So, you stand a better winning chance by ditching the passion mindset for a craftsman one.
“The big question of our time is not Can it be built? but Should it be built?”
― Eric Ries, The Lean Startup
What if you have a product idea, a target audience, but a tight budget. How do you know if the project is worth investing in or not?
You can’t just launch the product. It would be too costly. If it fails, it will take you down for good.
So you need to know if there is a market for what you are out to sell. How to do that? Focus on testing your products in the market before deciding on mass production.
Frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.
— Jeff Bezos
Having solid finance backing your venture up is an unfair advantage. Not everyone has that luxury. However, such constraints can be a blessing in disguise. And not everyone gets that.
If you are having a hard time getting through such unfair constraints, here’s something that might interest you.
Read More: How To Be a Winner and Not a Whiner: The Only Mindset Shift You Will Ever Need
We assume that multimillion-dollar companies are turning big profits, but it’s rare to find a truly profitable business.
― Mike Michalowicz, Profit First
Being big and being profitable aren’t always the same.
In reality, most startups reinvest most if not all of their revenues back to expand their business. The idea is that as the company grows, it will come back with much higher returns.
It might sound right, but it’s not. If the sales go down after your premature expansion, it will hurt your revenue. All the while, your expenses will stay the same.
So it’s a healthier as well as safer habit to set aside your profit from day 1 instead of after 10 years.
With failures, you learn one of 99 things to avoid. So they are not that useful. I think it is more useful to learn from others’ failures.
— Reed Hasting
Can you win a boxing tournament without getting punched in the face?
No.
In fact, the ones who reach the final receive much more punishment than those who gave in during the eliminators.
The same goes for businesses & entrepreneurship. The longer you want to rule, the longer you will have to deal with potential failures.
Without failures, there is no growth. Without obstacles, you never learn to work around them. Failure is inevitable.
However, if you want to minimize your losses and learn more without failing, you must get better at learning from other people’s mistakes.
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