Shifting From Employee To Entrepreneur Mindset
As employees we have all been trained, Pavlov style to work hard and then expect our reward, known as a salary package. The same experience taught you to expect two days off after every five working. Salary thus measures the value of your hard work and thus represents status and recognition level. You learn to judge success by the salary someone receives. If you see someone with an upmarket car or house, you wonder what job they do to have those possessions.
The answer, of course, is that the wealthy receive their unearned income, or not directly earned at least. They have other people or things working for them. Notice how the famous British entrepreneur Sir Richard Branson is always embarking on adventures, balloon trips and the like, and yet his businesses still flourish. He is not on the highest salary in Britain and none of the written works on him suggest anywhere that a high salary was his goal. His wealth does not come through salary. Imagine a race between you and me right now. The challenge is to see who can dig the biggest hole in one hour.
You go first, pick up the spade and get digging fast, taking no pauses for breath in the whole hour. I pick up my spade and pass it to ten rather big guys who start digging.
Sorry, I won!
Ridiculous example, showing how ridiculous you are trying get rich by digging the hole all by yourself. I let you off easy: next time I am going to hire a JCB for each of them. It’s a simple business principle that the Americans call leverage. It is why very few people get to be rich before 65, if then, by working for someone else. That is why you should stop digging and make better plan.
In the world of the entrepreneur, the main measure of success ‘ profit. Having a flash car or a plush office, is not a measure a success, it is the measure of someone who wants to be seen a successful. They are hangover habits from being an employee, uniform you need to change as you escape.
It can take any adult less than five minutes to register a company online and appoint themselves as Managing Director and main shareholder. I see so many people rush to the printers to have their new status printed on their cards. It counts for nothing and is really dangerous as your thinking is still in a world where titles count for something.
Entrepreneurs are quite like farmers: they till the soil, they plant the seed, they pray for rain and, if all goes to plan, they still know they will have no income for several months. So when they do have a good crop they store some resources to get through the lean periods. They know that work today will be paid several months, even years, into the future. I am not surprised that, although I did not know beforehand, two of the successful entrepreneurs I interviewed were brought up on a farm. I think that good business lessons, which the rest of us had to learn, were ingrained in them at early age.
Employees say, ‘How can I pay my mortgage, bills, live, while am building a business if I don’t raise finance to cover this?’ am not going to answer that question because it is the wrong question. You need an entrepreneur mindset and when you have this you will stop asking this question. You need to start thinking like someone in business to make a profit and grow capital wealth. You will find ways to cut costs and get sales ‘ fast. You will find ways to make a smooth transition. You need to realize that the house you live in is not an asset. You need to realize that paying off the mortgage should not be your top priority. Don’t you find it interesting that property investors tend to prefer interest only mortgages? Why do you think that might be? Could it be that they are using mortgage finance as leverage and thus want as much of it as possible? See, it is a different way of thinking. Again, ‘How can I pay my mortgage off in two years?’ is the wrong question.
An asset is something that makes you money, a liability is something that costs you money. Focus on building assets and reducing liabilities and you will do fine in business for yourself. Your house and car cost you money; shares, businesses and rental property make you money. I suggest you read Robert Kiyosaki’s book Rich Dad Poor Dad to explore this point further.