Chapter 6
What does ‘Making Money’ Mean to You?
What does ‘Making Money’ Mean to You?
Although the words used may be identical, what people lacking prosperity consciousness (‘poor’ people) mean when they talk about ‘making money’ is worlds apart from what the ‘rich’ (people with a prosperous mentality) mean.
The ‘poor’ person looks for additional ways to do the only thing they know - that is, to sell more of their time. They want to get a second job, do some jobs on the side or do more overtime. In other words, what a ‘poor’ person is looking for when they talk about making money is working longer or harder. Their concept of making more money may include asking for a raise or looking for a higher paying job. Nevertheless the result is still the same. What they earn is directly related to how much they can sell their time for. A ‘poor’ person is only interested in increasing their income. This type of income is called active linear income because it comes from their personal exertion.
A ‘rich’ person on the other hand is interested in creating more wealth when they talk about making money. They are more interested in working smart than hard. They are not interested in selling their time because they are looking for greater leverage from their efforts. In other words, they are looking for large results from the least amount of effort. They are looking to increase their assets rather than their income. They understand that working longer and harder is not the answer to making money.
John Paul Getty who was once the richest man in the world, pointed out that you will never become rich working for someone else. Getty once wrote: there are six requirements that must be included in your plan for success . . ."
He listed the following points:
1. You must be in business for yourself
2. You must sell a product that is in demand
3. You must guarantee that product absolutely
4. You must give better service that the competition
5. You must reward those who do the work
6. You must build your success upon the success of others
After I finished school, I went on to study accountancy and economics at university. I then went to work in an accounting practice for three years and qualified as a chartered accountant. I still remember how we had to fill out time sheets and account for every fifteen minutes of the day. If our time was not chargeable to clients, we had to allocate this time to a special account which our managers would scrutinize carefully. If our chargeable time fell below a certain percentage, we were asked to explain how we were spending our time and what we would do to increase our chargeable time.
I think this clearly illustrates the concept of selling your time. My value to the firm was in how much they could sell my time for - every fifteen minutes of the day. As I was promoted through the ranks, my value to the firm increased because they could charge more for my time. What was even more interesting was that it was an unwritten and accepted practice that we would work overtime (for which we were not paid since we had salaried positions) and the firm would obviously charge out this time to their clients.
Much to the amazement of my colleagues and superiors, I resigned from the firm the day I qualified. While they were busily selling their time to the firm and clambering over each other to climb to the top of the corporate ladder, I knew where I wanted to be. I wanted to be an entrepreneur. I wanted to be in business for myself. I wanted to play the game of business, taking risks and enjoying the spoils, rather than just recording how other people made money.
You see, I looked around at the partners in the firm I worked for and realized that as ‘owners’ of the firm they were still selling their time. When they were invited to become partners, they had to take out a huge new mortgage and pay for the privilege of selling their time until they retired from the firm. They were certainly paid well; however, they were not really creating wealth by being in business. They were not creating an item and selling it many times over. Their earnings were related to the amount of chargeable time they generated. Their income was still tied to their personal exertion even though they were considered to be at the ‘top of the tree’.
I wanted to get off this treadmill as soon as I could.
It makes no difference whether you are selling your time because you are employed in a job, or have your own consulting business or professional practice. Even though you may be paid well, you will not get rich from your activities if you are not building a valuable business asset to sell. You need to create wealth through your business. If you depend on your ongoing ability to sell your time to maintain your lifestyle, your business is centered on yourself and your personal efforts.
The world’s most valuable businesses make a product once and then sell it over and over again. Packaging and leveraging time is the quickest and smartest way of making money. Making the product once and selling it again and again allows you to earn ten times, 100 times, even thousands of times what you could earn by selling your time. Most importantly, your business becomes a very valuable, saleable asset as a result.
Think about Microsoft or Ford. They spend a lot of time and money developing their products and then they sell them over and over again according to their business system. Think about the time, effort and money McDonalds have invested in their system which makes and sells millions of hamburgers every day. Their system is so well organized that the owners of the business do not need to work in the business to make money. Their system is largely staffed by 16 year olds who have been trained to follow the McDonalds system without deviation.
Probably nobody would argue that McDonalds serve wonderful meals. What they offer is fast food served quickly from clean premises consistently around the world.
What makes McDonalds a valuable business asset is its systems. Nothing is left to guesswork. They have systems and procedures documenting just about everything from store design and layout, production procedures, administration, distribution, staffing, customer service, sales and marketing and all other aspects of the business. This is what makes the McDonalds system duplicatable around the world and allows the owners to leverage their time and skill.
Can you see the difference between earning an income and creating wealth?
Can you see what ‘rich’ people look for when they talk about making money?
What does making money mean to you?
The ‘poor’ person looks for additional ways to do the only thing they know - that is, to sell more of their time. They want to get a second job, do some jobs on the side or do more overtime. In other words, what a ‘poor’ person is looking for when they talk about making money is working longer or harder. Their concept of making more money may include asking for a raise or looking for a higher paying job. Nevertheless the result is still the same. What they earn is directly related to how much they can sell their time for. A ‘poor’ person is only interested in increasing their income. This type of income is called active linear income because it comes from their personal exertion.
A ‘rich’ person on the other hand is interested in creating more wealth when they talk about making money. They are more interested in working smart than hard. They are not interested in selling their time because they are looking for greater leverage from their efforts. In other words, they are looking for large results from the least amount of effort. They are looking to increase their assets rather than their income. They understand that working longer and harder is not the answer to making money.
John Paul Getty who was once the richest man in the world, pointed out that you will never become rich working for someone else. Getty once wrote: there are six requirements that must be included in your plan for success . . ."
He listed the following points:
1. You must be in business for yourself
2. You must sell a product that is in demand
3. You must guarantee that product absolutely
4. You must give better service that the competition
5. You must reward those who do the work
6. You must build your success upon the success of others
After I finished school, I went on to study accountancy and economics at university. I then went to work in an accounting practice for three years and qualified as a chartered accountant. I still remember how we had to fill out time sheets and account for every fifteen minutes of the day. If our time was not chargeable to clients, we had to allocate this time to a special account which our managers would scrutinize carefully. If our chargeable time fell below a certain percentage, we were asked to explain how we were spending our time and what we would do to increase our chargeable time.
I think this clearly illustrates the concept of selling your time. My value to the firm was in how much they could sell my time for - every fifteen minutes of the day. As I was promoted through the ranks, my value to the firm increased because they could charge more for my time. What was even more interesting was that it was an unwritten and accepted practice that we would work overtime (for which we were not paid since we had salaried positions) and the firm would obviously charge out this time to their clients.
Much to the amazement of my colleagues and superiors, I resigned from the firm the day I qualified. While they were busily selling their time to the firm and clambering over each other to climb to the top of the corporate ladder, I knew where I wanted to be. I wanted to be an entrepreneur. I wanted to be in business for myself. I wanted to play the game of business, taking risks and enjoying the spoils, rather than just recording how other people made money.
You see, I looked around at the partners in the firm I worked for and realized that as ‘owners’ of the firm they were still selling their time. When they were invited to become partners, they had to take out a huge new mortgage and pay for the privilege of selling their time until they retired from the firm. They were certainly paid well; however, they were not really creating wealth by being in business. They were not creating an item and selling it many times over. Their earnings were related to the amount of chargeable time they generated. Their income was still tied to their personal exertion even though they were considered to be at the ‘top of the tree’.
I wanted to get off this treadmill as soon as I could.
It makes no difference whether you are selling your time because you are employed in a job, or have your own consulting business or professional practice. Even though you may be paid well, you will not get rich from your activities if you are not building a valuable business asset to sell. You need to create wealth through your business. If you depend on your ongoing ability to sell your time to maintain your lifestyle, your business is centered on yourself and your personal efforts.
The world’s most valuable businesses make a product once and then sell it over and over again. Packaging and leveraging time is the quickest and smartest way of making money. Making the product once and selling it again and again allows you to earn ten times, 100 times, even thousands of times what you could earn by selling your time. Most importantly, your business becomes a very valuable, saleable asset as a result.
Think about Microsoft or Ford. They spend a lot of time and money developing their products and then they sell them over and over again according to their business system. Think about the time, effort and money McDonalds have invested in their system which makes and sells millions of hamburgers every day. Their system is so well organized that the owners of the business do not need to work in the business to make money. Their system is largely staffed by 16 year olds who have been trained to follow the McDonalds system without deviation.
Probably nobody would argue that McDonalds serve wonderful meals. What they offer is fast food served quickly from clean premises consistently around the world.
What makes McDonalds a valuable business asset is its systems. Nothing is left to guesswork. They have systems and procedures documenting just about everything from store design and layout, production procedures, administration, distribution, staffing, customer service, sales and marketing and all other aspects of the business. This is what makes the McDonalds system duplicatable around the world and allows the owners to leverage their time and skill.
Can you see the difference between earning an income and creating wealth?
Can you see what ‘rich’ people look for when they talk about making money?
What does making money mean to you?
| Overview | Only You can Make You Rich | Earn the Right to be Wealthy | Knowledge and Actions | Understanding Money |
| Entrepreneurs and Home-based Businesses | Meaning of "Making Money" | Season to Sow, Season to Reap |
| Developing Your Wealthy Mindset | Don't Throw Your Money Away | Pay Yourself First | How Money Grows |
| Teaching Your Children | Top 10 for Children | Top 10 Steps | Your Next Step |
| Entrepreneurs and Home-based Businesses | Meaning of "Making Money" | Season to Sow, Season to Reap |
| Developing Your Wealthy Mindset | Don't Throw Your Money Away | Pay Yourself First | How Money Grows |
| Teaching Your Children | Top 10 for Children | Top 10 Steps | Your Next Step |
