An Open Letter to My Grandchildren
THE SUCCESS MARGIN
Tuesday, February 3, 2004
In this issue I share some information, ideas and recommendations I’m sending to my grandchildren.I feel the concepts apply to everyone, especially parents and aspiring entrepreneurs. Indeed, as a teenager I wish someone had given me even a part
of this message.
To My Dear Brittany and Alex,
At your ages, 13 and 15, in the next few years you will both be making important career decisions.
My purpose in writing you today is to provide you some alternatives you may not have thought about or considered.
I’m going to propose you look closely at a career choice which is most probably not being discussed or offered in school.
The career choice I’d like you to ponder is that of an entrepreneur. This involves going into business for yourself.
Why do I suggest this option?
1. Conventional schooling is geared toward training you primarily as an employee, working for someoneelse.
The emphasis is on getting a “good” formal education and getting a “good” job. This means exchanging time for money. Forever.
While this can be a good choice for many people, it may not be for you.
2. Your own expressed desires.
In the past when I’ve asked Alex what he’d like to do when he finishes school, he’s stated: “I’d like to earn a lot of money and live a lifestyle just like yours.”
Please clearly understand that the only way you can become wealthy is as an entrepreneur.
People who have a job (employees) almost never become rich. They simply exchange their time for money. Therefore, their income potential is extremely limited.
Employees tend to live all their lives paycheck to paycheck even as managers, directors and professionals. This means they seldom accumulate substantial wealth.
As an employee member of the “middle class,” here is what you can expect financially according to statistics.
At age 65, after over 40 years of work, the average savings and income-producing assets of people in the U.S. are less than $7,000. This amount of money would last only a couple of months.
Please understand. Money is certainly not everything (health is far more important). But at age 65 having almost nothing in savings in the world’s richest country is really pathetic.
Here is the sad truth. The middle class is exactly like the poor in one major respect. Neither accumulates any real assets. Indeed, the vast majority are less than three months from being completely broke and even homeless.
** How the Rich are Different **
Wealthy people have money work for them.
The rich have income-producing assets. These include stocks, bonds, and real estate.
But the number one asset of virtually all rich people are income-producing businesses.
While some businesses can grow very large, all start as small businesses.
And contrary to popular belief, you can start many small businesses without capital—with little or no money.
Conventional wisdom says being self-employed is risky. I submit this is a myth. Of course any course of action, including your own business, involves some degree of risk.
However, in my view what is a far riskier career choice than being self-employed is to be an employee.
During poor business periods, you can be laid off. Plus, you are subject to losing your job at the whim of your employer! Maybe he or she wants to hire a relative to replace you. You can become unemployed at any moment.
There doesn’t have to be a good reason for any employee to get fired. Let me ask you this. Does this seem like a risk-free existence to you?
Please don’t misunderstand me. I don’t mean to suggest becoming a millionaire business owner is easy.Indeed, to be super successful requires a lot of persistence, determination and hard work. But the skills are all learnable. And once you master the
necessary skills, you can go as far as you want to go.The sky is the limit.
* What does it take to be a successful entrepreneur? *
1. You must be a “self-starter” and a person of action. Employees tend to act only when their management “nags” them to do so.
2. You must discover how to market and sell your product or service.
Tip: the very best way to learn sales skills is to study direct marketing.
3. You must become financially literate.
4. You must learn to think and act independent of others.
5. You must learn to take advice only from successful people.
6. The ancient Greeks said it best:”Know thyself.” You must make an honest assessment of your strengths and weaknesses.
Were I you, the first question I would ask myself is this. Am I really a self-starter?
Or do I require someone else—a teacher, a boss, my parents—to “nag” me to perform? Be as honest as you can possibly be.
If you are not self-motivated, I urge you to finish school, get an advanced university degree and get a job. Start at any level with your employer. Make yourself invaluable. And work hard to make a company money or help cut costs. Choose a solid, ethical company as your employer.
Everyone is not entrepreneurial material. And that’s OK.
Work on becoming the most skilled employee youcan be. Become a superstar who is the most likely to be kept on the payroll in both good and bad times.
If you want to become an entrepreneur, here is the action plan I recommend.
1. While you are still in school, instead of part-time jobs, work on developing income on your own. This can take many forms, including lawn maintenance, babysitting, newspaper route, teaching tennis or another sport, or selling a product. There are numerous possibilities.
2. Invest in yourself. One thing you can never lose or have taken away from you is your knowledge. Know-how is your best investment.Invest what you can afford in good books and tapes.Focus on small business skills. Information on personal skills is also invaluable. Pursue subjectswhich include building self-esteem, active listening and building relationships, both personal and
Read as many books on sales and business as you are able. Autobiographies of famous entrepreneurs such as Michael Dell, John Wanamaker, and Milton Hershey are great too.
Some of my favorite authors include Robert Kiyosaki, Napoleon Hill, John Caples, Robert Collier, Claude Hopkins, and David Ogilvy.
And as soon as you feel ready, (my favorite author) Ayn Rand. You might want to read all your Grandpaw’s books too.
3. At the college level, I recommend majoring in Philosophy, Psychology and History. I’d also take courses in sales, marketing, finance and public speaking.
4. Study entrepreneurial courses. While a university degree is not absolutely necessary, I’d go as far as I could and graduate from a good college or university. (A big name school is not important.) The social skills alone that you can learn in school will be of invaluable help in your business life.
5. Hang around entrepreneurs. When you have the opportunity to spend time with successful self- employed people, do it. You’ll learn a lot just from their positive “can do” attitude alone.
If your school has any clubs such as DECA (an association of marketing students) which promote entrepreneurship, join them and become an active participant.
6. Avoid debt. Overuse of credit keeps nearly everyone in debt their whole lives. It’s become far too easy to “charge it” to a credit card. Interest costs can keep you broke. And when one over borrows against a home, monthly interest charges can become a lifelong burden. A good rule is delay gratification until you can pay cash.
Please be aware that if you decide to join the world of entrepreneurs, I will help you all I can.
But, the decision of what to do with your life is strictly your own. I will love you, help and support you forever in whatever endeavors you pursue.
In closing, let me say that starting my first business at age 21 and founding and selling 23 others, while having lots of setbacks, has been a fantastic and exciting journey for me.
And it’s given me a lifestyle others only dream of. You, too, can achieve a lifestyle of your dreams having a business of your own.
Small business owners create more jobs and wealth than do big businesses. I consider entrepreneurs to be the undiscovered heroes of the world.
If you decide to take your own entrepreneurial journey, I’m confident you will do fantastically well. But knowing you, I’m also sure you will do great things in anything you choose to do.
With all my love,Your “Grandpaw”
I sincerely hope that in sharing this very personal letter, the impact on you and your loved ones is all that you want it to be.
Please drop me an e-mail with your experiences.
Until next time,
P.P.S. “The secret to success, in life and in business, is to work hard at the margin Relentlessly. It’s as powerful as compound interest, the eighth wonder of the world.Those little marginal extra efforts will inevitably grow into something big –Bill Bonner
Little things mean a lot.
“God is in the details.”