How to get rich

By Felix Dennis

Good fortune? The fact is
The more that you practise,
The harder you sweat,
The luckier you get.

Ideas? We've had 'em
Since Eve deceived Adam,
But take it from me
Execution's the key.

The money? Just pester
A likely investor.
To get what you need
You toady to greed.

The talent? Go sign it.
But first wine and dine it.
It's tedious work
With a talented jerk.

Good timing? To win it
You gotta be in it.
Just never be late
To quit or cut bait.

Expansion? It's vanity!
Profit is sanity.
Overhead begs
To walk on two legs.

The first step? Just do it
And bluff your way through it.
Remember to duck!
God speed ...

And Good Luck!


Rich means you can do whatever you want and live whereever you want securely and pleasurably for the rest of your life (this means tens of millions). More doesn't add much in life quality.

IS IT WORTH IT?

"The chief value of money lies in the fact that one lives in a world in which it is overestimated." - H. L. Mencken

Do you really need to become rich? Do not mistake desire for compulsion. It seems nice to be rich, but the odds to become rich are long, the work backbreaking and longer. It is gruesome to become rich, you will have to sacrifice years of your life. Trying will mean hurting your life and family. It will get bad. You will fail if you just would like to succeed, and are not driven, obsessed. Because you will not be able to endure the hardships. You may still fail, even if you do. Success if far from guaranteed, even worse, it is improbable.

Most importantly: Being rich does not make you happy. Sure, you may feel great because you are successful, and women will flock to you (if you are male, that is). But the only friends you can trust to like you for yourself are the ones that you had before you became rich. And even keeping them is hard, because you live a different lifestyle, and it takes a big heart not to feel envy.

The only things that count in life are health, love, freedom and spare time.


HOW TO BECOME RICH?

The best odds for getting rich as an individual are through entrepreneurship.

OWNERSHIP IS THE ONLY THING THAT COUNTS. Ownership is all. Because it gives you the right to shut down, alter, control and receive the profits of any enterprise. To become rich you must be the owner. Don't give up a single share for fairness, for love, for anything. Doing an outstanding job makes that ownership valuable. Ownership of a failure is worth nothing. So execution is the rest. Do the best damn job you possibly can. It's more satisfying and will appear less work and more fun.

DO YOU HAVE WHAT IT TAKES?

"You do not have to be smart or educated to become rich, but you do have to know how to become rich." -- Woody Allen

Self-belief.

Without self-belief nothing can be accomplished. With it, nothing is impossible (cf. Carnegie) If you do not believe in yourself, why should anyone else? The difference between those that become entrepreneurs, and thus, maybe rich, and those who prefer the comfort and security of a salary is the willingness to take large personal risk.

Fear of failing in the eyes of the world is the single biggest impediment. Working too long for other people can blunt your desire to take risks. Forget about getting rich when you are old and successful. Too much to lose, to little hunger and stamina. You need health and stamina. And you need to conquer your fears.

[His reasoning against fear is to realize that you will die, so nothing has any meaning in the end. The Life of Brian. But pain and suffering and rejection and failure and isolation still hurt. Life is suffering, as the Bhudddist says. And while death is ending your pains and suicide is painless, it also ends all the light, the happiness, the wonder you still could have seen - like Dirk.]

Persistence.

"If you're going through hell, keep going." -- Winston Churchill
"Success is never permanent; failure is never fatal. The only thing that really counts is to never, never, never give up." -- Winston Churchill

Never give in. Dark times, despair and misery will come. Don't give in.


Mindset.

Think big, act small. Don't limit your upside by thinking small. But remain in touch with your operation, think how it can be done better in detail. Work harder. Stay humble. Listen and learn. Live modestly. Lead by example. Think Aldi.

Fight, not flight. Be a predator of opportunities, not a prey.

Playing the game. Money and being rich in the end bring no happiness, and we must die. So see it as the sport that it is.

Just do it. It's easier to ask forgiveness than permission.

Luck.

"Luck is what happens when preparation meets opportunity" -- Seneca


WHICH MOUNTAIN TO CLIMB?

Growing, new industries with low start up costs/capital needs better your odds. Growing markets better your odds, because the swelling tide raises all boats. New markets/technologies better your oddds, because nobody understands them and this removes the advantage established players have in mature markets. If you are quick at grasping jargon and concepts, you can become an 'instant expert'. Glamorous markets tilt the odds against you, because too many people compete for them. A company that would be a good investment, is also a good idea to start.

You'll need an opportunity. If you see it, risk it. Go to where the money is. The focus is getting rich, not to do a particular trade. (Bit sticking near to things you understand helps. Otherwise, you are learning the ropes all the time, and make costly mistakes.)

Don't do anything for which you have no empathy or feeling. Do what you like and are good at. If you don't know what that is, try stuff and find out. (You'll need to add effective managment, sales and marketing.)

Ideas are needed, but execution is more important. Don't be ashamed to aggressively copy succesful ideas from others. Not-invented-here syndrome is a weakness, and if you execute better, you may still win.

CAPITAL.

To get rich, you need capital. This sucks, because in essence it means, to get rich you need to be rich. The biggest reward goes not to the idea-man, nor to the ones who implement it, but to the one who owns it. Owning the majority of shares alone gives control and allows calling the shots.

You can inherit it, win it, steal it, marry it, earn it or borrow it. The first two are outside your control or too slow, the third may land you in jail, the fourth might too, in a way. The fifth is slow, but can deliver money to start small. If you'll have to borrow, beware of debt with high interest. Try to avoid VC investors, who will take a large part of ownership from you. If possible, try to work with acquaintances, colleagues, friends, family, suppliers and customers, small investors, friendly bank managers, professional advisors. Its humiliating to go around begging, but there's no way to avoid it.

If you must enter a partnership, try to have the mjority in partnerships, as much as possible. Who put in how much capital? Who is doing what work?

Is the light worth the candle?

PEOPLE.

If you get the right people, it is hard not to succeed. They also bring all the skills you do not have but need. If you get the wrong people, you'll go bankrupt. Hire the best. Even if they seem to cost more. They really don't where you need five bumblers and one to manage them instead of one who is great. Plodders and jobsworths will get you nowhere. You need growth for riches, and talent for growth. Often they will take the opportunity to run the show over earning more money, especially if they are young (because it is clear, if they succeed, lots of more money will come their way). Nurture them, and protect them from getting poached, reward them, if needed, fire them. When you come across a great talent, it is sometimes worth allowimg them to create the structure in which they choose to labour (cf. Sloan). Your important management task is to identify, hire, nurture and promote able lieutenants who do the work for salary -- general mangers, accountants, lawyers etc (you will always need a lawyer and a qualified accountant).

Hiring. The hard part is telling good from weak when hiring. Never choose an important employee or supplier alone. Get second opinions. Go beyond the given references. Make notes, speak little. Good suppliers respect attention to detail and if you get comparative quotes now and then. Pay employees well, bonus better. See if someone would fit another position than the one they interview for. Only hire winners. Try to ignore your prejudices, likes and dislikes.

Delegation. Growth, delegation and promotion can help you to get spirited people that are willing to leave safe comfortable jobs for an atmothphere loaded with optimism and adventure. Don't just promote people who are like you. Promote the ones that are complementing you. Delegation is not abandonment. You still are involved, which can take several forms from scheduled or drop-in meetings to requiring reporting, or alerts in case of problems, to being there for advice, and giving feedback, to stepping in if thing go out of control. The more you trust, the more you can let loose. Obsessive micro-management scares away talent. Also, making an error must be forgiven, or people would venture nothing worthwhile, as long as people take it serious and it is not repeated.Delegate day-to-day management.

Incentives. If you pay peanuts, you'll get monkeys. Pay big bonuses based on meritocracy and delivery to get staff to focus. Have part of the goals shared.Fire weak performers, whiners and moaners. For promotions, look for loyalty, integrity, stamina and energy, execution, professionalism, drive, cunning and intelligence. Don't leave senior employees in the same job for more than two years. They'll get into a comfort zone, get bored or resign. Promote from within, if you can.

COMPETITION.

Don't be afraid to introduce products that cannibalize your other products, if they are a good idea. Or would you rather like your rivals did it? If there are barbarians at the gate, you may have to kill your sacred cows to survive, and find a way to become like them.

NEGOTIATION.

Real negotiation is not the everyday management bargaining about pay raises and job titles. It's about stakes that can ruin you or make you rich.

Find their weakness, the need. Do your homework rigorously. Ignorance can kill you in negotiation.
Weigh their need against your greed.
Create alternatives for you. (BATNA best alternative to negotiated agreement, like other offers)
Ignore flattery.
The negotiators opposite you are not your friends, your partners or your confidants, they are not there to like you or not. They are there to rob you if they can. Understand that real winners and real losers emerge from serious negotiations.
There can be only one negotiator. A house divided is a house that will fall.
Present strength, don't admit weakness in the matter. (Admitting personal shortcomings or weakness however is fine).
Care, but not too much. Empty yourself and make yourself believe you do not care. Be ready to walk away. Never fall in love with a deal. A deal is just a deal. There are will always be other deals and opportunities. If you lose it, see what you can learn from it, then move on. No need to get frustrated, the worrld is full of chances.
If you are not a good negotiator, set a price for yourself you will not deviate from. Harden your heart and walk away if it is not met. Or set out your response to every conceivable option and let someone else you fully trust do it for you. (Most people are not good negotiators. If you think you are, you are probably terrible.)
Listen. Listen some more. Use silence as a weapon.
Chose a rogue element to your advantage and introduce it at a late stage.
Divide and rule.
Keep to your word once you commit.
Most negotiations are unneccessary, don't even enter them. "A fortress that parlays is a fortress half-taken" (Russian proverb).
Avoid auctions, unless you are the seller. Competition with others works against you.

CUTTING LOSSES.

Don't reinforce failure. This is hard - when do you accept something is a failure? There is always the hope or the possibility that persistence or some tweak will turn it around. That the idea is right, you are just too early. That you can "educate" customers through marketing. That success is failure turned inside out. This makes you hang on in the face of obvious, glaring evidence that it is not working (hopefully at least trying way to fix it instead of just being stubborn). Always remember: there is no victory over customers.

Many entrepreneurs are unwilling to face reality. This is a natural weakness, given that they need to be full of self-belief and persistence. Like always, there is no easy, formulaic solution. The best I came up with is: Try, try again - but differently. Think of the wasps. Don't just repeatedly bang your head against the wall when there may be door nearby. You have to listen and look and understand the situation. Listen closely to your bean-counters and accountants. Listening is the most powerful weapon after persistence and self-belief you can bring to bear as an entrepreneur. And it has no downside. Assumption is the mother of all fuck-ups. Beware of overoptimism concerning cash flow. Plan for the worst and hope for the best. Regular, even obsessive monitoring of cash flow is key. Doubts and fears are good. If they do not paralyse you, but help you make more robust decisions. Write them down, look at them in bright daylight. Listen and learn, always. Not just to your officers.

If you decide it's failure determine your burn rate to see how long you have left before having to declare bankrupcy to turn things around. Might your enterprise work if viewed in another way, put to another use, changed in some way? Would more capital help or just throw good money after bad?

If you conclude it really is a failure, no way to change it into a success, figure out what went wrong so you can avoid it in the future. Beware of closing costs. If there is any way you can sell out, do so. If you have minority shareholders, you can try to sell out to them - they may believe they can succeed where you failed. If that doesn't fly, see if you can cut cost to become profitable -- but unless you were wasteful to begin with, this should not work. If you can't, close shop. Stop ordering goods. Stop all expenses you can. Declare bankrupcy if you must. Play that straight with suppliers and tax authorities. Try to pay the little people who can not afford the loss, first.

Cutting losses is easier if you have several bets running, a portfolio of enterprises. If you only have that one company at the start, you have much less options. Cling on with a vengeance and try to make it work. Once your first venture is a success, take money and start another one. If you have several, that gives you the option to shut down the ones that don't work any more.

Business is not a talking shop. It relies on decisions, often hard decisions, being made in as short a time as makes sense. Don't leave doubts if you are not interested - it is more courteous, and saves valuable time.

Lessons:
1. Never make your CFO or head accountant CEO or MD
2. Never go on a vacation when a deal is going down
3. When you change accounting systems or head accountants, have all the numbers checked twice
4. Never personally underwrite business loans for your company
5. If it flies, floats or fornicates, rent it - it's cheaper in the long run.

Practical tips:
1. Make annual bonuses generous. Never delegate bonus arrangements. Insist that at senior level part of the bonus is for collective results, to leverage peer pressure .
2. Ring-fence investments from ongoing business
3. Keep costs down. Overhead walks on two legs. Prune it regularly. Stop only when the pips squeak. Turn a cold eye on company perks (credit cards, mobile phones, travel expenses, non-economy air travel). Avoid "jollies", company paid team-trips to fancy resorts.
4. Praise excellent work. Recognize good work.
5. Fire maligners, incompetents, toads and glory hounds mercilessly.
negotiations
identify immediate, pressing needs or weaknesses
6. Give gifts or perks that you paid for privately.
7. Lead by example. If you want business class travel or fancy office furniture, pay for it privately.
8. Encourage senior managers to go over annual results with you one-on-one.
9. Back up your manager. Critizise them in private, even fire them. But do not undercut them in public.
10. Search out and promote good people. Interview your rival's people after work. You can find great people and you learn a lot.
11. Be nice to your suppliers, not only your customers. You can learn something too.
12. Never bad-mout rivals.
13. Sell early. Things do not increase in value forever.
14. Enjoy your work. Or get out.
15. Always promote.
16. Discourage secrecy.
17. Keep an eye on cash flow
18. There has to be a balance between investment and profit-taking. Between growth and the bottom line.
19. Your companies money is not your money. There are others (creditors etc) with claims against it, and whatever the company pays to you, you will have to pay tax on. Skimp these rules and you may end up in jail. Use tax consultans to pay the bare legal minimum instead.