The Problem With Passion

We are often told to find something we are passionate about to do for our work because it will make us happy. I think this is terrible advice. How many people tried out their passion in the marketplace and ended up on unemployment and food stamps? Where do you think the term “starving artist” comes from? Don’t get me wrong, if you can find something you’re passionate about and also make a good living doing, that’s fantastic! But first and foremost, making money is about providing value to others in the marketplace. Finding an occupation that others value and are willing to pay for is the fastest way for most people to produce income. You may not be passionate about what you are doing, but at least you can fulfill financial needs. After you accumulate some savings, you may be able to start a side business based around something you are really passionate about and make it flourish. However, there are a couple of warnings that I would offer regarding mixing passion and work…

1. What you are passionate about today may change in the future. I can tell you from personal experience that what I was really passionate about in the past, I no longer have any interest in. Some things I believe I will always be passionate about–fitness, business, and writing. But some things, like Magic the Gathering and wrestling, which I used to be very passionate about, no longer do it for me. If I had decided out of high school to start a business selling comics and playing cards, or becoming a wrestler, I imagine that I’d be wildly unhappy today. I’d probably also be struggling to make ends meat.

2. Work and business have a tendency to make you question whether you are really passionate about something. In other words, it can lead some people to actually hate what they used to be passionate about. For example, I learned very quickly after I opened a health club, that my passion for bodybuilding and fitness had nothing to do whatsoever with actually owning and running a health club. My skills as a bodybuilder did not translate into increased revenues, decreased business expenses, higher employee morale, or anything necessary to make my businesses a success. Also, as some members of my clubs will tell you, I have a problem with buying too much new equipment because I personally want it, rather than examining whether it truly adds value to the customer experience or the value of the business as a whole. If I’m being totally honest, my passion for fitness has faded at times because now I associate many new problems and stresses with something that is my passion. That is a very difficult thing for most people to handle emotionally. It has taken me many years to figure out how to separate training with the realities of owning a training facility.

3. Being passionate about something does not necessarily mean that you will be good at doing it for a living, nor does it mean that you were meant to do it. What I’m trying to hint at here is that your purpose in this life may not be what you believe you are passionate about. If you are very lucky, you will find passion in your purpose. If this is the case, you will be one of the few who can produce income, by doing what you like and also by helping others (purpose). I suggest that you look for purpose first, and then try to find what it is about fulfilling your purpose that you can be passionate about. For instance, as a bodybuilder and health club owner with autoimmune disease, I can build businesses for others to become healthy and transform themselves, and also serve as an example for overcoming certain disabilities. I can’t do that only by lifting weights though. No one is going to pay me for lifting weights and doing cardio. (I wish they would!) I can, however use my passion for lifting and mix it with my purpose (helping others overcome obstacles). This is why I continue to own health clubs as opposed to doing all passive investing in things like real estate.

4. Passion often does not mix with logic. The Stoics advised us to always use reason instead of emotion, because they understood that our emotions could deceive us. Have you ever been in an argument and said some atrocious things? Looking back you may realize that saying those things were not useful in the least and you regret not thinking before speaking. This is an example of letting passion overcome reason. Eleanor Roosevelt was once complimented on her “passion” for getting social legislation passed. She responded, “I hardly think the word passion applies to me.” The First Lady understood that she was driven by something more important than passion. She was driven by purpose. If she let herself become too passionate about anything, she may have forgotten reason to ensure that her purpose was realized. Eleanor Roosevelt understood that purpose is more useful and longer lasting than passion.

So beware of any advice suggesting that if you always follow your passion, you’ll be happy. You may not. Passions fade. Passions confuse our ability to reason. What we are passionate about today may change. Perhaps no one will pay us to engage in our passion. Instead, focus on mixing purpose with passion. Finding your purpose and then finding areas where you can be passionate about that purpose will lead to far more fulfillment and likely far more income than choosing to follow a career based on passion alone.

In health,
Sean

Business and Finance 101

Get Your Money Right!

I’ve had a large number of requests to write about business and personal finance. So many thousands of books and essays have been written on these subjects that I feel it will be difficult for me to add much more. However, I will cover a few crucial areas that I believe most businesses and households neglect when it comes to managing finances. The subject of money is often stressful, so I understand the temptation to avoid looking at your bank account and just praying that it will all be ok. Every time I get hit with a huge tax, fee, rent increase or my businesses have a lousy month for revenues I feel the stress as well. However, if it’s one thing I’ve learned, pretending it will all be okay without any strategy or action to back it up is useless. As Jim Rohn liked to say, “You can’t go in your garden and chant ‘there’s no weeds’!” The weeds will grow right up over your toes if you don’t recognize them and pull them out. So, here are the areas I think most households and businesses should pay attention to on a weekly basis:

1. Cashflows and income. It’s absolutely imperative that you track your income regularly. If you are in business, this will help you identify trends throughout the year and allow you to plan accordingly. If you get paid a paycheck once or twice a month, count that too. Make sure that you’re netting the correct amount. I can’t even tell you how many people I come across that don’t know how much was in their last paycheck. The same goes for business. Most small business people I know don’t know how much they made last month! They just keep grinding, spinning their wheels and getting nowhere! I’m asking you to keep track of the amount of money coming in on at least a weekly basis. If you only get one paycheck monthly, try to increase your streams of income so that you are getting paid multiple times a month from different sources.

2. Expenses. How much does it cost to run your business every month? How much does your family spend monthly? From my experience, the majority of people sorely underestimate their monthly expenses. Every business and individual should have a very detailed breakdown of every single category in which money was spent. Once you see how much you are actually spending, I guarantee it will be eye opening. When it’s all said and done, how much money did you have left over at the end of the month? Everything else was an expense that needs to be accounted for. If you had a little too much “month left at the end of the money” so to speak, it’s time to cut back your expenses and try to simultaneously to increase your income. If you can do both, you have discovered the fastest way to becoming financially free.

3. Know your numbers and what they mean. TRACK EVERYTHING!!!! This is the area that most businesses are neglecting. For example: what are your payroll hours as a percentage of revenues? What about rents as a percentage of revenues? What is the lifetime value of a new customer? How much new revenue does a new client produce in their first transaction? How much revenue does each billable payroll hour produce? What are the total costs per operating hour in your business? How much net revenues or expendable income are you left with at the end of the month? What is your best quarter for growth historically? How much are your COGS, or Costs of Goods Sold? You must know the answers to these questions and more if you want your business to succeed for longer than just a few years.

4. Work on your business and not in your business. If your business depends on your daily efforts to succeed, you are self-employed. You do not actually own a business. There’s nothing wrong with that either, just don’t be fooled into believing that you are an entrepreneur when you’re really working 80 hours a week and only making a few thousand a month. You may just be the lowest paid employee in your business. A true business owner spends most of his or her time reading market trends, strategizing, optimizing systems and making sure the business follows the regulatory and tax requirements. If the owner is not present, the business should still function well. The owner simply works to optimize the profits and expansion of the company and then decides how best to spend or reinvest the profits.

5. For households, follow the 70-10-10-10 RULE. When you determine your monthly profits or wages, never spend more than 70% of the money you earn. This includes all expenses like housing, cars, insurance, food and entertainment. 10% of your left over money should go to active capital, or starting your own business, which will produce additional monthly income. 10% of your income should go passive capital, or an investment run by others that will produce monthly passive income. The last 10% should go to charity or helping others that you care about. I strongly believe in this last one because the secret to living is truly giving. Helping others succeed will result in you doing even better. What goes around comes around and when you help others, you will reap the benefits. (If your monthly expenses are taking up more than 70% of your income currently, work immediately to reduce your expenses and increase your income. Eventually, as your income increases greatly, your expenses may only by 50%, leaving you with more to invest in businesses and spend more on helping others.

6. Know how much it costs to acquire a new customer. Track your marketing ROI, or Return on Investment. Many companies with advertising budgets are not properly tracking the lifetime value of a client, the efficacy of their marketing, or the total cost that goes into acquiring a new customer. I have made this mistake many times. I’ve spent hundreds of thousand on marketing without calculating my exact return from the ads. My new rule is that if I spend one dollar in advertising, it must produce more than a dollar in revenue in the first month. Other companies use a longer time frame as their metric depending on what they sell, but this rule has helping me control my marketing costs significantly. I also focus as much as possible on direct marketing so I can track who is engaging with an advertisement and then I can subsequently track what marketing pieces led to new clients. Another cost associated with new customer acquisition is the payroll hours it takes to call prospects and past clients, and the creation of media (such as signage inside and outside the business), etc. Just be sure to track all costs associated with new customer acquisition. As a general rule, the companies that can afford to spend the most to acquire a new customer and then have that customer produce higher than market average revenues for the business will win!

7. Love the business you are in, but fall in love with the customers more. Business is hard, so it helps greatly if you are passionate about the business you are in. I love health and fitness and bodybuilding, so this is easy for me. But I’ve learned that companies do best obsess over their customers, rather than the products or services they produce. Customers are the ones who pay all the bills at the end of the day. They are the real bosses. Every one needs to feel special or significant, so if a company can solve a problem with their products while making the customer feel special, they will do better than companies who do not.

8. Know the difference between good and bad debt. We live in a debtor nation. The country itself has a 20 trillion dollar federal debt and household debt is at record levels. Debt cycles are the reason for booms and busts in economies and a business or family that takes on too much debt will face significant financial hardships. However, there is a difference between consumer debt and business debt. The latter is a type of debt that produces income and is paid for by others. For instance, if I take out a mortgage to buy and apartment complex that produces cashflow, the tenants are paying for that debt. I am using the debt to create profit. This is called leverage and can be a good thing if used wisely. Consumer debt on the other hand is debt that is paid by the debtor. This includes home mortgages, student loans and auto loans as well as most credit card debt that we are familiar with. Do not let debt sink you or your business!!!! Go back to the 70-10-10-10 rule and see how much of your monthly expenses are debt service, or paying back money you’ve already spent.

There are so many more business lessons, but I think these eight rules are a great start for any business owner or head of the household. I’m hoping any of these tips will lead to financial abundance for you and your family for many years to come.

In health and riches,

Sean

7 Qualities of a Leader

Everyone wants to make more money, but few are willing to take on the responsibilities and execute the duties associated with bringing more value to the marketplace. Value is really what we are talking about when we talk about money. Now, everyone has value. As a person, a husband, a wife, you name it. But in terms of income, value to the marketplace is what determines your pay. Sure, you may be able to fool or scam some people short term and make a bunch of cash, but you can’t fool all the people all of the time as the saying goes. Eventually, the laws of compensation will catch up with everyone and everything in this universe. That said, here are the Seven Qualities that will ensure your income rises regardless of the economic climate. They just also happen to be the Seven Qualities of Leaders.

    1. VISION—To ensure more income for yourself and to be a great leader, you must have the capacity to see what is not yet there. You must have vision. You must tap into creativity—the energy source that brings life to all new things. Yes, you must see things as they are, but not worse than what they are. THEN, you must have vision for what could be better. After that, massive action is necessary to see your vision become a reality.
    2. COURAGE—This, in my opinion, is the most important trait to have. Without courage, nothing happens. Fear will always cloud your thinking and get in the way of your success. An example of courage in the marketplace is making cold calls to prospects or asking existing clients for referrals. That takes courage. Simply showing up to work and going through the motions takes no courage. In other words, to utilize courage, you must be willing to be uncomfortable—that’s the only way you can grow. All growth comes from a period of discomfort, and making more money requires doing what others are not willing to do.
    3. INTEGRITY—No one will follow a person without integrity for a sustained period of time. Being a person of ethics and values—having a code and living by it—will cause others to trust you and trust your judgment because they believe that you have their best interest at heart. This matters a great deal in every relationship, including those in the marketplace.
    4. HUMILITY—Having a modest view of your own importance as it relates to others is vital for any leader. Of course you are important, but no more important than anyone else as far as they are concerned. Understand that everyone is the star of his or her own movie! You are merely the cameo appearance. So, if you want to succeed in being a leader and making increased income, check your ego at the door. If others see you as being a person who lacks the humility to accept the importance of others, you may do well, but it will not last. People like to follow others they respect. And employers love to pay respectable people more.
    5. STRATEGIC PLANNING—This quality is so needed today, I could write hundreds of pages about the subject. The bottom line here is that the tactical work of doing the job as it is required and the strategic work of planning the future work that must be done for increased levels of success are two very, very different things. Most believe that by showing up and doing the job as required is enough to be compensated more (because there exist so many people who can’t even do that!). The truth, however, is very different. The truth is that in today’s marketplace, strategic planning is required to ensure that you become irreplaceable. Look at great leaders in history—they all had the capacity for strategic planning: Disney, Jobs, Washington, Churchill, Marshall, and Khan—all of these people were incredible planners and that’s why their names will be cemented in history.
    6. FOCUS ON STRENGTHS AND USING THEM—Great leaders focus on their own strengths as well as the strengths of others and plan a way to best employ those strengths. In other words, they don’t complain that “everyone around here is stupid” or “I’m the only one who really works hard.” Those are limiting beliefs that will ensure you never get to where you want to be. Those who focus on the tools they have and how they can possibly be used to accomplish a goal will usually figure out a way to get it done, even if they are lacking a certain tool or trait. This is due to the fact that they are more mindful than those who only see faults in others.
    7. FOCUS ON RESULTS—At the end of the day, RESULTS RULE. PERIOD. END OF STORY! If workplace morale is down, month over month or year over year revenues are down, or there exists an exponential increase in the costs associated with doing business or some other massive problem, you must figure out what is not working right. What needs to be optimized? What needs to be innovated? Who do you need around you to accomplish your goal? Who is not a right fit? What must happen to make your world incredible both at work and outside of it? Results rule. Do not keep going down the same road because you’re used to it. What if a giant tree or sinkhole was blocking the road? Would you still consider the route? Of course not. A great leader would formulate a new plan of action and then implement it to get the desired result. Change your approach until the result you want is reached.

 

There they are: seven qualities of a leader. Remember though, it’s not enough to understand something intellectually. You must embody it. You must live it and keep on living it so that others will follow you and help you achieve your desires!