About the Basics of Making Money
A decade ago, I decided I wanted to learn how to play polo. The “sport of kings” and the ultimate sport of all….So I started reading all about polo and I went on practicing nonstop.
The path to learning polo is pretty clear. You sign up for some lessons, you get the outfit, you watch people playing, you learn the drills, and you practice. And you keep practicing. You get better over time, but you never really stop practicing.
This is how we learn most things. Whether you want to be a writer or a musician or a painter or a baker or an accountant, the way to get there is fairly clear. Not everyone’s going to be as good as one would like to be, but at least you know where to start. Lessons, classes, books, internships, … All of these things are accessible to most people who want them.
One of the interesting things about picking up polo was that I realized it had been some time since I had actually tried to learn something new. We spend most of our childhoods learning new things. But as you get older, the frequency with which you develop new talents slows down. Sometimes it stops completely.
That said, when I first started playing polo, I was bad. When you suck so badly at something new, it’s comforting to know there are other things that you actually are good at. And being bad at polo reminded me of what I have gotten real good at: making money.
Today, I run Blackhawk Partners, a premier physical commodities trading house and a private equity family office. Profits have grown at double-digit rates every year for the past decade. (Like many private companies, we don’t disclose profits.) How did I learn how to do this and bootstrap Blackhawk keeping firmly in control of the money machine?
Well, it is all about sucking information like a sponge, surrounding yourself with people at least as smart and connected as you and executing flawlessly.
It is a fact that having a master’s degree in finance from the #1 business school in the world – The Wharton School of Finance at the university of Pennsylvania – and developing a “Platinum World Rolodex” helped in the process but I don’t remember taking any special classes that even remotely taught me how to make money – not even at Wharton. Lots of talk about money yes – but not much about how to actually create that great stuff out of thin air.
One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I am a financier. He is a headhunter. She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money. You can be the most creative software designer or engineer in the world. But if you don’t know how to make money, you’re never going to have much of a business or a whole lot of autonomy.
This is not about getting rich (though there’s certainly nothing wrong with that). Instead, for me, making money is about “freedom”. When you owe people money, they own you—or, at least, they own your schedule and you are literally their corporate slave. As long as you remain profitable, the timeline is yours to create.
It took me a long time to figure out how to make real money. Here’s how the lessons unfolded.
1. Know your client inside out. Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can’t get good at making money unless you get good at selling. I learned this as a teenage “anything goes” salesman having the trading DNA gene in my Phoenician blood, and it still drives how I operate. This is hardly a unique insight. But judging by the number of companies and products that totally miss the mark, day after day, it’s a lesson that needs to be learned again and again.
2. Charge Real Money for Real Products/Services. After discovering early in my life I could really sell anything to anyone, I decided to start my own business. Realizing that the whole wide world really revolves around money I went on reading everything and anything that had to do with money, the art of the deal, economics. geopolitics and the sort. I can humbly say that these formative years helped shape my future career and gave me an edge in finance second to none. Publishing a blue print article on the “business of banking” in the most widely read English newspaper in Lebanon at the ripe old age of 17 clearly put me on the map in selling my research to people with interest in the subject matter. The lesson? People are happy to pay for things that work well. Never be afraid to put a price on something. If you pour your heart into something and make it great, sell it. For real money. Even if there are free options, even if the market is flooded with free. People will pay for things they love.
3. There are different pathways to the same dollar. Don’t just charge. Try as many different pricing models as you can. That’s a great way to get better at making money. Remove the fear, and people will be more willing to pay you. People don’t like uncertainty—especially when they have to pay for it. A week and a fixed price is certain.
4. Learn how to bootstrap your business. I began learning these things when I was still in my late teens. And I’m glad I did, because the habits entrepreneurs develop early in their careers go a long way toward determining their success. I’ve borrowed money to start a business only once. That’s it. Everything else has been bootstrapped. My customers have always been my investors. My goal has always been to be profitable on Day One and this is the lesson I now use when backing my stable of over 500 self made entrepreneurs worldwide.
5. Constantly re-invent yourself. Like I said at the outset, it’s all about practice. Whether you’re playing polo or building a business, you’re going to be pretty bad at something the first time you try it. The second time isn’t much better. Over time, and after a lot of practice, you begin to get there. Don’t be afraid of constantly reinventing your brand and your product/service to cater to your clients. No gunshot approach. It is as “surgical” as can be folks.
Now here’s a great way to practice making money:
· Start buying and selling the same thing over and over again and again. Go buy something on eBay. Find something that’s a bit of a commodity, so you know there’s always plenty of supply and demand. An iPod is a good test. Buy it, and then immediately resell it. Then buy it again. Each time, try selling it for more than you paid for it. See how far you can push it. See how much profit you can make off 10 transactions.
· Get into as many revenue streams as you can. From buying to selling, trading, investing, divesting, etc….
· Become an avid learner, connect with real powerbrokers, keep a very young and alert mind and don’t stop practicing … and you are unstoppable.
Yes you will make plenty of mistakes along the way but this is the only way you will become real good at so many businesses – by knowing what fails and what succeeds – Seriously.
Now that you know the basics….go use those money making tips to make a killing and never turn back.
There is no such thing as thinking outside the box…. Consider there is no box. Be dangerous….