What does it take to run a successful company?
That’s a loaded question, but one that intrigues entrepreneurs, chief executives, business professors and economists. There never seem to be enough books to answer that question.
At the risk of oversimplification, running a successful business depends on what you know. Successful people are constantly researching and learning about business, the economy, and finance.
There are three things you can do to change your business fortune. They are like a combination lock with three tumblers. Once you learn the right configuration, you’ll be able to open many doors.
The Art and Science of Finance
The key to business success is mastering the art and science of finance. It’s an art because it requires intuition and insight. It’s a science because its based on economic theory. This is the study of supply and demand.
Success in business starts with understanding behavioral psychology. Specifically, how should you behave to attract, keep, and grow money?
So, learning about money isn’t about acquiring the knowledge of an accountant. If things were that simple, then it would be easy to create a fortune. You would simply become a certified public accountant or a personal financial advisor.
Learning about money isn’t necessarily about acquiring a new skills either. Rather, it’s about learning what works in business.
Once you understand the principles that attract wealth, you can go a long way in lie. You can grow out of almost any situation. If you’re an employee, you’ll rise in your corporation. If you’re a business owner, you’ll close the right deals. If you’re an established business, you’ll become a market leader in your industry.
Somebody who is wise in the ways of money can take a struggling company and make a fortune out of it.
3 Money Myths
There are many misconceptions about what is necessary to do well financially. Here are myths that often throw people off course:
Myth #1: You must find the right industry to create value.
If this were true, then manufacturing chewing gum would be absurd business model? Yet this is how William Wrigley created his fortune.
Myth #2: You must work harder than most people to make money.
If this were true, coal miners would be some of the most prosperous people on earth.
Myth #3: You must be well-educated to make money.
Ironically, many millionaires and even billionaires never made it past high school. And many well-educated people end up in the middle class.
3 Steps to Money Mastery
How do you get smart about money?
Here are three things you must do to get to a place in your business where money flows.
Step #1. Here’s an investing tip you’ll never hear elsewhere: treat every piece of proven business advice as gold. Over time, you will acquire a goldmine of knowledge about money. You can get this advice by reading biographies. You can get it by listening to successful people share their business experiences. And you can get it through formal education. Consider everything you learn about the ways of money as an invaluable clue. You can use it to invest in yourself, in your business, or in a financial market.
Step #2. Try out different ventures and figure out what works and what does not work. Often things that should work don’t work. Most brokers advise diversification of your assets. Yet this formula does not work as well as advertised. Other things that should not work do work. Warren Buffet built his fortune by buying high value stocks. His philosophy is intensification not diversification. So, the only way to figure out what works for you is through trial and error. You can’t become wealthy if you have no imagination. You also can’t become wealthy if you have a low tolerance for taking risks.
Step #3. In step one, you learned how to get practical knowledge. In step two, you learned to test things to see what works. Now, in step three, you pull it all together. Now throw your resources—time, money, energy, and genius—behind vicarious knowledge and acquired experience. This focused effort will result in learning three key skills. You’ll learn how to prioritize. You’ll learn how to assess. And you’ll learn how to restrain your wild impulses of greed and fear.
Is This Too Simple?
If money making is such a complex issue, how can things be so simple? Actually, this is only the 30,000 foot view. As you plunge into each of these three steps, you will find plenty of challenges.
Business owners struggle until they understand who money likes to befriend. They learn how to get it to keep it circulating. They learn how to grow it. Initially, study and labor creates money. Later, money makes money through interest earned, dividends paid, tax deferrals, rebalancing, and compounding. After you get financial literacy, money stops being a mystery.