Rich:

I’m so excited to be here today with my first mentor Alan Hall from back in the Netline days. You’ve heard me talk about Alan. Alan is an amazing individual. I’m so grateful to have him in my life. He is indeed an amazing individual and an example of what I hope to be in twenty years.

Alan you are now giving away everything you make! You’re promoting entrepreneurship and helping people’s lives. Will you talk a little bit about your work?

Alan: Well, it’s important for everybody to understand this is about stewardship—we’re stewards of resources. Somehow we accumulate wealth, but then wealth is really for us to give it away. To give to those who are of need. We all get enough to take care of our basic needs and then the rest outta be given away. That’s what we’re all about.

Rich: One of the philosophies that Alan has, is that the best way to take control of your life, and I agree, is to create a business. Not only does it impact yourself, but it impacts many people around you too.

Alan: Oh yeah. We’re looking for people all over the United States who are ready to start a business, and we’re here to support them! Obviously with Rich’s great knowledge, together we have teamed up to help make people successful. So go start a business! America needs you now.

Rich: That’s wonderful advice from a wonderful man. Look for more to come! I’m going to start highlighting Alan in future posts and tweets. Watch for Alan’s example. He’s done it the proper way. There are a lot of individuals that live and “it’s all about me”. But, Alan is the example to me; what I want to become like. Go forward and do good in this world. Please look forward for more to come from Alan.

One of my favorite books of all time is Viktor Frankl’s Man Search for Meaning. Although he covers two or three major concepts in the book, one of the major themes he discusses is that we all collaborate on a conscious or subconscious level.

I’m a Christian. I deeply believe that God has purpose for us in our lives. I think he has a bit of a sense of humor. And I think that oftentimes the alignment of happenings and circumstances in our lives are not just coincidental. I firmly believe that.

Although I’m a Christian, my mentor is an atheist who believes in the power of the universe. I also have dear friends who are Jewish and Hindu. Irrespective of beliefs and views, I think that we can all see that indeed, God, or the Universe, or whatever power we seek from; allows us amazing, unique, and beautiful opportunities.

I had such an event happen to me this weekend. Tenzing Norbu Sherpa is an amazing young man who has come over to the U.S. from Nepal this past year. We’ve been working with him on his college education, and we enjoyed having him join us for Thanksgiving dinner.

As we were down in St. George, Utah this weekend, we took a few minutes for a stop at the visitor center. All of the sudden, in walks my dear friend Roger Reid. Roger is a successful high school and college basketball coach.

For years Roger had been sharing with our family a story about an amazing woman from Hoang Jo, China. He tells about how when he spent time in China he and his family had a tender, wonderful relationship with this young woman. They spent time  discussing both religious freedom and personal freedoms that she was not afforded. In the past Roger had shared how deeply his family longed for this young lady to come to America.

Finally this young woman had come for Thanksgiving with the Reid family. So here we were: old friends with our amazing young international friends enjoying the holiday weekend. And to top it off at that very moment, in walks a woman who had a very profound effect on Tenzing’s life his first year of college. She helped him really live life with hope and optimism and belief.

It was serendipity.

Two minutes in the other direction and all of us would have missed each other. We had a delightful, joyful reunion. We gave hugs, we took pictures, and then we went our separate ways.

As for me and my house, I believe that God is in the details of our lives. I believe the universe does give us what we seek. Indeed as Victor Frankl points out, on a conscious or subconscious level we all collaborate.

It’s important to put positive energy into the universe and expect good things to occur. I think the energy is one part (not the only part) but one part of the equation that allows us to find success in our lives.

I’m so thankful in my life for these joyful, little, serendipitous events.

As you zigzag down that mountain toward your goal, you need to realize there are hazards on either side of the ski run.  Ski resorts groom and prepare the areas intended for skiers; however, experienced skiers know that just beyond the groomed runs are trees, rocks, potential avalanches, cliffs, and other dangers that may cause injury or even death.  The same is true in business and life.  If we’re smart, we establish boundaries and guardrails to keep us away from perils and on the groomed slopes that lead to our goals.

Some people think zigzagging is easy or a lazy person’s game.  The reality is it requires great discipline and control.  Any skier will tell you that traversing a steep mountain requires a strong back and legs, quick reflexes, and agility, while heading straight down is far less taxing.  That is, until you crash and burn. 

To avoid disaster, you’re going to want to create boundaries and set guardrails, which will keep you headed in the direction of your goal—and away from your own personal train wreck.

Keeping Your Zigzags under Control 

When you are beginning to head toward your beacon in the fog, you want to concentrate on three zigs and zags at a time.  That will keep you focused and under control. To help you with that, think in terms of devoting 65 percent of your time and resources on zig number 1 (driving to profitability), with 25 percent spent on planning and preparing for zag number 2 (adding resources and processes once you get to cash).  The final 10 percent of your time and resources should be spent planning how you want to scale your undertaking in zig number 3 (creating scale).  If you’re looking beyond three zigs, life gets too complex.

Once you have hit zig number 1 and your business is profitable, you need to turn and head toward zig number 2.  It’s easy, once you have cash coming in, to think you can skip making the turn.  But if you just stay in zig number 1, you may miss out on the dreams and goals defined as your true beacon in the fog.  (And remember cash alone is not a beacon worth pursuing.)

Once you are profitable, you should shift and spend about 65 percent of your time and energy on zag number 2, with 25 percent of your time spent on planning and preparing for zig number 3.  Again, if you do not make this next turn, you may find yourself with a lot of resources, but never hitting that big goal.  The last 10 percent of your time and efforts can then go toward setting another series of zigs that will help you get even closer to your beacon in the fog. 

Some people think zigzagging is easy or a lazy person’s game.  The reality is it requires great discipline and control.  Any skier will tell you that traversing a steep mountain requires a strong back and legs, quick reflexes, and agility, while heading straight down is far less taxing.  That is, until you crash and burn.

To avoid disaster, you’re going to want to create boundaries and set guardrails, which will keep you headed in the direction of your goal—and away from your own personal train wreck.

I recently saw an article about Mark Zuckerberg’s visit to Harvard University, his not quite alma mater. The title of the article was “It’s never been sexier to be an entrepreneur,” and while I completely agree with the sentiment, I worry that some people may think being an entrepreneur is sexy because of the myths they have bought into, not because of the wonderful lifestyle entrepreneurs enjoy. Today, I’d like to address three of these myths and show you why it’s still never been sexier to be an entrepreneur.

Myth 1: All I need is that one big idea. While it may be true in Hollywood that a big break can make your career, being a successful entrepreneur means doing a lot more than just having one great idea. If Bill Gates only had one great idea, Microsoft would have never been able to grow beyond the first build of Windows. Even Zuckerberg has to get bigger, better ideas, or else Facebook would never have added much of the functionality that keeps people on there every day. That first big idea gets you started in a business, but you need to be work on getting more to keep up with the rest of the world.

Myth 2: My venture needs to become the next Apple/Facebook/YouTube. I have said it before and I’ll say it again: though these successes are fun to talk about, they are the exception, not the rule. Being an entrepreneur doesn’t mean your business will be on the cover of Time. It means taking direct control of your career and day-to-day life. It means building something that makes you money and does something great. While entrepreneurs often make revolutionary products and services, most only revolutionize their respective fields, not the way the entire world works.

Myth 3: I need to quit my job and drop out of school to succeed. Once again, this is not necessarily the case. Indeed, quitting your job before having a solid source of income established to replace your job is financially dangerous. And though some decide that finishing school is not a good use of their time, colleges have many fantastic opportunities available for students, including the chance to earn an education. I not only got a Bachelor’s and a Master’s degree, but I have spent time working for other people as my situation needed, even after building several businesses.

Being an entrepreneur is a great life, and I encourage everyone to try it. There has never been a better time for it. Though building a business requires hard work and stressful sacrifice, it is the best life I know.

When I am planning new ideas for my business or for my life I like to use a tool I created called The Decision Matrix.  It helps me decide which ideas or options fit into my value plan.  This decision matrix can be used for any kind of decision you need to make in your life.  I have used it to help me decide which jobs I should take, where I would like to live, and, yes, what businesses and scale ideas I should pursue.  I love to use this model to appease the left hemisphere of my brain, which is the logical side.  It does not always tell me exactly which option that I want to take, but it does help me weed out the options that are best not to take.  It is really straightforward and simple.  Here is how it works:

Across the top of the paper, spreadsheet or whiteboard, I compose a list of the top ten or fifteen (maximum) things that are important to me for the particular decision I am trying to make.  For example, in a business some of the things I might want that business to do would include making me a lot of money, flexibility of lifestyle, giving back to society, or international travel.  If I were making a decision on where to buy a new home, I may list across the top things like location, quality of schools, safety, friendliness of neighbors, quality of the construction, yard for the dog, a good view, etc.

Once I have made my list across the top of the things that are most important to me in this decision, then I rate them in order of priority as to how important they are to me.  The most important item would have a rating of 2.  The next item would be ranked a 1.9, then 1.8, all the way down to the least important item.

In the business example, I may give “flexibility of  lifestyle” a 1.8 rating and the “international travel,” which I love but which may not be as important to me as my lifestyle, a 1.5 rating.  If I were moving to a new house, I would rate the quality of schools a 2, where I might rate the view I desire a 1.2.

Once I have my values of what I desire listed across the top and weighted in order of priority, then I list down the left side all of the options I am considering.  If I am thinking of ideas that would scale my business, I would list all of those down the left side.  If I were purchasing a house I would list all of the different property options down that left side.  If I were deciding which job opportunity I wanted to pursue or which college to attend, whatever it is I am deciding I list the options down the left side.

After my chart is complete, I ignore the weight factor of those important items and I fill in the blanks. I just go through really quickly and assess to the best of my judgment how my idea or decision would rank with my important item. I use a score of 1 to 10, with 10 being the highest.  After I have filled out the chart, then I simply take the score of the idea to the important item and multiply it by the weighted factor of that idea.  I then sum all of the important items together for a score of each idea.

If there are several people involved, then I have each person do their own weight factor.  We add up the weight factors and then use that number to score the spreadsheet.  Together we decide the score between 1 -10 of how well that idea would fit our needs.  If my wife wants a good view and I want a shorter commute to work, we would weigh those items differently.

I like to do this exercise when I am relaxed and calm.  It takes about an hour or so, but it is a really precise and fun way to sort out my ideas.  Oftentimes, I’ll get the top four of five scoring ideas.  These scores are not the only factors in my decisions, but they do usually tell me which of the options are not the ones that I want to pursue.  It helps me to hone in a little bit to where I want to take my next zig or zag.

Decision Matrix

Eating Our Own Cooking

We are currently trying to figure out the scale phase in our Froghair business. When we initially defined our three zigs and zags, we defined our scale as making three sales into our direct channel each day.  As we progressed, we hit profitability and were able to add resources, but we realized that our plan for scaling business was not viable. So, we had to adjust our strategy and go after a second option.  This time our plan was to sell items to large companies to use as their corporate gifts.  This has had some success, but we are still exploring other options.  Specifically, we are looking at generating Internet leads in our area of the market.  Almost everyday we’re using the zig zag principle because it gives us the flexibility to adjust and change course within the boundaries that we have set.  As we’ve seen obstacles, we’ve skied around them.  And we’ve been prepared to do so because we know they’re going to come.  My experience has taught me there is a much higher probability of success when you use this principle.

Summary

      Zig number 3 involvesa major shift in mindset.  You are no longer working in your business; you are working on your business.  Your are becoming deliberate and you have structures in place.  You’ve survived the determination phase.  You’ve survived the discipline phase.  Now you can leverage yourself, leverage the value of the market you’re in, and start to really see some success.

Eighteen years ago my wife and I built a home. One of the first things we did upon completion of the home, in the middle of the winter, was acquire a peach tree. With much diligence and hard work, we were able to chisel a hole in the frozen ground and plant the peach tree.

This peach tree has been a joy and a blessing for our family. Within a year or two, this peach tree was bearing peaches the size of grapefruits. The peaches were luscious and delightful and succulent. Each year, one of the things I lookedforward to more than anything else, is when those peaches come on the tree.

For the last 16 years we enjoyed those peaches. Then about a year and a half ago the tree got a bore in it and the poor thing deteriorated until this last summer it became evident that I was going to have to cut the tree down.

This past weekend, my family and I had a big yard-work day. With a little bit of sadness I gathered the family around and we all grabbed hold of that old peach tree and we thanked it. We had a conversation.

We said, “Goodbye old friend. Thanks for serving us so well. You’ve had a good life and you’ve been so fruitful. And we’ve enjoyed you so much. But obviously you’re in misery now.” After we thanked the tree, we took out the chainsaw and cut the thing down.

We dug a new hole with expectation of planting a new peach tree. The location is perfect. Warm air from the dryer vent blows onto the tree and indeed that’s what made the blossoms take when many of our neighbors’ peaches were freezing.

The point of this blog post isn’t to tell you to have a conversation with your peach tree. But it is to encourage you to acknowledge those individuals in your business and in your life who have impact and who bear fruit.

We so frequently gloss over them. We don’t take the time to thank them and to acknowledge them. Sometimes they come and they go. Hopefully we don’t take chainsaws and cut them down, or worse take words and cut them down. Instead, as these people come and go from our lives, we need to take time to thank them and build relationships and networks, which are more enduring.

At the end of the day business and money is really just a fleeting thing; but the relationships and the tender exchanges that we have in our life are really powerful and beautiful, and actually the more meaningful part of living.

Next time someone does something of significance for you, or next time you see someone who made an impact in your life, make sure that you take time to put your hand on their shoulder, look them in the eyes, and thank them for their contribution. Of course, this will cause more fruit to be borne out of the relationship, but more importantly, it’s just the right thing to do.

Zig number 3 requires yet another shift in mindset.  In Zig number 1 you are doing everything, and you are working hard.  In zag number 2, you become the head cheerleader, and you are defining processes.  Zig number 3 requires deliberate planning.  It is very cerebral. It is the academic part.  It’s a shift that is hard for many people to go through.  Working hard and working cerebral don’t always go well together unless you consciously acknowledge these two forces and plan the expenditure of your energy accordingly. 

As you shift to your cerebral effort, you are standing back from the minutia, analyzing it, and determining what little levers you could flip that would have significant impact.  In other words, you’re deliberately thinking, “If I do such and such to the business, then we can accomplish this.”  Up until now, your efforts have been all about action.  Now you’re looking for ways to maximize the work being done, and for ways to shift your work to others.

One of my recent ventures involved building an email list of several thousand subscribers.  That’s not a huge number, but for this particular niche we had amassed a sizeable database.  We had gone about building this list in a hundred or more different ways.  We tried one thing, and if it failed, we tried another.  We worked fast and we worked hard, which meant we didn’t always refine our efforts to the point of perfection.  In fact, in many cases we settled for “good enough.”  This is what my friend meant when he said he was “Striving for mediocrity.”

After we had built our email database to what we determined was our critical mass, we set about to craft the pitch that had always been our endgame.  We had one chance—an email blast that, if people responded, would bring us the success we had been building toward.

At this point, our strategy shifted from action to considerable thought.  “Good enough” no longer was.  Whereas early on we had thrown together things that took literally minutes, we now spent hours and hours on this one pitch, running our final effort through layers of strategic review and approval.

I can’t tell you exactly where you’ll need to expend your cerebral capital.  What I can do is encourage you to carve out time to step back, get away, and do the thinking that will identify where you can focus, refine, add resources, create processes, and move toward the scale that will create value whether you’re in the office or enjoying the fruits of your efforts.

I can also tell you this.  I have had very little success getting to a scale component when I’m in a crisis or in a reactionary mode.  I’m great at solving problems, but I am lousy at coming up with new ideas when I am in that task-oriented, problem-solving mindset.  Find time to get away to a relaxed, calm atmosphere when you’re generating ideas for how to scale your business.  I have had enough ideas come while I am on the golf course to justify my green fees for the next ten or twenty years.

Zig number 3 requires yet another shift in mindset.  In Zig number 1 you are doing everything, and you are working hard.  In zag number 2, you become the head cheerleader, and you are defining processes.  Zig number 3 requires deliberate planning.  It is very cerebral. It is the academic part.  It’s a shift that is hard for many people to go through.  Working hard and working cerebral don’t always go well together unless you consciously acknowledge these two forces and plan the expenditure of your energy accordingly. 

As you shift to your cerebral effort, you are standing back from the minutia, analyzing it, and determining what little levers you could flip that would have significant impact.  In other words, you’re deliberately thinking, “If I do such and such to the business, then we can accomplish this.”  Up until now, your efforts have been all about action.  Now you’re looking for ways to maximize the work being done, and for ways to shift your work to others.

One of my recent ventures involved building an email list of several thousand subscribers.  That’s not a huge number, but for this particular niche we had amassed a sizeable database.  We had gone about building this list in a hundred or more different ways.  We tried one thing, and if it failed, we tried another.  We worked fast and we worked hard, which meant we didn’t always refine our efforts to the point of perfection.  In fact, in many cases we settled for “good enough.”  This is what my friend meant when he said he was “Striving for mediocrity.”

After we had built our email database to what we determined was our critical mass, we set about to craft the pitch that had always been our endgame.  We had one chance—an email blast that, if people responded, would bring us the success we had been building toward.

At this point, our strategy shifted from action to considerable thought.  “Good enough” no longer was.  Whereas early on we had thrown together things that took literally minutes, we now spent hours and hours on this one pitch, running our final effort through layers of strategic review and approval.

I can’t tell you exactly where you’ll need to expend your cerebral capital.  What I can do is encourage you to carve out time to step back, get away, and do the thinking that will identify where you can focus, refine, add resources, create processes, and move toward the scale that will create value whether you’re in the office or enjoying the fruits of your efforts.

I can also tell you this.  I have had very little success getting to a scale component when I’m in a crisis or in a reactionary mode.  I’m great at solving problems, but I am lousy at coming up with new ideas when I am in that task-oriented, problem-solving mindset.  Find time to get away to a relaxed, calm atmosphere when you’re generating ideas for how to scale your business.  I have had enough ideas come while I am on the golf course to justify my green fees for the next ten or twenty years.

Last weekend I was in Dallas Texas lecturing on the book. As I was racing home I was very excited to see my family–most specifically I was looking forward to spending some time with my beautiful wife.

As we frequently do when I’m traveling, my wife and I exchange texts back and forth. Just as I was getting on the airplane and the stewardess was scurrying us along and rushing us to shut down our cell phones so we could have an on-time departure, I quickly sent this final text to my wife, “Loving my wife.”

I thought, what a fitting way to send a message before I departed for home. I pressed send and didn’t think anything about it. I sent the message, shut down my phone, buckled up, had a productive flight working on some things, read a little bit of a book—it was great.

When we landed back in Salt Lake City, I turned my phone back on and…bop, bop, bop, bop, goes the phone. It delivered a whole sequence of text messages from my wife. I looked down in dismay to see that my wife was slightly ruffled.

When I had sent the text, “loving my wife”. The autocorrect had interpreted it to say, “leaving my wife”, not loving my wife.

Of course my wife knows I’m totally committed and I’d never leave her so we got a bit of a chuckle out of it. But I thought, how frequently in our businesses we have good intent, but we’re very sloppy on the communication and the delivery of our messages–specifically on our elevator pitch, or what we call our catalyzing statements, or the emotional fuel for our businesses.

In the elevator pitch, you only get one chance to tell someone about your business. You have just one sentence to get their interest. Anytime someone asks what you do, and you go on for 5-minutes, you’ve lost them. You’ve got to able to quickly and concisely drop them a snippet and capture their attention.
My experience is that more often than not we have very good intent, but very poor delivery. If there’s one place that you could use a marketing expert or someone to really craft your message–it’s on that elevator pitch, or in those really critical communication deliveries. Certainly you don’t want to convey a missed message, as I did.

Zig Zag, communicate effectively, and have a great life.

Have you ever thought how closely connected success in your business and success in your marriage are?

I have, and I am convinced that when I am happy at home, I am more creative at work. I have more energy. I am definitely more productive, and I seem to make more money.

My dear friend Dino Watt and his wonderful wife Shannon pointed out this powerful concept to me recently. They have a company called the Business of Marriage where they help people learn to strengthen their marriage without sacrificing business success.

In short, they take the best systems and practices used by successful companies and help you infuse them into your marriage. This will help you have more love, passion and fun in your relationship. It’s really a unique concept that is revolutionizing the traditional way to overcome your marriage challenges, and it aligns perfectly with Zig Zag Principle number 10: avoiding the all-or-nothing trap.

And now Dino and Shannon have just released a FREE four-part video series called Marital Revolution, and we want to give you access to it. Just click here to see what it is all about. You can thank me later.

You need to act quickly though because they have only given me permission to send out this information until midnight on November 22nd. So don’t wait! I can’t believe they are giving away this much content, some of which their mentoring clients have paid up to $5000 to learn.

I’m watching the videos, too, so come learn with me how to strengthen your marriage and your business.

Here is a common story for entrepreneurs: You’re building your business. You’re zigging, you’re zagging. Then suddenly you’re stopped cold by a lack of financial resources.

But what if you actually have a lot more resources than you think?

Financial Advocate Garrett Gunderson is an expert at helping entrepreneurs and professionals uncover and leverage hidden financial assets.

I’ve asked Garrett to join me on a free teleseminar on November 3, 2011 at 6:00 pm PST, 7:00 pm MST, or 9:00 pm Eastern to expose the most common financial mistakes that stop business owners from progressing and rob their cash flow.

Furthermore, all attendees will receive a free, signed hardcover copy of Garrett’s New York Times bestseller, Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.

Access the call by dialing 801-656-2240 and insert the following number code: 021334#.

Garrett will reveal practical techniques that he uses to save his average client $11,700 per year in taxes and increase their monthly cash flow by $1,600.

Join the call to learn:

•    The monumental mistake most business owners make that creates stress and headaches and imposes frustrating limitations on your business growth.
•    The “Terrible 3” financial blind spots where entrepreneurs routinely lose cash without even being aware they’re losing it.
•    The 7 specific financial areas you can fine-tune to recover and maximize lost and inefficient dollars.
•    Why Dave Ramsey-style extreme budgeting is misguided and completely unnecessary.
•    How to optimize your current cash flow to be more profitable in the long-term while still enjoying your money immediately.
•    Why increasing production is far superior to decreasing expenses.
•    Why traditional financial advice robs your dreams, makes you lose control of your assets, and costs you hundreds of thousands of dollars over time.
•    How to turn your business wealth into personal wealth.

I want to help you zig zag your way to success. Join Garrett Gunderson and me for a free teleseminar to learn the most common financial mistakes business owners make that impede their progress and rob their cash flow.

All attendees will receive a free hardcover copy of Garrett’s New York Times bestseller, Killing Sacred Cows: Overcoming the Financial Myths that are Destroying Your Prosperity.

Access the call by dialing 801-656-2240 and insert the following number code: 021334#.

Won’t you join us?

November 3, 2011 at 6:00 pm PST, 7:00 pm MST, or 9:00 pm Eastern

What an amazing journey The Zig Zag Principle has been!

I want to so publicly acknowledge and thank all of you that have been involved in this great endeavor. 

There are two types of victory.  There is the private victory and there’s the public victory.  I am so thrilled about the public victory! We hit the bestselling lists!

- We were #3 overall on Amazon the day the book was released. On Amazon we also hit:
- #1 on the Movers and Shakers list
- #1 in Business Management
- #1 in the Motivational category
- #1 in Entrepreneurship
- #1 in Psychology and Counseling
- #1 in the category Life

We are #5 overall on the USA Today list.

And the public victory I am really excited about is that The Zig Zag Principle is the #6 bestselling book in Inc. Magazine. 

These listings stand for great public successes and victories. But the successes that I am the most excited about, is you.  I love the private successes. 

I get to hear the stories from individuals who are wresting control of their life. I love the stories of people take back their life—both emotionally and financially. These are the success stories that I am the most excited about. 

I thank you again so much for your support in The Zig Zag Principle and I hope that you will join me in having a zig zag, joyful, amazing, successful life.  Thanks again so much for supporting me on The Zig Zag Principle. Go forward and have a great prosperous life.

 I do have some businesses that do not fit into these last two categories but have been very stable businesses that have scaled well.  My wife and I started purchasing rental properties many years ago.  We bought our first fourplex at a fire sale after the owners went bankrupt.  We put enough money down that the cash started flowing from the moment we bought it.  As we obtained more cash, we paid off this property.  Through trial and error, we have been through the learning curve to know how to manage these rentals.  With the money we made from that first rental, we bought another rental property.  We added resources by hiring a repairman and other people to help manage the properties.  We hired our sons to work on these rentals, as this was a great way to teach them how to work hard. (I’d hire my daughters, but we don’t have any.)  One by one, we purchased rental properties that got us to cash, paid them off, and then purchased more.  The great thing about these properties is that they are income-producing assets.  Even as the housing market took a nosedive, our rentals remained full.  Those people who no longer qualified for mortgages needed places to live and were happy to live in our rentals. 

      When my partners and I started CastleWave, we first got our initial SEO contracts to drive us to profitability, and then we hired the engineers we needed to build our resources. Then it was time to add scale.  The scale component in CastleWave was our link-building component—the ability to get other authoritative web sites to direct traffic to the sites for which we were consulting.  Our expertise in this area was our number-one value asset.  We put together a pragmatic system—aset of processes and approaches that were bundles—that we could then have our employees replicate and follow, allowing my partners and me to focus on other issues. 

      If done properly, scale allows you to develop a system and train other people in how to use that system. Put together an entire system and process using all your rules of engagement, and then flip the switch and start cranking out the cookies.  A cookie-cutter system is what will get you to scale.

      Microsoft Windows is a great example of scale.  How many times did Microsoft build Windows?  Yes, Bill Gates and company have released updates and improvements (well, most of the time), but they really only built the program once!  And they have been able to sell it millions and millions of times over.  Virtually every PC sold has Microsoft Windows already installed, and Microsoft gets a royalty each time a person opens their box.  Now that is scale—and the reason why Bill Gates is one of the richest men in the world!

I have developed four rules I follow whenever I create a business.  There are times I violate them, but I do so deliberately.  Keep in mind that these are my rules that fit into my skill set and values.  You will need to look at your own situation and determine the rules that work for you. 

Rule # 1 – Ride a Wave:  I like businesses that are on a wave.  Just like a surfer who gets in front of a wave and rides it to the shore, I want the environment to be right before I get on a wave in my business or my life.  If the wave is big enough, then just being in its vicinity will generate enough power to propel you toward your destination.  But if you catch that wave wrong, life can come crashing down around you.  The key is to get on and off the wave at the right time.  September 12, 2001, would have been a terrible time to start an airline.  This same day would have been the perfect time to start an anti-terrorist airline security business.  Purchasing a row of new condos in 2006, when housing prices were at a point where experts were beginning to see they were unsustainable, would have been a bad move.  Purchasing those same condos after the housing bubble burst and prices were slashed in half would have been the right time to add scale.  You need to assess your environment and pick the right waves to ride.

Rule #2  – Transaction Businesses:  I like businesses that sit in the middle of a transaction.  A well-known example is credit card companies, which make 2-5 percent every time one of us slides our credit card through a reader.  None of us give what we’re paying a thought (and if you think we’re not paying, think again).  Merchants are happy to pass along the fee because the convenience brings more people to their business.  Customers love the convenience of not having to carry cash or write a check, so they willingly pay their annual fee (and high interest rates) as well.  Positioning yourself in the middle of a transaction puts you in a great place to make money.

Rule #3 – Own the Customer:  I like to own the customer.  I don’t like being in a business where I can’t look into the eyeballs of the customer and resolve the issue.  I like to be in the middle of the transaction, but I do not like being sandwiched between brokers.

During the rise in the housing market, I was riding a great wave with a company called Mortgage Saver 101.  We had an awesome web site that generated leads of people looking to obtain mortgages.  The company was riding a wave and was a transactional and a digital business.  The only problem was that we did not sell our leads directly to the banks or the people who were coming to refinance their loans.  We sold our leads to a broker who would then sell them to multiple vendors.  Many times the broker would come back to us and say he did not like some of our leads.  We would ask what he didn’t like and he would simply say, “It wasn’t a quality lead.”  Without being able to talk to the bank or the customer, we were left to guess at what they really wanted.  This left us very vulnerable, giving all of the power to the broker.  If there was a problem, we had no way to solve it.  On the other hand, credit card companies are good examples of being able to own the customer.  The credit card company can communicate directly with the merchant that is selling the product or the customer that has signed up for the credit card.  They own the customer.  They can manage the relationship on both sides of the transaction.

      Rule #4 – I Like Digital Assets:  This is my very personal preference, but I love digital assets.  I really do not like retail.  Why?  Because I stink at retail.  I don’t have enough discipline and I am not patient enough to succeed in retail.  It doesn’t scale as well for me.  I know many other people who have been highly successful in retail, but it is just not my preference.  Once I make a website or an application, I have made it once and as many people as want to come will fit into that store.  That’s the primary reason I like digital assets. 

At one point or another in our personal lives and our careers we get into a desperate mindset or a desperate mode of operation. I found this to be incredibly destructive, and actually counter productive.

As we slip into this mode you can typically tell because the volume and intensity with how we approach our customers, our clients, our employees, and everyone else is just notched a little bit too loud. At what point you want something so badly that you can’t do without, you know you are doing desperation.

My wife tells the story of driving through our little town and seeing a big poster on one of the little mom and pop clothing stores. The sign said, “Please shop here. I need to feed my children!”

That’s doing desperation. A person’s first thought is, “Oh, I’ll help out that shop owner.” But then that thought is quickly followed by another, “Oh, I don’t want to fall into that trap.”

Here are three things that I’ve found will help you avoid desperation not only in your business life, but also in your personal life.

Number one, put a buffer in place. Inevitably you’ll hit bumps in your personal life and in your business life. I put a three-month minimum savings buffer in the business. And I maintain more than that in my personal life.

Next, don’t risk what you can’t afford to lose. If you’re not in the position to risk at the level that you’re risking, that causes an extreme amount of desperation. So don’t risk what you can’t afford to lose. Before hand make a conscious decision and determine your level of risk.

Finally, if you do get into the desperate mode of operation…back off. Take three deep breathes. Consult those around you. Take a backdoor approach to it. If it is just simply beyond recovery—punctuate it. Don’t go deeper down the rat hole.

I frequently talk about my philosophy of failing efficiently. If you’re going to have a failure and you’re chasing it down the rat hole. Don’t keep following after it, to an even worse death. End it. Put that one to bed. Move onto the next thing.

I know this is an easy topic to discuss intellectually. But emotionally it’s a very difficult topic. I still find myself in modes where I’m doing desperation. I experience this particularly when it’s beyond my realm of control. When I put everything out there and it’s out of my hands, I often struggle with desperation.

I do strongly suggest that we stay in a positive non-desperate, non-threatening mode. Things just go much better in that mode. The putts fall better. The business comes together. Everything flows better and it is much simpler when you’re not in desperation mode.

Go forward, zig zag to success, and have a wonderful week.