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Big Data for Small Businesses

My first exposure to ‘big data’, although we didn’t call it that, was in the insurance industry. We did however work with very large data sets, with millions of records. Insurance is an interesting product, because you don’t know the cost of the product before you sell it. It’s unlike any other product. Say you’re baking cakes, you know how much the flour cost, the eggs, the sugar etc. You know how many cakes you can make with that amount, you know your fixed costs for running the business (rent, rates, insurance etc.), and you know the price of the gas or electricity for running the ovens.

You can add this all up and divide it by how many cakes you’re making, and you know each cake cost a certain amount. You know all this before you even sell any cakes, and then you can price the cake to be higher than this amount and guarantee a profit.

An insurance policy is entirely different however. It’s an agreement to cover potential future costs for a fee – the premium. So when you sell an insurance policy the cost of it is unknown at the time of sale. You may find out later that you sold it far too cheaply, and lose a lot of money, or that you were selling it far too expensively, and putting off customers unnecessarily. This is where the actuaries and pricing teams came in. The actuaries would pore over tens of thousands of historic claims, building models to predict the average cost of the customer. It was surprisingly accurate. Sure, individual to individual, mistakes would be made. But over the long-term, things would even out quite well and we’d often be close to our predictions. Each year we could feed the new data back into the model and refine it, and get better and better over time.

We would also bring in new data sources constantly. There were some interesting things that popped up. One funny example is that we would find people who kept their cars in garages, were much more likely to have expensive claims for their cars being damaged when parked by the road-side. This at first glance seems paradoxical. Surely, a car kept in a garage, is much less likely to be damaged by the road-side. That’s the entire point of keeping it in a garage. Except people know this, and so they lie on the insurance form and select the ‘I keep my car in a locked garage’ option to try and game the system and get a cheaper premium. And so the majority of the policies with ‘cars in the garage’ were actually people in high risk areas, who when first quoted their premium were rightly being charged higher premiums, and so lied to try and save some money.

Legality aside, there is a moral issue here as well. Claims are paid not by the insurance company, but by the policy holders of people who do not claim. If the premiums are high, it’s often down to the fact that the money is needed to pay for the added risk of that type of policy. Insurance companies just calculate that risk, then add a few percentage points for profit, and then sell the insurance. So when people cheat and try and defraud insurance companies, they are really just defrauding other members of the community who are then forced into paying higher premiums to cover the additional costs.

Another interesting example of innovative data sources, was that people who buy their insurance more than one week before the previous policy expires, are much less likely to claim than people who buy the same week, or especially the same day. So let’s say your policy runs out on 15th May, if you buy before the 1st May, you are significantly less likely to claim than if you buy on the 14th or 15th of May. The reason for this may not be immediately obvious, until you realise that insurance is a people-industry, and that one of the biggest risk factors in selling an insurance policy is the person you are selling to. Someone who is purchasing last-minute insurance, is quite likely to be disorganised and irresponsible compared to someone who is purchasing well in advance. This person is more likely to leave the gas on, less likely to get electrical checks done on their property, more likely to leave repairs outstanding that could lead to water damage. These are all things that the insurance company will need to pay for in the future.

And like I said, these methods were surprisingly accurate. The European Union brought in an anti-discrimination law that prevented insurance being priced differently for men and women. Personally, I wasn’t in favour of this. Partly because it is completely fair to charge men and women differently, because the risk is actually different and pricing according to risk is the entire point of insurance. It is not sexist or discriminatory to do this, it is just cold, hard statistical fact. Insurance pricing is by nature discriminatory, and if you want to take this to it’s logical conclusion, the correct thing would be to charge everyone the same fee. Regardless of how responsible someone is and how unlikely it is they are to claim, they would be charged the same as someone who is extremely reckless and doesn’t take the same care as they do.

The second, and more practical reason I was against it, was it was a total waste of time. The law stated that we were not allowed to use the person’s gender to price the insurance, which we didn’t. The interesting thing was, we didn’t need it. Men and women’s behaviour is so consistent, that we could actually infer the person’s gender by looking at other factors. Such as, make and model of car, age of car, colour of car, occupation etc. We are able to accurately predict someone’s gender, to an accuracy of 80%, based on what they did, what car they drove, where they lived and so on. And so we transferred the price loadings out onto these different variables, and charged everyone basically the same premiums as we were doing before. It was a 2 year project that achieved nothing ultimately.

Still, it just goes to show the power of the law of large numbers, and the benefits insurance companies were reaping from this before it was given the buzz word of ‘big data’. More recently, companies like Facebook, Google and Amazon have been applying similar techniques, and in some ways more advanced techniques, to answer the age old question - “what will this person get their wallet out for and buy from me”. The question every marketer and salesperson on planet Earth wants to know the answer to. By using similar statistical analysis, and also by leveraging more modern techniques such as machine-learning, these companies harvest vast quantities of data about their potential customers, and use that to predict what they are likely to buy. It’s the exact same approach used by insurance companies for centuries – what is the probability this person will claim, and how much is that likely to be? Conversely, what is the probability this person will buy? And how much are they likely to spend?

And they know frightening amount of data about you. By tracking phone activity, Google can infer the times when you go to sleep and wake up. They can build a model of your sleep-schedule. They can also monitor what you spend on the internet, thanks to the genius that is Google Analytics (code that exists on almost every website on the internet and tracks everything you do). They might realise that when you are tired late at night, you are more likely to purchase electrical goods. They will then bombard you with these advertisements late in the evening. They might realise that people in your demographic, are more likely to book holidays when it’s raining, and so show you pictures of sunny beaches and so forth when your local weather station is reporting rain.

The amount of data being collected, and being published, is vast. There are APIs everywhere. APIs for tracking weather, shipping movements, housing data, government statistics, the stock market, customer behaviour. There are APIs for controlling remote computer programs, so that vast networks of automated bots can be built to harvest and monitor things, and execute commands in response to that. This is the ‘internet of things’, where big data and portable hardware meet to create a dystopian future where everything is tracked, logged, analysed, then automatically processed to try and make some more money. In recent years, large corporations have cottoned onto this fact, and are investing large sums of money in harnessing the power of ‘big data’. The big problem then for small companies is, how do they compete? They don’t have a multi-million dollar budget to splurge on researching new technologies, or experimenting with exciting new APIs or data-sources. What they need is plug-and-play solutions that can level the playing field and give them access to big data, and machine learning, and harness the power that is data-driven artificial intelligent systems.

There is huge potential for small businesses to start leveraging this technology as it becomes available. Wouldn’t you like to know, which of your customers are most likely to stay and pay more money? Wouldn’t it be great if you found a common denominator to the customers that never come back? Maybe they are all of a certain type of customer, or a certain age. Maybe, it turns out, that most of the people that try your product and don’t come back, are middle-aged men making small purchases. Once you know this information, you can think about what is driving it. Maybe this type of person is looking for something else, maybe they need more time or a longer trial, maybe they actually wanted something more expensive but you didn’t offer it. You can now target your actions to finding and solving the problem for this customer segment, and reap the rewards of it. Maybe you set up automatic systems in place that detect this type of customer, and automatically email them 3 days later and offer them a special discount.

(Published on 27 Dec 2019)


Compounding - 8th Wonder of the Universe

I’ve recently become very fascinated with this idea of compounding. It reminds me of the classic school maths question of simple interest vs compound interest. You know how it goes. Stuffy exam hall, sun beaming in through the windows, the guy next to you with the squeaky desk that makes you want to get up and throw him out of his chair every time he starts rubbing out one of his answers:

14) Bill has £100 to invest. He gets two offers from different banks. One is for 10% per year simple interest over 10 years. The other is for 5% compound interest over 10 years. Which should he go for?

It’s kind of an artificial question, because they’re not including other options like stocks, or taking into account how much short-term debt Bill may have built up on his credit cards chasing women and living the high-life. But this deceptively simple question touches upon one of the most interesting things about living itself. The forces of compounding.

Another way to look at it, is what are called feedback loops. The term comes from the unpleasant sound you get by holding a microphone too close to a loudspeaker. The microphone picks up sound energy, converts it to electrical signals, feeds that signal to the speaker, which amplifies it and then converts it back to sound energy, which feeds the microphone etc. Etc. We have A feeding B, and B feeding A. This feedback loop then compounds and rapidly escalates the noise to the ‘who the bloody hell is doing that?’ level.

Ok so back to the maths. Simply put, this is the difference between an arithmetic (or linear) progression or a geometric (or exponential) progression. Linear progressions are repeatedly adding the same amount over and over again. Something like this:

3 + 3 + 3 + 3 + 3 + 3...

And if you plot this on a graph you get a straight line. A geometric progression is repeatedly multiplying by the same amount, so something like

3 X 3 X 3 X 3 ...

And if you plot this on a graph you get a nice upwards curve. But this curve starts off slow, then gets faster and faster and faster. The effects feed back on each other, and they compound to produce a VERY large effect.

Ok that’s the end of the maths I promise. But the maths is important nonetheless, to understand the principle we then apply to other areas. Another comment that has stuck in my mind recently is one from Grant Cardone – “middle class people learn how to add, wealthy people learn how to multiply”. And I have a feeling he’s driving at the same principle here.

Let’s look at some interesting feedback loops I’ve observed or even experienced myself. I was actually pretty decent at maths when I was at school (and went on to get a Masters Degree as well!) but I was always a bit miffed at how I was perceived as ‘gifted’, or ‘lucky’ by other people in my class. They couldn’t understand how I often knew the right answers. What they didn’t know is in my free time at home, I would read the textbooks we were given, or try things and be actively pursuing the knowledge in my own free time.

I did, basically, work harder than they did, and ultimately got the rewards of that. But I think compounding is an important factor. You see, when you first start learning a subject, it is difficult. The difficulty of it makes you feel stupid, serves to demotivate you, and that leads to people investing less time and effort into understanding the subject.

This lack of time and effort invested only serves to cement the incompetence, which then produces bad results and re-inforces the lower levels of motivation. It’s a negative feedback loop, and one that can be hard to get out of. I should know, I’ve tutored numerous students in this situation with maths. There is a way out however, and the way out is to begin a positive feedback that will counter the negative one. The solution is one I got from L. Ron Hubbard’s book, “The Problems of Work”, in which he says to find ONE thing, no matter how simple, that someone can do, and stick with that until they can do it.

That sense of accomplishment they get from mastering one task, serves to motivate them to try something else. And you then stick with that one thing until they get that. Then the confidence builds, and the person is on the road to recovery. They are on a positive feedback loop that will pick up momentum and carry them over the line.

I think life is like this. I think everything we do has feedback loops. Things start slow, so people don’t seem to feel there is any progress. What they don’t understand is they are starting off at a 1% growth rate on a tiny principle of $25.

Small multipliers of small amounts don’t result in much change. But, over time, feedback loops develop and start to build powerful forces that cannot be stopped. Let’s take a simple example. Let’s say there is someone down on their luck, working a minimum wage job with no opportunities.

One solution to this problem, is to get down about it, lose hope, start drinking and smoking, and give up on themselves. Ten years down the line and this person could be a total mess. Drinking is expensive, it impacts your health and mental health, which in turn makes it harder to take advantage of opportunities. The added expense means they haven’t saved any money, can’t invest in things that could create opportunities for themselves. Etc. Etc. They can quickly get into a negative feedback loop and traps them in a hell-hole of a life.

I’m actually writing this article sat in a public library right now surrounded by books. Each and every one of them is free, all you have to do is walk in and start reading.

Imagine this same person, instead of going for a drink every evening after work, came to the library to read for 1 hour. That’s all, 1 hour a day. And then let’s say 5 hours over the weekend. Doesn’t cost any money, doesn’t cost anything they don’t have, just a bit of their time. Well that’s 10 hours a week, or 500 hours a year. So over that same decade that would be 5000 of time invested in their own mind and knowledge.

I would be very surprised if that person hadn’t learned something new and valuable they can take into the market place and make more money with it. Very surprised. And all that money they didn’t spend on drink, could be invested in a nice stock portfolio worth $50,000-$100,000 earning them passive dividend income.

Gary Vee always talks about patience, and I think this is also what he might be driving at. Patience to recognise that feedback loops take time to develop. I think a vital part of success in life is to recognise negative feedback loops when they develop and nip them in the bud before they grow out of control. Another key ingredient is to plant seeds and invest in positive feedback loops, and have the patience to wait until they bear fruit, then reinvest the results back into the feedback loop.

I think the ingredients to success are well known. Most people know they should exercise more, drink less, eat better, control their expenses better, learn more, work harder, be kinder to people, improve their attitude. What I suspect happens to a lot of people, is they get 1 month into a project like that, don’t see any results, and throw in the towel. And that is why they are not successful. The do not understand compounding and how it works. It’s like a child planting a seed, then coming back every ten minutes to see how it’s getting along. And at the end of the day concluding that the seeds were no good and throwing them, and the soil, in the bin.

Now, we have to guard against one potential trap. And that is being SO patient with something that actually has very little positive benefit. Don’t invest $1000 in a bank account paying 1.00000001% interest. It will take a million years before you see the benefits of that investment! Luckily for us, we don’t have to take those kind of risks. Like I said, the ingredients to success are well known. Educate yourself, push yourself, keep good company, eat well, take care of yourself, exercise discipline and self-control, work hard, keep your spirits up, help other people. Keep doing these things and in 10 years time you are almost guaranteed success. The compounding effect will be too strong to be undone.

(Published on 14 Nov 2019)


How not to start a business

So after many years of trying to break out of the "9-5" and achieve "financial freedom", I've learned a good few lessons on the way which I wish I'd been told before I began. Surprisingly it's not all sunshine and roses and so this is information that will NOT be given by people selling courses promising financial freedom. Not that these people necessarily say anything untrue, but they will of course be selective in the information they present in order to show their products in the best light possible, in order to increase sales. This brings us onto lesson number 1:

Lesson One - The Buck Stops With YOU!

First of all, nobody else is going to help you, really. Family might, if they can, but most people are too busy dealing with their own problems to help you with yours. Either you get it right, or you get it wrong. If you're wrong, you pay the price and no-one else. So Due Diligence is SO important! If you get into bed with the wrong person, YOU will pay. Not them, Yes they shouldn't do it. True they should be more trustworthy, honest, decent etc. But if they are not, they are not. And usually with small amounts of money (i.e. in the thousands) the legal costs of recovering it are greater than the value of the money. Dodgy people know this and so they will sell you "products" for a few thousand each then leave you in the dust. Once that's happened, there's basically NOTHING you can do about it. Unfair? It sure is. If you get yourself into a mess there's no one else to blame but yourself. And there is no one else that will dig you out of it either. Deal with it.

Lesson Two - People Have an Agenda

This is closely linked to lesson one. Ultimately you have to look at lots of different sources of information, and think about why that person is saying it to decide how valuable or truthful that information is. I'm going to be blunt with you, I have three reasons for writing this article. First and foremost is a benevolent purpose, to help people who try to walk the same path I have walked, hopefully with less stress than I have been through (yes people can be good). Second of all, to drive traffic to my own personal website (yes I am a self-interested person like everyone else on the planet despite what they may say). Third of all, to vent my frustrations at not being wiser and having made bad decisions.

If you are smart, then you would have thought about my intentions before you even started reading this article. And you would be evaluating what I write against those intentions to see if what I'm saying is truthful or not. IF YOU DID NOT DO THIS, then I'm afraid to say, you are as foolish as I once was. I can tell immediately that you are gullible and will believe what other people say without thinking critically about it and analysing it for validity. You are WIDE OPEN to being taken advantage of. Watch out. The best example of this I came across recently was a "quote" by JFK that was posted on Facebook. The "quote" was written next to a picture of him writing on a desk. I did a bit of digging around and found NO EVIDENCE whatsoever that he ever said this or anything remotely like it. I could not find one single source or public record that he had said those words. Yet on the Facebook post there were all sorts of reactions to it etc. People had not bothered to check it and just because it looked good, people bought it.

People that sell methods of getting rich, are trying to get rich themselves by selling you those methods. They benefit from people BUYING THEIR PRODUCTS, not from people actually getting rich. Therefore their goal is not to make you rich, but to make you think they can make you rich so you buy the course. If they worked on commission based on the increase in your wealth then they would be incentivised correctly and you could much more easily trust what they say. For example, people that have bitcoins will promote bitcoins, as they directly benefit from more people joining the party. Look to see what someone's agenda is, what their incentives are, and see if you can really trust what they are saying. Maybe they are telling the truth, maybe they are telling part of the truth, maybe they are distorting the truth, perhaps they are out-right liars.

Lesson Three - Deal with Facts

Due diligence is an interesting one. If a poor person is offering you financial advice, be careful. If a divorced man is offering you marriage advice, watch out. If an overweight person is offering you nutrition advice, continue at your peril! As for me, if you just started reading this article you basically know nothing about me and have no idea if what I'm saying is true or if I'm just making it all up. You should have a think about it and see if it is true for yourself. Maybe you should check out other parts of my website and see if I talk sense (again I am cleverly plugging other articles to generate more traffic MWAHAHA). You should ignore what people say. Look at what they DO.

If a guy is selling you a course on how to make money, ask him for his latest tax return before you shell out for the course. Find some PROOF that he has actually made the money he claims to make. Maybe he makes more money selling courses than he does doing the thing he's telling you to do? Then maybe he should be running a course on how to sell courses instead of whatever other product he's selling. You need to check if there are facts backing up what this person is claiming. If someone is selling a "business opportunity" then think about why they are doing that? Maybe if the business was so good they would make money by doing it not selling it? MLMs spring to mind. A good, value for money product, should be easy to sell and make you lots of money just by selling it. And for a potential business, what's the market size? How many potential customers are there really? I mean, realistically, actually people that genuinely will buy that product. What type of person are they, how do you market to them? How many competitors are there? If there is a potential client base of 2m, but already 4000 suppliers operating in the marketplace, you've got to do much better than the average to get more than 500 customers. Have any surveys been done surveys to estimate demand for the product? Get the facts.

If there is an "investment" "opportunity", then what type of investment is it? Don't just look at the juicy returns they offer, think about other things like - how does this investment actually make a return? Does it just "sound good", or can you actually understand exactly how it works and how it makes money. And has the same sort of research been put together that demonstrates the reliability of this particular investment. Market research, business plan etc. I got duped into "investing" in a scheme which promised exponential growth. I was reticent to begin with, but got pressured into it and stupidly agreed. Of course being a mathematician I KNEW it was impossible to achieve exponential growth for a sustained period of time. You very quickly get to a point of earning billions every few seconds. Completely unrealistic. Of course I let the shiny rewards I was promised cloud my judgement and went for it. Turned out to be a ponzi scheme (o rly?) and the guys that ran it went to jail. The money however, was gone.

If someone is asking for a loan, find out what they earn. Find out what they spend money on. Find out if they have other debts. Find out if they have collateral. Find out why they didn't just go to a bank and get a loan from those guys (maybe the bank declined for a very, very good reason). Ignore the noise, and get the facts. Look at what can be verified and make your decision based on that. Do what Judges do. They will always, before making a decision, check BOTH sides of a story. They will thoroughly investigate the case for and against, using FACTS that each side presents, before making a judgement. So before you decide to start a business, did you look over the government business statistics? Do you know how many businesses there are, what the average size of a business is, how many hours they work? How does the industry you are entering compare to other industries? What are the pros and cons of each? Again, before you start dreaming of all the cash that will be rolling in, also think about the potential downsides that you will encounter.

If someone is asking for a loan, find out what they earn. Find out what they spend money on. Find out if they have other debts. Find out if they have collateral. Find out why they didn't just go to a bank and get a loan from those guys (maybe the bank declined for a very, very good reason). Ignore the noise, and get the facts. Look at what can be verified and make your decision based on that. Do what Judges do. They will always, before making a decision, check BOTH sides of a story. They will thoroughly investigate the case for and against, using FACTS that each side presents, before making a judgement. So before you decide to start a business, did you look over the government business statistics? Do you know how many businesses there are, what the average size of a business is, how many hours they work? How does the industry you are entering compare to other industries? What are the pros and cons of each? Again, before you start dreaming of all the cash that will be rolling in, also think about the potential downsides that you will encounter.

Lesson Four - Manage Risk

That brings us onto managing risk. Football I feel is a great example. Christiano Ronaldo is one of the richest people in sports. He makes millions, something like $90m in 2016 alone. That is pretty good. So you ask Ronaldo how he did it, and he says "Well I played lots of football, then I got a job playing football for Manchester Utd, then I got paid loads and scored lots of goals and went from there". And you think, hmm that sounds easy! I will make my millions in football! Except of course it doesn't work like that. What about the hundreds of thousands of academy drop outs, those that get injured, have a bad run and get fired, or just never make it.

Did you think about the risks you are taking on before you get involved in a business. What if it makes no money for 3 years? What if I have to work 80 hours per week and end up earning less than my "9-5 job"? What if that guy never pays me back? What if this is a big scam? What if the partnership breaks down? What if the investment goes bad? My mother always said, never invest more than you can afford to lose. I accept that in life you have to take risks, but you should think about what you are exposing yourself to and are you willing to deal with the bad things that can happen as they inevitably will. And have you taken steps and measures to minimise the chances of bad things happening? Are you wearing your seat-belt? Don't lend without taking collateral. Don't invest without an exit strategy. Never work with someone without a contract. Don't start projects without having facts and data to know what you're getting into. Protect yourself or pay the price. There is an important concept in life. That is "Risk vs Reward". Generally speaking if you want a bigger reward, you take on more risk. The lowest risk strategy is to put £10 in a bank account and cream the interest. Of course the reward is low. The highest reward is to buy a £2 lottery ticket and potentially get millions of pounds. Of course the risk is, it's almost a guarantee to lose your money. So if you start aiming for bigger and better things, YOU WILL TAKE ON MORE RISK AND INCREASE THE CHANCES OF BAD THINGS HAPPENING. Accept that, be ready for it, and try to manage it and plan for it.

Lesson Five - Learn from Others

Look at how other people do things. Judges are professionals. Their job is to make judgements on the truth of things. They check facts and look at both sides. Do the same. If you lend money, look at how banks do it. They are the pros. They check income and expense, credit history, they get collateral. Do the same. Look at sports people. They are in great physical condition. If that's your aim, find out how they do it and learn from them. Do they go boozing every weekend? Probably not. Look at people that are actually rich if you want to be rich. How did they do it? Did they inherit lots of wealth? Do they have great contacts? Do they work hard? How are they successful? Do they take ridiculous risks without protecting themselves? Do they do MLM? Look at people that achieve great things, sportsmen, scientists, entrepreneurs. How do they live, what do they do? Find out.

Lesson Six - There's no Free Lunch

Basically don't be daft. Money is hard to get. Everyone wants it. If someone manages to convince you there is an easy or simple way to get money, then you've been duped. Think about it. If there really was just this simple little trick to make millions, EVERYONE would be doing it. They are not, so it's obviously not true, Yes you can get lucky, this is called GAMBLING. Yes some people are successful, but you can BET it's not because of some little trick they used, or some scheme they invested in or something like that. It'll be down to personal attributes like, their network or contacts, their charisma, their hard work, their ideas, their leadership skills, their daddy's inheritance etc.

Lesson Seven - Study Economics

Like, what makes you suddenly think you will be a great businessman? The seminar? Running a business doesn't automatically make you money. Same way as playing football doesn't automatically make money. To make money from a business you have to be a good business person. To make LOTS of money you have to be a GREAT business person. Same in ANY other industry. The great players make the most money. Do you really have the skills to be a success on this project? I could easily give a talk and explain that kicking a ball about can make you millions. It can, that is true. But it's RARE that people are skilled enough to make that amount of money, Most footballers are in the middle or bottom tier, either as amateurs or semi-professional or just earning a similar wage to other professions. It takes a certain type of person to run a business. They need certain attributes, same as a sports star. Sure, you can learn those attributes, but HOW LONG WILL THAT REALLY TAKE? I could learn to be an actor, but it WILL be a long and slow road, because I cannot act. To make more money than someone else, you need to be able to do things that person cannot do. It's that simple. Life is competitive, play to your strengths.

Like, what makes you suddenly think you will be a great businessman? The seminar? Running a business doesn't automatically make you money. Same way as playing football doesn't automatically make money. To make money from a business you have to be a good business person. To make LOTS of money you have to be a GREAT business person. Same in ANY other industry. The great players make the most money. Do you really have the skills to be a success on this project? I could easily give a talk and explain that kicking a ball about can make you millions. It can, that is true. But it's RARE that people are skilled enough to make that amount of money, Most footballers are in the middle or bottom tier, either as amateurs or semi-professional or just earning a similar wage to other professions. It takes a certain type of person to run a business. They need certain attributes, same as a sports star. Sure, you can learn those attributes, but HOW LONG WILL THAT REALLY TAKE? I could learn to be an actor, but it WILL be a long and slow road, because I cannot act. To make more money than someone else, you need to be able to do things that person cannot do. It's that simple. Life is competitive, play to your strengths.

Lesson Eight - Always spend less than you make

Always. Never, ever break this rule. If you have to violate this rule, you are doing something wrong. If you cannot raise your income, lower your living standards. Live in a smaller house, a different part of the country, go out less. Much better of course just to make more money, but you have to do one or the other. When you start down that road of over-spending, it's a long, long, very long way back.

Lesson Nine - Forget About Money

Money is the surface of the real game. The real game is, how can I help? How can I become more valuable to other people? How can I make other people's lives better? What am I good at? What do I need to improve? What can I offer people? If you don't have the answers to those questions, you probably should not start a business yet. For some strange reason we all know we will not become movie mega stars. But we are so easily convinced we will become business people stars. For some strange reason I decided to do MLM and sell products that I have ZERO interest in. I literally was only doing it for the money. When the money doesn't show up and the hard work begins, you lose interest and pack it in.

Lesson Ten - Be Smart

Have a strategy, have a plan, control risk, and focus on the right things. Think through your plan, is it credible? If someone came to you and told them the exact same plan, what would you think? Would you invest in that? "Uh yeah, so I'm going to like try this MLM and maybe it will make some money, and if it doesn't I'm going to go online and look for ways to make money and then like, um maybe go to this seminar and like, um..." No. Just no. Unbelievably I did something not too far off of that. Your plan should include things like: "I will do X, because of these FACTS I have reason to believe the outcome will be THIS. If that doesn't happen I have contingency plan Z as backup" etc. If a plan is good, like a game of chess, you can see there will be checkmate in a certain number of moves. Don't be afraid to make long term plans. Better to plan to be rich in 5 years and actually get there, than plan to get there in 6 months, find you didn't, and waste 5 years anyway running around on different failures. The road to the top is long and hard. I'm not saying don't go for it, but don't be so stupid to think you can get there in 6 months if you are starting from the bottom. If it's what you want, find out what you need. Find out what skills you need, develop them. Find out what risks you're taking, and make sure you're ok with that. I'm not saying don't do it, but as another friend of mine says - "Know before you go".

(Published on 2 Feb 2018)