Change Is Coming

As I have mentioned before, I have provided a lot of tax advice and accounts preparation which was the bulk of my business career even though I only started it as a secondary income.

If you're having trouble finding something to diversify into, it is likely to be for one of two reasons:

1. You don't value your experience enough

2. You don't value yourself enough.

Number 1 works out something like this "But millions of people must know more about X, Y and Z than I do?" That may be true. It's also irrelevant. As long as you know more than someone else, you can help them. Sometimes knowing much more than someone else is actually a hindrance to teaching them because you forget about what it's like to be in their position and to not just know stuff. I have to keep reminding myself that most people haven't had 30 years of experience with computers and there is stuff that they don't automatically know. This is known as being "Expert Enough" which is a phrase I first learned from Naomi Dunford and Dave Navarro but I see Corbert Barr has appropriated it too.

The logic is that 95% of people know virtually nothing about any subject so it doesn't take much effort to know more than them. With a little more effort, you can know more than 99% of people because the other 4% who know a little don't know that much.

Number 2 goes something like this "Who am I to earn money in this way? My folks worked really hard to put a roof over my head. I shouldn't be able to earn money this easily". I don't know about you but my mother worked really hard to give me an education precisely so I wouldn't have to struggle so hard to get what I wanted as she did. I consider it an insult to her if I don't use my brains after all the hard work she did to encourage me to do that very thing

But that's just me.

"But Phil! No body wants to pay me to play video games" Ah, yes they do

Six ways to make money playing video games

Millennial kids can earn $10,000 a month playing video games  

Yes, and it comes about by believing the very stupid belief that being good at something means that you will automatically be a good manager.

Take a simple example: a car mechanic is an absolute genius with fixing engines. So the garage makes him a foreman. Why? What is the mental gymnastics behind the thinking that because someone is good at handling cars, they'll automatically be good at handling people?

And sadly the managers believe it too.

But this idiocy is rife.

How has this happened? Because of the Peter Principle. Imagine an organisation filled with good managers and they promote someone to management who is a bad manager. This happens because no system is perfect so errors will occur. If the bad manager isn't removed, they will also pick bad managers underneath them. This will also erode the management ability of those above them simply by the fact that it will be a drain on resources to correct the consequences of the bad management decisions. This will affect other management decisions which will perpetuate more bad management. As the situation worsens, the good managers will leave for other organisation and be replaced by bad managers simply because bad managers won't want good managers who will show them up and good managers won't want to work with bad managers. This will breed more bad managers until the entire organisation is swamped.

The solution is horribly simple: you create an operations manual

Take the example above. You get the mechanic to document his work. That gives you a guide to give to the other mechanics

The foreman also documents their work. Then when the existing foreman is on holiday, you make the mechanic an Acting Foreman. All they have to do is follow the manual or make amendments if the manual is insufficient. If they do well, you can consider making it permanent sometime in the future. It they don't do well, you may give the title "Chief Mechanic" and send the hard work to them which is what they would prefer doing with the day anyway.

And even though writing was invented thousands of years ago, is taught in schools and is the root of civilisation, people treat this advice like I've just suggested that they poke their eyes out with a sharp stick.

The usual pathetic excuse is

"I haven't got time to write things down. I'm busy" to which I reply,

"Then get an intern to follow you around making notes while you dictate to them what you're doing. Problem solved"

Understand that "Wealth has use value and money has exchange value"

It's not absolutely essential to use Money but it is necessary if you don't plan to live forever because living without out it means everything takes a lot longer

It is possible to not bother with money and just exchange wealth items by the use of barter. But barter has all sorts of problems.

Let's take a simple example:

A farmer decides that he wants a cow so he can have milk for his morning cereal. So, he takes two pigs to a farmer's market. There he spies an excellent cow. He asks the farmer what he wants for it

Farmer 2 "26 chickens"

Farmer 1: "I've got 2 fine pigs, will you take them instead?"

Farmer 2: "I've got plenty of pigs. I want some chickens so I can have eggs for breakfast"

So Farmer 1 takes his pigs around the market to see who will trade his pigs for chickens. The first farmer he meets offers him 20 chickens but he turns it down because he needs 26. All day, he walks his pigs around the market and the best deal he can get is 25 chickens. He decides to try negotiating with the other farmer and takes a chance. He goes back to the farmer

Farmer 1: "I've got 25 chickens, will that do?"

Farmer 2: "It would if I hadn't sold the cow for 20 chickens"

Farmer 1: "But you wanted 26"

Farmer 2: "True but he had 20 right there and then and I didn't want to wait all day to get a price. So I sold the cow to him. Sorry"

As it was nearing the end of the day, the farmer decided that he would try to buy a lesser cow. He approached the farmer

Farmer 1: "I'll give you 25 chickens for your cow"

Farmer 3: "No thanks, I've loads of chickens myself. But I'll swap for 2 pigs"

Farmer 1: "Aaaargh!"

So Farmer 1 now had 25 chickens he didn't want, had to get home in one piece, had to find a way of feeding them and protecting them from foxes. All because he wanted a cow and didn't have something called money.

Now consider the same example but instead of wanting chickens, the second farmer wanted money in the form of 26 FarmCoin. Now the story unfolds in the same way until the first farmer discovers that the cow is already sold.

At that point, he can choose to go home with 26 FarmCoin in his pocket to be ready for the next market. If he does this, the FarmCoin are easy to transport, will not die on the way and don't need feeding when he gets the home. He can just keep them in a drawer until he's ready to use them.

However, if he chooses to go to a third farmer to buy the cow, he no longer has to worry about having the wrong "currency" because the third farmer will also value his cow in FarmCoin rather than in something he doesn't have. At this point, he also knows that the better cow from the second farmer was sold for 20 FarmCoin which gives him an idea of how much he should be paying for this second cow.

And so life is so much easier and simpler simply by using money.

If you want to see how much easier money makes things, watch this modern day attempt at barter.

But remember that money only has value if you have something to exchange. It has no value on its own

If that farmer had taken his 26 FarmCoin home, put it in a drawer and then forgot about it until he re-discovered it 20 years later, for those 20 years, that money has been useless. In fact, it would've also devalued by the rate of inflation. But that's another story.

So, if you want to be rich, you must understand that money is only any good when it's out working - by exchanging it for something else. In fact, you never want to be holding money if you don’t have to because it could lose its value at any moment. You should always store it in wealth items that can be converted into money when you need it.

There are two words you need to understand if you want to be rich:

ROI: Return on Investment. You want to buy low and sell high.

Repetition. You want to do that again and again and again.

So you could do this two ways:

Buy items that have a low use value for the people you're buying from who will be happy to let them go for a low price and then sell them to people who have a higher use value for them and so pay a higher price. Example: buying Manhattan from the native Americans in exchange for some trinkets. The problem with this is the lack of repetition - you can only buy Manhattan once and sell it once. True, you could repeat the same trick with other land and other Native Americans but that adds to the cost.

Buy something with a low use value at a low price. Then add value to it and sell it out at a higher price. Once you learn how to do it, you can do it again and again and again. Example: high-class chef - they take a few simple items from the ground, prepare them and, voilà, £250 per plate. Brilliant. Of course, they don't make real money until they write a cook book but that's another story.

So to become rich, all you need to do is find the best ROI for the quickest repetition rate.

It's as simple as that.

Of course, just because it's simple doesn't mean that it's easy :)

The most secure form of wealth is knowledge

It cannot be stolen because it doesn't matter how much they take, you will still have it. It can be sneaked across borders and it's lightweight.

What is this? Am I really suggesting that information is more valuable than silver and gold and diamonds and bitcoin?

Err ... Yeah.

Because you can sell it again and again and again. Try doing that to diamonds. Or the Mona Lisa. It's doesn't matter how many copies you make, you can only sell the original once.

All knowledge is valuable. To the right people.

You know how to change an electrical plug? That's not very valuable. Maybe. But it still has value and there are still people out there who will pay for that knowledge or the use of that knowledge. And if there's more than one, you can charge them all.

You know the story of The Old Engineer And The Hammer?

Personally, I think he was cheap. He could've sent them a bill that was a proportion of the saved costs of purchasing a new machine and the days of lost revenue whilst they waited for its delivery. At just 5%, that would've come to a lot more than $5,000. Or he could've come to an arrangement with the insurance company who looked after the business for a standard 10% Finders Fee for solving the problem.

Welcome to the Information Revolution, dude.

Not convinced?

OK. Let's take an example. You and me have both been declared dissidents and have to flee for our lives. We reach a remote area of the border controlled by bandits. You have 20 billion in Bitcoin which you offer to get through the border. Oops, there's a problem - no internet connection. it's too remote or there's just been a particularly large solar flare that's just put all communication satellites offline ( Impacts of Strong Solar Flares ) which scientists say is inevitable in the near future. How much do you have on you - nothing. Sorry, no good. I have some knowledge that the bandits will find useful - like where they can find medical supplies. So who gets to cross the border and flee for their lives?

Say I talk the bandits into letting you through too. Now you still have your 20 billion in Bitcoin (when you can find a connection). Me? My knowledge just increased because I've now got usable intell on those bandits that might come in useful later. And I know you have 20 billion in Bitcoin if I didn't before. Wow! Isn't it amazing how fast knowledge breeds?

Obviously, the most worthwhile knowledge to store the most wealth would be the type that most people would find valuable so I can trade with loads of people and trade at a good "price".

So, what would that be?

Now, I'm not going to tell you that because it would take all your fun away finding it out.

Oh, have I just shown how knowledge is wealth, again?

I have an annoying motto:

learning is the price we pay to stay alive

Learning doesn't need to be hard and it doesn't need to be time consuming but it does have to be consistent.

Michael E Gerber in "E Myth" separates work into three categories: the technician, the manager and the entrepreneur. He goes so far as to suggest that if the entrepreneur does technical or managerial work, they are wasting their time and not doing the one thing that is vital: being an entrepreneur. I don't know if I entirely agree with him but I can see his point and it is a good one. Think Captain Kirk. It's his job to point the Enterprise in the right direction and do whatever is necessary to keep it moving towards its course and mission. Where I would differ with Mr Gerber is that what he calls entrepreneurship I would call marketing. Every successful business needs someone who knows what the market wants and how much they will part with to get it. Think Steve Jobs at Apple or Rupert Murdoch at Sky TV. Calling them marketers just makes their position and function within the business clearer.

So learning a new programming language - that's technical so it's a waste of time, outsource it.

Learning marketing and sales - yes that's the task of the entrepreneur because those are integral to the business. Businesses cannot succeed without correct marketing.

By practising these key skills daily, you will learn how to do them better.

1. First, break it down. That $1,000 is just an extra $2.75 every day. And earning an extra $2.75 sounds a lot easier than trying to earn the whole $1,000 in one go, doesn’t it?
2. Set aside a maximum of 15 minutes each day. No matter how busy you are or how tired you are, you can find just 15 minutes extra
3. Now find out all of the different ways you can get paid for doing the things you already do. If you live in the USA, this is really easy. You can get paid to watch TV ads, walk or even sleep. Elsewhere in the rest of the world, it is a bit more challenging which is why we move on to step 4
4. Want to earn even more money? The easiest way is to get paid for doing your hobby