Rules of the Scrappy Capitalist: Rule 3 – Leverage what you have

Success in business, the capital markets, or in real estate investing has changed. Old-school capitalists thought they had a deep moat around their endeavors as they build mega-corporations and traded vast amounts of investments.

But thanks to the web, a new group of capitalists — what I call scrappy capitalists — have risen up to collectively do so much more. But the difference is: These scrappy capitalists succeed with far less. They don’t have the old boy’s network or daddy’s railroad empire to rely on. Today, we scrappy capitalists build success businesses or learn to trade in the markets with sheer guts.

There are six rules that a scrappy capitalist follows to be successful. Here’s the third one:

SCRAPPY CAPITALIST RULE #3: LEVERAGE WHAT YOU HAVE

Everyone has some combination of 3 assets — time, money, and effort (effort might be thought of as having the skills and focus to do most of the work yourself) — that they can invest into every project. Scrappy capitalists use what they have to make it work.

  • Some people have a ton of time but no money, so they’re willing to put in the time and work hard (effort) to find success in business or the markets. A common example would be a boot-strapping entrepreneur who builds a start-up from scratch on a shoe-string budget and many late nights.
  • Some people have money but no time and an inability to put in any effort, so they’re willing to invest money to find success in business or the markets. A good example might be someone who wants to get into real estate investing but doesn’t want lift a hammer or drive around town looking for houses so they become a hard-money lender.
  • Some people only have a small sliver of time and no money at all — and they put in the effort necessary to achieve success anyway. Among all the scrappy capitalists, these ones are the scrappiest and we’re always impressed and amazed by them. The example that springs to mind right now is J.K. Rowlings who made a fortune on Harry Potter by investing a ton of sweat and only a little bit of time to write the book. And I know of a day-trader (who I know would prefer to remain nameless but he’s a client of mine) who has made a ton of money by overcoming some serious odds just because he put in the effort with the little time he had available to him.

There are, of course, other combinations. In all cases, the scrappy capitalist leverages whatever they have to achieve success in the area they’re focused in.

But sadly, there are many many aspiring entrepreneurs and investors who don’t want to put any time, money, or effort into it. (I wouldn’t define them as scrappy capitalists, obviously). There are a ton of them out there. And at the risk of offending some people, these people are whiners and dreamers who lack the courage to take a bold step.

So, if you are a scrappy capitalist ready to take the next move, how can you leverage what you have?

  • You need to figure out what you have, first! What combination of time, money, and effort can you put into your project? Everyone has SOME combination of these — what can you devote to your business or investment? If you truly want to be successful, you need to probably make some sacrifices to get more of these investable resources, too.
  • Even if you have the money to hire others or to pay for automation, invest what time and effort you can into becoming an expert yourself. Although a hands-off business or investment is great, there is huge value in knowing what you’re doing. This is a great way to leverage what you have into something more.
  • Each of these three investable resources — time, money, and effort — has a value expressed in terms of the other two. And we each value one of them higher than the others. So although they are all important, make sure your business or investment goal appreciates the one you place the highest importance on. (For example: Maybe you want to make money without a lot of effort but ultimately you want to spend time with your family; or maybe you want to make a ton of cash, period. Obviously, the end-result might be similar but each capitalist is going to measure their success based on the resource they feel has the greater value).
  • An investment of one or two of your resources can replace one or two other resources. But be wise! It’s not always a 1:1 ratio. Investments into technology, for example, might provide you with more time whereas an investment into people (staffed or outsourced) might require comparatively more time to manage.
  • As you build your business and gain more of the three resources, constantly reinvest in yourself and your business.

Stay tuned. I’ll reveal the next rule of the scrappy capitalist soon.

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