What is (business/financial) security and how do you achieve it?

One of my clients is a large corporation that contracts a lot of consultants. I had a recent conversation with an employee there who was wondering about life of a consultant. We were “comparing notes” about the difference between being a consultant and an employee. They said that even though there were drawbacks to employment (such as being at the mercy of a manager, as well as having little control over increases in pay), they mentioned that the comfort and security of employment far outweighed the uncertainty of being a consultant.

They wondered how I can sleep at night, knowing that once the project ended, I would need to find more clients. They pointed to other consultants who were contracted by the company who struggled through “boom/bust” careers and sweated the days leading up to the end of a contract.

I mentioned that I didn’t lose a wink of sleep at night. With or without this large corporate client, I’m fully booked through 2016 and have a waiting list of people who would hire me once I have some availability.

I’m not relating this conversation to you to boast. Rather, to make a point about security: Employees think they have security because they are part of a union (at least in the case of this particular company) and because there are many other people involved in the longevity of the business… and perhaps there’s some value to their tenure at the company. And entrepreneurs (and consultants and writers, etc.) seem to have less security because they are not only responsible for delivery but they’re also responsible for client acquisition. And it seems like they live from project to project.

Security is a funny thing: As an entrepreneur, I’ve had my share of sleepless nights in the very beginning of my business; those sleepless nights came from the gnawing question of “will I find enough clients to pay the bills this month?”. Today, I sleep well because my business is in a different place now.

But even more than the list of clients I’m fortunate enough to have, I recently realized that there’s something else that makes me feel secure.

SECURITY IS EVEN MORE THAN HAVING A JOB OR CLIENTS RIGHT NOW

What inspired this realization came from an old podcast I stumbled over in a forgotten folder on an external hard drive I was cleaning up. There were several podcasts — some of them too old and irrelevant to be valuable — but one of them was quite interesting, compelling, and inspiring. It was an interview with Jay Abraham. In the podcast, Abraham was describing his own journey in his career and how he got his start. He admitted that he started as a clerk and didn’t really contribute anything to the company he worked for. Deciding to change that, he immersed himself in becoming an expert in business and sales.

And then he said this about business/financial security: “I realized that security is nothing more than the faith, the confidence, and the trust you’ve got in yourself and your ability to perform.

I’ve been thinking about that statement pretty regularly ever since I heard it. I think most people believe that security comes from having a specific dollar figure in the bank and a job and a decent insurance policy.

And that might be true for some but it’s not true for me. Or for other entrepreneurs I’ve met. For me, a sense of security doesn’t come from those things. I’ve had them and I know that they can disappear.

Rather, Abraham’s statement revealed to me a reason why I feel very comfortable living the life of the self-employed: Because I know without a shadow of doubt that if everything came crashing down around me today, I could be up and running right away, serving new clients and building a profitable business from the ground up… even if I had to start with new clients and zero dollars and no website. My sense of security comes with my knowledge that I can deliver something of value to people who need it.

HOW TO GET SECURITY FOR YOURSELF

Jobs come and go. Money comes and goes. Clients come and go. Technologies come and go. Strategies come and go.

So how do you get security? Regardless of whether you want to work for someone else or for yourself, you need to build up in yourself the disciplines and knowledge and skills and mindsets that will allow you to deliver.

You need to know your strengths and understand who needs whatever you bring to the table. And you need to always sharpen yourself — to become better and better so that your employer or your clients or your target market consider you indispensable.

Indispensability comes from just what I’ve described above: A combination of disciplines (focus and willpower), specialized knowledge (in whatever category you work in), related skills (sales, negotiation, and others), and mindsets (positivity and opportunity-seeking, and probably others).

Whenever you want to build an even bigger foundation of security, you need to increase those elements of indispensability — either by deepening your existing ones or broadening them to acquire others.

Aaron Hoos’ weekly reading list: ‘SharkNado, sales, and motivation’ edition

Aaron Hoos: Weekly reading list

I just realized that I missed last week’s “weekly reading list”. We had company over and their vehicle was broken into while we were sight-seeing, so that became our focus for the day: Unpacking their car, finding a repair place, keeping the kids out from underfoot while we solved those problems.

I’m back with more reading.

Here’s what I read this week:

  • Inventing SharkNado: Inside Syfy’s booming B-movie factory. On Thursday, I was totally focused on wrapping up a project and I worked late through the evening without checking Twitter. On Friday, I learned that I had missed the Entertainment Event of the Decade. (Just kidding). SharkNado aired on Syfy and although don’t get the channel (and have no desire to!) I also missed the flurry of Twitter activity about it until Friday. It was interesting. I was also fascinated to read this article in BusinessWeek, which talks about the Syfy Channel and their movie generating “factory”. The movies fill a niche and the system is really working for them.
  • The science of positive thinking. In this blog post at Huffington Post, writer James Clear describes what goes on in your mind when you think negative thoughts and when you think positive thoughts, and he shows how research has revealed that positive thinkers see greater possibilities in life. Maybe it’s time to start seeing the glass as half full… and maybe you’ll start seeing other opportunities as well!
  • The two most powerful words in content marketing. The Sales Lion is a blog started by a pool salesperson, so we get to see a lot of his sales-skill-thinking and how it has worked in the somewhat mundane world of pool sales. In this article, he writes about two words that have helped him make over $2 million in pool sales. The words are “it depends”. No, I’m not joking. And to be honest, I was not sure I agreed with him when he first revealed what the words were. but I definitely see his point and think that there are opportunities for entrepreneurs to create “it depends” content. Will be thinking about this a lot more!
  • How to live an unstoppable life. Dan Waldschmidt is a writer I really admire. In this blog post he writes about the inner fire that all marketers and entrepreneurs must have in order to push ahead. I found it to be a very inspiring post!

The idea of something versus the reality: This HUGE problem is like an anchor on your business (but it’s also an opportunity)

I recently posted on Facebook that I wished I liked pesto as much as I like the idea of pesto. Pesto sauce on pasta sounds so good but I’ve never had a pesto I enjoyed; I always leave the table disappointed, regardless of how skilled the chef was who prepared the meal. But I look at pesto recipes and I order it restaurants anyway.

We all have that feeling about different aspects of our lives: We are caught between the idea of something and the thing itself, and those aren’t always the same. Often, the idea is much rosier than the reality.

This reminds me of a saying I heard once that “people don’t want to write a book, they want to have written a book”. There’s a distinction here between the idea of having written a book and the reality of having to write a book. Any author will tell you that it’s a painful process to write a book and people discover that when they try. (By the way, I tried to find the source of the saying but can’t find it; so if you know, please contact me so I can update this blog post).

Many of my real estate investing clients see this when they mentor aspiring real estate investors. People come to them with a desire to learn how to invest but few actually act on it because they perceive a ton of risk and the challenges of navigating through the unknown is so difficult for them that they fail to act. Once again, people like the idea of being real estate investors but they don’t like the reality of real estate investing.

And among novice equity investors we see something similar: People love the idea of being edge-of-the-seat investors who accept risk and are rewarded handsomely but in reality people hate it and they stick their money under a mattress or in a a low-risk, low-return fund. (But there’s tension between the idea and the reality, which is why sometimes some people choose the crappiest investment imaginable because their neighbor’s friend knows someone who made some money in the stock a few years ago — even if those people are usually risk averse. It’s because the idea of being risk-loving is appealing).

Buyer’s remorse might be a related result: We like the idea of owning something more than the reality of actually owning it, which we only discover after having paid for it.

I suspect we also see it in other areas of our lives: Relationships, home ownership, political and religious positions, hobbies, entertainment.

WHY THE DISPARITY?

We see this disparity between the idea of something and the much less enjoyable reality. But why does it happen, and why does it happen so consistently in so many areas of our lives?

I’m just guessing, of course, but I believe we can draw a clue from two of the examples I gave above — the example of writing a book and the example of being a real estate investor.

In both cases, the result (from which we draw our rose-colored ideal) is rewarding. With a book, the end result is that you have “proof” that you are an authority on a topic and it’s packaged into a coherent, nice-looking book worthy of becoming a New York Times bestseller; it’s something you can point to as an enviable accomplishment. With a real estate deal, the end result is that you have an asset that is generating regular monthly rental income while you sit back and light cigars with $100 bills.

But in both cases, the way to get there (from which we realize the harsh reality of the situation) is much more difficult. A book takes a lot of time and effort — time and effort that needs to come from somewhere else in our already-packed schedules — and you’ll be surprised at how hard it is to write 100,000 words on a topic and maintain coherence all the way through. With a real estate deal, the way to get there seems complicated with steps that require financial investment and a bit of sales ability and TON of rejection.

In all cases, the idea is an attractive end-result while the reality is a lot of hard work (or financial expense or time required) to get there.

So people avoid the work or they work around it or try to do half-assed solutions that minimize the work (unfortunately, this can often lead to even less satisfying results).

HOW THIS IS AN OPPORTUNITY FOR YOUR BUSINESS

You can build off of this idea-versus-reality disparity to grow your business in the following ways:

  • Identify the ideas that people have in which the reality is too difficult for them to achieve… and sell a product or service that delivers the dream and allows them to avoid the harsh reality. (This is why there are lots of freelance ghostwriters who are hired out to write books for clients, and it’s why there are so many real estate investing mentors out there who are making big bucks showing other people how to invest).
  • When faced with do-it-yourselfers who think they can ignore or ameliorate their problems rather than pay for a solution, outline the true costs of those decisions as part of your sales funnel in order to illustrate how the DIY option is the challenging reality.
  • When competing against low-priced competition, position your offering as being a fuller solution that completely eliminates all headaches and costs associated with the problem it solves. (In other words, your solution offers a clearer way to get the idea and avoid the reality than your low-cost competitor).
  • After people have bought from you, help them avoid buyer’s remorse by surprising them with additional post-purchase value that helps to ease the reality and elevate the idea.

Now the question is: Are you going to go through the harsh reality of implementing this or are you going to click away from this post, merely in love with the idea of it?

Risk as a source of profit

I’m reading Aswath Damodaran’s book Strategic Risk Taking: A Framework for Risk Management and I’ve been blogging about it from time to time as I chew through the concepts.

In chapter 4 of his book, Damodaran talks about how, in the nineteenth century, the idea of risk changed. Risk was once thought of as a function of loss (which is why we have insurance) but then it changed and risk became a source of profit (which prompted investors to create various statistical risk measures).

The idea of risk as a source of profit has been a rock in my shoe. I can’t get the thought out of my head.

A FEW WAYS THAT BUSINESSES PROFIT FROM RISK

It strikes me that all business profit from risk in many different ways:

First, businesses profit from risk by buying raw materials at a low price and then selling finished products at a higher price. They risk raw material prices going up and they risk that their finished products will have pricing pressure to cost less. They minimize this risk by negotiating for lower raw material costs and by periodically raising the prices of finished products.

Second, businesses profit from risk by hoping that people need their products and services. Here’s an example: People used to get where they needed to go by foot or by horse. Ford (and others) took the risk that people would want to get somewhere faster and a little more comfortably so they built a car. Here’s another example: Businesses could probably hire people to perform various functions and tasks but software companies took the risk that those same functions and tasks could be automated to free up staff for other purposes. Here’s another example: People could always make their own food but McDonalds took the risk that sometimes people would not want to cook but they would want something fast and affordable that they can eat on the go. Businesses minimize this risk by doing market research first and by making mid-course adjustments based on customers feedback.

Third, businesses profit from risk by competing with other businesses. They bring a slightly different business to market and hope that their offering is more attractive to customers than their competitors’ offerings (and they hope that another competitor doesn’t come along and out-do them). Businesses minimize these risks by targeting a narrow market, providing a ton of value, and marketing like crazy.

Fourth, businesses profit from risk by hiring staff to do the work that will collectively result in a product or service being delivered. The risk is that they’ll find enough employees to hire affordably, and that even on unproductive days, those employees will still collectively do enough work to deliver what the business promised. Businesses minimize these risk with hiring practices, training, incentives and perks, human resources departments, employee reviews, and more.

Fifth, businesses do all of this in an environment that risks running unprofitably because of inflation or litigation or government regulations (and more). Businesses minimize these risks with investing and expansion, lobbying, insurance, and more.

As I write this, I realize I could go on and on. There are many of ways that businesses accept risk to earn a profit.

WHAT ABOUT FOR YOUR BUSINESS?

If you run a business, you accept the risks in order to earn a profit. Ultimately, you are risking the possibility that people will try to do something themselves instead of getting you to do it for them.

And if you think “They couldn’t do this themselves”, you’re kidding yourself — which is exactly why financial advisors and real estate professionals are facing industry-changing competition from DIY options.

Every consumer has a do-it-yourself option for everything in their life (from health to food to finances to legal to transportation to employment — you name it!). Your job as a business owner or professional is to “take on the risk” and make your product or service so awesome that the customer immediately sees that their DIY option as the riskier (costlier and more time consuming and failure-fraught) choice.

Aaron Hoos’ weekly reading list: ‘Start-up ideas and names’ edition

Aaron Hoos: Weekly reading list

Mixed bag of topics this week! I hope you enjoy it.

  • 5 start-up naming rules. Recently I was pitching a project to a couple of potential collaborators. My naming conventions are usually: “Call it what it is and maybe mix in a benefit” (that’s why my brands tend to have names like Real Estate Investing Copywriter and Sin Stocks Report — there’s no mistaking what they are). But my collaborative partner didn’t like the name because it wasn’t “clever” enough. She’s a great partner so I mean no disrespect to here but it did highlight how naming conventions really differ between people. So this article does a good job of listing several parameters to help a business owner create a name for their brand or business.
  • 10 unique mobile businesses. Business ideas are my Kryptonite. I could sit here all day long and dream them up. These people are doing some really cool and creative things in the mobile business space. (No, I don’t mean mobile apps. I mean literally mobile businesses — businesses on wheels). Check it out!
  • Over $1 million in sales for 15 year old entrepreneur. I love to hear these stories; I’m always encouraged by kids who get out there and do something really exciting in business. (I had a couple of small businesses when I was a kid, too, but nothing like this, of course).