Rules of the Scrappy Capitalist: Rule 6 — Be relentless

Old school capitalists succeeded because they were well-connected in an exclusive “old boys network”. Whether they succeeded in business or in the capital or real estate markets, it was largely because of who they knew.

But the internet changed everything. It levelled the playing field, making it possible for anyone to start a business or make money in the stock market or real estate market. True: Not everyone who tries WILL succeed, but the possibility didn’t exist and now it does.

There are still obstacles and unknowns but that doesn’t stop today’s scrappy capitalists from rolling up their sleeves and fighting for success.

The ones who will succeed will apply a specific set of rules to become successful. There are six rules of the scrappy capitalist. So far, I’ve covered five of them.

Here’s the sixth and final rule that a scrappy capitalists follow to be successful.

SCRAPPY CAPITALIST RULE #6: BE RELENTLESS

If success in business or the markets were simple, everyone would achieve it. But it’s not simple. It takes effort, guts, persistence, patience, confidence and an internal fortitude. Those who lack these things (and can’t acquire them) will never become scrappy capitalists.

Like hammering a nail, success takes relentless effort to make it happen. Here are some ways that the scrappy capitalist can be relentless…

  • Starting a new project that takes an initial push to get into.
  • Working through the middle of the project in spite of the temptation to quit when the details become too detailed or the work becomes too arduous.
  • Finishing well even when other people have gone home.
  • Consciously focusing on the desired end-state to help reduce distractions or project-bloat.
  • Acting (i.e., working or investing or moving forward) when trusted colleagues and experts tell you you’re wrong.

Being relentless isn’t easy, and I think there are two huge reasons why:

  1. It seems to go against what everyone else is doing. That’s hard because sometimes scrappy capitalists need to go with the grain and other times they need to go against the grain. It’s not easy to know the difference. (And if you’re waiting for me to tell you, you’re going to be sorely disappointed… because I don’t think there’s a formula).
  2. Sometimes the smartest decision is to keep going when everyone else has stopped, and sometimes the smartest decision is to stop. It’s not easy to know the difference. (And if you’re waiting for me to tell you, you’re going to be sorely disappointed… because I don’t think there’s a formula).

The key here is to find something you believe in and stick with it through thick and thin. Push. Sell. Build. Convince. Learn. Struggle.

That effort will pay off. It might take years of toil and there will probably be times when the cost seems too high and the reward too low, but if you believe in it, keep moving forward.

Click here to view all six rules of the scrappy capitalist.

Rules of the Scrappy Capitalist: Rule 5 – Take smart risks

Until recently, business owners and investors had a deep, wide moat around their castle of success. They made money and then their money made money, and they sat around in mahogany-paneled rooms, smoking cigars. The internet changed everything.

Easier access to markets and an ability to start profit-generating businesses in minutes (instead of months) has created a new breed of business owner and investor. I call them scrappy capitalists. Starting and running a business or investing in equities or real estate is now available to anyone. That doesn’t mean success is guaranteed, but it is available to more people and the scrappy capitalists are the ones who pursue success in business or the markets.

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

SCRAPPY CAPITALIST RULE #5: TAKE SMART RISKS

Scrappy capitalists know that success doesn’t come automatically. Although more people can start businesses or investing in the capital or real estate markets, it doesn’t guarantee that they will be successful at it.

Scrappy capitalists know that today’s risks are different than the risks that yesterday’s “old school” capitalists understood. And they know that opportunities and risks are often tied together. For example, faster speed to market is a modern opportunity but it’s also a risk. Greater access to capital is a modern opportunity but it’s also a risk. Social media is a modern opportunity but it’s also a risk.

For this reason, scrappy capitalists are not risk averse. They embrace risk thoughtfully and intentionally, perhaps even using risk to their advantage. For example:

  • They are aware of changes in risks and use that awareness to trigger action
  • They mitigate risks in a way that others cannot, building a moat around their success
  • They solve risks that other entrepreneurs/investors cannot solve, monetizing this new ability

Scrappy capitalists don’t avoid risks. They accept that risk is always present and they act anyway when it makes sense to do so.

  1. Identify what the risks are: Scrappy capitalists use technology and tools to research potential risks and find out the experiences of other entrepreneurs/investors who have gone before them.
  2. Evaluate the level of danger and potential loss: Scrappy capitalists thoughtfully and creatively consider how the “cost” of each risk will impact them. Some risks are worth the cost, others are not.
  3. Act anyway (if appropriate): Scrappy capitalists will embrace risk as part of being in the game. That’s what makes them scrappy!
  4. Aggressively mitigate risks: Scrappy capitalists build a network of contacts and a library of knowledge and a resource of technology to help them reduce as much risk as possible.
  5. Repeat this process every single day: Scrappy capitalists make risk reduction a key part of their daily activity.

Running a business or investing in the capital or real estate markets is now available to anyone. But success isn’t guaranteed and the challenges skill scare many people away. Scrappy capitalists, on the other hand, embrace the risks and act anyway.

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

Rules of the Scrappy Capitalist: Rule 4 – Act fast; Learn more

Yesterday’s capitalists had a lock on success because newbies couldn’t easily break into business or investing. But the web changed everything. Today, anyone can be a successful entrepreneur, stock trader, or real estate investor.

Because of the easy access to opportunities that were once reserved exclusively for the elite, entrepreneurs and investors need to be particularly aggressive if they want to succeed. They need to be scrappy capitalists.

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

SCRAPPY CAPITALIST RULE #4: ACT FAST; LEARN MORE

Scrappy capitalists spiral upward toward success by doing two things — acting fast and learning more — and scrappy capitalists do these two things over and over again in a never-ending upward cycle.

When scrappy capitalists act fast, they find opportunities and quickly act on them. They move forward toward a critical mass. For example:

  • An entrepreneur might learn about an opportunity one afternoon and that evening they might put together a website, invest in some AdWords to test their theories, and create an ebook over a weekend to cash in on the opportunity.
  • A capital markets investor might learn about a stock one afternoon and then access a number of trusted, bookmarked sites to do quick, effective research on that stock before making a decision to buy it.
  • A real estate investor might meet a seller with a great property and, using a variety of internet tools and a network of people, the investor can decide in just a couple of short hours whether or not the property is worth investing in.

Ultimately, acting fast means watching carefully for opportunities and knowing when to pounce on them.

When scrappy capitalists learn more, they strategically pursue deeper knowledge that can lead to greater success. For example:

  • An entrepreneur might study copywriting as a skill to help to make his or her marketing more effective.
  • A capital markets investor might study risk with the goal of become a risk-reducing expert.
  • A real estate investor might learn more about raising capital so that they aren’t reliant on financial institutions to fund their marketing.

I’ve shown you some high level ways that a scrappy capitalist might act fast or learn more but this is true at a much lower level as well. For example, an entrepreneur might learn about a long-tail keyword that he or she thinks is relevant to his or her audience. So the entrepreneur does some quick research to learn more about that keyword’s potential and then they create content around it. Then they do something similar the next day… and the next… and the next. In short order, the entrepreneur is visible in search engines for several keywords!

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

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.

Rules of the Scrappy Capitalist: Rule 2 – Find a model that works for you

Success in business or the markets used to be impenetrable unless you looked and acted like Gordon Gekko.

But the internet has become the great leveller, allowing entrepreneurs, capital market investors, and real estate investors to break in and succeed like never before.

No longer is pedigree or the “old boy’s network” a factor. Today’s success stories come from scrappy capitalists who have broken the old rules and are building businesses or investing with new tools and new information… and guts.

A scrappy capitalist lives by a set of six rules. Here’s the second one:

SCRAPPY CAPITALIST RULE #2: FIND A MODEL THAT WORKS FOR YOU

I should note first that when I say “model” I could mean “business model” or “capital market investment model” or “real estate investment model” — and sometimes other people use words like “system” or “formula” or “algorithm” or “blueprint”. I also talk a lot about sales funnels on my blog, which are a way to talk about models for businesses.

Ultimately, you’re looking for a clear, simple way to analyze opportunities and act on them to profit. Think of it as a step-by-step operational plan that you follow regularly.

For a day trader, it might look something like this (Note: This is an incomplete example for illustrative purposes only):

  1. Use a stock screener tool to sort stocks based on fundamental parameters.
  2. Narrow search to the top 10 stocks to watch for the week.
  3. Watch technical indicators for specific technical events that signal opportunities.
  4. Trade with the goal of making a minimum of $500/day without dedicating more than 25% of my investable capital into any single stock
  5. Place trailing stop-buy or stop-sell triggers if the stock goes more than 20% in the wrong direction.

A freelancer’s model might look like this:

  1. Sort projects on Elance or Guru to find the top 10 projects that apply to me.
  2. Bid on 2 projects per day.
  3. Write a blog post and comment on a minimum of 5 other blogs per day.
  4. Spend a minimum of 6 hours a day doing billable work.

Now that I’ve showed you some really basic examples, here are some tips to help you find a model that works for you, whether you are a scrappy capitalist who focuses on business, the capital markets, or the real estate market:

  • Don’t start from scratch and don’t reinvent the wheel. Find what other people are succeeding with and use it as your starting point. Build from there.
  • When looking for a model to follow, start with the experts. If I were building a value investing model, I would pull my copy of Graham and Dodd’s Security Analysis from my bookshelf (one of the best books ever, by the way) and start there. Figure out the model THEY use to invest in undervalued stocks. I can always augment but they have a great approach. As a side note, remember to only build a model based on successful models. I used to take advice from someone I respected until I realized that they didn’t actually own a successful business. Once I started ignoring their advice, my business model changed and my business grew.
  • When building your model, augment it based on what you’re comfortable with and what your skills and strengths are. When I was first starting out, I had a lot of time and no money (just like every other entrepreneur! haha) so my business model was one that leveraged all of that time I had.
  • Build measurables into your model. Your model becomes a to-do list and a way for you to make sure that you are doing enough to succeed in whichever business/market area you’re in. Early in my business, for example, I knew that I needed to send out 2 proposals per day, 5 days a week. Based on my numbers, I knew that would give me the amount of business I needed.
  • Constantly test and refine your model. I just mentioned that I used to send out 2 proposals per day, 5 days a week. That was part of my model. But as I built my business, my proposals improved and so my close-rate improved and I no longer needed to send out quite as many proposals. Soon it was 1 proposal per day. Then 3 a week. Then even fewer. All of this comes from testing and making changes based on that testing. The same goes for capital market investing: Maybe you find that you have success in junior resource stocks and, as your investing continues, you discover that you do particularly well with junior resource investing stocks that specialize in gold. Your model changes slightly to reflect that. The same goes for real estate investing: Maybe at first you try various types of real estate investing and you refine your model. Soon you discover that you prefer wholesaling houses under 1500 square feet in the midwest. As you refine your model, your business becomes leaner and more profitable.
  • If your business doesn’t have positive cash flow, there is something wrong with your model. If your business is unprofitable, there’s something wrong with your model. Go back and look at each step in your model to find out what the problem is. Some examples: Businesses without positive cash flow might be invoicing clients too late; investors without positive cash flow might not be selling with fast enough turnover.
  • If you want to change your business, you have to change your model. For years, I wanted to work a little less (because freelancing can be VERY busy work!) but I never changed my model. I had to go back to basics and retool my entire model in order to change my business.

Scrappy capitalists create their own opportunity and claw their way to the top of the success ladder. They do this by finding a model that works for them and building on it.

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