There are
certain activities that all successful entrepreneurs do very well. While
writing The Creator’s Code, Susan Wilkinson uncovered six commonalities
shared by founders of some of the most recognizable brands. Though interesting in
this context, these traits are not limited to building a profitable business.
Parallels can be drawn into your personal finances as well.
- Find the Gap – See opportunities that others
don’t see. Finding the best investment opportunities often requires doing
things a little bit differently. For example, Warren Buffett has advised
that we “be greedy when others are fearful and fearful when others are greedy.”Markets move in cycles. Learn
the basics for why prices go up and down. Then you will be able to find investment opportunities that others are missing.
- Drive for Daylight – Top-level entrepreneurs focus
on the future. Wilkinson notes that “researchers at the University of
Chicago found that people who are pursuing goals focus on either what
remains to be done – “to-go” thinking – or how far they’ve come already –
“to-date” thinking.” They found that to-go thinking increases the
likelihood of reaching a goal. When it comes to managing your finances and
investments ask yourself “What’s next?” Visualize and focus on your desired result and you will gain momentum toward its realization. Don’t give yourself a
hard time about past financial mistakes. As Henry David Thoreau said “never
look back unless you are planning to go that way.” Spend all your energy
on what you can do next. Focus on your top three priorities. When building Apple into the technology
giant it is today Steve Jobs told his executive team “make a list of our
top ten priorities. Now throw away the bottom seven. We can only do three
things.” When it comes to your finances, focus on your top goals for this
year that, if reached, could dramatically improve your life.
- Fly the OODA loop – OODA stands for observe,
orient, decide, and act. Take inventory of your finances and update your progress regularly. “Focus
on the concrete particulars that are present right now” says PayPal
cofounder Peter Thiel. Move quickly from one decision to the next. Differentiate
between relevant and meaningless information. Be decisive. Take action. For you this may require creating a budget, reviewing how
your spending is going at the end of each month, making changes, and
putting these adjustments into action.
- Fail wisely – A series of small failures is
essential to avoiding catastrophic mistakes. Entrepreneurs use the failure
ratio. That is, they place small bets to test ideas. During my time
working in Wealth Management, a
new client would regularly “dip its toe in the water” and give my company
only a portion of their wealth. Once they felt more comfortable with the
investment, more money would be deposited into their account. On the other
hand, if something went wrong they would withdraw their money. Investing
like an entrepreneur requires that you learn from your mistakes and determine
a better way to move forward. Test out investment products before making a
big commitment. There is no better way to learn about a product, like an ETF, than to actually invest
some of your money in it.
- Network minds – Entrepreneurs bring together the
brainpower of diverse individuals through on- and off-line forums.
Collaborate with your significant other and friends to discuss ideas about
personal finance and investing. Additionally, broaden your network by interacting
with others in social media and personal finance writers. Wilkinson states
“the act of networking minds prompts us to set aside traditional
expectations and free ourselves to see things anew.” New perspectives will
plant the seeds for growth.
- Gift small goods – After you reach a certain
point in your financial education journey take time to help others and share
information. This is my favorite point and the main reason for my desire
to start this blog! I want to open
up opportunities for others and listen for ways to provide help. Paying
attention to others needs broadens an entrepreneur’s competitive edge. Similarly, the growth you experience in
understanding personal finance and investing will increase by offering to help
others who are trying to understand what you already know.
If you take
time to begin practicing each of these six guidelines you will begin to see
improvement in your finances quickly. You will increase your knowledge, be more
focused on your specific goals, plan better, take smarter risks, broaden your
network, and even be able to help someone else in the process.
As always,
if you have questions or comments, feel free to send me a message. Thanks for
reading.
John
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