Diversify Your Income

 

download (1)Years ago, my core business was synonymous with my net worth. As business cycles ebbed and flowed, so would my net worth and working capital. It was very nerve racking. After talking with some friends and colleagues, it became apparent that I needed to diversify my time, investments and businesses if I wanted to take control of the volatility I was experiencing.

Once I had that realization, I changed my “all eggs in one basket” mindset and started to actively search for business opportunities and investments. After wading through some of the oil drilling and triple your money in three months deals, it was amazing how many good opportunities began to show up.

I took a conservative approach and as stated let the risky opportunities lie and took full advantage of the others. These included things like purchasing  a long term care pharmacy, starting up a mini storage facility and joining a group to develop an old historic building into a premier condo project. These deals soon started to spawn more deals.

I’m often asked “How did you do all that and still run a successful business?”  Reflecting back, here are 6 principles that were fundamental to my success.

1) Make the Decision to Do It

From the day I made the decision to use the profit from my main business to invest in and start others, my mindset changed and opportunities began to present themselves. If I hadn’t been looking, I wouldn’t have seen what was right in front of me.

2) Network Constantly

Networking within professional organizations and with friends and family provided a wealth of opportunities. I would find myself listening to a friend or colleague talk about an interesting idea and ask “how can we work together to make money at that.”

3) Come from a Place of Service

I actively started to let others know I had available capital if they were working on a business idea or needed capital in their business. How could I help move their dreams forward? Just keeping an open ear and coming from a “How can I help” perspective turned up many opportunities.  I knew that the financial returns would come as long as I invested in passionate people with a solid business idea that needed my contribution.

4) Evaluate the Opportunity

This may be the most important part of my diversification strategy. I was able to evaluate many of the deals myself but also used my attorneys and accountants where I felt I needed a deeper analysis. I chose not to stick my neck out too far and went for the more conservative or “no brainer” deals. If I could determine the worst case scenario was that I would only make a little money, I would typically invest. Conservation of capital with a lot of middle of the road wins allowed me to stay in the game and get a few big wins along the way.

5) Free Up Time

Within my core business, I added key management personnel to reduce the time I was spending on day-to-day operations. That decision created the space for me to pursue my other investments, while still hitting my goals in the core business. I used this time for networking and I opened up more investment channels.  I also created a lot more time to spend with friends and family. Adopting these principles, I have allowed myself to dream bigger and consider many more factors than I did when I was concentrating all my effort and energy on my core business. Now I am scanning the entire horizon for profitable ventures.

6) The Importance of Leverage

There are two types of leverage I used in my investment strategy: time leverage and financial leverage.I already mentioned how I freed up time from operating my core business to create time leverage.  I also used financial leverage by not only investing directly from the profits in my core business, but also establishing lines of credit with my banks based on my core business and other acquired assets that I could use to execute quickly on a good opportunity. Leverage is fundamental to large increases in net worth, and I considered it key in formulating my net worth creation plan.

Looking back I am very pleased I was able to make the jump from 100% focus on one single business venture to spreading my time and energy over a wide range of business, investments and partnerships. This has proven to be very rewarding both financially and personally. The network of relationships that has grown from this approach is sure to provide dividends for years to come.

Perception is Reality

download (2)We have all heard the phrase “Perception Is Reality”. When we hear this phrase people are referring to the fact that if a person perceives a certain product or situation in a particular way that becomes that person’s reality.

We all know that the combination of our experiences and our mental outlook shapes our perception of everything around us. Some of us take this at face value and react to these perceptions as they present themselves. This can result in a powerless outlook and a person that simply reacts to things as they come their way.

I would challenge you to take control of the “Perception is Reality Opportunity” and make it a forward thinking and life control model for you. If you start to think about this, you realize that if Perception is Reality (and I think it is) you can MAKE your own Reality. How powerful is that! A colleague of mine states this in a different way. She says if your reality is made up anyway, why not make it great!

We all know people that; when presented with the exact same set of facts, react very differently. Some are cool and calm and look for opportunity and some freeze up and make things worse.

Let’s consider this.

FACT: An individual has been laid off from his position he held for the past 5 years.

Sam – Freaks out and goes into a depression. “Things could not get any worse. What will I do!!” Paralysis sets in and his life begins an ugly spiral down.

Fred – Can’t believe it, tells everyone he knows it was not his fault. He begins to read the want ads and begrudgingly starts what he perceives to be a long hard battle to find anything available.

John – Is disappointed with the move by his company. He takes the opportunity to book a trip with his wife to the Bahamas. He begins to meet with friends, family and colleagues to discuss opportunities. He is invigorated by the variety of opportunities available and is energized at the journey that lies ahead.

All three of these perceptions created VERY different Realities. Which one would you want? Some would say “Well, you think what you think!” “It is what it is.” I would suggest that you control your perception and therefore your reality.

Actual Business Example

A few years ago an owner of a Long Term Care Pharmacy came to me with a pressing need to sell his business. He was a very smart and hardworking guy who successfully started his own pharmacy and grew it to nearly 700 beds (Over 3million dollars in Revenue). Growing a business like this takes quite a bit of capital and he had to constantly feed his company cash. He had successfully gotten his business off the ground and now had the opportunity to really fuel monster growth with what he had created, but instead he was focusing on his loss of cash. He even mentioned to me that he didn’t mind losing a facility every once in a while because his short term cash needs improved. This perception beat on him every day and soon became overwhelming.

I purchased 90% of the company and provided the needed capital. He ran the pharmacy for the next 18 months and we more than doubled the size of the business. We grew so fast that we attracted quite a bit of interest from other big pharmacies. This allowed us to sell the pharmacy at a price 4 times the one paid just 18 months earlier. The facts of the business were the same for both of us; the difference was our perceptions of what was really happening.

Remember, since it’s all made up anyway, why not make it GREAT! The facts are the facts…. Your attitude, mentality and approach will create unimaginable successes.

You can take this new mind set and make your reality whatever you want in many areas of your life.

Work and career situations

Money and budget situations

Relationship and children situations

Action steps to achieve this new control:

Positive attitude with the realization that you are creating your reality with everything you do.

Interact and partner with other people who are skilled, positive and optimistic

Welcome adverse situations and see them as an opportunity to improve your life and get better.