The first principle of entrepreneurship is Optimization i.e. always working at the highest level of your capabilities.
For some entrepreneurs, the obstacle to optimizing is a mindset – a mindset that has them playing what I call the Finite Game. It is a belief that they have to do everything themselves and that they cannot depend upon others.
Many entrepreneurs with this mindset operate as a business of one. Running a business involves many tasks. Some of these tasks are worth $15 an hour, whereas a few are worth hundreds or thousands of dollars per hour. As an example, the value of managing a number of client relationships can be worth hundreds of dollars per hour, while time spent doing administrative and clerical activities is worth $15 to $25 per hour.
As a small business, it is very difficult to optimize.
A successful entrepreneur and friend of mine recently engaged with The Covenant Group.
- He is 60 and wants to retire in five years.
- He is earning about $250,000 per year and works by himself.
- His problem is that in order to maintain his lifestyle and prepare for retirement, he needs to grow his revenue to $500,000.
To increase his revenue by 250%, he needs to play The Infinite Game. The key to playing The Infinite Game is to employ the second principle of entrepreneurship – Leverage.
The Oxford dictionary defines leverage as “1. action or power of a lever; 2. the power to accomplish a purpose.” Archimedes said, “Give me a lever long enough and I will move the world.”
To play The Infinite Game, you adopt a mindset of abundance. It is no longer about getting a bigger piece of the pie. The goal is to create a bigger pie. The way to do this is to work with and through other people and utilize resources.
When my client and friend began to employ leverage by harnessing the time, energy, creativity and intelligence of others, he changed his work and his life. The starting point was to contact a local community college and hire an intern to work with him for a four month co-op term. This intern was able to handle all of the lower value tasks and schedule his appointments. This allowed him to invest more time working with clients and prospective clients, focusing on his unique ability in the business. The next step was to utilize outside resources to increase the depth and breadth of his product and service offerings.
His financial advisory firm deals primarily with affluent and ultra-affluent clients, many of whom are pre-retirees and retirees. A recent study highlights the fact that three out of four people change advisors within the first year after they retire. Armed with this knowledge, he has become much more conscious of the need to assist existing clients in the transition to retirement and to obtain introductions, recommendations and referrals to people who are about to retire or have recently retired.
Until recently, he specialized in providing investment advice. Now, he incorporates life, financial and estate planning into his work with clients. He utilizes insurance, financial and estate planning resources to produce much more revenue per client. In addition, his clients and centres of influence are more willing to introduce him because they value his service to a greater extent. He has made himself referable.
By changing the game, he has doubled his gross income in the last year and of equal importance, his net income has also doubled. In addition, he no longer feels alone. He has spread the weight of carrying his business by sharing the load with others. He feels revitalized and much less at risk. Yet, all it took was a change in mindset and two simple steps of hiring an intern and reaching out to work with collateral professionals.