Success Equals Assets
SUCCESS EQUALS ASSETS.
Christmas arrived early for Reilly in 1970.
December 8th to be precise.
His uncle Stiofáin had bought him a Monopoly set for Christmas and neither of them had the Smácht to resist the temptation of opening it before the big day.
That December 8th they played six consecutive games of Monopoly and Stiofáin won on each occasion.
Reilly could have been forgiven for giving up on Monopoly forever but that wasn’t Stiofáins way.
‘Look Reilly, I could have let you win but that wouldn’t do either of us any favors. In Monopoly, as in life, you have to first learn the rules.
‘When it comes to Monopoly there is only one rule. Green and red. Go to bed dreaming of green and red. Greenhouses and red hotels.’
‘Reilly, never forget the secret to winning at Monopoly and life. Success equals assets.’
By the time his cousins arrived on, Christmas Day Reilly had become a shark at Monopoly.
This is the theme of a great book called ‘24 Assets’ by Dan Priestley.
He argues that income is inextricably linked to the underlying assets in your business.
‘If you want more income flowing through your business, develop new assets, improve the assets you have, or buy assets that someone else has created, resisting the urge to keep focusing on lead generation, sales conversions, and hustle.
Dan defines an asset as ‘anything that makes achieving an outcome easier, faster, cheaper or better.’
AN ASSET IS ANYTHING THAT MAKES ACHIEVING AN OUTCOME EASIER, FASTER, CHEAPER, OR BETTER
‘To get asset income, you must either create assets (entrepreneurship), acquire them (wealth management) or be given them (inheritance, etc.). If you’re not the owner of the assets, you won’t be the beneficiary.
He makes an interesting point that the nature of assets required to get into business have changed utterly.
Back in the days of the agricultural revolution you would have needed assets in the form of massive tracts of land to set up a business. Or that in the industrial revolution you would have required a factory and loads of labour. Even as recently as fifty years ago you’d have probably needed property and labour and machinery at a very minimum to set up a business.
You can now get into business with a mobile phone and an internet connection.
The assets are more likely to be digitally housed assets such as Intellectual Property assets; Brand assets; Market assets; Product assets; Cultural assets; and Funding assets.
He makes a distinction between Profit and Loss based thinking and Balance Sheet based thinking.
‘Entrepreneurs and business leaders all over the world have come to think that income is correlated with sales and marketing activity, but this is short-sighted.’
This is Profit and Loss based thinking.
IF YOU WANT YOUR BUSINESS TO GROW, BECOME PROFITABLE AND BE ROBUST, SHIFT FROM PROFIT AND LOSS THINKING TO BALANCE SHEET THINKING.
‘Talk to your team about the assets of the business and go on a mission to create or improve those assets. In this digital age, think about creating media, intellectual property, data, and technology as primary assets for your business. These things probably won’t go on the actual balance sheet, but they are the assets that allow you to win.
‘My business really took off when I shifted the majority of conversations from profit and loss to balance sheet. I treated all problems as ‘asset deficiencies’ rather than leads, sales, or costs issues. If I wanted more sales, I assumed that I must be missing the right product, brand, or channel, rather than simply thinking about how I could talk to more people.
He also makes an interesting distinction between ‘small business thinking’ and ‘big business thinking.’ Small businesses think about profit and loss. Big business thinks balance sheet.
‘The most popular qualification for big business managers and leaders is the coveted MBA (Masters of Business and Administration).
TREAT ALL BUSINESS PROBLEMS AS ‘ASSET DEFICIENCIES’
‘In this course, you learn the skills required to run a business successfully. However, most MBA graduates don’t go off and start businesses. They become executives for existing companies. This is because ‘administration’ focuses on how to get the most from existing assets, but not how to create these assets in the first place.
‘The entrepreneurial journey is actually a journey of asset creation. It requires you to start with nothing and conjure up something of value and take it out to the world. This results in the creation of assets that could be handed over to an MBA to optimise and commercialise.
‘Entrepreneurship is alchemy
– the process of starting with nothing and creating something of value – whereas administration is the process of starting with assets and making money from them. This explains why so many entrepreneurs pour so much energy into their business and get so little back in return – they confuse the roles and either fail to create an asset or fail to commercialise what they have.
Sometimes your most valuable assets are closer than you think.
The Mustad family in Norway has been manufacturing fishing tackle for over 100 years. For several generations, the family business has grown and transformed with trends and technology. Along the way, there must have been years that were incredibly hard and times when the family wasn’t sure if the business would survive.
Then one day a painting that had spent the best part of a century hidden from sight was found up in the attic of the family home. Experts identified it as the original Van Gogh ‘Sunset at Montmajour’ that had been missing, worth an estimated $50 million.
How strange to think that many heated debates about money must have occurred in the rooms directly under the painting. So many times, the family would have asked the banks for finance and turned down opportunities because the funding wasn’t there, and all the while a $50 million painting was sitting above their heads!
I believe that you have hidden assets in your ‘attic’. In your brain, there are methodologies, stories, contacts, visions, and values that would make your business take flight. Sitting on your computer hard drive are documents, presentations and files just left lying around.
A business succeeds because it was designed to succeed. It is an ecosystem of assets that have been developed and utilised efficiently – a blend of intellectual property, capital, equipment, staff, leadership, and innovation. Each component is thought through, improved, refined, and enhanced. Each little insight is processed and measured against a new level of output.
* Your job as an entrepreneur is to create assets first and then look for the tools that can leverage them.
* You have hidden assets in your ‘attic’. In your brain, there are methodologies, stories, contacts, visions, and values that would make your business take flight. Sitting on your computer hard drive are documents, presentations and files just left lying around. Go now and unpack them.
* Think balance sheet as well as profit and loss account.
* Act & think as a big business would.
* Although you can’t spell the word Harvard, put the title MBA after your name as a matter of urgency because it is.
* Even Reilly’s an MBA. Patrick Reilly. MBA. (Manufacturer of Business Assets).
Oh the Green and Red of Mayo
I can see it still
Its soft and craggy boglands
Its tall majestic hills
Where the ocean kisses Ireland
And the waves caress its shore
Oh the feelin’ it came over me
To stay forever more
The red and green immortalised forever in the iconic song by the Saw Doctors
QUESTIONS FOR YOU AND YOUR TEAM AFTER THE BANK HOLIDAY MONDAY
1. Are we asset rich or poor?
2. What exactly are our business assets?
3. What business assets could we manufacture in 2023?
4. What assets could we manufacture before Christmas?