One of the greatest injustices to would-be entrepreneurs is that the late Felix Dennis’ book, How To Get Rich is so grossly overlooked. I never seem to spot it on anyone’s list of best business books.
Well, it’s time to make this situation right.
So without any further ado, here are some of the top nuggets from Felix’s memoir:
Most Common Startup Errors
Before we get into the growth tools, let’s go over the first few steps.
Achieving worthwhile success hinges on growth. Growth hinges on building a team.
You’ll need to develop the skill to identify, hire and nurture others with talent.
Any company managed and run by paycheck collectors and journeymen will be lucky to survive, let alone prosper.
Talent is the key to sustained growth, and growth is the key to early wealth. You have to identify and hire talent. You can’t skimp on it.
Venture capitalists may be demanding hard-asses, but they may be your best bet (or even your only chance) to really get started as well as making your first million.
VCs should only be turned to for injections of capital you believe will propel you to the next level. This will require a degree of preexisting success to put on display.
The biggest downside: You’ll likely lose control of any company VCs get involved in.
Don’t like the idea of dealing with VCs and giving them your soul?
One alternative to VC backing is to seek concessions from people who have a hand in your success.
When Felix was launching his first publishing enterprise, he asked his potential distributors to endorse him to the printing company he wanted to work with so that he could print on credit. It worked and Felix was able to print his run of magazines without having the capital.
No connections to get endorsements from?
In that case, there’s what Felix calls “Fishes” (best line of initial capital): friends, acquaintances, relatives, business colleagues, small investors and ex-employers.
Regardless of who you turn to for financing, keep Felix’s mantra in mind:
“To get what you need / You toady to greed.”
Got Money? Great – Now Watch Out
Watching your cashflow like a hawk is imperative to your success.
While a lack of cashflow is sometimes the result of a company that isn’t viable, it can also stem from a company growing beyond its means.
Always delegate bookeeping to a qualified professional — but always keep that hawk’s eye on the bottom line.
When you change accounting systems (or accountants for that matter), have the numbers checked over and over again. It’s 99% guaranteed errors will be found in the new iteration.
Once Growth Begins…
After Felix released issue #1 of Kung-Fu Monthly, he boarded plane after plane until he had licensed his existing product to as many foreign territories as possible.
What’s great about that lesson is that you no longer have to go to that level of effort to accomplish what Felix did.
The takeaway is that getting others to do the toil of publishing his magazines in their respective countries was the only viable way for Felix to expand his empire at a rapid pace.
To Continue Growth, Build Baskets
During the startup phase, your job is to focus on that one basket like your life depends on it.
But once you have something that’s working and making some money, start looking around quickly for another opportunity. The more baskets, the better.
If you had created a chain of fast food stores, then it would be unwise to leave matters there.
Public tastes change and customers are fickle.
To protect your investment, you would need to create new baskets. You would need to consider, perhaps, the creation of or the acquisition of a soft-drink operation….
…or a branded coffee. And you don’t have to be such a massively successful chain to do it. Because sometimes the new basket will become more valuable than the old.
Richard Branson is a perfect example of the basket rule: he owns or part-owns more baskets than anyone alive.
A Few Words About Luck
Felix has a story about a business man he had known for 30 years.
He saw this man as a better publisher than himself. This man was a master networker and was always one of the first to know which way the wind is blowing.
Despite it all, like a modern-day version of the tormented biblical figure, misfortune would always be nipping at his heels.
What was this man’s biggest problem?
Simple — Whenever he’d hit a bump in the road, he’d change course. He’d always pursue the greener pastures.
In business, the FLIGHT not fight trait is the sign of a prey animal, not a predator. Partnering is no way to get rich. To become rich, you must absolutely become a predator. A predator is not afraid to hunt alone, either.
Ownership! Ownership! Ownership!
To become rich, every single percentage point of anything you own is crucial.
- It is worth fighting for, tooth and claw.
- It is worth suing for. It is worth shouting and banging on the table for.
- It is worth begging and groveling for.
- It is worth lying and cheating for.
- In extremis, it is even worth negotiating for.
When Felix launched one of his startups 30 years earlier, four core members of his staff conspired to goad him into giving them 20% of his company for all the work they were doing.
They even offered to have their salaries lowered. He fired them on the spot.
Three decades later, that 20% would’ve amounted to $80,000,000.
Even if you were to go into business with your own BROTHER, insist on and GET as much of the company for yourself as possible.
If not 100%, then make sure you’re getting 75% to 80%.
If you did resort to 50% partnership (Bad!!), then a Mexican shootout can save you months (even years) of arguments, lost sleep and soul-crushing negotiations.
A majority shareholder should never allow for a Mexican shootout in the articles of association, but a minority partner should insist on it.
The Joys of Delegation
If you own a company and that company’s purpose is to make you wealthy, you will be content, delighted even, for any amount of glory to go to anyone who works there, providing you get the money.
Bossy people and gloryhounds are mostly interested in building a power base so they can have yet more people to boss about. It’s pitiful and sad, but we have all seen it. If you are observant, you have been seeing it nearly all your life.
Felix states that he only began to get rich when he began to delegate and ease up his own work schedule.
Sharing Pieces of the Pie (or not)
Giving employees a substantial portion of the proceeds from the sale of an asset makes no logical sense.
You’re not responsible for motivating them anymore — the new owners are.
Employees work for a salary, which is guaranteed. They are also, often, compensated with benefits and other added securities. They risked nothing by coming onboard.
Risk equals reward. “An honest day’s work for an honest day’s pay” is NOT risk-taking.
SELL EARLY!!: Whenever the chance comes to sell an asset at the top of its value, hit the button. Things do not keep increasing in value forever. More money is usually lost holding on to an asset, waiting for it to hit its zenith.
8 Biggest Success Secrets Summarized
Here are the eight biggest takeaways from the book, boiled down to the barest essentials:
- Analyze your need. Desire is insufficient. Compulsion is mandatory.
- Cut loose from negative influences. Never give in. Stay the course.
- Ignore ‘great ideas.’ Concentrate on great execution.
- Focus. Keep your eye on the ball marked “The Money Is Here”.
- Hire talent smarter than you. Delegate. Share the annual pie.
- Ownership is the real secret. Hold on to every percentage point you can.
- Sell before you need to, or when bored. Empty your mind when negotiating.
- Fear nothing and no one. Get rich. Remember to give it all away.
Even if you choose not to add How To Get Rich to your bookshelf, I sure do hope you were able to come away with some valuable insights from this summary.