Secrets Of Self Made Millionaires - PDF Free Download (2024)

Secrets of Self-Made Millionaires How You Can Create an Extraordinary Income and Build a Million-Dollar Net Worth… Starting from Scratch

Adam Khoo

Published by Adam Khoo Learning Technologies Group Pte Ltd 10 Hoe Chiang Road #01-01 Keppel Towers Singapore 089315 First published 2006 All right reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Adam Khoo Learning Technologies Group Pte Ltd. This book is sold subject to the condition that it shall not, by way of trade or otherwise, be lent, re-sold, hired out or otherwise circulated without the publisher’s prior consent in any form of binding or cover other than that in which it is published and without a similar condition including this condition being imposed on the subsequent purchaser. Copyright©2006 by Adam Khoo ISBN 981-05-5284-X Cover by Jason Chua Edited by Betty L. Khoo Illustrations, Design & Layout: Tan Mui Siang & Susan Lua Printed in Singapore by Seng Lee Press Pte Ltd Printed on excel bulky satin made from total chlorine free pulp, environmentally friendly paper.

DISCLAIMER

This book contains the ideas and opinions of the author. It is not a recommendation to purchase or sell any of the securities, businesses or investments discussed herein. The author and publisher are not stockbrokers, broker dealers, or registered investment advisors. We do not recommend any particular stocks, investments or securities of any kind. If particular stocks and investments are mentioned, they are mentioned only for illustrative and educational purposes. Although we have made the best efforts to provide the most accurate and up to date information, no warranty or guarantee is given regarding the accuracy, reliability, veracity, or completeness of the information provided herein. The author and publisher disclaim any responsibility for any liability, loss or risk, which may arise as a consequence, directly or indirectly, from the use and application of any of the ideas, strategies or techniques in this book.

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Also By the Same Author I Am Gifted, So Are You! Master Your Mind, Design Your Destiny Clueless in Starting a Business How to Multiply Your Child’s Intelligence Dedication from the Author Adam Khoo

Table of Contents

Dedicated to my Daughters Kelly and Samantha Khoo Special Thanks to Clickbank.com Corporateinformation.com Google.com Hauntedstudio.com Hearandplay.com Lillian Too Maddentips.com Moneycentral.com Morningstar.com

Rosalind Gardner Roboform.com Serenityhealth.com Smartcover.com Singapore Exchange Limited (SGX) Wire-sculpture.com Wordtracker.com Yahoo! Search Marketing

Acknowledgements To my parents Vince, Betty and Joanne who have given me unconditional love and support throughout the years. To my wife. Sally who has been my pillar of inspiration and strength. To my two daughters Kelly and Samantha who make me smile everyday. To my partner, Patrick Cheo, who has been sharing my vision and continually pushing me to the next level. To my partner Stuart for being the ultimate tag team partner for joining me on this amazing mission of empowering lives. To Zachary Low for being a great friend and business partner I can always depend on. To Gary Lee for years of friendship and support. To my trainers Amin Morni, Ramesh Muthusamy, Melvin Chew, Danny Tong,Yuan Yee and Jeff who keep bringing our programs to a higher level through their passion and dedication. To the entire staff of Adam Khoo Learning Technologies Group, Adcom and Event Gurus who have tirelessly spent all their weekends and late nights working to build the companies at an incredible rate. Special thanks to Andrew Ling, Cindy Lim, Cherie Kiew and Kelly Yee for a great job in putting the whole book together. This book is also dedicated to the hundreds of coaches & Whoosh members who have volunteered their time to continuously come back and coach for the Superkids™, ‘I Am Gifted So Are You!™’, ‘Patterns of Excellence™’ and ‘Wealth Academy™’ programs. To all my principals, teachers & lecturers from Ping Yi secondary school, Victoria Junior College and The National University of Singapore who have played a tremendous part in shaping the person I am today. Especially to Prof. Wee Chow Hou, Mrs. Lee Phui Mun, Mrs. Ng Gek Tiang, Dr. Kulwant Singh & Dr. May Lwin. To my mentors and trainers who have helped me discover the true power within myself. To my ﬁrst mentor, Ernest Wong who taught me who I am. To Dr. Tad James, Dr. Richard Bandler, John LaValle, Tony Buzan, Brad Sugars, Robert G. Allen and Anthony Robbins all of whom have taught me the invaluable strategies of wealth and success. To the management and staff of American International Group, John Hanco*ck, Prudential Life Assurance, Great Eastern Life, Lux Asia, Ngee Ann Polytechnic, NUS, NTU, Youth Challenge, Marshall Cavendish, Prentice Hall & Dennis Wee Realty for your invaluable support.

Acknowledgements

About Adam Khoo

Section I Chapter 1 Chapter 2 Chapter 3

Seven Steps to Financial Abundance Secrets of A Self-Made Millionaire Seven Steps to Financial Abundance The Nine Habits of Self-Made Millionaires

3 17 23

Section II Chapter 4 Chapter 5

Cash Flow Strategies of the Rich How the Rich Manage Cash Flow The Four Levels of Wealth

61 71

Section III Chapter 6 Chapter 7 Chapter 8

How to Massively Increase Your Income Commanding the Highest Price Tag Time is Money… Here’s How to Maximize It How to Magnify and Multiply Your Income in Any Career

89 109 121

Section IV Chapter 9 Chapter 10 Chapter 11 Chapter 12

Creating Multiple Streams of Income Online Building a Lucrative Business Without Quitting Your Job Turning Your Passion into Lifetime Streams of Income Secrets of Building a Proﬁt Generating Website How to Attract Tons of Paying Customers Online

147 159 181 203

Section V Chapter 13 Chapter 14

Managing Money & Controlling Expenses The Number One Principle of Self-Made Millionaires Strategies to Manage Your Money & Control Your Expenses

225 231

Section VI Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19

Building Your Million-Dollar Net Worth Growing Your Money at Millionaire Returns Getting a 12.08% Return Risk Free? Winning with Mutual Funds How to Pick Stocks Like Warren Buffett The Eight Criteria of Buying a Great Business at a Great Price

245 267 275 287 319

Section VII Chapter 20

Your Millionaire Master Plan Designing Your Millionaire Roadmap

341

References

364

SEVEN STEPS TO FINANCIAL ABUNDANCE

I section

About Adam Khoo Adam Khoo is an entrepreneur, a bestselling author and a peak performance trainer. A self-made millionaire by the age of 26, he owns and runs three businesses with a combined annual turnover of $20m. He is the Chief Executive Ofﬁcer of Adam Khoo Learning Technologies Group Pte Ltd, one of Asia’s Largest Public Training Companies and Education Group. Adam is also the best-selling author of four books including ‘I Am Gifted, So Are You!’ that was ranked the MPH#1 best-seller in 1998 and 1999. He also co-authored ‘How to Multiply Your Child’s Intelligence’ & ‘Clueless in Starting a Business’. His fourth book is ‘Master Your Mind, Design Your Destiny’ which was the second highest selling book in Singapore in 2004 and has been on the Straits Times Life! best-sellers list for thirty-six weeks. Adam holds an honors degree in business administration from the National University of Singapore. As an undergraduate, he was ranked among the top one percent of academic achievers and became a pioneer in the Talent Development Program. Over the last 15 years, he has trained over 245,000 students, teachers, professionals, executives and business owners to tap their personal power and achieve excellence in their various ﬁelds of endeavor. Some of his corporate clients include Tupperware, Ministry of Defence, The Singapore Police Force, American International Assurance, Prudential Assurance Company, Lux Asia, Rolls Royce Marine, Hewlett Packard, Legal Aid Bureau, Singapore Telecoms and many more. His success and achievements are regularly featured in regional media like the Straits Times, the Business Times, the New Paper, Lianhe Zaobao, Channel News Asia, Channel U, Channel 8, Newsradio 938, The Hindu, The Malaysian Sun and many more.

chapter SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

Secrets of A Self-Made Millionaire

irst, I would like to thank you for picking up this book. Your investment of time and money in reading this book only means that you know you can and deserve to make a lot more money and achieve greater wealth in your life. You know that you can achieve the wealth that will allow you to experience the freedom and security that you deserve. Money that will allow you to live the lifestyle of your dreams, to do what you truly love, to buy what you have always wanted, to share it with the people you care about and to make the world a better place through your generosity. Well, I have great news for you. You already have in your possession, the greatest money making asset that you will ever need. You have the exact same raw materials available to you as what Bill Gates, Warren Buffett or Donald Trump started off with.

The Greatest Money Making Asset That Will Make You A Fortune So what is this one asset that all of us already have at our disposal? No, it’s not your double degree, MBA or PhD. from the best universities. And no, it’s not the inheritance the ‘lucky’ get from rich dad, rich uncle or rich grandma to kick-start their business. No, this asset is so powerful that it will not just give you a 4% return like the bank or even a 20% return which you would expect from the stock market. This asset has the potential to give you inﬁnite returns. In fact, it can, if passionately developed, give you a 1000% return on your time investment. The asset I am talking about is something that all of us have been given at birth. It is an asset that all of us have in common. 2

SECRETS OF SELF-MADE MILLIONAIRES

It is this one single asset that will generate for you unlimited wealth. This asset is your mind, also known as your intellectual asset! When you invest time and money to expand your knowledge and skills, especially your ﬁnancial education, it will return you millions of dollars in income streams for the rest of your life! And that is exactly the purpose of this book, to massively increase the power of your intellectual asset. The reason why I believe in this so much is because like many self-made millionaires, I started with nothing but a hunger for knowledge of how to create wealth. Today, I can honestly say that the millions of dollars my partners and I have generated for our companies and our families have been spun off from nothing but the ideas in our heads. Ideas that would not have been there if not for the investment we had made in our ﬁnancial education. In the past, the majority of a company’s assets were made up of physical stuff like machinery, plant, equipment and land. You would value a company by adding up the book value of all its ﬁxed assets. Today, over 90% of a company’s value is in its intellectual assets! Look at Google, Microsoft, Nike, Berkshire Hathaway or Ebay. They are worth billions of dollars and generate hundreds of millions of dollars a year and yet they hardly own much physical assets. If you were to add up the total value of their factories, bank account, inventories and ofﬁce equipment, it would make up less than 5% of what the company is worth. In fact, Nike doesn’t even own many factories. The wealth of these companies lie in the ideas of the people working there. The same thing goes for you! Over 90% of your wealth is not what you have in your wallet or in the bank, it is the ideas that you have in your head! In the information age of today, one great idea can be worth a billion dollars. That was how a kid in blue jeans with no money, working out of his adopted parent’s garage could become a multi-millionaire at age 25 (Steve Jobs, CEO of Apple Computers). That’s also how a 35-year old Indian national who arrived in a foreign land (Singapore) without a single dollar in his pocket and nothing but a job offer from a prospective employer, could build a global company with an annual revenue of $3.4 billion with 800 staff in 31 countries all within just ﬁve years (Vikas Goel, CEO of eSys Technologies). 4

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

Latest brain research has shown us that all of us have basically the same neurology and that all of us share the same phenomenal brain potential. In fact, the average person uses less than one percent of their potential intelligence in their entire lifetime (if you want to know more about brainpower, read my ﬁrst book, ‘I Am Gifted, So Are You!’). So, as long as you have a functioning brain, you are already born with the greatest money making asset that you will ever need.You have the exact same raw materials available to you as Bill Gates, Warren Buffett, Richard Branson and Donald Trump. All these billionaires started with nothing but their intellectual capital. So, whatever your passion and purpose, I am going to share with you how to start activating your greatest asset by giving you what I believe is the cutting edge, the most advanced and powerful wealth creation strategies available today. You will learn precisely how to create, control, multiply and manage your wealth.

If You Want to Get a 1000% Return on Your Investment You Must Do this... However, in order to get the most out of this book, I encourage you to participate fully in all the exercises and activities I have laid out. As you read, circle key concepts, jot down notes and constantly return to them for reference. When it comes to speciﬁc activities, stop reading, grab a pen and follow the instructions that I will give to you. I believe that in jotting down and doing, you will truly integrate the essence of what I am going to share with you. If you have little or no background in ﬁnance and accounting, some of the later chapters on investments may seem a bit intimidating, but don’t worry, keep pushing yourself and you will master it in no time. Finally, I would like to challenge you to complete this book within ten days or less. How? Simply spend at least an hour a day reading two chapters, digesting the material and putting it into action. Statistics have shown that 72% of people who buy a book never complete it and less than 3% ever follow through by applying what they have learnt. What a complete waste of money and time! But I believe you are different. I believe that you are someone who

SECRETS OF SELF-MADE MILLIONAIRES

is fully committed to getting immediate results in your life. So, get pro-active as you read and you will begin to see doors and windows opening for you.

My Journey as a Self-Made Millionaire So, what qualiﬁes me to be your wealth coach? Who am I to teach you about how to make money? Am I the richest guy in the region? Or even in Singapore? Of course not! But I dare say that I am someone who has created massive wealth within a very short period of time. At the age of 26, I became one of Singapore’s youngest self-made millionaires (despite being in the army for two and a half years). As a result, I was featured in almost every major newspaper and TV channel in the country. (You can view these press reports at www. adam-khoo.com). Today, at the age of 31, I own three businesses with a combined turnover of over $20 million and personally earn over $936,000 a year, half of which come from my investments. And I created all this wealth starting with virtually nothing but the ideas in my head... the same raw material that you too have been blessed with. I did it without a single dollar in inheritance, no bank loans or any external investments.

So How Did I Achieve All This? I would say that the greatest contributing factor was my very intense desire for success and wealth. It was this passionate desire that drove me to want to learn everything I could about the strategies of the rich. From the age of 15, I was obsessed with reading books on success and wealth from authors like Warren Buffett, Peter Lynch, George Soros, Anthony Robbins, Zig Ziglar and many others. I would model the mindsets and strategies of these people and begin to take and apply every new technique I learnt until I achieved the results I wanted. So what ﬁrst inspired me to become wealthy? Why was I thinking about how to become a millionaire while all my friends were thinking about what was the latest show on television? Yes, in a sense I was privileged to be born into a wealthy family where my dad and my uncles were living in million dollar bungalows, driving Mercedes Benzes and earning million dollar incomes. 6

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

I saw the immense ﬁnancial freedom and security they enjoyed and it opened my mind up to the possibilities of what was achievable. In my family, it was not uncommon for someone to make a million dollars a year in personal income and so it installed a belief in me early on in life that it was indeed possible, especially as my dad and his brothers all started with absolutely nothing. However, the greater privilege I had was that although my dad was wealthy, he intentionally gave me nothing... but love, food and educational support. My dad saw how most kids who were born rich and given all the ﬁnancial beneﬁts eventually ended up spoilt and totally screwed up. So, he followed the motto ‘you have to be cruel to be kind’ and went the other extreme. Even though we lived in a bungalow and my dad had four country club memberships, I got less pocket money than my schoolmates. While many of my friends had lots of pocket money left over for snacks, marbles and card games, my dad would just give me just enough for a bowl of noodles and a drink. Even when he gave me $2 to buy something worth $1.50, he would ensure that I handed the 50-cent change back to him. Sometimes I felt very deprived and thought my dad was a real scrooge. But it was precisely the way dad brought me up that became a blessing in disguise. It laid the foundation to my true wealth education, which was to be hungry for wealth and success. My dad believed that if a parent gave his child everything, he would kill the child’s hunger for success. He knew that hunger was the key to motivation and the only way to make me hungry was to deprive me. Whenever I asked my dad to buy me something, his predictable reply would be, ‘Why should I buy it for you? Buy it yourself!’ So early on in my life, I learnt that nobody owed me a living. At that time, I was addicted to arcade games and had a love for collecting Star Wars toys. And since my dad was certainly not going to give me the money for it, I decided to make my own money. I felt that if I had my own money, then I would have the absolute freedom to buy what I wanted, without asking anybody’s permission, especially my dad, who would give me a one hour lecture for wasting his money. This was when I ﬁrst adopted the belief that ‘money equals freedom’. This is one of the single most important beliefs that has been the driving force behind my motivation to make money. 7

SECRETS OF SELF-MADE MILLIONAIRES

It was my best friend’s father who gave me my ﬁrst job. He had a wholesale stationery business and would get my friend and I to sell stationery door to door to other companies during the school holidays. I was only 13-years old at the time. Looking back, it was during those days that I learnt how to overcome shyness and the fear of rejection... two important traits of becoming rich. Besides selling stationery, I also got a part-time job as a disc jockey for mobile disco companies. That boosted my conﬁdence, as I had to learn how to speak and entertain in front of crowds. During those years, I also developed a great interest in magic. I was a big fan of illusionist David Copperﬁeld and every bit of spare money I earned went to buying magic tricks and practicing until I was an expert at sleight of hand tricks. I got my ﬁrst break as a ‘magician’ when my mum got me to perform at my cousin’s kindergarten graduation. That was for free but that gave me the conﬁdence and idea that I could start charging for my magic shows. So I added ‘part-time magician’ to my repertoire of entertaining skills. I charged $40 for a two-hour show and most of my clients were kindergartens, primary schools and family friends who threw children’s parties. You must be wondering by now how I managed to study and pass my exams while involved in so many money-making activities? Well, when I was in primary school, way before I started all these schemes to make money, I was a typical lazy, unmotivated underachiever who preferred to get into ﬁghts than to study. I used to be a rebellious troublemaker who got expelled from school in primary three (aged 9) and did so badly for my Primary School Leaving Examinations (PSLE) at age 12, that I was rejected from all the six secondary schools that I selected. I was eventually posted to a neighborhood school where I ended up failing most of my subjects and being ranked among the bottom of the cohort. In sheer desperation to help me ﬁnd some aim in life, my parents sent me to a motivational camp for teens when I had just turned 13. (The full story is in my ﬁrst book, ‘I Am Gifted, So Are You, published in 1998). It was at this camp that I was ﬁrst exposed to the concept of Neuro-Linguistic Programming (NLP) and Accelerated Learning. I learnt about the power of human potential and how anyone, with the right strategies can achieve any goal they set for themselves. 8

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

NLP taught me how to set inspiring goals in my life and more importantly, how to build in myself the conﬁdence and motivation to achieve them. I learnt that by modeling the mindset and strategies of anyone of excellence, I could produce the same outstanding results within a short period of time. Since one of my new goals was to become a top student, I decided to model learningto-learn expert Tony Buzan, from whom I learnt powerful accelerated learning techniques like Mind Mapping, Speed Reading, Memory Enhancement and Whole Brain Integration learning. I was also highly inspired by Anthony Robbins, a janitor turned multi-millionaire. It was from reading his ﬁrst book ‘Unlimited Power’ that I was ﬁrst exposed to the life changing concepts of NLP and success conditioning. Empowered by the prospects of limitless self-growth, I applied everything I learnt. My grades improved tremendously. From a below average student, I eventually graduated as one of the top student in my secondary school Ping Yi, scoring 7As for the Cambridge ‘O’ Level Examinations and was accepted into Victoria Junior College (the top ranking junior college at the time). I went on to study Business Administration at the National University of Singapore where I was ranked among the top one percent of academic achievers (NUS has been ranked the 18th top college in the world by Times Higher Education Supplement, Britain) and qualiﬁed for the Talent Development Program, which was the university’s gifted program. Although I believed in the importance of excelling academically, I knew that scoring ‘A’s in school had very little to do with achieving success and creating wealth in life. I knew that if I wanted to achieve my dream of becoming a millionaire by the age of 26 (one of my goals), I had to learn the strategies of wealth creation. So from the age of 15, I started to get obsessed with reading books on ‘how to make money’. One of the ﬁrst books I read which inﬂuenced me tremendously was ‘Think and Grow Rich’ by Napoleon Hill. It was from Hill that I ﬁrst understood the concept that money could be generated from ideas and not just hard work. I learnt that if a person used his muscles, he would only be worth a few dollars a day. But if he were to use his mind, his wealth would be limitless. 9

SECRETS OF SELF-MADE MILLIONAIRES

So I asked myself this question, ‘How can I make a lot more money with the same amount of time that I (as a secondary school student) now spend working weekends and school holidays?’ What service can I provide that would meet a popular need? Well, it so happened that among my friends it was the ‘in’ thing to go to discos. Because we were all well below age, we could only get into discos that organized afternoon tea dances on weekdays. No one could get into a disco on a weekend evening. So, I thought to myself, ‘ Why don’t I start a disco for teens and run it on weekends?’ The great thing was that I already had the experience from working as a part-time DJ. I calculated that if I could charge each student $8 (the discos were charging $12 at the time) and I had 200 customers, that would be $1,600 a night! I got so excited with my ﬁrst money-making venture that I swung into action right away.

My Very First Business... Setting Up a Mobile Disco In the middle of secondary three (at the age of 15), I rounded up a couple of my best friends, all students, to run this ﬁrst venture. For the venue, one of these friends managed to get the use of a function room at the condominium he was living in. So we had free rental. After looking around, I eventually contracted a mobile disco company that would set up the disco lights, sound systems and spin the songs all for $300 a night. I ﬁgured that we would still make a proﬁt of $1,300. I used my IBM compatible computer with a Wordstar program to print out tickets which we went round selling to classmates as well as students from neighboring schools. The response was phenomenal. On our ﬁrst run, we had over 300 kids who packed the place and we made $2,100 in one evening while having so much fun. That was when I ﬁrst learnt that great ideas make great money! Not only that, I think my friends and I had more fun running a disco than if we had been merely attending it. That encouraged us to keep running these disco parties once every two weeks. Within a few months, we were rolling in cash. That’s when I started thinking, ‘instead of paying the mobile disco company $300 a night, why don’t I buy my own equipment and start my own business’?

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

So with the ﬁrst $3,500 I made, I went out and bought a secondhand set of turntables, a mixer and an equalizer together with two helicopter spinning lights and a smoke machine and ‘Def Beat Productions’ was born. My friends were not part of this investmentin-equipment aspect of the business but they helped in marketing and providing the service and were happy with the rewards from that. So, not only did we run discos from then on, but I started to rent out my services to families who were throwing parties and needed a disco party. I spent all my weekends and my holidays running my business while still studying at Ping Yi Secondary School. First-hand experience in this entertainment business was also crucial in teaching me the skills that would later enable me to grow this entertainment enterprise into a full-ﬂedged event management business, ‘Event Gurus Pte Ltd’. My father wasn’t exactly happy about his son’s disco business, especially as the disco equipment was installed at home in my bedroom and my friends came often. But he couldn’t seriously complain as my school grades only got better as, along with my escalating business, I kept setting higher study goals and achieving them.

My Second Business Idea... Adam Khoo & Associates In fact, doing well academically helped me to create another source of income when I was in junior college doing my ‘A’ levels. Because I was achieving great results in school, I had the credentials to start giving tuition to other students for $200 each a month. By teaching these students (some of whom were just a few years younger) the study and motivation techniques I had learned, they started to show signiﬁcant improvement in their school grades. This helped grow my reputation and clientele. However, after reading all these wealth books and learning the power of multiplying the effects of my efforts with ideas, I ﬁgured that I couldn’t make very much by tutoring one student at a time. So I started to hire myself out as a freelance motivational trainer who specialized in training students how to succeed in school. I went round to schools in Singapore selling my program. Within a few months, I was consistently conducting classes for a hundred

SECRETS OF SELF-MADE MILLIONAIRES

students each time. With my charge of $20 per student, I was raking in up to $2,000 a day! It blew me away that I was probably making more money than my own teachers in school. I was only 17-years old at the time. What really got me tons of business was when I decided to compile all my knowledge into a book. This book, ‘I Am Gifted, So Are You!’ was written while I was in the Army. When it was launched in June of 1998, it topped the best-sellers list in the local bookstores, adding another huge (at the time) income stream to me. As a result of the success of my ﬁrst book, I co-authored three more books that multiplied my income streams even further. They were ‘How to Multiply Your Child’s Intelligence’, ‘Clueless in Starting a Business’ and ‘Master Your Mind, Design Your Destiny’ that was ranked on the Straits Times Best-Sellers List for thirty six weeks. However, what truly enabled me to accumulate so much money was not so much the income I created, but the lessons I learnt about saving and investing from the stacks of wealth books that I read. I develop the habit of saving far more than what I was earning, even when I was still studying. Instead of spending my money indulging in fun and frivolous things, I invested almost everything I had into unit trusts and stocks through the investment strategies I had learnt from reading books by wealth gurus like Warren Buffett, Peter Lynch and George Soros. I more than tripled my money in the stock market through investing in both US and Asian stocks. The boom lasted a few years then, just before the dotcom bubble burst in early 2000, I sold everything. I knew when to sell not from a lucky tip-off, but through studying and understanding the market. It was obvious that the Price-to-Earnings ratios were ridiculously high (you will learn about this in the later chapters), and many technology stocks were grossly overvalued and bound to burst. Sure enough, the market crashed, and that’s when I picked everything up again, for a song. By the time I graduated from university,I had two proﬁtable businesses going, a best-selling book and a growing investment account. At the age of 26, I had crossed the one million net worth mark. I began this book by sharing a brief history of my own journey not to impress you but to impress upon you that if I can do it, so can 12

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

you! All it took was intense desire, a mindset of inﬁnite possibilities, the right strategies and consistent action and determination.

Money is A Game... You Must Learn How to Play it You see... making money is a game. If you learn the rules of this game, money will ﬂow into your hands. If you do not play by the rules, you will struggle all your life ﬁnancially despite working very hard. Haven’t you ever asked yourself why some people earn ﬁve times, ten times or even twenty times more than others? Is it because they are twenty times smarter? Is it because they work twenty times harder? Or are they many times luckier? The answer to all these questions is a resounding ‘NO’! I am sure you know people who seemed to be much lazier than you in school and had poorer grades but now they are so much more successful ﬁnancially. Although their school report card used to be chockfull of ‘F’s, their ﬁnancial report card carries straight ‘A’s. Why? The only reason is because they know how to play the game of money whereas most people have not learnt how the game is played. You see... none of us are ever taught how to make money, how to invest money or how to manage our wealth and yet money is the most important subject in our adult lives. Although many people say that ‘money isn’t everything’, that’s only a half-truth.The truth is that ‘everything is money’! In order to achieve excellence in the different areas of lives like our health, relationships and family, we need to be ﬁnancially secure! To be ﬁnancially secure means to be ‘Free’ – free from being hounded by creditors to pay one’s rent or the hospital to pay one’s bill. To have sufﬁcient money to feed oneself and one’s family, to pay for basic needs and to pamper ourselves with luxuries once in a while. It also means the ‘freedom’ to walk away from a job, a company, an employer, one cannot stand and have the option to be employed or self-employed doing something one values and ﬁnds fulﬁlling. No one can quarrel with this deﬁnition of the need to have enough money.

SECRETS OF SELF-MADE MILLIONAIRES

The traditional education system (thank God it’s changing) never taught us how to be rich but instead brainwashed us into becoming poor. We are taught beliefs like ‘study hard, get good grades and a good job and you’ll be set for life!’, ‘investing is risky’, ‘don’t act smart’, ‘don’t play with stocks or you’ll get burnt’, ‘don’t be so money-faced’ or ‘don’t be so stingy’. As result of all the wrong anti-wealth advice, most people work hard all their lives, going around in circles in the rat race and ending up broke and unhappy. However, a fortunate few eventually learn that wealth is not made by just getting a good job and working hard. It takes a different way of thinking and a totally different strategy. Those that learn this lesson get out of the rat race and onto the path of ﬁnancial abundance and freedom. Some people take ten years to ﬁgure this out, some take thirty years and some never ﬁgure it out until it is too late. In this book, you will learn what others spend their whole lives trying to ﬁgure out.

First… You Must Know Why You Are Not Rich, Yet Before learning wealth creating strategies, let me ﬁrst ask you this question, ‘Why are you not rich yet?’, ‘What has prevented you from getting the wealth you deserve?’ Spend some time to really ponder on this question and write down as many reasons as you can think of. It is important that you are totally honest with yourself. Go ahead and do this now.

Reasons Why I Am Not Rich Yet 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 14

CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

Now, let’s see if your reasons are similar to those I’ve heard over the years when this question was posed to people. Most people tend to say: ‘I have no money to make money’, ‘I was born in a poor family’ ‘I need to support my family’, ‘I am too young/old’, ‘I’m not smart enough’, ‘I have no opportunities’, ‘I’m too lazy’, ‘I lack the qualiﬁcations’, ‘I have an unsupportive spouse’, ‘I lack the ﬁnancial know-how’, ‘I have too many children’, ‘I have no luck’, ‘I am afraid of taking risks’, ‘I lack discipline’, ‘The economy has been down’, ‘I made poor decisions’

Do any of the reasons shown here match the ones you have given? Now, I want you to look at all the reasons you have been giving yourself and to take note of whether they are reasons that are within your control or external reasons that you think are beyond your control. If you feel that they are self-created reasons like ‘poor decisions’, ‘lack of discipline’ or ‘lack the ﬁnancial know-how’, then put a tick next to it. If they are externally caused reasons like ‘no opportunities’, ‘bad luck’ or ‘lousy boss’, put a cross to it. Now, do you have more ticks or more crosses? Your ability to become rich depends very much on this! Every time I do this survey with people, I have discovered that people who put down a lot more ticks are generally more successful ﬁnancially than those who have lots more crosses. Why? Because the reasons you give yourself is a reﬂection of whether you have the Winner’s mindset or the Victim’s mindset. Most people go through life with the Victim’s mindset and this prevents them from ever changing their ﬁnancial situation. When they don’t get the results they want, victims tend to give themselves lots of excuses like ‘I’m just unlucky’, ‘I have no experience’, ‘I’m too old to earn more’, ‘I’m too young to be rich’, ‘I have no capital’, ‘I was born poor’ or ‘I’m not a creative person’. The reason all these are lousy excuses is because we know that there are many examples of people who have created wealth for themselves, despite all these perceived disadvantages. Victims also tend to blame everyone except themselves. When you ask victims why they are not rich yet they will say something 15

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CHAPTER 1 SECRETS OF A SELF-MADE MILLIONAIRE

like, ‘my boss won’t give me a raise’, ‘I don’t get any opportunities’, ‘my big family prevents me from saving money’, ‘the stock market caused me to lose everything’. And instead of ﬁnding a way to improve and change, victims spend their time complaining but not do anything about it. The trouble is that when you give yourself excuses, blame others and whine, it means that someone else or something else is controlling your life and your (lack of) wealth. Since you believe that it is not your fault, then you are powerless to change it. If you have a victim’s mindset and hold doggedly onto the belief that external forces are controlling your wealth, then any strategy you learn will be of no use! WINNER’S MINDSET

VICTIM’S MINDSET

Take 100% Responsibility & Ownership

Give Excuses Blame Others Complain

In order to fully beneﬁt from the teachings in this book, you must ﬁrst adopt the winner’s mindset. Winners take a hundred percent responsibility for the results in their life. They take ownership over their wealth. When their sales drop, they don’t blame their customers or the economy. They know that doing so will be futile since they can’t change these external factors. Instead, they take full responsibility for the fact that they did not sell hard enough, did not meet enough prospects or they used ineffective closing strategies. By taking responsibility for your results, you give yourself the power to change it! When winners don’t get a pay increase, they don’t blame their boss or their company, they take responsibility for the fact that they have not created enough value, not demonstrated their worth or have not asked for it! The moment you acknowledge that you create your own fortune (or lack of it), it means that you have given yourself the power to start becoming rich right now! When you learn the strategies of wealth creation, you will ﬁnd that you can make money at any age, with any background, with little or no money and in any economy. To ﬁnd out how millionaires achieve this, you must ﬁrst know ‘The Seven Steps to Financial Abundance’. 16

The Seven Steps to Financial Abundance

s there a formula for wealth creation? Do all self-made millionaires take the same steps to amass their fortunes? If we were to do an in-depth study of how self-made millionaires think and act, would we ﬁnd some common clues that we can learn from? The answer is yes. Although one millionaire may have made his money in real estate while another made her money providing children’s education, I would bet that all of them share similar wealth creating skills and took certain similar steps that allowed them to build up a large personal fortune. Of course there are individuals who seem to have oodles of money without having any of these wealth creating skills. They are usually people who inherited their money, won the lottery or have a marketable talent like singing. However, time and again it has been proven that if they do not eventually learn the necessary money skills, or have a trustworthy and money savvy manager, they will usually end up losing everything they have. Even famous 60s’ Hollywood singer-actress Doris Day lost her fortune when her husband-manager cheated her and ran off with her hardearned money. So, let’s get started on learning the seven-step formula to ﬁnancial abundance. These are seven essential steps, each one representing a wealth creating skill that all self-made millionaires possess and practice.

Step 1: Adopt the Million-Dollar Mindset First, learn and adopt the mindset of a millionaire. Millionaires think very differently and that is why they take different actions and produce vastly different results. Self-made millionaires have a different set of beliefs and habits that allow them to see opportunities where others see problems. 17

SECRETS OF SELF-MADE MILLIONAIRES

Millionaires see learning experiences, where Mister Ordinary sees failure. The moment you adopt the beliefs and habits of a millionaire, your perception of the world will change completely and you will realize that there are money-making opportunities everywhere and everyday around you. Amazingly, these are opportunities that you were once quite blind to! In chapter 3, you will learn the Nine Habits of Self-Made Millionaires and how to program your beliefs in such a way that your subconscious mind will begin to attract wealth to you.

Step 2: Set Clear Financial Goals Wealth never happens by chance. It always begins with a clear goal in mind. At one point of time in their life, millionaires always make a decision to become rich. However, whenever I ask most people what their ﬁnancial goals are, I often get a blank stare. When I ask people to write down their target income or how much they want to be worth, the standard answer I get is ‘as much as I can get’. This is a major reason why they will never achieve any level of wealth because they have no clue what it is. Unless you have a speciﬁc ﬁgure to focus on, you will never be able to develop a strategy to achieve it. If you are earning $4,000 a month and set a target to earn $20,000, it is not just about working ﬁve times harder. It is a completely different strategy. Similarly, if you choose to earn $40,000, it is again a totally different strategy! Only when you are speciﬁc abut how much wealth you want to create, then you will come up with a practical plan to execute it. No matter where you are now ﬁnancially, any target is possible as long as you use the right strategy. In chapter 5, you will learn about the Four Levels of Wealth and how to achieve them. They are ﬁnancial stability, ﬁnancial security, ﬁnancial freedom and ﬁnancial abundance

Step 3: Create A Financial Plan Once you have set speciﬁc ﬁnancial targets of how much you want to earn and how much money you want to accumulate, you can 18

CHAPTER 2 THE SEVEN STEPS TO FINANCIAL ABUNDANCE

then develop an effective plan to achieve it. Goals by themselves are nothing but pipe dreams. Only when you create a plan, have you made your goal a possibility. The moment you start taking action on your plan, your dream becomes a reality. For example, if your goal is to accumulate a $1 million portfolio by a certain date, then you must develop a plan as to how much you must save and invest each month, the rate of return you must get from your investments and the estimated time it will take you. If your goal is to triple your income to $15,000 a month, you must have a concrete plan as to how you will increase your primary income stream and the number and type of additional income streams you can add on. Most people never achieve their ﬁnancial dreams simply because they have no ﬁnancial plans and haven’t got a clue as to how to create one. They just work hard and hope that everything will be okay one day. You cannot leave your ﬁnancial future to chance, you have got to plan for it. While there are great ﬁnancial planners around who can give you some sound advice, you must ultimately take responsibility and develop your own plan! After all, it is your life we are talking about. In chapters 4 and 5, you will learn how to craft a ﬁnancial strategy and plan for yourself to reach the four levels of wealth. MINDSET

GOALS FINANCIAL PLAN

INCREASE INCOME

REDUCE EXPENSES

GROW

PROTECT

SECRETS OF SELF-MADE MILLIONAIRES

Step 4: Massively Increase Your Income After developing their ﬁnancial plan, most people tend to become initially disheartened. They look at their plan and realize that with the amount they are earning and saving right now, it will be decades before they see any big money. It is therefore important that you learn how to accelerate and turbo-charge your ﬁnancial plan by taking steps to massively increasing your income. When I talk about increasing your income, I am not talking about a 5%, 10% or even 20% increase, I am talking about doubling, tripling or even increasing your income by ﬁve to ten times? Is this possible? Yes! And it is deﬁnitely achievable without you having to quit your job or risking a lot of capital (your savings) in a business venture. In chapters 6, 7 & 8, you will learn practical and proven methods that thousands of people use to create multiple streams of income for themselves. And in chapters 9, 10, 11 and 12, you will learn how you can start a lucrative home-based business and reach out to a global marketplace with the power of the Internet. You will learn how students, professionals, retirees and housewives have created a sustainable source of income for themselves.

Step 5: Manage Your Money & Reduce Expenses Many people think that by increasing their income, their wealth will automatically increase. Unfortunately, increasing income is only one side of the wealth equation. After all, there are people who earn $2,000 a month who are broke and there are those who earn $20,000 who are still broke. The reason is because when we don’t manage the money we earn, our expenses will always rise to our level of income, wiping out any surplus we have! Or worse, we start spending on credit lured by easy repayment schemes. Millionaires become rich not because of how much they earn, but rather how much they are able to save and invest. In chapters 13 and 14, you will learn the essential money skills of how to track every dollar that ﬂows through your hand and how you can amazingly reduce your expenses by 20%-30% without compromising your standard of living.

CHAPTER 2 THE SEVEN STEPS TO FINANCIAL ABUNDANCE

Step 6: Grow Your Money at Millionaire Returns By increasing your income and reducing your expenses, you will ﬁnd that you will be able to accumulate a surplus of funds that you can use to help you build your fortune. You need to do this because, no matter how hard you work and save, you will never be able to create phenomenal wealth unless you learn how to put your money to work for you. Through the power of compounding, you will be able to take small sums of money and build it into huge returns over time. All self-made millionaires attribute a huge part of their wealth to their investments because they know that just working for money will never make them rich. It is when you allow your money to make you money that substantial wealth can be created. If you’ve had the bad experience of losing money in stocks and mutual funds and resigned yourself to believing that the only safe way to invest is to put your money in the bank and get 3% returns, don’t worry. The strategies that I will be sharing carry minimal risk. Remember self-made millionaires are shrewd risk takers and this is very different from being gamblers. In chapters 15 to 19, you will learn never-before revealed investment techniques that can allow you to earn millionaire returns of 15%-25% per year with minimal risk. At this rate, your portfolio will be doubling in value every three to four years!

Step 7: Protect Your Fortune There is no use working hard to build your personal fortune only to see it all taken away from you. There are many people who have taken decades to build their fortune only to see it wiped out by an accident, unforeseen illness or through an unexpected lawsuit. Self-made millionaires engage professionals like insurance advisors, lawyers and accountants to help them build a ﬁnancial fortress so their wealth is protected from potential creditors, plaintiffs looking to sue and the government who may take away a big chunk of your wealth through a whole range of taxes that you may not have even heard about.

chapter SECRETS OF SELF-MADE MILLIONAIRES

As it is beyond the scope of this book, I highly recommend that you engage such professionals who will help you use a variety of tools like insurance, trusts, offshore accounts to ensure no one or nothing can touch your wealth once you have built it. So there you have it, an overview of the seven steps that you must take towards ﬁnancial abundance. Let’s begin to learn each of the steps in depth, starting with...

CHAPTER 2 THE SEVEN STEPS TO FINANCIAL ABUNDANCE

The Nine Habits of Self-Made Millionaires

n this chapter, we are going to be exploring the million-dollar mindset, the ﬁrst in the Seven Step Formula to Financial Abundance! Before learning the speciﬁc strategies and techniques of how to make and multiply your money, your mind must ﬁrst be conditioned to wealth! Remember, millionaires think and see the world very differently! Where most people see problems, those with the millionaire’s mindset see money-making opportunities. Where you see failure, the millionaire sees a valuable learning experience that will lead to greater opportunities and wealth. Unless you have the millionaire’s mindset, you will never be able to see the limitless money-making opportunities around you. Without the millionaire’s mindset, you will not have the focus, drive and determination to take the massive action necessary to implement the ideas and strategies I am going to share with you. Wealth must ﬁrst be created in the mind before it can be manifested into physical reality. You must ﬁrst be mentally wealthy before you can attract physical wealth. It has been proven time and again that people who have the millionaire’s mindset are able to attract and create fabulous wealth, even though they had started with absolutely nothing. Some even had all the odds stacked against them. Such millionaire-minds, even if they suffer a major failure like bankruptcy or business failure and end up deep in debt, are able to bounce back and what’s more make back their losses plus more, within a short space of time. Take the irrepressible real estate tycoon, Donald Trump (host of ‘The Apprentice’).Trump lost his entire fortune when property prices crashed in the early 1990s during a recession and

SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

he ended up US$935 million in debt. Down, but not out, Trump hauled himself up from the pits to triumphantly make a US$3.7 billion fortune, all within ten years! Why didn’t such a crushing failure crush him completely? Because wily Trump of ‘The Art of the Deal’ fame, knew that he may have lost everything physically, but his true wealth did not lie in what he has stashed in his bank, it lay in his mind. It was his way of thinking and his ﬁnancial intelligence that was worth billions, and that is what continues to make him a genius in negotiating the best deals. Of course he does not always win, but with his multi-million dollar mindset, the comeback is inevitable. At the same time, there are hundreds of examples of people who had wealth thrust on them – a vast inheritance or a huge lottery windfall. Again, studies tracking the fortunes of such instant millionaires show that they invariably lose everything and then some more, within ten years of their coming into sudden wealth. They would either squander it all, get cheated out of their money or lose it through foolish investment decisions. Why? When you do not have the millionaire’s mindset, money will not stay with you for long. Similarly, when you do not think like a millionaire, you will never attract wealth no matter how smart you are or how hard you work. I know many people who were academic achievers. Many of them work really hard in some great companies and are paid quite handsomely for their efforts. However, these professionals are not truly wealthy and, from the way I see it, they will never be ﬁnancially free. And it has got nothing to do with their job, it’s got to do with their mindset.

So What is The Million-Dollar Mindset? Well, it is the way we perceive the world. It is the way we frame, ﬁlter and make sense of the events and experiences in our life. Although two people may experience the exact same event, they will invariably perceive it and think about it very differently because of their different mindsets. Their different thoughts will result in different actions and different results. MINDSET 24

THOUGHTS

ACTIONS

Let me give you an example. Imagine if you had to take an important early morning ﬂight to New York but due to unforeseen circ*mstances, the ﬂight got cancelled and you are stranded at the airport with a hundred other passengers. There is no other ﬂight out that day. What would you think about? How would you feel? What would you do? Would you (a)Just wait for news of the next ﬂight out? (b)Lodge a complaint with the authorities? (c)Hang around with the other disgruntled passengers and complain? Well, it depends on your mindset. Most people would think of the situation as a ‘problem’ they can’t do anything about. They would feel frustrated and angry and take one of the three above actions. What would someone with a millionaire’s mindset do? Well, this exact same situation happened to billionaire Richard Branson (founder and chairman of the Virgin Group) in 1980. While vacationing on Beef Island (part of the Virgin islands), Richard Branson and his wife were stranded when the local Puerto Rican ﬂight got cancelled. There were no other ﬂights out that day. Instead of seeing it as a ‘problem’, Branson’s millionaire mindset got him to see it as a challenging opportunity. As a result, he took a very different set of actions. Branson got on the phone to a few aircraft charter companies and managed to charter a private plane for $2,000. Knowing that there were many stranded passengers who needed to catch a ﬂight out badly, he borrowed a blackboard and wrote ‘Virgin Airways $39 Single Flight to Puerto Rico’. Within an hour of walking through the airport terminal, with the blackboard in his hand, he had sold every single seat! After successfully ﬂying everyone back and making a cool proﬁt, he mulled over what one happy passenger had casually said, “Virgin Airways isn’t too bad-smarten up the service a little and you could be in business.” Up till that moment, Branson, the builder of Virgin Records and a Hot Air Balloon adventurer, hadn’t given any thought to getting into the airline industry! But Branson, ever the bold adventurer, lost little time in launching Virgin Airways, taking on the giant British Airways and the rest is aviation history. Today, Virgin Airways is a global budget airline and one of the most proﬁtable in the world.

RESULTS 25

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The amazing thing about Branson was that he did not use any of his money to solve his ‘problem’. He used his millionaire mindset and thinking to turn a problem into an opportunity, which not only solved his problem, but made him even more money. So, if you are not creating tremendous wealth right now, it is because you are not taking the right actions. In other words, if you want to massively change the results in your life, you have to take different actions. To take different actions, you have to think differently. And of course to think differently, you must have a different mindset... the million-dollar mindset. The million-dollar mindset is made up of your habits, beliefs, values and attitudes. Now let’s get onto learning the ‘Nine Habits of Self-Made millionaires’. Follow them strictly and money will ﬂow into your hands, break them and money will forever elude you.

Millionaire Habit 1: Always Exceed Expectations Before I explain what this ﬁrst habit means, I want you to list down in the spaces below, at least ﬁve reasons why becoming rich is important to you. Why do you want to make more money? Is it to provide your children with the best education, to have peace of mind or to have the freedom to travel round the world? Unless you know WHY you want to be rich, you will never have the passion to go for it. Take as much time as you need to list down the reasons. 1. 2. 3. 4. 5. 6. 7.

Great! Have you done the exercise? If not, please write down AT LEAST ﬁve reasons before continuing. You will need these reasons to carry on beneﬁting from this book. It is EXTREMELY important. 26

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

The Value Reducers Now, let me ask you a question, ‘How many reasons did you write down?’ Did you write down less than ﬁve reasons, exactly ﬁve reasons or more than ﬁve reasons? Your actions are a direct reﬂection of your thoughts and actions in life! I have discovered that people fall into three categories. In the ﬁrst category are those who have the habit of doing less than what is expected. Their patterns are reﬂected in the fact that they probably write down three or four reasons. When you ask them why, they usually come up with excuses like, ‘I could not think of more’ or ‘I had no time’. Because of this pattern of thinking and action, these people do not add any kind of value to their company or department. In fact, they tend to reduce the value their company creates. These are the people who, when asked to do ABCD, will end up doing just A and B, forgetting or screwing up C & D. Although they are paid say, $2,000 in salary, they only give $1,500 in value. As a result, they are a liability, a burden to the company. There are always a couple of these individuals in every organization. Have you encountered one before? Now, let me ask you a question. Is this person’s salary to be regarded as an ‘investment’ or as an ‘expense’ to their company? Of course it is an expense! Will their company give them a raise? Unlikely. By increasing this person’s salary, the company’s expenses will increase and proﬁts will decrease. Since all companies’ primary aim is to increase proﬁts each year, these people will ﬁnd themselves working for years without getting a raise. In fact, whenever proﬁts drop for whatever reason, management will tend to layoff these people ﬁrst, to save costs! Obviously, if you operate from this pattern you will never achieve success and wealth! DO MORE THAN EXPECTED Create Value

Indispensable Asset & High Return Investment to the Company

DO EXACTLY AS EXPECTED Sustain Value

Dispensable Asset & Low Return Investment to the Company

DO LESS THAN EXPECTED Reduce Value

Liability & Expense to the Company

SECRETS OF SELF-MADE MILLIONAIRES

Then there are people who fall into the second category, those who have the habit of doing exactly as expected. This group will obediently write down ﬁve reasons as the instructions were ‘write at least ﬁve reasons’. They will just do ‘the least’. The majority of people in life think and act this way, and that is why they are not rich and wealthy. Be honest with yourself and ask, ‘are you currently displaying this pattern? Did you just write down ﬁve reasons? People who do exactly as they are expected sustain the value of their department or company. They are responsible people who get the job done, nothing more and nothing less. They clock in at nine in the morning and knock off exactly at six in the evening. If they are given a sales target of $80,000, they will hit that $80,000 and consider their job done. Now, are they an investment or an expense to their company? Well, they are what I call a low return investment. By paying them $4,000 a month, they will create $4,000-$4,600 worth of value, so the company gets a 10%-15% return on their investment. Will people who fall into this group get promoted and a pay increase? Of course! Since they are responsible people who get the job done, they will be given more responsibilities as the company expands. As their job scope increases, so does their position and pay. However, this group will only be promoted up to a certain point. They will eventually hit a ceiling. This ceiling is normally that of a manager. Why? Because they can only take orders and get things done. They lack the attitude to do more! Although they are considered assets, people in this category are dispensable assets. In other words, they are easily replaceable. Because of this, many would get retrenched the moment they reach a certain age. When the company ﬁnds that they can hire someone else at half their age and at half their pay to do the same job, they will get displaced. As you know, many middle managers suffer this fate when they reach their mid forties. Again, if you choose to be in this second category, you will never have ﬁnancial security and freedom.

The Value Creators Did you write down more than ﬁve reasons? If you did, then you belong to the minority of individuals in the third category, the value creators. Value creators end up as the rich and wealthy of our society. 28

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

It is not something you are born with, it has got nothing to do with your academic qualiﬁcations but it is a habit of choice that anyone can adopt. Value creators have the habit of doing a lot more than expected. If they are paid $3,000, they will work as if they are being paid $20,000. If they are expected to generate $10,000 worth of proﬁts, they will create $30,000 worth of value! They are called value creators because they create value for companies. It is through their efforts, that the company makes more and more proﬁts every year. As a result, their income is not considered an expense to the company, but a great investment. Even in periods of downturns, when everyone else is getting retrenched and pay cuts, they get pay increases, bonuses and stock options. The company knows that for every dollar they invest in them, they will return triple the value. These people are the high ﬂyers who get promoted super fast and get their incomes doubling and tripling in a few years. In the past, income was based mainly on seniority and loyalty. The longer you stayed, the more you were valued. In today’s world, income is based entirely on the amount of value you can create. It is not uncommon to see people who are much younger, with a lot less experience directing businesses and earning lots more than senior workers who have been with the company a lot longer. Value creators are indispensable assets to their company! They are very hard to replace. And that is why companies will pay them more and more and offer them partnerships to retain them. Value creators are never out of a good job. They are usually head hunted by other companies all the time, the head hunters offering to double their income if they join them. So, the ﬁrst unbreakable habit of wealth is to do a lot more than expected. In chapter 6, you will learn speciﬁcally about how to create massive value that will lead to massive income! This habit does not just apply to employees, it applies to anyone from sports stars to business owners. When Michael Jordan was interviewed and asked how he became the world’s greatest basketball player, he replied, “I expect more from myself than anyone would ever expect from me!” When my coach expects me to train three times a week, I would train ﬁve times. When my coach expects me to score 15 points for each game, I would score 36 points! That is why I am the best in the world”. 29

SECRETS OF SELF-MADE MILLIONAIRES

Do Exactly As Expected, And You Will Soon Be Out of Business As an entrepreneur today, you must do a lot more than expected in order to run a successful business and create wealth! In the past, economies were a lot less competitive. In the past, when a business performed below customer’s expectations, they would be struggling to break even. If a business met their customer’s expectations, they would make good proﬁts. If a business exceeded their customer’s expectations, they would become a market leader and would earn huge proﬁts! Why do over 90% of businesses fail today? It’s because markets have become so much more competitive. If you start a retail store, you are competing with hundreds of others, both locally and internationally! Today, if you perform below customer’s expectations, customers will never come back and you will go bust! Today, if you meet customer expectations, you will still be struggling to survive! Why? This is because hundreds of other businesses can also meet your client’s expectations, and some of them do so at half your cost.You will ﬁnd that you will be competing on price most of the time and will earn so little that it is hardly worth your while. I have seen so many business owners struggling to break even simply because what they offer is the same as every other business in their industry. In today’s marketplace, if you exceed your client’s expectations, you will only earn nominal proﬁts because many businesses already do their best to add more value to their clients. So how do you make huge proﬁts and become a millionaire in business today? The answer is that you have to go way beyond your client’s expectations. You have to give them an unbelievable experience where they will keep coming back to your business and tell all their friends about you. You must set your standards so high that they will never go to anyone else for that particular product or service. When you highly exceed your client’s expectations, you can charge a premium and make huge proﬁts. This has been my secret of success for all my businesses and I want you to learn this same secret right now!

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

One of my companies, Adam Khoo Learning Technologies Group’s (AKLTG) business units is in children’s education programs. We run a ﬁve-day program for children and teens on study and life skills. Now, the market for such educational courses is extremely competitive. So, with so much competition around what do you think is the usual ploy to get business. Slash prices, offer the lowest, the cheapest for what appears to be the same value? Wrong. My education business does quite the opposite. We charge the highest prices in the market ($1,700 for a 5-day program.) and yet, we run the highest number of classes and our courses are always fully booked, with a perpetual waiting list! AKLTG have become the market leader for such programs within two years of setting up my business, overtaking competitors that have been around for over ten years. How did we do it? Simple, the secret is in the delivery of our service. Our company gives our clients (both parents and their children or teens), an unmatchable experience, one that far exceeds their expectations. Here is a summary of how AKLTG does a whole lot more than expected and creates tremendous value. My Competitors l Present a one-hour preview detailing what is taught in their programs. l Offer a ﬁve-day program focusing primarily on study skills & basic motivation. l Provide ad-hoc follow up and customer service. AKLTG’s ‘I Am Gifted, So Are You!’™ & Superkids™ Programs l We present a three-hour information-packed free workshop that does not just give a preview of the program but teaches parents and their children a whole range of basic strategies on motivation, parenting and study skills. l When parents sign up, they get an array of free bonuses that include a free copy of my best-selling book. l The ﬁve-day program we offer doesn’t just teach students study skills but touches their hearts as well. We equip them with

SECRETS OF SELF-MADE MILLIONAIRES

l l

powerful skills that teach them how to succeed in life and how to appreciate their family and friends. Parents get a two-hour talk on effective parenting techniques, complete with a home follow-up manual. Students get unlimited free re-attendance to the program. Students get a series of encouragement emails for three months that keeps them focused. Students can have unlimited free personal coaching through emails.

As you can see, by giving my customers an unrivaled experience and offering tremendous value, my programs are clearly the best value, even at higher prices! So once again, the ﬁrst unbreakable wealth habit is to always do a lot more than expected! Exceed expectations and your wealth will multiply massively.

Millionaire Habit 2: Be Proactive In my live Wealth Academy seminars, I usually do an exercise where I get people to stand up, go to as many people as they can and introduce themselves. From this simple activity, I can tell immediately if they exhibit the second very important wealth habit. I notice that there will always be some people who will go around introducing themselves ﬁrst and getting to know as many people as they can. These people exhibit the pattern of being proactive. People who are proactive are people who take the initiative to make things happen. When there are no opportunities, proactive people are those that go out and ﬁnd opportunities. If they cannot ﬁnd any, they will create their own opportunities. When problems get in their way, proactive people will take action to solve their own problems! On the other hand, there would always be an even larger number of people who will just stand around and wait for others to come and shake their hand. These people exhibit the reactive mindset. People with the reactive mindset have the habit of waiting for things to happen to them. They tend to act only in reaction to others’ actions. As a result, they have a lot less control and choices over results that affect them. When no opportunities present themselves, reactive people just sit and wait for the opportunities to come to them. They are characteristic of people who complain about everything that is happening around them and hope that 32

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something will change. When reactive people face problems, they will just wait for others to come and solve their problem. Remember the example I gave you earlier about Richard Branson who took the unthinkable action to charter a plane and sell seats on it when he was stranded? That is a clear example of proactive thinking. Again, most people will just be reactive and wait for someone to come and ﬁx their problems. When the Asian currency crisis hit Singapore in 1997, many companies saw their sales and proﬁts plummet. Many business owners were reactive and just sat tight and prayed for the bad times to pass. Instead, Ron Sim, CEO of Osim International (a company that develops luxury massage chairs) took the proactive action of entering new markets like Hong Kong and Taiwan. As a result, his company proﬁts were not only unaffected by the crisis but they continued to increase. When the Asian economies recovered, over 60% of Osim’s business came from outside their home country of Singapore, leading to even higher earnings growth of over 30%! Another example I can give you is of the owner of an event management company. His name is Chris. When the recession hit, the number of potential projects in the market dropped by 80%! Many event companies which just waited for projects to happen, lost lots of money and eventually folded. Again, it is because owners and managers who were reactive led them. However, Chris had the proactive mindset. He packed his bags and went to countries around the region to ﬁnd new projects. When he found that there were still not enough projects being offered by clients, he took the next step of creating his own events! ‘If there are not enough clients who will hire me to manage their events, I will create my own events’! He went on to create a series of highly successful education and computer exhibitions which account for over 70% of his company’s revenues today! PROACTIVE They make things happen.

REACTIVE They wait for things to happen.

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By having the proactive mindset, you put yourself in the position of power and choice.You are in command and will take action that leads to wealth and success. However, when you act in a reactive pattern, you will ﬁnd that your ﬁnances will never be within your control.

Millionaire Habit 3: Take 100% Responsibility As this wealth habit has already been introduced and explained in the earlier chapter, I am just going to just mention it brieﬂy. Wealth habit number three is the habit of taking responsibility for your results and wealth! Unfortunately most people choose to adopt the victim’s mindset of giving excuses, blaming and complaining. Remember when you give excuses to yourself (i.e. no time, no luck, no capital, no experience, etc...) or blame others for your lack of wealth, then you are putting others and external events in control of your life! When you are not in control, you do not have the power to change your circ*mstances. Instead, millionaires take 100% responsibility for their wealth. They believe that they alone create their wealth through their strategies and actions. As a result, they know that they have the power to change their wealth by changing their strategies and actions. It is only when you live by this habit will you have the power to exponentially multiply your income and wealth.

Millionaire Habit 4: Delayed Gratiﬁcation What keeps most people from becoming rich is the habit of wanting instant gratiﬁcation. Instant gratiﬁcation is the habit of always wanting to enjoy now and not having the patience to wait for future beneﬁts. As a result, these people spend a lot more than they invest. By spending on that new car, new widescreen television set or designer watch they get instant gratiﬁcation. When it comes to investing in books, seminars, stocks or insurance products, they will think twice as they have to wait for future beneﬁts. It is precisely for this reason that whatever money comes into their hands will soon be frittered away and not multiplied. People who want instant gratiﬁcation will always look for quick and easy ways of making money rather than building a sustainable 34

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business that adds value to (repeat) customers. They tend to cut corners on quality and deliver shoddy products to save money and boost short term proﬁts. As a result, their proﬁts rarely last and they will soon go out of business. At the same time, those who desire instant gratiﬁcation lack the patience to allow their money to grow and compound through investing. When they don’t see huge sums of money in a few weeks, they abandon their investments and never get to reap the beneﬁts. They have no patience to wait for the seeds they sow to grow into huge money trees that bear fruit. You see, there are only two ways you can use your money. You can either spend it or invest it. When you spend $100, you get gratiﬁed from whatever you bought but that $100 is gone! You get zero returns. When you invest that $100 in a seminar, books or stock, it will grow into $120, $200, $500 or even $1000, depending on your rate of return. HABITS OF THE POOR

HABITS OF THE RICH

Instant Gratiﬁcation

Delayed Gratiﬁcation

Spend > Invest

Invest > Spend

On the other hand, all millionaires adopt the habit of ‘delayed gratiﬁcation’. They have the patience to wait for greater abundance in the future. Whether in business or in investments, you must have delayed gratiﬁcation in order to create massive wealth. People with delayed gratiﬁcation invest a lot more than they spend. Again, they know that by spending a dollar, they may feel good for an instant, but their future wealth will be destroyed. When it comes to spending money, they are extremely frugal. However when it comes to investing, they do not think twice about writing a check for a few thousands dollars.They know that through patience, that money will multiply into a future fortune. Millionaires never take shortcuts in business. They look at always giving the best value to their customers, even if it means earning less at present. They know that by building their reputation, it will lead to huge proﬁt streams in the future. 35

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I cannot emphasize this value enough because I feel that it is what has really set me apart from all my peers. It is why I earn many more times than most people my age. You see, when I was in college and university, most of my friends spent their holidays partying and having fun. They experienced instant gratiﬁcation. Instead of partying, I would spend all my holidays taking up speaking engagements to hone my presentation skills, reading investment books, analyzing company reports and writing chapters of my ﬁrst book. I knew that by ‘sacriﬁcing’ my immediate enjoyment, the rewards in the future would be tremendous! Sure enough by the time I graduated from University I had streams of passive income from my best-selling book and two businesses that I had set up. I was earning more money than many of my lecturers while many of my friends were struggling to get their ﬁrst job with their ﬁrst paycheck. Frankly, I never felt deprived. I had so much passion for what I was doing that indulging in drinking and idle lounge-lizard chatter just seemed like a huge waste of time. Nor did I miss social companionship. I had a steady, supportive girlfriend (now my wife), and a core of close buddies in these businesses we ran (and had so much fun and proﬁt), while still studying. In fact a couple of them are still working with me today. Let me give you another example. When it comes to spending money, I am extremely hesitant. Once I saw a mobile phone that I really liked. It was priced at $800. I kept staring at that phone over and over again but eventually walked away. I found it just too painful to part with $800 for a phone. My friends thought I was crazy as I was earning over $1,000 an hour at the time, whenever I spoke. But then again, I knew that the moment I spent that $800, it would be gone! On the other hand, whenever I go to a bookstore, I think nothing of spending $800 buying a whole series of marketing, business and investment books. In fact, I once spent $12,000 attending an NLP (Neuro-Linguistic Programming) training course in the United States, without even thinking twice. Why? Because I know that if I spend that $12,000, the ideas that I get from those books and seminars, when applied, will generate me millions and so they have! But most people do the exact opposite. They think nothing of 36

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squandering $3,000 on a ring but think twice before buying a good book for $30! No wonder they are poor! So, develop the habit of delayed gratiﬁcation – and spend wisely – and you will see your money multiply.

Millionaire Habit 5: Do What You Love The most common question that people ask me about getting rich is, ‘what is the best career or business that will make me the most money?’ Should I go into education? Food? Insurance? Network marketing? Heathcare? Options trading? Property? What’s the best industry to be in right now? Well, you will ﬁnd that in ANY industry, there will be a minority who will be making plenty of money, while the majority will be struggling to survive. You hear stories of insurance agents earning $600,000 to $1 million a year (many of them are my personal friends). Again, this is the minority. The majority will be just making enough to get by. Many people see me in the children’s education business making millions and think that it’s a lucrative business. Again, what they don’t know is that I am in the minority. The majority of businesses in education are struggling to survive. So my answer to that question is that you can become a millionaire in ANY INDUSTRY, only if you are one of the best! If you are not one of the best, you will never become rich in ANY industry. You CAN become a millionaire in insurance, property, options trading, children’s education, pest-control, retail, food or Internet marketing ONLY when you are one of the best. So, how do you become the best in the market? The answer is by being totally, absolutely one hundred percent committed towards your particular career or business. People become the best at what they do only because they eat, sleep, breathe, talk and think their business eighteen hours a day (sometimes, they even dream about it as they sleep). In other words, they are obsessed with doing what they do and are constantly ﬁnding ways to do it better. And the only way you can become totally obsessed and committed towards something is when you have a love and passion for it! All successful individuals have one thing in common. They love what they do. And because they have such an intense passion for their particular career or business, they do not distinguish work from play. 37

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Their work is their play and vice versa. As a result, they spend every single day and every waking hour working (to them it’s not work), and that is why they become so good at it that they become market leaders and experts. The reason why I dare say that I am one of the best motivational speakers around and was able to build the leading personal development training company is because I am totally obsessed with what I do. I love writing, developing curriculum and most of all, I love training and empowering people. It gives me such a great feeling to see people change their lives and achieving success with what I have taught them. In fact, as I am writing this book right now, it is 11.24pm on 31st December 2005. While people are out there partying and celebrating the start of the New Year, I am in my ofﬁce getting this book ﬁnished so it can be published in early 2006. All my friends think I am nuts for being a workaholic who works 19-hours a day and 364 days a year. The only day I stop working is Chinese New Year, which happens once a year. Other than that, I am either training, writing or planning my ﬁnances, even when I am ofﬁcially on vacation. What people don’t realize is that to me, this is not work, it’s fun! It is because of my obsession and total focus on what I do that has allowed me to overtake all my competitors to become the best in my industry. Every successful millionaire I know has a love and obsession for what they do. One of my friends, Thomas Fernandez who made his fortune in the pest control business (Pest Busters) has a passion for ﬁnding new ways to kill pests. He is constantly obsessed with talking about co*ckroaches, bees, ants and rats. Another guy I know, Kenny Yap has an intense passion for ﬁsh. He thinks and talks about ﬁsh all the time. This guy is really mad about ﬁsh. In fact, whenever he gives speeches on life and business, he uses ﬁsh as a metaphor. He even calls himself ‘Kenny the ﬁsh’ and wears a tie with a ﬁsh design. His love for what he does has been the key driving force that has allowed him to build one of the largest ornamental ﬁsh companies in the world, Qian Hu Corporation. Similarly, Tiger Woods is the best golfer in the world because he is obsessed with golf. It is his intense passion for the game that gets him to hit hundreds of balls under the hot sun every single day till he gets it perfect! It is his passion that gets him to continue competing in tournaments despite already having amassed a personal fortune of US$575 million. It is not the money that motivates him. 38

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It has always been the love for the game and the love of competing. Have you ever wondered why Bill Gates, the richest man in the world who is worth US$46 billion still works 18-hour days, every single day? Why doesn’t he just sit back and relax on the beach? The reason is because like all millionaires, what drives him is never really the money per se; it is the love of being at the forefront of technology. It was his obsession of ‘putting a computer in every home running Microsoft software’ that made him the best in the ﬁeld. Similarly, Donald Trump loves doing deals, Michael Jordan loves basketball and Steven Spielberg loves making movies. If you read all their biographies, you will ﬁnd that none of them got into their industries because they thought it was lucrative. They got in because it was what they loved to do. They love to do it so much that they would even do it for free. This is why although they never have to work for money ever again, they keep working harder and harder. It is because it was never work in the ﬁrst place.

Unless you do what you love to do, you will never become rich – Adam Khoo

Many people have the belief that millionaires are people who are just naturally more motivated, disciplined and focused. The truth is that when anyone does something he or she loves, the motivation, focus and discipline always comes naturally. If you ﬁnd that you lack the motivation and discipline to become successful in what you do, the reason is very obvious. It is not your passion! Think about it. Do you have a natural passion for something? Do you have a hobby? Like playing golf? Looking at beautiful women or men? Computer games? Football? Playing with children? Haven’t you noticed that whenever you are doing what you love, the energy never stops? It’s like no matter how tired you are, you will always ﬁnd the energy to do what you love. Well, this is the secret that will lead to your success and wealth! You have to ﬁnd something you are extremely passionate about and build your career or business around it! When you do, you will ﬁnd that you will be naturally focused, committed and energized to work at it.When you give your best to whatever you are crazy about, you will become the best! 39

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CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

You see, many people have the mindset that they have to work very hard in life in order to become rich. They have got to force themselves to be disciplined and motivated. They believe that when they eventually make enough money, they can ﬁnally do what they love to do and enjoy their lives. WORK HARD

MAKE ENOUGH MONEY

DO WHAT I LOVE

This is a recipe that is guaranteed to make you struggle in stress and misery all your life. When you do something purely for the money and not because of passion, you will ﬁnd it very difﬁcult to stay motivated. After a while, you will burn out and give up from the stress and exhaustion. Instead, you must do what you love to do now! Not only will you begin to enjoy your life and be happy but you will suddenly ﬁnd the natural energy and motivation that will drive you to give your best and become the best. When this happens, the money will automatically follow. DO WHAT I LOVE

MAKE MONEY

CONTINUE TO DO WHAT I LOVE

Whenever I teach this in my seminars, people will always have two more questions for me. The ﬁrst question is, ‘How do I know if I am truly passionate about something?’ To ﬁnd the answer, just ask yourself this question, ‘If I had all the money in the world, would I still be in this career/business?’ If the answer is ‘yes’, then it is truly your passion. If the answer is ‘no’, then you are deﬁnitely in the wrong industry. In fact, when I had the opportunity to interview the top insurance advisors in Singapore (I specialize in insurance sales training), I found that those who were highly successful, earning over $500,000 a year, had one thing in common. They were not primarily motivated by the money but by the love of helping people. The second question that people always ask me is, ‘just because I love something, can I always make money from it’? ‘What if my 40

passion has no market value’? The answer is ‘yes’! You can always make a highly lucrative career out of any passion! You only need to learn how to make it marketable and learn how to commercialize it! This is exactly what you will learn to do in the chapters that follow! More speciﬁcally, you will learn how to turn your ideas and passion into endless streams of income in chapters 8 and 9! Whether you have a passion for computer games, gorgeous women/men, knitting, cooking, surﬁng, trading, people, children, ﬁsh or even iguanas. So start asking yourself yourself… l ‘What do I love to do?’ ‘What would I do even if I didn’t get paid?’ l ‘If I had all the money in the world, how would I spend my time?’ l ‘Who are people who have made their fortunes around this passion I have?’ I guarantee you that when you start looking for them, you will ﬁnd no lack of role models you can learn from. Remember, do what you love and you will never work another day in your life!

Millionaire Habit 6: Acting with Integrity Many people have the perception that the fabulously rich and powerful are dishonest and unethical. And who can blame them after hearing stories of how millionaire executives rip off their shareholders in scandal after scandal on Wall Street? Think about Enron, China Aviation Oil, WorldCom, ACCS, REFCO and the list goes on. Certainly there are unethical & unscrupulous rich people around (incidentally, their wealth & businesses rarely last), but the truth is that most self-made millionaires share a common habit of personal integrity. Interestingly, in the best-selling book ‘The Millionaire Mind’, author Thomas Stanley interviewed 733 multi-millionaires and asked them what were the key factors that contributed to their wealth. Ranked number one was ‘being honest with people’. Surprised? This factor was ranked way ahead of factors like ‘making wise investments’, ‘working hard’ and ‘having a competitive spirit’. What is integrity and why is it so important to long term wealth? 41

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Integrity is about being honest with others and adhering to high moral standards. It is also about doing what you say you will do. When you act with integrity, your customers, colleagues and staff will place their trust in you. They know that you mean what you say and that you will not let them down. They know that you will give them the best quality for their money and they know that you will not cheat them.

It takes twenty years to build a reputation and ﬁve minutes to ruin it. If you think about that, you’ll do things differently – Warren E. Buffett, world’s second richest man

In a world where so many people are unethical and dishonest, build your reputation on integrity and you will have an endless supply of customers, suppliers, investors and business partners. In the ﬁrst chapter, I mentioned how Vikas Goel, Founder and CEO of eSys Technologies arrived in Singapore without a dollar, but managed to build a global billion-dollar company in ﬁve years. How did he do it? Where did he get the money to get started? Initially he worked at a company called Karma. When the recession hit in the late 1990s, Karma’s parent company collapsed. Instead of waiting to be retrenched, Goel took the proactive step (Millionaire Habit 2) of undertaking a management buyout of the Singapore unit. In order to keep the business going, he persuaded his customers to pay him in advance so that he could use the money to buy the products from his suppliers. The only reason his customers agreed was because Goel had built up his reputation as an honest and trustworthy man while dealing with them in the past. A few months later, he bumped into his old boss at Sim Lim Square. When he told his ex-employer that he was running out of money to sustain the business, Goldkist gave him US$300,000 simply because he knew that Goel was a man who would never run away with his money. This is the power of building a reputation of trust and honesty. That was not all. Goel also happened to meet up with an old friend and ex-customer in Sim Lim Square. When he asked for help, his ex-customer wired US$1 million into his Seagate account so he could buy goods from Seagate. 42

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Over the years, I have had many people who have approached me to do business with them and I have turned most of them down, no matter how great the opportunities to make money seemed to be. As a result, many people have asked me what I look for in a business partner (they know that anyone who works with me will make alot of money). My answer is that ‘integrity’ is above everything else. So, always act with integrity and you will possess one of the greatest strengths of all.

Millionaire Habit 7: Be 100% Committed Let me ask you this question, ‘Do you want to be rich?’, ‘Of course, that’s why I’m reading this book!’, you may say. Let me ask you the next question, ‘Are you 100% committed to be rich?’. You see, there is a very big difference between wanting to become a millionaire and being 100% committed to becoming a millionaire. When you merely want, wish or hope to achieve a goal, it will rarely ever happen. Think about it. Everybody wants to be ﬁnancially free, but very few ever make it happen. Studies after studies have shown that people who achieve phenomenal success and wealth did not just want it, they were 100% committed to achieving it. When you are 100% committed to a goal, it is no longer a wish, a hope or a want... it becomes an absolute MUST. You see, when something becomes an absolute MUST to you, it gets you to operate from a totally different frame of mind. When something is a MUST, it will become your number one priority and nothing will ever come in its way until that goal is accomplished. When something is a MUST, you will do whatever it takes to get it (within limits of integrity of course)! Even if it means stretching way beyond your comfort zone and investing time, energy or money, you will do whatever it takes. I believe that when you are willing to do whatever it takes to get something, you will ALWAYS ﬁnd a way. And if you cannot ﬁnd a way, you will make a way. For example, when George Lucas (millionaire at 28 and creator of Star Wars) wanted to revolutionize ﬁlm-making by creating the special effects required for the space battle scenes for Star Wars, the technology did not exist. Everybody told him that what he wanted to do couldn’t be done. Instead of

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accepting the comfort of reality, his total commitment to making his dream come true was to set up his own company, Industrial Light and Magic (ILM) to create the special effects required for his own movie. However, when you merely have a weak ‘wish’ or ‘hope’ for wealth, you will never attain it. Why? This is because the path to achieving any goal and creating wealth is never easy. It fact, it is extremely challenging and difﬁcult. I can bet you that when you begin on your path to ﬁnancial freedom, there are going to be huge obstacles and challenges that will get in your way. All the problems that you can possibly think of will come to test your faith and endurance and to stretch you out of your comfort zone. You will ﬁnd that at certain points of time, you will lack the time, lack the money and lack the energy. You may encounter people discouraging you, friends leaving you and things not going as planned (trust me, I have experienced all this and more). If it is merely a ‘wish’ that you have to become rich, chances are that you will eventually give up and ﬁnd lots of excuses of why it cannot be done. This is because those that merely ‘wish’ for success are never willing to stretch beyond their comfort zones and do what ever it takes to overcome all their challenges. In addition, when something is merely a ‘want’, you will ﬁnd that your mind will be ﬁlled by a dozen other ‘wants’ that will take away your time and attention. After a while, you will ﬁnd yourself being distracted by other things that come your way. Has this happened to you before? So, the only way you will ever achieve your goals of becoming rich is to make it a MUST for yourself. I remember that when I was in Secondary school, a group of close friends and I shared our dreams about becoming millionaires and business owners. The only difference was that for many of them, that dream was merely a dream. For me, it was an absolute must! I was so totally obsessed with the idea that during those school lunch breaks I would be designing my company name cards with the title ‘Adam Khoo – CEO’. Sure enough when I approached my friends with the opportunity to set up the disco business venture (earlier mentioned in chapter one), many of them started giving excuses like ‘we are too busy’, ‘our parents will object’, ‘what if it doesn’t work’, ‘what if we lose money’, ‘we have something on over the weekends’ and so on. 44

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Because their goals were not an absolute must to them, they naturally let all the perceived obstacles and excuses get in their way. Because it was a must for me to make money, I knew that I would ﬁnd a way to make it happen... and I did. Let me give you another example. Have you ever had a list of goals to achieve or actions to take, but kept putting them off? I’m sure you have, as it is pretty common to procrastinate. Did you eventually get some of them done? Why? Why is it that you eventually got some things done but not the rest? I would bet that those things that you got done eventually became a must for you! It eventually crossed the deadline and you HAD to get it done. As for the rest, we will usually continue putting it off until it becomes an ‘absolute must’ one day. You see, we will never do anything in our life until it becomes an absolute must for us. The trouble is that when something becomes a must, it is often too late. For example, I know a friend who set a goal to quit smoking. He knew that it was doing him harm and he really wanted to. Sure enough, he kept procrastinating year after year. Suddenly, in 2003, he was diagnosed with lung cancer and told that if he didn’t stop, he would die in six months. He hasn’t touched a cigarette since. You see, when something is a ‘must’, anything can be achieved. At the same time, when you make ﬁnancial freedom and security a must for you and not just a wish, you will achieve it. When something is a must, our brain gets us to tap our fullest potential to make it happen. The trouble is that becoming ﬁnancially abundant is rarely a must for most people. It is merely a wish. However, it is always a must to survive... and that it why most people merely survive. So once again, to achieve all your ﬁnancial goals, you have to make it a must for yourself. How do you make something a ‘must’? The answer is by putting yourself on the line. When you put yourself in situation where you give yourself no choice BUT to succeed, you very often will. If you study the life stories of millionaire history makers, many of them came to a point in their lives where they put themselves on the line and staked everything they had. And because they had NO CHOICE but to succeed, they often did it against insurmountable odds.

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When Vikas Goel needed to get the funds to start his company eSys Technologies, he walked into the Bank of India to get a bank loan. In order to persuade them that he was sincere and conﬁdent, he pledged his entire future family inheritance from India. It was this level of commitment that made it possible for him to overcome all the odds that stood in his way. The only reason that the movie Star Wars came into existence is because George Lucas was 100% committed to making his dream come true. Many people have the perception that Lucas was just a genius who was fortunate enough to dream up this naturally successful movie. If you read about the history of Star Wars, you would know that up to the day of its release, everyone believed that it would be a major ﬂop, including the actors! During production, anything that could have possibly gone wrong went wrong! At the end of sixteen weeks of ﬁlming, everyone had every reason to believe it would fail. The movie had grossly exceeded the initial budget, it had overrun the ﬁlming schedule, the special effects unit could not create the desired effects and everyone had the opinion that it was a kiddy movie. As a result, 20th Century Fox studios wanted to pull the plug and gave Lucas three days to ﬁnish two weeks of work that was lost. What made things worse was that Lucas suffered severe chest pains in the middle of all this and was warded for severe stress and exhaustion. Most directors would have given up and cut their losses, knowing that it was impossible to achieve it all in three days. If Star Wars had been a ‘wish’, it would have failed there and then. But to Lucas, it was a must... he would do everything to make it happen. Lucas hired a triple crew, divided the stage into three sets and directed three scenes concurrently. Three days later, Star Wars was delivered and the rest is history. By the end of its ﬁrst theatrical run, Star Wars became the most successful ﬁlm in North American history. It grossed a total of US$290 million and George Lucas’ cut from the box ofﬁce was more than US$50 million. As a teenager, Lucas set a goal of becoming a millionaire at the age of thirty. He was off by two years: Lucas made his millions by the age of twenty-eight. When it came time to making the sequels ‘Empire Strikes Back’ and ‘Return of the Jedi’, Lucas rejected the money offered by Fox studios. He was so committed to making the sequels an even bigger 46

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success (which is very rare in the ﬁlm industry), that he took what he earned from his ﬁrst ﬁlm and fully ﬁnanced Empire Strikes Back for $18 million (millionaire habit 4: delayed gratiﬁcation). Everyone thought he was crazy as the number one rule as a moviemaker in Hollywood is to ‘never use your own money, even if it is your own ﬁlm’. His belief and commitment paid off. The next ﬁve Star Wars ﬁlms generated revenues of over US$20 billion and today, George Lucas has amassed a personal fortune of close to US$3 billion. However, you don’t necessarily have to risk all your money like Vikas Goel or George Lucas to get totally committed to your goal. There are other ways of putting yourself on the line. As for me, I personally put myself on the line by making public commitments. Whenever I set a goal, I would announce to everyone my plans because I know that the moment I do so, there would be no turning back. I had to make it happen! So before moving on to the next millionaire habit, I want you to make a decision to be 100% committed to your wealth. Do whatever it takes to ﬁnish this book and apply what you learn, and I will guarantee that your wealth will multiply many-fold.

Millionaire Habit 8: The Ability to Turn Failure into Success The ﬁnal millionaire habit is the ability to accept failure and to turn it into success. Most people have the impression that successful people never fail and that millionaires never lose money. As a result, many people fear failure and shun those who have ﬂopped. This is a huge lie and distortion that prevents people from becoming rich. The truth is that everybody fails at one point or another. In fact, millionaires fail more times than anybody else because they take so much more action. I have made countless stupid mistakes, lost a lot of money and have failed so often that I have lost count. So mark my words, you will fail many times before you ever succeed. What’s important is what you do about failure. This is the critical habit that makes the difference between the rich and the poor. There are three ways people respond to failure. The ﬁrst group of people get so disappointed by their failure that they just give up! They would say,‘I tried it but I failed’ or ‘I tried investing but it didn’t

SECRETS OF SELF-MADE MILLIONAIRES

work for me’. They see failure as the end of the game, as the ﬁnal verdict that they are not meant to succeed. They give themselves reasons like ‘Maybe I am not good enough’ or ‘it’s just too difﬁcult’. Have you ever been guilty of doing this before? Sure enough, this way of responding to failure will see many dreams fade away. The second group does not give up that easily. When they don’t reach their outcome, they would say, ‘Let me try again. Let’s not give up’. So they quickly get on their feet and try again. If their business fails, they go start another business. If they lose money investing in the stock market, they will go and try to buy different stocks. Will they eventually succeed? The answer is ‘No’. Why? It is because this group may try and try again but they don’t change their strategy. They keep making the same mistakes, doing the same thing again and again. Sure enough they keep getting the same disappointing results. So what happens after a while? They eventually get so frustrated and tired that they too will throw in the towel. Some may even begin to accept mediocrity and fear to dream of anything better. Do you know anyone who has been caught in this trap? Have you ever done it yourself?

Success is the result of good judgment. Good judgment is the result of experience. Experience is the result of bad judgment – Anthony Robbins Millionaires approach and perceive failure very differently.When they don’t reach their goals, millionaires do not see themselves as having failed. Rather, they see themselves as getting a learning experience! To them, failure is not the end, but only a detour. They see it as feedback that they are not using the right strategy. They then take this feedback, learn from the experience and change their strategy! If changing their strategy still does not get them the result, they will once again get more feedback, change their strategy and take action again. They keep doing this again and again until they get the results they want! They will do whatever it takes UNTIL they succeed. By doing so, they turn their failures into success!

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

My policy is to learn from the past, focus on the present, and dream about the future. I’m a ﬁrm believer in learning from adversity. Often the worst of times can turn to your advantage, my life is a study of that – Donald Trump, after turning around his $935 million debt into a $3.7 billion fortune

Very seldom do millionaires achieve their success on the ﬁrst go. Many achieve their ﬁnancial dreams only after countless learning experiences and setbacks. However, many agree that if not for those ‘learning experiences’, they would never have found the solutions to their outcomes. Sim Wong Hoo, the founder of Creative Technologies did not succeed until numerous business failures. His ﬁrst idea was to develop and sell the Cubic CT, the world’s ﬁrst multimedia PC. After spending countless hours and hundreds of thousands of investment dollars on the product, it turned out to be a dismal failure. Instead of beating himself up and ﬁnding lots of excuses, he saw it as feedback that the market was just not ready for the product. It was just too expensive and complicated for its time. What did he do? He went back and changed his strategy. Eventually, after even more failures, he eventually came up with the idea of a low cost sound card called the ‘Sound Blaster’. And that one idea turned Creative Technologies into a billion dollar global company. You see, all you need is only ONE great idea that will make you your fortune. However, that ONE great idea hardly ever comes the ﬁrst time around. It only comes after lots of bad ideas. Another great example that never fails to inspire me about turning crushing failure into resounding success is the story of Steve Jobs, the founder and current CEO of Apple Computers. Steve co-founded Apple at the age of 21 in 1976. Within four years, the company was listed on the stock exchange and Steve was worth US$217 million at the age of 25. As Apple continued its phenomenal growth, it was decided that professional management had to be hired to run the huge organization. So in 1983, Steve hired John Scully to be the CEO. However, within two years, the CEO and directors at Apple could 49

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not get along with Steve Jobs (he was known to be an erratic and emotional manager) and stripped him of all his duties, forcing him to resign from the very company he founded in failure and disgrace. To make things worse, Apple sued Steve for neglecting his duties. While those in the business world wrote him off, Steve who possessed the millionaire mindset, took it as a huge learning experience (millionaire habit 8) and took the proactive action (millionaire habit 2) of starting a new and better company called NeXT computers. He believed that he could develop a range of hardware and software that would be even better than that at Apple. Did he succeed? Unfortunately, NeXT’s hardware division became a huge failure. Undaunted, he again took the feedback and went on to found Pixar Animation Studios, which became a huge success in creating the ﬁrst breakthrough fully digitally animated movie ‘Toy Story’. In the meantime,Apple Computer was on the verge of bankruptcy in 1995 after suffering from internal mismanagement and lack of new product innovation. The company was making losses of $800 million to $1 billion a year and its share price dropped from a high of $18 to $3.80. Believing that he could save Apple, Steve Jobs agreed to return as CEO for a nominal pay of $1 (he was doing it purely for the passion... millionaire habit 5). When Steve took over, he ﬁred all the unproductive executives and spearheaded the launch of revolutionary products like the iMac, iPod and iTunes. The revolutionary operating system (OS) he developed at NeXT was then evolved into the highly popular Mac OS X. As a result of these successful products, Apple turned its $1 billion loss into $1.3 billion in proﬁts by 2005. Its share price rose from $3.80 to a high of $75! Looking back, Steve realized that if he never got ﬁred from Apple, he would never have founded NeXT and Pixar Animation. If not for Pixar, he would not have become a pioneer in digital animation and if not for NeXT software he developed, Apple would never have the Mac OS X operating system that has made Apple a huge success today. It is for this reason that many millionaires believe that ‘everything happens for a reason’ and that ‘adversity is often opportunity in disguise’ provided you learn from your experiences and continue to take consistent action!

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

Millionaire Habit 9: Respect & Love Money The ﬁnal and one of the most important wealth habits is to respect and love money. I don’t mean loving money to the extent that you are a slave to it, but loving money for the good it can do for you and the people around you. Most people I share this with often respond by saying, ‘Well, of course I love money! Of course I respect money.’ Who doesn’t? If I didn’t love money for what it can do, I wouldn’t be reading this book. Well there are many people who consciously desire to be rich and know that money is important. However, at a deeper level they may not realize that their subconscious mind either holds many limiting beliefs about money or associate lots of negative feelings towards money. These negative associations cause them to repel money and prevent them from becoming rich without even realizing it. Do you feel that although you consciously desire to be rich, but something holds you back? Have you experienced working hard to achieve your goals. However the moment you start getting results and seeing your wealth increase, you tend to go into the pattern of sabotaging it? Like the moment your bank account hits a certain amount, you start losing your motivation until the money dips below a certain level then you start working hard again? It’s like your subconscious mind is preventing you from going beyond a certain level of wealth. I know of some friends who say that the moment they get a certain amount of money, they will tend to spend it away or lose it. If you are experiencing the same phenomenon, it is because subconsciously, your mind doesn’t want you to be rich. Again, its either because you have a lot of negative associations towards money or many limiting beliefs are holding you back. I remember a time when I gave a seminar to a group of teenagers and I was teaching them about the power of spotting opportunities and taking action on them. I took out a $10 bill and said that I was selling it for $2. I waved the bill in my hand for a good 10 minutes asking if there were any takers, but none came up. Eventually, one boy hesitantly came up and took the money. ‘Buying this $10 note for $2 represents a great proﬁt opportunity, so why didn’t any of you come up?’ I asked. The answers I got were: ‘I didn’t want people

SECRETS OF SELF-MADE MILLIONAIRES

to think I was money-faced’, ‘I did not want to cheat you of your money’, ‘I thought it must be a trick’. In other words, what prevented them from taking action on any opportunity were the limiting beliefs and associations they had formed about money. The scary thing is that the same thing happens in life! Why is it that some people see and act on money making opportunities everyday while others just don’t see them? Again, it is because of the beliefs that have been formed in their subconscious mind. As many of us grow up, we may unknowingly pick up many limiting beliefs and painful associations towards money from our family members, friends, teachers and relatives. Many people are taught that if they think about money or desire money, then they are being ‘money faced’ or ‘money minded’. As a result, their subconscious starts associating thoughts and desire for money as being bad or evil. This explains why those teens did not dare show that they are a ‘money minded’ person by taking advantage of the opportunity. Have you been taught to believe this as well? Because many people who come from working class families see their parents working so hard for money, they subconsciously believe that working hard is the only way to make money. This belief causes them to fail to realize that big money is from ideas and not just hard work. When they see $10 being offered for $2 they think that it must be some sort of trick or that they will be cheating me. What they don’t realize is that there are opportunities like this everyday! Warren Buffett made his billions by buying companies at half of what they were really worth. He was buying $10 stocks for $2 (you will learn exactly how to do this in chapters 18 and 19). Entrepreneurs make money by buying something a lot cheaper than what it is worth, re-packaging it and sell it for ten times the price! If you come from a poor or middle class family, there is a good chance that you may have been taught that ‘money isn’t everything’, ‘money doesn’t grow on trees’, ‘rich people are greedy’, ‘money is not important’, ‘if you have a lot of money then people will cheat you’, ‘investing is risky’, ‘money will change you’. As a result, your subconscious mind associates so much fear, hate and negative feelings towards money that it will stop you from ever becoming rich. You may feel this inner power struggle inside you such that although you set your goals to become rich, but somehow, you 52

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

sabotage your own success every time you achieve a certain level of wealth.Your inner mind won’t allow you to become rich as it would give you more ‘problems’ or make you into a ‘bad person’. However, you have to understand that your friends, parents or teachers may have taught you all these things because they probably thought they were passing on good advice. Their parents and teachers probably taught it to them as well, and that is why they have never become rich. Very often, they also choose to believe all these negative things about money because it helps them to justify their own lack of money. When someone says, ‘well... money isn’t all that important anyway’, they are just consoling themselves. When someone says, ‘I love my family and that’s why I have no time to make money’, they are just giving themselves justiﬁcations. So, it is really important for you to stop for a while and really reﬂect about the inner feelings you have towards money. I know that consciously you respect and love money for what it can do, but I want you to set aside your pre-judgments and really think about the subconscious beliefs and feelings that you associate with money. I once had a participant, Joshua who couldn’t understand why despite working hard, having a strong education and learning the strategies of wealth creation, just couldn’t seem to hold on to his money for long. Every time he closes a few big deals (he was a property agent) and made a nice pile of cash, he would sabotage his success by spending it all away. He just couldn’t understand why. When I got him to relax and think back into the past, he was shocked to ﬁnd the answer. Apparently when he was a young child, he saw his neighbor’s family constantly ﬁghting and arguing. The adults were perpetually miserable and constantly neglected their only child. When Joshua asked his parents why the neighbors had so much problems, he remembered his parents reply, ‘these rich people have got more problems... they always argue about money’. Because of that belief that ‘money gives you problems’ and the painful feelings he associated with wealth, Joshua kept repelling wealth without him realizing it. The moment he started identifying the problem and resolving it, his ability to hold onto and multiply his money began to change dramatically. So, I want you to grab a pen and spend a full, uninterrupted ten minutes to do this exercise. The moment you start, I want you to 53

SECRETS OF SELF-MADE MILLIONAIRES

write down as many answers to the following statements: ‘Money is... ’, ‘Having money will... ’ and ‘rich people are... ’. I want you to write down at least forty (that’s right... forty!) associations. It is important that you don’t stop to ponder or think about what you are writing. Just write whatever comes into your mind. If you think too much or too long about it, you are going to come up with a lot of useless politically correct answers. What you should be interested in are your hidden subconscious associations! The only way to get them out is to keep pushing yourself to write non-stop. Even when you feel like you are stuck and there is nothing left to write, squeeze something out, be it positive or negative. I bet you will be surprised with what you come up with. So are you ready? Stop reading now and start writing! (Remember, don’t stop until you hit at least 40 associations). Money is…

CHAPTER 3 THE NINE HABITS OF SELF-MADE MILLIONAIRES

Other Beliefs/Associations about Money…

Give yourself a pat on the back for completing the exercise. I know it wasn’t easy. So, what have you uncovered from penning down all your thoughts? What beliefs or associations do you have about money? Are they positive or negative? Good or bad? What beliefs do you have about rich people? Do you respect them or resent them? Do you admire them or loathe them? If you resent rich people and think that they are bad, then your unconscious mind will NEVER allow you to become rich. Why? This is because if you become rich, then you will become a ‘bad person’.

Common Negative Beliefs & Associations About Money Having Money Will…

After conducting this exercise with thousands of people in different countries, I have found the following common negative associations consistently being revealed. Do you share any of them? l l l l l l

Rich People are…

l l l l l l

Money is the ‘root of all evil’ Money will make you materialistic Money will make you less spiritual If I became wealthy, I will lose all my friends Money doesn’t grow on trees Rich people are greedy and selﬁsh Rich people are stingy To get rich, you must be lucky, dishonest or really smart Money will not buy you happiness Money isn’t that important anyway To have more money, I will be depriving others of it If God wanted us to have money, he would give it to us 55

SECRETS OF SELF-MADE MILLIONAIRES

l l l

l l

We don’t have a lot of money because we love our children Having a lot of money will change you (into a bad person) If I had a lot of money, my friends and family will look at me differently If I have more money, I will have more worries and problems There are less opportunities to make money nowadays

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Myth

Rich people are materialistic. They worship money

Fact

It is the people who lack money who worship it. Who works all day, year after year in a job which they hate, just for the money? Who is wishing they had more money? Who is constantly worrying about money? Who are those who constantly sacriﬁce their health and family to make more money? It is those who are wealthy or those who have no money? I rest my case. In fact, the rich rarely work because of money. They work because of passion and a sense of personal mission. Bill Gates, Warren Buffett, George Lucas, Michael Jordan and Steve Jobs certainly don’t work for money... they don’t need to.

Myth

If I became wealthy, I will lose all my friends

Fact

If you lose some of your friends, it only means that you have found out who your false friends are. When you become wealthy, you will make new friends with a wealthy mindset.

Myth

To have more money, I will be depriving others of it. There is not enough money for everyone to be rich

Fact

When you become rich, you actually create more wealth for other people. Wealth multiplies into more wealth. You see, money is a measure of the exchange of value. When you make more money, it means you are creating more value and wealth in the world. Bill Gates is the richest man in the world because he has created the most value in people’s lives through the creation of Microsoft and Windows. Because of his invention, so many more millionaires have been created as a result. Think about it, if Microsoft Windows, Word and Excel did not exist, would you have been able to create as much wealth as you have today?

Myth

Having a lot of money will give me a lot of worries and problems

Fact

The majority of the problems people face in life (relationships, health, career) are the result of the LACK of money.

Myth

Money is the ‘root of all evil’

Fact

The lack of money is the root of all evil. The number one cause of murder, cheating, stealing, lying is poverty (the lack of money).

Debunking the Myths of Money The truth is that many of these beliefs and attitudes that some people hold onto with much conviction are nothing but inaccurate generalizations and excuses that keep them from living a truly a happy and wealthy life. In order to truly align your mind to wealth creation, you must debunk these negative myths and really look at the facts...

Myth

Having a lot of money will change you (into a bad person)

Fact

Money is a personality magniﬁer. It brings out the true person within you. If you are a selﬁsh and nasty person by nature, having money will make you even more nasty and selﬁsh. However, if you are a kind, generous and loving person deep down inside, money will magnify your goodness.

Myth

Money will not buy you happiness

Fact

True. However, not having money will not make you happier as well. Isn’t it better to be unhappy with money than unhappy without it?

Myth

Money isn’t everything

Fact

This is the top excuse given by poor people who are in denial. The truth is that everything is money. Without money, you cannot maximize other important values such as family, career, health, spirituality and relationships.

Myth

Money will make you less spiritual

Fact

Again, if you are by nature a spiritual person, having money will allow you to touch more lives and help you do more of god’s work. In fact, the wealthiest people in the world are extremely spiritual. Not having to worry about money anymore allows many of the rich to focus on the more important things in life. Many truly wealthy people believe they don’t own their money. They are just custodians of God’s wealth.

Instead, I want you to write down as many positive associations and new empowering beliefs as you can about money.

SECRETS OF SELF-MADE MILLIONAIRES

My New Money Beliefs Money is…

Having Money Will…

II section

Stick these new beliefs next to your workstation or paste them on your computer’s desktop and repeat them daily. When your subconscious begins to get ﬂooded with all these new positive feelings about money, you will ﬁnd yourself becoming a money magnet! With the conclusion of this chapter, let’s move on to explore...

CASH FLOW STRATEGIES OF THE RICH

chapter SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

How the Rich Manage Cash Flow

The Biggest Lie Ever Told About Wealth Why is it that 90% of the population ﬁnd it so difﬁcult to become rich? It is because all of us have been told the greatest lie of all, the lie that has been keeping us from becoming rich. Before you can ever become wealthy, you must ﬁrst discover the truth about wealth and remove the wool that has been pulled over your eyes for way too long. Let me start off by asking you to do a simple exercise. I would like you to close your eyes and picture a millionaire in your mind. Picture the clothes the person is wearing, the car he drives, how he spends his money, how he spends his day and how he dines. Go ahead and do this NOW before you go onto the next paragraph. Well, what picture came into your mind? If you are like most people, you would have pictured a millionaire as someone who wears the latest, branded clothes, who drives the newest luxury car model, who spends lavishly, who dines in ﬁne restaurants and spends on the priciest, choicest dishes and most superb wines. You may have imagined someone who is relaxing in a cushy leather upholstered armchair in his mansion or yacht, pufﬁng on his Havana cigar. Why is this so? It’s because of the way we have been brainwashed by television and movies to think this is the way millionaires live and spend their money. It is precisely these beliefs and habits that actually keep us from becoming wealthy! The truth is that very few self-made millionaires live this way. In fact, the only ones who do live this indolent, self-indulgent lifestyle are the minority of millionaires who either inherited all their wealth or who made their money through sports or entertainment. And all of them usually have one thing in common.They inevitably 60

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end up losing everything within ten years. Their wealth is only temporary. Look at Mike Tyson, Michael Jackson, Bobby Brown and a whole list of other celebrities who made hundreds of millions within their careers. They are either all broke or heavily in debt today.

The Truth About Wealth In the New York Times Best-Selling book ‘The Millionaire Next Door’, Thomas J. Stanley interviewed 300 self-made American millionaires to ﬁnd out how they think, how they earn their money and how they spend their wealth.What he discovered was a shocking revelation that made his book an instant best-seller. It was discovered that many people who had high paying jobs, drove the latest luxury cars and wore the latest designer clothes and who appeared to be have millions to spend, were usually broke with a low personal net worth. Most of these professionals and senior executives of multi-national companies were what he termed ‘Under Accumulators of Wealth (UAW)’. In contrast, those who were actual millionaires (that is those with a net worth of over US$1 million) lived very frugally and well below their means. Eighty-percent of them were born poor or from middle class families. They wore inexpensive suits and never bought a watch that cost more than S$500. Most of them drove secondhand cars, never bought the latest models of vehicles and they usually invested a minimum of 20% of their income in the stock market or private businesses. He termed these people ‘Prodigious Accumulators of Wealth (PAW)’. I must admit that when I was much younger, I too had the same distorted beliefs about how real millionaires lived. When I was a kid, I used to admire and envy people who drove the latest Porsche Boxsters and who lived in Penthouses and lived lavish lifestyles. My millionaire Dad (who never bought a brand new car in his life until he turned 50), used to tell me that these people were in reality quite broke and it was really the bank who owned their houses and their ﬂeet of cars. He said that they were one paycheck away from going broke. I never really understood what he meant until much later on in my life.

CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

The True Deﬁnition of Wealth Before you can be truly wealthy, you must ﬁrst know what wealth really means. Again, many people think that a person’s wealth is deﬁned by how much he earns, by the clothes he wears, by the house he lives in and by the way he lives. We now know that this is not at all true. A person’s wealth is actually deﬁned by how long a period of time he/she can sustain their lifestyle if they stop working. The longer you can go on living your life without working another day, the richer you actually are. Your wealth is therefore deﬁned by three things: (1)your monthly expenses, (2)your liquid assets and (3)your passive income. Your liquid assets refer to how much cash or cash equivalents (like stocks, bonds & ﬁxed deposits) you have to pay for your monthly expenses. Your passive income refers to income that you will continue to receive even after you stop working. This could include interest, dividends, royalties and proﬁts from a business. Let’s look at an example. Steve is a director in a multi-national company and earns a $20,000 monthly salary. He lives a lavish lifestyle that results in personal and household expenses a month of $18,000. He hasn’t really saved much over the years as he has spent any surplus upgrading his house and car. His liquid assets are just under $18,000. Besides his full time job, he has no other sources of income. What is Steve’s level of wealth? Well, if he stops working today, his $18,000 will last him for just a month. So his wealth is one month’s salary. As you can see, wealth is deﬁned not by the absolute amount of dollars, but by time. On the other hand, Susan, a marketing manager in a retail store earns a monthly salary of $5,000 a month but she is much wealthier than Steve. How is this so? Well, over the last 20 years, Susan has diligently saved 20% of her income and invested it in the right stocks and mutual funds that have given her returns of 15% per year. (You are going to learn how to achieve this return with minimal risk in the later chapters). Over the years, Susan’s liquid assets have grown to $1.32 million (you can verify this with a ﬁnancial calculator). In addition, she has spent her free time building up a home-based business

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CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

that sells unique collectibles over the Internet. Her small business earns her an additional income of $1300 a month. She may not drive a fancy car or wear a Cartier watch, but let’s see what her wealth is. If Susan were to stop working today, she would still retain the $1,300 monthly passive income that her home-based business earns her. Since her monthly expenses total $4,000 a month (80% of her income), she would have a net outﬂow of $2,700 a month. With her $1.32 million in accumulated savings, she would be able to survive for 40 years! (This is assuming that she does not invest the $1.32 million she has prudently saved up!). If Susan were to put her $1.32 million into a risk-free ﬁxed deposit account earning interest of 4%, it would bring her an additional interest of $52,800 per annum. This means another source of passive income that rakes in $4,400 a month. So you can see how Susan can very comfortably go on forever without working another day in her life! Can you now see that your wealth (i.e net worth) is not determined by how much you earn, rather, it is determined by how much you save and wisely invest. Even with just a middle class income, you could become a millionaire if you have enough ﬁnancial intelligence, discipline and patience.

How Wealthy Are You Now? Before you can achieve your ﬁnancial dreams, you must ﬁrst know where you are right now. So, it is very important that you do a simple calculation to ﬁnd out your current level of wealth. It may be a painful and even discouraging process to some people, but it is absolutely necessary – if you don’t want creditors pounding at your door! So, take ﬁve minutes to complete this exercise before moving on.

Level of Wealth =

Liquid Assets (A) Monthly Expenses(B) – Passive Income(C)

1. How much in liquid assets do you have? This refers to how much cash and cash equivalents you have to pay off your monthly expenses. These are assets that you can easily sell off within a month. So it does not include the value of ﬁxed assets like your house, car or jewelry. It also does not include how much you have in your CPF* or 401K**. My liquid assets are $

(A)

2. What are your monthly expenses? How much do you spend a month on average including interest payments on loans? My monthly expenses are $

(B)

3. How much passive income do you have? This refers to sources of income that will continue if you were to stop working. Again, this includes dividends, interest, royalties or business proﬁts. My Passive income is $

(C)

4. What is your level of wealth? $

My wealth is $

(A) (B) – $

(C)

So, the key to increasing your personal wealth is to reduce your expenses, create sources of passive income and invest your money to massively increase your liquid asset base. How do you do this? First you must understand... * CPF-Central Provident Fund is a compulsory savings plan for Singapore citizens and permanent residents. ** 401K is a type of employer sponsored retirement savings plan for United States citizens. 65

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How the Rich Manage their Cash Flow Once again, the key difference that sets people apart in their ability to create wealth is not just how much they earn but more importantly, how they manage the cash that ﬂows through their hands. The rich manage their money very differently from the average Joe. They have a very different set of habits in the areas of saving, investing and cash spending. To become a millionaire, you must learn and adopt the cash ﬂow management habits of the rich. You have to ﬁrst understand the concept of an ‘asset’ and the fact that some assets help you accumulate wealth while some other assets reduce your wealth. Assets are physical or intangible items that you own. They can be classiﬁed into Positive Cash Flow Assets (Assets Cash+) or Negative Cash Flow Assets (Assets Cash-). Sometimes to purchase an asset like a house or a car, you have to take a loan from the bank. When we borrow money, we incur a liability. As you know, liabilities incur the extra expense of interest payments you must make. Positive Cash Flow Assets (Assets Cash+) are assets that provide you with positive cash ﬂow and/or capital appreciation even after deducting interest expenses from liabilities incurred. Examples are stocks, bonds, proﬁtable small businesses, properties with positive yield, intellectual property, ﬁxed deposits and so on. Negative Cash Flow Assets (Assets cash-) are those that depreciate in value and/or incur additional expenses such as maintenance or interest payments for liabilities incurred. For example, if you bought a house and rented it out for $2,000 a month but had to pay a mortgage interest of $2,200, it would be a negative cash ﬂow asset. A house which you buy to live in, or a car which is purchased for personal use will obviously not generate any form of income. They only incur negative cash ﬂow and should be considered as Negative Cash Flow Assets. Bearing this in mind, let’s see how the poor, middle class and the rich manage their cash. Although the use of income statements and balance sheets have been around for hundreds of years, Robert Kiyosaki (author of Rich Dad, Poor Dad) ﬁrst illustrated it in way that made it easy for people to understand how cash ﬂow was managed by the different income groups. In my illustration below, I use a slightly different approach. 66

CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

Cash Flow Management of the Poor

JOB

INCOME EXPENSES

EARN SPEND SAVE

ASSETS (CASH+)

ASSETS (CASH–)

Those with the poor mindset are usually made up of blue-collar workers and junior executives. They tend to spend whatever they earn. They live for the moment without sparing much thought for the future. They are driven by the need for instant gratiﬁcation. They save little or nothing with the excuse that they earn too little to save. Even if they get a pay raise, they will spend the surplus just as quickly. As a result, they have no ﬁnancial stability or security. Some continue to work in a job they loathe because they have to keep working to pay the bills. The moment they lose their job or suffer a pay cut, they ﬁnd it very difﬁcult to survive. It is obvious that this habit of managing cash will never help you get rich.

SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

Cash Flow Management of the Middle Class

JOB

Cash Flow Management of the Rich

JOB

INCOME

INCOME EXPENSES

EXPENSES

EARN SPEND SAVE

ASSETS (CASH+)

ASSETS (CASH–)

Savings

Larger house

Stocks

Luxury cars Country club Luxury goods Credit card

Passive income generated from Assets (Cash+)

EARN SAVE & INVEST (On Asset Cash+)

SPEND

ASSETS (CASH+)

ASSETS (CASH–)

Stocks

Larger house

Bonds

Luxury cars

Fixed deposits

Country club

Intellectual property

Luxury goods

Tenanted property

Credit card

Business

ASSETS (CASH–) far outweigh ASSETS (CASH+)

Those with the middle class mindset are usually made up of professionals, middle and senior executives with larger paychecks. They adopt the very common habit of ‘earn, spend and save’. After deducting their monthly expenses from their incomes, they will save the difference. The trouble is that they tend to use these savings to buy a lot more negative cash ﬂow assets as compared to positive cash ﬂow assets.They use their hard earned savings to buy a bigger house and a bigger car which all come with bigger loans, bigger monthly payments and bigger expenses. They buy the latest home entertainment systems on credit and max out their credit cards. As a result, there is no additional cash inﬂow but a lot more cash outﬂow. For this reason, most middle class families appear to be wealthy, but have very low or even negative net worth. Although their houses and cars may be worth millions, they also owe millions, leaving very little equity. They have in fact, even less ﬁnancial stability or security. If they lose their jobs or suffer a pay cut, they will end up with huge loans, large monthly expenses and deep in debt. Many of these people suffer high ﬁnancial pressure, working hard every month for the bank. They cannot afford to quit or lose their jobs and ﬁnd themselves well and truly caught in the rat race. As a result, they will have to work hard for the rest of their lives, hope they do not become seriously ill and will pay the ultimate price when they ﬁnd that they can never retire. 68

Income from Positive Cash Flow Assets are used to purchase Negative Cash Flow Assets (luxuries) ASSETS (CASH–) far outweigh ASSETS (CASH+)

So how do the rich manage their money? How do they achieve a level of wealth where they do not have to work if they choose not to? Those with the wealthy mindset adopt a ‘earn, save and spend’ habit of managing their cash.They set a speciﬁc target of how much they want to save every month, usually 15%-20%. They deduct this savings from the income they earn and spend the rest. Unlike those with the ‘middle class mentality’, the rich mindset motivates them to take their savings and invest in Positive Cash Flow Assets that will generate returns and appreciate in value.They would rather put their money in carefully selected stocks, mutual funds and businesses than to splurge on the latest LCD Plasma Television. Although they may buy a few luxuries to pamper themselves, their Positive cash ﬂow assets far outweigh their Negative Cash Flow Assets. As a result, the additional passive income generated from their investments outweighs whatever expenses they incur on these ‘extras’. They continue to diligently save and invest until their Positive Cash Flow Assets begin to generate sufﬁcient cash ﬂow to meet and even exceed their monthly expenses. When this is achieved, they are at a level of ﬁnancial freedom where they can choose to

chapter SECRETS OF SELF-MADE MILLIONAIRES

stop working and sustain their current lifestyle indeﬁnitely. This is the level that you must aim to attain within the next few years. With the strategies and techniques you will learn in the coming chapters, you will ﬁnd that it is indeed a deﬁnite reality within your grasp! So, the secrets of the rich can be summarized as follows...

Spend Less than You Earn. Invest the Savings for COMPOUND GROWTH Until You Accumulate a Portfolio of POSITIVE CASH FLOW ASSETS that Generate Enough Cash Flow to Sustain or Exceed Your DESIRED LIFESTYLE. An important thing to know is that it doesn’t always take money to create Positive Cash Flow Assets. In chapters 8 and 9, you will learn that from the ideas in your head, you can generate powerful cash ﬂow assets that generate multiple streams of passive income with little or no investment. Now that you know what you must do to achieve ultimate wealth, it is time to get into the speciﬁcs of how you are going to do it. The next chapter will be focused on helping you developing a speciﬁc plan to achieve the four levels of wealth. Let’s begin...

CHAPTER 4 HOW THE RICH MANAGE CASH FLOW

The Four Levels of Wealth

it up straight. Take a deep breath and get ready to engage your mind. Why? Because this short chapter is loaded with activities and exercises that will get you to understand and craft a powerful personal ﬁnancial plan that will help you reach your goal of true wealth. It’s a destination which, when you get there, you’ll have the option, the freedom, of never having to work (for money) for another day of your life! Some of these exercises may seem tedious and time-consuming. You may even have to dig up a lot of old bank statements, receipts and income tax returns but it is absolutely necessary that you push yourself and commit to completing every exercise here.This chapter is focused on showing you the speciﬁc mechanics of how you can eventually reach your goal of ﬁnancial abundance.

Taking Stock: Where Are You Now? In the last chapter, I got you to do a rough calculation on your current level of wealth. However, in order to develop an effective ﬁnancial roadmap, you must ﬁrst determine your speciﬁc ﬁnancial situation. You must complete what I call your ‘Financial Report Card’. When we were back in school we were all assessed by the number of ‘A’s that appeared on our school report card. Much emphasis was placed on those ‘A’s as they were the measure of our success. Similarly, all companies have quarterly and yearly report cards called ﬁnancial statements that tell the shareholders how successful the company is doing.Well, preparing your ‘Financial Report Card’ will enable you to ﬁnd out how successful you are at creating wealth. Your ‘Financial Report Card’ is made up of your ‘Personal Balance Sheet’ and your ‘Personal Income Statement’. Let’s explore them right now. 71

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CHAPTER 5 THE FOUR LEVELS OF WEALTH

Your Personal Balance Sheet

Personal Balance Sheet (Cont’d)

Your Personal Balance Sheet shows your ﬁnancial strength and stability at a speciﬁc point in time. It tells you how much you own (your assets), how much you owe (your liabilities) and how much is left over when you have deducted what you owe from what you own (your net worth).Your net worth is the traditional measure of your wealth. In other words your Assets = Liabilities + Net Worth (Similarly, Net Worth = Assets – Liabilities). So right now, I want you to spend a couple of minutes to complete your personal balance sheet the table below. If you have access to a computer, I suggest you key in the ﬁgures into a Microsoft Excel spreadsheet (or any other spreadsheet application), so you can do updates easily. You can download a ready-made template from my resource website at www.adam-khoo.com/bizandmoneytips.html and go to the section under ‘Free Business and Money-Making Downloads’. Personal Balance Sheet Assets

Liabilities & Net Worth

Liquid assets

Short Term Liabilities

Cash

Credit card balance

Sav/Curr account

Unpaid bills

Brokerage Account

Ready credit

Tax owed

Housing Value

Car value

Club membership

Total Assets

Net Worth (Total A – Total L) Total Liabilities & Net Worth

* CPF is a compulsory savings plan for Singapore citizens and 401 (k) is a type of employer-sponsored retirement savings plan for United States citizens.

You’ve completed your Personal Balance Sheet. Good, now you have a true picture of your current level of wealth. Although it may feel good owning assets worth $800,000, if you have a jumbo mortgages and loans of $720,000, you are really only worth $80,000. A sobering thought. Are your assets a lot more than your liabilities or is the reverse true? As you take a look at your Balance Sheet, take note of whether you have more Positive Cash Flow Assets (rich mentality) or a lot more Negative Cash Flow Assets (middle class mentality). Once you have done up your Balance Sheet, you should update it every six months with the goal of Increasing your assets (especially the positive cash ﬂow ones), Reducing your liabilities and hence Increasing your net worth.

Personal Income Statement

Assets (Cash+)

Assets (Cash–)

Fixed deposit

Long Term Liabilities

Bonds

Housing mortgage

*CPF/401(k)

Second house mortgage $

Stocks

Car(s) mortgage

Mutual funds

Businesses

Intellectual property

Total Liabilities

Insurance cash value

This is the second section of your ﬁnancial report card. Your personal income statement will tell you how much you are earning (income), how much you are spending (expenses), and how much you have left over to save and invest over a particular period of time (one month, a few months or one year). First, ﬁll in all your sources of income. Your income is divided into two categories: active and passive. Most people have a single source of active income (usually their salary) and no passive income sources.

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CHAPTER 5 THE FOUR LEVELS OF WEALTH

Next, ﬁll in all your annual expenses. Your expenses are categorized into personal (include donations here), children, housing and transport. Take your average monthly expenses (this month) and multiply it by 12 months to get an estimation of your total annual income. Finally, deduct your total expenses from your total income to get your annual savings. Again, if you have a computer, key the data into an excel spreadsheet. Again, you can also download this readymade template from www.adam-khoo.com/bizandmoneytips.html. Go ahead and do this exercise now. Personal Income Statement (Annual)

The Four Levels of Wealth

Income ACTIVE Net Salary CPF/401K Commissions Bonuses Directors Fees

$ $ $ $ $

Total Income

PASSIVE Dividends Royalties Interest income Private business proﬁts Net rental Income

$ $ $ $ $

Expenses PERSONAL Dining out Clothes Entertainment Hand phone Insurance life/medical Personal taxes Others (eg. Donations) Total Personal

$ $ $ $ $ $ $ $

CHILDREN Education (school, tuition) Allowance Clothes and toys Total Children

$ $ $ $

Total Expenses

With your completed annual income statement, you can then begin to plan based on the rate of your current savings. First, how long will it take you to reach your ﬁnancial goals? At the same time, you can begin to see where you are spending your money and how to control your expenses. Your objective is also to work towards ﬁlling up the entire income section so that you will have multiple streams of active and passive income. Besides an annual statement, you must also create a monthly statement that you can update at the end of each month. A sample is attached for your reference. This monthly template is also included in the free download section from my website.

HOUSING Mortgage Utilities Maid Groceries Property tax House insurance Total Housing

$ $ $ $ $ $ $

TRANSPORT Car installment

Petrol Maintenance/ servicing Car insurance Road tax Season parking Public transport Total Transport

$ $ $ $ $ $ $

Now that you know where you are ﬁnancially, you must know exactly where you want to be. In order to achieve your ﬁnancial dreams, you must ﬁrst identify speciﬁc levels of wealth that are achievable and attainable. There are basically four levels of wealth you must aim to attain. Level 1: Financial Stability The ﬁrst level of wealth is known as ﬁnancial stability. This is the most basic level of wealth that you must ﬁrst attain. You have achieved Financial Stability when: 1. You have accumulated enough liquid assets to cover your current expenses for a minimum of six months. 2. In addition, you have life and hospitalization insurance to protect you and/or your family’s lifestyle should you be permanently disabled, unable to work or if you pass away suddenly. When you have attained this ﬁrst level, you will have the peace of mind that should any unexpected challenges befall you (like retrenchment, business failure, pay cut, death or disability), you and your family’s lifestyle will not be compromised. Or worse, you or your family will not slide into debt. Attaining this ﬁrst level will also ensure that you or your family will have adequate time to look for new sources of income to put

TOTAL SAVINGS (Total Income — Total Expenses) = $ 74

SECRETS OF SELF-MADE MILLIONAIRES

you back on track. At the same time, you will also have the ﬁnancial stability to quit your job and invest your time to build a business, should you need to. Once you have achieved this, you must then aim to achieve... Level 2: Financial Security You have achieved Financial Security when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to cover your MOST BASIC expenses. In other words, when you reach this level, you can stop working and maintain a very basic lifestyle. It also means that if you continue working, all your active income can be channeled towards your investments and this will further compound your assets and increase your income streams. So, what are your most basic expenses? What necessities must you spend on to live a very simple lifestyle? Well, this is subjective but generally your basic expenses should include no more than the following: 1. House mortgage and related expenses such as utilities and conservancy fees. 2. Public Transportation expense. 3. Food for you and your family (household groceries). 4. All Interest payments for debts owed. 5. All Insurance premiums including life, disability and home. Of course, we shouldn’t be satisﬁed at being at this level. Once accomplished, you must then aim to go for... Level 3: Financial Freedom Many of us have heard of the dream of achieving ﬁnancial freedom but what does it really mean? Well, Financial Freedom is when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your CURRENT LIFESTYLE.

CHAPTER 5 THE FOUR LEVELS OF WEALTH

When you reach this level of Financial Freedom, you can choose to stop working and still maintain your current standard of living... indeﬁnitely! In reality, most people who achieve ﬁnancial freedom love their work so much that they continue working not because they have to, but because they choose to. I can tell you from personal experience that it is a great feeling to have... being free of ﬁnancial pressure & worries and working purely out of passion! Obviously, the more expenses you have now, the more luxurious and indulgent your standard of living, the longer it will take for you to achieve ﬁnancial freedom. So besides increasing your passive income, reducing your unnecessary/frivolous expenses will accelerate your way towards this fourth level. Finally, you must aim to achieve... Level 4: Financial Abundance So what is the ultimate level of wealth you can achieve? Financial Abundance is when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your DESIRED LIFESTYLE. Your desired lifestyle is the amount of monthly expenses it will take for you to live the life of your dreams. This is totally subjective depending on the lifestyle that you desire. If your desired lifestyle is to live in a 20,000 square-feet bungalow with a swimming pool, send your kids to the best schools and drive a Mercedes Benz S-Class, then you could be looking at a monthly lifestyle that’ll cost a cool $50,000. Of course the more luxurious your desired lifestyle, the longer it will take for you to achieve ﬁnancial abundance. The moment you reach the level of Financial Abundance, you will be able to choose to stop working and live your dream lifestyle indeﬁnitely. Again, most people who do reach this level usually love what they do so much that they keep on working for fun, channeling 100% of their active income towards charitable causes and further compounding their wealth. With the right strategies and plans in place, you too will be able to achieve this ultimate level of wealth.

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CHAPTER 5 THE FOUR LEVELS OF WEALTH

How Long Will You Take to Achieve these Four Levels of Wealth? Let’s ﬁnd out now... How You Can Achieve Financial Stability Recall: You have achieved Financial Stability when:

How You Can Achieve Financial Security Recall: You have achieved Financial Security when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to cover your MOST BASIC EXPENSES. The ﬁrst thing to do is to calculate your most basic expenses in the table below. You can do this really quickly by referring to your Income Statement earlier.

1. You have accumulated enough liquid assets (cash & short-term time deposits) to cover your current expenses for a minimum of six months.

Calculate Your Basic Expenses (Monthly)

2. In addition, you have purchased life & hospitalization insurance to protect you and/or your family’s lifestyle should you be permanently disabled and unable to work or if you pass away suddenly.

Dining out (basic)

Life & Hospital insurance

Interest expense

PERSONAL

To ﬁnd out how long you will take to achieve this, take the time to complete the next ﬁve steps.

HOUSING Mortgage

A. My Current Monthly Expenses are $

Utilities

Groceries

Property tax

per month

B. My Current Liquid Assets total $ (Look at your Income statement) C. To achieve Financial Stability, I must achieve total liquid assets of $ (Take your monthly expenses & multiply by six months)

TRANSPORT Public transport

A. My Total Basic Expenses

per month

D. I commit to save a total of a month (You should commit to save at least 10%-15% of your net income)

B. My Total Basic Expenses per year is $ (Multiply your monthly basic expenses by 12 months).

E. I will take months to achieve Financial Stability To calculate the number of months you will take to achieve ﬁnancial stability, take 6 x Monthly Expenses (C) – Current Liquid Assets (B)

In other words, in order to achieve FINANCIAL SECURITY, I must accumulate enough positive cash ﬂow assets that generate a passive income of $ a year (write down your annual basic expenses).

Committed Monthly Savings (D)

F. I commit to contact a ﬁnancial advisor to provide: l Life insurance coverage for a sum assured of $ My estimated annual premiums will be $

per year

Hospitalization & surgical insurance coverage: My estimated premiums will be $ per year

I commit to do this by

(deadline)

* Information on your sum assured and premiums will be provided by a good ﬁnancial advisor. With the investment knowledge you will acquire from Wealth Academy, you may want to buy the much cheaper alternative of term insurance and invest the difference yourself to maximize long term returns.

My Personal Strategy to Achieve Financial Security So, how do you accumulate positive cash ﬂow assets that generate the passive income you need to cover your basic expenses? In the coming chapters, you will learn how to create a whole range of cash generating assets. Some of these assets like stocks, businesses, bonds, ﬁxed deposits and mutual funds require the investment of money to generate a return. However, you do not always require lots of capital to generate passive income. You will learn that you can build cash generating

SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 5 THE FOUR LEVELS OF WEALTH

cash ﬂow assets like intellectual property and home-based businesses that require ideas and time, but very little capital. Right now, I want you to ﬁll in your current level of passive income (for most people, this ﬁgure is normally a couple of hundred dollars of interest from the bank) and your targeted passive income to achieve ﬁnancial security. Current Passive Income

Targeted Passive Income

Next, you must brainstorm and think of all the positive cash ﬂow assets you must accumulate, the amount of investment needed, the estimated return and the passive income that will be generated. The total passive income generated should cover your basic monthly expenses. As we have not yet covered the strategies on how to achieve this, you don’t have to complete this right now. We shall come back to this page after you have completed the ﬁrst 19 chapters, and you will be more than ready to develop your plan!

Here is an example, of how you can complete this ﬁnancial plan. Financial Plan to Achieve Financial Security + Cash Flow Asset

Investment

Return %

Passive Income

1. Home-based business selling art pieces

$2,300

> 100%

$1,500 per month

2. High Yielding Bonds

$50,000

$333.33 per month

3. Write an Ebook on art investment

4. Fixed time deposits

5. Create a special software that values art pieces and license it to art collectors

> 100%

$300 per month

$50,000

$125 per month

$12,000

> 100%

$1,800 per month

Financial Plan to Achieve Financial Security + Cash Flow Asset

Investment

Return %

Passive Income

Total $4,058.33 * Note that although stocks and mutual funds are positive cash ﬂow assets that can give you a return of 13%-25% a year, we do not include them here as the returns are capital appreciation and not cash returns.

As you can see, different cash ﬂow assets give you different rates of returns and while some require lots of capital, others require mainly the investment of time and ideas. For example, if you were to rely purely on high yielding bonds of 8% return, you will need $600,000 to generate $48,000 a year ($48,000 ÷ 8%) in passive income (i.e. $4,000 a month). If you were to create a home-based Internet business, a $2,300 investment could through time and hard work, generate you a monthly $4,000 cash ﬂow. Stay tuned on how you can possibly do this in the coming section on ‘Creating Multiple Streams of Income Online’.

Total $ I commit to achieve this target by 80

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CHAPTER 5 THE FOUR LEVELS OF WEALTH

How You Can Achieve Financial Freedom

Financial Plan to Achieve Financial Freedom + Cash Flow Asset

Recall: You have achieved Financial Freedom when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your current lifestyle.

The ﬁrst step is to write down your current annual expenses. Just refer to your completed income statement for this.

My Total Current Expenses per year is $

In other words, in order to achieve FINANCIAL FREEDOM, you must accumulate enough positive cash ﬂow assets that generate a passive income of $ per year.

Investment

Return %

Passive Income

My Personal Strategy to Achieve Financial Freedom

Once again, write down the targeted passive income required for you to achieve ﬁnancial freedom.

7 7. Current Passive Income

Targeted Passive Income

The next step is to think about how to further increase your existing cash ﬂow assets and how to add new ones so that you can hit your new targeted passive income. Once again, we will return to this section once you have completed the rest of the chapters in this book.

Total $ I commit to achieve this target by

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CHAPTER 5 THE FOUR LEVELS OF WEALTH

How You Can Achieve Financial Abundance Recall: You have achieved Financial Abundance when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your desired lifestyle.

My Personal Strategy to Achieve Financial Abundance Once again, ﬁll in the targeted passive income necessary to cover your annual desired expenses.

First, you must decide on your desired lifestyle. What is your dream home? Your dream car? Your dream lifestyle? Do you want to travel to exotic far ﬂung places for a total of say twenty days a year? How much would all of this cost to maintain a month? Take a few minutes and estimate the monthly expenses of your desired lifestyle now. My Desired Lifestyle (Monthly Expenses) PERSONAL

HOUSING

Dining out

Mortgage

Clothes

Utilities

Entertainment

Conservancy charges

Hand phone

Maid

Life & H&S Insurance

Groceries

Personal taxes

Property Taxes/ TV license $

Others

Mortgage insurance

Total Personal

Total Housing

CHILDREN

Current Passive Income

Targeted Passive Income

Again, think about how to further increase your existing cash ﬂow assets and how to add new ones so that you can hit your new targeted passive income. Once again, we will return to this section once you have completed the rest of the chapters in this book. Financial Plan to Achieve Financial Abundance + Cash Flow Asset

Investment

Return %

Passive Income

TRANSPORT

School fees

Car installments

School bus

Petrol

Insurance

Maintenance/servicing

Total Children

Car insurance

Road tax

Total Transport

Total Desired Monthly Expenses = $ Next, calculate your annual desired expenses...

My Total Expenses per year is $ (Multiply your monthly expenses by 12 months). In other words, in order to achieve FINANCIAL ABUNDANCE, you must accumulate enough positive cash ﬂow assets that generate a passive income of $ per year.

7 7.

Total $ I commit to achieve this target by

SECRETS OF SELF-MADE MILLIONAIRES

Great! Now that you have a clear idea about the different levels of wealth that you can achieve, let’s get started by learning how to accelerate your way there. In short, you will learn how to massively increase your income...

HOW TO MASSIVELY INCREASE YOUR INCOME

III section

chapter SECRETS OF SELF-MADE MILLIONAIRES

CHAPTER 6 COMMANDING THE HIGHEST PRICE TAG

Commanding the Highest Price Tag

here is available a veritable treasure chest of strategies to massively increase your income and get you on your way to ﬁnancial abundance. When I talk about increasing income, most people think of only two options. Either they work much harder in their job and hope their boss notices their efforts and gives them a raise of 5%-10% or they quit their job and ﬁnd another company that will pay them 10%-20% more. The trouble is that if you are at a mid to senior salary scale, the chances are that you might have already hit an income plateau and any increments thereafter will be insigniﬁcant. And quitting your job is again no guarantee that you will ﬁnd something better. When I talk about massively increasing your income, I don’t mean a mere appreciation of 5%, 10% or even 20%, I am talking about doubling your income or even increasing it by three to ﬁve times, all within 12 months! Is this possible? Yes it is! And you can achieve this without quitting your job. How? By not just focusing on your single, primary source of income, but taking action to create for yourself additional streams of income. The only way to double or triple your income is to create for yourself multiple streams of income. The rich never depend on one stream, but have multiple streams. The only way I was able to make my ﬁrst million by the age of 26 was that I focused on creating as many streams as possible. Today I have over ten streams of income. My ﬁrst stream of income is the fee I get paid for training and speaking engagements. This is known as an active stream as I have to physically work to earn this money. My other nine streams are known as passive streams as they keep recurring year after year with minimal effort. They include proﬁts from my event business, proﬁts from my education business, proﬁts from my advertising business, royalties from four other books 88

SECRETS OF SELF-MADE MILLIONAIRES

I have written or co-authored, returns from my stock investments, advertising revenue and proﬁts from my internet businesses and royalties from my audio programs. Now, will all the income streams you create make money and will they last indeﬁnitely? Of course not. And that is why I focus on creating two additional streams every year. In these coming chapters, you will see how easy it will be for you to increase your income by two to ﬁve times by broadening your primary source of income and adding additional income streams, all going legitimately into your pocket. No gambling sources, whatsoever! Let’s ﬁrst focus on how to widen your primary income stream.

What Determines A Person’s Income? Before you can increase your primary source of income, you must ﬁrst understand what determines a person’s income. Why is it that one person is paid $3,000 a month while another person is paid $30,000 a month? Every time I ask this question to people, I get standard answers like, ‘age, qualiﬁcations, experience, luck, title, special skills, specialized knowledge, intelligence and so on’. Well, none of this is really accurate. There are so many examples of people who are younger, less academically qualiﬁed with less experience who are earning much more than a 45 year-old Harvard MBA graduate who happens to be a member of MENSA. It is also not uncommon to see people with less experience in a company earn much more than someone who has been there for the last twenty years. So what does determine a person’s income?

The True Deﬁnition of Income A person’s income is determined by the amount of value he/she creates multiplied by the time he spends creating value multiplied by the scalability factor. In other words, INCOME = VALUE x TIME x SCALABILITY

So, in order to increase your income, you must increase the amount of value you create, the time you spend creating value and your scalability factor. 90

CHAPTER 6 COMMANDING THE HIGHEST PRICE TAG

Your Income is A Refection of the Value You Create Let’s ﬁrst focus on how your income is determined by the value you create.Well, let me give you a metaphor. Recently I went to the mall to buy a new mobile phone. When I found the mobile phone shop, I saw all kinds of brands and models on display – the price tags they carried all differed widely. I saw a Sony Ericsson 910i model that had a price tag of $1,400 and a Nokia 2600 with a price tag of $238. Now, why is one mobile phone priced seven times more than another? The answer is simple. It’s because one phone has a lot more functions and can hence create a lot more value to the user. The Sony Ericsson 910i is able to make calls, send & receive SMS, send & receive MMS, record and edit videos, play & edit music, take high quality pictures, surf the internet, entertain with games, send and receive emails, has word processing and spreadsheet capabilities, has Bluetooth technology and has an in-built personal digital assistant. In short, it is not just a phone, it is a mini computer! It does a lot more than expected (remember millionaire habit 1). It creates a lot more value for the user by allowing him to achieve his goals more efﬁciently. How about the Nokia 2600? Well, it’s just a standard mobile phone. It makes calls, sends and receives SMS, has entertainment games and a calendar. It creates a lot less value, and is hence priced lower. If the Nokia 2600 had a price tag of $1400, would you pay for it? Of course not. It’s just not worth the price. But if you had the money and needed to surf the net, manage your time, check emails and record images on the go, would you pay $1400 for the Sony Ericsson? Of course! I did! So let me ask you a question. Which mobile phone do you represent? What is the price tag that you carry? If you want to have a higher price tag and have people pay for you, then you must create the necessary value! What allows the Sony Ericsson 910i to create so much more value? The answer is that it has a lot more software installed. How does this translate to you? Well, in order for you to create a lot more value to your company and your clients, you must keep upgrading your knowledge and skills, your intellectual capital!

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CHAPTER 6 COMMANDING THE HIGHEST PRICE TAG

Now you may say to me, ‘Adam, I am not a mobile phone, I am a person!’ Absolutely! But the same thing applies. Let me give you a couple of examples from different professions. Over the last few years, I have interviewed people who were among the highest income earners in their industry and people who were the average income earners. Sure enough, I found that age, experience and academic qualiﬁcations had nothing to do with their price tags. It depended on how much value they created for their company and for their clients they served. This is an example of two insurance advisors I interviewed from a leading insurance company. Although they are of the same age, have had a similar university education and been in the company for about ﬁve years, one earns almost seven times more.

Insurance Advisor B gets paid so much more because he creates so much more value for his clients (he does more than expected & gives them such a worthwhile experience) that it not only keeps them coming back to him but they are happy to recommend B to their friends. The next example I can give you is of two teachers from a Singapore school. One Teacher (B), age 34 has been promoted to head of department just after four years in the school. Teacher (A), age 42 has been with the school for over 12 years and has yet to been given more responsibilities. Teacher A, Age 42 Income: $4,000 per month l

Insuran ce Advisor A, Age 33 Income: $3,000 per month l l l

l l

Waits for leads Follows up on leads Gives adequate presentation on product/service features Closes the sale Never follows up with the client thereafter Closes $7,000 worth of premiums a month

Insurance Advisor B, Age 33 Income: $20,000 per month l l l l

l l

Sets speciﬁc monthly sales target Actively generates leads from all sources Creates partnership with other companies Ensures a minimum of two appointments for consultations per day Gives seminars on ﬁnancial planning Writes and publishes a book on ﬁnancial planning Does a detailed needs and outcome analysis for potential clients Presents a highly beneﬁcial & value-added plan for the client Helps the client save money and identify important needs client may have overlooked (i.e. corporate insurance, estate planning, asset protection) Follows up every three months to ensure client’s emotional & ﬁnancial needs are met Sends a quarterly e-newsletter to his customers packed with tips on money management & investments Ability to generate even more referrals from powerful services Helps recruit & train more sales people for the company Closes $50,000 worth of premiums a month

l l l

Teaches the curriculum Gives & marks homework Gives tests & marks papers Fulﬁlls minimum CCA duties

Teacher B, Age 34 Income: $9,800 per month l l

Teaches the curriculum Able to motivate & inspire even the weakest & most unmotivated students Innovates and develops new curriculum/ teaching methods Writes system of best practices and trains new teachers Produces Innovative marketing ideas to enroll more students Develops strong rapport with parents and provides additional family counseling Innovates ideas to increase department productivity & reduce expenses Has written six textbooks and assessment books that are sold locally and over the internet Uses accelerated teaching methods to boost grades Conducts seminars and workshops on weekends for parents on ‘how to motivate their children’ Conducts seminars for students on ‘exam skills’ Consultant to private tuition centres

Again,Teacher B gets paid a lot more because she is able to create so much more value to the school and to her students. The ﬁnal example I want to give you is of two account directors from an advertising agency. Their jobs entail managing the client’s 93

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advertising accounts. A is paid $3,000 per month while B is paid $8,000 per month. Let me ask you this question, ‘Which employee is more expensive to his company? Is it A or B?’. On the surface, it looks like B costs the company a whole lot more in terms of salary, but let’s take a look at what value they add to the agency. Account Director A, Age 46 Income: $3,000 per month l

l l l l

Waits for company to assign clients to him Takes advertising brief from the client Instructs the creative team Executes ads within deadline Manages assigned client well Creates gross proﬁts of $30,000/mth

Account Director B, Age 32 Income: $8,000 per month l

l l

Actively networks, makes cold calls & sets at least one new appointment a day Actively develops new business & ﬁnds his own clients Takes the advertising brief from the client Develops more marketing ideas that convinces the client to increase the advertising budget. Brainstorms & develops a powerful campaign by leading the creative team Executes ads and other marketing tactics within the deadline Tracks the success of campaigns & initiates follow up strategies to sell to the client Uses successful testimonials to secure even more clients Creates gross proﬁts of $300,000/mth

Again, A does exactly as he is expected (sustains value) and B does a lot more than expected (creates value). So which director costs the company more? The answer is director A. Why? Because director A only creates gross proﬁts of $30,000 a month. After deducting his salary of $3,000, the agency only earns $27,000 in gross proﬁts. As for director B, he helps the company earn an additional $300,000 a month. After deducting his $8,000 salary, the company still grosses $292,000 per month. To the company, B is a much better investment. If Director B were to go up to the boss and ask for double his salary (i.e. $16,000), would the boss say yes? If the boss was smart, of course he would say yes. Why? Because the additional $8,000 is nothing compared to the value he adds.

If he does not agree to the raise, do you think that there will be other companies out there who would be willing to pay him? Of course! That is why people who choose to be value creators are constantly being head hunted by other ﬁrms willing to double their salary! In fact, I constantly look out for these kind of people in my competitors’ company and offer to double their salary if they were to join me. Remember, when you create tremendous value,YOUR market value and price tag will increase automatically. Let me use myself as the ﬁnal example. Why is it that companies are willing to pay me $2,500 per hour in speaking fees while many other speakers are charging only $1,000 per hour? What’s more, my schedule is continuously booked while some of my peers speak for only a couple of times a year.The reason is because I create so much more value for my clients. How? While other speakers are only able to present a particular topic as expected, I blow my client’s audience away by entertaining them, inspiring them and sharing with them the most powerful marketing, personal development and communication strategies available. As a result, after my talk, they are so motivated, empowered and equipped with the strategies that they are able to work harder and smarter and create a lot more proﬁts for their companies. So, paying me that $2,500 is nothing! It is well worth their while because I have helped my clients achieve their goals of boosting employee productivity and morale. Through all these examples, there is one important point that I want to get through to you, and that is your income (price tag) is determined by the amount of value you create for your clients and your company. You can have all the experience, all the MBAs, all the intelligence but if you do not create value, people will not pay a high price for your services or products. So how do you create value? There are only two ways you can create value for your clients. Either: 1. Help them reach their goals faster and more easily or 2. Help them solve their problems faster and more easily.

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The more you can do this, the more they will be willing to pay what you are worth. Similarly, there are only two ways you can create value for your company. Either: 1. Help the company increase sales or 2. Help the company to reduce costs. This will increase the company’s proﬁts. You must understand that all businesses have only one major goal, to make more proﬁts every year. The more proﬁts you can help your company make, the more you will be worth! INCOME = VALUE CREATED FOR CLIENTS/COMPANY

How Much Do You Commit to be of Worth? The next question you must ask yourself is, ‘How much do you commit to be of worth?’ What is the price tag that you choose to have? Once you know what price you can command, then you must ask yourself, ‘What value must I create for my company and clients to be worth this price’. If you choose to be like the Sony Ericsson 910i mobile phone with a $1,400 price tag, then what functions must you offer? So, write down in the space below your targeted value per hour. I commit to be worth $

per hour

per month

per year

I commit to achieve this by

(set a deadline).

How Much Are You Worth Currently? The ﬁrst thing you must do is to determine your current price tag. How much are you worth currently? Only when you know where you are, can you then move to where you want to be. To calculate this, take your monthly income and divide this by the number of hours you work. This will give you your value per hour. So grab a pen and do this now. For example, if you earn $3,000 a month and work an average of 180 hours a month, then your value per hour is $16.67 per hour.

My current value/hour =

Monthly income Hours worked per month

= $ Hours = $

per hour

Who can you model in your industry that commands this value? What value do they create? So what must you do to command this price? The next step is to identify people in your industry who are earning the income that you want. Then observe, model and study them. What do they do daily? What value do they create for their clients & for their company? For example, when I ﬁrst started out as a trainer, I was paid $50 per hour, simply because that was what I was offered. So I asked myself, ‘what do the top trainers get paid per hour?’ I found out that the going rate was $1,000 per hour. So, I went to attend as many of their talks as I could, ﬁnding out what they did well and what kind of value they created. So, from a $50 an hour speaker, I boldly set my target to become a $1,000 per hour speaker, within two years. I achieved my goal and I didn’t stop there. I kept asking myself, ‘How can I be priced even higher? How can I double the value that they create?’. By asking

SECRETS OF SELF-MADE MILLIONAIRES

these questions, I kept focusing on making myself even better and better and, as a result, I could raise my speaking fees by $800 more each year, until I reached my current $2,500 per hour mark. So, now it’s your turn. I want to you start brainstorming and write down the names of the highest income earners in your industry. Do not conﬁne yourself to your own country. Rather, benchmark yourself against the best in the region, even in the world. Next, commit to observing and modeling them to ﬁnd out what they do and how you can do even better. Write down the value which they create.

How to Double Your Company’s Proﬁts in Less than Six Months Many people have asked me,‘what can I do to increase my company’s sales and proﬁts?’. Whether you are an entrepreneur or an employee, I am going to share with you a formula that you can use to double the proﬁts of your department or company within less than six months. I call this the Proﬁt Multiplication Formula. In any kind of business, proﬁts are only determined by ﬁve variables: Leads generated, conversion rate, average dollar purchase, average repeat business and net proﬁt margins. Leads represent the number of potential customers or prospects that the company generates through walk-ins, inquiries, cold calls & recommendations. Let’s say that out of every ten prospects, two eventually end up buying, this means that the company’s average conversion rate is 20%.

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So, if you multiply the number of leads generated a year (also known as prospects) by the average conversion rate, it will determine the number of customers. This is illustrated below.

X =

Leads Conversion Rate Number of Customers

Now, some customers may spend more money and others may spend less, but there is always an average dollar purchase per customer. At the same time, some customers may only buy once while others may return to buy several times a year. This is known as the average repeat business per customer. If you multiply the number of customers by the average dollar purchase and by the number of repeat business, you will get the annual sales revenue of the company.

X = X X =

L ads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business Sales Revenue

Now, assume that your company’s sales revenue is $100,000 a year and the total cost of production & overheads are $80,000 a year. This means that the company’s Net Proﬁt Margins are 20%. If you multiply the Sales Revenue by the Net Proﬁt Margins, you will get the company’s net proﬁts for the year.

X = X X = X =

Leads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business Sales Revenue Net Proﬁt Margins Net Proﬁts

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In order to create value to your company and increase its proﬁts, you must either increase leads, conversion rate, average dollar purchase, number of repeat businesses and/or net proﬁt margins. Now, the number of variables you can inﬂuence will depend very much on the role you have in the company. If you are the owner or are a department manager, chances are you can take action to increase all ﬁve variables and massively create value. If you are a salesperson, then you can inﬂuence leads, conversion rate, repeat business and dollar purchase. If you are in operations, you can directly inﬂuence conversion rate, number of repeat businesses and net proﬁt margins. If you do your job really well and exceed client’s expectations, they will keep coming back and spending more. If you can work more efﬁciently and come up with strategies to improve the operational efﬁciency, margins will increase! To what extent can you increase your department’s/company’s proﬁts? Let’s take a look. Imagine if you are working for a shoe retailer and the company currently shows the following numbers every year.

X = X X = X =

Leads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business Sales Revenue Net Proﬁt Margins Net Proﬁts

x = x x = x =

5,000 25% 1,250 $200 1 $250,000 20% $50,000

The Impact of Increasing The Five Key Variables by 10% Do you think it is possible to increase each variable by 10%? Of course! It is only a question of testing out different strategies and taking action! a. Increasing Leads What can you do to help your company increase leads? The speciﬁc strategy would depend on whether your company is a Business to

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Business (B to B) enterprise or a Business to Consumer (B to C) enterprise. But in general, you could take the following actions! l

l l l l l l l

Learn how to create more effective advertisem*nts (Stronger headlines, more persuasive copy, i.e. text) Test new media channels (e.g. Newspaper, magazine, outdoor ads etc...) Make more cold calls Use telemarketing efforts Hold seminars & road shows Increase networking efforts Hold special promotions Create a referral system or member get member scheme Start email marketing... the list goes on

b. Increasing Conversion Rate How can you boost your company’s conversion rate? There are many strategies you could use such as... l Creating a more ﬂexible payment plan (0% interest installment) l Offer a product guarantee l Use successful testimonials l Create more persuasive marketing materials like brochures, videos l Use NLP* techniques to build strong rapport with clients l Innovate a new persuasive sales script that works l Create a more powerful, impressive & persuasive presentation l Keep following up with prospects regularly... and the list goes on c. Increasing Average Dollar Purchase At the same time, there are many things you can do to boost the average dollar purchase of each customer. One great example I can give you is McDonalds. What do they do? They simply ask you to buy more! Have you ever gone into a McDonalds wanting to buy only a cheeseburger? Do they just sell you the cheeseburger? No! They will ask if you want to have a combo meal. They will then ask you to upsize the meal. Next, they will ask if you would like to have a dessert to go along with the meal. Finally, they will ask if you would like the toy 101

SECRETS OF SELF-MADE MILLIONAIRES

that is on promotion. So you go in wanting to spend $2, but end up spending $10! They are great at getting their customers to increase their average purchase by ﬁve times. I gave you an example earlier on about the advertising account director who was able to convince his clients to increase their advertising budget. How? Because he showed them that by investing an extra $300,000 in advertisem*nts, they would be able to generate $600,000 in additional proﬁts. If you can show your clients that their investment in your product will reap great returns, they will spend more. So what can you do in your company? Maybe you can: l Bundle several products in a package l Create a ‘buy three get one free’ promotion l Up sell & cross sell l Educate your customers on your entire range of services l Do a complete needs-analysis to ﬁnd out how you can add even more value (remember the example I gave you about the insurance agent?) ... and the list goes on.

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l l l

Sell higher margin products ﬁrst Increase working efﬁciency (do it right the ﬁrst time) Strategize how to reduce unnecessary costs...

The strategies that I have just presented to you are just the tip of the iceberg. There are many more strategies that you could test out. I have included a whole list of ways you can increase each of the ﬁve variables at the end of this chapter. Now, with all these strategies I am giving you, do you think by fully employing just some of these ideas you can boost each variable by a mere 10%? Of course! Let’s see what happens when you do so... Increase by 10%

X = X X

Leads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business

* NLP or Neuro-linguistic programming is the science of being able to program a person’s neurology using the power of language. To learn more, read ‘Master Your Mind, Design Your Destiny’.

d. Increasing Repeat Business What can you do to boost the number of times your customer keeps coming back? Well, you can... l Exceed their expectations & give them a wonderful experience l Build a friendship with them l Keep in regular contact l Send them special occasion cards l Start a loyalty program l Give them a discount voucher off their next purchase... e. Increasing Proﬁt Margins Finally, how can you increase your company’s proﬁt margins? You can l Source for cheaper suppliers which are just as good l Bargain hard with existing suppliers 102

x = x x = x =

5,000 25% 1,250 $200 1 $250,000 20% $50,000

x = x x = x =

5,500 27.5% 1,512.5 $220 1.1 $366,025 22% $80,526

Just by increasing each variable by 10%, proﬁts jump to $80,530! That is a 61% increase! This is the power of compounding. Small consistent increases in each variable create huge effects to the bottom line! But this is not challenging enough. Now, think what can happen if, through innovation and hard work, you can help increase each of your company’s variables by 20%. Increase by 20%

X = X X = X =

Leads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business Sales Revenue Net Proﬁt Margins Net Proﬁts

x = x x = x =

5,000 25% 1,250 $200 1 $250,000 20% $50,000

x = x x = x =

6,000 30% 1,800 $240 1.2 $518,400 24% $124,416 103

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As you can see, proﬁts more than double (149% increase) to $124,416! Excited yet? Don’t be! From my vast business consulting experience I have found that is very possible to double certain variables like ‘Leads’, ‘Conversion Rate’ & ‘Number of Repeat Businesses’ and increase ‘Average Dollar Purchase’ & ‘Net Proﬁt Margins’ by 30%. What happens then? Increase by 30%–100%

X = X X = X =

Leads Conversion Rate Number of Customers Average Dollar Purchase No. of Repeat Business Sales Revenue Net Proﬁt Margins Net Proﬁts

x = x x = x =

5,000 25% 1,250 $200 1 $250,000 20% $50,000

x = x x = x =

10,000 50% 5,000 $260 2 $2,600,000 26% $676,000

Commit to Creating More Value Now! So, with all these ideas and strategies I have thrown at you in the last couple of pages, you should be able to come out with some great ideas of how to create more value to your customers and your company. Now, grab your pen and spend at least twenty minutes of uninterrupted time to brainstorm a whole list of strategies (come out with at least twenty)! Ask yourself the following questions… l How can I help my customers achieve their outcomes more? l How can I help my customers solve their problems? l What unmet needs do they have that I can meet? l How can I help the company increase sales & reduce costs?

The net proﬁt jumps by 13 times to $676,000! If you can create so much more value to your company/department, you can ask for a whopping 5X increase in salary, and it would still appear cheap to your boss. Now, you may say to me, ‘But I am not directly in control of a lot of these factors. Some of these factors are not even within my job scope’. Remember, when you are committed to a goal, you will ﬁnd a way! Do whatever it takes! Sometimes, you must do things out of your job scope to make an impact. Again, you want to do so without upsetting the people around you too much. You may also want to consider asking for a transfer to another more challenging position where you can directly inﬂuence sales and costs! This way, it is easier for you to create more value!

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What Additional Knowledge & Skills Must You Acquire? Now that you know what kind of value you can create, you must then ask yourself what additional skills, knowledge, competencies and expertise you need to learn or upgrade in order to achieve this? For example, if you want to be able to boost your company’s conversion rate, you may need to acquire stronger presentation skills, marketing skills, skills to write persuasive copy, NLP skills on how to persuade & inﬂuence, internet marketing techniques... So, write down all the additional skills and knowledge that you will commit yourself to acquire. Remember, you must constantly install new ‘software’ into your mind in order to be able to create more value. The New Skills & Knowledge I Commit to Acquire Are…

CHAPTER 6 COMMANDING THE HIGHEST PRICE TAG

How to Translate Value into More Income? If you are self-employed, then creating more value will automatically translate into higher proﬁts & income. However, as an employee, tripling the value you create is no use unless it translates into a higher price tag. Do not expect to get a promotion or a raise automatically. If bosses can help it, they would rather pay you much less than what you are worth. Most of the time, you must be proactive and ask for a raise. However, before you ask for double your pay, ensure that you have at least tripled your value! So you can be sure that if the answer is no, there will be a dozen headhunters waiting to pay you what you are now worth! Once you have created tremendous value, you can… 1. Ask for a pay increase Again, be conﬁdent that you are more than worth the increase! 2. Ask for a promotion & pay increase When you have demonstrated that you can create more proﬁts, they will be happy to give you a senior management position. 3. Ask for proﬁt sharing If you are a value creator, you can conﬁdently ask for this. 4. Ask for variable compensation People who prefer a ﬁxed salary are generally those who are not conﬁdent about how much they are really worth. The trouble is, a ﬁxed pay has got no upside. If you have the drive and conﬁdence to create value, ask for a higher performance based compensation (even if it means a lower basic pay). Then you know that you have a huge upside.

So, where do you ﬁnd the resources to continually upgrade your software? Go to www.adam-khoo.com. On this site, I present you with an array of resources ranging from how you can upgrade your skills in the area of communication, leadership, personal mastery, learning to learn, creativity, to many more. I also highly recommend that you visit the website of Adam Khoo Learning Technologies Group at www.akltg.com.You can ﬁnd out more about the Patterns of Excellence Program, an NLP program designed to empower you with personal mastery and inﬂuence mastery skills that will create signiﬁcant value in anything you do.

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5. Ask for stock or partnership Again, once shareholders can see that you are a value creator, they will want to do what it takes to keep you by giving you ownership.

On the last page of this chapter, I have included a list of strategies that I personally used to increase the 5 key variables in the Proﬁt Multiplication Formula. Now that you have learnt all the strategies to greatly increase your value, let’s move into the next component in the income formula...

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Time is Money... Here’s How to Maximize it

Strategies to Increase Your Business Proﬁts Leads

Conversion rate (ctd)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

22 Convenient payment scheme (NETS, Credit card) 23 Offer installment schemes with zero interest 24 Allow mail order/home delivery 25 Address concerns/possible objections upfront 26 Sell on value not price

TV, Radio or Newspaper advertising Industry newsletter advertising Internet/email advertising Magazine advertising Outdoor advertising Flyers Hold a promotion or sale Ask for referrals Offer a free gift Insert into other company’s invoice Letterbox ﬂyers Sales teams Telemarketing Buying or swapping database Hold seminars, events or roadshows Attractive window display/video Posters and large signage

Conversion Rate 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

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Deﬁne your unique selling proposition Set sales targets Have excellent customer service Introduce yourself Survey your past customers Sell key beneﬁts passionately High quality in store posters/brochures In-store sales scripts Act as a consultant/problem solver Give a money back guarantee Have a beneﬁts/testimonials list Give free bonuses that increase value Greet prospects and use their name Learn closing techniques Ask for the sale more than once Personal grooming/high dress standards Video in store displays Leave price to last Study and prepare for objections Have specialized knowledge about your product & industry Focus on the client’s needs and emphasize beneﬁts

Number of Repeat Business 1 2 3 4 5 6 7 8

Direct mail offers of the month Keep in touch every 3 months Inform your clients of your entire range of services Target likely repeat customers Send special occasion cards Make customers feel special (super experience) Build a close relationship Create a loyalty program

onsider this scenario. There are two lawyers A and B who create the same value of $200 per hour. If lawyer A worked for 18 hours a day and lawyer B worked for 7 hours a day, who would have a higher income? Obviously lawyer A. Why? Because lawyer A spends a lot more time creating value. Therefore, ‘Income’ equals to ‘Value’ multiplied by ‘Time’. INCOME = VALUE x TIME

Average Dollar Purchase 1

Focus on a higher income target market 2 Use a shopping list 3 Sell add-ons/up sizes 4 Make sure your client knows your full range of services 5 Suggest most expensive ﬁrst 6 Create value packages 7 Buy three get one free deals 8 Ask people to buy some more 9 Increase prices by 10% 10 Arrange easy ﬁnance and payment 11 Free gift/lucky draw with $xx purchase Net Proﬁt Margins 1 2 3 4 5 6

Increase prices Sell on value/service than price/discounts Set monthly budget targets Track costs weekly and aim to reduce by 10% Stop running ads that don’t work Sell more higher margin items

So besides increasing your value per hour, you must also increase the time you spend creating value to boost your income. If you are self-employed, then you are usually paid by the hour or by the job or project. So obviously, when you work longer hours and more days, your income will increase! One of the reasons I made so much money within a short period of time was because I was on-stage speaking (where I create the greatest value) for over 300 days a year, many of which were seven-hour days! If there were certain times of the year when business was slower in my home base of Singapore (especially during the school exams when students could not attend my training sessions), I would go to countries like India, Malaysia and Indonesia to ﬁll up every day of my time.When you maximize your time creating value, you maximize your income.

It is Not the Number of Hours You Work… Now you may be saying to me, ‘I am already working eighteenhour days! How much harder can I possibly work?’ Or if you are 109

SECRETS OF SELF-MADE MILLIONAIRES

for somebody else you may be thinking, ‘This does not apply to me. As an employee, my hours of employment are ﬁxed from 9am to 6pm. I do not get paid more for working longer hours’. When I talk about increasing the time you spend creating value, I do not necessarily mean that you must work longer hours. Rather, you must spend more of your time only on activities that create the greatest value... that generate the most proﬁts for your company. Whether you are an entrepreneur or an employee, you will have a list of things that you must do everyday as part of your responsibility. You will ﬁnd that not all the things you do create the same amount of value. There are some activities that create high value while some activities are low in value. In fact, I have discovered that most average income earners spend only about 20% of their workday doing truly high value added activities while they spend most of their time, about 80%, on low value activities like checking email, attending unproductive meetings, chit chatting, complaining, waiting, ﬁnding lost items... stuff that does not generate proﬁts or help clients meet their goals. High-income earners are the opposite. They tend to spend 80% of their time on high value added activities like business development, closing sales, innovating new revenue streams, market strategizing, following up with prospects, strategizing on how to improve productivity, managing projects, getting feedback from clients... stuff that lead to high customer satisfaction and higher proﬁts!

How I Was Losing $4,900 a Day Doing the Wrong Work Let me give you an example of how I lost a potential $4,900 a day when I ﬁrst started out in the training business by spending too much of my time on the wrong sort of work. Like every small startup business person, I was a one-man show. Naturally, I had to do everything myself. I had to write proposals to clients, make cold calls, do sales presentations, conduct the training itself, prepare logistics, prepare training materials, do administration and ﬁnally, manage the ﬁnancial accounts.

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CHAPTER 7 TIME IS MONEY... HERE’S HOW TO MAXIMIZE IT

Now among all my activities, which one do you think created the most proﬁts? The answer is when I was training. Every day I trained, I earned for my business $5,000 (100 students multiplied by $50 per student). However, because I had to do all the other activities, I only had the time and energy to do a maximum of six training days a month, thus the most I could gross was $30,000 a month. I thought of hiring people to do the administration, logistics and accounting but I was initially too stingy. I thought to myself, ‘If I hire an administrative assistant, I would have to pay the person $2,000 a month’. ‘If I do it myself, then I would save the money!’. What I did not realize then was that by doing the admin, accounts, logistics and selling myself, I was actually losing money everyday! Why? You see, every day was worth a potential $5,000 if I spent it doing training. If I were to hire an administration assistant, I would have to pay the person $2,000 a month, which works out to $100 a day (assuming 20 working days a month). If I did the administration work myself, I would save $100 a day. However, I would be losing a potential $5,000 as I would not be able to be out training. So although I save a potential $100, I lose a potential $5,000, I end up losing $4,900! The moment I realized this, I went out and hired an assistant to take care of all my admin work like ﬁling, answering calls, arranging logistics, coordinating with clients and so on... This freed me of a collective ﬁve days a month which I could now spend doing training and earning my business an additional $25,000 a month. Not bad, I invested $2,000 to earn back $25,000! Immediately I went out to hire an accountant to free up another two days of my time, which was the time I had spent doing all my accounts. Again, my earnings jumped by $10,000! So, I went out and hired a telemarketer, a salesperson, a logistics manager and so on. Within a year, I had ten staff who did all the lower value activities for me. As a result, I could spend 100% of my time just training! I ended up training twenty-ﬁve days a month, grossing for my business $125,000! Even though I had to pay total staff salaries

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of about $20,000, I still earned $100,000 a month, more than triple of what I used to! The lesson is this. You must ﬁnd the activities where you generate the highest value for your company and spend most of your time doing that! If you can, delegate the rest. Today, I know that my time is worth a potential $2,500 per hour when I am speaking. So if I can hire someone at less than $2,500 an hour to do any of the other company activities, I would do so. This is why today, I have over eighty staff (spread over three companies). They enable me to fully concentrate on where I can generate the greatest proﬁts. Now, bear in mind that all of us have different areas where we create the greatest value. For example, my business partner’ Patrick is really great at networking, doing business deals and building new proﬁt centres (which I don’t enjoy doing), while he, to put it politely, would put even a hyperactive teenager to sleep if he were to do public speaking. So Patrick focuses the majority of his time traveling around doing huge business deals as each deal he closes and each new business division he sets up is worth millions of dollars to our company! Once you know how much your time is worth, you will think twice about spending your time idly. For example, a couple of months ago I had to accompany my wife to see the gynecologist as she was expecting our second child.We had to wait an average of an hour each time before the doctor could see us. I noticed that most of the other couples would just sit around and wait. For me, realizing that every hour I sat idly waiting cost me $2,500 (in potential lost earnings), made me take my laptop along the next time. While waiting I would start writing more pages for my next book. You see, I estimated that every book I write is worth $550,000 in gross proﬁts. So if I spend the hour writing at least ﬁve pages, then I would be creating $9,167 worth of value! (Out of a 300-page book I calculated each page written to be worth $1833 based on past sales of my books). You should understand that to be a self-made millionaire you must bear in mind that time is money. You must be very focused on how much each hour of your time is costing you! For example, when I bring my family on a ﬁve-day holiday, in my mind, it is 112

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costing me $45,000! ($5,000 for the cost of the trip and a potential $40,000 that I am worth for those 5-days). So I make sure that I enjoy each of those ﬁve days to the maximum and treasure my time with my family!

How Dr. Dennis Wee Made Millions Selling Property by Maximizing His Time Let me give you another example. I have a good friend Dennis Wee who owns one of the largest real estate companies around. I once asked him the secret of his success (He made millions selling property from a very young age). Why was it that many real estate agents remain a one-man show while he has managed to build a huge property empire? And he has done so without a university education? Dennis told me that it was because he knew how to spend his time only on activities that created the most value. You see, as a real estate agent your list of monthly activities include making calls to prospects, handing out ﬂyers, administration, research new properties available, accounts, paperwork and of course, showing houses to prospects. Again, out of all these activities, which one do you think generates the highest value and proﬁts? The answer is when he is showing houses to clients! Most of the houses he sold were worth about $2 million each. Every time he closed a sale, he would earn a commission of 1% or $20,000. Now, it took him roughly ten days of showing houses to many prospects before someone eventually buys. This means that each day is worth a potential $2,000! ($20,000 in commission divided by 10 days). Most real estate agents never become super rich because they always have the ‘do it myself ’ mentality and dare not invest in other people. But Dennis knew that if he were to hire an assistant to do the paperwork and telemarketing, it would cost him salaries of about $4,000 a month, or around $200 a day. However, if he were to do all these tasks himself, he would save this $200 a day, but it would cost him a potential loss of $2,000, as he would not be able to spend this time showing houses! This would be a net loss of $1,800! 113

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So by hiring a whole team of staff to do all the low value work, Dennis could spend 90% of his time seeing clients, showing houses and closing deals that generated millions of dollars of proﬁts for his company. He also told me that he makes full use of every hour of his day, to ensure that no hour was used idly. As a real estate agent, lots of time is spent waiting for clients to show up. Again, most agents would just wait and waste their time. Dennis would spend every minute waiting doing something that created value. For example, he would be on the phone calling more prospects and inviting them down as well as going to all the nearby houses and stufﬁng their letterbox with his specially designed promotional ﬂyers.

How to Spend 70% of Your Time On High Value Activities... Then 100% You may be wondering to yourself, ‘But, I am an employee! How can I choose to only do work that is of high value? Who am I going to delegate it to? Many of the low value work like checking emails & paperwork are still necessary, they must be done!’. Yes, if you are currently employed in a job, you must still do everything yourself initially. However, start focusing on doing all the high value activities ﬁrst. Spend at least 70% of your total workday on these activities. Then, use non-work hours to clear most of the 30% low value stuff! The hours of 9 am – 6 pm are the critical times when your actions must be generating high proﬁts, like developing new businesses, following up with clients, ensuring product quality, strategizing growth in meetings and so on. Doing paperwork, organizing your ﬁles, surﬁng to research materials and checking emails should be done after ofﬁce hours. Once you have managed to fully optimize your time, you must then take the next step. You must ask for an assistant so you can delegate all your low value activities to this person and fully concentrate your time on high value activities. Remember, if you do not already have an assistant or one is not provided for you, be proactive, ask for one (Millionaire Habit 2!). Why would your boss want to get you an assistant and increase the company’s monthly expenses? Again, if you can show that by investing in an assistant for you at $3,000, you can be freed 114

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to generate an additional $15,000-$30,000 in value, it will be an obvious decision to do so.

A Lesson that My Staff Taught Me Another example I can give you is from my own advertising agency. I have got a number of account managers and directors. Some of them generate gross proﬁts of over $45,000 a month, while others manage only about $22,000. Obviously I pay the $45,000 person double what I pay the other, regardless of age or qualiﬁcations. When I observed how they worked, it was obvious why this was happening. The $45,000 account manager spent 80% of the time, out of the ofﬁce making presentations to secure new clients and visiting existing clients to get more advertising business. He would then spend 20% of his time on ofﬁce admin like checking the spelling, grammar of ad copy & coordinating workﬂow with the creative and media departments. On the other hand, the $22,000 manager was spending most of the time in the ofﬁce on the low value detail work and hardly any time strategizing on new campaigns or on business development. When I ﬁrst started out in business, I was not aware of the need to maximize the value of time until one of my staff, an accounts manager, taught it to me! This accounts manager came up to me and asked for a secretary. At ﬁrst, I thought that he was just being lazy and wanted to do less work. It appeared to be an unnecessary cost, so I did not approve it. However, my accounts manager did not stop there. He knew that if he proved to me how it would be a great investment, I would approve. He was paid $4,000 per month at the time and had to do everything that was necessary to manage the client’s advertising account. He told me that he was already working full eleven-hour days and that he just could not take on more clients and increase his gross proﬁts from the $35,000 he managed every month. But if I could get him a secretary for around $1,800 a month, he would have 40% of his time freed to bring in and manage additional clients and easily add another $20,000 in monthly proﬁts. Once I saw the math, I gave the go-ahead! 115

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CHAPTER 7 TIME IS MONEY... HERE’S HOW TO MAXIMIZE IT

How Do You Use Your Time Now? Now that you know the value of time and how to increase time spent on creating high value activities to maximize your total worth and ultimately your income, it is important that you do two exercises to ﬁnd out how you currently spend your time. In the ﬁrst exercise, I want you to pick a typical work day in your life. For each of the time periods, ﬁll in the typical activity you would be doing. In the last column, indicate on a scale of 1 (lowest) to 5 (highest), the amount of value that activity creates. This is obviously very subjective so it depends on your judgment. Again, remember that an activity is high in value if it directly or indirectly results in customer satisfaction and/or higher proﬁts. Exercise 1: How Do I Spend My Time Everyday? Time 9 - 10 am 10 - 11 am 11 - 12 pm 12 - 1 pm 1 - 2 pm 2 - 3 pm 3 - 4 pm

Typical Activity

Now, in the second exercise, I want you to list down all the activities that you must do in your job, what percentage of time you spend on each activity and again, the level of value creation. Exercise 2: How Do I Spend My Time Everyday? Indicate how much value each activity creates (scale of 1-5) Activity

% of Time Spent Value Creation (1-5)

1 2 3 4 5

Value Creation (1-5)

6 7 8 9 10 11 12 Total

100%

4 - 5 pm 5 - 6 pm 6 - 7 pm 7 - 8 pm 8 - 9 pm 9 - 10 pm 10 - 11 pm

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Welcome back! I assume you did the exercise right? Great! So, what did you discover about yourself through this activity? Are you spending your time optimally? Or is there a lot of unproductive time spent everyday? Is there a lot of room for you to spend more time on activities that will increase your value and income?

Think! How can you massively increase your total worth by focusing on the activity that creates the most value to your employer or business?

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CHAPTER 7 TIME IS MONEY... HERE’S HOW TO MAXIMIZE IT

Now, in the next two exercises, I want you to re-plan the use of your time. Re-plan your daily activities so it will maximize your time value. Take at least twenty minutes to do the next two exercises. Do it right now! I assure you this is time very well spent. Exercise 3: How I Can Maximize My Time Value? Time

Typical Activity

Exercise 4: How Can I Maximize My Time Value Activity

% of Time Spent Value Creation (1-5)

Delegate?

1 2 3

Value Creation (1-5)

9 - 10 am

10 - 11 am

11 - 12 pm

12 - 1 pm

1 - 2 pm

2 - 3 pm

3 - 4 pm

4 - 5 pm

5 - 6 pm

Total

100%

6 - 7 pm 7 - 8 pm

What are the activities that you can delegate right now?

8 - 9 pm 9 - 10 pm 10 - 11 pm

Now, in the next exercise, I want you to list down all the activities that you must do in your job, what percentage of your time do you intend to spend on each activity and again, the level of value creation. And, more importantly, which activities do you want to delegate to other people eventually?

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What are the activities you will plan to delegate in the near future? What is the deadline for this?

CHAPTER 7 TIME IS MONEY... HERE’S HOW TO MAXIMIZE IT

How to Magnify and Multiply Your Income in Any Career

I With the completion of this exercise, you have now learnt the strategies of how to maximize your value and your time. In the next chapter, we will move on to the ﬁnal and most powerful component of the income formula...

n the previous two chapters, we learnt that a person’s income is determined by how much value he creates for people and how much time he spends creating that value. So, let me pose you this question. Between a pop star like Madonna and a heart surgeon, who creates greater value in a person’s life? Of course it is the heart surgeon! The heart surgeon has the ability to save a person’s life whereas Madonna can only make a person feel good for a couple of minutes. Why then is Madonna paid 100,000 times more than a heart surgeon? What does Madonna have that the typical heart surgeon does not have? The answer is the ‘scalability factor’. The scalability factor is the ﬁnal and most powerful component of the income formula. It is what separates the rich from the super rich. The scalability factor is the extent to which you can magnify or multiply the effects of your value. It is the extent to which you can leverage your value & time.

The Power of Magnifying Value For example, for three hours work, how many lives can the heart surgeon save? He can probably only save one life. He creates tremendous value, charging probably $10,000 maybe even $20,000 for an operation. But he can only touch one life. In that same three hours of performing in a concert, how many people does Madonna’s singing beneﬁt? Thousands and if it is broadcast live, maybe even millions. So the value she creates is magniﬁed tremendously whereas the surgeon does not have the power of magniﬁcation. 120

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CHAPTER 8 HOW TO MAGNIFY AND MULTIPLY YOUR INCOME IN ANY CAREER

The Power of Multiplying Value If Madonna were to spend three hours singing an album of songs in a studio and if it were to be recorded on a CD, how many times would she get paid for it? The answer is multiple times. Every time that CD is sold, she would earn a percentage of money, called a royalty. If that CD album sold a million copies a year, she would get paid $5 million over and over again every year. In this case, her value of singing is multiplied many fold! As for the heart surgeon, he would generally be paid only once for the operation. Must you keep paying him royalties every year in order to keep your repaired heart? Of course not! Sure, your arteries could get clogged up again and you may need a second operation a few years down the road. But the multiplier effect in the case of a heart surgeon is twice at most. (Unlikely to have a third time because the patient would probably have died)! So, as you can see, a person’s income can massively increase when multiplied by the power of scalability.

However if the lawyer were to use the power of scalability by magnifying and multiplying his value (legal advice), which you will learn in this chapter, then he could earn ﬁve to a hundred times more in that same twenty-four hour period. Scalability is what separates the upper middle income earners and the rich from the truly super rich. Scalability explains why someone can make 100 times more money within twenty-four hours than anybody else.

INCOME = VALUE x TIME x SCALABILITY

Linear Income Versus Exponential Income Growth When you focus only on increasing your value per hour and the time you spend, your income increases in a linear fashion. There is a limit to how much you can earn a month, since there is a limit to the number of productive hours you can work. You are literally just selling your time for money. For example, even if you are a top lawyer who earns $300 per hour and you can only work a maximum of 180 hours a month, your maximum earnings would amount to only $54,000 a month or $648,000 a year. Now you may say to me, ‘Adam, that’s not bad at all!’ Sure, but why set a ceiling on your earning power? 122

How Anyone, In Any Profession, Can Massively Scale their Value Many people have the perception that you can only achieve scalability when you are singer, movie star, sports star or a famous celebrity. Absolutely not! You can achieve massive magniﬁcation or multiplication in any profession, whether you are a chef, garbage collector, lawyer, doctor, teacher or software programmer. 123

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When you fully utilize the power of (value x time x scalability), your wealth will grow exponentially. Let me give you examples of people who have created massive wealth as a result of understanding the power of this formula. a. How a Chef Made Millions Starting at the Age of 65 – and he’d started broke too! I am sure you have all heard of Colonel Harland Sanders. He is the portly Southern American ‘gentleman’ the life-size statue fronting all Kentucky Fried Chicken outlets to greet patrons. Of course Colonel Sanders is a multi-millionaire many times over but do you know that before KFC, Colonel Sanders had found himself at 65 years of age totally broke with nothing but a social security check for $105. But in less than ten years, at age 73, he had become a self-made multi-millionaire and a household name! How did he achieve this? By being one of the ﬁrst people in the world to understand the power of multiplication! Colonel Sander’s tremendous value came from his ability to innovate great tasting chicken that people love to eat. How? By developing his secret blend of eleven herbs and spices and insisting that all his chicken be pressure cooked for hours, something that most other chefs were not willing to do. In fact, Sanders was so insistent on the superiority of his recipe that he refused to sacriﬁce taste by cooking his chicken quicker. Remember, when you do something out of passion (Millionaire Habit 4), do more than expected (Millionaire Habit 1) and think of the value you give to others, money will come naturally. However, initially Colonel Sanders, though he worked day and night selling his great tasting chicken from his restaurant in Corby, Kentucky, never became wealthy.Why? He had the power of (value x time), but he lacked the scalability factor. It was in fact a twist of fate that got the Colonel thinking of how he could massively scale his value. One fateful day, the government built a highway that diverted all the hungry motorists away from his business. As a result, Sanders was forced to close the business down and that’s how he found himself broke at age 65. Instead 124

CHAPTER 8 HOW TO MAGNIFY AND MULTIPLY YOUR INCOME IN ANY CAREER

of giving up, he came up with the fantastic idea of approaching restaurant owners all over the country to offer them his secret recipe for their use. In return, he would get a percentage of the proﬁts for every chicken they sold. Within a few years, restaurants all over the country were selling thousands of chicken everyday, using his recipe! Through his franchising concept, he received thousands of dollars in checks every month. He multiplied his value a millionth fold as a result and at age 73 he could sell his business for $2 million. Remember this was in 1963 and that was a huge sum of money (equivalent to over $10 million today). b. How a Feng Shui Lady ‘Master’ Made Millions Starting Out at Age 45 Feng Shui is the Chinese art of c