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Building on the wealth discussion from previous installment, the two methods for growing wealth are cash flow and capital appreciation. Cash flow comes from your business and from certain investments that pay regular distributions. Capital appreciation comes in the form of equity growth.

Cash flow should be generated first and priority given to strategies that enhance this. Many people employ a practice of: make money, spend money, invest (what’s left). Brad teaches that a better approach is to make, invest, and then spend (just the earnings). This requires discipline and commitment, but provides a great deal of security. There are lots of ways to accomplish this and consulting with a financial advisor to tailor this approach to your circumstances is a great idea.

Capital appreciation comes from growth in value of long-term assets like real estate and stocks. Brad recommends that investing for capital appreciation is done AFTER a solid cash flow base is built. Further the cash flow, “spun off” from business and other distributions, is used to fund the acquisition of capital assets. Carefully building a balanced portfolio of both cash flow and capital appreciating assets is a wise approach to building wealth.

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To build wealth long-term, utilize a three-step process. For most, this process takes years of patience and consistency, but the rewards are worth the effort.

The first leg of your wealth stool is your business. The purpose of a business is to provide excess cash to invest. Dedicate the time and effort to build a reliable cash flow stream. Goal-setting, budgeting, and discipline are important tools in this process. After the bills are paid and sufficient reserves exist for emergencies and capital improvements, you can move on to step two with the excess funds.

Step two is the acquisition of revenue-producing real estate. Over time, you use the excess cash generated from the business to fuel the purchase and debt retirement associated with the transactions. There are many systems for doing this and it’s important to establish your own rules and stick to them. Your rules govern the types and circumstances under which a property enters your portfolio. Patience and discipline are again important as Brad has found that he needs to look at 50 properties, select 10, make offers on 5, and purchase 1. Once your properties are cash-flowing positively, you can move to step three.

The last “leg” of your wealth stool is the investment in stocks for the purpose of generating capital gains. Careful research and discipline will point you toward the right choices. Once you are “balanced” in these three areas, a change in market conditions that is unfavorable to one will usually be favorable for another. As always, a carefully crafted plan, regularly reviewed, tested and measured, provides you with the information to make informed decisions.

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Applying the concept of leverage accelerates business growth and improvement. Leverage means dividing your work to multiply the results. There are 4 ways to use leverage in business. You can leverage through people because you can get more work done through others than you can by yourself. You can use leverage with properly documented systems. We believe that systems should run a business and the right people should run your systems. You can leverage your marketing by employing a 10×10 marketing approach that is tested and measured. You can leverage through finance by tracking your numbers, reviewing them frequently, and making changes as needed.

Another way of understanding leverage is “do the work once, get paid forever, or at least long-term”. Every time you create a system, you are no longer doomed to repeating those instructions and should save at least 5 minutes of your time. Write 12 systems and gain an hour. The time you invest writing the system pays for itself for a long time to come. What if you write a book? A song? The effort you expend now pays dividends for a long time. Delegation is a form of leverage through your Team. Equip them with the tools, knowledge, and resources. Gain their commitment to be accountable and you will be amazed at the process. For more on leverage, read our book Instant Systems.

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The formula for success is BE x DO = HAVE. Whatever you want to have (great business, great relationships, great clients, great employees, great income, great lifestyle,etc) first implies the true willingness to receive it. Some folks fear success. Some folks don’t feel they deserve it. Some self-sabotage. To be “willing to have” first requires an acceptance of one’s share of the abundance that is available from the universe.

On the other side of the equation, we have the product of BE x DO. Your BE is your attitude, mindset, identity (combination of behavior, skills, beliefs, and values), and experience, which includes learning. Your DO is your activities and usage of precious time to execute them. If either BE or DO is low or zero, the effect on your HAVE is consistent.

To work on your BE, start with daily positive affirmations. Scrutinize your environment and remove the negative influences (TV, radio, newspaper, gloomy people, etc) from it. Commit your self to a regimen of continuous learning and improvement. Read at least one good book on business or personal development per month. Seek out workshops and lectures from successful entrepreneurs. Make one improvement every week (=52 in a year!)

Now for the DO. Resist the temptation to confuse “busy-ness” with “business”. Doing a lot of stuff to fill up your day may give the illusion of accomplishment but is it REALLY fruitful activity? DO implies the right stuff, tested and measured consistently. By the way, you can only do what you are and you are what you think (closely skin to BE). DO is improved by proper planning (use your reticular activating system to give you a head start) because this allows you to waste less time and make better use of the time you have. You also have the possibility of working less and accomplishing more, especially if you utilize the benefits of leverage. We’ll cover that next week.

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W. Somerset Maughn is credited with saying: “Nothing, if not first a dream.” Several years ago, a fantastic movie was released called The Bucket List starring Morgan Freeman and Jack Nicholson. Your “bucket list” is the 100 things you want to do before you die. (By the way, you’re not limited to 100, just a good place to start) These items could be places you want to visit, people you want to meet, experiences you want to have. By getting these things actually written down on paper, you stretch your mind with possibilities. Remember, dreams don’t have to be “realistic”; that’s why they’re called dreams. So, on a scale of 1-10 (1 = none, 10 = crystal clear & written), how clear and documented are your dreams?

Goals are outcomes you want to achieve. Unwritten goals are just wishes and evaporate without recourse. One more thing: there are no unrealistic goals, only unrealistic time frames. You can have a goal that you don’t yet know how to accomplish; if you knew how to accomplish it, then it’s a “to-do”. So, on a scale of 1-10, how clear and documented are your goals?

Plans outline the process for goal achievement. Plans need to be documented, detailed, and chronologically oriented. Would I invest in your business based on your plan? Could someone else run your business based on your plan? On a scale of 1-10, how clear and documented is your plan?

Actions are the activities you engage in to execute your plans. There is a BIG difference between “business” and “busy-ness”. Many people say they are so “busy”. Are all those long hours REALLY fruitful? Are you “fat, rich, and happy” for all the effort and activity you’re putting in? If not, then something is wasting your time. Poor people spend time to save money; rich people spend money to save time. On a scale of 1-10, how productive is your time?

The “formula” is Dreams x Goals x Plans x Actions. Perfect score is 10,000. Take a few minutes to calculate yours. Remember that small changes produce big results. Taking steps today to improve just one of those numbers by 1 point will make big difference. Get started now.

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“Earn” only comes before “learn” in the dictionary. In order to earn more, it is necessary to learn more (and apply the learning). That’s why “I Know” (meaning: been there,done that, got the t-shirt…) kills your ability to learn, grow and develop. In many cases, you are the expert IN your business—you know a lot. Most of us can benefit from learning how to work ON our businesses. Another way to express that is to say that we could all stand to improve our learning about how to run a business that delivers our product or service.

Well, you ask, how long will that take? ActionCOACH defines a business as: A commercial, profitable enterprise that works without you. Our experience has shown that it takes from 2-7 years to accomplish that with a business. Allow an additional 3 years beyond that and you could have a reasonable goal of getting rich in 5-10 years (depending on how you define that). The keys are to learn, prepare, plan, test, measure, adjust, apply, and discipline yourself. Your Coach will keep you focused on your goal and hold you accountable for the progress you want to make.

A great default for learning is reading 1 book per month on business or personal development. Doing this alone will put you ahead of most of your competitors and peers. When finished, select your top 3 takeaways and how you will apply them to your present situation. Some books may take more time, others less. Audio books, DVD’s and seminars/workshops “count” toward your learning regimen. Plan your learning along with other financial and project goals. You’ll be amazed at the results!

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A true example of WIN-WIN is the expression of gratitude and the willingness to celebrate our achievements. Too often, we are so “busy” that we don’t allow ourselves the time to stop briefly and “smell the roses”.

Thank you notes will really perk up someone’s day and will make you stand out because you took the time to care. How often do we spend time chasing the accounts who are overdue paying and simply accept the payment from those who pay on time? Unfortunately, the best-paying customers don’t hear from us as often as the slow payers and this is just not right!

Another opportunity that we often neglect is setting a reward for accomplishments. Try motivating yourself and your Team by defining what the “prize” is for achieving certain goals. Any excuse to celebrate significant achievement will bolster morale and increases the chances of a repeat. Behavior that gets recognized gets repeated.

One last point: the best goals are those that involve others. We seem to be better able to pursue something if it really means something to someone else. Parents do this all the time, denying themselves for the sake of the children. We are more willing to let ourselves down than someone else. Good goal-setting strategy implies that, if we include others in the goal (and the reward), we are more motivated to persevere and less likely to fall short.. Next time you’re feeling a little down, go on a “rampage of gratitude”, listing 10 things you are truly thankful for. It will turn your perspective, and your day, around.

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When opportunities appear, take advantage of them. Too often, business owners and leaders are caught in the “paralysis of analysis”. We study, question, fidget, and delay taking action. The driving force behind this behavior is FEAR. In this case it stands for: Failure Expected And Realized. When failure is expected, it becomes a self-fulfilling prophecy. Instead we should expect, and prepare for, success. The process is really the same. The difference is that we now ALLOW ourselves to deserve achievement. This is different from: “Well, let’s just do our best and see what happens”. Rarely do we get the outcome we want using this methodology. The definition of “try” is to work at something until it becomes difficult and then quit, because we “tried”. This gives us the excuse (below the line) to accept less than what we really want. Ask yourself: What do I really want? Then face the fear and go for it! Chances are the consequences won’t be as bad as you think and you’ll be able to handle it anyway. After all, haven’t you handled everything in your life up til now? You can do it! Face your fear and beat it!

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Your ability as the Owner or Leader to respond is critical to business improvement. For the business to change, first YOU must change. If you’re as human as the rest of us, you are a “creature of habit” and are somewhat resistant to change (some more so than others!).

The Formula for Change is: D x V + F > R. Your dissatisfaction (D) must be palpable (that’s usually easy given the challenging economic conditions). You must also believe that action you take will yield your desired results, or at least set you in the right path (V for vision). If either of these = zero (0), there is no impetus and you will not change. You must be willing to start (F for first steps) and all three of these combined must overcome your natural resistance (R) to change. By the way, this same formula is at work in your clients and prospects as they decide whether to do business with you.

Now to your action. The ability to respond implies that you are past the point of Denial. If you cannot accept the idea that corrective action is needed, you cannot be persuaded to take it. Once over this initial hurdle, then you must consider the time, money, team, and other resources necessary to accomplish the change you want to make. Your ability to respond is influenced by all these variables and it’s in your best interests to take a thorough look. It starts with a decision, your choice, so true responsibility is up to you.

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Regardless of your type of business, you can simultaneously manage multiple streams of income. This starts with expanding your mindset to “allow” it to happen. Often, our business “vision” is short-sighted and constrained to only the local circumstances.

When you apply the 5 Ways, the 10×10 marketing plan, identification and measurement of critical KPI’s, systems, and team-building you can replicate your learning to manage additional income streams. Remember to test & measure first in your existing business and be prepared to apply the learning from the eventual mistakes you will make.

As Brad said: “Do the work once, get paid forever or even long-term”. This opens the possibility of writing your own book. Can you imagine how compelling it would be when meeting a new prospect to hand them, instead of a business card, a copy of your book? There is something about putting the word “author” after your name that elevates credibility and allows you to generate residual income. There are lots of ways to accomplish this and you are only limited by your discipline and creativity. The internet further expands the possibilities for you to market yourself far beyond your current boundaries. Could you produce videos, webinars, etc? If others can do it, so can you. It starts by making up your mind to accept, then pursue it.

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