The question this month is whether you would rather have a baseball team full of home run sluggers or a team that is great at getting on base. Which approach wins more games? Well, the studies are clear. Home runs are fun to watch but if you want to build a successful baseball team, you want a dugout full of players that can reliably get on base. When you are on base, positive things can happen. When you swing for the fence and strike out, you are back on the bench. (Ref: Study)
Let's take the metaphor one step further. Imagine you've never played baseball before. You are up to bat the very first time. What is the chance you're going to hit a home run? Not very good right? Simply getting on base would be considered a success.
Connecting the Dots
Why am I talking about this? Because often I work with first time business owners who are swinging for the fences. When I asked them what their goals and objectives are, they provide a long list including paying off the first house, buying a second house on the beach, buying a boat they can go deep sea fishing with, buying their mother a house, buying their siblings cars, and a variety of other ‘must haves’. I then asked them how they are planning to achieve these goals. Their response normally includes opening a business for $150,000 that can eventually produce millions of dollars a year in revenue. In addition, they want to keep their job while dedicating around 10 hours per week to the business. Has this ever been done. Sure. Is it likely to be a winning strategy? Nope. It is swinging for the fences when the goal should be to just get on base.
The better approach is to focus on getting on base. Your very first business does not have to solve every financial desire you have in life. Quite often it doesn't not. The first business needs to grow to the point where you can cover your living expenses. This delivers freedom. At the same time, the first business needs to teach you all the critical lessons necessary to be an independent business owner. Once this is achieved, then you are on base, and, for a first-time hitter, you can consider that a success.
Just like swinging a bat, being a successful business owner is an acquired skill. Through education and experience, we improve. The goal over time is to grow a variety of income producing assets allowing you to have diversified income and become, as I mentioned in my August E-mail, ‘financially unbreakable’.
Swinging for the fences rarely works out. Focus on reliable, predictable singles and before you know it, you will be standing on home plate.