More than being only bean counters or tax strategists for our Skagit County and Surrounding Area clients, we make it a point to study what works well for our most successful clients, and (with all confidentiality) pass along principles we’ve seen work in various businesses.
On top of that, we look around. But not just at those in our contemporary age who are shouting about how smart they are or how many followers they have, or the money they’ve (supposedly) made.
I often prefer to examine the lives and principles of those who have done very, very well — but from earlier ages. Eras during which similar “change” was rocking the business landscape.
I’ve found that there are always principles to bring forward to today. In fact, the power of these principles is often increased because of the deteriorating work ethos and wisdom of our current age (at least, in my humble opinion).
So, I’ve recently read up on J. Paul Getty — at one point, the richest man in the world. Here’s a few things we can learn from his billionaire mindset.
The Billionaire Mindset by Steve Padgett
“When we seek to discover the best in others, we somehow bring out the best in ourselves.” -William Arthur Ward
J. Paul Getty became the richest man in the world during his time by practicing a few basic principles of risk-taking and reward throughout his life. I’ve gathered them for you — and these apply to other areas of life as well, beyond just the running of your business.
How To Assess A Decision
Whenever J. Paul Getty was considering a business decision, he would ask, “What’s the worst possible thing that could happen in this situation?” Then, when he was clear about the worst possible outcome, he focused all of his attention on making sure that it didn’t happen.
Remember Murphy’s Law: “Whatever can go wrong will go wrong.”
Per Getty, there are several secondary laws to Murphy’s Law, such as, “Whatever can go wrong will go wrong at the worst possible time,” and, “Of all the things that can go wrong, the most expensive thing will go wrong at the worst possible time.”
Another sub-law is, “Everything takes longer than your best calculation.” In advising, Getty would take the very best estimate of break-even for any business venture, and then triple it to arrive at a more realistic number.
Always Add A Fudge Factor
Another sub-law is, “Everything costs more than you can possibly anticipate in advance.” In minimizing risk in any venture, always add a “fudge factor” to account for the degree of uncertainty.
Having learned from Getty, whenever I now do a business plan, I always add 20 percent to the total of all costs that I can identify, to come up with a more probable cost. Anything less than this, whether in business or your personal life, is likely to be an exercise in self-delusion, and to open you up for some unhappy surprises.
Once you have identified the worst possible things that could go wrong, make a list of everything that you could do to offset these negative factors. Engage in “crisis anticipation”. Look down the road, into the future, and imagine every possible crisis that could arise as the result of changing external circumstances.
Do The Things You Fear
Getty wrote that one of the very best ways to develop your ability to take intelligent risks is to consciously and deliberately do the things you fear, one step at a time.
A very good way to overcome the fear of risk-taking is to set clear, written, measurable goals for yourself, and then to review those goals regularly. When you have clear goals and plans, and you continually work on them and evaluate your progress each day, you will see what you’re doing right and how you could improve your performance. You’ll feel more competent and capable, and will feel better about yourself. You’ll become more thoughtful and reflective and willing to take on even greater challenges. You’ll feel like “the master of your fate and the captain of your soul”. And your likelihood of success will become greater and greater.
Now, here are three steps you can immediately take to put these ideas from Getty into action:
First, take any worry situation in your life today and ask, “What is the worst possible thing that could happen?” Then go to work to make sure it doesn’t occur.
Second, look into the future and determine the worst things that could happen. Engage in “crisis anticipation” regularly, and continually be taking steps to guard against your worst-case scenarios.
Third, work from clear, written goals and detailed plans. Review them regularly. Consider alternatives, and always look for ways to increase the likelihood of your success.
If some of these concepts seem “tried and true” … well, they are.
And there’s a reason for that. Maybe this should be the day you tried them anew.
To more of what’s yours, in your pocket…
Feel very free to forward this article to a Skagit County and Surrounding Area business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Skagit County and Surrounding Area families and business owners. And we always make room for referrals from trusted sources like you.
Padgett & Padgett, PLLC CPA’s