How To Build A Business That Works | Brian Tracy #GENIUS

The number one reason for success is that people focus on things that have high potential consequences. The number one reason for failure is that people focus on things that have low or no potential consequences. Exactly what Joe was saying earlier: the famous Drucker quote is, "The very worst use of time is to work entangling on something that need not be done at all." I've dedicated my life to being a small and medium-sized entrepreneur, and I've devoted the second half of my life to helping other people to be successful small and medium-sized business owners. Carl

Schramm of the Marion and Ewing Coffin Foundation, the preeminent foundation on entrepreneurship, wrote an article in the Wall Street Journal two days ago. What he said was that there have been very few empirical studies into what actually makes a successful business and that most of what is taught in the entrepreneurship faculties of the universities is nonsense. In fact, he said that there are something like 1,687 professors of entrepreneurship, and their primary focus is drinking their own bathwater and telling that entrepreneurs have to have a business plan, and if you have a business plan, you'll be

successful. They spend two years in their faculties teaching people how to set business plans, yet 49 out of 50 businesses are started without a business plan, including some of the most successful businesses in the world today. So, we are now just starting to learn what we really need to do to build successful businesses. What Joe is doing here is absolutely marvelous because it can save you years of hard work and hundreds, even thousands, of hours of hard work to understand how to do it much, much faster—to shortcut. We say there's always a learning curve in

anything, and what we want to do is jump the learning curve. We don't want to spend years and years learning what we need to learn to reach a certain level of income. In the last few years, I've majored in doing seminars, talking, writing books and articles, and creating programs for owners and would-be owners of small and medium-sized businesses. Now, I've got 45 minutes, so I'm going to have to condense what sometimes I share in seminars for days. But I understand you're some of the smartest people in the world, so you can take a lot of

information in a short period of time. Is that true? Did anybody not understand the question? I'm going to try to bottom-line several of the concepts. One of the first concepts, which I thought was interesting, was a little story that was in the papers recently. Warren Buffett, who is one of the richest men in the world, and Bill Gates, who is the richest man in the world, along with Bill Gates Senior, were at a dinner party. The three of them are good friends, and they were talking when a gentleman came up to them and said, "You

know, I was looking at you, and you gentlemen are very successful. What would you say is the most important quality of success?" According to a bystander, all three broke off their conversation and turned and simultaneously said, "Focus." Focus is the most important requirement for success. In our fast-moving world today, if you can focus, you can succeed; and if you cannot, you cannot. It's almost a black-and-white thing. I thought that was interesting because the way Joe and I met is that I put together a program some years ago called the Focal Point Program, which basically brought

in business owners like yourselves and taught them to focus. We spent three years going through every single aspect of life with 82 exercises that dealt with family, business, marketing, products and services, competition, and positioning. It was focus, focus, focus. My offer, which is not as good as Joe's, was that you would double your income and double your time off within 12 months, or there'd be no charge for this program. I never had to give a refund; in fact, many people doubled and tripled their income within 30 days just by learning to focus and thinking in

terms of focus. So, it's really, really important. I read an article about a very successful entrepreneur in New Zealand that was sent to me last week. In this article, he said that the turning point in his life was when he went to a Brian Tracy seminar and learned how to focus. He was broke, unemployed, and had no money, but he walked out of the seminar a completely different person with written goals. He then looked around and, as it happens, he saw an article on coffee shops and Starbucks' success in the United States. It said that

coffee shops are a good business to be in because more and more people like the idea of a specialty coffee shop, and if it has Wi-Fi, then they go there; it becomes a social center, and so on. He knew nothing about coffee, and before the dust had settled, he owned 80 coffee shops in Australia and New Zealand. He then went through a divorce and had to sell them for $50 million to share the proceeds with his wife, but he did not sell off the worldwide rights to it, so he is rebuilding. Anyway, his point was

that at the end of the article, they asked him, "What would you say to aspiring entrepreneurs who want to be successful?" He said just two things: "Focus and fail fast. Focus and fail fast. Learn quickly, try something new." I thought I'd just pass that along. On because it's sort of what I have discovered over the years: the faster you fail and learn, the faster you succeed. You actually learn to succeed by failing. You know Thomas J. Watson's famous line: "If you want to increase your rate of success, you must double your rate of failure because

success lies on the far side of failure." Well, over the years I've done a good deal of reading, and I came across a concept that I want to share with you. We were talking about this a little bit earlier, and the concept is the question: What is the most valuable and highest-paid work that you do? It's a really interesting question because when I heard the question, I didn't know what the answer was. What do you think the highest-paid and most valuable work is that you do? The answer is thinking. Thinking is the most valuable work.

Now, I am the best-selling author in the world in time management, also on goals, and on some other subjects. But I began studying time management about 30 years ago, and I came across a word in my studies: consequences. What it basically said is that something is important if it has big potential consequences, and something is unimportant if it has low or no potential consequences. The number one reason for success is that people focus on things that have high potential consequences. The number one reason for failure is that people focus on things that have low or

no potential consequences. Exactly what Joe was saying earlier: the famous Drucker quote—"The very worst use of time is to work intently on something that need not be done at all." One of the things that is holding back entrepreneurs and business owners is killing them, by the way, and it's wiping out an entire generation. It's this obsession with technology. I see people who are walking with their phones; it's almost like drug addicts that are mainlining. They cannot stop staring at their screens. They cannot stop pushing their buttons. I hate to say it, but there are people

in this room who have that problem. The fact is that this obsession with looking at screens and staying connected is killing people because it stops them from focusing. You cannot focus if you are distracted, like an attention-deficit-disorder dog. You're constantly ringing and responding to bells, almost like a crazy person in a toy factory. So, just as a quick aside: if thinking is the most important thing you do because of the consequences of thinking determines the entire quality of your life, then the quality of your thinking determines the quality of your life. The more time you

spend thinking, and thinking well, and thinking clearly, the more successful you are. Over the years, I've worked with some very powerful people—billionaires and multi-billionaires, people who are on the Forbes 400 list repeatedly, over and over. I've had a chance to be with them during crises. At times when something serious was happening, a major problem, I noticed that they all had one quality in common: they all went calm. The people around them were angry, upset, and worried about what happened and who did it, and they would just go calm, almost like a pond becoming still. I

learned later, I didn't know why this was; I admired it, but I didn't know why it was. When your mind is calm, your entire cerebellum—the thinking and deciding brain—functions at the highest level, like turning up all the lights on a dimmer switch. It's functioning like a Christmas tree. But when you get upset and angry, your thinking reverts to your limbic, or emotional system, and your ability to think clearly diminishes dramatically, leading to a lot of mistakes. That's why, when you are facing a difficult situation, you have to use every skill, trick, and game you have—stay

calm. That's why they teach you to meditate, and they find that meditators in business are far more successful. They can automatically trigger their minds into the calm of meditation when facing a crisis, enabling them to think with greater clarity. Now, a couple of years ago, a man named Daniel Kahneman, a very fine man from reading him, who won a Nobel Prize in psychology and neuroscience, wrote a book called "Thinking, Fast and Slow." This book was very esoteric, and I don’t recommend that you read it; it's 500 pages of hard slogging. However, I will give you

the essence of it. He said that there are two types of thinking: fast thinking and slow thinking. Fast thinking is intuitive, instinctive, automatic, and reactionary. I think of it very much as how you would drive through busy traffic—you're not giving a lot of thought; you're just interacting. He said the other type of thinking is slow thinking, which is where you slow down the thinking and take time to think through issues. Now, if an issue has little or no consequences, then you can think quickly. For example, what do you have for lunch? What do you pick

up on your plate from the buffet? Where do you park your car? The consequences of these decisions are almost non-existent. But if it's a major issue, then you say, "Wait a minute, this requires slow thinking." Here is his contention that made the book. A bestseller is that the biggest problem that people have is that where they should use slow thinking, they use fast thinking. Entrepreneurs are extremely guilty of that as we make important decisions that have long potential consequences, including affecting the lives of people and costing money, and even leading to the bankruptcy of a

business. We make those decisions with fast thinking when, in reality, we should be making them with slow thinking. Now, I'm a great Drucker fan, as many people are. Mike was saying something about hiring the right people, and hiring the right people to work with you is very important. The biggest mistakes you make are hiring fast; you hire people quickly. The best decisions you make are when you really take your time to hire slowly. Peter Drucker said that fast people decisions are invariably wrong people decisions. Hiring an important person for an important job has tremendous potential

consequences; therefore, you need to take a long time. One of the things I teach, which is in my book "How to Hire and Keep the Best People," is a simple rule that will increase your hiring accuracy to 90%. I've taught it to Fortune 500 companies, and they make it a rule within their companies to use Brian's Rule: you cannot hire except by doing this. I didn’t invent it; I just studied the hiring practices of the companies that hire the best people and keep them the longest. They all, at the beginning, have a certain process that

they follow, and they follow it religiously—no exceptions. As a result, their accuracy in hiring goes up to 90% or better because they think more. Then the interesting professor at the University of San Diego last year wrote a book on decision making—not "Thinking Fast and Slow," but it was on decision making. What he said is the longer that you take to make an important decision, the better the decision will be, the higher quality decision. Lord Acton once said, "When it is necessary to decide, it is necessary not to decide." In other words, the professor said, buy

as much time as you can for a decision. Put it off if you can—put it off for a day, a weekend, a week, a month. Put it off. Some of the best decisions that you make will be decisions that you allow to steep for a while, like water and tea. So, thinking is the most important thing you do. We call it thinking fast and slow. Remember, anything that is important and has long-term consequences is a candidate for slow thinking—discussing it with other people, sitting quietly, going for a walk, letting it ruminate in your mind, sleeping

on it. You know they say if it’s a big deal, sleep on it. So, there are three thinking tools I want to give you, and then seven ideas. The first way I start off every seminar is what I call zero-based thinking. Everybody who knows me for any period of time knows that I harp on this. Zero-based thinking comes from zero-based accounting, where, instead of increasing an expense in the next accounting period, you ask, should we be engaging in this expense at all? Now, with zero-based thinking, you look at your entire world and ask this question:

knowing what I now know, is there anything that I am doing that I would not start up again today if I had to do it over? This is one of the greatest thinking tools I've ever learned because, in a time of turbulence, you always have an answer for this question. Each person has an answer; some people have multiple answers. There are lots of things that they're doing today that, knowing what they now know, they wouldn't get into today. They wouldn’t start them up—products they wouldn’t offer, people they wouldn’t hire, investments they wouldn’t make. These are

the greatest drags in life; these are sort of like a sea anchor, you know, that you drop and it drags, it slows down the boat. Well, how do you tell if you have a zero-based thinking situation? Many of you were asked to write your problems challenged as opportunities. The answer is stress. Whenever you experience chronic stress, it’s something that buzzes around. When Joe's talking or somebody else is talking, you're busy thinking about that. You drive around, and you think about it. It keeps you awake at night. It's something that pisses you off; it’s something that

irritates you and angers you and frustrates you. Whenever you have chronic, which means ongoing, continuous stress, this is a candidate for zero-based thinking. So you ask yourself the question: if I was not now in this situation, knowing what I now know, would I get into it again today? If the answer is no, the next question is how do I get out and how fast? When the answer comes back that I would not get into this again today, it’s too late to resolve it; it’s over. The only question now is how long do you suffer? How

much emotional suffering, how much financial suffering do you take before you walk? The most important requirement for practicing zero-based thinking, which a lot of people don’t like to practice, is courage. I call it the "C" word. You need the "C" word. You need to have the courage to look at every part of your life and say, is there anything that I'm doing that, knowing what I now know, I wouldn’t get into now? The starting point of zero-based thinking is always with... Your relationships, and those are both personal and business. Whenever I give this talk, by

the way, within a short period of time, divorces take place all over that city. People go home and say, "Geez, if I hadn't married this person, I would never marry them again today!" And that's what's making me miserable. Many people are working their heads off on the outside to achieve success, but inside, they're frustrated and unhappy because they're in a situation that, knowing what they now know, they would never get into. So I call this a quick analysis, and I'm going to ask you to do this for the rest of your life and to help

other people do it: K-W-I-N-K—Knowing What I Now Know. Do a quick analysis on everything. Do a quick analysis in my company. What we say is we look at every single person on a regular basis and we ask, "If we had not hired this person and they walked in today to apply for their current job, knowing what we now know, would we hire them?" If the answer is no, they’re gone that day. There's a little rule, by the way, in one of my books that says the first and best time to fire a person is the

first time it crosses your mind. Because after that, it’s only pain and suffering. The longer you keep them in place, the more likely they are to sue you, and the longer they sue you, the more it's going to cost. So, therefore, if you find that you've made a mistake, belly up to the bar, have the courage to admit, "I made a mistake," and cut your losses. There was a great book by an author called The Zurich Axioms some years ago, and it outlined principles of success. Anyone who's in finance has probably read the book because

it was written by a very successful New York financier. He was talking about the gnomes of Zurich and the rules that they go by. He said the number one rule for success in both business and personal lives is to cut your losses. When you realize you've made a mistake—bad investment, bad hire, bad relationship—cut your losses quickly. And what do they say in Las Vegas? You know, cut your losses, let your winnings ride. So in life, that's what we do. The faster you cut your losses—fail fast—the faster you can start doing things that are much more

productive. The second area has to do with every part of your business. Joel and I were talking about what I think is a revolutionary new field, though it's not revolutionary and it's not new: business model innovation. It's based on the concept that whatever business model you're using today is probably obsolete. If you're in any kind of business that uses technology to market, especially an information-based business, knowledge-based business, consulting services, training, or anything else, chances are your business is obsolete. The business model is your method, your step-by-step process of generating profitability. Now, there are some companies

that struggle along, struggle along, struggle on, then find a new business model. The next year, their business is up five or ten times; profits are just overwhelming. They're living in big houses on the hill, driving Cadillacs, and flying private jets. And you say, "What on earth did they do?" They changed their business model. If you don't change your business model and it's the wrong business model, two things are going to happen: your competitors are going to come up with a new business model and eat your lunch, or you're going to go broke. So it doesn't

mean that your business model is wrong; it just means that you must be open to the possibility that your business model is obsolete. That just means that there is a better business model, there's a superior business model, and your job is to find it. Again, there's no fixed answer to it, but I think this is a great area of thought and it's sort of like a tool for you to have. I wonder if I need to change my business model, which is your way of generating sales, producing and delivering products and services, getting payments, and

achieving profitability. Well, coming back to the second area, look at anything in your business: look at your products, look at your services, look at your people, look at the way that you advertise and market, and ask, "Is there anything that you’re doing today that, knowing what you now know, you wouldn't start up again today?" The only question that you ever ask is, "Does it work? Does it work? Does it work?" If it's not working and you can tweak it, then that's fine. If it's not working, have the courage to admit, "This isn’t working," and abandon

it. Now, the third area has to do with investments in zero-based thinking: investments of time, which people hate to lose. Someone said earlier that people hate to lose; it's one of the greatest emotions. We hate to lose time. If we've invested a lot of time in a course of action, a project, a business, a relationship—the second is emotions. If we put a lot of emotion into a course of action, a product, a course of study, a relationship, or money, we hate to admit that we made a mistake and that what seemed like a good idea

at the time has turned out not to be a good idea. Knowing what I now know, I wouldn’t get into it. Have the courage to cut your losses. And run now. The reason I teach this first is because you can't make any progress unless you clear the decks. Unless you get this 800-pound gorilla that's holding you back out of your life. Many companies that I've worked with literally transformed and became multi-million-dollar companies when everybody said, "All right, we're going to go through and do a quick analysis on this whole company" and realized that half the

things we're doing and half the people working here are not the right people for us at this time. Half the products that we're offering aren't selling and never will; they've been replaced by better, cheaper, faster products in the marketplace. So cut your losses. What happens when a big company gets into trouble? They bring in a quick analysis man, and he comes in with a chainsaw, shutting down all the factories and all the stores that are not profitable. The company goes from profits to losses in one year. Anyway, the second thinking tool that I teach people

is WPO thinking, which stands for Worst Possible Outcome. In everything that you're doing, always ask yourself: "What is the worst possible outcome of this course of action?" and "Can I survive it if it were to occur?" If not, what could I do to make sure it doesn't happen? One of the number one reasons that we worry about anything in life is because of fear. When you ask yourself what the worst thing that could happen in this particular situation is, and then if you can say, "All right, if that happens, I'll live with it," then your

worry goes away, your mind goes clear and calm. Now you can say, "Now what can I do to make sure that the worst does not happen?" and then you become proactive and take charge of your life. The third thinking tool—I hope I'm not going too fast for you—is called the Principle of Constraints, and it’s one of the most important thinking tools ever discovered. It says that between you and anything that you want to accomplish, there is always a constraint, a limiting factor, or a choke point that sets the speed at which you accomplish your goal.

I was just doing a teleconference a few minutes ago, and the question I posed was, "Let's always set the goal of doubling our income. I'm going to double your income." Okay, if you want to double your income, then why isn't your income already twice as high? Now, in business, we don't think of doubling our income; we think of doubling our profitability. What we're concerned with is net cash flow. We're focused on the amount that we take home to our family at the end of the day—not the gross, but the triple net. So we say, "If

I want to earn twice as much—and everybody in here can and will earn two, three, four, five times as much sometime in the future—if I want to earn twice as much, why aren't I already earning twice as much?" The number one reason for most people is distraction. They're so distracted that they're doing things of low or no consequence. We've found that the 80/20 rule applies to constraints: 80% of the constraints that are holding you back from achieving your financial goals are within yourself and within your business. They are not on the outside; they are not

the competition, the market, the people in Washington, or the taxes and regulations. Eighty percent are within yourself. So the mark of the superior person is that whenever they have a problem, they say, "What is it in me that's causing this problem?" I know this very clearly: "What is it in me that's causing this problem?" By the way, in illness, 85% of illness is psychosomatic. As Dennis Waitley said, "It's not what you're eating; it's what's eating you" that's causing the problem. The starting point, and the first thing a doctor or psychologist will tell you, is "What

is it that you're not dealing with?" Go back to zero-based thinking: "What is it that you have in your life that, if you had to do over, you wouldn't do?" Ask yourself, "What's holding you back?" Usually, it's the quality of self-discipline or a skill. One of the things that changed my life forever was learning that all business skills are learnable. You don't have to be a genius to learn any business skill; you can learn any form of technology. Mike has proven that with his products. You can take a person who's basically shoveling shoe polish in

Chibokan and teach them how to be technologically sufficient enough to earn a living from it. Every business skill is learnable. So I say, "What one skill, if you were absolutely excellent at it in your business, would help you the most to double your income?" What one skill, if you could wave a magic wand and wake up tomorrow morning superb in this area, would it be? When you ask that question, everybody knows the answer; they know what it is. But here's the challenge: You don't like the skill because it involves rejection, embarrassment, ego, potential failure, or

loss. You've tried it in the past and haven't been good at it. But nobody asked you what would be an easy skill to learn; they just asked you what skill would help you the most to double your income. Here's what we have found: Most of us are only one skill away from doubling our income. And all business skills are learnable. If you study the people who go from the top to the bottom in the Fortune 500 or Fortune 1000, you will find that, after 25 years of research, these people learn one skill at a time,

like climbing the ladder of success, or the ladder of income—like a sniper, one shot, one kill. They don't try to learn 50 skills; they focus on the most important skill, and they get their company to focus on the one skill that can help generate sales and profitability. Hey, I hope you're enjoying this video, and I want to let you know that I have a new book that's come out. If you'd like to get it absolutely free, there's a link below in the description, or you can wait until the end of this video, or you can

simply go to joesfreebook.com, and you can get a copy there. I talk about what I call "the greats"—the seven greats in business. In fact, my three-day seminar has the ten greats, but let me give you a brief overview of the seven greats in business. First of all, successful companies have great leadership. Leadership is the ability to get results, but it's also the ability to allocate resources, which means making decisions, and making hard decisions. Because if it were easy decisions, everybody would be a leader and everyone would be rich. Making decisions using slow thinking, and thinking

long-term, is the critical job of the leader. Drucker says the first job of the leader is to ask, "What results are expected of me?" Then I add to that: Of all the results that are expected of you as a leader, what is the most important result that you need to achieve the sales and profitability for which you are responsible? One of the rules we learn in business is that we never complain about anybody or anything in our business, because we're the boss. We're the ones who decided this. We don't complain about our staff because we

hired the person. If you don't like the person, get rid of them. Don't complain about them; you just sound like an idiot. It's like picking up food from the buffet and saying, "I don't like this food." Well, I never have liked this food; I've always hated this food. Well, why did you pick it up? Well, I don't know. The fact is, you never complain about something in your business if you're in charge of it. If you don't like it, change it. If you don't want to change it, shut up. Now, which leads me to the

next point: one of the marks of superior entrepreneurs is that they are intensely solution-oriented. Whenever something goes wrong, they immediately become calm and say, "All right, what's the solution? What's our next action?" What mediocre people do is they say, "Who did it? Who's to blame? How did this happen?" They go on a witch hunt, which makes them angry and frustrated. Superior executives, when something goes wrong—whether it's a problem with a customer, a problem with money, a problem with bills, or a problem with product delivery or defects—say, "Okay, all right, how do we solve this? What's

the solution?" The wonderful thing is, your success in life will be determined by your ability to solve problems. My friend Colin Powell said, "Leadership is the ability to solve problems. Success is the ability to solve problems." And how do you become really excellent at problem-solving? I just finished a book called "Creativity and Problem Solving," which Amicom is publishing in New York at the end of this year. It's based on years of research on the subject. Here's the point: the way that you solve problems is simply to think about solutions. What are all the possible solutions?

Be intensely solution-oriented. Don't allow yourself to get bogged down, negative, upset, or unhappy about the problem and who did it. Focus on the solution and the actions that you can take. When you start to think about the solutions, remember Helen Keller's wonderful line: "When you turn toward the sunshine, the shadows fall behind you." When you start thinking about solutions—"We could do this, look at that, and you could do this, and I could do that"—your mind becomes calm, your creativity turns on like lights, and you start to have more energy and feel more confident. Are you

with me so far? Thinking about problems makes you negative and shuts down your brain. Thinking about who's to blame is even worse. But thinking about what you can do and the actions you can take puts you back in charge. The second principle, which I call the second great, is having a great product or service. To me, this was a revelation, and it's so simple it stares you in the face: 90% of your success in business will come from having a great product in the first place. This is something that many people miss. They think if

they have a good product and pay thousands of dollars to attend clever seminars, they'll learn some marketing gimmicks and tricks to con people into buying it. They spend enormous amounts of time and money trying to advertise or market what is a mediocre product. I had a good friend, Mitch, who owned three first-class restaurants. He did no advertising for the restaurants, and they were always full. "Where do you want to go for dinner?" Let’s see if we can get into one of those restaurants. So I asked him. I knew him very well because we worked in

the same organization. Dr. Allard, my mentor, owned the three restaurants, and Mitch was a part owner, and he ran them. He could just start an excellent restaurant. I said, "What is your secret to promotion? How come these restaurants are always full?" He said, "We always put it on the plate." I asked, "How do you mean?" He replied, "We put superb food at good prices on the plate and just stand back, and the restaurants are full all seven days a week." I always thought that's the key to success in business: put it on the plate, put

it on the plate, put the quality, put everything into the product or service. Now, the Inc. magazine does a story on the Inc. 500, the 500 fastest-growing companies in America, taken over a three-year period, and every year they update it. The last edition, which came out a couple of months ago, showed that the number one fastest-growing company grew forty-two thousand five hundred percent—forty-two thousand five hundred percent! Unbelievable! It grew so fast. Others grew 5, 10, 15, 20, 30, 50 times in two or three years—all new companies, or reasonably new companies—all started by people like the

people in this room, and they grew 5, 10, 20, 50, 100 times. Wow! What was the key? So they went back and had outside researchers analyze it, and you know what they found? All the companies put it on the plate. Every one of them was obsessed with quality, and obsessed with quality as their customers defined it. They were close to the customer; they were locked tight to the customer. As I was sharing his idea about what was it called, what did you say about customers? Well, Joel, yes, think like a customer. I shared that at

my conference today: think like a customer. The very best companies think like a customer. What do customers want? What do customers need? You know, the key to success is to make your customers happy, and then make them happier than your competitors. Then, every single day, wake up and think, "How can I make my customers happier?" They went and interviewed the CEOs of four of the 500 fastest-growing companies, and every one of them was obsessed with customers. They thought about customers, talked about them, visited customers, called customers, and personally responded to customer complaints. They were just

obsessed with it, which again reinforces that 90% of your success will be the quality of your product or service. Now, how can you tell if you have a great product or service? Well, it’s a very simple test, and this is the test that predicts your future more than any other for the rest of your business career. How many people, after they have used your product or service, turn to another person and say, "Geez, that's a great product! Geez, that's a great service! Geez, that's a great company! Geez, they are great people!"? What percentage? 50 percent?

40 percent? The average in America is about 30 percent to 35 percent. Top companies, like Apple, that come out with an iPod, an iPhone, or an iPad, have people consuming the product. The next time they come out with an iPhone, they sleep on the sidewalks in rows of hundreds to be the first purchasers. They come out with an iPad; hundreds are sleeping on the sidewalks to buy it and pay outrageous amounts. Then they start showing everybody else, "Isn't this a great product?" And then they have apps: "Look at this! Ah, look what you can do

with this app!" How many people have an iPod 5 or an iPhone 5? Okay, how many of you showed other people the panoramic feature—how you can take panoramic pictures? Isn't that a great concept? You know, it used to cost thousands of dollars to have panoramic cameras that could take a panorama, and now you've got it in your iPhone as one of 100 or a thousand different things you can do. People who buy their products become their preeminent salespeople. They're running around grabbing people and showing them the product, or bragging about it. In a movie, by

the way, movie companies only have enough advertising for one weekend; they can take big ads for one weekend to get people into the theater quickly. After that, the movie will either grow or die by word of mouth. The movies that are successful through word of mouth have everybody talking. "Have you seen that movie?" If you said, "You’ve got to see that movie, honey! I just heard about this movie at work! Let's go tonight!" you weren't even planning to go to a movie, and you go there on a Tuesday night, and the theater is full! Have

you had this experience? You say, and everybody's talking about it—the most important key to our success. So, going back to the Inc. study, I’m looking for corroborations. In the Inc. study, they had researchers say, "What is the very best place for a company to invest if they want to increase their sales and profitability?" The answer came back—after looking at everything else—"Invest in improving the quality of your product. Invest in improving the quality of your product. Make the product better and better and better. Make your customers happier and happier." Your customers are so happy! I say

that the key to success is to get your customers to buy from you first rather than from your competitor, to buy again because they are so happy, and to bring their friends. If that becomes your operating theme, we could talk about this all day. Get them to buy from you, buy again, and tell their friends, and then you're going to be successful, you're going to be wealthy, you're going to be respected, and, more than anything else, you're going to be just as happy as you can be, as nothing gives us greater joy than to make

our customers happy. Number one is to become a great leader, which means setting clear goals, being decisive, and taking responsibility for results. Number two is to offer a great product and never be satisfied with the quality of the product—constantly strive to make it better in the eyes of your customers. Here’s one of the great revolutions in marketing, which I think is so important: the very best companies—the four stages of the epiphany of the lean startup—are going to their customers and asking, “How do you define a great product? Would you buy this? Would you pay for

it? What do you want more of? What would you want less of? What can we do to improve it?” They are even doing this with what they call the minimum viable product idea; they take a product idea to a customer before they even make the product and work with the customer shoulder to shoulder to develop the product so that the customer says, “This is a great product,” and then they produce and market it. So number three is you want to have a great business plan, but a great business plan simply requires that you think through

on paper the critical aspects of your business. You must especially analyze what it’s going to cost, what you can sell it for, what kind of profits you can make, and who are the people that you will need. There’s a great story of Napoleon’s generals around a large table with maps of Europe spread out when the French armies were conquering everywhere. They were talking about what cities, municipalities, and duchies they were going to attack with the army next time. Napoleon would come in from his nearby office and say, “What are you doing?” They would respond, “We’re

talking about moving the army from here to there,” and he’d say, “Well, gentlemen, I’m afraid that we can’t do it; we don’t have the horses.” You’ve heard the expression "we don’t have the horses," it comes from Napoleon. What he was saying was that the entire army was driven by horses—for cavalry and for pulling the wagons with supplies and everything else. They could get more men by recruiting on the march as they went through a village, convincing people to join the army and see the world. But the horses were scarce. So the whole success of the

army was determined by whether they could get the horses. That’s why, when Mike talks about getting the right people, he emphasizes, “Where do we get the horses?” We’ve got the ideas; we know what needs to be done, but where do we get the horses? These are the things you should think through in a business plan: What kind of technology will you require? What will it cost to set it up? Who’s going to run it and operate it? What kind of advertising, publicity, and promotion will you require? How much will it cost, and what kind of

returns will you get? A business plan—I'm sure you have lots of common business plan models—forces you to think long-term and to think slowly, and you’ll always make better business decisions if you think long-term and think slowly. The fourth area has to do with having a great marketing plan, and a great marketing plan is what you talk about all the time. However, there’s a rule in advertising that I used to work for at a large advertising agency: the fastest way to kill a bad product is to advertise it or market it because if you market it,

what happens? More people use it, more people get angry about it, and then they tell more people, and the product dies. So the fastest way to kill a bad product is to promote it. Many people think, “Oh no, the way I can get my money back is by selling it to people before enough people know how bad it is.” No! We have the internet today. Everybody in the world can know how many troops appeared on the streets of Crimea with balaclava masks on their faces, and they know that in three seconds. I was just in

Russia, where they control all the media and tell people that they were attacking the Ukrainians, backed by the CIA, who are behind all the problems in Ukraine. The poor Russian people are just being sacrificed, so they’re sending in some of their troops to help protect. I said to my friend Sergey, “Sergey, it’s nonsense! Not a word of what you’re saying is true; it’s totally false! The only people in the world who believe what you’re saying are people within Russia who have no access to news.” On the outside, anyway, so I'm getting off track. My point

is that marketing means: how do you attract people, uh, to your product or service? There’s a difference between marketing and sales. You know what it is: imagine that I were to say to you at midday, "This group, I say, is anybody here hungry? Raise your hand." All right, that’s marketing. I’m interested in your product or service; I’m interested in the product or service generally. But anybody here like to save money, make money, lose weight, be happy, pick up girls? You know, whatever it happens to be. Then, the second part is: now I have a restaurant.

Let me tell you why you should come to my restaurant to satisfy your hunger rather than go to the competitors. So those are the two. Marketing is to attract people who raise their hand, who are interested in the benefit that your product or service offers, and selling—the conversion—is to get them to buy from you rather than from your competitors. So they are very different functions. You can't sell if you can't attract interested prospects. So marketing is a very complex process, and you guys talk about it all the time. So you need a great marketing plan.

How can you tell if you have a great marketing plan? The answer is: you have a steady stream of interested prospects who are calling you, emailing you, coming in your door, sleeping on the street in front of your business each night to be the first ones to come in. And number five is you need a great sales plan. A great sales plan, of course, is a sale that consistently and predictably converts customers or converts interested people into customers. Now here’s the rule: if you have a professional sales process—and all 100% of all successful companies have

a professional sales process—if you speak to the salesperson working with an international company that has a branch in Warsaw, and if you speak to the salesperson in Warsaw or the salesperson in Los Angeles or the salesperson in Johannesburg, 100% of them use exactly the same sales process. The first contact will be a telephone contact to offer you a benefit and to try to set up an appointment, and the words will be word for word. The reason this company did this is they almost went broke because everybody was selling their own damn way. They would say

whatever fell out of their mouths whenever they ran across a prospect, and they realized that without a sales process, they had a great product—which they do—that was killing them. So they systematized the sales process; their sales went up a thousand percent. It’s been proven that if you go from random selling to a proven sales process—and of course you have to debug it—you increase your sales 500% with the same number of prospects. I’ve seen people get their closing rates from 1 out of 10 to 9 out of 10 by simply improving the sales process, and so

selling is really important. It’s one of the things we focus on. Now, there are two more points that I want to talk about in terms of grace. One is to generate great numbers, and this is one of the most important parts of business. All business activities and results can be expressed in numerical form—everything, right down to the number of telephone rings or the number of seconds it takes for a person on the phone to make a connection with a person who can help them. Jeff Bezos—who, as you see, got Best Entrepreneur and Businessman of the

Year from both Forbes and Fortune—are obsessed with measuring every single activity, and they look at the seconds, the number of seconds that it takes. When we first bought from Amazon, they would advertise five to seven days. Today, they offer one to two days max. In cities like San Diego, where they have warehouses, you can order in the morning, and it’s delivered in the afternoon—books, tapes, courses, clothes. It’s Zappos; they can deliver overnight. Because why? It’s because they're obsessed with shortening the amount of time it takes to make customers happy. And the shorter the time, customers

really value speed, and they’ll pay top dollar for someone who’ll make them happy faster. They’ve determined that. So look at the numbers: what are the most important numbers in your business? What we teach in our longer courses is about 35 numbers in any business. Some of them are unimportant; some of them are extremely important. There are five to seven of those 35 numbers that are the "A" numbers, and then there’s one number that’s the most important number of all. We call this—or Jim Collins, who wrote "Good to Great," calls it—the economic denominator. When I started

doing my coaching programs with entrepreneurs, one of the first things we taught was to identify your number. What is the most important number in your business? The number that most accurately predicts your success and your future. Most people get that wrong the first three to five times. What is your number? What is your most important number—the number that you just basically obsess with all the time? One company went from struggling to bankruptcy, and then a friend of his asked him, "What was your number? What was the number you were focused on?" Well, we weren't focused

on any number in particular; we didn’t even hardly keep track. So they were just selling by gosh and by golly, and at the end of the day, they were bust. He had to go home and live with... His mother, the age of 26, so he said, “No, you have to pick a number.” So he sat down and he said, “Hmm,” and he picked a number. It’s called net contribution margin. In other words, exactly how many net dollars and cents do we make from each sale? Then we compare those sales—that's after 100% of every expense, cost

of customer acquisition, lead generation, delivery, and everything else—and then they compare those against the others. They re-emphasize, in other words, net contribution margin. This year, they'll hit 100 million dollars in business. He’s laughing; he said, “Changed our whole life to finally figure out what our number was.” So, the question I always ask people is: What is your number? Do you know? Do you know the most important number? Do you know what most entrepreneurs say? “Sales.” Sales—everybody knows that. Just sales? Really? What if you’re losing money on every sale? Then the more sales you make, the

faster you go bust. You know that many companies are losing money on every sale because they don’t add in all the costs of the sale; they leave out their own labor, they leave out rent, they leave out utilities, they leave out delivery costs, they leave out defects, they think about packaging theft—and so there’s, “Boy, are we selling a lot?” Yeah? Well, how come you’re losing more money every month? Did you see these companies, by the way, that announced they had 11 billion in sales last year but lost 3 billion? You see them all the time.

How could you lose 3 billion if you sold 11 billion? Do you know why? It’s because they don’t know the numbers. What they’re doing is they’re probably working harder and harder to sell more and more products at which they’re losing more and more money, and nobody sat down and done the attributable cost. Okay, the last of the seven—and this is the one I love, and this is the future, by the way. The front end of business, the first bookend, is having a great product or service to start with. The last is to have a great

customer service experience, and I cannot tell you how important this is. This is what Joel and I have worked on all of our lives: make our customers so happy at the beginning, so happy with the product, and happy afterwards. It’s the key to repeat business; it’s the key to rapid growth. Every successful company, without exception, is obsessed with taking good care of their customers once they get them. If they have a customer complaint, the head of the company doesn’t sleep at night. They are so, so upset about customer complaints; they’ll go out and personally visit

them because the company president will phone an unhappy customer and talk to them. They consider customer happiness, like Tony Hsieh, to be the most important thing in the world. What Tony says is, “We’re not in the shoe business; we’re in the customer happiness business. We just happen to sell shoes.” If we were selling something else, we’d still be in the customer happiness business. What was that worth to Tony? He sold it for his idea, translated into Zappos, sold it for 1.2 billion dollars, and took home 350 million—not a bad idea. Make your customers happy. Does

it work? Yes. How often does it work? 100% of the time. So you’ll find that the very best companies, the ones that you really like and want to go back to, are the companies that make you feel happy. They make you feel good as a result of having done business with them. They take good care of you, and as a result, you go back over and over again, and you bring your friends. So those are the seven greats that we talk about here: great leadership, great product or service, great marketing plan, great sales plan, great

numbers, great business plan, and a great customer service plan. And here’s the interesting thing: if you’re missing one of them, it’s like dialing a seven-digit number. If you miss one of them, your company goes broke. Miss any one of them, get them wrong, or miss it completely, then your company goes broke. So now we know, scientifically, basically more and more of exactly what you have to do to build a high-profit business. And the wonderful thing is it’s all learnable. You can learn any one of these skills. Anything I just explained to you is as simple

as dishwater. All you have to do is just say, “Ah, what is it?” You think, “Yeah, I could do that; I could do more of that; I could improve that; we could do that.” Okay, I hope you found that video awesome and useful! So, if you want to get a free copy of my book, I want you to click here, and if you want to watch some more videos that will be useful and awesome, click here. Go ahead, they’re over here. Do it now! Come on! Thank you! Watch!