In Part 1 and 2 of the Millionaire Secrets Series I’ve introduced to you that in order to become a millionaire, you have to first develop a millionaire mindset and manage your money the rich way.
Adam Khoo in Action
Both of these lessons touch on the foundations of becoming a millionaire. Foundations are important because without a solid foundation, you’ll still be struggling financially even if you’re making a lot of money.
So if you’ve not read Part 1 and/or 2, stop reading this post right now and go to Part 1 here or Part 2 here.
In this lesson 3, I’m going to share with you how you can increase your income and create passive income.
Ready? Let’s go!
Lesson 3.1: Increasing Your Income and Creating Passive Income
Before I go into explaining how you can increase your income, I need to first dispel a myth.
Myth: Your income is determined by your academic qualifications, experience, luck, age and/or seniority in your company.
Fact: Your income is determined by the amount of value you create, the time you spend creating the value and to what extent you can magnify the effects of your value. (Income = Value X Time X Scalability)
So if you want to increase your income, you have to find ways to increase the amount of value you can create, you have to spend the majority of your time creating value and you have to multiply the effects of your value.
1. Creating Value
In Lesson 1, I mentioned that the first unbreakable habit of success is to become a person of value, and to do that you need to do more than expected.
Nobody pays you for the job you get done. Your company or customers pay you for the value you provide with the job you get done. So the more value you can create in your job, the more you’ll be paid!
So how do you create more value in what you’re already doing? Unfortunately, I can’t give you a definite answer because I have no idea what your job is.
However, I can give you a general rule of thumb. In general, there are only two ways you can create value for your clients and two ways you can create value for your company.
To 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
And to create value for your company, either:
1. Help your company increase sales or
2. Help your company reduce costs
At Wealth Academy, Adam Khoo provided a few examples to illustrate this point. I shall share with you two of the examples.
Note: The people mentioned in the examples given are real.
Example One:
• Increase Your Income by Creating More Value For Your Client
A) Financial Advisor A, age 33, income: $3,000 per month
> Waits for leads
> Follows up on leads
> Gives adequate presentation on product/service features
> Closes the sale
> Never follow up with the client thereafter
> Closes $7,000 worth of premiums a month
B) Financial Advisor B, age 33, income: $20,000 per month
> 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 and 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 and financial needs are met
> Sends a quarterly e-newsletter to his customers packed with tips on money management and investments
> Ability to generate even more referrals from powerful services
> Helps recruit and train more sales people for the company
> Closes $50,000 worth of premiums a month
Example Two:
• Increase Your Income by Creating More Value For Your Company
A) Teacher A, age 42, income: $4,000 per month
> Teaches the curriculum
> Gives and marks homework
> Gives tests and marks papers
> Fulfils minimum CCA duties
B) Teacher B, age 34, income: $9,800 per month
> Teaches the curriculum
> Able to motivate and inspire even the weakest and most unmotivated students
> Innovates and develops new curriculum/teaching methods
> Writes system of best practices and trains new teachers
> Produces innovative marketing ideas to enrol more students
> Develops strong rapport with parents and provides additional family counselling
> Innovates ideas to increase department productivity and 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
Acquire Additional Skills and Knowledge
As you can see from the above examples, both the higher income earners get paid much more than the rest of their peers because they create much more value by doing much more than they are expected in their respective jobs.
Now what you need to do is to brainstorm how you can create more value in your job and list the additional skills and knowledge required in order to deliver the extra value.
For instance, you may need better selling skills
, presentation skills
These are essential skills to make you stand out and be valued. And you do not need to take up a 2-3 year course to acquire these skills. All you need to do is to read a lot of related books, get some home study courses and/or attend a few workshops.
It’s puzzling how some people deem such forms of education as a complete waste of time and money, especially when it comes to attending workshops or seminars.
The only education they could come to terms with is academic education. To me, that’s extremely narrow-minded.
Most people have a mistaken view that the only way to the top of the corporate ladder is to upgrade themselves by acquiring an additional or higher academic qualification.
Although an additional or higher academic qualification may be good, it does not guarantee you the success or higher income you’re after.
As mentioned earlier, increasing your income has got nothing to do with academic qualifications, experience, luck, age and/or seniority in the company.
It’s all about creating value.
If you can’t provide the value your client or company desires, what good would it be even if you hold a Harvard MBA?
If you’d watched the reality show, The Apprentice, does Donald Trump
2. Maximising Your Time
In order to increase your value output, which hopefully will translate to more income, you’d have to increase the amount of time you spend to create value.
One way to do that is to work longer hours. I understand you’re probably turned off by this idea, but to be honest, if you’re following your passion and do what you love doing (read about this in Lesson 1), then you’d not think of it as work.
Take Adam Khoo for example. He’s paid by the hour when he speaks on stage. So the greater number of hours and days he speaks, the more money he makes.
As he loves what he’s doing, he works 364 days a year, many of which are seven-hour days. And when business is slower in Singapore, where he’s based, he’d go to countries like India, Malaysia and Indonesia to fill up his schedule.
Right now, you might be thinking, “I’m already working 12 hours a day. Am I supposed to work longer than that and on Sundays as well? Besides, my boss is not going to pay me more for working longer hours.”
Perhaps working longer hours applies more for the self-employed (e.g. real estate agent, financial advisor, designer) than an employee. But remember, I mentioned earlier that working longer hours is only one of the ways.
The 80/20 Rule
Another way to increase the amount of time you spend to create value is to focus more of your time on activities that create the greatest value. This is also called the 80/20 Rule
This principle was first discovered in 1897 by an Italian economist Vilfredo Pareto. He observed that most of the wealth in the nineteenth-century England went to only a small proportion of the population.
He went on to discover that this turned out to be true regardless of the time periods or countries. He found this pattern to be repeating itself over and over again.
However, Pareto’s discovery did not gain significant recognition until the twentieth century when Joseph Moses Juran, a management guru, applied the principle in his teachings and consultation work, and renamed it the “Rule of the Vital Few and the Trivial Many”.
In short, the principle assumes that 80 per cent of the results is derived from 20 per cent of the causes and it is applicable to most of what exists in the universe.
Applying the 80/20 Rule
Whether you are a self-employed, a small business owner or an employee, you will find that there are a lot of things to get done every day. Out of all the things you do daily, some will tend to create more value than the rest.
High value activities are those that will contribute directly to your company’s bottom line or help your clients achieve their targets.
High value activities include following up on clients, closing sales, providing support to your clients, developing new businesses, increasing productivity and so on.
Low value activities are those that do not contribute much to helping your company or clients achieve their goals, which in turn will not help you achieve your goals.
Low value activities include checking and replying emails, researching, doing paperwork, cold callings, chatting with your colleagues and so on.
Out of all the high and low value tasks you have to complete, the proportion of the tasks that create the highest value is probably about 20 per cent of the whole lot. But these 20 per cent highest valued tasks will very likely produce 80 per cent of the desired results.
Nevertheless, low value activities still need to get done, but you should spend only 20 per cent of your time doing them and 80 per cent of your time engaging in high value activities. This is the essence of the 80/20 Rule.
If you’re self-employed or if you’re a small business owner, you should outsource such trivial tasks to an administrator or a personal assistant.
Of course that will increase your monthly overheads, but by dedicating the low value tasks to an assistant, it will free you up a lot of your time so you can utilise the ‘extra’ time to focus on the high value tasks, which will have a direct positive impact on your bottom line.
Example of the 80/20 Rule
I once asked a real estate agent who is one of the top 20 producers in his company (his company has a number of approximately 6000 agents), why is it that he is able to consistently be in that position, while most of his peers struggle to make a living?
He told me that he understands the power of teamwork. He knows that no matter how hardworking he is, he’s not going to achieve as much as a team can achieve.
With him being the main engine in his team to generate sales and profit, he knows that he can only afford to focus his time on activities that produce the greatest results he wants.
But he also knows that he cannot ignore the trivial tasks, which is why he hires people to be in his team to handle the back end work.
As such, he is able to spend 80 per cent of his time strategising marketing campaigns, meeting up clients, showing houses, following up on potential clients, closing sales and so on, all of which contribute directly to how much money he makes.
Top producers don’t spend too much of their time in the office because activities carried out in the office are mainly of low value such as paperwork, accounting, preparing promotional flyers, cold calling, research and so on.
They’re always on the move, either to meet up with clients or prospects, showing houses, negotiating deals and/or closing sales.
The only time they will conduct low value work is when they want to utilise their waiting time.
You see, real estate agents spend a lot of time waiting for clients or prospects to show up on appointments. Instead of doing nothing while waiting, top producers will go check out the nearby properties to enhance their market/product knowledge and stuff the letterboxes of these properties with their promotional flyers.
All top producers understand and actively follow this 80/20 Rule, which is why their income is many times that of their peers.
3. Raise Your Scalability
In short, scalability simply means the number of people you can reach at one time with the value you’ve created.
Although increasing your value output and spending more time creating the value are important components of the Increase Your Income Formula, the most powerful component has to be the scalability factor.
Once again, let’s take Adam Khoo for example.
If Adam were to provide personal consultation on wealth creation, building self-esteem, developing better communications skill or some other personal growth topics, he can only reach one person at a time.
Instead of working within that limitation, Adam scales up his reach by creating the Wealth Academy workshop and some of his other similarly successful workshops so that he can reach many more people at the same time.
And to up his scalability to an even higher level, Adam had authored and co-authored a number of best selling books (in Singapore and a few other countries in the region).
He had also developed his own audio programmes, Secrets of Self-Made Millionaires, the Patterns of Excellence and Paving the Way to the Top, which are all sold online to reach the global audience.
Although Adam makes most of his money from the workshops (this is his core business), his books and the audio programmes have created some very lucrative passive income for him.
Another advantage of raising your scalability is that it allows you to create some very nice passive income at the same time.
Strategies to Raise Your Scalability and Create Passive Income
1. Sell your intellectual property
2. Start an Internet business
Strategy 1: Sell Your Intellectual Property
According to Adam Khoo, intellectual property is:
Any knowledge that you have or any idea, product or process that you have come up with that can help people solve their problems and satisfy their needs.
For most of us, the best intellectual property we can sell is the information and knowledge we already possess.
“But I don’t have any unique knowledge or skill which people will pay money for.”
That’s a common limiting belief we all have. But remember, every great accomplishment starts with a belief.
“If you think you can do a thing or think you can’t do a thing, you’re right.” – Henry Ford
Like you, I didn’t use to think that I have anything to offer. But I looked hard into everything I have an interest in and looked into what I’m always doing.
Eventually, I found that I’m always reading books and attending seminars in relation to personal growth. And I always form my own thoughts afterwards. So I thought, “Why don’t I just start a blog to share my thoughts and monetise my blog?”
And I did just that.
What you need to do is to think about your life experiences, carefully consider your own interests, hobbies and areas of expertise. If you have difficulty pinpointing them, don’t fret! I used to have trouble with that too.
In order to find out where your areas of expertise and interest lie, you can ask yourself some questions:
• What sports do you play?
• What books do you read?
• What awards have you won?
• Do you have a collection of anything?
• Do you have pets? What kind of pets?
• Did your boss ever commend you on anything?
• Have you ever taken any specialised classes such as drawing, cooking, rock climbing, etc?
• What music do you listen to?
• What television programmes do you watch?
Here are some examples of how people in different fields raise their scalability by selling their intellectual property in exchange for a licensing fees or royalties.
• Singers and songwriters earn royalties from their songs
• Photographers earn royalties from their images
• Visual artists earn royalties and licensing fees from their creations. Think Mickey Mouse, Smurfs, Superman, Spiderman, etc.
• Software and game designers
• Chefs earn royalties by licensing their recipes to food manufacturers
• Authors earn royalties from the books they write
I hope this lesson has helped open up your mind to what you are capable of doing to massively increase your income.
I have split this lesson into Lesson 3.1 and 3.2. In the second part of the lesson, I’ll introduce to you how you can start a business without quitting your job.
So stay tuned.
Cheers~
P.S. If you reside in Singapore, you might want to find out more about Wealth Academy. If you decide to go for the free preview, contact me prior to that. I’ll tell you how you can get a S$100 rebate should you decide to sign up for the programme during the preview. My email is mark[at]thebigdreamer.com.
However, if you live outside Singapore, don’t worry. You’ll still be able to learn all the millionaire strategies from Adam Khoo. Simply hop over to his website, Secrets of Self-Made Millionaires to get a copy of his audio programme.
Whatever is taught at Wealth Academy will be included, except the millionaire game, personal email mentorship, WA forum membership and Adam’s updates of his investment portfolio.
Don’t procrastinate. Start right now.
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