Empire of Business is a Three Legged Stool. Whic legs are yours?

Any business empire stands on three legs: Capital, Employees, and Employers. Money is made directly or indirectly from one of these legs. But before we move forward, I want to address a question that people are usually confused about: which one of these legs is more important than the other?

Let me give you my answer first, and the elaborate on what others say.

My answer is simply: none is more important than the other.

The only way I know to order these legs is by time, and not by importance. In this order, capital comes first. But is not first in terms of importance.

Philosophers, researchers, employees and employers debated this question since the beginning of human entreprise. Each argue that they are first in importance to a business empire. What they say is valid, but only from their point of view.

The reality is that a business empire rests on these three legs, and if only one of these legs goes down the whole business goes down. This has to be understood by all actors in a business empire. No one leg is more important than the other, instead all legs are important.

Now let us go back to the all important legs of a business empire, and how they relate to you tin terms of making money.

You must be in one or more of these legs in order for you to make money. The principles of how to be effective in each of these legs differ, and the potential money you can make depends on which leg you are part of.

In terms of requirement, the Capital leg requires you invest money (but this does not mean you will surely make money and I explain this later). The Employee leg requires from you to contribute your time, and the Employee legs requires from you both time and ideas.

If you want to make money from the Capital leg, your enemy is risk and your friend is the reward.

If you want to make money from the Employee leg, your friend is your time (in otherwords yourself), but your enemy is that your earnings are limited by the time you can devote, and the wage rate you can receive. This is not a good avenue to be wealthy.

If you are an employer, your friend is the size of your business and the money you make from the labor of each of your employees, and the more employees you have, the more money you make.

The only avenues for unlimited wealth are the capital legs and the employer leg. Read the latter sentence again, but the principle differ for each.

Let me highlight a principle that appears in both legs: it is more clear in the case of the employee leg, but less apparent in the case of the capital leg.

That principle is called leverage.

If you are an employer, your aim should be to grow your business. This involves more employees, and as you take a cut on each employee you make an increasing amount of money as your business increases.

In the case of capital, it has an interesting property. You can rent it. You create leverage, by borrowing more capital for each dollar your own. Your job is to make more money than the renting rate on this capital. Your eyes should be on making sure that your capital does not perform (on average or with a reasonable certainty) less than the renting cost. Note the qualilfication of "on average or with a reasonable certainty". This implies that you need to know how to deal with cases that involve loss or the possibility of loss. And the higher your leverage, the more skillful you need to be in managing this risk.

I will teach methods, some of which I am the inventor, of how to manage this risk. These will be keys for you to the money kingdom.

Before I leave you, I want you to think about leverage by giving you an example. If Bill Gates were to do the work that Microsft Employees do for a day, how many years would Bill Gates needs to do this same work from the time he was born to the time he dies working 24 hours a day, 7 days a week. The answer is more than 140 years! Go run the numbers.

One of the reasons why Bill Gates is the richest man on earth is that the products of the cut he makes in each employees work times the numbers of employees under his command is the largest quantity assigned to a single individual on the planet since the beginning of time. I am not saying that Bill Gates does not deserve what he earns, or that what he did is not good, it is rather the other way around. I am telling you that to be rich you have to operate like Bill Gates operates, and that is to use leverage.

I will find a free book for you where you can read about an example where leverage is used right now in the internet to make massive sums of money. I will post it in the next article.

Another example for you to make money and understand leverage is to sign up for this new search site. In three months, it has brought massive amounts of people, and all of it is because of
leverage. It is free.

Signup at http://www.bigdaddypays.com/bigcash

Cheers,

Dr. IC