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Lead How to Get Good at Making Money Entrepreneur Jason Fried offers the most fundamental of all small-business advice: how to get good at making money. Justin Stephens A few years ago, I decided I wanted to learn to play the drums.
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I've always loved the drums. Whenever I listen to music, I hear the drums first. I can listen to a great jazz drummer like Art Blakey for hours on end. I'd give up almost anything to be as good as Glenn Kotche of Wilco.
The path to learning the drums is pretty clear. You sign up for some lessons, you get some pads, you get some sticks, you learn some drills, and you practice.
And you keep practicing. Every surface—your desk, your leg, your steering wheel—becomes a drum. You get better over time, but you never really stop practicing.
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This is how we learn most things. Whether you want to be a writer or a musician or a painter or a baker or an accountant, the way to get there is fairly clear. Not everyone's going to be as good as he or she would like to be, but at least you know where to start.
Lessons, classes, books, internships, workshops All of these things are accessible to most people who want them. One of the interesting things about picking up the drums was that I realized it had been some time since I had actually tried to learn something new. We spend most of our childhoods learning new things.
But as you get older, the frequency with which you develop new talents slows down. Sometimes it stops completely. That said, when I first started playing, I was bad. I sounded like someone was tripping over a drum set and knocking it on the floor. When you suck so badly at something new, it's comforting to know there are other things that you actually are good at.
And being bad at drums reminded me of what I have gotten pretty good at: making money.
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Today, I run 37signals, a software and design firm that I co-founded in Sales have grown at double-digit rates every year for the past decade; so have profits.
Like many private companies, we don't disclose revenue. How did I learn how to do this? I have a degree in finance, but I don't remember taking any classes that even remotely taught me how to make money. I've read plenty of business books. Same thing—lots of talk about money, but not much about how to actually make the stuff.
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One thing I do know is that making money is not the same as starting a business. For entrepreneurs, this is an important thing to understand. Most of us identify with the products we create or services we provide. I make software.
He is a headhunter.
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She builds computer networks. But the fact is, all of us must master one skill that supersedes the others: making money.
You can be the most creative software designer in the world. But if you don't know how to make money, you're never going to have much of a business or a whole lot of autonomy.
This is not about getting rich though there's certainly nothing wrong with that. Instead, for me, making money is about freedom. When you owe people money, they own you—or, at least, they own your schedule. As long as you remain profitable, the timeline is yours to create.
It took me a long time to figure out how to make money. Here's how the lessons unfolded. In Illinois, that's when you can start option border reviews with your parents' permission. So I went with my dad to get a worker's permit and got a summer job at the local grocery store. I don't remember learning much there. But a year later, at my next summer job, the lessons flowed.
I sold shoes and tennis rackets. I didn't play tennis, but I learned how to be a very good tennis-shoe and tennis-racket salesman. That's because I made the discovery that people's reasons for buying things often don't match up with the company's reason for selling them. Manufacturers used to dispatch reps to the pro shop to educate us on their latest and greatest technologies. They'd tell us about the new ethylene how to make a lot of money practice acetate midsoles that made shoes more comfortable; the Goodyear-brand rubber outsoles that made the shoes more durable; the new variation of Nike Air that was how to make a lot of money practice ahead of the competition.
They thought they were arming us with facts that would impress the customers. But, it turned out, none of that stuff mattered. In fact, it had a negative effect. When you describe things in terms people don't understand, they tend not to trust you as much. Trust is important. You can bluff your way into money, but for only so long.
Once I stopped slinging the technical terms, I realized that when customers shop for shoes, they do three things.
They consider the look and style.
They try them on to see if they're comfortable. And they consider the price. Endorsements by famous athletes help a lot, too.
But the technology, the features, the special-testing labs—I can't remember a single customer who cared. I sold a boatload of shoes and tennis rackets that summer.
Understanding what people really want to know—and how that differs from what you want to tell them—is a fundamental tenet of sales. And you can't get good at making money unless you get good at selling. I learned this as a teenage shoe salesman, and it still drives how I operate. To be sure, this is hardly a unique insight.
But judging by the number of companies and products that totally miss the mark, day after day, it's a lesson that needs to be learned again and again.
The Middleman Years In which I sell electronics, knives, and throwing stars—and learn that it's all about passion After a couple more summers at the pro shop, I decided to start my own business.
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It hadn't taken long to notice that retail was pretty simple: The store bought stuff from distributors, marked it up, and sold it at a profit. Why couldn't I do that, too? It turned out, I could. I got a reseller's license from the state of Illinois. This allowed me to buy stuff cheaply from distributors.
This is where I learned my second key lesson: How to make a lot of money practice only things you'd want to buy for yourself.
I originally got the reseller's license so I could buy stereo equipment, computer equipment, a cordless phone, and a radar detector.
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My rusted-out Datsun was held together by bungee cords and duct tape, how to make a lot of money practice I still liked to drive fast. I soon realized that if I wanted these things, my friends probably did, too.
I could sell them stuff below what they'd pay in the store and still make a profit. So I picked some prices that seemed reasonable, pitched my peers, and the orders came in. I began offering more items.
Somehow I got hold of some military-supply and sporting-goods catalogs. I cut out the pictures of the stuff that looked cool—butterfly knives, throwing stars, pocketknives, and some other things I'd prefer not to mention—and created my own catalog, which I photocopied and gave to my friends. The stuff, as they say, sold itself.
I didn't have a credit card—remember, I was in high school at the time. So I ordered the items COD, cash on delivery. I'd learn when UPS would be coming and feign illness so I could stay home from school. The delivery guy rang the how to make a lot of money practice, I gave him the cash, and he handed over the boxes.