Entries by Michael B Rosmer


Transform Your Life Forever With the Dreamlife Ratio

What’s your dream life?

Take a moment to think about it…

Where are you?

What are you doing?

Who are you with?

How do you feel?

What is your typical day like?

Now consider this basic fact.

The life you live today is the life you’re living. The life you’ll live tomorrow is going to be determined by two things:

  1. Circumstances external to you
  2. Your behaviours

Some people will argue the factors external to them are overpowering and they are strong.The life you live today is the life you’re living. The life you’ll live tomorrow is going to be determined by two things:

But there’s something unique about humans compared with all other living things…

We have the ability to alter our environment.

I’m writing this from Belgrade Serbia where I’ve been working the last couple weeks and preparing to travel to Bali in a week or so.

Here the average person is very poor. Life is very hard for them with wages around $400 per month it’s amazing they can get by at all.

Maybe your situation is the same or worse or slightly better the point is it would be inaccurate and unfair to suggest that someone in these circumstances has the same access and ability as someone born into a wealthy family in a developed country.

Yet, many people do rise above their circumstances even if this means leaving an environment that makes life harder.

The reason I mention this is it comes back to behaviors.

In other words, our environment will have a powerful impact on us but we have the ability to change our environment over time to better support us.

All of this points to a basic truth.

The quality of your life over time will be determined by the quality of your behaviors. The choices you make and the actions you take.

It’s not exclusively the case but it’s all we can do and the rest is up to a higher power.

Since we’ve been given this one chance, this moment here and now doesn’t it make sense to do the most we can with what we’ve got?

We’re going to talk then specifically about what YOU can do today and every day forward to bring yourself a little closer to your dream life.

The Question of Values

Our time is limited.

As a result, life, whether we admit it or not, is always a matter of picking something over something else.

I choose to go out with my friends so I’m not able to study at home.

I choose to spend money on clothes, so I don’t have the same money to travel.

Constructing your dream life then is all about deciding what’s most valuable to you then optimizing your life for those values.

Your values are unique to you, someone else cannot choose them for you and your happiness will largely be determined by the extent you manage to make your reality align with what you believe is most valuable in life.

Everything we’re going to discuss then pertains to choosing what you value over what you don’t value.

This is what choices are all about you’ve got something even if it’s a potential something and you give it up in exchange for something else.

A good choice or a good life involves choosing to trade away as much of what you don’t value as possible to get as much as possible of what you do value.

Make sense?

For example, you might value the bustle of a city with great conveniences over lower costs so for you moving to New York or London or Tokyo might make sense.

Someone else might value tranquility and calm or a laid back easy life with warm weather so for them it makes sense to move to Greece or Bali or Costa Rica.

You can only be in one place at a time, so you need to choose what you value most.

The worst situation is where you feel trapped, you push the choice off, or you choose something you don’t value over something you do. That’s a recipe for misery.

Growing the Size of the Pot

Some of you might be thinking, “but I want both!”

Others might recite the old line, “you can’t have your cake and eat it too”.

The truth is you might not be able to now but you can often increase your overall, this is key to achieving your dream life.

Think about it like this.

Say you want to be able to travel the world and to afford a nice car.

If you’ve only got a small amount of money you might have to choose between them.

Some people live lives of resignation where they accept this as a fact.

Those who live the greatest lives say, “this is my reality today and I can improve it for tomorrow”.

How do you do this?

It turns out there’s only one way…

You grow the size of the put by getting more for less

In a sense the secret to having more is getting more for less.

So, the secret to the dream life then is two-fold:

  1. Getting more
  2. Trading what you don’t value for what you do value

This goes from “having more”, which isn’t necessarily better, to “having more of what you want and less of what you don’t want” = dreamlife!

What is the Dreamlife Ratio?

At Richucation we talk about what we call the “Dreamlife Ratio”.

This is a simple measurement of what you’re giving up (your inputs) for what you’re getting in exchange (your outputs).

It recognizes that we’ve always got many types of inputs:

  1. Time
  2. Money
  3. Timeframe
  4. Relationships
  5. Reputation
  6. Assets
  7. Risk
  8. Opportunity
  9. Peace of mind
  10. Health
  11. Etc.

And on the other side we’ve got similar outputs.

Most people go through life and don’t measure.

Most people do trades that keep them at roughly the same place.

Most people don’t find ways to make their trades worth progressively more, effectively banking their time (we discuss this in The Free Golden Path training for multiplying your income and it applies everywhere).

This is at the core of our Deal ROI training.

In fact it’s at the core of the idea of ROI or Return on Investment in general.

People think of Return on Investment in monetary terms but it applies for time, for energy for relationships, for reputation, etc. as well.

Most people don’t have a full view of their life and all they are giving up or getting in return.

And as a result, most people never live their dream lives.

What’s Next?

If you want to get a little closer to your dream life start by identifying what you really truly value in your heart of hearts.

Not what you give in to pressure from other people on, not what others say you should value but what matters to you.

Figure out what it will take to have it (in our Free Revenue Growth Action Plan we help break through process down).

Then begin measuring what you’ve got and start paying attention to the trades and learn to improve them.

If you need skills to improve this consider our Mastery ROI training.

If you need extra income, consider our Marketing ROI training.

If you need a team, consider our Team ROI training.

If you liked this article check out others we’ve written, reach out to us, we’re available to work with you 1 on 1, in groups or simply to provide you free resources and education to help you get there.

4 Step Formula to Building a HUGE Instagram Following From Scratch

People, in particular model friends, are always coming to me asking how to build a huge Instagram following so they can use it to create other opportunities and maybe make a living as an influencer.

Although we at Richucation haven’t been working much on building our following because when we did the research our target customers mostly aren’t on or active on Instagram we’ve helped friends and clients add tens of thousands of followers to their pages relatively quickly and easily growing from nothing to 5 and 6 figure followings and growing their followers by 30% per month even when they are in the 5 figure level.

There’s a ton of crap advice out there so after the latest request to share with someone how to do it this morning I figured I’d write a post and talk about what no one else is talking about.

You don’t have to be an Instagram expert to understand how to build a following if you understand the marketing fundamentals.

So even if you don’t necessarily want to build a huge following this article is going to take you through some really common mistakes we see lots working with clients who are struggling with their marketing.

As you’ll see there’s two sides and people most consistently screw up the one side so we’ll focus mostly there.

At the end of this you’ll be able to build a following of 10s to 100s of thousands of followers you can monetize and have the skills to do it over and over again.

If you do this well and if you learn the process well you can make A LOT of money using these skills and leveraging your following.


Why Build a Huge Following

Why Learn Marketing

Two Sides of Building Any Following

Understanding Instagram as a Platform

Dispelling Hashtag BS and Giving You the Real Goods

Post Frequency

Post Timing

5 Ways to Get Noticed

Being Findable

The Real Way to Grow

Looking Beyond This One Channel

What’s Next?

Why Build a Huge Following

A year or two ago Selena Gomez was getting paid $500k per sponsored post!

Kylie Jenner sold something like $421 million in make-up in big part through her social media following.

You likely won’t achieve those kind of results but being able to put out a post and either make a ton of money or get a ton of traffic to a site is powerful.

Add to this the ability to secure investment deals in companies, travel for free, and much more and there’s a huge obvious pay off to having a big following.

What most people seem not to realize is building an Instagram following is just like any other marketing in fact it’s just another channel.

If you’re smart you’ll focus more on learning marketing and use Instagram as one channel as opposed to focusing on Instagram itself.

Why? Because what’s popular might change but your marketing skills and ability to make money off them will not.

Why Learn Marketing

Let’s start by not confusing marketing with what we call Profitable Marketing and hence our Marketing ROI training because the difference between marketing that produces ROI and regular marketing is HUGE!

So let’s ask why learn profitable marketing?

In the world today what are some huge worries?

Automation, artificial intelligence, global competition are all eroding traditional jobs.

Self driving cars will probably eliminate 4% or more of the workforce.

It’s uncertain times where we don’t know if many of the normal jobs today like law, accounting, etc. will exist in 30 or 40 years.

This is partially because many things are becoming abundant and hence so cheap they aren’t worth paying much for.

But do you know what there will always be a demand for and scarcity of?

People’s attention!

Every business needs customers to survive and thrive and getting customers is first predicated on getting people’s attention but people’s attention is limited you can really only focus on a very limited amount of things at once so those who have the ability to get and hold people’s attention will have the power long term.

This is an incredibly unusual skillset because in most fields if you have the ability to make a lot of money (a top athlete, top actor, musician, author, etc.) the chances of failure where you get nothing or close to nothing are very high. It’s a winner takes all game.

By contrast traditional bastions of employment where you’re fairly likely to do ok like being a doctor, nurse, teacher, welder, carpenter, accountant, computer technician, etc. while they might provide you with a stable income don’t provide you with an opportunity to make millions.

Marketing is different it’s easy to make a solid 5 to low 6 figures by being decent at marketing in fact you don’t even have to be that good. You can get a job at an agency and earn a normal salary.

But if you’ve amazing at marketing it’s a field that scales meaning you can impact massive numbers of people with the same time input and as a result it’s one of the few skills where you can make millions if you’re good.

Better still it’s not a winner takes all game where only the top of the top are making those numbers we’ve got dozens of clients all over the world making millions of dollars through their marketing skills and a lot more making mid to high 6 figures mostly in their 20s and 30s though some older.

So marketing is perhaps the most valuable skill you can learn but most marketing is utter non-sense because it misses the most important part the ratio between input and outputs so what follows and in fact all our training isn’t about vanity creating awareness, looking good, etc. it’s about producing results with low input that people are then willing to pay you A LOT for.

With that in mind let’s get into the meat of how marketing works and how it applies to building a huge Instagram following fairly quickly.

Two Sides of Building any Following

Building any following has two sides. Most of what you’ll read out there focuses on one side and frankly falls flat because without the other you’ve got nothing.

Still the first does matter and we’ll start by describing it then spend the majority of this article explaining how to do the other well since that’s where most people go wrong.freq

Ask most people how to build an Instagram or social media following and what types of things will they tell you?

  • Post regularly
  • Get good photos
  • Engage with your audience

Mostly this is nonsense social media posting and success is more about quality than quantity with some rare exceptions we’ll describe later.

The people with the biggest followings don’t post more and don’t engage more.

What they do have though is people WANT to follow them so they are interested in what they are posting.

Sometimes this is because of who they are in the case of celebrities, sometimes it’s because of the content itself as in the case of photographers and sometimes it’s because they are getting something out of the content as in the case of say bloggers reporting on make-up or video games or whatever.

The point is although having great content people actually like and want to follow isn’t as important as the second side it is important and you’ll magnify your results by achieving this.

So what’s the second side?

Having people actually SEE that content!

The value of every post is directly proportional to how many people see it and the biggest problem most people encounter in building a social media following isn’t what they are posting it’s not being seen.

The equation for number of followers is simple: how many people see your posts multiplied by the percentage of those people who wants to follow you.

As you might imagine if you can get seen by enough people you don’t need really amazing content.

I once coached someone on building a following and they came to me saying “oh if I was a hot girl I’d get lots of followers easily”. So I’d show him feeds of random hot girls and ask “how many followers do you think she has?” When he guessed something high I’d show him they had only a few hundred or a couple thousand to prove the content even though you think it is compelling isn’t what gives you a big following.

More than anything what gives you a big following is getting seen A LOT by a lot of people.

This is why virtually anyone in tabloids tends to have a big following not because what they post is great but because they get seen a lot.

As a result what we’ll spend the rest of this article covering is how to get your posts seen on Instagram.

This same principle applies to any form of social media:

  • Youtube
  • Facebook
  • Snapchat
  • Pinterest
  • Twitter
  • Blogs
  • Etc.

Your number of followers is determined by the number of people who see what you post multiplied by the percentage of them who want to follow you based on those posts.

No matter how good or compelling your content is if you can’t get it in front of people 100% multiplied by zero is still zero.

Whereas if you get seen a lot at least SOMEONE is going to want to follow you.

You should work on improving both. When we’ve worked with people to build their followings having them get professional photos or at least great quality photos has definitely boosted their traction but it’s all predicated on getting that attention.

What’s different between social media platforms isn’t this formula, it’s simply how the platform works to get seen and that’s what we’ll cover next.

Understanding Instagram as a Platform

So the formula is the same in any social media platform for building a following and in fact in all marketing period it’s impressions multiplied by conversion rates.

But when you’re communicating with people through a platform it’s important to understand that platform, how it works, the frame of mind people are in and therefore how to optimize for it.

For example, when doing Facebook advertising you’re best not to sell directly because it’s not a shopping platform.

On the flip side on Amazon it is a shopping platform, people are there to buy so you should sell directly.

Google depends on the keyword.

Let’s talk about characteristics of Instagram as a platform though and you can then apply the same concept to analyze other platforms.

Characteristics of Instagram:

  • Not a sharing platform – this is different from Facebook or Pinterest, which are very much about sharing. On Instagram they make it hard to share posts broadly. You can send them on an individual basis to friends but it’s not an easy repost to your wall like Facebook.
  • Not a search platform – this is different from Youtube, which is highly search oriented. On Youtube optimizing your videos for search will help you a lot because that’s the primary way people engage with the platform. Instagram although it has a search is fairly limited. You can take advantage of this limited search as we’ll discuss below but people tend to interact with it by scrolling through their feed and the feeds of others rather than searching.
  • Discovery – Instagram is a discovery platform where you primarily uncover new feeds by scrolling through your feed and see feeds tagged by others or going through the Discovery feed or explore feed or whatever they call it. This is going to be very important later on when we’re looking for exposure.
  • Post notifications – it’s also worth noting that a big part of Instagram relies on post notification, which is a comparatively small portion of some other platforms.
  • Story – Instagram of course has stories and these are increasingly the way in which people follow the people or pages they are interested in.
  • Hashtags – these are also a popular, though arguably dying part of Instagram, which is another way it’s different from Facebook where hashtags aren’t particularly popular or useful.

Having recognized these core components let’s explore how to use them.

Dispelling Hashtag BS and Giving You the Real Goods

Alright so the first way people discuss getting seen and pretty much one of only two valid ways preached in most of the information you’ll find out there is through hashtags.

Most of the info on hashtags is utter non-sense as you’ll see.

Now, is it worth using hashtags?

Kylie Jenner famously said she doesn’t use hashtags but of course has one of the largest followings in the world. This should tell you a little about how necessary they are but then again you’re not Kylie Jenner or if Kylie Jenner is reading this please repost our article for your fans!

How do hashtags matter?

Hashtags are a way to get found because someone can click on that hashtag and see other posts also tagged with the same hashtag.

Likewise, someone can search for a hashtag and scroll through photos tagged accordingly.

What’s the problem?

It’s two-fold, first, people don’t tend to scroll through hashtags much. It’s just not how average people interact with the platform on a regular basis.

Yes, some people do it some and so using the right hashtags can get you extra exposure but it’s not a great way.

We pretty much will tell you hashtags are useful to get you to 1000 followers and beyond that simply don’t make enough difference to be worth much effort.

Why is this?

Because most hashtags tend to get buried really fast and therefore your posts won’t tend to get seen anyway.

This brings us to the non-sense about hashtags.

I read all kinds of bad advice online about what hashtags you should choose and it is based on a fundamental misunderstanding of the analytics.

What am I talking about?

People tend to use hashtags based on what tags are popular.

This is a mistake.


Because there’s a difference between what’s popular for people to POST and what it’s popular for them to SEARCH for.

Here’s an example.

Millions of people use #love it’s probably one of the most popular hashtags going.

However, how many people actually go searching for #love?

A lot less.

It gets worse.

The most popular hashtags have a lot of posts, which means your posts are likely to get buried really fast and are unlikely to be seen by anyway.

So, what are the best hashtags?

You want hashtags with enough interest that people are probably looking for them (sadly I haven’t been able to find any analytics on what people are searching for) and usually specific enough that people might be searching for it.

For example, if there’s some music festival or something someone might search for hashtags about it. Or some hotel or city or site they might look for hashtags about it because this is practical much different than some random #highfive, which people are far less likely to search for.

On the flip side you want a low enough number of uses of the hashtag that your post won’t get buried too fast.

We generally found in our tests you want hashtags with 10s of thousands or 100s of thousands of posts no more and usually not much less.

For example, in our tests we found #elonmusk worked extremely well because a niche group of people are very passionate about Elon but there are relatively few posts about him so if you post there’s a good chance your post will be visible for days rather than fractions of a second like it will be if you post say #love.

This is also where posting very often is helpful in creating more visibility because your post show up repeatedly under the hashtags in question after the others have been buried.

Location tags it should be noted function essentially the same as hashtags.

In theory having more tags is better you need to be careful as Instagram has begun adjusting their algorithms to penalize those who are perceived as spamming.

The added benefit of tags is they seem to play a role in what shows up on the discovery feed as it attempts to show users content similar to other content they like and follow.

Post Frequency

How often should you post?

Most posts is better within reason as each post gives you added exposure if done correctly in fact in very small pages with followings under 1000 we’ve found you can’t post too often.

However, this quickly exhausts itself as you’ll see later there’s a much more important factor than post frequency and you’re generally best tapering off to around 1-3 posts per day for optimal results but only so long as you can maintain post quality.

While building aim to post at least once per day and more when you’re first building up your base of 1000 or so followers.

Where you’ll post more frequently is in the story.

It’s important to realize aside from the discovery feed, which won’t likely give you a lot of exposure but is based a lot on location so bear that in mind as well as common friends, likes, tags, etc. your story will generally NOT help you to build a following. What it will do is keep your audience engaged, which is important to long term monetization.

Post Timing

When should you post?

This depends on your audience.

You want to post when your audience is awake and on their phones for the following reason.

Instagram is going to prioritize what content gets seen and this is based in large part on how the first people who see your posts respond to them. If there’s a great response Instagram will assume it’s good content and give you better or more prioritized distribution, which has a feedback magnification effect.

You can get apps to tell you based on other of your posts what the best times to post are for your audience.

5 Ways to Get Noticed

Alright, those are some really foundational basics but they don’t get you far. What we’ve described so far will get you a few hundred to maybe a thousand followers but beyond this becomes fairly difficult.

The next strategy is useful to get you to maybe 10, 000 but not much further efficiently.

This is a very accessible method for most people though far from the best method, which we’ll discuss soon.

What does this involve?

Well if you want people to see you on Instagram you’ve basically got three ways of doing it:

  1. Being discovered – hashtags are one of these ways and we’ll discuss some others shortly
  2. Being known – for example a celebrity known from some other platform and as a result will seek you out
  3. Getting noticed

What does getting noticed mean?

The easiest way to describe this is you show up in their notification feed.

When you end up in someone’s notification feed especially if you’ve got a good profile photo they’ll often go check to see who you are and then have a chance of following you.

In Instagram there are five actions you can take, which will cause the person to get a notification and therefore possible look at you:

  • Following them
  • Liking their post
  • Commenting on their post
  • Messaging them
  • Tagging them

Each of these actions will trigger a notification.

It’s worth noting this strategy works best on people with fewer followers though tagging them in your photos or your story often works for people with larger followings as it tends to be the most likely to get noticed.

So, for example to grow your followers you might do the following:

  1. Identify someone whose followers are likely to also like you because they are similar or complimentary – for example models might look at the followers of other models or photographers. Various types of photographers might look at other photographers or travel pages depending on the particular focus of the photography.
  2. Go through their followers one by one like a few of their photos (triggering a notification that you’ve liked their photo if they have notifications turned on), comment on a photo or two, and follow them.
  3. Each of those three actions will trigger separate notifications. Since they’ve seen a fair amount of activity they are more likely to check out your feed and maybe follow you.
  4. Unfollow them a few days or so later unless you actually really like their feed

Richucation Bonus Tip - Don't simply choose all followers of a page similar to you randomly.  Instead where possible focus on users who have been active recently.  Do this by visit a recent post of a feed similar to yours, look at who has liked that photo, then go through the process above of liking, following, and commenting.

Do not use and take advantage of the hashtag #follow4follow and variants because these are worthless followers.

You can pay for bots to automate this process. As of the time of this writing our favourite is Instazood.

This method will result in you following a lot of people but get you a decent number of followers over time though you can’t overdo it or Instagram will block you.

Being Findable

This brings us to the subject of being findable, which we’ve already covered a little.

You can get a reasonable amount of exposure by showing up the discovery feed of a lot of people especially if you’ve got good content.

How do you do this?

Well part of it is simply being relevant in other words similar to other content the person is following, has liked, etc.

This is where proper tags and hashtags can be a factor.

Another factor though is engagement.

Instagram is more likely to promote content that’s trending, hence having two things:

  1. Great content
  2. Legitimate followers who are actually engaged with you

Two ways you can help with engagement are to encourage people to turn on post notifications for your page and also to hint at your posts in your story without fully revealing them. Models might do this by putting “new post” in their story but covering or blurring out part of the image so the users have to go check it out and when they do possibly liking it.

Richucation Bonus Tip - Instagram will especially promote content where there's been engagement from popular pages (as of the time of this writing especially pages with over 10,000 followers) so when possible get yourself some followers and friends with last followings to like and comment on your recent posts.

Obviously, you could coordinate an effort to gain more engagement on posts if you’ve got a group of people or series of pages working together.

Once again, nothing replaces good relevant content in achieving this goal.

The Real Way to Grow

All of the above are great ways to get you started, things you can do on your own to grow enough of an audience to be perceived as having credibility.

What follows now is the single most important factor in growing a following fast.

What is it?

Having other people with followings tag you in their posts.

Consider for example that many of the models Dan Bilzerian hangs out with have huge followings of several hundred thousand.

Usually, their following grew dramatically after they spent time with him and he tagged them in his posts or story because it attracts a lot of attention.

Think of it this way say you like a person’s posts, comment on a few and follow them thereby getting some attention. You can do that for how many people per hour?

Let’s go extreme you can do it for about 400 people per day before Instagram shuts you down (this is subject to change as well so might decrease).

Of those people a bunch won’t even see you and of those who see you most won’t follow you so you’ll pick up maybe 10-40 new followers per day using that method if your feed is compelling and relevant.

The point is your maximum exposure is 400 per day.

You could use hashtags really effectively and with each post get in front of another few hundred people most of whom won’t check out your feed and fewer still will follow you.

In short, you might add a few followers per post that way so it will take a hundred posts to add maybe a couple hundred followers depending how well you optimize, how good your content is and how relevant your tags are.

Worse, these strategies are likely to take a considerable amount of your time.

Now imagine someone with a following of 100,000 real followers posts about and tags you.

Even if you assume only 20% of their audience sees the post that’s still 20,000 people you got in front of with virtually no effort on your part at all.

Of course, not all of them will follow to see who you are and fewer still will follow you but if your feed is attractive and relevant you could easily pick up several hundred followers each time this happens.

Now, multiply the process by 10 for someone with a million followers.

Now, assume instead of one person posting about you or tagging you there are dozens or hundreds.

So, the question becomes HOW do you get people to post about and tag you?

Great question and there are several methods you can use:

  1. Submission directories – some sites post relevant content of other pages that’s where they get their content from they are curators rather than creators so you can submit content to them, tag them in your posts, etc. Again, better content really helps you here. If you’ve got great original content people will sometimes do it simply discover you and do it because they like your work.
  2. Collaborations – lots of ways this might work out. For example, if you’re a photographer rather than doing photography alone go out with other photographers or other people in general and agree to tag each other. If you’re doing photoshoots with people get the hair people, the make-up people, the models, etc. all to agree to post the images and tag each other as it creates a real win-win all around as everyone benefits from the added exposure (this taps into one of our methods for How to Market if You Have Little or No Money).

    You could agree to mutual what are called “shout for shout” where you each promote each other for mutual benefit and exposure. This is why building up a base of followers from the beginning first through your friends then through hashtag posting strategies and getting noticed strategies are helpful because no one wants to do a shout for shout arrangement with someone with a hundred followers but if you’ve got a few thousand you can start by doing this mutually with pages with a few thousand to a few tens of thousands of followers and then as your following grows you can upgrade who you do this with.

    This has become much more popular to do in your story where it doesn’t stick there but still gets each other some exposure.

    You can also do this by going out with friends who have big followings and mutually tag each other or at least get them to tag you and if there’s some reason to be curious about you people are likely to check you out and maybe follow you.

  3. Pay for it – you can spend money for people to do shout outs for your page, mention you in their story, tag you, etc. This of course allows you to get in front of hundreds of thousands of people even when you’ve only got a small following. Of course, if you have friends who have big followings they might do this for you as a favor so never be afraid to ask.

By FAR this is the best, fastest, easiest way to grow your following on Instagram and can take you from close to nothing up to hundreds of thousands maybe even to the low millions though usually to get much beyond a million requires something extra, which is what we’ll talk about now.

Looking Beyond This One Channel

The people who get the most followers by far don’t get them purely on Instagram and this comes into a big part of the formula for being a large and successful social media influencer, which is being multi-channel.

It starts like this.

Your followers on Youtube, Facebook, Twitter, Pinterest, Snapchat, etc. will often follow you over onto Instagram and vice versa.

In fact, if you’re going to build Snapchat because it’s not as much of a discovery platform often the best thing to do is to build a following on Instagram and then promote to those followers to follow you on Snapchat.

The best people at building followings are all doing it multi-channel.

If you’ve got a website or blog people will follow you from there and vice versa.

That’s just the start though, that’s internal media.

Then you get external media, which means other sites and publications can pick you up.

Dan Bilzerian radically grew his following when Buzzfeed did some article on him referring to him as something like The Playboy Instagram King, which went viral and caused millions of people who wouldn’t have otherwise heard of him to begin following him.

Generally, there are a lot of external media sources in some way related to your area and the more of them you can hit the better.

This is where having good content is priceless because it makes other external publications more interested in featuring you especially if you’ve got very interesting engaging content.

Keep in mind media outlets are always looking for stories, for engaging content and done well this could be you.

This process is NOT easy.

Getting publicity is a project and expertise all unto itself but the more you grow the more viable it is and the more worthwhile it is to grow to the next level.

Take what you build and leverage it for more and more exposure. A following especially an active engaged one is increasingly valuable and gives you incredible options in life.

What’s Next?

Hopefully, this article has shown you how to deconstruct some simple marketing to take the mystery out of it and helped you with practical actionable tips.

If you’d like more like this please check out our other articles, download our free content and consider engaging with us in one of the following ways:

  1. Take one of our training programs – if this is a simple free article you can imagine what kind of value we pack into a few week or few month extensive training program on subjects like Profitable Marketing, Getting Deals, Leveraging Team, Growing Impact, etc.
  2. Have us consult with you in a Rapid ROI Strategy session to get results toward your financial and business goals quickly. These are perfect for people who don’t necessarily need extensive training but have a quick question or challenge to solve that would be very valuable and give them a big edge.
  3. Apply to have us work with you in helping you build your wealth, your business, your marketing directing you on exactly what to do, tweaking your process to get the fastest results possible. We do this especially in helping you to Build a Profitable Sales & Marketing Machine. You can also request similar assistance with other areas.

6 Ways to Market Your Business, Product, or Service With Little or No Money

We all wish we could have huge exposure for our business, product, service, cause.

Very few of us have it.

You might have found yourself saying, “if only I had a huge Instagram or twitter following I could blast my message out to millions of people in an instant at no cost”. (Of course, you could always build such a following.)

Or thinking, “if only I could afford a huge ad budget like Coca-Cola I could get the exposure of Superbowl half-time ads and people would know about and flock to my product”.

But of course, at millions of dollars per minute that advertising is out of reach for most people.

So today we’re going to explore the reality of being in an early stage business…having limited resources in particular limited financial resources and what you can do in this situation that will get you big budget results with only a small investment.


1 - Best for Early Stage Businesses & High Value Long Term Clients

2 – Best Way for Artists, Authors, Musicians, Models, and Also Great For Short Term Promotion

3 – Hardest Way But Great If You Get Lucky

4 – Good if Your System is in Place

5 – A Solution that Buys You Time

6 – The Best Way for Most Businesses

Background – The 6 Resources & The Dreamlife Ratio

We’re going to discuss ways to market with little or no money. It’s important to recognize something though…

There is ALWAYS an exchange.

You won’t get away from exchanging something in trade for customers or exposure. What you can do is exchange something you do have in place for money.

In other words, the way we grow our wealth is to exchange what we do have and isn’t as valuable to us for what we don’t have and want.

At Richucation we discovered there are 6 types of resources so by understanding those you can get a long way towards not having to spend money while marketing extremely successfully.

The other thing we can do aside from trading something other than money for exposure and customers is to be more efficient about what we exchange.

Get more out for what we are putting in, which is the essence of our Deal ROI training.

In particular we talk about the Dreamlife Ratio and Factors of Disproportionate Influence to get massive results with minimal output.

These are big parts of what makes Richucation different and helps us to get really rapid highly effective results consistently when others struggle or fail.


Let’s go get exposure, customers, profits on a tiny budget maybe even no money at all!

1 – Best for Early Stage Businesses & High Value Long Term Clients

The first way to market without spending money should be fairly obvious, it’s what most small business owners and entrepreneurs do, it’s continuing to do this that keeps them small, at least in most cases.

What is it?

It’s trading your time instead of trading your money.

This is the hustle.

It’s going knocking on doors.

It’s making phone calls.

It’s attending networking events.

It’s making social media posts.

You should NOT do this as you grow. This sort of behavior will keep you small. If you try to do this in stage 3 business you’ll never get to stage 4 because stage 3 is about building a profitable sales and marketing machine where business can come in the door every day consistently without YOU needing to be out getting it.

For an understanding of each of the 5 natural stages businesses grow through, which stage you’re in and what you should do to grow quickly to the next level ​enter your name and email below:

​The 5 Stages of Business that Will Make Your Business Grow Bigger, Faster, Easier

5 Stages of Business

Trading your time is a fantastic way to go at stage 1 and somewhat in stage 2 because you want to get to know your customers.

It puts you belly to belly in conversations with real buyers and potential buyers so you can adjust your product or service, figure out what the market wants, learn how they communicate and consequently what to put into your advertising and messaging to move them to buy.

This is also useful at the start of stage 3 where you might be employing sales people because you learn to systemize what you’re doing and teach it to your sales team so they can replicate it.

There’s one other case where this can be useful…

If each customer is EXTREMELY valuable and long term.

What do I mean by this? If a customer is worth a million dollars to you, it’s going to be a long-term relationship and the value of the customer will grow with time it’s worth it to invest your own time and there isn’t substantial value in having someone else doing it or building a complex system.

This is best illustrated by a real like case study:

Case Study – Warren Buffett Turns 13 Clients Into $80 billion

Although he’s actually not a bad salesman, Warren Buffett only ever really got 13 customers and those 13 customers have led to his deca-billion-dollar fortune.

Sure, along his journey he had to sell his professors, he’s built a team he needs to communicate with and engage, and of course he’s done various deals to buy companies over time but the only people ever to really give HIM money in his investing business were the investors in his first partnerships (officially 7 partnership arguably with 13 “customers” though some of these customers were small families).

Back in 1956 Buffett was working for his mentor Ben Graham who ran a famous investing partnership. But Graham decided to retire and close the partnership down so Buffett moved back home to Omaha.

There he started Buffett Associates Ltd. with 6 family members as partners. Over the next few years he adds a few other partnerships through a few other investors initially recommended by Ben Graham and through his social circles as well as asking one doctor who was a client to bring together some other doctors for an investment.

After this he never ended up needing more customers.


Because he could compound their money. In his business each of those customers was worth a fair amount to him If he did well (and of course he did) but more importantly the more he grew their money the more valuable they became to him.

If you’ve got customers who are extremely valuable and long term like this, it’s not so necessary to ever move away from direct personal sales.

Richucation Personal Marketing Tip

A lot of small business entrepreneurs make the mistake of believing because they are trading their time for money it is free. This isn’t true, your time has value often more valuable than money, which is why as you grow you want to get away from it and rely on a sales force or advertising.

When you realize you’re investing your time and your time has value it makes sense to also consider how efficiently and effectively you’re spending that time. In other words, it costs you to do bad marketing using your time.

To help address this apply the same principles of marketing you use in any other situation:

  1. Target the right people – most networking is ineffective because you’re not talking to the right people
  2. Communicate a compelling offer – WHAT you’re selling matters and will make a huge difference in your success as will what messaging you wrap it in
  3. Master communicating the way your customers buy – know the difference between a poor sales person and a great sales person? It’s all in how they communicate so if you’re going to be in front of people it makes sense to learn to communicate with them effectively so you’re making the most of your time and theirs

2 – Best Way for Artists, Authors, Musicians, Models, and Also Great For Short Term Promotion

Unless each customer is REALLY valuable you’ll never do particularly well marketing by using your time, you simply can’t talk to enough people at once (public speaking helps but then you’ve got to fill the room and how do you do that? It brings you back to this same problem and also our next method).

Some of the strategies we’ll discuss later work best for most businesses both mid and long term but not for all.

The classic examples are how do you succeed in marketing yourself if you’re a musician or author where each customer will spend maybe $20 with you?

It turns out this method works really well for a lot of other businesses though especially if you’re doing a short-term promotion.

In fact, when I used to be in the event business we found this was the most effective method to fill rooms and led to some incredible marketing successes for us when others said it was impossible.

So, what is this magic?

Instead of trading money you trade relationships by getting others to promote you.

You can achieve this in a few different ways.

The easiest where possible especially for artists, authors, musicians, etc. is to collaborate with others who have a similar market.

For example, you say how the musical artist Pitbull exploded doing “featuring” songs with a whole host of other artists essentially combining the audiences and giving exposure they might not have otherwise.

How does this work? Well, you’ve got an audience even if it’s small. These are the people you know and who know you, these are your Facebook friends and any customers or fans you get. As you grow you’ll of course grow these numbers.

Others have the same. Your objective is to say “let’s collaborate, both promote this to our audience and therefore get double or triple the exposure we would normally”.

Obviously, you’ve got to do this with people or businesses you actually respect and believe your audience would like, which there’s a good chance of if they are similar to you.

You’ll notice this is very reminiscent of one of the main strategies in the Formula for Building a HUGE Instagram Following.

Also note, you don’t have to collaborate with those who are the same as you they could be complimentary.

For example, if you had a business offering cleaning services you might pair up with a furniture business or a realtor.

The ideal is to find collaborations you can do over and over again or with multiple people in the same space rather than exclusive cross promotion because each person or business has a new audience and you can expand your audience rapidly through collaborations.

It’s not always practical to do a swap though so in those cases where a swap or joint promotion isn’t possible you can lean on relationships.

This is where you call up an influencer you know and say something to the effect “I need your help, could you please…” and state your ask. It might be asking them to bring out multiple people they know for an event you’re hosting, sending a promotional email, doing a social media post, inviting their friends, etc.

How do you get 50 people to attend an event?

Easy you get 7 people who know, like, and trust you with whom you’ve got relationship capital to each commit to bringing 7 people to help you out.

The downside of this strategy is you can’t do it repeatedly as an ongoing method of marketing as you’ll burn out those relationships but for an occasional promotion or launch it’s fantastic.

How do you find these people? Try our climbing the ladder networking method.

Case Study – Mint.com 1 million users in 6 months

Noah Kagan joined the Mint.com team with the goal of heading up their marketing and getting them I believe it was 500,000 users in a year.

How did he do it?

Aside from a few other strategies he started building relationships with personal finance blogs and other related publications with followings.

Rather than reaching out to them and asking for exposure (don’t do that, it doesn’t work well when you haven’t built relationships capital), he reached out to share with them how cool the product was they were developing (this was during prelaunch) and get feedback.

Over several months they built a relationship and excitement over the product as the bloggers, media people, etc. developed a relationship with the brand and the product in testing and providing feedback.

When it finally came time to launch he had relationships with these people, they knew and liked the product and he was able to ask, “would you mind writing an article about it?”

Of course, at this stage they were happy to and the exposure resulted in double the number of users targeted in half the time.

You can do the same in your business building and leveraging relationships as a principle method of marketing.

Richucation Relationship Marketing Tip

When you do this make sure you turn this exposure into an audience and an asset so you can reuse it again and again without relying on the collaborations.

How do you do this?

Collect emails, gain social media followers, build brand recognition and spot influencers among them to invest time in building personal relationships with.

For example, if you got 7 each of whom brought 7 identify more (say another 7) from among the 50 to invest time with building personal relationships over the next while to grow your network of champions.

3 – Hardest Way But Great If You Get Lucky

This next method isn’t exactly a direct trade but can be a skill you learn so let’s call it a means of using your expertise.

More than anything else on this list it’s very hard to predict and to achieve success you’ve got to be willing to try a lot of things and pay attention to what works.

In fact it’s so random we don’t recommend you rely on it instead we recommend you use it as fuel to boost another solid strategy.

What is this method?


What is virality?

It’s when people start sharing what you’ve got and spreading the message on their own because they like it.

You’re probably familiar with viral videos but it could be viral images, articles, videos, events, etc.

There’s plenty of tenants to achieving virality and we devote an entire section of the 7 sections in our Marketing ROI program to covering how to create viral spread.

For now, the easiest thing to understand is:

  • You want to make it easy to share
  • You want to make it stand out so it’s got novelty
  • You want to focus more on it spreading fast than it spreading a lot

This is where producing content often comes in.

Keep in mind though not all content platforms are viral for example, Instagram isn’t a particularly viral platform whereas Facebook is. If you want to be viral you need to make it accessible on viral platforms and encourage continuation of this.

There’s a bunch of tricks you can use depending on the field you’re in.

Case Study – Old Spice guy commercial gets 55 million Youtube views

In 2010 Old Spice was a lagging brand being dominated by Dove and Axe so they wanted a way to stand out and create buzz.

To do so they created a now famous commercial titled “The Man Your Man Could Smell Like”.

It spawned a viral session. To date the Youtube video has been viewed 55 million times, but this just scratches the surface.

The campaign spawned follow up engagement with audiences called Questions and Responses. One of the Questions videos alone has been viewed 25 million times.

The campaign has gone on to serve as a case study for viral marketing worldwide.

Another notable example from a smaller company is for the product Poo-Pouri whose viral videos launched them to prominence. One video along has been watched over 40 million times.

Consider how much advertising would need to be spent to get that much exposure.

Richucation Virality Tip

Achieving virality isn’t purely random, nor is it purely audience driven.

Generally, you’ll find virality is something that builds onto an existing campaign and requires a certain critical mass.

In other words, you don’t simple produce an image or video and have it go viral in most cases. You usually need to put enough marketing behind it or enough exposure through one place or another to get enough people sharing it to kick off the craze.

Since it’s so hard to predict what will work (you might say funny but lots of funny videos don’t go viral and a bunch of videos that aren’t funny do) so the key lies in following the approach of the site Upworthy.

Create a bunch of different options you think will be good, then test them and refine building on what works cutting off the losers and feeding and refining the ones with the best response.

For more information check out our program on Marketing ROI.

4 – Good if Your System is in Place

What small business owners often dream about is performance-based marketing or sales.

What do I mean?

Hiring commission only sales people, getting affiliates paid based on client acquisition to promote your product or service, etc.

In my experience usually, this is short sighted and normally doesn’t work very well for them for two key reasons:

  1. It’s hard to get people to work for you or promote you on a performance only basis
  2. When they are working performance only your ability to manage and optimize their process goes down

It makes sense it’s hard to get people because the best people are getting offers for performance plus extras.

Small business owners often think “if they are good and can deliver results they should be willing to work just for commission or performance fees” but this ignores the reality of the market where the best people are in high demand and so to sweeten the pot others are offering them upfront fees plus performance bonuses.

Put yourself in their shoes if you were being offers $100k+ commission or just commissions, which would you choose as a top sales person?

The result is often it’s very hard to recruit people (sometimes meaning it would have been easier simply to focus that time on getting customers then investing what you made off those customers into hiring someone good not performance only) and the people you do recruit are far from the best.

Since they aren’t the best it becomes more necessary to help them succeed by directing their efforts and guiding their process to actually get results.

The problem here is when you’re paying someone you can tell them what to do, when you’re not paying them it becomes much more difficult to do so.

What’s the solution to all of this?

Small business entrepreneurs often see hiring commission only sales people and affiliates as a solution to not knowing how to market and sell.

The exact opposite is true.

The best sales people and best affiliates want to market and sell where they can make a lot of money.

For them to make the most money means your part of the process they don’t control needs to be tight otherwise you might persuade them to promote or sell for you but you’ll burn the relationships and your reputation when they don’t get the results they want.

In other words if you want affiliates to send you leads you need to be able to close them and make them worth a lot.

If you want sales people to work on commission only you need an amazing system to deliver them lots of quality leads and help them turn those leads into loyal buyers.

This is where most small business entrepreneurs go wrong, they want to abdicate responsibility for the marketing process because they aren’t good at it but no one will do it for you.

Your job is to build a system that works then recruit others to work and compliment the system.

This process of making your overall campaign and pipeline tight is what we teach in detail in our Campaign ROI program where we walk you through step by step how to build campaigns that make money where you can invest a dollar and get two dollars back.

Or in our Built With You and Built For You Profitable Sales and Marketing Machine programs where we actually get involved hands on in helping you we do the same thing but to an even higher degree.

Build a Profitable Sales and Marketing Machine for your business where you can invest a dollar and get two dollars up and scale it but also where you don’t have to be involved at all in the marketing and selling so you’re free to enjoy the lifestyle you wanted when you became an entrepreneur or focus your time on actually growing the business to stages 4 and 5 where you make massive profits and leave a lasting impact.

Case Study – Legacy vs Jablonski

We’ve got a lot of clients who use these strategies successfully so we’re going to contrast a case where it was done right with another company in our social circle we didn’t work with who did it wrong.

The first was a pure sales organization called Legacy Enterprises, which specialized in customer acquisition mostly for large brands.

They worked on a very hard type of sales called canvasing where their agents went door to door selling services like cable TV, cable internet, gas and power services, bottled water, payment processing both to businesses and consumers.

Now, just imagine how hard this process is to walk into a business or home for the first time having never met the person and walk out with a sale.

Think how easily a sales person could get demoralized and want to quit.

Now add to this the fact that when the founder of the company started he couldn’t afford to pay people full time wages and as a result needed to resort to hiring people commission only.

If you were a sales person, just spent a day walking door to door getting rejected and not made a single dollar how would you feel? How long would you last?

However, amazingly, not only did sales people last some of them became career types and the company grew to $1.4 million within just a few short years.


First, they had a process for sales that worked to produce consistent results. Anyone could learn the process and get results.

Second, they installed great management and training systems including shadowing, being paired with someone getting results to learn in the field, role playing, sales drills, etc. to make sure every new hire learned the system and could get results quickly.

Third, they implemented a regular rhythm of daily and weekly activities to keep everyone on track, motivated, aligned and most importantly accountable to doing the activities and following the system to get them results.

Compare this to how to do it badly – Jablonski.

In this case the owner who was a skillful though unreliable sales person himself hired a team of former sales colleagues on commission only, great job step one.

However, he didn’t have a predictable system that worked instead relying on his own skills and knowledge to randomly pick up sales here and there. There was no system for getting new qualified leads and no system for turning those leads into buyers.

He proceeded to provide virtually no training, no role playing, no drilling, essentially leaving the sales people to their own devices trying to pick up and close business.

Finally, he failed to hold them accountable to regular metrics, activities, and systems that worked.

The results?

This whole team of sales people collectively failed to achieve more than three sales resulting in barely more than $20k in revenue, they earned almost nothing in commissions, became discouraged and quit ruining his relationship and trust with them.

Make sure if you’re going to go down the performance based compensation road you adequately support those performance based sales people and marketers to get results. Your job is to make them successful and this means refining everything in your control to a finely oiled machine.

For more details regarding how to do this please check out our Campaign ROI program and Built With You Profitable Sales & Marketing Machine program.

Richucation Performance Sellers Tip

It’s important to understand what the people you’re hiring have expertise in and therefore how to compliment them. Affiliates typically are great at lead generation but not conversions. Sales people are typically good at closing but not generating leads.

So often entrepreneurs haven’t taken the time to deconstruct their sales problem to see where it’s weak and then build a solution accordingly. In our experience the first problem of small business owners is getting in front of enough qualified people. Without understanding how to do this they resort to hiring sales people thinking “they will bring sales” but this is rarely true and normally the result is a loss of $10k+ in wages not to mention time, training, management, etc.

Deconstruct your weaknesses then address solving them systematically. Check out the Free Goal Achievement Structure training we put together to help with this.

5 – A Solution that Buys You Time

The next method is what’s used commonly in Silicon Valley and venture backed start-ups.

This isn’t a magical solution long term but what it does is buys you time, which as a small business entrepreneur, solopreneur, etc. going it alone you don’t have because you simply don’t have the money, you need to generate and live off revenue.

What is this mystery method?

It’s to raise capital from external sources in order to be able to afford marketing, which doesn’t have to pay off for quite some time.

This allows you to go through a learning curve.

It allows you to pay for customers now and make up for it over months or years on their lifetime value.

Let me repeat this is NOT a great long term solution in fact this solution is only worthwhile if you eventually figure out some other way, generally the method we’ll talk about in #6. However, it’s often what’s needed for small businesses to gain some ground.

What’s the big problem with this?

Raising money is a form of marketing in and of itself and can be as challenging as getting customers for your product or service.

It’s also limited by the fact that you can only raise so much money based on the valuation of the company whereas you can theoretically get unlimited customers making marketing a far better source of capital long term.

To learn some tips for raising capital check out our article on How to Raise Money For Your Business or Project.

Case Study – Facebook

When it started Facebook wasn’t making any money they were simply spending money. They were however growing their user base very rapidly through viral growth.

To pay for servers, to continue development, to continue to eat they needed money. Where would that money come from?

They could go sell advertising but they weren’t set up to do so and they weren’t sure how doing so would affect their platform.

It wouldn’t have simply been a challenge of getting the customers, they didn’t have a technology platform within their system to easily process those and finding advertising customers would have been a distraction away from their core focus, which was continuing to expand a platform of users that was growing extremely rapidly organically.

So, they turned to outside investors. Some top venture capitalists such as Paypal’s Peter Thiel provided early stage funding and brought credibility to win over the big VC firms and pave the way ultimately not just for a better team but also for a future IPO.

At the time it made sense to invest because the company was growing fast even though profits hadn’t showed up yet. Thiel and others knew getting users organically and virally at little to no cost was one of the greatest challenges, which over time could be worth a lot so they took a bet. Turns out it was a good one as they made billions.

Richucation Capital Raising Tip

Entrepreneurs often naively look at raising capital as a way to mask a poor business then wonder why they are struggling to raise capital.

It’s important to understand raising capital isn’t a substitute for the underlying fundamentals The Formula of successful entrepreneurship and successful business. It is an enhancement to run the business better.

If you never learn to nail the fundamentals the capital will dry up in time.

The best way to be able to raise capital therefore is to have nailed one or multiple of the other methods outlined here so the investors can see they are investing into something high yield.

If putting their money in results in huge outsized growth it will reward them and they’ll put in more “what gets rewarded gets repeated”. If their money gets spent with nothing much to show for it that gravy train will end really fast.

This bring us to our last and most important method.

6 – The Best Way for Most Businesses

For most small businesses marketing is an expense.

In many large institutions repeat business pays for an ongoing marketing budget without concrete accountability for the results.

But if you want to grow a small business there is one way that’s by far the best way and everything else is gravy.

This is to earn a positive return on your marketing dollars by turning the advertising or sales spend into profit.

What do I mean?

The way the best businesses, the fastest growing businesses on the planet grow and the way you should too is to build a system, a machine where you can spend a dollar and get at least a dollar but ideally two or more dollars back almost immediately.

How does this work?

Say you pay a sales person $3000 for a month. They go make some calls and this results in acquiring a couple new customers each of which pay you $5000 so you made $10,000 in revenue. Say your cost of goods sold is $5000 so you made $5000 in gross profit. You had to pay the sales person $3000 so that’s your cost of sales and you’re left with $2000.

What just happened?

First, you got your $3000 back so you can pay the sales person again the next month. If they have a solid system, they can repeat the process again each month and you never have to take a dollar out of your pocket to pay them.

Additionally, you made an extra $2000, which you can reinvest into growing the business. After two months of this you’ll have $4000 so you can use it to hire another sales person now you’ve got two, which with a good system can each generate $10,000 so you’re up to $20,000 and so on.

Notice, you didn’t need more than a few thousand dollars to start, which you got back within 30 days so you didn’t need a big budget to market. In many cases you need a lot less than this to get started (see the case study below).

THIS is how businesses are ultimately built.

You can download the formula and levers used to make this happen for free by entering your name and email address in the box below:

​The 6 Levers to Make Your Marketing Profitable

Now, of course, this is easier said than done. As we mentioned above most small businesses hiring their first sales person far from making money on them actually lose money and don’t get results. Hence because of their lack of confidence in their system or lack of a system at all they are afraid to spend money on the person or advertising.

This is such a big problem it represents the key inflection point in a business moving from Stage 3 to Stage 4 in business growth.

It is the #1 predictor of how much money you’ll make as a small business entrepreneur.

So what’s the solution?

You need to build a system not reliant on any one person you hire where to the extent the system is used it spits out profit. We call this a Profitable Sales & Marketing Machine because it works you don’t and it works profitably spitting out profit each month so you can focus on growing the business and actually enjoy the life you wanted when you became an entrepreneur.

So if that sounds good to you we’ve made it one of our core focuses at Richucation to help entrepreneurs precisely with breaking through this challenge because it’s made the biggest difference for us not only in business and wealth but also in lifestyle.

Check out our Campaign ROI program, which walks you through step by step the process of predictably turning your marketing dollars into profit using a proven template for getting consistent results regardless of business or industry.

Or if you’d like more direct assistance where we actually work with you directly step by step to build out a profitable sales and marketing machine in your business you can apply to work with us to see if there’s a fit.

Case Study – Augesir Recruiting

When I started my second business I had no idea how to market and sell I only knew it was important. I hated sales and I sucked at it. I tried all the things described above networking, selling on my own, getting referrals, etc.

I got some business from this but it was unpredictable one month we’d get a great new client and make some money the next month or two we’d make nothing.

It was stressful, I couldn’t predict my income, which made budgeting hard. I tried different sales model, different products and customers but I didn’t have the skills.

Everything changed when I nailed down by accident what to sell and who to sell it to. Then in a very short time I was able to hire someone just part time at first because I had almost no money. They worked for me 10 hours per week doing sales. It cost me $120/week and made me $3000 that first month.

Taking this success, I was able to triple the number of hours I paid the sales person for and grew the income to $9000/mo.

The best part? I wasn’t doing the sales, which I hated myself. I spent about 2 hours per week managing the sales people and was able to focus on what I enjoyed.

You might say the key was hiring someone, that helped but I’d hired someone before and lost thousands of dollars.

The key was figuring out who to market to and how to market to them, then hiring someone to work the system for me, focusing on coaching them to do well rather than doing it myself, controlling my risk through a small test then scaling up when it worked.

Richucation Profitable Marketing Tip

If you want a profitable sales and marketing system it helps to understand the steps involved in going from a cold market to making money. Often people think “I’m not getting sales” but the question is “why?”

By laying out a flow of the steps that need to happen to get new business you can work on what’s weak and address it.

Are you getting in front of the right people?

Heck do you know who the right people are?

How are you capturing and qualifying them?

Are the people you’re getting in front of converting?

Are they spending enough money with you to be worth the effort?

Are you reaching them inexpensively enough or do you need to find ways to drive down the costs?

Here’s the formula – you need a list of people to reach ideally high value customers.

You need a way to convert them from a cold audience into leads.

You need a way to get them to buy.

You need to make sure they spend enough money with you.

Then you systemize the process, you apply people, templates, technology and automation to remove yourself from the process and scale up.

Which of these is a breakdown for you in your business?

Next Steps

Hopefully the above has been helpful for you.

If it has I’d invite you to work with us.

If you’ve enjoyed this information please share it with us or reinforce your learning by teaching them what you learned (write a social media post about it, call a friend and summarize it for them, write an email to someone explaining how they can benefit). This will go a long way towards reinforcing what you’ve learned and help someone else in the process.

Learn more about learning faster in Mastery ROI.

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Raising Money For Your Business or Project

When I started my first few businesses I had no money.

When I started my fourth business I did and in case you haven’t had both experiences it’s 1000 times better to start a business with money than without.

Sometimes though you don’t have money of your own and you need to raise some money for your business or project.

Heck sometimes even when you do have money of your own you need to raise extra.

We devote a whole section and several lessons in our Scale ROI training to raising capital, determining what types of capital to raise when, working through common challenges, etc. but for now here’s a basic overview for you of how to raise money for your business or project if you don’t have it.

Lesson #1 – Raising Capital is Marketing

People sometimes paint raising capital as something special and it definitely has it’s own language terms like:

  • Debt vs equity
  • Security
  • Term sheets
  • Cap tables
  • Valuations pre-money and post
  • Etc.

The difference is you’re selling a part of your company (shares/equity) or a rate of return (debt). In some rare more modern cases you’ll crowdsource or do an ICO or something similar but most capital raising comes from debt or equity and if you’re talking about a very small company it’s almost always equity because debt is considered too risky.

Lesson #2 – Your Offer is EVERYTHING

There’s always smart money for smart deals.

A lot of people are either poor entrepreneurs with poor/non-existent reputations or have poor offers and then wonder why they are having a hard time raising money.

The best way to start making raising money easier is to work on yourself as an expert entrepreneur, build your reputation and improve the quality of your offer.

What is your offer?

It’s what you’re giving the investor or the perception of what you’re giving the investor.

If you’re talking about debt this is usually fairly simple you’ve got credit, you’ve got an asset, you’ve got cashflow, you’ve got security and you’ve got offered rate of return. You can improve the quality of the offer by improving any of these things.

If you’re raising debt then it’s about coming up with a better company, demonstrating better how it’s a no brainer success opportunity for the investor, offers higher ROI and you’ve giving them a bigger share.

Think about it do you want to invest in something pretty much sure to succeed or very risky? The former of course so come up with a plan with a very high chance of success think through everything that could go wrong and find ways to work around those.

Go a step further by demonstrating you know what you’re talking about and can actually execute, usually this is achieved by bringing on team members with a track record.

Would you rather invest in something that could be the next Facebook or best case will be the next local sandwich shop? The former of course so what’s the upside of your business? Paint a vision for what it will become but ground it in reality and immediate actions.

Where possible show traction and how it’s already picking up, signs of early success sell better than anything else.

Would you rather own 1% of the next big thing or 10% of the next big thing? The later of course. Now, obviously, you don’t want to give up too much this is like discounting your product but it will factor into whether people want to invest with you or not.

Lower valuation and higher percentage or better terms will both help you raising the money.

Bottom line if you make a really compelling offer everything else becomes 10x easier.

This should answer the question “What’s in it for them?”

Lesson #3 – Create a List of Possible People to Provide Capital

Getting investors is fairly straight forward in some respects. You need a list of people who have money (it doesn’t necessarily have to be a lot though you need to be mindful of capital raising rules wherever you’re raising money as the process is usually fairly regulated) who fit your criteria.

You can often start with your basic social circle here as well as asking around and/or looking for local angel investor groups.

You start by simply making a list of everyone you can think of or every capital raising hub you can think of.

To expand this list you ask those people and others you know who they know who might be looking for a business to invest in. Very often the people who are looking for investments know others who are looking for investments.

Ideally, those people can give you an intro.

Key Richucation tip here – many people have only one or two people on the list. You won’t close them all so it helps to have a lot of people you can talk to as it increases your chances of success and doesn’t make you as vulnerable to offers from any given person or group.

Final Richucation tip here – start building relationships with these people before you are ready to raise the capital. Keep them updated as you hit key milestones to build their excitement and interest in your project sharing the wins. By doing this when you call asking for money they are far more likely to jump in.

Lesson #4 – Communicating with Possible Investors

Knock off any intimation you might have about capital raising terminology it’s perfectly normal for new entrepreneurs and start-up founders not to understand the fancy investing lingo ask them to explain it to you instead.

Your focus should be on three things:

  1. Your company
  2. How you’re going to deliver results
  3. Understanding the hot buttons of your target investor

Understand each investor has slightly different preferences but they are all looking to invest money to get a return.

Some might say they only invest in real estate or tech or biotech or whatever that’s fine they aren’t your target ask if they know someone who might be a fit and stay in touch, learn what you can from them and treat them well.

You don’t know who they know there’s an expression “a dud can bring you a stud”. Maybe a little crass but true.

The most important point here is don’t get right into pitching your business instead take time to listen and hear what’s important to them then learn to pitch your business or project in the most attractive terms possible.

In a sense this is basic sales.

Entrepreneurs often fall in love with their company or vision but what’s in it for the investor?

What does the investor care about. You probably think your idea is amazing and the truth is it’s probably full of holes, it helps to identify those now rather than later but also don’t get discouraged.

You’ll probably get rejected a bunch of times, that’s normal learn from each pitch and learn to refine it accordingly. You don’t need to be articulate or charismatic to get the results look at the Google Founders or Mark Zuckerburg when they started, nerds!

Realize sometimes a no today just means you need to refine your offer, your pitch, your story more. Failure is feedback, take it and improve then come back once you’ve improved your offer.

Chances are they’ve also got more business experience than you so use this as a free education on things to consider and improve.

This being said don’t take everything they say to heart, opinions are like assholes everyone’s got one and they all stink. Focus on listening to the market more than the investors.

Pay more attention to what the investors say about HOW TO EXECUTE than what your product or service or business should look like that’s where they’ll have more useful and more universal experience.

If they have an objection try asking them how they’d suggest handling it.

Request permission to stay in touch and provide them with updates as you grow they can become valuable advocates.

Lesson #5 – Be Ready to Take the Money

Know what you’re asking for, what you’re giving in return and if they are ready to invest be ready to take the check.

They might require a particular corporate structure or some changes to your structure, it’s best to consult an expert on this it could be perfectly reasonable or could be a way for you to get screwed.

This is also where having multiple offers helps because you can compare them to each other.

Be aware one of the biggest questions almost everyone will ask and you need to be able to answer is “what do you need the money for/how will you use the money?” We call this “use of funds”.

You should have thought through what the money is going to be used for.

You should have thought through how much it will cost and not be asking for substantially more but probably a little more to offer a cushion because your estimates will probably be low.

The amount you’re asking for should usually be enough to bring you to your next major milestone.

Ideally find someone or a group who can provide you more capital if needed there’s nothing worse than running out of money shortly before reaching that next milestone.

What’s Next?

This is just a start your best advantage is going to be learning and there are 3 things to learn:

  1. How to be an amazing entrepreneur and build an incredible business – this will help raising capital more than anything else. This is something we can help with through our products and services if you’re interested check out our Advisory or Products section of the website.
  2. The Language and process of raising capital – this is a pretty quick study honestly, you can read a bunch in online articles, learn from the investors you talk to, as mentioned we cover it a lot in our Scale ROI training.
  3. Marketing in general – this will make your business more successful but will also help with finding great investors and pitching and comes back to point #1

Keep iterating and improving your business, your story, your pitch, your method of finding investors, and you’ll be in good shape.

This is a journey of continual improvement where the fastest learners win.

If you found this article helpful please share it with others who would also find it helpful or share with them what you learned here as it will reinforce your learning. Write a social media post, explain it in a conversation, or write someone an email.

If you’d like to learn more please check out our other articles, free resources, and programs we’re here to give you an unfair edge in being an extremely profitable entrepreneur.


Turn An Ice-Cold Audience Into Blazing Hot Leads

Have you ever run an ad and gotten no response?

The first time I ever ran an ad I was in high school, it was in the classifieds section of the regional newspaper for my computer business. I was so excited, I put pricing sheets next to each phone in my parents’ house so when someone called I’d be ready to quote them and make the sale.

I got a grand total of one call, zero sales. It was disappointing and I lost money.

For many people advertising is an expense when it should be an investment. The difference is often the message/offer and the funnel process you’ve got to warm them up and turn them into a buyer (our Campaign ROI program deals specifically with how to avoid this and actually make money from your advertising).

Now, years later I’ve learned a lot more, we’ve run hundreds of campaigns for my own companies and helped clients with their campaigns for their companies and I understand the process much better.

If you learn to master this process, which very few small business owners do, a big part of the reason so many small businesses fail and the ones who do survive very rarely thrive, you’ll have a skill for life to change your life and the lives of anyone you work with.  (Mastering this skill is the purpose of our Marketing ROI program).


We’re talking about generating leads here not making sales.

Of course, ultimately your goal is to make sales and you’re not going to turn down anyone who wants to buy, but you need to think of this as a relationship building process.

Would you ask a stranger to marry you? More importantly would they be likely to say yes? Of course not, so we’re going to make them want to get to know you, to become familiar with you, to trust you and then not only buy from you but buy again and refer others.

So, if you’re not going for the sale what are you going for? You’re going for a lead.

Going for leads has two objectives:

  1. Allow you to remarket more cheaply because you can target more precisely and communicate for less money
  2. Keep track of who is warm and interested so you can continue to warm them more and take them deeper through the process

A lead might be:

  • Someone whose come into your store
  • Someone whose called your business
  • Someone whose given you their email address or other contact info
  • Someone who attended your seminar
  • Etc.

The point is you’re going to get them to take some smaller action so they are more likely to do so, which is going to build trust in you and allows you to communicate to them more directly at lower cost going forward.


If you can’t get someone’s attention it doesn’t matter what you have to say so your first step is to break through the noise, stand out from the crowd and get noticed.

To do this it helps to understand the context they are looking in…what else are they seeing or hearing? What else is drawing their attention away and how can you stand out?

This might mean ranking higher on Google. It might mean getting your ad noticed on Facebook or in a newspaper. It might mean being the subject of conversation.

Here are several points to consider:

  1. The easiest way to get attention is to go where they already have their attention – this is why we use celebrity endorsements or pay to get someone with a following to promote us to their following rather than trying to go after them indirectly
  2. Be different – our brains are filtering machines so we tend to place our attention on that which is different from our surroundings. Usually, this means being loud (not just in terms of sound but could be visual, flair, etc.) Not always though, it’s about contrast in a way that stands out (you can’t get drowned).
  3. Go where there’s less noise – distractions are going to kill marketing effectiveness so ideally find mediums of communication with less competition for audience attention

Download our FREE Finding Your Ideal Customer Action Sheet for ideas.


So, what do you put in front of your audience?
Three really important considerations:

Make an offer as broad as applicable to your market/service offering

For example, if you offer roofing services don’t target based on shingles at this stage. Instead you might target more broadly based on home renovations or repairs.

You don’t want to go so broad it doesn’t speak to what you’re selling/offering but also want to be broad enough you catch the highest percentage of the audience seeing your marketing.

The reason for this is you’re paying for each impression and you will get the best ROI by maximizing the highest number of them.

Make sure you’re providing an offer

A big problem in a lot of marketing is not making an offer. An offer very simply is “give us x in trade for y”. This might be “come to our store to…” or “call us to…” or “enter your email address to..”

The important point is you’re asking for them to take an action, which makes them stand out from audience members who aren’t interested so you’re able to speak to them personally in the future.

An offer is not a slogan. “Just do it” might be a nice tag line but it’s a horrible lead generation offer.

An offer should answer the question “what am I giving you?” and “what am I asking in return?” the former being more important than the later.

For example, “free video – how to…” answers the question “what am I giving you?” It’s a free video.

Call now for your free video – how to…” answers the question “what am I asking in return?” it’s a call.

The “what am I asking in return?” might be implied by the context. For example on Facebook it might be a link on a link.

Choose an offer that fits your product/industry. It might be a free evaluation, quote, estimate, etc. It might be a piece of educational content. It might be some sort of free trial or experience.

Make sure it’s compelling

A compelling offer has two components and especially at the lead generation stage should include both.

  1. The first is high perceived value.
    Obviously, you want to reduce your costs in what you’re offering but the point is what you’re offering should be something your audience really wants. It’s meaningless to give away something they are indifferent about.
  2. The second is low perceived barrier
    For example, are you asking them to spend a day with you? This is likely too much for an initial ask. It’s easy to make a quick phone call, harder to make an in person visit. This means an in person visit is probably a more qualified lead but they’d also typically need to be further along in the buying process to take this step.

One of the easiest offers you can make is for them to click to read an article or something comparable. It’s fast, it’s accessible and as a result someone who isn’t in the immediate buying cycle will likely do it.

Putting these three components together you want to make a compelling broad but still relevant offer to your audience through whatever marketing communication/message you put out there.

Be sure this is congruent with the medium you’re communicating through both in terms of what you’re offering and what you’re requesting in return.

Download our FREE Trust Pyramid Action sheet to help communicate your offer more effectively.


The above is largely wasted if you don’t do something to capture the leads so you can follow-up with them. 
These are all people who have expressed interest through their actions with in you sell. 

On the flip side since you’ve gone really broad with your offer you’re going to get all kinds leads at different stages of the buying cycle and with different preferences and values.

The objective is now to communicate to them over and over to warm them up further and ultimately turn them into first customers then long term advocates.

To learn how to afford to get in front of these people Download our FREE Turning Marketing Into Profit Action Sheet.

What's Next?

This is obviously the tip of the iceberg with plenty more to learn and apply but it's a great place to get started.

If you’d like more like this please check out our other articles, download our free content and consider engaging with us in one of the following ways:

  1. Take one of our training programs – if this is a simple free article you can imagine what kind of value we pack into a few week or few month extensive training program on subjects like Profitable Marketing, Getting Deals, Leveraging Team, Growing Impact, etc.
  2. Have us consult with you in a Rapid ROI Strategy session to get results toward your financial and business goals quickly. These are perfect for people who don’t necessarily need extensive training but have a quick question or challenge to solve that would be very valuable and give them a big edge.
  3. Apply to have us work with you in helping you build your wealth, your business, your marketing directing you on exactly what to do, tweaking your process to get the fastest results possible. We do this especially in helping you to Build a Profitable Sales & Marketing Machine. You can also request similar assistance with other areas.


How To Get A HUGE List of Targeted Prospects

How do you make money?

It’s not a trick question but the simplicity of the answer baffles most people.

When I give talks and pose this question to the audience I get consistent responses:

  • Provide value”
  • Offer a service”
  • Work a job”
  • Get educated”

The truth is you can do all of those things and not make any money. Money comes from only one place. You have to get someone who has money to give it to you. This is the lifeblood of success in your business and in your financial life in general, it’s where it all starts.

So, in achieving a financial goal you’ve got to start with this question of “who” and follow it up with “where”. If I’m going to launch a campaign today to achieve a goal the first thing I start with is thinking of who has the money and the need for what I’m offering.

For you in building a list you should start with two questions:


If you’ve already got customers (people giving you money) you can examine what the best of them have in common. If you don’t then you’re going to speculate.

In sales there’s an expression “you sell to the M.A.N.”, which means someone who has:

  • Money – they can afford/have budget to spend on your products or services
  • Authority – they have the power to make the buying decisions…this isn’t as simple as it sounds because sometimes you’ve got to consider influencers for example a husband and wife in a family
  • Need – don’t get hung up on needs/wants the important thing is they’ve got demand for what you have to offer

When you pay attention to who is most profitable consider three areas:

  1. How much do they spend – this could include a single transaction or take place over multiple transactions. It’s about lifetime value not just one transaction.
  2. How easy is it to get them as a customer – the more you spend getting them as a customer and the more it costs you to maintain them the less worthwhile it becomes.
  3. How many people do they refer to you – a small customer who refers a lot might be worth a lot more than a big customer who refers no one

If you want to get deep into the process we teach the 7Cs of targeting in our training, you can download a FREE Action Sheet here or check out some of our paid programsYour objective is to come up with a particular type of person or ideally certain specific people.


This speaks to groups these people are a part of and how many other people like them are a part of those groups. You pay for each person you contact so you want as many of them as possible to fit your message.

This answers the question of “what list?”

  • One list might be the circulation of a newspaper
  • another might be the listeners of a local radio station
  • another might be the attendees of a conference
  • or the subscribers to the mailing list of a particular author or speaker.

Think about the people you described under “who are my most profitable market segments?”

Now ask yourself who has a list of a lot of those people? More importantly since not everyone on the list will fit this criteria who has the greatest concentration of those people?

Where will you get your list? You’ll go to those people who already have the list (some are known advertisers so no problem, others you’ll need to build a relationship with) and offer to buy, rent or joint venture with them to contact the list.

Final point, it’s not all about who has the most or even who has the greatest concentration.

It’s also about what it will cost you to reach them. An Instagram influencer might charge you $50 whereas a radio station might charge you $5000. Pay attention to the lowest cost per member of your target market.

Finally, different types of communication will have different levels of impact. A phone call generally has better impact than an email and speaking in front of an audience (the list would be conference attendees) has better impact than a booth on a trade show floor. Sometimes you pay a premium per person but it’s worth it because you gain added credibility, clarity, and time with the audience.

What's Next?

​Obviously, this is the tip of the iceberg with plenty more to learn and apply but it's a great place to get started.

If you found this article useful and would like more like this please check out our other articles, download our free content and consider engaging with us in one of the following ways:

  1. Take one of our training programs – if this is a simple free article you can imagine what kind of value we pack into a few week or few month extensive training program on subjects like Profitable Marketing, Getting Deals, Leveraging Team, Growing Impact, etc.
  2. Have us consult with you in a Rapid ROI Strategy session to get results toward your financial and business goals quickly. These are perfect for people who don’t necessarily need extensive training but have a quick question or challenge to solve that would be very valuable and give them a big edge.
  3. Apply to have us work with you in helping you build your wealth, your business, your marketing directing you on exactly what to do, tweaking your process to get the fastest results possible. We do this especially in helping you to Build a Profitable Sales & Marketing Machine. You can also request similar assistance with other areas.

How to Ensure You Don’t Lose Money Part 3

In today’s market (April 2013) we’ve got a major problem with most of the investments out there, something most people aren’t accounting for in their calculations, but they should, inflation.  Lots of people will sit in a cash position because they are uncertain where to invest, what the market will do, etc.  What does this really mean?  They are losing 2-3%/yr.

If you don’t want to lose money you have to beat inflation.

Most people, most of the time don’t need to contend with hyper-inflation and frankly, hyperinflation is a tough thing to cope with so we won’t address that here except to say that real assets provided you can hold them are the only real hedge there.  But we all deal with the threats of inflation, which is historically in most of the western world somewhere around 3% give or take.  For those who aren’t familiar inflation is the gradual decrease in purchasing power of each of your dollars due to increases in prices.

Today, bonds, GICs, and savings accounts actually provide a negative return when measured against inflation (banks are advertising 2%/yr. as though it is something special).  In other words you’re losing money (albeit not a lot) even as your money sits in a savings account.  To be clear, you still have the same number of dollars you just can’t buy as much with them, which in the short term doesn’t seem very substantial but it compounds and adds up with time.

So, what are your options?  If you can get a fixed income investment such as a bond, or a debenture, or a loan on a mortgage, which when adjusted for real risk pays more than the value of inflation you’re fine.  Probably the most obvious example of how you can do this is with whole life insurance, which will typically beat inflation and has an array of other benefits, not to mention being about as close to risk free as you can get.  But what about if you can’t easily get cashflow greater than inflation, particularly when you account for risk?

Some investments are essentially inflation adjusting.

There are some investments that are essentially inflation adjusting, this is an advantage of equities and potentially commodities.  Keep in mind these won’t guarantee you won’t take a loss, you need to apply the other strategies we’ve discussed as well, but inflation is accounted in their value.  Here’s how it works, let’s consider property.  If you buy a house (or purchase a fund that buys houses such as units in a REIT) inflation more or less refers to the amount of money in circulation relative to the productive capacity and as people make more money they also spend more money, this is what causes the prices to go up.  Now, if you’d purchased a bond or GICs or mortgage the value will remain the same as the face value.  In other words a GIC purchased today worth $10 000 will always be worth $10 000 at the time of maturity.  But a house will tend to vary in value with the rate of inflation, if inflation goes up so will house prices.  The same is generally true of rents.  That’s not to say that prices and rents are driven by inflation, they aren’t, those markets are much more complex, what it means is inflation will be accounted for so it at least isn’t likely to cost you money.

Where do you think the money goes when the prices rise?

An easy way to understand these dynamics is when the prices rise who gets the extra money?  The people you are buying the real goods and services from.  Think of it this way, you are buying apples for your family, today the prices go up due to inflation so now you’re paying more for apples, but notice you’re buying those apples from someone who now has more money as a result.  (They don’t necessarily have more profit because their expenses might have gone up too but they have inflation adjusted revenue).  In other words if you want to avoid the negative impact of inflation you need to be selling or owning real goods and services.

The class of investments that does this is essentially equities, in other words, companies and real estate where you own the actual asset and not an instrument related to the asset such as a mortgage.  This is because they are real goods and services or involve the supply of real goods and services.  In other words avoid investments with a fixed face value at the time of maturity if they aren’t paying more than the rate of inflation.

​Commodities can be a hedge against inflation.

You might have heard gold is a good hedge against inflation.  Generally, I don’t recommend gold or other commodities but the truth is gold is a real good, likewise for oil, silver, etc. so provided you’re buying it for a fair price over the long term it will protect you against inflation, though many would argue you’re much better off purchasing stable funds of gold mining companies it really depends on the circumstances and your investment goals.  To keep it simple, stick with equities for the majority of your portfolio or fixed income investments paying higher than the rate of inflation.

If you’ve got investing questions you’d like to discuss or like us to cover please click "Ask a Business Question" in the lower right corner of the screen to send it to us, looking forward to hearing from you.

​Where Are You In the Wealth Journey and What’s the Highest Impact Objective For You Next?

Wealth Scales Map

How to Ensure You Don’t Lose Money Part 2

We’ve examined how the markets function in cycles and now we’re going to look at how time plays a role in risk.  The reality for anyone investing money is they eventually plan to take it out of investments and use it, after all, what’s the point otherwise?  The question is when?

Here’s the risk, the market moves in cycles varying from boom to bust to recovery, to a sideways market and then another boom, at least as a general rule (it’s not 100% accurate but for our purposes it is close enough).  What if you needed the money, say to get married or for your child’s education in March 2009 or January 1932 just after a major stock market collapse?  You’d likely be forced to either cash out at a major loss or not spend the money as you’d planned, neither is a pleasant prospect for your family’s wealth or children’s education.  So how do you avoid this?

If you want to avoid losing money you need the freedom to choose when to sell.

Given time markets as a whole (not to be confused with individual holdings such as individual stocks or properties) tend to recover in price.  People know this about property almost intrinsically and it’s what stock brokers and financial advisors will often tell you “you’re in this for the long haul” when things are going down.  There’s some definite truth to it though, the key is you need to plan your investments and spending so you can wait until the value has increased in order to sell.

How does this work?  Well if the market is really high and you’re going to be needing the money in the near to mid future, sell part or all of the investment, in other words always make sure you’ve got cash around to cover your short to mid-term needs, the last thing you want is to be selling your investments in a down market because you lost your job.

If you have upcoming cash requirements such as retirement, paying for a child’s education, etc. reallocate some of your investments into investments with short term price stability such as short term bonds or GICs to ensure you aren’t going to lose the money when you exit the investment.  Note, you don’t need to do this for all your money, just enough to cover the needs.

Enter an investment with the expectation of holding if it drops in the short term.

Your expectations and planning play a big role here and applies to buying a house as well as buying equities.  Enter the investment with the thought “if this goes down I’m going to make other arrangements to ensure I don’t have to sell until it recovers”.  A lot of people lose money say by buying  house then need to relocate for work and have to sell when the market is down, often paying mortgage payout penalties in addition to realtor fees and taking a loss on the investment itself.  What would have been much more prudent is to have been prepared to rent the house out while waiting for the market to recover.  Of course the decision isn’t so simple if you’re caught in that situation, but if you’d planned that way from the beginning you’ll generally be ok.  Consider if you’d purchase counter cyclically for below market value then you’re unlikely to find yourself in a position where you’re taking a loss to begin with, but at least if you do and you’ve planned on being able to hold you’ll be better off.

This comes down to the last consideration to protect yourself, which is to have at least some of your portfolio in investments providing cashflow (either dividends or interest).  Consider for example if you purchased the stock of a company or fund and the price goes down.  The market will rise and fall but if the stock or fund you purchased pays dividends then at least you’ve got cashflow to help you weather the storm.  Likewise for real estate, if you’ve got rental cashflow it makes holding much easier than if you have negative cashflow.

One of the biggest keys to not losing money is being able to hold until you have recovered your initial investment or have made a profit.

If you’ve got investing questions you’d like to discuss or like us to cover please click "Ask a Business Question" in the lower right corner of the screen to send it to us, looking forward to hearing from you.

​Where Are You In the Wealth Journey and What’s the Highest Impact Objective For You Next?

Wealth Scales Map

How to Ensure You Don’t Lose Money Part 1

This and the following two posts continue and build on the subject of how we decrease risk while increasing return except that in this case you don’t necessarily increase return, you merely decrease risk, that is to say you minimize the chances of losing money.

We’ll start with what I believe is the most important factor in not losing money, at least not losing money in an absolute sense, though it’s only one piece of the puzzle in a relative sense.

Ask yourself “if I wanted to ensure I could sell what I bought for at least as much if not more than what I bought it for, what would be the most important factor I could consider?”

Buy something that will increase in value.

It sounds fairly obvious.  What’s the chance you’ll lose money buying a car?  Pretty high, why?  Because it tends to lose value with time, the same is true of cash, it tends to lose value with time.  What about buying an option, what’s the chance you’ll lose money?  Again, relatively high only because time is working against you, which means the longer you hold the more likely you are to lose money.  There are investments where time works with you and investments where time works against you, if you want to decrease the chances of losing money the solution is to buy things where time works with you by increasing the value.  

What are some examples of this?

  • Rare art – because it becomes increasingly rare with time it tends to increase in value with time
  • Real estate – again because there is a limited supply of it the value tends to increase with time
  • Consistent undervalued companies – notice we’re going back to this point about buying for below what something is worth, in many cases when you buy something for less than what it’s worth it will increase in value, at least for a time, the question is for how long?

What do you need to know about something in order to determine whether it will increase in value?  You need to:

Understand how time affects value in a given investment.

For example, patents might increase in value for a time but they also expire at which point their value expires as well.  The same is often true for royalty rights, books, movies, music, etc. tend to sell at a peak level for a time then decrease in value as sales drop off and then copyrights expire.  Bonds will never exceed their face value at maturity so time affects them by getting closer and closer to the face value (assuming they are going to actually pay out).  By contrast a market fund tends to increase in value with time because the market as a whole tends to grow due to increases in technology, etc.

This brings us to a huge advantage of private investing in certain areas.  What’s the number 1 way to ensure an investment increases in value?

Increase the value of the thing you’re investing in.

This is why people who want to get really exceptional returns generally need to control or at least have some influence over the thing they are investing in because it allows us to increase its value manually, by improving it, by marketing it, etc.  Obviously, this isn’t practical for a lot of people and not possible with a lot of investments, but if you want to get the best returns on a consistent basis it’s practically essential.

Buying something that will increase in value with time generally means it’s just a matter of time before you’ve recovered from any losses that might occur.  Of course you’ve also lost time in there, which might or might not be worth it depending on the alternatives but investing in something that will increase in value decreases the likelihood that you’ll need to worry about that lost time.

If you’ve got investing questions you’d like to discuss or like us to cover please click "Ask a Business Question" in the lower right corner of the screen to send it to us, looking forward to hearing from you.

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How to Decrease Risk & Increase Return Part 4

I see a lot of people who get focused on possible risk while missing out on guaranteed risk, that is to say cases where you are guaranteed to lose money.

It is possible to beat other people in the same market simply by minimizing or eliminating these guaranteed forms of risk.  Most people reading this are probably sitting there saying “What’s he talking about guaranteed risk?”  After all, who would invest in a way that they were guaranteed to lose money?  The reality is the majority of people do it without knowing it.

So let’s ask, what are these guaranteed forms of risk in most investments?  Some might argue fraud but that’s not what we’re talking about.  Some might argue paying more for something than it’s worth and that’s fair, but not really what we’re referring to here.  There are two ways primarily that you are guaranteed to lose money that can be mitigated to some extent, they are taxes, and fees.  What then is the rule if we want to decrease risk and increase returns?

Minimize taxes and fees

Before I continue on let’s be careful because some fees actually add value so being able to sort out where value is added or not is an issue.  It’s also a fact that the people who help us need to earn a living as well so it’s fair to pay some fees on some transactions.  However, there are also a lot of fees that don’t add value, and a lot more fees that can be avoided.

Let’s talk specifically about fees and what kinds of fees can show up in most retail investments, since this is what most people invest in:

  1. Marketing fees – different investments pay these out in different forms but you can’t get around the fact that every investment needs to be marketed and consequently you’re giving up your returns by investing with them, in the exempt market these budgets typically range from 10-15%, meaning they have to get a rate of return with just 85-90% of your money (remember what we said about the impact of losing money?)
  2. Administration & Management fees – this includes everything from picking the investments, to doing research, getting approvals, paying for office space, paying to send correspondence to the investors, paying for recruiting, management, computers, phones, office supplies, legal structuring, accounting, etc. these vary wildly but a typical mutual fund will charge about 2.5%/yr. of the money under management whether you make money or lose money that year, private equity firms tend to charge 2%/yr., other companies bury the fees all over the place but the point is it hurts your rate of return
  3. Transaction fees – a lot of people don’t realize that what’s called MER (Management Expense Ratio) in mutual funds doesn’t cover the actual transaction fees when buying and selling individual stocks, a similar fact is true for realtor fees when buying and selling properties
  4. Profit – don’t forget that in addition to the fees the people offering and managing the investment need to make money so they are going to take extra out for themselves, in venture capital and private equity this is typically 20-30% of the profits, again, it can vary wildly from one investment to another

All of these fees added together it is very reasonable to expect that in a lot of investments they can reduce your returns by 50% or more, which is partially why it is almost impossible for investors to get a consistent rate of return in excess of 15%/yr. because to get an actual 15%/yr. means the company needs to have generated at least 30%/yr. which is wildly unlikely in most cases on a continual basis.  This is also why learning to invest yourself and investing yourself gives you an intrinsic advantage, though of course you have to factor in the cost of your time to learn it, to do it, etc.

Bottom line, you can often increase your returns simply by decreasing or eliminating  lot of these fees, consider that a 10% marketing fee effectively reduces your investable capital by 10% compounded over the term of the investment.

What about taxes?

Some people will say “the only guarantees in life are death and taxes”, this might be so, but there are definitely ways to reduce those taxes.  The most common ones come in essentially 4 different forms:

  1. 401K, TFSA, RRSP, Permanent Life Insurance, etc. – investment vehicles designed by the government to help tax shelter your money (may vary by country) can increase your returns simply by decreasing your taxes
  2. Write offs – by paying attention to your legal structure when investing you can get write-offs to decrease your taxes (for example you can write off certain expenses against rental income on a rental property)
  3. Capital Gains & Dividend Income – there are various types of investments that are taxed differently, by paying attention to the tax type and factoring it into your rate of return calculations you can increase your income (this can also be done through flow through shares though they need to be evaluated carefully)
  4. Sourcing Income In a Lower Tax Jurisdiction – on the extreme level this can mean moving to another country with lower taxes (Sir John Templeton the famous billionaire founder of the Templeton fund is famous for this), or setting up a legal structure in another country with lower taxes though this requires careful planning, but could also mean moving income to another province or state within your country where tax rules are superior (Tony Robbins is famous for having left California to avoid the high taxes there).

There’s a lot to be said about taxes and they really need to be evaluated on a case by case basis but suffice to say this can be a significant source of lost return.  For example, an 8% return if taxed as interest income at the highest rate (approx. 40%) becomes only 4.8% after taxes and you can earn that with guarantees inside a life insurance policy.

One particular way people incur excess taxes and fees though is worth noting, or rather there’s one way you can really minimize taxes and fees while at the same time making your life easier:

Avoid money churn

Think about those marketing fees discussed above.  Every time you sell out of one investment and buy into another investment you incur those fees.  You also incur taxes every time you sell.  Why is this so bad?  Because it undermines your compounding, it can actually be compounding in reverse.  If you can find great investments and hold them for as long as possible you’re in the best position.  Every time you can avoid churning your money you have effectively decreased your risk and increased your return.  This is partially why Warren Buffet aims to hold most of his investments for decades, he has deferred tax bills in the billions but so long as his money keeps growing in the same investments as before he doesn’t need to worry.

If you’ve got investing questions you’d like to discuss or like us to cover please click "Ask a Business Question" in the lower right corner of the screen to send it to us, looking forward to hearing from you.

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