“You’re not making money,” I said.
“But I am trying to make an impact,” replied Mike, an entrepreneur friend.
I met Mike six years ago. His idea was a B2C services business which I believed had too many moving parts. In other words, too many things had to go right to make money.
From Meager to Money
He eventually found an angel investor. With this money in hand, he began plugging away day by day, literally going door to door to sell his service. After six years, he achieved, in his own words, “a meager existence.”
Mike is a well-educated and thoughtful man who wants to make a difference. He wants his business to have an impact on society. He wants to leave the world a better place.
I like this and am attracted to this motivation in a startup. I want to invest in businesses which will have an impact. But I also want a return on my money.
I asked Mike, “Did you ever read Rich Dad, Poor Dad?”
“No,” he answered.
I said, “The book was written by a man whose father was a blue collar worker. The advice he got from his father was get a job, keep it and save what you can for retirement.
“But his friend’s father taught him to think big financially. He told him the secret to financial success. The message I got from the book was simply this: If you want to make lots of money, think about making money all the time.”
Setting Money Priorities
Mike realized he didn’t think about making money as a priority. His priority was first and foremost making an impact; making money was a distant second. With impact as his major goal, he continually worked on business ideas which had anemic economic models.
“Mike,” I said, “You must put making money right up there with your priority of making an impact. Making money and making an impact are your competing priorities. These are your planning constraints.”
He said, “You are right. I don’t really think about making money as an equal priority. It is clear now why I am living this meager financial existence.”
We all want to make a difference in this world. It is at the core of every entrepreneur I meet. But to change the world for the better, you have to make a living while holding on to the possibility of great wealth. This means raising money from customers, investors or both. To make this happen, you must hold the priorities of making an impact and making money in tension with each other.
If you are all impact and no money, that’s a nonprofit.
If you are making lots of money without impact, that’s emptiness.
You must do both to truly succeed as an entrepreneur.