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:04 JIM: We’ve all heard the statistics where nearly half the college kids graduating today can’t find a job and the number of Americans that aren’t working anymore is at historically high levels yet some people seem to have the Midas touch where everything they touch turns to gold and are succeeding incredibly well even while many are facing tremendous difficulties. What’s the difference? Joining us today is Lewis Schiff, the executive director of Inc. Business Owners Council, a membership organization for Inc. Magazine’s top entrepreneurs and owners of closely-held family businesses and author of several books including his recent Business Brilliant: Surprising Lessons from the Greatest Self-Made Business Icons which focuses on wealth-creating behaviors and attitudes that work best in the new economy and what separates the really successful from those striving to survive. Welcome, Lewis. :57 LEWIS: Thanks, Jim. :59 TONY: Hey, it’s great to have you on. I’ve just recently saw you at a conference in Toronto and you really inspired me. I’ve got a couple kids that finished with college and I’ve had them read books on goal setting and being on track. One of the things that you brought up was a statistic that talked about question of what do you do really well that earns you money? Can we maybe just open up by talking about what that statistic said? 1:26 LEWIS: Sure, it’s pretty simple information really. What we learned is that people who have higher net worths tends to focus on fewer wealth-creating behaviors or practices or skills. What that means is people who are very successful have figured out what they’re really good at and they do it a lot and that should sound as simple as it is except that there are so many things that stand in the way of that. What we learned are that people with less net worth now as move down the economic ladder to the middle class who have net worths of less than a million dollars, we found that those individuals have the most things that they think that they do well that helps them make money. You can understand the gap there, right? If the middle class thinks they do the most things well, but they actually have the least amount of money in our survey cohort and the very wealthy have the fewest things they do well and have the most amount of money, it sort of tells the story of focusing on just a few things and doing them very well. 2:18 JIM: that’s interesting. I have a lot of clients that own rental properties. They’re do-it-yourselfers so they do pluming real well, they do the painting and replacing the carpeting and all that stuff. When I figure it out, they’re main livelihood, what they’re really skilled in, they might have a professional job somewhere, they might make $60,000 or $100,000 a year in their profession and they never take the time to do the math. They’re saving all this money and bringing contractors in that really know what they’re doing, but by doing themselves we figure out their investment return typically is coming out to 3% to 5% not even counting their labor in there. If we assign a value to that labor, they’re moving money on their investment. I think that really kind of shine light on that subject where everybody is trying to do everything themselves to save money, but they don’t focus on necessarily makes them money. What exactly is Business Brilliant, the title of your new book? 3:16 LEWIS: It’s a set of behaviors. I identified seven of these best practices behaviors that we gleaned by serving 800 individuals around the country and 400 of them were millionaires and 400 of them weren’t. The idea was if you want to be successful, why don’t you do what successful people do. That’s easier said than done. When we were through this exploration about the best practices of very successful people and we identified these seven, we called it Business Brilliant. In other words, it’s not regular brilliance. It’s not that you’re the smartest person, went to the best school or anything like that. It’s that you have a sense, an innate instinct for what it takes to create wealth. There is growing evidence now that people who are succeeding in the new economy are the ones who have adopted some or all of these seven techniques. They’re never taught in school, they’re rarely taught by our parents to our children, they’re rarely practiced or encouraged in the corporate work place and yet they are the best practices that lead to wealth. 4:12 JIM: Can you give us some examples of maybe one or two of these traits? 4:17 LEWIS: Well, one that speaks directly to your example about landlords spending time fixing up their houses. Very successful people don’t focus on saving money. They focus on earning more money. What I’ve done in that chapter is explored why it’s so important to ask; to ask for a pay raise, to ask for more money when you’re in negotiation to asking for even more than you thought you should ask for. That sounds simple enough, but if when we look at the behavior patterns around who asks and who doesn’t, it becomes very clear. Most people never ask for more money at their jobs. When they start a new job, when they’re offered X amount of dollars, they rarely ask for more. What I looked at was one of the gaps that we have is an asking gap and successful people tend to ask and less successful people tend not to ask. When you go into the psychology behind that, the sense of failure that people have or fear of being rejected you can see that this is not a skill, this is not something that we ever learn in school; it’s just an asking practice. People who are successful have it and people who are less successful don’t. 5:17 TONY: This doesn’t necessarily mean you may not have aspirations to be a multi-millionaire business owner, but I’ve come across so many people who share their frustrations, man I haven’t gotten that raise, I know I’m doing a better job than anybody else, these people take off all the time, I’m there when we need me, I’m always on call and then they never ask for that extra. Man, you ask for pay, what’s the worst that happens? You’re right where you were. 5:45 LEWIS: You’ve just stumbled across one of the other best practices which is when people have something like a failure or a setback, something doesn’t go their way, who do they look to. Very successful people ask themselves what could I, what could I the person who just fell victim to this, what could I have done differently? Others overwhelmingly will say how did those people let me down? A very simple premise, when you experience a setback, look at how you could’ve behaved differently. Don’t look at how the other people around you or the circumstances didn’t go your way because that is not a practical way to get a different outcome. It may feel good, but it’s not practical. 6:21 TONY: I have a little question and that is, I’ve always been a big believer in goal setting and identifying your goals and having a path. Would you recommend then for somebody that maybe feels a little bit insecure on these things, maybe just write it down. Think about it and plan a little bit. Would you agree? 6:36 LEWIS: How once handles negotiations or clashing of ideas is very telling in whether or not you’re going to be successful or not and what you just described doing research early on, writing down your minimums, things that you would accept or wouldn’t accepting, doing research on the person you’re negotiating with, all these things are practiced by very successful people; rarely are they practiced by less successful people. There is nothing shocking about that, but there is something shocking about how rarely the typical person negotiates using best practices or even standard practices. 7:08 TONY: A lot of times people will say, well they’re just lucky or they were born into it or they just have that natural gift of gab. What would you have to say to those folks? 7:18 LEWIS: That’s a common refrain by people who are less successful; that those people, those successful, wealthy people have somehow been touched by lady luck. I have kind of a controversial response to that which is in a way they have, but what I mean by that kind of luck is that they created an environment where when the lucky thing happened they were in a position to take advantage of it. For example, if you have a regular job, you work 40 hours a week for an employer and the lucky break happens probably your employer is the one who benefits the company that you work for. If you’re an entrepreneur and I realize that everyone is not going to be an entrepreneur, but you can see how somebody who is an entrepreneurs is best positioned to benefit from a lucky moment. There is an old saying that luck favors the prepared mind and the point of that is that when we look at the lucky moments in the life of very successful people we see that there was some condition beforehand, some circumstance that they created beforehand that allows them to take full advantage of that luck. A lot of it is just being open to the luck. I think luck does exist. I think successful people will tell you that luck is a part of their success story, but I think they’ll tell you that there was some element of creating that luck that they have some responsibility for. 8:22 TONY: In baseball they have an analogy, if you don’t get any strike outs, well you may not hit any homeruns. The best homerun hitters they created their opportunities by swinging for those fences and whether you’re fence is a pay raise or a new job opportunity or maybe starting your own business, you’re going to create your luck by just trying and being prepared. As you said, when you fail, get up off the ground and try again. I forget how many times Thomas Edison when he talked about the success, he knew each failure was one step closer to successfully creating the light bulb or the phonograph or any one of the many inventions that he had. 9:01 LEWIS: I find that people who view the success through the process of failure that so many people have is that they say to themselves that person must not be as sensitive to failure as I am. That person’s skin must be thicker than mine. I don’t think that’s true, I don’t think that’s true. I think that very successful people have the same skin, thickness or thinness as anyone else. I think they’re just as hurt by failure as the next person. I just think that their attitude after they shake off that failure which hurts them just as bad everyone else, but a day, a week, a month later, their attitude is let me go back at it. The attitude of a lot of other people is you know what, that failure was a sign that I should never had swung for that ball to begin with. 9:41 JIM: That’s a sad truth. We’re going to take a short break. When we come back, we’re going to continue to cover some of those traits that successful people have and maybe we can learn something. Especially in this season where kids are graduating in an environment where 50% can’t find jobs, maybe a little bit of the aptitude of the attitude can help prepare them to get that first job. Please stay tuned. 10:02 BREAK 10:33 JIM: Welcome back as we continue to meet with Lewis Schiff. Lewis has just released a book, Business Brilliant, which was based on the successful individuals of interviewing over 400 millionaire business people as well as 400 people that weren’t comparing those traits and trying to find those differences. Hwy, Lewis, are there any consequences for failing to develop one’s business brilliance? 10:57 LEWIS: Now we get into kind of common themes, I would even say political themes that we’re hearing about; social mobility and income and equality. What I believe and what I think a lot of other economists now believe is that the behaviors that lead to success are becoming a little more obvious to those who succeed and that the speed and size with which they accumulate wealth is also accelerating. What you’re seeing are that if you do things right, that good things happen to you, they happen to you faster and they happen to you bigger. If you do things wrong, that bad things happen to you, they happen to you smaller and they happen to you faster. When we look at where income is being distributed and how social mobility is revealing itself in our country, I think we’re very simply looking at who seems to have business brilliance which is not being brilliant in general, but just has a knack for these seven capabilities and who doesn’t. I think the question on all of our minds is what can you do to reverse these trends. I think that is the explanation for the trend. 11:56 JIM: How important is hard work and a good education. If you have this business brilliant, can you just sit back and let it all happen or what do you have to do? 12:02 LEWIS: Well, you know, hard work so I’ll translate that into hours worked. Successful people tend to work more hours than less successful people. People in the middle class basically still tend to work something like a 40-hour work week and people in higher net worth classes tend to work 50, 60, sometimes even 70 hours a week. You can definitely translate hard work into being correlated with wealth. Obviously a lot of other things have to go your way as well; it’s not just the hours. It remains that it must be a priority to people that if you’re going to succeed, you have to make it one of your key priorities and when you make something a priority, it does come at the sacrifice of other things. 12:42 TONY: you talk about priorities, that all goes back to having write out what your plan is, figure out what your priorities are. I’ve heard one author of a book referred to it as rabbit trails. You know, you’re going off in this direction and that direction and chasing this, that and the other thing. If you don’t have your priorities in order, you’re just going to end up spinning your wheels and that goes back to what we started with; the people that do things really, really well and achieve the wealth, they stay very, very focused. 13:09 LEWIS: I think we also see that to that point that very successful people both can recite their goals very specifically. My goal by the end of the year is to do this, my goal in 10 years from now is to have that done. They can recite it very specifically and they probably have written it down. 13:24 JIM: So true. What are some of the challenges you see facing people in the future? 13:29 LEWIS: One of the big challenges that Business Brilliant tries to highlight is that the conventional wisdom. In other words, a lot of the things that we were taught as kids simply don’t lead to the kind of success that most of us hope for. Very simple example would be how many of us heard from our parents that if you do what you love and you follow your passions, the money will follow you; do what you love and the money will follow. That is an old saying. It happens to be that when you translate that into the language of the business brilliant, it comes out this way, do what you love, but always make sure that you follow the money. That is an important although subtle difference between that phrase and the phrase we were brought up with. I think there are a lot of months and conventional wisdom that we are taught when we grow up that is standing in the way of our success. I think that that’s the big issue. How many of us are prepared to rethink our conventional wisdom or out instincts if we want to be successful? 14:22 JIM: It sounds like you’re challenging people to change the way they are thinking. 14:22 LEWIS: The definition of insanity that we all love, right? Doing the same thing over and over again, expecting different results. I mean if the middle class conventional wisdom is the path to financial success, how come the middle class isn’t more financially successful? It’s almost a statement that proves itself. If you want to be successful, you’re going to have to do something different than what you’re taught as a middle class person. 14:43 JIM: Let’s talk a little bit about the economy. A lot of people are sitting back and saying, well, we’re going through a tough stretch here. Eventually the economy will take off and all things will be good again. What do you say to that? 14:54 LEWIS: There’s a robust rise with the tide mentality. Obviously if you study the economics of something called purchasing power meaning what does it cost to buy a loaf of bread and when does inflation set in? Some of those things don’t quite last, but I think that if anyone thinks that they can keep engaging in the old pact, here was the pact. The pact was if I go to a good school and I study a smart subject and I have some proficiency in it and I go get a job at a good company and I work hard for a lot of years, I will be rewarded with financial security. If that’s the pact that you believe in still, I think that you have to revisit it because that doesn’t really exist for too many people anymore. It doesn’t mean it can’t happen for you, but if you’re betting on that being your experience, you’re betting on your having a very unlikely experience these days the way things are going in the career development. I think that that’s what people have to really re-evaluate. 15:40 TONY: When you were doing the research for the book, I mentioned earlier that when I heard your talk, my aha moment was and I forget the exact income or net worth categories, but on the low end of it people that did things well for money, it was like five or six things, but the ultra-high net worth individuals it was one maybe two things and that really struck a chord with me. As you were doing this research, was there something that really struck a chord with you that really differentiated people from average to business brilliance? 16:11 LEWIS: Actually I think all seven of these practices play a role and I also noted that very successful people are very good because they’re good at one or two of them; they don’t have to be good at all seven. I think for myself to answer one of the essential questions that I’ll call it any self-help although my book isn’t quite self-help, but any sort of self-help category book we can think of is look, if I do these things will I have that outcome? I can tell you it’s been fascinating for me to learn so deeply the tactics and the behaviors of the business brilliant so that I can make adjustments in my own life. I’ve practiced a lot of them, but I would say that the one you mentioned earlier about focusing more time doing what you’re good at seems to have the most profound effect. When I actually had a wonderful exercise with a team I was working with where we all told each other what we were good at and what we were not so good at. I heard overwhelming the same answer from people about what I was good at and that was 10 years ago. I’ve’ spent the last 10 years inching my way professionally towards focusing on that one thing. It’s been hard. It’s not always obvious how that should show up, but that has made a big difference not only in my successful, but in my enjoyment of that success. 17:18 JIM: That’s just an awesome story and I hope that the people listening today take to heart a lot of the things you shared. It’s not necessarily that your book is a self-help, but it’s more of a reaffirmation of what it takes to reach those goals and objectives and dreams that you’re looking for and there is work involved. I think one of the things you just mentioned with this team, I’ve heard a lot of times a lot of the successful business people I work with, if they don’t have a formal board of directors, they might have an informal board of directors where they can bounce ideas off and it’s free for people to be open and honest because the only way you’re going to improve is to hear where the problems are because you may not see them yourself. Another thing that I say is if you look at the 12-step programs, alcoholics before they can fix the problem they have to admit there is a problem. If you’re in a rut, you have to figure out what that problem is if you’re going to move forward. I think a lot of things that are in your book whether you’re a business owner or not, these are traits that help people have success and enjoy life along the way and enjoy the journey. I think it’s a book that anybody can benefit from. Would you agree with that? 18:22 LEWIS: I do and in fact you mentioned young people more than once during this conversation and I will tell you that I’ve’ had the great pleasure of sharing this information with college students who are made very uncomfortable by the news I’m sharing with them because a lot of it kind of concludes as the things you are studying in school are not necessarily the things you need to be studying, but I will say that a lot of the older people who hear this will often say to me (a) they say I wish I had this book 20 years ago; and (b) they say I’m picking up a copy for my kids. That seems to be a common refrain. 18:49 JIM: That’s awesome. We’re going to make the book available on the website, but if anybody wants to get other materials from you, I know you have other books, where would you say they go to find this? 19:01 LEWIS: They can come to and they can of course go to Amazon or Barnes and Noble and just type in my last name which is Schiff. 19:10 JIM: Then just real quickly, you have a couple of other books. You want to just mention those? 19:13 LEWIS: Sure, actually Business Brilliant is a followup on a book I wrote that came out in 2006 called The Middle Class Millionaire. The Middle Class Millionaire was a study of how it is that people with a net worth of $1 million to $10 million are showing the rest of the middle class how to live their lives. I made a lot of predictions in the book about how the middle class million will change middle class life for the rest of us. It’s been about eight years since that book came out and I’m happy to say that a lot of my predictions came true. I’m sure I was convinced of that when I did it, but it’s working out so I recommend that people read that because it gives you a prism to how to look at how middle class habits might be changing again in the future. Then the second was a book called The Armchair Millionaire which is a book I really wrote for my friends although it was published by a major publisher, but I really had my friends in mind. I was about 23 or 24 when I wrote it. I was really trying to share with my friends that here was a very simple way to invest in the stock market. It was not complicate and it would get you to where you wanted to get to which is success and wealth and it was easy; that’s called The Armchair Millionaire. 20:17 JIM: Excellent, I can attest after going and listening to you speak you have awesome information and very through knowing from my years of experience a lot of what you share is just incredible and in the time like we are experiencing today where we have economic challenges, there is a lot of uncertainty especially for college kids graduating today we just found out recently that the 2014 class graduated with the most indebtedness and I think we have to be a point now too where less and less of the graduates are finding work out of school they are able to get some lessons from that. Thanks again for joining us. 20:53 LEWIS: Thanks, Jim. 20:53. TONY: Thanks for joining us this week and tune in again next week as we explore another phase of the real wealth process. Remember if anything you heard in today’s show you’d like to get more information about, contact your Prism Insurance Agency Advisor. Also, you feel that nay of this information would be helpful to a friend or family member, just click the forward to a friend button. Go To: To Learn More!
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