This weeks Typical Business podcast theme is – Farming is for suckers. More importantly, are you a farmer, an artisan or are you effectively running your business?
Now before you think – hang on, farmers are hard working honest people doing it tough! I know, I know… The reference is specifically in relation to a group of people that played the online game ‘World of Warcraft’. In this podcast episode we break down what farmers did, and just why they were referred to as suckers. More importantly, we’re going to take a closer look at those farmers and see if you can identify with any of them.
This weeks snippets;
My Favorite Tools In My Toolkit – Project Bubble
Project Bubble is a cloud based software solution for project management that helps me track projects and gets things done. It has a terrific user interface that allows for drag and drop management, user assignment to each task and a quick visual guide with stoplights – Green, Amber and Red.
Each task can have sub-tasks which are used as a check-list. You can add comments, tags and notes to each task which is great for later reference.
Plus, this is in the cloud, meaning anywhere you have Internet access, you can use Project Bubble. Perfect for when you may travel, as your projects can simply run without delays.
This week’s Book Review; Platform – by Michael Hyatt
This is a fantastic down to earth guide that will help you understand the steps you need to consider if you’re going to launch your own platform. Your platform could be; business coaching, how to knit kids clothes, children’s story books, make up professionals, moonshiners – whatever.
If you’re looking for a general business book, this isn’t it. But if you’re wanting to build your own platform to promote your passion, then I don’t think you could have a better start than with this book.
My rating: 5/5 stars for anyone wanting to launch their own platform
Main Podcast – Farming Is For Suckers!
World of Warcraft is a virtual world but has a lot of similarities to the real world we live in. It has an economy. People buy and sell. People craft. People do quests together and raid and form guilds. There are different ranks or social classes within guilds.
What is a farmer? A farmer is someone who would spend time in the virtual world, running around collecting raw materials that could be used to fashion items using crafting.
They would gather say ’20 thistle leaves’ and then sell a stack of 20 thistle leaves on the auction house for a price.
In my analogy today, these farmers represent employees. They do the mundane tasks for minimum wages.
ARTISANS / CRAFTERS;
The people that would buy those items were artisans/crafters. The idea being that the crafters would craft a new item, and then use it themselves or on-sell it at the auction house.
Most crafters would actually do the whole process – they’d farm the materials, then craft a new item (say a weapon) and then sell that weapon on the auction house.
The problem being, a lot of crafters would sell the new weapon at the same combined price of all the materials or worse – LESS than the cost to put all the items together.
These represent a lot of solo-prenuers today or sole traders. They tend to do everything and often cut their prices making minimum profit.
Finally, there were the really profitable artisans/crafters. Those that NEVER spent time farming. Instead, they would buy the materials from the farmers, then craft rare items and sell them for double or triple the cost to produce the items – making a clear profit.
The smart crafters/business owners had learned to leverage the time of the farmers and to corner the market. They knew what items were in demand and would continually make them over and over and make a profit overnight – selling items on the auction house even when they weren’t in the game.
Lets Talk About Leverage
A lot of people understand leverage in terms of creating wealth. A great book and one that I recommend is ‘The Richest Man in Babylon’ by George S Clason.
This book reveals how the rich get richer.
See unlike most people – that get paid then spend all of their money, the rich would get paid then invest a portion of their money to make money.
But the real leverage went beyond that.
The real leverage came when that money would make money, then the new money would make money also.
I’ll explain that relating to shares;
If you buy $1000 worth of shares at $1 each, you have 1000 shares.
Then, each year the company declares a dividend. Lets say 2.5c per share. You make $25 dollars as a dividend. So your Invested Money has made you $25.
But the smart investors don’t just take the $25 and spend it. Instead, they reinvest it. So, with shares they may choose to purchase new shares instead of receiving the money.
Now they have 1025 shares in the business.
That’s real leverage when the profit from your initial investment also starts to make you money.
So ask yourself; How are you making money in your business.
Are you a farmer? Are you doing the same mundane job over and over again. If you are, you need to hire someone to do that for you.
Are you a crafter? Are you using all your own tools and equipment and then producing a product only to on-sell to someone at your cost price?
Are you a smart business owner? Are you leveraging your farmers and crafting an item in a hot market for a profit?
This Weeks Action Points
Think about where you are and what you’re doing. You might want to make some changes to the way you think about your business so you can actually start running your business as a business. Don’t be a farmer – or an artisan. Instead, build a profitable business by leveraging your staff’s abilities and efforts.
If you want to comment on this podcast, please leave a comment below. I’d love to hear your thoughts on the ideas presented in this podcast episode.