As you know, I’ve gotten involved with a local Jiu Jitsu Academy. It’s run by several young people, none of whom has much business experience. Teaching martial arts is probably among the 10 worst businesses you can be in. Every year, thousands of new academies open up all over America. Within six months, over 90 percent of them are gone.
Those that survive just scrape by, affording their owners a modest income — not much more than they’d get by working for someone else. There are exceptions: a few chains that operate like McDonald’s, using low-cost employees and catering to a discount market (tots and young children). And then there is our academy. Or so we hope.
Our strategy — and so far it’s working — is to go upmarket. We are selling private lessons to affluent adults. The per-hour charge for learning from us more than twice as high as with other Jiu Jitsu academies. We get away with it by offering more than twice as much as they do. We promote our extras by following some well-established principles of upscale marketing.
Many of these have been explained lucidly by a colleague of mine, copywriter Robert Bly (firstname.lastname@example.org):
1. Make an apples-to-oranges comparison. “Don’t compare us to a group class in a karate studio. Compare us to an hour-long, personalized tutorial on computer programming.”
2. Decrease the price by adding valued component parts. “The lesson is $60 … but a supervised training period is only $15. By taking one of each, you pay only $37.50 per session.”
3. Identify the unique, invaluable aspect of your product. “Our program was specifically designed by … to ensure the fastest possible … No other program …”
4. Make the high price itself a benefit. “Our service is not for gym rats. You will find only quality people here: doctors, lawyers, etc.”
5. Shame them into acceptance. “If you cannot afford our fees, I can recommend several group-lesson programs that fit into the price range you are looking for.”
The Richest Man in Babylon, Part 5: What Is Worth More Than Gold? “A bag heavy with gold or a clay tablet carved with words of wisdom: If thou hadst thy choice, which wouldst thou choose?” That was the question Old Kalabab asked his students, wealth seekers who had come to ask his advice in George S. Clason’s classic parable “The Richest Man in Babylon”.
And how did the wealth seekers respond? “The gold! The gold!” they shouted. “So it is with the sons of men,” rued Kalabab. “Give them a choice of gold and wisdom and they will ignore the wisdom and waste the gold.” Alas!
Human nature is weak. “Gold is reserved for those who know its laws and abide by them,” Old Kalabab said. And to illustrate this truth, he told the tale of his master, Nomasir, the son of Arkad (the richest man in Babylon). “In Babylon,” Kalabab began, “it is the custom that the sons of wealthy fathers live with their parents in expectation of inheriting the estate. Arkad did not approve of this custom.
Therefore, when his son Nomasir reached adulthood, he told him that before he should succeed to his estate, he must prove that he had art capable of supporting it. “To start thee well,” he said, “I will give thee two things of which I myself was denied when I started as a poor youth to build up a fortune . . . a bag of gold . . . and this clay tablet upon which is carved the five laws of gold.” And with that Nomasir went off to seek his fortune.
After 10 years on his own, Nomasir returned to give an account of his adventures to his father. “My father,” Nomasir said upon returning, “Thou gave me liberally of thy gold. Thou gave me liberally of thy wisdom. Of the gold, alas! I must admit of a disastrous handling.” Nomasir’s gold had disappeared into two investment opportunities: a wager on some prize racehorses that turned out to be a scam and an investment in a business in which he had no experience.” “Soon there followed bitter days,” he admitted.
When he sought employment, he found none because he had neither the experience nor the skill to make him employable. He sold his horses, his slave, and all of his possessions just to stay alive. Just as he was about to be forced into slavery, he remembered his father’s other gift — the tablet with the five laws of gold written on it. He studied the tablet, memorized its laws, and began applying them to his daily life.
1. He began saving a tenth of his income, even though his income was small.
2. He invested that gold wisely.
3. He searched for good financial advice and got it.
4. He invested only in businesses he knew about.
5. He was not tempted by deals that were too good to be true.
By practicing the five laws of gold, Nomasir was able to get out of debt and acquire wealth. So much wealth did he acquire, in fact, that he was able to pay back his father not only the bag of gold he’d been given but three additional bags for the wisdom. This, he did to prove “how much greater value” he considered the wisdom than the gold. Nomasir had proven to his Arkad that he could be entrusted with his estate. And that’s exactly how it works today.
Until you’ve proven you know how to safeguard, invest, and develop wealth, few people will trust you with it. But once you have learned the secrets of wise investing, all sorts of people will want to invest their money in your projects. ETR has its own laws of wealth building that are in some ways similar to and in some ways different from Arkad’s “five laws of gold.” But the big idea of this chapter of “The Richest Man in Babylon” — that a good strategy for wealth building is more important than money itself — is indisputable.
I’m thinking about someone I’m mentoring right now. He’s a bright, resourceful person who has been working hard on his business for more than 12 years. In that time, I’ve had at least a half-dozen discussions with him about it. It was clear to me from the start that with one exception he had everything he needed to succeed — a good idea . . . a good market . . . plenty of energy . . . and some capital.
What he didn’t have was a sensible plan as to how he was going to make it happen. His career had been a chaotic history of starts and restarts, hiring and firing, new products and used ones, bad ideas and new ones. He had been working at least 10 hours a day, six days a week for the past 12 years — and during that time, his business never accumulated any real, substantial value. It was paying his salary, but not much else. He couldn’t sell it and he couldn’t turn it over to anyone else.
Every three years or so, he’d run into some kind of cash-flow crunch and have to borrow some money. At such times, I offered to help him rethink his business strategy. Each time, however, he refused. “Thanks, bro,” he’d tell me, “but you’ve done enough for me already. I appreciate it — and I’ll let you know if I need your help in the future.” That request didn’t come until it was almost too late.
His business had gone from promising to struggling to dangerous and then to disastrous. He probably would have gone bankrupt at that point had he not, finally, agreed to work with a business plan. We’re working that plan now, and we’ll soon find out if we can make his business work. Meanwhile, it occurred to me that this is an example of something Old Kalabab pointed out to his students in “The Richest Man in Babylon”: the tendency of wealth seekers to ask for money (loans) and turn down wisdom.
The advice I’d been offering would have cost him nothing had he taken it in the beginning. But now that he’s gotten himself so deeply into debt, the only way out of it will be to submit to loan repayment terms that will be significant. It would have been much, much cheaper for him to start with the wisdom.