 Of the many offerings of the investment world from banks to governments, the sexiest and most publicized is corporate ones. Specifically Stocks, Mutual Funds, and ETFs. Each has their own flavors of the month, but they are all simply “equity in a company”. Most are publicly traded and on the largest stock exchanges. There are also private stocks from privately owned companies you can buy, but they have the issue of not having as liquid of a market as publicly traded stocks because the trading of the stock is private as well. Now you have to understand stocks (equity in the company) are the base for everything else in corporate offerings as stocks make up Mutual Funds and ETFs. Understanding this will allow you to understand our list today.
Corporate/Brokerage Offerings Corporate Stocks Corporate stocks represent ownership in a company, the stock’s price is a representation of how valuable it is according to public opinion. If a company is expected to not do as well as hoped, stock prices will go down as people sell off them off. If the company does a lot better than expected, then the stock price goes up as more people buy them. If there is bad news about the company, then the stock goes down. If there is good news about the company then the stock goes up. This is the way of stocks. Therefore, it’s not a bad idea to think of the prices of stocks as the expectations of the company. Strong prices tell you people expect it to do well while weak prices mean the opposite. And if you disagree, you can buy the stock in expectations that the price will go up or you can short the stock in expectations it will go down. Shorting simply means you’re borrowing shares and selling them, expecting they will be cheaper to buy back in the future. Not only can you short stocks, you have a million other contracts you can have to make money such as options, which is a contract that sets a price that you can either buy or sell a certain stock for at a subsequent time. Pros · Higher Returns - Stocks typically have the potential for higher returns compared to other types of investments over the long term · Pay Dividends - Some stocks pay dividends, which provide extra income or used to buy more shares Cons · Volatile - Stock prices can swing dramatically from high to low meaning your gains today may be gone tomorrow based · Uninsured – stocks are the unsafest of all investments as they can become worthless quickly based on investor opinion and if the company goes bankrupt Corporate Bonds Next up is corporate bonds. Corporate Bonds is debt issued by a company, and are very similar to government bonds except they aren’t as safe. But because they aren’t as safe, they usually pay out more interest than government bonds. Because when investing, the interest on a debt represents the risk of the investor, called a risk premium. Therefore an investor should be paid more for taking on more risk. Thus, the more creditworthy the company, the less interest it will pay because of the lesser risk. This is not only how corporate bonds work, but all loans from mortgages, auto-loans, and personal loans such as payday loans and even pawn shops. All loans’ interest is calculated based off of how risky the borrower is. The more likely you expect someone not to pay you back, the more interest you will charge to compensate you for taking on the risk. Pros · Pay Higher Interest - Corporate bonds usually pay more than government securities, money markets, and CDs, especially if they are risky bonds Cons · More Risk - The Company that issued the bond could suspend interest payments, or even go out of business · Commissions - You may have to pay a commission to purchase corporate bonds and affecting your ROI · Penalty for Cashing in Before Maturity – cash out before the bond matures, and you may not get back all of your original investment. Brokerage Offerings Money Market Funds Money market funds combine a checking account with a mutual fund. When you put money in a Money Market fund, you have all the benefits of a checking account such as high liquidity and the ability to write checks. But while your money is in the account the fund invests it in highly liquid, safe securities such as certificates of deposit, government securities, and commercial money. Meaning you’re making with your money, but because its invested in highly liquid assets that if you want to use your money, you can. Pros
Bond funds Bond funds are mutual funds that invest exclusively in Bonds and purchase large swathes of different bonds to diversify and protect your portfolio. Pros · Diversified – owns a little bit in every bond market to minimize risk from one or two bad bonds · Balanced Interest – Because the bonds are in many different markets that have varying interest rates, you can have a higher interest rates than just buying only one bond in one market Cons · Fluctuating Yield – being a mutual fund, the yield will change depending on interest rates, buy/sell costs, and other factors that are outside your control. So you never know how much you are going make until you cash out · Management Fees - You will pay ongoing management fees, which is fine as long as they make more money than they charge you, as some of the best managers will take all your profits for themselves · Commissions – the bane of the financial industry, paying someone to sell you a certain fund. Whether or not the fund is any good for your goals Mutual Funds Mutual Funds come in a variety of flavors and each have their own risks and returns. But essentially, you just have to think of them as a basket that holds multiple investments. This basket could have individual stocks and bonds in it or can even have other mutual funds or ETFs. The idea behind them is that you pay someone a management fee to fill the basket for you so you don’t have to do it yourself. And of the many flavors, here are the major six you will see on the market. 1. Fixed income funds - These funds fill their basket with investments that pay a fixed rate of return. Usually, government bonds, investment-grade corporate bonds, and high-yield corporate bonds. The purpose of these funds for most people is that they want a guaranteed return on their money so they can sleep well at night. 2. Equity funds – Equity funds fill their basket with stocks. Unlike fixed income funds, these funds aim to make more money over time by taking on higher risk. These could be growth stock funds that make their money on investing in companies they are expecting to grow quickly over the next few years to sell for a hefty profit at the end. Income funds that pay large dividends and are for people who want cashflow while they own the fund. 3. Balanced funds – These funds fill their basket with both fixed-income and growth stocks to try to capitalize on the benefits of both. 4. Index funds – To understand an index, you have to think of it as a very, very large mutual fund that covers a lot of companies in an industry. Although the index is made up, their purpose is to show how well a specific industry is doing within the economy. This could be blue-chip stocks that represent the largest and most established companies, the tech industry that is populated with many tech companies, and any other index of companies that can make up an industry. Therefore, the mutual fund that follows an index, fills its basket with stocks that best replicate the return you’d get if you had purchased all the stocks in the index. (Usually cheaper because management doesn’t have to work as hard) 5. Specialty funds – these funds could also be called “Niche Funds” as they focus on their basket with specialized investments such as real estate, commodities, or any other niche they specialize in. 6. Fund-of-funds – These mutual funds could be called “Meta-Funds” as they invest only in other funds. Essentially, they fill their basket with funds they believe know what they are doing and getting great returns. Piggybacking off their success. Pros · Don’t Need Plugged In – if you have ever traded stocks, you know at times you have to be plugged in 24/7 to make sure your investment is doing well. This includes reading quarterly and annual financial reports. Deciphering what the company is really saying and making a decision to hold or sell. Putting your money in a mutual fund makes all that the manager’s job, leaving you to enjoy your free time. · Different Flavors to Choose from – Mutual funds have an option available for nearly anyone’s investment goals. If you want fixed-income, there is a mutual fund for that. You want to take on higher risk for a higher return, there is a mutual fund for that. If you want a combination of the two, there is a mutual fund for that.
Cons
ETFs ETFs (Exchange Traded Funds) are exactly like a mutual fund in that they are a basket of investments such as stocks and bonds and are managed by a manager who decides what those investments will be. The only major difference is that an ETF is treated like a stock in the way it is bought and sold compared to a mutual fund. As a mutual fund cannot be bought and sold, it can only be invested in or out. This means that an ETF can be bought and sold on the stock market, can be shorted and optioned, and anything else you can do with a stock. Pros · More Readily Traded - Traditional mutual fund shares are traded only once per day after the markets close meaning you can’t speculate on the fund to go up or down in price for a profit. While ETFs are traded all day like a stock. · Cheaper than Mutual Funds - streamlined compared to mutual funds as the costs are put on the brokerage instead of the investor. Making less overhead that equates to more investor returns as they don’t have the legal requirements of having a call center for questions or the need to send out monthly reports. · Tax Benefits – mutual funds have more capital gains taxes than ETFs because mutual funds have to pass on the costs of every trade before a year to the investor, while ETFs are only taxed when they are sold. · Quickness of Buy/Sell – because it’s sold as a stock, this makes it easier to buy and sell to gain exposure to certain industries. You could get the same result by having a mutual fund, but because mutual funds are designed mostly for long-term investors, it can be a process to get in and out of them. Cons · More Expensive than Anticipated – because the costs are baked into the stock, it can be hard to tell if you’re really getting a deal or not. · May not make sense for the Long-Term Investor – due to the nature of how it is traded, it may not make sense for a long term investor who wants to hold onto his investment for years to come. The benefits of being a stock are not utilized for some long-term investors ADRs The last offering from the brokerage and corporate world is ADRs (American Depository Receipt). This were introduced as an easier way for U.S. Investors to invest in foreign companies. As the bank would purchase a large lot of shares from the company, bundle them into groups, and reissue them in US currency. Although you don’t have to invest in ADRs and you can invest in foreign companies yourself, you’d have to set up a brokerage account and watch the exchange rate as you move in and out of currencies. Making things complicated quickly. Pros · Don’t Need Foreign Brokerage Account – the biggest pro of ADRs is having the ability to buy stocks in foreign countries with your normal brokerage account. This takes the hassle of having to set one up in the country you want to invest · Automatically Calculated Exchange Rates – because the bank calculates the exchange rate for you, you can follow the prices of the stock based on your currency and not the foreign companies · Diversify your Portfolio – allows you to expose your portfolio to other countries and companies that can increase your return. Cons · Political Risk – with the purchase of an ADR, you now have vested interest in the politics of that country because the government could decide to expropriate the company or your investment. · Exchange Rate Risk – may have to be mindful of the foreign companies’ currency, although your ADR is calculated in your currency, strengthening and weakening of the foreign currency and affect the returns you receive. · Inflationary Risk – if the government is very poor with their finances, they may print more money and cause inflation. High inflation can make the company becomes less and less valuable each day and your investment worth less and less. Conclusion There you have it. Here are the most common offerings from the corporate/brokerage world. Being they are backed by private organizations and individuals, they are the riskiest of all investment as they are not protected from scandal, bankruptcy, or bad business practices. Meaning you need to be careful and understand that with the higher return your expecting, carries with it a higher risk of losing your investment. With that said, INVEST WELL and with DUE DILIGENCE. As they can only get it past you, if you let them.  Everything is Connected in One Way or Another Life is but a system. A closed system that has so many variables that the human mind sees it as an open system. But even if the human mind cannot comprehend the system itself, does not mean it doesn’t exist. As an underlying current in nearly all aspects of life that, it is taken for granted and remains unseen to many. This is the idea of general systems, general systems theory, and general systems thinking. Although it is a simple concept that can become infinitely complex. It is used to identify and understand everything that man has come to interact with. Therefore, if one fully comprehends the ideas emplaced in general systems theory, it will allow them to have a foundation to understand everything else. Because unlike most people, general system theorists do not create a new system for each thing they learn and understand, but apply what they learn to the tried & true system they have already honed in their learning and thinking process. In essence, people in general create millions of systems and processes inside their minds as they learn. But a general systems theorist brings all those systems into one and simply moots the outputs and inputs to satisfy the new stimuli or information. In becoming a Meta Learner, you must stop creating new processes and systems with each new subject you learn. You must instead turn your mind into an information placing machine, that constantly takes in it, places it in the different outputs and inputs, and allowing you to associate it to the patterns, processes, and systems you know previously. This can be done by training the mind to think in visuals (pictures & flowcharts), diagrams (Venn and Fish & Bone), and webs (ecosystems). As you need to see each new piece of information as a puzzle piece that fits in the general systems in life. As you collect more, the easier it is to get the gist of how the different inputs and outputs affect the system itself. As small pieces make small differences and big pieces affect in big ways. This can be applied in all aspects of life from markets, economics, sciences, societies, and more. The clear definition of systems, systems theory, and systems thinking is as follows: Systems - a group or combination of interrelated, interdependent, or interacting elements forming a collective entity; a methodical or coordinated assemblage of parts, facts, concepts General System Theory - Systems theory is a trans-disciplinary approach that abstracts and considers a system as a set of independent and interacting parts. The main goal is to study general principles of system functioning to be applied to all types of systems in all fields of research. Systems Thinking – Understanding that everything, to include chaos, has an organization to it and being able to formulate a structure to simplify the inputs and outputs to understand, comprehend, experiment, and enhance it in nature or synthetics Types of Systems There are a few types of general systems to include Open vs. Closed, finite vs. infinite, and real vs. theoretical. Each one is in essence on the other side of the spectrum of each other. Closed System - A closed system as its name implies is a system that is not affected by its outside environment. An example is the chemical reactions and the electrical wiring of a house. Open System – an open system is one that is affected by its outside environment such as the human body. It is affected by temperature, food/water, shelter, and culture. Finite System – a finite system is a system that can only be sustained as long as it has input to allow it to run. An example would be a car with a gas tank. The car would be the finite system as the fuel would be the input. Infinite System – an infinite system is a system that has the ability to run perpetually forever and is nearly impossible to obtain, but is useful in the theory and practice of sustainability. An example would be wind energy through a windmill to power a house. Real System – A real system is a system that works in reality and given to “human” forces produces a desired result in the real world. An example would be an ecosystem model that monitors and lists every factor that ultimately affects the system. Theoretical System – Theoretical systems are those that cannot exist, but provide models to simplify and build Real System Models. An example is Closed Systems as every system cannot be created in a vacuum and is affected by process losses and its environment in some way. How Systems Work There are three main bodies one needs to know to fully comprehend a system. These are known as the stock, inflows/inputs, and outflows/outputs. Stock – is defined as a “whole” that has a unit of measure which reacts to inflows/inputs and outflows/outputs. Inflows/inputs – are defined as units of measure that affect the stock by going into it. The difference between inflows and inputs is the “human” or outside factor. Because inflows natural stream into the system and inputs are added from an outside force with intention. Outflows/outputs – are defined as units of measure that affect the stock by going out of it. The difference between outflows and outputs is the “human” or outside factor. Because outflows natural stream out of the system and outputs are intended results desired by an outside force. Thus, a simple system to understand is a lake. The amount of liters in a lake would be considered the stock. The inflows/inputs would be any flow of liters into the lake that increase the stock while outflows/outputs would be any flow of liters out to decrease the stock.  The 3 Spectrum Levels of a System
As anything in life if not more so with systems, there is a constant struggle to find balance. In that struggle, there are 3 levels that a system can reach. They are known as Unsaturated, Harmony, and Saturated. 1. Unsaturated This level is achieved in a system by having outflows surpass inflows. When that happens, the system dries up and quits functioning. Like a bank account, if the money spent outweighs the money saved then the bank account quits functioning as you won’t use it. If the outflows are severe enough then the system will implode in on itself as if you begin to charge your bank account into the negative, the bank will close your account down. 2. Harmony This level is achieved by having inflows equal to outflows. This is what all systems want to attain as it will allow the system to function perpetually. An example is temperature, as it gets hot, we use ac, as it gets cold, and we use a boiler, thus trying to maintain that comfortable or harmonious temperature. 3. Saturated This level is achieved when the inflows surpass outflows. When this happens, depending on what type of system it is, the result is beneficial or disastrous. In a system that can handle and sustain an infinite amount of inflow and force such as a bank account, then the system will be infinitely beneficial. However, if the system is unable to handle excess force or overflow. It will explode as it can’t take the intake. An example of this would be an engine that can only handle a certain load. If the load is too much for the engine, the engine will explode as it can’t take it. In all, Saturated Systems are running at full capacity. Conclusion Taking these lessons to heart will allow you to think as a General Systems Theorist. Understanding how inputs and outputs affect stock will allow you to easily take everything you learn from now on and plug it into what you already know. Instead, of reinventing the wheel like most people do. You now can build upon your knowledge to create something even better without having to start from scratch.  Welcome Back to the Second Part of Our Series “Thinking Like a Millionaire”.
Today we delve further into the mind of an investor and learn how the investor thinks differently about money than most people do. As most people feel money is a dispensable item and are too easy to give it away for things they want or value. While an investor uses the same money as a tool. For example, A normal consumer uses money to purchase a vehicle. Some even believe that it’s an investment. However, a car is not an investment because you will never be able to use it to make the money back that you spent. You will never be able to resell it for more than you paid and most likely will get next to nothing when you finally do resell it. Even worse, is when people see a car as an investment. They take out a loan on it, and make a promise to give away their future wealth for a vehicle that will never pay for itself let alone the interest their going to pay on it. (Click here to learn how to avoid Shark Loans) A consumer views a vehicle as an asset and investment. In the same vein but with an investor, A normal investor purchases a vehicle with cash. They consider the gas mileage, reliability, reviews, and resale value of the car to ensure if it’s the best deal for their money and ultimately meets their needs. On top of that, they usually never purchase from a NEW car dealer and instead get it from a certified-used dealer, craigslist with proper inspections, or my personal favorite EBay. In comparison to a consumer, an investor views a vehicle as an expense and liability that can eat money quickly and leave you in financial stress if it isn’t properly purchased. Therefore it’s time to get started and think about money like an investor. Because when you think of money as tool, you begin to understand how to use it to better position yourself in life. If you don’t, even when you make more money as a consumer, you ultimately just spend more money as a consumer. You don’t really change your habits, you simply have more and you spend more like a bigger house, better car, or the NEW ITEM YOU JUST NEED NOW. Instead of consuming with your money, here are some common investments that are offered by the government that are available to you right now. That most don’t even know. Government Offerings U.S. Government Bills or Notes Also known as Treasuries, they are government notes that are backed by the U.S. government. And there are two types, Treasury Bills which are short term-loans that mature in less than a year. While Treasury Notes are longer term and mature after a year and can go up to 10 years. In simple terms, you are giving a loan to the government and they pay interest to you on the loan. Pros: · Safe – Unless the U.S. Government defaults and goes bankrupt (Not very probable) · Commission Free – unlike a lot of investment vehicles they can be purchased directly, without the need of a broker · Tax Exempt – treasuries are exempt from state and local taxes which can help the savvy investor save a lot of money in the long-run Cons: · Better Interest Elsewhere – Good returns, but if you shop around, you may find higher yielding investments that are just as safe such as CD’s, Money Market Funds, and bonds. · Hefty Penalties for Cashing out Early - If you need your money before the security matures, you may not get back all of your original investment. I-Bonds I-Bonds are a Government Backed Bond that gives you protection from inflation by changing the interest rate on the bond semi-annually. They began offering this as many people who buy bonds don’t want to have to keep up with the macroeconomics of the US Economy. Pros: · Backed by U.S. Government - makes it one of the safest bets on Earth · Inflation Protection - Protects your investment against inflation risk by adjusting the payout interest · Manageable Denomination – you can buy I-Bonds ranging from $50 to $10,000. · Tax Exempt/Tax Deferrable – are exempt/deferrable from state and local taxes which can help the savvy investor save a lot of money in the long-run. Cons: · Penalty for Cashing-Out Early - must hold for at least 12 months before redeeming, but if you redeem it before five years, you have to pay a 3 month Returns Penalty. Municipal Bonds Municipal bonds are similar to federal bonds but are issued by state and local governments. They use the money you give them to fund the building of schools, highways, and other projects for the city and state. Used mostly by high-income investors to reduce their tax liability. Pros: · Safe – almost as safe as U.S. Government backed securities · Tax Exempt/Tax Deferrable – are exempt/deferrable from federal taxes and sometimes state and local taxes which can help the savvy investor save a lot of money in the long-run. Cons: · Low Interest Rate – because the taxes are low on municipal bonds, they have much lower interest rates. Which might not make sense unless you’re in a high tax bracket and looking to avoid taxes · Commission–Based - you may have to pay a commission to buy municipal bonds · Hefty Penalties for Cashing out Early - If you need your money before the security matures, you may not get back all of your original investment. If your interested in more, please check out the entire series.  Do you think like a Millionaire?
Well welcome back to “Your Life as a Business”. Where we introduce the First Part of a 5 Part Series on how to make your money work for you and to your first Million. Today we will change your viewpoint of money. Showing you the different ways to make it work for you. By simply summarizing the positives and negatives of each. First off, let’s go over the two worldviews of money and how they differ from each other. The first one is the one most people know because they enact it every day, the Consumer. The consumer views money as a dispensable item that comes and goes, but ultimately is made to be spent. The consumer sees the value of a dollar as a means to get things they want, but not for its other values such as tool to protect yourself and your family or a means to build wealth. Instead, they use it to consume things. The pros of being a consumer is to get what you want when you want it and experience the things you always wanted. However, many times the consumer buys things they can’t afford, are constantly broke, and spend money faster than they can make it. When seeing money as dispensable, it’s easy to fall into the mindset of easy comes and easy go. The other worldview is the Investor. The investor views money as a tool. They don’t see it as a dispensable item to buy things they don’t need, but as a way to make things happen. Such as make more money or as a weapon and shield against the world to protect yourself, your family, and your interests. With this way of thinking, people use money not as a way to consume the “next best thing” but instead think strategically how they can better their lives with money rather than have it control them. Therefore it’s time to get started in “Your Life as a Business’ and start thinking about money like an investor. When thinking of money as tool, you have to imagine the different things you can do with money. Its many facets and uses. Of the many things you can do, here are the most common that most people never know about even though they are available to them every day. Bank Offerings Checking accounts Everyone knows what a checking account is. It’s a transactional account where most of the money that graces its presence it’s swiftly spent to bills, consumables, or any other immediate expenses. Pros: 1. Liquid - They are extremely liquid as you can have available to you immediately through ATMs, checks, and debits cards. 2. Services - Usually are a staple of big banks and come with branches so you can avoid pesky transaction fees from ATMs 3. FDIC Insured - They are also insured by the Federal Deposit Insurance Corp so if the bank fails, the government is supposed to step in and pay you out your funds Cons: 1. No Interest Paid - Because of the liquidity of your funds in a checking account and the benefits you receive such as access to branches, they use you’re your interest to provide those services 2. High Required Minimum Balances – Many banks require minimum balances or they will charge you fees 3. Nickel and Dime Fees – Many banks make their money by finding ways to make your money theirs. This is why they will nickel and dime you in any way possible with transaction fees, penalties, and services. (Remember – Banks need your Money to Function and they Must Be Reminded of that Fact) Savings accounts Savings accounts are a more illiquid form of checking accounts and that was why they gave higher interest rates as there were less services and benefits associated with it. That is why most have only a certain amount of transactions you can have per month or they will charge you a fee. However with the advent of online banking. They can be just as liquid as a checking account. As you can easily move your funds from your savings to your to you checking with just a few swipes. Pros: 1. Higher Interest than a Checking Account –less services and benefits equals more interest paid out 2. Low Required Minimum Balances – don’t need as big of a required balance, but negates the purpose of a savings account, which is to make interest on Big Money 3. FDIC Insured - They are also insured by the Federal Deposit Insurance Corp so if the bank fails, the government is supposed to step in and pay you out your funds Cons: 1. Next to No Interest Paid – With the destruction of the financial system came the lowest interest rates the world has ever seen. This has created a new benchmark for savings accounts, which is next to nothing. 2. Restricted Transactions – Can only use it for a few transactions a month before they start charging fees to keep you from using it like a checking account 3. Illiquid/No Services – no debit cards, checks, or other ways to spend money out of the account Online-Only Bank Offerings High-yield bank accounts High-yield bank accounts are the same as checking and savings accounts but give much better interest rates by eliminating all the frills of a normal bank such as ATMs, branches, and staff. This keeps overhead low so they can pay more out to their customers. Pros
Cons 1. No Frills Banking – can be hard to get to your cash fast with no ATMs, debit/checking services, or branches 2. Money Coordination – can be troublesome when you need to transfer money back and forth from the online bank account to a normal account 3. Teaser Rates – Beware of limited-time teaser rates that they get you to sign up for that reduce in half after only 6 months. Money market deposit accounts One of the most restricted accounts is the Money Market Deposit Account. They are usually offered by banks, but require a minimum balance and only permit a few transactions per month before they start charging fees. Pros
Cons
Both Branch/Online Banks Certificates of Deposit (CDs) Certificate of Deposits are illiquid deposits in a bank or brokerage. They work by you promising to deposit your money and promise not to touch it for the time until it matures. Where you get it back in full with interest. If you take it out early, you have to pay a penalty that usually offsets any gains you have made so you don’t touch it. Pros 1. FDIC Insured - They are also insured by the Federal Deposit Insurance Corp so if the bank fails, the government is supposed to step in and pay you out your funds
There you have it for this first part in the series of thinking like a millionaire. Please check back each week as we unravel the investor's mind.  Sales is not the evil of the world.
Although many would have you believe it is. It is, instead, one of the most important skills you can have in life. Because many of the things you have to do in your life involves selling something in one way or another. As sales is just the business word for persuasion. And the reality is, you have to persuade people to do things for you every day. You need to persuade employers to give you a job. You have to persuade your coworkers that they need to finish the work you need on time. You have persuade your boss you need a raise. You have to persuade your friends the idea to go check out a certain activity you enjoy will be fun for them. Every day you’re persuading others. Now just for a little fun, let’s say that last paragraph again but replace persuading with selling. You need to sell yourself to employers to give you a job. You have to sell to your coworkers that they need to finish the work you need on time. You have sell your boss you need a raise. You have to sell your friends the idea to go check out a certain activity you enjoy will be fun for them. Every day you’re selling to others. Therefore you have to build this fundamental skill if you truly want to be successful. Because no one will give you anything without being sold on it. Because of this, here are the 12 steps to make a sale and in essence becoming a salesman. Step One: Pre-Sale Prep – What gets you in zone? · Talk yourself up · Get Pumped up · Flush Toxins In this step, you have to get yourself ready for the sale. You have to get your mind right. If you do not get your mind right and ready to sell to someone, it will be easily noticeable by your prospects. They will not feel comfortable being with you and will ultimately shoot you down. Therefore, talk yourself up in a mirror with compliments, get pumped up with a ritual of coffee, yoga, or jumping jacks, and flush toxins by trying to get rid of all the bad energy and thoughts you have that can affect your abilities. Step Two: Meet and Greet – Set the Stage for a Good 1st Impression · Strong Handshake · Good Eye Contact · Establish rapport with compliments on their person and possessions In the second stage, you have to have a good first impression as many times you can lose the sale in the first 10 seconds. Especially if they don’t like what they see and feel uncomfortable. Therefore, break the ice with a strong handshake and good eye contact. Don’t forget to wave a flag of peace by giving out a compliment and make them comfortable. Step Three: Warm Up – Get them talking and warmed up · Mini-Bio – Give them a Quick Background that makes you relatable to your prospects · 5Alive – The 5 things you need to know to sell to people
Stage 3 is when you get them talking and warmed up. But first you have to give them a mini-bio of who you are so they have material to ask you questions about so there isn’t a lull in conversation. Once you’re done, you have to start work with the 5Alive Questions (The 5 Questions to Stay Alive in the Sale). Knowing this information is how you will quickly find commonalities between yourself and your prospect to build a relationship. Because the key in any sales transaction is to get your prospect to like you. Because no one wants to work with someone they hate. Especially in sales. So ask questions based on their Activities, Lifestyle, Interests, and Employment. The Fifth-type of questions revolve around specifically on what you’re selling and will change based on what products you sell. For example, real estate agents will talk about where they live, if they rent or buy, and how they like that situation. A massage therapist will talk about their stresses in life and how it affects their everyday. And a software salesman will talk about how they feel about tech and the frustrations it may cause in their daily life. Step Four: Set the Stage– Establish why you’re both here today · Set the Bar– Tell them why your there and the problem your trying to solve · Have them acknowledge that they need to give a yes or no at the end.
After talking about their 5Alive, your prospect should be nice and comfortable and ready to talk business. You should also have all the information you need to sell them. Which is why stage 4 is to set the stage for the rest of the sales transaction. Essentially, you are going to establish why you’re both here today, to do business and solve a problem they have or not. No in-betweens. While you set the stage, a use these techniques to help close the sale. One is to establish that they are responsible for the fact you are there now just for them. They asked to hear more about your service and they need to respect your time and business. Two is to offer only in-person offers that you only offer once to create scarcity and give them a deal that only they can take advantage of. Three is to establish commitment from your prospect about the value of your product and what you do. Step 5: Buying motives – Discover their buying motives Write all the answers down and repeat major points… · Ask questions to get the prospect to tell you more about the problems your product solves · Ask questions to get information on negatives of the experiences and problems they have had in the past · Ask questions that expose what objections they would have
· Rope Them In
In stage 5, it’s time to ask specific product questions rather than the general one’s you asked in the 5Alive. Specifically about the problems your product solves, the negative experiences you may have had with those problems, and questions that expose any objections they may have later in the transaction. A god technique to use here is a comparison technique of what they do now and how much more expensive it is to continue doing it that way or how inefficient it is compared to using your product. Step Six: The Pitch – Show the product’s features and benefits and relate them to their buying motives · Give them the pitch of how your product and service will solve their problems · Appeal to the buying motives you have already discovered · Have them actively participate in what your selling · Use Stories of Others who have successfully used the product. · Get vocal commitment at the end that what you’re selling will in fact benefit them. In the sixth stage, you give them the pitch using everything you have learned so far. The key here is to only talk about the issues and points that are important to the prospect. For example, if your prospect only cares about the cost savings of your product, why would you talk about how the product will look in their office or something else that you already know the prospect doesn’t care about. The prospect should be actively participating throughout the entire transaction, but it’s most important during this stage. Because nothing is worse than talking “at” a prospect who is no longer interested because you’re doing all the talking. The last thing to remember is to use stories of others who have successfully used the prospect. A good can be from your company your company, your personal experiences with clients, and even your family and friends. Just don’t forget to finish the pitch with a vocal commitment that they see that your product will benefit them. Step 7: Give them a Sample/Example - · Let them use the product / Let them see the product / Let them see themselves using it · Paint a picture of the future where their problem is solved by the product · Use Stories of Others again In stage 7, its time to bring the product out and let them experience the product themselves. While they use it, paint a vision for your prospect using the product and solving that problem that has nagged them for years. Even use more stories form others who have used the product successfully to let them know they are not alone and it’s a proven product. Step 8: Recap the Offer – Establish that this is once again a “One-Time Offer” they will never get again. · Summarize the major points of the Offer · Emphasizing what the prospect finds most valuable After the pitch, it’s time to up the tempo of the encounter. Summarizing the offer to their specific points of interest. Emphasizing that you will only make this offer once. It’s the best deal they are going to get. Step 9: The Talk – Discuss the different options and what the prospect would like to buy · Talk with the prospect to show the different packages and what fits their specific needs · Emphasize the benefits to their buying motives · Have an active conversation and let them lead it
Once your prospect has interest, it’s time to go over the different packages, products, and services you offer, and find the one that fits their needs exactly. In this conversation, it ii imperative to let them lead the conversation and ask questions of you to find out which deal will be the best for them. Once they feel comfortable with one, tell them your recommendation from what you have learned and why. This will most likely be the one they have chosen for themselves or an option that you know from expertise will work better. This is also the time where you answer any objections they would have. None of what they say should surprise you because with everything you have discussed, it should be fairly obvious what they don’t like about the product. Just don’t make it be ‘You”. Step 10: Show Prices / Negotiate – See if they like what they see or need extra incentives · Push the package they like the most and fits their needs · If they aren’t liking what they hear and see, it’s time to throw some extras in · Last Ditch Effort – if all else fails, give them the best deal you have to get them through the door You can reveal the prices to the packages long before this stage as long as when you do, they are comfortable enough to hear them. As many times, people reveal the prices too quickly and end up scaring off their prospect long before they get to this point. If your prospect isn’t receptive to the prices, you have to emphasize again the value you will be creating for them. You are letting them see that the product will more than cover its cost through savings or cash flow creation. Otherwise start negotiating the price down until you hit a price they are happy with. If all else fails, give them your “Last Ditch Effort” and give them the best offer you can afford. Step 11: Close the Deal – Get them to sign the documents for a fruitful relationship · Have them sign all the documents and keep them motivated and on a purchasing high Once they say yes. It’s time to get the closing documents and finalize the deal. This is a great time to pump them up and get them excited for all the wonderful things they will experience with your product and service. Tell them you’re excited to be in their service. Step 12: Follow-up – Don’t lose them when they get buyer’s remorse · Give them a congratulations note and gift basket · Have lunch with them within 24 hours to do a mini-sales / pep rally to keep their high going · Phone Call in 48 hours. · Ensure they are on your email list and maintain contact over the years
The worst part of any deal is when everything is going great. Documents are signed. Everyone is happy. Then it happens… The buyer call in the next few days that he would like to rescind the contract. He doesn’t know what he was thinking and doesn’t want to do business with you anymore. This is called buyer’s remorse. And it happens to everyone who doesn’t follow up with their new clients. Don’t let it happen. It’s your job to ensure that your new client feels comfortable before, during and especially after the sale. Therefore, congratulate them on their decision, give them thank you notes and gift baskets, have lunch with them within 24 hours to make them feel good about the decision. A phone call within 48. And a email every month for a lifetime. Conclusion Now you understand the Power of Becoming a Salesman. The fundamentalism of it as a basic skill to live. And exactly how to become one through the sales process. It’s time to become one and go out there and practice. Practice. Practice. Practice. Because it is a skill you will only master through hours of rejection and failure. But once you get past that, you will able to persuade people to give you what you want.  A Thought Experiment A thought experiment is when you have an idea and take that idea to its logical end through rules and parameters that already exist or develop as the thought experiment matures. Mostly through conversation and the use of verbal experimentation and arguments. The purpose of having thought experiments is to expand your abilities to think, innovate, find patterns, plan, and imagine. Having this ability will allow you to break free from the influences of others, understand things quicker, learn faster, and develop better plans. For Example: Fallacies (Common Sense) are a great example of Thought Experiments that are brought to their conclusion. Although these arguments themselves represent bad logic and unsound reasoning. How people came to the conclusions that these are fallacies is the essence of what a Thought Experiment is. A deeper look at one of the fallacies and the thought experiment that created it: Needling: simply attempting to make the other person angry, without trying to address the argument at hand. Sometimes this is a delaying tactic. You are watching a political talk show. You realize that the talk show host isn’t actually presenting any counter arguments or evidence and is simply goading the politician to see if he can get a rise out of him. You begin to discuss with your friend about the tactic and he says that it is a viable argument technique where as you believe it’s not an argument at all, but just a tactic to disclaim someone whose beliefs you don’t believe in. You continue to talk it over until your friend agrees that it is a tactic and not an argument. Making it a fallacy because the logic and reasoning to think of it as such is bad. You then call the fallacy needling because you are trying to poke the other with verbal needles to frustrate and annoy. For a look at more fallacies, check out this list. (A very good list to know for your next debate or negotiation as finding false logic is a lot easier than you’d think.) Another Example: Your friend has a great idea for a Television Show. You create the premise and the characters. You continue to develop it until the show takes on a mind of its own and the characters take such shape that you can no longer just make them do anything. Because the characters develop their own rules/personalities (as if out of nowhere) that if they were written to do an action out of character, people won’t believe it. Thus a thought experiment has been created with rules that guide where the show can go. Until it reaches its logical end of happy, sad, eventful, or uneventful ending. Now that you understand the concept of a Thought Experiment… here is the nitty-gritty on how to create one. Step #1: Throw out all your beliefs and biases to ensure the purity of your thought experiment. This rule is important as any outside influence of your thought experiment can lead to fallacies and bad logic. This rule is less important for creative thought experiments as where the logical end goes is less based on reality and more based on one’s imagination. Step #2: Decide to create rules for the Thought Experiment at the beginning or let them develop over time. You can develop the rules for a thought experiment to be as outrageous to as realistic as possible. All depends on the end goal of the Thought Experiment. Realistic Rules (Black) 1. Follows realities rules and order of operation 2. Follows Logic and Reason (No Fallacies) 3. No Biases or Assumptions Creative Rules (White) 1. Follows a set of rules not dictated by material facts 2. Rules can develop laissez faire and become permanent as they develop 3. Assumptions can be used to build the Thought Experiment to places reality won’t allow without proven facts. Combination Rules (Gray) 1. Follows a set of rules that are based in reality, but can change with current events. 2. Rules follow logic and reason, but includes the actions with a probability of low success so nothing is ruled out. 3. Assumptions are allowed, but must be proven throughout the thought experiment. #3: Talk through your Thought Experiment With the others in the Thought Experiment, talk through the thoughts you have or had. Ensuring to maintain the rules. Where the experimentation comes into play is having the idea be bounced, fleshed out, and redone to by many diverse people with different views, angles and experiences to meet the rules and logic of the thought experiment. The experimentation comes from the fact you don’t know where the thought process will go, what other rules will develop during the experiment, and the scenarios, scenes, or actors that develop. #4: Take your Thought Experiments to their Logical End An example on the creative side would be a storyline for a character. The more you flesh out the character and create a world around him, the easier it becomes to bring them to their logical end. Therefore a Tragic Character dies to redeem himself. A Happy Character wins the day. Or any combination of paths that the story may take. (Uses made-up rules and parameters to dictate the path of fictitious characters) An example on the realistic side, is having a thought experiment on real life events and people. Such as finding the truth of the matter behind the actions of what others do, such as rivals, friends, and enemies. Finding the motives behind their actions or to build an idea of the interworking’s of what’s really going on. (Uses real world facts to develop theories about the real world) A great example of a Combination is making a plan off the real world. Because plans make a lot of assumptions about how the real world will work according to the plan, but more than likely has to change before the end. This combination of the realistic to the creative side of thought experiments allows you to build your thoughts and bring them to fruition even if they don’t come to reality in any shape or form. Think well. Be well.  What's Behind Your Mind's Door #1? Learn-2-Learn Series (Part 4 – Sensing and Intuitive Learning Techniques)
Many people learn differently. Some learn by Sensing and others by Intuition. These are the most basic of the learning styles in that they are the ones people use most and find themselves using in almost every learning situation. Either through theory or real world application. We will go over the techniques for these learning styles, but remember… to become a true meta-learner, you must learn to learn beyond the techniques that make you feel comfortable. *Note – Techniques used by each style can work and be useful to the other styles. Just because one may statistically be better for one does not mean it won’t work for you. Try them all and experiment a little. How to Use Sensing Techniques to Learn Sensors learn through practical exercises. If it doesn’t have anything to do with the real world or be useful in a way they can use it in the real world. They will tune it out and consider it a waste of time to learn. Because of this, as a Sensing Learner, it is imperative to get exercises using methods, processes, formulas, and actual examples of its use in the real world. Therefore, when learning find how something you learn fits in the practical knowledge of what you do every day. How? Find Real World Professionals Using the Knowledge You’re Learning Today. This can be done by interviewing, working with, or even just watching videos of how people do what they do in the real world. This allows you to see the practical knowledge in the mess of theory and concepts. Find practical exercises you can do on how to physically do something like sew, program code, or anything else you’re trying to learn. Look online or in person for practical exercises on how to learn a skill you want. Want to learn to sew? Sew a blanket. Want to learn to build a house? Build a dog house and learn the basics. Want to learn to program? Develop a program, application, or tool that you can use. The idea is to not learn something useless, but how to actually ‘DO” something. Not the concept of how to do something. Figure out how to input the new information into what you do every day. This is my favorite technique as it entails you to actually understand your life and how you work within it. Because if you know the inner workings of your life, you are easily able to input new information into your inner workings and instead of having to rebuild your life around it, you simply apply it into the grand scheme of what you’re already doing. This can be easily done if you keep a Day Journal. A day journal can be an important part of any person’s life by logging all your accomplishments, your botch-ups, and everything in-between. Why is it so important? Because a day journal helps you track the things you do. Letting you know which are helping you with what you want to do with your life, and those that aren’t. By identifying the things that went right. You can continue them and understand why they went right and how to keep them right. For example, being able to get to the end of the day and seeing the things you actually accomplished is inspiring and gets you pumped up for tomorrow. For me, being able to see that I wrote my weekly blog post t as well as went to the gym inspires me to keep succeeding. It lets me sleep, knowing that I was productive and had many everyday victories. Going in the opposite direction. It allows you to see places in your life where you would like to improve. As it is more easy to see the patterns as they emerge and eliminate them before they become too much of a problem. This can go to understand your bad patterns such as sleeping-in too much. Allowing you to think up a solution such as moving your alarm clock out of arm’s length to get you out of bed and more likely to not sleep in as a result. How to Use Intuitive Learning Techniques Intuitive Learners learn through interpretations or theories that link to facts. This is helpful in establishing the way things can work and when combined in finding how they do. The key for Intuitives is to be able to easily learn the concepts and theories of how things work through connecting the information. How? Find out how to put Two and Two Together. For every theory or concept, you need to be able to look and find connections from theories to real life. This entails being able to put two and two together by asking questions, being able to see how things connect in general, and following the trail of clues. This makes learning in this style a lot harder as many of the ways to learn this way comes from a general knowledge of how things work in universally and applying them to a multitude of situations. However, anyone can learn to harness its power in varying degrees, now let’s get started. How to Put Two and Two Together and Build Theories Yourself. First: Asking Questions Will Lead to Answers Asking questions is the best way to get answers. Which is why asking questions to professors, professionals, or anyone who has information you seek. Having all the information is the first step to being able to connect it. Second: Find Clues After you’re done asking questions, it’s time to find clues of how things work by looking at real life situations such as the methods, processes, and formulas of people, events, and scenarios. The more you know, the more dots you will have to connect. This can include research. To find the information, you can look at newspapers, reports, and other material to build information off. You can also experiment to verify information. Third: Connect the Dots To connect the dots, you have to have a map of the information you’re trying to combine. Each piece of information has to be connected to see the big picture. This can be drawn out. Knowing the connections will allow you to remember the storyline of the concept or theory. These roads between information is the best way to lead one piece of information to another. Fourth: Look for Patterns. While looking over data and other information, learn to look for patterns as everything biological eventually starts to form patterns/habits. For example, DNA comes in patterns of 4 proteins, matter comes in patterns of atoms, and people create habits and rituals they do every day to every year. The ability to see patterns will allow you to see the general system that everything runs on. This will allow you to begin to become a meta-learner and general systems logician. Learn more on how to become a Meta-Learner and General Systems Theorist? Then contact me at [email protected]. |
AuthorLucas Thomas, professional writer, entrepreneur, and business owner. Archives
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