“There is no intellectual merit in holding conventional ideas but there is sometimes wisdom in doing so.” – Michael Masterson

Have You Given Your Business “Stretch Goals” for 2020? 

“Double your revenues with one sales technique!”

“Triple your profits by optimizing your customer list as the insiders do!”

“10X the size of your business in one year by coming to my seminar!”

These sorts of promises are ubiquitous these days, but I’m not sure how they developed or where they come from. My best guess is that the crazy valuations given to a handful of high-tech companies that went public in the first 10 years of the century had something to do with it. The combination of genuinely innovative technology, marketing hyperbole, and financial prestidigitation created a view of how businesses become more valuable that seems (at least to old-timers like me) downright nutty.

There was a time in my career when I was young and innocent when I might have tried to persuade my employees that we could double our sales in one year. I do know that when the company had passed the hundred-million-dollar mark, I was asking our profit center managers to create ambitious annual goals. I was operating under the understanding that setting “stretch” goals would encourage everyone to think more creatively, work harder, and spend frugally.

That never happened. What happened was that the day those stretch goals were presented everyone was happy. I was happy. The other shareholders were happy. The managers presenting the goals were happy. Even the local liquor store manager was happy to supply us with the champagne we used to toast to the coming year.

But despite our best efforts, we never came close to achieving those goals.

Stretch goals feel good. And the logic behind them – that they will encourage everyone to stretch their efforts – feels good too. But it’s specious.

When the problem became apparent to me, I called my managers together and told them that I didn’t want them to set stretch goals anymore. In fact, I didn’t want them to set goals at all.

What I wanted, I said, was for them to give me projections. “I want to see what revenues and profits will look like in 12 months if we continue doing everything we are doing now and experiencing the same response rates as we are experiencing now,” I said. “I want to see the probable future, not another highly unlikely possibility.”

The rules were strict. If a particular marketing campaign was getting a 1.5% response rate in December, they could not project that it would be getting a 2% response rate the following year simply because they “planned” to strengthen it. Unless they had a proven test with a response rate of 2.5% or better, the best they could put down on the spreadsheet they were giving to me was 1.25%… because response rates always go down.

No one was particularly excited about this, but they did it. And the projections they came up with were very useful.

By basing their goals for the year on current reality rather than future hopes, we were able to see very clearly the challenges that lay before us. This made it much easier to see where we needed new products, where we needed to terminate weak products, what sort of marketing campaigns were on the rise, and which were losing steam.

In other words, we were able, for the first time, to understand what we really had to do to increase revenues and profits.

As a result, almost all of our profit centers started growing steadily, almost always exceeding projections and growing the business as a whole.

But even then, even in our best year, we never grew by more than 50%. Most of the time the growth rate was 20% to 30%. And guess what? You can grow awfully quickly with gains like that.

Why do projections work better than stretch goals?

I’ve given you the first answer already. It’s because when you look at reality-based projections, it becomes instantly clear what will and what won’t work in terms of increasing revenues and squeezing out higher profits.

The other answer is that the energy you waste thinking about how much fun it will be to be three or five or 10 times bigger can be invested in thinking realistically about the bump you are likely to get from the innovations you are introducing. And that will almost certainly force you to realize that you are going to have to work harder and think more creatively than you have in the past.

In other words, projections, dismal as they may be to look at once a year, are very effective in getting everyone to stretch more – i.e., to accomplish what stretch goals promise to give you but won’t deliver.

“When I was a child I dreamed as a child. When I became an adolescent I stopped dreaming and gave up my soul to desire. I became a man when I gave up desire and began to take action.”– Michael Masterson

So… You Want to Get Rich? Really? 

A white limousine pulls up to the parking lot where the school children are playing. The kids pause to look at it. A chauffeur gets out, walks around the car, and opens the passenger door. Out steps a young boy in a top hat and tails. “Who’s that?” the children murmur. He comes closer and they can’t believe what they’re seeing. “It’s poor little Mark Ford!” one of them exclaims.

This was a recurrent dream of mine when I was in fourth grade. It was a mental movie I scripted, directed, and starred in. Every night, I’d go to sleep, eager to watch it again.

Dreaming about being rich is fun. I recommend it. Such dreaming requires nothing from the dreamer. The dream itself is the reward.

Wanting to be rich – that’s another thing entirely. The word “want” has two meanings. As a verb, it means a desire to possess or do something. As a noun, it means a lack or deficiency. So wanting to be rich – i.e., desiring something you lack – is a two-fold problem. The desire to have what you lack creates dissatisfaction. Dissatisfaction leads to anger and blame and sometimes self-loathing.

Deciding to be rich – that’s yet a third thing. It is a commitment. It is a promise to yourself to abandon the behaviors of the past and adopt new behaviors that motivate you towards the objective.

I decided to become rich on a Wednesday evening in 1982, driving to a Dale Carnegie meeting. That decision changed my life. It launched me into a get-rich orbit. Getting rich came quickly, and growing richer became as effortless as floating in space.

There was a lot of baggage that came along with me on that trip. Baggage that informs my thinking about acquiring wealth today. And there’s a lot of data that supports what I learned through personal experience: that most people who become wealthy do so by committing themselves – 100 % – to achieving that goal.

So what does that tell you about where you are right now?

A short quiz to find out if you have what it takes to become rich 

1.-How many hours a week are you willing to spend working? 50 hours? More than that?

Fact: 86% of millionaires that work full-time put in 50 hours or more each week. Two out of three entrepreneurs and professionals in the top 10% of income earners work more than 60 hours per week.

2.-How long are you willing to work those extra hours? 5 years? 6 years? 10 years?

Fact: The average time it takes to acquire a million-dollar net worth is 32 years. In a recent study, 74% of the millionaires reported that they achieved that status at 55 years or older. Only 7% achieved it before the age of 45.

3.-How do you feel about taxes? What percentage of your income do you currently pay? Are you willing to pay more than that? Are you willing to give the government 50% of your income? Are you willing to work all day Monday and Tuesday and half a day Wednesday for the government?

Fact: Anyone with an income above $250,000 a year is paying approximately 50% of it to taxes. Although constituting less than 5% of the population, millionaires pay 40% of the country’s income tax.

4.-Are you a saver or a spender?

 Fact: Self-made millionaires give a high priority to saving. Most people save less than 5% of their income, but millionaires save an average of 23%. In a study of 10,000+ millionaires conducted in 2019 by Ramsey Solutions, 48% reported that they save at least 16% of their income.

5.-Do you like to read? More important… do you read?

Fact: Studies show a direct correlation between the number of books read and the number of dollars earned. The average millionaire reads 11 or more non-fiction books per year.

You see where I’m going with this, right? Point is, if your answers to the above questions don’t tell you what you want to hear, you might want to give up on “wanting” to be rich.