Motivate Yourself

(FIRST DRAFT - the below has yet to be Proofed & edited)

Elsewhere in the book, we spoke of setting goals – and I explained why I felt it best to have an Immediate, Mid-Range, and a Long Term goal. Here I want to address your motivation to hit those goals.

While success in of itself should be enough motivation, I feel that you should promise yourself a reward for achieving the stated goal – if the goal had you to Aim High. Go for the big rewards for the big goals but not too many little rewards for the little goals – or else the reward/motivation system will not have the impact required to be as effective as it could be.

In 1997, I told myself that I would like to take some chips off the table with selling one of my businesses. I was offered $6.8 million – but did not sell as I felt it to be worth $10 million at the time. When I decided not to sell for the $6.8 and then made it part of my Immediate goal to sell for at least $10 million – I also promised myself a reward for when I hit the goal. (Notice I say when and not if. I never set goals that I am not confident that I will achieve – and I never give up or compromise downward my goal)

My family always wanted a nice weekend house on the lake, I wanted one of the new (for then) Dodge Viper GTS’, and we also wanted to upgrade our entry level Class A motorhome to a diesel pusher motorcoach in the mid/upper level. So I went to the Dodge Dealer and got a Viper Brochure and taped it to the hutch on top of my credenza. I also taped a photo of a high level motorcoach up, and a photo of a beautiful house on the lake. These photos were right behind and to the side of my computer monitor – to where I saw the images many times a day for the year it took me to sell the busines. During that period, I was reminded daily that the objective was to sell the business for as much money as I could get, which because of the formulas used to buy a business -- required I run the business much differently than if I was to keep it. Running it that way is the part I really needed to be reminded of.

To explain further, buyers put all emphasis on the profit of the business and not the assets of the business – at least for the type of business I was selling. I was ultimately bought for 4.5 times my annual profit (regardless of my assets), which came to $16 million. Ordinarily, I would be looking long term (which I had always done in the past) and roll much of the profit back into the business for newer and nicer assets, and expansion. However, by doing that you reduce your profit – and as such, the price offered will be less 4.5 times that money you spent to improve the business. It forces the person wanting to sell his business to starve it, and that goes against your natural instinct of growing a business. So back to the story, I sell the business and promptly reward myself with the lake house, car, and motorcoach.

What is most important is that you have to be reasonable with the size of your rewards – and to also take care of your family and key managers (explained in more detail in the “Motivate Others” section). While $750,000 for the lake house, $70,000 for the Viper, and $350,000 for a motorcoach is a lot of money – it was not that large of a percentage of my total proceeds from achieving the goal. In the case of the lake house and the motorcoach, these items were shared equally with the entire family, who also wanted them as a reward, and not just something for me. The lake house is and asset that appreciates in value while you have the benefit of using it. Additionally, we created a Family Limited Partnership with each family member having ownership, and trusts for every member of my family. It would be hard to accuse me of personal greed at the expense of my family.

With my key people, I negotiated for their salaries increased and each to have golden parachutes. I then spread over $350,000 in “thank you” bonuses from the sale of the business to seven of the top managers -- based on their organizational ranking.

Another example of a reward promised came in 1992, when I promised myself a Rolex Day/Datejust watch with a President band when I hit $100,000 profit in a month. When that came in April of 1995 – I bought the watch on the last day of the month. The $14,000 spent was a reasonable percentage of my portion of one month’s profit – and at the same time I bought my wife a 3.5 caret diamond to spread the wealth. If you do not spread the wealth with your family (especially your wife) – you will have problems with the reward system, or have to sneak it, and that is not honest (also discussed in this book).

So in a nutshell, promise yourself a reward that is reasonable with the goal the reward is to motivate you to achieve, and if that reward is something that only you can really enjoy (like the watch and car were) – then expect that you will need to double that reward to satisfy your family. Award yourself the reward quickly after achieving your stated goal. Be honest with when the goal has been hit (do not compromise it down) and be reasonable with what the reward is compared to the goal.