The Butler Project

One of the interviews I’ve done was with Todd, an incredibly successful network marketer. Todd is 26 years old; he’s been working at this for 5 years now, and he brings in over a million dollars a year with his partner, who also happens to be his brother.

Mark: Having been on the path that you’re on for a while now, and having accumulated some money, if you could only give me one piece of financial advice, or a couple, you know, what would the advice be?

Todd: You know, it really comes, my perspective also comes down to understanding the type of money I’ve made because when you make money in network marketing, it really is a different vehicle. And I guess my advice would be to create an income or incomes that are not completely dependent on your showing up. Whether that be through becoming a manager of a sales office where you’re getting paid a percentage of the sales of the other sales people that you have or a percentage of profits, or whether that be investing in things that are going to pay an annuity or a residual income or whatever it may be.

The fatal flaw that most people have in their idea of creating wealth is to work a job to where they make a good income and to save that and put it away, and the majority of people just don’t do that.

If you can create an income that is ongoing; it’s a hard thing to do, but there’s a lot of ways to do it, and I’m not saying that network marketing is the only way to do it. You can do it in real estate, you can do it by owning a parking lot, you can do it by building your own company; I mean there’s a lot of ways to do it. But creating some type of passive, residual income or multiple forms of it is really the only way to create total retirement freedom for yourself.

Mark: And, network marketing, there’s no question that’s a tough business; that’s a business with a lot of rejection in it on a daily basis, but you’ve had success there. Looking back now, five years later, thinking of all the crap that you did have to deal with and go through; was it worth it?

Todd: Oh, absolutely, I mean if you were to do it from a numbers perspective . . . if it were 8000 people that had rejected me in the last five years, I get paid more than 10 dollars for every one of those people who rejected me every single month.

I’m laughing.

Todd: I mean if you break it down to actual numbers, I’d say I’d probably been rejected realistically by maybe 1000 people so I’m making [more than $80] a month off of each of those people

Mark: (Still laughing.) That’s 80 grand!

Todd: You know, if you look at it from that perspective, oh yeah, who cares?!

Mark: That puts it in some pretty amazing terms . Maybe that’s gonna turn some of us on to network marketing.

Todd: Yeah, [you] could definitely do worse.

Let’s face it, getting out of debt, sticking to a tight budget, or building a new business is not always fun. In fact, many days you might feel downright depressed about it. And that’s OK because it’s hard work to make up for past mistakes, delay gratification, and keep at it when results are few and far between. Does that mean you should quit? No! That just means you accept that some days will be hard and you’ll figure out how to deal with them.

Try some of these solutions; they work for me.

1. Do something physical.

Lift weights, go for a walk, take a hike, ride your bike, run around the block, go for a swim, play Frisbee in the park, whatever you enjoy doing, do it! Physical activity will not only distract you from your cares, but it’s scientifically proven to boost your mood.

2. Play.

I have kids, so I always have someone to play with. It’s amazing how a short game of pretend, Chutes and Ladders, or kick ball can improve my mood.

3. Serve others.

Nothing is a quicker antidote to a pity party than helping others. Do something nice for your spouse, your children, even your mother. Send a card, perform a secret act of kindness, help a neighbor with yard or house work. It doesn’t have to be a big thing, just think about someone else and act on their needs for a minute.

4. Gratitude.

Gratitude goes right along with service. You can’t help but feel better as you count your blessings, and nothing makes your blessings more apparent than serving people in tough situations. Oprah made gratitude journals famous a few years ago. It’s not a bad idea to start a little notebook where you write down the things you are grateful for. It’s amazing how many things you start to notice when you’re paying attention.

5. Avoid sugar, caffeine, and other stimulants.

Yeah, yeah, we all know we need to eat well. But junk food tastes so good, especially when you’re having a bad day! Did you know stimulants, including sugar and caffeine actually increase anxiety? Check out what not to eat here

6. Make a visual.

Sometimes we need a visual reminder of where we’ve been and how far we’ve come. I’ve made a simple one to show how much debt I’ve paid off (remember my vending machine venture?) and have that reminder that I’ve done a good job. The visual reminds me that by continuing to do the hard work, I’ll be through with debt soon. If you don’t have debt, make a net worth visual or a bar graph showing your business’s improvements over the last few weeks, months, or years. Include your goals in the visual and post it somewhere you’ll see it often.

7. Get to work.

I loved this post about whining. Quit whining. Get to work. If all your work is done, play; play hard.

8. Surround yourself with Success.

If you remember Dan, one of Mark’s interviewees, he read books every day:

Dan: [Read] self help books– it could be anything, it could be Tony Robbins, it could be sales books, it could be Zig Ziggler, Tom Hopkins, whatever . . . Just get in the habit of reading, even if it’s only for 20 minutes a day or a half hour a day where you wake up and you start your day with that and it just gives you ideas; it gets you in the right mind set. [Basically] you need a personal mentor, and I use a lot of those books kind of as that to get me upbeat and get me going.

Read blogs about other people who are working at doing what you’re doing. They’re proof it can be done.

Read the Butler Project. Every time I listen to or read about a millionaire interview, I am inspired and feel like I can take on the world. They did it. So can we!

9. Reward yourself.

When you get to a certain point, you’ll have some financial and business breathing room. Think about a “sunny” day fund. Even if you’re just saving $10 a week of your grocery money so you can go to lunch with a girlfriend or buy a pair of shoes in a few weeks, it’s a good idea to have plans for you.

10. Remember, it takes time to change your life.

Whether you’re working on paying off debt or building a business, expect that it will take a significant length of time to produce significant results. Our family owns an ecommerce site. Last summer, after working on it for a good 10 months, we were all pretty much ready to throw in the towel. We were doing a lot of work for a very little money. We took 2 months off. After the break, we got together and decided to make some significant changes on the site and with our suppliers. Then we got to work. It was a lot of hard work and still, the results were meager.

Then the Christmas season began, and business picked up. We were enthusiastic and eager again. January came and we expected the same serious slump we had experienced the previous January. It didn’t come. In fact we held steady through January and February and now we’re setting new records for traffic each week.

Remind yourself it takes time. All the hard work we did months ago (setting up accounts with new suppliers and entering literally thousands of products into our database) is paying off now. We’re not entering new products anymore, but we are enjoying the results of that hard work months later. The little things you do today (saving that 10 bucks, or advertising your business, whatever you’re doing) can make a big difference tomorrow or next week or next year. It takes time.

Wow. There are so many good blogs out there right now. Here is a look at a few of the posts I read and enjoyed this week.

Frugal Dad wrote a great article entitled Language of the Perpetual Poor. It’s an interesting look at how our thoughts/beliefs influence our money decisions and therefore our financial lives. I bet many of us have had these thoughts at one time or another, and all of us have been exposed to people who believe them. The thing is, it’s easy (and entertaining) to read an article like this and think, “Oh yeah, that’s dumb.” What we each need to do is look at ourselves and see where we are suffering from similar thinking and make a change!

Shanti at antishay.com gave readers a first hand look at her efforts to make money on the side. What I liked most about this article is that she’s doing it, and she tells us about it honestly. Her enthusiasm is infectious and she’s really trying to help.

For a laugh, check out The Orange Paper’s Fuel for Thought. It will be the first time you’ve ever been grateful your car didn’t run on printer ink. (Sorry, the money values are not in dollars, but you’ll get the idea).

And, on a serious note, check out Steve Olson’s post, Satisfaction is the Death of Desire Here’s my favorite quote:

Somehow, when we were kids, we began to believe we needed our desires satiated to be happy, but we don’t, and this mind set cheats us out of many happy moments.

Recently Oprah did a show about Living With Less. She introduced her viewers to two families who live wasteful and, I think somewhat unconscious lives. I recommend you follow the link above and check the story out for yourself, but I’ll give you a quick recap here too.

The Dominguez Family

First was the Dominguez family. They admitted to being wasteful in many ways:

• heating or cooling the house to the same temperature outside
• throwing leftovers and other perfectly good food away
• cooking three or four different meals for dinner because the kids are picky eaters
• drinking half of a water bottle and then throwing it away

Oprah also highlighted the fact that the family spends a lot more time with their personal electronics (ipods, dvd players, Tvs, video games, cell, phones, etc) than they do with each other.

The Keegan Family

Next was the Keegan family. They waste a lot of electricity and food; they go through a roll of paper towels and many paper cups and plates a day. The kids are addicted to consumer items including vanilla steamers from Starbucks and video games.

Oprah challenged each of these families to live with less–to turn off the TV, to take the bus to school, to share the same meals, to drink tap water, to eat out less, to use less electricity, and to generally think more about their consumption.

After the week long challenge, the families ultimately found they were happier and more connected. They both claimed they would continue to make changes and live a simpler, less consumer oriented life.

I loved that one of the moms, Kriss Keegan said, “We were checked out. We’re checked in now.”

Shannelle

After the families, the viewers were introduced to Shannelle, who had been living a life centered on consuming just a few years ago. She was making 6-figures, eating out most nights, wearing the best and most expensive clothes, and was completely unaware of how her lifestyle was affecting her. “Before I saw the Debt Diet show, I was focused on just consuming and not really knowing what I was consuming,” she says. “I had the hottest, the latest, the cutest, the best. I lived in 675 square feet, and I couldn’t understand where my money was going.”

Shannelle, after watching Oprah’s Debt Diet show, made serious changes to live on less, and do more for herself (like styling her own hair). Her new philosophy: “I want to make sure that I only use what I need, not what’s available to me,” she says. “Life is not about spending. It’s about living.”

Harpo Studios

At the very end of the show, Oprah told the viewers that her studio goes through about $41,000 a year in disposable cups. After staging a “no paper cup” day at the studio, she decided to make it permanent.

What can we learn from this show?

What struck me about the families highlighted was how unaware they were of their lifestyles. It seems to me that their lives were lived in reaction to what was going on instead of deciding how they wanted to live and making it happen. They weren’t considering what was going on and if that was really how they wanted to live.

In Business

Take Oprah, for example, she feels very strongly about “going green,” recycling and not wasting precious resources. I’m sure it was a shocker to her when she realized how much money she was spending and how much trash she was creating through the use of paper cups. That’s not okay with Oprah, so she made the conscious decision to change the situation and bring it in line with how she wants to live her life.

In Parenting

If you’re a parent, think about how often you just let your kids watch TV, play video games or spend hours texting because it’s easier? When our kids are engaged in electronics they are quiet, they’re not making any trouble, they don’t require any brain power from us . . . we parents can do what we want. But we’re reacting to life instead of looking at the situation and thinking about how we really want it to go. If you’re looking at what’s really going on, you know you are the parent; it’s your job to raise this child into a responsible adult. You know video games and TV do little to help with that responsible adult role. You know you only have a limited time with your child. So, you decide to put down what ever you’re doing and take a few minutes with your child: read a book, ride a bike, help with homework, do a science experiment.

In Finances

Same with finances. Mr. Dominguez’s comment at the end of their segment was “Some months, I have to borrow money. If I get a bonus, I can pay back my mother or friend. Right now, I’m on the brink of, borderline, where I’m going to lose everything.”

I’m sure it’s not really okay with Mr. Dominguez to ‘lose everything’ over cell phones, half empty water bottles, a thermostat set too high, and a garbage can full of perfectly good food. I’m sure he and his family could sit down and make some decisions about how and where they want their lives to go and then figure out what role money needs to play in getting there.

Thank You

We can all learn from these examples; we can all take a minute or an hour or a week to examine our own lives, our own spending, our own family time and consider if we are really living the lives we want to live.

Thank you Oprah, and thank you Dominguez and Keegan families for having the courage to share these stories.

Back in October of 2006, when Ford announced it would no longer be making the Taurus,  Saturday Night Live’s comment was, “Now, people in their 30’s will have to find another way to announce to the world that they have given up on their dreams.”

While a lot of people bought the Taurus, it did always fall short in the style category.

What does your car say about you?  What do you imagine people think as they see you climbing in or getting out of your car?  Do  you hope your car tells the world you’re successful and smart?

Does It Matter?

Maybe, maybe not, you’ll have to decide that for yourself, but one thing that matters to all of us (whether you want to think about it or not) is the bottom line of owning a car: How much will it cost, and how will you pay for it.

Your Plan

How does a car purchase fit into your financial planning?  Are you preparing for it by socking away a car payment each month in your savings account?  Or is your plan to sell some stock or other asset to come up with the money?  Will you take out  a loan and “figure out” how to pay for it as the need arises?

If there is one thing I’ve noticed about the millionaires we’ve interviewed, it is that they don’t like debt.  They think about their finances and plan more than the typical person how to make and how to spend their money.  They stay out of debt.

What does this say about buying a car?  It’s pretty much all about what you can afford.  How much car can you afford?

A Car Is Not a Good Investment

We all know cars depreciate–they lose some of their value every day, at an average of 15-20% each year, even more the first year.  That means that a car that was worth $24,000 new will lose approximately $4800 of it’s value the first year you drive it.  Would you invest in an investment that was guaranteed to lose 15 to 20% every year?  I think not.

A car is an expense. And not just the purchase price, everything about a car is an expense.  When you’re planning how to pay for a car, remember after you buy the car you pay tax, license, and registration, you fill the tank with gas, you pay for insurance, repairs, and maintenance.  You pay to wash it; you pay to park it.

I’m not telling you this to depress you, I’m telling you this to open your eyes to the way a car fits into your financial plan.  Avoiding unpleasant thoughts, like all the extra expenses associated with a car is the way we get ourselves into debt and other financial troubles in the first place.  Taking the time to examine your feelings and the total cost of ownership is actually the way to take control of your finances instead of being controlled by them.

So, Think About It

How will  you pay for the car?  Will you go into debt?  Will you really go into debt to lose a guaranteed 15 to 20% of your money each year?  Ouch.  You don’t have to go into debt.  You could be saving money each month in anticipation of your next purchase.  You could find ways to spend less and choose a less expensive car to drive.

There Are Ways To Make Purchasing A Car Smarter

Here’s how one of the millionaire couples featured in The Millionaire Next Door does it: As farmers in cotton country, they shop for quality, late model, used Japanese cars every 2 to 3 years.  They find they can get better prices in the city from private owners, they drive those cars for two or three years and then sell them in their rural community for close to the price they paid.

Why Japanese cars?  It seems they hold their value well and require few repairs during those first 5 to 6 years.  This millionaire couple lets someone else drive the worst of the depreciation off the car and then finds cars that will sell well in their area when they are done.

You too could figure out a system where you’re not taking the brunt of the cost of owning a car.  The Internet is full of information to help you. Sites giving new and used car prices abound.  Edmunds.com has listed cars by depreciation rates.  There is great cost of ownership information at the Internet Autoguide.  Many auto insurance sites will give you a quote if you’ll give them your specifics.  Use that information to find out which car models you’re considering cost the most or the least to insure.  Cars that cost less to insure typically cost less to repair.

Points to remember:

• Don’t be defined by what you drive.  Get a car you like, but don’t let your emotions take over the car buying process.  Driving more car than you can afford might look good on the outside, but having control of your finances feels good inside and out.
• A car is not generally a good investment.  You can, however, find ways to minimize your depreciate costs through researching depreciation rates, insurance costs, and total costs of ownership.
• Take the time to plan how you will pay for your next auto.

On Monday we featured John, who spent his career in corporate America and now runs his own company. These excerpts showcase how integrity, networking, and surrounding yourself with the right people are so important to your success.

Mark: What is the one attribute you feel is crucial to your success?

John: I’d have to say integrity. Integrity takes a lot of different forms. If you’re working hard when the boss isn’t watching…if you say something is going to get done then it will be done. There’s no room for excuses, it’s all about results. I found that by becoming known as a person of integrity, being an honest person, it just has so many different tentacles.

People will be more open with you. they won’t have their guard up as much because they won’t feel like you’re trying to stab them in the back, that you’re trying to take their job, that you’re trying to do something to self-promote. You just get a lot of leeway and a lot of freedom. With that leeway and that freedom you’re given the opportunity to really shine and that’s what you have to do.

So I’d have to say the one word would be integrity because integrity is power. I work a lot with vendors, vendor management, and supply management. When you tell somebody like a supplier or a customer that it’s going to happen, it just has to happen. And then when you say something people just check it off as it’s done. You don’t need to have a boss following you up, and what follows out of that is a lot of additional responsibility, opportunities and projects.

Mark: Is there anything else you would share with me about getting ahead?

John: After I read [your] email it caused me to think a little bit, and there are a couple of other things that we haven’t touched that I think are really important.

[First], the importance of networking. Networking expresses itself in a lot of different ways. Look in your career for mentors…people that are a little bit ahead of you in their careers that can kind of take you and they can point you and open doors for you.

I’m kind of past that now but I used to do it quite a bit. [Let's say] you’re looking somebody to hire, you call somebody that’s credible. They help you here, and then you help them. [Maybe] you’re looking for work or if you’re looking for suppliers or manufacturers. That’s where your network comes in. A network in a big corporation is so important because that’s where you get opportunities to move your career.

The last thing I’d say that we haven’t talked about is the importance of surrounding yourself with good people. It’s a real skill to be able to recognize talent and skill and in others. You have to look beyond hiring people just because you like them.

If you’re a a white 40 year-old male and that’s the people you hire…you’re pretty vanilla - you really lose out. I have a good friend, a partner; he’s not college educated. He’s very bright, and he’s extremely business savvy; he just has an innate business sense.

He’s made millions and millions and the way he’s done it is through the people he hires. He hires the best in every field. People that have their Harvard MBAs…that kind of thing. That has been his leverage.

You have to be confident in yourself and not be threatened by that. I have seen in corporations and corporate America…people get threatened by people below them and so they will hire down so they feel safe and secure that somebody won’t come and take their job.

What I learned was quite the opposite in my career. My approach was “I’m going to hire the very best and if they push me then we’ll all win.”

I honestly believe that if you hire the best not only do you come out better but the organization raises up and everybody gets opportunity. I have seen in corporations and some cultures where the incentive is to hire down so you look good. In time you don’t win, because in time you can’t do it all. As you move up the ladder and the responsibilities get big enough, you’ve got to have people you can trust underneath you.

If you’ve established a pattern of hiring down…you’ll mentally implode, and that’s just the way I’ve seen it so many times.

I talk a lot about entrepreneurship, and most of the millionaires I’ve interviewed so far made their money as entrepreneurs. There’s another perspective to be had. The vast majority of people with never pursue their own business (which I consider unfortunate), so I feel like we need to give some attention to how a person that spends her/his career in corporate America can achieve financial independence.

I spoke with John, a successful older gentlemen who spent over ten years with Hewlett Packard “when it was still a great company”. He told me the lessons he learned there have been integral to his success as an entrepreneur.

He first talked with me about the attitude he took into his corporate job.

John: I’ve never really set any financial goal to be at some certain level, and my whole approach to my career has been do the best I could wherever I was and then the opportunities and the doors would just open naturally. A lot of people will have very specific goals of where they want to be by a certain time. I had some very broad goals - I had a goal coming out of college to double my income in the first five years (which I did), and it doubled in the next five years, but it wasn’t anything that I set out in a plan. I approached it more like “I will do the very best I can with whatever I’m given and the rewards will follow.” And that’s what happened.

The attitude of doing the very best with what you’re given isn’t something he saw a lot of during his career:

John: I did a lot of hiring and recruiting of MBAs through my career from some of the top schools in the country, and they’d come in with a little bit of a primadonna attitude. [They acted] like the pick and shovel work was beneath them and they wouldn’t put out…and therefore they’d lose out on opportunities because they saw themselves one or two levels above where they were. They had the potential but it doesn’t matter how bright a person might be – they’ve got to perform where they are. In any organization you’ve gotta perform where you are [or] you’re not going to be given more responsibility.

That’s the whole approach I took with my career. Early on in my career I wanted to be in management, but in order to do that I took a position that didn’t seem very meaningful - it was managing a bunch of people in accounts payable, and it wasn’t by itself a real highly visible kind of position, but it got me into (management) at a company like HP that [had] all the management training. I got the experience, and established the credibility.

I believe an attitude of entitlement and ‘being above that kind of work’ is one of the biggest threats to success for people of my generation. John has gone on from his ‘lowly’ position as an accounts payable manager to being a successful entrepreneur in the health supplements industry. He works now, not because he has to, but because he enjoys it.

Ask yourself: are you more similar to John in your approach to your work? Or are you like one of his primadonna MBAs that saw themselves as above the menial tasks?

If you haven’t read about my foray into the world of entrepreneurs, here’s the short version: Looking to generate some passive income, I bought some 25-cent vending machines through a classified ad. I put the cost of the package, the whole $11,000 on my credit card. The package included a Locator Service — someone to come to my city and find businesses where I could profitably place my vending machines. The locator company warrantied a certain number of vends per day, and assuming they stuck to their warranty, I would be making about $2700 a month from my little vending machines! One of my biggest concerns going into this business was, “How will I carry $2700 worth of quarters?”

The Saga Continues

Well, I had signed all the papers, now I just had to wait. The candy arrived first. A Fed Ex truck showed up, and two people unloaded boxes and boxes of candy. 1/4 of it was Chiclets. Does anyone even like Chiclets? Tom, the vending machine salesman, had assured me gum was a top seller. He was the closest thing I had to a mentor, so he must be right. Building an empire on Chiclets. It felt good . . . or so I told myself as I hauled boxes of peanut M&Ms, Runts, Chiclets and small encapsulated toys to my basement. It was a great start.

The machines arrived 2 weeks later. Awesome. No one mentioned they came in pieces. Luckily, I’m married, and my husband did the manly thing and put them together. Now we just had to wait for the locator service. No problem. When you’re going to make that kind of cash, you don’t mind waiting a few days.

Please Come

Days, however, turned to weeks. I started making phone calls. I tried to be patient and understanding, but all I wanted to do was to get out there and make some money! By this time I had a credit card statement with a balance larger than I’d ever seen. We had carried a balance on a credit card before, but we worked like bandits to pay it off. I was anxious to start working like a bandit to pay this one off too. No one at Cornerstone Marketing shared my urgency or enthusiasm. They said my locator, Craig, was busy elsewhere in the country, but he would get there. “Two weeks,” they assured me, “Two weeks.”

Two weeks turned into two months. The machines got dusty in my garage. I made phone call after phone call. I knew everyone by voice at Cornerstone Marketing. I was figuring out their family relationships –Chris was the son, Melanie was either his wife or sister, and their Dad was the BIG BOSS.

Finally Cornerstone gave me the locator’s phone number. I talked to my locator, several times. First, he couldn’t come because Cornerstone wasn’t paying him enough. Then he couldn’t come because he and his brother had a huge fight. Another time he had the flu, worst case he’d ever had in his whole 52 years. Then he started giving me the “Two weeks” promise. Two weeks turned to four, four weeks to six, etc, etc.

Things started getting ugly. Chris (the original salesman at Cornerstone) had started refusing my calls months before, but now no one would talk to me. I finally filed a complaint with the BBB. Cornerstone claimed this (filing the complaint) voided our contract. How convenient for them. I stood behind the complaint; Cornerstone refused to answer.

Eventually, my locator showed up. He called me that morning and claimed he would have 15 awesome locations for me by noon. At 3:30 we met at a gas station where he told me he got 1 good location and 6 terrible ones. He then handed me a map of a neighboring town, circled a few spots I might want to try, and wished me luck.

I placed vending machines at the 7 locations and started servicing them. After two weeks I got 4 quarters from one, 8 quarters from another; my monthly gross totaled less than $100. Carrying those quarters wasn’t an issue. Counting them took moments. They were not even enough to cover the minimum monthly payment on my credit card.

I had pretty much given up on Cornerstone. Even with the warranty, they couldn’t manufacture decent locations for me. The BBB complaint had seemingly led nowhere, and I had little hope of getting any of my money back. I thought maybe Tom, the vending machine salesman might put some pressure on Cornerstone for me. But then hurricane Katrina hit his business, and I never got a hold of him again.

One day a lawyer from the Federal Trade Commission called me. He was investigating Cornerstone Marketing, and had seen my BBB complaint. I told him my story and signed a deposition. He said he’d let me know how it turned out.

How It Turned Out

• I have 13 vending machines in storage (two went “missing” when their location changed management.) One of these has been vandalized, but still works. I tried selling them online. I tried selling them in the classifieds. Anybody want to buy a vending machine?
• My total (net) take in quarters over the 8 months I had the machines out was less than $1000, somewhat less than the $21,000 I was “warrantied.”
• Chris, Melanie, Carol, and Sidney Putnam were all charged with two counts relating to “unfair or deceptive acts or practices in or affecting commerce.” (At least that’s my understanding of the formal complaint against them.) The judge suspended the $3 million judgment against them because they showed they are unable to pay that full amount. They were required to pay $55,000 plus the proceeds from the sale of a house Chris and Melanie owned. No one has called me to come pick up my settlement check. I’m not sitting by the phone.
• I’ve decided my vending career is over.

He Knows What He’s Talking About

One of our millionaire interviewees, Dan emphasized again and again that there are 3 essentials entrepreneurs must have: a mentor, money, and people. Let’s go through them individually:

A Mentor

Sure, I knew a few people who had made money with vending machines. I didn’t discuss this offer with them. I didn’t have a relationship with any of them where I could call them up and get advice on what to do next. I had no one to turn to when I wondered How do I get my own locations? Where are the best locations? What should I do with all these machines?

Dan also stressed the importance of experience–knowing the business you’re getting into.

The only experience I had with vending machines prior to this business opportunity was that I hated my kids begging for quarters whenever we saw one. I didn’t like vending machines. I thought they looked tacky and made a mess of the business where they were placed. When considering buying my own machines, I ignored my negative feelings because I was focused on the promises of two salespeople who stood to gain from my leap into vending.

I had no mentor and no experience.

Money

I had no money to invest in this business opportunity. I leveraged my good credit into this vending “route.” I ended up with 13 vending machines (anybody want to buy a vending machine?), some airline miles rewards, a whole lot of useless vending product, and 18 months worth of credit card payments.

People

Did I have people? I had a husband who supported me. He put my machines together, helped me deliver them, and even placed a few after the original locations proved their inadequacy. In the right business, we’ll do great together.

What Did I Learn?

I learned just how essential money, a mentor, and experience are for an entrepreneur. I learned about sales, and shady business offers–deals that sound too good to be true.

I learned that I can come back. I can pay for my own mistakes and try something else. I learned humility. I learned something about myself and the work I am and am not willing to do.

Had I taken my time and paid cash for one vending machine and the product to fill it, I would have learned these lessons of experience at a much lower price, but I’m back. I’m smarter, wiser, and ready to try again.

Could you recover from a multi-million dollar loss?

Here’s more from my conversation with Mike, an advertising executive. In this excerpt he tells me about overcoming adversity, and his greatest attribute.

Mark: Can you think of … a setback that you’ve experienced and what you learned from it?

Mike: Yeah, in 1985, I had four of my biggest clients go bankrupt on me. It was all within a month of each other. Left me hanging for 2 million dollars.

Mark: 2 million dollars in 1985 - that’s a lot of money in today’s dollars.

Mike: It was a lot of money then.

Mark: How did you bounce back from that? What did you learn from it?

Mike: I learned you just have to be persistent. It took me four years to work out of it. You just face it up front and you deal with the people that you owe money honestly. You call them, you dont wait for them to call you, you give them updates all the time, and then you’re very careful with who you give credit to [in the future].

Mark: [C]an you give me a rough idea of what it’s been worth to your company - the fact that you did persist instead of giving up?

Mike: Oh, its made all the difference - I didnt declare bankruptcy; everybody told me to. Your name is everything in business. Having a name associated with integrity and [meeting] your commitments makes all the difference. It’s meant everything…I can’t place a dollar figure on it; millions and millions.

Mark: What attribute of yours, then, has been the biggest factor in the success you’ve experienced?

Mike: I would say my persistence, and just staying with it, not giving up, showing up every day, attacking the problems every day, and doing a little bit at a time. Having an attitude that you’re not going to get rich overnight. There’s not one little scheme thats going to make you rich. You just get up and go to work every day, and try to work through things, and after a while you’ve built something that has value. It’s persistence.

Are you noticing how often the word persistence comes up in these interviews?

I know we’re barely scraping the surface of Mike’s experience here, so take a minute to think through what he overcame. $2 Million in 1985 dollars is approximately $3,950,000 in 2007 dollars. Try to imagine the feeling of losing almost $4 Million in a month.

Setbacks are a part of life. One of my favorite success authors says life is nothing but a series of problems, only interrupted by the occasional crisis.

If you want success and financial independence, accept the fact that problems and setbacks are guaranteed for all of us. Embrace each one as an opportunity to deal with the next more easily.

My accountant emailed me the other day. He needed some more information about Loose Change Vending, a business I had started a few years ago and got rid of last year. I thought I was done with Loose Change last January, but apparently I have one more tax return to file that reminds me of my huge entrepreneurial mistake . . . misstep . . . or trip and fall into a deep dark hole.

A couple of years ago I was reading Kawasaki’s Rich Dad, Poor Dad. It was one of my first entreprenurial self help reads, and he convinced me that passive income is the way to go. (Passive income being income for which you work once and are paid many times, or, ideally, for which you are paid residually forever.) To me, any money that comes in without requiring your constant presence seems like a pretty good idea.

Vending?

So, I was reading the classifieds one day and an ad listing a vending business for sale caught my eye. Eureka! Vending is a passive income– you just go and service your machines and pick up the quarters every month or so! What a great idea.

Not wanting to be rash, and a little afraid of jumping into my own business so quickly, I thought about it for a few days. I discussed the possibility of vending with my husband. I called my parents and talked to them about it. Although we were sure vending couldn’t be as easy as it sounded, none of us could think of a reason not to at least check it out.

So, I did it. I called the 800 number. A lady with a great southern drawl answered the phone at First American Vending. She connected me with Tom, vending salesman extraordinaire.

Tom was really nice. I questioned him; he educated me. Turns out it was not an established business he was selling, it was 15 brand new machines plus inventory and a guarantee that I would have my full investment returned to me within 5 months. Wow. That sounded like a good deal. That sounded like a great deal. That sounded like a deal to good to pass up.

Still, wanting to err on the side of caution, I talked to my husband some more. I talked to my parents again. I called my brothers and explained the business to them. Everybody thought it sounded great. Everybody was thinking about calling Tom themselves. Who knew you could make that much money on little 25 cent candy vending machines?

With my whole family excited and thinking of following me into the vending business, I felt some responsibility and decided to expand my circle of advice. My husband had a friend whose dad had owned vending machines in the past. He said they did alright and provided a steady income. I looked for more experienced vendors, and Mark reminded me he worked summers for a neighbor whose lifelong business was in vending. This neighbor had a big house and sent his kids to private schools, apparently vending was working for him! For further confirmation, I asked Tom if he had vending machines. I figured it would be a huge red flag if the vending machine salesman didn’t have machines. But he did. And he reported they did great. So, combine those three positive reports plus the guarantee, and I was sold.

Guarantee or Warranty?

Before I signed anything though, I questioned Tom about the guarantee a little more. Well, First American didn’t do the guarantee, that was Cornerstone Marketing, LLC in Bluffton, South Carolina. But Tom assured me everything was great and gave me the number of Cornerstone Marketing where I talked to Chris.

Chris was real nice. He explained that the deal was not a guarantee of profits, rather a warantee. Hmmm . . . I liked guarantee better.

The warranty worked like this: Cornerstone Marketing would send someone, a professional “locator” to my home town and that person would find the perfect locations for me to put my vending machines. I was required to service them regularly and send reports back to Chris at Cornerstone Marketing. If I was not making the minimum number of sales at any of my locations, then Cornerstone would send the locator back to find new places for me to put my machines and rake in my quarters.

Well, I still didn’t like the sound of warranty instead of guarantee, but I really couldn’t see any holes in their plan, and I had convinced Tom to include the cost of the locator in my package price, so I decided to go for it.

The way I saw it, the worst part about vending was finding profitable locations and getting the business to allow you to place your machine there. With that taken care of, I was free to ponder the problem of carrying all my quarters. Cornerstone was warranting 16 vends a day. That’s $1200 a month on candy and $1500 a month on my sticker/tatoo machines. So, how much does $2700 in quarters weigh? Would I need a cart? Even if I only made half of what they warrantied, $1350, how would I count all those quarters? Would my bank have a problem taking them? What would I do with all my money?

Let’s Put in on the American Express

Clearly, I was sold. I upped the credit limit on one of my credit cards, and gave Tom number. I signed and faxed the contracts in. It was exciting. I was on my way. Ha! Kawasaki had to live in his car before he made it big. Here I had pretty much a guarantee of $3000 a month, I was going far. Far, far.

Now take a minute and think about the three essentials for entrepreneurs that Mark posted about last week: money, a mentor and experience. Here I was putting myself out there for $11,000, money I didn’t have (not even in an emergency fund), for a business I had absolutely NO experience with, and the closest thing I had to a mentor was the salesperson I had met two weeks ago who was taking my money! I went far alright.

Wednesday I’ll tell you just how far I got. How many quarters I carted to the bank, and who won the lawsuit.

Image credits: Mykl Roventine and Me (yes, that’s my very own vending machine).