Jean Paul Getty (December 15, 1892 – June 6, 1976) was an American industrialist who founded the Getty Oil Company. He was named in 1957 by Fortune magazine as the richest man in America. At his death, he was worth more than $2 billion.
From World War II until his death Getty was considered one of the richest men in the world, in this post I share his 10 winning formulas for business success. These rules were extracted from his legendary book “How to be Rich”, I have added footnotes to each of the rules to make it more relevant to our age and time. I hope you find this as useful as I did and make a commitment to apply these rules to your business.
There are no absolutely safe or sure fire formulas for achieving success in business. Nonetheless, I believe that there are some fundamental rules to the game which, if followed, tip the odds for success very much in the businessman’s favour. These are rules which every millionaire businessman in history has followed.
The rules have worked for them–and for him (J. Paul Getty) and they will work for you too!
Here are the rules;
1. Adequate knowledge of the business:
Almost without exception, there is only one way to make a great deal of money in the business world–and that is in one’s own business. The man who wants to go into business for himself should choose a field which he knows and understands. Obviously, he can’t know everything there is to know from the very beginning, but he should not start until he has acquired a good, solid working knowledge of the business.
There’s no way one can run a business successfully without having adequate knowledge of the nitty gritty of the particular business he or she is venturing into. Take your time to learn as much as you can about the particular industry, market and peculiar characteristics of the prospective customers your product or service will serve. Also, make sure you have the necessary skills needed as the leader of the business. Remember, “time spent learning and planning is considered an investment in business and the knowledge eventually acquired is an asset and competitive advantage to the business.”
2. Commitment to the central purpose of a business:
The businessman should never lose sight of the central aim of all business–to produce more and better goods or to provide more and better services to more people (customers) at lower cost.
In the words of Management Guru, Peter F. Drucker, to know what a business is, we have to start with its purpose. Its purpose must lie outside of the business itself. In fact, it must lie in society since business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer. This then is achieved through the continuous production of more and better goods or the provision of more and better services to the society at lower cost. Because its purpose is to create a customer, the business enterprise has two–and only these two–basic functions: MARKETING and INNOVATION. It is not necessary for a business to grow BIGGER; but it is necessary that it constantly grows BETTER. A businessman or woman who runs a business that isn’t doing this should not hope to achieve any form of business success.
3. Financial management:
A sense of thrift (economy) is essential for success in business. The businessman must discipline himself to practice economy wherever possible, in his personal life as well as his business affairs. “Make your money first – then THINK about spending it,” is the best mantra for the man who wishes to succeed!
There’s no way a business can be successfully managed without a good sense of money management on the part of the business owner. There must be a clear line of difference between ‘necessary expenses’ and ‘luxury expenses’. Always remember you’re not in business to satisfy your own personal desires, but to satisfy your customers’ desires consistently through the production of more and better goods or the provision of more and better services at lower cost.
To do this, firstly, you must practice budgeting–a process of prioritizing necessary expenses essential to the survival and operational stability of the business. Secondly, negotiate everything! Always strive for a bargain no matter how small or intangible it may seem.
4. Seek continuous growth through necessary expansion:
Legitimate opportunities for expansion should never be overlooked or ignored. On the other hand, the businessman must always be on his guard against the temptation to over expand or launch expansion programs blindly, without sufficient justification and planning. Forced growth can be fatal to any business, new or old.
Every business like every child ultimately wants to grow; this is the natural inclination of every living entity. The alert businessman or woman would seek various ways through which the business can grow through expansions. There are a few strategies for business expansion such as; buying over other related businesses, licensing of products or services, selling of franchises, opening of more branches, creation of strategic alliances and the cheapest; network marketing. Adequate planning and research must be fully carried out before any of these strategies can be adopted. Any business which fails to grow through necessary expansion faces the risk of extinction!
5. You’re the BOSS, call the shots:
A businessman must run his own business. He cannot expect his employees to think or do as well as he can. If they could, they would not be his employees. When “The Boss” delegates authority or responsibility, he must maintain close and constant supervision over the subordinates entrusted with it.
The great Inventor and entrepreneur, Henry Ford was once accused of being uneducated and rather than feel offended he posed a challenge telling his accusers to ask him any question whatsoever. With every question asked, Henry Ford simply called upon any of his workers who was qualified enough academically to answer the questions. On answering all the questions through his workers, his accusers claimed to have proved their allegations of Henry Ford’s illiteracy.
Henry Ford smiling made a profound statement which will never go down in history; “I don’t bother to do the work anyone can do, I do the hardest work of all–thinking, which only a few men can do.” The few men who can think are those who become business owners employing those who cannot think but simply follow orders. Your key task as a businessman or woman lies in these words: directing human activities. And only those who know how to think can direct those who don’t think. To do this, you have to know a little about a lot (versatility) and employ those who know a lot about a few (specialization).
6. Seek continuous improvement:
The businessman must be constantly alert for new ways to improve his products or services and increase his production and sales. He should also use prosperous periods to find the ways by which techniques and operational processes may be improved and costs lowered. It is only human for people to give little though to economies when business is booming. That, however, is just the time when the businessman has the mental elbow room to examine his operations calmly and objectively and thus effect important savings without sacrificing quality or efficiency. Many businessmen wait for lean periods to do these things and, as a result, often hit the panic button and slash costs in the wrong places.
Success they say is a lazy teacher who makes her student complacent and comfortable. The best time to examine your business and seek ways for improvement isn’t when it’s declining, but rather when it is booming. A businessman or woman who desires success in business must deliberately seek out more and more ways of improving their business operations, products or services long before it becomes an emergency. Entrepreneurship is not a destination one is heading to, but a journey one embarks on; it has no end but death.
In other words, there is no stationary spot or a point for resting on one’s laurels. Areas through which improvements can be channeled includes; business processes or systems, cost of production or cost of service delivery, product or service features and benefits, human resources, research and development, customer relationship management, finance, distribution etc. Remember, “opportunity is a haughty goddess who wastes no time with those who are unprepared”. Now, not later or tomorrow, is always the time to make room for improvement!
7. Take only justified risks:
A businessman must be willing to take risks – to risk his own capital and lose his credit and to risk borrowed money as well when, in his considered opinion, the risks are justified. But borrowed money must promptly be repaid. Nothing will write finis to a career faster than a bad credit rating.
Taking risks in order to meet the needs and solve the problem of the society is the essence of entrepreneurship. However, not all risks are worth taking. A businessman or woman who desires to be successful in business would always evaluate and analyze any risk they choose to take so as to justify its viability.
It has always been said, “It’s not the entrepreneur with the best idea that wins but the entrepreneur with an idea whose time has come.” Adequate care must be taken in ensuring that whatever project or venture a businessman or woman chooses to embark on has a positive return on investment (ROI). There are various tools that can be used to analyze the viability of a venture or project some of which are; Best/Worst analysis (BWA), capital budgeting techniques, SWOT analysis etc.
8. Seek new business opportunities:
A businessman must constantly seek new horizons and untapped or under-exploited markets. Today’s shrewd businessman looks to foreign markets.
Businesses exists because of the opportunities created by the needs and problems of the society in which they operate. If these needs or problems weren’t present, the entrepreneur wouldn’t have any cause to go into business in the first place. Each need or problem represents a business opportunity usually called an ‘untapped-market’.
It becomes paramount then to the alert businessman or woman who desires to succeed in any business to constantly be on the lookout for more needs or problems that may represent business opportunities within the society in which they operate. Taking advantage of these opportunities is what innovation is all about. An innovative business is one that is alert to the needs and problems of the market it serves. Once a business becomes dead or indifferent to the needs and problems of the society, its demise is inevitable.
In today’s world, the society in which a business operates has greater implications as a result of the changes created by Information and Communications Technology (ICT). The world as we know is now a global village making the operating environment in which businesses function to be unlimited. A local business enterprise can fully meet the needs and solve the problems of an international market through the aid of Information and Communications Technology.
For example, millions of businesses are created on the internet every day, businesses open up branches in different parts of the world as a result of strategic alliances/partnerships formed over the internet, goods and services are now being bought and sold online, meetings are held in various places over the internet across the world. Never before in the history of mankind has such a time like this where opportunities abound for the alert businessman or woman to capitalize on and make the most of the ‘boundary-less markets’ open to them.
9. Trust is a social capital:
Nothing builds confidence and volume faster or better than a reputation for standing behind one’s work or products. Guarantees should always be honoured–and in doubtful cases, the decision should always be in the customers’ favour. A generous service policy should always be maintained. The firm that is known to be completely reliable will have little difficulty filling its order books and keeping them filled.
Business at its very core is a social activity. The whole concept of business is built around human interaction. All the parties needed for the successful operations of a business are people; your customers, employees, suppliers, professional partners, etc., are all people. So there’s hardly any thing one can do in the world of business without dealing with people or social interaction.
This places a great burden on the character of every businessman or woman much more than they probably bargained for. In the world of business, whether you’re just starting out or you’re an established entrepreneur, your character is a valuable asset that must be jealously guarded. Before you became a businessman or woman, very few people counted on you and how you lived your personal life.
The moment you choose to start your own business, the reverse is the case; every one within the world of business watches your every move and character. Your employees look up to you for leadership, your customers hold on to your brand promises, your suppliers bank on your credit worthiness, your professional partners count on your integrity.
Everywhere you turn in the world of business, your character as an entrepreneur is daily put to test; your long term success in business will greatly depend on how well you are perceived by those you work with in business. Do you keep your word to your customers, employees, suppliers, professional partners? Do you sell or produce inferior goods or services?
Do you cut corners to get the project done? Do you make all the money and treat your employees like rags? Are you sincere and honest in your business dealings? What you must always bear in mind at all times is this; “business is like making babies, you can’t do it alone!” And the golden rule of dealing with people is; “do unto others as you would have them do unto you–treat people like they would like to be treated”
10. You are an instrument of nature:
No matter how many millions an individual amasses, if he is in business he must always consider his wealth as a means of improving living conditions everywhere. He must remember that he has the responsibilities toward his associates, employees, stockholders–and the public.
Entrepreneurship is a call that is obeyed. There is a spiritual side to it. History is filled with great men and women who built businesses that have significantly improved our existence as humans here on earth. Imagine what the world would have been like if there weren’t people like Thomas Edison who invented light bulb? Imagine a world without computers; would there ever be a term like global village? Imagine a world where we had to gaze at the sun to know what time of the day it is?
There are countless examples the world over of breakthrough inventions that has radically changed our existence, all these were made possible by men and women like you and I who felt it more compelling to use their wealth and talents for the good of humanity rather than wallowing in their own fantasies enjoying all the good their wealth can possibly buy. Entrepreneurs are the architects of civilization. We are the instruments of nature being used for the good of humanity.
In conclusion, in the words of the legend himself, J. Paul Getty;
“do you want to make a million? Believe me, you can – if you are able to recognize the limitless opportunities and potentials around you and will apply these rules and work hard. For today’s alert, ambitious and able young men and women, all that glitters truly CAN be gold!”
Thanks for reading!