To the Entrepreneur Go the Spoils Eventually

victory_signYou’ve probably heard the old saying, “To the victor go the spoils.” It’s stated as a positive – the winner gains more than just the thrill of victory.

___

___

History has shown its validity in warfare. Kings and other leaders often went to war to gain the spoils.

We see it in politics. When candidates win a position, they often reward their supporters with jobs, contracts or other perks.

Entrepreneurs also get the spoils, although there are two important distinctions:

  • Entrepreneurs create the spoils.
    That’s a key part of entrepreneuring. You must create value. It’s not a zero-sum game. Entrepreneurs build something out of nothing or they build something bigger out of something smaller. Society wins. They win.
  • Entrepreneurs don’t get the spoils first.
    They’re actually the last in line. So the term spoils is really a misnomer. A better term is residual. Entrepreneurs get what’s left after everyone else wins.

Customers
You must find a group of people with a problem. You have to discover a unique solution that fits their budget. You have solved their problem. That’s the spoils they get from your venture.

But that’s not enough … you have to make a profit while you solve their problem. 

___

Get the tips and tools you need to be a BIGG success.
Subscribe to our bi-weekly newsletter – it’s FREE!

___

In fact, entrepreneurs must create value for at least six other groups of people before they get to enjoy the spoils of victory:

___

george My dad used to say, “Profit is not a four-letter word.” I was pretty young when I heard him say that for the first time. I remember thinking, “Well, duh, dad. It’s a six-letter word.” Well, I finally got what he was really saying: Profit isn’t a dirty word.

___

___

marylynnYet a lot of people seem to think that it is. They equate profit with greed. They think profit comes at the expense of people. Well, as we’re about to see, profit is what creates the win for everyone in the chain.

___

If you don’t make a profit, you won’t be able to keep serving your customers. You’ll go out of business! And there won’t be any spoils for you and the rest of the groups in line.

Government
When you make a profit, you pay taxes. As your profit increases – most likely from finding more customers with a problem you can solve affordably – you pay more taxes. Governments win as you win but they get the spoils before you do.

Employees
Obviously, this doesn’t apply to all businesses. But if you do have employees, you provide them with a stable income (on which they pay taxes; government wins again).

As you solve more problems for more customers, you’ll hire more employees. You’ll also create opportunities for your people to take on more responsibility and make more money (and pay more taxes).

Bankers
Of course, some of you may not have bank loans. However, banks are significant funders of small businesses.

To return the money you borrow, you have to make a profit. Basically, you substitute the profits you retain in your business for the bank debt.

Banks don’t give you money; they rent it to you until you return it. In the meantime, they collect rent (i.e. interest). Oh and by-the-way, they pay taxes on this interest income.

Suppliers
Every business has suppliers – the local office supply store, service providers, utilities, landlords and the like. Just like you, these suppliers must sell their products or services at a profit (and pay taxes).

You want your suppliers to make money on you. If they don’t, they won’t be around when you need them.

Venture capitalists
Admittedly, this applies only to a small percentage of all businesses. But if you accept venture capital, they will insist on a deal structure that puts them ahead of you.

They won’t invest unless they think you can create enough profit so there’s something left for them after all of these previous groups have received their spoils. They want you to make so much profit that you can afford to return three to five times their money in three to five years. That’s their spoils (on which they pay taxes).

Finally, you get your share
You get the residual. After these six other groups have enjoyed the spoils of victory, you get to stake your claim.

As you can see, entrepreneurs create value for themselves by creating a whole lot of value for society (oh … and by paying taxes).

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00544-011910.mp3

Related posts

Losers Put Money First

4 Signs You are Playing to Win

(Image in today's post by hisks)

6 replies

Trackbacks & Pingbacks

  1. […] need to unleash its power. It’s the prosperity solution. The only alternative is […]

  2. […] know that the first value they create won’t accrue to them. They add value to the lives of others. Then they get their […]

  3. […] The final question in this process is: How do I create value? […]

  4. […] success is about entrepreneuring your life. Successful entrepreneurs focus first on creating value for others. If they do that well, they will create value for […]

  5. […] Small business owners know they are the seventh in line for the fruits of their labor. Government is second (and first, and third …). […]

  6. […] We define an artist as someone who creates works with aesthetic worth but not necessarily commercial value. And we define an entrepreneur as someone who creates net worth by adding value to society. […]

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *