"Forget the law of attraction...'The Law of Effection' states that the more lives you affect in an entity you control, in scale and/or magnitude, the richer you will become".
- MJ DeMarco
Motivation Monday - Richard's Insight
I am in the process of reading the book The Millionaire Fastlane by MJ Demarco, which provides today's motivational quote.
The reason why this struck me was that in such a short phrase, it manages to cover a few key principles of success. Control through your own entity - relates to a business rather than a job, that's the first point. Wealth comes to business owners more readily than it does to employees states Demarco. The biggest reason is that in employment, taxes are deducted before we invest or receive any income, thus reducing the benefits of leverage and compounding. That's worth keeping in mind on its own.
However, the second part of the quotation relates to value creation really. The scale and magnitude of how we affect (or have an impact on) other people will determine our wealth (or riches as per Demarco). Scale is a reference to price or unit value itself, whilst magnitude is a reference to volume.
The result is a simple equation where our income = scale (or price) x magnitude (or volume).
Therefore, we have a choice...we can go mass market with low price & margin or instead high value but niche market instead. Of course, there will be a middle ground too...
The point being...we can get to our final destination: wealth, through a variety of methods. We don't have to have hundreds of low-value properties with low-income customers (or tenants in our property world), we could instead have a few higher-end or higher income properties, such as HMOs, serviced apartments and so on.
Once we are aware of this equation, all that is then left is to decide which way to flex to the component parts that most suits our own skills, preferences, resources and direction.
Sometimes, less really can be more if you think about it...