My godson Jack was given a book from his uncle Joe Buck for his high school graduation. The title of the book is “The Millionaire Next Door.” I took the opportunity to skim the book at their house and it really got my attention. So I asked my wife, Jackie, to order it on Amazon Prime. It arrived two days later, and I anxiously began reading it to hopefully gain some amazing insight into how to build wealth.
The authors did a massive amount of research interviewing folks who achieved a net worth of more than a million dollars. There are numerous examples of how individuals who earn annual incomes in excess of $100,000 have much lower net worth than others who earn significantly less. In other words, increasing your net worth to millionaire levels has less to do with earnings than lifestyle and spending habits. In general, budgeting, investing and prudent spending habits make a much bigger difference in terms of wealth accumulation than earning a higher income. We’ve seen numerous examples of this truth with professional athletes. After several years of earning millions and millions of dollars, many declare personal bankruptcy. How does this happen?
After reading more than 200 pages of the book, please allow me to net it out:
- Don’t spend more than you earn
- Invest a portion of your income on a consistent basis, long-term
- Reduce the purchases of depreciating assets
- Lower your annual tax liability
Excuse me, but the bullet points above are, at least in my opinion, common sense. If you spend more than you make you will accumulate high-cost debt. If you purchase expensive luxury cars every few years that depreciate heavily you will have significantly less to invest. For example, instead of making a $1,500-a-month car payment for a brand-new European luxury car, consider purchasing a slightly used one for a payment of $700 a month. The $800 a month you save in car payments translates to about $700,000 over 30 years. And if you pay the government less in taxes by leveraging 401Ks, IRAs and Health Savings Accounts, you will have more to invest. These are fundamental financial truths that are quite frankly common sense, yet are not adhered to by many high-earning individuals. Now there is no need to go out and purchase the book, since you have the Cliff Notes version.
So what does this have to do with professional sales? Sales execs, more than any other professionals, must have strong discipline when it comes to financial matters. Since our incomes are highly leveraged and can fluctuate from year to year, we must be careful not to adjust our lifestyle based on a blowout commission year. We should resist the temptation to purchase the 500 SL Mercedes convertible or $7,000 Rolex watch. There is no need to flaunt around the office — or, even worse, to our clients — the success that contributed to our good fortune. For one thing, there is no guarantee that this income level will continue. And secondly, as stated above, we should be mindful to invest in financial instruments that will appreciate as opposed to depreciate.
And even worse, if you were handed an account that happened to purchase a large amount of your product, which resulted in windfall commissions, the last thing you want to do is pretend to be someone you are not. You are not an outstanding sales exec simply because you happen to be in the right place at the right time. This attitude does not sit well with sales management, your peers or anyone else in the office, for that matter. Additionally, chances are you will not be successful long-term without lots of support.
For more on this topic please read my previous article, “Be Humble – Not Prideful.”
In the research I did for my book, I was shocked by some of the stories I heard regarding how so-called “sales professionals” handle their clients. There are fundamental principles that should be adhered to if you intend to make a living in sales. I discuss these in great depth in my book. I refer to them as Universal Sales Truths.
The principles about the “millionaire next door” hold true in my book as well. In my opinion, 80% of sales success is executing on the basics:
- Common sense
- Consistent work ethic
- Integrity
- People skills
The remaining 20% is specific product, competition, industry knowledge and a certain amount of fundamental sales skills.
One could argue that common sense is by far the largest component of sales success. Why? Because common sense should tell you that work ethic, people skills, integrity and solid product knowledge are the keys to success.
I’ll take a large dose of common sense and solid people skills over book smarts anytime. I hope captain obvious would agree?
