“Skill and confidence are an unconquered army.” – George Herbert
Principles of Wealth #35*
With respect to building wealth, there are two kinds of skills: financially valued skills and financially valuable skills. Developing skills in either category is a big advantage in building wealth – but the financially valuable skills are more important.
We are all aware of the financially valued skills. They are the skills that can earn you a lot of money. Practicing medicine is every ambitious parent’s top choice for their children. But lawyering, accounting, and engineering are also popular.
The advantage of such professional skills is that they can be learned by anyone that is reasonably smart and doggedly determined. There are other financially valuable skills – like batting at 400 or having a knockout punch that requires not only dogged determination but also rare natural skills.
When my son decided to study computer engineering in college, I agreed that he would be acquiring a financially valued skill. But then I explained that if he could also acquire a financially valuable skill his opportunities for building wealth would be much, much greater.
In a note to him before he left for school, I wrote:
“There are plenty of financially valued skills. And, yes, societies and companies value people who know how to design a car engine, analyze a spreadsheet, or fix a broken arm.
“As an engineer, you can earn very good money – so long as you continue to develop your knowledge of engineering and keep up with the changing technology. But you should recognize that however valued your engineering skills may be, your employers will always think of your work as an expense, rather than as a way for them to grow the business and increase profits.
“Only by developing – and mastering – a financially valuable skill will you be guaranteed a high income for the rest of your life and perhaps one day have the opportunity to become a company owner.”
So what is a financially valuable skill?
It is one that creates wealth opportunities for others. There are many skills of that kind, but they are all related to generating sales and profits. Here are four of the most important:
The 4 Financially Valuable Skills
Marketing: Reduced to the simplest terms, marketing is the art and science of acquiring customers at a reasonable cost. This is the most complex of the financially valuable skills. It normally takes years to acquire it. Most people that call themselves marketers do not possess this skill.
Selling: Selling is the skill of persuading a customer or prospective customer to buy a particular product at a particular place and time. There are as many ways of selling things as there are salespeople. Generally speaking, however, sales strategies can be broken into four objectives (fast, slow, short, long) and two methodologies (hard and soft).
Creating Saleable Ideas: The financially valuable skill of “creating” refers to the skill of developing product and service ideas that can be profitably sold in a given marketplace. Most businesspeople that think of themselves as “creative” have little or no idea about how to originate such ideas.
Managing Profits: Profit management has two very specific objectives – to promote productivity and reduce unnecessary costs. With respect to the protocols and processes of business (buying, selling, marketing, information technology, and accounting, for example), this requires an eye for detail and a knowledge of pricing. With respect to employees, vendors, and advisors, it requires the secondary skills of diplomacy and persistence.
* In this series of essays, I’m trying to make a book about wealth building that is based on the discoveries and observations I’ve made over the years: What wealth is, what it’s not, how it can be acquired, and how it is usually lost.