The Retirement Trap!

I should have said something…

He began, 25 years ago, as an accounting executive with a German partner of ours. Bright and ambitious, he rose quickly through the ranks to head of marketing, head of operations, and then COO, working with the company’s founder to break through the $100 million barrier in less than 10 years. When the founder retired, he took over as CEO and steered the company profitably for another 12 or 13 years.

Then, two years ago, he told me he was going to retire. “Bad idea,” I thought. But I didn’t say anything. I didn’t want to rain on his parade.

So he retired. The company threw him a big “goodbye” party, and I was one of dozens of colleagues from all over the world who flew in to help him celebrate.

A few weeks ago, he emailed to let me know that he and his wife would be vacationing in South Florida. I was eager to catch up with him, so we made a date to meet at The Green Owl, my favorite breakfast spot in Delray Beach.

“How’s retirement going?” I asked, as the waitress plunked down two cups of coffee on the table.

He shook his head.


His was a story I’d heard many times.

Before he retired, he was the man. He was not just the big boss. He was the guy you went to when you had a problem you couldn’t solve. The business thrived on his ideas and his energy.  So when he announced his retirement, the company’s top execs were in a panic. They tried to convince him to at least keep working with them as a consultant.

As a courtesy, he stayed an extra two months to make sure that everything was buttoned up. And he told them that after he’d had some time to enjoy retirement, he’d be happy to talk about that attractive consulting gig.

It wasn’t long before he realized that he missed the problem solving he had always been so good at. So he contacted his former fans at the company.

Much to his surprise, they weren’t so eager to talk to him. And when he managed to nail them down to a meet up, they politely hedged for an hour and wished him well, but he left without a consulting job.

He kept at them for a while, identifying a half-dozen specific ways he could help them cut expenses and increase profits. They demurred. Finally, he reached out to the founder, his longtime partner in building up the business. “Sorry. I don’t call the shots anymore,” the founder explained.

So here he was, 18 months into his glorious retirement, unable to get back to doing what he did best. And feeling that he had devoted his best years to building a successful business that was now scorning him.

I should have said something…

In fact, I should have sent him one of the essays I’ve written about this subject.

Retirement has indisputable attractions. But as I learned the three times I tried and failed to retire, it also has three unexpected consequences.

* When you retire, you give up your active income. Without an active income, you are dependent entirely on passive income. When you are dependent on passive income, you are more likely to make unwise, wealth-damaging investment decisions.

* Unless you have a fair amount of brain damage, spending four or five hours on the golf course is not a pleasant way to spend your day. Likewise for shuffleboard, board games, and other activities that seem like a lot of fun when you have a full-time job.

* If you do retire and decide you’ve made a mistake, it’s difficult to come back. For one thing, nobody really wants you back. (Although they may pretend otherwise.) The current management of the company you left will see you as an old timer with old ideas that will clog things up and get in the way. And they are probably right. Things change fast today. Six months of being away will put you one step behind. A year of being out of the trenches will set you back by a mile. And two years? Forget it. It will be obvious, even to you.

Is there a solution?

Yes. In fact, there are three.

  1. If you own the business, don’t retire. Let other people run it. But don’t give up the captain’s wheel until you are on a walker.
  2. If you don’t own the business but have serious skills, create a retirement job for yourself long before you retire. Figure out something useful you can do that you would now, as a senior executive, pay for. And enlist all your clients, including the business you work for, before you retire.
  3. If you have a regular job with a regular business, start a side business now. Work it nights and weekends till it’s giving you whatever extra income you need for retirement. Then, when you want to, you can quit.
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Advertising Advice: A 9-Step Process for Producing Irresistible Offers

A huge mistake many, if not most, direct response marketers make is to pay scant attention to the offer.

Many years ago, a colleague of mine and I developed a protocol for reviewing and revising marketing copy ( the “Peer Review”), that is used today by businesses all over the world.

It was a low-stress, time-efficient, non-critical way to identify weak copy and make good copy better.

Recently, I introduced a similar strategy for reviewing and improving direct response offers. (The offer is essentially the proposition you make to the buyer at the end of the sales pitch: “Here’s what you get. Here’s the price. These are the terms. And here’s the guarantee.”)

Although they say “copy is king,” anyone that understands how direct marketing works knows that of the three elements that comprise a sales promotion, the first in importance is media (the list you go to). The offer is second. King Copy is third.

That’s why I’ve always urged my clients, employees, and marketing protégés to devote as much time to the offer as they do to the copy. I’ve sung that song for many years, but I was usually singing into the wind. To change behavior, you need to give people more than a good idea. You have to give them an instruction manual.

So here’s a preliminary instruction manual for the Offer Review:

* Enlist. 4 to 6 people to participate, including the copywriter.

* Circulate. the draft of the promotion, including the existing offer, so they can read it before the review.

* Refresh. Ask the reviewers to skim the promo again at the beginning of the meeting, so that both the copy and the offer are fresh in their minds.

* Rate. After they’ve finished skimming the promotion, ask them to rate the offer, from 1 to 4, based on how compelling it feels to them.

1 – Not very interesting.

2 – I’m thinking about it.

3 – It sounds good.

4 – This is too good to say no!

* Discuss.  Allow everyone to explain his/her rating. Have a short, general discussion of the copy’s strengths and weaknesses and how that affected their feelings about the offer.

* Question. Ask, “After reading the promotion, what possible objections or doubts might the prospect have at this stage? Enumerate them.” Then ask, “What can we do in terms of the offer that can answer these questions and/or overcome these objections?”

* Challenge. Ask, “How else can we strengthen this offer? How can we make it absolutely irresistible to our prospective buyers?”

* Finish the meeting with a recap of what the new test offer will be.

* Follow up with a note to everyone confirming what they will be testing.

This is just a first draft of the Offer Review. It will need to be refined through practice. But although it’s not perfect, it’s roughly right and should be very useful to any marketer that wants to achieve maximum results.

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He wanted to know: Did he need to get an MBA?

At my niece’s college graduation last week, one of her friends asked me whether I thought getting an MBA was worth it.

I have no problem articulating my opinions when I’m writing or speaking to the many. But when an individual asks for my thoughts, I’m reluctant to provide a definitive answer. Because results, as they say, do vary.

I don’t want to bump into the same person in 10 years and discover that I ruined his life by giving him bad advice.

My answer, therefore, was a moderated version of what I’ve been saying for many years: You definitely do not need an MBA to succeed in business. You may need an MBA to be accepted for certain jobs – to work for a large bank, accounting firm, business consulting firm, and so on. But for the most part, those are safe jobs for ambitious plodders. Not the kind of jobs I’d normally encourage anyone to pursue.

Many would not agree with me. I know parents that have encouraged if not begged their kids to get MBAs. And many of them, millennials, listened. MBA programs are proliferating, and the number of MBA graduates in the US has doubled to almost 200,000 in just a few years.

If you want to be a doctor and save lives, I find that admirable. If you want to be a lawyer and fight injustice, I admire that too. Anyone that dares to be a teacher deserves not just admiration but awe.

But I have a feeling that most people who pursue an MBA do it because they see it as a safe and predictable way to make a good income. That’s not a wise way to move into a career.

Let’s face it, most of the fun and the profit in a career comes from getting involved with an up-and-coming business and then rising to the top as it grows. To do that, you don’t need an MBA. In fact, as I have argued many times, you would probably be much better off with a much less expensive liberal arts degree.


Here’s how I explained it in an article titled “The Case for a Liberal Arts Education”:

A liberal arts education teaches you three skills: to think well, to write well, and to speak well. And in the corporate world – and in the entrepreneurial world as well – wealth is created by analyzing problems, figuring out solutions, and selling those solutions. In other words, a liberal arts education is tailor-made to give you the skills you need to succeed in business. And not just to do well. I’m talking about going all the way to the top.

 Businesses have one fundamental problem that presents itself endlessly in different disguises: how to sell products/services profitably. There are many, many solutions to this problem. Even in a specific situation on a specific day, there is always more than one. And the person who can regularly come up with solutions – and convince others that his solutions should be implemented – is the person who is going to get the rewards. The money. The power. The prestige.

 Yes, you can improve your thinking, writing, and speaking skills while enrolled in [an MBA program]. But it will happen indirectly and additionally. It won’t be what you are mainly concerned with. With a liberal arts education, you ensure that you will spend most of your time learning and practicing the very skills you will use later to get your ideas and solutions sold.

Of my three sons, only the third one got an MBA. He told me that it was valuable at the beginning of his career. (He became a copywriter for an investment publishing business.) But now, after less than five years, he uses very little of what he learned about business in his master’s program at the University of Denver.

Think of it this way: What skills and knowledge are you likely to acquire by spending two or three years on an MBA?

You will spend a fair amount of that time studying business management. But IMHO, business management cannot be taught. It can only be learned by experience.

You will also almost certainly take a few classes in business ethics. These are popular to the point of being requisites in many MBA programs today. But business ethics is a vacuous idea. There is only ethics. And that is something your parents either taught you or they didn’t. You can’t learn it in school.

What about accounting? The only accounting you need in business (if you are not an actual accountant – a dreadful occupation) you can learn on your own. Ditto how to read a P&L and a balance sheet. And basic statistics (which has helped me avoid all sorts of mistakes).

The bottom line: If you are mildly ambitious, moderately intelligent, and risk averse… by all means, get an MBA.

But if you want to work for a growing business, doing interesting projects, taking on exciting challenges, and eventually conquering some portion of the business world, skip the MBA path and devote those years to learning on the job.

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How You Can Give Away Money Without Paying Even MORE Taxes on It

I know. This sounds obnoxious. But one of my top financial priorities these days is giving away the wealth I’ve accumulated.
What most rich folks do is hoard everything they’ve got until they croak. Then they have it distributed post-mortem by lawyers working with trusts and wills.

From everything I’ve seen and read, this is a terrible idea. The good feelings you imagine your benevolence will engender most often devolves into bitterness, resentment, and altercations among those you leave behind.

I like what Warren Buffett did when he was about my age. He gave a huge chunk of his wealth to Bill Gates’s charitable foundation. Buffett understood that giving away billions was an enormous responsibility. So rather than simply naming some charities in his will, he put the money in the hands of someone he trusted to put it to good use while he (Buffett) was still alive.

K and I have the same general idea: We want to give away most of our money while we are still alive. We are assigning some assets to fund several charities that the family foundation currently manages. (So they will be self-funded in perpetuity.) And we’re putting other assets into the family limited partnership, which will be directed by our sons. But we are also in the process of giving away money to friends and family members. This we are doing with the help of legal counsel.

Not surprisingly, the IRS has restrictions on how much you can give away and to whom. These encumbrances are embodied in the tax code. If you exceed those limits, you (not the recipient of your gift) must pay a tax on it. And, yes, that means you have to pay a tax on money that has already been taxed.

The current limit on yearly gifts is $15,000 per person. So as a couple, K and I can give $30,000 a year to whomever we want without incurring a gift tax.

This is not a problem if you and your spouse want to give, say, $90,000 to your ne’er-do-well brother John. You can do it, tax-free, in 3 years. But if you want to give him enough to keep him in spam sandwiches and reefer for life, you may want to give him $300,000. That will take 10 years.

In our case, $30,000-a-year gifts won’t make a dent in the amount of money we want to disburse. And happily, there is a way to do what we want to do withou tpaying yet another tax on our money.

It’s called the “lifetime gift tax exemption.” Here’s a summary of what I’ve learned about it: READ MORE

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Copywriting: A Great Freelance Gig, But Is the Market Overcrowded?

I’m retired but I need income. What’s the best part-time retirement job?
I’m sick of the nine-to-five. How can I make good money working from home?

Whenever I’m asked these questions, I do my best to list four or five options. But my favorite – the one I want to recommend to everybody – is copywriting.

Copywriting has always been a lucrative and rewarding profession, especially for independent-minded people. But since the internet revolution changed global commerce, it’s become one of the very best ways to make part-time freelance money.

In addition to far-above-average compensation, copywriting offers many lifestyle advantages:

* working from home or while traveling

* being in charge of your own time

* choosing your clients

* choosing your work

* having an unlimited intellectual challenge

And if you master a niche, you can get rich. Multimillion-dollar rich.

Perhaps the most surprising thing about copywriting is that you don’t have to be a good writer to do it. Many successful copywriters would deny this. They want you to believe that the work they do is art. They want to think of themselves as direct-response Fitzgeralds and Hemingways. But they are not.

That’s because copywriting is fundamentally a selling – not a writing – skill. And anyone that is willing to put in the work can learn how to sell.

As you may know, I have an interest in a business that teaches copywriting (AWAI), so it would be fair to accuse me of bias. But that doesn’t mean I’m wrong.

However, because of AWAI’s 20-year history of successfully training thousands of people to be copywriters, dozens of smaller programs have popped up. And this has led to speculation that the supply has overstepped the demand, and that the prospects for new people coming aboard are not good.

That may be true… unless, of course, you get really good at copywriting.

This is the position that Master Copywriter Bob Bly took in a recent blog post. He made his point by quoting this from P.T. Barnum’s The Art of Money Getting (Great title!):

No profession, trade, or calling is overcrowded in the upper story. The basement is much crowded, but there is plenty of room upstairs.

Wherever you find the most honest and intelligent merchant, or the best anything, that man is most sought for, and has always enough to do.

Whoever excels all others in his own line, if his habits are good and his integrity undoubted, cannot fail to secure abundant patronage, and the wealth that naturally follows.

“Study and practice, coupled with dedication and effort,” Bob says, “can propel you into the top 10% of copywriters in terms of ability and results – enabling you to enjoy success, good income,and financial security. Do that and you will have all the work you need and you will earn more. And you’ll earn 2 to 10 times more than 90% of the other copywriters out there.”

But there are so many opportunities! So you really don’t have to become one of the best to get all the work you want. And although you probably do need to be an elite copywriter to make $500,000 to more than a million a year, you can make good money – $50 to $200 an hour on a part-time freelance basis – with just mediocre skills.

Consider this: In my day, you’d need a college degree to land a job in the advertising industry. But as a freelance copywriter, nobody’s going to ask you for a CV. They will just want to know what you have done and they’ll want to see samples. And even if the only thing you have is samples that you did as a copywriting student, it’s not difficult to get a test assignment. If you do well with that, you’re on your way.

Eventually, you’ll have more work than you can handle. That’s when you raise your fees – 50 grand, 100 grand… the sky’s the limit!

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6 Ways to Maximize the Potential of Your Superstars

CB recently wrote to me about one of his superstars – a promising young (23-year-old) copywriter who has already contributed many great ideas to the business. In fact, he’s so good, that CB is worried about losing him.

“I’m giving this young man the training courses he thinks will help him and the company, giving him autonomy in content, web design, and other projects, and helping him find ways to generate more income,” CB said. “But how do I continue to support him?”

Here’s what I told him…
That’s a very good question.

It’s so important that I’ve written about it many times over the years. And I’m thinking about it right now because I’m involved in an imbroglio over one of Agora’s top marketers leaving one franchise to join another. He’s leaving because the publishers did not listen to the following advice:

Extreme Value…

Recognize the value of your superstars. You can populate your business with good and great employees if you put the work into it and create the right environment. But superstars – they are rare. A superstar is worth 5-10 great employees.

Risky Business…

Recognize the fact that you cannot hide them from the competition. I can’t tell you how many times I’ve seen very smart CEOs try to do this. It works for a while. Then one day a competitor discovers them and makes them an offer that is way above what they are making. When that happens, you are screwed. You can offer to meet or even beat the new offer, and you might even retain that superstar. But he/she will never trust you and always resent you.

The Hook…

Understand what motivates them. Superstars are not motivated primarily by money. Nor is praise a sufficient reward. What superstars want and need most of all is the opportunity – the freedom and the support – to accomplish great things. That is what makes an otherwise great employee a superstar.

The Game Plan…

Compensate them strategically. Money is not the primary motivation, but money matters. Superstars should be paid a base plus incentive compensation. The base should be just above (maybe 5%) what someone else would offer them to do the same job. (And by that, I mean someone else that recognized their value.) The incentive compensation should be structured so that they could make a shitload of money – even more than you. But it should never be so much that they are getting more than they clearly deserve.

The Trap…

Don’t overcompensate. This last point is complicated. It’s easy to overcompensate people with incentive plans. And when you do, you can spoil them to the point where you will have to let them go. I don’t have time now to get into all of that. But in this case, since the young man is a copywriter, the challenge is easier to meet because there are existing formulas that work. You are probably familiar with them. If not, I can send you some examples.

One Final Thing

Despite what I’ve said, when your business is relatively small (as yours is), you may not be able to compete with the sort of compensation he could get at a company like Agora. Even if you gave him the same base (say, $80,000), it would be nearly impossible for him to make the same incentive compensation with you because your file size and revenues are too small.

Instead, you have to make him feel like he is working for a good business that is doing good. From what I’ve seen, you are already doing this. In fact, I’m sure you are already doing much if not all of what I’ve suggested above. But I thought I’d write it down this way so I could publish it in my blog and kill two birds with one stone!

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The Chicken Entrepreneur Approach I Used to Become a Valued Partner in Dozens of Multimillion-dollar Companies

I write a lot about entrepreneurship and real estate investing. And since I’ve started a bunch of multimillion-dollar companies and own dozens of properties, I feel confident to talk about what I’ve learned from these experiences.

But If you asked me for the one skill that had the greatest effect on developing my wealth, it would be something I’ve written about only occasionally. That is the skill of rising to the top of every business I’ve been involved in.

I started my career in the information publishing business nearly 40 years ago as a rank-and-file employee. I rose – relatively quickly – to an executive position and then to a CEO position and finally to the level of junior partner. That journey took me from a negative net worth to a positive one. More than $10 million.

After 18 months of semi-retirement, I went back into business. I was officially a consultant to about half a dozen secondary clients and one main one, but my job was always the same as it had been when I was a company’s number-one employee: to work closely with the founder/CEO to grow the business quickly but safely.

Being a “growth” consultant may sound like a much better job than being an employee, and it was in that I didn’t have a boss per se. However, it was tougher because my job had zero security. If I failed to keep the business growing, I was out. Simple as that.

When I talk about the way I worked during that time, I usually describe myself as an intrapreneur or chicken entrepreneur. An entrepreneur in the sense that I held myself responsible for developing strategies to increase the business’s long-term profits. A chicken because I wasn’t risking my own money – which also happens to be one of the primary benefits of being a company’s number-one employee.

As I rose to the top, I’m sure I made more mistakes than I can remember. And I’m sure I had victories I’ve forgotten. But along the way, I discovered many “rules” that seemed to work with remarkable regularity.

I’m mentioning 20 of them below – with this caveat: They may not work for everyone. Nor will they work in every business. To make them work for you, you’ll have to be willing to work as hard and as purposefully as I did. You will also have to be judicious in terms of the companies and people you work for.  READ MORE

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The “Extreme Poverty Problem”: Hans Rosling Explodes Yet Another Myth

Answer this: In the last 20 years, the percentage of the world population living in extreme poverty has:

  1. Almost doubled?
  2. Remained about the same?
  3. Dropped by two-thirds?

The correct answer is C. The number of people living in extreme poverty is less than 9%. It was more than three times greater, 29%, in 1997.

If you answered A or B, you are not alone. In fact, an online poll conducted by Hans Rosling found that 90% of those polled got it wrong.

I wrote about Rosling before. LINK

His life work is correcting misconceptions. And one of the biggest misconceptions he’s discovered is that most people – and this includes most educated people – believe that poverty is getting worse.

Here are the facts:

In 1800, roughly 85% of the world population lived in extreme poverty, deprived of such basic human needs as food, safe drinking water, shelter, and access to medical care.

And this was not confined to Asia and Africa. It existed everywhere. Even in England, the US, Europe, and Scandinavia. The world economy back then was still agrarian. When crops failed, people starved.

The situation improved only slightly for the next 70 or 80 years. But by then the Industrial Revolution was in full swing. Wealth was being created at a rate that was faster, by multiples, than at any previous time in human history. And the beneficiaries were not only big industrialized countries but also their trading partners.  READ MORE

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A Brief Answer to a Surprise Question: The 3 Cornerstones of Career Success

After my speech, I found myself surrounded by a cluster of people wanting to say hello or ask a question. This surprised me because these were employees, not readers. Like matriculated students attending classes, employees attend company-sponsored lectures under some degree of compulsion. They weren’t there because they were fans.

One of them, a young man who works as a telemarketer, surprised me doubly by asking a question so simple it seemed at once naïve and profound: “What do I have to do to be successful in my job?”

The thing is, this kid was serious. He believed I knew the answer. And I had the feeling that he was ready to put into practice whatever advice I was going to give him.

Other people were listening. The question begged for a long and complicated answer, but the moment demanded a brief and simple reply.

What to say?

As it happened, I’d been thinking and writing about a parallel question: What does it take for a social or cultural group to achieve economic independence? My answer to that question was about values and commitment.

To lift themselves out of poverty and acquire wealth, a social group (even a family) must place a high moral value on three ideas: hard work, saving, and learning. No amount of external financial aid will do the job if the group does not believe in and practice these values, for they are the moral and behavioral cornerstones of wealth creation.

So that’s what I went with: Hard work, saving, and learning.  READ MORE

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Two Vitally Important – and Completely Opposite – Business Management Strategies*

Managing a growing company requires competence in two business strategies: centralization and decentralization.

Decentralization, as the name implies, is the process of spreading out the business from the managing core. It is done by developing multiple profit centers, each with its own management team, in different geographical/market areas and/or with different product lines.

Decentralization is usually a strategy for growth. But it is also a good vehicle for innovation, because you have more people separately working on similar challenges and problems.

Centralization is the contrary process. When you centralize a business, you reduce the number of independent operating entities, bringing them back under the command of a central core management team. You end up with fewer people in charge of more business functions and activities.

Decentralization is generally employed when the business seems to be slowing down because of bureaucratic bottlenecks. When there is a concern that growth has stalled because too few people have too much to do.

Centralization is generally done when the business seems to have lost its bearings. When communication and production and processes are breaking down. When there is a concern that profits are being lost due to redundancies and inefficiencies.

To centralize or decentralize? It’s a  critical decision that every CEO of a growing company has to make – and remake – at various stages. And most of the time, the answer is fairly simple. When seeking innovation, decentralize. When seeking efficiency, centralize.

From the perspective of our hypothesis, centralization can be seen as an exercise in concentration and decentralization as an exercise in expansion. But, in fact, decentralizing requires a good amount of relaxation (of control) on the part of senior management. Breaking up one marketing division into four almost guarantees that protocols and practices will begin to change. Some for the better and some for the worse.

To support decentralization, you have to be “loose” enough to accept some degree of unexpected and unfortunate outcomes for the sake of longer-term growth. To support centralization, you have to believe that the policies and practices implemented by the core management team will be better than the sum total of those that had been in place before.

Most managers arrive at their jobs predisposed to one or the other strategy. Those that favor control prefer lots of meetings, memos, monitoring, and “feedback.” They feel safest when the power structure is hierarchical and everything is regulated, so they do everything in their power to keep that order.

Other managers arrive with a more flexible disposition. They are not comfortable with rigid structures and formalities. They prefer fewer meetings and memos. And they provide employees with a good deal of freedom in deciding how to do their jobs. These laidback managers feel comfortable with a more horizontal power structure.

Of course what actually happens in most growing businesses is that there is an ongoing fluctuation between these polarities, depending on external market conditions and internal goals and resources.

Thus the challenge for managers is twofold: to understand their own preferences in terms of control, and to adjust their behavior when circumstances demand that they manage otherwise.

In other words, the concentration-prone manager must understand that there will be times when he/she must make an effort to loosen things up. And the relaxation-prone manager must understand that there will be times when he/she must tighten things up.

The most effective managers can do both.

* In this series of essays, which hopes to become a book, I’m exploring an idea I’ve been thinking about for a long time: that our knowledge of the universe and our experience of living can be understood by the metaphor of pulsation – of contraction and relaxation. And that such an understanding might be helpful in succeeding in life and accepting death.

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