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May 30

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How a College Kid Earned $50,000 a Summer by Choosing Multiplication over Fractionalization

By Michael Q. Pink

May 30, 2014


The sooner you think in terms of being fruitful and then multiplying, the sooner your results can soar…

There are seven factors I am aware of that contribute to multiplication and make tremendous gains available, even a 100-fold return. As I have previously mentioned, getting a 100-fold return is possible even at 5% interest, if you can wait long enough and not touch the principal. However the true 100-fold return refers to a one-year result, not a lifetime result. (See Genesis 26:12)

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When it comes to profit, some people are very chincy with themselves to their own detriment. A very good friend of mine told me the other day that when he was in college getting his degree in finance he did landscaping in the summer to earn some money.

The first factor he considered was profitability

Now most people reading this would probably think he got paid an hourly laborers wage, but that’s not how he thought. He believed in multiplication, not fractionalization. Instead of working for someone else, he bid on commercial jobs and hired his college buddies for $7 an hour to do the work. Instead of marking up the labor to $10 an hour, he marked it up to $30 an hour, earning a tidy gross profit on labor of $23 an hour PER college buddy!

His calculus for gross profit was he wanted to quadruple his investment for labor. That definitely lowered his success rate when it came to being awarded jobs he bid on. He lost out 90% of the time, but 10% of the time he won and while most college kids were making a few thousand dollars over the summer, he would earn $50,000 and then continue his schooling in the fall.

Without a doubt he would have won more jobs by charging $20 an hour and even more at $10 per hour, but it would have created more headaches, required more staff and other infrastructure. This wasn’t a career path for him. It was a summer enterprise to pay his way through college.

The second factor he exploited was velocity.

The jobs he was awarded began immediately and were completed fast. Payment was upon completion. He chose a field of endeavor that had velocity built into it. Profitability and velocity however were not enough. After all, had he only been awarded one or two jobs it wouldn’t work out very well.

The third factor he employed was scalability.

He was only being awarded 10% of the jobs he bid on, so in order for this to work he needed to be able to bid on lots and lots of jobs. If there were only a few opportunities to bid on, his plan would have failed. What he did instead was pay $100 per month to have access to an exclusive “bid room” where contractors could come and view bid requests from all over the region.

While most competitors never thought to come to the bid room, those that did would only bid on a few jobs of interest to them. There were hundreds of jobs to bid on and he went often and bid on every single one of them. Without the possibility to scale up the number of bids, his profit model and velocity advantage would have meant nothing. He confided to me that if he started winning more than 10% of his bids, he knew his price was too low and he would increase it. He used scalability to maximize profitability.

Scalability has many more applications than that. In fact when he was in college, he was training for a career in fractionalization while paying his way through college with multiplication. In other words, he was being prepared for a career where he would be the hourly guy but at a higher wage, instead of an education to prepare him for entrepreneurship.

When he graduated, he wanted his first job to be a CFO (Chief Financial Officer) for a company. His fellow classmates and teachers told him to lower his sites to begin with and get a clerical support role first. Then work his way up to the top position as CFO.

He chose to use the scalability principle and instead of applying at a handful of local companies for whatever related position he could get, he sent out 2000 resumes across the country! If, I’m not mistaken, only four resulted in an interview, but one of them hired him as their CFO! While his friends were working the low pay, low-level jobs, he was in the position his education had prepared him for.

As he grew in his experience, he realized he could do far better applying these principles of profitability, velocity and scalability if he had his own business. If I told you how well he was doing now, you would be astounded.

These principles can work for anyone and there are a myriad of applications too many to describe in a blog. If you would like to be part of my MPI Business Institute where we have live training and interactive question and answer time, check this out and let me know of your interest. We anticipate starting in June so let me know if you want to be part of that.

Also, I just completed laying out the format for a two-day boot camp that can be held in your city. Take a look at this incredible, one-of-a-kind seminar outline and let me know if you would like to bring it to your church or city.

Michael Q. Pink

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  1. I love this! What an encouraging story. I tend to get weighed down by all the “no’s” some times instead of looking at the big picture. Thank you so much for sharing this with us!

    1. Hi RaShell and Team Southerland! It’s easy to focus on the “no’s” instead of the “yes’s” but we need to look at the positive outcomes more than the negatives. When folks go gold mining, almost everything they pull from the earth, is dirt. Only a very, very small amount is gold, but the gold makes it worthwhile if you can deal with all the dirt!

      Blessings, Michael

  2. Good stuff! I believe portions of this can be used in my sales position where I technically am fractionalized. While I can’t hire others to do my work , I can increase my referral partners who will continue to refer their clients. This muiltiplication allows me to focus on creating a positive experience and recruit more referral partners. I can also increase my profitability by going after Realtors who focus on more expensive homes.

    1. Hi Larry;

      I love that you are thinking of ways to apply the principle! I suggest you deliberately think on these ideas often and you will see more and more ways to apply them. Before you know it, you will be multiplying! (o-:

  3. Hi Michael, this is a great story with incredible underlying principles. It is a very good example of applying 80/20 thinking. I would love to hear and learn more about doing business this way.

    Blessings
    Darren

  4. Stories like this really inspires and resonates…thanks again, our Sensei Michael! I am reminded right away of the Professor’s words in his Ecclesiastes 11:2 on Scalability & multiple options:

    “Divide what you have into seven parts, or even into eight, because you don’t know what disaster may happen on earth.”

    May our Lord multiply the works of your hands!

    His, BenjieC.

    1. Hi Benji;

      Thanks for the Sensei comment (o-:

      Solomon was indeed a great professor. Thanks for that reminder from Ecclesiastes!

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