The Power of Monopoly

Remember when you were a kid and you would play Monopoly? Sometimes what you bought paid off and you would win, while other times you would end up broke and have to mortgage your properties to pay your debt to another player. Did you ever see the patterns that are within Monopoly as a model to follow for success?

Just this last Christmas, I played Monopoly with my family. I can remember when I was younger I would lose every time to my older sister. It seemed no matter what I bought, I still ended up with no money and couldn’t afford the high rents that I had to pay as a result of her collecting more money. Yet as I grew up, I saw the game differently. I knew that Boardwalk and Park Place were too expensive to be sustainable at the beginning. I also noticed that the real cheap property was, well, cheap. While you could build houses and hotels on them with little money, their return on investment was little as well- hardly enough to last long in the game when you would have to pay out to other owning more expensive property.

Over the last ten years or so, I have become much better at the game. Yet, the reasons for my improvement are not based on me playing Monopoly my whole life. While I am sure that experience has helped, I believe it is the knowledge I have acquired in business, real estate, and strategy that have helped me to understand the game of Monopoly, and therefore, the game of money in real life, much better.

A Simulation of Your Life’s Actions

Games and role playing are a great simulation of how people react to situations in their real lives. While Monopoly is just a game, your actions in the game may reflect how you behave in your business and personal life. The idea of Monopoly is to gain raw land, properties, and make them more valuable, buy building homes and eventually hotels. The more land you acquire and build, the probability of you making more money as the other players have a higher chance of landing on your spaces.

Through game play, you can see patterns that people make, whether it buying too high priced properties which may become unsustainable, or staying with cheap properties they know they can afford, yet the profit from them isn’t enough to cover their expenses.  These patterns that happen in life, come through in a game like Monopoly, because it forces you to think differently and manage your money well. For a lot of people, managing their money is a subconscious effort. In other words, they don’t do it, or they may try, but do not manage it well.

The Power Within

There are many parallels between business and Monopoly. Utilizing this game can be a powerful model for how you structure, manage, and grow your business. While it is a game, the metaphor for which it stands for is what I am talking about. Here is a good example:

Lots of Competition

There were 5 of us playing the game. This meant that acquiring the right properties were crucial to winning the game. Negotiating was another important factor. With 5 people, you really had to make deals where multiple people would get money or property, or free rent the next time they landed on the space, or some other deal. Creativity was key.

Competition exists in every market available. The question is how do you separate yourself from that competition to gain market share. And if competition is close, how can you make their products complimentary to yours? In other words, while they may be putting your products down, maybe you do the opposite. Praise the company on product X and how it works seamlessly with your product to make your product even better.

Start Small, Build Slowly

Having a loose plan is always a good strategy when playing Monopoly. Your loose plan may be to acquire the orange properties. Should that not happen, maybe you will go for the lighter purple near the electric company or the red properties right around the corner. One costs a little bit more, one a little bit less, but it is close enough to the plan that it could still be executed with either of these properties.

The same is true in business. You may not have an exact plan that is detailed for the next 5 years, but you should have a loose 5 year plan that allows the company to be flexible and adaptable to change.

While your plan is acquire the orange properties, you still want to acquire as much property as possible to use as negotiating power should you need to make a deal to complete your own monopoly.  Slowly, you will end up with a number of properties, some of which will be more valuable to certain players than others.

Continue to Buy and Manage Assets to Continue Increasing Cashflow

Just as in business and personal finance, the concepts are the same; buy and/or create assets that you can then manage to increase your monthly cashflow. In other words, you should be building a foundation to continually earn more and more money each month and each year, whether you are actively working or not.

The same is true in Monopoly. The more properties you acquire, the more chances you have at creating monopolies, which will allow you to earn more money off of the properties, as well as build houses and eventually hotels for more cashflow.

Applying the Power of Monopoly

Think about these concepts, how they apply to Monopoly and how they apply to your personal life or company. The concept is the same in all three. The more you practice by playing games, the easier it will be to implement those concepts in your life and in your business. You are training your brain to think differently by playing these games. Then you simply take that training and apply it to your business or personal finances.

Ready for an Advanced Version of Monopoly?

Want an even greater lesson in this powerful concept? Want to learn more about managing money, other types of assets, cashflow analysis, and more? Stay tuned for my next post on a game that take Monopoly to the next level- Cashflow 101.