Backwards Mentality

A veil has been lifted over the population of the United States. It has revealed that the vast majority of Americans have been led down a path of only understanding one side to business. And that is to consume. While this has been apparent for some time now, with the recent crash it has become widely known. Now, with a weak economy and volatile stock market, the American population are being told to go out and consume to help rebuild the economy. Buy when times are good, buy when times are tough. When, do you suppose, that one shouldn’t buy?

To answer that question would shed light on the fact that businesses, as well as the government, want the American people to consume. When the population consumes, businesses make money and grow. However, once the  American consumer understands that in order to get ahead, it may make more sense to be the seller rather than just a buyer, they often get stuck. Why is this?

Taught to Buy, Not to Sell

For many people, when you mention a salesmen, or selling, or any act of selling, it is a conversation killer. The word “Sell” has been written off as a negative, a swear word to some. Yet, it is this understanding of how to sell that will help everyone, which in turn will help the economy.

Sure, there are those stereotypical salesmen who can swindle naive buyers into believing they need something they don’t. But then again, those stereotypical people exist everywhere. In the end, it is still a choice that the buyer has to make.

Understanding sales and how to sell is 90% of the battle. That last 10% is pure confidence in the product or service that is being sold. See my post titled, “The Art of A Great Sales Pitch” to learn more.

Selling Equals Growth

As entrepreneurs, selling is what will make a business grow. Without understanding how to sell, many would be entrepreneurs get stuck. Michael Gerber calls it “an entrepreneurial seizure.” That is, the person decides to strike out on their own, but when they can’t make enough sales to keep the business alive, they get stuck.

Passionate Hobbies, Zero Income: Why?

People often have the next product they want to purchase already picked out. Down to the very last detail, they know exactly what they will buy and how much it will cost. When I hear stories about people who spend thousands of dollars on equipment for a hobby, I find it somewhat odd when they have not turned it into a side income.

It is not to say that everyone is entrepreneurial or wants to turn their hobby into a business. However, by using that equipment to make extra money, they would be able to do something they truly enjoy and make money with it at the same time.

The Smarter Consumer

One way to really think about buying and selling is to understand the difference between assets and liabilities. To keep this concept simple, an asset earns money and a liability costs money. Most things people choose to buy are liabilities. They will continue to cost money over the life of the product. Cars, boats, computers, and houses are all examples of liabilities that will continue to cost money to maintain.

Those things are all great to have. However, how you go about buying them can make all the difference. If you want to buy a sports car (a liability), then you should come up with a way to pay for that sports car above and beyond your normal income (an asset). If you have a hobby that could be turned into a profitable, steady income, then that could in turn pay for the liability.

Another way to think about buying something is to think how you could earn the money spent on that item back, using that item. An example. Say you are really into photography. You decide to purchase a high end camera. To make the money back, you could sell your photography or your photography services. A goal might be to break even or to earn 150% of the price of the camera back. It may be challenging, but could be fun as well.

Consumers, for the longest time, have been in the business of acquiring things. Many acquire and don’t take advantage of the opportunity to make their money back or more. Yet, as times change, the consumer needs to adapt as well. Consumerism will always be around as it is what the capitalist economy is built on. However, it is up to the consumer to become smarter in what they buy and how they can use products bought to their advantage.