The Success Pyramid

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Congratulations and welcome to one of the most important and impactful Wealth Coaches Academy courses we have to offer, called Small Business Ownership. You have just begun the crucial step of investigating and conducting due diligence on whether or not starting your own business, either a home-based business or a traditional outside-the-home, bricks-and-mortar business, is right for you.

You are at the fork in the road I was in 1991 when I graduated from the University of Calgary with my second of two degrees. The first degree was a Bachelor of Arts in Economics (with a double major in micro & macro economics), and the second was a Bachelor of Commerce (with a double major in Finance and Management Science).

Upon graduation from my business degree, I was interviewed by a couple companies in the financial services industry: Primerica (formerly AL Williams) which I was not overly-impressed with because of a younger and relatively weak interviewer; and Investors Group, one of the leading mutual fund financial planning firms in Canada back in 1992. I ultimately settled on IG as an "independant representative" of the firm to offer financial planning services, mutual funds, insurance, mortgages, and group benefit plans to individuals and businesses.

Under their compensation model, I was NOT considered to be an employee of IG but rather a consultant who would be paid a commission based on the volume of business I brought to the company every month. Although I had worked several other traditional "regular" jobs that paid by the hour or by the month, this was my introduction to a performance-based compensation plan based on straight commission. That is, I could make as little or as much money as I wanted to and it would be entirely dependant on my efforts. As I got to know the more seasoned veterans in the office, I quickly learned that sales people are generally the highest paid professionals in the business world, often times making more than their managers, presidents and even the CEO.

Unlike gifted sports stars and movie celebrities, however, sales is a skill that everyone can learn and which doesn't rely on genetics or family privilege to get involved and to succeed.

Success Pyramid

One of the key financial planning tools we had in our presentation binder at IG was a chart similar to the one below. It was a statistical probability chart that showed the likelihood of an 18 year old individual achieving certain levels of financial success (or failure) by the age of 65. The numbers were based on long-term studies of tax records, occupations, and mortality tables. What was shocking to me at the time was the relatively low number of people who could retire with financial freedom after working 8 hours a day, 5 days a week, and 240 odd days per year for 47 years of hard work spent on building someone else's dream.

After at least 11,280 days or 90,240 hours of work and roughly $1.4 Million in lifetime earnings for the average person (at $30,000 per year in 1991), I wondered "how could it be that only 4% of the population (that's what it was back then) was able to retire in comfort and that most people ended up financially broke or dependant on someone else in their golden years?

My manager explained it in these 10 simple words which have stuck with me ever since:


As it turns out, people spend more time each year planning their family vacation than they do planning their family finances, and that's why the pyramid of success looks the way it does.

success pyramid rounded.JPG

When I asked my manager what type of people make up the 5% at the top, the answer was quite surprising. I had assumed that it might be CEO's, musicians, rocks stars, athletes, celebrities, wall street execs, and those with large pools of inherited money. Although those groups are definitely in the financial freedom category, as it turns out, 80% of the top group (or 4% of the total who start their climb at age 18) are: BUSINESS OWNERS!

WOW, what a revelation!

The very business owners who hire and pay you from the revenue YOU help THEM to generate, turn out to be the majority of those who retire with financial freedom, free of worries about money. At some point along the way, I heard the phrase, and you probably have too, that

"If you help enough other people get what they want, then you will get what your want".

Business owners do this on two fronts: First, they help customers find products or services that they need and want, and then help fill that need. Second, business owners create 70% of all the jobs in existance and thus help employees get what they want, a paycheck, in exchange for the labor that generates revenue for the owner to give him what he wants, financial freedom. It is a great tradeoff and is at the core of the free enterprise system.

FACTOID: Labor costs are typically 30-40% of the gross revenue of a business. If the employer pays you $60,000/yr in salary, then you must be contributing $150,000 towards the bottom line. Wouldn't you rather monetize your labor in a way that allows you to keep 100% of your effort?

Business owners, I have learned, also get numerous opportunities to write-off expenses that were categorized for employees as after-tax personal items, but for business owners are treated as pre-tax legitimate business deductions under the tax code, and then they invest the tax savings, for long-term growth.

Imagine if you could earn thousands of extra dollars in tax refunds each year to re-invest in other ways. Would you be more likely to move up the success pyramid?

So, given the dominant 95% failure rate for most people who go to school to earn a degree that will get them a safe, secure, job so they can work the 40/40 plan (40 hrs/wk for 40 years) just to help build someone else's dream, does it really make sense to get a college degree AND take out a massive student loan, only to INCREASE your odds of failing financially by age 65 after 47 years of post graduation employment?

It's not that I am advocating not getting an education, but rather I am pointing out that the education system is NOT designed to teach people the basics about financial money management, entrepreneurship, or how to build a business. Thus, the need for this Wealth Academy. While it is true that 90% of businesses will likely fail in the first decade, that is still a 10 times better success rate than the 1% of employees who make it to the top of the pyramid.

So here is my question for you: If you knew these financial success odds BEFORE signing up for college AND incurring tens of thousands of dollars in student loans, would you still take that route, or would you be more likely try to start a business where you have 10 times better odds and a 5.6X greater Net Worth potential than employees? If you have already done the traditional route and have just learned these odds for the first time, does it not make at least a little bit of logical sense to find out how you can become a business owner NOW rather than being stuck as an employee in a (just over broke) J.O.B. for the next half century?

If you said yes, then let's continue with the course lectures and learn what they didn't teach you in school. If you said no, then I suggest you request a tuition refund and purchase another course instead that is geared more towards the employee / investor mindset where we can help you to better manage what you do keep in AFTER tax dollars.

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