Last Updated on: 18th August 2020, 11:37 am
In the book the richest man in Babylon, ‘‘George Clason’’ shows a timeless set of principles. His goal is to provide insights to ‘‘those who are ambitious for financial success”, and to share relevant money lessons for businesses.
He hopes that, like the law of gravity which is universal and unchanging, the financial principles in this book may prove for the readers, as they’ve proven for many others, a sure key to a fat purse, large bank balances, and gratifying financial progress. His technique is simple story-telling.
The book teaches that the prosperity of a nation depends on the personal financial prosperity of the citizens. It takes us back to Babylon, the cradle in which was nurtured the basic principles of finance, now recognized and used the world over.
This book, published in 1926 is just as relevant today as it was then. It is an undeniable finance guide for both personal and business purposes. The primary lesson comes from Arkad, the proclaimed richest man in Babylon. He had a humble background as a son of a merchant and achieved the feat by utilizing the advice he garnered from Algamish, the rich money lender. Arkad shares his ‘‘seven cures to a lean purse’’, which would soon help individuals, businesses, and the society as a whole in their quest for financial progress.
We found these lessons exceptionally relevant for small businesses and we decided to share them below in regards to business success.
- Start thy purse to fattening
‘‘For every ten (10) coins thou placest within thy purse, take out for use but nine (9). Thy purse will start to fatten at once and its increasing weight will feel good in thy hand, and bring satisfaction to thy soul’’
Interpretation: Learn to save at least ten percent (10%) of your income.
As a business owner, no matter how much expenditure is incurred, try to separate at least ten percent (10%) of your revenue for savings. It might seem difficult at first, but you’ll discover that you’ll manage to get along just as well. If it feels tempting to keep the money yourself, you could use online banks or even better, online services like Cowrywise. They automate your savings and you can even save more than ten percent (10%).
- Control thy expenditure
‘‘Confuse not thy necessary expenses with desires …….. Budgets thy expenses that thou mayest have coins to pay for thy necessities …….. without spending more than nine-tenths (9/10) of thy earnings’’.
Interpretation: Learn to live within your means as a small business owner.
Understand that what each of us calls ‘‘our necessary expenses’’ will always grow to equal our incomes unless we protest to the contrary.
- Make the gold multiply
‘‘……to put each coin to laboring that it may reproduce it’s kind, even as the flocks of the field, and help bring thee income, a stream of wealth that shall flow constantly into thy purse’’
Interpretation: Put your money to work. Your wealth should extend beyond your income as a business.
Learn to make your treasure work for you. Not only that but its children and its children’s children, until great will be the income from their combined efforts. Do not be tempted to misuse your profits. Reinvest it smartly and you’ll be taking advantage of time and compound interest.
- Guide thy treasures from loss
‘‘Guard thy treasure from loss by investing only where thy principal is safe, where it may be reclaimed if desirable, and where thou will not fail to collect a fair rental. Consult with wise men, secure the advice of those experienced in the profitable handling of gold. Let their wisdom protect thy treasure from unsafe investment.
Interpretation: Protect your wealth.
Be careful where you invest. Take your business seriously and do not become complacent. Seek professional and experienced counsel. Sometimes, it is tempting for startups to plunge into a pool of business without doing proper research and analysis. This principle teaches against such and advises that before you invest, you should carry out proper research and technical analysis to ascertain the chances of growth of that business.
- Make of thy dwelling a profitable Investment
‘‘Own your own home …… I recommend that every man own the roof that sheltereth him and his …. Nor is it beyond the ability of any well-intentioned man to own his own …….. thus come many blessings to the man who owneth his own home. And greatly will it reduce his cost of living, making available more of his earnings’’
Interpretation: Build or rent a home you can comfortably afford.This is an important money lesson for businesses
This principle is debatable. In our opinion, we feel that as a business owner, you should run the numbers to see which method makes sense (whether it is renting a business complex or building/buying one) for you at a particular point in your business.
- Secure your future income
‘‘Therefore do I say that it behooves a man to make preparation for suitable income in the days to come, when he is no longer young, and to make preparation for his family, should he no longer be with them to comfort and support them……… provide in advance for the needs of thy growing age and the protection of thy family’’
Interpretation: Plan for growth, expansion, and retirement.
Most people so believe the ‘‘live in the moment trend’’, that they neglect to plan for the future. As a growing business, it is important to set long term goals and try to follow it up. Implement strategies that will enable your business to run on auto-pilot (in the nearest future), while still generating a steady influx of income
- Increase thy ability to earn
‘‘As a man perfecteth himself in his calling, even so doth his ability to earn increase …………. cultivate thy own powers, to study and become wiser, to become more skillful, to so out as to respect thyself. Thereby shalt thou acquire confidence in thyself to achieve thy carefully considered desires’’.
Interpretation: Invest in yourself, improve your skills, and make yourself more employable.
You may be wondering, ‘‘how does this apply to my small business?’’ The answer isn’t far-fetched. You see, the world is evolving, things are changing at a very fast pace. Innovations are setting in, and it is very natural for your customers to turn to your competitors if they feel that their services are better than yours.
So what do you do? Train yourself and your workers (if you have any), go to class, follow trends, be open to innovations, attend seminars, research, and ask questions. Whatever you choose, set measurable goals. This way, you will provide our business with the capacity to earn more
The remaining part of the book covers both the five laws of gold that Arkad teaches his son, as well as other lessons and insights including ‘‘Choose wisdom over money’’, ‘‘borrow sensibly’’, ‘‘seek luck by working hard and embracing opportunities’’, etc.
The nuggets from this book are simple and relevant. They work well once they are implemented. As a small business owner, this book is just one from the basket of many, if you are planning to start and scale your business profitably.
Have you read this book before and have something to share?
Can you recommend other business growth books?
Drop your comments and we’d be really glad.
To your success!
Disclaimer: This blog/book review does not contain financial advice.