Build Assets That Compound

This post is an exerpt from my new book, The Craftsman Creative Manifesto. You can get a copy for yourself using the link at the bottom of the page.

This lesson took me a long, long time to learn. As soon as I realized what I’d been doing compared to what I could have been doing it was a complete facepalm moment. I knew that I needed to share this concept with as many people as possible.

First, what is an asset?

An asset is any resource owned by a business or individual.

A few examples might help: Your email list is an asset. You own it and have complete control over who is on it, what size it is, what platform you use to engage with it, etc. It’s yours.

Your YouTube subscribers are not an asset. You don’t own them, and as many creators have experienced, YouTube can take them away at any moment. The platform can change and cut your subscriber count in half. They can make it harder to reach your subscribers, or make you pay to reach them as Facebook did with fans of pages.

Any equipment you buy for your business is an asset. If you rent an office, it’s not an asset, it’s a liability – something you have to pay for, an obligation or debt.

Ok, with the definitions out of the way I can give you the principle here:

Spend Your Time Building Assets That Compound

Yes, it sounds like we’re diving into accounting. In a way, we are, but it’s manageable.

Compounding is what happens when things grow on their own, with no extra effort on our part.

Compounding in this context means “to add to”, so let’s go back to the email list example.

If we add 100 people to an email list but never add anyone else, that is an asset. But it’s not compounding.

If we create a way for our email subscribers to share the email with others, that causes the list to compound. It grows, or “adds to” itself with no extra ongoing work on our part. You build the infrastructure once and the compounding happens all on its own.

We need assets that compound in as many places in our business as possible.

Think about how much you’d save if you owned paint that never ran out? That would be an incredible asset, right? Those types of assets exist all over the place.

A few examples of assets that compound:

  • An email list that grows every day because of the way you built it out.
  • A funnel that sells products day and night without any input required on your part.
  • A product that can sell on its own without incurring any new costs to create or distribute it. Think about how much Netflix is spending to renew the TV show Friends. (It’s 9 figures…) That extra income cost the creators and owners of the show NOTHING. They had already built the asset.
  • Equipment that, when rented, pay for themselves over time and generate income.

The first step is to spend some time thinking about what assets there are in your business. Your laptop is an asset. Your materials are assets. Your brain and your creativity are assets. Don’t limit your list to your current assets. Look outside your business for how others have assets that you could add to what you’re doing.

Then, think about which assets have the potential to compound. The opposite are assets that depreciate. Computers, equipment, and materials often don’t compound, even if they are essential to the work you’re creating.

Once you’ve got an idea of which assets you could create our own that compound, the last step is to find time in your day and week to create these assets.

This book is an asset. It helps people but also has built-in mechanisms to help readers share it with others. It also helps those that read it discover other assets that I’ve built.

It took over 100 hours to create, but I own it, 100%. I can do what I want with it. I can point you to anything in the end, which I do! It’s my asset, I can do what I want with it!

We need to not only build assets that compound but have some ownership of those assets. If you’re an actress you get residuals based on your performance in a film or TV show. That’s part of your agreement with the producers of the film. That small chunk represents ownership. You can receive those residuals for as long as the film or show generates income.

Being the producer you’ll likely get a bigger chunk of ownership, or “equity”, in the movie.

Being the financier or the production company or the distributor that acquires the show gives you even more ownership.

How is it that Disney makes more than $10 Billion each year from its media content? Because they own it.

Build and own assets that compound, and watch your business grow on its own.

Take a look at your business now. How much time are you spending on work that is not an asset? How much work are you doing to build assets for others where you have no ownership? When I work as a producer on a TV show I have no ownership at all. That’s part of the reason why I got up early in the mornings to write this book. I was spending some time every day building my own asset.

This process and mindset speak to some of the core Craftsman values. Security, growth, independence, vision, and progress.

Craftsmen build assets that compound.

What is a Craftsman Creative? If you enjoyed this post, you’ll love my new book written for creatives who are seeking to turn their passion into a business. You can get it for free, just click on the link below!

Preorder The Craftsman Creative Manifesto

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