Financial Data
Updated 18 Oct 2019


Want to make more money? Understand the multiplying effect

When I was in my early twenties, my father sat me down. The advice he gave me fundamentally changed the way I thought about work and led me to my current career.


Stephen Key, Entrepreneur, 03 June 2014  Share  0 comments  Print


All the answers to your unique business lifestage questions

How much money do you want to make every year? If you haven’t seriously asked yourself that, you should. Why wouldn’t you?

It’s a very easy question to answer. And until you’ve really thought about it, it’s impossible to determine how you’re going to get there.

When I was in my early twenties, my father sat me down and asked me that same question, point blank. The advice he gave me after fundamentally changed the way I thought about work and led me to my current career.

Doing the maths.

I told him I wanted to make R500,000 a year. At the time, I thought that was a lot of money. You’ll work for about another 30 years, he told me. So how much money would I make in my lifetime? I did the maths: R6 million.

He asked, was I happy with that amount? If I wasn’t, what was I going to do about it?

My father was a smart man. Six million didn’t seem like a lot of money over 30 years, given taxes and living expenses. The math didn’t add up: Life is short, and it didn’t seem like enough for a lifetime of work. When I looked at the last paycheck I had received, I wasn’t happy.

My father told me the only way to create wealth was to find a business opportunity that had a multiplying effect and that didn’t require my presence. It took me some time to figure out what that meant. The latter part was easy enough.

He explained, “A doctor can only help so many people in a day and in a year. A lawyer can only try so many cases.”

To create great wealth, I needed to find something that didn’t require my hands or my presence. Fair enough.

The second was trickier: What did having a multiplying effect mean? He told me that I needed to piggyback on or create something that would be used over and over again - that people never stopped needing.

In other words, he explained to me the idea of collecting a royalty. That made sense to me. And it’s what spurred me to start licensing my ideas.

Today, there are many examples of businesses that share these qualities. App developers, for one. Franchises are another. And of course, there are countless examples of more traditional methods, like the stock market, bonds and real estate.

For me, the concept of the multiplying effect was tremendously attractive. Some people derive pleasure and contentment from being masters of their craft, from working day in and day out with their hands.

That’s not me. I wanted to make money and I wanted to be able to do new things, to constantly challenge myself in new ways.

How much money do you want to make? How are you going to make it? Finding my multiplying effect - writing a book, offering a course and licensing my ideas - has allowed me to live where I want, have people working for me elsewhere and be my own boss. It is incredibly freeing. It works for me.

I’m not saying it’s for everyone. But I want you to critically ask yourself how much you want to make. And do the math.

Entrepreneur Mag Logo

Copyright is owned by Entrepreneur Media SA and/or Entrepreneur Media Inc.
All rights reserved. Click here to read our editorial disclaimer.

Rate It12345rating

About the author


Stephen Key, Entrepreneur


Introducing the cash solutions for a growing business

Are your cash solutions supporting your growing business? Leigh Livanos, Head of Payments, Collections & Cash for Business & Commercial Banking explains how your cash solutions needs will evolve as your business expands.

Login to comment