Success will not happen overnight. Only through small, smart choices made consistently over time will you see success in your business. Darren Hardy teaches this to his readers in his book The Compound Effect. He explains that the process of taking small, consistent steps over time to yield big results is called the compound effect. To get a better understanding of the compound effect, here gives us this illustration:
If you were given a choice between taking $3 million in cash this very instant and a single penny that doubles in value every day for 31 days, which would you choose? If you’ve heard this before, you know the penny gambit is the choice you should make—you know it’s the course that will lead to greater wealth. Yet why is it so hard to believe choosing the penny will result in more money in the end? Because it takes so much longer to see the payoff. Let’s take a closer look.
Let’s say you take the cold, hard cash and your friend goes the penny route. On Day Five, your friend has sixteen cents. You, however, have $3 million. On Day Ten, it’s $5.12 versus your big bucks. How do you think your friend is feeling about her decision? You’re spending your millions, enjoying the heck out of it, and loving your choice.
After 20 full days, with only 11 days left, Penny Lane has only $5,243. How is she feeling about herself at this point? For all her sacrifice and positive behavior, she has barely more than $5,000. You, however, have $3 million. Then the invisible magic of the Compound Effect starts to become visible. The same small mathematical growth improvement each day makes the compounded penny worth $10,737,418.24 on Day Thirty-one, more than three times your $3 million.
In this example we see why consistency over time is so important. On Day Twenty-nine, you’ve got your $3 million; Penny Lane has around $2.7 million. It isn’t until Day Thirty of this 31-day race that she pulls ahead, with $5.3 million. And it isn’t until the very last day of this monthlong ultramarathon that your friend blows you out of the water; she ends up with $10,737,418.24 to your $3 million.
The great thing about the compound effect is that it can be applied to all areas of our life. Think about it in terms of our fitness goals. People trying to lose weight don’t shed 100 pounds at a time, but by shedding a few pounds a week, the goal of losing 100 pounds can be achieved over time. At the beginning of the process, the effects will look very minimal and often will not be obvious, but over time that momentum will result in hitting those big time weight loss goals.
In the business world it’s no different; however, thanks to all of the inspirational overnight business success stories out there, entrepreneurs expect to see success overnight and are often disappointed and tend to give up too quickly when their business doesn’t take off overnight. The problem with these overnight success stories that we read about is that about 99% of them did not actually succeed overnight. In fact, it took most of them years of failure and slow growth to get to where they are today. Most of them would agree that their success looked more like the compound effect, a series of small steps and tweaks that they made to better their business that over time resulted in success. The compound effect is all about laying a foundation and building on it. A house isn’t built overnight, it’s built brick by brick, from the ground up.
So for all of the new entrepreneurs out there, don’t get overwhelmed by comparing yourself to someone who is already established in their business. Learn from them, emulate them (but don’t copy them). You will get to where you want to be one day, but you have to be patient, consistent, and take it step by step starting today and by showing up every day.
P.S. Add The Compound Effect to your reading list. There is a lot more valuable info in there worth checking out.
Caroline and Brian's thoughts, tips, and tricks to help you grow your business and become an expert marketer, business leader, and mompreneur.
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