Why set up your own Pipelines?

Posted at August 23, 2009

Get Ahead Series

Money is the exchange of value, the more value you create and deliver; the more you will get paid. In this “Get Ahead” series, we continue to look for smart ways to rise from financial mediocrity to financial freedom. Setting up your own value distribution system is a great way of achieving financial freedom.

I was inspired by a story told by Robert Kiyosaki and I will share that with you today.

Instead of creating and delivering value in person, you can set up systems to serve you. Package your value and find a way of delivering that value to the people who need it. For example, companies like Coca-cola and Pepsi thrive even if they do not have their own shops. They seek partners in delivering their refreshments. You can do the same in your life; you can work with others to deliver value for you, just like Pepsi does.

Here is that brilliant story by Robert Kiyosaki.

Once upon a time there was this quaint little village. It was a great place to live except for one problem. The village had no water unless it rained. To solve this problem once and for all, the village elders decided to put out to bid the contract to have water delivered to the village on a daily basis.

Two people volunteered to take on the task and the elders awarded the contract to both of them. They felt that a little competition would keep prices low and ensure a back-up supply of water.

The first of the two people who won the contract, Ed, immediately ran out, bought two galvanized steel buckets and began running back and forth along the trail to the lake which was a mile away. He immediately began making money as he labored morning to dusk hauling water from the lake with his two buckets.

He would empty them into the large concrete holding tank the village had built. Each morning he had to get up before the rest of the village awoke to make sure there was enough water for the village when it wanted it. It was hard work, but he was very happy to be making money and for having one of the two exclusive contracts for this business.

Business Owner Thinking

The second winning contractor, Bill, disappeared for a while. He was not seen for months, which made Ed very happy since he had no competition. Ed was making all the money.

Instead of buying two buckets to compete with Ed, Bill had written a business plan, created a corporation, found four investors, employed a president to do the work and returned six months later with a construction crew.

Within a year his team had built a large volume stainless steel pipeline which connected the village to the lake. At the grand opening celebration, Bill announced that his water was cleaner than Ed’s water.

Bill knew that there had been complaints about dirt in Ed’s water. Bill also announced that he could supply the village with water 24 hours a day, 7 days a week. Ed could only deliver water on the weekdays–he did not work on weekends.

Then Bill announced that he would charge 75% less than Ed did for this higher quality and more reliable source of water. The village cheered and ran immediately for the faucet at the end of Bill’s pipeline.

In order to compete, Ed immediately lowered his rates by 75%, bought two more buckets, added covers to his buckets and began hauling four buckets each trip. In order to provide better service, he hired his two sons to give him a hand for the night shift and on weekends. When his boy s went off to college, he said to them, “Hurry back because someday this business will belong to you.” For some reason, after college, his two sons never returned.

Eventually Ed had employees and union problems. The union was demanding higher wages, better benefits and wanted its members to only haul one bucket at a time.

Bill, on the other hand, realized that if this village needed water then other villages must need water too. He rewrote his business plan and went off to sell his high speed, high volume, and low cost and clean water delivery system to villages throughout the world. He only makes a penny per bucket of water delivered, but he delivers billions of buckets of water, and all that money pours into his bank account. Bill had developed a pipeline to deliver money to himself as well as water to the villages. Bill lived happily ever after and Ed worked hard for the rest of his life and had financial problems forever after.

That story about Bill and Ed has guided me for years. It has assisted me in my life’s decision making process. I often ask myself, “Am I building a pipeline or hauling buckets?” “Am I working hard or am I working smart?”

In Summary

Are you capable of creating a “pipeline” to be delivering value for you? What do you need to do before you can deliver value to others 24/7? To get ahead in life, you have to be more like Bill and less like Ed.

Please share this blog post with your friends on Facebook and other social media. I would also love to hear from you about practical areas of life that one can setup a distribution system (pipelines).

Series Navigation«Set up Systems to Serve YouChasing the Wind of Success»

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