Business? It is quite simple. It is other people’s money!” said Alexander Dumas the Younger in his play, The Question of Money. Yes, it’s that simple: use OPM—other people’s money. That’s the way to acquire great wealth. Benjamin Franklin did it, William Nickerson did it, Conrad Hilton did it, Henry J. Kaiser did it, Colonel Sanders did it, and Ray Kroc did it. And if you are wealthy, the chances are you did it, too.
Now, if you are not wealthy, learn to read what is unwritten. The basic unwritten premise in “Use OPM” is: that you will operate on the highest ethical standards of integrity, honor, honesty, loyalty, and consent. The dishonest man is not entitled to credit.
Credit and the use of OPM are one and the same thing. It is the lack of a satisfactory credit system within a country that keeps backward nations back. Whereas the credit system of the developed countries supports them to generate great wealth and progress.
Now the person, corporation, or nation that does not have credit—or does not use it for expansion and progress if they do have it—is missing an important number in the combination for success. Therefore take the advice of a wise and successful businessman like Benjamin Franklin. “Advice to a Young Tradesman” written in 1748 by Franklin, discusses the use of OPM as follows: “Remember, that money is of the prolific, generating nature. Money can beget money, and its offspring can beget more,” and so on.
A Man of Credit
The above statement from Franklin is a symbol of an idea. His advice is as good today as when it was written. You can start with a few cents and have constant possession of $500 by employing it. Or you can expand the idea and have constant possession of millions of dollars. That is what Conrad Hilton does. He is a man of credit. The Hilton Hotels Corporation obtained the credit of millions of dollars to build luxurious motels for air travelers at large airports. The corporation’s collateral: mostly, Hilton’s name for honest dealing. Honesty is one thing for which a satisfactory substitute has never been found. It is something that reaches deeper into a human being than most traits of personality.
The use of other people’s money carries a strong overtone to the character in it. Honesty and reputation, credit, and success in business are all intermixed. The man who has the first of them is well on his way to gaining the other three.
Make investments with OPM. William Nickerson was another man of credit and reputation who found: “Money can beget money, and its offspring can beget more,” and so on. He tells about it in his book “How I Turned $1000 Into $3 Million in My Spare Time”. The title tells what he did. The book tells how he did it.
Nickerson’s book is aimed specifically at how to make money with OPM in your spare time in real estate. Almost everything he has to say also applies to you in your efforts to acquire wealth by making investments with other people’s money. “Show me a millionaire,” he says, “and I will show you almost invariably a heavy borrower.” To back up his statement, he points to wealthy men such as Henry Kaiser, Henry Ford, and Walt Disney.
Your Banker is Your Friend
Your banker is your friend. Banks are in business to loan money. The more they loan to honest men, the more money they make for themselves. Commercial banks loan money primarily for business purposes. Your banker is an expert. And more importantly, he is your friend. He wants to help you. He is one of the people eager to see you succeed.
An average American boy named Charlie Sammons becomes wealthy with the support of his banker. At the age of 19, he was no better off financially than most teenage boys except that he had worked and saved some money. And with bank credit, Charlie Sammons developed a forty million dollar business in ten years.
One of the officers in the bank where Charlie regularly deposited his savings each Saturday took an interest in him. For the banker felt: now here’s a boy of character and ability—and he knows the value of money.
So when Charlie decided to go into business for himself, buying and selling cotton, the banker gave him credit. And this was the first experience Charlie Sammons had in the use of other people’s money.
About a year and a half after he became a cotton broker, the young man became a horse and mule trader. It was then that he learned much about human nature. And his understanding of people in addition to his knowledge of money soon developed in Charlie Sammons a very sound philosophy of a brand commonly observed in persons who are or will be, successful. Charlie learned this philosophy at an early age. He has never lost it. Today he still maintains it. This brand of philosophy is known as: common sense.
A Mega Beginning
After he had operated a few years as a horse and mule trader, two men came to Charlie and asked him to go to work for them. These two men had developed a reputation for themselves as being outstandingly successful in the sale of insurance. They had come to Charlie because they had learned a lesson from defeat. Here’s how it happened….
It seems that after these two salesmen had successfully sold life insurance over a period of many years, they were motivated to form a company of their own. They were good salesmen all right. But they were poor business administrators. In fact, they were such good salesmen that they sold their company out of business.
Now it is not uncommon for salesmen to assume that financial success in a business is contingent only on sales. But this is a false premise. A poor administration can lose money as fast, or faster, than a good sales management and sales force can bring it in. Their trouble was that neither one of these men was a good administrator.
But they had learned their lesson—the hard way. On the day they went to see Charlie, one of the salesmen told their story of defeat and said:
“Since our company went broke, we have paid off our losses from the commissions we have since made selling insurance. We also had to pay for our living. It has taken a mighty long time but—we have done it. We know we are good salesmen. And we also know now that we should keep to our own specialty—selling.” He hesitated, looked into the eyes of the young man, and continued: “Charlie, you have your feet on the ground. You have good common horse sense and we need you. Together we can succeed.” And they did.
A plan and other people’s money developed a $40,000,000 volume. A few years later Charlie Sammons bought all of the shares of the company he and these two men had formed. How did he get the money? He used OPM plus what he had saved. Where did he get the large amount of money that he needed? He borrowed it from a bank, of course. Remember: he had learned early that his banker was his friend.
And then in the year that his company had produced an annual premium volume of almost $400,000, the insurance executive finally found the successful formula for rapid expansion that he had long been looking for. He was ready.
It was this formula plus OPM that developed a forty million dollar premium volume in a single year. Sammons had seen that an insurance company in Chicago had successfully developed a sales plan through “leads.” Now for many years sales managers had used what is termed the “lead system” to promote a new business. And with sufficient good leads, salespeople often earn exceedingly large incomes. Inquiries from individuals who indicate interest are called “leads.” These are generally obtained from some form of the promotional advertising program.
Some companies build their entire sales program on such leads. And advertising is used to obtain them. But advertising costs money. Charlie Sammons knew where to go to get the money when he had a good bankable idea—the Republic National Bank of Dallas. It is well known in Texas that this bank helped build Texas. And it is in the business to lend money to men of integrity like Charlie Sammons who have a plan and know how to work it.
Now while it is true that some bankers won’t take the time to learn their client’s business, Oran Kite and other officers of the Republic National do. Charlie explained his plan to them. And, as a result, he was able to employ unlimited credit to build his insurance business through the lead system.
You see, it was because of the credit system that Charlie Sammons was able to build the Reserve Life Insurance Company. And under such a system he was able to develop a premium volume from four hundred thousand dollars to over forty million within the short space of ten years. (Excerpt is from “Success Through A Positive Mental Attitude” by Napoleon Hill & W. Clement Stone).