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The Law of Compensation

By John Assaraf and Murray Smith

The Law of Compensation is an expression of how cause and effect operates in the marketplace. Monetary compensation doesn’t happen by chance or by accident; it occurs as the natural and inevitable result of a specific set of circumstances:
Compensation occurs when enough people want what you offer.

Sounds simple, doesn’t it? It is simple. And like all universal laws, it is also incredibly powerful. The more you explore this law, the more you come to see the keys to success that it holds within its elegant simplicity.

What you offer (your product or service) is the result of an idea you’ve had. That idea is the seed of the eventual compensation. When you have a clear, focused, vivid idea that translates into a commercial offering that matches up with something enough people want--and want badly enough to pay for it--then you’ve created compensation. In the simplest terms, your idea is the cause, and compensation is the effect. Like everything else in the universe, the success of your business starts with an idea. But simply having that idea, no matter how strong, clear, vivid, or valid it may be, is not enough. People have to want it. And for that to happen, they have to know about it.

You plus your business idea does not yet equal a viable business. In fact, you plus your idea plus the full development of that idea—capital investment, research and design, a facility, plant, staff, inventory—still does not yet add up to a business. The magic point where all these ingredients actually cross the threshold from idea to reality, where they go from being an acorn to becoming the beginnings of an oak, is the point where customers come into the equation.

You, plus customers who want what you’re offering—that’s a business.
Compensation occurs when enough people want what you offer.
It doesn’t matter whether you’re a corporate CEO, a manager, a doctor, a café owner, an athlete or a computer engineer: no matter what you do, if you are out to earn an income at it, this law applies to you.

We can break the Law of Compensation into three questions. First, is there a strong desire in the marketplace for the product or service you offer? Next, is your offering outstanding? And finally, are you or your team sufficiently skilled at marketing this offering to induce people to pay for it?
In other words, your business will be compensated to the degree that it satisfies three factors:

1) There must be a strong need and/or desire in the marketplace for your product or service.
2) Your offering must be outstanding.
3) You or your team must have the ability to market and sell your offering.

That last factor is especially worth noting. There is a popular myth in business that goes something like this: “If you have the right product at the right time, the public will beat a path to your door.” Sorry, but that’s not how it works. They won’t beat a path to your door—they can’t—if they don’t know about you.
You have to have a great idea. Then you have to turn that idea into an outstanding product or service. But that’s not enough: you also have to be very, very good at marketing and sales.

We did a study many years ago to see who the most successful entrepreneurs in our company were. We found one thing in common among all those individuals who were earning $500,000 a year or more: they were all spending at least 80 percent of their time in front of potential customers. We also found one thing in common in the low-end group, those who were earning anywhere from $25,000 to $40,000 per year: every one of them was spending no more than 20 percent of their time in front of customers.

No matter what your business is, sales and marketing is its most important function, its life blood. The buying public is so saturated with media and marketing messages that it takes a highly focused and determined effort to slice through the clutter and reach your target market with enough impact to gain their attention. If you don’t accomplish that, your business won’t grow. It’s that simple.

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This article is adapted from The Answer, by John Assaraf and Murray Smith (Atria Books).

About the Author

John Assaraf is a New York Times bestselling author, speaker and entrepreneur. The author of Having It All and a contributor to The Secret, he has appeared on Larry King Live and The Ellen DeGeneres Show, and on ABC, CBS and NBC programs worldwide. Over the last twenty years, he has built four multimillion-dollar companies. He lives in San Diego, California.

Murray Smith is a business turnaround guru and consultant who has launched or revived fourteen highly successful businesses and helped thousands of other business owners increase revenues, profits and value. With John Assaraf, he is cofounder of OneCoach, the world’s fastest-growing provider of small-business coaching services. He lives in San Diego, California.

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