Two Words: Risk Management.
Don’t worry, I’m not quoting Kenny Rogers again. Rather, I’m tipping my hat to the other “dancer” and the video poker guru also named Bob.
Yes, I’ve read all his books. You should too. And while the other Bob plays on a rarified level WAY above where I play, there are definitely lessons to be gleaned. Let me explain.
I’ve been a 100% commissioned sales rep (in wholesale, most recently LED lighting) my whole life. That’s a tough road. But I have a simple market plan. I answer all calls and emails. I tell the truth. I fix the problem. I create opportunity. And I’m never a d*ck.
Many of my clients are lifelong friends spanning decades.
When there’s no floor, no paycheck and your entire income is based on your results? Well, whom you work with is key and losing just ain’t fun.
I applied these experiences when I started plying the video poker trade. I was committed to learn how to win with the lowest risk possible and the highest return.
Everyone has their own comfort level. Big D may be playing $25 a hand, even $125 a hand, while I’m playing 25 cents. Fine by me. What I learned from the other Bob is how he managed the swings in cash flow.
For Big D, a five-figure swing up or down in a single day was normal. Since he had total confidence in his ability to play virtually perfect VP, he knew that OVER TIME, he’d win. That was the lesson I applied to my commissioned-sales-rep business. OVER TIME I’d win.
After many years monitoring my quotation activity, sales-closing ratios, sales volume on a daily, weekly, monthly, and quarterly basis, I pretty much knew I’d make between X and Y sales within a clear parameter, hence Z cash flow.
Example: Quoting $10,000 a day for 30 days at a 5% commission with a closing ratio between 10% and 20% ($10k x 30 @ 5% x .1 -.2), whether I actually made that money, I knew I’d created $1,500-$3,000 in commissionable EPV, or what I call Expected Commission Value.
Some days I made zero and spent money and time. Other days/weeks it just rolled in in barrels. But over time, it worked like a charm.
Like the daily swings in VP, I knew, based on past results, that if I just kept plugging, like hitting a royal, I’d eventually cash in. I just needed the bankroll to survive the swings and not be a victim of risk of ruin. Remember the 6 Ps from my last post?
There was a period where I risked investing time and money in large projects, mostly military bases. This involved a much longer lead time, up to two years. But the payoffs were in the five and six figures. Those were my royals.
Risk management. Winner winner steaks for dinner. And I gleaned all that from learning about video poker. And not being a d*ck.