The Formula for Riches / The Difference Between Rich and Poor - by Dr. Hannes Dreyer / Chapter 11 / Part 2.
$ = Intention or Goal.
You have the intention and are willing to put in the time, effort, and responsibility to do whatever it is going to take to become rich. You must invest in yourself and find out everything you can about Clivias (or whatever investment you choose).
S = Surplus.
You can create a surplus and this is the first thing you should concentrate on.
The smaller the original surplus you will invest the smaller the risk is going to be. If you can start an investment by using a zero surplus it simply means you have eliminated the risk 100%!
If something costs you $0 and it does not work what was the risk? The risk was zero. If it cost me $100 to start the investment the risk on the $100 will be 100%.
Finding the Seeds for Growth (Surplus).
What if you do not have Clivias or any other plant for that matter?
Simply ask someone to harvest the seeds of their plants.
I have been interested in plants and their growth potential for some time.
When I started off, I would knock on people’s doors when I saw that their palm tree seeds were ripe. I would tell them that I was learning how to grow seeds and that I would harvest their seeds, plant them, care for them and then give them a portion of the seedlings I produced. Most people weren’t going to do anything with their seeds anyway so they were quite happy with the deal.
Other places to find seeds: public parks and gardens; and simply asking other gardeners – mostly you will find they are happy to share their passion with someone else.
If you make a deal, be sure to honor that deal. If you said you will give the first 100 plants or 50% of the seedlings to the person who gave you the seeds, then it is your responsibility to make sure they get what you promised them.
In this way, it is possible to collect hundreds or thousands of different seeds, even if you do not own any plants yourself.
Ri = Risk
There are two kinds of risk.
The first risk is ignorance.
The first and most dangerous kind of risk is ignorance. The way to overcome it is to apply the first law and that is to invest in yourself in other words find out how it works.
How do you learn?
You can get some value from formal education such as school, college, or university, but you do not have to rely on them. Education can be found in a far broader spectrum of places.
At school, I took biology and one of the subjects was plants. So although at that stage I could not see the value of the subject (and I nearly flunked the subject) I do know the basics of how you can propagate a plant. I am sure you do too.
All you need to start with is some basic information about how to grow plants, how they grow, what pollination is, and how it works.
Nowadays you can get a lot of added information from the Internet. See what happens when you Google “pollination”!
Pollination is about Growth – that’s why it is Key.
In order to get more Clivia seeds, I need to pollinate the Clivias (or I must leave the job to nature but then I break the Formula For Riches because I do not take the responsibility to lower the risk and increase the growth).
When I do not take responsibility I do not get great results. Look at the difference between the growth you get on your investment with a financial institution (no responsibility) compared with what you can easily get if you stick to the formula (full responsibility)!
The difference is not trivial – it is the difference between being rich or staying where you are.
So what is Pollination?
It is the transfer of pollen from the anthers of a flower to the stigma of the same flower or of another flower.
What are the anthers and stigma? Here is a quick lesson from the Internet.
Flower Parts.
Flowers are seed factories. The shape and appearance of flowers may vary, but some parts are common to all. The parts that interest us are the male part, called the stamen, and the female part, called the pistil.
The stamen consists of anthers and filaments. The anthers carry the pollen. These are generally yellow in color.
The pistil has three parts: stigma, style, and ovary. The stigma is the sticky surface at the top of the pistil; it traps and holds the pollen. Pollen which lands on the stigma goes down via the style to the ovary which contains the ovules.
Flowers can have either all male parts or all female parts (e.g. cycads, melons, cucumbers), or a combination (roses, lilies, dandelions, clivias).
If you are a Wealth Creator this little system spells money. If someone wants to buy something that we can produce or get for free we are in the pound (or dollar, or euro, or yen or rand) seats – as I’m sure you will agree!
So now that you have a basic overview of what a plant is, let’s go back to pollination.
Pollination is a prerequisite for fertilization.
Fertilization allows the flower to develop seeds, in other words, if I want to produce plants to sell I first need to produce seeds. If I can get the seeds for free it means I can get the plants for free.
This means my risk (Ri) is zero.
Some flowers will develop seeds as a result of self-pollination, when pollen and pistil are from the same plant, often (but not always) from the same flower. Other plants require cross-pollination: the pollen must come from a different plant.
I have found the best results with Clivias come when you use cross-pollination, but some of the experts tell me it does not really make a difference.
How does the pollen get to the pistil?
Most plants need help moving pollen from one flower to the pistil of another.
This job is done by a pollinator. What is a pollinator?
The pollinator is normally an animal or insect which moves pollen from the anthers to the stigmas of flowers, thus affecting pollination. Creatures that are known to be good pollinators of flowers include bees, butterflies, hummingbirds, moths, some flies, some wasps, and even nectar-feeding bats.
Wind moves the pollen for some plants such as grasses (including corn).
As far as I know in the natural state Clivias depend on wind pollination.
Obviously, if you compare wind pollination with bee pollination, it is a very hit-and-miss business.
Unlike a bee that helpfully (but unknowingly) carries the pollen directly from one flower to another, the wind could blow pollen anywhere in a 360 degrees range. If the pistil does not happen to be downwind of the pollen then it goes to waste.
Where there is waste there is an opportunity. This is where I can step in and make the process more effective by applying time and effort (nm).
In other words, by applying the Formula For Riches I take control. I become the pollinator.
The Economy of the Plant.
And unlike a natural pollinator such as a bee, the plant does not have to incentivize me to do its pollinating by luring me with sweet-scented nectar. There is no price for it to pay when I do the work!
Plants are prepared to “pay” for pollination because the movement of pollen allows them to reproduce by setting seeds. However, natural pollinators don't know or care that the plant benefits from their movements.
Their motivation for putting in the time and effort is to get nectar and/or pollen from flowers to meet their energy requirements and to produce offspring. In the economy of nature, the pollinators provide an important service to flowering plants, while the plants pay with food for the pollinators and their offspring.
Aside from this, seeing as we’re talking of the economy of the plant, do you know why nectar exists? It is there as a cheaper alternative to the expensive resource of pollen. The plant would rather “pay” the pollinator in nectar because it is not much more than sugar and water, whereas pollen is expensive for the plant to produce.
Now as a pollinator, because I know the benefits (financially) I will make sure that I do the best possible job. My reward will not be the nectar or pollen but the beauty and the money which I will get from the offspring – in other words, the growth (G) of new plants.
Make Educating yourself Fun and Interesting.
I have read a number of books on plants over the last couple of years. The more you read and study the more interesting it becomes.
The Lesson of the Cycads.
There are two ways you can learn. The best way is to go to the experts and ask them to show you how they do it. You will normally learn more than you expect. The experts are usually more than happy to find someone who shares their interests and they cannot wait to help you. They will go out of their way to help you - I was even given many valuable plants (or seedlings) for free.
The second way is simply to do it yourself by trial and error. Personally, based on experience, I try to avoid this method as far as possible. It can be very costly. It is far better to consult an expert or get a mentor or to pay someone who knows what they are doing and then learns from them.
For example, I also grow Cycads, which are rare and sought after plants, very ancient, which reproduce by means of cones very much the way pine trees do. But they look more like palm trees. Unlike Clivias, each plant is either a male or a female.
When I started growing Cycads I had two female “Encephalartos Transvenosus” plants in my garden, each with three seed cones. Each seed cone has about four hundred seeds.
This sounds good - but I was not going to successfully grow seeds without access to a male plant. This, for a Cycad, can be quite a major problem. For example, there is a Cycad in the Durban Botanical Garden which is classified as technically extinct because while there is a healthy, vigorous specimen right there, large as life, nobody has been able to find one of the other sex.
So clearly if you want to grow Cycads, pollination is a big issue.
Because I did not know how to proceed, I looked around for an expert who knew how to pollinate E. Transvenosus plants. This process led me to someone who was prepared to help me.
I made a deal with him. He supplied the pollen and he did the pollination. My job was to ask questions and learn and then I did some pollination myself under his watchful eyes.
(above picture) A female Encephalartos Cycad with cones.
He took me through the whole process, and a couple of months later he showed me how to harvest and how to clean, and plant the seeds.
Within a year there were more than two thousand seedlings (small plants).
He then showed me how to transplant the seedlings into plastic bags.
He told me what soil mixture to use and how often to water, etc. Without this knowledge, I could have made a lot of mistakes and lost a lot of seedlings.
When the time was right I honored my commitment and gave him his 50% share of the seedlings – more than a thousand of them. I kept the rest.
But what I gained in giving him a thousand plants was worth more than gold to me. I had the knowledge – and I knew how to apply that knowledge.
Some people would think I was crazy to give away a thousand plants.
But the way I see it, I gained a thousand plants for free plus I gained applied knowledge. If he had not helped me I would have had no seeds and therefore no seedlings and therefore no growth! I got all this risk-free! There is an important lesson here.
Many people don’t ‘get it. But it is integral to how I work my partnerships.
Because of that exercise, I have more than 10 000 cycads today.
Now, why is applied knowledge so important? The moment that I know how to pollinate Encephalartos Transvenosus I basically know how to pollinate all the Encephalartos species, and there are more than 45 African species, some of which are worth a fortune.
This leads me to the accelerator principle.
How can you Apply the Accelerator Principle?
I also grow palm trees. I started seven years ago, simply because they were in my garden. Today I have more than 20 000.
Because I love plants and I saw how easy it is to grow palm trees, I applied the accelerator principle and started pollinating the cycads which were on my premises as I explained earlier.
Today I have more than 10,000 cycads.
I then applied the principle to the Amaryllis, starting with the six plants in my garden, and today I have more than 5000 plants and seedlings.
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And then I applied the principle to the Clivias.
What were my Risks?
The first one is ignorance and as explained I dealt with that right from the start.
The second risk is the risk of losing capital.
What capital?
Remember the seeds were all free, so there was no capital to lose. This means that the whole thing has been risk-free beyond some time and effort on my part.
Looking at it in terms of the formula – my surplus was the free seeds on the plants in my own garden.
So the financial cost was nothing.
If the “cost” was nothing it simply means the financial risk was zero because I used no money to start the investment. Because I adhere to the Formula For Riches I do not consider the growth of the investment as mine. It belongs to the “investment”.
The investment will not become mine until the monetary value is equal to the intention (the goal I set myself - $.)
Where it all Began.
You will have gathered that I have an extensive garden. This is because I live on a smallholding. When I bought the smallholding I said to my wife that I would make more in ten years out of the smallholding than what it cost to buy.
Today – eight years later - the total value of the plants on the smallholding is four times what I paid for the property.
The best part is that I have no intention of selling any of the plants – I started with nothing, I was prepared to put in time and effort (which I enjoy) and I do not need the money, so I do not have to break the Formula for Riches. Thus the value of my investment is going to continue to grow and grow.
Other Risks.
Not putting in TEM($) (time, effort, the right mindset or attitude, and whatever money is genuinely required – not much)
Growth.
I like any investment where there is more than one factor that will influence the growth which I will get.
When we look at plants there are several. Let’s discuss some of these:
Germination Growth.
I find that this gives you the highest growth in monetary terms. It is possible to get seeds for free. If any of those seeds germinate and you get a plant your growth is infinite and your risk is zero.
There are three ways to get seeds: firstly you can produce them in your garden in which case the growth you get is infinite; secondly, you can get them from a friend’s garden and if you do not have to pay for it, then the growth is infinite.
Thirdly you can buy seeds. If you buy seeds I suggest you never pay more than 10% of the market value of a seedling. Say for example you can buy a year old plant for $1 then the seed should not cost you more than 10 cents. You will find with some species such as Clivias the germination rate is almost 100%.
With other species, the germination rate can be as low as 10% or even less. You must take this into consideration.
Now let’s say you buy 100 seeds for $10 and 50% germinate, this means you will have 50 seedlings. Let’s assume a seedling's fair market value is $10 then the value of the plants is $50. The growth within the first year is 400%.
400% Versus infinite growth, now you can understand why the trick is to get the risk down by getting the seeds for free?
The Second type of Growth – is the Plant’s Natural Growth.
Under the same climate and growth factors, a two-year-old plant is bigger and therefore more expensive than a one-year-old plant. So this type of growth depends on maintenance on your part – care, attention, watering, fertilizing (time and effort) ... and the passage of time.
The Third type of Growth – The inflation Index.
Because of inflation, the price of a plant tends to go up. But do take care – there are exceptions. As with everything else in life, the moment the masses find out about how simple it is to make money this way and they all start to follow you, you could find that four years from now the Clivia market is flooded and prices drop.
This is at the point when your first plants start to flower and suddenly you find there is no market anymore.
Then everyone is disappointed by the lower prices, and most new people drop out of the market, and then you’re back to a situation where you can make money again.
Sounds like property, don’t you think?
Be aware of the effect of crowd thinking. This is why Wealth Creators go against popular opinion. Should a situation like this arise, a Wealth Creator might choose a lesser-known plant or select several different types of plants in order to avoid the problem. There are thousands of other plants species available.
The fourth type of Growth - Abundance Growth.
I love this one!
One Clivia plant can produce more than 200 seeds, depending on the species and the circumstances. If you look at the Clivia Miniata for example, you will find that the flowers are borne in an umbel supported by a peduncle that clears the leaves, and the umbels can have in excess of 40 florets, although 20 are more usual.
The seeds are carried in berries which can contain up to 20 seeds, although less than 10 is the norm. It is therefore possible to get 40* 20 = 800 seeds from one plant.
This is an exponential growth factor. Even more fascinating is the fact that it can do so year after year after year. In fact the older the plant gets the more flowers it produces – the only issue is time.
Re = Responsibility.
Your responsibility is first to determine and calculate the risk and growth potential on the investment (or business) for which you wish to apply the Formula for Riches.
Then it is your responsibility to manage the risk down and the growing up. The only way you can do this is by asking the three questions.
The answers to all three must be “yes!”
How can you minimize the financial risk? Firstly by using a surplus, to begin with, and secondly by making sure the surplus (investment) is as small as possible – preferably nothing.
If you get the seeds for free, by harvesting them yourself or getting them from a friend, then your financial input and risk are zero.
What if nothing works out the way you thought it would? The only reason would be that you did not do your homework or were not willing to put in the time and effort (nm). It is no good to get the seeds, plant them and then never water them for example.
However let’s just say that for whatever reason, you do not get the growth you were expecting. If nothing grows then your financial risk has been limited to zero.
What you’ve lost has been time and effort and even that is not a loss because now you have the experience. You now know what will not work.
Now let’s assume it costs you nothing to get the first 100 seedlings and you sell those seedlings a year later for $0.15 per seedling. What was the growth in your surplus?
It cost you nothing and you made $15. This means you have infinite growth in your investment.
If you want $150 all you have to do is to use the (nm) portion and do it on a scale that is ten times bigger. What if you want to make $1500? It’s the same story, only another ten times bigger.
What I want you to understand is that you do not have to put in more money; what it is going to take in the beginning is more time and effort with the right mindset.
To understand this you have to break your habit of thinking that you need to pour money into an investment. Remember this serves only the financial institutions and other people who want to make money out of you.
If you want to become really picky you may say but what about the cost of the water.
Let’s say the waterworks out at $1 for the year and you sell the 100 plants for $15, your growth on the surplus will be 1400% ($15 - $1 = $14 / $1 *100)
How can you eliminate this risk?
Next time it rains you take all the buckets you can find and fill them with free rainwater. So the risk should at all times be zero.
You manage the risk down by applying logic. It is always so much simpler than you think. To understand this you need to break another habit – thinking that making money is very complicated and best left to the experts.
Nm = Time and Effort.
You have to put in the time in the beginning - there is no other way.
You have to put in the effort in the beginning - there is no other way.
After this, it gets easier and easier. But it does take an application, most particularly in the early stages.
Now if this is so easy why is everybody not rich?
There is one answer to the question ... they break the Formula for Riches.There are numerous ways to do this. Let’s look at a few of the common mistakes people make…
They break the $ = intention part.
They do not know what they want – or they do not want it desperately enough. In other words, they do not have the intention, and/or the intensity of the intention is lacking.
They think they need money to make money, instead of creating the surplus (S) first.
If you create a surplus it does not cost you a cent.
They separate the growth from the risk because they do not want to take the responsibility (Re)
to manage the risk (Ri) down
and the growth (G) up.
Typically they will do this by giving their money to a financial institution or an expert.
They are not prepared to put in the time and effort (nm) to invest in themselves first, as well as in learning about the investment.
They take shortcuts or they do not apply technology. They try to do everything themselves and hit the ceiling of complexity and end up working too hard again.
How can you overcome the ceiling of complexity?
In the beginning, you will not have a problem. You can do all of the work yourself. You do not need any sophisticated equipment.
How do you know that you are at this stage?
If you are doing it all by yourself and you are enjoying the process, then you know.
But you also need to know that there will come a time when you will need to apply systems. It is best to prepare for this in advance. Because it takes time to put systems into place. If you only start when you are already overloaded the chances are your business is going to suffer in the meantime.
From year six you may start finding it difficult to keep up with the growth.
You will also find that in order to maintain the growth there may be pressure on your cash flow.
This is where many promising businesses start going wrong because they get into debt at this point. Make sure you plan ahead to avoid this.
The way to handle the ceiling of complexity is to learn all you need to know about the effectiveness factor m = PT q.
Luckily you should have about four years before you run into the ceiling of complexity. In the meantime, learn as much as you can and perhaps subscribe to my Wealth Creators Mentors™ in order course to see how I handle the ceiling of complexity.
For more information on the Formula for Riches book;