We read a lot. And you should too. Reading is simply the fastest, most efficient way to absorb the experience of people who have already accomplished your goals or made all of the mistakes that lie in your future. Reading is a chance to invest a few hours in an easy chair to gain a lifetime of experience.
That’s probably the best ROI in business.
What follows is the shortlist of books that have been directly responsible for increasing our profit. The lessons we’ve taken from these books have directly led to changes (managerial, philosophical, whatever) that increased the actual dollar amount that we pocket each month.
I want to be clear about this. This is not a list of some metaphorical, wishy-washy financial improvement, but real, tangible dollars.
This is also not a list of books that have saved us money or improved our ability to cut costs (those things are important and will get their own post in due time). This list is all about directly increasing profit.
Let’s make some money, shall we?
The Best Business Books
E-Myth Revisited by Michael E. Gerber
What is it?
Probably the most important book anyone looking to start a small business (or anyone struggling with their small business management) can read.
Gerber tackles the myth of the ‘entrepreneur’, the glorified image we see in the media: Working tirelessly, day and night, sacrificing everything for their business….
He claims that the reason most small businesses fail is because we blindly chase that image, and we forget that there is more to creating a business that very few people talk about.
In short, Gerber shows that there are actually three separate ‘hats’ that the small business owner must wear (as opposed to the ‘entrepreneur’ hat too often depicted in the media). He explains what these ‘hats’ are, how to wear each of them, and how to manage both yourself and any employees you might have.
Understanding these ‘hats’ has been crucial to maintaining our sanity and increasing our efficiency. Without this one concept, we would not be able to manage our two businesses in less than two hours per day.
And that’s just a small part of the book. The real value lies in how this book made us money.
How did it make us money?
We owe the entirety of our current business model to this book. Gerber takes a page from The 7 Habits of Highly Effective People (“Begin With the End In Mind”) and expands it, showing how it applies directly to the management of small businesses.
Using real-life examples, Gerber demonstrates how some of the biggest companies in the world followed that same advice and altered the way they thought of their businesses.
Instead of thinking of our business as way to generate income, we began thinking of the business itself as the valuable asset. An asset that can be sold, copied, cloned. I know that doesn’t make a lot of sense without reading the book, but here’s the result of following Gerber’s advice:
We quadrupled our number of revenue streams. Those revenue streams had been there all along, we just couldn’t see them. After following Gerber’s advice, they became clear as day.
In Short:
- We learned how to manage our business from different perspectives (wearing different ‘hats’)
- That allows us enormous efficiency (we work less, and get more done)
- We discovered several new revenue streams, by changing the way we ‘view’ our business
- We would not be able to run our business in less than three months per year without this book.
The 7 Habits of Highly Effective People by Stephen R. Covey
What is it?
This book was recommended to me as “An MBA in book form”.
While I think that was a bit of an oversell, I get where the comment came from. There is so much experience-derived wisdom packed into this book.
In this book you will learn:
- The importance of implementing a ‘paradigm shift’
- How to leverage perspective into better communication and success
- How to advance along the maturity continuum (ie. how to move from a state of dependence to a state of independence)
- How to the author and Dwight D. Eisenhower developed a fantastic tool for prioritizing (and how to use that tool)
- How Greek Philosophy is alive and well in communication and problem solving
- I-don’t-even-know-how-many psychological concepts that weren’t empirically proven until long after this book’s publication
How did it make us money?
Chapter 2 alone has been priceless to us.
Even if we set business aside for a second, the lesson of Chapter 2 (Begin With the End In Mind) has made every task, project, plan, and goal in our lives far more manageable, far less intimidating, and all-around more rewarding.
But, in the more tangible business world…
Before reading this book, our projects and goals tended to be open-ended, vague. As we worked on them, we’d go around in circles, leaping hurdles that didn’t directly lead to our goal, which we weren’t that clear on anyway.
Basically, in the language of 7 Habits, we were mired in ‘dependence’ we didn’t have the skills yet to truly take control of ourselves. We burned through man-hours and got nowhere. We accomplished goals that didn’t actually help us. We did not have a focused framework for moving our business forward.
But now we know how to prioritize, how to focus, how to communicate more clearly, how to always know exactly where we are going, even when life changes.
We accomplish more social good than ever before and we do it all knowing that are still, and will forever be, improving our businesses. Every unit of effort, every minute we spend on our businesses directly increases our revenue.
Clarity brings cash.
In short:
- This book taught us to only focus our efforts on the most valuable projects
- We now know exactly what that project should look like in its finished state
- We know how to complete our projects by helping others
- We thrive on the constant improvement of our business
- We communicate better than we ever have before
The Alchemist by Paulo Coelho
What is it?
Simply the best business book that isn’t about business.
Wait, what?
The Alchemist is an allegorical novel that is usually thrown in with the ‘Self-Help’ genre. It’s it written as a fairy tale, in simple, easy-to-read language.
*I used to teach this book to seniors as the last reading assignment of their high school careers. If they can figure this book out, so can you.
Admittedly, most people read this book looking for personal insight and enlightenment. And that’s great. You will undoubtedly gain wisdom and insight from reading this book.
But we’re here to talk about business. And while this isn’t targeted at business owners per-say, every small business owner, and every person who dreams of building their own business, should read The Alchemist.
The Alchemist deals with themes of enthusiasm, growth, and evolution. It is the story of a young man’s pursuit of his dream (his “Personal Legend”). Any business owner will see the parallels between Santiago’s journey and the journey that is building a business. (Santiago does, in fact, help to build a business in the story).
Through it all, Santiago learns the importance of enthusiasm, the need for constant evolution in response to changing markets, the danger of procrastination, the need for determination, the importance of work/life balance, about never settling for status quo, about risk and reward and sacrifice.
Much ink has been spilled about the nuts and bolts of running a business–the financial, the managerial, the legal–but I believe everything you need to know about the philosophical and spiritual sides can be found in this 200 page book.
How did it make us money?
By keeping us from quitting. By giving us the tools to find new products and revenue streams. By making sure we never settle for status quo.
One of the main lessons of this book is the metaphor of turning lead into gold. Turnings weaknesses into strengths. Trash into treasure.
This alone has earned us thousands of dollars. We routinely look to turn our mistakes and failures into successes. We look at the failures of others, and figure out how to turn their lead into our gold.
Want a specific example? You’re reading it. I love browsing lists like “The Top 10 Books Every Business Owner Should Read”. I’ve literally read hundreds of them.
And you know what book those lists never mention?
The Alchemist.
Because it’s not a ‘business’ book. To the creators of those lists, The Alchemist is lead.
But The Alchemist taught me to look for what other people are missing. To turn their lead into my gold. They failed to give their readers a powerhouse of a book. By realizing that, and by including The Alchemist here, I gain an advantage over those lists, and you gain an advantage over the readers of those lists.
I can’t think of any of our revenue streams that is not in some way tied to the concepts of enthusiasm, evolution, or turning lead into gold.
In short:
- There is a (for lack of a better term) spiritual side to a successful business. The business you are building needs to feed your soul. This book shows you how to do that
- You will learn to avoid the pitfalls of mediocre lives (and mediocre businesses)
- You will learn to embrace evolution as the core of your business
- You will learn to turn lead into gold – and you will never run out of ideas ever again.
The Best Productivity Books
Getting Things Done by David Allen
What is it?
The best productivity system anywhere.
Business value aside, this book is worth it simply for the peace of mind it gives you. Once you get this system into practice, you experience this unique state of calm… that I really can’t describe. If you were to ask me what (other than writing this post) is the next big responsibility I have for work, my answer would be….
I don’t know.
Not because I’m unorganized or clueless, but because I trust my system. I know that whatever it is, it’s logged in my next actions list, sitting in my calendar. And it is not taking up one iota of my processing power.
That frees me to focus on the task in front of me (this post). I work with clarity and creativity because my mind is not racing, worrying about the next thing. There is only this thing. One task at a time. David Allen calls this state having a ‘mind like water’ and I can’t think of a better way to describe it.
When I finish this post, I’ll look at my next actions and my calendar and I will load the next thing I need to do into my brain and I will focus on just that thing. I have a vague sense that I have a meeting coming up, but I won’t know for sure until I do my daily check-in. If it’s something I need to prep for, the system will tell me.
A quick note: I have since integrated my Google Assistant into this system and really taken this to the next level.
I wish I could quantify the amount of stress this little book has removed from my life. I wish you could see the composure I feel. I wish I could show you how much my creativity has increased.
All of that is priceless. But that’s not what actually made us money.
How did it make us money?
All that stuff is incredible and great, but it’s not what actually made us money. (Though avoiding a stress-induced heart attack has saved us some medical bills, I’m sure).
The real money maker here is just one small component of the Getting Things Done system: ubiquitous capture.
Ubiquitous capture refers to your ability, once you have the system in place, to capture everything that enters your mind. Chores, erands, to-do, calls to make, appointments, and….
Ideas.
Oh so many ideas.
If you are anything like me, you probably have no idea just how many ideas pop into and out of your head each day. Ideas for products or plans or blog posts or whatever. Before GTD, I would lose most of the ideas I had, distracted as I was by the chaos in my own head.
But now, each time an idea pops into my head, it is captured. Ubiquitously. I just jot it down. I don’t think about it. I don’t give myself time to think ‘nah that’s a stupid idea’. All ideas, good and bad, go into the system. They wait in a backlog until I am ready to either develop it into a full project or scrap it as unfeasible.
The post you are reading now started life this way. As did just about every post on this site. In fact the site itself started life as just another captured thought, hanging out in my backlog. I don’t know where I was, or what prompted the thought, but the germ of this entire business came to me in a flash, and would have vanished just as easily, had it not been for GTD.
I don’t want to think about all the money I let slip away before GTD.
In short:
- Your stress levels will go down
- Your creativity will go up
- You will never miss another appointment / birthday / anniversary again
- You will capture way more ideas and
- Build a system for developing those ideas into full (and profitable) projects
Read this one at least twice. And take notes. The system feels complicated at first (there is a learning curve) but there are countless resources online that will help you make sense of this. Once you have it down it becomes second nature. I literally could not not follow this system anymore.
Mindset by Carol Dweck
What is it?
A book about everything in your life. I mean it. Reading this book will force you take a long hard look at your entire life up to this point.
It teaches you a new framework, a new way to think about your childhood, your parents, and the places and events that have formed you.
But most importantly, it teaches you a new frame work for looking at the present moment.
Mindset asks you to look at people as possessing one of two ‘mindsets’ or generalized patterns of thought. Once you do this, you will see that everyone in your life, everyone who has ever been in your life, would fall into one of these two categories.
And you will see that one is clearly better than the other.
Dweck uses her own research, as well as the research of others, to both define these mindsets and to show you how to navigate from the lesser to the greater.
For us, this meant a greater amount of understanding and forgiveness toward people in our lives. It meant greater understanding and forgiveness toward ourselves. Overall, this book will just plain improve your life.
One of the really interesting things about Mindset, though, is that it proposes much of the same advice as The Alchemist. The Alchemist was published in 1988, and it took nearly 18 years for the field of psychology to catch up to and actively research its advice. You can think of Mindset as a clinical confirmation of one of the main wisdoms found in the Alchemist.
How did it make us money?
As an owner of a small business, you will have bad days. Fact of life. For us, the value of this book came from how we reacted to / handled those bad days.
Before reading Mindset, bad days tended to be crushing defeats. We faced more insurmountable obstacles. We often encountered resistance that ground us to a halt.
No more. After following Dweck’s advice, we encounter no fewer obstacles and feel no less resistance, but the number of insurmountable odds we face has gone away almost entirely. The obstacles haven’t changed. We have. I would estimate that 99% of the obstacles we thought were impossible were actually opportunities in disguise.
Before reading Dweck we wasted those opportunities. Now we capitalize on them. Want an example? Sure thing:
In our post Small Business Tools We Wish We Knew About Sooner we have a section on business formation services. We put this right at the top because we really struggled with this when we were starting out. It seemed so expensive and so frightening, we just sort of ignored it, putting ourselves at great legal risk.
That was old us. That was pre-Mindset us. We saw an insurmountable obstacle (lawyers! legalese! expense!) where we should have seen opportunity.
Post-Mindset we can see that all the research we did, all the mistakes we made (we formed the wrong business, and paid way too much to do it) were actually valuable. We can now share that experience with you. You can learn from our mistakes. We get paid to advertise. Our expensive mistakes are now an active revenue stream.
This is only possible because we actively shifted our mindsets.
In short:
- You reexamine your life so far
- You will reexamine your present moment
- Hurdles become opportunities
- Setbacks become agents for growth
- You forgive easier, understand deeper
- While bad days still happen, they will no longer crush your soul
The Best Investing Books
The Little Book Of Common Sense Investing by John C. Bogel
What is it?
Hands down the greatest book on investing for the average person. Bogle is a legend in his own right, and this book is just one of the reasons he’s a personal hero of mine.
Basically this book lays out the data showing why low-fee index investing will beat high-fee money managers.
See, Bogel is the guy who brought index investing (the ability to invest in large numbers of stocks with a single purchase) to the masses. He created The Vanguard Group, a mutual fund manager that focuses, for the most part, on keeping fees low and matching the overall market.
Basically, hiring someone to try to beat the market will only cause management fees to increase. Bogel uses hard data to show that the increase in fees will always outpace any gains made by the manager anyway.
In short, hiring money managers to beat the market makes the manager rich and you poor.
Instead, index funds that match the market can keep fees incredibly low so that your performance nearly mirrors the stock market as a whole.
Bogel’s claim is that you will make more money matching the market cheaply than trying to beat it expensively. And he has the data to prove it.
Here’s a real example:
TIAA (the managers of our retirement accounts) charge a fee of 0.53%.
Vanguard (the managers of our business investments) charge a fee of 0.03%.
**Bogle points out that each of these services (and all mutual funds that invest in the broad market) are nearly identical services.**
Assuming our usual investment setup ($600 per month for 30 years) we would pay fees to the tune of:
TIAA: $85,150.
Vanguard $5,076.
Because of this book, our business will earn more than $80,000 extra cash than it would have over the next 30 years.
That’s more than $2,600 extra income per year.
*Using our actual retirement contributions and including employer matching, TIAA will actually walk away with over $100,000 of our money. All because our employer refuses to switch to Vanguard. Can you sense my frustration?
How did it make us money?
I (Ben) have to admit, that I started reading this book with a giant chip on my shoulder. I believed that it was entirely possible for someone to beat the market. Therefore, I believed that while index invest was nice, I could do better.
This book convinced me how wrong I was. Not the money I had lost. Not the other experts who tried to save me.
This book.
And I went into it convinced that I would be able to prove the book wrong. But I could not. The data is too sound.
One thing that I will point out about Bogel: He does not say that beating the market is impossible. He says that it is possible, that it happens every year, but it’s extremely rare. So why pay high fees to managers who will probably do worse than the market? In fact, most managers do no better than coin flipping when picking stocks. (I believe the current best record is Warren Buffet, who is not a money manager anyway. And even Buffet says to invest in index funds.)
This book became the backbone of the 3MM strategy. Monthly additions to the cheapest index fund you can find. Since we have started this plan, our net worth has exploded. Bogel says to stop trying to beat the market. He was right. Since we started trying to match the market, our net worth has beaten the market each and every year (at the time of this writing, we have been compounding at about 25% per year). Before Bogle, we were just spinning our tires.
How can matching the market beat the market? Because of efficiency. We are no longer losing money to slippage or emotional trading and the fees we do pay are the lowest we can reliably find. Our businesses earn dollars, then our dollars (now invested) earn dollars, and all of it (except for taxes and that 0.03% fee) stay in the company. So while our investments match the market, the combined effect of our business growth and investment growth beat the market.
One last note: Bogle tells the story of a man who never earned more than $25,000 per year, yet became a millionaire with Bogle’s plan. That story was the start of Three Month Millionaire. It’s what inspired us to use the market to leverage even small investments into serious wealth.
In short:
- Investing this way is cheap, easy, and profitable
- Yes you can do this, anyone can
- The data is strong enough to convert even the stubbornest of investors (me)
- This book is potentially worth millions of dollars
One Up on Wall Street by Peter Lynch
What is it?
OK, a quick caveat here. You only need to read this book if you still believe you can hand pick stocks that will beat the market.
If that’s you, this book will cure you and send you running to index funds.
And that’s not even what this book was meant to do.
Peter Lynch has about the best investing record of any money manager out there. He ran the Magellan Fund for 13 years and averaged 29% per year while doing so. In these pages, he tells you exactly how he beat the market. It’s all there. 100% transparent.
So why would this book send you to index funds if it clearly tells you how to beat the market?
Because you will see that while you can beat the market, you will also see what that will require of you. His biggest piece of advice? Know what you own. Like jump on your private jet, fly to the factories, have lunch with CEO, schedule meetings with the board of directors.
Exactly like he did. Dozens if not hundreds of times over. This is why he retired after 13 years.
And if you did follow all of his advice? Well, for all that full-time hustle, you’d be able to turn a $10,000 investment into $280,000. Over 13 years. That comes out to $21,000 per year.
How did it make us money?
Because I took all the time and energy that I used to spend researching stocks, reading reports, scouring 10Ks, and focused it instead on building small businesses that generate cash.
This book made it clear that beating the market was out of reach for someone like me (namely, someone who can’t jump on a company jet and fly around the world) and that the dollars-earned per hour-worked really isn’t that hot anyway. There were much better returns waiting for me at home, online, no jet required.
In short:
- You will see exactly what it takes to be a market beating investor
- Lynch is completely transparent about what he did to achieve one of the best investment records ever
- (With a little math) you will also see that you can beat his returns by creating your own business and investing excess cash
The Best Books on FIRE
The Simple Path To Wealth by JL Collins
What is it?
FIRE stands for Financial Independence Retire Early. We have a bit of a love-hate relationship with the concept of FIRE.
The problem is, there are actually two parts to the concept: Financial Independence (which we love!) and Retire Early (which can get ugly).
I won’t go into too much detail here, but in short we feel that the FIRE movement has pushed many people into an early ‘retirement’ that they were not financially or psychologically ready for.
I forget who said this to me but I’ve always held on to it: “Retirement should be your absolute last resort.”
That doesn’t mean that you should work until you die. It means that you should work on building income streams that are so easy you could do them at 95 without breaking a sweat. Our goal here at 3MM is to own businesses that run themselves. Retirement to us, then, is what happens if our health declines beyond being able to maintain businesses that run themselves.
Too often we hear stories of FIRE types that retire in their thirties and then….
They face the existential crisis of “Now What?”
Remember, at 3MM we don’t build businesses for income alone. We build them as sources of fulfillment and satisfaction, as vehicles through which we give back to our communities. We build them to create financial support for our families and loved ones. We build them to donate to charity.
Many of the Retire Early crowd we run into miss this part of the equation. They work high-paying jobs for a few years, dump everything into index funds and retire without ever having the opportunity to have built something incredible.
Enter the Simple Path to Wealth. Collins makes it clear that the focus should be on the FI side of the acronym. He advocates that everyone should control their spending and savings with a clear goal in mind. You need to know your number. Not how much you need to retire forever, but how much you need before you could walk away from a job you hate without a second thought.
He calls it ‘FU’ money.
He speaks about the importance of vocation, and the dangers of just ‘retiring’ with nothing to do and no one to give back to. He speaks of the reason money really matters. It’s not there to brag about how young you retired, but to protect your loved ones and help those who need it.
I respect this book. It’s equal parts financial advice and life perspective.
How did it make us money?
We follow the advice of this book. Simple.
Honestly, it could not have a more accurate title. Collins has a simple plan. It even covers the tricky subject of investing in bonds.
This book is our personal retirement guide. We follow this advice for our non-business cash (meaning the money we earn from our salaries). We view that money as our FU money and we follow Collins’s advice as closely as we can.
In short:
- The most simple and clear guide available to FIRE concept
- Mercifully free of BS claims of globe-trotting and living on beaches at 30
- Basically I’m trying to tell you this is financial planning for grown ups
Summary
There you have it. The books that have most improved our bottom line. I’ll keep this list updated as time goes on, so be sure to check back. Who knows what money I’ll find hiding in the pages of the next book!
