Overcome Your Fear When Investing Money in a New Venture or Project
We’ve all been there. Well, some of us have – maybe even most of us.
I’m talking about taking a business risk, specifically a financial risk. You know, the kind of situation where you take serious money out of your bank account and plop it down in hopes of growing it into something more.
Despite your best plans and calculations, you know there is a chance you could lose everything – all of it – and that can be a little frightening! In fact, it can be downright horrifying for many of us. After all, we know those dollars we worked so hard to earn (or win from investors) may evaporate if we aren’t careful.
What is our natural response to all this? We get anxious. We may get a little fidgety, second guess ourselves, and go through every little detail in our head for the 17th time to make sure we aren’t missing something important.
Hence, we NEED to know how to deal with anxiety and manage our emotions in these situations. The solution must provide clarity of mind to ensure we aren’t stumbling into a bad deal, while simultaneously ensuring fear alone doesn’t scare us out of taking a healthy risk.
What’s the solution?
Part 1 of the solution is to have a plan. When you have spent the time – in advance of taking action – to think everything through, you are empowered with confidence since you’ve already determined how to handle twists in the road as they come up. Of course, you can’t possibly plan for everything and many business plans do change rapidly with time. But still, taking the time to adequately prepare ahead of time will provide you with great confidence and resolve in your ability to succeed.
Part 2 of the solution is to use Jedi Mind Tricks to desensitize yourself to your fears. Exciting, I know.
To show you how to conquer your fears with Jedi Mind Tricks, below I am giving away the entire second chapter from my recently published book, The Key to Making Money on Craigslist. In Chapter 2, I set forth two extreme “Exposure Therapy” methods to overcome your fears of losing your investment when buying an item for resale on Craigslist (or any medium of trade, really), plus a third mechanism for programming your state of mind to think positively – all the time. The lessons from this chapter can be extrapolated and applied to any venture or medium of trade.
By the way, within hours of launching the free promotion for my book on Amazon last week, I’d accumulated over 500 downloads, and by the end of the promotion several days later this number topped out at 3,152 for the 5-day period. In an unbelievable case-in-point, one of my reader’s used a tip from Chapter 3 to score a $13,500 item for free during the promo. More on all this soon in another article.
Onto Chapter 2, then:
Chapter Two: Sharpen Your Mind
This chapter is all about managing your internal world, including your thought processes and emotions.
In this chapter, you will learn why you must let go of your possessive nature, move past your fears with confidence, and adopt a positive attitude. I’ll also provide specific methods to help you achieve these objectives. These are great life skills in general, and critical to success when starting what is essentially a small business.
The importance of mental preparation when undertaking a new task or challenge cannot be overlooked. With a proper “sharpening of the mind,” people can do just about anything they set their hearts and minds to. Sports coaches, executive advisors, and personal counselors all know this, including it their programs and drilling it into the minds of their players and clients.
Entire books have been written on personal development, and while this single chapter does not go into that level of detail, it will explain several mental strength factors relevant to success in a small, inventory-based business.
If you are already a confident person, this chapter will simply nudge you into place before you move forward. On the other hand, if you struggle with self-confidence or motivation, it will challenge you to first address some core issues related to your thought processes – issues that might be real eye-openers for you.
Speaking of which, if you are interested in personal development at a deeper level, I would recommend picking up at least one self-improvement book and reading it alongside this one. Pick one from Amazon’s current best sellers or from the list of suggestions I have posted in Appendix E.
Now let’s dive into the meat of this chapter. Here is what we will cover:
- Let Go of Your Possessive Nature
- Face Your Fears
- Learn a Useful NLP Trick
1. Let Go of Your Possessive Nature
The first step to sharpening your mind is to let go of your possessive nature with regards to material items, especially those that you intend to buy and resell. This means ceasing to look at items you buy as “things you own,” and instead looking at them as inventory, or rather, business tools that are a simple means to an end – profit, of course.
Shifting your approach this way is very powerful. It removes any emotional attachment you might have had to a particular item and allows you to rationally make decisions about its purchase and resale. You need this rational decision-making power in order to succeed.
Oftentimes, when we buy new things (or used things), we get emotionally attached to them. There is a sense of possession that comes with purchasing and physically having something. You might not realize this, but it is true for the vast majority of people. This emotional attachment may stop you from selling your inventory if you are not careful.
Why do we get so attached? Well, consider the feeling you get inside when purchasing or inheriting something new and exciting. You now “own” it, and it has value to you. When you think about it going away or no longer being there, it triggers a sense of loss. You may experience all sorts of silly inner self-talk designed to help justify keeping the item in question.
“What if I don’t ever find another one like this?”
“I got SUCH a great deal. Doesn’t it make sense to keep this particular item… just this once?”
“This item is one of a kind! How could I ever let it go? Besides, it might be worth even more in a few years…”
What you are really saying in these examples is, “It’s Mine! You Can’t Have It!”
After all, we do have a primal instinct to protect our possessions. Realize, though, that this instinct is an obstacle on the road to success.
If you can cease to see items that you buy for resale as personal possessions, and instead start viewing them as business inventory, you will become more clear-headed and less emotionally attached.
When you achieve this frame of mind, your sales performance will increase, and in the long run you might actually be able to buy something to keep for yourself with all the money you’ve earned.
Let me repeat: you must be clear-headed and remove any ideas about personal possession from your business operations.
Here is an example of how this applies to me. I have been playing the guitar for fifteen years now. As a guitarist, I have a great appreciation for certain types of guitars and other instruments.
Every now and then, I purchase a guitar for resale that is really nice. My band members sometimes urge me to keep these items because they are “so awesome,” or because I got such a “good deal.”
Luckily, I know better. My side business cannot be profitable if I am always transferring my inventory out of the business and into my personal belongings.
Sometimes when I sell one of these rare and wonderful items, my band mates and friends will express disappointment, and even show a little pain at seeing such a great find disappear. As for me, though, I could not be happier, both inside and out. When great items disappear, it means I made a good sale, which in turn means I am doing well with my side business.
How to Let Go
If you struggle with letting go, consider participating in this exercise. This is optional, but may help you more quickly hone a strategic mindset that will benefit you in your dealings.
In this exercise, your task is to identify something currently in your possession that is valuable to you, and then sell it quickly, confidently, and without thinking twice. Even better if the item is something you cannot easily replace.
Please do not sell the most meaningful thing you have, though, because that certainly is not necessary for this exercise. Just understand the chosen item should have some basic value to you in order to achieve the desired effect.
I know this is a very direct challenge and it may seem like a lot to ask, but you are at an important crossroads.
What is more important, really? Do you want to hold onto this one possession now and forever, or challenge yourself to achieve a new way of thinking that will ensure your long-term success?
By actively letting go of something you consider meaningful, you will be allowed the opportunity to feel firsthand that it’s not that bad.
By getting this out of the way now, you will build the confidence you need to repeat this process in the business world on a regular basis. Not to mention, you will raise some capital in the process, which might even get you out of reading Chapter 3!
I went through this process myself. There was a time when I thought I would never sell my old guitar amplifier. It had sentimental value, including personal experiences attached to it that could “never be replaced.”
Furthermore, I knew that, if I ever sold this guitar amp, I would only net a little more than $100 from the sale, so why throw away all those great memories for a small handful of $20 bills?
What I eventually discovered was that the guitar amplifier was holding me back. This particularly heavy amplifier was taking up space, not being used, and was begging to be converted into cash to put into my next deal.
Ultimately, I sold it for $140 to someone who could not have been more excited about it. It went to a good new home, and it freed up valuable cash for reinvestment on my end. This reinvestment eventually led me to my new and improved guitar amplifier, a top of the line, hand-wired amp that retails for over $5,000.
Do you think I regret selling my old amplifier? Of course not. Now it’s your turn to let go and move forward with your success.
2. Face Your Fears
Facing your fears is not an easy thing to do. It is not easy for me, or for you, or for anyone. However, it is something we frequently must do if we wish to go beyond our current state of living and achieve something greater.
The way this usually manifests in resale situations is through a fear of purchasing.
Maybe you don’t know exactly how much you can resell an item for, so you hesitate to buy it; or maybe you do know how much you can sell it for, but you are not sure how long it will take, so you walk away from the deal.
How can we move past this limiting mindset?
Moving forward begins with understanding how this fear reaction originates in the first place.
Deep down, we humans perceive failure as “bad” and try to avoid it by not taking risks. The primitive part of us that cares about survival on an evolutionary level knows that if we do not try, then we will not be able to fail.
As it turns out, this is just our inner croc brain trying to reach out and put the brakes on things before we encounter imaginary harm; and although this fear response helped us avoid life-threatening danger thousands of years ago, in modern society it does little more than hold us back. Uncertainty should give us pause to calculate our risk, but the fear response itself should not prevent us from taking action.
Realize: we must take risks in order to succeed at a high level. We frequently must make tough decisions without complete certainty of the outcome.
This means there must come a day where you take some hard-earned cash out of your wallet and invest in your first inventory item. This might seem risky or scary at the present moment, but it is the only way forward.
Understand that even if you wind up upside down on a few deals, by putting yourself out there and buying up some inventory, you will develop confidence in your abilities. Moreover, you can and will learn important lessons from your occasional failures.
For those of you who are still feeling unsure, consider this: even when I have wound up upside down on a deal myself, it was never that bad. I broke even on a handful of deals and ended up losing a little cash on another handful. But in using my valuation methods, believe it or not, to date I’ve never lost more than $40 in value on a single resale transaction.
How to Face Your Fears
As with the last exercise, this is optional. If you have already experienced financial loss in business, you can probably skip this because you already understand the concept. However, if you have not experienced loss, or believe you will struggle to make acquisitions (invest money) out of fear, this exercise can help you move past this potential road block.
Note that both this exercise and the previous one are designed around exposure treatment principles of behavioral therapy, in which a person’s phobic response gradually extinguishes itself when the subject learns the target stimulus does not produce the harm originally feared.
Onto the exercise, then.
Buy something on Craigslist, then purposely mark it down and sell it at a small loss. Yes, you read that right. For the sake of this exercise, keep your losses to an absolute minimum, so I don’t have to feel too bad for pushing you into this.
“But… WHAT?!” you say.
Yeah, I know. To reassure you, this book is about making money.
This exercise is meant to push you out of your comfort zone. It will prove to you that, even in failure, the sun will still rise tomorrow. At the end of the day, you will get most of your money back and realize it’s not the earth-shattering event you once thought it was.
This is especially crucial if you have never experienced something like this before, because loss is bound to happen at some point in your ongoing business operations, and you do not want it to emotionally derail you when it does.
Once you have completed this exercise, instead of internally exclaiming, “But… WHAT?!” and having that reaction, you will be more calm in the event a particular deal does go south at some point in the future. Your confidence will remain intact and your emotions unaffected, even if there is a lesson to be learned.
Remember, this is a purely optional exercise and you are more than welcome to skip it for practical purposes. However, just be sure you are mentally and emotionally prepared to invest, and for the occasional speed bump that is bound to come up from time to time.
I have seen too many people fail to invest their money into great deals due to an irrational fear of loss. They sit there and mull a deal over, and while it kind of sounds good… ultimately they cannot bring themselves to take the risk. Interestingly, it is this lack of action that absolutely guarantees failure, whereas taking a chance provides an opportunity for success.
An Extra Note on Loss Aversion
As a final note on this subject, whether in relation to a fear of losing money (when purchasing) or inventory (when selling), everyone experiences a fear of loss to some degree. In psychology, this is termed loss aversion and it has a very real, measurable effect on the human psyche. In fact, this applies directly to both of the sections we have covered above – conquering your possessive nature and facing your fears.
The essence of loss aversion is that we all have a strong tendency to prefer avoiding losses to realizing gains. Daniel Kahneman and Amos Tversky were the first psychological researchers to clearly show this trend through tests conducted in the late 1970’s. Several experiments have been done since then showing how loss aversion plays into human behavior and financial markets.
In the Journal of Economics Perspectives (Vol. 5, No. 1, 1991), Daniel Kahneman, Jack Knetsch, and Richard Thaler published an article titled “Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias.” The article cites several studies, including one conducted at Cornell University using students from an advanced economics class split into two groups. Group A was given coffee mugs and told they were theirs to keep. Group B was simply shown the same set of coffee mugs, and then they were taken away.
After a short time, each group was asked to place a value on the mugs. When asked to specify a price they would be willing to sell their mugs for, Group A’s median owner asked $5.25. Yet the median buyer from Group B was willing to pay no more than $2.25-2.75! The experiment was performed over and over again, and it consistently resulted in median selling prices roughly twice as high as median buying prices.
Why was there such a large gap between prices?
It was concluded the primary factor responsible for the gap was a reluctance to sell. Specifically, selling prices were found to be higher due to the endowment effect, which states the psychological effects of loss aversion take hold when we experience a sense of ownership over something. In this case, the sellers wanted more money to justify the additional pain that came with giving up mugs that were now theirs.
Notice the effects of endowment do not lead to an increase in the inherent appeal of an item, but rather an increase in the pain associated with letting it go. This increased pain is what leads to the assignment of a higher price, thought to justify these feelings – even if an ideal outcome exists at a lower selling price.
Moving back to our subject matter, this is why seeing Craigslist transactions as a business (rather than seeing them as personal transactions) is so powerful, since it helps you move you away from the clouded decision-making that is so common due to our innate psychological makeup.
By mentally separating your personal assets from your business assets in your mind, you can come to view your business activities through a more rational frame of mind. Your personal sense of attachment does not into play quite as much when your business is viewed as a separate, independent entity apart from your personal affairs.
Viewed through this lens, neither the fear of losing money when investing in new inventory, nor the fear associated with losing an item itself during a sale, is quite as significant. In turn, this emotional freedom enables you to act faster and with more confidence when making ongoing business decisions, ultimately reaching higher levels of success in shorter periods of time.
For additional reading on this subject, I would highly recommend an article titled “When Do Losses Loom Larger than Gains?” by Dan Ariely, Joel Huber, and Klaus Wertenbrauch from the Journal of Marketing Research (May, 2005). Notably, it is explained how the endowment effect may be circumvented when in a “selling frame of mind,” as opposed to an “endowment state of mind.” This is at the essence of seeing Craigslist transactions from a business perspective.
It is notable that you can leverage loss aversion to your advantage as a seller by literally putting an item into a potential buyer’s hands. Virtually every retailer uses this psychology to their advantage, since once a person holds something in their own two hands, tries it on, or otherwise uses it, their sense of attachment starts taking root and increases the threshold price they are willing to pay – to avoid losing the item now in their hands.
Think about the many forms this comes in: software demos, free trials, test drives, trying clothes on, product samples… how many times have you bought something after “testing it out” that you never would have bought beforehand? How many times did you pay a higher price than you would have originally been willing to pay?
As a seller, I generally have my potential buyers try out an item during our meeting before asking for payment, even though the price is almost always negotiated beforehand. This provides buyers with an opportunity to honestly evaluate the item they have come to purchase. But it also helps “seal the deal” by creating a sense of ownership and thus represents the correct logical order of events. Demo first, payment last.
3. Learn a Useful NLP Trick
Before we move on to the next chapter, I want to share a Neuro-Linguistic Programming (NLP) trick with you that I learned back in college.
Feel free to skip over this if you’d like, but if you enjoyed the first part of this chapter, you will probably enjoy this next exercise as well.
This NLP trick is a powerful way to immediately shift your focus and control your perceptions of the various experiences you have in life. I have tailored it to be quick and easy to implement, so it can be used on the fly just about anywhere if you have two or three minutes to sneak away (to a bathroom, perhaps) and close your eyes.
Performing this trick will force you to stay focused on the good, positive things that you seek and help you avoid dwelling on the negatives we all must face from time to time. Use this trick whenever you need a mental or emotional boost to shift your mind back to your true goals. It is easy to get hung up on the little stuff sometimes; this will pull you out of the weeds and “reset” your mind and mood.
Here is some background to help you understand the purpose of the exercise.
When we perceive things to be important to us, whether they are past, present, or future events, we tend to blow them up very large in our minds.
We see these things in full color, and they may even play back to us like videos. We hear sounds, smell smells, and so on, being totally immersed as a character in our mental creation using all five senses. This amplifies any emotions we feel, too, because we make it so real for ourselves.
On the other hand, when we perceive something to be relatively unimportant, we quickly file it away in the back of our mind.
It might not be a full-color video, either, but instead a small and insignificant snapshot in black and white. After enough time, details are difficult to recall, because we did not conjure up anything extravagant in our minds when initially forming the memory of the event.
Now I must pose a question to you.
Would it not be fantastic if you could remember the many good, positive, and successful things that occur in your life in full HD, while simultaneously quickly “filing away” less exciting, non-productive things as small black-and-white snapshots, soon to be forgotten? Would it not be great if your mind was trained to generally focus more on the positive things and quickly let the negatives roll off your back?
Fortunately, there is a specific mental process that anyone can do from their alert, conscious mind-state that will influence and “reprogram” their subconscious in an intentional manner. This is how it works:
Part A: Strengthening Positives
- First, find a relaxing and quiet place to perform this exercise. The exercise can be done in more distracting environments, but for your first time, you should be somewhere that you can give your full attention to it.
- Think of something good that happened to you recently, within the past week. It might be a major life event, or it might be something extremely small, like finding a good parking spot at the grocery store.
- Evaluate your first impression of the memory. Is it easy to recall what happened? Are you viewing your memory as a full color, full HD video in your mind, or is it more of a snapshot?
- Now you are going to reconstruct the memory into a highly detailed HD video. Walk yourself through the memory, starting with what you were doing immediately beforehand. Look at yourself from a distance in the third person as the picture comes into focus. Then walk through the rest of the memory until its completion.
- Throughout the process, make sure you are seeing all of the colors around you, and blow up the video image in your mind as big as you can make it.
- Go through the rest of your five senses in detail, remembering what it physically felt like, what it smelled like, all the sounds you heard, and the taste, if there was one. Recall the emotions you felt in vivid detail, too. Focus intently on how great the things are that are happening in your memory.
- Finally, step into your character (remove yourself from the third person perspective and put yourself into the first person) and fully immerse yourself in the memory as though it was happening again in real life. Stay here for a few minutes and absorb as much as you can.
- When the memory is as vivid as possible, you are ready to anchor it in your mind. In order to anchor it, open up an imaginary briefcase and stuff this memory into it.
- The more detail you include about the briefcase itself, the better. How big is it and what color is it? Maybe it has a scratch on the corner, and perhaps you need to use a special code to open it. Making the briefcase unique helps you create a mental pathway that you can trigger each time you store your positive memories.
- From here forward, you will tend to remember this memory in more detail and with more positive emotion. Furthermore, if you are ever having a bad day or need to perk yourself up, you can quickly place yourself back in this mindset by taking out your imaginary briefcase, unlocking it, and pulling your memory out of it again.
Part B: Minimizing Negatives
- Like in Part A, find a relaxing and quiet place to perform this exercise.
- Think of something undesirable that happened to you recently, within the past week. Again, this could be anything from a major life event to a very small or petty setback.
- Evaluate your first impression of the memory. Is it easy to recall what happened? Are you viewing your memory as a full color, full HD video in your mind, or is it more of a snapshot?
- Now you are going to deconstruct the memory into an extremely small, insignificant black-and-white photo. Regardless of the level of detail you originally remember, you will be removing details one by one until there is almost nothing left.
- First, take yourself out of the first person in your memory and place yourself at a far, far distance in the third person. You are looking at yourself in this situation from very far away as a neutral observer.
- Next, dumb down the mental movie into a mere single-shot photograph of the experience. Once you have this singular picture in mind, make it grayscale (black and white) and detach yourself from any emotion or feeling that previously existed. As a third party observer, the feelings gradually slip away until they are no longer there.
- Remove any other senses you may have associated with this experience. There are no smells, no sounds, no tastes…nothing. Just that one-frame visual snapshot that is now in grayscale and shrinking quickly. Shrink the photo down in your mind to the point where you almost can’t see it anymore; it should be smaller than your fingernail.
- When this memory has been stripped down, made void of any emotion, and shrunk as much as possible, you are ready to anchor it in your mind in that format. In order to anchor it, open up an imaginary trash can and throw away the picture.
- Like with the briefcase in Part A, the more detail you include about the trash can itself, the better. How big is it and what color is it? Is it made out of metal, plastic, or what? Is there a can liner inside? Making the trash can unique helps you create a mental pathway that you can trigger each time you discard your negative memories.
- From here forward, you will tend to forget about this memory. When you do recall it, the memory will seem much less significant and important than it originally was, like it does not really matter or affect you.
For best results, I would recommend picking a handful of significant emotional events to work through in Part A (positive associations), and then another handful of events to walk through in Part B (negative disassociations). After just fifteen minutes of going through these exercises, you will be amazed how excited you are about the many positive things going on in your life, and quite surprised at how the things you had been dwelling on just don’t matter anymore.
Furthermore, there are three specific applications for these NLP exercises in our case: conquering loss aversion, managing your emotions after failures, and constructing a fiercely tough belief system capable of ignoring negative outside influences.
To conquer loss aversion, imagine yourself in a buying or selling situation in your mind’s eye. Let your emotional attachment and fears related to loss aversion come to the surface, and then address these feelings with Part B of the exercise, minimizing the emotional significance related to such events. Then, follow this up with an imaginary success scenario and bring it to life in your mind using Part A. This will strengthen your resolve to buy and sell objectively, and minimize emotional resistance to making otherwise sound business and sales decisions.
To manage your emotions after a failure, loss, or other setback, simply go through Part B to minimize what I like to call the “post-traumatic effects” of such an experience. This can be very powerful as an ongoing maintenance measure; you do not want the occasional and inevitable setback to create undue emotional resistance to taking reasonable business risks in the future. Plus, having a systematic process like this to address the occasional failure means there is less to fear at the outset of a new risk; even if you do fail, you already have a plan to quickly address such an occurrence and move on, as opposed to getting caught up in an emotional loop of self-doubt and confusion.
Finally, to construct a fiercely tough belief system, think of a time someone important to you said something negative about your abilities. Surely none of us are so blessed to have 100% positive people surrounding us; even the best spouses, brothers, sisters, parents, and children can get stressed out and say things that damage our self-confidence, whether or not that is their intention. Imagine this person standing in front of you and listen to them saying their negative remark while looking you in the eye. Then, using Part B, reduce this full-color mental “video” down to something very small and insignificant. Rinse and repeat a few times if necessary, and be sure to use this to disarm all of the negative people in your life.
Next, you should recount the times people have complimented you or said things to boost your confidence, and run through Part A with those to amplify their effect in your mind. Note that the more often you run through these exercises, the better equipped you will be to let the positive people in your life support you while simultaneously putting up an impenetrable mental barrier to those who are not.
Even though this third application of our NLP exercises may initially seem unrelated to the subject matter of this book, I include it for an important reason: as you get into buying and reselling things on Craigslist, you may encounter people who do not believe in your abilities or who are jealous of your success, and who wish to discourage you. With this tool, you can easily program your mind to effectively ignore them as you advance further down the road of success. It is important to have a tool like this to functionally ignore negative influences at a mental and emotional level, as opposed to simply pretending to ignore them at a social level. Pretending is great for appearances, but does little to help us on the inside, where it really matters.