P. T. Barnum's Golden Rules For Making Money

P.T. Barnum wrote “The Art of Money Getting: The Golden Rules for Making Money” in 1880 at the age of 70 when he was already an accomplished businessman, politician, philanthropist, and author–after his hugely successful 1855 autobiography “The Life of P.T. Barnum: Written By Himself.” Barnum’s 21 golden rules for making money was a codification of his rules for business. Here are key excepts from the introduction and 20 chapters.

0. True Economy

True economy consists in always making the income exceed the out-go. Wear the old clothes a little longer if necessary; dispense with the new pair of gloves; mend the old dress; live on plainer food if need be; so that, under all circumstances, unless some unforeseen accident occurs, there will be a margin in favor of the income. A penny here, and a dollar there, placed at interest, goes on accumulating, and in this way the desired result is attained.

Here is a recipe which I recommend; I have found it to work an excellent cure for extravagance, and especially for mistaken economy: When you find that you have no surplus at the end of the year, and yet have a good income, I advise you to take a few sheets of paper and form them into a book and mark down every item of expenditure. Post it every day or week in two columns, one headed “necessaries” or even “comforts,” and the other headed “luxuries,” and you will find that the latter column will be double, treble, and frequently ten times greater than the former. The real comforts of life cost but a small portion of what most of us can earn. Dr. Franklin says “it is the eyes of others and not our own eyes which ruin us. If all the world were blind except myself I should not care for fine clothes or furniture.”
P.T. Barnum in “Golden Rules For Making Money“

This is the introduction to the book but it supplies a first rule (which I have numbered “0”): personal expense control diligently and systematically applied is the starting point for entrepreneurship.

1. Don’t Mistake Your Vocation

“Unless a man enters upon the vocation intended for him by nature, and best suited to his peculiar genius, he cannot succeed.”
P.T. Barnum in “Golden Rules For Making Money“

Note this is not “follow your passion” but “build on your strengths.”

“Each person’s only hope for improving his lot rests on his recognizing the true nature of his basic personality, surrendering to it, and becoming who he is.”
Sheldon Kopp

2. Select The Right Location

“It is equally important that you do not commence business where there are already enough to meet all demands in the same occupation.”
P.T. Barnum in “Golden Rules For Making Money“

There is something strangely attractive about trying to follow a crowd of competitors and strive to outcompete them. Often “different” is a superior approach to “better” for startups. Technology markets in particular look like a game of rock paper scissors. Startups have to find an effective counter to a competitor’s offering not just a slightly better version. Their pebble cannot beat the incumbent’s rock, they have to use paper (and scissors is a really bad idea).

“I keep my eyes clear and I hit ’em where they ain’t.”
Willie Keeler

3. Avoid Debt

Money is in some respects like fire; it is a very excellent servant but a terrible master. When you have it mastering you; when interest is constantly piling up against you, it will keep you down in the worst kind of slavery. But let money work for you, and you have the most devoted servant in the world.

Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. “If a young man,” he says, “will only get in debt for some land and then get married, these two things will keep him straight, or nothing will.” This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided. Some families have a foolish habit of getting credit at “the stores,” and thus frequently purchase many things which might have been dispensed with.

I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit. The old Quaker said to his farmer son, “John, never get trusted; but if thee gets trusted for anything, let it be for `manure,’ because that will help thee pay it back again.”
P.T. Barnum in “Golden Rules For Making Money“

Barnum clearly differentiates between borrowing because you see a way to combine it with your labor and expertise to improve your business and borrowing to increase your consumption.

4. Persevere

“When a man is in the right path, he must persevere. Perseverance is sometimes but another word for self-reliance.”
P.T. Barnum in “Golden Rules For Making Money“

In “Be Careful How You Tell Yourself ‘The Story So Far’” I distinguished between persevering, which was getting pulled forward by your goal and tenacity, which was holding on to what you had. An entrepreneur often has to trade some current assets and the security they bring for opportunities and the future they may enable.

5. Whatever You Do, Do It With All Your Might

“Work at it, if necessary, early and late, in season and out of season, not leaving a stone unturned, and never deferring for a single hour that which can be done just as well now.”
P.T. Barnum in “Golden Rules For Making Money“

I think this is as much about avoiding procrastination and the need for patient and thorough exploration.

“The test of a vocation is the love of the drudgery it involves.”
Logan Pearsall Smith

6. Depend Upon Your Own Personal Exertions

“A man may be a manufacturer; he has got to learn the many details of his business personally; he will learn something every day, and he will find he will make mistakes nearly every day. And these very mistakes are helps to him in the way of experiences if he but heeds them. He will be like the Yankee tin-peddler, who, having been cheated as to quality in the purchase of his merchandise, said: “All right, there’s a little information to be gained every day; I will never be cheated in that way again.” Thus a man buys his experience, and it is the best kind if not purchased at too dear a rate.

Among the maxims of the elder Rothschild was one, an apparent paradox: “Be cautious and bold.” This seems to he a contradiction in terms, but it is not, and there is great wisdom in the maxim. It is, in fact, a condensed statement of what I have already said. It is to say, “you must exercise your caution in laying your plans, but be bold in carrying them out.”

A man who is all caution, will never dare to take hold and be successful; and a man who is all boldness, is merely reckless, and must eventually fail. You must have both the caution and the boldness, to insure success.”
P.T. Barnum in “Golden Rules For Making Money“

There is a lot in this section, the need to balance caution and action, the need to view mistakes as opportunities for learning, and the value of planning and execution.

“There are three ingredients in the good life: learning, earning and yearning.”
Christopher Morley

7. Use The Best Tools

“Men in engaging employees should be careful to get the best. Understand, you cannot have too good tools to work with, and there is no tool you should be so particular about as living tools. If you get a good one, it is better to keep him, than keep changing. He learns something every day, and you are benefited by the experience he acquires. He is worth more to you this year than last, and he is the last man to part with, provided his habits are good, and he continues faithful.

Those men who have brains and experience are therefore the most valuable and not to be readily parted with; it is better for them, as well as yourself, to keep them, at reasonable advances in their salaries from time to time.”
P.T. Barnum in “Golden Rules For Making Money“

He is really talking about building a learning organization where the founders cultivate and reward learning that leads to improved performance over time.

8. Don’t Get Above Your Business

“Give a boy twenty thousand dollars and put him in business, and the chances are that he will lose every dollar of it before he is a year older. Like buying a ticket in the lottery, and drawing a prize, it is “easy come, easy go.” He does not know the value of it; nothing is worth anything, unless it costs effort. Without self-denial and economy, patience and perseverance, and commencing with capital which you have earned, you are not sure to succeed in accumulating.

No profession, trade, or calling, is overcrowded in the upper story. Wherever you find the most honest and intelligent merchant or banker, or the best lawyer, the best doctor, the best clergyman, the best shoemaker, carpenter, or anything else, that man is most sought for, and has always enough to do.”
P.T. Barnum in “Golden Rules For Making Money“

Three distinct thoughts on the need to work you way up in terms of financial, intellectual, and social capital.

9. Learn Something Useful

“Every man should make his son or daughter learn some trade or profession, so that in these days of changing fortunes–of being rich to-day and poor to-morrow–they may have something tangible to fall back upon. This provision might save many persons from misery, who by some unexpected turn of fortune have lost all their means.”
P.T. Barnum in “Golden Rules For Making Money“

You cannot define yourself just in terms of your bank account but develop skills that enable you to be self-reliant.

10. Let Hope Predominate But Be Not Too Visionary

“Many persons are always kept poor, because they are too visionary. Every project looks to them like certain success, and therefore they keep changing from one business to another, always in hot water, always “under the harrow.” The plan of “counting the chickens before they are hatched” is an error of ancient date, but it does not seem to improve by age.”
P.T. Barnum in “Golden Rules For Making Money“

This is the flip side of balancing planning with execution.

11. Do Not Scatter Your Powers

“Engage in one kind of business only, and stick to it faithfully until you succeed, or until your experience shows that you should abandon it. A constant hammering on one nail will generally drive it home at last, so that it can be clinched. When a man’s undivided attention is centered on one object, his mind will constantly be suggesting improvements of value, which would escape him if his brain was occupied by a dozen different subjects at once. Many a fortune has slipped through a man’s fingers because he was engaged in too many occupations at a time. There is good sense in the old caution against having too many irons in the fire at once.”
P.T. Barnum in “Golden Rules For Making Money“

I think this is a risk you need to manage once you start to enjoy success and now have the resources to diversify your efforts: be careful in wandering too far afield with your second or third product. Trying to manage business models what are too different from each other is a recipe for setback.

12. Be Systematic

“Men should be systematic in their business. A person who does business by rule, having a time and place for everything, doing his work promptly, will accomplish twice as much and with half the trouble of him who does it carelessly and slipshod. By introducing system into all your transactions, doing one thing at a time, always meeting appointments with punctuality, you find leisure for pastime and recreation; whereas the man who only half does one thing, and then turns to something else, and half does that, will have his business at loose ends, and will never know when his day’s work is done, for it never will be done. Of course, there is a limit to all these rules. We must try to preserve the happy medium, for there is such a thing as being too systematic.”
P.T. Barnum in “Golden Rules For Making Money“

Not only for your own person efforts but to make delegation and management easier you need to be systematic in your approach.

13. Read The Newspapers

“Always take a trustworthy newspaper, and thus keep thoroughly posted in regard to the transactions of the world. He who is without a newspaper is cut off from his species. In these days of telegraphs and steam, many important inventions and improvements in every branch of trade, are being made, and he who don’t consult the newspapers will soon find himself and his business left out in the cold.”
P.T. Barnum in “Golden Rules For Making Money“

This translates today into cultivating peripheral vision and awareness of competitor actions and developments in your environment.

14. Beware Of “Outside Operations”

“If a man has plenty of money, he ought to invest something in everything that appears to promise success, and that will probably benefit mankind; but let the sums thus invested be moderate in amount, and never let a man foolishly jeopardize a fortune that he has earned in a legitimate way, by investing it in things in which he has had no experience.”
P.T. Barnum in “Golden Rules For Making Money“

A variation on “don’t scatter your powers” for managing your financial capital.

15. Don’t Indorse Without Security

“I hold that no man ought ever to indorse a note or become security for any man, be it his father or brother, to a greater extent than he can afford to lose and care nothing about, without taking good security.

So with the young man starting in business; let him understand the value of money by earning it. When he does understand its value, then grease the wheels a little in helping him to start business, but remember, men who get money with too great facility, cannot usually succeed. You must get the first dollars by hard knocks, and at some sacrifice, in order to appreciate the value of those dollars.”
P.T. Barnum in “Golden Rules For Making Money“

He is clearly in favor of bootstrapping, this is as much about doing business with friends and family in a way that will be fair to all parties.

16. Advertise Your Business

“We all depend, more or less, upon the public for our support. We all trade with the public–lawyers, doctors, shoemakers, artists, blacksmiths, showmen, opera singers, railroad presidents, and college professors. Those who deal with the public must be careful that their goods are valuable; that they are genuine, and will give satisfaction. When you get an article which you know is going to please your customers, and that when they have tried it, they will feel they have got their money’s worth, then let the fact be known that you have got it. Be careful to advertise it in some shape or other, because it is evident that if a man has ever so good an article for sale, and nobody knows it, it will bring him no return.

Nor do I say that everybody must advertise in a newspaper, or indeed use “printers’ ink” at all. On the contrary, although that article is indispensable in the majority of cases, yet doctors and clergymen, and sometimes lawyers and some others, can more effectually reach the public in some other manner. But it is obvious, they must be known in some way, else how could they be supported?”
P.T. Barnum in “Golden Rules For Making Money“

This is an earlier version of the “Luck Surface Area” concept by Jason Roberts

17. Be Polite And Kind To Your Customers

“Politeness and civility are the best capital ever invested in business.

The truth is, the more kind and liberal a man is, the more generous will be the patronage bestowed upon him. “Like begets like.” The man who gives the greatest amount of goods of a corresponding quality for the least sum (still reserving for himself a profit) will generally succeed best in the long run. This brings us to the golden rule, “As ye would that men should do to you, do ye also to them,” and they will do better by you than if you always treated them as if you wanted to get the most you could out of them for the least return. Men who drive sharp bargains with their customers, acting as if they never expected to see them again, will not be mistaken. They will never see them again as customers.”
P.T. Barnum in “Golden Rules For Making Money“

Especially in the early years of your business you need to bend over backwards so that you customers get a great return on the use of your product or services. This is playing a long game: Barnum outlines the risks very clearly of maximizing the value of an individual customer transaction: it’s likely to be your last with them.

18. Be Charitable

“Of course men should be charitable, because it is a duty and a pleasure. But even as a matter of policy, if you possess no higher incentive, you will find that the liberal man will command patronage, while the sordid, uncharitable miser will be avoided.

The best kind of charity is to help those who are willing to help themselves. Promiscuous almsgiving, without inquiring into the worthiness of the applicant, is bad in every sense. But to search out and quietly assist those who are struggling for themselves, is the kind that “scatters and yet increases.”
P.T. Barnum in “Golden Rules For Making Money“

More broadly your charity should not foster dependence and encourage independence and self-sufficiency as much as possible.

“The key ingredient of success is persistence. And luck, of course. I am happy to help people these days, if I can, but I try to help only those who are persistent and determined. I know the others will not make it no matter how much help they are given.”
Julian Fellowes

19. Don’t Blab

“Some men have a foolish habit of telling their business secrets. If they make money they like to tell their neighbors how it was done. Nothing is gained by this, and ofttimes much is lost. Say nothing about your profits, your hopes, your expectations, your intentions. And this should apply to letters as well as to conversation.”
P.T. Barnum in “Golden Rules For Making Money“

20. Preserve Your Integrity

“The old miser said to his sons: “Get money; get it honestly, if you can, but get money.” This advice was not only atrociously wicked, but it was the very essence of stupidity. It was as much as to say, “if you find it difficult to obtain money honestly, you can easily get it dishonestly. Get it in that way.” Poor fool! Not to know that the most difficult thing in life is to make money dishonestly! Not to know that our prisons are full of men who attempted to follow this advice; not to understand that no man can be dishonest, without soon being found out, and that when his lack of principle is discovered, nearly every avenue to success is closed against him forever. The public very properly shun all whose integrity is doubted. No matter how polite and pleasant and accommodating a man may be, none of us dare to deal with him if we suspect “false weights and measures.”

Strict honesty, not only lies at the foundation of all success in life (financially), but in every other respect. Uncompromising integrity of character is invaluable. It secures to its possessor a peace and joy which cannot be attained without it–which no amount of money, or houses and lands can purchase. A man who is known to be strictly honest, may be ever so poor, but he has the purses of all the community at his disposal–for all know that if he promises to return what he borrows, he will never disappoint them. As a mere matter of selfishness, therefore, if a man had no higher motive for being honest, all will find that the maxim of Dr. Franklin can never fail to be true, that “honesty is the best policy.”
P.T. Barnum in “Golden Rules For Making Money“

While some are not found out as soon as we would like, I always assume I would get found out and try and act in such a way that people will still do business with me when my actions and motivations are disclosed.

Barnum’s Advice Holds Up Well after Thirteen Decades

What was most surprising about reading his “Golden Rules For Making Money” was how timeless they were.

P. T. Barnum’s Golden Rules For Making Money