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The Flip-Flop Effect

By Rob Lambert - Email Editor

Date : Dec 07, 2006

Dear Subscriber:

Companies like A & W Restaurants, Marriott Hotels & Resorts and even McDonald’s started with one location, and quite possibly with the decision of one person. These companies were the visions of entrepreneurs who took their ideas and grass-root initiatives into an unknown world. In the successful franchise history of these companies, someone, perhaps the founder, made a decision about expanding. This was a proactive decision. The entrepreneurs of the past, like us, had to make decisions about creating wealth and keeping wealth. These people made money and created assets beyond their wildest dream.

Assets can flip-flop to create liabilities. Why? Because the more you have, the bigger the target you are. All of these good assets create corresponding liabilities because they draw professional takers and other folks who want to have a piece of your good fortune. I call this the Flip-Flop Effect, and we should all take lessons from those who have gone before us.

What is the secret?

What is in a name? The answer is that behind many known namestoday there is a trust. Take John D. Rockefeller. His company,Standard Oil, became the largest most profitable company inthe world, and he the richest man in the world in his time.He made proactive decisions over a forty-year period that ledhis companies into monopolistic practices and civil attackspressing every business front that he managed. His goal wasto monopolize wealth through the much-needed commodity of oil,and he even monopolized the refining capacity, the railroads,the infrastructure, and the pipelines in the United States,Russia, and Switzerland. I always say that behind every greatfortune is a crime (real or perceived). Rockefeller personifiedthis. Rockefeller irritated many, and inspired an angry Congressto pass the Sherman Act (anti-trust monopoly act). Even thoughhe stepped down as Chairman, his wealth continued and so didhis name. Is this an example of good business or bad business?

It is neither. It is a lesson in protection. It is human nature to expand, and expansion in wealth causes problems. Entrepreneurs should be so lucky to incur these types of problems. You once made a decision to protect yourself and your family by starting an LLC, and now it has made money, attracting the attention of the contingent fee lawyers/professional takers. Your good fortune to have created wealth comes with a cost: You must have protection for this money, wealth and income. This is the point where successful people make proactive decisions, taking steps and precautions to protect what they have earned. Just as surely as the sun follows the moon, attack follows the creation of wealth.

This is the Flip-Flop Effect. When you see the good times coming, start preparing for the bad times. Be like John D. Rockefeller. Even though he was a philanthropist, he was less than liked by many. He was one of the first Americans to rely on trusts for protection of wealth. It is said that there are over a thousand trusts from the wealth that John D. Rockefeller created almost one hundred years ago. Whether you agree with his business principles or not, he had the forethought to realize that he would be under attack even though he was the richest man in the world. He knew about the Flip-Flop effect and planned for it.

It seemed for many years that this example was only for the rich and famous. A billionaire today is a millionaire back then. Now the lessons are beginning to trickle- down through the generations to the “common folk,” or as we call it, “the middle class” who desire to keep the wealth that they have earned.

Do not be foolish and think that this Flip-Flop Effect does not apply to you. Unfortunately, in the United States, we have allowed the creation of legal machinery that makes it profitable to attack “regular folks.” If you are one of these “regular folks,” who has managed to accumulate some assets, do not forget the Flip-Flop Effect. Your good fortune invites attack. Be wise like Rockefeller and plan on the attack. It is sure to come. I want you to keep your money, so count on the Flip-Flop Effect applying to you and protect your assets.

Have a healthy and protected week.

Rob Lambert

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