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you want to take your passive things and make them more active in order to increase your returns

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and that's a very tempting thing to do because we're entrepreneurial and we can see

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where the margin is getting lost. Welcome to the game where we talk about how to get more customers,

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how to make more progress, how to keep them longer, and the many failures and lessons we have

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learned along the way. I hope you enjoy and subscribe. In this video I'm going to show you how to

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take an active business and make it into passive income, right? So the goal that most of our

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entrepreneurs have, right, is to have freedom, right? So we want to not work or not have to work

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and have money coming towards us. And the thing is what I have learned is that you can make anything

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passive and you can make anything active. And one of the difficulties for entrepreneurs when you

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switch from entrepreneur to investor is that you want to take your passive things and make them

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more active in order to increase your returns. And that's a very tempting thing to do because we're

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entrepreneurial and we can see where the margin is getting lost, right? But if you always chase time,

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then you'll always be able to make whatever it is. Like if you chase time, always, then eventually

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you'll end up with all your time and you should have some leftover that is coming towards you, right?

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And so I'll give you a quick example. So Jim launched two years ago, I think it made 17 million,

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I mean according to our quality of earnings, we made 17 million in profit in 2019, 2018,

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2018, 2018. And this year will probably do eight million in profit. So you were like,

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whoa, you cut in half. Here's the difference. When we did 17 million, I was the business,

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it was 100% Alex's face wrapped with a monetization structure wrapped around it. I was taking calls,

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I was doing all of these things, I was definitely CEO, I was definitely in front of the marketing,

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I was also the product, I was doing all those things, right? Right now, the business basically

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generates half the profit, but it involves me for about 90 minutes a week. And so my dollar per hour

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is significantly higher because now I also have all these other things that I can do with the time

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that has earned back for me. And so what I want to walk through in this video is kind of the process

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and how to do it and when to do it. And so one of the issues that I see people starting out,

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and when I say starting out, you know, making a million, three million, etc, is that I'll get

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messages from them and they're like, dude, I think I'm ready to outsource my business and I'm like,

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but why? Like, I don't think you've gotten to the, I mean, and maybe somebody who's at

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a zillion, you know, so this to me, like, why are you doing that now? But I think for me,

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my answer would be like, I've achieved the wealth that I, that I want, I don't need to gas it

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anymore. And now it's really using a different metric for success, which is like how, how much can I

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spend, you know, how much time can I spend with my life? My wife, how much time can I spend,

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whenever I want in the gym working out, eating this stuff I want to eat, etc. How can I have other

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metrics for success, spending time, you know, meeting people, etc. And doing stuff like this,

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which I never did while I was growing the business, not in this way, right? And so anyways,

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the thing that I see people do is they try and jump out of the CEO seat too soon. But what I want

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to do is give you the best model for how to do it when it's right, right? Because ultimately,

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if you can turn your active income into passive income, I just love this quote, you get paid on what

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you do, you get returns on what you own, right? Gym launch as an enterprise is far more valuable,

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or my fitness companies, because there's a couple there are far more valuable now than they were

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when it made $17 million in profit, because then no one would ever buy it, right? Because no one's

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going to buy me, right? It's just a frozen personality brand, whereas now it is an enterprise that

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generates revenue by providing value to customers on a consistent basis, and I have nothing to do with it,

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and as a management team at place, etc. Right? And so as we make these transitions, right, going from

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CEO to owner, you have to go from active to passive. So this is the mental framework that it took me

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really long to time to discover when figuring this out, all right? So think about your trajectory

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as an entrepreneur, right? So first, you start, you do everything, right? And then all of a sudden,

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you start delegating out the things that are the lowest value time wise, right? If you can pay someone

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$10 an hour or $15 an hour to do, you know, $10 an hour is a week of your work, then you get 10 hours

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back, and then you can put higher value skills in those 10 hours and then make more money. And then

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fundamentally, that's literally what entrepreneurs are business, just arbitrashing time over and over

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again, and then leveling up your own skillsets so that with the time that you get back, you can

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provide, you can do more valuable things. And that's, I think, one of the bigger issues that I see a

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lot too is that people will outsource their time and then not fill their time back up with higher value

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skills, right? Now, if that's what you want to do for lifestyle, well, that's cool, but like in terms

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of the game, if you, if you seek to grow, then you need to re, re, put more things in your stack

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and take the extra 10 hours and do something even more valuable. Maybe it's marketing again or

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learning any channel or improving the product or whatever it is, it's more valuable than maybe

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frontline support, right, or whatever. And so the idea here is going from active to passive,

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and so as I was saying, when you replace that role, right, what you did is you got time back,

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right? And so if you do that enough times, you're always, you know, doing the next thing,

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but here's what's kind of funny, and this is the mental framework that I want to give to you.

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Imagine, like, let's say you look back at what you were doing a year ago, and it probably

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should look different than what you're doing today, right? Hopefully if you're, if you're growing

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in your business, what you're doing then versus what you're doing now is different.

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Most of the nation real quick, if you are a business owner that has a big old business and wants

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to get to a much bigger business, going to $50, $100,000 plus, we would love to talk to you.

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And if you like that, we'd like to hear more about it. Go to acquisition.com and you can plan

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anywhere on the page and talk to one of our team and see if we can help you get there.

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And so if you look back to what you were doing then and you see the progress that you made

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to what you're doing now, then rather than saying, okay, well in 12 months, I'm going to be doing

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all these things and all these things are gone. If you can actually jump two steps forward,

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then your business could be 100% growing at the same pace as it is now with somebody doing both

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of these things that you were doing and then you're just owning it. All right, and I know that you're

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like, wait, what does he mean? I'll try and explain this again. So this is like, if you can understand

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this concept, it will set you free and allow you to turn your active income businesses into passive

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income things that you get returns on. These become assets that become sellable. One of the

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number one issues that people have is like, you can't sell personality brands. You can't sell

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their own businesses because they're so integrally involved in them. And this is one of the mistakes

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a lot of people make, especially smaller entrepreneurs that are like, you know, my business makes,

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let's say three million dollars a year, right, in that profit. Well, if it would cost, you know,

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a million and a half to get all of the leadership and executives in order to do all the stuff that

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you're doing, which is very realistic, you might need four or five high level leaders to do that stuff,

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then your business is actually making a million or a million and a half in profits. It's actually

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half as valuable. So you're doing a million and a half dollars a year of payroll work because you're

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getting paid for that. And then your business is returning you an extra one and a half million. So

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you're, you're total as a person are netting three million dollars, but the business is generating

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one point five and you are generating one point five. If you can delineate that concept, it will serve

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you very well in business, and especially with the concept that I'm saying right now. So the idea is

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what we want to do is take two steps forward from where we're at right now, not one because if you

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take one step forward, you delegate what you're doing now and then you start doing the next thing,

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right, that you need to do. But if you delegate what you're doing now and then you get someone else

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to do the thing that you should be doing next, then you can take a step back and now you're owning

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the business while this person now does the thing that you were doing before. And that is ultimately

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how you can take your active thing and turn it into passive. And now you're an owner who looks at

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the enterprise and then what's crazy about this is that you can actually see the weaknesses of your

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own business far better when you're outside of it looking in and see you can see the marketplace

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better, you can see what your customers are saying better. You just get so much more perspective

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and then you really become the chairman of the board and then you're really meeting with the CEO

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and you're talking to the CEO about their direct reports, how they can improve as a leader,

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and what they need to do in order to kind of like and help them cast the vision for the company.

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That's really it and the thing is the vision doesn't change that frequently. And so you need to be

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smart about why you're choosing to go in the direction you are, but once you've made the decision,

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there's not a lot of change that has to happen, right? It's really like how can we execute consistently

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to get there. And so big picture to wrap this puppy up, if you want to go from business running

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to business ownership, one, don't do it too soon, and this is probably the number one mistake

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that I see people make is that they do it too soon. Two, if you are going to do it, then if you can

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think about what you get paid on versus what you can return on, then you can separate what you do

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versus what you own within the value that you have in your own network. Like you are valuable because

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you have skills. I, I own that like, I love this quote and I'll say it again, poor people do

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the wrong things, rich people do the right things, wealthy people own the right things. And so if you

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can think through that within your own life, it's like, well, I need right now you're probably doing

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the right things and you own some of the right things, right? But you're doing both of these things.

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You're getting paid here, you're getting paid here and you're getting returns here. So we want to

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put someone in place to do the things that we're getting paid for and then continue to keep the things

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that we're getting returned on. I mind you. At some point, that means that you might lose half of

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your income if it's 50-50, right? If your business makes you a million dollars a year and then you

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make a million dollars a year working your business and the business nets you two million, then you

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quitting, right? Quitting and hiring somebody else to do this thing because you take two steps

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forward. If you do that, then all of a sudden you'll get a pay decrease, but your dollars per hour

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will go up, your enterprise value go up because now it is something that is sellable that operates

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without you, right? And so that actually means that your net worth increases even though the

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profit of the business decreases. And then here's what's cool is that once you've done this,

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right? Once you've eliminated this step and now you just own the thing that you get returns on,

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now you can focus on how can I how can I increase revenue here? Trying to put more fingers on my

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on my revenue, right? How can I increase the revenue that I'm making here without me being involved

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because it's all about the constraints that we can put on ourselves. So if I can increase the

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revenue without me doing anything, how would I do that? And then you ask better questions and then

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you get better answers. And then that is ultimately how you can grow the wealth of the business without

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you spending more time or making more trade-offs that you don't want to make because you've got

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in this game for freedom, right? And so anyways, hope this was valuable for you. Hit subscribe

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because it was. Check out the next video that comes up because I'm sure it's sweet. And if you

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hated this, then I would ask that you can you can also tell me that you made it and I will send you

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a lot more. So anyways, keeping awesome lots of love. Catch you next video. Bye!