WEBVTT 1 00:00:00.000 --> 00:00:04.720 So just imagine losing everything you have in a week. It was horrible and this is just after I had kind of come out of my 2 00:00:04.800 --> 00:00:07.840 Barely getting out of bankruptcy situations. Welcome to the game 3 00:00:07.840 --> 00:00:12.760 Where we talk about a get more customers how to make more per customer and how to keep them longer in the many failures and lessons 4 00:00:12.760 --> 00:00:15.080 We have learned along the way. I hope you enjoy and subscribe 5 00:00:15.920 --> 00:00:18.480 What's going on everyone? I have an exciting topic for you today 6 00:00:18.880 --> 00:00:25.360 It is how and I guarantee that anyone who makes this shift will make significantly more money for the rest of their lives 7 00:00:25.360 --> 00:00:27.560 All right, so this is a good one worth listening to 8 00:00:28.560 --> 00:00:35.440 When I was doing gym launch, which is when I started the original gym launch version of my company. This is after I had my chain 9 00:00:36.440 --> 00:00:40.280 I would fly out to facilities and fill them up, right? 10 00:00:40.280 --> 00:00:45.020 And then we scaled up to a team and then we'd fly out to those facilities and scale them up and what's interesting is 11 00:00:45.760 --> 00:00:47.760 when I had my chain of gyms and 12 00:00:48.320 --> 00:00:51.400 I built them not to make money. I built them 13 00:00:52.400 --> 00:00:54.920 To build a business right that was kind of the mindset 14 00:00:54.920 --> 00:01:00.040 I was like, I want to build a business and so what's interesting is I continued to grow the business, but I didn't make much money 15 00:01:00.040 --> 00:01:03.560 I mean, I made it enough, but I didn't make a ton of money 16 00:01:03.760 --> 00:01:07.880 But I will say this is that whenever I got into a hard spot, right? 17 00:01:07.880 --> 00:01:10.680 And this made you may identify with this whenever I'm going to do a hard place 18 00:01:10.680 --> 00:01:12.720 I was like, I didn't have enough money and there was payroll coming up 19 00:01:12.720 --> 00:01:18.520 I always found a way to make money, right? And I like never failed and never missed payroll 20 00:01:18.520 --> 00:01:21.720 I never missed right right? You know what I mean? Like I always found a way and 21 00:01:22.680 --> 00:01:25.440 The same thing happened with gym lunch when we were flying out 22 00:01:26.200 --> 00:01:29.800 We always found a way and what's interesting is 23 00:01:30.600 --> 00:01:35.760 When gym lunch was growing I got into this horrible position and so what ended up happening was I 24 00:01:36.120 --> 00:01:39.360 You know when I was selling, you know, we fly out and I talked to the gym owners 25 00:01:39.360 --> 00:01:42.560 And we'd kind of help them with their business shift everything around et cetera, right? 26 00:01:42.560 --> 00:01:48.560 But then as I scaled up and then I had sales guys, you know flying out and doing the sales of these facilities right for 30 days 27 00:01:48.560 --> 00:01:50.560 we'd fill their gym up and 28 00:01:50.800 --> 00:01:54.480 The thing is is they didn't really have the same, you know, rapport with the gym owners 29 00:01:54.480 --> 00:01:59.360 They weren't gym owners. They're like, hey, I'm here to close deals and which is fine. That's that's that's okay 30 00:01:59.360 --> 00:02:00.880 You know what I mean it happens 31 00:02:00.880 --> 00:02:07.080 But the problem was what would happen is they would sell people on, you know, a challenger or program and 32 00:02:08.160 --> 00:02:16.840 The gym owners would after they left after that, you know, we'd already fronted the cost of the marketing the hotels the commissions everything and sold all these people in their gym 33 00:02:17.840 --> 00:02:24.520 Some of the gym owners told all of the clients that we had sold to refund and then and then buy it again through them 34 00:02:25.080 --> 00:02:31.640 Which you might be thinking that sounds dishonest and the answer is you are right. It is dishonest and so I think in a matter of a week 35 00:02:31.640 --> 00:02:36.200 I had like two gyms do that and I think I had like a hundred or 150,000 or some refunds and mind you like 36 00:02:36.200 --> 00:02:41.880 I think I had a total of 150,000 or saved up and so this was like everything I had and it happened in a week 37 00:02:41.960 --> 00:02:47.400 So just a matter of losing everything you have in a week. It was horrible and this is just after I had kind of come out of my barely 38 00:02:49.800 --> 00:02:55.560 Barely getting out of bankruptcy situation. So I got rid of the gyms. I'd started the new enterprise that money had disappeared 39 00:02:56.360 --> 00:03:01.640 Because the partner had taken it out and then I was basically left with $1,100 and I started gym launch the way this 40 00:03:01.640 --> 00:03:07.000 Company had grown. I was able to grow it back up at 150,000 in savings and then boom. It's all gone again, right? 41 00:03:07.000 --> 00:03:08.520 And so I 42 00:03:08.600 --> 00:03:11.560 I share this with you because I know what it's like to lose everything 43 00:03:12.920 --> 00:03:16.760 But what's interesting though is that when that happened the reason that Scott Worse and Worse is that 44 00:03:17.240 --> 00:03:20.440 Even before I had those two gyms that told everyone to refund 45 00:03:20.600 --> 00:03:25.080 There were still a high percentage of people that were refunding like an egregious amount 46 00:03:25.080 --> 00:03:27.880 We were at like 25% and the reason was 47 00:03:28.840 --> 00:03:31.000 Because we had a satisfaction guarantee with the program 48 00:03:31.000 --> 00:03:32.680 But I had no control over the fulfillment 49 00:03:32.680 --> 00:03:35.960 So I had you know Jim Wondershoe were coming to us who were struggling 50 00:03:36.840 --> 00:03:38.760 So they probably weren't that good at fulfillment 51 00:03:38.760 --> 00:03:42.040 And then we would sell people into their gyms and then they weren't that good at fulfillment 52 00:03:42.040 --> 00:03:44.920 And so people would just say like just give me a refund. I don't I don't want to do this 53 00:03:45.160 --> 00:03:48.920 And the thing is is they had no skin in the game because it was all my money not theirs 54 00:03:49.640 --> 00:03:51.320 And so they were like yeah, whatever refund 55 00:03:51.320 --> 00:03:54.120 And so we started a huge refund rate and what ended up happening was 56 00:03:54.920 --> 00:03:57.560 The refund rate basically surpassed the margin of the business 57 00:03:57.560 --> 00:04:02.120 And so let's say I had a 25% refund rate and the margin of the business was 12 and a half right and so 58 00:04:03.240 --> 00:04:05.640 All of my margin was gone based on these refunds 59 00:04:06.120 --> 00:04:09.080 And so in order for me to make up the additional 12 and a half percent 60 00:04:09.080 --> 00:04:13.080 I had to sell more in advance to cover the deficit 61 00:04:13.080 --> 00:04:15.480 And if you're thinking ahead here, you know where this is going 62 00:04:15.480 --> 00:04:19.400 Basically every month I had to sell more to cover the refunds from the last month 63 00:04:19.400 --> 00:04:21.800 And so this is what is called a death spiral right 64 00:04:21.800 --> 00:04:25.480 I didn't know how to get out of this trap that I had woven for myself and it was horrible 65 00:04:26.120 --> 00:04:30.200 It was horrible. I can I mean it was I could bear I had I was stress sleeping 66 00:04:30.760 --> 00:04:32.760 It was it was really not fun 67 00:04:33.080 --> 00:04:37.160 And honestly, I just was like I was like I went from having nothing to now having less than nothing 68 00:04:37.160 --> 00:04:40.440 And not knowing how to get out of it. It was just an unbelievable feeling of being trapped 69 00:04:41.400 --> 00:04:43.400 And so anyways 70 00:04:43.560 --> 00:04:45.560 I thought I was like I just have to make money 71 00:04:45.560 --> 00:04:47.800 I was like I just have to make money to get myself out of this 72 00:04:48.360 --> 00:04:51.720 And so what was interesting is I made the shift and I said you know 73 00:04:51.720 --> 00:04:55.640 And this is where Leila she had a little side business selling fitness online 74 00:04:56.200 --> 00:05:01.400 And I said why don't we why don't I put all my my marketing and sales efforts towards your business instead of this business 75 00:05:02.200 --> 00:05:04.760 Because we can you know basically cut the the middleman out of it 76 00:05:04.760 --> 00:05:07.000 We'll just sell direct to consumer and it'll be fine 77 00:05:07.320 --> 00:05:10.840 And so believe it or not we ended up doing about a thousand a day within 14 days 78 00:05:10.840 --> 00:05:13.720 Directing all that attention to her business. I was like this is awesome 79 00:05:13.720 --> 00:05:17.480 We've got these you know eight guys we can shift them over and we'll do eight thousand a day 80 00:05:17.480 --> 00:05:19.480 And this could work we can make this pivot 81 00:05:19.480 --> 00:05:24.760 And so but I still need to cover this huge deficit which at this point was probably like a hundred thousand dollars 82 00:05:24.760 --> 00:05:27.400 That I was going to have to come up with and I had nothing because I just covered the last month 83 00:05:28.200 --> 00:05:31.080 I decided to come up with a hundred thousand dollars of profit right not revenue 84 00:05:31.080 --> 00:05:36.520 I'd have a hundred thousand dollars of extra juice to be able to put towards this you know, throw in the logs of this fire 85 00:05:37.960 --> 00:05:39.960 Of refund monster that was growing 86 00:05:41.160 --> 00:05:44.360 And so the thing is is that when I thought from that perspective 87 00:05:45.080 --> 00:05:46.760 I ended up coming up with a solution really quickly 88 00:05:46.760 --> 00:05:48.520 Which is like well, you know, I'll just bundle all the stuff 89 00:05:48.520 --> 00:05:51.240 I'll call all those gyms back up and say hey, you remember how I 90 00:05:51.720 --> 00:05:55.560 Put all those people in your gym want me to show you how to do it and then you can just buy the information for me 91 00:05:56.200 --> 00:05:59.560 And I did this as like I'm getting out of the gym ministry concept 92 00:06:00.120 --> 00:06:03.720 Because we were doing well with the online thing and what was crazy was 93 00:06:04.200 --> 00:06:09.800 When I thought from the perspective and this is the entire point of this podcast all right when I thought from the perspective 94 00:06:10.520 --> 00:06:12.520 Man, I really just need to make money 95 00:06:14.760 --> 00:06:16.760 I made the money 96 00:06:17.960 --> 00:06:22.440 We'll go guys you guys already know that I don't run any ads on this and I don't sell anything 97 00:06:22.520 --> 00:06:26.760 And so the only ask that I can ever have are you guys that you help me spread the words we cannot more entrepreneurs 98 00:06:27.240 --> 00:06:32.840 Make more money feed their families make better products and have better experiences for their employees and customers 99 00:06:32.920 --> 00:06:37.240 The only way we do that is if you can rate and review and share this podcast 100 00:06:37.400 --> 00:06:39.880 So the single thing that I have to do is you can just leave review 101 00:06:39.880 --> 00:06:41.880 Let's take 10 seconds or one type of the thumb 102 00:06:41.880 --> 00:06:45.640 It means the absolute world to me and more importantly it may change the world for someone else 103 00:06:46.280 --> 00:06:48.280 And 104 00:06:48.280 --> 00:06:52.760 It was one of the most profound lessons that I've that I've learned as an entrepreneur is that most entrepreneurs 105 00:06:53.320 --> 00:06:54.920 Don't think about it like that 106 00:06:54.920 --> 00:06:59.960 And so what I mean by that is like I'm sure there've been times like I said earlier that like you need to make payroll 107 00:06:59.960 --> 00:07:06.280 Or you need to make rent or you needed to you needed to buy something and you had to go generate cash right and then you boom 108 00:07:06.360 --> 00:07:08.360 You want to generate the cash 109 00:07:09.000 --> 00:07:13.800 What I can tell you between the people who I think who I've who I've observed were very successful 110 00:07:13.800 --> 00:07:19.080 We have lots of money and people who who have businesses but don't make that much money is that the people who are 111 00:07:20.280 --> 00:07:23.400 Really successful always earn that mindset 112 00:07:23.960 --> 00:07:28.440 They're always trying to think about how they can make more right from the business 113 00:07:28.600 --> 00:07:31.320 And I'm not saying that from a from a from a self-restained point of think like that 114 00:07:31.320 --> 00:07:33.560 Obviously you have to do that provide value, you know, etc 115 00:07:33.560 --> 00:07:37.320 Like that's that's a that's a foregone conclusion in this conversation all right 116 00:07:37.800 --> 00:07:43.160 But simply making the extra effort right so this is this is like when you're um, you know 117 00:07:43.240 --> 00:07:47.880 If you have a business and you know you run a you run a flash sale or something like that and it works well 118 00:07:48.360 --> 00:07:53.960 Well, why aren't we doing this once a quarter rise in this systematized if we know that doing this extra little 119 00:07:53.960 --> 00:07:58.840 Promotion and we do this on a 12 week cadence we can get four times these amount of pops and we can do this on a regular 120 00:07:59.160 --> 00:08:03.320 You know like cadence then then we're gonna make a lot more money and so it's it's like 121 00:08:03.720 --> 00:08:10.520 Think about the thing and this is a good exercise that I do a lot which is like if I really needed to make money like I had to make money 122 00:08:10.680 --> 00:08:12.520 What would I do 123 00:08:13.240 --> 00:08:16.680 Think about it like if you can think about that within your own business like right now 124 00:08:16.840 --> 00:08:21.080 If you had to go pay for something that's that's a lot of money relative to whatever your income is 125 00:08:21.080 --> 00:08:23.880 Well, let's say let's say it's three times what your normal monthly 126 00:08:24.440 --> 00:08:29.960 owner cash flow is like what you take out of the business every month whatever that number is think about if you had to double or triple it 127 00:08:30.040 --> 00:08:32.040 Right, what would you actually do 128 00:08:33.320 --> 00:08:39.320 And what's interesting is that for me I think very differently when I'm posed that question rather than how would you grow the business? 129 00:08:39.800 --> 00:08:43.080 Right and what's interesting is that they shouldn't really be separate questions 130 00:08:43.160 --> 00:08:45.800 But they are because growing a business versus making more money 131 00:08:46.440 --> 00:08:47.560 um 132 00:08:47.560 --> 00:08:54.600 Are for some reason at least for me separate concepts right, but the thing is is that it takes money to grow a business 133 00:08:55.000 --> 00:08:59.800 Right and so when when I start from that perspective and when I lead with like okay 134 00:09:00.280 --> 00:09:04.600 I if I had to make money I had to because my life depended on it. What would I do? 135 00:09:05.480 --> 00:09:07.480 Oftentimes that 136 00:09:07.480 --> 00:09:16.840 Focus and clarity cuts through all the noise of all the extra do-dads and and and be asked and and progativity stuff that we just put on our calendars 137 00:09:17.160 --> 00:09:25.640 To just get straight to the gold right that you cut straight to the middle and grab what you need and then it's that mindset at least repeated 138 00:09:26.440 --> 00:09:31.080 Systematized over the span of a business will make you significantly more money and so 139 00:09:31.640 --> 00:09:32.440 um 140 00:09:32.440 --> 00:09:34.440 Ultimately, obviously we made that shift 141 00:09:34.600 --> 00:09:38.120 Um, and we made a tremendous amount of money and what was ironic to me was that 142 00:09:38.680 --> 00:09:45.400 When I started gym launch I had learned the lessons from my gym business and from the gym and from the first version of the gym lunch business 143 00:09:45.400 --> 00:09:47.400 What you guys? 144 00:09:47.560 --> 00:09:49.560 Building a business does not make you wealthy 145 00:09:51.400 --> 00:09:57.080 Now sure I had enterprise value, but what I had forgotten about was the massive operational risk that I was taking on right 146 00:09:57.160 --> 00:09:59.960 So whenever you're running a business you are always exposed to operational risk 147 00:10:00.120 --> 00:10:05.720 I mean every gym owner and any and every small business owner who's brick and mortar and covid experience this right is that 148 00:10:05.800 --> 00:10:08.600 There are risks that are unforeseen that you are exposed to 149 00:10:08.840 --> 00:10:11.880 Unknowingly that you take on while you perform business 150 00:10:12.200 --> 00:10:16.360 Which means that next month something might happen that could that could cost you everything you have right? 151 00:10:16.680 --> 00:10:22.120 And so this is where I transition from I'm going to spend everything I have to reinvest into business to 152 00:10:22.280 --> 00:10:28.280 I'm going to pay myself and I'm going to make money while this while this grows because if I don't it could end 153 00:10:28.360 --> 00:10:32.040 And I could be left with nothing right and that's exactly what happened after I had 154 00:10:32.440 --> 00:10:34.200 um, you know my my chain of gyms 155 00:10:34.200 --> 00:10:35.320 I mean I wasn't left with nothing 156 00:10:35.320 --> 00:10:35.960 I had some money 157 00:10:35.960 --> 00:10:40.120 But like it wasn't it wasn't a lot and then I ended up making a poor decision and then losing it right 158 00:10:40.200 --> 00:10:46.680 And so at that moment I had I had built I'd put all my my energy and my sweat my tears my time and sleeping on the floor 159 00:10:46.680 --> 00:10:49.080 And all of these memories right for nothing 160 00:10:49.880 --> 00:10:51.960 But it wasn't for nothing because I got the experience 161 00:10:51.960 --> 00:10:57.160 And so this is why I'm telling you this is that hopefully you don't have to do that for four years and have nothing 162 00:10:57.560 --> 00:11:01.160 Right to show for except for one lesson right and that's what I'm trying to explain right now 163 00:11:01.160 --> 00:11:04.360 It's like if you can keep this lesson of like I should 164 00:11:05.640 --> 00:11:08.600 Pay myself right and I should think from that perspective 165 00:11:09.240 --> 00:11:12.680 How how can I actually make money from this thing rather than just building this thing 166 00:11:13.240 --> 00:11:17.080 Then I think you'll be much better off and so I I didn't even learn it the first time right 167 00:11:17.080 --> 00:11:20.600 I had to learn it I had to learn it after two really big failed businesses 168 00:11:21.000 --> 00:11:24.200 Uh failed you know what I'm saying like it didn't make me independently wealthy 169 00:11:25.160 --> 00:11:30.360 And it was when I started the this business that I that I came into it with the perspective of 170 00:11:30.920 --> 00:11:32.040 Okay 171 00:11:32.040 --> 00:11:35.800 I'm going to grow this thing, but this thing has to feed me too, right 172 00:11:35.800 --> 00:11:41.000 I'm not just going to take on all the risk for everyone for everything and and have no upside for me 173 00:11:41.400 --> 00:11:46.040 Because hoping and dreaming that you're going to sell your business as your way of profiting 174 00:11:47.320 --> 00:11:48.840 Less than one percent of businesses sell 175 00:11:49.640 --> 00:11:53.240 It's it's just it's it's such a small percentage. It's laughable, right 176 00:11:53.720 --> 00:11:58.600 And so if you think that you're going to bet everything on the one percent chance that you're going to you're going to be that one percent 177 00:11:58.600 --> 00:11:59.800 That sells your business 178 00:12:00.040 --> 00:12:04.040 And I don't even know the metrics to be fair. I'm quoting a quote that I was given but um 179 00:12:04.760 --> 00:12:09.960 I would bet like if it's that one percent then I would say it's the one percent that like the sale is meaningful 180 00:12:10.120 --> 00:12:13.160 You know that mean not just like an asset sale or garage sale um 181 00:12:13.880 --> 00:12:18.520 So if you're betting your entire business or your bet your entire future and your income on 182 00:12:18.840 --> 00:12:22.280 This one percent shot. I don't think it's the right 183 00:12:22.840 --> 00:12:24.840 mindset to take and so 184 00:12:25.320 --> 00:12:27.320 You should get paid while you grow 185 00:12:27.320 --> 00:12:32.200 And this is a concept that Warren Buffett talks about a lot which he calls it owner earnings 186 00:12:32.440 --> 00:12:34.440 Which is how much money? 187 00:12:34.600 --> 00:12:37.720 After reinvesting in the business to keep its competitive advantage 188 00:12:38.600 --> 00:12:41.560 Can I take home his profit right and that is what he 189 00:12:42.280 --> 00:12:48.120 Values a business off of which is how much owner earnings from now until infinity right until the end of time 190 00:12:48.920 --> 00:12:54.520 Will this business produce right because it's not fair to just say well this business produced a million dollars in profit 191 00:12:54.520 --> 00:12:59.160 But I have to reinvest a million dollars into new R&D, you know research and development to keep us competitive 192 00:12:59.400 --> 00:13:03.800 Well, if that's the case then you're not really making anything besides your salary right and so then that business 193 00:13:03.800 --> 00:13:08.200 Doesn't have really much value and and trolley monger and and Buffett talk about this extensively 194 00:13:08.440 --> 00:13:11.960 And I think it's like you have to experience it firsthand or for these things to be real for you 195 00:13:12.360 --> 00:13:14.360 But I'm trying to hopefully 196 00:13:14.360 --> 00:13:20.520 Give you the experience via this story so that you don't have to but if the best investors in the world think about owner earnings 197 00:13:21.080 --> 00:13:25.320 And when you need to make money and actually take cash out you know how to do it 198 00:13:26.120 --> 00:13:28.360 You have the ability you just don't have the belief 199 00:13:29.320 --> 00:13:32.680 And if you can make that shift like it wasn't like I became more skilled 200 00:13:33.160 --> 00:13:38.520 You know, I mean, I literally I started one from from launching gyms in person to showing gym owners how to launch their gyms 201 00:13:38.840 --> 00:13:42.040 Within within a week or two wasn't like I got that much smarter 202 00:13:42.280 --> 00:13:46.040 It was simply because I had a shift in beliefs and as soon as my belief shifted 203 00:13:46.040 --> 00:13:50.920 I was able to make a hundred thousand dollars something you know in that in profit in that next like a couple weeks 204 00:13:51.000 --> 00:13:53.960 To cover all these refunds and then I was like holy cow 205 00:13:54.760 --> 00:14:00.680 Wait, I can have a business and make money and that was that was kind of the lightball moment for me 206 00:14:00.680 --> 00:14:03.080 And I was like oh, I'm never doing business the other way again 207 00:14:03.480 --> 00:14:10.120 And so I tell this story to hopefully you know share that experience with you so that you don't have to go through it like I did 208 00:14:11.080 --> 00:14:15.000 But anyways um if you if you are a business owner you have it within you 209 00:14:15.080 --> 00:14:18.280 You already know how to make the money because every time you need it you always do 210 00:14:18.840 --> 00:14:25.080 And so simply think like that every month and I guarantee you'll be significantly more profitable because the dream exit 211 00:14:25.400 --> 00:14:28.440 You have a 1% chance of doing it, but you taking a profit this month 212 00:14:28.680 --> 00:14:32.280 You can absolutely do it because you already know how to do because you already have all right 213 00:14:32.280 --> 00:14:34.920 So anyways lots of love keeping awesome. I'll get you guys soon. Bye 214 00:14:40.120 --> 00:14:42.760 You