WEBVTT

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If you feel like you're not likely to skill set,

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then you're lacking a character trait

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or you have a belief about the world that is false.

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Right, it's just false.

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And so you have to figure out what that belief is.

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And sometimes that investment comes with

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going into communities,

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connecting, paying to have access to people

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who can break that belief for you.

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The wealthiest people in the world see business as a game.

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This podcast, the game is my attempt

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at documenting the lessons I've learned

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on my way to building acquisition.com

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into a billion dollar portfolio.

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My hope is that you use the lessons to grow your business

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and maybe someday soon partner with us

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to get $200 million in beyond.

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I hope you share and enjoy.

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I wanted to talk about something

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that's a little different than the actual business,

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but very important,

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which is just about the money of the business.

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So I'm just going to this one to take chips off the table.

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So as business owners,

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we're always trying to grow,

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we're always trying to reinvest in our businesses.

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And a mistake that I see happen many, many, many times

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and something that I made earlier on

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in my business career

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was reinvesting in the business.

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And so there's a difference in my mind

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between reinvesting in the business

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versus reinvesting in yourself.

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I think you should always reinvest in yourself,

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but reinvesting in your business,

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your business may come and go,

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but you will always stay, right?

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I mean, as long as you stay alive, right?

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And as long as you keep playing the game.

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And so the whole idea here is a lot of people were like,

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well, I didn't take anything out

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because I wanted to reinvest it and grow.

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The thing is, like you really think about it,

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there's, you're reinvesting growing

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because you're trying to make money,

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the thing is they're kind of like counter to one another,

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which means that at some point you have to decide,

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I'm going to take this money and keep it for me, right?

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And it's hard because you're like,

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man, some of that money that I'm taking out is money

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that I could be using to grow.

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The thing is, is what is the end game, right?

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And so if the end game, let's say,

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like let's play out a couple different alternative

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because what I'm having my one day's,

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the VIP days that one guy's are coming out,

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a lot of times we'll get into this,

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which is like, what's the goal, right?

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And so if you have a gym, right, a single location

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and you want to, like you enjoy running the gym,

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you enjoy that business,

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then the objective should be to make as much money

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from that business in real time,

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which means month over month,

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you take as much money as you can

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out of the business of the business serving you, right?

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That's the goal.

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Now, if your goal is then, you know what,

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I'd rather have multiple occasions.

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For me, in my opinion, the only reason

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to have multiple locations is because you're trying

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to have proof of concept so that you can then go

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into licensing or franchising.

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There are very, very, very, very, very, very,

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very few people who make a substantial amount of money

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through owning multiple brick and mortar service businesses,

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it's typically made on the licensing and franchising side

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because with these new locations,

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you take on more overhead, you take on more,

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they cost capital to open them.

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And so like that nest egg that you had,

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then gets blown into this new thing.

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And if you have a hiccup, all of a sudden,

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the nest egg and all you built at one disappears in two, right?

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And so the objective of a business is to make a profit.

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That is the point.

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So it separates it from a nonprofit, right?

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And so it is my belief that you should take as much money

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as you can out more than you probably feel comfortable with.

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And that'll put you into a place of needing

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to make more money to pay you, which is good,

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because then it means you'll actually think

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like a business owner like you're trying to make money

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rather than just trying to build something, right?

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And what's weird is that a lot of times when you think

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from the frame shift of, shoot, I really need to make money,

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you tend to make money, right?

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And that means that your business actually is better.

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It's kind of backwards, but it's true.

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I mean, I'm sure most of you guys at some point

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have had to make payroll in three days

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or had to make rent in a week

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or had to, you know, get hit with a tax bill or who knows, right?

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And you've had to make five grand, ten grand, fifteen grand

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in a week, and then you do, right?

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And here you are still breathing.

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And the thing is, is you still always have that skill set.

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You just don't utilize it to feed yourself.

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You only use it to feed other people,

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which you can, I can dig more into later,

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but you can think about that for yourself.

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So back to one to take tips off the table.

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The only outcome besides, you know,

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opening a location for the desired

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to franchise or license that model

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would be an exit, meaning you're selling the location.

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But the thing is, is if you're selling the location,

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you're going to want to show as much profit as possible.

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If you're consistently putting money back into the business,

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now this comes into accounting stuff,

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but when you're buying more equipment,

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things like that, a lot of that stuff

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is not going to be considered reinvestment,

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that's going to be considered, you know, equipment costs

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or upkeep, which will take from the multiple

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that you would get from that business.

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And so if your desire is to exit your business

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at some point, then you want to take as much profit

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out of that business as you can.

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Now, mind you, big, full disclaimer,

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I do not know your business, I do not know your situation.

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Everyone is unique, having self-awareness is key

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to making big decisions in your life.

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But just from like an overarching standpoint,

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this is something that I see all the time.

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And so I figured I would at least speak to it.

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So back to the tips.

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If you're like, you should try to run as lean as possible.

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You have to be incredibly disciplined

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to not just spend the excess on fun stuff

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or things that you think might make money.

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Like you have to make an argument for like,

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how is this thing going to make me this amount of profit?

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So if it's like, I'm going to go by $4,000 worth of equipment.

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I'm using the example.

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Now, if you know what your profit margins are,

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which the average gym runs 12.5% margins,

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average, I'm not saying this is certainly you guys,

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but the average gym, I have a CPA friend

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who runs just gyms, is 12.5%.

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Which means to make $4,000 in profit back, right, back,

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then you're going to have to make eight times that

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in revenue to make the $4,000 back.

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So you have to make an equivalent argument.

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It's not, can I just make $4,000 more?

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It's, can I make $32,000 more?

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Because I'm taking this off of bottom line.

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I'm taking this off of profit.

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And moreover, if you wanted to sell your facility,

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you'll probably get three-ish,

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three to four depending on the buyer,

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but three times your earnings, your profit

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at the end of the year, right?

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So if the profit at the end of the year is $5,000 less,

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that is actually losing you $15,000 on your actual sale number,

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which again, so you're losing on the actual real profit

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in real time, but you're also losing

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on the actual valuation of your business.

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And so it's really difficult to make that money back,

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especially if I'm being real for the majority of people

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who are small business owners,

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the things that they choose to spend money on are stupid, right?

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Now, that being said, I think that when you take

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the money out of your business,

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you should not just spend it on yourself, on shit, right?

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Spend it on learning more skills

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so that you can make more money, right?

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That's typically, like leveling up your skill set

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is going to do more for you than probably anything

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that you can invest in the actual business itself, right?

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In terms of buying stuff, your skills will make you money, right?

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Way more money.

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Hey guys, real quick, if you're new to the podcast,

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I have a book on Amazon called $100 million offers

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that over 8,000 five star reviews

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has almost a perfect score.

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You can get it for $0.99 on Kindle.

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The reason I bring it up is that I put over 1,000 hours

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into writing that book,

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and it's my biggest gift to our community.

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So it's my very shameless way of trying to get you

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to like me more and ultimately make more dollars

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to that later on in your business career,

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I can finish the part with you.

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So that's my gift, go check it out, Amazon,

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and back to the show.

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And so that's what you should invest in.

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Beyond that, it is my belief,

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and I made a podcast about this,

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that really unless you're making $100,000 a month

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in profit or more,

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this is like I'm just been row with you,

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I think you should consistently spend money

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on acquiring skills,

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because that's the problem, right?

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If you're not making the money you want,

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it's because you're lacking a skillset, right?

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And if you feel like you're not lacking a skillset,

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then you're lacking a character trait,

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or you have a belief about the world that is false, right?

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It's just false.

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You have to figure out what that belief is.

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And sometimes that investment comes with

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going into communities,

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connecting, paying to have access to people

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who can break that belief for you, right?

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I'm not saying me, do whatever you want,

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but I'm just saying like, just having that approach.

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And so back to chips off the table.

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I'm gonna go make sure my ADD stays in check.

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When you are running the business,

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every month take as much as you can out.

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Have a number that you drain the bank account to

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every single month and do that religiously.

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All right, you drain it,

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and you rip the cash out and you stack it,

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and you do that every single month.

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All right, you don't give yourself an excuse

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to not take out money one month,

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or it's like, I kind of close.

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If there's only $800 above the line,

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you take the $800 out,

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like you have to be disciplined about that.

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You drain the account,

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and the thing is is it'll keep you on it.

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One of the habits that I did for a very long time

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that was extremely useful

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before cash flow became kind of crazy.

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Basically until we were doing more than a hundred thousand a day,

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I looked at the total bank accounts of all assets,

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my personal, my savings, my everything that was cash,

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that was liquid across all accounts every morning,

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and I told it up.

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And so every morning I do exactly how much money

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I had across everything.

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And the thing is, if you look at that,

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and the beginning you're not gonna do it,

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it's gonna be uncomfortable.

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And if you do this religiously,

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you'll have a mind for where your money is going.

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You'll see a big pop, and you'll be like,

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hey, where did that go from?

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And then you'll start to start,

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there's a rhythm that starts happening.

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You'll start seeing it.

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This pattern on Tuesday's payroll hits,

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on Wednesday we get our credit cards,

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on Thursday we get our ACH deposits, right?

259
00:09:24.760 --> 00:09:26.680
You'll start seeing these hits,

260
00:09:26.680 --> 00:09:28.400
and you'll start feeling the rhythm,

261
00:09:28.400 --> 00:09:30.600
and then you'll start seeing if something seems high

262
00:09:30.600 --> 00:09:32.440
or something seems low, right?

263
00:09:32.440 --> 00:09:34.200
And just by being mindful of that,

264
00:09:34.200 --> 00:09:35.600
you will make more money.

265
00:09:35.600 --> 00:09:38.560
I promise you, because you'll see how hard it was

266
00:09:38.560 --> 00:09:40.680
for you to make the money that you made,

267
00:09:40.680 --> 00:09:42.880
and see actually come into your account,

268
00:09:42.880 --> 00:09:45.960
you won't be as quick to spend it, right?

269
00:09:45.960 --> 00:09:48.840
So rip the couch out as much as you can every month,

270
00:09:48.840 --> 00:09:52.160
because both that's going to increase your net worth, right?

271
00:09:52.160 --> 00:09:54.040
Because at the end of the day, if you keep going,

272
00:09:54.040 --> 00:09:55.680
and I saw someone have this happen to somebody,

273
00:09:55.680 --> 00:09:58.280
and this is why I'm making this for you,

274
00:09:58.280 --> 00:10:01.120
I saw someone who, quote, reinvested in their business

275
00:10:01.120 --> 00:10:02.720
during the good times, right?

276
00:10:02.720 --> 00:10:05.520
They're just making tons and tons and tons of money, right?

277
00:10:05.520 --> 00:10:08.800
And then bad times hit, right?

278
00:10:08.800 --> 00:10:10.320
Something happened, trainer leaves,

279
00:10:10.320 --> 00:10:12.600
takes half the clients, whatever, right?

280
00:10:12.600 --> 00:10:15.000
And they had nothing, right?

281
00:10:15.000 --> 00:10:18.040
And they ended up having to close their facility

282
00:10:18.040 --> 00:10:21.640
after three years of what was good times,

283
00:10:21.640 --> 00:10:23.640
but they didn't have a dollar to show for it.

284
00:10:23.640 --> 00:10:25.080
Now, if during the good times,

285
00:10:25.080 --> 00:10:26.600
they'd be consistently stacking cash,

286
00:10:26.600 --> 00:10:28.080
consistently stacking cash,

287
00:10:28.080 --> 00:10:31.160
one, you have a parachute that if you need

288
00:10:31.160 --> 00:10:33.240
to switch opportunities, you have it there.

289
00:10:33.240 --> 00:10:34.880
Two, from an emotional standpoint,

290
00:10:34.880 --> 00:10:37.240
you feel like you have something to show for what you've done.

291
00:10:37.240 --> 00:10:39.440
I can tell you, after having sold the gyms,

292
00:10:39.440 --> 00:10:41.880
and then having a partner at one point, basically,

293
00:10:41.880 --> 00:10:43.520
essentially drain the funds out of the account,

294
00:10:43.520 --> 00:10:45.480
and then send it to somebody offshore,

295
00:10:45.480 --> 00:10:47.040
the person been indicted for fraud twice,

296
00:10:47.040 --> 00:10:48.040
and I just didn't know.

297
00:10:48.040 --> 00:10:50.080
I saw six, all my locations,

298
00:10:50.080 --> 00:10:52.720
all the money that I had made, vanish.

299
00:10:52.720 --> 00:10:54.240
And I can tell you it's soul crushing,

300
00:10:54.240 --> 00:10:56.280
and I don't want that to happen to you.

301
00:10:56.280 --> 00:11:00.840
And so, don't do that, just take money out every month,

302
00:11:00.840 --> 00:11:02.160
so that you have something to show for it.

303
00:11:02.160 --> 00:11:04.320
Now, no matter what, what you have to show for the end of the day,

304
00:11:04.320 --> 00:11:07.320
at the end of this entire game is who you are, right?

305
00:11:07.320 --> 00:11:08.480
Is the character you've built,

306
00:11:08.480 --> 00:11:09.800
is the belief that you have,

307
00:11:09.800 --> 00:11:11.320
and the skills that you've acquired,

308
00:11:11.320 --> 00:11:13.640
which create your reality, right?

309
00:11:13.640 --> 00:11:16.160
That is truly going to always be the end goal.

310
00:11:16.160 --> 00:11:18.440
But in the real material world that we live in,

311
00:11:18.440 --> 00:11:20.360
there are some things that money can do

312
00:11:20.360 --> 00:11:22.920
that can help make, like, money can't buy you happiness,

313
00:11:22.920 --> 00:11:24.200
but poverty can't buy you anything.

314
00:11:24.200 --> 00:11:26.000
I heard that the other day, so that's not my quote.

315
00:11:26.000 --> 00:11:28.240
But the other side of it is that money can't buy you happiness,

316
00:11:28.240 --> 00:11:30.200
but it can sure help you avoid pain, right?

317
00:11:30.200 --> 00:11:31.160
I'll tell you that much, like,

318
00:11:31.160 --> 00:11:33.520
it can help you avoid pain in your life.

319
00:11:33.600 --> 00:11:35.560
And so if you can smooth transitions out for you,

320
00:11:35.560 --> 00:11:37.080
for your family, for whatever,

321
00:11:37.080 --> 00:11:38.320
your kid has a learning disability,

322
00:11:38.320 --> 00:11:40.600
and it costs $2,000 a month to get some special tutor

323
00:11:40.600 --> 00:11:41.680
for them to learn how to read.

324
00:11:41.680 --> 00:11:43.640
Like, that shit happens, right?

325
00:11:43.640 --> 00:11:45.440
And for you to be able to be prepared for that

326
00:11:45.440 --> 00:11:47.840
will allow you to be prepared, right?

327
00:11:47.840 --> 00:11:49.000
For when those types of things come.

328
00:11:49.000 --> 00:11:51.040
So take your chips off every month.

329
00:11:51.040 --> 00:11:54.240
It's not helping you grow your business for most of you,

330
00:11:54.240 --> 00:11:56.400
for the vast, vast majority of you,

331
00:11:56.400 --> 00:11:58.360
the things that you're investing in are not actually things

332
00:11:58.360 --> 00:11:59.560
that are going to help you grow your business.

333
00:11:59.560 --> 00:12:02.400
So make it a priority to profit as much as you can every month,

334
00:12:02.400 --> 00:12:05.120
and stop buying stupid shit, all right?

335
00:12:05.120 --> 00:12:06.120
If you wanna exit,

336
00:12:06.120 --> 00:12:09.200
it's still gonna increase the value of your business

337
00:12:09.200 --> 00:12:10.960
by being disciplined in that process,

338
00:12:10.960 --> 00:12:12.400
because then you're gonna show lower overhead,

339
00:12:12.400 --> 00:12:14.200
higher profit, and it's gonna be more attractive

340
00:12:14.200 --> 00:12:16.640
to a potential investor in the future, all right?

341
00:12:16.640 --> 00:12:20.000
So just don't make this mistake because I'm just telling you,

342
00:12:20.000 --> 00:12:23.800
when the times are good is when you need to take money out.

343
00:12:23.800 --> 00:12:25.280
That is when you need to do it.

344
00:12:25.280 --> 00:12:26.720
That's when you rip your cash out.

345
00:12:26.720 --> 00:12:29.040
Like, you think it's gonna keep going,

346
00:12:29.040 --> 00:12:31.440
but the game of the business is cyclical, right?

347
00:12:31.440 --> 00:12:35.440
After every good time, there is a bad time, right?

348
00:12:35.440 --> 00:12:38.000
Every up cycle is followed by a down cycle,

349
00:12:38.000 --> 00:12:40.400
and every down cycle is followed by an up cycle.

350
00:12:40.400 --> 00:12:42.360
We don't be like everyone else

351
00:12:42.360 --> 00:12:45.000
and think it's always going to be this way, right?

352
00:12:45.000 --> 00:12:45.840
It's not.

353
00:12:45.840 --> 00:12:47.280
Like, there's probably going to be something

354
00:12:47.280 --> 00:12:48.640
that's happening on the horizon, right?

355
00:12:48.640 --> 00:12:50.680
Like, the yield curve is flipped.

356
00:12:50.680 --> 00:12:53.120
Like, we're on borrowed time right now.

357
00:12:53.120 --> 00:12:55.720
So right now, things just still get, right?

358
00:12:55.720 --> 00:12:57.320
Economy is still frothy.

359
00:12:57.320 --> 00:12:59.000
Take some chips off the table, all right?

360
00:12:59.000 --> 00:13:00.040
Because you don't know what's gonna happen.

361
00:13:00.040 --> 00:13:02.320
So anyways, I hope that was useful.

362
00:13:02.320 --> 00:13:04.120
I hope right now, if you could think to yourself,

363
00:13:04.120 --> 00:13:06.120
man, there's some extra money in my bank account right now.

364
00:13:06.120 --> 00:13:07.040
What should we do with it?

365
00:13:07.040 --> 00:13:08.920
Take it out, right?

366
00:13:08.920 --> 00:13:10.920
Run a paid and full play every once in a while, right?

367
00:13:10.920 --> 00:13:12.880
Just take some, scrape some cash off,

368
00:13:12.880 --> 00:13:15.840
make sure you run internal plays to your existing clients.

369
00:13:15.840 --> 00:13:17.080
At least four times a year,

370
00:13:17.080 --> 00:13:19.000
because that's just pure excess profit.

371
00:13:19.000 --> 00:13:20.360
And you shouldn't reinvest in the business,

372
00:13:20.360 --> 00:13:21.600
you just take it right out

373
00:13:21.600 --> 00:13:24.120
and you put it in the bank of you, all right?

374
00:13:24.120 --> 00:13:25.760
Because number one thing that is guaranteed

375
00:13:25.760 --> 00:13:29.080
to make you more money is more money.

376
00:13:29.080 --> 00:13:30.560
So if you take the money out,

377
00:13:30.560 --> 00:13:32.440
it's guaranteed to actually increase your net worth.

378
00:13:32.440 --> 00:13:35.120
Whereas if you invest it, it is not guaranteed to do that.

379
00:13:35.120 --> 00:13:37.880
And likely, if you look at it from a profit standpoint,

380
00:13:37.880 --> 00:13:40.880
if you're doing 12% margins or even 20% margins,

381
00:13:40.880 --> 00:13:42.920
you have to make five times that investment

382
00:13:42.920 --> 00:13:46.520
just to make it back, just to make it back.

383
00:13:47.160 --> 00:13:48.320
What should we do with it?

384
00:13:48.320 --> 00:13:49.320
What should we do with it?

385
00:13:49.320 --> 00:13:50.320
What should we do with it?

386
00:13:50.320 --> 00:13:51.320
What should we do with it?

387
00:13:51.320 --> 00:13:52.320
What should we do with it?

388
00:13:52.320 --> 00:13:53.320
What should we do with it?

389
00:13:53.320 --> 00:13:54.320
What should we do with it?

390
00:13:54.320 --> 00:13:55.320
What should we do with it?

391
00:13:55.320 --> 00:13:56.320
What should we do with it?

392
00:13:56.320 --> 00:13:57.320
What should we do with it?

393
00:13:57.320 --> 00:13:58.320
What should we do with it?

394
00:13:58.320 --> 00:13:59.320
What should we do with it?

395
00:13:59.320 --> 00:14:00.320
What should we do with it?

396
00:14:00.320 --> 00:14:01.320
What should we do with it?

397
00:14:01.320 --> 00:14:02.320
What should we do with it?

398
00:14:02.320 --> 00:14:03.320
What should we do with it?

399
00:14:03.320 --> 00:14:04.320
What should we do with it?

400
00:14:04.320 --> 00:14:05.320
What should we do with it?

401
00:14:05.320 --> 00:14:06.320
What should we do with it?

402
00:14:06.320 --> 00:14:07.320
What should we do with it?

403
00:14:07.320 --> 00:14:08.320
What should we do with it?

404
00:14:08.320 --> 00:14:09.320
What should we do with it?

405
00:14:09.320 --> 00:14:10.320
What should we do with it?

406
00:14:10.320 --> 00:14:11.320
What should we do with it?