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The easiest business to start to make a million dollars a year is also the hardest business

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get to a hundred million dollars a year.

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And I say this is someone who's both a product of the education space, which is by the way,

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Wingkwink, the business model I'm going to talk about.

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But I've also done a hundred million plus in sales in that business and sold my last

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one for 46.2 million.

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And so I have a very good understanding of being both a customer in that industry and

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a supplier of that industry, and so I want to make this video for two types of people.

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First is somebody who's like, hey, I want to start a business.

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And the second is for people who have a business and they're considering switching into an education

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or coaching business.

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And this business and this video is going to talk about the pros and cons on both sides

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and the two biggest considerations that you have to make.

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One is, what's the goal that you're actually solving for?

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Believe it or not, the reason that this thing is really fast is also the same reason why

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it's not going to make you a billionaire.

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And the second problem, or the second thing that you have to consider, is what problems

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are going to come up for each of these businesses and which ones you're better at solving.

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The problems that are in this business are the opportunity in this business and the

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problems in this business are the opportunity in this one.

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And that's why this thing can be mega, mega big, takes a little longer.

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This one can get moderately big, really fast, but really hard to scale from there.

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So let's dive in.

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Coaching, information, education, digital course, membership, businesses are among the easiest

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businesses to get to $100,000 a year, $100,000 a month, $200,000 a month.

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But this is what the business looks like in terms of the difference between that and

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a traditional business.

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A digital course business looks like this in terms of the speed.

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A traditional business looks like this.

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And so the key thing to make this decision really only comes down to two factors.

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And they're both incredibly important, but they're very simple to understand.

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So the first one is, what is your goal?

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If you want to sell a business and build an asset that you can exit for $25, $50, $200,

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$250,000 a billion some day, then this business, the coaching, digital, et cetera, businesses

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are not a good business for that.

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And all we have to do is look around and see, okay, of the people who don't have a brand

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who started from scratch and had information businesses, how many of them were able to

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get to $10 million per year, how many to $30 million per year, how many to $100 million

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per year?

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I said $100 million, I can count on one hand, I don't know, I'm all.

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And all of them have deep brands and have been doing it for 30 plus years, almost all

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of them.

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The people at $30 million a year, there's probably I can count on two hands, and I almost

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know all of them.

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And think about how many people are in this space.

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There's millions, if you count creators of people in the information digital product space.

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And so that's a very, very small success rate, even at $30 million a year.

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And so what's interesting is that there's this massive band of people at the $500 million,

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$2 million, $3 million a year, because it is a business that requires almost no operational

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infrastructure to get to that level.

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You can get to $2 to $3 million a year with a team of 10.

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That for most entrepreneurs is where they cap out in terms of their operational skill

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set.

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They don't know how to lead, they don't know how to manage.

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So the first thing you have to figure out is what your goal is and the second is what

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problems you are more comfortable solving, all right?

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Let's walk through this.

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So if your goal is to make, let's say, $1 to $3 million per year in a business, this is

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probably the fastest and easiest way to get there.

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You have no inventory, you can immediately package the knowledge and experience that you

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have.

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You can deliver very outsized value to a very niche audience.

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So for example, Jim launched, I knew how to run a gym, there is no school for running

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a gym.

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And so if you're a gym owner, learning from thousands of other gyms and getting the best

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practices off the bat because there is no book for running a gym, there are textbooks,

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right?

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I tried to write one, but there's no, there's no book on it.

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And so no one tells you how to set up a membership sale, no one tells you what the script

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is, no one tells you how to set up your lobby, no one tells you what hours are the ones

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that are empty and which ones are full, no one tells you how long to make your sessions,

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no one tells you how to pay to pay your trainers, all of these things you have to figure out

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on your own.

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And it's so valuable if you can immediately learn the stuff and then triple your income,

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that's incredibly valuable.

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But it's not sticky, once you teach someone, they know it.

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That's why four year degrees or four years, not forever.

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You learn it, you graduate.

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And so for that reason, they become very difficult to create revenue retention with as in people

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buy it and then they leave.

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So that is why this business is very hard to turn into an asset because the recurring

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nature of it is very low.

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And on top of that, you have three types of key man risk.

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So if you're a personal, you're an influence, you got a personal brand, you're the one

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who's bringing the customers, you're the one who's leading the team and you're the one

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who's delivering the product.

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If you're the one who's required to make the ads, then no one's going to buy the business

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and say, okay, well, we're just going to get rid of the guy who makes, who gets all the

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customers in.

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Well, that's not going to happen.

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Let's say you magically replace yourself on the front end, well, you're still the one

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who's in charge of making the thing that delivers all the value, which is the product.

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And you're the one who's staying on top of it, seeing what's working right now and all

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that stuff.

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And if you're not doing that, then they're like, okay, well, maybe we can replace this,

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but eventually the product's going to deteriorate and we're going to be out competed by people

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who are newer and better.

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And so, okay, fine, then you have to replace that.

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These are both very hard problems to solve.

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And then finally, the entire team's loyal to you and they start working because they

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probably watch your content or consume your ads or in some way they aspire to be like

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you in some way or they admire certain traits about you.

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And so if they're like, well, if you leave, I'm leaving.

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And so you have this infrastructure of people who also don't want to work for anybody else.

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And so there's huge risk from an asset perspective to seller exit this company.

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And so if you want to make this as income and just think about this as getting a really

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high paying job, then this is a great opportunity.

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But now I want to talk to these people.

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So I had three different business owners and this is why I'm making this video.

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Recently, one was a guy who had a paint business who was doing $4 million a year.

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Another was a salon owner doing about three or $4 million a year.

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She had six locations doing lash extensions and other stuff like that.

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And then the third business was a business opportunity, like a micro business, where he

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would set up home gardens and people's backyards.

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Like that was his thing and people would pay him to do that.

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And so he could teach other people how to set up gardens and other people's backyards,

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etc.

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Okay.

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So almost all of these guys were right here.

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They had enough skill that they could teach a beginner, but not enough skill to be a

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master.

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So they could jump from here and based on the time in the business, they'd be like here.

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Like if you look at this amount of time to here, they would jump all the way to here

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on their income.

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They'd jump higher up on that graph.

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But as time continues to go on this way, this graph, as time goes on, goes off the chart.

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And this one is very difficult to get there, especially if you have a exit, meaning somebody

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buys your business because you built an asset that does not rely on you.

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When you have 60 locations and you're not the one in the ads and you're not the one delivering

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the lash extensions, that's a very sellable business.

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And what I can also promise you is that to get from one to five, going from 55 to 60 locations,

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you're going to make more money at 55 to 60 and it's going to cost you almost no time.

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But most people quit right when they reach a boss that they don't know how to beat, in

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which is interesting about this, is that the cap on this business and the cap for most

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people in local and chain or traditional service businesses is about the same.

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It's because they don't know how to get the next level of leadership in.

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And so they're able to get the first team in, maybe one manager, but they can't get the

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next level of leadership in.

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That's what takes you from five locations to 25 to 30 locations.

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That's going from one city where you've got three to five to five cities.

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We have three to five.

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If you're thinking locations, but you can think about this as an accounting firm, it

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doesn't really matter.

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But fundamentally, you have another lay of leadership, which is why people get stuck.

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And so if you are in this business, then you just need to realize that you're about

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to get the best returns that come at the end and not get the shiny object.

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Now if you are in this boat and you deceive yourself and you say, you know what, I love

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making an impact.

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I love helping people with their businesses more than I like.

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I like paint, paint owner, helping, I like helping paint owners make more money with

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their paint business than I do, like helping homeowners paint their houses.

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Fine.

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But guess what?

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That will one wear off.

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When I was in the gym business in the beginning, I was like, I love fitness, but guess

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what it very quickly became, not about fitness, it became about business.

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And so once I got my hundredth and five hundred and thousandth weight loss testimony on

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before and after, I stopped caring.

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It's just like, I got numb to it because I had so many testimonials that was like, yeah,

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you know, you ate less and you did resist training and you got stronger and you bought

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muscle and like, yeah, like your body changes.

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That's kind of the point.

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And the thing is, is that right now this is novel, it's new.

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Now you're like, oh, wow, this guy was able to move houses and go into a new zip code

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and his kid went to a new school and he's got time for his family.

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And as crazy as I'm about to say, well, sound, you will get used to it too.

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It'll be the same as the other thing because you're going to say, well, I mean, dude,

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it's not, you'll start downplaying.

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You're like, listen, man, I mean, you ran some ads that you are, that we already knew

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worked and you ran an offer that was better and you set up a sales process, which you didn't

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have and you had a script, which you also didn't have, and when you run that thing, you're

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going to make more money.

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And so it starts, the razzle dazzle around it starts to go away.

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It's just exciting because it's new.

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And so my first big piece for either of these people is do not straddle their line.

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You got one ass.

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That's an ass.

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Okay.

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You can't ride two horses.

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Pick.

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And it's the fundamental skill for entrepreneurs being able to make a decision.

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And if you can't make a decision and you can't commit, and that was just not common, we

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define commitment by eliminating alternatives.

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When you get married, you eliminate all other women or all other men that you're going

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to be dating.

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That's how you commit.

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You say, I will eliminate alternatives.

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And so if you want to commit to either of these things that means you need to eliminate

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the alternatives.

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Focus is the measure of the amount of things that you say no to.

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So somebody says no to more things is more focused than somebody says yes to more stuff.

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Period.

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So if we're looking at these two opportunities, this, if you want to be in this range,

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then great.

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Then this is a good opportunity.

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But understand that this will cap and it will get very difficult to scale, which goes

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to problem number two.

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So I'll write the goal here real quick.

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If you want to have a $10 million plus exit, then sticking with the traditional business

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is the better model.

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Now, real talk, over five years, you might make that an income over here and not be able

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to exit the business, but you'll have made that an income.

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And so there are lifestyle benefits.

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So here you'll make more income faster and you'll sustain a higher, you'll be able to

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sustain a higher lifestyle the whole ride.

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And so that's also a little bit of a trade off.

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So here you usually have to reinvest more of that cash into opening new locations, into

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hiring better people, whatever, less so than you do in a digital products or education

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business.

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So that's a pro work on depending on how you want to see it.

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Now the second element of this is what problem are you more comfortable solving?

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So if you're in this business, you're going to have huge key man risk, which is you have

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to figure out how to transfer everything that makes you special to other people without

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making them so special that they leave your business and take your customers.

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Very, very hard.

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On top of that, you're going to be in the talent and training business.

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And if you really, really want to scale, then you have to build a brand because acquisition

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will only become more and more expensive as you get to colder and colder audiences,

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which means you need to build positive brand associations with you over time, which means

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the product needs to consistently be very, very good.

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So you get good reviews, good word of mouth.

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And that continues to compound in time rather than compound against you, which is what happens

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for most people because they make mediocre products because they only are a little bit

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better than most people, not way better than most people.

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So the problem that you have in this business, on the other side, of sticking with the thing

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that you're in, if you're in a, let's say you're the painting business, you're the accounting

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business, you're the whatever business, the problem that you have to deal with is that

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it's slower.

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And in the beginning, this is faster in the beginning, slower near the end.

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This is slower in the beginning, faster near the end.

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So number one, it's slower.

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Number two, it typically has more capital involved.

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You have to reinvest more of the money to continue to grow out, especially if you have

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brick and mortar locations.

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You literally have to spend money to open into location to expand capacity.

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Here, there is no capital expense to sell more people into your membership, sell more people

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into your course.

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Not really.

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You just have more people you have to hire.

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That's it.

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So in this business, it takes longer and it costs more money.

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But because it takes longer and it costs more money, there are fewer people who do it successfully.

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And as a result, they create something that we can put here in big letters, which is

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you create an asset.

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You create something that someone else could own.

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And so what I will say here is that if you stick with it from here to here and you get

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it good enough that you really understand all the special sauce about the business,

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you might not ever want to tell anybody about it, because you want to own the whole thing.

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And I'll say like adacreson.com, the last chain we recently purchased, it was a franchise.

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And it had more franchise locations open than it had corporate.

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And I bought all of the franchisees out.

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And so we took all 30 plus locations in-house and made them all corporate.

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And we did that because I looked at the economics and I was like, wait a second, why would

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we want to make 8% when the amount of work that it takes to open a franchise location

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is 50% of the work that it takes to open a location we own the whole thing up anyways.

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And with franchisees and customers, by the way, you can't fire them because they paid

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you.

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If you have employees and you have a bad manager, you can swap them out.

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And so we have more control and we can know that they're going to execute correctly.

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The amount of franchise or buddies I have, I can't even count.

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And they all say the same thing, man, these franchisees are idiots, they all think they're

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smarter than me.

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They all want to do it their own way, right?

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And their own way is the wrong way.

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And so they end up making less money.

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And they don't do it right.

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And so then all of a sudden your reputation tanks because they're not following your process

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and it's a whole cycle.

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And so there's a reason Panda Express is a significantly more valuable company is that

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Mr. Panda owns them all.

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He owns all the net income from every single location, he owns the dirt, and he owns the

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property itself, all 2,600.

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They're almost 4 billion in sales with 27% net margins.

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Absurd.

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27% net margins.

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It's almost a billion a year in income, income, cash flow, woo.

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But he didn't start coaching other Chinese restaurant owners when he had five locations.

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He just stuck with it.

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And so it goes back to what goals you have.

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If you want to build an asset that eventually will acquire less of you, less work, and

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give you ultimate freedom, this business model will do it.

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If you're looking to make $100, $500, $2 million a year, and are willing to continue to work,

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and basically always have to keep working in order to do that, then this is a good business

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model.

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If you're here, which is at this early part here, then this model is the faster and easier

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way to make a million to a million dollars a year, it is.

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If you want this, and you're further along in this curve, then for most of you, it makes

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sense to just stick with what you're doing because you're about to unlock this huge amount

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of value that's going to get created.

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And so I want to give you an even-handed approach to thinking about this and understanding

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that you also may be, let's say you're at this point, and your goals might actually change.

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And so when I was starting out, if someone's like, hey, you can make a million bucks here,

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I'd be like, screw asset value, I don't care about exits, I was like, I just want to make

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money.

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In which case, great vehicle.

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But what happens, and the reason that you can look at Alex Becker, who I think got

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up to $25 or $30 million a year in his information business, switched to high roasts, and then

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built a multi-hundred million dollar enterprise with software.

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Damn, events had consulting.com, they were doing $30 plus million a year, and then from

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all the skills he learned, transfer it to school.com, and then made it significantly more valuable

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enterprise.

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Right?

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Now mind you, school makes less cash flow than consulting.com, because this business requires

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more capital and is slower at the onset, schools in your five or six right now, right?

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But it's scaling like this now, because it's easier to add 5,000 customers in a month

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in this business, and almost impossible to do it here, especially if you have service

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attached to it.

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And so, there are pros and cons on both sides, and you have to realize that your goal will

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change, and if you do get to this point where you're right at this point where you're

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like, well shoot, because sometimes people go the other way.

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They say, hey, I've been doing this for five years, I want to start a software company.

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Look at all the people who are successful with software companies who made the switch.

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Let me tell you the one common trait, because I know all of them.

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They stop this, and they start doing that.

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And so, in either direction, if you're going to do it, do it, and don't do the other one.

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So I want to talk to you, Avatar number three, hidden bonus.

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Is somebody who's been successful here for five years, or someone who's been moderately

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successful here for five years?

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The other side looks really tempting, because if you're over here, you've got enough cash

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saved up, you've been making a million bucks, two million bucks a year for a while, and

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you're like, man, now I want to have that $10, 20, $50, $100,000,000 plus exit, right?

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I get it, I was there.

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On the other hand, if you're here, you're like, man, I've been put in five plus years in

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this thing.

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I want to start making some money, I want to start making some cash flow, and so this starts

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looking attractive, and I'll give you the quote from my CFO, they're shit in every business.

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And so, the key here is, let me walk you through the transition on either side.

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If you're going from traditional business over to digital education business, what you

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don't want to do is keep the traditional business.

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And so, there's the fallacy of like, well, one, some of you want to keep it because you're

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afraid of actually making the jump, and this is actually what makes you money.

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In which case, just keep doing what you're doing.

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But if you really are going to make the jump, then there's this idea that you want to have

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keep a test kitchen, and I actually think it's not true, so let me explain.

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So the concept of a test kitchen works when you're making food, because you want to standardize

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the process, and then you roll out the food making process across the locations.

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It's much easier to roll it out, you have franchise control, we have corporate control,

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whatever.

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Now, if you're in an education business, you teaching your employees on site, how to

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do a new process, or do a new play, is not how you're going to teach all of the people

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in your community, all the people who are your customers, that buy your stuff from you,

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from an education perspective.

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What are you actually going to do?

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You're going to probably record some videos, and add some sort of zoom call, you know, add

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on to help give support, maybe some community support as well, but that's about it.

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And so if you want to test whether or not a new play is going to work in this education

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model, then test it like you would actually roll it out, which is if you have 100 customers,

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take 10 customers that represent different segments of the market, both geographically,

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like what market are they in, and what skill level they're at.

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And so when we ran things at gym launch, I wouldn't say, let me take the top 10 gyms

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and test something out, because that's going to give me bad data.

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I'm going to have the top 10 winners, they're going to make everything work.

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But if I take the bottom 10 on everything, nothing's going to work.

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But if something does work for them, it's going to definitely work for everyone.

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And so what I did was I took two people from each of the 20% bands, so two people from

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the top 20%, two from the next 20, next 20 in the middle, next 20 in the bottom middle,

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and then next 20 at the very bottom.

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So I had 10 people in different markets at different skill levels.

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And so when I rolled it out, I got to have a representative sample of both markets and

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performance to see whether this play actually worked.

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And I see that as a far superior model to actually creating better products and better

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education that also doesn't require you to keep an appendage of a business that you have

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to stay attached to.

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Because whether you like it or not, if there's a problem in this business and a client

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sleeps with an employee, right, or an employee stealing, guess what's taking your shower

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time?

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I don't care if this is 10% of your income, as you can take 50% or 100% of your mental

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bandwidth until the problem goes away.

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Your brain is going to deal with what's urgent, not necessarily what's important.

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And so this is why focus is so important.

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So if you're going to switch from here to here, cut it, sell it, don't have any appendages

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and go all in on this.

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If you are going to go from the education business over to a more traditional business like software

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or service business that you want to attach to it, then guess what?

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You cut this business.

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You say, I'm done with that and I'm going to build this for real.

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Just don't straddle the line.

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I've yet to see anyone succeed big doing this.

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And the vast majority of people do exactly that, which is why I'm making the video.

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So you have your three scenarios.

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You're starting out.

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You just want to make income.

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Then yes, digital products, education businesses is probably the fastest and easiest way to make

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a lot of money pretty quickly.

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If you want to build an asset that's going to be valuable and sellable without you and

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you're comfortable with a slower pace of growth and putting more capital in, this is something

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that's going to give you a $10, $50, $100,000 plus exit.

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If you're going to make the transition, then pick.

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If you are in this bucket and you're like, that is cool.

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00:22:14.240 --> 00:22:15.720
I don't necessarily want that right now.

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That's not the stage of the journey I'm at.

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We have a free thing that you can do at school.com for slash games where I will lead you through

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starting a business right now, 50.54.1% of people who start the school games of the paid

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community and make their first dollar online, very, very proud of that.

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If you are this business and you're trying to get to hear, you want to have a massive

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exit, then acquisition.com, every once in a while we run workshops that are headquarters,

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we help businesses that are smaller than our portfolio size, kind of take the next

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step so that hopefully someday maybe we're the ones who buy it from you and help you scale

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it from 30 locations to 300.

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That being said, this is the path.

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I want to make it clear for you, give you the pros and the cons on either side and hopefully

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get you to commit one way or the other.