Cashflow oder Vermögen: Worauf fokussieren?

0:00Let's say you have two businesses. All right? One that does I'm going to use simple math. You can remove zeros if it hurts your eyeballs to think of more zeros. All right. Let's say you've got a $10 million year business over here topline. $10 million business over here doing top line. So 10 and 10. Okay. Which business do you want? Well, you need more information, right? Of course. Now let's say that both businesses are 10 million uh top line, 2 million bottom line. $8 million of cost in both. Now which business do you want? You still need more information of course. Now, let's say that of this 10 top 10 10 topline $2 million bottom line businesses, this one the owner is running 80 hours a week is c like every day of the week they're working uh and is required to work different than choosing to work as a side note, but I won't get into that for now. The second business, the the owner never is there and just owns it like you would own a stock on the stock market. Now, think about which of these business owners is richer. Now, at the onset, you'd think, "Oh, well, they're both the same topline, both the same bottom line." But the difference is actually very dramatic. And so, let me explain. So, this guy, first guy, very frustrated entrepreneur Fred, he makes $2 million a year and then he pays his 50% taxes and he makes a million bucks left over. Then he lives his his living expenses, whatever. Maybe he's got a family. Okay?

1:12He takes home five uh 500,000 he can put away. So, he's getting richer at $500,000 a year roughly in terms of his net worth. That's a slow way to accumulate cash. Now, don't get me wrong, $500,000 is a lot of money, but I'm just saying big picture. Now, this guy, let's call it, so we had frustrated Fred and let's call it wealthy William. Sounds very, you know, fancy fancy. So, this guy has an entire team that actually runs the business uh day-to-day without him. And so, he just owns it like he owns the paper stock of a company. And his business right now trades at six times profit, meaning somebody would be coming would be willing to come in and write him a check for six times $2 million, which is $12 million. And so of these two guys, this guy adds $500,000 to his net worth every year. This guy has a business that is worth $12 million. This guy's way richer. But check this out. Now, let's say that both of these guys work, you know, figure out a way to make the business make an extra $500,000 a year in profit. So, they go from 2 million to two and a half, 2 million to two and a half in profit. That's what happens here. Now, here's where it gets extra sexy. This guy after he makes his extra extra 500,000, let's say that uh he pays a 50% taxes and that $250,000 after taxes goes straight to it. So he goes from taking home 500 to 250. He doesn't doesn't change his living styles. All right. So he he all the extra money he's he just he saves. So he starts making 700,000 $750,000 in savings per year.

2:35Okay. After taxes. Neat. this guy, the $250,000, sorry, the $500,000 that comes in after taxes, he gets a 6x multiple on. And so he actually gets another $3 million added to his net worth. So his 12 million becomes 15 million. And this is the game of wealth. This is how you get wealthy. It's very, very inefficient to become wealthy off of regular income because it's taxed to oblivion and you're it it just there's zero multiplication that occurs on it, right?

3:06You don't get 10 years of work. You get one year divided by two after taxes. So the difference is like a 20x difference between a valuable company that can sell for 10x versus one that can't. Now hopefully I've sold you a little bit on the idea of why this is worth doing. Now let's walk through the steps of actually doing it. So the first step of actually taking it from frustrated Fred to wealthy William is you do a self inventory. So what that means is that you actually list out everything you do.

3:32Literally all of it. All right? And then you turn each of those uh checklist items into something that someone else can do. And you want to get as granular as humanly possible. And this is how you get out of the day-to-day without breaking the machine. And so I'd say the step even before this, if you don't even know what you do, what we have people do is run a time study. So time study, real simple, you don't need any like fancy technology for this. You just take an Excel sheet and you write times on one side every 15 minutes and you simply put in a timer. You turn your timer and every 15 minutes you just note what you did. It's very simple. Now, some of you might think, "Wow, I could never that sounds like so much work. It's like you literally have a timer and then you write one word down every 15 minutes."

4:14What's crazy about is it'll be the most productive week of your life. Every time I do a time study, I think I should do this every single week and I don't. But you certainly will be really productive because you're going to improve to yourself that you're super productive. I'm just telling you that's what'll happen. So, anyways, you can also, by the way, do this with your team. If you're like, I have a key man risk over here. this person is super valuable to the business. I have to have less dependency on this person. You walk through this process. So you do a time study, then you get the list of stuff. Great. Now we have this list and we can break it down into component parts. This is the kind of list of everything, right? And what we want to do is we want to start building little processes or installing people. So it's either a project, a process or a person that's going to installed in each of these little slots next to it. So you have all the list of things and then you have all the people or process or project. Okay.

5:01So pro project is a one-time thing which sometimes creates a process or you have a person who does this thing on a continuous basis and you probably have people on your team who are underutilized. Some of these slots you can just be like I think Angela can do this. I think Tommy can do this and you can start slotting them. Then you'll have your red, yellow, green. And so my red my green is I can give this to somebody. So I'm going to look at my team, teach them how to do it. They get this. My yellow is there's a one-time uh project or process that I have to install here, but I can do it and I know how to do it. The red is where it's something that I either don't know how to do or there's a person that I know I need to have, but I don't have. And so I solve these in green to reds because the greens you can get out quickly. The yellows is the next level that you can do with a little bit more time. And then the reds is like once I've done my greens and yellows, I can move on. Now the way to think through this is having so in in addition to this list it's like okay these are the things I'm doing there's also the decisions are deciding on right and so as these this time of documentation comes up we want to start saying if this then that these are rules of behavior right they're decision trees for common scenarios and I'll give you an example so when I uh so prestige labs was the first physical products business that I started supplement company and I remember uh the the manager of the support team saying, "It's really hard to get new people on."

6:19And of course, I like lost my I was less patient than I am now and less polite. And I was like, "How hard could this be?" I was like, "Change my change my uh change my address, change my car, change my flavor, change my billing cadence." I was like, "Cancel, refund. What else do we have here?" Right? And when I said it like that, uh you know, Leila pingked me and was like, "Don't be rude to people. They're trying to win and you are making it look really bad and don't do So I will tell you the story because that's what happened. Um but fundamentally it's just if this then that somebody will come in and say I would like to change my card. This is how you change your card. Someone will say I would like to change my flavor.

6:55This is how you change the flavor. I would like to change change my billing cadence from once a month to every two month. This is how you change the billing. It's just if this then that. The more complex the roles, the more one-off the scenario. The more duplicatable the job, the more people you have in a specific department or function typically the more standardized the questions become. All right. And so once we have that, then we can say, "All right, there are all these questions that come in. Some of these questions require approval. Okay, somebody has a bad night's stay at our hotel. How much money do I normally give them in credit or do I give them a gift card to our restaurant or something like that?"

7:32Well, we decide that under $500 or under $1,000, under $10,000, depends on the size of your company, under $100,000 sometimes, uh this person can act uh independently without your supervision. Now, of course, you still have financials and at the end of the month, something looks out of whack. You can go check it out. So, I'll give you an example of that. So, uh, we like to over, you know, overd deliver and have people have an amazing experience if they come out to our headquarters. And so, I let people do surprise dinners.

7:59And so, my team, like if they see two or three people that they think would like jive well together, we tell them, "Hey, we made a reservation at this nice place. Uh, go there." And so, it's like a nice surprise and delight thing. And so then then I got like the bill at the end of the month and uh we were spending $250,000 a month in fivestar dinners and I was like well guys listen I mean I love uh our our clients but the question is is this actually generating true value and so it it turned out that that was not something and when we removed that thing it didn't change anything about our our happiness scores or reviews or anything like that. So it's like, okay, so I say this because there's going to be a feedback loop and you're going to mess up, but understanding like what is the amount of money that I'm let I'm able to let someone make a decision on their behalf. And you can also put a cap on it. So it's like you can make decisions under $500 in total up to 5,000, right?

8:47So they gives him 10 shots to mess up, you know, fix something uh in the business.