Ep 499: Non Competes Are No More – What You Need To Know | Matthew Miller Episode Recap
AJV (00:02):
So non-competes are going away. What do you need to know to stay compliant as an employer? So there is a new ruling by the FTC, right? The Federal Trade Commission on non-competes. Here’s what you need to know, is that the new non-compete rule is going into effect on September 4th, 2024, right? So as I record this, we are heading into middle of May, 2024. So in a short four months, this is happening. So there’s a cushion of window to get yourself prepared. What does it mean? Right? So this new comprehensive ban is federal, which means it is nationwide, not state by state, and it is banning all new, non-competes with all workers, right? So employees including senior executives. So this includes 10 90 nines consultants, employees, including senior executives. The final rule states that it is unfair to have a non-compete as it’s preventing a method of competition, and therefore they are banning it, right?
AJV (01:15):
So that is happening September 4th for existing non-compete. So anything that is established and in place, I would say prior to today, which is May 14th, right? So as I record this, anything that is before today would be existing. Like if you know about this, it is wise and I would advise you, not legally, but as a, a friend friendly advisor to go ahead and put these things into place because they’re coming, right? So what I’m talking about is pre-signed employee documents that have non-compete sent for those. This has a different, a little bit of a ruling for senior executives, and then it’s so it’s different for senior executives than it is for I would just call ’em non-senior executives. So what is the defining tool term of a senior executive? Typically it is someone who is making more than $150,000 a year, who is also in some sort of policy or decision making capacity, right?
AJV (02:21):
So don’t hold me to that for the, to the dime, but that’s what is technically considered a senior executive role. They have decision or policymaking power making more than $150,000, give or take a thousand or $2, right? So for those, for those individuals, for senior executives existing non-competes can remain in place, right? So existing can, but here, moving forward, again, I’m saying May 14th, like as you know about this, don’t be trying to like, just like hire a bunch of people if that’s not in your best interest. But this, this ban on September 4th also includes new senior executive positions, and they will, that will not hold to them. So it will hold, if you have a non-compete for existing ones, it will not for future ones after September 4th. So that’s the first thing. So if you are a non senior executive, right?
AJV (03:19):
So all work, all other workers different than senior executives it is not, nothing is enforceable after the effective date. It’s just gone, right? So existing ones for senior executives will hold intact, new ones will not, and for all other workers, it’s gone, right? So all other 10 99 or W2 employees the non-compete will not be enforceable after September 4th, okay? That’s, that’s, that’s the general thing that you need to know about this. Now there are some things that you should also know that are not a part of like this, you know, technically this federal ruling which are non-solicitation are staying intact, right? So as non-competes go away, which there are pros and cons to this, right? I used to be in the consulting world and this would be very advantageous for me in that role to not have a non-compete. But there are some nuances to that thing of proprietary information confidential information trade secrets, right?
AJV (04:22):
So there are some things that are still going to stay intact for a, you know, consultant work for hire 10 99, where if I, I’m currently being hired by, you know, X company with certain trade secrets, confidential information, proprietary whatever I’m not able to go and compete with a direct competitor with those things during my timeframe of work. But as soon as my timeframe of work is over the very next day, no non-compete will be eligible to me, right? So that is very much in my favor, although there is still some protection for the company, for the business owner who is hiring someone to come in. And this is where you just really need to make sure that as a, an employer as a business owner, this, this, you get this four month window that you really need to meet with your attorney.
AJV (05:12):
This is the time that you need to do contract reviews service agreement reviews for you and vendors. If you, if you hire consultants or 10 99 make sure you’re talking to your employment attorney about your current contracts because as non-competes go away, that doesn’t mean that non-solicitation is going away, right? So I think it is a fair to go, hey, like, you know, there are free market free trade here, right? If you choose to leave here, you can go do your own thing. You, yes, fine, but you cannot take our trade secrets and use them. You cannot take our confidential information. And this is where you really need to get into the nitty gritty
AJV (05:57):
Cross your t’s, dot, your i’s and your agreements to make sure that you actually have provisions, you have clauses that that does protect your proprietary information, your systems, processes, methodologies, frameworks, your ip, right? Those need to be in your employment agreements. Now, I am not an attorney. This is not legal advice. This is my opinion as a business owner that just has non-competes are going away. Doesn’t mean that you can’t still be protecting yourself and your business as you want to be free, open, and transparent with your team. Of course you do. At the same time protecting, you know, trade secrets and proprietary information as well as keeping your non solicitations intact, right? So just because an employee at free will decides to leave and go start their own thing, even if it’s in competition with you, they cannot recruit other employees.
AJV (06:50):
They cannot recruit away your clients and they cannot take your information and use it as their own, right? So there are some things here that are very much in favor of the individual, the employee, which is fine, right? But that’s where you as the business owner need to step in and go, great. And now I need to double down in these other areas with confidential information and my IP and non-solicitation and everything else to make sure that you are fairly protected, right? Not being overbearing or this is no time to panic. Most non-competes. We’re holding up in a court a lot anyways mo there are many states that have banned this years ago, like California. So yes, there’s a lot of talk and a lot of flurry about this, which is part of why we’re making this many podcasts right now about it.
AJV (07:44):
And at the same time, very few non-compete lawsuits we’re holding up in court anyways. So this is just kind of like making it a federal stance overarching of what really was hard to uphold anyways. But it’s a great opportunity and a necessary time to update all of your agreements as well as review and ensure that you do have other clauses protecting your information, your ip, as well as doubling down on non-solicitation as the non-compete will be no longer allowed. It will be illegal to have that. So you do need to ensure that all agreements are updated. Those are removed by September 4th because at that point people can sue, people can turn you in. The federal government even has a website and a form where you can go and submit people who still have this in their agreements. Don’t be one of those people.
AJV (08:39):
And go ahead and take care of this now. So quick high level update. If you need more information, talk to your attorney, right?
Ep 498: Important Things to Consider Legally When Starting a Business and Building a Brand with Matthew Miller
AJV (00:02):
Hey, everybody. Welcome to the influential personal brand, AJ Vaden here. So, so, so excited to get to introduce you guys to one of my closest friends, Matt Miller. And although I could literally spend the next 60 minutes just shooting the breeze with Matt, that is not the purpose of today’s conversation. So y’all, before I introduce you guys to Matt, I want to tell you what the premise of this podcast is all about and why you need to stick around. And then I’ll do a quick formal introduction. There are a lot of things changing in the legal landscape, and here’s what I know to be true. Most of us have no idea what they are,
AJV (01:01):
And so I have invited on a very, very knowledgeable wise individual to help us understand what it is that we need to know when it comes to protecting our business, protecting our personal brand, but then also just some things we need to know in the ever constant changing landscapes of what it means to do business today in the United States. So that is what today is about, which means if you’re in business, it pertains to you. So stick around. So now let me formally introduce you to Matt, formally Matthew, but I call him Matt Miller, who is a nationally recognized attorney and a legal advisor to businesses with a niche in healthcare companies as he lives in Nashville, Tennessee. Everyone has to do business in healthcare. But my love is that he has a focus on merger, mergers, acquisitions, private equity transactions, and general corporate law.
AJV (02:00):
I’ve been harassing him for months on how do you, how do you become my, my general counsel? I think eventually he will fold and say, fine, fine here. Here’s how we do it. But he is literally, when we say nationally recognized, he was named as one of the Bloomberg laws, 40 under 40, and being recognized as one of the nation’s most accomplished legal minds. He has been recognized in the best lawyers in America. He has overseen transactions ranging from a hundred million to over a billion dollars. That’s with a be. And that is why I have him come o come on the show today because I need someone who actually knows what they’re talking about to help us understand what is going on in the legal landscape today. So, Matt, welcome to the show.
MM (02:44):
Thank you, aj. This is amazing to be here. Are you guys a billion dollars yet? I think you’re getting close.
AJV (02:48):
MM (04:11):
Well, that’s, you know, like we said, broad questions are the name of the name, name of the game today, I guess. I mean, I, I think it’s amazing that, you know, a lot of people are getting their legal information off of Google today.
MM (04:52):
So what we do as lawyers is not just, you know, have the information in our heads and, and, and, you know, provide that to clients, but we try to organize and apply that information in a way that benefits the client. So I think with all that’s going on out there with, with the changes, and like you just pointed out, is it is an election year. There is is going to be potentially a change in the executive branch. There could be changes at the judiciary. There were certainly a lot in the last few years. There are changes happening at the regulatory level on the FTC side. There are changes happening at the antitrust level. There are changes happening in the small business domain. There are so many things happening. How do you get your mind straight around what’s important?
MM (05:41):
You know, what, what, what do I need to pay attention to? What is just you know, not applicable to me? And, and there’s a lot. So I totally see how it can be overwhelming at times for the small business owner. And, and that’s what I really would like to do, is help make that a little bit more accessible, make it a little more organized, make it a little more or understandable so that small business owners can go out and feel protected and, and have confidence in what they’re doing is compliant. So, I mean, I guess one of the, one of the areas I think, or I guess what I could say at the outset is, one thing that’d be good to like take off the table is that if you are a small business owner that is operating, you don’t need to really have your finger on the pulses of every legal, legal change.
MM (06:21):
I think you do need to be aware of a couple things. And those with, with, by and large, don’t change, right? So the typical rules around formation of your corporation, the tax rules around recognizing revenue and income those things, you know disclosures to your shareholders, if you have shareholders, how you treat employees, you know, discrimination, hiring and firing rules, all that doesn’t change by and large. But the things that do change, you hear about, right? And I, I think we were talking either before we started, or you just mentioned it, that we’ve all heard about the recent changes to the non-compete laws that have been proposed. And you, you’re right. I mean, the FTC, which is one of the agencies that oversees antitrust and anti-competition laws held a special session where they voted three to two to actually make illegal non-competition agreements for most workers.
MM (07:18):
Okay? Hmm. So this applies to both W2 employees and to consultants. And that’s a pretty revolutionary thing. And formerly you could apply a non-compete to an employee in most states. It just had to be narrowly tailored in terms of the scope and in terms of, you know, the geographic scope and then the duration of the non-compete. But what the FTC has said is that starting, and I, I, I apologize, I don’t remember the effective date of this, but it, you know, it’s not effective yet, but starting here in a few months, the proposal is that every non-compete would be defacto illegal in the United States. Now, there are a couple of exceptions to that. There’s, there’s the standing exception for if you sell your business, you’re not allowed to turn around and compete against the buyer. So non-competes in connection with the sell of the business will remain in effect, and non-competes for certain high level executives will be allowed, it seems again, with narrow prescriptions around duration and scope.
MM (08:19):
So that is one key area that has changed a lot, and it’s interesting to see that that happens right on the cusp of an election year. So you’re right to be mindful of those things. But I wouldn’t say that you need to be juggling all of this as a small business owner. You can talk to your tax accountant, talk to a CPA or talk to a lawyer who, you know or even if you have to Google it, and they’ll probably give you enough information at least, oh, ask an intelligent question
AJV (08:47):
Yeah. So on this topic of non-competes, like, just in case someone is listening, going like, okay, I hear this term tossed around a lot, but what does that actually mean? Can you like, help explain, like, what is a non-compete?
MM (08:59):
Right. Well, a non-compete is actually a it is a contractual agreement. It’s a restrictive covenant. Okay? So it’s a promise that you make as an employee or, you know, going forward a consultant that says that you will not participate in a business that is potentially competitive, or is comp actually competitive with the person or the company on the other end of that agreement? Right? So if you are an executive at a company and, and you’re privy to a lot of internal information, a lot of confidential information, then you go and leave that company and you want to start another business that your company will want to put certain restrictions around you to make sure that you’re not going to start a business that could compete and, and take away customers and take away take, take away business, take away employees to, to this new venture.
MM (09:56):
Mm-Hmm,
MM (10:48):
It goes beyond logos. You know, I think, you know, you talk a lot about reputation. It, it really is your, a reputation in the marketplace, or in other words, your goodwill. That’s the legal term for it. One way to really lock up goodwill is a non-compete. A non-compete means you can’t take that goodwill from one business and take it over to another one. It is restrictive. It is, it is in some cases could be deemed punitive. And so the law has always tried to reduce those and tried to make those reasonable and supported by consideration. But now it’s, it’s, it’s, you know, could be the law of the land. And now states have been doing this for many years. California has always made non-competes defacto illegal, and you can actually get in trouble if you try to enforce one in, in certain states. But the landscape is changed, is, is changing. And I think it’s important for brand owners to understand that it, this is actually a potentially good thing for them because it means that their, their goodwill is going to be protected and respected and not subject to unreasonable restraints.
AJV (11:58):
Yeah. You know, it’s interesting because this whole concept of a non-compete or a consultant Mm-Hmm.
AJV (12:54):
It’s like, right. There’s a lot of different things there that probably was not okay when I was in that world just even six years ago. And today it’s going, no, like I could go do whatever I want with all of your competitors, but then also I wanna talk about it as the, as the owner, as the CEO, as the founder. If I hire a consultant, the last thing in the world that I wanna do is give them keys to the kingdom of everything we have built, and then have them also go call up John Smith, you know, my top competitor and go do it for them too. So I see how it’s advantageous in one, you know,
MM (13:37):
Out? No, no. You, you are exactly right. And it’s a very astute question, and I’m trying to get too in the weeds on this, but, you know, consultants, you can restrict their performance, right? Because one of the tests to see if someone’s an employee versus a consultant or not, is whether or not the company or the employer is exercising too much control over the service provider, right? If you exercise too much control, then they actually convert from a consultant or an independent contractor into an employee. And one of the ways that you exert too much control is, is having something that’s an expressed non-compete against a consultant. So they have or, you know, so you, you, you will see, you will see things like conflicts of interest policies where they will say that if you are working for us on this project, you cannot go out and work again, you know, work for a competitor.
MM (14:30):
While you know, you know, you know, while you have this information with, with us, that is, that is a non-compete that would be potentially struck down under, under the analysis the FTC is now putting out. So conflict of interest type policies you know, you have to really word those correctly to have them only apply, like while the service provider is providing services. And you really can’t have a post-term period of a non-compete. And so that is potentially challenging for the business owner and potentially liberating or freeing for the consultant. Mm-Hmm,
MM (15:43):
There’s lots of different ways that you can address this new liberality that consultants have under these non-compete under the loosening of the non-compete laws. But but yeah, I mean, previously consultants were the most subject to these kind of ancillary non-competes that were, were enforceable. Now they’re seeing a, a great lifting of those restrictions in their ability to go provide services after the consulting agreement is ended. So during, during the period of, of service, you know, a non-compete or some sort of conflict of interest policy that’s reasonably tailored, that’s probably okay. Mm-Hmm,
AJV (16:41):
So that’s interesting. So it’s kind of like with anything, it was, there’s this natural ebb and flow, right? You’re gonna have some release of some of these restrictions, but it’s very likely, very possible and probably in the, you know, business owner’s best interest to then tighten up some areas of contract or service agreements and other areas like, you know, confidential information and trade secrets, right?
MM (17:07):
And, and that’s, those are usually the information that, those are usually the terms that the business owners know least about. Yeah. And there’s not great forms that really cover they’re sort of broad based, you know, templates that are out there, but they don’t really address your unique business and your individual business and your situation, and they may not be tailored to your laws. Particularly trade secrets are operate under a wholly different set of laws than just typical confidential information operates. So those are kind of separate concepts. You know, I think something else to keep in mind is that non-solicit will still be enforced. So there are certain things that the law will allow you to continue to do that have been historically the way we’ve done business for a long time. And things like non-disparagement clauses, other restrictive covenants that prevent someone from leaving a company and then saying bad things about that company later down the road.
MM (17:58):
Those will all be those will all still continue as will just general releases when you, whenever an employee, employee leaves a company. And, and if, if, you know, if there’s a, if you get a release from them, those will be upheld and enforced so long as they’re supported by consideration. Mm-Hmm.
AJV (18:35):
Yeah. So it’s so interesting because, you know, on the one hand, you know, our former business was heavy on, you know, 10 99 and, and we literally had to like, you know, check every t dot every i for, you know, all the compliance things. And I wonder just like, how much of this is just to deter, right? Hiring 10 90 nines and kind of forcing everyone towards the more W2 environment Mm-Hmm.
MM (19:04):
Tax. Sure. Well, and, and there’s another thing to keep in mind too, is that a lot of companies will have arbitration clauses with their consultants, and you have to word that arbitration clause correctly. I’ve seen this a lot lately where an arbitration clause that does not have a carve out or protecting your confidential information means that you’ll have to go to arbitration in order to protect your ip. Right? Now that is difficult because you’re going into court where there’s not a judge that can give you an order that can allow you to do an injunction. You’re really in front of a binding judge. But that, but they’re not a court of, it’s not a court of law. It’s not under the laws of our United States and our federalist system. It’s more of like a contractual agreement between the parties to go to a commercial resolution Mm-Hmm.
AJV (20:15):
And then you also mentioned the non-solicitation. So that will stand, so can’t solicit employees, can’t solicit clients. All of those things will stand, even though the non-compete will eventually fade away.
MM (20:30):
That’s right. Because, you know, that’s a restriction on on, on the, you know, not a restriction on someone’s ability to, to be employed and to go work where they want to work is different than the ability for someone to come and, and take employees from someone else. And now you, you can always generally advertise and, and invite people to come work for your company, and you just can’t do a targeted solicitation if there’s a non-solicit in your contract. And, and that will continue to be the case. But yeah, this is, you know, it, it, there’s a, there are also some changes happening that are relevant to the business owner in, in something, some things around corporate formation and reporting beneficial ownership. And I think, I think, you know, aside from the non-compete, there, there are some changes in the law regarding corporate information.
MM (21:24):
And, and that’s called the Corporate Transparency Act. You may have heard of it. This is a law that requires it, it was really put out for to prevent money laundering. And so people would companies were starting shell companies and no one really knew who owned these entities. And in order to deter fraud and, and in order to like cut back on Monday laundering and things like that, they have started requiring businesses to report their ownership. Now, it’s interesting because one of the carve outs or exceptions from the reporting obligation are large businesses or businesses with lots of employees. Those typically do not have to report their beneficial ownership, but small businesses do. And so this is one of those laws which is meant to target one group of, of individuals or, or, or companies or founders, but it ends up you know, having an effect on a d on a different class that they really intended.
MM (22:24):
A lot of people are still grappling with the requirements of the CTA. There are portals to register and, and to make reporting your information more efficient. Most people are not even aware of it, and there’s already a couple suits making their way up to the Supreme Court, hopefully about the legality of requiring people to disclose their ownership in, in these corporations. So that’s another development that if you’re not aware of it speak to your lawyer or talk to your even accountant would probably have some information on that. And then the the so,
AJV (23:01):
So on that note, really quick before you move on, so the Corporate Transparency Act is basically, so when you say small business, is this like under 5 million, under 10 million? Like, are, is it a revenue requirement? Is it employee requirement? What is it?
MM (23:16):
Yeah, I, so I think there is an employee requirement. If you have more than 20 employees then, then, you know, I think you, you fit into the large business. And I think that there’s, I, I can’t remember right now off the top of my head what the revenue requirement is. But we actually have a policy at our firm that any advice related to the CTA has to be run through a special team because it’s so new and it’s just so unclear what, what the process is. I mean, this happened January of this year, and now we’re just, just past April tax reporting season, and now people are starting to report for the first time. And
AJV (23:54):
How are people supposed to know about this?
MM (23:57):
AJV (24:30):
Yeah. So there’s a couple of things. So I just think this is so fascinating. I only knew about the Corporate Transparency Act because you told me and I consider myself pretty savvy when it comes to tax law and corporate law. And I mean, there’s been two or three things that have come up here lately that I’m like, well, what, where did I miss the memo on that? And I am generally someone, I subscribe to a lot of newsletters, I attend lots of webinars. I’m in different organizations to keep me up on that, and I’m still just like missing stuff left and right. And I’m just curious, for the average business owner who is head down in their business, who’s not checking in with an attorney on a regular basis and really only talks to their accountant during tax season, like, what are the repercussions for not doing this or not knowing about it? Like, are there gonna be penalties? Are there fines like,
MM (25:27):
Well, we don’t even know. That’s the point.
MM (26:22):
And if you keep that in mind, a lot of things that you think are the law, they could change because either they don’t align the incentives correct correctly, or they’re, they don’t promote efficiency. Hmm. You know, so that, that’s one of the things that’s, that’s cha challenging about the law, is that even when something is the law, like in the case of the non-compete that we discussed, that can change in a year or, or, you know, in, who knows, it may, it may come back and it may, it may be different in different states, but, but it, it looks like at least for now, that those are the two big developments this year are, is the change of the non-compete, which, which would be a federal law, meaning it applies to all states, and that a state could not go below that floor.
MM (27:07):
And, and the, the Corporate Transparency Act, which requires small businesses to report their beneficial ownership. I think it, if, if you could put that on the awareness radar of most of your audience and most of your listeners, I think then they can start asking the questions, well, what do I need to do? But in terms of the penalties for non-compliance, in terms of like, what happens if you don’t do it? You know, my advice would be do it follow the law, right? While it’s the law. But the truth is we don’t know because it’s so new. So even lawyers are grappling with these things.
AJV (27:41):
So fascinating. And part of why I wanted you to come on, because I think there’s just so much that, you know, unless you do have, like, you know, legal counsel on staff or accountant on staff, and most, I would say personal brands don’t, right? That this is a really hard thing to keep up with. So is there a place that if you don’t have an attorney that it’s like, oh, well, this is how I get federal updates or legal, like, does that exist? Like, how do you
MM (28:10):
Find this stuff out? You, you know, you know, unfortunately, it, I don’t, to my knowledge, there is no place other than having a lawyer to explain these things to you. There’s no place you can go that will give you legal advice. I mean, it’s, it there, the way that our legal system is structured and the way that our attorney-client engagements work, it’s very outdated. It’s very antiquated, and it, it, it, it, it’s not that it discourages the free full of information because you can get information and you can get people to help you. Like you can go to a conference, for example, Mm-Hmm.
MM (28:59):
You know, you know, about these changing trends, about these legal issues to the general public. Mm-Hmm.
MM (29:55):
I, I think the law firm model is, is really evolving from a, a fee for service institution to a, to a flat fee kind of project based or relationship based model where clients are able to get the information that they need based on their, their unique situation and, and not so much based on the billable hour as it has been in the past. And, and that, that is one big problem out there is that the affordability of good legal counsel, it’s hard, is not really available. Yeah. We don’t, and now, now there are legal clinics that are out there, right? There are, you know, there, there are services that will provide advice on a relatively budget basis but a lot of, a lot of founders, a lot of entrepreneurs that are actually making revenue and growing and growing businesses won’t qualify for a lot of that support Mm-Hmm.
MM (30:56):
AJV (31:57):
Yeah. Because at the end of the day, well, first of all, it seems like there’s a gap in the marketplace that you should go and fill. So I’m just gonna give some encouragement. There seems like a, well, I, I have,
MM (32:07):
I have some updates I can share on that if you, if you want.
AJV (32:09):
Yeah. Yeah. But then also I think it is kind of one of those things of, you know, really it’s like, it’s, it’s the beauty of content creation, right? It’s like the whole premise of, you know, give away the what for free charge for the how. Right? It’s like, just because I know about the Corporate Transparency act doesn’t mean I’m gonna go and DIY the whole thing. It’s like, tell somebody for free, tell me about it, and then tell me how you could help me do it. Right? It’s, you know, welcome, you know, to year 2024 attorneys. So,
MM (32:41):
Well, I mean, there are actually, there are actually in, in, in the, in the, for the average business, there are really five journeys that they go on and, and the lifecycle, right? And it’s, it’s starts with, with the, with the founding or the formation of the, of the business. And then it goes all the way through to the exit of the business. And as the business grows and evolves and goes through these different journeys, I like to call them their needs change. And so it’s not just about having advice at, at the stage that you’re at, it’s what are, what advice are you gonna need as you continue to grow and evolve? Because it, it does change every time.
AJV (33:19):
Yeah. So it’s a great transition that I think would be really good to talk about is since you have such specialty in mergers and acquisitions I would love to just hear from you, like, what are the things that people need to know or consider? Like if somebody is listening today going, Hey, maybe I’m in the beginning phases. Maybe I’m in growth phase, maybe I am, you know, ready to exit, whatever they are. But what are some things that you see that make a business worth buying? Right. Because I think there’s a difference in I’m trying to sell my business versus someone who’s trying to buy my business. Right? Right. And I think we just had this conversation a couple of weeks ago with a friend of mine of going, trying to sell your business means that you are trying to find someone versus someone who’s trying to buy it. So make it a business worth being bought. Right? Right. So, how do you make your business worth being bought? So since you’ve been through this, what are some of those things? Like what makes a business purchase worthy?
MM (34:22):
Yeah, so I mean, I mean, I, I guess the first thing is what you do in the early stages really matters at the end. Mm. And it’s not just, okay, now we’re ready to sell our business, let’s go to market. It’s, it really when someone comes to look at your business, they’re gonna do diligence on your business, and they’re gonna go all the way back to the moment that you formed your company till the present date. So things that you do in the beginning matter later. And that’s, that’s the first point. The second point is that, you know, the, the way you organize your business model matters a lot too. If, if you are going to be a services business, that is kind of one direction, if you’re going to be an ip business, that, that relies more on proprietary information and systems, that is another direction, right?
MM (35:06):
If you’re, if you’re gonna have a brand that does a little bit all the above, you know, that’s, that’s another business. And, and those businesses are valued differently and, and, and at the later stages of their, of their life than they are than the others. So not every process is the same, but, but what we look at when we’re trying to acquire a business is we wanna make sure that the risk is minimized as much as possible for the buyer. And that if anything was done that was not correct or not accurate you know, or not in compliance with law, that that risk remains on the seller. So you, you, it’s not like you can just sell your business and then you don’t have to worry about it anymore. I mean, the buyer will make sure that, that you are responsible and ultimately held accountable for that, and it could come out of the sales proceeds.
MM (35:56):
So it’s really in your interest you know, when the business is small and, and these things cost a few hundreds of dollars to deal with them now versus when they cost few hundreds of thousands of dollars later. And we see business owners have to put up large escrows large amounts of indemnification to offset certain risks and purchase price, price adjustments all the time because of things that were not caught early enough in the, in the process. So it, it’s really like, do yourself a favor. Save a ton of money later if, if you’re planning to ever exit by getting those things right today. You know, and I think as, I think really if you look at the early stage founder, one of the most important things that they can do is choose the right business partner. And I think that is something that often gets overlooked or, or not really fully appreciated, is that, you know, are you in business with the right person?
MM (36:53):
And does that person have the same vision as you? The same? Are the, are the skill sets complimentary? Are, are they gonna be able to take the business the long term? Do they have the same sort of goals as you, and, and, you know, it may be that they do initially and that changes over time, and that’s okay. I think it’s okay as long as you have the right documents in place. And that’s the third thing, is you wanna have, you know, the, the right business model, the right team, and the right documentation. And that documentation is really where the rubber meets the road, because say there is a change in the partnership, say there is a, a different direction that the founders want to go, and one founder wants to leave and the other founder wants to stay. And, you know, how do you negotiate that split? Because that is a very common that’s a very common scenario. Happens all the time. It’s nothing, it’s not like it’s a bad thing. It’s just you need to plan for that in some ways. Or at least you need to have mechanisms that allow that to naturally evolve without it destroying the business or harming the business. So that’s what we focus on a lot in the initial stages of the business.
AJV (37:59):
So when you talk about documentation, you mean like an operating agreement?
MM (38:03):
Correct. Yeah, the operating agreement. If you’re an LLC, if you are a corporation it would be something like a certificate of incorporation or a charter. Typically, we would organize businesses that want to raise capital. So if you’re a software business or a technology business, or you’re any kind of business that has a really high level of research and design r and d attached to it, you’ll probably, so if it’s capital intensive, you, you may need to raise money. Mm-Hmm.
AJV (39:07):
Why do they like ’em more?
MM (39:09):
Well mostly because they’re corporate in Delaware a lot of the time, and the Delaware corporate code is very investor friendly. Mm. Also for tax purposes, c corporations don’t have an automatic pass through. Mm-Hmm.
MM (40:15):
And you wanna protect the investors. So investors get a little, a little bit more protection in a, in a C corporation, but you can certainly invest in an LLC as well, like LLC operating agreements. Certainly can have investor provisions and they can issue units, common units and preferred units just like a corporation. They can even have you know, many of the same investor rights, hard is harder. And to, to make the same level of anti-dilution protections in an LLC as you get in C corp. And I’ve actually seen that a lot lately, or a couple times lately, where investors have been asking for anti-dilution protection, but it’s an LLC that they’re trying to invest into. And the way the partnership system works, because it is a pass through, it causes all sorts of issues from a tax perspective when you try to adjust for the varying levels of, of the company’s valuation amongst members in an LLC.
MM (41:11):
Interesting. So that’s one issue. And now it, now a lot of people have been asking about s corporations, and I’m not a tax attorney. But you’ll see people form S corporations or you’ll see ’em form LLCs and it’s Fast Corp, excellent LC and then right. And then file, then check the box, file a, it was called an 88 32 form election, which checks the box, and then they’ll file a 25 53, which is an s selection to essentially qualify for better tax treatment on their self-employment. And, and that’s fine if you are doing a consulting business or if you are, you know, just, you know what, what you don’t wanna do is start an operating company file an S selection and then go need to raise capital. Mm-Hmm. Because what you can’t be, if you’re an S corporation, is you can’t be a, you can’t be a business that has multiple classes of stock.
MM (42:07):
That’s one of the impermissible things in an S corp. And the moment you take investor money from investors, they’re going to want usually a preference or some sort of interest rate, and that creates a different class or different economic treatment on that stock. And that can invalidate your s selection. So if, if you’re forming an S corporation solely for the purposes of being a consultant and, and getting some tax efficiency on your, on your on your self-employment that, that’s one thing if you’re forming an S corporation because you want to be a corporation, but want to pass the treatment of an LLC but wanna raise preferred stock, that’s not okay. You’re gonna blow your s selection. So, oh, man, that’s one thing you can do correctly. And I’ve actually seen a business get all the way down to the end 10 years later thinking they’re an S corp and turns out that they had actually blown their s selection a long time ago, and now that’s a big tax bill that the company, the sellers have to come up with at closing in order to make the buyer comfortable enough to buy the business back.
AJV (43:11):
And not only that, it’s a very, make sure you form it correctly in the beginning. So it’s like really, like, you know, that old saying, start with the beg you know, start with the end in mind is
MM (43:20):
Like Yeah, yeah. Begin with the end in mind. Sure.
AJV (43:22):
This is such a great real life tangible business example of, I think a lot of people just rush to get their entity started, right? Mm-Hmm.
MM (44:03):
My, my favorite one is that people will say, I just want to do the simplest thing. I’ll do a 50 50 J, I’ll do a 50 50 LLC. So an LLC with each member has a even share. And, and most people think that’s the most simple way of going forward. It’s actually the hardest way to structure any entity formation because it raises all sorts of issues around voting. And the impasse you, when you, if you don’t have an agreement among the 50 50 members, then you can have a real problem. Not a, not a, not, it’s a, it’s avoidable. It’s fixable. Yeah. But you, it’s, it’s one example where most people think they’re doing the easy thing, but in reality, it’s actually the hardest thing you could possibly do. So it’d be much better to do, just do 50 51 49, please
MM (44:54):
Ah, but people often will say, no, 50 50, we’re just trying to be fair and reasonable, not realizing that they’re causing themselves a whole lot of information of, of, of, of a headache. Because now they have to go out and get a buy, sell clause into their LC agreement. And if they don’t have that, then they find themselves at an impasse where they have to really negotiate amongst themselves how they’re gonna wind down the business or, or, or come over or make a certain decision that might be a, a different change of direction for the company. And, you know, the company needs to have a decision maker. It needs to have someone at the helm and 50 50 LLCs are not always the best for that. So
AJV (45:32):
That’s good. All right. Last question. I know ’cause we’re running out of time, but since you do have a lot of this, there’s been a lot of talk and my circles at least around the, the valuation of companies has like, it’s like an all at, at an all time market low. Whether that’s true or not, I don’t know. ’cause I’m not in the business of buying companies and I’m definitely not trying to sell mine, but can you give us any updates on how are companies being evaluated today? I heard the other day it’s like, you know, what was getting 10, you know, 10 x multiple five years ago is like getting three today. What’s true, what’s not true? And what do we need to know when it comes to getting, you know, a valuation on your company today?
MM (46:15):
Yeah, so I mean, the thing about valuations, good businesses are selling at great multiples. Good
AJV (46:22):
To know.
MM (46:23):
Okay. So that, that has not changed. But, you know, a lot of valuation metrics are based on the appetite of the buyer and what they are looking to do with the business that they’re acquiring. In the healthcare space a lot of companies, private equity companies will go and acquire a, a healthcare practice, a a medical practice, and they’ll pay the initial the, the initial practice will, will get a high multiple, and then as they go and add other practices to that platform they, they will pay lower and lower multiples in, in order to arbitrage or or average out the average multiple paid. And then with hopes of growing the platform over time and then selling that platform to, you know, a higher bidder. By the way, healthcare private equity is also an area where there’s been a lot of change lately and a lot of attraction from the federal regulators.
MM (47:22):
So that’s also another area, but not so relevant maybe to your, to your audience. But you know, that it, it, you know, multiples are a function of the economy. They’re a function of, you know, interest rates. They’re a function of a lot of different socioeconomic and political forces. But ultimately good businesses will sell at the max multiple. You know, and, and, and that’s something that just won’t ever change. If a buyer wants the business bad enough, and if it’s accretive enough to their organization, their revenue you know, their, their own reasons for wanting to acquire the business, you know, they will pay it. Mm-Hmm.
MM (48:28):
You know, and that really is market timing, right?
MM (49:25):
And that’s really where brands come into play, right? Because ultimately a brand, the way that the law looks at a brand is, it’s a trademark, right? Mm-Hmm.
MM (50:15):
Mm-Hmm,
AJV (50:56):
Yeah, and I love that. ’cause It, it’s, it’s keep it simple. It’s like if you have a great business, then likely you would be naturally attracting a great buyer. And I love that. Matt, thank you so much for coming on the show today. So much wisdom, so much information and I love most of all that there’s nothing that you said that should cause anyone to get in a flurry or a panic, but nonetheless, we all need good resources. And this was a great resource for our community today. So thank you so much. Thanks for being on the show. And for all of you guys listening, stay tuned for the recap episode, which will be coming up next. And we will see you next time on the influential personal brand.
Ep 497: 4 Principles of Making More Money | Mel Abraham Episode Recap
RV (00:05):
I wanna share with you four principles of making more money, right? Like, how do you make more money? What do you need to know to make more money? And this was inspired by the recent conversation I had with Mel Abraham on our podcast. And I wanna start by highlighting a couple things that Mel said. So this is not part of the four things that I want to share with you, but there were a couple, there were two really beautiful things that he said that I do want to share with you. ’cause These, these are from him, not from me, but he said, you should focus on building safety first and growth second. Safety first and growth second. And I actually really like that. I agree with that strategy. And I, I think there are also two different parts of your life. There’s, there’s times where financially your focus is safety.
RV (01:00):
That is a different set of rules, a different paradigm, a a different, a set of strategies, a different way of thinking when you’re trying to build safety. And then you’re going for growth. Once you have safety, then you go for growth. And I think thinking about it as like two different strategies and first get safe, then focus on growth is important. ’cause If you try to grow before you have a safe foundation, I think that’s a big mistake. And I think that’s a really big risk. You’ll see that reflected in my four strategies. But I’d never heard anyone say that. And Mel said that. And I, and I love that. And the second thing that Mel said, which was my favorite thing that he said in our interview together was he said, your family doesn’t care about profit as much as they care about your presence.
RV (01:45):
Your family doesn’t care as much about your profit as they do care about your presence. And I think a lot of entrepreneurs run the risk of saying, I have to make more money for my family. And in reality, they’re using that as a justification to spend so much more time away from their family that it’s like they’re, they’re giving up. Well, the thing that the family really wants, which is just more of you. And they don’t need more money. They, they, they do want more of you and they need more of you. And I, I never heard someone say it quite like that, so I love that. So thank you for that, Mel. And if you haven’t yet, go listen to the interview of Mel Abraham on our podcast. It’s really, really good. So I wanna walk you through four principles of making more money, having more financial security, more financial stability, more growth, more excitement, just in your financial life. And the first one is simple. Be debt free. Be debt free. Now, I, I know that you’ve probably heard that before, but it’s such a critical one, and I wanna explain why. I wanna make sure that this really sinks in as to why being debt free
RV (02:58):
Is such a good idea and why being debt free is so important to building your wealth. So first of all, from a, from a emotional standpoint, okay? There’s, there’s an, there’s an emotional side of this and a logical side of this. The emotional part of being debt free is really where I think the power most lies, which is to go, your level of peace changes when you don’t have debt. Like your stress level goes way down. And maybe you don’t have a nicer car, maybe you don’t have a nicer house. Maybe you don’t have the nicest tv. Maybe you don’t go on the biggest, most grand vacations. Maybe you don’t wear, you know, brand new, you know, brand label clothes. But, but what you exchange, you give up all of that. But what you get in return, the payoff is peace. And I really believe that peace is the new profit.
RV (04:02):
What we really want is peace. And even people I know that are super wealthy, there’s lots of people I know that are super wealthy, they don’t have peace. And there’s people who maybe don’t have a lot of money, but they do have peace. And where you get peace from, and to use Dave Ramsey’s term financial peace, to me, financial peace is less the result of how much money you make. And it is more the result of how little debt you have. Financial peace is more, is is less of the result. Financial peace is less of the result of how much money you make. And it is more the result of how little debt you have. In other words, the lower the debt you have, the more peace you have. That’s what the real secret is, because when you have debt, you have to work, not just have to work.
RV (04:53):
When, when you have debt, you have to make money. You have to, because you owe money and you owe money on timelines, you owe money on deadlines and deadlines create stress. And so when you have debt that creates stress, you have to make money to pay off that debt. The moment you don’t have debt, you don’t have as much stress, right? There’s always some level of stress to have to earn, to make money, to provide food on the table. But, you know, it doesn’t take, but, you know, maybe a few hundred, several hundred dollars a month to be able to provide food. And you know, I mean, someone who could make $12,000 a year could, could provide more than the amount of food they would ever need. Now, you might also have shelter that you have to provide, but, but even somebody making maybe $24,000 a year, if you had no other debt and all you had was like rent and food and like utilities, you could do that on a couple thousand dollars a month or realistically in the, in the us.
RV (05:55):
And that’s not blowing it outta the water, right? Like that’s not being filthy rich. Like that’s just going, but you would have less stress. And this is something that AJ and I decided, and, and look, we’re we’re far, we’re, we’re nowhere near the richest people in the world, but we’re far, far away from being the poorest. And one of the decisions that we made in our marriage that I think has changed our marriage and it has changed our family, and I actually think it has increased our physical health, is we decided we don’t need more money. As much as we need less stress, we don’t need more money as much as we need less stress. So what gives you the least amount of stress with, with, with money is being debt free. That’s the emotional side of it. Now, the, the technical side of being debt free, and this is obvious, it’s not so obvious to so many people, but it’s to go look, if you have no debt, like if you have, you know, debt is money going out the door, right?
RV (07:05):
That’s money you owe that’s going out the door. Well, it’s kinda like if there’s a hole in your ship there, if you plug that hole, there’s no money going out the door. So if you plug that hole, then even if you make a little money, you get to keep that little bit of money and that little bit of money, you know, next month piles on top of the little money and that piles on top of a little bit of money and it piles on top of a little bit of money and it piles on top of a little bit of money. And so it’s not about the quantity, right? It’s about the idea that whatever is coming into you, you actually get to keep, and you actually feel yourself and you see your account making progress. You see your account growing because it’s not all pre-assigned.
RV (07:47):
It’s not spent before you have it. It’s not going out the door, right? When you get it, it stays there. And, and that’s the, the logical part that should be obvious. But it’s the not so obvious strategy when it comes to money is it’s like, even if you only make a little, you get to keep a little. And next month when you make a a little bit more next month, that little gets piled on the little you have. And so you have a little bit more and a little bit more. And, and, and so that’s really the power. But what, what’s stressful is keeping up with the Joneses and having to have the nicest house and the nicest car and the biggest va biggest TV and the, you know, the grandest vacations and all that sort of stuff that, that’s stressful. You don’t need it. You don’t need it. So be debt free. The second principle of making more money that I just, I want to share with you, and, and by the way, if you haven’t gone through my, my free training High Earner Habits, it is the seven psychological ways that wealthy people think that’s different from everybody else. You have to go through that training like it’s a couple hours, but it, it’s, it, it teaches the best of what I have learned
RV (08:54):
About money and wealth and financial freedom. And it’s free. And, and you can go to my Instagram page and you can just comment HEH down below on my Instagram page, or you can you can go to rory vaden blog.com and click on free trainings and, you know, sign up for hiring your habits that way. But like, you gotta learn this stuff and, and, and, and nobody teaches this stuff. It, it’s, they don’t teach it in schools. And, and, you know, most of, most of the people are broke. So who are you gonna learn it from? You gotta learn it from people who have figured this stuff out. And one of the greatest differences of wealthy people compared to everybody else is that wealthy people spend their money to save time. What most people do is they spend their time to save money, right? They’ll spend three hours cutting coupons so that they can save $20 at the grocery store.
RV (09:53):
Now, $20 is not nothing, but what if you put that three hours into something else that was more income producing, or they’ll park, you know, an hour away from a stadium or their meeting to save money on parking, where it’s like, well, you could pay the money for parking and you could be closer. Now it’s, it’s, it, it all depends on how much money you have in total and like what your circumstance is. But the point is, I mean, the other thing is people will go, you know, small business owners will say, well, I, you know, I will do everything myself so that I don’t have to pay the money to hire somebody else. But, you know, if you can’t hire an assistant, then you are an assistant making an assistance’s wage. And that I talk about in my second book, procrastinate on Purpose, five permissions to Multiply Your Time.
RV (10:37):
The whole delegate chapter is just understanding mathematically it doesn’t make sense. You’re not actually saving money if you’re spending time doing a task that you could pay somebody less money to do than the opportunity cost of you using your time somewhere else, making more money. And this is just, just, just something you just gotta, like, it’s a switch you have to flip. It’s, it’s a realization you have to make. It’s a habit you have to change. And it’s just like a paradigm that, that, that has to be transformed is that most people spend their time to save money. Rich people spend their money to save their time to, they, they, they spend money to get their time back. They spend money to pay people to do things so that they get more time so that they can reallocate their time into higher income producing activities.
RV (11:31):
And that’s just, that’s just the way that it is. And that’s, that’s a, that’s a hundred percent truth of every single like, you know, really old ultra wealthy person that I know. The third thing is that if you really wanna make more money, you wanna be, choose to be paid for your results, not be paid for your time. Now, you can make, you know, if you’re a top level executive at a very large organization, you can get good money for your time, but you’re still trading money for time. So that can be okay. Like if your financial, you know, vision is, is not past a certain point, I’m not saying it’s wrong to trade your money for time, especially early on, that’s the fastest way to make money, is to trade your time for money. But the least scalable way long term to grow your income is to trade your money for time.
RV (12:21):
So you have to find vehicles that are create money disproportionate to the amount of time that you put in. So it’s not wrong to do it, it’s just saying that if you wanna become super wealthy, if you wanna be ultra wealthy, like really wealthy, it, it’s gonna happen from separating your time from the results. And that’s why sales is one of the first ways that people become really wealthy because you get paid not for how many calls you make, not for how much time you spend prospecting. You get paid per sale that you create if you’re in a commission, assuming you’re in a commission based sales position. And that was how I started to learn how to do this. And, and, and that was where I first experienced the power of being paid for my results was to go, well, if I could create a lot of sales in a short amount of time, I can actually make an extravagantly disproportionate amount of money for the time that I was spending where I was just getting paid hourly or as a salary for my time.
RV (13:26):
Now, is that risky? Yeah, it’s risky. Is it scary? Yeah, it’s fricking terrifying. But if you can learn to do that and you, and you develop certain skill sets of being a great salesperson or sometimes it’s being an artist or being a content creator, or being an entrepreneur in general or being an investor, those are ways that you get paid not based on how much time. Now if you fail, you’re not gonna make anything and that’s the risk. But if you can learn those skills and you can succeed, then you can get more money for your time. The other thing is, man, if you get a, if you ever get a chance to be a part of a company, ev even if, if even if it as you’re an employee, but if you’re a part of a company where they you know, offer some type of a profit sharing plan or, or, you know, even if they’ll invest into your retirement and things, right?
RV (14:16):
That’s why investing is powerful, because investing, you’re, you’re, you are trading time for money, but it’s not your time, it’s just the compounding interest of time and your money, time turns money into more money. So as you have money invested, that money starts to grow. But it’s not, it’s, it’s separated from how much time you’re spending working but it’s connected to how much time you have that money invested. So, you know, investing earlier in your life, investing when you are younger matters even more than investing a lot of money when you’re older. So figure out ways to, to, to be paid for your results and not for your time. And there’s many ways to do that. There’s, there’s profit, there’s commission, there’s bonuses, there’s profit sharing, there’s investing those, those are the, are the main skill sets. There’s operating a business, which is, which is again profit or it’s just agreeing to someone to say, you know, give me your to-do list and I will give you a number and you pay me for a project.
RV (15:17):
You don’t pay me for a time. You know, you ask me to, you know, design you a logo and you pay me to give you a logo that you’re satisfied with and you don’t, you know, charge for whether it took one hour or 10 hours or a hundred hours, and you get really good at your craft and then you charge for a, a result or a project. And, and that’s the other thing is you get paid for results. You can be a consultant who doesn’t get paid anything for your time, and you say, just pay me a percentage of the growth or a percentage of the increase or percentage of the profit. Is it risky? Yeah. But that is really where wealth ultimately comes from, is you gotta be separating your time and, and being paid for your time. If you wanna get really, really wealthy right now, if you just wanna make a lot of money, you can be really good at your job, get a great company, your income will grow over time, and that’s awesome.
RV (16:02):
But if you can find vehicles where you can, in order to become really wealthy, you have to eventually detach money from time you have to. And then the fourth thing is, the fourth way to make a lot of money is to de-risk your own business. You de-risk your own business. Like being an entrepreneur and starting your own business is the best way to make the most amount of money because you’re in charge of your own destiny and you’re separating your time for results. Now it’s extremely difficult, right? Don’t think it’s easy at all. It’s very difficult. And for many years you’ll be underpaid, right? For many years you’re putting in more time than you’re getting paid for. But if you have those skills and you learn those skills and you get good coaching from people like us or others who can teach you marketing and sales and operations and customer service and finance and tax, and you know, it, and infrastructure and project management, like if you can master those skills, then you can build a machine that makes money.
RV (17:05):
Well you should always be the number one investor in your own dream. And I really believe where I go, man, the number one thing I could ever invest in is into my own education, right? Like, personal development is the number one investment because I will get that return the rest of my life, right? Whether I spend 20 bucks on a book or $2,000 on a course, or $200,000 on private coaching from someone very high level who can teach me a skill, it’s like, yeah, $200,000 is a lot of money, but if I have the rest of my life and, and, and that skill that I’m learning is very, very valuable, I go, I have the rest of my life to earn back that investment. So the number one thing you should invest on is your own personal development, your own education. But the number two thing to invest in is to your own business, right?
RV (17:50):
Is, is into your own income producing activities. And that’s where I go, well geez, you know, if I invest into the stock market, I, you know, hopefully I get eight to 12% on my money. If I build my own company that has a 20% profit margin, that means I’m getting 20% on my money. So the the, if you have a business, the number one thing you can do is invest to grow your own business. And that’s why it’s like, yes, get coaching, get technology, hire people, you know, build your personal brand. Like those investments are huge because they multiply over time again and again and again into the future. But now investing in your own business can be risky. What makes a, what makes any risky? What what makes any business risky to invest in is how volatile the business is. So how do you de-risk that investment of any business, but especially your own ’cause, your own, you have control over super simple.
RV (18:46):
You’re gonna invest in the three Ps people, product and processes, people product and processes. If you want to de-risk your own business, if you wanna make more guaranteed money from your own business, if you want more stability in your business’s ability to produce more income for you, you have to get great people and spend money, recruiting, hiring, training, developing, promoting people. You’re investing money into people. By far, our people are the number one expense at brand builders group. It, it, and it’s the number one thing we spend money on our, in our, on our life, other than maybe taxes is we spend money. We are paying people constantly. We hire people for all sorts of things personally and professionally. We are constantly hiring people. So that’s the first thing. The second is, invest in your product, have an amazing product, make it look awesome, make it be awesome, make make it made of awesome materials and, and, you know, create an awesome product.
RV (19:49):
Like if it’s a service, make it an awesome experience. Invest in making sure that the thing that you are selling is absolutely phenomenal. That will de-risk the investment in your own business. And then the third is processes, processes, processes, processes. You need better processes. The the better processes you have, the less risk there are inside of any company. And in your company, you’ve got full control. So you need to invest in processes. And, and that could be technology, it could be equipment, it could just be paying people to spend time while they’re at work documenting exactly how to do every task in the company. Why? Because if that person quits dies or gets fired, now you have a process that someone else can be hired and they can step in and they don’t have to figure it all out. They can follow the process. A company really is what is the value of a company.
RV (20:46):
It’s effectively the people in the processes. That’s it. And, and I guess to the product to some extent, but it’s really the people in the processes. And then you can create products. You have to invest in your processes. This type of thinking, at least for me and most of my life and most of my friends, was very rare. It took me years to learn these things. Heads of the hundreds of thousands of dollars I invested to learn how to think the way that wealthy people think so that I could become like wealthy people, you know, become wealthy and it, and it has worked. And so you’ve got to learn from people who have done, been there and done that and understand it and who are good teachers. Again, just type HEH down below on my Instagram profile, and I will send you my free training Hire Earner Habits, seven Ways That Wealthy People Think and Live.
RV (21:38):
Or you can go to rory vaden.com, click on Free Trainings, and you can sign up for Higher Earner Habits there. That’s a great start. It’s totally free. Like it, it is the best of the best of what I’ve learned about money. I give it to you for free. So I wanna encourage you to do that. But in addition to that, do these four things. Be debt free. Spend your money to save time, choose to get paid on your results and de-risk your own business By investing in people, products, and processes. You do those things, you’ll be well on your way.
Ep 496: Build Your Money Machine with Mel Abraham
RV (00:03):
Anytime we can talk about money and financial freedom and being more rich and abundant and helping you grow your business, it is a powerful conversation. And today is especially going to be that because we have my good friend Mel Abraham on the show. Mel and I have known each other for several years now, and he is one of the most genuine amazing nice individuals that I’ve ever met. And everybody who knows him in real life will say the same thing by trade though, he is a CPA and he is a deep, deep expert on, on the subject of all things money. He is a globally recognized thought leader. He shares the stages with shares the stage with 400 Fortune 500 companies. He speaks at some of the biggest public events in the world. He is friends with a lot of the most influential people in this space, and he understands online business, understands offline business. He’s also a cancer survivor, which was something that he endured like in and around the, the pandemic and went through some of his own financial, you know, kind of issues dealing with that. And he’s just an amazing, amazing, genuine human. So he understands our space and he understands specifically, you know, he’s an expert in, in finance and all things money. So, without further ado, Mel, welcome to the show, buddy.
MA (01:25):
Rory, it is so good to be here. Thank you for having me, man.
RV (01:29):
Man, I’m so excited about your new book. So, building Your Mon Build Your Money Machine, which I love the title, build Your Money Machine. This book is fantastic. It is. It has diagrams and tools and charts and tables. You do such a brilliant job of making it clear and simple, you know just helping people understand money. So I’m excited to talk to you. I I, I wanted to ask you, where did your whole journey start? Like, how did you get into money and like, what, what happened early? I know you, you talk in the book a little bit about some of your earliest, like money memories and how that impacted you and has really like, set the trajectory of your life. So I’d love to hear that.
MA (02:16):
Oh my God, thank you. So, yeah, I look, most of our money lessons are caught not taught. And, and I was no different. I, I remember my, one of my earliest money lessons was was seeing my dad cry for the first time. Now, I’m, I’m a son of an immigrant family. My dad came here at 17 years old with nothing. He came here to go to school and, and he fought to get here and built a life, you know, he was an engineer, you know, aerospace engineer. But in my life, I looked at him as this tower of power and everything. And here he was in tears for the first time that I’d ever seen him in tears. And I didn’t know the specifics. I just knew it had to do with money. It was my mom and him having a conversation.
MA (03:07):
And I hear my dad say, I just feel like I’m letting down and disappointing the people I love. And I, I, and that hit me. And I didn’t realize how much it hit me, but I ended up carrying this idea that if I don’t make enough money, you’re gonna disappoint the people you love. Hmm. And I’m, it, it became this, this chase for me, the, the challenge was obviously I was wrong,
MA (04:02):
And Jeremy, at six years old comes running in and says, daddy, daddy, I drew a picture of you at school today. And so I kneeled down to grab this picture and look at it, and there I am, and blue felt tip pen, a stick figure with two computer screens and a phone in each ear, and the one on the desk ringing. And that was a mirror into my soul. He, he in a moment looked at me and said, dad, you know, you, you may want the profits because it pays the bills, but I don’t want the profits. I just want your presence. And that’s, it was in that moment where I ki I kind of looked at things and said, how, how is it and is it possible for the dream to be an entrepreneur, the dream to, to build and impact lives, to coexist with the gift of being a parent, giving, being, being a dad.
MA (05:01):
Because I knew that no matter what my financial success was, if I screwed up and messed up the parenting part, then I was a, I failed. I failed. Mm-Hmm.
RV (05:46):
Yeah. I love that. Well, so, so let’s talk about that specifically in the context of entrepreneurs, because there’s a part of being an entrepreneur that is like, when, when I think of it financially, there’s like these different buckets, right? So first of all, it’s like I have to make a lot of money. Like I have to generate revenue. That’s a, that’s an important part of being an entrepreneur. Then there is I have to manage expenses and I need to not spend more than I’m making. Then there is whatever past I had, like the debt I came in with to being an entrepreneur in the first place. And so I have to like, resolve that. But then it’s like, I’m also planning, I also have to plan for the future, right? For like retirement. And, and then I have like my personal finances. So if, if I just think about like, the businesses, okay, we gotta make money.
RV (06:43):
We have to spend money wisely. We have to pay off debt that exists. We have to plan for the future, and then we have to like pay our expenses now. And like, it is freaking hard. Like just, just even saying that out loud is overwhelming. It’s going like, yeah, I do feel like I need to get back to work. Like to do those five things really well is incredibly difficult. And then you go, how do I do that in some reasonable amount of hours inside of a week where I can still be a present dad and, you know, mom and friend and not, not work all the time? ’cause It’s scary going, how the heck am I gonna do those five things? So where do you think is the, is the, is most often the first place to focus? So like you look at those buckets, there’s making money, they’re spending money wisely. There’s paying off the past planning for the future and then like, you know, managing our personal, our personal lives. If, if, if, if that’s sort of overwhelming to me, where do I start first or just, you know, in those various areas, what are some things that we can do to kind of get more control Yeah. Financially.
MA (07:53):
So before we get there, I think the first thing that we wanna make sure we have clarity on is our direction. And that’s why everything I think starts with life. What is that life vision? What do we want for the business? What do we, you know, are we trying to, like I look at the stage of, I, I’m at my desire is to impact people as much as possible and have as much reach. My desire isn’t to build this huge organization. And so, so we, we need to be clear that we’re running our race first, because the tendency, and I watched, I watched a dear friend of mine start hiring a bunch of people because everyone else around him was hiring a bunch of people, and he felt it was the thing to do. He was miserable until he skinnied it back down to a small team to do the things that he really wanted to do. And, and so, so I think the very first thing, whether it’s in the personal or the business, is to ask ourselves, what’s my race look like? What’s my finish line look like? Where am I trying to go and why am I trying to get there? Mm-Hmm. Because then we allow that. So that will inform the plan. The vision will inform the plan. The plan will determine the strategy. The strategy will dictate the tactics. And then there.
RV (09:09):
That’s so good. That’s so good too. Because like, if you don’t, if you don’t do that, you literally, you scroll on social media and you see Lamborghinis and Ferrari’s and private jets, and you’re like, oh, my whole life needs to be about this. And then one day you wake up, you go, I don’t even care about that crap. Like, I don’t want five houses, five houses sounds like a fricking nightmare to me. Like all the, all, you know, mowing five yards and cleaning, having five, even if you’re not doing any of it, it’s like managing the contractors. It’s like, what a nightmare. But yet, if you don’t do this deliberately, you get like swallowed up into this current, like this, this mainstream current of like, more is better, bigger is better, nicer house, nicer car, bigger, nicer vacation. And, and you’re like consumed chasing something you literally don’t even want.
MA (10:01):
It’s, it’s so true. Patrick Beda, I saw an interview with him and he made a comment, he said, when we were growing up, and he grew up not far from, from where I grew up. And he says, when we were growing up, we would see a kid with a new bike. And that became our comparison set where we’re looking at new bike, I kind of want the new bike, but now because of social media, the comparison set is the Kardashian’s new jet and starts to create this, this need, this desire. And that that’s the definition of success. But the reality is, is that your definition of success might be a tent in Montana. And, and that’s okay as long as it’s of your own hands, of your own doing. I think that’s one of the biggest lessons that came out of the drawing that Jeremy made was because I had so many people saying, Mel, you have to get work-life balance.
MA (10:54):
But balance is a myth. This idea of a weight on one side, a counterweight on the other side, playing tug of war. And on average you’re balanced. And it’s like what we really needed was harmony. And harmony comes from intent. And I think when we become intentional with our life, with our time and our money, now we can direct it in a focused way to, to achieve the things that we’re trying to achieve. But too often we’re diluted in our, in our focus because we’re getting all, we’re getting barraged with all these messages, and we haven’t taken the time to define really what our lane is and what our race is
RV (11:31):
Gonna look. So when you define it, when you define it, like what, what does that mean? Does it mean like, I need to say exactly how much I money I wanna retire with, I need to describe exactly the kind of house I wanna live in, how many cars I want to have, what kind of college I wanna send my kids to, if I wanna send ’em to college? Like, what are the elements of going, this is what it means to be clear on the race that you’re running.
MA (11:58):
Yeah, so, so I look at it and I say, we’re gonna look at all the domains of life. So we’re not just gonna, so, ’cause it’s, it’s how we wanna live our life that matters. And then we put the price tag on it. So relationships, what do we want our relationships to be like? What do we want our family to look like? Where do we wanna live? What does our career look like? What is our health? So we, we define that and say, okay, what does it take to get there? Now let’s just be really clear. We can get as specific as we want, but we’re not gonna be exact. Because if I had that kind of crystal ball, then I’d be in a totally different business. I don’t have that crystal ball. So I look at things and say, where do I want to be in a decade?
MA (12:41):
Let’s just use a decade to start, because then a decade I can break to a five year milestone to a one year milestone, to 90 day increments, to action steps and projects. And it allows me to look at things through those eyes knowing that life’s gonna change. When, when my son was born, life changed. When I met my wife, life changed and things changed. And we have to revisit it. When my granddaughters were born, things changed. When I got cancer, things changed. So, so what we’re doing is setting a trajectory for a horizon to get us going the right direction and give us the boundaries that we want to operate within. And then as we start to live our life and we get closer to that time, we’ll refine it. And a lot of that refinement is realizing, I actually don’t like that, so I’m gonna put it away and I’m gonna just focus on this.
MA (13:38):
Like you said, I, I don’t own a ton of real estate directly, and part of it is I don’t want that lifestyle. I, the, the thought of having a bunch of properties and to manage it, even with a management company just stresses the hell out of me. I don’t want it. And so we tend to, to not do that. So the first thing is, is this is, let’s just figure out an idea of where we’re going. Let’s put a price tag a an estimated estimated price tag on it. So we kn we have something to go towards. Because the risk is if we don’t do that, we have no idea what the finish line is. And we don’t know how close we are, how far we are, and we have nothing to judge. So I just want to have something there. And every year, every couple years, you’re gonna revisit it and get more precise.
MA (14:28):
Then we can look at it and say, okay, great. Now I have an idea of where I’m going. Let’s look at where I really am. Because once I have those two points, my current reality, my desired future, we know the gap in between. Now we know the work we have to do. Mm-Hmm,
MA (15:19):
We gotta get a bigger shovel. We gotta get more income. And I think one of the biggest things, especially in a personal brand type of environment is that, is to ask ourselves, do I actually value myself? Do I actually own the value with conviction that I bring to the table because, and am I getting paid for it? Because that we grew up in this, the industrial age thinking of time clocks and time sheets and hourly rates and, and, and billable hours and all that stuff. Commoditize everything and, and cheapens it. And that’s the risk we create when we start to think in terms of a math equation, especially if we’re talking about expertise and personal brands and that kind of thing that we have to get away from that math equation. So one of the biggest, so how
RV (16:15):
Would you price it instead of that, right? Like how would you think of it instead of using like the math equation and is there a different way to think about it?
MA (16:24):
I look at, so part of it is, is looking at the, the value of the solutions you create. So for instance, in my world, what I originally started doing was I was A-C-P-C-P-M, still a CPA, I was valuing businesses to buy and sell, but I was also valuing businesses for purposes to fight, you know, tax, tax situations and litigation. Well, someone brings me in to do a valuation for an estate that’s gonna pay an estate tax at 40%, and I have the ability to create a value, you know, to come up with a valuation that supports a reduction of that, that tax by a million dollars. Me sending them a bill for a hundred grand is a drop in the bucket. And so I look at it, I started look at my business and say, I’m gonna, I’m gonna price it based on the solution that I’m providing more so than the hours it takes to do it.
MA (17:29):
Now, in some cases I got burned. In other cases, if you reduced it to an hourly eight rate, I got paid $10,000 an hour. You know, but I’m trying to, because the other thing is, I think it’s important for us to have the conversations with the potential clients. And, and in, in, in the frame of, of value, we don’t talk price without the context of value. It just, it just doesn’t, it doesn’t play well. And in the, the, the risk, I had a, a, one of the top tax attorneys, he, he since passed away in Beverly Hills. He brought me into to meet with a client, have the conversation, see if I was gonna be the one that they would hire. And then when the client says, how much is this gonna cost, I hemmed and hawed and I didn’t. And I, I hesitated.
MA (18:19):
And once the client left that the attorney Elliot looked at me, he says, if you ever do that again, I’ll never bring you another client. He says, you need to understand that you have a specific set of skills and expertise that you bring to the table, and you have to own them. The reason you hemmed and hawed is because, one, you didn’t own it. Two, you believe that it is your job to justify your price and your value to the client. He says, no, it’s your job to own your value. Put it on the table and sit there quietly. And the client is the client’s job to deal with it. And either they will or they won’t and, and leave it. Leave it that way. And so all of my pricing, other than government contracts, which required an hourly rate that I did all of my pricing was, was project pricing based upon what I saw the value of the solution was. And either they, they decided to hire me or they didn’t, and I was okay with it.
RV (19:16):
Mm-Hmm.
MA (19:23):
Yeah. And then, you know, and with, you know, post-cancer and all that stuff, you start to value time and, and, and your life. So I start looking at things and saying, how much of my life force is this gonna take away from me? Do I really want to get on the plane? Do I really want to do that? So, so I start to price things out saying, that makes it worthwhile for me. Now, is there a math equation behind it? Likely not. It’s, it’s me sitting back saying, I’m, I’m okay, this is the value of what, what I, what I can create for you and I’m willing to, to, to, to own it.
RV (19:59):
What if it’s not an empirical thing, right? Like it’s one thing to go, I can save you X percent on your taxes, or I can help you grow your revenue. You know, I can help you double your revenue, but what if it’s more you know, I can say, help you save your marriage or, you know, or like, I can help you get in better shape. I can, I can, it, it, it’s more per I can restore your relationship with your kids. Yeah. I, I get, you know, some of these like non non empirical types of scenarios. Is there a way to still do that, do you think? Or do you, is it, does it only work in certain environments?
MA (20:37):
You know, it’s, it’s harder to do it in there because it’s, it’s, it’s not as easy to quantify in, in that perspective. But I look at it and I go, the first doctor I went and saw for my, when they, they found the tumor was very flippant when we went in, he says, ah, it’s my bread and butter. And he just kind of, and, but he sat on the, on the original CT scan for 11 days. And I thought, and now he says, I need you in surgery right now. And I said, how is it that now it’s an emergency, but you sat on the CT scan for 11 days and I, so we made calls to different doctors and this, this one doctor came up three times and called his office sitting in the parking lot of the original doctor before we left. We called this doctor’s office. He says, we have an opening tomorrow morning, 9:00 AM do you wanna come in? And I said, yes. I didn’t ask the price,
MA (21:32):
I didn’t care. Now I was for, I’m fortunately in a financial position to not worry about it. But, but the solution was because I looked at it and go, this could be the death of me. You know, this could mean losing my life. And so I don’t know how to put a price tag on that. And so I didn’t ask the price, I didn’t look at it from that perspective. I just said, give me the best and I’ll figure out a way to make this work. Because the pain of losing life, not being here to live with my wife and my kids and the grandkids and all that stuff was too great. And so there was still a, a transactional analysis, even though it wasn’t monetary. It was, it was, it was still something. I looked at it and said, I, I can’t put a price on it other than the fact that I wanna be here.
RV (22:26):
Mm-Hmm.
RV (23:30):
It’s like, I’m, for my business to work, typically I have to be all in on the business. And it, it, it’s like having a baby, right? Especially the first five years. It’s like, it consumes all of your attention. So how should we, as entrepreneurs be thinking about retirement and, and are there any sort of retirement strategies specific to personal brands that you think that, that really lend themselves well to like experts, right? Yeah. Speakers, authors, coaches, financial advisors accountants, doctors, lawyers, like professional service providers, you know, people like that, direct sales, et cetera.
MA (24:38):
All right. I thought he would, I thought he wouldn’t bark, but
RV (24:41):
It’s all good. It’s all good. All good. We’ll edit it out. I made a note.
MA (24:47):
So this is a, this is a really important question to, to look at and to answer. The first thing that I, I’d like everyone to understand is that wealth creation is a muscle group. It’s, it’s a, it’s a behavior. Our ability to build that wealth is more about our, our actions and behaviors than it is about our money. So I’m not as concerned at the beginning, especially when you’re first starting out with how much you’re putting away. What I am concerned about is that we’re getting into the habit of putting something away. So, so no matter who or where you are, I just want you to put a little bit away and we’ll talk about where in a moment. But I, but I want you exercising the muscle. And so that’s, that’s one piece of it. The second, and I hear this all the time with entrepreneurs saying, I can make more money if I just reinvest in my business.
MA (25:42):
Mm-Hmm.
MA (26:46):
And so, so, but we set, we tend to just look at it and say, I can make more in the business by putting all my money back in the business. And the answer’s yes, as long as you can run the business and it can continue to run. But if that, if either one of those is not true, then you would’ve been better served to have a little bit put aside somewhere else to give you some cushion. And so that’s, that’s the, the foundational just philosophy behind it. I also look at things and say, I wanna build safety first, growth second. So my job is to keep, keep people safe. The way you keep ’em safe is, is to, to have some diversification, but also keep simplicity in it. You know, you mentioned all kinds of things, crypto and real estate and all that stuff. And you’re right, you’re trying to run a business.
MA (27:39):
You can’t learn about all that other stuff. And if you don’t have a passion for it, it’s gonna be hard to learn about it. So keep it simple. If all I had was 50,000, $10,000 to invest, you’re not going to buy a piece of real estate. At least you shouldn’t. Because again, we come back to risk. I can ba buy one property. If I have a bad tenant, a tenant that doesn’t pay someone I have to evict long-term, vacancy, bad repairs, all those things. I can’t carry it because I got into it and I don’t have safety first, growth second. And so I tell people when you first start out, let’s just keep it easy. I want you to put it in a diversified ETF or index fund. Buy 500 companies, 3000 companies. Make it easy. We know long term, 94% of the time in over 10 years or more, that that market’s gonna go up.
MA (28:38):
We’ll make eight to 10% in it. You have diversification, you have liquidity, and you’re in the game and you’re doing it simply. And if you’re not sure what to go into, you go into either an s and p 500 fund, a total stock market index fund, or you just turn around and do something called a target target date index fund. Say you don’t need the money for 30 years. You pick a 2055 fund with Vanguard or something and, and you just park it there and let it roll. There’s no, there’s not a lot of thought, there’s not a lot of analysis, there isn’t a lot of management, there isn’t a lot of fees, there isn’t a lot of expenses, but you’re in the game and the money’s starting to work for you. But it has to be long-term money to do it that way. And so that’s, and
RV (29:24):
That you can park that it started inside of an IRA, right?
MA (29:27):
Yeah. So I was just gonna go there so you can, you can park it inside of an IIRA. Now in the book, I talk about the wealth priority ladder, and I literally break down where you put each dollar, depending on where you are in that ladder. And, and so, so one of the things that we might do is early on, early on, if you’re not making a lot of income, we might have you put it into a Roth IRA first, because that’s gonna grow 100% tax free forever. You know, so, so early on, I wanna take the, the, the, the tax advantaged kinds of things, especially if I’m a low income bracket, low tax bracket. The tax deduction doesn’t mean a lot this year. Put it in, I’ve got a kid, 16 and a half year old kid who joined one of my programs. We had a conversation, 17 years old.
MA (30:23):
He says, he got, I got a job, what do I do? I said, open a Roth. I said, great. So three weeks ago we’re on a call and he says, I funded my Roth. I said, he says, I don’t know how to invest it, what do I do? I said, how much do you fund it with? I said, you’re still 17? He says, no, I just turned 18. So he’s 18 years old. He funded a Roth. And, and so I’m thinking he’s 18 years old. What did you put in it? 500 bucks, a thousand? And I said, how much you put in? He says, well, I fully funded 2023 and I already funded 2024. I go, hold on a second. You’re 18. You’re telling me you put 6,500 in for 2023 and 7,000 already for 2024? And he said, yeah, he says it helps because I’m living at home. But here’s what happens. If he just put it in an s and p 500 fund, let’s just say it grows at 8%, it will go up 107 times before he, before he ever get, you know, is at, at retirement age. That means that he’ll have $1.2 million or more without doing a thing. It’s in a Roth. He put 13,000 in, he gets 1.2 million out. He never pays a diamond tax.
MA (31:35):
And, and so at the very beginning, if I have low income and I’m eligible, ’cause there’s income limits for Roth, I’m probably gonna tell you to put it in a Roth. Take the tax advantage, have it tax free down the road, then you’re not not worried about it. Then as the income grows and we do, we have more income in the business, we might put a solo 401k in to get more because the Roth is limited to 7,000 bucks. Now but if I put a solo 401k in, I can put 23,000 and if I put a profit sharing piece to it, I can put up to 69,000 or so in there and more if I’m over age 50. So the, there is a, just like a recipe, you need to know the ingredients, the amount of the ingredients, and the timing in which to do it. So there is a hierarchy that I break down that literally says, if you’re here, this is what you do. If you’re here, this is what you do every step of the way. Because every dollar that comes into our life must have a job description before we earn it. If we want it to do the things intentionally, like we talked about the way to, to get us to the goal, we want
RV (32:45):
IEA budget and a plan or just a plan for that dollar. It’s a plan where, where it’s going. Yeah. A, a, a plan. Well, so that is, that’s why you need this book. You also building your money, build your money machine. And like I told you, like Mel has a knack for making it simple, breaking it down, the visuals, the ladder, the, this kind of stuff is super duper helpful and straightforward. So where should we, where do we want people go, Mel, to buy copy of the book and connect up with you?
MA (33:15):
I’ll go to your money machine book.com and you can, you can, you’ll see the, the links there to different booksellers in the uk in Australia, Canada, us You can buy the book, come back, give, give us the receipt and we’ll, I’ll give you some, some other wealth resources and gifts to help accelerate your path to financial freedom. And some additional trainings around, around that and resources. So, so yeah, that’s, that’s where they do
RV (33:44):
It. I love it. Your money Machine book.com. Mel is also a brand builders group client. So if even if you don’t wanna buy the book, you should go to your money machine book.com to see how he’s got his page structured and he’s given away some killer incentives for pre-ordering his book which are super duper valuable. And Mel, I’m so grateful for you, man. I, I, I’m grateful for your friendship and just for your partnership and, and letting us speak a little bit into your life and you speaking into ours today. Brother. We’re praying for you and your family and all the clients you help and, and we just wish you all the best.
MA (34:19):
I appreciate you, my friend. It is, it has been a journey and it’s good to have you on, on the journey with me.
RV (34:24):
Thanks, buddy.
Ep 489: How to Move From Your Current Gig to Your New Gig | Kelly Roach Episode Recap
RV (00:17):
I wanna share with you a four step process for exactly how to leave your job and start a side hustle. Welcome back to the Influential Personal Brand podcast. I am recapping the addition of the interview I just did with Kelly Roach. And one of the things that we were talking in there was about how did she start her own business? And I thought, gosh, I get this question so often, which is, how do I know and how do I orchestrate leaving my job and starting my personal project or my side business or even leaving the, the current thing you’re doing with your, your personal brand and then starting something new. And so I’ve got a four part process for this that I think will really help you. And these are kind of four principles and tactics and strategies for how to think about transitioning from the thing that you’re doing now into the thing that maybe you want to do.
RV (01:17):
And this could apply to, even if you already have your own business and you’re trying to pivot, you’re trying to maybe rebrand, you’re trying to move into a different space. But specifically I want to talk to those of you who are maybe working at like a corporate job or something and you want to try to leave. The first thing I want you to know, and I believe this firmly, this principle is actually in my take the stairs book towards the back of the book, there is a principle that I call crush It where you’re at, crush It where you’re at. And I don’t think that we hear enough about this in the world today. So many people just say, ah, you know, your job sucks. Quit your job and just start your side hustle. Like that’s gonna be a dream. Let, let me tell you something.
RV (02:01):
Being an entrepreneur is far from a cakewalk. It is grueling hours, it is rejection, it is fear. It is often years of brokeness. It is very challenging. It, it can be con, it creates a lot of conflict on a marriage. It makes it really hard to have a family. Like the on the entrepreneurial dream is also got lots of nightmare components of it. Now, I love being an entrepreneur and I love working with entrepreneurs, but I think it is far over glamorized. And not every person is a great fit to be an entrepreneur. And even many people who could be entrepreneurs, I think make really great intrapreneurs. What’s an intrapreneur? And an intrapreneur is someone who can be a mover and shaker inside of a company who can innovate and create and can, can cause change and make new things happen inside of the right culture.
RV (02:55):
So this first principle, crush it where you’re at is really important. And even though it’s not popular, and even though you may not want to hear it, ’cause perhaps you’ve already made up your mind, no, I hate my job. I wanna leave it. Or I, I don’t like my current business or my current business model, I wanna leave it. And just before you do, I just want to encourage you to crush it where you’re at. What does that mean? That means be excellent at what you’re doing now, whatever it is that you’re doing. Now, why do I say that for two very specific reasons? Okay? The first reason is because when you’re doing something excellently, it often looks different and feels different than when you’re doing it in a mediocre fashion, right? I mean, the, if you’re hiking up a mountain and it’s a really big mountain, you might get tired and that might not seem awesome, but once you’re at the top of the mountain, it can totally be worth it.
RV (03:58):
And too many people give up while they’re on the climb and they haven’t yet experienced the, the fruits and the benefit of everything that their current thing has to offer, right? And you go, maybe you hate your job because you’re not good at it. Maybe you hate your job ’cause you’re not doing enough. Now maybe you hate your job ’cause your boss is a jerk and it sucks and it’s negative and it’s not fun. And you go, great, go ahead and quit the job. But many times I think people have an opportunity to sort of excel at the thing they’re doing before they just abandon ship. And that, that leads me to the other reason why I think crush it. Where you’re at is, is really important. It’s really important because how you do one thing is how you do everything. How you do one thing is how you do everything.
RV (04:46):
That’s the age old quote. And I have found that to be really, really true. And too often people think, oh, if I just abandoned my corporate job and I start my own business, it’s gonna be a cakewalk. And you go, well, if you’re not putting everything you have into the thing you’re doing now, you might find that you won’t do it on your own either. And now you don’t have any of the guarantee or stability or the things that, that come with a corporate job. So I just want you to really think about that and go, am I crushing it where I’m at? Am I doing the best I know how to do? Have I experienced all there is to experience here? Am I squeezing all the juice out of the thing that’s in front of me? Now, if it’s just your dream and you’re a hundred percent sure and you just want to go, fine, go, or if, if, if you just live in a, if you’re working in a place that is just terrible and they treat you like crap and you want to go, go, but I would even, so I would still say, gosh, be really, really good at what you’re doing.
RV (05:44):
Be the best at what you do. Be be performing at your personal best, the the best you’ve ever done in your role before you decide to leave. Because what you might find is that once you’re performing at your personal best, you might decide you wanna stay, you might figure out, actually this isn’t so bad. Actually, there’s more opportunity. Actually, once I started performing at my best, they gave me more money, they opened new doors, they gave me more responsibility, they, they put me in charge of new initiatives. And so that’s really, really important because sometimes we think the grass isn’t, is always greener. And the reason the grass looks greener is ’cause you’re not watering your own grass, okay? So crush it where you’re at, and then even if you’re gonna leave, carry that momentum into the thing that you’re gonna do. Now, the second part of leaving your job and starting your own business or starting your side hustle, or again, it could be that you maybe have a current business model, and it’s like, I wanna just transition from what I’m doing is a rule that I like to call the 70 30 rule.
RV (06:45):
The 70 30 rule. How does the 70 30 rule work is simple. It means that there, in order to succeed at something and really blow it up, it takes a lot of focus, right? In order to win anything, you really have to crush it. As we sort of, you know, religiously say around Bram Builder’s group, if you have diluted focus, you will get diluted results. If you have diluted focus, you will get diluted results. So how then do you transition between two things? How do you go how do I do a good job, you know, at my corporate thing, but I really wanna like start my own business or my side hustle and I wanna go full time and when’s the right time to do that? Or how do I serve my current clients that I have and my current model, but then transition to my new model or my new dream or my new message or my new audience?
RV (07:38):
And that’s a really important tactical question, and I’ve got a functional answer that we’ve used and I think we’ve seen a lot of clients do this successfully. And it’s the 70 30 rule. And the 70 30 rule says, start your new thing, okay? And take your old thing and expend the minimum amount of resources that you can to maintain the level of performance of the old thing, right? So basically put it on autopilot, but not in a way that it’s, it’s autopilot. Like it’s going down. Put it in autopilot that it’s like, okay, I’m gonna maintain this level of performance over here and then dedicate 100% of your excess energy into the new thing and build the new thing, right? This is probably the nights and the weekends and the late hours and the early mornings, and you’re studying and you’re reading and you’re, you’re probably getting coaching and you’re investing money and you’re not making much money, but you’re building the thing.
RV (08:39):
You’re building the thing and you’re starting, you’re starting that thing and keep building that thing until your income reaches a 70 30 split to where you go, 30% of my income is coming from the new line of business, or it’s coming from the new side hustle, or the new project or the new audience. And what happens is you are earning a hundred percent of your income from the first thing, and now your income is starting to balance out to where you get to 70 30. It’s about that time that I would recommend that is when you make the leap, you rip off the bandaid, you jump into the deep end of the pool you, you, you wisely are reducing your risk. If you can get your income to about 30% on the new thing. Do you have to do this? Of course not. You don’t have to do anything that I say.
RV (09:30):
This is just an idea and an observation. But what I would say is a lot of entrepreneurs live by the seat of their pants and it’s kind of like, you know, there’s this phrase in the entrepreneur community that says, you know, you build the plane, you jump off the cliff and build the plane on the way down. And in some ways that’s always true, but in other ways that’s downright stupid. And keep in mind that 95% of businesses fail. So just because a lot of entrepreneurs say it’s a good idea, 95% of those people don’t turn out to be successful. So I’m not taking advice from a group of people where 95% of ’em failed the class. So the smarter thing to do is to do calculated risk. And that’s what the 70 30 rule is all about. The 70 30 rule instead says, man, if 30% of my income is coming from the new thing, first of all, you get a sense of whether or not you really like it and you really want to do it.
RV (10:25):
Second, you really get to determine is there product market fit? Is is there an audience for what I want to do? And do I have the ability to sell it to them? Because if you just pull the ripcord and jump ship and start something from scratch, you might find nobody wants to buy that thing. Or you might find you don’t really love the thing, or you’re not as good at it as you thought, or that you don’t have a great marketing plan for it or a great sales strategy for it. And you need to try to figure out some of those kinks on the side and before you kind of jump full time, at least that’s how the 70 30 rule works. And that’s, that’s what we advise. So that’s the 70 30 rule. The third thing, and this is super practical, important, is to be debt free.
RV (11:10):
Be debt free. To the extent possible, the more that you can lower your personal debt, the more likely you are to succeed as an entrepreneur. Why? Because of something called Financial Runway, right? And this term, financial runway refers to, you know, a plane taking off. And if you think of like, planes don’t just suddenly take off like a helicopter, right? They need runway. It takes velocity, it takes speed. In order for them to catch the tra you know, trajectory and be able to climb that is runway. Well, cash is the runway. And if you run outta cash, you run out of runway and the plane stops, right? So you could start something and you could kind of get it going, but if you don’t generate enough cash or you don’t generate cash fast enough, or you’re burning cash, you’re generating cash in the business, but it’s, it’s less than what you’re burning in your personal life, the runway ends, the plane stops, and the business never takes off.
RV (12:12):
That’s what financial runway means. So the, the, the more disciplined you are about your personal expenses, the longer the runway you give yourself. It also means the lower the stress you have, right? When I’m in debt, if, if I’m in debt, suddenly I’m more desperate for a sale, right? Like, the more in debt you are, the more desperate you are to make a sale. The more in debt you are, the more desperate you are to make a sale. Why not? ’cause You’re a bad person, but because you have external pressure, you’ve got mouths to feed, you’ve got bills to pay. So the more you can lower those bills, the more you extend the runway of having a chance to sort of pursue your dreams. When you’re debt free, you’re, you, you’re beholden to fewer masters, and this is biblical, right? The borrower, slave to the lender, but literally and pragmatically and functionally going, I’m not as dependent on my job.
RV (13:13):
I’m not as dependent on, you know, the where my income is coming from. I’m not as dependent on my current customers because I don’t have other financial obligations. So staying debt free creates freedom in your life, freedom to pursue your dream, and, and it creates more runway, it creates a longer timeline for you to figure it out and make it successful. So it’s a really important part I think, of launching a successful business as an entrepreneur. Unless you’re raising a bunch of money and generating millions of dollars or, you know, you just hit the jackpot, but that’s few and far between.
RV (14:01):
The fourth key to breaking free from your corporate job, if you hate it or if you just have a dream that just is, it is time for you to pursue is to start first with what you know best. Start first with what you know best. What I mean by that is your best chance of making money is doing more of the thing that you already know how to do. Now that may not be the most exciting thing for you, right? That may not be what your dream is, but it is almost always the fastest path to cash, right? The fastest path to cash is to do more of the thing you’ve already been doing, to do better at the, the, the thing you already know. And so you might be doing it on your own. You might be, you know, s starting your own business or your own side hustle, but serve the people that you have access to.
RV (14:57):
So a real, if you need money right now, if you have lots of money, this thing changes. If you have lots of money, you have lots of runway, you can build a whole brand new business, you can dream up anything you want. But in the practical reality for most of us is you’re gonna have to make money fairly quickly. And, and so you have to do what you have to do in order to get, in order to earn the right to do what you want to do. You have to do what you have to do in order to earn the right to do what you want to do. And so you’re going to have to pay a price for a while, and part of that price you would pay is just offering your expertise maybe in, in a very, in a way that accesses the, the people who are closest to you.
RV (15:42):
Now, I’ll give you the an example. When I first wanted to leave the corporate job that I had while I was in graduate school and I wanted to become a professional speaker, I was in the Toastmasters world championship of public speaking. And I spent a couple years just studying the psychology of laughter and learning how to be funny on stage because I wasn’t funny in real life, even though I am hilarious in real life now. But I had to learn to be funny on stage. And so I studied humor. And even though I didn’t wanna teach humor for a living in that season of life, the most tactical, practical skill that I had was teaching humor. And so, a lot of people don’t know this, take the stairs. It was not actually my first book, it was my first traditionally published book. My first book was actually called No laughs, NO to no laughs, KNOW How to Be Funny to Make More Money, no laughs to No Laughs, how to Be Funny to Make More Money.
RV (16:43):
And the first income I actually ever earned as a speaker was I was hosting classes where people could, could they could buy a ticket to a class where I could teach them everything that I had learned about comedy, and then I would sell my books at the back of the room. And that was how I started. Even though I knew I wasn’t gonna do that forever. I started first with what I knew best. And if you really want a, a chance to escape, you know, something that you, a situation that you’re in now, right now professionally, that you don’t love, or if you’re really, really just passionate about having your own thing and you really want to pursue that, I would encourage you to start first with what you know best as a stepping stone to getting to do the thing that you really want to do later.
RV (17:28):
Because you have to do what you have to do in order to earn the right to get to do what you want to do. So there’s four key principles that I think we don’t hear enough about for strategies, concepts that I think if you are trying to make a pivot, if you’re trying to make an escape, if you’re trying to start something new, those are some modalities of thinking that I hope will really, really help you because we want you to succeed and we want you to be able to pursue your passion. We believe that the world is a better place when you’re listening to the calling on your heart and serving the people that you were meant to serve. So in the meantime, while you’re figuring it out, keep coming back to the influential personal Brand podcast and share this episode with someone in your life that you know is in this professional dilemma right now. We’ll catch you next time.
Ep 488: Creating Operational Infrastructure with Kelly Roach
RV (00:01):
Well, Kelly Roach is a new friend of mine and who says You don’t make real friends on social media because we met on social media and now are becoming real life friends. And I think she’s just delightful and really intelligent and very successful, which you’re, you’re gonna hear this story, which when I saw the arc of her kind of career journey and path, it really impressed me because she started out as it didn’t start out, but she was a former NFL cheerleader. Mm-Hmm.
RV (00:54):
We’re gonna talk about that. She also is a, a, a multi-time bestselling author. She has been featured in A, B, C and Fox and Forbes and Inc. 5,000. She’s been on Inc. 5,000 list. And one of the other things that I love about her is she’s done, she’s built this business with no debt, no investors or outside funding, which is also what we believe in how we operate. And it’s, it’s pretty unusual for a company to get to eight figures in annual revenue without those things. So I was like, yeah, let’s, let’s talk to Kelly and let’s see what she’s about. So Kelly, welcome to the show.
KR (01:31):
Well, thank you. Thank you for the intro, and I’m so happy to be here. Thanks for having me.
RV (01:35):
Yeah. So tell me how, first of all, so you were NFL cheerleader, so I want to hear about all these leaps because Yeah. You know, a lot of the people we talk, I mean, we do personal brand strategy. Yeah. So a lot of people are going through a pivot of some type Mm-Hmm.
KR (02:07):
Absolutely. So I, it, it all started one day on the free lunch line. So I was on the free lunch line. There was five kids in my family. My dad worked for a nonprofit. He decided that he wanted to give his life to that work. My mom was a stay at home mom. You can do the math. Okay. Five kids, right. Stay at home mom, dad worked for the nonprofit. I’m on the free lunch line. No one knows. I’m on the free lunch line holding it all together. One day there’s a, a fill-in cafeteria lady, and she rips open my envelope in front of everyone and there’s no money in it. And that moment was a turning point for my life because in that moment I was just, so, I call it naked in the lunch line, like vulnerable. And I was like, I’m not gonna live that life.
KR (02:52):
And so I was, you know, early in middle school. And at that moment I was like, I’m gonna do every possible thing that I can to change my circumstances, to live a different life, to make my life what I believe it can be, and I don’t wanna be naked on the lunch line again. Right. And so you said, how did I go up an NFL cheerleader? Well, I cleaned the dance studio floors after school almost every day for seven years, so that I could go to the best dance school in the area. I would go, oh,
RV (03:22):
That’s like how you paid for your,
KR (03:24):
That’s how I paid for my lessons. I would go after school, I would eat my dinner in the car, I would go clean the dance studio, and then I would stay for lessons. And I was able to go to the best dance school in the area. It was a very competitive dance school that produced professional dancers that went on to have careers. And so I did that for seven years. Loved it. I loved performing, I loved entertaining all of those things. Got into high school and college, and I was like, you know, I, I think I had five jobs in college. Being an NFL cheerleader was one of them. So I was the youngest NFL cheerleader
RV (03:58):
People. People don’t often realize that the cheerleaders don’t make what the players make.
KR (04:04):
I mean, and, and yeah. And I completely did it because it was, it was an ability to continue my craft, right? Sure. Because I went to the college where I was gonna be in the least amount of debt they had like a D three dance team, D three cheerleading team. I was like, all right, I don’t think I can do this. So I was like, I’m either going to shrink back to my circumstances, or I’m gonna leap forward and just go for it and audition for the NFL. And I was like, F it, let’s do this. So I auditioned for the NFLI made the team my freshman year. So I was teaching aerobics. I was cheering for the NFLI was a cocktail server. I was babysitting all the things. And it was great because I always had money. I was able to have these amazing experiences, all of that. And, you know, as I was progressing through college, I had been on the, the cheerleading team for a couple years and I was like, okay, it’s time to get really serious about my career. And I was going to school for communications because I was like, I have no idea what I wanna do with my life. I just didn’t wanna sit in spreadsheet
RV (05:00):
All day. You’re using your, of all the people who went to college, I feel like you’re actually using your degree, isn’t
KR (05:06):
It wild? So I picked a communications degree. ’cause I was like, I just don’t wanna sit in a spreadsheet, like in a cubicle. I won’t interact with the world. I had no idea what that was gonna look like. So I got the most entry level job in the Fortune 500. ’cause I was like, if nothing else, this girl knows how to put in the work. I was willing to do the work. And I was like, I can get promoted here. I can grow here. I can become financially free, I can learn business. So I was the first one in, last one out basically every day for a decade. I was promoted seven times in eight years. I went from being a single producer in the most entry level job in the company to becoming a senior vice president. I was managing a $50 million portfolio.
KR (05:43):
I built a team from one to a hundred, interviewing, recruiting, hearing, training, and I was managing 17 locations. And so over the course of this journey, I got this amazing business education. Like I fell in love with sales and marketing and teaching people and coaching. And I was like, this is unbelievable. Like, I just was like, I need to share this with others. But when I got to the top of that, you know, ladder corporate, I was traveling all over the place. I mean, I had branches from New York City down into the Carolinas, and I was like, I had been dating my husband at that time. We’ve been together for 18 years now. And, you know, I was starting thinking about, well, what do I want for my actual life? And I was like, it’s not this, right? I don’t wanna be on planes and trains and buses and be away.
KR (06:32):
I wanna have a family. I wanna have a life. And I, I loved the work, but I did not feel that I was making the kind of impact in the world that I felt that I was intended to with those skills. And so I said, well, who can I help? Like, who can I share these, these principles, these lessons with? And I was like, I know small business owners because small business owners start a business. ’cause They’re graded a think necessarily. Have the operations and the sales and the leadership and the management, which is why 85% of businesses, you know, go outta business. So I started this side hustle. I actually went to my employer and I said, I’m doing this. You can fire me if you want, but I’m doing this. And, and I I said, if you see my performance drop, you can also come back and fire me. And they didn’t. They let me because this performing person in my role. So they let me build my business on the side. Even even, you know, while I was working full-time, build it to seven figures, became a full-time entrepreneur, took it to eight. I have six companies now in the portfolio that I’m growing. And here we are now I’m interviewing with you, Rory Uhhuh
RV (07:43):
KR (08:21):
Yeah. That’s a really good question. Let me answer both sides of it because I think it’s, it’s pertinent to the conversation that we’re having. First and foremost I focused on building and mentoring teams. So over a 10 year period, not only did I coach and hire and manage the entry level people that were gonna be the ground floor producers on my team, but I promoted internally managers, senior managers, pre vice presidents, senior vice presidents. And so what I was doing was I was building autonomy and I was building this very high performance, very systematic high growth team instead of leaders. And so I went from being the manager where I had my hands in everything and I was part of everything day to day. And I needed to be active on the floor, you know, hip to hip coaching producers every day to getting to the point where over, you know, a period of years I was able to elevate leaders.
KR (09:18):
They had worked with me. There was a cadence, there was predictable performance. We had metrics and KPIs and structure to what we were doing. And it got to the point where they really only needed me in a much more consultative capacity day to day versus like the kind of the, the fire, the flames that you have to be in. And so I had breathing room intellectually, and I actually built my business on the side, basically doing an hour before work in the morning. I would go outside and sit in my car on my break, and I would take an hour on my lunch break, and then I would basically service my clients in the evening, like seven, eight o’clock at night. So that’s, that’s kind of how I got it off the ground in terms of how did I get customers? That’s such a great question.
KR (10:03):
I started running ads from literally almost day one, really my business. Wow. Yes. One of the best things I ever did. I, there’s three things that I did that I feel fundamentally changed and formed my ability to be where I am today and to do what I’ve done. One, I hired my first coach before I had my first client. Two, I, I started building a team from day one. So I had, I had support in the business before I had a client and I had a coach before. I had a client, number one and number two. And number three, I started running ads right away. And the simple ads that I started running were for people to book a free consultation. And I would take consultations either on my lunch break or in the evenings. And I started off by selling high ticket one-to-one services until I got to the point where I was like, okay, I can’t do that anymore. And then I obviously pivoted into a group program. But running the ads allowed me, when I was at work during the day, I had an automated machine that was building my email list, building my audience, booking consultations for me. So that gave me this duality of, I’m at, I’m at work, I’m managing my team, I’m running the business, but I have ads over here that are working all day, even when I’m not available. What
RV (11:20):
Year was this?
KR (11:23):
Okay, so 20. We’re talking 20 12, 20 13. Yeah.
RV (11:28):
Okay. Yeah. So you were running like digital Facebook ads kind of a thing?
KR (11:33):
Yeah, I wasn’t running them, but I paid someone to run them. Yes,
RV (11:36):
Sure, sure, sure. Yes. Yes. But yeah, I mean, that was like the heyday of ads, right? Where they were just coming on. Oh, it
KR (11:42):
Was so different. It was
RV (11:43):
So
KR (11:45):
Do you even remember those days?
RV (11:47):
I mean, did you, did you even, so were you driving, were you driving ads directly to a free consultation? I mean, you mentioned building your email list. I was, were you trying to drive right your
KR (11:56):
Email first? I was both doing both. It’s so funny. I wish I had it. So I had like the cd Did you have the CDs? Did
RV (12:02):
Cds
KR (12:02):
Nice. Of course. Oh yeah. We had couple loads of CDs. So yes. So I had
RV (12:05):
Secret and then we went to SB b thumb drive secret, like mail the thumb drive. We did that for a hot minute. Yep. Secret. Yes,
KR (12:10):
Yes. So I did both, right? So I was always running the opt-in ads where they could get the digital thing and then they could also add a, an address and we would physically ship them. I still remember them with the little sleeves. But yeah, then I also simultaneously was running ads direct to consult. And that’s how I got like the majority of my customers in those beginning years was, you know, email list, audience building ads and then running ads directly to consultation. And that kind of was like my salesperson until I was ready to hire my first salesperson. Uhhuh
RV (12:46):
Yeah, I mean, it’s, it’s interesting. Like the one-on-one coaching model is what we tell almost everybody. Like, if you’re trying to build an escape path from your corporate career, it’s like one-on-one coaching is the thing. ’cause Consulting takes absolutely. Time to build. Speaking takes time to build writing books takes time to build. And then a lot of the things like the courses in the eBooks, it’s like you can’t make enough money selling a $99 widget to, to really leave until you have a monster audience. Yes. You’re not making enough. So it’s interesting that that’s like your exact path
KR (13:19):
And that story. I mean, that’s exactly it. And, and that’s exactly what I tell people today. Everyone wants to go right to like the digital product, the course, the, the low ticket thing, but they don’t realize the size and scope of the brand and audience that you have to build. So I do those things now, but I’ve had 10 years of audience building behind me to do that. Right. You’re absolutely right. I mean, for anyone that’s early stage, whether you’re working job or whether your business just isn’t at the point yet where you can support your family. Like that one-to-one coaching model is beautiful. And the thing that’s so powerful about it is you become so so well versed in the exact trends and language and, and break points and all of that, that it’s so easy to sell group coaching. When you’ve done one-on-one, I find people that try to go straight to group coaching really have trouble selling it because they haven’t been in the trenches and gotten to the point where it’s like they could look at someone’s, you know, situation in three seconds, they can pinpoint exactly what the person needs.
KR (14:22):
‘Cause They’ve been there, done that. It’s like they can do it in their sleep. And it’s so much easier to sell and to scale a product when you understand your avatar to that degree versus trying to do it in theory. Right?
RV (14:34):
Mm-Hmm.
KR (15:11):
Yeah. It it’s, it absolutely is. And it’s so funny because I’m sure you get this question from people all the time, and so do I, because like I pump out a ton of content. You do too. Right? And, and people are like, how do you think of your content? How do you know what to create? How do you, how are you always create, I’m like, if you’re having conversations with your people, you are never creating, in theory, you’re always creating to answer questions and to solve problems Yeah. That people are already pushing to you Anyway. So I think that’s kind of the danger of, you know, in today’s market, there’s so much focus on like automation and digitizing things and all of that. And listen, I have a Black Belt six Sigma operations manager that help like automate and digitize things and like get stuff dialed in. But the human element is so essential to sell with ease. Because when there’s connection there and there’s congruency and you’re not trying to take an idea and force it on the market, but instead you are like in cohesion right. With your people. That’s where it is. Like it’s fun and it’s easy because what you’re producing is is what they’re already craving. They’re just waiting for it. Right? Mm-Hmm.
RV (16:24):
Well, and it’s interesting how simple, like, you know, the other thing about running ads to a consult, which is really great, is we call it chicken on a Stick in the Brand Builders group community, which is, I love, like giving people that sample, right? Is just going like, how do they sell chicken in the food court? They don’t say, we’ve got the best chicken in the world. Yeah. They hand you a piece of chicken on a stick and you eat it and you’re like, wow, that was amazing. Like, I think I will have a chicken sandwich. That’s
KR (16:48):
So good.
RV (16:49):
Like doing a free coaching call. Even if you don’t sell them, you get all these other benefits that you’re talking about.
KR (16:55):
For sure. They
RV (16:56):
Get to trust you. They become a referral source, they become a fan, and hopefully they become a client. But even if not, like you get all these other things but it’s, you’re so right. Like everybody wants to jump to the like, scalable digital empire of reaching millions of people and then they, they, they don’t give themself enough financial runway to ever get the plane off off the ground
KR (17:19):
That that’s a thousand percent in. And I mean, I go off on my like soapbox about this all the time because, you know, you can, you can do a quick Google search. It, you know, you don’t have to spend a lot of time and, and you can look up the fact that, you know, the average business is not profitable for two years. If you go into a business and your only focus is, let me extract every single dollar out of this business as fast as I possibly can, the chances are it’s gonna fail. Because you need to be able to love and nurture and invest in that business building a foundation that is gonna be sustainable, that’s gonna last a profitable foundation for growth. So number one, I feel like so many people are starting and growing businesses from a place of financial, like dire straits, right?
KR (18:02):
And, and, and then how do you make good strategic decisions? How can you be a visionary if you’re making decisions you know, in financial dire straits? But, but also I think people are very quick. Like, I know the whole like, mindset is burn, burn the boat and, you know, don’t give yourself any other option. And I tell people all the time, I’m like, if you have a job, like find a way to get your business off the ground on the side before you quit, because you need to fund getting that thing off the ground and you’re gonna be a much better CEO if you’re making strategic decisions and not very transactional ones because you’re trying to survive. Like, it’s, it’s not a great place to build a company from, you know? Yeah.
RV (18:41):
I mean, it’s just desperation. Like very few things are good to do. Like from desperation, specifically financial ones
RV (18:52):
I love that. So I wanna come back to something you said a few minutes ago, which was that before you had your first customer, you hired your first person. Mm-Hmm. That’s the other thing that I think small business owners really struggled to go, well, I can’t afford to hire somebody. And it, and it, and it’s, it’s not just the first person. It typically stays with them for like many years where they’re constantly going, I can’t afford to hire. I’m not making enough money to hire somebody. Yeah. How did you flip your mindset there and how, how did you, how did you get yourself to do that?
KR (19:22):
Well, I think there’s a couple things. And one I got so off about exactly what you just said, that I wrote a book about it. Because no one is teaching entrepreneurs how to build teams. And this is why entrepreneurs are, are so burnout and overwhelmed and frustrated and stressed in their businesses because they don’t have the appropriate support. To answer your question specifically,
RV (19:41):
What’s that book called?
KR (19:41):
Oh, it’s called Bigger.
RV (19:42):
You have 11. You have 11 books. So
KR (19:44):
What’s that one? It’s bigger than You. The Entrepreneur’s Guide to Building an Unstoppable Dream Team. And it literally walks you through step by step by step, the strategy, the thinking, the mindset, and the tactical action plan of how to go through building a team that will be profitable. So to answer your question, almost any role that you hire for, especially in the beginning of your business, you know, you’re, you should hire, basically there’s a front of the house and a back of the house, right? We, let’s just make it really, really simple for people. Front of the house is sales and marketing. Back of the house is operations and client support. One is driving new customer acquisition and one is making sure you get paid. You service the people that are already paying you, you keep them and you grow them. Almost any role that you hire for in your company can be monetized.
KR (20:32):
So when I hired, when I brought on my first person, they had a element of their role that was already built into it that was going to monetize. They were helping me to get referrals. They were helping me to do upsells. They were helping me to do contract renewals. So I knew before I hired this person that yes, they’re gonna cost me this amount each month, but this is what I’m gonna do to monetize their roles. That instead of this being an expense, this is gonna be an investment. And that’s how I look at any person that I’m hiring in any one of my companies today, before I go and bring someone on board, I’m saying, how is this role gonna be sustainable in my organization? Because as the CEO, your plan is the survival, your responsibility is the survival of the business. It’s how does this business stay in business?
KR (21:22):
How does this business stay profitable? How does this business keep growing? And if you start building a team with either a, the mindset that this team is gonna cost me money, then you have a scarcity mindset, and you’re probably not gonna hire the right people or the best people, or any people at all. To your point, rari or on the flip side, we have people that go out and they hire all these people, but there’s, there’s no plan, right? And when you hire people without a plan to monetize their roles, it it’s, it’s a heavy burden. So now you end up working to pay their payroll instead of them working for you. But I think the beautiful thing, and this is what I remind my clients all the time, is this is all decisions we have free will
RV (22:14):
Wanna, I wanna, I wanna zoom in on that because Yeah. You know, you, you mentioned like, there’s certain roles where you go like, hey, referrals or repeat customers or renewals or you know, collecting cash or like outstanding payments even. Yep. What are some of the, how do you, so, so I I’m curious to know, like you mentioned front of the house, back of the house, sales, marketing, operations, delivery. Have you seen a consistent pattern in who you should hire first versus who you should hire second, who you should hire third? Or is that different? Yeah. For every business, yes. And then, and then also what I really am also curious about is how do you tie operational roles like assistance and, you know, people like that. How do you tie those to a metric to where both, like you can feel like, oh, I’m getting the business is getting the money back for this person.
KR (23:09):
Yeah. These are really good questions. Thank you for asking these questions. I think these can change people’s lives that are listening here today. So listening. Totally,
RV (23:16):
Totally.
KR (23:17):
Okay, so, so let’s start with the first question that you asked, which is, is there an order of hiring? And this is what I’ll say. Obviously there’s nuance to every situation, so it’s not gonna be like, yes, it’s the same for every person, but let’s just talk about like, the trend, the pattern of, of what I see with the thousands of clients that I’ve worked with, right? First things first, you need to buy back your time period, right? Because as the CEO of the company, you need to be doing things that are forward market facing, creating content, getting on podcasts, generating leads, having consultation called, doing launches, right? Which means that the first thing that you need to do is to get your time back on admin operations. Just all that transactional stuff that takes your time during the day that keeps you, I say like, behind the scenes instead of out front.
KR (24:05):
So the first thing to think about is how much of your time is actually being spent out front driving the business forward, versus how much of your time is being spent behind the scenes, basically just maintaining the tasks that have to get done. So that tends to be the very first role. And it doesn’t need to be a full-time person. It could be a, a fractional admin, it could be a part-time person. You know, there’s all different ways you can slice that, you know, equation. But that’s number one. Then number two is you need someone whose only role is gonna be to generate cash. So someone who’s gonna probably be a hybrid of sales and marketing with a goal of taking the leads that you’re generating, building relationships with them, nurturing them, getting them into consultations or getting them on your calendar for consultations. That tends to be the second one, which then puts you the business and puts you in a position to be able to afford to hire the third person, which is now, oh my gosh, I have more clients than I can service well myself.
KR (25:01):
How do I make this business scalable? Point number three is, okay, now we need someone that can actually do client servicing, that can take your methodology, that can take your, your, you know, scientific approach to what you do and can empower other people to go through that process. It doesn’t mean you’re totally removed from it, but it means you can elevate your role and then you can have support roles, right? That are taking the nuances and, and helping the application of them. So that tends to be the most effective order. And I’m not saying it’s like that with everyone, but I’m saying that is a pattern that tends to work very, very well because first person gives you back time so you can sell more. Second person is selling more directly or indirectly, and then third person is able to then help you to make sure that you retain, upsell, get renewals, get referrals from the people that you’ve now brought in. Mm-Hmm,
RV (25:54):
KR (26:56):
Yeah. It’s such a good question. And, and the answer is that it changes as the business grows very dramatically. So like, I’ll give an example of like, here’s what this looks like. I have, I have some companies right now that are only 1-year-old. I have my original company that’s now 12 years old. So let’s talk about the difference between an operations person in a baby company versus an operations person in a a established company. ’cause It’s so different, right? Totally. In a baby company that’s just getting started, your operations person is very much gonna be in like a hybrid role, okay? So this person is gonna be doing tasks related to scheduling your customers, renewing their contracts. They’re gonna be kind of interacting and engaging. They’re not servicing your customers, but they are going to be kind of that, that touch point, right? They’re doing all of your scheduling, they’re coordinating with customers on all different things that come up.
KR (27:46):
They’re, you know, managing billing to make sure that, you know, all, all things go in order. All of those things, right? And, and many times, the first time that you hire for any role in your company, when your company’s very small, the role is gonna be a hybrid role. Meaning they’re gonna be doing a lot of kind of different things because you don’t need a full-time person that’s gonna sit there all day long to do operations for a little baby business, right? When I was fi first building this role, and I still do this with my newer companies now, I tend to have kind of someone in an operational, hybrid, hybrid role that in many ways, even though they may not be the person that is servicing the customer, they are almost like the customer care person for all intents and purposes, which means that they’re getting referrals, right?
KR (28:33):
When I first started doing this, I literally had my ops person send thank you notes and, and touch points for our referral program, and she would generate new referrals every single month. She was a brand new college kid. I hired her as an intern. She had no sales experience, she had no marketing experience, and I was literally training her from the ground up on operations. But I said, what’s something that is systematic and can produce profits that someone that’s brand new can do well? Anyone can build relationships by caring anyone, right? Sure. And so I said, I’m gonna have this person, I’m gonna look at my client base and I’m gonna say, who are the right people that I could be generating consistent referrals from? And I simply had her manage the monthly touch points for referrals. And we consistently saw that we got sales coming in and introductions coming in because of her just doing these kind of thoughtful monthly touch points to our own customers.
KR (29:30):
And a lot of people think, well, I’m a small business, you know, I’m just getting started. It doesn’t make sense for me to have a referral program. If you have one customer and you get one referral, you just double the size of your business. Amen. If you have five customers and you get five referrals, you just double the size of your business. So you can do this on a really small scale, or you can do this on a really large scale. But when I was starting at the very beginning, that was how I monetized that first role. They got us referrals. They got people to renew their contracts and do upsells. Let’s say someone was in my group program, they could add a VIP day with me. At the time I was still doing a lot, like, you know it looks different for everyone now when I look at, you know, our operations manager, you know, in my coaching company that’s 12 years old, right?
KR (30:18):
He’s a black Belt six Sigma, and his job is helping us buy back the time of every other person in the organization by finding efficiencies in the business systematically. And then getting them to work like a well-oiled machine so that every other person in the company’s productivity is lifted up so that they can actually open up their bandwidth, open up their productivity to sell more, to serve more clients, to get more leads to, to close more whatever it’s gonna be. So it looks, it looks really, really different. It’s kind of much more scientific over here ’cause it’s like deep dive, like systems efficiencies, you know, process orientation. Whereas in the beginning stages it’s just like, well, what are the things that most small businesses don’t do? And, and Rory, this is what, if I can just take one minute on this. Most small businesses, they do not consistently reach out to their customers for referrals.
KR (31:14):
They do not consistently reach out to their past customers. This was the other thing I had my operations manager do. Whenever someone rolled off a contract, she would stay with in touch with them every month. And then we would consistently see them come back and they would come back and they would come back. So that was the other thing. It was just she wasn’t selling, she was just literally staying in touch with them. Right. We would put together mailers or a handwritten note or whatever the case. So I’ll just pause there. I know that was kind of a lot.
RV (31:41):
No, that’s great. I I was actually gonna ask you what are these monthly touchpoints that you’re systematizing for referrals? Yeah. Like what are, what are they doing? ’cause Like you say you is intern fresh outta college, like not the sales and marketing wizard. Yes. But clearly you’ve developed some type of process or system that they’re able to run.
KR (31:59):
Yeah. Yeah. So we do everything digitally now because we run much larger scale programs. But back then, and even I would say if you’re running a small business and you’re just getting off this off the ground and you’re not talking about you know, hundreds of people that you’re reaching out to you know, we sent handwritten notes. You know, we might share an interesting article with them and say, you know, I thought of you this, you know, I thought you would enjoy this. She might share a resource with them. We did send out gifts, we sent physical gifts. So I mean, again, I’m in the high ticket world, primarily that this business that I’m talking about is in the coaching consulting world. So when someone works with you, you, and, you know, the equivalent of a relationship is a hundred, $200,000 over the lifetime of the business, it makes sense to spend 50 bucks on a gift for someone, right?
KR (32:49):
So we did gifting, we did thank you notes, we sent out articles we would make connections if there was someone that we thought that it would be relevant and meaningful for them to, you know, have a connection with you know, she would answer questions here and there. So it, it was nothing genius. It was just literally the consistency of doing it at all. And that’s kind of what my point was. Most small businesses never follow up with their past customers. Your past customers know you. They like you, they trust you, and they’ve gotten a result working for you. But if you don’t care enough to reach back out to them and say, Hey Rory, I saw we haven’t worked together for two years. What have you been up to? I’d love to see you back in our world again. Why would you come back to us?
KR (33:32):
Right. You’re gonna go to someone who’s pursuing you and saying, I’d really like to work with you. Right? So that’s one of the easiest money makers that sit in every single business that most small businesses, they don’t have any cadence to how they’re going after that business. And that’s free money. That’s free money because most people buy things cyclically and habitually, meaning they’re gonna buy in that category for life, but they’re not gonna buy every day for forever. And people buy from top of mind awareness, which means they’re gonna buy from one of the last three people that they interfaced with. So if you put those two things together, people buy habitually, meaning they buy typically in a category for life. If you’re a person that believes in coaching, you’re probably gonna keep investing in some way, shape or form in expanding your education and growing and whatever. Right? So we know that people, when they buy in a category, tend to buy in that category long term. We also know that people’s lives go like this. They’re, they’re not ups and down, they’re not
RV (34:33):
Ups and downs. Yeah.
KR (34:34):
There’s constant ups and downs and season
RV (34:37):
Have kids, you go to college, you move da, you get a new job, you start a new company, whatever, Uhhuh,
KR (34:43):
That’s exactly it. So where someone might be your best customer spending 50 grand, a hundred grand, $200,000 with you for three years straight, something might happen in their life where they don’t work with you for three or four years. I’ve actually had this happen. And, and then, and then when it’s time because we maintained a relationship, they’ll come back again. Right? And it’s not to say that people never will if you don’t maintain a relationship, it’s saying that you’ll 10 x 20 x 50 x the amount of people that will if you focus on just maintaining a relationship, right? Mm-Hmm.
RV (35:14):
KR (35:33):
Amazing. Uhhuh And, and you know what’s so funny, Rory, to your point, people will come back to us all the time now and they will literally say, thank you so much for following up with me. Like, I’m, I’m just here ’cause you followed up with me. And like, they’ll come back and they’ll buy again and they’re, they’re just simply there because we like reminded them. Mm-Hmm.
KR (36:28):
Most people focus singularity on customer acquisition and the bottom of their business is like a funnel and it’s just pouring out the bottom. And so they’re just on this constant hamster wheel of they have to sell just to maintain. There’s no continuity of building the brand because they’re only focused on customer acquisition. They’re not focused on retention, renewals, referrals, upsells the lifetime value that creates really nice stability in the business. And no one’s selling you that course. No one’s selling you that methodology because it’s not like the bright, shiny Right. You know, exciting thing. No one’s
RV (37:04):
You to like how to be successful eventually one day through Exactly. Long-Term relationships and long-term strategy, you know? No, exactly. I’ll teach you how to quadruple your revenue over the next 10 years
KR (37:17):
No, it’s not exciting. But the thing is, it’s what it, it’s what will keep you in business and it’s what will make you a multi, multi multimillionaire. I mean, it’s, it’s, it, it, listen, it’s very hard to retain really high level performance in a company if you don’t get the backend right. Totally. Most will never scale because they figure out the front end, but they never figure out the backend. So it falls out the bottom as fast as it comes in the top. Mm-Hmm.
RV (38:06):
Absolutely. Well you know, I’m sitting here thinking to go you know, I’ve interviewed so many different people on this show, amazing, amazing thought leaders. But if like someone asks me to say, Hey, who’s a, who’s a business coach you would recommend, like, there’s not somebody that I really go like, ah, this people share same philosophies and similar things. And I think so much of what you shared is so similar in our philosophy and what we’ve, our experience more than our philosophy, just our, our experience. So I love that. So Kelly, where do you want people to go if they wanna connect with you learn about you, obviously you’ve got your podcast, which I know is really important to you and, and is a great show. We’ve had so many of our, our clients on there. So many of my friends have have been on there. So you got the podcast. Is that the best place or where else should they go?
KR (38:53):
Yeah, I mean, definitely come listen to the Kelly Roach show. I bring it, you know, there’s a thousand episodes you can literally grow your business for free. Just come and listening to the show or connect with me on Instagram, Kelly Roach official come DM me. My team’s in there all the time, but I pop in too. And, and they’re there as themselves. So if it comes from Kelly, it’s coming from me and I love to meet you. So come say hello.
RV (39:13):
I love it. Well, we will link up to all that. Thank you so much for this. It just never amazes me. You know, I can, I can always tell when I meet a real eight figure entrepreneur because they’re not talking about the flashy tactics and trending things. They’re talking about the principles that have always worked and will always work that are not sexy. But they are simple and they’re not, they’re not easy, but you can execute on ’em and they will make a big difference. And that’s what I think today has been all about. So we really appreciate it, Kelly and so great to connect and we wish you all the best.
KR (39:49):
Thank you. Thanks for having me.
Ep 477: Entrepreneur Mindset | AJ Vaden Episode Recap
AJV (00:02):
We’re gonna talk about mindset today. And specifically we’re gonna talk about the entrepreneur mindset. And I’ve got five quick things that I wanna hit on to help you develop a rock solid entrepreneur mindset. And even if you are not a, you know, definitive entrepreneur, I wanna create an entrepreneurial mindset that no matter what you do, what role you have or title you possess, that these five characteristics can go with you anywhere you go. Because having an entrepreneurial mindset really just means you have an ownership mindset. And I don’t mean ownership of a business, I mean ownership over a task, ownership over a person, right? In terms of like owning, like what you’re gonna do in order to develop, develop, and lead that person, it’s over a project, or it could be over a business, but it is an ownership mindset. That’s what I need mean by an entrepreneur mindset.
AJV (00:59):
So number one, build as you go. That’s the first thing. Don’t wait until it’s perfect. It’s not going to be, so you must build it as you go. There’s this great analogy, actually, I saw a picture of this on Instagram so, so many years ago, and it was a picture of an individual who had jumped off a cliff and they were building the airplane as they fell. And the, the caption read below the life of an entrepreneur, right? Building the airplane after you jump off the cliff. And that’s a little bit of the ownership mindset of like, no matter how it goes, I’m gonna own it. I’m gonna own the successes, own the failures, but I, most importantly, I’m going to own the process of building it as we go and knowing that it’s always going to have opportunity to improve and be better.
AJV (01:44):
And we will do so as we go. But I’m not going to wait to launch. I’m gonna own what I’ve got and I’m gonna go and I’ll make it better as we continue. Number two, be a salesperson first. The ownership mindset is the, the key to all business is to make more than you spend
AJV (02:59):
Companies. ’cause Other companies have said, my gosh, they’re better at selling this than we are. They have more influence than we do. They have become great salespeople. So in an ownership and an entrepreneur mindset, you have got to, to own and take on the abilities and the responsibilities of being a great salesperson for your company, your products and your services. Number three, grow only as fast as you can. Serve your community. IE your clients and your employees. Grow only as fast as you can. Serve your community. Some of the greatest stories of all time about companies who have had enormous growth in unbelievable timeframes and in a devastatingly sad story of how they imploded that’s most of the docuseries out right now are about that. And I won’t list any of them specifically, but there are story after story after story about this monumental mind blowing growth.
AJV (03:57):
Only to watch it come to a tumbling disaster. A pile of rubble in the end because they outgrew their ability to serve their customers in a good and decent way. Right? Now, that’s not just their own customers, that’s also your employees. Don’t outgrow your capacity to take care of your people. So if that means you need to slow growth down, slow it down so that you can do it right? You don’t have to grow fast. There’s no accolades and fast growth, although seemingly that’s what people talk about in the market often fast growth is worrisome to me of going, do you have the infrastructure in place? Like if you’ve grown that fast in that short amount of time, like, do you really have all the systems in place? Like, can I see a little bit more into the, you know, under the cover now, under the hood, grow only as fast as you can serve your people, your community.
AJV (04:51):
That’s your employees and your customers. Number four, hire a players only if they are not an A player, don’t hire ’em. You gotta have a players in every single role of your company. This whole idea of the weakest link, why do you have weak links? Why? Why do you have those? I have no idea. I’m not saying that we haven’t had weak links. I’m just saying like, be cognizant of hire a players. An A player can do the job of three C players. So hire one phenomenal person. Pay ’em every single thing that they’re worth and it will save you three other positions. Hire top talent. Hire A players. Don’t settle. Hire the person that can help you grow, help you take it to the next level. Hire top talent. Hire A players. I cannot say that enough on repeat. And then number five, focus on being better over bigger. This is one of my favorite stories to tell right now. And it’s funny ’cause I don’t even remember the book that I read this in last year but I, that’s
AJV (05:57):
Not true. I think it was called To Create, it was a book called, called to Create. And they were telling this amazing story about Truitt Kathy, who’s the founder of Chick-fil-A And it was in the late mid or mid to late 1990s. And there was apparently this, you know, once of kind of like once of a lifetime boardroom meeting with Truit Kathy, who I, I did not know personally clearly, but was known to be a very calm executive. But in this particular meeting they were meeting about a competitor company called Boston Market, who had come on the scene and was growing at an expedient rate, taking up massive market share. And they were on the track to being a a billion dollar company at this point. I think Chick-fil-A was maybe like $400 million. Don’t quote me on the facts here, I’m recalling from memory.
AJV (06:46):
But they were in this conversation about how all these other Chick-fil-A executives were wanting to talk about, well, how do we grow market share? We need to open more stores. We need to do this and do this. And uncharacteristically of Truitt Kathy, he bangs his fist on the table and he said, we’ll have no more talk of this. The only thing that we need to talk about is how do we become better? We don’t need to become bigger. We need to become better and let our audience demand that we become bigger. And this saying has become a mantra at Brand Builders Group because who says you need to be bigger? Who says scale is better? That’s not necessarily the case. And I love this story with Truitt Kathy, because less than a decade later, Boston Market had filed bankruptcy. But Chick-fil-A was now a billion dollar company.
AJV (07:41):
When you focus on becoming better at what you do, you force your customers to talk about you more in the best way. Better quality products, better quality team members, better quality experiences. That’s how you grow. That’s how you become bigger, better, makes you bigger. Bigger does not always make you better, but better, almost always makes you bigger. So focus on being better at what you do, not just being bigger. Focus on better teammates, better training, better experiences, better service, better programs, better products, better services, better, better, better. And then let your audience demand that you get bigger because they want so much of it.
Ep 476: How to Go From 0 to 8 Figures in 5 Years with AJ Vaden
AJV (00:02):
How do you go from zero to eight figures in five years or less? That’s what we’re gonna be talking about today. And I gotta be transparent. I gotta be honest. I was actually in the shower this morning and I was brainstorming, what am I gonna do for this solo episode for our podcast today? And I, I looked over at my husband, Rory, and I said, Hey babe, what do you think would be worthy of doing a solo podcast episode, which is what we’re doing right now? And he said, babe, you gotta talk about the growth trajectory of Brain Builders Group. Because what’s what’s been done is something that has happened organically and the lessons that we have learned are extraordinary for entrepreneurs. And mainly because of all the things that we’ve done wrong. But luckily over the last five years, there’s been a few things that we’ve been blessed to do right through the grace of God and good coaches and mentors and amazing community.
AJV (00:54):
And in a fantastically awesome team at Brand Builders Group, we’ve been able to pull some pretty cool things off. And so we’re gonna talk about that. It’s what are eight things that you should know to help you go from zero to eight figures and five things and five years or less, right? So number one, focus on sales and revenue first. And don’t hear what I’m not saying. I’m not saying don’t focus on people or service. What I am saying is you have to know how to sell your product and service as the first thing you do. You have got to have a sales oriented mindset, a revenue focused effort before you start thinking of things that are ancillary, which I’m gonna throw out there would be marketing, right? And this will hear, hear more about this over our story, but it was sales first. It was like, we have to bring revenue in the door. If we’re going to make it, we’ll figure the rest out later. We’ll get better as we go, but we have to figure out how to sell this first. So it was figuring out what problem we solve, who we solve it for, the unique way in which we solve it. It’s what at Brand Builders Group, we call your brand positioning statement. It’s what are the offerings that
AJV (02:03):
We have and the price points, which will inevitably change. They will evolve. They must evolve. They must change as you grow as a company. But first and foremost, you have to know how to sell what you offer products or services alike. So, sales mindset first, revenue focused first. Not in lieu of service, but you’ve gotta bring clients in the door. You gotta bring money in the door in order to serve them well. So that was number one. Number two,
AJV (02:35):
Make more than you’re spending, right? Simple Law of Economics. Spend less than what
AJV (02:43):
You’re earning, right? In our case, it was like we, we were focused on making more than we were spending. And that means that us as the business owners were the, honestly, the, the lease paid people in the company for a minute. ’cause We could afford it. We had lots of savings. But
AJV (02:58):
We were not getting big office spaces. We still work from home. Still don’t have a permanent office space. We still use coworking spaces. We’ve decided that’s not the right capital investment for our company. We are investing in other things first. Website. We, we had, we full launched as a company way before we had a website. We didn’t even have a website until we were almost a full eight months in to Brand Builders group. So yeah, it’s a little bit amazing that this thing took off the ground, but it did. And we’ll talk about why. But just focus on spending less than you’re making, right? Be wise with the money. We did not take loans. This was all self-funded. I’m not saying don’t take a loan, I’m just saying we didn’t. ’cause We were sales focused first and we were focused on making more than we were spending, right?
AJV (03:43):
That was number two. Number three, build and adjust as you go. We were not tied to, it has to be this way. In fact, we were tied to the fact that we don’t know how it’s supposed to be. That we’re very open and very quick to adapt. And I think that’s one of the, the great blessings of our team and our company at Brain Builders Group is we are quick to pivot and rather everyone that is a part of our team is naturally this way, or they have adapted and adjusted to be this way. Our team has an incredibly high tolerance for change. Myself and my business partner, my husband, Rory, have an incredibly high tolerance for change because we know that in a startup, that we know in order to survive, in order to succeed, things have to change. And they, we have to be able to change them quickly.
AJV (04:27):
There can be no bureaucracy. We have to see a problem, fix a problem, right? See something, say something. Airport policies, we gotta be able to quick to pivot, right? And as a smaller, more nimble company we’re able to do those things. So we have been very willing to build and adjust as we go knowing that what we build today very likely won’t be a fit for even a year from now. And we’ve bought into the idea that that means we’re growing. That means we’re succeeding. So we’re buying into that. That’s a choice. It’s not a choice everyone wants to make, but it’s a choice that is necessary to make. And that with a changing market, a changing economy, changing technologies, as you have to be willing to build and adjust as you go, you cannot build it to be perfect and wait till it’s perfect to sell it.
AJV (05:13):
‘Cause That date never comes, right? It’s never gonna be perfect. It’s never gonna be exactly the way that you want it. There are 1,000,001 things I could list out right now that I wish were different, that I wish were better, that I wish were X, Y, and Z. But that doesn’t mean we don’t launch. That doesn’t mean that we don’t continue as is because what we have is good. And that’s how you know that it’s ready to sell. ’cause You know that it works. You know that it can help people. And we work to make it better every day, every week, every month. But it’s not the best. It’s better. And that’s okay. So build and adjust as you go. Number four, hire, right? Hire for the long term and set the vision for the people hiring, right? You’re gonna probably hear me mention the importance of team members again, in just a, a second.
AJV (05:55):
But hire right means hiring for the long term. And what I mean by that is like, when we bring on somebody literally on our first interview, I tell people and I think that’s something that I would just, I would like to mention, I’m a part of every single interview process. I do not hire anyone for any position in our company without also getting to meet them and interview them. This is a family. This is not just a business to us. This is our ministry. This is our calling. This is what we feel like we were put on this planet to do. And we wanna do it with people who share those values and beliefs and who are in it for the right reasons and who are in it for the long term. So on the very first interview, I say, I’m not asking you to sign a 50 year contract, although I would if I could.
AJV (06:37):
But I am asking you to don’t take this position. Don’t continue this interview if you don’t think this is a company that you could be with in 10 years, right? And I think that says something because we want to hire top talent. That doesn’t mean we can’t afford all top talent, but it means we want to hire the top talent so that we can afford top talent. And you do that with having a long-term in mind of like, Hey, we see the potential in you and in this company, and we want you to be here when we can afford to pay the top, the top pay for the top talent. We don’t want to grow and replace, grow and replace. We want to grow and promote, grow and promote, grow and promote the team that is here today. I would love to say that we hired so well, and so, right?
AJV (07:21):
It’s almost the same team that you’re gonna see in five years or 10 years, knowing that of course there’s gonna be turnover. We have had turnover. We have made not ideal hiring decisions based on fit and skills, but that doesn’t mean that’s not what we aim for, right? It is not hire just a body or hire the lowest, you know, paid person I can find it’s no, I hire the right person and I see if we can, we can make it work. And as we grow, their income’s gonna grow along with us. But that means you’ve got to sell the long term. You’ve gotta know the vision and sell the vision. Being a great recruiter is one of the most important assets of a leader. And as a CEO and an entrepreneur, recruiting is one of my number one jobs as the owner of Brand Builders Group.
AJV (08:07):
And it needs to be one of the number one jobs of our team recruiting, IE selling, right? But recruiting great talent is a skill that can be developed and honed. But a part of that is knowing where you’re going so that you can sell the vision and bring people along with you and actually fulfill the vision and the process, right? Number five, ask clients for feedback and then actually act on that feedback. It’s one thing to get feedback, and I think that’s humbling enough to, to constantly ask your clients like, what are the things we’re doing not so well? As well as what’s, what’s, what’s going well? What can we do more of? It’s a whole nother thing to go, I hear you and I’m gonna do something about it because I want the clients that we have today, just like my team to be the clients we have 5, 6, 7, 8, 9 year, 10 years from now.
AJV (08:52):
I want them to feel like they’re a part of building this company because honestly, our community at Brand Builders Group has been, they are the people who come up with the ideas. They are the ones who give us the feedback. And sometimes it’s not awesome feedback to hear that often is the feedback that is necessary to make that next move to growth. I can give you countless examples of things that I’ve just grabbed off of a survey of going, yeah, why aren’t we doing that? Or a conversation that someone said, Hey, would you be willing to hear me on this? And it created a whole new event or a product line or a service line. It’s ask for it. Genuinely, genuinely ask for it and then actually act on it. Help your community be a part of what makes you great. Because they know, they know where your weaknesses are.
AJV (09:39):
They know where your strengths are. And if you’re humble enough to ask for it and to listen to it and to act on it, it will make you a better company, a stronger company, and it will create more loyal customers. Okay? Number six, dev or sorry, give 10 times the value of what you charge. That’s a core philosophy of brand builders group. Every single time that we look at our, our suite of offerings for each of our product products or programs, we go, do we feel like they’re getting 10 times the value of what they’re paying for? And if not, how do we add more? It’s not, how do we constantly increase prices, although we’re in business at some point, we have to do price increases with the rate of inflation and the, the, you know, just cost of economies. Like, yes, those are things that we have to do to adjust with the rest of the world and the markets, but we are going to add more as we do that.
AJV (10:28):
Why? Because retention matters. Our customers matter. Our team matters. We don’t wanna be a revolving door. We want the, we want lifetime customers just like, and to some degree, I want lifetime employees, right? Again, but it’s, are you giving 10 times the value for what you’re charging for? So instead of thinking, what should you be charging, just be like, how much value can I give? And how can I make it such a no-brainer that it’s impossible to say no. Like I would be so dumb to leave. I would be so dumb not to do this. Like, I’m getting what? Like, is there a catch? Is there a trick? Like you want people to be like, this is extraordinary. How do you afford doing this? In fact, one of the most often questions I get from other people I know in our space is, why aren’t you charging more?
AJV (11:12):
Like, you know, you should be charging more, right? And I’m like, I mean, I know we could be charging more, but I don’t know that we should because we are aiming to do a very specific thing for a very certain group of people. Not to say that our prices won’t increase over time, they will, but always subservient to the value that we’re providing. So give 10 times the value than what you charge. Number seven, care. I’m just gonna pause for dramatic effect. Care, care about your team. Care about what you’re doing. Care about the numbers. Care about the details, care about your clients. Care about how things are done. Care. And I don’t mean you should be involved in every minute detail, that’s not what I’m saying. But in order to care, that does mean you need to stay on the front lines. You need to have contact with your customers.
AJV (12:06):
What we call our community. They’re way more than customers to us. They are our community, they are our friends, they’re our family. These are the dreams that we’re, we are working to empower, to come to life. These are not clients. This is our community. These are people that we care deeply about serving and helping. That’s why we’re doing this. And back to, it’s like we treat this as our ministry, not just our business. This is, these are friends and family. These are relationships, not clients. Customers and employees care. Stay on the front lines. Know your people. Know your community. Know what they’re about. Know what their brands are doing. Know what they’re up to on social media. Now, if you’ve got thousands and thousands of clients, I know that gets harder, but that doesn’t mean you can’t stay on the front lines. You read the surveys, you show up at the events, you get on customer service calls.
AJV (12:59):
You meet with the sales team, you meet with your team of people who deliver your products and services. You stay on the front lines. That’s how you show that you care, right? There’s places that you can care and there’s people that you can care. And what I mean by that is that there are some places that you need to be. And then there are some people that you need to be with. Know the places and know the people, the care, stay on the front lines. And number eight, develop your team so you can trust your team. And that has a lot to do with the mindset of no one is going to step into any role perfectly. It doesn’t matter what their experience is. It doesn’t matter how long they’ve been with you. There are nuances to every day, every role, every market, every year.
AJV (13:52):
They need developing just like you do as the business owner or as the leader. Develop your team. Provide them books to read, classes to go to courses to part, to participate, to participate in events, to go to coaches, develop your team so that you can trust your team. If you are a leader right now who questions your team, then I would question how much time you have spent developing your team. When you develop your team, it grows trust in your team because you know that they are getting equipped with the skills that they need. And they don’t all need to come from you. They cannot all come from you. They should not all come from you. They need to learn things outside of you so that they bring new things to the table. And that means they need developing. And that means you need developing.
AJV (14:44):
So who is your coach? How are you growing? What conferences are you going to? What classes are you attending? What courses are you participating in? Develop your team so that you can trust your team. And if you can’t do it together, right? Have a book of the month, have a book of the quarter, go to events together atti, you know, participate in courses together, whatever it is. Like, do things together so that trust grows at the same time, in the same ways, in the same places. But develop your team so that you can trust your team. Now I have probably like 88 more things that I could have listed, but when I reflect over the last five years of brand builders group, these are the eight things that we have done to go from zero to eight figures in the last five years. Now, there is one overriding thing that I would be remiss if I did not mention, and it is the fact that more so than anything else over the last five years, we have had open hands and we have said, God, this is yours.
AJV (15:46):
Do with it what you will and equip us to do what you want. Now, regardless of what your religious beliefs are and your affiliation with any sort of faith or religion, I would just encourage you that there is power and surrender of holding your business with open hands of going, this is not me. This is not my identity. This is something I do. It’s something I’ve been entrusted with. There are people here that I care about and that I have the opportunity to grow, trust, and develop. I have been entrusted with them. That is a responsibility I carry. It is not a burden. It is a responsibility. It is an honor, it is a privilege. And I hold it loosely knowing that this is not mine. There is no way that we could have done what has been done in the last five years on our own.
AJV (16:42):
And I don’t just mean our team and our community. I mean, this was a, God did it company, it is a God did it company. And it is because that we have been obedient and disciplined and we have listened. We have made lots of mistakes. But you know what? We didn’t stop. But it is holding it with faith of going, whatever is happening, I believe it’s for a reason. I believe there is a lesson for me to learn. I believe there, there is something to garner out of every bad situation that’s going to make us better. And for every ounce of faith that it has taken to do this. When we had to sell our car to make payroll, we said, okay when we had to you know, battle a lawsuit in order to start the company, we said, okay, when we gave up our life savings to start this, okay when it required us taking no pay so that we could pay our team, okay, there is an element of faith.
AJV (17:39):
IE trust that what you’re doing is significant enough that it’s worth the risk. But that doesn’t mean you don’t work. You must work. We, we work, we work hard, and at the same time, we do what we can while letting God do it. Only he can. And that’s where the trust and the faith has to come in. And again, regardless of your religious beliefs, I would just encourage you holding it loosely of knowing your business is not who you are and it is not your identity. It is something that you’ve been given. It is something that you’ve been entrusted with. You have skills that align well with you being successful at this, but it is not who you are. It’s not your identity. And if you hold it loosely there, the success has come a little easier and with a little less ego, but the failures come a little less hard. So five years, eight lessons to go from zero to eight. Hope this was helpful and I can’t wait to hear your story in the next five years.
Ep 475: 6 Tips to Scale the Profits of Your Personal Brand | Jeremie Kubicek Episode Recap
RV (00:06):
Welcome to the Influential Personal Brand podcast. This is the place where we help Mission-driven messengers, just like you learn how to build and monetize your personal brand. My name is Rory Vaden and I’m the co-founder of Brand Builders Group, a hall of fame speaker, and New York Times bestselling author. And this show is to help experts learn how to become more wealthy and well known. I know you’re gonna love it. Thanks for being here. Let’s get started.
RV (00:34):
I want to share with you one powerful principle and six key questions that you can use to scale your personal brand revenue right away. And this is really what I more and more as time goes on, I really believe that this is the secret to making more money. And it’s not something that most people are doing, it’s just the thing that I see the people who are making a lot of money are doing. And what this concept is all based upon is the idea that most people are pursuing width rather than depth. They’re concerned about the width of their reach, they’re trying to get more followers and more subscribers and, and that kind of thing. But the people who are making money are focused not on the width of their reach as much as they’re focused on the depth of their impact, and they’re utilizing something that we have created or coined as fractal math.
RV (01:30):
That’s the, the, the fractal Math method as what we call it. And we didn’t create the concept necessarily, but we’ve kind of branded it as that. And we are teaching it formally in our Brand Builders Group membership to all of our members. And so this is the big idea, this is the big concept that I will share with you. Fractal Math is a principle that says that 10% of your customers will invest at a level 10 times what they have already invested in. So 10% of your customers will buy something that’s 10 times more than what they’ve already invested in, right? So the the simple math example or illustration that I used for this is, let’s say that you had a $30 offer. Okay? You had a a $30 product, a $30 book, let’s say and you got a thousand people to buy it.
RV (02:20):
If a thousand people buy a $30 offer, that’s $30,000. When most people think about doubling their revenue, they think about adding more customers, right? To go, okay, if I wanna add another, if I wanna add another 30,000 revenue, I need to add another thousand customers. But a new customer is the most expensive type of customer there is acquiring, you’ve probably heard the term CAC or cac, the cost customer acquisition cost. It’s how much does it cost to acquire a new customer? Because new customers are the most expensive thing. The most profitable customers are existing customers when they buy repeat business, that is the most profitable because you get to have new revenue without any of the CAC. So the concept here, fractal Math, says to focus on serving your existing customers. And instead of getting a thousand new customers, the, the fractal math says that 10% of your customers will invest at a level 10 times higher than what they’ve already invested.
RV (03:21):
So if you have a thousand people who bought a $30 product, then that means 10 per, that means a hundred people, which is 10% of the thousand, a thousand customers, 10% of those is a hundred, a hundred people would invest in a $300 product. So 10, you know, 10 times what they’ve already invested, they already bought 30 times 10 is 300. So one 10th of the audience will spend 10 times more than what they just spent. And now you have a hundred customers who are already in your database, who invested at $300 rather than 30. And $300 times a hundred is also 30 grand. So you doubled your revenue without adding a single new customer. And it continues, right? So you go, if a hundred people would buy a $300 offer, then that means that 10 people, 10% of a hundred is 10, 10 people would buy a $3,000 offer.
RV (04:13):
And that’s another 30 grand because $3,000 offer times 10 people is $30,000. And then that means that one person, ’cause 10% of 10 is one, one person would invest at $30,000 with you potentially. So that’s another 30,000. So that’s three sets of $30,000, a thousand people buying a $30 product, a hundred people buying a $300 product, 10 people buying a $3,000 product, and one person buying a $30,000 product, 30,000, 30,000, 30,000, 30,000. That’s $120,000. That means you have not just doubled your revenue, you’ve quadrupled your revenue, and you’ve quadrupled your revenue without adding a single new customer. And that is the most profitable way to do it. And so this is, this is one example When we say that we teach monetization strategy inside a brand builders group, right? Part of our spiritual gifting is making money. We are good at it, we are good at teaching people to do it, and it’s through helping them understand principles and concepts of money that are like this, that a lot of people don’t know.
RV (05:21):
So that’s the concept. The concept here is fractal math. 10% of your customers will invest at a level 10 times higher than what they’ve already invested with you. And another way of saying it at a principle is to say, focus not just on the width of your reach, but the depth of your impact. And so now I’m gonna give you the six key questions that we ask for to, to increase our monetization at Brand Builders Group by increasing our, our level of service to our clients. And there’s six of the same questions that we ask, you know, my private clients who, who you know, either come invest to spend two days with me, one-on-one, or they come to one of my Brand Mastery events, which are very, very small events that I host now that are just like five or 10 people.
RV (06:07):
And we spend two days together. And basically I fractionalize the cost of two days with me, one-on-one across like five to 10 people. And so it becomes much more affordable. And these are the kind of concepts that I’m helping walk them through, okay? So here are the six questions that will help you extract more revenue from your current customers. But I don’t wanna don’t just think about it like that. And this is what question number one is. Question number one is, how can I help my clients succeed faster? How can I help my clients succeed faster? That is something that you should be asking. This is not just how do I get more money out of people, right? That’s not it. It’s thinking in a service centered way. And that’s what these six questions are. These are six service centered questions that lead to scale, that lead to more profitability for your personal brand and really for any business.
RV (07:02):
Although we only focus on working with personal brands. So when you ask that question, the quality of your answers is determined by the quality of your questions. And so if you want different answers, you gotta ask different questions. And if you ask better questions, you’ll get better answers. And that’s why these questions are so important. How can I help my clients succeed faster? Remember, money follows speed. That’s a principle of money. The faster you can, you can get a result for somebody, the more they’re willing to pay you for that result. And the more people there are who are willing to pay you that money. So that’s a question you should be asking. How can I help my clients succeed faster? Number two, what can I offer to help my clients succeed in a deeper way? Right? So how do I, how, how can I serve them in a deeper way?
RV (08:01):
How can I give them more access to me? There’s a, a, a principle and a, a framework that we teach in monetization strategy in our, in our formal curriculum that’s called the services spectrum, which is basically this idea that as, as intimacy goes up, as, as, you know, proximity to the messenger goes up, the price goes up because you’re able to serve people in a deeper way, right? Like the most expensive thing someone can buy from brand builders group is two days with me, one-on-one that’s expensive, but that’s also the most value that I’m able to give. I can completely customize everything I’ve spent my life learning to one person’s business or one person’s strategy. And that’s what, you know, most of my big private clients, the Louis Howes, the Ed millet, the, you know, the, the Eric Thomas’, the, the, the Amy Porterfield, the Jasmine Stars, the Jim Quicks, right?
RV (08:47):
These are people that are private clients of mine where I’m able to work with them one-on-one, and I can help them create massive value. Some because of who they are and what they have. And, and, and some just because, you know, they’re massive action takers and they, they, they execute and they’re coachable. So how can you serve your clients in a deeper way? How can you give them more access to you? More access to you requires more of your time. If it requires more of your time, then you should, you should. It’s justifiable to collect more money for that. It’s also worth more money to people because you’re able to shorten the learning curve because they’ve got more custom solutions coming directly from you. As they get closer to you, the solutions become more custom to their unique situation and more applied to their specific questions.
RV (09:34):
And so it’s worth more, and it also is worth more because it takes more of your time. So there’s more opportunity cost to your time. So how can you help your clients? How can you serve your clients in a deeper way? How can you give them more intimate access to you? Number three, what tools can I create that make it easier for my clients to implement? What tools can I create that make it easier for my clients to implement? Right? So especially if you are some type of educator or you, you’re an expert, right? We, we serve mission-driven messengers. A lot of our clients are experts. They don’t all sell information like courses and eBooks. A lot of ’em are professional service providers, right? They’re doctors, they’re lawyers, they’re accountants, they’re chiropractors, their financial advisors, their real estate agents. But what tool can you create where the tool can help your clients succeed without you having to be there?
RV (10:30):
Especially what tools can you create that help them implement the things that you teach or implement the things that you ask them to do? The more that you can create those tools, the higher value you, you, you are providing because you’re moving them from just education to application. And remember, that’s another one of our principles that we say is that people don’t pay for information. They pay for organization and application and tools accelerate the time, you know, it takes to, to implement it. You know, they, it compresses the amount of time that it takes to, to execute related lead. Number four, what vendor partnerships or vendor relationships can I form that I can refer my clients to that will help them execute, right? So maybe you can’t execute everything for all your clients we’re that way, right? Like we have over 800 clients in our, in our flagship membership program now, right?
RV (11:23):
Like, we’re serving 800 people. Our vision when we started the company was a thousand messengers. We’re getting really close to that. And we have like another 1500 private clients that just do, you know, private two day sessions with us. Well, the, the question is, is to go, well, we can’t write the copy for all, you know, 2000 of our clients. We can’t build every funnel for 2000 clients. We can’t ever, every video, you know, launch every podcast, manage every speaking career, do every single book launch write every single speech, write every joke. We can’t do that for all 2000 clients. And so we are going, what tools can we create to make it more accessible? And then also, where are their strategic vendor relationships? And I think one of the most valuable parts of our community when someone becomes a, a, a paying member of Brand Builders group is we curate a community of vendors, right?
RV (12:13):
So it’s like you need people to write copy, graphic design, do video editing, do websites, you know, build funnels like, you know, do research studies. Be a literary agent, book you for speaking like what all, you know, PR services, all of the things that personal brands need that we can’t provide. We’re just not that big, at least not yet. We go, well, let’s, let’s let’s curate vendors to introduce you to. And we do referral fees with the vendors, right? We pay them when they refer people to us, and they pay us when we refer people to them. So it’s a win-win win for everybody. Number five, big question. Where do my clients most often get stuck when they’re trying to implement the things that I teach? Right? So that’s a big question. Where do my clients most often get stuck when they’re trying to implement the things that, that you teach to them, right?
RV (13:06):
So you know what to do, you know how to do it. You’ve been doing it your whole life, your whole career, or some big chunk of it, right? And so what you gotta identify and your current clients well, and your past clients can help you do this, is go where do they fall apart, right? Where does, where does everything fall off the tracks? Where do they, it’s like they, they get excited and inspired, but then when they get to, you know, blank, it all just disintegrates and they lose all their momentum. You have to identify those roadblocks, those bottlenecks, and then you have to provide support to them. And then question number six, what problem can I solve for my clients? That never goes away. What, what problem can I solve for my clients that never goes away? And I give you example of some of the ones that we do at Brand Builders Group.
RV (13:51):
People come for our content, right? They come for our expertise, they come for our principles. They come because we give them a world class education that, in my opinion, exceeds the practical value by a long shot of what you would get from, you know, a a hundred thousand six, multi six figure MBA. And we teach them how to apply things quickly and make money for an a, a, a fraction of what something like that would cost. They come for the content, but they stay for the community. See, people leave college, they get their degree and they leave here. They stay because there’s, there’s community, there’s relationships, there’s joint ventures there’s friendships that are formed, right? There’s accountability that’s developed. They’ve got access not just to me and aj, but to our strategists and, and to the other clients. We also provide a lot around data and trends.
RV (14:41):
So our clients get insider access to like, what’s working right now. Not what worked five years ago, or just what worked five years ago, but what worked right now. Another thing that we have started doing for our members is pr. Our members need pr. They need publicity. They need to get in front of more stages. They need to get on more podcasts. They need to be on more YouTube shows. They need to be doing more Instagram lives. They need to be doing more, you know, onstage speaking breakouts, virtual summits, et cetera. Well, we are not a PR service, so you can’t hire us to book you for pr. We don’t do that. But what we figured out is, wow, we have 2000 clients. Almost every one of our clients, e every one of our clients has some type of a platform. They have podcasts, YouTube channel, they have events, they do stages, they do summits.
RV (15:27):
And so what we, we hired a full-time person to do nothing but connect our members to one another. So it’s an internal PR service inside our own community. And so people are going, wow, I’m paying for education, but I’m getting community and I’m getting these tremendous PR opportunities because I’m sitting next to people at your events who write for Forbes and do big summits and have huge podcasts. And all of them have social media followings, like is PR and then related is gigs. This is the next thing that we’re, we’re moving towards is helping our clients actually get paid gigs. And that’s like the new emerging area for us. So those are problems we can solve that never go away. So there you have it, one key principle, fractal math, and six key questions to ask to help you scale the revenues of your personal brand much faster.
RV (16:20):
Don’t be so consumed with the width of your reach that you ignore the depth of your impact. If you want more strategies like this, and you’re serious about taking your personal brand to the next level, make sure you go to free brand call.com/podcast to request a call with our team. If you’re not ready for that, that’s all right. Hang on here. Stay tuned next week, share this episode with someone who you think it would be valuable for. Come talk to me on social media and we’ll catch you next time on the Influential Personal Brand Podcast.
Ep 474: How to Build a Personal Brand that has Enterprise Value with Jeremie Kubicek
RV (00:02):
One of my favorite sayings that we’ve been talking about recently with our community is that, you know, in golf, you drive for show and you put for dough, and we’ve been talking about how email or social media is for show, and email lists are for dough, and that’s really where you make money inside of that same vein of that concept, a lot of the personal, the biggest personal brands in the world that you meet and you follow and you hear of often don’t have that big of businesses on the back end. And that’s usually because they’re really built around one person and one person can only do so much, they can only be available so many days in so many ways and so many places. And so there’s a very different conversation that happens around building a personal brand versus turning a personal brand into something that has enterprise value, basically a, a business or a revenue stream or set of revenue streams that you can sell.
RV (00:59):
And that’s what we’re gonna talk about today. We’re gonna talk about how to turn your personal brand into a business that you could actually sell one day, or just that has enterprise value, that it would live beyond you if you died, or that could be transferred to your kids or your employees you know, after you die. And to talk about that, we’re gonna bring one of the people who is truly the best in this space of anyone in the industry, of any, anyone that I’ve ever met in the personal development industry. So his name is Jeremy Kubek. I’ve known about Jeremy for years probably over a decade. We’re gonna, you’re gonna hear some of his background. But this person, like this man has had a lot to do with being a part of John Maxwell and helping build the Maxwell companies and some of the things they’ve done.
RV (01:47):
If you’ve ever heard of Chick-fil-A leader cast Jeremy was a huge part of that. These are, you know, huge catalyst catalyst conferences. This is a man who was very involved in a significant way behind the scenes. Now today he’s a Wall Street Journal bestselling author. He’s a speaker. He talks, he’s a thought leader and he is a serial entrepreneur, and he, you know, generally works in this space of kind of corporate leadership. And we’ll talk about some of his model today. But I really brought him on the show to talk about his newest book, the Communication Code. So, we’ll, we’ll touch on that a little bit, and also to really talk about how do you turn your personal brand into something with enterprise value. So Jeremy, welcome to the show,
JK (02:32):
Or good to be with you. Thank you, man. I’m, I appreciate all that you do. You have such a good reputation and just fun to be here.
RV (02:38):
Well, thank you, man. I, I, so you too. And, and I think specifically when I, the brands, the, the, the, the brands, the movements, the conferences, the companies that you’ve been a part of are ones where it’s like, you know, they have very, very strong reputation. So knowing that the context of this conversation is kind of around building a scalable enterprise can you just give us sort of like a brief history? I know you’ve done so many things, but like some of the high points of the big personal development brands that you’ve been a part of, of building.
JK (03:15):
Yeah. And so much of what I’ve done in the past, you know, which was, and I’ll tell you why I shifted to where I’m going and where I’m now, but we were a part of helping John Maxwell. We bought John Maxwell’s assets years ago inside Enjoy Maximum Impact. We bought inside of that was Catalyst. We stripped out and built the Catalyst conferences. We created Leadercast as a brand and started that as well. And then we partnered with people like Henry Cloud, pat Lencioni, Craig Rochelle, Andy Stanley you know, these thought leaders that were just doing amazing things and, and still are. But at the time that was, you know, that was back in the day, right? It’s like, yeah, I’m the good old days. And it was at the height of the conference world, and I, I saw the writing on the wall.
RV (04:08):
What year is this? What year is this? This is
JK (04:10):
2007 to 2015 that timeframe. And up to, I sold it all in 2011 and then 17 in parcels. And these
RV (04:23):
Were all on my vision board. FYI like Leadercast funny. I’m speaking at Leadercast this year. That’s, that’s still going. I’m actually speaking there in April. But like Leadercast and Catalyst, like these, these were events that were on my vision board as like an, as a up and coming speaker. So that’s, that’s awesome.
JK (04:39):
Yeah. And so, and you know, catalyst was so fun because Brad Lanik and I I was CEO he was exec director. He, he did such a good job, but we built an unbelievable experiential event. I don’t think there’s anything like Catalyst today. And, but the problem was, is that I, I was looking at it going, okay, this is a 20th century model. We are one pandemic away from going outta business. We’re one terrorist attack. And I was trying to figure out how to scale, how do we scale content? And most all the content was speakers having books, and what do you do from here? Right? And that led me on this journey of like, man, I wanna, I wanna actually go and look at how do you actually scale. So I moved to London, sold all of that, and people thought it was crazy. But we started over because I was trying to look at the 21st century, how do adults learn? How do you actually work inside B2B and actually make it stick and last? And that’s what we’ve done since that time.
RV (05:46):
Uhhuh
JK (06:06):
Yeah, that’s right.
RV (06:07):
Is that like, and how do you, how do you get a title sponsor? How did you even think to go to them? Like how did that come about? And like, if somebody has a big event, like what, what do they do to land sponsors like that?
JK (06:18):
Okay. It was, it was unbelievable how this happened. This is an epic story. So I my, I have a phrase like, who says we can, right? And so I had built a relationship through Chick-fil-A through David ERs, and he was over marketing and a good friend of mine, JT Robinson at Chick-fil-A and they connected me to Dan Cathy, and then we started becoming friends. And, you know, they loved the Catalyst conference. We were in Atlanta, so they already knew all about us because of that, right? So we already had these great relationships. But I invited, we were, we had Tony Blair, we as the speaker with Leadercast, and I invited David to come with me, Sawers and Dan, Kathy and I had Henry Cloud do the interview. So we’re in Tony Blair’s office, which was the home of John and Abigail Adams that shows you how old it was.
JK (07:08):
Wow. And we did the interview there, and it was, I have funny side stories with Henry Cloud and, and Tony Blair’s socks. But anyway funny things that happened. And then Dan, Kathy was with us and he saw the gravitas of it. He saw it. And on the way home David Sawers we took another trip to Paris and let, let’s get a couple of days and just, you know, process a partnership. What would a partnership look like? We’re on the way to the airport in a taxi, and David throws out a number, he’s in the front seat. I’m right behind him. He goes, Hey, how about X? And I go, how about Y? And then he goes, well, how about Z? And we shook hands at the, at the airport as we’re both flying back, and that’s how it took place. And we created the title sponsorship with a vision of the Chick-fil-A leader cast. Unfortunately, I had sold down by the time we were finished, I had sold down. And the other owners, they made different moves and didn’t value that partnership. I think it was fear of political positions of Chick-fil-A and things like that, that I think they overthought it. And now Chick-fil-A’s at 22 billion and Leader cast missed out on it. But I had already sold at that point in time.
RV (08:30):
Yeah, that is, that’s just wild. And so, like,
JK (09:21):
Well, so let’s take Leader Cap. I meant Catalyst is pretty simple. You have an arena, it has a cost. You build an amazing experience and amazing brand. And we actually, we, we did Catalyst. We said you had to be over 40 to come under under 40 to come. And we, we carted people at the door. So we created Scarcity with the idea, and then we produced the ticket price, and we said it’s for volunteers inside churches. So it’s not just church leaders, it’s the entire volunteers of a church. So they would use it as their annual retreat. And so Catalyst became kind of a mecca, probably the wrong word to use, but from that, the, a mecca of that, that that world. And then for Leadercast, it was different. I had already done the Maximum Impact simulcast, we own that. And then I sold that with John Maxwell and I sold it back to him.
JK (10:11):
So I built the leader cast brand. And we just took a brand that we had, we had done before, but we hadn’t used it. And I basically thought of Jake at State Farm. This is State Farm Insurance around the, the United States, like small town insurance agents, small town chambers, small town bank presidents. They want to gather and have events, but they can’t afford to bring Tony Blair in. They can’t afford to bring John Maxwell in or pick a thought leader. So really, there was a simulcast for small towns. And then you get them to, to host it, and they pay a host fee. And I can’t remember what we charged at the time the fees, but we basically, there’s different levels. They sold tickets and it was different. You know, if you bring X people, if you bring under 50, it’s this price, 50 to a hundred, a hundred to, and then you just sell the host fees. So we’d have, I think the highest I had was 184,000 people at 874 host sites. And that was the highest that we had ever gotten. I
RV (11:21):
Said 184,000 people watching live from how many host
JK (11:25):
Sites? The simulcast at 874 sites.
RV (11:30):
8 74.
JK (11:32):
Yep.
RV (11:32):
Wow. And so each of those sites, they basically pay a fee to be able to host it, but then they go resell the tickets and they keep the profit from it, some of
JK (11:40):
It that’s right. Mm-Hmm.
RV (12:08):
A break in the agenda for like a local person to get up and speak.
JK (12:12):
Mm-Hmm.
RV (12:13):
Oh, that is brilliant.
JK (12:16):
So, so now that became a massive business year over year. And then we would do live, well then Chick-fil-A sponsorship basically helped me pay for the live location, because that’s where all the expense is. You have the technology back in the day, this is, this was before the modern streaming, but you had a lot more broadcast, literally broadcast trucks, you know, and, and so it was just, but it was a lot of risk, man, a lot of expense. Just to pull it all off, you work 360 4 days for one day, and it was just, it was intense.
RV (12:57):
Yeah. Yeah. Uhhuh
JK (13:03):
We had, we had we had, we got hacked. The group that we bought got hacked, and we had Aramaic on the bottom screen for 45 minutes one year. You know, this is little spooked out after nine 11, things like that. I mean, it was just, we had some hard stuff that took place, but we did it from 2000, whatever, all the way to you know, it’s still going, you know, I sold it and now it’s become a lot smaller. But it’s, it’s the concept. Anyone could do it. I mean, it’s, if you have vision for it, yeah. But what was the problem was this, the group that I sold to, they started going to larger companies. Larger companies. They get to see Tony Blair, they get, and they took, I think they took their eye off the ball of Jake at State Farm. It’s small town America, small town, you know other countries that, that’s where the, the, the opportunity is. But how do
RV (14:01):
You reach those people? Did you have local reps or do were you just do an advertising and stuff like that? You have an inside phone sales team? All,
JK (14:08):
All, yeah, we had a sales team. And so the sales team, then we had leads, and we’d have, when I, what I had at the time, we had regional connectors and, you know, people who would be one city leader. Hey, I know 10 churches, three chambers, you know, and you kind of build it that way.
RV (14:28):
Amazing, amazing. So you, but then you thought, you saw going, man, we’re one pandemic away here from live events or something. So you saw that in 2017 and bounced out. That was, that was about as perfect autonomy as you could have gotten. And, and you basically thought, okay, adults are gonna be learning virtually, and how do we deploy this to companies? And that’s so, so, so catch us up now to what you’re doing now.
JK (14:55):
Yeah. So Steve Cocker and I my business partner in England, we started to, like, honestly, here’s how we did it. We’re like, who’s scaled better than anyone in the world? And we’re like, Jesus
JK (15:11):
How did he do it? So we dissected the Jesus model, and this, I’m not even religious when I say this. Just how did he do it? And we’re like, oh my goodness. He used parables. So we use visual tools and we figured out that most adults, they, they’re cynical know-it-alls, and they don’t read much anymore. And they have short attention spans, and everything they do is on video and short video. And so we’re like, okay, where we go. So we took all of these concepts and we built 75 visual tools, and we made the tools so scalable that they help people get healthy relational, intelligent, but we teach them to multiply. So they have to teach it to other people. ’cause When you teach, you learn. So we started packaging these programs and we started certifying people. And eventually, now we just, we’re just a wholesaler. We just certify our content for coaches and consultants, and anyone in the world can use it. And so now we’ve got a, a system. So the Five Voices is probably what we’re best known for. Okay.
RV (16:13):
So hold on a second. Let me just, let me back up and pause there to make sure I understand. Because, because you’re saying we’re just a wholesaler, basically, you’re a, you’re a wholesaler, a wholesaler of your own product. Like you basically created ip and then you allow coaches to resell that IP wherever they are at, to whoever they want. So then how do you, how do you make money? And how does the coach make money? So
JK (16:41):
Here’s how, here’s what we figured out. It’s a win type of, of proposition. And it’s really interesting. We to set in 2019 we were more traditional in our certification process, 2019. I’m like, we have to be in technology. We have to be ready to scale. Don’t, didn’t like our business model. So we shifted and we launched in January of 2020 into a SaaS business. Wow. So we moved in January with the pandemic in March. We had no idea, but we, we turned and we started selling to coaches, in essence. I don’t know why that does that. But we started selling to coaches for 2 99 a month. So $299 a month. They get to be certified in our content. They take our content, and then they become a partner with us. And we built a community and we help them build their business.
JK (17:37):
And then they take our content of the Five Voices, 100 x our toolkit, and they sell that inside companies. And then we have an operating system, it’s called Giant os pro. And they take five Voices assessments, team performance assessments, and it’s a recurring revenue machine. It’s basically a SaaS business for them. We, we help coaches have a SaaS company. And if you don’t know what SaaS is for those listing, it’s software as a subscription. So it’s, it’s technology at $10 a month. So we have now they sell price points and products inside companies, but they get to keep a hundred percent of their workshops, of their keynotes, any of the content. They keep a hundred percent of that. They pay us 2 99 a month. And then they sell products, technology products inside companies. And then we do a rev share with them.
JK (18:33):
So it’s brilliant. They have direct work. They have directed work because now we have a community and they help each other around the world. They get pulled in to each other to help each other at Google or Pfizer or Biogen or wherever. And then they have a recurring revenue, a SaaS model. Well, here’s the beauty. If you think about us from enterprise, our evaluation of our company in 2018, we had a hundred coaches at 2018, and we did rev share splits. When you take their gross margin and all the way down to our ebitda, we maybe would’ve gotten three times our ebitda, which was really low. And we’re like, we’re gonna work this hard for that. It’s not sellable. We have content that everyone loves. We have this coaching community. It’s kumbaya, people love Giant, but it, the economics weren’t working. We flipped it, went to a SaaS model.
JK (19:31):
We’ve spent the last three years really, really pushing hard to get it established. Now we’re at scale, but now we’re being traded off of revenue. And Rory, this is the craziest part, you know, this, but SaaS businesses are traded off of revenue because our growth rate is so high. Our gross margins are so high, but now we’re probably worth on the minimum of six times revenue up to 12 times revenue, depending on our growth rate. Growth rate, not of ebitda, off of revenue. So a, a business that was worth maybe 900,000 in an EBITDA model is now worth 30 to 40 million in a SaaS model. And that’s the beauty of it.
RV (20:18):
Yeah. And let me just, just to walk y’all through like some rough math on this. If you’re not familiar with valuations, right? So let’s, let’s say you have a company that does just for easy math, 10 million in revenue and 1 million in profit or ebitda, right? Earnings before interest, tax risk, depreciation and amortization, that’s basically profit. So most companies are valued at a multiple of profit. That’s what we’re talking about here. That’s what Jeremy is saying. A, a service-based business would be valued at a multiple of profit. So if you had a, a three x multiple on profit, that’d be three times your ebitda. So in this case, three times $1 million would be a $3 million company. But if you’re a SaaS company, you’re valued off of revenue. And instead of three times a million, which is, you know, the multiple times the profit, it’s, it’s maybe something like, let’s say five for easy math, five times the revenue.
RV (21:09):
So five times 10, which is 50 million, right? So that’s by, by repositioning the company. For, for those of you, that’s just like a quick little math, like lesson in how this works. And so anyways, so, so come back. So, so it’s blowing my mind here is now you said the coaches are creating a recurring revenue, you’re creating a recurring revenue model for them. So I see how you’re creating a, a recurring revenue model for yourself because they’re paying you 299 a month. Got it. They get to use all your content. They get to keep all a hundred percent of their training and speaking, which is cool. ’cause That’s always a rub, right? Is who gets to, you know, who gets to keep the percentage, but then you have these IT products you’re talking about that they’re then selling into companies. And so are those basically subscription products and that that’s what your revenue sharing? Yeah.
JK (21:58):
So they’re selling the operating system inside companies. So when they do Five Voices, for instance, five Voices is we think the most innovative personality driven growth tools. So you understand your personality and wiring. Well, people take the assessment through the operating system and it’s $10 a month per employee. And then they, they find or
RV (22:20):
Limited access to the test,
JK (22:22):
To the operating system. Mm-Hmm.
RV (22:24):
Whole operating system,
JK (22:25):
They get everything. So the employee, they get, and, and it’s robust, they get team performance assessments, they have peace index assessment, communication code assessment, all of our books and tools, they get access to all of it. So, and employees now can build their team leaders. They can run their teams through Giant, but we’re partnering with a coach, a consultant. So each of them are then bringing on, like today I showed you that list that wins channel. Becky in England, she brought on 45 people at $10 a month. Well, that’s $450 a month, so it’s really low for the client. But that adds up because our churn rate is super low. It’s less than 3%. So people stay with us a long time because they’re using it as an ongoing basis. So now we’re in the software model. So now we’re helping coaches and consultants actually have a software business because they couldn’t afford to build what we’ve built.
JK (23:27):
So now we’re partnering with them. They’re selling five Voices, pro or Giant inside the company. They’re adding people onto the software and technology, and they’re running their systems off of it. The coach and consultants working with the company to do that. So now you have your direct income. So the, the direct income would be if you do a workshop or speaking, that’s a hundred percent yours. If you are so full and you need help, you can pull from any of the other giant community and ask, Hey, can you do this work for me, Rory, I can’t do it. But you keep a percentage of it. So you get a percentage of you directing work to people, and then you have recurring revenue. So we have one group, and it’s the largest group. So be be mindful of this, we have one group that’s making 49,000, or they have 49,000 a month in recurring revenue, and they’re making 25% of that. So 25, 30% that they’re making of 49,000 a month. We have other people making 9,000 a month. We have other people making 1000 a month. But it’s the idea that as a coach or consultant, you can actually have recurring revenues. You can actually be in the SaaS model itself. And that’s the partnership that we’ve, we’ve figured out.
RV (24:43):
Amazing. So, so basically they get a hundred percent of the speaking, you get a hundred percent of the coach’s monthly fee, and then they get 25 to 30% of the recurring. But then they also have a, they’re also vested in making sure people are logging in and using it and using the tools and all that sort of stuff. Yeah.
JK (25:00):
And it’s a frequent
RV (25:00):
That is so brilliant. That is so magnificent. I love that so much.
JK (25:05):
JK (25:59):
We’re doing different businesses, but Giant has now got five voices, but we are building certifications around five voices for other things. There’ll be a future of five Voices for healthcare, five voices for cells. And so now we’ve got this community that wants to take it in different directions than they can, but it’s just a different way to think than the other alternative, which was, I go speak, I sell books, and then maybe I get a certification product that I can sell to people. There we go. I’ve, I’ve already sold it. Maybe they do renewals. Well, in this case, it’s like we’re trying to, we we’re, we’re, our churn is so low. We’re trying to get to 3000 consultants. We’re at a thousand right now. We’re trying to get to 3000 consultants minimum that we think that will be the kind of next level for us. So, and we made it where it’s just very inexpensive. It’s 2 99 a month in that regard. So,
RV (26:56):
Yeah. Interesting. Well, that, I mean, that is so fascinating, and it’s just part of what I wanted to, to, to show in the interview is like, there’s different, there’s different ways to do this. And sometimes a shift in your thinking sometimes a minor shift in your thinking, create an exponential difference in the outcome of, of what it’s worth. And I think, you know, there, there’s a lot of people chasing like big speaking fees and, you know, wanna be the bestselling author and want to have lots of followers and like the celebrity, which is not bad or wrong. I mean, there’s, we, we do a lot of that, right? And we, we understand that world, but it’s also like there’s a way to be filthy rich and totally obscure at the same time.
RV (27:42):
You can get your content out. You can change the world. You can, you can multiply through other people. You can leverage. I, I also love how in both the story of Leadercast and in this model, you are really like reaching like the small town people and the, you know, the independent coaches. And, but, but, but pulling all those people together becomes a really powerful force. So I think that’s just really, really fascinating. So all right. Well, I, I, I, I, I, we, we gotta wrap up here soon. I, I wanna make sure that you get a chance to talk about the communication code. And maybe you can, you, you can just do a brief mention of how does that book tie into what you’re doing and, and you know, why did you write it and all that? ’cause I know that’s your, your most reset.
JK (28:24):
Yeah. So real fast. So I create content. The content then goes into our operating system and it goes into our consulting pool. They use that content for marketing. So we have the five gears, five voices, a hundred x leader, peace index, communication code, so on and so forth. So the communication code is one of our powerful tools in the giant community. They love it. And you can check it out giant worldwide.com if you want to find out more of what that community looks like. But communication code was really a tool. The idea is this, that Rory when we communicate, we have communication has expectation attached to it. Every communication is an expectation. And every expectation has a code word attached to it. If you understand and learn the code word, then you’ll unlock the expectation or the relationship. If you miss the code word, then you’re gonna miscommunicate.
JK (29:17):
And when you miscommunicate walls go up and then relationship sour, that’s the summary. So the five code words are, there’s care, there’s celebrate or celebration, care, clar, clarify, collaborate, and critique. Those are the five things that people are wanting when you understand what it is, and specifically how, and you customize it. ’cause Your care might look different than my care. But once you figure it out, then you actually use code language. Hey Roy, all right, we’re working today. Hey, what are you wanting today? Well, I want you to clarify first, and then I want you to collaborate. Awesome. You gave me the code words. I, I probably won’t miscommunicate, but if, if you come to me with desiring care and I start critiquing and then you pull back and I’m like, dude, what’s up with him? And most relationships are strained because we’ve missed the code words of communication. So it’s a, it’s one of the tools in our communication sec or section of Giant. We have communication, we have a relationship alignment, execution, and capacity tools. And that’s one of the key tools for that.
RV (30:28):
Very, very cool. So Jeremy, where do you want people to go if they wanna learn more about you and be connected with what you’re, what you’re up to? Yeah,
JK (30:36):
So jeremy ache.com. It’s not the easiest spell. Maybe that can be in the show notes. Giant.
RV (30:41):
We’ll put it in the show notes.
JK (30:43):
Yeah. And giant worldwide.com. Those are two that are very easy. You can also find our books on Amazon.
RV (30:49):
Yeah, yeah, yeah. And if you reach out, make sure you just let ’em know that you heard ’em with Brand Builders Group and Influential Personal brand and show ’em some love online to some of his social counsel stuff. Jeremy, thanks for that story, man. What, what an amazing trip kind of down memory line and just the evolution of the industry and, and kudos to you for making a lot of impact. I mean, separate of money and all that stuff is like, I just think about all the people who came to Leader, leader ca have come to Leader, cast and Catalyst, and, you know, Maxwell and all the stuff that you guys are doing, you’re doing now at Giant. Like, it’s really, really cool to add all that up and go, you know, somewhere, somewhere, somewhere somebody’s lives been vastly improved by the sacrifices and the work that you’ve put in. So kudos to that. Man. We wish you the best. Thanks for being here. And we’ll continue to follow your journey.
JK (31:38):
Thanks Rory. Appreciate you