This is Season 1 Episode 4. Today I will be sharing with you the formula to wealth and happiness. Yes, they can both be achieved.
The basic fuel is knowledge. Learn everything you can every day about as many topics as you can handle; you’ll never know what Rocky Road ice cream taste like unless you’ve tried vanilla chocolate strawberry and the rest. Find out what you love to do and get really good at it whether it’s hunting, painting, sculpting, writing, raising horses, breeding puppies, left-handed underwater basket weaving, whatever the case may be. Then think and figure out a way to monetize those skills, and with your earnings, secure them with something tangible and recession-resistant like real estate or precious metals. The short version is this: do what you love to do and get paid for it so you never have to work a day in your life. I’m sure we’ve all heard a variation of that before. “Think and Grow Rich” by Napoleon Hill, Henry Ford Quotes: “Thinking is the hardest work there is, which is probably the reason why so few engage in it”. Always continue to learn because you don’t know what you don’t know and that’s the only way to find out.
I am what you would call a solopreneur. I like things to be simple and efficient and I’ve always had a hard time delegating tasks to other people. If you want something done and done right do it yourself right? Well no. It’s not realistic to think that you can do everything yourself that is not what I’m talking about what I’m talking about is spending most of your time creating your business building your Empire and less time on minutiae, managing human resources, worrying about tax laws, keeping up-to-date with Medicaid and Social Security rules and regulations, etc.
Let me ask you this,
When you get sick do you treat yourself or do you seek assistance of a doctor? Well the same can be said with the way I handle my business. It depends, if the task is simple and the learning curve short then yes, I do it myself; if it requires a specialist, I happily pay what a specialist is worth.
Everything we do in business has a price, what they probably won’t teach you in school is that the price can be paid either with time or money. We’re all familiar with the concept of paying with money but people’s time is precious; your time is precious and a very limited asset, a depleting resource. If some of you out there are ones to spend hours in front of the television without learning anything I implore you to reassess your time allocation.
Recognize the difference between an asset and a liability. Robert Kiyosaki, author of “Rich Dad, Poor Dad” explained it best by simply saying “an asset puts money in your pocket, a liability takes money out of your pocket”. This is a great book to get inspired and gain some courage into believing in yourself and starting a business. So is the car you’re driving an asset or a liability? Well it’s a liability, but what if you drive for Lyft or Uber? Now it becomes an asset. Is the home you live in an asset or a liability? A lot of people use the word investment without knowing what that means. Well your home is a liability; but what if you rent out a room or you move to an apartment and rent the house and draw monthly rent from it? Then it becomes an asset.
So if I can pay an electrician with money to do a job that will take him two hours, and within those two hours I’m free to continue working on my business which is not being an electrician, I would happily pay it. Because what would take him two hours to do, would take me 8 or more to complete. Not to mention the steep learning curve and safety risks I would have to take.
The same thing can be said for tax preparation and the same can be said for attorneys. If you need a specialist pay a specialist and move on. A note about attorneys and the same can be applied when you are choosing a mentor: choose wisely who it is you take advice from. It’s been my experience that you should never ask a family attorney a question about real estate. If you’re seeking legal advice for Real Estate, consult a real estate attorney. Not your buddies or your pals or your cousin that says he’s been doing real estate for the last 20 years, you ask a real estate attorney. Not because your cousin has been doing real estate for 20 years means that he’s been doing it right; there are only a handful of ways of investing in real estate correctly, and hundreds of ways of investing incorrectly, you can figure out the odds of that one.
At the same time realize that an attorney is not an end all-say all about anything, it’s okay to ask for a second opinion. Another word of caution, don’t ever ask a real estate attorney about how to run your business, ask your mentor. I really hope the mentor you chose was because he or she has the business you want to have and not because they’re either nice or well read or say they’ve been buying and selling houses for 20 years, remember? And a realtor is not an investor but a realtor.
I’ve been asked before if it’s wise to get your real estate license if you’re thinking about investing in real estate and the answer is “no”. They do not teach you how to invest in real estate when you’re getting your realtor’s license; the only thing they teach you is how to read and fill Purchase and Sales Agreements and that’s about it. I can teach you that in one afternoon. If you want to know about real estate investing you ask a real estate investor. If this is something you’re personally interested in, please let me know and I’ll be happy to share how I conduct my business.
I hope I got my point across with what I previously said; the certainty of people never fails to amuse me. I can’t tell you how many times I’ve been talking with potential buyers and they are so certain about everything. I get told things like “this property is not worth that much” or “it will take this much money to fix up this property” or “the roof needs to be replaced”. To all of those comments my response to them is: if you don’t think its worth that much then tell me, how much is it worth? And watch them backpedal and spin their wheels.
Because I know for a fact that I need an appraiser to tell me how much a property is worth. Yes there is such a thing as comparables in the area for retail buyers, but those are only good if you are a regular buyer or seller, they don’t apply if you’re an investor. There’re too many other variables to consider to list them all here. Just to give you an idea, it’s like buying a house “as-is” and selling a house with financing. The values for you as an investor vary.
But the true worth of a property sold retail, can only be told by an appraiser; and if I send three different appraisers to the same property, I can assure you I will get three different prices back. Plus, to become an appraiser you must go to school for a couple of years and get your license. Not just anyone can say they’re an appraiser.
Another thing that I hear is: “it’ll take 10 to $15,000 to fix this property”. My response to that is “well write me up a contractor bid and let me look at it”. And guess what? They have no idea what I’m talking about because they’re not a contractor. Same thing with the roof “the roof needs to be replaced” well are you a roofer? No? Then shut up. Some people just want to corner you into giving them stuff at a discount.
I do make it a point to let them know that they’re not an appraiser and neither am I but I am the seller and that is the price of the home and that I’m willing to sell it at. Whether they think it’s worth it or not, in the end, the value will only be dictated by the market. I can tell you that if I show you how, then you’ll know what you’re doing and you will always price it correctly.
Business models are as limitless as there are ideas. If you want to know the business models in which you can absolutely go at it “solo” without ever needing to hire employees, I’ve got your back. We have done it and continue to do so ‘till this day, and so can you. But if you must hire employees: pay them well so they don’t ever steal from you, and treat them well so they never leave you. Without knowing your own business modal, that is all the advice I can give you about this, for now.
All the businesses I’ve consulted for had the same elements: people. Whether they are hired services (contractors and virtual assistants) or employees (cooks, waiters, electricians, office, from department heads to assistants). They can also be structured and organized in similar ways: organized delegation of authority. Very important: responsibility can be delegated, but accountability cannot. This is where a lot of structures crumble. People generally don’t like being held accountable, especially for other people’s actions. This is addressed and overcome by training and conditioning.
As a business consultant, I once tried and failed to help a business owner that owned 7 restaurants and had been in business for years. I’m sharing this with you so you have an idea of how far people are controlled by their convictions.
To the untrained eye this man was very successful. Remember what I said about this before? Not because you’ve been doing it for years means you’ve been doing it right! With his permission I dug around and observed the main restaurant to prepare a proposal for him. I made it a point to visit the restaurant at different times and days and to chat with the managers of different shifts. I checked out the kitchen and the freezers, made friends with the “chef” (head cook, not really a chef) and the cooks working for him.
I also looked at the books with what would be the bookkeeper/human resources/general manager/floor captain/bartender/scheduler… I’ll stop there, you get the idea. I was only interested in honing into two numbers: money going out, money coming in.
What I found out shocked me. His employee turnover was massive, he had money leaks that could be nearly impossible to trace, and wasted food and talented resources daily that were costing him tens of thousands of dollars per month. I wish I were exaggerating.
My proposal ended up being about 20 pages long with estimates and calculations. It’s highly unlikely to get a perfect picture about a business after only a week of observation. So to not keep you here for hours, let me summarize my proposal for you. Here are the highlights:
– Reduce the menu of over 150 possible items and combinations to about 20. This will increase the efficiency of both, the servers and the cooks. The head cook doesn’t decide what food to buy and replenish daily, the owner (or his delegate) does. Too much food is thrown away.
– The freezers and the kitchen need to be inspected for cleanliness and waste daily.
– A floor captain stays on the floor, a head cook commands the kitchen, and a caller calls out the orders. A bartender… you guessed it, at the bar; no one else is allowed there but the bartender.
-Training and Standard Operating Procedures. Waiters must be trained how to properly wait, for customer service and so they don’t leave without paying. A restaurant’s huge profit comes from selling alcohol. If the customer doesn’t know they can order steak, they’ll never order the steak. Bartenders must be trained for measurements; quit trying to eyeball what a shot or a double is. Each bottle has an expected margin of profit. Cooks need to be trained to cook. It’s unacceptable for a cook not to know the different times and temperatures needed to cook individual items (rare, medium, well done) and they should all be trained on all stations.
To write a training and standard operating procedures manual from scratch takes a lot of work. To create a training schedule for each team and offer incentives to them for other optional training, takes a lot of work. To train trainers on a weekly basis and troubleshoot problems and offer course corrections, takes a lot of work. To adjust expenses to the 30, 30, 30, 10% rule, takes work.
A decent restaurant should make about $100,000.00 per month. 30% should go to payroll, 30% should go to items costs, 10% to rent and utilities, and an awesome 30% profit. That’s $30,000.00 per month, per restaurant of potential revenue. And this guy owned seven! With my offer I could guarantee a 10% profit margin increase with a few adjustments in just the first month alone, easily; or your money back.
So my offer was this (please consider adjusting for inflation as this was a few years ago):
- $10,000.00 to write the training and standard operating procedures manual (with up to 3 revisions)
- $10,000.00 per month for two hours per week to personally train each team at a scheduled time and location of his choosing. And email access for questions 24/7 during that month. Renewable each month until he feels his training team can take over.
In almost every business there are fluctuations to consider: seasons, vacations, weather, etc. that affect the bottom line. That is why the guarantees I offer with my proposals are very specific.
He said “no”. This was the only time someone turned down an offer this great, but it happens to the best of us. He said that in spite of the waste, the money leaks, the employee turnover, and the massive amount of money he was leaving on the table in potential profits, he would pass. Because as long as he’s making a profit even a small one, he’s ok with it. This training thing was just too complicated for him even though he was to remain hands-off in the businesses as he liked to be.
No matter what your business is, whatever the case may be, the end goal is the same: replace yourself from your business so it can run without you, free yourself from being tied down as soon as possible and travel and explore to continue your spiritual growth, happiness and success attracts happiness and success. Then you’ve truly achieved financial freedom; and perpetual happiness, is just around the corner.
That’s all the time we have for today. Next episode we’ll be discussing the action step of “getting rid of the measuring stick”, toxic people and what to do about it, and “enabling”, the false help act of harming someone you love or want to protect.