Finding Equity Partners and Selling Cosmetics

You're listening to Freedom Fastlane, presented by capitalism.com. this is the show about building businesses and investing the profits so that you can live life on your terms.

Today we'll be listening to an audio version of our brand new Freedom Fast Lane TV series. If you haven't seen a Freedom Fastlane TV episode yet, you can find them on the Freedom Fastlane YouTube account or by going on itunes and searching under podcasts. Freedom Fast Lane tv. But for now, enjoy this episode on Freedom Fast Lane podcast.

What's up, fast Laners? Welcome to Freedom Fast Lane tv. Today, we're talking about the bane of my existence. That's right, paying the government money. We're gonna talk about dealing with haters, taking on equity partners, and we'll look at a batting gloves company.

Let's.

All right, here we go. I think this is the biggest check I've ever written. Oh, my pen won't work. That's a sign. It's a sign from above. God hates the government.

Okay.

Oh, there we go. Nope, it just started working. As soon as I accused God of hating the government, my pen started working. Here we go. This is it. This is what I have to show you right here. I think this is the biggest check I've ever written. Zoom in on that one. Block out my. Would you do me a favor and block out my banking information? $340,000 check to the government? That is an estimated payment first of the year. I'm handing it to the mysterious person on the back of the camera.

Taxes. Look, last year I did a video on taxes when I wrote a check for $170,000 on tax day, and it was the most viral video that I have ever done. Now, the biggest pushback that I've ever received is people saying, well, how much does that mean that you brought home? You should feel proud that you get to contribute that much to your country. Listen, I don't care how much money you make. I don't care what good you think the government does. Money in people's pockets is always better spent than handing it off to politicians who don't know who you are, probably don't care who you are, and are out of touch with the solutions that actually make change in the world. Whether somebody buys a Lamborghini or. Or whether somebody hires seven more people with, oh, I don't know, maybe the $340,000 that they pay as an estimated payment to the government. It is always better spent when it is kept in the hands of private individuals rather than turned over to fight war. Whether it is turned over to subsidize certain industries that you may or may not benefit from, or whatever it is that the government says that they are going to do. And look, this is not about Trump or Obama or about being Republican or Democrat. It is simply about you making choices rather than people making choices for you. And I'm not an anarchist. I want to have a military. I believe in strong borders. But apart from that, the federal government really has the role of protecting liberty and making sure that we have free markets. You have a right to keep what you earn. You have a right to go produce as much of it as possible. And by doing exactly that, you make a better world. By you creating things in the economy that makes the world a better place. Even the idea of giving back is a misinformed idea because it assumes that by you acquiring wealth, you didn't give in the first place and you had to if there was a value exchange. So again, this isn't about what side of the aisle you fall on or who you voted for in the last election. I didn't vote for Obama or Trump. But you always have a right to keep what you earn. And we should give as little to the government as possible. And also, people have accused me of saying you only want to keep dollars cause you want to buy a fancy car or something. Which, by the way, would be a better use of money than giving it to the government, but. Hey, Faras, would you sprint over here for a second? Watch this. This is spontaneous. This is how we roll on FFL tv. Sprint faster. Sprint faster.

Way to hustle.

Way to hustle. All right.

Hey, so I get scared of cameras.

Okay, so question just here@capitalism.com. what could we do with approximately, oh, $340,000?

Wow. We can help a lot of businesses, actually.

Okay, you're being all political about it. Just bro out with me here for a second.

$360,000.

Well, it just grew by 20 grand because I said 340,000. But what would we do with $340,000 to grow our business? A lot. Like what?

For one, marketing. We can extend on our marketing budget A lot.

Right way, a lot. Anything else we could do with, I don't know, $340,000, bonuses for everyone.

Put money back in the pocket and we can also hire more people that we could bonus out. Yep. And would that not be a better use of money than giving it to the government, which is going to waste it in bureaucracy anyway?

It's always better to give money back to the community where they can either build businesses or get jobs be hired. And we get bonuses too.

Good work for us.

Thank you.

This check is so big because I sell physical products and I build businesses. And I believe the fastest way to financial wealth and financial freedom is to build businesses and to invest the profits. So let's go into some questions that'll show you how to do just that.

Lance Mechanic asks, does bringing on an equity partner dilute your portions and potential profits?

Given two equal scenarios, a business being a billion dollar company with investors or a billion dollar company without investors, obviously you want to keep as much of the pie that you have built as possible. The question just becomes, does bringing on investors create a bigger pie than you could do on your own or not? I'm currently in the process of acquiring a business, and while we didn't need to raise money, we. We decided to court investors on this because of the relationships that it would create. And by doing so, we had to give up equity in the company that we were acquiring. The benefit was it freed up our own business capital to be able to put that into the business so we can hire people, so that we can release new products, so that we can be more aggressive with advertising. And as that capital is freed up, that's gonna grow the business bigger than if we didn't have that capital. Cause it was tied up in the acquisition cost. The other thing is some of the investors that we're partnering with adv value to the company. So we all know that there's that one book, that one person, that one opportunity that has shown itself that as a result has created a huge impact in your life and business. Sometimes investors can be those people not just because of the capital that they bring to the table, but because of the other relationships they bring, the expertise that they bring, the connections that they have, the experience of doing this before, the insight that they have, the ideas that they bring, the client base that they bring, the email list they bring, the blog that they run. So it is not just a matter of do you dilute your equity or not. It's a simple value exchange. Does the 10 points or the 20 points that you give up in exchange for that money allow you to run a bigger business or not. There's a deal that I'm going through right now where there's money being taken off the table, which makes the founders of the company happy because they get to cash in a little bit. And as a result of them cashing in, they're more likely to be risk tolerant in growing the business, meaning a lot of entrepreneurs are risk tolerant when they start a business, meaning they're okay taking the risk to grow a business, but as soon as it gets profitable, we go into protection mode and we stop taking risks, which can slow down the growth of the business. So if you take on an investor, which allows you to take money off the table, breathe a little bit easier, put money into your pocket. Now say, okay, I'm playing with house money now, so I'm going to take some risks in this business. Calculated risks, of course, that can create a net positive in the business by you being more aggressive in growing the business. So I think a lot of small businesses, especially solo entrepreneurs, are a little bit too protective of the way that they start a business because they're thinking about potential rather than what impacts the business right now. Sometimes that hundred grand or that 50 grand that you raise in a business simply gives you the breathing room to be able to operate it like it should be run, which allows you to grow the type of business that it could be. All things equal, of course, you are more profitable, meaning your own personal gain from the business if you keep 100% of the business. But in the event that an investor is adds more value to the collective pie of the business, then it can be a very wise decision. Right for everybody? Absolutely not.

Right.

In the correct strategic positioning, like the things that we try to create in the tribe, and when you've got a specific relationship where somebody adds more than just the money they're putting in, then bringing on investment partners can be a very wise business decision.

Dennis Murphy asks, how do you deal with the haters?

My buddy and mentor, Jesse Elder, has a quote that I have restated a hundred times. It seems particularly relevant as an answer to this question, But Jesse answers a little bit differently. He says he is asked, what do you think of the war in blank Country? What do you think about what such and such politician or celebrity said? And he says, I simply answer, I don't think about it. We all have a very limited amount of attention and our brains are wired to see problems and haters and naysayers your brain interprets as problems. My buddy Nathan Latke says it's a lot easier to get people to hate you than it is to get people to love you. Because it is natural for people to push back against someone who is making a statement. Look, the reality of the situation is if you are making any sort of a statement in the world, there are going to be people who disagree, and people who disagree are going to be louder than the people who agree. So if people aren't disagreeing with you, it probably means that you're not being loud enough with the thing that you believe in. So if you don't have haters, I encourage you to be a little bit more bold about what you do as a brand, what you do as a company, what you stand for publicly. We as human beings crave to follow people who represent our beliefs. And I believe that by representing something, you create more core raving fans, that creates more repeat business. That means faster growth as a company by you standing for something. Even as a physical products brand, even as a blog, if you stand for something that you believe in, you will attract people who naturally resonate with that and you will get some haters in the process. I am comfortable with that because I know that YouTube haters can't do anything to me. I know that Facebook commenters can't hurt me unless I let them. But by making a statement, you do create a net positive among those who do agree with you. Most importantly, it just puts you in front of the people that you want to be doing business with anyway. And if you're doing a good job, then those who believe in your ideals will come to defend you. Anyway, I used to spend a lot of time and energy replying to negative comments. It doesn't really bother me anymore. Yes, sometimes there's that one that just digs in a little bit. But really that is just a sign of you being bold about what you believe in. And I think the world needs more of that.

All right, this is the part of the show where we look at one of our students businesses. Today we're looking at a submission from Ed Alf. He is one of our tribe members. Hey Ed, good to see you. And Ed runs a business called Spiderz with a Z. They sell batting gloves and custom fielding gloves. A man after my own heart. Good work, Ed. His primary sales channels are his e commerce website, retail independent player reps and Amazon.com and his monthly sales currently are about $60,000 per month. So he's looking to expand. He has a decent Instagram and Facebook following that he could be growing. But today, Ed, I want to look at some obvious low hanging fruit for you because in his submission he said that his biggest problem is keeping sufficient inventory because they're spreading themselves really thin because they're trying to keep their designs fresh and modern and they're releasing a lot of new designs which requires inventory purchases, which becomes a bit of a balancing act. We're taking sales, but we want to release a New sku. So how do we fund that? This would be my recommendation, Ed. I think that you will immediately become more profitable if you go deep instead of wide. When I built ZenActive Sports, it was not until we had several products selling consistently that we even thought about releasing additional colors other than black. All of our yoga mats were one color. And then after we were selling really predictably and we could take money off the table, that's when we said, maybe we should do pink or orange or green. What that allowed us to do was to get to the point where we were selling predictably, selling successfully, and then take everything out of profit and release the new product. It allowed us to get our reviews really dialed in. So when I pull up your Amazon store, I Notice that the SKUs that you have listed only have between 3 and 25 reviews. That's gonna be tough to scale. The way that you are really gonna get this is if you get Those, you're selling $60,000 a month. Ed, you can get those buyers to come back and review your products because they've already bought an existing product. I would say put a hold on releasing any new products that are duplications of what you already have. Meaning if you've already got good batting gloves, just focus on selling more of that specific design. Esthetics can be changed later. You can roll out new colors, new designs, new patterns later. Right now, does the product do what it says it's going to do? Does it give the buyer the result that they want? If so, you've got a minimum viable product. Now let's scale that to be a multimillion dollar business. You have enough products to where you could be selling at least 1.5, probably $2 million a year before worrying about adding an additional design, an additional color, an additional anything, unless it's a completely new product. Right now, I would say you need to double down on your Amazon presence, get ranking for certain keywords that are going to drive new customers, and allow you to get the reviews that you need to be able to stand out in the marketplace. Shelve all new designs and colors for at least six months, preferably a year, and take all that creative capacity into driving more traffic, more conversions, and more new types of products that are not deviations from what we already have, meaning they're not variations. So if you wanted to do a T that people hit off of, if that's your market, then add that, because that's a completely different set of customers and it's something that your existing customers would come back and Buy versus if you just roll out another color, are you doubling your market size? Are you giving them a reason to come back and buy again? You're not. You might just hit the person who likes yellow instead of Blue and that's 5% of the market versus 50% more if you added a completely new product. That's how I think that spiderz is going to grow as a brand. The other piece is you've got a solid Instagram following, a solid Facebook following. Are you driving traffic to the existing products that you have rather than just highlighting new designs? You will grow this business by putting all of your resources that following your email list the reviews behind those products, in this case specifically on Amazon, because you can drive the algorithm, get those reviews, get the conversions up, allow yourself to spend more money to get yourself ranking for those keywords. You are sitting on an easy way to double this company. You can double Spiders in the next six months if you do only that and worry about the rest of the variations later.

I get a lot of questions about what I think of some of Tony Robbins investment strategies, especially the ones where he talks about assets that can go up in value over time, but don't participate in any downside.

I don't agree with all of Tony's.

Investment recommendations, but do participate in investing in insurance, which is one of the things that he's describing in that strategy. Now, I want to give you a warning. When I went into that investment strategy, I got schmoozed over by a slick salesman and I wish that I had used a sophisticated firm that was actually dedicated to that. That's why I had wealthpoint on the podcast recently. And I'd encourage you to go listen to that episode about infinite banking. Now, infinite banking isn't the proper term to describe what they do. They actually use a modified version which is called capital warehousing. But what it basically allows you to.

Do is park cash like you would.

Put it into a bank, participate in the growth of the market without participating in any downside, and you still get access to that capital so that you can put it into other investments. So if you've got money sitting on the sidelines, you might want to use capital warehousing as part of your strategy. So you can go over to gowealthpoint.com freedom to learn how the strategy works. Or you can just listen to the episode that we had with Sam Prentice from wealthpoint here on the podcast.

It's called how the Rich Use Infinite.

Banking for Tax Free Wealth.

If you are sitting on a business idea, or you have a business that is already off the ground, or you're looking to invest in businesses that you know you can impact. We take those types of entrepreneurs and we put them together in our tribe, and that's@freedomfastlane.com tribe. We take people who are successful in business, people who are starting new businesses, as well as investors and audience leaders. We bring in retail partners and people who run traffic, and we bake them all together to create new opportunities. Because when people collaborate with a common goal of growing a business, that's when real magic can happen with a new venture. So if that's you, that's over@freedomfastlane.com tribe. I said earlier that the process of making sales and generating wealth is in and of itself a way of providing value in the world. That by you creating something new and someone else voting with their dollars and saying, I want this, you have impacted someone else's life. What you do matters. As an entrepreneur, it's one of the most freeing thoughts in the world to realize that by you operating in your genius, by you creating new things, by you bringing new products and services to the marketplace, you make the world a better place. So you are free to go and be as successful as you want, as wealthy as you want, as creative as you can possibly be. That is what drives innovation and change. You have the right to keep what you earn because you did it in a way that provided value for somebody else. And that is why entrepreneurship and capitalism is so important and so necessary in today's world. As always, thanks for watching the show. We'll see you next time.