Growth_Hack_101_What_Keeps_Businesses_Growing.mp3

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Welcome to Freedom Fastlane. RDM here. Thanks for checking out the show. Today I'm going to be talking about one specific distinction that makes a huge difference in the overall success of a business. I was doing a call with the tribe, it was actually just yesterday, and I made a comment that received an interesting response and that was I told everybody that I spent three days with one of my mentors this past weekend. And I was telling them that when I was a new entrepreneur, all I wanted were the tactics that were going to put money in my pocket. But as I become a fairly successful entrepreneur, I realized that the really, really successful people only work on mindset. They spend probably 20% of their time working on new tactics and strategies in their business and the rest of their working on their mindset and their beliefs and their perspective about business and money and their team members and their employees perspectives on money and business. It's interesting. When I was a new entrepreneur, I used to hear everyone talk about mindset and think that it was woo woo, hippie stuff. And now that I'm a successful entrepreneur, I realize that I spend most of my time working on my own mindset. And that is the very reason why I have been successful. You know, tactics are a dime a dozen. Most of them will get you to where you want to go as long as you follow them. It is our junk that gets in the way. It is our own stories, our own beliefs, our own habits that get in the way of things that work, actually working. And I want to talk about one thing today that I think makes a tremendous difference in the success of a business. And it's a mindset thing. It's one of those key differences between really successful entrepreneurs and those who kind of struggle to make it. This came up in a conversation with my TRI mastermind. It's my group of my most successful students. We all sit in a room and work on each other's businesses. And these are people who are doing at least $50,000 a month in their business. And we brought this concept up and it created a very interesting conversation about this topic. And we got on this topic by talking about this mantra that we all hear, which is work on your business, not in your business. And this concept led to another discussion that will kick off today's content. But I want to talk about this concept for a second. This idea of working on your business, not in your business, and how most entrepreneurs spend their time doing things that are not really empowering to the business but put out fires. They're working in the customer Service department, They're working in the marketing department. They're wearing a jack of all trades hat in their businesses rather than actually building the business beyond themselves. We were talking about this for a minute, and I said one distinction. And this distinction, I think, really help people get it. And I want to share it with you on today's podcast. And that distinction is this, that you are not your business.

This raised some eyebrows in the room. So let me tell you a little about what I mean. Most entrepreneurs are afraid to take a risk in their business because they believe that they are their business. They started the business, their money went into the business, all their hard work went into the business. So the fruits of their labor reflect on them. And that is true. But where the confusion comes in is when you put in $10,000, say, into a business, and now it is $100,000. The mistake is believing that that money belongs to you, that you are the business. Now, this is a little bit different than the concept of working on your business, rather in your business. But the reason why most entrepreneurs never really work on their business and they stay stuck in their business and letting their business control them is because they believe that they are their business. Now, if you've ever read any spiritual material, if you have read any kind of the new wave of spirituality that is going on, I don't care what your opinion is about it. But there is one important distinction that recent spiritual teachers have made that I think they've portrayed very, very accurately. That was not as accurately described ancient texts, and that is that you are not your thoughts. Your thoughts happen, but you are not your thoughts. And if you can step back and observe your thoughts, that is a huge step in spiritual growth. I bring that up because it is a great connection to business owners who believe that they are their business and as a result, stay stuck in their business. The antithesis to this is taking a step back and realizing that you are not your business. Therefore, you are free to work on your business. What, again, most people do is they invest the money, they put the time in, they build something, and they say, this is what I built. This is me. So I need to be protective. This business, I see this all the time in entrepreneurs who put in a certain amount of money and then they will build their business, and then it kind of stays stuck at a certain level of growth. I would like to invite you to the possibility that if you have a business that has grown and it makes money, but has been stuck at a specific point, it is because you have been doing things like taking lots of money off of the table because it's your money and you're enjoying the fruits of that labor. And I'm not saying anything's wrong with that. I'm just saying this is one of the causes of the symptoms of lack of growth. You're taking a lot of money off the table. You haven't hired anyone in a while, and you're not developing proactive systems. And the reasons you're not doing those things is because you believe that you are your business, it's my money. I'm going to enjoy some of the fruits of my labor. Now, let me spin this a little bit to kind of help it be a little bit more clear. I see and I have seen a very strong difference between entrepreneurs who fund a business themselves and entrepreneurs who take outside funding to grow a business. Now, neither one of these are right or wrong. I've never taken funding. But for an outside business, I've only ever funded my own. But in most cases, I have seen a difference between those two types of people. And the person who funds the business themselves has risk involved. So after they have invested money, they believe that their risk is over. They believe that they have now graduated from the school of taking risks, and now they are going to benefit from whatever growth comes from that business. So they put themselves on payroll. Once it's making money, they take distributions from that money, and all that is fine and well until the business stops growing. And then the entrepreneur says, gee, why? Why aren't I growing? And why am I worrying every night that all of this is going to go away? If this all goes away, then I'm toast because I no longer have income anymore. Meanwhile, there is the entrepreneur who takes outside funding. And these entrepreneurs don't have any risk or their risk is much smaller in the grand scope of the business, they have a smaller percentage of risk. This entrepreneur hires a team, comes up with a strategic plan, everyone gets on board, they hire the best people, and they grow, and they continue to grow because they were free from this risk of I'm going to fail, I'm going to be on the streets, and this is my business that I have to protect. Now, there's no right or wrong perspective on if you're going to take money to grow your business or not. I personally don't, but I appreciate the mindset that comes from being freed up of the risk of the business. So if you have ever been guilty of trying to hire cheap employees over really outstanding employees because you're afraid of the loss of funds, that will come from hiring the right person. Or if you have ever taken a lot of money off of the table while not reinvesting money into your business to grow it, and in reinvesting an equal amount that you're paying yourself, then you're probably suffering from the disease of believing that you are your business. The truth is, you are not your business. You built your business. But the minute you confuse the two, you will stop building your business and you will be operating in your business, which makes you a slave to the business. And you will always wonder, what happens if this all goes away? What happens if tomorrow there's a change in whatever business I'm in and now I have to move home and work at Walmart? All entrepreneurs I know have this fear until they separate themselves from the idea that they are not their business, that their business is part of something they've built, but it is not them. I work with a lot of physical product entrepreneurs, people who have created physical products. A lot of them sell on Amazon. And what tends to happen is, let's assume it's their first business. They take a few thousand dollars and then they put it into their existing business, into their new business, and they buy inventory and they buy a little bit of advertising. And they're so proud of themselves for taking this risk. Then what happens is it starts to grow, and it starts to accumulate and continues to grow. And then it comes time to where they can pay themselves back. And it's a really great feeling to pay yourself back that money that has come as the result of your risk and the fruits of your labor. But then what happens is they've paid themselves back, so their risk is now taken care of. Then they become fearful of taking another risk, of making another investment into their business to grow. So even if there are 50 or $100,000 in their business bank account, they're afraid to risk that money because they believe, that's my money. I own that business. Let me propose a question. What if it wasn't your money? What if it was the business's money? And what if the best investment that you could possibly make was reinvesting that into your business? And by doing so, you'll make more money than you even knew what to do with. You see, the solution to this is, go ahead, pay yourself back. If you have taken a risk in your business, if you have money into your business and you want to eliminate that risk, pay yourself back. By all means, take money out of the business and pay yourself back. And then rather than taking out all the Profits of the business. Put yourself on salary or with regular distributions from the company, but then designate at least an equal amount to go back into the growth of the business. Now what does that mean, the growth of the business? This is, this is going to make some people uncomfortable. Reinvesting back into the growth of the business means that it has some risk.

That doesn't mean buying more of what you've continued to do. That doesn't mean spending money aimlessly. That means, and it doesn't mean your expense account either for you to take clients out to dinner and go golfing. What that means is that you have money designated for taking new risk. There's a great book called the Breakthrough Company. And what this book outlines is that most businesses will at the beginning of their business, designate a certain amount for risk because they're new. And then when money starts to flow in, they take that money off the table and put it into their pockets. But really, really successful companies are those that continue to risk that same equal amount each time. So let's say at the beginning of your business you take some money off the table, but you also reinvest an equal amount into new products, into new people. That's easy to do when you're first growing because you can easily see the growth. But once you have a million dollar business or even just a successful business that's paying your bills, all of a sudden you start to feel attached to that money if you believe that you are your business. But if we separate that and we look at what really successful companies have done in order to create extraordinary results, what they have done is they have maintained that percentage, that proportion. So if you take out 50%, let's say you have $10,000 in your business account, you take out five for you put five back into the business for a second product. But once there's $100,000 in the business bank account, it becomes difficult to risk $50,000. Take out 50 for yourself, put 50 into some sort of risk. Why is that difficult? Because you believe it's your money and you are limited by the mindset that you have about your personal money. But if we allow ourselves to see it as the business money and we take half out for ourselves and the rest goes into risk activity, growth activity, then all of a sudden we're free from the responsibility of what happens if it fails. But the temptation is to say, if we take a risk that we don't like or that doesn't go how we like, we start to say, ah, if I just hadn't taken that risk, I would have 50,000 extra dollars in my bank account. Can't think of it that way. The way we have to think about it is if I never take a risk, if I never continue to reinvest of the growth of my company, then I will have zero dollars. I will have far fewer dollars than if I got comfortable building the risk muscle, building the muscle of growth. So here's a practical plan for you. Your practical plan is to designate an amount that you're going to take out for yourself when there's cash in the bank and at least an equal proportion that will go into growth. Meaning it makes you a little bit uncomfortable. And this can be rolling out new products or hiring a team, or reinvesting into developing systems or bringing outside help. These are the things that are a little bit scary, but they ultimately drive the growth of business. It could be buying new advertising, going into new channels, something that is a little bit uncomfortable, that we don't know perfect perfectly. But we can see that if it develops, it will result in direct growth of the business. Because you're working on the business, not in the business. And you are not the business. The important distinction is that you keep that proportion of investment, that proportion of investment into growth equal, no matter how much money is in the bank account. It's really easy to designate 50% of the profits back into growth. When the profits are $5,000, it's still even kind of easy to do it. And I'm speaking from my experience and my beliefs about money, I guess. But it's easy for me to invest 25, even $50,000 in my business if I'm still getting half of that. But once there's a million dollars in profits, it's really tempting to take that extra half a million dollars that you're reinvesting into your business instead. Now, there's one caveat to this. This is assuming that you want your business to grow beyond the level that it currently is. If you want your business to stay how it is, and I know plenty of lifestyle entrepreneurs who have a couple million bucks coming in from their business each year, and they're perfectly happy with that, by all means, you can tweak this strategy to have as much money as you want coming in. You don't have to reinvest anything into the business if you don't want to grow. But for new entrepreneurs and ambitious entrepreneurs who want to grow beyond a lifestyle business, you have to continue to reinvest in your business in things that are going to directly result in growth. Otherwise, you will stop growing. And so many entrepreneurs that I know put so much energy into saying how much can I get out of this business? There's X amount of dollars in the bank account and it's mine. And I don't want to reinvest into growth areas because that is going to take money out of my pocketbook. That is incorrect. Your net worth is driven by the business and the more that business grows, the more money you make. In the same way that I would never recommend that someone take money out and put it into a something that is going to go away like a sports car or a big party. And I know people who do this. I know entrepreneurs who spend most of their money on drugs and hookers while that, well, we would laugh at that idea. It's an equally silly idea to take money out of your greatest asset when it could be used to grow the business and grow the investment in ways that are exponential to our own growth and net worth. Until the point point where we are satisfied with the size of the business, there needs to be a designated amount that is at least equal to what we're paying ourselves. That go back into people, new products, new channels, new marketing avenues. Because that area, even though it makes us uncomfortable at first, is what drives the growth of the business. And this is a muscle, the muscle of taking risk. And it was a risk, a big risk at the beginning of the business. That was the reason why the business exists in the first place. But after that, most entrepreneurs think that they're done with risk and nothing could be further from the truth. The truth is, if you want to keep growing, then you need to continue to flex your risk muscle by taking money that's designated in your bank account and investing it into growth driven activities. Would love to hear your thoughts on today's show. You can let me know when you head over to freedomfastlane.com I've got the show notes posted. You can also leave a comment there and let me know what you think of today's episode. Thanks for listening to Freedom Fastlane and I'll see you on the next show.