Highest and Best Use & The Theory of constraints -EP#077 Ben Simkin

G', day, guys. And welcome to this episode of the how to Scale a Video Business podcast. Now, as part of this coaching month, I've got a very, very special guest today. Ben Simkin is the founder of the Mastermind, which is a high level business mastermind program that Ben founded five years ago. And he's also the founder and CEO of Businessnet. And Businessnet have generated over $2 billion in revenue for their clients. Ben is a very, very smart guy and I'm pleased to say that he offered to sit down with me for half an hour and share his story about how he got started. And really more importantly, from the perspective of a small business, how can you move from that small business mindset to building a very, very substantial business? Ben started life as a programmer, so has, you know, complete experience of starting a business when he was very young and doing, you know, 20 hours a day, trying to do everything himself. And then something changed. He saw how other successful businesses operated and he asked the question, what are they doing differently? So in this interview, Ben shares not only a concept of highest and best use of time, but we also delve into something called the theme theory of constraints, which I think you'll find very, very interesting and very useful. And I want you to do is think about this from the perspective of how can you apply this in your business? This is a really incredible 30 minute conversation. I'm so grateful that Ben made some time available in his diary to have a chat with us. We were in his apartment and his cleaner was in cleaning the apartment while we're doing it. And we actually talk about that in this session about leveraging other people to help you with tasks that are not the highest and best use of your time. So I think you're going to really enjoy this. Guys.

Hey, guys. Just before we get started in this week's episode, I wanted to make sure you were aware of some new resources we've got for you over@denleny.com that's D E N L E N N I E.com including I'm giving away a free copy of my book A Filmmaker's Guide to Budgets and quotes that increase profit margin on Productions by 20 to 30% instantly. So if you want to grab a copy of that book, it's on the website now. And we're adding new resources to the resources tab all the time to help you scale your business faster. Thanks so much and enjoy the show. So, Ben, we've known each other for a little while now. I've had the opportunity to spend some time with you in your zone of genius, which is making good decisions around business and growth. And I'd love you to share your theory around highest and best use of time. Because whether or not you are a startup video production business or you're running multimillion dollar ad campaigns and ad agencies like you do, everyone starts as a small business, don't they? And tell me about that idea of highest, best use of, of time.

Good question. Highest and best use theory. Well, you know, thinking back to when I first started in business, you go into business, you don't really consciously think about, you know, am I using my time in the best way? And you kind of waste a lot of time. You take too long to do things that should be done quicker. And you do things and you spend time on things that you shouldn't be doing at all. And there comes a time where you have to, if you want to break the glass ceiling where you're, you've reached kind of reach your max. You know, this is how much money I'm making. I'm working 20 hours a day, or I'm working 15 hours a day, I'm working 100 hours a week, whatever it is, whatever that number is, you can't physically spend more hours. And therefore you are maxed out on your earning capacity. And it has to be a point where you have to start questioning, well, If I'm working 20 hours a day and I'm only making fifty thousand, hundred thousand dollars a year, whatever it is, and the guy down there is making $10 million a year with the same amount of time, then what am I doing differently? And that's exactly what happened to me, is I met a guy who was.

Making, you know, tens of millions of dollars. I was struggling to make $200,000 a year working 20 hours a day, six days a week. And I was like, well, what's the difference? And the difference is really highest and best use theory, which comes, which I found out later, comes from an economist called Dr. Irving Fisher, and he invented the highest and best use theory in relation to real estate. What is the highest and best use of a block of land, for example? And there's an example that my mentor J. Abraham mentions about you. Have you, you inherit a little quaint cottage, you know, with some land, and. But it so happens to be on the Las Vegas strip. Now, do you sell the cottage for what a cottage is worth, $300,000, or can you sell it for $100 million? Because the highest and best use of that specific piece of property is is not to live in with your cat, it's to.

It'S to build a casino one. And so you think about that, then you think about what's the highest and best use of my time. Is it to go in, spend time on marketing or learning about marketing or doing sales, or is it to do filing, answering the phone, check my emails every five minutes, looking at my notifications every two minutes. You know, where do you spend your time? And you find that you start to be more astute about how you spend your time.

And so you're a big advocate of fiercely protecting your time. Like, you know, turn off notifications on your phone, don't have email on your phone. Like don't even deal with email. Can you give me some other examples of where you have learned and perhaps shifted a habit from a habit that wasn't serving your revenue generation capacity to. To now when you fiercely protect all of your time?

Yeah, I mean, I've been diligent with my time for a long, long time. I've been in business since I was 16, I'm 30, 21 now.

Being business for almost 20 years. So.

I've been pretty diligent because that was one of those things that really, that flick the switch between doing okay to being, doing really well. That was one of the biggest pivots and so been pretty good at that. But maybe I think it was four or five years ago now I realized I was just looking at my emails way too often on my phone and I was like, why do I even need emails on my phone? And so the only way I can check my emails, if I go to my office, physically go to my office, and if you don't have an actual office and maybe think about, well, I can only check emails on my home office, for example, on my desktop computer. And that was one of the big game changers. And I get people now. I've sent you an email to send me a text message. I've sent you an email, I say, great, I'll check it when I get to the office.

So you're actually training your customers and your team to deal with you on your terms. And I think that's something that a lot of small businesses just don't do. They're always reacting, you know, in the video space. They're like, oh, a client's emailed me. I need to get back to them straight away. And I don't believe you have to. If you train your clients and you articulate and you communicate how you do business.

Yeah, absolutely. Well, you know, I have a 24 hour rule where I have to give back to somebody within 24 hours on an email, like a client or even earlier, depending on what level you know of money they pay us, for example. So I have rules around we need to get back to people quickly. But it's not like five minutes. I mean, the whole thing is like, you are not a doctor, your client's not going to die if you don't reply to their email. If you're a doctor, then sure, you've got to get, or an ambulance officer. You've got to get to the, to get to the scene really quickly. Otherwise the guy's going to, you know, whatever. But you're not that you're, you know, whatever business you're in, you're not in the, your client's not going to die as a result of you not replying to that email, for example. And you're not domino's where you have to get the thing out in 30 minutes or it's free. So you realize what business you're in.

But that also protects your energy, doesn't it? Because then you're not in reactive mode, you're actually in strategic mode the whole time.

Yeah, you become more in control of your direction, your strategy, your business, your direction, everything. Because now you're in a, you're, it's like either being behind the eight ball and then being in front of the eight ball is very, very different. And that's a really important thing to think about. Emails. You know, I've heard it said, someone said to me once, that email is everybody else's to do list. So you've got your to do list. You go into Your email inbox, I.e. everyone else's to do list. Would you rather work on theirs or yours?

100%. And I know you're someone who has been very disciplined when it comes to systems even for your own life. We're sitting in your apartment just now and you've got a list on the wall of disciplines that you want to adhere to. I think some people might, some people might be surprised that you know, those who don't know you. You're a very successful businessman. You've been very committed to your business for the best part of 20 years. You've seen some financial success and you've also seen some challenges around that. And I'm sitting here and I won't read them out unless you want to. But it's like, you know, it's like what time you go to bed, what time you get up. Principles that you live by that are things like no phone at home, like you're disciplining yourself. Talk to me a bit more about the importance of, regardless of where you're at in your business journey, why those rhythms and routines are so important.

Yeah.

They'Re so important. And I have them written down for sure. And I don't think that's something that if somebody came in here and that's weird, why has he got his rules of life written down on a. On a board over there in the corner? But for me, it's important because if you. You either you're. You're controlled. You're either controlled by external forces, by other people, or you're controlled by your own beliefs, values and direction. So you don't have a choice. Like, if you want to be free, you. You can't be free. You're only either controlled by something or someone else or by yourself. So I'd rather choose myself, wouldn't you?

100%. And, you know, I've been in your Mastermind program for two or three years now. I think maybe three years. And we've actually come back to an event the next couple of days. And you hold these events every quarter. It's called the Mastermind. We'll link to it in the notes in this episode. But the last event, you set a challenge, which was to place a coin on the side of the kitchen. And every day, I think was for 30 days, just flip that coin over once. Talk to me about that, that theory and why that was such a significant lesson for everyone in the room.

Yeah, well, something so simple as you have, like a coin, that's 5 cent, 10 cent, dime, whatever it is, you have a dime on your kitchen bench. And all you have to do is every morning when you get up in the morning is to flip it over one side. Next morning you go back, you flip it back the other side. Third morning, you go flip it back again. Just do that. Very, very easy. Simple, very easy. Anybody could do it. Anybody could do it.

And no matter what intelligence level you're at, for example, but it's something that most people, after one day, two days max, will fail to do. So the idea is, like, even a simple task is very difficult to do consistently and to be aware of, like to be aware of that. If you are aware that even a simple task is hard to do, then you start to think about, how can I set up frameworks, systems, practicalities to achieve even, like, small things, big things.

And that's because we are vulnerable as humans to it up like, we will, we will break a habit as quickly as we'll set one. And so, and I know you well enough that by writing things down on a whiteboard, when you see them every single day, they become embedded in your brain. And so why is it, do you think, so many small businesses fail to see the importance of the discipline around daily systems and daily practice?

Well, that is a difficult question, but I think that, number one, they're not aware of how important it is. Number two, people don't really know what success looks like. They have this idea, I want to be successful or I want to get $10 million or whatever. It is like some sort of abstract. It's an abstract goal. In reality, even if you have some specifics around it, it's really abstract because you don't know what it looks like. You don't know what it feels like. And it comes back to this thing where it's like B, do have. You know, this thing where it's like, everybody wants to be rich. Everybody wants what. Everybody wants what rich have, but they don't want to do the do. They don't want to do what the rich do. So it's be, do, have. They want to be, and they want to have, but they don't want to do. So you want to. You need to have the do because you can't get, you can't go to be rich. You can't have the things that rich people have unless you actually do what they have. And who knows? People don't know what, what rich people do behind closed doors. Because Mark Zuckerberg's not going, hey, this is exactly what I'm doing when I get home at night. And I do this and I have these rituals and I have these rules. You just see the little glossy media snippets of what that's about. You know, people don't really understand what, what, what it takes. People don't know what it takes.

Well, I know there's, there's very famous stories about Steve Jobs, for example, who had, like, what would buy the same pair of jeans and the same sweatshirts, the same polo necks. So that. And, And Mark Zuckerberg is the same. It's like when you wake up in the morning, there's one less decision to make. What am I going to wear?

Absolutely. But they're going to have way more things behind the scenes that they're doing rituals. Like, I'm a big fan of rituals. I go through. It's not, it's not a religious thing. It's like before I go to bed, I'm going to do this, I'm going to like. One of the things is like, simple is like I have a cup of tea as not because I particularly like tea, but it's a ritual for myself to go, well, I'm going into this phase or I'm going to go to sleep soon. And these little actions that I take, you know, don't look at your phone because the light from your phone, you know, makes it harder for you to sleep. So there's like little steps that you take in the morning. There's little steps you should be taking to set yourself up. One of the things I do is write my to do list the night before.

Right.

This is like rituals, rules, structure, discipline, frameworks. All of these things sound like horrendous, but they actually give you freedom.

Well, you know, you've been sharing that philosophy with us for some years and I've been doing it for a couple of years now. And it's incredible, like how much more pleasant your day is when you set an agenda the night before because there's something to do with that, sitting and thinking about the highest and best use of your time the next day. What is the biggest objective you can achieve? And I'm always amazed and continually amazed with how powerful that is as a rhythm. Which leads me to the next question around, you know, and it's related to highest and best use theory, which is another theory you introduced me to, which is a theory of constraints, which is a book that you introduced us to called the Goal. And can you, can you share a little bit of insight into how the theory of constraints ties into running a business as well?

Yeah, well, the theory of constraints comes down to, you know, it's a system developed by Dr. Eli Goldratt, who was, I think was the first scientist physicist to look at business and go, well, this is just like, you know, the principles that I mean, following in physics and applying those principles. Elon Musk is a, is a famous example of doing the same thing now, but Dr. Goldrat from the 60s 70s was one of the pioneers in this thinking to look at systems and constraints. Because every system or everything in this world, in this life, in this universe that we know has, is, is defined by constraints. And if you're not aware of that, if you don't acknowledge that, then you're not going to be able to.

Control the system. It's all about thinking about, well, can I be in charge of what's going on in my life or am I going to be dictated to. Because they're the only two options you have. There's nothing in the middle, Right? So you want to think, well, how can I take control of that? And the constraints. If you're aware of what the constraints are like, you have constraints. One of the biggest constraints is not your time, by the way, it's energy. You have 24 hours a day, sure, but you can't work 24 hours in a day. You might be able to smash out four hours of high peak work where you have really good energy, you're feeling great, you're feeling creative, and you're not tired and sluggish. Right? So you think about, well, I need to manage my energy more than I need to manage my time. That's super important, for example. But in terms of constraints in business is way more. It's way more granular. When you think about what constraints do I have about how many clients can I solve? You know, in the film industry, how many video shoots can I do in a day? That's a big one. If you don't know that or you don't actually kind of verbalize that, revere that, and like talk about it, think about it in a more. In a bigger, deeper way, then you start to think about, well, then how can I solve these issues in a different way, creative way rather than linear, which is what people are like. Well, if I put more people on, then I can get more shoots done than I can get more money. But that's kind of just one way of taking, tackling the problem. There's like 100 different ways to solve those specific constraint problems, but you haven't thought of any of them except for one. And so you have to think about the theory of constraints is. And there's a process. I won't go into it, but there's a process for identifying the bottleneck, which is a constraint, and working out how to solve that problem.

Well, if anyone's interested in digging into this more, there's a great book called the goal by Dr. Eli Goldratt, which it's actually a great read and it's a great. It's quite a funny listen, actually, because the read itself is. It's done. It's done as a story. The listen is quite funny because it's done with quite kind of funny characters. But. But the lessons are really powerful and. And I know you've been a huge advocate of consuming lots and lots of different influences when it comes to business.

In terms of, you know, a lot of video businesses, specifically, they behave like the freelancers they sort of freelancers and they morph into running a business. But they'll tend to say, well, I'll do the shoot and I'll do the edit and I'll keep all the money. And which relates back to the idea of, of energy because I've done it in the past myself. Where, and I'm sure every business owner has, where you go, well, I'll just, when I'm starting off, I'll do all the work myself and I'll keep all the money. And then I can, when I've got some more money, I can hire someone. But they don't create systems and they don't create processes. So therefore, when it comes to hiring someone, it's very challenging because no one knows what to do. And the second part of that is they get stuck in a kind of spiral of doing too much work and then being exhausted. And so what happens is their clients start to suffer.

And I guess the first question I'm going to ask is, where's the best place to start in terms of preserving energy? In terms of, you know, you've been that person where you've, you've worked 80 to 100 hours a week, you've done the 22 hour days, you've done it all yourself. What was the shift for you in terms of breaking that habit?

Yeah, exactly. And we all start there, we all start thinking we have to do everything, you know, everything from cleaning the dishes to doing the invoices to doing, you know, a mission statement or everything in between. And it's, it comes down to. And by the way, I still do 20 hours because I love what I do and it's a passion for me, but it's leveraged.

But it's a choice.

Leverage is choice. It's a choice. And what I do is very highly leveraged and fun and I love it. So why would I not do it? And by the way, like they people say, oh, you work too many hours, you're going to burn out. But no, because burnout comes from stress. And if you love what you do and you minimize stress, and by the way, most stress comes from your personal life, not from your business life. Right. So you need to think about how can I manage all of that process. But that's, you know, tackle one problem at a time probably.

But leverage in a simple sense is that you hear some noise in the background. Ben's cleaners here cleaning the apartment. That's leverage because she's cleaning the apartment and we're doing this.

Yeah, exactly. So you know, when People are doing everything in the business. It's rooted on one thing. It's rooted on identity, how you view yourself. And you haven't even thought about what's my identity? What is my identity as a person? Am I a freelancer? Am I, you know, I'm the little guy, I'm the little video guy, you know, I'm the, I'm the, I'm the video enthusiast, you know, like how many. I started off in it in computers because I was the IT enthusiast. So my identity wasn't CEO like this businessman. It was like, I'm just a tinkerer, right? And the video goes up. Well, I'm a creative. I love doing video. I love capturing, you know, the light and I love doing other stuff, right? So identity is important to think about. If I want to be more like if you want to have more money coming in, I want to be a business owner, then I have to identify as a business owner. And what does a business owner do? You know, what are the things that act, you know, this movie, Boiler Room.

Really good line. Ben Affleck, the character, he says, act as if. Act as if. Would a CEO of a 500 grand a year company do what you're doing right now as. As we speak right now? Probably not. You know, you're doing this specific task. Are you doing the shoot? Are you doing the editing? Are you doing this? Like, I don't think that that CEO would be doing all of that. And you know that now that you think about it, so what's my identity? That's where it all comes from. And then you'll act as if you are that person.

That's golden. I really love that. So how do you start to act as if in practice? Like when you're the. Go back to Ben, the IT guy who was doing the 20 hours a day. How did you get out of that habit?

Well, I guess it starts with questioning, you know, what am I doing? You know, I don't like what I'm doing. I'm burning out. I hate, I hate my life. I'm smashing keyboards over the fucking desk, right?

And you know, and it's like reflective. What am I doing? You know, that's important. Or you know, if you're in business, what am I doing? I'm working so long and I'm not even making much money. This is.

Question it. Like, I'm kinda doing this for the next 20 years. I've got to make some changes, right? But if you don't think about it, there's a lot of People who never think about it. There's a lot of people who never question that. So then you start to think about, well, what can I do? And the easiest things to do is start thinking about what are the easiest things for me to start delegating.

In my case, it was things like answering the phone or doing filing or things like that. What are the dumbest things that I do that, that could be easily delegated? Not the most complicated things. Things like editing. In what, Adobe Premiere. What are people to use? Right. What do they use now? Like something complicated like that. Right.

But in actual fact, there are so many editors who just love editing, you can subcontract that out.

Well, if it's easy to delegate, then do it.

I think what stops people is the identity.

Yeah. Yeah, okay. Yeah, well, that's, that's, that's definitely important. Basically the idea is if it's easy to delegate, then do it now, because why wouldn't you? What's the friction between you delegating? If you do into something complicated, then fine, work that out later on, but get everything else off your plate. Start Getting like, claim five hours back a week and then claim 10 hours back a week and then claim 20 hours back a week over a process.

And of course, when you get that time back, you can start to be more strategic and more identify the best, the best opportunities to be working on rather than taking everything that comes in, which is there's like a perpetual cycle, I think, in small businesses where people just take everything because they're desperate for the cash, because they're not taking time out to think. And you know, one of the things I like to do is, is take time to think. So I'll spend half an hour at the beginning of a day just thinking, I'll take the dogs out for a walk, come back, I sit on, on the lounge and I get my iPad out and I just think, because maybe you'll get an idea walking the dog or you get an idea when you're at the gym. How, how important is, is creative thinking time for you? And how much time do you spend in thought, allowing things to kind of percolate and develop? And do you have a process around that?

Yeah, downtime is the most important thing that I have. It sounds strange that I need to have some much time that I create. I create the time. It's not going to happen, but you have to create little frameworks and little time where you can just do nothing because that's where your ideas come from and that's where your advantage is going to come from. So you need to do that. You need to build that time in. It's super important. I spent a lot of time, I probably spend more time thinking than I do doing on a weekly basis. And it comes from that. And my idea is to. I let an idea percolate. I don't write down anything. I'll let it percolate for a week, two weeks, three weeks, four weeks without writing a single word. And I'll let it really formulate. And when I feel like I'm ready, I'll start writing it all down. Because if you start writing it down too soon, it'll solidify too quickly. Your idea will be constrained around specific things. It's kind of like you trap. It's like a prison when you write something down. When you write an idea down, you're putting it in prison. And you don't want to put in prison too soon because you want it to develop over time and have more complex idea, more probably deeply deeper knowledge about what the idea is before you write it down. Because as soon as you write it down, it'll crystallize and it'll be. It's like you, you putting into this like a little cage. You, like a bird in a cage, you don't want to put it in there too soon.

Well, a classic one, especially with creative businesses, is the get an idea, they go, I've got an idea, I want to start a second business doing time lapses, because I reckon I can set that up and it'll be our passive income. And people often make the mistake of having an idea and automatically running to set it up as a business. And of course, when you set up a second business, you're just diluting your time, aren't you? Diluting, diluting your energy. What is a better way to deal with. And you know a lot of creative people and you observe and you work with a lot of filmmakers in your business. What are some of the characteristics you see that separate the successful operators from the unsuccessful operators?

Yeah, definitely. Chasing too many opportunities is a killer. Like, you don't want to do that. One of the things I do is I have a book, it's called Ideas. It's very creative name for it.

And I have an idea for like, I've got an idea for a business, I've got an idea for a product. I'll write it down in my ideas book and I'll close the book and I'll put it away in a drawer. I don't act on it, but I want to Write it down because maybe one day I might do it, maybe I won't. Maybe it'll come in handy at some point. And I've had situations where I wrote an idea recently. Actually, she wrote an idea like three years ago for a business and it wasn't the right time to do it because I was doing other things and opportunity came up, opened my book and I'm like, yeah, this is the idea I need to run with right now. But there's like 50 things in there that I'll probably never run with as well. So write it down. But you don't have to act on.

It because writing it down takes it out of that instant part of your brain that's sort of blocked with too many ideas. And by writing it down, I think I had a similar story. I can't remember someone in the Mastermind said, oh, have a maybe later folder. Yeah, like, it's an idea that I've got it got this idea. I'm going to put it in the maybe later photos. It's still there if I want to access it.

Yeah. Otherwise, you know, you either going to go, well, I'm going to run with all the ideas or I'm going to say no to everything. And both of those approaches are wrong. So maybe later is good. I like maybe Later. It's really good.

I think it was one, one on your team that said that Mastermind event, which I guess I want to wrap up by just talking a bit about your events because.

The events are amazing and I know you put an awful lot of thought and energy into them. Can you just share a little bit about why you decided to set the Mastermind up? Because, you know, you're pretty successful commercially. But what was it that caused you to set up a Mastermind where you. And I want to just say this to the audience, share the most incredible speakers and insights and pretty much what's working now in your business. Why did you do that?

Yeah, well, I was already, you know, I was already, well, in. In business. I was in business for over a decade, actually, probably more than that. Like 15, 14 years, something like that, when I was traveling to the US all the time. And I'll be dropping $25,000 US dollars each time. And I would spend three, four days just traveling there and doing the event. And I was doing that over and over again. And I was like, I can't keep doing this. This is crazy. Not only for the money, but for the energy as well and the time. So the last time I went over, my mentor said, to me said, you need to either find something that you can do in Australia, go to an event, find an event, you can find a mastermind you can get involved with. And if you can't find one, create one. And so I did just that. I went back and I had a look at what there was out there at the time and it wasn't anything suitable for what I wanted. So I created my own mastermind to be in one, to be in a mastermind, to be around successful people, to get ideas and support, not only from the business side of things, but emotionally, because it's a lonely experience. Business is the. One of the loneliest careers.

I love that. And it's fifth birthday this year.

It is, it's great. It's fifth birthday. We've been going well. We've got amazing members like yourself and a lot of other people as well that are just fantastic. And the culture of it is. I'm very blessed because everyone's very giving. There's a culture of abundance versus scarcity. So very, very good.

But that comes from you, because you are abundant. You demonstrate great leadership by being abundant and that's what creates a culture of abundance. And just to wrap this up, why is being part of a mastermind so important as a business owner?

So many reasons. Being part of a mastermind is super important. It's this idea that. And it comes from Napoleon Hill from 1932. He talks about, you can go what you say, you go, what I learned. So let's just think about an analogy. You go for a trek through the jungle on your own, right? Or you go with a couple of people or a few people that have been there before. You know, which is going to be more enjoyable, which is going to be more successful and which is going to be safer. Which is going to be safer, right? So you think about that. You wouldn't go down the Amazon by yourself. You'd find some people that have been there before or. And also friends that you can share the experience with, right? You wouldn't be going on your own. Or maybe you would, but you know, think about that as the analogy of, do you want to do this? It's a hard slog. Business is a hard slog. It's not easy. You want to do it with friends, you want to do it with people that have been there before. You want to do it when, you know, when times are tough and you have people around you lifting you up, or you want to do all this on your own. That's the question.

Well, I'm certainly excited for the next two days. Thanks so much for coming on this show and sharing your wisdom.

It's been fantastic. Thank you.

Yeah, thank you. You've been listening to the how to Scale a Video Business podcast with me, your host, Dan Lenny. If you're a video business owner who's hit a ceiling and we benefit from mentorship, support, and coaching, then check out how you can work with me over@denlenny.com don't forget to subscribe and rate the show over on itunes. And and we'd really appreciate you taking a few minutes to leave a review. And don't forget to share if you feel you've gotten value from this episode and you think it would be useful for other filmmakers you know, then please do me a massive favor and share it on social media and in groups that you might be in. We'll see you next week.