5 Tips All Entrepreneurs Need to Hear - with Jason Hartman and Frank Bria
In this interview, entrepreneur and real‑estate investor Jason Hartman discusses the common blind spot many founders have: treating investment and business growth as mutually exclusive. Using a cruise‑ship metaphor, he explains that passive, low‑maintenance investments should "chug" alongside the active, high‑risk roller‑coaster of running a company. Hartman advises entrepreneurs to diversify by allocating profits into uncorrelated assets—particularly rental real‑estate—while maintaining a solid legal and tax structure with multiple entities to protect the core business. He stresses minimizing fixed‑cost overhead, recommending leasing over owning commercial space, favoring residential property investment, and reducing employee costs through contractors, freelancers, and automation. Hartman warns against over‑delegation and the temptation to over‑spend on software or services, urging founders to learn tools themselves. He also touches on timing exits, suggesting owners sell at business peaks, and shares resources such as Garrett Sutton’s Rich Dad series and his own podcast and website for further learning. The conversation blends personal anecdotes, practical tips, and strategic metaphors aimed at helping entrepreneurs build resilient, diversified financial foundations while scaling their ventures.
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It's amazing for you or any of your listeners that have been on a cruise, you just get on that ship, it only goes about 20, 22 knots. You're not moving very fast, versus an airplane that goes 600 miles an hour, 500 miles an hour, you know, but surprisingly, you just get on the ship, you live your life, you have a couple meals, you sleep, and suddenly you've gone a long distance. And that ship, the metaphor of the ship, Frank, is it's always just chugging away a kind of just automatically, right. And that's the way investments should be for us entrepreneurs.
We want to talk today about the thing that's, I think, one of the big blind spots for a lot of entrepreneurs, and that is investment. There seems to be this. This idea in some of the investment community or sort of the entrepreneur community that you either invest, like, classically for your retirement or you start a business, but it's like you don't do both.
Like one or the other, Right? Yeah.
What's wrong with that picture of the world?
Yeah, I'm glad you get it because, you know, when we talked just for a brief moment off air before we started, you know, you. You see that there is that blind spot for entrepreneurs. And, you know, I love entrepreneurship. It's my baby. I'm sure everyone listening, it's their baby, too. It's really very fulfilling to just create something. Usually that comes just out of your head and you put it in the marketplace, and my God, Frank, people buy it. That's a miracle. You know, it just. It's just like an idea became reality. And as an entrepreneur, you just get to give birth to those things all the time. Super, super fulfilling creative process I absolutely love. But as entrepreneurs, you know, we do tend to get overly focused on our business. And, you know, you've heard the old saying, don't put all your eggs in one basket, right? And I think that saying is only partially true because there is another saying that's pretty good also. It's put all your eggs in one basket, but watch that basket. I think they're both true. And there's some balance to this. You know, I recently, I've been on many, many cruise ships, right? And I was just on another cruise recently. It's amazing for you of your listeners that have been on a cruise, you just get on that ship, it only goes about 20, 22 knots. You're not moving very fast versus an airplane that goes 600 miles an hour, 500 miles an hour, you know, but surprisingly, you just get on the Ship, you live your life, you have a couple meals, you sleep, and suddenly you've gone a long distance. And that ship, the metaphor of the ship, Frank, is it's always just chugging away a kind of just automatically. Right? And that's the way investments should be for us entrepreneurs. We've got our business. That's our baby. That's our active thing. We're living it every day. We're dealing with it every day. We're thinking about it all the time. We all know we are. And just get some investments on the sideline that are not correlated to your business and let those things chug away like that cruise ship, and you're in a much more stable, better position. Because as entrepreneurs, we know that there's a lot of moving parts. The competitive market, the regulatory and legal climate. Gosh, if you're in my former home state, the Socialist Republic of California, it's like there's 900 laws coming at you every year that you're gonna just disobey a bunch of them and possibly face a big fine you didn't even expect for some obscure law you didn't even know you broke. It's just absurd. Right? So being an entrepreneur is a pretty high risk activity. Okay. It's great. I mean, I've done it all my life, but no question it's high risk. So you gotta have something off to the side that is your safety net.
I love that you've used the metaphor of the cruise ship, because that would definitely not be the metaphor anyone would use to describe their business. You know, we say things like roller coaster, rocket ship, or something else, but it's not a cruise ship.
Yeah. I think roller coaster is the best one, by the way. Yeah. Got glorious highs and really depressing lows, but it's a roller coaster. Yeah.
Yeah. You know, I just think that there, there are definitely some overly optimistic folks who call it a rocket ship, but they. They forget about the part where the sections drop off and fall back there.
But anyway. And you know, on your rocket ship metaphor, that's a good one too, because as business people, we have to realize that a rocket ship uses 99% of its fuel, taking off and breaking out of the gravitational p. And the same is true with entrepreneurship. When we start, we got to go all in. We've got to learn everything we can. We've got to get the best coaches we can. We've got to make all out effort. It is absolutely a must. But I'll tell you, the first company that I bought was a failing Real estate company in Southern California. It was the hardest thing I ever did, was turning that thing around. I mean, it was like every obstacle you could possibly imagine just hit me in the face. It was a very humbling experience. And before that, I was like a hotshot agent. I made tons of money. I started when I was 19 years old, part time, going to college. I made a bundle of money. I was one of the top REMAX agents in the world. I was number 59 at age 24. And then I thought I could buy this brokerage and everybody would be just like me. Big mistake. They were nothing like me. Right. They were not nearly as motivated. It was very difficult. But the thing that got me through that is I had all my properties, I had my rentals, and they were just kind of chugging away under the surface as I was on that roller coaster. And it did end up pretty well. I ended up selling it to Coldwell Banker. So, you know, when you're on that roller coaster, you want to exit when you're at the peak, Right.
Or at least when you're not at the bottom. Yeah.
Or at least when you're not at the bottom. Ex. Enough. This.
This concept you're talking about, so critical in investment, the diversification thing. And diversification requires you to take your money and kind of split it up across a number of different things. I know for a lot of entrepreneurs, this is the hard part because it is so easy to dump everything back into the business again. So what? And like we said at the beginning, you know, it's. You're trying to get off the ground, and so you do want to put a lot of energy in. How does one balance this need or desire to kind of funnel things back into the business, but yet carve out, you know, enough to have that to start the cruise ship, to start the, you know, that diversified portfolio?
It's a great question, and it's a tough question to answer kind of generically because everybody has a different financial situation, right? Everybody starts at a different point. But I would just say you got to invest your profits back into your business for growth. No question about it. Kenny Rogers, the country western singer, you know what I'm gonna say, right? He said, you gotta know when to hold them and know when to fold them and know when to walk away and know when to run. And he also said, you never count your money when you're sitting at the table. Okay? And so what that means to me, there's a lot of wisdom in that, obviously, you know, from poker players. Right? And I don't play poker, but yeah, I think it's still. I get the metaphor. You know, just, you got to get some of those chips off that table. Okay. You know, maybe you've got most of them in your business and as you become more successful, you start to take more off. Okay. And the other thing you want to do in business, of course, is you want to have proper legal structuring. You want to have multiple entities. Maybe one entity owns the intellectual property for your business, another entity owns the customer list or, you know, the trademarks or whatever. Right. So that you protect yourself so that that whole ship can't be sunk at once. Okay. And we're talking a lot about ships today, aren't we? Ships and airplanes and rockets.
I'll talk about cruise ships forever. That's great. I love it. As you're, you're an avid traveler. I am too. So we'll talk about cruises, but good stuff. What's a good time for people to be starting to think about this? I mean, obviously you want to think about legal structure and the long term and the exit plan at the beginning, but at the beginning you are kind of focused on viability and generating this. When is it the right time in the business to start thinking about legal structure and all of these longer term stability elements?
Well, I think the right time is sooner rather than later. The sooner you do it, the better. And the better your protection. Okay. And the better your peace of mind, too. You don't have to spend a fortune on it. A lot of times you'll walk into a law firm and they'll just, just charge you ridiculous amounts of money to do this stuff. This stuff is mostly. And look at. I'm not a lawyer. I'm not qualified to give legal advice. That's my disclaimer. Same with tax advice. But I do know about it just from my own personal experience. And you don't have to spend a ton of money to do this stuff. It's relatively rote. These are simple filing forms. It's not super complicated. Of course, you do have to think about the structure and things like that. There's a lot of great books, podcasts on the topic. I'd recommend the books in the rich dad series by Garrett Sutton. He's an attorney friend of mine and he's written some great books that explain. I think one's called own your own corporation. And he's mostly talking not for real estate investors, although he talks about that too. And that's what I like. But business owners. And he gives great Examples and snarky metaphors of what can happen. It's good stuff.
Yeah, that's great.
That's excellent.
Well, I want to pivot a little bit here.
You.
In and of itself, you're an incredibly successful entrepreneur, but a lot of businesses together. You've exited several, sold some off. You know, obviously you're talking about the pains of running that first business. You've been through the gauntlet. If you could go back to the beginning, right. And sort of whisper into younger Jason's ear a piece of advice that would have made that entire process a little bit easier for. For you, what would that be?
You know, I think number one is minimize any fixed cost overhead. Fixed cost overhead kills businesses. Okay, so what are the fixed costs? They are rent, on real estate, on office space, whatever kind of space you need for your business, industrial space, whatever. So really minimize fixed cost overhead. So leases. Leases can sink businesses. Okay. Or property ownership. And listen, I love property, but I don't like commercial property very much. I like housing because that's what everybody needs. It's a universal need. So buy your investment housing. You don't need to buy the building your business occupies. That's just a utility. Plus, if you own the building your business occupies, which some entrepreneurs really believe in, which is kind of a simpleton strategy, it sort of determines too much of your business growth because, you know, if you lease it, you can get out of it and you can, you know, get a bigger building if you need that, whatever, right? You're much more flexible. If you need to move locations, if you need to move your whole thing to another city, you can do it. You know, maybe there's an incentive here or there. If you own a building, you're just too stuck. Okay? So invest in real estate. But that's not the real estate you should be investing in necessarily. Okay? There are some exceptions, of course. So fixed cost overhead. The other big fixed cost overhead area is employees. Now, of course, you can lay people off, but nobody wants to do it. It's terrible if you have to, and it's not good for morale. Okay? So try, when possible, to use contractors, freelancers, and technology. Okay? And try to really minimize the cost of employees. The most expensive thing you have in your business are the people, okay? So really try and minimize the people impact. Okay? And I have definitely made that mistake of over hiring and then waiting too long to shrink the business when I had to.
So I've done that as well. It's not fun at all. If you've had to stand in Front of a cubicle full of office, you know, office full of cubicles of people and announce that you're, you know, shutting down. It is. You never want to do that ever again. I love that you're talking about this fixed cost component, because I do think that, and especially because most of the audience are service business owners. So of course labor is going to be one of the biggest components of their expense ratios. But I always talk about the ability to be very clever, be very creative in how you structure arrangements so that you can move labor over into a marginal cost rather than a fixed cost, so that you're aligning your labor expenses with the actual revenue. And as that goes up, cost can go up, but if it goes down.
Then you can, you can shrink it quickly without a penalty, right? Yeah, absolutely. Very, very good. You know, the other cost that become really, really high is sometimes software. There's some business, you know, a lot of. It's amazing. Whenever you talk to a vendor of a various product, you know, they'll. They'll segment you. For example, you know, any computer company, right? They'll say, are you calling for personal business or government or education, right? And the reason they do that is because they know how much to rip you off, okay? So, you know, if you're a big corporation, they're gonna jack the price up. A lot of these business services and consultants are just so overpriced. You know, be careful of that kind of stuff. Be mindful of that. You know, another big mistake I made is just being sort of busy and lazy. And I. Listen, I'm the last. I'm not lazy at all. But I do get busy with, you know, you trade one thing for another, right? And if I had just spent the time, a little bit of time in some of my business to learn maybe a piece of software, it would have made me a lot less dependent on another employee and it would have been so much cheaper in the long run for me to just know how to do it. You know, this is a. Kind of a tricky one, okay? And it requires people to use their own judgment. But look, we've all heard, you know, delegate, delegate, delegate, okay? And yeah, I mean, that's kind of true, but it's kind of not true, okay? So use your own judgment. But here's what I mean by that. I had the founder of 99designs on my podcast years ago, okay? And he wrote a couple of books and one is called, I think, Rework, okay? And the thing is, nowadays with technology, people almost have the tendency to over delegate I remember I walked into this executive's office who worked at the Irvine Company, and I was doing a deal with him many years ago, and, you know, I looked on his desk, I said, you don't have a computer? And he said, no, I have a secretary. Why would I need a computer? And, you know, that's just dinosaur mentality. Okay. And one of my attorneys, you know, he has his secretary book all his travel. It's like, it's literally easier to do it yourself. Okay. Because, you know, you. You know, when you look on the website, you see all the times and that you can pick it yourself. It's just much easier than 29 emails back. And for to try, you know, some things are not meant to be delegated. Stop over delegating. Okay? Do delegate some things, but don't overdo it.
Okay, well, that's really good, good advice. There's automation has really made change the rules. It has completely changed the rules of the game. Absolutely. Yeah. Yeah, for sure. Jason, this has been great. I appreciate the time you've taken with us. We're out of time. I'd love to continue the conversation, but you've been really gracious with the time you've given us so far. Last question for you. As the audience is listening to what you have to say and want to learn a little bit more about what you do, what's a great place for them to connect with you?
Jason Hartman.com is my main website for my real estate investment company. I always say income property is the most historically proven asset class in America. It has been that cruise ship for me through many, many storms, just chugging away as I'm on the business roller coaster. So it's a great thing. And you can learn more about that on my podcast. Just look me up, type in Jason Hartman on any podcast platform, itunes, whatever, and you can find me there. Okay?
