Mike Andes (creator) argues that investing in a well-built small business can dramatically outperform passive assets. He gives a numeric example: invest $100 in marketing to generate $1,000 in revenue with a 20% profit margin (producing $200 profit, i.e., 100% ROI), and explains how recurring customers over 5 years can compound that to a 10x return. Andes advises spending the first five years building a customer-acquisition machine and the next five years reinvesting profits to scale, contrasting small-business ROI with typical S&P 500, bonds, and real estate returns.
Questions this video answers
$100
$1,000
20% (resulting in $200 profit on $1,000 revenue)
5 years (compounding recurring profits)
Over 85 locations around North America.
I had 100% return on investment. I doubled my money.
Something I'm always amazed by is just how powerful an investment in a small business can be. And people talk about investing in their business, putting the money back into their company. And I truly believe that if you have a small business where you know the customer acquisition cost and you have a predictable lifetime value of the customer, you know how long you're going to retain them, that you should be able to have a lot of confidence in the amount of money you pump back into the business in the form of income investment, investing in marketing, investing in infrastructure, investing in hiring. And I truly believe that a lot of small business owners, they fail to recognize what they have because the average return on the s and P500 over the past 15 or 20 years is about 8%. There's years where they lose, people in the stock market lose 20%. There's years where they gain 20%. And you know, if you look at housing and you look at, you know, a real estate trust, or you look at bonds, these are all giving a return on investment, a certain rate of return. So for bonds, you might get a couple percent a year, basically backed by the full faith and credit of the United States of America. And you might get 2, 3% maximum. You might invest in real estate, maybe you get a 5 cap or 6 cap or 7 cap if you're lucky. And that's going to give a percentage, that's the return on your money. But what I want to think about is like, what if you have a small business and you can invest $100 into marketing or $100 into buying a truck or $100 into hiring somebody. If you can invest $100, and in that hundred dollars, I am able to get $1,000 worth of revenue. OK, so I spend $100 in marketing, I get $1,000 in revenue. Now, this whole premise is that I've built a machine, a business that turns that hundred dollars into $1,000 in revenue. So the whole goal in a small business is how do I create the arbitrage where I can put $100 into marketing customer acquisition cost and get $1,000 back in revenue. And let's assume that I have a 20% profit margin that on that $1,000 in revenue, I. I'm going to make $200 in profit after all of my expenses are paid. That covers the $800, all my overhead, wages, all the rest of it, that's $800. I'm going to keep $200 in profit. What I Essentially did in this equation is I turned $100 into $200. I had 100% return on investment. I doubled my money. And the thing that blows my mind, especially if you have a recurring based business, is if I can keep that customer for two, three, three, four years. Now that compounds no longer is it $200 that I made this year, it's, well, I made 200 again next year and 200 again next year. And now maybe if I keep them for 5 years, I literally have made $1000 in profit off of my initial $100 in investment. I turned $100 into $1000. I had a 10x return over the course of 5 years. And the thing that is so important here that the reason I'm making this video is because I feel like so many small business owners, we have this disease of the next shiny thing. We're like a squirrel, like, oh, over here. And then we're over here and invest in crypto. And then I need to go buy real estate. I heard so and so said I needed to do, you know, drop shipping. And we get so distracted. Instead of just focusing on the next five years, I want you to think about this. The next five years, focus on one thing. Build the machine that turns $100 into $1,000. Make that machine and that's buying the equipment. That's investing in the people that's building the infrastructure that allows you to take $100 in advertising costs and turn that into $1,000. Now, you could have different numbers than $100 and $1,000, but the end of the day, small businesses in America have the greatest return on investment. The reason most small business owners do not invest into their business is two things. One, they have not built the system by which they can confidently put $100 in and get $1,000 out. In other words, they don't know their customer acquisition costs and they don't know how long they're going to retain the customer. And the second reason why people will not stay committed to this is they truly cannot sustain and manage the if they are constantly putting in the $100. Because if I can infinitely put in $100 and confidently know that I'm gonna get $200 in profit in within one year and double my money in one year, like, who would not do that in your right mind? I just truly believe that most small business owners, if they invested the next five years in building that machine and then the following years on actually putting the money into the machine to double it on an annual basis, it would absolutely change their life. But most people, you don't stay committed for the five years to build the machine and then the next five years of not spending lavishly, spending money on cars and houses and fancy vacations, but then taking all the money they make from the business and pumping it back in and investing it back into the business. That is what it really takes. Five years building the machine and then five years of feeding the machine. I've talked about this before. Feed the beast. Why would I spend money on investing in the stock market or in bonds or in real estate where I'm in a 5, 6, 7% return on investment, or worse yet, put it in a mutual fund where I'm going to actually get a fee off of that every single year. And by the way, all the returns that I make on any of those investments, I'm going to have to pay capital gains on, pay income taxes on. Why would I do that when I can literally take my small business and double my money? This is one of the asset classes, the few asset classes that you can double triple 5x your money very easily. If you focus on the next five years to build the machine and then feed the machine over and over and over again, stay focused for 10 years. Give me 10 years and not only will you change your own life, you'll change the lives of your employees, your family, and the financial future for generation. I'm Mike Andes, and if you want to watch a video about how I went from making $10 per hour to making $10,000 per day and built a big business, and now Augusta Lawn care has over 85 locations around North America. Check this video out right here.
The train is passing one more horn. Oh, no. It passed. Nice. Now you can have different numbers than 150.
