If I Wanted to Create a Business That Runs Itself, Here's What I'd Do

There's one belief that keeps most entrepreneurs trapped and unable to grow. They stay stuck. And when I started, I made the same mistakes that everyone makes. So I used to think no one can grow my business like me. If you want it done right, you got to do it yourself. No one can do it like I can do it. Never let anyone else handle the money. Never outsource sales, never outsource marketing, never outsource anything. Right. And so I had all these different people who would tell me these things. And it's interesting because they were a little bit ahead of me in business. I think, oh, they must be right. But they were just limited business owners like anyone else. And it wasn't until I broke that belief or that that system of thinking that is able to build real companies, ones that make money even if I'm not involved in the money-making. And so in this video, I'll show you 5 steps that will let you hit your money goals by building a business that runs without you, or rather, that can create value without you being required. Conceptually, this is the big idea. A business that requires you isn't a business. And I'm gonna say that in a technical sense, anything that generates a profit with an LLC is a business. But in terms of the intention of the vast majority of people who begin a business, it's for freedom. And then what ends up happening is that you create more liabilities more dependencies, you lose your optionality, you lose your freedom, and you have a job you cannot quit. Tough. What's interesting about this is that I want to talk about transitioning this thing from an Iron Man suit where it just enhances your ability to do but still requires you to run, not like the newer Iron Man suits which didn't require a person, let's not get into it. The businesses are valueless without you, all right? And if you can get the Iron Man suit to become upgraded so it can run and go fight the bad guys or make the profit without you, then it becomes something that is inherently valuable to anyone. And once something goes from valuable to you to valuable to anyone, it means it's something that other people would want to buy. When it's something that other people want to buy, it's something that is valuable and inherently has worth. And so let me give you some simple math here. Let's say you have two businesses, one that does— I'm gonna use some math, you can remove zeros if it hurts your eyeballs to think of more zeros, all right? Let's say you've got a $10 million a year business over here top line, $10 million business over here doing top line, so 10 and 10. Okay, which business do you want? Well, you need more information, right? Of course. Now let's say that both businesses are $10 million top line, $2 million bottom line, $8 million of costs in both. Now which business do you want? You still need more information. Of course. Now let's say that of this $10 million top line, $2 million bottom line businesses, this one, the owner is running 80 hours a week, is like every day of the week they're working and is required to work. Different than choosing to work as a side note, but I won't get into that for now. The second business, the owner never is there and just owns it like you would own a stock on the stock market. Now think about which of these business owners is richer. Now at the onset you'd think, oh well, they're both the same top line, both same bottom line, but the difference is actually very dramatic. And so let me explain. So this guy, first guy, very frustrated entrepreneur Fred, he makes $2 million a year and then he pays his 50% taxes and he makes a million bucks left over. Then he lives his living expenses, whatever. Maybe he's got a family. Okay. He takes home $500,000 he can put away. So he's getting richer at $500,000 a year, roughly in terms of his net worth. That's a slow way to accumulate cash. Now don't be wrong, $500,000 is a lot of money, but I'm just saying big picture. Now this guy, let's call this, we had Frustrated Fred and let's call it Wealthy William. Hmm. Sounds very fancy, fancy. So this guy has an entire team that actually runs the business day to day without him. And so he just owns it like he owns the paper stock of a company. And his business right now trades at 6 times profit, meaning somebody would be willing to come in and write him a check for 6 times $2 million, which is $12 million. And so of these two guys, this guy adds $500,000 to his net worth every year. This guy has a business that is worth $12 million. This guy's way richer, but check this out. Now let's say that both of these guys work, you know, figure out a way to make the business make an extra $500,000 a year in profit. So they go from $2 million to $2.5 million, $2 million to $2.5 million in profit. That's what happens here. Now here's where it gets extra sexy. This guy, after he makes his extra, extra $500,000, let's say that he pays 50% taxes and that $250,000 after taxes goes straight to him. So he goes from taking out $500,000 to $250,000. He doesn't change his living styles. All right. So all the extra money he just, he saves. So he starts making $750,000 in savings per year. Okay, after taxes, neat. This guy, the $500,000 that comes in after taxes, he gets a 6x multiple on, and so he actually gets another $3 million added to his net worth. So his $12 million becomes $15 million, and this is the game of wealth. This is how you get wealthy. It's very, very inefficient to become wealthy off of regular income because it's taxed to oblivion. You don't get 10 years of work, you get 1 year divided by 2 after taxes. So the difference is like a 20x difference between a valuable company that can sell for 10x versus one that can't. Now hopefully I've sold you a little bit on the idea of why this is worth doing. Now let's walk through the steps of actually doing it. So the first step of actually taking it from frustrated Fred to wealthy William is you do a self-inventory. So what that means is that you actually list out everything you do, literally all of it. All right? And then you turn each of those checklist items into something that someone else can do. And you want to get as granular as humanly possible. And this is how you get out of the day-to-day without breaking the machine. And so I would say the step even before this, if you don't even know what you do, what we have people do is run a time study. So time study, real simple. You don't need any fancy technology for this. You just take an Excel sheet and you write times on one side every 15 minutes. And you simply put in a timer, you turn your timer, and every 15 minutes you just note what you did. It's very simple. Now some of you might think, wow, I could never, that sounds like so much work. It's like you literally have a timer and then you write one word down every 15 minutes. What's crazy about it is it'll be the most productive week of your life. Every time I do a time study, I think I should do this every single week and I don't. But you certainly will be really productive because you're going to prove to yourself that you're super productive. I'm just telling you, that's what'll happen. You can also, by the way, do this with your team. If you're like, I have a key man risk over here, this person is super valuable to the business. I have to have less dependency on this person. You walk through this process. So you do a time study, then you get the list of stuff. Great. Now we have this list and we can break it down into its component parts. This is the kind of list of everything, right? And what we want to do is we want to start building little processes or installing people. So it's either a project, a process, or a person that's going to install in each of these little slots next to it. So you have all the list of things and then you have all the people or process or project. Okay, so project is a one-time thing, which sometimes creates a process, or we have a person who does this thing on a continuous basis. And you probably have people on your team who are underutilized. Some of these slots, you can just be like, I think Angela can do this, I think Tommy can do this, and you can start slotting them. Then you'll have your red, yellow, green. And so my green is I can give this to somebody. So I'm going to look at my team, teach them how to do it, they get this. My yellow is there's a one-time project or process that I have to install here, but I can do it and I know how to do it. The red is where it's something that I either don't know how to do or there's a person that I know I need to have but I don't have. And so I solve these in green to reds because the greens you can get out quickly. The yellows is the next level that you can do with a little bit more time. And then the reds is like once I've done my greens and yellows, I can move on. Now the way to think through this is In addition to this list, it's like, okay, these are the things I'm doing. There's also the decisions you're deciding on, right? And so as this time of documentation comes up, we want to start saying if this, then that. These are rules of behavior, right? They're decision trees for common scenarios. And I'll give you an example. So Prestige Labs was the first physical products business that I started, supplement company. And I remember the manager of the support team saying it's really hard to get new people on. And of course I like lost my, I was less patient than I am now and less polite. And I was like, how hard could this be? I was like, change my address, change my card, change my flavor, change my billing cadence. I was like, cancel, refund. What else do we have here, right? And when I said it like that, you know, Layla pinged me and was like, don't be rude to people. They're trying to win and you are making it look really bad and don't do that. So I will tell you the story 'cause that's what happened. But fundamentally it's just if this, then that. Somebody will come in and say, I would like to change my card. This is how you change your card. Someone will say, I would like to change my flavor. This is how you change the flavor. I would like to change my billing cadence from once a month to every two months. This is how you change the billing. It's just if this, then that. The more complex the roles, the more one-off the scenario, the more duplicatable the job, the more people you have in a specific department or function, typically the more standardized the questions become. All right. And so once we have that, then we can say, all right, there are all these questions that come in. Some of these questions require approval. Okay, somebody has a bad night's stay at our hotel. How much money do I normally give them in credit or do I give them a gift card to our restaurant or something like that? Well, we decide that under $500 or under $1,000, under $10,000, depends on the size of your company, under $100,000 sometimes, this person can act independently without your supervision. Now of course you still have financials and at the end of the month something looks out of whack, you can go check it out. Now underneath of that, This is where having kind of clear scorecards and KPIs around these things help because if we're going to unlock some sort of decision tree, we want to also make sure that it's unlocking some sort of value. And so I'll give you a really powerful frame that you can talk to anybody in the business with. You can say, how do you in your role make the company money? It sounds like a very simple question. Like we should, people should be able to know how the business works, especially as it relates to their job. If you ask this to your team today, many of them will not know the answer to that question and that will frighten you. But fundamentally, like some of them are easy. Sales, people come in and I get them to give us money and if they give us money, we make more money, right? That makes sense. Great job. Okay. But then you have some ancillary roles like what does finance say? What does tech say? What does media say? What does marketing? So of course marketing is something that generates money. But you don't do marketing. What do you do? I hold the camera. Okay, so then what ways do you make us money? Not the marketing function. This is where it gets more interesting. So if I had this camera person and he or she, right, slow down, he or she holds the camera, I say, all right, what does bad camera work do? Well, bad camera work would be a waste of time, right, of the entire team. Number 2, the media would perform not as well because it would be off-center or, you know, it would just— the lighting would be off, whatever the hell, right? On top of that, I mean, we'd waste the footage, we'd probably have equipment that would be ill-fitted, we wouldn't save the stuff that we'd have. All the things are huge cost centers. And so you can reverse each of these kind of potential mistakes into these are the things that we have to make. What percentage of the time was everything saved correctly? Was it named correctly in the system, saved to the correct drive? Timestamped appropriately, the lighting and/or camera was set up correctly, and it was on time so we could start at the time we said we were going to. If that's 100% of the time, it's like, dude, you're making us money and here's how. And I think that when people have the understanding of how what they do relates to how the company makes money, it gives more meaning to what impact. People are like, I wish I had more impact. If you have a job in a company, you have an impact. You probably just don't know what the impact is. And so decide, and explaining that to somebody I think is a very big unlock because they see the value that their role provides in the overall work. All right. Now, before you have this, because again, we're trying to replace ourselves here. We have our little scorecard, we have our KPIs. Let's say you were the camera guy, right? The next thing is we have to have some sort of test to graduate the person, which is can someone 80% as you get 100% of the result? And the key learning that I had— this is a belief that I had to have broken— was that number one, no one's going to ever be able to do it as well as you. Not true. No one's going to be able to do it as well as you with with 1/10 of the work, with 1/10 of the practice or reps, but every human is replaceable in my opinion. And we know that because humans have replaced all humans since the beginning of time. But we can know that on a shorter time horizon, if they only learned all the things that you learned the right way without learning all the bad mistakes, they might be able to get to 50% as good as you right off the bat. And so a belief that I would like to switch for you, I'll give you 2. Number 1 is if I can do it right, with part of my time, someone else can do it better with all of their time. Real quick, check this out. So if you aren't sure what strategic competitive advantage you should be doubling down on, I'd love to invite you out to one of our scaling workshops that we have here in Vegas at our headquarters, and my team can actually work with you on it. But before you do that, you can download our free $100 million scaling roadmap where you can plug in information and it will give you basically your step where you're at in the scaling process. And ultimately give you the things that you can help get to the next level. But like I said, if you want help from my team, you can book a call after you download this. It's free, and we'd love to see if we can help you out. Okay, here was the second belief I just remembered, which is you can outwork anyone in your business. You will not be able to outwork everyone. And this is something that it took me too long to learn. I kept— I mean, you can imagine me, I pride myself on my work ethic. I can outwork everyone. And so the longer it took me to realize that, the longer it limited my ability to grow. I could do a mountain of work, but I can't do Mount Everest. That requires more hands and more shovels, which brings us to number 2. So you want to start trading doing for managing and leading. So here's the simple math behind this. Like, there's actual math here, which is let's say you swap 200 hours a month, so, you know, roughly 50 hours a week of work for doing 20 hours of managing. So now you go from 50 to 5. So you have a 10x improvement in leverage and you replace yourself again by hiring a manager the next time and then you trade the 4 hours for 1 hour, right? This is basically how leverage occurs through labor, right? Is that you have to turn your effort into an organization that produces without you. Employees or AI in the future make a fully functioning enterprise that can continue to scale. And that's kind of my litmus test is the baseline is does it burn down without me? For many of you, if you just get to here, you'd love your business 10 times more. I can actually leave for a month and come back and it didn't burn down, thank God. But where it gets really nasty and really exciting is where you can leave for a month and when you come back, it's in a better position than it was when you left. That is a business that that people wanna buy. Because what it functions as is essentially a faster growing annuity for an investor, which gives them a big multiple, which is why they pay you lots of money for it. So let's walk through what this actually looks like. There's kind of 3 steps to it. So you'll shadow train. So this is where they watch you do it. The next is you supervise them doing it. So they do it in front of you. So you do it in front of them, they do it in front of you. And then after that, you kind of just support their independence and you're available but not involved. So it's like I'm fully available. You can hit me up whenever you need anything. And then what happens is in the beginning they require a little bit more ad hoc calls, consults, help. And then over time, if you have a competent employee, those decisions get automated back down to them. Right. And so that's when the full handoff occurs, is that they own it completely. And again, initially I'm cool with 80%, sometimes 60% as good, as long as I have a clear path to them getting better. And I'll give you a little pro tip. I used to measure employees by how well they started. I measure employees today on how fast they improve. Because if you look at two employees, right, let's say somebody starts here and someone starts here. If this person's flat and this person's like this, I know that in 3 months, 6 months, this guy's gonna pass this guy. But then what happens another 6 months, right? And so sometimes it's worth taking someone who's a little bit less experienced or has fewer inherent skills 'cause they didn't have as much time because they're able to learn faster. And like, so intelligence I measure as rate of learning. And so I will rather have a more intelligent employee who learns faster than a more experienced employee who learns slower. Just something that I've learned. And it depends on the role obviously. But I would say that I've had a big shift in terms of how I think about talent. Now the goal here is that we want to move from doing the work. This is the big picture of point 2, move from doing the work to managing people, right? We focus on recruiting A players, not doing A player work. We focus on the business, aka strategy, prioritization, not on the tactics of what we need to do next or what we need to do today. And so your job becomes attracting talent and aligning incentives. And so the ultimate test for you is can you take 3 months off and have the business grow anyways? Like this is the easiest, especially for those of you who are brick and mortar, this is super important. If you're brick and mortar, a lot of you guys want to get my second location, want to get your third location. This is the simplest litmus test. If you can leave it alone, like your phone doesn't ring, and I'll tell you how to do that in a second. I call it the phone test. I'll tell you later. But 3 months later, it's bigger. Great. It's the same. We have to figure out a way to get it to be able to grow. Unless you're in a super cap market where there's no way it can grow, fine. But the vast majority of businesses can improve, can grow year over year over year if you have a good business. And if it's flat, the thing is, is that you still have some sort of magic over here. As soon as the Eye of Sauron moves, sometimes if it's flat, it's going to go down. Now all of a sudden you've got double the liability, double the debt, double the overhead, half the talent because it's spread. And now you have more risk and less profit. No bueno. So this is why it's so important. You're like, man, that's never going to happen. It's like, right. That's why a lot of people shouldn't have second locations for much longer than they think. That's why overexpansion is one of the number one reasons people go out of business. So you're like, okay, how do I find these types of A players, right? Is we want to look for people who describe their role in metrics in as much detail as humanly possible, right? So I can measure someone's skill in any endeavor based on the quality and the quantity of metrics they track. And I'll tell you, I'll tell you the first time, like, a great example of this. So the first time I hired a really good HR professional— and I've had plenty of them in my history— but the first time I hired a good one, she asked me questions on the interview. She was like, so what's your cost of acquiring talent? And I was like, I don't know. That's a good question. I should know that. She was like, what's your time to fill? And I was like, wow, I didn't really think about it. She was like, okay, what's your two-way fit in terms of what percentage of 90 days later do both the employee and the manager say that it's a 10 out of 10 fit? And I was like, don't know. And so she starts giving me all these different metrics for the talent side of the business that I had no idea about. I was kind of in the internet marketer world of, oh, if I have a low refund rate, therefore my product is good. It's kind of like I had that on the talent side where I was like, oh, which by the way, that is not how you know you have a good product, just FYI. I was on the talent equivalent of that of like, well, you know, I mean, we haven't had any lawsuits lately. It's like, duh, you think? That's probably not a good way to know if you have a good culture or a good team or a good talent management process. And so again, the quality and quantity of metrics. Now this particular HR professional was a leader in turnarounds and so she knew all these different metrics and then obviously I learned all those things from her. And then discarded her. I'm kidding. But I learned those skills so I could apply them. And fundamentally, I try to find people who can teach me things because that's like the best thing in the world is like you pay someone and say, hey, you know way more than me, go do that in here. When you're starting out though, it's hard to afford those people because those people don't want to work for you or you can't afford them or both, right? Now I'll give you a couple rules of thumb that also took me too long to figure out is that number one, interview more people than you think you should. And I know how costly this is as a business owner. So you want to stack as many as you can. Also, I highly encourage Group interviews, pretty high up. Once you get into director and executive, it's tough. But like anything that's like frontline to maybe even manager, you can have group interviews because it'll save you time and you'll very quickly be able to read people's vibes. And so the idea here is that I'll tell you, I'll tell you a story. For school, Sam interviewed 600 developers, 600 developers to find our co-founder Daniel. The CTO. 600. So think about 1, 2, 3, 4, 5. Okay, so that's just me naming numbers and I felt like it took a long time. Now imagine each of those represented a 30 to 60 minute conversation and then imagine that that's over a year of those conversations. It is brutal. But when you do that, what happens is you start to get a lot of nuance of who's good and who's not. When you talk to 10 people, who say that they are a sales manager, you're gonna get a way better idea than when you talk to one of who's actually legit. When you talk to your 50th person, you already know who's got game. And so what happens is it starts to tune your picker because fundamentally, the reason I think we've been able to grow businesses faster and faster and faster with each next company that we start is because pattern recognition becomes one of your biggest assets. So like some people call this wisdom or whatever you wanna call it, But fundamentally it's just that I've had a good sales manager. They looked like this. You look like that person. Therefore you have a higher likelihood of working out in this role. But to figure out which sales manager was good, I had to hire 5 different sales managers and waste 6 months or a year on each one of these before I finally found somebody who was good. So that's the thing is that if you look at every role in the business, and again, this goes from the ground up. So a frontline support rep, a frontline sales rep, a frontline media editor, whatever. And then all of a sudden it's like, okay, those start to work and then your business starts to grow. And then you're just like, I've never hired my first level of management. So you gotta figure out what a good sales manager, a good media manager, a good— all these roles. And then after that you're like, okay, well that starts to grow. Now I've got my director level. And so each of these levels, you keep putting these people in until eventually you know what it looks like when it's right across an entire org. And so what happens is when you start really building businesses, you're not actually building the business. It feels much more like assembling the people who then built the business, which Leads us naturally into the third of our little buckets of what do you do to remove key man risk? And I'll give you one more little tip. When you're doing all those interviews, if you aren't learning from the person, especially if it's in a leadership role or above, waste of time. If you're not learning from them, then it means that you're going to have to teach them, which means that not only do this person— like, it means that you're going to have an increase, like your life's going to get worse before it gets better, which sometimes it's required. But at a leadership role and above, that person should be teaching you And so there's no point in you trying to go in and train them. They should be like, this is what we need to do for our financial function. You're like, great, love that for us. Go do that. Right? Okay. Brings me to the third point, which is you want to remove yourself from marketing. Now marketing is a larger term, but fundamentally it's acquisition, right? If the business relies on you to get customers, which is very common in founder-led companies, like you're the breadwinner, you're the promoter, you're the one who brings the business in. This is one of the biggest risk factors in business because this is why you can't leave. And when you do leave, the revenue goes down and it's very scary because everything relies on you. And what's tough is that it feels good in the short term to have everyone rely on you, right? It feeds your ego, it makes you feel important 'cause you're like, I'm irreplaceable, I'm a special snowflake, I am a unique human being with unique skills and therefore I am important. But the idea is that you actually, in order to make an important business, you need to become less important. Like if you want to help more people, you can't help more people. And so for me, obviously, like I've had plenty of businesses that were face-driven, but if your face gets the customers, you are the key man. And so this is kind of the 3-step simple way of kind of getting out of this. Well, easier said than done, but fundamentally this is what we do. There are 7 different ways that you can install systems into the business to capture media and marketing on your behalf without it having kind of quote direct-to-camera founder-led ads. Okay, so I'll give you a couple of them. So one of them is that you probably have some sort of place where customers gather, right? Maybe it's an online community like a school or whatever. In those communities, you should have a standard process weekly where you screenshot people saying nice things about you. Then all of a sudden all those screenshots become ads that get pushed to you every single week. The next thing is having incentives for customers to leave testimonials. So you can have things that are unlockables. You have a certain amount of credit. You can have tiers of service you can give them trials to, which by the way is a double whammy. So you give someone a trial of a higher level of service if they provide a testimonial. It allows you to ascend customers who love your stuff and get more marketing. Bingo, bingo. The next one is something I call lifecycle ads, which basically you probably already have functions in the business that already occur. Which is you probably record your sales calls. Hopefully you record your onboarding calls for, you know, a new customer. You record delivery checkpoints and maybe if they have a good experience, you would record some sort of testimonial from them. Great. Now the thing is, is that means that all of this stuff already exists within your business. And so when you have a testimonial and someone says, I did, these guys are great, you just say, cool, we're going to look back through our CRM, look back through our scheduling and pull the recordings from their sales call to their onboarding to each of their touchpoints. And then what happens, you can compress that into a timeline that also becomes another advertisement. Pretty sweet, 'cause instead of saying I was here and now I'm here, show them here of them actually being scared, being not sure, hesitating before signing up, and then all of a sudden getting this amazing outcome. The next thing you probably already do is you have some sort of key moments of client deliverable, whether that's like you do a ribbon cutting or you do a reveal of their new kitchen or they get on the scale if they're losing weight, or there's obviously with businesses there's revenue or there's monthly financials or whatever, there's always moments where something had happened that has emotive, right? Emotive as in emotional. And so what we wanna do is just put a process in place where we can incentivize the person to document that moment to then create more collateral for us. And so hopefully you're getting an idea here. Like another process you can put in place is that your customer support, if you have a customer support line, is that you can pay a customer support person $5 for every person that they get like a mini testimonial in chat format from, right? You resolve something, oh my God, these guys are amazing, I love this product, it's fantastic, I highly recommend it to anybody. Great screenshot that, right? And I'll give you $5 for every one of them to do. I'll give you another one. All of you guys have Google reviews, Yelp reviews, Trust Advisor reviews, Amazon reviews. It depends on where your product sits, but like you probably have someplace where people have reviewed you, right? And think, here's what's crazy. You probably have hundreds, not like 1 or 2. You probably have hundreds of like local businesses have a few hundred reviews. It's not like uncommon to have that. What's crazy is that those reviews rarely get made into marketing. Why? Now here's an even crazier one. You can take the hilarious 1-stars and take a page out of Liquid Death's marketing book and just say like, hey, if you were one of these people, you won't like our stuff. And if it clearly casts out the wrong type of person, it will pull in the right type. And it's also hilarious marketing. And so I think I just gave you 6 or 7 different processes that you can install in a business that all get ads and marketing to come to you. If you wanted to go even further, you could build an affiliate program out. You could use TikTok Shop and sell widget and then whitelist those ads in the modern era and use those as your marketing, right? All of these are things that you can do to remove your face from your market. So the next thing that we think through is stress testing this. And so if we're zooming all the way out, we put our big list together, we red, yellow, greened it, We then created a decision tree. We created a box around how much money they're able to make decisions on. We have our scorecard. We test them to make sure that they actually pass the KPI. That's step one. The step after that that we did is, okay, well now we need to increase the amount of people in the business for all those reds. So we have to interview more people. We have to look for people who have higher skills. We have to be willing to get taught by these people, which is, by the way, the cheapest learning you can do is get people who are way out of your league to teach you about the role and you learn a ton in the process of also finding great talent. Ask those people how what they do turns into revenue for the business. And then finally, actually take your 90 days off and something will break, but you continue this process until eventually nothing breaks. And then once nothing breaks, you actually have a business that can run without you.