When To Take The Chips Off The Table Ep 603

In this podcast, the host emphasizes the importance of distinguishing between reinvesting in oneself versus one's business, advocating for extracting profits and building personal wealth. He advises business owners to prioritize personal skill development over pouring funds into business expansion, which may not guarantee increased net worth. The host suggests adopting a disciplined approach to financial management, such as regularly withdrawing profits, to ensure security during cyclical economic downturns. He also touches on the potential pitfalls of reinvestment, highlighting the need for strategic decision-making in business growth and the ultimate goal of preparing for unforeseen personal and economic challenges.

• Individuals may feel they lack either a skill set or a character trait, which can impact their success.
• False beliefs about the world need to be identified and addressed.
• Investment in personal growth may require connecting with communities or paying for access to mentors.

"If you feel like you're not lacking a skill set, then you're lacking a character trait or you have a belief about the world that is false, right?"

This quote emphasizes the importance of self-awareness in personal development, suggesting that success is not solely about skills but also about character and beliefs.

• Wealthy individuals often view business as a game.
• The speaker's podcast is a documentation of their journey in building a successful business portfolio.
• The goal is to share lessons learned to help others grow their businesses.

"The wealthiest people in the world see business as a game."

The quote highlights the mindset of treating business strategically like a game, which can lead to success.

• Business owners commonly reinvest in their businesses but may overlook the importance of taking profits for themselves.
• There is a distinction between reinvesting in the business and reinvesting in oneself.
• The speaker advocates for securing personal financial gains from business endeavors.

"So I'm just calling this when to take chips off the table."

This quote introduces the concept of knowing when to secure personal financial gains from a business rather than continuously reinvesting all profits back into the business.

• The permanence of self contrasts with the potential transience of a business.
• Business owners must balance growth with securing personal financial stability.
• The end game or ultimate goal of the business should guide decisions on reinvestment.

"I think you should always reinvest in yourself. But reinvesting in your business, your business may come and go, but you will always stay, right?"

This quote distinguishes the importance of investing in oneself over the business, acknowledging that while businesses can fail, the individual remains and continues to have financial needs.

• The primary objective of a business is to make a profit, differentiating it from a nonprofit.
• Taking substantial profits from the business can lead to a healthy pressure to generate more income.
• Thinking like a business owner involves focusing on profit-making rather than just building the business for its own sake.

"And so the objective of a business is to make a profit. That is the point. That is what separates it from a nonprofit."

This quote defines the fundamental purpose of a business, which is to generate profit, and underscores its importance in decision-making.

• The speaker suggests that the main reason to have multiple business locations is to prove a concept for licensing or franchising.
• Owning multiple service-based locations is not typically as profitable as licensing or franchising.
• Expansion can deplete reserves and increase risk, emphasizing careful consideration before growing through additional locations.

"For me, in my opinion, the only reason to have multiple locations is because you're trying to have proof of concept so that you can then go into licensing or franchising."

This quote explains that the strategic reason for expanding to multiple locations should be to establish a model suitable for licensing or franchising rather than just to increase the number of owned outlets.

• Cash flow management is crucial for business survival and success.
• Businesses often face urgent financial obligations such as payroll, rent, or taxes.
• The ability to generate quick cash under pressure is a valuable skill for business owners.
• Utilizing this skill for personal gain, rather than just to meet business needs, is often overlooked.

"And that means that your business actually is better. It's kind of backwards, but it's true." This quote emphasizes the counterintuitive idea that a business is better when it can generate cash quickly, even under pressure, highlighting the importance of cash flow management.

• Reinvestment in a business should be strategic, with a focus on the return on investment (ROI).
• Not all costs, such as equipment purchases, are considered reinvestment; they can affect the business's valuation.
• When planning to sell a business, showing maximum profit is beneficial for a higher sale price.

"The thing is, if you're selling the location, you're going to want to show as much profit as possible if you're consistently putting money back into the business." This quote outlines the strategy of maximizing profit for a potential business sale, indicating that not all reinvestments are perceived equally in terms of business valuation.

• The decision to take profits out of a business should be based on long-term goals, such as franchising, licensing, or selling the business.
• Profits should be maximized if an exit strategy is planned to attract better offers from buyers.
• Business owners should be self-aware and understand their unique situations when making financial decisions.

"The only outcome, besides opening in a location for the desire to franchise or license that model would be an exit, meaning you're selling the location." This quote discusses the scenarios in which a business owner should consider taking profits out of the business, focusing on expansion or exit strategies.

• Discipline is required to run a lean operation and avoid unnecessary expenditures.
• Every expense should be justified by its potential to increase profits significantly.
• Understanding profit margins is essential to determine the true cost and return of investments.

"You should try to run as lean as possible." This quote advises business owners to minimize expenses and maximize efficiency, emphasizing the importance of running a lean operation.

• Investing in personal skill development can yield better returns than physical investments in the business.
• Skills can directly contribute to increased revenue and business growth.
• Business owners should prioritize learning and improving their abilities to enhance their earning potential.

"Leveling up your skill set is going to do more for you than probably anything that you can invest in the actual business itself." This quote suggests that personal skill development can be a more valuable investment than spending on business assets, as skills directly contribute to the owner's ability to generate income.

• Business decisions have a compound effect on both immediate profits and long-term business valuation.
• Spending on unnecessary items can reduce profits and, consequently, the business's sale price.
• Owners should be mindful of how their spending choices affect their business's financial health.

"So if the profit at the end of the year is $5,000 less, that is actually losing you $15,000 on your actual sale number." This quote explains the multiplier effect of profits on business valuation, illustrating the significant financial impact of seemingly small business decisions.

• The speaker has dedicated over 1000 hours to writing a book intended as a significant contribution to their community.
• The book is also a strategic move to increase the speaker's likability and potentially lead to future business partnerships.
• It is available on Amazon, and the speaker encourages the audience to check it out.

I put over 1000 hours into writing that book and it's my biggest give to our community. So it's my very shameless way of trying to get you to like me more and ultimately make more dollars so that later on in your business career.

This quote highlights the effort and strategic thinking behind the book's creation, aiming to provide value to the community while fostering future business relationships.

• The speaker believes entrepreneurs should invest in acquiring new skills unless they are making significant profits ($100,000 a month or more).
• Lack of skills, character traits, or false beliefs can hinder financial success.
• Investing in communities and connections can help correct false beliefs.
• Discipline in financial management is crucial, including setting a monthly target for withdrawing profits from the business.
• Regularly monitoring bank accounts and cash flow can lead to better financial mindfulness and decision-making.
• Consistently saving cash during prosperous times provides a safety net for potential downturns and opportunities to pivot.

And so that's what you should invest in. Beyond that, it is my belief, and I made a podcast about this that really, unless you're making $100,000 a month in profit or more, I think you should consistently spend money on acquiring skills because that, that's the problem, right? If you're not making the money you want, it's because you're lacking a skill set, right?

The speaker emphasizes the importance of continuous learning and skill acquisition as a means to achieve higher profits in business.

When you are running the business every month, take as much as you can out, have a number that you drain the bank account to every single month. And do that religiously, all right? You drain it.

This quote advises entrepreneurs to practice disciplined cash withdrawals to ensure personal profit and prevent overspending within the business.

I looked at the total bank accounts of all assets, my personal, my savings, everything that was cash, that was liquid across all accounts every morning, and I totaled it up.

The speaker shares a personal habit of daily financial monitoring that helped maintain awareness of cash flow and financial health.

So rip the cash out as much as you can every month, because both, that's going to increase your net worth, right.

Here, the speaker suggests that regularly saving cash can increase net worth and provide financial security during uncertain times.

Consistently stacking cash. One, you have a parachute that if you need to switch opportunities, you have it there.

The speaker advises building a financial safety net to allow for flexibility and security when unexpected business challenges arise.

• Experiencing significant financial loss can be devastating and soul-crushing.
• The speaker shares a personal anecdote about a partner committing fraud, leading to the loss of their gyms and earnings.
• Emphasizes the importance of safeguarding oneself against such occurrences.

"And I can tell you it's soul crushing, and I don't want that to happen to you."

This quote highlights the speaker's personal experience with financial loss and their desire to prevent others from experiencing similar hardship.

• Stresses the need to regularly take money out of the business to have tangible rewards for one's efforts.
• Suggests that personal character, beliefs, and skills are the ultimate endgame but acknowledges the material benefits of money.
• Advises against reinvesting everything back into the business.

"Just take money out every month so that you have something to show for it now, no matter what."

The speaker advises to secure personal profit regularly, ensuring that there is a personal gain regardless of the business's future.

• Money cannot buy happiness but can prevent certain pains and difficulties in life.
• Financial resources can provide for unforeseen personal and family needs, such as special education for a child.
• The speaker emphasizes the importance of being financially prepared for unexpected challenges.

"But the other side of it is that money can't buy you happiness, but it can sure help you avoid pain, right?"

This quote discusses the practical benefits of money in mitigating life's hardships, beyond the pursuit of happiness.

• Many investments do not contribute to business growth as expected.
• Encourages prioritizing profit and avoiding unnecessary expenditures.
• Discipline in financial management increases business value and attractiveness to potential investors.

"So make it a priority to profit as much as you can every month and stop buying stupid shit, all right?"

The speaker advises to focus on maximizing monthly profits and to avoid wasteful spending, which does not contribute to business growth.

• Business is inherently cyclical, with periods of growth followed by downturns.
• Advises taking profits during good times in anticipation of potential future downturns.
• References economic indicators like the flipped yield curve as signs of potential economic downturns.

"After every good time, there is a bad time, right? Every up cycle is followed by a down cycle and every down cycle is followed by an upcycle."

This quote emphasizes the inevitability of business cycles and the importance of financial caution during prosperous times.

• Suggests running "paid in full" plays to extract cash from the business.
• Recommends internal promotions to existing clients to generate excess profit.
• Advocates for not reinvesting all profits back into the business but instead increasing personal net worth.

"Make sure you run internal plays to your existing clients at least four times a year, because that's just pure excess profit and you shouldn't reinvest in the business."

The speaker suggests leveraging current client relationships to enhance profit without additional investment, emphasizing the strategy of personal financial gain over business reinvestment.

• Taking money out of the business is a guaranteed way to increase net worth.
• Investing back into the business offers no guarantee of return and requires significantly higher earnings to recoup the investment.

"The number one thing that is guaranteed to make you more money is more money. So if you take the money out, it's guaranteed to actually increase your net worth."

This quote underscores the certainty of increasing personal wealth by saving profits rather than the uncertainty associated with reinvesting them in the business.