Jonathan shares a story about a young man that he met that made him question, are we all thinking big enough?
It’s been a while since I’ve recorded a video. One, I’ve been thinking I need to get this done. Two, what would be something that would be of value to talk about or which question of the tons of questions I have outstanding that I haven’t yet answered should I answer? The thing that keeps coming to mind is a story, an experience I had a couple of weeks ago that I’d like to share with you. The story is also your challenge and my challenge.
A couple of weeks ago, I was in Louisville, Kentucky which is the GIE conference for the industry. It’s non-stop everyday from 7:30am till the end of the show. Dinners at night, probably some drinks in the evening and then you start the whole thing over again the next day. Along the way I have tons of fantastic conversations. I get to see a lot of people I know and have great conversations with them. I get to see people that I’ve never met and have conversation with them. One of the stand out memories from the show is that a fellow came up to me on Friday near the end of the day, and I can’t remember his name for the life of me, but I know that he was 17 and he’s from Ohio.
He had his little brother with him. He had a couple of questions for me but the biggest question, the one he started with was, “How do I go about hiring somebody to work inside my business?” I think it was full-time. He wasn’t looking for a high school kid to help him, he was looking for a person that could work for him all day while he’s at school. I think that’s pretty ambitious and pretty awesome. When I was in high school, I started mowing lawns. Not the business I have now, and I had a couple people working for me but they were high school students.
It’s far more intimidating when you’re 17 years old to go hire somebody that’s still possibly a young person but probably in their 20’s, maybe even somebody older, to work for you. That’s just super intimidating. I was super impressed that he’s thinking this way. He’s already thinking about what’s going to happen when he goes off to college. To you, I apologize I forgot your name, congratulations. That type of attitude, that type of working really hard, getting out of your comfort zone and doing something like that is going to make you really successful. Just keep doing that and do more of it and push harder and go faster.
At 17, if you can build this business now, you’ll be in a ridiculously great spot. I want to tell that story because I think that he has a lot of courage and a lot of guts to do such a thing. I wouldn’t have been doing that at 17. My challenge to you watching this, and the challenge to me is, what are we not doing or thinking big enough about because we’re scared or apprehensive?
Maybe we don’t want to put somebody else out. That’s generally my biggest flaw. I don’t want to put other people out or bother them and so I don’t ask for the thing that I might need or need help with.
What is it that you’re not doing that you could be doing that takes a little bit of courage like the fellow in Ohio that’s 17 that’s going to hire somebody out of school to work for him full-time while he’s going to school? That’s awesome. Is there an area in your life where you could push and challenge yourself like he’s doing with himself? Go do it.
Now is the time to take a look at your business and figure out how to hire the right people to elevate your company to the next level.
If you’re running a little bit bigger organization, I think the question you want to be thinking about right now is, “Who could we hire next year, or by the end of this year that would be business changing in the next calendar year? This person’s going to cost some money, but if we could find this person and they could bring an entirely new set of knowledge, experience, understanding to our business, take a ton of stuff off my shoulders, take a ton of stuff off some of my really talented team members so that they could move onto other things and this person could show us new ways to do things that we’re doing now, possibly incorrectly or not as efficiently or optimally as possible. What might that do for our business?”
If you want to grow your business and get yourself out of the field, watch this video to learn how to prioritize projects to increase the efficiency of your company.
Hey, this month in ServiceAutopilot Academy, we have focused heavily on time management. When I say time management, I am talking about the management of your time, but I’m also talking about the management of the time of your organization and of your team that operates within your organization.
As an example, if you want to grow your company quickly, it’s really important that you’re working on the most important projects that move the company forward the quickest. I think one of the simplest ways to do that is to figure out all that you need to get done from a project standpoint. Marketing projects, operational projects, identifying your standard operating procedures, fixing operational problems, improving inefficiencies in the company. All of those activities that I just identified form a project and each of those projects has a value that it will return to your company in the form of additional savings or new revenue.
I believe what you want to do is you want to take all of your projects that you need to get done as an organization, you want to prioritize them and you want to work on the ones that will make you or save you the most money first. Then once you get those done or that example project that you identified that’ll make you the most money, then you move on to the next one. The idea is that if you work on the ones of greatest value first, they’ll return to you more money and with that money you can then go hire other people to join your organization that can then help you work on the projects.
Whereas if you start with a low value project, one that doesn’t return a whole lot of savings or money to your company but it’s easy, it doesn’t cause you a lot of trouble and pain and work, it’s going to return a small amount of money to you and as a result you don’t really have much new money to go hire somebody to help you.
If you want to go from a little company to a bigger company, or if you want to go from a medium sized company to a really big one, it’s really important that you’re working on the right projects in the right order and at the right time so that as you make and save more money, you can reinvest that money into your company to hire more people to help you do those projects and get the stress and the frustration and all the heavy lifting off of your shoulders. The whole entire point of business is to build something that in a sense is an investment. It’s an asset for you that generates money for you but doesn’t require you to do all of the work.
The way you get there is you work on exactly the right projects that move the company forward so that you can bring more and more people onto the team to help you move the company forward faster and faster and then before you know it, most of the heavy lifting, most of the problems, most of the stress, most of the frustration is not just on you, it’s shared across a team, and it’s a team made up of a bunch of really smart people that know how to solve different things and know how to move the company forward.
One day you wake up and you realize that wow, you’ve got tons of projects going on within your organization but they’re all being handled by different people without you even realizing that they’re being handled. you weren’t even involved and problems are getting solved. The only way you get to that point is to start in the very beginning by prioritizing exactly what needs to be done, again, in terms of how much will it return to your company in the form of money, savings or new revenue, and then working those projects one at a time in order. It just gets faster and faster over the years. In other words, you get more and more projects done faster as your organization grows and progresses.
Focus on that concept and it’ll have a huge impact on getting you one, out of the field or out of the position you’re in right now, and two into a position of acting like a real CEO of your company.
Jonathan answers, “How much money do I need to save to retire and still be able to keep my lifestyle?”
Hello. I’ve got a question that I’m going to answer, and first I’ll read it to you. My question is, “How much should I sock away for the future when I retire? I’m 40, and I will be starting a lawn care business part-time next spring. I know there are a lot of factors here. Thanks.”
This is another one that with a lack of information, it makes it very challenging for me to answer it, but let me throw some stuff out at you and give you some ideas.
Probably when you were younger, you’re imagining, and I was this way, I thought, “Man, if I could just make $90,000 a year, and if I could save a million dollars, boom, life would be first class, like, I’d be set.” Then you make ninety grand and then you’re like, “Uh wow, this ninety grand doesn’t buy nearly as much freedom and fun as I thought it would, and oh man, now I’ve got a wife and kids, and wow, that’s not as much as I thought it was.” And, a million doesn’t pay so well anymore, so let me give you an example.
Back when I was in my early 20s and I had money market funds with Vanguard, I think I was making like 5% in my money market fund, maybe 6, it was great. I don’t remember the exact amount but it was really good. It was like 5%. I still have that same money market fund today, it’s one of many, and in that fund, I think I make .018%…not even a quarter of a percent. I have another money market fund that they’d only let me put so much money into it, it capped out, and I earn 1% on that. It’s my best by far. In fact, I think they use as a loss leader to get business, because at the end of 2015, I no longer will get 1% of my money in that anymore. Just think about that math. Let’s just say it’s 1%. If you saved a million dollars, what’s 1% a year on a million dollars? You can’t live on that.
Now you can’t even keep a 1% return on money right now in a money market fund. Not that you’d keep all your money in a money market fund, but it’s just very conservative. If you go to something like Treasury Bills with the US government, super, super safe, because I believe by law, if they can’t repay them, they tax the public, so they’re considered ultra-safe, but they don’t pay. The return is horrible. A CD with the bank…horrible returns. None of these things on a million dollars would pay you enough money to even live. You could not survive. You probably couldn’t even pay your rent or your mortgage with the money on that.
So you have to have your money in assets that are growing, and they have to be diversified across a bunch of different stuff. They can’t just be in ultra safe things; which brings risk into the equation, that something could go wrong. That money that you had spent years and years building, something bad could happen to it; it’s not there when you need it. Or 2008 could happen and the absolute worse time to be pulling money to live on, is ’08 when everything’s been cut down by 40%. Now you’re pulling your principal when it’s only got 60% of the original value. I could go on and on. There’s all these factors to consider.
The million dollar dream is flawed. It’s not enough. So what I would suggest at a minimum, which for most people they’re going to throw up their hands when they hear what I’m about to say, but for me, the minimum number is $5-million. But it also comes back to, “What do you expect out of life, and what is the lifestyle you want to live, and travel, and cars, and homes, and things of that sort. Five million, truly is not an extravagant lifestyle, but it’s a pretty good one. It’s a really good one, but the return on that if invested in a somewhat safe fashion is enough that you could continue having a pretty good life, that might be equivalent to the times when you owned a company and it was making hundreds of thousands of dollars a year in profits.
For me, the $5-million isn’t enough to do what I want to accomplish, but for most people, it truly could be enough. It’s just I kind of have a little bit bigger goal than that. But that could be flawed. You may say, “Boy, that’s crazy!” But $5-million is kind of that number. What happens when you hear $5-million? You hear $5-million, you’re like, “I’m never going to get to $5-million. I mean, that’s impossible. It’s going to take me forever. I’m 40 years old. How am I going to save $5-million after tax?” And some of your money could be pre-tax.
That gets into what I really want to mention. Here are a couple things: One, the way I believe you think about this is, this is the beauty of building a company, and this is the beauty of building a company where you’re not the person doing the work, because imagine being the person doing the work when you’re 60 or 70. It’s not going to happen. Then you better have that money to live on. Another thing to keep in mind is as technology and medicine, everything continues to improve, I think it’s realistic to believe that we’ll live longer; five years, ten years longer than the average.
I don’t know what that is, but we will continue to live longer, even at 40, you have plenty of time in terms of time horizon for a tremendous number of things to improve in society, that it’s possible that the average life expectancy will have increased by five or more years, by the time you get into your 80s. That requires more money, so back to my point. If you don’t commit to learning and doing what it takes to build a real company that has a team, and it’s not just you, at 60 and 70 years old, how much energy and motivation will you have to keep up with the ridiculous amount of change that’s happening in society, as you’ve got to continue to think creatively about your business, and as you have to continue to year after year, mold your business to keep up with all the disruption and the change.
So you want to build that team around you to help you. If you do that, this totally changes the amount of money that you have to have saved. Totally. This $5-million requirement isn’t the same, because really the reason for $5-million is so that when you invest it, it can return to you some amount of money. I didn’t do the math, but let’s just say it’s two hundred grand a year. The real focus here, is not the $5-million, the real focus is the return you get each year; the money that you make each year, so that you can live.
Your investment is spinning off cash. That cash is what you live on. The real goal is the two hundred, not the $5-million. So what you first do is you figure out how much money do you need to live on in the future? Remember, there’s going to be inflation and things in the future, so the value of money continually declines, so in the future, how much do you need to live on? That’s what you’re trying to get to. Five million just is the principal that you need, so that after your return on investment on that $5-million, it returns to you $200,000 to live on.
Now could you create a business with a team that runs itself, that doesn’t require all of your time, that maybe when you get older, you only have to work in that business 15 hours a week, and that business returns to you $200,000? That’s the same thing. Your business is an asset; it’s an investment. What I think the real approach here is, how can I build a company that is a real company, which is very different from what most people build, because they’re unwilling to learn, do the work, or go through the short-term pain to better themselves, to grow, and to solve problems?
If you’re willing to do that, then this business could make you, let’s call it, $150,000 a year. It could be way better than that, but let’s just call it $150,000 a year. And you have decided that you want to live really well into retirement, and so you want to make at least $200 a year. Now the amount of money you need invested is way smaller. Maybe it’s a million and a half. I’m making up numbers. If you do my math, it’s going to be screwed up; I’m making a point. Now maybe all you need is a million and a half, because the million and half will spin off another fifty. Or maybe you need a couple million, so that that couple million will spin off a hundred a year, and you can use fifty of that to live on, and another fifty keeps getting saved; so that you’re still saving every year as you go into your retirement.
When you think about it that way, that your business is an investment, and it can generate a big portion of your retirement income, and then your money saved can make up the difference, or if you could accomplish it where your business pays for all of your retirement, and your investments just continue to grow, and grow and grow, then you’ve really built a security blanket, in a sense. You’ve really set yourself up to be somewhat protected. Then too, when you’ve done that with your business, you don’t have to take as many risks on your investment to get a big return. You can play it a little more safe. Yes, you’ll get lower returns, but that the probability of something happening to your stash is way less.
That’s the way to really think about it. Don’t just think about, “Yeah, I need to build this big amount of money so I can be done, and I’ll live on that money.” What if your business is thought of just like investing in stocks, or bonds, or real estate, or whatever, and it’s spinning off cash that you live on.
A couple things. I read a book awhile back that will do a better job explaining this. I read this book, I was like, “Hm, yeah.” I was kind of nodding as I was reading it. It did a good job of explaining some of what I just said, which I had learned years and years ago, and I think that Tony Robbins, he wrote a book called, “Money: Master the Game,” and he does a really good job of explaining that.
In fact, he has a calculator you can go to to put in some things about your home, your cars, your vacations, all these different things you want. He’ll say, this is how much money you need to make per year, and then it will say, “This is how much money you need to save.” I think it even gives the business analogy in there that I just gave. He does a good job explaining it. I recommend that book. I thought it was good.
Regardless of what you think of Tony Robbins, and I actually don’t have a problem with him. I think he does a tremendous amount of good. But some people don’t like him. I think that book is a solid read. I recommend that to everybody. I think he does a really good job of explaining some financial topics at a more simple level, that we all can understand.
One other book, so for Academy, for our elite members in Academy, one of our members asked what I thought of the book called, “Profit First,” by a guy named Mike something. His last name starts with an M. The cover has a pig on it, like a piggy bank, a pink pig. I’m only half-way through the book. I haven’t formulated my opinion yet. I will say that I’m on the fence on a few things, but I’ll have my opinion when I’m done, and I can kind of think through it. I will say, that he has said a ton of things in that book that I completely agree with, that I’ve said, probably on video and to others a million times, and I feel like I’ve agreed with him on a lot of stuff.
The only thing I’m not quite sure about is, can I grow companies as fast using his method as I have with my approach? I don’t know. I’ve got to think through that. Where I’m going with this is, that book is probably a solid read. I can’t say for sure if it’s a great book, or my favorite, but thus far, I think it’s a no-brainer to read it, and think about it. So many of us build these companies that don’t generate a lot of money, or a lot of profit, and I’ve probably said it before, that’s the entire point of the business. It’s gross revenue is not the point and he makes that argument.
If you get your business set up properly, and you build it properly, so that it’s someday sort of running itself, or running very smoothly with minimal involvement from you, and it’s spinning off a lot of profit, you’ll very quickly accomplish the goal I’ve talked about. You don’t have to wait until you’re 65. You can get there in five, 10 years, or maybe shorter, depending on how aggressive you are. So those two books would be good reads to think through your goal of building enough money to retire, and be very successful.
I hope this helped. Good luck with that.