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So what's an action step for our viewers here who want to start a business? When they actually think about investing in themselves, what do they do? How they do it? Where do they--
-You just need to ask yourself right now, if you are somebody that has a big ambition, a big goal, ask yourself what practical skills do I need to learn today? Do an assessment on your appearance. Every Hollywood celebrity I've ever seen that's like, you know, like those A-lister actors.
Everyone, there might be a couple that I'm not thinking of, but they've all had some kind of dental work done. Why? Because they need to have great looking teeth.
-You know? These are things that cost money. Your personal appearance, your clothing. So you definitely need to be thinking about your education. Think about your appearance, and also think about your business. Like, if your business needs a new computer to do what you do, if you're a graphic designer and your computer stinks, go get a new one.
-Finance that if you need to. Pay $25 a month. Whatever you gotta do. Just get the tools you need to be successful.
-Good. Principle number three.
-This one might sound somewhat similar. This is reinvest in yourself.
-OK, and this-- let me just go on a real quick rabbit trail on this, because the rabbit-- this is what happens, OK? This is your business. It is a snowball. Snowball, you feel me? Snowball.
-Oh, yeah. Snowball.
-This is a snowball. We're up on the top of the mountain.
-I see it. I can see it.
-Here it comes. It's coming down the hill. It's getting bigger. It's getting bigger. It's getting bigger.
-Oh, my good.
-This is what jack [BLEEP] entrepreneurs do.
-They say time out, snowball's getting a little too big, so I'm going to peel off a bunch of this cash, and I am going to go on vacation.
-Then their snowball is now this size again.
-And it gets a little bigger, and they keep this cycle going their whole life, and they die poor. This is not a good thing. What you want to do is you want to start off at the top of this hill with the snowball. It gets bigger, it gets bigger. You delay gratification. It gets bigger. You delay gratification. You delay gratification. It gets bigger. You have so much money. Who the freak cares?
Go buy a boat, or a yacht, or a house, or a third house, or a fourth house, or a skateboard, or a shiny little thing that-- paddle thing with diamonds on it. Just whatever you want to buy, because you'll have enough money.
-But what you don't want to do when you have very little money is you want to take every dime you have and like, buy a house that you can barely afford. You don't want to just go out and go, I can barely afford this trip, and so I'm going to do it. Because you're going to put yourself in a bad spot. It's like my wife and I right now, when we go on trips, we use our reward points.
You know, we do stuff because we want to build a big snowball. That's what you do. But you see entrepreneurs all the time that have a bank account that's starting to get to like, $40,000, and then they spend it.
-So if you're watching this and you're saying, well, how big of a snowball do I need, man, I mean this, this is what I would say to you. I would say you need to have at least $100,000 cash in the bank before you need to start buying hoo-ha.
-But again, that goes back to point number one. You've got to define where you want to be financially yourself. You've got to sit down and actually get to that number, because if not, you will keep taking out. Because you'll feel good about having $40,000, $50,000 in the bank.
-It constantly-- it's unbelievable. I see this in probably 95% of businesses I work with.
-You'll get a guy who has $20,000 that he's saved up, and for whatever reason he wants to spend 23 of it tomorrow. You can't write it off, by the way. If you buy something that's not business related, you've got to pay taxes on that.
-So you've got a big tax bill. You didn't get any-- it's just a bad deal. Don't starve your business to like, you know, buy frozen yogurt.
-I know that you have studied a lot of millionaires. You've been able to sit down with a lot of them, get to know them. You've read about them, studied them. Most of these guys are reinvesting in themselves. Not many are taking out of that snowball too early, are they?
-No, they're not. And the thing is you can take stuff out if you're smart about it. I mean, if this is a big ski hill of life, and you say, well, gosh, I want to go over here to this little-- fancy little lodge on the hill, you know, and I just want to hang out here-- and this is a very good drawing, by the way. If I want to, you know, hang out here at this fancy shmancy lodge--
-It's very nice. Look at this pathway that leads us over here.
-This is a good use of time. Keep it moving.
-Yeah, it's good. But if you're here on the lodge, you say I want to pull over and I want to go grab a hot chocolate, that's cool.
-But you don't want to pull over and say, I want to buy the lodge.
Are you looking to start a business?
-I'll tell you this. The American Dream, this American Dream we've talked about, do you know that no matter what research you look into that very, very few Americans can afford to retire? And very, very few Americans enjoy their jobs? Gallup research shows that less than 20% of people are engaged in their job. Less than 20% of people are excited about their job.
So what I would submit to you is don't go out and buy a house just to keep up with the Joneses. Don't buy a new car just to keep up with somebody else. What you want to do is you want to go out there, and you want to invest in yourself and be intentional about getting where you want to go. You know what I'm saying?
-Yeah. And you've outlined for us how you invest in yourself. How about when you've reinvested? You've kind of already touched on that, I think. But I mean you've reinvested, and reinvested, and reinvested over the years. It's not an initial investment for you, right?
-Yeah. I mean, it's just a situation where I don't understand it. I see business owners that-- there's one guy I worked with out of Dallas. And he had three locations of his business. And this guy in particular, he got married. So he bought this palatial estate and spent all the money in the world on these things, and then he's calling me asking for money from me to help him grow his business.
I'm like, what happened to your money? Well, I bought a small plane. And I bought a-- what? And I bought a this, and I bought a that. And he doesn't have any money to grow his business.
So it's not like you can't live and enjoy things, just don't be an idiot. I'm saying that because I think that there's so many entrepreneurs I meet with who are great people, who just for whatever reason, are not being disciplined about how we're handling our finances. And we need to do a better job of not pulling things off our great ski hill of life. Don't kill your snowball. It should grow. Warren Buffett wrote a whole book about this called "Snowball." It's just phenomenal. Just keep reinvesting in yourself.
-So is that kind of the action item here, is to ask yourself, am I taking too much from my snowball right now?
-The action item of this is this. For every dollar that comes into your business, I would recommend that you set aside 10% for charity, and I would recommend that you set 10% percent in to reinvest. OK? I'm not talking about 90.
Now different people I know, but Rockefeller and Sam Walton were famous for saving 20% and putting 10% in charity. But I recommend you at least reinvest 10% of every dollar. So I hope I'm giving you clarity. You could still go to the ski lodge of life, and go have a hot chocolate. But you just don't want to be like, well, I think I'll buy those chalets. You know you just-- what's a chalet?
-I don't know, but don't buy it.
-All right, don't buy it.
-Don't buy it. Principle number four-- find a formula that works for you. Find a formula that works for you. So this is what we were talking about earlier with the vehicles. There are a ton of different vehicles you can choose to get you from where you are to where you want to be financially, real estate, stocks, mutual funds, and other businesses.
Those are the main four-- real estate, stocks, mutual funds, and other businesses. I mean ultimately, you've got to sit down, and decide which vehicle is best for you, best fit for your personality.
-Yeah. Now let's get into this. Like real estate-- you know what real estate is? When you get into real estate, you start off investing in real estate, that's you going to a house that you bought and that's discovering that it has termites. There are bugs eating away at this house. There is a dude who pooped in the living room of the house that you're wanting to flip.
-Yeah. There is asbestos in the ceiling. There is a city dude who's going to come, and he wants you to get a permit. This is what investing in real estate is. Investing in real estate is pulling all-nighters to fix
It. It's working hard. It's demolishing walls. It's fixing walls. It's designing things. It's buying wallpaper. It's saying, wallpaper has to be forbidden. We're doing paint. It's all that.
If that sounds horrible for you, then don't do it. Now for me, that's the worst thing in the whole world, and I have flipped houses. And I can say, I would almost rather experience a painful death than to do real estate. It's just awful. Somebody else says, I love real estate. It's awesome. I couldn't imagine doing something else.
-So a friend of mine, he thinks that real estate is the coolest thing in the whole world. And he doesn't understand how the exact same investment, for me, could be bad. So I'm asking you, I'm not telling you, I'm asking you-- does that sound fun to you? If it sounds fun, going in there and remodeling houses, and if you like watching that TV show about flipping houses-- cool. For me, I'm just like, get me out of this house. I don't really see the potential in the houses.
-And you do the same for all three of these, these other ones.
-Yeah. And so with like, stocks, if you're going, I don't really want to do it. But the only way to do it is to get in it. So if you're a young guy watching this, or you're somebody who's like, in your-- whatever age you are-- I recommend if you think you want to do stocks, you know what we're going to do. We're going to read about stocks. We're going to study stocks, and then what we're gonna do, is we're actually going to buy some stocks.
What, wait? You mean I'm going to buy stocks, not really knowing what I'm doing? I'm saying you're going to read about it, study it, get encouraged. You're going to learn some awesome things here on Thrive, and then jump in. Now how much are you going to jump in with? I recommend you jump in with like $1,000.
-But you can't buy a $1,000 house.
-Well, on the house side, you can get 10 buddies. You all put $1,000 in. You flip a house. I've done that before. And four of us are like, this was terrible. And the other guys are like, this is great. One of my good friends, he's doing great, built up a million dollar net worth flipping houses.
-Other ones of us are like, dude, if I had to spend even one more day with a nail gun, I'm gonna--
So now, mutual funds, same thing. The business thing though, here, this is the part I want to throw out for you. If you're gonna invest in businesses, the talent you need is you're going to need to be an awesome manager. You have to become a super manager, and you have to be a great student of business. Because if you're not, how are you going to assess the fundamentals of the company you're investing in, to know if they have their stuff together?
You've got to be a great manager, and you gotta understand business. Real estate you gotta be good with your hands, because when you start out you don't have a lot of money to afford to pay people to experiment on these rental houses for you. You have fixed money.
-So I'm assuming your favorite here is this last one. And why do you prefer that so much? Is it because you have learned to become that excellent manager?
-Because running a neurology office is the exact same as running a DJ service, and it's the same as running a fitness business. And they're all the same. So I get it, and it's just that I get the principles. I understand it. And I don't like going outside, in the light.
-Well, we can see your skin.
-But I mean like, going outside, getting nail guns, going to Lowe's, asking where the hooks are to hang up a shelf, I just can't handle that. I hate that process. And stocks, I don't like to invest in something I can't touch and feel and see. It's probably just because I have a weird issue, but I just like to be more involved. And in the mutual funds, again, I like to have something I can see and touch and feel.
But I know guys, I have one guy that I'm very, very good friends with, who's made a lot of money with gold. When the price of gold goes down, he buys the gold at the right price, and knows when to sell it. He's obsessed with it. So he's done great with it. I know people, I'm sure you know people, who collect things. And things were you're like, that-- you coll-- you make money with that?
But anybody can become-- I know one guy I went to school with, who made a ton of money flipping cars. You buy cars from auctions. He makes them look nice, and sells them. Well, I didn't know you could flip cars. And here's a guy making a ton of money flipping cars. So you could invest in a lot of different vehicles, you just have to find one that works good for your personality.
-So is that the action step? Is kind of evaluate these four areas here, figure out which one fits you best, if you have to try it out, research it?
-Yes, and I would also say that get in it. If you think you want to invest in restaurants, honestly go get a job, if you have to, as a busboy. If you have to, go there and work there as a busboy. See how it works, see how it runs, see the good, see the bad, see the chefs, fight the staff, see the boss, see the manager-- see if it's a good fit, because otherwise how are you going to know if you want to be involved there?
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