Dan Martell - Every Level of Business in 14 Minutes

00:00:00.120 15 years ago, I came across an idea.

00:00:02.540 An idea that could have saved me 15 years of business mistakes.

00:00:06.140 And it's that a business will never grow past the growth of the CEO.

00:00:09.440 And if you don't evolve and grow past these four levels of business,

00:00:12.540 you will be the one holding it back.

00:00:14.260 Level one is your first $100,000 is made from skills,

00:00:17.920 getting crazy good at what you do.

00:00:19.680 Level two, your first million dollars is made from hiring,

00:00:22.600 building an awesome team around you.

00:00:24.660 Level three, your first 10 million is from systems,

00:00:27.520 refining your process and operations.

00:00:30.000 Level four, your first hundred million is from building your people and coaching your leaders.

00:00:34.260 And I made mistakes at every one of these levels. But today I'm going to share with you the eight

00:00:38.720 simple business rules that got me to that hundred million dollar level without working a hundred

00:00:42.920 hour weeks and hating my life. Starting at the hundred K level with rule number one, model, 0.91

00:00:48.640 then modify. A lot of first time entrepreneurs make this huge mistake. They decide to get into

00:00:53.940 business and create a product that's never existed before. And they try to make everything up as they

00:00:59.000 go. They think if I do it this way, it'll be innovative. The problem is if you don't understand

00:01:03.500 why certain things are done a certain way, then you're going to fail. It's like learning to play

00:01:07.240 a guitar. You don't start by writing songs. You start by playing other people's music to understand

00:01:12.280 how the notes work with each other. If you don't find a blueprint that's worked before to give you

00:01:17.180 that foundation, then adding innovation on a sloppy foundation will only fail. So here's what you got

00:01:22.340 to do. Find the people who have what you want and do what they did. One of the biggest mistakes

00:01:27.620 people make is thinking they have to be unique to win. Even today, at $100 million in revenue per

00:01:32.580 year, I still call people to get advice on how to start something new because they've been there,

00:01:37.260 they've done it, and I can usually get there three to five times faster copying somebody else's

00:01:41.560 process and trying to make it up myself. But now that you're up and running, your attention will

00:01:45.840 get sucked into new problems. But before I share rule number two, we've got a goal of hitting 1

00:01:50.360 million subscribers. So if you haven't already, take a second to hit subscribe. Which brings us

00:01:54.340 a rule number two. Profit solves all problems. Oftentimes when I'm coaching new clients, I catch

00:02:01.040 them working on things that are good for the business, but don't make them money. It's a lot

00:02:06.140 of busy work, creating systems, creating content, fancy funnels. What they should be doing is

00:02:10.740 whatever gets them to sell something. Anything other than generating revenue is just playing

00:02:15.420 the game of business, but actually not being a great entrepreneur. Here's my philosophy. If the

00:02:19.740 problem can be solved with money, then it's not a real problem. If you can pay somebody for the

00:02:24.720 answer to your problem, then you have to get better at making profit to solve those problems.

00:02:29.880 The other issue is that people confuse revenue with profit. That's why every one of the businesses

00:02:35.040 I'm involved in, I focus on what's called gross margin. It's not what I sell it for. It's what it

00:02:41.060 costs me to make. Things that have 80% or higher gross margin, like information or software,

00:02:46.120 are the best businesses because what's left over

00:02:48.720 after you pay people to operate the business is profit.

00:02:52.240 So a lot of people focus on revenue,

00:02:53.840 which is top line number,

00:02:54.880 but what they should do is focus on the profit,

00:02:56.820 what's left over at the end of the day

00:02:58.140 because I can't pay bills with top line revenue

00:03:00.480 and I can't pay it with invoices.

00:03:02.260 But if you wanna reach level two at a million dollars,

00:03:05.340 you gotta think way differently about hiring.

00:03:07.500 Which brings us to rule number three,

00:03:09.280 don't hire to grow the business,

00:03:10.860 hire to buy back your time.

00:03:12.540 After struggling for years and finally making it work at my third company, Spheric Technologies,

00:03:18.720 I thought I had to work 100-hour weeks. I thought that my job was to keep all the plates spinning.

00:03:24.220 What I didn't realize then that almost killed me was the fact that I should have took some of that

00:03:28.520 profit and reinvested it in hiring people to actually get me my time out of my calendar.

00:03:33.420 Instead, I just kept adding capacity to the business, which meant I had more people to

00:03:38.020 manage and i didn't learn to let go so here's a big idea if you don't have an assistant you are

00:03:44.260 one and you're probably overpaid and honestly you suck at your job here's why i say that everyone's 0.81

00:03:50.040 first hire should be an executive assistant because it's the least amount of money you have 0.94

00:03:53.800 to pay somebody to buy back the largest portion of your time if you look at your calendar where

00:03:58.260 you're doing things that don't actually make profit it's things more like calendar and inbox

00:04:03.060 it's not stuff you need to do what's cool is i actually wrote about this in my book buy back

00:04:07.200 your time. On page 16, it's called the buyback loop. That's where we focus on three core areas.

00:04:12.540 First, we have to audit our calendar for time and energy. Number two, we got to take the things that

00:04:16.660 are taking our energy that we don't want to do, transfer it to somebody else. That's usually your

00:04:20.600 executive assistant. Then we want to fill our time up with things that make us more money that we can

00:04:24.760 charge for right now, or go learn new skills to up-level our abilities to grow the business.

00:04:30.320 If you're struggling trying to figure out what you should give your assistant, then just find me on

00:04:33.700 Instagram and message me the word YouTube EA and I will send you my internal executive assistant

00:04:38.220 playbook that has the principles, the process, the agenda. It is the most complete system out there

00:04:43.420 and it's my gift to you for free. But having the right people can make or break your business.

00:04:48.440 Which brings us to rule number four, culture over cash. A long time ago, I was operating my business

00:04:54.200 and everything was going great until I realized I had people I was working with that weren't

00:04:59.120 aligned with my vision. It got me so upset that after weeks of feeling like I was starting to

00:05:03.840 hate interacting with my team members, I decided to do something crazy. I went into Slack and wrote

00:05:08.980 this post. This is the vision I'm after. These are the kind of people that are going to support

00:05:12.980 that vision. If for whatever reason you don't feel aligned with that, feel free to resign and I will

00:05:17.680 pay you $15,000 cash. No questions asked. Just resign as soon as possible. Now, the essence was

00:05:24.520 there, the execution could have been done better. The unfortunate part is that people that I loved

00:05:29.740 actually decided to take the money because they were concerned. Why would he say this?

00:05:33.720 What I learned in that moment is that if you don't focus on creating the culture of your business,

00:05:38.580 you may wake up one day and hate the company you've actually built. So my philosophy today

00:05:43.180 is hire for the soul, train for the role. Most people will say to me, how do you find these

00:05:48.780 great people? First off, you need to be the person that they would want to work for. You have to sell

00:05:53.820 the dream. You have to have vision. Many entrepreneurs are just scared to state it

00:05:58.100 because they don't want to scare their team or they don't want to be held accountable to having

00:06:01.780 to build something big and massive. But the truth is, if your dreams aren't big enough for your

00:06:06.180 team's goals and dreams to fit inside of, they'll find somebody else where that is true. So to do it

00:06:11.320 right, we want to make sure that we hire people that have the skills. That's why I always do a

00:06:16.060 test project. I call it the test first hiring method. Essentially, it's a 10 hour project that

00:06:20.460 they have to do that simulates the actual work

00:06:23.000 they'll be doing on the team.

00:06:24.060 And we pay them for that

00:06:24.940 so it doesn't feel like paid consulting.

00:06:26.800 But it is a lot cheaper to pay somebody for a test project

00:06:30.320 than to make a bad hire.

00:06:32.120 The other thing I like to do

00:06:33.320 is to interview people in person.

00:06:35.780 Recently, I was hiring a revenue leader

00:06:37.540 and he was like Mr. Chad, you know, Mr. Success,

00:06:40.840 sales guy, led teams.

00:06:42.580 And we went on a hike and within three minutes,

00:06:44.840 he couldn't keep up.

00:06:46.100 And I was curious to see if he would try to keep up.

00:06:48.540 And unfortunately, a third of the way up,

00:06:50.500 he started falling back.

00:06:51.900 He fell back into the arms of my general manager

00:06:54.300 who then dropped him again.

00:06:56.080 So if you think that somebody

00:06:57.520 that's gonna be the head of revenue,

00:06:59.200 can't fight to keep up to the CEO of the company

00:07:02.020 or to the general manager who's involved in hiring him,

00:07:04.580 that person was never gonna succeed in our culture.

00:07:07.040 But this next one will save you years

00:07:09.040 getting to the $10 million level,

00:07:10.960 which brings us to rule number five, dry,

00:07:13.320 which stands for don't repeat yourself.

00:07:15.300 I first learned this concept in my teens as a software programmer because anybody that's ever written code knows that the best code is dry.

00:07:24.500 I also take this philosophy and apply it to my life and my business where if I make a decision, I want to make it once and never repeat myself.

00:07:31.340 Doing it twice just makes the whole business slow and inefficient.

00:07:34.920 So one of the core principles for me is principles versus process.

00:07:38.840 See, everybody knows what a system or a playbook, a checklist looks like.

00:07:43.320 But what if you go one level above and think about what's the principle that drives that outcome?

00:07:48.820 What's the philosophy around the work?

00:07:51.400 Teaching people how to think in principles is more scalable because then they'll have a framework to look at their work that applies to multiple different areas.

00:08:00.740 The other idea is I like to use budgets, an allocate amount of money that I'm willing to spend per year, per month on different things.

00:08:07.780 On a personal level, I might have a travel budget.

00:08:10.200 On a business level, I might have a marketing budget.

00:08:12.320 that way the team can operate within that

00:08:14.860 and they never have to come to me asking for approvals

00:08:17.260 for every little decision.

00:08:18.660 They know what their budget is, they operate within it

00:08:20.780 and then that way I make the decision once

00:08:22.360 at the beginning of the year or the quarter

00:08:23.700 and never again.

00:08:25.060 It saves me so much time.

00:08:26.880 If you're the bottleneck

00:08:27.960 because you haven't created the principles

00:08:29.520 or the budget for people to operate within,

00:08:32.040 you'll always hit the complexity ceiling in revenue

00:08:34.540 and never get to 10 million.

00:08:35.840 But without this next one,

00:08:36.960 you won't actually know if your processes are getting results.

00:08:39.860 Which brings us to rule number six,

00:08:41.420 what you measure expands.

00:08:43.920 So often I have people message me

00:08:45.480 because we've added 3 million followers

00:08:47.400 in the last year on our social media

00:08:48.760 and they asked me how we did it.

00:08:49.940 My only question to them is,

00:08:51.560 how many followers have you added in the last day?

00:08:53.140 What are your views in the last day?

00:08:54.600 Most of them can't tell me.

00:08:56.300 That answer shows me they're not measuring their revenue,

00:08:59.520 they're not measuring your social media,

00:09:00.860 they're probably not even measuring their profit.

00:09:03.100 What I learned a long time ago

00:09:04.700 is that a scorecard measured daily will get you results.

00:09:08.460 Here's a big idea.

00:09:09.220 If you don't measure something,

00:09:10.760 you can't improve it. Most entrepreneurs would rather live in this like fun land of creation

00:09:15.700 and innovation. But the truth is, is for you to improve any aspect of the business, the precision

00:09:20.360 of measurement and the frequency, if it goes up, the revenue goes up. That's why for me,

00:09:26.280 it's all about being visible. I have it on dashboards all over the office. We have spreadsheets

00:09:30.780 at full access. We even have these things called sensor. Think about like a water sensor in your

00:09:35.460 basement of a house. If it goes off, it shuts off the water so you don't flood your whole basement.

00:09:39.880 We do this for every department in our business

00:09:42.020 so that if there's an issue with a customer or a funnel,

00:09:45.180 it catches it early so that we can address it, fix it,

00:09:47.520 and then turn back on the traffic.

00:09:48.720 If you don't do this,

00:09:50.480 the time between an issue happening

00:09:52.360 and you finding out is so long

00:09:54.540 that it costs you time and energy.

00:09:56.740 What you wanna do is figure out

00:09:58.000 what are the five to seven metrics

00:09:59.780 you need to monitor in your business

00:10:01.240 and then put those up on a screen,

00:10:03.320 put it where everybody can see it

00:10:04.880 because what that does is it brings attention to it,

00:10:07.380 or I like to say sunlight.

00:10:08.540 And what happens with sunlight, it sanitizes all problems.

00:10:12.040 It fixes things before they ever become an issue.

00:10:14.400 But the path to 100 million will only happen

00:10:16.840 if you build leaders.

00:10:18.260 Which brings us to rule number seven, teach, don't tell.

00:10:21.600 When I was in my 20s, I used to run around

00:10:23.820 and tell people what to do.

00:10:25.320 The problem is that created a bunch of people

00:10:27.660 that sat back waiting to be told what to do.

00:10:29.620 So if I didn't show up that day

00:10:30.920 because I was busy with clients,

00:10:32.200 nothing in the business moved forward.

00:10:34.100 What I've learned since then

00:10:35.400 is a completely different process.

00:10:37.340 and the big idea behind this is your ability to scale

00:10:40.580 depends on your ability to work through people.

00:10:43.300 So the old way where I was the bottleneck

00:10:45.300 is a thing called transactional leadership.

00:10:47.200 What I used to do is I'd tell people what to do,

00:10:49.000 I'd check that they got done

00:10:50.000 and then I told them what to do next, which sounds logical.

00:10:52.680 That's how my boss did it with me when I started off

00:10:54.660 but a better way is what's called transformational leadership

00:10:57.400 and that transformed my whole business.

00:10:59.940 I start with outcomes where I'm clear about the vision

00:11:02.260 or how this thing gets done and it feels complete.

00:11:05.040 Then I talk about the measurement we're gonna use

00:11:06.900 to let the person know, are you making progress?

00:11:09.440 If people don't know how you're gonna measure success,

00:11:12.060 then how can they make better decisions day-to-day

00:11:14.080 to improve their activities?

00:11:15.340 The third part is if I see anybody off course,

00:11:18.220 I write it down and I use our one-on-ones to coach them up

00:11:21.860 so I could teach them how to think

00:11:24.100 about overcoming that problem.

00:11:25.700 That way, the more I coach them,

00:11:27.400 the higher level individual I'm developing.

00:11:29.720 The goal is to build the people

00:11:31.360 and the people build the business.

00:11:33.240 That's why for me, I do a weekly leadership training

00:11:35.800 where I'm writing down things I see in the business

00:11:38.160 that apply to the most people

00:11:39.620 that if resolved would make me the most money.

00:11:42.120 Then every Monday afternoon,

00:11:43.220 I have a chance to upgrade and coach the team up

00:11:45.840 so they can get better week over week.

00:11:47.580 The reason why this works to get to 100 million

00:11:49.580 is one, it removes the emotional shrapnel

00:11:52.720 you might feel when you're frustrated

00:11:54.460 with your team not performing.

00:11:56.120 Two, it codifies your thinking

00:11:58.440 and shares with your team

00:11:59.900 what you've paid other people to coach you

00:12:01.980 or you went to seminars to learn or you read in a book.

00:12:04.420 It allows you to take that and transfer it to them so they can feel like they're learning.

00:12:08.820 And third, when your team feels like you're investing in them, they will show up excited,

00:12:14.200 growing, learning how to use these new skills you've taught them.

00:12:17.580 But you don't even get close to 100 million if your team isn't motivated.

00:12:20.980 Which brings us to rule number eight, dream for your team.

00:12:24.360 Recently, I was on a call with one of my private coaching clients and I asked them,

00:12:27.820 tell me specifically what your executive leaders want to achieve in their life over the next five

00:12:33.020 years? And they said, well, they want to make more money. I said, that's not what they want.

00:12:37.280 I said, what are their personal goals? What are their personal dreams? What do they want to achieve

00:12:41.640 in their life? What kind of impact do they want to make outside of the business? See, if you can't

00:12:46.440 tell me those direct reports, dreams and goals, then you can't lead them. Your goal is to figure

00:12:51.980 out where they want to go and map where you're going in your business to making those things

00:12:56.900 a reality. These are non-negotiables. Number one is you have to know your team's goals. You need

00:13:01.520 know the personal and professional goals i always ask this question on first interview doesn't

00:13:05.920 matter who i'm interviewing for whatever role even if they never report to me see financial goals are

00:13:10.480 simple what i'm more interested is the personal ones i want to know what is the title you want

00:13:15.440 to have in five years where do you want to live what kind of work do you want to create if i can

00:13:20.400 get you clear on that and connected emotionally then everything else gets so much easier because

00:13:25.440 you'll be intrinsically motivated to push yourself forward then you have to map their goals to the

00:13:30.240 work they're going to do in your company that way they'll be motivated to do the work to expand to

00:13:35.280 grow so that they can get ready to maybe do their own thing someday or get in a position where they

00:13:40.480 can grow and i also believe how you lead is how you will teach your leaders to lead and the best

00:13:46.000 thing you can do is not only do this for your leaders but encourage them invite them to ask

00:13:50.960 their team if everybody on the teams know what everybody else want to do personal and professional

00:13:56.640 where they want to end up, they will just feel like a cohesive unit building and creating their

00:14:01.880 future together. And it just makes it so much easier. These rules will save you years of

00:14:07.140 mistakes, but it won't actually get you the freedom you're looking for. If you want to learn

00:14:11.040 how to build a business that runs itself, click here and I'll see you on the other side.

Dan Martell - February 07, 2025

Every Level of Business in 14 Minutes

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