Dan Martell - Most Entrepreneurs Will Be Broke by 2026...

00:00:00.000 The S&P is hitting all-time highs. The housing market is overinflated and interest rates are

00:00:05.140 through the roof and inflation is ramping up. We're in the new economy and the bubble is going

00:00:09.700 to burst eventually. I'm going to share with you how to get rich in this new economy with

00:00:13.520 principles as old as the market itself. And I'm going to go over everything from how to protect

00:00:17.880 yourself against the downturn to getting ready for the upswing and capture as much money as possible.

00:00:22.740 So without further explaining it, these are the old principles of the new economy.

00:00:26.360 The first principle is to build an emergency plan.

00:00:29.260 When the 2020 event hit,

00:00:30.720 I had to build a plan for my personal

00:00:32.520 and my business life within two days.

00:00:35.100 I learned a long time ago that the best way 0.96

00:00:37.340 to focus on creating a predictable future

00:00:40.060 is to build a disaster recovery plan,

00:00:42.400 to prepare upfront on if this happens, then I do that.

00:00:47.080 Unemotional, before the world pushes on you

00:00:49.520 and causes you to overreact,

00:00:50.980 you wanna just sit there in the calm

00:00:52.480 and just decide, here's what I will do if this happens.

00:00:56.540 And I think most people miss this

00:00:58.140 and it's why they lose when the economy

00:01:00.540 goes into a downturn.

00:01:01.620 What I've learned over the years

00:01:02.560 is that great leadership isn't about how you show up

00:01:05.440 when things are good,

00:01:06.320 it's how you show up when things are bad.

00:01:08.400 People want to lean on somebody that is calm,

00:01:11.360 collected, cool, even in the face of a storm.

00:01:14.160 When things go bad or worse, what are you gonna do?

00:01:17.000 Are you gonna overreact?

00:01:18.280 Are you gonna sell everything?

00:01:19.560 Are you gonna run away and hide in the woods?

00:01:21.200 Are you going to stop and say, hey, what's really going on here?

00:01:24.500 Where's the wind blowing right now?

00:01:26.840 Because I learned a long time ago from one of my mentors, this guy named Jim Rohn, who

00:01:30.280 I studied in my car, university style.

00:01:33.120 It's not the direction of the storm.

00:01:34.900 It's how you set your sail in the storm.

00:01:37.740 Everything's going on around you.

00:01:38.980 It's chaotic.

00:01:39.860 I want to set my sail to take advantage of that wind so I can create forward movement.

00:01:44.680 I had friends in the downturn take their whole business and pivot it into a medical company.

00:01:49.320 I had people that took all the resources and the assets and the knowledge they knew

00:01:53.340 and restructured it into something that could take advantage of the way the world was moving.

00:01:58.140 So the key is to have a plan for each phases and each threshold.

00:02:01.820 For example, if all of a sudden your profit goes to half, then you lay off 25% of your team.

00:02:07.900 If then the next stage is one of your large customers fire you and you lose 30% of your

00:02:12.100 business, then you lay off another 25% of your staff.

00:02:15.820 You wanna decide how you're gonna respond unemotionally

00:02:18.400 when the threshold is met for each phase of reaction

00:02:21.760 because you wanna be proactive,

00:02:23.200 you don't wanna be reactive.

00:02:24.640 Which brings us to principle number two,

00:02:26.620 which is to cut cost.

00:02:28.380 You know, several times in my entrepreneurial journey,

00:02:30.640 we've been on a tear upwards

00:02:32.320 and all of a sudden hit a ceiling or a wall

00:02:35.720 and then we have to readjust.

00:02:37.520 It's almost like the entrepreneurial journey

00:02:39.780 is an expansion, contraction, expansion, contraction.

00:02:42.740 It's two steps forward, one step back.

00:02:44.920 and layoffs is part of it.

00:02:46.660 As an example, I remember I was building

00:02:48.120 this company, Flowtown.

00:02:49.420 One day we wake up and there's a change in an API

00:02:52.500 that had no fault to us

00:02:54.300 that caused our whole product to stop working.

00:02:56.840 Imagine you build a business

00:02:58.000 on top of all these different data points

00:02:59.980 and you find out that one of them

00:03:01.760 is no longer gonna be provided to you

00:03:03.440 so you can't actually deliver the thing

00:03:05.120 that customers have been paying for.

00:03:06.160 We went from doing almost 200,000 a month

00:03:08.380 to zero almost overnight.

00:03:10.540 So we had to lay people off.

00:03:12.140 But we also knew that we had potential

00:03:14.260 to build something different, knowing what we knew now,

00:03:17.420 and we didn't wanna tarnish the culture.

00:03:19.920 We didn't wanna hurt the culture.

00:03:21.460 We didn't want it to stop us from having the team.

00:03:23.740 I mean, we spent all this time building this team.

00:03:25.560 So what we did is we decided to do a layoff,

00:03:28.080 but we were very strategic.

00:03:29.500 We wanted to really assess all the people,

00:03:32.220 all the roles, all of our expenses,

00:03:34.920 and cut off any of the fat without nicking the bone.

00:03:39.960 See, that's the key when we're doing layoffs,

00:03:41.760 is that you wanna remove anything

00:03:43.300 that's unnecessary, but not to the point

00:03:45.800 where you demoralize your whole team

00:03:47.900 and cause all of them to start looking for other jobs.

00:03:50.360 Because if you wanna talk about dealing with an issue,

00:03:52.680 losing your customers won.

00:03:54.260 Losing your team that could give you

00:03:55.880 a fighting chance to rebuild it,

00:03:57.740 that's a completely different game.

00:03:59.340 So step one is to print off all of your expenses.

00:04:03.500 Then I want you to highlight in green

00:04:05.120 everything that is necessary.

00:04:06.980 We're talking like your food, your rent,

00:04:08.940 your mortgage, your transportation, your debt.

00:04:10.940 But I mean, some of this stuff, even mortgage,

00:04:12.500 You gotta ask yourself, do I still need that office space

00:04:14.560 or can I let that go?

00:04:15.620 So only keep the things that are green

00:04:17.420 that are absolutely necessary.

00:04:19.340 Then highlight in yellow everything that is a need.

00:04:22.260 Gym membership is a need.

00:04:23.440 I think it's very important, but it may not be a necessary.

00:04:26.120 Medical type stuff, clothes, shoes,

00:04:28.400 like whatever is your expenses

00:04:29.660 that are more needs not necessary to live.

00:04:33.300 Then highlight in red everything that are nice to have.

00:04:36.160 This is everything from entertainment, eating out,

00:04:38.660 travel expenses, gifts for other people.

00:04:40.820 and that'll give you at least the roadmap

00:04:42.540 for what you need to do next.

00:04:44.200 Step two is plan the cuts.

00:04:45.940 I want you to take all your expenses for the year

00:04:47.780 and then you have total amount of costs,

00:04:49.880 then divide it by 12

00:04:50.920 so you know what your monthly costs are per month.

00:04:53.080 Then you take everything you've highlighted,

00:04:55.100 all the red and yellow items

00:04:56.580 and that's when you start planning the cuts.

00:04:59.380 You figure out who you're gonna call and what order.

00:05:02.080 You're gonna schedule things.

00:05:03.300 You're gonna maybe do some layoffs.

00:05:04.660 You're gonna call some vendors.

00:05:05.960 You're gonna renegotiate your credit card bills.

00:05:08.100 You're gonna do everything

00:05:08.840 but the key is don't be emotional.

00:05:11.100 I know that it sucks and that it's tough,

00:05:12.780 but I want you to know this. 0.81

00:05:13.920 From somebody who's done this dozens of times,

00:05:16.200 it is required to be successful.

00:05:18.160 There's no pride in holding on to inflated expenses

00:05:21.980 when the business is not able to support it

00:05:24.180 to have your whole life implode on itself

00:05:26.400 because you weren't able to weather the storm.

00:05:29.120 When people are able to make the tough decisions,

00:05:31.500 even though it's not popular,

00:05:32.860 that's when you actually develop your leadership skills.

00:05:35.720 Which brings us to principle three,

00:05:37.140 which is to audit your financials.

00:05:39.020 See, a lot of people say that they manage their money,

00:05:42.020 but they actually don't know

00:05:42.760 what's going on with their money.

00:05:43.920 I get a daily report every day.

00:05:46.180 It's called daily cash reports for all my companies,

00:05:48.880 including my personal, including my holdings,

00:05:50.700 including all my active companies

00:05:52.120 that tracks how we're doing from a cash point of view.

00:05:54.940 Now, anybody that knows finances also can say

00:05:57.240 that's probably not the best way

00:05:58.320 to manage the success of a business,

00:06:00.200 but what it does for me is it creates rhythms.

00:06:02.220 It allows me to look at different levels,

00:06:04.540 how they fluctuate, how they get replenished,

00:06:06.640 how they move, and I can start to see patterns.

00:06:09.540 I can see if all of a sudden a company had

00:06:11.520 a million dollars in cash

00:06:13.020 and all of a sudden drops down to 100,000.

00:06:14.820 You better believe I'm gonna be asking questions.

00:06:16.780 I mean, honestly, what I've done is I've asked my team

00:06:18.680 that if there's ever a change that's more than 20%,

00:06:20.880 please include notes in the email

00:06:23.200 telling me why that happened.

00:06:24.860 You know, it's just like tracking your body weight.

00:06:26.540 You know, if you don't track it at all,

00:06:28.100 you'll slowly put on weight

00:06:29.680 until the day you finally realize you're a little chubby

00:06:32.500 and then you go and you step on a scale

00:06:34.340 and you're like, holy cow, I put on 12 pounds.

00:06:36.180 It doesn't happen overnight.

00:06:37.960 You don't notice it right away.

00:06:39.620 But if you manage it every day,

00:06:41.420 it's almost impossible for you to have these reactions

00:06:44.020 that are massive amounts of change.

00:06:46.160 So the key is to measure what matters.

00:06:47.840 If we don't measure how our business is doing,

00:06:50.120 how our lives are doing, our daily cash position,

00:06:52.780 then we're not gonna focus on making it better.

00:06:54.640 And sticking your head in the sand

00:06:56.000 and pretending like it's not there is not gonna help you.

00:06:58.820 I've learned that clarity is an accelerator.

00:07:01.480 Clarity gives you confidence.

00:07:02.820 If you just audit your financials,

00:07:04.860 figure out exactly where you're at,

00:07:06.400 how much debt you have, what your cashflow position is,

00:07:08.820 and not pretend like it's not happening

00:07:10.400 when you know it's bad,

00:07:11.500 then you'll at least be able to respond.

00:07:13.780 Amateur entrepreneurs may look at their numbers once a year.

00:07:16.640 They literally sit down with their accountant

00:07:18.280 and they get the report

00:07:19.360 and they either drink because they had a great year

00:07:21.520 or they drink because they had a bad year.

00:07:23.000 Good entrepreneurs look at them maybe once a month.

00:07:25.660 You know, and it's funny is that even at that,

00:07:27.440 it might be 30, 45 days after the month is done

00:07:30.300 that they're getting a report for something

00:07:31.840 that's almost two months past.

00:07:33.180 The best entrepreneurs look at their numbers every day.

00:07:36.220 They look at the leading indicators that drive the results.

00:07:39.240 And at the end of the month,

00:07:40.180 they're getting their reports within seven to 10 business days

00:07:42.940 for the previous month's performance.

00:07:44.860 They are maniacal.

00:07:46.260 You can't manage what you don't measure

00:07:48.140 and you have to be on it frequently.

00:07:50.040 The way to make sure that you track those leading indicators

00:07:52.500 is to implement a scorecard.

00:07:54.200 So within all my companies,

00:07:55.480 there's a scorecard that every leader has to report into

00:07:58.900 that shows the leading indicators into their progress.

00:08:02.220 So there's a plan and there's an actual.

00:08:04.920 There's this is what I said I would do

00:08:06.300 and this is how we're showing up.

00:08:08.220 So that way there's a red, green, yellow

00:08:09.740 for each leader to know if they're on track

00:08:12.340 to hit their numbers,

00:08:13.620 which supports the bigger goal of the business.

00:08:16.240 If you do this,

00:08:17.040 then it doesn't matter how big your company is,

00:08:18.780 everybody will know where they stand

00:08:20.180 on their ability to perform.

00:08:21.920 And it takes all the responsibility off of you

00:08:23.720 to sign if somebody's doing good or bad

00:08:25.200 because it's in the scorecard.

00:08:26.580 Most people mess up their scorecard.

00:08:28.640 So if you're an entrepreneur, DME scorecard.

00:08:31.200 It's Dan Martell, 2Ls of Martell on Instagram.

00:08:33.780 Just send me scorecard and I'll send you over my template.

00:08:36.300 Which brings us to principle four,

00:08:38.000 which is to become a necessity.

00:08:39.720 The other day I had a friend

00:08:40.860 and I hadn't seen him in a while

00:08:41.980 and asked him how life was doing.

00:08:43.160 He said he'd just gotten laid off.

00:08:44.740 And it was interesting because he was kind of confused.

00:08:46.640 He didn't know why he got laid off.

00:08:48.040 And I was like, how are you making the company money?

00:08:50.220 He goes, what do you mean?

00:08:50.820 I said, well, how did your work make the company money?

00:08:54.260 And he couldn't answer the question.

00:08:55.940 See, I think a lot of people go to work every day

00:08:57.700 and they don't correlate their activity

00:08:59.520 to how it makes their business money.

00:09:01.880 I think a lot of people have team members working for them

00:09:04.460 and they can't correlate how that activity makes the money.

00:09:07.720 If I can teach somebody how their activity

00:09:09.560 makes the company money,

00:09:10.880 then they'll make better decisions

00:09:12.240 to make the company more money.

00:09:13.880 It's like I had a bookkeeper once

00:09:14.940 that was making 80 grand a year

00:09:16.140 and they wanted to make 300,000.

00:09:18.060 And I said, cool, I want you to make 300,000.

00:09:20.840 Do you know what needs to be true

00:09:21.900 for you to make 300,000 in this company?

00:09:23.720 And they're like, I don't know.

00:09:24.580 And I said, well, if you're making 300,000,

00:09:26.740 then you're probably making the company $3 million.

00:09:28.660 dollars. And they were like, oh, well, how would I do that? I said, well, you tell me. Well, I don't

00:09:32.780 know. And I said, well, that's the problem we need to solve for you to make 300,000 a year because I

00:09:37.500 want you to, but it also means you got to create value. So for example, do you think a person that's

00:09:41.880 creating $3 million a year in value is got a team that they're leading? They go, yeah. I said, cool.

00:09:46.980 And I go, do you like leading people? And they were like, not really. And I go, well, that's

00:09:50.920 going to be a challenge for you. So you got to decide where do you want your career to go? And

00:09:55.300 once you understand how your work or how people make you money then everything gets a lot easier

00:10:00.720 so whether it's at your job or at your business the key is is it doesn't matter if you're the ceo

00:10:06.380 and it's your company or you work on a team you want to become a necessity to your team you want

00:10:11.360 to invest in yourself to a level to become so good that people would feel sad if you weren't

00:10:17.680 on the team it means that you're the kind of person that solves big problems fast you're

00:10:22.940 reliable and it doesn't matter how crazy the world downturns trust me it doesn't matter how

00:10:27.560 sharp the axe gets for making cuts if you're the kind of person that everybody points to as somebody

00:10:32.540 as an example that creates massive amounts of value for a team they're going to want to keep

00:10:36.240 you around and that's how you become immune to the external world that's happening because you

00:10:40.860 become so valuable that people would never consider cutting you versus all these other expenses they

00:10:46.720 would rather get rid of their whole office before they got rid of their team so my question to you

00:10:51.340 If you're on a team or you're evaluating your expenses,

00:10:54.620 have you shown up for your team to teach them

00:10:56.440 how to become value, to become necessity,

00:10:58.240 and have you become a necessity

00:10:59.400 so that when they're pulling out their highlighters,

00:11:01.640 you're in the green or the yellow, you're not in the red.

00:11:04.320 You do what you say you're gonna do.

00:11:05.780 You're a person that has integrity.

00:11:07.280 You're a person that shows up and does the work

00:11:09.300 even when nobody ever asks you to do the work.

00:11:11.520 You're somebody that goes above and beyond.

00:11:13.040 You're somebody that sees opportunities all around them

00:11:15.420 and you don't have the Debbie Downer attitude.

00:11:17.340 You know, you spend more time talking about ideas,

00:11:19.240 not talking about constraints,

00:11:20.440 Which brings us to principle five,

00:11:22.200 which is to find the bright spots.

00:11:24.060 One of my favorite things to coach people on

00:11:25.880 is to identify what's going good in their business,

00:11:28.920 not necessarily what's going bad.

00:11:30.500 See, most people can find the thousand things

00:11:32.340 that are going wrong,

00:11:33.080 but they forget to focus on the things

00:11:34.500 that are going awesome.

00:11:35.420 And if you focus on it, it will expand.

00:11:38.100 So during the 2020 event where the whole world just melted,

00:11:40.980 the whole economy went to zero,

00:11:43.100 there were certain industries

00:11:44.220 that actually were skyrocketing like SaaS,

00:11:46.860 the housing market, the stock market,

00:11:49.140 All of these things went on the opposite

00:11:51.440 of where the restaurant, the local gyms, et cetera,

00:11:54.780 in regards to their performance.

00:11:56.360 And what happens is people that take those moments to pivot

00:12:00.100 are looking for the bright spots.

00:12:01.880 They're looking at their business and they're going,

00:12:03.640 okay, we can't do this anymore, but what can we do?

00:12:06.220 What data do we have access to?

00:12:07.980 What capacity do we have?

00:12:09.540 What competency do we have?

00:12:10.920 Like, what are we good at?

00:12:12.340 And we take what we're good at

00:12:13.580 and we offer that to the market.

00:12:15.320 So one of my clients had this software for restaurants

00:12:17.240 that helped them understand if the customers are happy.

00:12:19.020 The problem with that is, is all the restaurants shut down.

00:12:21.700 So then he took his technology, he pivoted it

00:12:24.160 and went after big corporations in America

00:12:26.480 to figure out if the employees were happy,

00:12:28.560 same technology, essentially, same workflow, same everything.

00:12:31.760 They just pivoted the bright spot,

00:12:33.900 which is we have a great product, a great technology.

00:12:36.540 We were just using it in the wrong way.

00:12:38.260 When you identify the opportunities in your business

00:12:40.860 and you focus on what's working

00:12:42.320 and double down on those things, those will expand.

00:12:45.320 If you focus on what's not going good,

00:12:47.940 trust me, you're gonna bring more of that into your life

00:12:50.000 versus finding those moments,

00:12:52.340 that information that's crushing

00:12:53.920 and putting all your resources into that

00:12:56.440 so that you can get more, it's bananas.

00:12:58.480 What can happen?

00:12:59.140 You've gotta find what's working and double down.

00:13:01.440 Attention goes where energy flows.

00:13:03.560 If you focus your energy on something,

00:13:05.860 you bring that attention, it's gonna get better.

00:13:08.180 And most people don't invest in the opportunities

00:13:10.260 that have a unique advantage

00:13:11.540 because they just don't think it's that impressive.

00:13:13.360 They don't realize that what they do

00:13:14.860 is actually tip of the spear, top of the mountain

00:13:17.260 for what they're doing in their industry.

00:13:19.060 And that's where their biggest opportunity lies to expand.

00:13:22.800 That's how you get rich in the new economy.

00:13:24.700 If you wanna learn the best investments

00:13:26.040 you can make this year, click the link

00:13:27.660 and I'll see you on the other side.

Dan Martell - August 30, 2024

Most Entrepreneurs Will Be Broke by 2026...

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