Dan Martell - Why Going Too Big Too Fast Can Ruin Your Company

00:00:00.000 There's this tendency that we do of not sharing because we don't want to have that

00:00:03.980 that feeling that that people don't believe in us and I get it. 0.52

00:00:20.400 Hey everybody, Dan here. I've got something on my heart. I do know this shirt is a little loud

00:00:25.880 but it's about going too big and too fast.

00:00:28.180 And I thought maybe this shirt

00:00:29.220 was going too big and too fast, but why not?

00:00:31.960 We're gonna wear it.

00:00:33.360 My videographer, Sam said, it looked decent.

00:00:36.360 So we're gonna go with that.

00:00:37.180 But anyways, I wanna talk about

00:00:39.120 when you have a vision for what you wanna create,

00:00:42.520 but sometimes you're getting advice

00:00:44.020 from family and friends

00:00:45.020 and it makes you feel like they don't support you.

00:00:47.960 Here's what I mean by that.

00:00:49.280 When I was building my company, Spheric,

00:00:51.440 I got advice from my dad, who I love.

00:00:54.000 He's my hero.

00:00:54.740 but man when I was starting off I felt like he was trying to cramp my dreams every time we talked

00:01:00.200 he'd always tell me about the hundred things that I was doing wrong or that I should think about or

00:01:04.660 you know and it just made me second guess everything one things he said was you know

00:01:08.820 you really got to watch your cash flow you really got to watch your cash flow and I was like

00:01:12.020 I had saved $70,000 at that point okay and I was only 24 I felt really like maybe unfounded

00:01:20.720 confident but i felt i felt like i'm doing all the right things why does he keep bringing this up

00:01:26.640 well i continued to build the company i hired four people from day one and we started doing

00:01:34.080 work with clients and we started to build the product and we started to generate revenue

00:01:38.000 and fast forward six to nine months i understood exactly what he was talking about essentially what

00:01:43.280 happened is because of the way we were working with clients and we would essentially i hired

00:01:48.320 people so all of a sudden cost day one i've got salaries then i bought them all you know new

00:01:54.560 laptops because they needed that we had to buy some servers we had to buy all this infrastructure

00:01:58.480 so 70 grand gets depleted really quick then we you know had to find these customers get the

00:02:05.040 customers on board and then eventually do some work invoice the customers and then they would

00:02:11.520 pay us but like they would pay us like 30 days after we did the work and then when they paid us

00:02:16.640 they paid us through a check that showed up in the mail,

00:02:19.740 and then we were in Canada, they were in the US,

00:02:22.160 so then there was like a three week delay there.

00:02:24.040 Oh, and then when I went to the bank

00:02:25.500 and deposited that check, the bank's like,

00:02:27.780 oh, yeah, it's frozen for 20 business days

00:02:29.980 because you're a new company.

00:02:31.600 And I'm like, literally the bank account went boop,

00:02:34.960 no money in, and I knew exactly

00:02:37.320 what my dad was talking about.

00:02:38.320 That's what he meant by cash flow.

00:02:39.980 And I ended up having to sell my receivable,

00:02:43.660 sell my essentially invoices to a business payday loan shark like you know those payday loans for

00:02:51.420 individuals they exist for businesses as well so if you need some cash before your paycheck and

00:02:57.260 they will they will 100 finance your receivables and they'll take 30 so i literally lost 30 of my

00:03:04.160 profit or revenue just because i didn't understand how to manage my cash flow now when my dad was

00:03:10.800 saying this to me it wasn't because he was not believing in my dream it's because he knew I

00:03:16.880 didn't have the experience to make financial decisions that were aligned with cash flow

00:03:22.560 because I was just looking at revenue so I want to share a few principles number one is to dream

00:03:27.540 big but start small but at least start okay so if I just want you to start I want you to get one

00:03:34.520 customer I want you to get 10 customers I want to get 100 customers but I want to make sure that you

00:03:38.980 keep your expense structure small and reinvest i don't want to stop you i want to encourage you i

00:03:45.300 want you to dream big okay but you gotta start small i had a friend julie once and she had

00:03:51.080 started a company a personal training company in her house she um bought you know converted her

00:03:57.020 whole basement into kind of a gym so emptied out the basement put bought gear equipment etc started

00:04:04.500 her business, posted it on Facebook. It's probably a year, 16 months after she started that I get a

00:04:09.160 call. And she just said, hey, I could use your advice. You have some time. And I went over to

00:04:14.320 her house. This was like 15 years ago. And I go and I sit, we go upstairs to her office and we're

00:04:20.700 sitting in her office and she goes, here's the deal. Essentially, I, you know, got some money

00:04:27.480 from my parents. I got a line of credit. We secured against the house. I spent all the money on the

00:04:34.140 new equipment in the basement, my office, furniture.

00:04:38.240 She had letterheads, she had business cards,

00:04:40.260 she had a branded swag, she had everything.

00:04:44.420 And the problem was that she had no customers.

00:04:46.940 She just, and this is normal.

00:04:49.340 This happens every day in business.

00:04:51.980 And maybe you're like, whoa, why did they do that?

00:04:54.020 Why didn't they start small and do workouts in a park?

00:04:58.280 And then from a park they could, and I get it.

00:05:00.320 People say this all the time.

00:05:01.320 They're like, oh, you know, if you're starting a restaurant,

00:05:03.380 should start at the farmer's market and then you know to the food truck and then eventually a small

00:05:07.780 location and then maybe a pop-up shop or whatever and I've told people the same advice but I also

00:05:13.040 realize that if you're not around other people that maybe you just think that is what business

00:05:18.440 is about is the setup it's getting the gear to attract the customers and nobody's going to want

00:05:23.500 to come train in my basement on old gear or nobody's going to take me seriously if I don't

00:05:28.180 have like branded swag and I'm like supposed to be a business person and I but I really want to

00:05:32.700 encourage you to not start too big I want you to dream really freaking huge but I want you to start

00:05:37.420 small the second thing is to really know your numbers okay and if you want one of my favorite

00:05:41.900 books on this topic is is called simple numbers by Greg Crabtree he's a friend of mine he's he's

00:05:47.100 done all of our financial modeling and it's just probably the best entrepreneurial financial book

00:05:52.740 out there okay because it he's a accountant that doesn't act like an accountant and if you ever

00:05:57.740 get frustrated with accountants you know what I'm talking about I love you thanks for doing all my

00:06:02.060 financial stuff and help me with my taxes.

00:06:04.660 But man, you guys, your reports are complicated.

00:06:07.380 And the whole argument is that revenue is for vanity, okay?

00:06:12.300 Top line revenue, it's sexy, it's awesome.

00:06:14.820 It's like people talk about how many employees you have

00:06:16.820 or they say, well, this is our revenue.

00:06:18.340 You know, we're at 10 million, we're at 1 million,

00:06:20.020 we're at 500, and they're really proud of it.

00:06:21.980 So that's interesting.

00:06:22.820 So revenue for vanity. 0.91

00:06:24.840 Profit for sanity, right?

00:06:26.260 You might hear this, profit meaning like, okay,

00:06:29.180 at the end of the month, how much profit do we make?

00:06:31.580 The one thing you'll learn in business

00:06:32.840 if you've been doing long enough

00:06:33.800 is that what your accountant calls profit

00:06:36.040 is not what you think profit is.

00:06:37.660 You, I know me, I like to look at cash, not profit.

00:06:42.160 Because a spreadsheet or a balance sheet, a P&L,

00:06:46.040 whatever you're using for your accounting software,

00:06:47.920 the profit number does not equal dollars

00:06:49.940 I can then go and spend.

00:06:51.600 It just means I gotta pay taxes.

00:06:53.400 So profits for sanity, but cash is king.

00:06:57.340 Cash flow.

00:06:58.860 What you have left over at the end of the month

00:07:01.400 from a cash point of view,

00:07:03.040 after you've paid off your credit cards

00:07:06.140 and your lines of credits and your wages

00:07:08.620 and your vendors, et cetera,

00:07:10.860 that is the most important thing.

00:07:13.080 And most entrepreneurs don't understand

00:07:15.420 how to do projections

00:07:17.020 and they don't understand how cash flow is created.

00:07:21.000 So if this is news to you,

00:07:23.580 again, it's on my heart to share this.

00:07:24.860 Can you please, please spend some time learning about this?

00:07:27.620 This is a non-negotiable fundamental aspect about business

00:07:30.960 that if you don't know how this all works,

00:07:33.900 you will catch yourself in a bad spot.

00:07:35.680 Number three that I wanna share

00:07:37.540 that I think is really important is

00:07:39.620 share your decisions with other people

00:07:41.820 that have been more successful than you.

00:07:43.880 And this is what I mean, I have so many friends, okay?

00:07:48.260 Family members, cousins, friends in my community

00:07:53.800 that I find out after the fact

00:07:56.080 that they made a big decision to buy a business,

00:07:59.120 to start a business, to invest their life savings

00:08:01.400 into a business when they could have shared that

00:08:04.440 with me prior, but people in the early days,

00:08:06.480 you're just like, well, I don't wanna,

00:08:08.020 you get into the spot where you're worried

00:08:09.840 that if I share my vision and they don't buy into it,

00:08:14.060 then I'm gonna like feel deflated.

00:08:17.120 And there's this tendency that we do of not sharing

00:08:21.120 because we don't wanna have that feeling

00:08:23.340 that people don't believe in us.

00:08:25.480 And I get it, but I'm telling you,

00:08:27.380 if you're making big financial decisions,

00:08:30.260 don't necessarily go to your parents

00:08:31.660 who've never done this before,

00:08:32.600 who've never maybe executed their dreams

00:08:35.880 at the level that you're going to do,

00:08:37.980 and that's totally fine, no judgment,

00:08:40.000 but go to people that have had that kind of success.

00:08:43.380 If you have any friend that's been in business

00:08:45.480 for five years and you're starting a business

00:08:47.460 and you are not sharing your decisions with them,

00:08:50.060 just saying, hey, here's some big decisions we're making,

00:08:52.400 this, this, and this, a new business partner,

00:08:55.040 I'm deciding I need to raise some money,

00:08:56.620 or moving locations, whatever it is,

00:08:58.560 just get in the habit of sharing your decisions

00:09:00.880 to get feedback.

00:09:01.720 Now, you don't have to take any action on it,

00:09:04.000 but at least you're gonna be informed.

00:09:06.180 At least you're gonna have somebody

00:09:07.900 doing a check and balance on you.

00:09:09.440 And I'm telling you, if you're wanting to go big,

00:09:13.820 then these are the things that are non-negotiable

00:09:16.340 to allow you to stop the potential downside

00:09:19.580 of making bad decisions, right?

00:09:22.060 And to really put a bow on everything,

00:09:26.260 I wanna share this belief that I have

00:09:28.560 when people are comparing themselves to others.

00:09:31.080 They see, you know, a big company do this

00:09:33.740 and they're like, well, they're doing this

00:09:34.740 or they see an individual doing something.

00:09:36.740 They're like, my friend's doing this, so this must work.

00:09:39.340 Here's the caution, okay?

00:09:41.300 Which is all of this wrapped up into a bow.

00:09:44.220 Don't compare your chapter one to their chapter 13, okay?

00:09:49.220 Or their chapter 27.

00:09:51.060 If you have never had a business in the past

00:09:53.280 And a side hustle when you're 17,

00:09:56.640 selling something at the farmer's market, doesn't cut it.

00:10:00.120 Unless you are supporting yourself 100% financially

00:10:02.600 by your business and you've had some success,

00:10:06.040 then you don't have a chapter,

00:10:08.100 when you don't have one year of education, right?

00:10:10.320 And when we compare ourselves to the 32 year old

00:10:14.160 that's making 25 million a year,

00:10:16.880 and you don't realize they've legit

00:10:18.820 been running their business since they were 15,

00:10:21.280 meaning that from the age of 15,

00:10:23.200 and I have friends like this,

00:10:24.300 they have been self-sustaining their income

00:10:26.780 off of business activities.

00:10:29.060 So they're on chapter, what would that be, 17,

00:10:33.500 and you're looking at their decisions

00:10:35.680 and comparing your chapter one to their chapter 17.

00:10:38.400 Biggest, biggest fallacy that you can make in business,

00:10:41.700 which is, and why for a lot of people

00:10:44.500 that go way too big too fast,

00:10:45.760 they don't have that understanding.

00:10:47.200 So that's what I have on my heart.

00:10:49.180 If you like what you've shared

00:10:50.340 and you wanna like follow along in my journey,

00:10:52.680 Be sure to subscribe to my newsletter, links below.

00:10:55.160 Be sure to leave a comment on the channel.

00:10:57.820 This helps with engagement.

00:10:59.600 Subscribe, like, let me know

00:11:01.340 what is the number one thing you took away

00:11:02.760 based on what I shared today.

00:11:04.700 And I hope this video finds you incredibly well

00:11:07.320 and we'll talk soon.

00:11:08.620 Peace, later.

Dan Martell - January 31, 2022

Why Going Too Big Too Fast Can Ruin Your Company

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