The most important business pivot is done before starting.

[MJ DeMarco]

My stepson was a Generation Z young adult with no interest in business or entrepreneurship. I've tried to get him interested in owning his business and controlling his destiny for years.

No luck.

Everything changed after he graduated from college and got a full-time job.

Early morning wake-ups, traffic, low pay, corporate politics, passive-aggressive bosses, and boom! Suddenly, he wants to start a business.

As I like to say, words rarely can wake people up. Warning people about the fire doesn't work; they need to stick their hand into it and get burnt.

In any event, when my stepson finally came to me for some feedback on a business idea, I showed him the following graphic:




My stepson's first business idea was related to agriculture—terribly hard to scale with equally difficult customer acquisition hurdles. His best-case scenario is a middle-class salary.

The best business to start (above) is Idea #1 and #4. The low rewards of the other ideas are not worth your effort.

You see, no matter what business you decide to launch, you will struggle and grind. The question is, will that work and grind change your life or pay your bills?

I mentioned this last year in an earlier newsletter in a parable of a mountain hike. You cannot avoid the treacherous hike up the mountain, but you can ensure your effort is handsomely rewarded.

People are running small corner cafes who work as hard as I but earn 100X less. Effort is not an issue; the answer lies in the graphic above.


Think that guru with a $3,000 course to sell you has the answer?

Wrong.

Here's what you don't see.




If you need a billionaire to convince you, Stephen Schwarzman, the CEO of Blackstone Group, which is a global private equity firm, said it best:

"I had reached an important conclusion about starting any business; it's as hard to start and run a small business as it is a big one. You will suffer the same toll financially and psychologically as you bludgeon it into existence... so if you're going to dedicate your life to business, which is the only way it will work, you should choose one with the potential to be huge."

If you play the big-boy/big-girl game of business, be in the business of big rewards. Or work for the rest of your life, an outcome no better than a job.

~ MJ

 

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[JimPeak]

My stepson was a Generation Z young adult with no interest in business or entrepreneurship. I've tried to get him interested in owning his business and controlling his destiny for years.

No luck.

Everything changed after he graduated from college and got a full-time job.

Early morning wake-ups, traffic, low pay, corporate politics, passive-aggressive bosses, and boom! Suddenly, he wants to start a business.

As I like to say, words rarely can wake people up. Warning people about the fire doesn't work; they need to stick their hand into it and get burnt.

In any event, when my stepson finally came to me for some feedback on a business idea, I showed him the following graphic:

View attachment 53487


My stepson's first business idea was related to agriculture—terribly hard to scale with equally difficult customer acquisition hurdles. His best-case scenario is a middle-class salary.

The best business to start (above) is Idea #1 and #4. The low rewards of the other ideas are not worth your effort.

You see, no matter what business you decide to launch, you will struggle and grind. The question is, will that work and grind change your life or pay your bills?

I mentioned this last year in an earlier newsletter in a parable of a mountain hike. You cannot avoid the treacherous hike up the mountain, but you can ensure your effort is handsomely rewarded.

People are running small corner cafes who work as hard as I but earn 100X less. Effort is not an issue; the answer lies in the graphic above.


Think that guru with a $3,000 course to sell you has the answer?

Wrong.

Here's what you don't see.

View attachment 53488
View attachment 53489

If you need a billionaire to convince you, Stephen Schwarzman, the CEO of Blackstone Group, which is a global private equity firm, said it best:

"I had reached an important conclusion about starting any business; it's as hard to start and run a small business as it is a big one. You will suffer the same toll financially and psychologically as you bludgeon it into existence... so if you're going to dedicate your life to business, which is the only way it will work, you should choose one with the potential to be huge."

If you play the big-boy/big-girl game of business, be in the business of big rewards. Or work for the rest of your life, an outcome no better than a job.

~ MJ

In the past, I overcame this ‘hard work’ issue by doing what I loved. I figured that the only way I would have the ‘juice’ to get the hard done was to make sure I had some passion about it.

This worked until it did not work.

I believe a key issue was not intelligently looking for the idea with the huge (potentially even infinite) upside.

Thank you

 

[freek]

My stepson was a Generation Z young adult with no interest in business or entrepreneurship. I've tried to get him interested in owning his business and controlling his destiny for years.

Imagine having MJ as your stepdad and mentor when you are just starting out haha, that would be great.

 

[MJ DeMarco]

Someone asked me how to determine how big a potential reward is in business?

Answer this (again) by visualizing.

If you made $10K profit in one day, what would your OPERATION need to look like? Would you need 100 employees or 3? Would you need 10 locations or 1? What does this day specifically look like?

Is that even possible?

Imagine having MJ as your stepdad and mentor when you are just starting out haha, that would be great.

LOL, he tunes me out for the most part. It's a true parent/child relationship.

 

[DCBrooks]

This is all too true in hits very hard it's tough when you've invested 12 years into a small business and you realize a lot of what this article is saying.

Currently working on a fast track to get everything systemized in my current small business to make it sellable over the next two years so for that very reason, to use the income to pursue ways to serve the many instead of just one market area.

Thanks to all on the forum, have been taking it all in like a sponge it's a privilege to gleem from and grow with such a large group of so many different backgrounds in business that have already paved the way. Special thanks to MJ for being commited to the cause.

 

[Cris Bar]

Someone asked me how to determine how big a potential reward is in business?

Answer this (again) by visualizing.

If you made $10K profit in one day, what would your OPERATION need to look like? Would you need 100 employees or 3? Would you need 10 locations or 1? What does this day specifically look like?

Is that even possible?

This hit me in the face hard! I thought about this and my answer would be 72 at this moment (awful).

@MJ DeMarco what should be the right Employee - Revenue ratio?

 

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[DCBrooks]

This hit me in the face hard! I thought about this and my answer would be 72 at this moment (awful).

@MJ DeMarco what should be the right Employee - Revenue ratio?

Thats a good questions, I am sure it varies heavily for different sectors

 

[Cris Bar]

Thats a good questions, I am sure it varies heavily for different sectors

Yes, you are right, but I am having in consideration as a general rule for a Fastlane business (&CENTS framework).

 

[biophase]

@MJ DeMarco what should be the right Employee - Revenue ratio?

Theree is no right ratio, but it should be something manageable. I’d never done this calc until now but my estimate is that I’m running $500-$800/day/employee. Feels ok to me, I have no idea.

But if I scale that to $10k a day, it wouldn’t be a linear scale. My guess is that I would need to add 3-4 people more.

 

[DCBrooks]

Theree is no right ratio, but it should be something manageable. I’d never done this calc until now but my estimate is that I’m running $500-$800/day/employee. Feels ok to me, I have no idea.

But if I scale that to $10k a day, it wouldn’t be a linear scale. My guess is that I would need to add 3-4 people more.

Nice, On the trades end usually in contract work I would say 200-500 Pd per emp after overhead is taken out, could be higher could be lower just depends on alot of variables

 

[Cris Bar]

Theree is no right ratio, but it should be something manageable. I’d never done this calc until now but my estimate is that I’m running $500-$800/day/employee. Feels ok to me.

Well, if we take in account @MJ DeMarco 's example, for a business of 300.000$ and 3 employees (best case), that would mean around 5.000/employee/day.

 

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[ZCP]

kids don't listen to their parents. need to get them exposure to others.

mine have had business and financial and effort advice their whole lives.
both struggling in / getting in college with trash finances
as MJ said, they'll learn at some point

 

[Subsonic]

Hmmm, for a 10k day

I make about 120 revenue per job.

50 goes to the worker, 5 to gas
40 goes to acquisition.

One worker can do 3 jobs a day.
That's 75€ a day of profit.
100 workers would be 7.5k a day therefore I'd need around 120 workers and with that maybe 10 managers. That would increase costs so then 6 managers and 150 workers for 10k profit a day.

This is a pretty conservative estimate but also definitely an ammount of stuff I'd be willing to deal with for several million a year in profit.

On the other hand, is this truly the way to make millions (cleaning windows) ?

To give myself a chance to shoot for magnitude I am going to study medical engineering in uni next year since selling 35k medical devices means 20 to 30 sales a month for 10k profit a day.

 

[rjdgreat]

Someone asked me how to determine how big a potential reward is in business?

Answer this (again) by visualizing.

I am curious MJ, suppose someone who have no experience in any business/job ask you a question like this? How can visualising help if he/she doesn’t have any experience in any business/job? I think what will you say is get a job or start a business, right? But is there any other smarter way to do? What I mean by smarter way is do I have to talk to someone I know getting legendary money and ask them how to be like them?

 

[rjdgreat]

I am curious MJ, suppose someone who have no experience in any business/job ask you a question like this? How can visualising help if he/she doesn’t have any experience in any business/job? I think what will you say is get a job or start a business, right? But is there any other smarter way to do? What I mean by smarter way is do I have to talk to someone I know getting legendary money and ask them how to be like them?

Forget about it. The market decides.

 

[ZCP]

@rjdgreat i often suggest people find someone to work for / a company to join in that field. You'll learn a lot, make contacts, stack some cash, and find a LOT of opportunities. A job is a tool to use in your fastlane journey!

 

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[Kevin88660]

I am curious MJ, suppose someone who have no experience in any business/job ask you a question like this? How can visualising help if he/she doesn’t have any experience in any business/job? I think what will you say is get a job or start a business, right? But is there any other smarter way to do? What I mean by smarter way is do I have to talk to someone I know getting legendary money and ask them how to be like them?

Read and watch business contents online.

Talk to business onwers offline.

 

[Dark Water]

Going to make a random throwback to childhood here, but something that I think contributed to my mindset and ultimate fastlane adoption were games like Runescape. Started playing in the early 2000s when I was a wee lad along with my cousin. You could make in-game money any number of ways, which a lot of people did by skilling (aka working a job), like chopping virtual trees, fishing for virtual fish, etc. and selling them. Others "merched", where they basically bought and resold items at a higher price.

Skilling (working a job) always had a fixed income amount. Once you reach a certain skill level, you can fish for sharks, which were worth 1k each in-game. You could make good money but it was always slowlane. You could keep the game running in the background all day, but you were ultimately only going to make a fixed amount by the end of the day.

Merching (loosely equivalent to entrepreneurship) had a lot more potential; you could manipulate the entire market of single items if you had enough.

My cousin always merched. He reached huge levels of in-game wealth. In real life, he went on to start a tree and landscaping company with employees, doing mid 6-figures per year with no proper business background or knowledge of the fastlane; he grew up landscaping in the family and did a couple of years at an agricultural college but that was it. He was still the "merch". I think he would've been successful regardless.

Like MJ's stepson, there is no way you were ever going to sit him down and talk through the fastlane, or talk objectively through business logic. There was just no interest. But I truly think he learned some of those premises by trial-and-error online. Runescape and other games offered an environment where you could make mistakes freely, and see the results of your actions and fruits of your labor on a more fast timeline.

There's a million ways to illustrate the fastlane. To fully grasp it, you need to be wise beyond your years or learn through experience - I think a lot of people fall into the latter, so maybe some kind of gamification is key here.

 

[kurohana]

I had to learn this the hard way. I was working on my startup for basically 12 hours a day, and after eight months, I realized I was doing the work of at least 15 people. This meant it was impossible to learn or focus on the business side of things when the core product was so complicated.

But... Even if I had known this beforehand, I don't think I would have listened. I do agree that some things can only be learned by trying and failing. You just need to fail fast.

 

[WJK]

Someone asked me how to determine how big a potential reward is in business?

Answer this (again) by visualizing.

If you made $10K profit in one day, what would your OPERATION need to look like? Would you need 100 employees or 3? Would you need 10 locations or 1? What does this day specifically look like?

Is that even possible?



LOL, he tunes me out for the most part. It's a true parent/child relationship.

My stepson does the same with me. He just wants to know how much I'm gonna pay him as a laborer. Other than. that, he has no interest in any of the business management aspects. OK. So, he's one of my workers. That's it. I cannot make him want to learn about what I do and how I think. (He's not interested in what I've learned over my last 49 years in the RE business. I'm sad about it.) The best we can do is to teach him some construction skills.

 

[biophase]

My stepson does the same with me. He just wants to know how much I'm gonna pay him as a laborer. Other than. that, he has no interest in any of the business management aspects. OK. So, he's one of my workers. That's it. I cannot make him want to learn about what I do and how I think. (He's not interested in what I've learned over my last 49 years in the RE business. I'm sad about it.) The best we can do is to teach him some construction skills.

Some people can only visualize doing physical or hourly work and getting paid directly for it. They need instant gratification.

They can’t conceptualize doing 2 weeks of work for no direct pay and indirectly getting $2/week for the next 5 years from it.

 

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[Kevin88660]

My stepson does the same with me. He just wants to know how much I'm gonna pay him as a laborer. Other than. that, he has no interest in any of the business management aspects. OK. So, he's one of my workers. That's it. I cannot make him want to learn about what I do and how I think. (He's not interested in what I've learned over my last 49 years in the RE business. I'm sad about it.) The best we can do is to teach him some construction skills.

It would be extremely interesting to know you and talk to you in person, because I took years studied those economics cycles in books while you lived through them.

Stagflation in the 70s, Nixon removed the gold peg for dollar in 1971, Paul Volcker raised rate to 20 percent and indirectly causing the S&L crisis.

Your stepson is sleeping on a goldmine. In the insurance business I learnt a lot from people older than my parents.

 

[WJK]

Some people can only visualize doing physical or hourly work and getting paid directly for it. They need instant gratification.

They can’t conceptualize doing 2 weeks of work for no direct pay and indirectly getting $2/week for the next 5 years from it.

You're right. My stepson cannot see nor understand what I have built.

 

[WJK]

It would be extremely interesting to know you and talk to you in person, because I took years studied those economics cycles in books while you lived through them.

Stagflation in the 70s, Nixon removed the gold peg for dollar in 1971, Paul Volcker raised rate to 20 percent and indirectly causing the S&L crisis.

Your stepson is sleeping on a goldmine. In the insurance business I learnt a lot from people older than my parents.

This is my 5th business cycle. I didn't understand how cycles work when I was younger. Now I can feel the earth moving before things change. Others around me can't. I don't try to pin down the exact moment that things are going to pivot. Close to that turn is good enough for me. I know that these changes happen in an instant so I just make sure that I'm prepared and ready.

The early 1970s was the first time that we had gas shortages because OPEC was formed. It was on the heels of the Vietnam War.

It was when the Fair Credit Act changed my whole life. It was enacted in 1974. I, a lowly woman, could have a credit card, take out a bank loan, and qualify to buy a house for the first time in the USA. Before that, it took a man's signature to do anything. It was all part of the Civil Rights Movement from the 1960s. That law included women as well as minorities. They had also changed the law and made 18-year-olds legally adults because of the war and the draft. Before that adulthood started at 21 years old. And birth control pills became widely available. I was a young woman out working my a$$ off, and I could control my fate for the first time in my life.

The 20%, 22%, and 24% interest rates came in at the beginning of 1980. I owned 2 RE offices with a partner. We lost everything. Did I say that I'm really good at starting over? Next...

The S&L and Thrift crisis came around 1990. I can tell you about what happened and why -- but that's a longer lesson. Most people have no idea why it happened at that particular moment...

I was in the RE business in Los Angeles, and that "recession" lasted for that whole decade. I was a commercial RE appraiser (we had 7% women in that field). So, at times, I got hired by the Feds to be on the team that took over some of those institutions when they failed. My first family was grown and gone from home. I spent the beginning half of that decade going to law school in my spare time. Yes, I'm a JD. I used my years in law school and my resulting doctorate to become an Expert Witness and litigation support specialist in RE matters. By the time I graduated, I was working 60 hours a week at my appraisal business and my expert consulting business, while I carried 9 grad units at school. It was tough, but it set me up for many years after that.

Yes, there's a lot I can teach my stepson if he ever wants to know. I don't think he'll ever want me to teach him. He's young enough to think he knows everything that he needs in this life. I would hate to get in his way. And the beat goes on, and the beat goes on...