Show notes
If you want to multiply money in your business, it means you have to figure out the very specific steps that you need to take in order to make that happen.
David: Hi and welcome to the podcast. In today's episode, co host Jay McFarland and I will discuss the topic, Can You Multiply Money? Welcome back, Jay.
Jay: Hey David, of course you can. I have a tree in my backyard. Money grows on it and I just have to water it every year. What else do I need?
David: Nice. No, that's great. You got a money tree. You're in great shape. When I think about the abilty to multiply money, I know that in the early stages of some of my businesses, and in the early stages of trying to figure out how to make them work, I was able to multiply money. But I was multiplying it by fractions, you know. So...
If you multiply money by 0. 5, you now have half the money you started out with. So I think we're all able to multiply money. But, ideally, we want to multiply by whole numbers.
Jay: Yeah, I agree, but we also subtract money. I'm not sure what the terminology is. Bbut a lot of times in an attempt to multiply money, if you're not careful, you're actually losing money.
David: Yeah. And you will have to invest. You'll have to make investments up front. I think a lot of times people go into business, particularly small business owners, will go in with the idea of, "well, I'll just bootstrap it."
And it's certainly what I've done, I did that a number of times and when it works, it's fantastic. And when it doesn't, it's disastrous.
So as long as you recognize that going in, it's all okay. But having that focus, what will it take to get this going? How much will it cost? How long will I have to work for nothing, if I bootstrap entirely? A lot of those questions come into play.
Jay: Yeah, otherwise it's kind of gambling. You know, starting a business is kind of a form of gambling, but the better the idea is, the more help you have along the way, the more financially stable you can be in the process, the more you increase the odds that your gamble will pay off.
David: Yeah, and it really is a gamble in the truest sense of the word. Because you don't know if it's going to work. It might work and it might not.
You may have a really good feel for it. You may have done it before and say, okay, I feel really good about this. I think this is really going to work, but it's still a bet. You're still guessing and betting that it's going to work based on what you know. You think you can multiply money, but you can't be sure until you try.
I've never really been a gambler in terms of casinos and things like that, but I guess people who do that well and know how to do it, they can go into a situation and say, "okay, I have a pretty good feel for the fact that I'm going to make back a multiple of what I lay down on the table.
And sometimes they're right and sometimes they're wrong. And it's exactly the same in business.
Jay: Yeah, absolutely. Only in business, you may put a lot of things on the line, your family's future. You may quit your job. You really put yourself out there in many ways.
I found success in making sure my family is supported with a day job and then I pursued other things on the side.
Meanwhile, I had other family members who have said, "no, I'm going all in" and they put everything at risk. And that didn't turn out so well, but you know, it depends on the individual and the idea, I think.
David: Yeah, absolutely. And I know in the early stages I tried doing sort of a sideline thing for a while and I could never personally make that work.
Jay: Yeah, yeah.
David: Because it was hard for me when somebody else was paying me money to do a job, I didn't feel like I could walk away to do my thing, so I was torn in that way.
When I was working on my side project, I felt like I should either be working on the work that was paying me or when I was at real work, I felt like I should be working on my business.
I remember quitting a job that I had because I knew I was going to start a business. And it was really like flying without a safety net. You know, the big trapeze with no safety net. Because I literally quit a job. It's like, okay, I'm no longer going to get that money and hopefully it'll work out.
Eventually it did, but it wasn't fast and it wasn't a straight line and it took some real time and some real effort and a lot of scares.
We talked about scares in our podcast at Halloween. It took a lot of that stuff in order to get to the point where eventually things started to work. And I don't know many entrepreneurs who don't go through some version of that.
Jay: Oh, I totally agree. It's a hallmark of entrepreneurship. Can you take that step into the darkness, right?
Are you willing, and I think is a double edged sword. Yes, you gamble a lot, but also when you do take the complete step, when you separate from employment or whatever, You've given yourself a level of motivation that may not exist otherwise, right?
Because when you have to pay the bills, when you have to make the money, and you're like, the clock goes off, the alarm goes off in the morning, and you're like, "Oh, I don't know if I want to do this today." If you've got a bill coming up, you put your family on the line, sometimes that keeps you going, that in itself.
David: Yes, exactly. It's a tremendous motivator.
I think a lot of people too who have never owned a business, never started a business of their own, they tend to look at business owners and say, "Oh, well, they're rich and they have it made and they should do more. They should pay their people more or doing this or doing that."
I learned that lesson a really long time ago from an employer that I had. When I was a kid, I used to work in radio. I was about 15 or 16 and I was doing on-air shifts on the weekend and doing commercials and things like that.
They were doing a remote broadcast, so I was going to to a remote location to broadcast live from that place. And they were going to pay me like, I think it was 350 bucks. This was back in the day.
And I heard from the sales rep who sold that job or that gig, that the radio station was being paid $3,500 to do that gig. And I'm like, "Hey, wait a second, I'm only getting $350!"
Basically, I said this to my boss, the guy who owned the station, and he was a pretty young guy as well. So he had to be up to his eyeballs in stuff that I had no idea about.
And whenever you'd say something about money, he'd always rub the back of his head and he'd say, "don't count my money!" And as an employee, I thought he was saying, "don't count my money cause it's my money, and, don't count my money."
But then when I became an entrepreneur, one day I figured it out.
I'm like, what he was saying is "don't count my money, 'cause you have absolutely no idea what you're talking about. You have no idea what it costs to operate this place and to pay salespeople and to pay for overhead and a transmitter, you know, we're broadcasting, our electric bill, all that kind of stuff. I had no idea.
So I think it's a mistake as, if you've never been an employee, if you've only ever had a business for yourself, then you may be non-sympathetic to employees. But the flip side is also very true. If you're an employee and you've never owned a business, it's very easy to say, "Oh, well, this person is this, and this person is that."
And very likely, if you're saying those things, you probably don't know what's been going on behind the scenes.
Jay: Yeah, one of the things I used to do in the restaurant business, because, that's one of the reasons employees will steal from you, because they think you're making money hand over fist, and the world's against them, is I would sit them down, and I would show them my P& L.
I was just very open with them, and say, "look, you saw all this money, here's what we brought in, and guess what? You got paid this month, I didn't."
David: Yeah.
Jay: And they're like, "what do you mean you didn't?" I'm like, "I only get paid from the bottom line here. You get paid hourly, whether or not..." So who's taking the risk? That's what they don't understand. And so sometimes communicating that can be very important.
David: Yeah. And I remember a lot of times in the early stages of some of my businesses where I was just not paying myself at all. Other people were getting paid. I didn't tell them that at the time because I didn't want them to be scared, you know, that the business wasn't going to make it.
But I think most small business owners have gone through some version of that. And if you managed to avoid it, congratulations, well done. But most of us, it takes a lot. because you have to go through all these different iterations. You have to figure out a lot of what doesn't work before you can get to what does work.
And if you want to start to multiply money, it's going to require a bunch of experiments, some of which will fail.
Jay: Mm hmm. And I think, for entrepreneurs, if you really get to that point where you can multiply money, you can say, you know what, I spent, $8, but I made 10. So I made a 20 percent increase.
It becomes this passion. It's like a farmer planting a seed and it grows into something. To me, there's something very, I don't know, fulfilling about that idea that you've made something and you've grown it out of the dirt and then you've turned it into profit.
That's what entrepreneurship is, and people gain a real love for that.
Like, I look at somebody like Mark Cuban, he's a billionaire, but he's still investing. The guy spends all day long multiplying money, and I'm like, "you have billions of dollars in net worth. Why do you still do this?"
And it's because I get the feeling for him. It was never about how many dollars you made. It was about this skillset and the,