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Dear Entrepreneur:
There's a lot of information out there. You see it every single day.
Most, if not all of it, is bullshit.
Becoming wealthy is not complicated.
It’s not easy, either.
I’m going to assume that most of you are starting from nothing.
If you are starting from nothing, understand this:
Achieving wealth is going to take a certain level of obsession and self-belief.
In my experience, there are only 6 steps you need to become wealthy.
I will explain these 6 steps in very simple terms.
In the case you do not have $99 per year to spend and 47 minutes of your time, i'll just tell you a summary of what is in The Wealth Model Course below and you can use this as a guide to figure it out on your own.
--Step 1: Focus--
Focus is something that hardly anyone has these days.
Your focus lives rent-free inside the largest social networks. It’s a sad state of affairs.
The first part of my wealth model is Focus.
You will be wealthy if you can focus and know what to focus on.
Focus is more than just how to organize data and take action on it.
It’s what you will be deciding to do.
And will that focus area yield the results you want?
Many people focus on the wrong path for years at a time.
They are on the treadmill of life. They aren’t moving toward their goals.
Just because you can focus doesn’t mean you are focusing on the correct path.
Please understand this and internalize it.
Learn how to filter what to focus on in the full wealth model course.
--Step 2: Start (or buy) a Business--
The second part of the wealth model is to start (or buy) a business.
The fact remains that owning a business is the fastest way you can achieve long term financial gain.
To start a business, you must know how to build and sell.
If you only have one of these qualities, partner with someone who knows the other.
It has never been easier to start a business than now.
This means it has never been easier to become wealthy than right now.
Starting is easy, yes.
But growing a new business is hard work.
Don’t let anyone tell you that it’s easy.
Where focus is awareness of what you will be doing, a business is a vehicle / path for for that focus.
--Step 3: Cash Flow--
After starting a business, you must propel it to do the third part of the model: cash flow.
Cash flow is what is left of your revenue after all the expenses are subtracted.
You’ve likely heard the term a lot, especially from so-called real estate gurus.
A business without cash flow is worthless.
And that is likely what your business will be for the first few months.
The only caveat is if it is a long-term venture capital play.
Venture capitalists will invest in companies with no cash flow for years if they think they can make a pretty penny when the company IPOs.
And a very small amount of these VCs are correct. These are the ones that get a ton of money and their spot on CNBC.
VCs should be applauded for their risk. These people usually push technology forward faster.
Let's talk about cash flow in the Non VC world.
Without cash flow, you can’t do anything.
You can’t pay yourself. You can't hire employees. You can’t sell the company. You are stuck.
Positive cashflow comes from sales and not making stupid decisions.
The stupid decisions to avoid are: pricing your product too low, expensive software, expensive office space, over hiring, buying stuff you don’t need.
You may find that after you start your company you will have to pivot due to cash flow drying up.
This is very common and if done correctly can keep the company going.
Learn how to be cash flow positive in the full wealth model course.
--Step 4: Scale--
After you understand cash flow and have it optimized, it’s time for the fourth part of the model: Scale.
Now, ideally you started your business with the intention to scale.
But some people don’t.
Scaling is when your expenses stay about the same while your revenue increases greatly.
This can happen a number of ways depending on your industry.
As an example, if you start a supplement company that was initially online-only but then you get distribution at grocery stores and supplement stores, your scale will increase.
Scale is not about adding more cost.
It’s about adding more revenue drivers and making that revenue wider.
Yes, you will need people and software to facilitate some scale.
But you will not need as much as you think.
Many companies spend themselves into a certain death while trying to scale.
They end up taking on too much expenses and cripple their cash flow.
This is because they simply do not understand scale.
I'll say it again.
Scaling is not about adding more costs.
--Step 5: Exit, IPO or Install Management--
When a company has good, consistent cash flow and you have scaled it as far as you believe you can take it or maybe you are just tired of running it, it’s time to look at the fifth part of the model.
During this part you have three options: Exit, IPO or Install Management.
Exit: This means to sell your company.
IPO: This means to take your company public on the stock market.
Install Management: This means you will hire someone to run the company and meet with them once per quarter. You will also be involved in high level decisions but not the day-to-day.
There is no bad option here.
If your company is too small an IPO won’t be an option.
If your company is large enough you can mix the IPO option with Install Management.
But you should do this long before you IPO.
When you sell (exit) a company, you will get a lump sum of money.
You will have to pay taxes on this money (the part no one like to talk about - especially your broker).
It's also very important to consider: you will not be getting cash flow from the company anymore.
Depending on your unique situation, you may want to keep that cash flow. So perhaps installing management is better option for you.
You can also install management and keep your company private.
This is a very appealing option for most. Especially those building personal brands and those that want to keep their asset and cash flow.
But understand this: the longer you keep the company, the more risky it is that it will eventually fail.
I know we like to look at great companies that have been around for a long time as examples.
But technology changes. And sometimes, companies fail to adapt.
We cover these options in The Wealth Model Course.
If you do not have the stomach and iron fist to deal with the company, then sell it and move on to the next venture.
A final note: Managers must be managed and measured.
Installing a CEO or president, is not a set it and forget it strategy.
It may take a considerable amount of energy to find and onboard this person.
But the right person, with the right incentives can grow your small company to new heights and everyone will benefit from this.
--Step 6: Real Estate, Other Businesses and Index Funds--
The last part of The Wealth Model involves taking your cash flow or a portion of your lump sum of money and putting into real estate, other businesses and low risk vanguard index funds.
Depending what happened in the last part of your wealth journey, at this point, you may want to consider create what is called a “family office”.
Consult your CPA and attorney on this one.
The goal with the last part of your wealth journey is to continue to create or buy/invest in income producing assets.
The more assets you have, the more you will need to protect yourself.
Everyone wants a piece of your pie.
Lawsuits. Family. Friends. Bad business deals. Bad ideas. Waste.
When you have money, do not go cheap on protection.
Find the best attorneys and fiduciaries.
—
In a nutshell, The Wealth Model guides you to create, buy and sell income generating assets. 6 Steps to remember:
Focus.
Start a business (or buy a business).
Achieve consistent positive cash flow.
Scale.
Exit, IPO or Install Management.
Take your earnings and buy real estate, other businesses and low risk vanguard index funds.
If you want to take this to the next level for a more in-depth understanding, consider upgrading to premium below.
-Paul