When was your AHA moment....??

Discussion in 'Investor Psychology & Mindset' started by Sackie, 14th Dec, 2019.

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  1. NHG

    NHG Well-Known Member

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    Anything. Everything.

    Restaurateurs, hoteliers, removalist, developers, educational speakers, online sales, furniture suppliers, gym owners, cleaners, painters, labour hire, etc.

    It's an attitude to business, not the business.

    Lessons:
    (Too many, but I'll take a stab)

    1. Look ahead to where things will be, not where they are now. E.g. 10 years ago, I chased yield. If I'd looked ahead, those development sites I turned down, I would have bought them and build NGBH. Looking at Asia to see how they are solving housing affordability now.

    Climate change, wether true or not (I'm a believer), is impacting cost of living. How are you mitigating against it?

    2. Systematic analysis of business (recent lesson). I'm hitting 27% profit on turnover, I do a war room once a month, where we are held accountable to our monthly business and personal milestones. Aim is to drastically increase revenue, and hit 35% profit. I have to take my P&Is, cashflow, and balance sheet, actual, and 12 month forecast to find the opportunities.

    3. Money is the easiest thing to get. Like stupidly easy. When you're making 100%+ cash on cash return. 10-15% interest is chump change. People are desperately trying to invest money safely.

    Doesn't seem like it when talking to the average property investors. Let's have a quick look. 5% ROI (maybe), long term exit strategy. Scalability? Why would money flow here. Developing? Ok, do you have a proven track record. If yes, not that tricky to get funds.

    4. Scalability and automisation is super important. I don't enjoy the IT space even though it is by far the most scaleable. Management is tricky for me atm. However what good is a business if you can't step away from it for a time. Stops you from moving onto your next opportunity.

    5. None of us do it for the money, we just love the game. The money is a heuristic. We are taught to run lean to keep the business hungry. Excess cash is removed or (more likely) re-invested.

    6. Earning $M's and having $M's are very different experiences. That stated, other than a handful who I am wary of, the people I know with $10's if not hundreds of $M's, you would never know.

    Drive crap cars, dress like hobos. This is not a millionaire next door example. They could loose $M at a casino and shrug it off. They just don't care about that stuff. I think that's more about the people I attract rather than that's what super wealthy people do. I drive a $500 car, and wear worn out $10 Uniqlo t-shirts. I repel Ferrari owners.

    7. 90%+ of business owners are not business owners. They just have a higher paying PayG, many don't even have that. Don't know why some see it, but yeah. Was at a Tony Robbins event, almost everyone raised their hand when asked if they were business owners.

    Almost everyone I spoke to were USANA, or a graphic designer. Only a handful had businesses like patents for orthopedic shoes, franchisers (selling, not buying), etc. Not the same thing.

    8. Health is energy. Doesn't matter how wealthy you are, you still need to put in the time and effort like everyone else to stay fit. I let myself go last 2 weeks *cough* years. I'm exhausted after a long day. Takes a toll.

    Relationships are the same. Have to dedicate time to wifey, parentals, and friends. Can't buy that kind of love.
     
    Last edited: 19th Dec, 2019
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  2. NHG

    NHG Well-Known Member

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    My personal perspective. Right or wrong.

    I feel you can stumble on to $1M-ish a year incomes through business. Disclaimer is most business owners go broke.

    Clearly to earn that as a job, you need to be incredibly gifted. As business however, just work off your nut. Luck out with some contracts.

    It's the guys earning $10M, $20M, $30M a year that have me looking at it as a genuine skill. Lot of strategy, and long term commitment required.

    Difference between a sucker punch KO, and winning a boxing match over and over again.

    You can't take that from someone. If I lost it all, I'd just do it again within a handful of years.

    It's not financial independence, it's financial confidence.
     
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  3. VanillaSlice

    VanillaSlice Well-Known Member

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    That's very good, thanks for sharing the details
     
  4. kierank

    kierank Well-Known Member

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    I know it is different for each business but, with the four businesses I owned in my working life, I would use the following “rule of thumb”:
    “If the average annual wage/salary was $100,000 per employee, then the business had to generate a gross profit/margin of $300,000 per employee”.​

    The $300,000 would be allocated evenly to the following:
    • $100,000 to the employee as wages/salary
    • $100,000 to the business (to cover operating expenses)
    • $100,000 to the business owners
    So, with 10 employee, the business owners would be allocated $1,000,000.

    With 20 employee, the business owners would be allocated $2,000,000.

    And so on ...
     
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  5. Gockie

    Gockie Life is good ☺️ Premium Member

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    So it sounds a company should offer products and/or services that are worth a lot of money and/or scales well (little effort/mostly passive).
    Lots of companies have significant numbers of non profit generating staff.
     
    Last edited: 19th Dec, 2019
  6. kierank

    kierank Well-Known Member

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    I always looked for businesses that had products/services with high gross margin/profit. My two favourites were take-away food (eg pizza) and training courses.

    Having high priced products/services typically meant a longer sale cycle and one had to sell lower volume.

    Having a low priced products/services typically meant a short sale cycle and one had to sell high volume.

    I never owned a business that I would term “little effort/mostly passive”. For me, it was 12 hour/days, 6 to 7 days/week. If one is expecting to own/grow a business working a 35-hour week, don’t go for it would be my thought.

    Non profit generating staff are management and admin staff. The purpose of these staff is enable profit generating staff to be as efficient and effective as possible.

    Successful businesses have the minimum number of these staff to achieve the above purpose.

    For me, the most important staff in any business is the sales staff. The second most important is operational staff. It never ceases to amaze me how many businesses don’t get this.
     
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  7. MWI

    MWI Well-Known Member

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    Yep!
    Had been looking for a while but thought businesses was the answer instead of investments, nearly killed ourselves!
    So then...
    Read Robert Kiyosaki 'Rich Dad Poor Dad' and John Fitzgerald '7 Steps to Wealth', then gently hinted to spouse to read the books.
    Next day all our plans changed, we decided not to build our 700sqm house (DA paid and approved - ouch, costly exercise, lesson we had to learn!), instead sell and start to invest into IPs instead (for cashflow, alternative passive income and so on).
    Sold in year 2000 and started from there...never looked back.
    Books have literally change my life for the better.
    When the student is ready the teacher will appear!;)
     
    Last edited: 21st Dec, 2019
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  8. The Y-man

    The Y-man Moderator Staff Member

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    As much as some of us bag the guy (and the book), RTK's "Rich Dad, poor Dad" was definitely the lightbulb moment, and as per @MWI post above, JF's "7 steps" and (of course) Jan Somer's books - especially the "story by story".

    The Y-man
     
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  9. MWI

    MWI Well-Known Member

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    Totally agree @Y-man!
    I don't like to bag anyone, what may work for one may not work for other...?
    BUT....from every book I read I took something and applied to my life to make it better!
    Why reinvent the wheel if others before us have been successful?
    Many years prior to year 2000 read actually Jan Somer's book that was also an AHA moment, then read many economists views in FR how low inflationary environment will no longer double house prices, so did not ACT.
    Had to learn another lesson so we waited, then houses doubled, the economists were wrong, so after those two books we were looking for alternative sources of income and decide RE was for us and let's ACT!
     
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