EFP 97: Turning Cashflows Into Assets
The concept of making your money work for you without your direct input isn’t new. It’s how businesses are made and it’s the sort of engine entrepreneurs want to create. Income that keeps coming in without having to involve you 24/7 sounds pretty good.
From Direct Involvement to Systems that Work Without You
Today, Joe and I talk about how to transition from owning “cashflows” (Requiring your direct manipulation or involvement) into assets. (Built on systems and processes that retain better value over time) You can’t do everything on your own after all, and what better way to scale than to remove yourself and build teams that can handle it for you?
There is SO much opportunity here Joe and I just had to record a podcast on the topic. This is the “hard work” that the get-rich-quick crowds avoid, but this is the exact type of work you should be doing if you want to build an online empire.
If you want to really grow your business and turn cash flow into assets, check this episode out:
Check Out This Week’s Episode Here:
Topics Discussed This Week Include:
- The difference between cash flow, “cashflows”, and assets.
- The money and cost required to make the transition into assets.
- Documenting your processes for future training and scaling.
- Tracking your time and chopping down your processes for different skillsets.
- Eliminating the non-essentials of your business.
- Jordan Harbinger’s The Art of Charm Podcast
- Sweet SweetProcess
- EFP 62: How to Hire Your First Virtual Assistant
- EFP 9: Ultimate Guide to Outsourcing
- Dave’s Self Made Businessman
- Leave an Empire Flippers Podcast iTunes Review
Help Us Out:
- “There’s no ‘Super VA/Employee’ because no one is good at every single thing.” – Justin – Tweet This!
- “You’re going to find that some of the things you’re doing isn’t giving you a great ROI.” – Justin – Tweet This!
- “You don’t want to scale a broken/inefficient machine or you’ll multiply your costs/waste across a larger scale.” – Justin – Tweet This!
What are some of your successes or failures in creating assets for your business? Leave your stories on SpeakPipe or comment below!
Speaker 1: Welcome to the Empire Flippers podcast. Are you sick and tired of gurus who have plenty of ideas but are short on substance? Worried that ebook you bought for $17.95 won’t bring you the personal and financial freedom you long for? Hey, you’re not alone. Join thousands of others in their pursuit of niche profits without the bullshit. Straight from your hosts, Justin and Joe from Empire Flippers.
Justin Cooke: Welcome to episode 97 at Empire Flippers podcast. I’m your host, Justin Cooke. I’m here with my business partner extraordinaire, Joe “Hot Money” Magnotti. What’s going on buddy?
Joe Magnotti: Hello everybody.
Justin Cooke: We’ve got a fantastic lineup. This week we’re talking about turning cashflows into assets. Whether you’re buying sites, whether you own these sites, whether you are buying businesses, we’re going to talk about how to take what is traditionally a cashflow-type business, like, it’s making you a bit of money, and turn it into an actual longterm asset. We’re going to talk about what that means in a bit. Before we do that, let’s do some updates, news and info. First thing, buddy, we got one five-star iTunes review.
Joe Magnotti: Hit me up, buddy.
Justin Cooke: Coming in from Jordan Harbinger. He’s actually the guy from The Art of Charm podcast. He says, “Not just Internet marketing fluff. Guys who listen to The Art of Charm podcast know I usually hate Internet marketing and label it akin to multi-level marketing in many cases. These guys are the exception. Justin and Joe aren’t scammy, they don’t push fluff. They select topics and experts where they deliver real, clear and actionable information to help get you with your budding business. Put down the Get Rich From Home crap course and tune in to these guys instead.” So I actually heard of this guy, Jordan, through a mutual acquaintance and then he turned me on to this podcast, The Art of Charm. I listened to one where they were just bashing on MLMs. And I’m really not a fan of MLMs-
Joe Magnotti: Yeah, me neither.
Justin Cooke: … you know this. Like not at all. And so there’s a little bit of a connection there. I was like, “Oh, that’s cool, man. They’re beating them up.” And then I listened to a few other episodes of his. It was really good. You can tell he’s a great podcaster. He did some traditional radio, Sirius or something, radio and had a real show there. And he’s a really interesting guy. So I actually interviewed him. He’ll be on a future podcast interview for our show, and I was on his as well, so it was good.
Joe Magnotti: Cool. I’m looking forward to that and I’m glad we passed the MLM test.
Justin Cooke: I know. The sniff test. “Hey, man, if you can just sign up two people, and they can just sign up two people, you’re going to be a millionaire.” Yeah, dude, no way man. I’m not a fan. I really hate that in the Philippines. It’s just so horrible here, because you want to rip off some upper-middle-class housewife in Ohio, whatever, I mean, that’s not good either, but it’s particularly bad here where people are broke and then they are supposed to come up with this money to join your MLM scheme.
Joe Magnotti: And then they’re not looking for a real job. They’re working on the MLM business.
Justin Cooke: They’re trying to convince you about how many cars they’re going to own soon. Oh, oh, stop it. You knew a guy, you-
Joe Magnotti: Yeah. “Just buy these vitamins. Buy these vitamins and sell these vitamins to all your friends.” Oh, my god, it’s horrible.
Justin Cooke: Another update we’ve got is AdSense is now offering live chat support to special accounts, specific accounts, and they have very limited hours. But live chat support’s pretty cool. It’s an interesting direction that Google’s taking.
Joe Magnotti: Yeah. I mean, Google is maybe finally starting to address the support issues where people complained. I think the level that your account needs to be at is actually pretty low. I’m not sure what the threshold is. But we’re definitely there and, like I said, I think it’s like four hours a day they’re actually able to get them on the live chat support. But it’s pretty cool. I didn’t test it out but it would be interesting to see what they would say and what kind of support you could actually get.
Justin Cooke: We’ll put a link to more information about that in the show notes. Talking about trends with buyers and sellers, we’ve seen a trend recently and it’s a pretty small trend, I’ll admit it, but it’s a trend all the same where we have people, especially sellers, looking to sell their websites or businesses because they’re looking to invest in offline real estate property. So they’re looking to buy houses. They’re either looking to buy investment homes or homes for themselves and their new wife and kid or whatever. You also have buyers that you’ve been talking to, Joe, that are looking to buy these online properties with some additional cash that they have so they can pay their mortgage payments.
Joe Magnotti: Yeah. It’s kind of a recurring theme when I talk to people on the phone. They always seem to want to either take the influx of cash for a down payment, like you said, or use the cashflow every month to pay off some sort of debt and that being, housing debt seems to be a good thing to be paying off.
Justin Cooke: I just think that exchange or the interchange between online real estate and offline real estate’s kind of interesting here, where people are kind of taking cash from one and putting it in another. It would be interesting to see. Have you talked to anyone that was looking to sell offline real estate and buy online assets?
Joe Magnotti: We’ve heard of people taking loans out-
Justin Cooke: Yeah, yeah, yeah. Equity lines. Yeah.
Joe Magnotti: … to do that kind of stuff. But I haven’t really heard of anyone selling anything in particular.
Justin Cooke: That’s interesting, though. An equity line, you’re basically taking loans out against your home anyway. Yeah, that’s pretty interesting, though, how you can interchange these two. Talking about medical and education niches are really hot right now, buddy. So, you know, we’re getting a lot of sites in the medical space or in the education space and for both buyers and sellers, these are hot. So we’ve got buyers who are looking for these types of sites, we’ve got sellers that are happy to sell these and offload them because they have great earnings. I mean, they are generally in very profitable niches in those industries.
Joe Magnotti: And it makes sense to me because the per-lead cost there can be very high. So you can have a relatively low-traffic site and it could still make a good deal of money because each lead, each click, whatever it is, is going to generate a good amount of revenue for you.
Justin Cooke: The other thing, too, is that these are real problem-solving industries or niches, right? Like you’re solving major problems if you’re in the medical space or if you’re in the education space.
Joe Magnotti: And it’s geo-targeted. So most of them are geo-targeted. You know, you can use the same kind of information for one area in another area and it works very well.
Justin Cooke: That’s hot, man. And, you know, in episode 92 we’re talking about kind of our partner investment programs we still have going. It’s taken a bit of a backseat for a couple of weeks, dealing with the redesign, but we want to get into that and one of the things that we’re going to focus on are some of the sites that are easily geo-targeted. So we have a lot of familiarity and experience in the local SEO space so I just see a ton of opportunity, especially for these types of sites, for us to expand them via geo-targeted content.
And one of the reasons we’re talking about this episode today is that we have been overhauling our SOPs, overhauling our team, overhauling a whole bunch of workflow, and we’ve been changing our company around quite a bit and it’s interesting. And this episode is going to focus on that a bit. Not just our experiences but what we think might be able to help you to get cashflow into an asset.
Joe Magnotti: Yeah, I love SweetProcess, but SweetProcess and nine-hour training meetings, I’m a little tired of it.
Justin Cooke: Yeah, I can plan a sweet, SweetProcess I kept telling them. What do you do? You go to sweet SweetProcess, that’s what you do. No, I like them. And some people ask, “Well, why do you use them over Google Docs?” I don’t know, man. I like the UI, it’s easy for our people to use, easy to edit and change, and your SOPs have to be a living document, it has to be something that people use on a regular basis, that can easily be updated. And I think SweetProcess, for us, does that. So I really appreciate what they’re doing. I’d love to get that founder on the phone.
Joe Magnotti: Yeah.
Justin Cooke: I think that would be an interesting call. So, anyway, we’re going to be talking about that a bit in this week’s Heart of the Episode.
Speaker 1: This is the Empire Flippers podcast.
Justin Cooke: All right, Joe, so let’s get into this, buddy. We’re going to be talking about turning cashflows into assets. And before we do that we should probably start to define a little bit what we mean by a cashflow or an asset. So a cashflow is some type of revenue-generating activity that requires your direct input or manipulation. You’re involved in the process and you’re not easily extrapolated from that process. So the process is definitely heavily reliant on you, your skills, and your abilities to keep rolling.
Joe Magnotti: Yeah. Look, we may be a little negative about cashflow in this podcast, but-
Justin Cooke: I don’t know. Yeah, we’ll see.
Joe Magnotti: Yeah. But, in general, I mean, cashflow is a good thing to have. It’s definitely better to have than a negative thing. Sure, I’d love to have assets, but cashflow is always nice.
Justin Cooke: But I’m thinking about cashflow more as a thing, right, and not really the cashflow in your business. So a cashflow being a website or something, or your business that requires your direct input. So something like, let’s say, a consulting business, I would say, is an example of a cashflow in this regard or in this particular instance, not just a cashflow from your business and the monthly take. This can also include anything from small to massive amounts of cash. So there are cashflows, I think Tung Tran recently ran into a cashflow that was giving him $50,000 in one month. So it’s not just $1,500 a month or something. It can be a massive cash influx. You know, selling T-shirts up by Teespring or whatever. And it may be also short lived.
Joe Magnotti: Yeah. They’re really streaky, right? That $50,000 is probably not going to last more than one month.
Justin Cooke: It could be up or down, yeah. It could last three months and then go away or it’s up and down. And it can also disappear pretty quickly. So a cashflow is a very temporary thing. It’s one of those things where you just need to take advantage of it while it’s rolling. It may be where you have a client, one particular client, you landed a really big client. It may last for a year, but as soon as they bail, they’re out. There’s nothing behind it that’s intrinsically viable. It’s just a bunch of cash from a particular source.
Joe Magnotti: Our outsourcing customers were great examples of that.
Justin Cooke: Yeah, that’s a good example. Whereas an asset, instead of requiring as much of your direct input, is built on systems and process. So the real IP or the real thing behind it would be the processes and things that you put in place to run it. And it doesn’t require nearly as much direct input from you. In fact, you could walk away for a little while, and that asset may not only maintain, but continue to grow because of what you’ve put in place.
Another thing about an asset is that it’s, in most cases, it tends to see slower growth. In most of the cases, people that we know that are successful, these are not built very quickly. And you hear, “Oh, you’re not going to get rich overnight, and you’re definitely not going to build very valuable assets overnight.” It just doesn’t work that way generally. It’s like, maybe you’ll win the lottery. Maybe for one person you know it might happen, but not for the rest of us.
Joe Magnotti: Yeah. You just look at somebody like Dan Norris, right? How many times did he have to try and fail before he really built a valuable asset that he has now with WP Curve.
Justin Cooke: And I think even then, it’s not like it just took off in like two months or something, right? Like it’s a slow burn. But I think the benefit, too, is that the value is better retained over time, too. So it’s not like it’s going to go away with the snap of a finger. It tends to last a bit longer. So these are the types of things that we’re talking about when we’re mentioning a cashflow or an asset. And we want to talk about how you can take a cashflow from its current state and actually turn it into an asset. We’ve got 10 points we really want to get into in this episode.
So the first thing we want to talk about, or the first point, is are you sure you prefer an asset? And that’s not always the case. We do, in most instances, but it’s not always true. So, let me give you two scenarios. Scenario A, you’ve got a $5,000 a month net business … or, I’m sorry, you’ve got a $5,000 business, you’ve got 50% profit margin on that, and you’re working, let’s say, as a founder, 100 hours a month.
Scenario B, you’ve got a $5,000 a month business, you’ve got a 20% profit margin, and you’re working 10 hours a month, let’s say. So in scenario A, you’re making $2,500 a month net profit. So you’ve got a bit more cash. In scenario B, you’re only making $1,000 a month net profit. So for some people, especially if it’s their only thing and they’re relying on that and they don’t have a bunch of cash in the bank or runway, scenario A may actually be better.
The problem with scenario A is, for 100 hours a month and $2,500, you’re only working for $25 an hour. Where with scenario B, $1,000 month net profit is significantly less cash, but you’re only putting in 10 hours a month. So you’re making $100 an hour on your time. Now the big question is do you have something more valuable to do with your time? So with that extra 90 hours a month, are you going to be able to use that time effectively? Are you going to be able to make additional money with it? If not, at least in the short term, and if this is your only thing, maybe scenario A and maintaining the cashflow would be better.
Joe Magnotti: Yeah. And I also say what are you doing for those hours? Because in those 10 hours, if you’re doing something where you absolutely cannot be replaced, then that’s something to consider as well. Whereas if you’re in the 100 hours, if you’re doing something that eventually could be replaced or could be trained out, that’s maybe something to consider.
Justin Cooke: Our second point is that financials matter. And this involves everything from pricing to margins to total revenue. So the fact of the matter is, if you’re looking to take a cashflow and turn it into an asset, it’s going to cost you some time and money to make this transition.
Joe Magnotti: We’ve learned that the hard way, that’s for sure.
Justin Cooke: Yeah. And what you’re not going to want to do, at least you’d prefer not to do, is to come out of pocket a ton of money to make that transition. So if you’ve got margin, if you’ve got a bit of cash in the business, you can suck up your margins or not use those temporarily to help you with that transition and you’re not coming out of pocket heavily to go through the transition.
Another point I want to make about financials is that it’s a lot easier to double your price than it is to double sales. You know, you can double your price through a bunch of different ways, but actually getting more sales or adding sales channels, at least in our experience, has been more difficult than simply raising your price. That’s an easier transition. And there are ways to do that that are not just raising your price for the same value.
Joe Magnotti: Yeah. I’m envious of those guys that can just jump on the phone, Wolf of Wall Street style, and just start making deals happen.
Justin Cooke: Or building huge sales teams that can really scale.
Joe Magnotti: Yeah. I mean, I’m envious of it in the fact that it seems like an easy way to do sales. And I know it’s not easy. I wouldn’t want to do it, even if I could, because it doesn’t seem like a great way to do sales. But for the rest of us, I think that we have to look at other ways of marketing our business and changing our pricing so we can increase our margins.
Justin Cooke: So talking about the Wolf of Wall Street, Joe, it’s pretty interesting. I saw a pretty damning article about him. So there is this real estate guy in Australia that was looking to bring him up to speak to his sales people in Australia and this, I think it was a lady, she just went to town on why it’s a horrible idea, on like what a scammer the guy was. And like he says, “Oh, I’m changed and I’ve improved.” And what a horrible thing it is for him to bring this guy on. And the guy’s like, “Well, he can sell.” “Yeah, but even selling, he’s scammed people.” Like literally scammed people.
Joe Magnotti: Yeah. I remember when I first started my career in sales, I remember that whole guy telling me “Sell me this pen,” thing. And I’m just thinking back now. I’m glad I didn’t take that job because I bet you it was a scam.
Justin Cooke: It is kind of weird how … this is totally on the side of the subject … but it’s kind of weird how the movie did kind of make him out to be … I remember watching the movie and like, I think it’s horrible, but there was a part of me going, “Yeah, buddy, yeah, buddy. That’s so cool.”
Joe Magnotti: He’s the antihero, right? Yeah.
Justin Cooke: But, in all reality, I mean, it’s not good. So anyway, Wolf of Wall Street aside, one of the ways you can double price, or a few of the ways you can double price, and we’ve talked about this before on the show, is you can change your target market. So maybe you’re targeting people that don’t have the cash or aren’t willing to spend it with you for that particular hurt or that pain that they have. You can also change the positioning of your product or service, right? So come at it from a different angle, show how it solves different problems, maybe deeper problems.
Another thing you can do is just add value, add higher-margin value. So if you’re adding things to the product or the package, that cost you less but are able to solve other people’s problems even more, you’re able to charge more money and improve your margins over time just by increasing your price. The other thing, though, is that it’s not just about margins, right? So I’ve got a funny little story. I used to sell … when I was in college I was selling an eBay and I sold these Baby-G watches. And I bought them for like $5 or whatever, and I’m selling them for like $25 to $30.
Joe Magnotti: I remember this business very well.
Justin Cooke: Yeah. My margins on that were fantastic. At $5 purchase, $25 to $30 sold, that’s fantastic. The only problem is, here’s the problem, is that they just weren’t valuable enough. So I would handle 10, maybe 15 emails from prospective clients to sell one of these watches. That’s ridiculous. So my time is spent doing all these emails. No matter what I do, I just can’t scale that. I can’t scale that. I can’t hire a team of people to do. If it would have got bigger, it would have blown me away. I wouldn’t have been able to continue. It wouldn’t have been a good business.
Joe Magnotti: Yeah, there’s definitely a lot of value in getting involved in high-ticket items because the margins, there’s just so much extra cash around to do stuff with. 10% of a 1,000 is just a lot more than 10% of 10. So, a lot, lot more. And you don’t need to deal with more volume that way, you just need to deal with scale.
Justin Cooke: Well, this really leads into our third point is that size matters, too, not just financials, right? So the business is going to have to be big enough to afford yourself some wiggle room. Much like my Baby-G watch problem. If you look at people that are buying websites, if you’re buying $100, or $150 a month, or a $200 a month website, let’s say that it’s mostly passive income. There’s a bit of work for you to do. There might just not be enough earnings there to really do much with. You can’t hire a VA for $150 a month, full time. You just can’t do that.
So, I mean, you’re really trying to fit in margins on this $150 a month. Really, there’s not much there. So I think there’s value in those sites but I think you’re going to have to look at it more as a cashflow. That’s not going to be an asset. You may be able to turn it into one eventually. But it’s going to have to go through some significant growth before you get to that point.
Joe Magnotti: Yeah. I see those sites as portfolio sites, for sure, where you just have a bunch of them. You take the winners, you expand those. But the losers or the ones that are just mediocre, you just hand off.
Justin Cooke: Now with websites or businesses making $3,000 a month, let’s say, net, you can afford VAs, right? You can buy software or you can pay monthly for software that helps to really improve the process and helps make the website or business much more of an asset than just a cashflow requirement sucking up your time.
So our fourth point is actually documenting your process. Now, this can be awfully time consuming. It’s something that we’ve been going through as we’re changing around our SOPs and changing around our processes. And it is a time sucker.
Joe Magnotti: It’s mundane.
Justin Cooke: It’s worse, man.
Joe Magnotti: Especially when you get into screenshots and screen casting. Nobody really wants to do it, but it does have to be done. And if you do it right, from the beginning, the changes later on, as long as you make it like we were talking earlier … a living document … those become very easy. But if you don’t do it right from the get-go, it’ll just make things worse.
Justin Cooke: Yeah. I think the best thing, though, is it’s going to get worse before it gets better.
Joe Magnotti: Yeah.
Justin Cooke: So it’s going to be stressful and kind of miserable and you’re going to go, “God, I could just do this in 30 minutes and now it’s taking me three hours to do,” but you’re going to appreciate it down the road. You’ve just got to trust us on this one. Another thing is that this is going to be required for any future training, any future scaling of your business. It’s just you can’t do it with more people and more involvement in your business, you just can’t do it by word-of-mouth or trying to explain to someone briefly and having them run with it. It just doesn’t work.
Also there’s isn’t this … I love how Chris Ducker talks about the super VA myth, right, that someone can just come in and do everything and take over for you. That’s probably not the case. And we’re going to talk about that a bit more when we break it into skillsets. But if you want to really grow your business and scale you business and turn this into an asset, you’re just not going to be able to kind of say, “Hey, man, can you just do this for me? Can you just run this for me and talk it over?” No. You have to show them how to do it. And as an entrepreneur, that’s really your responsibility, right?
Joe Magnotti: Absolutely. I think well defining those process and those skillsets and responsibilities, that’s going to be key to making your business a real asset.
Justin Cooke: And this is definitely going to be a fluid or changing thing. It’s going to be a fluid or changing document and we’re going to talk a bit more about how you can make that the case. Now if you can empower some of your people to actually do that. So the fifth thing you’re going to want to do is you’re going to want to track your time. And, again, this can be a bit tedious. You’re like micromanaging yourself at this point by tracking your time, but you might be surprised at how much time you’re spending on one thing or another.
I know that some of our sellers are. So when they come to us and they’re looking to sell a site they say, “Oh, I spend this much time on this and this much time on that.” They’re not very clear. So when we start asking them to dig into it a little bit, they start to realize, “Oh, yeah, I spend a little more time on this or less time on this than I thought I did.”
Joe Magnotti: Yeah. Especially the larger sites. We definitely drill down on them and make sure that they understand where their time is going. And, you know, it’s something we have to be clear about with our buyers because we don’t want buyers to get into a situation where they’re not familiar with that. But you building an asset, I think you definitely have to track this time. And there’s plenty of ways to do that.
Justin Cooke: I think one of the things you want to do is you want to give yourself at least a month and you’re going to want to stick to it for that month. So you’re going to want to make sure you’re tracking everything you’re doing, about how long it takes you, how much time you’re spending per day, per week, per month, on all these different tasks and activities in your business. You could use something like Evernote or just track it in a Google Doc, but I really recommend checking out Time Doctor. It makes it a hell of a lot easier. So you can start and stop on different campaigns or different tasks, even individual tasks. And then you can tally that all up at the end of the month and see exactly how much time you’re spending.
Joe Magnotti: Yeah. And it even tracks what programs you’re using, what websites you go to. It gives you reports on that kind of stuff. What’s the number one websites you go to. So I get that report on all our agents for a little bit of too much micromanagement, but you can also use it on yourself very effectively.
Justin Cooke: Yeah. I think RescueTime might have something like that as well. I actually use RescueTime but I think it might be a premium and I’m just a freebie subscriber there. But they might have something as well so you might want to check into that. The next thing you’re going to want to do is you’re going to chop down all these processes that you’ve documented by skillsets.
As we talked about before, there is no super VA, there is no super employee, and nobody is great at every single thing. So what you’re going to want to look at are specific skillsets that are required for certain areas of the process. So, one skillset may require someone to be able to get on the phone and be able to schmooze with customers or something. Another skillset may require them to be able to program or be able to edit content or something like that, which may require a different skillset. And so what you want to do is you want to start breaking those up.
Joe Magnotti: Yeah. But I don’t think you want to silo them too much, right? You still want people to be aware of these things, of these different skillsets and these different SOPs that are out there, unless your company’s large. But otherwise you wind up with people saying, “Well, that’s not my job,” kind of thing.
Justin Cooke: Yeah. I think what you want to do is you want to look at your … especially like the longer processes … and see if you have too many skillsets included in one particular thing. And maybe you’re able to do that because you’re a founder and because you are the entrepreneur in your business or this website or whatever it is that you’re dealing with. But not everyone is going to be you, right? And, to be truthful with you, there are probably things in there that you’re not all that fantastic at.
So if you could actually break those or chop them down into smaller processes based on these skillsets, that’s going to be helpful for you. So now you’ve documented everything, you’ve tracked the time and you’ve actually broken them down to these smaller pieces based on skillsets. You can move into step seven which is review the skillset groups and the hours worked. Now, what I love about this is that it’s going to tell you what skillsets and processes are taking up the most amount of time, where most of your time is being spent, on which particular skillset, and which particular process.
And from there, it’s going to let you know exactly the type of person that you need to hire as a VA, as an employee, or as a contractor, or even a partner. So there may be things that you need a partner to do because it’s just that critical to the business, and that’ll tell you kind of what skillsets you should look for in a partner. Because you’ve already got the business. You’re in a position of control where you’re bringing on a partner, you’re bringing on someone who you don’t need them, necessarily, but you need them to grow.
Joe Magnotti: Right. And so if you break it down to skillsets and you know how many hours it takes, that’s great because it’s also going to kind of tell you how much it’s going to cost you. So you can go on oDesk and figure out about how much this is going to cost you, you can figure out if you’re going to get an ROI on this kind of thing, if you’re really going to have to bargain hunt or if you can afford to go top-level talent kind of thing. So that’s why breaking it down like this is pretty important.
Justin Cooke: So you’re going to want to actually get on the hiring train. Before you do that, though, let’s talk about step eight which is to eliminate and automate. Plenty of other people have talked about this in much more depth than we will. It’s straight out of 4-Hour Workweek and some other people. But what you’re going to want to do is you’re going to want to see what actual processes are needed. You’re going to find that some of the things that you’re doing, you’re not getting a great ROI return on. So you can actually start to chop some of these things out. And you want to do that whenever possible because what you don’t want to do is scale a broken or inefficient machine. That’s a really bad idea because now you’re multiplying your cost or your waste across a much larger scale. That’s always a bad idea.
Joe Magnotti: Yeah. And then I think we’ve been guilty of that before. It’s hard. I mean, sometimes you build an engine and you think it’s running well. But if you don’t track the numbers well, it’s easy for inefficiencies to add up, for the game to change, and you not get the ROI that you were getting before.
Justin Cooke: Sometimes it’s difficult … I’m kind of just talking here … but sometimes it’s difficult to know which are the right numbers to track. So you’re tracking something and it seems like everything’s working and it turns out that it’s broken because you weren’t tracking or reporting on the right numbers. We’ve been guilty of that one, too.
Joe Magnotti: Yeah. And I think why that happens, probably, is because you have number overload. You’re tracking too many of these little things and it doesn’t really matter.
Justin Cooke: Yeah, you’re not reporting with eye-on-the-prize, right? And that’s painful. We’ve made that problem before and it’s an ugly one. So part of the automation is to look for software tools you can use to remove or cut out some of those hours. What I love about this now is you already know kind of the hours or the time that you’re spending on these particular processes.
So let’s say you’re building websites or whatever and you’re looking at your keyword research and it’s a pretty straightforward proposition on whether you should get LongTailPro or whether you should invest in other pieces of software, based on the time that you’re spending. You value your time and you see “I’m spending this many hours. Does this software really solve this problem for me? Does it cut out this many hours?” And it’s a go or no-go.
Joe Magnotti: Yeah. And there’s so many different types of software and services out there that can really help you automate even the most esoteric tasks. So you should really look into that. I forget the name of it but there’s that one service that helps connect two services that don’t-
Justin Cooke: Zapier.
Joe Magnotti: Yeah, Zapier. That’s a really cool kind of technology that you should be looking into to try and automate this low-level stuff, if possible. But don’t go overboard. I mean, if you’re spending a heck of a lot of time on this and this is something that a VA could do for you very cheaply, and maybe a manual automation, if that is a term, is the better route to go.
Justin Cooke: Well, that’s something that we use. Sometimes we do manual processes to test it out because it’s cheaper to do it than to invest the money up front. Then afterwards we’ll go back and we’ll put in the automations once we’ve proved it to be successful. Because, you know, we get excited about a new project. We’re like, “Oh, this is going to be a huge winner,” and then we put all this time and effort into kind of like making everything how we think it should be and then no one cares.
So before we do that, it’s great to at least make it look good on the front end. And you’ve got people on the back chugging away doing all the work. And you can always automate that later once you’ve figured out you’ve got a winner on your hands. My point, of course, is hiring and training. Now this is an entire subject unto itself and we can’t get into it in this podcast. But we have and we’ll put some links to some other podcasts we’ve talked about-
Joe Magnotti: I think we’ve done at least two episodes on hiring and training.
Justin Cooke: … hiring your first VA, building a team. But what this practice allows you to do is it allows you to easily see which skillsets and people are needed. So you’ll know right away, “Okay, well, I see that I’m putting in 25 hours a week in this. If I replace myself with someone at this dollar per hour, whatever, even if I’m not using them full time, I can have them do a little bit of this, this, and this, and it cuts my time down.” So I’m now creating an asset by taking myself out of the picture. Sure, I’m going to make less money, but I make a higher dollar per hour. And that’s really what I’m looking to do is to pull myself out of this business so it’s a real asset.
Joe Magnotti: Yeah. And hiring and training, again, we talked about it a lot in other episodes, but it can be tough early on, especially if you’ve never done it before. I know Dan and Ian just did a when is the right time to hire, kind of thing, episode. Maybe something you want to look at. But don’t be afraid to hire and fail. That’s okay. That’s part of the learning process and I think it’s something that you have to do if you’re building an asset.
Justin Cooke: So the 10th point is actually scaling your business. You’ve put the right people in place, you’ve backed your hours down a bit, you’ve gone through the hassle of hiring and training and putting the right people in place.
Joe Magnotti: You’ve got the SOPs done. This is actually my favorite step, scale. Because this is like, you’ve got all the pieces on the chess board and now you get to play the game.
Justin Cooke: I love that, buddy, that’s awesome. Yeah, I know, that’s totally true. I think maintaining an open feedback loop with the people that you’ve put in place or these chessboard pieces you’ve put in place, is important because these are the people that are taking on the tasks and you’re going to want to empower them to look for improvements, cut out inefficiencies and allow them to make changes to the process, to the SOPs, to everything that you’ve put in place going forward. Because, again, if you build this machine where you’re constantly having to get in there and adjust levers and tweak things, it’s not much of a machine. Because all of your time is going to be a repairman for your machine, right?
Joe Magnotti: Yeah. Your company has to be flexible and adaptable. Especially when you’re small and margins are thin and it’s early on, you want to make sure that your group of core people can easily adapt to changes.
Justin Cooke: And the fun part here is you get to cut back your time, you can repeat the process with new cashflows or you can actually get to the point where you have enough of a war chest where you can start buying up assets. And that’s an interesting thing, actually, for someone looking to buy a websites. Do you buy cashflows and turn them around? Or do you buy actual assets that are already in place? The asset is the easier option but I think buying the cashflows and turning them is probably longterm the more profitable option.
Joe Magnotti: Definitely the more profitable option that we’ve seen. And we’ve seen people come back to us that they’ve taken a cashflow and made it into an asset kind of thing. But, yeah, there’s just a lot of profit in buying cashflows, expanding them or holding onto them and flipping them later. There’s just different ways to do it.
Justin Cooke: I think that’s the reason it’s probably more profitable is because that’s the hard work. That’s the harder work, right? It’s not like you’re just buying a site, hanging onto it and not doing anything with it, and just flipping it. I mean, anyone can basically do that. But if you’re able to buy a cashflow and put processes in place and people and make it a true asset, the value is going to go up significantly and you’re going to have investors banging down your doors looking to buy that asset off you. All right, man, enough about that. Let’s get into our Tips, Tricks and Plans for the Future.
Speaker 1: You’re listening to the Empire Flippers podcast with Justin and Joe.
Justin Cooke: All right, Joe, so our tip for the week actually comes from Dave at selfmadebusinessman.com. I’ve been reading his blog recently. It’s pretty cool, man, it’s got some really good articles in there.
Joe Magnotti: I love that domain name.
Justin Cooke: You love that.
Joe Magnotti: Selfmadebusinessman.
Justin Cooke: It sounds like a boss, right?
Joe Magnotti: Yeah. That’s cool.
Justin Cooke: So he turned me on to triberr.com. And they’ve been around a while. I’ve heard them mentioned before. But I liked what he was doing. He talked about how he was able to get involved in some tribe [inaudible 00:32:05] and I said, you know what, I’m going to sign up and go check it out. So basically what it does is it allows you to meet up with other people in your niche or tribe, so to speak, and you can join other tribes that are already there and it’s kind of a closer-knit kind of community.
And what you do is, obviously, you can read their content and a lot of it will be interesting. You and learn from it. But from a content creator’s perspective, it’s also having other people in your niche or around your niche in your tribe that see your content and they can share it with their audience, can get inspiration from it.
And so it really kind of is great for bringing these tribes together and helping them share content, helping them find podcast guests or guest posts or that kind of thing. And I think that’s fantastic. I think it definitely leans towards cabals or people like, “Hey, let’s just share our stuff and promote each other,” and that kind of thing. But I don’t think it has to be used that way. I think it can be used as a great network with other people that are in our niche that put out some interesting shit, you know.
Joe Magnotti: Cool. Yeah, that sounds interesting. I’ll have to check it out.
Justin Cooke: We’ll see how often I’m using in now. But I’m checking it out, man. I’m playing with it. So I think it’ll be something I want to play with. If you’re interested at all go check it out. It’s Triberr, T-R-I-B-E-R-R.com and add me up. That’s it for episode 97, the Empire Flippers podcast. Thanks for hanging with us this week. Make sure to check us out next week. You can also check out our website at empireflippers.com. And it’s up on Twitter at empireflippers and we’ll see you next week.
Joe Magnotti: Bye, bye, everybody.
Speaker 1: You’ve been listening to the Empire Flippers podcast with Justin and Joe. Be sure to hit up empireflippers.com for more. That’s empireflippers.com. Thanks for listening.