Rank #1: [Interview] Chen Tay: How To Maximise Mindset, Market Your Message, and Mastermind Your Way To The Top
Strategic Advisor to Speakers, Coaches and Seminar Promoters, Entrepreneur
Having Chen for an hour would normally cost me my right leg…but he agreed to giving this interview in order to help entrepreneurs… just like you. He shed gem after gem about mindset, positioning, personal branding and the biggest mistakes he sees entrepreneurs make.
In this interview you will discover:
– How Chen started by migrating from the war in Cambodia to getting established and successful in the seminar arena
– How to shift your mindset around money and personal branding
– How to strategise and dominate your niche and become ‘irreplaceable’ so you get head hunted by the best
– How to find and build long term, lasting relationships
– Why you need to join a complimentary mastermind and how to get the most out of it
– How to shift the way you spend your time to eliminate tasks that aren’t serving your greater good and value
Click Play To Hear Streaming:
Click To Read Full Transcript West Interviews Chen Tay
West: West Loh
Chen: Chen Tay
West: Okay, folks! Welcome to the call this morning. I’m here with Chen Tay now. Literally, I’ve been trying to get an interview with Chen for the last twelve months. And it’s been very tough to get him because he’s an amazing guy but he does a lot of travel, does a lot of mentoring and coaching. I’d like to call him—kind of like—a secret mentor because he’s really behind the success of a lot of the speakers and gurus you see out there in today’s world. But you probably never heard of the guy because he doesn’t like to actually publicize who he is and what he does. So we’re very lucky to have him today.
Welcome to the call, Chen!
Chen: Thanks for having me, West. I look forward to sharing some good stuff with you.
West: Absolutely. Why don’t you give us your version of what you do and how you add value to people’s lives?
Chen: Okay, West. Well firstly, I’ll just go tell you a little bit about myself and how I got into this game and do what I do because, I think, the story to someone is actually more interesting than the actual facts. Because sometimes, you know, when I’m in a seminar or when I’m learning from someone, I find their story very intriguing. And also, sometimes it just tips something off in your brain and it gives you the inspiration and motivation to pursue your dreams.
So for me, I was born relatively young. I was born actually in the killing fields of Cambodia in the late ‘70s, early ‘80s. And what I learned from that experience alone that in Australia we’re very lucky. We don’t have too many major disasters. And if I can do this, I know that a lot of people can do it too. Because the reality is, is that your situation doesn’t determine who you are. It actually accumulates and gives you the experience to go where you need to be.
So when I came to Australia, I went through the school system, didn’t really know what I wanted to do. I concluded about the time I got to Grade Six that if I could just get a factory job and then 500 bucks a week, like that, I would have made it. I would have been very happy.
West: So…very humble beginnings.
Chen: Very, very humble beginnings. Now one of the things that really hit home with me as I got older was that, you know, I started to develop interests and crushes and stuff like that. And one of the things was, you know, having a drug-free lifestyle. So that’s why I never drank or smoke. And I found in Korea that really suited me; and that was chiropractic.
So after about six weeks of work experience as a dentist, I realized that I was actually living Mommy’s dream and not mine. So I stopped there and I went and did work experience with—
West: So you realized that after six weeks? That’s impressive.
Chen: I made so many dental trays and seen so many dental procedures now that I knew pretty conclusively that I didn’t want to be a dentist. But the thing is that—as you know—opportunity: as one door closes, another door opens.
West: Yes. So chiropractics.
Chen: So I went to Chiropractics. And I was one of the very fortunate people that actually got into chiropractic straight out of school because the year that we entered chiropractic college, they were taking a lot more mature-aged students because it was determined that chiropractic was one of those courses that where actually life skill was more important than academic skill.
So being one of the few that got in, I was pretty happy with that. But the thing is that, after 2nd year, I wanted to get out. The reason why is that in the 1st year, they teach you all this good philosophy, all this good stuff; but in the 2nd year they pretty much tell you all the medical stuff which is not congruent or aligned with all the stuff that we learnt in the first year. So I was fortunate enough to—at that time—to have someone who looked up to me and supported and actually got me through the course because without that person, I can tell you now, I wouldn’t be here. And one of the things that I learned in that whole process was that—I went and started interviewing chiropractors. I probably interviewed about a hundred and twenty chiropractors over the next twelve to eighteen months—and what I learned was that a lot of these chiropractors were very successful but they were also, a high majority of them, were living week by week. Some of them were actually just working to pay their bills. I didn’t understand how you can be twenty, thirty years in practice and still be living week by week. So I started thinking differently.
And when I got through this process, West, I found that a lot of people in that situation, where life just gets ahead of you. And I started going to seminars. And one of the things that I learned at seminars was that, geez, I was always one of the youngest people there. I mean, I’ve invested a lot in seminars and it was only early in one of the seminars that I realized that the money was in the marketing and building the business. And that’s when I started changing my whole mindset.
And I think mindset is a very important aspect of all this because I’ve watched my journey from when I left school and to who I am now, and I can honestly say to you that the mindset journey for me has been the most transformational and pivotal change that I’ve made that has actually helped me get ahead in life. I know a lot of people invest a lot in strategies and programs and…
West: And how-to’s, yeah.
Chen: Yeah. But the reality is, that it’s the real estate between your ears, that’s the one that gives you the most infinite returns. So I’ve always been a student. I’ve just been one of those people that really got the seminar game in terms of it was about: not only implementation but it was about networking and finding a lot of people to mastermind and be mentored by.
And in the meantime, while I graduated with that chiropractic side, I also had done a property course and was basically able to secure about $1.1 million of property as well. So I learned very quickly the power of implementation. But then, what I learned later on is the importance of having a strategy in place and being clear on what you want. Because one of the things that I got clear on is that, look, I went into this game thinking like I was just a chiropractor. But then as I developed and evolved in the game, I realized that, hang on, my business and marketing skills were being acknowledged by a lot more people…
West: It’s applicable. Yeah, it’s applicable in so many other areas.
Chen: Yeah. So that’s why, when people come to me and they don’t know what they want to do, I often tell them, “Look, what are you good at? What are your skills? What are your passions?” Because if you align your business with your skill or your passion, something you enjoy doing everyday, I honestly believe you actually got it right. I mean, at this point in time I do three hours of chiropractic a week, which a lot of people find it hard to believe. But I also do consulting with other clients. And then most of the time I’m with my two young boys.
So you can really engineer the life you want as long as you get clear on what it is that you want. And if you don’t know what you want, start with something. Start with a skill, go look in the marketplace and look at the people that are successful. And what I do is I write their traits down or what they do and I try to work out, okay, well, how do I follow that trait? For example, when I was young I had a really big fear of rejection. I was so shy, I felt like I was always getting rejected.
So I started thinking opposites, you know, you go from one extreme to the other. So I thought, ‘where can I get totally rejected all the time?’ So I took up door-to-door sales. And it was an interesting experience, mate. I don’t know if you’ve ever done door-to-door sales but…
West: Mate, I don’t have the guts to do that.
Chen: Well, door-to-door sales and telemarketing, I think, are the two jobs that mold your character, let’s just say that. I remember when they dropped us off in a suburb in Melbourne. And it took me about half an hour to build up the courage to knock on my first door. And it was funny because I was starting to judging houses and thinking like, okay, you know, trying to work out whether these people will be able to afford the telephone system that I was at that time selling, you know. And it was embarrassing because it took me half an hour to knock on the first door. But I can honestly say to you, West, after about the tenth rejection…I was over it. I don’t mind about rejection stuff anymore.
One of the things is that when you confront your fears and your challenges, I mean, that’s where the massive growth comes along. I remember one of my earliest mentors. I would ask him, I said, “Look, I’m new to this. I’m going to try a lot of things. If I’m out of line, pull me up,” you know. And it’s actually great to have someone in your life that pulls you up out of your bad behavior, your bad habits or just when you behave poorly.
West: I mean that’s one of the things I really notice about my interactions with you, Chen—not only with yourself and your mentors, but also with the people you speak to—you’re very real and you don’t sugarcoat things. And I think that a lot of the people listening to this call—they would be your clients—but also, new people listening could really appreciate that.
Chen: Well, West, you know what I concluded, you know. Life is short. And you’re right…too many people are just getting by; they’re just surviving. And having been in survival mode during my student years, I mean, understandably I’ve seen a lot. When I was a student on Austudy—I think they call it Youth Allowance these days. I mean, I was earning a hundred and forty (140) a fortnight. And I thought that was a lot of money, you know. And my only goal at that time was if I can make 250 a week, I’ll be safe. I mean, just 250 a week. Then when I got there, I said, “Oh, if only I can make 500 a week,” you know. 500 a week—that’s the number. And then when I got there, it was like a thousand dollars (1,000). I thought, ‘Geez, who would spend more than a thousand dollars a week?’ And it’s interesting to see the mindset journey with that. It made me realize that, hang on, it actually didn’t matter how much money I made. It’s actually what I did with it and how much I invested in myself, my education, but also how much I put away in savings. I mean,DeMartini has a great line “you increase your quality of life when you increase your amount in savings.” And I love it. Because that’s what happened in this whole global financial crisis: was that a lot of people led the good life, they sit and didn’t save, and then when the rainy day came along they found, hang on, geez, there’s not enough to live. And this is where it causes a lot of problems if you don’t have some structure behind finances.
That’s why I’ve always made to study personally and professionally about money. But early on I’ve decided that I wanted to learn and study money because these chiropractors were working all day long and they still have no money. So I made it a quest to learn about money.
And a book that actually started me off was Rich Dad, Poor Dad. When I read Rich Dad, Poor Dad, it really gave me an insight into the world of money because prior to that, I had no clue about money. And what I realized is that Rich Dad wasn’t actually just one person, but that Rich dad was actually a series of mentors that Kiyosaki had. So I decided to build my Rich Dad family. And I added mentors that helped me in all areas of my life: like I had Rich Dads in business, in investing, in property, in shares, on the internet. So when you build this panel of experts or mentors, what you can do is access all their accumulated knowledge. And one of the things that one of my earliest mentors told me was if you just spend half an hour with someone who’s done it and they share their experience, by the time your half an hour comes up, they want to keep going. And by the time you get to an hour you’ve actually accumulated so much of the information at that time and allows you to accelerate to where you want to go.
Chen: I’ve been one of those people in the seminar game that actually have applied what I learned and got results and have just kept doing it, to the point where one of my mentors asked me to come work for him. And we ended up putting some of the biggest events in Australia and also probably one of the most successful business coaching mastermind programs as well. And that basically set me up on this journey.
So these days, what I do is I advise speakers, coaches and seminar promoters and basically work behind the scenes. Because what I learned is that in this game, you have a choice—and I made a decision a long time ago—that you’re either the Porsche body or you’re the Porsche engine. And when I decided that I don’t want to be the shining star on stage with names on lights. I want to be that engine that drives that Porsche because I found that if I had…
West: Wow. Great analogy.
Chen: Well, if I had the skills and I could build the team and drive the Porsche, it didn’t matter who the star was. I could just plug in that system to anyone. And what I found is that if you build the engine, you build the team and you build the driver…you know what? You really get to know where your strengths are.
Chen: Or you can actually leverage and get the results faster. And that’s why, you know, you noticed in me, West, I try very hard to be authentic all the time because in this game where there’s a lot of ego—and actually, one of the quotes that I live by, which was given by one of my earliest mentors, was that: “The truth is the result; all else is ego”—because I’ve learned that in this game, ego is a two-edged sword. You know, you can rise on it or you’ll fall on it. That’s why I chose to be an unreasonable friend to a lot of speakers and coaches and seminar promoters.
West: Absolutely. I think they really, really appreciate it and it’s one of the very unique things… we were talking, just chatting on the phone the other day and we both highly agreed—and many people agree—that you are irreplaceable in that there is actually no one who does what you do. It’s a very, very unique position. And I don’t know if there’s a name for what you do but…
Chen: Well, what happened, West, was that…see, I had lunch with a lady that ran a very successful seminar company and pretty much offered a position to run one of the biggest seminar companies in Australia. Now one of the things she said to me that really stuck was, “You know, Chen, we’ve looked at the marketplace and there’s no one like you.” Now, in my head I’m thinking, of course there’s not, because ten years ago I looked at the marketplace and I worked out which space I wanted to dominate. And basically, it was a culmination of three mentors. And I took the traits of these three mentors and trying to combine them. And at the age of thirty now, I’m pretty much getting very, very close to the traits of these three mentors to the point where most seminar promoters in Australia and also some really well-known speakers overseas now know me or know of me. I mean, at least when I went I went to America, some of the big-name speakers would actually come up and approach me by first name. I mean, one of the greatest things in this game is the fact that it’s all about relationships.
West: Yes, because in the past you would have to approach them, right? No one would have any idea who you were.
Chen: Mate, in the past, they wouldn’t even take your call and won’t answer your emails. You’re no one. But the thing is, what really happened, what really changed this game is I’ve learned that the power of relationships if you really get focused on building strong relationships. And you know, it’s so easy to chase the money, West. I mean, when you’re in survival mode, all you care about is the money. But when you build these long-term relationships, what you’ll find is that people will do things for you and not ask you for money. They reward you for your commitment, your energy.
Like when I went to work on my first seminar company, I filed the whole employment process. So for me, I don’t like taking ‘no’ as an answer because one of my philosophies is just to fail forweard fast because a lot of people that start out, they wait for their ducks to line up, they want to know the best CRM program, the best autoresponder, the best business plan, the best sales letter, the best offer—they’ve got everything the best. But you know, the reality is, is just get started.
And for me, when I introduced this one rule in my life, my life changed. And that rule was: any time I fail is when I give up. And you know what, West? It’s been over ten years now and I’ve never given up. Now there have been a few times that I’ve been tempted to give up but I’ve never given up. So in my world, it’s really hard to fail, West.
And when you talk about the seminar industry, you have to realize that success isn’t overnight. There are a lot of people that come into the game and then like over night, stop. But if you do the research and you dig, I mean, you know, just remember, for two years I was entrusted with over half a million dollars to research the seminar industry and to study it and to find speakers and promoters and to really find background information on a lot of people in the game. And what I discovered is that reality is that a lot of them are not as well off as you think. A lot of them are living week by week. But the thing is they just get paid bigger incomes and because they’ve learned how to leverage themselves. But you know some of the best speakers—I can tell you now—have some of the most poorest businesses. Like I know one speaker that is lucky to get probably ten cents in a dollar of everything they earn because they never spent the time to run the business side.
And I can tell you now, when you’re a star or if you want to be a star, it doesn’t matter who you are, any star—if they’re getting 50-50—over time, they’ll get jaded. They get very, very jaded because at the end of the day, they did all the work and they’re not getting the rewards. And you know what that’s like: when you’re doing a lot of work and you don’t get the rewards. That’s why I often talk to my clients about the three to seven year cycles. Most of us stick with something for three to seven years and we give up. And it’s like when people come into the seminar game, they get excited, they go to their first event. Then they upgrade to a cause. Then they chase these moneymaking opportunities. And then they get burned or they lose money or it doesn’t work for them because they were trying to integrate a moneymaking system for someone else and they were trying to copy it. Because the reality is, is that the person that created the system created it for them. And one of the things that I learned is that the key is to find out which system or which vehicle is most aligned with your values and beliefs.
West: And that’s one area that you really specialize in, getting to—what I’d like to call—the ‘core’ of a person’s desires and skills and then helping them to fast track their way to a result.
Chen: Well… the thing is, West, when we get to the core of someone—actually, it’s interesting—when you really get to the core of someone and you get all the delusions and their illusions away, they actually achieve things a lot faster. Like, I mean, we have a friend called Bret Thomson and…
West: Yes. Great guy.
Chen: Bret has a great story.
West: Actually, I’ll be able to include…I interviewed Bret recently and I’ll include that as a bonus to this call.
Chen: But Bret is someone I really respect and admire because he’s a solid guy that just shuts up and does it. Now I remember in 2007, I met Bret and he basically stayed on the floor of our hotel room we had a big event on. And he basically struggled to even get there. And within a year of implementing and just putting it out there, he ended up with a seven-figure copywriting job with probably one of Australia’s best marketers.
West: That’s a pretty awesome story.
Chen: And so one of the things that I learned from that is that Bret just applied himself. I mean, one of the times, you know, he had to get to Perth for a meeting and I said to Bret, “You’ve got to be there. If you have to, look, I’ll pay for a one-way fare for you to get there.” Because the thing is, at the end of the day, the first step of success, West—I think—having gone through the process is I actually found that the most successful people, someone believed in them more than they believed in themselves. That’s why you always see people that are couples, you know, whether the wife will believe and support them so much—the husband or the guy so much—because the self-doubt and the self-sabotage gets you, you know, because we all have value issues. I mean, that’s probably the biggest obstacle in our way starting out in business: is that we don’t value ourselves. We ask questions like, “Why me?” “Why people pay me all this money?” I mean, I get that. My mom still, to this day, doesn’t understand why people pay a lot of money to spend a day with me and then just talk. It doesn’t make sense to her, you know, because what I can do in a day, that’s about two months earning for her.
And also, when you’re starting out, there’s always a lack of money. But the great thing is education’s free, mate. And people forget that. When I was growing up—and I hope they’re still around, but—there’s a thing called a library. And you know what? It’s free to join. And it’s an amazing concept. You can go there and you can actually borrow books. And some of these books can really change your life. And I spent a lot of my time in the library because I wanted to find out that if the best minds are in here, what are their commonalities? What have they done? I don’t just read or study business marketing, you know. I try and read a wide variety of material because the inputs that you put in, in fact give you the raw data to synthesizing your ideas.
West: And the thing with you is if there’s an event that is very specific and will help you and help you help people, you go to it wherever in the world it is.
Chen: Perfect example, West. I’ve gone to America pretty much three or four times a year the last few years. I mean, I remember one event, I flew over to Perth for the day and that night flew back into Brisbane. I think I was on the ground for like less than twelve hours.
But the thing is, West, a lot of people think, “Yeah, that’s all good. That’s all good because you’ve got the money.” But you know what, West? I was doing that when I had no money. I mean, I remember having to eat at home more times—actually, when I say home, I had to eat at my parents’ place—because I spent three months’ wages on the next seminar, all three months study allowance on the next seminar. I was always voraciously getting books, buying books. Because I understood that in investing in yourself, yes, the money leaves your hand but it never leaves your life. And what I find is that the whole concept is that a lot of people are too afraid to give money away, that they’re too afraid to invest because your hierarchy or base will determine where you spend your money. But for me, it’s books and education. I’ve always been ingrained that way. That’s why if you dropped me at a sopping center and you lose me, I can tell you where you’ll find me: in a bookshop.
Because the thing is, once you start getting some results—‘coz I think that, you know, when you’re starting out it’s hard to get the confidence—but when you get little results and you have the support of someone significant, you start to attract opportunities and things. That’s why I love the seminar game, you know. Like I think people need to realize there are too many people complaining about the seminar game, about the pitch fest environment, about what’s going on, but I mean…any of those people that talk to me, I would show them the other game behind the game, I call it. And the game behind the game is that the seminar environment is a great way to network and build new top contacts. But also, not so much to get new content but get new context on what’s possible, okay? Because we write so many notes down and we take so many notes but most of us never get back to it. These days I never write any notes. I like taking big ideas because for me, I know that these big ideas—sometimes it’s just one idea or a twist on a different idea—and you know, it can seriously add a lot of money to your bank account.
The number of clients I’ve had this year that have taken their businesses from scratch and gone to six figures, I think it’s been nearly about eighty percent. And one of the reasons why I think that is, is that there are models and marketing that are established out there that are working. You don’t need to reinvent it. You know, when I do a deal with someone, I’m always thinking, “Okay, where’s the revenue model? And where’s the marketing?” And the last few years spending over half a million dollars of research, I found that there’s like a 5-step process, West, that… Actually, why don’t we do that now?
West: Okay. Why don’t you share that with us real quick? I’m just writing down…I’m taking notes here, by the way, folks. There are some good lessons out to learn. But take us with the five steps, Chen.
Chen: Okay. So I’m going to give you the five steps then I’ll talk a little bit more about it, okay?
So the first step is mindset.
The second step is marketing.
The third step is mastermind.
The fourth step is mainstream.
And the fifth step is a maven.
So let me explain that in a little bit more detail for you. Now obviously the first one, mindset: nothing changes unless you change your mindset. Most people are stuck because they’re trying to be this new person but they’ve got the old priority programming. It’s like all these people that want all the features and all the benefits of Windows 7, but they’re still running Windows 95 or they’re running DOS. I don’t know if you remember DOS, West. I don’t know if you even remember DOS.
West: I do remember.
Chen: But yes, so they’re trying to…
West: CD/games was the…
Chen: Yeah, that’s the one. That’s the one. So you know, they’ve got their mind set. So what I’ve learned is that you always, always train and behave at the level you want to be.
Now let’s take a moment here and think about this. I’m not telling you to go buy a boat. I’m not telling you to buy a new car. But you know what? You can experience it. Go test drive a BMW or a Merc. It costs nothing. Wear a nice suit. Wear a nice outfit. Go test drive it.
West: Absolutely. You’ve told me to do that as well and I’ve done it. And it’s powerful.
Chen: It’s powerful. It’s the experience. Something just happens, mate. The shift in your head—it’s subconscious, I believe—but just something that triggers other opportunities and other people to come into your life.
Now the other thing I used to do when I was a student was to actually stay in the lobby of 5-star hotels and pretend like I’m waiting for a meeting. And I used to just sit there and I used to watch all these wealth roll by, all these successful businessmen.
West: That’s really cool.
Chen: Because if you think about it, West, some people in this hotel are paying a thousand to two and a half thousand dollars ($1000-$2500) a night.
West: It’s very true.
Chen: And you know, the funniest thing is—and this will give you an idea of my mindset and where it was—the thing I love about sitting at these hotels was actually using the toilet. It was actually nice to go use a nice toilet as opposed to being trapped at Maccas all the time, you know. I mean, you know what it’s like, you know? You’ve got to hold the door because the lock’s broken on it. And it’s very uncomfortable, mate.
Now the next step is marketing. And now, early on I thought marketing was everything. But as I’ve learned in the process, marketing is a very important element of the business. And you have to treat is as such. It’s a fundamental. You know, nothing happens until the sale’s made. And one of the things that I’ve learned is that the marketing system and your marketing message will determine the top people that come into your business. And that’s why it’s so important to get your message right, you know. Who are you going for out there? Because you know, research has shown us that the more scattered, the more broad you are, you’re going to suffer in 2010 and 2011 in moving forward. Because now—I think Chris Anderson wrote The Long Tail—the people that are finding niches within a niche are doing so much more better than—
West: People trying to cast the wide net.
Chen: That’s right. Yeah. The people that are focusing on niches and niches within niches are doing really well. Like, look at Apple. Despite Windows controlling over probably ninety percent of the market, Apple’s created a great niche. And now they’ve gone into niches within the niche. I mean, now they’ve got—within the whole Apple range—they’ve got iPods, they’ve got…
West: Absolutely. iPhones, laptops…
Chen: The next shift will probably bring a tablet Mac as well. So they’re always looking to find different segments of the market. Now one of the things I love about Apple is that they’re always focused on quality because that’s the brand. They want to just make great products. And that’s why Apple never touched the net PC. Now I don’t know if you’ve ever got one of those netbook PCs—I mean I’ve bought one—and they’re pretty much useless. So I ended up having to give mine away. I got caught in the buzz. I got caught on the hype and I got one. And, you know, that’s one of the things I’ve learned, is that one of the things in marketing is building your brand. Because what happens when you build a great brand? People trust you. Like people know that when they come to Chen, they get it as it is. They don’t get it half; they get the truth. And sometimes, the truth hurts.
West: And sometimes it’s scary too.
Chen: It’s very confronting. The truth is very confronting. You’ve probably experienced it a few times, you know. But sometimes, I think, if you don’t take people to the other extreme, they’ll never, ever see the greatness of what potential…
West: Yes. And you were telling me before that when you push people to a certain level, you’re like—we were saying before—you push hot buttons. It actually shocks people into a faster result. And they may not like it at the time, but when they look back, you know, it’s the kick up the butt they really needed.
Chen: What I call, West, I call that process: ‘you plant seeds and you watch behavior.’ So if you plant the seedlings, then you watch the behavior. If it changes, you teach them more. If they don’t change, you stop the lessons there. Because there’s nothing worse than trying to help someone that doesn’t want to be helped or doesn’t think that there’s anything wrong.
West: Or he’s wasting your time.
Chen: Or he’s wasting your time, that’s right. So for me, marketing is about trying out that message. It’s like the matrix that Dan Kennedy uses, you know. It’s the message. And then it’s from the market and using the right media.
Now media is so fragmented at the moment that you actually need to just keep two or three medias to start off with and just focus on those. We can always test and measure later on. But the problem is, is that when you try and do every media, it’s impossible to implement and monitor.
West: Yes. Yes, it is. There are always unlimited things you can do.
Chen: That’s right. And whenever you’re looking at the marketplace, just think about who is your ideal customer. That’s the thing that I spend a lot of time on these days with every new business I look into and every new venture we start. We look at, okay, who’s the ideal customer? For example, we’re studying a new business called optimization, which is taking hard-cover books and digitizing them for the iPhone app—turning books into apps.
West: That’s cool.
Chen: And basically, we rebranded the digital publishing platform. Now…it’s not new. All we did was resource people who used to do a VHS tapes to DVD, you know. And now they’re digitizing DVDs onto the hard disk. It’s the same thing. So it’s the same concept but we used it for the Apple iPhones. We know that Apple iPhone are only going to increase in numbers. They’re amazing tools. And there’s amazing opportunities to actually expand that network, because it is a media.
West: Wow. And I have to point out here also that these may seem like really basic questions, but I’m sure when you talk to your clients, Chen, a lot of them have overlooked it.
Chen: Mate, everyone’s trying to make that hundred thousand or million dollar day. And the reality is if you just make a couple of thousand but made it consistently and regularly…
West: You’ll get there.
Chen: You’ll not only get there but you actually keep your family, keep your faith and you’ll have a lot of fun in the process.
West: Yeah, exactly. We were talking about relationships before the call and that’s a whole other call that I think you talk about that’s um…
Chen: Well, put it this way…relationships is everything. Like one of the questions I ask my clients, West, is when you’re successful, who are you going to celebrate with? And most of them will say no one. Because, see, in their pursuit of financial freedom or success or whatever they’re chasing, they realize that, hang on, they actually haven’t got anyone in their life they can share this with. Now I’m sure family—like immediate family like mom and dad, husband or spouse—is great. But you know what? That’s not what it’s about. It’s about building a network and having your support team support you in each stage of the process. Because you know, like one of the things that when you play this game you realize that, you know, marketing can get you out there but the thing is, if you haven’t got the goods, more and more people will just know how bad you are, you know? Like, I mean…
West: That’s a great point. You don’t have the infrastructure to fulfill them.
Chen: No, you don’t. I mean, that’s one of the biggest problems at the moment with these internet marketers. They had one shot at success and now they’re teaching every one their system and they’re a one-man show so they go to all these seminars and they tell you what they’re going to give you, but when it comes to delivering them…not many of them are honoring it. And that’s one of the hardest things—is that we’re in this internet culture. I mean, the internet marketing industry feels a lot like the network marketing, MLM industry all those years ago. You know, you get all these people that come in in the gold rush, but the pros hang around. And that’s what I’ve discovered in this game: is that the pros will hang around. I mean, it’s easy for anyone these days to start a Clickbank check or Google check, you know. And a lot of people I talk to don’t trust a lot of these things anymore because they’ve been let down so much, people paying like thousands and thousands of dollars for a website that is literally free to set-up.
So in every industry, West, there’s always going to be sharks. There’s always going to be shark bait. But the key is to actually find the right people, the right mentors, the right resources or the right coaches that can actually help guide you along this path. I mean, for a lot of my clients, they would tell you, West, I actually—in some cases—saved them lot more money than I actually make them. But because of what I say, then they realize it’s not just the time and money but it’s also the energy that you lose to going through a great deal.
West: Yeah. Yeah. And the emotion and all that sort of stuff.
Chen: Yeah. So once you get the marketing sorted out, the third step is masterminding it. And that’s when you go to events. That’s when you start networking. That’s when you start building some relationship equity. Okay, now I learned very quickly that at seminars that the real content, the real value wasn’t at the front of the room. It was actually at the back of the room during breaks. And I’ve met so many of my best friends, and actually, also clients in the back of the room. And one of the things that made it very clear to me is that you’ve got to mastermind.
I think Napoleon Hill came up with the concept of masterminding. And the reason why masterminding works so well is that we generally want to help others. And we all have information and knowledge. And we’re all going on this sort of journey the same way but we’re just taking different paths. And masterminding allows us to walk on a common path. And what that means is that you know what? When you get like-minded people together and progressive people together… magic happens. I’ve seen it so many times.
I remember one of the first mastermind think tank groups we set up. I mean, just within the first half hour all the information was unbelievable. And I don’t think it’s ever been taught because at the end of the day, you know, the caliber of the people determine the environment. And it’s actually the environment that builds the people, not the personalities. Because one of the biggest problems in a mastermind environment is that a personality or an ego can get in the way and because people think they’re bigger than they really are. And that’s one of the things that masterminding—you know—you’ve got to put that ego aside and go there…it’s also actually networking: go there as a member and contribute.
West: Definitely. And I think one of the other things that you do, Chen, other than being a great masterminder and networker is you connect people. You see synergies in other people and in organizations that people own that they potentially don’t see themselves.
Chen: And that’s the beauty of having someone like outside to look at your situation. I call it ‘fresh eyes.’ I’ve heard this concept before, Dan Kennedy, when he talks about how a consultant brings fresh eyes. And one of the most important things about those…I’ve seen it many times where a client will tell you all their problems and then you go through the solution, they thought, ‘How come we didn’t think of that?’ Yeah, and that’s one of the beauties of a consultant: is they can actually see all these opportunities that you can’t see. Because when you’re so busy in it, in some cases you’re always putting fires out all the time that you actually don’t have time to build opportunities and to make opportunities happen. You can’t. And one of the things that I learnt over time and time, sometimes, just taking someone out of that environment and taking them and just for the day work on their business, is actually enough value on a time.
I think more and more people need to realize that you need to disconnect from your business. You need to disconnect from people. Because we just get consumed with all the clutter and all the scatter that we just don’t find the one or two things that if we just did and we did really, really well, we would actually achieve whatever we want to achieve. I call it ‘filtering system.’ You go to these seminars and stuff and you get all these JV opportunities and everyone wants to be your best friend as long as you’ve got a list. And you know, one of the things that I learned is that when I started getting more successful, I started getting more opportunities. And the more successful I got, I got more and more opportunities. I’m thinking like, ‘Where were all these opportunities when I had no money and no time?’
So one of the things that I do is that I set out a criteria. If someone presents me a business opportunity or gives me an idea, I go through this list, you know:
How much will I make with this opportunity?
How long is it going to take?
Who’s driving or who is responsible for this business?
What are we selling? What are we doing?
What budget have we allocated for it?
What are the risks involved.
But the most important question is what I call the ‘Opportunity Ratio’ test. Because remember, whenever you decide to do something, it means you’re not doing something else.
West: Yes. Opportunity cost.
Chen: Opportunity cost. So you’ve got to know your opportunity cost. And what you do is when you find out where your opportunity cost is, you might think, okay— it puts some reality into that—okay, that’s a part-time business.
And one of the things that I’ve learned lately is that it’s okay to be what’s called a ‘chicken’ entrepreneur. A chicken entrepreneur is someone who has their job and keeps their job, but on the side they do a little venture, a little business opportunity. And I actually, honestly West, I think in the emerging new economy, that’s actually one of the best models going out there because your job gives you your income security but you business opportunity allows you to learn, grow, network, socialize. But also, it will fuel and develop your mindset to be an entrepreneur.
And that’s one of the things, is that—you know—some people can do it straightaway and cut all ties or jump. But with other people, it needs to be gradual. It’s like when we came to buy a practice. And everyone told us, “Don’t do it. Don’t do it. You can’t buy a practice with no money down. You shouldn’t do it. It’ll be too stressful,” and they said it was out of gradient. Now, I didn’t understand what that meant back then but now that I’ve gone through it, I understand totally what they meant. It was literally like we jumped into the deep end. Now for some people, you know what, you thrash about you can survive; but for others they’ll just drown. And sometimes it’s better just to dip your foot in the pool, you know? You invest in one moneymaking system and you save for the worst, because at the end of the day, one of that works or not. It’s actually not on the system; it’s based on you, on what you do to the system.
West: And I’m assuming obviously, when people approach, when your clients talk to you, you take them to a similar process. I know it might be an elaborate process that you really take the time and the care to make sure that they make the right decisions as well when they’re talking with you.
Chen: Well, one of the things is that—and you might want to use this on your business, if you have a business out there—is that when someone approaches you it’s about positioning. It’s not about selling. Too many people are too keen to make the sale. My friend, Ari, says “it’s about building trust first. And never ever pitch the sales until you get permission.” And I love Ari’s game process because it makes so much sense.
And one of the things I find these days is that because there’s such a massive amount of marketing and messages out there, it’s so important that you build the relationship and trust. And that’s why the fourth step—I often talk about it—is mentoring: having someone in there in your life, in your ear as a platform of support but also a board where you can bounce ideas off, to actually guide you. See, that’s what mentors do…they guide you. I took up mentoring very early. Actually, my first mentor is in chiropractic. And I found that the experience gave me the confidence and security of knowing that you can venture as far as you want and they’ll be like your GPS; they’ll always put you back on track even if you took the wrong turn.
Now the problem is, is that some of the mentors and coaches, their whole business is based on your income. I’ve heard clients where they’re outgrowing their mentor but they have to stay in the group because the problem is the mentor didn’t want them to out grow them. Now the best coaches and mentors—I can tell you right now, West—they allow their students to outgrow them. There are too many coaches out there that live in scarcity. And they feel that “if my client goes to that seminar or that coaching program, they’ll drop me.”
In America, I found a lady that was in three coaching programs. One was 5,000; one was 10,000; and one was 30,000. Now she said that she’s in each of those different groups for different reasons. The 30,000 one, would you believe that she only is in that group for socializing, you know. The 10,000 dollar group is a business mastermind. And the 5,000 dollar group is an internet mastermind.
A lot of people have different types of coaches. And I think it’s important to know what type of coach do you want because there are just so many coaches out there. Like I predicted the coaching boom for Australia many years ago because I could see it in America. In America, coaching is a standard thing everyone got. But in Australia at that time, no one really got coached. I mean, yes, sure, there were a lot of life coaches but they were more like glorified counselors, you know. No one really had strategies in place. It was more an outlet to talk to. Whereas these days, the coaching industry has really matured and really evolved and…
West: Systemized as well. A lot more firm and structured.
Chen: Yeah. And it’s great people like Sharon Pearson out there—from the Coaching Institute—that have actually created structures for coaches. Because in the past, the coaches were like the Wild, Wild West—everyone just did what they wanted. There’s no accreditation. There’s no set agendas, set curriculum. And that’s why it’s important that people can put it together so that you get a bit of a gold standard. You know, some of the people use me for just ideas; others, it’s just having access to me but they’ll pay me to have access. Some of them pay for me to sit on their advisory board. For others, it’s actually coming up and implementing a full marketing program. I know in other mastermind groups they just want me to sit there during meetings with their members to give access to the feedback. But also, at high level masterminding sometimes it’s only a contact that they want. For example, in a speaker mastermind, a lot of people just want me to actually put their name in front of a promoter.
You know, you’ve got to find out what coach you have and why they’re in life. And I really believe that if you really apply yourself and you’re progressive, within one or two years you’ll outgrow your coach. So don’t get too attached to it. A coach is there for a reason. And it is a relationship. But also, if you get clear on what you want, you’ll work out very clearly how long a coach will be there. I mean, I remember a lot of my friends in chiropractic. She signed a two-year apprenticeship or an internship with this lady. And I said to her that she will be over it in six months because she’ll learn everything she needs to know from this lady in six months. And sure enough, when it was six months later she called me up and said, “Look, Chen, I think I have outgrown this lady.” And the only reason why I knew that was because she was doing a lot of personal development and this lady wasn’t. This lady did the typical one-year experience for twenty years.
Chen: Whereas my friend was making twenty mistakes, having twenty different experiences in a year.
West: Wow, that’s such a huge, huge distinction there. And I think a lot of the listeners can do that. Why don’t you tell us about the last step, Chen, which is the maven. I’m really interested to hear about it.
Chen: The last one is a maven. And a maven is pretty much about being the expert. And at the highest levels, it’s about being a personal brand. It’s like Oprah Winfrey, you know. Look, a lot of people at the moment feel sorry for Oprah because she’s stopping her show. But make no mistake, she is actually stopping her show is because she’s got her own network. Now I don’t know about you, West, but I’ll give up my TV show for my own network. And one thing that needs to be understood is that by becoming a maven, it’s not so much about being a guru anymore. I think the age of gurus is very overrated now because anyone these days can be a guru. It’s not hard. I mean, there are so many publishing opportunities out there at the moment where you can actually buy a chapter. You don’t even have to write your book these days. There are so many people who will offer you a service where you can be an instant bestselling author because of what other ten, fifteen, twenty other authors that contribute to the book.
Now the reality is, that’s great within a marketing point of view. And it’s great from a positioning point of view because it gives you credibility. But from a strategic point of view, a lot of times these books don’t give you enough room to tell your story. Like one of the best books around is Think and Grow Rich. And if you read Think and Grow Rich again, and read it from a sales point of view, you realize how brilliant it is because it takes you through all the emotion, it sets up a story. It’s not just a manual for life. It’s actually a great long piece sales copy. But not many people are aware of that.
Chen: So for me, a maven is about your ability to sell your self, it’s ability to speak, it’s ability to communicate, it’s ability to build a team, it’s leadership. There’s a whole lot of stuff.
West: Yeah. I’m just commenting and thinking that when you say personal branding, you know, you were telling me in a private chat the other day that you actually need to put together a strategy. But in order to achieve that, you can’t just hope it happens and sort of doodle around.
Chen: That’s right, West. And you know what the tracking or branding at the moment is? Social media has allowed a lot more people to be instant celebrities. I mean, Perez Hilton will be a no one with out the internet. Natalie Tran will be no one without YouTube. There are always people that made themselves big in the industry—and it’s like I said, it’s such a small niche but they’re being significant in it.
What I’ve learned in this game is that you can be a real big fish in a small pond. The key is to actually find that small group of people that you can be the trusted adviser. That’s why I think in the future years we’re all looking for our trusted advisers. No more gurus. No more experts. We want trusted advisers because there’s a lack of trust these days, because the internet marketing messages are very manipulative these days. I think that’s one of the reasons why the seminar industry is struggling at the moment, West, is because a lot of these people make these outrageous promises in the sales. And you read it and you attend it and you find, geez, none of that was covered. And because they built it up and they thought it was an opportunity for them to change their life, the reality hits them and thinks, hang on, ‘I actually didn’t come out with anything new. I didn’t come out with anything worth…’
West: But also in line with what you’re saying there, I noticed when I do go to a seminar—because like yourself, I like to network and I follow actually a lot of what you’re talking about—when a speaker makes the most sales, for example, they are the ones that build the most trust and have the most human side to their presentations.
Chen: In my advance speaking, consulting and coaching, I tell them that what every speaker sell from stage—it doesn’t matter what vehicle they sell or what product they sell—the essence of what they’re really selling is trust. So they’re selling trust wrapped around property. They’re selling trust wrapped around trading or trust around internet. Now what you’re selling is actually trust. And that’s why the best speakers are the ones that keep the audience engaged.
Chen: They’re the ones that make the most sales. That’s why you can go to an event and think it’s the best event because you’re totally engaged in the process whereas if you go to another event and there’s another guy, and out of his hour’s talk he’s spending forty minuets pitching his product and services and you’re thinking, ‘Hang on, that was just one big giant infomercial and I didn’t learn a thing.’
Now this is one of the biggest problems: is that there’s a structure to crafting your presentation. I mean I’ve been responsible for many million dollar pitches. I’ve been able to craft offers and also show some of these speakers how to set up their presentation.
I can tell you now, West, I’m not a speaker. And you know that; I’m not a speaker. But the thing is that once you work with these guys a long time, you can actually see commonalities for success. And when you take these elements out and you apply them to someone new and they get results, you’re thinking now, ‘Hang on. This is becoming more of a science.’ And I think that’s one of the things with why a lot of speakers get drawn to me and my work and what I do is because they see that, ‘hang on, he’s actually teaching us the business and marketing side of our business, which we’ve never looked at. We’ve been going to all those speaking courses that tell us how to hold our hands and tell us how to make our facial expressions, tell us what to wear,’ you know. ‘Whereas this guy is telling us, hang on, “No. This is how you leverage your product and service.”’
I remember one lady, for example, she went from just selling her book, a $20 book at the back of the room, to selling a $500 package, to selling a $2,000 license and opportunity at the back of the room. I remember a fitness guy who wanted to get on the big stage and I told him, “Mate, if you want to get on the big stage you need to do at least fifty grand.” Now at this point in his life, he was selling out a $147 product. And he was averaging $10,000-$14,000 of sales every time he spoke, which is still good; but not good enough for the high levels. So I said to him, “Mate, if you want to get to those high levels you’ve got to sell the opportunity to make money.” So he turned his package, his $147 package, into a license and opportunity where a health professional could buy his kit, duplicate it as many times as they want, and actually keep all the profits. Now to make it even more sexy: ‘You can buy the rights, we’ll give you a license to print it and we’ll also fulfill and ship the first fourteen packs. So therefore, you’re not literally paying any money for your license.’
West: Wow. That’s so cool.
Chen: Now you can tell a pitch is going well, West, when people start walking to the back of the room and they don’t know the price. That’s one of the things that I boast. I watch three people walk to the back of the room and they were signing up. And the people at the back of the room said, “Uh, can you just hold on? We don’t know the price yet.” And that’s one of the things that’s really interesting, West.
Now long story short: I think he did about $64,000 during that presentation.
West: That’s awesome.
Chen: Now he got noticed. Other promoters started noticing him as well. Other opportunities came up. And this is the thing West, is that a lot of us, with the right advise or right strategy, it can actually take us to a whole new level. See, I know that about being a maven. I’ve sort of become one by default, I think. It’s sort of a process that’s happened. Like I’ve never actually seen myself as an expert but by just being in the seminar environment and having people ask you questions. I mean, I remember a guy approach me in a seminar—I do one of those off-the-cuff comments that didn’t mean anything—but I said to him, “Look, mate. If you want extra income why don’t you try your copywriting services on Rentacoder?” You know, six months later, I get this email from this same guy and he said, “Chen, thank you so much. Thanks for your advice. I’m making $2,000 a month on Rentacoder now with my copywriting.” He even had the opportunity to fly over to America and be mentored by a really well-known copywriter as well from the funds that he was able to generate from Rentacoder.
West: Awesome. I know you could just pump out story after story after story of how you’ve helped people. And I think in future calls—which I’d like to do with you—we’ll definitely cover a lot of those topics.
So in closing, I want to now give you the opportunity to tell people how you can add value to them. And one thing I want to mention here is your Conversations with Chen on Facebook. And I know that’s available for people to read. So that’s the first thing I’d recommend people do—with your permission of course—is to join that group.
And secondly, if they’re looking at learning more about you, Chen, and figuring out how they could benefit from your wisdom and guidance, what would you say?
Chen: Well West, you know, you’re just spot on. I’m putting my time and energy and heart into that Conversations with Chen because I’m very committed at giving away my best stuff. But one of the things that I’ve learned in this whole process is that by giving away your best stuff, you attract the people you want in your life. Facebook is a digital community. And basically, you get some of the best people in that environment. And it blows me away. I’ve actually started collecting the feedback. I used to—when anyone sent me feedback—I used to just delete it. But now I’ve started collecting them up because I was getting so many at one stage that it’s hard to keep up with that. But the reality is, is that I found that people want authenticity. People don’t want to be shocked. People don’t want to make mistakes again. They want an environment where they know it’s safe.
West: And they don’t want to be sold to.
Chen: And they don’t want to be sold to. And this is the thing that I’ve learned, West. Because I’ve looked at, you know, having spent all that money in this self-help, personal development game, a lot of people ask me to be speaking and offer coaching and stuff and I’ve never done that because in the past I’ve always had six-figure opportunities with speakers, coaches and consultants. I’ve never needed to work with people starting out.
But times have changed, West. This whole economy has really dented a lot of people’s dreams and aspirations. Like what I’m doing with you today, West, I mean this whole thing started because I mean, you know, if we tell them a little bit about our relationship, I always kick you up the bum. And I’ve always believed in you and it’s been over a year now that we’ve kept in touch. And I’ve also given you opportunities to go to seminars. I introduced you to some very high profile people as well.
Chen: And part of the reason why I’m doing that this year is to allow you to monetize all that information you have. Remember how we spoke about your strength as an interviewer? Now imagine if you’re a speaker or someone who wants to get your brain down on paper, if someone like you can draw it out, it will fast-track what you’re trying to achieve. And I think that’s what I’m trying to do. I’ve learned that I’m at a stage in my career, in my life now where—I mean for examp le, I’ve taken on a new project that I know will not derive any income for three years. Now it’s great to be in a position to do that but I also am aware of the fact that there’s a lot of other people out there that just actually want access to me. And so I’m working on some programs and some opportunities. So if you’re not on Facebook, I highly recommend you get a Facebook and sign up to the Conversations with Chen. If you’re not on there, the messages will actually be reposted on my blog, which is www.chentay.com.
Now one of the things that I’ve learned in that whole process is that I want to be different. I’ve looked at the coaching game. I’ve looked at the marketing game. I’ve stayed away from it this year because I wanted to keep it simple but also to keep it clear on what I’m offering. And basically, I want to be a difference. I want to make a difference. And I don’t want to be just another coach out there. the thing that I discovered, where I’m different from a lot of the other coaches and a lot of the other businesses out there is the fact that I provide that platform for support, I can help clients engineer their environment for them to succeed. And also, I can introduce you to my network of successful people for opportunities.
And what I found in the past, when I was beta testing this in the last year, is that any client that paid upfront and was honoring their commitments got results. Whereas two clients who agreed to go on the program and was always out of financial exchange and never paid their bills, they got no results. So West, it’s the universal law of fair exchange. So what I’m trying to do now is create this program where there’s a great opportunity for people that want to accelerate what they’re doing. And to be honest with you, this program’s pretty much suited to speakers, coaches, and seminar promoters or people that want to get into the seminar game, whether you want to have that as a separate business to your business—I often call that a business within the business—because at this day and age, more and more people are learning how to take the information from their head and digitizing it.
Now a lot of people had said to me, “Yeah, but Chen, aren’t you then selling time for dollars? And my answer to that is that, “You know what? If you’re getting paid enough for what you want, there’s nothing wrong with earning a high amount per hour.”
Chen: I think people are bought over the fact that they’re told about this passive income and passive revenue and stuff like that. But they forget that it doesn’t matter what you do in life, if it’s worth doing, it’s worth working for.
You know mate, I love it when I see clients like yourself and Bret and Pete Godfrey and a lot of these guys, make big breakthroughs. No amount of money will hide my joy at seeing those results. One of the things is also…I guess the most valuable part of what I do is being an unreasonable friend that kicks you up the butt when you need it. Because you know, West, I can trumpet and support you but the thing is I’m sure you’ve got other friends in your life that will comfort you when you’re down full in your face. I don’t want to be one of those people. I want to be the unreasonable friend that keeps pushing you because my job, my goal is to unlock that greatness from with you. Because I think that there’s nothing worse than having all the skills and all the talents and being over-educated underachiever.
West: Absolutely. I have to second everything there that Chen said, not only about his clients but also in his interactions with my self. So you can consider this a kind of a mini testimonial in the interactions that we’ve had. You’ve pushed me and helped me have massive breakthroughs and definitely kicked my ass on a regular basis, which I don’t enjoy at the time but look back and thank you for.
Chen: Well, one of the reasons why I do that, mate, is that I see in this game time and time again—and it’s probably good to finish up on this—is that too many people keep chasing these bright, shiny objects, these magic pills and stuff like that because it distracts them from building a real business. And the reality is business is very simple. People complicate it because we always have to believe that’s somewhere out there someone’s doing it easier, better, faster. Because the reality is, it doesn’t matter what they’re doing—it’s actually what this whole process is about, it’s who we’re becoming. I mean, the late Jim Rohn always had this one quote that I live by: “Don’t wish things be easier, wish it were better.” And I live by that, you know. And I’m very grateful for learning that lesson from him because I’ve never ever wished things were easier. I’ve always tried to be better because when you get better, when you reach the top of your game, new opportunities will present.
I remember when I was in America, Ali Brown said a line that just resonated with me. And she said, “What if you grew and your business didn’t? Or what if your business grew and you didn’t?” I mean, I’ve seen so many speakers and promoters and coaches that their businesses are outgrowing them and they don’t know how to put a team in place, they don’t know how to let go, they’re still running that one-man shop when in fact they could be a multi-million dollar company. But you know…if they choose not to, that’s fine. But it’s like trying to accelerate by having the foot on the brake at the same time. There’s a lot happening but you’re not getting anywhere. That’s one of the things that I think is important to let the members know: that if you have that support—and you know this, West. I mean, I’ve been a real big fan, a real big advocate of yours in all things…
West: Thank you.
Chen: Because the thing is, at this day and age, in this economy, in this emerging new economy, talent is getting harder and harder to find because most people aren’t prepared to do the work. Most people aren’t prepared to do that. They fall for these illusions of the 4-Hour Work Week and all this other stuff that promotes push-button wealth. And the reality is, is that you actually have to do stuff. The thing is, if you do stuff—I’m telling you now—it accumulates and it sets you up for the next opportunity. You don’t need to spend a lot of money. But if you can harness your money into one direction… or one of the rules that I put in place that changed my life is that ‘one guru a year.’
I’m in the process now actually of finding out who that guru is because each year that I’ve gotten this rule, I found that it’s so much easier to study one person and study them well and follow them and do everything they say than it is trying to do ten programs all at once.
West: Very insightful.
Chen: I mean, I’m sure you know this too because I’m sure you’re in a lot of opt-in list and you get a lot of offers and opportunities. And one of the things is that, what I’ve done is that I’ve learned that my programs are going to be more experiential. Now I want to take you to an event and show you behind-the-scenes.
West: Yes. And I think you’ve done one recently. Tell us about that group.
Chen: Well, yeah. I took a group over to America and we had a road trip. So we went there and not only do they get good information but the day afterwards we sat down and debriefed. And also, seven people wanted to make certain contacts and I was able to align people up with different contacts. But just the opportunities to find new marketing, new models over there: is priceless. Now I know that next year—you know, I had a lot of people ask me what events are next—and what I learned is that people want more experiences…because that’s what it’s about. No one ever, on their death bed complains that they didn’t work enough or they wish they did over time. I mean, we all talk about our experiences. And I think that’s where this shift that’s happening in the marketplace is that, you know, from what I’m seeing from my point of view is that women are evolving—we’re in trouble, mate—because they’re finding their voice, they’re finding their power. They’ve got choices now. And it’s not going to be long before they realize they’re actually going to need us but the reality is that if you provide a support mechanism, let the women grow. I spoke to a guy the other day, I said, “Mate, let your wife grow. Because if she grows and keeps supporting your family, you can just stay home, look after the kids and play golf. What more do you want?”
West: Well, on that note Chen… you’ve just got so much wisdom and wealth so you could probably talk—literally—for weeks on end and lift up on the amount of value that you’re adding. But we’re going to have to capture those in future calls.
So for those listening, you can find about Chen by visiting ChenTay.com or going on Facebook and looking up Conversations with Chen as a group. It’s one of the best things you’ll ever do, better than any list that I’ve ever been on. And he doesn’t sell you any stuff. It’s just pure authentic observations of life, business, education and experiences.
And on that note, I think we’ve been very sport today to have Chen for over an hour to chat with us and share with us. So Chen, thank you for your time.
Chen: Thank you, West!
Oct 21 2010
Rank #2: [Interview] Tracy Repchuk: Millionaire Advice For Internet Newbies
Internet Marketer, Entrepreneur, Speaker, Strategist and Business Makeover Consultant
Tracy brought a wealth of experience from her businesses to our call, and she didn’t disappoint. One of her skills is to teach newbies starting online how to find their ‘sweet spot’ and start making money fast. Get a generous taste of Tracy’s philosophies on generating a successful business in this call!
In this interview you will discover:
– The mindset keys to a successful internet business, especially if you are a complete newbie
– Tracy’s favourite mindset shifting strategies
– What is formula-based success and how to directly apply to your business
– Tracy’s step by step criteria on deciding what activities you should be spending your time on
– How to use the internet to save time and automate processes
– What are the characteristics of her most successful clients
– What is the Million Dollar Formula
– How to handle information overload
Click Play To Hear Streaming:
Click To Read Full Transcript West Interviews Tracy Repchuk
West: West Loh
Tracy: Tracy Repchuk
West: Folks, I want to welcome you to the call this morning—or evening—depending on where you are in the world. Today we’ve got Tracy Repchuk. Firstly, welcome Tracy!
Tracy: Thank you very much, West.
West: Now Tracy comes with a whole heap of accolades and I’ll let her run through some of them but just briefly, she’s spoken at the World Internet Mega Summit, she’s hung out with the best in the business. She’s recently a best-selling author, I believe, of a really good ebook or book—I’m not sure whether it’s published yet—but I’ll let her tell you about it later as well. She’s running four different companies at the moment and she’s played on the internet for over a decade.
So I’m hoping that she’s going to share a ton of wisdom with us on the call today. And welcome formally, Tracy Repchuk.
Tracy: Thank you very much.
West: So tell us a bit about how you sort of came to be where you are at the moment, Tracy. I’m sure you weren’t always a guru. And you worked your way up through steady, hard work in a journey. So would you give us a brief rundown on where you come from?
Tracy: Yeah, sure. Thanks. So I started off as an entrepreneur in 1985 when I graduated at the age of 19. So I started right away. I’ve never been employed. So I guess that means I’m completely unemployable. So the bottom line is, whatever I do has to feed me and my family. So that’s where it started. So it has been a very long journey. And during that time, I was very successful. I was kind of Canadian Entrepreneur of the Year nominee, Chamber of Commerce Businesswoman of the Year nominee, my products had won awards for development. I was one of the youngest Provincial Board of Governor elects for Certified Management Accountants which is a designation that I hold. And I’ve appeared on TV shows such as Report on Business Television, CTV News, radios, newspapers and magazines.
So that took me all the way to about—I guess it was September of 2006—and then I went to a very remarkable show called the World Internet Summit. Because what had started happening is I’ve gone through almost twenty four years as a successful entrepreneur and the workload never decreased. I couldn’t figure out a way to break away from the service to time exchange. And when internet marketing came across my desk, I thought, ‘Wow, what’s this? They’re talking about forms of automating their income. I’m interested.’ So I went to my first show in Las Vegas, flew down there…
West: As a participant?
Tracy: As a total participant. A newbie, as we call it.
West: Did you get to meet like the gurus who were gurus back then at the time just as a participant or did you sort of sit back and observe?
Tracy: I did. I actually introduced myself to Brett McFall. I introduced myself to Tom Hua. Mark Widawer was there. Sterling Valentine, Michael Cheney, Matt Bacak, and I believe Don Childers. And so there was a few that were…
West: That’s like the who’s who of internet marketing, isn’t it?
Tracy: Yeah! So it’s very cool. And of course, I didn’t know any of these guys. But I could tell, based on their presentations that they knew what they were talking about. And so from that moment I knew I wanted to get into internet marketing. And I bought myself mentors right off the bat. I invested in a couple while I was there, came home, and of course, to anybody who’s been to one of those how to explain what they have just done, made a very heavy investment and I said, “I swear that I am going to pay this money back. I will recoup this money that I’ve spent,” because I could also recognize from spending four days entrenched in internet marketing education, that this was an enormously vast field that would instantly overwhelm me if I attempted to take it upon myself. And given the fact that my schedule was already full with my own companies and three kids, I knew I had to take a route that was going to fast track me. And that, of course, was the mentor route.
So I invested in mentors, went back home. At that moment, actually, I didn’t start because I said we’re moving. We lived in Canada at that time. I said, “We’re moving down the US.” So if we’re going to make a fly of this, and I wanted to make a very big impression in internet marketing very fast, I said, “I need to be in the US,” because the amount of traveling I foresaw that was going to be involved, given the schedules, everyone else seemed to be talking about what they were doing. So we did; we moved. And I spent the next five months packing, moving, shifting countries, going from Canada to US. And despite the proximity of that…
West: That’s commitment, Tracy.
Tracy: It was not an easy task, actually. It isn’t just kind of ‘Hi, welcome, come on in, you’re Canadian.’ It was actually a very arduous task. It took many, many months to be able to feel comfortable staying here until we got some sort of legal claim to be able to stay longer than, you know, kind of a visitor allotment. And so finally, after five months—it was about January 1st, it was technically December 26, but January 1st—I said, “I’m staring. And I’m starting now.”
And so January 1st, 2007 was the very first moment that I said I was an internet marketer and I was about to stake my claim in this industry.
West: Now that’s just over a year ago, isn’t it? That’s not that long ago at all.
Tracy: It is technically—exactly—just over a year ago. And it’s funny, I was interviewed the other day by Brett McFall and he said, “Give me a one year snapshot.” And when I gave him a one year snapshot, I almost overwhelmed myself. I said, “Good Lord. Is that really what I’ve done?” Because I sometimes sit here and think, ‘Faster. You need to go faster.’ Of course when I explained to Brett how much I’d done in a year, he was impressed and so that lets me relax a little bit once in a while, that says, “You know what? You’re doing okay. You’re just fine.”
West: Definitely. But it’s that mindset of constant urgency and always wanting things faster, I guess, that has got you there in the first place.
Tracy: That’s exactly it. So that’s kind of the birthday when I set foot into internet marketing.
And then, of course, my internet marketing snapshot in a very fast time, as you say. I have spoken with almost every master and internet marketing guru. And I’m now starting to be termed with them and called that and it’s been a hilarious journey from that perspective, in that the people I admired a very short time ago, they’re phoning me and interviewing me and talking to me as if I’m a peer. And I’m like ‘this is just surreal.’
West: That’s awesome.
Tracy: And within that same period of time, I did become an international platform speaker, a coach, mentor, motivator, best-selling author of the book 31 Days to Millionaire Marketing Miracles, opened up multiple coaching programs. I’ve had tons of students go through all of those. Five of my own products are out there. I do free blog talk radio shows. I have four continuity programs, 1 MLM and 97 operating websites. And then I’d won the World Internet Mega Summit last year. And so that is really what catapulted me fast, was appearing on stage in Singapore—all expenses paid—and they profiled me as a success story. And that was really the moment of definition.
West: Wow. And I can’t wait to really get into details of how you do all that stuff later on, Tracy. But if you’re stuck in an elevator with someone for like twenty seconds and they say, “So what do you do?” What do you actually say?
Tracy: Actually, I say that I’m an international platform speaker and motivator, a best-selling author and I coach and mentor other people so that they can achieve their financial freedom.
West: Very nice. So you’ve got it down to a nice little spiel.
Tracy: I didn’t know I did.
West: Okay. All right. There it is. And I’m sure your card reflects that as well because people, I’m sure, when they speak to you they like to know more.
But okay, we’ll definitely get into the nitty-gritty of that later on in the call but before we do, I always like to—at the start of my calls—talk about mindset and talk about how people think or how their thinking has changed over the course of their journey. And I know that when you dive into a new project now, it’s obviously as daunting as when you first dived into it—say, January last year when you sort of dove into it—so most people, when they come to a new project or looking at starting something new there’s a whole heap of blockages or self-talk that goes through their own mind. First, I wanted to ask you if you get those. And second, I want to ask you how you deal with them or how you eliminate it.
Daryl and Andrew Grant liked to talk about removing the blockages altogether through a lot of their techniques. So let’s start with do you get self-doubt when something new comes up, you want to dive into it, all these things come into your head?
Tracy: Right. Okay, well there’s kind of two pieces to that. So first off, now I don’t get self-doubt before I go into projects. And that’s one skill that I hold very dear to me and it gives me the ability to trust my intuition. And it has become a cornerstone, actually, in my quantum leap thinking approach to life. However, it was not always that way. So luckily, when I hit internet marketing that was the point that I was at. Because in my past, I definitely have now spent many years building that skill, learning to trust myself, clearing myself of garbage thoughts, negative self-talk and any other barriers that I encountered. And if I immediately found and immediately took responsibility for the fact that somehow I put it there, it would eliminate excuses. And then I’d go straight to solutions.
So currently, I don’t experience that. However, I’m very well aware of it. And I did spend probably close to twelve years working that specific mindset. And it is not something that I currently still don’t work at. I actually probably spend 8-12 hours every single week on that one skill set alone. And that’s not me sitting there kind of going, “Ooh, how’s my intuition today?” It is actually really more actively clearing the garbage from my own mindset so that I don’t encounter barriers that I’ve put in my way that I don’t longer even see.
West: Do you help some of your coaching clients do that as well? Because I know that when Andrew works with people, he likes to make sure that they sort of got a clean slate before they come in and work with him on a joint venture basis.
Tracy: Yeah. Historically, I was actually going straight into…I mean I would touch on it. We would do one of the classes—it wouldn’t be mindset, per se. Let’s say I had a ten week coaching class or something. We would touch on mindset. However, this year—particularly as I go on the circuit—I have a brand new program that’s going to be four formulas. And two of them of the four now involve mindset: Quantum Leap Millionaire Mindset; and Successful and Shatter Barriers. So that is because I’ve just found over the last year, of course working with clients, that their mindset is not ready to take in the information that you need in order to move forward and make money just because of the history that they’re bringing with them. And of course, at that point, if I ignore or continue to ignore other people’s barriers and mindset, what happens there is they will fail. And then I’m attached to that failure because they can only push so hard and only work so hard. In the physical world when you’re fighting your mindset eighty percent of the time and you’re fighting matter, energy, space and time of the physical universe (the other twenty percent), you’re pretty well going to get bowled over.
West: I couldn’t agree more. And especially people who, like say, computer literate or internet literate and they’re wanting to jump online and they have all these conditioning from their schooling and parents. And that’s really tough to undo. I mean we certainly share some of them in our Money Mindset program, but I was wondering if you could or if you’re able to share maybe one or two of your favorite strategies that you use with people to help them identify and maybe eliminate.
Tracy: First I go through a little bit of self-talk identification.
West: So just get them to write down what’s coming into their head?
Tracy: Yup. That’s right. And for them to also have a little discussion with me, depending on the coaching program they’re on, of course. But if it’s one where they get to discuss things with me, I’ll actually listen to what they’re saying or I read their emails and go back and forth. And I can detect, of course, negative self-talk instantly and I will highlight and return it and say, “Remove this. Remove this line from your thing. I do not want to see it in another email that comes to me,” and that type of thing.
And so once you make somebody aware, in general, of something that they’re saying because it’s completely automatic to them—it’s under their third level of consciousness—and so as soon as you make them aware of it, at that point they start to…when they say it, they go, “Oh my god, there’s that stupid sentence again. Why do I keep saying that?”
And so step one is showing them that they have it and identifying some of the triggers that they’re initiating within themselves. You know, it’s up to them how far they take their own clearing. And then I use quantum leap thinking which is really just a series of techniques, really, to recognize and to apply kind of some straightforward—kind of like a straight-wire thinking—instead of going A to J to K to get to B. Or I try to undercut some stuff and just get them from A to B and have them ignore a lot of the self-talk until they can go through some sort of program that completely eliminates all of that.
For me, my own personal experience has been with a book called Dianetics. That’s how I’ve done all of my cleaning up—if you’ll call it that. But they’re free to choose whatever route. I just keep them as straight as I can and try to get some undercutting strategies in there to get them through the program.
West: So you quantum leap, that basically is like a toolbox of strategies and various techniques that they can use to help them through that process? Or is it a set program?
Tracy: Well actually, in a way, it is a set program in that I have twelve strategies that we work through. However, it’s not a science. It’s simply commonsense strategies that I use with people. And as I have used them, they have caused me to get results far faster than not using them. And so that is kind of why I teach them.
West: And I think it’s super important as well that—I’m sure you do this with you coaching clients, but you actually sell this is a standalone product, correct? Or…?
Tracy: It’s going to be. Yeah, actually that’s true. I’ve spent the last year actually revising, testing, and training on it. And so it is about to roll out as part of a full program this year. And then at some point, I will pull it out separately just so people can have what I’ll call quick strategies to clear their mind and to move forward faster.
West: For sure. And I’m sure you’ll put together some sort of support group, Tracy, like an online forum because I think…one of the things that I really, really am an advocate of is a lot of people, when they read new strategies or hear about new techniques, they sort of read it and brush over it but they don’t actually hold themselves accountable to it or actually commit and do it and stay disciplined to do it. I know some of the techniques that we teach our clients. It takes a period of days or it might take a week of doing something small every day. And if you skip a day or skip two days or you miss or decided to brush over an exercise, it loses its effect.
Tracy: That’s exactly right. And again, you know what? It’s that way for everything you learn. If you try to skip steps, you’re going to encounter barriers right away. And you’ll say, “Where did that come from?” Well because you were trying to skip steps. It’s just in life, generally, there’s a sequence of learning…
West: There’s a formula.
Tracy: There is a formula. And it’s funny because my presentation this year is called “Formula Based Success.” And because if you follow a formula, that’s how you’re going to get there. And then you can add your creative thinking and your quantum leaping and all of your other unique selling propositions on top of that because the success is already built in. You’re just adding a whole other dimension to a successful strategy as opposed to constantly creating or trying to come up with solutions all from scratch, which of course is draining you mentally, physically, and you’re not getting the results you wanted because it’s too big of a ramp to run by yourself.
West: That’s great. Very true. Couldn’t agree more. I really enjoyed talking to you Tracy, about the mindset, and I believe we could probably talk hours about it as well and it’s been awesome to get some of your insights on that. But I want to shift now slightly to your internet business because I know a lot of the people listening to this call are interested in internet marketing. And one of the things that has impressed me about yourself is how you managed to be so well-known, like, so fast. I mean, usually you think of it as a linear-type process. But in your case, I believe, it’s kind of exponential.
So there are a couple of questions I have about that. And the first one is: in terms of like managing your time—because I do a lot of work on the internet as well and you sit down and you go through the list of things you have to do and usually it’s never ending and there’s hundreds and thousands of things that you have to do—how do you decide what’s important and what’s not? And do you have a team that you use? Talk us through that process, Tracy. How do you decide and what’s going to get you the best results in the shortest time.
Tracy: So I’ll address many things in this answer then and I’ll break it up in little bits. So kind of backtracking to if we talk about how did I get success so quickly online…because one of the points I want to make sure everybody understand, is that was planned. So I researched my niche thoroughly because if you don’t know what people need and there aren’t keyword strategies you can wrap around a product or guessing, that can be very costly. So I teach this heavily again in my programs. So that’s a couple of steps there.
Then I find a formula. I search for the formula. I search for the most successful person I can in that field and then I test it. And then I rework it, make it better, add creativity and unique selling propositions. And then I kind of retrain others on it.
And the other piece for how I got where I am so quickly is the relationship building. This industry and the world is really about giving, helping, and sharing. And when you do those things you’ll end up with what you need back.
And so taking to that point then where you start to say, “Okay, what’s important and what’s not important?” At that point, what I did for myself was I created a tagline—and again, this is a marketing term that I took—I noticed all the best companies out there of course had what they were calling a ‘tagline.’ And for example, like Southwest Airline, it was: low cost flying.
West: Like a USP right?
Tracy: Exactly. Your USP. What’s your USP?
West: For you as a person, is that what you mean or…?
Tracy: Yeah. So I did that. I analyzed taglines out there and then I started to realize what people were doing with these and how it created such focus. And so something that is like one sentence for where you are going and what you want or your core focus can really keep you determining whether it’s important or not. Again, back to the Southwest, it was flitting that I read it that sticks with me because it’s such a simple analogy. And they had a staff meeting and somebody said, “You know, we should serve chicken salad as an option and people can buy it on the flights.” And so the question on the president was does this match our USP, which is low cost flying? And it didn’t because, you know, if you add this or you stock or you have spoilage or waste or flight stewards are spending time doling and collecting ad mucking…it just created an absolute nightmare logistically for them.
West: It made their decisions very easy then, didn’t it?
Tracy: Exactly. So if mine, for example, is like I want to be one of the most powerful and financially successful female speakers for internet marketing motivation, and then for me this includes the fact that I must affect positive change in other people’s lives so that they too can achieve what they have. And so if I’m about to analyze anything, if it does not fit into this, then I’m not going to do it. So that’s how I determine what’s important. And no matter how lucrative that opportunity—because I’ve had multimillion dollar opportunities come across my desk and I’ve had to walk away from them because they didn’t fit into this. And so you’ve just got to go with that. And so you have to skip it because that’s an opportunity for somebody else.
And then if we go back to the ‘how do I get done so much in so little time,’ again for me, this has been what I’ve been working on a little bit this year and it’s the Quantum Leap Thinking, Quantum Leap Goals, Quantum Leap Connections…and it’s a system that I haven’t perfected yet but I’ve been teaching and testing it in pieces. But in general, if I keep applying the things that I learned, I will keep moving forward.
West: That’s very powerful. And just getting back to what you were saying before about like Mike Filsaime, I was watching one of his seminars recently and he spoke about the hedgehog concept which was in a book called Good to Great by Jim Collins. And that just really embodies what you were talking about, developing a very, very specialized USP and not wavering from that. And that’s powerful.
Tracy: It was the hedgehog concept that I had actually learned as well from Mike Filsaime in his 7 Figure cd series.
West: 7 Figure Code?
Tracy: Yeah, 7 Figure Code. That was the very first time I’ve been exposed to that concept. I realized that…
West: It’s powerful, isn’t it?
Tracy: …absolute, um, what do they call it? The fox?
Tracy: And yeah, I was sniffing and checking and I’ll bind it, bind not, bind this, bind that, not finish it, you know. So there was thousands of unopen cycles. And so when I realized that I needed to be the hedgehog, that’s where I got tight with my tagline and started to really pull things into a tighter core focus. And that, of course, accelerated me at that point as well. As I said, if I continue to learn I will definitely keep moving forward because other people know far more than I do. And of course by taking that knowledge in and applying it to my current situation or current status, I am definitely can move forward.
West: And that also helps with you in terms of running your team. Like I’m assuming you’re not like a one person show. I mean most people have at least some form of support. I’m not sure you do your own tech stuff unless you never sleep, Tracy. But it helps in terms of getting your team on track too, correct?
Tracy: Yeah. Well my team, actually, consists of me and my husband. He’s worked side by side with me for the last sixteen years. He joined my company in 1992. And it has been a joy and a pleasure to spend 24/7 with him. And so he is the cornerstone of the second I need something, I will say, “Can you take a look at this? Do this,” you know. And so, yeah, he’s definitely a huge support system for me.
West: Because I know Mike, for example, he has twenty coders in Romania that do a whole bunch of stuff for him and he’s got a team on site, I think he’s got 15 20 people in his actual office. So you’re just working with your husband?
Tracy: Yeah. Actually, we used to be that way when I had my software company. We were up to fifteen programmers at one point as well. And I realized at that moment that I didn’t want to be a manager and I didn’t want to be tied to that big an animal, that big of a corporate beast—if you want to call it that. So really, that’s where I again started to shift everything to the point of…
West: Cutting back?
Tracy: Exactly. Because, you know, three kids and lots and bigger things to do in life. So it really became a need for more automation. And this is what internet marketing provided for me from that perspective, is also don’t take on projects that I can’t figure out a way to automate. And so that’s really how we’re able to do what we do with two people.
West: Yeah. That makes what you’ve done all the more admirable, Tracy. I mean, you look at all the guys who you mentioned before and I’m almost certain that most of them have a bunch of people helping them out, working for them. But for you to actually have done what you done with just you and your husband, that’s even more impressive. And I’m with you in the way that you look at automated opportunities. And I think the internet can have that for you if you’re not smart about how you approach your opportunities, like you can be putting out fire after fire after fire or you can be smart about what you choose before you get into the project, know that every part of the process can be automated and that’s something that you jump on.
Tracy: Absolutely. Yes. I can’t figure out the formula and if I can’t figure out a way to automate it, it’s not in my current scope.
West: Hmmm, powerful. So I guess you get to now spend your time doing things you love, which is speaking, producing products, coaching people and everything. All the tech stuff is all pretty much done by software and your husband. But is that how you spend your time mostly these days—just doing stuff like people stuff, stuff that requires your valuable input from you?
Tracy: Yup. That’s exactly it. The majority of my time is spent, like as you say, if I’m not on the road at a speaking engagement or if I’m not teaching clients what I’m doing—I keep them current as far as that’s concerned—I keep them current on what I do. I am always tightening the process of everything we have, figuring out how to improve statistics through logistics of everything that we have. And then if I’m not doing that, I’m writing. I can literally sit around and write probably ten, fifteen books a year if I didn’t have to market them. But marketing is the biggest part…
West: But you love both, that’s the good thing, right?
Tracy: I do love both. Yes, I do love both for sure. So it’s one of those relationships. You know, some days I would love to just sit and crank out a book in 14 days. And then of course, but I have to spilt my time between getting that book out and marketing it at the same time or else it’ll release to a very quiet audience. Those are definitely where I spend the majority of my time: is anything that is improving what I’m working on, anything that is advancing what I’m working on or anything that will help to ensure that my client base and people that are connected with me and subscribers—anybody that kind of latches themselves on to me for whatever purpose—that I am feeding them the information that is current, the thing you need to get forward towards where they want to be as well.
West: Definitely. And that, again, is really confirming your hedgehog concept. So you’re only focusing on things that get you closer to that goal, which is awesome. And it also sounds to me like you’re really, really big on testing, measuring, tweaking and fine-tuning the current processes that you’re good at so that you become even better and better at it. And I think that would be definitely a key to one of your successes.
Tracy: It is, actually. And that’s kind of one of the quantum leap strategies that you can’t ignore. You can’t ignore matrix, you can’t ignore statistics. My desire for that probably comes from the fact that my background is in accounting and my background is in computer programming.
West: So you love numbers.
Tracy: Yeah. Well, my favorite numbers are the ones going to the bank account. But you have to work the other numbers before you can just sit back and depend on that one.
West: Absolutely. Wow. You were talking about your clients before, Tracy, and I know you do a bit of coaching. I wanted to ask you really quickly: what are some of the characteristics that you have noticed that have made your most successful clients? And I think, if we can sort of identify some similarities there, it’d be really helpful for the listeners, just to see if they’ve got what it takes and maybe if they need to work on some areas.
Tracy: Absolutely. I can tell quite quickly what a client’s going to be like as far as their success factor is concerned. They come to me with their own skills, obviously. They come with their own desires. And I can teach somebody quickly how to do something as far as the practical is concerned, but if we’re constantly fighting their own mindset, that is the hardest part. So the first thing, if they’re open to new data and they do not think that they know it all and they follow the path and the formula, you can teach them without questioning it—because what I do to someone I have paid for as well because they wouldn’t be teaching stuff that didn’t work, they’re kind of the brand, you know, their personal branding of their product. And again, it goes kind of the key to selecting a mentor—do they do what they teach and if they teach public speaking, are they still doing that, things of that nature—that will tell you where they make their money ‘cause I make my money doing my teach, you know, like I’ve been doing it. The teaching is actually just another income stream. So they have to be open to new data and they have to be willing to trust me enough that what I’m about to tell them is going to work.
So the second thing: the need to remain focused on that task and not introduce a confusion or other data from different sources when they’re trying to accomplish a single goal. Because, you know, they come in and they say this, “Well, such and such said this.”
“I understand that. Did you pay him right now to tell you that? No? Okay. So let’s just do this.” Because they’ll get overwhelmed, they’ll completely get overwhelmed if you’re listening to forty people all at once…
West: And it slows down the process massively, doesn’t it?
Tracy: Oh it massively slows down the process because instead of sending emails or corresponding about how to advance the process, we’re Q & A’ing each other. It’s really a waste of time and it’s slowing down their own personal progress. So I definitely try to keep them focused on that.
The need to take responsibility for the delivery and accountability to me that their—I call it ‘homework’—is done. Because in my program, if it’s a weekly coaching, you better have what needs to be delivered next. Because it doesn’t affect me; it only affects them. It affects me in the sense that I’m now going to have to train the next lesson and you’re not done with the prior one. That’s the only way it affects me. It affects them though hugely, in the fact that…
West: It does. It’s making a big difference in their life. They’re slowing down their progress.
Tracy: Exactly. You have to take responsibility for your dream. I can’t do that for you. they need to take pride in what they’ve done and don’t accept excuses for underdelivery to themselves or anything that they deliver to me for a review. If they’re not sitting there going, “My god, this is the best thing ever! And I feel so great,” even if it’s not the best thing and it doesn’t fly, even if it comes to me and it says, okay, we can completely rework this, if they believed at that moment that it was the best thing that they can produce, that’s all I’m looking for. Because then, once you point out to somebody, you say, “Okay, this head lines this because of this,” or “This is weak because of that,” or “You need to rework this,” or “This doesn’t flow,” then they’ll see that. And they’ll go, “Oh, now I can see how to make it better.” And so then they’re often running and excited about that. And that’s because they take pride in what they do and they can recognize ways to improve it once something’s been pointed out because they can only deliver as high as their own current ability. And so you just have to constantly be helping them to increase their current ability.
And then in general, you’ve got to want it as much as breath in some cases. This is your mission. This is your dream. You have a message, obviously, that you need to get out, that needs to be heard, they need to accomplish this goal because it is a part of whatever they have established for themselves.
West: Do you help them cultivate that hunger, Tracy? Do you help them increase that drive if they just sort of want to do it? because the difference between someone who’s just wanting to make some extra money—and like you mentioned before, that you actually had to put food on the table—there’s a huge difference in drive and motivation and how you approach things. So is it part of your role to actually help cultivate their hunger as well?
Tracy: Well, yeah, it’s a bigger scope. That’s really more in the quantum leap end of things. In the current program that I was going through, as I said, it was very practical-based. Definitely, though, I cultivated as much as I can as we’re corresponding. But the best way that I think I cultivate that is I don’t let them proceed unless they’re passionate about what they’re about to do. If they’re coming in with an idea and I ask them, “Why are you doing it?” and they say, “Money!” they better readdress that. We’ve got to say, “Okay, money’s the end product. Money’s the thing. What do you want from that money and why are you really doing this?” Because as you talk to somebody and you rework what they’re really trying to verbalize, it will come out and they’ll say, “Well, the reason I’m doing this is because, you know, I have a daughter and she has this. And I need to get the message out about that because it’s an illness and it affects many people ad blah blah blah…” All of a sudden, it will pour out. And then we don’t even proceed. I don’t even take people past the niche selection until we have tapped into what they’re going to be able to be self-motivated on through the sheer fact and magnitude that they are dedicated to themselves as a person and they’ll know that moment when they speak it. And I can hear the change in their voice, I can hear the change in their purpose. So they will, though, ultimately be the one driving them through this process. But if I get them as close as I can to the niche that’s going to make a difference in their own life, then they’ll be able to carry that forward.
Definitely, though, this year I’m going to be talking far more on keeping your drive and motivation. And, of course, the way to do that is to have the dream that is your purpose.
West: I think that really hits a nail on the head for me as well. And if you can identify what really works for you and use that to motivate you, everything becomes much more meaningful and has a purpose rather than money, which is just not going to cut it.
Tracy: And we all need a pile of money, we can’t take that with us. We need to give pleasure. We need to donate to charity. We need to add more value to the planet. We need to preserve whatever. There’s such a far bigger purpose. And then when you start to have people really understand what that is, then they have restored their own purpose and of course their own internal drive.
West: I’m really curious…why don’t you tell us about your Quantum Leap program, Tracy, or some of the programs that you’ll be offering this year or that people can get through your website as we sort of journey into this call? And I know you’ve shared some awesome, awesome information but I can’t imagine the depth and the awesome complexity of what you’ll be able to share with people through your programs.
Tracy: Yeah, I’m really excited about this year’s program which isn’t even available yet on the open market. The first presentation of it is going to be on the World Internet Summit Australia. That’s going to be the first set of people that are going to be exposed to it. It’s four formulas that I’m working on:
Quantum Leap Millionaire Mindset
Successful and Shattered Excuses
Million Dollar Design Formula
Market Your Vision Formula
I’m starting with the strong foundation, we’re going to take a look at the quantum leap secrets that I created to get where I did so fast. Once we have kind of the mind ready for millionaire mobility, we’re going to take a look at Excuses because we’re going to step in front of everything you do and how to shatter them. And then we’re going to tae a look at your own personal million dollar design, what you want to get out of life. And then we’re going to take a look at…
West: Is this going to be like a caching program or is it going to be like a product?
Tracy: Its’ a combination. It’s both. It is actually a really big program. And as soon as I have completed the launch of it in Australia, then it will be available to everybody. It is extensive—I’m saving the content of it for my bog announcement—but it’s extensive as far as products, it’s extensive as far as training. And then it’s extensive as far as the exposure and the time we’ll spend focusing on key core areas of coaching and things of that nature. So it’s going to be incredibly exciting.
West: Absolutely. I’m pumped and I don’t even know anything about it.
Tracy: I have a website for it. I haven’t even launched it. I’m waiting until I’ve hit back, but of course…
West: Well, let me know when you get the URL so I can post it along with this interview so people who are listening to this call and want a piece of the action can actually find you.
Tracy: That’s right.
I would always recommend the InternetMarketingNewbieClub.com, a great place to start. Because what I did there was a literal brain dump. I took the logic of what I had experienced from a practical standpoint and I laid it out into lessons. And then on tope of that, I added affirmations. And then on top of that, I added life lessons. And then every single week will also get a new ebook, a new product on top of all of that. So every single week, there are five elements that you receive. And it will come to you every single week at a pace that you can enjoy. So that’s a great way for everybody to get started.
West: It sounds like it’s jam-packed with good content there, Tracy. But what was the site again? You said it pretty fast—just for the listeners who aren’t speed writers.
Tracy: It’s InternetMarketingNewbieClub.com.
West: That’s all one word?
Tracy: Yeah, all one word. That thing was like giving birth because it was the biggest brain dump I have ever done. And then I got to sequentially organize it. And might I say, I didn’t just do my brain dump. I made sure I brought in affirmations from other people and I made sure I brought in life lessons to go on top of the other lessons because you need to be organized, you need to goal set, you need to clear your mind of clutter and so all of these other, kind of, periphery lesson regarding …
West: So you really got some good head stuff, mindset stuff on there as well that people can access?
Tracy: Yes. There are two elements of mind addressed on every lesson.
West: Wow. Sensational. Well, you’ll be pretty silly not to go over there as soon as you hear this interview wouldn’t you, Tracy?
Tracy: Absolutely. I think it will be the easiest and most valuable $47 you can probably spend because it just keeps delivering. It’s not something that goes away. You keep saying those affirmations.
West: And it’s like having you like a personal coach, which if they were to get you one one one, you’d probably charge $4700.
Tracy: That’s exactly it. And that’s why I introduced that program because the number one question I got all year last year was…okay, I have two levels of coaching: one is JV Coaching Club.com and the other is Entrepreneur in Overdrive.com. And some people still could not afford those despite the value exchange. They just couldn’t do it. and so I really needed to open up a channel for people that could not afford one on one mentoring.
West: We’ll finish the call. I want to ask you one question and I’m sure you get his all the time. That is, how do you deal with the information overload? Because the internet is massively, massively huge in its delivery and access of information, what’s your solution to that?
Tracy: That is a really great question that I love to answer, actually, because too many times that’s answered far too quickly or tried to deal with it organizationally-wise or just push it away or just stop reading your emails. And those aren’t really great solutions to getting ahead faster or quantum leaping, as I like to do. Because what you’ve got to remember is when you get into internet marketing, you are now a student. You are a student of internet marketing and you better have some fantastic study techniques in order to get you forward at the rate that you’re going to want to move.
So I have a great study background because I’m a student of life, I’m constantly reading, constantly attending seminars, teleseminars—you name it, I’m learning it. And so, when you have information overload one of three things has occurred. Depending on what happens, this is how I deal with it:
So the first thing that can happen to somebody is called Lack of Mass. So what happens there is you’re sitting at you’re computer and you’re reading, and you’re reading and you’re reading. And of course, you don’t have anything to relate it to. Let’s say you’re studying about tractors or something. If you don’t have a picture of a tractor or you don’t know what a tractor looks like or you’ve never touched one…all of a sudden, you’re going to get a certain feeling. And that is, you’re going to get a headache, maybe stomach pains. You actually start to bend forward, you start to muck with your face, you’re squishing at your eyes…if you’ve ever encountered something like that, that means that you’ve experienced something called the ‘lack of mass.’ And that means that now you need to balance. You need to go get a picture. You need to go look at a website. You need to go look at whatever they’re talking about. You need to get some what’s called ‘mass’ on it.
So if you’re reading about sales pages and you don’t have one in front of you, you need to now go look at a sales page and that type of thing. So those are some things that will actually physically manifest in you if you experience that one.
The second one you’re going to hit in this industry all the time, and that’s called “Too steep a gradient.” And this happens actually when you’re doing something. So let’s say, for example, you want to build a website. And you get in there and you’re doing great and you’ve got your little HTML going then all of a sudden—again—you’re confused: you have no idea, you figure, “I can’t do this. There’s no way I can build a website!” What happens at that moment, especially if you were doing good, just a little bit prior to that is you hit too steep a gradient. You hit a point where you have not entirely understood almost a fundamental step right before you moved on. So it’s kind of like building on a foundation that isn’t stable. And as you go too high or as you move forward further and further from that point that you didn’t understand, you’re going to just get more and more confused. And again, you’re going to feel that. That’s a physical feeling you get.
West: It’ll catch up with you.
Tracy: It will catch up.
And then the third and final one which people don’t even think about—it’s funny—and this is the misunderstood word. You’re sitting on it and it’s rampant in internet marketing. We have our own language in this industry. We have our own nomenclature, you know, we actually have developed and we all discuss these wonderful things with our acronyms…
West: I can relate to that.
Tracy: Yeah. They’re reading something and it might be a word like ‘niche,’ it might be the word AR and they might be thinking accounts receivable and in our industry its not that at all. And then even when they know it says autoresponder—or they may have no idea what an autoresponder is—yet they keep on reading and they figure…”I’ll clear that up later.” If you continue to go and do that, everything else after that will go blank. You’ve just completely wasted your time and it’s not going to stick in. And so when you encounter words—especially in this industry—you really need to go look them up. Just go to bigchair.com or just go to whatever sources around and take a look at what that means before you move on because you will be unraveling yourself from a nightmare if you proceed and don’t know what that word means.
And so how you deal with it is you just recognize which one it is, correct it, go back, slow down, get a definition or learn what you missed. And that’s how you’ll be able to cerate a really solid foundation so fast. This is what I practice, how I approach internet marketing. And again, it is one of the principles to how I went forward so fast.
West: Thank you for sharing that, Tracy, because I know that it’s very, very easy to feel completely overwhelmed when you’re diving into anything, especially the internet. And by setting those very strong foundations, you know—what you were talking about before—it’s a formula. You don’t want to mess with a formula.
So based on that… I want to thank you, Tracy, for joining us on the call. It’s been an awesome call. I can’t believe how much information you’ve jam packed in. And if it’s any indication of your seminars or your products, I think people should definitely find out more about you.
So on behalf of everyone on the call, Tracy, I want to thank you for joining us.
Tracy: Thank you very much, West.
Nov 16 2010
Rank #3: [Interview] Nhan Nguyen: How I Started in Property and Went From 0 to Controlling Over $70 million Worth Property in less than 3 Years
Property Investor with over 70 deals, Speaker, Found of Green Mint Property Group
We were lucky enough to get Nhan to discuss some of his projects and strategies in some detail in this interview. He also reveals some of his personal mental shifts and how he’s continually cultivated his networks and honed his craft of property investing.
In this interview you will discover:
– How Nhan started his journey in property investing with no money
– How Nhan got his first investor to put up the capital for his first property
– How to go from having not enough money to not enough deals to feed your investors
– Some of Nhans regular success routines and triggers
– The Recommended step-by-step strategy for beginning property investors, and what to avoid!
Click Play To Hear Streaming:
[ mp3 – 33 mb – 55 mins ]
Click To Read Full Transcript West Interviews Nhan
West: West Loh
West: Welcome folks! My name’s West. I want to thank you for joining us on this call. Today, I’ve got a very special guest, a good friend of mine actually. We’ve gone back through many years and I’ve seen him grow exponentially in the last five or six years. And it’s an absolute pleasure to have him on the call today. His name’s Mr. Nhan Nguyen and he’s currently controlling, I believe, around $20 million worth of property, including house and land packages, land subdivisions, units and townhouses. But I’ll let Nhan himself give us a bit of a spiel on his background. So first let me welcome you, Nhan. Welcome to the call.
Nhan: Thanks West.
West: I appreciate you being here. Why don’t you give us a little bit of a background about maybe how you started your journey into property?
Nhan: Yes, sure. Firstly, West, thanks for having me on this call. I enjoy the privilege of sharing he knowledge that I’ve had. Mind you, there’ll be several experiences about positive and negative and a lot of people supporting me along the way. I’m twenty seven, turning twenty eight. And I’ve been with property game for about six years and haven’t been able to get where I am today without help from a lot of people. I started when I was twenty one. And one of the reasons, you know, I nearly dropped out of Uni is I was out looking for deals learning how to do it. One day before an exam and I had a Chemistry test. But it was funny, I think I got a 2.
West: For the listeners out there, it’s a scale of 1 to 7.
Nhan: Yeah. And 3 is passing. And 4 is passing. And 2 is a fail. I was lucky that I got the grade earlier in my degree to pass my Bachelor degree of Science. I did have a Bachelor in Science but I didn’t use it. Once I finished my uni degree, I went straight into the workforce and worked for a couple of property investment companies. And Robert Kiyosaki, whose name you may recognize said, “Don’t work for money; make money for you.” So the first three years of my career, I worked for property investment companies and learned how to do the deals. And after three years of working on the job and learning how to do it, I left there and did my own thing. But in December 2003, I was doing joint ventures, about $2 million in joint ventures with a partner who put up all the money and all the debt. Yeah, so that’s when I decided to leave work. But as a start, my first properties were about $50,000-$55,000 in a suburb called Goodna, which is about 25 k out from Brisbane towards the West. And the second deal I did, I bought a house $45,000. And the third deal was about $57,000.
West: Wow. So you started small and just grew from there.
Nhan: Yeah, that’s right. And after a few years of practicing, I sold those properties. And instead of making $100,000 per property, I was able to make $10,000-$20,000 all up, because I was filled with experiences and mistakes and, yeah, a little bit of money. But I think the learnings were much more valuable than the money.
West: For sure. I’d like to touch on all those little things that you brought up as we go throughout the chat today. But why don’t you tell us what got you interested in property in the first place, Nhan? And what sort of gave you that push in that direction? Because I understand that you also looked at shares and you looked at a few other different investment opportunities. Property caught your eye. Why is that?
Nhan: I think it wasn’t so much that property caught my eye. I was reading the Kiyosaki books—as everybody does when they start out. And I tried everything. I tried network marketing. I tried all these schemes in terms of put money on that lot; lost money on that. I put $5,000 to $10,000 into offshore investments; lost money on that. I tried share trading and I found it a bit boring. I listened to a Dolf De Roos tape. I think he was in one of Robert Kiyosaki’s game’s tapesets in Cashflow 101. If you guys get the chance to play that game, it talks about properties and trading shares. And in terms of property, how you’ve got leverage, you can add value and also you can buy undervalue. I listened to some tapes, John Burley, and he talks about how to buy property with no money down. And it’s good because I didn’t have enough money.
West: Now how did you…you said before that you got your first couple of deals down with none of your own money. That’s amazing—first thing—congratulations. But how did you approach that? I mean most people think that they first need to save and save and save until they get enough before they get their hands wet. How did you find someone?
Nhan: First thing, I did a lot of ‘no-money down’ deals. On the first few, I had actually did put about $4,000-up to a $55,000 house. I had $4,000 in the bank and I used $7,000 of my own money spent available at that time. I borrowed as much as I can, including the $4,000 of my own money.
The second deal, the $45,000 deal, my parents lent me $9,000 for the 20% deposit.
And the third one, that’s when I started to ramp up because I literally have run out of money and my parents have run out of money to lend me. And John Burley talks about doing JVs, joint ventures where the other partner puts up all the cash…
West: Right. So how did you go find people?
Nhan: So literally I put together a business plan. What we buy the property for, what we ‘d onsell the property for, how much we’d rent it out at. And I presented. I just went around and talked to investors. Basically, we did make a list and ring the list and see if they’re interested in buying property and doing deals. And after a while there was a guy his name was Simon. And he said, “Yup. I’ll do it. I’ve got a good income.” I think he ended up putting maybe $3,000-$5,000 cash down, borrowed the rest of the money from ANZ, and off we went. It was more of the confidence and the willingness to try something else,and be willing to be rejected. I think that was a big deal rather than finding investors. Right now there are too many investors but not enough deals. But it never seems to be an issue anymore.
West: For sure. And the amazing thing is all this information that you’re referring to is available freely to everyone, isn’t it? But only very few people knuckle down and actually follow the advice.
Nhan: Yeah, that’s right. Yeah. What you’re saying is in the book shops. It’s on the internet, on CDs. You can go to seminars, they talk about it all the time. But actually, not many people do the work.
West: So what’s the difference with you, Nhan? And I noticed it not only in your property investing, I’ve noticed it in almost everything that you do. I mean we play golf together. We’ve played Cashflow together. We’ve played a whole arrangement of things. We’ve done lots of stuff together. And one thing I noticed is that when you hear something or you learn and you distinction, you immediately put it into place. You don’t really care what happens. Additionally, it’s all about learning for you and getting that feedback immediately so you can get over those initial humps. How did you develop such a—sort of an—action-focused attitude?
Nhan: I it’s just a lot of impatience.
West: So the key to success is impatience.
Nhan: I know what I want and I just chase it. I always believe that I can get it; I might not get it now. And I’ve always looked at desire, thinking about Think Rich book, with desire being one of the keys that you need. I think that’s very much what I’ve got built in with me and it’s just going and believing that I can do it, I can have it. If other people can do it, so can I.
West: Was there a time when you had self-doubts or you just weren’t sure what was going to happen with an event or deal you were doing or you just sort of…there were things that started popping up in your head that you question them? Most people would give into but you’ve managed to overcome. Have you ever been through a stage where you’ve just had serious doubt and serious self-limitations?
Nhan: Yeah, definitely. Definitely staring on your teenage years or especially when you’ve gone through adolescence and growing up and trying to concern and reassure yourself of who you are. At one stage, my identity was that I was going to be a doctor and that was going to please my parents. And then the identity shifted from being a doctor into being a property developer or property entrepreneur. There was a lot going through my mind at the time. And especially now that I run my own business. We’ve got a lot of projects on the go and sometimes when things aren’t going right, doubt does go through your head but you’ve got to stick to your guns.
I think they always talk about never, never give up. And that there is only one option: to never give up. There is an option to fail but there’s no other option to give up because you’ve got to keep playing even if you’re losing.
Awhile back I was doing network marketing and I was part of the Amway corporation. And I was doing that for eighteen months. And I know a lot of people have made lots of money on it—network marketing. As for me, I wasn’t making money at the time and I just go and make those phone calls when I didn’t want to make those phone calls because I had a vision in my mind. I’ve always got a goal. When you’re chasing something, you keep chasing it and that’s what gives you that willpower. You’ve got to develop your own willpower. And after a while become so strong that you can’t help but chase your goal. It becomes a habit.
West: For sure. So for you it’s all about seeing the vision and seeing the end result. And that vision is enough to inspire and motivate you on a day to day basis even when you feel like not doing it.
Nhan: Yeah, absolutely. Absolutely. And sometimes I feel like doing it, other days I don’t. And that’s the thing…you’ve got to overcome how you feel because all of these are emotions. I’ve got investors I’m accountable to. I’ve got banks I’m accountable to. There is no option to not fulfill those obligations. I draw my own lines and those are the paths I have to follow,when I write down a to-do list, all there is is to do my list. Stop procrastinating because that’s what makes it hard.
West: For sure. Let’s take a step back, Nhan. I want to talk about your jump from—you know how you said before you were working in property investment companies, that the step there to actually becoming a full-time investor and taking on the risk and all that stuff that comes with becoming an investor, you put a lot of things on the line to do that. There are some emotional blockages. A lot of people listening on this call may be thinking of doing something like that but they just can’t overcome that self-fear and doubt. So it’s kind of a different limitation that I was talking about before. How have you gone about breaking through your own self-doubt about taking that leap in order to exponentially increase your income and put yourself on the line?
Nhan: I think one of the key of me exponentially growing with the support that you mentioned before which is Landmark, that causes the Landmark forums and they have a lot of programs which deal…they don’t deal with gradual and slow improvement but they talk about instant results over a short period of time. And their technology is so advanced and so brilliant that sometimes you just can’t see it. And that’s what they do—they look at your blind spots. I’ve applied their technology for about two or three years now and I encourage anyone to go LandmarkEducation.com to have a look at their courses.
But my point is that starting with that course, I used that course to, first, to inspire me with confidence. And then secondly, I didn’t leave my job until I had a firm foundation in place. Robert Allan, who has a book called Property with No Money Down (Nothing Down), and he says, “Make sure that you have at least six to twelve months of funds behind you after you leave your job so that you can securely start your business and acquisitions and yadda yadda yadda.” I didn’t look at leaving my job until I secured a handful of properties and also have some cash behind me. And once I had a couple of properties that were in the pipeline with joint ventures, then I quit my job. And in that time frame, opportunities came up, and yeah, I had to learn how to sustain myself and learn how to swim so I didn’t drown.
West: For sure. Because you’re pretty much burning your bridges—your safety bridges—aren’t you? Once you jump into it.
Nhan: That’s right. And the worst case scenario was I’m going to go back and get a job earning $20-$30 an hour. So that would be my worst case scenario. And that’s the thing too. I’ve known people who left their job to do the property thing and done it for six to twelve months but they just don’t have the discipline to go look for deals. I’ve known a mate who worked at a bank or something, didn’t have the discipline to look at deals and six months later they’re back at the bank again working. But there’s nothing wrong with that, it’s being willing to take a leap of faith, trust in yourself and having the discipline to ongoingly on a day to day basis look for deals.
West: For sure. I’ve spent some time with you, Nhan, and discipline is something that definitely I was very impressed with. Do you have a secret formula when it comes to discipline, Nhan? Is there a secret thought or a routine or some sort of anchor or is it just comes as a resulp of all the things you’ve talked about before?
Nhan: [15:43] I think that one of the key patterns I use is, one, I look at the paper or CD in the morning on the way to work. And it doesn’t have to be a complete CD, it could be just fifteen minutes of time to the office. Secondly I have a goal card which is a reminder for me, of how much income I want to make per annum and by when. Previously, I wrote number down. But now, these days, all that I use is a blank piece of cardboard and a rubber band through my sun visor, something that’s weird that’s in my face. It triggers me to say that I’m out of money, right? I had a goal card, I write the number and I lost it. So all it is is just a trigger or a reminder.
So one is tapes.
Two is triggers for my goals—have my goals in front of me.
Three is I go to seminars.
And four, I read books.
Those are the ways that I condition myself. And the other thing is I use my diary to write down the six areas that I need to work on for the day. So it might be this project, that project or this property or that property. And all I need to do is to keep taking actions on a particular project. Then that project will move forward whether I like it or not.
West: Yeah. One of the other things that I’d like to point out is that you got yourself an office. I know for a lot of you work from home; you have a home office. And I’ve heard from other people as well that it is a powerful shift when you actually go to work to work, so to speak, rather than having when you’re at home—and let’s say for people listening you’ve got a home-based office; and I know I’m guilty of this as well ‘coz I do right now—but sometimes you’re not sure when you’re working and when you’re playing. And you’re not sure when you’re actually on task and you’re doing something for personal gain. Has that made a difference in getting you more effective?
Nhan: I don’t think at the beginning I needed it. But I’ve been at the point where I’m waging money from investors $50,000, $100,000 at a time and doing $5 million dollar projects. And it’s wonderful from a credibility point of view of people looking at you, but also for yourself, you know, this is real: it’s not a game anymore in a way that you deal with other people’s money.
I’ve always resisted having an office because it means spending money. But yeah, I’m at the point where I can’t scrimp and save anymore. It’s for real. I don’t mind having a home office at all. If I could I would. I’ve just got staff and my wife doesn’t have any liking to staff prancing around our kitchen or the bedroom; it just doesn’t work.
But the other key thing is that I leave work at home; I’ve got work at work and home at home.
West: Yes. That’s powerful.
Nhan: That’s another thing that I can switch off. I find that’s very important for me. Otherwise as you probably know when we’re working at the home office, you wake up at 7, start checking the emails, go to bed at 11. That’s when you shut your computer down then you come home and leave the office.
West: So it sounds like you’re actually getting some time to relax these days, Nhan.
Nhan: Oh mate! I play golf. I went to the driving range yesterday. I went to the driving range on Saturday. Yeah, mate, it’s good. I’m proud of it. I really enjoy it. I do a bit of yoga, acupuncture as well. I’m just grabbing the bull.
West: Fantastic! You were telling me before you were also getting some squash each week which I’m very impressed to hear.
Nhan: Once or twice a week. It’s just good to keep up my fitness
West: It is. It is. I mean, investing in any discipline can be stressful, especially in property with the deadlines and being accountable. It can get your blood pressure up, can’t it Nhan?
Nhan: Yeah. Absolutely, mate. I always believe that for us its the long run. In the world of business, they’re competitive. And people, you know, and I like to be able to keep my endurance up, my fitness up that much because it’s not a short term game, it’s my life so then it become a part of your lifestyle.
West: Absolutely. Absolutely. Now I wanted to ask you really quickly because I know you spent some time with people—going back to Landmark, you’ve been a coach on some of Landmark’s programs—what are some of the major stumbling blocks that you see in other people have in terms of money or finances, if we could narrow it down to there? And are there any strategies that you are able to share with us that have really worked for them?
Nhan: Yup. I think one of the biggest stumbling blocks in people, probably more so on the later generations—the Y generation, they call it—is they want instant results. People want results now. They want to be able to read a book and go out and make a million bucks. Or they’ll listen to a tape and they want to be able to go out and they want to build their block of units after having one conversation. And I think it’s the false expectations that they can have everything now. They can have everything; it’s just delayed gratification, delayed results and time lag. So I think patience is a big issue that I’ve had to learn and it’s taken me years of banging my head against the brick wall chasing opportunities when there really aren’t opportunities there.
And all I mean by that is my skill level has a certain level. And as it grows the field gets better. But people at a skill level, at zero or negative 5, want to go out and do a $10miliion dollar deal and expect people to believe it.
West: Sure. And the risk is really high if you haven’t got any experience, is it?
Nhan: It is. It is. And also, people that don’t have the right people around them because people around them might not be trustworthy or they might not be competent. So I think—like you said before—was that one of the common errors that people make or that their blockage is impatience.
West: But you’re at a stage now where you can tap yourself on the back and say, “Hey listen, Nhan. You’re aware of it.” You’re aware of it happening when it’s happening.
Nhan: It is. And I use a lot of tools to keep myself aware of that. And one of the tools I use is golf. It’s an indicator. And I always believe that games or books or boardgames are a reflection of who you are.
West: Yeah, I truly do as well.
Nhan: I use golf a lot to measure how I’m doing in life. If I’m impatient, if I’m angry, if I’m resentful, if I’m throwing my golf clubs…maybe that’s how I feel in my life at the moment. But that’s why I like to use it. And also, it shows how other people are as well, like if they cheat or lie or whatever on the golf course, maybe they’ll be doing that for real as well.
West: I read once i a Japanese-related publication that the Japanese, in big business deals, they never ever go into business with someone without having first have a round of golf with them because it is such a high accuracy in terms of how they would act in a deal and in the professional instance. So you’re dead right there. And I actually have noticed it personally as well.
So as I was saying before, when I noticed you play golf for the first time I believe I was there with you. And you just sort of dove in head first even though you had no idea what was going on. No offense to you, Nhan.
Nhan: No, no. But that’s me in life.
West: That’s exactly right. And it just reflects in how you approach your fitness as well when I see you training in mornings and how you’ve approached you property investing as well.
Nhan: And I must say I’m not perfect and I don’t think anybody is. But let’s give it a go. Let’s have fun. Life’s too short to sit around waiting, watching other people make money.
West: It is. So let’s move on to your property now. Are you able to tell us the kind of strategies you’re into these days…for the people who are interested?
Nhan: There are a couple of kind of strategies I’m working on at the moment. Previously, we’re doing renovations, minor renovations, touch-ups, things like that. At the moment, we’re doing unit and townhouse developments where we might buy a block of land which has a zoning to it, we get the materials and a change of use, and that would give us approval to build townhouses or units or land subdivisions.
At the moment,we’re buying a block of land in a suburb called Hawthorne, which is about 4km from the Brisbane CBD. And we’ve got approval now to build 4 townhouses. That block was a little bit under 700,000 to build it, to roughly 800,000-900,000 which is about 1.6 with holding costs. And the market value is at 2.4. It is a two year process where it takes a bit of time, bit of skill and knowing the market and knowing what you can build and what you can’t build.
West: So you’ve got some investors ready to put in or they’ve already put in and you’ve presented them with the plan and it’s on the process right now?
Nhan: Absolutely. Yeah, that’s right. We found the opportunity roughly April 2006—right now we’re October 2007—and back then, we started a contract for roughly six to eight months. And that was one of the keys: we bought it for under 700,000 and the evaluation came in over 800,000. The banks lent us all of the money to buy the block of land.
West: So you really do make money when you buy.
Nhan: Yeah. So you make your money when you buy in that…
West: Was that a case of you negotiating hard or was it a case of the seller not knowing the value of their property?
Nhan: I think a bit of both. I think at that point in time—in 2006, early on—the market was quite flat. And the developer, he was doing a subdivision deal, he cut off his 800 square meter block off 1600 square meters and he wanted to pre-sell. All developers, just like myself, we do want some surety that we will get paid once the project is cut off. So all we did was we sold a block off just to get some cash in down the track. I think he knew the value and that’s what he thought it was. But we could see a bigger opportunity.
West: Yeah. You could see more potential than he could.
Nhan: That’s right. Yeah. We saw potential. And that’s really what it is: it’s about being seeing the potential when somebody can’t.
West: Absolutely. I mean, even this guy, he’s in the market, he’s dealing with developers everyday almost as well and yet you could still see what he couldn’t.
Nhan: That’s right. That’s right.
The other opportunities we’re working on at the moment is land Subdivision or using the instrument called the put and call option.
West: On property? Wow.
Nhan: Yeah, that’s right.
West: I’ve heard about it in the shares but you can do it on property as well?
Nhan: Absolutely. And I’m not going to go into details but other than to say that’s it’s like an unconditional contract where we basically say, yup, we agree to buy property at this price and if we find someone else to buy it at a higher price, we keep the difference. So roughly, we bought 20 blocks of land at roughly $250,000 each. And when we sell those blocks of land, like say, we go $270,000 then the $20,000 in between, that’s the settlement we keep.
So it’s a very sophisticated instrument that I wouldn’t recommend people use because it’s kind of like an unconditional contract.
West: Unless you know what you’re doing.
Nhan: That’s right. That’s right. And I’ve known about it for three or four years in a previous company that I worked at and they’ve used it and they taught me how to use it. But it’s not as straightforward as a put and call in shares. I probably suggest for people who are looking at options is to do what we call straight call options, where they put a deposit down and have a right to buy property at a certain price.
At the moment, we’ve got 20 blocks that we have under the put and call option. And we’re only selling them for considerably more than what we paid for them. So the bonus there is, one, all we do is to pay a 5% deposit. We don’t have to come up with the finance to settle on the property to own it, to control it. We can just onsell it as a paper transaction to someone else and that’s when they own the property, they get the finance, and we keep the difference at the sale point.
West: Very nice.
Nhan: So those are the two main projects we’re working on. I do have blocks of units that I bought previously in Mackay that we’re strata-titling and possibly onselling those, and also Tarm street. Do you remember those blocks selling over at Wavell Heights?
West: Yes, I do.
Nhan: For a while you and I were driving around Wavell Heights looking for property?
West: Yes, yes.
Nhan: Yeah, we sold that at auction.
West: Oh, fantastic. Did you get a good price?
Nhan: Yeah, we did. We got mid 5’s. Yeah. And we were happy with the unconditional contract that you get at an auction. And the guy hadn’t seen it before, he just rocked up and bought it. We need more of those guys!
Yeah. That gives you an indication of the way the burgeoning market is at the moment. Lots of people are paying premium prices.
West: So you were saying before that, it’s a pretty hot market. So how does an investor like your self deal with a period like this? Because, I mean, property goes in cycles. It goes up and down, doesn’t it? What do you do when it’s in the stage as it is now?
Nhan: Well previously, we usually, let’s say, take advantage of it whenever I can. And what I mean by that is previously we built some blocks of land and I had a sign on the block. And people would call incessantly on this phone number. And I’d have a call everyday off this sign. And it was in a cul de sac,tucked away estate. And you have to look and drive around to look at the sign to get the phone number. And I got calls everyday and it was an indicator for me that the land market is hot. Because the land market was hot, and land opportunities that came up, I snapped up as fast as I could and that’s how we came up with this 20-lot subdivisions of land being in demand and people wanting it. That’s why I supplied them with it.
Having said that, at the moment the market is quite tough to find deals. We just got a deal with our egos not being frustrated or impatient. And we are looking inter state at opportunities, and also opportunities that do not involve construction because construction does take time to build and that’s where you’re holding costs rise. So we’re looking at interstate options whether it’s land subdivisions or buying blocks of units, either up north, Townsville, Mackay or Adelaide, Melbourne, Sydney. So we just have to spread our wings. Otherwise, we just get tired sitting and waiting for the tide to turn.
West: It’ll be a great turn when it does that, won’t it?
Nhan: Yeah, that would be good. So that’s what we’re doing. We’re cashing up and getting rid of any of the stuff that we don’t really want, any of our ‘dogs’—they call it—and any of that properties that are negatively geared that we can’t hold anymore. So we’re just selling them, cashing up and sitting on our money for awhile.
West: I know Jim Rohn talks about the seasons of life, and the summers and the winters. And you’re basically, obviously, planning for the bountiful summer whilst it’s winter, so we call it. But moving on to the next five to ten years for you, Nhan, are you looking at changing your deals in terms of strategies or looking at structuring your deals any differently or is it just going to be pretty much similar stuff that but with a couple more zeroes on the end of them?
Nhan: One of the things I’ve always wanted was to own a high-rise building, a 10-storey commercial building.
West: Donald Trump style.
Nhan: Yeah, that’s it mate, Donald Trump style. We are looking at expanding into different types of property, commercial property and industrial property…but definitely something that I have an interest in. But at the moment, that market is hot as well. So we’re just cashing up and getting ready for those opportunities. Yeah, we’re definitely moving into land acquisition soon, the subdivisions and the unit townhouses. I think it’s not so much changing our portfolio. It’s more diversifying our portfolio and spreading our wings a bit more…
West: Are they also more involved in more complex strategies as well?
Nhan: What’s that?
West: When you’re moving into getting 10-storey buildings. Or is it the same skills, just big in numbers?
Nhan: Yeah. It seems to be the same skills, bigger numbers.
What I’ve got in mind is basically bigger land subdivisions up to 100 blocks, townhouses and units but not doing the high-rise construction. You know, the high-rise construction tends to be quite risky but we propose the 2 to 3-storey at a max.
West: Wow. Very nice. I understand also, Nhan, that since you’ve taken these leaves a lot of people have been asking you how you’ve done it and how you’ve changed your thinking, how you’ve grown as a person. And I understand you also conduct some seminars on teaching people. How has it affected you to be able to give back to people in terms of—I also know you used to run Cashflow games days and you put on property days where you come along with people and you show them how you buy property. And I noticed that as a trait of all the successful people that I’ve interviewed so far, in being able just to give back and not expecting a lot in return, but just giving back in itself seems a very intrinsic and satisfying event.
My question is how have you been able to give some time of your self selflessly and what do you get out of helping people without expecting anything in return?
Nhan: I think with the time thing, I know that a big issue—even if morning I’m working on a seminar, I’ve got a two-day workshop this coming weekend and people paying 300 bucks to attend…I don’t know, I feel intrinsic in the way that I do stuff a lot of information from a lot of people. And I do absorb that information and it becomes like a funnel. You can’t just keep taking it in because it’s got to come out somewhere.
West: So you need an outlet to basically spray all this information?
Nhan: I think that it is an outlet. And education, given back, is an outlet as well. And I always find that when I share my information, it always comes back ten-fold. People are wanting to learn and I just know that I wanted to learn from people and here’s an opportunity to give back. I think that after a while I’ve been used to chasing the buck and chasing the money and after a while it doesn’t just become about the money anymore, it becomes about who your friends and who hang you around, what kind of deals you get to do. And the people who want to learn, I’m willing to teach them if they’re willing to do the work because the last thing I want to do is for people to go and make the same mistakes I have. I’ve got the money and convenience and I’ve made money on deals, but it doesn’t mean that they have to go through that same thing. I suppose it’s a generosity thing. I enjoy spending time with people and watching them grow.
West: Absolutely. I mean because time is very valuable especially for guys doing big deals. And to give of their time is very much a generous gesture. And I’m assuming when you do help someone, the last thing you want to see is you invest all this time on someone and they don’t do anything with it. They just keep doing what they’re doing.
Nhan: Yeah, that’s true. And I think it’s important that I’m happy to spend time with people who adhere to that—doing something. Invest in soil that wants to grow rather than people who just want to criticize and analyze what you have to say. I’m not interested in that. I’m interested in people who want to give it a go, who want to spend some time and take a risk and put their lives in their own hands probably, rather than just criticize and look at the negative of things.
West: How do you define success, Nhan?
Nhan: Definitely a great question. I would say: is a person who has the willpower to chase their dream, chase their dreams on an ongoing regular basis. Some people don’t have the opportunities to pursue their goals on a daily basis because they might be in a job and they can’t pursue their career as a painter or…
West: Absolutely. Or maybe they’re in a country that just doesn’t have the infrastructure or even the opportunities.
Nhan: Or they might have a disease or they might be in a hospital or whatever. I think it’s having the willingness or the willpower to regularly chase their dreams and be able to share your dreams with people in your life rather than just chase that Porsche and then drive it around and think you’re better than everybody else. I want a Porsche but it’s just how you reflect your attitude towards people and towards life. Some people I know driving Porsches think they’re better than everybody else and I don’t think that’s success at all.
West: Absolutely. Couldn’t agree more.
Nhan: I think success is getting up when you get hit for a six as well, chasing your dreams in any circumstance whether things are going your way or not, or whether the market’s up or down, or you’ve had a biff with ASIC or the ATO or investors. And there are lots of circumstances out there…
West: Because as you grow, that’s kind of bound to happen, isn’t it? It’s inevitable that these guys are going to be coming knocking on your door one day.
Nhan: Yeah, that’s it. But then the people are going to take you to court, they’re going to sue you. It’s inevitable when you’re out there exposed, people want to have a shot at you. They want part of your money, they want to see what kind of person you are.
West: For sure. Now if someone—we’ve got some listeners on the call today, Nhan, who’ve been inspired by your call and they want to thank you and they want to learn more about you and they want to learn more about what you’re doing, the strategies that you’re using—is there anyway that they can contact you or find out more about you?
Nhan: At www.greenmint.com.au.
West: But you’re not selling chocolates Nhan, are you?
Nhan: No, of course not mate. Maybe I should. People ask me about where the word ‘Greenmint’ comes from. Everything has a double meaning behind: Green as in the greenback; and the ‘mint’ is also the mint leaf which is fresh and the mint as in the mint place where the money is made. So that’s where Greenmint comes from. And yeah, we’re on the net.
I’m not really looking for investors at the moment. But there are always opportunities for people who want to have conversations about doing deals and maybe JVs or putting opportunities on the table, they can definitely look into…
West: Cool. So they can contact you through that site?
Nhan: Yup, through that website. It’s got phone numbers and emails and everything like that.
West: Fantastic. And is there like information on your seminars or anything or is that like a product thing?
Nhan: Well, on that website, if you want to contact us then we can inform you of what’s coming up in the future. I haven’t really put up regular programs or seminars. It’s more about investing for this year and probably have maybe one or two next year depending on how it goes.
West: Well Nhan, I want to thank you for your time. It’s been a true honor to catch up and touch base with you again. I’m always impressed every time I speak to you with what you have to offer and what you have to share. So in behalf of everyone listening on the call today and myself, Andrew Grant, thank you so much for your time, Nhan.
Nhan: Thank you West!
Oct 14 2010
Rank #4: [Interview] Bob Andersen: Billionaire Property Developer Reveals Tips, Strategies and Mindset Techniques To Build Massive Wealth
One of Australia’s Wealthiest Property Developers, Having Turned Over More Than $1 Billion Worth of Property Development Deals
You’ve probably never heard of Bob Andersen, he’s the guy behind the scenes putting together some of the largest property development deals in the country. I’ve managed to track him down in a rare interview to get inside the mind of this real estate genius. If you’re a property investor and want to take your game to the next level, time to listen up!
In this interview you will discover:
– Different types of property development and which type is the best for you
– The biggest mistakes made by first-time property developers and how to avoid them
– How becoming a property developer can save you thousands in fees and taxes
– How to build your property development portfolio in just a few hours a day
– The Mindset of a successful property developer as compared to a hobbyist property investor
Click Play To Hear Streaming:
[mp3 – 39mb – 43min]
Click To Read Full Transcript West Interviews Bob Andersen
West: West Loh
Bob: Bob Anderson
West: Welcome, folks, to today’s interview. And today, I’m very privileged to have with us Mr. Bob Andersen. Now Bob has been involved in property development for a very long time, over thirty years. And he’s in a conglomerate of people who control over $1 billion worth of property. And that’s a super, super impressive stat.
What’s more impressive is Bob not only has a personal portfolio but he’s also doing it day to day and he’s also teaching people how to do it. So we’re very lucky to have Bob with us today. And I want to welcome you to today’s interview, Bob.
Bob: Thanks, West. Great to be here.
West: Absolutely. Now tell us, Bob, when you speak to people and they ask you what it is that you do—because I know you’ve got such a range of skill set—what is it essentially that people need to know about you?
Bob: Well West, primarily, I’m in the property investment, property development area. But ultimately, what I do is I use property development more as a vehicle for getting property investment at cost price whether it’s for myself or for investor clients. Property development is really a vehicle to accumulate the asset class of property, primarily residential property. So yup, I’m a developer but there’s a reason for being a developer.
So what do I do? I’m a developer and I’m an investor and my clients are all investors.
West: So a lot of people who are kind of thinking of getting into development but maybe they’ve only done a couple of residential or maybe they haven’t done any property and they’re looking at getting into something on a small level, is that something that you help people primarily and teach people how to do as well?
Bob: Yeah. I heard Mal saying, “Never pay retail.” So myself, that’s part of the reason I got involved in property development, really. It was a vehicle for getting property investments at a—well, not wholesale price—but absolute cost price.
So people, sometimes they haven’t done a development at all and they’re investors with one or two investments of their own and they see that potentially property development could be a great way of accumulating property investments fast and at cost. So with those people, I have a whole property development education program for those people who want to make the next step up from property investor to just more property developer.
West: Wow. And I think there’s a perception in the public that you’ve got to be some sort of sophisticated, right up there and have done hundreds of deals before you can into development. I mean that’s kind of—when I was going through—at least, that was the perception. I mean if you look at a lot of the property work out there and books and tapes and seminars, they always show you a progression where development is like the ultimate goal. But you’re saying that people can—with some knowledge—get into property development and make it work for them.
Bob: Yeah, they can. I think one of the first things that people need to do is to know why they want to get involved in property development.
West: So find their reason.
Bob: Yeah…and a good reason. I was talking to somebody last week. He actually wanted to become involved in property development. So I put the question, “Why do you want to do this?” And they say, “Oh, I see property developers and they’ve got big fancy houses, they drive red Ferraris. They often have young women hanging off their arms.” And I say, “Well, that’s not a really good… It makes me sound very unsuccessful.” You know, I’ve been married for thirty years. I don’t drive a red Ferrari. And I haven’t got the biggest house in the suburbs.
But I think you have to go in there for the right reasons. And initially, as I said it’s a vehicle. It’s a way of accumulating wealth. It’s a way of accumulating property. So for those people, get the reason right first. And that’s important…having the right reasons.
Then the next question is ‘well, how do I get involved?’ And really, just like everything, you have to be educated. You have to gain knowledge and increase your knowledge for leveraging off people with far greater knowledge.
West: Absolutely. And you’ve got to learn from people who are in the industry and doing it and are the real deal. I mean, there’s kind of a lot of pretenders out there and obviously, I’m not going to name names or anything but there are people out there who don’t walk the talk and there are people out there who don’t actually do what they claim to do or say they do. And you have a record that just speaks for itself with all the developments that you’ve done: resorts, hotels, government buildings and all those kind of things that do that.
So how can people, I guess, identify who to learn from and what kind of signs can they look for when looking for a means or looking for someone to actually leverage from?
Bob: I think they’ve got to do a little bit of their own due diligence, really. In my case, I’m a real developer. I have a development company, Positive Property Strategies, where we’re involved in projects all the time. Even currently, you know, retirement villages, combination projects, townhouses, units—we’re always doing projects. And so I’m a real property developer, therefore, I have the ability to pass that knowledge on.
We’re like talking about people who may be trying to pass knowledge on that are not property developers but they’re outs… look, you’ve got to do your own due diligence on the subject.
West: So you’re a developer first and you’re teaching people afterwards. You’re not teaching people first as your core business and then kind of trying to do property development on the side. And I think there’s a big distinction, a big difference there.
Bob: Yeah, exactly. And I’ve developed this course. It took me quite a long time to develop it. It’s basically the culmination of nearly thirty years of experience that I’ve put into in my course. And I think that shows for anybody who really sees it.
Bob: Credibility’s everything, really.
West: Definitely. And I definitely like to chat a little bit about it later because, you know, before our interview today, Bob was actually giving me a little sneak peek at the course. And it’s really exciting to see what he’s put into it. It seems like kind of a labor of love that he’s actually put almost everything into his brain that people can follow in a blueprint.
But before we get to that, Bob, why don’t you tell us maybe a couple of strategies that you recommend in today’s volatile environment with regard to property development? How can someone get into property if they don’t have, you know, a million dollars in the bank? And how do you specifically help people would be a really good addition to how people get in.
Bob: Yeah. Well look, knowledge is power. So first thing people need to do is actually to educate themselves—make an investment in their future. And that requires spending some money. That’s fine because the greatest asset is you have is yourself. So you need to invest in yourself. And there are sources of knowledge out there.
When I started, when I originally sort of moved from, if you like, from a short period in real estate into property development, there’s nothing out there. There were no books, there were no courses, there were no mentors. I did it the hard way. I made a few mistakes along the way. So increase that level of knowledge.
And then ultimately, you know, you have to make the first step. Some people keep accumulating knowledge, accumulating knowledge but they never make their step. Eventually, you have to make that move. I always say you don’t have to have an IQ of 150, you don’t have to be a multi-millionaire, you don’t have to drive red Ferraris to get into property development.
So start small. You might be looking at something like a duplex, two townhouses to get or maybe a triplex of three. You can get into that fairly readily. If you have no cash at all and you’re building up this experience, you can look at more creative ways of getting into things—joint ventures. I’ve done a lot of joint ventures and there are so many different ways of structuring joint ventures. You might look at joint ventures as a way of bringing in somebody with some money…
West: And you provide your time.
Bob: …and you provide your time and the knowledge that you’re building.
There are all sorts of things out there. There are things like using fancy stuff like call options and building equity into deals and that sort of thing. There are creative ways of getting in that requires knowledge of that. And also, look, at the end of the day you’re going to do some work.
So there are creative ways of getting in. But finance wise too, on the smaller projects, some of the banks are coming back in and starting to lend retail finance going for twos and three townhouses at higher LVR’s. So there are some too good opportunities to get in on the ground floor.
West: Absolutely. So even if you don’t have any money, you can still get your hands dirty and get some experience. And once you find some really good information that you can act on and find, I guess, a strategy that suits your personality, I guess—in a way, Bob—I mean, you were saying before that there are so many different things you can do but some people like to do something that’s more attuned to their personality and their risk profile I guess.
Bob: That’s right. Some people are more entrepreneurial. Basically, I’m a property developer or a property investor. Also, do you make entrepreneurs… there are things to suit people’s personality. Some people are more creative than others. But, you know, there’s a deal around the corner for everybody to fit everybody.
West: Absolutely. And I think, even that mindset in itself, people are saying that there aren’t deals out there. And someone like Bob who is day in and day out… there’s always a deal.
Bob: Yeah. And look, if you miss out on a deal of the year, the next one’s only a week away.
West: Absolutely. Absolutely. Wow. That’s powerful.
So what are some of the strategies that you give, Bob, to people who may have a little bit of cash lying around and maybe come to see you for, you know, “How can you help me, Bob?” What kind of things do you say to those people and maybe if you can give us a case study of how you’ve helped someone or given someone some advice or a strategy that has saved them some money or made them a lot of money?
Bob: One of the first things to do before you say, “I’m looking for a site,”—the first thing you do is not look for a site—the first thing you do is have a look at your structure. You need to get your structure right. And that will depend on what you’re going to do. Are you going to look for a site to flick. Are you going to develop something and sell it? Are you going to develop something and hold, the structure will vary.
Have a look at the finance and how you’re going to fund this thing: Are you going to use your own cash? Are you going to use somebody else’s? How it’s going to be funded.
But beyond that, before you start looking for a site, is to decide on the answers to those questions, then we have look at what sort of deal fits the person.
West: So kind of do it like a mini business plan.
Bob: Yeah, a mini business plan. Yeah, exactly.
Some people come to me that they’re already into development. They say, “Look, where do go from here?” Some people will say, “Look, I want to get into it. Where do I start?” Just start with the knowledge. Once you’ve got the basic knowledge, then you can build upon that with a mentoring program or whatever’s the next step. Now at the moment people arrive with a deal and a title. They already started. It’s amazing, you know. You see something has started. It’s scary sometimes but actually some people are actually in their first project and are quite lost. And I pick up people at various stages.
But as far as helping people in the deals, um, I mean you’ve met Ben Smith recently. Ben runs my portfolio turbocharger program. Ben started off basically as a mentoring student and I know he’d be right for the deal with a land subdivision, potential joint venture for a 20 lot subdivision. And I was like helping him with that in terms of how to structure the deal, how to structure the joint venture, how to make the win win with both parties. That was a great outcome. It was a great outcome for the land owner. It was a great outcome for Ben. And that was a 20 lot subdivision which actually, the way it’s financially structured, meant no money into the deal for the actual developer—it’s a 20 lot subdivision. Great outcome.
West: Wow. It’s crazy.
Bob: I often use that one as an example because it’s a very good deal of having… you can actually get into a deal and create at least…
West: So Ben obviously didn’t know that by his own back. But he got into the game and he came and saw you because he knew you were actually, you know, you know what you’re doing and you were able to systematically look at all the different aspects of the deal and put something together that was a win.
Bob: That’s right. That was a ‘no money down’ deal.
West: Wow. Powerful stuff.
So if someone is sort of getting—you mentioned before people kind of just dive in and they don’t really know what they’re doing. And I was also reading in your book, which we’ll talk about later, but what are some of the most common mistakes, Bob, that people make when they try and get in their first property development deal and they just, you know, they don’t know what they’re doing and they can potentially lose a lot of money? What are some of the pitfalls that people can stay away from based on your experience from the most common list of things?
Bob: One thing that scares me is that often with people starting out is they don’t know that they don’t know. It’s a dangerous thing. It’s a good thing to know that you don’t know but when you don’t know that you don’t know, that is very dangerous. And sometimes I go in some of the large property forums and you go and you see people coming up with a question, “I just bought a development site. What do I do next?” They’re asking other people out there who have never done a development for advice. That’s pretty scary stuff.
So where can they go wrong? Well, due diligence is a big thing when you’re looking for a site. Some people just launch out, they believe a real estate agent. Nothing wrong with real estate agents but caveat emptor: do your own due diligence.
I always say, first thing, get a little team together-be it an architect, be it a town planner and do your due diligence on the site. It might be a site without a development approval. What’s the zoning? What’s the likelihood of success on the development? What’s the yield? What can we get on it—two townhouses, four townhouses? Some people just launch out, buy a property without knowing and it’s quite scary.
So yeah, initially, the right sort of due diligence.
Know the structure before you enter into a contract. Some people just launch into a contract signing their own personal name with intent of developing and holding and then they find out, Well, I don’t really want it in my own name after all. And it’s an expensive business to try and take it out and sign personal name back into a trust or a company—whatever the structure is. So get these things in place early.
West: Absolutely. So I guess it all comes back to educating yourself and making sure that you have at least a base level of education. Personally, I actually respect people who dive in and do stuff but I think when there are things at stake, such as people’s lives and people’s families, you’ve got to actually have that base foundation. And I think a great step, as we’re talking about before, is going to Bob’s site and getting his eBook. I just spent the last few days reading it a few times and it’s an amazing, amazing resource. If nothing else, it’s free. It just teaches you everything…all the basics of property development.
And so Bob, for people who want to know a little bit more about your book, how did the structure come? And I’m guessing, over the years, you’ve thought, ‘How can I Put together something that just teaches people the backbone of what I do.’
Bob: Well, I wanted to get the basics out there because I was bumping into people all over the place, I was seeing…
West: You’re always getting the same questions probably.
Bob: They’re all the same questions and you know, as I said, you go into some of the property forums and you see what they were really doing. So I thought, ‘Look, at least let’s get some basic information out there about the development process, the sorts of development you can do, what are the risks or basically the advantages of doing property development. It’s about a 41 page ebook and it’s free. So that helps as well.
West: And it’s pretty damn good.
Bob: It just gives people a bit of a feel for property development: what it’s really about, what some of the advantages are, what the risks are, how you can get into deals. Obviously, here you can get a lot of wealth from it as well. So it’s a good first base, if you like, to go to.
West: Absolutely. And one of the things I noticed about it is people can start doing this in their spare time. I mean they don’t have to quit their job tomorrow and start going full—you know—full time property. They can actually learn and kind of do it on their weekends.
Bob: Look, I don’t want to make property development sound like it’s really easy. But it can be. With the right help, it’s relatively easy.
Look, very often people have done a course or start to mentor or have what I call a day job. And most of them are quite happy or quite comfortable to do, say, three townhouse projects—let’s say that’s an entry level: 2 or 3 townhouse project—in their spare time while they‘re currently in a full time job. A lot of that comes from two areas. It comes from getting the right help when you’re doing it. And then getting the right team of people around you.
And look, the thing is, once you start doing it, once you’ve done your first project, like you might do a 3 townhouse project—let’s say it’s a moderate but a successful one—you might pull, let’s say, $70,000 profit per townhouse. At the end of 12 or 18 months, it’s $210,000 worth of profit. But it could be a cash property if you sell them. It could be even better if you decide to keep some, because then you can hold it as a long term investment. And because you don’t pay tax unless you sell it, you’ve got this accumulating asset that you can still harvest the equity of. So all of a sudden, you know, the property development part time thing is making 3x or 4x as much as the day job. So the temptation is whether to do it full time.
West: For sure.
Bob: Some do it sometimes. Some people are happy to do a little project every couple of years. Use that to build their property portfolio with a long term goal, whether that long term goal is…it’s usually retiring early, change their lifestyle. Some people might develop three every 12, 18 months, 2 years. Sell one, keep two. Sell two, keep one. Use the extra cash.
West: I guess that’s all part of their strategy. Like the overall strategy that you were talking about before—putting down on paper what it is you want out of it. I mean if you want to travel the world for the rest of your life and drive Ferraris, you’re going to have to probably work a little bit harder than someone who just wants to be able to live and have their expenses paid by their investments.
So on that note, I was reading one of the principles you were teaching Bob, (in the book) where you teach people how a property developer saves way more money than a retail investor for exactly the same deal.
West: Give us a really quick summary of how that process works. I thought that was really fascinating.
Bob: Okay. Let’s take a little three townhouse project, let’s say three or four townhouse projects. Just to make it easier to understand, let’s break it down per townhouse, okay? So we might be cutting a three townhouse project into three or four townhouse project into four. Looking at it on a per townhouse basis, so a typical townhouse, let’s say, might sell on completion for about $500,000—normal bread and butter townhouse in one of the suburbs. Now that townhouse is probably going to cost somewhere between $400,000 $425,000 to develop. Now what I mean by that is all the costs are going to run up to let’s say about $410,000 $415,000. That cost includes the land, professional fees of the consultants, the approval process, the finance, the counsel fees, all the bits and pieces. So what you’ve got on completion, you’ve got a property that’s worth $500,000. What you’re going to do, obviously, you can sell it at the end and you make a cash profit. You make a cash profit, it becomes income tax paid. That’s great. You get a bundle of money, you pay your tax and you move on.
The other thing you can do—and you can even do a mix of the two—is to actually hold that property at the other end. Now when you’ve developed—let’s say it’s worth $500,000. Now what’s the bank going to lend you? Well typically, a bank on an investment will say, “We’ll lend eighty percent without mortgage insurance.” So they’re only going to lend you $400,000 on a property that only owes you, let’s say, $410,000. So really, all you have to do is leave $10,000 into that deal. And the other $90,000 is profit. So the bank will lend you almost a hundred percent of your cost.
Now if there’s been even a smidgen of growth during that twelve month project, what was $500,000 at the beginning or say even a five percent growth, it’ll be worth $525,000 by the time you complete it. So they lend eighty percent of that and it’s all your costs. So really, all you’re doing is you’re leaving a development profit in as your deposit on the finance at the other end. So the bank is fully funding all your costs. So the equity that you put in on the front of the project to do the development, you can now take out, leave your profit in and hold that property. And really, that’s how you accumulate wealth.
So all of a sudden, you’ve got a property where you’ve got a twenty percent deposit which is just your profit. You’ve got your equity back out and you’re going to do the same thing again.
West: Wow. So it allows you to essentially replicate much more than if you tried to do it on your own.
Bob: That’s right. The normal way is to go and buy a $500,000 property for $500,000. By the time you pay legals and stamp duty, it might owe you $520,000—it’s worth $500,000—you get a yield of negative. So you have to put in your $100,000 from some of it—often it’s equity over other projects like properties or whatever. But what you’ve got to do now, of course you’ve got to wait for normal organic growth, you’ve got to wait for the market to increase your properties in value. When they have you refinance, you harvest your equity. So you’re waiting. You’re waiting on the market.
The other way you take control of and actually create that equity immediately is through property development. And that’s the principle of it.
West: Just from the structure and the concept. Wow. That’s powerful. Really powerful stuff.
Bob: So you accumulate a lot of property quicker. If your goal is to retire, then you’re retiring early.
West: Absolutely. Wow.
Bob: Or you’re retiring with more money.
West: Definitely. Definitely. And I think that’s a distinction that people would do well to read about, go back to Bob’s book, check it out and really do some numbers. And for the same deal, as I said before, you can get up to twenty, thirty, possibly more percentage back on your money. And I think that’s really powerful.
I want to talk about one more concept before we start telling people how they can find out more about you, Bob. Potentially, for more sophisticated investors watching this interview, maybe they’ve got a little bit more money in the bank than someone who is just starting out and they were wondering what they can do, how you can potentially help them. How do you help people with a higher platform?
Bob: Well, a couple of ways. What we’re talking about, I guess, my whole thing’s property development so it’s really property investment but my vehicle of getting me faster to property development. So really, you can almost break property development into two areas:
You’ve got active property development.
And then you’ve got passive property development.
So active property development would be somebody who wants to learn the ropes, get in to developments, do their own developments. Okay? So they have to educate themselves and need a hand on the way through. And they become property developers. They may stay small developers or they may become big developers. That’s active development.
Now the other way is if you like is to get all the advantages of property development, but passively. So what that means, a passive developer, for instance, may be somebody who really doesn’t want to get involved in the day to day operation of the development. One good example could be a brain surgeon. So he’s just too busy operating people’s brains. So that’s a near enough to a 7-day a week job, 14 hours a day.
West: Yup. Absolutely.
Bob: So he doesn’t want to take his mind off that, thank goodness. So what he wants to do, he wants to work his money.
West: Yeah. He wants to use property development as a vehicle.
Bob: Exactly. So he uses that, his asset base and his cashflow, to accumulate properties passively.
So some of these high net worth individuals may come into a project with us. It could be a joint venture structure. We have different structures where people can come in on a passive basis. And that way, they can get the benefits of property development almost—well, not quite as cheaply as doing it yourself because obviously, if someone’s doing it for you…in our case they pay for that, but they can get—eventually into property way below retail price.
Like I say, I never pay retail. I mean I can’t pay retail for anything. Well actually, you know what? I just can’t go out, I can’t buy a car retail. I can’t buy a computer retail. I’ve got to find a deal. So I look for a deal with property.
West: And I’m really impressed by the fact that Bob takes that philosophy and it’s part of his mindset, it’s part of what he believes in. One question I would ask you, Bob, is about how you continue to cultivate your mindset and what are some of the characteristics of the successful students that you have, mindset wise, how they’re thinking, how they’re building their knowledge, what kind of philosophies are they taking into their investments?
Bob: Well I think, first of all, most of the people that come on and want to do a project, we only ask them why, what’s their motivation? Because if they don’t have the right motivations, it’s not going to work. And if things get a little bit tough, they’ll give up.
So having an end plan to it, they may become motivated to achieve that end plan. So once the motivation’s there, that’s the driving force behind it. So it makes them a lot more motivated and open to accumulating knowledge that they need. And if there are little bushfires to put out along the way and they’re motivated, they’ve got the end goal in mind, and they’ll deal with it. It will help them deal with it.
So that’s the right sort of mindset: is to go into it for the right reasons and not just for a red Ferrari. That can be a side road. A red Ferrari and a big house—that’s a side road.
A little while ago, I was talking to someone about the characteristics of a good developer, okay, in terms of being able to solve problems, being a reliable thinker. But as I said, you don’t have to have an IQ of beyond 140 or 150; just an average intelligence but a drive to learn and a drive to succeed. That’s a good work ethic. They’re the basis.
West: Absolutely. And I guess, obviously, when you’re looking at working with someone, you need to make sure that those things are in place. Otherwise, they’re going to waste your time and it’s not going to work. And obviously, time is money.
Bob: Yeah, that’s right. You know, if people move on beyond that or go mentor with somebody, they need to have all the basics in place in terms of that initial knowledge through the course or whatever and then that are of motivation because, you know, I wear a few hats. I have a property development business to run and I can only take on a certain number of mentorees, if you like. And it’s a matter of really choosing those who really want to move forward.
West: Absolutely. So on that note, Bob, I want to talk now about your mentoring programs. You actually offer a few things. We’re going to talk a little bit about your upcoming product which I’ve had the pleasure of previewing just a few minutes ago. But your mentoring program, people can actually leverage off your knowledge and have personal contact with you, is that correct?
Bob: At the higher level, yes. It’s all about… you know, this whole education thing of being educated and building knowledge is about investing in yourself and then leveraging off other people’s knowledge. You can knock five or ten years off your learning curve by accumulating the knowledge of…
West: Well, you’ve had 30+ years of experience and people can get straight into that.
Bob: The initial thing that people need is they need to build their knowledge up of what property development is, what it’s all about. Obviously, the more technical aspects, just the processes of how it works and sort of people that you integrate with. I’ve got a little saying to ‘what is property development.’ Well, what it is, it’s about managing people and managing processes.
So we’ve got the procedural part of property development. We’ve got the processes to go through whether it’s the purchase of the site, obtaining of the approval, finance, project management or sales—whatever it is—the processes. You need to know those.
The other thing is managing people on the way through. You’ve got various people to work with…an architect. The good thing is, you know, property development, you actually subcontract the areas of it. It’s a bit like renovating. You can go and renovate a house. You can just get a builder in to do everything or you can go and then start organizing one trade at a time. It’s been like that with development. You get a really good architect and then if you like, organize some of the other consultants on your behalf and you just control it.
But this knowledge base is the initial thing. So that’s what I call my property mastermind property development course—
West: And where can people go to, to actually get into that? Is there a site or…?
Bob: Well, initially, if they go to www.propertymastermind.com.au, that’s my website where you can download the free ebook. I think that’s a good place to start.
Bob: Once they’ve downloaded the free ebook, then they’ll automatically be on my database. Once you’re on there, when I have a launch, I’ll start to send out a few emails. So I like to send out more content.
West: Just like this.
Bob: Like this, yeah.
Bob: Another good, sort of, good content leading on to the course. And then the course will be available for a period of time. People, if they want to, can purchase the course through my website. It’s very easy to do.
West: Now the course itself, Bob, it’s a monster, of course, I’ll be honest. It’s got twenty something CDs, one big manual and a support manual, four DVDs, software program, retails for $400. Tell us about the actual structure of the course, Bob, and how it’s going to help people take that next level from not knowing where to go into having a blueprint to get into property development.
Bob: West, I built it in a sequential order I know that people need to know by now.
West: You were saying before people don’t know what they need to know. You know what they need to know.
Bob: Yeah, I know what they need to know even if they don’t.
So what I’ve built into the Property Mastermind Property Development Course is all the knowledge that they’ll need to take the next step into property development. I keep saying, you don’t have to be brilliant. It’s all sequential. People that have done it just say, “Look, it is really easy to follow. It’s detailed but it’s not difficult to understand.”
It’s built upon lessons, about forty one lessons or forty one chapters of covering everything from beginning to end. And within those lessons, I refer to a support manual which accompanies the lessons. I have a 370 page support manual. It’s all the things like check list and documents and templates of…
West: Exactly the stuff that you use in your business.
Bob: Yeah, but these are copies out of lots of my projects and the things that I use everyday.
West: But you paid probably tens of thousands, if not more…
Bob: I learned the hard way.
West: To develop.
Bob: Exactly. Yup. And that’s in the support manual saying Welcome to an area of lessons and say ‘refer to the feasibility template’ or ‘refer to the due diligence template.’ You go to the support manual and there it is.
So we’ve got the lessons. We’ve got the support manual. And beyond that, I’ve actually recorded this set of 20 CDs which is really the whole of the 41 lessons in audio. So if you like, you can put that on to an mp3 player and play it at the gym, you can play the CDs in the car. Because some people are more audio— they like to hear, they like to read.
West: That’s for sure.
Bob: So one can reinforce the other.
I put in as well a six-hour set of DVDs or live workshop I did with some of our investors. It was a closed door workshop. We go through the whole development process but in looking at different angles that aren’t in the lessons. Lots of Powerpoints. We’ve probably got a hundred Powerpoint slides in there in the set of CDs as well. We go through a whole heap of things: create a finance, the whole due diligence, the process. 6 hour DVD set.
Now beyond that, something new is I’ve done a series of interviews lately with my inner circle of consultants. So it’s me interviewing them. So I’d interview my property accountant, property lawyer, one of my builders, project marketer, commercial finance broker, my interior designer—these sorts of people. So that’s me interviewing them. That’s in a set of 8 CDs.
West: I imagine—I mean—the experience you bring to know what questions to ask. I mean you could put a newbie in front of these guys and they just wouldn’t know what to ask.
Bob: No. That would be a 30-second interview.
So I dragged out all the knowledge out of them. And that’s valuable.
Also, in my lessons, what I plugged in to the back of those is three case studies. So three deals that we’ve done, three projects we’ve done, real offers— a subdivision and two townhouse projects. We’ve absolutely pulled the deals apart, from how we came across the deals, showed due diligence that we did, how we contracted the deals, terms and conditions in the contract, how the deal came together, how we financed them, how we got the approvals, the project management side, how it all came together, the marketing, the sales at the backend on three of those. There’s no substitute for actually going inside real deals and see how that happens.
And also looking at our early bird special, for those who get in an order early, is I’ve done a series called ‘Under the Microscope.’ What I’ve done, these are sites that we’ve looked at that were on the market for sale and we got in and pulled the lease apart until about these are the things to look for in this particular deal. These are the things I liked about the site, the things I didn’t like about the site, problems that could arise…
West: It’s almost as if someone was looking over your shoulder and accessing your brain.
Bob: Yeah, exactly.
And the things that people come back to me often and say, “What’s the hardest thing with getting in your first project?” And people that are looking at getting into their first project say, “…to know a deal when I see one. If I see a site, how do I really know if it’s a deal?” So part of that is the due diligence analysis. And the other part is the pure number crunching. So this is my, if you like, my due diligence analysis of how I look at a deal.
West: Because, I mean, in thirty years you would have pretty much got it down to a fine art. Would it be fair to say?
Bob: It would be, yeah. And all of that—the due diligence stuff—is in the course. So that’s called Under the Microscope. I’ve pulled out five of those that I’ve looked at probably the last six months with full analysis. Probably an early bird special.
Now there’s something else I’ve put in to the course. It has to do with the number crunching. How you number crunch or feasibility analysis, all that’s in the course. We’ve got four chapters just about how to do feasibilities.
But I put a software program in there. Not just a cheap little Excel that somebody has put together. I’ve seen a few of them around and they’re just full of holes. This is a proprietary software package which has been on the market for twenty years. It’s called Feastudy. The deal is called Feastudy Lite. That’s the program. It’s an excellent program. And the recommended retail price is $440. And it’s great value for $440. It’s all you’ll ever need to do to do small development projects. I’ve put it in my course because I really want people to have a professional presentation when they put it before the bank or before a valuer. And also, it really makes the number crunching easy. I mean who wants to work out interest in a deal the long way?
It’s a great program. It’s constantly being redeveloped. Been around for twenty years. I’ve put that in the course.
West: Wow. Fantastic. So it sounds like, Bob, you’ve literally given the entire toolbox that anyone would need to get into property development from point a to point z: everything they’re going to need, the foundations they’re going to set. And we were talking before about information and education being the first step into getting in without getting burnt massively, and there’s literally no better way to get in from someone who’s done it for so long.
I, for one, am excited about the release of this product and I think it’s going to help many, many people avoid the traps and the misconceptions of getting into property development.
So I guess on that note, Bob, is there any parting words you want to say to people watching the interview, a bit of a sage advice or anything you want to impart on leaving?
Bob: On leaving? Uh, other than no matter what endeavor you want to get involved in, get a good ground. Look, it doesn’t matter whether it’s property or outside property, there’s just so much knowledge out there these days. Do the right due diligence but don’t be afraid to invest in yourself. The best asset you have is yourself and invest in that, increase your knowledge. With knowledge comes confidence. And with confidence comes the inner strength to take that step, that first step.
West: Absolutely. Beautiful. And on that note, just really quickly, if they want to get a hold of Bob’s free report, it’s at www.propertymastermind.com.au. I highly recommend reading the free report if you’re looking at getting into property development or even if you’re just looking at learning about the industry or taking another step in the right direction.
You can read more about Bob’s course from the links included in and around this interview. And I hope you’ve got something of value.
Bob Andersen, thank for talking to us. Hopefully, it’s added value to the viewers and I appreciate your time.
Bob: Absolutely! A pleasure, West.
Mar 17 2011
Rank #5: [Interview] Brian Sher: Small Business Reality Check – Paradigms, Habits, Metrics and Lessons Every Small Business Owner Must Know For Maximum Growth in Minimum Time
Author 4 Bestselling Books, Founder Vision Publishing, Mentor To Business Owners, Board of Directors 8 Companies
As you listen to this you’ll immediately feel Brian’s business acumen has come from an extensive background of experience. Sharing his insights on how to evaluate, structure and grow a business he also reveals some of the deepest traps he sees entrepreneurs make, and how to avoid them. His books are revered as business classics, and I even get time to soak up the essence of his best-selling philosophies.
In this interview you will discover:
– How Brian overcame incredible self doubt to launch a successful publishing company and become a best selling author
– Key Lessons from being headhunted on a small business advisory board with a large network
– Why everyone should ‘be in business for themselves’
– Habits of the worlds most successful business people
– Why most people fall in love with their product (bad) when they should be falling in love with their market (and how you can too)
– The importance of PE ratio
Click Play To Hear Streaming:
[ mp3 – 43 mb – 46 mins ]
Click To Read Full Transcript West Interviews Brian Sher
West: West Loh
Brian: Brian Sher
West: Welcome to the call, folks. And today we’re very privileged to have Brian Sher on the line. Brian was born in South Africa and moved to Australia to study a degree in Marketing but he’s since gone on to grow many companies, one of the main ones being Vision Publishing, where he’s got some books—which I actually have in my personal library and I’ve been reading for a long time now and it’s been very, very useful for me. And Brian’s also been recruited as a dynamic and exciting speaker and adviser to many, many top business owners and professionals. So we’re very lucky to have Brian on the call today. And welcome, Brian!
Brian: Well thanks, West. How are you?
West: Very well indeed. I’m excited to speak to you today. Before the call, I was actually just reading through one of your books, How to make Money Out of Thin Air. It’s a fantastic read and I recommend people to go and have a look at it.
So Brian, why don’t you tell us a bit about your journey, how you got into, firstly, running these books, that would be a good start. Yeah, what was the premise behind you being able to reveal some of these secrets?
Brian: A lot of people ask that question. And the truth of the matter is, is that I don’t consider myself to be an author, I don’t consider myself to be a speaker, I don’t consider myself to be a business consultant. I just—like many other people—started life by thinking ‘What am I going to do?’ And having left university, I suddenly realized that working in a job probably wasn’t for me. So I just set out to do the best I could, you know. And what that means is that when you’re faced with the prospect of not getting a job, you have to start looking at the alternatives. And sometimes it was quite scary, quite unsure what to do.
And going into business at a young age, you know, is always a great thing because you start off with a lot of energy, enthusiasm; but the flipside of it is that you’re quite naïve and therefore you do things that you wouldn’t do if you actually had some common sense. And that’s your biggest advantage, really. Because, you know, how many people have you spoken to who have been in business three, four, five years and they say, “You know, if I knew back then what I know now, I probably would never have done it.”? I’m sure you’ve heard that many times. And I was in that boat—it seemed like a good idea to go into business and I was excited about the prospect of doing that and the thrill of doing it. And so off I went.
You know, I started a number of businesses in different areas and I met some great people along the way. And like everybody else, I had to learn and struggle and find the right way versus the wrong way. And there’s many, many wrong ways to do things badly but a few ways to do them correctly and pay the price like everyone else. I just learned things along the way.
You know, one of my early businesses that you mentioned was a company called Vision Publishing where we used to summarize business books. And so I was in a very fortunate position that my product was ‘learning’ and my product was to be the best business books that were being published at the time. So every day, I was taking a lot of great information from some of the best minds around the world and I was applying it to my business. And I found that a lot of the stuff worked. So over a period of time, I built a lot of content, a lot of things that worked for me. Because obviously, every business is different; and some things work better in some businesses and some things work better in others. But I found what worked well for me in a business of my size. And usually small and medium sized businesses operate differently to large corporate businesses. And being in a small-medium sized business, I found that certain things worked. And I wanted to document those. So I thought the best way to do it was to just write them down.
So I never set out to write the book. I just set out to document the things that I found were working for me. And that turned out to be a book that a lot of other people valued and found that something was really good. So that’s the road to becoming an author.
West: Wow. I just noticed on the back of the book here you’ve got a raving testimonial by John McGrath, someone who has followed in your footsteps and written a couple of books of his own. But he’s a very successful real estate agent. And also Simon Reynolds, who’s also a very well respected entrepreneur. So yeah, you definitely had an effect on some of these guy’s careers, Brian.
Brian: Well look, I mean, John McGrath and Simon Reynolds today are friends. I see Simon really and we do quite a lot of work together. And that’s one of the great benefits of achieving a certain level of success, is that you get to meet some really great people. I’m sure you’ve experienced it yourself, West. You find that people of that caliber rub off and you get to really lift yourself to level thinking that you wouldn’t otherwise achieve. So that’s a really good benefit and something which I treasure and value a lot.
West: Absolutely. I want to ask you, Brian, when you were looking at starting your initial businesses as a budding entrepreneur, did you have any really critical self doubts and barriers or obstacles or self talk that a lot of people go through? First, did you have them? And secondly, if you did, how did you break through them?
Brian: Well, you know, I would start this conversation by outlining for you one of the great things about being young and enthusiastic and having the great vision: the fact that you don’t see problems. You know, you just see all opportunity. And it’s only once you’re in business that you suddenly start your own limitations.
So starting out, I never had any doubts, really. I was just enthusiastic and I saw an opportunity and I went for it. I didn’t have to think too hard about it simply because when I looked at all my other options, there weren’t too many. So I just thought, ‘Gee, this is a good opportunity. I liked the idea of it and I’m going to do it.’
It’s only once you’re in business—and I do remember sort of three months after I started Vision Publishing and things weren’t going so well because the thought process that I had and how I was going to grow the business wasn’t working—and it was only at that point that I really had to start the true learning process. Because I thought I knew everything before going into business, but once you get there you realize there are a lot of things that you don’t know. And I went into a bit of depression, self doubt, loss of faith in myself. And I remember sitting in my office thinking, ‘Well, how do I get out of this without looking bad?’ That was my predominating thought. But fortunately, all the money that I had was invested in the business. And that kept me going.
West: So you were committed, basically.
Brian: I was committed. So all those personal development things that you read about—commitment and focus and persistence—those are all the things that are nice to read about but where they really come to play is when you are forced to make some really life changing decisions. Now I remember sitting in the office here in Sydney thinking to myself, ‘I really am going to be a disgrace to myself and to my family. And I’m going to let down my partners,’ ‘coz this thing’s going to fail. And I was in a lot of pain, you know, a lot of emotional pain. And this happens to a lot of people, not only to my self. And it happened to me many times. But because of that experience and having gone through that and succeeded beyond that first experience, I know every time I go to that place of self doubt, I know the way out. And a lot of people don’t know that because they get to a place of self doubt and they never found their way out.
I happen to be in that place of self doubt surely after I started my business, but the pain of it drove me to take greater risks and to try things that I ordinarily wouldn’t have thought. You know, it was a black or red scenario for me. So I decided, ‘Look, I’m just going to do this and see if it works.’ And I tried some things which worked really well. And the business dug itself out of making a loss to making great profits. And the business grew enormously as a result of that whole experience and that pain that I was in.
And I value that today because every time I have that self-doubt, I remember that and I know that that’s a good place to be because the greatest innovation and the greatest breakthroughs that ever happened in your business, in your life are at a time when you are in the most pain.
West: Wow. It sounds almost as if you…like expect to go into that phase whenever you take on a new venture or go through a phase in your business. And when you expect to go into that, you know that there’ll be a way out. And that’s a reassuring thought for anyone going into business.
Brian: Well, that’s a very fair comment that you made. Obviously, the smarter that you get, the more you learn, the less time you spend in that period of pain. The problems just become different. And then you need to learn different things at different times.
And you’re always learning lessons. You always find that there are things that you don’t know that cost you money…but at a different level. Rather than just judging success or failure, there are different things that cost you money that you still think, ‘Well, if I didn’t do that, I would have been far more successful rather than just successful,’ if you know what I’m saying.
West: Mmm. Very powerful. Do you have like a certain sequence of questions that you ask yourself when you’re in that period of pain or period of self doubt and you’re just not sure where to go next? And I completely empathize with that feeling of doubting yourself and not knowing where to go next and not knowing how things are going to pan out. When you’re in that phase, Brian, what’s the process you go through to start clawing your way back on track and staying focused?
Brian: The answer to that question is varied. But the basic process that I go through is I try to look at things in the simplest terms because I also think that once you get to that point, you’re not thinking clearly. You’re at a point where you’re under a lot of stress…
Brian: Exactly. Your cortisol levels are very high…in most people. And when you’re at that point, it’s very hard to think clearly. So you’ve got to take yourself back to a place of excitement. You’ve got to take yourself back to that experience of joy, you know, “Oh this is a great thing and this is the reason why I got into it in the first place,’ and get that excitement back. Because once you’ve got that excitement back, then you can start to see clearly again. And at that point where you can start to see clearly again, you can then start to say, “Okay, it’s a matter of just connecting these three dots.” And if you keep it that simple and you understand that business is just a matter of building a good product and selling it and you do that many times and you become successful, then the complexities are taken out of it.
West: Hmm, that’s powerful stuff. So basically you need to get unclouded so you can see clearly the path ahead.
Brian: Well, you need to firstly realize emotionally where you’re at. And the hardest thing to do is to do that. And a lot of people who are suffering in business just can’t see that, you know, the forest with the trees. And that’s the hardest thing. And the hardest thing is to actually get your self out of that.
What I would do if I was in that situation—now I just couldn’t see the forest with the trees—I would spend whatever money I had or I had left or I could afford to get another perspective, whether it’s a friend that you trust your success on business or a business coach or mentor. But not just any business coach or mentor. Because one of the things that I find—certainly for myself—is that people go and get advice from other people that are more messed up than they are. And I can never understand that. That’s like going and asking someone who’s homeless for advice on finances. You’ve got to go to the right people.
West: Exactly. And you probably have to invest in that.
Brian: Exactly. Today I’m very fortunate. For me, I’ve got a circle of friends who are successful. So I can ring them up and say, “Hey, let’s have coffee later (or lunch). I need to bounce some things off you.”
West: But you weren’t always like that.
Brian: But I paid the price.
Brian: I paid the price to get those sort of people. And today, fortunately, I can call a few of them friends. So I can get that sort of advice.
But you’ve always got to understand that free advice is never free. Because unless you paid for that advice, you don’t value it. And you should go and try to find the best people that you can that you can afford to help you get through that process.
West: Very true. Now that’s awesome advice, Brian. Thank you for sharing that with us. That’s going to be something I think people should go back and listen to again.
So I wanted to ask Brian now…with the kind of things you do today—you mentioned you don’t classify yourself as an author or a speaker—what kind of activities are you mainly involved in today? I mean, do businesses come and ask you to help them grow their profits? Or do they get you to look over some of their constraints? What are kind of the main things that you do today as Brian Sher?
Brian: For the last eighteen months… I’ve just returned from the US where I grew a business over there for three years prior. And so I’m in the process now of buying into and establishing a number of businesses, new businesses in areas that I’m familiar with, some that I’m not so familiar with. But I’m also on a couple of advisory boards of about seven or eight companies. I do that together with Simon Reynolds. So there are a lot of small and medium size businesses who really don’t have anyone that they can turn to. You know, large corporations have Boards of Directors, whereas small and medium size businesses (SMEs) really don’t have that mentorship that large corporations do.
So I have set up advisory boards that Simon Reynolds and myself work on, where we will become an advisory board for small businesses. Like the board of directors, we will sit with the business once a month and say, “Look, here are the five things that you need to do and here are the eight things that we feel that you’re making a mistake of.” And that’s been very powerful and very effective.
West: It sounds like kind of a mastermind group where businesses that don’t necessarily have access to very large networks can access people who have experience and proven records in the industry.
Brian: Right, right. But we do that on a selective basis. And we find that that’s working really well.
But the main game for me is to always… you know, I’ve been in business for myself. Advising is fine and I do a little bit of that. But to be in business for yourself is ultimately where I think the value lies because the amount of money that you can generate in your own business far exceeds anything you can do by being a consultant or by being an author or any of those sorts of businesses.
And in my book, How to Make Money Out of Thin Air, which you have a copy of, I’ve outlined 20 habits of the world’s most valuable businesses and 41 habits of the world’s most successful business people. And those are the sort of criteria that I try to follow myself personally as well as businesses that I look at and get involved in. Because I think that by having that checklist, it allows me—and that’s the reason I wrote the book; obviously because I like to keep a documentary of my own thought processes—is that if I’m looking at a business or if I’m consulting to business or if I’m helping out in a business, I look and compare that business against the list of the twenty habits of world’s most valuable businesses. Because if you can do that and you can say, well, this business or this potential business should add these components or should have these components, suddenly you can change your business model to be a far more successful business model than you may have started out with in the first place.
West: Absolutely. It’s very powerful to see that list. And it just minimizes your risk, obviously, and it minimizes the businesses’ risks if they can follow those key criteria which have been proven time and time again.
So why don’t you tell me some ingredients that if someone’s looking to build a million dollar business now no matter the economic conditions, what are some of those key ingredients that you look for? Or if someone came to you and was looking to build a million dollar business now in the current economic crisis, what advice would you give them Brian?
Brian: Well, the first thing I pull out is this list of habits of the world’s most valuable businesses and say, “Look, let’s compare your business against these.”
And I’ll run you through a couple because I don’t have enough time to go through all of them.
West: Yes. Give us the key ones.
Brian: Well, the first and obviously the most important is you’ve got to look at what market you’re in. And that sounds obvious. But a lot of people going to business, they’re really not addressing the market potential for what they have.
So for example, someone might come to me and say, “Look, I’m thinking of opening up a news agency.”
And I’ll say, “Well, that’s great! What’s your long term goal? How much money do you want to earn? And what do you want your business to look like in 5 years?”
They might say, “Well, I want to have a business that’s pulling in a million dollars a month,” or whatever their goals are.
And then I look at their business and say, “Well, the market you’re doing doesn’t match your life goals. It doesn’t match your potential.
Because if they’re going to open up a news agency, the market is limited to their neighborhood. In other words, someone who lives in Perth is not going to fly to Sydney to go and buy their news agency. So you’ve got to understand that your market is probably the most important thing. And that’s why the internet is such an exciting breakthrough for many businesses because all of a sudden, the person—such as yourself, West, you’ve got an internet business—you have access to millions, if not, billions of people around the world. And you can operate it from a location in your garage or your home. And that’s why internet is such a fantastic tool.
But if you’re selling widgets, if you’re selling a service or you’re selling consulting services, you can’t distribute that through…
West: It’s limited.
Brian: If you’re a doctor, how do you sell your services to the internet? So you’ve got to look at your market. You’ve got to look at your product first and say, “Well, does this have huge potential?” And if it doesn’t then you’ve got to realize that you’re limited to the amount of customers that you have. And you know, what’s surprising is…
West: Sorry I lost you for a second there, Brian. So you were saying about people not realizing the market potential of their business.
Brian: That’s right. And what’s so surprising is that people going into business or starting a business, they fall in love with their product and they don’t fall in love with their market. So they look at their product and go, “Wow, I really love this new paper that I’ve got! It’s a really different sort of paper.” And then I’m thinking, well, you know, how big is the market for this paper? They’re not really looking at the volume of business that they can generate should they be successful in their marketing.
West: So when you talk to people you basically give them a reality check and say, “Let’s face the facts. Let’s take a look at your market and let’s really figure out what the true potential is. And let’s not kid ourselves.”
Brian: Correct. Yeah. And you’ve got to look at every circumstance and say, “Well, look. Your market is limited.” But where I get excited is about businesses that have unlimited potential. One of my clients, she’s selling courses on how to write, how to become a screenwriter or how to become a scriptwriter. And she was just selling it in Sydney. And I said, “Well, look. If you repackage this and you make it an online course, all of a sudden you can sell this around the world.” You always have the potential to grow the business to a worldwide business. She just didn’t realize it. So that’s a success story.
On the other hand, there are a lot of people who try to look at their products and want to sell it on a worldwide basis but just never will and never can because there’s no potential to do that. So that’s the first thing, West.
The second thing is…obviously, I’m a big believer in selling what I call leverage products. And I think you know what that is. A leverage product is something where you’re not necessarily selling time—because time is a limited commodity—so in theory, if you’ve got twenty fours hours a day and you’re prepared to work twenty four hours a day, you’ve still only got twenty four hours a day. Whereas if you make any product that you can sell that’s made by a machine, you can sell as many products of those in as many markets as you potentially can get to. And every time you sell a product you make a profit. So if you can sell a thousand products an hour, you can make $1 profit out of every one of those products, you’re making $1,000 an hour and you don’t have to be there.
West: Exactly. That’s powerful. And I think not a lot of people really maximize that concept even though they’re able to. So I guess that’s where you come in as well, as kind of a coach and a mentor to some of these people that come and approach you, to help them realize that potential.
Brian: Sure. If that’s what their goals are, of course. And then one of the other habits that I’m really big on is if you’re going to make a sale, you should have some sort of residual income. And I know you guys are big believers in that and it’s become a lot more popular now with a lot of online…
West: Yes, we call it a backend in the internet marketing world where we continually upsell or we try and get more out of them. But you’ve probably been advocating this type of business model well before it became popularized in the internet world.
Brian: Right. I mean, the online businesses have really picked up on that and it’s become really popular. And there are a lot of guys now talking about what they call continuity programs. And then there’s new lingo out called forced continuity and volume continuity and white continuity and black continuity. There’s a lot of lingo and jargon that’s developed around this but the bottom line to keep it simple is, you know, the most valuable businesses where if you look at them, they sign you up with a customer and you end up using them every month. Look at companies like banks, credit card companies. You get a credit card every single month and you use that credit card. They don’t have to market to you every month. You buy now and you keep the credit card for ten, twenty years. That’s why credit card companies are very, very successful.
You look at some companies, they sign you up—these days, everybody realizes you get a mobile phone for free because they’re not interested in selling you the phone, they’re interested in your mobile phone bill every single month. Those are the sort of business models that you need to look at and say, “Well, how do I take my business from a one time sale into a continuity sale?”
West: Definitely. And I’m sure there have been many instances where people have come up to you and said, “Brian, I don’t think I can create an ongoing, continuous income,” but then you’ve been able to show them how to do that based on those principles.
Brian: Well, sometimes you’ve got be creative. And sometimes it’s easier than others. And sometimes it’s more obvious than others. And sometimes there’s just no opportunity at all, in which case, you need to adjust your business model.
West: Yup. Powerful stuff.
Now tell us about the power of the Price Earnings Ratio, Brian, because I know that you’ve mentioned that to me in the past and how most businesses don’t even take that into consideration. So give us—for those of us who don’t understand what it is—just a quick explanation what it is. And then tell us how, as business owners, maximize our P/E Ratio.
Brian: I love this topic because this is the real business end of getting rich. And when people talk about getting rich and going into business, there are so many people in businesses today that have a business that effectively is nothing more than a job for themselves. And while they’re self employed, they really don’t have much value in their business because they don’t understand the P/E Ratio and they don’t understand what that means and they don’t understand how powerful that is. And they don’t understand the fact that if you employed these 20 habits that I keep talking about—of the world’s most valuable businesses—your P/E ratio skyrockets. And if you can skyrocket your P/E, you’ll skyrocket your wealth.
So let me just answer your question as to what the P/E ratio is. The P/E Ratio is basically a price earnings ratio. And what that means is that your business is valued being the price relative to its earnings. And the ratio is just the proportion between what you’re earning and what the value of your business is. Let’s take around numbers as an example. If you’re making $100,000 profit or you’re making a million dollars profit, what is your business worth? Now you can be making a million dollars profit and your business is not worth anything. Why? Because for your business to be worth anything, it’s like the real estate market, for the business to be worth anything, there has to be someone who’s willing to pay that price.
Brian: So for example… let’s use real estate as an example. If you have a house—and it’s a beautiful house—but that house is built on a toxic waste dump, even if it’s got harbor views, I don’t think you’re going to find anybody that’s going to give you anything for that house.
West: Yup. True.
Brian: But that house is undervalued to you if you’re prepared to live in it. It’s the same thing with the business. If your business is not structured properly and it’s dependent on you as an individual and it doesn’t have leveraged products and even if it’s making a million dollars profit, and it doesn’t have these twenty habits of the world’s most valuable businesses built in, your price earnings ratio is going to be almost zero.
And people who sell their time, who are consultants or doctors, lawyers, those sort of businesses really don’t have a lot of value and their price earnings ratio is very, very small.
On the other hand, you’ll find other businesses that are well systemized—again, which is one of the twenty habits—they have residual income, they sell leverage products, they create powerful brands, they’re not dependent on any one person, they’re usually the market leader, they attract the best and brightest people, they have few real competitors because they’ve differentiated themselves, they have high margins on their products, they don’t have a lot of real competition because they’ve differentiated themselves properly. And what they’ve also done is they’ve built an exit strategy from day one. Now, if you do all that, all of a sudden your price earnings ratio starts to skyrocket.
And the value of earning a dollar is different in two businesses. So if I was going to start a business, I’d be wanting to start a business or grow a business that has the potential for a really high price earnings ratio. And the reason for that is because if I’m going to build a million dollars worth of profit into a business and it’s going to take me five years to do that, what I want to do is make sure that when I sell that business like I would want to sell a house, I want to sell it for the highest value that I could. And to get a high price earnings ratio is the way to do that.
So if I was going to build a million dollars profit, I would rather try to sell my business for $10 million at a P/E of 10 than at a P/E of 1, which means I’m only going to get a million dollars for my million dollar profit. And if you try and sell your business at a P/E of 1, there’s almost no reason to sell it because why would you sell a business that you can earn a million dollars out of anyway? So there’s no point and no one will want to sell a P/E of 1. So every dollar that I’m going to earn over the next five years, I want to make sure that not only am I earning a million bucks but I’m earning a million times 10 (million X 10). Because I’m earning $1 million every year but at the end of that period, whether it be three years or five years, I’m then going to sell that $1 million for $10 million or I’m going to sell it for $5 million or I’m going to sell it for $20 million.
And that’s a really incredible thought process that very few people talk about when they start growing their business. Because if you can build a business with a high P/E ratio and you can build all these twenty habits in, you become instantly rich.
West: And it’s a completely different way of thinking from how most people approach business and business foundations, isn’t it?
Brian: The words are: “Start with the end in mind.” And that’s one of the Seven Habits of Highly Effective People.
West: Yes. Stephen Covey.
Brian: You know, millions of people have read that book but if people take those principles and apply it to themselves on a daily basis, they can make a huge difference to their lives.
So when I think about business or I try to help people, advise them, I try to think of it in those terms and I try to drum those concepts into their head because if you’re going into business, there is no point in—unless you’re doing it as a hobby—but the point of going into business is to make a lot of money and to give yourself a lifestyle that you will enjoy, appreciate and you can maximize and you can value. But the best way to do that is to earn the most amount that you can in the shortest period of time. So I would rather have a business where it’s producing half a million dollars a year and has a P/E of 5 than a business that’s producing a million dollars a year and has a P/E of 0. Does that make sense to you?
West: Yes. Absolutely. Different mindset from what the masses are thinking out there. So I’m curious, Brian, with regards to online businesses…is it more difficult to determine the P/E ratio if the business is primarily online? Because I noticed you’re talking a lot also, obviously about offline businesses with staff and systemization and all that sort of stuff. I’m sure a lot of the principles will also apply for online businesses.
Brian: They absolutely do. The great advantage that online businesses have is that immediately a lot of those habits are already built-in. I mean, if you’ve got an online business, the first thing you have is you have a huge audience, you have a huge market that you can access to. Obviously if you’re selling left hand knitting business or something that’s really a niche market, you might find that you’ve got a decent size business because you’re able to sell around the world, which wouldn’t succeed if you were just in Australia. However, it’s still a relatively small niche market. But if you’re able to attract a larger niche market around the world, then it’s automatically built in. So that’s the first thing.
Online businesses don’t automatically have high margins. They don’t automatically have residual income. They don’t automatically have real competitors. So you still need to address a lot of those principles with online businesses. You still need to have an investor entry and exit strategy if you want to grow the business. You still need to keep innovating. Those are all the things that online businesses still need to do which apply to online or offline businesses. But, you know, online businesses have some advantages…just intrinsically.
West: Absolutely. I can’t speak highly enough of online businesses. I completely agree. I love having that worldwide audience being able to purchase from me while I’m out playing golf and while I’m sleeping. So that’s an advantage that I enjoy as well.
So is it an exact science, Brian, calculating the P/E ratio? I mean, can someone who doesn’t have a lot of experience or doesn’t have an MBA or an Accounting degree…are they able to pull from these factors you mentioned and get an idea of their own P/E ratio or do they need to follow some strict guidelines in order to look at how their business is currently standing if they have one?
Brian: Look, the P/E ratio, the market determines that; you don’t determine it. what I’m suggesting is that if you have these 20 habits built in to your business or as many of them as you can built in to your business, then your P/E ratio will be higher than if you don’t have them built in. Now what does that mean? I mean, what does higher mean relative to your own particular business? If you go to the Financial Review and you look at a lot of the public companies that are listed there, they will have a column next to their daily price quotes which determine their price earnings ratio. Now the price earnings ratio is simply the value that the market puts on the company based on the current earnings. So for example, if the company is doing a $10 million profit as a public company and the company is valued or the company share price is, say, $10, then how do you determine whether what the price earnings ratio is? Well, you have to look at hoe many shares are issued.
So let’s keep this really simple. To determine your own price earnings ratio, firstly, it’s only a calculation that you do yourself, it’s the value of your business that someone will pay when they buy your business relative to your earnings. So if you’re doing a $1 million turnover and you can sell your business for $10 million, then your P/E is 10.
Now most small-medium size businesses, if they’re private, will be valued somewhere between 3 and 6. That’s a rule of thumb. In other words, someone will come along and depending on how many habits you’ve got built in to your business… By the way, when I say 3, that’s a business that already has systems or already has products developed; it’s not a service business that depends on a doctor or a lawyer because that’s virtually worth nothing. But I’m talking about a business that already has a profit, it already has systems built in, it has a customer base, it’s got a track record, it’s been going for a number of years. You’ll typically get between… today, maybe a little less because the whole market’s depressed and the recession; if you were to sell your business, maybe 2 ½ to 6 as a private company.
But the idea is that if you are able to go in the right industry and you’re able to build your business where you have built in your exit strategy from day one, you may find that there’s a public company out there that has a price earnings ratio of 28 or 30. And by approaching that company and saying, “Look, would you like to buy my business?” they may offer you a price earnings ratio of 10 or 12 because they’re buying you at a multiple of 12; but for them, the value is 28. Does that make sense to you?
West: It does.
Brian: So they’re buying your business at, say, $12 million. At a million dollars profit, they may give you a check for $12 million bucks and they’re going to take your million dollars profit. But that million dollars profit is worth $28 million to them because that sort of capitalizes their business at.
So if you understand that principle and you understand that by thinking about your exit strategy from day one and always identifying a company that has a very high P/E ratio relative to yours and making them the target of your business, then you effectively could have an extraordinary result from a very small amount of effort.
West: And that’s the goal of business, isn’t it, Brian?
Brian: Well, yeah. It is a goal and certainly, you know, if I was getting up in the morning and saying, “Look, I’m going to start a business and I’m going to work really hard for the next five years,” I would rather walk away with a check for $12 million than a check for $2 million, wouldn’t you?
West: Yeah, absolutely. Absolutely.
So if people are looking at getting into business or selecting a business to go into—obviously we’ve talked a lot about the P/E ratio and the factors that go into that—are there any other factors that you look at apart from those key pillars? You know, maybe in terms of personality, whether it fits or lifestyle. Or are they the main things that you advise people to look at?
Brian: Well, look. I’ll jump to the other list that I spoke about, the 41 habits of the world’s most successful people. Because I think if you’re not passionate about your business—in other words, if I’m looking at somebody and they’re asking me for advice and I’m talking to them about their business, they may just don’t have the burning desire to succeed, which is, I think, the very first habit that you need to have and you don’t have the energy and you don’t have that passion about your business, then it doesn’t matter how good the idea is, I just don’t think you’re going to succeed.
West: Absolutely. And I strongly recommend everyone…is your book still for sale on shelves, Brian? Is it still out there in the market or can I buy it through your site or…?
Brian: The What Rich People Know, I think you can get on Amazon. You can order that on Amazon. And the How to Make Money Out of Thin Air, I think you can order that through Penguin. I don’t know which bookshops have them or still have them. But Penguin Books has it. I’m sure they can order it through those two sources if they really want to get it.
I think that it’s a great list to have. And it’s a great checklist.
West: It is. Absolutely.
Brian: I go and explain each one. And by the way, we started this conversation by saying that these things work in recessions or no recessions. It doesn’t really matter. It works equally and powerfully for you in a recession. In fact, I personally think the recession is really a good time to start a new business.
West: Because things aren’t as expensive. People don’t tend to chuck their prices up so your starting prices might be a bit lower or…
Brian: Well, yeah. You can get reasonable office space. You can get good stuff, you can buy desks and fans and whatever you need at discount prices. I mean what a great place to start.
West: Definitely. Definitely. Cool. Well that’s been a really good content packed call, Brian. I want to thank you for your time.
Actually, I want to ask you one more question before we sign off today. It’s actually about your books. I’ve been doing some courses recently that have all recommended having a book. And I was wondering for you, has it made a significant difference in your credibility, your ability to interact with people in gaining trust and building relationships? And would you strongly recommend that everyone has one?
Brian: Well, look. That’s a really interesting question. I believe that books should be strategic. And just writing a book can damage you as well if the book’s no good. I mean, I’ve seen some excellent books out there obviously. But if you’re going to put a book together, my advice is this: make sure that you’ve got some really good things to say that other people will value. There’s nothing wrong with documenting. That’s what I did. I just documented my thought processes and I think that everybody should do that. But the value of your book—if it’s not well researched and it’s not well written and it’s not professionally put together, it can do a lot of damage to you.
So don’t just think by going out there and writing a book, it’s automatically going to serve your purpose. Because one thing that I learned is that there are probably more people that I know that have written books than people who haven’t. And that’s probably because of the circles I sort of hang around in. But the bookshops are full of books and it’s very hard to know what’s good and bad. But writing a book is a really good thing to do to document your thought process. And I suggest that everyone at least start that process and see where it takes you. You’ll never know…you might be the next New York Times bestseller.
West: It sounds like it was almost a journal of yours that you decided to share with the world.
Brian: Yeah, absolutely. I must say I started this interview, again, by saying I’m not an author and I don’t consider myself one. I write that stuff down because I thought, ‘Look, I want to keep this fresh in my mind and I want to document it.’ And certainly, if someone wants to know how to do things the way I do it, well, they can just read it. It’s certainly up to them.
And I’ve been fortunate that the book’s been successful. I think it’s in twenty countries now, in different languages. It’s very nice to see that happen but that’s not the ultimate goal. The goal is just to go out there and do the best you can and learn as much as you can from everybody and certainly, you can learn from someone, a person sitting next to you in the bus. You can. And you’ve just got to keep your eyes open and learn from everyone and everything around you. Use what you want; throw away the things that you don’t and I’m sure you’ll be successful.
West: Sure. For sure. So if people want to find out more about you, Brian, where do they need to go if they want to…do you have like a coaching program or a website that people can sign up for a list? Do you offer anything to the public that people can benefit from your knowledge, besides your books?
Brian: I’m doing some sort of advisory on a selective basis. If they want to get in contact with me, they can just go to my website which http://briansher.com.au/work-with-brian.html. Or just email me at firstname.lastname@example.org and let me know what they’re thinking or what they’re interested in and we’ll go from there.
West: Great. Beautiful. Well thanks for your time, Brian. I really, really appreciate your knowledge and wisdom you’ve imparted on us today.
Brian: You’re very welcome. And thanks for the opportunity.
Feb 24 2011