TMBA 244: “I Got My First Monies, What Should I Do Now?”

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This week, we’re talking about money. We’ve had quite a few listeners asking us about what to do when your business starts generating enough money for you to live comfortably. Bossman and I are not financial experts by any means, but we have experienced a lot as entrepreneurs, and we have our own opinions on what to do after you’ve started making money. Hope you enjoy and happy Thursday!

Listen to this week’s show and learn:

  • The biggest investment decision that you can make.
  • It’s easier to make money from your business than to make money from your money.
  • The importance of disassociating your personal income from your business income.
  • How to choose a long-term trajectory for yourself that you are willing to manage.
  • Why you should be building a portfolio of small businesses instead of an investment portfolio.

People on this episode:

Mentioned in the episode:

Listening options:

Thanks for listening to our show! We’ll be back next Thursday morning 8AM EST.

Cheers,

Dan & Ian

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Published on 05.15.14
  • https://plus.google.com/u/0/+JesseBoydConsulting/posts Jesse Boyd

    nice crash, that looks super fun till the whiplash part. don’t hold tight to your monies, keep the energy flowing.

  • Adrijus Guscia

    Maybe a nice investment vehicle for smaller amounts of money would be Angel List-like marketplace for businesses that aren’t suitable for VC investment. Say you could invest 1-10k per business with an agreement that you get back 10% interest rate and money back in a year. No equity. For some service businesses, that could be huge boost and a way to scale up faster and for investor, that’s a way safer investment than stock probably. Basically, a business loan from one entrepreneur to another.

  • http://www.adventurous-soul.com/ Shayna

    I just upleveled today – after two years of sleeping on a thick piece of foam on the floor, I finally splurged and bought a $225 box-spring bed. Baselining in Brazil FTW! :-p Now at least I’ll sleep better while I continue to build up my war chest.

    One thing that helped me break through a motivation plateau last year was going to a more expensive country. I had reached a comfortable level in Brazil and my drive was lagging… then I traveled to Germany and had to squeeze by on a shoestring and eat the cheapest food available – that definitely kicked me back into gear.

    Totally agree that reinvesting in business is the best bet. Though in the early years when you’re still kind of thrashing and figuring it all out on the fly, it can be tough to know exactly what kind of reinvestment will be most beneficial. Spend on ads? Hire somebody? Invest in a high-level coach? Better equipment?

    Obviously this differs from business to business, but I wonder if there’s a framework for figuring it out and making those kind of decisions.

  • Tung Tran

    Checked the Quora thread. Lol I can’t wait for over 45 years to have 20 million dollars. Right now I reinvest my money in 3 things:
    – In myself (eat well, working out, etc)
    – In my business
    – In experiences (travel, try new things, learn new languages,..)

  • http://empireflippers.com/ Joseph Magnotti

    Thanks for the shutout boys and another good link to check out is wealthfront.com. If you really are sitting on a pile of cash (i.e. more than $25k USD) that you don’t want to invest in your business and feel the need to get your money working, check them out.

    Otherwise stay liquid and look for deals!

  • Will

    Another great podcast guys, thanks

  • http://www.MimicMethod.com Idahosa

    Free to use my name as long as you remember how to pronounce it ;)

  • http://www.minimalistmusings.com Shelley

    My investment approach is trading options. Extremely short term, and highly volatile, but lucrative, if you know what you’re doing.

  • http://www.JohnnyFD.com Johnny

    What’s up Dan and Ian! That was awesome having my question featured on the show. I just wrote up a blog post summarizing the tips you gave me along with what actions I plan on taking. http://www.johnnyfd.com/2014/05/i-got-my-first-monies-biz-tips-from.html Keep up the great work on the TMBA Podcast and thanks for the mention.

    http://www.JohnnyFD.com / http://www.TravelLikeaBossPodcast.com

  • Russell Smith

    Oh man, JumpCut is really useful! Thanks!

  • http://appjetpack.com Chris Chidgey

    This is similar to Millionaire Fastlane style – invest in yourself, keep cash on sidelines for opps whether after a market correction or for new businesses. I am in same boat as Dan and Ian – find many more opps for high returns in my businesses than outside of them… Enjoyed this one fellas!

  • http://wpcurve.com/ Dan Norris

    Hey guys this was great, it’s funny I have been thinking about this exact thing lately.

    I wonder though, if it’s sensible to have a whole bunch of businesses. If you have 1 business with multimillion dollar potential I think it is probably better advice to just focus on that one rather than diluting yourself across a range of smaller ones.

    The other thing is what if your business doesn’t need the investment? I scratch my head thinking what we would actually do with more money, particularly at our early stage.

    I’d love to know some fun / somewhat sensible things to do with smaller amounts of money i.e. $40k, $100k etc.

  • http://empireflippers.com/ Joseph Magnotti

    I’m sure Damian Thompson will tell you jokes all year on Clarity for $40k. Oh wait, you said “somewhat sensible”. ;-)

    I agree that the distraction of starting a new venture may not be worth it, especially if your main gig has room to grow. If the money is burning a hole in your pocket, I seriously suggest checking out Prosper for a good way to get a great return on personal loans. You can diversify over many different risk categories as they classify borrowers based on payment history and credit score.

    For a business approach, try Fundable.com, but I think that much more risky. If you are just looking for a place to stash the cash check out WealthFront.com, very low fee investment.

    Not sure if any of this works for Aussies, however.

  • http://wpcurve.com/ Dan Norris

    Awesome thanks man I’ll check these out. In the past we’ve bought and sold property but you lose so much money in buying and selling that I don’t want to do that again. But at the same time whenever we’ve had spare cash we’ve found a way to spend it on shit and I don’t want that to happen either.

  • http://empireflippers.com/ Joseph Magnotti

    Oh, and you could always buy a passive income earning advertising site from us! ;-)

  • http://www.TropicalMBA.com/ Ian

    Dan, interesting question ‘what if you business doesn’t need investment’.. I’m sure it needs something whether it be cash or resources… I’ve talked to a bunch of people since we recorded this ep and one concept that came up is this generation seems very uncomfortable with ‘cash on hand’. It’s like we have to deploy it or have it working in some way or another. I say hold it! Be comfortable not doing anything until the time is right.

  • http://wpcurve.com/ Dan Norris

    Yep I’ve tried that, it didn’t go well haha.

  • http://www.tropicalmba.com/ Dan Andrews

    Also here if you can come up with something legit for people to do with 40K you’ve got a hell of a business on your hands.

  • http://www.tropicalmba.com/ Dan Andrews

    Dan this is a great point. I am SO tempted to go out and build a portfolio that could be managed by someone following a process and inventivzied to grow the portfolio. Bossman and I are kicking around ideas for doing an experiment to see if we can keep it at a low enough time commitment that it would make sense to do financially and creatively.

    One of the biggest shames for me would be squandering some creative entrepreneurial potential by trying to do too much random shaz.

  • http://www.tropicalmba.com/ Dan Andrews

    Great links Joe thanks for that !

  • http://www.tropicalmba.com/ Dan Andrews

    Hey Johnny wow man great round up! Thanks so much for your question and really pumped that it provided a little bit of encouragement / value your way.

  • http://www.tropicalmba.com/ Dan Andrews

    Hey Shelley have a few super smart friends with a similar approach! Crazy question, but could you quantify how many hours it would take somebody to “know what they are doing” in a field like trading options?

  • http://www.tropicalmba.com/ Dan Andrews

    LIKE LIKE LIKE :D

  • http://www.tropicalmba.com/ Dan Andrews

    Cheers Chris thanks for that! Yeah we could have just rolled a clip of Mark Cuban as well, his “how to get rich” blog series has really made an impact on my thinking.

  • http://www.tropicalmba.com/ Dan Andrews

    YO! Yeah I’m not putting up with any more crap from bossman :)

  • http://www.tropicalmba.com/ Dan Andrews

    haha you caught that! :D thanks for writing in :D

  • http://www.tropicalmba.com/ Dan Andrews

    thank you Will!

  • http://www.tropicalmba.com/ Dan Andrews

    Thanks for the advice as always brother!

    “Stay liquid!” :D

  • http://www.tropicalmba.com/ Dan Andrews

    I dig the splurge!!! I enjoyed Mark Cuban’s story about buying a heap of fluffly towels when he started making a couple bucks.

    This moving up class is something I’ve been thinking about lately, saw talk of it at DCBKK and in the DC lately. I”ve been staying in luxury hotels lately (occassionally) sorta nervously looking at my chit. I sorta think its motivating, but I can always hear the bossman on my other shoulder!!!

    Regarding investing in your business, I think if the investments are big question marks the idea is just to wait. We are so impatient as entrepreneurs, “patience” is something I’ve been saying a lot on our calls lately. Don’t know if I’m right about that but I”m trying to get over this sense that we just need to do EVERYTHING NOW!

    Not sure about the framework either, that’s the million dollar question I suppose ! :D I’ve love to develop a small biz investing thesis, working on one now will share shortly!

  • http://www.tropicalmba.com/ Dan Andrews

    :D

  • http://appjetpack.com Chris Chidgey

    Oh yeah – Cuban too. It is always good to hear, though, what your peers are doing in “real life” with their funds. Thanks again for sharing.

  • http://www.minimalistmusings.com Shelley

    Dan, You can get trained up pretty fast just by going thru the free program at Dough.com. They are the best. I’d recommend watching Tastytrade.com archives too (also free). But it takes practice, and some trial & error. You also need a feel for the market by following it on a regular basis. There is a learning curve for sure. I’ve been trading for about a year and it took me about 4 months to start making a steady profit. Its kind of an adrenaline rush though. :) Super fun.

  • http://supremacyseo.com/ Travis Jamison

    This episode is right up my alley fellas.
    I have yet to find any type of “typical investment” that can even come remotely close to the ROI that my team and I can create. We can throw $5k at a project that will make $50k the same year, and then be an actual asset that is sellable. Sure as shit beats 5%. Being able to make money from AND then sell an investment doubles the benefit that the stock market can never touch.

    I’m also with you that investing in a skill is one of the best investments one can make. Without it, the only opportunities available are the typical ones. Having any one of the big marketing skills can have exponential payoffs if mastered and applied correctly. All that is needed is finding a market that is weak with that skill, and applying it.

    My team has doubled down on this by offering partnerships and Profit Share SEO, which is turning out to be the best investment ever. We invest our resources in things we have direct control of, and we’re also able to absorb plenty of losses because there is such a low downside and an exponentially high upside. “Typical investments” for the public seem to have such a low capped upside that it’s ludacris to me.

  • http://supremacyseo.com/ Travis Jamison

    I’ve pondered on this myself Dan, but at the end of the day I personally decided that peace of mind from being completely diversified was worth it.

    Also having lots of separate projects mitigates the risk of failure, while having a much higher possible upside as you have more chances for a “home run”.

    Even with that said though, I still have sometimes wondered if 100% focus on one thing would be better. What I’m personally trying to do now to allow for both is creating systems using my teams skills so that we can tackle markets without my direct involvment. So I can personally focus 90% on one personal project, while they take care of 90% of another project. It’s all about the systems maximizing your skills.

    So shooting from the hip, IMO your main boss-level skillset is content marketing. Put together a system for a team following your content marketing guidelines, and throw them into a market (craft beer of coffee knowing you). It will require 10% oversight from you, but they will do the majority of it, especially after it’s up and running.

  • http://www.adventurous-soul.com/ Shayna

    +1 for holding it. Seeing the premium sites that pop up for sale by the Empire Flippers really makes me wish I had enough cash on hand to snap up one of those opportunities.

  • http://www.adventurous-soul.com/ Shayna

    Fluffy towels are totally my next uplevel :-p

    Funny that you should mention patience, I was reflecting on this the other day. When I’m feeling frustrated, I’ve gotta remind myself – my biz is growing 2-3x per year and I want it to go faster?!? Instead of stressing myself out frantically trying new strategies, how about just keep doing what I’m doing for the next three years and then see if I still want it to be “faster,” heh.

    I think one heuristic that can be used in making biz investment decisions in the early days is “Am I actively suffering by not having this?” – ex) when my site literally started to outgrow its budget hosting, I felt the pain and invested in premium hosting.

    But stuff like prematurely hiring a VA (for the novelty of it…) or optimizing for conversions when you don’t have actual traffic yet are the online entrep’s equivalent of printing useless business cards before you’ve managed to sell anything.

  • Impe83

    Great content guys, thanks as always! I wonder if you have read Rich Dad Cashflow by R. Kiosaki? I really like his philosophy, I simplify it a little here but basically at the end of the day we should invest in assets rather than liabilities.. and of course in your education!

  • http://www.tropicalmba.com/ Dan Andrews

    absolutely love those books as well

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