Business Profit Maximizer #2 – Financial Literacy Made Simple

Business Profit Maximizer #2 – Financial Literacy Made Simple


– Profit maximizer number
two, financial literacy. What is it? – [Audience] Financial literacy. – Is the key to lifelong
financial success. I learned this the hard way. I learned this the hard way. Financial literacy is the key
to lifelong financial success. On average, research shows, 50% of the business
owners and entrepreneurs do not read their financial statements. They don’t. Even though they get their tax return, you show them, “What does that mean?” “I don’t know. “I just pay whatever in taxes. “My accountant handles that.” They don’t understand financials. They just don’t. And I don’t blame them ’cause I used, before, I didn’t understand
financials either, and it cost me dearly
because I was always, always, always been a revenue guy. I’m the guy focused on
bringing in, making, generating more revenue. Revenue will solve all problems. That was my belief until, you know, DJ, the co-founder of this, VEG. Then DJ told me that, I learned it from DJ, and DJ said, by the way, put up your
hand DJ so people know. Yeah, so DJ told me that, “Dan, it’s not how much money you make, “it’s how much money you keep.” (audience laughing) And I thought, “Oh come on, man, money?” We can always make money, ’cause I’m good at making money. I can always generate more revenue. Then when he showed me
some of the numbers, when I’m writing out some of these checks, “Okay, maybe we should look
at the numbers a little bit.” Just to see. When I’m writing these big
checks, something is wrong. I’m paying everybody else, like for any kind of, let’s say for this project. When everybody else
gets paid more than me, something is wrong here. Don’t like those numbers. How many of you have done that before? Do your project, everybody
gets paid more than you, right? Something is wrong. Something is wrong. So, Warren Buffet said,
“Accounting is the language.” Is what? Language of business. “Accounting is the language of business.” “Accounting is the language of business.” So, if you don’t speak the language, how do you expect to win
the game of business? How do you expect to win
the game of business? And that’s coming from Warren Buffet. Has Warren Buffet earned the right to teach some of this stuff? – [Audience] Yes. – Oh yeah, oh yeah. Love Warren Buffet. You’ll see, today I have a lot of quotes from Warren Buffet, actually. So imagine this. How many of you have been
on a airplane before? Okay, how many of you
have been on a plane, where you walk up to the plane as you, you know, you have your
luggage, your handheld, and then you walk by past
when you enter the plane, and sometimes you see
the pilot there, yes? – [Audience] Yeah. – He’s greeting the people, right? – Yep.
– Saying you know, “Welcome. “Welcome to WestJet. “Welcome to,” right? “Welcome, here’s your seat.” Great, and that’s all good. Let me ask you a question. What if you are walking
by, and the pilot’s like, “Hey, welcome,” shaking your hand, and then suddenly the pilot turns over to the cockpit and say, “Phew, look at all those dials, man.” (audience laughing) “Good luck!” (audience laughing) Now, what would you do? (audience murmuring) – You’d be like, “Stop!” You know, “Get me off the damn plane!” Right? (audience laughing) So, you think in terms,
well, what does that mean? What does that mean? A lot of entrepreneurs, they are flying, that’s their business. They’re flying this plane. They have no idea if they’re off course, they’re at the wrong altitude, and they’re running out
of fuel, which is cash, and they don’t even know, because they’re not looking at the dials. They are flying blindly, and they don’t understand what dials, they need to under, like, “What do I need to look for?” They just look at this
stuff, like, “Do push here? “Do I do the… “Shit.” And you wonder why 95%
of small businesses fail within the first 10 years. Think about it. Sustainability comes from knowing, knowing what you are doing,
and measuring your progress. Write this down. If you want to build a
sustainable business, you have to know what you’re doing, and measure your progress. Measure your progress. In fact, repeat after me. You can’t improve something
you don’t measure. – [Audience] You can’t improve
something you don’t measure. One more time. – [All] You can’t improve
something you don’t measure. – Because you don’t even
know if it has improved. You’re guessing. You’re like, “I think it
is, but I have no clue. “I don’t know. “I hope it is.” If you want to build a
sustainable business, here’s what I’ve learned. The goal is not to get
rich, it’s to stay rich. It’s actually not too difficult to become successful. It’s actually way more
difficult to stay successful. Now, for some of you, I know you are new to business. You may be at the initial startup stage. You’re not quite there, yet. You may not be able to understand
how profound this is, yet. Take it from someone, I’ve almost been financially dead twice. Twice. No bankruptcy, but I’ve been
in financial debt almost twice because I was overconfident
that I could always make money, and then overspend, overinvest. Made some bad decisions. Made some bad investments, and lost my money, and made
more money, and lost money. Twice. So now, my philosophy is I’m much more conservative. That I am, I used to be this crazy, stupid, optimist. I’m always very optimistic. “Oh yeah, it’s gonna work. “Yes, no problem. “We can always make it happen. “Yes, it will come through.” Now, my philosophy is
not like that at all. Now, I’m very conservative. I look at risk very, very, differently. Before, I would think of, in terms of any deals that I do, the first thing comes to mind is, “How much money would I make?” How many of you think
about that sometimes? When you get, yes, be honest. “How much money would I make?” Okay? Now, I look at any of
you I get involved with, “How much money could I afford to lose? “For how long? “What is the downside? “Can I live with the downside?” Very differently. I’m much more a realist, now. So, take that from me. It’s not to get rich, it’s to stay rich. The whole name of the game, ’cause you’ll notice what happens is in business, usually, if you study successful guys, usually, it goes through a cycle. How many can see the economy
goes through a cycle, yes? – [Audience] Yes. – When they economy is a
good, a whole bunch of people, even stupid entrepreneurs,
they make money. Because the tie, right, or the trend. You don’t need to be that smart. You’ll make money. What happens is your 10 year period time, and then they lose it, and
then they try to rebuild it, and then they try to build again, and make whole bunch of money,
and then they lose it again. Very, very common. Very common. What happens is you, what you want to do is
you wanna minimize it. You wanna make the money, minimize loss, and then go from there. That’s easier said than done. Easier said than done, because
when you are making money, you think you’re invincible. I’ve been there. I thought my shit doesn’t stink. I thought I had the Midas Touch. Wonderboy. Smart as hell. Right? And that’s when you know. Uh-uh. And usually, usually, you lose it way faster
than you make it back. So, the whole point is you wanna minimize, you don’t want to have so
many of these do-overs. Look at Warren Buffet. Did Warren Buffet make his
money overnight, yes or no? – [Audience] No. – No, he made it through a what, a short period of time
or long period of time? – [Audience] Long period of time. – He hasn’t had that many do-overs, even lost very, very little. Very, very little. Now Earl, I know you have
something to say, right? Share your story actually, Earl. From this. – [Earl] Sure. – Yeah, get a mic. Get a little mic. ‘Cause Earl has. – [Earl] Go there or want me to stay here? – No, come here. – [Earl] Oh, okay. – No, come here, come here, come on. Earl, round of applause. (audience clapping and cheering) Hear from Earl, hear from Earl. Some painful lessons, man, but share that with them and they can see. – Sure, so that chart is me. (Dan laughs) So yeah, I guess I got
into marketing and sales, quickly when I was in my early 20s, and I made my first million by age 27. I sold about 40 million
dollars worth of stock, made a lot of money,
thought I was invincible. My answer to everything was,
“Hey, throw more money at it, “then it’ll just work.” And then I got dumb, right? ‘Cause when you do that, you
lose a little brain cells, and I had more money than brain. So, that’s kind of what I did. Anyways, so yeah, so exactly
like that chart says. I made a bunch of money,
and then I lost it all. And then I made a bunch of
money, and then I lost it all. So, I– – Twice, right? Twice.
– Yeah, twice. – Twice.
– So on my peak, I was making two million a year, and then at my fall I lost everything. So, almost went bankrupt twice. – Now, let me ask you a question. – I haven’t gone yet, but yeah. – When you lost it, how
long did you stay here? – Oh, the first time wasn’t so bad. The first time, I only stayed there for maybe three to six months. – Okay, three to six months, okay. – The second time was
when I lost for sure. I lost 40 million. So, I’ve stayed there for
like three to six years. So, it took a little longer– – So, you didn’t just lose
you’re money, you lost your what? – Oh, I lost my will,
my power, everything. So, yeah. – Yes.
– So, completely. But the funny this is
I’m on the way back up, thanks to Dan, actually. – Yes, yeah, thank you. – And yeah, so and then
the hilarious thing is, that it’s actually coming up
faster than the first time. – Yes. – So, the skills that you get on the up you get to keep, right? So, just remember that. Don’t dwell too much on the down, right? Don’t forget, learn your
lessons from the down so you don’t screw up twice. But yeah, that’s just it. – Round of applause. (audience clapping) – And yes, it’s very true. Yes DJ, buddy? – [DJ] I just wanted to say,
I mean some people think – Mic? – [DJ] This only happens
to young entrepreneurs. So, I mean, I’ve known
Dan for almost 10 years. I know a lot of entrepreneurs
in their 50s and 60s. – One second, one second. Get a mic. (laughing) Make sure they hear it. Thanks, bud. – Thanks. So, a lot of people
think this only happens to young, inexperienced
entrepreneurs, right? (Dan laughs) And so you never
– Yes. – Dan and I have known
a lot of entrepreneurs over the years. A lot of people that, I don’t want to say their names here, that were famous in let’s say, the marketing world, for example. I know a lot of
entrepreneurs that just took too much risk in their 50s and their 60s and lost it all. So, this is not a
problem that just happens to a young, inexperienced entrepreneur. This can happen to an
experienced entrepreneur. The natural tendency of an
entrepreneur is to take risks, which is good, but it’s
also the Achilles heel a lot of these times. Because these people have
been very successful at times. A few examples, some people
that ran some infomercials. And I know people that made almost 100 million dollars in one year running an infomercial. That’s a lot of money when you think about 100 million dollars, okay? And within 18 months of that
time, they are flat broke. Okay? They were smart. They were making a lot of money. They were taking risks and
kept pushing the envelope. As Dan was saying, they’re not looking at where the downside is. They’re not looking when the
market shifts or changes. So, for those that don’t
much about infomercials, you buy media time in infomercials three, six months, up
to a year in advance. And you prepay for that time.

21 thoughts on “Business Profit Maximizer #2 – Financial Literacy Made Simple

  1. Well said, Dan. I've been completely over enthusiastic about different business ideas and similar to you I'm now more conservative on where I invest to minimize risk.

  2. 1:52 I’ve been there. I’m there now. I can see why you recommend these videos to me. AND MAN I need it.

    The pilot analogy made sense. Not running my acquisition cost monthly almost flat lined my business (and my revenue was good).

    The goal is not get rich. It’s to stay rich .

    Wow! There’s so much here. I always joked with people if I’m ever in trouble, I’ll just do some more deals and it’ll be okay. (This mindset is NOT one of a rich owner). Minimize loss.

  3. How do I get to know when a market shifts or changes? Thank you! ( I’m 17 and I really like your videos Dan!) If anyone could answer I’m happy to listen 👂.

  4. "Look at all those dials man!" Ha haaa! Great knowledge with a great sense of humour! Thanks for sharing Dan.

  5. Financial Literacy = financial success,
    Goal in financial is to Stay rich for a long period of time.maintain rich success and minimize loss

  6. इदमेव हि पाण्डित्यं चातुर्यमिदमेव हि ।

    इदमेव सुबुद्धित्वम् आयादल्पतरो व्ययः ॥

    – समयोचितपद्यमालिका

    Transliteration:

    idameva hi pāṇḍityaṃ cāturyamidameva hi ।

    idameva subuddhitvam āyādalpataro vyayaḥ ॥

    – samayocitapadyamālikā

    Meaning of the subhAShita:

    This alone is erudition, this alone is dexterity, this alone is good intellect – expense less than revenue.

    Commentary:

    Not stretching beyond means!

    What one possesses, only that he can expend. What one owns, only that he can give. What one earns, only that he can spend. Isn't this a straightforward philosophy? The poet opines that this alone is erudition, dexterity and good intellect. Although all these, are different facets of decision making, the emphasis here is 'all these have to give the same end result'. There is no choice about it. For, owing to someone is a burden of the heaviest kind. Even enslaving someone may be a better choice, for only the person is pawned for that. But to a debtor, the heaviest interest one pays are his dignity and self-respect!

    The most sensible way to avoid getting into this scenario is – living within one's means. Not stretching beyond what one can afford… Always having some stored for a rainy day… Even ants do that! Shouldn't humans do this more ardently :)?

    Spending is quick, earning is slow. Beware! Earn slowly, spend even more slowly :).

    pada vigrahaH:

    इदम् एव हि पाण्डित्यं चातुर्यम् इदम् एव हि ।

    idam eva hi pāṇḍityaṃ cāturyam idam eva hi ।

    इदम् एव सु-बुद्धित्वम् आयात् अल्पतरः व्ययः ॥

    idam eva su-buddhitvam āyāt alpataraḥ vyayaḥ ॥

  7. What gets measured gets improved. Thank you for your insight lessons everyday, which really blow my mind, change my mindsets and business strategies as well.
    You are absolutely the best teacher ever in the Youtube channel.

  8. I Should
    Create multiple sources of Income
    1 Active Income which is my Job my
    Monthly Salary
    6 Passive Income
    My Businesses while working
    While Doing my Job
    6 Passive Income in Different Fields in Different Industries
    But First I should Improve in Execution of Right Money Blueprints And I should have extraordinary Marketing Strategies
    Now That is the biggest challenge for me That is my obstacle how am I going to plan a great Marketing Strategy How Can I Execute Properly My Right Money Blueprint

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