- In this video I'm gonna show you
how you can generate wealth from your business
whether it's a small business or a big business.
I was delivering this Contana seminar
I think that's gonna be really useful for you
and you're gonna see it right now.
Before we go any further though
and we work out our wealth plan
and what we wanna achieve we need to look at something
called the business life journey
and look at where and how business works
so that you guys can make a decision
whether you're gonna go boutique or big.
And we're gonna go through that right now.
So 70% of the bottom start outs businesses
are in what we call start up phase.
The next phase is called struggle,
the next phase is called lifestyle.
Now if you go to page three I've drawn this out for you.
This is gonna be a really good thing for you.
So you'll be able to see here that's in the diagram.
So these are the steps of the business.
70% of businesses in the UK don't pay VAT
so that's means they are turning under £85,000, right.
30% do pay VAT,
and we go through this process
we've got start ups here,
then we go in for businesses that are going into a struggle.
Now, start ups doesn't really care
that they aren't making any money.
They just sold something and they're having a orgasm
cause they've sold something.
Like yes, we've sold something.
Brilliant. This is great.
Let's have a party.
But the next phase is struggle.
They take their business past £50,000 in revenue.
They're struggling between £50 and £3000.
Now, they got a couple of employees ,
but they're not really earning anything.
The cash is burning in the business through growth.
The next phase between £300,000 of annual revenue
and two million is the lifestyle business.
This business is a lifestyle business
and you're here,
this red line is a business that can build a wealth plan,
so you can pour cash out of it to invest in,
what I would invest into is property.
And these guys are pulling out their business
anywhere between £50,000 and £300,000 of profit
from a lifestyle business.
What happens in this scenario is if you're entrepreneurial
you wanna take it further, don't you?
Of course, you do.
So I like to tell this story.
You've got one restaurant
and you build this restaurant and it turns £1.5 Million
and it makes £200,000,
you start working three days a week,
you got time freedom
and you've got some good cash flow
coming in to your personal bank account.
So back to that, that's why I talk about PBA.
So the business is making money,
you're making money,
and we've got some great time freedom.
So what happens?
Let's open, guess what?
Restaurant number two.
So we open a second restaurant.
The problem is the banks sought of saying, oh, okay,
you're gonna manage two restaurants.
Can we lend you the money to do this?
We'll lend you a little bit of what you need,
but not quite all you need.
So you open the second restaurant.
You trade in the second restaurant.
You're working really, really hard
trying to grow the business.
You're now working seven days a week.
You're still earning some decent money,
but you reduce you're personal bank account
because you're funding restaurant number two.
And because you want both,
you're not afforded the great management
to go into the two restaurants
you think to yourself,
my God, we're over trading here more than we can cope with
and I haven't got the good people around me
to grow this business,
but I can't afford the good people around me,
so I'm stretched, I hate it.
And what happens is one of two things.
These people that go into that struggle phase return.
They get rid of one of their restaurants
and they go back down to one restaurant.
And they start running a lifestyle business,
and they've lost a couple of £100,000,
but over a period of time they go, yep,
we know what we're doing now,
we'll never do that again.
Strong entrepreneurial people then realise
that you can't have medium size business.
You have a boutique business or a big business.
A medium sized business doesn't work.
It's the same with anything that you look like in life.
You either have one day nursery
or ten day nurseries.
You either have one hotel or ten hotels.
You either have a 20 bedroom hotel or a 70+ bedroom hotel.
And the stuff in the middle is always difficult
because you need the middle management,
but you quite haven't got the skill to do it.
So the difficulty is, is that funding that.
So over here I've just put this in.
When you start up a business
usually you're using you're own funds.
If you get bank funds you gotta give security,
so effectively you're using you're own assets to do that.
The next thing through the struggle phase is own funds again
You may not even be paying yourself a salary,
you're working for free
for the business as it's building up,
so you're using you're own capital again.
When you get into the lifestyle phase,
guess who comes to help you? Who?
You don't really need any money.
This is a brilliant business.
We're a bank, can we lend you some money?
Cause you don't really need us.
But then, you want to grow the business this... Here.
So if you've got four restaurants and you're struggling,
but it sought of working,
guess who wants to come and help you
private equity, venture capitalist, angel investors.
They love that stuff.
This bloke here has built four hotels,
but he's just a couple million quid short,
but we can give him that,
plus another ten million and blow this up
and then sell it to a bigger private equity company.
But, if you do manage to get through to the scale phase
and everything works,
guess who come back to help?
The bank!
But then you see this process repeats
in sizes as businesses grow.
Now, there's two red lines here.
Red line here, you can build some serious wealth here
if you've got a scale business.
If you build a boutique lifestyle business, red line here,
you can build a wealth plan as well.
If you operate here, and here, very difficult to do
because the business will suck up all the cash.
This is crucial for you to understand
before we go any further.
So you either have a lifestyle business that's boutique
or you have a big scale business.
I hope that video was useful for you,
and I hope you understand now
would you wanna build this small boutique business
or big business you should know where you're at.
Now look, give me some comments below the video
and I can interact with you
and sought of guide you on some of the things
you might be not so sure of,
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See you soon. Bye-bye.
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