- 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.
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.
So, Warren Buffet said, "Accounting is the language."
Is what?
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.