Financial freedom is a cherished dream for entrepreneurs, but many get stuck in a cycle of financial frustration. They believe in vague notions of getting rich and have the tendency to overvalue scarcity and undervalue abundance.
In this episode of Entrepreneurs Rising, we dive deeper into financial freedom and setting goals that build sustainable wealth with Jackson Millan AKA “The Wealth Mentor.” Jackson has dominated the wealth and business strategy space by helping over a thousand clients build over $2 billion in combined wealth.
Rather than dealing with vague ideas about building wealth, Jackson offers a clear roadmap. He reveals the importance of defining what financial freedom means to you, based on the lifestyle goals that bring joy and fulfillment.
Discover how you can utilise Jackson’s powerful systems and frameworks to analyse business and personal finances and to maximise profit and cash flow, how to fix bottlenecks that are draining your finances and work your way towards financial freedom in this value-filled episode.
IN THIS EPISODE, YOU’LL FIND OUT…
- The Annual Wealth Letter and how it can help you achieve your goals (03:43)
- The common entrepreneurial financial traps to avoid (06:42)
- The 20-year Roadmap for Building Wealth (11:39)
- Why you need to build identity outside your business (17:53)
- Building “money muscle memory” with small steps (21:25)
- The 7 Levers to Endless Profits (24:38)
- Jackson’s 8 Wealth Accelerators and their impact on income targets (26:02)
- Cash Flow bottlenecks that could be costing you right now (28:50)
- The rules and principles surrounding ideal price increases (34:19)
- 40-Point Financial Performance Scorecard to create financial freedom (41:40)
- The need for perseverance and focus in difficult times (45:28)
QUOTES
- “We pay a big price for certainty and at a very bare minimum, inflation becomes a universal tax on you unless you are prepared to act above and beyond it.” -Jackson Millan
- “A good idea in theory remains exactly that. Just a good idea. Until you put it into practice.” -Jackson Millan
- “Live for today and plan for tomorrow.” -Jackson Millan
- “If you put your price up and it all goes crazy, you can always change it or put the price back down. So much of it is a mental game for your sanity.” -Carl Taylor
- “It’s an easy trap for people to think wealth is only about money. Money is a core component of it but there’s a difference between being in a rich life and a wealthy life.” -Carl Taylor
Resources
Financial Performance Scorecard
Get In Touch With Jackson Millan
- Website: https://www.wealthhealthcheck.com.au/ https://www.wealth-mentor.com.au/
- Facebook: https://www.facebook.com/jackson.millan
- TikTok: https://www.tiktok.com/@jacksonmillan
ABOUT JACKSON MILLAN
Jackson Millan, also known as The Wealth Mentor is an award winning entrepreneur and wealth coach.
He is the author of international best selling book ‘Enjoy The Journey: Creating Wealth & Living The Life You Desire’ that has been featured on best seller lists in 8 countries across 15 categories.
Jackson has spent the last 12 years dominating the wealth and business strategy space having worked with over 1,000 clients to help them build over $1.2b in combined wealth. Jackson has personally scaled multiple 7 figure businesses and has helped many of his clients do the same.
TRANSCRIPTION (AI-Generated and may contain inaccuracies)
Transcription from Final Audio Cut
Jackson Millan Snippet (00:00):
As a business owner, you can have your cake and eat it too. The fundamental principle of wealth building is that if I want a greater tomorrow, I need to sacrifice today, the basis of that assumption is a finite amount of means financial means I have no control over my income. So I must control my expenses. And that’s true if you can’t control your income. But instead, what if we could just set an income goal that allows you to have everything you want. And now the wheels start turning?
Carl Taylor (00:40):
Hey, everyone, and welcome to another episode of Entrepreneurs Rising. If you have been a longtime listener, welcome back. If this is your first time tuning in, hey, I’m Carl, nice to meet you. I’m the host of the show. And today is an interview episode, meaning we’re going to delve deep with a guest on the show. We do that every two weeks. And in the off weeks, we also then have a little solo episode by me.
So if you do like today’s episode, or even if you don’t, but you’d like to stay in tune, follow subscribe, whatever you need to to keep listening or connect on social media. So today, I’m going to introduce you to a friend of mine. I’ve known Jackson, well, I’m gonna let him tell me how long have we known each other? I don’t actually know.
Jackson Millan (01:24):
Many years made, I think we’re pushing five or six. Now.
Carl Taylor (01:27):
Yes, we were kind of in each other’s world for a bit. And then I think probably as you say, five or six years ago, we actually kind of first met and got chatting. And one of the things I really admire about Jackson is he just he knows his shit.
And he’s very generous man and help he’ll he’ll share what he can to help people. But let me give you a little bit of the condensed chat GPT version of the really long bio that he sent me just before this, and I was like, if I read that out, you’re gonna tune out not because it’s boring. It’s just it’s going to take a long time.
So let me give you let me give you a little highlights. So Jackson, Milan, otherwise known as the wealth mentor, he’s over 15 years in financial wealth and business, Jackson has taught 10s of 1000s around the globe how to master their money.
Now the key things I want you to know, though, is he has helped hundreds of clients scale seven, eight and nine figure businesses. But more than that, he’s scaled five, seven big figure businesses himself, you know, so it’s not just, he’s helped other people, which is super amazing, because that’s a skill set on its own.
He’s also been in the trenches and had to build and scale his businesses himself, either by himself solo or with business partners. He’s written two international best selling books. He a billion dollars, I want to think of this, too, but I think it’s 2 billion actually $2 billion in client wealth, he’s assisted over 1000 clients to build over $2 billion in clients wealth.
He’s the winner of advisor of the Year Award and practice of the Year award. He’s been a finalist in the Thought Leader of the Year Award, and he’s the judge of a financial industry awards. So all of that is to say is, listen to what he’s got to say. And I’ll just add just a really good dude. So, Jackson, hey,
Jackson Millan (03:07):
thanks for having me, mate. This has been a long time coming. I know we’re busy men living our lives and doing our things. But I’m glad we can make this happen. Right. I’m looking forward to sharing some great banter today.
Carl Taylor (03:17):
Yeah, man. And I remember it was a little while back, we were all playing cash flow. And I don’t know if that was the first time we were talking about coming on the podcast, but I just some of the guys listening you know, my my old co hosts, if you’ve been listening for a while my old co host Peter Moriarty.
There’s a picture this was Peter Moriarty. Jackson myself, I can’t remember who else was on that game. But we’re on Zoom, playing the Kiyosaki cashflow game online. And so there’s at least three of us who are very switched on with our money to investing in the real world play business.
And so just seeing us all playing the game and how we’re talking, it was just it was just a great, great game. And then because, of course, we’re unpacking and going, here’s what I did, and why I did it.
And here’s what Anyways, you guys probably don’t want to know that. What I want to share with you and start with Jackson is just before we hit record, you were telling me what you did today. So let’s tell the listeners and the viewers, what were you do today?
Jackson Millan (04:13):
Yeah, a little bit of backtrack, just to lay the kind of foundations. I have ADHD, and for my entire life, with hyper fixation and object impermanence and very much obsession around certain pursuits and whatnot.
Most people who are new or divergent really struggle with money. And I was actually one of those people. And a lot of the work that I’ve done has been building systems and frameworks that help people like myself, and many of my clients who are also neurodivergent or not money people, or how to actually create wealth by default.
And a lot of those things are really about playing mind games and understanding how synapses in the brain work and how these fundamental principles of NLP and at all of these out there kind of mindset frameworks allow us to future pace and enhance accountability.
So for many years, I’ve done this exercise called the annual wealth letter. And every year, I sit down and I write a letter to myself in 12 months time, with all of the goals that I want to achieve around four segments, lifestyle, and the things that I want to do where I want to be living holidays, experiences, these kinds of things.
My career, what do I want to do as a professional, what I want to achieve? What do I want to learn? What do I want to grow? personal hobbies, interests, things like that, book writing. And then lastly, is financial.
And every year I sit down with my team, all of our team, we’ve got a team of 36 now, and I take them to the same exercise. Because the interesting thing, Carl, and the common theme, even through our team, that we get them to do this all the time, the common feedback is I don’t do this kind of thing enough.
And it’s interesting when you create that frame, and you set those intentions, and then you actually review it, and you execute on it. It’s amazing what you can actually achieve when you put your mind to something. Oh, it was a fantastic exercise.
Carl Taylor (06:06):
I love that, like, you know, I’ve been to numerous seminars over the years, and I probably even did this for some of my clients years ago, when I did that a lot of coaching. But like the exercise of writing out a letter to your future self is just so powerful.
And the fact that you’re focusing on as a wealth letter, and you’re encompassing wealth to be more than just finances, I think that’s an easy trap for people to fall into and go wealth is about money. And money is a core component of it. Absolutely.
But really, there’s a difference between being a rich life and a wealthy life. Right. And I know you fully agree with that. So I love this activity. I love the process of it.
And what you mentioned there, we don’t do it enough, even as someone like the fact that you do it to yourself every single year, I fully admire that, because there’s things I’ve done over the years where I’m like, Yeah, I’m going to do this thing, this is good. But then, you know, maybe do it for one or two years.
And then you kind of fall off the wagon, even though you know, it’s good for you. And it really helps it just life or whatever other things you prioritize. So let’s kind of change tack, though and go, okay.
You’re helping these business owners to figure out the money stuff. Like, what would you say is the biggest thing when you come across people? Would you say there’s two camps? There’s entrepreneurs who really know their money?
And then there’s entrepreneurs who don’t? Or is that across the board? Even those who think they know their money don’t really, what’s your experience?
Jackson Millan (07:32):
That’s the reality cow, even we work with even finance professionals. And they think they have their shit together. And they don’t. Right. And I think the big challenges because we work primarily with people in, in helping professions, their service businesses, they’re serving others, that they serve others to the detriment of their cells. and I are the perpetual plumbers with leaky taps, right?
That we have all of the best intentions to want to look after ourselves. But because we take so much pride in delivering service to others, that we always come last. And for that reason, there’s opportunities left on the table. And I probably say those people are in like one of three camps.
We do get a lot of people who know how to make the money, and they just absolutely hopeless with holding on to it. And it’s just the endless source of frustration for them. They’re just to the point of tears, like they’re the amount of people that I know, I don’t know whether I should be proud of this or not.
But they said Jackson, like, I don’t cry, that when I’ve gone through this process, and I’ve done this like a cry because I’ve realized that there’s a pathway, there’s a way through this. It’s like this catharsis now, which is so important. And I call these people out there in battle mode, because you can have a great business with full of vanity metrics.
But unless it produces a tangible outcome, and there’s net surplus cash flow at the end, what’s the bloody point. And what’s really interesting how we’ve been saying businesses that are multi eight figures that are still cash eating monsters, it just is mind blowing. Second, which is probably the majority, the people that are called financial comfort stage, whereby they’re treading water.
They have a good business, they live a comfortable lifestyle, but they either reinvest all of their profits into the business, or they suffer from what I called a cashflow creep. So quite frankly, they’ve eaten ship for a period of time as their bootstrap their business and they’ve sacrificed their lives now it’s time for me to catch up.
So I’m going to fly at the pointy end of the plane and drive their brand new Tesla and this and that. And it’s because they have a fundamental belief that wealth requires scarcity. And in order to build wealth, they need to compromise their lifestyle, which is really interesting.
And we can talk a little bit about loss aversion bias and some behavioral finance of how we overcome that. But then the third camp is people are in what I call financial growth. They do have good businesses, and they are profitable businesses. But much like if you’re a professional sports person, let’s say you’re a sprinter, Carl, and you’re doing kind of 100 meters in 10 seconds or whatever the number is.
That’s pretty good. That’s pretty fast. Is that gonna stop you from trying to get 9.8 And what we try and do is we use that But yeah, we’re incremental improvement. Okay, this is great. We’ve beaten up personal best out of the go again?
And how do we try and break those systems so that we can build them back better. And so that’s the kind of fun part of what we do.
Carl Taylor (10:13):
I love that. And it’s interesting what you said, like I recently did a call out for, you know, a new thing that I’m launching, and I said, Oh, you know, I’m looking for people who are doing seven figures.
And I naively, naively assumed that if you’re doing seven figures in your business, you know, you had profit, you had cash flow, and the number of people I spoke to, to see if this was going to be right for them, that were either going backwards, very little to no profit, like it just because it was just so different to my business.
So it just, it blew my mind. And so good to hear that even you can people can be in like multi eight figure businesses, and still be in that same position just is, is mind blowing to me, but it’s just, it’s true. And if you’re listening, I share this not too if this is your situation, not to make you feel bad about yourself, because that’s why Jackson’s on this show.
That’s why I’m doing the show is to share the lessons so that you can learn what you need to look at. And you decide if you want to work with someone like Jackson and see if you can get some help through this. It also is probably to help reassure you that if that is your situation, you are not alone. It’s far more common than you probably think and no. So
Jackson Millan (11:26):
it’s it’s really interesting, like, and it’s a dichotomy, because people have this belief that seven figures, I’ve made it, I’ve got this amazing business of I’m like a top 2% or whatever the number is, right? And like I am in this crap position, maybe it’s just me, maybe I’m not good enough, maybe I’m not worthy, maybe I’m doing something wrong.
And then they’re fearful of getting help because of the fear of being judged. And I think this is the thing, right? Let’s lower the barriers. And let’s not worry about the ego. Let’s just get the help that we need. And hopefully we can give you some some actionable insights of how we can improve this today. Yeah, well, I mean,
Carl Taylor (12:03):
let’s, let’s talk about that. If someone, if someone’s in that situation, the they’ve hit the magical seven figures, you know, majority of our listeners, you have been, you’ve been in business for a while, I don’t know where you are, maybe you’re still in the six figure space.
But some of you are probably in the seven figure space, maybe some of you even at the eight figure space, that you’ve been in business for a while, business should be good. You’re in one of these three categories, you’re either making money easily and holding on to it badly, you’re treading water, or you’re in this growth phase.
No matter where they’re at. I’m curious Jackson, what would be the very first thing you would be saying to them? To do? What is the biggest mistake, you usually find that no matter who they are, that they’ve got that going on? The interesting part
Jackson Millan (12:44):
I see is what I refer to as left to right thinking, okay, and this is very logical thinking right that in our business, we start at the top of the funnel, like produce the leads and sign up the clients and then get the top line revenue, and then spend what we need to in the business and make the profit and then pay ourselves and then live our lifestyle, and then build wealth. It’s common sense, right?
The problem is that the outcomes that you truly want, are not presupposed, they’re a byproduct. And what I do with my neurodivergent mind, is I flipped that completely on its head, and I start at the end, and I reverse engineer my way backwards. So what the first step we take all of our clients through is creating what we call a 20 year roadmap, which for many people, it sounds scary.
And they might have actually got this dialed in, we take that to 100 years because we start talking about generational wealth. But let’s start 20 Before we freak people out, they have a nervous breakdown cow.
So the idea of the 20 year roadmap is that for most of us, we’re not we’re gonna have for dinner tonight, right? And little and what we’re going to do in 20 years. But the important part of this is about creating accountability to your future self.
And there was a study that was done, I believe it was by by Yale University. And they surveyed all of these people. And they used overlapping circles to get people to relate how closely connected and deeply connected they were to their future self.
So those who had a lot of overlap, they were intrinsically motivated to save and build wealth and defer gratification because the by not doing so that they could feel the pain of their future self. And then for people who didn’t have a lot of overlap, like who’s my future self, don’t care your low, whatever, right?
Because they just had no sense of connection to that future person, like, oh, that’s future Jackson’s problem, they’ll deal with that later. I’m going to deal a deal with myself. So what we need to try and do is create some level of overlap and my motto is live for today and plan for tomorrow. I believe that you can have your cake and eat it too, as a business owner, like not in life in general, because not everyone is afforded this privilege but as a business owner, you can have your cake and eat it too.
Because the fundamental principle of wealth building is that if I want a greater term Morrow I need to sacrifice today. The basis of that assumption is a finite amount of means financial means I have no control over my income.
So I must control my expenses. And that’s true if you can’t control your income. But instead, what if we could just set an income goal that allows you to have everything you want?
And now the wheels start turning, okay, well, what’s everything I want? Well, we break that down into lifestyle goals, goals that add quality to your life and your experience, holidays, experiences, the car, you want to drive, hobbies, interests, all of these kinds of things that light you up.
And then financial goals is merely a, a resource to fund future lifestyle goals. Yeah, so we wouldn’t end also, there’s an element of ambition, right and safety there. So if we can define all of our lifestyle goals, one 510 1520 years and all of our financial goals over the same period, we can reverse engineer that into a single income tag.
And if I then say to you, Hey, mister missus, client, you need to earn $425,000 a year, in order to achieve all of the things or whatever the number might be, it’s now real, we can connect outcomes to activity. It makes a profound change.
Carl Taylor (16:17):
Yeah, like one of the key things I really like about this is they often talk about you need to have a why, right? Why a why and why you’re trying to grow your business while you’re going to do these things.
And many entrepreneurs, I think over the years, people I’ve met was like, I want to build to I want to $10 million business. And you ask why. And that’s usually quite challenging. There’s a few that can give a really compelling why but most people just because that’s what I think I need to do.
That’s, that’s how I’ll have a million. They’re aiming a 10% profit margin. So they’re like, I tell half a million dollars for me like, like, what do you need, then you’re not really wanting 10 million, you’re just wanting 1 million.
But what I like about this is you’re actually going okay, what is the life you want? What is the why? What is the thing that actually motivates you that are going to juice you up. And then let’s just put $1 figure to that, as opposed to, we’re gonna have $1 figure and figure out what you can live to. It’s really cool.
Jackson Millan (17:09):
And it works so well, mate, because I found this interesting idea. Because the biggest issue here and what you’ve rightly said, it’s funny, there’s such this bit this number, it’s the $10 million number that so many entrepreneurs want to chase for that exact same reason.
And it’s arbitrary. It’s like keeping up with the Joneses, which means that you’re not actually invested in that number, which also means you’re probably not going to get there hit it. Or if or if you do hit it, it’s going to be empty.
And you are going to be so crushed and deflated when you get there and you go, is that it? What’s next. And in stoicism, there was this quote, I believe it was by Seneca. And he said, happiness is found by defining the difference between enough and extra.
Once you understand what is enough, you can choose to chase extra for fun. And this changes the game, right? Because it lowers the stakes of everything once you’ve got enough. Perfect right now this is just a game. It’s like playing a game of cash flow with your mates, right? It’s very low stakes, and the energetics fundamentally change.
Carl Taylor (18:14):
That’s definitely been true. In my experience. I Yeah. When you when you hit that level of just oh, I don’t know if I went, I think I’ve shared this already on the podcast before. But I went through a period of probably five years, four years, at least, of being like, what’s the point? Like, I’ve got enough money?
Why do I want to grow my business? Like I hadn’t quite figured out the extra bit. That just I didn’t have that motivation. That’s shifted now. And I found that motivation again, but it’s people don’t talk about that. I think that’s something too, you know, I know you help people who want to maybe get their business ready for sale. One of the things that I don’t think enough people talk about is if you sell your business, the kind of the despair that most business owners have where they like, Oh, who am I now?
Like, what am I going to do? What’s the what’s the point of it all? That could be a whole interesting angle to go down in in this podcast. So but I do have you got thoughts on that of you?
Jackson Millan (19:08):
I definitely do. I’ve worked with some really successful entrepreneurs have had like, eight multi eight figure a nine figure exits. And leading up to that is you need to develop a new identity.
Because for many entrepreneurs, their business is their identity. And it’s the exact reason why behind me I’ve got my classical guitar. And I live on a 70 acre animal sanctuary. We’ve rescued it animals, we practice permaculture, I’m in the garden growing stuff. I write I do all of these things because I don’t want my identity to be Jackson, the entrepreneur.
I want to be Jackson, the guitarist and Jackson, the author in Jackson, the sanctuary owner and this and that, because if I peel away that aspect of my business one day, and I don’t want to be left with the question of who the hell am I am I Hmm. And this, this client that I work with very closely, and he’s become a dear friend, he had a very successful exit.
And he’s like, wow, okay, I’ve my business was my baby. And I did it at the detriment of my family and my health. So I’m probably going to get back to entrepreneurship at some point.
But for now, this chapter of my life is my family being the best possible dad I can be, and becoming an athlete. And when he in his dream was to become an artist to do an Ironman, and he’s dedicating all of his time and energy and effort there. And it was just that, that beautiful shift of identity and focus and direction that we all need goals to follow.
Because on the opposite end of the spectrum, Carla, we’ve had retiree clients who have dedicated their entire life to a business or their career, they retire and sit on the couch watching daytime television and their brain goes to mush they age so quickly, and you don’t want to do that.
It’s my opinion, it’s, it’s a waste of opportunity to waste of talent, you can just channel that elsewhere.
Carl Taylor (21:01):
Yeah, 100%. And I say it’s important thing that you know, because it’s, you know, we talk a lot on this podcast, you want to build a business that you could sell one day, you don’t have to sell, but one because it’s ultimately a better business to own.
But at some point you might want to take in and cash in that asset, you know, that is an asset. A number of entrepreneurs I meet who don’t even think about that they’re measuring their net worth, and they’ve got no line item in their, in their net worth tracker for the value of their business.
But to be fair, for a lot of them, their business is probably only worth one times, maybe two times anyway. So nothing at all, worth nothing at all. And that’s what we tried to fix. And we tried to help them yes.
But all right. So I’m loving this, we set this income goal, not from the goal, we actually set on the lifestyle goal that we want, and then we put $1 amount to it. And so that’s one of the first things and I can see how that applies across all those different categories of people where you are as an entrepreneur.
What would you typically then do next? What they’ve set this number? What like, what is that number is, let’s play devil’s advocate. That number they’ve set it right now their business is doing 100k 200k.
And that means out of that money, maybe they’re pocketing 60k, they’re lucky to be pocketing 60k. And they’ve done this math. And they see that they need to be making half a million in their pocket to live the life they want. And they go on how the hell do I go from where I am? To there? Is what do you say that what do you say to them?
Jackson Millan (22:30):
It’s a really great point. This is where a lot of people give up. And this is where my next philosophy of what I call creating money, muscle memory comes into play. So let me paint you a picture here.
Let’s say that you decided that you wanted to be an Olympic weightlifter. Okay. And you decide that you’re going to go to the gym, at what in what circumstance would you go and try and squat 300 kilos?
Carl Taylor (22:52):
Well, only after I can do I can squat, you know, 520 3040
Jackson Millan (22:58):
You hit the nail on the head. So when I go and squat 300 kilos on the first day, we might go and start with the bar, right? But just because you can’t do 300 kilos today shouldn’t mean you don’t do anything at all.
And this is the relationship most people have with their finances. They’re like, yeah, I might be earning 60k. Now, I need 500 best effort. I’m too far. And it’s too hot. But what we do is through frameworks and our systems is we start at the bar, and then we add weight incrementally over time.
So what that actually looks like is we implement we call our cash flow operating system, we implement one in the household. And the idea of this is that it avoids the cashflow creep that as your income grows, we don’t want your expenses to grow proportionally.
And we want to make sure that we can have a controlled and increasing surplus in the household. And then we do the same in the business. And we look to remove what we call cashflow bottlenecks, because in my experience, businesses of all shapes and sizes, there are cashflow bottlenecks that exist in that business, that costing them between 15 and 20%.
Profit without them even knowing it. And through implementing those things. We optimize we structure and we control, which then allows us to then start working on what I call the the financial operating system, which is essentially, if we need to get from where you are to where you want to go, what does the financial model need to look like in order to start bridging that gap?
And because as you rightly said, Well, if your business has a 10% margin, and you need to make a million bucks, well, one way is to get to 10 million. But what if we could build a business model that allows you to do a 20% profit? Well, you only need 5 million now.
And we start calling this what we call the seven levers to endless profits. So we actually have a tool, a dashboard that we put in their financials, and we show them the sensitivity of the Levers, so they can start once again reverse engineering the numbers to then design a value proposition that the consequence of that value proposition is achieving the result as opposed to throwing darts at a dartboard blindly.
Carl Taylor (24:58):
It makes sense. Yeah, and So just you don’t need to disclose. You know, obviously, it’s your thing that when you talk about the levers, are we talking about things like, you know, average revenue per user, like average dollar sale numbers like that. It’s like, when you’re talking about the seven levers, that was even simpler
Jackson Millan (25:14):
than that volume, price, direct cost, operating expenses, we’ve got accounts receivable work in progress and, and accounts payable. And on each of those has deeper levers. But those are our kind of seven core levers that we can focus on.
And then we might say, okay, price, well, I’ve got five products, how could I potentially adjust the pricing on those or cost of sale? It cost me this much to deliver this product that managed to deliver that product. So we can get into far more detail. But the seven primary Levers is what ultimately is going to dictate the result?
Carl Taylor (25:46):
Yeah, got it. And that makes sense. So I’m curious when you’re working with someone, how often have you found that when you look at their whole model, you’ve got to go, you know, what your whole model is broken, we’ve got to basically reinvent this whole business.
Like, I can imagine someone who’s pulling home 60k A year and their current business model, the idea of pulling out 500k In my hallucination is that would be a very different business required to make that jump.
It’s probably not just cool, hire a bunch of team and scale really big. It’s probably like your margin sock, this needs to change your hoop, maybe even who you’re going after, like if you had to do complete transformations of businesses before.
Jackson Millan (26:22):
The interesting part is the business owners typically make that realisation themselves. And look, it’s not. If if your business is over seven figures, it’s likely you’re doing something right, okay.
Where I see, say business owners spinning the wheels, that that that kind of 50 to kind of 80k a month mark, they’re burning the candle at both ends, they’re exhausted, and they still can’t earn the the income that they’re looking for, there’s probably a fundamental flaw in their systems.
And what we actually do is we basically go back to what I call the eight wealth accelerators. There is four in the business that we can implement, primarily. And then there’s three wealth accelerators, that we can focus on implementing that base, basically, or asset based.
So it’s like, okay, well, how do you build better systems? We’re not systems people. But we’re like, Well, if you can’t get more margin, because all you’re trying to do is throw people at your problem. Have you remove people from the equation? And that’s when we refer them to yourself car, right?
Next is like, Okay, well, partnerships, how do you leverage somebody else’s business? Who has a non competing business and leverage their client base in yours, because it’s a very easy way for you to acquire and grow your business? Then third, can you put out a product, something that’s leveraged that you disconnect effort from income?
Or can you create some sort of licensing and royalty based arrangement, that’s going to be the business exit strategy of the future, because with the sheer volume of intellectual property that’s going to exist, people are going to pay a premium for curated content quality content.
And if you’ve had amazing business, and you’ve got all these great IP packaged really well, people pay premium for it. And then from a wealth side of things we’ve got, we can accumulate assets, by property, by shares by other businesses, you can trade assets, which is probably not something that I advocate a lot. The idea of kind of trading assets and kind of flipping and that kind of stuff, but it’s an option.
You can monetize intellectual property. So a lot of clients who exit, they then go and coach or they mentor, they do whatever. And then you’ve got passive income. So it’s about okay, how do you generate cash flow from the assets that you hold? And by understanding those eight wealth accelerators, you’re like, Well, okay, what does Mike what needs to change in my value proposition to allow me to hit those income targets?
Carl Taylor (28:42):
Yeah, I like that. I, you know, one of the things that it’s really clear, as you talk is how you’ve broken these down into these core models, you know, you got your seven levers, your your eight wealth Academy with the word you used, but you know, each one, you’ve got 7854, like, you really, you really kind of package these up into into clear systems, which I think is really powerful to help, as you say, to make it easier for people to understand. I want to backtrack a little bit because we I think we brushed over and I think there’s value here because you’re talking about the cash flow challenges.
And in particularly, so there were these cash flow bottlenecks. Could you give an example of what a cash flow bottleneck is? So someone might go Oh, yeah, I’ve got that.
Jackson Millan (29:23):
The interesting part about it is that when I look at a set of financials of a business, it’s very rarely big, obvious things that are consuming their cash flow. They are in isolation, seemingly insignificant things often almost invisible, that then add up over time.
And it is those things that compound that consume that business, and it often comes as a result of what I call the scale tax. It is for ambitious entrepreneurs who throw so much fuel on the fire and they grow at a annual growth rate above 30%. year on year typically
And what they have had to do is throw money at fixing reactive problems. And it’s just basically an inefficient business. So I’ll give you an example. A client we’ve been working with for the past 12 months or so, runs a multi seven figure plastering business, and huge staff, big jobs, great clients at face value, amazing business, was losing money, hand over fist, and we looked at it and go, Well, it’s a cost of sales issue.
And then then we speak to their team, and they’re like, Whoa, now we’ve put this much margin on every single job. And then we’ve got the gross profit price stamp. And then we’re like, well, there’s a disparity between what’s happening in your estimation process and what’s actually happening in the financials of the business.
Where’s the gap. And what we’re able to find out is that there was about a 12% wastage in terms of material that wasn’t taken from one side and then used on other jobs. And it was seemingly insignificant that people said that it doesn’t matter a bit of plaster board, a bit of this bit of that doesn’t really matter. 12% margin was being wasted as a result of that cashflow bottleneck a
Carl Taylor (31:08):
lot of multi seven figure business, that’s a lot of money, you do the math.
Jackson Millan (31:12):
The other interesting part here, Carl, is the opportunity cost of cash. So give you another example, Kalina was working with it had relatively long payment terms. And we identified that there was a way that they could get collect cash from their clients 30 days faster than what they were doing currently.
Now, that the current rate of inflation, let’s be super conservative, let’s say it’s 6%, for every month that you do not get paid, that is a point 5% erosion of your working capital. Now, on a multimillion dollar business, that’s potentially $50,000 a year or more of inefficiency, as a result of not tightening up your accounts receivable process. It’s 50. Grand, that’s a lot of money.
So that’s, that’s your business class travel for you and your family for the next 12 months. Right? If that’s not an incentive, then what is? So it’s these little things that most entrepreneurs are just like, that doesn’t make a difference, it doesn’t really matter. And it really does particularly at that end of
Carl Taylor (32:13):
town. A little Yeah, the little things add up. And what I like to there is not enough people really think about it that way. They don’t consider inflation as a cost. It’s like, oh, yeah, I’ll get paid at the end, you know, you know, I’m using an AIMEX on my end, which gives me 55 days, and you know, they can pay me in 30 days, it’s fine.
Don’t understand the costs. I’ll just say it again, because I really want someone listening if you don’t understand this concept, that if you don’t get paid, and it’s an extra month for two months, at a 6% inflation rate. So Jackson, just explain that one more time, just I really want this to land for someone.
Jackson Millan (32:57):
Yeah, so what we do is we take the annual inflation rate, let’s say 6%, you divide it by 12. So that’s point five. And that becomes the monthly rate in which your n recouped capital is eroding by as a result of it not being in your pocket, and you putting it to work for you.
Carl Taylor (33:13):
So a rolling by he means it means literally buys less. So a month later, the dollar is worth less, right, like you might go cool, I did a $50,000 job. If you don’t get paid for three months, you actually that $50,000 job, you just basically given them a 1.5% discount, just because they paid three months later, let alone like cash flow challenges that might have put on your business.
If you needed the cash, you’ve actually recoup less money. I really hope that lands if you’re in a situation where your business is
Jackson Millan (33:46):
important, because cash flow is what kills businesses, particularly in this high inflation environment. And for most of us that were young whippersnappers. We haven’t lived through high inflation periods that existed in the 70s.
And the early 80s. We’ve had an armchair right because cost of capital has been so low. And aside from the GFC. We haven’t had a lot of risks associated with the opportunity cost of capital now we do and we pay a big price for certainty.
And at a very bare minimum, that inflation becomes a universal tax on you unless you are prepared to act above and beyond it. And that’s why we’re going to see businesses insolvencies spike at a rate of knots we’re already seeing it. And the next two to three years you will see more businesses failed and you’ve probably seen in your entire career. And it’s just the reality of the situation.
Carl Taylor (34:39):
That’s fascinating and so you do what is it you think is the core drive obviously inflation but is that because then cost of money like to get there paying higher interest to all these things? They can’t raise the capital that way they could.
Jackson Millan (34:54):
There’s a number of factors. It is inflation which pushes up a material prices and puts pressures on on wages, we obviously have skilled labor shortages. And we’re hoping that it’s going to start to turn however, that’s an issue.
And it’s also that most businesses don’t even put up their pricing, considering inflation, which means that if you haven’t put up your price by six to 8%, over the last 12 months, and you’re going backwards, you’re making less than you were last year, and you do that year over year, then we start to see this point of diminishing return.
And just value propositions that once worked very well and were amazingly fruitful. Due to the scale tax, and the changing market conditions and their inability to react to those changing conditions. They find themselves running out of runway, they run out of working capital, their businesses become insolvent, and they’re forced to close.
Carl Taylor (35:51):
It’s interesting, the price rise thing, what do you what do you what’s your thoughts on? You know, there’s some people who are like, oh, you should just raise your price any old time just raise your price? And then the others are like, well, you know, you’ve got to factor in the value to the market to the client.
And so I’m one of those people who I haven’t actually increased my price in the last 12 or even 24 months. But like, obviously, there is a change in the market, too. I’m not saying I’m right or wrong for not increasing price, and we probably will in the next 12 months or so.
But I’m curious, how do you what do you say to someone who’s like, Well, the idea of putting my price up? Sounds good. One, it’s scary. I think most people are scared to do it. But to the they’ve got a logical thought process, if I put my price up, and the markets already scarce, and they don’t have money, they’re telling me things are tight.
Is that is that? am I shooting myself in the foot? If I put my price up? So are you a blanket really good price up? Or do you have it depends.
Jackson Millan (36:49):
It’s blanket, but with rules and principles that surround it. So let’s go through a few of them. Now, let’s talk about behavioral psychology, it’s been tested that price increases between eight and 12% have a sweet spot where you create an asymmetrical risk versus return.
In a typical business based on the average cost of sale, you have the ability to increase price by 10%. And you could lose up to 13% of your clients and make the same amount of money.
Now, in my experience implementing this for so many of our clients and doing it in our own business, you don’t lose 13% of your clients, you might lose, let’s just pick a number 5%, which means you’ve got a net benefit. Okay? Now, we’ve also got to realize that we’re in a capitalist system, guys. And people will pay anywhere up to the value that they believe they are receiving, if they paid any more, that’d be crazy, right? Like, you don’t go and buy something and pay more unless you truly believe that it’s worth more, which could be quantitative.
But it could also be qualitative, right? So there’s a number of factors that influence that. So the idea here, if you need to think about pricing as a byproduct, and it’s a byproduct of, of positioning a value, and particularly in the in the service space, a lot of that value is perceived.
So let’s look at a couple of options. Yeah. Positioning exists on a matrix. On one side of the matrix is a utility. People buy something for the problem that it solves. So for example, your roofs leaking, and you’d need to get somebody to fix the roof, right, you’re just going to allow that to continue, and you kind of pay what needs to be paid, right?
But grudgingly sometimes, but you just have to do it. On the other side of the spectrum, the complete opposite side of the matrix is luxury. Now, there is utility to some respect, the emotional value that that luxury provides is typically what people use to substantiate their purchasing decision.
And it’s typically about how it makes them feel. So like I could buy a Prius, or I could buy a Ferrari, they’re both going to get me to the same place. Once far more luxurious, right? And it makes you feel a very different way. I’m not sure there’s many people that get excited going to drive the Prius, right. I’m sure it’s empty, right, which is fine. There’s nothing wrong with that.
Now, if you are neither, it means you are a commodity. And people will always try and pay the least amount for a commodity like car. When was the last time you saw somebody going to the petrol Bowser and tipping 20% On top of whatever the bill was? No, it just doesn’t happen, right?
So you need to make a choice. And it’s about what side of that spectrum you want to be on. And that largely dictates what you can do in price. So to wrap that up, if you suck, I need to put up my price by 10%. Do I substantiate and articulate enough value to warrant a customer pay? Some will somewhat. It’s about having the the methodology that surrounds that. Yeah. And,
Carl Taylor (39:46):
you know, I think something that’s also really useful to remember is if you put your price up, and it all goes to shit, you can always put the price back down. Like you can always change the price again if you really needed to.
And it’s so much of it’s a mental gain so much of as it means this entity, do you think it’s gonna be worse than it is? It’s crazy stuff. It’s good. Yeah, I like that. And that eight to 10%. That’s interesting. I’ve not heard. I love the matrix where it like shows like if you put your price up by this much, how many would you have to what percentage of clients you have to lose to actually to be to hurt you?
So if you’re listening to this, and you haven’t increased your prices, myself included, look at how can you put your prices up by eight to 10%. I’m curious, I want a business like mine, I’m a subscription. I have found that when you change pricing, it doesn’t change people’s ability to buy on the front end, but it can affect churn and retention.
Do you model and forecast that when you’re working with people, the subscriptions are demonstrated?
Jackson Millan (40:40):
Yeah, we do. So what’s interesting and look, once again, typically how we how we structure it is that we put up the new client price higher than what we do existing client price. And the threshold that’s created between the two pricing models is what are age of attention.
And of course, it’s just about delivering great service, ensuring that there’s an asymmetrical risk versus return for the client, as people want to leave, if they feel like that value equation is dropped in a subscription, right.
And largely, it’s not because of our assets because of their use of that subscription or that service. Right. So if we can control that, then we can control chair. So once again, when we know those numbers, we can implement the appropriate strategies to improve it and see what the outcome is in terms of the numbers.
Carl Taylor (41:26):
I love that. So we’ve talked about about a bunch of stuff. We’ve talked about cash flow, firstly, we’ve talked about setting a goal, lifestyle goal, and then putting $1 amount on it.
And then we were like, well, let’s play devil’s advocate, you know, you need to make half a million dollars to have the lifestyle you want. You’re currently pulling 60k out of your business, there’s a bit of a gap there. So we’re talking about, you know, how do you do that. So you got to look at your whole model, is what we’ve talked about.
And then that got us talking a bit about pricing and some of the levers. What what’s next, if someone someone’s going through this, like, what else is some of the big things that you see people get wrong, or you just really wish more business owners knew
Jackson Millan (42:02):
yet the most important thing here, Caldas, like these are all good ideas. But a good idea in theory remains exactly that just a good idea until you put it into practice. And it is overwhelming because it’s like, well, it’s somebody comparing their chapter 10 to somebody else’s chapter 20, you know what I mean.
And they there’s the risk that you try and do things that aren’t actually necessary based on where you’re at. And it’s actually not the next best thing. And we try and get our clients in their own lane and get them focused on what they’re trying to do and focus on the next right thing that is going to move their financial needle forwards.
And how we do that is, once again, it’s all about these systems, how do we create evaluation systems that minimize the menu, and allow us to focus on on that thing with with clarity and focus.
And we created basically a 40 point financial performance scorecard. It is basically the top 40 things that business owners need to put in place to create financial freedom using their business.
Now, funnily enough, we’ve done 1000s of responses to it. So we’re going to stack a data. And with the new code interpreter, I chuck the data in there on chat GPT. And I started to get a lot of insights.
And the interesting part was that the two big correlations, the average score was 19 out of 40. Wow. So the typical business owner is below average financially. And the answers that are across all of the 1000s of responses that got answered the least is that they didn’t have an exit plan.
They didn’t know what their business was worth. And they didn’t know how to define what financial freedom actually meant to them, along with a whole heap of other things. And it’s interesting thing, when we started this conversation, Carl, those are the first two most important things that people need to do. So this reaffirms my principle of left or right thinking.
Carl Taylor (43:47):
Hmm, I think yeah, that that’s the one that really stands out to me there is the defining what financial freedom means to them. That yeah, just not taking the time to go what like, oh, I want financial freedom, because I mean, who would you not meet that’s like, I don’t want financial freedom.
Truly anyone else I want financial freedom, especially in the entrepreneur space. Yet the fact that so many would say they don’t actually know what that is. They want it but they don’t really know what it is. They can’t articulate it. That’s fascinating to me. Fascinating.
Jackson Millan (44:21):
And it’s just haven’t taken the steps to define it. Right? There’s Mizdow way most people don’t have the quantifiable tools. And the good news is, we’ve built them off. And we actually give away for free and one of my biggest bugbears cow, because being originally trained as a financial advisor, we pay 10s of 1000s of dollars a year for enterprise software to do this kind of modeling.
And I’m like, Why doesn’t stuff exist for people, particularly entrepreneurial, curious types, who want to learn how to do this stuff for themselves to do it, and it just didn’t exist? So I built all of the tools, financial freedom forecast tools and pricing tools and all the seven levers tools, all of these things, so we’d give them away for free.
So, guys, yeah, If you want to do that scorecard and get access to those tools, we’ll include a link, you can check in the show notes. If you just go to wealth health check.com Today, you and basically get the scorecard. It’ll give you all of those extra resources and tools, and it’ll actually start helping you quantify the numbers. Okay, I
Carl Taylor (45:19):
love that. So wealth health check.com. There, you will make sure there’s a link in the show notes. But yeah, if you’re, you know, you’re listening to this and you’re on your phone or your computer right now.
You can type it in, save yourself the time wealth health checker.com that to you. I think that’s really super valuable. And so yeah, you get they get to do their quiz, and then all those other assets and things you were talking about, they get all of that to get them all for free. Amazing.
That’s super valuable. Well, we’ll make sure that that’s checked in there. Is there any like last last remarks, anything you really want people to know, outside of that?
Jackson Millan (45:52):
I think there’s just the biggest part, he made his action taking the common theme I see particularly right now, Carl, people are exhausted. They’re burnt out. They’re frustrated. And angry, disheartened, because I think the last few years through COVID.
And everything that’s happened has definitely taken its toll. And I think it’s actually showing, and I think we need a reason to ignite the fire and keep persevering because perseverance is key in business.
And it’s it’s not about being the smartest, it’s not about being the first it’s about being the most perseverant. And to be perseverant. You need to have something to persevere for. Now’s the time, let’s quantify the gap. Let’s get clear or actually chasing, let’s define the difference between enough and extra.
And then let’s start doing the work. And it’s interesting how quick this can change from going from that frustration to being focused. And that’s in this market focus is what we need.
Carl Taylor (46:48):
Yeah. So it all comes back again, get that why, and I love that enough versus extra know the difference. Jackson, I really appreciate you coming on sharing your wisdom sharing so openly. And guys, I really encourage you go to wealth health check.com that a you you’ll find it in the show notes.
You can find all the show notes to this episode. You can find all that other previous episodes at rising dot show rising dot show. Apart from going to wealth health check if they want to connect with you on a social platform or where’s the best place for them to go and connect with you man.
Jackson Millan (47:26):
Facebook app is a friend. Check me out there just search for Jackson Milan. Also big on Tik Tok. I love a good bit of tick tock so same thing search for Jackson, Milan. And those are the two main social platforms on the World Health Check.
They’ll have all my details if you want to have a chat and see how we can help in a high capacity and preferably chat, happy to have a conversation and do a bit of an audit and see where you’re at and what we can do to add value. And just make sure you implement what we’ve covered here today. Because it’s not the ideas that matter. It’s the the implementation.
Carl Taylor (47:58):
That was really and to clarify, too. It is a.com.au address. But do you work with overseas or do you only work with a strict
Jackson Millan (48:05):
EU? Yep, though we work internationally. And based up in far north Queensland. We’ve got clients as far as Bahrain, that work with us. The great thing about money is it’s universal. So works everywhere. I
Carl Taylor (48:17):
love that. I love that. All right, well, you should definitely follow Jackson on socials as well as getting this because then you’ll get to see all his great photos with his cows. And on the farm. It’s always a pleasure to see what’s this crazy photo?
What’s, what’s happening now what’s changed in on the farm. So how long have you been on that farm now?
Jackson Millan (48:36):
That nearly two years now, mate. So prior to moving up here, we spent a year traveling around Australia and a four wheel drive, which was awesome. And we just stumbled across our dream home up here. And yeah, now we’ve rescued over 80 animals. And it’s just it’s it’s it’s a lot of work. But it’s so fulfilling, right. It’s amazing. We love it up here.
Carl Taylor (48:57):
I love it. All right. Well, thank you, Jackson. We’ll make sure we check it out and make sure all the links in the show notes. As I said, If this is your first time listening, and you liked this episode, you thought this sounded pretty cool.
Obviously connect with Jackson. But I encourage you to go back, listen to some of the other got or watch. If you’re watching this on YouTube, go back and watch and consume some of our previous episodes, the solo episodes, the other episodes with other amazing guests who come and share their wisdom.
And if you like the show, and you haven’t already, hit subscribe, whatever your favorite platform is. So that way you get notified every time a new episode hits. You can also if you go to rising dot show or if you take our free quiz, which is at the start of this this episode, there was a link to that. You will also get an email every time a new episode goes live.
So you can also get on the email list to be notified. If you’re a longtime listener, and you haven’t yet told a friend about us all after review. Please, I encourage you to just think of someone I’m sure while you’re listening today. There was a few things that popped and maybe there was a brother, father, daughter, sister, colleague, someone came to mind if I can, I should know this to find the little Share button and share this episode with them to send them a little message on text or Facebook Messenger or however you communicate and you say, Hey, I was listening to this and you came to mind check it out.
That helps them because they’re getting the value. It helps us because it introduces a new listener to the show. So I would really appreciate it and hopefully your friend will really appreciate it too. Well, that’s it from me. Until next time, keep up the journey.
Carl Taylor Outro:
You’ve been listening to Entrepreneurs Rising. Thank you, dear listener for tuning in. I appreciate your time and look forward to connecting in future episodes. If you would like show notes or any resources from today’s episode, you can find them at rising.show rising.show. You can find a show notes for this episode and all other episodes as well as links to socials and or the ability to reach out and connect with me make your suggestions for future episodes. Until next time, keep up the journey.
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