The Blog of Maui Mastermind

Today I wanted to share with you three specific words of advice from a business owner who helped build a multi-billion company in less than 10 years!

He’s a guy who launched and sold his first business to American Express for over $10 million, then went on to help form, scale, and eventually take public an upstart travel company that had the audacity to leverage a broke, B-list celebrity spokesperson to create a business that literally changed a multi-billion dollar industry.

His name is Jeff Hoffman, and the company he helped create is called Priceline.com.

Jeff was one of the founding team members and former CEO in the Priceline.com family of companies.

He was a keynote speaker at one of our past Business Owner Success Conferences.

Here is what Jeff shared in his talk…

#1: Build a Business, Not a Job

Jeff recognized that most business owners don’t build a business so much as they build a self-employed job for themselves.

Why do so many business owners get caught up in the day to day activities and stunt their business’s growth and get stuck in the status quo?

According to Jeff the reason is simple, they don’t have an accurate road map that gives them a clear model for HOW to build their business.

They think that long hours spent doing the job of their business is going to help them escape.  But let’s be very clear, you cannot dig your way out of a hole!  The more and faster you dig, the deeper you get.

The same thing is true for business owners–you cannot dig your way out of your business by putting in longer hours doing the job of your business.  To escape the Self Employment Trap™ you’ve got to stop doing the job of your business and step back to grow and develop your business as a business.

#2: To Reach Your Business Dreams, Follow a Better Road Map

The road map you are using to build your business is one of the biggest determiner of where you’ll end up with your business.

Jeff always encourages business owners to build their business with the end in mind of building a business that COULD be sold.

Regardless of whether you ever sell it, this will spark you to build a better business.

You’ll incorporate stable systems; you’ll groom your leadership team; you’ll implement intelligent business controls.

All of these things will make your business more valuable, more scalable, AND easier to own passively.

#3:  Get Off the Couch and DO Something

Jeff shared with our group how the average business owner works hard in the business, but is actually lazy about learning new ways to grow and expand their business.
Case in point, the workshop he was a guest advisor for had 75 business owners.  The invitations went out to over 10,000 business owners.  Where were the other 9,925 business owners who could have been there that weekend learning about ways to grow and expand their business?

One of two places… Either they “had to work” for their businesses (ironic isn’t it?) or they were at home “on the coach”.
Jeff’s observation was that in business it’s always the business owner who can consistently get him or herself up off the couch and learning new ways of growing the business that will outshine and outperform the masses of business owners who are just too lazy to break out of old, outdated ways of doing things.

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3 Tips to Build Wealth Independent of Your Business

Tip One: Cultivate the skills and experience of investing so when/if you do sell your business, you have the skills to intelligently invest the money.

This includes picking a few areas to focus in on to build your “Advantages” in. Your Advantages include your knowledge, expertise, experiences, contacts, financial resources, etc.

For myself, over the past 15 years I’ve cultivated Advantages in real estate and my two key investment niches are currently commercial real estate (mainly office buildings) and hard money lending. Both of these work well for me to generate passive, residual income (PRI) based on my advantages.

What niches will you focus on? A particular area of stocks? Bonds? Private placement investments in privately held companies? Index investing?

You need to start today to create a plan whereby you accumulate the Advantages you need to be successful. If you wait until you have that liquidity event (e.g. selling your company) you’ll be in a rush to invest the capital and you’ll make mistakes. I learned this one the hard way to the tune of $3 million.

What do you need to learn about your chosen niche investment vehicle?

What books, courses, classes will you master?

What contacts do you want to cultivate over the next 24 months to help you in this area?

What experience sets do you want to gain to help you in this area? How can you creatively craft those experiences over the next 24 months?

Tip Two: Start investing 10-15% of your working time and money NOW to your investing outside of your main business.

I will be the first to acknowledge that focusing your main efforts on building your business is the single BEST way to accumulate net worth. Period. End of story.

But it isn’t enough. You need to build wealth outside of your business, both to protect you and your family, and also to cultivate the skills and Advantages you need to be ready if you ever sell your business.

Start today to set aside 10-15% of your working time and net income to invest outside of your business. (An interesting test would be to sit down and calculate how you are doing on this target that I laid out. Where is your current starting point?)

Tip Three: Create a simple quarterly “scorecard” for how you are doing in your investing outside of your business.

Your scorecard should include:

• How much have your set aside to invest (both in dollar amounts and as a percentage of your net income). Track this against your target (see Tip 2 above for my suggested level).
• How have you done managing your investments? Measure your AFTER TAX, AFTER FEE, REAL return against an appropriate passive bench mark.
• The key learning goals you have for the quarter in this area of your life. Track how you did to meet and exceed these learning goals.
• The key relationship/contacts you wanted to establish or deepen for the quarter. Track how you did to meet these targets.

Imagine the impact of doing this for several years BEFORE you sell your company. You will be more confident and much more prepared to wisely invest the money you get from the sale.

I’ll share one more cautionary tale about this. One of our clients sold his business for over $4 million cash. He knew how to build businesses, but he never really focused on the skill of how to intelligently invest his net worth. The result? 5 years after the sale of his company he had lost $3.5 million from the sale from bad investments. Don’t let that happen to you. Invest the time and energy to prepare yourself NOW!

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Today I wanted to remind you of the five core ingredients from which to build your business.

As you read through each of these building blocks, ask yourself two questions:

1.      Am I currently using this raw material to build my business?

2.      If so, how can I use it more effectively to leverage my results?

Okay, here we go into the building blocks…

Building Block #1:  The Business Owner’s Mindset

It all starts with you the business owner.  You’ve got to make the mental shift from running your business as a self-employed job to building a business you can one day sell, scale, or own passively.

This means consistently reminding yourself that you are just a temporary producer, and that your business must eventually replace you from its day-to-day operations.

Building Block #2: Systems

Systems are the reliable processes and procedures that empower your business to consistently produce an excellent result for your clients.

They’re documented best practices that increase your company’s efficiency and reduce costly mistakes; the checklists your shipping clerks follow to ensure that all orders are shipped correctly; the orientation process for all new clients when you begin working together; and the standardized contracts you use with all your new hires and vendors.

You’ve got to get your whole team to buy into the belief and discipline of creating, using, and editing your systems over the long haul.

Building Block #3: Team

Every business needs talented people to help make it successful. My insistence that your business’s success be independent of any one person does not mean your team is unimportant. On the contrary, the only way to build a Level Three business is to have great team members who consistently perform for your company.

It’s critical, however, to ensure that it doesn’t rely on the presence of any one individual. Instead, capture critical knowhow in your systems. You need great team members, and you need them to document the core processes by which you operate your business successfully.

Building Block #4: Intelligent Business Controls

Controls are the intelligent processes, procedures, and safeguards that protect your company from uninformed or inappropriate decisions or actions by any team member.  They also are your business’s way of making sure that key work is getting down on time and the right way.

There are three main types of business controls: Checklists/Visual Process Controls; Scorecards/Metrics; and “Embedded Controls”.

Visual controls include tools like checklists that let you SEE that the right action was taken by the right person at the right time.  They also include scorecards and metrics which give you a quantifiable way to make sure that any specific area or system is operating well, and if not, it gives you a timely warning light to go and fix it.

Process controls are the safeguards you build into your “way you do things” that keep people from making costly errors (or worse).  These include your financial controls like having two or more unrelated party in the flow of any money cycle.  And having levels of spending authority.

Embedded controls are those systems that work beneath the surface to automatically protect your business.  They include things like standardized contracts, and mandatory fields in your database.  The control is built into the fabric of the system and cannot not be used.

Building Block #5:  Scalable Solutions

Have you ever watched the television show This Old House? Imagine you’re on it, working on a 75-year-old house with its original electrical wiring and plumbing. What would happen if you plugged in a full complement of modern electrical appliances? You’d blow your fuses, not to mention create the potential for an electrical fire to break out.

And what would happen to your plumbing if you went from a well-water system to tapping into the higher pressure of city water? (Can you say rain gear?!)

Likewise, too much growth that makes increasing demands on old, outdated systems is what causes most growing businesses to fail. The systems that worked for a $500,000-a-year business are no longer sufficient to cope with a $5 million business, and not even close to being adequate

for a $50 million business. At first, the additional sales will cause a few “leaks,” but before long, your business will have burst pipes and water everywhere! That’s why the final building block of a Level Three business is scalable solutions.

Scaling your business requires building it in such a way that your business model and systems can be rolled out and replicated on a much bigger playing field. This also means when you’re solving a business challenge, you look for solutions that can be scaled.

In essence, building with scalable solutions mean that the systems, controls, and team solutions you choose are ones that can handle multiples more volume.  For example, this could be outsourcing your shipping to a third party fulfillment company.  Or this could mean choosing your database solution based on your future needs and not just on today’s costs.  Or it could mean tweaking your business model so that your service is more scalable and not so dependent on one or two key people.

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Welcome to the new year!

Today I wanted to share with you three specific questions to ask yourself to help you massively grow your business in 2012.

Question One: What is the single greatest limiting factor inside my business?

Is it the limited number of leads you generate? Or do you have enough leads, but your lead conversion (aka: sales process) stinks?

Or maybe you just don’t have any more capacity to take on new orders or clients?

Or is it a lack of financing to fund your growth?

Or is it that you the business owner just don’t have the time to focus on the highest value parts of the business?

What is the SINGLE biggest limiting factor currently in your business.

Question Two: What are your top three business priorities for 2012?

Too many business owners scatter their energies across too broad a front. Instead, focus on FEWER but BETTER areas!

We hold our Maui Business Consulting program clients to just 3 top priorities, any more than that and you simply fritter away energy.

Question Three: Is your peer group pushing you ahead or holding you back?

I know that’s a painful question to ask, but we need to be real.

Too many business owners stay stuck in a Level Two self employed “job” rather than build a true Level Three business… and one of the biggest contributing factors is that these business owners buy in to the limiting beliefs of their Level Two business owner peers.

Don’t let that happen to you. Upgrade your peer group to be with people who are playing at the level you want to be or higher!

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Myself and the Maui team are about to close up shop for the holidays and I just wanted to reach out to you one more time in 2011 to ask you what just might be the most important business question of all:

            What is the deeper reason(s) you invest so much of you in your business?

Think about it.  You invest thousands of hours each year in working for and growing your business – what’s the deeper “why” for which you do it?

I’ll share with you my deeper whys for Maui Mastermind so you can see what I’m getting at, but please make sure you don’t just read this passively, but that you invest 20 minutes to write down your answers to this core question.

David’s Answer with Maui Mastermind:

1. I love writing about, talking about, thinking about, and creating on ways to build and grow successful businesses.  I find the subject matter so interesting and it is a huge creative outlet for my “driver” / “builder” energies.  I find this a joy; it is something that I would do for free.
2. It gives my family and me a wonderful, values driven lifestyle.  I get to control my schedule and spend tons of time with Heather and Matthew and Adam – and that is so fulfilling for me.  I know that when they grow up, Matthew and Adam may say that my dad messed up on this or that, but that they’ll say, “My dad was incredibly involved and present in my life.”  That matters deeply to me.
3.  It is the major way that I “serve” the world.  Every time we help a business owner improve his or her business, we directly help them, their employees, and their vendors improve their life.  Plus, we get to do it in a way that empowers people to do for themselves, not just writing a check for us to do for them.  This is one of my core values.

Now what are YOUR deeper reasons for doing your business?

Write them out on a 3×5 index card and keep it up and out in front of you at the office.

Also, thank you to all of you who took the time to write in and share your ways of “paying it forward” in the world this holiday season based on the email I sent you last week.

I heard so many inspirational stories and I want to share a few ways you in the Maui community are making a difference:

• Sharon and her husband gave a young couple who manage their manufactured home park a free and clear home!
• Antonia gives to her local food bank and women’s shelter and challenges her peers in the Maui community to buy an extra case of a staple food at the store the next time you shop and drop it off.
• Matt played Santa at his local animal shelter raising money and awareness to adopt pets.
• Chris is buying gift cards through his church to give out.

As you can see real wealth is savoring the people and blessings in your life AND real wealth is what you give and share with others.

Thank you for being a part of the Maui community.  You are a blessing in my life and I deeply care about you

From the entire Maui team – may 2012 be a prosperous and healthy and joyous year for you.

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I was thinking about what to get you for the holidays and I decided to give you the gift of growing your business!

For a limited time, get your own personal copy of our 4-part video training course for business owners (a $596 value!)

Here’s exactly what you’ll get:

Video One: Simple Steps to Breakthrough Business Ideas! ($149 Value)

Join Jeff Hoffman, mega-successful entrepreneur as he shares with you his proprietary system for reliably staying ahead of your competitors by creating breakthrough business ideas.

Jeff sold his first company CTI to American Express for over $20 million before he was 35 and went on to launch, scale, and sell numerous other successful businesses.

He is the former CEO and founding team member of Priceline.com (currently valued at over $6 BILLION!)

In this 50-minute video, you’ll learn the exact same system he used to build the multi-billion dollar Priceline.com family of companies.

Captured live at a past Maui workshop, you’ll get dozens of ideas to make your business more successful.

—-> Link to get your complimentary copy of this 4-part video training course!

Video Two: How to Escape the Self-Employment Trap™ and Build a Business, Not a Job! ($149 Value)

Join Wall Street Journal and Business Week bestselling author and serial entrepreneur David Finkel for this 90-minute training on how you can build a business that independent of you the business owner.

You’ll learn the how to avoid the single biggest mistake that most business owners make, and how you can build a business you can one day sell, scale, or even own passively.

This video training lays out the concrete road map to build a business, not a job.

—-> Link to get your complimentary copy of this 4-part video training course!

Video Three: 6 Time Tactics to Free Up 6+ Hours per Week to Build Your Business! ($149 Value)

Have you ever felt maxed out, without the time to focus on building and developing your business? In this 50-minute video training you’ll learn 6 tested and proven time tactics to free up a full day each week to reinvest in growing your business.

You’ll learn a revolutionary new entrepreneurial time mastery system that helps restructure your week for maximum impact inside your business.

You’ll learn how a physician in St. Louis MO, Dr. Gurpreet Padda, increase his net income by over $1 million in less than 12 months of applying this system. And you’ll get 6 specific time tools that will immediately help you to upgrade your use of time to create more value, higher sales, and more discretionary time to grow your business.

Video Four: The Three Essential Ingredients to Build a Business You Can Sell, Scale, or Own Passively! ($149 Value)

Too many business owners try to build a business independent of themselves simply by hiring the “right manager”. This rarely works over time. Instead you need to build a solid foundation of competent team, solid systems, and intelligent business controls.

In this detailed “nuts and bolts” workshop you’ll learn about all 3 of these critical building blocks to build a business, not a job.

You’ll learn the four core systems of every successful business, the 5 simple controls that your business needs now, and the 4 stages every business system goes through as you build your company the right way.

—-> Link to get your complimentary copy of this 4-part video training course!

Take action now and enjoy this gift with our compliments!

We look forward to your continued engagement with the  Maui Mastermind community of business owners!

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