The Power of FOCUS

Episode 4

It won’t matter if you do a thousand deals a year if all the money you make simply goes out the door!

DAVID RICHTER

In today’s episode, we discuss the power of focusing on your ONE thing.

The reality is opportunity is EVERYWHERE but the only way to truly gain success, is by
deciding on ONE choice.

In today’s show, we go in detail about:

• The power of FOCUS
• Defying the odds, continuing to grow your business, and ULTIMATELY emerge from the crisis with certainty and strength
• The importance of taking OWNERSHIP
• And more!

Hope you enjoy the episode!

Transcription

David: Hey, this is David Richter with the Profit First REI Podcast. And I am excited to be here today. We’ve got Jaren Barnes also co-hosting. Jaren, you want to say hey?

Jaren: Hey, hey, what’s up, guys?

David: Hey, hey, so we are continuing this podcast and, as we’ve said on the very first podcast. We’re going to have a main central theme for our shows and want you to get at least one thing; even if we dive into several concepts, we want you to at least be able to walk away with one common theme. And this today is all about Focus. That’s what this podcast episode is all about, and it’s- we want to dive right into it, and I wanted to first before I can have some banter with Jaren. I want to actually give you a tale of two companies because you are going to see the actual power of these companies that I’ve worked with before and how the difference Focus really made between the two companies. So the first company was kind of a big company they didn’t start out that way though it started off where they were just wholesaling deals. I think they might have gone from 45 deals one year to 95 to about 180 that they wholesaled like in consecutive years, so they were doing really well. They were doing that with about 5 to 10 employees based on the year and the number of deals they might’ve got a little bit more. They might’ve had a little bit more than 10 when they did a hundred and eighty wholesale deals, but at that stage, they were very profitable, they were wholesaling those deals and everything and didn’t take much to actually get the deals sold because they bought them at the right price and then sold them, but then they started to grow and let’s just see if this describes you as if you’re out there listening to this podcast they started to grow and they got out up to about over 25 employees and several virtual assistants on top of that, but then they had 25 employees we had a big office then too. there was enough stuff going on all over the place. We were doing 30 deals a month at that point too, so I told you at the beginning they started off doing like 45 deals in their first year they were up to 180 deal when they were still profitable, but then they started doing 30 deals a month and this- you know it was going game Busters. It was a foray of activity everywhere you look, there were people in every single seat. We were running off to the EOS System, the entrepreneurial operating system by Gino Wickman. That company was just they- we had the structure we had everything, but we were- they were doing too many things they were- that was 30 deals a month between fixing and flipping, turnkey properties, straight rentals, rent-to-own, owner finance there was a ton of activity going on. There was about 30 deals a month, and it could be any type of exit strategy. So we had little- we had the same people doing a lot of different things though too, so they would be one employee that would help like in an area maybe with the rentals, but they might also be helping with project management for some of the fixes and flips too. so you had some employees that we’re focused on one area, but they had some employees that and some managers that were going across different areas and whatnot. And honestly it got to the place where it was so big and doing so many different types of deals they lost its focus they lost- they lost what it was it’s core- the core function it was good at and I I remember talking with this company I remember being in those meetings when it was like oh we have to change and adapt because they used to buy properties off you know like that word transactional more like it or MLS deals or things like that or Action deals where are those- those were drying up across the country and they were having to adapt but then they were thinking they had to adapt their exit strategies too and now just try and stay small and profitable but they grew so fast and I will- cuz I literally went for- I feel like over the course of a year to have went from 10 employees to over 25 with doing all these different types of deals but we had to with all the different things that were happening in that company but then it started not being profitable and guess what it couldn’t sustain that and eventually it had to scale weight down it had to rethink his plan and it had to take a step back because those 30 deals a month even though that sounded good on paper it was fun to say that at the end of the day it’s about what you keep and not just what you make and that’s where it- it kind of lost that Focus of like no we are a wholesale company and we are good at wholesaling and we’re going to find these deals on going to wholesale with this amount of team and with this overhead and what not and they kind of lost that Focus but then I will say that it started regaining that focus when it had to scale back down and it’s not fun to scale down but you obviously have to do what you have to do in order to make a company profitable but I will say that like I said that the focus really help let me tell you about the story of another company. another company started off with when I saw working with them it was one employee and one contractor basically, and they had some virtual assistant helping them with some of the nitty-gritty stuff, but they were fixing-flipping and wholesaling, so this wasn’t as bad they just had two exit strategies they did have some rentals but that- they didn’t have enough of a rental portfolio where was like taking someone hours and hours and hours a week, so they were mainly fixing flipping and wholesaling but they weren’t profitable because their fixing flipping was really taking their time away from wholesaling, and they were great wholesalers. They knew you how to get the properties in the door, they knew how to sell the properties, but they didn’t know their numbers, they didn’t know where they stood, they didn’t know, and at the end of the year, they had hired us on near the end of the year SimpleCFO Solutions our company and we finally got them to where they actually knew their numbers and then for 20- this was just last year in 2019 they weren’t profitable- they weren’t profitable with what they had done, and that hit them really across the face cuz they had a business-to-business all trade meeting almost back to back they have one with us and one with a business coach and the one with us where we showed him the numbers the owner literally got mad and hung upon us.

Jaren: What?

David: and yeah, so it was a- it was a pretty intense call where we were like here is what the numbers are here is what to tell him and he-he did not like it and he just- he hung up on the call thankfully I was able to call him back and say hey you know are you okay? and he just said it was nothing against us it was more facing those numbers and he just got very upset because he didn’t know how is he going to get out of this hole and so with that meeting and then with the other business coach that the company had and I’ll just tell you right now that business coach was Gary Harper with Sharper Business Solutions I highly recommend they were actually able to- after that meeting they had the numbers they were able to sit down and see their exit strategies for their Fix and Flip, their average profit per deal was almost like five or six thousand and their- their profit per deal on the wholesale is like 15-20 grand and they did more wholesales than fix and flip but the fix and flip was taking so much more time.
They did more wholesales than fix and Flip but with a fix and flip has taken so much more time it was taken their energies away from focusing on how to generate the deals and get those in and that’s really what hurt them, but once they had the numbers they had the power in their hand they were able to look at those numbers and say look at this- this is what it’s actually telling us and not only did we not make a profit but look what if we would have just done these types of deals and kept it like this we actually would have probably been profitable because if we just would’ve focused on this area. so they started focusing on wholesaling, and I am very happy to tell you that this has a good ending because they started to grow, but they started to grow because they were actually making a profit they’re at three employees now with several 1099 contractors also, that are helping them in like commission type employees and then once they had those numbers like I was saying for their exit strategies they focused on wholesaling and just this year already up through the end of May they’ve already done more deals than in 2019-

Jaren: Wow

David: Which from the first story, you would say, well, who cares if they’ve done more deals but are they more profitable? And honestly, they have done more property profit up through May than all of 2019.

Jaren: Wow

David: So they’ve already exploited 2019 out of the water. They’re not only more profitable like property for property and like saying their total property profit, but they’re also profitable as a business as a whole, and they’re eating up 2019’s loss. They are actually going into town, and they are building that business, but one of their first take steps with having that those numbers in their hand and they actually pivot it and that’s what now they’re in that much better position, so I don’t know if that describes you that first company or that second company, but it’s almost kind of a mirror of each other and then from there that one company had to scale back one was slowly scaling up because they’ve started making a profit and focusing on what they really could and focus is so key. So I don’t know if that it describes anyone out there, but those are two examples I’ve seen a tale of two companies that one where they didn’t focus you know they lost their focus and their vision and then the other one they just- they embraced focus whole-heartedly. So Jaren, do you have anything to comment on?

Jaren: Yeah, man. That’s- that’s such a powerful- powerful of how getting your one thing can take you to the next level my wife has a spiritual father that taught her a lot of wisdom and stuff throughout the years and one of the things that she always reminds me of is that once her spiritual father told her the focus is like a magnifying glass he said what happens when you have light go through a magnifying glass and you focus the light beam you focus the sunlight into concentrated area and obviously it becomes a light beam and it burns whatever it’s so powerful, it’s so potent that it literally will burn wood or ants or whatever if you’re demented you know that- but it’s a really interesting perspective you know it’s like- it’s a really good thought image to consider like if I am spreading out too thin and I’m all over the place I can only have my concentration be you know more linear more like- like a horizon whereas if I concentrate on one thing and I give it everything that I have it becomes really really potent and really powerful. So yeah.

David: Yeah.

Jaren: I love it.

David: So true that is so true, and I know this is a podcast that focuses on like profit first and financials and cash flow. I just wanted to let you know focus- if I could help businesses, that would be one of the biggest things is just being able to focus on what you’re good at, and honestly, if you don’t know what you’re good at and what what you need to focus on it would be very beneficial to stop your operations for a day and just sit and think if you have a team to sit and think with them or if you don’t have a large team sit by yourself and have other employees run it for the day if you can and just sit and think what are you good at? How are you going to be able to focus on that? What other what other areas are avenues will help you focus on that one thing that you’re good at? and what you’re good at is it sustainable in order to build that business? Where I think a lot of people just go into business and say how can I make money especially in the real estate world there’s- there is a thousand different ways to make money in real estate, and that is one of the downfalls of real estate is that there’s a thousand different ways because everyone wants a little bit of every single pie but if you focus on one area and you can get that one area just humming and then you actually build a system around that one area who’s to say you couldn’t go after those other areas, but you need to focus to make sure you have a- a business system around that area that you’re good at. Because you’re going to end up growing and growing and growing and saying, where’s my cash? Where’s the money that I made? How am I supposed to keep- you know where’s- where’s any of that? I want to keep my money, not just make it. So that’s where you can just figure out what you’re good? What is your main area that you could take away and say this is what we need to focus on in order to be a profitable, healthy company? So that way you’re healthy for yourself, for your employees, for the people that depend on you that’s why you need to focus and need to take that step back, and I didn’t- there was no more powerful real-life example than those two different companies that I had the privilege to work with and be able to see on the side like one is the focused. One lost the focus, and you could definitely see the big difference there. And I know I’m taking a lot here to talk on focus with this, but I know that this can help a lot of investors out there. Because they don’t know what to focus on, if you just take time to say what are we good at? what are we good at systematically repeatedly doing, or what can we build around? Is that something that we can- can actually build a business on? and then it was great. I was just- I was preparing for this podcast, and I saw this statement, and it was such a great statement it said financial literacy is not a byproduct of wealth. Wealth is a byproduct of financial literacy.

Jaren: I love it

David: It was from MJ DeMarco; he wrote The Millionaire Fastlane, which I highly recommend on getting if you are looking into growing your business.

Jaren: Yeah, one of my favorite books.

David: it’s a great book, and he posted that on social media on his page and I saw that and you could replace that financial literacy is not a byproduct of sales or house sales house sales is a byproduct of financial literacy being able to stay like I need- because if you don’t keep that money and if you don’t focus on making it an actual healthy business it won’t matter if you make a thousand more sales in a year if it’s all going out the door you saw that big company they did more deals, they had more sales, they were generating more leads than they ever generated before, but at the end of the day they weren’t keeping that money it didn’t matter they had to scale back down to be profitable and so now if you don’t have that financial literacy or don’t know where your cash is going I highly empower you to do that because that’s what this podcast is all about to help you. But even before you dive into that, what is that focus? What can you do in your business to have systemic, repeated wealth coming in there if that’s buying rentals and having the rent checks come in doing the wholesale and building a system around wholesaling? or you’re a great fix and flipper, and you could put those deals together or anything that you do in your business you buy owner finance and sale owner finance if you’re doing that- subject 2’s whatever you’re doing what can you focus on to make it repeatable? And that’s where you see a lot of successful people in real estate they found something that they are good at and then they- he blew the top of it they said I’m going to create a system around it no matter how painful it is and get in there and focus on. So I just wanted to share that with you because I’ve seen that firsthand what Focus can really do for your business and what it does for our business and what it does for a lot of Real Estate Investors, and I wanted this to be one of the first podcasts. Because of how impactful I feel like it is not only on your business but on your financials too so I want you to I wanted this to get in there and be like this is something that you can practice today. A practical takeaway would be to go by yourself or with your leadership team if you have a leadership team and say, what are we good at? and are we focusing on it to get the most out of our business?

Jaren: So I have one question for you that I think will be beneficial for- for our listeners out there. What do you do when you have to make a call? So let’s say it’s pretty simple if you’re making 15- 20 grand on a wholesale and you’re only making five grand on a flip, what if you’re making 15-20 grande on both? What do you do when you know like you’re good at two different things, and you have traction, and you have momentum? I guess if it’s not detrimental or if it’s not like hurting anything, then you’re fine but is there a place where resources are being employed and maybe a business owner is feeling pulled in two different directions and doesn’t know how to make a call do you have any insight into how they would figure out which one is worth giving up and which one is worth double down- doubling down on? Is that a word? doubling down on?

David: Yeah

Jaren: We’ll go with it.

David: So this is a great question. Absolutely great question because I’m sure there’s listeners out there who are like well, I’m good at two different areas; if you’re good at two different areas and you build a system for both, then figure out how you can scale those areas now then like which one do you need to focus on because if it’s- if you are able to make and keep the money well then obviously if you’re doing fix and flipping and wholesaling then- and you’re profitable at both that’s great, but this is the caveat. If one of them is making you dread getting up in the morning or you hate working on one part of the business, then that’s probably the one that- if you’re like I’m going to keep that arm, then you need to systematize it and make sure that you have as little interaction with it other than seeing how it’s going. Because that’s what you really need to see is a burden on you? is it a burden on the business? Because if you make 15 to 20 on both deals like if you’re making the same amount of profit, obviously Fix and Flip usually takes longer than a wholesale deal.

Jaren: Yeah

David: So wholesale deal. If you’re good at getting wholesale deals and you’re doing the same volume of each type well, then you probably have a great system already in place, but if you’re like well, I make 15 or 20 on a wholesale deal, and we do a couple of those a month, but I do one Fix and Flip here and there you know it’s really dependent on you as a business owner and what you want as far as your goals. This is another thing we see so many Real Estate Investors take the goals from other people that they’ve set for themselves and be like I should have that goal or I should be doing that amount of deals. Well what if you want to spend more time with your kids? what if you want to do- what if you want to write books? Or you want to whatever it is that you’re big aspirations are in life you want to go on a mission field and- and take a big missions trip every single year for a whole month? Well, then was your business serving you? and if you focused on that one area that was taking less of your time and really explored that and expanded that is that going to get you closer to your actual end-goal? And not some preconceived notion that someone else said because you heard somewhere at a mastermind or on some podcasts like I’m doing this amount of deals and everyone should be doing this amount of deals, or you know I’m this profitable or that profitable by doing 15 different things. It’s really what does your business need? What do you need as a person a human being, and then how can you focus on that? So it’s really taking it a step back from okay we might be good at these different things, and we might be making the same amount of profit but do we have a system around it and do we also not only have a system around it but is it- is it a headache on me or anyone in the business that I can either get off their plate or that we can make that system better? Because obviously, you don’t want to take away something that’s making your business profitable, I’m not saying if you’re at a fix and flip or you’re profitable in wholesaling. You’ve got both systems running and an engine working and that you should cut off one arm. I’m saying that no, you need to be able to focus on one thing, make sure it’s up and running and then you can add those other arms and make sure that they’re profitable. So that’s where I would take it from and what I’ve seen other people that are successful in the industry due to.

Jaren: So one of the questions for you to David, what if they have to make a call and then them making the call forces them to scale down and having to let go of their team and stuff? Like I know, this is the- the questions that a lot of Real Estate Investors have to make like. If Sally is, you know the point and in contact with a transaction coordinator of the flip company, and you know it’s clear that it’s time to go towards wholesaling. Well, Sally is out of a job and- or maybe you keep Sally, but then you’re going to have to let go of other people you know, so how do you navigate to those waters? Because I feel like a lot of real estate entrepreneurs also struggle with that where it’s like they build this monster, and then everybody’s like, their team all depending on this monster continuing to consume and consume and consume even if they’re not profitable at least they make enough revenue to like pay salaries you know, and as a business owner, you think about things like a man like if I stop and I scale down this arm of my business that I hate doing that makes me dread waking up in the morning then people going to lose their jobs and I have to make that call. So how did how do you navigate that water?

David: First of all, great question. The second thing is that’s where you have to take a step back and say have you built it correctly up until now? And maybe swallow a hard pill. I love how in Profit First- how open, and honest Mike is about his struggles. Mike Michalowicz, the author of Profit First where he said he came to that crossroads he had to make that call and had to let several employees go in one of his first businesses and then he gave the people that stayed with him a 10% decrease so like it was like adding insult to injury when number one you know now that people have been let go the other people think is anything going to happen to us? and have to get a paycheck, so I love how vulnerable he is in the book because that was

Jaren: Now when you say- when you say the book, you’re talking about Profit First, right?

David: Profit First, exactly.

Jaren: by Mike Michalowicz

David: Profit First, by Mike Michalowicz. So when- when he gives that in Profit Firs that story he said I had to take responsibility it was my fault I got it in this position and that’s a hard pill for anyone to swallow because how many times and where we live today in the days- does anyone take responsibility for anything?

Jaren: Yeah

David: so being able to say it’s my fault I’m going to have to figure this out and you might- if you have to make those calls it’s really the difference at the end of the day if you had to cut off one arm you know of the business it’s either saving the company you know like the rest of the company to make sure that you could say hey if it- once we build this foundation we will have a spot for you even though that’s not the best-case scenario but being able to say I need to do what’s best for the company and I got us into this position and I’m going to have to get us out with some very hard decisions and be able to say we got to- we’re going to have to offload some of the current workers or the current employees and also being able to stay to yourself I need help- I need help in order to get to a better position because the other thing to is not only- not only- I know you’d be letting down them but the alternative is to keep running negative and then for you to file bankruptcy everyone in the whole company to lose their job you’re out of a house to go into foreclosure you know it’s like the worst case scenarios where if you just keep doing the same thing you’ve always done and you’re not profitable and nothing changes that’s the road you’re heading down where that company will shut down completely and then you’ll be another statistic that you hear about all businesses having to shut their doors. So it’s like what is the alternative? The alternative to the bad decisions you’ve made so far is either to keep making them and then go completely out of business and hurt your family and hurt the financial position you’re in or to make hard decisions now so that way it gets a little bit better so that way you can build a better foundation for your business and I’m not saying you shouldn’t do anything you can to protect your employees but you should do everything possible to make sure that you are profitable and that you are actually providing a healthy environment and not something that one day someone’s going to come and just repossessed your business basically because you haven’t been making either your tax payments or you haven’t been making this payment to that lender and then your- your name goes down the drain I think your name would be a lot better if you owned up to a responsibility that you had and then said it hurts, this is my fault ,we’re going to have to make these decisions to let these people go but we’re going to come out of this better and stronger and taking that responsibility rather than just pushing it off and then your name is mud in the future because you keep taking people’s money or lenders money private lenders money and then you’re never going to be able to pay back because you’re using that for Operational Expenses. So it’s a very big wake-up call, and you’re going to have to be able to say I need something to change in order to be profitable.

Jaren: Man, that’s gold. I really get bugged for the listeners related to- to that about taking ownership. Is a book called Extreme Ownership by Jocko Willink that was a book that really helped me understand that at the end of the day in my life, everything really is my fault. And that’s not like to carry a huge weight, and the go-around super stressed all the time, but it’s a hard posture that allows you to do something about your circumstances, you know like life is not fair and bad things happen, and sometimes you have to make tough calls and do things that are not pleasant sometimes you have to pick the lesser of two evils and at the of the day the only person that can change your situations is you so.

David: And I love that- I love that book, Jocko Willinck’s book The Extreme Ownership. Highly recommend that it will change your life when it comes to accepting the responsibility. I will say a big part of Focus is taking responsibility for your business and taking it into the right direction and saying I am going to own this business and I am going to make sure that I do everything humanly possible to make sure that I can push it forward and cuz you’re in control you started a business not to take anything from the man. You started a business to be able to say I am going to not only be profitable for myself but for these employees, for the lenders, for the people around me too, so you’ve got to take ownership, and you have to- you have to be able to focus to say this is what the company needs to do, this is how we need to pivot, or this is what we need to focus on in order to take this business to the next level.

Jaren: Yup, I love it, man.

David: Well, I think we are wrapping that up here. Jaren, do you have any final comments before I give them a couple of links that they can use?

Jaren: No, I am good man.

David: Awesome. Well, Jaren, I appreciate you being on co-hosting and if you out there as a listener if you want to tell your story a Profit First story or anything like that, I ran over today, or you have a great real estate story, especially if it relates to finances and I- just potentially you could be in Profit First book for Real Estate Investors. If you are interested in telling a story that could potentially be in that book because SimpleCFO I believe will be- we’re in the talks with Mike Michalowicz right now to write that book. If you want to be interviewed on this podcast or potentially be in the Profit First book, go to profitfirstrei.net and then you can go there and can give us either feedback or if you have a story where have- something for that too and where you could put it on there also just one other link if you want to work us with SimpleCFO to know and grow your profit which we- that where we specialize in and make sure that you know and grow your profit and want to be like that second company that- we helped them realize their numbers and then they took it in their hands and actually turn their company around. If you would like to be in this position, you could go to SimpleCFOSolutions.com and fill up the application there. We work with a lot of different companies during the core, and we really strive to help them not only know their numbers but know and grow their cash flows. We want you not only to know that cash flow but grow that cash flow too. So that- that just the couple links. We really appreciate you being on this podcast, and we hope you- hope you have a great day and that you can focus on what you need to. Have a great day!

Jaren: See you guys next time!

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