ANTHONY TUMBIOLO

Decision Making Entrepreneurship

Make Decisions Out of Abundance, Not Fear and Lack

Just a few years ago, I was sitting on one of those long tables that you often see in the movies. Lawyers on my side.

On the other side of the table? The other party in this deal. Big, bad, scary lawyers on his side too.

The stakes were higher than the Empire State. This deal could make-or-break Jakt’s future. And I had worked tremendously hard to bring it to where we were to just let it slip off my fingertips.

So, I put on my Superman cape and brought the deal home to everyone’s adoration. I was treated like a Rockstar for years. Forbes and Fortune Magazine fought for me to be in their covers…

Nah. Just playin’.

I was actually deadass scared. Nervous. Fearful.

And things were not going well. At all. It looked like keeping Jakt alive would cost me hundreds of thousands of dollars — an amount that I couldn’t afford to spend.

I knew that, if the deal didn’t work out, I’d have to start over. From scratch. Find new clients. New employees. New offices. And everything I had done would be for nothing.

But the thing is, the guys on the other side of the table knew that too. And they knew that I was afraid of having to go through that. Which is exactly why the deal was not working out for me — they had all the leverage.

But there was a moment that I got tired. Tired of being scared. Tired of thinking the world was going to end if this deal fell through.

So I pulled my lawyers apart and said — “You know what? Fuck it. I don’t care anymore. I’ll be fine either way.”

As we sat back on that infinite, wooden table, I remember realizing that something had changed. They didn’t have the leverage anymore. We did.

There was no fear in our eyes. And that scared them. Then I saw a glimpse of… alarm in theirs. The tables had turned.

In the end, we closed the deal. Because of it, Jakt not only remained profitable, but the following years were of extremely rapid growth. I still think of that day as one of my greatest W’s.

Breaking Off Fear’s Chains

This experience was a defining moment for me because it taught me one thing: never make decisions out of fear and lack.

That day, whoever was fearful and had a scarcity mindset would lose. And whoever was abundant in his thinking would win.

Have you ever wondered what fear **really** is?

I think fear is just being scared of the future or some future outcome. Which is funny since, well, none of us have crystal balls at home that let us predict what’s going to happen.

The problem with fear is that it often leads us to make “safe” decisions –which doesn’t necessarily mean they’re the best one.

In fact, they might not even be “safe” — they just feel it. Someone said to me that “underneath safety is fear,” and I couldn’t agree more. Be careful to not fall in this trap.

But Fear doesn’t come alone. He brings his brother: Lack. I think of lack as swimming in scarcity. Thinking that there are only “so many” chances, “so many” opportunities, “so many” clients, “so much” money you can make…

Admittedly, this is something I have personally struggled with too. Getting better at this is definitely one of my propositions for this year.

As you can imagine, lack and fear don’t help you make the best decisions.

But, at the same time, you cannot force yourself to not have any emotions. We’re all humans –not Terminators, and I don’t care how “tough” you say you are, we all have them.

It’s what you do with them that really matters. First, you need to accept that they’re a normal part of the human condition. They don’t make you weak. They make you human.

Then, you have to recognize them.

As a business owner, sometimes you’ll be fearful. Other times you’ll be nervous. And then you’ll be overconfident. And then you’ll panic. While I am much more calm now, the early years were a bit of the proverbial “emotional rollercoaster.”

Emotions have a purpose. They let you see how you’re feeling –how your body and mind are reacting to a specific circumstance. Process them. Use them as input. And earn from them. Don’t ride the rollercoaster along with emotions.

But never make decisions on an emotionally-charged state of mind. You can’t let them overtake your mental clarity. They’re there for a reason, but don’t let them dictate your choices at that moment.

How can you rewire that, and what’s the opposite of fear and lack?

The Power Of Abundance In Decision-Making

I was recently sharing the story from the beginning with a business friend of mine who is in a similar situation.

Like me, he is scared. Long story short, he was afraid of losing his biggest customer. They were pressuring him because they knew he needed them. And he was telling me that he felt like he had to do anything they asked for.

It was clear to me that he was coming from a place of lack. “They’re my biggest customers, I can’t go on without them” –he said.

As I said, emotions like these are normal. You can usually uncover valuable insights from them. Later on that call, we uncovered that the real issue was in his marketing/sales system: customer concentration, low prices, no pipeline of leads, etc.

How do I know this?

I’ve been in the same exact position.

At the same time, having an abundant mindset will give you a 180-degrees shift on how you negotiate, make decisions, and recognize situations.

If my friend approached this situation with the belief that, no matter what happens with this customer, he can always go and find 10 more –everything would change. He’d have the leverage. He’d be acting from abundance, and not reacting off fear.

Funnily enough, the Law of Attraction plays a major role here.

If you believe that you cannot find a client to save your life, well, you probably won’t. That’s how it works: you attract what you think about. So you really brought it upon yourself.

But if you walk in the room truly believing that you can figure shit out, you will. Attraction works both ways –so you choose which one you want to lean in.

Do Not Ever Make Decisions Out of Fear or Lack

  • Don’t make decisions based on fear or lack. You can’t predict the future, and “safety” is often just perceived. Emotions are normal and a learning experience –but never make a decision in an emotionally-charged state.
  • When negotiating, whoever has the most fear usually loses. If you want to gain leverage, make sure your decisions are not coming from a scarcity mindset.
  • Abundance is the opposite of fear and lack. When you believe that you can handle things either way –that you are resourceful and that you’ll be fine– your decision-making will improve. There’s plenty of great things out there for you. And you attract what you believe.

Finance

The 1 Crucial Personal Finance Tip Every Business Owner Should Know

You’ve been lied to about the price of everything you buy.

Oops…

Here’s the thing, personal items are always more expensive than you think when you add your tax rate to it. And your personal finances could be slowing down your business’ growth.

What do I mean by that?

Well, when you make a dollar, the government takes it takes. What’s left is the money you have to spend on things.

That suit you just spent two grand on — you had to earn over $3,000 to buy it.

That $500 dinner plus drinks at NYC’s most trendy place — you had to earn $750+ for that.

And, admittedly, the $25,000 Rolex I bought a few years back really cost me $35,000 – $40,000 when I incorporate my tax rate into the equation.

See what I mean?

Knowledge of personal finance as a business owner/CEO starts with understanding your pre-tax and post-tax income. Your pretax income – the earnings you make after deducting all of your operating expenses (insurance, depreciation, employees, etc.) – really needs to be $550 to pay for that $500 Gucci belt you loved.

There are ways to lower your pre-tax income, such as but that doesn’t help when you’re taxed afterward. Everything is 1.4x to 1.7x (depending on the state you live in) more expensive than you think.

Yup, it sucks.

Recognizing the expense of your overall tax rate is the first step toward making smarter spending decisions and reducing your living expenses. Fight off immediate gratification

Now, it’s not all doom and gloom.

If you understand the system, you’ll realize you can use it to your advantage:

Reinvesting in the Business vs. Personal Spending

We’ve talked before about keeping and reinvesting your profits back into the business. It speeds up your growth, it provides a safety net for when the shit hits the fan… But you are also now starting to get why it just makes logical sense:

The government is (indirectly and unknowingly) incentivizing you to spend money in your business.

Here’s how:

If I spend $1000 on a personal item, it’s actually costing me $1,700 because of my tax rate. You know that by now, so I won’t repeat myself.

But, if I reinvest the same $1000 into my business, I can expense the entire thing so my money goes much further. You end up making more money in the long run when reinvesting in your company – and you don’t have to pay taxes until you take profits out!

The 1 Crucial Personal Finance Tip Every Business Owner Should Know

Instead of going to the government or to Gucci, wouldn’t you rather have your hard-earned dollars go towards hiring new talented people, funding projects, scaling, or investing in new business opportunities? I surely would.  

Note: I am obviously not promoting tax evasion. There’s a BIG difference between that and being smart about how you spend your money and business expenses. Always (and I mean always) be legal and compliant.

It really just doesn’t make financial sense to me to spend post-tax dollars on things that don’t provide me an ROI. You could spend that money tax-free by investing in your business (e.g. spending on marketing that will bring you, new customers).

Personal Finances and Business Owners

Educating myself on personal finances (trust me, it’s taken some rewiring) has proven to be a huge competitive advantage.

At the same time, I sometimes hear from business owners that tell me things like:

“Anthony, dude, I made that money –I deserve the Porsche!” Or “you can’t take dollar bills with ya when you are 6 feet deep.”

They’re not wrong, and neither am I. Both options are viable, and I am no one to tell you how to live your life or how to spend your cash.

And listen, I get it. I bought myself a $25,000 Rolex because I also thought I deserved it –and I probably did. I also knew that its real cost was much, much higher.

But if you’re like me, you already LOVE spending money in your business. It’s not a sacrifice. You want to see your company grow, and you also realize that you don’t need to buy shit to impress other people.

The added benefit is that doing that also makes financial sense. I limit the amount of money spent on personal items as much as possible and throw the rest into my business. I get the most bang for my dollar, and my business expenses become tax-free. It’s a Win-Win.

Crucial Personal Finance Tips:

Next time you’re about to buy something, ask yourself: “do I want to invest $1,000 on a business expense and have the government incentivize me for doing so, or actually spend $1,700 on something personal?”

If the answer is the $1,700, go ‘head and buy it. Just know that you have options. So, three things to remember and apply right away:

  1. Know that everything you buy with post-tax money is much more expensive than what the price tag says. Multiply it by 1.4x to 1.7x depending on your tax rate.
  2. Leverage the power of pre-tax money by reinvesting in your business. Take advantage of tax-free spending to stretch your dollars.
  3. Educate yourself on personal finances for business owners and CEOs. It will help your business and your day-to-day lifestyle.

If you want to read more about personal finances, managing money, and business strategies, sign up to my email list on the form below.


Building a Business

The 4 Systems Every Agency Owner Should Know About

After 7+ years as the CEO of Jakt, I’ve begun to truly look at a company as a machine. A well-oiled machine is comprised of different systems that operate separately but are simultaneously intertwined.

If you run a service-based business (and this probably applies to other business models as well, but I based this on my experience running one), I have identified four main systems that you as a business owner, CEO, or entrepreneur will have to integrate and manage.

Throughout this article, I’ll continuously use the example of running a marketing agency. But this is the same way my service based business (SBB) Jakt, an NYC digital product studio, operates –and I’m sure your SBB does too.

At the end of the article, I’ll also touch on how to manage these four systems as you grow in revenue and people. So, let’s get to it.

System 1: New Business System

The New Business System is mainly focused on signing new clients. Here’s how it all works together:

The 4 Systems Every Agency Owner Should Know About

The first step is to generate leads, which can be either inbound or outbound. I will explore this in more depth in the future.

Let’s use our example of a marketing agency. You can generate leads through a variety of ways: content marketing, PPC, Facebook ads, word-of-mouth, referral partnerships, etc. They all bring awareness to your company and, once people show interest in your services, they become a lead.

The New Business System is also in charge of qualifying those leads to make sure they’re a good fit to your business. If your agency only works with realtors, being approached by physical trainers is not worth much.

But the industry is not the only component.

Other things you’ll want to consider are budget, project type (i.e. what the customer wants), customer size, timing, etc.

Qualified leads move into the next step of the system –closing them. You can’t feed your family or make payroll with leads, feel me?

Think of the sales engines as a funnel: leads →  qualified leads → clients. In a separate article, I will go much more in-depth into it and talk about how to optimize it —click here so I can let you know about future posts before anyone else.

What happens after you sign a new client to your business? Let’s move to the next system.

System 2: Production System

The Production System includes all processes, tools, and people that help you deliver your offered services to your clients.

The transition from the New Business System needs to happen as smoothly as possible, and you’ll want to connect both systems to make it a cohesive experience.

The 4 Systems Every Agency Owner Should Know About

Let’s go back to our example. If the terms of the contract are that you’ll provide Facebook ads for XYZ Company, the Production System will be in charge of that. Your Facebook ads guy or gal (or yourself, more on this later) are part of this system. They will be the ones now engaging with the client –or an account manager that represents them– and doing the daily work.

One of this system’s focus should also be to increase your client’s lifetime value (LTV). It’s much cheaper to extract more revenue from current clients than finding new ones.

But how can you do that?

One option is to renew their contract. For example, if you signed with them for three months, you can renew the contract when it’s up. (Sidenote: much easier to do this when you deliver exceptional work).

Another option is to cross-sell another service. If you identify another problem that your business could help solve, you can sell that to them. For example, you could offer to now run their PPC in addition to the agreed upon Facebook ads management.

However, there’s a fine line between selling an additional service just because you can and staying focused on your core offering. Staying niche’d down and focused is important – but that’s outside the scope of this blog post.

The third option is upselling a service to them, which is not the same as cross-selling. If cross-selling is offering PPC after FB ads, upselling would be offering a $4,000/month FB ads package instead of the $2,000/month the initially were looking for.

And fourth and final option [I’ll cover in this post] is to expand your services with more of their products or divisions. This normally applies to larger companies. For example, if you’re running Facebook ads for one brand, but the parent company has other brands, you can try to land another of their brands as a customer.

Renewing, cross-selling, upselling, and expanding are great ways to build a solid revenue floor. Any new business then goes on top of that –which stops you from having a leaky bucket. You don’t want to add new customers just to lose previous deals because you then won’t increase your top-line revenue.

System 3: Back-Office System

So far, we have covered 1) how the New Business System brings clients, 2) how the Production System delivers the work.

But you already know that there are plenty of other elements that are needed to run a business.

The 4 Systems Every Agency Owner Should Know About

The Back-Office system covers accounting, finance, HR, legal, rent, administrative work, executives, etc. The truth is, all of these tend to be overlooked because they’re not sexy. It’s cool to talk about marketing strategy and closing deals, right? They’re important, don’t get me wrong. But the Back-Office System can also make-or-break your company and is key to operating the machine and to your business growing and scaling.

How does this look in practicality?

For our marketing agency, this system will cover accountants to file taxes, lawyers to draft contract templates, HR people to hire new talent and set up payroll, finance manager to help with financial reports and analysis etc. Note: if you’re small, you might be handling a lot of roles yourself. But it doesn’t mean they don’t need to get done.

Everything else that helps you run the business belongs in the Back-Office. It works as the thing that supports everything else and makes them happen.

System 4: Financial System

And you might be thinking, doesn’t the Back-office overlap with the Financial system? I originally did have the Financial System as part of the back-office, but I decided to remove it and have it stand on its own legs because of its influence towards the survival of the machine.

The Financial System will be focused on ensuring the financial health of the company, which is mutually dependent on the other three systems.

The 4 Systems Every Agency Owner Should Know About

Simply put, there are three elements to this system.

First, revenue.

It can come from closing deals through the New Business System or from upselling/renewing through the Production System. The monthly payment from the client that your agency runs FB ads for goes here.

The second element is expenses.

There are three main expense buckets: sales and marketing (New Business), cost of services (Production), and operational costs (Back-Office).

Hiring a writer to produce marketing content or a Facebook ads specialist, or paying rent are all expenses from these systems.

And finally, this system is also concerned about Profits. That could be a 10k-word article by itself, but let’s just say for now that it comes from a simple equation: Profit = Revenue – Expenses. There’s obviously much more to it, so if you’re interested, here’s an article I wrote on cash flow and profit management.

Since I started Jakt, having a strong knowledge of finance and accounting has proven to be crucial to running a profitable and healthy business. That’s why we are now offering Accounting + CFO as a service so that agencies can have better quality service for less than a full-time hire. If you are an agency owner, you can find more information about it here.

4 Systems Takeaway:

For the machine to work, all systems need to operate together and separately. Here’s a visual representation of them:

The 4 Systems Every Agency Owner Should Know About

Something that I do want to mention is that the people in charge of each system will evolve as you grow. When you are just starting up, you might be the one looking for clients, closing them, doing the work, etc. Later on, you might hire a salesperson or a specialist to take over one system. And with time, you might have a full team of people for each one (or even for each step inside of every system).

It’s part of the transition from working IN the business to ON the business. Want to learn more about how to architect a perfectly well-oiled machine? Sign up to my newsletter on the form below.

  1. If you want to see how all systems work together, you can download this chart I’ve prepared for you here.

Self Care

How To Fight Off Immediate Gratification As a Business Owner

Just a couple of months ago, I opened up a community for Service Based Businesses that are looking to grow their company to 7 figures. It’s a Q&A group where no question is off-limits: finances, operations, marketing, sales… You name it –we have a channel for it. This week, one of our members –Sam Shepler– asked a very insightful question that you’ll more than likely relate to.

Sam is the Founder of  Testimonial Hero –they film and produce authentic video case studies for software marketers worldwide, with no travel fees (check them out). He told the group that he had taken on a video project that is going to be very profitable. However, he’ll have to very involved in its fulfillment since it has a tight deadline and it’s more custom than usual. His #1 medium-term vision is to remove himself from working IN the business, but he didn’t want to say no to the client, and the money was still very attractive.

Other than willpower and having your vision top-of-mind, he asked me if I had any mental models to stop yourself from doing things that are short-term gains, but ultimately don’t fit in or distract you from your future goals.

It’s a dilemma that many other business owners, CEOs, and Entrepreneurs (including myself) face on a constant basis. To answer this question, I believe it all starts with having vertical coherence.

Achieving Vertical Coherence.

I definitely think Sam is right when he mentioned willpower and keeping your future objectives top-of-mind. But, if it was that easy, we would all be extremely disciplined. We would all go to the gym, eat healthily, and accomplish all of our New Year propositions. But it’s harder than that. We need a mental model or framework that guides us and pushes us forward when doubts start creeping in.

The best way I’ve found to get there is by answering a very simple set of questions. For example, whenever there’s something that could be done, I like to ask myself this: “Does this get me closer to where I want to be?” Obviously, you first need to know where it is you’re trying to get to. In this case, Sam wants to become the Architect of the company. And he knows that doing project work will slow this transition.

To prevent falling for these traps, I try to have very clear yearly, quarterly, monthly, and weekly business objectives. They all trickle down from each other –what Taylor Pearson calls Vertical Coherence. The idea is that all of your goals have to stack up and align with your values, big vision, etc. The weekly objectives add up to the monthly ones and so on until we reach the full year.

Consequently, if all your weekly goals are met, you know you’ll reach your mission by the end of the year. That’s not to say you won’t fall short sometimes –shit happens, I get it. But this weekly cadence gives you the opportunity to re-adjust before the next checkpoint. That way you won’t go off road for weeks at a time, and you constantly make sure your actions add up to your vision.

Resisting Immediate Satisfaction.

The next question I ask myself is –Why do I want to do it? (or “did it” if it’s too late). There’s often a (sub)conscious story or justification that you want to uncover. And you need to go deep on this.  The “5 Whys” framework is a good way to get to the root cause and find what’s really under the surface.

Sam, for example, said that he didn’t want to say no, and “the money was very attractive.” And who’d blame him, right? But there’s a difference between needing money vs wanting it. You needed the money if you were down to your last dollar or didn’t know if you’d make payroll. In that situation, you just have to do it even if you don’t want to (more on this later).

Or, on the other hand, did he take it because he just wanted to increase his bottom-line? That’s a completely different issue. In hindsight, I’ve been down the same road as him, and it slowed my progress towards my long-term goals.

Yes, some extra cash to fund things sounds great. But too much distraction will just take you away from the path you want to walk. You’ll quickly find yourself spending too much energy in projects that don’t align with your vision. If you can afford it, turn down the money (I know it sucks), and focus. Again, easier said than done –I’ve definitely struggled with this over the years.

“Ideal” Clients Go First.

Let’s say you took the non-ideal project client just like Sam did. If they were not ideal because he still has to be involved in the fulfillment process, it’s not that big of a deal. All it means is he hasn’t set up the systems that will run without him. Moving from IN to On the business takes time, and you will have to do the work sometimes. Just keep working on the business, and you’ll eventually fire yourself.

But if you wouldn’t take them as a client even later, when you’re closer to your ideal state, that’s a bigger problem. What this then tell me is that you took on a non-ideal client because you don’t have enough income from current ideal customers. It’s a sales/marketing engine problem –or you’d just would’ve said no to them. Keep in mind that any minute spent on a non-ideal customer is a minute you’re not spending on finding someone ideal.

If you’ve already taken in the work, that’s okay. Just acknowledge it for what it is –even pretend they’re not a customer and exclude them from your “real revenue.” That way you don’t think you’re doing great and forget where that money is really coming from. But, if you want to build the business you say you do, don’t keep doing this. It’s a slippery slope –and a dangerous one. Also, make a strict rule that you will only do this under XYZ conditions (to make payroll, for example).

And finally, use it as a kick in the butt to work on getting your ideal customers in your sales/marketing pipeline so you don’t have to take on clients like this in the future. That said, it’s not an all-or-nothing equation. It will take time to only work with ideal customers and, even then, it still may not ALWAYS be perfect. Start slow. If right now you take 50% non-ideal and 50% ideal, then next quarter shoot for 60-40, and grow from here.

How To Fight Off Immediate Gratification Takeaway:

  • Really examine and ask yourself if taking this action will help you get to where you want to be. If the answer is no, don’t do it.
  • Have very clear yearly, quarterly, monthly, weekly goals that trickle down from your long-term vision. That vertical coherence will give you the answer to whether something aligns with what you want to achieve or not.
  • Gradually stop signing high-paying but not-ideal clients. Your time is limited, and the more energy you spend with them, the less you will have to look for your dream clients.

I talk more about moving from in to on the business, finding ideal clients, and growing service businesses to 7 figures in my newsletter. Sign up below!


Building a Business Decision Making

When Dealing With Uncertainty: Here’s How To Make Business Decisions

As an entrepreneur or a CEO, you know that one of the only constant things you deal with in business is: uncertainty. Tough decisions are natural and recurrent, and you need to have a strategy behind them. We both get you won’t always make the choice that leads to the ideal outcome, but that shouldn’t stop you from trying. In this article, I will cover how I personally deal with uncertainty and how to make business decisions. I’ll also share a few strategies that you can implement today to improve your decision-making.

Not all decisions are made equally.

There are different types of decisions that you’ll encounter as a business owner. You’ll have to handle daily, smaller decisions and big-time, monumental ones; and your approach can’t be the same for both.

Being Jakt’s CEO, I have to make numerous minor, quick decisions on a weekly basis. Over the years, I’ve learned that you can’t get hung of on being wrong or making the wrong choice (is there even a right vs wrong? We’ll talk about that in the end). You can’t let analysis paralysis or uncertainty when you’re figuring out how to make business decisions stop you from getting shit done. So what do I do instead?

I simply make a decision. Look at the data and result of that decision. And adjust. Then I make another decision. Look at the data and results again. And adjust one more time. And repeat. I cut off things that are not working and emphasize those that do work.

Let’s say you run a financial agency. You have eyed a new sales tactic –FB ads, for example– that you think could work, but will it? You simply don’t know and, the truth is, you simply can’t know. Because, well, if you knew, you wouldn’t be asking yourself whether it will work or not. Then, you could spend three months doing your due diligence, or you could just calculate potential risks (more on this later) and just try it.

So you decide to invest a few thousand dollars –or any amount that you feel comfortable with. Once the FB ads are implemented, you now check and analyze the results: what’s the ROI, is their potential for improvement, what was done right/wrong, etc. And then you adjust: you scale up if it worked, or you shut it down if it didn’t.

And what about crucial decisions?

I’ve been running Jakt for over 7 years and, understandably, there have been a handful of huge decisions I had to make. I’m talking about things that can and will impact the long-term future of my company: “Should I fire this person? Should I get rid of my business partner? Half my team quit in a matter of a month, what should I do?” And so on.

One of the key principles I learned from my coach changed the way I think about this. She said: “if you don’t know—keep going until you know.” It really rewired the way I approach monumental decisions.

When facing choices like these, I like to wait until I KNOW what my choice should be. That doesn’t mean I’m sure I’m right either –just that I’m sure of my decision. I don’t want to make premature, emotional decisions because you can’t take them back. You can’t fire someone and call them up the next day because “you made a mistake.” These are definitive decisions that affect not only yourself but other people and your company as a whole. Only make such a choice when you are 100% sure that’s what you want to do.

“But, what if I’m wrong?”

I have to make dozens of decisions every single day –and I’m sure you do too. I’ve been playing this game for over 7 years and, as you can imagine, I’ve messed up a few times. We all know how important it is to take responsibility and “own” our choices –but I want to go deeper in regards to handling your decision-making mistakes.

In the past, when something didn’t go well –if I lost say $50k or $100k–, I’d beat myself up over it: “oh, I’m stupid. I should’ve known, what the hell was I thinking!” Over time, I’ve rewired the way I go about this. The reality is, if I knew it wouldn’t work in the first place, I would not have tried whatever it was. There are no mistakes: you had to go through them, and there’s just no avoiding them. I’ve also changed my relationship with money, and now I see it as just a tool. Not tying my personal identity to it has helped me make less emotional decisions. And this gave me less uncertainty when thinking about how to make business decisions.

Now, when I make a mistake, my first thought is, “What did I learn?” I don’t get emotionally triggered anymore. And that’s been very freeing for me because I’m much more stable. The entrepreneurial roller coaster is much easier since there are no lows and highs — it’s all part of the fun, just one big game. It did take me almost seven years to finally figure that out tho.

Hypotheticals aside, I set aside over $100k for my personal brand this year. The truth is, I have no idea whether that’s going to have a return or not.

What I do know is this:

  • If nothing comes of it, I’ll be okay with it because I am okay with losing that money and it going to $0.
  • I’ll learn a shit ton, so I’m not actually losing, and
  • If it works I’ll have a great monetary ROI + I’ll learn.

I cannot lose. No matter the outcome: worst case scenario: I win because I learned; best case scenario: I learn, I make money AND I win. When you can only win, there’s no uncertainty when making business decisions–that’s how I think of entrepreneurship. Taken from this view, there is no real right or wrong. Therefore, you can take the weight off always trying to make the “right” decision, or fearing you made the “wrong” choice.

But let me give you another example: last year I lost $75K. I tried something, and it didn’t work. At all. Most people would think I’m screwed or stupid for spending that money. And three years ago, I would’ve totally agreed with you. “You just lost 75K. That’s a lot of money.” And it is. However, what everyone doesn’t understand is what I learned from losing 75K. I got an education that I couldn’t get at the best Ivy League schools.

Now that doesn’t mean that I just throw money around, which leads me to my next point:

Calculating Risks:

Look, I’m an entrepreneur, but I hate gambling when it comes to business. Every decision I make is based on minimizing the downside while having the highest upside possible. It is irresponsible and, honestly, just plain stupid to risk money away with a blind eye.

Yes, I love learning, but I also don’t like losing money (who does) –so every financial move I make has to be calculated. So, on that deal I lost above, I knew going in that I couldn’t lose more than $75K. That was my level of comfort, and I I wouldn’t care if I lost that amount. Well, not that I wouldn’t care, but I knew that losing $75,000 was not going to hurt me either financially nor my business. And when it hits that number, I pulled the plug. Unemotional. Business.

I am very precise on how much I am willing to lose. Basically, I don’t risk money I can’t lose. In any decision, I try to limit my downside while maximizing my upside potential –that’s how I deal with uncertainty and how to make business decisions. With that in mind, if the investment doesn’t work, I’m fine with it. The problem starts when people gamble money they can’t afford to lose. Or when they don’t cover their downside risk, and that’s when businesses go under and people get screwed.

Uncertainty & How to Make Business Decisions– A Takeaway:

  1. The way to approach a decision depends on its magnitude: for minor decisions, you just make them, analyze the results, adjust, and repeat; for monumental ones, you keep going until you know. 
  2. There are no “mistakes”… as long as you learn. You’re investing in education –you had to go through them. Just make sure you don’t make them again. 
  3. Calculated risks have a low, limited downside and as high of an upside as possible. Don’t gamble money –especially if you can’t afford to lose it.

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