Momentum Podcast: 245
Explode Your Net Worth
by Alex Charfen
Most entrepreneurs fail to focus on growing their net worth. The number one responsibility of your business is to create a profit. The second responsibility of your business is to increase your net worth.
Far too many of us have grown up feeling like we shouldn’t talk about money and have a discomfort with money. Tracking and understanding net worth could be one of the biggest game changers in your life.
Full Audio Transcript
I'm Alex Chafren, and this is the Momentum podcast. Made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum, so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will.
We don't accept our destiny, we define it. We don't understand defeat, because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority. The few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters. Clearly, the most important people in the world because entrepreneurs are the only source of consistent positive human evolution, and we always will be.
Explode your net worth. In my experience coaching entrepreneurs over the last 25 years, what I've realized is that most entrepreneurs fail to focus on growing their net worth. I think that what happens to us is when we get into business, there are so many variables to pay attention to. Our product, who we're selling it to, how our clients respond, who we're hiring to help us, how our team is progressing. Everything becomes almost immediately overwhelming when we start a business.
One of the challenges that I've observed in the majority of the entrepreneurial businesses that I've either analyzed or coached is that there is very little, if any, focus on growing the entrepreneur's net worth. Let's make something very clear. The number one responsibility of your business is to create a profit. Because if it creates a profit, it will stay in business. If your business creates a profit, it can invest. If your business creates a profit, it can scale and grow. And if it continues to create a profit, it will survive. And businesses should do everything they can to survive.
The number two outcome or objective of your business, responsibility of your business is to increase your net worth. But here's the problem. Far too many of us as entrepreneurs have grown up feeling like we shouldn't talk about money, shouldn't worry about money, shouldn't want more money, and have a discomfort with money. In fact, so much so, that a small, tiny fraction of entrepreneurs even have a net worth goal. When I go out and speak at conferences, I ask two simple questions of most entrepreneurial audiences I'm in front of. The first question is, I'll say, "All right, everyone. How many of you believe your business will make you wealthy in your lifetime?"
As you would predict, the majority of the hands go up. And then I say, "Okay, great. How many of you know your net worth down to the dollar as of the close of last month?" And it's amazing how quickly all the hands go down. In fact, if I'm in a room of 100 or 200 entrepreneurs, two, three, maybe four or five hands might be up. Four or five, as in a really high net worth tracking population group. How can it be that in two or 300, there's four or five people that track their net worth? How can it be that there's two or 300 people that believe they will be wealthy someday, but don't track their net worth? Because the next question I asked the audience is, "If you know you're going to be wealthy but you don't track your net worth, how will you ever know when you get there?"
It's kind of a joke, but it really isn't. Because this is one of the biggest issues with running businesses, is that entrepreneurs create businesses that produce profitability. But somewhere in between profitability and growing their net worth, there's this revenue black hole. I talk to entrepreneurs about it all the time. I'll say, "Well, how much have you made in your business?" "Well, top line's two and a half million." "Well, what are your margins?" "About 35%." "Well, that's fantastic. You've put away almost a million dollars." "Well, not really, I've reinvested some and some of it went to ..."
And then this conversation starts where it's like this leaking money, leaking net worth, leaking results, and we don't really understand where they are. I get ambiguous answers like, I'm reinvesting in the business or I had a lot of expenses. Well, guys, here's the bottom line. If you're not growing your net worth, what are you doing with your business? If you're not growing the resources, the security, the safety net you have, then what are you doing?
Here's something I want you to know about yourself as an entrepreneur. And if you've listened to this podcast, you've heard me say this before. You don't know who you are at your full capacity until you have a massive financial backstop backing you up in the bank. I'm going to say that again. You don't know who you can be, you don't know what you're capable of, you don't know who you are to your full capacity until you have a massive financial backstop backing you up in the bank. When you have six figures, or seven figures, or eight figures in net worth in the bank, and you'll go through those milestones progressively. First, it'll be six, then it'll be seven, then it'll be eight.
Here's what will blow your way. As you cross through each one of those progressive milestones moving forward, you will feel more and more secure. That security, that confidence in where you are in the world, having that ... For most of us, one of the biggest issues we've ever had in our lives, one of the biggest issues we struggle with in our lives is net worth. So, when you create a business and you force it to increase your net worth on a daily basis, you increase the backstop, the confidence, the choices, the options you have.
Here's what happens. You can't possibly know this until you do it. It's one of those thresholds that you don't fully understand, you're not fully aware of or feel until you actually do it yourself. But when you start putting net worth in the bank, when you start piling up cash in the bank, when you create that financial stability, everything in your life will change. In fact, not only will everything in your life change, but your opinion about business, your view of the world, your view of opportunity will mature and grow and become more indelible, more strong and more foundational irrelevant. I watch this happen every single day with the entrepreneurs I coach.
Because here's something that we do in my programs. We track top line revenue in your business, bottom line revenue in your business. So how much did you bring in? How much did you keep? And then we track net worth on a monthly basis, so that you know exactly how much you're actually adding to your own bottom line. And so, by understanding your net worth, by cultivating your net worth, by forcing your business to increase your net worth, everything in your life will grow. Because when your business is required to create a profit, when your business is required to pay you every month, when your business is required to have a financial outcome, that business will mature, it will become more real, it will become more viable, it will become more profitable and you force it to.
But when you say things like, "Oh, I'm growing the business and then we're going to start taking money out." Or, "Someday I'll be able to take a paycheck from my business." Or, "I've really been sacrificing for my business for years." Guess what? You're kind of doing it wrong. You have to force that business to pay you, so that your net worth will grow. And when you force the business to pay you, you force it to become a real business and start growing with you. Tracking net worth, understanding net worth is one of the biggest game changers in your life.
If you've listened to this podcast at all, you know that we had the incredible good fortune of having someone who's worked with us before, come back and work with us again. Matt Olier, who started in customer service, but then moved into a marketing role with me a few years ago, left, went off into the world, did incredible things, worked with some really big online brands, helped them do tens of millions of dollars, grew the brands hundreds of ... Not 10X, but 100X. And, is one of the most talented marketers I've ever met. He came back to work with us. After leaving our company, he came back to work with us. He shared a story with me that I will never forget.
He said that six, seven, eight years, I can't remember how long ago it was, when I sat our team down, he was on my team. When I sat the team down and I had all 40 or 50 of us go through and calculate our net worth, I had my entire team do it. I wanted everyone to see it. And Matt calculated his net worth, and it was a negative number. He still to this day contends that it was one of the most important and one of the most foundationally inspiring and belief shifting days of his entire life. He still to this day feels like that day sitting down and calculating net worth with our team changed everything for him. Honestly, it's one of the reasons he came back to work with us.
Net worth is crucial. When you understand it, it will change your perspective of everything. When you know how to track it, it will make everything in your life easier. And when you have a massive net worth in the bank, whatever massive is for you. Whether it's six figures or seven figures or eight figures, I know how all three of those feel. And I can tell you as you go up, it feels more and more secure and more fundamentally safe and you feel less risk and less exposure and less vulnerability. All of that will make you show up as a more powerful entrepreneurs, as more of what you're capable of, as more of who you are, and we'll help you go out and build the business you really want.
If you're ready to grow your net worth, if you're ready to expand your net worth, if you're ready to make it as big as you possibly can, I have some simple suggestions for you. A very easy three-step net worth growth process. All you have to do to get it, you don't have to take notes or write anything down, just go to billionairecode.com/networth and download our simple three-step net worth growth hack with the resources you need to start tracking your net worth immediately, understand it on a daily basis, and do so easily and in an automated way. Because when you start getting served up your net worth every day, it gives you a new metric to track.
As I've said before, it may be, and in my opinion is, the single most important metric for entrepreneurs to track. It's our stability in the world. It's our backstop. It's what we have in the world. It's how many options we have. It's what we have to make certain that we can take care of what we want to take care of.
If you're ready to start tracking your net worth, exploding your net worth, understanding it on an intimate basis, go to billionairecode.com/networth and download our brand-new report on the three net worth growth hacks that will explode this number for you faster than you ever thought possible.