EP 486 – Mistakes New Entrepreneurs & Business Owners Make with Aaron Young

NCS 486 | Biggest Mistakes Entrepreneurs Make

NCS 486 | Biggest Mistakes Entrepreneurs Make

 

Note investing is attracting new investors every day with it becoming a more established niche in the real estate industry. In this episode, Scott Carson talks with Aaron Young from Laughlin Associates about some of the biggest mistakes that entrepreneurs when launching their business and how to overcome those mistakes. Some new investors get interested in the note space and consider leaving their high-paying job, but they treat it as a hobby, not a business. While others are constantly going to events but are not taking what they’ve learned to work. In this episode, Aaron shares the right mindset to succeed in the note business where he highlights the importance of passion, the right planning, and working hard for every new note investor to dodge the newbie mistakes and be on a brighter path in note investing.

Listen to the podcast here:

Mistakes New Entrepreneurs & Business Owners Make with Aaron Young

As always, I’m excited to have our brother from another mother, our good friend, Aaron Young joining us. Aaron is joining us from the Coast of Oregon on the beach house. Is it you and Michelle there and you get to have some vacation, Aaron?

It’s a little going to be quieter now here at the beach house. We had my two married kids and their combined four children, three of them, two years and younger. It was a lot of baby time. It’s great. We love to be with the kids. We also love to have it be the two of us.

One of the things that we were talking about is what to discuss. I’ve been getting a lot of phone calls and emails from new investors that are looking to get into the note business, looking to leave their full-time job. We’re talking about what might be some great things to share are some of the biggest mistakes or things that you’re seeing entrepreneurs make because you’re dealing with many different entrepreneurs, business owners. Whether they’re brand new in the business or they’d been around for ten, fifteen, twenty years. You’re a very active business owner. You’ve bought and sold business your whole life. I thought we’d share some of the biggest mistakes you’re seeing entrepreneurs make when they go out on their own. What do you say about that?

That sounds like a great topic. I know you and I are like-minded on this. One of my biggest goals at this phase of my career is to help people avoid a lot of the pitfalls, which is the whole reason behind what you teach because you’re in a complex industry. It’s a niche industry but complex. There are lots of pitfalls. I work on a broader level, a lot more industries but people fall into the same freaking traps over and over again. My goal at this point is to teach people from all of my climbing my way out of the pit, teaching them how to avoid those things. It’s a great topic that’s exactly in line with what I love to talk about.

Let’s talk about the big things. Everybody gets excited that they’ve got a passion. They’ve got something they want to chase. One of the biggest mistakes people make is they start chasing a passion versus seeing if it makes sense as a business opportunity?

It’s almost needful that you’d be passionate about what you’re doing. However, it’s different to feel passionate about something than to chase your passion. I know a lot of gurus out there I believe in an effort to sell books, sell courses and make everybody feel like whatever you’re passionate about is a great business. Somebody wants what you want to sell. I want to say it’s BS. That is not true. There are people that go do things all the time that are stupid things to do. Sorry for anybody that this hits close to home. There are so many people out there that I run into regularly who know, “I can’t pay my rent now, but I know that two years from now I’m going to have a $100 million company.” Have you met these people? I don’t fault them. They’ve been sold a bill of goods. They’ve been told that there’s some pixie dust if they go to enough conferences, buy enough courses and write their own book.

There’s nothing wrong with writing your own book except for the dozens or hundreds of people that I know who have boxes and boxes of books in the garage that are never going to sell. Be passionate about what you’re doing. Think about how you’re solving a world-class problem with your solution. That’s fantastic. My passion is starfish. I’m going to start a blog about starfish. I’m going to do a starfish conference, not scientific because I love starfish. You’re going to continue to struggle to eat if you do that. Become passionate about what you’re doing, but chasing a passion most of the time is a fool’s errand. Find something the world wants from you. Do they want that? The old saying, “Build a better mousetrap and the world will beat the path to your door.” There’s my feeling about passion.

You mentioned two things. We’ve dealt with this a lot. We’ve had different people that we’ve talked to who wrote a book. I’m like, “Congratulations.” “It’s $39.95.” I’m like, “Great, I’m not buying your book.”

It’s $19.95. I’m still not buying your book.

Book writing is a led gen these days. You’re not the Jack Canfields, you’re not the JK Rowlings. You’re not going to be that. If you’re going to be using that as lead gen for a business trying to find and see if there are people that are interested in a book while you’re giving away or block minimal costs to provide that, but businesses change. A lot of people that get into leaving their job or want to pursue their passions aren’t thinking in the 21st century. The whole market and marketing are totally different than it was a decade ago or even a few years ago for the most part.

Back to JK Rowling, I watched a documentary about her. It was called JK Rowling and Harry Potter. People know this little bit of her story. She was a single mom on welfare. She wrote this book and became a billionaire. What you learn in the documentaries, first of all, before she wrote the books, she wrote all this other source material. She wrote Fantastic Beasts and Where to Find Them, which is now a series. She wrote an actual book describing parts of this world that she was creating. She created Hogwarts history. She created all these things that are referred to in the books and in the movies that are not part of the canon.

She wasn’t like, “I wrote this magical book. It took me a few months sitting in a coffee shop at Starbucks. It was awesome and now I’m rich.” She did all this work. She wrote the book not knowing what it would do. It did well. She felt all this tremendous pressure and she got less happy. She said, “When I was writing that first book, I was happy. Nobody knew me. Nobody expected anything from me. I was doing my thing. It was a pure time of life.” As that thing hit and it started to take off, she said it became a difficult and dark time for me. I’m trying to do what everybody else wants me to do not what I want to do. To try to put a weird connection on that one, but this is right on your point. A guy called me, he’s been trying to get ahold of me for weeks.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: If you organize yourself right, you can become unshackled.

 

I recognized his name, but I wasn’t exactly sure. We got on the phone and we started talking. He left his job at JPMorgan Chase to go to another company, Ameriprise, to do stuff. He had all these clients at JPMorgan that he thought they would follow him and they didn’t, which is another big mistake. If you think all your customers from this successful company you work at now are going to come with you on your entrepreneurial journey, they’re not. They’re going to stay at JPMorgan Chase. They’re not coming with you to Bob’s Financial Services. The point is, he said, “Do you remember how we met?” I said, “Are you the guy that I told to close down your company and go get a job outside those food trucks at some conference that I spoke at?”

He said, “Yes, that’s me.” I said, “It’s all coming back now. You quit and went to work at JPMorgan Chase?” He said, “Yeah.” I said, “How did that work out?” He said, “I saved my marriage. I spend more time with my kids. I was making a ton more money than I was as an entrepreneur.” Now he’s going to leave and he’s struggling because he’s down to $1,000 a month to live on plus some money they loaned. He’s going into debt to the company store. Here’s the point I’m trying to make. Sometimes when you do what you’re great at and you do it in a company or in some situation where everything is stable, sometimes you’re going to be happier.

It’s going to be a more pure existence. It’s going to be more pleasant. Don’t go into entrepreneurship thinking, “I’m going to stick it to the man. I’m going to follow my passion. I’m going to write my book and everybody is going to give me money.” That is almost never how it happens. It’s almost always much harder than you think and so on. Now, that I’ve said all the negative. I feel like I’m representing a public stock going, “You’re going to lose all your money. It’s going to be the stupidest thing you’ll ever do. Why would you ever invest in this stock?”

They buy this stock and now I’m going to say, “You’re in the family.” Let me say this, “If you can get it right, there’s nothing better.” They’d be an entrepreneur. If you can make it work, the wealth that you can create, the freedom that’s possible, you’ll probably work your butt off for a number of years. If you organize yourself right, you can become, in my parlance, unshackled. This isn’t about unshackled. This is about doing things right. All I want to say is when you have some of the people want, you have the skills to deliver it and you have the intestinal fortitude to do the work because you’re going to work longer than all of your friends and your family is going to go, “Where are you, mommy? Where are you, daddy? Why don’t you come to my play?”

You’re going to go, “Sorry, I have to be at this thing across the country.” If you’re willing to do that for a while, you can be like, “I’ve done for the last week. I can entertain everybody. The whole group can come because we don’t have one house. We don’t have two houses. We have three houses. We can go where we want.” That’s after lots of stories sitting around the campfire talking about, “Remember that camping trip?” “No, dad, you weren’t there. Mom took us. No, dad, you weren’t there at the museum that day. You didn’t go to the zoo when the giraffe was born. You weren’t there. You were working.” If you can tolerate that, you can create something that for a gigantic part of your life will be a giant benefit. You’ve got to put the work in. It’s going to be challenging at the beginning. Know that going in. Otherwise, you’re going to be sad.

One of the biggest mistakes I made early on as a young kid was thinking, “I’ll go out on my own and leave the good-paying six-figure job to go out on my own originally.” I definitely struggled. I was financial-wise struggling and not being able to go do things. I was busy doing other things, traveling to conferences and events.

Your friends are saying, “Let’s do this.” You’re like, “Sorry, I’ve got to be at the meetup. I’ve got to be at the REIA.” “We can’t go see the new movie tonight because I’m going to be at the REIA until 10:30 hearing about somebody to talk about whatever.”

A lot of the people don’t realize that they treat it as a hobby. They don’t treat it as a business. That’s another big mistake. A lot of things you mentioned something too and this is something that I’ve seen from a lot of people when I’ve been out coaching and traveling. I’ve gone to seminars. People sign up for these big educational programs. There’s nothing wrong with coaching. I’ve got coaches. There’s nothing wrong with that mastermind and things like that. They sign up for a package of classes. Every weekend they’re traveling to a new conference, a new seminar. This is one of the most frustrating things when I talked with real estate entrepreneurs like, “I’ve got to go to this seminar on college room rentals and subject to deals. I’ve got to go to this thing on claims trust or I’ve got to go to this thing on owner financing and wraparound mortgage.” They’re constantly going to events. They’re not taking what they’ve learned at whatever their big thing as they’re focused on to put it to work.

When you’re going only to conferences in your space, you may be getting educated, which is fine. First of all, you’ve got to slow the education down because it’s one thing to listen to it while you’re driving around. You can talk about it at a party, but you’ve not done it yet. Until you get the first piece figured out where you know how to do it yourself, now you can click on another piece and click on another piece. Most entrepreneurs are idea people. They’re talkers. They love talking about something and dreaming about it. Getting their calculator out and adding up. If I get 87 of these at $19.95, I’ve only got a 15% cost. That’s 85% margin I can be making $86,000 a month.”

They get all hung up on this stuff but they’ve never sold one widget yet. They’ve never closed one deal. A huge mistake they make is they bury themselves in education. It’s education that’s in one ear, out the other because they’ve never applied it. Until we apply it and even teach it to other people, we are not a master of that concept. You’ve got to get your hands dirty. It’s the old example about you can read all the books, watch all the YouTube videos you want about riding a bicycle. Until you get on the bike, try to balance, pedal, brake, you fall down and you skin your elbow until you start riding the bike, you don’t know anything. You know about it but you don’t know it.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: Until we apply our knowledge and teach it to other people, we are not a master of that concept.

 

That’s one of the things we tell people all the time. I’m like, “You’re going to learn more from buying your first note and working through that, getting the servicing set up, getting all the paperwork filed, reaching out to the borrower or working with your vendors more than you will from any workshop, any seminar or any online coaching program out there. It’s great that you have a good knowledge base, but until you’ve pulled the trigger, you’ve not done anything.

A lot of times if they trust you, you get this from them later on in their journey. They go, “I’ve spent $80,000 on coaches and on programs. I’ve never done one deal. I’ve used up all of my savings,” or “I inherited that money when my parents died. It wasn’t much. It’s $100,000. It’s almost all gone now on hoping some guru will hold my hand and do the work for me.” I teach and you teach, we can help you jump the line, but we can’t do the work for you. You’ve got to get your fingers and your hands dirty. You’ve got to get in there and figure it out and become an expert. People pay for experts. You’re paying to hire Scott Carson, come to his workshop, Aaron Young or whomever else. We can tell you everything, but until you do it, you won’t understand it. It’s a huge mistake for these seminar junkies. I speak to a lot of seminars. I’m glad they’re there, but I do see people who spend all their time attending and never doing the work.

It’s a shame because they’re proceeding from a false truth, a false belief that if I get the information, I’ll be able to do it. The first part is getting the information to know it’s even possible to do. It exists. You didn’t know about notes all of your career. You found out, you or anybody reading this, they found out about it. They said, “Tell me more.” They go to a Scott Carson conference. At that point, you start to pull the trigger, buy your first note, play with it and maybe get killed on it. Maybe lose your shirt on it. Who cares? In the note business, you’re losing it like a Costco t-shirt. You don’t have to lose your custom made three-piece suit that was tens of thousands of dollars. If you go easy, it’s not that much money. Isn’t that true, Scott? You can lose millions of dollars.

There’s an opportunity to buy stuff at lower pricing to get your feet wet.

Even if it costs tens of thousands, let’s say it costs $50,000. In the scheme of things, compared to $500,000 McDonald’s franchise, it’s a cheap education. If you want to go start a dry cleaner, if you want to start a convenience store, if you want to sell cars and all kinds of stuff like that. It’s going to cost you way more than it will cost you to do note and do one that’s maybe not your dream property, do one and learn it. You’re not going to get wiped out on that or if you’re getting wiped out, maybe you got in prematurely. If all of your savings can be wiped out in one deal, that’s terrifying because you’re going to have ups and downs.

There are always ups and downs. They lead us into the next phase. It would be a good discussion. I always say it’s going to cost twice as much and take twice as long if not longer. Everybody puts that best possible solution that we’re going to sell like crazy. What happens if we don’t sell it like crazy? What’s your Plan B? What’s your Plan C? As you are famous for saying, “Starting with the end in mind is why your asset protection is valuable.” Most people slough off of that in the beginning.

I was with a fellow in Houston who’s been a client for a long time. We were talking about that he built up a real estate business. He was highly leveraged and lost about $100 million during the recession, in the crash. Out of that collapse, his first private equity deal was $200. Since the crash to now, he has $150 million private equity fund. That’s all his own money. Plus, all the other stuff that he has acquired along the way that makes him now the third-largest minority-owned company in the United States, in hundreds and hundreds of millions. He hasn’t run the billion-dollar bell yet, but that’s his goal.

One of the things he said was, “Aaron, I’ve been a client of Laughlin for many years. The strategies that you guys taught me way back then, I’ve built everything I’ve done on those, which even in the worst time with the giant loss in real estate, still didn’t wipe me out. I still had my assets segregated and nobody could come.” He’s taken several companies public. He said, “We’ve had not battles like investigations and stuff with the SEC, all the pieces work.” Everything has worked. That’s why I’ve been a client for many years and built all these companies on top of your strategies because they work. It’s like going to conferences.

If you set up a strategy and then you don’t put a business into it or put real estate into it or if all you do is buy a box. It’s a beautifully shiny box that costs you $1,000 or $25,000 or whatever it is, but you don’t do anything with the box, it’s worthless. It sits there on a shelf and people go, “That seems cool. What is it?” “Nothing.” There’s nothing in it. It seemed like a good idea at the time. Whatever you do, you’ve got to start doing the thing and start doing the work. If you’re to set up a strategy as we do for all these tens of thousands of customers, you start using it. Don’t buy it because somebody says, “Buy the LLC because you’re ready to start working inside of it.” You’re going to use it for asset protection, for tax reduction, for leverage, for prestige or whatever you’re going to do, but if you use it, you’re going to be so much happier.

If you start doing something, that’s how you get rich. Most people think that’s how you get poor. I’m afraid I’m going to lose everything. You’re going to lose everything if you spend all your time trying to get educated and never doing the work. We see this with student loan debt, this huge chronic problem of people deeply in debt because they got comfortable in academia. They went and got a bachelor’s degree. They’re like, “I did pretty good in this environment. I’ll go get a Master’s. I’ll go get a PhD.” All of a sudden, they’re checking groceries because their PhD in Russian literature didn’t do a lot for them in the job market. You’ve got to start doing the work and don’t hang around where it feels fun, sexy and safe with a bunch of other dreamers.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: Be taught by people who play at the stuff you have to work at.

 

Get out there and leave the dreamers for a minute. Get your hands dirty and then come back and recheck your education. Make sure you’re getting an education from people who’ve done the work and not people who’ve become successful on YouTube. Unless you want to build a YouTube channel, do it. Otherwise, there are so many people out there that are coaches who have never done anything. They don’t have a payroll. Their payroll is their Filipino assistant. That’s $6 an hour. “I’ve built this six-figure or a seven-figure. I broke $1 million in one year,” or the one I love is, “We’ve made over $200 million doing this.” “How long have you been doing it?” “For 25 years.” You have to divide the $200 million by 25. It’s still good, but don’t be disingenuous. Tell the truth. Find people who are doing the work, who can demonstrate repeated success. One of the expressions I love to use in my classes is, “Be taught by people who play at the stuff you have to work at.”

That’s a great bit of counsel going out and talking to the people that are in those fields. I’ve cool friends growing up that wanted to go to medical school. They want to be a doctor in cardiology. Tasha went and interviewed about a dozen cardiologists in different hospitals. What she got from all of them is that if they had to go back and repeat it again, they wouldn’t do it. They were making good money, but they also had practice insurance. They had all this other stuff now. It wasn’t the same when they started. They had all this debt in education and things like that in the get-go. It took him years and working 80 hours a week being on call constantly. That led her to change fields.

She was glad that she didn’t do that. That’s the thing, especially in the real estate industry. I was cracking up because I see here in Austin, we’ve got some of the big national TV gurus to come through here. “We’ll make this work in Austin, Texas. We’ll make this work in San Diego.” I chuckle because I’m like, “It’s not the same market. We’ve got a guy here in Texas who wrote a book a while back about his experience in doing houses. He’s got stuff that he does in specifically one market here in Texas. It works great for that market. It wouldn’t work in Austin. It wouldn’t work in Dallas. It wouldn’t work in Houston. It wouldn’t work in a lot of other areas of the country and people get upset. I’ve had people call, “I took this guy’s class and it doesn’t work where I’m at.” I’m like, “Are those priced homes in those neck of the woods? You have to look at the market.”

I made this with a huge amount of respect. There’s a couple in little Waco, Texas. I won’t even name the show. It’s a wildly successful show, which is turned into a magazine and stuff in Target stores and all kinds of stuff. I talked to all these people, including my children, who go, “If we bought a fixer-upper for an all-in budget of $250,000 buying the house and fixing it up, I could have this beautiful showplace home. Let me tell this story. In Waco, Texas, there’s a wonderful family. My dad wanted to go to the Dr. Pepper Museum, which was also in Waco, Texas. My dad and I went over to Waco. It was a weekday. The school was out and there’s Baylor. Baylor was out. It was summer, but it was a beautiful summer day in this town.

We drove into town and it was like a ghost town. There was no one there. There was nobody on the streets. There was nobody anywhere. Every few blocks we’d pass a car and I’m like, “This is like Zombie apocalypse stuff. Where is everybody? Is there a tornado warning I don’t know about?” When you see a non-bustling area, I bet you there are good prices on real estate. If there is nobody there and there are all these houses, probably somebody wants to sell one and get rid of it. There’s nothing going on in this town. The Dr. Pepper Museum, if Baylor is not in, the only other thing going on is their place, which by the way, had tour buses, had velvet ropes, had people in queues to buy a hammer that says, “Demo Day.”

I thought, “Is that hammer going to be structurally well as deeply as they’ve branded Demo Day into the woods or are you going to hit something and it’s going to snap?” It must be put on the shelf. The point is, they’ve taken a little market. It was a little sleepy, nothing town and done something with it and it become wealthy in their little pond. It became the enormous blue whale in this tiny pond. In that little village of Waco, they were able to make something. They made so much money. They said, “We’re not going to do this show anymore. We’re done. We made our money.” You can make a lot of money if you realize what your market is.

They could show a fantasy. This fantasy for most places, San Diego, Dallas, Portland or Oregon, where I’m from. You can go to buy this house. We offered him a deal. “We got the house for $89,000. We’re going to put $100,000 and you’re going to be a $189,000 house. It’s going to look like freaking architectural digest.” Kevin Day, our mutual friend, I was visiting his home a few years ago in Del Mar, California. There’s a vacant lot by him. This is a little 50×100-foot dirt lot. It’s for sale. I said, “How much is that lot?” He said, “It’s not a very good lot because you can’t see the beach. From my house, you can see it. You turn this corner and you’re blocked by the other houses so you can’t even see the ocean.”

I said, “How much are they asking for the lot?” He said, “It’s $2 million.” I don’t care what that great interior designer is going to do. That house is going to be a $4 million or $5 million house in order to justify it sitting on the street. That’s not realistic for doing notes, for doing flips. If you’re going to do it, you have to be prepared. If you’re learning the note business and you’re from Portland, Oregon, you’ve got to have a comfort level with going to Tennessee, to Arkansas or to Mississippi, and owning real estate that you’re maybe never going to see. Is that true?

It’s certainly true. That’s part of the reason that I started getting in the note business years ago is the Austin market here got so overly hot and overpriced. It doesn’t make sense. That’s why I started looking. I need to go where other deals where. If I focused on the Austin market and focused here in my backyard where I can touch it, I would’ve gone broken bank a long time ago. I lived in Florida years ago and there are plenty of deals in their backyard. They wouldn’t have to go anywhere. That’s one of the things I always tell people that, “If you’re looking for something in your backyard, you need to make sure you know where your backyard is and if it makes sense.” If that’s all you’re trying to do, this may not be the business for you. You need to go somewhere else.

Detroit is different than Traverse City, a vacation area, a place where everybody wants to go spend money to be up on the water. Detroit has entire neighborhoods I’m sure that are still overgrown because nobody is living on that block. Everything’s turned into the jungle. Somebody says, “You’ll give me money for that. You’ll put some dogs in the front yard, so am I safe? Okay.” This is about real estate. I know it’s about note closing, but I’m going to say this as the guy who’s done a bunch of real estate deals. Most buyers don’t have the imagination to see what it can be like under different circumstances. Sometimes you have to buy the thing that looks terrible on the outside and with very little money, clean it up, put a coat of paint on it, and put the appliances back in that were all robbed out of place. Repaint the walls, mow the lawn and all of a sudden, it looks different than it did two weeks before.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: Business is about finding something that’s not being done or finding something being served poorly and doing it better.

 

The more you can buy something because you can see past the cobwebs. You say, “If you can imagine it, you can create what other people want to have.” The wealth is in seeing how to fill the gap. In any business, wealth is always in “You don’t see it, but I do. I can create something so that you go, ‘That’s great.”’ Somebody figured out that a double-lined, walled drink holder would keep everything cold. We can all buy these now at the grocery store. They’re everywhere. When I saw my first one that didn’t look like a thermos from middle school, when I found my first one of these S’well bottles four, five or six years ago or whatever, I was like, “I thought this was like magic. How did this happen?” I really did, Scott. I thought, “Where has this been? Now they’re everywhere.” Somebody said, “I bet people would love to keep their stuff hot or cold for a long time and we can even make it look interesting. We’ll get $50 a bottle for this thing.” I paid multiple $50 bills for S’well bottles when they first came out.

Now, if it’s $10, I’m like, “We can get a better deal.” Somebody saw the gap and they filled the gap. They made money, that’s what business is all about. It’s the biggest thing people don’t remember. Business is always about either finding somebody that’s not being done. You have to find someplace where the market is not served and find a way to serve them or find a place where the market is being served poorly and you can do better. That’s basically what happened years ago. I don’t know that it’s this way now, but it’s what happened with Apple. Apple came out and said, “We’re more expensive. People are using these entry-level PCs. We’re going to do something more interesting than that. We’re going to make it a little more beautiful.”

Even those Macintosh, back in 1985, they were still better than the HPs you could buy. When the iPhone came out, it was much better than this crap we’d been carrying around. I remember distinctly, the first time I grabbed a phone and they said, “Here’s your contact list.” I said, ” How do you look at the people?” They go, “Do this.” I’m like, “It’s moving. What is going on?” I was freaked out. How can it scroll past me like that? I’ll grab a newspaper pictures sometimes and try to make it bigger with my fingers. The point is because now it’s how it is but when I first saw that, it was like the second coming. This was magic. This was mystical to me.

I had no problem spending the money to buy a phone that would do that because it’s like that doesn’t exist with my Nokia. That doesn’t exist with my flip phone. This is super cool. One way is to build a cellular phone. There’s nobody in that market. The next way is to make it better. That’s what keeps seeing between Samsung and Apple. Google is trying to be into it and other people or other companies. They’re iterating on making it better. How do you make yourself better? The prices went down for a while, but now they’re going up because of this computer in your pocket. The market to some extent believes if it costs more, it’s probably better.

I’m not saying that’s true, but if you say, “Here’s a sushi place. It’s $9.95 all you can eat.” There’s a place in Austin that has really good sushi. For four people, you’re going to spend like $500 for sushi that night. I’m not talking about a bunch of drinking. I’m talking about the chefs delivering you four pieces of sushi at a time. Everybody eats one and goes, “I detect a little flavor of this or that. The swordfish is exceptional tonight with that little bit of Roe on it.” This place that’s going to cost all this money is by default better than the $9.95 all you can eat. It may not be it. It’s maybe the same chef. The difference is people will pay for things that they think are better. It may not get as many people. You probably get a classier group and people will pay.

It comes into if you’re in a business and you see your competition or you can tighten this backup. You can make a better mousetrap that’s better or higher-priced or calls to people that will pay more because they think of it as a status symbol or see a tool that works. You can go out and buy a camera these days. You can still buy a digital camera. It’s cheaper than a cell phone. You can buy a phone cheaper than you can buy an iPhone or a Samsung. You can still do that. You’re like, “Will they still do the same thing?” “Yeah.” “Is it going to be easier to use?” “Yeah.” “Can you save some money?” “Yeah.” “Is it going to be as effective?” “Probably not.”

It’s not going to have a camera. It’s not going to have the storage. Another mistake people make in business is they think I can do it cheaper than the place I’ve been working. I see what’s going on here and it doesn’t cost that much to deliver this widget or this service. They go, “I can do it.” I’ll go out and make tons of money because I feel I’m basically paying the entire payroll with my sales per month. They get this idea in their head. One of the things is that people come out and they underestimate what it cost to do the work, get the leads, deliver, fulfill, guarantee and all that. Also, they come out and they try to be a low price leader. I’ll do it cheaper.

There’s usually a reason why the best companies cost a little bit more than the person working out of their beat-up old van. There’s a reason. It’s because they do better work. They have specialized teams. They’re only using the best parts. They guarantee their work for two years or whatever. To deliver on all that is way more than the sale. A big mistake people make is they don’t understand the costs of being in business. They don’t understand the costs of having a contingent liability of a guarantee that’s still hanging around for another 12 to 24 months. They don’t understand what that is or even not only they don’t understand it viscerally, they don’t understand how to even put it on their books as a contingent liability, as a negative on the balance sheet.

They’re guaranteed. We’re taking payments. People don’t even know the simple things about accounting. That’s not true. It’s not hard to be in business. It can be challenging to be successful in business. It’s why my guy could lose $100 million and ten years later have $150 million in a private equity fund. That’s his money and not investor’s money. The reason is because he knows the system. He knows the way to do it. Once you guys learn the way to do it, once you learn the recipe to do it, once you know the right vendors to use who will be specialized and give you what you need, not more, not less is exactly what you need, the more likely you are to have repeatable success.

If you’re a true entrepreneur, once you get this project working, it’s becoming easy because all the parts are working. You’re going to get bored super fast. You’re going to want to turn it over to a manager. You’re going to want to go again. The idea is how do you have repeatable success in different industries? Learn the formulas. Don’t go to things and say, “Here’s how you do a Facebook ad. Here’s how you use Instagram. Here’s how to use the filters on Instagram to get better engagement because you can make $1 million.” It might help, but it’s not going to make you a $1 million. I know a few of these Instagram models that make pretty decent money, but if they don’t keep putting up bikini shots or whatever they’re doing, their sponsors dry up.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: If you can’t launch because you have no money, it won’t last very long no matter how good it is. There’s got to be sufficient money so that you can still survive.

 

You said something very important early on about people. They leave the mothership to go up and around to do it cheaper. They think they built a clientele list at that mothership and that mothership is going to follow. One of the biggest things that we talk with and see on a regular basis, people leave their regular 40-hour week job and they don’t market. They don’t understand the power of reaching out to find clients. They think because they have the best phone or the best mousetrap if you build it, they will come. It’s not always that way. It’s not a field of dreams.

If they don’t know it exists, how can they come to get it? Even if you tell them that it exists and they go, “It’s super interesting, but I’ve got to run over here to the kid’s school,” or “That’s interesting, but I’ve got a cold. I don’t have time to think about it. I want to think about it.” It will be gone for an hour from now. You’ve got to stay in front of them. You’ve got to keep reminding them. If they like what you’re talking about, they’ll keep listening. That’s why this show is doing well. It’s because people like what Scott talks about. They liked the people he brings on. They like the idea of it. Tens of thousands, hundreds of thousands will orbit your show. Someday, some moment, they’ll go, “I’m going to take his class. I’m going to do my first note. I’m going to do the virtual workshop,” or whatever.

All of a sudden, it will be now is the day. If you don’t stay in front of them and let them be in your orbit as much as they want to be. If you start producing content, that’s not in line with your core message. If I’m selling an incorporation, compliance, asset protection and tax reduction then I start pitching toothpaste that whitens your teeth, people will go, “Why is he doing that?” If I’d come in and say, “I found this other pillow that works great, we should all be buying this pillow.” People are going to go, “I’m not going to open your stuff anymore because I wanted to hear about asset protection. I wanted to learn how to run a company. I want to be pitched toothpaste from him. I can get that on television.”

Stay in your wheelhouse. The other huge mistake is they get all spread out. They’re doing five things. They have FOMO, Fear Of Missing Out. They do it all and they do it all poorly. None of it’s making any real money and they don’t understand why it’s such a great opportunity. He’s failing so miserably. They haven’t given the effort to make it work. You said you want to talk about mistakes. First, we’ve discussed ad nauseam here is the idea wasn’t right. You weren’t ready. Nobody wanted it. You had misconceptions about how to deliver that product or service.

The idea or the fundamental deliverable is out of sync. That’s always the first one to me. Either people want it or they don’t want it where they go, “That’s a cool technology, but you’re ahead of the wave.” Even though you’ve got something great and everybody acknowledges it’s great, there’s no way to use it yet. There’s nowhere to plug it in. The idea is usually the first make or break. You’ve got to have enough money to eat. Even if you have to eat, do you like Mark Cuban, eat the ketchup packages? Do you like JK Rowling sit at the coffee shop and collect welfare for a little while? If you can’t eat while you’re trying to launch and if you can’t launch because you have no money, it won’t last very long no matter how good it is. There’s got to be sufficient money even if you’re bootstrapping so that you can still survive.

Maybe that means you move from this beautiful apartment or a beautiful home to something much lower-priced so that you can take that difference in money and invest in your business. If you don’t do that, you won’t last long because you have to eat. If you have dependents, if you have people counting on you for income, I guarantee you that money is going to dry up a lot quicker. The tolerance level will be very low. Saying that, I heard Daymond John give a talk. He’s on his second family because he totally sacrificed his family for FUBU, for his clothing line. He didn’t leave them physically, but he left them emotionally and timewise. They were married. He wasn’t a bad guy. He said, “This is more important to me than you.”

I don’t think he consciously did that. That’s what happened. That wife and their children migrated away from him. He was single. When you’re single, you can do a lot because you can live in a cardboard box while you’re single and eat ketchup packages. Depending on your circumstance, you have to decide, “How long can I pursue this before I start losing things that matter to me?” The third one is process. If you don’t understand step one, step two, step three, step four, you will grasp around in the dark like a blind person trying to find your way through a maze. It’s difficult. If you can go, “Is my idea any good? Can I afford to do this or is there a more cost-efficient way that I don’t know about yet to do it? Is there money available to me? Are there strategies available that give me greater leverage than I currently know because I’ve never learned about that before?”

Are there systems to follow that are already proven, tried and true that if I have a good idea, I feel comfortable with the amount of money I have and I have a system so I cannot grasp around. I can take a straight path. Does that make it simple? Simple, yes. Easy, no. It’s straight forward, but you have to do the work. The work is hard but once you get the momentum going, it’s like a rocket that expels almost all of the fuel in that first 30 seconds to try to get up off the ground and get moving. Once it’s up in the atmosphere where the atmosphere is thinner, it gets into space, all of a sudden a little push of gas will move the whole thing.

To try to get liftoff, it takes a lot of energy. Once you do it, it gets easier and easier. Those are the big things. Is your idea any good? Can you afford to sustain this? Do you have a process that will help you be successful? If you can get those three things and you’re willing to do the work, I could go into much greater detail on how to build successful companies. That’s not what we’re here for. The other thing is, I’d be remiss if I didn’t say this because my company, if you build something on a shaky foundation, on a sandy foundation if you want to go back to your Bible Sunday school, it will wash away in a storm. If you build something on a rock-solid foundation, it can withstand the storm.

That’s what we’ve been doing for 48 years is building rock-solid foundations, which is why we have clients like the hedge fund guy who’s been with us many years and who have built empires on that solid foundation. Whether it’s your first deal and you want to set up your first LLC or you’re opening a store or something and you’re going to get an escort to set up. You want to go out and build something big, you’re going to set up a C corp and you need to get it all figured out. Those are the things that we do. You want to have a solid foundation. If at some point, you’re going to bump into somebody. Somebody is going to get mad at you. They’re going to want to report you to the Better Business Bureau.

NCS 486 | Biggest Mistakes Entrepreneurs Make

Biggest Mistakes Entrepreneurs Make: Get in front of experts who can help you solve your specific problem or get you to your specific goal.

 

They’re not going to pay you. You’re going to get into a battle. The IRS or your state is going to come at you and say, “We’re going to check you out. You did nothing wrong, but you still spend $100,000 in legal fees. Something is going to happen at some point if you get in the game. The question is, “Have you organized yourself structurally, properly, so that when they come to look, they go, “This isn’t the typical micro business owner. This person is doing it right.” If they see that you’re doing it right on the big chunks, they usually don’t dig down into the minutia because they assume if you’re doing what most people ignore and you’re doing it properly, you’re following the rules. You’re probably following the rules everywhere. You stop problems before they start.

It’s always true. Get it figured out and you can be successful. You can have your dreams. You can have your beach house. You can have your farm. Those were my dreams. Now, I’m working on a ranch. I’m looking at large pieces of property. You can do it because you’ve created a flock of geese that lay golden eggs. Once you do that, when you take care of the goose that lays the golden eggs, it keeps making you wealthier and wealthier. If you go out there and say, “I’m going to do a crappy job. I’m hungry now so I’m going to eat the goose,” you’re screwed. Don’t do it. There are ways to do it. We can show you how. Between the two of us, Scott and the people we know, we can show them how to do it.

For those that are interested, Aaron has been the CEO of Laughlin Associates. It’s an amazing company in Reno, Nevada, who helps specialize in putting your books together, putting the veiled protection around your business, your assets, yourself. You can check them at CorpVeilProtection.com. You can also check out your upcoming event on November 7th, 8th and 9th?

Think of what it’s called the Magnify Your Wealth Summit. You’re going to learn from guys like Scott Carson. You’re going to learn about note investing and about oil and gas. You’re going to learn about proper structures, foundations, meaning a foundation to hold money, all kinds of ways to use trusts, all kinds of ways to do all kinds of stuff. We work hard to bring great people to teach at that event, not just fancy guru people but people doing the work.

You definitely do. You bring in great people. People that help you with their asset protection. You’ve got the lawyers, the accountants, potential CEOs of your company or growing people to help you structure your business, your entities and your asset protection so that you are protected in case something does happen. Your businesses, your wealth and your livelihood doesn’t get washed out to sea.

People like you who say you’ve got money and it’s in a safe place, “How am I going to magnify that wealth?” It’s on November 7th, 8th and 9th, MagnifyYourWealth.com. Go check it out. We still have early bird pricing. If they want to go do that, it’s limited to 100 people. The fall event particularly sells out early because it’s only 100 people. The reason you want to come is because you get to sit down with that $700 an-hour lawyer and talk about your company for free. There’s nobody pitching from the front of the room. You’re sitting down and only talking to people to get your questions answered to see what you want to do. If you engaged that lawyer or you engaged Scott Carson, there’s no magical package that we’re selling. You choose to do it or not do it. There’s no running to the back of the room to buy. It’s giving you a chance to get in front of great experts in a way that can help you solve your specific problem or get you to your specific goal.

That’s why you want to check it out. The event to attend for any entrepreneur out there, whether you’re seasoned, you’re a business rock and rolling or you’re starting off. We’ve had students who have gone to it from both facets and everywhere in between too and he is raved. He said, “I should’ve gone to this a whole lot sooner instead of waiting three to six months to do this. I should have done this in the get-go and I wouldn’t be sweating like I am right now.”

We do definitely get that comment every single time, “I wish I’ve known about this many years ago.”

Aaron, thank you so much for joining us. I appreciate you having you. It’s good visiting with you again. We got great knowledge and great nuggets. Thanks so much, Aaron.

It’s my pleasure. Thanks for having me on.

Check out MagnifyYourWealth.com to find out the dates and time. It’s November 7th, 8th and 9th. It’s an amazing event. It’s one of our must-attend events, one of the few events that we recommend people going to for asset protection because it’s not pitched. There is no running to the back of the room. You get the opportunity to sit down with some great and amazing people to help you get your ducks in a row or keep your ducks in a row and take your business to the next level. Go out and make something happen. We’ll see you all at the top.

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About Aaron Young

NCS 486 | Biggest Mistakes Entrepreneurs MakeAaron Young, is a lifelong entrepreneur, trusted advisor to CEOs and business owners and creator of The Unshackled Owner a program for entrepreneurs looking to build a business and not just a glorified job.

Aaron is Chairman/CEO of Laughlin Associates, a 44-year-old company that has helped over 100,000 entrepreneurs start, grow and profit from their business. This has given Aaron an ideal vantage point to observe common mistakes and successes in businesses from Main Street to America’s largest yacht broker from medical professionals to manufacturers to investors.

For over 34 years, his experience founding, acquiring and directing multi-million dollar businesses as well as working as an officer for a publicly-traded, multi-national, sets him apart from the crowd as a voice of real-world knowledge and authority.


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