Newsletter #16

Shared some exciting news again this week!

And as you expect by now, all of this happened because of Twitter.

Start posting! ; )

With that, I felt like writing something different this week.

Because one benefit (for me at least lol) of not having a job is that you get a lot more time to think.

This week I felt like sharing some of these thoughts.

They’re inspired by working with my first 3 clients and from the dozens of conversations I’ve had at this point… They are on:

1. Mission Statements

2. First Principles in Business

3. Limiting Beliefs

1. Mission Statements

This idea links to last week’s post on how to write a good business plan.

Your “mission” should come down to “why” we do what we do. What’s the “purpose” of the business?

For years, I’ve believed that this should be something that you’re passionate about. I thought the business plan and your “mission” should reflect that.

That’s BS. It’s just textbook advice.

Until you’ve reached a stage where money isn’t the main focus anymore, then your mission statement should simply be:

“To transfer as much money as possible to our bank account”.

That’s it. Don’t overcomplicate it. And don’t come up with some fairy tale, when your main worry is to put food on the table.

Be passionate about growing your business. You don’t have to be passionate about milking cows, shipping products, cleaning windows, or renting out apartments.

But if that allows you to fulfill this new mission statement, then I’d say that’s enough reason to be motivated.

Yes, it’s probably better to not put this on your website and your marketing material, but it’s a realistic personal motto.

2. First Principles in Business

I’ve been thinking a lot about what makes a “great” business. That raises questions like:

• How should a business manage risk?

• When is the right time to take on debt?

• What are the best ways to expand? Acquisitions? Organic?

• When is the right time to hire employees?

Which all reminds me of a post from Farnam Street on First Principles.

First Principles essentially means breaking down a “complex problem” to its most basic form, and then reassembling it from the ground up.

And no matter what problem I’m breaking down, I always end up with one thing:

Cash.

An example:

When is the right time to take on debt?

This is a tricky question with lots of nuances around risk tolerance, interest rates, timing, and opportunity cost.

But it can be simplified by thinking logically about the cash flow:

1. What will the debt be used for? Will this increase future cash flow?

2. What is the monthly repayment? Can these future flows offset this?

3. If not, does the business generate enough cash to cover this?

4. If not, does the business have enough cash saved up to cover it?

5. What happens if the assumptions are less favorable?

6. What would cash flows look like if another opportunity is pursued?

The point: it becomes a simple equation of cash coming in, cash going out, and a cash buffer (safety net).

If the current high-interest rates result in a cash deficit, then now is not the right time to take on debt.

If even with stressed assumptions the additional cash flows can be covered, then now would be the right time for it.

This might sound too simplistic. But I know most business decisions are made on “gut feeling”.

Approaching things from a “first principles” (cash) basis and creating a simple model to visualise this and reassemble it, can be very profitable.

3. Limiting Beliefs

One of my clients said that “limiting beliefs” was the main thing holding them back.

They reached a self-imposed plateau.

I knew exactly what they were talking about as I “suffered” from this myself.

I think it’s especially common for people coming from regular jobs, as you get so accustomed to trading your hours for a fixed pay cheque.

You just can’t imagine how you could ever make 10x that amount of money without putting in 10x more hours.

Again, that’s BS.

What we all need is a heavy dose of “exposure therapy”.

For me, this came from Twitter. Speaking (for weeks) with people making 6 to 7 figures per year completely reset my expectations of what’s possible.

And for my client, the trick was to think about their competitors (who were much larger). Are they superhuman? No? Then why couldn’t you do the same?

If humans can build spaceships, (try to build) submarines and self-driving cars, then surely you can run a successful business.

Best of the week

I have a bit of a crush on Alex Hormozi, so this section could be filled every week with his tweets.

But this tweet especially hit different.

Being a “content creator” can be pretty weird. What this tweet reminded me of is that it’s not just about content, but about you.

People want to follow interesting people, not just read some AI-generated stuff.

Noted.

I’d be very curious to hear your take on any of these points.

Let me know and I’ll respond!

Till next week 🌷

Joey