7-Steps to 7-Figures
- Sell a product or a service in the form of a product that you know better than most and that people will pay for.
- Determine the addressable market. The addressable market for small business accounting in Alberta is worth anywhere between $448M-$1B dollars per year. There are 165,792 business in Alberta that would at least pay minimum $225/mo. = $448M. Our market nationwide is $3B -$5B per year.
- 50% of your resources should be spent on delivering your product. Simplify your business into a process (see our 5 step process to accounting). Be clear with what your customers can expect and say no to anything that falls outside your process. Train disciplined people to handle the process. Hire 2, work them like 4 and pay them like 3. Use pool-style retention bonuses.
- Until you are financially independent, 50% of your resources should be spent on sales. Either use sales reps and logic to cater to the top 20% (like us) or emotion and buying traffic – adjusting for conversion rates to appeal to everyone else!
- Use your business account (bank/credit card) for expense transactions vs. cash or personal debit/credit cards. Send us your statements in 1 of 3 formats in order of preference: .csv, .pdf, paper statement.
- Aim to set aside 50-90% of all the money you collect. Focus on earning more so you are not miserable living off the rest. Do not leave surplus cash in your operating company- 1) Payoff your home 2) Make the minimum RESP contributions to get the government grant 3) Save cash in a holding company to invest in things that increase your productivity.
- Charge up front to create a positive cash-flow cycle. No single customer should make up 15% of your income.
11 Basic Tips
- Focused skill x dedicated hours = success
- Earning, fun, and negative visualization – don’t spend time on anything else.
- Do not fall into the temptation of cheap credit and live within your means. Your house should not cost more than 4x your gross annual household income. In German, borrowing is ‘schulden’, the same word for sin.
- Be extremely focused and work systematically. Do not multi-task. Do things once and do it right. Downsizing and minimizing whenever you can will help with the focus. Trash all video games. Trash all personal social media if you are not using it to earn 6+figures! The cheapest things in life: social media, netflix, walmart, accountants will cost you the too much in terms of wasted time, energy and money. Touch things/paper/email only once. Deal with it or trash it and do not look back.
- There is too much choice and we all suffer decision fatigue. Embrace minimalism and bring focus and clarity to your life. Have your necessities automatically delivered to you on a biweekly shipment.
- Produce more than you consume. Concern yourself with delivering something useful and needed rather than making money and the latter will come easier!
- Shop only one per year – towards the end of your fiscal year to accelerate access to CCA on capital additions.
- Autonomy and not having to rely on anyone will ultimately make you happy. Having expensive to-maintain items, like gas-guzzlers will take you further from autonomy and happiness. CRA’s ceiling on passenger vehicles = $30,000 + GST. These limits do not apply to SUVs, vans, and trucks that are used 90%+ to transport goods, passengers to earn income. These limits do not apply to a van/truck used 50% to earn income with a maximum of 3 seats.
- Buy & hold when it comes to all investments including your personal residence if you insist on buying (most should rent). Buy to only to improve your life and not for rental income or capital appreciation. Only if you have no mortgage on your first place and move into a second place, then sure consider renting out your first home (buy and hold).
- If you make a 20% down-payment you should consider a home less than 2.5x your gross annual household income. If you can make a down payment of at least 30% you could consider a home that costs up to 4x your gross annual household income. A condo is usually less desirable – only if the alternatives simply do not suit you or if you have the resources to acquire a multi-unit property.
- Consider an income property only after you’ve paid off the mortgage on your residence. If you divide the net operating income from a rental property by the cost of the property you get the investment yield. From this value we can determine if it is economically viable to rent out the property or sell it. Having positive cash flow is not good enough to determine economical viability.