We've all been in a spot in our business where we're trying to work out how to get from A to B or how to get to the next level. But what is the next level? How many levels are there?
Luke Fatooros from Ideas Into Business shares with us the 7 steps to building a smart business engine to give you time, money, and freedom.
Play and listen to the podcast below, learn more about Luke and his business journey, or jump straight to the steps to read more.
Luke's Business Journey
Luke: Let me start with my $12 million failure. It's something that I don't recommend, but this was my first step into business.
My first business was a store that my partner and I shared with $800. We thought we were going to conquer the world, and the first 14 months were a living hell. We didn't know what we were doing. We had all the ambition and enthusiasm, and that was really what got us through the first 14 months.
When we eventually learned a few things, such as how to distinguish ourselves from the competition, my first joint venture took off. After all that pain, it eventually became a $12 million, 65-staff business after five years. I was winning awards like Entrepreneur of the Year, Microsoft top companies, the Westpac finance.
And then I lost everything. My partner had to go to the staff and tell them we had to close this business. What came out of that were life-changing lessons. There are three critical lessons I want to share with you, and this was how the seven steps were formulated.
3 Tips for Everyone Who Wants to Start a Business
1. Understand Cash Flow
Luke: I had to learn how money works and how money flows. The first lesson was to stop trading time for money—I didn't know what that meant. I had to move from a limited earning structure to an unlimited earning structure.
When I lost that business, I learned the difference between being self-employed and being a business owner, and I understood creating wealth in business. I realised that my business was worth nothing because it was strapped to me. We become burnt out when trying to build a business the wrong way. It took me 7 years to recover.
2. Work on Your Internal Structure
Luke: By contrast, when I built my second business, a distribution business, I had three factories in China, the Philippines, and Korea, and I'm supplying five countries from a desk.
That gives you a lot of flexibility with the way you can travel. You're not tied to a location, which is something that's becoming very important with our current times.
Luke: If someone saw me with my notebook at my home office, they would think it's a joke, a hobby. But that business was valued at $3.5 million up to 3 years. It's not how fancy a business looks on the outside. It's how structured internally.
When I was 12 years old, I was given the opportunity to make these number plate brackets. It sounds like such a boring product, but I was getting $6 a bracket. I was able to make one in 1.5 hours. I sped up my processes. By the time I was 13, I was making 10 number plate brackets an hour, so I was then making $60 an hour relatively.
Turn IT into a utility that will help grow your business. Talk to a dork about your business needs.
I went on to employ people, but the lesson that I learned was people are lazy. Don't tie things to money, and don't tie things to yourself. If you have a problem or a key person in your business has a problem, how do you overcome that? How do you make sure that you aren't the key person? How was that valuable to the next person that was buying it?
3. Build a Strong Foundation
Luke: This comes to this thing called sequencing. You cannot step out of the engine. You cannot hand down management or the responsibilities with regard to the foundation of your business to anyone else. If you have a vehicle that's got a broken engine, you cannot paint it green hoping that the engine would work.
That is what people do in business. They change the website or invest in social media marketing and think this is going to grow the business. That has to come at a certain point. Your sequencing is wrong.