01.29.22 Cost reduction and drag
This morning I woke up very early. Sometimes the fastest and easiest way for me to get alone time is to get up before the rest of the world with some coffee and a notebook.
I was thinking about the fastest way to improve the value of your assets.
What is the #1 asset in your portfolio? I’ll tell you right now: it’s you.
More people would do more amazing things if they put themselves on their balance sheets and invested accordingly. Let’s get more practical, though.
I just hosted a 2-day event with one of my partners who has acquired several 9-figures in business ownership. The thought came to me during the event that not enough people understand cost reduction as a viable strategy for growing their personal value as humans.
Cost reduction in its simplest form usually means reducing costs & boosting margin. But there’s another way to think about this: drag. I’m not really talking about going into a P&L and cutting costs — I’m talking about the drag/cost profile on you as a thinker, dreamer & doer. Sometimes the fastest way to boost a P&L isn’t cutting costs — it’s finding where the drag is on your people and removing it from the business.
I define drag as the suppression of momentum. Drag can be emotional, physical, tangible or intangible. In my work on the service brands, one of the fastest ways to decrease drag and increase momentum is matching people to outcomes.
Simply put: the right person in the wrong role is the WRONG person.
If you are a CEO or a leader at a company, you have to be very good at seeing where people are 10/10 versus 6/10. Any time someone is under a 7/10 at their role (and the outcomes attached to the role), they are creating drag. A 7 out of 10 is the lowest rating possible before it becomes destructive.
This works personally, as well. Where are you a 5/10? Get out of those things. Backfill yourself with someone who is (or can be) a 9/10 so that you don’t become the bottleneck.
Imagine buying a piece of real estate in a great location. Then physically moving it to a bad location. What would that do to your investment & the yield that follows? Putting a great person in a mismatched role is the equivalent of securing an asset then moving to a bad location.
It doesn’t mean the ‘deal’ is bad, it just means it isn’t properly matched.
There was a lot of talk around people & management at this week’s event, because the main insurance policy you have in creating growth & profit in your business acquisitions will be the team you put in place to grow the business without you.
We are currently turning the recordings from this week into a nice product that you can watch & study from your home or office. We included all parts of finding, negotiating, securing financing for, growing & then flipping businesses through quality M&A systems.
A giant list of deliverables is included (which I will paste below).
If you want this just hit “reply” and tell me you’d like to get it and when you’d like to buy. There is a steep discount until Sunday at 12a midnight.
Enjoy your weekend - and do some digging on where you can bolster the value of your assets through drag reduction or elimination. Emotional drag is the hardest — but the most important to deal with.
P.S. Here’s a list of templates included in the M&A package:
WACC Calc Excel
DCF Calc Excel
100+ Financial Stratgies
125+ Sourcing Stratgies
200+ Deal Funding Stratgies
Industry Mulitples on average
5000+ Family Offices and PE funds
35+ Legal Docs:
- Asset Purchase Agreement
- Realease form
- Membership interest assignment
- Closing checklist
- Consulting agreement
- Contribution agreement
- Copywrite assignment
- Domain assignment
- Due diligence checklist
- Due on sale letter
- Employment agreement
- Equity agreement
- Escrow Docs
- Finders Fee Agreement
- Founders Agreement
- Ip assignment Agreement
- It System agreement
- limited power of attorney
- Membership Purchase agreement
- Non qualified stock option agreement
- Options agreement
- Option agreement for property
- Option agreement for stock
- Phantom stock agreement
- Privacy notice
- Profit only agree to
- Promissory note - converatble, secured, unsecured
- Resolution agreement
- Share purchase agreement
- Shareholder agreement
- Stock purchase agreement
- Subordination agreement
- Term sheet
- Trademark Agreement