Greetings (again) from the south of France… |
I'm still smack in the middle of my annual 30-day vacation. |
No email, no meetings, no checking in on the office. |
(If you're wondering how that's even possible, it's because of the systems we build with our clients…and you can see exactly how we do it here.) |
But before I left, I had two conversations that I haven't been able to stop thinking about… despite all the rosé and limoncello spritzes I’ve been drinking. (Don’t judge. It’s been insanely hot in France, and these are the only drinks that cool me down.) |
Both conversations were with business buddies of mine. For the sake of this email, let's call them my "Rich Friend" and my "Poor Friend." (Hat tip, Robert Kiyosaki.) |
Here's what makes these two interesting: On paper, their businesses are nearly identical. |
Both run companies doing roughly $10M a year. Both have solid teams, world-class offerings, and impressive logos on the client lists. |
But my Rich Friend takes more cash home in a month than my Poor Friend does in a year. (He also sleeps a lot better at night.) |
Sounds ridiculous… |
…until you look at what growth actually did to my Poor Friend's company. |
Somewhere on the way to $10M, the business got bloated, and the cash started disappearing. Every new million on the top line came with new layers, new tools, new "strategic initiatives," and new people whose main job was managing the other new people. |
The business got bigger.
The bank account didn't. |
So what is my Rich Friend doing differently? Four things… |
…I've started calling them the Rich Friend Rules: |
Rich Friend Rule #1: Get “smaller” before you get bigger. |
Before my Rich Friend scaled anything, he cut the bloat and killed the distractions. The zombie projects, the "just in case" hires, the tools nobody logged into…gone. |
Only then did he step on the gas. |
Why does this matter? |
Because growth is a multiplier. And it multiplies waste just as happily as it multiplies profit. Scale a bloated business, and all you get is a bigger, “bloatier” business. |
Rich Friend Rule #2: Don’t confuse revenue with distributable cash. |
Revenue growth is great, but a bigger top line doesn’t always equate to a bigger bottom line. |
In fact, often the opposite is true. I've had years where revenue nearly doubled and my personal take-home went down…and if you've been at this a while, I'd bet you have, too. |
It’s one thing if you allow for a strategic, temporary profit dip to fund growth. It’s another thing if you simply expect growth to equal profit. |
My Rich Friend never lets that happen, because the number that matters most to him is the one that reaches his personal bank account. |
Everything upstream of that number is the means… not the scoreboard. |
Rich Friend Rule #3: Hires DOERS, not helpers. |
A doer takes a job off your plate. A helper adds a new job to your plate called "managing the helper." |
You can't be productive if you're spending all your time telling other people how to do their jobs. |
My Rich Friend figured that out early, so every hire he makes has to fully own an outcome…not just assist with one. |
His average salary per employee is higher than my Poor Friend’s, but that’s ok, because his revenue per employee is higher, too. |
And that’s the difference between “spending” and “investing” in talent. |
Rich Friend Rule #4: Accept the truth most founders never will… |
…the more valuable you are to your business, the less valuable your business is. |
That one stings, I know… but it's the whole game. |
My Rich Friend doesn't optimize for feeling needed. He optimizes for a business that runs (and grows) without him standing in the middle of it. Which, not coincidentally, is the same reason I'm able to write this from France instead of a conference room. |
Now, before you write my Rich Friend off as some coasting, "lifestyle business" guy who traded growth for golf…don't. |
His business is growing just fine. (At least as fast, if not faster, than my Poor Friend.) |
He simply refuses to buy growth with bloat. |
That's the real takeaway here: these aren't "stay small" rules or "play it safe" rules. They're post-startup rules. |
Once you're past the scrappy, survive-at-all-costs phase, they apply whether you're doing $2M or $200M. |
Which is exactly why, when my Poor Friend asked me what he should do, I told him to run the Rich Friend Rules on his own business: |
Get smaller before you get bigger…because you can't scale your way out of bloat. Manage to the number that hits your account…because revenue hides problems and cash exposes them. Audit every seat for doers vs. helpers…because payroll is where take-home goes to die. Start firing yourself from the jobs only you can do…because that's what makes the business valuable with or without you.
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So, which of the four Rich Friend Rules have you been breaking? Hit reply and tell me. I read every reply, even the ones I won't see for another couple of weeks. |
⚡️ Action Step: Pull up last month's P&L and write down ONE number: how much cash actually reached your account. Not revenue. Not EBITDA. What you got. Then pick the ONE rule above that would move that number the most, and take the first step this week. Don't overthink it…just start. |
Give it a shot and let me know how it works… |
-Ryan |
Ryan Deiss
Co-Founder and CEO, The Scalable Company |
P.S. If you want to see the systems that let me leave my business for 30 days without checking email, sitting in meetings, or worrying about what's happening back at the office, that's exactly what we build with our clients. |
Click here for the details on what we do and how we work. |
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