1 00:00:00,000 --> 00:00:08,240 This is your plan. This is your strategy. There is a man in charge of the world's largest 2 00:00:08,240 --> 00:00:15,000 economy right now, who is so unpredictable. And if you are not planning for the worst 3 00:00:15,000 --> 00:00:19,120 case scenario, you are being irresponsible. 4 00:00:19,120 --> 00:00:24,400 Alright everybody, welcome to 2026. We thought we'd do something new different and interesting 5 00:00:24,400 --> 00:00:28,000 at the beginning of this year, really as we lean into our content strategy. So here's 6 00:00:28,000 --> 00:00:31,980 what I want to share with you today. For those of us who are watching this, you're running 7 00:00:31,980 --> 00:00:35,680 your own business and you're beginning to do your thinking, your planning and your strategizing 8 00:00:35,680 --> 00:00:39,000 for this year. In particular, if you're a business owner, an entrepreneur, you already 9 00:00:39,000 --> 00:00:42,680 run your business, you do your own thing. And you are thinking about how are you going 10 00:00:42,680 --> 00:00:47,200 to scale your business for this year. There are three metrics that I want to invite you 11 00:00:47,200 --> 00:00:51,560 to measure, not only at the beginning of the year, but throughout the year and then toward 12 00:00:51,560 --> 00:00:55,720 the end of this year. Now word of warning here, when you first hear about these metrics, 13 00:00:55,720 --> 00:00:59,800 it kind of sounds simple until you actually start thinking about these metrics and what 14 00:00:59,800 --> 00:01:04,920 these metrics actually mean. So I thought what I would do is I'll take a quick 15 minute 15 00:01:04,920 --> 00:01:11,560 and explain these metrics to you, explain why they matter and then most importantly, explain 16 00:01:11,560 --> 00:01:14,640 to you why you need to keep a tally on them. Now it doesn't matter what your business is 17 00:01:14,640 --> 00:01:18,880 or at what stage you're at. And on the work we do, we see companies who are making a million 18 00:01:18,880 --> 00:01:23,560 dollars US and companies who are making a hundred million dollars US. And in each and 19 00:01:23,560 --> 00:01:27,780 every single one of those businesses for sure, it really is about measuring each of these 20 00:01:27,780 --> 00:01:32,200 metrics at every single stage and turn. So whether you're a personal trainer watching 21 00:01:32,200 --> 00:01:37,000 this conversation and you just have 10 clients that you work with every single year or every 22 00:01:37,000 --> 00:01:40,520 single month rather and you're training those clients and you think about how do you scale 23 00:01:40,520 --> 00:01:44,240 and take your business to next, this is going to be relevant to you. If you're a content 24 00:01:44,240 --> 00:01:49,280 creator, this is going to be relevant to you. If you buy stock and you sell it on an online 25 00:01:49,280 --> 00:01:53,080 e-commerce platform, this is going to be relevant to you. Run a consulting company relevant 26 00:01:53,080 --> 00:01:56,960 to you. You're a mid-tier stage business looking for growth that's going to be relevant to 27 00:01:56,960 --> 00:02:02,640 you. Let me just say one last thing. So in my experience doing the work that we do, that 28 00:02:02,640 --> 00:02:07,520 things typically seem easy until you're actually doing that thing and then you realize it looks 29 00:02:07,520 --> 00:02:13,720 easy but it's very, very different from executing it. So here we go. Three metric that I want 30 00:02:13,720 --> 00:02:23,920 you to measure this year. Don't dare me. I promise you these actually matter. First metric, 31 00:02:23,920 --> 00:02:29,640 sales. Now I know what you're thinking. Well, of course I'm going to measure sales, right? 32 00:02:29,640 --> 00:02:33,000 But remember, one of my favorite things to do when I work with entrepreneurs is to help 33 00:02:33,000 --> 00:02:37,640 them build an income statement, right? When you build an income statement, what an income 34 00:02:37,640 --> 00:02:41,520 statement does or the other word we call an income statement is a profit and loss is it 35 00:02:41,520 --> 00:02:45,720 shows you at the end of a trading cycle whether or not you've made money. How do you build 36 00:02:45,720 --> 00:02:49,880 an income statement? Remember, the first line item on an income statement is revenue and 37 00:02:49,880 --> 00:02:55,760 revenue is price times quantity. The second line on my item is cost of goods sold, which 38 00:02:55,760 --> 00:02:59,200 is the cost of those goods times the quantity and these quantities of course will be the 39 00:02:59,200 --> 00:03:04,360 same. Why? Because for every product that you sold, it must be the same quantity. And 40 00:03:04,360 --> 00:03:11,400 then of course the difference of these is gross profit. And the gross profit is the difference 41 00:03:11,400 --> 00:03:17,320 between revenue versus cogs. All right, this is basic simple accounting. You should know 42 00:03:17,320 --> 00:03:21,760 this by now. If you're watching in my masterclass, as you know, this is always where we start. 43 00:03:21,760 --> 00:03:26,240 Why am I sharing this with you? When I say you've got to measure your sales, most entrepreneurs 44 00:03:26,240 --> 00:03:32,120 don't get this right. Sales is fundamentally two things. It's the price at which you sell 45 00:03:32,120 --> 00:03:39,080 something and the number of those things that you sell. So let's break it down. If sales 46 00:03:39,080 --> 00:03:44,280 is the price at which I'm selling something and the quantity at which of these things 47 00:03:44,280 --> 00:03:49,920 that I sell, right, spelled wrong here, but the quantity of these things that I sell, 48 00:03:49,920 --> 00:03:55,680 it means that if I'm going to increase my sales, I have one of two options. Either I'm 49 00:03:55,680 --> 00:04:01,440 going to increase my price, I'm going to increase my quantity, or I'm going to increase both. 50 00:04:01,440 --> 00:04:05,280 Now there are some businesses that are immediately limited. In my public speaking business, we 51 00:04:05,280 --> 00:04:11,520 issued at the end of last year, we had an unbelievable year. I did 84 flights over 500,000 52 00:04:11,520 --> 00:04:18,320 kilometers that I flew over 21 hours that I spent in the air and we traveled to 32 countries. 53 00:04:18,320 --> 00:04:23,040 It's actually available. We published it. You can go and check on my social medias. What 54 00:04:23,040 --> 00:04:26,800 is my limitation? My limitation is because in my public speaking business, I've got 55 00:04:26,800 --> 00:04:32,600 to stand on stage and speak, I only have a certain number of times I can do that. So 56 00:04:32,600 --> 00:04:37,680 even though I might want to grow the quantity, this is finite, which means the only way I 57 00:04:37,680 --> 00:04:44,720 make more money is if I charge price. But even my ability to push up the price is also limited 58 00:04:44,720 --> 00:04:48,360 because there is a point at which, beyond that price, I'm just not going to get customers 59 00:04:48,360 --> 00:04:51,880 phoning and say, "We want to work with him." They'll sure we'll see value, but they might 60 00:04:51,880 --> 00:04:55,840 not be able to afford it. Does that make sense? So it's really important for you to think 61 00:04:55,840 --> 00:04:59,880 about as you are driving your growth of your business this year, which of these struggles 62 00:04:59,880 --> 00:05:05,280 do you want to win, which brings me to the second point here. It's a game, guys. So you've 63 00:05:05,280 --> 00:05:10,800 got to figure out what your composition is. If you focus on winning the price war, then 64 00:05:10,800 --> 00:05:13,120 you're going to sell more quantity, which means you're going to be busier. You're going 65 00:05:13,120 --> 00:05:19,120 to need more stock. If you're a consultant, you're going to need more hours. But if you 66 00:05:19,120 --> 00:05:24,400 focus on winning the quantity war, then you're going to be limited on price. You just got 67 00:05:24,400 --> 00:05:29,560 to think about which of these that you want to, you actually want to win on. I can't stress 68 00:05:29,560 --> 00:05:35,480 enough how important it is at the beginning of the year to decide which battle do you 69 00:05:35,480 --> 00:05:42,760 want to win. Here's why this matters. Let's assume I want to win the price battle. And 70 00:05:42,760 --> 00:05:47,800 what I actually want to do is I want to be able to charge more than my competitors. Well, 71 00:05:47,800 --> 00:05:53,400 if I want to charge more than my competitors, then what have I got to do? It means I've 72 00:05:53,400 --> 00:06:03,160 got to increase the value of my product. And value, by the way, is both tangible and intangible. 73 00:06:03,160 --> 00:06:15,440 So this value can be perceived. How do you get that right? Well, you've got to ask yourself, 74 00:06:15,440 --> 00:06:19,400 what are the things that your market and your customers understand to matter, that they 75 00:06:19,400 --> 00:06:25,920 are willing to pay you more for the same thing, because they perceive the value to be more. 76 00:06:25,920 --> 00:06:31,080 This has everything to do with your marketing or communications, your social media. This 77 00:06:31,080 --> 00:06:34,640 is why I start here, because a lot of us start the beginning of the year. We're like, well, 78 00:06:34,640 --> 00:06:38,160 you know, I'm going to focus more on my social media. I'm going to post more. I'm going to 79 00:06:38,160 --> 00:06:42,360 post more product pictures. I'm going to post more client testimonials. Yes, sounds great. 80 00:06:42,360 --> 00:06:47,320 But what does it do for your sales? Because if I can't link that social media activity, 81 00:06:47,320 --> 00:06:51,360 that marketing activity, that promotional activity, that PR activity to sales, then what am I doing 82 00:06:51,360 --> 00:06:57,480 it for? Okay, so you sit him on 100,000 followers on Instagram, but your sales have been grown 83 00:06:57,480 --> 00:07:03,200 in five years. So what did you do it for? For likes and comments? Come on. So you've got 84 00:07:03,200 --> 00:07:10,880 to be very clear when you're growing your marketing that it drives perceived value so 85 00:07:10,880 --> 00:07:16,120 that you can increase the price. Otherwise, why are you doing it for? Just want to be 86 00:07:16,120 --> 00:07:24,040 famous. Go and be an actor. Go attend editions and get known. That's not particularly complex. 87 00:07:24,040 --> 00:07:30,840 It's not easy. It's just not complex. The alternative is, I want to grow my quantity. 88 00:07:30,840 --> 00:07:35,080 This is, I want to sell more. Okay, this is literally the difference between the Bugatti 89 00:07:35,080 --> 00:07:42,200 strategy and the Amazon strategy. I was that last year, middle of last year, I traveled 90 00:07:42,200 --> 00:07:50,360 to London. I went to a dealership there that sells several luxury cars. One of the luxury 91 00:07:50,360 --> 00:07:55,440 cars they sell is Bugatti's. I'm chatting to the manager of the branch because that just 92 00:07:55,440 --> 00:07:59,920 went and I walked in and I was like, "Yo, I'm a car guy. I love cars, et cetera, et cetera. 93 00:07:59,920 --> 00:08:02,960 Do you mind if I have a look?" And they had two on the floor and they had a beautiful 94 00:08:02,960 --> 00:08:06,640 shirong. There was like a beautiful pearl blue. So I'm chatting to him about this beautiful 95 00:08:06,640 --> 00:08:10,760 Bugatti's shirong and he's telling me about the car and the relationship with Jacob and 96 00:08:10,760 --> 00:08:15,760 Cole with a watch, et cetera. And he's telling me all about the story of Bugatti and the car 97 00:08:15,760 --> 00:08:19,880 and the watch and the relationship and the branding and the lineage and all of these 98 00:08:19,880 --> 00:08:25,200 things. And all the reason he's telling me this was to say, "We don't measure ourselves 99 00:08:25,200 --> 00:08:29,240 on the number of cars we sell. We measure ourselves on our ability to drive perceived 100 00:08:29,240 --> 00:08:36,040 value so that we can sell the car more expensively." No. Bugatti's an engineering feat, guys. 101 00:08:36,040 --> 00:08:41,360 I hope you understand that the car weighs over two tons and it'll do well over 350 kilometers 102 00:08:41,360 --> 00:08:47,840 per hour. It's an engineering feat. But Bugatti doesn't make as much money as Toyota. Why? 103 00:08:47,840 --> 00:08:53,280 Because even though Bugatti has a better perception and sells for more, Toyota sells more cars. 104 00:08:53,280 --> 00:08:57,440 This is a different strategy. And so the question for you is, are you building a Toyota or are 105 00:08:57,440 --> 00:09:02,080 you building a Bugatti? Because if you are building a Toyota and you want to be focused 106 00:09:02,080 --> 00:09:06,680 on quantity, then it brings me to the second thing you want to be measuring in this here 107 00:09:06,680 --> 00:09:16,840 in your business. Let me just say, this is where businesses go to die, cash flow. Cash 108 00:09:16,840 --> 00:09:22,760 flow, cash flow, cash flow. It all sounds great until you're not making money. Cash 109 00:09:22,760 --> 00:09:30,200 flow, cash flow. And not just cash flow, but you've got to be clear on how do you manage 110 00:09:30,200 --> 00:09:33,600 the net cash flow in your business. So what does that mean? What are you going to be 111 00:09:33,600 --> 00:09:39,240 worried about? You're going to be worried about your working capital. You've got to 112 00:09:39,240 --> 00:09:43,120 be worried about your working capital. For those of you who didn't do accounting, when 113 00:09:43,120 --> 00:09:46,880 you're doing your working capital requirement and working capital cycle, it basically is 114 00:09:46,880 --> 00:09:53,120 your inventory, the amount of stock you're holding. It's your accounts payable, how long 115 00:09:53,120 --> 00:09:56,680 it takes for you to pay your supplies, and your accounts receivable, how long it takes 116 00:09:56,680 --> 00:10:02,680 for you to receive money from your supplies. So let's run the math. Assume, my customers 117 00:10:02,680 --> 00:10:09,760 pay me after 15 days, right? I get money into my bank account after 15 days of selling 118 00:10:09,760 --> 00:10:16,080 a product, but I pay my suppliers seven days after I've bought the product. Let's think 119 00:10:16,080 --> 00:10:19,520 about what that means. It means I get the product today after seven days I have to pay 120 00:10:19,520 --> 00:10:25,120 my supplier, John's being paid, but then I've got to wait an additional eight days before 121 00:10:25,120 --> 00:10:30,600 Michael pigs me back. So it means even though I'm going to grow my sales, I'm constantly 122 00:10:30,600 --> 00:10:35,160 going to have a negative working capital cycle. Because for every unit of inventory that I 123 00:10:35,160 --> 00:10:40,880 sell, I only get paid off to 15 days, but I have to pay after seven days. Why is this 124 00:10:40,880 --> 00:10:44,960 important? You're starting the year 2026. You go, I've got these big dreams, these massive 125 00:10:44,960 --> 00:10:48,400 things I want to do, this big business I want to build, all of this incredible stuff. Yeah, 126 00:10:48,400 --> 00:10:51,600 sounds great. And I want to double my revenue. Okay, so how are you going to do it? Well, 127 00:10:51,600 --> 00:10:54,440 I'm going to increase my price and increase my quantity. I came to tell you, you can't 128 00:10:54,440 --> 00:11:00,800 do both because struggle. Now, that's not an absolute term, but it is relative. So that 129 00:11:00,800 --> 00:11:05,960 mean can you increase price and quantity? Sure. But the greater the extent to which you increase 130 00:11:05,960 --> 00:11:10,760 the one typically it has an inverse relationship on the other. Then you go, well, I want to 131 00:11:10,760 --> 00:11:14,240 do all of this. And by the way, for me to grow my business, I need more cash flow. Okay, 132 00:11:14,240 --> 00:11:18,000 great. So how are you going to do that? Now in a services business, you don't necessarily 133 00:11:18,000 --> 00:11:21,400 worry about inventory, but you do have to worry about your accounts payable in your accounts 134 00:11:21,400 --> 00:11:28,280 receivable, for sure, for sure. So watching your cash flow in this year, 2026 is going 135 00:11:28,280 --> 00:11:31,160 to be a big one. I want to say something else that has a lot to do with the geopolitics 136 00:11:31,160 --> 00:11:35,360 right now, you're seeing the stuff happening all over the world, man, we're seeing countries 137 00:11:35,360 --> 00:11:39,960 getting rated with presidents getting sitting presidents getting removed, we're seeing oil 138 00:11:39,960 --> 00:11:46,160 tankers getting seized. I guarantee you, we are so close, we are so on the precipice of 139 00:11:46,160 --> 00:11:51,080 a major global conflict. But if you're not thinking about how do you manage cash, you're 140 00:11:51,080 --> 00:11:56,320 going to be in trouble this year. I have a theory that my theory is 2026 is going to 141 00:11:56,320 --> 00:12:00,560 be the year to hold on to cash, because we are less than two standard deviations away 142 00:12:00,560 --> 00:12:05,580 from another 2020 lockdown style of stuff, where something happens in the world and it 143 00:12:05,580 --> 00:12:09,880 affects how your business operates. So you're going to be thinking very carefully about how 144 00:12:09,880 --> 00:12:14,640 you're planning around your cash flow. I am fascinated by how many entrepreneurs don't 145 00:12:14,640 --> 00:12:17,880 think about these things. And so for many entrepreneurs, they think cash flow is the 146 00:12:17,880 --> 00:12:22,840 amount of money they have in the bank. No, no, that's cash. In fact, the accounting 147 00:12:22,840 --> 00:12:28,520 term for it is cash on hand. That's not cash flow, because the key part here is this word 148 00:12:28,520 --> 00:12:36,880 flow. Money is a cycle. The way that I explain it to my own team, I always say to my team, 149 00:12:36,880 --> 00:12:43,520 money is like water. Have you ever seen water? I've this thing like middle of the year in 150 00:12:43,520 --> 00:12:48,640 my house saw the pool pump broke. It wasn't going to love the story. So the pool pump breaks 151 00:12:48,640 --> 00:12:53,520 and my pool was like beautiful and blue, et cetera. And so the pool was covered and the 152 00:12:53,520 --> 00:12:58,800 pool pump broke. And we had some acid and chlorine and stuff. And over time, the acid 153 00:12:58,800 --> 00:13:03,120 and chlorine finished the garden. It didn't replace it. We didn't fix the pool pump. And 154 00:13:03,120 --> 00:13:06,400 then months later, there was like this stench around the pool. So I went and removed the 155 00:13:06,400 --> 00:13:13,360 pool cover and the water was green. Same water. What happened? The water didn't move. It didn't 156 00:13:13,360 --> 00:13:21,120 flow. In a business, it's the same. Cash has to flow in a business. There must be activity. 157 00:13:21,120 --> 00:13:25,200 Money must come in. Money must go out. And a lot of entrepreneurs who are early stage 158 00:13:25,200 --> 00:13:31,200 don't have the mindset for this. Money leaving your business isn't a bad thing. It's how 159 00:13:31,200 --> 00:13:37,040 much leaves and how much comes back. Cash has to flow. That is the nature of running a 160 00:13:37,040 --> 00:13:42,560 business. So the first thing, sales, critical, and you go to choose the fight you want to 161 00:13:42,560 --> 00:13:47,360 win on your sales. The second thing, cash flow. And you got to choose what's going to be driving 162 00:13:47,360 --> 00:13:54,080 your cash flow. What's going to be driving your cash flow? Okay? These are the two things 163 00:13:54,080 --> 00:14:02,000 that you're going to have to measure. And then the third. And I write this one in blue because it matters. 164 00:14:07,120 --> 00:14:18,720 Reserves. Get ready for a year where there's enough SHIT for your business to go under. 165 00:14:18,720 --> 00:14:23,840 There is a man in charge of the world's largest economy right now who is so unpredictable 166 00:14:23,840 --> 00:14:28,960 that if you are not planning for the worst case scenario, you are being irresponsible. 167 00:14:28,960 --> 00:14:33,360 So you're watching this and I came to tell you you need to start building up your reserves. 168 00:14:35,360 --> 00:14:41,760 Sell more. Once you sell more, collect more cash. Once you collect more cash, build up your reserves. 169 00:14:41,760 --> 00:14:45,680 I came to tell you this is so important. And that's why when you follow the flow of the 170 00:14:45,680 --> 00:14:54,720 income statement, it ends at the bottom with retained income. That content in this room will 171 00:14:54,720 --> 00:15:00,240 go, right? Because you get to retained income after you declare your dividends and retained 172 00:15:00,240 --> 00:15:05,840 income is what builds up your reserves. Build up reserves. The rule that we've just passed 173 00:15:05,840 --> 00:15:11,600 in the business, we've set 10%. What's that mean? 10% of every single invoice that we are issuing, 174 00:15:11,600 --> 00:15:15,600 we're immediately removing that money and putting it into our reserve fund. We really have reserves, 175 00:15:15,600 --> 00:15:20,960 but we're just building up that reserve fund. Because I have a theory 2026 is not going to be 176 00:15:20,960 --> 00:15:26,160 like any year that we've seen since 2020. And I remember what happened in 2020. I'm not going 177 00:15:26,160 --> 00:15:33,680 through that stuff again. So this is your plan. This is your strategy. Hit me up in the section, 178 00:15:33,680 --> 00:15:38,800 in the comment section and tell me which of these do you think you need to improve on from last year? 179 00:15:38,800 --> 00:15:44,160 Is it how much you're selling, right? Is it how much cash you're generating? Or is how much reserves 180 00:15:44,160 --> 00:15:50,080 you're sitting on? And whichever one of these that you know you need to improve on from last year, 181 00:15:50,080 --> 00:15:55,040 focus and understand the relationship between these three. I'll see you on the other side of this. 182 00:15:55,760 --> 00:15:56,260 Cheers.