Use This Mindset Shift To Set You Free Financially
In this episode of The School of Greatness, Rory Vaden and Lewis Howes examine common misconceptions about building wealth through multiple income streams. The discussion challenges the idea that diversifying revenue sources is the best path to financial success, suggesting instead that mastering a single revenue stream often leads to better results, especially for those just starting their wealth-building journey.
The episode presents two practical frameworks for business growth: "Shehan's Wall," which emphasizes focusing on one primary business model, and the "Golden Grid," which helps evaluate revenue stream sustainability. Vaden and Howes explore various ways personal brands can generate income and explain how to scale business revenue through premium offerings, using concepts like "fractal math" to demonstrate potential growth patterns.
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Mindset and Limiting Beliefs Around Money and Wealth
In a thought-provoking discussion, Rory Vaden and Lewis Howes challenge the conventional wisdom about building wealth through multiple income streams. They suggest that focusing on mastering a single revenue stream is often more effective, particularly for those early in their wealth-building journey. Using examples of successful entrepreneurs like Richard Branson and Jeff Bezos, Vaden demonstrates how excellence in one area typically precedes diversification.
Frameworks and Models for a Sustainable, Scalable Business
Vaden introduces two key frameworks for business success. The first, "Shehan's Wall," emphasizes the importance of focusing on one Primary Business Model (PBM) until it's successful. Howes shares his personal experience of transitioning from seventeen different revenue streams to focusing solely on his podcast, illustrating the power of this approach.
The second framework, the "Golden Grid," helps entrepreneurs map their revenue streams and evaluate their sustainability. Vaden suggests using a scoring system based on whether business elements are Digital, Automated, Recurring, Evergreen, and Scalable (DARES), helping entrepreneurs focus on the most sustainable activities.
Strategies For Increasing Revenue and Scaling a Business
Vaden outlines various ways personal brands can generate income, including products, ads/affiliates, digital info, deals, and services. He introduces the concept of "fractal math" for scaling business revenue, explaining that typically 10% of customers will invest ten times more in premium offerings. To justify higher prices, Vaden recommends enhancing premium offerings with qualities like speed, execution, exposure, and intimacy, noting that wealthy clients often value time savings over money.
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Counterarguments
- While focusing on a single revenue stream can lead to mastery, it also increases risk exposure; diversification is a traditional hedge against this risk.
- Success stories like Richard Branson and Jeff Bezos are exceptional and may not be representative of the average entrepreneur's experience.
- The "Shehan's Wall" framework may not account for the dynamic nature of markets where adaptability and diversification can be crucial for survival.
- The transition of Lewis Howes from seventeen revenue streams to one might not be universally applicable; what works for one individual or business may not work for another due to different circumstances or industries.
- The "Golden Grid" framework, while useful, may oversimplify the complexity of business sustainability; not all successful businesses will score highly on the DARES metrics.
- The concept of "fractal math" assumes a uniformity in customer behavior that may not exist in all markets or with all products.
- The strategy of enhancing premium offerings with speed, execution, exposure, and intimacy assumes that all wealthy clients have the same preferences, which may not be the case.
- The emphasis on digital and automated services may not apply to industries where personal touch, craftsmanship, or face-to-face interaction are highly valued.
- The idea that focusing on a single business model is the most effective path to success may not consider the benefits of learning from a variety of experiences and the innovation that can result from cross-pollination of ideas.
Actionables
- You can refine your business focus by creating a "Success Journal" where you document daily the progress and challenges of your primary revenue stream. This will help you identify patterns, celebrate small wins, and maintain a laser focus on growing that one stream before considering diversification. For example, if you're a freelance graphic designer, track the types of projects that bring in the most revenue and client feedback to understand where to concentrate your efforts.
- Develop a "Revenue Reality Check" spreadsheet to periodically assess the potential of your current revenue stream against the DARES criteria without the acronym. Create columns for factors like online presence, automation potential, repeat business likelihood, content longevity, and scalability without using technical jargon. This will help you visually see where you can improve. For instance, if you sell handmade crafts, consider how you might increase repeat purchases or automate parts of your sales process.
- Experiment with a "10x Value Challenge" by identifying your most loyal customers and designing an exclusive, high-value product or service tailored to them. This doesn't require creating something entirely new; instead, think about adding a premium tier to your existing offerings. For example, if you run a local coffee shop, you might offer a limited "Connoisseur Club" membership that includes early access to new blends and private tasting events.
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Mindset and Limiting Beliefs Around Money and Wealth
Financial experts are challenging traditional beliefs around money-making and wealth preservation, suggesting that a focus on single streams of income and mindset shift is more beneficial.
Reprogram Your Money to Make and Keep It Easily
Rory Vaden and Lewis Howes call into question the common belief that one must have multiple streams of income to achieve wealth. The dialogue between them shifts perspectives on traditional wealth-building strategies.
Rethinking "Multiple Income Streams" as the Wealth Path
Rory Vaden presents the idea that the widely accepted notion of needing multiple income streams is actually a mindset that can hold people back, particularly those who are just starting out in their wealth-building journey. He indicates that this approach is more suitable for individuals who have moved beyond the beginner stage. Lewis Howes echoes this sentiment by suggesting that multiple revenue streams are most effective when they involve upsells and cross-sells within one’s chosen area of clarity.
Shift Mindset From Temporary Success to Lasting Wealth
The key to shifting from short-term success to long-term wealth may lie in the power of concentrated effort, as opposed to the diversification that is commonly advocated.
Diluted Focus, Diluted Results in Financial Abundance
Vaden illustrates that spreading efforts too thin—allocating hypothetical 10 units of resource across 10 different ventures—tends to lead to diluted focus and, consequently, diluted results. This common but ineffective approach must be reassessed in the context of wealth creation.
Importance Of Mastering one Revenue Stream B ...
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Mindset and Limiting Beliefs Around Money and Wealth
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Clarifications
- Upsells and cross-sells are sales techniques used to increase the value of a customer's purchase. An upsell is when a customer is encouraged to buy a more expensive version of the product they are interested in. Cross-selling involves offering complementary or related products to what the customer is already buying. These strategies aim to boost revenue by maximizing the customer's purchase value.
- "Diluted focus and diluted results" means that when you spread your efforts too thinly across multiple ventures or tasks, your attention and energy become weakened or less concentrated. This can lead to reduced effectiveness and outcomes in each area due to not giving sufficient focus or resources to any one thing. In essence, it highlights the idea that dividing your attention among too many things can hinder your ability to achieve significant success in any one area.
- Richard Branson, Jeff Bezos, Bill Gates, Jamie Kern Lima, and Sarah Blakely are successful entrepreneurs known for founding an ...
Counterarguments
- While focusing on a single stream of income can lead to mastery, it also increases risk exposure; diversification is a traditional hedge against this risk.
- The idea that multiple income streams are only for those beyond the beginner stage may not account for the varied opportunities and abilities of individuals starting out today, especially in the digital and gig economies.
- Concentrated effort on one revenue stream might lead to missed opportunities in emerging markets or industries where early entry could be advantageous.
- The success stories of individuals like Branson, Bezos, Gates, Lima, and Blakely may not be replicable for everyone; survivorship bias can lead to overestimating the success of focusing on one area.
- Upsells and cross-sells within a single area of clarity can be effective, but they also require a customer base willing to purchase additional products or services, which may not be feasible for all business models.
- The concept of "mastering" one revenue stream is subjective and can be diffic ...
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Frameworks and Models for a Sustainable, Scalable Business
Starting and scaling a business can be challenging, but with appropriate frameworks like Shehan's Wall and the "Golden Grid," entrepreneurs can navigate the process with a stronger focus on sustainability and scalability.
Shehan's Wall: From Unknown To Known By Focusing On One Model
Rory Vaden emphasizes the importance of focusing on one main revenue stream, the Primary Business Model (PBM), until it is successful.
Avoiding the Trap Of Chasing too Many Revenue Streams
Vaden cautions entrepreneurs against the temptation to create multiple revenue streams, which can make a business less effective. Lewis Howes shares his own experience, recalling a time when he was juggling seventeen different revenue streams. Vaden uses Howes's past to illustrate common mistakes made when attempting to generate income.
Identify and Scale Your Primary Business Model Before Diversifying
Through his suggestion to Howes to focus solely on his podcast, Vaden identifies the critical tactical decision in business: to determine which single revenue stream is paramount and to commit to making it successful above all others. Howes's decision to stop a multimillion-dollar mastermind to concentrate on the podcast exemplifies the idea of scaling the PBM before diversifying.
"Golden Grid": Mapping Short-Term and Long-Term Revenue Streams
Vaden introduces the "Golden Grid," which helps entrepreneurs understand their current financial position and plan their financial future by identifying primary, secondary, and ancillary revenue streams.
Distinguishing Primary, Secondary, and Ancillary Revenue Streams
The Golden Grid framework requires entrepreneurs to be clear about their current main source of income. For Howes, the primary revenue stream is ads and sponsorships for his podcast, while ancillary revenue streams might include book sales or public speaking gigs.
Vaden suggests using a scoring system to evaluate how well each aspect of a business aligns with the characteristics he deems essential for a sustainable business: Digital, Automated, Recurring, Evergreen, and Scalable (DARES). By slotting each revenue ...
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Frameworks and Models for a Sustainable, Scalable Business
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Counterarguments
- While focusing on a Primary Business Model (PBM) can be beneficial, it may also lead to missed opportunities for diversification that could stabilize the business against market fluctuations.
- Relying on a single revenue stream can be risky if market demand shifts or if the industry faces disruption; diversification can mitigate such risks.
- The "Golden Grid" may oversimplify the complexity of financial planning and not account for the unique challenges or opportunities of different businesses.
- The DARES scoring system might not be universally applicable; some successful business models may not be digital, automated, recurring, evergreen, or scalable.
- The "70-30 Rule" may not be suitable for all entrepreneurs, especially those in industries where the transition from job to business requires a different allocation of focus and resources.
- The case study of Lewis Howes might not be representative of all entrepreneurs, as indivi ...
Actionables
- You can visualize your business model by creating a personalized "Revenue Stream Map" on a large poster board. Draw your primary revenue stream as a large river, secondary streams as smaller streams, and ancillary streams as tiny creeks. This physical representation will help you see the scale of each revenue source and its contribution to your overall business. For example, if you're a freelance graphic designer, your primary river might be client projects, secondary streams could include teaching design workshops, and ancillary creeks might be affiliate marketing from your blog.
- Develop a "Revenue Stream Health Checklist" to periodically assess the vitality of your primary revenue stream. Include factors such as customer satisfaction, market demand, operational efficiency, and profit margins. Schedule a monthly review of this checklist to ensure your primary revenue stream remains robust and capable of supporting growth before considering diversification. For instance, if you run an online store, your checklist might include reviewing customer feedback, analyzing sales data, checking inventory turnover rates, and comparing profit margins month over month.
- Create a "Transition Timeline" to plot your journey from employm ...
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Strategies For Increasing Revenue and Scaling a Business
Ways Personal Brands Make Money: Products, Ads/Affiliates, Digital Info, Deals, Services
Rory Vaden highlights different ways personal brands earn income and the need to evaluate revenue streams to determine the best fit for one's brand. Personal brands, which Vaden describes as the digitization of one's reputation, can monetize through products, ads/affiliates, digital info, deals, and services. He points out that each of these methods has its advantages and disadvantages, and the key to scalability can be to raise prices or train others to deliver services.
Evaluating Revenue Streams: Pros and Cons For Best Fit
Lewis Howes and Rory Vaden discuss the various revenue streams available to personal brands, emphasizing the importance of evaluating which streams best align with individual or business goals. Vaden suggests giving each offering a score in terms of how digital and automated they are, considering factors like whether the content is digital, automated, recurring, evergreen, and scalable. He uses Netflix's model as an example of a business high in digitization and automation that requires constant new content to keep subscribers.
Using "Fractal Math" to Boost Customer Revenue
Vaden introduces the concept of fractal math as an advanced strategy for scaling a business. He explains that 10% of customers are often willing to invest 10 times more in premium offerings.
10% Will Invest 10x More In Premium Offerings
The fractal math concept suggests that among a base of customers, a subset is willing to pay significantly more for premium products or services. For example, Vaden describes that out of 1,000 customers buying a $30 product, 100 might buy a $300 product, potentially doubling revenue without increasing the customer base.
Enhancing Higher-Priced Offerings With Speed, Execution, Exposure, and ...
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Strategies For Increasing Revenue and Scaling a Business
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Counterarguments
- While personal brands can monetize in various ways, not all methods are suitable for every brand, and some may require more resources or expertise than others.
- Digitization and automation are valuable, but they may not be feasible for all types of content or services, and some customers may prefer a more personalized, human touch.
- The concept of fractal math assumes a uniform willingness to spend more among a certain percentage of customers, which may not hold true across different markets or customer demographics.
- Enhancing offerings with speed, execution, exposure, and intimacy might not always justify higher prices if the perceived value does not match the cost from the customer's perspective.
- Aligning ...
Actionables
- You can create a tiered value ladder for your products or services to cater to different customer investment levels. Start by identifying your core offering and then brainstorm additional tiers of value that could be added at higher price points. For example, if you're a graphic designer, your base tier could be logo design, the next tier could include branding packages, and the top tier could offer complete business rebranding with ongoing support.
- Develop a personal passion project that can be monetized over time. Begin by choosing an activity or topic you're passionate about and consider ways to share your knowledge or creations with others. This could be starting a blog about sustainable living practices, creating an online course about DIY home repairs, or selling handmade crafts. The key is to start small and gradually find ways to monetize as you build an audience.
- Experiment with a "customer spotlight" program to build intimacy and exposure for your higher-p ...
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