Why Every Entrepreneur NEEDS Passive Income NOW with Chris Miles

0:02Who's ready to rock today, Fire Nation? JLD here and welcome to Entrepreneurs on Fire, brought to you by the HubSpot. podcast network, the audio destination for business professionals with great shows like Created with John Ushai. Today, we'll be breaking down why every entrepreneur needs passive income now. To drop these value bonds, I brought Chris Miles into EO Fire Studios. Chris is the anti-financial advisor and teaches entrepreneurs and professionals how to get their money working for them today. He's an author and podcast host of the Money Ripples podcast. In today's information, we will talk about where most entrepreneurs lose money, the most common mistakes they have, why you need passive income, how to get passive income, and real world examples, and oh, so much more.

0:44And a big thank you for sponsoring today's episode goes to Chris and our sponsors. The Next Wave, your chief AI officer, hosted by Matt Wolf and Nathan Lance, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Matt and Nathan are leading AI creators in your guiding light in the AI and technology frontier. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business. Listen to The Next Wave wherever you get your podcasts.

1:19Chris, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. I would say it's not about working harder or smarter. It's about working right. It's about doing the right things in the right way. I don't really believe you have to work 180 hour weeks. You have to go all Grant Cardone or Gary Vee to be able to do it. It's about doing the right things and doing it the right way. And you'll get a lot more leverage and you'll be a lot happier too. Well, it's going to help if we really get into the meat and potatoes of today's episode, because we talk all about this.

1:55And that's why every entrepreneur needs passive income now. That means money that's coming in or being generated when you're not just grinding your face off in that moment in time. And you are called the anti-financial advisor. So how the heck did you get this nickname, Ann Rep? It wasn't planned, that's for sure. But that's kind of how life takes you, doesn't it? You know, for example, I mean, growing up, I mean, I was just like everybody else, kind of raised very with typical parents, taught me good values, you know, follow your dreams, you know, your word is your bond, do what you say when you say you're going to do it, have integrity, that kind of thing.

2:32But when it came to money, it was always about, hey, we can't afford this. We don't have enough. What do you think I am? Made of money? Money doesn't grow on trees, you know, eat everything off your plate because there's starving kids in Africa, you know, all that kind of crap that you hear growing up, right? And so I realized that pretty quickly, I didn't want to live that kind of life growing up. So when I went to college, pretty quickly, I realized that the entrepreneur path was the path I should take. And so I was planning on becoming a business consultant, but I figured I should have real life business experience if I'm going to do that.

2:59So I ended up kind of looking around trying to see where, where I could actually have some kind of business would be interesting. And the first one that came up that I thought would be worst case scenario, I learned something would be being a financial advisor. So I started being that traditional salesman in a suit, that person that just tries to sell you a bunch of crap. You know, I was, I was that guy for four years, actually dropped out of college to be able to be an entrepreneur and loved being an entrepreneur. I loved having control my time and my own destiny and my freedom and that kind of thing.

3:26But I'll tell you, after four years, my dad reached out to me. He says, well, Chris, when do you become my financial advisor? Now, understand my dad was like the stereotypical, he's like the Dave Ramsey kind of guy, right? I mean, he's the one that probably taught Dave Ramsey everything Dave knows because he was like the penny pinching, like cheapskate. I mean, he'd save everything, spend nothing. And I mean, he paid off his house in 18 years, which was amazing. He did that. He even, you know, he even like stuffed money as 401k. He did everything that good boys and little girls should do based on what I was teaching.

3:57And then he said, okay, Chris, I want to retire. And I, and as I looked at all of his money, I said, dad, here's the deal. As much hard work as you've done, if you want to retire today at the age of 61, you better hope you die in five years because that's when you're going to run out of money. And naturally he's like, well, that's not what I wanted to hear. I said, no, you worked for 40 years to live on maybe five. That's not cool. And so as a result, you know, I was kind of bummed. I was a little bit, I was really conflicted because I didn't know what to do because I couldn't just throw my dad in anything.

4:27I didn't want to have his life gamble away, but it wasn't very long. I realized that, you know, really when I looked at it, honestly, how many of my clients were truly financially free where they didn't worry about money? And really the answer was none. Even the ones in retirement still worried about living too long and running out of money. And here's the big kicker. One of my friends asked me this. He said, Chris, how many of your clients or how many of you guys as financial advisors are financially free, not off the commissions you're earning, but actually doing these same investments? And when I realized there was guys, this is 2006, almost 2006, there's 2005.

5:01There's all these guys that have been working since the late 1970s that couldn't retire themselves either. I realized it was a problem. I was like, well, none. I don't think any of them can. And so, John, what ended up happening is I ended up taking the red pill. I ended up going down the path of real estate investing. I actually quit being a financial advisor, vowed never teach about money again and started real estate investing. And later that next year in 2006, when I was 28 years old, I had enough passive income coming in from my investments and so forth that I was able to retire. And that blew my mind that it was even possible.

5:32Right. And, uh, and as a result, you know, it wasn't much longer. People kept asking me, well, how'd you do it? You know, how'd you, how'd you actually make that happen? And that's where kind of that anti-financial advisor thing started to stick because I started telling people, well, do the opposite of what I taught as a financial advisor. Don't stuff your money in those retirement plans because they don't work. Don't, you know, just pay off your debt willy nilly because that doesn't even make you free either. It's all about how much income's coming in to pay for your lifestyle, you know? And, and that's something that even entrepreneurs, even though I know entrepreneurs get it because, you know, you are going after that destiny.

6:05You want that freedom as well, like I did and still do. But the thing that I see is that many entrepreneurs are in their own rat race. You know, they may not have jobs, but sometimes their business owns them, doesn't it? And that's why it's so important that you've got to make sure that you really not just, you know, not just work hard in your business and build it up, but also make sure that you have other streams of income coming in so that you can work because you want to, not because you have to. Fire Nation, this is a very important concept to understand because at the end of the day, all entrepreneurs set out to make money.

6:40But I want to talk about how they actually lose money most of the time. So let's really talk about this because this is key because a lot of people aren't financially where they think they should be or need to be. And this topic is an important one. It sure is, man. Like I'll tell you that the number one way that people lose money, especially entrepreneurs, is really in watching their money, right? I mean, we are so amazing and trying to drive business and try to earn money. But what about keeping it, right? How do we keep from losing that money? And one of the biggest, there's a couple of them.

7:14One is that I see often is that entrepreneurs are not really tracking their money and they're not trying to focus on profit. Many focus on the top line, right? The revenue, what am I making, but not what am I keeping. And it doesn't require you to have to be cheap. You know, understand that you don't have to be someone who has to bootstrap everything. You don't have to be dirt cheap and hire nobody. and just do everything yourself. That's not what I'm saying. But really focus on how do I make my business more profitable? Two great books that I read that really helped me with that. One is called Profit First by Mike Michalowicz.

7:45I'm sure many of you guys have heard of him. Even had him on my podcast recently too. And then another one that I read that actually helped me explode my business, even after you and I did a show. This is our fourth show we've done together. But even after I did another show with you, I read another book of his called The Pumpkin Plan, which got me to really focus on what were my most profitable, like what were the best marketing streams that I was using, marketing strategies that were bringing in the most business or the best clients into my business. When I started to do that, I actually started to cut off all this unnecessary fluff, things that weren't really working from the marketing side and freed up a ton of cash flow to where I create a lot more profit.

8:25And here's the thing I'll tell you, because when you have more profit, you have more options, right? When you create more cash flow that way. Cash flow creates options. When you have more options, you have more freedom. And what happens is that many entrepreneurs end up losing. One of the biggest losses they have is the money they never were able to see in the first place. All because they were focusing too much on doing everything, throwing spaghetti on the wall versus just what's that? Those one or two activities that bring in the vast majority, maybe 90 % of your business. If you go there, focus everything on that, like double down.

8:58Like I realized with me, John, like my podcast, my money ripples podcast that was my most profitable source you know i'm just getting past my 10 year anniversary right now and and almost 90 of my clients come from the podcast so why in the heck would i be spending like you know hundreds of thousands of dollars on movies and and uh i don't know you know paid ads and everything else what it doesn't really drives in the worst leads anyways why not just double down and put more emphasis on building and growing that podcast. And that's the same thing for everybody here too. It's like you all have your own different ways of doing it.

9:31It could be local networking. If you're more of a, you know, brick and mortar type business, if you're more virtual, I'll tell you brick and mortar, you know, I'm a virtual company as well. Brick and mortar doesn't really help me. You know, like I don't, I don't doing local networking. It's kind of a waste of time for me for the most part. But you know, there are a lot of people that do have affiliate type of relationships that can have that can create a lot more money. And so find those profit centers that really create the most revenue with the least really, and the best clients, I'll add to the best clients or customers least, uh, and also least expense.

10:03In Fire Nation, I think it's really critical, very important to understand that Peter Drucker quote, what gets measured gets improved. And so few people are actually measuring anything. And if you can't measure something, then you're not going to know what's working and what's not, and then you can't improve with what's working. So you can really double down and go that 80, 20 rule and just continue to refine the major profit centers in your business. And we have a lot more to talk about around this topic when we get back from thinking our sponsors. Being a small business owner comes with a lot of challenges, especially now.

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12:34Entrepreneurs get in their own rat race and it could be a multiple seven or eight figure rat race they're stuck in. But I have a lot of friends that, you know, even though they're multimillionaires, just like I am, one thing that happens is that they get stuck. They get trapped in their business. And some people think that the answer is just trying to sell off the business, you know, build it up enough and then you can sell it off and you're free. But that doesn't have to happen. You know, if you build in systems in your business to where you can be able to buy your time back and, you know, you could definitely do that.

13:02And I recommend doing that, too. But here's one that you don't often hear in the entrepreneur space is besides just building systems in your business to try to buy your time back, which usually means more people, more systems, and it could create more complexity in your life, too. you could also create passive income outside of your business. I'll tell you one of the most powerful things. In fact, one of the things that actually got me to make more money in business is when I didn't need to make money in my business. It's kind of like Harry Potter and the Sorcerer's Stone. If you watch that movie or read that book, and the spoiler alert if you've never watched Harry Potter, but when Harry ends up getting the stone, the only reason he got the stone and Voldemort couldn't is because Harry didn't really want it.

13:42And it's like that in business. You know, when, when somebody needs the business, I call it business breath, right? When you need it so desperately that's, that you're throwing business cards at people left and right, people don't want to do business with you. You will do five times the work to get the same effort you could be having if you just relaxed and slowed down a little bit. And especially if you knew you didn't have to make money from that customer or that client. And so what I've done is like, I take the profits of my business. Some of it does reinvest in my business. Don't, mistake that.

14:12I do reinvest it. But if you reinvest 100 % of your money back in your business, you are not profitable. You are just spending more money in your business and you will constantly be trapped there. You've got to take profit home. And when you take that profit home, then what I do is I buy real cash flowing investments. No, I'm not buying crappy Bitcoin or anything like that or gambling it in NVIDIA or Apple stock or anything like that. No, I go and buy real cash flowing investments like real estate. And it doesn't have to be something where you have to spend a lot of time because let's be honest, we're too busy doing what we love doing in our business to want to spend a lot of time playing around and trying to invest.

14:50And so I invest with people that are real estate investors. And now even if I buy a real property, like I can buy, I bought a rental, for example, for$32 ,000 down payment. And right now after six years, it's currently paying me over 8 ,800 bucks a year, right? If you just had 12 of those same properties, that would end up If you average that out, that would be over$100 ,000 a year just that alone. I also lend my money out. I become the bank for real estate investors. I can get paid between 10%, 11%, 12 % plus, sometimes 15 % from what's called hard money lending, where I lend money. I become the bank.

15:26Because honestly, real estate investors are really entrepreneurs, and they don't want to have to deal with the bank sometimes, just like we don't. And so they'd much rather just do a private loan with you. you could actually have the property back it up to make money. I'll tell you, even business partnerships. I'm in a business partnership where I'm a 70 % partner, and then the people that do all the work are 30%. I finance it all. So I finance, we're doing what's more like raw land investing. So we buy and then sell raw land to somebody, and then we become the bank where they pay us back principal and interest, just like a mortgage payment, right?

16:00Now, Chris, you're actually starting to edge into this. So I just want to dive in fully because I know that my audience loves real world examples. So take a second and give us one or two stories of actually increasing cash flow, this passive income idea. Let's really get into the details on, let's say, two quick stories. That's what I was talking about here with this raw land partnership that I'm in, right? I mean, I do nothing with it, but they're literally buying raw land at a discount. They buy it at wholesale, turn out and sell it to somebody at retail, and then I get paid the cash flow, the monthly income that comes from that, their monthly payment.

16:35So for example, we bought this piece of property for like 25 grand. And when I say we, I didn't do anything. They did it, but bought it for 25 grand, turned around and sold it to them for 80 grand. And we're making over $800 a month on that. So that's 10 ,000 a year for my 25 grand. That's awesome. That's a 40 % rate of return on my money. And so already I've put in 400 grand. We've reinvested the cash flow in this business to where in two and a half years is pay me over$11 ,000 a month. Again, I have so much passive income coming in that I could shut down Money Ripples today and be just fine.

17:09But what's awesome is that because I have those streams of income coming in, just like I mentioned with my rental property that is paying about$750 a month right now, and I've got all these things coming in, the cool thing is now I'm in business for a mission, not for a commission. right? I'm in business because I'm there to actually serve and help people. And ironically, I make more money in my business because I don't need the money. Does that make sense? Totally makes sense to me. Give us one other example. Yeah. Another example. I had a friend that said, Hey, I need to try to help sell off my apartment building.

17:45I need three more months of cash to keep it float. I need to borrow some money. You know, I had 50 ,000 bucks. He asked for 50 ,000. He said, Chris, I'll pay you 15 % for that money. I said, great. So I lent him the money for three months and then he paid me back the 50 ,000 plus the, you know, about 4 % of interest to go with it for that 15 % a year. And voila, I've got more cash that can then go and use again. And so it's kind of like people talk about like, you're always here, these crappy financial advisors talking about compounding interest. I like compounding income, right? I like income where it could compound itself because as I get the interest back now that 50 ,000 became$52 ,000, I can then do it again and make more money off of that.

18:24Right. And, and that's the thing is like, I love growing my money in my business and I love growing it in real actual assets like real estate, just like that. And so that's the thing is that don't just focus on trying to build money only in your business, but as you get profits from your business, make sure instead of throwing away in crappy 401ks and retirement plans where you can't touch it till you're 60 ,000 years old, you want to actually retire young and rich. The great way to do that is to take that cash and then get it to work for you. Heck, You get$100 ,000, you make 1 % a month on it.

18:56There's another lending thing that I did where I lent money to an investor that paid me 1 % a month. That$100 ,000 makes me$1 ,000 a month each and every month. Again, I do nothing. It's truly passive. Not like a lot of the people you see out there in marketing and talk about passive income, but really you have to start another crappy Amazon dropship business or something else where you've got to put in all this labor and work. That's not it. You've got to be doing something where you are hands off. You can still focus on your business, still make that your number one profit center, but then make sure you take some of that profit too, to then generate multiple streams of income.

19:31So if we get another crappy 2020, they decide you're not, you know, you're not, you know, what was the word they used? Like a non-essential business, right? You know, you get something like that kind of crap happening again. You know that you're going to be safe and you're okay. Fire Nation, so many lessons learned here. We talked about the mistakes that entrepreneurs make, how they lose money. We talked about passive income opportunities, how you should be looking at these opportunities. Chris, if you want Fire Nation to walk away with just one piece of knowledge from today's conversation, what is that one thing?

20:03Don't reinvest everything you have in your business. Keep the profit. Get as profitable as you can in your business. Then keep some of that profit to generate multiple streams of passive income so that you work because you want to, not because you have to. And if Fire Nation wants to connect with you, learn more from you, what is your call to action for Fire Nation today? Follow anything Money Ripples. You can go to moneyripples.com. You can follow our Money Ripples podcast or social media is all at Money Ripples. Fire Nation, you're the average of the five people you spend the most time with.

20:32You've been hanging out with CM and JLD today. So keep up the heat. For links to everything we talked about, visit eofire.com. Type Chris in the search bar. The show notes page will pop right up. And Chris, thank you for sharing your truth, your knowledge, your value with Fire Nation. For that, we salute your brother and we'll catch you on the flip side. Hey, Fire Nation, a huge thank you to our sponsors and Chris for sponsoring today's episode and Fire Nation. Over the last decade, I've interviewed more than 4 ,000 of the world's most successful entrepreneurs and I created a revolutionary 17-step roadmap to your financial freedom and fulfillment and I put it all into my first traditionally published book, The Common Path to Uncommon Success, which is personally endorsed by Seth Godin and Gary Vaynerchuk.

21:15The common path to uncommon success is the step-by-step guidance that you need to achieve the lifestyle of your dreams. Visit UncommonSuccessBook.com and I'll catch you there or on the flip side. The next wave, your chief AI officer hosted by Matt Wolf and Nathan Lanz is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. Matt and Nathan are leading AI creators in your guiding light in the AI and technology frontier. AI technology is transforming the way we do business and the media landscape is fragmented. The Next Wave strives to be the leading podcast on AI technology and how you can apply it to growing your business.

21:52Listen to The Next Wave wherever you get your podcasts.