Time, Money and Lifestyle
Note – I wrote this article in 2009 following the Global Financial Crisis and titled it ‘Time, Money and the Physical Preparation Coach‘. Distributing it via PDF in email and as a stand alone website. It’s as relevant now over a decade on, as it was then.
You’re living your ‘dream’, physically preparing athletes as a coach. Doing what you love. What’s that saying?
‘If you do what you love and get paid for it, you’ll never work a day in your life’.
As I type this at 7:54pm on a Friday night, prior to meeting a new group of athletes for their first dedicated stretching session, I’ve decided to share a different perspective for the physical preparation coach, one that you’ll be all too familiar with unless you’re still in your honeymoon coaching period. If you are still honeymooning put this article down and come back and read it in 5-10 years time!
Everyone on the planet earns money one of two ways, via the provision of a service and/or the sale of a product. Coaching is a service-based industry this includes all types of coaching. This also applies to personal trainers in addition to any other vocation that trades their time for money such as a chiropractor, physical therapist, massage therapist, naturopath, receptionist, engineer, accountant, photographer, journalist, electrician, etc.
Here is where the education will begin for most. At school we’re never taught what I’m about to share with you and if it was taught, I must have missed school on that day! It was never mentioned during all my years of school, college and university, or in any of the sports science subjects I studied.
It was half way through my university degree when I started my coaching business and these concepts I’m about to share with you never once came to mind, nor had anyone I knew at the time taught them, mentioned them or demonstrated that they were incorporating them into their own businesses.
At the time I was incredibly content just running on excitement, getting my business off the ground and completely oblivious to these what I now call business fundamentals!
Around five years into my calling I was somewhat forced to take stock. My brother and best friends decided to go overseas to live, work and travel for a few years. I too could have gone, I wanted to go but felt as though my hands were tied. I’d worked incredibly hard building up my business to date (being self-employed) that I couldn’t justify throwing it away only to have to start from scratch again in a few years time when I returned home to Australia. Add in the unique learning opportunities I was having at the time and the teams/organisations I was working with, I knew I needed to see these opportunities through for at least the next five to seven years (uninterrupted) to test my hypothesis on how to train, how to lead athletes/teams to win and build my skills with individual, squad and team sport athletes.
Going away for a few years at that stage of my professional development was just out of the question. This experience forced me to take a strong look at how I used my time, how I earned my income and at other people in my industry whom were further along in their careers. I asked myself, ‘is that where I want to end up’?
I learned that school and university teaches us to become ‘employees’ or ‘technicians’, to use the words of Michael E Gerber, author of The E Myth. And later on through studying Robert Kiyosaki’s book The Cash Flow Quadrant, business started to make a lot more sense.
This is what I learnt.
Lesson #1: Time
Looking at my time, I had limited control over it (if any). I was working when I should have been sleeping (both morning and night). I was spending my time with people I wouldn’t usually choose to spend my time with and I was giving away time in my life to make someone else’s life more convenient for a few extra dollars. After taxes, the built in costs of doing business, loss of lifestyle etc. I thought – am I crazy?
But the most crazy of all was that 100% of my income was derived from trading my time for money. Time is the most limited resource in the world; the only thing you can’t bank or gain back is time. We’ve all only got 24 hours a day and once time is gone, we simply never get it back. Money on the other hand I realized is replaceable, can come from multiple sources and can be lost and acquired again and again.
It’s been said that trading our time (a limited resource) for money (an unlimited resource) is the craziest transaction/idea/exchange imaginable! Just because most people in the world do this, didn’t mean I had too. Plus, I didn’t know anyone with self-made wealth who had a dominantly ‘earned’ income, across all industries.
Decision made… NO MORE TRADING MY TIME FOR MONEY, unless I choose too and it was on my terms.
How many physical preparation coaches or personal trainers do you know who can genuinely do this? Choose who they work with, when they work and do so on their own terms?
Here’s where the dynamics of my business started to shift.
Lesson #2: Income
Next, I looked at my income. It was good, but not even close to where I believed it could be, nor what I was worth. If I relied on trading my time for money alone, there were far too many hurdles in the way of the income I desired. For example:
1. Only getting paid when I work. No work equaled, no income.
2. My income was capped/limited. Even if I was to physically work 24/7 (a physical impossibility) that’s all the time there is. Therefore, my income was limited to the amount of time I could physically work and my hourly rate.
3. Theoretically, service providers can just increase their hourly rate to increase their income right? This is only accurate up to a point, I encourage you to test it out for yourself to come to your own conclusions about your perceived worth in the market place. The other challenge is not everyone values our services the same and if bills need to be paid, what do you do – say no and earn no money at all?
4. What if the coach/organization decreases your contact hours with the athletes? Or you have clients going away or you get sick. These all impact your weekly income as well as your long-term financial security.
5. Once you stop physically working with athletes (they all retire at some point!) or you stop working for a sports team, what do you to do? Jump back on the coaching merry-go-round with another one, over and over again?
6. As an industry, few coaches/trainers get paid what they are worth. The majority will undercut or do it cheaper just to get the work and put food on the table.
Clearing these hurdles did not interest me. Instead, I needed to change the game I was playing in and learn some new rules.
The next lesson opened my eyes even more…
There are only three types of income in this world, earned income, leveraged income and passive income.
Earned Income: Trading your time for money.
Leveraged Income: Doing the work once and being paid on that unit of work forever or for a long time. Often referred to as ‘set and forget’.
Passive Income: Being paid irrespective of whether you work or not.
When I learned about these three income streams in the book ‘Paycheck to Passive’ I got excited! I only found out about them because I was looking for more choice in my life. It was reading that lead me here, and when I learnt anyone could build multiple streams of income starting out part-time, while still working full-time, with the plan to walk away from working full-time, I got busy doing exactly this! I started adding additional streams of income part-time.
Leveraged income is what the author of a book gets or a music band gets. The author/band does the work once (writes the book/records the album) and gets paid every time the book/album sells, forever!
If it’s a great book or album, he/she will receive great long-term income. If it stinks, so will the income (if any) that comes from it.
Traditionally leveraged income allows anyone to leverage or benefit from other peoples labour and/or from capital. These days [updated 2020] thanks to code, we can also benefit from ‘product leverage’ . As explained by Naval, product leverage is permission-less and where much of the new wealth in the world comes from. The key to product leverage is there is no marginal cost of replication. Copies can be stamped out or used at zero ‘cost’ to you in anyway.
It’s important to note, initially leveraged income requires you too work productively – often – before you get paid. You’re paid based on your productivity, not on how much work you do and that is one of the biggest differences between earned, leveraged and passive incomes.
Another significant difference is your income potential becomes unlimited. Your market can be typically global, unlike an earned income where your market is generally based on where you are geographically trading your time for money. For most this is within a driving radius from where they live.
Additionally leveraged and passive incomes are residual, meaning they can continue paying you, long after you stop working. This is what I was after!
Let’s experiment, where are you currently?
How long could you live off the money you’ve made/acquired if you stopped working today?
Projecting forward, you’d need $2.5 million dollars cash in the bank at 2% return or $1 million dollars in productive assets at 5% dividends/return to receive just $50,000 a year (approx. $1000/week) in passive income. Keep in mind that in 10, 20 and 30 years from now $1000/week may or may not be a lot of money with the possibilities of inflation/hyper-inflation/deflation and the likely rising cost of living. Would this cover your weekly expenses? For an average family of four, it’s doubtful.
With $2 million dollars net in productive assets this would equate at 5% return to approx. $100,000 per year, or $1923/wk. If you wanted a higher standard of living, you’d need an even greater net asset position, or risk a greater rate of return…
Does what you’re currently doing allow you to have/acquire $2+ million in cash or productive assets? How long would this take you to achieve? Does the opportunity even exist?
Lesson #3: Others in the Industry
Finally, I looked at other physical preparation coaches in the industry and concluded I didn’t want to be part of the coaching merry-go-round. Nor did I want to be part of the rat race; working 40+ hours a week for 40 years and ending up dead or dead broke!
Moving beyond physical preparation coaches and now including all occupations, statistically in Australia approx. 80% of people (4 out of 5 people) at age 65 (and it’ll be 67yo in 2023), are financially dependent on a full or part pension after 40 plus year in the work force. Just 20% (1 in 5 people) are able to fully self-fund in retirement1.
For me the lesson became crystal clear – make choices and take the actions of the minority. If I find myself on the side of the majority again, change quickly!
Getting Started: Emptying my Cup!
So, how do you do this? It’s simple, but not easy.
It’s at this point – if you’re committed to moving from paycheck to a more residual income like I was you must empty your cup to allow new thoughts, beliefs and actions in. You cannot solve a problem with the same thoughts; beliefs and actions that created you’re current situation, in the first place. This is how I started.
I encourage you to come to your own conclusions based on your own experiences in building leverage. This is not a theoretical or textbook exercise; in business you can earn while you learn. So few people have any positive leverage in their lives, so be careful and cautious as to whom you seek guidance from or listen too.
10. Essential Rules:
Today, some of my values are health, time, money and contribution. There are many who out earn me, but few who have the daily time flexibility/freedom, the choice in coaching and the leveraged income stream that pays weekly, allowing me these wonderful choices in life each day.
To learn more about what I looked for to identify a truly leverage opportunity, below are 10 points. Going through these I encourage you to ask yourself:
“Is what I’m doing now or what I plan to do, meeting these requirements?”
1. Is it profitable or has the potential to be?
Turnover runs a distant second to profit. As the late great Jim Rohn said ‘profits are better than wages’. For example, having a fancy facility and large overheads cuts into your profit, does the potential exist for you to reduce or remove these and still increase your overall leveraged/passive income?
2. Is it leveraged?
If we want any type of time freedom in life, we must have leverage working for us in some way. According to Naval Ravikant there are 3 types of leverage:
1. Labor – This is people working for you.
2. Capital – This is money working for you.
3. Product – This is product working for you.
The oldest forms of leverage are labor (how many employees work for you, as an example) and capital (how much money you have to invest for example).
Both are permission-based leverage, meaning you need others to help achieve these things.
Product leverage is permission-less and where most of the new wealth in the world comes from.
The key to product leverage is there is no marginal cost of replication. Copies can be stamped out or used at zero ‘cost’ to you in anyway.
Product includes all things code and the seamless sale of products online, at no marginal cost to you. For example 16 years ago (at the time of updating this) I set up an arrangement and have received payment from this once a month transaction for the past 16 years. This is leverage.
3. Is it residual?
Will the income continue to come in after you stop working for it, get sick, retire or die? (One or more of these things will happen…)
4. Gives you time freedom?
Time is more valuable than money. I would rather have an income that gave me time freedom than one that makes me time poor. How about you?
5. Is it willable and or sellable?
Can you pass it on like any other asset so that your inherit ants receive this income? This means your family’s financial future can be set in the event of your untimely passing. Think multi generational, will your income provide you and you’re family income in a decade, two decades or five decades from now?
6. Does it have global income potential?
If your business relies wholly or pre-dominantly on one countries economy, you are trapped by the economic cycle of that country. Does what you’re doing right now depend on and is limited on only one countries economy? Does the genuine potential exist for expansion and growth into other countries?
Could you expand easily into Asia for example? Can you operate in more countries than just the one you live in and secure your business by benefiting from other economies if/when your countries economy is challenged?
7. Robert Kiyosaki, Tony Robbins, Jim Rohn, Les Brown, Bob Proctor, Denis Waitley, Paul Zan-Pilzer, Jack Canfield, Robert Allen, FORBES Magazine, Stephen R. Covey and others recommend your current business model, industry and/or products?
This is a no brainer. And in these current economic times many of them recommend certain businesses and business models as your #1 option to secure your income now and well into you’re future.
8. Is your income from an industry sector that is growing or shrinking?
Today, middle management and many low skilled jobs are being wiped out by disruptions in technology and outsourcing work off shore. Think Uber and AirBnB for example. These technology platforms are the new ‘norm’ and every inefficient business model will be replaced by a model of greater efficiency. As Amazon founder Jeff Bezos said ‘your profit margin in my opportunity’. This paradigm business is only accelerating with time. Are you operating in a business model that’s got product leverage, zero net marginal cost of replication and embracing these changes?
9. Are you helping others as you help yourself?
Are you doing something that can be of benefit to others? Buckminster-Fuller said “Your greatness may remain obscure to yourself, but it will become apparent if you commit yourself to the highest advantage of others”.
Does what you do everyday heal the world or steal from the world? Is it in the highest and best good of others?
“By helping others receive what they want, you can have everything you want.” Zig Zigler
10. Is it making you healthier/fulfilled?
Finally and most importantly, you can have all the money and time in the world but without your health to enjoy it, how enjoyable is all you’ve achieved? Hence the saying, ‘the greatest wealth is health’.
Is what you are doing exposing you to improving your health now and in your future? Health is influenced by many factors, including nutrition, supplementation, fulfilment, time freedom, enjoyment, who we associate with, the environments we find ourselves working in, recovery from training and the list goes on!
I hope you’ve enjoyed these insights and experiences.
My hope is that you’ve become informed, educated and perhaps even inspired?!
PS – check out part two of this article, a video called ‘The Business of Getting Paid More Than Once’ (https://youtu.be/EbkNo_po1BI) to watch it.
Reference:
1. http://www.ncoa.gov.au/report/phase-one/part-b/7-1-age-pension.html
