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These are the user uploaded subtitles that are being translated: 1 1 00:00:00,270 --> 00:00:01,949 ROI leadtime are 2 2 00:00:01,950 --> 00:00:03,599 the two top factors that most sellers 3 3 00:00:03,600 --> 00:00:05,219 ignore and why most sellers 4 4 00:00:05,220 --> 00:00:06,730 have cashflow issues. 5 5 00:00:06,840 --> 00:00:08,699 And it's the number one reason why I was 6 6 00:00:08,700 --> 00:00:10,799 able to scale from zero to six million in 7 7 00:00:10,800 --> 00:00:11,050 six months. 8 8 00:00:11,460 --> 00:00:13,259 If I wouldn't have had extreme 9 9 00:00:13,260 --> 00:00:14,129 detail 10 10 00:00:14,130 --> 00:00:15,364 and attention to my ROI 11 11 00:00:15,365 --> 00:00:17,219 and my leadtime I 12 12 00:00:17,220 --> 00:00:18,709 may have only made three hundred thousand 13 13 00:00:18,710 --> 00:00:20,639 instead of three million in 14 14 00:00:20,640 --> 00:00:22,259 that period of time because we'll 15 15 00:00:22,260 --> 00:00:23,899 find out why in this video. If you have any cash all 16 16 00:00:23,900 --> 00:00:25,529 issues you can really solve it by 17 17 00:00:25,530 --> 00:00:27,166 just honing in on your ROI 18 18 00:00:27,420 --> 00:00:28,280 and your leadtime 19 19 00:00:28,920 --> 00:00:30,989 these are the two main levers 20 20 00:00:30,990 --> 00:00:32,330 that you're going to be pulling to get success. 21 21 00:00:32,580 --> 00:00:34,439 Now the 22 22 00:00:34,440 --> 00:00:37,240 one thing that is dependent on this is being having 23 23 00:00:37,470 --> 00:00:39,269 the ability to add more products and 24 24 00:00:39,270 --> 00:00:39,520 knowing how to be successful. 25 25 00:00:42,870 --> 00:00:43,140 But even so if you're not able to add more products 26 26 00:00:43,141 --> 00:00:44,160 faster and you're still learning 27 27 00:00:44,161 --> 00:00:46,910 and ROI is 28 28 00:00:47,580 --> 00:00:49,139 going to give you the opportunity to have way 29 29 00:00:49,140 --> 00:00:51,599 less risk compared to your expected 30 30 00:00:51,600 --> 00:00:51,699 outcome. 31 31 00:00:51,700 --> 00:00:53,759 So we covered that in 32 32 00:00:53,760 --> 00:00:55,249 the expected value video where we showed that 33 33 00:00:55,250 --> 00:00:55,890 if something 34 34 00:00:55,891 --> 00:00:57,759 with the wristbands it could pay 35 35 00:00:57,760 --> 00:00:59,309 off 38 X 36 36 00:00:59,310 --> 00:01:00,959 over two years and your worst case scenario was 37 37 00:01:00,960 --> 00:01:02,639 your last 10000 best 38 38 00:01:02,640 --> 00:01:04,310 case you make 38 40 grand. 39 39 00:01:04,680 --> 00:01:06,319 So we're going to illustrate why 40 40 00:01:06,320 --> 00:01:08,399 lead time is 41 41 00:01:08,400 --> 00:01:08,650 the most important right now. 42 42 00:01:10,020 --> 00:01:11,609 So here's the question What would you rather have 43 43 00:01:11,610 --> 00:01:12,879 a million dollars or would you rather get a penny 44 44 00:01:12,880 --> 00:01:14,579 and then every single day you 45 45 00:01:14,580 --> 00:01:15,839 get to double that Penny. 46 46 00:01:15,840 --> 00:01:17,099 And so you go off somewhere 47 47 00:01:17,100 --> 00:01:19,079 and you know day one you have 48 48 00:01:19,080 --> 00:01:20,330 one penny. Day 2 you have two pennies. 49 49 00:01:21,050 --> 00:01:21,869 Day three of four pennies 50 50 00:01:21,870 --> 00:01:22,740 and so on 51 51 00:01:22,741 --> 00:01:22,990 and so on. 52 52 00:01:23,440 --> 00:01:24,929 Well I 53 53 00:01:24,930 --> 00:01:26,729 would rather have the penny than 54 54 00:01:26,730 --> 00:01:29,009 having the million dollars because if we 55 55 00:01:29,010 --> 00:01:31,560 do the math out here at 56 56 00:01:31,890 --> 00:01:33,690 the end of 31 days you 57 57 00:01:33,750 --> 00:01:35,010 end up having 10 million dollars. It's pretty crazy 58 58 00:01:35,011 --> 00:01:37,199 growth. So this is all 59 59 00:01:37,200 --> 00:01:39,089 because of the when you get at least 100 60 60 00:01:39,090 --> 00:01:39,340 percent ROI. 61 61 00:01:40,000 --> 00:01:41,519 Now you're doubling 62 62 00:01:41,520 --> 00:01:44,759 your money every time and you go into more 63 63 00:01:44,760 --> 00:01:45,434 of an exponential growth curve so the higher your 64 64 00:01:45,435 --> 00:01:45,685 rOIthe 65 65 00:01:47,250 --> 00:01:47,690 faster you grow. 66 66 00:01:47,970 --> 00:01:49,809 But that doesn't matter if 67 67 00:01:49,810 --> 00:01:51,329 your lead time isn't as 68 68 00:01:51,330 --> 00:01:53,039 fast so let's say on 69 69 00:01:53,040 --> 00:01:53,290 this. 70 70 00:01:53,740 --> 00:01:55,379 So let's say this one on the left was 71 71 00:01:55,380 --> 00:01:56,810 where you doubled every day. 72 72 00:01:57,030 --> 00:01:58,709 But on the left let's 73 73 00:01:58,710 --> 00:02:00,389 say you just doubled every 74 74 00:02:00,390 --> 00:02:02,799 two days. OK so let's say your lead 75 75 00:02:02,800 --> 00:02:04,349 time was twice as fast to the time of two days 76 76 00:02:04,350 --> 00:02:06,649 instead of on the left where 77 77 00:02:06,650 --> 00:02:08,609 you have one. Well you end up only 78 78 00:02:08,610 --> 00:02:10,119 having three hundred twenty seven dollars 79 79 00:02:10,120 --> 00:02:11,510 at the end of 31 days. 80 80 00:02:11,970 --> 00:02:13,859 It's because it's all about turnaround 81 81 00:02:13,860 --> 00:02:15,050 time at the end of the day. 82 82 00:02:15,150 --> 00:02:16,739 So you 83 83 00:02:16,740 --> 00:02:18,779 just end up hitting this crazy exponential 84 84 00:02:18,780 --> 00:02:20,289 growth curve the better you get your are a 85 85 00:02:20,290 --> 00:02:21,289 Y 86 86 00:02:21,290 --> 00:02:22,859 and the better that you 87 87 00:02:22,860 --> 00:02:24,459 get your lead time. Now let's say that our 88 88 00:02:24,460 --> 00:02:25,700 lifetime was two days 89 89 00:02:25,730 --> 00:02:27,399 but we still were like 90 90 00:02:27,400 --> 00:02:29,119 let's say I increase our y 91 91 00:02:29,120 --> 00:02:30,149 on this other side 92 92 00:02:30,150 --> 00:02:31,529 and we could change that graph. 93 93 00:02:31,530 --> 00:02:33,029 Now if we take a look here 94 94 00:02:33,030 --> 00:02:34,639 on the second column now 95 95 00:02:34,640 --> 00:02:36,389 right here I've changed 96 96 00:02:36,390 --> 00:02:38,609 this to instead have a 300 97 97 00:02:38,610 --> 00:02:40,199 percent ROI instead 98 98 00:02:40,200 --> 00:02:41,030 of a 100 percent ROI 99 99 00:02:42,000 --> 00:02:43,559 that what that 100 100 00:02:43,560 --> 00:02:44,962 actually means is a 300 percent ROI 101 101 00:02:46,020 --> 00:02:47,180 means you multiply your money by four. 102 102 00:02:47,920 --> 00:02:49,390 So for every dollar you put in and you get back four. 103 103 00:02:49,720 --> 00:02:51,269 And then when you put in 104 104 00:02:51,270 --> 00:02:53,179 four dollars you end up getting back Sixteen 105 105 00:02:53,180 --> 00:02:54,849 okay. And you made so 106 106 00:02:54,850 --> 00:02:56,360 sixteen minus four. 107 107 00:02:56,530 --> 00:02:57,460 You have twelve. 108 108 00:02:57,590 --> 00:02:58,120 OK. 109 109 00:02:58,620 --> 00:03:00,180 So that's three hundred percent ROI cause 110 110 00:03:01,000 --> 00:03:01,730 that's your profit 111 111 00:03:01,800 --> 00:03:03,900 and we're 112 112 00:03:03,930 --> 00:03:05,580 able to get the same amount of growth by. 113 113 00:03:05,610 --> 00:03:07,229 We're 114 114 00:03:07,230 --> 00:03:08,150 able to get the same amount of growth here 115 115 00:03:09,120 --> 00:03:10,920 and 116 116 00:03:12,750 --> 00:03:13,000 we end up at 10,737,000 regardless. 117 117 00:03:14,340 --> 00:03:16,199 But here's the difference. We literally had 118 118 00:03:16,200 --> 00:03:17,810 to make way more money 119 119 00:03:18,420 --> 00:03:20,119 and all we did was change the 120 120 00:03:20,120 --> 00:03:21,839 leadtime from two days to 121 121 00:03:21,840 --> 00:03:22,090 one day. 122 122 00:03:22,560 --> 00:03:24,149 Now I know this is kind of extreme where you can 123 123 00:03:24,150 --> 00:03:25,080 ever find a one 124 124 00:03:25,081 --> 00:03:25,939 or two day leadtime 125 125 00:03:25,940 --> 00:03:27,509 but this is just to prove out 126 126 00:03:27,510 --> 00:03:28,130 the point. 127 127 00:03:28,510 --> 00:03:31,280 So I focused extremely 128 128 00:03:31,500 --> 00:03:33,479 extremely hard on my business on 129 129 00:03:33,480 --> 00:03:34,410 increasing my ROI 130 130 00:03:34,820 --> 00:03:36,419 and lowering my 131 131 00:03:36,420 --> 00:03:36,950 lead time. 132 132 00:03:37,280 --> 00:03:39,659 So I want to illustrate that point by 133 133 00:03:39,660 --> 00:03:41,699 making the lead time half is 134 134 00:03:41,700 --> 00:03:44,159 short. We were able to make 100 135 135 00:03:44,160 --> 00:03:45,749 percent ROI instead of 300 136 136 00:03:45,750 --> 00:03:46,000 percent ROI. 137 137 00:03:47,280 --> 00:03:49,069 So that means like if you made you 138 138 00:03:49,070 --> 00:03:49,869 had a dollar 139 139 00:03:49,870 --> 00:03:51,779 and you made a dollar on 140 140 00:03:51,780 --> 00:03:53,639 profit on top of that the 141 141 00:03:53,640 --> 00:03:55,039 other one we had a dollar 142 142 00:03:55,040 --> 00:03:56,699 and we made three dollars a 143 143 00:03:56,700 --> 00:03:58,949 profit. So we literally made 144 144 00:03:58,950 --> 00:03:59,200 three times as much money 145 145 00:03:59,660 --> 00:04:01,379 but 146 146 00:04:01,380 --> 00:04:03,239 we grew to the same amount by just having half the 147 147 00:04:03,240 --> 00:04:04,829 lead time was as powerful 148 148 00:04:04,830 --> 00:04:06,509 is 149 149 00:04:06,510 --> 00:04:08,740 making three times as much profit. So one 150 150 00:04:09,180 --> 00:04:10,949 more way to explain this is obviously lead time is 151 151 00:04:10,950 --> 00:04:12,749 important because if 152 152 00:04:12,750 --> 00:04:14,389 you double your money but your lead times a year 153 153 00:04:14,390 --> 00:04:16,469 well then a dollar turns 154 154 00:04:16,470 --> 00:04:18,110 into two after one year 155 155 00:04:18,149 --> 00:04:19,949 and then it takes you two years just 156 156 00:04:19,950 --> 00:04:21,898 to get four dollars so obviously the 157 157 00:04:21,899 --> 00:04:23,729 shorter the lead time the 158 158 00:04:23,730 --> 00:04:24,650 way better that it's going to be. 159 159 00:04:24,750 --> 00:04:26,399 So I want to show you guys something 160 160 00:04:26,400 --> 00:04:27,929 kind of cool. So just just 161 161 00:04:27,930 --> 00:04:30,569 mentally remember 162 162 00:04:30,570 --> 00:04:32,329 that image of the penny right now and 163 163 00:04:32,330 --> 00:04:34,349 I'll show you something. All right. So this 164 164 00:04:34,350 --> 00:04:36,149 is literally what 165 165 00:04:36,150 --> 00:04:37,889 happened to my business. I had 166 166 00:04:37,890 --> 00:04:39,879 the exact exponential growth that 167 167 00:04:39,880 --> 00:04:41,309 this penny example does. 168 168 00:04:41,310 --> 00:04:44,230 And it was because I put every 169 169 00:04:44,250 --> 00:04:46,050 ounce of my energy and 170 170 00:04:46,350 --> 00:04:47,159 time and effort into decreasing my lead time 171 171 00:04:47,160 --> 00:04:48,672 and increasing my ROI. 172 172 00:04:49,030 --> 00:04:51,179 So I was constantly raising 173 173 00:04:51,180 --> 00:04:52,889 prices and 174 174 00:04:52,890 --> 00:04:54,629 making sure that I was always getting the highest possible 175 175 00:04:54,630 --> 00:04:55,110 ROI. 176 176 00:04:55,570 --> 00:04:57,440 It will combined with sales obviously 177 177 00:04:57,770 --> 00:04:59,369 but I was actually not 178 178 00:04:59,370 --> 00:05:00,879 making as much money in 179 179 00:05:00,880 --> 00:05:02,529 the short term because I knew 180 180 00:05:02,530 --> 00:05:04,350 that it was helping me grow my money 181 181 00:05:04,390 --> 00:05:06,209 grow everything exponentially. 182 182 00:05:06,210 --> 00:05:07,680 I know it seems kind of weird 183 183 00:05:07,720 --> 00:05:09,429 but we'll show you guys in a little bit 184 184 00:05:09,430 --> 00:05:11,019 here. Now if I go back to the sheet 185 185 00:05:11,020 --> 00:05:12,549 and we take a look at the 186 186 00:05:12,550 --> 00:05:14,319 typical private label first 187 187 00:05:14,320 --> 00:05:15,849 before I show you my example at 188 188 00:05:15,850 --> 00:05:17,619 the top here somebody will go 189 189 00:05:17,620 --> 00:05:19,299 and typical private label are about forty five 190 190 00:05:19,300 --> 00:05:20,919 day lead time fifteen days 191 191 00:05:20,920 --> 00:05:22,560 shipping so about 60 days 192 192 00:05:22,630 --> 00:05:24,579 in between every you know like 193 193 00:05:24,580 --> 00:05:26,059 you buys you essential 194 194 00:05:26,060 --> 00:05:27,669 you order and then 60 days later hits 195 195 00:05:27,670 --> 00:05:28,890 the Amazon warehouse. 196 196 00:05:28,990 --> 00:05:29,610 All right. 197 197 00:05:30,820 --> 00:05:32,379 So and you know maybe they're going 198 198 00:05:32,380 --> 00:05:33,939 and getting about one hundred nineteen percent 199 199 00:05:33,940 --> 00:05:34,190 ROI 200 200 00:05:34,960 --> 00:05:36,519 and essentially at the end 201 201 00:05:36,520 --> 00:05:38,259 of the day they're making a 40 202 202 00:05:38,260 --> 00:05:39,879 percent margin so they think wow this 203 203 00:05:39,880 --> 00:05:40,590 is great. 204 204 00:05:40,660 --> 00:05:42,159 But what they're missing out 205 205 00:05:42,160 --> 00:05:43,659 on is that ROI in that lead 206 206 00:05:43,660 --> 00:05:44,640 time aspect. 207 207 00:05:44,710 --> 00:05:46,779 So let's say instead 208 208 00:05:46,780 --> 00:05:48,579 you were to have a 180 percent 209 209 00:05:48,580 --> 00:05:50,259 ROI but a 43 210 210 00:05:50,260 --> 00:05:51,630 day cumulative lead time. 211 211 00:05:51,700 --> 00:05:53,259 Well you're able to get to four hundred 212 212 00:05:53,260 --> 00:05:54,840 and sixty thousand dollars 213 213 00:05:54,910 --> 00:05:56,589 instead of seventy eight thousand 214 214 00:05:56,590 --> 00:05:57,180 dollars. 215 215 00:05:57,280 --> 00:05:58,899 Now what happens if you were to have a 216 216 00:05:58,900 --> 00:05:59,559 three hundred 217 217 00:05:59,560 --> 00:06:00,922 and sixty seven percent ROI 218 218 00:06:01,600 --> 00:06:03,159 and you had the same 219 219 00:06:03,160 --> 00:06:04,860 forty three day lead time. 220 220 00:06:04,900 --> 00:06:06,909 Now it doesn't seem like much of a difference. 221 221 00:06:06,910 --> 00:06:08,529 Well it ends up being three 222 222 00:06:08,530 --> 00:06:10,239 point five five million 223 223 00:06:10,240 --> 00:06:11,829 dollars which is very accurate 224 224 00:06:11,830 --> 00:06:12,639 to what I did. 225 225 00:06:12,640 --> 00:06:14,439 These are very accurate of my numbers 226 226 00:06:14,440 --> 00:06:16,072 of three under 67 percent ROI 227 227 00:06:16,660 --> 00:06:18,030 and about my lead time. 228 228 00:06:18,940 --> 00:06:20,529 Alright so above in that example 229 229 00:06:20,530 --> 00:06:21,960 that I just showed you guys 230 230 00:06:22,210 --> 00:06:23,553 I was altering ROI 231 231 00:06:24,160 --> 00:06:25,599 And the margin 232 232 00:06:25,600 --> 00:06:26,619 and the lead time. 233 233 00:06:26,620 --> 00:06:28,269 OK. So that some people are like 234 234 00:06:28,270 --> 00:06:29,790 well come on you can't 235 235 00:06:30,160 --> 00:06:31,719 come on a course that makes sense. 236 236 00:06:31,720 --> 00:06:33,210 But let me just show you how 237 237 00:06:33,250 --> 00:06:34,989 you could by just altering lead 238 238 00:06:34,990 --> 00:06:36,579 time. It makes an extreme 239 239 00:06:36,580 --> 00:06:37,689 difference to your business. 240 240 00:06:37,690 --> 00:06:39,219 So let's say we're 241 241 00:06:39,220 --> 00:06:40,860 going and we're looking at something 242 242 00:06:40,900 --> 00:06:41,979 and we're talking 243 243 00:06:41,980 --> 00:06:43,080 with our manufacturer 244 244 00:06:43,180 --> 00:06:44,719 and you know he offers a 60 245 245 00:06:44,720 --> 00:06:45,116 day lead time 246 246 00:06:45,850 --> 00:06:47,559 or we could try 247 247 00:06:47,560 --> 00:06:49,059 to argue and get a 45 day 248 248 00:06:49,060 --> 00:06:49,740 lead time 249 249 00:06:49,870 --> 00:06:51,720 or you know we're just comparing between 250 250 00:06:51,730 --> 00:06:52,479 two people. 251 251 00:06:52,480 --> 00:06:54,129 And most people don't really like blink 252 252 00:06:54,130 --> 00:06:55,609 or think at this. OK 45 days 253 253 00:06:55,610 --> 00:06:57,159 whatever it's you know it's two weeks it 254 254 00:06:57,160 --> 00:06:58,740 doesn't make much of a difference 255 255 00:06:58,810 --> 00:07:00,219 and let's say it's the same margin 256 256 00:07:00,220 --> 00:07:00,960 and everything. 257 257 00:07:00,970 --> 00:07:03,009 Now I want to show you just how important 258 258 00:07:03,010 --> 00:07:04,569 that 15 days really 259 259 00:07:04,570 --> 00:07:05,269 is to your business. 260 260 00:07:05,270 --> 00:07:07,029 Now caveat you need to be able to add 261 261 00:07:07,030 --> 00:07:08,589 products fast like 262 262 00:07:08,590 --> 00:07:10,239 you need to be able to add products 263 263 00:07:10,240 --> 00:07:11,499 as fast as like you can. 264 264 00:07:11,500 --> 00:07:13,380 But most people they can't fund them 265 265 00:07:13,420 --> 00:07:14,829 as fast as they can come up 266 266 00:07:14,830 --> 00:07:16,329 and create them so let's 267 267 00:07:16,330 --> 00:07:17,889 go over to the spreadsheet 268 268 00:07:17,890 --> 00:07:19,389 now. Alright so we take a look at 269 269 00:07:19,390 --> 00:07:21,009 the spreadsheet right 270 270 00:07:21,010 --> 00:07:22,599 here what we have is this is 271 271 00:07:22,600 --> 00:07:24,300 the 60 day lead time up here 272 272 00:07:24,370 --> 00:07:26,239 and then we have the 45 273 273 00:07:26,240 --> 00:07:27,769 day lead time there 60 40. 274 274 00:07:27,770 --> 00:07:29,289 OK. Everything else is 275 275 00:07:29,290 --> 00:07:29,970 the same. 276 276 00:07:29,980 --> 00:07:31,659 But at the end of 180 277 277 00:07:31,660 --> 00:07:33,309 days this one is seventy eight thousand 278 278 00:07:33,310 --> 00:07:35,109 dollars and this one has one hundred 279 279 00:07:35,110 --> 00:07:36,930 and seventy one thousand dollars. 280 280 00:07:36,970 --> 00:07:38,529 Now that's over 100 281 281 00:07:38,530 --> 00:07:40,080 percent more profits 282 282 00:07:40,210 --> 00:07:41,709 comparatively to the other one 283 283 00:07:41,710 --> 00:07:43,680 just by getting 15 days lead time. 284 284 00:07:43,780 --> 00:07:45,309 OK guys so I am about 285 285 00:07:45,310 --> 00:07:46,869 to make the argument that 286 286 00:07:46,870 --> 00:07:48,540 you will make more money 287 287 00:07:48,880 --> 00:07:50,250 by making less money. 288 288 00:07:50,510 --> 00:07:52,290 OK. So let me show you here. 289 289 00:07:52,350 --> 00:07:53,919 So. So let's say OK we're gonna 290 290 00:07:53,920 --> 00:07:55,689 we're gonna argue for that 30 291 291 00:07:55,690 --> 00:07:57,480 day lead time instead of 45 292 292 00:07:57,490 --> 00:07:59,019 and we're gonna hey say hey you know 293 293 00:07:59,020 --> 00:08:00,699 we're gonna pay you nine 294 294 00:08:00,700 --> 00:08:01,949 dollars fifty cents per unit 295 295 00:08:01,950 --> 00:08:03,459 and said eight dollars fifty cents per 296 296 00:08:03,460 --> 00:08:03,990 unit. 297 297 00:08:04,120 --> 00:08:05,679 Now what we're able to do 298 298 00:08:05,680 --> 00:08:07,389 then is yeah we get less 299 299 00:08:07,390 --> 00:08:09,060 units for our amount invested. 300 300 00:08:09,070 --> 00:08:10,179 But guess what. 301 301 00:08:10,180 --> 00:08:12,069 Because our lead time is faster now 302 302 00:08:12,070 --> 00:08:13,590 we don't have to order as much. 303 303 00:08:13,630 --> 00:08:15,480 And what ends up happening is 304 304 00:08:15,520 --> 00:08:17,079 we get our money back a lot 305 305 00:08:17,080 --> 00:08:18,759 faster because that lead time 306 306 00:08:18,760 --> 00:08:20,349 you know imagine if it was just one day you'd 307 307 00:08:20,350 --> 00:08:22,179 only have to buy one day of inventory 308 308 00:08:22,180 --> 00:08:23,910 and you'd get it back the next day 309 309 00:08:23,980 --> 00:08:25,580 and then you could just keep refunding 310 310 00:08:25,630 --> 00:08:26,799 or you could keep doing it 311 311 00:08:26,800 --> 00:08:28,659 and you're not having to like float 312 312 00:08:28,660 --> 00:08:29,670 all of this money. 313 313 00:08:29,730 --> 00:08:31,629 Your risk is way reduced 314 314 00:08:31,630 --> 00:08:33,219 so we're actually able to make thirty 315 315 00:08:33,220 --> 00:08:34,779 thousand dollars more in that 180 316 316 00:08:34,780 --> 00:08:36,519 days by paying more 317 317 00:08:36,520 --> 00:08:38,048 per unit and making less per 318 318 00:08:38,049 --> 00:08:39,849 unit. It's all about having 319 319 00:08:39,850 --> 00:08:40,920 that capital 320 320 00:08:40,929 --> 00:08:42,428 and being able to invest it into 321 321 00:08:42,429 --> 00:08:43,577 more and more products. 322 322 00:08:43,900 --> 00:08:45,609 So let's just show how this really 323 323 00:08:45,610 --> 00:08:47,280 compounds out over time. 324 324 00:08:47,650 --> 00:08:49,179 So let's say that we extend 325 325 00:08:49,180 --> 00:08:50,670 this to 360 days 326 326 00:08:50,830 --> 00:08:52,539 all the sudden you end up making twice 327 327 00:08:52,540 --> 00:08:54,099 as much money as 328 328 00:08:54,100 --> 00:08:55,629 you did before by making 329 329 00:08:55,630 --> 00:08:57,309 less per unit because you're able 330 330 00:08:57,310 --> 00:08:58,749 to keep reinvesting it. 331 331 00:08:58,750 --> 00:09:00,249 So I hope that you guys kind of 332 332 00:09:00,250 --> 00:09:01,779 understand how you can make more money 333 333 00:09:01,780 --> 00:09:03,279 by making less money by 334 334 00:09:03,280 --> 00:09:04,920 having a faster 335 335 00:09:05,020 --> 00:09:05,860 lead time. 336 336 00:09:06,070 --> 00:09:07,028 So we could talk about why ROI 337 337 00:09:07,690 --> 00:09:09,189 is important kind of draw it out 338 338 00:09:09,190 --> 00:09:10,860 here. Let's show you more later. 339 339 00:09:10,900 --> 00:09:12,639 So let's say there's two scenarios 340 340 00:09:12,640 --> 00:09:13,650 a and b. 341 341 00:09:13,810 --> 00:09:15,369 One where you get 342 342 00:09:15,370 --> 00:09:16,641 a 70 percent ROI 343 343 00:09:16,990 --> 00:09:17,790 with a 344 344 00:09:18,190 --> 00:09:19,624 and then you get a 200 percent ROI 345 345 00:09:19,625 --> 00:09:19,875 with 346 346 00:09:21,550 --> 00:09:22,140 B. 347 347 00:09:22,300 --> 00:09:23,859 Okay. So what 348 348 00:09:23,860 --> 00:09:25,350 the difference here is 349 349 00:09:25,600 --> 00:09:27,309 is that you're able 350 350 00:09:27,310 --> 00:09:29,049 to when you sell all 351 351 00:09:29,050 --> 00:09:30,969 of a then 352 352 00:09:30,970 --> 00:09:32,499 you get all of you know you're 353 353 00:09:32,500 --> 00:09:33,900 able to reorder a. 354 354 00:09:34,120 --> 00:09:35,659 And then you have 70 percent left 355 355 00:09:35,660 --> 00:09:37,470 over. So you could put that money 356 356 00:09:37,660 --> 00:09:39,369 into a new product 357 357 00:09:39,370 --> 00:09:40,949 but it wouldn't have to 358 358 00:09:40,950 --> 00:09:42,789 it couldn't be as big of an opportunity 359 359 00:09:42,790 --> 00:09:44,619 as a because you didn't make 360 360 00:09:44,620 --> 00:09:46,650 back the whole amount of money 361 361 00:09:47,020 --> 00:09:48,639 as profit so you 362 362 00:09:48,640 --> 00:09:50,229 could have to go after a smaller 363 363 00:09:50,230 --> 00:09:50,979 opportunity 364 364 00:09:50,980 --> 00:09:52,560 or wait until longer. 365 365 00:09:53,020 --> 00:09:54,759 Now and B were able 366 366 00:09:54,760 --> 00:09:56,370 to fund two more 367 367 00:09:56,410 --> 00:09:58,080 product opportunities 368 368 00:09:58,090 --> 00:09:59,579 because we had a 200 369 369 00:09:59,580 --> 00:10:00,152 percent ROI. 370 370 00:10:00,600 --> 00:10:02,099 Most people think that 371 371 00:10:02,100 --> 00:10:03,740 margin is really important 372 372 00:10:03,780 --> 00:10:05,159 but it's really not. 373 373 00:10:05,160 --> 00:10:06,959 So if we take a look at margin 374 374 00:10:06,960 --> 00:10:08,639 verse ROI I really 375 375 00:10:08,640 --> 00:10:10,139 don't care about margin as 376 376 00:10:10,140 --> 00:10:11,757 long as I have a high ROI 377 377 00:10:12,300 --> 00:10:13,049 because think of it. 378 378 00:10:13,050 --> 00:10:14,639 If you're investing all of your 379 379 00:10:14,640 --> 00:10:16,229 money at any given 380 380 00:10:16,230 --> 00:10:17,849 time or you're investing money 381 381 00:10:17,850 --> 00:10:19,559 into a product you just care 382 382 00:10:19,560 --> 00:10:21,299 about how much did 383 383 00:10:21,300 --> 00:10:22,160 you put in 384 384 00:10:22,170 --> 00:10:23,720 and how much do you get back 385 385 00:10:23,880 --> 00:10:25,619 not how much of the total sales 386 386 00:10:25,620 --> 00:10:27,329 price. So like just a super 387 387 00:10:27,330 --> 00:10:28,889 simple example let's say 388 388 00:10:28,890 --> 00:10:30,389 it was one hundred dollars that you 389 389 00:10:30,390 --> 00:10:31,470 sell it for. OK. 390 390 00:10:31,710 --> 00:10:33,020 And you only get back 10 391 391 00:10:33,620 --> 00:10:35,299 What if you only paid a 392 392 00:10:35,300 --> 00:10:36,779 dollar you 393 393 00:10:36,780 --> 00:10:38,269 just 10 extra money go find a 394 394 00:10:38,270 --> 00:10:39,919 tent. Now you could 395 395 00:10:39,920 --> 00:10:40,170 have. 396 396 00:10:41,320 --> 00:10:42,050 Now you have nine dollars in profit. 397 397 00:10:42,051 --> 00:10:42,680 OK. 398 398 00:10:43,420 --> 00:10:44,999 And then you could now go find 399 399 00:10:45,000 --> 00:10:47,389 in theory like if you were 400 400 00:10:47,390 --> 00:10:49,909 to be able to find this now you could go find nine 401 401 00:10:49,910 --> 00:10:50,740 more of these opportunities. OK. 402 402 00:10:50,750 --> 00:10:52,159 And after a one month 403 403 00:10:52,160 --> 00:10:54,229 or like you know it just in this 404 404 00:10:54,230 --> 00:10:56,339 theoretical world in one month you turned 405 405 00:10:56,340 --> 00:10:57,169 one dollar into ten 406 406 00:10:57,170 --> 00:10:58,999 and then now you have all those 407 407 00:10:59,000 --> 00:11:00,589 nine dollars. OK so that's like 408 408 00:11:00,590 --> 00:11:02,349 one two three four 409 409 00:11:02,350 --> 00:11:02,657 blah blah blah 410 410 00:11:03,250 --> 00:11:04,789 and then you turn those into 411 411 00:11:04,790 --> 00:11:07,079 ones that grow into making 412 412 00:11:07,080 --> 00:11:08,320 you another ten dollars 413 413 00:11:08,470 --> 00:11:10,729 and those make nine 414 414 00:11:10,730 --> 00:11:12,209 more products you know and then pretty soon you're good 415 415 00:11:12,210 --> 00:11:13,189 at the frickin moon. 416 416 00:11:13,190 --> 00:11:14,800 OK. 417 417 00:11:16,030 --> 00:11:17,500 But that's a very unreal world. 418 418 00:11:17,590 --> 00:11:19,579 But just just trying 419 419 00:11:19,580 --> 00:11:21,859 to illustrate that margin does 420 420 00:11:21,860 --> 00:11:23,570 not matter unless you're in. 421 421 00:11:24,090 --> 00:11:25,579 You can't add 422 422 00:11:25,580 --> 00:11:28,089 more ideas if you can't add any 423 423 00:11:28,090 --> 00:11:30,169 more ideas and you have just a 424 424 00:11:30,170 --> 00:11:31,929 crazy amount of money and you have no cash 425 425 00:11:31,930 --> 00:11:34,759 flow issues then 426 426 00:11:34,760 --> 00:11:36,709 you might want to focus on increasing your 427 427 00:11:36,710 --> 00:11:39,409 margins and not 428 428 00:11:39,410 --> 00:11:39,660 just so much on these ROI 429 429 00:11:40,930 --> 00:11:42,769 opportunities because you can't add 430 430 00:11:42,770 --> 00:11:44,569 any more sales to 431 431 00:11:44,570 --> 00:11:46,579 your company that at all no 432 432 00:11:46,580 --> 00:11:48,079 matter what you do. That's the only time that 433 433 00:11:48,080 --> 00:11:49,156 margins should matter ROI if 434 434 00:11:51,200 --> 00:11:52,840 you're trying to grow ROI helps you grow. 435 435 00:11:52,970 --> 00:11:54,509 But if you're flat lined 436 436 00:11:54,510 --> 00:11:56,269 Well now 437 437 00:11:56,270 --> 00:11:58,159 you're focused on well how 438 438 00:11:58,160 --> 00:11:59,320 do I get more of that pie to be profit. 439 439 00:12:00,660 --> 00:12:03,019 But that's the only point and my guess is if you're 440 440 00:12:03,020 --> 00:12:04,270 watching this video you're not at that point. 441 441 00:12:04,550 --> 00:12:06,166 So focus on ROI To 442 442 00:12:07,070 --> 00:12:08,380 really grow your business fast. 443 443 00:12:08,640 --> 00:12:10,249 So I'm 444 444 00:12:10,250 --> 00:12:11,809 gonna illustrate why this 445 445 00:12:11,810 --> 00:12:14,509 is actually so important. And then we have a 446 446 00:12:14,510 --> 00:12:14,760 more exact formula. 447 447 00:12:15,180 --> 00:12:17,680 Breaking this down so you can use it tactically. 448 448 00:12:18,340 --> 00:12:20,209 But I wanna show you guys visually why 449 449 00:12:20,210 --> 00:12:20,830 it's important. OK. 450 450 00:12:21,270 --> 00:12:22,780 So let's say on your first order 451 451 00:12:23,120 --> 00:12:24,799 it 452 452 00:12:24,800 --> 00:12:25,629 requires a stack of cash. 453 453 00:12:25,630 --> 00:12:26,230 OK. 454 454 00:12:26,880 --> 00:12:29,149 And then now you 455 455 00:12:29,150 --> 00:12:29,400 have to reorder 456 456 00:12:29,940 --> 00:12:31,740 and 457 457 00:12:31,940 --> 00:12:32,600 you have to pay a second stack of cash. OK 458 458 00:12:33,310 --> 00:12:34,879 but how 459 459 00:12:34,880 --> 00:12:36,100 do you pay for that second stack of cash. 460 460 00:12:36,650 --> 00:12:38,539 Well you either pay for it from 461 461 00:12:38,540 --> 00:12:40,680 your pocket or from 462 462 00:12:40,850 --> 00:12:41,470 the sales from the first order. 463 463 00:12:44,310 --> 00:12:46,619 But if you have a long lead time let's 464 464 00:12:46,620 --> 00:12:48,469 say you may have only 465 465 00:12:48,470 --> 00:12:50,149 sold one maybe 466 466 00:12:50,150 --> 00:12:51,950 25 467 467 00:12:52,790 --> 00:12:54,079 percent of that first amount of cash. 468 468 00:12:54,080 --> 00:12:54,640 OK. 469 469 00:12:55,910 --> 00:12:57,980 So we've only sold 25 470 470 00:12:58,610 --> 00:12:59,860 percent of that original order. OK. 471 471 00:13:01,200 --> 00:13:02,209 So now take a look at this. 472 472 00:13:02,210 --> 00:13:02,710 OK. 473 473 00:13:03,920 --> 00:13:04,360 So we sold one fourth of it. 474 474 00:13:05,230 --> 00:13:06,100 So we've gotten this back. 475 475 00:13:06,740 --> 00:13:08,509 Of course we 476 476 00:13:08,510 --> 00:13:09,490 get the amount that we paid. 477 477 00:13:09,710 --> 00:13:10,920 But now what is your ROI. 478 478 00:13:13,830 --> 00:13:15,489 So if we have a 70 percent ROI then 479 479 00:13:15,490 --> 00:13:17,219 the next stack of 480 480 00:13:17,220 --> 00:13:19,129 cash isn't as tall so 481 481 00:13:19,130 --> 00:13:20,689 maybe. So 482 482 00:13:20,690 --> 00:13:22,639 this is like what we 483 483 00:13:22,640 --> 00:13:22,890 got back from the inventory. 484 484 00:13:23,400 --> 00:13:24,239 And then here's the profit. 485 485 00:13:24,240 --> 00:13:25,640 You know maybe like that. 486 486 00:13:25,700 --> 00:13:26,280 OK. 487 487 00:13:26,950 --> 00:13:29,800 So of this. But look we 488 488 00:13:29,900 --> 00:13:31,639 only have not 489 489 00:13:31,640 --> 00:13:32,740 even enough for that. 490 490 00:13:32,980 --> 00:13:34,919 So essentially what we have back 491 491 00:13:34,920 --> 00:13:36,509 is 492 492 00:13:36,510 --> 00:13:38,079 like half of 493 493 00:13:38,080 --> 00:13:41,190 the first order and we 494 494 00:13:41,360 --> 00:13:42,680 have to fund this one too. 495 495 00:13:43,330 --> 00:13:44,869 So now 496 496 00:13:44,870 --> 00:13:47,160 we have to fund one point five 497 497 00:13:47,970 --> 00:13:49,490 of the original order 498 498 00:13:49,560 --> 00:13:51,470 because we didn't make enough back. 499 499 00:13:51,570 --> 00:13:53,510 But if we were to have more of 500 500 00:13:54,000 --> 00:13:55,559 what if we had 300 501 501 00:13:55,560 --> 00:13:57,059 percent ROI well 502 502 00:13:57,060 --> 00:13:58,649 then this stack of 503 503 00:13:58,650 --> 00:13:59,330 cash. 504 504 00:13:59,400 --> 00:14:00,848 If we had a 300 percent ROI 505 505 00:14:01,380 --> 00:14:03,179 we'd get back the original amount plus 506 506 00:14:03,180 --> 00:14:04,859 three. So one two 507 507 00:14:04,860 --> 00:14:05,760 three. Oh wait. 508 508 00:14:06,090 --> 00:14:07,970 Look we funded the whole thing. 509 509 00:14:08,430 --> 00:14:09,950 So that is all 510 510 00:14:10,020 --> 00:14:10,829 paid for. 511 511 00:14:10,830 --> 00:14:12,449 We've gotten back all the money that we put 512 512 00:14:12,450 --> 00:14:14,039 in and then we put all that back 513 513 00:14:14,040 --> 00:14:14,780 into there 514 514 00:14:15,060 --> 00:14:16,970 and we don't have any money issues ever. 515 515 00:14:17,130 --> 00:14:18,779 We only had to put up 1 516 516 00:14:18,780 --> 00:14:20,429 times the original 517 517 00:14:20,430 --> 00:14:20,990 order... 518 518 00:14:24,600 --> 00:14:25,920 Kind of a messy drawing. 519 519 00:14:26,040 --> 00:14:27,749 But then here's 520 520 00:14:27,750 --> 00:14:28,460 the thing. 521 521 00:14:28,920 --> 00:14:30,509 Because we have such a high 522 522 00:14:30,510 --> 00:14:32,069 ROI if 523 523 00:14:32,070 --> 00:14:34,250 we get to the next order 524 524 00:14:34,410 --> 00:14:36,029 by the time we've sold that 525 525 00:14:36,030 --> 00:14:37,460 we end up having 526 526 00:14:37,620 --> 00:14:38,930 four times 527 527 00:14:39,120 --> 00:14:41,159 because we now have sold 528 528 00:14:41,160 --> 00:14:42,560 a whole initial order. 529 529 00:14:42,630 --> 00:14:44,189 So we get back all that money 530 530 00:14:44,190 --> 00:14:46,169 for that initial order plus 531 531 00:14:46,170 --> 00:14:47,720 three more one 532 532 00:14:48,050 --> 00:14:49,349 you know and so two 533 533 00:14:49,350 --> 00:14:50,420 and it goes to three. 534 534 00:14:50,460 --> 00:14:52,169 So now all the sudden we've 535 535 00:14:52,170 --> 00:14:53,690 paid for it by the 536 536 00:14:54,060 --> 00:14:55,799 time that that set that 537 537 00:14:55,800 --> 00:14:57,110 that order is sold. 538 538 00:14:57,150 --> 00:14:58,829 We can now start three new 539 539 00:14:58,830 --> 00:14:59,930 products 540 540 00:15:00,330 --> 00:15:01,949 and this we never run into 541 541 00:15:01,950 --> 00:15:02,879 cash flow issues 542 542 00:15:02,880 --> 00:15:04,439 with this product because 543 543 00:15:04,440 --> 00:15:05,515 it has a high ROI. 544 544 00:15:06,300 --> 00:15:07,010 All right. 545 545 00:15:07,170 --> 00:15:08,669 Now where does 546 546 00:15:08,670 --> 00:15:09,869 lead time come into play 547 547 00:15:09,870 --> 00:15:11,570 with this. If we have 548 548 00:15:12,150 --> 00:15:13,679 a lower if 549 549 00:15:13,680 --> 00:15:15,179 we have a smaller lead time 550 550 00:15:15,180 --> 00:15:16,820 this is the only thing that changes 551 551 00:15:17,160 --> 00:15:18,779 that initial stack of cash is 552 552 00:15:18,780 --> 00:15:21,080 just smaller OK 553 553 00:15:21,180 --> 00:15:22,949 because you can 554 554 00:15:22,950 --> 00:15:25,460 reorder faster so 555 555 00:15:25,890 --> 00:15:26,140 you don't have to buy as much at one time. 556 556 00:15:26,700 --> 00:15:28,499 So if 557 557 00:15:28,500 --> 00:15:30,419 we increase the ROI then 558 558 00:15:30,420 --> 00:15:31,679 we get more back 559 559 00:15:31,680 --> 00:15:33,830 and solve the cash flow issue 560 560 00:15:34,490 --> 00:15:37,170 but we can also 561 561 00:15:38,790 --> 00:15:40,289 reduce the amount that's required in 562 562 00:15:40,290 --> 00:15:42,029 the beginning by having a 563 563 00:15:42,030 --> 00:15:42,280 lower lead time. 564 564 00:15:44,780 --> 00:15:46,389 So it's a combination of both of those because 565 565 00:15:46,390 --> 00:15:49,079 essentially by 566 566 00:15:49,080 --> 00:15:50,599 having a smaller initial stack you Well 567 567 00:15:50,600 --> 00:15:52,499 let's say you've 568 568 00:15:52,500 --> 00:15:53,870 only got so much money at any given point. 569 569 00:15:54,160 --> 00:15:57,120 But if you each order has 570 570 00:15:57,900 --> 00:16:00,130 a smaller initial required stack then 571 571 00:16:00,870 --> 00:16:01,500 you can make more products. Okay. 572 572 00:16:01,950 --> 00:16:04,039 And if it returns more of 573 573 00:16:04,040 --> 00:16:04,670 that initial stack. 574 574 00:16:04,880 --> 00:16:05,580 OK. 575 575 00:16:06,430 --> 00:16:07,730 Then you have more products to fund. 576 576 00:16:08,090 --> 00:16:09,929 So if you get a 577 577 00:16:09,930 --> 00:16:11,969 lot of products that require a 578 578 00:16:11,970 --> 00:16:14,009 smaller stack by having a 579 579 00:16:14,010 --> 00:16:15,825 shorter lead time and have a high ROI 580 580 00:16:16,400 --> 00:16:19,079 you can grow really 581 581 00:16:19,080 --> 00:16:20,679 exponentially. But if you were if 582 582 00:16:20,680 --> 00:16:22,589 you get a lot of orders that 583 583 00:16:22,590 --> 00:16:23,910 are tall stacks 584 584 00:16:23,911 --> 00:16:25,649 and small 585 585 00:16:25,650 --> 00:16:27,929 lead times then now the 586 586 00:16:27,930 --> 00:16:30,779 amount of cash required actually increases over 587 587 00:16:30,780 --> 00:16:32,060 time and then eventually decreases. 588 588 00:16:33,420 --> 00:16:34,145 So a 589 589 00:16:34,975 --> 00:16:36,929 by choosing something with here's 590 590 00:16:36,930 --> 00:16:38,999 just your quick little trick if you 591 591 00:16:39,000 --> 00:16:40,769 get something with a 200 592 592 00:16:40,770 --> 00:16:42,609 percent are ROI in 593 593 00:16:42,610 --> 00:16:44,399 45 days or 594 594 00:16:44,400 --> 00:16:46,709 less of lead time about you 595 595 00:16:46,710 --> 00:16:48,059 shouldn't have too many cashflow issues 596 596 00:16:48,060 --> 00:16:49,140 with it but if you go 597 597 00:16:49,141 --> 00:16:51,919 with a sick like a 598 598 00:16:51,920 --> 00:16:53,519 really long lead time and a 599 599 00:16:53,520 --> 00:16:54,772 not above 100 percent ROI 600 600 00:16:55,160 --> 00:16:56,960 you 601 601 00:16:57,090 --> 00:16:58,589 running into a lot of cash flow issues. Now some 602 602 00:16:58,590 --> 00:17:00,920 people think the way to make more money is 603 603 00:17:00,990 --> 00:17:02,699 well I 604 604 00:17:02,700 --> 00:17:04,379 should just increase 605 605 00:17:04,380 --> 00:17:06,749 the amount that I buy because 606 606 00:17:06,750 --> 00:17:07,000 I get a lower price. 607 607 00:17:08,690 --> 00:17:09,049 While you may get... like 608 608 00:17:10,839 --> 00:17:11,480 So let's say this. 609 609 00:17:11,490 --> 00:17:12,640 So this like a ha. 610 610 00:17:12,950 --> 00:17:14,608 Well if I increase my order 611 611 00:17:14,609 --> 00:17:16,739 amount then instead 612 612 00:17:16,740 --> 00:17:18,598 of being here for ROI I'm 613 613 00:17:18,599 --> 00:17:19,490 now here. Look at that. 614 614 00:17:19,849 --> 00:17:20,099 That's better. 615 615 00:17:20,550 --> 00:17:21,830 But wait it's not like that 616 616 00:17:22,050 --> 00:17:23,119 cause guess what you just did. 617 617 00:17:23,339 --> 00:17:24,830 You made your stack of cash taller. 618 618 00:17:25,440 --> 00:17:27,170 So why is that second stack taller. 619 619 00:17:27,420 --> 00:17:29,079 Because you just bought more units 620 620 00:17:29,080 --> 00:17:31,229 because unless you somehow negotiated 621 621 00:17:31,230 --> 00:17:32,100 a lower price 622 622 00:17:32,101 --> 00:17:33,779 with the 623 623 00:17:33,780 --> 00:17:36,299 same lead time and no more quantity 624 624 00:17:36,300 --> 00:17:38,519 required to buy it then you're of course going 625 625 00:17:38,520 --> 00:17:39,990 to have to pay more. So if it's 10 dollars a unit 626 626 00:17:39,991 --> 00:17:41,229 and you bought a thousand 627 627 00:17:41,230 --> 00:17:42,779 and then you negotiated it 628 628 00:17:42,780 --> 00:17:43,609 down to 850 629 629 00:17:43,610 --> 00:17:45,469 but you have to buy two thousand well 630 630 00:17:45,470 --> 00:17:47,120 you just tied up a lot more cash. 631 631 00:17:47,330 --> 00:17:48,950 So you're ROI is higher. 632 632 00:17:49,250 --> 00:17:50,779 But if you're running the cash flow issues 633 633 00:17:50,780 --> 00:17:52,409 you just hide up all 634 634 00:17:52,410 --> 00:17:53,900 your cash to make a little bit extra ROI 635 635 00:17:54,630 --> 00:17:56,179 But you'd 636 636 00:17:56,180 --> 00:17:58,179 actually be better off by finding instead 637 637 00:17:58,180 --> 00:17:59,859 with that extra part of 638 638 00:17:59,860 --> 00:18:01,469 your cash right here. You'd 639 639 00:18:01,470 --> 00:18:03,089 be better off finding something that 640 640 00:18:03,090 --> 00:18:04,589 would additionally have 641 641 00:18:04,590 --> 00:18:05,250 a high ROI 642 642 00:18:05,520 --> 00:18:08,580 or a new product because that's going 643 643 00:18:08,760 --> 00:18:10,539 to be way higher amount than that little bit extra 644 644 00:18:10,540 --> 00:18:12,719 that you would get by 645 645 00:18:12,720 --> 00:18:13,820 getting more quantity. Here's the math. 646 646 00:18:14,020 --> 00:18:15,659 So like we said 10 647 647 00:18:15,660 --> 00:18:17,699 dollars and let's say you were getting 86 648 648 00:18:17,700 --> 00:18:17,950 percent ROI 649 649 00:18:18,700 --> 00:18:20,759 and then what we do is we go 650 650 00:18:20,760 --> 00:18:21,950 back to the example we showed earlier in the video. 651 651 00:18:22,000 --> 00:18:23,189 So I changed it to 10 652 652 00:18:23,190 --> 00:18:24,749 and you get 86 653 653 00:18:24,750 --> 00:18:25,730 percent ROI right there. 654 654 00:18:25,860 --> 00:18:27,439 But let's say we negotiated to 655 655 00:18:27,440 --> 00:18:28,100 850. 656 656 00:18:28,230 --> 00:18:30,139 Also today we're getting one 657 657 00:18:30,140 --> 00:18:30,394 hundred nineteen percent ROI. 658 658 00:18:31,400 --> 00:18:33,269 So at 850 we're 659 659 00:18:33,270 --> 00:18:34,850 getting a hundred nineteen percent ROI 660 660 00:18:35,490 --> 00:18:36,830 but you need to look at this. 661 661 00:18:36,880 --> 00:18:38,699 So let's 662 662 00:18:38,700 --> 00:18:40,510 say we've invested ten 663 663 00:18:40,590 --> 00:18:42,089 thousand dollars at 86 664 664 00:18:42,090 --> 00:18:43,619 percent ROI But here 665 665 00:18:43,620 --> 00:18:45,389 we have to invest seventeen 666 666 00:18:45,390 --> 00:18:46,550 thousand dollars 667 667 00:18:46,920 --> 00:18:48,308 at one hundred nineteen percent ROI 668 668 00:18:49,050 --> 00:18:50,609 So as we just said you 669 669 00:18:50,610 --> 00:18:52,319 have to get a higher quantity from 670 670 00:18:52,320 --> 00:18:54,320 your supplier to get that lower price. 671 671 00:18:54,420 --> 00:18:56,270 So that's why it's seventeen thousand 672 672 00:18:56,310 --> 00:18:57,800 four the hundred nineteen percent 673 673 00:18:57,840 --> 00:18:59,729 and then ten thousand for the 86 674 674 00:18:59,730 --> 00:19:01,250 percent because we paid more 675 675 00:19:01,260 --> 00:19:02,759 to have a less 676 676 00:19:02,760 --> 00:19:04,220 minimum order quantity. 677 677 00:19:04,260 --> 00:19:05,939 Let's just quickly look at what 678 678 00:19:05,940 --> 00:19:07,460 I was explaining there. 679 679 00:19:07,560 --> 00:19:09,560 So it costs you ten thousand 680 680 00:19:09,570 --> 00:19:11,510 dollars to buy 1000 units... 681 681 00:19:13,510 --> 00:19:15,329 And then if you were to lower 682 682 00:19:15,330 --> 00:19:16,890 it at ten dollars apiece 683 683 00:19:16,930 --> 00:19:18,710 and if you were to lower to 850. 684 684 00:19:19,600 --> 00:19:21,099 You ahmm know then it cost you eight thousand 685 685 00:19:21,100 --> 00:19:21,870 five hundred 686 686 00:19:21,880 --> 00:19:23,589 but to get that 850 price 687 687 00:19:23,590 --> 00:19:25,389 you have to buy two thousand units 688 688 00:19:25,390 --> 00:19:27,289 and we're assuming that they sell 689 689 00:19:27,290 --> 00:19:28,779 three hundred and fifty units a 690 690 00:19:28,780 --> 00:19:30,549 month. So by buying 691 691 00:19:30,550 --> 00:19:32,379 that's the two thousand 692 692 00:19:32,380 --> 00:19:34,239 units. He's actually buying 693 693 00:19:34,240 --> 00:19:35,949 about you know five six 694 694 00:19:35,950 --> 00:19:37,539 months of inventory because I think 695 695 00:19:37,540 --> 00:19:39,159 this is a good idea because 696 696 00:19:39,160 --> 00:19:40,779 it's increasing my profit per 697 697 00:19:40,780 --> 00:19:41,950 unit and my ROI. 698 698 00:19:42,400 --> 00:19:43,419 Well you'll see why Now why. 699 699 00:19:43,420 --> 00:19:44,199 That's a mistake. 700 700 00:19:44,200 --> 00:19:46,230 You're selling the same amount. 701 701 00:19:46,450 --> 00:19:48,189 OK. So you're going 702 702 00:19:48,190 --> 00:19:49,860 to end up getting back 703 703 00:19:49,930 --> 00:19:50,910 the same amount 704 704 00:19:50,920 --> 00:19:52,740 and essentially you end up getting 705 705 00:19:52,750 --> 00:19:54,480 a ten thousand dollar profit 706 706 00:19:54,550 --> 00:19:56,049 versus an eight thousand six 707 707 00:19:56,050 --> 00:19:57,240 hundred dollars profit. 708 708 00:19:57,250 --> 00:19:58,869 But you have to look at how much 709 709 00:19:58,870 --> 00:19:59,739 you invested. 710 710 00:19:59,740 --> 00:20:00,270 OK. 711 711 00:20:00,400 --> 00:20:01,899 So in here remember 712 712 00:20:01,900 --> 00:20:03,650 that we invested eight thou. 713 713 00:20:03,670 --> 00:20:05,700 We invested ten thousand dollars 714 714 00:20:05,920 --> 00:20:07,569 and we made eight thousand six under profit. 715 715 00:20:07,570 --> 00:20:09,429 So our ROI was 86 716 716 00:20:09,430 --> 00:20:10,959 percent. Because we forecasted in 717 717 00:20:10,960 --> 00:20:11,910 the story correctly. 718 718 00:20:12,010 --> 00:20:13,929 But if you buy extra inventory 719 719 00:20:13,930 --> 00:20:15,630 because you think you're getting less per unit 720 720 00:20:15,700 --> 00:20:17,319 and you're just having dead inventory sitting 721 721 00:20:17,320 --> 00:20:18,870 there you're actually getting 722 722 00:20:19,850 --> 00:20:22,009 youre actually getting a 59 723 723 00:20:22,010 --> 00:20:22,656 percent ROI. 724 724 00:20:23,000 --> 00:20:23,710 What. 725 725 00:20:23,990 --> 00:20:24,969 Well look at this. 726 726 00:20:24,970 --> 00:20:26,479 OK so what 727 727 00:20:26,480 --> 00:20:28,189 you're doing is you invested seventeen 728 728 00:20:28,190 --> 00:20:28,960 thousand 729 729 00:20:29,030 --> 00:20:30,589 but you only made ten thousand in 730 730 00:20:30,590 --> 00:20:31,690 that time period. 731 731 00:20:31,850 --> 00:20:33,589 OK so that's a 59 732 732 00:20:33,590 --> 00:20:34,163 percent ROI. 733 733 00:20:34,760 --> 00:20:36,319 So you've missed out on this 734 734 00:20:36,320 --> 00:20:38,209 thing called opportunity cost. 735 735 00:20:38,210 --> 00:20:40,189 So you've missed out on opportunity 736 736 00:20:40,190 --> 00:20:41,719 costs. And that's what this whole video is 737 737 00:20:41,720 --> 00:20:42,820 actually really about. 738 738 00:20:43,370 --> 00:20:45,250 By lowering your lead time 739 739 00:20:45,590 --> 00:20:46,810 you reduce your risk 740 740 00:20:46,910 --> 00:20:48,292 and increase your ROI 741 741 00:20:48,860 --> 00:20:50,050 you you lower your risk 742 742 00:20:50,090 --> 00:20:51,820 and you're able to have 743 743 00:20:51,830 --> 00:20:53,329 many more opportunities to 744 744 00:20:53,330 --> 00:20:54,859 add. So as long as 745 745 00:20:54,860 --> 00:20:56,779 you have the opportunity to add more products 746 746 00:20:56,780 --> 00:20:58,279 and the skills to do that you 747 747 00:20:58,280 --> 00:21:00,019 can't. And what you end up doing 748 748 00:21:00,020 --> 00:21:01,549 by buying more inventory to 749 749 00:21:01,550 --> 00:21:03,199 make more money is you'll lose 750 750 00:21:03,200 --> 00:21:04,819 more money because you're losing 751 751 00:21:04,820 --> 00:21:06,439 out on the opportunity to 752 752 00:21:06,440 --> 00:21:07,339 do something else. 753 753 00:21:07,340 --> 00:21:08,899 So what you could have done then 754 754 00:21:08,900 --> 00:21:10,360 instead with that extra 755 755 00:21:10,400 --> 00:21:11,980 seven thousand dollars. 756 756 00:21:12,230 --> 00:21:14,350 All right you could have put that into something 757 757 00:21:14,390 --> 00:21:15,309 that. Oh yeah. 758 758 00:21:15,310 --> 00:21:16,990 The other thing that mention is 759 759 00:21:17,540 --> 00:21:19,000 you know that extra money you did. 760 760 00:21:19,370 --> 00:21:20,899 Yeah. You might have saved a little bit per 761 761 00:21:20,900 --> 00:21:22,519 unit but you don't have another product that's 762 762 00:21:22,520 --> 00:21:24,190 generating you more money either. 763 763 00:21:24,260 --> 00:21:25,369 So there's another yet. 764 764 00:21:25,370 --> 00:21:26,149 Opportunity costs. 765 765 00:21:26,150 --> 00:21:27,359 I didn't even account for. 766 766 00:21:27,360 --> 00:21:28,919 So that other seven thousand dollars you could have 767 767 00:21:28,920 --> 00:21:30,469 put that into something that made you 768 768 00:21:30,470 --> 00:21:31,660 86 percent 769 769 00:21:31,940 --> 00:21:33,499 and you ended up would have actually made 770 770 00:21:33,500 --> 00:21:35,359 more money overall because 771 771 00:21:35,360 --> 00:21:36,859 now that you know that ends up 772 772 00:21:36,860 --> 00:21:38,439 coming back to about oh 773 773 00:21:38,440 --> 00:21:40,129 let's just call it six thousand profit 774 774 00:21:40,130 --> 00:21:41,839 there. So instead now. 775 775 00:21:41,840 --> 00:21:43,420 Yeah. Well six thousand 776 776 00:21:44,900 --> 00:21:46,499 get messy here six thousand plus eight 777 777 00:21:46,500 --> 00:21:47,999 thousand six hundred let's call that fourteen 778 778 00:21:48,000 --> 00:21:48,710 sixty 779 779 00:21:48,990 --> 00:21:50,789 or whatever and then the other one was ten thousand 780 780 00:21:50,790 --> 00:21:51,040 115 781 781 00:21:51,630 --> 00:21:53,309 and the additional benefit 782 782 00:21:53,310 --> 00:21:54,899 now is you have two products instead 783 783 00:21:54,900 --> 00:21:56,549 of one. So if you want to buy more 784 784 00:21:56,550 --> 00:21:58,049 inventory and store it because you think 785 785 00:21:58,050 --> 00:21:59,579 you're going to grow your business that 786 786 00:21:59,580 --> 00:22:01,349 way. That's not a way to grow your business. 787 787 00:22:01,350 --> 00:22:03,479 That's just a way to increase your margins 788 788 00:22:03,480 --> 00:22:04,890 not a way to grow your business. 789 789 00:22:05,740 --> 00:22:07,569 One other thing that you could do 790 790 00:22:07,570 --> 00:22:09,159 is so let's say that 791 791 00:22:09,160 --> 00:22:10,779 you have remember there's this 792 792 00:22:10,780 --> 00:22:12,780 stack of cash you're required to buy 793 793 00:22:12,940 --> 00:22:13,715 and you have you ROI. 794 794 00:22:14,480 --> 00:22:15,050 OK. 795 795 00:22:15,400 --> 00:22:16,959 So one other thing you 796 796 00:22:16,960 --> 00:22:18,909 could do is you could increase 797 797 00:22:18,910 --> 00:22:19,860 your prices. 798 798 00:22:20,020 --> 00:22:20,866 So now your ROI 799 799 00:22:21,850 --> 00:22:23,820 becomes higher okay 800 800 00:22:23,860 --> 00:22:24,939 but you're gonna say wait. 801 801 00:22:24,940 --> 00:22:26,040 But I sell less. 802 802 00:22:26,350 --> 00:22:27,210 But wait 803 803 00:22:28,430 --> 00:22:30,280 this means your stack of cash is lower 804 804 00:22:30,800 --> 00:22:32,050 Oh wait 805 805 00:22:32,310 --> 00:22:33,839 so you're telling me that I 806 806 00:22:33,840 --> 00:22:35,149 of course lost capital 807 807 00:22:35,150 --> 00:22:36,979 and I still get that nice 808 808 00:22:36,980 --> 00:22:39,450 little boost so also not 809 809 00:22:39,500 --> 00:22:40,529 just massively increase my cash flow 810 810 00:22:40,530 --> 00:22:41,562 and my ROI. 811 811 00:22:42,440 --> 00:22:43,669 Yeah that's what I'm saying. 812 812 00:22:43,670 --> 00:22:45,250 You could sell less quantity. 813 813 00:22:46,020 --> 00:22:47,080 Probably still make the same amount of money 814 814 00:22:47,400 --> 00:22:48,670 or maybe a little bit less 815 815 00:22:48,990 --> 00:22:50,690 but now youe ROI 816 816 00:22:50,920 --> 00:22:52,669 is so huge you don't have a 817 817 00:22:52,670 --> 00:22:54,739 cash flow issue. So then you just add 818 818 00:22:54,740 --> 00:22:56,389 another one of those. And then all the 819 819 00:22:56,390 --> 00:22:58,219 sudden now you're growing 820 820 00:22:58,220 --> 00:22:58,900 really fast. OK. 821 821 00:22:59,520 --> 00:23:01,399 So it's all about not 822 822 00:23:01,400 --> 00:23:02,959 tying 823 823 00:23:02,960 --> 00:23:04,469 up too much capital at any given time 824 824 00:23:04,470 --> 00:23:06,199 because we all run into cash 825 825 00:23:06,200 --> 00:23:07,870 flow issues as we grow. 826 826 00:23:08,720 --> 00:23:11,089 This is how you solve that from 827 827 00:23:11,090 --> 00:23:12,589 a mathematical standpoint and we're gonna go in-depth 828 828 00:23:12,590 --> 00:23:14,179 with the formula video 829 829 00:23:14,180 --> 00:23:16,219 but this is just the 830 830 00:23:16,220 --> 00:23:18,079 general concept to lower 831 831 00:23:18,080 --> 00:23:19,699 that lead time increase the ROI you 832 832 00:23:19,700 --> 00:23:21,319 decrease your risk you 833 833 00:23:21,320 --> 00:23:22,619 solve your cash flow issues. 834 834 00:23:22,620 --> 00:23:24,289 So as we're here in my Sellics I 835 835 00:23:24,290 --> 00:23:26,179 just wanna show you guys what this actually 836 836 00:23:26,180 --> 00:23:27,949 looks like. If you go and apply it now 837 837 00:23:27,950 --> 00:23:29,710 what I found was that there's 838 838 00:23:30,200 --> 00:23:31,759 a maximum 839 839 00:23:31,760 --> 00:23:33,319 amount of money you can make 840 840 00:23:33,320 --> 00:23:35,059 on any given product. So what I 841 841 00:23:35,060 --> 00:23:37,519 really focused on was getting that exponential 842 842 00:23:37,520 --> 00:23:39,319 growth by 843 843 00:23:39,320 --> 00:23:40,039 adding more products. 844 844 00:23:40,040 --> 00:23:41,539 OK you keep adding adding 845 845 00:23:41,540 --> 00:23:43,309 solve all those customer needs that 846 846 00:23:43,310 --> 00:23:44,609 are unsolved in the market 847 847 00:23:44,610 --> 00:23:46,360 and take over the complete area. 848 848 00:23:47,340 --> 00:23:48,949 So I've said before that I did 44 products 849 849 00:23:48,950 --> 00:23:50,449 and I've 850 850 00:23:50,450 --> 00:23:52,159 been wrong. Apparently I did 100 hundred 851 851 00:23:52,160 --> 00:23:54,499 products in that 852 852 00:23:54,500 --> 00:23:56,259 five month period. So we just had the 853 853 00:23:56,260 --> 00:23:57,799 exponential growth. I just want to show you guys what 854 854 00:23:57,800 --> 00:24:00,049 it's like. Just make all these 855 855 00:24:00,050 --> 00:24:01,120 different variations and you'll find profit 856 856 00:24:01,230 --> 00:24:03,069 and money to be made on 857 857 00:24:03,070 --> 00:24:03,849 a lot of them. 858 858 00:24:03,850 --> 00:24:05,479 And some of them will 859 859 00:24:05,480 --> 00:24:07,240 be home runs and some of them won't. 860 860 00:24:07,340 --> 00:24:08,629 But you just got to keep adding 861 861 00:24:08,630 --> 00:24:11,359 and I really focus on having extremely 862 862 00:24:11,360 --> 00:24:11,630 high ROI 863 863 00:24:12,170 --> 00:24:14,059 and some of them don't 864 864 00:24:14,060 --> 00:24:15,520 have the highest but I just wanted to show you guys 865 865 00:24:15,900 --> 00:24:17,389 you 866 866 00:24:17,390 --> 00:24:19,029 definitely can make it happen. But just it 867 867 00:24:19,030 --> 00:24:20,869 comes down to get 868 868 00:24:20,870 --> 00:24:21,535 a high ROI 869 869 00:24:21,610 --> 00:24:23,249 and really like I 870 870 00:24:23,250 --> 00:24:24,080 put literally all of my time 871 871 00:24:24,081 --> 00:24:26,420 and efforts into 872 872 00:24:26,570 --> 00:24:28,015 focusing on my lead time in my ROI. 873 873 00:24:29,040 --> 00:24:31,039 We had a factory in 874 874 00:24:31,040 --> 00:24:31,290 my house. 875 875 00:24:31,690 --> 00:24:33,040 We had all the products shipped to us. 876 876 00:24:33,330 --> 00:24:35,779 We did all the inspection ourself 877 877 00:24:35,780 --> 00:24:37,209 to save time. We shipped it ourself. 878 878 00:24:37,210 --> 00:24:38,650 We would buy overnight shipping 879 879 00:24:39,090 --> 00:24:40,729 literally every 880 880 00:24:40,730 --> 00:24:43,249 day that I could reduce my lead time. I put every 881 881 00:24:43,250 --> 00:24:46,180 ounce of effort into that and stayed up all night just 882 882 00:24:46,670 --> 00:24:47,489 to make sure that everything was always happening. And 883 883 00:24:47,490 --> 00:24:49,219 like let's 884 884 00:24:49,220 --> 00:24:50,620 say something was gonna It was a Wednesday 885 885 00:24:50,880 --> 00:24:52,459 and I knew exactly what time I had to get to 886 886 00:24:52,460 --> 00:24:54,039 a warehouse at FedEx so 887 887 00:24:54,040 --> 00:24:55,600 that I would get there on Friday. 888 888 00:24:55,790 --> 00:24:57,709 And then that way they would start to process that over 889 889 00:24:57,710 --> 00:24:59,689 the weekend and I would get sales out 890 890 00:24:59,690 --> 00:25:01,549 really force everybody to get do 891 891 00:25:01,550 --> 00:25:03,289 everything they could to get it in on 892 892 00:25:03,290 --> 00:25:04,849 time on Wednesday because the difference between getting 893 893 00:25:04,850 --> 00:25:06,589 it in started to 894 894 00:25:06,590 --> 00:25:08,119 check in on Monday first Friday at 895 895 00:25:08,120 --> 00:25:11,179 the end of this exponential curve made 896 896 00:25:11,180 --> 00:25:12,970 a huge difference and I knew that mathematically. 897 897 00:25:13,720 --> 00:25:14,639 So I did everything to push out 898 898 00:25:14,640 --> 00:25:16,189 and then I made sure I was 899 899 00:25:16,190 --> 00:25:17,929 never out of stock if I was going to run our 900 900 00:25:17,930 --> 00:25:19,579 stock I 901 901 00:25:19,580 --> 00:25:20,730 would increase my price and increase my ROI 902 902 00:25:21,150 --> 00:25:23,179 so that my money could 903 903 00:25:23,180 --> 00:25:23,430 keep growing exponentially. 904 904 00:25:24,030 --> 00:25:24,749 I took out credit 905 905 00:25:24,750 --> 00:25:26,599 and when I needed to so 906 906 00:25:26,600 --> 00:25:28,099 that I could 907 907 00:25:28,100 --> 00:25:29,900 keep up with the demand curve and 908 908 00:25:29,930 --> 00:25:31,159 keep adding more and more products and we had like our 909 909 00:25:31,160 --> 00:25:33,709 own factory inside the house so we could 910 910 00:25:33,710 --> 00:25:34,970 keep adding variations in our lead time. 911 911 00:25:35,180 --> 00:25:37,729 It was literally so small that I would come 912 912 00:25:37,730 --> 00:25:39,319 up with an idea I would listed 913 913 00:25:39,320 --> 00:25:40,909 on Amazon and this are running ads to 914 914 00:25:40,910 --> 00:25:42,519 it and guess what it would start to sell that 915 915 00:25:42,520 --> 00:25:43,700 we'd ship a couple out of our house 916 916 00:25:43,701 --> 00:25:45,289 and I chipped some in Amazon 917 917 00:25:45,290 --> 00:25:46,599 right away. Great. That's a new product. 918 918 00:25:46,600 --> 00:25:47,269 Let's go. 919 919 00:25:47,270 --> 00:25:49,219 And so being able to kind 920 920 00:25:49,220 --> 00:25:50,599 of have this quick lead time 921 921 00:25:50,600 --> 00:25:52,159 and turnaround was 922 922 00:25:52,160 --> 00:25:53,989 the reason that we're able to do so much of 923 923 00:25:53,990 --> 00:25:55,549 this in a such 924 924 00:25:55,550 --> 00:25:57,949 a short period of time. So I believe in 925 925 00:25:57,950 --> 00:25:59,539 this concept mathematically and from 926 926 00:25:59,540 --> 00:26:01,309 my personal experience I turn 927 927 00:26:01,310 --> 00:26:03,229 seven thousand five hundred dollars into through over 928 928 00:26:03,230 --> 00:26:05,389 three million dollars in five 929 929 00:26:05,390 --> 00:26:07,459 months of sales history and I was only by really 930 930 00:26:07,460 --> 00:26:08,970 hardcore focus on my ROI 931 931 00:26:09,890 --> 00:26:10,640 and my margin 932 932 00:26:10,641 --> 00:26:12,346 or not even my Margin no my 933 933 00:26:12,830 --> 00:26:14,269 margin my margin was kind of cool 934 934 00:26:14,270 --> 00:26:15,284 but it was all about the ROI 935 935 00:26:16,750 --> 00:26:17,640 and that lead times so 936 936 00:26:17,650 --> 00:26:18,290 and testing out 937 937 00:26:18,291 --> 00:26:19,240 and expanding. 938 938 00:26:19,320 --> 00:26:20,899 So hope 939 939 00:26:20,900 --> 00:26:20,950 that this has been helpful. 70720