Podcast

Episode #173 – The Five Currencies Of Decision Making

 

Every business decision comes with trade-offs. There is no free lunch, as economists say. But most investors think that money is the only currency.

Sure, you can make more money by doing everything yourself. It just comes at the expense of your happiness, freedom, and sanity.

Here’s why I bring it up:

There are five different currencies of decision making. And by understanding what each currency is, you will not only make more profitable decisions, but you’ll get more joy from your business too.

Want to find out what these five currencies are? Listen to the episode now.

Show highlights include: 

  • Why only measuring business decisions in dollars bankrupts your happiness (and 4 other currencies to use instead) ([4:40])
  • The “5 TIMER Currencies” which help you make smarter, more profitable business decisions ([5:11])
  • How to create time out of thin air (without sacrificing your business) ([6:57])
  • The single most important asset in your real estate investing business (and why you can never get more of it) ([13:08])
  • The weird way becoming too successful in business causes untold amounts of suffering ([15:14])

To get the latest updates directly from Dan and discuss business with other real estate investors, join the REI marketing nerds Facebook group here: https://adwordsnerds.com/group

Need help with your online marketing? Jump on a FREE strategy session with our team. We’ll dive deep into your market and help you build a custom strategy for finding motivated seller leads online. Schedule for free here: https://adwordsnerds.com/strategy

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Read Full Transcript

You're listening to the REI marketing nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords nerds, a high tech digital agency focusing exclusively on helping real estate investors. Like you get more leads and deals online, outsmart your competition and live a freer more awesome life. And now your host Dan Barrett.

(00:41): All right. Hello everybody. And welcome to this week's episode of the REI marketing nerds podcast as always. This is Daniel Barrett here from Edwards nerds.com. How are you? Hope you are having a truly wonderful week this week. I wanted to check in with you and talk a little bit about the different currencies that are influenced by marketing. Okay? The different currencies that we can use to make decisions in our business to make wiser decisions about the types of marketing that we do, and ultimately to make ourselves not just richer, but also happier. And I wanna kick this off by stating something that should be obvious, but often isn't, which is that people change people change businesses, change. This means you change. We all do this thing where whatever the current version of ourselves is, whatever that represents to you. We tend to think of ourselves as a finished product, right?

(01:38): We are ourselves wherever we are in our lives. But if we look back 10 years, we don't think of that person 10 years ago as a finished product in any way. In fact, usually we're pretty embarrassed by the stuff that we did 10 years ago, by the stuff that we thought by the stuff that we thought would work by the sort of vast misunderstandings we have about the universe and ourselves and the way the world works. I mean, man, 10 years ago, I was what, 32 I was thinking about getting married or just about to get married. I was a very different person, right? No kids business was in a very different place. And I, at the time, you know, despite all these things, despite being very much an unfinished product at the time, I thought I had things pretty well figured out, and we all tend to do this right?

(02:29): If you, 10 years ago, really didn't have everything figured out. Despite everything that you thought to the contrary, think about yourself 10 years from now, you are likely to have a very different understanding about the way the world works. Very different set of priorities, very different set of things that are important to you. And so it's important to understand that where you're at now is not necessarily where you're always going to be, and that the things that are important to you are going to change over time. Okay? Now, the reason I bring this up is that every decision that we make in our business, in our marketing, you know, in our relationships, every decision that we make carries a set of trade offs. Now, look, you're a real estate investor. You are obviously very used to the idea of trade offs because you weigh different financial trade offs.

(03:23): Every time you think about making a deal, right? Every deal or contract you enter into is going to bring some kind of reward. But it's also going to require some kind of investment, some kind of expense that could be the money you put into it. It could be the amount of time you're gonna have to spend thinking about the deal or handling the rehab or whatever it's gonna be. Every single decision we make has a series of trade offs. Okay? And I think most of us get that, but those trade offs are not always in terms of money now as an investor. And of course, for me too, as a marketer, we are trained to think in terms of money, right? What's the primary metric that everybody measures. It's R O I return on investment. We're talking about the amount of money we get back based on the amount of money that we put in.

(04:15): And there's nothing wrong with that. But over time, those decisions that you make in your business, won't always be best measured in money. For example, Warren buffet right, is gonna make very different decisions because he has in a certain place in his life. And in his business, he's got a certain amount of money. I, I don't know exactly how much money, but I think he's gonna be okay. Right? So for Warren buffet, if I come to him and I say, Hey, this deal has a two X ROI up to a million dollars. That might be a total snooze EST for him that might not be worth the energy to get outta bed in the morning. Whereas for someone like you, that might be a big deal. Wow. Two X ROI up to a million dollars. That's a huge deal. If you are in a certain place in your business.

(05:05): So not every business decision, not every marketing decision is best measured in money. So what are the other currencies we use to evaluate trade offs that we make in our business or in our life, the way to remember these, there's an acronym that acronym is timer M E timer, like the timer on your watch. Okay, now we're gonna go through these. And I want you to think, as we talk about it about right now, which of these currencies is most important to you because we go through different phases of our life. We go through different phases of our life, even within the course of a week or a year, right? Definitely through, within the course of a decade. So think about which of these are most important for you right now think about which were most important for you and think about which might be the most important for you moving forward.

(05:59): So let's start at the top timer. The first currency T is time. Every decision you make in your business is going to take a certain amount of time. Now, even if you are fully systematized, and you're like my friend Dan Schwartz, or my friend, Mike Simmons, these investors who are incredibly good at systems and processes, and they have killer teams and they're not spending a whole lot of time in their business, even for those people, every decision in their business has a trade off in terms of time. Because even if you are not the one executing, you are going to have to think about it. At least every once in a while. Now that might be just at the end of the year when you do your taxes might be every month when you balance your checkbook or whatever, it might be every day, if it's particularly stressful, but everybody's going to have to invest a certain amount of time into a given trade off.

(06:57): Now, conversely, certain decisions that you make in your business create time, right? You might hire an employee who is incredible, and that person's going to create time in your schedule. So you might be trading money for time in that case. Similarly, if you are getting into a deal and look, you need cash flow. So you're gonna put in the time yourself, you're gonna handle everything yourself, but you're gonna save all those expenses you would've otherwise spent. In that case, you are trading the currency of time for the currency of money. And this is really important to understand because many people as their businesses grow and as their investment businesses grow and they become more successful, they sort of forget that money is no longer the scariest resource. They continue to trade time for money. When in actuality their time is the thing that they need the time is the thing that's most valuable to them.

(07:56): Again, this is what we're talking about, how everybody's always changing. And the currencies that are important to us are gonna change over time, depending on our situation. So that's the first currency time. Second currency, and the timer I is influence influence is a currency. It's a form of power. It's a form of value. If you have the ability to influence your team or the people around you, you can create an incredible amount of value in those people's lives. Or you can use that influence to accrue value into your life. And certain decisions that you make are going to increase or decrease the amount of influence you have. For example, if someone offers you, you know, a seat on the board at this local nonprofit for a cause that's really important to you, you are going to gain in the currency of influence by doing that, but you're going to pay in the currency of time.

(08:53): You see how this works, there's a trade off, right? No such thing as a free lunch, as the economists will say. So there are certain situations in which you might be willing or desiring to increase the amount of influence I'll take over someone in your family, a son or a daughter, or a, you know, a, a partner, right? And to get that amount of influence, you might have to trade some of the other currencies. You might have to trade money in order to do that, right? Maybe you pay money in order to be part of a mastermind group. That's going to give you the skills and the relationships that you need in order to increase your local influence. That's a trade off and we've already talked about trading time for influence. Now, conversely, the opposite is also true. I can give up influence in order to acquire time or money, right?

(09:47): If I say, look, I'm not gonna join that mastermind. I'm gonna value my own time. More highly than that, right? I wanna free up my schedule. So I'm not gonna be on the board of that nonprofit. In that case, what I'm doing is stepping back from engaging with the world around me, in order to AMAs a different set of currencies. And there's nothing wrong with that. Neither of those is right or wrong, right? Like I said, we're always changing over time. What's important is understanding what's important to you right now. So we had time. That was the T we had influence, which is the I, the M in timer is of course money, perhaps the best understood of all occurrences. We're used to thinking of ROI, right? We're used to thinking of return on investment. You are an investor. You are used to putting in a dollar and getting out too.

(10:35): This is your essentially your business model. So you understand time. But of course it's an important currency to understand. And oftentimes it is going to be the most important currency. This happened to me in my business. We went through a period where we grew and we grew and we grew and we grew, and I invested very heavily in my own business, improving my service for my clients, improving the experience that the clients would have. And I created a truly world class service over at AdWords nerds. But after a certain point, we sort of hit a bit of a ceiling and I kept investing and I kept investing, but we were no longer growing. And in that case, if you are investing and you're no longer growing, you are simply eating your own profit margin. And so I had to pull back my investment and instead think about efficiency. Well, that is a form of referencing money. There were things that I was hiring out that I said, no, we can do this in the team. We can use our time in order to get back some of that money and make sure that we have a profit margin that makes our sort of growth trajectory is safe and stable. So money is obviously a critical currency as well. So that's time influence and money

(11:55): Want to find motivated. Seller leads online, but don't know where to start download our free motivated seller keyword report today. AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www dot AdWords, nerds.com/keywords. The fourth currency is energy. The E in timer stands for energy, and you are always going to have some sort of trade off in energy for the business and personal decisions that you make. Certain things are gonna give you energy. And certain things are going to cost energy. For example, in that situation, we talked about said, Hey, I'm going to preference my own cash flow by doing all the repairs, the rehab work myself. So I'm paying time and I'm getting back money, but I'm also paying energy. I am sacrificing energy investing it, and that's perfectly okay. That is perfectly okay. But there comes a point in your business where you're gonna have too many drains on your energy. And instead you need to think about how can I start to get energy back? What kind of tasks are going to give me energy? And am I willing to, for example, invest or sacrifice time or money or influence in order to grow my stock of energy.

(13:32): Now, this is critical to understand because ultimately you, as the investor, you are the real asset. It's now your portfolio. It's you, you are the golden goose, the unicorn, the one that makes the value, the one that gets the machine. And if you run sooner or later, what youll find is that everyone around you will start to lag and, and everything will difficult. Like you're trying to push a Boulder up the metaphorical, SIS and task, right? So we have to make sure that we manage our energy. It is a currency just like money and just like influence and just like time, the final currency that we can use to consider our business and marketing trade offs. Remember timer the acronym T for time, I, for influence M for money E for energy, and finally R for reputation reputation, there are things you can do that will save you time and save you money, but will cost you reputation.

(14:44): They will damage your reputation in the long run. OK. For example, and not even damage damage is bit of a strong word. They were less in your reputation over time. Let me give you an example. The very first time I got started in business, um, I was starting as a freelancer doing online marketing. I hadn't decided to work only with real estate investors yet. I was casting about to try to find my thing, my angle, you know, my way in the world. And the very first mentor I ever hired was this guy named Michael port, who wrote a book called book yourself. Solid wonderful book was back in the day where writing a New York times bestselling book was the thing, right? This was the way. And, uh, Michael was an incredible coach, really charismatic guy had a very straightforward process for finding clients and getting yourself booked solid as the title would say, and I joined Michael port's coaching group, and I got a ton of value out of that, made a ton of incredible people.

(15:41): That's really where my business education started, but Michael had a problem in his own business, which was that if you got a copy of book yourself, solid, his face was on the cover. If you went on the book yourself solid website, uh, what you found was a giant picture of Michael port. When you went to a coaching, uh, event with, uh, the book yourself solid team, Michael port was the main attraction. He was the one doing most of the education. And so he had created this situation where he was highly influential and he had an incredibly high, uh, level reputation. And he was making a lot of money, right. But he was spending a lot of energy and he was spending a lot of time. So this is a situation where his business model high on reputation, high on influence, but required a high investment of time and, uh, energy.

(16:39): And so Michael port needed to find a way to actually lower his reputation because he needed people to be able to come to the business and be happy to receive coaching from other people in the organization that weren't him. Otherwise, he was gonna have to spend his own energy and time forever. And while that was great with him in the earlier parts of his business, as he grew as a person and sort of moved on other professional endeavors, it just wasn't what he wanted anymore. That's such a classic trap that entrepreneurs fall. Now, similarly, you could do, for example, type of marketing, that would make you a lot of money and might actually save you a lot of time, but would cost you reputation. For example, if you put up a giant billboard in your town with a giant, you know, uh, obscene pictures and a ton of swear words, you'd probably get a lot of attention, probably get national media attention.

(17:43): You might get links to the website. You could do something totally over the top, but what's that gonna do to your reputation locally over time? Is that gonna help you or hurt you in the long haul? Now it's a truism. People always say, there's no such thing as bad publicity. I think that's absolute nonsense because while there may be no such thing as publicity, that doesn't get you attention in the short term, in the long term reputation, uh, takes a lifetime to build. It only takes a few minutes to destroy. And this has been something that I've had to learn in my business. I've had to learn this as well, right? There are investments that we've made at AdWords nerds that were, you know, in the short term, damaging to the amount of cash flow and money we had available that lowered our profit margin.

(18:31): But I knew we had to make those investments in order to get the best possible result for our clients because ultimately real estate investing is a small world and reputation is everything. And I used to sort of fight over every nickel and dime until I realize, oh, even when I'm right, the damage to the reputation outweighs the benefit in money saved. And again, no right or wrong, this changes over time. And it might change over the course of a day or a week or a month or a year, but you gotta be aware in every single business decision that you make when you are making these tradeoffs. What are the currencies that are most important to you is really important, a little bit of time or influence isn't gonna matter much, but if money is what's most important, you might be willing to sacrifice a little reputation or influence in order to get that, understand your own goals, understand what you are trying to achieve, and you will be able to make incredible trade offs again and again.

(19:38): So once again, those currencies, remember the acronym timer T I M E R for time influence money, energy and reputation as always. This is Daniel Barrett from AdWords nerds.com. If you need help, finding more leads in deals for your real estate investing business online, you know where to go. It is AdWord nerds.com. And if you could leave us a, uh, like or view on this podcast, it would really mean the world to us. I read every single one and it helps other people find the show. And, uh, I hope you will be back next week until then this is Daniel Barrett signing. Cheers.

(20:21): This is the podcast factory.com.

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