JF978: How 9 MILLIONAIRES Were Made with This Simple Trick #SkillSetSunday
He’s a professional consultant from New Zealand and helps other people get their business off the ground with their own ideas and unique talents. There are too many gold nuggets to not take notes, be sure you bring your full attention to this episode, enjoy!
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Sam Ovens Real Estate Background:
– Millionaire Consultant & Creator of Training Programs For Consultants at OVENS International
– CEO & Founder of SnapInspect; A property inspection app for property management companies
– Created 9 Millionaires & 136 6-Figure Consultants from his trainings
– SnapInspect has an office in New Zealand, North America with over 2,000 clients in 16 different countries
– Based in New York, NY
– Say hi to him at http://www.consulting.com
Click here for a summary of Sam’s Best Ever advice: http://bit.ly/2pe6ukl
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.
I hope you’re having a best ever weekend. Because it is Sunday, we are doing a special segment called Skillset Sunday, where by the end of our conversation you will have a specific skill that you will then be able to apply towards your real estate investing ventures. Now, today it is a unique skill, in that this is a skill that you can implement prior to starting your real estate ventures, to have the capital to actually use to invest. That’s the focus of our conversation – how to generate cash flow to use for your real estate investing.
With us today to talk us through that – Sam Ovens. How are you doing, my friend?
Sam Ovens: Good, thank you!
Joe Fairless: Nice to have you on the show, Sam. A little bit about Sam – he is a millionaire consultant and creator of a training program for consultants at Ovens international. He has created nine millionaires and 136 six-figure consultants from his trainings. He created SnapInspect, which has an office in New Zealand, North America with over 2,000 clients in 16 different countries. That is a property inspection application for property management companies. So he does have some experience within the real estate category. He’s based in New York, New York. You can say hi to him at his website, which is the show notes page.
Before we get into it, Sam, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Sam Ovens: Sure. I did the normal sort of thing – went to school, went to college and then got a corporate job, and then realized that I didn’t like my corporate job pretty quickly. I decided I wanted to be an entrepreneur, so I quit my job and then I moved back home with my parents into their garage, and decided I was gonna start a business. I didn’t know anything and I had no money either, really… I had probably about $1,000 or something, which was supposed to keep me alive.
The first couple of businesses I started were just cool ideas; that’s how a lot of people start, they’re just like “What’s a cool idea?” I started a job board, and then an office lunch delivery business, and they both failed, and I spent my first year pretty much just failing. Then that’s when it really hit me that all these businesses I’ve created, they were just cool ideas which I’d come up with. I just thought “What’s a cool idea?” and then I created it and went out there and tried to sell it, and then no one wanted it.
That’s when I really realized that no one wanted the things I was coming up with, and the ideas that were cool in my head weren’t exactly things other people would pay money for.
It was like a big wake-up call, so the next time around I decided to go to the market first and ask them. So I went out to the market first and I said, “Hey, what are some problems that you guys have? Maybe I can help you solve those.” So I went out to the market and I found out that property managers had a massive problem with property inspections, so I decided to start helping them with property inspections and I came up with SnapInspect. For the first time ever, something I created worked, and it was because I got outside of my own head and went to the market, and I created something that people actually needed, instead of something which I thought people would want.
That worked, and that kind of evolved… I grew that business up, I ended up selling my shares in that to my business partner, so I’m out of SnapInspect now. Then I became a digital marketing consultant, helping businesses get customer online, and then that’s involved into — now I help people start consulting businesses. I help people who have a skill or want to have a skill start their own private consulting business. We have online trainings that help people do that.
Just recently we acquired Consulting.com, so now we’re really growing into a company that has multiple offices and a big team, and it’s less about me now and it’s more about a company. It’s gone from being a private consulting business to being kind of like an e-learning platform. Like most entrepreneurial stories, it started one way, ended up somewhere totally different, but that’s kind of how it happens.
Joe Fairless: What was the need that SnapInspect solved the problems, based on your original research?
Sam Ovens: Property managers – when I spoke to them… This was back in 2012, or something… Back then, the way they were doing property inspections is they were going to the property, carrying a clipboard with a printed checklist; they’d have a pen, they would complete the inspection checklist like that, and then they would have a digital camera with them, they’d take photos, and then they’d go back to the office. There they would open up a template on Microsoft Word, manually copy the information over into the template, and then upload the photos from the digital camera to the computer, format them, put them in, save it as a PDF, attach that PDF to an e-mail, then send that e-mail to the owner.
The average property manager managed 130 properties and they had to inspect each one twice a year minimum, legal standard. So we’re talking about like 600 of these inspections, and each one of them was quite an ordeal of just shuffling things around, and it was very inefficient. People hated it, it was their number one problem.
If you spoke with a property manager then – I’m sure even if you spoke with a property manager now – and you were like “What’s the number one burden of your day-to-day in your job?” they would say “It’s property inspections.”
Joe Fairless: So you put it in a digital template or format, so they could easily upload the content and then the output would be something they could send out.
Sam Ovens: Yeah, I created a mobile app; you just take photos, you complete the checklist, and then it creates the PDF and e-mails it to the owner as you walk out the door.
Joe Fairless: Now we’ll transition into what we kicked off the show talking about, and that is how to generate cash flow for investments so that we can invest in real estate? How do we build up our cash flow? Your focus was teaching how to get online customers, now it is help to start a consulting business… Take it away – how should we structure our conversation so that by the end of this the Best Ever listeners will know how to generate cash flow so they can start investing in real estate, if they haven’t already?
Sam Ovens: Well, generally you have to have cash flow to build up a large stake, like a war chest of cash to invest. Unless you’re lucky enough to get given some, which I’m sure most people aren’t — that was the big hurdle for me… I was like, “Well, I’ve got no money to invest, so there’s no point in learning how to invest unless I’ve got money to invest”, and it’s like the chicken and the egg problem, which one comes first?
That’s when it really dawned on me that when you’ve got no money, cash flow is the most important thing in the world, because you have to keep yourself alive and you have to stay in the game. And most importantly, I found you have to have confidence. If you don’t have a certain amount of cash in the bank, you start making lousy decisions, and you’re desperate, and you’ll want to jump at a deal which you usually wouldn’t jump at if you had enough cash to float you through the year.
Warren Buffett talks about it a lot – he even calls it “cash float.” Berkshire Hathaway always has at least 36 billion on cash, purely because he never wants to worry, because when you worry, you make poor decisions.
So I realized this, and I was like “Okay, so you need cash to really be a good businessman, but how do we get it?” All the product businesses I looked at, they were capital intensive; you had to spend money upfront. To built a software product, you had to spend money upfront. So when it came to developing SnapInspect, for me, I had a great idea, the market validated it with me, they saw that this would work, and we all paid for it, but I didn’t have the thing to sell to them.
So I was kind of stuck here, I was like “Well, this is a good investment, but I don’t have the money to front it”, so I was forced to figure out a way to generate the cash to fund the investment and bring it all to life, and that’s when I first turned to a consultant. Plain and simple, I knew that a lot of businesses and a lot of people out there, they need help with different things, they have problems, and a lot of problems people have aren’t just product problems… Like, there’s not a product to solve everyone’s problem; a lot of them are services and advice, and there’s a whole market out there for people that just need advice, and that’s just talking to someone and they give you money in exchange for it, and you can actually charge quite a lot of money for that.
I realized that the stuff I had in my brain just from understanding a little bit about marketing and sales and stuff, to me it was worth nothing because it was just what I knew, and everyone always undervalues what they know, but to other people, I had no idea that that was worth money. So I started talking to other people and asking them about what their problems were, and then if I could help them, I would say “Okay, well I can help you with that. I’ve got experience with this thing, I know how to solve this problem. Would you be willing to have an agreement together where I train you on this or consult you on this, and you pay me in return?” I was able to get a few deals like that… None of them were huge, they were like $500-$1,000. And just by selling those things, I was able to get enough money to build SnapInspect and actually get it off the ground.
So it was through selling my advice that I got enough money to front an investment, and I think having a consulting arm really for any business is a great thing to have, because if you need cash flow or if you need to get some liquidity at any point in time, you can do that.
Joe Fairless: So for the Best Ever listeners in varying backgrounds, because we’re all over the United States mostly – 93% of the listeners are in the U.S., and then 7% all over the world – where do we go from here? …Where yes, agree, Sam, it makes sense; we should start a consulting arm for our business to help generate cash flow. Now what do we do?
Sam Ovens: Well, if it’s something you actually want to do, you have to go to the market. You need to know what you’re gonna be selling. People feel like they have to go out and just learn a whole bunch of skills and acquire a whole bunch of knowledge, and it’s the wrong way to go about it. If you just go out and you start learning – learning for what? What are you optimizing for? Your mind is an algorithm, and if it doesn’t have an output function set for what it’s optimizing for, it’s just gonna make a mess.
Whenever you’re gonna learn or whenever you’re gonna acquire information and knowledge, you need to have a reason why, you need to have some sort of intent. And then once you have the intent, it’s very easy to acquire the knowledge. Where you find that intent is you don’t [unintelligible [00:13:31].05] because you don’t know what you need to know.
The way I make it really simple for people is it’s like imagine that there’s a girl called Suzie and she’s sitting on a park bench, and you’re sitting on a park bench opposite of her, and you’ve gotta guess what Suzie wants for lunch. You have no idea what Suzie wants for lunch; you could sit there and think about it all day, you could read every book there is, you could listen to every podcast, you could read every blog… You could own Google, and you still wouldn’t really know what Suzie wants for lunch.
This is kind of what entrepreneurship is about, and people kind of messed it up a bit… They try and learn all this stuff and then guess what Suzie wants for lunch, but you’re never gonna know, no amount of information can tell you. The easiest way is to just go over and ask her. That’s what entrepreneurs need to do, any type of entrepreneur. This doesn’t matter what niche, what country, what anything.
Very simply, Suzie is the market. You need to go out to your market. If your market is real estate investors, if your market is property managers, if your market is whatever – you can go and talk to your market and be like, “Hey, what are the most painful problems that you face on a day-to-day basis as an X?” And X could be a property manager, it could be an accountant, it could be a real estate investor… You ask them that, and then you’ll be quite surprised – people love telling you about their problems. They love talking about themselves, and they’ll tell you. And you don’t just listen to the first one, because one person can be wrong, one person can be an outlier; you need to listen to enough of them. I would say a sample size of about 20 or more.
After you’ve talked to 20 people in one specific niche, you’ll start to recognize a pattern, and you’ll start to recognize reoccurring themes between these conversations, as I did with property managers. I started to notice that out of 20 property managers I spoke to, probably 18 of them hated property inspections. I was like, “Okay, this isn’t just one person. This is like a widespread issue here.”
You’ll be amazed at how easy these things are to find. If you talk to the market and you care for them and you don’t have any agenda or any bias in your mind when you go there… A lot of people – they already know what they want to sell to the market, so they go there and they’re asking questions to position it just so that they can sell their thing. You’ve gotta remove all the bias; you can’t have an agenda, otherwise you’re gonna skew the conversation. You literally have to have no bias.
You talk to them, you find out what you want, and then you create the offer. That’s where you get the information and you create the offer, whether it’s a product or a service or a consulting business or whatever, and that’s how you find out what to sell.
Once you know what to sell, then you know what skills to acquire, and if you don’t have those skills in order to solve their problem – it’s very easy, you can go and learn them.
Learning things is very easy. Knowing what things to learn is the hard part. So that’s how we figure out what to learn, we optimize off the market. We go speak to the market, find out what Suzie wants for lunch, figure out a solution to give Suzie what she wants, and then acquire all the knowledge and information necessary in order to fulfill Suzie’s want.
Joe Fairless: On the very first step, which is really knowing who you’re speaking to, knowing your audience, knowing which niche you’re focused on – do you have any suggestions for the Best Ever listener who hasn’t identified who they should be speaking to?
Sam Ovens: Yeah. Well, the first thing is you have to pick a niche. The man who chases two rabbits catches none. The guy who tries to chase all of the rabbits, he’s like “Screw chasing one, I’m going for everything. I’m gonna chase everybody.” And he goes chasing everybody and he gets nothing. Then the guy who just chases one rabbit, he always ends up catching it. Business is very much like this.
A lot of people, a lot of entrepreneurs are too afraid to narrow their reach because of what they might miss out on, but they don’t understand without narrowing their niche they don’t get anything. So the key is to pick a niche, that is mandatory. You can always make it wider later, but to begin with, it has to be nice and narrow.
To answer the question “What niche to pick?”, it honestly doesn’t matter. You can’t pick the perfect niche, there’s no way to do that. This isn’t a science, or at least a science that exists at this present moment in time. There’s no way to study and theorize on what niche to pick. The best thing to do is just to pick one… Just use your instinct.
Imagine someone has a gun to your head. They’re gonna blow your brains out in ten seconds. What niche are you gonna pick? Whatever you say is a good one to start with, because we can always change it. Like I said, your mind is like an algorithm, it optimizes. If something doesn’t work, it’s like “Okay, we don’t do that again.” If something does work, it’s like “Maybe we’ll do more of this.” So it doesn’t matter what you start with, it’s just that you need to start.
I told you my story before about how I started with an online job board, then an office lunch delivery business, then a property inspection app, and now I’m here… I’m probably doing the thing right now which I should have always been doing, but I was only able to find that by doing the wrong things. So that’s the key – pick anything, and just do it. If it’s not right, then change it. If it is right, do more of it. Trying to get it right, you’ll never have picked anything.
If I was still trying to pick the perfect niche, I’d still be back at the starting blocks, five years ago.
Joe Fairless: Once you identify what should be created based on what your target audience says they have a problem with – so you’ve got the offer, and then you went and learned whatever is necessary, assuming they didn’t have that knowledge, how do you know how to price or structure the consulting program?
Sam Ovens: That’s a very good question. We’ll handle the structure of it first, and then we’ll handle the price. In terms of the structure, I like to use this thing I call ‘minimum viable offer’. I blatantly stole that from the guy who wrote Minimum Viable Product, which is MVP – Eric Ries, The Lean Startup. He found in the sales world that people were building these big bloated products that had like a thousand features and they were like rocket ships, and people were sick and tired of all of this crap; they just wanted something lean, and just something that was simple and could do the job…
So these new protagonists emerged in the market who were people who focused solely on minimum viable products and made them dead simple, and they were actually able to beat the fancy, complex products. It was a case where simple beats complex. In the consulting world right now it’s gotten complex, so it’s a ripe time to come in with that same strategy.
I came up with the term ‘minimum viable offer’ – it’s the same as minimum viable product, except we’re selling services instead of products. So we look at the customer’s problem and we ask the question to ourselves “What is the least amount of work I can do to get that person what they want?” I’m not trying to show off how smart I am, I’m not trying to talk about this new theory that I read in this book, I’m not trying to talk about any crap which they don’t need… I’m just trying to offer the least possible, because that means it’s easier for me to deliver, it means it’s simpler for the client, it’s more simple to communicate, and it’s a lot easier to do.
So you really have to start with that question, “What’s the least amount of work possible that I can do to help this customer achieve their result?” and again, like everything in life, you’re not gonna be able to figure this out perfect before you do it. So you kind of come up with a hypothesis; you’re like, “I believe this is going to work” and then you form your hypothesis and you go out to a customer and you sign them up, and you start doing the work with them. Then they either get the result they were after or they don’t. Then you go back to your hypothesis and you’re like, “Okay, where could I have improved this? Where did I go wrong? What should I do more of, what should I do less of?” Then you form a new hypothesis, you go back to the market, you implement it again, and it’s just an iterative process, each time coming closer and closer to the perfect offer.
So that’s how we create the perfect offer – it’s minimum viable, and we use the scientific method of hypothesis, iteration and feedback to optimize it to get it to that perfect product market fit, or in our situation, service market fit. So that’s how we do that.
Then in terms of pricing the offer, what I like to do is price around 10% of value. You have a price on costs. I think costs-based price is a very stupid way to do things. That came about from the industrial revolution when people were selling steel and oil and things, and we’re not in the industrial revolution anymore.
These days it’s all about value. You really have to determine what is it worth for this person to have their problem fixed. Let’s say we’re in real estate investing and this guy has a bad deal; it’s bleeding him out like 2k/month. If he doesn’t fix that, it’s gonna cost him 2k/month for some horizon of months; you could assume maybe six months – it would cost him $12,000. Then if we would have priced our offer, if we thought we could save him from that deal, we could say “Okay, the value would be $12,000 for him”, and to make it a blockbuster deal, we wanna price on 10% of value.
If he’s gonna save 12k if we charged him $1,200 for that, then it’s a no-brainer, right? That way you’re gonna have an awesome offer. We don’t wanna be too greedy and be like “We’ll charge him 10k.” We could absolutely do that, but my view is that you want to blow people away. You want to be like the iPhone. The iPhone is pretty cheap for how much value you get.
When you have an offer like that, it just goes crazy. You don’t even need to market, you don’t need the webinars, you don’t need all this crazy copywriting which all these copywriters do and put highlighter and countdown timers everywhere… It’s just a bloody good offer and people talk about it.
That’s what happens when you price it about 10% of value, so that’s how I recommend everyone prices things.
Joe Fairless: I love that. And just to ask a clarification question on the pricing – do you recommend pricing based off of, say, monthly retainers of 10% of value, or a one-time thing, or any combination thereof?
Sam Ovens: That’s a good question. It totally depends on the nature of the problem. If the problem is kind of a one-off sort of thing, then you’d probably just have a one-off fee. If it’s an ongoing thing, which is like you’re going to be working together for a while, and personal training is one of them – you just don’t get fit and then that’s it; people who have tried to do that, they often end up not fit again.
So it totally depends on the nature of the problem. If it’s an ongoing thing, then you would have a retainer; if it was a one-off sort of thing, you would go one off. You’ll be able to tell what makes sense when you see the problem.
Joe Fairless: Sam, is there anything else that we haven’t discussed as it relates to generating cash flow so that we can then invest in real estate that you wanted to mention?
Sam Ovens: We’ve talked about some good theory and everything about how to go out and make money, but the big thing that I see every day with entrepreneurs is that they become great money makers but not very good money keepers. Pretty much everyone I’ve observed – even my heroes who I observed five years ago – it’s amazing to see that all the money that’s gone through their hands, they still don’t have any of it… So I think there’s massive amounts of information missing in this industry, and in terms of accounting and finance and being financially responsible.
I think everyone’s being so pulled on the bias of “Make money!” It’s all about making all this money, and it’s great, people have learned how to make a lot of money, but they haven’t kept any of it. It’s kind of like, if we observe history, when pro athletes first started making a lot of money, in boxing or in football or in basketball or whatever, the first people were the pioneers of their industry; the first people who did it, they lost it all. Only the modern day people can look at their mistakes and learn, and that’s why they have financial managers, and they’re more sensible now.
I think it’s more than just making the money, I think it’s also hanging on to it, especially in investing. I understand now that in business once you’ve got money, it’s more of capital preservation than trying to make more. Protecting your downside is more important than trying to make more, and that’s the number one thing that becomes an issue once you have some money.
So I think a lot of people need to read some books on accounting and on finance, and just on managing money, because the biggest thing — I’ve seen so many millionaires do it… They’ve made millions, and they don’t have millions anymore. So that’s the only other piece of advice I would add.
Joe Fairless: I was interviewing a gentleman, and his mentor was Ross Perot… And Ross had a famous saying that he’d always mention prior to investing in something; he said, “It’s more important to be focused on return OF capital than return ON capital”, and that’s exactly what you’re talking about here.
Sam Ovens: Yeah, absolutely. It’s a concept which you don’t learn to appreciate until you have some capital. Because most people are swinging for the fences all the time, because they’re like “What does it matter if I lose 1k?” But once you’ve got a pile, it’s more about protecting that pile than trying to add to it.
Joe Fairless: Where can the Best Ever listeners get in touch with you or your company?
Sam Ovens: My website – the new one, which is live right now, but it’s just one page… There’ll be a full blog there and everything in the next few days. It’s Consulting.com.
Joe Fairless: And what will they find when they go there? On that one-pager, what will they find?
Sam Ovens: They will find a basic video about what we do – we provide training programs helping people become consultants. The reason why I’m saying it now is because in like two or three days’ time there’s gonna be a proper website there, which has a lot more information… Because we’ve only just acquired that domain name.
Joe Fairless: Well, congratulations on the new acquisition and thank you for being on the show. You walked us through six steps to start a consulting program, so that we can go invest in real estate if we haven’t already. Step one is pick your niche; as you said, if you chase two rabbits, then you get no rabbits… So find your rabbit and go chase it. Two is know your audience. Three is know what you should be selling to your audience; talk to them, do 20+ interviews. Four is create the offer based on what they want, and then five is know how to structure it with your minimum viable offer approach. You test and optimize that. Six is getting the pricing right, and you recommend pricing it at around 10% of value.
Thanks so much for being on the show, Sam. I love your quote also — you had a couple of money quotes, in my opinion. One is “Don’t undervalue what you know. Most people do.” And also, “Learning things is easy. Knowing what to learn is the hard part.” Ain’t that the truth?
Thanks for being on the show, my friend. I hope you have a best ever weekend, and we’ll talk to you soon.
Sam Ovens: Thanks, you too!