Property Hub - Investment Insights & Inspiration - Get Invested: Business or busy-ness? The business investment test before you bet your life on it

Starting point is 00:00:00 Hi Frater Fighters. Picture two business owners. On paper, they look almost identical. Similar industry, similar turnover, similar headline profit. And both appear to be doing very nicely. But the first owner works 60 hours a week. Every important customer wants them. Every awkward decision waits for them. Every quote, complaint, password, payment and paperclip emergency somehow finds its way back to their phone. They're the singer, the drummer, the conductor, the ticket seller, the roadie and the unpaid cleaner sweeping up after the encore. Now, they look impressive, they sound important, they're permanently busy

Starting point is 00:00:43 and if they disappear for 30 days, so does much of the music. Now, the second owner looks much less heroic. They're not copying into every email. Customers know the team. The work follows a written score. The numbers arrive without a founder-shaped miracle. And when the owner takes a month away, the business keeps playing. Now, here's the puzzle.

Starting point is 00:01:08 Which owner has the better business? And which business is the better investment? Because the loudest, busiest, most visibly indispensable owner may actually own the weaker asset. Their impressive profit may be hiding three very different things inside one bucket. Payment for their labour, profit produced by the business system, and value that somebody else would genuinely pay for. Now, mixed those together, and a pay packet can turn up wearing a profit moustache. And suddenly, the three times bargain that you thought you were buying

Starting point is 00:01:44 may be closer to ten times the real transferable return. So today, we're going to test whether starting, buying or continuing to own a business belongs in your A for Approach investment strategy at all. Because once your why has defined what you want, and your examination has diagnosed what you can do, your approach determines what you then do do, and which investment vehicles can help you get there. You'll discover the four very different ways that you can take a seat in the business orchestra.

Starting point is 00:02:16 the empty chair test that exposes what stops without you the founder paradox where the person creating the magic can also become the critical flaw and why for some people the smartest business investment is a great salary invested somewhere else because if the music stops when you leave the room you don't own the orchestra you are the orchestra and you may not have sacked the boss You may have simply hired yourself for every job without annual leave. So before you give business a starring role in your investment strategy, let's discover whether you're building a freedom asset or becoming the whole workforce. And let's discover whether a business pays you or quietly owns you.

Starting point is 00:03:02 So let's get invested as we appreciate the business investment symphony on the inside. Welcome to Get Invested on the Property Hub podcast channel, the leading weekly show for Australians who want to learn how to unlock their full self, health and wealth potential. I'm your host, Bushy Martin, and each week I go deep with the best investors, experts, leaders and founders to find out what it takes to break free from the grind, discover freedom and to live by design. Subscribe now and join me and get invested in the life that you really want. Let's get started. But first, a quick heads up before we jump into today's episode. After the huge response to our recent deep dives on the proposed post-budget property

Starting point is 00:03:46 tax changes on negative gearing, CGT, and the impacts of all of this on new builds, existing properties, trusts, super, commercial, ETFs, and the whole confusing tax spaghetti bowl and what it all means to you, we've been working really hard to pull together some free resources to help you cut through the noise so you can finally understand what you should be doing now with your money and your property in this new post-budget tax world. They're designed to answer the questions that many of you have been asking. Is residential property still worth it? Should I buy established or new? Should I pay down my home loan? Should I look at shares, ETFs, commercial or super? And what are the real dollar impacts of these changes and how do they compare

Starting point is 00:04:31 to other options that I need to consider. And most importantly, what helps me build my strongest usable net nest egg to achieve my version of freedom, not just pay the smallest tax bill. Because the budget noise has made everything feel like a financial Rubik's cube wearing boxing gloves. So our short, sharp guides bring it all back to earth with simple explanations, hard dollar examples percentage comparisons and the best nest test to help you make better informed decisions from here and the best part they're absolutely free so if you want to make better informed decisions just click the link in the show notes and grab your copies because property investing isn't dead but lazy investing is and the smarter investors from here will be

Starting point is 00:05:21 the ones who cut through the noise, run the numbers, and act with informed strategy, not stress. Righto, let's get back to the episode. Welcome, creative fighters. I want you to pull up a chair, pour yourself a coffee, and I want to clear up one important point right from the outset of this episode. This episode isn't an entrepreneurship pep talk. I'm not here to tell you to sack your boss, buy a laptop, change your LinkedIn title to visionary founder, and start posting photographs of yourself thinking deeply beside an indoor plant. Today's question is much more useful to you. Should a business be one of the investment vehicles that you consider to grow value and help fund your life after work? And if the answer is yes, does the particular business

Starting point is 00:06:08 that you are starting, buying, already running or investing in behave like an investment? Or is it really just a demanding job wearing your logo. Now, if this is your first Get Invested episode, we've been working through the A for Approach stage of your property wealth journey, where your why defines the life you want and what that life costs. Your examination stage tells you what you can realistically acquire, afford, hold and live with. And now your approach stage chooses the combination of investment vehicles that can bridge the gap between where you are and where you want to be. And across this A4 Approach series, we're wheeling each major investment vehicle into the workshop, lifting it onto the sniff test hoist and looking under the bonnet

Starting point is 00:06:56 and beneath the chaffee. We'll assess business, shares and equities, property and alternative assets in detail. And we'll assess each separately against the same criteria so that you can decide what fits your personal strategy, what job it needs to perform, and what to invest in when, and why. Now, super also matters, but it's the retirement investment structure that holds the assets, not another asset class competing with them. So today, business goes up on the horse first, because business can absolutely play a role. It can create income, capital growth, control, capability, borrowing strength, future cash flow and eventually transferable sale value. But business also brings an unusually concentrated mix of cash, control, complexity, responsibility

Starting point is 00:07:52 and time. So we need to treat it with the same asset neutral honesty that we apply to every other potential investment vehicle. Not business is best, not business is bad, but what job for whom, at what stage, for what price and at what cost to me. Because there are four legitimate seats that you can take in the business orchestra. Seat one, you remain a well-paid soloist inside a strong, adaptable organisation, then invest your salary surplus through other vehicles. Seat two, you start a business and build the score, the audience and the orchestra from scratch. Seat three, you buy an existing business where some players, customers, systems and financial history already exist. And finally, seat four, you own small slices of many businesses through listed

Starting point is 00:08:46 shares without taking the operator's seat. Now, they're not four versions of the same decision. They involve very different levels of control, concentration, liquidity, responsibility and time demand. And there's no prize for sitting in the wrong seat just because somebody called it entrepreneurial. So we're going to use the same three-layer assessment that we introduced in the recent investment sniff test episode, but we won't replay the whole workshop. So your gear set tests whether direct business ownership fits you, your life, your money, your nervous system, and the people sharing your life. Your SNF test tests the business itself, its strategy, numbers, investment, integrity, flexibility and force multipliers with a failure plan. And your personal Bushido code

Starting point is 00:09:38 governs how you behave as an owner and investor. So Gearset fits you. SNF tests the business and Bushido governs the owner. And you'll be pleased to hear no new acronym today. no embroidered conductor's jacket and no membership card required just one hard line that I want you to keep in mind an owner-operated enterprise can be meaningful enjoyable and very profitable there's nothing wrong with choosing that but if the business can't ultimately produce income without relying on you and can't be sold without selling you with it then it hasn't yet passed a transferable investment test. It may be a bloody good job, but classify it honestly, because freedom starts when the truth does. And before we inspect the business, we need to inspect

Starting point is 00:10:32 whether you should be conducting one at all. Now, a business doesn't only consume money. It consumes and hopefully compounds three very precious resources, your time, your money, and your capability. Now that was one of the strongest principles I explored with business strategist Tim Dwyer in an early Get Invested conversation. And it's even more relevant now because a good business can compound all three. It can convert your time into systems, your money into productive capacity, and your hard-earned capability into value that other people can repeat but a poorly fitted business can consume all three faster than a brass band consumes oxygen so let's put direct business ownership through your gear set without turning this into acronym

Starting point is 00:11:23 aerobics so starting with g which is the growth and the goal job what does the business need to perform inside your life first strategy is it meant to create active income now build capital value over the next decade. Create recurring cash flow that progressively buys back your time. Build the income and financial capacity that fuels other investments. Create a future sale asset. Express your purpose or some deliberate combination of all of these. So name the job because if you don't the business will appoint itself to the position of chief consumer of every available hour. now in my wealth by stealth journey the broad job is to go for growth then progressively convert that accumulated value into the cash flow that funds your life after work now business may

Starting point is 00:12:17 help fuel the climb it may become part of the capital value it may later produce recurring income or it may supply the surplus cash that lets you invest in more passive style assets But if you can't say which job it performs, you don't have a strategy. All you've got is an expensive hobby with payroll. Then comes your gear set E of expertise and ease. And this is where one of the most dangerous business starting sentences usually appears. I reckon I can do a better job than my boss, so I might as well work for myself. Well, maybe you can do the technical job better,

Starting point is 00:12:57 but technical competence doesn't automatically create demand, distribution, pricing, cash flow, leadership, systems or saleable value. A magnificent chef doesn't automatically own a magnificent restaurant. Sometimes they simply become a magnificent chef who now worries about leases, wages, marketing, suppliers and why the dishwasher has resigned by text. So I ask, do you understand how this business finds customers, serves them, gets paid, keeps them, and turns that activity into cash? Do you have the relevant capability?

Starting point is 00:13:36 Can you access it through a trusted operator or team? And do you actually enjoy the human work of leadership, sales, decision-making, and responsibility? Because appointing experts doesn't remove management. It just changes what you need to manage. Now next comes your gear set A for affordability and the purchase price or startup budget is only the ticker price. You also need working capital, cash buffers, equipment, technology, insurance, people, professional advice and room for customers who pay with the urgency of a sleeping koala.

Starting point is 00:14:12 If you're starting, how long can you fund your household before the business pays you reliably? If you're buying, how much cash remains after settlement for surprises, repairs, reinvestment, and a slower-than-promised handover? And if you're continuing, are you drawing too much for the business to strengthen itself? Because reinvestment needs to come way before reward. And throughout today, I'm going to use our own know-how business as a real-world case study. not a self-promotion or a victory lap but because I always want that the approaches that we discuss here to be real tangible and tested in practice for example Sonia and I designed know-how from the outset to become a lifestyle business but please don't confuse the destination with day one

Starting point is 00:14:59 the first few years we knew we had to carry it so we ran hard and fast we generally work seven days a week and we reinvested pretty much everything into awareness, brand, people, systems and the repeat business and referral machine before we slowly and incrementally started rewarding ourselves. There was no passive income pixie dust. There was patience, purpose, reinvestment and plenty of blood, sweat and tears. So the freedom was designed from the beginning but it had to be earned over time. So affordability asks more than can I start or buy it, it asks can I safely carry it, strengthen it and survive long enough for it to compound. Which brings us to your gear set R for risk and risk or your sleep and eye factor. Direct business ownership can

Starting point is 00:15:54 concentrate your income, your capital, reputation and identity into the same vehicle. One customer, one key employee, one supplier, one platform, one personal guarantee or one change in technology, consumer behaviour or industry conditions can carry disproportionate weight. So how much volatility can your household generally tolerate? How much management does the risk require after you invest? What happens if revenue drops, you become unwell, someone needs care or your best person leaves? And can you still rest, not just financially, but physically, mentally and relationally? Because the business that gives you a bigger bank balance while bankrupting your health has produced a very expensive form of poverty. Then comes your

Starting point is 00:16:47 gear set S for simplicity. No direct operating business is completely simple. You've got customers people cash flow contracts technology tax regulation and risk all playing at once but complexity should be understood documented and deliberately reduced not stored inside one clever person's head like a password protected filing cabinet with legs then consider your second year set e for equity and leverage efficiency one attraction of business is that leverage doesn't only mean debt. You can leverage people, process, intellectual property, technology, profile, partnerships and recurring relationships. Use well, those force multipliers allow value to grow beyond your personal hours. Use badly, debt, leases, fixed overheads and personal guarantees

Starting point is 00:17:43 can leverage your stress with impressive efficiency. Then finally consider your gear set t for time efficiency how much time will this business require before you invest how much after for how many years and is that demand compatible with your health relationships family responsibilities and the life you're supposedly building it for active involvement isn't a failure you may love your work you may deliberately choose to keep performing. The critical distinction though is this, are you choosing an active role inside a transferable asset or does the asset disappear the moment that you stop performing? And then comes the mandatory co-driver check. What does your partner, family or the people who rely on you

Starting point is 00:18:34 think that they're actually signing up for? Do they share the destination? Do they understand the uneven income, the capital at risk, the time commitment and the seasons where reinvestment comes way before reward. Now Sonia and I could only build what we built because we shared the lifestyle vision, we accepted different roles, we had the war chest and cash flow to fund our business for the first few years and we kept refining how the business needed to work for both of us and for our small growing loyal team around us. So don't resign, sign, borrow or buy then arrive home with the business like somebody else arrives home with a rescue goat. Your co-driver needs to be in the conversation well before the journey begins.

Starting point is 00:19:21 Now once you run that gear set you may discover that direct business ownership doesn't currently fit and that isn't a failure ambition it may be a triumph of self-awareness if your household needs stable income your buffers are thin your health or caring commitments need priority you dislike leadership or selling you don't yet have the relevant capability or a trusted operator you can't tolerate uneven cash flow or the industry has no credible answer to that technology that's changing his foundations, then becoming the owner may reduce your freedom, not increase it. Sometimes the smarter move is to choose a rewarding, well-paid role inside a financially sound, adaptable organisation, build your capability, protect your health, enjoy your family,

Starting point is 00:20:11 and then invest the surplus through vehicles that ask less of your time and your nervous system. A secure salary can supply salary, security and surplus. And invested deliberately, that surplus may buy you more genuine freedom than a business that requires you to prove your commitment by never leaving it. You don't need to be the singer, drummer, roadie and cleaner to prove that you're entrepreneurial. Mostly, it just proves that you need a nap. So the first three Bushido disciplines matter enormously here. Begin with the end in mind, understand before you own, and survive before you strive.

Starting point is 00:20:51 Your destination comes long before your business card. Your understanding comes before your enthusiasm. And your room for error comes before your dream forecast. If direct ownership passes the life fit audition, then and only then can we sniff test the specific business. so your first s in your business sniff test stands for strategy and self-fit your gear set tested whether direct business ownership broadly fits your life this s now asks whether this business at this price in this structure at this point in time performs the job your personal investment strategy actually requires because starting buying and improving an existing business

Starting point is 00:21:38 aren't interchangeable. Starting gives you maximum design freedom but minimum proof. You build demand, cash flow systems and trust from the ground up. Buying may give you customers, people, history and cash flow on day one. But it asks for more capital, much deeper due diligence and a very clear view of what leaves when the seller does. And then continuing or improving your current business gives you intimate knowledge, but can also carry sunk costs, old habits, and an identity that makes

Starting point is 00:22:13 honest decisions emotionally expensive. So ask, what exact job does this specific business perform in my portfolio and my life? Why this business? Why now? Why this amount? Why this structure? And what happens if I do nothing? Then remove the seductive labels. Remove the be your own boss, the lifestyle business that established, remove high growth, remove AI proof and remove once in a lifetime. Would the underlying business still deserve a place in your strategy and does it have a credible path to grow, pay, scale and eventually sell without assuming that you personally provide all four? Because if it only works when you do all the work, it isn't yet a business investment. It's your labor with a logo. But even when the strategy fits, the headline numbers can still

Starting point is 00:23:11 make a very ordinary investment look magnificent. Because next, we need to separate your wage, the business profit, the cash that you can actually keep, and the value that someone else can buy. And that's where the profit moustache finally comes off. So the N in your business sniff test stands for numbers and net return. And this is where we stop asking what the business earns for its working owner and start asking what it returns to an investor. Because business numbers can be accurate, but still create a very misleading impression. Turnover can be impressive. Profit can look attractive. And the owner may be taking home a very healthy amount of money. But how much of that money is payment for the jobs that they

Starting point is 00:23:58 perform? How much needs to go back into the business? How much cash is generally maintainable? And how much value can transfer to another owner? Now, these aren't accounting niceties. They're the difference between buying an investment and paying a premium to buy somebody else's job. As my old mate then Carlson from KPI then said here on Get Invested way back in May 2019, revenue is sanity, profit is sanity, but cash is reality. And for an investor, we need to go one important step further, because even cash isn't passive style return until you've separated fair wages for the work being done, necessary reinvestment to keep the business healthy, maintainable cash that can be distributed, and transferable value that someone else can actually

Starting point is 00:24:50 buy. So imagine three different chairs on the same stage. The operator's chair, the owner's chair and the investor's chair. When you sit in the operator's chair you deserve a fair wage for the work you do. Sales, management, technical delivery, customer relationships, problem solving or whatever combination of jobs currently carries your name. When you sit in the owner's chair you decide what gets reinvested which risks get carried who gets hired and how the system improves and when you sit in the investors chair you ask what maintainable return am i receiving on the money and risk that i've invested and what transferable value is being created beyond my own labor now one person may sit in all three chairs that's common in a small business but the numbers do need to pay each

Starting point is 00:25:45 air chair honestly. Otherwise the operator's wage gets dressed up as business profit and the investor quietly applauds their own unpaid overtime. So let's make this real with a simple but fictional example. So imagine a business that's advertised for $900,000 based on $300,000 of annual owner earnings. At first glance it looks like you're paying three times earnings. Very tidy. The brochure smiles. The spreadsheet hums. And somewhere a business breaker starts warming up the confetti cannon but then you discover that the owner personally handles the major customers, manages the team, wins the new work, approves every important decision and regularly works well beyond a normal week. So to own the business without performing

Starting point is 00:26:31 all of those jobs you may need a capable replacement manager so let's allow a fully loaded cost of 170 grand to do that. Now that's not just salary, it allows for superannuation, employment on costs, leave cover and the real cost of employing the capability that the owner currently supplies. Then let's allow another $40,000 a year for necessary reinvestment in technology, equipment, marketing, training or systems that had been deferred. So the apparent $300,000 return may leave about $90,000 of maintainable profit for a non-working owner before finance costs, tax and life's talent for producing surprises. So you're no longer paying three times the maintainable return,

Starting point is 00:27:19 you're paying roughly 10 times. Same business, same advertised numbers, completely different investment. Now, those figures are deliberately simplified and purely illustrational. They're not a valuation or a view of what any business should be worth. The lesson here is the recast. Separate the wage, the reinvestment, the maintainable cash, and the transferable value. And when a seller, broker, or accountant uses terms like owner benefit,

Starting point is 00:27:51 seller's discretionary earnings, adjusted profit, or adjusted EBITDA, don't be frightened by the alphabet soup. Ask exactly what's been added back, what work the owner performs, what it would cost to replace that work, and what spending the business needs to remain competitive. Because an add-back isn't automatically money in your pocket. Sometimes it's a real saving, but sometimes it's a real cost wearing an invisibility cloak. Now, before we compare it with a different business, here's a simple multiple return translator.

Starting point is 00:28:26 If the price model is applied to genuine maintainable earnings, two times earnings means you're paying $2 for each $1 of annual earnings. That's a 50% starting earnings yield and a two-year simple payback. At three times earnings, it's about 33%. At four times, 25%. At five times, 20%. At eight times, 12.5%. And at 10 times, 10%.

Starting point is 00:28:53 All before finance costs, tax, future reinvestment, and life surprise percussion solos. That's arithmetic, not a forecast. A higher multiple means the buyer accepts a lower starting earnings yield, usually because they expect better quality, growth, recurring revenue, transferability or lower risk. But if the multiple is applied to revenue, stop. Don't use the same shortcut. Imagine $300,000 of recurring revenue is priced at three times revenue.

Starting point is 00:29:28 That's a $900,000 purchase price. but if the business only converts 30% of that revenue into maintainable profit the investor receives 90 grand before finance and tax. So the buyer is really paying 10 times maintainable earnings for a 10% starting earnings yield not three times earning and not 33%. That's why turnover starts the story, gross profit shows what survives the direct cost of delivering the sale and net profit shows what survives the overheads and maintainable profit shows what may survive for the investor after a fair owner wage and necessary reinvestment. There's no universal good margin here. A cafe, a builder, a professional practice and a software

Starting point is 00:30:13 business play very different scores. So compare cost of sales, labour, rent and total expenses as percentages of turnover with current benchmarks for the same industry. Use those benchmarks as a reasonableness check not a gold star. Then compare the maintainable return with what your capital could reasonably pursue through shares, property or alternatives while allowing for the business's extra concentration, illiquidity, operational effort and risk. Control, meaning and flexibility can be valuable returns but they don't transform a weak financial return into a strong investment by wearing a motivational t-shirt. Now let's compare the first business example with a quieter business. Its headline owner earnings may look lower but its customers

Starting point is 00:31:05 are diversified, its revenue repeats, its systems are documented, its team is capable and the service doesn't depend on the founder personally arriving with a cape. Now that less glamorous business may produce the stronger freedom asset because more of its value can survive the handover. And recurring income can become a very powerful part of this. For example, in our know-how property finance business, the finance trial income progressively grew as our brokers continued serving clients. And over time, that recurring income helped cover the operating costs, improved resilience and contributed to transferable value. But trial wasn't free money falling from the ceiling. It relied on long-term client care, quality lending, retention, compliance

Starting point is 00:31:57 and a team continuing to deliver. Now recurring doesn't mean risk-free and systemised doesn't mean effortless. It means the income is lessly directly chained to one person's next working hour. So now apply the passive-aggressive questions from our SNF framework. Can it grow? Can it pay? Can it scale? And can it sell? Growth without cash can start the business. Cash without reinvestment can slowly shrink it. Scale without systems can multiply the mess. And profit without portability may disappear when the founder does.

Starting point is 00:32:38 So the numbers tell you what happened. But they don't tell you who made it happen, why customers came, why good people stayed, or whether decisions behind those results can be repeated. And that's where the next sniff letter takes us behind the spreadsheet. Because the next question can't be answered by a balance sheet alone.

Starting point is 00:32:59 Who are you backing? That's the I in your business sniff test of investment integrity. historical accounts matter tax returns bank statements and cash conversion all matters but their rear view mirrors the future day of the business will also depend on the people their motivations their judgment their incentives their culture and their ability to keep solving a dayable problem for real customers now i explore that from a different investment seat with lawrence lamb here on get invested back in september 2025 in our conversations about

Starting point is 00:33:35 founder-led businesses. Now, Lawrence was talking primarily about buying minority interests in listed companies, and that's very different from directly owning and operating a private business. With listed shares, you generally have more liquidity, less direct control, and no responsibility for opening the doors on Monday morning. But his underlying principle travels well. You can't understand the future of a business from historical numbers alone. you need to understand the people behind them what motivates them whether their interests are aligned whether they've got skin in the game and whether their judgment has created repeatable value now bring that principle back to direct ownership a founder can be the creative force and the

Starting point is 00:34:20 critical floor their energy judgment relationships and standards may be the reason the business exists but if all that value remains trapped inside one person the purchaser isn't only buying a business they're hoping to bottle a founder and founders rarely fit into the hand language so ask do the owners leaders and key people act with psychological ownership or in plain english do they think and behave like the outcome matters to them personally do their incentives reward the same outcomes that matter to customers, the team and a future owner? And can they apply judgment over bias? Can they challenge their favourite idea, admit a mistake, change course and take responsibility when reality refuses to follow the forecast? This is why culture isn't soft

Starting point is 00:35:13 wallpaper, it's operating infrastructure. Again for example in our know-how business we've always said that we're not really in the finance business or the property business. Finance and property are the mediums. What we're really in is the trust and relationship business. So our education, books, podcasts, programs and strategy work all help to get to know us, then like us, then trust us before deciding whether you want to do business with us. Now nobody needs to be cornered, convinced or chased around the internet by a sales funnel wearing active wear. So the hard-working Aussies who believe what we believe naturally join our tribe. And because trust is the real product, who we work with matters enormously. That's why we've often said no more than we say

Starting point is 00:36:02 yes, and why our no wanker policy has probably protected more business value than some policies with much longer names. And it's important to note that this isn't about arrogance, it's about alignment when clients team members and partners share the same standards the relationships are more sustainable the work's more enjoyable and everybody has a better chance of winning together at the same time our gold values of generosity openness leadership and diversity aren't framed lyrics for a foyer wall and our share the love 4f formula of fast frequent friendly and fun supported and underpinned by our team's 100% personal responsibility and zero excuses, isn't corporate karaoke.

Starting point is 00:36:49 They're behavioural promises that shape how our team works, how our clients are treated, and what happens when something goes wrong. Because a values poster can sing beautifully while the customer experience plays in another key. So when you're assessing a business, don't only read what it says about itself. Look for proof in what it repeatedly does. over 300 independent five-star reviews says far more about clients actual views of our know-how property finance business than we can ever say about ourselves so check the independent accounts

Starting point is 00:37:24 the tax records banking evidence customer concentration contracts intellectual property staff history complaints reputation supplier reliance and the incentives driving key decisions so speak to customers speak to team members understand why they stay why they leave whether the business solves a core repeat problem for repeat customers and remember seller prepared information is just an audition it isn't independent evidence so before you start a business is qualified independent accounting legal finance valuation and industry specific due diligence. Integrity can make a business admirable. Good numbers can make it profitable but neither proves that ownership will make you free. For that we need to remove the most

Starting point is 00:38:18 important player from the stage and discover whether the performance continues when their chair is empty. So imagine that tomorrow the conductor doesn't arrive for the orchestra's symphony performance. No baton, no frantic phone calls, no founder silently playing every instrument with their elbows. Does the orchestra still know the school? Does the music continue? Or does everyone stare at the empty podium until the audience asks for a refund? Because that's the first F in your business sniff test for flexibility and freedom. And here's the hard threshold. If the business can't ultimately earn without you, and it can't be sold without you,

Starting point is 00:39:03 then it hasn't yet become an investment. It's still a job with your name on the building, even if the building is now your laptop. Now, that doesn't make it bad. It may be a very good job. It may pay well. It may be meaningful. It may offer more autonomy than employment.

Starting point is 00:39:21 But, Freedom Fighters, we need to call the instrument that we're playing by its actual proper name. So give the business the 30-day empty chair test. Not a holiday where you relocate the office to a poolside banana lounge and then spend every afternoon answering emails with sunscreen on the keyboard. I mean 30 days where you stop being the answer. What stops? What slows? What breaks? Who can approve? Who can decide?

Starting point is 00:39:50 Who owns the customer relationship? Who knows what happens next? and which tasks only exist inside one person's head. Then extend the test. If a purchaser took over tomorrow, what would they still own 12 months after the founder left? The brand, the customers, the contracts, the know-how, the team, the systems, the recurring income,

Starting point is 00:40:12 or just the founder's old chair and a phone that stops ringing. That's where the word flexibility needs a little discipline because flexibility isn't working whenever you want provided you want to work all the time and freedom isn't escaping a boss only to collect 300 smaller bosses called clients and customers. Real business flexibility is optionality. The choice to step in without being trapped in. The choice to lead without having to carry every chair. The choice to work because you still enjoy the contribution not because the whole show goes dark if you take a day off. Now Sonia and I didn't begin with that freedom and know-how. We carried the business

Starting point is 00:40:55 before the business could carry us but the early effort and reinvestment had a destination to build an orchestra not become its most too exhausted musicians and we had another investment reason from the outset. Our property management and finance breaking investments weren't random businesses that we collected like fridge maggons. They gave us direct expertise and greater control over important parts of our own property investment journey. They also created recurring income streams that could help fuel other investments. And importantly, those income streams

Starting point is 00:41:29 have a value beyond the next month. Now, back in 2015, we sold our property management rent roll for multiple times its annual management revenue. And notice I said revenue, not profit. The buyer wasn't purchasing multiple years of free money. They were purchasing a recurring client base along with the work, staffing, service obligations, retention risk and operating costs required to

Starting point is 00:41:53 keep it. Because that distinction matters. A revenue multiple is a price label. It isn't your return. Your return depends on the maintainable profit that survives after all of the real costs, including a fair cost for replacing the owner. Now, at the time of this recording in 2026, Industry Price Guide places finance home loan trailbook businesses in a broad range of between two to five times annual finance trail income. But please don't tattoo that range on your calculator. It's a dated market guide, not a universal valuation. Because client quality, loan runoff, concentration, compliance, data quality, sales terms, and how dependent the business is on one person can all move the price. And the stronger and more systemized the operation

Starting point is 00:42:43 becomes, the more likely it is that a serious buyer will examine the actual earnings and operating strength, not just multiply the top line. So a recurring income book can be a real asset. But a book plus a capable team, repeatable systems, trusted relationships and founder independence can become a great business investment. So for us, that distinction has helped create what Sonia and I call our many-wear lifestyle and over recent years Sonia our Smiling Rescue Samwise and I have enjoyed living and working across the country from the Adelaide Hills and Floro Peninsula to Bowron Arring on the Mornington Peninsula, Points Lonsdale on the Bellarine and currently Lakes Entrance in East Gippsland in the what's called the middle of

Starting point is 00:43:29 everywhere which we believe is the best kept sacred in the country. And along the journey we've also tasted other regional locations around Australia while our performance-based team works across the country and overseas. Now that's not a big as thick as travel brochure and it certainly didn't appear with a puff of smoke and a business class outbreak because it's the later fruit of earlier labour, deliberate systems, appropriate technology, trusted people and a shared commitment to a sustainable lifestyle business that supports our clients, our team and the founders through our small performance-based finders, binders, minders and winders team, which is the winning business combination that I'm going to break down for you later in the episode. So we still work, we still

Starting point is 00:44:16 care and we still contribute. But our contribution is on the business, not in the business. And it's increasingly a choice, not an emergency service. And that gives us something a share portfolio or investment property can't offer in quite the same way. Direct control over how value is created, how clients and customers are served, how the team works, and what the organisation stands for. But control isn't a free return. It comes bundled with concentration, responsibility, operational risk, and emotional entanglement. Comparatively, shares can offer liquidity, instant diversification, and very little need for you to roster the percussion section. While property can offer tangible security, leverage, rent and long-term growth, but it's still lumpy, debt-sensitive and not instantly saleable.

Starting point is 00:45:10 And alternative assets can diversify or create opportunity, but their income, liquidity, transparency and risk can vary wildly. So a business can deliver income, equity growth, control, meaning and lifestyle flexibility. But compared with those other vehicles, it's usually more concentrated, more operational, more personal, and much harder to sell quickly. So the business return needs to earn its place in your portfolio. After paying a fair wage for your work, does the maintainable return adequately reward you for the capital, time, concentration, and illiquidity? does the control create genuine value for your lifestyle and your wider portfolio and does the likely after cost after debt after tax sale proceeds meaningfully advance your freedom numbers because the headline sale price isn't the nest egg your investable net nest egg is what remains

Starting point is 00:46:11 after business debt transaction cost tax working capital adjustments retentions and or clawbacks and any transition costs have finished having a nibble and any small business tax concessions have been considered that may actually improve your take-home bottom line if you qualify. That's the amount that you could convert into diversified cash flow assets as you move from growth to cash flow in your wealth-by-self portfolio journey. And if that amount doesn't compensate for the years of risk and reinvestment required to create it,

Starting point is 00:46:43 then the applause may be hiding a very expensive performance. Flexibility therefore isn't measured by how casually you can dress for a Zoom call. It's measured by how much choice the business creates without sacrificing the day that somebody else could later own. And if freedom depends on the founder staying on stage the next job isn't to practice the solo harder. It's to build the sections that can carry the performance. And that's the second F in your business sniff test

Starting point is 00:47:15 of force multipliers and failure planning, where force multipliers are the people, processes, products, platforms, profile, partnerships, recurring income, technology and incentives that allow the same human effort to create much more consistent value. They're how a one-person band becomes a multi-instrument orchestra. But every force multiplier can also become a failure point. One rainmaker may generate growth and create key person risk.

Starting point is 00:47:49 One major client may create scale and concentration risk. One software platform may create efficiency and a single digital point of failure. One referral partner may feed your pipeline and quietly own the tap. So don't just ask what multiplies performance. Also ask, what happens when that multiplier goes missing? Now, when Glenn Carson from the key person of influence, Dent Business Accelerator, joined me on Get Invested way back in May 2019, he also shared a very useful business 5P framework of pitch, publish, product, profile, and partnerships, which Sonia and I have tirelessly applied and implemented in the know-how business. and if we break that down your pitch clarifies the value and the tribe that you serve publishing turns your expertise into useful assets that work 24 7 beyond having to have

Starting point is 00:48:48 every conversation your product turns your know-how into a repeatable outcome your profile helps the right people find and recognize you and partnerships create trusted pathways to opportunity. But the interdependent 5Ps only become valuable when they support real promises for real customers delivered by a real repeatable operating system that uniquely solves real pain points. Otherwise, you've built or are investing in a magnificent brass section with no sheet music. This is also where legendary Andrew Griffiths from the Authors Academy lessons about business books has shaped our approach intimately because a book isn't merely a product it's a platform it lets people get to know you then like you then trust you before anyone needs

Starting point is 00:49:40 to be convinced to do business with you so our education through this podcast and others i appear on my books the freedom formula and get invested along with our freedom formula and property wealth programs all help hard working Aussies like yourself understand how to invest and to do property properly then as part of your lifestyle borromean ring our investment strategy creates the starting score the vision the sequence and the reason for each move this is then followed by the borromean finance ring where our finance breaking team becomes the lubricant and the fuel that connects your investment journey and then your property borromean ring is protected through our unique independent secret agent guide dog and watchdog role where we sit on your side of the

Starting point is 00:50:23 table and help to verify and validate that what's being suggested by your professional team actually suits your specific strategy, your needs and your best interests. And that unique combination has helped us become a trusted national needs specialist rather than just another voice in the low-rate loan choir. And as artificial intelligence increasingly handles standard repeatable bottom line tasks, the sustainable premium will increasingly sit in the human the value-add side of judgment, verification, context, care, trust and the courage to say no when no is the right answer. Because a sustainable business isn't built by saying yes to every dollar that wanders in wearing shoes. It's built by knowing who you help, how you help and what

Starting point is 00:51:12 kind of business relationship you refuse to create. Then the operating structure has to deliver that promise. Now in this regard, Get Invested guest Tim Dwyer's diamond business bottle of four key team components that he unpacked way back in episode two in March 2019 helped give us the practical language for all of this. So using know-how as the working example, this is why we think in terms of finders, binders, minders and winders. Where finders create opportunity, profile and partnerships. Binders are our finance architects or brokers matching suitable solutions to the client's strategy. Our minders then support delivery, administration,

Starting point is 00:51:54 and long-term client care and contact. And the central pivot behind the scenes are the winders that then coordinate, systemize, and keep the whole machine running in time. So different strengths, different chairs, but one shared performance. So the aim isn't to clone the founder. It's to stop requiring one person

Starting point is 00:52:15 to be the clone of an entire company and Sonia's guiding role for making that possible is beautifully blunt. If it isn't written down it didn't happen and if something happens more than once it becomes a process and then a habit. So nothing important is ever assumed, nothing critical ever remains trapped inside someone's head and every recurring process needs an owner, a trigger, a sequence, a standard and a place where someone else can find it, which is what we call our run over by bus test. Not because we spend our mornings planning traffic accidents, but because if one of us gets taken out of action tomorrow, someone else can pick up the score, find their place and keep the music playing. That's how knowledge becomes intellectual property. That's how

Starting point is 00:53:04 activity becomes process. That's how service becomes consistent. And that's how a founder dependent job begins to become a transferable asset. Performance-based rewards can also help align contribution, client outcomes and business sustainability while reducing unnecessary risk. But variable cost doesn't mean zero responsibility. Good incentives need clear measures, fair rules, quality safeguards and day use alignment. Otherwise, you haven't built an orchestra you've started a commission only symbol fight. Now failure planning is where we apply Bushido discipline. Head before heart, diversify by design and own the process. So inspect the business as if everything that can wobble has booked a rehearsal. What happens if the founder

Starting point is 00:53:55 disappears? If a key staff member leaves? If the biggest client goes elsewhere? If the major a supplier changes terms. If a lender calls on a personal guarantee. If the lease ends. If the core platform goes down. If customer data is compromised. If regulation changes. If cash collection slows for 90 days. If the owner becomes ill, separates, dies or is forced to sell at the worst possible time. Now you don't need a bunker, 18 tins of beans and a laminated plan for meteor impact. But you do need to identify single points of failure, reduce them where practical, ensure what should be ensured, document what must be transferred, retain enough working capital, and know your succession and forced exit options before the music stops.

Starting point is 00:54:43 Because resilience isn't predicting every wrong note. It's designing the business so one wrong note doesn't end the concert. And this finally gives us the full sniff business investment test. suitability, numbers and net return, investment integrity, flexibility and freedom, force multipliers and failure planning. But a completed test still isn't a decision because the final verdict depends on your freedom numbers, your current capacity, your preferred lifestyle and the specific job that this business must perform inside your wider portfolio. So next we're going to turn the entire orchestra into a simple verdict, whether to start, buy, inherit, invest, reshape or walk away. And the must-do now actions to stop a business dream becoming a very expensive

Starting point is 00:55:33 full-time costume. So on Monday morning, you don't need an embroidered conductor's jacket. You just need three simple traffic lights, red, amber or green, where the first light is your gear set. That's the fit between direct business ownership and your actual life. It's green when the business supports your goals, uses or develops your competence, fits your available money, your time, your nervous system, your family responsibilities, and your sleep at night factor. It's amber when the fit isn't clear yet or the family price hasn't been discussed. And it's red when the business can only succeed by sacrificing the very life it's supposed to improve. the second traffic light is your sniff that's the quality of the business as an investment

Starting point is 00:56:21 it's green when the strategy fits the number survive an honest recast the people deserve trust the business progressively buys back time and the systems team recurring relationships and value plans create value that can transfer it's amber when the business is still founder dependent but the dependency is visible, fixable, funded and being reduced. And it's red when the income can't ultimately continue without the owner or the value can't be sold without the owner. That red light doesn't mean the work is worthless. It means the business hasn't yet passed as an investment.

Starting point is 00:56:59 And the third traffic light is your Bushido. That's the behaviour you bring to the ownership. It's green when you begin with the end, understand before you own, survive before you strive, use your head before your heart, stay patient, diversify deliberately, and take 100% personal responsibility for the results. It's amber when enthusiasm is running slightly ahead of evidence. And it's red when ego, urgency, borrowed certainty, or desperation has grabbed the baton. Now, your overall verdict doesn't require perfect grain across every measure.

Starting point is 00:57:35 Every investment contains compromise, but you need to know which compromises you're accepting, why you're accepting them, and whether you've got the capacity to carry them. And I wouldn't call direct business ownership a passing investment while income independence or saleability is sitting on red. Now, the next move may be to improve the business,

Starting point is 00:57:56 buy a different business, retain a strong salary, or invest in businesses through shares instead. Because sometimes the smartest business decision is to be a well-paid soloist in somebody else's excellent orchestra and invest the surplus without taking home the drum kit. So here's how you turn that verdict into action. Action one, define the job. Is this business supposed to create active income, growth, future passive style, cash flow, an eventual sale nest egg, purpose, strategic control, or a deliberate combination of them. Write that job down. If you can't describe what the business must do for your

Starting point is 00:58:35 life and wider portfolio, you can't judge whether it's doing it. Action number two, run your gear set with your family or co-driver. Before you resign from a strong role, sign a contract, borrow heavily or bet the home, discuss the money, the time, the stress, the family load and the downside and the exit. Because a business decision made by one partner can still send the invoice to the whole family. Action number three, recast the numbers. Separate a fair wage for every job performed, necessary investment, working capital, maintainable cash and transferable value. Then ask if it can grow, pay, scale and sell. For a business purchase, don't rely on the seller's spreadsheet having excellent numbers. Independently reconcile two to five years of financial statements,

Starting point is 00:59:27 tax returns business activity statements sales cash flow debtors creditors assets liabilities and the bank account where cash reality finally takes a stage action number four keep a 14-day dependency diary record every task relationship approval decision password and rescue mission that waits for you then run a 30-day empty chair test what stops what slows what breaks and what can be documented, delegated, automated or deleted. Action five, map your orchestra. Who finds, who binds, who minds, who whines, who owns each recurring process?

Starting point is 01:00:09 And where is the lonely player whose unexpected absence would turn your concert into two hours of nervous coughing? Identify every single point of failure, then reduce, insure, document or deliberately accept it. Action number six, choose your lane. Is it start a business, buy an established business, take an existing business over, improve the business you already own,

Starting point is 01:00:35 keep the salary, invest elsewhere or own small slices of many businesses through shares and equities? If you're buying, use independent accounting, legal, finance, valuation and industry expertise. Verify licences, contracts, leases, employers, employees, suppliers, customer concentration, intellectual property, cyber and data risk, plant equipment, and any security interest registered against assets.

Starting point is 01:01:01 In Australia, that includes checking the Personal Property Securities Register, or PPSR, so that the shiny equipment that you're buying isn't still carrying somebody else's security risk and a risk of repossession. And use qualified advisors to improve your decision not to outsource it because the signature at the bottom is still going to be yours. Now if today's conversation has made you realize that you've got income, ideas, assets or perhaps a very demanding business but not yet an integrated life first strategy then that's exactly what the Complete Property Wealth Program is designed to help you build. It takes you through the full journey in the right order. Your why, your examination, your approach, your leverage, your treatment and your

Starting point is 01:01:44 ongoing, repeating health check. So you're not collecting businesses, shares, property or alternatives like financial fridge maintenance. You're selecting the right vehicles and the right sequence to perform the right jobs for your freedom numbers and your ideal lifestyle. If you're ready to connect your purpose, your capacity approach and portfolio into one clear plan, then just click the Property Wealth link in today's show notes and take a closer look. No pressure, no fog machine and no salesperson appearing from behind the curtain with a tambourine and the countdown clock. Just the structure, the tools and the sequence to help you build your wealth by design and not by default. So what should remain when the music fades?

Starting point is 01:02:25 A business can be a powerful investment. It can create income, growth, control, purpose, flexibility and a saleable nest egg. It can also consume capital, concentrate risk, occupy your mind, strain your family and by itself a very comfortable lifestyle using yours. The difference isn't entrepreneurship, it's investment discipline. Does it fit you? Do the numbers reward the risk? Can the performance survive your absence? And does the business progressively turn your time rather than permanently wrenching your life? If direct ownership passes those tests, it may become an extraordinary engine for your freedom and your wider portfolio. If it doesn't, that's not failure, that's clarity.

Starting point is 01:03:14 Because there are ways to own excellent businesses without taking the operator's seat. And when we turn to shares and equities in upcoming episodes, we'll explore how owning small slices of many businesses changes the balance between income, growth, control, liquidity, diversification and the time they demand from you. but for now that brings us to my original quote of the week the strongest business doesn't just pay you money it pays you back your time and keeps playing when you leave the stage so don't measure your success by how indispensable you become measure it by the value that you've

Starting point is 01:03:56 created the choices you've earned the lives you've improved and whether the music can can continue without costing you the freedom that you built it for. So thanks for joining me, Freedom Fighters. And until next time, go out there, live more, give more, grow more, and become more. And remember, wealth isn't just what you own. It's the freedom to live how you choose, with the ones you love, while you're still here

Starting point is 01:04:22 to enjoy the performance. So choose your seat, know the score, build your orchestra, and always, always get invested. Thanks for tuning in to Get Invested on the Property Hub podcast channel, your home for property investment insights and inspiration. Make sure you subscribe to Property Hub for free. Get your weekly dose of Get Invested inspiration along with every episode of Realty Talk, Australia's top online property show for red hot property investing news and insights direct from industry leaders and influencers. And finally, I'll see you next time.

Property Hub - Investment Insights & Inspiration - Get Invested: Business or busy-ness? The business investment test before you bet your life on it

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