SFR 174: Why Entrepreneurs Are Paid More...

Boom! What's going on everyone? This is Steve Larsen. This is Sales Funnel Radio, and today we're gonna talk about why entrepreneurs get paid so much.

 

I've spent the last four years learning from the most brilliant marketers today, and now I've left my nine to five to take the plunge and build my million dollar business.

 

The real question is, how will I do it without VC funding or debt, completely from scratch? This podcast is here to give you the answer.

 

Join me and follow along as I learn, apply and share marketing strategies to grow my online business using only today's best internet sales funnels.

 

My name is Steve Larsen, and welcome to Sales Funnel Radio.

 

What's up, guys? Hey, I've been really excited for this episode actually I put up my little trello board, and I was taking notes on it. I've been really excited actually to dive through this with you guys.

 

I've got my whiteboard here, for those of you guys that are on iTunes, I'm actually drawing this out, but I'm sure it'll also be in the blog and other places anyways.

 

Guys, thanks so much, wherever you're tuning in, thanks so much. Sales Funnel Radio has been blowing up like crazy thanks to you guys, and I really just wanna say "Thank You."

 

When I left my job, actually let me go further, let me go further back...

 

A while ago, I don't even know how long ago it was, it was over a year ago. It was probably a year before I left ClickFunnels.

 

we were launching this program, and I was really excited because it was one of the first projects where I was able to get a little bit of cut of the action, and I was like, "Yeah, what's up? This is super cool!" Right?

 

I was just working my guts out for this thing. I worked so freakin' hard, I don't even know how many hours I put into this thing...  It was an ungodly amount of work. 'Cause I wanted to... You know, man, it's freakin' Russell Brunson... I wanted to make sure it was awesome stuff.

 

And we killed it. The sales were awesome, but when my cut came into my bank account, I was like, "What?!"

 

I had calculated all these sales, and I was like, "Holy crap! Check this out, we're gonna hit all these financial goals." All these financial goals my wife and I had, we were gonna hit 'em so fast, I was like, "Holy crap, this is so cool! Holy crap!"

 

And when the check came in it was about half of what I expected. I was like, "What the heck? Who? Where's all the cash?" I was like, "There has to be some mistake!"

 

And I start going, and I'm looking through the pay stub and everything, and sure enough, greedy, disgusting, nasty, filthy Uncle Sam had his just molded, gross, fleshy hand all over that check, and I got taxed 42% on that thing.

 

I was like, "Where did all the cash go?! Oh my gosh, what?! This is ridiculous!"

 

It was my first big encounter of getting paid a huge lump sum and only getting really about half of it. And I was like, "That sucks."  

 

And I can see where there's a lot of dilemma that goes back and forth, where entrepreneurs are like, "Well, should I not make more money because  I gotta pay more taxes?"

 

...Man, just pay the taxes,  and make more money. Make your wallet fatter.

I'm not a financial adviser, but that's what I do. Just pay the taxman, just move on forward.

 

And I was like, "That's crazy." And what was interesting to me is when I ended up leaving ClickFunnels, cash started coming on in, quite a bit right at the beginning, like "Bam! Huge flood of cash," 'cause I had built up this big campaign and the doors opened, and a big old flood came in. There was this big surge of cash, and we kept almost all of it, and I was like, "Hmm, why did that work that well that time?"

 

Alright, I'm a W-2 of my own business, that's how I set it up, a W-2, anyone, so I'm an employee of my company,  so we were still paying ourselves, we paid ourselves a small amount.

 

I didn't take a paycheck from my company for quite a while, alright? 'Cause I was just rolling cash on it, we were living on savings.

 

And what was funny is when we started paying ourselves, it ended up being about the same tax rate as when I was working at ClickFunnels. But suddenly I could expense things like the car.

 

So while we were still at the same tax rate, I could go in, and I could grab...

 

And this is not to be like a financial, you know, strategy session. I would not say I'm a guru of that at all. I hire other people out for that, kay?

 

But I started expensing out all this other stuff and now suddenly, with the same amount of cash coming in, we were keeping more of it, right? We had greater amounts of discretionary income because of the fact we run a business and had an actual company.

 

And I was like, "That's really fascinating, Why is this working so well?"And I went back, and I started looking at it, and sure enough, all these other guys kept telling me, "Man, if you are a W-2 employee you are getting eaten alive with taxes." And I was like, "Ah, what do you mean? "

 

I had no idea until I actually jumped ship how much a W-2 employee gets gouged. I mean straight up murdered with taxes. Holy crap, it was nuts!

 

It actually made me sick to my stomach to think about how much money I had given away to the taxman which I legally did not need to do if I was simply a 1099, right? Or something else like that.

 

So anyway, one of the first moves I ever made...

 

And again, I'm not a tax person, I'm not your financial adviser. *Disclaimer, Disclaimer* Does everyone feel disclaimed? Nice.  Alright, now that you're all disclaimed, I'm just gonna tell you what I did...

 

I went in, and I immediately took every exemption I could for my own company, the full nine, if that's the full amount, hopefully, it is, 'cause I took the full amount.

 

And then I started figuring out what other ways we could put more expenses back on the business - not that I'm gonna live off the business solely -I would not do that, but what made sense to make the business run we started doing that.

 

I was like, "Sweet, okay, this is super cool." And it was crazy to get paid the exact same amount, but we were keeping way more of it. So my wife and I could go hit these other goals we wanted to...

 

"Alright we got this much to put in our little emergency fund” - I call it the "oh craps," like if a water heater goes out, which it did a little while ago, right, "Oh crap!" That comes from the "oh craps." So we've got an "oh craps account," you know, a rainy day account.

 

And it was funny how fast we hit those because I paid myself the same amount as when I was at ClickFunnels, but I was keeping way more of it, right?

 

So anyway, I just wanna talk real quick about why entrepreneurs get paid so much more, 'kay? Again, those are some of things that I do. And there's way more that I do with that as well.

 

I don't want anyone to think I'm trying to become like a financial adviser, I'm not that at all. I will not ever try to be that. I'm a marketer, but real quick, I just wanted to walk through and share with you guys why, why an entrepreneur gets paid so much and why everyone should have their own LLC.

 

Again, *Disclaimer, Disclaimer*  - But it is ridiculous to me when someone doesn't, 'kay? It is insane, it is insane how much money you don't have to pay in taxes when you have revenue going to an LLC instead of you as freakin' W-2, oh my gosh. I Lost a lot of money. Okay, anyway. Whatever, it's over.

 

I'm still not totally over that emotionally, that was like crazy.

 

This is not just coming straight from me, someone taught this to me. I don't remember whether it was Russell, or someone in the circle, anyway... I wanna go through real quick, and I wanna talk about what I learned.

 

Now if you are W-2, I wanna be able to share with you guys the best places, in my opinion, to be in the company - because the entrepreneur gets paid a lot of cash, right?

 

In fact, that's something that Russell would always say, "Look, the business exists to serve people and to make the entrepreneur money. Take money from it. That's why it exists - to create income. Don't be afraid to get paid by your business."

 

So again, I'm not a financial adviser, I'm speaking in massive stereotypes here, got it? But this is why an entrepreneur gets paid so much money...

 

When you think about an entrepreneur, they're here at the top, I'm just making sure you guys can see this, yeah, okay cool. They're here at the top.

 

I always laugh when people are like, "Is this a pyramid scheme?" And everyone tries to backpedal out of that. "Man, you freakin' hope it is!" To be an entrepreneur, it means you're at the top! The pyramid's all below you, right?!

 

You might have this person here, they work for you, this person, this person. And then these people underneath there, they got their teams, right? What does that look like? Might just be the office. Anyway, right. It's funny... so this is the entrepreneur at the top, right?

 

Think about what the entrepreneur has...

 

The entrepreneur at the top has all of the risk. All of the risk!

 

When I left ClickFunnels, I'm the one who took all of the risk, right? The risk doesn't sit on anyone else's shoulders, just me, right? All risk is right there, risk. Huge amounts of risks directly on the entrepreneur's shoulder, no one else shoulders it, 'okay?

 

With risk also comes reward, right?

 

So there's risk, but that's the other reason why the entrepreneur gets rewarded so much, because they take on all of the risk, right? All of it. And they don't even know, a big old shot in the dark.

 

Doing something like I did was kinda ballsy, right? Leaving ClickFunnels without actually having a revenue stream set up...  It's only because I've been doing this a long time I felt comfortable doing that. I don't recommend that to anybody else, 'kay?

 

Somebody messaged me, and said, "I quit my job, just like you did!" I'm like, "Oh crap!" Like, let me just be clear, okay? Don't, don't, I'm not telling you to quit your job, 'kay?

 

What I wanna do is I wanna share with you why an entrepreneur gets paid so much money.  And the best places to be in a company when you work inside of it.

 

One thing that my dad always taught me growing up, and I'm so glad he taught me this. He said, "Stephen, always make sure you are in the revenue side of the company, not the cost side of the company." And I said, "What do you mean?" He said, "Meaning the role that you're in when you're an employee."

 

If you become an employee of somebody else always make sure that you are sitting on the revenue side of the business.

 

I talked about this like one of the earliest episodes of Sales Funnel Radio. But this is the reason why...

 

If you are in a position that makes it rain, it's really easy to justify:

 

#1: Paying you more

#2: It's hard to get rid of you.

 

If you need the job security, and if you don't have something else that's actually working on the side yet, man, don't leave the job. Just figure how to make it rain.

 

Everyone else, right underneath here in this pyramid - they are a cost to the business.

 

Someone who's in support, you're a cost to the company, you don't bring revenue in, you're a cost. I'm just being real with ya.

 

If you're support, or if you are...

 

I don't wanna say coders - 'cause sometimes it depends on the kind of coder, right? If the software you're coding makes money, then obviously you're on the revenue side of the business. Does that make sense?

 

What I want you to do is I want you to think through and be like, "Oh man, I'm right here, or I'm right here, or I'm right here," and get real with yourself- "Does my position in this business make money? Do I add to the bottom line of this business or do I take from it?"

 

Guys, WHEN crap hits the fan, not if, WHEN... the positions to go are the ones that are a cost on the business. Suddenly everyone learns more things, they put on an additional hat to cover that additional space.

 

The people they don't get rid of easily are the ones that make money for the business. Why would you get rid of rainmakers?  As a business owner, you just wouldn't do that.

 

So think about this:

 

All the risk is on the shoulders of the entrepreneur - which is also why there's so much upside for the entrepreneur.

 

There have been multiples times, I've heard a lot of other stories from a lot of other people...  

 

I've coached 1,800 people through this process now, at the time of recording this, 1,800 personally, I'm not saying just like through the course, like 1,800, that is a lot of freakin' offers, that's a lot of businesses.

 

...And I've heard a lot of stories where someone will get their first hire or first virtual assistant or something like that, and that person has no clue what risk the entrepreneur has taken on, and is trying to share in the revenue fruits, right?

 

(Stephen draws on the whiteboard)

 

The entrepreneur, at the top of the pyramid, takes all this risk - which means they also have this huge potential for reward, right? And then this new person, they're trying to share in the pie that the entrepreneur is getting, even though they're in a position down here in the pyramid.

 

That makes no sense, right? And you might look at that now and be like, "What?" Exactly, what?! That makes no sense.

 

Hopefully, you guys can see the green? I'm gonna switch to black. Although I wasn't before anyway... maybe I'm thinking green money? That must be it.

 

Anyway, alright. Don't do that if you're an employee of somebody. Eventually, I asked for a raise at ClickFunnels when I got higher, but not for like a solid freakin' year after I'd killed myself over there, right? And it was very evident. There was no challenge when I asked for a raise because they knew I was bleeding for this thing, right?

 

Morning and night, I was coming in early. I was staying in late, I was doing projects late at night. I was making sure I was on when I knew he was on, I was killing myself, right? And it's for this exact reason, I wanted to make sure that my position was in a spot where it was pulling cash into the company.

 

So when I decided, "Oh my gosh, you know what? I think it's NOT gonna be an awkward conversation when I ask for a raise." It's not gonna be just because of custom that they give me one. Right? I wanna actually have measurable revenue.

 

So one thing that I did is I would go in, and I'd look at all the funnels that I was building. All the ones I'd pressed go on. Everything that I was building out there, and I could tally up all the cash that I was helping to bring into the business. And it was not a small amount.  It was a huge amount. And so when I asked for a raise, it made sense logically, it made sense emotionally:

 

#1: I was easy to work with.

#2: I was bringing in revenue.

#3: I was a solution provider rather than just a problem bringer.

 

- so it was an easy, easy conversation.

 

The only reason why I'm bringing this up is that I know a lot of you are still in a job, and that's fine.

 

I know a lot of you guys are new entrepreneurs, some of you guys are experienced entrepreneurs which is awesome. Thank you so much for tuning in.

 

But a lot of you guys are new at hiring people, or you're still working for somebody else.  So you gotta ask yourself, "Does my position bring money in or do I require money to support my position?" I'm just gonna tell you, that's a freaky place to be. You are replaceable.

 

I got like 15 stories just zooming through my noggin right now:

 

All these people are like, "Well, I should be getting this, I should be getting this!" I'm like, “What are you freakin' talking about? I don't need to give you a dime, alright?” You're replaceable. You're replaceable. And I want you to know that.

 

And when I run my company like that, I'm replaceable to my business. Now, is that actually true? I don't know.

 

But when I have that mentality, and I keep that mentality, guys, I'm freakin' hungry. I'm seeking the cash flow. I'm hungry, I wanna kill it, I wanna destroy, I wanna take down walls, I wanna take the hill, I'm here to conquer, right? And that's my mentality when I wake up in the morning, and I'm like, man, I'm going to freakin' war.

 

If you're going to your job and you're not going to war, and you're on the revenue side -  you're starting to move to the cost side. That's a bold statement. I don't care. You understand what I'm saying though?

 

You gotta go to war, you gotta go to war in your head, you gotta be ready to step up to the plate and kill it and crush it and take down.

 

If you're like, "Man, I wanna be an entrepreneur someday," and you're not, you gotta understand, until the entrepreneur can see that you're ready to go to war for 'em, they're not gonna put you on the revenue side of the business, or give you the fruits that come with it.

 

There's one exception to this rule, and it is one of the fastest ways for you to scale inside of a company.

 

There's an exception to the rule. There's a person over here on this side, they're the cost side of the business, not the revenue side. They're not responsible for any kind of marketing, they're not responsible for any kind of innovation (those are the easiest ways to get out of the cost side).

 

Regardless of what the title is that you carry in the business, the easiest way to sidestep this structure is one role, it's this one right here.

 

Remember the reward and risk are very favored for the entrepreneur because of the amount of risk they take on - they take on all of it! The sales guy is the only position where there is hardly any risk, but there's still a huge potential for reward.

 

If you feel like, "Oh, I'm not a sales guy." Freakin' learn. That's not an excuse. It's not. You gotta learn how to be a salesperson, you gotta learn how to sell, you gotta learn how to make it rain.

 

The people who know how to sell - they have hardly any risk plus they have a huge potential for reward.

 

A lot of CEOs who were working in a company before they became the CEO, a lot of 'em were salespeople. You don't see the head of HR really becoming the guy who's the CEO in the future, that's not really like a standard play. It's the person who knows how to make it rain.

 

Who better to have the future of the company be rested on than the person who can continue to make it rain because they once made it rain? Does that make sense?

 

If you want to move up in a company, and you're like, "Hey, I wanna stay here." Or if you're like, "Man, my spin's not spinning up yet on the side, you know, I got this side hustle"- I guess it's what we all call them now, a side business, alright?

 

If you've got this side business running, you've got this thing going over on the side, and it's not quite spun up yet... Seek to become a salesperson.

 

You don't have to ask permission for that. You can go in, and you can start to, an example...

 

When I was, I was an employee at ClickFunnels, I was trying to demonstrate this very principle.

 

This was an active conversation in my head. I never talked about it over there. In fact, a lot of employees that I know listen to this over there, "You know, Russell, what's up?"

 

I never talked about this, but this was a theme that ran in my head all the time, "How can I make it rain? How can I make it rain? How can I make it rain? How can I provide solutions instead of provide problems?" You know what I mean by that?

 

Like, someone who walks up, "Oh, here's this problem." You should never walk up to a superior, you should never walk up to someone who's over you.

 

You should never walk up to your boss with, "We got this problem!" without a suggested solution. Does that make sense? That changes the way you're perceived in the eyes of the person.

 

So if you wanna be the go-to person for the new and upcoming opportunities inside of a company, you gotta be:

 

#1: A solutions provider, number one.

#2: Start finding ways to sell.

 

And you don't always have to ask for permission to do this.

 

One of the ways that I did that at ClickFunnels is I actually sought opportunities to sell ClickFunnels without being invited to do so.

 

For example, there was an opportunity that came my way from one of my good friends, Ben. Ben Wilson, "What's up?" Shout out to you, buddy. He's got Conversion Marketing Radio, that's his podcast.

 

Anyway, he's awesome, a good buddy of mine. He invited me, he had this really cool hookup with DECA.

 

If you don't know what DECA is, they help high school students figure out what they wanna go do to make money. Anyway, someone else can tell better than me than what they really do. But they're the group of kids though, growing up, you can tell they're trying to go places.

 

Anyway, the DECA national conference was going on - the regional conference, and I got invited to go speak because of connections that Ben had. So I was like, "Sweet, I'm gonna "sell ClickFunnels at that thing."

 

And so I go, and I start selling - I basically sold ClickFunnels from the stage in front of 2,000 kids, lots of advisors, lots of MBAs. 2,000 right, it's awesome! 2,000 people came to that event.

 

Why? Why did I do that? I could have sold my own thing, right? I was selling because I wanted to be a solution provider, I wanted to be the guy who was like, "Oh, man, that dude hustles when I'm not asking him to." You guys understand?

 

I had this weird tradition at ClickFunnels, and I know I'm talking about it a lot, but like, you gotta get over it, 'okay?

 

I'm trying to help you understand what my mentality was over there and why things went so well and why I was able to have such good relationships.

 

I have mad, intense, brotherly love for Russell Brunson and what he does over there - but how did I politically navigate that area as well?

 

Well, one of the ways I did it was I made sure that I was a solution provider. I made sure I was selling - that I'm bringing extra revenue into the business.

 

I also wanted to make sure that they knew that I was serious about it when I didn't need to be asked to be serious about it, you know?

 

I had this weird tradition over there that every time we would launch a funnel, I would go buy the product. I wanted to be one of the first people to buy the product through the funnel that I just helped launch. And they're like, "You could just log in "and make yourself an account." And I was like, "Yeah, I know."

When we were filming a lot of Funnel Hacker TV, and I think they're still doing it, I pulled the camera up, and I said, "What's up, everyone?" I just want you to know that "I'm really into this thing, it's because not only do I help make the Kool-Aid here at ClickFunnels, I drink it too!"  And it became like a phrase over there.

 

If your boss is like some guru, or if they're not, be your boss' best student! That's what I've actively tried to be for Russell! I am one of his best students, I know that. Russell knows that. The community knows that. I do what the man says!

 

That helps validate his principles, that helps validate the things he's doing, right? That scratches his back. It's one of the easiest ways for me to do that.

 

There are very few things I could go buy for him that he could not buy on his own, right?

 

So instead, drink the Kool-Aid that your guru boss is also drinking and making. Help it make, drink it, be a salesperson and figure out how to be a solutions provider.

 

That's the, basically the crux of the episode, guys. That's what I wanted to let you guys know.

 

Hopefully, that makes sense?

 

And so when you're hiring, you do the same thing. Who can make it rain? Those are the positions you're trying to make fill before you ever, ever, ever go hire someone who's a cost on the business.

 

Who can make it rain in that fragile, fragile beginning phase of that business when it's just barely spinning. It's like a little kid that can't survive on its own, right? You know what I mean? It's a really fragile period for the company.

 

That's why I didn't take a paycheck for a while, alright? Is there enough cash in the business to operate? If something massive hit, if I didn't get paid for a year, would it be okay? Those are all the questions I'm asking.

 

How do I make sure I stay hungry? I don't want too much cash in that business. I wanna make sure I stay hungry - which I have no problem doing.

So if you're hiring people, ask: "Who will make it rain?”

 

I love what Dana Derricks says in his Dream 100 book, he says that your first hire should be a dream 100 / affiliate manager. So that was my first hire, Colton sitting right over there, boom!

He's the affiliate manager, he's the dream 100 manager. If you wanna promote our products, you contact him. And that's the reason why that was my first hire.

 

I don't have a dedicated support person, we kinda tag team that. Those are the things I'm getting next. But why on earth would I get those without the other positions that make it rain?

 

Those are the only positions that matter. I can get rid of pretty much every single one of these positions.

 

I've been thinking about it a lot lately, and I know someone's gonna fight me on this. I'm sure someone's gonna get mad about the fact that I'm saying this, but, man, besides me, a sales guy, a support person, an assistant, that's kind of it.

 

These funnel games are so freakin' cool because the actual business structure, when you gotta funnel the works right, the actual business structure, man, you only need like three to five people tops depending on what you're doing.

 

I know, some of you guys have massive call centers, okay cool, but I'm talking employees though.

 

I'm gonna go get an assistant soon, I'm gonna get an actual dedicated support person soon, but man, we haven't needed that for a long time, alright? I'm more obsessed about building the revenue machine, the actual funnel machine, the sales, right?

 

How does that happen? Sell, sell, sell, sell, sell! Right, how do I make that happen? How do I be obsessed over that?

 

I love something that Grant Cardone teaches, he says, the order of operations that you have as a business owner is this:

 

#1: My first order of business is to close the lead. The issue with that is that when you close a lead, you no longer have a lead. So you gotta refill that pipeline, right?

 

#2: The second order of business is to replace that lead.  Otherwise, the future of the business is gone.

 

#3: The third order of business after replace, is fulfill on this first lead.

 

That might sound backward to you, but that's the reason why I set it up the way I do. I'm closing the leads, I'm making sure we got more of 'em, and then I'm fulfilling on the sale.

 

And that's the reason why I always sell something before it's even made. If it doesn't sell consistently, who the freakin' cares what I'm making? It doesn't matter what product I'm making, right?

 

And when you find salespeople, and you find personnel in your company that can back that, oh man, cool, this guy's closing 'em, right? Oh, cool, I got another person over here, let's say you got another like, it's a setter, it's not a closer like a sales guy here, right?

 

Let's say this guy's a closer, you got a setter - he's the one who's going out and replacing leads, your funnels are doing that also. And then you're fulfilling, man, because of all that automation that goes on. You can do that automatically now anyway with a lot of things that are going out there. Does that make sense?

 

So anyway, that's why I'm trying to help you guys understand this. This whole game, the reason why it works, it works well for the people who know how to freakin' make it rain.

 

If you are an employee, figure out how to be a solution provider, drink the Kool-aid, don't just make it, right?

 

Be all in, then an entrepreneur is far more likely to give you a slice of this reward pie 'cause you're helping to remove some of his risk. But until then, why on earth would he ever do that?

 

Anyway, that's all I wanted to share with you guys today. It was a good episode, it was my favorite so far. Hopefully, you guys enjoyed it.

 

If you have not thus far gone and checked out  days.com, it's a podcast interview I just did with Russell to promote a book, talking about what I would do to get this all back in  days. It's really cool.

 

You can see a lot of other millionaires and what their plans are. A lot of big guys, guys all know the names of. So anyway, it's really fun.

 

I got to write a chapter, go to days.com/stephen to check that out. Hopefully, this is helpful.

 

Thank you so much, please rate and review and share this if you liked it. Thanks, guys, I'll talk to you later, bye.

 

Oh, yeah, wasn't that awesome?

 

Hey, just real quick, a few months ago, Russell asked me to write a chapter for a secret project he was doing, and I had to write a chapter for a book, and this was the prompt, this was the letter I got from him:

 

"Hey Stephen,

 

Let me ask you a quick question.

You suddenly lose all your money along with your name and your reputation and only have your marketing know-how left.

 

You have bills piled high and people harassing you for money over the phone.

 

You have a guaranteed roof over your head, a phone line, an internet connection, and a ClickFunnels account for only one month.

 

You no longer have your big guru name, your following, your JV partners, other than your vast marketing experience, you're an unknown newbie.

 

What would you do from day one to day  to save yourself?

 

-Russell Brunson."

 

If you wanna see my answer and the answers of a bunch of other amazing marketers, then just go to days.com/stephen.

 

You can see the entire summit, you can see the book, and each of our detailed plans. Just go to days.com/stephen, that's  as in three zero, days.com/stephen, S-T-E-P-H-E-N. Guys, enjoy.

 

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