My Business Would Not Exist Without This | The Litmus Test (#118)

Back in 2020, when I couldn't get a job, I knew I wanted to start a business. I didn't know what business to start. It was around that time when I learned about the concept of a litmus test from my OG mentor, Mal Emery. The litmus test is the cornerstone for how I ideated and launched my business back then, and it's how I make a lot of important decisions today. If you haven't adopted a framework like this into your life or your business, definitely check this one out; it's super valuable.

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Transcript

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Hey everyone, hope you're all doing really well. I recently went to a TAFE and gave a talk to a class full of business students. And now if you don't know what TAFE is, if you're not from Australia or New Zealand, if they do that there, it's basically like community college, I think. It's where people go and they they get qualifications and skills similar to university, but usually, you know, much shorter courses, that kind of thing. So I was asked to give a presentation to a class of business students, and then I had like a Q ⁇ A at the end. And it was really cool. I think I spoke for about an hour and a half and then had a a very long Q ⁇ A session. The students were very engaged and I got a lot of good feedback. And I actually thought while I was doing this presentation and creating and kind of like walking back down memory lane with the business, I I kind of realized I haven't really done a podcast episode on my litmus test. Now the litmus test was a very big fundamental part of my business journey. It was pretty much the cornerstone for the entire business. Now, I talked about this briefly in the the podcast with Mal Emery, um, because that's who I actually got the the idea for a litmus test from. Now the litmus test is essentially just a a test that you run for yourself before making a decision. Now you can have a litmus test for you know what type of person that you want to date. You can have a litmus test for what kind of food you want to eat. I had a litmus test for what sort of business I wanted to get into. And that's kind of how this presentation started. So if you're listening to this on Spotify or YouTube or maybe even Apple Podcasts, there should be a video attached to this. I'm currently sharing my screen and I will be showing kind of what I'm talking about as I go. Now you don't have to watch the video, but it may just be a good visual aid. So the start of this presentation, it just starts off by introducing who I am and and how I kind of started the business. But no one really knows why I started a business. Like a lot of people will ask me, why did you start a cleaning business? And that's where the litmus test comes into play. So that's kind of where we are here. What business should I start? Now, like I was saying before, a litmus test is a test that you use when making a decision, when trying to make an informed decision based on a set of criteria, prerequisites. It could even just be like wants or needs or desires. Now for me, this is what it looked like. I knew I wanted to start a business because I couldn't get a job, but I wasn't sure what business I wanted to start. So I just started to list things out. I just started to list things out about myself, about the type of business that I wanted to run, um, how it would integrate with my belief system and things I like and things I don't like. And so it kind of went a bit like this. I had no borrowing capacity because you know, we have to go back in time. This is I was 18 years old. I didn't really have any kind of I didn't have anything behind me. My parents weren't gonna give me money, my grandparents weren't gonna give me money, because why would they? I was just a naive, done uh kid back then. So I needed to use my own money if I was gonna launch a business. Now, problem with that, I didn't have any money. So I needed a business with a low startup cost, right? So this is how the litmus test kind of works. Okay, I don't have borrowing capacity, I need to use my own money. I don't have any money, so I need a business opportunity that has a low startup cost. Now, I was the opposite of a social butterfly back then. I did not like people, I did not like talking to people, I wasn't good at it. I considered myself very much an introvert, and I just didn't think that I would ever become good at it. And I wanted a business that was non-people facing. I wanted a business where I didn't have to interact with members of the public a lot. So, you know, that ruled out hospitality, retail, customer service, that kind of thing. And so that was one of the things in my litmus test. Now, I also wanted to be able to sleep at night and have a very low-risk business. So I wanted a business that had low overheads. You know, I don't want to have a $100,000 lease glooming over my head and and you know, being kept up at night, not knowing if I'm going to be able to pay that. Um and I I didn't want to have to fight tooth and nail for market share. I wanted there to be an inherent, obvious gap in the market that I could slot myself into. So that was another thing in my uh litmus test. Now, I don't have the original litmus test I laid out for myself. I think I just wrote it down on pen and paper. But this is more or less what I had written out before I ever started a business. Now, I had no idea, you know, I did I didn't have a concept for if it was going to be a cleaning business or what sort of business I was going to start, but this litmus test is what led me there. And that's kind of what I'm uh mapping out right now. So I didn't want to fight tooth and nail for market share. I wanted there to be an inherent gap in the market I could slot myself into. I didn't have any specialized qualifications or want to get them. So I needed something that had a low barrier to entry on skills and licensing and that kind of thing. I didn't want to hold stock or tie cash up in inventory. So I wanted a business that was service-based, not product-based. So again, kind of tying into that low overhead, low risk sort of business. I didn't want to be tied to a physical location or lease. So I wanted a business that was mobile or I could run from home or, you know, a mix of the two. I didn't want to wait months to get paid as well. So I wanted a fast cash conversion cycle, you know, paid on the job, near job completion, or, you know, like before any work is actually carried out, ideally. Um I didn't want to chase customers constantly. So I wanted work that naturally repeats weekly, fortnightly, monthly. I wanted that recurring revenue model. I wanted that continuity. I didn't want to depend on a single big client. So, you know, I always say like the number one in business is a scary number. The scariest number in business is the number one. You don't want to have one customer that you rely heavily on for a majority of your revenue. You don't want to have one way of getting clients. You don't want to have, you know, you don't want to have one thing. Um, so I needed to have a lot of small customers, a very fragmented customer base. So losing one of them won't hurt, you know? And I wanted a starving crowd that I could sell to, one that had money to spend and didn't need to be hard sold. Because I I'm not really like a super salesy sort of person. I don't want to be pushing people to buy from me. I don't want to be doing all that stuff. And finally, um, I wanted something that was recession proof and it wasn't affected by trends, seasons, and world events. I wanted a business that could run all year round, no matter what the weather, no matter what's going on in the political climate, the economic climate, or any other things that are going on in the world. Now, these were my non-negotiables. These are the things I had mapped out for myself. And the business that I was going to start had to integrate with all of these things. If it didn't tick any of these boxes, it was it wasn't an immediate no, but it would be put in a pile that I would, you know, not necessarily consider first. So after kind of mulling over these for a while and and thinking about what sort of business I could start, um obviously the rest is history, I I went with a cleaning business. But I kind of I kind of show you this to say, you know, this is how you get successful, not just in business, but just in your decision-making processes. If you have it doesn't have to be a you know a written litmus test for everything you do, but if you have some sort of process, if you have some sort of check process for big decisions that you have to make, and you have like a set of criteria and prerequisites, like you will be more likely than not you will achieve success in whatever it is you're doing. So those were not my non-negotiables for the type of business I was going to start. For others with different circumstances, you know, it may be different. You may have kids, so you need a business that works around that, that gives you the flexibility with school hours and stuff like that. You know, you may have a disability, you may have a health ailment that, you know, or or you may, you know, on the other end of the spectrum, you may have like inherent benefits or, you know, talents or skills that you can use. So you want to have a business that can work around that. No, the the possibilities are endless. There's so many different things that you could potentially build a business around and thus build a litmus test around as well. So that's just what it looked like for me. It was pretty much that, more or less. Like then there may have been some more things I added in there. But once I had all of this mapped out, I I came up with a few ideas and I landed on lawn mowing, car detailing, and house cleaning. I think I've talked about this before. Now, lawn mowing, you know, it fits a lot of the litmus test criteria. Um, obviously, very big on, you know, it's pretty low startup cost, non-people facing, absolutely. You don't have to be talking to people if you're mowing lawns. Most of the time you'll never even meet the clients, they're just going to be out of the house or you know, you just go there, mow the lawn, and leave. Um, you don't have to fight tooth and uh nail for market share. There is an inherent gap. There's always going to be a need for people mowing the lawns, blah, blah, blah. Um, but it's not exactly, you know, um unaffected by weather and and trends and seasons. So I ruled that out. Also, the the startup cost is a little bit higher. It's on the higher earth side of a low startup cost. Like it does cost a few thousand dollars to get the equipment, all that stuff. Um, so I I've kind of put that to the side. Then I looked at car detailing and house cleaning. Car detailing did appeal to me. I actually had a logo and a business name ready to go for this. I forgot what it was called, but I had a website mapped out and everything. But in the end, I decided like um, you know, one of my litmus test things was I wanted something that had a low barrier to entry on skills. Now, I I felt like car detailing, you need a lot of intricate knowledge and like a lot of niche knowledge about cars and surface types and chemicals and just lots of different processes. Now, that may or may not be true. That's the impression I had at the time. And the other one, the other kind of litmus test prerequisite or metric that it just didn't really hit as hard on was the continuity base. Now, people aren't really getting their cars detailed weekly, you know what I mean? Like, obviously, there are some people that are getting their cars detailed weekly. There are fleets, um, you know, car high companies, they have fleets and you know, um companies in like mining and and agriculture and all these things. That they'll get their cars detailed weekly and and maybe even more often than that. But there just seemed to be more continuity and and a higher recurrence in service for a house cleaning business. And it just seemed like a slightly lower barrier to entry and also it had it had uh a more starving crowd. There's just it's it's an easier business to get into. Like every house you see, it needs to be cleaned, right? So I ended up going with house cleaning, and that was how I ended up in this business. It all came from this litmus test. I had no I had no notion beforehand that I wanted to start a cleaning business, but once I had all of this mapped out and I started to just think like, oh, based on this, based on that, what sort of business would fit would you know most uh ideally fit this criteria? And eventually I landed on a cleaning business. So and that's why today I have a really, really cool business that is it integrates well with my lifestyle, how I like to live, how I like to be, you know, like I'm I don't have to be, you know, on the phone to customers all the time. I don't have to be in front of people all the time. It's um it's given me a very flexible, comfortable lifestyle. Like I'm flying to Bali tomorrow. Um and I can do these things because I built the sort of business on my terms. I I built a business by my own, by my own, you know, like uh inhibitions and wants and needs and desires and all that stuff. And I made it work around me and I and I worked around the business, not the other way around. I didn't I I made the business work around me. I didn't have to, you know, mold myself around the business um just just to make it work. So that's why I now have a business that allows me to, you know, take trips like I'm going to Bali tomorrow, I'm going to Spain next month. Um I can do all these things because I started with the end in mind. Because I I had this litmus test laid out and I had these prerequisites and I had these these non-negotiables and all these things that I knew I needed for me to succeed in this business. Because, you know, to be able to succeed in a business as well, like you have to like it. I mean, you can you can hustle as hard as you want and you can just you know grit your teeth and and keep your head down and keep doing it as long as you want. But if you don't like it, eventually you're gonna burn out or it's it's not gonna work, or you know, one thing or the other, and you're just gonna be left in the lurch and it's it's not gonna work out right. Like if you don't like it, if you don't at the very least like it, like I love it, but if you don't like it, it's gonna be really tough. So that's another reason why something like this is so important, and you can do this for everything. You know, I had a litmus test for when I bought my first car, and it wasn't as long as this, it wasn't all like written out, but you know, before making a big decision or an important decision, you can just have this list of checks and these non-negotiables in your mind, and you're like, okay, based on this, does this fit my decision-making criteria? Um, so many things you can use it for. It's it's really it's a really great tool to have. And you can um if you have to make like a lot of repeat decisions, if there's like decisions you make every day, like even if it's hiring people or firing people, you can have a litmus test for hiring people. We have a litmus test for HR, you know, in terms of like personality, availability, um, you know, background, kind of like, you know, we our our ideal employee avatar is sort of like a mum that wants school hours, work, two, three days a week. And so we integrate that with our litmus test when it comes to the ideal person we want to hire. And the the successful candidates are the ones that tick the most boxes in our litmus test, right? This is how we can rig success. This is how we can have the highest degree of certainty when making a decision. And it's why I now have a business that almost it almost I'm almost out of it now. It almost runs entirely without me, right? And it's a very, very cool thing. There's not many people that I know of that at least in the online content creation space, that have businesses like this where they can just step away, where they can go on holidays whenever they want, they can they have people managing it and they don't have to micromanage the managers. There's not a lot of businesses like that out there. And it's because a lot of people don't start with the end in mind. They don't start with these things. And you know, even if you're already in your business now and you you didn't start with a litmus test and you and you didn't begin with the end in mind, you can still do this down the track. You can you if you have a business now that you don't like, if you're in like, you know, if you for example, if you do vacate cleaning, you can start, you know, a litmus test now. Like what things do I do I like and do I not like? Right, just draw a line in the sand and just consider what you will and and will no longer do for money. And that can create, that can become your new litmus test that you begin to evolve the business around. Like it doesn't have to be a day one thing. Your day one can be two-day, even if you've been doing this for five, ten years. Right? I just want I want this to become something that you just integrate with daily life, with decision making and and whatnot, because it's a very, very powerful tool, and it's what's led me um largely to where I am now. And I'm very, very grateful that I started with this and I was able to build the business that I wanted, you know, the business that was going to give me the lifestyle and the flexibility and the comfortability that I knew I wanted. And so a lot of people I see in business that struggle, that are in positions that you know they're unhappy with, it's because they didn't have this stuff mapped out in the beginning. You know, they didn't have this stuff in in the beginning and they didn't know their numbers. It's a combination of those two things. Um, 99% of the time, that is why a lot of businesses fail or the owner-founder burns out and they just give it up after a while. It's because of those things. Business is a very simple game when you distill it distill it down to its just barebone uh roots, um, and this is really all it is. If you want to rig the game, this is it. So just thought I'd share that. It was um when I was yeah, when I was doing this presentation, it was something that I I went a little bit deep into and like it was a very long presentation, it was like 70 slides long, very, very cool. And yeah, it was great. So anyway, I'm getting so many messages on my phone right now. Um yeah, anyway. So yeah, I'm going to Bali tomorrow for a success school retreat. It's gonna be it's gonna be uh like a business retreat. Uh we're gonna learn about marketing and and whatnot. So that'll be fun. And yeah, I'm I'm doing a lot of travel this year, so I'm going to Spain in in a month. So Bali, Spain. Then I've got some other trips in my head. I haven't planned them out yet or booked anything, but they are in my head, and hopefully they come out of my head and they um they come to fruition because uh I'm very keen to do more travel. But you can only do these things when you've built a business uh based on you know uh your terms and and your wants and your needs and your desires. So it all starts with the litmus test. Um hope this helped. Hope you got something out of this. And again, even if you're well into your business journey and you you missed out on doing this in the in the in the beginning, you can adopt this system, this principle now, and you can base all of your future decisions on a framework like this as well. So thanks for watching another episode or listening to another episode of Self Made. I'll catch you again next time when I'm in Bali. See ya.