E775 | The Power Of Delayed Gratification In Your Business

The Power of Compounding and Delayed Gratification

In the fast-paced world of entrepreneurship, the allure of instant gratification can often derail long-term success. On the latest episode of the PT Entrepreneur Podcast, Doc Danny dives deep into the concept of compounding—not just financially but also in life and business—through the practice of delayed gratification.

What Is Compounding?

Compounding, often associated with financial investments, is the snowball effect of growth over time. For example, a 10% return on $1,000 turns into $1,100 in a year. The next year, that 10% return applies to $1,100, growing the investment further. The longer the timeframe, the more impactful the compounding effect becomes.

But compounding isn’t just limited to money. Danny explores how the same principle applies to habits, discipline, and business growth.

The Power of Delayed Gratification

Delayed gratification is the ability to resist short-term temptations in exchange for long-term rewards. For entrepreneurs, this often means resisting the urge to immediately expand their lifestyle when revenue starts rolling in.

Danny shares a personal example: After leaving the military and starting his business, he and his family chose to live on the same modest budget they had before, despite earning significantly more. This decision allowed them to save aggressively, reinvest in their business, and bootstrap their growth without outside funding.

Key Lessons for Entrepreneurs

1. Live Below Your Means: Avoid lifestyle inflation, even as your income grows. The more you save, the more you can reinvest in growth opportunities.
2. Reinvest Wisely: Use your profits to improve your business—hire staff, expand infrastructure, or invest in marketing. This creates a compounding effect on your business success.
3. Patience Pays Off: Building a sustainable, scalable business takes time. Avoid the temptation to shortcut the process by prematurely expanding your lifestyle.
4. Create a War Chest: Financial stability in your business gives you the freedom to make strategic decisions and weather economic challenges.

Why It Matters

Danny highlights a common mistake he sees among entrepreneurs: scaling their personal spending in tandem with their business income. This approach leaves no room for the compounding effect to work its magic, stunting long-term growth.

By delaying gratification and focusing on reinvestment, entrepreneurs can build businesses that are not only profitable but also stable, scalable, and valuable for the long haul.

Action Steps

• Assess your current spending and identify areas to cut back.
• Set a savings goal to reinvest in your business.
• Develop a plan for reinvesting profits in ways that directly impact growth.
• Embrace patience and focus on the bigger picture.

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Podcast Transcript

Danny: But where most people run into problems is they aren't able to save 100, 000 in a year and a half, two years to then double down on their own business because most people, if they go from, making 78, 000, like to then making 100, 000. 150, 000 to 200, 000. All of a sudden their lifestyle turns into that of somebody that makes 150, 000 to 200, 000.

Hey, are you a physical therapist looking to leverage your skill set in a way that helps you create time and financial freedom for yourself and your family? If so, you're in the right spot. My name is Danny Matta. Over the last 15 years, I've done pretty much everything you can in the profession. I've been a staff PT.

I've been an active duty military officer physical therapist. I've started my own cash practice. I've sold that cash practice. And to date, my company, Physical Therapy Biz, has helped over a thousand clinicians start, grow, and scale their own cash practices. So if this sounds like something you want to do, listen up, because I'm here to help you.

What's going on? Dr. Danny here with the P. T. Honest from our podcast. And I want to talk about compounding cash. Interest, but not necessarily monetarily. And for those of you, most of you are probably aware compounding interest is the interest on an investment that snowballs over time, right? So let's say you get a 10 percent rate of return on a thousand dollars in a year, right?

So you have that thousand dollars. And in that year. That a thousand dollars at a 10%, return is now worth $1,100, but let's say it's 10% the next year as well. Now you're starting with $1,100, not a thousand. So it's gonna be worth whatever 10% of that is, which I'm not smart enough to do the math on in my head right now, but let's call it more than a hundred dollars more.

And it starts to snowball over and over and over again. And the longer that you let that interest compound, the bigger it grows. Like a snowball, right? So it's more about. Time than it is rate of return, which is important as well. But rate of return, sometimes you can't go over a certain amount.

It's very hard to do that versus it's not impossible to wait and be patient. Now, when I think of compounding interest, I think it's one of the more important concepts to understand this sort of ratio between time and rate of return. But one of the things that you can apply this to. Is looking at the compounding effect of delayed gratification.

So I talked about this when I did a presentation for our mastermind group. This was earlier this month and part of it was had to do with finance and a bunch of other stuff that I was getting into, but. One of the core concepts that I like to think about is the importance of compounding delayed ratification.

Now, you can apply this to basically anything, right? You can apply this to your training like in regards to a diet, right? In particular, let's say you can hold off on, eating sugar, or you can hold off on throwing your macros off. You can hold off on, whatever sort of, alcohol something that, is not great for you, but you like to do.

It's fun to eat a cookie, love cookies, obviously, who doesn't, but we know they're not necessarily the greatest thing for us to eat all the time. So delayed gratification can lead to dramatic improvements in your health. When we look at delayed gratification from an entrepreneur standpoint, this is.

essentially going to be a monetary delay. And I'll give you an example through story, right? When I got out of the military, I was making 78, 000 a year as a captain with at the time it was like six years of experience in the military. And I, you get pay adjustments every two years.

So like I was halfway in between my next one would have been eight years and I was at seven but it incrementally changes, right? But I was at 78, 000. So when we got out, my wife and I, we said, okay, a, we hadn't been living off of 78, 000 because we were always like very fiscally responsible, even when we were very young, but we didn't want to.

Spend more money than what I was making in the military living off of one income. We just had we had young kids and she was she was raising our kids at home. She wasn't working in a nonprofit world at that point. So we decided that's what we would do. And we were roughly spending probably 50, 000 a year.

So the goal was let's replace our income, 78, 000. And we were able to do that within the first, honestly, it was about six months. So within about six months, we had made roughly that much in the business in what we were used to making in a year. So let's say within the first full year, the first 12 months, cause I actually started our clinic in June.

So it was like halfway through the year, but in the first full year we were well over double what I made as a captain in the army. With our business that we had started. And what we decided to do was still live off 50, 000 and we didn't change our lifestyle in any way, zero. And that allowed us to save a ton of money, just a ton of cash.

And that money that we saved, we eventually reinvested back in the business as we expanded into a standalone space bought equipment, brought on staff. We self funded all of this, right? We bootstrapped it all. And we were able to do that in a relatively short time because we were able to save so much cash in such a short period of time.

The move seems somewhat natural, right? You might want to expand your clinic. You might want to grow and try to make that revenue stream bigger. But where most people run into problems is they aren't able to save 100, 000 in a year and a half, two years, to then double down on their own business.

Because most people, if they go from, making 78, 000 to then making, 150, 000 to 200, 000 all of a sudden their lifestyle turns into that of somebody that makes 150, 000 to 200, 000. And don't get me wrong. It's not like I didn't look around and say to myself, holy shit, I can get a way nicer car.

I can get a way bigger house. We can do whatever we want. Way cooler stuff now because we have all this additional income that we were not used to but instead we decided all Let's save all this. Let's put it into the business and go from there and we did it again and again and we Slowly increased what we were spending like up to maybe 70, 000 A year when we were making probably five times that in income.

And because of that, we were able to put ourself in a position where we were able to not just have start one business, but start another business and start to invest in real estate and start to invest money in ways that were like way more than most people could, because we delayed the gratification of our expanding our lifestyle of moving the goal goalpost of our lifestyle.

And this is a really important. Point that I'm not just like bringing this up so I can, whatever, make myself sound cool. What I'm getting at is one of the biggest mistakes that I see with entrepreneurs that we work with is when they start to make money, they spend it all. So the business does pretty well.

And then they spend it all personally and they never allow the compounding of that. Money that they're making, that would be the Delta, the difference between what they were giving up working somewhere else and working for themselves to then grow and be reinvesting a meaningful way that then increases their income streams even more because of they buy a new house, this big new house or something like that, that, obviously they need a place to live, but.

They move into something that's like the top end of their budget. They buy a new car. They go on a really expensive trip. They whatever, they get married and they buy a really expensive engagement ring and their lifestyle starts to creep up to whatever their income is, no matter what it is.

And even as they start to make more money, let's say they're making a couple hundred thousand dollars a year. They're spending a couple hundred thousand dollars a year and they never ever let that money Compounding effect take it take place because there's never any money left over for that to happen And they haven't delayed the gratification of the success.

They've had long enough and if anything We might have been guilty to from delaying too long But I'd almost rather you have to deal with that then not delaying too long The gratification of an expanded lifestyle too soon, which is frankly, what the vast majority of most people do. So if you're listening to this and you're starting to have success in your business, I challenge you to try not to spend more than what you're used to spending for a long time.

Like for us, this was probably. We were probably six years in we were actually five years in before we moved to another house that was bigger five years in, and we easily could have done that the second year. But we waited five years until we had businesses that were mature. We had multiple, revenue streams at that point between two businesses.

And really, if we just even just had the one, it doesn't matter. Like we still would have doubled down on that and been in a far better place. And we moved to a place that was well within our our budget. That was like, and it was even hard for us to do that. Like it just was a, it was a big transition.

We were used to living, really minimally. And I think it's a good skill to develop, cause you want to delay that gratification, especially as a business owner, because the longer you can delay that, the more you're going to. The more pressure you build on the upside for your business, that is going to be able to grow faster.

It's going to be able to more stabilized. You're going to be able to reinvest more in people and in infrastructure to build a business. It's really worth something that is very stable and has great revenue, but also has a lot of enterprise value. And you need to do that over, five, 10 years. To really build something of significance that can support you longterm and or create a windfall of money if you have an exit and sell that business.

So my advice, hold off on expanding your lifestyle. Don't live a super, super cool life until, you have really earned it and you've built up a war chest. You can invest back in the business and you put the business in a place that it is very stable before you start to expand your lifestyle in any meaningful way.

Hey, peach entrepreneurs. We have big, exciting news, a new program that we just came out with. It is our PT biz part time to full time five day challenge. Over the course of five days, we get you crystal clear on exactly how much money you need to replace by getting you ultra clear on how much you're actually spending.

We get you crystal clear on the number of people you're going to see and the average visit rate you're going to need to have in order to replace your income to be able to go full time. We go through three different strategies you can take to go from part time to full time. You can pick the one that's the best for you based on your current situation.

Then we share with you the sales and marketing systems that we use within our mastermind that you need to have as well. If you want to go full time in your own practice. And then finally, we help you create a one page business plan. That's right. Not these 15 day business plans. You want to take the small business association, a one day business plan.

It's going to help you get very clear on exactly what you need to do. And when you're going to do it to take action. If you're interested in signing up for this challenge, it's totally free. Head to physicaltherapybiz. com forward slash challenge, get signed up there. Please enjoy. We put a lot of energy into this.

It's totally free. It's something I think is going to help you tremendously as long as you're willing to do the work. If you're doing the work, you're getting. Information put down and getting yourself ready to take action in a very organized way. You will have success, which is what we want. So head to physicaltherapybiz.

com forward slash challenge and get signed up today.