Momentum Podcast: 597

Know Your Worst-Case Scenario

by Alex Charfen

Episode Description

Crises create ambiguity. Ambiguity creates insecurity. Insecurity will rob your momentum. The first thing to do in a crisis is to eliminate ambiguity and understand your financial situation. It is a challenging place to go in challenging times, but understanding exactly what is happening for you and your business financially will provide invaluable perspective into how your business can start to recover and overcome the current market.

Very few people go straight to the worst-case scenario in a crisis, because we are all trying to avoid it. Those who do and understand what could happen, have a basis for making better decisions. By eliminating ambiguity and understanding your financial position, you will create a foundation so you can make far better decisions.

Resources Mentioned:


Full Audio Transcript

This is the Momentum podcast.

Crisis creates ambiguity, ambiguity creates insecurity, and insecurity will rob you of your momentum. The first thing to do in a crisis is to eliminate ambiguity and understand one key thing. Now, this conversation is challenging for entrepreneurs and especially in challenging times like this, but understanding exactly what is happening for you and your business financially is going to provide invaluable perspective as to how your business can start to recover and overcome in the current market. In this episode of the moments and podcast, Alex is going to take you through a very simple framework for understanding your current financial situation and what the worst case scenario is for you. Because understanding where you are financially is going to create a foundation to make far better decisions and create momentum in your life and in your business. I can't wait for you to hear it.

Alex Charfen: I'm Alex Charfen and this is the Momentum podcast made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds, those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution. Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters, clearly the most important people in the world because entrepreneurs are the only source of consistent, positive human evolution and we always will be.

What I want to talk about today, the tactic I want to share with you today is a tactic that so few coaches and consultants and people out there ever coach or ever talk about, and there's a reason it's uncomfortable. It is really uncomfortable and here's why. We live in this world of entrepreneurial positive thinking where people say things like, "Fake it until you make it and never let them see you sweat." Well, my opinion, a lot of entrepreneurial positive thinking that's encouraged these days, hear my opinion. A lot of the entrepreneurial positive thinking that's taught today is really all about lie and deny. Let's get real, fake it until you make it, you're not really telling people what's going on. One of the biggest issues in a crisis is you must know exactly where you stand. Katie and I helped thousands of people recover during the economic crisis that started in 2008. We actually helped the country, the United States, recover from the economic crisis that started in 2008.

I was in multiple crisis roundtables in Washington, I've been involved in crisis decision-making. I feel like my entire career has in some way or another involved crisis. I got into the consulting industry within a few years we were facing the dot-com crisis, and so I have always been in a crisis management seat. And here's what you must do, both personally and professionally in order to make it through a crisis. Is right away, right now, sit down and calculate your worst case scenario. What is your worst case scenario financially? So here's how you do that. You look at how much cash that you have in your business, then you look at how much cash you have personally and you look at what is your burn rate in the business and what is your burn rate personally. So you know, "Starting today ..." And here's the worst case scenario. "... if I didn't make another penny today, how long could I last financially?" Here's why you do this ... Actually, let me start with a story. This is the recommendation we are giving every member in our group. Here's why.

When you understand what your financial position is in the world, when you understand with clarity how long you have left, you can start making better decisions. And here's what happens to us as entrepreneurs. I always tell entrepreneurs, the thing that we should be focusing on the most, the thing that we're avoiding in a crisis like this, we all avoid like, "Am I going to go bankrupt? Am I going to lose everything? What's the worst case that's going to happen to me?" And then we think about it, but then we avoid bringing it out of the ether and into reality. In fact, a lot of times for entrepreneurs, the thing that is bothering us the most is the thing that we spend most of our energy denying and trying not to think about, but it's there anyway and it's on our mind. I don't know of a single person since this crisis has started that isn't thinking like, "What's going to happen? What's the next step? What's worst case scenario for me?" So if you're anywhere near that, here's what I want you to do. Answer the question, "What is worst case scenario?"

As an entrepreneur, this will change how you make decisions, and here's where I share that opinion with you from. During the last crisis, Katie and I had 47,004 almost 48,000 real estate members. We were helping all of those real estate agents not only help people avoid foreclosure, but we were also helping them in their businesses get through this crisis. And here's what I can tell you after watching thousands of people go through our exercises, those who got really clear on where they were, who calculated their net worth, who understood their burn rate, who knew what worst case scenario was, consistently made better decisions and got better results compared to the people who didn't. I know that it is a heavy lift to sit down and say, "Okay, I'm going to see where I really stand in the world." And it can feel like it provokes anxiety, it can feel like it provokes stress and is frustrating. But here's the result that you will have as an entrepreneur if you're willing to do this.

If you sit down and you add up how much money you have, and you look at all of your expenses, and you get clear on how many months you have left ... Like Katie and I know the number, we know how many month, for us [inaudible 00:06:11], we know how many years we could last if we stopped making money tomorrow, which we don't believe is going to happen. So we know our worst case scenario. By knowing that, it gives me this massive confidence that I know compared to most entrepreneurs I compete with, I'm way better off. Not even close. I know that our position is so much better than those around us and I know that we have what it takes to not only get through this, but to thrive. And we're going to take advantage of this, we're going to create massive opportunity and impact and contribution to make things happen. For me, adding this up has given us a tremendous amount of confidence. Now, let's flip the coin.

Let's say that you add up how much money you have in the world, you add up your burn rate and the number's not that great of an answer. It's a very limited runway. Here's what I know from having dealt with so many people who are navigating, trying to succeed through living through a crisis, is that if you know your worst case scenario and you sit down and you get real about where you stand, even if it's a bad number, almost immediately you will start making better decisions. And if it's not immediately, give yourself 24 to 48 hours, you will start to see a new horizon. Here's why I know this about entrepreneurs like us. Ambiguity, so crisis creates ambiguity. Crisis creates doubt. Crisis creates frustration. Crisis creates lack. And all of those things, ambiguity, doubt, lack, all of those create insecurity for an entrepreneur. Insecurity will rob you of your momentum. It will stop you from going forward. It will stop you from making progress. So if we can eliminate ambiguity, we can actually take a lot of that insecurity away. And here's what's interesting.

We went through this exercise ... or I've been through this exercise with thousands of people that are in a highly pressurized financial condition during the foreclosure crisis that we had from 2008 to 2013, or depending on where you think it ended. And here's what I can tell you. We would start communicating and coaching with somebody who didn't know their numbers and they would have challenges, and they'd have ideas, and they'd be overwhelmed by opportunity or a lack of opportunity. They wouldn't see what was going on, they'd have a hard time knowing what to do next. And then as soon as we got them clear on their numbers, as soon as they understood where they stood in the world, as soon as we eliminated the insecurity and ambiguity that was clouding their decision making, they almost immediately started making better decisions, saw opportunity where they didn't see opportunity before. And in our experience, would start creating momentum like crazy so that they could move forward and move their businesses forward, protect their families, move their lives forward.

Here's what I can tell you about those people, a lot of them when they put all this stuff together, when we had them calculate net worth, a lot of them had massive negative networks and very short runways. But even if you have a negative net worth and a short runway, knowing is so much better than not knowing because it starts to give you options. And once you get clear on financially where you stand in the world, here's what happens. Evaluating your the projects you're doing, evaluating how much you're spending, evaluating your savings, those all get so much easier. If you want motivation to make the right decisions financially, know your worst case scenario right now in the middle of a crisis and you will start seeing new opportunities. I also think that there's just something energetic about this. We're in a crisis, I'm going to take the gloves off. I'm going to start talking about the energetics of how we exist in the world, and here's what I know ... The energetics, here's what I mean by energetics. Energetics is how we energetically affect other people.

If you are grounded and aware and present, you are just present. If you're just present in the current moment and you walk into a room, you can calm that room. You can increase momentum for the people in that room. You can increase transparency for the people in that room. That is energetics. When I speak, when I go out and I share with crowds and I get to the privilege of being on someone's stage, I make sure that energetically I am aligned. I am in my body, I am calm, I am aware, and I am present because I want to be able to have a massive effect on the people that I've been given the privilege to speak to. Just like right now. Before I got on this live, I actually made sure I was calm, I was aware, I was present so that I showed up in a way that would convey that, that would share, that would help other people feel and adopt that. And what I know about energetics.

The less ambiguity you have in your life, the less doubt, the less lack, the less frustration, confusion, the better the energy you show up with. I can tell you from having stood in the room with people and gone through the exercise of knowing your worst case scenario with people, that even when there was challenging numbers, even when it wasn't exactly what they wanted to see, even when they weren't excited with the results of the exercise, their confidence would go up. I could feel it. Their energy completely shifted from a place of confusion and chaos, to a place of determination and clarity. And when we can shift our energy from confusion and chaos to determination and clarity, that in and of itself shifts our reality. Eliminating ambiguity will shift your reality. Giving it out of your head and onto paper and seeing it in black and white will shift your reality for the better. And in a time like this, in a crisis like this, here's what I want you to know. Your focus determines your reality, so your reality is yours to create.

I'm going to say it to you again because I want this to be your mantra. My focus determines my reality, and my reality is mine to create. You are the creator of your own world and where you focus will expand like Wayne Dyer says. So eliminate ambiguity, understand your worst case scenario. Stop that lizard brain, that primitive brain from working it over and over and over again without actually seeing it in black and white. Get clear on where you stand. And here's what I know, when you understand where you are foundationally with money, when you understand your finances, when you eliminate the ambiguity and you know what you have left, that will be the platform from which you make the decisions that not only will get you through this crisis, but will help you succeed, will help you make an impact, will help you make a massive contribution and get back into momentum. Here's what I want all of us to know. The world has shifted. The world has shifted. There has been a tectonic shift and we are not even realizing how far the world has shifted yet.

Entire industries are going to be changed permanently, the way that we communicate and interact with each other will be changed permanently. I believe that the world of rental offices, and medical offices, and medical care, and how we communicate, and meetings, and structure around us is going to shift radically throughout this crisis because we will adopt a new normal. And in that new normal, in that crisis, in that shift, that change, that turmoil, a new normal creating there is going to be massive opportunity. It might not look like what you're doing right now and you might have to make some adjustments. You might have to change some of what you're doing, you might have to find a new opportunity. But here's what I want every person who listens to this to know, crisis creates massive opportunity. Crisis creates a massive chance for contribution. Crisis creates an opportunity for entrepreneurs to step up, rise above the noise, identify what will get us out of here, and then pursue it like crazy so that we can recover from this thing.

Entrepreneurs have always gotten us out of crisis. Now, that's not to say that the first responders, the doctors, the nurses, the medical professionals out there that are walking into a war zone every day right now, they are helping us do this. They are getting us through and I am so grateful for them. One of them happens to be my sister who's an ER doctor in California where they've just gone on a two week quarantine, so this is very personal to me. She comes home to my two nieces, and my nephew, and my brother-in-law every day, and I don't want anyone in my family to be affected by this. But here's what I know about crisis like this. There are the caretakers out there who are helping people get better, and then the entrepreneurs like us need to rise above the noise, figure out what solutions are here, pursue them to their end, and get us through this. So first things first, that old adage of putting your mask on first. I know it sounds cliche and I know we roll our eyes when we hear it, but it is so real right now.

And the first thing you should do to help yourself survive this crisis ... and not just survive. Let's get through this, let's thrive, let's make an impact. Let's change the world because the opportunity is here. The first thing you should do is eliminate ambiguity in your life, know your worst case scenario. It will create the foundation from where you make better decisions. Sit down and calculate it now. And if you are in a business where you want help with structure and systems and you know there's going to be opportunity here and you see it coming, you want to identify it and make it happen, go to right now, and fill out a few questions for my team. Sign up to get on a call with one of us and let us show you how our systems, our structure will not just help you get through this crisis, but will help you identify, opportunity, consistently make the right decisions, move forward with confidence and create momentum while the rest of the world is in chaos.

Because as entrepreneurs, that is what we have done, will do, and will do in the future to help humanity past anything that comes up. We all go forward faster together. Go to right now and reach out to us. We look forward to talking to you.

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With gratitude,


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