Ep562: AJ Aluthwala – Make Decisions Based on Numbers Not Emotions

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Quick take

BIO: AJ Aluthwala is a specialist in discovering, planning, and executing customized online marketing strategies for businesses to attract massive amounts of online traffic and convert that traffic into sales.

STORY: AJ and his business partner agreed to get into an unprofitable business only to help a friend. They lost a ton of money, and the friendship failed too.

LEARNING: Don’t partner with anybody, especially friends, based on emotion. Always know your numbers. Review your financial statements monthly.


“Always know your numbers.”

AJ Aluthwala


Guest profile

AJ Aluthwala is a specialist in discovering, planning, and executing customized online marketing strategies for businesses to attract massive amounts of online traffic and convert that traffic into sales.

He also helps companies develop their own proprietary apps to help them improve customer experience and increase the value of their business.

He has worked with over 200 companies around the US and worldwide.

AJ has lived and worked in Asia, Europe, and North America and has visited over 15 countries worldwide. AJ and his family moved to sunny Florida in 2014.

He is offering listeners a free white paper on “5 Things to Look for When Selecting a Mobile App Developer’ which you can download at ElleApps.

Worst investment ever

In 2013, AJ and a partner were running a wholesale business. They did not want to get into the retail side at all because they knew it was cutthroat. However, they had a friend who begged to get involved in their business. His idea was to take the wholesale business to retailers for better profit and more significant margins.

To help out this friend, the two partners accepted his idea and got into the retail side. They acquired property, vehicles, and other things to run the business. However, the company was losing around $5,000 a month, which was excruciatingly painful. AJ had to borrow $10,000 from his wife to keep the business afloat.

Eventually, they had to close everything up in a few months. The partners didn’t part ways on good terms, and the friendships fell apart. So AJ not only lost money in this investment but a friend too.

Lessons learned

  • Don’t partner with anybody based on emotion.
  • Before starting a business, do your research and look at numbers; if numbers make sense, you can start the business.
  • Be careful when getting into business with friends.

Andrew’s takeaways

  • Stay open to new ideas, but don’t get distracted from your vision.
  • Create, or hire someone to draw financial statements and then review them monthly.

Actionable advice

Make sure you run the numbers, then make decisions based on the numbers, not on emotions.

AJ’s recommended resources

The 5 Things to Look for When Selecting a Mobile App Developer whitepaper.

No.1 goal for the next 12 months

AJ’s goal for the next 12 months is to expand and build an A-grade team to handle a couple of new projects starting up.


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risks but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives to reduce risk in your life. Go to my worst investment ever.com today and take the risk reduction assessment I created from the lessons I've learned from more than 500 guests fellow risk takers, this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guest, AJ Luth. Wallah, AJ, are you ready to join the mission?

AJ Aluthwala 00:45
Thank you, Andrew, for having me really appreciate you.

Andrew Stotz 00:48
Yeah, I'm glad to have you with us, I want to introduce you to the audience. AJ is a specialist in discovering planning and executing customized online marketing strategies for businesses to attract massive amounts of online traffic and convert that traffic into sales. He also helps companies develop their own proprietary apps to help them improve customer experience and increase the value of their business. AJ has worked with over 200 companies around the US and worldwide and has lived and worked in Asia, Europe and North America and his visit over 15 countries around the world and lives in the sunny climes of Florida. And he's been there since 2014. And I do want to mention that you had said that you had a special offer, which was a free white paper on five things to look for when selecting a mobile app developer, which for everyone out there, you can download at Le apps, e ll e a p p s.com. And look for the free gift. And I'll have a link to that in the show notes. So AJ, tell us just a minute about the unique value that you bring to this wonderful world.

AJ Aluthwala 02:05
And go through the unique value I bring to the world of online marketing is my team. And the experience that customers have with us. Obviously, there are so many web developers, app developers out there who can promise the world but not deliver on those promises. We have a proven method to see the customer success. And that is the uniqueness we bring to the table.

Andrew Stotz 02:41
One of the reasons why I was excited to talk to you today is because I have challenges in both these areas. Number one, driving traffic to my website, whether that's my worst investment ever.com or the valuation masterclass as another website, or I also have an issue where I have a proprietary Excel model that I've developed over 20 years, it has a lot of coding in it, and all that and I use it in my valuation masterclass. And just yesterday, I was talking with someone about creating an app for that. And I am terrified to start that process, because I did it about five years ago with something and it just didn't work. I just couldn't make it work. So I would like for you to give me and the listeners some advice or ideas from your own spirit experience about kind of what are the first steps and obviously, I'm going to download your white paper and read through that and try to understand that about mobile apps. But I'd love to get your high level thoughts on my challenges, which I know are the challenges of many of my listeners.

AJ Aluthwala 03:55
Yeah, so I think you know, you need to, first of all, find a company who, who's good at was really good at you know, what they claim to do. So checking references, I would say is the number one thing you want to do. Just check the references. Once you find someone you obviously have a conversation with the main person, whether it's the owner or project manager or the sales guy, have that conversation and see whether you kind of you know, jive with those folks, and then ask for references, look at their Google reviews. And maybe if they have any video testimonials from their, from their current clients or past clients, dive dive kind of you know, deep into them, because those will really give you an idea about whether they can deliver on promises. Now we all have been there where we listened to the sale As message and then get lured in, and then when you start with the production team, then you have a completely different experience. Right? So I really dive deep into the production, the communication, because there are so many app developers who are out there that are extremely talented. And I don't think you know, we live in a world where there is lack of talent, but it's how that lack of talent of the talent is communicated, right? How talented people can work with others towards a towards kind of a agreed upon mission. Right. So those are very, very important aspects to my company, Lea apps. And for everyone who's part of Lea apps, we try to make sure that we set great expectations up front and we try to exceed those expectations. So to kind of recap, have a conversation with them, see whether you what your gut tells you, right, so that's number one, check the references, look into Google reviews, and then dive deep into their process, because that process will give you an idea about whether they are a good fit for you or not. And then make sure that you set expectations up front for communication, because you don't want to be in the dark. When you're going through a project, which is Multimap, maybe it might go beyond an ear, right? So that's very important.

Andrew Stotz 06:50
It's interesting, because every friend of mine that's tried to develop an app has ended up in trouble. And they've tried to outsource it, then they switch the outsourcer. Then they tried to insource it and they had problems there. And it's funny, because I was talking to the CEO and the founder of one of the businesses that I advise that is developing an app. And basically what I was saying is that we're not in a modern era. It's like we're in the stone age is when it comes to apps and all of this stuff. I mean, it's really cool. And yeah, what you realize is that like Facebook, and others just have 1000s of developers that they're throwing at things, and they're coming up with something. But the typical company that wants to do an app, it is 10 times harder than it appears. And that's strange, because aren't we in that tech age? And isn't everything so modern, but really, what I found is that it is not as easy as it appears.

AJ Aluthwala 07:51
You're absolutely right. I think, again, you know, going back to my previous point, it's the, the expectations versus delivery, that there's that gap between this is what I expect. And here's what I'm going to get right. So the other thing isn't a lot of app developers who are out there. They are very technical. They're very talented. However, if there's no project managers, if there are no analysts, business analysts who can Brad the who can bridge the gap between the developers and the plants, and you're trying to talk to the developers directly. That's like talking to someone who speaks a foreign language. Maybe literally, but speaks you might both be speaking English but what you're saying is not what what they're understanding maybe and this applies for a native English speaker even when they when you have the technical brain things work with a different result find a team who has a couple of layers between the developers and yourself which will make the experience much better because the that middle layer the sandwich will try to they will even try to understand themselves. What is going on right? Why are we not understand this so that will ease the pain on your side?

Andrew Stotz 09:25
That's good. So that's good lesson like try not try to avoid working directly with a programmer because they may be speaking in a different language.

AJ Aluthwala 09:32
Right? Yeah, you know, yeah, you don't want to work with especially a one man show you know, you want to work with a team, right? You know, the one man show can come and go. When you have a team, there's assurance to that the team is going to survive, even if the ability of that particular developer leaves.

Andrew Stotz 09:47
Yep. Okay, well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be tell us a bit about the circumstances leading up to it then tell us your story.

AJ Aluthwala 09:59
Absolutely, this is a fun story. And my worst investment is getting into a business with a friend to help that friend, right. So, and it happened around 2013 time period, we were having a retail business with another partner. And we did not want to I'm sorry, not a retail business, a wholesale business. And we did not want to get into the retail side at all, because we knew that the retail side is cutthroat. However, we had a friend who came over and basically pleaded and begged to get him involved in our business. But his idea was to take the wholesale business to retailers for better profit and bigger margins, and so on and so forth. What ended up was, we spent a whole bunch of money. And we got into the retail side, we acquired property, we acquired vehicles, we acquired all types of things to run the business. However, we were losing around 5000 US dollars a month, which was excruciatingly painful, when it happens every month, and you know, when you are making good revenue when you make, you know, $60,000 a month, but when you lose 5000 What are you doing right? Then you are a pass through entity which is on a negative cash flow, which is a bad position to be in. So we had to close everything up in few months, and talk to our landlord, we did not part ways in good terms. The friendships just fell apart, all that, you know, the, you know, the, the great friendship, and we been friends forever, all of that just fell apart. And we don't even talk to each other. That is I think it's a financial and emotional, big time fail. And that I see as my worst investment ever.

Andrew Stotz 12:37
Can you remember the day when you realize we got to shut this down?

AJ Aluthwala 12:44
I do. I do remember that they because I even had to borrow $10,000 from my wife to keep this afloat because I have gone really I mean, you know, into done really bad into the hole. And we even spent that 10 grand paying off all our the people who we are in debt to. And we are still losing money. The day I wrote that actually, I remember the day because I had to go and close my own personal checking account. Because datas were pulling money from my account. And I had to close it out. Because we were in a really, really bad

situation. And it's very

Andrew Stotz 13:34
painful to ask your wife and close your account. How were you feeling at that time?

AJ Aluthwala 13:39
How I was feeling I mean, I felt like you know, I mean, there's, my world has come to an end. I remember, you know, it was not just that business, which was affected because of all that negativity, all my other businesses for affected as well. Because all my energy now goes towards, you know, just just managing this very poor situation. And it's not just the financial resources, the emotion, the emotional drain, it has on going through a certain experience like that is extremely, it's bad, right? So it's a very bad situation to be in.

Andrew Stotz 14:30
So how would you describe the lessons that you learned from this experience?

AJ Aluthwala 14:35
My number one lessons, I think you know, there are two tool two lessons number one lesson is don't get in business with anybody all just with yourself based on emotion. Get into business based on numbers. Do your research, look at numbers. If numbers make sense. Then you should start the business or not get into that business at all. Number two, I would say is, you might want to always start I mean, we are always wanting to start businesses with people whom we know like and trust right now, namely friends, or people whom we think who are good friends, or who can be a great business partner, I think you know, you can, you have to choose those decisions very wisely. Because you can be a bit better business partner by not getting into a business, or you can be a bit of businessman by not getting into business with certain friends, if you see that, you know, there is no real path forward.

Andrew Stotz 15:51
Got it, maybe I'll summarize some of the takeaways I get. The first one is this shiny object syndrome, right where you are on a path to accomplish something and someone comes along, or an idea comes out of the team, that, hey, we got to do this. Yeah, and then, and then you find yourself being distracted by this shiny object that you may or may not have thought was a good idea in the past, but all of a sudden, you're caught up in it. And this is also what I call the, the chasing revenue phase of a business because very rarely do you start a business and you get the revenue from exactly where you thought you were gonna get it, you're gonna get it somewhere else. So you got to check. So the dilemma is that you got to stay open to new ideas, because you need the revenue. But gotta make sure that you don't make the wrong choice or get distracted. And that is ultimately an allocation of energy, as you've said, about emotion, the emotional energy. And it's, it's, it's really the ultimate job of the entrepreneur. And it's the reason why the entrepreneur ultimately makes the big bucks in the end. Because if they continue to learn how to allocate resources to various ideas, they eventually come up with something after chasing revenue and all that that works. The second thing is, you know, I'm really after many, many interviews, after interview talking to so many people in business, I have one very simple piece of advice, simple, but not easy piece of advice for every startup. And that is create, on time, an accurate monthly financial statements and review them for one hour, a month with a team. And if you do this, you expose what's happening most of the times what's happening in the companies in startups is that you're going on the wrong path, and everybody knows it, but nobody really wants to talk about it, or really address it head on. But when you see the financial numbers coming in, now, most people don't do this. Because either they say I don't know how to do that. Or it costs more to hire the accountant to close the books on a monthly basis. But I'm telling you that this, particularly if you're trying to build a business that's, you know, serious and will someday maybe be sold. So those are some of the takeaways that I have anything you would add to that?

AJ Aluthwala 18:20
Absolutely. So Andrew, you know, that was a great learning experience, you know, so any failures are really opportunity to opportunities to learn, right? So I learned a lot from that. And I, I've taken those failures and with my current businesses, we run them in the exact fashion which you just described, we do a monthly review call. And then we have a bookkeeper on staff who keeps the book straight, not at the urine, but the everyday they are there making sure the books are straight, the accounts are reconciled. And we also practice, Profit First accounting, you might have heard about it. And we implemented it a few years ago, and it has basically revolutionize the finances. So we are in a great position now. But back back in the day, I had no clue what I was doing. So great lesson learned there.

Andrew Stotz 19:31
So based upon what you've learned from this story, and what you've continued to learn what you just told us some of what you've continued though, what action would you recommend our listeners take to avoid suffering the fate same fate. Let's imagine some young people that have their little business just where you were. What would you recommend? One thing?

AJ Aluthwala 19:51
Yeah, the one thing I would recommend is make sure you run the numbers make decisions based on numbers, not with emotion. That's it. Yeah, if you don't, if you don't get into the numbers, you know, just don't make up the numbers, but get, get the numbers somehow, the if you say that you can't get the numbers from wherever, then you can do it, you just can't do it. You have to pull the numbers of comparable businesses from whatever the resources, there are plenty of resources that are available to you, you can obviously search online, you can go to the local library, ask a librarian, if you don't know where to search, they'll be able to help you out. You can talk to a business coach, the money you'll spend on a business coach will be well worth it. So find your numbers, and then get into business, don't run into any business or try to start any business based on emotion just because someone else is doing it, you see their successes, you don't really see the failures and think, oh, yeah, you know, I can do the same thing. Don't do that. Because, you know, that's a bad way to get into any kind of business. So run your numbers and know your numbers.

Andrew Stotz 21:21
Great. And I'm going to answer the question. The next question I have, which is about a resource. Ladies and gentlemen, make sure you go download that white paper five things to look for when selecting a mobile app developer. I'll have the link to that in the show notes. Last question, what is your number one goal for the next 12 months.

AJ Aluthwala 21:40
My number one goal for the next 12 months is to expand the team. Because we have a few more projects starting up. So when I say expand the team, it's not just expansion, but I want to do a build an eighth grade team. We have very solid team, but we want to take it to the next level with the expansion. As you know, Andrew, as you expand teams, you know, you run into all kinds of problems. So but we want to expand that team and still maintain the same standard. And our team is actually based in few different places. So we have a team here in the US, my partner of 16 years in Winnipeg, Canada, we have a team there, then we have a team in Sri Lanka. My assistant who reached out to you is in Venezuela, we have someone from payroll working for us. So our team is all over the world. And as we expand, we have to take into account several different things as well. You know, things like culture, language things, which you don't even think about when it comes to expanding a team. So we are very sensitive to a global team and how that expansion works. So that's our main goal in the next 12 months, expanding a team but maintaining the same or better standard for the entire team.

Andrew Stotz 23:28
It's amazing how you know for the listeners out there how easy it is now to set up a global team. Well, listeners, there you have it another story of loss to keep you winning. If you haven't yet taken the risk reduction assessment, I challenge you to go to my worst investment ever.com right now and start building wealth the easy way by reducing risk. As we conclude, AJ, I want to thank you again for joining our mission. And on behalf of a Stotz Academy I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience

AJ Aluthwala 24:09
thank you everyone for listening in. Really appreciate you. as Andrew mentioned, go to lax.com click on free gift to get your free gift. And if you'd like to connect with me go to AJ a three sixty.com that is again a j k three sixty.com and you will be able to connect with me on multiple social media platforms as well as see the ways you can connect with

Andrew Stotz 24:39
me. Fantastic. Well that's a wrap on another great story to help us create grow and protect our well fellow risk takers This is it time to celebrate that today. We added one more person to our mission to help 1 million people reduce risk in their lives. This is your words podcast hos Andrew Stotz saying I'll see you On the upside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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