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This business coaching episode explains the true story of how one business owner went from rags to riches.

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Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Jargonization Translation: Insurance Pooling: A practice where a group of small firms join together to secure better insurance rates and coverage plans by using their increased united buying power.
  • Jargonization Translation: Insurance Adjuster: Someone who investigates insurance claims to determine the extent of the insuring company's liability. -Investopedia.com
  • Jargonization Translation: Owner Carry: In owner-carry financing, the seller agrees to receive payment of all or some portion of the price after closing.
  • Lesson Nugget: An owner carry situation can be helpful if the prospective buyer cannot obtain funding through a conventional mortgage lender.

[MUSIC PLAYING] overcome obstacles mentorship and time management tips like netflix

 

-I asked him one day what he did. And he told me what he did.

-What does he do?

-What did he do? He was a broker for insurance companies. Our auctions ended up being called insurance pools.

-Insurance pools.

-Because up to the point that the pools came to existence whenever there was a wreck with an insurance company and the car was totaled, they bet you that you're not going to wreck the car, and you're saying, yes, I am. And so they say it's a total loss. They needed a place to hold that car while they do their investigation, file the correct paperwork, and usually ending up once the car reaches a certain threshold, buying the car from the individual.

-OK.

-Well, before the pools came along, that meant each individual adjuster had to take care of selling that piece.

-Hm. OK. So the insurance adjuster had to take care of selling the car that's been in an accident.

-Yeah.

-OK.

-Which was productivity time that he's not settling claims, which he was hired for. And relationships would form between certain adjusters and certain buyers.

-For the folks at home who aren't aware of what an insurance adjuster is, can you explain what that is?

-If you have an accident, he's the person that will come out and look at your car and say with the paper and pad in hand, hey, this is how much this is going to cost. This is how much this is going to cost. And we'll be glad to fix it for you or we can just write you a check and get a new car.

So when you saw this relationship and this whole thing about people totaling their cars and getting in touch with these adjusters and this whole thing, where did you start to see a business idea? Where did you start to see a problem that you can solve? Where did that happen?

Well, what I saw was what Gerald had started. He had started the base work for this pool. He went to State Farm, Farmers, and he said instead of having each individual adjuster take the car to their friend to sell, bring them all to one place, hold them here, and we'll create a competitive atmosphere in an auction format where all people will have to come in and get you more for this car, and if they get more for this car, it will reduce the amount it costs you to settle this claim.

-So people are going to come to an auction and bid on totaled cars?

-Mm-hm.

-Why would someone want to buy a totaled car?

-At one time you could buy them for $0.25 on the dollar.

-OK.

-And for another $0.25 on the dollar, you could have it fixed, repaired, put back on the road. So you would get a nice car. I mean, if you know who put it together, there's buyers that will buy them and disassemble them and sell the parts at an automobile recycling facility. We shipped approximately-- at the end, when I got out, 20%, 25% of our cars were all over the world-- South America, Central America, United Arab Republic. Yeah.

-OK. So you see this problem and you pitch this idea of a carpool.

-Mm-hm.

-And how did you get the money to start?

-Pitching the idea, the idea was there. But we thought that it could be refined. And I'm probably not your typical entrepreneur because I'm not an expert in anything. I mean, I knew absolutely nothing about cars. My wife knew nothing about cars. But when I told my friends what we did, we bought the auction, I said, well, we bought the auction from my neighbor. He carried owner carry part of it.

-Can you define what owner carry means?

-That means that I give him an x amount. He has a value for his company. He would take a certain percentage of that down, and then he would loan me the rest over a three-year, five-year period-- very good way to buy a company.

-I want to put it up on the board here real quick, a little drawing here just to make sure the folks at home get this. A lot of entrepreneurs are looking to start a business and they have no cash or very little cash.

And so let's say-- just for simple numbers-- that you want to buy a business that costs $100,000. And the guy who is the current owner, he wants to sell it. He's going to sell the business for $100,000. And what you're saying, if it's an owner carry, if I'm over here and I'm the buyer, maybe all I have to put down is $5,000 down.

But then every month instead of paying a bank-- because maybe I don't qualify for a bank loan-- I'm just making a payment to this guy. So every month I make a monthly payment. And this owner serves as the bank. Is that right?

-Absolutely.

-OK. And so every month I make payments to this guy. And that's how you did it.

-Uh-huh. That's part of it, yeah.

-Part of it.

[MUSIC PLAYING]

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Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Editor's Note: Jeff Bezos' mother and father cashed out a considerable portion of their retirement savings to invest $300,000 in Jeff and Amazon.com.
  • Notable Quotable: "Success is not final; failure is not fatal: It is the courage to continue that counts." -Winston Churchill (Former Prime Minister of England during WWII)
  • Lesson Nugget: Entrepreneurs must always have a jealous can-do attitude when starting and building a business.
  • Editor's Note: Sam Walton took a $20,000 loan on his father-in-law and empties his own account of the $5,000 he had personally saved to start his business.
  • Notable Quotable: "Part of being successful is you have go with your heart, not with what people are saying."
  • Notable Quotable: "Every person who wins in any undertaking must be willing to burn his ships and cut all sources of retreat. Only by doing so can one be sure of maintaining that state of mind known as a burning desire to win, essential to success." -Napoleon Hill

[THEME MUSIC]

-Now, if you don't mind me asking, because your wife's working at the bank and you were doing what at this time?

-Selling office furniture.

-Selling office furniture. So financially, did you have just a little bit of money left over? Did you live below your means? What were you doing to cope with that?

-I quit my job. Marie quit her job.

CLAY CLARK: Really?

-She was pregnant with our first kid. So we put a--

CLAY CLARK: Perfect timing.

-Yeah. And we put a second mortgage on our house.

CLAY CLARK: So I want to make sure the Thrivers are getting this. So you had to take out a second mortgage.

TIM ROKISKY: Mm-hmm.

-Because a lot of Thrivers are watching this all across the planet saying, well, how do I get money to start a business? And you're saying, you got a second mortgage. You quit your job. So you--

-So I'm unemployed. My wife's unemployed.

-So you're unemployed and you have a baby on the way, right?

TIM ROKISKY: Yeah, first one.

-Baby on the way-- so this is kind of like the success formula here, I think, almost. Baby on the way-- anything else that was going on at that time, just to sort of set the tone here?

-My friends probably thought we were crazy, which is a big part of being successful is you have to go with your heart, not what people are saying, because you aren't going to get it done. If you don't have a passion for it, you might as well just quit.

CLAY CLARK: I love this. So now, you talked to the guy. And who agreed to do the owner carry with you?

-The guy I bought the business from, a guy named Gerald Adams.

-Gerald-- so you work out the deal with Gerald. Did you pitch the idea to Gerald about doing an owner carry?

-No, he actually pitched it to me.

-He pitched it to you?

TIM ROKISKY: Yeah, I started begging, stealing, borrowing-- I went to every bank that I could and nobody would give us anything. At that time, we had $30,000 equity in a $60,000 house. So there's $30,000. So now, I'm down to $70,000. I knew better to ask my family, because my dad would just say, I got mine. You get yours. You've got to get this yourself.

And we borrowed-- we talked-- and we didn't ask. We constantly prayed, where can this come from? And out of the blue, my wife's parents say, I have a 401(k) that has $50,000 in it and you're welcome to it.

CLAY CLARK: Really?

-And boy, I didn't want to do that because you're talking-- he was a lineman at Southwestern Bell for 25 years and you're talking about your father-in-law's retirement money. But they felt strongly in that we could do it and I was pretty driven. And so we went to the bank and we did a little bit more adding. And with my $30,000 and his $50,000, we needed $20,000 but then we needed some operating cash. So we needed another approximately $60,000. And I went to Spirit Bank in Sapulpa and gave my pitch.

-How many banks did you go to before you got a yes?

-About two more than there are in Tulsa.

-All right. Well, I want to real quick put this on the screen because I think this is huge. So for the Thrivers out here who are watching this who are going, well, how do I get funding-- so many people want to know, how do I get funding? Your answer would be, well, you pulled out $30,000 of equity, right? Then, you had $50,000 that came from the family, right? And then, from the bank, you raised another $60,000. And how many banks-- do you think you had more than a dozen banks tell you no?

-On the first day, very easy. Some of them wouldn't even give me a meeting.

CLAY CLARK: So I'm going to say 50 rejections. Does that sound pretty reasonable?

-Yeah, that's probably pretty close.

CLAY CLARK: Now, I just want to make sure that the Thrivers watch. There's some people who are watching this who are going to go, I finally get it. This finally makes sense to them, because what happens is, Jeff Bezos, his parents are the ones who started Amazon. And he started Amazon, but his parents are the ones who cashed out their retirement and said, hey, we're going to be all-in on your business. Sam Walton, he could not raise money. But his father-in-law lent him the money to start Walmart.

TIM ROKISKY: I didn't know that.

CLAY CLARK: So it seems like this is-- even though for someone watching this, it might seem extreme to have their father-in-law's retirement cashed out for this and to have a bank and have a home equity line, this is very, very normal for most entrepreneurs that I meet, this sort of concoction of how to do it. It's just whatever you have to do. Once you had all of this capital, was failure an option?

-No. I was getting ready to tell you that. There's no way I could fail. It never even came to my mind that we could. I didn't-- it was like, I'm not going to fail with this. There was no way this was not going to be successful.

-Well, Napoleon Hill writes about how-- he's a self-help author, one of the top self-help authors of all time-- but he talks about when you have a burning passion for something, almost like this irrational passion that you can't possibly lose, when failure is not an option, he kind of talks about if you burn the boats, you can then take the island is the idea. It seems like that's what you did. You burned your boats. You had no other way to retreat so you had to storm the island here.

-That's pretty close.

[MUSIC PLAYING]

[WHOOSH]

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Notable Quotable: "Success consists of going from failure to failure without loss of enthusiasm." -Winston Churchill (Former Prime Minister of England during WWII)
  • Ask Yourself: Am I doing whatever I need to do in order to learn all facets of running my business?
  • Editor's Note: "A bad day working for yourself, beats a great day working for anybody else!"
  • Lesson Nugget: Clearly defined goals will help you stay focused and positive in the midst of adversity.
  • Lesson Nugget: No matter where your starting point is, success can be achieved. However, it will require hard work and will not happen overnight.

[THEME MUSIC]

-Once you had this capital, what was your step one to go out there and get customers and how'd you go about it?

-The way so you understand and that the people out there will understand what happens, there's a wreck. The insurance company has to do something with that wreck. Some wrecker shop has that car off the highway. I would drive the wrecker to go get it and then I would drive the wrecker to bring it back. And then, I had one yard hand and he would put in place with a tractor. And then, I would go out and get more cars and bring them back.

And I'd work until about noon every day doing that. And then, I would go in and work in the office. And I spent the first two and 1/2 years learning the business inside-out, every--

CLAY CLARK: Two and 1/2 years--

-Every facet of it that I could inside-out. If you want to know what goes on in your company, open the mail. And that's what I started going. I started opening the mail and finding out, oh, what's this? What's that? What's our turnaround on this? How come it's taking us 21 days to get this title back from the state of Oklahoma when it should only take three days to get this title back? Just everything that we could possibly learn, I learned it.

And there's Marie working side by side with me after Todd was born-- we bought the business in January of '92. He was born in May of '92 and then Emma was born in May of '93 or January of '93. So Marie would be walking around with a baby in an arm and here's this arm and this arm and then have one in the swing and waiting on customers. And I'd be driving the wrecker and it was just learning as much as we could.

-So I'm sure you had some bumps and bruises along the way. But as you were building the business here, Winston Churchill is a guy who I absolutely love him. He used to be the prime minister of the United Kingdom. And he has this little quote he says about success. He says, "Success consists of going from failure to failure without loss of enthusiasm." How did you keep yourself positive and enthusiastic as you were growing this business with the kids and all the dramas and all that? How did you stay positive?

-I stayed positive because I never got negative because I never took my eyes off of our goal, which was to be independent enough that we didn't have to work for anybody else. All Marie and I ever wanted was a good living where we were our own bosses and make our own schedule. What happened was not planned. But we stayed positive because we were where we wanted to be.

And one day, I was coming back on the interstate the day TU was playing in a bowl game and driving a wrecker on New Year's Eve. And it's raining, slushy, sleety, snowy, and my truck breaks down on the Turner Turnpike, Will Rogers Turnpike. And I have to crawl underneath of it to fix the fuel line that's leaking in and a big piece of slush, ice, and diesel fuel hits me straight in my ear and goes down in my ear.

And I just start laughing. I said, God, thank you, because a bad day working for yourself beats a great day working for anybody else. So that was how we did it. We didn't worry about the things that weren't right perfect. We remembered where we had come from and where we wanted to be. So we didn't have time to worry about it.

-Did you ultimately end up selling the business?

-Oh, yeah.

-Yeah, you did?

-Yeah.

-How did you decide when it was time to sell it?

-A lot of prayer.

-A lot of prayer?

-Because that's your baby. And I think a lot of mistakes a lot of entrepreneurs make is they're looking for the quick hit. And we were-- you've heard guys say it. We were the typical 15-year overnight success. And so we build it a little one building block at a time.

[MUSIC PLAYING]

[WHOOSH]

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