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-Business coaching for method number one. Work hard and save method for raising capital. The work hard and save method for raising capital. Clay, define this for us a little bit.
-Yeah, Napoleon Hill, my favorite success author-- I named my son after this author because the book changed my life-- he says, "When you thoroughly understand the law of habit, you may insure yourself success in the great game of money-making by playing both ends of the game against the middle."
What he's talking about is if you're working hard and you're going to start earning more and if you're saving more than you'll meet and you'll do great. Business coaching example. I went and worked construction. I did not have any money, and I wanted to start a business. I need like $20,000 to get started. I needed to buy a van. I needed equipment. I had a net worth of zero. I had no cash flow.
So I got a job working as a home health aid and working construction simultaneously. My schedule consists of about 90 hours a week on the clock. So I'd work from like 5:00 AM to 5:00 PM roughly, and then I would go take a shower to work as a home health aid until midnight or 1:00 or 2:00 and then come back and do it again. I was earning a ton, but I also was saving a ton.
-So I was able to earn and save, thus working both ends against middle. Boom! All of a sudden I was able to save like $20,000 in less than half a year. And a lot of people it takes them years and years and years. Business coaching lesson: So what he's talking about is the habit of saving mixed with the habit of learning how to work hard. That's what we're talking about.
-So what are some of the pros and cons of this?
-Business coaching tip: Well, the pro is that you're going to build a reputation for being a diligent person. And I think anybody if you're watching this, if you are diligent person, you will get presented with opportunities all the time. Everybody that I have-- it seems like almost everyone I've met calls and says, hey, bro. I have a business idea. Can we meet? Why? Because they know that I consistently I want to say something I should say, but I consistently kick derriere. Derriere? Perrier? Derriere? Perrier?
But I get it done. So if I have to get up at 3:00 in the morning to get it done, I'll do it. If I have to stay till midnight, I'll do it. I'll get it done. I don't have to-- I don't worry about my work-life balance. I just get done. And because of that, people are like, you're diligent. I'll invest it. So I have more opportunities than I know what to do with all the time.
But the con of that is you just can't run around anymore just buying stuff or whenever you feel like it. You can't just be this person every time you hear a marketing commercial you're like, I should buy that! Because that's what most people do. As a culture-- and I worked in the mortgage business, this is crazy. Do you know, if you Google this mess if you're watching this, the average American refinances, their house a little less than every four years? Do you know that on a 30-year mortgage almost the first 15 years are almost all interest.
So you start to think about the average American is basically just renting a house from the bank and moving every four years. Why? Because I send them a letter because we're a mortgage company, we're good at it. We send a letter saying, do you want to lower your payments? Do you want to take money out with a home equity line to renovate your deck? Do want to go on a dream vacation that you deserve? And they're like, yeah, we do. And I'm like, yeah, I know you do. And you take money out and it's this great game of marketing.
And you can't be influenced by that. Business coaching tip: I'm a marketing guy, and I'm telling you, do not be influenced by that mess, because every company's trying to market. Starbucks says, treat yourself. I think you should treat yourself, but if you treat yourself every day you're going to be massive. So you just got to be very careful that you're not just led by marketing. You've got to say no to things.
-So this second method is similar to this. I think it goes hand-in-hand here. This is business coaching for method the number two, the live below your means method. Dive into that for us a little bit.
-Well, a lot of people watching this who are wanting to start a business might say I don't want to work at hard. Now I'm not offended and upset. I'm not coming down on you. I'm saying some people say, I know a lot of my friends will say, I would never work until midnight. I would never do it. There's nothing you can make me do.
I've got one of my buddies he's been a civil servant for years. He will never, ever work more than 40 hours. But what he's done is he's consistently chosen to live below his means, so he's acquired a massive sum of money at a relatively young
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-So I'm going to read you this business coaching quote from John D. Rockefeller--
---the guy who was, at one point, the world's wealthiest man. He says, "I believe that every right implies a responsibility, every opportunity, an obligation, every possession, a duty." And I want to underscore every possession, a duty. What does that mean? If you buy a car, you have to change the oil. You have to have it maintained. You have to fix it. If you buy a house, the roof is going to be damaged.
I have a friend of mine who bought a home, no money down, back when you could do that. No money down. Bought this beautiful house. Well, his air conditioning goes out. Why? Because it's a house.
-So he's like, I'll just call the-- call who, I said. You own it. [GROAN] You know. Well, you can't. His car. His car. Car breaks down. Same guy, car breaks down. He comes over. Hey, my car broke down. I've got this roof problem, I got this air conditioning problem, I got the car. Just all these expenses.
-So you're saying living below your means is having that in mind? This duty that comes with your possessions.
-Business coaching tip: Simplicity is the ultimate form of sophistication, according to Steve Jobs. And I would argue that if you had two really good pairs of shoes and you lived in a rental house, and two really nice outfits, and you had very little. You had one TV, very little possessions, your expenses will be less because you don't have the cost to maintain that stuff. You get what I'm saying?
-That's why for Thrive, we're so passionate about the military. Because we have a free country, but you have to maintain that mess. To be a free country, somebody has to sacrifice year, after year, after year. Business coaching truth: Therefore, nothing is free. So he talks about here. Again, I'll read it to you one more time.
-It says, he says, "I believe that every right implies a responsibility, every opportunity, an obligation." So it's just like, you got to be thinking about that. If you're somebody who's saying, I'm going to live below my means, but you go out and install a pool. Well, I can afford. I'm still living below my means. I can install a pool. No, you're not. Because you're adding your expenses.
-Nobody's taking into account the maintenance.
-Almost everybody I know does this. It is crazy. Business coaching advice: So please live below your means. And if you do, according to the millionaire next door, you're one of the few people in the whole country we have here, the United States, assuming you're not watching in Australia, who does so. Very few people live below their means. And it doesn't matter how much you make.
-If you're watching this and you're going, if I made a million dollars a year, I would definitely start living below my means. No you wouldn't, if you don't yet. Because all these NBA players. They earn $63 million, $104 million. People mock Antoine Walker and Allen Iverson.
You know what though, there's doctors I know who make a million bucks a year, spend it all too. Teachers I know making $40,000 a year, spending it all. Just live below your means.
-So give us some business coaching pros and cons here of this living below your means method.
-Well, the pro-- and I want to quote Dave Ramsey, the great financial coach, financial consultant-- Dave Ramsey says, "If you live like no one else, later you can live like no one else." Marinate on that for a second. Just here we go, marinate. Close your eyes while keeping focus on the screen. "If you will live like no one else, later you can live like no one else."
-I feel like you're a good example of that, though. Early on in your career, did you not have to live like no one else?
-Yeah. And I think that people don't-- I drove a 1984 brown van that didn't have a door until 2008. So I had a doorless van till 2008. And a lot of people were like, "dude, you live in this nice house. Why do you drive that van?" And I only replaced the van after my homeowner's association made me do it.
So I got a Hummer as my backup plan. But the reality is, is that I'll probably drive the Hummer till the wheels fall off. But I think it's important that everybody watching this, you have to know you have to have sacrifice.
-Some of the most successful business coaching mentors we have here on Thrive do this so well. Lee Cockerill, we've seen him do it. These men live below their means now, and you know that they did that back before they had wealth as well.
-Well, when Lee took us out for dinner, took us out to one of the fanciest, nicest restaurants that we'd been to. Really nice. He really treated us like royalty out there in Florida. And we drove there in a minivan that was paid for. Why?
Because he knows that if he buys a bunch of cars, luxury cars, which he could buy, he has to maintain it. He has to then pay for the insurance. He has to pay. So he drives a vehicle that's paid for that he can afford. Now the one drawback here, a con of living below your means is that you can't keep up with the Joneses. You can't live like most people. You just can't.
-So people say, hey, you want to go out to dinner? Sometimes you'll have to say no. I would say, most times. So my wife and I, do stuff that's interesting, I guess. For us, it's normal. But we turned off the air conditioning in our house so we could buy Yellow Page ads. And we made a decision that we would work together on accounting every night as our time together.
-Let's just go ahead and clarify where you're living when you turned of the air conditioning. And what time of the year it was.
-It was in Oklahoma. We got married in May, so it was like May, June. It was about 100 degrees. And it was in the Fountain Crest Apartments over there behind the Marriott, where it's very hot, at 71st and Lewis. But that's what we did. But the thing is, is that we'd made a decision that we wanted to buy a Yellow Page ad the size of like an 8 1/2 by 11 sheet of paper. When all we had was just very, very, very little money.
But what we did that made that sacrifice, then we made that reward later. So we lived like no one else so that we could live like no one else later. So we went on our big old extended cruise and lived it up, people were like, how did you guys afford that? You're only-- I remember when I moved into my neighborhood. I was 20. I was 21, I guess. I moved into this neighborhood and every neighbor I had could be my dad.
And they're all like, what, did your parents buy the house for you, son? You know, that kind of thing. And it's because I had chosen to live below by means. That's just what you have to do. If you want to get there, ask yourself how bad you want it. And are you willing to say, now these are practical ways to generate capital.
-Number three. Business coaching for method number three here. The SBA, small business loans, method for raising capital. Talk to us about this.
-Um, I'm going to read you a little business coaching definition from entrepreneur.com. It says, a Small Business Administration loan is a government-backed term loans that are available at most banks and commercial lending institutions in any given year. The SBA can guarantee tens of billions of dollars of loans that support tens of thousands of small businesses.
Business coaching lesson: What it is is the SBA basically goes to banks and says, if you lend money to conforming clients, to clients that-- if you lend money to people who are starting a business and if they meet these certain guidelines, we as the federal government will guarantee the loan. So if I'm the bank and I lend money to you and you go out of business, I'm OK, because the federal government will back and will pay off the money that you basically owe the bank. So the investors-- the people who deposit their money in the bank-- their deposits are safe.
-However, if this happens too often, then the bank will basically not be in good standing with the Small Business Administration, and that practice will soon stop.
-Business coaching tip: So if you have a conforming business plan and you have all the documents and documentation that the bank needs, then you have a very strong chance of getting a small business loan approved by the Small Business Administration. And the banks are going to be a little bit more loose with the checkbook to write those loans because the money's backed by the federal government.
-So I think that we've kind of outlined what that pro is there. You can touch on that anymore, but what's a con that we've got?
-I think a con of that is that you do have to deal with the government.
-And whenever you deal with the government there's paperwork. There's meetings. There's meetings about the paperwork. There's forms. There's forms about the forms and there's red tape. There's a lot of bureaucracy.
-And so if you're an entrepreneur who's like, I just want to open up businesses everywhere. All of a sudden you're going to have a real frustration because you're like, I have to go to another bank meeting?
-And then another one and then another one? And you might try to apply-- it might take you six months. I worked with one doctor. It took him almost nine months to get his documentation up to conforming standards.
INTERVIEWER: Nine months?
-Yeah. It would've taken me probably three weeks, but it required about 100 hours of work.
-And so he wanted to space it out a few hours a day, And so it took him nine months. I know other people who've gotten SBA loans in three or four months, but you have to have a conforming loan.
-Got it. Now let's move on to business coaching for method number four-- the credit card method for raising capital. Clay, talk to us about the credit card method.
-This is where a lady or a dude will use their credit card to finance their business. And if you're resourceful and you have a good credit line or good good credit standing, you can use this method without ever paying interest. And so I guess a good example would be I knew as a young man that I wanted to start businesses and I knew I had no money.
-So what I did was I went on-- at the time they didn't have this website-- but I went on to Discover card and I applied for a card, which I've had since I was I think 16--
- --and I built up a limit where in 2007 I think my limit I could buy like $100,000 of purchases on my card at any given time with 18 months no interest.
-So that is real business coaching talk. So now what you do on a credit card method I'm going to walk you through it.
-I'm going to go ahead and buy stuff. As indicated, this'll be the debt. This paper-- a lot of times they call debt paper, notes, whatever. So this is the debt, and let's say it's $100,000. I can have another credit card-- and you want to have the other credit card set up, by the way, before you do this.
-But then what happens is there's a no charge, or a very minimal charge, to transfer balances. So if this is a Mastercard, I can then use my discover card. And in six months, after I've paid it down a little bit, I'll transfer the balance from one card to the next.
-Thus freeing me up for another 18 months.
INTERVIEWER: There you go.
-And every six months or so I'll keep doing. So if I have a six month no interest period, every six months I'll transfer. And so in 2000-- like 2003, 2004-- I booked I think 45 weddings on the same day--
- --and I think I had six DJ systems--
- --or maybe 10, and so I bought them all on credit cards. Just maxed out every single card I had and I kept one for working capital. And what I did was I charged the brides and grooms a deposit to finesse a down payment to reserve the DJ. And then when their wedding date came and I got the full payments, I just paid them off. And I've done that probably 100 times.
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