1
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we'll have so many write offs, we'll be able to write ourselves right out of business.
2
00:00:03,375 --> 00:00:04,226
Yes.
3
00:00:04,500 --> 00:00:06,320
I mean, they make a dollar, they spend a dollar ten.
4
00:00:06,320 --> 00:00:11,580
I mean, it's just the mentality of, you know, and yeah, exactly.
5
00:00:11,920 --> 00:00:14,943
make your business decisions as business decisions.
6
00:00:14,943 --> 00:00:21,197
take advantage of every write off you can, but you never make a business decision because
of the write off.
7
00:00:21,197 --> 00:00:24,109
You write off things that were wise business decisions
8
00:00:24,108 --> 00:00:28,660
I want to take a moment to tell you about this episode's sponsor MacArthur Company.
9
00:00:28,660 --> 00:00:32,822
As a former contractor, I know the importance of working with a great team.
10
00:00:32,822 --> 00:00:35,523
That team includes more than your employees.
11
00:00:35,523 --> 00:00:36,650
You need what you need
12
00:00:36,650 --> 00:00:38,753
on time and at the right location.
13
00:00:38,753 --> 00:00:41,074
Competitive pricing sure helps too.
14
00:00:41,074 --> 00:00:44,436
A good relationship with your supplier can make a huge difference.
15
00:00:44,436 --> 00:00:47,437
That is why I always use MacArthur Company.
16
00:00:47,437 --> 00:00:49,578
At MacArthur, you are more than just a number.
17
00:00:49,578 --> 00:00:52,469
You are a person, a customer, and a friend.
18
00:00:52,469 --> 00:00:59,665
With branches throughout the United States, MacArthur is big enough to handle your most
demanding needs, but they do it with small town service.
19
00:00:59,665 --> 00:01:04,769
MacArthur isn't another big box store run by a board answering to stockholders.
20
00:01:04,769 --> 00:01:14,396
They are employee owned, making them one of the last independent suppliers serving all of
your commercial, industrial, and residential building envelope needs.
21
00:01:14,697 --> 00:01:22,623
Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with
great service and a personal touch.
22
00:01:22,751 --> 00:01:31,375
If great service and good pricing don't win you over, make sure you check out their
customer incentive program, where every purchase earns points towards a free vacation.
23
00:01:31,375 --> 00:01:35,097
I am already packing for my next MacArthur incentive trip.
24
00:01:35,097 --> 00:01:43,440
Call or check online to find your nearest MacArthur warehouse so you too can enjoy
superior service and start earning points towards your next vacation.
25
00:01:43,440 --> 00:01:46,202
Get what you need, when and where you need it.
26
00:01:46,202 --> 00:01:48,002
All the service without the hassle.
27
00:01:48,002 --> 00:01:49,343
MacArthurCo.com.
28
00:01:59,943 --> 00:02:09,451
Hey there and welcome to From the Ground Up Show, the show where we encourage and inspire
the next generation of free thinking leaders by telling the stories of those that have
29
00:02:09,451 --> 00:02:12,254
been there, done that and are still getting it done.
30
00:02:12,254 --> 00:02:16,077
Building a life that they love with their hearts, their hands and their hustle.
31
00:02:16,077 --> 00:02:17,926
I'm your host, Erick Loden.
32
00:02:17,926 --> 00:02:20,717
If you guys are enjoying the content, help me out.
33
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Check us out on social media at from the ground up show.
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Make sure you subscribe to the podcast or the YouTube channel.
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And if you can click that auto download button that really helps us out getting those
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And of course, like, share, subscribe, follow all of the things.
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We really appreciate that.
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Now you can get your own From the Ground Up show merch.
39
00:02:44,188 --> 00:02:46,571
Check out our store online at
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00:02:46,570 --> 00:02:49,694
shop.fromthegroundupshow.com.
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00:02:50,216 --> 00:02:51,237
Again, is
42
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shop.fromthegroundupshow.com.
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00:02:54,622 --> 00:02:56,938
So today I'm excited.
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00:02:56,938 --> 00:02:59,735
I have a special guest, Van Carlsen.
45
00:02:59,735 --> 00:03:03,838
uh This is a little bit of a deviation from our normal format.
46
00:03:03,838 --> 00:03:10,843
Van is a bit of a more white collar worker, but he's got an entrepreneurial streak in
there as well.
47
00:03:10,843 --> 00:03:19,959
And I think he has some great information that will be very beneficial to those of us that
work in the trades and in non-traditional career paths.
48
00:03:19,959 --> 00:03:25,193
Van works with many blue collar companies to mitigate insurance risks.
49
00:03:25,193 --> 00:03:30,977
Van is the founder and CEO of SRA 831B.
50
00:03:30,977 --> 00:03:40,593
He has more than 25 years experience working in the insurance industry and is going to
help us better understand the risks that we face and how we can mitigate them.
51
00:03:40,593 --> 00:03:43,095
So, Van, thanks for joining the show.
52
00:03:43,573 --> 00:03:45,167
Yeah, thanks for having me on your show, Erick.
53
00:03:45,167 --> 00:03:46,716
Appreciate the opportunity.
54
00:03:46,939 --> 00:03:47,609
Awesome.
55
00:03:47,609 --> 00:03:57,817
Well, I'm sure our listeners are anxious to dive into the advice you have for us, but we
like to start every show getting to know you a little bit and connecting a little bit.
56
00:03:57,817 --> 00:04:03,111
So can you tell me a little bit about where you grew up and what your childhood was like?
57
00:04:03,531 --> 00:04:04,111
Yeah, you bet.
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00:04:04,111 --> 00:04:07,295
uh grew up in Central Valley of California, farm kid.
59
00:04:07,295 --> 00:04:13,061
Did that for many years and then my folks back in the early 80s decided to sell everything
and moved to Idaho.
60
00:04:13,061 --> 00:04:23,801
And from there, my dad bought a couple small businesses, ran local convenience stores and
pretty much worked my, you if wasn't running a tractor, we were working at one of the
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grocery stores my dad owns.
62
00:04:25,482 --> 00:04:26,810
So pretty much.
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00:04:26,810 --> 00:04:29,411
That was just what you did as a kid back in the 80s.
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And I liked being the farm kid mostly.
65
00:04:31,360 --> 00:04:32,928
It was a great experience for me.
66
00:04:32,928 --> 00:04:36,906
I worked at a lot of farmers markets on the weekends and that's kind where I learned how
to sell.
67
00:04:36,906 --> 00:04:43,790
I mean, I remember my dad would say, hey, let's sell everything at the end of the day when
the farmers market was getting ready to shut down.
68
00:04:43,790 --> 00:04:48,543
And I think I was selling watermelons, three, four dollars, just so we didn't have to
bring them home.
69
00:04:48,543 --> 00:04:54,947
uh But uh I remember yelling that out as a little kid when I was, I don't know, seven or
eight years old.
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00:04:55,050 --> 00:04:57,765
Been doing it ever since, been yelling it out ever since.
71
00:04:57,765 --> 00:05:03,255
that's kind of where all that gets, I guess this is it kind of started, being the
entrepreneur, so.
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00:05:03,331 --> 00:05:07,278
Yeah, yeah, it sounds like that entrepreneurial streak runs pretty deep.
73
00:05:07,278 --> 00:05:10,414
So what did education look like for you?
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00:05:10,900 --> 00:05:14,164
You know, education wasn't that important to me, like most kids I guess.
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I played a lot of sports, went to a very small school,
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00:05:17,063 --> 00:05:21,748
got a scholarship to play football, that kind of went south, and I ended up joining the
Coast Guard for four years.
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00:05:21,748 --> 00:05:27,122
And after four years of that, I came back and actually had my GI Bill and finished out
here at Boise State University.
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And with a political science degree, I was going to become a lawyer, go to law school, and
I'm glad that didn't happen.
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I'm not a fan of lawyers in any level and I couldn't imagine being one.
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00:05:36,852 --> 00:05:42,827
But no, I got into risk management right about that time, started PNC agency and as they
say, the rest is history.
81
00:05:42,827 --> 00:05:46,700
But it's been almost 30 years, well will be, yeah it was 96.
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00:05:46,700 --> 00:05:48,300
So yeah, is that 30 years?
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00:05:48,502 --> 00:05:51,094
I think that is, damn that is 30 years.
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00:05:54,216 --> 00:05:55,896
Yeah, I guess.
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00:05:58,446 --> 00:05:59,286
man.
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00:05:59,427 --> 00:06:11,768
So a political science background, now working as an entrepreneur and specifically in the
insurance space, uh do you utilize your education much in your current career?
87
00:06:12,106 --> 00:06:13,066
I would say not.
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00:06:13,066 --> 00:06:22,577
think what the biggest thing, know, college is getting kind of a knock right now, which is
justifiable in my opinion in a lot of ways, but I do think it does create the narrow paths
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to critical thinking, hopefully.
90
00:06:26,357 --> 00:06:32,348
That's what it did for me, honestly, was to be more of critical thinker in my decision
making.
91
00:06:32,468 --> 00:06:34,698
that's...
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00:06:34,761 --> 00:06:39,684
You know, I would attribute that more than anything as far as any kind of degree out
there.
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00:06:39,684 --> 00:06:42,985
I was never going to be a, you know, the doctor.
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00:06:42,985 --> 00:06:46,369
I mean, I never specifically would have focused in on any one.
95
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It was a liberal arts degree at the end of the day, political science was, but I liked it.
96
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I loved history.
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00:06:51,222 --> 00:06:56,533
Actually, saw myself as a, honestly, I was going to become a teacher originally.
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But then when I found out they got rid of corporal punishment somehow along the line in
those four years of me being away.
99
00:07:03,678 --> 00:07:11,094
I'm like, I went to a class one time and the guy, a lot of kids were back talking.
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was observing a junior high class for one of my college credits.
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And I'm like, hey, these kids are kind of talking and they broke for recess or whatever.
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I asked the teacher, said, hey, I noticed these kids are kind of, it was already after
spring break.
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And I said, they're pretty active right now.
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They're talking back, they're interrupting you.
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I go, why don't you have a paddle on the wall?
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And he looked at me like, what?
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And I said, yeah, that's what my teachers did.
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That's what I plan to do.
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And he's like, no, man, you can't do that anymore.
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I'm like, well, I'm out.
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I'm literally at that point.
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I said, all you got is carrots?
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I can't do business with people that just have carrots.
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So that's why I went a different route very quickly after that.
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I had no interest in being a public school teacher at that point.
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anyway.
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man, that's great.
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That's funny.
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As long as you can smack kids around, you're good to go, otherwise...
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Yeah.
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it, right?
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00:08:04,766 --> 00:08:06,690
mean, there's nothing for hell's sakes.
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00:08:06,690 --> 00:08:07,404
mean...
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00:08:07,404 --> 00:08:10,766
yeah, there's no way I could make it as a teacher in today's world.
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00:08:10,766 --> 00:08:20,472
ah I've got some friends and relatives that are teachers and the things they put up with,
the way that they have to go about running their classroom, it'd just be untenable for me.
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00:08:22,353 --> 00:08:23,754
yeah, yeah.
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00:08:23,754 --> 00:08:28,737
man, great teachers are few and far between and they don't get paid enough.
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00:08:28,737 --> 00:08:29,379
So.
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00:08:29,379 --> 00:08:30,272
No, that's for sure.
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00:08:30,272 --> 00:08:32,477
uh
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00:08:32,581 --> 00:08:37,133
I want to take a moment to tell you about this episode's sponsor MacArthur Company.
132
00:08:37,133 --> 00:08:41,295
As a former contractor, I know the importance of working with a great team.
133
00:08:41,295 --> 00:08:43,996
That team includes more than your employees.
134
00:08:43,996 --> 00:08:45,117
You need what you need
135
00:08:45,117 --> 00:08:45,238
on
136
00:08:45,329 --> 00:08:47,275
time and at the right location.
137
00:08:47,275 --> 00:08:49,596
Competitive pricing sure helps too.
138
00:08:49,596 --> 00:08:52,958
A good relationship with your supplier can make a huge difference.
139
00:08:52,958 --> 00:08:55,959
That is why I always use MacArthur Company.
140
00:08:55,959 --> 00:08:58,100
At MacArthur, you are more than just a number.
141
00:08:58,100 --> 00:09:00,991
You are a person, a customer, and a friend.
142
00:09:00,991 --> 00:09:08,187
With branches throughout the United States, MacArthur is big enough to handle your most
demanding needs, but they do it with small town service.
143
00:09:08,187 --> 00:09:13,291
MacArthur isn't another big box store run by a board answering to stockholders.
144
00:09:13,291 --> 00:09:22,918
They are employee owned, making them one of the last independent suppliers serving all of
your commercial, industrial, and residential building envelope needs.
145
00:09:23,219 --> 00:09:31,145
Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with
great service and a personal touch.
146
00:09:31,273 --> 00:09:39,897
If great service and good pricing don't win you over, make sure you check out their
customer incentive program, where every purchase earns points towards a free vacation.
147
00:09:39,897 --> 00:09:43,619
I am already packing for my next MacArthur incentive trip.
148
00:09:43,619 --> 00:09:51,962
Call or check online to find your nearest MacArthur warehouse so you too can enjoy
superior service and start earning points towards your next vacation.
149
00:09:51,962 --> 00:09:54,724
Get what you need, when and where you need it.
150
00:09:54,724 --> 00:09:56,524
All the service without the hassle.
151
00:09:56,524 --> 00:09:57,865
MacArthurCo.com.
152
00:09:57,865 --> 00:10:06,265
Well, it sounds like you came from an entrepreneurial background, kind of a blue collar
childhood and growing up.
153
00:10:06,265 --> 00:10:12,305
Can you tell us a little bit about you mentioned a few jobs there and a transition through
your career.
154
00:10:12,305 --> 00:10:14,005
But can we dive into that a little bit deeper?
155
00:10:14,005 --> 00:10:20,185
How do you get from a political science degree to founding SRA?
156
00:10:20,357 --> 00:10:22,809
Yeah, was actually working at FedEx.
157
00:10:22,809 --> 00:10:24,730
So I worked my way through school.
158
00:10:24,730 --> 00:10:27,752
You worked at UPS, FedEx, here in Boise.
159
00:10:27,752 --> 00:10:29,653
And I was going to go to the FedEx route.
160
00:10:29,653 --> 00:10:34,036
And honestly, I trained under the corporate management program during college.
161
00:10:34,036 --> 00:10:38,379
And back then, you had to have a college degree and all these other things to become a
manager for FedEx.
162
00:10:38,379 --> 00:10:39,599
And I was...
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00:10:39,767 --> 00:10:47,998
I remember hopping on planes, flying to Memphis, and then from there I'd fly to other
parts of the country applying for management positions.
164
00:10:47,998 --> 00:10:52,518
And I applied, I was stationed down in Florida for a couple years, so I went down to Fort
Lauderdale.
165
00:10:52,918 --> 00:10:57,558
I was interviewing for a job there as a manager, and I would have to operate.
166
00:10:57,558 --> 00:11:02,918
At that point I had my oldest son, and then my daughter was just born.
167
00:11:03,078 --> 00:11:05,898
And I thought to myself,
168
00:11:06,046 --> 00:11:08,449
I'd have to uproot my family, move to a place.
169
00:11:08,449 --> 00:11:14,613
Florida's great place, but back then even there was a lot of issues back in late 90s
around that part of the world.
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00:11:14,613 --> 00:11:17,484
But I just thought, man, this is not what I want for my family.
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00:11:17,484 --> 00:11:18,775
And so I took the risk.
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00:11:18,775 --> 00:11:22,158
I uh started as a Farmers Insurance agent, actually.
173
00:11:22,158 --> 00:11:23,879
And it was scratch agency.
174
00:11:23,879 --> 00:11:29,452
you literally, I remember back then they didn't have caller ID, so telemarketing, local
phone calls.
175
00:11:29,452 --> 00:11:31,050
I bought mortgage leads.
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00:11:31,050 --> 00:11:42,101
started my own insurance agency literally from scratch and within eight months, nine
months, was a I was a top producer at that point relative to my peers in the area and I
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00:11:42,101 --> 00:11:52,904
was offered an agency and I took it and that was in a town, a little town called Meridian,
Idaho, which is now, when I started it was 24,000 people, I think now it has...
178
00:11:52,904 --> 00:11:55,724
about 125,000 now.
179
00:11:55,724 --> 00:11:57,815
So it's grown by that far.
180
00:11:57,815 --> 00:11:59,655
But no, that's literally how it started.
181
00:11:59,675 --> 00:12:03,395
really, I just wanted the lifestyle for my family living in Idaho.
182
00:12:03,831 --> 00:12:13,318
I know working for, know, working, you know, I called it a job, you know, the, you know,
just over broke kind of stands for, you know, it's hard to make it a really strong living
183
00:12:13,318 --> 00:12:13,858
in Idaho.
184
00:12:13,858 --> 00:12:21,714
I kind of recognized that early on, pay scales are not the greatest, but you got the
quality of life and, you know, sometimes it'll still go in line.
185
00:12:21,714 --> 00:12:23,966
But if you start a business, you got the opportunity to do both.
186
00:12:23,966 --> 00:12:25,237
And that's kind of the way I saw that.
187
00:12:25,237 --> 00:12:26,117
And that's what we did.
188
00:12:26,117 --> 00:12:27,821
So, rent now for many years.
189
00:12:27,821 --> 00:12:31,815
Came in top one producer and all that good stuff, all the accolades of that.
190
00:12:31,815 --> 00:12:33,406
And then I started dabbing in everything.
191
00:12:33,406 --> 00:12:37,400
But honestly, my clients were subcontractors.
192
00:12:37,400 --> 00:12:38,661
I loved plumbing.
193
00:12:38,661 --> 00:12:40,882
I actually owned a plumbing business with my brother.
194
00:12:40,882 --> 00:12:42,874
I own four of the businesses now at this point.
195
00:12:42,874 --> 00:12:47,388
I own a construction company that does nothing but industrial refrigeration businesses.
196
00:12:47,388 --> 00:12:49,549
Really, we're licensed in five states.
197
00:12:50,030 --> 00:13:01,168
That's that's I started that company with my brother-in-law that company's sir has been
awesome to watch grow over the last several years and it's become a really Great business
198
00:13:01,168 --> 00:13:10,114
and I do love I'll be honest with you of all the businesses I've worked with and been
involved with I do like the service industry with some of the construction side of things
199
00:13:10,114 --> 00:13:12,015
and That's kind of got my
200
00:13:12,048 --> 00:13:15,230
Interest right now peaked more than anything.
201
00:13:15,230 --> 00:13:18,371
son runs this company now and my daughter's involved as the controller.
202
00:13:18,371 --> 00:13:22,474
She worked for Deloitte for a couple years and she's a CPA and she came to work for me a
couple years ago.
203
00:13:22,474 --> 00:13:25,755
And my youngest son actually works in that company, Sir.
204
00:13:25,755 --> 00:13:30,319
And uh Sir stands for Superior Industrial Refrigeration and I love that business.
205
00:13:30,319 --> 00:13:31,659
I love the cold store space.
206
00:13:31,659 --> 00:13:36,803
It's very unique, very niche-y still in the construction world and we've done well there.
207
00:13:36,803 --> 00:13:39,704
uh
208
00:13:40,620 --> 00:13:46,592
I own some, they call them rave laundromats, I started laundromats with my business
partner probably about eight years ago.
209
00:13:46,809 --> 00:13:47,590
here in the Valley.
210
00:13:47,590 --> 00:13:50,871
There was really needed and that business has been great.
211
00:13:50,871 --> 00:13:59,595
So yeah, think for the most part, what's afforded me to be able to grow my business though
is really what we do, what I predominantly do is risk management.
212
00:13:59,595 --> 00:14:07,923
And how do I position dollars more effectively and efficiently for business owners,
entrepreneurs such as myself, that really takes advantages of the downturns and the...
213
00:14:07,923 --> 00:14:12,046
unforeseen incidences that happen all the time now in the world we're in.
214
00:14:12,046 --> 00:14:14,367
When it comes to risk, it's gotten much more complex.
215
00:14:14,367 --> 00:14:18,206
So, kind of drove me there was 08, honestly.
216
00:14:18,172 --> 00:14:19,092
Yeah.
217
00:14:19,473 --> 00:14:20,293
Okay.
218
00:14:20,293 --> 00:14:21,574
Man, that's interesting.
219
00:14:21,574 --> 00:14:23,785
I wasn't aware of all those other businesses.
220
00:14:23,785 --> 00:14:30,178
think you probably fit our traditional guest profile a lot more closely than I expected.
221
00:14:30,178 --> 00:14:37,262
thought insurance was kind of your focus, but you've been all over the map and got your
fingers in almost everything.
222
00:14:37,537 --> 00:14:40,117
Yeah, I do love it.
223
00:14:40,117 --> 00:14:42,477
When I see an opportunity, I can't say no to it.
224
00:14:42,477 --> 00:14:44,757
It's kind of a disease, I think, maybe.
225
00:14:44,757 --> 00:14:46,017
I don't know.
226
00:14:46,317 --> 00:14:50,985
I do drive my staff nuts with it, because I do come up with...
227
00:14:50,985 --> 00:14:52,046
all sorts of different things.
228
00:14:52,046 --> 00:14:54,809
And there's just a ton of opportunities out there right now.
229
00:14:54,809 --> 00:15:00,665
I know a couple right now that I'd love to, but I mean, I'm getting to the point where I
don't know if I want to do it, honestly.
230
00:15:00,665 --> 00:15:05,760
I'm 58 now, I'm starting to have grandkids, and so things start to pivot on that end.
231
00:15:05,760 --> 00:15:08,484
you know, it does eventually calm down a little bit.
232
00:15:08,484 --> 00:15:10,037
You don't want to...
233
00:15:10,037 --> 00:15:11,962
I think it starts to calm down anyway.
234
00:15:11,962 --> 00:15:13,052
I hope it does, but
235
00:15:13,304 --> 00:15:14,261
anyway.
236
00:15:14,261 --> 00:15:15,291
yeah, that's awesome.
237
00:15:15,291 --> 00:15:23,265
I think that's probably a trait of a lot of entrepreneurs is they see opportunity
everywhere they turn and it's hard not to take advantage of it.
238
00:15:23,265 --> 00:15:28,137
I think that's probably maybe more so than skill or intelligence or education.
239
00:15:28,137 --> 00:15:35,943
That's probably one of the determining factors with entrepreneurs is the ability to see
opportunity and the risk.
240
00:15:35,943 --> 00:15:40,822
Oh, I guess the lack of being risk adverse to go after it when you see it.
241
00:15:40,822 --> 00:15:41,313
So.
242
00:15:41,313 --> 00:15:42,985
I couldn't agree more.
243
00:15:42,985 --> 00:15:46,490
And it's really the risk tolerance you gotta have.
244
00:15:46,490 --> 00:15:52,578
mean, and being fearless when it comes to doing something nobody's ever done before or any
of kind of stuff.
245
00:15:52,578 --> 00:15:56,463
And you gotta have a chip on your shoulder to do it right, honestly.
246
00:15:56,463 --> 00:15:57,444
So.
247
00:15:57,811 --> 00:15:59,151
I think that's true as well.
248
00:15:59,151 --> 00:16:01,712
And yeah, that was the word I was looking for risk tolerance.
249
00:16:01,712 --> 00:16:04,233
It wasn't coming to me this morning.
250
00:16:04,233 --> 00:16:05,804
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251
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261
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262
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263
00:16:54,389 --> 00:17:01,432
Well, do you want to tell us a little bit about I guess you have lots of businesses, but
specifically SRA.
264
00:17:01,432 --> 00:17:06,555
At what point did you decide to step away from farmers and start your own thing?
265
00:17:06,553 --> 00:17:09,039
Well, ironically enough, my wife came to work for me.
266
00:17:09,039 --> 00:17:12,055
Our kids were starting to get old enough, she came to work for me.
267
00:17:12,097 --> 00:17:14,263
And she actually, I sold my agency to her.
268
00:17:14,263 --> 00:17:15,330
When 08 hit...
269
00:17:15,330 --> 00:17:18,742
you know, the great recession, you know, I had a lot of clients.
270
00:17:18,742 --> 00:17:22,964
So we're growing, mean, Meridian's growing, you know, it's building homes, subdivisions.
271
00:17:22,964 --> 00:17:25,176
I mean, it was this pouring into the valley here.
272
00:17:25,176 --> 00:17:27,617
And uh all those guys were clients of mine.
273
00:17:27,617 --> 00:17:34,683
I mean, this sheetrock guys, to plumbers, to electricians, general contractors,
landscaper, I mean, you name it.
274
00:17:34,683 --> 00:17:38,915
you know, looking back, I you I love those guys.
275
00:17:38,915 --> 00:17:41,306
mean, they all became friends eventually.
276
00:17:41,306 --> 00:17:43,147
I mean, you work with them long enough, people become friends.
277
00:17:43,147 --> 00:17:52,707
friends in that relationship and especially if you're like-minded of business and you know
I loved the fourth quarter I mean the fourth quarter was good for me because you know
278
00:17:52,707 --> 00:18:02,672
these guys would call up and say hey I met with my CPA I got a tax liability I'm buying
two more trucks and a skid steer what's it gonna cost to insure
279
00:18:02,672 --> 00:18:03,174
Yeah.
280
00:18:03,174 --> 00:18:05,565
you know, everybody's making more money, you know?
281
00:18:05,565 --> 00:18:10,224
And, you know, looking back, I mean, all he kept doing is betting every year was going to
be better than previous year.
282
00:18:10,224 --> 00:18:18,345
You know, I mean, they take advantage of accelerated depreciation and then finance the
equipment and then afford a new boat or the bigger house and all those things, right?
283
00:18:18,565 --> 00:18:21,365
And, you know, I made the joke and it's true.
284
00:18:21,359 --> 00:18:23,179
I mean, they make a dollar, they spend a dollar ten.
285
00:18:23,179 --> 00:18:28,439
I mean, it's just the mentality of, you know, and yeah, exactly.
286
00:18:28,779 --> 00:18:29,639
And,
287
00:18:29,842 --> 00:18:37,862
You know, here comes 08, 09, you know, that, and unfortunately I was witness to a lot of
those, I lost a lot of those clients, that, you know, the loans and, you know, covenants
288
00:18:37,862 --> 00:18:45,562
and loans started the mean things and leverage was, you know, you didn't want to be
leveraged, over leveraged because there was a sudden halt.
289
00:18:45,562 --> 00:18:47,082
It was like a slow stop.
290
00:18:47,082 --> 00:18:50,093
It was like, you know, it was like hitting a wall.
291
00:18:50,093 --> 00:18:55,033
you know, so then I, you know, I was kind of exposed to the idea of managing self-insured
risk.
292
00:18:55,531 --> 00:18:57,742
through a tax code called 831B.
293
00:18:57,742 --> 00:19:00,403
At the time, I wasn't that interested in it, quite honestly.
294
00:19:00,403 --> 00:19:02,473
Didn't seem to make sense for my business owners.
295
00:19:02,473 --> 00:19:04,305
I didn't really see the lines, you know.
296
00:19:04,305 --> 00:19:08,507
And I thought traditional insurance was doing a good job and honestly, it was pretty
cheap.
297
00:19:08,507 --> 00:19:15,269
And so this idea of, you know, and then here comes 08 and then you realize the financial
risk business owners take.
298
00:19:15,269 --> 00:19:21,223
And uh betting every year, you know, my clients were good, hardworking people.
299
00:19:21,223 --> 00:19:32,172
Maybe not the high sophistication of business, but knew their trades really well, cared
about their employees, sponsored the baseball teams, I mean all of that, right?
300
00:19:32,172 --> 00:19:34,052
And then boom, they're out of business.
301
00:19:34,395 --> 00:19:36,066
uh
302
00:19:36,106 --> 00:19:44,669
blue collar businessman is they start in a trade, they get really good at it, they see
opportunity, they take a risk, and they're really great plumber or really great
303
00:19:44,669 --> 00:19:46,880
electrician or really great whatever.
304
00:19:46,880 --> 00:19:50,451
And they learn business along the way instead of coming at it from the other angle.
305
00:19:50,451 --> 00:19:54,583
So they need experts in their corner to help educate them on those things.
306
00:19:54,622 --> 00:20:03,413
Absolutely, and unfortunately their CPAs aren't, you know, they're a good trusted advisor,
but they don't...
307
00:20:03,690 --> 00:20:05,281
I can tell you some nightmare stories.
308
00:20:05,281 --> 00:20:09,913
saw what's happened to some business owners dealing with CPAs that weren't paying
attention to them.
309
00:20:09,913 --> 00:20:15,516
Guys that grew really fast and didn't know the back end exposure they had to taxes.
310
00:20:15,516 --> 00:20:21,729
Anyway, so you get all this out there going and then the financial risk business owners
take every year to do what they do.
311
00:20:21,729 --> 00:20:25,441
And that's really what I thought, man, there's got to be a smarter and better way of doing
business.
312
00:20:25,441 --> 00:20:29,502
And I was exposed at that same time of an RV manufacturer here.
313
00:20:29,502 --> 00:20:30,983
If you ever go up down through
314
00:20:30,983 --> 00:20:40,305
Highway 84, which is, you know, all the way from, really from Salt Lake coming up through
Portland, Oregon, through the Columbia Gorge and all that.
315
00:20:40,305 --> 00:20:43,385
There's a lot of RV manufacturers through that corridor.
316
00:20:43,525 --> 00:20:47,365
And I knew the gentleman that was running one of those.
317
00:20:47,425 --> 00:20:54,265
And he had seven of these 831B plans set aside over the years that he was using
tax-deferred expenses.
318
00:20:54,265 --> 00:20:56,725
So basically, let's talk about 831B real quick.
319
00:20:56,725 --> 00:20:58,123
On a high level,
320
00:20:58,123 --> 00:21:00,863
831B is no different than when you fear 401K.
321
00:21:00,863 --> 00:21:02,843
It's just where you find it in the tax code, right?
322
00:21:02,843 --> 00:21:06,903
The federal tax code, which is, I don't know, three or four inches thick.
323
00:21:07,603 --> 00:21:10,803
So that's just a tax code.
324
00:21:10,803 --> 00:21:15,303
what it is is designed and it was introduced in 1986, shockingly enough.
325
00:21:15,303 --> 00:21:16,635
I was just...
326
00:21:16,635 --> 00:21:18,636
I was still in high school in 1986.
327
00:21:18,636 --> 00:21:25,479
But in 1986, they passed a law called the 831B tax code for a tax incentive.
328
00:21:25,479 --> 00:21:29,982
If people were going to self-insure risk, we want to use pre-tax dollars to do that with,
right?
329
00:21:29,982 --> 00:21:31,273
uh Versus after tax.
330
00:21:31,273 --> 00:21:32,383
So that was the incentive.
331
00:21:32,383 --> 00:21:41,148
And what was happening back in 1986, very similar to the market today, where there's just
more exclusions, pay more premium, getting less coverage.
332
00:21:41,148 --> 00:21:42,608
Very similar to what's going on today.
333
00:21:42,608 --> 00:21:44,362
And I would say actually today it's
334
00:21:44,362 --> 00:21:45,983
worse than it was back in the 80s.
335
00:21:45,983 --> 00:21:48,775
The farmers are also losing their crop insurance.
336
00:21:48,775 --> 00:21:57,033
So private sector was getting out of it, it became too volatile, it wasn't profitable
business and of course it's backed by the federal government no different than FEMA or
337
00:21:57,033 --> 00:21:59,695
terrorism coverage and all that kind of stuff is today.
338
00:21:59,695 --> 00:22:01,136
But back then that wasn't the case.
339
00:22:01,136 --> 00:22:02,719
So they created an incentive.
340
00:22:02,719 --> 00:22:10,105
basically you're going to expense it out of your operating company level, no different
than if you bought a general liability policy or work comp or any other expenses when it
341
00:22:10,105 --> 00:22:12,807
comes to your operation of your business, but then it
342
00:22:12,807 --> 00:22:22,167
was going to dump into an 831B plan that has to look and feel like an insurance company,
the premium going into it, you don't pay taxes on it.
343
00:22:22,167 --> 00:22:28,127
And so where we kind of fit with our clients is very similar to a 401k administrator,
right?
344
00:22:28,127 --> 00:22:34,262
You're not going to participate in a 401k plan without a person in the middle, a Chinese
that forms the
345
00:22:34,251 --> 00:22:35,195
guardrails and all that.
346
00:22:35,195 --> 00:22:37,722
read that three inch thick tax code.
347
00:22:37,722 --> 00:22:38,239
Exactly.
348
00:22:38,742 --> 00:22:39,702
And keep you out of trouble.
349
00:22:39,702 --> 00:22:41,442
Make sure the dollars stay tax-referred.
350
00:22:41,442 --> 00:22:42,422
You got your risk of rules.
351
00:22:42,422 --> 00:22:45,022
You got all sorts of regulations in 401k.
352
00:22:45,022 --> 00:22:48,002
If you're going to participate, it's no different than 831B.
353
00:22:48,002 --> 00:22:52,633
But it is for small to middle market business owners that are self-insuring risk.
354
00:22:52,633 --> 00:22:55,053
And that was 1986.
355
00:22:55,173 --> 00:22:58,873
Now you fast forward to, well, 2026.
356
00:22:59,201 --> 00:23:00,901
The world's gotten much more complicated.
357
00:23:00,901 --> 00:23:05,501
mean, there wasn't even a thing about, you know, back in 96, nobody even thought about
cyber risk, right?
358
00:23:05,501 --> 00:23:07,012
I cyber wasn't even a thought.
359
00:23:07,012 --> 00:23:11,832
You started seeing supply chain, you started seeing more of a global economy and all that
stuff develop.
360
00:23:11,832 --> 00:23:17,772
again, it wasn't really, you know, a long-term thought process to what's the ramifications
for all that.
361
00:23:17,772 --> 00:23:22,043
And then you fast forward up to 08 and then, then of course the big one would be COVID.
362
00:23:22,043 --> 00:23:25,523
You know, that's when a lot of business owners took a, you know, and...
363
00:23:25,538 --> 00:23:29,533
And so one of the things that we do and is just, know, hey, Mr.
364
00:23:29,533 --> 00:23:37,152
Business Owner, you know, we run through their underwriting, we look at their policies
again, we come through and back and say, hey, listen, you got this coverage, you're
365
00:23:37,152 --> 00:23:38,423
self-insuring this, this, and this.
366
00:23:38,423 --> 00:23:41,127
And a lot of times these business owners already know what they're self-insuring for.
367
00:23:41,127 --> 00:23:45,471
And we just come down to, do you want to use pre-tax dollars or after-tax dollars?
368
00:23:45,612 --> 00:23:47,993
If you want to use after-tax dollars, just keep doing what you're doing.
369
00:23:47,993 --> 00:23:52,475
Rely on your lines of credit, your savings, or your operating capital of your business.
370
00:23:52,475 --> 00:23:58,057
Or take some of the tax liability you pay and defer it and put it into an 831B plan.
371
00:23:58,057 --> 00:24:01,730
And when these things arise, you're going to use pre-tax dollars.
372
00:24:01,730 --> 00:24:07,393
to handle that self-insured loss in your business versus after-tax dollars.
373
00:24:07,393 --> 00:24:14,427
And very similar to the 401k, you just have a lot more dollars to invest over here to work
out no different than the 401k.
374
00:24:14,427 --> 00:24:16,918
You're deferring your taxes on that as well.
375
00:24:16,981 --> 00:24:17,310
Yeah.
376
00:24:17,310 --> 00:24:22,414
for you, your retirement, and for your employees retirement, but you just got a lot more
dollars to invest.
377
00:24:22,414 --> 00:24:25,977
Well, in this case, you got a lot more dollars to handle the risk.
378
00:24:25,977 --> 00:24:31,363
And now in today's world, you're seeing a lot more first dollar losses, Erick, when it
comes to traditional insurances.
379
00:24:31,363 --> 00:24:38,990
And I can dive into that if you want, especially when it comes to different trades and
what we're seeing out there in the world of exclusions, unfortunately.
380
00:24:38,990 --> 00:24:40,910
And it's...
381
00:24:40,910 --> 00:24:47,650
You know, it's one of those things where I would say that if you talk to the business
owner, they've been in business long enough, they're going to have a nightmare story,
382
00:24:47,650 --> 00:24:51,630
honestly, that happened to them that they thought they were covered for and they weren't.
383
00:24:51,630 --> 00:24:52,370
You know?
384
00:24:52,370 --> 00:24:54,410
And how did they handle it?
385
00:24:54,410 --> 00:24:58,990
And that's really what we're, I'm just here to position money for them, to make it more
effective for them.
386
00:24:58,990 --> 00:25:06,560
And honestly, think, you know, a good way example to get your listeners to understand,
think of this as like an HSA for business.
387
00:25:06,560 --> 00:25:07,818
All we're doing,
388
00:25:07,818 --> 00:25:09,943
Does that make sense when I say that to you as far as how
389
00:25:09,933 --> 00:25:11,193
Absolutely.
390
00:25:11,234 --> 00:25:11,894
Yeah.
391
00:25:11,894 --> 00:25:12,914
That's awesome.
392
00:25:12,914 --> 00:25:13,995
So sorry.
393
00:25:13,995 --> 00:25:15,517
I was making a few notes there.
394
00:25:15,517 --> 00:25:17,879
My mind's just racing with questions.
395
00:25:17,879 --> 00:25:21,441
is kind of my first exposure to the 831 as well.
396
00:25:21,441 --> 00:25:28,212
I've been in a family business for 40 some years and running it for 12 and
397
00:25:28,709 --> 00:25:35,114
everything you're saying clicks right with all that I know and I wasn't aware this was
even an option so I got all kinds of questions here.
398
00:25:35,114 --> 00:25:43,077
Before we really dive into the mechanics of the 831 I was curious does your wife still
have the agency that you sold to her?
399
00:25:43,820 --> 00:25:46,320
oh
400
00:25:46,320 --> 00:25:47,540
2014.
401
00:25:47,540 --> 00:25:53,200
I was very fortunate to get this business up and running and still have our cash flow in
the back room.
402
00:25:53,200 --> 00:25:57,660
And my wife, you know, she never dreamed of becoming an insurance agent.
403
00:25:57,960 --> 00:26:02,931
So she took one for the team on that and she was happy to see it sold.
404
00:26:02,931 --> 00:26:05,550
But yeah, she ran it for another, I don't know.
405
00:26:05,952 --> 00:26:07,203
four or five years after that.
406
00:26:07,203 --> 00:26:11,845
She did a great job with it actually, but no, it was time to move on.
407
00:26:11,845 --> 00:26:14,567
But it took a while for this business to grow too, honestly.
408
00:26:14,567 --> 00:26:23,512
mean, the concepts, the grind, just trying to get people's head around this, well, why the
hell do I want to own an insurance company?
409
00:26:23,513 --> 00:26:26,888
And uh then too, took the economy to get better too, quite honestly.
410
00:26:26,888 --> 00:26:28,763
mean, that was a...
411
00:26:28,763 --> 00:26:36,254
You know, look pretty young, so I don't know how much you got hit on the 08 deal or not,
but some of you just said, I couldn't believe how long that's been.
412
00:26:36,254 --> 00:26:37,334
It's coming up on 20 years.
413
00:26:37,334 --> 00:26:38,634
That blows my mind.
414
00:26:38,894 --> 00:26:41,365
But, man, time flies.
415
00:26:41,365 --> 00:26:46,241
But yeah, it's it's, and also, you know, it's funny too, I...
416
00:26:46,241 --> 00:26:52,604
I say this a lot and I speak all over the country on this, especially with entrepreneurs,
we got to have short-term memory, right?
417
00:26:52,604 --> 00:27:03,180
I I kind of joke, if we remembered all the headaches, all the mistakes, all the losing
money and all of those things, we'd be in a fetal position and never get out of our bed,
418
00:27:03,180 --> 00:27:03,450
right?
419
00:27:03,450 --> 00:27:07,883
I mean, it's just, we have the amnesia like nobody else's business.
420
00:27:07,883 --> 00:27:09,503
I mean, we forget real quick.
421
00:27:09,503 --> 00:27:10,774
We only remember the good stuff.
422
00:27:10,774 --> 00:27:15,607
We like to flush the old stuff pretty quick, but anyway, hopefully learn from it.
423
00:27:15,600 --> 00:27:16,501
Yeah.
424
00:27:16,501 --> 00:27:20,026
Nobody would ever stick with it if you remembered all the bad things.
425
00:27:20,026 --> 00:27:22,019
Running a business can be tough.
426
00:27:22,019 --> 00:27:22,749
man.
427
00:27:22,923 --> 00:27:23,923
yeah.
428
00:27:24,044 --> 00:27:24,864
Yeah, you would.
429
00:27:24,864 --> 00:27:34,754
And so, yeah, I think that's the, you know, like I said, I was very fortunate to keep that
agency during that time to be able to grow this business because, you know, it's not easy,
430
00:27:34,754 --> 00:27:35,274
you know.
431
00:27:35,274 --> 00:27:42,980
I mean, you still got expenses at home, you still got a family to provide, and meanwhile
you're trying to start another business, and we're very fortunate that that cash flow is
432
00:27:42,980 --> 00:27:46,164
sitting there still to manage that, to...
433
00:27:46,362 --> 00:27:48,069
make that bridge work, you
434
00:27:48,069 --> 00:27:49,010
Yeah, that's awesome.
435
00:27:49,010 --> 00:27:51,311
It sounds like you've made that jump a few times.
436
00:27:51,311 --> 00:28:01,007
You got your fingers in two different insurance agencies and plumbing and refrigeration, a
few different trades and, man, I don't think I have the bandwidth to take all of that on.
437
00:28:01,007 --> 00:28:03,398
You, you must be doing something right there.
438
00:28:03,398 --> 00:28:03,857
So.
439
00:28:03,853 --> 00:28:09,196
know what, I would say no micromanaging and really, really good people.
440
00:28:09,196 --> 00:28:14,478
And I'm all about giving part ownership in the business to some of my key employees.
441
00:28:14,478 --> 00:28:16,800
mean, there's some agreements they got to sign.
442
00:28:16,800 --> 00:28:18,541
Basically, it's a 10-year investment.
443
00:28:18,541 --> 00:28:21,042
But I'm all about that, especially up front.
444
00:28:21,042 --> 00:28:23,285
I I want a good EBITDA to offer these.
445
00:28:23,285 --> 00:28:26,787
I want to either resell or they get another retirement on top of it.
446
00:28:26,787 --> 00:28:32,069
I just think if you're going to dabble in multiple businesses, then you better have some
people
447
00:28:32,069 --> 00:28:37,396
People need to buy in and they need some ownership up front, in my opinion, to make it
work.
448
00:28:37,393 --> 00:28:38,445
Yeah, that's great.
449
00:28:38,445 --> 00:28:39,777
That's some good advice.
450
00:28:39,777 --> 00:28:43,082
yeah, man, I'm making more notes here.
451
00:28:43,082 --> 00:28:44,563
I'm learning all kinds.
452
00:28:44,892 --> 00:28:48,312
Okay, well, you kind of got us going on the 831.
453
00:28:48,312 --> 00:28:51,092
I got some more questions kind of for you and your leadership.
454
00:28:51,092 --> 00:28:53,752
But while we were on it, I want to dive in here.
455
00:28:53,752 --> 00:28:57,952
So I like the analogy of the 401k or the HSA.
456
00:28:57,952 --> 00:29:05,392
With the 831, is that money investable when you have it set aside like an HSA or a 401k?
457
00:29:05,392 --> 00:29:07,092
Or does it have to sit in cash?
458
00:29:07,092 --> 00:29:10,572
What kind of regulations are around where that money sits?
459
00:29:10,705 --> 00:29:20,065
There's some of it does, meaning that, you know, because it's obviously there to pay
claims, but because you gotta remember the box looks and feels like an insurance company.
460
00:29:20,270 --> 00:29:26,976
So absolutely, I mean you can invest that money, it becomes surplus so these policies earn
out no different than HSA right?
461
00:29:26,976 --> 00:29:29,968
Every year you get the ability to put more money into it every year.
462
00:29:29,968 --> 00:29:35,343
You may not have used it last year, hopefully, but now you have more money into it, now
you're able to build it.
463
00:29:35,343 --> 00:29:37,564
And it's very similar to this program too.
464
00:29:37,564 --> 00:29:41,443
Those dollars become surplus, it can be either self-directed.
465
00:29:41,443 --> 00:29:44,403
or you can have your financial planner manage it.
466
00:29:44,643 --> 00:29:47,683
Again, we are, as a company, are an administrator.
467
00:29:47,683 --> 00:29:53,763
So if you ask me what's our core competency, is we manage over 800 insurance companies.
468
00:29:53,875 --> 00:29:54,691
Okay.
469
00:29:54,691 --> 00:29:56,022
for privately held companies.
470
00:29:56,022 --> 00:30:04,962
so we do everything from taxes to financials to underwriting the risk, issuing the
policies, adjudicating the claims.
471
00:30:04,962 --> 00:30:07,953
We run their insurance company for them on their behalf.
472
00:30:07,953 --> 00:30:10,933
And we're not here to complicate business owners by no means.
473
00:30:10,933 --> 00:30:13,753
I think we're a compliment to what they're doing.
474
00:30:14,133 --> 00:30:19,113
One of the things that we say here, Erick, is we embolden business owners to innovation
and risk management.
475
00:30:19,293 --> 00:30:21,764
And we've seen it and we've lived it.
476
00:30:21,764 --> 00:30:28,872
clients that have been with us for number of years, knowing what they've done in the back
room, it does give a propensity to take on more risk, quite honestly.
477
00:30:28,872 --> 00:30:37,840
And I love that because some of these people are really good, smart business owners, and
when they start to become risk adverse, that could be a problem for us.
478
00:30:38,317 --> 00:30:39,998
Yeah, yeah.
479
00:30:39,999 --> 00:30:47,808
So uh you said it's structured, it has to be structured to look like almost a separate
insurance company.
480
00:30:47,808 --> 00:30:52,063
So how does that roll down to the company's balance sheet?
481
00:30:52,063 --> 00:30:55,536
Are those assets still kind of shown on the balance sheet?
482
00:30:55,946 --> 00:30:57,016
Well, it depends, right?
483
00:30:57,016 --> 00:30:58,607
So these are C-corps.
484
00:30:58,607 --> 00:31:01,748
The 830-mil V plans are formed as a C-corp, so they're shareholders.
485
00:31:01,748 --> 00:31:04,325
Those shareholders can be the operating company.
486
00:31:04,325 --> 00:31:07,071
A lot of times it could be the owners of the operating company.
487
00:31:07,071 --> 00:31:08,793
It's typically where we structure those.
488
00:31:08,793 --> 00:31:12,534
So it really depends on what they want to do for the long term.
489
00:31:12,713 --> 00:31:14,265
This is an outside asset.
490
00:31:14,265 --> 00:31:22,693
can be no different than on your personal balance sheet at that point as far as if you're
a shareholder of that 831B plan.
491
00:31:22,693 --> 00:31:28,178
I can tell you, our typical clients are husband and wife, and they own this thing 50-50 in
their name.
492
00:31:28,178 --> 00:31:30,815
And their operating company is their operating company.
493
00:31:30,815 --> 00:31:38,151
And our two, if I got multiple partners in a company, we structure it little differently,
or we may just have the operating company own it, which is perfectly fine.
494
00:31:38,151 --> 00:31:42,453
That's when we kind of rely on, we would advise on how to own it.
495
00:31:42,453 --> 00:31:44,974
There's some legalities to how you have to own it.
496
00:31:44,974 --> 00:31:48,115
So obviously that's where we stay within that bandwidth.
497
00:31:48,115 --> 00:31:50,817
But we rely on their other trusted advisors.
498
00:31:50,817 --> 00:31:56,121
That's when the CPA ought to be advising them or their attorneys or whatever is going on
out there.
499
00:31:56,121 --> 00:32:00,526
advice on how the ownership should look but it really is a C Corp.
500
00:32:00,526 --> 00:32:10,154
can either land on there as another, you know, no different than owning a building in a
way, right, from a business standpoint or you can own it individually and husband and
501
00:32:10,154 --> 00:32:11,896
wife's name and all that kind of stuff.
502
00:32:11,896 --> 00:32:16,679
or the two partners names or whatever going on there but that's really way it looks.
503
00:32:16,766 --> 00:32:20,006
Okay, I would just I'm trying to get my head wrapped around it.
504
00:32:20,006 --> 00:32:29,406
Like you said, I'm this is new to me as well as probably many of our listeners and I just
thinking, you know, if we if you set that cash aside to self insurer versus putting it in
505
00:32:29,406 --> 00:32:32,486
an 831, there's the obvious tax advantage.
506
00:32:32,786 --> 00:32:39,706
But if you know, if you have that in an account, it could be collateralized for future
financing or things like that.
507
00:32:39,706 --> 00:32:44,266
And, you know, is this still going to be held as an asset in that regard?
508
00:32:44,641 --> 00:32:46,541
Yeah, it's definitely gonna add to your balance sheet.
509
00:32:46,541 --> 00:32:48,621
Either your company's balance sheet or your personal balance sheet.
510
00:32:48,621 --> 00:32:49,941
Both the bank's gonna want.
511
00:32:49,941 --> 00:32:52,701
So, you know, it might not work.
512
00:32:52,896 --> 00:32:53,396
Yeah.
513
00:32:53,396 --> 00:32:56,982
Everybody thinks they can keep liabilities limited to their business.
514
00:32:56,982 --> 00:33:00,145
at least what I've found is in the real world, that's not the case.
515
00:33:00,145 --> 00:33:04,349
You're responsible for all your company's assets and liabilities.
516
00:33:04,600 --> 00:33:12,396
Yeah, they all, you know, these banks want to wrap you up the best they can when it comes
to protecting downside of their risk.
517
00:33:12,396 --> 00:33:14,255
So, I get it.
518
00:33:14,255 --> 00:33:18,340
them all, some of the documents I've signed as a business owner would be a bit terrifying.
519
00:33:18,340 --> 00:33:21,162
The trick is you just got to sign it without reading, right?
520
00:33:21,454 --> 00:33:25,994
Yeah, press hard, know, sign here and press hard.
521
00:33:26,834 --> 00:33:35,734
No, I would say that the personal guarantees definitely become a burdensome for you and
you know, it's funny, I'm literally going through this right now.
522
00:33:35,734 --> 00:33:47,394
Sir is buying, we're buying the building we're in right now plus it has two more buildings
on the campus plus another two acres that we're gonna develop into a drop yard for our
523
00:33:47,394 --> 00:33:48,565
materials.
524
00:33:48,565 --> 00:33:56,564
I'm trying to avoid the PG right now and I think I'm going to but you know, honestly not
yeah, but not to my own horn here.
525
00:33:56,564 --> 00:34:02,761
just think you know You got to get to a certain level financially and then it is yeah,
okay We're good and we're buying the buildings, right?
526
00:34:02,761 --> 00:34:06,801
And I think that helps with we're gonna have a lot of equity into him from day one
527
00:34:07,665 --> 00:34:08,471
Thankfully
528
00:34:08,471 --> 00:34:12,557
years building multiple businesses, finally build up the assets where you can do that.
529
00:34:12,557 --> 00:34:14,140
So that's great.
530
00:34:14,544 --> 00:34:17,404
yeah, I still though, yeah.
531
00:34:18,205 --> 00:34:19,145
It is what it is.
532
00:34:19,145 --> 00:34:28,849
I'm not, because I own a lot of commercial buildings too and at the time you think these
are all really good ideas and then did this become, know somebody said to me, well
533
00:34:28,849 --> 00:34:35,971
actually a financial planner, I recently came on board as one of his clients, he said you
have complexity creep.
534
00:34:36,316 --> 00:34:37,467
And I'm like, what?
535
00:34:37,467 --> 00:34:40,498
And he goes, yeah, you have complexity creep.
536
00:34:40,559 --> 00:34:43,481
And it's just, again, getting back to that entrepreneurial thing.
537
00:34:43,481 --> 00:34:50,197
You don't really, you know, I drive my daughter nuts because, you know, she'll call me, do
you have a new LLC formed that I didn't know about?
538
00:34:50,197 --> 00:34:51,609
But that's getting better.
539
00:34:51,609 --> 00:34:52,599
It's all getting better.
540
00:34:52,599 --> 00:34:53,570
I'm calming down.
541
00:34:53,570 --> 00:34:56,733
But I would say five years ago, man, I was not afraid.
542
00:34:56,733 --> 00:34:59,545
All I looked around was opportunity, opportunity.
543
00:34:59,545 --> 00:35:01,056
But now I'm kind of...
544
00:35:01,056 --> 00:35:02,271
Kind of calming down,
545
00:35:02,265 --> 00:35:03,087
so.
546
00:35:03,205 --> 00:35:05,365
sorry, this is a sidetrack.
547
00:35:05,365 --> 00:35:12,965
I'll get back to the mechanics of the 831, but you've been in business, running a business
for 30 years.
548
00:35:12,965 --> 00:35:14,365
You've been in a lot of industries.
549
00:35:14,365 --> 00:35:16,336
You've run a lot of different businesses.
550
00:35:16,336 --> 00:35:19,716
The people that say the American dream is dead.
551
00:35:19,716 --> 00:35:22,416
There just isn't opportunity out there like there used to be.
552
00:35:22,416 --> 00:35:26,887
Do you agree with that or do you still see opportunity for someone to do what you've done?
553
00:35:26,885 --> 00:35:27,986
I see opportunity.
554
00:35:27,986 --> 00:35:31,470
I mean, I think it's going to be more opportunity going forward, quite honestly.
555
00:35:31,470 --> 00:35:39,978
If you're in the right mindset, you know, if you're not in the right mindset and you want
to play victim or, you know, woe is me or hey, not everything.
556
00:35:39,978 --> 00:35:43,762
And if you're looking for the right time, does not exist.
557
00:35:43,762 --> 00:35:48,597
You know, and and so, you know, it comes down to having faith in yourself.
558
00:35:48,597 --> 00:35:50,053
And, you know, honestly,
559
00:35:50,053 --> 00:35:53,213
Maybe it's fear, you know I kind of ran scared for a while.
560
00:35:53,213 --> 00:35:54,404
I mean I had a young family.
561
00:35:54,404 --> 00:35:59,384
I had my first son when I was 20 and my wife was 18, you know what I mean?
562
00:35:59,484 --> 00:36:01,524
So you kind of run kind of scared at that point.
563
00:36:01,524 --> 00:36:04,055
So you're like, damn I got to get going here.
564
00:36:04,055 --> 00:36:07,635
so all of that stuff plays in your mindset, right?
565
00:36:07,635 --> 00:36:09,555
And you got to have faith in yourself.
566
00:36:09,735 --> 00:36:12,415
And then honestly you got to have people around you too, right?
567
00:36:12,415 --> 00:36:14,535
That aren't trying to...
568
00:36:14,912 --> 00:36:20,539
You want to tell a cautious tale, but at the same time you don't want to discourage from
somebody to want to take a risk either.
569
00:36:20,539 --> 00:36:22,802
We don't live in a...
570
00:36:22,802 --> 00:36:25,125
We look for comfort all the time.
571
00:36:25,125 --> 00:36:30,572
And I'm always trying to consciously be aware of trying to look for discomfort.
572
00:36:30,572 --> 00:36:33,372
Trying to be comfortable all the time is a trap.
573
00:36:33,372 --> 00:36:37,672
I think that's, you know, because you start making enough money at your existing job so
you don't want to leave.
574
00:36:37,672 --> 00:36:44,092
You don't want to take the chance of going out and starting a business for yourself
because, or you got too much debt on the backside because, you know, things were good and
575
00:36:44,092 --> 00:36:52,512
you, you know, there's all a lot of things that go into it, but sometimes you just, you
don't need to check out deep the pool, you just got to dive, you know, and it's like, you
576
00:36:52,512 --> 00:36:59,212
know, it's all of those things, you know, it's just, but yeah, I think the American dream
is live and well.
577
00:36:59,212 --> 00:37:00,575
I think that's why,
578
00:37:00,575 --> 00:37:06,271
Honestly, I was just sitting in a class and going through scenario planning.
579
00:37:06,271 --> 00:37:07,714
That was interesting day.
580
00:37:07,714 --> 00:37:16,090
it was said in that meeting, this gentleman's from South Africa, and he said, America is
unique because of entrepreneurship.
581
00:37:16,490 --> 00:37:19,063
It does not exist anywhere else in the world.
582
00:37:19,063 --> 00:37:22,596
The mentality to think that you can start your own business.
583
00:37:22,596 --> 00:37:26,936
does not exist, and I've traveled now since my kids have gotten older and started having
kids.
584
00:37:26,936 --> 00:37:27,916
My wife and I do travel.
585
00:37:27,916 --> 00:37:31,676
I see it all the time when I go to other foreign countries and especially Europe.
586
00:37:31,836 --> 00:37:41,716
I look around, like, you know, there's not a lot of small, there's small businesses, but
as far as like true entrepreneurship, I mean, it's looked like they just got a highly paid
587
00:37:41,716 --> 00:37:44,096
job that they have all the risk for, right?
588
00:37:44,096 --> 00:37:46,856
I mean, that's basically what their business is.
589
00:37:46,856 --> 00:37:49,356
And so I just find that really unique to us still.
590
00:37:49,356 --> 00:37:50,847
And I'm so,
591
00:37:50,847 --> 00:37:55,744
appreciated that, especially people from around the world recognize that.
592
00:37:55,744 --> 00:38:02,672
I that's why a lot of people want to, I mean think about who, you know, illegal or illegal
immigrant, what are they first thing they do?
593
00:38:02,672 --> 00:38:09,409
They look to start a small business and you know there are other parts of the world that's
not possible and that's crazy, right?
594
00:38:09,409 --> 00:38:11,412
That's super foreign to us.
595
00:38:11,391 --> 00:38:13,671
Yeah, I agree 100%.
596
00:38:13,671 --> 00:38:15,950
I think the opportunity is there.
597
00:38:16,111 --> 00:38:21,531
I think comfort is the detriment of, I think there's been a couple generations here.
598
00:38:21,531 --> 00:38:23,531
They got pulled aside by that comfort.
599
00:38:23,531 --> 00:38:26,551
I saw this morning, Michael Easter just came out with a new book.
600
00:38:26,551 --> 00:38:30,571
It reminded me of his book a couple years ago, The Comfort Crisis.
601
00:38:30,571 --> 00:38:31,936
I loved that book.
602
00:38:31,936 --> 00:38:38,319
And I think and hope that this next generation kind of coming behind me.
603
00:38:38,319 --> 00:38:48,056
uh Sees that and and is willing to take that risk because I think the opportunity is still
there what we're lacking is the people that have the the grit the determination and the
604
00:38:48,056 --> 00:38:57,834
Optimism to really go for it to take a risk and and dive in like you're talking about so
Yeah, I think this next generation we're gonna really see a divergence between the people
605
00:38:57,834 --> 00:39:03,680
that want to be comfortable and work a job and the ones that are willing to take that risk
Like we haven't seen in a few generations.
606
00:39:03,680 --> 00:39:04,051
So
607
00:39:04,048 --> 00:39:11,128
Yeah, and we have a huge disruption on the horizon and it's called artificial
intelligence.
608
00:39:11,568 --> 00:39:21,599
And I'm encouraged by what I'm seeing, to your point about the Gen Zers, that they seem to
be a little bit more entrepreneurial from what I'm seeing.
609
00:39:21,599 --> 00:39:24,301
And then maybe it comes back to that risk, right?
610
00:39:24,301 --> 00:39:26,054
And that they're not afraid to take risks.
611
00:39:26,054 --> 00:39:29,608
They believe in what they're doing or they believe in themselves enough to want to take
the risk.
612
00:39:29,608 --> 00:39:37,034
I think the millennials kind of screwed over a little bit, just based on their experiences
getting back to the 08 crisis.
613
00:39:37,034 --> 00:39:39,705
But yeah, I'm encouraged really on the Gen Z, quite honestly.
614
00:39:39,705 --> 00:39:40,626
I mean, we're seeing it here.
615
00:39:40,626 --> 00:39:42,888
We're seeing younger business owners calling us.
616
00:39:42,888 --> 00:39:47,070
where we're seeing it mostly is agricultural, honestly.
617
00:39:47,070 --> 00:39:56,564
The family ran farms and ranches that these kids that go to college, they do want to
stick, we see more of them trying to go back to where, instead of trying to get that
618
00:39:56,564 --> 00:40:01,987
corporate job, they want to go back and work the farm and dairies and all that stuff with
mom and dad.
619
00:40:01,987 --> 00:40:06,319
And that's been kind of encouraging to see, because very, very business oriented.
620
00:40:06,319 --> 00:40:07,181
it honestly.
621
00:40:07,181 --> 00:40:11,236
mean this is totally, you know, not your normal farmer kind of mentality which,
622
00:40:11,903 --> 00:40:12,340
yeah.
623
00:40:12,340 --> 00:40:18,253
lot of family farms turning into big, big corporate organizations right now and they're
doing well.
624
00:40:18,253 --> 00:40:18,753
Yeah.
625
00:40:18,753 --> 00:40:19,934
It's exciting stuff.
626
00:40:19,934 --> 00:40:24,196
I'm yeah, I'm, excited to watch and excited to be a part of it.
627
00:40:24,196 --> 00:40:31,958
And, uh I've, I have high hopes for parts of our culture, but, like you said, I think that
victim mentality, can look at.
628
00:40:31,958 --> 00:40:37,240
the disruption in our economy and AI and know, woe is me, my job's going away.
629
00:40:37,240 --> 00:40:41,002
Or you can go, wow, look at this tool and what can I do with it?
630
00:40:41,002 --> 00:40:44,765
And the people that see opportunity in that disruption are gonna boom.
631
00:40:44,765 --> 00:40:48,487
And yeah, I'm excited to see what happens.
632
00:40:48,487 --> 00:40:48,886
So.
633
00:40:48,884 --> 00:41:00,055
You know, there's been a, you know, anytime there's been a major disruption, know, uh
internet, well, cell phones, internet, personal computers, least in our lifetime, right?
634
00:41:00,055 --> 00:41:05,481
mean, you know, major interruption would have been the first time you saw a car driving
down the road back, you know, 100 years ago, right?
635
00:41:05,481 --> 00:41:07,383
I mean, that would have been a major interruption, right?
636
00:41:07,383 --> 00:41:13,697
And what's been interesting is every time there's been a major interruption in our
country, you know, in the back, in the back,
637
00:41:13,697 --> 00:41:16,549
jobs were, more jobs were created because of it.
638
00:41:16,549 --> 00:41:25,675
What will be interesting to see is how AI plays out in that because honestly, you know,
when you look at everything that's, that's been like those big disruptors, there was a lot
639
00:41:25,675 --> 00:41:26,105
of jobs.
640
00:41:26,105 --> 00:41:32,960
Now they got rid of jobs in the front, but they created a lot of jobs in the back room,
more so than what was lost, right?
641
00:41:32,960 --> 00:41:41,526
And so it will be interesting to see how that plays out because, you know, on the, you
know, I don't know, but I do think that there's an opportunity for a lot of small
642
00:41:41,526 --> 00:41:42,619
businesses to
643
00:41:42,619 --> 00:41:43,950
you know, fill in the gaps.
644
00:41:43,950 --> 00:41:50,369
then, you you talk about, you know, you talk about human experiences and all the other
stuff that's going on out there that people are gonna have time to do.
645
00:41:50,369 --> 00:41:54,683
I think homesteading is going to be big, honestly.
646
00:41:54,683 --> 00:41:57,236
think, you know, that's got my attention.
647
00:41:57,236 --> 00:41:58,842
I mean, I'm literally, I'm...
648
00:41:58,842 --> 00:42:02,122
I'll be home setting in two to three years when my kids are taking this company over.
649
00:42:02,122 --> 00:42:04,102
That's really my goal, honestly.
650
00:42:04,102 --> 00:42:05,702
Get back to being a farmer.
651
00:42:05,842 --> 00:42:09,562
Nothing like what we were doing, but enough to support my family.
652
00:42:10,002 --> 00:42:11,742
But I'd love to know where all my food came from.
653
00:42:11,742 --> 00:42:13,033
That's literally my goal.
654
00:42:13,033 --> 00:42:14,953
But I think people are going to have time for all that stuff.
655
00:42:14,953 --> 00:42:16,333
So it's going to be interesting.
656
00:42:16,333 --> 00:42:17,793
It's going be an interesting time.
657
00:42:17,873 --> 00:42:21,353
I hope there's more optimism and then pessimism when it comes to this.
658
00:42:21,353 --> 00:42:24,373
But I do think there'll be a big disruption.
659
00:42:24,373 --> 00:42:26,553
Bigger than I think you want us to understand.
660
00:42:26,985 --> 00:42:28,256
I agree a hundred percent.
661
00:42:28,256 --> 00:42:38,771
And I think that opportunity is there because, yeah, like you said, you know, pre
industrial revolution, it took everybody's full time attention to grow the food that they
662
00:42:38,771 --> 00:42:40,442
needed for that day, that year.
663
00:42:40,442 --> 00:42:52,097
And there are so many industries that had not been born yet simply because we didn't have
the, the labor capital bandwidth in our society and in our culture.
664
00:42:52,099 --> 00:42:59,995
And so, yeah, farm equipment comes on the scene, takes over all those farm jobs, but it
frees up that human capital to do so many other things.
665
00:42:59,995 --> 00:43:01,696
you know, computers, the same thing.
666
00:43:01,696 --> 00:43:05,520
We got rid of all the people just keeping records, copying things.
667
00:43:05,520 --> 00:43:07,932
Computers did it all, freed them up to go elsewhere.
668
00:43:07,932 --> 00:43:13,636
And so, you you talk to most small business owners right now and their biggest struggle is
human capital.
669
00:43:13,636 --> 00:43:14,526
They don't have the labor.
670
00:43:14,526 --> 00:43:15,347
They don't have people.
671
00:43:15,347 --> 00:43:19,986
There's twice as many open job positions as there are job seekers right now.
672
00:43:19,986 --> 00:43:26,667
What we need is technology that's going to take over a few jobs to free people up to do
other things.
673
00:43:26,701 --> 00:43:27,421
Yeah,
674
00:43:27,419 --> 00:43:31,559
yeah, and I think you better be a critical thinker too.
675
00:43:31,559 --> 00:43:33,559
You better be proactive and not reactive.
676
00:43:33,559 --> 00:43:37,459
And that's part of the problem too though, right?
677
00:43:37,459 --> 00:43:40,359
mean, is education come that way?
678
00:43:40,359 --> 00:43:41,321
You know, I don't know.
679
00:43:41,321 --> 00:43:43,001
Yeah, yeah.
680
00:43:43,001 --> 00:43:48,412
Well, sorry, we're getting a long ways away from insurance here, but great, great
conversation.
681
00:43:48,412 --> 00:43:55,583
So the the 831 plans, it's money set aside in a separate C Corp, it can be invested.
682
00:43:55,583 --> 00:44:07,123
And then I would assume that when that money gets used to cover actual costs or risks, is
it then taxed when it gets used or is it tax free on both ends?
683
00:44:07,593 --> 00:44:08,567
It depends.
684
00:44:08,567 --> 00:44:09,690
It depends, right?
685
00:44:09,690 --> 00:44:10,305
So,
686
00:44:10,305 --> 00:44:17,698
Depends if it's a business interruption, protecting your income of your business or
there's a physical loss on the property where you're just being made whole, right?
687
00:44:17,698 --> 00:44:24,912
So anytime you have a traditional claim through traditional insurances, it depends on what
the coverage was and what it's covering you for.
688
00:44:24,912 --> 00:44:32,575
If you had a fire and you had to pay out $50,000 in deductible and we took $50,000 out of
your phone, that would be an expense, right?
689
00:44:32,575 --> 00:44:34,516
So you wouldn't pick it up as income.
690
00:44:34,516 --> 00:44:38,398
But if it protected your loss of income, very similar to PPP was, right?
691
00:44:38,398 --> 00:44:40,269
Like, hey, I was just forced to shut.
692
00:44:40,269 --> 00:44:50,844
down for two weeks or whatever, it disrupted my cash flow, I lost money, you know, and
that's where you could put a claim in as well for those types of issues.
693
00:44:50,844 --> 00:44:52,264
So it really depends on how comes in.
694
00:44:52,264 --> 00:45:03,329
Now, as far as tax free, so these dollars that stay in the 831B plan, the premium is tax
deferred and realized investment gains would be taxed at the corporate rate.
695
00:45:03,329 --> 00:45:03,991
that's...
696
00:45:03,991 --> 00:45:04,733
Okay.
697
00:45:04,733 --> 00:45:08,633
So like let's say you put your money in a money market account, kept it really simple,
right?
698
00:45:08,633 --> 00:45:10,413
You're getting, let's say, 5%.
699
00:45:10,413 --> 00:45:13,393
You would get taxed on that 5 % every year.
700
00:45:13,821 --> 00:45:14,181
Right?
701
00:45:14,181 --> 00:45:15,941
But the premium that was sitting there would not.
702
00:45:15,941 --> 00:45:21,860
Now, as a shareholder, you say, hey, I'm going to take a dividend out, no different than
if Coca-Cola declares a dividend, right?
703
00:45:21,860 --> 00:45:31,721
Then I would pay long-term capital gains out, which is the same as capital gains rate,
which I think right now, depending on your tax brackets, anywhere from 15 to 20 % with the
704
00:45:31,721 --> 00:45:32,541
feds.
705
00:45:33,341 --> 00:45:34,841
So that's how that works.
706
00:45:34,841 --> 00:45:36,561
So it does get taxed.
707
00:45:36,561 --> 00:45:39,821
It's when it's taken out of the C-corp in the form of a dividend.
708
00:45:39,821 --> 00:45:42,481
Or let's say, hey, I've sold the business.
709
00:45:42,481 --> 00:45:44,148
I no longer need this.
710
00:45:44,148 --> 00:45:45,768
going to go ahead and shut it down.
711
00:45:45,768 --> 00:45:53,588
Then I'll pay a long-term, you know, I'm basically selling the stock or reclaiming the
stock back, shutting the C Corp down and I'm paying long-term.
712
00:45:53,588 --> 00:45:54,928
It's like selling a building at that point.
713
00:45:54,928 --> 00:45:58,268
I'm going pay long-term capital gains as a shareholder.
714
00:45:58,368 --> 00:46:00,064
So that's how that works.
715
00:46:00,061 --> 00:46:09,867
I mean, best case scenario, you invest in this for a long time, you don't end up using it,
and you have to liquidate it, you're going to have a tax event, but really, converted
716
00:46:09,867 --> 00:46:17,131
ordinary income to a long term capital gains, you still stave on taxes even at the end of
the story if you don't use it.
717
00:46:17,249 --> 00:46:20,352
Yeah, and think of this as a HSA plan too, right?
718
00:46:20,352 --> 00:46:21,523
HSA works the same way.
719
00:46:21,523 --> 00:46:24,895
If you don't use it, it eventually turns into another retirement plan.
720
00:46:25,276 --> 00:46:27,378
It's very similar to the 401k though.
721
00:46:27,378 --> 00:46:30,821
The 401k gets taxed as ordinary income at the time you take it out, right?
722
00:46:30,821 --> 00:46:34,384
So those are the nuances internally on that.
723
00:46:34,384 --> 00:46:38,148
And uh that's how that, yeah, so I'm glad you picked up on that.
724
00:46:38,148 --> 00:46:39,742
But yeah, that's exactly right.
725
00:46:39,742 --> 00:46:47,776
Yeah, sorry, I'm probably boring all the people that are not spreadsheet nerds are rolling
their eyes right now, but I dive right into that.
726
00:46:47,776 --> 00:46:55,583
So, um, well, my, next question I had about that is, so you're essentially running your
own insurance company over there.
727
00:46:55,583 --> 00:47:01,045
and I'm guessing this is part of where you really come in and helping, administrate the
plan.
728
00:47:01,045 --> 00:47:07,195
do you have to underwrite specific risks that you're covering ahead of time?
729
00:47:07,251 --> 00:47:12,517
ah or what things are you allowed to use that money for?
730
00:47:12,517 --> 00:47:14,260
When do you get to cash that in?
731
00:47:14,256 --> 00:47:17,481
Okay, so yeah, we are the administrator, right?
732
00:47:17,481 --> 00:47:21,609
So we're going to underwrite and recognize self-insured risks.
733
00:47:21,609 --> 00:47:22,853
We're going to run through your policies.
734
00:47:22,853 --> 00:47:24,413
We're going to show you the exclusions.
735
00:47:24,413 --> 00:47:25,478
We're going to wrap.
736
00:47:25,478 --> 00:47:29,140
endorsements or policies around those exclusions or you have a first dollar loss.
737
00:47:29,140 --> 00:47:38,265
We're seeing a lot of coinsurance clauses now come in, very similar to healthcare, where I
had a deductible but now I got a wind damage or I got a hail damage and I got a separate
738
00:47:38,265 --> 00:47:43,909
coinsurance on top of that where I got to come in 20 % on top of my deductible.
739
00:47:43,909 --> 00:47:49,413
So we'll start to build a policy around that first dollar loss and start to fund for that,
right?
740
00:47:49,413 --> 00:47:50,706
God forbid if it happens.
741
00:47:50,706 --> 00:47:57,752
And again, most business owners, they don't have like a sinking fund where they were, in
case this happens, I'm gonna take after tax dollar and put it in his account.
742
00:47:57,752 --> 00:47:59,983
Nobody's really doing that, right?
743
00:47:59,983 --> 00:48:04,357
This kind of forces that to recognize that first and foremost.
744
00:48:04,357 --> 00:48:06,238
So that gets back to that.
745
00:48:06,586 --> 00:48:09,467
you start to sleep a little better at night knowing you've done this thing, right?
746
00:48:09,467 --> 00:48:17,821
Because now you're not relying on lines of credit, operating capital, or your own personal
savings that you've made out of the company, but now you'd have to loan it right back in
747
00:48:17,821 --> 00:48:21,504
because now it's got a huge expense that was not in operating capital, right?
748
00:48:21,504 --> 00:48:23,965
So those are just great...
749
00:48:23,965 --> 00:48:25,406
strategies honestly.
750
00:48:25,406 --> 00:48:32,622
are you know I tell clients that's not you know if you're a good year to take a little bit
off the top park it off to the side it's not only good risk management it's just good
751
00:48:32,622 --> 00:48:37,626
business and you know it's like it's like I get back into that 08 conversation.
752
00:48:37,626 --> 00:48:43,811
You're still taking the deduction as if you bought the equipment but you still have the
money.
753
00:48:43,856 --> 00:48:44,511
Yeah.
754
00:48:44,511 --> 00:48:45,671
a big difference.
755
00:48:45,671 --> 00:48:48,371
And I'm all about people buying equipment when they need it, right?
756
00:48:48,371 --> 00:48:51,922
But that's where the tax tail wags the dog kind of thing.
757
00:48:51,922 --> 00:48:56,642
to spend a dollar to save 40 cents, somehow will make sense of it.
758
00:48:56,642 --> 00:49:01,182
I'm guilty of it in my younger days, so I'm not saying I wasn't.
759
00:49:01,502 --> 00:49:03,162
there's not a lot.
760
00:49:03,162 --> 00:49:04,882
If you need it, you need it.
761
00:49:04,937 --> 00:49:11,177
And you know a sad thing, what I witnessed back in 08, thinking about 08, when people were
doing that, buying more stuff.
762
00:49:11,177 --> 00:49:14,750
Well, yeah, they eventually said, well, that's eating at me.
763
00:49:14,750 --> 00:49:15,921
That skit steer can't be.
764
00:49:15,921 --> 00:49:17,042
We got to put that thing to work.
765
00:49:17,042 --> 00:49:24,619
Well, let's go bid more work, lower our margin down to get the job, and then we'll have
more work.
766
00:49:24,619 --> 00:49:30,717
And I have literally sat and I'll never forget a great guy that owned a plumbing business,
had like 20 employees.
767
00:49:30,717 --> 00:49:34,279
And he looked at me, we were talking one day on his renewal and.
768
00:49:34,457 --> 00:49:38,158
rates were going up of course and coverages and had some losses and all that.
769
00:49:38,158 --> 00:49:41,000
Great conversations you have with your business owner on that.
770
00:49:41,000 --> 00:49:49,964
And he said to me, goes, know, I literally think I made more money with very little, when
I had eight guys with eight trucks and I had very little headache relative to this.
771
00:49:49,964 --> 00:49:55,247
And I'm making less money, take home money, now that I got 20 guys with 20 trucks.
772
00:49:55,247 --> 00:49:57,532
And the way he got there was,
773
00:49:57,532 --> 00:50:01,234
He'd have a good year and he'd buy more stuff and he'd admire more employees.
774
00:50:01,234 --> 00:50:03,515
That's literally a hamster wheel at that point, right?
775
00:50:03,515 --> 00:50:05,697
And it just keeps getting faster and faster.
776
00:50:05,697 --> 00:50:07,978
That's what I don't want business owners to get themselves into.
777
00:50:07,978 --> 00:50:18,934
I want it to be strategic growth, not tax, you know, not avoidance of taxes because I
gotta go, you know, and that's, you know,
778
00:50:19,586 --> 00:50:23,595
It's very safe from a CPA's perspective for you to go buy more stuff.
779
00:50:26,846 --> 00:50:28,788
Yeah, they're not gonna lose sleep over it.
780
00:50:28,788 --> 00:50:32,492
You're not like, you're doing some kind of really rude tax scheme here, you know?
781
00:50:32,492 --> 00:50:33,823
No, it's pretty black and white.
782
00:50:33,823 --> 00:50:36,497
And they just put it back in the big, beautiful bill.
783
00:50:36,497 --> 00:50:39,295
think they accelerated the appreciation up to a million bucks.
784
00:50:39,295 --> 00:50:39,640
Yup.
785
00:50:39,640 --> 00:50:45,780
And I want people to be strategic on growth, not let the tax tell back the dog.
786
00:50:45,780 --> 00:50:50,191
again, these guys are good people, hey, they don't want to pay any more taxes.
787
00:50:50,191 --> 00:50:54,591
They get upset about paying taxes more than anybody else.
788
00:50:54,791 --> 00:50:57,411
And they're like, yeah, I want to grow my business.
789
00:50:57,411 --> 00:51:00,591
So they go out and buy a piece of equipment, or they go out and buy a truck.
790
00:51:00,791 --> 00:51:03,031
And they're going to put it to work.
791
00:51:03,031 --> 00:51:05,562
They're not going to sit in the...
792
00:51:05,562 --> 00:51:13,122
bone, what am I, the backyards and just sit there and there in the bullpens and not put it
to work, you know?
793
00:51:13,120 --> 00:51:16,933
And so, you know, but hey, for more work, we gotta bid more work.
794
00:51:16,933 --> 00:51:22,620
We gotta, you know, now we start to lower our margins, which is crazy, but it happens all
the time, all the time.
795
00:51:22,620 --> 00:51:27,614
you just nailed a couple of my pet peeves there is I got some advice early on in business.
796
00:51:27,614 --> 00:51:29,004
I repeated all the time is
797
00:51:29,004 --> 00:51:32,026
make your business decisions as business decisions.
798
00:51:32,026 --> 00:51:40,721
And at the end of the year, when it's time to pay your taxes, take advantage of every
write off you can, but you never make a business decision because of the write off.
799
00:51:40,721 --> 00:51:43,633
You write off things that were wise business decisions
800
00:51:43,633 --> 00:51:44,607
and uh,
801
00:51:44,607 --> 00:51:48,041
I think you mentioned, you know, talking to CPAs and them as advisors.
802
00:51:48,041 --> 00:51:55,467
I've, I've come to the opinion that, uh, right now you brought up AI and everybody talks
about, well, AI is only as useful as the input.
803
00:51:55,467 --> 00:51:56,999
You have to ask the right questions.
804
00:51:56,999 --> 00:51:58,470
You have to have the right input.
805
00:51:58,470 --> 00:52:00,582
And I think the CPA it's the same way.
806
00:52:00,582 --> 00:52:03,915
if you ask, can I pay less taxes by buying equipment?
807
00:52:03,915 --> 00:52:05,376
The answer is yes.
808
00:52:05,376 --> 00:52:06,917
That's exactly what it does.
809
00:52:06,917 --> 00:52:09,579
If you ask, will I have more money this year?
810
00:52:09,579 --> 00:52:13,392
And next year, if I buy new equipment, the answer might be no.
811
00:52:16,363 --> 00:52:17,344
Yeah.
812
00:52:18,711 --> 00:52:19,351
man.
813
00:52:19,351 --> 00:52:21,011
you know, it's funny about write-offs.
814
00:52:21,011 --> 00:52:21,751
I'll never forget.
815
00:52:21,751 --> 00:52:26,771
So I had a business partner in the insurance agency and he didn't last very long, but it
was all good.
816
00:52:26,811 --> 00:52:37,662
But I never forget when he, there was one office, he was the next office and somebody came
into my office to talk to me about advertising on a poster for the local football team.
817
00:52:37,662 --> 00:52:40,462
And they said, oh, it's a great write-off.
818
00:52:40,462 --> 00:52:42,682
You know, you can write it all off, blah, blah, blah.
819
00:52:42,834 --> 00:52:50,894
And they get up and they walk out and I heard Phil, he spoke, hey man, I got great news.
820
00:52:51,214 --> 00:52:53,114
I'm like, oh, what Phil?
821
00:52:53,114 --> 00:52:53,694
He goes,
822
00:52:53,693 --> 00:52:57,068
we'll have so many write offs, we'll be able to write ourselves right out of business.
823
00:52:57,068 --> 00:52:57,919
Yes.
824
00:52:58,193 --> 00:53:05,199
And that always stuck in my head when I hear somebody tell me their sales pitches, oh, you
can write it off.
825
00:53:05,199 --> 00:53:06,410
Oh man.
826
00:53:06,410 --> 00:53:10,770
Again, like you said, you spend a dollar to save 30 cents.
827
00:53:11,930 --> 00:53:13,710
Oh great.
828
00:53:14,210 --> 00:53:15,070
Okay.
829
00:53:15,070 --> 00:53:17,341
Well, we'll get back on track here.
830
00:53:17,341 --> 00:53:29,034
I assume that most of the 831 plans are in addition to kind of your standard insurances
that most businesses carry liability insurance and...
831
00:53:29,034 --> 00:53:31,992
property, casualty, auto, is that accurate?
832
00:53:31,992 --> 00:53:35,899
This is usually in addition to that instead of a replacement of that.
833
00:53:36,054 --> 00:53:37,826
No, you're spot on.
834
00:53:37,826 --> 00:53:41,284
When I took my time out here to increase or decrease the risk you have.
835
00:53:41,284 --> 00:53:47,507
I'm here to recognize risks that you're self insuring for and how do we position dollars
more effectively to handle that.
836
00:53:47,507 --> 00:53:49,989
I think traditional insurance does a great job, honestly.
837
00:53:49,989 --> 00:54:01,615
Now, it does get to a point in time, and we do this as well, when we're having a client, a
big ag operation with a lot of employees may say, hey, I'm paying north of $500,000, I got
838
00:54:01,615 --> 00:54:04,476
good loss runs, got loss controls, all those things.
839
00:54:04,476 --> 00:54:09,338
We will start to build out that, we will start to replace those insurances as well.
840
00:54:09,551 --> 00:54:10,404
Yeah.
841
00:54:10,599 --> 00:54:16,562
company called Insure Edge, those are called macro captives where these are large
construction companies.
842
00:54:16,562 --> 00:54:24,715
Anybody paying north of $500,000 in traditional insurance, I got some dairymen here in
Idaho that pay a lot more than that and they're a great resource to have their own
843
00:54:24,715 --> 00:54:34,210
captive, meaning we'll start to put their own traditional insurances in that, but it's
very very niche and technical, honestly if you're paying
844
00:54:34,224 --> 00:54:36,358
You know, typically it's 40 cents on the dollar.
845
00:54:36,358 --> 00:54:37,899
if you're...
846
00:54:37,899 --> 00:54:45,899
If you're operating an insurance company, like traditional, you're buying insurance
company from all state travelers and whoever, 40 cents on the dollar, every dollar you pay
847
00:54:45,899 --> 00:54:48,479
them in premium just goes towards operations.
848
00:54:48,819 --> 00:54:51,839
Really the 60 cents left is paid claims.
849
00:54:51,859 --> 00:54:59,939
So when they tell you you're unprofitable, you paid $5,000 but you had a $4,000 claim that
year, to them you're unprofitable.
850
00:55:00,260 --> 00:55:07,394
What we do is when you get big enough though, let's say you're paying a million dollars in
traditional premiums, that's 400,000.
851
00:55:07,447 --> 00:55:18,327
now well now we can put $400,000 in your own still take the 600 and go buy reinsurance
Carriers in case you have a large loss, but you know you're now you're you're betting on
852
00:55:18,327 --> 00:55:26,907
yourself You're taking the profit and you're running a lot more efficient than some some
big insurance companies run it right so That's how that works.
853
00:55:26,907 --> 00:55:30,327
So if people are used to hearing that We do that very well.
854
00:55:30,327 --> 00:55:34,918
I would say one of the persons one of the people that works in that division for me in my
company
855
00:55:34,918 --> 00:55:42,002
Stephanie Forbes is probably no better educated person when it comes to that kind of a
program and she's great.
856
00:55:42,002 --> 00:55:47,644
But that's very, very specific and there's just not a lot of clients like that out there
that have paid those big premiums.
857
00:55:47,644 --> 00:55:55,327
But most of them already know about it or they've looked at it or if they haven't then
they absolutely should be looking at something like that for sure.
858
00:55:55,486 --> 00:55:56,316
Okay.
859
00:55:56,316 --> 00:56:06,271
And so for, you know, a lot of our listeners are young business people or new business
people, like we said, tradesmen that they'd eventually end up running a business and are
860
00:56:06,271 --> 00:56:07,402
educating themselves.
861
00:56:07,402 --> 00:56:16,657
What are some of the common things that maybe people don't expect that it would be wise to
plan for and self-insure through that maybe people just don't think about?
862
00:56:16,653 --> 00:56:22,553
You know, one of the things, quite honestly, Erick, was, you know, did you rely on PPP or
the ERC programs?
863
00:56:22,553 --> 00:56:25,053
And if you did, what are you doing differently today?
864
00:56:25,413 --> 00:56:32,213
You know, God forbid if it happened again, but I don't know if we can expect or should we
expect the government to do what they did going forward.
865
00:56:32,213 --> 00:56:32,853
That's one thing.
866
00:56:32,853 --> 00:56:35,133
So that's kind of spun some folks up in their heads.
867
00:56:35,133 --> 00:56:41,013
And then too, if they've been in business long enough, they know they, you know, one of
the big gaps we see is warranties.
868
00:56:41,013 --> 00:56:43,433
You know, they offer a lot of warranties, service contracts.
869
00:56:43,433 --> 00:56:46,253
You know, they sign a three or four year service contract.
870
00:56:46,560 --> 00:56:54,640
and they're just gonna keep betting every year they sell enough of those to make up for
the difference in other areas because of ongoing cash needs.
871
00:56:54,780 --> 00:57:03,600
Because, hey, I sold 500 service contracts this year, great, you picked all out of his
income this year, but you just booked it out, you just booked the liability for the next
872
00:57:03,600 --> 00:57:08,680
three years for that guy to go out and check on the HVAC and AC twice a year.
873
00:57:08,680 --> 00:57:10,940
And he's gonna wanna get paid when he goes out there.
874
00:57:10,940 --> 00:57:13,960
And if he doesn't pick up another job while he's there,
875
00:57:14,349 --> 00:57:17,329
That's a loss leader in your business now.
876
00:57:17,349 --> 00:57:22,589
And the only thing that's making that up is you're selling other service contracts that
year.
877
00:57:22,689 --> 00:57:31,230
But we all know if economy takes a hit, first and foremost, people are going to want to
make sure you come out and check their ACs and their HVACs and all that.
878
00:57:31,230 --> 00:57:35,663
And the second one is they're less likely to renew or even want to buy your service
contracts.
879
00:57:35,663 --> 00:57:40,246
So that's when we could take a portion of those proceeds and put it into an 831B.
880
00:57:40,246 --> 00:57:47,692
as those folks are going out and doing that warranty deal, they could put a claim back on
those dollars and move them back into their operating company.
881
00:57:47,692 --> 00:57:49,883
And again, this is the efficiencies of business.
882
00:57:49,883 --> 00:57:54,098
What we're describing is big business does this all the time.
883
00:57:54,834 --> 00:58:03,759
And what we always wanted to do as a business, especially having these clients that were
clients of mine in the traditional insurance company, I wanted to price it and make it to
884
00:58:03,759 --> 00:58:10,363
where small to middle market business owners can take advantage this, not just the Fortune
500 companies or very large privately-owned companies.
885
00:58:10,363 --> 00:58:12,185
They're the first ones to adopt this.
886
00:58:12,185 --> 00:58:15,682
You may not be aware of this, but auto dealers are also a big adopter.
887
00:58:15,682 --> 00:58:21,317
mean, if they're trying to sell you a service con, any warranty that's being sold through
a dealership,
888
00:58:21,317 --> 00:58:25,897
through a furniture store, or any of kind, all have these 831B plans.
889
00:58:25,937 --> 00:58:30,837
They're taking those dollars out of their operating company and they're putting it in
their own 831B plans.
890
00:58:30,857 --> 00:58:39,148
And I can tell you what they're doing with those reserves and surpluses in the back room
is they're expanding on their ability to grow businesses in so many different ways.
891
00:58:39,148 --> 00:58:41,148
Warren Buffett's the epitome of insurance, right?
892
00:58:41,148 --> 00:58:43,428
I he owns more insurance companies than anything.
893
00:58:43,568 --> 00:58:48,508
And if you ever got any education or even watched that guy, he's the OPM guy, other
people's money.
894
00:58:48,508 --> 00:58:53,068
I mean, he uses other people money to invest in and not give you any interest why he has
it.
895
00:58:53,068 --> 00:58:54,475
And then he just gives it back to
896
00:58:54,475 --> 00:58:57,057
end of that period, but meanwhile, he knows how to make money.
897
00:58:57,057 --> 00:58:59,398
And I want business owners to do the same thing.
898
00:58:59,398 --> 00:59:03,610
And that's really getting back to that level of sophistication business owners need to be.
899
00:59:03,610 --> 00:59:09,862
And not be afraid to look at the types of tools like this and take advantage of all the...
900
00:59:09,889 --> 00:59:18,215
All the things that you said earlier, you should try to take advantage of all those tax
incentives that are out there for you, but be diligent and be smart about what you're
901
00:59:18,215 --> 00:59:18,605
doing.
902
00:59:18,605 --> 00:59:22,529
uh But this is just one more tool in the toolbox for business owners.
903
00:59:22,529 --> 00:59:24,739
But yeah, that's, yeah, so.
904
00:59:24,739 --> 00:59:25,420
I love that.
905
00:59:25,420 --> 00:59:27,960
My mind went right there as you were talking about that.
906
00:59:27,960 --> 00:59:37,668
was like, for all the years that I've been paying insurance, I didn't know it was the
60-40, but I wondered how much of that went to paying claims, how much of it was overhead,
907
00:59:37,668 --> 00:59:39,408
not much of it was profit.
908
00:59:39,408 --> 00:59:44,804
And then I thought, yeah, I own a little bit of Berkshire Hathaway stock and it does
pretty good every year.
909
00:59:44,804 --> 00:59:48,656
It'd be nice to just keep that yourself instead of a...
910
00:59:48,866 --> 00:59:51,138
paying them their overhead and profit.
911
00:59:51,138 --> 01:00:01,145
And now at this plan, if you can have that money invested and growing and when one of
those big losses does come up, you get to use your own money that has been invested
912
01:00:01,145 --> 01:00:07,960
earning an income for you rather than borrowing and taking on another liability and paying
more interest.
913
01:00:07,960 --> 01:00:13,085
So at the time of that claim, really you're kind of getting the double win and a tax
advantage along the way.
914
01:00:13,085 --> 01:00:15,082
get to invest the government's money and
915
01:00:15,082 --> 01:00:17,271
It sounds like a win all the way around.
916
01:00:17,641 --> 01:00:23,961
Oh yeah, and you know some of the things that we're talking about, and then the other
thing is called the enterprise risk, which is now they got to worry about brand
917
01:00:23,961 --> 01:00:25,401
protection, right?
918
01:00:25,401 --> 01:00:28,701
You know, we try to build our brand in all of our business.
919
01:00:28,701 --> 01:00:35,853
Our reputation is everything when it comes to Google reviews, know, podcast, mean,
reputation is everything.
920
01:00:35,853 --> 01:00:37,844
The second one would be supply chain risk.
921
01:00:37,844 --> 01:00:43,384
And then the other one is, we're seeing a cyber, and then the other one, the big one is
third party business interruption.
922
01:00:43,384 --> 01:00:45,481
More and more people are dependent on their CRM.
923
01:00:45,481 --> 01:00:50,514
own systems, more more people, their files are held in the clouds, they get compromised.
924
01:00:50,514 --> 01:00:55,916
I can't pull down my customer base any longer to either market.
925
01:00:55,916 --> 01:00:58,096
contact, which happens.
926
01:00:58,096 --> 01:01:02,576
mean, and then they get held hostage on their phishing and meanwhile it's affecting your
business.
927
01:01:02,576 --> 01:01:07,456
There is no traditional insurance that's going to trigger coverage for you on that
business interruption side either.
928
01:01:07,456 --> 01:01:16,236
And so, you know, again, the complications of running a business and the amount of
self-insured risk you're already doing, you just don't know about it.
929
01:01:16,236 --> 01:01:17,956
A very good example is PPP.
930
01:01:17,956 --> 01:01:19,876
You know, hey, the government's going to shut me down.
931
01:01:19,876 --> 01:01:20,836
Oh, okay.
932
01:01:20,836 --> 01:01:22,376
My insurance is going to cover me?
933
01:01:22,376 --> 01:01:23,316
No.
934
01:01:23,476 --> 01:01:24,296
No.
935
01:01:24,358 --> 01:01:27,091
And so that's why the government had to do what they did.
936
01:01:27,091 --> 01:01:31,878
at the same time, you know, that's just one, that was just a, I can go into stories.
937
01:01:31,878 --> 01:01:33,239
I get a lot of stuff down in Florida.
938
01:01:33,239 --> 01:01:35,322
You know, they get a hurricane coming their way.
939
01:01:35,322 --> 01:01:36,573
Hey, you gotta shut down.
940
01:01:36,573 --> 01:01:38,025
They shut down for five days.
941
01:01:38,025 --> 01:01:39,177
Hurricane never hits.
942
01:01:39,177 --> 01:01:40,010
Well.
943
01:01:40,010 --> 01:01:41,450
That's five days of operations.
944
01:01:41,450 --> 01:01:45,790
They weren't able to collect revenues from their, you know, what, sell their products or
whatever.
945
01:01:45,790 --> 01:01:50,030
And so there's, there's always constant disruptions in business today.
946
01:01:50,130 --> 01:01:52,670
It's, it's, uh, we deal with it all the time.
947
01:01:52,670 --> 01:01:54,490
I, Dallas with ice.
948
01:01:54,490 --> 01:02:00,181
I don't know what goes on down there, but you know, uh, nobody's going to get on the road.
949
01:02:00,181 --> 01:02:01,521
Nobody's going to come and see you.
950
01:02:01,521 --> 01:02:07,041
Dentists aren't going to have, you know, it's just a huge disruption in those parts of the
world.
951
01:02:07,520 --> 01:02:09,841
And we have it every year it seems like.
952
01:02:09,841 --> 01:02:18,161
Anytime there's a hell, or excuse me, an ice storm down there, we're having business
interruption claims come in because some of these businesses run on pretty thin margins.
953
01:02:18,161 --> 01:02:19,741
They make it up on volume.
954
01:02:19,741 --> 01:02:29,085
And if they can't have the, if they can't create the volume because they have to close
down for five, six, seven, eight days in that month, that could be a big hit to them.
955
01:02:29,085 --> 01:02:29,266
You
956
01:02:29,261 --> 01:02:29,692
know?
957
01:02:29,692 --> 01:02:34,678
I mean, there's a lot of retail stores that their net might be 5 % or less.
958
01:02:34,678 --> 01:02:41,045
If you're shut down for a week, you know, one week might be, yeah, yeah, that's your whole
year's profit.
959
01:02:41,045 --> 01:02:45,000
um, no, no.
960
01:02:45,000 --> 01:02:51,138
still want the, you know, so the bank still wants to get paid on their loans, you know?
961
01:02:51,345 --> 01:02:52,138
Yeah.
962
01:02:52,138 --> 01:03:03,946
And so I know when we first started communicating, said you had recently walked through a
pretty significant uh cyber claim within a construction company, which, yeah, I know I'm
963
01:03:03,946 --> 01:03:04,866
guilty of it too.
964
01:03:04,866 --> 01:03:11,090
When my insurance agent started talking about cyber stuff, my eyes kind of glass over
because I'm in, I'm a trade business.
965
01:03:11,090 --> 01:03:13,061
don't, we don't do cyber stuff.
966
01:03:13,061 --> 01:03:18,685
We're not running things on the web, but in today's world where everybody's using cloud
and everybody
967
01:03:18,685 --> 01:03:23,742
even has just sensitive files stored on their own servers, that can be a real liability.
968
01:03:23,742 --> 01:03:27,657
Could you tell us a little bit more about that incident, what happened?
969
01:03:27,696 --> 01:03:31,039
yeah, they had a policy that's very low, very low limits.
970
01:03:31,039 --> 01:03:38,265
honestly, the cyber policies today are written in a way to really protect you from the
cost of the guidelines.
971
01:03:38,326 --> 01:03:46,303
And the guidelines are, if you're compromised, if you your client files or it became
public, and if you're collecting social security numbers, date of births, and all that
972
01:03:46,303 --> 01:03:49,775
kind of stuff, and somehow you get...
973
01:03:50,198 --> 01:03:58,652
that those files get stolen from you, you gotta notify, you gotta give them credit watch
for the next two years, know, kind of like LifeLock or whatever and all that kind of
974
01:03:58,652 --> 01:03:59,092
stuff.
975
01:03:59,092 --> 01:04:03,374
So that's very traditional type coverages inside those cyber policies.
976
01:04:03,374 --> 01:04:06,435
What's never really covered is a forensic.
977
01:04:06,435 --> 01:04:16,781
So meaning you gotta hire a forensic team to come in and how they penetrated into your
firewalls to get into your content or your third party was disrep, and you have a hold
978
01:04:16,781 --> 01:04:18,235
harmless on the third party
979
01:04:18,235 --> 01:04:20,779
that you didn't create the cyber breach, but they did.
980
01:04:20,779 --> 01:04:22,220
That happens a lot.
981
01:04:22,220 --> 01:04:25,163
And then too, sometimes your stuff is held in ransom.
982
01:04:25,163 --> 01:04:25,974
That happens often.
983
01:04:25,974 --> 01:04:28,868
Or you wire money to the wrong people, you got fished.
984
01:04:28,868 --> 01:04:35,751
And that's really where that kind of comes into play today is, especially companies that
wire money and move money around, it's crazy.
985
01:04:35,751 --> 01:04:39,083
They got how sophisticated things have gotten in that space.
986
01:04:39,083 --> 01:04:43,645
It's pretty scary ah because AI is being used now for voice overreach even.
987
01:04:43,645 --> 01:04:48,608
CEO calls up, acts like, you that's why we're recommending now, you know, like.
988
01:04:49,167 --> 01:04:57,528
Keywords to be used when there's a request for a wire Never wire somebody calls up and
says hey I need to change my wire instructions or they send you an email with wire
989
01:04:57,528 --> 01:05:06,248
instructions You know we always you got to send a test wire today say hey tell me what I
just wired into your account You know if it's two dollars and fifty cents.
990
01:05:06,248 --> 01:05:06,708
is it?
991
01:05:06,708 --> 01:05:14,428
I mean it's all of those things you need to be proactive on but unfortunately every year
More times than not we have clients it
992
01:05:14,622 --> 01:05:23,435
Because if they want to help and please the client, they, we want to do things fast and
appropriate, you know, this may not be our money, or the client should have already been
993
01:05:23,435 --> 01:05:29,956
paid it, or suppliers should have already been given the money, we need it in order to get
the product, I mean, all sorts of stuff, right, that we do.
994
01:05:29,977 --> 01:05:38,300
In our haste, things come up, you know, an email that was masked to look like your email,
you're getting, again, in a hurry.
995
01:05:38,412 --> 01:05:48,092
You don't pay attention and now you wired money off, know several hundred thousand dollars
off to the wrong account never to be seen or heard from again and banks will not reverse
996
01:05:48,092 --> 01:06:00,292
that you are You're on your own and so it's those types of things that happen and I do
hope people get training and protocols We actually have great if you're a client of ours,
997
01:06:00,292 --> 01:06:02,832
you always have access to cyber training
998
01:06:03,181 --> 01:06:08,165
And most of it comes down to about 90 % employee mistakes, honestly.
999
01:06:08,245 --> 01:06:11,369
Mostly wanting to please the boss to make sure it gets done timely.
1000
01:06:11,369 --> 01:06:17,574
And they kind of, like I said, they insert themselves at the right time on these emails.
1001
01:06:17,574 --> 01:06:19,537
And it's very sophisticated stuff.
1002
01:06:19,537 --> 01:06:20,878
it happens all the time.
1003
01:06:20,878 --> 01:06:21,659
I wish it didn't.
1004
01:06:21,659 --> 01:06:23,580
It's gotta get better.
1005
01:06:23,580 --> 01:06:26,241
I hope AI kind of cleans that up somehow, but.
1006
01:06:26,241 --> 01:06:28,361
It's so rapid.
1007
01:06:28,361 --> 01:06:31,492
It's mind blowing to me how bad it is.
1008
01:06:31,813 --> 01:06:34,253
I was just having that conversation the other day.
1009
01:06:34,253 --> 01:06:37,761
It blows my mind the ACH transfers.
1010
01:06:37,761 --> 01:06:46,681
In a world that is, you know, I gotta click a button on my phone and receive a text and
open a letter in the mail just to sign into my email.
1011
01:06:46,722 --> 01:06:53,522
And yet I can send $100,000 via ACH with a name, a routing number, and an account number.
1012
01:06:53,522 --> 01:06:56,862
No password, no confirmation, no trigger word, nothing.
1013
01:06:56,862 --> 01:06:58,922
It's just there it is and it's gone.
1014
01:06:58,922 --> 01:07:02,502
It blows my mind that there isn't more security there.
1015
01:07:02,582 --> 01:07:04,982
So yeah, it's a real thing.
1016
01:07:05,258 --> 01:07:15,383
Yeah, and they look for businesses that transact that way and they either compromise,
somebody sends them a link, sends them some kind of email that looks attractive enough to
1017
01:07:15,383 --> 01:07:20,466
hit a link, and then they put their Trojans inside your deal and they just wait.
1018
01:07:20,466 --> 01:07:22,428
And then they intersect that email.
1019
01:07:22,428 --> 01:07:24,409
There's not a human eyes looking at it.
1020
01:07:24,409 --> 01:07:32,332
I'm sure they build algorithms and stuff like that that say, wait a minute, somebody's
getting ready to wire some funds, let's intersect this and put an email in there saying,
1021
01:07:32,332 --> 01:07:34,073
hey, we changed it.
1022
01:07:34,073 --> 01:07:43,604
We changed our bank this year, it's this wire and it looks, feels like the same person
that you might have gotten talked to two days ago on a phone.
1023
01:07:43,604 --> 01:07:48,515
So it's all of those things that, and there's no insurance for that.
1024
01:07:48,675 --> 01:07:50,575
Insurance companies will not cover that.
1025
01:07:50,575 --> 01:07:59,215
They're gonna deem that to be more of errors and omissions or an intentional act.
1026
01:07:59,362 --> 01:07:59,743
Right?
1027
01:07:59,743 --> 01:08:01,604
And I get where the insurance companies are at.
1028
01:08:01,604 --> 01:08:05,568
How do you, I mean, how much do we want to pay in premiums to offer that kind of coverage
to us?
1029
01:08:05,568 --> 01:08:06,229
You know what mean?
1030
01:08:06,229 --> 01:08:07,370
It wouldn't be cheap.
1031
01:08:07,370 --> 01:08:10,163
It'd be a lot of money if they covered you for everything, right?
1032
01:08:10,163 --> 01:08:13,775
Insurance companies are never gonna, they can't afford to offer you for everything, right?
1033
01:08:13,766 --> 01:08:14,747
Yeah, exactly.
1034
01:08:14,747 --> 01:08:18,051
Do you want to tell us a little bit about that specific claim?
1035
01:08:18,051 --> 01:08:21,245
What happened and how you were able to walk with them through that?
1036
01:08:21,430 --> 01:08:29,125
Yeah, so when he did turn around and had that situation happen where he wired money
mistakenly to the wrong counts, yeah, we submitted a claim.
1037
01:08:29,125 --> 01:08:35,287
We investigated the claim, found it to be a valid claim, and we were able to recapture.
1038
01:08:35,287 --> 01:08:37,837
I shouldn't say we were able to go out and get that money.
1039
01:08:37,837 --> 01:08:41,308
Now, he did get some of that money back, actually, but he didn't get all of it back.
1040
01:08:41,308 --> 01:08:45,810
And put a claim against his 831B plan and was made whole that year.
1041
01:08:46,235 --> 01:08:54,286
You can just imagine if it hits you at the wrong time, know, cash flows everything and all
of sudden now you got this, you know, you just threw money into a black hole unbeknownst
1042
01:08:54,286 --> 01:09:01,457
to you or one of your CFOs or your controller or whatever, bookkeeper or whatever, however
you're operating your company.
1043
01:09:01,457 --> 01:09:08,117
You know, you as the owner, you know, you got to come up with the difference of that and
sometimes that can be really painful.
1044
01:09:08,157 --> 01:09:09,599
And that's really where...
1045
01:09:09,599 --> 01:09:18,016
We kind of shine, honestly, because over the years you've been able to put money away that
when you were profitable and your things are good and you had a tax liability, you you're
1046
01:09:18,016 --> 01:09:26,943
able to save for those, for these unexpected type of losses where, you know,
unfortunately, you know, if you're having a bad year, just from a business standpoint, you
1047
01:09:26,943 --> 01:09:33,549
know, which happens obviously, and you take this hit on top of it, you know, sometimes
that could be the difference between living and dying, unfortunately.
1048
01:09:33,647 --> 01:09:34,433
Yeah.
1049
01:09:34,601 --> 01:09:39,452
And I think that's really where, it's one of those things you don't search these things
out.
1050
01:09:39,452 --> 01:09:47,612
But one of the things that was said to me early on in my career doing this, and I knew I
was on the right path at that point, is when the business owner said to me, you know, Van,
1051
01:09:47,612 --> 01:09:50,083
I just sleep better at night knowing I've done this.
1052
01:09:50,083 --> 01:09:54,454
And I jokingly say I still don't sleep that great to this day, but.
1053
01:09:54,454 --> 01:09:57,574
It's nice to hear a business owner say that to you though.
1054
01:09:57,834 --> 01:10:06,754
That's probably the biggest compliment you can get in the risk management profession
business that, hey, I just sleep better at night knowing I did your program.
1055
01:10:06,754 --> 01:10:12,114
And know, truthfully too, Erick, you know the traditional insurance, and we work with a
lot of property and casualty agents.
1056
01:10:12,114 --> 01:10:15,465
guys that do what I used to do.
1057
01:10:15,465 --> 01:10:18,145
You know, they're looking to solve problems too for their clients, right?
1058
01:10:18,145 --> 01:10:20,676
They want to bring solutions like this to the table.
1059
01:10:20,676 --> 01:10:23,456
One these I never really loved being a property casualty agent.
1060
01:10:23,456 --> 01:10:24,136
Van I love you.
1061
01:10:24,136 --> 01:10:25,616
You're a great guy.
1062
01:10:25,916 --> 01:10:28,627
I enjoy the fact you buy me lunch every year on the renewal.
1063
01:10:28,627 --> 01:10:31,147
But every time I see you, you cost me more money.
1064
01:10:31,147 --> 01:10:36,667
And that was never a great feeling, honestly, you mean, you don't want to...
1065
01:10:36,667 --> 01:10:43,361
Anyway, but when this program came out and when I really embraced it and saw the
advantages from small to middle market
1066
01:10:43,361 --> 01:10:47,387
business owners, you know, I save them money now and that's a good feeling.
1067
01:10:47,928 --> 01:10:48,948
Yeah, that's great.
1068
01:10:48,948 --> 01:10:52,984
That's a joke I make a lot is my background is in a roofing business.
1069
01:10:52,984 --> 01:11:00,282
And I said that the next business I run, I want to sell like four wheelers or boats or
something because nobody is ever excited to write me a check.
1070
01:11:00,282 --> 01:11:05,627
I might provide great services, give them what they need, really help them, but they're
never happy to pay me.
1071
01:11:05,627 --> 01:11:08,721
uh
1072
01:11:08,721 --> 01:11:09,753
Same thing with insurance.
1073
01:11:09,753 --> 01:11:12,616
yeah, no, roofing guys are great, man.
1074
01:11:12,616 --> 01:11:13,918
We do stuff for roofers.
1075
01:11:13,918 --> 01:11:17,092
It's the, it's the, you know, it's crazy back East, man.
1076
01:11:17,092 --> 01:11:19,185
I can't believe how competitive roofing is.
1077
01:11:19,185 --> 01:11:19,776
man.
1078
01:11:19,776 --> 01:11:20,107
Yeah.
1079
01:11:20,107 --> 01:11:23,683
In some markets, especially it gets, it gets pretty cutthroat.
1080
01:11:23,683 --> 01:11:24,092
So.
1081
01:11:24,092 --> 01:11:25,664
sell on the warranty.
1082
01:11:25,664 --> 01:11:28,807
I'm like, warranty's coming down to the differentiator, who do you go with?
1083
01:11:28,807 --> 01:11:30,088
And it's been interesting.
1084
01:11:30,088 --> 01:11:33,082
So we've actually enhanced some of these guys back east, their program.
1085
01:11:33,413 --> 01:11:42,527
on making it more competitive on the warranty side because now they're going to include
labor not just the shingle, you know, 25-year shingle, but to also include the labor in if
1086
01:11:42,527 --> 01:11:44,359
they got to come in there 10 years from now.
1087
01:11:44,359 --> 01:11:45,640
And it's been interesting.
1088
01:11:45,640 --> 01:11:52,663
We've worked with some, we've worked with some labor, some roofing guys back, especially
Michigan and the Minnesota area.
1089
01:11:52,663 --> 01:11:59,537
mean, the older homes, obviously, a lot of older homes and older areas, they needed those
roofs replaced and.
1090
01:11:59,537 --> 01:12:03,590
Yeah, anyway, been interesting from seeing what goes on in the roofing industry.
1091
01:12:03,584 --> 01:12:07,967
You kind of covered this a little bit earlier, but I'll switch directions go to
1092
01:12:08,136 --> 01:12:12,816
question more about kind of your business rather than the product you provide.
1093
01:12:12,976 --> 01:12:22,436
Was there a particular impetus or something that caused you to want to move into the 831
plans rather than your old agency?
1094
01:12:22,509 --> 01:12:24,750
Yeah, was definitely the 08.
1095
01:12:24,750 --> 01:12:27,290
I mean, there had to be a smarter, better way to run business.
1096
01:12:27,290 --> 01:12:29,720
And that's really where...
1097
01:12:29,997 --> 01:12:39,058
When I saw the gentleman that had four or five of these in place leading up to 08 and what
he was able to do with that money, those reserves and surpluses over all those good years
1098
01:12:39,058 --> 01:12:47,578
of selling RVs and manufacturing RVs, he was the only one showing up at the auctions when
these other RV manufacturers were going out of business.
1099
01:12:47,618 --> 01:12:50,798
He was the only one that showing up to buy the raw materials.
1100
01:12:50,798 --> 01:12:53,958
I mean, he was literally buying raw materials for 10 cents on the dollar.
1101
01:12:53,958 --> 01:12:55,598
He was the only one that had the money.
1102
01:12:55,598 --> 01:12:59,272
The one thing that, you know, going back to 08 and through that time,
1103
01:12:59,272 --> 01:13:06,117
I mean the one comment that always resonated, always heard, man if I only had the cash.
1104
01:13:06,117 --> 01:13:07,879
mean banks weren't gonna loan you money, right?
1105
01:13:07,879 --> 01:13:18,628
But I can't remember how many times I heard that between real estate, buying a business,
going to the auction, buying raw materials or equipment, or man if I only had the cash.
1106
01:13:18,628 --> 01:13:23,151
And that's really what flipped my trigger was like, yeah this is what smart businesses do.
1107
01:13:23,151 --> 01:13:25,252
This is what smart money does.
1108
01:13:25,252 --> 01:13:28,254
You you don't go buy a stock when it's an all-time high.
1109
01:13:28,254 --> 01:13:28,955
right?
1110
01:13:28,955 --> 01:13:39,568
And it's very similar in business and I think when if you're in a certain industry,
roofing if I'm making money, more likely my competitors are making money too.
1111
01:13:39,568 --> 01:13:43,703
It's when times get tough can I still make money when my competitors aren't.
1112
01:13:43,703 --> 01:13:49,326
And that's the difference again between living and dying or growing your business or not
growing your business.
1113
01:13:49,326 --> 01:13:54,949
And I think everybody makes money when everybody's either on plateau or on a peak or on a
climb.
1114
01:13:54,949 --> 01:13:57,650
Mostly, not as bad managers, right?
1115
01:13:57,650 --> 01:14:04,744
But for the most part, as an overall industry within what you're doing, probably
everybody's making money in there, right?
1116
01:14:04,744 --> 01:14:05,776
I mean, more than likely.
1117
01:14:05,776 --> 01:14:08,407
They may not be spending it wisely, but they're still making money.
1118
01:14:08,407 --> 01:14:15,942
But it's when those troughs happen, you know, when things do go down the other way, when
there's a peak and now there's a down downward slope.
1119
01:14:15,959 --> 01:14:19,360
And then you have this trough and then we all kind of come out of that trough.
1120
01:14:19,360 --> 01:14:21,443
mean, this is what happens.
1121
01:14:21,443 --> 01:14:23,724
You don't make your money going down the trough.
1122
01:14:23,724 --> 01:14:31,648
You might make your money down the bottom of it if you're a really good manager and frugal
and have got the money.
1123
01:14:31,648 --> 01:14:34,989
But it's really the upward trajectory on that other side.
1124
01:14:34,989 --> 01:14:42,783
And that's really where you can grow your business because the other businesses that
you're the people you were competing with are out of business or they've been stifled so
1125
01:14:42,783 --> 01:14:44,734
much and so fearful of moving forward.
1126
01:14:44,734 --> 01:14:53,383
that they're not going to move as fast as you can because you've got the war chest or the
rainy day fund sitting in the back room because as you were climbing you were putting some
1127
01:14:53,383 --> 01:15:02,012
of that away as well not just spending it or you know and you know that those are the
those are things that the business owners need to be aware of and the opportunities that
1128
01:15:02,012 --> 01:15:04,467
sit there are significant
1129
01:15:04,454 --> 01:15:05,385
quite honestly.
1130
01:15:05,385 --> 01:15:07,316
that's some incredible advice right there.
1131
01:15:07,316 --> 01:15:10,929
And even in my uh relatively short career, I've seen that.
1132
01:15:10,929 --> 01:15:15,872
I've always been adverse to borrowing money.
1133
01:15:15,872 --> 01:15:17,813
I'm not a big fan of having payments.
1134
01:15:17,813 --> 01:15:20,876
I grew up in the construction industry and saw just what you're saying.
1135
01:15:20,876 --> 01:15:26,181
There's good years and bad years and loans that you get on the good years are hard to pay
on the bad years.
1136
01:15:26,181 --> 01:15:26,690
So.
1137
01:15:26,690 --> 01:15:27,059
Yep.
1138
01:15:27,059 --> 01:15:31,341
and I've even gone further than that and been, run things pretty cash heavy.
1139
01:15:31,341 --> 01:15:41,164
And so just what you said, there's, uh, a couple of years kind of in the middle of my
tenure of owning the business that, when all my peers and colleagues were selling off
1140
01:15:41,164 --> 01:15:46,325
equipment, I was buying it because we had some cash and stuff was on sale.
1141
01:15:47,385 --> 01:15:53,808
and this sounds, uh, you know, to me, that was smart business, but this is even a step
above that.
1142
01:15:53,808 --> 01:15:55,294
you know, I was using.
1143
01:15:55,294 --> 01:16:05,754
taxed dollars that were sitting in the savings account instead of invested in so if you
can get tax deferred money and then Earn some returns and have it invested along the way.
1144
01:16:05,754 --> 01:16:07,926
This is just a win all the way around
1145
01:16:07,920 --> 01:16:17,865
It makes you so much stronger and nimble and it gives you so many more options on the
table and the more options you have as a business owner, the better decision.
1146
01:16:17,865 --> 01:16:18,596
you can make.
1147
01:16:18,596 --> 01:16:22,418
You're not being reactionary, you can be proactive in a situation.
1148
01:16:22,418 --> 01:16:28,885
What I'm describing is our big businesses we got to compete with.
1149
01:16:28,885 --> 01:16:37,640
They're doing these things and they're doing them because Deloitte is their CPA firm and
they're not afraid of the IRS and they'll tell clients like, hey, you got to do this all
1150
01:16:37,640 --> 01:16:38,090
day long.
1151
01:16:38,090 --> 01:16:42,342
And then you got the small to middle market CPA firm that you went to high school with
1152
01:16:42,342 --> 01:16:49,221
the guy, he's a good dude, and you you started as a small business and now you're running
a 20 million dollar year operation and you still kept him.
1153
01:16:49,221 --> 01:16:54,187
And meanwhile, he hasn't grown with you, but you've succeeded over his ability to help
you.
1154
01:16:54,289 --> 01:16:56,301
But out of loyalty, we keep them.
1155
01:16:56,301 --> 01:16:57,271
I see it all the time.
1156
01:16:57,271 --> 01:16:59,523
And we outgrow CPAs all the time.
1157
01:16:59,523 --> 01:17:00,905
It's just out of loyalty.
1158
01:17:00,905 --> 01:17:06,630
Who we are as a person, we want to stay loyal to these people that help to grow our
business.
1159
01:17:06,630 --> 01:17:09,432
But at some point, you do outgrow people.
1160
01:17:09,432 --> 01:17:13,296
And you've got to recognize that and make some tough decisions.
1161
01:17:13,296 --> 01:17:16,048
so these are, I shouldn't bring that up.
1162
01:17:16,048 --> 01:17:20,182
mean, one of the things about this code is it's been abused shockingly.
1163
01:17:20,182 --> 01:17:21,118
uh
1164
01:17:21,109 --> 01:17:29,454
Imagine that a government program with a lot of bureaucracy and it hurts a lot of people
and then a few people abuse it and take advantage.
1165
01:17:29,741 --> 01:17:33,958
No, mean, you know, we are, you know, it's part of that innovation as Americans.
1166
01:17:33,958 --> 01:17:41,998
I work with Lloyds of London on some things and the guy, my contact over there, always, he
always, he says, I love you Americans.
1167
01:17:41,998 --> 01:17:42,700
He said,
1168
01:17:42,700 --> 01:17:46,912
He said, you guys go to cocktail parties and you tell people how little taxes you paid.
1169
01:17:46,952 --> 01:17:52,294
He said, here in London, we go to cocktail parties and we tell everybody how much we paid
in taxes.
1170
01:17:52,415 --> 01:17:56,616
And I said, yeah, there's a, Boston Tea Party's embedded in our DNA.
1171
01:17:56,616 --> 01:17:57,957
There is no doubt about it.
1172
01:17:57,957 --> 01:18:04,430
But it's just, you know, again, it's just, you you pass something, oh, wait a minute, I
can do this with it.
1173
01:18:04,430 --> 01:18:08,282
And really what happened with the code, it was hijacked for state tax planning.
1174
01:18:08,282 --> 01:18:10,963
And that's what really got the IRS hot and heavy on these things.
1175
01:18:10,963 --> 01:18:12,674
I think it's one of those things,
1176
01:18:12,674 --> 01:18:16,506
me once, don't give me twice, and somebody went for the bite of the apple twice.
1177
01:18:16,506 --> 01:18:22,619
And you know, these are estate tax attorneys that got really creative under the code and
it got the attention of the IRS.
1178
01:18:22,619 --> 01:18:28,414
you know, it was massed to make it look like a risk mitigation when it really was used for
estate taxes.
1179
01:18:28,414 --> 01:18:30,596
I mean, that's what really has brought the pressure on this.
1180
01:18:30,596 --> 01:18:33,878
Today's conversations are so different today because
1181
01:18:33,878 --> 01:18:41,353
Business owners know the risks they've taken to self-insure and they want to position it
better for them to be able to survive, God forbid, if it happened, right?
1182
01:18:41,353 --> 01:18:44,382
So, the abuses aren't out there like they were.
1183
01:18:44,382 --> 01:18:49,677
We still some bad actors, I don't care what industry you're in, you're gonna have bad
actors, so.
1184
01:18:49,670 --> 01:18:52,281
Yeah, yeah, this sounds like a fantastic program.
1185
01:18:52,281 --> 01:18:53,961
I wish I would have learned about it earlier.
1186
01:18:53,961 --> 01:19:04,105
uh When it comes to funding these programs, know you mentioned or you threw out the term
principal payments and things like that earlier.
1187
01:19:04,105 --> 01:19:08,107
We've also been talking a lot about good years and bad years.
1188
01:19:08,107 --> 01:19:14,892
When you structure 831 plan, is it set up with kind of regular fixed principal payments?
1189
01:19:14,892 --> 01:19:18,519
Or can you dump a little extra in there when you're having a good year?
1190
01:19:18,690 --> 01:19:20,030
You know what?
1191
01:19:20,090 --> 01:19:21,310
Great question.
1192
01:19:21,310 --> 01:19:23,050
So the premiums we're talking about, right?
1193
01:19:23,050 --> 01:19:24,810
What premiums we can put in.
1194
01:19:24,950 --> 01:19:27,390
It's based on methodology pricing.
1195
01:19:27,390 --> 01:19:29,410
We always give our clients the ceiling.
1196
01:19:29,490 --> 01:19:33,430
So for example, you could put up to $2.9 million away in this now.
1197
01:19:33,430 --> 01:19:40,210
When it first started it was $1.2 and it got changed a couple years ago and they increased
how much you can put into it.
1198
01:19:40,210 --> 01:19:41,590
Congress did.
1199
01:19:41,930 --> 01:19:44,161
That was back in 2017 actually.
1200
01:19:44,161 --> 01:19:45,332
That doesn't mean you get to.
1201
01:19:45,332 --> 01:19:47,323
So we look at your gross revenue.
1202
01:19:47,323 --> 01:19:49,915
We underwrite this no different than insurance carry would, right?
1203
01:19:49,915 --> 01:19:53,888
Like what's your gross revenue is based on really how much premium you're gonna pay.
1204
01:19:53,888 --> 01:19:59,672
The more gross revenue you have, theoretically the more risk you have, the more premium
you'd be able to pay.
1205
01:19:59,672 --> 01:20:02,164
So we come back in and we always tell our clients to ceiling.
1206
01:20:02,164 --> 01:20:05,398
So the other thing is not every year you have to fund.
1207
01:20:05,398 --> 01:20:09,110
because getting back to, know, I don't have a lot of tax liability this year.
1208
01:20:09,110 --> 01:20:10,610
I did buy a piece of equipment I needed.
1209
01:20:10,610 --> 01:20:15,143
I don't have that exposure to that, or I just don't have the extra funds to do it with.
1210
01:20:15,143 --> 01:20:16,140
It's not gonna kill you.
1211
01:20:16,140 --> 01:20:24,833
I designed our program, there's annual maintenance fees regardless because it is a C-corp,
so it has to have a tax return, a domicile has to get paid, there's premium tax that gotta
1212
01:20:24,833 --> 01:20:26,150
get paid, you know, all that.
1213
01:20:26,150 --> 01:20:29,573
we made it to where we do recognize the ups and downs of business cycles.
1214
01:20:29,573 --> 01:20:33,785
doesn't matter what, you know, one industry could be doing good and the other one could be
1215
01:20:33,785 --> 01:20:34,465
doing bad.
1216
01:20:34,465 --> 01:20:39,279
know, it's not a cross-sector industries that are doing good all at same time.
1217
01:20:39,279 --> 01:20:45,874
mean, ag is a great example of that, Cattlemen, know, cow-calf operations great right now,
but dairy is not that great.
1218
01:20:45,874 --> 01:20:48,006
I mean, there's all versus things going on there.
1219
01:20:48,006 --> 01:20:52,530
So that's kind of, we recognize that when we built our system out, that you don't have to
fund every year.
1220
01:20:52,530 --> 01:20:58,113
And that's a differentiator in our space where our competitors really, they have fixed
fees every year.
1221
01:20:58,113 --> 01:20:59,754
You got to pay whether you fund or not.
1222
01:20:59,754 --> 01:21:00,568
And that never made any
1223
01:21:00,568 --> 01:21:09,808
sense to me and blah blah blah but no we definitely are you know we're bringing this into
the point where and I really appreciate being on your show quite honestly because
1224
01:21:09,808 --> 01:21:11,408
We just want to bring awareness to this.
1225
01:21:11,408 --> 01:21:17,799
We want to bring awareness to guys like you that are risk takers that say, there is a
better, smarter way to position dollars.
1226
01:21:17,799 --> 01:21:18,899
And here's what I know about.
1227
01:21:18,899 --> 01:21:22,599
Here's what I've come to realize being 58 years old.
1228
01:21:22,599 --> 01:21:28,970
I used to be the, you know, I've had the 65, 76 series financial licenses.
1229
01:21:28,970 --> 01:21:33,390
When I look at legacy type families or legacy wealth,
1230
01:21:33,882 --> 01:21:37,004
It's really how they position money over those years.
1231
01:21:37,485 --> 01:21:47,651
And by positioning the money, whether it's tax-deferred or just the they position it,
gives them the opportunities to take advantage of certain things in the marketplace.
1232
01:21:47,651 --> 01:21:49,612
And that's what builds legacy.
1233
01:21:49,612 --> 01:21:50,313
It's not...
1234
01:21:50,313 --> 01:21:56,288
And really building a solid business that you can pass on to the next generation.
1235
01:21:56,288 --> 01:21:57,450
Or you can get the...
1236
01:21:57,450 --> 01:22:05,171
investment companies coming in wanting to buy your company and creating a legacy for not
just yourself but also for your family and your grandkids and all that stuff.
1237
01:22:05,171 --> 01:22:10,022
And if that's something you want to do and if that's something excites you and stuff, it
isn't about positioning money.
1238
01:22:10,022 --> 01:22:11,121
It's not about spending money.
1239
01:22:11,121 --> 01:22:12,562
It's about positioning money.
1240
01:22:12,662 --> 01:22:21,302
You got to be strategic on spending the money of course but how you position dollars I
think is really the long-term plan you got to be looking at all the time.
1241
01:22:21,302 --> 01:22:23,022
That's the long-term game.
1242
01:22:23,195 --> 01:22:24,035
Okay.
1243
01:22:24,035 --> 01:22:27,877
And so are those premiums, can they flex throughout the year?
1244
01:22:27,877 --> 01:22:39,531
So, I mean, if we're coming into our fiscal year and I'm projecting a really great year
and then something happens and the market falls apart, I can slow that back and not be
1245
01:22:39,531 --> 01:22:41,382
obligated to that expense.
1246
01:22:41,410 --> 01:22:42,550
Yeah, we adjusted.
1247
01:22:42,550 --> 01:22:47,690
mean, typically we're going into our fourth quarter is our busiest time of year because
that's where clients are deciding what they're going to fund.
1248
01:22:47,690 --> 01:22:51,750
So they're really looking in the rear view mirror for that year to take a deduction.
1249
01:22:51,790 --> 01:22:56,690
Twenty five, for example, December 25, we were dealing with business owners that are
typically calendar ran.
1250
01:22:56,690 --> 01:22:58,410
They're not a cruel county.
1251
01:22:58,410 --> 01:23:03,150
We do have clients that are uncruel, but you know, you got to be pretty large to get that
number today.
1252
01:23:03,150 --> 01:23:10,790
But if you're on a calendar year cash basis, you know, you're going to make a decided do I
want to take a deduction for 25 or not?
1253
01:23:10,790 --> 01:23:11,393
So then you write to
1254
01:23:11,393 --> 01:23:21,900
premium check for that year you took the deduction but you by risk going into 26 right so
now I got my 26 years so you kind of the nice thing about property casualty insurances you
1255
01:23:21,900 --> 01:23:31,526
can prepay that expense like if I want to prepay my work comp I get to write that whatever
month I wrote that check on is that month I get to write that off right health care you
1256
01:23:31,526 --> 01:23:40,141
can't do that with but property casualty insurance premiums are absolutely recognized
under and that's what this category falls under is property casualty insurance
1257
01:23:40,289 --> 01:23:42,029
Okay, awesome.
1258
01:23:42,029 --> 01:23:44,369
Well, man, you have me all excited and fired up.
1259
01:23:44,369 --> 01:23:50,029
I wish I still owned my business so I could open up an 831 and get this going.
1260
01:23:50,489 --> 01:23:56,129
Is there anybody or a situation where it really doesn't make sense?
1261
01:23:56,129 --> 01:24:03,589
Is there somebody that, you know, is there a size of business, a level of income that you
kind of have to be at for it to make sense?
1262
01:24:03,626 --> 01:24:04,887
No, no, great question.
1263
01:24:04,887 --> 01:24:07,930
I would say this to you, I think it's more of a mindset.
1264
01:24:07,930 --> 01:24:09,521
Where you at in the mindset of your business?
1265
01:24:09,521 --> 01:24:11,233
I love entrepreneurs.
1266
01:24:11,233 --> 01:24:16,560
Entrepreneurs typically have their floor to the pedal, their foot to the pedal and it's
all the way to the floor, right?
1267
01:24:16,560 --> 01:24:22,985
Meaning this, that if you're making every dollar you make to put back in your business and
you're in a grow, grow, grow, this is probably not for you.
1268
01:24:23,222 --> 01:24:28,615
uh There's some rules and regulations to those reserves and surpluses, so you can't merely
get access to them and all that kind of stuff.
1269
01:24:28,615 --> 01:24:29,986
So that's one thing.
1270
01:24:29,986 --> 01:24:33,768
So I think it's more of a mindset, not so much a gross revenue standpoint.
1271
01:24:33,768 --> 01:24:40,332
We try to target two million and above in gross revenues in a business before it really
starts to pencil for them.
1272
01:24:40,332 --> 01:24:46,276
And you know, I'm actually coming out with a book called Weathering the Storm When Winning
is Expected.
1273
01:24:46,276 --> 01:24:49,340
And I go into pretty extensive detail.
1274
01:24:49,340 --> 01:24:52,533
in that on when you should do this, when should you be looking at it.
1275
01:24:52,533 --> 01:24:57,175
Because what we're asking a business owner to do is take money off the balance sheets and
not miss it.
1276
01:24:57,175 --> 01:25:07,361
ah You know, you know, not a lot of, you know, I hope all businesses eventually strive to
that point, but not a lot of them, you know, and it is what it is.
1277
01:25:07,361 --> 01:25:12,105
So there is some, there's more of a litmus test to whether or not you should be doing
this, right?
1278
01:25:12,105 --> 01:25:15,265
What frame of mind you're in, where you at in the business.
1279
01:25:15,265 --> 01:25:19,980
Do you want take the, you you want to back the foot off the pedal a little bit, stuff like
that.
1280
01:25:19,980 --> 01:25:25,396
I think that's probably the bigger question is, and you know, are you working on the
business or in the business all the time?
1281
01:25:25,396 --> 01:25:31,322
And if you don't, if you find yourself always working in it, again, it's probably not,
this is probably not the right time for you.
1282
01:25:31,643 --> 01:25:36,948
But if you're on, you're working on it and you're looking for other tools like this, you
know, absolutely.
1283
01:25:37,068 --> 01:25:38,230
It's time to start looking.
1284
01:25:38,230 --> 01:25:41,514
I think awareness is no matter what, you got to know this is out in front of you.
1285
01:25:41,514 --> 01:25:43,052
This ought to be one of those things.
1286
01:25:43,052 --> 01:25:44,518
We call it the CPA playbook.
1287
01:25:44,518 --> 01:25:51,827
This is just one more chapter in the back of the book where you would want to start to
look at tools like this from a business standpoint.
1288
01:25:51,928 --> 01:25:55,728
Yeah, yeah, man, like I said, I wish I had known about this earlier.
1289
01:25:55,728 --> 01:25:57,379
That sounds like a great program.
1290
01:25:57,379 --> 01:26:04,899
And you obviously know a lot about it and have put a lot into it building a business
around this 831 program.
1291
01:26:04,899 --> 01:26:10,239
Are there many other people doing what you're doing or are you kind of leading the charge
here?
1292
01:26:10,498 --> 01:26:11,818
We're kind of leading the charge.
1293
01:26:11,818 --> 01:26:17,480
I think we're probably the only, I would say, insurance professionals doing the management
side.
1294
01:26:17,480 --> 01:26:20,301
I still see a lot of law firms trying to mimic what we do.
1295
01:26:20,301 --> 01:26:24,402
uh But I don't, I would, I mean we have competitors.
1296
01:26:24,402 --> 01:26:25,682
And here's what my hope is.
1297
01:26:25,682 --> 01:26:28,653
I hope with time it does become more competitive.
1298
01:26:28,653 --> 01:26:32,766
I think we want to make this synonymous with the 401k.
1299
01:26:32,766 --> 01:26:36,361
mean business owners should be aware of these types of tools.
1300
01:26:36,361 --> 01:26:38,515
Right now, we're dealing with the IRS.
1301
01:26:38,515 --> 01:26:40,218
We've sued the IRS on some issues.
1302
01:26:40,218 --> 01:26:43,334
And I think our court hearing is coming up this month in the Fifth District.
1303
01:26:43,334 --> 01:26:48,383
But they've been a little bit more aggressive on this stuff because...
1304
01:26:48,454 --> 01:26:51,605
Well, they could in their previous lives.
1305
01:26:51,605 --> 01:26:58,509
Bureaucracies are something we got to deal with as business owners and they've definitely
gotten an overreach at this point.
1306
01:26:58,509 --> 01:27:02,371
But nevertheless, we think this is going to become a normal business practice.
1307
01:27:02,371 --> 01:27:07,535
Once you've achieved a certain level of business, at some point you want to take the risk,
you want to take risk off the table.
1308
01:27:07,535 --> 01:27:08,715
Well, how do you do that?
1309
01:27:08,715 --> 01:27:12,477
Do you have to sell your business to take risk or bring a new partner in?
1310
01:27:12,477 --> 01:27:14,999
This is just one more way to take some risk off the table.
1311
01:27:14,999 --> 01:27:22,205
and still have the money in the back room to help keep the cash flow of the business going
first and foremost, protect the business that created the cash flow.
1312
01:27:22,205 --> 01:27:26,688
But also down the road if everything works out I can sell my business or not sell my
business.
1313
01:27:26,688 --> 01:27:30,931
There's ways we structure on ownership for key employees.
1314
01:27:30,931 --> 01:27:33,913
You know if we want to make a transit transfer down to the kids.
1315
01:27:33,913 --> 01:27:37,446
I mean there's all sorts of things that we can bring to the table in the back room on
these things.
1316
01:27:37,446 --> 01:27:42,030
Working with other trusted advisors in their group and their surroundings that brings a
lot
1317
01:27:42,030 --> 01:27:48,957
solutions to the table or they otherwise wouldn't have it and you'd be at more at the
mercy of the deal versus trying to make the deal.
1318
01:27:49,124 --> 01:27:50,625
Yeah, yeah.
1319
01:27:50,625 --> 01:27:55,790
So again, you know, we've used the analogy, the HRA and the oh 401k.
1320
01:27:55,790 --> 01:27:58,742
You know, I know now the tax law is always changing.
1321
01:27:58,742 --> 01:28:00,714
That's why it's three inches thick.
1322
01:28:00,714 --> 01:28:11,144
But currently there are some exceptions and some ways to, you know, pull money out of a
401k or something like that, or even just pay a penalty to pull it out for non covered
1323
01:28:11,144 --> 01:28:11,949
items.
1324
01:28:11,949 --> 01:28:21,249
Is there something similar for the 831 if you got in desperate straits and needed to pull
that money and didn't really qualify for a risk payout?
1325
01:28:21,249 --> 01:28:25,189
Can you pull that money and pay a a penalty?
1326
01:28:25,545 --> 01:28:26,885
There's no penalties.
1327
01:28:26,885 --> 01:28:29,225
You just pay your long-term dividend rates.
1328
01:28:29,525 --> 01:28:33,705
you are, yeah, but you can also bridge a loan out.
1329
01:28:33,705 --> 01:28:35,785
That's where it gets pretty sexy, honestly.
1330
01:28:35,785 --> 01:28:40,445
That's where I see a lot of ad guys use this as part of their operating line.
1331
01:28:41,425 --> 01:28:50,485
You know, once they've been in it four, five, six years and they got a lot of surplus,
they've had good loss, know, minimal lost years, and then they're able to pull on that
1332
01:28:50,485 --> 01:28:52,205
from an operating line standpoint.
1333
01:28:52,225 --> 01:28:52,816
Again,
1334
01:28:52,816 --> 01:28:54,047
That's just good business.
1335
01:28:54,047 --> 01:29:04,193
mean, uh insurance companies are the largest lenders, You can make an argument, insurance
companies lend as much money as banks do in the back room.
1336
01:29:04,193 --> 01:29:05,314
You just don't know about it.
1337
01:29:05,314 --> 01:29:06,744
So no, I love that.
1338
01:29:06,744 --> 01:29:11,397
You're collateralized against your shares at the corporation, so if you default, you
default it on yourself.
1339
01:29:11,397 --> 01:29:15,219
I mean, we're fully insulated and collateralized on those types of loans.
1340
01:29:15,219 --> 01:29:16,940
I think it's great planning.
1341
01:29:16,940 --> 01:29:18,610
uh Auto dealers do it a lot.
1342
01:29:18,610 --> 01:29:19,821
I I see them borrowing money
1343
01:29:19,821 --> 01:29:27,981
all the time out of their, you know, when they sell service contract to you for $2,500,
you know, they're keeping $2,000 of that on their books in their own A31B.
1344
01:29:27,981 --> 01:29:36,741
They turn around and loan that money back to their operating company for flooring,
consumer financing, I mean, all sorts of, the efficiencies of business really start to
1345
01:29:36,741 --> 01:29:39,081
play in a lot of different areas here.
1346
01:29:39,121 --> 01:29:43,021
And that's just, you know, that's just, this is who you gotta compete against.
1347
01:29:43,021 --> 01:29:44,712
These guys are doing this stuff already.
1348
01:29:44,712 --> 01:29:48,712
You know, if your listeners are hearing this about the first time, you know, well, I
always buy service contracts.
1349
01:29:48,712 --> 01:29:53,272
Well, did you know your dealership kept the risk in the back room and his own insurance
company?
1350
01:29:53,272 --> 01:29:54,912
No, you didn't know that.
1351
01:29:54,912 --> 01:29:58,872
know, mean that, you know, but yeah, it's great revenue.
1352
01:29:59,272 --> 01:30:01,912
It's why you get asked all these warranties all the time.
1353
01:30:01,912 --> 01:30:04,492
I mean, it's really good money in the back room.
1354
01:30:04,492 --> 01:30:11,952
It's satisfying the customer's needs to avoid that risk, you know, because if that TV
breaks, I want to return it five years from now.
1355
01:30:11,952 --> 01:30:14,223
Like I'm going to remember I had it.
1356
01:30:14,223 --> 01:30:17,786
But, you know, meanwhile, I paid 200 bucks to have that warranty, right?
1357
01:30:17,786 --> 01:30:21,039
Now they get to take that 200 bucks and they get to put it to work in the back room.
1358
01:30:21,039 --> 01:30:25,733
Again guys, this is just, this is what goes on in big business.
1359
01:30:25,733 --> 01:30:32,569
I want to bring these concepts and ideas down to the people that really at risk, honestly,
losing their businesses.
1360
01:30:32,910 --> 01:30:33,590
yeah.
1361
01:30:33,590 --> 01:30:37,766
When the big Fortune 500 companies have a big payout, they can cover it.
1362
01:30:37,766 --> 01:30:42,301
But Bob the plumber has a rough year and then gets hit with a claim at the same time.
1363
01:30:42,301 --> 01:30:44,003
That puts him out of business.
1364
01:30:44,044 --> 01:30:44,436
So.
1365
01:30:44,436 --> 01:30:46,489
you just got to look at downturns of economy.
1366
01:30:46,489 --> 01:30:48,283
Who goes out of business more likely?
1367
01:30:48,283 --> 01:30:49,485
It's not big business.
1368
01:30:49,485 --> 01:30:53,431
It's the small to middle market business owners that go out of business.
1369
01:30:53,813 --> 01:30:57,392
And that's who I'm trying to protect going forward, for sure.
1370
01:30:57,392 --> 01:31:01,725
Yeah, it's really leveling the playing field too, because like you said, that's who you're
competing against.
1371
01:31:01,725 --> 01:31:11,353
There's, ah especially now we're talking about trends in the economy and man, there's big
companies kind of rolling up small companies across the country.
1372
01:31:11,353 --> 01:31:16,656
And so some service industries that were traditionally small businesses are now being
backed by big businesses.
1373
01:31:16,656 --> 01:31:19,368
And this levels that playing field a little bit.
1374
01:31:19,368 --> 01:31:25,428
If you can bring some of the efficiencies to the table that they are, the small business
can compete.
1375
01:31:25,428 --> 01:31:30,178
and have that small business touch and really puts a lot more power in their hands.
1376
01:31:30,176 --> 01:31:31,476
I couldn't agree more.
1377
01:31:31,476 --> 01:31:32,996
mean, those guys are clients of ours too.
1378
01:31:32,996 --> 01:31:40,236
The guys that go out and all these HVACs and Plummie, I mean, I've seen it from shore to
shore on what's gone on over there.
1379
01:31:40,236 --> 01:31:45,956
I'm encouraged by it because I think some of these business owners are getting multiples
they would never gotten anywhere else.
1380
01:31:45,956 --> 01:31:48,996
But there's absolutely a consolidation going on in that space.
1381
01:31:48,996 --> 01:31:53,556
They're going to keep the name the same, the employees the same, and they're just buying
it for the cash flow.
1382
01:31:53,556 --> 01:31:54,384
I mean,
1383
01:31:54,384 --> 01:31:56,656
you know, but...
1384
01:31:56,656 --> 01:32:03,400
opening up a lot of opportunity for maybe the mid-size businesses might get hit a little
bit.
1385
01:32:03,400 --> 01:32:13,787
But I think those really big, more national or regional customers tend to serve a
different clientele than the small local business.
1386
01:32:13,787 --> 01:32:23,243
And so as some of those mid-size businesses get bought up and rolled up into the big ones,
it's opening the door for those small businesses to take a little more market share.
1387
01:32:23,525 --> 01:32:25,725
I could not agree more.
1388
01:32:25,725 --> 01:32:27,245
I 100 % agree with that.
1389
01:32:27,245 --> 01:32:35,405
I think they're going to lose their personal touch, their identity, their community is
going to be lost, and people are going to want to do business with people they know and
1390
01:32:35,405 --> 01:32:35,965
trust.
1391
01:32:35,965 --> 01:32:37,996
And so I couldn't agree more with you.
1392
01:32:37,996 --> 01:32:43,496
I do think it's going to get back to our conversations with the engineers when he started
their own businesses.
1393
01:32:43,496 --> 01:32:50,976
As there's these roll-ups and consolidations, and service to the customers is more of an
afterthought.
1394
01:32:51,027 --> 01:32:59,767
I do think it's going to open up an opportunity for businesses to spring up around
different areas to take advantage of that, bring that personal touch back.
1395
01:32:59,767 --> 01:33:01,067
And we're going to crave for that.
1396
01:33:01,067 --> 01:33:04,027
And as a human, we're going to crave for that.
1397
01:33:04,027 --> 01:33:05,707
So I'm encouraged by all that.
1398
01:33:05,707 --> 01:33:09,507
there'll be a backlash eventually, in my opinion, on it.
1399
01:33:09,507 --> 01:33:12,267
It would make sense to me that would happen.
1400
01:33:12,267 --> 01:33:13,307
We'll see.
1401
01:33:13,323 --> 01:33:14,103
awesome.
1402
01:33:14,103 --> 01:33:20,683
Well, you've brought just a ton of knowledge and information to the table here with the
831 plans.
1403
01:33:20,703 --> 01:33:26,774
with all of your experience in business acumen, I want to ask a few questions, tap into
that a little bit as well.
1404
01:33:26,774 --> 01:33:31,734
30 years experience running a number of businesses in different sectors.
1405
01:33:31,734 --> 01:33:35,765
Is there a lesson that you've learned that you wish you would have learned earlier?
1406
01:33:35,763 --> 01:33:39,316
Oh man, take advice from people who have been doing it longer than you.
1407
01:33:39,316 --> 01:33:40,947
And learn from other people's mistakes.
1408
01:33:40,947 --> 01:33:42,409
mean, that's the cheapest way.
1409
01:33:42,409 --> 01:33:46,155
I when somebody's already got the will, don't try to duplicate the will.
1410
01:33:46,155 --> 01:33:48,037
Just learn what they're doing.
1411
01:33:48,037 --> 01:33:52,392
And I do think being disciplined to the money, meaning that as you grow,
1412
01:33:52,392 --> 01:33:54,903
Don't increase your lifestyle too quickly.
1413
01:33:54,903 --> 01:34:02,834
That's probably one of the things I've seen, one of the big, one of the reasons I was very
successful in my insurance agency, a guy told me early on, he said, okay, what are you
1414
01:34:02,834 --> 01:34:04,814
gonna allocate for marketing and budget?
1415
01:34:05,194 --> 01:34:07,394
And he said, I suggest you do 30%.
1416
01:34:07,394 --> 01:34:08,614
I'm like, man, that's a lot.
1417
01:34:08,614 --> 01:34:09,734
He said, yeah, but do it.
1418
01:34:09,734 --> 01:34:14,934
So as my income grew, as my agency grew, I kept the 30%.
1419
01:34:14,934 --> 01:34:22,073
So if I wrote a big commercial deal that one month and all of sudden I got a $20,000
commission.
1420
01:34:22,377 --> 01:34:25,097
I would take $6,000 of it and put it in the market.
1421
01:34:25,097 --> 01:34:27,957
I wouldn't take the $20,000 home, right?
1422
01:34:27,957 --> 01:34:35,529
And that's what really, that discipline kept my ability to keep growing the business, but
it wasn't like I was...
1423
01:34:35,529 --> 01:34:38,509
It didn't feel like I was taking a step back because of it.
1424
01:34:38,509 --> 01:34:39,548
That makes sense.
1425
01:34:39,548 --> 01:34:41,769
And they kept that discipline going.
1426
01:34:41,869 --> 01:34:44,109
So my marketing budgets got high.
1427
01:34:44,269 --> 01:34:48,129
But at the same time though, it was already programmed into the business.
1428
01:34:48,129 --> 01:34:57,409
so I never, as I made more money, it wasn't that I was taking more money home, it was the
fact that I was keeping my discipline to my percentages and growing my business.
1429
01:34:57,409 --> 01:35:01,609
that's what's allowed me to, that mindset helped me a lot.
1430
01:35:02,013 --> 01:35:03,166
man that's awesome.
1431
01:35:03,166 --> 01:35:09,412
Throughout your career and the businesses you've run what has been the the most difficult
challenge that you faced?
1432
01:35:09,409 --> 01:35:10,121
Employees.
1433
01:35:10,121 --> 01:35:13,679
You know, you can't help but have these people become friends or acquaintances.
1434
01:35:13,679 --> 01:35:18,439
I mean, you know more than, you know, so you maybe don't make the right decisions at the
right time.
1435
01:35:18,439 --> 01:35:23,535
It's more of a, you know, we're small business and very loyal to people that help build
our business.
1436
01:35:23,535 --> 01:35:25,498
mean, sometimes to our...
1437
01:35:25,825 --> 01:35:34,709
dismay you know what I mean or you know and you know you don't do anything to have and
this is another piece of advice I was given early on and I remember sitting at a meeting
1438
01:35:34,709 --> 01:35:39,235
and it was a farmers insurance meeting and one of the old timers I was talking to him and
1439
01:35:39,371 --> 01:35:41,883
It was the crash of 99, it was the tech wreck of 99.
1440
01:35:41,883 --> 01:35:44,765
And I was worried about the stock market and everybody's gonna lose money.
1441
01:35:44,765 --> 01:35:49,530
And you start hearing all this like, geez, you and I was just new in the business.
1442
01:35:49,530 --> 01:35:52,252
And he goes, Van, get ready, there's gonna be a ton of business you're gonna write.
1443
01:35:52,252 --> 01:35:53,303
I'm like, what are you talking about?
1444
01:35:53,303 --> 01:35:56,932
He said, no, when people feel vulnerable, they're gonna buy more insurance.
1445
01:35:56,932 --> 01:35:58,904
And I thought they'd buy less insurance, right?
1446
01:35:58,904 --> 01:35:59,652
They can't afford it.
1447
01:35:59,652 --> 01:36:00,645
He said, no, they're gonna buy more.
1448
01:36:00,645 --> 01:36:02,237
And I thought, man, that's great.
1449
01:36:02,237 --> 01:36:03,078
And that happened.
1450
01:36:03,078 --> 01:36:09,872
And then the other guy, the same guy told me one day, goes, I was hiring employees and I
was having problems with a particular employee.
1451
01:36:09,872 --> 01:36:12,506
And he said, man, just remember one thing.
1452
01:36:12,827 --> 01:36:18,362
On career day at school, nobody stood up and said, one day I wanna go work for Van
Carlson.
1453
01:36:18,362 --> 01:36:26,662
And that really put it in perspective for me is like, yeah, these people are not here
because, you know, like how much do they owe me?
1454
01:36:26,662 --> 01:36:27,262
You know what I mean?
1455
01:36:27,262 --> 01:36:36,042
It's like, you know, and it was one of those moments in my head that stuck with me over
the years that I've always, you know, kind of put that in the back room in my head.
1456
01:36:36,042 --> 01:36:38,762
It's like, yeah, nobody, nobody planned to work for me.
1457
01:36:38,762 --> 01:36:40,342
You know, I didn't plan to have this business.
1458
01:36:40,342 --> 01:36:41,002
You know what I mean?
1459
01:36:41,002 --> 01:36:47,096
Nobody stood up and, you know, so it's just a, you know, consequences of, you know, one
turned out of the
1460
01:36:47,096 --> 01:36:49,096
other turn, right, while we're here.
1461
01:36:49,316 --> 01:36:59,716
no, but I, so I try to keep those two references in my head when I'm dealing with
employees, you know, but at the same time, you know, what you expect for something to
1462
01:36:59,716 --> 01:37:08,856
happen doesn't happen and employees at the end of the day are, you know, good people and
hard workers, but at the end of the day, they're not family.
1463
01:37:08,856 --> 01:37:16,716
And sometimes you, you kind of, you know, again, we're very loyal to who helped us grow
our business sometimes to.
1464
01:37:16,820 --> 01:37:18,549
to our mistakes.
1465
01:37:18,549 --> 01:37:19,120
Yeah,
1466
01:37:19,107 --> 01:37:22,189
yeah, you still have to grow a business.
1467
01:37:22,489 --> 01:37:24,331
yeah.
1468
01:37:24,452 --> 01:37:29,908
Are there any strong opinions that you once held and have changed your mind about?
1469
01:37:29,907 --> 01:37:33,021
yeah, a big one would be culture.
1470
01:37:33,021 --> 01:37:36,634
I never, I'm kind like an old football coach, right?
1471
01:37:36,634 --> 01:37:39,487
You know, get up and walk it off, you'll be fine kind of thing, right?
1472
01:37:39,487 --> 01:37:41,718
I mean, that's my management style.
1473
01:37:41,718 --> 01:37:42,789
I'm not saying that's rough.
1474
01:37:42,789 --> 01:37:44,361
That doesn't work today.
1475
01:37:44,361 --> 01:37:47,763
And maybe it shouldn't work, right?
1476
01:37:47,763 --> 01:37:51,807
I'm kind of coming more to that, but also just creating a culture inside your company.
1477
01:37:51,807 --> 01:37:54,825
I never gave much value to that, quite honestly.
1478
01:37:54,825 --> 01:37:57,609
But I do recognize the value of it today.
1479
01:37:57,609 --> 01:38:00,952
And I'm glad I had a son that came in and really ran.
1480
01:38:00,952 --> 01:38:07,600
He's the president of SRA, which he'll eventually be the CEO here in a couple years, if
not maybe a year, we'll see.
1481
01:38:07,600 --> 01:38:10,304
he is really into it.
1482
01:38:10,823 --> 01:38:13,164
Yeah, yeah, for sure.
1483
01:38:14,886 --> 01:38:15,789
Yeah.
1484
01:38:15,789 --> 01:38:22,146
Yeah, it's been great that he saw the value of that, he instituted that in our company and
it's paid off drastically for us.
1485
01:38:22,146 --> 01:38:26,036
So company culture was definitely something I would not have seen.
1486
01:38:26,026 --> 01:38:27,608
Awesome, awesome.
1487
01:38:27,608 --> 01:38:32,074
Well, this is uh my favorite question I ask of every guest.
1488
01:38:32,074 --> 01:38:35,167
Are you a person of a particular faith tradition?
1489
01:38:35,167 --> 01:38:40,553
And if so, how has that affected your business management or your leadership?
1490
01:38:40,550 --> 01:38:45,467
You know, definitely a Christian, Methodist, and born Methodist, raised Methodist.
1491
01:38:45,467 --> 01:38:46,629
You know, it comes and goes.
1492
01:38:46,629 --> 01:38:51,875
You know, when you're growing a business and you're just putting your head down and
getting after it, do think you kind of put things kind of...
1493
01:38:51,875 --> 01:38:55,800
You do kind of, I guess, lose your path a little bit.
1494
01:38:55,800 --> 01:38:56,773
You know, maybe you have...
1495
01:38:56,773 --> 01:39:02,853
Maybe you just kind of lose your, I wouldn't say you lose faith, but you just lose your
discipline to the faith.
1496
01:39:03,733 --> 01:39:08,253
But as you get older and you start to have grandkids again, man, it comes back around and
you're tenfold.
1497
01:39:08,253 --> 01:39:11,233
mean, it's just, and then you just feel blessed.
1498
01:39:11,233 --> 01:39:17,244
I mean, honestly, with so many things that have gone right and that could have gone wrong.
1499
01:39:17,244 --> 01:39:21,015
You know, you definitely, I would say, and it's been good.
1500
01:39:21,015 --> 01:39:25,538
I mean, it's been good for me personally, for that to come back into play into my life.
1501
01:39:25,538 --> 01:39:28,910
yeah, for a while I was definitely not, you know, who needed it kind of guy.
1502
01:39:28,910 --> 01:39:30,160
You I can do it all on my own.
1503
01:39:30,160 --> 01:39:34,101
I you really start, and I say this a lot, you gotta be careful to believe your own BS.
1504
01:39:34,101 --> 01:39:36,542
And we can start to believe it pretty quickly.
1505
01:39:36,862 --> 01:39:40,945
and that can get you in trouble.
1506
01:39:40,945 --> 01:39:45,479
I wasn't no saint by no means down the road.
1507
01:39:45,479 --> 01:39:48,601
I used be pretty rough as a leader of the company.
1508
01:39:48,601 --> 01:39:50,153
I was pretty black and white.
1509
01:39:50,153 --> 01:39:54,801
But as time goes on and you get more comfortable with your own skin...
1510
01:39:54,801 --> 01:39:57,533
And you have people around you that trust you and then mentors.
1511
01:39:57,533 --> 01:39:59,675
Mentors are a big play in my life too.
1512
01:39:59,675 --> 01:40:04,848
People around me, I surround myself with really good business people but also a lot of
people with faith.
1513
01:40:05,047 --> 01:40:07,719
Okay, great, great.
1514
01:40:08,179 --> 01:40:12,124
And is there anybody that you'd like to see on this show?
1515
01:40:12,124 --> 01:40:18,160
Somebody that has a really unique business, works in a really unique industry, you might
have an interesting story to tell.
1516
01:40:18,160 --> 01:40:19,252
Yeah, I do actually.
1517
01:40:19,252 --> 01:40:20,916
I've got a couple of folks in mind.
1518
01:40:20,916 --> 01:40:22,646
if you're in it, yeah, love to.
1519
01:40:22,646 --> 01:40:26,694
One guy I know, actually I'm going to have, I'm going go meet with him this afternoon.
1520
01:40:26,694 --> 01:40:28,056
uh
1521
01:40:28,053 --> 01:40:34,526
We haven't seen each other for probably a couple months, but he runs a, he runs a, and
he's a hired gun.
1522
01:40:34,526 --> 01:40:41,361
So I like being around hired, but I mean by hired guns, he's a CEO for a very large
company, but he's not the founder.
1523
01:40:41,361 --> 01:40:47,663
I'm a founder of a business and I love to surround myself with guys that are running
businesses that didn't start them.
1524
01:40:47,684 --> 01:40:51,019
I learned a lot from them, much more so than people that are founded business.
1525
01:40:51,019 --> 01:40:56,379
I don't know why I belong to a business group, a CEO peer group, and that's been really
great for me too.
1526
01:40:56,379 --> 01:40:58,524
Honestly, but yeah, yeah, absolutely.
1527
01:40:58,524 --> 01:41:00,098
You could definitely talk about that.
1528
01:41:00,096 --> 01:41:00,576
Okay.
1529
01:41:00,576 --> 01:41:03,891
Yeah, I'll shoot you an email, see if maybe you'd be up for making an introduction.
1530
01:41:03,891 --> 01:41:09,429
Do you have any thoughts about what makes the difference between kind of a hired gun
versus a founder?
1531
01:41:09,429 --> 01:41:11,611
What differences have you noticed?
1532
01:41:12,101 --> 01:41:22,316
Well, I can tell you that risk tolerance, it's been really interesting sitting in meetings
and somebody's deciding to buy another business or...
1533
01:41:22,343 --> 01:41:28,194
make a decision to pivot their business or their company and founders are like, yeah,
let's go.
1534
01:41:28,194 --> 01:41:29,897
You know, let's do this thing.
1535
01:41:29,897 --> 01:41:35,319
But hired guns are very strategic in their decision making, much more so than a founder
is.
1536
01:41:35,319 --> 01:41:37,791
And it has to do with entrepreneur.
1537
01:41:37,791 --> 01:41:43,273
And I'm not saying the hired gun's not an entrepreneur, but much more strategic in their
decision making.
1538
01:41:43,273 --> 01:41:44,173
And they almost have to be.
1539
01:41:44,173 --> 01:41:46,784
You hired them for that reason, you know?
1540
01:41:47,085 --> 01:41:49,490
But that's a big difference in their mindsets.
1541
01:41:49,490 --> 01:41:50,472
Both are good.
1542
01:41:50,472 --> 01:41:52,036
Both are at the right time.
1543
01:41:52,036 --> 01:41:54,579
It can make a big difference in your business.
1544
01:41:54,656 --> 01:41:56,307
Yeah, that's great.
1545
01:41:56,307 --> 01:42:04,501
I think that's probably a transition that most business owners, if they don't go through
that transition themselves, they suffer because of it.
1546
01:42:04,501 --> 01:42:12,314
When you're starting out and bootstrapping something, building it from scratch, it's the
big play, the going with your gut, taking risks.
1547
01:42:12,314 --> 01:42:14,585
That's what got you to where you are.
1548
01:42:14,725 --> 01:42:19,934
And then as you get established, as you have some chips to play with, so to speak,
1549
01:42:19,934 --> 01:42:27,366
The strategy has to change a little bit because uh the strategy that got you to where you
are doesn't necessarily get you to the next level.
1550
01:42:27,760 --> 01:42:37,443
No, in fact, if most founders can create a lot of unnecessary disruption and I've been
guilty this.
1551
01:42:37,443 --> 01:42:42,128
If you get bored, you will find something to create chaos with.
1552
01:42:42,221 --> 01:42:47,565
I've recognized that and I've been witness to it outside of my company too where we get
bored.
1553
01:42:47,565 --> 01:42:51,546
mean, entrepreneurs are great, but are you a builder or are you a maintainer?
1554
01:42:51,546 --> 01:42:56,148
And if you built your business up to a certain level to maintain it, you're gonna get
bored.
1555
01:42:56,148 --> 01:43:01,611
And if you get bored, you're probably gonna create some chaos internally that you
otherwise, so yeah, you're absolutely right.
1556
01:43:01,611 --> 01:43:04,232
To make that pivot and make that recognition.
1557
01:43:04,232 --> 01:43:07,364
I'm just fortunate my son is completely opposite of me in a lot of ways.
1558
01:43:07,364 --> 01:43:10,255
He's more operational driven.
1559
01:43:10,255 --> 01:43:14,346
where I would, you I'm the guy that says, can't that get done tomorrow?
1560
01:43:14,346 --> 01:43:18,746
Why do we gotta, you know, what's this 90 day sprint thing?
1561
01:43:18,746 --> 01:43:20,806
Why is it gonna take 90 days for us to do this?
1562
01:43:20,806 --> 01:43:22,286
That doesn't sound right.
1563
01:43:22,286 --> 01:43:22,658
You know, something
1564
01:43:22,700 --> 01:43:24,280
like that, you know.
1565
01:43:24,415 --> 01:43:27,800
We'll just stay up all night and work for three days straight and it'll be done.
1566
01:43:27,800 --> 01:43:29,326
That's what we used to do.
1567
01:43:29,326 --> 01:43:29,854
Yeah.
1568
01:43:29,854 --> 01:43:30,995
the problem?
1569
01:43:31,415 --> 01:43:32,626
that's great.
1570
01:43:32,626 --> 01:43:37,880
Well, my last question to either settle or fuel the debate.
1571
01:43:37,880 --> 01:43:42,554
I know it is a little bit outside of your expertise, but I'm sure you've used plenty of
them.
1572
01:43:42,554 --> 01:43:47,717
If you have a job to do and require a cordless tool, which brands do you prefer?
1573
01:43:48,195 --> 01:43:49,911
Milwaukee all day long.
1574
01:43:49,911 --> 01:43:52,264
Milwaukee, okay, they're pulling ahead.
1575
01:43:52,264 --> 01:44:02,677
I think oh we're working on coming up with an official tally but DeWalt in Milwaukee were
kind of running head and head and I think now Milwaukee's pulling ahead so
1576
01:44:03,149 --> 01:44:05,831
man, their impact tools are nothing like them.
1577
01:44:05,952 --> 01:44:06,793
I love them.
1578
01:44:06,793 --> 01:44:08,455
I can't get enough of it.
1579
01:44:08,455 --> 01:44:12,900
I'll sit there and watch YouTube videos on new Milwaukee tools coming out all the time.
1580
01:44:12,900 --> 01:44:13,889
I love it.
1581
01:44:13,889 --> 01:44:17,031
It's amazing how uh fascinating that can be.
1582
01:44:17,031 --> 01:44:19,352
I'm a DeWalt guy, but I do the same thing.
1583
01:44:19,352 --> 01:44:24,444
Some of the new stuff that's coming out from Milwaukee and a few other manufacturers.
1584
01:44:24,444 --> 01:44:27,705
It's like, sometimes I wonder what problem were you trying to solve?
1585
01:44:27,705 --> 01:44:29,377
Who thought this tool up?
1586
01:44:29,377 --> 01:44:36,036
You know, I've never been sitting there going, man, I wish I had one of those, but now
that it exists, I want one.
1587
01:44:36,036 --> 01:44:40,748
did you see the concrete float that came out that you can actually sit in now and it
floats on them?
1588
01:44:41,128 --> 01:44:42,489
Like man, that'd be fun.
1589
01:44:42,489 --> 01:44:47,231
But I love my Milwaukee grease gun though.
1590
01:44:47,231 --> 01:44:52,903
There is, my gosh, for greasing tractors up, there is nothing better.
1591
01:44:52,903 --> 01:44:58,115
That thing's just, yeah, saves the forum a lot from that old.
1592
01:44:58,872 --> 01:45:01,772
The first time I saw one of those, I laughed at it.
1593
01:45:01,772 --> 01:45:04,412
was kind of really, you got to have a power grease gun.
1594
01:45:04,412 --> 01:45:06,072
can't just squirt it a couple of times.
1595
01:45:06,072 --> 01:45:10,072
And then I worked on a farm working my way through college.
1596
01:45:10,072 --> 01:45:16,772
And so I spent a lot of time greasing tractors and yeah, I got to be real good friends
with that electric grease gun.
1597
01:45:16,815 --> 01:45:17,676
Yep.
1598
01:45:18,601 --> 01:45:19,802
That's funny.
1599
01:45:19,851 --> 01:45:21,723
Well, Van, thank you very much.
1600
01:45:21,723 --> 01:45:24,435
I really appreciate you taking the time and chatting with us.
1601
01:45:24,435 --> 01:45:28,478
And I hope that I'm sure all our listeners will get a lot out of that.
1602
01:45:28,478 --> 01:45:29,878
I love what you're doing.
1603
01:45:29,878 --> 01:45:39,124
I love the program you've put together and and taking advantage of that tax code that's
already there to save small and medium sized businesses some money really put their money
1604
01:45:39,124 --> 01:45:39,946
to work for them.
1605
01:45:39,946 --> 01:45:42,928
I hope that a lot of our listeners reach out to you.
1606
01:45:42,928 --> 01:45:49,528
and take advantage of your services for those that want to do that, what would be the best
way to get a hold of you?
1607
01:45:49,628 --> 01:45:53,411
You know, we own 831b.com website, honestly.
1608
01:45:53,411 --> 01:46:00,155
ah I'm van at 831b, v-a-n at 831b.com if they want to email me, but, excuse me.
1609
01:46:00,155 --> 01:46:03,277
The biggest thing is, you got to, you know, go do your own due diligence.
1610
01:46:03,277 --> 01:46:04,238
Learn about this thing.
1611
01:46:04,238 --> 01:46:06,699
It's, you know, take some time.
1612
01:46:06,760 --> 01:46:07,740
Go to our website.
1613
01:46:07,740 --> 01:46:09,802
It's designed to be an educational website.
1614
01:46:09,802 --> 01:46:11,443
There's a lot of case studies in there.
1615
01:46:11,443 --> 01:46:13,004
You know, you can pick your own industry out.
1616
01:46:13,004 --> 01:46:15,326
There's typically a case study on your industry.
1617
01:46:15,326 --> 01:46:16,717
How would this apply to you?
1618
01:46:16,717 --> 01:46:17,549
How does it work?
1619
01:46:17,549 --> 01:46:24,716
I didn't start thinking about the timing of when I should be starting to look at this type
of thing as a real tool for my business.
1620
01:46:24,716 --> 01:46:28,160
Not only to maintain the cash flow, but also eventually grow the business as well.
1621
01:46:28,160 --> 01:46:30,492
yeah, that's where I would tell them to go.
1622
01:46:30,492 --> 01:46:32,744
mean, it's just, especially if you haven't heard about it.
1623
01:46:32,744 --> 01:46:35,736
I mean, you got to do your own homework, especially with AI today.
1624
01:46:35,736 --> 01:46:36,957
I mean, it's easy to do, right?
1625
01:46:36,957 --> 01:46:40,930
But this is just another tool in toolbox.
1626
01:46:40,930 --> 01:46:43,787
And at the right time, it's a hell of a tool.
1627
01:46:43,787 --> 01:46:45,563
Yeah, awesome.
1628
01:46:45,563 --> 01:46:48,522
And you mentioned you're coming out with a book.
1629
01:46:48,522 --> 01:46:50,337
When is that going to be available?
1630
01:46:50,337 --> 01:46:51,838
You know, we're hoping in May.
1631
01:46:51,838 --> 01:46:53,538
We're in the final edit right now.
1632
01:46:53,538 --> 01:46:54,959
uh I'm really happy.
1633
01:46:54,959 --> 01:46:57,420
I'll be honest with I'm pleasantly surprised.
1634
01:46:57,420 --> 01:46:58,481
Never wrote a book before.
1635
01:46:58,481 --> 01:47:00,623
And it's been a great experience, actually.
1636
01:47:00,623 --> 01:47:05,695
uh But it's not like more of uh a decision making versus a textbook.
1637
01:47:05,695 --> 01:47:14,289
It dives a little bit into the code, but really, where should you be at in business world
when you start to look at tools like this and make the right decision for your business
1638
01:47:14,289 --> 01:47:15,304
and your family?
1639
01:47:15,304 --> 01:47:15,815
Yeah.
1640
01:47:15,809 --> 01:47:17,291
And what was that title again?
1641
01:47:17,291 --> 01:47:19,044
I liked that when you rattled it off.
1642
01:47:19,044 --> 01:47:20,010
I forgot what it was.
1643
01:47:20,010 --> 01:47:24,099
was weathering a storm when winning is expected.
1644
01:47:24,178 --> 01:47:25,364
Okay, that's good.
1645
01:47:25,364 --> 01:47:27,011
That's really good.
1646
01:47:27,011 --> 01:47:28,624
That'll be interesting.
1647
01:47:28,624 --> 01:47:29,226
Thanks.
1648
01:47:29,226 --> 01:47:31,834
mean, hey, as business owners, we're expect to win.
1649
01:47:31,834 --> 01:47:32,938
We have to win.
1650
01:47:32,938 --> 01:47:33,748
So.
1651
01:47:33,748 --> 01:47:35,338
yeah, that's why we get started.
1652
01:47:35,338 --> 01:47:35,896
So.
1653
01:47:35,896 --> 01:47:36,792
Yep.
1654
01:47:36,978 --> 01:47:37,378
Awesome.
1655
01:47:37,378 --> 01:47:38,759
Well, again, thank you very much.
1656
01:47:38,759 --> 01:47:43,332
I really appreciate the time and the knowledge, the expertise that you bring to the table.
1657
01:47:43,332 --> 01:47:47,354
And thank you guys for joining us here on From the Ground Up Show.
1658
01:47:47,354 --> 01:47:51,597
Again, make sure you follow us on social media at From the Ground Up Show.
1659
01:47:51,597 --> 01:47:57,681
Like, share, follow, subscribe on social media, YouTube, your favorite podcast platform.
1660
01:47:57,681 --> 01:48:00,282
Make sure you hit that auto download button.
1661
01:48:00,282 --> 01:48:03,474
We rely on you guys to get the word out and help the show grow.
1662
01:48:03,474 --> 01:48:05,005
And that's the best way you can help us.
1663
01:48:05,005 --> 01:48:05,741
So.
1664
01:48:05,741 --> 01:48:07,842
Until next time, keep grinding.
00:00:00,000 --> 00:00:03,375
we'll have so many write offs, we'll be able to write ourselves right out of business.
2
00:00:03,375 --> 00:00:04,226
Yes.
3
00:00:04,500 --> 00:00:06,320
I mean, they make a dollar, they spend a dollar ten.
4
00:00:06,320 --> 00:00:11,580
I mean, it's just the mentality of, you know, and yeah, exactly.
5
00:00:11,920 --> 00:00:14,943
make your business decisions as business decisions.
6
00:00:14,943 --> 00:00:21,197
take advantage of every write off you can, but you never make a business decision because
of the write off.
7
00:00:21,197 --> 00:00:24,109
You write off things that were wise business decisions
8
00:00:24,108 --> 00:00:28,660
I want to take a moment to tell you about this episode's sponsor MacArthur Company.
9
00:00:28,660 --> 00:00:32,822
As a former contractor, I know the importance of working with a great team.
10
00:00:32,822 --> 00:00:35,523
That team includes more than your employees.
11
00:00:35,523 --> 00:00:36,650
You need what you need
12
00:00:36,650 --> 00:00:38,753
on time and at the right location.
13
00:00:38,753 --> 00:00:41,074
Competitive pricing sure helps too.
14
00:00:41,074 --> 00:00:44,436
A good relationship with your supplier can make a huge difference.
15
00:00:44,436 --> 00:00:47,437
That is why I always use MacArthur Company.
16
00:00:47,437 --> 00:00:49,578
At MacArthur, you are more than just a number.
17
00:00:49,578 --> 00:00:52,469
You are a person, a customer, and a friend.
18
00:00:52,469 --> 00:00:59,665
With branches throughout the United States, MacArthur is big enough to handle your most
demanding needs, but they do it with small town service.
19
00:00:59,665 --> 00:01:04,769
MacArthur isn't another big box store run by a board answering to stockholders.
20
00:01:04,769 --> 00:01:14,396
They are employee owned, making them one of the last independent suppliers serving all of
your commercial, industrial, and residential building envelope needs.
21
00:01:14,697 --> 00:01:22,623
Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with
great service and a personal touch.
22
00:01:22,751 --> 00:01:31,375
If great service and good pricing don't win you over, make sure you check out their
customer incentive program, where every purchase earns points towards a free vacation.
23
00:01:31,375 --> 00:01:35,097
I am already packing for my next MacArthur incentive trip.
24
00:01:35,097 --> 00:01:43,440
Call or check online to find your nearest MacArthur warehouse so you too can enjoy
superior service and start earning points towards your next vacation.
25
00:01:43,440 --> 00:01:46,202
Get what you need, when and where you need it.
26
00:01:46,202 --> 00:01:48,002
All the service without the hassle.
27
00:01:48,002 --> 00:01:49,343
MacArthurCo.com.
28
00:01:59,943 --> 00:02:09,451
Hey there and welcome to From the Ground Up Show, the show where we encourage and inspire
the next generation of free thinking leaders by telling the stories of those that have
29
00:02:09,451 --> 00:02:12,254
been there, done that and are still getting it done.
30
00:02:12,254 --> 00:02:16,077
Building a life that they love with their hearts, their hands and their hustle.
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00:02:16,077 --> 00:02:17,926
I'm your host, Erick Loden.
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00:02:17,926 --> 00:02:20,717
If you guys are enjoying the content, help me out.
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Check us out on social media at from the ground up show.
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Make sure you subscribe to the podcast or the YouTube channel.
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And if you can click that auto download button that really helps us out getting those
early downloads helps us move up in the algorithms.
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And of course, like, share, subscribe, follow all of the things.
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We really appreciate that.
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Now you can get your own From the Ground Up show merch.
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00:02:44,188 --> 00:02:46,571
Check out our store online at
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00:02:46,570 --> 00:02:49,694
shop.fromthegroundupshow.com.
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Again, is
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shop.fromthegroundupshow.com.
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So today I'm excited.
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00:02:56,938 --> 00:02:59,735
I have a special guest, Van Carlsen.
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00:02:59,735 --> 00:03:03,838
uh This is a little bit of a deviation from our normal format.
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Van is a bit of a more white collar worker, but he's got an entrepreneurial streak in
there as well.
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And I think he has some great information that will be very beneficial to those of us that
work in the trades and in non-traditional career paths.
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Van works with many blue collar companies to mitigate insurance risks.
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Van is the founder and CEO of SRA 831B.
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He has more than 25 years experience working in the insurance industry and is going to
help us better understand the risks that we face and how we can mitigate them.
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So, Van, thanks for joining the show.
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00:03:43,573 --> 00:03:45,167
Yeah, thanks for having me on your show, Erick.
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00:03:45,167 --> 00:03:46,716
Appreciate the opportunity.
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Awesome.
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00:03:47,609 --> 00:03:57,817
Well, I'm sure our listeners are anxious to dive into the advice you have for us, but we
like to start every show getting to know you a little bit and connecting a little bit.
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So can you tell me a little bit about where you grew up and what your childhood was like?
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00:04:03,531 --> 00:04:04,111
Yeah, you bet.
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uh grew up in Central Valley of California, farm kid.
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Did that for many years and then my folks back in the early 80s decided to sell everything
and moved to Idaho.
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And from there, my dad bought a couple small businesses, ran local convenience stores and
pretty much worked my, you if wasn't running a tractor, we were working at one of the
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grocery stores my dad owns.
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00:04:25,482 --> 00:04:26,810
So pretty much.
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That was just what you did as a kid back in the 80s.
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And I liked being the farm kid mostly.
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It was a great experience for me.
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I worked at a lot of farmers markets on the weekends and that's kind where I learned how
to sell.
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I mean, I remember my dad would say, hey, let's sell everything at the end of the day when
the farmers market was getting ready to shut down.
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And I think I was selling watermelons, three, four dollars, just so we didn't have to
bring them home.
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00:04:48,543 --> 00:04:54,947
uh But uh I remember yelling that out as a little kid when I was, I don't know, seven or
eight years old.
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Been doing it ever since, been yelling it out ever since.
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00:04:57,765 --> 00:05:03,255
that's kind of where all that gets, I guess this is it kind of started, being the
entrepreneur, so.
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Yeah, yeah, it sounds like that entrepreneurial streak runs pretty deep.
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00:05:07,278 --> 00:05:10,414
So what did education look like for you?
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You know, education wasn't that important to me, like most kids I guess.
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I played a lot of sports, went to a very small school,
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got a scholarship to play football, that kind of went south, and I ended up joining the
Coast Guard for four years.
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And after four years of that, I came back and actually had my GI Bill and finished out
here at Boise State University.
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And with a political science degree, I was going to become a lawyer, go to law school, and
I'm glad that didn't happen.
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I'm not a fan of lawyers in any level and I couldn't imagine being one.
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But no, I got into risk management right about that time, started PNC agency and as they
say, the rest is history.
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But it's been almost 30 years, well will be, yeah it was 96.
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So yeah, is that 30 years?
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I think that is, damn that is 30 years.
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Yeah, I guess.
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man.
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So a political science background, now working as an entrepreneur and specifically in the
insurance space, uh do you utilize your education much in your current career?
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I would say not.
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00:06:13,066 --> 00:06:22,577
think what the biggest thing, know, college is getting kind of a knock right now, which is
justifiable in my opinion in a lot of ways, but I do think it does create the narrow paths
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to critical thinking, hopefully.
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That's what it did for me, honestly, was to be more of critical thinker in my decision
making.
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that's...
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00:06:34,761 --> 00:06:39,684
You know, I would attribute that more than anything as far as any kind of degree out
there.
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I was never going to be a, you know, the doctor.
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I mean, I never specifically would have focused in on any one.
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It was a liberal arts degree at the end of the day, political science was, but I liked it.
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I loved history.
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Actually, saw myself as a, honestly, I was going to become a teacher originally.
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But then when I found out they got rid of corporal punishment somehow along the line in
those four years of me being away.
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I'm like, I went to a class one time and the guy, a lot of kids were back talking.
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was observing a junior high class for one of my college credits.
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And I'm like, hey, these kids are kind of talking and they broke for recess or whatever.
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I asked the teacher, said, hey, I noticed these kids are kind of, it was already after
spring break.
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And I said, they're pretty active right now.
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They're talking back, they're interrupting you.
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I go, why don't you have a paddle on the wall?
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And he looked at me like, what?
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And I said, yeah, that's what my teachers did.
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That's what I plan to do.
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And he's like, no, man, you can't do that anymore.
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I'm like, well, I'm out.
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I'm literally at that point.
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I said, all you got is carrots?
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I can't do business with people that just have carrots.
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So that's why I went a different route very quickly after that.
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I had no interest in being a public school teacher at that point.
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anyway.
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man, that's great.
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That's funny.
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As long as you can smack kids around, you're good to go, otherwise...
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Yeah.
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it, right?
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mean, there's nothing for hell's sakes.
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00:08:06,690 --> 00:08:07,404
mean...
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00:08:07,404 --> 00:08:10,766
yeah, there's no way I could make it as a teacher in today's world.
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ah I've got some friends and relatives that are teachers and the things they put up with,
the way that they have to go about running their classroom, it'd just be untenable for me.
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yeah, yeah.
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man, great teachers are few and far between and they don't get paid enough.
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So.
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00:08:29,379 --> 00:08:30,272
No, that's for sure.
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uh
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I want to take a moment to tell you about this episode's sponsor MacArthur Company.
132
00:08:37,133 --> 00:08:41,295
As a former contractor, I know the importance of working with a great team.
133
00:08:41,295 --> 00:08:43,996
That team includes more than your employees.
134
00:08:43,996 --> 00:08:45,117
You need what you need
135
00:08:45,117 --> 00:08:45,238
on
136
00:08:45,329 --> 00:08:47,275
time and at the right location.
137
00:08:47,275 --> 00:08:49,596
Competitive pricing sure helps too.
138
00:08:49,596 --> 00:08:52,958
A good relationship with your supplier can make a huge difference.
139
00:08:52,958 --> 00:08:55,959
That is why I always use MacArthur Company.
140
00:08:55,959 --> 00:08:58,100
At MacArthur, you are more than just a number.
141
00:08:58,100 --> 00:09:00,991
You are a person, a customer, and a friend.
142
00:09:00,991 --> 00:09:08,187
With branches throughout the United States, MacArthur is big enough to handle your most
demanding needs, but they do it with small town service.
143
00:09:08,187 --> 00:09:13,291
MacArthur isn't another big box store run by a board answering to stockholders.
144
00:09:13,291 --> 00:09:22,918
They are employee owned, making them one of the last independent suppliers serving all of
your commercial, industrial, and residential building envelope needs.
145
00:09:23,219 --> 00:09:31,145
Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with
great service and a personal touch.
146
00:09:31,273 --> 00:09:39,897
If great service and good pricing don't win you over, make sure you check out their
customer incentive program, where every purchase earns points towards a free vacation.
147
00:09:39,897 --> 00:09:43,619
I am already packing for my next MacArthur incentive trip.
148
00:09:43,619 --> 00:09:51,962
Call or check online to find your nearest MacArthur warehouse so you too can enjoy
superior service and start earning points towards your next vacation.
149
00:09:51,962 --> 00:09:54,724
Get what you need, when and where you need it.
150
00:09:54,724 --> 00:09:56,524
All the service without the hassle.
151
00:09:56,524 --> 00:09:57,865
MacArthurCo.com.
152
00:09:57,865 --> 00:10:06,265
Well, it sounds like you came from an entrepreneurial background, kind of a blue collar
childhood and growing up.
153
00:10:06,265 --> 00:10:12,305
Can you tell us a little bit about you mentioned a few jobs there and a transition through
your career.
154
00:10:12,305 --> 00:10:14,005
But can we dive into that a little bit deeper?
155
00:10:14,005 --> 00:10:20,185
How do you get from a political science degree to founding SRA?
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00:10:20,357 --> 00:10:22,809
Yeah, was actually working at FedEx.
157
00:10:22,809 --> 00:10:24,730
So I worked my way through school.
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00:10:24,730 --> 00:10:27,752
You worked at UPS, FedEx, here in Boise.
159
00:10:27,752 --> 00:10:29,653
And I was going to go to the FedEx route.
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00:10:29,653 --> 00:10:34,036
And honestly, I trained under the corporate management program during college.
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00:10:34,036 --> 00:10:38,379
And back then, you had to have a college degree and all these other things to become a
manager for FedEx.
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00:10:38,379 --> 00:10:39,599
And I was...
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00:10:39,767 --> 00:10:47,998
I remember hopping on planes, flying to Memphis, and then from there I'd fly to other
parts of the country applying for management positions.
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00:10:47,998 --> 00:10:52,518
And I applied, I was stationed down in Florida for a couple years, so I went down to Fort
Lauderdale.
165
00:10:52,918 --> 00:10:57,558
I was interviewing for a job there as a manager, and I would have to operate.
166
00:10:57,558 --> 00:11:02,918
At that point I had my oldest son, and then my daughter was just born.
167
00:11:03,078 --> 00:11:05,898
And I thought to myself,
168
00:11:06,046 --> 00:11:08,449
I'd have to uproot my family, move to a place.
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00:11:08,449 --> 00:11:14,613
Florida's great place, but back then even there was a lot of issues back in late 90s
around that part of the world.
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00:11:14,613 --> 00:11:17,484
But I just thought, man, this is not what I want for my family.
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00:11:17,484 --> 00:11:18,775
And so I took the risk.
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00:11:18,775 --> 00:11:22,158
I uh started as a Farmers Insurance agent, actually.
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00:11:22,158 --> 00:11:23,879
And it was scratch agency.
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00:11:23,879 --> 00:11:29,452
you literally, I remember back then they didn't have caller ID, so telemarketing, local
phone calls.
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00:11:29,452 --> 00:11:31,050
I bought mortgage leads.
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00:11:31,050 --> 00:11:42,101
started my own insurance agency literally from scratch and within eight months, nine
months, was a I was a top producer at that point relative to my peers in the area and I
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00:11:42,101 --> 00:11:52,904
was offered an agency and I took it and that was in a town, a little town called Meridian,
Idaho, which is now, when I started it was 24,000 people, I think now it has...
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00:11:52,904 --> 00:11:55,724
about 125,000 now.
179
00:11:55,724 --> 00:11:57,815
So it's grown by that far.
180
00:11:57,815 --> 00:11:59,655
But no, that's literally how it started.
181
00:11:59,675 --> 00:12:03,395
really, I just wanted the lifestyle for my family living in Idaho.
182
00:12:03,831 --> 00:12:13,318
I know working for, know, working, you know, I called it a job, you know, the, you know,
just over broke kind of stands for, you know, it's hard to make it a really strong living
183
00:12:13,318 --> 00:12:13,858
in Idaho.
184
00:12:13,858 --> 00:12:21,714
I kind of recognized that early on, pay scales are not the greatest, but you got the
quality of life and, you know, sometimes it'll still go in line.
185
00:12:21,714 --> 00:12:23,966
But if you start a business, you got the opportunity to do both.
186
00:12:23,966 --> 00:12:25,237
And that's kind of the way I saw that.
187
00:12:25,237 --> 00:12:26,117
And that's what we did.
188
00:12:26,117 --> 00:12:27,821
So, rent now for many years.
189
00:12:27,821 --> 00:12:31,815
Came in top one producer and all that good stuff, all the accolades of that.
190
00:12:31,815 --> 00:12:33,406
And then I started dabbing in everything.
191
00:12:33,406 --> 00:12:37,400
But honestly, my clients were subcontractors.
192
00:12:37,400 --> 00:12:38,661
I loved plumbing.
193
00:12:38,661 --> 00:12:40,882
I actually owned a plumbing business with my brother.
194
00:12:40,882 --> 00:12:42,874
I own four of the businesses now at this point.
195
00:12:42,874 --> 00:12:47,388
I own a construction company that does nothing but industrial refrigeration businesses.
196
00:12:47,388 --> 00:12:49,549
Really, we're licensed in five states.
197
00:12:50,030 --> 00:13:01,168
That's that's I started that company with my brother-in-law that company's sir has been
awesome to watch grow over the last several years and it's become a really Great business
198
00:13:01,168 --> 00:13:10,114
and I do love I'll be honest with you of all the businesses I've worked with and been
involved with I do like the service industry with some of the construction side of things
199
00:13:10,114 --> 00:13:12,015
and That's kind of got my
200
00:13:12,048 --> 00:13:15,230
Interest right now peaked more than anything.
201
00:13:15,230 --> 00:13:18,371
son runs this company now and my daughter's involved as the controller.
202
00:13:18,371 --> 00:13:22,474
She worked for Deloitte for a couple years and she's a CPA and she came to work for me a
couple years ago.
203
00:13:22,474 --> 00:13:25,755
And my youngest son actually works in that company, Sir.
204
00:13:25,755 --> 00:13:30,319
And uh Sir stands for Superior Industrial Refrigeration and I love that business.
205
00:13:30,319 --> 00:13:31,659
I love the cold store space.
206
00:13:31,659 --> 00:13:36,803
It's very unique, very niche-y still in the construction world and we've done well there.
207
00:13:36,803 --> 00:13:39,704
uh
208
00:13:40,620 --> 00:13:46,592
I own some, they call them rave laundromats, I started laundromats with my business
partner probably about eight years ago.
209
00:13:46,809 --> 00:13:47,590
here in the Valley.
210
00:13:47,590 --> 00:13:50,871
There was really needed and that business has been great.
211
00:13:50,871 --> 00:13:59,595
So yeah, think for the most part, what's afforded me to be able to grow my business though
is really what we do, what I predominantly do is risk management.
212
00:13:59,595 --> 00:14:07,923
And how do I position dollars more effectively and efficiently for business owners,
entrepreneurs such as myself, that really takes advantages of the downturns and the...
213
00:14:07,923 --> 00:14:12,046
unforeseen incidences that happen all the time now in the world we're in.
214
00:14:12,046 --> 00:14:14,367
When it comes to risk, it's gotten much more complex.
215
00:14:14,367 --> 00:14:18,206
So, kind of drove me there was 08, honestly.
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00:14:18,172 --> 00:14:19,092
Yeah.
217
00:14:19,473 --> 00:14:20,293
Okay.
218
00:14:20,293 --> 00:14:21,574
Man, that's interesting.
219
00:14:21,574 --> 00:14:23,785
I wasn't aware of all those other businesses.
220
00:14:23,785 --> 00:14:30,178
think you probably fit our traditional guest profile a lot more closely than I expected.
221
00:14:30,178 --> 00:14:37,262
thought insurance was kind of your focus, but you've been all over the map and got your
fingers in almost everything.
222
00:14:37,537 --> 00:14:40,117
Yeah, I do love it.
223
00:14:40,117 --> 00:14:42,477
When I see an opportunity, I can't say no to it.
224
00:14:42,477 --> 00:14:44,757
It's kind of a disease, I think, maybe.
225
00:14:44,757 --> 00:14:46,017
I don't know.
226
00:14:46,317 --> 00:14:50,985
I do drive my staff nuts with it, because I do come up with...
227
00:14:50,985 --> 00:14:52,046
all sorts of different things.
228
00:14:52,046 --> 00:14:54,809
And there's just a ton of opportunities out there right now.
229
00:14:54,809 --> 00:15:00,665
I know a couple right now that I'd love to, but I mean, I'm getting to the point where I
don't know if I want to do it, honestly.
230
00:15:00,665 --> 00:15:05,760
I'm 58 now, I'm starting to have grandkids, and so things start to pivot on that end.
231
00:15:05,760 --> 00:15:08,484
you know, it does eventually calm down a little bit.
232
00:15:08,484 --> 00:15:10,037
You don't want to...
233
00:15:10,037 --> 00:15:11,962
I think it starts to calm down anyway.
234
00:15:11,962 --> 00:15:13,052
I hope it does, but
235
00:15:13,304 --> 00:15:14,261
anyway.
236
00:15:14,261 --> 00:15:15,291
yeah, that's awesome.
237
00:15:15,291 --> 00:15:23,265
I think that's probably a trait of a lot of entrepreneurs is they see opportunity
everywhere they turn and it's hard not to take advantage of it.
238
00:15:23,265 --> 00:15:28,137
I think that's probably maybe more so than skill or intelligence or education.
239
00:15:28,137 --> 00:15:35,943
That's probably one of the determining factors with entrepreneurs is the ability to see
opportunity and the risk.
240
00:15:35,943 --> 00:15:40,822
Oh, I guess the lack of being risk adverse to go after it when you see it.
241
00:15:40,822 --> 00:15:41,313
So.
242
00:15:41,313 --> 00:15:42,985
I couldn't agree more.
243
00:15:42,985 --> 00:15:46,490
And it's really the risk tolerance you gotta have.
244
00:15:46,490 --> 00:15:52,578
mean, and being fearless when it comes to doing something nobody's ever done before or any
of kind of stuff.
245
00:15:52,578 --> 00:15:56,463
And you gotta have a chip on your shoulder to do it right, honestly.
246
00:15:56,463 --> 00:15:57,444
So.
247
00:15:57,811 --> 00:15:59,151
I think that's true as well.
248
00:15:59,151 --> 00:16:01,712
And yeah, that was the word I was looking for risk tolerance.
249
00:16:01,712 --> 00:16:04,233
It wasn't coming to me this morning.
250
00:16:04,233 --> 00:16:05,804
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251
00:16:05,978 --> 00:16:10,332
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261
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262
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263
00:16:54,389 --> 00:17:01,432
Well, do you want to tell us a little bit about I guess you have lots of businesses, but
specifically SRA.
264
00:17:01,432 --> 00:17:06,555
At what point did you decide to step away from farmers and start your own thing?
265
00:17:06,553 --> 00:17:09,039
Well, ironically enough, my wife came to work for me.
266
00:17:09,039 --> 00:17:12,055
Our kids were starting to get old enough, she came to work for me.
267
00:17:12,097 --> 00:17:14,263
And she actually, I sold my agency to her.
268
00:17:14,263 --> 00:17:15,330
When 08 hit...
269
00:17:15,330 --> 00:17:18,742
you know, the great recession, you know, I had a lot of clients.
270
00:17:18,742 --> 00:17:22,964
So we're growing, mean, Meridian's growing, you know, it's building homes, subdivisions.
271
00:17:22,964 --> 00:17:25,176
I mean, it was this pouring into the valley here.
272
00:17:25,176 --> 00:17:27,617
And uh all those guys were clients of mine.
273
00:17:27,617 --> 00:17:34,683
I mean, this sheetrock guys, to plumbers, to electricians, general contractors,
landscaper, I mean, you name it.
274
00:17:34,683 --> 00:17:38,915
you know, looking back, I you I love those guys.
275
00:17:38,915 --> 00:17:41,306
mean, they all became friends eventually.
276
00:17:41,306 --> 00:17:43,147
I mean, you work with them long enough, people become friends.
277
00:17:43,147 --> 00:17:52,707
friends in that relationship and especially if you're like-minded of business and you know
I loved the fourth quarter I mean the fourth quarter was good for me because you know
278
00:17:52,707 --> 00:18:02,672
these guys would call up and say hey I met with my CPA I got a tax liability I'm buying
two more trucks and a skid steer what's it gonna cost to insure
279
00:18:02,672 --> 00:18:03,174
Yeah.
280
00:18:03,174 --> 00:18:05,565
you know, everybody's making more money, you know?
281
00:18:05,565 --> 00:18:10,224
And, you know, looking back, I mean, all he kept doing is betting every year was going to
be better than previous year.
282
00:18:10,224 --> 00:18:18,345
You know, I mean, they take advantage of accelerated depreciation and then finance the
equipment and then afford a new boat or the bigger house and all those things, right?
283
00:18:18,565 --> 00:18:21,365
And, you know, I made the joke and it's true.
284
00:18:21,359 --> 00:18:23,179
I mean, they make a dollar, they spend a dollar ten.
285
00:18:23,179 --> 00:18:28,439
I mean, it's just the mentality of, you know, and yeah, exactly.
286
00:18:28,779 --> 00:18:29,639
And,
287
00:18:29,842 --> 00:18:37,862
You know, here comes 08, 09, you know, that, and unfortunately I was witness to a lot of
those, I lost a lot of those clients, that, you know, the loans and, you know, covenants
288
00:18:37,862 --> 00:18:45,562
and loans started the mean things and leverage was, you know, you didn't want to be
leveraged, over leveraged because there was a sudden halt.
289
00:18:45,562 --> 00:18:47,082
It was like a slow stop.
290
00:18:47,082 --> 00:18:50,093
It was like, you know, it was like hitting a wall.
291
00:18:50,093 --> 00:18:55,033
you know, so then I, you know, I was kind of exposed to the idea of managing self-insured
risk.
292
00:18:55,531 --> 00:18:57,742
through a tax code called 831B.
293
00:18:57,742 --> 00:19:00,403
At the time, I wasn't that interested in it, quite honestly.
294
00:19:00,403 --> 00:19:02,473
Didn't seem to make sense for my business owners.
295
00:19:02,473 --> 00:19:04,305
I didn't really see the lines, you know.
296
00:19:04,305 --> 00:19:08,507
And I thought traditional insurance was doing a good job and honestly, it was pretty
cheap.
297
00:19:08,507 --> 00:19:15,269
And so this idea of, you know, and then here comes 08 and then you realize the financial
risk business owners take.
298
00:19:15,269 --> 00:19:21,223
And uh betting every year, you know, my clients were good, hardworking people.
299
00:19:21,223 --> 00:19:32,172
Maybe not the high sophistication of business, but knew their trades really well, cared
about their employees, sponsored the baseball teams, I mean all of that, right?
300
00:19:32,172 --> 00:19:34,052
And then boom, they're out of business.
301
00:19:34,395 --> 00:19:36,066
uh
302
00:19:36,106 --> 00:19:44,669
blue collar businessman is they start in a trade, they get really good at it, they see
opportunity, they take a risk, and they're really great plumber or really great
303
00:19:44,669 --> 00:19:46,880
electrician or really great whatever.
304
00:19:46,880 --> 00:19:50,451
And they learn business along the way instead of coming at it from the other angle.
305
00:19:50,451 --> 00:19:54,583
So they need experts in their corner to help educate them on those things.
306
00:19:54,622 --> 00:20:03,413
Absolutely, and unfortunately their CPAs aren't, you know, they're a good trusted advisor,
but they don't...
307
00:20:03,690 --> 00:20:05,281
I can tell you some nightmare stories.
308
00:20:05,281 --> 00:20:09,913
saw what's happened to some business owners dealing with CPAs that weren't paying
attention to them.
309
00:20:09,913 --> 00:20:15,516
Guys that grew really fast and didn't know the back end exposure they had to taxes.
310
00:20:15,516 --> 00:20:21,729
Anyway, so you get all this out there going and then the financial risk business owners
take every year to do what they do.
311
00:20:21,729 --> 00:20:25,441
And that's really what I thought, man, there's got to be a smarter and better way of doing
business.
312
00:20:25,441 --> 00:20:29,502
And I was exposed at that same time of an RV manufacturer here.
313
00:20:29,502 --> 00:20:30,983
If you ever go up down through
314
00:20:30,983 --> 00:20:40,305
Highway 84, which is, you know, all the way from, really from Salt Lake coming up through
Portland, Oregon, through the Columbia Gorge and all that.
315
00:20:40,305 --> 00:20:43,385
There's a lot of RV manufacturers through that corridor.
316
00:20:43,525 --> 00:20:47,365
And I knew the gentleman that was running one of those.
317
00:20:47,425 --> 00:20:54,265
And he had seven of these 831B plans set aside over the years that he was using
tax-deferred expenses.
318
00:20:54,265 --> 00:20:56,725
So basically, let's talk about 831B real quick.
319
00:20:56,725 --> 00:20:58,123
On a high level,
320
00:20:58,123 --> 00:21:00,863
831B is no different than when you fear 401K.
321
00:21:00,863 --> 00:21:02,843
It's just where you find it in the tax code, right?
322
00:21:02,843 --> 00:21:06,903
The federal tax code, which is, I don't know, three or four inches thick.
323
00:21:07,603 --> 00:21:10,803
So that's just a tax code.
324
00:21:10,803 --> 00:21:15,303
what it is is designed and it was introduced in 1986, shockingly enough.
325
00:21:15,303 --> 00:21:16,635
I was just...
326
00:21:16,635 --> 00:21:18,636
I was still in high school in 1986.
327
00:21:18,636 --> 00:21:25,479
But in 1986, they passed a law called the 831B tax code for a tax incentive.
328
00:21:25,479 --> 00:21:29,982
If people were going to self-insure risk, we want to use pre-tax dollars to do that with,
right?
329
00:21:29,982 --> 00:21:31,273
uh Versus after tax.
330
00:21:31,273 --> 00:21:32,383
So that was the incentive.
331
00:21:32,383 --> 00:21:41,148
And what was happening back in 1986, very similar to the market today, where there's just
more exclusions, pay more premium, getting less coverage.
332
00:21:41,148 --> 00:21:42,608
Very similar to what's going on today.
333
00:21:42,608 --> 00:21:44,362
And I would say actually today it's
334
00:21:44,362 --> 00:21:45,983
worse than it was back in the 80s.
335
00:21:45,983 --> 00:21:48,775
The farmers are also losing their crop insurance.
336
00:21:48,775 --> 00:21:57,033
So private sector was getting out of it, it became too volatile, it wasn't profitable
business and of course it's backed by the federal government no different than FEMA or
337
00:21:57,033 --> 00:21:59,695
terrorism coverage and all that kind of stuff is today.
338
00:21:59,695 --> 00:22:01,136
But back then that wasn't the case.
339
00:22:01,136 --> 00:22:02,719
So they created an incentive.
340
00:22:02,719 --> 00:22:10,105
basically you're going to expense it out of your operating company level, no different
than if you bought a general liability policy or work comp or any other expenses when it
341
00:22:10,105 --> 00:22:12,807
comes to your operation of your business, but then it
342
00:22:12,807 --> 00:22:22,167
was going to dump into an 831B plan that has to look and feel like an insurance company,
the premium going into it, you don't pay taxes on it.
343
00:22:22,167 --> 00:22:28,127
And so where we kind of fit with our clients is very similar to a 401k administrator,
right?
344
00:22:28,127 --> 00:22:34,262
You're not going to participate in a 401k plan without a person in the middle, a Chinese
that forms the
345
00:22:34,251 --> 00:22:35,195
guardrails and all that.
346
00:22:35,195 --> 00:22:37,722
read that three inch thick tax code.
347
00:22:37,722 --> 00:22:38,239
Exactly.
348
00:22:38,742 --> 00:22:39,702
And keep you out of trouble.
349
00:22:39,702 --> 00:22:41,442
Make sure the dollars stay tax-referred.
350
00:22:41,442 --> 00:22:42,422
You got your risk of rules.
351
00:22:42,422 --> 00:22:45,022
You got all sorts of regulations in 401k.
352
00:22:45,022 --> 00:22:48,002
If you're going to participate, it's no different than 831B.
353
00:22:48,002 --> 00:22:52,633
But it is for small to middle market business owners that are self-insuring risk.
354
00:22:52,633 --> 00:22:55,053
And that was 1986.
355
00:22:55,173 --> 00:22:58,873
Now you fast forward to, well, 2026.
356
00:22:59,201 --> 00:23:00,901
The world's gotten much more complicated.
357
00:23:00,901 --> 00:23:05,501
mean, there wasn't even a thing about, you know, back in 96, nobody even thought about
cyber risk, right?
358
00:23:05,501 --> 00:23:07,012
I cyber wasn't even a thought.
359
00:23:07,012 --> 00:23:11,832
You started seeing supply chain, you started seeing more of a global economy and all that
stuff develop.
360
00:23:11,832 --> 00:23:17,772
again, it wasn't really, you know, a long-term thought process to what's the ramifications
for all that.
361
00:23:17,772 --> 00:23:22,043
And then you fast forward up to 08 and then, then of course the big one would be COVID.
362
00:23:22,043 --> 00:23:25,523
You know, that's when a lot of business owners took a, you know, and...
363
00:23:25,538 --> 00:23:29,533
And so one of the things that we do and is just, know, hey, Mr.
364
00:23:29,533 --> 00:23:37,152
Business Owner, you know, we run through their underwriting, we look at their policies
again, we come through and back and say, hey, listen, you got this coverage, you're
365
00:23:37,152 --> 00:23:38,423
self-insuring this, this, and this.
366
00:23:38,423 --> 00:23:41,127
And a lot of times these business owners already know what they're self-insuring for.
367
00:23:41,127 --> 00:23:45,471
And we just come down to, do you want to use pre-tax dollars or after-tax dollars?
368
00:23:45,612 --> 00:23:47,993
If you want to use after-tax dollars, just keep doing what you're doing.
369
00:23:47,993 --> 00:23:52,475
Rely on your lines of credit, your savings, or your operating capital of your business.
370
00:23:52,475 --> 00:23:58,057
Or take some of the tax liability you pay and defer it and put it into an 831B plan.
371
00:23:58,057 --> 00:24:01,730
And when these things arise, you're going to use pre-tax dollars.
372
00:24:01,730 --> 00:24:07,393
to handle that self-insured loss in your business versus after-tax dollars.
373
00:24:07,393 --> 00:24:14,427
And very similar to the 401k, you just have a lot more dollars to invest over here to work
out no different than the 401k.
374
00:24:14,427 --> 00:24:16,918
You're deferring your taxes on that as well.
375
00:24:16,981 --> 00:24:17,310
Yeah.
376
00:24:17,310 --> 00:24:22,414
for you, your retirement, and for your employees retirement, but you just got a lot more
dollars to invest.
377
00:24:22,414 --> 00:24:25,977
Well, in this case, you got a lot more dollars to handle the risk.
378
00:24:25,977 --> 00:24:31,363
And now in today's world, you're seeing a lot more first dollar losses, Erick, when it
comes to traditional insurances.
379
00:24:31,363 --> 00:24:38,990
And I can dive into that if you want, especially when it comes to different trades and
what we're seeing out there in the world of exclusions, unfortunately.
380
00:24:38,990 --> 00:24:40,910
And it's...
381
00:24:40,910 --> 00:24:47,650
You know, it's one of those things where I would say that if you talk to the business
owner, they've been in business long enough, they're going to have a nightmare story,
382
00:24:47,650 --> 00:24:51,630
honestly, that happened to them that they thought they were covered for and they weren't.
383
00:24:51,630 --> 00:24:52,370
You know?
384
00:24:52,370 --> 00:24:54,410
And how did they handle it?
385
00:24:54,410 --> 00:24:58,990
And that's really what we're, I'm just here to position money for them, to make it more
effective for them.
386
00:24:58,990 --> 00:25:06,560
And honestly, think, you know, a good way example to get your listeners to understand,
think of this as like an HSA for business.
387
00:25:06,560 --> 00:25:07,818
All we're doing,
388
00:25:07,818 --> 00:25:09,943
Does that make sense when I say that to you as far as how
389
00:25:09,933 --> 00:25:11,193
Absolutely.
390
00:25:11,234 --> 00:25:11,894
Yeah.
391
00:25:11,894 --> 00:25:12,914
That's awesome.
392
00:25:12,914 --> 00:25:13,995
So sorry.
393
00:25:13,995 --> 00:25:15,517
I was making a few notes there.
394
00:25:15,517 --> 00:25:17,879
My mind's just racing with questions.
395
00:25:17,879 --> 00:25:21,441
is kind of my first exposure to the 831 as well.
396
00:25:21,441 --> 00:25:28,212
I've been in a family business for 40 some years and running it for 12 and
397
00:25:28,709 --> 00:25:35,114
everything you're saying clicks right with all that I know and I wasn't aware this was
even an option so I got all kinds of questions here.
398
00:25:35,114 --> 00:25:43,077
Before we really dive into the mechanics of the 831 I was curious does your wife still
have the agency that you sold to her?
399
00:25:43,820 --> 00:25:46,320
oh
400
00:25:46,320 --> 00:25:47,540
2014.
401
00:25:47,540 --> 00:25:53,200
I was very fortunate to get this business up and running and still have our cash flow in
the back room.
402
00:25:53,200 --> 00:25:57,660
And my wife, you know, she never dreamed of becoming an insurance agent.
403
00:25:57,960 --> 00:26:02,931
So she took one for the team on that and she was happy to see it sold.
404
00:26:02,931 --> 00:26:05,550
But yeah, she ran it for another, I don't know.
405
00:26:05,952 --> 00:26:07,203
four or five years after that.
406
00:26:07,203 --> 00:26:11,845
She did a great job with it actually, but no, it was time to move on.
407
00:26:11,845 --> 00:26:14,567
But it took a while for this business to grow too, honestly.
408
00:26:14,567 --> 00:26:23,512
mean, the concepts, the grind, just trying to get people's head around this, well, why the
hell do I want to own an insurance company?
409
00:26:23,513 --> 00:26:26,888
And uh then too, took the economy to get better too, quite honestly.
410
00:26:26,888 --> 00:26:28,763
mean, that was a...
411
00:26:28,763 --> 00:26:36,254
You know, look pretty young, so I don't know how much you got hit on the 08 deal or not,
but some of you just said, I couldn't believe how long that's been.
412
00:26:36,254 --> 00:26:37,334
It's coming up on 20 years.
413
00:26:37,334 --> 00:26:38,634
That blows my mind.
414
00:26:38,894 --> 00:26:41,365
But, man, time flies.
415
00:26:41,365 --> 00:26:46,241
But yeah, it's it's, and also, you know, it's funny too, I...
416
00:26:46,241 --> 00:26:52,604
I say this a lot and I speak all over the country on this, especially with entrepreneurs,
we got to have short-term memory, right?
417
00:26:52,604 --> 00:27:03,180
I I kind of joke, if we remembered all the headaches, all the mistakes, all the losing
money and all of those things, we'd be in a fetal position and never get out of our bed,
418
00:27:03,180 --> 00:27:03,450
right?
419
00:27:03,450 --> 00:27:07,883
I mean, it's just, we have the amnesia like nobody else's business.
420
00:27:07,883 --> 00:27:09,503
I mean, we forget real quick.
421
00:27:09,503 --> 00:27:10,774
We only remember the good stuff.
422
00:27:10,774 --> 00:27:15,607
We like to flush the old stuff pretty quick, but anyway, hopefully learn from it.
423
00:27:15,600 --> 00:27:16,501
Yeah.
424
00:27:16,501 --> 00:27:20,026
Nobody would ever stick with it if you remembered all the bad things.
425
00:27:20,026 --> 00:27:22,019
Running a business can be tough.
426
00:27:22,019 --> 00:27:22,749
man.
427
00:27:22,923 --> 00:27:23,923
yeah.
428
00:27:24,044 --> 00:27:24,864
Yeah, you would.
429
00:27:24,864 --> 00:27:34,754
And so, yeah, I think that's the, you know, like I said, I was very fortunate to keep that
agency during that time to be able to grow this business because, you know, it's not easy,
430
00:27:34,754 --> 00:27:35,274
you know.
431
00:27:35,274 --> 00:27:42,980
I mean, you still got expenses at home, you still got a family to provide, and meanwhile
you're trying to start another business, and we're very fortunate that that cash flow is
432
00:27:42,980 --> 00:27:46,164
sitting there still to manage that, to...
433
00:27:46,362 --> 00:27:48,069
make that bridge work, you
434
00:27:48,069 --> 00:27:49,010
Yeah, that's awesome.
435
00:27:49,010 --> 00:27:51,311
It sounds like you've made that jump a few times.
436
00:27:51,311 --> 00:28:01,007
You got your fingers in two different insurance agencies and plumbing and refrigeration, a
few different trades and, man, I don't think I have the bandwidth to take all of that on.
437
00:28:01,007 --> 00:28:03,398
You, you must be doing something right there.
438
00:28:03,398 --> 00:28:03,857
So.
439
00:28:03,853 --> 00:28:09,196
know what, I would say no micromanaging and really, really good people.
440
00:28:09,196 --> 00:28:14,478
And I'm all about giving part ownership in the business to some of my key employees.
441
00:28:14,478 --> 00:28:16,800
mean, there's some agreements they got to sign.
442
00:28:16,800 --> 00:28:18,541
Basically, it's a 10-year investment.
443
00:28:18,541 --> 00:28:21,042
But I'm all about that, especially up front.
444
00:28:21,042 --> 00:28:23,285
I I want a good EBITDA to offer these.
445
00:28:23,285 --> 00:28:26,787
I want to either resell or they get another retirement on top of it.
446
00:28:26,787 --> 00:28:32,069
I just think if you're going to dabble in multiple businesses, then you better have some
people
447
00:28:32,069 --> 00:28:37,396
People need to buy in and they need some ownership up front, in my opinion, to make it
work.
448
00:28:37,393 --> 00:28:38,445
Yeah, that's great.
449
00:28:38,445 --> 00:28:39,777
That's some good advice.
450
00:28:39,777 --> 00:28:43,082
yeah, man, I'm making more notes here.
451
00:28:43,082 --> 00:28:44,563
I'm learning all kinds.
452
00:28:44,892 --> 00:28:48,312
Okay, well, you kind of got us going on the 831.
453
00:28:48,312 --> 00:28:51,092
I got some more questions kind of for you and your leadership.
454
00:28:51,092 --> 00:28:53,752
But while we were on it, I want to dive in here.
455
00:28:53,752 --> 00:28:57,952
So I like the analogy of the 401k or the HSA.
456
00:28:57,952 --> 00:29:05,392
With the 831, is that money investable when you have it set aside like an HSA or a 401k?
457
00:29:05,392 --> 00:29:07,092
Or does it have to sit in cash?
458
00:29:07,092 --> 00:29:10,572
What kind of regulations are around where that money sits?
459
00:29:10,705 --> 00:29:20,065
There's some of it does, meaning that, you know, because it's obviously there to pay
claims, but because you gotta remember the box looks and feels like an insurance company.
460
00:29:20,270 --> 00:29:26,976
So absolutely, I mean you can invest that money, it becomes surplus so these policies earn
out no different than HSA right?
461
00:29:26,976 --> 00:29:29,968
Every year you get the ability to put more money into it every year.
462
00:29:29,968 --> 00:29:35,343
You may not have used it last year, hopefully, but now you have more money into it, now
you're able to build it.
463
00:29:35,343 --> 00:29:37,564
And it's very similar to this program too.
464
00:29:37,564 --> 00:29:41,443
Those dollars become surplus, it can be either self-directed.
465
00:29:41,443 --> 00:29:44,403
or you can have your financial planner manage it.
466
00:29:44,643 --> 00:29:47,683
Again, we are, as a company, are an administrator.
467
00:29:47,683 --> 00:29:53,763
So if you ask me what's our core competency, is we manage over 800 insurance companies.
468
00:29:53,875 --> 00:29:54,691
Okay.
469
00:29:54,691 --> 00:29:56,022
for privately held companies.
470
00:29:56,022 --> 00:30:04,962
so we do everything from taxes to financials to underwriting the risk, issuing the
policies, adjudicating the claims.
471
00:30:04,962 --> 00:30:07,953
We run their insurance company for them on their behalf.
472
00:30:07,953 --> 00:30:10,933
And we're not here to complicate business owners by no means.
473
00:30:10,933 --> 00:30:13,753
I think we're a compliment to what they're doing.
474
00:30:14,133 --> 00:30:19,113
One of the things that we say here, Erick, is we embolden business owners to innovation
and risk management.
475
00:30:19,293 --> 00:30:21,764
And we've seen it and we've lived it.
476
00:30:21,764 --> 00:30:28,872
clients that have been with us for number of years, knowing what they've done in the back
room, it does give a propensity to take on more risk, quite honestly.
477
00:30:28,872 --> 00:30:37,840
And I love that because some of these people are really good, smart business owners, and
when they start to become risk adverse, that could be a problem for us.
478
00:30:38,317 --> 00:30:39,998
Yeah, yeah.
479
00:30:39,999 --> 00:30:47,808
So uh you said it's structured, it has to be structured to look like almost a separate
insurance company.
480
00:30:47,808 --> 00:30:52,063
So how does that roll down to the company's balance sheet?
481
00:30:52,063 --> 00:30:55,536
Are those assets still kind of shown on the balance sheet?
482
00:30:55,946 --> 00:30:57,016
Well, it depends, right?
483
00:30:57,016 --> 00:30:58,607
So these are C-corps.
484
00:30:58,607 --> 00:31:01,748
The 830-mil V plans are formed as a C-corp, so they're shareholders.
485
00:31:01,748 --> 00:31:04,325
Those shareholders can be the operating company.
486
00:31:04,325 --> 00:31:07,071
A lot of times it could be the owners of the operating company.
487
00:31:07,071 --> 00:31:08,793
It's typically where we structure those.
488
00:31:08,793 --> 00:31:12,534
So it really depends on what they want to do for the long term.
489
00:31:12,713 --> 00:31:14,265
This is an outside asset.
490
00:31:14,265 --> 00:31:22,693
can be no different than on your personal balance sheet at that point as far as if you're
a shareholder of that 831B plan.
491
00:31:22,693 --> 00:31:28,178
I can tell you, our typical clients are husband and wife, and they own this thing 50-50 in
their name.
492
00:31:28,178 --> 00:31:30,815
And their operating company is their operating company.
493
00:31:30,815 --> 00:31:38,151
And our two, if I got multiple partners in a company, we structure it little differently,
or we may just have the operating company own it, which is perfectly fine.
494
00:31:38,151 --> 00:31:42,453
That's when we kind of rely on, we would advise on how to own it.
495
00:31:42,453 --> 00:31:44,974
There's some legalities to how you have to own it.
496
00:31:44,974 --> 00:31:48,115
So obviously that's where we stay within that bandwidth.
497
00:31:48,115 --> 00:31:50,817
But we rely on their other trusted advisors.
498
00:31:50,817 --> 00:31:56,121
That's when the CPA ought to be advising them or their attorneys or whatever is going on
out there.
499
00:31:56,121 --> 00:32:00,526
advice on how the ownership should look but it really is a C Corp.
500
00:32:00,526 --> 00:32:10,154
can either land on there as another, you know, no different than owning a building in a
way, right, from a business standpoint or you can own it individually and husband and
501
00:32:10,154 --> 00:32:11,896
wife's name and all that kind of stuff.
502
00:32:11,896 --> 00:32:16,679
or the two partners names or whatever going on there but that's really way it looks.
503
00:32:16,766 --> 00:32:20,006
Okay, I would just I'm trying to get my head wrapped around it.
504
00:32:20,006 --> 00:32:29,406
Like you said, I'm this is new to me as well as probably many of our listeners and I just
thinking, you know, if we if you set that cash aside to self insurer versus putting it in
505
00:32:29,406 --> 00:32:32,486
an 831, there's the obvious tax advantage.
506
00:32:32,786 --> 00:32:39,706
But if you know, if you have that in an account, it could be collateralized for future
financing or things like that.
507
00:32:39,706 --> 00:32:44,266
And, you know, is this still going to be held as an asset in that regard?
508
00:32:44,641 --> 00:32:46,541
Yeah, it's definitely gonna add to your balance sheet.
509
00:32:46,541 --> 00:32:48,621
Either your company's balance sheet or your personal balance sheet.
510
00:32:48,621 --> 00:32:49,941
Both the bank's gonna want.
511
00:32:49,941 --> 00:32:52,701
So, you know, it might not work.
512
00:32:52,896 --> 00:32:53,396
Yeah.
513
00:32:53,396 --> 00:32:56,982
Everybody thinks they can keep liabilities limited to their business.
514
00:32:56,982 --> 00:33:00,145
at least what I've found is in the real world, that's not the case.
515
00:33:00,145 --> 00:33:04,349
You're responsible for all your company's assets and liabilities.
516
00:33:04,600 --> 00:33:12,396
Yeah, they all, you know, these banks want to wrap you up the best they can when it comes
to protecting downside of their risk.
517
00:33:12,396 --> 00:33:14,255
So, I get it.
518
00:33:14,255 --> 00:33:18,340
them all, some of the documents I've signed as a business owner would be a bit terrifying.
519
00:33:18,340 --> 00:33:21,162
The trick is you just got to sign it without reading, right?
520
00:33:21,454 --> 00:33:25,994
Yeah, press hard, know, sign here and press hard.
521
00:33:26,834 --> 00:33:35,734
No, I would say that the personal guarantees definitely become a burdensome for you and
you know, it's funny, I'm literally going through this right now.
522
00:33:35,734 --> 00:33:47,394
Sir is buying, we're buying the building we're in right now plus it has two more buildings
on the campus plus another two acres that we're gonna develop into a drop yard for our
523
00:33:47,394 --> 00:33:48,565
materials.
524
00:33:48,565 --> 00:33:56,564
I'm trying to avoid the PG right now and I think I'm going to but you know, honestly not
yeah, but not to my own horn here.
525
00:33:56,564 --> 00:34:02,761
just think you know You got to get to a certain level financially and then it is yeah,
okay We're good and we're buying the buildings, right?
526
00:34:02,761 --> 00:34:06,801
And I think that helps with we're gonna have a lot of equity into him from day one
527
00:34:07,665 --> 00:34:08,471
Thankfully
528
00:34:08,471 --> 00:34:12,557
years building multiple businesses, finally build up the assets where you can do that.
529
00:34:12,557 --> 00:34:14,140
So that's great.
530
00:34:14,544 --> 00:34:17,404
yeah, I still though, yeah.
531
00:34:18,205 --> 00:34:19,145
It is what it is.
532
00:34:19,145 --> 00:34:28,849
I'm not, because I own a lot of commercial buildings too and at the time you think these
are all really good ideas and then did this become, know somebody said to me, well
533
00:34:28,849 --> 00:34:35,971
actually a financial planner, I recently came on board as one of his clients, he said you
have complexity creep.
534
00:34:36,316 --> 00:34:37,467
And I'm like, what?
535
00:34:37,467 --> 00:34:40,498
And he goes, yeah, you have complexity creep.
536
00:34:40,559 --> 00:34:43,481
And it's just, again, getting back to that entrepreneurial thing.
537
00:34:43,481 --> 00:34:50,197
You don't really, you know, I drive my daughter nuts because, you know, she'll call me, do
you have a new LLC formed that I didn't know about?
538
00:34:50,197 --> 00:34:51,609
But that's getting better.
539
00:34:51,609 --> 00:34:52,599
It's all getting better.
540
00:34:52,599 --> 00:34:53,570
I'm calming down.
541
00:34:53,570 --> 00:34:56,733
But I would say five years ago, man, I was not afraid.
542
00:34:56,733 --> 00:34:59,545
All I looked around was opportunity, opportunity.
543
00:34:59,545 --> 00:35:01,056
But now I'm kind of...
544
00:35:01,056 --> 00:35:02,271
Kind of calming down,
545
00:35:02,265 --> 00:35:03,087
so.
546
00:35:03,205 --> 00:35:05,365
sorry, this is a sidetrack.
547
00:35:05,365 --> 00:35:12,965
I'll get back to the mechanics of the 831, but you've been in business, running a business
for 30 years.
548
00:35:12,965 --> 00:35:14,365
You've been in a lot of industries.
549
00:35:14,365 --> 00:35:16,336
You've run a lot of different businesses.
550
00:35:16,336 --> 00:35:19,716
The people that say the American dream is dead.
551
00:35:19,716 --> 00:35:22,416
There just isn't opportunity out there like there used to be.
552
00:35:22,416 --> 00:35:26,887
Do you agree with that or do you still see opportunity for someone to do what you've done?
553
00:35:26,885 --> 00:35:27,986
I see opportunity.
554
00:35:27,986 --> 00:35:31,470
I mean, I think it's going to be more opportunity going forward, quite honestly.
555
00:35:31,470 --> 00:35:39,978
If you're in the right mindset, you know, if you're not in the right mindset and you want
to play victim or, you know, woe is me or hey, not everything.
556
00:35:39,978 --> 00:35:43,762
And if you're looking for the right time, does not exist.
557
00:35:43,762 --> 00:35:48,597
You know, and and so, you know, it comes down to having faith in yourself.
558
00:35:48,597 --> 00:35:50,053
And, you know, honestly,
559
00:35:50,053 --> 00:35:53,213
Maybe it's fear, you know I kind of ran scared for a while.
560
00:35:53,213 --> 00:35:54,404
I mean I had a young family.
561
00:35:54,404 --> 00:35:59,384
I had my first son when I was 20 and my wife was 18, you know what I mean?
562
00:35:59,484 --> 00:36:01,524
So you kind of run kind of scared at that point.
563
00:36:01,524 --> 00:36:04,055
So you're like, damn I got to get going here.
564
00:36:04,055 --> 00:36:07,635
so all of that stuff plays in your mindset, right?
565
00:36:07,635 --> 00:36:09,555
And you got to have faith in yourself.
566
00:36:09,735 --> 00:36:12,415
And then honestly you got to have people around you too, right?
567
00:36:12,415 --> 00:36:14,535
That aren't trying to...
568
00:36:14,912 --> 00:36:20,539
You want to tell a cautious tale, but at the same time you don't want to discourage from
somebody to want to take a risk either.
569
00:36:20,539 --> 00:36:22,802
We don't live in a...
570
00:36:22,802 --> 00:36:25,125
We look for comfort all the time.
571
00:36:25,125 --> 00:36:30,572
And I'm always trying to consciously be aware of trying to look for discomfort.
572
00:36:30,572 --> 00:36:33,372
Trying to be comfortable all the time is a trap.
573
00:36:33,372 --> 00:36:37,672
I think that's, you know, because you start making enough money at your existing job so
you don't want to leave.
574
00:36:37,672 --> 00:36:44,092
You don't want to take the chance of going out and starting a business for yourself
because, or you got too much debt on the backside because, you know, things were good and
575
00:36:44,092 --> 00:36:52,512
you, you know, there's all a lot of things that go into it, but sometimes you just, you
don't need to check out deep the pool, you just got to dive, you know, and it's like, you
576
00:36:52,512 --> 00:36:59,212
know, it's all of those things, you know, it's just, but yeah, I think the American dream
is live and well.
577
00:36:59,212 --> 00:37:00,575
I think that's why,
578
00:37:00,575 --> 00:37:06,271
Honestly, I was just sitting in a class and going through scenario planning.
579
00:37:06,271 --> 00:37:07,714
That was interesting day.
580
00:37:07,714 --> 00:37:16,090
it was said in that meeting, this gentleman's from South Africa, and he said, America is
unique because of entrepreneurship.
581
00:37:16,490 --> 00:37:19,063
It does not exist anywhere else in the world.
582
00:37:19,063 --> 00:37:22,596
The mentality to think that you can start your own business.
583
00:37:22,596 --> 00:37:26,936
does not exist, and I've traveled now since my kids have gotten older and started having
kids.
584
00:37:26,936 --> 00:37:27,916
My wife and I do travel.
585
00:37:27,916 --> 00:37:31,676
I see it all the time when I go to other foreign countries and especially Europe.
586
00:37:31,836 --> 00:37:41,716
I look around, like, you know, there's not a lot of small, there's small businesses, but
as far as like true entrepreneurship, I mean, it's looked like they just got a highly paid
587
00:37:41,716 --> 00:37:44,096
job that they have all the risk for, right?
588
00:37:44,096 --> 00:37:46,856
I mean, that's basically what their business is.
589
00:37:46,856 --> 00:37:49,356
And so I just find that really unique to us still.
590
00:37:49,356 --> 00:37:50,847
And I'm so,
591
00:37:50,847 --> 00:37:55,744
appreciated that, especially people from around the world recognize that.
592
00:37:55,744 --> 00:38:02,672
I that's why a lot of people want to, I mean think about who, you know, illegal or illegal
immigrant, what are they first thing they do?
593
00:38:02,672 --> 00:38:09,409
They look to start a small business and you know there are other parts of the world that's
not possible and that's crazy, right?
594
00:38:09,409 --> 00:38:11,412
That's super foreign to us.
595
00:38:11,391 --> 00:38:13,671
Yeah, I agree 100%.
596
00:38:13,671 --> 00:38:15,950
I think the opportunity is there.
597
00:38:16,111 --> 00:38:21,531
I think comfort is the detriment of, I think there's been a couple generations here.
598
00:38:21,531 --> 00:38:23,531
They got pulled aside by that comfort.
599
00:38:23,531 --> 00:38:26,551
I saw this morning, Michael Easter just came out with a new book.
600
00:38:26,551 --> 00:38:30,571
It reminded me of his book a couple years ago, The Comfort Crisis.
601
00:38:30,571 --> 00:38:31,936
I loved that book.
602
00:38:31,936 --> 00:38:38,319
And I think and hope that this next generation kind of coming behind me.
603
00:38:38,319 --> 00:38:48,056
uh Sees that and and is willing to take that risk because I think the opportunity is still
there what we're lacking is the people that have the the grit the determination and the
604
00:38:48,056 --> 00:38:57,834
Optimism to really go for it to take a risk and and dive in like you're talking about so
Yeah, I think this next generation we're gonna really see a divergence between the people
605
00:38:57,834 --> 00:39:03,680
that want to be comfortable and work a job and the ones that are willing to take that risk
Like we haven't seen in a few generations.
606
00:39:03,680 --> 00:39:04,051
So
607
00:39:04,048 --> 00:39:11,128
Yeah, and we have a huge disruption on the horizon and it's called artificial
intelligence.
608
00:39:11,568 --> 00:39:21,599
And I'm encouraged by what I'm seeing, to your point about the Gen Zers, that they seem to
be a little bit more entrepreneurial from what I'm seeing.
609
00:39:21,599 --> 00:39:24,301
And then maybe it comes back to that risk, right?
610
00:39:24,301 --> 00:39:26,054
And that they're not afraid to take risks.
611
00:39:26,054 --> 00:39:29,608
They believe in what they're doing or they believe in themselves enough to want to take
the risk.
612
00:39:29,608 --> 00:39:37,034
I think the millennials kind of screwed over a little bit, just based on their experiences
getting back to the 08 crisis.
613
00:39:37,034 --> 00:39:39,705
But yeah, I'm encouraged really on the Gen Z, quite honestly.
614
00:39:39,705 --> 00:39:40,626
I mean, we're seeing it here.
615
00:39:40,626 --> 00:39:42,888
We're seeing younger business owners calling us.
616
00:39:42,888 --> 00:39:47,070
where we're seeing it mostly is agricultural, honestly.
617
00:39:47,070 --> 00:39:56,564
The family ran farms and ranches that these kids that go to college, they do want to
stick, we see more of them trying to go back to where, instead of trying to get that
618
00:39:56,564 --> 00:40:01,987
corporate job, they want to go back and work the farm and dairies and all that stuff with
mom and dad.
619
00:40:01,987 --> 00:40:06,319
And that's been kind of encouraging to see, because very, very business oriented.
620
00:40:06,319 --> 00:40:07,181
it honestly.
621
00:40:07,181 --> 00:40:11,236
mean this is totally, you know, not your normal farmer kind of mentality which,
622
00:40:11,903 --> 00:40:12,340
yeah.
623
00:40:12,340 --> 00:40:18,253
lot of family farms turning into big, big corporate organizations right now and they're
doing well.
624
00:40:18,253 --> 00:40:18,753
Yeah.
625
00:40:18,753 --> 00:40:19,934
It's exciting stuff.
626
00:40:19,934 --> 00:40:24,196
I'm yeah, I'm, excited to watch and excited to be a part of it.
627
00:40:24,196 --> 00:40:31,958
And, uh I've, I have high hopes for parts of our culture, but, like you said, I think that
victim mentality, can look at.
628
00:40:31,958 --> 00:40:37,240
the disruption in our economy and AI and know, woe is me, my job's going away.
629
00:40:37,240 --> 00:40:41,002
Or you can go, wow, look at this tool and what can I do with it?
630
00:40:41,002 --> 00:40:44,765
And the people that see opportunity in that disruption are gonna boom.
631
00:40:44,765 --> 00:40:48,487
And yeah, I'm excited to see what happens.
632
00:40:48,487 --> 00:40:48,886
So.
633
00:40:48,884 --> 00:41:00,055
You know, there's been a, you know, anytime there's been a major disruption, know, uh
internet, well, cell phones, internet, personal computers, least in our lifetime, right?
634
00:41:00,055 --> 00:41:05,481
mean, you know, major interruption would have been the first time you saw a car driving
down the road back, you know, 100 years ago, right?
635
00:41:05,481 --> 00:41:07,383
I mean, that would have been a major interruption, right?
636
00:41:07,383 --> 00:41:13,697
And what's been interesting is every time there's been a major interruption in our
country, you know, in the back, in the back,
637
00:41:13,697 --> 00:41:16,549
jobs were, more jobs were created because of it.
638
00:41:16,549 --> 00:41:25,675
What will be interesting to see is how AI plays out in that because honestly, you know,
when you look at everything that's, that's been like those big disruptors, there was a lot
639
00:41:25,675 --> 00:41:26,105
of jobs.
640
00:41:26,105 --> 00:41:32,960
Now they got rid of jobs in the front, but they created a lot of jobs in the back room,
more so than what was lost, right?
641
00:41:32,960 --> 00:41:41,526
And so it will be interesting to see how that plays out because, you know, on the, you
know, I don't know, but I do think that there's an opportunity for a lot of small
642
00:41:41,526 --> 00:41:42,619
businesses to
643
00:41:42,619 --> 00:41:43,950
you know, fill in the gaps.
644
00:41:43,950 --> 00:41:50,369
then, you you talk about, you know, you talk about human experiences and all the other
stuff that's going on out there that people are gonna have time to do.
645
00:41:50,369 --> 00:41:54,683
I think homesteading is going to be big, honestly.
646
00:41:54,683 --> 00:41:57,236
think, you know, that's got my attention.
647
00:41:57,236 --> 00:41:58,842
I mean, I'm literally, I'm...
648
00:41:58,842 --> 00:42:02,122
I'll be home setting in two to three years when my kids are taking this company over.
649
00:42:02,122 --> 00:42:04,102
That's really my goal, honestly.
650
00:42:04,102 --> 00:42:05,702
Get back to being a farmer.
651
00:42:05,842 --> 00:42:09,562
Nothing like what we were doing, but enough to support my family.
652
00:42:10,002 --> 00:42:11,742
But I'd love to know where all my food came from.
653
00:42:11,742 --> 00:42:13,033
That's literally my goal.
654
00:42:13,033 --> 00:42:14,953
But I think people are going to have time for all that stuff.
655
00:42:14,953 --> 00:42:16,333
So it's going to be interesting.
656
00:42:16,333 --> 00:42:17,793
It's going be an interesting time.
657
00:42:17,873 --> 00:42:21,353
I hope there's more optimism and then pessimism when it comes to this.
658
00:42:21,353 --> 00:42:24,373
But I do think there'll be a big disruption.
659
00:42:24,373 --> 00:42:26,553
Bigger than I think you want us to understand.
660
00:42:26,985 --> 00:42:28,256
I agree a hundred percent.
661
00:42:28,256 --> 00:42:38,771
And I think that opportunity is there because, yeah, like you said, you know, pre
industrial revolution, it took everybody's full time attention to grow the food that they
662
00:42:38,771 --> 00:42:40,442
needed for that day, that year.
663
00:42:40,442 --> 00:42:52,097
And there are so many industries that had not been born yet simply because we didn't have
the, the labor capital bandwidth in our society and in our culture.
664
00:42:52,099 --> 00:42:59,995
And so, yeah, farm equipment comes on the scene, takes over all those farm jobs, but it
frees up that human capital to do so many other things.
665
00:42:59,995 --> 00:43:01,696
you know, computers, the same thing.
666
00:43:01,696 --> 00:43:05,520
We got rid of all the people just keeping records, copying things.
667
00:43:05,520 --> 00:43:07,932
Computers did it all, freed them up to go elsewhere.
668
00:43:07,932 --> 00:43:13,636
And so, you you talk to most small business owners right now and their biggest struggle is
human capital.
669
00:43:13,636 --> 00:43:14,526
They don't have the labor.
670
00:43:14,526 --> 00:43:15,347
They don't have people.
671
00:43:15,347 --> 00:43:19,986
There's twice as many open job positions as there are job seekers right now.
672
00:43:19,986 --> 00:43:26,667
What we need is technology that's going to take over a few jobs to free people up to do
other things.
673
00:43:26,701 --> 00:43:27,421
Yeah,
674
00:43:27,419 --> 00:43:31,559
yeah, and I think you better be a critical thinker too.
675
00:43:31,559 --> 00:43:33,559
You better be proactive and not reactive.
676
00:43:33,559 --> 00:43:37,459
And that's part of the problem too though, right?
677
00:43:37,459 --> 00:43:40,359
mean, is education come that way?
678
00:43:40,359 --> 00:43:41,321
You know, I don't know.
679
00:43:41,321 --> 00:43:43,001
Yeah, yeah.
680
00:43:43,001 --> 00:43:48,412
Well, sorry, we're getting a long ways away from insurance here, but great, great
conversation.
681
00:43:48,412 --> 00:43:55,583
So the the 831 plans, it's money set aside in a separate C Corp, it can be invested.
682
00:43:55,583 --> 00:44:07,123
And then I would assume that when that money gets used to cover actual costs or risks, is
it then taxed when it gets used or is it tax free on both ends?
683
00:44:07,593 --> 00:44:08,567
It depends.
684
00:44:08,567 --> 00:44:09,690
It depends, right?
685
00:44:09,690 --> 00:44:10,305
So,
686
00:44:10,305 --> 00:44:17,698
Depends if it's a business interruption, protecting your income of your business or
there's a physical loss on the property where you're just being made whole, right?
687
00:44:17,698 --> 00:44:24,912
So anytime you have a traditional claim through traditional insurances, it depends on what
the coverage was and what it's covering you for.
688
00:44:24,912 --> 00:44:32,575
If you had a fire and you had to pay out $50,000 in deductible and we took $50,000 out of
your phone, that would be an expense, right?
689
00:44:32,575 --> 00:44:34,516
So you wouldn't pick it up as income.
690
00:44:34,516 --> 00:44:38,398
But if it protected your loss of income, very similar to PPP was, right?
691
00:44:38,398 --> 00:44:40,269
Like, hey, I was just forced to shut.
692
00:44:40,269 --> 00:44:50,844
down for two weeks or whatever, it disrupted my cash flow, I lost money, you know, and
that's where you could put a claim in as well for those types of issues.
693
00:44:50,844 --> 00:44:52,264
So it really depends on how comes in.
694
00:44:52,264 --> 00:45:03,329
Now, as far as tax free, so these dollars that stay in the 831B plan, the premium is tax
deferred and realized investment gains would be taxed at the corporate rate.
695
00:45:03,329 --> 00:45:03,991
that's...
696
00:45:03,991 --> 00:45:04,733
Okay.
697
00:45:04,733 --> 00:45:08,633
So like let's say you put your money in a money market account, kept it really simple,
right?
698
00:45:08,633 --> 00:45:10,413
You're getting, let's say, 5%.
699
00:45:10,413 --> 00:45:13,393
You would get taxed on that 5 % every year.
700
00:45:13,821 --> 00:45:14,181
Right?
701
00:45:14,181 --> 00:45:15,941
But the premium that was sitting there would not.
702
00:45:15,941 --> 00:45:21,860
Now, as a shareholder, you say, hey, I'm going to take a dividend out, no different than
if Coca-Cola declares a dividend, right?
703
00:45:21,860 --> 00:45:31,721
Then I would pay long-term capital gains out, which is the same as capital gains rate,
which I think right now, depending on your tax brackets, anywhere from 15 to 20 % with the
704
00:45:31,721 --> 00:45:32,541
feds.
705
00:45:33,341 --> 00:45:34,841
So that's how that works.
706
00:45:34,841 --> 00:45:36,561
So it does get taxed.
707
00:45:36,561 --> 00:45:39,821
It's when it's taken out of the C-corp in the form of a dividend.
708
00:45:39,821 --> 00:45:42,481
Or let's say, hey, I've sold the business.
709
00:45:42,481 --> 00:45:44,148
I no longer need this.
710
00:45:44,148 --> 00:45:45,768
going to go ahead and shut it down.
711
00:45:45,768 --> 00:45:53,588
Then I'll pay a long-term, you know, I'm basically selling the stock or reclaiming the
stock back, shutting the C Corp down and I'm paying long-term.
712
00:45:53,588 --> 00:45:54,928
It's like selling a building at that point.
713
00:45:54,928 --> 00:45:58,268
I'm going pay long-term capital gains as a shareholder.
714
00:45:58,368 --> 00:46:00,064
So that's how that works.
715
00:46:00,061 --> 00:46:09,867
I mean, best case scenario, you invest in this for a long time, you don't end up using it,
and you have to liquidate it, you're going to have a tax event, but really, converted
716
00:46:09,867 --> 00:46:17,131
ordinary income to a long term capital gains, you still stave on taxes even at the end of
the story if you don't use it.
717
00:46:17,249 --> 00:46:20,352
Yeah, and think of this as a HSA plan too, right?
718
00:46:20,352 --> 00:46:21,523
HSA works the same way.
719
00:46:21,523 --> 00:46:24,895
If you don't use it, it eventually turns into another retirement plan.
720
00:46:25,276 --> 00:46:27,378
It's very similar to the 401k though.
721
00:46:27,378 --> 00:46:30,821
The 401k gets taxed as ordinary income at the time you take it out, right?
722
00:46:30,821 --> 00:46:34,384
So those are the nuances internally on that.
723
00:46:34,384 --> 00:46:38,148
And uh that's how that, yeah, so I'm glad you picked up on that.
724
00:46:38,148 --> 00:46:39,742
But yeah, that's exactly right.
725
00:46:39,742 --> 00:46:47,776
Yeah, sorry, I'm probably boring all the people that are not spreadsheet nerds are rolling
their eyes right now, but I dive right into that.
726
00:46:47,776 --> 00:46:55,583
So, um, well, my, next question I had about that is, so you're essentially running your
own insurance company over there.
727
00:46:55,583 --> 00:47:01,045
and I'm guessing this is part of where you really come in and helping, administrate the
plan.
728
00:47:01,045 --> 00:47:07,195
do you have to underwrite specific risks that you're covering ahead of time?
729
00:47:07,251 --> 00:47:12,517
ah or what things are you allowed to use that money for?
730
00:47:12,517 --> 00:47:14,260
When do you get to cash that in?
731
00:47:14,256 --> 00:47:17,481
Okay, so yeah, we are the administrator, right?
732
00:47:17,481 --> 00:47:21,609
So we're going to underwrite and recognize self-insured risks.
733
00:47:21,609 --> 00:47:22,853
We're going to run through your policies.
734
00:47:22,853 --> 00:47:24,413
We're going to show you the exclusions.
735
00:47:24,413 --> 00:47:25,478
We're going to wrap.
736
00:47:25,478 --> 00:47:29,140
endorsements or policies around those exclusions or you have a first dollar loss.
737
00:47:29,140 --> 00:47:38,265
We're seeing a lot of coinsurance clauses now come in, very similar to healthcare, where I
had a deductible but now I got a wind damage or I got a hail damage and I got a separate
738
00:47:38,265 --> 00:47:43,909
coinsurance on top of that where I got to come in 20 % on top of my deductible.
739
00:47:43,909 --> 00:47:49,413
So we'll start to build a policy around that first dollar loss and start to fund for that,
right?
740
00:47:49,413 --> 00:47:50,706
God forbid if it happens.
741
00:47:50,706 --> 00:47:57,752
And again, most business owners, they don't have like a sinking fund where they were, in
case this happens, I'm gonna take after tax dollar and put it in his account.
742
00:47:57,752 --> 00:47:59,983
Nobody's really doing that, right?
743
00:47:59,983 --> 00:48:04,357
This kind of forces that to recognize that first and foremost.
744
00:48:04,357 --> 00:48:06,238
So that gets back to that.
745
00:48:06,586 --> 00:48:09,467
you start to sleep a little better at night knowing you've done this thing, right?
746
00:48:09,467 --> 00:48:17,821
Because now you're not relying on lines of credit, operating capital, or your own personal
savings that you've made out of the company, but now you'd have to loan it right back in
747
00:48:17,821 --> 00:48:21,504
because now it's got a huge expense that was not in operating capital, right?
748
00:48:21,504 --> 00:48:23,965
So those are just great...
749
00:48:23,965 --> 00:48:25,406
strategies honestly.
750
00:48:25,406 --> 00:48:32,622
are you know I tell clients that's not you know if you're a good year to take a little bit
off the top park it off to the side it's not only good risk management it's just good
751
00:48:32,622 --> 00:48:37,626
business and you know it's like it's like I get back into that 08 conversation.
752
00:48:37,626 --> 00:48:43,811
You're still taking the deduction as if you bought the equipment but you still have the
money.
753
00:48:43,856 --> 00:48:44,511
Yeah.
754
00:48:44,511 --> 00:48:45,671
a big difference.
755
00:48:45,671 --> 00:48:48,371
And I'm all about people buying equipment when they need it, right?
756
00:48:48,371 --> 00:48:51,922
But that's where the tax tail wags the dog kind of thing.
757
00:48:51,922 --> 00:48:56,642
to spend a dollar to save 40 cents, somehow will make sense of it.
758
00:48:56,642 --> 00:49:01,182
I'm guilty of it in my younger days, so I'm not saying I wasn't.
759
00:49:01,502 --> 00:49:03,162
there's not a lot.
760
00:49:03,162 --> 00:49:04,882
If you need it, you need it.
761
00:49:04,937 --> 00:49:11,177
And you know a sad thing, what I witnessed back in 08, thinking about 08, when people were
doing that, buying more stuff.
762
00:49:11,177 --> 00:49:14,750
Well, yeah, they eventually said, well, that's eating at me.
763
00:49:14,750 --> 00:49:15,921
That skit steer can't be.
764
00:49:15,921 --> 00:49:17,042
We got to put that thing to work.
765
00:49:17,042 --> 00:49:24,619
Well, let's go bid more work, lower our margin down to get the job, and then we'll have
more work.
766
00:49:24,619 --> 00:49:30,717
And I have literally sat and I'll never forget a great guy that owned a plumbing business,
had like 20 employees.
767
00:49:30,717 --> 00:49:34,279
And he looked at me, we were talking one day on his renewal and.
768
00:49:34,457 --> 00:49:38,158
rates were going up of course and coverages and had some losses and all that.
769
00:49:38,158 --> 00:49:41,000
Great conversations you have with your business owner on that.
770
00:49:41,000 --> 00:49:49,964
And he said to me, goes, know, I literally think I made more money with very little, when
I had eight guys with eight trucks and I had very little headache relative to this.
771
00:49:49,964 --> 00:49:55,247
And I'm making less money, take home money, now that I got 20 guys with 20 trucks.
772
00:49:55,247 --> 00:49:57,532
And the way he got there was,
773
00:49:57,532 --> 00:50:01,234
He'd have a good year and he'd buy more stuff and he'd admire more employees.
774
00:50:01,234 --> 00:50:03,515
That's literally a hamster wheel at that point, right?
775
00:50:03,515 --> 00:50:05,697
And it just keeps getting faster and faster.
776
00:50:05,697 --> 00:50:07,978
That's what I don't want business owners to get themselves into.
777
00:50:07,978 --> 00:50:18,934
I want it to be strategic growth, not tax, you know, not avoidance of taxes because I
gotta go, you know, and that's, you know,
778
00:50:19,586 --> 00:50:23,595
It's very safe from a CPA's perspective for you to go buy more stuff.
779
00:50:26,846 --> 00:50:28,788
Yeah, they're not gonna lose sleep over it.
780
00:50:28,788 --> 00:50:32,492
You're not like, you're doing some kind of really rude tax scheme here, you know?
781
00:50:32,492 --> 00:50:33,823
No, it's pretty black and white.
782
00:50:33,823 --> 00:50:36,497
And they just put it back in the big, beautiful bill.
783
00:50:36,497 --> 00:50:39,295
think they accelerated the appreciation up to a million bucks.
784
00:50:39,295 --> 00:50:39,640
Yup.
785
00:50:39,640 --> 00:50:45,780
And I want people to be strategic on growth, not let the tax tell back the dog.
786
00:50:45,780 --> 00:50:50,191
again, these guys are good people, hey, they don't want to pay any more taxes.
787
00:50:50,191 --> 00:50:54,591
They get upset about paying taxes more than anybody else.
788
00:50:54,791 --> 00:50:57,411
And they're like, yeah, I want to grow my business.
789
00:50:57,411 --> 00:51:00,591
So they go out and buy a piece of equipment, or they go out and buy a truck.
790
00:51:00,791 --> 00:51:03,031
And they're going to put it to work.
791
00:51:03,031 --> 00:51:05,562
They're not going to sit in the...
792
00:51:05,562 --> 00:51:13,122
bone, what am I, the backyards and just sit there and there in the bullpens and not put it
to work, you know?
793
00:51:13,120 --> 00:51:16,933
And so, you know, but hey, for more work, we gotta bid more work.
794
00:51:16,933 --> 00:51:22,620
We gotta, you know, now we start to lower our margins, which is crazy, but it happens all
the time, all the time.
795
00:51:22,620 --> 00:51:27,614
you just nailed a couple of my pet peeves there is I got some advice early on in business.
796
00:51:27,614 --> 00:51:29,004
I repeated all the time is
797
00:51:29,004 --> 00:51:32,026
make your business decisions as business decisions.
798
00:51:32,026 --> 00:51:40,721
And at the end of the year, when it's time to pay your taxes, take advantage of every
write off you can, but you never make a business decision because of the write off.
799
00:51:40,721 --> 00:51:43,633
You write off things that were wise business decisions
800
00:51:43,633 --> 00:51:44,607
and uh,
801
00:51:44,607 --> 00:51:48,041
I think you mentioned, you know, talking to CPAs and them as advisors.
802
00:51:48,041 --> 00:51:55,467
I've, I've come to the opinion that, uh, right now you brought up AI and everybody talks
about, well, AI is only as useful as the input.
803
00:51:55,467 --> 00:51:56,999
You have to ask the right questions.
804
00:51:56,999 --> 00:51:58,470
You have to have the right input.
805
00:51:58,470 --> 00:52:00,582
And I think the CPA it's the same way.
806
00:52:00,582 --> 00:52:03,915
if you ask, can I pay less taxes by buying equipment?
807
00:52:03,915 --> 00:52:05,376
The answer is yes.
808
00:52:05,376 --> 00:52:06,917
That's exactly what it does.
809
00:52:06,917 --> 00:52:09,579
If you ask, will I have more money this year?
810
00:52:09,579 --> 00:52:13,392
And next year, if I buy new equipment, the answer might be no.
811
00:52:16,363 --> 00:52:17,344
Yeah.
812
00:52:18,711 --> 00:52:19,351
man.
813
00:52:19,351 --> 00:52:21,011
you know, it's funny about write-offs.
814
00:52:21,011 --> 00:52:21,751
I'll never forget.
815
00:52:21,751 --> 00:52:26,771
So I had a business partner in the insurance agency and he didn't last very long, but it
was all good.
816
00:52:26,811 --> 00:52:37,662
But I never forget when he, there was one office, he was the next office and somebody came
into my office to talk to me about advertising on a poster for the local football team.
817
00:52:37,662 --> 00:52:40,462
And they said, oh, it's a great write-off.
818
00:52:40,462 --> 00:52:42,682
You know, you can write it all off, blah, blah, blah.
819
00:52:42,834 --> 00:52:50,894
And they get up and they walk out and I heard Phil, he spoke, hey man, I got great news.
820
00:52:51,214 --> 00:52:53,114
I'm like, oh, what Phil?
821
00:52:53,114 --> 00:52:53,694
He goes,
822
00:52:53,693 --> 00:52:57,068
we'll have so many write offs, we'll be able to write ourselves right out of business.
823
00:52:57,068 --> 00:52:57,919
Yes.
824
00:52:58,193 --> 00:53:05,199
And that always stuck in my head when I hear somebody tell me their sales pitches, oh, you
can write it off.
825
00:53:05,199 --> 00:53:06,410
Oh man.
826
00:53:06,410 --> 00:53:10,770
Again, like you said, you spend a dollar to save 30 cents.
827
00:53:11,930 --> 00:53:13,710
Oh great.
828
00:53:14,210 --> 00:53:15,070
Okay.
829
00:53:15,070 --> 00:53:17,341
Well, we'll get back on track here.
830
00:53:17,341 --> 00:53:29,034
I assume that most of the 831 plans are in addition to kind of your standard insurances
that most businesses carry liability insurance and...
831
00:53:29,034 --> 00:53:31,992
property, casualty, auto, is that accurate?
832
00:53:31,992 --> 00:53:35,899
This is usually in addition to that instead of a replacement of that.
833
00:53:36,054 --> 00:53:37,826
No, you're spot on.
834
00:53:37,826 --> 00:53:41,284
When I took my time out here to increase or decrease the risk you have.
835
00:53:41,284 --> 00:53:47,507
I'm here to recognize risks that you're self insuring for and how do we position dollars
more effectively to handle that.
836
00:53:47,507 --> 00:53:49,989
I think traditional insurance does a great job, honestly.
837
00:53:49,989 --> 00:54:01,615
Now, it does get to a point in time, and we do this as well, when we're having a client, a
big ag operation with a lot of employees may say, hey, I'm paying north of $500,000, I got
838
00:54:01,615 --> 00:54:04,476
good loss runs, got loss controls, all those things.
839
00:54:04,476 --> 00:54:09,338
We will start to build out that, we will start to replace those insurances as well.
840
00:54:09,551 --> 00:54:10,404
Yeah.
841
00:54:10,599 --> 00:54:16,562
company called Insure Edge, those are called macro captives where these are large
construction companies.
842
00:54:16,562 --> 00:54:24,715
Anybody paying north of $500,000 in traditional insurance, I got some dairymen here in
Idaho that pay a lot more than that and they're a great resource to have their own
843
00:54:24,715 --> 00:54:34,210
captive, meaning we'll start to put their own traditional insurances in that, but it's
very very niche and technical, honestly if you're paying
844
00:54:34,224 --> 00:54:36,358
You know, typically it's 40 cents on the dollar.
845
00:54:36,358 --> 00:54:37,899
if you're...
846
00:54:37,899 --> 00:54:45,899
If you're operating an insurance company, like traditional, you're buying insurance
company from all state travelers and whoever, 40 cents on the dollar, every dollar you pay
847
00:54:45,899 --> 00:54:48,479
them in premium just goes towards operations.
848
00:54:48,819 --> 00:54:51,839
Really the 60 cents left is paid claims.
849
00:54:51,859 --> 00:54:59,939
So when they tell you you're unprofitable, you paid $5,000 but you had a $4,000 claim that
year, to them you're unprofitable.
850
00:55:00,260 --> 00:55:07,394
What we do is when you get big enough though, let's say you're paying a million dollars in
traditional premiums, that's 400,000.
851
00:55:07,447 --> 00:55:18,327
now well now we can put $400,000 in your own still take the 600 and go buy reinsurance
Carriers in case you have a large loss, but you know you're now you're you're betting on
852
00:55:18,327 --> 00:55:26,907
yourself You're taking the profit and you're running a lot more efficient than some some
big insurance companies run it right so That's how that works.
853
00:55:26,907 --> 00:55:30,327
So if people are used to hearing that We do that very well.
854
00:55:30,327 --> 00:55:34,918
I would say one of the persons one of the people that works in that division for me in my
company
855
00:55:34,918 --> 00:55:42,002
Stephanie Forbes is probably no better educated person when it comes to that kind of a
program and she's great.
856
00:55:42,002 --> 00:55:47,644
But that's very, very specific and there's just not a lot of clients like that out there
that have paid those big premiums.
857
00:55:47,644 --> 00:55:55,327
But most of them already know about it or they've looked at it or if they haven't then
they absolutely should be looking at something like that for sure.
858
00:55:55,486 --> 00:55:56,316
Okay.
859
00:55:56,316 --> 00:56:06,271
And so for, you know, a lot of our listeners are young business people or new business
people, like we said, tradesmen that they'd eventually end up running a business and are
860
00:56:06,271 --> 00:56:07,402
educating themselves.
861
00:56:07,402 --> 00:56:16,657
What are some of the common things that maybe people don't expect that it would be wise to
plan for and self-insure through that maybe people just don't think about?
862
00:56:16,653 --> 00:56:22,553
You know, one of the things, quite honestly, Erick, was, you know, did you rely on PPP or
the ERC programs?
863
00:56:22,553 --> 00:56:25,053
And if you did, what are you doing differently today?
864
00:56:25,413 --> 00:56:32,213
You know, God forbid if it happened again, but I don't know if we can expect or should we
expect the government to do what they did going forward.
865
00:56:32,213 --> 00:56:32,853
That's one thing.
866
00:56:32,853 --> 00:56:35,133
So that's kind of spun some folks up in their heads.
867
00:56:35,133 --> 00:56:41,013
And then too, if they've been in business long enough, they know they, you know, one of
the big gaps we see is warranties.
868
00:56:41,013 --> 00:56:43,433
You know, they offer a lot of warranties, service contracts.
869
00:56:43,433 --> 00:56:46,253
You know, they sign a three or four year service contract.
870
00:56:46,560 --> 00:56:54,640
and they're just gonna keep betting every year they sell enough of those to make up for
the difference in other areas because of ongoing cash needs.
871
00:56:54,780 --> 00:57:03,600
Because, hey, I sold 500 service contracts this year, great, you picked all out of his
income this year, but you just booked it out, you just booked the liability for the next
872
00:57:03,600 --> 00:57:08,680
three years for that guy to go out and check on the HVAC and AC twice a year.
873
00:57:08,680 --> 00:57:10,940
And he's gonna wanna get paid when he goes out there.
874
00:57:10,940 --> 00:57:13,960
And if he doesn't pick up another job while he's there,
875
00:57:14,349 --> 00:57:17,329
That's a loss leader in your business now.
876
00:57:17,349 --> 00:57:22,589
And the only thing that's making that up is you're selling other service contracts that
year.
877
00:57:22,689 --> 00:57:31,230
But we all know if economy takes a hit, first and foremost, people are going to want to
make sure you come out and check their ACs and their HVACs and all that.
878
00:57:31,230 --> 00:57:35,663
And the second one is they're less likely to renew or even want to buy your service
contracts.
879
00:57:35,663 --> 00:57:40,246
So that's when we could take a portion of those proceeds and put it into an 831B.
880
00:57:40,246 --> 00:57:47,692
as those folks are going out and doing that warranty deal, they could put a claim back on
those dollars and move them back into their operating company.
881
00:57:47,692 --> 00:57:49,883
And again, this is the efficiencies of business.
882
00:57:49,883 --> 00:57:54,098
What we're describing is big business does this all the time.
883
00:57:54,834 --> 00:58:03,759
And what we always wanted to do as a business, especially having these clients that were
clients of mine in the traditional insurance company, I wanted to price it and make it to
884
00:58:03,759 --> 00:58:10,363
where small to middle market business owners can take advantage this, not just the Fortune
500 companies or very large privately-owned companies.
885
00:58:10,363 --> 00:58:12,185
They're the first ones to adopt this.
886
00:58:12,185 --> 00:58:15,682
You may not be aware of this, but auto dealers are also a big adopter.
887
00:58:15,682 --> 00:58:21,317
mean, if they're trying to sell you a service con, any warranty that's being sold through
a dealership,
888
00:58:21,317 --> 00:58:25,897
through a furniture store, or any of kind, all have these 831B plans.
889
00:58:25,937 --> 00:58:30,837
They're taking those dollars out of their operating company and they're putting it in
their own 831B plans.
890
00:58:30,857 --> 00:58:39,148
And I can tell you what they're doing with those reserves and surpluses in the back room
is they're expanding on their ability to grow businesses in so many different ways.
891
00:58:39,148 --> 00:58:41,148
Warren Buffett's the epitome of insurance, right?
892
00:58:41,148 --> 00:58:43,428
I he owns more insurance companies than anything.
893
00:58:43,568 --> 00:58:48,508
And if you ever got any education or even watched that guy, he's the OPM guy, other
people's money.
894
00:58:48,508 --> 00:58:53,068
I mean, he uses other people money to invest in and not give you any interest why he has
it.
895
00:58:53,068 --> 00:58:54,475
And then he just gives it back to
896
00:58:54,475 --> 00:58:57,057
end of that period, but meanwhile, he knows how to make money.
897
00:58:57,057 --> 00:58:59,398
And I want business owners to do the same thing.
898
00:58:59,398 --> 00:59:03,610
And that's really getting back to that level of sophistication business owners need to be.
899
00:59:03,610 --> 00:59:09,862
And not be afraid to look at the types of tools like this and take advantage of all the...
900
00:59:09,889 --> 00:59:18,215
All the things that you said earlier, you should try to take advantage of all those tax
incentives that are out there for you, but be diligent and be smart about what you're
901
00:59:18,215 --> 00:59:18,605
doing.
902
00:59:18,605 --> 00:59:22,529
uh But this is just one more tool in the toolbox for business owners.
903
00:59:22,529 --> 00:59:24,739
But yeah, that's, yeah, so.
904
00:59:24,739 --> 00:59:25,420
I love that.
905
00:59:25,420 --> 00:59:27,960
My mind went right there as you were talking about that.
906
00:59:27,960 --> 00:59:37,668
was like, for all the years that I've been paying insurance, I didn't know it was the
60-40, but I wondered how much of that went to paying claims, how much of it was overhead,
907
00:59:37,668 --> 00:59:39,408
not much of it was profit.
908
00:59:39,408 --> 00:59:44,804
And then I thought, yeah, I own a little bit of Berkshire Hathaway stock and it does
pretty good every year.
909
00:59:44,804 --> 00:59:48,656
It'd be nice to just keep that yourself instead of a...
910
00:59:48,866 --> 00:59:51,138
paying them their overhead and profit.
911
00:59:51,138 --> 01:00:01,145
And now at this plan, if you can have that money invested and growing and when one of
those big losses does come up, you get to use your own money that has been invested
912
01:00:01,145 --> 01:00:07,960
earning an income for you rather than borrowing and taking on another liability and paying
more interest.
913
01:00:07,960 --> 01:00:13,085
So at the time of that claim, really you're kind of getting the double win and a tax
advantage along the way.
914
01:00:13,085 --> 01:00:15,082
get to invest the government's money and
915
01:00:15,082 --> 01:00:17,271
It sounds like a win all the way around.
916
01:00:17,641 --> 01:00:23,961
Oh yeah, and you know some of the things that we're talking about, and then the other
thing is called the enterprise risk, which is now they got to worry about brand
917
01:00:23,961 --> 01:00:25,401
protection, right?
918
01:00:25,401 --> 01:00:28,701
You know, we try to build our brand in all of our business.
919
01:00:28,701 --> 01:00:35,853
Our reputation is everything when it comes to Google reviews, know, podcast, mean,
reputation is everything.
920
01:00:35,853 --> 01:00:37,844
The second one would be supply chain risk.
921
01:00:37,844 --> 01:00:43,384
And then the other one is, we're seeing a cyber, and then the other one, the big one is
third party business interruption.
922
01:00:43,384 --> 01:00:45,481
More and more people are dependent on their CRM.
923
01:00:45,481 --> 01:00:50,514
own systems, more more people, their files are held in the clouds, they get compromised.
924
01:00:50,514 --> 01:00:55,916
I can't pull down my customer base any longer to either market.
925
01:00:55,916 --> 01:00:58,096
contact, which happens.
926
01:00:58,096 --> 01:01:02,576
mean, and then they get held hostage on their phishing and meanwhile it's affecting your
business.
927
01:01:02,576 --> 01:01:07,456
There is no traditional insurance that's going to trigger coverage for you on that
business interruption side either.
928
01:01:07,456 --> 01:01:16,236
And so, you know, again, the complications of running a business and the amount of
self-insured risk you're already doing, you just don't know about it.
929
01:01:16,236 --> 01:01:17,956
A very good example is PPP.
930
01:01:17,956 --> 01:01:19,876
You know, hey, the government's going to shut me down.
931
01:01:19,876 --> 01:01:20,836
Oh, okay.
932
01:01:20,836 --> 01:01:22,376
My insurance is going to cover me?
933
01:01:22,376 --> 01:01:23,316
No.
934
01:01:23,476 --> 01:01:24,296
No.
935
01:01:24,358 --> 01:01:27,091
And so that's why the government had to do what they did.
936
01:01:27,091 --> 01:01:31,878
at the same time, you know, that's just one, that was just a, I can go into stories.
937
01:01:31,878 --> 01:01:33,239
I get a lot of stuff down in Florida.
938
01:01:33,239 --> 01:01:35,322
You know, they get a hurricane coming their way.
939
01:01:35,322 --> 01:01:36,573
Hey, you gotta shut down.
940
01:01:36,573 --> 01:01:38,025
They shut down for five days.
941
01:01:38,025 --> 01:01:39,177
Hurricane never hits.
942
01:01:39,177 --> 01:01:40,010
Well.
943
01:01:40,010 --> 01:01:41,450
That's five days of operations.
944
01:01:41,450 --> 01:01:45,790
They weren't able to collect revenues from their, you know, what, sell their products or
whatever.
945
01:01:45,790 --> 01:01:50,030
And so there's, there's always constant disruptions in business today.
946
01:01:50,130 --> 01:01:52,670
It's, it's, uh, we deal with it all the time.
947
01:01:52,670 --> 01:01:54,490
I, Dallas with ice.
948
01:01:54,490 --> 01:02:00,181
I don't know what goes on down there, but you know, uh, nobody's going to get on the road.
949
01:02:00,181 --> 01:02:01,521
Nobody's going to come and see you.
950
01:02:01,521 --> 01:02:07,041
Dentists aren't going to have, you know, it's just a huge disruption in those parts of the
world.
951
01:02:07,520 --> 01:02:09,841
And we have it every year it seems like.
952
01:02:09,841 --> 01:02:18,161
Anytime there's a hell, or excuse me, an ice storm down there, we're having business
interruption claims come in because some of these businesses run on pretty thin margins.
953
01:02:18,161 --> 01:02:19,741
They make it up on volume.
954
01:02:19,741 --> 01:02:29,085
And if they can't have the, if they can't create the volume because they have to close
down for five, six, seven, eight days in that month, that could be a big hit to them.
955
01:02:29,085 --> 01:02:29,266
You
956
01:02:29,261 --> 01:02:29,692
know?
957
01:02:29,692 --> 01:02:34,678
I mean, there's a lot of retail stores that their net might be 5 % or less.
958
01:02:34,678 --> 01:02:41,045
If you're shut down for a week, you know, one week might be, yeah, yeah, that's your whole
year's profit.
959
01:02:41,045 --> 01:02:45,000
um, no, no.
960
01:02:45,000 --> 01:02:51,138
still want the, you know, so the bank still wants to get paid on their loans, you know?
961
01:02:51,345 --> 01:02:52,138
Yeah.
962
01:02:52,138 --> 01:03:03,946
And so I know when we first started communicating, said you had recently walked through a
pretty significant uh cyber claim within a construction company, which, yeah, I know I'm
963
01:03:03,946 --> 01:03:04,866
guilty of it too.
964
01:03:04,866 --> 01:03:11,090
When my insurance agent started talking about cyber stuff, my eyes kind of glass over
because I'm in, I'm a trade business.
965
01:03:11,090 --> 01:03:13,061
don't, we don't do cyber stuff.
966
01:03:13,061 --> 01:03:18,685
We're not running things on the web, but in today's world where everybody's using cloud
and everybody
967
01:03:18,685 --> 01:03:23,742
even has just sensitive files stored on their own servers, that can be a real liability.
968
01:03:23,742 --> 01:03:27,657
Could you tell us a little bit more about that incident, what happened?
969
01:03:27,696 --> 01:03:31,039
yeah, they had a policy that's very low, very low limits.
970
01:03:31,039 --> 01:03:38,265
honestly, the cyber policies today are written in a way to really protect you from the
cost of the guidelines.
971
01:03:38,326 --> 01:03:46,303
And the guidelines are, if you're compromised, if you your client files or it became
public, and if you're collecting social security numbers, date of births, and all that
972
01:03:46,303 --> 01:03:49,775
kind of stuff, and somehow you get...
973
01:03:50,198 --> 01:03:58,652
that those files get stolen from you, you gotta notify, you gotta give them credit watch
for the next two years, know, kind of like LifeLock or whatever and all that kind of
974
01:03:58,652 --> 01:03:59,092
stuff.
975
01:03:59,092 --> 01:04:03,374
So that's very traditional type coverages inside those cyber policies.
976
01:04:03,374 --> 01:04:06,435
What's never really covered is a forensic.
977
01:04:06,435 --> 01:04:16,781
So meaning you gotta hire a forensic team to come in and how they penetrated into your
firewalls to get into your content or your third party was disrep, and you have a hold
978
01:04:16,781 --> 01:04:18,235
harmless on the third party
979
01:04:18,235 --> 01:04:20,779
that you didn't create the cyber breach, but they did.
980
01:04:20,779 --> 01:04:22,220
That happens a lot.
981
01:04:22,220 --> 01:04:25,163
And then too, sometimes your stuff is held in ransom.
982
01:04:25,163 --> 01:04:25,974
That happens often.
983
01:04:25,974 --> 01:04:28,868
Or you wire money to the wrong people, you got fished.
984
01:04:28,868 --> 01:04:35,751
And that's really where that kind of comes into play today is, especially companies that
wire money and move money around, it's crazy.
985
01:04:35,751 --> 01:04:39,083
They got how sophisticated things have gotten in that space.
986
01:04:39,083 --> 01:04:43,645
It's pretty scary ah because AI is being used now for voice overreach even.
987
01:04:43,645 --> 01:04:48,608
CEO calls up, acts like, you that's why we're recommending now, you know, like.
988
01:04:49,167 --> 01:04:57,528
Keywords to be used when there's a request for a wire Never wire somebody calls up and
says hey I need to change my wire instructions or they send you an email with wire
989
01:04:57,528 --> 01:05:06,248
instructions You know we always you got to send a test wire today say hey tell me what I
just wired into your account You know if it's two dollars and fifty cents.
990
01:05:06,248 --> 01:05:06,708
is it?
991
01:05:06,708 --> 01:05:14,428
I mean it's all of those things you need to be proactive on but unfortunately every year
More times than not we have clients it
992
01:05:14,622 --> 01:05:23,435
Because if they want to help and please the client, they, we want to do things fast and
appropriate, you know, this may not be our money, or the client should have already been
993
01:05:23,435 --> 01:05:29,956
paid it, or suppliers should have already been given the money, we need it in order to get
the product, I mean, all sorts of stuff, right, that we do.
994
01:05:29,977 --> 01:05:38,300
In our haste, things come up, you know, an email that was masked to look like your email,
you're getting, again, in a hurry.
995
01:05:38,412 --> 01:05:48,092
You don't pay attention and now you wired money off, know several hundred thousand dollars
off to the wrong account never to be seen or heard from again and banks will not reverse
996
01:05:48,092 --> 01:06:00,292
that you are You're on your own and so it's those types of things that happen and I do
hope people get training and protocols We actually have great if you're a client of ours,
997
01:06:00,292 --> 01:06:02,832
you always have access to cyber training
998
01:06:03,181 --> 01:06:08,165
And most of it comes down to about 90 % employee mistakes, honestly.
999
01:06:08,245 --> 01:06:11,369
Mostly wanting to please the boss to make sure it gets done timely.
1000
01:06:11,369 --> 01:06:17,574
And they kind of, like I said, they insert themselves at the right time on these emails.
1001
01:06:17,574 --> 01:06:19,537
And it's very sophisticated stuff.
1002
01:06:19,537 --> 01:06:20,878
it happens all the time.
1003
01:06:20,878 --> 01:06:21,659
I wish it didn't.
1004
01:06:21,659 --> 01:06:23,580
It's gotta get better.
1005
01:06:23,580 --> 01:06:26,241
I hope AI kind of cleans that up somehow, but.
1006
01:06:26,241 --> 01:06:28,361
It's so rapid.
1007
01:06:28,361 --> 01:06:31,492
It's mind blowing to me how bad it is.
1008
01:06:31,813 --> 01:06:34,253
I was just having that conversation the other day.
1009
01:06:34,253 --> 01:06:37,761
It blows my mind the ACH transfers.
1010
01:06:37,761 --> 01:06:46,681
In a world that is, you know, I gotta click a button on my phone and receive a text and
open a letter in the mail just to sign into my email.
1011
01:06:46,722 --> 01:06:53,522
And yet I can send $100,000 via ACH with a name, a routing number, and an account number.
1012
01:06:53,522 --> 01:06:56,862
No password, no confirmation, no trigger word, nothing.
1013
01:06:56,862 --> 01:06:58,922
It's just there it is and it's gone.
1014
01:06:58,922 --> 01:07:02,502
It blows my mind that there isn't more security there.
1015
01:07:02,582 --> 01:07:04,982
So yeah, it's a real thing.
1016
01:07:05,258 --> 01:07:15,383
Yeah, and they look for businesses that transact that way and they either compromise,
somebody sends them a link, sends them some kind of email that looks attractive enough to
1017
01:07:15,383 --> 01:07:20,466
hit a link, and then they put their Trojans inside your deal and they just wait.
1018
01:07:20,466 --> 01:07:22,428
And then they intersect that email.
1019
01:07:22,428 --> 01:07:24,409
There's not a human eyes looking at it.
1020
01:07:24,409 --> 01:07:32,332
I'm sure they build algorithms and stuff like that that say, wait a minute, somebody's
getting ready to wire some funds, let's intersect this and put an email in there saying,
1021
01:07:32,332 --> 01:07:34,073
hey, we changed it.
1022
01:07:34,073 --> 01:07:43,604
We changed our bank this year, it's this wire and it looks, feels like the same person
that you might have gotten talked to two days ago on a phone.
1023
01:07:43,604 --> 01:07:48,515
So it's all of those things that, and there's no insurance for that.
1024
01:07:48,675 --> 01:07:50,575
Insurance companies will not cover that.
1025
01:07:50,575 --> 01:07:59,215
They're gonna deem that to be more of errors and omissions or an intentional act.
1026
01:07:59,362 --> 01:07:59,743
Right?
1027
01:07:59,743 --> 01:08:01,604
And I get where the insurance companies are at.
1028
01:08:01,604 --> 01:08:05,568
How do you, I mean, how much do we want to pay in premiums to offer that kind of coverage
to us?
1029
01:08:05,568 --> 01:08:06,229
You know what mean?
1030
01:08:06,229 --> 01:08:07,370
It wouldn't be cheap.
1031
01:08:07,370 --> 01:08:10,163
It'd be a lot of money if they covered you for everything, right?
1032
01:08:10,163 --> 01:08:13,775
Insurance companies are never gonna, they can't afford to offer you for everything, right?
1033
01:08:13,766 --> 01:08:14,747
Yeah, exactly.
1034
01:08:14,747 --> 01:08:18,051
Do you want to tell us a little bit about that specific claim?
1035
01:08:18,051 --> 01:08:21,245
What happened and how you were able to walk with them through that?
1036
01:08:21,430 --> 01:08:29,125
Yeah, so when he did turn around and had that situation happen where he wired money
mistakenly to the wrong counts, yeah, we submitted a claim.
1037
01:08:29,125 --> 01:08:35,287
We investigated the claim, found it to be a valid claim, and we were able to recapture.
1038
01:08:35,287 --> 01:08:37,837
I shouldn't say we were able to go out and get that money.
1039
01:08:37,837 --> 01:08:41,308
Now, he did get some of that money back, actually, but he didn't get all of it back.
1040
01:08:41,308 --> 01:08:45,810
And put a claim against his 831B plan and was made whole that year.
1041
01:08:46,235 --> 01:08:54,286
You can just imagine if it hits you at the wrong time, know, cash flows everything and all
of sudden now you got this, you know, you just threw money into a black hole unbeknownst
1042
01:08:54,286 --> 01:09:01,457
to you or one of your CFOs or your controller or whatever, bookkeeper or whatever, however
you're operating your company.
1043
01:09:01,457 --> 01:09:08,117
You know, you as the owner, you know, you got to come up with the difference of that and
sometimes that can be really painful.
1044
01:09:08,157 --> 01:09:09,599
And that's really where...
1045
01:09:09,599 --> 01:09:18,016
We kind of shine, honestly, because over the years you've been able to put money away that
when you were profitable and your things are good and you had a tax liability, you you're
1046
01:09:18,016 --> 01:09:26,943
able to save for those, for these unexpected type of losses where, you know,
unfortunately, you know, if you're having a bad year, just from a business standpoint, you
1047
01:09:26,943 --> 01:09:33,549
know, which happens obviously, and you take this hit on top of it, you know, sometimes
that could be the difference between living and dying, unfortunately.
1048
01:09:33,647 --> 01:09:34,433
Yeah.
1049
01:09:34,601 --> 01:09:39,452
And I think that's really where, it's one of those things you don't search these things
out.
1050
01:09:39,452 --> 01:09:47,612
But one of the things that was said to me early on in my career doing this, and I knew I
was on the right path at that point, is when the business owner said to me, you know, Van,
1051
01:09:47,612 --> 01:09:50,083
I just sleep better at night knowing I've done this.
1052
01:09:50,083 --> 01:09:54,454
And I jokingly say I still don't sleep that great to this day, but.
1053
01:09:54,454 --> 01:09:57,574
It's nice to hear a business owner say that to you though.
1054
01:09:57,834 --> 01:10:06,754
That's probably the biggest compliment you can get in the risk management profession
business that, hey, I just sleep better at night knowing I did your program.
1055
01:10:06,754 --> 01:10:12,114
And know, truthfully too, Erick, you know the traditional insurance, and we work with a
lot of property and casualty agents.
1056
01:10:12,114 --> 01:10:15,465
guys that do what I used to do.
1057
01:10:15,465 --> 01:10:18,145
You know, they're looking to solve problems too for their clients, right?
1058
01:10:18,145 --> 01:10:20,676
They want to bring solutions like this to the table.
1059
01:10:20,676 --> 01:10:23,456
One these I never really loved being a property casualty agent.
1060
01:10:23,456 --> 01:10:24,136
Van I love you.
1061
01:10:24,136 --> 01:10:25,616
You're a great guy.
1062
01:10:25,916 --> 01:10:28,627
I enjoy the fact you buy me lunch every year on the renewal.
1063
01:10:28,627 --> 01:10:31,147
But every time I see you, you cost me more money.
1064
01:10:31,147 --> 01:10:36,667
And that was never a great feeling, honestly, you mean, you don't want to...
1065
01:10:36,667 --> 01:10:43,361
Anyway, but when this program came out and when I really embraced it and saw the
advantages from small to middle market
1066
01:10:43,361 --> 01:10:47,387
business owners, you know, I save them money now and that's a good feeling.
1067
01:10:47,928 --> 01:10:48,948
Yeah, that's great.
1068
01:10:48,948 --> 01:10:52,984
That's a joke I make a lot is my background is in a roofing business.
1069
01:10:52,984 --> 01:11:00,282
And I said that the next business I run, I want to sell like four wheelers or boats or
something because nobody is ever excited to write me a check.
1070
01:11:00,282 --> 01:11:05,627
I might provide great services, give them what they need, really help them, but they're
never happy to pay me.
1071
01:11:05,627 --> 01:11:08,721
uh
1072
01:11:08,721 --> 01:11:09,753
Same thing with insurance.
1073
01:11:09,753 --> 01:11:12,616
yeah, no, roofing guys are great, man.
1074
01:11:12,616 --> 01:11:13,918
We do stuff for roofers.
1075
01:11:13,918 --> 01:11:17,092
It's the, it's the, you know, it's crazy back East, man.
1076
01:11:17,092 --> 01:11:19,185
I can't believe how competitive roofing is.
1077
01:11:19,185 --> 01:11:19,776
man.
1078
01:11:19,776 --> 01:11:20,107
Yeah.
1079
01:11:20,107 --> 01:11:23,683
In some markets, especially it gets, it gets pretty cutthroat.
1080
01:11:23,683 --> 01:11:24,092
So.
1081
01:11:24,092 --> 01:11:25,664
sell on the warranty.
1082
01:11:25,664 --> 01:11:28,807
I'm like, warranty's coming down to the differentiator, who do you go with?
1083
01:11:28,807 --> 01:11:30,088
And it's been interesting.
1084
01:11:30,088 --> 01:11:33,082
So we've actually enhanced some of these guys back east, their program.
1085
01:11:33,413 --> 01:11:42,527
on making it more competitive on the warranty side because now they're going to include
labor not just the shingle, you know, 25-year shingle, but to also include the labor in if
1086
01:11:42,527 --> 01:11:44,359
they got to come in there 10 years from now.
1087
01:11:44,359 --> 01:11:45,640
And it's been interesting.
1088
01:11:45,640 --> 01:11:52,663
We've worked with some, we've worked with some labor, some roofing guys back, especially
Michigan and the Minnesota area.
1089
01:11:52,663 --> 01:11:59,537
mean, the older homes, obviously, a lot of older homes and older areas, they needed those
roofs replaced and.
1090
01:11:59,537 --> 01:12:03,590
Yeah, anyway, been interesting from seeing what goes on in the roofing industry.
1091
01:12:03,584 --> 01:12:07,967
You kind of covered this a little bit earlier, but I'll switch directions go to
1092
01:12:08,136 --> 01:12:12,816
question more about kind of your business rather than the product you provide.
1093
01:12:12,976 --> 01:12:22,436
Was there a particular impetus or something that caused you to want to move into the 831
plans rather than your old agency?
1094
01:12:22,509 --> 01:12:24,750
Yeah, was definitely the 08.
1095
01:12:24,750 --> 01:12:27,290
I mean, there had to be a smarter, better way to run business.
1096
01:12:27,290 --> 01:12:29,720
And that's really where...
1097
01:12:29,997 --> 01:12:39,058
When I saw the gentleman that had four or five of these in place leading up to 08 and what
he was able to do with that money, those reserves and surpluses over all those good years
1098
01:12:39,058 --> 01:12:47,578
of selling RVs and manufacturing RVs, he was the only one showing up at the auctions when
these other RV manufacturers were going out of business.
1099
01:12:47,618 --> 01:12:50,798
He was the only one that showing up to buy the raw materials.
1100
01:12:50,798 --> 01:12:53,958
I mean, he was literally buying raw materials for 10 cents on the dollar.
1101
01:12:53,958 --> 01:12:55,598
He was the only one that had the money.
1102
01:12:55,598 --> 01:12:59,272
The one thing that, you know, going back to 08 and through that time,
1103
01:12:59,272 --> 01:13:06,117
I mean the one comment that always resonated, always heard, man if I only had the cash.
1104
01:13:06,117 --> 01:13:07,879
mean banks weren't gonna loan you money, right?
1105
01:13:07,879 --> 01:13:18,628
But I can't remember how many times I heard that between real estate, buying a business,
going to the auction, buying raw materials or equipment, or man if I only had the cash.
1106
01:13:18,628 --> 01:13:23,151
And that's really what flipped my trigger was like, yeah this is what smart businesses do.
1107
01:13:23,151 --> 01:13:25,252
This is what smart money does.
1108
01:13:25,252 --> 01:13:28,254
You you don't go buy a stock when it's an all-time high.
1109
01:13:28,254 --> 01:13:28,955
right?
1110
01:13:28,955 --> 01:13:39,568
And it's very similar in business and I think when if you're in a certain industry,
roofing if I'm making money, more likely my competitors are making money too.
1111
01:13:39,568 --> 01:13:43,703
It's when times get tough can I still make money when my competitors aren't.
1112
01:13:43,703 --> 01:13:49,326
And that's the difference again between living and dying or growing your business or not
growing your business.
1113
01:13:49,326 --> 01:13:54,949
And I think everybody makes money when everybody's either on plateau or on a peak or on a
climb.
1114
01:13:54,949 --> 01:13:57,650
Mostly, not as bad managers, right?
1115
01:13:57,650 --> 01:14:04,744
But for the most part, as an overall industry within what you're doing, probably
everybody's making money in there, right?
1116
01:14:04,744 --> 01:14:05,776
I mean, more than likely.
1117
01:14:05,776 --> 01:14:08,407
They may not be spending it wisely, but they're still making money.
1118
01:14:08,407 --> 01:14:15,942
But it's when those troughs happen, you know, when things do go down the other way, when
there's a peak and now there's a down downward slope.
1119
01:14:15,959 --> 01:14:19,360
And then you have this trough and then we all kind of come out of that trough.
1120
01:14:19,360 --> 01:14:21,443
mean, this is what happens.
1121
01:14:21,443 --> 01:14:23,724
You don't make your money going down the trough.
1122
01:14:23,724 --> 01:14:31,648
You might make your money down the bottom of it if you're a really good manager and frugal
and have got the money.
1123
01:14:31,648 --> 01:14:34,989
But it's really the upward trajectory on that other side.
1124
01:14:34,989 --> 01:14:42,783
And that's really where you can grow your business because the other businesses that
you're the people you were competing with are out of business or they've been stifled so
1125
01:14:42,783 --> 01:14:44,734
much and so fearful of moving forward.
1126
01:14:44,734 --> 01:14:53,383
that they're not going to move as fast as you can because you've got the war chest or the
rainy day fund sitting in the back room because as you were climbing you were putting some
1127
01:14:53,383 --> 01:15:02,012
of that away as well not just spending it or you know and you know that those are the
those are things that the business owners need to be aware of and the opportunities that
1128
01:15:02,012 --> 01:15:04,467
sit there are significant
1129
01:15:04,454 --> 01:15:05,385
quite honestly.
1130
01:15:05,385 --> 01:15:07,316
that's some incredible advice right there.
1131
01:15:07,316 --> 01:15:10,929
And even in my uh relatively short career, I've seen that.
1132
01:15:10,929 --> 01:15:15,872
I've always been adverse to borrowing money.
1133
01:15:15,872 --> 01:15:17,813
I'm not a big fan of having payments.
1134
01:15:17,813 --> 01:15:20,876
I grew up in the construction industry and saw just what you're saying.
1135
01:15:20,876 --> 01:15:26,181
There's good years and bad years and loans that you get on the good years are hard to pay
on the bad years.
1136
01:15:26,181 --> 01:15:26,690
So.
1137
01:15:26,690 --> 01:15:27,059
Yep.
1138
01:15:27,059 --> 01:15:31,341
and I've even gone further than that and been, run things pretty cash heavy.
1139
01:15:31,341 --> 01:15:41,164
And so just what you said, there's, uh, a couple of years kind of in the middle of my
tenure of owning the business that, when all my peers and colleagues were selling off
1140
01:15:41,164 --> 01:15:46,325
equipment, I was buying it because we had some cash and stuff was on sale.
1141
01:15:47,385 --> 01:15:53,808
and this sounds, uh, you know, to me, that was smart business, but this is even a step
above that.
1142
01:15:53,808 --> 01:15:55,294
you know, I was using.
1143
01:15:55,294 --> 01:16:05,754
taxed dollars that were sitting in the savings account instead of invested in so if you
can get tax deferred money and then Earn some returns and have it invested along the way.
1144
01:16:05,754 --> 01:16:07,926
This is just a win all the way around
1145
01:16:07,920 --> 01:16:17,865
It makes you so much stronger and nimble and it gives you so many more options on the
table and the more options you have as a business owner, the better decision.
1146
01:16:17,865 --> 01:16:18,596
you can make.
1147
01:16:18,596 --> 01:16:22,418
You're not being reactionary, you can be proactive in a situation.
1148
01:16:22,418 --> 01:16:28,885
What I'm describing is our big businesses we got to compete with.
1149
01:16:28,885 --> 01:16:37,640
They're doing these things and they're doing them because Deloitte is their CPA firm and
they're not afraid of the IRS and they'll tell clients like, hey, you got to do this all
1150
01:16:37,640 --> 01:16:38,090
day long.
1151
01:16:38,090 --> 01:16:42,342
And then you got the small to middle market CPA firm that you went to high school with
1152
01:16:42,342 --> 01:16:49,221
the guy, he's a good dude, and you you started as a small business and now you're running
a 20 million dollar year operation and you still kept him.
1153
01:16:49,221 --> 01:16:54,187
And meanwhile, he hasn't grown with you, but you've succeeded over his ability to help
you.
1154
01:16:54,289 --> 01:16:56,301
But out of loyalty, we keep them.
1155
01:16:56,301 --> 01:16:57,271
I see it all the time.
1156
01:16:57,271 --> 01:16:59,523
And we outgrow CPAs all the time.
1157
01:16:59,523 --> 01:17:00,905
It's just out of loyalty.
1158
01:17:00,905 --> 01:17:06,630
Who we are as a person, we want to stay loyal to these people that help to grow our
business.
1159
01:17:06,630 --> 01:17:09,432
But at some point, you do outgrow people.
1160
01:17:09,432 --> 01:17:13,296
And you've got to recognize that and make some tough decisions.
1161
01:17:13,296 --> 01:17:16,048
so these are, I shouldn't bring that up.
1162
01:17:16,048 --> 01:17:20,182
mean, one of the things about this code is it's been abused shockingly.
1163
01:17:20,182 --> 01:17:21,118
uh
1164
01:17:21,109 --> 01:17:29,454
Imagine that a government program with a lot of bureaucracy and it hurts a lot of people
and then a few people abuse it and take advantage.
1165
01:17:29,741 --> 01:17:33,958
No, mean, you know, we are, you know, it's part of that innovation as Americans.
1166
01:17:33,958 --> 01:17:41,998
I work with Lloyds of London on some things and the guy, my contact over there, always, he
always, he says, I love you Americans.
1167
01:17:41,998 --> 01:17:42,700
He said,
1168
01:17:42,700 --> 01:17:46,912
He said, you guys go to cocktail parties and you tell people how little taxes you paid.
1169
01:17:46,952 --> 01:17:52,294
He said, here in London, we go to cocktail parties and we tell everybody how much we paid
in taxes.
1170
01:17:52,415 --> 01:17:56,616
And I said, yeah, there's a, Boston Tea Party's embedded in our DNA.
1171
01:17:56,616 --> 01:17:57,957
There is no doubt about it.
1172
01:17:57,957 --> 01:18:04,430
But it's just, you know, again, it's just, you you pass something, oh, wait a minute, I
can do this with it.
1173
01:18:04,430 --> 01:18:08,282
And really what happened with the code, it was hijacked for state tax planning.
1174
01:18:08,282 --> 01:18:10,963
And that's what really got the IRS hot and heavy on these things.
1175
01:18:10,963 --> 01:18:12,674
I think it's one of those things,
1176
01:18:12,674 --> 01:18:16,506
me once, don't give me twice, and somebody went for the bite of the apple twice.
1177
01:18:16,506 --> 01:18:22,619
And you know, these are estate tax attorneys that got really creative under the code and
it got the attention of the IRS.
1178
01:18:22,619 --> 01:18:28,414
you know, it was massed to make it look like a risk mitigation when it really was used for
estate taxes.
1179
01:18:28,414 --> 01:18:30,596
I mean, that's what really has brought the pressure on this.
1180
01:18:30,596 --> 01:18:33,878
Today's conversations are so different today because
1181
01:18:33,878 --> 01:18:41,353
Business owners know the risks they've taken to self-insure and they want to position it
better for them to be able to survive, God forbid, if it happened, right?
1182
01:18:41,353 --> 01:18:44,382
So, the abuses aren't out there like they were.
1183
01:18:44,382 --> 01:18:49,677
We still some bad actors, I don't care what industry you're in, you're gonna have bad
actors, so.
1184
01:18:49,670 --> 01:18:52,281
Yeah, yeah, this sounds like a fantastic program.
1185
01:18:52,281 --> 01:18:53,961
I wish I would have learned about it earlier.
1186
01:18:53,961 --> 01:19:04,105
uh When it comes to funding these programs, know you mentioned or you threw out the term
principal payments and things like that earlier.
1187
01:19:04,105 --> 01:19:08,107
We've also been talking a lot about good years and bad years.
1188
01:19:08,107 --> 01:19:14,892
When you structure 831 plan, is it set up with kind of regular fixed principal payments?
1189
01:19:14,892 --> 01:19:18,519
Or can you dump a little extra in there when you're having a good year?
1190
01:19:18,690 --> 01:19:20,030
You know what?
1191
01:19:20,090 --> 01:19:21,310
Great question.
1192
01:19:21,310 --> 01:19:23,050
So the premiums we're talking about, right?
1193
01:19:23,050 --> 01:19:24,810
What premiums we can put in.
1194
01:19:24,950 --> 01:19:27,390
It's based on methodology pricing.
1195
01:19:27,390 --> 01:19:29,410
We always give our clients the ceiling.
1196
01:19:29,490 --> 01:19:33,430
So for example, you could put up to $2.9 million away in this now.
1197
01:19:33,430 --> 01:19:40,210
When it first started it was $1.2 and it got changed a couple years ago and they increased
how much you can put into it.
1198
01:19:40,210 --> 01:19:41,590
Congress did.
1199
01:19:41,930 --> 01:19:44,161
That was back in 2017 actually.
1200
01:19:44,161 --> 01:19:45,332
That doesn't mean you get to.
1201
01:19:45,332 --> 01:19:47,323
So we look at your gross revenue.
1202
01:19:47,323 --> 01:19:49,915
We underwrite this no different than insurance carry would, right?
1203
01:19:49,915 --> 01:19:53,888
Like what's your gross revenue is based on really how much premium you're gonna pay.
1204
01:19:53,888 --> 01:19:59,672
The more gross revenue you have, theoretically the more risk you have, the more premium
you'd be able to pay.
1205
01:19:59,672 --> 01:20:02,164
So we come back in and we always tell our clients to ceiling.
1206
01:20:02,164 --> 01:20:05,398
So the other thing is not every year you have to fund.
1207
01:20:05,398 --> 01:20:09,110
because getting back to, know, I don't have a lot of tax liability this year.
1208
01:20:09,110 --> 01:20:10,610
I did buy a piece of equipment I needed.
1209
01:20:10,610 --> 01:20:15,143
I don't have that exposure to that, or I just don't have the extra funds to do it with.
1210
01:20:15,143 --> 01:20:16,140
It's not gonna kill you.
1211
01:20:16,140 --> 01:20:24,833
I designed our program, there's annual maintenance fees regardless because it is a C-corp,
so it has to have a tax return, a domicile has to get paid, there's premium tax that gotta
1212
01:20:24,833 --> 01:20:26,150
get paid, you know, all that.
1213
01:20:26,150 --> 01:20:29,573
we made it to where we do recognize the ups and downs of business cycles.
1214
01:20:29,573 --> 01:20:33,785
doesn't matter what, you know, one industry could be doing good and the other one could be
1215
01:20:33,785 --> 01:20:34,465
doing bad.
1216
01:20:34,465 --> 01:20:39,279
know, it's not a cross-sector industries that are doing good all at same time.
1217
01:20:39,279 --> 01:20:45,874
mean, ag is a great example of that, Cattlemen, know, cow-calf operations great right now,
but dairy is not that great.
1218
01:20:45,874 --> 01:20:48,006
I mean, there's all versus things going on there.
1219
01:20:48,006 --> 01:20:52,530
So that's kind of, we recognize that when we built our system out, that you don't have to
fund every year.
1220
01:20:52,530 --> 01:20:58,113
And that's a differentiator in our space where our competitors really, they have fixed
fees every year.
1221
01:20:58,113 --> 01:20:59,754
You got to pay whether you fund or not.
1222
01:20:59,754 --> 01:21:00,568
And that never made any
1223
01:21:00,568 --> 01:21:09,808
sense to me and blah blah blah but no we definitely are you know we're bringing this into
the point where and I really appreciate being on your show quite honestly because
1224
01:21:09,808 --> 01:21:11,408
We just want to bring awareness to this.
1225
01:21:11,408 --> 01:21:17,799
We want to bring awareness to guys like you that are risk takers that say, there is a
better, smarter way to position dollars.
1226
01:21:17,799 --> 01:21:18,899
And here's what I know about.
1227
01:21:18,899 --> 01:21:22,599
Here's what I've come to realize being 58 years old.
1228
01:21:22,599 --> 01:21:28,970
I used to be the, you know, I've had the 65, 76 series financial licenses.
1229
01:21:28,970 --> 01:21:33,390
When I look at legacy type families or legacy wealth,
1230
01:21:33,882 --> 01:21:37,004
It's really how they position money over those years.
1231
01:21:37,485 --> 01:21:47,651
And by positioning the money, whether it's tax-deferred or just the they position it,
gives them the opportunities to take advantage of certain things in the marketplace.
1232
01:21:47,651 --> 01:21:49,612
And that's what builds legacy.
1233
01:21:49,612 --> 01:21:50,313
It's not...
1234
01:21:50,313 --> 01:21:56,288
And really building a solid business that you can pass on to the next generation.
1235
01:21:56,288 --> 01:21:57,450
Or you can get the...
1236
01:21:57,450 --> 01:22:05,171
investment companies coming in wanting to buy your company and creating a legacy for not
just yourself but also for your family and your grandkids and all that stuff.
1237
01:22:05,171 --> 01:22:10,022
And if that's something you want to do and if that's something excites you and stuff, it
isn't about positioning money.
1238
01:22:10,022 --> 01:22:11,121
It's not about spending money.
1239
01:22:11,121 --> 01:22:12,562
It's about positioning money.
1240
01:22:12,662 --> 01:22:21,302
You got to be strategic on spending the money of course but how you position dollars I
think is really the long-term plan you got to be looking at all the time.
1241
01:22:21,302 --> 01:22:23,022
That's the long-term game.
1242
01:22:23,195 --> 01:22:24,035
Okay.
1243
01:22:24,035 --> 01:22:27,877
And so are those premiums, can they flex throughout the year?
1244
01:22:27,877 --> 01:22:39,531
So, I mean, if we're coming into our fiscal year and I'm projecting a really great year
and then something happens and the market falls apart, I can slow that back and not be
1245
01:22:39,531 --> 01:22:41,382
obligated to that expense.
1246
01:22:41,410 --> 01:22:42,550
Yeah, we adjusted.
1247
01:22:42,550 --> 01:22:47,690
mean, typically we're going into our fourth quarter is our busiest time of year because
that's where clients are deciding what they're going to fund.
1248
01:22:47,690 --> 01:22:51,750
So they're really looking in the rear view mirror for that year to take a deduction.
1249
01:22:51,790 --> 01:22:56,690
Twenty five, for example, December 25, we were dealing with business owners that are
typically calendar ran.
1250
01:22:56,690 --> 01:22:58,410
They're not a cruel county.
1251
01:22:58,410 --> 01:23:03,150
We do have clients that are uncruel, but you know, you got to be pretty large to get that
number today.
1252
01:23:03,150 --> 01:23:10,790
But if you're on a calendar year cash basis, you know, you're going to make a decided do I
want to take a deduction for 25 or not?
1253
01:23:10,790 --> 01:23:11,393
So then you write to
1254
01:23:11,393 --> 01:23:21,900
premium check for that year you took the deduction but you by risk going into 26 right so
now I got my 26 years so you kind of the nice thing about property casualty insurances you
1255
01:23:21,900 --> 01:23:31,526
can prepay that expense like if I want to prepay my work comp I get to write that whatever
month I wrote that check on is that month I get to write that off right health care you
1256
01:23:31,526 --> 01:23:40,141
can't do that with but property casualty insurance premiums are absolutely recognized
under and that's what this category falls under is property casualty insurance
1257
01:23:40,289 --> 01:23:42,029
Okay, awesome.
1258
01:23:42,029 --> 01:23:44,369
Well, man, you have me all excited and fired up.
1259
01:23:44,369 --> 01:23:50,029
I wish I still owned my business so I could open up an 831 and get this going.
1260
01:23:50,489 --> 01:23:56,129
Is there anybody or a situation where it really doesn't make sense?
1261
01:23:56,129 --> 01:24:03,589
Is there somebody that, you know, is there a size of business, a level of income that you
kind of have to be at for it to make sense?
1262
01:24:03,626 --> 01:24:04,887
No, no, great question.
1263
01:24:04,887 --> 01:24:07,930
I would say this to you, I think it's more of a mindset.
1264
01:24:07,930 --> 01:24:09,521
Where you at in the mindset of your business?
1265
01:24:09,521 --> 01:24:11,233
I love entrepreneurs.
1266
01:24:11,233 --> 01:24:16,560
Entrepreneurs typically have their floor to the pedal, their foot to the pedal and it's
all the way to the floor, right?
1267
01:24:16,560 --> 01:24:22,985
Meaning this, that if you're making every dollar you make to put back in your business and
you're in a grow, grow, grow, this is probably not for you.
1268
01:24:23,222 --> 01:24:28,615
uh There's some rules and regulations to those reserves and surpluses, so you can't merely
get access to them and all that kind of stuff.
1269
01:24:28,615 --> 01:24:29,986
So that's one thing.
1270
01:24:29,986 --> 01:24:33,768
So I think it's more of a mindset, not so much a gross revenue standpoint.
1271
01:24:33,768 --> 01:24:40,332
We try to target two million and above in gross revenues in a business before it really
starts to pencil for them.
1272
01:24:40,332 --> 01:24:46,276
And you know, I'm actually coming out with a book called Weathering the Storm When Winning
is Expected.
1273
01:24:46,276 --> 01:24:49,340
And I go into pretty extensive detail.
1274
01:24:49,340 --> 01:24:52,533
in that on when you should do this, when should you be looking at it.
1275
01:24:52,533 --> 01:24:57,175
Because what we're asking a business owner to do is take money off the balance sheets and
not miss it.
1276
01:24:57,175 --> 01:25:07,361
ah You know, you know, not a lot of, you know, I hope all businesses eventually strive to
that point, but not a lot of them, you know, and it is what it is.
1277
01:25:07,361 --> 01:25:12,105
So there is some, there's more of a litmus test to whether or not you should be doing
this, right?
1278
01:25:12,105 --> 01:25:15,265
What frame of mind you're in, where you at in the business.
1279
01:25:15,265 --> 01:25:19,980
Do you want take the, you you want to back the foot off the pedal a little bit, stuff like
that.
1280
01:25:19,980 --> 01:25:25,396
I think that's probably the bigger question is, and you know, are you working on the
business or in the business all the time?
1281
01:25:25,396 --> 01:25:31,322
And if you don't, if you find yourself always working in it, again, it's probably not,
this is probably not the right time for you.
1282
01:25:31,643 --> 01:25:36,948
But if you're on, you're working on it and you're looking for other tools like this, you
know, absolutely.
1283
01:25:37,068 --> 01:25:38,230
It's time to start looking.
1284
01:25:38,230 --> 01:25:41,514
I think awareness is no matter what, you got to know this is out in front of you.
1285
01:25:41,514 --> 01:25:43,052
This ought to be one of those things.
1286
01:25:43,052 --> 01:25:44,518
We call it the CPA playbook.
1287
01:25:44,518 --> 01:25:51,827
This is just one more chapter in the back of the book where you would want to start to
look at tools like this from a business standpoint.
1288
01:25:51,928 --> 01:25:55,728
Yeah, yeah, man, like I said, I wish I had known about this earlier.
1289
01:25:55,728 --> 01:25:57,379
That sounds like a great program.
1290
01:25:57,379 --> 01:26:04,899
And you obviously know a lot about it and have put a lot into it building a business
around this 831 program.
1291
01:26:04,899 --> 01:26:10,239
Are there many other people doing what you're doing or are you kind of leading the charge
here?
1292
01:26:10,498 --> 01:26:11,818
We're kind of leading the charge.
1293
01:26:11,818 --> 01:26:17,480
I think we're probably the only, I would say, insurance professionals doing the management
side.
1294
01:26:17,480 --> 01:26:20,301
I still see a lot of law firms trying to mimic what we do.
1295
01:26:20,301 --> 01:26:24,402
uh But I don't, I would, I mean we have competitors.
1296
01:26:24,402 --> 01:26:25,682
And here's what my hope is.
1297
01:26:25,682 --> 01:26:28,653
I hope with time it does become more competitive.
1298
01:26:28,653 --> 01:26:32,766
I think we want to make this synonymous with the 401k.
1299
01:26:32,766 --> 01:26:36,361
mean business owners should be aware of these types of tools.
1300
01:26:36,361 --> 01:26:38,515
Right now, we're dealing with the IRS.
1301
01:26:38,515 --> 01:26:40,218
We've sued the IRS on some issues.
1302
01:26:40,218 --> 01:26:43,334
And I think our court hearing is coming up this month in the Fifth District.
1303
01:26:43,334 --> 01:26:48,383
But they've been a little bit more aggressive on this stuff because...
1304
01:26:48,454 --> 01:26:51,605
Well, they could in their previous lives.
1305
01:26:51,605 --> 01:26:58,509
Bureaucracies are something we got to deal with as business owners and they've definitely
gotten an overreach at this point.
1306
01:26:58,509 --> 01:27:02,371
But nevertheless, we think this is going to become a normal business practice.
1307
01:27:02,371 --> 01:27:07,535
Once you've achieved a certain level of business, at some point you want to take the risk,
you want to take risk off the table.
1308
01:27:07,535 --> 01:27:08,715
Well, how do you do that?
1309
01:27:08,715 --> 01:27:12,477
Do you have to sell your business to take risk or bring a new partner in?
1310
01:27:12,477 --> 01:27:14,999
This is just one more way to take some risk off the table.
1311
01:27:14,999 --> 01:27:22,205
and still have the money in the back room to help keep the cash flow of the business going
first and foremost, protect the business that created the cash flow.
1312
01:27:22,205 --> 01:27:26,688
But also down the road if everything works out I can sell my business or not sell my
business.
1313
01:27:26,688 --> 01:27:30,931
There's ways we structure on ownership for key employees.
1314
01:27:30,931 --> 01:27:33,913
You know if we want to make a transit transfer down to the kids.
1315
01:27:33,913 --> 01:27:37,446
I mean there's all sorts of things that we can bring to the table in the back room on
these things.
1316
01:27:37,446 --> 01:27:42,030
Working with other trusted advisors in their group and their surroundings that brings a
lot
1317
01:27:42,030 --> 01:27:48,957
solutions to the table or they otherwise wouldn't have it and you'd be at more at the
mercy of the deal versus trying to make the deal.
1318
01:27:49,124 --> 01:27:50,625
Yeah, yeah.
1319
01:27:50,625 --> 01:27:55,790
So again, you know, we've used the analogy, the HRA and the oh 401k.
1320
01:27:55,790 --> 01:27:58,742
You know, I know now the tax law is always changing.
1321
01:27:58,742 --> 01:28:00,714
That's why it's three inches thick.
1322
01:28:00,714 --> 01:28:11,144
But currently there are some exceptions and some ways to, you know, pull money out of a
401k or something like that, or even just pay a penalty to pull it out for non covered
1323
01:28:11,144 --> 01:28:11,949
items.
1324
01:28:11,949 --> 01:28:21,249
Is there something similar for the 831 if you got in desperate straits and needed to pull
that money and didn't really qualify for a risk payout?
1325
01:28:21,249 --> 01:28:25,189
Can you pull that money and pay a a penalty?
1326
01:28:25,545 --> 01:28:26,885
There's no penalties.
1327
01:28:26,885 --> 01:28:29,225
You just pay your long-term dividend rates.
1328
01:28:29,525 --> 01:28:33,705
you are, yeah, but you can also bridge a loan out.
1329
01:28:33,705 --> 01:28:35,785
That's where it gets pretty sexy, honestly.
1330
01:28:35,785 --> 01:28:40,445
That's where I see a lot of ad guys use this as part of their operating line.
1331
01:28:41,425 --> 01:28:50,485
You know, once they've been in it four, five, six years and they got a lot of surplus,
they've had good loss, know, minimal lost years, and then they're able to pull on that
1332
01:28:50,485 --> 01:28:52,205
from an operating line standpoint.
1333
01:28:52,225 --> 01:28:52,816
Again,
1334
01:28:52,816 --> 01:28:54,047
That's just good business.
1335
01:28:54,047 --> 01:29:04,193
mean, uh insurance companies are the largest lenders, You can make an argument, insurance
companies lend as much money as banks do in the back room.
1336
01:29:04,193 --> 01:29:05,314
You just don't know about it.
1337
01:29:05,314 --> 01:29:06,744
So no, I love that.
1338
01:29:06,744 --> 01:29:11,397
You're collateralized against your shares at the corporation, so if you default, you
default it on yourself.
1339
01:29:11,397 --> 01:29:15,219
I mean, we're fully insulated and collateralized on those types of loans.
1340
01:29:15,219 --> 01:29:16,940
I think it's great planning.
1341
01:29:16,940 --> 01:29:18,610
uh Auto dealers do it a lot.
1342
01:29:18,610 --> 01:29:19,821
I I see them borrowing money
1343
01:29:19,821 --> 01:29:27,981
all the time out of their, you know, when they sell service contract to you for $2,500,
you know, they're keeping $2,000 of that on their books in their own A31B.
1344
01:29:27,981 --> 01:29:36,741
They turn around and loan that money back to their operating company for flooring,
consumer financing, I mean, all sorts of, the efficiencies of business really start to
1345
01:29:36,741 --> 01:29:39,081
play in a lot of different areas here.
1346
01:29:39,121 --> 01:29:43,021
And that's just, you know, that's just, this is who you gotta compete against.
1347
01:29:43,021 --> 01:29:44,712
These guys are doing this stuff already.
1348
01:29:44,712 --> 01:29:48,712
You know, if your listeners are hearing this about the first time, you know, well, I
always buy service contracts.
1349
01:29:48,712 --> 01:29:53,272
Well, did you know your dealership kept the risk in the back room and his own insurance
company?
1350
01:29:53,272 --> 01:29:54,912
No, you didn't know that.
1351
01:29:54,912 --> 01:29:58,872
know, mean that, you know, but yeah, it's great revenue.
1352
01:29:59,272 --> 01:30:01,912
It's why you get asked all these warranties all the time.
1353
01:30:01,912 --> 01:30:04,492
I mean, it's really good money in the back room.
1354
01:30:04,492 --> 01:30:11,952
It's satisfying the customer's needs to avoid that risk, you know, because if that TV
breaks, I want to return it five years from now.
1355
01:30:11,952 --> 01:30:14,223
Like I'm going to remember I had it.
1356
01:30:14,223 --> 01:30:17,786
But, you know, meanwhile, I paid 200 bucks to have that warranty, right?
1357
01:30:17,786 --> 01:30:21,039
Now they get to take that 200 bucks and they get to put it to work in the back room.
1358
01:30:21,039 --> 01:30:25,733
Again guys, this is just, this is what goes on in big business.
1359
01:30:25,733 --> 01:30:32,569
I want to bring these concepts and ideas down to the people that really at risk, honestly,
losing their businesses.
1360
01:30:32,910 --> 01:30:33,590
yeah.
1361
01:30:33,590 --> 01:30:37,766
When the big Fortune 500 companies have a big payout, they can cover it.
1362
01:30:37,766 --> 01:30:42,301
But Bob the plumber has a rough year and then gets hit with a claim at the same time.
1363
01:30:42,301 --> 01:30:44,003
That puts him out of business.
1364
01:30:44,044 --> 01:30:44,436
So.
1365
01:30:44,436 --> 01:30:46,489
you just got to look at downturns of economy.
1366
01:30:46,489 --> 01:30:48,283
Who goes out of business more likely?
1367
01:30:48,283 --> 01:30:49,485
It's not big business.
1368
01:30:49,485 --> 01:30:53,431
It's the small to middle market business owners that go out of business.
1369
01:30:53,813 --> 01:30:57,392
And that's who I'm trying to protect going forward, for sure.
1370
01:30:57,392 --> 01:31:01,725
Yeah, it's really leveling the playing field too, because like you said, that's who you're
competing against.
1371
01:31:01,725 --> 01:31:11,353
There's, ah especially now we're talking about trends in the economy and man, there's big
companies kind of rolling up small companies across the country.
1372
01:31:11,353 --> 01:31:16,656
And so some service industries that were traditionally small businesses are now being
backed by big businesses.
1373
01:31:16,656 --> 01:31:19,368
And this levels that playing field a little bit.
1374
01:31:19,368 --> 01:31:25,428
If you can bring some of the efficiencies to the table that they are, the small business
can compete.
1375
01:31:25,428 --> 01:31:30,178
and have that small business touch and really puts a lot more power in their hands.
1376
01:31:30,176 --> 01:31:31,476
I couldn't agree more.
1377
01:31:31,476 --> 01:31:32,996
mean, those guys are clients of ours too.
1378
01:31:32,996 --> 01:31:40,236
The guys that go out and all these HVACs and Plummie, I mean, I've seen it from shore to
shore on what's gone on over there.
1379
01:31:40,236 --> 01:31:45,956
I'm encouraged by it because I think some of these business owners are getting multiples
they would never gotten anywhere else.
1380
01:31:45,956 --> 01:31:48,996
But there's absolutely a consolidation going on in that space.
1381
01:31:48,996 --> 01:31:53,556
They're going to keep the name the same, the employees the same, and they're just buying
it for the cash flow.
1382
01:31:53,556 --> 01:31:54,384
I mean,
1383
01:31:54,384 --> 01:31:56,656
you know, but...
1384
01:31:56,656 --> 01:32:03,400
opening up a lot of opportunity for maybe the mid-size businesses might get hit a little
bit.
1385
01:32:03,400 --> 01:32:13,787
But I think those really big, more national or regional customers tend to serve a
different clientele than the small local business.
1386
01:32:13,787 --> 01:32:23,243
And so as some of those mid-size businesses get bought up and rolled up into the big ones,
it's opening the door for those small businesses to take a little more market share.
1387
01:32:23,525 --> 01:32:25,725
I could not agree more.
1388
01:32:25,725 --> 01:32:27,245
I 100 % agree with that.
1389
01:32:27,245 --> 01:32:35,405
I think they're going to lose their personal touch, their identity, their community is
going to be lost, and people are going to want to do business with people they know and
1390
01:32:35,405 --> 01:32:35,965
trust.
1391
01:32:35,965 --> 01:32:37,996
And so I couldn't agree more with you.
1392
01:32:37,996 --> 01:32:43,496
I do think it's going to get back to our conversations with the engineers when he started
their own businesses.
1393
01:32:43,496 --> 01:32:50,976
As there's these roll-ups and consolidations, and service to the customers is more of an
afterthought.
1394
01:32:51,027 --> 01:32:59,767
I do think it's going to open up an opportunity for businesses to spring up around
different areas to take advantage of that, bring that personal touch back.
1395
01:32:59,767 --> 01:33:01,067
And we're going to crave for that.
1396
01:33:01,067 --> 01:33:04,027
And as a human, we're going to crave for that.
1397
01:33:04,027 --> 01:33:05,707
So I'm encouraged by all that.
1398
01:33:05,707 --> 01:33:09,507
there'll be a backlash eventually, in my opinion, on it.
1399
01:33:09,507 --> 01:33:12,267
It would make sense to me that would happen.
1400
01:33:12,267 --> 01:33:13,307
We'll see.
1401
01:33:13,323 --> 01:33:14,103
awesome.
1402
01:33:14,103 --> 01:33:20,683
Well, you've brought just a ton of knowledge and information to the table here with the
831 plans.
1403
01:33:20,703 --> 01:33:26,774
with all of your experience in business acumen, I want to ask a few questions, tap into
that a little bit as well.
1404
01:33:26,774 --> 01:33:31,734
30 years experience running a number of businesses in different sectors.
1405
01:33:31,734 --> 01:33:35,765
Is there a lesson that you've learned that you wish you would have learned earlier?
1406
01:33:35,763 --> 01:33:39,316
Oh man, take advice from people who have been doing it longer than you.
1407
01:33:39,316 --> 01:33:40,947
And learn from other people's mistakes.
1408
01:33:40,947 --> 01:33:42,409
mean, that's the cheapest way.
1409
01:33:42,409 --> 01:33:46,155
I when somebody's already got the will, don't try to duplicate the will.
1410
01:33:46,155 --> 01:33:48,037
Just learn what they're doing.
1411
01:33:48,037 --> 01:33:52,392
And I do think being disciplined to the money, meaning that as you grow,
1412
01:33:52,392 --> 01:33:54,903
Don't increase your lifestyle too quickly.
1413
01:33:54,903 --> 01:34:02,834
That's probably one of the things I've seen, one of the big, one of the reasons I was very
successful in my insurance agency, a guy told me early on, he said, okay, what are you
1414
01:34:02,834 --> 01:34:04,814
gonna allocate for marketing and budget?
1415
01:34:05,194 --> 01:34:07,394
And he said, I suggest you do 30%.
1416
01:34:07,394 --> 01:34:08,614
I'm like, man, that's a lot.
1417
01:34:08,614 --> 01:34:09,734
He said, yeah, but do it.
1418
01:34:09,734 --> 01:34:14,934
So as my income grew, as my agency grew, I kept the 30%.
1419
01:34:14,934 --> 01:34:22,073
So if I wrote a big commercial deal that one month and all of sudden I got a $20,000
commission.
1420
01:34:22,377 --> 01:34:25,097
I would take $6,000 of it and put it in the market.
1421
01:34:25,097 --> 01:34:27,957
I wouldn't take the $20,000 home, right?
1422
01:34:27,957 --> 01:34:35,529
And that's what really, that discipline kept my ability to keep growing the business, but
it wasn't like I was...
1423
01:34:35,529 --> 01:34:38,509
It didn't feel like I was taking a step back because of it.
1424
01:34:38,509 --> 01:34:39,548
That makes sense.
1425
01:34:39,548 --> 01:34:41,769
And they kept that discipline going.
1426
01:34:41,869 --> 01:34:44,109
So my marketing budgets got high.
1427
01:34:44,269 --> 01:34:48,129
But at the same time though, it was already programmed into the business.
1428
01:34:48,129 --> 01:34:57,409
so I never, as I made more money, it wasn't that I was taking more money home, it was the
fact that I was keeping my discipline to my percentages and growing my business.
1429
01:34:57,409 --> 01:35:01,609
that's what's allowed me to, that mindset helped me a lot.
1430
01:35:02,013 --> 01:35:03,166
man that's awesome.
1431
01:35:03,166 --> 01:35:09,412
Throughout your career and the businesses you've run what has been the the most difficult
challenge that you faced?
1432
01:35:09,409 --> 01:35:10,121
Employees.
1433
01:35:10,121 --> 01:35:13,679
You know, you can't help but have these people become friends or acquaintances.
1434
01:35:13,679 --> 01:35:18,439
I mean, you know more than, you know, so you maybe don't make the right decisions at the
right time.
1435
01:35:18,439 --> 01:35:23,535
It's more of a, you know, we're small business and very loyal to people that help build
our business.
1436
01:35:23,535 --> 01:35:25,498
mean, sometimes to our...
1437
01:35:25,825 --> 01:35:34,709
dismay you know what I mean or you know and you know you don't do anything to have and
this is another piece of advice I was given early on and I remember sitting at a meeting
1438
01:35:34,709 --> 01:35:39,235
and it was a farmers insurance meeting and one of the old timers I was talking to him and
1439
01:35:39,371 --> 01:35:41,883
It was the crash of 99, it was the tech wreck of 99.
1440
01:35:41,883 --> 01:35:44,765
And I was worried about the stock market and everybody's gonna lose money.
1441
01:35:44,765 --> 01:35:49,530
And you start hearing all this like, geez, you and I was just new in the business.
1442
01:35:49,530 --> 01:35:52,252
And he goes, Van, get ready, there's gonna be a ton of business you're gonna write.
1443
01:35:52,252 --> 01:35:53,303
I'm like, what are you talking about?
1444
01:35:53,303 --> 01:35:56,932
He said, no, when people feel vulnerable, they're gonna buy more insurance.
1445
01:35:56,932 --> 01:35:58,904
And I thought they'd buy less insurance, right?
1446
01:35:58,904 --> 01:35:59,652
They can't afford it.
1447
01:35:59,652 --> 01:36:00,645
He said, no, they're gonna buy more.
1448
01:36:00,645 --> 01:36:02,237
And I thought, man, that's great.
1449
01:36:02,237 --> 01:36:03,078
And that happened.
1450
01:36:03,078 --> 01:36:09,872
And then the other guy, the same guy told me one day, goes, I was hiring employees and I
was having problems with a particular employee.
1451
01:36:09,872 --> 01:36:12,506
And he said, man, just remember one thing.
1452
01:36:12,827 --> 01:36:18,362
On career day at school, nobody stood up and said, one day I wanna go work for Van
Carlson.
1453
01:36:18,362 --> 01:36:26,662
And that really put it in perspective for me is like, yeah, these people are not here
because, you know, like how much do they owe me?
1454
01:36:26,662 --> 01:36:27,262
You know what I mean?
1455
01:36:27,262 --> 01:36:36,042
It's like, you know, and it was one of those moments in my head that stuck with me over
the years that I've always, you know, kind of put that in the back room in my head.
1456
01:36:36,042 --> 01:36:38,762
It's like, yeah, nobody, nobody planned to work for me.
1457
01:36:38,762 --> 01:36:40,342
You know, I didn't plan to have this business.
1458
01:36:40,342 --> 01:36:41,002
You know what I mean?
1459
01:36:41,002 --> 01:36:47,096
Nobody stood up and, you know, so it's just a, you know, consequences of, you know, one
turned out of the
1460
01:36:47,096 --> 01:36:49,096
other turn, right, while we're here.
1461
01:36:49,316 --> 01:36:59,716
no, but I, so I try to keep those two references in my head when I'm dealing with
employees, you know, but at the same time, you know, what you expect for something to
1462
01:36:59,716 --> 01:37:08,856
happen doesn't happen and employees at the end of the day are, you know, good people and
hard workers, but at the end of the day, they're not family.
1463
01:37:08,856 --> 01:37:16,716
And sometimes you, you kind of, you know, again, we're very loyal to who helped us grow
our business sometimes to.
1464
01:37:16,820 --> 01:37:18,549
to our mistakes.
1465
01:37:18,549 --> 01:37:19,120
Yeah,
1466
01:37:19,107 --> 01:37:22,189
yeah, you still have to grow a business.
1467
01:37:22,489 --> 01:37:24,331
yeah.
1468
01:37:24,452 --> 01:37:29,908
Are there any strong opinions that you once held and have changed your mind about?
1469
01:37:29,907 --> 01:37:33,021
yeah, a big one would be culture.
1470
01:37:33,021 --> 01:37:36,634
I never, I'm kind like an old football coach, right?
1471
01:37:36,634 --> 01:37:39,487
You know, get up and walk it off, you'll be fine kind of thing, right?
1472
01:37:39,487 --> 01:37:41,718
I mean, that's my management style.
1473
01:37:41,718 --> 01:37:42,789
I'm not saying that's rough.
1474
01:37:42,789 --> 01:37:44,361
That doesn't work today.
1475
01:37:44,361 --> 01:37:47,763
And maybe it shouldn't work, right?
1476
01:37:47,763 --> 01:37:51,807
I'm kind of coming more to that, but also just creating a culture inside your company.
1477
01:37:51,807 --> 01:37:54,825
I never gave much value to that, quite honestly.
1478
01:37:54,825 --> 01:37:57,609
But I do recognize the value of it today.
1479
01:37:57,609 --> 01:38:00,952
And I'm glad I had a son that came in and really ran.
1480
01:38:00,952 --> 01:38:07,600
He's the president of SRA, which he'll eventually be the CEO here in a couple years, if
not maybe a year, we'll see.
1481
01:38:07,600 --> 01:38:10,304
he is really into it.
1482
01:38:10,823 --> 01:38:13,164
Yeah, yeah, for sure.
1483
01:38:14,886 --> 01:38:15,789
Yeah.
1484
01:38:15,789 --> 01:38:22,146
Yeah, it's been great that he saw the value of that, he instituted that in our company and
it's paid off drastically for us.
1485
01:38:22,146 --> 01:38:26,036
So company culture was definitely something I would not have seen.
1486
01:38:26,026 --> 01:38:27,608
Awesome, awesome.
1487
01:38:27,608 --> 01:38:32,074
Well, this is uh my favorite question I ask of every guest.
1488
01:38:32,074 --> 01:38:35,167
Are you a person of a particular faith tradition?
1489
01:38:35,167 --> 01:38:40,553
And if so, how has that affected your business management or your leadership?
1490
01:38:40,550 --> 01:38:45,467
You know, definitely a Christian, Methodist, and born Methodist, raised Methodist.
1491
01:38:45,467 --> 01:38:46,629
You know, it comes and goes.
1492
01:38:46,629 --> 01:38:51,875
You know, when you're growing a business and you're just putting your head down and
getting after it, do think you kind of put things kind of...
1493
01:38:51,875 --> 01:38:55,800
You do kind of, I guess, lose your path a little bit.
1494
01:38:55,800 --> 01:38:56,773
You know, maybe you have...
1495
01:38:56,773 --> 01:39:02,853
Maybe you just kind of lose your, I wouldn't say you lose faith, but you just lose your
discipline to the faith.
1496
01:39:03,733 --> 01:39:08,253
But as you get older and you start to have grandkids again, man, it comes back around and
you're tenfold.
1497
01:39:08,253 --> 01:39:11,233
mean, it's just, and then you just feel blessed.
1498
01:39:11,233 --> 01:39:17,244
I mean, honestly, with so many things that have gone right and that could have gone wrong.
1499
01:39:17,244 --> 01:39:21,015
You know, you definitely, I would say, and it's been good.
1500
01:39:21,015 --> 01:39:25,538
I mean, it's been good for me personally, for that to come back into play into my life.
1501
01:39:25,538 --> 01:39:28,910
yeah, for a while I was definitely not, you know, who needed it kind of guy.
1502
01:39:28,910 --> 01:39:30,160
You I can do it all on my own.
1503
01:39:30,160 --> 01:39:34,101
I you really start, and I say this a lot, you gotta be careful to believe your own BS.
1504
01:39:34,101 --> 01:39:36,542
And we can start to believe it pretty quickly.
1505
01:39:36,862 --> 01:39:40,945
and that can get you in trouble.
1506
01:39:40,945 --> 01:39:45,479
I wasn't no saint by no means down the road.
1507
01:39:45,479 --> 01:39:48,601
I used be pretty rough as a leader of the company.
1508
01:39:48,601 --> 01:39:50,153
I was pretty black and white.
1509
01:39:50,153 --> 01:39:54,801
But as time goes on and you get more comfortable with your own skin...
1510
01:39:54,801 --> 01:39:57,533
And you have people around you that trust you and then mentors.
1511
01:39:57,533 --> 01:39:59,675
Mentors are a big play in my life too.
1512
01:39:59,675 --> 01:40:04,848
People around me, I surround myself with really good business people but also a lot of
people with faith.
1513
01:40:05,047 --> 01:40:07,719
Okay, great, great.
1514
01:40:08,179 --> 01:40:12,124
And is there anybody that you'd like to see on this show?
1515
01:40:12,124 --> 01:40:18,160
Somebody that has a really unique business, works in a really unique industry, you might
have an interesting story to tell.
1516
01:40:18,160 --> 01:40:19,252
Yeah, I do actually.
1517
01:40:19,252 --> 01:40:20,916
I've got a couple of folks in mind.
1518
01:40:20,916 --> 01:40:22,646
if you're in it, yeah, love to.
1519
01:40:22,646 --> 01:40:26,694
One guy I know, actually I'm going to have, I'm going go meet with him this afternoon.
1520
01:40:26,694 --> 01:40:28,056
uh
1521
01:40:28,053 --> 01:40:34,526
We haven't seen each other for probably a couple months, but he runs a, he runs a, and
he's a hired gun.
1522
01:40:34,526 --> 01:40:41,361
So I like being around hired, but I mean by hired guns, he's a CEO for a very large
company, but he's not the founder.
1523
01:40:41,361 --> 01:40:47,663
I'm a founder of a business and I love to surround myself with guys that are running
businesses that didn't start them.
1524
01:40:47,684 --> 01:40:51,019
I learned a lot from them, much more so than people that are founded business.
1525
01:40:51,019 --> 01:40:56,379
I don't know why I belong to a business group, a CEO peer group, and that's been really
great for me too.
1526
01:40:56,379 --> 01:40:58,524
Honestly, but yeah, yeah, absolutely.
1527
01:40:58,524 --> 01:41:00,098
You could definitely talk about that.
1528
01:41:00,096 --> 01:41:00,576
Okay.
1529
01:41:00,576 --> 01:41:03,891
Yeah, I'll shoot you an email, see if maybe you'd be up for making an introduction.
1530
01:41:03,891 --> 01:41:09,429
Do you have any thoughts about what makes the difference between kind of a hired gun
versus a founder?
1531
01:41:09,429 --> 01:41:11,611
What differences have you noticed?
1532
01:41:12,101 --> 01:41:22,316
Well, I can tell you that risk tolerance, it's been really interesting sitting in meetings
and somebody's deciding to buy another business or...
1533
01:41:22,343 --> 01:41:28,194
make a decision to pivot their business or their company and founders are like, yeah,
let's go.
1534
01:41:28,194 --> 01:41:29,897
You know, let's do this thing.
1535
01:41:29,897 --> 01:41:35,319
But hired guns are very strategic in their decision making, much more so than a founder
is.
1536
01:41:35,319 --> 01:41:37,791
And it has to do with entrepreneur.
1537
01:41:37,791 --> 01:41:43,273
And I'm not saying the hired gun's not an entrepreneur, but much more strategic in their
decision making.
1538
01:41:43,273 --> 01:41:44,173
And they almost have to be.
1539
01:41:44,173 --> 01:41:46,784
You hired them for that reason, you know?
1540
01:41:47,085 --> 01:41:49,490
But that's a big difference in their mindsets.
1541
01:41:49,490 --> 01:41:50,472
Both are good.
1542
01:41:50,472 --> 01:41:52,036
Both are at the right time.
1543
01:41:52,036 --> 01:41:54,579
It can make a big difference in your business.
1544
01:41:54,656 --> 01:41:56,307
Yeah, that's great.
1545
01:41:56,307 --> 01:42:04,501
I think that's probably a transition that most business owners, if they don't go through
that transition themselves, they suffer because of it.
1546
01:42:04,501 --> 01:42:12,314
When you're starting out and bootstrapping something, building it from scratch, it's the
big play, the going with your gut, taking risks.
1547
01:42:12,314 --> 01:42:14,585
That's what got you to where you are.
1548
01:42:14,725 --> 01:42:19,934
And then as you get established, as you have some chips to play with, so to speak,
1549
01:42:19,934 --> 01:42:27,366
The strategy has to change a little bit because uh the strategy that got you to where you
are doesn't necessarily get you to the next level.
1550
01:42:27,760 --> 01:42:37,443
No, in fact, if most founders can create a lot of unnecessary disruption and I've been
guilty this.
1551
01:42:37,443 --> 01:42:42,128
If you get bored, you will find something to create chaos with.
1552
01:42:42,221 --> 01:42:47,565
I've recognized that and I've been witness to it outside of my company too where we get
bored.
1553
01:42:47,565 --> 01:42:51,546
mean, entrepreneurs are great, but are you a builder or are you a maintainer?
1554
01:42:51,546 --> 01:42:56,148
And if you built your business up to a certain level to maintain it, you're gonna get
bored.
1555
01:42:56,148 --> 01:43:01,611
And if you get bored, you're probably gonna create some chaos internally that you
otherwise, so yeah, you're absolutely right.
1556
01:43:01,611 --> 01:43:04,232
To make that pivot and make that recognition.
1557
01:43:04,232 --> 01:43:07,364
I'm just fortunate my son is completely opposite of me in a lot of ways.
1558
01:43:07,364 --> 01:43:10,255
He's more operational driven.
1559
01:43:10,255 --> 01:43:14,346
where I would, you I'm the guy that says, can't that get done tomorrow?
1560
01:43:14,346 --> 01:43:18,746
Why do we gotta, you know, what's this 90 day sprint thing?
1561
01:43:18,746 --> 01:43:20,806
Why is it gonna take 90 days for us to do this?
1562
01:43:20,806 --> 01:43:22,286
That doesn't sound right.
1563
01:43:22,286 --> 01:43:22,658
You know, something
1564
01:43:22,700 --> 01:43:24,280
like that, you know.
1565
01:43:24,415 --> 01:43:27,800
We'll just stay up all night and work for three days straight and it'll be done.
1566
01:43:27,800 --> 01:43:29,326
That's what we used to do.
1567
01:43:29,326 --> 01:43:29,854
Yeah.
1568
01:43:29,854 --> 01:43:30,995
the problem?
1569
01:43:31,415 --> 01:43:32,626
that's great.
1570
01:43:32,626 --> 01:43:37,880
Well, my last question to either settle or fuel the debate.
1571
01:43:37,880 --> 01:43:42,554
I know it is a little bit outside of your expertise, but I'm sure you've used plenty of
them.
1572
01:43:42,554 --> 01:43:47,717
If you have a job to do and require a cordless tool, which brands do you prefer?
1573
01:43:48,195 --> 01:43:49,911
Milwaukee all day long.
1574
01:43:49,911 --> 01:43:52,264
Milwaukee, okay, they're pulling ahead.
1575
01:43:52,264 --> 01:44:02,677
I think oh we're working on coming up with an official tally but DeWalt in Milwaukee were
kind of running head and head and I think now Milwaukee's pulling ahead so
1576
01:44:03,149 --> 01:44:05,831
man, their impact tools are nothing like them.
1577
01:44:05,952 --> 01:44:06,793
I love them.
1578
01:44:06,793 --> 01:44:08,455
I can't get enough of it.
1579
01:44:08,455 --> 01:44:12,900
I'll sit there and watch YouTube videos on new Milwaukee tools coming out all the time.
1580
01:44:12,900 --> 01:44:13,889
I love it.
1581
01:44:13,889 --> 01:44:17,031
It's amazing how uh fascinating that can be.
1582
01:44:17,031 --> 01:44:19,352
I'm a DeWalt guy, but I do the same thing.
1583
01:44:19,352 --> 01:44:24,444
Some of the new stuff that's coming out from Milwaukee and a few other manufacturers.
1584
01:44:24,444 --> 01:44:27,705
It's like, sometimes I wonder what problem were you trying to solve?
1585
01:44:27,705 --> 01:44:29,377
Who thought this tool up?
1586
01:44:29,377 --> 01:44:36,036
You know, I've never been sitting there going, man, I wish I had one of those, but now
that it exists, I want one.
1587
01:44:36,036 --> 01:44:40,748
did you see the concrete float that came out that you can actually sit in now and it
floats on them?
1588
01:44:41,128 --> 01:44:42,489
Like man, that'd be fun.
1589
01:44:42,489 --> 01:44:47,231
But I love my Milwaukee grease gun though.
1590
01:44:47,231 --> 01:44:52,903
There is, my gosh, for greasing tractors up, there is nothing better.
1591
01:44:52,903 --> 01:44:58,115
That thing's just, yeah, saves the forum a lot from that old.
1592
01:44:58,872 --> 01:45:01,772
The first time I saw one of those, I laughed at it.
1593
01:45:01,772 --> 01:45:04,412
was kind of really, you got to have a power grease gun.
1594
01:45:04,412 --> 01:45:06,072
can't just squirt it a couple of times.
1595
01:45:06,072 --> 01:45:10,072
And then I worked on a farm working my way through college.
1596
01:45:10,072 --> 01:45:16,772
And so I spent a lot of time greasing tractors and yeah, I got to be real good friends
with that electric grease gun.
1597
01:45:16,815 --> 01:45:17,676
Yep.
1598
01:45:18,601 --> 01:45:19,802
That's funny.
1599
01:45:19,851 --> 01:45:21,723
Well, Van, thank you very much.
1600
01:45:21,723 --> 01:45:24,435
I really appreciate you taking the time and chatting with us.
1601
01:45:24,435 --> 01:45:28,478
And I hope that I'm sure all our listeners will get a lot out of that.
1602
01:45:28,478 --> 01:45:29,878
I love what you're doing.
1603
01:45:29,878 --> 01:45:39,124
I love the program you've put together and and taking advantage of that tax code that's
already there to save small and medium sized businesses some money really put their money
1604
01:45:39,124 --> 01:45:39,946
to work for them.
1605
01:45:39,946 --> 01:45:42,928
I hope that a lot of our listeners reach out to you.
1606
01:45:42,928 --> 01:45:49,528
and take advantage of your services for those that want to do that, what would be the best
way to get a hold of you?
1607
01:45:49,628 --> 01:45:53,411
You know, we own 831b.com website, honestly.
1608
01:45:53,411 --> 01:46:00,155
ah I'm van at 831b, v-a-n at 831b.com if they want to email me, but, excuse me.
1609
01:46:00,155 --> 01:46:03,277
The biggest thing is, you got to, you know, go do your own due diligence.
1610
01:46:03,277 --> 01:46:04,238
Learn about this thing.
1611
01:46:04,238 --> 01:46:06,699
It's, you know, take some time.
1612
01:46:06,760 --> 01:46:07,740
Go to our website.
1613
01:46:07,740 --> 01:46:09,802
It's designed to be an educational website.
1614
01:46:09,802 --> 01:46:11,443
There's a lot of case studies in there.
1615
01:46:11,443 --> 01:46:13,004
You know, you can pick your own industry out.
1616
01:46:13,004 --> 01:46:15,326
There's typically a case study on your industry.
1617
01:46:15,326 --> 01:46:16,717
How would this apply to you?
1618
01:46:16,717 --> 01:46:17,549
How does it work?
1619
01:46:17,549 --> 01:46:24,716
I didn't start thinking about the timing of when I should be starting to look at this type
of thing as a real tool for my business.
1620
01:46:24,716 --> 01:46:28,160
Not only to maintain the cash flow, but also eventually grow the business as well.
1621
01:46:28,160 --> 01:46:30,492
yeah, that's where I would tell them to go.
1622
01:46:30,492 --> 01:46:32,744
mean, it's just, especially if you haven't heard about it.
1623
01:46:32,744 --> 01:46:35,736
I mean, you got to do your own homework, especially with AI today.
1624
01:46:35,736 --> 01:46:36,957
I mean, it's easy to do, right?
1625
01:46:36,957 --> 01:46:40,930
But this is just another tool in toolbox.
1626
01:46:40,930 --> 01:46:43,787
And at the right time, it's a hell of a tool.
1627
01:46:43,787 --> 01:46:45,563
Yeah, awesome.
1628
01:46:45,563 --> 01:46:48,522
And you mentioned you're coming out with a book.
1629
01:46:48,522 --> 01:46:50,337
When is that going to be available?
1630
01:46:50,337 --> 01:46:51,838
You know, we're hoping in May.
1631
01:46:51,838 --> 01:46:53,538
We're in the final edit right now.
1632
01:46:53,538 --> 01:46:54,959
uh I'm really happy.
1633
01:46:54,959 --> 01:46:57,420
I'll be honest with I'm pleasantly surprised.
1634
01:46:57,420 --> 01:46:58,481
Never wrote a book before.
1635
01:46:58,481 --> 01:47:00,623
And it's been a great experience, actually.
1636
01:47:00,623 --> 01:47:05,695
uh But it's not like more of uh a decision making versus a textbook.
1637
01:47:05,695 --> 01:47:14,289
It dives a little bit into the code, but really, where should you be at in business world
when you start to look at tools like this and make the right decision for your business
1638
01:47:14,289 --> 01:47:15,304
and your family?
1639
01:47:15,304 --> 01:47:15,815
Yeah.
1640
01:47:15,809 --> 01:47:17,291
And what was that title again?
1641
01:47:17,291 --> 01:47:19,044
I liked that when you rattled it off.
1642
01:47:19,044 --> 01:47:20,010
I forgot what it was.
1643
01:47:20,010 --> 01:47:24,099
was weathering a storm when winning is expected.
1644
01:47:24,178 --> 01:47:25,364
Okay, that's good.
1645
01:47:25,364 --> 01:47:27,011
That's really good.
1646
01:47:27,011 --> 01:47:28,624
That'll be interesting.
1647
01:47:28,624 --> 01:47:29,226
Thanks.
1648
01:47:29,226 --> 01:47:31,834
mean, hey, as business owners, we're expect to win.
1649
01:47:31,834 --> 01:47:32,938
We have to win.
1650
01:47:32,938 --> 01:47:33,748
So.
1651
01:47:33,748 --> 01:47:35,338
yeah, that's why we get started.
1652
01:47:35,338 --> 01:47:35,896
So.
1653
01:47:35,896 --> 01:47:36,792
Yep.
1654
01:47:36,978 --> 01:47:37,378
Awesome.
1655
01:47:37,378 --> 01:47:38,759
Well, again, thank you very much.
1656
01:47:38,759 --> 01:47:43,332
I really appreciate the time and the knowledge, the expertise that you bring to the table.
1657
01:47:43,332 --> 01:47:47,354
And thank you guys for joining us here on From the Ground Up Show.
1658
01:47:47,354 --> 01:47:51,597
Again, make sure you follow us on social media at From the Ground Up Show.
1659
01:47:51,597 --> 01:47:57,681
Like, share, follow, subscribe on social media, YouTube, your favorite podcast platform.
1660
01:47:57,681 --> 01:48:00,282
Make sure you hit that auto download button.
1661
01:48:00,282 --> 01:48:03,474
We rely on you guys to get the word out and help the show grow.
1662
01:48:03,474 --> 01:48:05,005
And that's the best way you can help us.
1663
01:48:05,005 --> 01:48:05,741
So.
1664
01:48:05,741 --> 01:48:07,842
Until next time, keep grinding.
