Reinvest, Reward and Repurpose Your Money with Cannon Carr

[00:00:01] Welcome to Business, Finance and Soul. My name is Shaun Enders and I'm a curious entrepreneur. I love exploring business, personal finance and consciousness. I'll jump around topics, offer my opinions and occasionally interview interesting people. Looking forward to going on this journey. Let's be curious together.

[00:00:29] Welcome back to Business, Finance and Soul. I am excited to speak with Cannon Carr. Cannon is a regional director and partner with EP Wealth. He's an entrepreneur and wealth advisor based out of Atlanta. And I'm just happy to have you here, Cannon. Welcome to the show.

[00:00:45] Hey, Sean. Glad to be with you.

[00:00:47] Yeah, absolutely. Today, although my audience is going to get a lot of value out of this conversation, selfishly, I'm excited to extract as much knowledge as possible from you. I'm really excited because as a wealth advisor and as an entrepreneur, you have the inside track to really how people live their financial lives and the journey that we all go down.

[00:01:13] And I think you probably more than most get a chance to pull back the covers, see what people's life goals are. And ultimately, you can help navigate them to hopefully financial freedom, which is what I know all of us want, but not everybody can attain. So I wanted to start with you with the first question of really, how did you begin this journey in wealth advisory?

[00:01:40] Yeah, no, it's interesting. So I started out and there are kind of three quick phases to it, chapter one, two and three.

[00:01:46] So the first part is I started out as a Wall Street analyst in New York City, and I got to take apart balance sheets and income statements for large companies and maybe small companies, but all public companies and learned, you know, what are the business drivers and what's risk on the balance sheet and learned how to communicate to a sales force actionable ideas, right?

[00:02:06] Very simple, actionable ideas. But at some point I was like, you know, I'm a commentator as an analyst, you're a commentator up in the booth.

[00:02:12] And I wanted to be on the field playing and I love investments, but I want to be more relevant to people's lives.

[00:02:17] I knew the founders of an investment firm in Atlanta. And so I became the second largest shareholder in that firm and bought into it with wanting to be a small business owner and work with clients.

[00:02:28] And for really that first decade, you know, enjoy the ride of the business owner. And then chapter three, you know, you get punched in the mouth and the business gets disrupted.

[00:02:36] And, you know, then you learn what it's really like to be a business owner and and how you rebuild some of the business and how you focus on the strengths, build a leadership team and build something that's sustained.

[00:02:48] And then, you know, ultimately we years later were able to merge into BP Wealth Advisors, which brought some growth capital and some expanded services.

[00:02:58] But all three of those got me into really an area of focus now, which is so key to me, which is since I speak the language of business owners and entrepreneurs, you know,

[00:03:05] how do you help business owners ultimately, you know, live the life they want and create the legacy they want through through their business,

[00:03:14] but ultimately creating independent wealth alongside it and through it.

[00:03:18] Very nice. So that's what excited me about this meeting is, is that not only do you have an objective of where you want to take your clients and help guide them and really be that Sherpa,

[00:03:30] but you've also lived it and you're living it right now, you know, as a shareholder, as someone who's managed employees and as someone who's had that experience in their own mind of,

[00:03:43] okay, what kind of business do I want to create?

[00:03:47] You know, do I want to create this lifestyle company that gives me a sense of freedom and gives me, you know,

[00:03:55] that financial flexibility and opportunity, but at the same time, you know, doesn't burden me with heavy overhead and the fear of employees and turnover and the rest of it.

[00:04:10] You're living all of that.

[00:04:11] I want to take a step back and find out, you know, really the framework when you came from a wall street environment,

[00:04:17] which really has scripted, you know, profit growth.

[00:04:23] You know, it's, it's, there's a mindset of more, more, more.

[00:04:27] What happened when you became the operator and you really sat down now and said, okay, hey,

[00:04:34] we can either make, you know, uh, $500,000 this year in profit, or we could make a hundred thousand dollars and hire these two or three individuals with the hopes of, of, of making even more money.

[00:04:52] Right.

[00:04:52] How did you reconcile that?

[00:04:54] And what kind of business did you start out?

[00:04:56] Uh, you know, what kind of mindset did you start out with when you jumped into the operator role?

[00:05:03] Yeah.

[00:05:03] So you do it a little bit naively and we have several clients who came from the corporate world, what I call the sure thing.

[00:05:09] Although that's not really the sure thing in reality, you know, but you know, you get a W2, you got a structure, you got a bureaucracy or an organization around you and you leave the sure thing for the unsure thing.

[00:05:18] And if you're doing a startup, you really know what it means to be the unsure thing.

[00:05:22] Right.

[00:05:22] So, you know, yeah, I left wall street, which is driven by, you know, salaries and bonuses, um, and, and working long hours, right.

[00:05:30] Um, to become a business owner.

[00:05:32] Fortunately for me, I didn't start from scratch.

[00:05:34] I, you know, I, I partnered with a founder who, um, you know, had, had taken most of that risk of startup.

[00:05:40] So that one reduced my risk there of moving in.

[00:05:43] Uh, and so, you know, my mindset was, you know, let's, uh, let's move from, you know, being a commentator in the booth to ultimately owning and making decisions about the business.

[00:05:51] Right.

[00:05:51] And like you said, you know, are we going to maximize profits or are we going to, uh, depress profits and, and maybe take a little bit less for ourselves as we invest for the future.

[00:05:59] And, um, and, you know, while I didn't have to take a founder's mindset of complete, uh, startup, you know, cause our business had been established for a while, we were growing it and we were moving from basically, you know, something around the founder to, uh, or actually two founders at the time to, uh, to building something that was sustainable beyond them.

[00:06:17] And beyond ourselves, which meant scaling up processes.

[00:06:20] So, yeah, I mean, you, you're, you're making those real choices, which, um, you know, are thrilling to a business owner because you are looking to the future and you're delaying gratification as you invest today for growth.

[00:06:32] Um, and you know, that's, that's a key concept.

[00:06:35] It's an exciting concept.

[00:06:36] They're going to be certainly bumps and surprises along the way that can get you off plan.

[00:06:40] Right.

[00:06:40] And so you have to be able to navigate those.

[00:06:43] And that's a lot of the reason we're here today to talk about.

[00:06:45] Yeah.

[00:06:46] Well, you had a nice,

[00:06:47] I think what's, what's really interesting is yes.

[00:06:49] When you jump in and you start something from scratch, there has to be, I mean, especially for first time entrepreneurs, there's that naivete that you come in and you say, Hey, we're, we're growing, you know, I'm in the thick of it.

[00:07:01] And a lot of times people are just responding to, uh, the product market fit, the service market fit, uh, the opportunities that are in front of them.

[00:07:10] And, uh, there, there, there isn't so much this calculated, we're going to do it exactly like this because there isn't, uh,

[00:07:17] a straight line between, you know, always in business action and results.

[00:07:22] A lot of times it's, it's, uh, very nuanced along the way.

[00:07:25] And just when you think, yeah, something is shutting years to find out, you know, what you did actually.

[00:07:30] Absolutely.

[00:07:31] Absolutely.

[00:07:31] Yeah.

[00:07:32] Yeah.

[00:07:32] That, that, that's, that's just it is it's things kind of give you a payoff in unpredictable ways.

[00:07:38] So when you came in, now you're a shareholder and you have an opportunity to, to either buy into the philosophy of growth, you know, uh, or say, well, wait a second.

[00:07:49] I, I want the returns, you know, I want those dividends.

[00:07:52] And instead of reinvesting my dividends, I'm going to take those dividends as lifestyle.

[00:07:56] And, um, you know, and I, and I like those dividends and depending on where you are, you're still young in your career.

[00:08:02] And certainly at that point in your career, you know, even, uh, uh, even earlier.

[00:08:08] So the smart move, the prudent move would be reinvest, you know, um, you've got time, you can use compounding and opportunity, but a lot of people get caught up in the lifestyle.

[00:08:19] And, uh, you know, nicer car, nicer home, better zip code.

[00:08:24] Um, talk to me a little bit about, you know, you're a big believer in financial freedom.

[00:08:29] Uh, I know your philosophy and, you know, where did that come from?

[00:08:35] Where your parent, do your parents have a high financial IQ and they pass that on to you?

[00:08:39] Or did you come from, you know, tougher beginnings of where you said, Hey, financial freedom and, and, uh, maybe fiscal, you know, kind of conservatism is, is something.

[00:08:49] That I'm a little bit more attracted to from my own life.

[00:08:52] Where did it stem from?

[00:08:54] Well, so two things.

[00:08:55] So one, yes, my parents, uh, cared about finances and, and talked a lot about it.

[00:09:00] So I grew up, uh, appreciating what, uh, compound interest would do for you.

[00:09:05] Right.

[00:09:05] And, and, you know, we, uh, I, I had every need I, I could have met, you know, as a kid.

[00:09:10] So it's not like I did not come from, you know, having to really stretch that dollar.

[00:09:14] Um, and, but, you know, fortunately my, my parents, you know, we didn't live a highly expensive lifestyle.

[00:09:19] And we talked about investing for the future and compound interest.

[00:09:23] So that's point number one.

[00:09:23] Point number two, you know, I look back three generations in my family and my great, uh, great grandfather started a business that, uh, kind of peaked in the next generation.

[00:09:33] Uh, the second generation.

[00:09:35] Uh, and then by the third generation, it had, uh, it had declined.

[00:09:38] Right.

[00:09:39] And, and you heard that, that phrase shirt sleeves to shirt sleeves and three generations.

[00:09:44] Well, the family business, uh, at that time did exactly that.

[00:09:47] And it's amazing to see how you can hear echoes of what that business was today.

[00:09:52] But the reality is, you know, the financial impact is extremely small because the value had been, uh, eroded away by, I think by third generation, very poor decisions about how to invest, about how to harvest capital, where you are in your business cycle.

[00:10:07] So, uh, in managing a business.

[00:10:08] So those two things informed, uh, you know, my, my decision and almost say every career decision I've made has been proactively stemming from that, but I do find I keep coming back to those lessons.

[00:10:18] Yeah, that's it.

[00:10:19] Well, you're really one of the fortunate ones.

[00:10:21] I think, uh, you know, I, I think there's such a big opportunity now, especially with what, you know, once we had more financial professionals, uh, the whole fire movement, you know, that, that mindset of an infiltration, thanks to the internet, really getting out into family households of saying, Hey, there's another way to do this rather than just hand to mouth all the time.

[00:10:48] And it isn't really about how much you make, obviously, you know, the more you make the, the, the, the easier decisions become and the faster you can get out of bad, you know, financial moves.

[00:11:00] But it's really about how much you spend.

[00:11:03] A lot of people, there's so much headline around, um, you know, do you have enough for retirement?

[00:11:08] Is 2 million enough?

[00:11:09] Is a million is 3 million?

[00:11:12] And it's really, the question is really how much are you going to spend and what kind of lifestyle?

[00:11:17] So when you mentioned that, that your parents were really, you know, keen on that of saying, Hey, this is, this is what we need.

[00:11:24] This is, you know, here's, here's how we create happiness.

[00:11:28] I think a lot of people need to, to, uh, to hear this, especially as you come into money at whatever age, whether it's not, it's starting a business or you're an executive.

[00:11:37] Um, it's really, what do you think it takes, uh, to create happiness around the material aspect of your life?

[00:11:48] Not happiness intrinsically, but there is a happiness with materialism too, you know, of like, Oh, I like the way this car drives or I like the way I feel when I come into my neighborhood.

[00:11:59] You know, I, I like my neighbors.

[00:12:01] They think like me.

[00:12:02] They, they, um, uh, I appreciate where I live.

[00:12:05] I like the schools, um, that my kids attend.

[00:12:08] Yeah.

[00:12:09] Now there's a quality of life aspect to all that, right?

[00:12:11] Spending allows you to achieve a quality of life.

[00:12:14] Um, and, but as you've alluded to, and, and, you know, we've used some words around what I call our three R's framework, which we'll get into about reward, you know, reinvest, reward, and repurpose, uh, your, your capital from the business.

[00:12:24] But we'll get to that.

[00:12:26] But you, you know, you'd mentioned how, um, uh, well, actually I forgot, I forgot my train of thought on that, except, um, you know, that, uh,

[00:12:36] you're, it's a good point.

[00:12:37] I mean, you know, quality of life and spend.

[00:12:38] Oh yeah.

[00:12:39] The things you can control are spending more than actual market returns, more than, um, you know, ultimate income levels.

[00:12:46] And as a business owner, you know, the equity value you're creating.

[00:12:48] I mean, you know, you try to put those things in place that will create that equity value down the road and you defer gratification, but there's no guarantee.

[00:12:54] Right.

[00:12:54] So spending is that one thing you can truly control.

[00:12:58] That, that, that's it.

[00:12:59] And, and I, and I like that.

[00:13:01] I think that, uh, that's an exciting place for a lot of people to play.

[00:13:04] You know, I started my company, uh, with two other partners in, uh, 2005.

[00:13:11] Uh, five.

[00:13:13] And so over time, it's been a lot of fun when we reinvest back into the business and we take on new technologies and we look at pairing back expense.

[00:13:24] How do you run lean and efficient?

[00:13:28] And technology has, has allowed us and afforded us the opportunity to create a lot of, you know, uh, great and fun conversations around that very topic.

[00:13:38] Uh, but I think you can have fun with spending less.

[00:13:42] And I think you can find ways to have bigger impact without always, uh, uh, bigger financial investments into just, you know, things.

[00:13:52] I like a good return on investment in business, but also in my household, I like an ROI, whether or not that's, Hey, I'm going to spend, you know, $300 on this pillow.

[00:14:01] So, but guess why, you know, because my sleep, I get a deep sleep of eight plus hours a night.

[00:14:09] That's worth its weight in gold.

[00:14:10] It's a great ROI, you know, and, and, and same thing for, uh, you can go on and on in terms of what you bring into your life.

[00:14:16] So there's, there's areas where it's like, it's, this is fun to spend on that.

[00:14:20] And then other areas are like, there's no ROI here.

[00:14:22] Let's go ahead and just cut the, you know, cut the fat off that one.

[00:14:26] But you mentioned the three R's and I want to get into that because I think this was very exciting for me.

[00:14:33] And, and I want you to break down those three R's, but the question that I had surrounding the three R's is, is really the formula that you might use.

[00:14:42] If you have one, you know, where companies can say, okay, Hey, um, this is important to me.

[00:14:50] I believe it, but what's the structure?

[00:14:53] What's the outline?

[00:14:54] How do I know what percentage I should be allocating for those R's?

[00:14:58] So maybe you can talk a little bit about the three R's and the framework around it.

[00:15:02] Yeah.

[00:15:03] So I'll give you the framework and, um, but what's neat about it is because people ask all the time.

[00:15:08] Yeah.

[00:15:08] What is that prescriptive answer?

[00:15:09] And the answer is it's dynamic, right?

[00:15:11] And it's dynamic for a reason because, you know, if you build a traditional financial plan or wealth plan for, you know, a business owner within a year or two with disruption or whatever goes on and the choices you make in the business and things you can't control, whatever your plan gets tossed out the window.

[00:15:28] It becomes static.

[00:15:28] It becomes less relevant and maybe even irrelevant.

[00:15:31] All of it.

[00:15:31] Uh, and actually even counterproductive.

[00:15:33] So you've got to have a dynamic allocation model that's constantly in sync with a couple things.

[00:15:38] So we'll get to that.

[00:15:39] But you know, the three R's is it's a simple principle for every dollar your business generates.

[00:15:45] You have three choices and only three choices for that dollar.

[00:15:47] The first thing is you reinvest it, right?

[00:15:49] And in your earliest stage, if you're a founder or if you're mid stage and you're scaling, that's what you're doing, right?

[00:15:55] You talked about earlier, you're going to delay taking your dividend because you're reinvesting.

[00:15:59] Uh, the second thing, uh, you can do with that dollar is reward yourself.

[00:16:03] You can pull out your salary or some kind of distribution.

[00:16:07] And as you alluded to, some, um, owners will overpay themselves, right?

[00:16:12] And maybe starve the reinvestment.

[00:16:13] Often what happens though is, um, owners will underpay themselves, particularly in the first five years of a business or first seven years, right?

[00:16:21] When it's, when it's in that survival mode and that's a tough time.

[00:16:25] Um, and, and ultimately when you move to potentially selling your business, you better be bringing it up to a market rate because you're going to be overstating your profitability.

[00:16:33] Right.

[00:16:33] But we can get into that.

[00:16:34] Uh, the third R is what I call re, uh, repurpose, which is diversifying the wealth away from the business into, uh, something that trades differently.

[00:16:45] Right.

[00:16:45] And, uh, initially, uh, when you're first building it, I recommend it being in, in public markets, right?

[00:16:52] So it's very liquid.

[00:16:53] And I'm not talking about a 90 day or six months cash pile.

[00:16:56] I'm talking about a strategic asset that you've invested to grow alongside because that is, that's where you're starting to build your financial independence that brings you options and flexibility when surprises happen in your business.

[00:17:07] So again, you know, you can reinvest, you can reward, or you can repurpose.

[00:17:11] And those three R's start setting the annual framework.

[00:17:15] So what am I doing with cash that comes out of the business each year to get a couple things right?

[00:17:20] My business, uh, uh, sustain, am I building a sustainable business and, and what is it going to take to get there?

[00:17:26] Am I building the financial, uh, independence and contributing to that?

[00:17:29] I'm not going to build complete independence, but am I contributing to it?

[00:17:32] And am I supporting a lifestyle that at least I'm comfortable with, right?

[00:17:36] And not overdoing it.

[00:17:37] So it's a dynamic allocation, which we'll get into all kinds of examples, but that is the framework.

[00:17:42] I, I, I love that.

[00:17:44] And that's what excite, one of the areas that excited me the most about, you know, generally the framework and philosophy that you bring to the table in that space, because I think that's, that's really eloquently put.

[00:17:54] But it is taking, uh, those, those, I guess that mindset around a dollar and, and understanding, okay, what am I going to do with each one that comes into the business?

[00:18:05] Canon, what, one thing that I did, I wasn't even sure, you know, if I didn't have that, that, uh, uh, roadmap.

[00:18:14] When I started the company, uh, transition staffing group years ago.

[00:18:19] And, and, but what I did do is I, I was always about financial freedom and I, I knew that we are in an industry that consolidates a lot.

[00:18:29] So there is a lot of acquisition that happens in our business because of, you know, regional marketplaces.

[00:18:34] And, and, uh, but I always wanted the money that spun off our company to have a purpose to retire off of that money and to be able to say, okay, that money, our profits are going to be what creates financial freedom for me.

[00:18:51] And we will put it into, you know, public markets.

[00:18:55] I love that.

[00:18:55] Um, you know, I love whether or not that whatever vehicle that is, you know, post to pre-tax, you know, people can make up their minds on 401ks or.

[00:19:03] It should be both at some respect, but yeah.

[00:19:04] Should be, should be both, um, syndications, you know, uh, real estate, whatever, whatever, anything else that was passive for me, you know, that didn't require any time away from the business to manage that money.

[00:19:18] And, uh, um, so you intuitively got it.

[00:19:20] And, but I mean, what I'm saying here is not rocket science, right?

[00:19:23] It's, uh, I think again, it's a chaotic world.

[00:19:26] Here are the three things we focus on.

[00:19:28] That's very doable.

[00:19:29] Um, but you intuitively got it, right?

[00:19:31] You were doing that from an early stage.

[00:19:33] And the other thing that's key is you had a great awareness of where you were going to head, right?

[00:19:37] I think a lot of founders, entrepreneurs, business owners, you know, go into starting a business and they don't think about exit.

[00:19:43] They don't think what it means to be independent from the business personally, emotionally, and financially.

[00:19:48] And it happens by accident.

[00:19:50] And usually when it happens by accident, it's usually happened because something went wrong.

[00:19:53] You've lost control and you're not optimized when you exit.

[00:19:56] And, and it didn't work out as well.

[00:19:58] And, and you haven't met the goals you wanted.

[00:20:00] So the whole idea is avoid that.

[00:20:03] Yeah.

[00:20:03] Well, and I've seen it.

[00:20:05] I've watched other business owners not really have any plan in terms of, Hey, where are you putting your money?

[00:20:13] And, and what do you take for distributions?

[00:20:15] And, you know, I kind of geek out in this area because I think it's exciting.

[00:20:19] And I think that I, I, I don't know, it's probably just somewhere in my DNA that, uh, that it just naturally clicked with me to, to take an interest in it.

[00:20:29] But I have watched others struggle in that area to really have a plan and to, um, uh, to your point, know what they're going to do outside of their own business.

[00:20:40] And this is, this is a very real issue that I think a lot of people who are emotionally tied their identity to their companies, everything else, they, they only see one Avenue.

[00:20:52] And, um, uh, I love that you're bringing a different, uh, uh, purview to, to, uh, uh, to this space.

[00:21:01] I want to talk a little bit about, you know, I think this is good for, uh, founders, CEOs, um, and executives or just an average person that's living life and making more money as they go along.

[00:21:15] How do you work with your clients on, you know, that lifestyle creep?

[00:21:20] You know, if they're, if they're really gaining, you know, now all of a sudden they're competing, you know, they just, they, they, they just got a new house, but in a new zip code.

[00:21:29] But now all of a sudden people around them have boats and, you know, bigger vacations.

[00:21:34] And, you know, all of a sudden you start playing in a different area.

[00:21:38] And, and, and for the average person that doesn't even run a company, it's the same thing, right?

[00:21:43] Something with a nicer car.

[00:21:44] I mean, it's a human, human thing.

[00:21:46] How do you personally stay disciplined, Canada?

[00:21:48] And do you have a kind of a, uh, a North star that, that you, you think about to not fall into that, that trap?

[00:21:58] Or do you just, are you not interested?

[00:22:00] Yeah, well, we all fall into it, right?

[00:22:00] I mean, oddly, you know, you, I've got entrepreneurs who, who start out saying, yeah, this is, this is what I want to build.

[00:22:06] I, you know, a business that's worth 20 million and I'll be happy.

[00:22:09] And I'll live on this and I'll be happy.

[00:22:11] And then five years later, they're like, gosh, you know, uh, my, my, my, uh, YPO group, uh, that, you know, everybody I'm hanging out with is building a business.

[00:22:18] It's 50 million or 60 million.

[00:22:20] And you know what, if I scale it, I can do the same thing.

[00:22:22] And they just go back from Europe and, you know, I, you know, I, I'm, I'm going to go to Europe now.

[00:22:27] And, and, uh, they just, you know, flew first class or now they own a jet.

[00:22:31] Hey, I'm going to own a jet.

[00:22:31] So before you know it, you're right.

[00:22:33] You use the word lifestyle creep.

[00:22:34] It's so easy to have that happen when you're, you're in a, the peer group that's doing that, or B you're just, you're just competitive.

[00:22:41] I mean, it's a natural human instinct.

[00:22:44] And, you know, there are basically two simple principles I use to try to fight that for myself, but also, you know, the clients I work with.

[00:22:51] And, um, and the first one is you mentioned the word North star.

[00:22:54] I often use the word North star.

[00:22:55] The question is how much is enough for you to walk away from the business?

[00:23:00] And, and by walking away from the business, that means you're not getting income from the business anymore.

[00:23:05] So you've got to be financially independent.

[00:23:07] Now, if, if your business isn't going to be enough to support that financial independence, well, then there's going to be a phase two in some way.

[00:23:13] Right.

[00:23:13] And that's part of the plan.

[00:23:14] But anyway, how much is enough for you to walk away and be independent?

[00:23:18] And then, and from that number, you back into everything that the three R's gives you.

[00:23:22] And it helps you prioritize how you're building, you know, the, the reinvestment to get to that point and the repurpose to build a different asset.

[00:23:32] So that first one is, um, the financial independence.

[00:23:35] The second one is the idea of buckets of where you're putting your money.

[00:23:38] Right.

[00:23:38] If you, you know, so when you are repurposing, you know, there's a, there's always a short-term bucket for emergency cash needs.

[00:23:45] There's an emergency bucket for taxes.

[00:23:46] Um, there's an emergency bucket for those liabilities, 529 plans, you know, those kinds of things.

[00:23:51] But then there's also that bucket for your independence that you're building for the future.

[00:23:56] And in an emergency, you may have to tap it.

[00:23:59] Let's say, you know, something went wrong in your business and now, you know, it was worth 10 million today and something happened.

[00:24:04] Now it's worth six and you ultimately need to get to 16.

[00:24:07] Well, all right.

[00:24:08] So now we've got to think through it, but this is the beauty of why liquidity gives you options.

[00:24:11] You don't have to sell at a discount, right?

[00:24:13] You can start building again and rebuilding.

[00:24:15] So, um, so buckets are so important.

[00:24:17] And when you put your money in a bucket, leave it there.

[00:24:20] Right.

[00:24:21] Uh, and you're going to have to come to me as your accountability coach and ask for permission to get it out.

[00:24:26] So, um, and there you also in your lifestyle bucket, you have a, that is a spending bucket, right?

[00:24:31] And it's okay to spend within that bucket, but don't try not to let it creep out beyond that though.

[00:24:37] So it, you know, it's, it's a behavioral discipline at the end of the day, again, not rocket science.

[00:24:40] Uh, but I, I find, you know, if you anchor to a number of how much it's enough, you anchor to your buckets, uh, and you have somebody over your shoulder, you know, kind of helping you make your choices.

[00:24:50] You can succeed.

[00:24:51] Yeah.

[00:24:52] Yeah.

[00:24:52] You, that is perfect in terms of two things that I'm going to touch upon.

[00:24:56] Number one, really just having that, uh, behavioral and financial discipline.

[00:25:02] And like you said, everything, uh, is, is fluid in life.

[00:25:08] Right.

[00:25:08] So what we believe today will not is, is our lives are not static belief systems, right?

[00:25:14] They're very dynamic.

[00:25:15] And, uh, and yeah, sometimes you're going to have a desire to, to, uh, upgrade, uh, and, and say, okay, this is what I'm going after now.

[00:25:24] Um, I have kids and now all of a sudden this is what I'm excited about, but I love having a financial accountability coach.

[00:25:31] I think that is one reason, even if you're a DIY or, you know, in, in, in the area of, of, you know, your own personal portfolio management and you say, Hey, I feel good about my finances.

[00:25:44] I feel good about investing my own capital.

[00:25:46] Um, some people are really excited about that as a hobby on the side.

[00:25:50] And I think having a financial coach is really helpful, especially to run purchases by each other.

[00:26:00] And to say, Hey, this is, you know, how does this derail me?

[00:26:04] And I think having just that conversation and where you go, I'm going to take out of this bucket, you know, uh, a little bit more than I expected.

[00:26:11] Cause I, I want to, I want to do this thing.

[00:26:13] I want to buy this thing.

[00:26:14] Um, I want to even invest into this thing and I'm not going to see any returns on it.

[00:26:18] You know, not everything has to be, you know, some of this can be a big expenditure on what could be a potential asset.

[00:26:27] And you might not see returns on that for, for five, seven years.

[00:26:30] But I think just having the, the awareness and having a coach as a sounding board to say, what do you think?

[00:26:37] Take a look over this with me.

[00:26:39] And, and would you do this?

[00:26:41] Um, I, I, I think that's where you, you can add great value.

[00:26:45] Yeah, no, it helps.

[00:26:46] I mean, people often don't want to be told no, but, uh, and sometimes that creates arguments and sometimes it creates blowups.

[00:26:52] Right.

[00:26:52] But the reality is, um, I mean, it's, you know, it's, it's your money, right?

[00:26:56] Something like, you know, I can only tell you so much, but yeah.

[00:26:59] And we do have clients that have a very hard time managing spending.

[00:27:03] You know, they, that lifestyle creep, I'll say even lifestyle set in the stage.

[00:27:08] And we have one or two who just like to be larger than life and spending shows the world that they are it.

[00:27:13] Right.

[00:27:14] And, um, and you just, you, you, you do what you can to keep a balance, you know, and, and provide a voice to it's awareness at the end of the day, at least even when you're doing it, as long as you know, you're doing it.

[00:27:25] That, that, that's just it.

[00:27:26] Some people know that they're doing it and they're just like, Hey, listen, all I got to do.

[00:27:31] And it's just, it's mindset and it's crazy.

[00:27:33] The difference between people who live with a scarcity mindset versus abundant mindset.

[00:27:37] Some people are like, Oh yeah, I just got to go earn more money.

[00:27:41] And you're like, okay.

[00:27:43] You know, like how, how is that so easy for you to say?

[00:27:46] And where you have, you know, millions and millions of people that are very afraid of money.

[00:27:53] Right.

[00:27:53] You know, I'm very afraid of having to need more.

[00:27:55] Oh my gosh, what if I run out?

[00:27:57] What if the, what if I lose this?

[00:27:59] Um, so it's fascinating to have both perspectives out there.

[00:28:03] You know, there is a last thing just, uh, I'll say, I mean, the ones that do the best are the ones that manage their.

[00:28:07] It's not the ones that have made the best brilliant idea.

[00:28:10] Right.

[00:28:11] That helps too.

[00:28:12] Yeah, no question.

[00:28:12] But the ones that have done the best are the ones that manage their spending.

[00:28:15] Um, and you know, what's interesting too, those that do spend a lot makes people often think, Oh, that's a wealthy person.

[00:28:22] The reality is they've, they're monetizing on things that are depreciating in value.

[00:28:27] And you actually don't see what their real wealth is.

[00:28:29] And it might be a lot lower than what they're using to live on by credit.

[00:28:33] So, you know, just the perceived wealth versus actual wealth is always so fascinating and, and, and different.

[00:28:39] Oh, absolutely.

[00:28:40] And, and, and one of the things that I think, uh, uh, so Buffett has a, uh, a great quote that is simplistic, but difficult to execute.

[00:28:51] Right.

[00:28:52] Like most, most things in, in the financial world, because they don't move in, in minutes, you know, sometimes they move in months and sometimes in years.

[00:28:59] And, you know, uh, uh, to be fearful when, when others are greedy and greedy, when others are fearful.

[00:29:05] And I think, you know, when you're running a company and you have, uh, you know, a nice bucket, you know, built for opportunity.

[00:29:15] Uh, you know, one of the things in our business, when we, we tap that bucket, it's generally when we're the most scared to dip into that bucket, which is okay.

[00:29:27] Okay. The market is taking a collective breath. We've seen that in our industry. There've been some headwinds in, in 2024 and we were getting mixed messages in terms of hiring, you know, unemployment's at all time lows, but yet companies are still going through, um, you know, some right sizing.

[00:29:47] And, um, uh, there's layoffs and there's corrections and all this stuff. But when the market is really hot, it's hard for us to recruit marquee talent because everybody's happy.

[00:29:58] They're getting bonused, their salaries, their jobs are secure. And so we have a heck of a time finding good A players, you know, because everyone is happy.

[00:30:08] So it's these moments of where it's counterintuitive of where you say, okay, you know, this is why we have money.

[00:30:14] This is the, this is the very essence of what, of why we've put aside this capital because the market's a little rocky in our industry.

[00:30:25] That's the time to go direct recruit, you know, people that are seeing their commission plans change, you know, getting compression in terms of branches or divisions closing.

[00:30:34] And so they're a little bit like, I'll take that recruiting call. You know, I'll, I'll, I'll talk to somebody else.

[00:30:40] And, um, and I think that that's to your point when you're living on the edge all the time, it's cool. Uh, it's fun, but it doesn't allow you that leeway to be able to take advantage when, when others are fearful.

[00:30:56] And I think that that's, that's an example of how we see, you know, tangible gains as, uh, uh, you know, as executives and CEOs is, is, uh, human capital, which is number one for everybody.

[00:31:08] Well, great mindset. And it sounds like you and your partners think alike. So that lets you move more quickly. Um, you know, their examples plenty when the partners in fight enough, cause they're, they have a different philosophy and it's usually times of stress that uncover that, but that'll be a podcast episode for another day.

[00:31:23] Have you ever read, uh, die with zero by Bill Perkins?

[00:31:27] Uh, I have not yet. I'm trying to think, probably come across a summary of it, but anyway, but not yet.

[00:31:33] You know, this philosophy is really interesting because it's, it's this, you know, idea of, um, uh, you know, not delaying gratification because we don't know the expiration of, you know, our own journey.

[00:31:48] And so this idea of balancing, um, today's experiences based on, you know, your own youthfulness and your ability to extract as much experience and opportunity out of that.

[00:32:03] Right. So when you're younger, of course, running around Europe, you know, traveling on trains, uh, uh, taking all day excursions, photos, jumping onto boats and, you know, getting on gondolas.

[00:32:17] And doing all of these things, a lot more fun than when you're 75 and much more feasible to get on a 12 hour flight, 16 hour flight than it is when you're, you know, now you're, you've got all the money.

[00:32:30] Uh, and you're, you know, you're, you've aged and you, and you hurt. So I bring this up because I say, how do you balance that out?

[00:32:36] You know, to make sure that, you know, the founders that you're working with, the high net worth individuals that you're working with are in fact hedging.

[00:32:45] But at the same time, they are absolutely infusing, you know, fun, excitement, and, uh, checking off some bucket list items while they're healthy and able to enjoy it.

[00:32:57] That's a great question because we have clients who were so frugal and they were always saving for the future.

[00:33:03] And then something happens, they, they, they may pass away. They may become incapacitated.

[00:33:07] They may set their life may change to where they just can't do this anymore.

[00:33:10] And they, they never took advantage of it. Right.

[00:33:12] And, and if you're building wealth along the way, you know, you can take advantage of it.

[00:33:17] And even if you're not, even if you're still in survival mode, I mean, I get it.

[00:33:20] The first five years of your business, you know, you've got to be dug in and make it happen.

[00:33:24] But to answer your question, you know, we spend a lot of time on understanding values because I think, you know, as a, as a business owner, but even if you're not a business owner, just yourself, just a non-business owner person, your values are how you want to make your choices and you want to be deliberate about that.

[00:33:40] So if you're, because values should ultimately underlie and drive your financial decisions.

[00:33:45] So if you value trips that help you discover and learn something new, or if you value, you know, investing time with peers on, you know, going to do events and ski trips or concerts or whatever.

[00:34:01] You know, if you value retreating to a mountain home and that's where your sanctuary is, well, you may not be able to get it literally today, but no, build it into the plan now because that is, that's part of your value system.

[00:34:13] And so that, you know, you're not going to do it every, every year, but, and you may not get everything, but you absolutely should be experiencing those things along the way.

[00:34:23] Don't, don't wait forever.

[00:34:24] So that concept of, you know, delayed gratification too far is totally right.

[00:34:30] You know, you don't want to starve your values.

[00:34:32] So at least that's how we think about it.

[00:34:34] We spend time understanding and discovering what I call the narrative of the business owner personally.

[00:34:38] So we know what's important to them, lifestyle, but also it feeds into exit at the end of the day.

[00:34:44] As you go back and say, I'm going to exit my business.

[00:34:46] It's not just about the dollar and maximizing your, your valuation.

[00:34:50] Because if you let that drive the process, there are other things that are going to be sacrificed.

[00:34:56] And it's usually tied to that regret of, oh my gosh, I had values that I did not protect in this exit.

[00:35:03] Yeah.

[00:35:04] This, this goes to the essence of intentionality in the way that I think most of us, you know, want to live our lives.

[00:35:13] And the ones that, that are extremely intentional with why am I doing this?

[00:35:20] And what is my value system?

[00:35:23] What's important to me?

[00:35:24] What gets me excited?

[00:35:25] And does that align with my family?

[00:35:27] Is my spouse, you know, does he or she have the same value system?

[00:35:31] Do my kids even buy into this?

[00:35:32] You know, I have two kids.

[00:35:34] One is like, if you told me, you know, we're, we're doing a big, uh, uh, European vacation tomorrow, I'm in.

[00:35:43] Whereas the other one's like, hold on, wait a second.

[00:35:46] I need to plan this out.

[00:35:47] I need to get my mind around that, um, different value systems.

[00:35:51] And that's okay.

[00:35:51] Even though we're all in the same family, you would think there's gotta be, you know, just cohesion naturally.

[00:35:56] But I, I do think that more people should, and that's why it's good working with somebody like you can, where you can bring this up.

[00:36:05] And again, hold somebody accountable to saying, Hey, by the way, have you sat down with the closest ones to you and, and discussed your value systems?

[00:36:12] And are you guys living those, you know, each year, are you checking in with yourself and saying, you know, your value system was that you wanted to expand your, your, your cultural, um, knowledge.

[00:36:25] And what did you do this year to do that?

[00:36:28] And that probably would require a little bit of spending to, to, to get out of your home and jump on a plane or, or do a long road trip.

[00:36:36] Yeah.

[00:36:36] No, it's intentionality.

[00:36:38] It's a great word that you used and I use it and that can govern a spending policy, right?

[00:36:43] It's a good sanity check on spending policy or, you know, if you're spending in line with your values, great.

[00:36:48] Um, you know, but again, keeping a balance, right?

[00:36:50] Particularly if you know, you got to reinvest, uh, to succeed over the next five years and hit certain targets.

[00:36:55] Okay.

[00:36:55] You know, so, uh, you know, again, dynamic balance.

[00:36:59] So I have a few questions for you, but before I do, I wanted to just, we, we talked about, you know, kind of the answer of it depends with the three R's, you know, and that it is a dynamic question kind of that each person goes through with their own journey and their own aspirations.

[00:37:17] But do you have a general, uh, percentage of reinvestment that you recommend for companies in the early stages and then in the later stages, you know, and I would just use pre five years, post five years, you know, once they get past five, they're starting to get some stability.

[00:37:38] And there's obviously a, you know, uh, a market fit there.

[00:37:42] Yeah.

[00:37:43] Do you, do you kind of, yeah.

[00:37:44] Do you guide, do you guide your, your, your entrepreneurs in that way of saying, Hey man, you're, you're not investing enough, right?

[00:37:50] Like you, you're investing 10%.

[00:37:52] I really would like to see 15% or 20% going back into this business.

[00:37:57] What's your thoughts there?

[00:37:58] Well, and, and I, I stay away from an actual prescription, but you can directionally get it right.

[00:38:03] Right.

[00:38:03] And, and like in the first five years or let's call it in survival mode where you are having to put capital into the business, you know, in the earliest stages, you know, you're not going to get a lot of third party capital yet.

[00:38:13] Right.

[00:38:13] You're going to get some friends and family.

[00:38:15] You're going to have a small business loan.

[00:38:17] Um, and you know, and you're going to put your personal capital, uh, in, in place.

[00:38:21] And there, uh, it's not so much the percent of the capital in the business itself on the reinvestment part.

[00:38:26] It's more relative to what your own independence means.

[00:38:29] Right.

[00:38:29] So if you've got a slug of assets, you know, we're, we'll squeeze that down, but we're going to leave some liquidity there.

[00:38:36] So reinvestment, uh, is kind of, you know, maybe this year, next year kind of phased in.

[00:38:41] Um, but that's, that's one way we look at it, but it is true.

[00:38:44] It is heavier in that survival startup mode, right?

[00:38:48] Once you get to lifestyle business, you know, then the reinvestment, you know, it can change on the margin.

[00:38:54] You know, let's say it's maintenance mode.

[00:38:56] You know, that tends to be five to 12%, right?

[00:38:59] Um, if you are in a little bit extra growth mode, you know, you might add a new salesperson or you're, you're going to expand the engineering team or whatever.

[00:39:07] Um, you know, that might boost it up one year, but you always want to keep track of your own metrics of like, you know, how are my, what's the revenue model relative to my full-time employees?

[00:39:17] And is that in balance, right?

[00:39:19] You don't want to get overspend.

[00:39:20] I see a lot of, you know, sometimes there's a trap people fall into.

[00:39:23] Entrepreneurs are like, this is how many people work on my team now.

[00:39:25] And I'm like, that's not that important a number, particularly if it's not productive.

[00:39:29] Right?

[00:39:29] So it's not a sign of success necessarily.

[00:39:32] So, um, so, you know, that's in the maintenance mode, but if you lifestyle business and now you're like, or let's say you acquired a business like I did and you're going to say, all right, now we're going to scale it.

[00:39:40] So we're going from maintenance to growth.

[00:39:42] Well, you're going to reinvest heavily again there.

[00:39:44] Right?

[00:39:44] So, you know, that gives you a little sense of at least how the priorities are, but once something is, um, you know, once something, a business is established and you're, and you can kind of be working as consistent plan toward your North star, how much is enough and what's the value you're creating.

[00:40:00] You know, the, the repurposing part deliberately 10 years, five years, seven years before exit becomes extremely important.

[00:40:06] So, um, there you, you know, then you tilt a little bit more that way.

[00:40:10] Right?

[00:40:11] Notice I've left the third R, the reward, the second R reward, um, as a little bit of something that placeholder.

[00:40:17] Right?

[00:40:17] And again, we want to support your lifestyle, but you know, you've got two bigger priorities in my opinion.

[00:40:22] So always lean to the reinvest and repurpose, um, away from reward.

[00:40:27] Um, but you want to be mindful of reward too, but a lot of people want to push reward too much.

[00:40:33] Yeah, it's more, it's fun.

[00:40:34] It's, it's, uh, it's, uh, it's, it's, uh, it's, uh, it's, uh, it's, uh, it's, uh,

[00:40:36] right here, you know, it's like, okay, we all get this.

[00:40:38] I'm going to acquire this.

[00:40:39] And yeah, I, I've kind of, the model I've used a lot has been as I diversify funds away from

[00:40:46] our business.

[00:40:47] I also am very mindful of what's our return on invested capital within our company, you know, to see, you know, are we in a, are we in a chapter right now where for every dollar we put in, we're, we're getting, you know, a dollar 30 back.

[00:41:05] Like that's a good, yeah, I feel like that's a really good, like, okay, right now let's ride that for a little while because what we've got is hot and we probably should, you know, we're getting 30, 40% returns in a mature business.

[00:41:19] And there's a good, well, and which is great, right?

[00:41:21] So there's an example of a good dialogue there.

[00:41:24] So, you know, me or my team, I'm not going to actually tell you, you know, when you're reinvesting, is it ultimately, uh, getting the return you want, right?

[00:41:31] That is kind of your job and your team, right?

[00:41:33] Your CFO, your CFO and figuring that out, but that is a vital input, right?

[00:41:38] I mean, I'm, I have to rely on you to do that, but I'm going to say, are you, is, are, can you continue to justify that reinvestment?

[00:41:44] Because you are ultimately going to compare it to a, your exit value and be the repurposing you can do.

[00:41:50] And, you know, and if, you know, and I get it, right?

[00:41:52] If, if reinvesting gives you a 8%, 10% return, I mean, I can, I can match that in public markets, but, uh, but I get it, right?

[00:41:59] You're, you're building your, your baby in your business, but yeah, if you're getting 20%, 30%, 40%, that is the magic of business ownership.

[00:42:07] That's why ultimately business ownership is, is the greatest wealth generator if you do it right.

[00:42:12] That's right.

[00:42:12] Right. And I think that then the, um, uh, you know, the, the false positive that many entrepreneurs can fall into is believing that that will always be the case.

[00:42:23] I mean, there's always outliers, right?

[00:42:24] There's companies out there that we've seen that type of growth, you know, compounding, you know, for a decade or more.

[00:42:30] There's very isolated instances.

[00:42:32] And, and, um, uh, uh, I think it's, it's more prudent to take that approach and say, Hey, ride that for a while, but, you know, let's diversify, you know,

[00:42:43] even when you've got a hot hand, let's make sure we're taking some chips slowly off the table.

[00:42:49] You know, you know, let's not put all of our, and I've seen this, uh, I've got a good friend of mine.

[00:42:54] Who's, uh, uh, who's an attorney, um, with, um, in, in the MNA space.

[00:43:01] Um, and he's, he's like, man, I watched a client ride it so hot.

[00:43:05] And then they had all their assets in their business and they lost a big contract.

[00:43:10] Uh, you know, their, their AR suffered.

[00:43:13] Somebody went bankrupt and, you know, kind of wiped them out with their cashflow.

[00:43:17] And tragic to see, I, I, my good podcast who built one of the largest national, uh, digital camera chains.

[00:43:23] And, um, his last big move was to do a major acquisition driven by debt.

[00:43:27] And just as in hindsight, it was clear that, uh, digital was going to, it was, uh, I say

[00:43:33] he's building digital camera.

[00:43:34] I mean, he was building, you know, the, the traditional cameras, uh, and so, and, and photo, uh, that

[00:43:39] kind of photography.

[00:43:40] So his digital undermined all that he had just taken on this big amount of debt and it drove

[00:43:44] him into bankruptcy and he was able to pull some money out, but it was, it was radically

[00:43:49] different than what three years before the value of the business was.

[00:43:52] And so, you know, in hindsight, it's always easy in hindsight to play armchair quarterback.

[00:43:56] Um, but you know, he, he, he had gotten some advice along the way and he said, my weakness

[00:44:01] was, I wasn't really a financial guy and I didn't have a strong financial guy.

[00:44:05] And, um, you know, there, you know, is an entrepreneur and business owner.

[00:44:08] You got to know your strengths and weaknesses and it's easy to criticize, but it hurts when

[00:44:12] it doesn't happen.

[00:44:13] No, that's it.

[00:44:14] You know, balanced diet, you know, whether or not that's the nutrition you feed yourself

[00:44:17] or it's the, the, the financial mindset that you have within your own company, you know,

[00:44:22] is that you, you really, you know, you got to have some, some, some peas or vegetables,

[00:44:27] you know, you want a little protein, you know, uh, uh, if you're going to eat carbs, you know,

[00:44:33] it's, it, let's have a few of those and, and know that they're, they're the healthy carbs

[00:44:37] for us.

[00:44:38] And, you know, but you balance it out and make sure that we understand how we're using

[00:44:41] this fuel.

[00:44:42] Um, one of the things back to some, I want your question, but I do want to talk about risk

[00:44:46] when, when you're ready.

[00:44:47] Yeah.

[00:44:48] Yeah.

[00:44:48] Yeah.

[00:44:48] I'm trying to bring, go ride with that.

[00:44:50] Well, so, um, so that's another component that's so important is I call it the three

[00:44:55] hours framework, but you would get it intuitively, right?

[00:44:57] Again, it's not rocket science.

[00:44:58] It's just a discipline.

[00:44:59] So, um, it's so important to understand the risks inherent in your business and then your

[00:45:04] own personal appetite for risk.

[00:45:05] And when those are in conflict and, and, and disruption happens, um, that's a lot of

[00:45:11] pain that'll cause.

[00:45:12] And that's where things, that's where regret, where, uh, where, uh, dissatisfaction, where

[00:45:17] relationships fall apart as your business is falling apart.

[00:45:20] So again, you can't predict the future.

[00:45:22] Like I use the example of the, the camera, uh, industry changing underneath this guy's

[00:45:26] feet.

[00:45:26] I mean, you can't really predict that he did have some advice that it might happen, but

[00:45:30] the point is it's managing risk in the business, uh, and knowing, you know, and I have an exercise

[00:45:35] I'll take people through or, you know, let's list the 15 risks that are, uh, could happen,

[00:45:39] you know, and then we'll, we'll rate the likelihood and we'll rate the, uh, the impact.

[00:45:43] And you get a quick priority when you do the math of what those three or four you have to

[00:45:46] focus on in any year.

[00:45:48] Right.

[00:45:48] And it's a rolling conversation.

[00:45:49] So they are, you can say, all right, what are my priorities?

[00:45:51] How am I managing this risk?

[00:45:53] And, you know, if your business is high risk, your personal side should be a little bit less

[00:45:57] high risk, right?

[00:45:58] Don't be putting a lot in, in Bitcoin, for example, but if you've got an annuity lifestyle

[00:46:03] business and you've got good cash, you know, you can take more risk in your, your

[00:46:06] personal liquidity and you'd be more illiquid.

[00:46:08] So, um, it's just, I just wanted to point that out.

[00:46:11] Getting that dynamic is, is so important.

[00:46:13] Well, and I think that understanding, like you said, your risk profile, uh, you know, are

[00:46:18] you, uh, uh, I think the gentleman that, uh, just went and purchased, what is it?

[00:46:25] Michael Saylor, you know, um, went and purchased another 7 billion, you know, for a Bitcoin.

[00:46:32] Yeah.

[00:46:32] Yeah.

[00:46:33] I think he's got 36 billion now.

[00:46:35] Um, micro strategies.

[00:46:36] Is that the, the company?

[00:46:37] I think so.

[00:46:38] Yeah.

[00:46:38] So, but he understands his risk profile.

[00:46:42] His investors understand their risk profile.

[00:46:43] They know what they're doing from, from, from a risk perspective.

[00:46:48] It doesn't mean that they understand the outcome, but they understand, you know, Elon's kind

[00:46:52] of infamous for that with, with going all in on Tesla and SpaceX doesn't mean he knew that

[00:46:58] it would work out.

[00:46:59] I mean, maybe he did cause he's half alien, but you know, um, doesn't mean he knew that,

[00:47:05] but he understood what his risk was.

[00:47:07] And that's how you bounce back from things because you don't, you don't see it, you know,

[00:47:11] in the same way as someone who, who's so fearful of putting something out there.

[00:47:16] Talking about risk, talking about failures, you know, when you look at your own life, um,

[00:47:22] what's, what is something that, that was either, you know, a failure at the time turns

[00:47:28] out to be a setback, um, that really helped shape where you are today.

[00:47:34] Yeah.

[00:47:34] Yeah.

[00:47:35] Um, well, and I tell you, it gave birth to the three hours framework, right?

[00:47:38] And it, and it gave, it's that punch in the mouth I talk about.

[00:47:41] Uh, I mean, you know, there, there are a couple of different examples with the one here I'll

[00:47:44] focus on.

[00:47:45] So, you know, our, uh, our two founders about, uh, five years ago, uh, actually kind of split

[00:47:51] not on good terms and it was painful to watch and both sides had were right.

[00:47:57] And both sides were not right.

[00:47:58] Right.

[00:47:58] There were elements of both.

[00:47:59] So not picking sides, but when our, uh, one founder left.

[00:48:03] Um, you know, he took about 15% of the business with him over the coming year.

[00:48:08] Um, and that passed straight to the bottom line for us, right.

[00:48:12] At a time when, you know, personally I had, you know, I've got three kids in school.

[00:48:16] I mean, you know, we're, we're living in an expensive part of Atlanta.

[00:48:18] Um, and so, you know, basically we had to cut it.

[00:48:21] We cut our distributions for a period to zero.

[00:48:23] Right.

[00:48:24] And, um, so, um, that, that hurt.

[00:48:27] And two things, I remember reading the email when he was announcing surprise, he was leaving

[00:48:33] effective immediately.

[00:48:34] And, uh, the portfolio manager who was with him said, you know, there's going to be pain

[00:48:38] here.

[00:48:38] And he left with him.

[00:48:39] And, um, I remember looking at that thing and, oh my God, our, our business, uh, may not,

[00:48:44] it'll survive, but gosh, I mean, this, this is a major setback and, and, uh, it's going

[00:48:49] to cause a lot of angst.

[00:48:50] And it did.

[00:48:51] Um, but two things came out of it.

[00:48:53] One, um, we made our team stronger.

[00:48:57] We professionalized our management team.

[00:48:59] Um, we, uh, we put in place scalable processes.

[00:49:03] We, we, we just, uh, you know, we use the EOS system, but we did all those things that

[00:49:08] help, um, build a sustainable business beyond just, you know, two founders.

[00:49:13] Um, and secondly, you know, it, it helped me really build that three R's framework.

[00:49:18] And fortunately for me, you know, I, I had liquidity, which gave me options.

[00:49:23] Right.

[00:49:23] And it wasn't easy.

[00:49:24] Right.

[00:49:24] I mean, we had to pull from retirement assets to fund things.

[00:49:27] I had to jack up the home equity line and credit cards.

[00:49:30] And, you know, I never fully paid them down.

[00:49:32] I was constantly balancing between the two.

[00:49:34] And, uh, we may, we, and we cut back on some lifestyle things and, and, um, you know,

[00:49:39] and, and fortunately, you know, and for our kids in college now they, we, you know,

[00:49:42] we have them take on debt and it's good for them.

[00:49:44] Right.

[00:49:44] We help them, of course, you know, majority, but, um, they're having skin in the game.

[00:49:48] So all that we had to right size our life, uh, in a way, but we had to, I had to, you

[00:49:53] know, you have painful sources to go through and, um, you know, uh, fast forward four or

[00:49:59] five years and we're healthy, but it was, uh, it was a real, uh, period of, of stress.

[00:50:05] I, I really appreciate you sharing that because I think that there's more, there's more that

[00:50:10] binds us through those setbacks than there are, you know, really the, the, the victories,

[00:50:16] uh, that we see, the exciting stories that we see because most business owners and even,

[00:50:24] you know, uh, individuals in, in their own life that have been fired for, from a job and

[00:50:28] that they want it, you know, and, um, and it ends up becoming, you know, for the ones that,

[00:50:34] for, for the ones of us that, that really say, yeah, I'm going to use this as fuel.

[00:50:38] Um, we're going to figure it out.

[00:50:40] We're going to, we're, we're going to get stronger from this.

[00:50:42] And I think that, um, um, so much more is built in those moments that creates a sustainable,

[00:50:51] scalable growth because you're, you're, you're setting it up with that mindset of we're, we're

[00:50:57] going to do this, right.

[00:50:58] We're going to be, you know, very fiscally responsible and we need ROI out of everything

[00:51:03] that we do.

[00:51:04] And, um, I think running a company that way, it's exciting, you know, and, and, uh, more

[00:51:09] deliberate.

[00:51:10] Oh, absolutely.

[00:51:11] Yeah.

[00:51:11] And much, uh, I think, uh, smarter and, and you're right.

[00:51:14] We reinvested in the business at the same time.

[00:51:16] And, um, you know, and, and yeah, you can only cut so far purposing at all.

[00:51:21] What's that?

[00:51:21] Yeah.

[00:51:21] You can only cut so far, right?

[00:51:23] Like you, as a business owner, when, when things get tight, you can only cut and get so

[00:51:27] skinny.

[00:51:28] You, you still, that's the crazy thing about running a company is that when times get tough,

[00:51:33] you still have to somehow, you know, find the capital, whether or not that's through,

[00:51:40] like you said, raiding the retirement accounts or home equity or something.

[00:51:43] That's when you start really understanding the rubber meets the road that moment.

[00:51:47] Um, I want to find out from, from you, what gets you up in the morning, you know, to, to

[00:51:53] come and, and really, again, be that Sherpa for your clients, um, grow your company.

[00:52:00] What, what is it that, that does that for you?

[00:52:04] I think, uh, as you can probably tell just from this, uh, podcast, I mean, like, um, it's

[00:52:08] empowerment.

[00:52:09] I love, I love empowerment, helping people feel empowered to do things.

[00:52:12] And I love building, um, you know, the free, what I call the freedom to flourish, right?

[00:52:16] Which is that financial independence.

[00:52:18] So, you know, all these tools help, you know, small business owners and entrepreneurs succeed.

[00:52:22] And, and, and I get a thrill knowing that a, somebody can live a life on their terms with

[00:52:28] the legacy they choose.

[00:52:29] And I get a thrill knowing that, you know, if you can really help small business owners

[00:52:32] succeed, you're helping your local community, right?

[00:52:34] You're helping your economy, your, your city, your state, maybe even the nation.

[00:52:38] So, um, all those things get me excited.

[00:52:40] And I think only because at its core, you know, um, I've never been a teacher, but I, you know,

[00:52:44] I just love education.

[00:52:46] I love teaching, um, you know, I love being collaborative with people and, um, and I love,

[00:52:52] as we kind of, uh, have alluded to simplifying complex things.

[00:52:56] And if I can use those skills and interests and tools to help people live and flourish,

[00:53:01] uh, I get excited.

[00:53:03] Yeah.

[00:53:03] I can tell Canon that you like to have impact.

[00:53:06] Uh, obviously you like looking at where things are going, uh, in a positive way.

[00:53:11] I saw behind you, Dan Sullivan's book, the gap and the gain.

[00:53:14] And, and, and, yeah, yeah.

[00:53:15] I have a couple of books that it moves around, but I've got different books that I will refer

[00:53:19] to in programs or whatever.

[00:53:20] They're great ways, great thinkers behind me.

[00:53:23] Yeah, absolutely.

[00:53:24] Well, they create, you know, that mentality of, of self-exploration, you know, um, and

[00:53:29] introspection of where you're, you're, you're going, how, you know, how am I living and,

[00:53:34] and having that intentionality mindset.

[00:53:35] I can, I can see, you know, how that, that really resonates in your day to day.

[00:53:40] Um, when, you know, last question really that I think is, is most important, um, whether

[00:53:46] or not you are a business owner or not, what's one question, uh, that you think more people

[00:53:52] should be asking themselves on a daily basis when they check in?

[00:53:57] Uh, I think, well, you know, for business owners, I like to say, you know, what does

[00:54:01] independence for you look like from the business?

[00:54:04] Um, but if you're not a business owner, I think, you know, what does success look like

[00:54:08] for you in terms of your values and understanding first and foremost, your values?

[00:54:12] So one of the first exercises I do with any client is, you know, uh, and, and again,

[00:54:16] this isn't rocket science, right?

[00:54:18] I think everybody in the financial services industry will do this, but, you know, really building

[00:54:22] off of what your narrative is, what's important to you, what, what are, what is your

[00:54:25] value system?

[00:54:26] Because the deeper you understand that, the more likely you're going to build a plan and,

[00:54:30] and success on terms that resonates with you, right?

[00:54:34] It's so hard to ask people to do things, um, that's against their nature.

[00:54:38] Uh, and when there's conflict with values, I mean, it's hard enough just behaviorally,

[00:54:42] right?

[00:54:42] We all, we use an example of, you know, envy, regret, you know, greed, all these things

[00:54:46] make us get off plan, but, uh, you know, that's fighting one battle and the discipline

[00:54:50] helps there.

[00:54:51] But if it's in conflict with your value system, um, it, it, it almost has no chance, right?

[00:54:57] So you want to build something that's achievable.

[00:54:59] I mean, I don't want to build a third R program where, you know, reinvestment, I'm asking reinvestment

[00:55:04] and it's just not achievable for this person, right?

[00:55:06] Or a reward component that's just not achievable.

[00:55:09] So it's gotta be a, so, but understand your values.

[00:55:12] I mean, your question, what is, what, uh, you know, what does success look like with the

[00:55:17] values that are important to you?

[00:55:19] And those can change.

[00:55:20] I mean, people over a decade, they're sometimes their value systems stay the same, but sometimes

[00:55:24] they evolve and their priorities evolve and it, and it requires a lot of listening.

[00:55:30] Really appreciate that, Cannon.

[00:55:31] I really appreciate your time and your expertise in this space, uh, using a combination of your

[00:55:37] own experience, your own stories, and then also the insight that you've gained from, you

[00:55:42] know, the many years of working with very successful, uh, uh, drivers, you know, in, in many different

[00:55:49] industries, where can the audience find you?

[00:55:52] Uh, how do you like to be engaged?

[00:55:54] Well, uh, so, uh, you can find me on LinkedIn.

[00:55:56] That's an easy place and a easy way to connect.

[00:55:58] Uh, we're in the process of actually getting the cannon car.com website, uh, up and running

[00:56:03] under the new, um, partnership that we have.

[00:56:06] So, uh, that'll be up momentarily, if not now.

[00:56:08] Um, and you can always go to epwealth.com and go to the Atlanta market and you'll see me

[00:56:13] and my team there.

[00:56:14] And any of those three things can get in touch with us.

[00:56:17] I mean, also you can reach out.

[00:56:19] I'll just give my email.

[00:56:20] I mean, it's c-c-a-r-r at epwealth.com.

[00:56:24] Uh, just email me and we can, um, you know, we can have a conversation.

[00:56:27] I often offer to people, you know, Hey, let's just find 30 minutes.

[00:56:30] Let's do that quick qualitative risk assessment, uh, in our conversation.

[00:56:34] And, um, you know, you'll walk away just understanding your priorities a little bit

[00:56:37] better.

[00:56:37] And if, you know, if there's some way we can help, uh, I'm excited to explore it.

[00:56:41] Perfect.

[00:56:41] Well, we'll put that in the show notes.

[00:56:43] Uh, your name's easy to remember.

[00:56:44] Cause you know, it just basically sounds like a, you know, college quarterback.

[00:56:48] Uh, I wish.

[00:56:51] Yeah.

[00:56:51] It just is immediately.

[00:56:53] I was like, Oh, cannon car.

[00:56:54] Absolutely.

[00:56:55] 80,000 people screaming for you.

[00:56:57] You know, he could have been a contender.

[00:56:58] Yeah, exactly.

[00:57:00] Hey, by the way, where did cannon come from?

[00:57:01] Um, where, where'd the name?

[00:57:02] It's just been a family name and it, uh, it's been a last name.

[00:57:05] It's been a middle name.

[00:57:06] It's actually my middle name.

[00:57:07] Um, but it's one, my parents chose from me for me early and I've always loved it.

[00:57:12] I mean, I answered a Cameron, Kenneth, Conan, Conrad, Cameron, you know, anything.

[00:57:16] But, uh, once people get cannon, you're right.

[00:57:18] They do remember it.

[00:57:18] Oh yeah.

[00:57:19] It's, it's, uh, it's awesome.

[00:57:20] So, uh, well, I, I appreciate your time.

[00:57:22] Any, any parting words?

[00:57:24] No, just, Hey, Sean, I enjoyed it.

[00:57:26] I think you have the same spirit.

[00:57:27] I mean, you bring out the best in us, uh, you know, in, in these podcasts that you do.

[00:57:30] So thanks for making it fun.

[00:57:32] Thanks for making it relevant.

[00:57:33] And, uh, just appreciate all you do to, uh, help people succeed.

[00:57:39] Outstanding.

[00:57:40] Thanks, Cannon, for saying that.

[00:57:41] And, uh, until next time, everyone stay curious.

[00:57:44] Enjoy your day.