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Garrett Gunderson is the founder of wealth factory, a NYT bestselling author, and helped thousands of business owners create efficient wealth building strategies.
Little did I know before this interview that Garrett and I both got our start in the car detailing business, then moved into the financial services industry.
I love Garrett's outlook on life, true wealth, and entrepreneurship. He's a brilliant guy that has built an impressive network of A – players.
In This Episode, You’ll Learn:
- The five components of true wealth
- Why most entrepreneurs fail at maximizing their cash flow
- Simple strategies that can save you thousands of dollars
- How to create a bulletproof financial and wealth building plan
Links & Resources From This Episode:
- Garrett’s company
- Garrett’s bestselling book
- Garrett’s required reading for entrepreneurs and investors – Give & Take & Atlus Shrugged
- Read Garrett’s articles on Entrepreneur.com
Subscribe To The Pathways To Wealth Show:
Hey everybody. Welcome back to Pathways to Wealth. This interview is awesome. I don’t know any other way to say it. Garret Gunderson is the founder of Wealth Factory. He is also a New York Times bestselling author and just an all-around really smart guy. One thing I didn’t know before this interview is Garret and I actually both got our start-in business the exact same way. We both started car detailing companies when we were in high school and then went into the financial space, so I think this is really interesting.
Garret talks about and has helped thousands and thousands of high-level entrepreneurs and investors get a hold of their finances and build a bulletproof financial plan and has a really good definition for what true wealth means to him. He also talks about several ways that you can actually increase your cash flow in your business today. There are all these little hacks that he’s figured out from taxes – I'm not even go into it. You’ll hear it in the interview but it’s really impressive and these are things that can save and earn you thousands of dollars a month extra if you own a business or if you're an entrepreneur. Without further ado, I'm excited to introduce Garret Gunderson.
Chris Dunn: Alright, hey everybody, welcome back to Pathways to Wealth. We have another great interview today with Garret Gunderson who is the founder of the Wealth Factory. He is also a New York Times bestselling author. He’s on CNBC, Fox, ABC and just all-around really interesting guy. Garret, how’re you doing?
Garret Gunderson: I'm doing well Chris. How you're doing man?
Chris: I'm great, I'm great. Thanks for being here man. I feel like your message and what you guys do is really in line with of my message with the show and everything that I'm about, so I'm excited to have you here.
Chris: So tell me a little bit-, I kind of gave you a standard intro. You're founder of Wealth Factory, you're a New York Times bestselling author, what else should everybody know about you?
Garret: I started in the financial services business in 1998 because back when I was15 years old, I had a car detailing business, won $5,000 for being the young entrepreneur of the year and unlike most kids, I want to invest that money and by wanting to invest that money, my mom would never sign up as a custodian, so when I finally turned 18, I got a bunch of low-tier financial firms who are interested in me, people that were pedaling products and the stock market was good at 18% because it was 90s and all that kind of stuff, and so, in that interview process, I got offered an internship.
At first, I did It very different than I would do today. I pedaled mutual funds for a couple of years and I even sold some life insurance because I want to be called the financial planner and that’s what most financial planning firms are about, people pedaling life insurance or mutual funds.
But then, when the market started to go down in 2000 and a lot of my family and friends and the parents of my friends were clients, I didn’t want to give them the same old crap everyone else was saying that they're in it for the long haul or buy because the market’s on sale, all that kind of nonsense that I think dollar cost averaging, all that stuff that I think doesn’t really provide long sustainable wealth and definitely doesn’t emphasize cash flow.
That was really the beginning of my career and once we discovered that, then I turn that into an inc 500 firm and I'm in the process of writing four books for right, one called Budgeting Sucks, another one called What Would The Rockefellers Do? So I'm really about how do people create economic independence in a short period of time because you don’t need to wait 30 years for a compound interest to get you there, you can have assets that produce cash flow and get that within seven year.
Chris: Okay, so a few things that you just said really took me back. One, we both started a detailing company when we were teenagers. I had no clue about that you had that same experience. That was my experience too. I started a detailing company when I was 16 and then went into financial services on the lending side, so you went into the mutual fund side. That’s so funny man.
Garret: Yeah, I was a mortgage broker at one time during the process too man because I was making money there.
Chris: Nice, nice. So you're writing four books. That’s insane to me because I just wrote my first book and I wanted to kill myself through the process, so you must be naturally gifted at that.
Garret: No man. Because the first book, Killing Sacred Cows, I tinkered with it for two years and finally brought in a co-author to really create more structure and accountability and so I wasn’t doing from blank pages. We’d have conversations, he’d write, then I would expand on the writing and that worked really well and then I took a bit of hiatus because doing the first book, getting it to New York Times, doing media promotions and even leaving my business for months at a time, my business wasn’t really ready for it and then we had all the chaos and the economy changed in 2008 which provided a lot of fear for the general marketplace, it was just taxing, so I was like, “Dude, I don’t know if I want to do that again.” And now here I am, I have a book that’s a limited print run called What Would The Rockefellers Do, very specific on how you can start to rig the game in your favor, cut out the bank as a middle man, and then start to create a sustainable lifelong wealth formula that leads to generational wealth and also becomes a way to have a family bank where your family always earns interest rather than institutions, so kind of a cool book.
But Budgeting Sucks, my plan is to make that much bigger than Killing Sacred Cows because it’s really a completely different formula than what most of the financial pundits are teaching. Budgeting is a constraining mindset and no one shrinks their way to wealth, so people thinking about budgeting and use their energy and thought process towards that, they miss out on opportunity. And sure there are three ways to live within your means, you can live within your means by budgeting but that’s the least effective way for an entrepreneur or an investor. More effectively, is to be more efficient within your means which means save on taxes, save on interest, save on investment fees, and save on insurance costs through financial intelligence or the best thing to do is expand your means, which means produce more and create more value and it’s going to lead to a whole lot more money and that’s really what the wealthiest people do. They don’t get there by pinching pennies. They get there by reaching a ton of people.
Chris: Right, focusing on the things that matter, not saving $2.00 on a Starbucks Coffee, right? You're not going to be a millionaire by cutting out coffee.
Garret: Right. I mean, this whole cutting out coffee type of concept, one is, coffee is a pretty damn addictive thing; two is, a lot of people go have coffee with relationships and they do business with; and three is, if you just enjoy it, why give that up? I don’t think there’s a single multimillionaire or billionaire that we could interview and say, “Did you get here because you cut out coffee?” I mean, it’s almost laughable but that’s middle class advice to help middle class people continue to stay ahead and stay on track but never get where they truly want to be and most books out there are really around middle class advice. But it’s this simple, if you want to be wealthy, you have to own a business or you have to be in a business that gives you upside potential, anything outside of that, the stock market’s never going to get you there, and so that’s why I like other types of investing where people can treat it as a business, right? I know people that have made their entire career on real investing and that’s their business. By the way, they usually kick the butt of the part-time investors because they can have a more robust organization. They have a lot of knowledge around it, so anyway, without going too much on the deep end—
Chris: So tell me a little bit about Wealth Factory, what is that? What do you guys do?
Garret: We’re a personal finance of entrepreneurs and our objective is to get 1 million entrepreneurs to economic independence by the time I die, so what that means is they have enough investment income or entrepreneurial income that doesn’t require their daily involvement to cover all their expenses.
We’re absolutely experts in people getting their financial house in order. We have something called an accredited network where we have attorneys, accountants, investment advisers, cash flow specialists, every type of insurance professional. I modeled it after a family services firm, so when someone’s worth $50 million or more, they can walk in, be at a common room table with all those professionals sitting around it and get great advice.
The rest of the world especially entrepreneurs that invest all their money back in their business, if they follow the advice of the middle class around their finances, they’ll be devastated and they're going to have exposure, they're going to have things working together. So I want to come in there and say I'm not after the people worth $50 million or more because they get good advice. I'm after the small business owner that’s making you an income but could really use the financial support and structure to transfer risk, find money and keep more of the money they make without having to cut back. Know that it’s important to invest back in the business and with the right people, processes and the technological infrastructure. It’s not about high-risk equals high return by putting money into investments they don’t know. It’s about discovering their investor DNA so we are a comprehensive personal financial services firm. Finding money for entrepreneurs and helping them achieve economic independence with a great team to support them.
Chris: I love that idea because there’s so many entrepreneurs that are good at what they do. They're good at their business but they suck when it comes to managing their own finances, right?
Chris: What would you say is the biggest challenge that entrepreneurs or small business owners run into when it comes to growing or managing their wealth?
Garret: Well look, as a business owner, it takes up a ton of time running a business. There are fires to put out, there’s a vision to have, there are relationships to build, there’s just so much to do that even if they know they need to handle their personal financial side, their car insurance, homeowner’s liability, disability, medical, life insurance or business owner policies, their corporate structure, their estate plan, their credit score, their loan structures.
I mean, that kind of stuff becomes overwhelming and if they try to do it, most financial professionals don’t agree. They have their own philosophies, so it’s hard enough to hire the right people for your organization, let alone go higher, the same caliber, the highest caliber financial people out there because most of these firms are product peddlers and trying to get them to think about retirement planning rather than thinking and understanding who they are as business owners, so that to-do list gets big simply because of a constraint of time and a constraint of the right people supporting them in what they do and that’s where we saw this huge opportunity in this massive niche because that’s what we’re best at, is being results-based and implementation-based and we’re not money managers trying to confiscate their money and put it into some crappy retirement plan but they have to relinquish control forever, have government 100% control it, have a bunch of unknown fees associated with it. Instead, we are about, “Let’s help them improve cash flow. Let’s charge a tuition that’s results-based so that it’s really about having that access to individuals to turn those huge to-do list and do a lot of the heavy lifting so that they got done because we can bring the person in to get it implemented immediately.
Chris: Nice. So give me an example. You talked a little bit about cash flow, how would you set that up? What do you focus on to make that happen?
Garret: Well first, we would look at what is their biggest area of opportunity? 93% of business owners overpay on their taxes. That’s immediate cash in their pocket if they save on taxes and if it’s the right strategy, that’s going to happen year in and year out. So we find business owners that are not incorporated. That’s a very simple way to get better structures incorporate and how you pay yourself.
When you take income into salary form as a business owner, that’s the highest amount of tax you’ll pay. When you take income in a passive type of form, you’ll have less taxes, so you take salary plus dividends, so those dividends don’t get hit with self-employment tax and so that could save you up to 15.3% on your taxes. If you’ve overpaid taxes in the last three years as a business owner, which about half of them do, as far as things you can go back and get back, you can amend those returns and have the IRS write you a check. So for over three years you’d like a second set of eyes or we have entrepreneurs all the time that are hosting people over at their home and saying “Hey, why don’t you come over.” It’s their clients, their vendors. Well, 14 days a year, they can rent that home out to their business tax deducted for the business but don’t have to claim personal income as long as that stays 14 days or less or a business owner can hire their kids if it’s legitimate projects and that’s $6300 dollars a year they could be paying their kids, that’s tax free to the kids, they write it off for the business or they own a commercial building and they didn’t have an engineer come in, if you do something called cost segregation, now all of a sudden, rather than waiting 39 years to get all your tax deductions, you might start getting some of them in 3 years, 7 years, or 10 years and get double or triple the tax deductions.
All that stuff starts to improve cash flow immediately and how they pay themselves at any time they move active to passive or ordinary income to capital gain or any kind of that stuff. That’s money right there in their pocket. I don’t believe in spending to save tax. It never makes sense to spend a dollar to save 40 cents and I don’t really believe in deferring tax because I plan on being in a higher tax bracket in the future because I always have been earning more money year by year and I think the government’s going to raise taxes so we will get legitimate strategy.
But the second area is that if someone has loans, so if someone has loans, we want to make sure their credit score’s greater over 780 because if it is, they could get better interest rates on their loans and then we want them to address cash flow from a loan perspective. The way we do this is called the cash flow index, so we would take and say Take every loan you have, write down the balance and divide that balance by the minimum monthly payment. It’s going to spit out a number. If that number is below 50, you have a cash hog. If you have a loan that’s cash flow inefficient, it’s requiring too high of a payment and relationship to that low balance. If you have a loan that’s over 100 on that score, that’s a pretty efficient loan. It means you're going to keep control of your cash flow pretty well and so never pay actually more than one loan at a time if you're really trying to pay something up. You pay the minimum to every single loan and only attack the loan with the lowest cash flow index. That’s going to help you pay it off faster by paying that off. You could improve your credit score, by improving your credit score, you can renegotiate other interest rates and then there’s plenty of ways to gaining the system there, maybe if they a paid off car, refinancing a credit card with a car loan, lowering the interest rate, getting an installment loan which helps your credit score or finding any underperforming assets. There are a lot of people that usually have old crappy IRA sitting around or some money that they inherited or something that happened that is just not part of the normal course of investing, if that’s underperforming, they can cash that out and pay off high interest rate loans free of that cash flow, then use that cash flow to invest back in their investments or back in their business or to pay off another low cash flow index loan.
That’s another way that we manage cash flow. Those are 2 of 20 ways that we really start to dive in and find cash flow for business owners but in the world of finance, you are in financial services through the mortgage side, you just know that most financial advisers don’t address 90% of issues people have because there’s no compensation for it. Because someone writes us a check the highest, we address the things that put more cash in their pocket and we’re not worried about 30 years from today. We’re worried about cash flow immediately so we have a completely different philosophy.
Chris: So you guys are basically attacking it from all angles just looking for hacks that can save a little money here and a little money there—
Garret: And the little money is the average cash flow improvement just on the loan side of someone who has more than one loan, for us is $2044 per month and then on the taxes $11,430 for half million of revenue. That’s all bottom line cash that they can spend however they want, not revenue that goes through the gauntlet of pain, overhead and employees and taxes, this is cash in their pocket.
Chris: That’s great. Like I said, whenever you stack up, credit score, taxes, investment, debt, stuff like that, that’s a significant six-figure or more a year cash flow.
Chris: Basically, you guys are a full service financial firm where you have all of these advisers that usually is reserved for the super wealthy that now small business owners and entrepreneurs can have access to. Is that right?
Garret: That’s exactly right. When I was 22 years old, I went to New York, I went into a family services firm, I saw what that was. I was like, I want to build this for the entrepreneur that has a good income but doesn’t have that huge net worth and it took me about a decade. It was a lot bigger project that I anticipated because we created a 42-question application. We created a process with a 9-month minimum interview cycle. They have to be approved by everyone else in our network. They have to come into one of our 3-day workshops. They have to work on our stuff before they ever meet another client and we have a 20-point philosophy, so 20 different points that if they don’t subscribe to all 20 points, they don’t even get in the door in the first place, so we make them read my book. We do all the stuff to jump through hoops.
We just had an event last week where we had two people where they have already gone through the application process, they’ve flown in and done multiple interviews and now they're onto that next stage, but yeah man, that took a long time because I want all of those people communicating with one another, working together on behalf as advocates for the clients rather than as adversaries or completely not communicating with one another and leaving the complexity up to the client which is once again, why business owners neglect this kind of stuff to do because it’s such a huge pain in the ass, it feels overly complicated but our job is to simplify it and make sure that it is emphasized on saving them a ton of time so they can focus on swinging for defenses in their business.
Chris: You’ve got attorneys, accountants, financial planners?
Garret: Yup and we don’t really call them financial planners because we have, in our own organization, what we call financial architects which are like the quarterbacks of the navigators to design the entire plan and then we have wealth engineers that say “Hey, what it is that you truly want? What’s important to you?” so it applies to the individual, that’s our internal team.
Then, the external team is the accredited network where we have multiple types of accountants, we have engineers, CPAs, tax attorney, we have corporate attorneys, we have registered investment advisers not a financial planner. We write them a check and then do all the analysis, make sure people are protected, make sure that they discover what their real fees are, what are the options they have. Because the problem is, if the investment adviser is just worried about managing money, then they're just going to pedal products like everyone else.
Then we have cash flow specialists and the cash flow specialists, they specifically look at people’s financial reports and dive in and find out where they can find money and then we have every type of insurance professional and their job is to be educators and analyze them. A lot of them don’t even do the transaction. They just come in and look and make sure that people are doing the right things and it’s all coordinated.
Chris: How big is that external network? How many people are in there?
Garret: Well, we have about 15 different firms that we work with, maybe 17 different firms that we work with, not every client is going to see all of them because some might be on the more advanced side of things or some—it’s just an issue that, that client isn’t facing based upon the type of business that they have but there’s probably seven or eight that everyone pretty much sees because it’s the foundational pieces that everyone has to deal with.
Chris: Gotcha. So do people pay your company directly for the whole package or do they consult with you and then pay all of these external people individually.
Garret: It’s an invite-only into our full program, so what happens is people might subscribe to our weekly publication or they might subscribe to our curriculum for wealth video series or they might subscribe to our wealth acceleration program where they come to one of our workshops and with all of those things, they typically get a phone call where it’s a cash flow overview and then we even have online surveys and stuff that they do to figure out what's going on in the financial life. Based upon those conversations, that’s where they get invited in. When they get invited in, because we’re [boutique 00:20:44] when it comes to the one-on-one, we only take 125 people a year into that one-on-one type of circumstance and we have to make sure we can put twice the amount of money back in their pocket [than when 1 00:20:44] the investor to join the program and then after that, it’s a much lower investment to continue to work with us but everything’s included other than two factors. Yes, the attorney looks at their existing corporate structure, their estate plan, educates them, but if they have to set up a new corporation, they do a domestic asset protection trust, that would be extra but they get a 25% discount through us simply because not everybody needs the same things. The accountant will look at the last three years’ taxes, current year tax strategy. That’s all included, education included, but if they file taxes, then they would pay for that. Otherwise, everything is completely inclusive. We used to include those two things but it’s just so different from person to person. Some people have three businesses, some people have partnerships, some people have awesome accountants, they're the 7% where everything’s handled. We don’t want them to pay extra if it wasn’t something they need to pay extra for.
Chris: Gotcha. What’s your ideal client? You said you want to put them through the ringer and really find the perfect client for you. What things do you look at? Do you look at revenue? Do you look at wealth?
Garret: Revenue. Our range is anywhere from a half a million to $5 million on the revenue and the majority of people are between $1 and $2.5 million on the revenue side. We love to see other factors. These are not musts but they got to have at least some investable assets so that we have some things to maneuver and work with but it doesn’t have to be a large amount, six-figures is all, doesn’t have to be in the seven-figure range. Love it if they're married, love it they have one kid at home, love it if they have more than one loan, love it if they own a building, but those are on the peripheral.
What really is most important to us is that we like who they are, we feel like they're very coachable, they have to be an entrepreneur, they're not going to retire within the next two years because we want people to see retirement is something they do in their business not that they do so that they could go sit on the beach and throw rocks while we do all the hard work. We view this as a partnership that “it’s a done with you not done for you program.” So that kind of gives you a sense of who we work with.
Chris: Nice. I love that. I think a lot of people, especially entrepreneurs need a partner, needs somebody to help guide them just like you have a doctor or somebody that’s going to help you stay healthy so you can go through the long haul and I feel like a lot of entrepreneurs especially like type A guys like me, we’re stubborn sometimes “No! I got this. I can handle it” and then you don’t realize how much shit has actually fallen to the wayside and then you look back a year later and you go, “Oh my God, I could optimize that–” so I love that. What would you say to somebody’s watching or listening to this on the podcast that they're like “Well, I'm not quite at a half a million or a million and I'm working on building my wealth but I don’t have a lot yet.” Are there any tips or strategies that you think could help somebody get to that level?
Garret: You bet. If you go to wealthfactory.com, you can see on the front page there’s a free cash flow guide. If you go the about us section, there are three guides on that. One is, what we call the investment score card but there are other ones that are actually like cycle of creation which helps people being about an idea and taking the idea to a concept where other people now understand it and are a part of it to a framework where other people are helping them build it to a product service or experience where they can get paid for it and a lot of it is extracting that business side of things.
Now, we have our curriculum for wealth and some of our programs like cash flow generator that we don’t have any safeguards on or gate keeping on, it’s just simply, if you can afford it and it’s something what we sell online, we will let people in and we give them all the resource.
The big programs are for people that have a lot more money than they have time. The lower programs are for people that have more time than money or they need to figure out how to make more money so there’s so incentivized to go in and dive in into our content and that’s how we plan on get to the million people is through the front end and just having that spread and having people share it and that’s why we have a lot of free content when people go to our website and a lot of free resources that is stuff that we used to charge for back in the day but we extracted out and said “here’s something that we just feel is valuable enough that everybody should share it.” Kind of like, Mercedes owns the patent on the seatbelt but if they didn’t let other car manufacturers use the seatbelt or sue them, then it’s just going to be less safe so they just shared it for free and I looked at that and I said “What’s our seatbelt stuff? What’s our stuff that we really created for people to pay but start giving that away so we could build relationships and so that we can really help people get where they want to go because we know there’s a lot of people with a lot of potential but they don’t quite have our normal parameters yet and we don’t want to just say “Good luck, hope you get there,” we want to reach out and give them value.
Chris: I love that. I'm looking at the guides right now and we’ll certainly link these up in the show notes. Is there one aspect of the complete financial plan that you would say is like, 80/20 principle, what’s one thing that most people could do today to start building more wealth or at least to start keeping what they’ve already got or build towards the next level?
Garret: Well, I think Andrew Carnegie said it well and I know you ask some of your guests this, so I'm giving you an early answer to this. but Andrew Carnegie said, “I put all my eggs in one basket and watch it like a hawk.” And to me, the real road to wealth is focus instead of diversification.
So, focus and build like the Amazon River. Multiple streams, streams are small, they can dry up. An Amazon River brings so much life all around it and there’s so much fresh water into the ocean because of the power of that flow. You focus on cash flow, and one on the people on my board whose name is Rich Christiansen wrote a book called Zig Zag Principle, and in that he says, you know, when you start a business or when you're at the early stages, you don’t have the revenues you want, you just do everything you can to build cash flow. Don’t worry about having a scale yet. Don’t worry about bringing all the resources that you need. You begin lean and what’s your minimum buyable product, get that, get people behind it, and I call it win and play.
Win then play is even if you're launching something, you can pre-sell it at a lower price. Like when I did Killing Sacred Cows, my New York Times bestseller, people that bought it before it came out, I gave them bonuses and sold it at a lower price just to get that money in, to get that momentum in, and then it gets them excited. You think, in the Superbowl, what happens is they sell the tickets before you even know who’s in the game and they're doing everything they can to make it a great game first so we got to have a mentality of win first, then play the game. Don’t play not to lose, don’t even play to win. Win the game by how you structure it, how people pay you and then build it based upon the excitement and what they paid you and have high integrity to deliver that or more and that’s the success rules in a business.
Chris: I love that. There are so many knowledge bombs in that one or two minutes. Basically, focus all your energy on the Amazon River, don’t dig around with a bunch of little streams, focus on the big life force. And then, win and play, I think I heard in there sales will cure all. Get some cash flow, get some sales, right?
Garret: You just got to keep your eye on the ball with cash flow and then build liquidity even when it’s tough. As a business owner, pay yourself first. Put some money in a separate account because most businesses die because of a lack of liquidity, not even because they have a bad idea or they're run by bad people which there’s plenty of that out there but the majority is simply because they didn’t build up the safety, stability, and foundation, and so a lot of business owners red line.
They spend optimism. They have a good month, they think it’s always going to be that good. Instead, take and reserve and preserve some of that money so that when the right opportunity comes up, you can pounce on it or when the health challenge comes up or a family member needs you or you lose an employee or there’s embezzlement or the economy changes, you can handle it because you have staying power. Far too many people in the financial world don’t emphasize savings because you don’t get paid on it but the bottom line is, savings creates a peace of mind fund, that piece of mind fund grows and becomes an opportunity fund, that opportunity fund grows and as you become a more successful business, it becomes a war chess because you’ll have a success tax at some time.
A success tax is, if you don’t hire us, you're going to find out one day a bigger tax build than you’ve expected, that a success tax or you get sued simply because you have money and people want what you have because there’s a lot of moochers and looters out there, so you got to have a war chess for those kinds of things. And you know what, 90% of the financial surprises people face could be planned for and alleviated not that the problem wouldn’t exist but they could handle it because they have the right infrastructure and foundation and that’s what we’re just badass at doing, is protecting business owners having invest back in themselves, keep more of what they make but make sure that they aren’t going to be derailed so they can sustain through whatever unforeseen circumstance comes their way.
Chris: I like that idea of thinking about all the possible things that could go wrong and that a lot of times do go wrong and then planning for them ahead. Yeah, I see a lot of investors, especially like early stage start-ups guys or small business that they want to have a little bit of money so they can feel good and buy cool shit. I think a lot of people put their priorities backwards, they want the big house, they want the nice car before they actually have a financial plan and I like the different accounts that you said, the only one that I really referred to as my FU account. Money that you know is there so you don’t have to make fear-based decisions because when people get desperate and they're down to the last dollar—
Garret: They chase bad profits at that point.
Chris: Say it again.
Garret: That’s when they chase bad profits.
Chris: Chasing bad profits, yeah exactly. And then, you make fear-based decisions, you make stupid decisions and then everything goes down the tube. I love that idea of just saving and then making wise decisions for the long term and almost like doing a pre-mortem, looking at why something could die or what the problems could be, and if you plan for them, you're not going to be surprised by it.
Garret: Yeah, yup.
Chris: Awesome. So Garret, that’s great stuff so far man. Tell me a little bit about the business side of what you built. How many clients do you have? What do the economics of that look like? What do you charge for the whole package?
Garret: Our flagship financial program is called the Freedom Fast Track. It’s a $25,000 investment. We have another program called the Business Fast Track, which is when we start diving more into the business side of things, look at business metrics and margins, team, all that kind of stuff, leadership and strategic initiative. That program is $22,000. It’s usually a year or two, sometimes people combine them.
We have on our front end our weekly publication called Billed which allows us to reach a lot more people. That’s getting tens of thousands of people. We just started that 51 weeks ago and really just continued to gain momentum and ground on it. it’s a one-time investment and then people have permanent access to that. We have our cash flow banking product that we just finished which is a couple of hundred bucks but what's cool is it teaches people how to rig the game in their favor around finances by cutting the bank out as the middle man, super charge their savings which is normally less than 1% taxable to get it 4% or 5% without taxes and then have that become a fund that helps fund other investments and be one of the stops along the way.
Then, we have our Curriculum For Wealth which is our step-by-step education system to achieve economic independence which is primarily done through video with a little one-on-one support and then our Wealth Acceleration Packages which are anything from cash flow generators at $1,000 to $3,000 that comes with our three-day workshop which are three or four phone calls analyzing taxes, finding out where people are losing and leaking cash and then what their overview is of their entire financial pitch or what’s working and what’s not working. That front end allows us to reach a whole lot of people. The backend one year in 2010, we took 375 people in, way too many people for us. We didn’t want to scale that because we want— the caliber of people we have, we have guys that have been with us since ’05, ’07, ’08, so we have long term great employees that know what they're knowing in a pretty dynamic field but on that front end, that’s how we can impact a million people and then really just, for an annual basis 125, maybe we’ll grow that up to 200 people on the one-on-one side.
Chris: Nice, yes. So you go real wide with the front end stuff and then as the funnel gets deeper and you identify who are the high-end clients that really need that service, that is kind of difficult scale huge because you're doing it at such a high quality, that you really need to make sure you have the right people and that takes time, right?
Garret: Yeah. There’s a book out there called the Discipline of Market Leaders. It’s a little bit of an older book but it basically talks about three types of business models. I really believe that there are four.
One business model is Product Superior. So Product Superior would be like Gucci, Virgin, or Mercedes. We brought that up before. Those are Product Superior. You know the name, you think of high quality when you think of Product Superior. Those are pretty tough businesses to build, usually requires investing a lot of capital, raising a lot of capital, and it usually takes a long time to building that reputation.
The second type is Operational Excellence. Operational Excellence would be like McDonald’s, plug and play, hire a new person that can start tomorrow, the systems are there. Southwest Airlines is pretty operationally excellent. It doesn’t require extraordinary individuals to work on a lot of those positions, they just have it well documented to what to do.
And the third type is Customer Intimacy where you just conserve your clients best because you know the most about them. Harder to scale customer intimacy, it’s possible, but we’re more of a customer intimacy business on the backend.
And the fourth type is Path Dominance. You go to a football game, you eat whatever is available because that’s the only path that’s there. You go to a hotel, you want to eat late at night, it’s whatever is in the room, that’s $20. That’s normally $2 somewhere else.
You could be two of those things, the dominant and the secondary but you can't be three of those things and make it work, so we really looked at it like, “Hey, we’re a customer intimate company and to scale that, we’re going to lose customer intimacy and it would be impossible to scale it and be product superior just because at that point, we would lose touch with who the clients are and there’s a lot of players in that game.
Chris: So you guys have really identified your niche and it seems like you are Product Superior, that’s great and you have that intimacy with the high-end guys. Alright Garret, now it’s time for five to thrive. Questions that are going to help people learn more about your business and you, are you ready?
Chris: Alright. What’s one piece of advice that you’d give to a young entrepreneur that is looking at what you do and saying. “I want to start a financial services business.” Where you would you say is a good place to start or what’s one piece of advice that could help them get started.
Garret: What I would say is, find out the most successful people that you know in that arena and do whatever you can to shadow them or be around them whether it’s giving them internship type or whatever for free, so you’d be around them whether it’s just supporting them in their business. I mean, I got super aggressive by going out there and getting educated because I believe that you got to have the right mental capital and then it’s simply looking for the highest quality relationships that you can build value for so you start building up that database relationships.
Chris: Nice, I love it. So you already answered the second question, which is, you are all in. You're the Amazon River. I love that analogy of just focusing on one thing and growing it big and then maybe delegating everything else. What would you say is required reading for entrepreneurs or investors?
Garret: Required reading for an entrepreneur is Atlas Shrugged by Ayn Rand because you get it what it means to be an entrepreneur as you read that book and the trials and tribulations they face and the turmoil and the way that other people don’t see the world the same, so I think that that pretty critical and then in addition to that, I think Give And Take by Adam Grant.
Chris: Give And Take, okay. I thought I read that one, I read Atlas Shrugged but not Give And Take, got to get that. Nice. Garret, do you have a favorite quote or a mantra that guide your life or that you live by?
Garret: Yeah, Benjamin Franklin said, “Wealth is not the man that has it but the man that lives it,” so I live in a mantra that I want to live wealthy all along the way that some days never going to come, so it’s all about how do I prepare for the worst but live for the best and that’s really how I live.
Chris: Nice. And that leads right into our last question which is, what does true wealth mean to you?
Garret: True Wealth to me comes in five tracks. Some people say money is not important, they usually don’t have much of it. I look at money like air, when there’s none, it’s pretty damn suffocating, so money’s part of it in finance but also sole purpose which is our values, our passions, our abilities combined for a vision that’s worthy of our life, sole purpose is the core, deeply who we are. We are either congruent and live that an express it properly or we are incongruent and we suffer. The third thing is mindset because there are two determinate mindsets out there. One that is scarcity– fear, lack, doubt, worry; the other is abundance which is human ingenuity, innovation, production, profitability, so to me, mindset is a part of true wealth. Then, it’s health, our physical well-being. If someone doesn’t have that, it’s like someone with good health, the proverb is, you have millions of dreams, someone without their health has but one dream and that is to get their health back. And then the fifth one is social, which is friends, family, relationships, experiences. So to me, true wealth comes in five tracks, financial, sole purpose, mental, physical and social. If you don’t have all five, they’ll bleed over and it’ll start to impact your life either through the feeling of guilt, worry, feeling like you're out of harmony, all that kind of stuff, so true wealth is all five tracks.
Chris: Garret, I got to say man, it’s probably best damn answer I've ever heard to that question. You nailed that man. That is just perfect, it’s all encompassing. The one question that I have is, I hear a lot of people say “Well Chris, I don’t know my passion. I don’t know my purpose. I don’t know what I should be doing.” Do you have any advice or suggestions for people that are maybe unclear on what that is?
Garret: Yeah, I have a lot of suggestions and advice around that. One is, take time to start thinking. Take time and start paying for people to mentor you in that arena. It’s worth figuring it out and uncovering it. To me, it can't just be about passion. It’s got to be passion combined with ability. I have seen people that have passion without business wherewithal that are getting bitter and broke right now, so simply, you have to start inquiring and asking the right questions. I mean, hell, people just subscribe to our weekly publication, every fifth issue has worksheets and things for people to discover what that is but if you look back in your life, what do you find yourself consistently talking about? What are the most painful experiences that now you're very passionate about never having someone else experience that pain? What types of things are you reading regularly or would you whether you get paid or not? What types of things do people compliment you on all the time because it tends to come more naturally or feels more natural in your arena, so it’s simply as you inquire an ask those questions, you start to discover that, and to me, in today’s world, there’s no excuse for that. Passion is like a fuel. It helps you get further but without ability, passion can just feel like things coming apart at the seams because you want to see it happen but you can't see it happen because you don’t have the ability. You got to combine the two factors in order to have real sustainable true wealth.
Chris: There’s a lot of people that would love to be a professional athlete and are passionate about that but they're 5’2 and 120 pounds, that’s just not going to happen, so I agree, I mean you’ve got to find—
Garret: –could be a jockey, maybe they could ride horses, maybe they just got to change the picture, right?
Chris: That’s right, that’s right. You just got to find the right niche. I love it man. Garret, thank you for all those knowledge bombs man. That was some really good stuff. I love your philosophy on true wealth, I love your philosophy on just getting your financial house in order and how entrepreneurship and financial prosperity, they do go hand in hand but I see time and time again entrepreneurs who just don’t do that the right way and you guys have gotten that figured out, so we’re certainly going to link up your [unintelligible 00:41:46] anything else that you want in the show notes. Do have any final words of advice or wisdom for entrepreneurs, investors, traders, or innovators?
Garret: If you don’t have a financial team, you will pay the price. If you have the right financial team that are A-teamers they will be 5200% more productive for you in your financial life. That’s according to the study that IBM did, 5200% principal of having A-teamers. It’s worth investing in the right team. They're going to protect you. they’ll save your butt in difficult times and making sure you do things right and especially when you get caught up emotionally on things, so that’s the next investment for these people that are watching is, get that team. Don’t have any holes in it and make sure that team communicates with one another and all of a sudden you're going to get access to the same thing the ultra wealthy always had access to that allows them to perpetuate well from generation to generation.
Chris: I love it man. It’s a great place to leave it off. Garret, thank you so much for being on the show, man. I appreciate it.
Garret: Thanks Chris, have a good one, man.
Chris: You too.