Boom! Shake the room, Fire Nation! JLD here and welcome to Entrepreneurs on Fire. Brought to you by the HubSpot Podcast Network, the audio destination for business professionals with great shows like System Saved Me. Today we'll be breaking down the number one financial strategy for business owners to multiply wealth predictably.
To drop these value bombs I brought to M.C. Lobster and the E.O. Fire Studios. M.C. is a business owner, investor podcaster, and best-selling author. He's the founder of Producers Wealth, a firm with a mission to elevate the financial well-being of business owners and their families. Today, if our nation will talk about challenges, we'll talk about the biggest returns on our investment, where we should be focused and owe so much more. And the big take of response in today's episode goes to M.C. and our sponsors.
DTCPod, hosted by Ramon Barrios and Blaine Bolas, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. DTCPod is a podcast about all things direct to consumer. Ramon and Blaine cover everything from starting, growing and optimizing e-commerce stores in DTC brands. If you're interested in the stories behind your favorite consumer brands, this podcast is for you. One recent episode on how the best brands are built is a must listen. Listen to DTCPod, wherever you get your podcasts.
MC, say what's up to Fire Nation and share something that you believe about becoming successful that most people might disagree with. JLD Fire Nation, I'm honored to be here and have a conversation with you. To achieve extraordinary results, you can't just do things differently from most people. You need to do the exact opposite of what the majority of people are doing.
The information you receive through various media, whether it's print, digital, video, audio, it's typically designed for the average person, but Fire Nation isn't here for an average life. You're not striving to have average health, relationships, spirituality, business success, or financial wealth. If you simply aim to be different, you'll get a different version of average. But when you choose to do what
And to do the opposite of what the average person does, that's when you're on the path to achieving something truly special. Fire Nation, you're not listening to this podcast because you are a sheep. You do not just follow the herd. You stake your own claim. You are a pioneer. And we'll be talking about the number one financial strategy for business owners who want to multiply their wealth predictably, keyword predictably.
Listen, MC, we all make a lot of mistakes in life. In every way, shape and form, I mean nutrition, skipping exercise sometimes, and overall financial. Let's be honest, the mistakes in the financial space can be especially costly because, man, I can always get back on that nutrition plan. I can always hit the gym for a week and get back to where I need to be, but sometimes, man, those financial mistakes can cost you for good.
Let's break down the number one mistake entrepreneurs make when it comes to finance. So when entrepreneurs start a business, they bet on themselves. Fire Nation, if you're listening to this and you've started a business, you bet on yourself. And if you didn't come from a wealthy family, you're usually bootstrapping the business and you invest all of your resources, your time and financial resources. You invest your blood, sweat and tears. So at that stage,
When all this is going on on a financial statement, you look like a broke person because you're all in. No financial tax or legal advisor will usually give you any time of day because again, you look like a broke person on paper, right? Banks are not going to lend you any money or extend you any credit. Is it only me, but does it feel like when you really, really need money from a bank, they don't lend it to you? But if you don't need it, they will.
It's kind of funny how that works out. But then after long days and nights, blood, sweat, and tears and fire nation, you know what I'm talking about. Your business starts to survive. It becomes profitable and then boom, it starts to grow. It continues to grow because you keep reinvesting the profits that you make back into the business.
You're now successful. By the way, your relatives and friends who did not see the hours that you spend working to build this business, not knowing, you didn't know at that stage whether to work or not. They think you're all lucky at that stage, right? At this moment, also financial texts and legal advisors, they're just banging down your door. And banks are cold calling you to do an account review. Sounds familiar, fine nation. At this point, you've got a financial advisor that tells you
You've done incredible. You're crushing it, but it's time to diversify some money outside of your business. And then they'll take that money and diversify it in stocks, bonds and mutual funds and also ETFs, which are just exchange traded funds. So what happened right here? Instead of using your money to grow your business and incorporate technologies like AI or hire new employees, you use the money to provide money
for other businesses to do that by buying your stock. Now I love Apple, big Apple fan here, big Steve Jobs fan and also big fan attempt cook. I use Apple products, but Apple does not need my money to grow. My business does. I'm starving my own business and feeding Apple. Does that make any sense?
The results, by the way, after this happens are very predictable. Business owners, after doing this, see their businesses reach a plateau and stop growing at the right they previously grew. So the biggest and best return entrepreneurs will ever get is investing in their own businesses, not by investing through the stock market and other people's businesses. 8% average returns in the markets is average.
And we're not playing the game of being, we're not in the game of being average, right? And so Fire Nation, there's no other vehicle that can match the return that you will generate in your own business. It's impossible. Then you're doing it wrong. Your business, by the way, will always need money to grow. So stop starving your own business and feeding other businesses.
So I want to talk more about challenges. I mean, we've talked about some, but I really want to dive into the biggest financial challenges that we as entrepreneurs face. Talk about those. Yeah, because you've diversified outside of your business in stocks, bonds and mutual funds and ETFs and no longer have access to the money. They moved outside of your business. You're now beholden to banks to finance the growth of your business and manage cash flow.
So if a business owner needs to incorporate technologies like AI in their business or hire new employees, they need to get loans or access lines of credit from banks. The other challenge and Fire Knight Nation, I know you know this already, that entrepreneurs face is managing cash flow. And every business has four seasons of cash flow. Summer is your highest revenue month. Every entrepreneur listening to this conversation will automatically know their highest revenue month. Mine is mine.
Every year, the opposite of summer is winter, your lowest revenue months. Just as entrepreneurs will be able to identify their highest revenue month, they'll all know their lowest revenue month, minus August, by the way. In both of these seasons, you have fixed overheads for your business, rent, payroll, software subscriptions, and more. And these expenses stay the same every month.
If entrepreneurs do not have access to money in the lowest revenue generating months, as they have in the highest revenue generating months, then they need to go to banks and borrow money and or set up lines of credit. Now, Fire Nation, here's an overview of the four cash flow seasons that entrepreneurs will relate to. Now, in the cash flow season of summer, which I've already mentioned, entrepreneurs are crushing it with their revenues.
Then things start to slow down in the fall and eventually lead to your winter, which I've also mentioned that your lowest revenue month, then the spring comes in with entrepreneurs investing in new products and services and marketing campaigns that then produce the summer cash flow season. Now, on the fall and the winter cash flow seasons, entrepreneurs need access to money to pay all of the fixed overheads in the spring.
Entrepreneurs needs access to money to invest in the business and develop these new products and services and marketing campaigns. In managing the cash flow of the business, entrepreneurs always struggle because they have to go back to banks to get more money to find their business. So that becomes the biggest challenge in managing cash flow.
Fire Nation, this is such a critical thing to understand because this seasonality, this understanding, this need to be able to come up with fixed costs on a month to month basis. You need to be able to accomplish these challenges if you're going to win. Now, I want to focus on the biggest returns on our investments. Where exactly should we focus for that?
You know, it's interesting. We always look outside of ourselves and our businesses to see where we can get the biggest return. But the, the actual truth is the biggest returns are always in ourselves and our business. It's not even close. And I'll, I'll share some examples of a client that sells coaching packages online in March of 2020, when the world went into lockdown and all of the chaos ensued, most business owners,
because of the shock stop marketing and running paid ads. So this kind of mine took $100,000 from the get wealthy for sure account and ran paid ads. He sold $1.25 million in coaching packages. His return on that $100,000 he invested into his own business was 1,150%.
That's, I mean, I don't think there's a doggy coin that can get you that. And these types of returns are not uncommon for my clients. Fire Nation, if you're listening to this, just think about this. Think about the returns you had when you invested your own money back into your own business. And think about any business owner, when they hire employees, their common rule of thumb is in many businesses is to aim for a return of three to five times the employee's salary.
So let's stick with $100,000, right? So if you use $100,000 to hire an employee, your return on that employee could produce 300,000 to 500,000 as a return. Now a $300,000 as a return is a 200% return. $500,000 as a return is a 400% return. There's no vehicle that exists that can generate
a bigger return for an entrepreneur or business owner than their own business. Fire Nation, I hope that you are fired up about investing in yourself for all these reasons and more that we're gonna be talking about when we get back from thinking our sponsors. Marketers have never been spread so thin. Trust me, I feel it too. Between creating content, launching campaigns, journeying leads, nurturing your prospects and more, you barely have a second to breathe, let alone do your best marketing.
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Stop spreading yourself thin and start making major moves with HubSpot. Visit hubspot.com slash marketers to learn more. So MC, you believe that entrepreneurs should become our own source of financing. If we want to grow and scale our business, which of course people listening to the show want to do both. So tell us more about that. Yet all comes down to where business owners warehouse their cash reserves, their savings, their money.
And what we're looking for is a vehicle with guaranteed access to manage cash flow and finance our business, right? So that takes qualified plans like your 401k, 403b IRAs and Roth IRAs off the table. This is some of the worst places for business owners to put their money if they want to use it to manage cash flow and finance the growth of their business. Again, you can achieve other outcomes with those vehicles.
but it's not there for to manage cash flow or finance the growth of your business because your money is trapped there. When you look at vehicles where you can warehouse money and access it to grow your business, you'll find banks, bonds, and life insurance. So let's start with banks. So since Silicon Valley bank collapse, we've seen a total of seven banks go under, 11 banks that they're writing downgraded by writing agencies, 10 banks were put on a watch list with six of them.
facing writing downgrades by writing agencies like Moody's. And the FDIC, which is the Federal Deposit Insurance Corporation, has admitted that it only has 2% of the cash reserves of the deposits that they're currently ensuring. That'll keep you up at night. In March 2020, the Federal Reserve Board also reduced reserve requirements for banks to zero so they don't even need reserves anymore.
So to warehouse a large amount of cash reserves for your business in a bank is risky. Then there's bonds. So let's take a look at bonds. The reason why banks are in so much trouble is bonds. When interest rates spiked up, the value of bonds plummeted. So with rising interest rates, banks at their bond portfolio cut in half. If you had a run on any bank, like what happened with Silicon Valley Bank, the bank would go under because of that. The institutions also issuing bonds
are for all intensive purposes, bankrupt, pick your country, state, province, city, town, local municipality. They're all basically insolvent. And a promise is only as good as the party making that promise. The third option is one that not many people know about, life insurance. The ultra wealthy have for over 170 years in the United States, warehouse their cash reserves in life insurance policies,
specifically designed to be supercharged savings accounts with a mutual life insurance carrier? Well, actually, MC, I want to dive deep into this topic specifically because I know my audience is really curious about how life insurance actually works because it's a misunderstood asset class. The rich are using it so effectively. The middle class and the poor are not. So what is up with this life insurance being used correctly? When you say insurance, this, the concept of insurance,
Um, it already has a bad connotation, right? Think of auto insurance. You pay premiums that the worst case scenario will never happen. And then when it does, you struggle to get a payout from a carrier or they raise your premiums. So, uh, the majority of people think of life insurance in the context that someone has to die in order for someone else to benefit.
And the life insurance space is also filled with sleazy promoters and sleazy critics. So whether you listen to a pro life insurance promoter or an anti life insurance promoter, you need to take a shower when you're done with listening to the presentation, right? So the concept of life insurance does strange things to people. If you ask a hundred people their opinions on pitfalls, you'll have three opinions. Pro.
con and somewhere in the middle, people that can see both sides. You ask 100 people about life insurance, you'll have 100 emotionally charged opinions. So when you look at the big difference in the marketplace of insurance and how people use it, there's a very different way how the ultra wealthy use life insurance than the regular public. So for example, mutual life insurance carriers
are not listed on the stock markets. Most people from Malia were stock insurance carriers. So it's a completely different life insurance carrier that's there for the benefit of the shareholders, which are the policy owners. So it's managed purely for the policy holders. And these companies have been around for 170 years. They've been profitable every single year for 170 years consecutively. So you have had families like the Rockefeller's that warehouse, their cash reserves there for over 150 years.
so that they can access it to grow their operating businesses to invest in it. Ray Crock for McDonald's fame leverages life insurance to manage cash flow, run payroll, and scale the real estate underneath its McDonald franchises while Disney has used its life insurance to finance the construction and build out of Disneyland. And the current president of the United States has six of these specifically designed policies. So it's one of the best vehicles to warehouse
cash reserves for business owners that no one knows about. It's actually quite comical. It's been referred to as the rich person's Roth. So there's a couple of reasons why people actually and how it's used by business owners. In my book, Get Wealthy for Sure, the number one financial strategy for business owners to multiply wealth predictably, I share exactly how
These policies are specifically designed to be supercharged savings accounts. So it's structured for early high cash value. So the money that you put inside of these policies are guaranteed and it's guaranteed never to go down in value. It's not tied and or correlated to any financial markets. So regardless of what happens in the stock market, your money is guaranteed and it's guaranteed to grow. And you also get dividends, which are currently around 6%.
The growth inside the policy is tax-free. The dividends are tax-free. You have guaranteed access to your cash value tax-free and the death benefit, which is usually a multiple of your cash value is tax-free. The policy is also private and it has asset protection in all 50 states. So if a business owner gets sued, the creditors cannot get to the cash value. The best part of this vehicle is that you can access the cash value in this account
through a policy loan. So when you access it through a policy loan, you never touch the cash value in the account. You place the cash value as collateral for a loan the same way that you would place the assets of a business as collateral for a line of credit at a bank. So your money grows inside a life insurance policy and it's compounding uninterrupted, tax-free, and then you get to borrow from your policy
currently at 6% to use the money to grow your business. And I'll give you an example. I shared an example of a client of mine that sells coaching packages that borrowed from his life insurance policy, $100,000. And he generated $1.25 million in revenue. So he borrowed the $100,000 from his policy at 6%. And in this scenario, inside of his policy,
He's getting guaranteed growth. He's getting dividends at 6%. He borrowed from his policy at 6%. He generated 1.25 million in revenue, but it gets even better. He actually owns the policy and he loaned the money to his business. So he created a loan for his business at 12%. So he borrowed at six. He loaned it to his business at 12. He kept the spread as the banker.
The business received the money to invest in this marketing campaign generated all this revenue. So this is just an example of your money, one pool of money doing multiple things simultaneously. And in this example, he's returned that he generated on that money inside of his business was 1,150%. He made 6% as the banker and inside of his policy, the policy was growing
getting 6% in dividends. So this is what the wealthiest individuals are doing. This is what business owners that have optimized their cash flow management are doing. It's your money working in many different places simultaneously, fueling you the business owner and your business. Besides being a vehicle that makes you the bank, business owners can also pull out income for retirement, tax free from their life insurance policies. So when they sell their businesses,
They'll walk away with millions of dollars in life insurance tax-free and also millions of dollars from the sale of their business. That's what I call it the number one financial strategy for business owners that want to multiply wealth
Predictably, Fire Nation, there's no such thing as getting rich quick, right? There's only getting wealthy for sure. Fire Nation, I know that you are fired up from this value that MC is dropping here. So thanks for that, brother. And frankly, I know that a lot of listeners are like, how can I learn more? Where do I learn more? How do I connect with MC? So let's do this. Give Fire Nation a call to action. How can they connect with you to take the next step in learning more about this process?
Fire Nation, if you're interesting in connecting, you could go to getwealthyforsure.com. That's getwealthyforsure.com. I'm now giving all of your listeners a free paperback copy, only pay for shipping, that you can request a copy of the book, get wealthy for sure, the number one financial strategy for business owners that want to multiply wealth predictably. So request your paperback copy at getwealthyforsure.com, only pay for shipping.
Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with MCL and JLD today. So keep up that heat. And for links to everything we talked about, visit eofire.com. Just type MC in the search bar and the show notes page will pop right up and MC one more time. What is that call to action? Get wealthy for sure.com. That's get wealthy for sure.com.
MC, thank you for sharing your truth, your knowledge, your value of Fire Nation. For that, we salute you and we will catch you on the flip side. Hey, Fire Nation, a huge thank you to our sponsors and MC for sponsoring today's episode and Fire Nation. Are you ready to rock your very own podcast? Check out our free podcasting course where I will teach you how to create and launch your podcast for free free podcast course.com for free podcast course.com. I will catch you there or on the flip side.
DTCPod, hosted by Ramon Barrios and Blaine Bolas, is brought to you by the HubSpot Podcast Network, the audio destination for business professionals. DTCPod is a podcast about all things direct to consumer. Ramon and Blaine cover everything from starting, growing, and optimizing e-commerce stores in DTC brands. If you're interested in the stories behind your favorite consumer brands, this podcast is for you. One recent episode on how the best brands are built is a must listen. Listen to DTCPod, wherever you get your podcasts.
