Your Business Only Grows as Much as you Do

Welcome back to Investment Fund Secrets. I'm Bridger Pennington. Today, I want to talk about how your business only grows as fast as you do. All right, so welcome to the show today. As you— a lot of you know, I treat this as kind of my personal journal as well. I'd like to take you on the journey of what I'm doing. I'm drinking my own Kool-Aid, man. I do everything I'm talking about on the show. I'm running my own fund right now. I run a small debt fund and we're trying to grow it like crazy. These last couple months have been really exciting, really fun if you followed the podcast. You have seen that, and I wanted to stop and talk about something that I've started to recognize in my life is how as an entrepreneur, and probably a lot of you feel this way, but as an entrepreneur, it is the best course on self-development you can possibly go through. Jim Rohn, fantastic teacher and mentor, said before, he said, set a goal to become a millionaire not because of the money but because of who it will make you become. Setting high lofty goals in monetary ways, the only ways to get there is you have to develop yourself to enable your companies to do that much. And I feel like as a, as a small business owner, I feel like my business will hit a peak somewhere along the path, and it's me that's holding it back. I have to grow in ways of whether it's hiring employees, landing new contracts, becoming better at a certain area that I am the one holding the company back. It's me. One of my mentors, fantastic guy, he's coached literally hundreds of entrepreneurs He does a lot of sales, a lot of online marketing coaching, a lot of stage coaching, all sorts of stuff like that, and he says a lot of his clients have fantastic products, fantastic people around them, fantastic mentors, and they always want to talk about, okay, how do I take this to market differently, or how do I change the product? And he says, your product's great, your marketing's awesome. You are the one that's holding your company back. And he says, 9 times out of 10, when I start coaching somebody, I have to first start with the entrepreneur and help them upgrade their vision, their goals, their strategies, their systems within a business that enables their company to grow. And they don't see this, but they are the one holding their company back the most. As a mentor to me, I'm sure he saw the same thing in me, and we've been working on upgrading our systems and processes and making things cleaner and smoother. And I know a lot of you out there are running your own funds. It's actually been cool to talk to a lot of you. On Instagram, LinkedIn, wherever I've been, reached out to people in the UK, Netherlands, across the United States that are starting. I mean, you guys are doing all sorts of stuff. I had no idea the amount of different people starting just funds in these little niches all over the place. It's really cool once we've started this podcast and show and publishing in this area to see all the people in the community that I think if you're part of the world, because I felt this, just feel alone because nobody talks about funds. Like, You go to your grandma's house and she's like, what do you do for work? And I just say, I just, I manage money. She goes, oh, okay, like you're a scammer? And I'm like, no, I'm not a scammer. I do good things with other people's money, but we manage money, right? And it's sometimes a lonely world to be in, and I think it's great that we can come together. And I've had people reach out to me the last week all over the place that are starting funds for forex, for real estate, for Airbnb rental real estate, doing stock trading, doing debt funds like I'm doing. And doing super niche thing within those. One kid reached out to me setting up a debt fund to only help companies that want to move into China and expand and scale in China. Pretty cool. And so I love to hear from you. So if you have things like that, reach out to me on Instagram is probably the best one. Just DM me. It's @bridger_pennington. That's where we post a lot of our content. So find me on there. But I want to tell you a quick story that's helped me to upgrade is this last week we've been working on a deal and I treat this as my personal journal like I said before. So I'm going to just tell you about deals that I'm doing right now and what's going on. So a deal comes across my desk. These guys run a company And they do oil and freshwater pipelines. So they set up pipelines, and I didn't dive into the weeds of this, but they do these massive piping deals. I mean, they'll sign a client for $30, $40 million, and they'll take their whole team to Wyoming and set up an entire freshwater pipeline for this person, and they'll get paid. The problem is the upfront costs, right? They've got to get the machinery, all the pipe, they got to pay for materials, right? And so there's usually this upfront cost that they're short on capital for. Now, they've accounted for that. They've done this for about 2 and a half years. Last year, they were booming. They were doing— they did about $90 million last year in sales. Fantastic. They were growing like crazy and they overhired like crazy and they overbought and they didn't land all the contracts they thought they were gonna land. And this is the guy telling me this on the phone, right? So I'm just taking his word for it. And they kind of collapsed and now they have a cash flow issue. He said, hey, we've just landed another big client, but we are short about $500 grand and we need $500 grand quick to get moving. And this is how all these deals are, right? They always tell me how amazing their company is, but it's always like, if you're doing so well, why are you calling me for money? So that's why I asked him, like, what's going on? So he told me the story. We're just— we need to meet payroll and we have to buy these other, you know, machines to take out there. It's okay. And I mean, it doesn't always make sense, especially in my world. I'm in the world of fraudsters, people calling me that. I made an episode previously about this, about fraudsters, right? So My my antennas are always like, like buzzing around. Like I know you're trying to screw me. Like whoever's trying to call me for money is trying to somehow hide things. Usually nine times out of ten, and that usually that one person out of ten is a great deal. We make money on them. Anyways, I'm like, why don't you have relationships with banks? Well, banks want to see our audits audits for the last two years, and they're doing that. But we'll get the money in about three four months. Then those are finished. I say okay. And so I always end the deal, and this is my mentors have instructed me to do this with hard money loans especially is. Don't worry about the business, whatever. You have got to take positions on hard assets that you can close on, to liquidate quickly, to foreclose on, that you can get paid back your initial principal. For instance, if I gave them $500 grand, I would need some type of property or asset that I can close on, take with a first deed of trust, and be able to liquidate that quickly and get my $500 grand back to my investors. That's how you got to look at that lens. So And I told him on the phone, I was like, hey, I said, honestly— he kept talking about his business. I said, honestly, I don't care about your business. You guys could be the greatest business in the world. I do not care one lick about it. All I care about is that I can put a lien on assets that I can pretty much collateralize this loan. Because I don't know if you guys are going to take this money and fly to the Bahamas for 3 months and buy a private island. I don't know what you guys are going to do. You guys could all drop dead tomorrow. Maybe you all crash in a plane. I don't know. I got to make sure that my money is secure. And And he said, okay, I get that. So I said, what do you got? Do you have assets that we can lend on? He said, I do. And so he said, hey, I have a motel. It's awesome. It's like worth a few million dollars. You can definitely take that. And he said, we also have machinery and we also have a freshwater pipeline. So I said, awesome. So I said, yeah, send me over the documents. I'd love to look through that. And I was getting excited, like, this is gonna be a good deal, right? We're gonna make some good amount of money on this and maybe set up a relationship with these guys for future deals. So he sends me over the documents. I look through them. First off, the motel Has not been rented in two months. Like I think one person has stayed at it because I'm looking at it. I'm like, oh gosh! I call this guy, and I'm like, so is the motel free and clear? Are there any other liens on it? He said, oh yeah. Well, we have one lien on it. It's not a big deal. And I said, you have a lien on it? And he said, well yeah. And I said, well send me over that document. I need the documents. I can't. I said, just so you know, you're not going to get anything around me. Like if if I chose the motel to collateralize, I'm going to hire a title company. To go in and do a title check on that, and if somebody has a lien, I'm gonna see it then. So you can either tell me now or tell me later, but there's no purpose in hiding this kind of stuff. So he said, okay, yeah, well, there's a lien on that one. He sent me over the documents, and I said, honestly, I don't know if that's gonna work. We'll see. And then he sent me over the pipeline, right? So he has this freshwater pipeline. He tells me it's worth $7 million, and I'm like, wow, okay, that sounds great. And he sends me the documents. I look into it. Turns out, after I read the documents, He only owns 15% of the pipeline, and so which is still a sizable amount on a $7 million pipeline. But there's also a board that governs the pipeline, and so I'm like, but that's— and I'm trying to make this deal work. I'm like, this is— come on, we can figure something out. I look at all the tractors and stuff, he's already lent and put liens on all those tractors. He's already had other lenders do this, and so I'm like, well, maybe I take a second or a third on these, and I would— because I really was getting invested in this deal, and they call it getting drunk with a calculator. Is where you start typing in numbers. I was putting in $500 grand at this interest rate with, you know, we charge this many points. I was like, I'll make a— I personally will make a good chunk of change by— this is a really easy deal. So I was trying to make it work, and I called up one of my mentors who's done this before, and within 30 seconds of me telling him this deal, he just said, you can't do that deal. And I was like, no, but what about this? He's like, you can't do the deal. I said, why? He said, we call this types of deals spaghetti financing. What do you mean spaghetti financing? He said spaghetti financing is imagine a big bowl of spaghetti and on one end you've got, you know where it goes in, this piece of spaghetti, and then you know where it comes out on the other end, but you don't know what goes on in the middle. They all say, oh, it works out. We've got all these deals and we'll put second and thirds on all these things, and that's this mix of the spaghetti. And the out, they're gonna say, oh yeah, we'll pay you a huge interest rate and all this great stuff. You're gonna make tons of money. He said you can't do those types of deals because there's too much spaghetti mixed up and it's way too hard if They all died in a plane crash, for you to move on those properties at a second position. And to define that real quick, I know I'm going fast. Let's say the motel, that means someone's already lent on the motel, let's say a million dollars. So if they don't pay back the first person, the first person is going to close on the motel and they get first rights to the motel. They get the first million cash that goes to them. If I put a second position, $500 grand, that means the motel needs to sell. For the first million and then all their fees and stuff and then my $500 grand. So the motel needs to sell for at least probably $1.6 million with all of our fees and stuff to actually for me to even get paid out and I've got to work with that other company to sell it because a lot of times the first position person doesn't care about the second position. They say, yeah, we want to sell it as quick as we can. We'll put it on sale. We're going to put on a 50% sale. We're just going to sell it for $1 million just because we want to liquidate. And I'm like, whoa. Hey, I want my money too, so let's put it higher. They say, no, screw you, man, we're gonna put it lower. And so you gotta negotiate that. It's a hard position to be in, in a second position is what it's called. And so you really don't wanna be in those positions anywhere. So that's what my mentor was telling me. He said, he said, I, in all my years of doing these types of deals, I've only done second positions once or twice because it was just a perfect deal. He said, unless you've got a perfect deal in your hands and you really trust these guys, he said, I would not do it. You've gotta say no. So anyways, I got back on the phone with them. I was like, still, if you got something else, you got a real estate property, even a home, You know something we can put a deed on. And anyways, he's going to get back to me these next couple days, but I think it's a it's a dead deal. But talking to my mentor right there, back to upgrading myself, right? As a as a young entrepreneur that runs a fund that sees money signs dinging in your face, it's so easy to jump in and say, "Oh yeah, we can do anything. We can we can we can change our contracts for you. We can go all around and make sure that you have a good deal set up so we can make money." I've had to work on upgrading myself to. Think through, you know, what is a second position? What's gonna happen if they all die in a plane crash next week, right? Really, what are the steps? What are the things that are gonna happen for me to get paid out? And also, I've had to upgrade how I talk on the phone. I think with this last deal, from the first initial call, he could tell that I was too willing to do the deal. And one of my mentors talked to me, the same mentor, he said, when you get on the phone with these guys, you got to kind of act like a jerk a little bit. A little bit, because you're the guy with the money. They need to be selling you. They need to be pitching you on why you should give them money. It shouldn't be you pitching them. And I said, oh, that's genius. Yeah, so I've had to sit down and mentally walk myself through of, okay, I've got to upgrade how I negotiate. I've actually taken a few negotiating courses, which are awesome, and I had to go back and restudy those and rethink through, okay, how am I going to negotiate at this deal and at this play? I mean, you look at Donald Trump, you like him or not, the dude has negotiated his entire life, and he's a very strong negotiator. Donald Trump is always negotiating everything, and it makes people give in. He just got approved for a wall. He never gave in on that wall for the last like 3 years. He never gave in on that. And whether you want to put up a wall or not, you got to respect that he is a dang good negotiator. There's other people out there to study, and I have started to dive into that of studying because I'm on the phone with guys that are twice my age that are worth way more money than I, and they, they don't know that I'm a 24-year-old kid just getting started. And I've got to upgrade how I present myself on the phone, talk to people, how I negotiate with employees, how I negotiate with partners. I have other— you call them contractors that I work with that bring me deals. I've got to negotiate with them so they can help vet, and I negotiate how I'm paying them. I mean, life is a huge negotiation. That's something that I'm working on like crazy right now and trying to upgrade, because I think my business is capping out on my ability to negotiate on the phone. And if I can't do it, I need to find somebody else who can, right? So that's another option is if you can't figure it out, you gotta find somebody else who can figure it out and who can do it for you. Think through in your business right now, whether it's your fund or maybe you're running a different business, what personal development attributes are you lacking? Is it leadership? Is it negotiation like me? Is it being able to talk to people that are wealthier than you, right? When you're pitching investors, right? Some people get really nervous to be around rich people. You need to walk through these scenarios and upgrade yourself first and your systems to be able to help your business grow. Anyways, that's today's episode. See you guys in the next one.