Your Financial Legacy with Zebadiah Wade

Foreign. Hey everybody, it's Jim Johnson here and we are super happy to have you at Contractor Radio hanging out with us this week. Wherever you're listening, if you're listening at home, you're behind a windshield sitting at airport. Our whole goal is to help contractors get control of their business so they can grow their business, find personal and financial freedom. And my guest today is about that last one, personal and financial freedom. I'm super excited to have him on board. Just one second though. We're going to go ahead and bring on one of our sponsors and we'll be right back with our special guest who's going to be talking about financial freedom.

Want more 5 star reviews from your customers? At Signpost, we make it easy for your customers to give you great reviews on Google, Facebook, Yelp and more. Our software connects with industry specific solutions, driving even more reviews from your customers. Drive loyalty and repeat business by sending the right messages at the right times to your prospects and customers. Message your contacts from anywhere, anytime, using text, photos and video all in one app. Check on progress with campaigns and review generation across Google, Facebook installations and Yelp. Visit signpost.com and get your demo today.

It's all about engagement with our prospects and customers. And if you're looking to get more and keep them in your world, check out Signpost. Those guys are amazing at helping you create that for your company and building that brand and reputation that you need. Today, we're here to talk about achieving some dreams. So one of our big things is helping contractors break their dreams down, reshape them, and get them down to something that they are after because of their why, which we all talk about, but because of who they are as well. And I've got a guest on today that we had an opportunity to meet a couple weeks ago and I said I gotta get you on, on our podcast. You gotta share some of this information with contractors. Because one of our dreams, like when we open one of our businesses, is to achieve personal and financial freedom. In other words, to be able to do what we want, whether we want with who we want and where we want. And Zebediah here. Zebediah, welcome aboard. You help with that kind of stuff, right?

Yeah, we do. Thanks for having me, Jim.

Yeah, it's awesome to have you on board. We had a great conversation the other day with you and me and Nathan and learning more about what you guys do and the insight you brought was invaluable and I thought, man, our contractors could really benefit from this conversation. So tell us a little bit about you and how you got to where you are and then what RMA does. You are partner at rma, right? Yep, yep, I am. And you guys are, you guys are focused on wealth building, exit programs, corporate finance, that kind of stuff.

Yeah, yeah. So we, we kind of do three pillars of our business, so. Well, first, thanks for having me. Really appreciate it. Love what you guys are doing. It's, it's been really fun to watch and I cannot say enough about how important the planning aspect of what you guys do is huge. But so what we do, we do kind of three different things. We do that corporate finance, which is your standard advice, kind of a high level CFO. Our experience goes over 30 years. We're a family organization. So one of the things we love to do is continue that legacy picture. And that's what I'm trying to do. My father is the principal of the firm and I'm trying to continue his legacy. We also do that succession transition planning, which is the idea in which you've built this awesome company. How do you take chips off the table and not destroy the company in the process? And you can sell it, you can give it to your kids, you can give it to your management team. There's a lot of different things that you can do in that, but which one is the best and how to do that? And then we get creative on some of the, what we call refinancing, getting sub debt, mezzanine debt, when to use debt, why to use debt. And another piece is that what's known as a micro captive, building your own insurance company for the warranty risks that you provide.

Ah, that's awesome. We did something similar with my contracting, but I can't wait to talk to you about that. So let's first off, let's talk about this concept of wealth building. I think a lot of people think wealth is make money, create profit and then there's this net profit thing that's left over and I go and put it in, into investments of some type or another to make money off of my money. Is that, is that a basic understanding of wealth building or do you guys take it a little further than that?

That's a, that's a good base understanding. So we're not financial advisors. We're not going to tell you where to put your money in the market, how to do it right or wrong. But where we're going to come in is when you create a business, typically 80 to 90% of your net worth is tied to that business. Right. And so how do you over A period of time, capture that net worth, that value that you've created in the business without killing the business or killing the golden goose. And how do you take, as we would call, take chips off the table like you're playing poker. You got to know when to hold them, you got to know when to fold them. Same kind of thing. When do you pull those chips off and how do you do that? Well, that's more the wealth creation that we're talking about. It's sustainability of the wealth that you've already created.

Well, one of the things I love about this conversation is after coaching contractors for the last eight years, being in the software world for five years before that and seeing thousands of contractors and being a contractor myself, what I've learned is that there's two major reasons that contractors go out of business. It's a lack of leadership, skill and capacity, and then also financial acumen. And so this financial acumen part of it, I don't think we come into it with that knowledge. It's one of those things. This is a pretty easy entry trade hammer a truck, maybe a phone, and you're in business. Right. I can go get a line of credit, hopefully at a supplier and maybe do my first job or two. But as time goes on and we start to build up some resources, how we use that money wisely tends to be one of the struggles that contractors deal with. You know, they end up buying a truck that they shouldn't buy because they've got the money in their bank and they don't realize that some of that money may not be theirs. Do you guys help them with managing that type of thing? Yeah.

So we're also not tax consultants. Right. A lot of those things come into the taxes, but there are what we call best practices. So taking advantage of the different tax code where you can pre buy, you can buy X amount of vehicles up to a luxury tax. There, you know, there. There's a lot of base knowledge that when you get into a financial blueprint of a business that you can quickly tell, all right, hey, you're gonna have this much money left over. You need to figure out what to do with it. Right now, our candid advice is that this is the best tax environment we will ever potentially.

Right.

So who knows what the new administration has ideas. They have talked about capital gains to 49. They've talked about corporate to 48. Okay, if those things happen, what does that mean? And how do you start to again, continue and sustain the amount of value that you've created? And so we take the time to go through. How do you do that?

Yeah, it's one of the things that drives me crazy is just a, a human being that lives in America. And I, I figured it all up and between business taxes, my income taxes, my sales taxes and just all of that stuff, at one point it was about 62% of what I made. Like good grief, between everything and all the different type property tax. And you throw them all together, you go, wow, I'm working 62% of my year before I make a dollar. And that takes you down a notch. Right. And so I went out and I got some tax advisors and they really helped me a lot and I was able to reduce that dramatically. It sounds like that's something similar to what you guys do. What are some of the best ways that guys can do that?

Yeah, well, one is always having a competent bookkeeping, controlling. You have to have good books and you got to do them according to Gap then having a good CPA that you can lean on. And where we have found the issue with CPAs is that they don't get creative in terms of, you know, let's find a new way to do this or a best way to do this. But they're really good at following directions. And so sometimes where we partner is, we say hey, talk to your CPA about this idea of the biker captive, which is a beautiful system when you have a self insurance risk then I can get into that down, you know, whenever you'd like. But it's a, it's an incredible system to be able to put money away for a catastrophic loss, a loss that you're currently self insuring and you pay for it using Uncle Sam's dollar.

Okay, let's talk about it because, and tell me if I'm reading it right. For example, I had a project back when I was a contractor, sales guy sells it, project manager watching it gets all done, we get paid, everything's wonderful. Right. Two years down the road there was an inspection on the property because the property was going to be sold and they found out that it wasn't installed correctly. There wasn't ice and water shield where ice and water shields should be. So who they come back to us, right. Project manager no longer works for me, sales guy no longer works for me. And me being me, I said we'll take care of it. And that was about $175,000 hit to fix it. And, and we did and I, and I just paid for it. Sounds like you have a different route that I could have gone that might have saved me a little bit. Yeah, exactly.

So you're doing, you're providing a warranty, right? And sometimes you have to provide a 10 year warranty, you have to provide a 20 year, and sometimes your manufacturer provides you a warranty on the product, but rarely do they provide you the warranty on the labor. So the idea is it's called an A31B micro captive. It's a small insurance company. And to simplify, let's say you have self insurance risk of $100,000 a year. So that means your warranty work is probably 200,000 and you're going to self insure or anticipate 50% of it being claimed. So the idea is that you take that $100,000 and you put it into utilizing a reinsurance route into your own insurance company. And that insurance company holds those dollars. And those, the business gets a tax break because it's paying premium, it's paying insurance premiums over to your own insurance company. Your insurance company pays no taxes because it's earned premium. And insurance companies don't pay taxes on earned premium. The only taxes that that insurance company will pay is on interest or dividends earned on those dollars. So any investments that that company makes. So say that claim example happens two years later. You put $200,000 into your insurance company over two years. Well, those dollars come back to you tax free for that claim. And so instead of taking dollars out of your working capital today, you're taking them out of tax dollars that Uncle Sam gave you because you're not taking that, that corporate tax rate. Right? Those dollars are going straight over, it's going off of your books, but it's held in your other company. So those dollars come over tax free. You've paid your claim now with essentially a 40% arbitrage in the taxes. And that's, that's kind of the system. That's a very simplified way.

No, I'm sitting here going, oh well, that would have saved me a bunch of money. I would have certainly been nice. And I get the concep, while that is my money, for lack of a better term, it's money that didn't get taxed because I put it over here in this other thing and when I needed it I could pull it out. And it didn't get taxed there either because it went towards that warranty claim. Is that a fair understanding? Yep.

And, and those dollars that you don't use, we have many clients that own the mortgages on their buildings, that own the equipment loans that own a line of credit to themselves. You basically start to create your own bank with your warranty dollars. And it becomes a very, very lucrative system to utilize the tax code as it was written.

That is. So, yeah. Any of these guys doing volume, I can remember I did something similar to this. After that event, I went, okay, this is a bad idea. I'm not doing that again. So I was. And the crew was no longer available, like, so everybody involved in that project was gone except for me, the owner, who owned all the risk.

Right.

Which is common. Like, this is not unusual. You see this all the time in contracting. And I went, hey, that's never going to happen to me. So what I'm going to do is I'm going to set $2 aside per square of every square we ever put on for insurance. Right. That way. But I didn't know about this thing. I could have actually benefited from knowing that. That's. Man, that's really good. That is. That's pretty cool stuff. That's just one example, I assume, of several different things that you guys do.

Yes. Yep. That's. That's probably one of the. My favorite. And because it's a lot of fun to create that. And when you see a client has five to $10 million and they're, you know, reinsurance company, you kind of sit back and it becomes a lifeline. Like during COVID Right. Shutdowns, all these things happened. Well, yes. We got Triple P money before the Triple P money came. Well, what did they do? Well, they had a line of credit with themselves, and it was. It was the best system we've ever seen.

Yeah, that. Boy, that would have come in handy for a lot of the contractors that we worked with when. When covet hit, we had. We picked up the pieces and we. Okay, let's get it fixed. And it worked out well. But, boy, that sure would have been helpful to. To help them out with those type of things as well. So. So that's a little bit of like, structuring things the right way and you guys helping them put their money to work for them is really kind of the best way to think about that. Which helps with that legacy, I would imagine. Like, if we're going to pass it down to kids or maybe our employees, they walk into a situation that's pretty good for them as well. Probably adds value to your business. Is that a fair assessment?

It sits on your. Your personal balance sheet because it's your entity.

Okay.

And. And we have seen it used as a way to build cash for an Eventual buyout. So one of the things that people get in trouble in this succession transition planning is they say, well, I just want to give it to my kid. And the idea is like, yes, I love that idea and that's really important. But the IRS says, well, no, there's value. And while you can say that there's no value if you've made a dollar for the last three years, there's real value there. And so there has to be some sort of exchange of value. And the IRS is going to take taxes on that. And so while you can use the micro captive, you can also use ideas of things like sinking funds, vehicles that do not are not taxed in the growth. The biggest thing is in order to eliminate or essentially hedge against the idea that the IRS is going to come and tax those dollars, you have to either have those individuals that are going to receive the business take a big tax hit and have to have those dollars. So you got to bonus it out to them at some point for those taxes if they don't have the money to do it, yada yada, if it's.

Going to be a gift.

But if it's, you know, I want to get 80% of the value of this business that I've put into over 20 years of work, I want some of this value off the table. Well, you can do a couple things. You can sell it to a competitor, which means you're selling the established workforce and the customer list. And that's really it. You may be selling some brand reputation, but really that's client and customer list. You can, and you can push it off a cliff, which is one of the things that we see a lot of the time. Someone gets a health issue, the wife or the husband says, I'm tired of you working so hard, you need to stop. So we're going to push this off a cliff and be done with it. And I'm going to, we're going to go travel the country. Those two processes end up with 40 to 60% of the value of the business being transferred to you. You know, at a top end, when you decide to make a plan and you do it internally, where you either sell it to your kids, you sell it to your key personnel, you end up with the higher 80 to 90%. And the reason for that is you're using the business's cash flow a lot of the time to set aside dollars that do not get taxed every single year. They don't get taxed at all. Those dollars sit on your balance sheet. So instead of Them being retained earnings. They're sitting in a vehicle that's an asset on your balance sheet, and that scales. And the higher it scales and the moment that you're ready to sell a percentage of the business, you sell that percentage of the business. And then we help them typically go get an SBA loan. Once they reach that 20 to 40% of ownership and you're out and you've received 80 to 90% of your business.

That is a cool vehicle. And I. I have not heard of that. So this. This is why I had you on there. There's so many different ways for us to, you know, we work really hard. We work hard for, you know, quite a few years. I mean, I have seen guys do it in a short period of time, but the reality is you're in this 15, 20 years for sure if you're running a really good business before you can truly exit anything of any real consequence.

Right, right.

And. And when I do, I want to get as much of it as I possibly can. I don't want to, like, have a bunch of taxes out of it on any of that kind of stuff. You know, you see people go sell their business, it's 7 million bucks, but you got all these taxes are going to come out that are outrageous. Right. And you're just like, well, that didn't turn out quite the way, and now I got to go get a job again. I, like, maybe that wasn't enough to keep back. So I think exit planning, and there's so many different ways that's something you guys help with, and. And it really has a lot to the legacy planning from that owner. Is that something you guys like? Do you talk with contractors first and kind of get a feel for that and maybe meet with them and talk with them about what that might look like? How does that conversation go?

Yeah. So a lot of the times we end up being almost a counselor, psychologist sometimes, especially during COVID and everything that happened here, we ended up seeing a lot of people that were either just exhausted, tired, just tired, and they were like, I'm done. I want to go out to, you know, middle of nowhere, and I want to sit in my hunting lodge, and I just want to sit there, and I want to hunt and fish, and that's all I want to do. And you got some other ones that were like, I'm getting older. I got sick this year. I recognize that family is more important, and because I wasn't able to work a bunch, I got to spend more time with my family, and I'm I'm more passionate about spending time with my family than I am about this job today. So what ends up happening is we sit down with the business owner and we say, okay, what's your goal? You know, what are you trying to do? Do you want to have a legacy for your kids? If you have kids, do you want to have a legacy for your name so that if you're, you know, involved in that community for 30 some years, you want to stay involved in the community and you want your business to continue to be a resource for that community. Okay, so you take all these kind of ideas that they have, and sometimes it's as simple as, okay, well, let's get you two weeks out of every month that you can step away from the business and the business doesn't blow up and you don't have a nightmare at the moment you walk back in the door. Because that's always the fear when a business owner leaves. They're like, oh, man, someone's going to screw it up and I'm going to have to come back and I'm going to have to fix it all. And it's like, okay, how do you eliminate that? So we take the time to go through what their dreams, desires are with that. Do they want a legacy? Do they want to just be out? Is it really just a timing issue and they're exhausted in the need to rest? Or is it a change of priorities and can we move the business in a way that the change of priorities is possible? So to answer your question, yeah, we take a lot of time to understand what's the goal, where they want to go.

Yeah, it's pretty similar to what we do. I mean, it's really our focus is we got to. We got to figure out what that dream is first. And a lot of times, you know, people will tell us the dream and then we'll realize we start to ask some questions, right? Hey, my dream is, you know, I want to be a $100 million contractor. Okay, why? Why that number? What does that get you? What are you? What are you really after? And we start breaking that thing down and really challenging them on their dreams, and we start to find out that there's more to it than that. Sometimes it's legacy. Sometimes they have an internal thing that they're feeding and they don't really understand it. That's the one that has been the most powerful for us, is understanding that. There's a book out there called Start with why, which I think is a great book. Don't get me wrong. I think it's just titled wrong. It should be. Why is important. Start with who you are first. What's this gift you have that you can give back to the world and then fill the gap in the world with that gift and then everything else kind of starts to roll. Have you seen clients do any of that kind of stuff where they get passionate about who they are and this gift or talent that they have that they can give back?

Yeah. So most of the business owners that we have helped sell their business or move on from have moved to their passion. And whether that passion is some sort of a ministry, some sort of activity. You know, a couple of them have been as simple as they wanted to become a woodworker, and so they wanted to sell their business and buy a little mill and, you know, some basic equipment, some sanders and everything. And they just wanted to woodwork and they wanted that to be their passion and teach kids how to do it. We don't, excuse me, we don't take, I would say, as in depth of an approach as you do. And I think that's why you guys are really, really good at what you do, is to find that passion that someone has deep inside of them and help bring light to it. We're taking the time that really, once there's some sort of understanding of it, how do we do it and how do we. How do we use the business to accomplish that without killing it?

Yeah, it sounds like. It sounds like a match made in heaven. Like we get that, that real like depth part of it that gives them that. The thing that gets them up every day.

Right.

That's the big thing for us. What is it that I can do every single day and have joy in it? Right. And, and so once we figure that out, then we can kind of build a roadmap and a game plan and stuff and help them build that business and do a great job of it from there. It sounds like they should maybe talk with you guys and say, okay, now I got this business rolling and got some money coming in, I understand how it works and everything. How do I best set this up for, you know, building even more wealth from it, you know, possibly exiting from it. And then maybe I just want to stay involved and. But I want to take some of it out like that.

Well, when you create a business, it's really hard to do it again. Right. When you've made a real good sized business, it's hard to do it again.

It takes a lot out of you. I know.

Yeah.

This is my third one and it's a lot of work.

Oh, my gosh. Okay, so how do you create that dividend stream that allows it to continue and allows you to still not lose sight of this egg, but you have a management team.

Before you give that up, let's take a pause here. I got to get one of our sponsors in. We'll come right back, and we're going to talk about how we may take some of those chips off the table and still be running that thing.

Sure.

Perfect. Thank you. If you're not using Hell Trace, it's definitely worth the money. That money invested was one cell was already bought. We've got from deny or declined 2x of being bought just because of Hell Trace and the storm reports that they give us. Not only do I know where the storm's at sometimes as they're happening and I can already head right there to the storm, but also after the fact, when I'm out knocking on doors, I can show homeowners the map and what kind of hail was in their area. We've seen a huge return on our investment, and I have no doubt that you will, too. So if you're a storm restoration and you're not using Hail Trace, you need to start. They bring uber value to what you do in storm restoration, not just from a mapping aspect of things, but knowing who your prospects are, who your customers are, and really maximizing the opportunity that you may have with one of those storms. Funny enough, I. I just flew to Kansas City. I always tell people that if I'm coming to you to do some kind of training event, I'm probably bringing a storm with me. So I thought I was safe. I thought I was like, hey, I got an event on December 15th and 16th. Right. So I'm gonna go do this event on 15th and 16th. Like, Dave doesn't have storms in those times. I land, like, literally land at the airport and all these sirens are going off, and we're in our vehicle. There's all these storm clouds and everything coming up. The wind picks up, stop signs are spinning on it. I'm like, we need to get to the hotel. So we to the hotel, we get literally get through the door, and the guy's giving us the tornado warning, like, where to go and what to do about it. Here it goes again. I just brought another storm with me. So, yeah, that whole big old storm that went through the country here this past week. Yeah, it was my fault. So sorry. All right, so I'm in business. We've got our systems down, We've got our Processes down, We're able to create this culture that people want to be a part of. I'm able to recruit, things are growing, we're being profitable because we've gotten things set up well. But I don't know if I should take money out or not take money out. Should I reinvest it back into the company? Should I buy some trucks? And so how do I know when I can, like actually take some money out and go, I'm going to go put that over here into this thing and hopefully help that build some, I don't know, comfort or freedom, like knowing that, hey, I got that thing over there. How do you guys do that? Like this idea of knowing when I can do it.

Yeah, good. Great question. All this is typically driven off of data, right? So there's a certain point in time when you recognize I have too much money in this business and it does not need to be here. What am I going to do? And so our process is kind of unique in that we take two years financials and on our nickel, we will review them and basically give you a game plan and a summary of here's what's going on. Here's where you're losing money, here's where you could be making money, here's where you could be taking advantage of XYZ services or programs. And when you're ready or you are starting to consider this idea of, I want to take some chips off the table, here's how we recommend you do that. And it can be as complicated as, let's set up a bunch of plans for your management team to buy the business from you in 10 years to as simple as, let's put in a process in which the business can buy shares from you as an individual or even as simple as explaining to people the difference between a dividend and, you know, being hand. Excuse me, a dividend, a shareholder note from the business. And why sometimes those make sense? Because taxes and taxes and taxes. Everything has to do with taxes. So with that blueprint that we get from you that tells you what's going on in your business, we share and say, well, here's how we do it. And then if you want to work with us, that's when you make that decision.

Yeah, those are. First off, it's important advice. Is that something that you guys do? You said it was on your nickel. Yes. It sounds like it's something that you go, hey, here you go, let's meet, let's talk. Let's. Let's build out what we think this structure Is. And this is what you should do. Whether they take the advice or not or do it with you. Like, you just do that, right?

Have fun. Yeah.

Yeah. Sounds like us, like, we do the same thing. We're like, hey, this is what you. This is the roadmap. This is the blueprint. This is what we can do and what you need to do and the order in which you need to do it. Go do it right. Like have a party. Or if you want some help, we can help you with that too. Sounds like a similar process.

Yep.

And.

And we found that it's. When you're dealing with financials and. And those kind of secrets of the business, you have to provide some sort of trust. And so we take the time up front to give and try and show we're trustworthy and we understand what's going on. And here's how we understand what's going on, and here's what we would do and why we'd do it better. So we're trying to always give value at the immediate point in time in which we have that conversation, because it's just. I mean, from my experience and our team's experience is the best way to do it.

Yeah. That kind of gets back to that who you are versus why you're doing what you're doing thing.

Right.

We believe the same thing. Identical. That first time that we meet with you, it's usually focused on the results of an assessment that you took. So we can kind of see a few things about your business and say, okay, these are some things you need to go do, and you can do them on your own and go for it. And if you want help with that, we're here and available, but we're not required. You can do that. None of this stuff that we do is rocket science, but if you need somebody to walk you down the path, hold your hand, be your guide, and probably execute, well, we can do that too. That's a. That's a really great way of doing business. Provide value first. That's pretty. Pretty solid way to. I don't know. It's one of those things, like, if you serve people well, it tends to come back to you. It just does.

Yeah. Tenfold.

So what's the. Give me a story like. Give me a story of, like, you know, you had this client, he had doubts, and you guys, like, broke it all down for him, and now this is how it all turned out. What's. What's your best story?

Well, that's a good question. A couple of them I'd Say, one of my favorite stories is a Colombian immigrant with an attorney by trade came over under prosecution, and he's just an entrepreneur. Smaller shop, started landscaping. And we were introduced because the idea was, well, I've got these. My son's involved in the business, and I want them to continue to be involved, but I want them an opportunity to give them an opportunity to have upside. But I also want to start roofing. I also want to start refurbishing houses in Texas, and I want to do all these things. And so over the last three years or so, at least three years now, we have had an incredible opportunity to help this entrepreneur recognize, okay, you can't spend every single dollar you get. You just can't do it. You can't pull money and use the business as your personal checking account if you want to get any kind of financing or growth opportunities, okay? You also have two to three prime project managers that anyone in a heartbeat would take them if they could because they are absolute rock stars. So how do you lock them down? And with this idea that the business is going to be owned by your kids one day, every dollar that you put into this plan to lock these individuals down that they will never leave is going to inevitably be repaid to the business. So how do you do that? And how do you start to build foundational pieces? And so we've built quite a few different plans for this business in which their workforce and their talent is locked down. They're never going to leave, regardless of, you know, a change in guard or something. Rocky hits the boat. It's okay, because the foundation has been laid. They also have a way for the Suns to now step into the business ownership at any point in time. And they have a plan that if, you know, dad goes back to Columbia, something happens or something happens here in the States. The business isn't going to implode. It has safeguards.

That's pretty cool.

Yeah.

First off, we have multiple Colombian clients, which is wild, right? They come from Colombia. They busted their tails. Now they're running their businesses and they're trying to figure it out. And it's awesome to see, you know, the growth of them over the years. We've worked with several of them for quite some time, and the work ethic is just unbelievable. And the community, the family part of it's insane. It's so cool. Yeah, man, that's super awesome. And they sound like a smaller company. I made this assumption earlier that maybe you kind of work with a bunch of big companies that got a bunch of money and they're trying to figure out what to do with it. But it sounds like you work with all kinds. Is that a fair understanding?

Yeah.

Yeah.

This company is going to do 3 million in revenue. But it's a fun company. You know, we. We like to work on people that want to work with us. It is. It's just. It's easier, it's better, and it's. It's a. As you said, it's a reason to get up in the morning is that I'm not going to be banging my head against the table because the client doesn't care. Right. These guys care. They want to build a legacy. They want something for their family, and they're going to work hard and take the advice and implement it. And the fruits of that are being seen every single day.

Cool stuff, man. Like, I sit here, I said, I wish I would know the people that I know today and the things that I know from the last 20 years. 20 years ago. Like, if I. 20 years ago, things would be a whole different ball of wax at this point.

Point.

But it's fortunate. I've been really fortunate to have things turn out pretty well, and then to get to know folks like yourself. Zebediah, the value that you bring. One of the things I found, like, you know, we had our own. I wish I would have known you. Maybe I would have talked to you instead of these guys. But one of the things I know is we had a fairly significant investment just because of the way we were structured. I don't think that's always the case, but we had a fairly significant one. But just in my tax savings alone, it paid for itself, you know, six times over. It was crazy. The. If you're not up on it all the time. And I relate it to, like, marketing. So, like, if you're not up on Facebook business and how that's done and how to run ads, it's constantly changing. Google Ads and their algorithms and stuff. Yeah. You need pros in those areas that know what they're doing and they're up on the latest thing so that they can help you maximize every dollar and opportunity that comes across to you. And it sounds like you guys do a pretty good job of that. Do you see it the same way? Like, you're similar to that type of thing? Yeah, it's definitely.

We spend a lot of time to read and understand how are these things working. We have a wealth of knowledge in the team that just business practice. And, you know, my father Dennis, had a thousand electricians, owned a very large Electrical contractor. He's witnessed. Well, I mean, he would say he ended up working for the union, as he put it, even though he owned the company. But he's witnessed some crazy things. And to be able to sit there and say, okay, even for this small shop, it's, hey, we understand you're a tenth or, you know, a percentage of the size of this company, 100th of it. But that's okay. Here's how you can still take advantage of these different systems and different processes that will inevitably create value for you within the next year or two. And that's really the goal.

So for me, just personally, what do you. What do you guys hope to, like, how do you hope to change things? How do you hope to, like, raise the bar in this contracting world?

Yeah, well, for us, we find that small business is the backbone of this country. And if you are involved in small business, you're holding this thing up. And in our world, our competitors charge $10,000 a month to do what we do. And we just find that as astronomical. And so we typically charge a tenth of that because it's not. Well, yes, we got to pay for the lights, we got to pay for our lives. We got to do these things. We have just found that because 98% of every dollar that comes to us is a referral, that if we continue to bring value and build up these small businesses and don't let them get taken advantage by their banker, by their underwriter and their insurance and all these different people that are simply going to, you know, a chief lending officer could simply say, nope, we're no longer involved in roofing. Good luck, and you lose your line of credit and what are you going to do? We don't like those situations. We get really ticked off on those situations. So our goal is to help the industry take advantage of the things like the micro captive, take advantage of legacy planning and locking down key employees or employee retention that is separate from your standard benefits, your, your culture, things of that sort, and take advantage of having multiple banks in line for your and competing for your business. And that's, that's really important.

Yeah, I always look at it like the bank was there to see how much money they could make off of me. The insurance company was there to see how much money they could make off of me. They're all there to make, see how much money they can make off of you. And while they may say that they're there to serve you, it was a rare thing.

They're there to serve the deposits that you give Them that they loan with.

And so it sounds like you guys are taking a bit of risk out of the equation. Is that how you see yourselves too?

The risk RMA is risk management. That is fundamentally what we're doing is taking risk off the table for the business owner.

So you mentioned it a little bit with the pandemic deal. And so you obviously had clients going into the pandemic. You had set some things up that made that easier to tolerate. Were you thinking about things like that, or was it just, hey, worst case scenario, can you operate your business for six months, 12 months, that. Is that how you were approaching it? Yeah.

So with a lot of our clients, we end up doing kind of a risk analysis that says, if these circumstances were to occur, what happens to the business and how much cash do you need in the bank or in some sort of a vehicle to pay for all these things? If this XYZ happens 2 years ago, had no clue that the government could shut you down. That was an unbelievable thing that occurred.

It was not on our roadmap, just.

So you know, but it was understood that you could have an earthquake, you could have some of these catastrophic events occur. So we always say you need, just like in your personal finances, you get disabled, you get injured, you can't work. What are you going to do and how are you going to protect yourself? It's the same thing in the business. How do you protect the business and keep it going and then primarily take advantage of the opportunity that occurs whenever something like this has happened? A lot of our clients have made acquisitions through this time. They've grown their business. They found new employees that are talented because other people didn't take the time to plan. Other people didn't take the time to really build a foundation. And that created opportunity for all of our clients.

Yeah, that's critical right now. The people working for you. It seems to be the overwhelming thing we've been hearing for the last year is I can't find people. You know, they're not. And for me, that usually is. Well, maybe we need to look in the mirror a little bit. Like, am I somebody that anybody wants to work for, number one? But if you are, what are you doing to hold on to the good ones that you do have? It sounds like you guys have some solutions for that, too, which is pretty good. Is there anything there that you could share that you know, these are some of the strategies we would use to. To lock people in. I don't know if I like the term lock them in, but make them want to stay.

Yeah. Golden handcuffs. They're gold.

Exactly.

Yeah. There's a few different things. With a lot of the seasonality that we see in our clients, we advise using acquisitions to essentially eliminate that seasonality. So if you're working in Montana, why don't you buy something in Louisiana? And here's how you do that in line the cultures up and, and here's how you fund that. If you're having trouble getting people because the housing rates are too expensive, well, have you considered buying three or four fifth wheelers and giving it to them for free to use and utilize throughout, throughout the year? While it's, it is kind of an idea of a golden handcuff with that alone where it's, what are they going to do? They can't just leave because you're providing them housing. It's, it's one of the basic necessities of life. Another system that we've done is utilizing that tax free gains vehicle where you tell to a couple of your key employees, hey, you stick around for ten years, I'm going to give you 100% of your existing salary today in ten years. Is that enough to keep you around for ten years?

And so like if my salary was 60 grand, ten years from now, you're going to give me 60 grand, just.

Give you a sixty thousand dollar check. Or you can have it paid out over five years. You can have it paid out over ten years. I'm going to give you a, what's known as an unqualified plan. So it doesn't follow erisa. It's discriminatory where the business owner gets to choose who gets to partake in this plan. And the business owner says, I pick you up, you get this plan, here it is.

And that's pretty cool. So I would assume there's something there that gives both parties a little bit of a sense of security that really is there. Right? You don't go 10 years. The guy goes, ah, I didn't have it, I didn't put it back.

No, it's a legal document. It gets formed, it's a, it's a contract that states that if you stick around for 10 years, this money will be available to you. But on the protection for the business owner, if that employee decides to leave, well, they don't get a claim on it. You know, it's as simple as that.

Those are, those are pretty good strategies. I like those. And I'm assuming they can vary over the amount of time, right?

5 years, 5, 7, 10, 12. I mean some of them are 20 years, right. You get a really young, talented guy that you think is going to buy the business from you, has expressed interest. Well, in 20 years, a lot of things can change. But if there's a big old pile of cash sitting there at the end of the 20 years, it's a lot harder to make the move and say, I'm, I'm not interested in this and I'm not going to work with you to fix whatever problems are occurring than not having that, you know, carrot at the end of the stick.

Yeah, sounds like people should talk to you guys, at least have a conversation. Sounds like that doesn't cost you. How would people get a hold of you? Zebediah?

Yeah, you can reach out on, on our website, rma-nw.com also my email is zebma-nw.com or you can reach out to the contractor coach, pro team and, and I believe that they can simply forward you over and, and, and we'll get in contact and I, I'd like to keep you guys involved in those conversations because a lot of what we do is very synergistic and you know so much about a business already and we get to just simply be an accessory to your wisdom and your knowledge and that's what we're trying to do.

Yeah, that's, it's, it's a good alignment for sure. I can see our guys. You know, I've been considering putting together, I don't know what you want to call it. Necessary. I don't like the term mastermind. I just think it's cliche and all that good stuff. Think tank, just a group of, of solid individuals that are truthfully looking to make real change in the world, in their business and their lives. And meeting with those folks kind of in a retreat type style situation three times a year and then bringing them to us once a year and then meeting with them, you know, once a month or something like that and helping them do these things, take this next step, move their business forward in a way that gets them to that freedom that they're looking for. Is that something you'd be a part of with us? Like if we put that together? You come and hang out at a retreat or come to our event here in New Braunfels?

Yeah, yeah, I think that would be really, really fun. And I think if people wanted to share some information, I could come prepared with summaries for everybody to review and say, hey, here's what it looks like for you.

So is that something that you like, you could give us to say hey, these would be the things we need to know, and then they can prepare that information and you can come there with actionable stuff for them to do.

Yep.

Dude.

Okay.

We're gonna make this happen. This is gonna be.

We were.

We were trying to figure out, right, like, how do we work together, get this thing done so that people can get this. I. I truthfully think this is one of those things that makes the difference.

Right.

This leadership culture, all that stuff is super important. That's how you start to grow the business and how it really starts to become something impactful. But once it is, what do you.

Do with all that?

I think you guys help quite well with that, so let's make that happen.

Sure. Yeah, absolutely. One and one thing to keep in mind, over the next 20 years, we're going to witness $73 trillion of wealth transfer in small business.

Okay, okay, hold on a second. Where's that coming from? What?

That's out of the Wall Street Journal. And it's essentially this, because the boomer.

And the business, into it or out of it.

So you own a business, within 20 years, you're going to hand it and transfer it. It's going to be given to somebody else, it's going to be sold to somebody else. There's going to be this transfer of wealth in the small business world. And so within the next 20 years is an opportune time for business owners to consider, how am I going to take advantage of this? How am I going to transfer my wealth as well? Because every. A lot of other people are going to do it, and there's going to be opportune times to take advantage.

I sit there as a. I sit there as a young guy, because you mentioned it. Baby boomers, right. Those folks are getting to the point, like, I'm done with my business. And. And really. And truthfully, whether they sell it, hand it down, or just say I'm done, which is a possibility. You know, some people, I think you call that pushing it over the cliff, right?

Yeah, pushing off.

They say, I'm done. They whatever they've been able to put back and retire and go hang out the cabin. What that does is it says that money that they've been generating with this large population of people is going to be transferred to a much smaller population of people. Yeah. Baby boomers are twice the size of the other generations for them. And so these guys that are 20, 25 years younger than that cross crowd, maybe even 30, 35 years younger than that crowd, man, there's opportunity for acquisitions there's opportunity for market share. Like, because that money is not going anywhere, it's still going to get spent, right?

Yep. And. And it's an opportunity for some of the younger generations to go to the business owner and say, hey, I want to buy this.

So do you. I was, I thought we were done there for a second, but I got some curiosity going now. Do you help with that? Like, hey, I want to buy a business over here, I want to buy more business or I want to expand my business. Do you help them from a financial aspect to make that possible, number one, and to hopefully maybe make the right decisions on those purchases?

We do. Yep. And we will sit there with a project manager that wants to go to the owner and say, I want to buy this business and here's how I want to do it and here's the plan. We'll help them with that. We'll help in the idea of, I want to acquire this business and I need financing to get it done. We'll help with that.

Nice. All right. It's a big thing in our industry right now. Consolidation, acquisition, there's a lot of that I see going on. And in all, not just roofing companies, but landscaping anybody, that's kind of a blue collar home services type country. You see a lot of consolidation in that. And because it's ripe for it, A lot of the reasons you're talking about with just the transfer of wealth, it's a, it's an open playing field because it isn't consolidated right now. And that tends to be what happens to those type of industries. So, yeah, we're going to talk more for sure.

Love it.

That's pretty cool. Zebediah, thanks for being here today. That was great. I hope you enjoyed it.

It was awesome. Yeah, it was a pleasure.

He shared some really cool things. I think the, the biggest thing is like, really thinking about that that money is not going anywhere. Somebody's going to spend it, who's going to get it. I think is really important to be thinking along those lines. Well, thanks for being on our show today.

Yeah, thank you. Really appreciate it.

Awesome. Hey, guys, that was Zebedee Wade from rma. We'll put their links and contact information in the show notes down below. But boy, there was a lot going on there. There's wealth building and how to do that and take advantage of tax codes and different types of systems that allow us to do that. There was risk management for warranties and those type of things and just an absolute focus on legacy. This idea of saying, I got something it's valuable. How do I take something from it while still putting it into a position to be passed on to somebody else and, and keep that name around for a while. If you get a chance, reach out to Zebediah and his team over at rma. I think they would be a good person to at least just talk to. I think that's some solid information. I think it's one of the areas we lack the most as owners and leaders of our businesses is just financial knowledge. It's one of those things I can remember sitting back, you know, 15, 20, 25 years ago and saying, how do these people live in these houses? How do they, you know, like have all this money and do all these things and because, man, I work my rear end off and I make pretty good money and most of it goes away. And I started to learn through a lot of trial and error and, you know, failures and things like that. Some of the different ways we can go. So getting a guide to help you along there, a great way to go. If you need a guide with your business and you want to get it into a position where you have control of it so you can lead it well, grow that business and try to get to that personal financial freedom that you were chasing when you started your business. Contact us here at Contractor Coach Pro. Go to our website, contractorcoachpro.com click on the Assessment button or click the assessment button link down below. Take a quick assessment from us. It'll take you a good 15, 20 minutes, but whenever you get done with it, it gives us great insight into your business. With that insight, we will do a free coaching call with you. And it is a coaching call, not a sales pitch. We're going to see the things that are weaknesses in your business, areas where you could optimize and take advantage of some opportunities for you and give you that coaching that day and some guidance that day to take your business to the next level. If you want some help with it, we can certainly help you with the coaching of it, the accountability of it and the strategy to get there. But either way you're going to get value from that call. Thanks for hanging out with us here on Contractor Radio. This is what we do. We are here to help you identify your dream, probably challenge it quite a bit. Help you figure out why you're doing what you're doing and who you are and that God given talent that you've been given that you can give back to the world generously. When we give to the world generously, the world gives back to Us, we want to help you figure that out, solve that problem, and help you achieve your dreams as a contractor. Thanks a lot for being here. We'll see you on our next episode.

So it's going to be sold to somebody else. There's going to be this transfer of wealth in the small business world. And so within the next 20 years is an opportune time for business owners to consider, how am I going to take advantage of this? How am I going to transfer my wealth as well? Because every. A lot of other people are going to do it, and there's going to be opportune times to take advantage.

I sit there as a young guy because you mentioned it. Baby boomers. Right. Those folks are getting to the point, like, I'm done with my business. And, and really. And truthfully, whether they sell it, hand it down, or just say, I'm done, which is a possibility, you know, some people, I think you call that pushing it over the cliff, right?

Yeah, pushing off.

They say, I'm done. They take whatever they've been able to put back and retire and go hang out the cabin. What that does is it says that money that they've been generating with this large population of people is going to be transferred to a much smaller population of people. Yeah. Baby boomers are twice the size of the other generations for them. And so these guys that are 20, 25 years younger than that crowd, maybe even 30, 35 years younger than that crowd, and there's opportunity for acquisitions, there's opportunity for market share, like, because that money is not going anywhere. It's still going to get spent. Right.

Still going to be taken. Yep. And it's an opportunity for some of the younger generations to go to the business owner and say, hey, I want to buy this.

So do you. I was. I thought we were done there for a second, but I got some curiosity going now. Do you. Do you help with that? Like, hey, I want to buy a business over here, I want to buy more business, or I want to expand my business. Do you help them from a financial aspect to make that possible, number one, and to hopefully maybe make the right decisions on those purchases?

We do. Yep. And. And we.

We will sit there with a project.

Manager that wants to go to the owner and say, I want to buy this business, and here's how I want to do it, and here's the plan. We'll help them with that. We'll help in the idea of, I want to acquire this business and I need financing to get it done. Will help with that.

Nice all right. It's a big thing in our industry right now. Consolidation, acquisition, like there's a lot of that I see going on and all. Not just roofing companies, but landscaping anybody. That's kind of a blue collar home services type country. You see a lot of consolidation in that because it's ripe for it. A lot of the reasons you're talking about with just the transfer of wealth, it's an open playing field because it isn't consolidated right now. And that tends to be what happens to those type of industries. So, yeah, we're going to talk more, for sure.

Love it.

That's pretty cool. Zebediah, thanks for being here today. That was great. Thank you. Enjoyed it.

It was awesome. Yeah, it was a pleasure.

You shared some really cool things. I think the biggest thing is like really thinking about that that money's not going anywhere. Somebody's going to spend it, who's going to get it. I think is really important to be thinking along those lines. Well, thanks for being on our show today.

Yeah, thank you. Really appreciate it.

Awesome. Hey, guys. That was Zebedee Wade from rma. We'll put their links and contact information in the show notes down below. But boy, there was a lot going on there. There's. There's wealth building and how to do that and take advantage of tax codes and. And different types of systems that allow us to do that. There was risk management for warranties and those type of things, and just an absolute focus on legacy. This idea of saying, I got something, it's valuable. How do I take something from it while still putting it into a position to be passed on to somebody else and keep that name around for a while. If you get a chance, reach out to Zebediah and his team over at rma. I think they would be a good person to at least just talk to. I think that's some solid information. I think it's one of the areas we lack the most as owners and leaders of our businesses. It's just financial knowledge. It's one of the things I can remember sitting back 15, 20, 25 years ago and saying, how do these people live in these houses? How do they have all this money and.