Click Above To Listen In iTunes…
Jon Paramore:
Hey, what’s up, everybody. Welcome to the Liberated Contractor Podcast and today, we’re going to talk about a very sensitive topic. So, I’m going to start by kind of giving you some preface and let you guys know the topic today that we’re talking about is going to be around money and money management. And essentially, it’s not necessarily how much money that you guys are making but it’s about what you’re actually doing with your money.
And so, I got to preface this and I got to put in kind of a disclaimer and let you guys know right out of the gate, I am not a financial adviser and neither is my counterpart here, Katy Martin. Neither one of us claimed to be any type of financial adviser. We don’t have those fun little letters behind our names on our business cards like certified financial planner or any of that fun stuff. All the information that we’re sharing with you and the reason why I’m giving you this disclaimer is strictly because and solely based off of our own experience and what we see in the marketplace and the stories that we hear on a consistent basis and the posts on social media that we see on a consistent basis.
And so, that being said, I need to tell you right out of the gate, what we’re talking about today is actually more on the side of the mismanagement of funds that we often see in the contracting world and how that can be readjusted. Sensitive topic, it might have triggered you right out of the gate. It might have put you in kind of a negative shitty mood right out of the box but it’s something that needs to be addressed. It’s getting a bit out of control.
Actually to be frank with you, it’s probably been out of control for quite some time and I’ve experienced it and I’m going to share my woes and issues and all the problems and all the things that I’ve experienced and all the stupid things that I’ve done along the way with the hope that it resonates with you and it impacts you on some level and encourages you to whatever your situation is right now to stop whatever you’re doing especially if it’s hurtful or harmful and move in a positive direction.
Jon Paramore:
So, happy to podcast today with you, Katy.
Katy Martin:
Hello!
Jon Paramore:
What are the things that we’re going to get out of the gate and talk about really, really quickly is some of the instances that we see where people are taking like making lots of money and then they are broke by January. That is-
Katy Martin:
Super broke by February.
Jon Paramore:
Super broke by February. There’s this noticeable trend during what we would label as the busy season and the busy season could be anywhere from the first hailstorm. You’re typically seeing these things in April, May, somewhere in there.
Katy Martin:
It depends on the country but basically anywhere from March, April to November.
Jon Paramore:
Right. And then you’re seeing these other trend that everybody seems to be like there’s some pretty crass terms. I’m not going to use a bunch of them today but you kind of end up being like trailer park rich for a period of time during the summer when all the jobs are coming in. And then by February, what’s the problem that we typically hear and see the most? Guys are what?
Katy Martin:
Oh, they’re completely broke or they’re looking for the next storm.
Jon Paramore:
That’s right. Everybody starts to-
Katy Martin:
When is it going to hail? When is it going to hail? We need work.
Jon Paramore:
Everybody starts to get like this withdraw symptom where they’re starting to like jones or kind of freak out like where’s the next storm coming from? What is the … I’ll just tell you from my own story when I was younger and how this evolved and why this is so transparent and why we’re seeing this thing. The lifestyle essentially that’s being created is … Well, some people might label it as living above your means.
Essentially what happens is there’s this lifestyle being created and then when the storms die down and you can no longer get access to what you’re doing, the money to be made and all of that stuff, the funds dry up and what is the most common thing that we see is the reason why the funds are drying up? What are they not doing?
Katy Martin:
They’re not preparing for when … They’re not actually bringing new money in or consistent money in. I think a lot of this weird … Not everybody in this business does that but it’s common, right? We see it a lot with the sales reps who make a lot and lot of … It starts from the sales rep level but really what the goal of the podcast is it’s talking about from the business owner level but you see, most of these business owners, they started where? Where did most of them start?
Jon Paramore:
Sales rep.
Katy Martin:
As a sales rep, right?
Jon Paramore:
Yeah.
Katy Martin:
They go from a place of making a large amount of money in a short amount of time usually at a young age. What do most young people do with money?
Jon Paramore:
They blow it.
Katy Martin:
They spend it on whatever’s fun, whatever’s fun. And we’re going to talk about what some of those things are. But when they transition and they get to a place where like, “Oh, I could do this. I could open my own business, switching that mindset from a hustler to the person that’s chasing the money because they want to spend it as fast as they make to an actual business owner. And what do I need to do to prepare and make sure that I have some stability and the people now that I’m hiring underneath of me don’t have to worry about losing their job in December?
Jon Paramore:
That’s right.
Katy Martin:
It’s little things. Sometimes it’s big things. It’s obvious things like quit spending money on ridiculously gigantic watches that are the size of your head and it’s other things like simple things that you can change in how you manage your money that make a bigger impact.
Right. Here’s the cycle. We’ll start kind of at the lowest level and we’ll work our way up to kind of the business owner level. We see the trend like Katy’s talking about and I’m going to more reflect back on myself just so you guys know like the point of this is we’re not picking on anybody. We’re bringing a legit problem that we see that is very widespread and relatively rampant in this industry. We’re bringing it to the attention and we’re going to give you some suggestions on how to get control of it.
What we see it down starting at the sales rep level. Sales rep go out most of the time like Katy is talking about. You can equate this a lot to a young professional athlete. What we’ve noticed is that and one of my good friends that used to play professional sports specifically told me at one point in time, the crazy thing about money is it doesn’t really change people. Money just makes people more of who they are.
So, the more money you make, if you’re a turd, you’ve just become a bitter turd. If you’re a great giving person, the more money that you make, you just become more giving. Here’s what crazy. If the lifestyle that you have when you’re younger that you develop is cycled around partying and being crazy and being silly and whatever, and like I said, I’m going to give you suggestions of how I was at the very beginning before I got married in particular.
When I started making a bunch of money and contracting sales, all I used that money to do was to support the lifestyle. It was, “Let’s go out and party.” And then not only could I buy drinks for myself pretty much at will, a $600, $700 bar tab was nothing a lot of times. Then I got to the point where I was taking my friends to like table services and VIP access and whatever and spending $3,000 or $4,000 a night.
And so, that kind of stuff just … But then that perfect example that you were talking about earlier, I would get into February and because I didn’t take any of that money and put any of that money aside, in February, I’m then going, “Man, I hope a storm shows up soon,” right? Because my pockets were starting to get empty. My credit cards were starting to get maxed out, like I was already an irresponsible person with money before I had money.
So, when money showed up, I just became a more irresponsible person. That’s at the sales level. That’s when I was at the sales level. Fast forward several years after that when I really figured out the industry … Figured out, I mean, I’m still 40 and trying to figure things out, but I’d relatively had a pretty good grasp on the industry. Transitioned into business owner and the irresponsibility didn’t really go away. It just started to amplify itself.
Now, I was definitely like I had some pretty good financial advisers around me and they were saying, “Hey, man, at 24, 25 years old, it’s probably relatively important that you start thinking about long-term future.” But it’s hard to do when you’re young, right? How many young people do you know really sit down and go, “Let me map out a financial plan to be 60, 70 years old?
Katy Martin:
No, because they were like, “We have so much time to do that.”
Jon Paramore:
That’s the myth.
Katy Martin:
It’s that whole thing and when you’re feeling younger and feeling invincible, it’s like, “I can just make more money.” And in reality, that’s the struggle because most of these entrepreneurs are sales-minded-
Jon Paramore: That’s it.
Katy Martin:
They totally have the ability to.
Jon Paramore:
That’s it. And listen, you guys, this is a trap. This is the reason why we’re doing this podcast because this is the trap. And for you guys who were in contracting, who built a business that is heavily reliant upon the storm, that’s the trap, because the consistency of the storm industry with the storms happening every single year leads you to a myth to believe, “Although we are broke right now, a storm will happen and everything will be okay.”
But the reality is what? If you don’t correct the situation, if you’re in this position … I don’t care if you’re at the sales level. I don’t care if you’re at the business level. If you don’t correct this situation right now and you feel it’s July right now, and you get out to like towards, we’re headed down. We’re really starting to head down that hill going into next year, going into the slower seasons. If you haven’t prepped that plan going into the slower season, what are you likely feeling right now?
What’s the emotion digging up inside of you going, “Well, what are we going to do? We don’t have a whole bunch of money in savings. We don’t have a whole bunch of money in the coffers. We’ve taken some really great vacations this year. Well, I guess we’ll just start setting up for next year.” That’s not a plan.
Like from your perspective, you see these people all the time. Where do you feel like is the detachment in all of these, like you hit on it a little bit earlier, you were talking about, “Well, we have so much time.”
Katy Martin:
Yeah. Just not being prepared or not exactly … When you’re young, I guess you have a little bit of that struggle like you said when you’re 24, you’re not thinking about preparing for when you’re 60. But what is it, I’m not telling you … We almost are going down the path of like maybe you should reevaluate your life. But the lifestyle, like really the lifestyle that you want to live like we’re not saying don’t have fun. But what’s the priority? What’s the longevity? What’s the endgame? What are you wanting really to create?
And if you’re clear on that, you can make some adjustments to fix it. Some of it is definitely correctable. There’s little things that you can do to fix it because we run into … Maybe you’re not the business owner who parties and buys flashy things but maybe you’re just in the cycle of we’re waiting on a storm and we spend a bunch of money. Maybe you’re spending money on other stuff. But it has to do with managing it and keep it where you know that your vendors are being paid and maybe you don’t know what you don’t know.
Maybe there’s little things that you can pay attention to within your business like knowing specifically what your average margins are and things like that to where you can effectively manage the cash from week to week and know exactly what you can put away to get you through the winter, to get you to the next season or to have that money to invest in something else, to diversify a little bit.
Jon Paramore:
Yeah, and I think that’s the important part is we’re not saying don’t have a life. That’s the key. It’s not about not having a life. It’s about building like getting clear about the life that you want to live and then building the business that supports that and responsibly managing the cash flow that comes in from the business. And like Katy is saying, maybe you don’t … Eventually at 31 or 32, I grew out of that party lifestyle.
I stopped drinking but that still didn’t mean that understood what responsible money management looked like.
A whole other set of issues involved and developed…
And so, that’s the point that we’re really working on today is more of the responsible money management and what does that look like? If you already have … Some of you guys might be saying, “Well, I already have an established lifestyle, Jon, like how do I build a business that essentially can fund that but where I can also become a responsible money manager?”
The reality is if you’re an adult, I don’t give a shit if you’re 25 years old or you’re 45 years old, somewhere in between that and at whatever stage of life that you’re in, you don’t understand or have a grasp on money management, it might be a smart thing for you to do to go sit down with a responsible money manager.
And like we were talking about before we even came on air today, that might mean that, guess what? You have to go on a budget and learn what it means to be a responsible money manager. And just so you guys know, and so I’m not sitting here like lecturing you on this, whatever. This is a very consistent and constant struggle that even I go through because there’s a certain level of how I like to do things. There’s a certain level of lifestyle that I want to live and sometimes we push beyond that and then something happens. We get kicked in the gut and then we have to make a correction.
There’s not like a perfect formula for this. There’s a lot of different ways to do it. Essentially what Katy and I are bringing to light and what we felt like we needed to really talk about today was the trend in the industry that says that the falsity, the lie that says you have lots of time. You have lots of time, and there will be another storm.
It’s crazy but we see this … It’s almost like we were talking about this too. This industry is an anomaly. You can’t go into like any other industry that I can think of off the top of my mind that has this cycle of ebb and flow where there’s almost this guarantee that if you’re willing to travel or you’re willing to go, there’s almost this guarantee that there’s going to be money on the other side of it.
And I think that’s the poison that’s elusive that is really breaking things down and almost destroying businesses because there’s not a real plan. There’s not a real financial plan being laid out.
Katy Martin:
They take it for granted because of the speed that it can happen.
Jon Paramore:
Right.
Katy Martin:
So, you have so many. And I hate to say it but there’s probably more companies out in this market that operate that way than ones that really have more of a financial plan and a budget, and like a specific procedures when it comes to managing money, managing multiple bank accounts, profit sweeping and moving things, investing, interest earning accounts like other things to make additional money for the long haul because unfortunately, you can almost … The people that do treat some of their businesses like an ATM, like if it’s just not producing money right now we can just go-
Jon Paramore:
It will get better, right?
Katy Martin:
You just keep pushing the buttons and it will eventually spit out. And because it is something that you can make money fast but again, if you’re in St. Louis for example, like-
Jon Paramore:
It’s been a couple of years.
Katy Martin:
There hasn’t been a big storm.
Jon Paramore:
No, and that’s a perfect example. We are plugged into the vendors, the suppliers, the people behind the scenes that give us information like it’s been staggering to watch all of the contracting companies that have gone out of business in the last two years.
Katy Martin:
Just in this market.
Jon Paramore:
Just in this market, because they were so heavily reliant upon the storm to fund the business.
Katy Martin:
And it had to be a big storm.
Jon Paramore: It had to be a big storm.
Katy Martin: Which means they expected it to be easy.
Jon Paramore:
That’s exactly right. I want to spend the last few minutes with you guys, like just helping you to understand, what does it look like to diversify and to expand your horizon a little bit to create some financial stability that makes you not reliant upon the storm but blessed when you get a storm because you and I have clients that are that way. We have clients that are very, very non-reliant upon a storm but when it happens, it’s like gravy. With or without a storm, they’re going to eat. With or without a storm, they’re going to pay their bills. With or without a storm-
Katy Martin:
So, it’s a bonus at that point.
Jon Paramore:
The bonus is the storm.
Katy Martin:
How many of you guys work up north? How many of you guys listening work up north? We’re blessed that we don’t have terrible winter.
Jon Paramore:
Like feet of snow.
Katy Martin:
But like they’re North Dakota, Minnesota, Michigan. They will legitimately have snow on the ground and snow on the roof for months in parts of those states. And we have clients and there are other businesses that they’re fine. But when there’s a storm, it’s amazing.
Jon Paramore:
Yeah. It makes things better. Here’s the point that we’re really going to drive home and like the nugget, I guess if you will, that I’m going to give you guys that you guys could take and practically apply. There’s a big difference between depreciating investments and appreciating investments. And I think what you’ve really got to do is take a look at kind of how things are in your world if you’re buying things to buy things to have things. Those are likely depreciating investments.
If you’re buying things that essentially create additional cash flow or if you’re paying for things that essentially appreciate as you go, those are appreciating investments. The big difference is if you don’t have those things and the majority of your business is built around paying bills. It’s built around buying depreciating assets. It’s built around generating money to pay people in your office and whatever, that is very, very, very shaky. It’s a weak foundation. It’s going to lead you down a place at some point in time.
If you guys need reserves or if there’s something that pops up in your business that was unforeseen, you just don’t have anything to fall back on in like an appreciating asset that you could cash out and sell off or that you might be able to rely on if you’re main business starts to fall back.
Some of you guys might be asking like, “Okay, so we’re in the middle of June or we’re in the middle of July. We’re making a bunch of money. How can we set these things up?” This is the time of year when cash flow was high to start thinking about what’s going to happen in the off-season. And for some of you guys who are listening, this is the time of the year where you build the front side of a solid plan that produces income without a storm.
And I don’t care what that looks like for you. Remember, I’m not a financial adviser. I don’t care if that’s real estate. I don’t care if that means, go build a side of your business that is non-storm reliant. Go build a retail side to your business. Go start a business that does something totally different that you know is going to give you cash flow, that doesn’t need a lot of overhead, any of that stuff, whatever that looks like to you. Sit down with a financial adviser if you have to and get clear about how do we build essentially a reserve.
That’s it. That’s the key because this mindset of quick hit, almost drug. The storm industry that relies on a storm is almost like a drug, like you’re basically putting heroin into your veins in the form of a storm and then when you run out, you’re the guy walking around the street asking everybody for money to try to go get a quick fix. And you cannot build a life around that. It’s just too volatile. How many employees would want to work in an environment like that? Where’s the next injection?
Katy Martin:
Well, your voice start to sense that where they can sense the non-stability. And that, all that does in your culture start to breed like fear of losing their job.
Jon Paramore:
Of course. We’ve talked about this in other podcast before, if you are the owner and that’s how you treat your business, your capacity to attract people who are responsible money managers is almost zero because there is this phrase, this old adage of you can’t lead above how you lead yourself. How do you bring people in and lead them in that way when you don’t even lead yourself that way? It’s not possible. It’s not possible.
At the end of the day, the whole focus and the whole point to having this conversation is again I did a lot of these things. A lot of these things that we brought up today were things that I did in my younger years in my business.
I’m trying to give you guys some clarity and some focus that if you’re stuck in this rut and you’re stuck in this cycle like you can break the cycle relatively easy. It’s not like we’re asking you guys to go sell off like all of your stuff and start over, like if you’re living in a big house and you’re driving a bunch of cars and whatever, it doesn’t mean go sell all that stuff off and go live in what they call a tiny house, the new HDTV craze. Let’s go buy a tiny house.
I’m not saying that, right? What I’m saying is you need to bring somebody in likely where it’s highly suggested or you might want to consider bringing somebody in just to take a look at your financial “portfolio” if you have one. Maybe you don’t and starting to give you some clarity and direction on how to build something that’s more sustainable that’s not just reliant upon a storm. So, what do you have for final thought around this?
Katy Martin:
Well, that and like you said reach out to somebody that knows or somebody that has a system in place because maybe you’re not to the point of, you may not need a financial adviser or you might not be thinking of investments. Maybe you’re just at this step of, “What can I do on a daily basis to just start correcting some of these?”
Jon Paramore: That’s right.
Katy Martin:
And some of those things can be done with implementing just some different reporting mechanisms and don’t get freaked out by that word or by that phrase, reporting mechanisms. But simple things of just know your numbers like you’re a contractor. You’ve been doing this for a decent amount of time. You’re smart.
You understand what your profitability is on the certain jobs that you sell. What out of that is required and what can you put aside? What’s going to support your lifestyle? What kind of sales does that take and what are small things that you can do to correct some of that?
And some of that is done on a weekly basis. Some of that is done on a daily basis, and just ways that you can move money around and be smart about it to where you’re prepared later on down the line and you’re not freaking out. If you’re to a place of getting a financial adviser where you have some money that you can put into some smarter investments, great. Do that.
If you’re not to that point, reach out and talk to somebody to where, “What can I do on a daily and a weekly basis to start correcting what I’m doing and then I will have the money to work with the financial adviser to start to diversify?” Everybody is at a different level, so it doesn’t really matter where the level that you’re at. There is somebody out there that can help you.
Jon Paramore:
Yeah, I agree. So, here’s the deal. If you want to reach out to us and you need a resource, like maybe some type of referral from us or some kind of resource that you guys can use to get started on this, we’ve got some for you. You’re welcome to reach out to us, [email protected]. You have questions for us, [email protected].
You want to follow us at Facebook, Instagram. There’s a bunch of different ways that you can get a hold of us. We’ll post some links you guys can get access to, it’s there.
Also, if you guys want more information about us, you can visit us at rhinobranded.com. That’s our website, so there’s a lot of hopeful information and resources there for you too. Listen, we’re greatly appreciative for you guys joining us on the podcast. For those of you who show up on a regular basis, very, very appreciative.
Feel free to leave us some reviews. Make sure that you’ve downloaded the podcast, that you’ve signed up to the podcast, that you subscribed to the podcast, all of that fun stuff.
Our sole mission here is to just pay attention to the trends in the industry that are going on. Bring them to light, have a conversation about them and try to drop in some nuggets and things that you guys can use if like these topics affect you to really just help you get clarity and move away from the things that are making your business harder.
Again, we greatly appreciate you guys joining us and until the next time that we get together, take care.
