Paul Winkler: Welcome to “The Investor Coaching Show.” I’m Paul Winkler talking about money and investing and related topics. Charles Alexander. He is a business coach. Here with me today because this isn’t just about how to invest money, it’s also about how to make money. Welcome.
Charles Alexander: Thanks for having me in.
Start Now, Quit Later
PW: His book is Start Now, Quit Later. It’s about how to start and grow your business without quitting your full-time job. This is how I started this company as a matter of fact, because I was actually working. I was selling health insurance of all things.
What I did is I actually started this company because I was getting tired. We did 401(k)s, we did some investment stuff, but I didn’t really believe I knew what the heck I was doing and I wasn’t going to harm people. They were trying to get us to sell annuities and life insurance policies as investments.
Annuities have their place every once in a while, but the reality is they’re oversold and you’ve heard me talk about that a million times. But what happened is I got really frustrated. I had a really, really low income and I had to figure out some way to make it work, but I didn’t like what I was doing.
What I did is I actually started the finance business, the investing business on the side and picking up some things. Mine was a little different. I actually gave away all of the health insurance business to have the right to take the investment business I had built up in exchange, so it was a little bit different.
Your book, talk a little bit about this. How did you decide to do this?
CA: You’re talking about giving that away and every bit of it when somebody starts a business, well, whether they’re working full-time or not, it’s never the same, it’s a snowflake basically.
Everybody’s path is a little different.
For me, I’ve been business coaching for 16 years now. A few years back I decided to practice what I was preaching and started my own business creating explainer videos. Anybody listening, watching those are the 90-second videos that somebody can put on their website that quickly explains who they are, what they do, and why you should work with them versus somebody else. Fun fact, I actually do it for financial advisors and insurance agents, so it gives us something extra to talk about.
Potential Hiccups in Starting a Business
But I started doing that and that business kept growing and growing until it eventually became a full-time thing. Now, the way it became a full-time thing is that I had to implement some of the processes and procedures that I would teach other people to do. Also, fun fact, I am my own worst client. I had to go out and hire a business coach because I couldn’t take my own advice.
I’ve coached over 2000 people, helped 250 start businesses. And I used a lot of those examples. But most importantly, I used myself as my own example. I’ve got a job, I’ve got a business, I’ve got a side hustle in addition to the job in the business, all running simultaneously.
PW: You kept all those balls in the air and then started coaching people. You were doing classes over there at the college for people who were starting their business. There was so much stuff in this book, and I have my book flagged like crazy on all of the things that I picked up in here and there were so many different little pointers. Some of the things that you tell people that are thinking about starting a side hustle, so to speak, what are some of the common mistakes that you see people make?
CA: Well, a lot of the common mistakes, first and foremost, are that they want to quit their full-time job primarily because I think they’re right around, let’s say my age now. And they’ve been at that full-time job for two decades and they’re willing to do anything they can to pull the ripcord and get out of it.
I always explain to people, if you can start small, do that. Get a proof of concept. One of the issues besides quitting their job right away is not getting that proof of concept. People like to take whatever idea they have and run with it.
Food service is a great example. I make these great casseroles, brownies, or insert whatever. And it’s always popular at family reunions, church potluck, so everybody must want it. And then they market it with people that know and love them. Well, you’re going to get distorted feedback if you’re giving it to Uncle Henry and Aunt Linda, they’re going to tell you how great it is. You have to go out and find people.
Test Your Ideas and Gain Confidence
PW: Because they love you. They love you and they want to build you up. They want to support you, so they’re going to tell you what you want to hear.
CA: You have to start with the most minimally viable object idea. Test it before you start building on top of it. Test it with people that do not know you, that are your target customer that will be willing to buy the product later. Make sure you have actual capital in the bank. When I say capital, I mean real money to get started with.
So many people will get started and then they try to backfill it later. And then they come crying to Paul about how they want to break open the 401(k) and he has to break out the charts and graphs and explain to them what a terrible idea that is and why so many people still continue to do that.
You want to build up your mindset.
People don’t know how to market or they refuse to market or they just lack the confidence. They get imposter syndrome right away. Imposter syndrome being the, I’m a fraud and everybody else is going to know. And they can’t see that. In this case, you’re not a fraud. You’re doing something you’re good at, it’s just building up that mindset to do it. But those are a few of the quick things right out of the gate that are hurdles that folks have a difficult time getting through.
PW: Well, I think also when you talk about fraud and you look at it, sometimes friends and family can be your worst enemy too. They can drag you down. It’s like the crab syndrome.
CA: It is. And you can explain anytime that crab’s trying to get out, the other one just pulls him right back down into the bucket.
PW: What ends up happening is you may not even try because everybody’s telling you, “Well, you can’t do it.” It’s like a prophets without honor in their own country. That same concept.
Start for the Right Reasons
CA: Many times, yes. There’s no prophet in his hometown is the saying. And anybody that knows you and likes you gets powdered butt syndrome—where if somebody changed your diapers, they do not see any viability of you raising above their standard of living right now whatsoever. You couldn’t do it because you are a babbling little child and you didn’t know how to do it. They don’t mean to tell you you can’t do it. They’re just trying to help you out in their own perverted little way.
PW: Now there are several different types of people that start businesses for the wrong reason you talk about in the book. Let’s talk a little bit about that. You’ll have the dreamer. And I got to tell a quick story. The stories in this book are phenomenal and funny too. It’s not a boring read.
I used to cold call businesses around town. Almost every business in Nashville has seen me walk through their door, believe it or not. Not everybody, but there were a lot of them that I would walk through the door because I was trying to sell health insurance when I first got here. And you go talk, “Hey, can I give you a quote on your health insurance, blah, blah, blah.”
But how many times did I run into dreamers that I have this dream of starting a business? And talk a little bit about them, what happens there with that type of a person?
Dreamers need to plan more than dream.
CA: Using that example, I remember this vividly. I was doing one-on-one coaching. It was a guy that wanted to start a business. He’d been in the factory forever. I don’t know what he did there. He couldn’t visually explain it to me, but he had this idea for wanting to start this cigar bar lounge restaurant. He had everything in mind.
When he was talking to me, you could almost see the glaze in his eye and him leering over my shoulder just talking about how amazing the lights would be on the wall and what kind of marble countertops there would be. He’d even give me the design of the leather of the chairs. None of this had been planned out. He was just overexcited or rather just dreaming of what the future could be.
Seek Counsel
That’s why I used that example a minute ago about folks that have, I’ll call it a midlife crisis. I don’t know if that’s what you’d call it or not, but they’re between 35 and 55 and they’ve been doing this job forever and they have just dreamed of this better life. But what they’re basically doing is just daydreaming of a better life and not planning for it.
Then they start looking for every avenue they can in order to get them to that point. And so many folks, they don’t have a plan. They just pull the ripcord and quit the job and cash out every avenue of savings they have. And they just get started and then they realize after they did it, they wake up from the dream and it becomes a nightmare.
PW: And Charles, I’m going to guess that probably what happens is a lot of these people don’t seek counsel because they’re afraid that counsel is going to tell them something they don’t want to hear or are afraid to hear.
CA: It might not be the answer I want.
No, that’s right. Same reason somebody might not come and see you before they go out and buy a handful of crypto because you’re going to tell them, “Hey, maybe we want to take a look at some other avenues before we do that.” I might not hear what I want to, but I’m dreaming big. I want to dream my dream, so this is an avenue for them to do that.
Be willing to plan for your dreams.
PW: Don’t throw cold water on it. Then there was the enabler. Moms often want to make sure and they want to make sure that their kid is successful and actually helps them do something that they probably shouldn’t be doing. Talk more about that one.
CA: This is a case where I have people that are starting in business and they’re getting help from family or friends. In a lot of cases, they’re parents and mom and dad are trying to set them up for success. Again, a lot of parallels here with second generational wealth or even third where it absolutely disappears because somebody at the top is trying to set up Johnny or Susie for success later.
Do It for Yourself
In a lot of those cases, people are trying to pass on a business of their own. The example I’ve used in this book was a woman that was trying to put her son into a handyman/construction business. He had run into all of his own issues, probably from her smothering/mothering. I vividly remember. She’d bought him all the tools and she had tried to put money into his account trying to help him set up the business with the name and the registration and all of that.
PW: Well, protect him from any mistakes that might happen.
CA: Which is a mistake, ironically enough.
PW: And so trying to protect them from mistakes that they might make, which actually if they were to make those mistakes, it would strengthen them.
Allow yourself some mistakes, sometimes that’s the best way to learn and be strengthened.
CA: Correct. It’s like parenting a child. I am in the helicopter parenting generation. I’ve got a 14, 12, and a 10-year-old, and they run me absolutely all over town like an unpaid Uber driver with a one and a half star rating with them. But I have to let them take bumps and bruises. If I do not and they don’t learn how to make a quesadilla while mom and daddy ain’t home or they don’t learn how to clean up after themselves, that’s little things they won’t learn how to do later.
The same is true with somebody wanting to start a business. Get help, get counsel, but don’t let mom and daddy do it for you. Don’t let your grandparents do it for you. Don’t let somebody hand everything to you. You have to learn how to do it on your own. I see this quite a bit and it’s on two ends of the spectrum. It’s with boomers and maybe even millennials or now Gen Z, where my skills aren’t translating or I’m not getting hired right away.
PW: Well, maybe it may be age discrimination. And it can be very frustrating. You’re trying to find something. I had one woman that I was talking to who’d had a lot of interviews. She finally got a job, and I said, “How did you get it?” She said, “They didn’t see me.”
Working IN the Business versus Working ON the Business
CA: But in those cases, and that’s a very real thing, but I still have people that will make up a job. Now, if you want to create your own job, hey, that’s great if you still have your own full-time job. Or you can put together two or three part-time hustles while you do that, that’s even better.
But don’t just create a job in an industry where you don’t have experience. And I got a lot of examples of people that’ll do that. In that particular case, with that example, somebody decided they were going to be a florist with no florist history, with never having even worked in the business, much less run one.
PW: You might have skill in arranging flowers, but don’t realize that when you’re working in the business versus on the business, there’s a big difference between the two of them. Talk about that really quick while we’re on it because working in the business versus on the business, that’s a whole topic unto itself.
There’s a big difference when it comes to actually working on a business, when all you’ve done in the past is work in the business.
CA: Well, and that’s one of the reasons I wrote this book, so somebody could learn how to be more of the employer versus the employee where you’re working in the business. Financial advisors are great examples. There’s a ton of good CFPs that are out there that have all the designations. They know how to rebalance, diversify.
But then when you throw them out into their own world and they become their own firm owner, they don’t really have a great idea of, how do I build a team around me? What are the things that I’m going to do that help the business grow? What are the things that I’ve got to outsource, delegate, batch? What kind of content can I create? What can I not? There’s so many things to run in that business.
That’s a world of difference than the difficult task as it is just creating a portfolio that’s balanced and that works for your client. There’s a whole list of other things you have to do on top of that.
Franchises
PW: Well, that was one of the first things I did when I started the company. I actually hired a business coach. I got a rude awakening. There were a lot of things that I needed to know about that I had no clue about. I had a couple of business coaches, as a matter of fact. I had two to three of them, so I totally get where you’re coming from regarding this.
Now the other thing we see a lot is franchise buyers. Somebody comes out and buys a franchise. Talk a little bit about that because I’ve seen people put a lot of money, literally cash, completely out of retirement plans and buy a franchise.
CA: They get super excited. Look, so first thing, I love franchises. I have a franchising background. I worked for SERVPRO forever because I live in Sumner County. And it’s some kind of requirement that if you live in Sumner County, you work for SERVPRO at some point. I worked for a franchisor.
Franchises are a great business model.
The issue I see a lot of people will run into is just what Paul said. It’s a husband, wife, and they’re ready to go do the new thing. And I don’t want to do this corporate job anymore. Well, let’s go buy a franchise. They shop franchises like people do vacation destinations. Well, this would be fun, this is a froyo place. Well, this is okay, it’s a commercial cleaning and I like cleaning the house on Saturday. That’s not the way you shop out a franchise.
First and foremost, I love franchise brokers and there’s a ton of good ones out there that are guys or gals that will help you find the right franchise that fits not just your skillset, but also what you can afford in terms of purchasing. But then outside of that, find a franchise that has a strong history that will give you training that is steadily growing every year that will be your business coach and help you grow the business instead of just being a logo and then expecting you to figure the rest of it out on your own.
The Grass May Not Be Greener
PW: I think a big surprise for me regarding franchises is that often when people have franchises, they don’t just own one store. They actually have multiple, because you can’t make ends meet in a lot of these franchises with only one location.
CA: That’s 100% correct. You see that quite a bit with McDonald’s and it’s a big outfit. But in addition to that, quick tip, if you ever decide to buy into a franchise, call up franchise owners. Don’t call up the ones the franchisor tells you, call up your own. Make up your own list of 10. And you’ll be really surprised. These people will talk to you and they’ll tell you the good and the bad and the ugly.
PW: You need to know everything when you make this kind of decision. Finally, you have the desperator is what you call the person that is maybe in a midlife crisis. And what happens there?
CA: They’re the guy that’s sitting into the corporate meeting and everybody’s talking about the cover on the TPS reports aren’t right. And the quarterlies are down and they’re staring out the window watching this guy mow the yard and they’re thinking, “I wish I was him. I would just put in my earbuds.”
PW: The grass is greener on the other side. And you’re talking about mowing grass, right?
CA: That’s right. But I have so many examples of people that just, they’re done. They’re done. I get it. We came out of the pandemic. All these movements happened of resignation and quiet quitting. People didn’t want to go back into the office. I understand that. I didn’t either. They just decided, I’m just going to jump on the first thing that moves and I’m getting out of here.
Crazy investment strategies are not going to fix your problems.
PW: And I would add to that, I see that sometimes because people get older, they get desperate because they haven’t saved enough money and they haven’t made it financially. And I’ve got to get my big hit. I’ve got to do something big and something, anything. And then sometimes what they’ll do is they’ll invest with crazy investment strategies.
Think Ahead to Selling the Business
And then sometimes what they do is they jump into their own business without having a clue what they’re doing just to try to hit it big so that they can retire. And didn’t recognize, a lot of times you’re actually having to think about selling the business 5 to 10 years before you retire and you’re starting a business 5 to 10 before you want to.
CA: That’s right. There is no retirement. This is now what we’re doing.
PW: Now that is key because too many times people just say, “Take this job and shove it. I ain’t working here no more.” And then they go to try to start a business straight out when maybe the better way to start the business is part-time on the side to test things out and build it. Make some mistakes while you still have a full-time income coming in, but not necessarily work on your business at your employer’s expense. That’s one of the things you point out, right?
Because the reality of it is you don’t want to steal from the business overall. Okay, so when we look at this, you said something in here, you were talking about not following your passion, which I think is brilliant because so many people, they follow their passion and they go, “Oh man, I just love doing this.”
Be wary of the passion trap.
I had one guy, as a pilot, “I’m not going to go and become a pilot because that’s my hobby. And I don’t want to mix the two.” But just in general, talk a little bit about why not to follow your passion when starting a business.
CA: Well, a couple of reasons. You fall into what is called the passion trap, where you are only wanting to do the things that only you love. But when you own a business, there’s going to be a ton of stuff that you don’t love. And every minute you’re doing something you don’t love, you think you’re doing something wrong. In our case, we talk about following passion. Paul, I’m passionate about college football or the NFL or playing basketball with my kid. There’s not really a living that I’m going to be able to personally make from that.
Skillset and Passion
If I go talk to the wrong person, they’ll try to tell me how to start a blog and make a million bucks on any of those. That’s not really great advice. I tell people to follow their skillset and then develop a passion for it later. I have my own business in addition to business coaching. I had a passion for telling stories.
PW: What you just said is absolutely brilliant, and I want to make sure people hear what you just said. You said:
Follow your skillset and then develop the passion later.
I find that so often I’m just not really into what I’m doing. I really don’t like that area. And the reality of it is I went into economics with a business minor and then what happened? I got out and I started studying this thing on life insurance, and then I started studying investments and the passion came later. It was a totally related topic. Economics and business and being a financial guy are completely related. I went into the industry that I actually studied to a great extent. But you’re right, I didn’t develop the passion until later.
CA: I’ve used you as an example before. I have told folks, I’ve got a financial advisor that if you mention anything about the markets or how they work or fluctuations or if you can time it, he is so passionate about it that he can talk nonstop like a windup toy for hours because he is passionate.
And that’s exactly right. There’s no way you came out of the gate just that passionate. You learned about it. And the more you learned about it, the more you realized how it affected people, how they misunderstood it. Now you’re one of, if not the most passionate people I know that talks about personal finance and investing the way that you do.
PW: Well, and you said something about skillset, so I’m just going to use that as an example. A skillset maybe that you like teaching.
And that was for me, that was it. I like teaching. I also liked numbers. I was always good at math. It was those skill sets, teaching and making things simple and math. And also I loved explaining things how they worked. Now, don’t just tell me that something works. Tell me why it works.
Perfection and Progress
When you talk about not following your passion, you talk about, hey, you may not like selling, you may not like bookkeeping, you may not like dealing with imperfection is the other one. There are those who go into a bakery business and love baking. And they don’t think, well, I love baking, I love the food industry, but I don’t like selling. Therefore you’re going to have to do a lot of what you don’t like.
CA: I have example after example, and even the steal from one of the greatest entrepreneurial books, The E-myth by Michael Gerber.
It’s written about a woman named Sarah who owns a bakery. It starts off with her head in hands and tears because she is so frustrated with the process of getting up at 04:00 in the morning, cooking, cleaning, getting the place set up, being open all day, managing employees, dealing with the bookkeeping on her own, shutting down, figuring out the marketing at night, going to bed at midnight, and then doing it all over again.
If I could just do that and just keep it just to the few things I love, then I’ll never have to work a day in my life. Except for like what you’re just saying. Well, if you’re a caterer, you’re going to have to go talk to some businesses. And if you’re a bar owner, you’re going to have to deal with some possible employees that aren’t employable elsewhere.
PW: Is that what you meant by imperfection?
CA: Oh my gosh, yeah. People are scared to death of imperfection, but that’s all running a business is.
Perfection is the enemy of progress.
If you were aiming for perfection, I’d keep using finances as an example, you’d never deal with a down market. But you get to deal with the imperfections of the market to get the highs from it.
PW: That is so true because you talk about imperfection and trying to be perfect at everything. Excellence is a good thing, but perfection is unattainable. So often what happens is stymies people from actually doing anything.
It will stop you from trying to take action because you won’t take action until it’s going to be perfect. That’s a problem because you’re never going to have perfection. Watch out with following your passion. Figure out your skills and then let the passion follow.
Advisory services offered through Paul Winkler, Inc an SEC registered investment advisor. The opinions voiced and information provided in this material are for general informational purposes only and not intended to provide specific advice or recommendations for any individual. To determine what investments are appropriate for you, please consult with a financial advisor. PWI does not provide tax or legal advice. Please consult your tax or legal advisor regarding your particular situation.
