363 | Smart Money Decisions During A Crisis

The Coronavirus has affected almost every business. Each business is asking a ton of questions about finances and we are here to help answer some of these tough questions!

Joel and Chris sit down (virtually, of course) to discuss the ins and outs of how to make the best choices about money starting today, so you can lead your business in success during this pandemic.

 

For full transcript, continue reading:

Welcome to the Chris LoCurto show where we discuss leadership and life and discover that business is what you do, not who you are.

Welcome to the Chris LoCurto Show! Today we are going to do something a little different with everything that is going on in the world. We want to encourage you and give you some hope as well. So whether you are a business owner or a stay at home parent who has suddenly become your kid’s teacher, we want to encourage you during this time. So today we’re going to share with you part of the conversation that Joel and I had on our Facebook live recently. So if you want to watch the entire discussion, which is almost about two hours, that’s good stuff there. Please visit our page on Facebook. We hope you find some good news in the conversation today and we thank you for joining us.

What about loans?

Joel: So Chris, we’ve hit on this so you hit on this a little bit more, but it’s incredibly important and the loans are being peddled like crazy right now. Loans of all shapes and sizes. I mean, there are all sorts of loans and people are coming after you to get a loan, whether it’s personally, especially businesses that they know are scared to death. They entrepreneurs who don’t want to give up on their dream owners who feel super guilty about laying people off and they will reach for everything possible to keep themselves afloat and debt and loans are so attractive right now. What is your, what’s your advice there?

 

Chris: Okay. Um, listen, as I share this stuff, this is my opinion. This is where I’m coming from. I have been doing this for decades. Um, I praise God, hallelujah, am sitting in a place because I prepared for this time and did things the way that we teach currently. We are not laying anybody off right now. We’re not laying anybody off. And I have options because I’d been doing it this way for a long time. So here’s what I do not want you to hear. I’m speaking to you where you are today, not where you’ve been. All right? So I don’t want you to receive shame. This isn’t a shaming discussion. I’m not telling you you’re a horrible person and I am probably going to tell you you’ve been listening to the wrong people. Um, because you know, for as long I, I can’t tell you how many businesses over the last few decades that I’ve talked to them not going ballistic.

You know, they’re like, Chris, I can double my business if I go take this loan in good times, in good times. Chris, why go take this on? I’m like, that’s not the way to go double your business. That’s going to hurt you. That’s to affect you. I cannot the number of businesses that I’ve said slow down, do it this way over here. And they’re like, eh, Chris doesn’t know what he’s talking about. And they’ve come back to me saying, okay, how do I fix this? Because I did it my way and I screwed up. It’s not first off, growing your business. So I’m speaking to preparing for times like this. Okay. Growing your business by going heavily in debt. What happens in times like this, right now, you’re struggling. You don’t have the finances. You’re having to battle this. Oh, well I can defer my, okay, still, you’ve cut out your legs from underneath you because you don’t have opportunities. You know, debt robs you of your options, right? So those that have done a really good job of not being in debt and stockpiling money and growing at a slower rate are, are doing great during this time. Right? And even if their business part has fallen off, they’re not closing their doors. They’re still, they have options. So you have to take a look at this time right now and go, had I not done debt, where would I be right now? Where would my, my personal finances be? Where my business finances be? And if even from me, if, if this is hitting you the wrong way and you’re pissed off at me right now, ask yourself the question, why? Why are you mad at me? Right? I’m pointing out something from somebody who’s a practitioner who has done this for a long time and is one at it and has been successful at it.

And it’s what I teach our clients and they do it. Okay? So if you’re upset with this conversation right now, I want you to ask yourself the question, why? Why are you upset at this? Right? So I’m not saying you should be ashamed. I’m not trying to make you feel horrible about yourself. I’m trying to show you that if you make better decisions from this moment going forward, you’ll be in a better place, right? It’s not about sitting here and going, well, let me cry over spilled milk, but freaking recognize that the milk has been spilled, right? Recognize we’ve not made the best choices. Who could possibly, and this is what people are going to say, well, how could I have known that there was going to be a Coronavirus, Chris? Well, the Bible says, be prepared for any disaster. 2 Chronicles seven 13 -14 where God says,” I will send a plague upon your land and if you will repent and seek me and pray to me and follow me, do the things that I’m saying, I’ll remove it.” Okay? So we have a God, who’s shown us, Hey, stuff’s going to happen. Where are you going to be when it does?

All right, so with that, what about all these loans and everything? Oh, we’ve got a great discussion on Wednesday about it. Uh, the SBA disaster loans, uh, and again, I want you to understand, I am not researching the living crap out of this and watching the news like crazy on this. I’ve just got small amounts of information on what’s being offered. And so here’s what I thought the loans were going to come out and be interest free, which I still wouldn’t do the loan anyways, but they actually are not interest free. Actually come with a, I think it’s like a 3.75% interest rate. Check it out. I may be wrong on that.

Here’s what you have to recognize about going into debt right now that needs to be your absolute last option. I want you to check all the things that I’ve already mentioned already. Kick people’s 401k contributions out, right? That is not an important thing. That’s not an essential thing right now. Take a hard look at where you’re spending money. While we got office cleaners, they’d come in and clean her opposite 500, 1500, 4,000 a month. Hey, pick up the broom and pick up the toilet scrubber. Right? Let’s put some people to work all, they’re not going to work for that. Well then, okay, then you don’t need to be paying them if they can’t actually jump in and take care of things at a time like this. Take a look at the expenses where you’re spending money. Um, make sure you hold onto the smart things. A lot of times, you know, it’s like we were talking about with, with Magnus, some of his clients, they were worried about their clients are going to start yanking money from their marketing spend and one of his clients is like, are you kidding? This is the time that the C and D level law firms are all going to pull out. So I want to stay on top because that’s going to separate us from everybody else, right? So you have to take a hard look at where you’re spending your money and also recognize what are the smart spins that you can put your money into. Things that keep pushing you, your leadership, your business along your team along, right? But if you’re spending money in areas that just aren’t that important, uh, you know, if you’re dropping hundreds of dollars on your coffee and you know, Hey guys, we would never do that. Dillanos, We love you guys. Uh, we do spend a lot of money on top of, around this place, right? But we have to make smart decisions. We have to go through all of those expenses and say, okay, what are we gonna put on hold? What are we gonna? What are we going to stop? But what are we not going to stop? Right? Stopping to stop where we’re spending money on growing our people, right? We still have coaches and stuff that we spend money on for our people to keep them growing, especially in, it’s on like this, to learn the things that they need to be doing to handle situations like this, right? So take a look at those expenses.

 

Take a hard look at if it gets absolutely desperate, do you, will pay cut, right? So think about it. Somebody might rather still take a pay cut for a couple of weeks, then take unemployment.It’s probably still, you know, for some, a lot of your folks, it still may be a better place for them to be then unemployment, right? The amount of money that they’re going to bring home on unemployment is probably considerably less. So look through all of these pieces first, make decisions, smart decisions based on all of that. Right? You might take a look at some of your vendors if you are leasing business space. I mean, I hate to even, I don’t know, maybe you have some conversations there with some of your, your vendor or some of the places that you have expenses and see if there’s an adjustment that they can do. Right? With that being said, um, you have to then remember this when it comes to any of the loans that you’re taking, any of the loans that you’re taking, you’re going to have to pay them back.

Okay. So, um, what we originally thought was, is that they were going to be interest free and then you would still have to pay the money back. However they’re coming with interest as far as I can tell now, I may be wrong, but the ones that I’ve seen, I saw the small business disaster loans the other day that were at 3.75. So I don’t know if they changed anything since, but point that I’m making is you’re still going to have to pay that back. Well, Chris, I, I gotta pay my people. Okay. Are they working and still creating revenue inside of the business? Nope. They’re not working at all. Then, here’s what I’m going to ask. Do I take a loan out to pay people who aren’t working? I don’t think that’s a smart idea. I would not do that. I love my people. I will take care of my people as long as I can. Uh, I’m, you know, I’m, I’ll do anything. However, if I am losing everything inside of the business, money’s not coming in. I’m not going to feel guilty that I take out a loan for a business that’s plummeting to pay people who aren’t working. Right. It doesn’t make sense. Your guilt does not make sense. And believe me, nobody’s going to it. If somebody looks at you and is like, I can’t believe you’re not paying me for not working, they probably shouldn’t be working at your business in the first place. Right?

So when it comes to getting the loans, I’m going to bypass as long as I won’t be getting a loan. I mean I’m, I will have to make other decisions if it ever gets to that place. I personally, some of you are in a place right now where, because of what your leveraged, it might be your only option to keep your doors open. So I’m going to say, if that’s where you are, then make smart decisions. Gain as much perspective as you possibly can. Don’t go taking out a lot of money. Don’t go blow this thing out of the water. Make as many adjustments as you possibly can, but ask yourself the question, what if you do take out that loan and you still end up closing your doors? Would that have been a better decision than shutting it down sooner? Right. So I know this is a difficult conversation. I know it’s a painful conversation, but, it’s a good thing to be through. Get insanely creative on things you can do before you ever do that. Get really creative, text your team on what they can do. Ask them for input, right? You might have people on your team that are going, Hey, I think we can do, make this thing over here and saw this right now. I think I’d be willing to do that. You know, I don’t know what it is, but a last ditch effort.

Joel: Yeah, no, that was super fantastic advice, especially with looking at the con side of thinking through this decision and looking at the consequences you may be choosing as a result of this. You’ve talked a lot about preparation and I think as we both know and we’ve lived a little bit, um, is that you don’t prepare for a crisis in the midst of the crisis. You prepare well before it. So, okay, let’s say I’m an owner and I’m here, okay, I’m a leader and I’m here and I haven’t prepared well point well taken Chris. I’ve got it, I’m receiving it. What am I need to do now? Once I’m recovering and I pick up the pieces, where do I need to focus when things sort of normalize and calm down some, what are the first one, two, three steps I should take to better prepare to make my business and my team healthier?

Chris: So again, I can’t say it enough. You should not be hearing shaming, from us on this. What you should be hearing is this is the best time to recognize. It’s not worth trying to impress people with growth. It’s not worth trying to make tons of money by taking massive risks, right? We don’t teach that. We teach people how to grow. And one of the lessons we’re going to be teaching at the Next Level, Leadership Live Event, the Live Stream is scaling your business with excellence, right? So we teach people how to do it the right way. So I want to make sure you’re not hearing, um, shaming. Oh my gosh, you should feel so bad about yourself. I understand why. We know why people make those decisions. We get it. We just think there’s a better way, right? So here’s what you do when all of this starts to rightsize do everything you can right now to keep busting it, keep doing what you’re doing or, you know, make some adjustments, make some change, do whatever you need to do. All this stuff we’ve already talked about.

What do you do going forward? I had a guy reach out to me and I, this is one example of 11 billion different versions of this. I had a guy reach out to me years ago, said, Chris, I make the best tacos man, because these things are off the hook. They’re amazing and people love these things. And I hear you talk about not doing debt and all that kind of stuff, but man, for you know, I can’t remember, it was a couple of hundred thousand or 300,000 I remember, he goes, man, I can get any restaurant up and running right now. And I’m like, dude, those tacos are so great. So think about this. This is what happens all the time when it comes to debt, right? We think that everybody wants our taco. You know, everybody’s going to love or tacos when we start selling our tacos, right?

We believe that everything’s going to go ballistic for it. And so we, you know, leverage the crap out of ourselves and then we have no clue how to market or we don’t know how to keep the business going or we don’t do a really good job, you know, making sure buying enough taco shells, whatever the crap, I said, if your tacos are so great, do this. Go buy a cart and get in every heavy populated area and sell your tacos like crazy. And if people really, really, really want them so much, they’ll keep coming back to you. And make enough money. Buy yourself a food truck. So I’m like crazy on that food truck. You know higher on some people do some more, buy more carts. I don’t care. When you’ve made tons of money, move up in soze, you’re actually doing the same kind of thing.

You’re getting a physical brick and well, I mean that’s a rolling cart. So not a brick and moter, but you’re putting yourself in a physical place. Join people to you in selling your product. If it’s good, people are going to come back, right? Grow it with what you have. So I’m saying that to say as you go forward, you need to be thinking, how do I back out of debt and start utilizing the cash that I have to grow the business? So what if I grow slower? What if I don’t grow at a much higher rates? What if I don’t grow super fast? What if I don’t put up the numbers that impress people that I get to tell them how many units we sold or how many millions of dollars we’ve made? What if I grow at a slower rate, but I’m doing it debt-free?

I’m doing a by putting money in the bank actually have cash. I have a great cash position. What does it look like? Well, the thing you gotta kick in the butt is your work. If your worth is trimming by the millions of dollars or hundreds of thousands or tens of millions, whatever it is that you’re making, then you’re going to have a really hard time following what I’m telling you right now. So you’ve got to get that out of the way. But if you will do this, then this will put you in a much better position. We’re in a position right now, the only changes that we’re really making, we’re not making any financial changes yet, but the only changes we’re making is, is pointing people in different directions right now. It will put you in a place that you can make decisions like that and you can continue to help people along with your products and services instead of freaking out and you know, taking out loans or worrying about how are you going to make money.

So start taking a hard look at how do I start eliminating the debt? How can I put more money on the debt? You know, what do I do? What do I need to remove? Um, you know, if you’re, if you’re spending a lot of money on amazing furniture so that your brick and mortar looks great, maybe you don’t, maybe you spend that money on the debt and start getting rid of the debt. When it comes to your people. Not everybody in our business has been through FPU. Is that accurate, Joel? I think there’s one or two still need to go through. Um, when you, you can actually be a hero to your team by how you’re going to race. I wanna know how you, your team a raise, you have them go through financial peace university. We paid for everybody to go through financial peace university.

We are a team member to go through their family to go through to learn how to handle their finances. It actually gives a person a rings above what you’re paying when they handle their finances well. And they actually don’t spend as much, they get rid of all that kind of stuff, right? So you can be a hero for your team by making sure that you don’t only make great financial decisions for your business, but you’d help them to make great financial decisions, right? So this is not an advertisement for Financial Peace University, but yet it’s an advertisement for Financial Peace University.

Dave’s building is empty right now, which like every, every other building, they’re all working remote as well, right? But you know what? What did they do? They help people change their lives with good stuff. So if your people are also making smart financial decisions then in times like this, if you do have to lay them off, if something goes wrong, if one of their family members gets sick, if, if their spouse, I mean, you know, you might, you have team members that have spouses that work in other places as well. What if they’re getting laid off at that place? Well, if they’ve handled their finances well, then that’s not going to hurt them in this battle, right? They’re going to be prepared. They’re going to have emergency funds. They’re going to be in a position that they are taking care of.