Harnessing the Power of Business Debt

In this episode of The Faces of Business, Tim Yurek, Founder and CEO of Tier 1 Capital, shares strategies on how to leverage business debt to accelerate growth.

In this episode of The Faces of Business, Tim Yurek, Founder and CEO of Tier 1 Capital, shares strategies on how to leverage business debt to accelerate growth.

Tim is an accomplished financial consultant with over 35 years of experience helping clients achieve their financial goals. He has helped thousands of people minimize risk, increase accessibility, and take control of their finances.

The Livestream begins with Damon’s unshakable commitment to exploring how to harness business debt’s power to fuel your company’s growth. Regarding the company’s growth, Tim believes improving the bottom line, cash flow, and access to capital for business owners is essential. He points out that many business owners unintentionally give away their capital, which he termed “wealth transfers.” Tim’s mission is to raise awareness about these wealth transfers and empower individuals to avoid them.

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Suggesting Tim starting from the beginning of his journey, Damon inquires the guest about his current venture.
Tim reveals that he currently works in financial services with a background in economics. He excels in pinpointing business problems and offering solutions, such as exit strategies, key employee incentives, and succession planning. Previously, he noticed that business owners often struggle to find the money to implement these solutions, even when they recognize the need.

Tim’s unique approach involves assessing five key financial areas: taxes, real estate, retirement, college funding, and major capital expenses.

Tim enlightens the audience through a real-life example of a retail business owner on the East Coast. This business was started by five siblings who lost their jobs when a national entity acquired a regional retail company they worked for. The partners used a bank loan of $2 million to start their store, paid it off in eight years, and then expanded to a second location. However, they struggled to buy out a partner when one got sick, even though they were 20 years into their business journey and generating $40 million in sales.

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Tim explains that they couldn’t access the necessary funds because they used their money inefficiently. He helped them realize that the same bank they used for financing was giving them their own money back and charging them interest and fees. Extending their loan repayment period freed up $35,000 per month and enabled them to handle all financial commitments. As a result, they now have $7 million in cash and are ahead of schedule for future buyouts.

Tim compares this to a “financial golf swing.” He described the financial services industry as providing tools (like golf clubs), but they often neglect to teach clients how to use them effectively. His approach involves showing clients how to use their money more efficiently to gain better control over their cash flow, access to capital, and the ability to fund essential initiatives without impacting their current lifestyle or increasing expenses.

Similarly, Tim addresses some common misconceptions about interest rates and how banks encourage people to focus on rates rather than cash flow. He described a scenario where individuals negotiate for a lower interest rate, thinking they’ve made a better deal. Still, the bank aims to shorten the loan term and recover their money more quickly.

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The guest provides another example involving a trucking business that paid cash for their vehicles but needed to fund a succession plan. Tim suggested financing the trucks over a longer term, freeing up cash flow to support the succession plan.

These two examples show how banks divert people’s attention from cash flow, leading to less favorable financial decisions.

As the course of Livestream progresses, Tim discusses a common mindset among individuals who prefer to pay cash for everything due to their aversion to paying interest. He illustrates this with an example of a $30,000 car purchase, where paying cash avoids $4,000 in interest. Yet, if they earned just a 4% return on that money, they would earn $5,000 in interest. This understanding, To Tim, can help people see that they might benefit more from financing at a lower interest rate and investing their cash to earn a higher return.

While discussing his satisfaction from helping clients, Tim highlights his ability to hold meetings with legal and finance teams because he’s well-prepared and focused on clients’ best interests. In the same breath, Tim challenges the conventional mindset of being debt-free. He poses a thought experiment about being a debtor or creditor, showing that having the money to pay off debt makes you effectively debt-free, even if you technically owe money.

Tim stresses the importance of financial preparedness and financial security, noting that it doesn’t necessarily mean paying off all your debt but being able to do so if desired. He mentions the current rise in interest rates, giving an example of a business owner who wanted to pay off a low-rate mortgage using all his available cash.

Likewise, Tim questions the wisdom of paying off 2.25% of debt only to borrow at a much higher rate in the future. He discusses the concept of good and bad debt, acknowledging he and his team give financial analyses to companies without charging fees because they want to help people make informed financial decisions.

Tim pays special regard to Nelson Nash, his mentor. He taught the guest to use capital to create more opportunities. Tim shows how clients who have access to their cash flow and sit on substantial cash reserves often encounter a rapid influx of opportunities. He provides an example of a client who initially struggled to find affordable opportunities but now has the luxury of choosing better options.

Damon mentions Mike Starcher’s question, exploring the concept of restructuring cash and its connection to actions like buying out a partner. The host wraps up the discussion by pointing out that many business owners desire growth but sometimes underestimate the cash needed for inventory, equipment, and accounts receivable. He praises Tim’s insights on the flexibility of managing debt.

The show ends with Damon thanking Tim for his time.

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ABOUT EXIT YOUR WAY®

Exit Your Way® provides a structured process and skilled resources to grow business value and allow business owners to leave with 2X+ more money when they are ready.

You can find more information about the Exit Your Way® process and our team on our website.

You can contact us by phone:  822-BIZ-EXIT (249-3948)   Or by Email:  info@exityourway.us

Find us on LinkedIn:  Damon PistulkaAndrew Cross

Find our Companies on LinkedIn: Exit Your Way®,  Cross Northwest Mergers & Acquisitions, Bowman digital Media 

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Other websites to check out:  Cross Northwest Mergers & AcquisitionsDamon PistulkaIra BowmanService Professionals Network (SPN)Fangled TechnologiesB2B TailDenver Consulting FirmWarren ResearchStellar Insight, Now CFO, Excel Management Systems  & Project Help You Grow

46:44
SUMMARY KEYWORDS
money, cash flow, business, pay, clients, cash, business owner, debt, years, people, damon, bank, financial security, question, buy, partners, tim, finance, give, loan
SPEAKERS
Damon Pistulka, Tim Yurek

Damon Pistulka 00:02
All right, everyone, welcome once again to the faces of business. I’m your host, Daymond Pustaka. And with me today, I am very excited because we’ve got Tim Urich from tier one capital, and we’re going to be talking about harnessing the power of business debt. And Tim, welcome.

Tim Yurek 00:24
Well, thanks for having me, Damon, it’s a pleasure to be here.

Damon Pistulka 00:28
Well, you said something before we got on, it’s not how you use your money, it’s or what you buy, it’s how you pay for it. So I think that’s, that’s gonna be a fun conversation we’re gonna have

Tim Yurek 00:41
well, yeah, so what, what we found is that if you really want to improve your bottom line, if you really want to improve your cash flow, and if you really want to improve your access to capital, the thing that’s holding you back, you know, as business owners, we always feel that there’s nothing, there’s not a problem that more sales can’t solve. True. Yep. What I found is, while that may be true, sometimes the key component is always how you’re using your capital. And just think about this, as business owners, we work so damn hard to make a profit. And it’s not easy, I don’t care what business you’re in, it might look easy to the outsider.

01:47
But if you’re a business owner, you know, damn, well, it’s

Tim Yurek 01:50
not easy, because you’re juggling, marketing, sales, operations, production, accounting, you name it right, then, then you’re putting out fires, because this employee is arguing with that employee, and you know, it’s like you’re a referee sometimes. So, you know, we all know how hard it is to juggle the demands of owning and running a business. But on top of that, what I found is, we shoot ourselves in the foot, by the way, we freely give away our capital. And I call that wealth transfers. And those wealth transfers, we’re, we’re committing, unknowingly, and unnecessarily, unknowingly means we don’t realize it, because let’s face it, there’s not a person on this podcast that’s listening. That would wake up in the morning and say, Hey, how can I screw myself up financially, today? Yeah. But we have been conditioned to accept as normal by the institutions, we’re dealing with the banks, the investment firms, the insurance companies, the government, large corporations that we deal with, to use our money in a way that benefits them to our detriment. And I’ve cracked the code on that. And we are our mission is to get that, that knowledge out there to as many people as possible.

Damon Pistulka 03:28
Very cool. So Tim, let’s, let’s go back, let’s back up a little bit. And kind of talk about how you got into doing this. Because I mean, we don’t just wake up one day and and say, I’m going to teach people how they’re going to use their money differently. And and you don’t wake up understanding that what you just said about we’re using money in a way that benefits the financial institutions rather than ourselves. Yeah, let’s start back and kind of talk about how this all began.

Tim Yurek 04:03
You know, that’s a great question. So what we so my background is in in finance is in financial services, I have a degree in degree in economics. And, you know, I got into financial services. And the financial services industry is really, really good at identifying problems and showing you how to solve those problems. For example, you want to set up an exit strategy for your business. Okay, this is what you’re going to have to put away in order to be in a position to have that exit. You have key people that you want to incentivize to keep around. Well, this is what it’s going to cost to keep them you have a some business partners, you want to set up a succession succession plan. This is what it’s going to cost to fully fund that buyout, in the event of somebody wants to basically just leave, or they die or become disabled. So we know what the problems are, we know how to pinpoint those problems. We know what the cost of those problems are, then we turn to the business owner and say, Hey, mister business owner, it’s going to cost $250,000 A year to solve this problem. And he looks at you like, Are you kidding me? If I had 250,000. Now, you wouldn’t be here today. And that’s the problem. Nobody’s showing the business owner how to find the money within their current cash flow, without interrupting their current lifestyle without having to increase revenue, or without having to decrease expenses. And that’s sort of the special sauce that I found. So to answer your question, I came in through it financial services. And I was really good at pinpointing problems. And I was laying out the the cost of the solutions. And I’m getting these looks from these business owners like, you know, what’s wrong with you? I don’t have that kind of money. And then I figured out well, okay, let me take a look at your finances. If I could find the money. To solve this problem, what would you do? Well, my gosh, I’d you know, I’d do the problem, I’d solve the problem. But I’m going to tell you, my CPA, ma in house, finance guy tell me that we’re already using our money efficiently. Yeah, you are, according to conventional wisdom. But let me take a look. So we take a look, we go back, we say okay, here, you need $200,000. Here’s 250. Well, how did you do that? Well, it’s right here. And we look at five areas taxes, how they’re paying for their real estate, how their funding their retirement, how they’re paying for their children’s college education. And finally, how they’re making and this is the big one, how they’re making major capital purchases. And that’s when we found out that it’s not what you buy, it’s how you pay for it that matters. And with a simple shift, you can control more money, more cash flow. And more importantly, you know, we always say whoever controls your cash flow, controls your life. And it’s, it’s so now if you’re in control of your cash flow, you’re in control of your life, whether that’s to set up your exit for business succession, or just to have a better lifestyle. So these were the things that we found. And I can give you do you want me to give you a couple examples of how we

Damon Pistulka 08:00
get some of the great

Tim Yurek 08:04
out here on the East Coast, there’s a company, it was a retail business. And what happened was, they were there were five siblings that worked in this business for another regional retail business. And that regional company sold out to a national entity. And that national entity looked at their the business, the various locations that they had purchased and determined that certain locations were just not large enough to justify, you know, running that operation. So it just so happened that these four siblings, or these five siblings, all worked in that one in one location that got closed down. So now, they’ve been working in this industry for about anywhere between 10 and 15 years. And now they’re out of a job. And it was the only thing they knew from their for their business career. So, they did a market feasibility study and saw that there was a need for a retail store in this particular neighborhood. So they went about and they went out and they they got a bank to buy into their dream. And they financed, they put up the bank put up $2 million, and they used it to capitalize their business. And then they by having the business capitalized, they were able to sell enough inventory to generate a profit and then take the profit and pay off the debt. And as you would imagine, they got so good at it, that they paid off a 20 year note in eight years. So Now they’re thinking, hey, we hit the lottery. So they increase their, their wages and you know, did did other things. And about two or three years later, they did another feasibility study and found out that there was the the local area could stand to have another store. So they went out. And now think about it, they didn’t have any access to capital. So what did they do? They went back to the bank, Hatton hand and said, Hey, can we please have more money? We want to, we want to open up a second location. And bank said, Sure, absolutely. So now fast forward, they’re into that second store about eight or nine years, one of the partners gets sick, and they need to buy him out. But they don’t have the cash or the cash flow to do that. Then, now, this is almost 20 years into their business history or their business journey. And none of them have any financial security. Yeah. And they realize that when this one brother got sick, oh gosh, if if this happens to me, I don’t know if the business can support this. So that’s where I came in. They wanted business succession, they wanted to pay for this one brother to be bought out. And they also wanted financial security. They wanted an exit strategy for the other four partners. So with my business training, my my industry training, what do I do? I say, Okay, here’s what it’s going to cost. And it was $300,000.25 grand a month. And I looked to the CFO, we were meeting in our conference room, I looked at the CFO and the CFO said, I said to her, how much money can you get your hands on, on a monthly basis? And she said, if we really tighten our belt, we could probably come up with five grand a month. I said, Well, it’s going to cost 25 grand a month. Yeah. And now the four partners are sitting there saying, well, we can’t do this. Again, having looked at their finances and their financials. I said, Well, what if I were to tell you that you already have the money within your current cash flow, it’s just being used inefficiently. And their reaction, Damon was, how could that be? Our CPA says, you know, we’re doing everything right. I said, Okay. Well, if you’re doing everything, right, how come you can’t buy out your brother? How much? How much money? Can you get your hands on right now? They did. They at the time, they did 40 million in sales? How much of that money? Can you get your hands on right now? It was less than $50,000. Wow. So I said but I could find it in your in your cash flow. Okay, show us. And here’s all we did. Most business? Well, so So here’s how I set it up. I said, Okay, when you opened your first location, did you have the money to finance that? No. So what do you do? We went to the bank? What bank did you use? They told us the bank told me the bank? I said, Okay, you pay that off in eight years? Yeah. Okay. When you open the second location, what bank did you use? And they said the same bank? And this was the question that sort of opened their eyes. Whose money did they give you to, to finance the second location. And I just heard crickets in the boardroom. And after it seemed like a long time, but it was probably, I don’t know, 12 or 15 seconds. The president of the company bangs his fist on the table and says, Those son of a guns. He was the son of a guns, they gave us our own money back and charged us interest in fees in order to do it. He said, What do we got to do to fix this? I said real simple. All your debts going to be paid off in six years, let’s extend the amortization schedule to 10 years. And within four and a half years, if you do this, you’ll have enough cash to pay off the remaining five and a half years left on the amortization schedule if you want. But I would tell you don’t do that. Just keep keep paying it at that rate and put more more money away. And that’s what we did. We freed up not 20 $80,000 per month, $35,000 per month. And that was enough to pay for everything. Now, here’s, here’s the back story to that. Because we changed their paradigm on how they were using their money. Right now, this company that couldn’t put their hands on $50,000, maybe seven or eight years ago. They’re sitting on $7 million of cash. And they’re doing, they already bought out another partner. And they’re, they’re, they’re preparing, they have three more partners to, you know, to buy out, and they’re way ahead of schedule. So the point is, it’s not. We call this the financial golf swing, it’s not where your money is, it’s how you’re using your money. Right. So how we made this golf analogy was the financial services industry sells products, those products are the equivalent of golf clubs. But nobody’s teaching you how to use those golf clubs. And that’s what we do for our clients, we show them how to use their money in a more efficient way. So that they have more control of their cash flow, more access to their capital, and they can fund the initiatives that need to be funded. So with that particular company, they were able to buy out the brother setup financial security for the other four partners, an exit strategy. And now they’re not sure saddling this the next generation, which is poised to take over with unnecessary debt. It’s really ended, and none of this Damon had any impact on their current lifestyle, on their current expenses, or they didn’t have to increase their revenue in order to do this.

Damon Pistulka 17:08
Yeah. Yeah. That’s amazing. That’s amazing. So you’ve helped people do this, and this is a great example of how it can get their cash flow better. And and really, without changing their lifestyle, as you said, what are some of the things that you’ve learned from the traditional banks and everything else is they see this happening? What are what are what are they telling these people?

Tim Yurek 17:41
Okay. So, again, they have the financial institutions have conditioned us to accept as normal, something that is not normal for us, it’s actually against our best interest. But it’s in the best interest of those institutions. Let me give you an example. There’s a lot of factors that you should consider when you’re taking a loan from a bank. Yeah. But we have been trained to consider one factor and one factor only when we’re shopping for money. What is it?

Damon Pistulka 18:22
The payment, the terms,

Tim Yurek 18:24
the interest rate, the interest rate, right? Yeah. So the conversation goes something like this. You want to get a loan, a business loan, a car, loan, whatever, a mortgage. This is the rate. Okay, then you bang your your fist on the on the desk, and you say, my family has been doing business with this bank for 30 years. This is an insult that you’re charging me six and a half percent. I want a better rate. Why? Because that’s the way that they the bank trained us. They trained us to shop for rates. And it’s not the rate that’s killing us. It’s the cash flow. So here’s what the bank says to you. Well, Damon, well, we can, we can give you a five and a half percent interest rate. On this, let’s say it’s a car loan. But instead of paying it off in five years, you have to pay it off in four. And then you say, Okay, that’s a deal. And then you’re looking at your wife and you say, See that honey, I got us a better rate. And the bank is the bankers laughing and he’s saying, okay, Damon, we’re gonna give it to you our way. Yeah, right. And that’s the key, they’re gonna give it to you our way. And their way is, now they want to get their money back quicker. Why? Because then they could turn it around, turn it over, and loan it again. So they take our eye off the ball. Because if we kept our eye on the ball, we would be more concerned about cash flow. Yeah. But they focus us on the interest rate. So our eyes off the ball. And then all of a sudden, we’re making foolish foolish decisions. Another thing, so here’s another thing. We had another business, it was a trucking business. And they paid cash for all their trucks and those trucks. Oh, yeah. They’re not cheap. Oh, yeah. So what they would do is they would pay cash, and then start putting money away after that. And then in three years, buy another truck and they kept turning, they would turn their fleet over, they would keep their, their their trucks for about six or seven years. trade them in when they got six, seven years old. And then but they pay cash all the time. And I was explaining to this business owner they needed. So here’s another company, they needed to fund a succession plan, it was two partners. And I said, Well, here’s what it’s going to cost. There was, I don’t know, it was like $80,000 a year. And they’re like, well, we don’t we don’t have that kind of money. I said, Well, if I could find the money, within your current cash flow, what would you do? Well, we would fund this plan. I said, Okay, I found the money. Here it is. And it was real simple. I said, instead of buying a truck every three years and paying cash, what if we financed and paid it off? In five years? That would free up enough cash flow? It was about $6,500 per month, you would have to come up with about 500 bucks a month to fund this succession plan? Oh, my God, how do we do it? Where do we sign up? But it’s just it’s just a change in how you do things. And again, I mean, I love talking about this, because this is what I do every day. And it’s so amazing when you I mean, we literally see the light bulb go on for people. And they and they realize it. It’s not like they’re saying, Okay, I trust you. And I hope this works out. They’re seeing results the very next month. Yeah, because now they got they got their hands on more and more of their cash flow, and more and more of their hard earned profits. Does that make sense?

Damon Pistulka 22:40
Oh, it does? It does. Because if you’re if you’re using your money, right, like you said, you can use your money more wisely, the same $100? Because it’s not put into, you know, it’s not going here when it really doesn’t need to be going here and I can allocate it someplace else. It’s yeah. Yeah. And this is especially, you know, we run into a lot of business, like you said, like a trucking business? Well, we have no debt. We have no debt. Well, how much? You know, what, what’s outside? Well, we’d have no debt, you know, they haven’t really taken the time to think about what that decision, you know, by buying all your equipment with cash by doing everything paying, you’re paying your vendors, you know, right, when you get the bill even, that’s a simple thing. And these kinds of things where you that, that the way you use your money, as you said, can affect how you’re doing these things. So tremendously. So

Tim Yurek 23:39
we call so when I meet some, I love to talk to people who who pay cash for everything. Because so and why do they do that? People who pay cash, pay cash, because they hate paying interest. And they’re so obsessed about what they see. So when they go to buy a car, or a truck or a piece of equipment or whatever, and they get the financing estimate, and it says, Okay, this $50,000 I’ll use something I know, I know the rates on this $30,000 car, you’re gonna pay back $4,000 in interest. So they’re so focused on the interest that they’re going to pay, and it tears them apart. So what do they do? They say, I’m not paying interest, I’m gonna pay cash. What they don’t see is that if they were earning the same amount of, well, even less interest, so a 6% loan on a $30,000 purchase, would have a payment of 566 per month for 60 months. So you’re going to pay back $4,000 in interest 3398 or something that like had an interest. But if you could earn 4% on your money, just 4% you would earn $5,200 in interest, I don’t know the exact numbers, but it’s Yeah, $5,000. So you’re all torn up about paying about paying $4,000 in interest. And because you don’t see the interest you’re not earning, it doesn’t bother you that you’re, you’re, you’re given up $5,000 in interest, it doesn’t make sense. And this is what we show folks, that there’s a difference between compound interest that grows on an increasing balance and amortize the interest that’s paid on a declining balance. That’s why you can pay less interest at a lower interest rate at a higher interest rate than you would have earned on a lower interest rate compounding. And so this is what we sort of the light we shed, or we shine on how they’re using their money.

Damon Pistulka 26:05
That’s really cool. That’s really cool. So you had the example with the five siblings where they were able to buy themselves out by the other partners out, save the money, do the kinds of things, you know, that was a $40 million business now. That’s a lot of people don’t have $40 million businesses need to look across the United States. You know, the, I think it’s something like the average business has less than 25 employees, like 80, or 90% of them do. So what what are some, some things that they might want to think about?

Tim Yurek 26:39
That’s a great question. So I shared with you in the pre call. We had a client who owned a repair garage, an auto repair garage, and he was saving money. And we sort of fast tracked him about a 10 years ago. And he was able to put aside a little over $1.8 million. Now, this guy had the money in his cash flow, he always had the wherewithal to do that. He was just using his money and efficiently paying cash. He was another one, he was a big cash payer. And when we showed him how that was holding him back, he made some changes. Well, about almost a year ago, he was able to sell his business for twice what his best offer was previously. And he was able to do it because he didn’t need the sale of that business to be the crown jewel of his retirement, he had a lot of money set aside, because of what we had, we had put, you know, the plans that we had put into effect for him. And then he was able to sell his business get wait for a really good offer. And he sold his business. And now they’re in a really strong position financially. Because their financial, their retirement, or their financial security wasn’t predicated solely on the sale of their business. And, you know, this was this was a less than a million dollar business, for sure.

Damon Pistulka 28:21
Wow. That’s something that’s something. So you’ve seen this happen over and over helping people do this? What is the thing that you just makes you giggle about doing this? This makes you just happy.

Tim Yurek 28:45
So here’s the deal. I’m a poor kid from Wyoming, Pennsylvania. And it just tickles me to death to say, to see that, you know, these I could go into a boardroom and I’m not intimidated. I can I can go into and sit down with with the legal team and the and the finance team and hold my own against them. And I’m not, I’m not meaning to make them look bad. But they’re not prepared because they’re think they’re the way they think is not in literally not in their clients best interest. The things that they’re they’re recommending. And I go in incredibly well prepared, so that when we’re making these recommendations, we’re not just saying, Hey, we freed up X amount of money, where it’s we freed up X amount of money, here’s the areas we did it and these are all the reasons why this is where you’re losing control. And these are all the reasons why this is where you’re losing control. So we’re, we’re not. And I will tell you, I had one, one CPA of a client of mine came up to me after the meeting that he was brought in. And he wasn’t brought in to refute anything he was just brought into say, Okay, does this make sense? And I’ll never forget, he said, I’m embarrassed. And I said, why? And he said, I should have known this. And I said to him, Brian, that was his name. I said, Brian, is there anything that I presented today that you didn’t know? He said, No. And I said, All this was is my my training and focus versus your training and focus, your training and focus is on one is in one area. My training and focus is on a little bit of a broader scope. We don’t only look at saving our client taxes today, we look at saving taxes everywhere along the way, prospectively. And I said your your focus is on making sure that he or she pays as little in taxes this year as possible. And we’re looking at we’re more like a tax strategists. We’re looking down the road. But as far as the cash flow is concerned, do we have any issues? He goes, Oh, no, absolutely. That all makes sense. I said, I get it. But here’s the problem. Now, when we extend the amortization schedule on our clients debt, does he get more or less tax deductions? He goes less. I said, Isn’t that going to help him down the road? He goes, Yeah, absolutely. And this is where I sort of, you know, that my response to him was, then why are you recommending he be in a race to get out of debt? And he said, Well, he wants to be debt free. I said he wanted to be debt free, because he didn’t know that there was a better way. And see, this is the issue. I think that at the end of the day, a lot of financial people, a lot of business people don’t understand what debt is, right. So think of it this way. If I owe a million dollars, and I don’t have a million dollars, am I a debtor or creditor? I owe a million dollars. I don’t have a million dollars. Am I a debtor or creditor? I don’t know. You’re a debtor. Yeah. Right. Yeah, yeah. Now, if I owe a million dollars, and I have a million dollars, am I a debtor or creditor? Now, technically, I’m a debtor. But you’re even, I could pay that off anytime I want.

Damon Pistulka 32:59
I see exactly what you’re saying. And that’s the

Tim Yurek 33:01
power in financial preparedness. It’s not financial preparedness, financial security, isn’t paying off your debt. It’s being in a position to do so if you so choose. And here’s so so. So think about this interest rates have just risen. We’re at the highest rates we’ve been in almost 15 years. Yet I have clients or prospects who come to me. I have this business owner in Oklahoma come to me about three weeks ago, talking about wanting to pay off his mortgage on his home. He’s got a rate of 2.25%. And I said, Well, okay, if you do that, how much cash will you have? He goes, Well, I’ll use all my cash to pay it off. What if you need to buy a car? What if you need to? What if? What if you want to expand your business? What if you need to buy additional equipment? What if you want to recruit a stud salesmen? Where are you going to get the money? He goes all borrow it? Do you know what interest rates are now? No. Well, I’ll tell you on a business loan, it’s about seven and a half, eight. At the time. It was seven and a half. It’s eight and a half percent now. Yeah. So I said to him, does it make sense to pay off two and a quarter percent debt? Only to borrow at seven and a half percent? He said no. I said why are we even talking about this? But again, this is just the focus that people have incorrect understanding of what debt is and what’s good to end there’s there’s also good debt and bad debt. So you know, we have these discussions. And here’s the deal, like we don’t charge anything and I have colleagues of mine that say, you know, you’re giving away the store, why are you doing that? This is just the way I do it. And and you know, so we’ll do an analysis for a company find out, free up all this money. Listen, if I’m if I’m the guy that’s freeing up the money, and you want to do a business succession plan or a big business exit strategy, or you just want to do some financial security for yourself, I would think that you’re gonna want to do it with a guy that knows what the hell he’s doing. Yeah. Right. And that’s so and, you know, that’s the way we get in the door. So yeah, we give away the store. But I, I sleep really well at night, knowing that I’m helping people.

Damon Pistulka 35:45
Yeah. What was the thing that surprised you the most about doing what you’re doing?

Tim Yurek 35:51
How logical it is. So everything we do is based on sound economic strategies. But so what I will tell you, the thing that surprises me is, I’m swimming upstream against the marketing machines that are investment firms, insurance companies, banks, the government, everybody’s telling people that you do things in a different way. And then these so called financial gurus are telling people, you know, don’t do this, don’t do that. Okay, fine. But you know, you’re not going to have a good time doing it the way they recommend, I could tell you that. It’s funny. There’s a saying, my mentor, Nelson Nash said to me one time, he said, Tim, when you have access to capital, opportunities will find you. And Damon, you have no idea how, you know, pressured that was, and I see it every day for myself. And I have clients that because they’re sitting on so much cash, and they have access to so much more of their cash flow. Opportunities are coming across their desks, at a rapid pace. And the great thing is like, there was this one client client of ours, he, you know, was frustrated that he didn’t have many opportunities, and the ones he did have, he couldn’t afford. And now things that he would have jumped at, he’s turning his nose to, because he knows there’s better opportunities out there. And, you know, I always say, like, opportunities are like buses. If you miss one, there’s going to be another one and a half hour. And sure, sure enough, that’s the way it’s been working. So hopefully that makes sense. But that’s the thing that that sort of was was surprising.

Damon Pistulka 38:00
Yep. Yep. We do have one. Mike starcher. He has a question here. It’s yeah. He said, he gets the idea of restriction. Wait, the company is using cash, restructure the castle and looking buying out a partner? So yeah, that’s one of the things you mentioned that earlier, it’s talking about, that’s how they did that. No other companies, yeah, by giving you the money to do the kinds of things like that, but and that’s one of the one of the ways but I think one of the things that you’re really talking about too is when you look at how you’re working, and this is we run this all the time, one of the things we run into all the time with business owners is they want to grow, they think it’s awesome, because they’re going to add on sales, but they don’t understand that every dollar that they grow, is going to take some money to grow. They don’t really think that it’s either inventory, it’s equipment, it’s AR It’s there’s all kinds of cash it takes to grow. And I think what you’re talking about is so cool, because if I’m that same person and I’m buying my equipment for buying my trucks for cash, like your example and that’s every time I have enough cash I’m just I’m sure well if I grow my business, it’s taking cash to but if I’m putting my money over here to buy my trucks in cash, I can’t grow my business fast because I you run out of cash, there’s no more cash at a certain point. And honestly, that clips the wings off of growth with a lot of companies if they don’t have the cash to grow or and because that just takes money to grow. Yeah, and what you’re saying is is an excellent way to do that and help everything else you’re trying to do as well. Like you said it could be buying out a partner or it could be something else that you can do to really do it and just like the the example you said you know someone that’s got a million dollars in a million dollars debt or your debtor or creditor really, really neither, because you can pay it off when you want.

Tim Yurek 40:04
And that’s where the power is. And when people see that, and listen, this is not this is not rocket science, is it? Right. And that’s the thing that that is sort of shocking is like, it’s so darn simple. Why don’t people do it? But, again, we do things we’ve been, I always say is we’ve been conditioned to do things in a way that’s not in our best interest.

Damon Pistulka 40:31
Yeah, yeah, good stuff. Good stuff. Well, if people want to talk to you, Tim, where’s the best place for them to find you? Is it on your website? What’s the what’s the best place to find the guys?

Tim Yurek 40:44
Yeah, they can go to our website. It’s www dot tier one capital.com. And that’s T i e, r, the digit one C A P i t a l.com. And we have a buyer’s guide. This the six critical questions to ask when looking for advice from on succession, and executive benefit planning? And if they go to tier one capital.com/the faces of business, they could pick up that free resource.

Damon Pistulka 41:23
Awesome, awesome. Well, Tim, it’s been it’s been incredible getting to talk to about this. And I know there’s been people listening that that’ll hopefully, reach out if they don’t understand maybe rethink the way that they’re looking at their debt, and cash flow, to really understand that looking at interest rates, I think it was amazing, that piece that you talked about, with the car and the compounding interest on the other side of it, and really something. So just thanks so much for being here today.

Tim Yurek 41:56
Well, it’s again, it’s been my pleasure, and really enjoyed this conversation. And, you know, hopefully, something hit with somebody. And if you have questions, listen, there’s no cost or obligation. And I gotta tell you, I’m not a high pressure guy. So yeah, you know, my philosophy always has been if your final act is to hang yourself, what do you do for an encore? And so I, you know, it’s funny, my daughter works with me. And she started, she just started her ninth year with us. Oh, wow. And she, you know, she, when she came in, she was reading all the sales books and classes and stuff. And she goes, Daddy, you don’t? You don’t? Like you don’t close? I said, No, I know. And I said, Well, I think we’re gonna be okay. And she said, Well, you know, you’re supposed to close. I said, Listen, when people are ready, they’ll do it. And we will just present it in a way that it’s a logical step to do it. So. And I can’t tell you how many times this has happened. I mean, it’s a lot. So we make the presentation. And then here’s our clothes. The client says, Okay, how do we get started? That’s my close. And I think when you do things in a logical way, and listen, this doesn’t happen overnight, right? This, this are our processes is theirs, it’s highly educational. And because think about it, you’ve been doing things for 3040 years, that these are habit, these are hard habits to break. So we’re going to give you the the economic reasoning and the logic behind our recommendation. And then you’re going to sit there and chew on it and digest it. And then you’re gonna probably come back with questions and we’ll answer those questions. And then we get to the point where, okay, yeah. Okay, Tim, what’s the next step? Or how do we get started or stuff like that? And I prefer to do business that way. Because listen, when I’m out buying something, whether it’s a car or you know, software, something, I hate to be pressured. Hate to hate it. And I’m sure you know, there’s

Damon Pistulka 44:24
100% All right. I want zero pressure, then,

Tim Yurek 44:28
yeah, I want to be able to, you know, I want to be able to make the decision, but I need all the information. And this is the problem. People have been making decisions with not all the information going back to that thing on loans, right. Yeah, we’ve been conditioned to buy money to shop for money using one criteria and one criteria only and that’s interest rate. But now when you think about cash flow, interest rate, tax deductions, et cetera. Well, now you’re you’ve sort of expanded your knowledge. And now the decision isn’t, oh, I’ll take the lowest interest rate. Or maybe it’s I’ll take the the the option that allows me to be in greater control of my cash flow. And that’s the answer we’re hoping for, for our clients. Because listen, these, these clients of ours, yeah, they, they, they put some money in the plans that we recommend, but the excess money that they end up having, because they we flip that switch for them, all of a sudden, it’s like, significantly greater than what they’re putting away for what you know, in our plans. Yeah. All because we changed how they’re using their money and how they’re looking at things. Yeah.

Damon Pistulka 45:52
That’s awesome. That’s awesome. Well, Tim, thanks so much for being here today. It’s been really just an educational experience and having you and I just wanted to thank the listeners, I think, Mike for dropping the question. I know we get lots of people that are listening here, not dropping questions, go to www dot tier one. It’s t e r one, the number one capital.com. And if you are on there, and you look forward slash the faces of business, you can get your resource guide your free resource guide from from Tim and the others. They’re at tier one. But thanks so much for being here today. Tim, thanks everyone else for for listening, and we’ll be back again next week.

Tim Yurek 46:37
Thanks for having me, Damon.

Damon Pistulka 46:39
You bet. hang out for a moment, Tim and we’ll talk sure

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