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Profit first lessons from a talented businessman and founding Parter of Ascend Partners, Trey Taylor

Episode 148: Profit first lessons from a talented businessman and founding Parter of Ascend Partners, Trey Taylor

 

The Profit First REI Podcast

January 19, 2023

David Richter 

Summary:

 

Profit First isn’t just a method for struggling business owners. Our guest today is proof that Profit First is a system that can benefit even the most successful entrepreneurs, giving them a better way to manage their cash flow. 

 

Trey Taylor is a talented businessman, speaker, and executive leader. He holds the positions of CEO at Taylor Insurance Services, Managing Director at trinity | blue consulting, and Founding Partner at Ascend Partners. He is also the author of “A CEO Only Does Three Things,” a book I’ve had the pleasure of reading and applying in my career.

 

Today, he joins us to talk about his career, the problems he encountered along the way, the importance of partnership, and how Profit First revolutionized his business. Catch the full discussion here!

 

Key Takeaways:
[00:41] Introducing Trey Taylor

[07:11] How Profit First Fits Into His Business 

[08:27] Problems He Encountered Before Profit First

[11:33] The Effect of Implementing Profit First

[16:12] How Profit First Gives You a Better Perspective on Money Management

[20:30] On His Real Estate Business, His New Partnership, and Implementing Profit First Into It

[26:41] On His Book: “A CEO Only Does Three Things”

[29:01] On Using His Book and the Profit First for REI Book to Get as a Way to Start Conversations Between Partners About Money

[35:46] Advice for People Who Want to Get Into Real Estate Investing

[40:13] Connect With Trey

 

Quotes:

[8:10] “ I remember reading it on an airplane. I came home, got my accountant and bookkeeper together, and we sat down and revamped our entire financial picture.”

[23:21] “Yeah, I think it’s all about over; communicating everything before you make the decision. Partnerships are marriages, in almost every sense of the word, they are legal unions…and so you need to have a way to get into that, which should be based on shared values that are authentic to both of you.”

[36:54] “Don’t wrestle with the ideas [once] they’ve been proven out, just implement them…don’t study on [Profit First] for too long, just get it into place, and start letting it benefit you, and growing your business through that.”

 

Website: trey-taylor.com
Consulting Website: https://trinity-blue.com/
Newsletter: https://plantyourflag.substack.com/
Get a copy of his book “A CEO Only Does Three Things”: https://www.amazon.com/CEO-Only-Does-Three-Things-ebook/dp/B08L8FRQQ8

 

Tired of living deal to deal? 

If you are a real estate investor or business owner who is tired of living deal to deal, and want to double your profits, head over here to book your no-obligation discovery call with me. Either myself or someone from my team will hop on a short call with you to get clear on your business goals, remove any obstacles holding you back, and map out a game plan to help you finally start keeping more of the money you work so hard to make. – David 



Transcription:

 

Trey Taylor:

So I remember reading it on an airplane. I came home, got my accountant and a bookkeeper together, and, uh, we sat down and, uh, and revamped our entire financial picture.

Outro:

If you’re a real estate investor who’s sick and tired of living, deal to deal, then welcome home. Hear from everyday real estate investors just like you, and discover how they’ve completely transformed their business by taking a profit First approach. This is the Profit first for REI podcast, where we believe revenue is vanity. Profit is sanity. It’s time to start making profit a habit in your business. So here’s your host, David Richter,

David Richter:

Trey Taylor. He is one of my personal friends from the Masterminds that I’ve gone to, but this guy, I tell you what, you’re in for a real treat today because he goes deep into how Profit First has completely revolutionized his business. Several times he even fell off the bandwagon. I mean, if you have ever gone down that road of like you’ve started and implemented, but then you fell away from it, he’s your guy because he’s done that, he’s gone through that with his businesses. He just opened a new real estate investing JV partnership too, and he goes into what makes a great partnership, what keeps a great partnership, how to dissolve a great, you know, a partnership that didn’t, that wasn’t so great. He also talks about how to implement Profit First right away in a real estate business when you first get started, and what he did and how he took the guidance from Profit First for real estate investing.

So this one, I believe, can help you launch you into what you need, the bare bottom shelf of getting started with Profit First for real estate investing in hearing what in the world was happening with him in his businesses before Profit First. And it was a long time too, 10 or 11 years before he started implementing it, and then seeing what happened to his life after it and how he feels now. So really excited for you to hear him. He’s also written a book that you will need to pay attention to the episode because I mentioned it several times. It was one of the most life-changing books I’ve read. So please read that book, get it. But listen to this episode and I promise you’re gonna get a ton of value from Trey. The Trey Taylor is here. We have him in the studio right now. We are recording live. Trey, it is so great to see you. This is one of my, uh, someone who I look up to greatly over the last few years of being in several different masterminds. So, Trey, thanks for being on the show.

Trey Taylor:

David, what a thrill to be with you brother. Just, uh, so happy to see the growth that you’ve had in your business with the book and all that. And, and just flattered man, that you would ask, uh, that I could come on the show and be with you. Really appreciate that.

David Richter:

Yeah, which is a totally funny story. He’s saying that to be very nice, but he had to shame me into it. Just kidding.

Trey Taylor:

<laugh>,

David Richter:

I love Trey. I needed to get him on. Honestly. He’s one of the ones where I should have had him on a long time ago. He’s read the book Prophet First. He’s implemented, he’s read my book too. I mean, like, he checks all the boxes of why someone should be on here, but here’s a value tip for you right away. If you’ve read Prophet First and you love those books and you’re listening to this, go out and buy his book right now. A c e o only does three things. It is the framework. I still wake up and think of every day when I’m the c e o that you do three things if you’re the owner. And I don’t care if you’re like, just starting out in real estate investing and haven’t done the first deal, like this is how you should be thinking long term, or if you’re doing a million dollars a year plus. You know, like make sure that you have this framework in your mind. So I just wanted to give a huge shoutout, cuz that’s been a book that’s really helped and impacted me. So just want to give that value right outta the gate. So, Trey, thank you for writing that book too, because I know the writing process now and be like writing a legitimate book,

Trey Taylor:

<laugh>,

David Richter:

It’s no joke. So thank you for doing that.

Trey Taylor:

Yeah, no, I appreciate that. I appreciate the shout out for the book. The book is really having a moment right now. We’re CEOs, uh, or sort of gifting it to each other. Uh, it’s been called the most gifted book Inside the Ink 5,000. Wow. Whether that’s true or not, I don’t know, but I will continue to repeat that until somebody tells me it’s not true.

David Richter:

<laugh>.

Trey Taylor:

Uh, yeah. So it’s really having a moment and I appreciate, uh, the fact that, uh, it had an impact on you.

David Richter:

So another thing that’s connected me with Trey too is his love for Mr. Rogers, because that’s kind of like both of our, one of our role models in our lives. And he said he spoke those words like from one of his first presentations. So Trey’s got a lot of just, you want to know him, not just from a business level, but on a personal level as well too. So Trey, do you want to go into that at all as how he made an impact? Then we can get into the profit First man.

Trey Taylor:

Yeah, I grew up with Mr. I mean, I’m older than you, so I grew up, you know, with Mr. Rogers live, you know? Yeah. And it was a bad day in my household if I didn’t get to watch Mr. Ro Rogers and, uh, king Friday and all of that. I came across later, you know, as I was an adult, I came across this, uh, this article about him that pointed out that he never won and in me.

David Richter:

Hmm.

Trey Taylor:

And it bothered me so much, you know, that all these sort of soap opera stars and Oprah and all of these people had won Emmys, and I’m sure they’ve had fulfilling careers and created value where they could, but Mr. Rogers didn’t. I mean, he parented and grand parented two, three generations of Americans. He single handedly saved CBS’s funding in the late sixties and early seventies.

David Richter:

Yeah.

Trey Taylor:

And, but he never won an Oscar, uh, sorry, an Emmy. And so when he was getting ready to retire, they remembered that they realized that whoever makes those decisions, and so they gave him a lifetime achievement award. And you can watch that speech that he gives on YouTube. He could find it on YouTube. And it is chilling how perfect and balanced and integrated his personality is. It really sits you back in your chair and says, wow. He really was one of the great ones because in that speech, he doesn’t think, oh, thank me and thank my God and thank all these people that made me great. He said, uh, let’s talk about the people that made you great. And he turns the camera back on the audience and makes people think about who sacrificed for them so that they could be at the height of their career. And it’s a Zen master move, and I love talking about it. And as you know, David,

David Richter:

Yes,

Trey Taylor:

I talk about it from the stage a good bit. Yeah.

David Richter:

Yeah. So that’s just a part of who Trey is. You’re getting just a brief snapshot here. I mean, he’s also super successful. He’s a c e o, he’s a consultant. Like he does a lot of different things and has taken a business and grown it and invest in a lot of different businesses. I think even Grant Cardone called you like the smartest person in the room at one point, and one of those, like when, uh, what was that app? I can’t even remember.

Trey Taylor:

He did, yeah. We were on Clubhouse at that point.

David Richter:

Clubhouse.

Trey Taylor:

We were right in a shared room together, and a bunch of my guys and his guys were in the room and we were having a debate, and I think I kind of won a point on the debate and, and he said, Hey, Trey Taylor’s the smartest guy in the room. He probably regrets saying that

David Richter:

<Laugh>

Trey Taylor:

Now because I repeat it so often, but, uh,

David Richter:

right.

Trey Taylor:

I appreciate you.

David Richter:

It’s your tagline.

It sits on your desk like they’re the smartest man in the room by Grant Cardone, you know, like,

Trey Taylor:

That’s right. I have t-shirts I give him out. Yeah.

David Richter:

<laugh>. Oh man. So being super successful with all the different businesses, being a fan of Mr. Rogers, really making sure that you have exactly what you need for your businesses. And writing this book, getting out, being the CEO almost to CEOs, where did Profit First fit into this? Like where did you hear about it then? Where did you, you know, like why did you implement Profit First?

Trey Taylor:

Yeah, I’ll tell you, I implemented it because I had the problems described in the book, and I can’t remember who recommended it to me, but I was in a mastermind meeting and one of the people in that meeting said, you need to read this book. This is such a great book. You need to read it. It’ll affect your business, and that sort of thing. And as a side note, David, I know you’re as in as many masterminds as I am and, and just group conversations, that’s a habit that we should adopt, right? Of just stopping the clock and saying, what are you guys reading? What should I be reading? Uh, it’s just such a gift that we can give each other in those kinds of, of meetings. And this book is a testament to that. So I remember reading it on an airplane. I came home, got my accountant and a bookkeeper together, and, uh, we sat down and revamped our entire financial picture.

David Richter:

So then you started implementing it. Let me ask you, before we go into like what it looked like after you implemented it. What did the business look like before you implemented Profit First as far as capital goes

Trey Taylor:

yeah.

David Richter:

And like those problems? Can we go a little bit deeper there?

Trey Taylor:

Yeah, absolutely. So in the insurance business, it’s a very good business, uh, to be in over the long term because the cash flow always exceeds your cash outlay to generate new business, right? So that’s the perfect proposition to be in. Um, and so we were in that bus, we still are in that business. We’re approaching 55 years as a family in that business. And, um, and that’s the kind of insurance business you want to own is a 50 year old one with all the renewals built in and all of the legacy clients and, uh, that sort of thing. And so we had that business, but every time I would go to the Well to wanna spend the money in the business to grow the business, or even to do something on a personal nature, it was already spent, you know mm-hmm.

David Richter:

<affirmative>,

Trey Taylor:

Because we were spending on the fly and we were running our finances exactly backwards. We would pay our bills and live on what was left. And, uh, and the title of the book spoke to me almost immediately, and I got so excited about getting into it and saying, wait a minute. We need to pay ourselves first. We need to separate. We were constantly chasing a tax bill every April the 15th, you know, we would have to reallocate funds and how do we pay? We handle all of that upfront now. And, uh, it’s just, uh, you know, you can’t even overestimate the amount of stress that saves in an executive’s life.

David Richter:

So how long did you live like that? Like in the, going to the well and like, ah, shoot, it’s, you know, there’s no money there. I can’t reinvest, or I can’t do this. Was that years’s worth of like, Penton?

Trey Taylor:

That was years frustration. Yeah, that was years. I’ve been in this role for, uh, 17 years now. Oh, that was probably the first 10 to 11 years of being there. I don’t wanna poor mouth and say that we had, um, you know, uh, financial troubles or anything of that nature. We never did, but we also didn’t get as far down the path as we could have if we had simply been smarter about it from the very beginning. Um, you know, we would’ve built equity in a lot of different projects in a lot of different ways if we had thought about money in the right way from the beginning.

David Richter:

Yeah. Now, you may not have ever crossed this point, but during those first 10 to 11 years kind of living like that, did you ever think about throwing in the towel and just be like, this is ridiculous, you know, like, can’t do stuff for myself or for the business and what’s going on?

Trey Taylor:

It didn’t get dire like that for me.

David Richter:

Okay.

Trey Taylor:

Uh, because again, it was a very well established business.

David Richter:

Yeah.

Trey Taylor:

But no matter what, if you think about it, I was still living paycheck to paycheck.

David Richter:

Okay. Right.

Trey Taylor:

Even on big numbers, that’s kind of pathetic <laugh>. Right. And so you know, that’s why it was so attractive to us. So we didn’t get to the point where we wanted to throw in the towel. We did get to the point, I had a partner at that point, my brother was my partner. We did get to the point where we had sharp words on a few occasions. You know, Hey, maybe I wanna do this, but you wanna do this. And those things might be diametrically opposed. Well, after the implementation of Profit First, we never had those, uh, sharp words anymore. We didn’t have to.

David Richter:

Okay

Trey Taylor:

We both knew where we stood and we could argue for projects well in advance by having the cash and capital available, uh, to spend on

David Richter:

Them. So I guess take me through that process then. So then you read the book, then you started implementing it, and what kind of, so that was obviously a big change, was going from like not knowing and kind of having the sharpers, but no resolution to having more clarity. What other things happened as you were starting to implement?

Trey Taylor:

I’ll tell you one of the interesting things, uh, my former accountant said, this is a waste of time,

David Richter:

<laugh>.

Trey Taylor:

Right. This is just a parlor trick. You already have the same amount of dollars as you ever had before, and I can’t really point out to you why it is, but we have way more dollars now than we had

David Richter:

<laugh>

Trey Taylor:

At that point.

David Richter:

Yes.

Trey Taylor:

Um, uh, largely because we were able to take the equity in the profited account, uh, and invest in a higher cash flow activities, either in the business or as pure investments, which we’ve done now for, um, for eight years as a family in our family office, as you know. Uh, so there was some static from our cpa. There was a static from the bookkeeper who said, you know, she didn’t understand it. Shit, that’s not how bookkeeping is supposed to work. You have, you know, sort of one account and that’s sufficient and you don’t need to play around with it. At the same time, I began working with a financial planner who took a very similar proposition

David Richter:

Okay.

Trey Taylor:

Of having sort of coordination of accounts in the financial plan as well. So I think there was a year or two years separating those decisions, but we did the same thing for our individual financial planning lives as well

David Richter:

okay,

Trey Taylor:

Where we have, you know, income coming into a wealth accumulation account that builds up until it spills over into other things, investments and protection and things like that we love to do.

David Richter:

Awesome. So it sounds like putting in place helped then. I think one of the times where we got cut off, like, and we had to go in back and redo it, the you had said that you had, you ran this way for about three or four years, correct. Like you were able to get it up

Trey Taylor:

we did,

David Richter:

And running

Trey Taylor:

Yeah. And we were really pleased with it, you know, and there’s this sort of, uh, management sin that when something works really well, you quit doing it.

David Richter:

Yeah.

Trey Taylor:

You know, and so maybe we had, I can’t remember the precipitating cause, but we had some issue that we had to take money and put it in a different place. It was probably taxes or something of that nature. And, uh, you know, once we did that, we sort of fell off the wagon about you know, divvying of the money the way that it was going to be, uh, most optimally effective for us. And so we got off the habit for four or five years, and again,

David Richter:

yeah

Trey Taylor:

It immediately felt like I was living paycheck to paycheck. And, uh, and so, um, after I read your book, I said, gosh, I, you know, I know I need to be doing this in my real estate investing practice.

David Richter:

Right.

Trey Taylor:

But I’ve gotta get back to this in my core operating businesses as well.

David Richter:

Yeah. Okay. So sounds like just reading the book, like it’s great that you started with, this is where I found it. I was in these groups, you know, and then they got me to read it. Then it sounds like, again, after four or five years of bang your head against the wall again, it was like the concept being reintroduced and like, okay, let me read this, this time. It was more of a mutual friend now, you know, that you were able,

Trey Taylor:

Right.

David Richter:

To get it through. Now it was like, okay, well, do you, I guess, do you wish you would’ve been running it for that last four to five years while you were off of it, or, okay.

Trey Taylor:

Yeah, absolutely, because, and in angel investing practice, I’m very, um, I’m very focused on this. You can give a company too much money because a company’s going to spend every dollar it gets. Right?

David Richter:

Yeah.

Trey Taylor:

And if you’re a startup, you say, oh gosh, there’s never enough money. And so give me all the money that I can get so I can get further along down the way Excess capital allows for poor decision making. And when we run Profit First, we run lean because we’ve already taken the excess capital out of the business, and we’re just trying to get the business to function on what we know it absolutely needs. Um, when we run off of Profit First and we let that profit be soaked up into the business, the business finds a way to use every dollar it can use, and there’s never anything or never enough, you know, left over at the end of the month.

David Richter:

Right. Yeah. That is so interesting how it gets to be like that where, you know, it’s like if I do profit first, I feel like, you know, like all the money’s in the proper place and it’s going there, but I still don’t feel like, oh, I’ve just got a billion dollars sitting around.

Trey Taylor:

Right.

David Richter:

But then if you don’t do it, then it’s like, it just gets vacuumed up. I’ve heard that over and over and over again. Real estate investors, different business owners that it does, it just becomes that black hole of like,

Trey Taylor:

And when you first implement, I don’t know if you’ve ever heard this before, but when you first implement the, you know, the first month, you’re just seeing, does this gonna, is it gonna work? Or, you know, am I gonna regret this decision or something? The next month, you’re starting to think, where did that money go beforehand? Like, did someone steal it? Like, did I buy something I didn’t know about? You know, and you go back and you look and you’re kind of like, you know, peeking around the corners and say, where do those dollars go? They didn’t get stolen. You allowed them to be used in a less than optimal fashion. That’s the thing.

David Richter:

Huh.

Trey Taylor:

Um, one of my CEO coaching friends the other day told me a great phrase and he said, um, you know, until CEOs realize they are the disease, no cure will help them. And that’s exactly it.

David Richter:

yeah

Trey Taylor:

You know, so CEO o CFO doesn’t matter. I wish the disease, I wasn’t being disciplined enough with the spending of the money in their businesses.

David Richter:

That is a very interesting point of view. Cuz I don’t know if anyone said that either on the podcast or wherever, where, you know, the first month, is this gonna work the second month? Where the hell? Like, why do I have more now? Where was it going before because

Trey Taylor:

Where was it going before

David Richter:

I could live off of this and where I am right now and having money where it needs to go. So it’s like, where was the money going? Which I think that’s another thing. Has running Profit first, has it made you ask better questions of your business and of yourself and of the money?

Trey Taylor:

Absolutely it has. And so one of the disciplines that we instituted at that point was a full blown spending review every single month. So we look at top line,

David Richter:

okay

Trey Taylor:

Bottom line, we look at cash balances. Uh, we look at this point we are in a six month and 12 month, uh, look forward so that we say, Hey, what’s coming in six months? Uh, we did it, uh, Wednesday of last week, and we know we have a very big software purchase coming in six months for our business.

David Richter:

Yeah.

Trey Taylor:

So instead of us getting all the way into January and then having to come up with a, you know, 60 or $80,000 check for that software, we began to plan for it today.

David Richter:

Yeah.

Trey Taylor:

And so what we’re doing two things, we’re contributing profit into that because it’s an investment in the business

David Richter:

yup

Trey Taylor:

Tqhat I expect to have a, you know, a good positive, uh, investment return on. And we’ve decided to, um, to short pay some other, uh, things that we were trying to make some headway against in order to come into that period, uh, with plenty of money to do.

David Richter:

Yeah. See, I love hearing stuff like that because I don’t know about you, but there’s, it’s one thing if the numbers person knows like, Hey, there’s something coming down the pipeline versus the owner knowing there’s something and we have a system that I can see that it’s coming down. Like, does that give you any peace of mind to know like, Hey, if I know there’s something big coming, I know I can take care of it and the as long as I have this plan, I mean, like, how does that make you feel?

Trey Taylor:

Oh, yeah, absolutely. So, you know, the whole thing, and I write about this in my book, but the whole point of being an executive is sharing the insomnia, you know, share it with somebody else. Right. So I want the CFO worried about

David Richter:

yeah

Trey Taylor:

Not telling me enough that we can make good dis joint decisions together, rather than her worrying about, uh, running outta cash at a pivotal time when the decision is to be made. Right. The second one is something that, I don’t know, it’s a fireable offense, but it’s one that if she comes to me on January the first and says, oh, by the way, we need 80 grand to buy that software that you told us that we needed. Um, I’m going to feel very underserved

David Richter:

right

Trey Taylor:

By someone who should be much more proactive in that.

David Richter:

Yeah.

Trey Taylor:

And I’ll tell you that most of the work that I do with CFOs and CEOs that don’t do really good work, uh, live in that sort of up and down rollercoaster emotional relationship all the time.

David Richter:

Right.

Trey Taylor:

You know, because they aren’t doing proper planning upfront. Yeah. CEOs don’t really know how to do that as much as CFOs should do, but CFOs in my experience, aren’t doing enough of that transparent communication about what’s coming in six and 12 months

David Richter:

Right now. That’s really good, especially in the real estate world where they’re already living cyclical and like, oh, is this deal gonna close or not? And, you know, like, are we actually getting the money in and do we have enough for the next six months or not? But, uh, speaking of real estate, this has been really good. his has been great info. I want you to tell a little bit about the business that you have started recently in the real estate world with a friend, Tand you were telling me a little bit about, about

Trey Taylor:

Yeah.

David Richter:

You know, setting things up. So tell a little bit about that stuff.

Trey Taylor:

I thought you would love that. Yeah. So a a mutual friend of yours and mine, who is gonna be at the event that we always attend together, um, we’ve decided to do, uh, a joint venture real estate investment, uh, business, bringing the strengths that I bring with, um,

David Richter:

yeah

Trey Taylor:

You know, capital, uh, and that sort of thing in business planning and how to run a business. And his very detailed subject matter expertise on how do you wholesale, how do you underwrite a house for, uh, you know, fix and flip and all of the various things that you might do when you buy up a piece of single family property. And so we’re doing that. Well, there are two things that we both decided to do before we inked the paper. Number one was to read my book because he’s going to be the CEO of this business.

David Richter:

Mm-hmm. <affirmative>,

Trey Taylor:

I’m not going to be, I’m not looking for another job. I’m looking for investment returns. Um, but he has to be the kind of CEO that I would be if I was in that chair. And the best way to train him to do that is to have him read my book, which he had done already, and I appreciate. Secondly, we read Profit First for real estate investing. Why wouldn’t we? And you know, it, it occasioned a few really good conversations

David Richter:

Yeah.

Trey Taylor:

And to say, well, I’ve never done it this way, or I think this is the proper way. And we had very good conversations, uh, around what we want out of the business, what the goals of the business should be, and how are we going to account to the business and to each other in terms of dollars. Very positive conversation. We went to the bank last week to sign the opening, um, paperwork, and there was a stack of, Hey, we have to have all these bank accounts, you know,

David Richter:

nice.

Trey Taylor:

And the banker knew because she knows me, she banks me.

David Richter:

Yeah.

Trey Taylor:

And she knows that I do these accounts on every company that we have. Um, uh, but it was interesting experience for him to go through to say, I’ve never implemented in this way before. So, um, now we absolutely know we’ve done two deals and we absolutely know which of those are profits, which of those are, uh, are for us, and which of those go into a holding account where we use it to run the business in the future.

David Richter:

That’s so great. I love hearing that story of just, you know, starting it from day one. There’s so much to unpack there too. Like, this is how you got into a JV partnership and like the criteria, like the two things that, for this specific business that you said, these are the things we’re going to do. And can you speak to that a little bit? Like just you’ve, you’ve run partnerships, JVs you’ve seen also as a consultant, lots of different businesses, you know, that probably blow apart at the partnership level.

Trey Taylor:

Yeah.

David Richter:

Like what makes, what makes a successful partnership? And I know those two things are probably big that you go through with people, like thinking about the ceo and how you’re gonna make decisions. But what would you say is like, if you wanna get into a partnership with something, would you give some tips there?

Trey Taylor:

Yeah, I think it’s all about over-communicating everything before you make the decision.

David Richter:

Mm-hmm. <affirmative>

Trey Taylor:

Partnerships are marriages, uh, in almost every sense of the word. They are legal unions, you know? Yeah. Uh, and so you need to have a way to get into that, uh, which should be based on shared values, uh, that are authentic to both of you. Not aspirational. Like, I wish I was somebody who told the truth all the time in this partnership, I will be that person.

David Richter:

Right.

Trey Taylor:

You know, that’s not gonna work out probably

David Richter:

mm-hmm. <affirmative>

Trey Taylor:

In times of stress, we default to the worst versions of ourself. Yeah. Uh, so we want to have those articulated values right up front, which is a big part of my practice in my book as you know. Um, and then secondly, we have to talk about the way, um, that people feel and relate to money.

David Richter:

okay

Trey Taylor:

So if you were born in such a privileged way as I was that, you know, I never questioned where my next meal was going to come from. My parents were very good providers and, you know, we just didn’t have the same financial stresses that somebody else did versus someone who comes into a partnership who grew up in a much different way.

David Richter:

Right.

Trey Taylor:

Uh, it is uncomfortable upfront, but way less uncomfortable upfront than it would be if you’re readdressing that every time a check comes in. Yeah. So my partner, uh, specifically here, you know, thought we would clean the bank account every month because that’s what he’s done in his other businesses. And I’m, I had to show him that actually we won’t do that because, you know, we’re building something that needs gas in the tank over the long term so that we can achieve some extraordinarily aggressive goals, acquisition goals.

David Richter:

Yeah.

Trey Taylor:

So that’s a big part of it. You talk, you have to talk it out upfront, and then you have to agree on how you will get out of business with each other.

David Richter:

Yeah.

Trey Taylor:

If that is something that happens. And so we also have done that. We build in, uh, we, in this specific agreement we built in a six month checkpoint. So at the end of six months we can come back to each other. Either one of us can throw the red card and dissolve the partnership and walk away with a equitable split that ties back to the cap table, who owns what, uh, in the company. We have that again at 12 months, and we figure if we can get through 12 months, we should be able to make it. So.

David Richter:

Okay. I love that. Because honestly, I, you probably hear this just, you know, in your world and in the consulting world, and I hear this a lot at the real estate places that I go, it’s like, oh, I should partner up or I should get someone, uh, you know, to help me or that. And it’s always like, okay, are you going into this with a plan or is this just your best buddy that you’ve always liked?

Trey Taylor:

Right.

David Richter:

But then, like, you don’t have these frank conversations with them to get down that road. So I wanted to stop there because that’s one big thing that I thought with your experience and going into a new JV partnership over the last year with this guy, like, here’s some tips for that. So that was really good. Then the second thing I wanted to focus on was training him to think like you, because you’ve been where you want him to be, you know, and like you want to get him to a certain point. So having a framework of training him to be the CEO that thinks like you too. So not everyone has written a book on being a CEO. So how would you help someone who hasn’t written the book on being a great ceo and doing those three things to be able to think like that, you know, together? Or like, this is i Iwant them to have the CEO see I wants to be on the same page.

Trey Taylor:

Well, obviously they should read my book <laugh>.

David Richter:

Yes. Yes. A hundred percent agree with that.

Trey Taylor:

Both partners should read the book.

David Richter:

Yeah,

Trey Taylor:

We’ll sell two copies that way.

David Richter:

There you go.

Trey Taylor:

No, I think it is all about any upfront discussion about how do we want this thing to be run in the best of times? How do we want it to be run in the worst of times and how do we know when the worst of times means that we shouldn’t be in business together anymore?

David Richter:

Okay.

Trey Taylor:

That’s the real conversation that needs to take place. Because I’ll tell you, partnerships are never equal. It doesn’t matter what the cap table says. It doesn’t matter who clocked the most hours that day. They are never equal. Somebody is always doing more for the partnership than the other person does. Okay. Over the long term, you hope that the results produced by that are equal.

David Richter:

Yeah.

Trey Taylor:

But where I see partnerships fall apart, and this goes for marriages as well, not that I’m any kind of qualified marriage counselor, but it is when somebody recognizes the fact that maybe they’re doing more and begins to feel unappreciated because of that.

David Richter:

Mm.

Trey Taylor:

And the person not doing the appreciation very often is not doing it consciously because they don’t want to bring up the fact that, Hey, David, you and I are in business and you did 80% of the work over the past six months and I didn’t do anything.

David Richter:

Right.

Trey Taylor:

I appreciate that. And then David thinks, Hey, you’re right. Maybe I should hit the road and go do this on my own. You know? Yeah. People get afraid of those sort of hard conversations, but in reality, you know, if we are moral people with values, we should appreciate, uh, the good things, the love that we are shown in business and at home. And we should be very articulate about that.

David Richter:

No, that’s, that’s really good stuff. If you’re listening to this right now, you’re getting some gold nuggets from someone who’s been down this road, who’s traveled this road on both sides, making sure that people are getting the end result that they want. If you’re thinking about a partnership, this is a great way to have a framework for it. Read Trey’s book also. Trey, I want to ask too, being on the same page financially, that was one of your big points too. Do you think that reading, not just for the JV partnership, but reading Profit first or Pro First for real estate investing, do you think that’s one of the books that ties in of how we want to talk about money and like making you ask the better questions that you wouldn’t have asked each other, it sounds like?

Trey Taylor:

Yeah, it absolutely ties in and it is a great jumping off point for conversation. You know, when somebody says, I don’t understand why you would segregate accounts, I don’t understand why you are preparing for the future in a way, you know, that we could just do on the fly as things come along. It gives you a really good way to understand their background and how they’re gonna act in a stressed, financially stressed, uh, place. And it gives you the opportunity to share your own fears, your own insecurities, maybe around that and your own learnings as well.

David Richter:

That is so good. Because I would assume, because you’re saying this, we’re coming from the framework of a partnership, but you just said as well, this is also going to reveal how you feel about money as well too. Give you insight to that because what, for the business owners that are listening now that aren’t in a partnership and like, I’m never gonna give away any equity or like, you know, get into a partnership, do you feel like it’s the same if they read those books like your book and Profit First, that they’re going to get what they need, you know, from the leadership side and then from the financial side to ask themselves those questions too?

Trey Taylor:

Yeah, I think it does. There are other books of course, that you should supplement with. Uh, but just, you know, having the, um, having the plan that we’re going to agree this is how we’re gonna run things financially puts you a hundred times at an advantage over somebody that comes in and says, we’ll figure it out as we go along. Um, same thing, you know, in my own marriage, when I first got married, I said, Hey, here’s how we are going to run our financial life. We’re gonna have a budget and that’s what we’re gonna pay ourselves every month. That budget, it’s not every dollar that we make is gonna come into the house cause we’ll waste it. This is how we’re gonna handle that. My wife and I have had two conversations, not even fights, two conversations and 15 years that we’ve been married about money because we’ve run that plan. We shook hands on that agreement and that’s what we do. There are times that we fall short and say, oh, we overspent this month, you know, and I have to go find some money to plug that gap. Of course that’s always there. Sure. Uh, but I plug that gap. She knows she comes to me when that has to happen and she’s really proactive about telling me that so that I’m not stressed and having to produce something, you know, uh, without a sufficient lead time to produce it. So, uh, same thing in the marriage, same thing in the partnership. I think the overlap is so extensive

David Richter:

There. Well, that’s so good. It’s making you ask yourself those better questions. Cuz even if you, if you’re listening now as a real estate investor and you just have a small team, these are good things where it’s gonna trigger you to ask of your spouse and yourself too. Cuz she’s probably wondering or he’s probably wondering like, what’s going on here? Like, I thought, you know, like why are they out 40, 60, 80 hours a week,

Trey Taylor:

Right

David Richter:

Or whatever, you know, like doing this stuff and it’s good for them to know what’s going on. I think that’s a huge testament too for what you’re saying of being married 15 years, having two conversations about money. It’s like we had that agreement up front, this was the framework that we were going to use, you know, like this is the system. So that way we could always fall back to that. Um, cuz we’ve got mutual.

Trey Taylor:

Exactly, right.

David Richter:

You know who,

Trey Taylor:

And if she came back to me and said, Hey, I don’t like the framework anymore, I want the different framework, then we would talk about that.

David Richter:

Yeah.

Trey Taylor:

But we haven’t had to have that conversation at all. I’ll tell you one of my mentors gave me the, he calls ’em power questions, but one of the power questions that I use all the time in these kinds of discussions is simply, you know no kind of manipulative way, just ask, okay, I hear you. What would you do in my situation?

David Richter:

Hmm.

Trey Taylor:

And this came up when we were articulating how do we want to build our bank accounts for this JV partnership? And we had a difference of opinion on a single, uh, issue, which was don’t sweep at the end of the month. And I said, well, you know, if these were your goals that we are sharing here together, what would you do in my situation in order to hit those goals? And he said, well I would do it exactly the way that you’re laying it out. And I said, do, is there anything else to discuss? Right?

David Richter:

right.

Trey Taylor:

And he got it immediately that that was the most efficient way for us to end up where we wanna end up.

David Richter:

No, that’s great because asking yourself those better questions, you know, and that’s where if you have someone on your team, like a CFO or a financial guide or something like that, or financial expert, that’s a great question to ask them, what would you do.

Trey Taylor:

That’s right, if you were, what would you do in my situation,

David Richter:

In my situation to really pull it out of them? Because sometimes it’s like they don’t wanna give you that advice, you know, like they wanna make sure that you’re on the same page and sometimes you have to pull that out of them as well too. So it’s like just making sure that you know, those good questions. I like the power questions. It’s like that’s what you’ll get from Trey’s book. These are the types of things that will make you a better leader of your organization. So I know I keep plugging it, but it, like I do, I have it behind me here and I’ve read it multiple times. It’s a really good book and I know this is a profit first for real estate investing podcast. But you need to read that book, get it. It’s what the, uh, every CFO does, only three things. CEO only does three things. So make sure to get that Trey Taylor look it up on Amazon and it sounds like it’s going around the CEOs too. So if you’re in the Inc 5,000, you might just hear about it, you know, just from being, uh, one of those CEOs. Okay. So we’ve talked about a lot here. We’ve co we’ve covered a lot of ground. So from the very beginning of making sure that you have a grasp on the business, making sure that if you go to events that you’re asking them what are you reading? Like some of the better questions to ask while you’re out as well too. Really getting into once you started this system and knew like you wanted to stop living paycheck to paycheck and then getting into it, you know, running that system for and getting that clarity, getting the people on board like your accountants, bookkeepers, you know, that sounded like a hassle.

But then at the same time too, going away from it, you know, then going back into it for five or six years, then coming back out of it. I just think there’s a lot to learn here that if we can stick with it and if you can get that guidance, you know, this is a good framework for where you want to end up. But then it’s also a good framework for wherever you are starting right now too. Cuz then you told a story of starting the JV business and like starting a very new, a brand new real estate business from scratch and starting those accounts as well too. So the last question, I only have a couple last questions. What would you say to a new investor who wants to start a business, you know, or who wants to get started in real estate investing? Here are the couple things that I would say, you know,

Trey Taylor:

yeah

David Richter:

almost a checklist of what I would do to get started.

Trey Taylor:

Yeah, absolutely. So, uh, I think the first thing, and maybe this is just me, but I wrestle with ideas before I implement them. I wanna make sure that they’re the right thing, you know, and that I think maybe we all have a little bit of not invented here syndrome when it comes to that.

David Richter:

Yup

Trey Taylor:

I think you can just defer that for profit first. It’s been proven out. Profit first real estate investing has been proven out. David, I don’t even know how many people you have personally coached in, into doing this who all were probably, well I’ll do it, but I’m gonna do it my way. And we all end up, you know, at the end of the road doing it like you advised us to do it in the first place. Not to say that you can’t customize it to fit, you know, we don’t call our accounts exactly what you call ’em in the book or something of that nature

David Richter:

Sure.

Trey Taylor:

To totally unimportant detail. Right. It’s the practice of doing what you outline is necessary. I think that’s very important. Don’t wrestle with the ideas they’ve been proven out. Just implement them. Go, go wrestle with some other idea. You know, there’s enough work, uh, to be done in the world. Uh, just implement. That’s the thing. In other words, don’t study on it for too long. Just get it into place and start letting it benefit you and growing your business, uh, through that. So that’s the first thing that I would do. Uh, the second thing that I would do is, you know, I’m a tremendous thinker and researcher. I read a hundred books a year. Uh, I go to these events like you and I are talking about, I sit and you have to filter out the people that are spot on and the people that are just spots, you know?

David Richter:

Yes.

Trey Taylor:

And, uh, you, you have to listen to people at a macro level like our work friend Jason Hartman.

David Richter:

Yeah,

Trey Taylor:

Right. Jason educates me every time I’m around him.

David Richter:

Right

Trey Taylor:

Because he’s a very different kind of thinker. Very hundred thousand feet and know what’s coming down the road in 3, 5, 7, and 20 years.

David Richter:

Right.

Trey Taylor:

That’s very, uh, useful and interesting. And then you have to surround yourself with micro experts who know how to do little things that make up the big picture for you. So I may not know how to wholesale a house or I may not know how to do a subject to, or I may not know how to do a innovation or any of that sort of thing. Thankfully I don’t have to because my partner does. And then if he doesn’t, he knows who to go to, who are the experts in that space who he can make a phone call to and get the answer that we need and apply it to a specific opportunity that we’re looking at.That’s the second thing I would do. And then the third thing is, um, which I just think is the best advice I ever received. I take 2% of what I make in profit every year from every business venture and I invest it into myself.

David Richter:

hmm<affirmative>

Trey Taylor:

Mastermind, mastermind, mastermind. I do a ton of those. I go to lectures, I go to every university has an executive education department. I can go sit literally at um, you know, Northwestern University in the finance department and learn about SPACs, which I did two summers ago, or LBOs or anything of that nature. I may never use any of that. I may never do a spac, I may never do an lbo, but as long as I’m surrounding myself with really smart people, uh, then I’m learning and uh, that’s, you know, that’s important to do and that money is tuition for me to do that.

David Richter:

Yeah.

Trey Taylor:

There’s two kinds of tuition. Tuition that you pay to learn proactively and reactively.

David Richter:

Right.

Trey Taylor:

And, uh, I would much rather pay a lot more proactively than having to pay some damages or something, you know, on something I messed up or did poorly. Yeah. Uh, so I think those are three good pieces of advice.

David Richter:

Well that is great that there’s frameworks out there. You know, like if you know those like Profit First and like Trace System, like make sure that you get those into you. Then making sure that you find the micro people that know what you need on the, like the day-to-day level and then making sure you’re investing in yourself. That’s, those are three great points if you’re getting started. Honestly, those are great points. If you’re a thousand deals into it and just getting back into it and like, hey, these are the things that can help guide us to the right, you know, point where we, if you are spinning your wheels right now or living paycheck to paycheck or deal to deal. Trey, this has been awesome. I really have enjoyed this. Is there, and you dropped a lot of great knowledge here,

Trey Taylor:

<laugh>.

David Richter:

Is there any way that the listeners can provide value back to you? Connections or anything? Or like how can they find you or what are you into?

Trey Taylor:

Yeah, absolutely. So, uh, you can find me. My uh, consulting website is trinity-blue.com. I also have a newsletter, David, you’re subscribe to it. I’m pretty sure Plant your flag.live. Uh, that comes out whenever I feel like it should come out whenever I’ve got something to say. Uh, and you know, it’s typically once, twice a week. Uh, it’s got snippets, interesting things, maybe some conversations that I’ve had with other people, uh, that I share on that platform. We’ve got 10 or 11,000 people subscribing to that and uh, and I get a good feedback, uh, from that as well. Uh, we are looking always for deals, so multi-family, um, uh, single family. We have pretty locked cuz we’re very narrow in our geographic focus for that. But multi-family, as long as the numbers work all over the country. Uh, and then, uh, we’re doing storage acquisition deals, uh, as well. So, uh, any of those we would be, uh, very interested. I have myself, my family office, and then several, uh, co-investors that we work with from time to time to take down larger deals. So always love to see what people have for that.

David Richter:

Awesome. If you haven’t connected with Trey or you haven’t heard of Trey up to this point, you need to get in those circles. I’m very glad that I took that leap several years ago, joined a mastermind, got to know Trey. Uh, he does great work and I know that he’s helped a ton of people get his book too. No, he didn’t plug it there. And I don’t know if I’ve plugged it yet on this podcast. Just kidding.

Trey Taylor:

<laugh>,

David Richter:

Uh, get his book co only does three things. You need to go and get that by Trey Taylor. And then if you’re listening to this as a real estate investor and you’ve connected with what Trey was saying, like you’ve lived paycheck to paycheck deal to deal, like you were spinning your wheels, like where the heck is all the money going? And you wanna get off that rat race, head over to simplecfo.com. We can at least book a call together and just see if we’re the right fit, if we can help you get off that rat race or if we have someone in our network. I just wanna provide value to you no matter what because you’re working too hard to keep spinning in that rat race. Just get off the Hampshire wheel like Trey has, he had to read a couple times and go through the ups and downs like he’s telling you this whole podcast. Like, don’t do that. Just have that system run it. That’s what we can help with. Remember to make profit a habit in your business. And then Trey, thank you so much for being on today. It was an honor interviewing you.

Trey Taylor:

Thanks for having me, David. Always good to be with you. Look forward to be with you in person soon.

Outro:

This episode of The Profit First for REI podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the Profit First system in your business? Schedule a discovery call at simplecfo.com right now. We’ll see you next time on the Profit First for REI podcast with David Richter.

 

 

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