Show Setup And Guest Intro

SPEAKER_00 0:00

This is the Empowering Healthy Business Podcast, and I'm your host, Cal Wilder. Each episode, we'll dive into topics important to folks who want to run businesses that are both nicely profitable, sustainable, and scalable, and who want to achieve balance in their lives and realize their potential inside and outside of work. The show is sponsored by SmartBooks, provider of bookkeeping and accounting for businesses. Let's get started. So I'm really excited to be speaking to today's guest, Adam Landrum. Um, you know, at SmartBooks we work with business owners and maybe a hundred or so that we close the books for every month. And once they get to a certain level of income, they sometimes ask about real estate as an investment. And maybe they've maxed out their 401k contributions or their simple RRA contributions, and they want to know what's what they should do after that. Or, you know, they've got a stable business and they think, eh, maybe I should try to buy my office building. Um, and you know, I used to be an active stock and options uh investor in my younger days. After my kids were born, I went completely passive into, you know, um stock market equity index funds. And so I'm out of the active game myself. But um I do find I'm not really qualified to talk about real estate as an investment. I've never done it myself. But uh I figured, hey, let's get somebody on the show who has done that and can talk to us about it. So I'm really excited to hear your story, Adam, your entrepreneurial journey, and what you got got you into investing in real estate. So welcome to the show.

SPEAKER_01 1:39

Thanks, Cal. Uh, thanks for having me on. I uh appreciate it and excited to talk about this topic.

SPEAKER_00 1:45

So I know you you started out. Well, maybe we should go back in time a little bit. You started out, well, I got introduced to you by Jamie Mullikan. Um, and I think you ran a marketing agency maybe with him at some point. But like, how did you start out in business? What was the beginning of your entrepreneurial journey?

SPEAKER_01 2:03

Yeah, if well, if we yeah, well, the beginning the the precursor to the entrepreneurial journey was uh public accounting CPA with a firm called Arthur Anderson, which is uh no more no longer with us. Thanks. But I did yeah, I did that in 80 hour weeks or 70 hour weeks, whatever it was. It was ridiculous. And I'm like, I am not doing this. I've always wanted to start my own business. So that so the loathing uh for public accounting um put me in a position to to say, hey, if you don't like this, go go do something else. So um, yeah, I I started a web firm is is is what it ended up being in 2021.

SPEAKER_00 2:43

Cool. Yeah, I remember Arthur Anderson. Um, I remember the Enron days. Uh that was back when I was still actively investing and was keeping a close watch on on all of that. Too bad. A lot of good people at Arthur Anderson, but unfortunately a few brought down the firm. Yeah, few but a few bad apples.

SPEAKER_01 3:02

But um, you know, that web firm became ended up becoming um a digital agency and then in time a full-blown agency. And we specialized uh in branding and marketing for higher ed for colleges and universities. And Jamie, back to full circle, um, was my VP of strategy um for several years and and we've known each other for for a long time. He now owns his own agency and and is growing that. So so yeah. So are you telling me you're you are passively investing? Does that mean you're doing Bitcoin or no or no Bitcoin?

SPEAKER_00 3:39

You know, it's enticing, but I feel like I don't know enough uh to invest in crypto. Um, so I'm I'm just broad market index funds US and uh international with Vanguard. That's that's my deal.

SPEAKER_01 3:53

At the end of the day, it's probably the safest route.

SPEAKER_00 3:56

So like you know, I want to make sure if I invest in something, the odds are in my favor I can beat the market. And I just don't know enough about crypto. And so I'm gonna stay away from it.

SPEAKER_01 4:07

Yeah, it's been interesting. All right, well, so we'll talk, we'll talk about we'll talk about real estate. That's what we're here for.

Why Owners Turn To Real Estate

SPEAKER_00 4:12

Yeah. So you have this, you know, web firm marketing agency making some money. And then at some point you decided, what the heck, let me get into real estate. So what what what was what was that like?

SPEAKER_01 4:24

Yeah, and you know, just just for the the listeners so they know, um, hopefully what I'm gonna share is is sort of maybe where they are. Uh, and and that is I didn't know a ton about real estate either. And I just, you know, historically it's a good investment. So if you're looking for an expert in real estate, I'm not the guy, but I will tell you from a layperson standpoint, a business owner standpoint, how I've approached it. And um, I that's sort of how I even do business. It's sort of it's like common sense. I you know, I don't need an MBA. I I you know, I'm gonna use common sense. So so yeah, so it just for for me, Cal, it was really practical of why I bought a business or but bought a building. And um it, you know, I I was paying the the first thing that happened is is I just looked down, I was paying five thousand dollars a month, I think, at the time, or around that. And um, I I think my lease was due. So I had and I think the landlord wanted to extend it to a five-year lease. So, you know, if we do the math on that, um, 60,000 times five, uh, you know, is it is a gonna be over a$300,000. I think at the time it's gonna be like a almost a half a million dollar commitment and liability that I was gonna assign. And I think too many business owners don't realize how significant that obligation is and that and that lease is. And um, and so it just so that's the first thing. It just made me, it made me think um, you know, about what I was about ready to sign.

SPEAKER_00 6:02

Hmm. Yeah, I I hear that sentiment a lot, even residentially with people who are, you know, renting apartments or condos, like, uh, I'm tired of just throwing my money away. I'd rather put it toward a a mortgage that I where I'm eventually going to own something. So I think that's a pretty common sentiment. Um, right. And so I feel like that's what you were saying. I'm spending$5,000 a month, but maybe I should own something at the end of the day. And it takes a long time, but eventually you do own something, right?

SPEAKER_01 6:31

Yeah, I mean, when you're spending that much money, you you start to question of like, well, wait a minute, after five years, I'll have nothing. And or after five years, I could have at least put a pretty significant chunk down towards equity and I would I would still own it. So that's so that was just my that was my train of thought. And you're you're right. And sometimes, you know, the I I think conventional wisdom is always buy, buy, buy. That may not always be true. It sometimes it's smart to rent. Um, but I was relatively my business was at this time relatively stable. I'm thinking um I was about 12 years into the into the business. And you know, I also that also gave me the confidence that hey, you know, we we had enough history that we could um, you know, I I again I had confidence I could make make big bank payments, so I didn't lose my house. So um so that was the first thing. The second thing was, you know, you have these moments um in life that you know you look back and you're like, oh, that was like a that was a special moment or or whatever, and I I might be overplaying it here. But um, but I had a consultant uh in Tennessee, he he consults agencies, and he just said at one of his seminars as that he said, you know, you're not gonna build your real wealth selling your agency. You're gonna you're gonna build your real wealth uh when you sell the building your agency owns. And so he planted that seed, I don't know, a couple years before that, and I was just thinking, huh, okay. So um, and and and what's going to end up being, I I sold my agency in um in 2023, and I would say it was a life-altering event. Um, maybe on the I I don't own a private jet, but it was on, you know, it was a life-altering event. And if I sell my building now, it's it's probably gonna be two to three times what selling my business was. Now, that's all relative, but that's just that's just gonna be my experience. And um, so buying a building from from my standpoint has ended up being a great, great investment.

SPEAKER_00 8:39

And you're in the Greenville, South Carolina market, which is you know, I'm up here in Massachusetts. I don't know a lot about it. I have a fraternity brother who uh is from Greenville, but I understand it's kind of a you know, a growing market where it's probably hard to lose money in real estate as long as you're not over-leveraged. Would you agree with that?

SPEAKER_01 8:58

We have at least one advantage over Massachusetts, and we have is it's we have Sun. And uh we have a lot of it. Um yeah, um, no, Greenville is definitely it's a it's a hot middle market, you know, it's halfway on 85 between Charlotte and Atlanta. You know, we're gonna see Charlotte and Atlanta become one one day. Um, and Greenville's right smack in the middle. And it's just a real it's a yes, it's a really, really cool market. Cool. So the real estate's relatively hot. So that was that was definitely a factor into, you know, I I figured it was it was just gonna go up, and that has that's proven to to be the fact.

SPEAKER_00 9:35

So you um so you're paying you know five grand a month or so of rent in an office building. Assume it was a building with other tenants, right? Yep. How how how large was the building?

Finding The Right Commercial Building

SPEAKER_01 9:48

That uh that I was in or that I bought ended up buying. Well, that you ended up buying, yeah. Oh yeah, yeah. So yeah, so my my uh my let me say what my intent was, and then I'll tell you what I ended up buying. My intent was um I I think one of the hardest things, whether you're leasing or buying, is trying to figure out how much office space you need, right? Like that's because you sort of get you get locked in, and then if you do the goldfish thing, and uh it'll only grow as big as the as big as the bowl. Um, and so it's really challenging to buy the right size or even lease the right size space. So my idea was is I wanted to buy a building that was twice as big as I needed. And we were um probably then we were about 12 people then. Um, and so I was thinking, I don't know, 2500, you know, maybe 3,000 square feet times two. Give me a 6,000 square foot building, that'd be great. And the reason why is you could sign another tenant, right, to the other half of the building, maybe give them a three-year lease, and then hey, in three years, if you need more space, you take more space, or maybe you take over the the whole building. Um, and they also help you pay down the note, so it reduces the risk a little bit.

SPEAKER_00 11:00

But then you have one other tenant, so it's kind of like zero or one, right?

SPEAKER_01 11:05

You yeah, well, you mean uh yeah, eventually it'd be zero or one, yeah. Yeah, so at the yeah, at the beginning, you do have another tenant and you do probably have a bigger note. Um, so that's a little bit well, I don't know. It to me that balances I I felt that was rest r less risky than me buying just a building solely for myself and then sort of being locked into that footprint. So so that was my intent. Um, and that that's what I would recommend um people probably do is look for a 2x and and then and then put another tenant in the other side in the beginning. Well, what ended up happening um was Greenville was so hot I literally knew um more about what was on the market than the commercial realtors did. Um I would have a I had a commercial realtor and they're like, hey Adam, this this property just came up on what you know on Main Street. I said, I was in that property two years two days ago. I mean, I was I just I was very into it, um, and I really knew the market. And so it was getting harder and harder to find buildings. Alana was starting to invest in Greenville, Charlotte was starting to invest in Greenville. Um, I had been outbid on a couple buildings, and so like it was it was the time sort of like during COVID, if you tried to buy a house, like you had to have cash, right? You had to be ready and you had to bid up 20 to 30,000 more than asking. So that was basically what the environment was. And I told the the uh realtor when we got on the steps of this property, I said, if I like it, we're we're putting an offer in today. And he said, Okay. So um this building was a 20,000 square foot building, way bigger than way bigger than I needed, almost six to seven times bigger than I needed. Um but I ended up, long story short, um, there there's another person bidding, we were bidding each other up on this particular building. And um he said, Hey, instead of bidding each other up, he said, Why don't we be partners? And I said, Oh, all right, that's great. So um I had one caveat. I wanted to meet I wanted to be the managing partner and him the minority partner, and he said, That's fine. He agreed to that. Um, and that ended up working um outstanding because now we had two owner-occupied tenants. Banks really like that, by the way. So if you're taking notes, they like that you're owner-occupied, and typically you need to occupy um owner-occupy half of the building, and so between his company and my company, we um magically uh occupied 51% of the building.

Partnership, Tenants, And Property Management

SPEAKER_00 13:44

Nice, nice. Yeah, um and then so you built this building. Um, it's probably more than you were gonna personally manage yourself. Let's how do you go like how did you approach the maintenance and property management side of things?

SPEAKER_01 14:02

See, this is where I might look brilliant, but I'm not. Um, you'll find out quickly. I'm not, is the partner that uh that I partnered up with was a commercial developer um who had a property management uh arm and an asset management. Asset management is making sure it gets leased and all that good stuff. So they so we paid them a fee, you know, as a um, even though he was an owner, um, we paid them just as a third party and they they manage all the property um or all the yeah, the they manage the property, they manage the tenants, and they handled the leases and stuff. So I would be as the managing partner, I would be in the no and I would give approvals and stuff, but they they did um the heavy lifting. So, you know, I overall I would recommend to people like you probably want to hire um you probably want to hire a property management company. Um, you know, you'd you don't need an asset management company, you probably just need a realtor, a commercial realtor to help you get the tenant. Um and um, you know, you want to you want to focus on your business. You don't want to focus on the building because the building could take a ton of time.

SPEAKER_00 15:17

Yeah, that's the one one the one main thing that's kind of deterred me from getting into real estate over the years is I don't want to be the guy who has to take the call when like the subject system breaks or the you know the the pipe bursts in the middle of the night or something like that. It's like uh I can just invest in the SP 500 and not have to worry about it. But I think you know, if you're smart about it, there's probably you could probably make a little more money with active management, but you've got to find the right partners to help you manage the asset.

SPEAKER_01 15:51

You definitely definitely do. And um yeah, you know, I I don't property management's not too hard to find and outsource, but um, but yeah, there I mean there there certainly were times we had a a water main break, and uh it we it's a two-story building, and the the you know, I don't know how many thousands of gallons of water just went through our downstairs, and you know, I was very involved in that. Um, we had a hurricane, you know, come through Greenville, uh Helene, uh with you know, we had down trees and yeah, so there's little stuff that you do um you do have to deal with. But I would say, you know, the you can invest in the SP 500, um, but you also have some you know pretty nice benefits. Um one benefit, like I said, I was a lay person, so I wasn't fully aware of this, even as a former CPA, um, was you know, we had a really large depreciation write-off um after the first year and recapitalizing stuff. And so um because of that, I got a massive refund. I wasn't even I wasn't even anticipating. Um, and you know, partly, you know, one question um listeners may have is like, hey, how did you finance it? Um, because you do I think we had to put maybe three percent down. Um and uh so I needed I needed for my side about$250,000, which I did not at that time have laying around. Um so I had uh partly friends and family help with that, and I had a mentor who chimed in. So I had two investors. I was I was able within 12 months to be able to pay one of those investors completely off$100,000. Here you go. Thank you very much. Um, so I was I didn't even anticipate that um as a benefit.

SPEAKER_00 17:37

So I'm curious how you went about figuring out the valuation, how much money to pay for the building. I mean, these days maybe you can ask Check GPT and they'll do a bunch of analysis, but uh that didn't exist at the time you were doing your deals, right? So how did you go about figuring out how much to bid?

SPEAKER_01 17:56

Yeah, um great, great question. And um, I'll even share I think a mistake that we made. Um, yeah, that like it's not even fair that people who are looking to buy a building now have chat. Like that's I I don't I don't think that's fair. I think you should pay like twice as much or something. But um, yeah, I think I I looked at um I had spreadsheets. I probably was searching Google on how to do you know mortgage calculators and stuff like that. But it's you know, it's not that different than buying a house, right? And you buy the house and you go, okay, well, if the loan's eventually going to be five million, say it's five million dollars, if it's gonna be five million dollars, what's the payment? Uh okay. Can I afford that? Um, you know, you know, you got some pretty high-level litmus tests in terms of, okay, well, what's the market rate? Um, you know, 20 bucks a square foot, um, you know, 3,000 square feet, you know, that's I'm just doing math in my head. That's that's 6,000 times 7. So it's$72,000 a year. So okay,$6,000 a month. Excuse me. How does that work in my um, you know, in my cash flow? So I I primarily just sort of looked at it from a cash flow standpoint. My um development investor, and and brokers could help you do this too, would be would help you with like cash on cash, um, and cap rates and all that all that fancy stuff. Like I said, I wasn't that fancy. I was like, can I afford it? Yes, I can afford it. Is this asset gonna grow? Yes, it's gonna grow. Um, and you know, my goal was to get um cash flow positive in the building. I I figured if I was cash flow positive in the building, um, then you know, the value of the building was gonna grow, and that would be a win. Some people want to be, you know, that's the the the cap rate. And so some people want to be um, you know, have more cash coming in. That that's a great investment. That's a wise, but when you are an owner operator, you have a little bit of leverage um to not demand um as high as returns.

SPEAKER_00 19:57

Yeah, I think the way you explained it to me when we spoke last week was you wanted to be at least cash flow neutral, ideally a little bit cash flow positive, and you knew in the Greenville market that things were going to appreciate. So you know, if listeners are in a market where maybe it's not as hot as Greenville is or was, you know, you need to worry a little bit more about the appreciation potential. But the way you described it was you just wanted to make sure, you know, you factored in all the cost, including property management, including brokers, including everything, that you'd at least be casperal and neutral, if not a little bit positive, and then you would bank on the appreciation in the Greenville market, right?

SPEAKER_01 20:37

Yeah, and I would say those are those are your operating costs, right? So before you get to your operating costs, you have to um you know make sure what your loan is gonna be, and because you're probably buying a building that's gonna meet need some upfit. So we call that upfit or TI tenant improvements. So it was weird because I owned the building, but my business was gonna be in the building. So I also I had to do tenant improvements in my own space. That's gonna be on me. Um, and so this is the mistake I I referred to is that we really didn't set a this sounds crazy, but we really didn't set a budget for how much what like what the ceiling was for what we could remodel because we are two owner-occupied owners going to this building, we sort of just build it how we wanted it to. And money was very cheap. This was 2015. Money was like, I think our loan was like three percent or something like that. Money was very cheap, and so um, we put way too much money into the building. Um, and as a result, um and then by the way, the building it was an old textile like warehouse. Um, it needed tons of work. Uh, and we ran into lots of surprises, as you could imagine. Um, and so we ended up putting what you know, just way too much money in, and that did put us um cash flow negative for. Several years uh where we had to do equity calls, um, capital calls, and uh you know, contribute to really the operating funds. So the so we had we had cash. And that was that was um a little bit. I I to be honest, I was a little disappointed in my partner that um because he is a developer that he didn't foresee that. I was a little disappointed in myself that I didn't foresee that. Um, but even even with that in the long run, it's still gonna work out beautifully.

Residential Investing For College Housing

SPEAKER_00 22:31

So cool. And so um you also invested in some residential properties, right?

SPEAKER_01 22:37

Yes, yeah, I have. Um so one, yeah, so real, you know, yeah, real real estate has has has been good to us. Um, maybe you know, if you're in your index funds and stuff like that, um, I might be over-indexed in in real estate in terms, but but it's been pretty good. So um, you know, Greenville is 40 minutes um away from Clemson University. I have four kids, and I and I predicted that three and a half of my kids would go to Clemson. Um I was about I was I was about right, it ended up being about uh 2.2.5. So um so I just you know I uh college is unbelievably expensive, as we all know, but it's the housing that gets you. I mean, to me, it's like the the room and board is so has become so expensive. And so again, I sort of did the same logic. I'm like, why would I pay$10,000 a year, or is it a year or semester? I think it's a year,$10,000 a year to for housing, just housing. Like what would that buy me? Um, you know, did that did that back of the Mac napkin test again? And and um at Clemson, I was very, very fortunate to buy a condo that is on the right on the border of campus, so you can still walk to school. So what's happening um real almost nationwide with big schools, especially like they're running out of housing on campus. Like you can only like it's only available to freshmen, and then after your freshman year, you're basically commuting, and um that which is which is true at Clemson. So anyway, long story short, there is that yes, we bought this great condo, it's very close uh to campus, and it has um appreciated considerably because um again, Clemson has sun. Uh they used to have football, not as much anymore, but um, but uh you know, Clemson's been a popular place, and and um so that's that's been a great investment too.

SPEAKER_00 24:33

So on the when you're searching for properties, how do you go about doing that search? Do you do it yourself? Did you uh you know work with a broker? How how did you find the properties that you wanted to buy?

SPEAKER_01 24:44

Yeah, so um there, you know, I I I use Loopnet, um, so LoopNet, which is you know, like Zillow, uh, but for commercial properties. So that was probably the primary way. And then uh my experience with commercial uh brokers is like they're like realtors. I I don't know if you've looked for a property recently, but again, I I would know about properties before the realtor does usually. And I'm actually um for if if people are watching this, I'm I'm you can see my background. I'm at my cabin in in North Carolina, um, and this was a perfect example is I was looking for a very specific type of property, a log cabin. Um, and I found it, you know, three days, you know, why I found it two days after it was listed, and well before my realtor ever knew about it. So, so I you know, I think it's almost like you know, these days you're your own advocate for your healthcare, your own doctor. It's like you got to be your own realtor. Um, the so that's so I'm sure I found it through LoopNet, the commercial, and then the Clemson property. My son was actually in the condo uh as a tenant. And I said, Hey, ask your landlord if he's interested in selling. And sure enough, he was interested in selling. And like that's like if you looked at the um MLS um for Clemson, you will see zero houses. Like you only buy those things um word of mouth. So you gotta be scrap. If you really want it, you gotta be scrappy. Um, you gotta be scrappy, and that's how I bought well three properties now. Okay, because I was scrappy.

SPEAKER_00 26:22

How would you compare or contrast the uh the residential condos you bought versus the commercial properties? Like if you're trying to, if you're a you know, regular business owner thinking about investing in real estate, you know, kind of make the decision commercial versus residential. How would you compare the two?

SPEAKER_01 26:39

Okay. A lot of things came up in my I hope my banker's not listening to this. Um, I mean, it's it's it's magnitude, you know. Uh, and it's so for instance for the condo, let's just say that that I bought that for 200 grand. Um if it burnt down and I didn't have insurance, I would, I would still be okay. Like it would stink, but you know, I'd be all right. Um, the building uh is a magnitude of at least 10x that, maybe 20x that. If I can't make a payment on the the building, I'm in trouble. Right. So it was sort of it was sort of like I don't know why the bank is lending me this money. But they are, and um, you know, I hope nothing goes wrong, right? So it's there's definitely there's definitely some risk. Now I felt like I had enough friends and family that if I already gotten a bind, I would be, I would be okay. And I also felt that um you know if it really got really bad, worst case scenario is I'd have to, you know, fire sell the b building and maybe you know have a note that I'd have to work pay down over time. So so but yeah, you definitely want to think twice about it when you're doing when you're doing the deals. Um and I would say the due diligence on the commercial loan is is a lot heavier than than like real estate, you gotta jump through a bunch of hoops and it's sort of stupid. Um real estate or commercial real estate when they're loaning you that much money, they're you know, they're really want to understand everything financially.

SPEAKER_00 28:21

So yeah, I mean with your residential, everybody needs a place to live. Just you know, yeah. With commercial, especially these days. I mean, I don't know. I get nervous about commercial because not so many businesses have gone virtual. Um Yeah, I know.

SPEAKER_01 28:37

It's it's that isn't that interesting. And and we've been a hundred percent occupied for 10 years. Um, we're in a really cool part of town, we're in a really cool, you know, we're in the Trinity warehouse district type space. I mean, it's cool. Um, but yeah, I mean that would be concerning to me too. But it's you know, it's worked out.

SPEAKER_00 28:58

Um I gotta ask you, since you mentioned you're in a log cabin in North Carolina, uh whereabouts in North Carolina?

SPEAKER_01 29:08

Yeah, we're so there's a cute little town called Brevard, uh, North Carolina, and and Brevard has is known for its mountain biking that's sandwiched between DuPont uh uh State Forest and Pisgah National Forest, and it's just a absolute beautiful. So I am outside of a little town called Rosman, which almost nobody even around here has heard of from. It's it's an hour away from Greenville, so it's it is magical from a standpoint of um, you know, you just drive an hour away and you're in a completely different, it feels like a completely different part of the country. Like I'm in the mountains, I'm staring at the Blue Ridge Mountains right now. Um it's beautiful. But yeah, Rosman has 700 people. Um there's a there's a lake called Lake Toxway, which is one of the most beautiful lakes in the country. I was mountain lakes in the country. Um a lot of Atlanta CEOs have houses there. I I um I couldn't even sniff a property there. Um so but yeah, so it's a it's a it's just a beautiful part of the country.

SPEAKER_00 30:07

Cool. Yeah.

SPEAKER_01 30:08

Have you been do you have ties in North Carolina?

SPEAKER_00 30:10

Well, I went to college um at Duke in Durham. Um and my roommate, first uh year freshman roommate was from Candler, which is right outside Asheville. Yeah um and I never actually made it out there. I did interview for a job in Charlotte my senior year. So but I stayed basically on the highways, more or less, uh in the beaches of uh you know the outer banks of North Carolina. Um took a family vacation to Carolina Beach several years ago, but I've never actually been out to like the western part of the state. Been close in Tennessee, though. We've done Dollywood a couple years with my kids the last couple summers, um, but haven't actually made it into western North Carolina.

SPEAKER_01 30:55

Yeah, it's a it's a beautiful part of the country, and you know, North Carolina, yeah, you got Western North Carolina, the Appalachians, and then you got you know Charlotte and Tarale, almost like the cities, and then and then you got the Outer Banks, of course. So yeah, divert diverse state, but uh yeah, I love coming up here and I try to get up here a couple times, a couple days a week, um, and just work and write and and do podcasts, evidently.

Coaching Founders With AI Tools

SPEAKER_00 31:22

Nice, yeah. So you had a marketing agency, you got in your real estate along the way, and now what are you doing these days? What's your what's your day job these days?

SPEAKER_01 31:32

Yeah, uh well, it's it's it we're we're living in some interesting times, right? So um, I mean, I started my web firm in 2001 when I felt like that it's sort of like it was sort of the internet was just happening, right? You know, um, and uh, and that was really exciting times. How are we gonna apply this new fangled internet thing to business? And you know, um, and I'm just feeling the same way, maybe times 10 with AI. So so that so maybe that's the environment. What I'm doing is I'm doing executive coaching. So um in 2013, 2014, I hired I was sort of stuck in my business, and I hired an executive coach, and um, she worked with me for a year and it was life-changing, it was unbelievable. And so I went and got two coaching certifications in 2016 and 2018. And my whole thing was I wanted to coach my managers to coach their people, not to manage their people. And then um, I just knew that when I sold, I would this was what I was gonna do when I grew up. And so I absolutely love coaching. So I'm coaching founders um with less than you know, uh 10 employees and um who who are most likely they started something and they're just they just feel stuck. They just feel like they're working too much in the business, they're working too hard, the you know, the uh juice isn't worth the squeeze. And so I'm really helping them um get unstuck. And at the same time, what I'm what I'm discovering, this is just really interesting, is oftentimes they want me to really help them um implement the work uh to do it. So, like, you know, a coach just asks questions, a consultant just tells you what to do. Neither of them do anything, right? So my clients are starting to say, Hey, can you help me with that? Can you actually like, do you know how to do that? And I'm like, Well, yeah, I do. And they're like, Well, can I pay you to do that? And I'm like, Yeah. And so um, I used to be a programmer, part of my you know, CPA, and I was a computer science minor and or emphasis and uh, and so I've I was a hack programmer, but like now with vibe coding, I can the things you can do are just unbelievable. And so I am I am coaching and and helping my clients uh by implementing vibe coded solutions to help run their business. It's the it's the craziest combination, but um, but the coolest, the coolest thing ever. So I'm having a blast.

SPEAKER_00 34:01

Huh? What kind of tech platform? What's the tech stack that you work with?

SPEAKER_01 34:05

Yeah, so have you have you gotten into any vibe coding at all? Or is that in your wheelhouse?

SPEAKER_00 34:11

Not really. I mean, we do have uh custom software we built, you know, the expensive hard way in 2000 starting in 2019. Um a lot of money with developers building software that could probably get done for a tenth of that cost now. But uh yeah.

SPEAKER_01 34:29

Yeah, it could probably get done for a tenth of the cost. It would probably do what I'm finding is it could do exactly what you want it to do and nothing of what you don't want it to do. Um yeah, that and that's what that's what vibe coding offers. But my uh my tech stack, um I'm using I'm using cursor, um, which is an IDE. And uh again, I you're you're gonna you're gonna put me on the spot and be like, I can't tell you what an IDE is. I could I I could look it up. But it's a it's sort of a it's a it's a place where you can code with agents and then you have access to all the LLMs. So, you know, um OpenAI's codecs and cursor or um and uh Claude and all the LLMs, and um it's basically a whole ecosystem of where you can do all of your five coding. So that's my main local tech stack, and then I use Supa Base or databases, I use Netlify for hosting, and I'm even messing around with Cloudflare um as well. So it's fun, man. It's it's the wild, wild west, and uh the what you can do is just amazing.

SPEAKER_00 35:37

And so how do you fit that into the uh the the business coaching?

SPEAKER_01 35:42

Yeah, well, so you know, um like just for for example, tomorrow I'm meeting with um well, I don't know if it's a great example. Uh I have a fractional uh CFO client, right? And he wants um or he wants uh to have an operating system of how he runs his business, uh, to do financial reporting, to do um project management, to do um CRM. And um, and so you know, as we talk about those strategies, like, hey, how do you manage employees? How do you get things done? How do you set up projects? You know, how do you do marketing? How do you um what's your messaging? You know, as I we're coaching, as I'm coaching around those things, we're also creating the tools and the processes and the systems to help him um you know execute them. So it's a it's a from that standpoint, I think it's a really unique and cool model, and you know, and giving him tools to execute on. Um, so yeah, so that's I guess that's an example of how I'm doing that.

Three Traps That Keep Founders Stuck

SPEAKER_00 36:46

Cool. Now, when we spoke uh the other week, you talked about uh two or three different traps that entrepreneurs fall into. Um can you talk more about those traps?

SPEAKER_01 36:59

Yeah, yeah, it's interesting because um yeah, there I I I call them three traps. The the the first thing is I just call it the founder's threshold. And um, I'm typically working with businesses that are under a million dollars in revenue. Um, so 90% of businesses do not reach uh a million dollars in revenue. So only 10 only 10% make it, right? And that I think that's just a it's a crazy stat. And I think what the stat that stat highlights is that businesses don't get big enough to get to grow beyond the founder. Um right, and or better put, like the founder doesn't have the ability to to build a business bigger than themselves. And so that's um, and that's fine. That's that that's fine. That's you know, that's perfectly fine. You don't have you usually if you go start a business, you know the skill that you're that you're doing, right? You're not an expert in being an entrepreneur or running a business. You need help. You need help figure doing that. So the the first trap is uh the founder's trap. Um, and this is the most common. And you just you literally get stuck. Um you just get stuck being the cog in the wheel. Like you're doing everything, you're doing marketing, you're doing sales. Well, guess what? When you win marketing and sales, then you got to go do the work. Um, you know, and once you do the work, you look up and you go, Oh crap, I go do marketing and sales. And you don't want to do any expense reports or taxes or just QuickBooks or whatever, right? So that piles up and you know, on and on and on. So you you're the one, you're the you're the limiting factor, the founder's the limiting factor, and that's the that's the founder's trap. And so we gotta we gotta get out of that trap. Um and then the second um the second trap, well, do you do do you see that in any of your clients?

SPEAKER_00 38:50

Or oh yeah, oh definitely, definitely. Um it's hard because a lot of people who start businesses, they're practitioners of something. They're you know, they're marketers, they're software designers, they're engineers, they they do something, they're very skilled at, they're very great at it, but uh they don't have experience with XR and hiring and marketing and sales, and it's it's hard, yeah.

SPEAKER_01 39:16

Yeah, reading contracts or you know, again buying buildings or you know, signing signing leases, or you know, yeah. So yep, so that so that totally makes sense. And so you know, you gotta learn how to do that somewhere. And so that's that's one thing I help with. And then the the the second trap is the trap of um ambiguity, and that is um, it's really um, I think comes from scarcity, but it's this idea is like I'm gonna keep everything ambiguous so I can be all things to all people, instead of picking a niche, having a very clear offer, um, standardizing your you know, standardizing your product or your service, um, and just and just being intentional and and and well and and defined. And so when when we try to keep all these, you know, plates spinning and balls in the air, you just can't get any traction. Um, and so you know, so so in that I'm I'm really helping the founder decide on what's important, what matters, and just just focus and stick with what matters. And when you do that, like amazing things happen.

SPEAKER_00 40:22

So yeah, I've uh I've struggled with that some. I would say my struggle has been a little bit more like I don't know, probably not saying this uh well, but I feel like I've been too ambitious in some ways. Um, kind of in my mind, had all these different service lines and service offerings, and I love standardization and documenting. And so in my mind, I get very clear service offerings, but I have, you know, five different service offerings, and I've got a small team. And in my mind, yeah, maybe we can do all five, but my team's like, you know what? What are we actually trying to do here? We can't do all these five things, they're too complicated. Uh let's just pick a cup, one or two of them. So I tend to uh, you know, and I've I've gotten better over the years, but I've always kind of dreamed big and had these huge designs in my head, but were just unrealistic for people to execute on.

SPEAKER_01 41:17

Yeah, I think what Cal, what my experience has been is that um complexity comes quickly. You know, when you add uh when you add one, you know, you just one more option, one more color, one more, you know, whatever. And then all of a sudden you go from like giving your clients and your employees like seven options of of different to like 53,000. Right. And so like you um I I I heard a great quote is that clarity is is simplicity divided by two. And like, so we know that you have to be effective, you gotta be clear um to the market. You gotta be clear to your team, you like and and um, and that means you gotta make it really simple divided by two. So like you your master plan might be great with five different service lines, but that might mean need to come, you know, 15 years from now. Maybe it's a one or two. So that just would be that would be an example. But yeah, yeah, and and by the way, all these things have happened to me. Um, I'm it's not like I knew all these things. I was like, oh, I started my business. No, I learned these things along the way. And the and the last the last trap is um the trap of survival. And that is so um I had a mentor tell me, he said, you know, entrepreneurs are the best in the world at breaking even. Like they are unbelievable at breaking even. And I would experience it like I would have a horrible year, or it seemed like a horrible year, and then all of a sudden I'd lo and behold, I would get some wins at the end of the year, we'd like we would break even. Um, or I'd have a great year and I'd take my foot off the gas, and lo and behold, we would break even, right? We'd have a horrible end of the year and we'd break even. And so um, and part of but part of it of the survival mode and scarcity mode, um, it just we get so focused on cash flow and you know making sure we can meet payroll and making sure we can make rent that we don't really start um we we don't have a wealth mindset. We don't have uh we don't have a mindset of abundance. So that starts looking like um I can fund 401ks, I can offer health care, I can uh you know, you're starting to invest in your benefits and stuff, and which is investing in your people, which um which um you know produces retention. Um, you know, I can buy a building. Um, you know, I'm gonna I'm gonna use this instead of I can take a little risk and buy a building. You know, so once we get out of this survival trap, um, we can really start investing to grow. So those are the yeah, those. Are the three traps um that um I think are are core to why people get stuck, why they never hit a million dollars, and that's what I helped my clients through you know systematically.

SPEAKER_00 44:12

Yeah, I had a client I think struggling with their survival trap a couple weeks ago. He's he sent a note um kind of mapping out um his cash flow plan for the next three months. And I looked at it like, okay, this is good. You have to actually be able to make payroll for the next three months, but there's nothing in here about what's your labor-loaded gross profit margin, what's your labor value multiple, like what's the is the core business profitable and successful or not? Like, you gotta separate what are the economics of the business from short-term cash flow. And yes, short-term cash flow is key. You gotta stay solvent and in business, but um we need to be looking at the the operating metrics that help you understand what you need to do to have a sustainable, viable, long-term, valuable business. So I can f I definitely sympathize with that trap.

SPEAKER_01 45:10

Well, I I I think you your services are key to that trap because I can tell you I would say it's a hundred percent of clients and prospects that I work with don't have financials. And if they have financials, it's cash base. And I don't know about you, but from my standpoint, cash base is almost worthless um in terms of you know, it tells you if you have money in the bank or not. But um, you know, so they're not on accrual, and like until you start getting those financial statements and those that reporting to make decisions on, it's hard to get out of survival mode. It makes sense why they would be in survival mode, right? You're just like, do I have enough cash to make this purchase? Yes, I do. Okay, I'll go make it. And it's like, oh, it's horri, it's horrible.

SPEAKER_00 46:00

So yeah, or they think they need to spend a bunch of money at the end of the year to reduce their tax bill. Right. It's not worth uh spending a dollar to save uh 35 cents.

SPEAKER_01 46:12

That's right.

SPEAKER_00 46:13

You're you're wasting 65 cents that you could put in your pocket.

SPEAKER_01 46:16

So yeah, it's a it's an amazing phenomenon that that mentality.

How To Connect And Closing

SPEAKER_00 46:20

But uh yeah, so um, what's the name of your coaching business?

SPEAKER_01 46:24

Oh, yeah, it's um it's made to matter. So made to matter.coach um is where you can find out. And I talk more about the um the founders trap and the or the founders threshold and the three traps there.

SPEAKER_00 46:36

Um so if people want to connect with you, Adam, what's the best way for them to do that?

SPEAKER_01 46:43

Yeah, you made to matter is uh dot coach. So Adam at made to matter.coach, you can email me or um LinkedIn. Uh I I think it's just Adam Landrum uh on LinkedIn. You should be able to find me. And um I'm active, you know, active on there, and and uh I would love to hear from you and talk to you. And if anybody has building advice and you want some layman advice, I can give you some layman advice. Um, but the the layperson here has been somewhat successful, so I'm I'm uh comfortable doing that. But if you want even better advice, then we could talk about you know growing an entrepreneurial venture. Awesome.

SPEAKER_00 47:19

Well, thank you, Adam. I really appreciate you sharing your experience uh in general with your career and uh specifically with your uh journey into investing in real estate. Uh hopefully the audience has found this insightful.

SPEAKER_01 47:32

Yeah, I hope so. And uh Cal, thanks for having me on again. It's been a it's been a pleasure.

SPEAKER_00 47:37

Yeah, likewise. So really appreciate it. Uh, this has been another exciting episode of Empowering Healthy Business. Until next time, another episode in the books. Thank you so much for tuning in. For show notes and more. Visit Empowering Healthy Business.com. If you would like to have a one on one discussion with me or possibly engage smart books to help with your business, you can reach me at cal C A L at Empowering Healthy Business dot com or message me on LinkedIn where I am easy to find. Until next time, this is Empowering Healthy Business, the podcast for business owners, signing off.