Van Carlson – Risk, Wealth, and the Entrepreneur’s Edge: Protecting What You Build

we'll have so many write offs, we'll be able to write ourselves right out of business.

Yes.

I mean, they make a dollar, they spend a dollar ten.

I mean, it's just the mentality of, you know, and yeah, exactly.

make your business decisions as business decisions.

take advantage of every write off you can, but you never make a business decision because of the write off.

You write off things that were wise business decisions

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As a former contractor, I know the importance of working with a great team.

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on time and at the right location.

Competitive pricing sure helps too.

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At MacArthur, you are more than just a number.

You are a person, a customer, and a friend.

With branches throughout the United States, MacArthur is big enough to handle your most demanding needs, but they do it with small town service.

MacArthur isn't another big box store run by a board answering to stockholders.

They are employee owned, making them one of the last independent suppliers serving all of your commercial, industrial, and residential building envelope needs.

Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with great service and a personal touch.

If great service and good pricing don't win you over, make sure you check out their customer incentive program, where every purchase earns points towards a free vacation.

I am already packing for my next MacArthur incentive trip.

Call or check online to find your nearest MacArthur warehouse so you too can enjoy superior service and start earning points towards your next vacation.

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Hey there and welcome to From the Ground Up Show, the show where we encourage and inspire the next generation of free thinking leaders by telling the stories of those that have

been there, done that and are still getting it done.

Building a life that they love with their hearts, their hands and their hustle.

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So today I'm excited.

I have a special guest, Van Carlsen.

uh This is a little bit of a deviation from our normal format.

Van is a bit of a more white collar worker, but he's got an entrepreneurial streak in there as well.

And I think he has some great information that will be very beneficial to those of us that work in the trades and in non-traditional career paths.

Van works with many blue collar companies to mitigate insurance risks.

Van is the founder and CEO of SRA 831B.

He has more than 25 years experience working in the insurance industry and is going to help us better understand the risks that we face and how we can mitigate them.

So, Van, thanks for joining the show.

Yeah, thanks for having me on your show, Erick.

Appreciate the opportunity.

Awesome.

Well, I'm sure our listeners are anxious to dive into the advice you have for us, but we like to start every show getting to know you a little bit and connecting a little bit.

So can you tell me a little bit about where you grew up and what your childhood was like?

Yeah, you bet.

uh grew up in Central Valley of California, farm kid.

Did that for many years and then my folks back in the early 80s decided to sell everything and moved to Idaho.

And from there, my dad bought a couple small businesses, ran local convenience stores and pretty much worked my, you if wasn't running a tractor, we were working at one of the

grocery stores my dad owns.

So pretty much.

That was just what you did as a kid back in the 80s.

And I liked being the farm kid mostly.

It was a great experience for me.

I worked at a lot of farmers markets on the weekends and that's kind where I learned how to sell.

I mean, I remember my dad would say, hey, let's sell everything at the end of the day when the farmers market was getting ready to shut down.

And I think I was selling watermelons, three, four dollars, just so we didn't have to bring them home.

uh But uh I remember yelling that out as a little kid when I was, I don't know, seven or eight years old.

Been doing it ever since, been yelling it out ever since.

that's kind of where all that gets, I guess this is it kind of started, being the entrepreneur, so.

Yeah, yeah, it sounds like that entrepreneurial streak runs pretty deep.

So what did education look like for you?

You know, education wasn't that important to me, like most kids I guess.

I played a lot of sports, went to a very small school,

got a scholarship to play football, that kind of went south, and I ended up joining the Coast Guard for four years.

And after four years of that, I came back and actually had my GI Bill and finished out here at Boise State University.

And with a political science degree, I was going to become a lawyer, go to law school, and I'm glad that didn't happen.

I'm not a fan of lawyers in any level and I couldn't imagine being one.

But no, I got into risk management right about that time, started PNC agency and as they say, the rest is history.

But it's been almost 30 years, well will be, yeah it was 96.

So yeah, is that 30 years?

I think that is, damn that is 30 years.

Yeah, I guess.

man.

So a political science background, now working as an entrepreneur and specifically in the insurance space, uh do you utilize your education much in your current career?

I would say not.

think what the biggest thing, know, college is getting kind of a knock right now, which is justifiable in my opinion in a lot of ways, but I do think it does create the narrow paths

to critical thinking, hopefully.

That's what it did for me, honestly, was to be more of critical thinker in my decision making.

that's...

You know, I would attribute that more than anything as far as any kind of degree out there.

I was never going to be a, you know, the doctor.

I mean, I never specifically would have focused in on any one.

It was a liberal arts degree at the end of the day, political science was, but I liked it.

I loved history.

Actually, saw myself as a, honestly, I was going to become a teacher originally.

But then when I found out they got rid of corporal punishment somehow along the line in those four years of me being away.

I'm like, I went to a class one time and the guy, a lot of kids were back talking.

was observing a junior high class for one of my college credits.

And I'm like, hey, these kids are kind of talking and they broke for recess or whatever.

I asked the teacher, said, hey, I noticed these kids are kind of, it was already after spring break.

And I said, they're pretty active right now.

They're talking back, they're interrupting you.

I go, why don't you have a paddle on the wall?

And he looked at me like, what?

And I said, yeah, that's what my teachers did.

That's what I plan to do.

And he's like, no, man, you can't do that anymore.

I'm like, well, I'm out.

I'm literally at that point.

I said, all you got is carrots?

I can't do business with people that just have carrots.

So that's why I went a different route very quickly after that.

I had no interest in being a public school teacher at that point.

anyway.

man, that's great.

That's funny.

As long as you can smack kids around, you're good to go, otherwise...

Yeah.

it, right?

mean, there's nothing for hell's sakes.

mean...

yeah, there's no way I could make it as a teacher in today's world.

ah I've got some friends and relatives that are teachers and the things they put up with, the way that they have to go about running their classroom, it'd just be untenable for me.

yeah, yeah.

man, great teachers are few and far between and they don't get paid enough.

So.

No, that's for sure.

uh

I want to take a moment to tell you about this episode's sponsor MacArthur Company.

As a former contractor, I know the importance of working with a great team.

That team includes more than your employees.

You need what you need

on

time and at the right location.

Competitive pricing sure helps too.

A good relationship with your supplier can make a huge difference.

That is why I always use MacArthur Company.

At MacArthur, you are more than just a number.

You are a person, a customer, and a friend.

With branches throughout the United States, MacArthur is big enough to handle your most demanding needs, but they do it with small town service.

MacArthur isn't another big box store run by a board answering to stockholders.

They are employee owned, making them one of the last independent suppliers serving all of your commercial, industrial, and residential building envelope needs.

Whether you're doing roofing, insulation, HVAC, or siding, MacArthur has you covered with great service and a personal touch.

If great service and good pricing don't win you over, make sure you check out their customer incentive program, where every purchase earns points towards a free vacation.

I am already packing for my next MacArthur incentive trip.

Call or check online to find your nearest MacArthur warehouse so you too can enjoy superior service and start earning points towards your next vacation.

Get what you need, when and where you need it.

All the service without the hassle.

MacArthurCo.com.

Well, it sounds like you came from an entrepreneurial background, kind of a blue collar childhood and growing up.

Can you tell us a little bit about you mentioned a few jobs there and a transition through your career.

But can we dive into that a little bit deeper?

How do you get from a political science degree to founding SRA?

Yeah, was actually working at FedEx.

So I worked my way through school.

You worked at UPS, FedEx, here in Boise.

And I was going to go to the FedEx route.

And honestly, I trained under the corporate management program during college.

And back then, you had to have a college degree and all these other things to become a manager for FedEx.

And I was...

I remember hopping on planes, flying to Memphis, and then from there I'd fly to other parts of the country applying for management positions.

And I applied, I was stationed down in Florida for a couple years, so I went down to Fort Lauderdale.

I was interviewing for a job there as a manager, and I would have to operate.

At that point I had my oldest son, and then my daughter was just born.

And I thought to myself,

I'd have to uproot my family, move to a place.

Florida's great place, but back then even there was a lot of issues back in late 90s around that part of the world.

But I just thought, man, this is not what I want for my family.

And so I took the risk.

I uh started as a Farmers Insurance agent, actually.

And it was scratch agency.

you literally, I remember back then they didn't have caller ID, so telemarketing, local phone calls.

I bought mortgage leads.

started my own insurance agency literally from scratch and within eight months, nine months, was a I was a top producer at that point relative to my peers in the area and I

was offered an agency and I took it and that was in a town, a little town called Meridian, Idaho, which is now, when I started it was 24,000 people, I think now it has...

about 125,000 now.

So it's grown by that far.

But no, that's literally how it started.

really, I just wanted the lifestyle for my family living in Idaho.

I know working for, know, working, you know, I called it a job, you know, the, you know, just over broke kind of stands for, you know, it's hard to make it a really strong living

in Idaho.

I kind of recognized that early on, pay scales are not the greatest, but you got the quality of life and, you know, sometimes it'll still go in line.

But if you start a business, you got the opportunity to do both.

And that's kind of the way I saw that.

And that's what we did.

So, rent now for many years.

Came in top one producer and all that good stuff, all the accolades of that.

And then I started dabbing in everything.

But honestly, my clients were subcontractors.

I loved plumbing.

I actually owned a plumbing business with my brother.

I own four of the businesses now at this point.

I own a construction company that does nothing but industrial refrigeration businesses.

Really, we're licensed in five states.

That's that's I started that company with my brother-in-law that company's sir has been awesome to watch grow over the last several years and it's become a really Great business

and I do love I'll be honest with you of all the businesses I've worked with and been involved with I do like the service industry with some of the construction side of things

and That's kind of got my

Interest right now peaked more than anything.

son runs this company now and my daughter's involved as the controller.

She worked for Deloitte for a couple years and she's a CPA and she came to work for me a couple years ago.

And my youngest son actually works in that company, Sir.

And uh Sir stands for Superior Industrial Refrigeration and I love that business.

I love the cold store space.

It's very unique, very niche-y still in the construction world and we've done well there.

uh

I own some, they call them rave laundromats, I started laundromats with my business partner probably about eight years ago.

here in the Valley.

There was really needed and that business has been great.

So yeah, think for the most part, what's afforded me to be able to grow my business though is really what we do, what I predominantly do is risk management.

And how do I position dollars more effectively and efficiently for business owners, entrepreneurs such as myself, that really takes advantages of the downturns and the...

unforeseen incidences that happen all the time now in the world we're in.

When it comes to risk, it's gotten much more complex.

So, kind of drove me there was 08, honestly.

Yeah.

Okay.

Man, that's interesting.

I wasn't aware of all those other businesses.

think you probably fit our traditional guest profile a lot more closely than I expected.

thought insurance was kind of your focus, but you've been all over the map and got your fingers in almost everything.

Yeah, I do love it.

When I see an opportunity, I can't say no to it.

It's kind of a disease, I think, maybe.

I don't know.

I do drive my staff nuts with it, because I do come up with...

all sorts of different things.

And there's just a ton of opportunities out there right now.

I know a couple right now that I'd love to, but I mean, I'm getting to the point where I don't know if I want to do it, honestly.

I'm 58 now, I'm starting to have grandkids, and so things start to pivot on that end.

you know, it does eventually calm down a little bit.

You don't want to...

I think it starts to calm down anyway.

I hope it does, but

anyway.

yeah, that's awesome.

I think that's probably a trait of a lot of entrepreneurs is they see opportunity everywhere they turn and it's hard not to take advantage of it.

I think that's probably maybe more so than skill or intelligence or education.

That's probably one of the determining factors with entrepreneurs is the ability to see opportunity and the risk.

Oh, I guess the lack of being risk adverse to go after it when you see it.

So.

I couldn't agree more.

And it's really the risk tolerance you gotta have.

mean, and being fearless when it comes to doing something nobody's ever done before or any of kind of stuff.

And you gotta have a chip on your shoulder to do it right, honestly.

So.

I think that's true as well.

And yeah, that was the word I was looking for risk tolerance.

It wasn't coming to me this morning.

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Well, do you want to tell us a little bit about I guess you have lots of businesses, but specifically SRA.

At what point did you decide to step away from farmers and start your own thing?

Well, ironically enough, my wife came to work for me.

Our kids were starting to get old enough, she came to work for me.

And she actually, I sold my agency to her.

When 08 hit...

you know, the great recession, you know, I had a lot of clients.

So we're growing, mean, Meridian's growing, you know, it's building homes, subdivisions.

I mean, it was this pouring into the valley here.

And uh all those guys were clients of mine.

I mean, this sheetrock guys, to plumbers, to electricians, general contractors, landscaper, I mean, you name it.

you know, looking back, I you I love those guys.

mean, they all became friends eventually.

I mean, you work with them long enough, people become friends.

friends in that relationship and especially if you're like-minded of business and you know I loved the fourth quarter I mean the fourth quarter was good for me because you know

these guys would call up and say hey I met with my CPA I got a tax liability I'm buying two more trucks and a skid steer what's it gonna cost to insure

Yeah.

you know, everybody's making more money, you know?

And, you know, looking back, I mean, all he kept doing is betting every year was going to be better than previous year.

You know, I mean, they take advantage of accelerated depreciation and then finance the equipment and then afford a new boat or the bigger house and all those things, right?

And, you know, I made the joke and it's true.

I mean, they make a dollar, they spend a dollar ten.

I mean, it's just the mentality of, you know, and yeah, exactly.

And,

You know, here comes 08, 09, you know, that, and unfortunately I was witness to a lot of those, I lost a lot of those clients, that, you know, the loans and, you know, covenants

and loans started the mean things and leverage was, you know, you didn't want to be leveraged, over leveraged because there was a sudden halt.

It was like a slow stop.

It was like, you know, it was like hitting a wall.

you know, so then I, you know, I was kind of exposed to the idea of managing self-insured risk.

through a tax code called 831B.

At the time, I wasn't that interested in it, quite honestly.

Didn't seem to make sense for my business owners.

I didn't really see the lines, you know.

And I thought traditional insurance was doing a good job and honestly, it was pretty cheap.

And so this idea of, you know, and then here comes 08 and then you realize the financial risk business owners take.

And uh betting every year, you know, my clients were good, hardworking people.

Maybe not the high sophistication of business, but knew their trades really well, cared about their employees, sponsored the baseball teams, I mean all of that, right?

And then boom, they're out of business.

uh

blue collar businessman is they start in a trade, they get really good at it, they see opportunity, they take a risk, and they're really great plumber or really great

electrician or really great whatever.

And they learn business along the way instead of coming at it from the other angle.

So they need experts in their corner to help educate them on those things.

Absolutely, and unfortunately their CPAs aren't, you know, they're a good trusted advisor, but they don't...

I can tell you some nightmare stories.

saw what's happened to some business owners dealing with CPAs that weren't paying attention to them.

Guys that grew really fast and didn't know the back end exposure they had to taxes.

Anyway, so you get all this out there going and then the financial risk business owners take every year to do what they do.

And that's really what I thought, man, there's got to be a smarter and better way of doing business.

And I was exposed at that same time of an RV manufacturer here.

If you ever go up down through

Highway 84, which is, you know, all the way from, really from Salt Lake coming up through Portland, Oregon, through the Columbia Gorge and all that.

There's a lot of RV manufacturers through that corridor.

And I knew the gentleman that was running one of those.

And he had seven of these 831B plans set aside over the years that he was using tax-deferred expenses.

So basically, let's talk about 831B real quick.

On a high level,

831B is no different than when you fear 401K.

It's just where you find it in the tax code, right?

The federal tax code, which is, I don't know, three or four inches thick.

So that's just a tax code.

what it is is designed and it was introduced in 1986, shockingly enough.

I was just...

I was still in high school in 1986.

But in 1986, they passed a law called the 831B tax code for a tax incentive.

If people were going to self-insure risk, we want to use pre-tax dollars to do that with, right?

uh Versus after tax.

So that was the incentive.

And what was happening back in 1986, very similar to the market today, where there's just more exclusions, pay more premium, getting less coverage.

Very similar to what's going on today.

And I would say actually today it's

worse than it was back in the 80s.

The farmers are also losing their crop insurance.

So private sector was getting out of it, it became too volatile, it wasn't profitable business and of course it's backed by the federal government no different than FEMA or

terrorism coverage and all that kind of stuff is today.

But back then that wasn't the case.

So they created an incentive.

basically you're going to expense it out of your operating company level, no different than if you bought a general liability policy or work comp or any other expenses when it

comes to your operation of your business, but then it

was going to dump into an 831B plan that has to look and feel like an insurance company, the premium going into it, you don't pay taxes on it.

And so where we kind of fit with our clients is very similar to a 401k administrator, right?

You're not going to participate in a 401k plan without a person in the middle, a Chinese that forms the

guardrails and all that.

read that three inch thick tax code.

Exactly.

And keep you out of trouble.

Make sure the dollars stay tax-referred.

You got your risk of rules.

You got all sorts of regulations in 401k.

If you're going to participate, it's no different than 831B.

But it is for small to middle market business owners that are self-insuring risk.

And that was 1986.

Now you fast forward to, well, 2026.

The world's gotten much more complicated.

mean, there wasn't even a thing about, you know, back in 96, nobody even thought about cyber risk, right?

I cyber wasn't even a thought.

You started seeing supply chain, you started seeing more of a global economy and all that stuff develop.

again, it wasn't really, you know, a long-term thought process to what's the ramifications for all that.

And then you fast forward up to 08 and then, then of course the big one would be COVID.

You know, that's when a lot of business owners took a, you know, and...

And so one of the things that we do and is just, know, hey, Mr.

Business Owner, you know, we run through their underwriting, we look at their policies again, we come through and back and say, hey, listen, you got this coverage, you're

self-insuring this, this, and this.

And a lot of times these business owners already know what they're self-insuring for.

And we just come down to, do you want to use pre-tax dollars or after-tax dollars?

If you want to use after-tax dollars, just keep doing what you're doing.

Rely on your lines of credit, your savings, or your operating capital of your business.

Or take some of the tax liability you pay and defer it and put it into an 831B plan.

And when these things arise, you're going to use pre-tax dollars.

to handle that self-insured loss in your business versus after-tax dollars.

And very similar to the 401k, you just have a lot more dollars to invest over here to work out no different than the 401k.

You're deferring your taxes on that as well.

Yeah.

for you, your retirement, and for your employees retirement, but you just got a lot more dollars to invest.

Well, in this case, you got a lot more dollars to handle the risk.

And now in today's world, you're seeing a lot more first dollar losses, Erick, when it comes to traditional insurances.

And I can dive into that if you want, especially when it comes to different trades and what we're seeing out there in the world of exclusions, unfortunately.

And it's...

You know, it's one of those things where I would say that if you talk to the business owner, they've been in business long enough, they're going to have a nightmare story,

honestly, that happened to them that they thought they were covered for and they weren't.

You know?

And how did they handle it?

And that's really what we're, I'm just here to position money for them, to make it more effective for them.

And honestly, think, you know, a good way example to get your listeners to understand, think of this as like an HSA for business.

All we're doing,

Does that make sense when I say that to you as far as how

Absolutely.

Yeah.

That's awesome.

So sorry.

I was making a few notes there.

My mind's just racing with questions.

is kind of my first exposure to the 831 as well.

I've been in a family business for 40 some years and running it for 12 and

everything you're saying clicks right with all that I know and I wasn't aware this was even an option so I got all kinds of questions here.

Before we really dive into the mechanics of the 831 I was curious does your wife still have the agency that you sold to her?

oh

2014.

I was very fortunate to get this business up and running and still have our cash flow in the back room.

And my wife, you know, she never dreamed of becoming an insurance agent.

So she took one for the team on that and she was happy to see it sold.

But yeah, she ran it for another, I don't know.

four or five years after that.

She did a great job with it actually, but no, it was time to move on.

But it took a while for this business to grow too, honestly.

mean, the concepts, the grind, just trying to get people's head around this, well, why the hell do I want to own an insurance company?

And uh then too, took the economy to get better too, quite honestly.

mean, that was a...

You know, look pretty young, so I don't know how much you got hit on the 08 deal or not, but some of you just said, I couldn't believe how long that's been.

It's coming up on 20 years.

That blows my mind.

But, man, time flies.

But yeah, it's it's, and also, you know, it's funny too, I...

I say this a lot and I speak all over the country on this, especially with entrepreneurs, we got to have short-term memory, right?

I I kind of joke, if we remembered all the headaches, all the mistakes, all the losing money and all of those things, we'd be in a fetal position and never get out of our bed,

right?

I mean, it's just, we have the amnesia like nobody else's business.

I mean, we forget real quick.

We only remember the good stuff.

We like to flush the old stuff pretty quick, but anyway, hopefully learn from it.

Yeah.

Nobody would ever stick with it if you remembered all the bad things.

Running a business can be tough.

man.

yeah.

Yeah, you would.

And so, yeah, I think that's the, you know, like I said, I was very fortunate to keep that agency during that time to be able to grow this business because, you know, it's not easy,

you know.

I mean, you still got expenses at home, you still got a family to provide, and meanwhile you're trying to start another business, and we're very fortunate that that cash flow is

sitting there still to manage that, to...

make that bridge work, you

Yeah, that's awesome.

It sounds like you've made that jump a few times.

You got your fingers in two different insurance agencies and plumbing and refrigeration, a few different trades and, man, I don't think I have the bandwidth to take all of that on.

You, you must be doing something right there.

So.

know what, I would say no micromanaging and really, really good people.

And I'm all about giving part ownership in the business to some of my key employees.

mean, there's some agreements they got to sign.

Basically, it's a 10-year investment.

But I'm all about that, especially up front.

I I want a good EBITDA to offer these.

I want to either resell or they get another retirement on top of it.

I just think if you're going to dabble in multiple businesses, then you better have some people

People need to buy in and they need some ownership up front, in my opinion, to make it work.

Yeah, that's great.

That's some good advice.

yeah, man, I'm making more notes here.

I'm learning all kinds.

Okay, well, you kind of got us going on the 831.

I got some more questions kind of for you and your leadership.

But while we were on it, I want to dive in here.

So I like the analogy of the 401k or the HSA.

With the 831, is that money investable when you have it set aside like an HSA or a 401k?

Or does it have to sit in cash?

What kind of regulations are around where that money sits?

There's some of it does, meaning that, you know, because it's obviously there to pay claims, but because you gotta remember the box looks and feels like an insurance company.

So absolutely, I mean you can invest that money, it becomes surplus so these policies earn out no different than HSA right?

Every year you get the ability to put more money into it every year.

You may not have used it last year, hopefully, but now you have more money into it, now you're able to build it.

And it's very similar to this program too.

Those dollars become surplus, it can be either self-directed.

or you can have your financial planner manage it.

Again, we are, as a company, are an administrator.

So if you ask me what's our core competency, is we manage over 800 insurance companies.

Okay.

for privately held companies.

so we do everything from taxes to financials to underwriting the risk, issuing the policies, adjudicating the claims.

We run their insurance company for them on their behalf.

And we're not here to complicate business owners by no means.

I think we're a compliment to what they're doing.

One of the things that we say here, Erick, is we embolden business owners to innovation and risk management.

And we've seen it and we've lived it.

clients that have been with us for number of years, knowing what they've done in the back room, it does give a propensity to take on more risk, quite honestly.

And I love that because some of these people are really good, smart business owners, and when they start to become risk adverse, that could be a problem for us.

Yeah, yeah.

So uh you said it's structured, it has to be structured to look like almost a separate insurance company.

So how does that roll down to the company's balance sheet?

Are those assets still kind of shown on the balance sheet?

Well, it depends, right?

So these are C-corps.

The 830-mil V plans are formed as a C-corp, so they're shareholders.

Those shareholders can be the operating company.

A lot of times it could be the owners of the operating company.

It's typically where we structure those.

So it really depends on what they want to do for the long term.

This is an outside asset.

can be no different than on your personal balance sheet at that point as far as if you're a shareholder of that 831B plan.

I can tell you, our typical clients are husband and wife, and they own this thing 50-50 in their name.

And their operating company is their operating company.

And our two, if I got multiple partners in a company, we structure it little differently, or we may just have the operating company own it, which is perfectly fine.

That's when we kind of rely on, we would advise on how to own it.

There's some legalities to how you have to own it.

So obviously that's where we stay within that bandwidth.

But we rely on their other trusted advisors.

That's when the CPA ought to be advising them or their attorneys or whatever is going on out there.

advice on how the ownership should look but it really is a C Corp.

can either land on there as another, you know, no different than owning a building in a way, right, from a business standpoint or you can own it individually and husband and

wife's name and all that kind of stuff.

or the two partners names or whatever going on there but that's really way it looks.

Okay, I would just I'm trying to get my head wrapped around it.

Like you said, I'm this is new to me as well as probably many of our listeners and I just thinking, you know, if we if you set that cash aside to self insurer versus putting it in

an 831, there's the obvious tax advantage.

But if you know, if you have that in an account, it could be collateralized for future financing or things like that.

And, you know, is this still going to be held as an asset in that regard?

Yeah, it's definitely gonna add to your balance sheet.

Either your company's balance sheet or your personal balance sheet.

Both the bank's gonna want.

So, you know, it might not work.

Yeah.

Everybody thinks they can keep liabilities limited to their business.

at least what I've found is in the real world, that's not the case.

You're responsible for all your company's assets and liabilities.

Yeah, they all, you know, these banks want to wrap you up the best they can when it comes to protecting downside of their risk.

So, I get it.

them all, some of the documents I've signed as a business owner would be a bit terrifying.

The trick is you just got to sign it without reading, right?

Yeah, press hard, know, sign here and press hard.

No, I would say that the personal guarantees definitely become a burdensome for you and you know, it's funny, I'm literally going through this right now.

Sir is buying, we're buying the building we're in right now plus it has two more buildings on the campus plus another two acres that we're gonna develop into a drop yard for our

materials.

I'm trying to avoid the PG right now and I think I'm going to but you know, honestly not yeah, but not to my own horn here.

just think you know You got to get to a certain level financially and then it is yeah, okay We're good and we're buying the buildings, right?

And I think that helps with we're gonna have a lot of equity into him from day one

Thankfully

years building multiple businesses, finally build up the assets where you can do that.

So that's great.

yeah, I still though, yeah.

It is what it is.

I'm not, because I own a lot of commercial buildings too and at the time you think these are all really good ideas and then did this become, know somebody said to me, well

actually a financial planner, I recently came on board as one of his clients, he said you have complexity creep.

And I'm like, what?

And he goes, yeah, you have complexity creep.

And it's just, again, getting back to that entrepreneurial thing.

You don't really, you know, I drive my daughter nuts because, you know, she'll call me, do you have a new LLC formed that I didn't know about?

But that's getting better.

It's all getting better.

I'm calming down.

But I would say five years ago, man, I was not afraid.

All I looked around was opportunity, opportunity.

But now I'm kind of...

Kind of calming down,

so.

sorry, this is a sidetrack.

I'll get back to the mechanics of the 831, but you've been in business, running a business for 30 years.

You've been in a lot of industries.

You've run a lot of different businesses.

The people that say the American dream is dead.

There just isn't opportunity out there like there used to be.

Do you agree with that or do you still see opportunity for someone to do what you've done?

I see opportunity.

I mean, I think it's going to be more opportunity going forward, quite honestly.

If you're in the right mindset, you know, if you're not in the right mindset and you want to play victim or, you know, woe is me or hey, not everything.

And if you're looking for the right time, does not exist.

You know, and and so, you know, it comes down to having faith in yourself.

And, you know, honestly,

Maybe it's fear, you know I kind of ran scared for a while.

I mean I had a young family.

I had my first son when I was 20 and my wife was 18, you know what I mean?

So you kind of run kind of scared at that point.

So you're like, damn I got to get going here.

so all of that stuff plays in your mindset, right?

And you got to have faith in yourself.

And then honestly you got to have people around you too, right?

That aren't trying to...

You want to tell a cautious tale, but at the same time you don't want to discourage from somebody to want to take a risk either.

We don't live in a...

We look for comfort all the time.

And I'm always trying to consciously be aware of trying to look for discomfort.

Trying to be comfortable all the time is a trap.

I think that's, you know, because you start making enough money at your existing job so you don't want to leave.

You don't want to take the chance of going out and starting a business for yourself because, or you got too much debt on the backside because, you know, things were good and

you, you know, there's all a lot of things that go into it, but sometimes you just, you don't need to check out deep the pool, you just got to dive, you know, and it's like, you

know, it's all of those things, you know, it's just, but yeah, I think the American dream is live and well.

I think that's why,

Honestly, I was just sitting in a class and going through scenario planning.

That was interesting day.

it was said in that meeting, this gentleman's from South Africa, and he said, America is unique because of entrepreneurship.

It does not exist anywhere else in the world.

The mentality to think that you can start your own business.

does not exist, and I've traveled now since my kids have gotten older and started having kids.

My wife and I do travel.

I see it all the time when I go to other foreign countries and especially Europe.

I look around, like, you know, there's not a lot of small, there's small businesses, but as far as like true entrepreneurship, I mean, it's looked like they just got a highly paid

job that they have all the risk for, right?

I mean, that's basically what their business is.

And so I just find that really unique to us still.

And I'm so,

appreciated that, especially people from around the world recognize that.

I that's why a lot of people want to, I mean think about who, you know, illegal or illegal immigrant, what are they first thing they do?

They look to start a small business and you know there are other parts of the world that's not possible and that's crazy, right?

That's super foreign to us.

Yeah, I agree 100%.

I think the opportunity is there.

I think comfort is the detriment of, I think there's been a couple generations here.

They got pulled aside by that comfort.

I saw this morning, Michael Easter just came out with a new book.

It reminded me of his book a couple years ago, The Comfort Crisis.

I loved that book.

And I think and hope that this next generation kind of coming behind me.

uh Sees that and and is willing to take that risk because I think the opportunity is still there what we're lacking is the people that have the the grit the determination and the

Optimism to really go for it to take a risk and and dive in like you're talking about so Yeah, I think this next generation we're gonna really see a divergence between the people

that want to be comfortable and work a job and the ones that are willing to take that risk Like we haven't seen in a few generations.

So

Yeah, and we have a huge disruption on the horizon and it's called artificial intelligence.

And I'm encouraged by what I'm seeing, to your point about the Gen Zers, that they seem to be a little bit more entrepreneurial from what I'm seeing.

And then maybe it comes back to that risk, right?

And that they're not afraid to take risks.

They believe in what they're doing or they believe in themselves enough to want to take the risk.

I think the millennials kind of screwed over a little bit, just based on their experiences getting back to the 08 crisis.

But yeah, I'm encouraged really on the Gen Z, quite honestly.

I mean, we're seeing it here.

We're seeing younger business owners calling us.

where we're seeing it mostly is agricultural, honestly.

The family ran farms and ranches that these kids that go to college, they do want to stick, we see more of them trying to go back to where, instead of trying to get that

corporate job, they want to go back and work the farm and dairies and all that stuff with mom and dad.

And that's been kind of encouraging to see, because very, very business oriented.

it honestly.

mean this is totally, you know, not your normal farmer kind of mentality which,

yeah.

lot of family farms turning into big, big corporate organizations right now and they're doing well.

Yeah.

It's exciting stuff.

I'm yeah, I'm, excited to watch and excited to be a part of it.

And, uh I've, I have high hopes for parts of our culture, but, like you said, I think that victim mentality, can look at.

the disruption in our economy and AI and know, woe is me, my job's going away.

Or you can go, wow, look at this tool and what can I do with it?

And the people that see opportunity in that disruption are gonna boom.

And yeah, I'm excited to see what happens.

So.

You know, there's been a, you know, anytime there's been a major disruption, know, uh internet, well, cell phones, internet, personal computers, least in our lifetime, right?

mean, you know, major interruption would have been the first time you saw a car driving down the road back, you know, 100 years ago, right?

I mean, that would have been a major interruption, right?

And what's been interesting is every time there's been a major interruption in our country, you know, in the back, in the back,

jobs were, more jobs were created because of it.

What will be interesting to see is how AI plays out in that because honestly, you know, when you look at everything that's, that's been like those big disruptors, there was a lot

of jobs.

Now they got rid of jobs in the front, but they created a lot of jobs in the back room, more so than what was lost, right?

And so it will be interesting to see how that plays out because, you know, on the, you know, I don't know, but I do think that there's an opportunity for a lot of small

businesses to

you know, fill in the gaps.

then, you you talk about, you know, you talk about human experiences and all the other stuff that's going on out there that people are gonna have time to do.

I think homesteading is going to be big, honestly.

think, you know, that's got my attention.

I mean, I'm literally, I'm...

I'll be home setting in two to three years when my kids are taking this company over.

That's really my goal, honestly.

Get back to being a farmer.

Nothing like what we were doing, but enough to support my family.

But I'd love to know where all my food came from.

That's literally my goal.

But I think people are going to have time for all that stuff.

So it's going to be interesting.

It's going be an interesting time.

I hope there's more optimism and then pessimism when it comes to this.

But I do think there'll be a big disruption.

Bigger than I think you want us to understand.

I agree a hundred percent.

And I think that opportunity is there because, yeah, like you said, you know, pre industrial revolution, it took everybody's full time attention to grow the food that they

needed for that day, that year.

And there are so many industries that had not been born yet simply because we didn't have the, the labor capital bandwidth in our society and in our culture.

And so, yeah, farm equipment comes on the scene, takes over all those farm jobs, but it frees up that human capital to do so many other things.

you know, computers, the same thing.

We got rid of all the people just keeping records, copying things.

Computers did it all, freed them up to go elsewhere.

And so, you you talk to most small business owners right now and their biggest struggle is human capital.

They don't have the labor.

They don't have people.

There's twice as many open job positions as there are job seekers right now.

What we need is technology that's going to take over a few jobs to free people up to do other things.

Yeah,

yeah, and I think you better be a critical thinker too.

You better be proactive and not reactive.

And that's part of the problem too though, right?

mean, is education come that way?

You know, I don't know.

Yeah, yeah.

Well, sorry, we're getting a long ways away from insurance here, but great, great conversation.

So the the 831 plans, it's money set aside in a separate C Corp, it can be invested.

And then I would assume that when that money gets used to cover actual costs or risks, is it then taxed when it gets used or is it tax free on both ends?

It depends.

It depends, right?

So,

Depends if it's a business interruption, protecting your income of your business or there's a physical loss on the property where you're just being made whole, right?

So anytime you have a traditional claim through traditional insurances, it depends on what the coverage was and what it's covering you for.

If you had a fire and you had to pay out $50,000 in deductible and we took $50,000 out of your phone, that would be an expense, right?

So you wouldn't pick it up as income.

But if it protected your loss of income, very similar to PPP was, right?

Like, hey, I was just forced to shut.

down for two weeks or whatever, it disrupted my cash flow, I lost money, you know, and that's where you could put a claim in as well for those types of issues.

So it really depends on how comes in.

Now, as far as tax free, so these dollars that stay in the 831B plan, the premium is tax deferred and realized investment gains would be taxed at the corporate rate.

that's...

Okay.

So like let's say you put your money in a money market account, kept it really simple, right?

You're getting, let's say, 5%.

You would get taxed on that 5 % every year.

Right?

But the premium that was sitting there would not.

Now, as a shareholder, you say, hey, I'm going to take a dividend out, no different than if Coca-Cola declares a dividend, right?

Then I would pay long-term capital gains out, which is the same as capital gains rate, which I think right now, depending on your tax brackets, anywhere from 15 to 20 % with the

feds.

So that's how that works.

So it does get taxed.

It's when it's taken out of the C-corp in the form of a dividend.

Or let's say, hey, I've sold the business.

I no longer need this.

going to go ahead and shut it down.

Then I'll pay a long-term, you know, I'm basically selling the stock or reclaiming the stock back, shutting the C Corp down and I'm paying long-term.

It's like selling a building at that point.

I'm going pay long-term capital gains as a shareholder.

So that's how that works.

I mean, best case scenario, you invest in this for a long time, you don't end up using it, and you have to liquidate it, you're going to have a tax event, but really, converted

ordinary income to a long term capital gains, you still stave on taxes even at the end of the story if you don't use it.

Yeah, and think of this as a HSA plan too, right?

HSA works the same way.

If you don't use it, it eventually turns into another retirement plan.

It's very similar to the 401k though.

The 401k gets taxed as ordinary income at the time you take it out, right?

So those are the nuances internally on that.

And uh that's how that, yeah, so I'm glad you picked up on that.

But yeah, that's exactly right.

Yeah, sorry, I'm probably boring all the people that are not spreadsheet nerds are rolling their eyes right now, but I dive right into that.

So, um, well, my, next question I had about that is, so you're essentially running your own insurance company over there.

and I'm guessing this is part of where you really come in and helping, administrate the plan.

do you have to underwrite specific risks that you're covering ahead of time?

ah or what things are you allowed to use that money for?

When do you get to cash that in?

Okay, so yeah, we are the administrator, right?

So we're going to underwrite and recognize self-insured risks.

We're going to run through your policies.

We're going to show you the exclusions.

We're going to wrap.

endorsements or policies around those exclusions or you have a first dollar loss.

We're seeing a lot of coinsurance clauses now come in, very similar to healthcare, where I had a deductible but now I got a wind damage or I got a hail damage and I got a separate

coinsurance on top of that where I got to come in 20 % on top of my deductible.

So we'll start to build a policy around that first dollar loss and start to fund for that, right?

God forbid if it happens.

And again, most business owners, they don't have like a sinking fund where they were, in case this happens, I'm gonna take after tax dollar and put it in his account.

Nobody's really doing that, right?

This kind of forces that to recognize that first and foremost.

So that gets back to that.

you start to sleep a little better at night knowing you've done this thing, right?

Because now you're not relying on lines of credit, operating capital, or your own personal savings that you've made out of the company, but now you'd have to loan it right back in

because now it's got a huge expense that was not in operating capital, right?

So those are just great...

strategies honestly.

are you know I tell clients that's not you know if you're a good year to take a little bit off the top park it off to the side it's not only good risk management it's just good

business and you know it's like it's like I get back into that 08 conversation.

You're still taking the deduction as if you bought the equipment but you still have the money.

Yeah.

a big difference.

And I'm all about people buying equipment when they need it, right?

But that's where the tax tail wags the dog kind of thing.

to spend a dollar to save 40 cents, somehow will make sense of it.

I'm guilty of it in my younger days, so I'm not saying I wasn't.

there's not a lot.

If you need it, you need it.

And you know a sad thing, what I witnessed back in 08, thinking about 08, when people were doing that, buying more stuff.

Well, yeah, they eventually said, well, that's eating at me.

That skit steer can't be.

We got to put that thing to work.

Well, let's go bid more work, lower our margin down to get the job, and then we'll have more work.

And I have literally sat and I'll never forget a great guy that owned a plumbing business, had like 20 employees.

And he looked at me, we were talking one day on his renewal and.

rates were going up of course and coverages and had some losses and all that.

Great conversations you have with your business owner on that.

And he said to me, goes, know, I literally think I made more money with very little, when I had eight guys with eight trucks and I had very little headache relative to this.

And I'm making less money, take home money, now that I got 20 guys with 20 trucks.

And the way he got there was,

He'd have a good year and he'd buy more stuff and he'd admire more employees.

That's literally a hamster wheel at that point, right?

And it just keeps getting faster and faster.

That's what I don't want business owners to get themselves into.

I want it to be strategic growth, not tax, you know, not avoidance of taxes because I gotta go, you know, and that's, you know,

It's very safe from a CPA's perspective for you to go buy more stuff.

Yeah, they're not gonna lose sleep over it.

You're not like, you're doing some kind of really rude tax scheme here, you know?

No, it's pretty black and white.

And they just put it back in the big, beautiful bill.

think they accelerated the appreciation up to a million bucks.

Yup.

And I want people to be strategic on growth, not let the tax tell back the dog.

again, these guys are good people, hey, they don't want to pay any more taxes.

They get upset about paying taxes more than anybody else.

And they're like, yeah, I want to grow my business.

So they go out and buy a piece of equipment, or they go out and buy a truck.

And they're going to put it to work.

They're not going to sit in the...

bone, what am I, the backyards and just sit there and there in the bullpens and not put it to work, you know?

And so, you know, but hey, for more work, we gotta bid more work.

We gotta, you know, now we start to lower our margins, which is crazy, but it happens all the time, all the time.

you just nailed a couple of my pet peeves there is I got some advice early on in business.

I repeated all the time is

make your business decisions as business decisions.

And at the end of the year, when it's time to pay your taxes, take advantage of every write off you can, but you never make a business decision because of the write off.

You write off things that were wise business decisions

and uh,

I think you mentioned, you know, talking to CPAs and them as advisors.

I've, I've come to the opinion that, uh, right now you brought up AI and everybody talks about, well, AI is only as useful as the input.

You have to ask the right questions.

You have to have the right input.

And I think the CPA it's the same way.

if you ask, can I pay less taxes by buying equipment?

The answer is yes.

That's exactly what it does.

If you ask, will I have more money this year?

And next year, if I buy new equipment, the answer might be no.

Yeah.

man.

you know, it's funny about write-offs.

I'll never forget.

So I had a business partner in the insurance agency and he didn't last very long, but it was all good.

But I never forget when he, there was one office, he was the next office and somebody came into my office to talk to me about advertising on a poster for the local football team.

And they said, oh, it's a great write-off.

You know, you can write it all off, blah, blah, blah.

And they get up and they walk out and I heard Phil, he spoke, hey man, I got great news.

I'm like, oh, what Phil?

He goes,

we'll have so many write offs, we'll be able to write ourselves right out of business.

Yes.

And that always stuck in my head when I hear somebody tell me their sales pitches, oh, you can write it off.

Oh man.

Again, like you said, you spend a dollar to save 30 cents.

Oh great.

Okay.

Well, we'll get back on track here.

I assume that most of the 831 plans are in addition to kind of your standard insurances that most businesses carry liability insurance and...

property, casualty, auto, is that accurate?

This is usually in addition to that instead of a replacement of that.

No, you're spot on.

When I took my time out here to increase or decrease the risk you have.

I'm here to recognize risks that you're self insuring for and how do we position dollars more effectively to handle that.

I think traditional insurance does a great job, honestly.

Now, it does get to a point in time, and we do this as well, when we're having a client, a big ag operation with a lot of employees may say, hey, I'm paying north of $500,000, I got

good loss runs, got loss controls, all those things.

We will start to build out that, we will start to replace those insurances as well.

Yeah.

company called Insure Edge, those are called macro captives where these are large construction companies.

Anybody paying north of $500,000 in traditional insurance, I got some dairymen here in Idaho that pay a lot more than that and they're a great resource to have their own

captive, meaning we'll start to put their own traditional insurances in that, but it's very very niche and technical, honestly if you're paying

You know, typically it's 40 cents on the dollar.

if you're...

If you're operating an insurance company, like traditional, you're buying insurance company from all state travelers and whoever, 40 cents on the dollar, every dollar you pay

them in premium just goes towards operations.

Really the 60 cents left is paid claims.

So when they tell you you're unprofitable, you paid $5,000 but you had a $4,000 claim that year, to them you're unprofitable.

What we do is when you get big enough though, let's say you're paying a million dollars in traditional premiums, that's 400,000.

now well now we can put $400,000 in your own still take the 600 and go buy reinsurance Carriers in case you have a large loss, but you know you're now you're you're betting on

yourself You're taking the profit and you're running a lot more efficient than some some big insurance companies run it right so That's how that works.

So if people are used to hearing that We do that very well.

I would say one of the persons one of the people that works in that division for me in my company

Stephanie Forbes is probably no better educated person when it comes to that kind of a program and she's great.

But that's very, very specific and there's just not a lot of clients like that out there that have paid those big premiums.

But most of them already know about it or they've looked at it or if they haven't then they absolutely should be looking at something like that for sure.

Okay.

And so for, you know, a lot of our listeners are young business people or new business people, like we said, tradesmen that they'd eventually end up running a business and are

educating themselves.

What are some of the common things that maybe people don't expect that it would be wise to plan for and self-insure through that maybe people just don't think about?

You know, one of the things, quite honestly, Erick, was, you know, did you rely on PPP or the ERC programs?

And if you did, what are you doing differently today?

You know, God forbid if it happened again, but I don't know if we can expect or should we expect the government to do what they did going forward.

That's one thing.

So that's kind of spun some folks up in their heads.

And then too, if they've been in business long enough, they know they, you know, one of the big gaps we see is warranties.

You know, they offer a lot of warranties, service contracts.

You know, they sign a three or four year service contract.

and they're just gonna keep betting every year they sell enough of those to make up for the difference in other areas because of ongoing cash needs.

Because, hey, I sold 500 service contracts this year, great, you picked all out of his income this year, but you just booked it out, you just booked the liability for the next

three years for that guy to go out and check on the HVAC and AC twice a year.

And he's gonna wanna get paid when he goes out there.

And if he doesn't pick up another job while he's there,

That's a loss leader in your business now.

And the only thing that's making that up is you're selling other service contracts that year.

But we all know if economy takes a hit, first and foremost, people are going to want to make sure you come out and check their ACs and their HVACs and all that.

And the second one is they're less likely to renew or even want to buy your service contracts.

So that's when we could take a portion of those proceeds and put it into an 831B.

as those folks are going out and doing that warranty deal, they could put a claim back on those dollars and move them back into their operating company.

And again, this is the efficiencies of business.

What we're describing is big business does this all the time.

And what we always wanted to do as a business, especially having these clients that were clients of mine in the traditional insurance company, I wanted to price it and make it to

where small to middle market business owners can take advantage this, not just the Fortune 500 companies or very large privately-owned companies.

They're the first ones to adopt this.

You may not be aware of this, but auto dealers are also a big adopter.

mean, if they're trying to sell you a service con, any warranty that's being sold through a dealership,

through a furniture store, or any of kind, all have these 831B plans.

They're taking those dollars out of their operating company and they're putting it in their own 831B plans.

And I can tell you what they're doing with those reserves and surpluses in the back room is they're expanding on their ability to grow businesses in so many different ways.

Warren Buffett's the epitome of insurance, right?

I he owns more insurance companies than anything.

And if you ever got any education or even watched that guy, he's the OPM guy, other people's money.

I mean, he uses other people money to invest in and not give you any interest why he has it.

And then he just gives it back to

end of that period, but meanwhile, he knows how to make money.

And I want business owners to do the same thing.

And that's really getting back to that level of sophistication business owners need to be.

And not be afraid to look at the types of tools like this and take advantage of all the...

All the things that you said earlier, you should try to take advantage of all those tax incentives that are out there for you, but be diligent and be smart about what you're

doing.

uh But this is just one more tool in the toolbox for business owners.

But yeah, that's, yeah, so.

I love that.

My mind went right there as you were talking about that.

was like, for all the years that I've been paying insurance, I didn't know it was the 60-40, but I wondered how much of that went to paying claims, how much of it was overhead,

not much of it was profit.

And then I thought, yeah, I own a little bit of Berkshire Hathaway stock and it does pretty good every year.

It'd be nice to just keep that yourself instead of a...

paying them their overhead and profit.

And now at this plan, if you can have that money invested and growing and when one of those big losses does come up, you get to use your own money that has been invested

earning an income for you rather than borrowing and taking on another liability and paying more interest.

So at the time of that claim, really you're kind of getting the double win and a tax advantage along the way.

get to invest the government's money and

It sounds like a win all the way around.

Oh yeah, and you know some of the things that we're talking about, and then the other thing is called the enterprise risk, which is now they got to worry about brand

protection, right?

You know, we try to build our brand in all of our business.

Our reputation is everything when it comes to Google reviews, know, podcast, mean, reputation is everything.

The second one would be supply chain risk.

And then the other one is, we're seeing a cyber, and then the other one, the big one is third party business interruption.

More and more people are dependent on their CRM.

own systems, more more people, their files are held in the clouds, they get compromised.

I can't pull down my customer base any longer to either market.

contact, which happens.

mean, and then they get held hostage on their phishing and meanwhile it's affecting your business.

There is no traditional insurance that's going to trigger coverage for you on that business interruption side either.

And so, you know, again, the complications of running a business and the amount of self-insured risk you're already doing, you just don't know about it.

A very good example is PPP.

You know, hey, the government's going to shut me down.

Oh, okay.

My insurance is going to cover me?

No.

And so that's why the government had to do what they did.

at the same time, you know, that's just one, that was just a, I can go into stories.

I get a lot of stuff down in Florida.

You know, they get a hurricane coming their way.

Hey, you gotta shut down.

They shut down for five days.

Hurricane never hits.

Well.

That's five days of operations.

They weren't able to collect revenues from their, you know, what, sell their products or whatever.

And so there's, there's always constant disruptions in business today.

It's, it's, uh, we deal with it all the time.

I, Dallas with ice.

I don't know what goes on down there, but you know, uh, nobody's going to get on the road.

Nobody's going to come and see you.

Dentists aren't going to have, you know, it's just a huge disruption in those parts of the world.

And we have it every year it seems like.

Anytime there's a hell, or excuse me, an ice storm down there, we're having business interruption claims come in because some of these businesses run on pretty thin margins.

They make it up on volume.

And if they can't have the, if they can't create the volume because they have to close down for five, six, seven, eight days in that month, that could be a big hit to them.

You

know?

I mean, there's a lot of retail stores that their net might be 5 % or less.

If you're shut down for a week, you know, one week might be, yeah, yeah, that's your whole year's profit.

um, no, no.

still want the, you know, so the bank still wants to get paid on their loans, you know?

Yeah.

And so I know when we first started communicating, said you had recently walked through a pretty significant uh cyber claim within a construction company, which, yeah, I know I'm

guilty of it too.

When my insurance agent started talking about cyber stuff, my eyes kind of glass over because I'm in, I'm a trade business.

don't, we don't do cyber stuff.

We're not running things on the web, but in today's world where everybody's using cloud and everybody

even has just sensitive files stored on their own servers, that can be a real liability.

Could you tell us a little bit more about that incident, what happened?

yeah, they had a policy that's very low, very low limits.

honestly, the cyber policies today are written in a way to really protect you from the cost of the guidelines.

And the guidelines are, if you're compromised, if you your client files or it became public, and if you're collecting social security numbers, date of births, and all that

kind of stuff, and somehow you get...

that those files get stolen from you, you gotta notify, you gotta give them credit watch for the next two years, know, kind of like LifeLock or whatever and all that kind of

stuff.

So that's very traditional type coverages inside those cyber policies.

What's never really covered is a forensic.

So meaning you gotta hire a forensic team to come in and how they penetrated into your firewalls to get into your content or your third party was disrep, and you have a hold

harmless on the third party

that you didn't create the cyber breach, but they did.

That happens a lot.

And then too, sometimes your stuff is held in ransom.

That happens often.

Or you wire money to the wrong people, you got fished.

And that's really where that kind of comes into play today is, especially companies that wire money and move money around, it's crazy.

They got how sophisticated things have gotten in that space.

It's pretty scary ah because AI is being used now for voice overreach even.

CEO calls up, acts like, you that's why we're recommending now, you know, like.

Keywords to be used when there's a request for a wire Never wire somebody calls up and says hey I need to change my wire instructions or they send you an email with wire

instructions You know we always you got to send a test wire today say hey tell me what I just wired into your account You know if it's two dollars and fifty cents.

is it?

I mean it's all of those things you need to be proactive on but unfortunately every year More times than not we have clients it

Because if they want to help and please the client, they, we want to do things fast and appropriate, you know, this may not be our money, or the client should have already been

paid it, or suppliers should have already been given the money, we need it in order to get the product, I mean, all sorts of stuff, right, that we do.

In our haste, things come up, you know, an email that was masked to look like your email, you're getting, again, in a hurry.

You don't pay attention and now you wired money off, know several hundred thousand dollars off to the wrong account never to be seen or heard from again and banks will not reverse

that you are You're on your own and so it's those types of things that happen and I do hope people get training and protocols We actually have great if you're a client of ours,

you always have access to cyber training

And most of it comes down to about 90 % employee mistakes, honestly.

Mostly wanting to please the boss to make sure it gets done timely.

And they kind of, like I said, they insert themselves at the right time on these emails.

And it's very sophisticated stuff.

it happens all the time.

I wish it didn't.

It's gotta get better.

I hope AI kind of cleans that up somehow, but.

It's so rapid.

It's mind blowing to me how bad it is.

I was just having that conversation the other day.

It blows my mind the ACH transfers.

In a world that is, you know, I gotta click a button on my phone and receive a text and open a letter in the mail just to sign into my email.

And yet I can send $100,000 via ACH with a name, a routing number, and an account number.

No password, no confirmation, no trigger word, nothing.

It's just there it is and it's gone.

It blows my mind that there isn't more security there.

So yeah, it's a real thing.

Yeah, and they look for businesses that transact that way and they either compromise, somebody sends them a link, sends them some kind of email that looks attractive enough to

hit a link, and then they put their Trojans inside your deal and they just wait.

And then they intersect that email.

There's not a human eyes looking at it.

I'm sure they build algorithms and stuff like that that say, wait a minute, somebody's getting ready to wire some funds, let's intersect this and put an email in there saying,

hey, we changed it.

We changed our bank this year, it's this wire and it looks, feels like the same person that you might have gotten talked to two days ago on a phone.

So it's all of those things that, and there's no insurance for that.

Insurance companies will not cover that.

They're gonna deem that to be more of errors and omissions or an intentional act.

Right?

And I get where the insurance companies are at.

How do you, I mean, how much do we want to pay in premiums to offer that kind of coverage to us?

You know what mean?

It wouldn't be cheap.

It'd be a lot of money if they covered you for everything, right?

Insurance companies are never gonna, they can't afford to offer you for everything, right?

Yeah, exactly.

Do you want to tell us a little bit about that specific claim?

What happened and how you were able to walk with them through that?

Yeah, so when he did turn around and had that situation happen where he wired money mistakenly to the wrong counts, yeah, we submitted a claim.

We investigated the claim, found it to be a valid claim, and we were able to recapture.

I shouldn't say we were able to go out and get that money.

Now, he did get some of that money back, actually, but he didn't get all of it back.

And put a claim against his 831B plan and was made whole that year.

You can just imagine if it hits you at the wrong time, know, cash flows everything and all of sudden now you got this, you know, you just threw money into a black hole unbeknownst

to you or one of your CFOs or your controller or whatever, bookkeeper or whatever, however you're operating your company.

You know, you as the owner, you know, you got to come up with the difference of that and sometimes that can be really painful.

And that's really where...

We kind of shine, honestly, because over the years you've been able to put money away that when you were profitable and your things are good and you had a tax liability, you you're

able to save for those, for these unexpected type of losses where, you know, unfortunately, you know, if you're having a bad year, just from a business standpoint, you

know, which happens obviously, and you take this hit on top of it, you know, sometimes that could be the difference between living and dying, unfortunately.

Yeah.

And I think that's really where, it's one of those things you don't search these things out.

But one of the things that was said to me early on in my career doing this, and I knew I was on the right path at that point, is when the business owner said to me, you know, Van,

I just sleep better at night knowing I've done this.

And I jokingly say I still don't sleep that great to this day, but.

It's nice to hear a business owner say that to you though.

That's probably the biggest compliment you can get in the risk management profession business that, hey, I just sleep better at night knowing I did your program.

And know, truthfully too, Erick, you know the traditional insurance, and we work with a lot of property and casualty agents.

guys that do what I used to do.

You know, they're looking to solve problems too for their clients, right?

They want to bring solutions like this to the table.

One these I never really loved being a property casualty agent.

Van I love you.

You're a great guy.

I enjoy the fact you buy me lunch every year on the renewal.

But every time I see you, you cost me more money.

And that was never a great feeling, honestly, you mean, you don't want to...

Anyway, but when this program came out and when I really embraced it and saw the advantages from small to middle market

business owners, you know, I save them money now and that's a good feeling.

Yeah, that's great.

That's a joke I make a lot is my background is in a roofing business.

And I said that the next business I run, I want to sell like four wheelers or boats or something because nobody is ever excited to write me a check.

I might provide great services, give them what they need, really help them, but they're never happy to pay me.

uh

Same thing with insurance.

yeah, no, roofing guys are great, man.

We do stuff for roofers.

It's the, it's the, you know, it's crazy back East, man.

I can't believe how competitive roofing is.

man.

Yeah.

In some markets, especially it gets, it gets pretty cutthroat.

So.

sell on the warranty.

I'm like, warranty's coming down to the differentiator, who do you go with?

And it's been interesting.

So we've actually enhanced some of these guys back east, their program.

on making it more competitive on the warranty side because now they're going to include labor not just the shingle, you know, 25-year shingle, but to also include the labor in if

they got to come in there 10 years from now.

And it's been interesting.

We've worked with some, we've worked with some labor, some roofing guys back, especially Michigan and the Minnesota area.

mean, the older homes, obviously, a lot of older homes and older areas, they needed those roofs replaced and.

Yeah, anyway, been interesting from seeing what goes on in the roofing industry.

You kind of covered this a little bit earlier, but I'll switch directions go to

question more about kind of your business rather than the product you provide.

Was there a particular impetus or something that caused you to want to move into the 831 plans rather than your old agency?

Yeah, was definitely the 08.

I mean, there had to be a smarter, better way to run business.

And that's really where...

When I saw the gentleman that had four or five of these in place leading up to 08 and what he was able to do with that money, those reserves and surpluses over all those good years

of selling RVs and manufacturing RVs, he was the only one showing up at the auctions when these other RV manufacturers were going out of business.

He was the only one that showing up to buy the raw materials.

I mean, he was literally buying raw materials for 10 cents on the dollar.

He was the only one that had the money.

The one thing that, you know, going back to 08 and through that time,

I mean the one comment that always resonated, always heard, man if I only had the cash.

mean banks weren't gonna loan you money, right?

But I can't remember how many times I heard that between real estate, buying a business, going to the auction, buying raw materials or equipment, or man if I only had the cash.

And that's really what flipped my trigger was like, yeah this is what smart businesses do.

This is what smart money does.

You you don't go buy a stock when it's an all-time high.

right?

And it's very similar in business and I think when if you're in a certain industry, roofing if I'm making money, more likely my competitors are making money too.

It's when times get tough can I still make money when my competitors aren't.

And that's the difference again between living and dying or growing your business or not growing your business.

And I think everybody makes money when everybody's either on plateau or on a peak or on a climb.

Mostly, not as bad managers, right?

But for the most part, as an overall industry within what you're doing, probably everybody's making money in there, right?

I mean, more than likely.

They may not be spending it wisely, but they're still making money.

But it's when those troughs happen, you know, when things do go down the other way, when there's a peak and now there's a down downward slope.

And then you have this trough and then we all kind of come out of that trough.

mean, this is what happens.

You don't make your money going down the trough.

You might make your money down the bottom of it if you're a really good manager and frugal and have got the money.

But it's really the upward trajectory on that other side.

And that's really where you can grow your business because the other businesses that you're the people you were competing with are out of business or they've been stifled so

much and so fearful of moving forward.

that they're not going to move as fast as you can because you've got the war chest or the rainy day fund sitting in the back room because as you were climbing you were putting some

of that away as well not just spending it or you know and you know that those are the those are things that the business owners need to be aware of and the opportunities that

sit there are significant

quite honestly.

that's some incredible advice right there.

And even in my uh relatively short career, I've seen that.

I've always been adverse to borrowing money.

I'm not a big fan of having payments.

I grew up in the construction industry and saw just what you're saying.

There's good years and bad years and loans that you get on the good years are hard to pay on the bad years.

So.

Yep.

and I've even gone further than that and been, run things pretty cash heavy.

And so just what you said, there's, uh, a couple of years kind of in the middle of my tenure of owning the business that, when all my peers and colleagues were selling off

equipment, I was buying it because we had some cash and stuff was on sale.

and this sounds, uh, you know, to me, that was smart business, but this is even a step above that.

you know, I was using.

taxed dollars that were sitting in the savings account instead of invested in so if you can get tax deferred money and then Earn some returns and have it invested along the way.

This is just a win all the way around

It makes you so much stronger and nimble and it gives you so many more options on the table and the more options you have as a business owner, the better decision.

you can make.

You're not being reactionary, you can be proactive in a situation.

What I'm describing is our big businesses we got to compete with.

They're doing these things and they're doing them because Deloitte is their CPA firm and they're not afraid of the IRS and they'll tell clients like, hey, you got to do this all

day long.

And then you got the small to middle market CPA firm that you went to high school with

the guy, he's a good dude, and you you started as a small business and now you're running a 20 million dollar year operation and you still kept him.

And meanwhile, he hasn't grown with you, but you've succeeded over his ability to help you.

But out of loyalty, we keep them.

I see it all the time.

And we outgrow CPAs all the time.

It's just out of loyalty.

Who we are as a person, we want to stay loyal to these people that help to grow our business.

But at some point, you do outgrow people.

And you've got to recognize that and make some tough decisions.

so these are, I shouldn't bring that up.

mean, one of the things about this code is it's been abused shockingly.

uh

Imagine that a government program with a lot of bureaucracy and it hurts a lot of people and then a few people abuse it and take advantage.

No, mean, you know, we are, you know, it's part of that innovation as Americans.

I work with Lloyds of London on some things and the guy, my contact over there, always, he always, he says, I love you Americans.

He said,

He said, you guys go to cocktail parties and you tell people how little taxes you paid.

He said, here in London, we go to cocktail parties and we tell everybody how much we paid in taxes.

And I said, yeah, there's a, Boston Tea Party's embedded in our DNA.

There is no doubt about it.

But it's just, you know, again, it's just, you you pass something, oh, wait a minute, I can do this with it.

And really what happened with the code, it was hijacked for state tax planning.

And that's what really got the IRS hot and heavy on these things.

I think it's one of those things,

me once, don't give me twice, and somebody went for the bite of the apple twice.

And you know, these are estate tax attorneys that got really creative under the code and it got the attention of the IRS.

you know, it was massed to make it look like a risk mitigation when it really was used for estate taxes.

I mean, that's what really has brought the pressure on this.

Today's conversations are so different today because

Business owners know the risks they've taken to self-insure and they want to position it better for them to be able to survive, God forbid, if it happened, right?

So, the abuses aren't out there like they were.

We still some bad actors, I don't care what industry you're in, you're gonna have bad actors, so.

Yeah, yeah, this sounds like a fantastic program.

I wish I would have learned about it earlier.

uh When it comes to funding these programs, know you mentioned or you threw out the term principal payments and things like that earlier.

We've also been talking a lot about good years and bad years.

When you structure 831 plan, is it set up with kind of regular fixed principal payments?

Or can you dump a little extra in there when you're having a good year?

You know what?

Great question.

So the premiums we're talking about, right?

What premiums we can put in.

It's based on methodology pricing.

We always give our clients the ceiling.

So for example, you could put up to $2.9 million away in this now.

When it first started it was $1.2 and it got changed a couple years ago and they increased how much you can put into it.

Congress did.

That was back in 2017 actually.

That doesn't mean you get to.

So we look at your gross revenue.

We underwrite this no different than insurance carry would, right?

Like what's your gross revenue is based on really how much premium you're gonna pay.

The more gross revenue you have, theoretically the more risk you have, the more premium you'd be able to pay.

So we come back in and we always tell our clients to ceiling.

So the other thing is not every year you have to fund.

because getting back to, know, I don't have a lot of tax liability this year.

I did buy a piece of equipment I needed.

I don't have that exposure to that, or I just don't have the extra funds to do it with.

It's not gonna kill you.

I designed our program, there's annual maintenance fees regardless because it is a C-corp, so it has to have a tax return, a domicile has to get paid, there's premium tax that gotta

get paid, you know, all that.

we made it to where we do recognize the ups and downs of business cycles.

doesn't matter what, you know, one industry could be doing good and the other one could be

doing bad.

know, it's not a cross-sector industries that are doing good all at same time.

mean, ag is a great example of that, Cattlemen, know, cow-calf operations great right now, but dairy is not that great.

I mean, there's all versus things going on there.

So that's kind of, we recognize that when we built our system out, that you don't have to fund every year.

And that's a differentiator in our space where our competitors really, they have fixed fees every year.

You got to pay whether you fund or not.

And that never made any

sense to me and blah blah blah but no we definitely are you know we're bringing this into the point where and I really appreciate being on your show quite honestly because

We just want to bring awareness to this.

We want to bring awareness to guys like you that are risk takers that say, there is a better, smarter way to position dollars.

And here's what I know about.

Here's what I've come to realize being 58 years old.

I used to be the, you know, I've had the 65, 76 series financial licenses.

When I look at legacy type families or legacy wealth,

It's really how they position money over those years.

And by positioning the money, whether it's tax-deferred or just the they position it, gives them the opportunities to take advantage of certain things in the marketplace.

And that's what builds legacy.

It's not...

And really building a solid business that you can pass on to the next generation.

Or you can get the...

investment companies coming in wanting to buy your company and creating a legacy for not just yourself but also for your family and your grandkids and all that stuff.

And if that's something you want to do and if that's something excites you and stuff, it isn't about positioning money.

It's not about spending money.

It's about positioning money.

You got to be strategic on spending the money of course but how you position dollars I think is really the long-term plan you got to be looking at all the time.

That's the long-term game.

Okay.

And so are those premiums, can they flex throughout the year?

So, I mean, if we're coming into our fiscal year and I'm projecting a really great year and then something happens and the market falls apart, I can slow that back and not be

obligated to that expense.

Yeah, we adjusted.

mean, typically we're going into our fourth quarter is our busiest time of year because that's where clients are deciding what they're going to fund.

So they're really looking in the rear view mirror for that year to take a deduction.

Twenty five, for example, December 25, we were dealing with business owners that are typically calendar ran.

They're not a cruel county.

We do have clients that are uncruel, but you know, you got to be pretty large to get that number today.

But if you're on a calendar year cash basis, you know, you're going to make a decided do I want to take a deduction for 25 or not?

So then you write to

premium check for that year you took the deduction but you by risk going into 26 right so now I got my 26 years so you kind of the nice thing about property casualty insurances you

can prepay that expense like if I want to prepay my work comp I get to write that whatever month I wrote that check on is that month I get to write that off right health care you

can't do that with but property casualty insurance premiums are absolutely recognized under and that's what this category falls under is property casualty insurance

Okay, awesome.

Well, man, you have me all excited and fired up.

I wish I still owned my business so I could open up an 831 and get this going.

Is there anybody or a situation where it really doesn't make sense?

Is there somebody that, you know, is there a size of business, a level of income that you kind of have to be at for it to make sense?

No, no, great question.

I would say this to you, I think it's more of a mindset.

Where you at in the mindset of your business?

I love entrepreneurs.

Entrepreneurs typically have their floor to the pedal, their foot to the pedal and it's all the way to the floor, right?

Meaning this, that if you're making every dollar you make to put back in your business and you're in a grow, grow, grow, this is probably not for you.

uh There's some rules and regulations to those reserves and surpluses, so you can't merely get access to them and all that kind of stuff.

So that's one thing.

So I think it's more of a mindset, not so much a gross revenue standpoint.

We try to target two million and above in gross revenues in a business before it really starts to pencil for them.

And you know, I'm actually coming out with a book called Weathering the Storm When Winning is Expected.

And I go into pretty extensive detail.

in that on when you should do this, when should you be looking at it.

Because what we're asking a business owner to do is take money off the balance sheets and not miss it.

ah You know, you know, not a lot of, you know, I hope all businesses eventually strive to that point, but not a lot of them, you know, and it is what it is.

So there is some, there's more of a litmus test to whether or not you should be doing this, right?

What frame of mind you're in, where you at in the business.

Do you want take the, you you want to back the foot off the pedal a little bit, stuff like that.

I think that's probably the bigger question is, and you know, are you working on the business or in the business all the time?

And if you don't, if you find yourself always working in it, again, it's probably not, this is probably not the right time for you.

But if you're on, you're working on it and you're looking for other tools like this, you know, absolutely.

It's time to start looking.

I think awareness is no matter what, you got to know this is out in front of you.

This ought to be one of those things.

We call it the CPA playbook.

This is just one more chapter in the back of the book where you would want to start to look at tools like this from a business standpoint.

Yeah, yeah, man, like I said, I wish I had known about this earlier.

That sounds like a great program.

And you obviously know a lot about it and have put a lot into it building a business around this 831 program.

Are there many other people doing what you're doing or are you kind of leading the charge here?

We're kind of leading the charge.

I think we're probably the only, I would say, insurance professionals doing the management side.

I still see a lot of law firms trying to mimic what we do.

uh But I don't, I would, I mean we have competitors.

And here's what my hope is.

I hope with time it does become more competitive.

I think we want to make this synonymous with the 401k.

mean business owners should be aware of these types of tools.

Right now, we're dealing with the IRS.

We've sued the IRS on some issues.

And I think our court hearing is coming up this month in the Fifth District.

But they've been a little bit more aggressive on this stuff because...

Well, they could in their previous lives.

Bureaucracies are something we got to deal with as business owners and they've definitely gotten an overreach at this point.

But nevertheless, we think this is going to become a normal business practice.

Once you've achieved a certain level of business, at some point you want to take the risk, you want to take risk off the table.

Well, how do you do that?

Do you have to sell your business to take risk or bring a new partner in?

This is just one more way to take some risk off the table.

and still have the money in the back room to help keep the cash flow of the business going first and foremost, protect the business that created the cash flow.

But also down the road if everything works out I can sell my business or not sell my business.

There's ways we structure on ownership for key employees.

You know if we want to make a transit transfer down to the kids.

I mean there's all sorts of things that we can bring to the table in the back room on these things.

Working with other trusted advisors in their group and their surroundings that brings a lot

solutions to the table or they otherwise wouldn't have it and you'd be at more at the mercy of the deal versus trying to make the deal.

Yeah, yeah.

So again, you know, we've used the analogy, the HRA and the oh 401k.

You know, I know now the tax law is always changing.

That's why it's three inches thick.

But currently there are some exceptions and some ways to, you know, pull money out of a 401k or something like that, or even just pay a penalty to pull it out for non covered

items.

Is there something similar for the 831 if you got in desperate straits and needed to pull that money and didn't really qualify for a risk payout?

Can you pull that money and pay a a penalty?

There's no penalties.

You just pay your long-term dividend rates.

you are, yeah, but you can also bridge a loan out.

That's where it gets pretty sexy, honestly.

That's where I see a lot of ad guys use this as part of their operating line.

You know, once they've been in it four, five, six years and they got a lot of surplus, they've had good loss, know, minimal lost years, and then they're able to pull on that

from an operating line standpoint.

Again,

That's just good business.

mean, uh insurance companies are the largest lenders, You can make an argument, insurance companies lend as much money as banks do in the back room.

You just don't know about it.

So no, I love that.

You're collateralized against your shares at the corporation, so if you default, you default it on yourself.

I mean, we're fully insulated and collateralized on those types of loans.

I think it's great planning.

uh Auto dealers do it a lot.

I I see them borrowing money

all the time out of their, you know, when they sell service contract to you for $2,500, you know, they're keeping $2,000 of that on their books in their own A31B.

They turn around and loan that money back to their operating company for flooring, consumer financing, I mean, all sorts of, the efficiencies of business really start to

play in a lot of different areas here.

And that's just, you know, that's just, this is who you gotta compete against.

These guys are doing this stuff already.

You know, if your listeners are hearing this about the first time, you know, well, I always buy service contracts.

Well, did you know your dealership kept the risk in the back room and his own insurance company?

No, you didn't know that.

know, mean that, you know, but yeah, it's great revenue.

It's why you get asked all these warranties all the time.

I mean, it's really good money in the back room.

It's satisfying the customer's needs to avoid that risk, you know, because if that TV breaks, I want to return it five years from now.

Like I'm going to remember I had it.

But, you know, meanwhile, I paid 200 bucks to have that warranty, right?

Now they get to take that 200 bucks and they get to put it to work in the back room.

Again guys, this is just, this is what goes on in big business.

I want to bring these concepts and ideas down to the people that really at risk, honestly, losing their businesses.

yeah.

When the big Fortune 500 companies have a big payout, they can cover it.

But Bob the plumber has a rough year and then gets hit with a claim at the same time.

That puts him out of business.

So.

you just got to look at downturns of economy.

Who goes out of business more likely?

It's not big business.

It's the small to middle market business owners that go out of business.

And that's who I'm trying to protect going forward, for sure.

Yeah, it's really leveling the playing field too, because like you said, that's who you're competing against.

There's, ah especially now we're talking about trends in the economy and man, there's big companies kind of rolling up small companies across the country.

And so some service industries that were traditionally small businesses are now being backed by big businesses.

And this levels that playing field a little bit.

If you can bring some of the efficiencies to the table that they are, the small business can compete.

and have that small business touch and really puts a lot more power in their hands.

I couldn't agree more.

mean, those guys are clients of ours too.

The guys that go out and all these HVACs and Plummie, I mean, I've seen it from shore to shore on what's gone on over there.

I'm encouraged by it because I think some of these business owners are getting multiples they would never gotten anywhere else.

But there's absolutely a consolidation going on in that space.

They're going to keep the name the same, the employees the same, and they're just buying it for the cash flow.

I mean,

you know, but...

opening up a lot of opportunity for maybe the mid-size businesses might get hit a little bit.

But I think those really big, more national or regional customers tend to serve a different clientele than the small local business.

And so as some of those mid-size businesses get bought up and rolled up into the big ones, it's opening the door for those small businesses to take a little more market share.

I could not agree more.

I 100 % agree with that.

I think they're going to lose their personal touch, their identity, their community is going to be lost, and people are going to want to do business with people they know and

trust.

And so I couldn't agree more with you.

I do think it's going to get back to our conversations with the engineers when he started their own businesses.

As there's these roll-ups and consolidations, and service to the customers is more of an afterthought.

I do think it's going to open up an opportunity for businesses to spring up around different areas to take advantage of that, bring that personal touch back.

And we're going to crave for that.

And as a human, we're going to crave for that.

So I'm encouraged by all that.

there'll be a backlash eventually, in my opinion, on it.

It would make sense to me that would happen.

We'll see.

awesome.

Well, you've brought just a ton of knowledge and information to the table here with the 831 plans.

with all of your experience in business acumen, I want to ask a few questions, tap into that a little bit as well.

30 years experience running a number of businesses in different sectors.

Is there a lesson that you've learned that you wish you would have learned earlier?

Oh man, take advice from people who have been doing it longer than you.

And learn from other people's mistakes.

mean, that's the cheapest way.

I when somebody's already got the will, don't try to duplicate the will.

Just learn what they're doing.

And I do think being disciplined to the money, meaning that as you grow,

Don't increase your lifestyle too quickly.

That's probably one of the things I've seen, one of the big, one of the reasons I was very successful in my insurance agency, a guy told me early on, he said, okay, what are you

gonna allocate for marketing and budget?

And he said, I suggest you do 30%.

I'm like, man, that's a lot.

He said, yeah, but do it.

So as my income grew, as my agency grew, I kept the 30%.

So if I wrote a big commercial deal that one month and all of sudden I got a $20,000 commission.

I would take $6,000 of it and put it in the market.

I wouldn't take the $20,000 home, right?

And that's what really, that discipline kept my ability to keep growing the business, but it wasn't like I was...

It didn't feel like I was taking a step back because of it.

That makes sense.

And they kept that discipline going.

So my marketing budgets got high.

But at the same time though, it was already programmed into the business.

so I never, as I made more money, it wasn't that I was taking more money home, it was the fact that I was keeping my discipline to my percentages and growing my business.

that's what's allowed me to, that mindset helped me a lot.

man that's awesome.

Throughout your career and the businesses you've run what has been the the most difficult challenge that you faced?

Employees.

You know, you can't help but have these people become friends or acquaintances.

I mean, you know more than, you know, so you maybe don't make the right decisions at the right time.

It's more of a, you know, we're small business and very loyal to people that help build our business.

mean, sometimes to our...

dismay you know what I mean or you know and you know you don't do anything to have and this is another piece of advice I was given early on and I remember sitting at a meeting

and it was a farmers insurance meeting and one of the old timers I was talking to him and

It was the crash of 99, it was the tech wreck of 99.

And I was worried about the stock market and everybody's gonna lose money.

And you start hearing all this like, geez, you and I was just new in the business.

And he goes, Van, get ready, there's gonna be a ton of business you're gonna write.

I'm like, what are you talking about?

He said, no, when people feel vulnerable, they're gonna buy more insurance.

And I thought they'd buy less insurance, right?

They can't afford it.

He said, no, they're gonna buy more.

And I thought, man, that's great.

And that happened.

And then the other guy, the same guy told me one day, goes, I was hiring employees and I was having problems with a particular employee.

And he said, man, just remember one thing.

On career day at school, nobody stood up and said, one day I wanna go work for Van Carlson.

And that really put it in perspective for me is like, yeah, these people are not here because, you know, like how much do they owe me?

You know what I mean?

It's like, you know, and it was one of those moments in my head that stuck with me over the years that I've always, you know, kind of put that in the back room in my head.

It's like, yeah, nobody, nobody planned to work for me.

You know, I didn't plan to have this business.

You know what I mean?

Nobody stood up and, you know, so it's just a, you know, consequences of, you know, one turned out of the

other turn, right, while we're here.

no, but I, so I try to keep those two references in my head when I'm dealing with employees, you know, but at the same time, you know, what you expect for something to

happen doesn't happen and employees at the end of the day are, you know, good people and hard workers, but at the end of the day, they're not family.

And sometimes you, you kind of, you know, again, we're very loyal to who helped us grow our business sometimes to.

to our mistakes.

Yeah,

yeah, you still have to grow a business.

yeah.

Are there any strong opinions that you once held and have changed your mind about?

yeah, a big one would be culture.

I never, I'm kind like an old football coach, right?

You know, get up and walk it off, you'll be fine kind of thing, right?

I mean, that's my management style.

I'm not saying that's rough.

That doesn't work today.

And maybe it shouldn't work, right?

I'm kind of coming more to that, but also just creating a culture inside your company.

I never gave much value to that, quite honestly.

But I do recognize the value of it today.

And I'm glad I had a son that came in and really ran.

He's the president of SRA, which he'll eventually be the CEO here in a couple years, if not maybe a year, we'll see.

he is really into it.

Yeah, yeah, for sure.

Yeah.

Yeah, it's been great that he saw the value of that, he instituted that in our company and it's paid off drastically for us.

So company culture was definitely something I would not have seen.

Awesome, awesome.

Well, this is uh my favorite question I ask of every guest.

Are you a person of a particular faith tradition?

And if so, how has that affected your business management or your leadership?

You know, definitely a Christian, Methodist, and born Methodist, raised Methodist.

You know, it comes and goes.

You know, when you're growing a business and you're just putting your head down and getting after it, do think you kind of put things kind of...

You do kind of, I guess, lose your path a little bit.

You know, maybe you have...

Maybe you just kind of lose your, I wouldn't say you lose faith, but you just lose your discipline to the faith.

But as you get older and you start to have grandkids again, man, it comes back around and you're tenfold.

mean, it's just, and then you just feel blessed.

I mean, honestly, with so many things that have gone right and that could have gone wrong.

You know, you definitely, I would say, and it's been good.

I mean, it's been good for me personally, for that to come back into play into my life.

yeah, for a while I was definitely not, you know, who needed it kind of guy.

You I can do it all on my own.

I you really start, and I say this a lot, you gotta be careful to believe your own BS.

And we can start to believe it pretty quickly.

and that can get you in trouble.

I wasn't no saint by no means down the road.

I used be pretty rough as a leader of the company.

I was pretty black and white.

But as time goes on and you get more comfortable with your own skin...

And you have people around you that trust you and then mentors.

Mentors are a big play in my life too.

People around me, I surround myself with really good business people but also a lot of people with faith.

Okay, great, great.

And is there anybody that you'd like to see on this show?

Somebody that has a really unique business, works in a really unique industry, you might have an interesting story to tell.

Yeah, I do actually.

I've got a couple of folks in mind.

if you're in it, yeah, love to.

One guy I know, actually I'm going to have, I'm going go meet with him this afternoon.

uh

We haven't seen each other for probably a couple months, but he runs a, he runs a, and he's a hired gun.

So I like being around hired, but I mean by hired guns, he's a CEO for a very large company, but he's not the founder.

I'm a founder of a business and I love to surround myself with guys that are running businesses that didn't start them.

I learned a lot from them, much more so than people that are founded business.

I don't know why I belong to a business group, a CEO peer group, and that's been really great for me too.

Honestly, but yeah, yeah, absolutely.

You could definitely talk about that.

Okay.

Yeah, I'll shoot you an email, see if maybe you'd be up for making an introduction.

Do you have any thoughts about what makes the difference between kind of a hired gun versus a founder?

What differences have you noticed?

Well, I can tell you that risk tolerance, it's been really interesting sitting in meetings and somebody's deciding to buy another business or...

make a decision to pivot their business or their company and founders are like, yeah, let's go.

You know, let's do this thing.

But hired guns are very strategic in their decision making, much more so than a founder is.

And it has to do with entrepreneur.

And I'm not saying the hired gun's not an entrepreneur, but much more strategic in their decision making.

And they almost have to be.

You hired them for that reason, you know?

But that's a big difference in their mindsets.

Both are good.

Both are at the right time.

It can make a big difference in your business.

Yeah, that's great.

I think that's probably a transition that most business owners, if they don't go through that transition themselves, they suffer because of it.

When you're starting out and bootstrapping something, building it from scratch, it's the big play, the going with your gut, taking risks.

That's what got you to where you are.

And then as you get established, as you have some chips to play with, so to speak,

The strategy has to change a little bit because uh the strategy that got you to where you are doesn't necessarily get you to the next level.

No, in fact, if most founders can create a lot of unnecessary disruption and I've been guilty this.

If you get bored, you will find something to create chaos with.

I've recognized that and I've been witness to it outside of my company too where we get bored.

mean, entrepreneurs are great, but are you a builder or are you a maintainer?

And if you built your business up to a certain level to maintain it, you're gonna get bored.

And if you get bored, you're probably gonna create some chaos internally that you otherwise, so yeah, you're absolutely right.

To make that pivot and make that recognition.

I'm just fortunate my son is completely opposite of me in a lot of ways.

He's more operational driven.

where I would, you I'm the guy that says, can't that get done tomorrow?

Why do we gotta, you know, what's this 90 day sprint thing?

Why is it gonna take 90 days for us to do this?

That doesn't sound right.

You know, something

like that, you know.

We'll just stay up all night and work for three days straight and it'll be done.

That's what we used to do.

Yeah.

the problem?

that's great.

Well, my last question to either settle or fuel the debate.

I know it is a little bit outside of your expertise, but I'm sure you've used plenty of them.

If you have a job to do and require a cordless tool, which brands do you prefer?

Milwaukee all day long.

Milwaukee, okay, they're pulling ahead.

I think oh we're working on coming up with an official tally but DeWalt in Milwaukee were kind of running head and head and I think now Milwaukee's pulling ahead so

man, their impact tools are nothing like them.

I love them.

I can't get enough of it.

I'll sit there and watch YouTube videos on new Milwaukee tools coming out all the time.

I love it.

It's amazing how uh fascinating that can be.

I'm a DeWalt guy, but I do the same thing.

Some of the new stuff that's coming out from Milwaukee and a few other manufacturers.

It's like, sometimes I wonder what problem were you trying to solve?

Who thought this tool up?

You know, I've never been sitting there going, man, I wish I had one of those, but now that it exists, I want one.

did you see the concrete float that came out that you can actually sit in now and it floats on them?

Like man, that'd be fun.

But I love my Milwaukee grease gun though.

There is, my gosh, for greasing tractors up, there is nothing better.

That thing's just, yeah, saves the forum a lot from that old.

The first time I saw one of those, I laughed at it.

was kind of really, you got to have a power grease gun.

can't just squirt it a couple of times.

And then I worked on a farm working my way through college.

And so I spent a lot of time greasing tractors and yeah, I got to be real good friends with that electric grease gun.

Yep.

That's funny.

Well, Van, thank you very much.

I really appreciate you taking the time and chatting with us.

And I hope that I'm sure all our listeners will get a lot out of that.

I love what you're doing.

I love the program you've put together and and taking advantage of that tax code that's already there to save small and medium sized businesses some money really put their money

to work for them.

I hope that a lot of our listeners reach out to you.

and take advantage of your services for those that want to do that, what would be the best way to get a hold of you?

You know, we own 831b.com website, honestly.

ah I'm van at 831b, v-a-n at 831b.com if they want to email me, but, excuse me.

The biggest thing is, you got to, you know, go do your own due diligence.

Learn about this thing.

It's, you know, take some time.

Go to our website.

It's designed to be an educational website.

There's a lot of case studies in there.

You know, you can pick your own industry out.

There's typically a case study on your industry.

How would this apply to you?

How does it work?

I didn't start thinking about the timing of when I should be starting to look at this type of thing as a real tool for my business.

Not only to maintain the cash flow, but also eventually grow the business as well.

yeah, that's where I would tell them to go.

mean, it's just, especially if you haven't heard about it.

I mean, you got to do your own homework, especially with AI today.

I mean, it's easy to do, right?

But this is just another tool in toolbox.

And at the right time, it's a hell of a tool.

Yeah, awesome.

And you mentioned you're coming out with a book.

When is that going to be available?

You know, we're hoping in May.

We're in the final edit right now.

uh I'm really happy.

I'll be honest with I'm pleasantly surprised.

Never wrote a book before.

And it's been a great experience, actually.

uh But it's not like more of uh a decision making versus a textbook.

It dives a little bit into the code, but really, where should you be at in business world when you start to look at tools like this and make the right decision for your business

and your family?

Yeah.

And what was that title again?

I liked that when you rattled it off.

I forgot what it was.

was weathering a storm when winning is expected.

Okay, that's good.

That's really good.

That'll be interesting.

Thanks.

mean, hey, as business owners, we're expect to win.

We have to win.

So.

yeah, that's why we get started.

So.

Yep.

Awesome.

Well, again, thank you very much.

I really appreciate the time and the knowledge, the expertise that you bring to the table.

And thank you guys for joining us here on From the Ground Up Show.

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