Cash Flow – MC Laubscher

MC Laubscher:
So I usually talk about, you have to know what you’re doing and what you want the outcome to be. So in our world, people talk about investing and throw investment around all the time. So they would say things like, I’m planning for retirement, investing for retirement in a 401k, which I’m like, what are we talking about here? Because you have savings, you have investments, you have speculation and you have gambling. So with savings, you’re putting your money in a vehicle where you take on less risk in a savings vehicle for a smaller return. And the reason that you’re doing that is capital Presentation.

Dana Robinson:
Exit Plan is a podcast for business owners and those who.

Dana Robinson:
Want to be business owners.

Dana Robinson:
I’m always in search of the lesser known stories of entrepreneurship. In the Exit Plan podcast, you’ll hear stories from startup to sale and hear from the professionals who helped business owners achieve their exit. Hosted by me, author and private equity manager Dana Robinson. Along with my co hosts and guests, you’ll hear real stories, tips and tools that will help you plan for the exit you want, whether you are still working as a day job or running a business. Let’s get started with this episode of the Exit Plan Podcast.

Dana Robinson:
Hey everybody, it’s the Exit Plan Podcast. Dana Robinson, your host, coming at you with today’s guest, MC Laubscher. Thanks for coming on mc.

MC Laubscher:
Thanks for having me.

Dana Robinson:
So you’ve got a lot packed into your resume and we’re going to draw that out and learn from you at the same time. I, I’m always eager to find out somebody’s own entrepreneurial journey because most people that are educating and mentoring people around entrepreneurship, finance, you know, helping business, business owners with their economic engines, we usually got there by doing something ourselves. So if you don’t mind, introduce yourself with what, what, what made MC Laubscher the MC Laubscher that he is today.

MC Laubscher:
I originally grew up in South Africa during a very interesting time. So originally from South Africa. And as a young man, I went through that whole transition right when South Africa went from the apartheid regime. I remember Nelson Mandela being released from prison. Three years later, he became the president at a new form of government. And I mean, I remember seeing all of that and, and going through it and now I look at it as pretty much a gift, you know, as a, as a entrepreneur and investor because there was so much uncertainty. You were in a very politically fractured environment similar to what we’re living through today in the United States. But it was, it was, you didn’t really, there was a lot of unknowns, there was a lot of, there was no, there was no certainty about what’s going to happen next or happening tomorrow.

MC Laubscher:
And like I said, that turned out to be a real gift because you can navigate through uncertain times and create predictability in your own life through setting things up and taking control of things. So you don’t have to be completely just relying on variables which you have no control over. So, yeah, I did my schooling there, you know, played Blights blade sports, went on to university, played sports. Then when I, when I was done with university, I traveled a little bit around the world. I ended up in the United States. And I couldn’t believe the incredible opportunity that exists here. I mean, people here literally at the jackpot just by being born here. Most people don’t know that, you know, the upward mobility was incredible.

MC Laubscher:
And I just saw that you can just come from any background and bring your A game and work as hard as you possibly can and you will be rewarded eventually for it. So that kind of blew me away about the United States. So I ended up playing in a sports league up until 2007, a national rugby league. And what I did at that time, as people travel, you can either get into really bad habits or you can make use of some, some traveling time either on buses or planes and that kind of stuff. So I was always interested in business. I was always interested in investing. So I started reading business and investing books. Came across Robert Kiyosaki’s Rich dad, Poor Dad.

MC Laubscher:
Completely blew my mind, as it probably blows everybody’s mind the first time they read it, because it’s a completely different perspective and gives you a different context and a different lens in which to view the world through. So what I ended up doing was within six months, I bought my first investment property, that was 2001, a single family. I put some tenants in there and collected the rent, paid all the bills, and there was money left over. And I’m like, wow, just like in the book Cash Flow, right? And of course, the first question is like, well, wait a second, how many times can I do this? Like, how many times can I do this over and over? Because if I, you know, got a couple hundred bucks from each unit, how many units can I acquire and how quickly can I do it? And then of course, as every investor and entrepreneurs know, that’s. That’s usually when school starts. You know, things happen. Like tenants don’t pay rent. Wait, what? You know, they break things.

MC Laubscher:
What didn’t know that was going to happen and so forth. And you know, another thing back to that book is that it had A profound impact on me. And I actually read it still once a year because I pick up something new as I was going through all of this trial and error stuff, as you do being an investor. And I was still playing sports at that time, so I just took the money that I was making. I was trying to buy real estate and starting up businesses. Right. Because I always kind of like looked at, all right, I have a pretty good opportunity here to gain incredible experience, you know, get to travel, to play some sports. But in the meantime, let’s, let’s build something outside of this so that there’s something, something that I can be doing when I’m done playing sports.

MC Laubscher:
So I, yeah, again, went, went into head first into the investing and, and, and business world. And one of the things that came from that book, again, besides the cash flow and besides how you think about money, how the rich don’t work for money, the work to learn, you know, all the different lessons from it. One of the things that I realized in the book was like, wait a second, there’s even on, on every financial statement, I see all these liabilities that are on my, on my financial statement. But where does this all fit in? On the opposite side of a liability. It’s got to be someone’s asset. And it just always came back that it was the bank’s assets, you know, so all of your liabilities ended up being the bank’s assets. And that’s, and, and then I looked at banking as a whole and the game of banking. I’m like, this is a completely different ball game.

MC Laubscher:
And then I started to realize, well, I got, I, I got to figure out how do, how do I become my own bank, how do I do that or do the same things that banks are doing just, you know, on, on my scale at that, at that stage. So I went into that, learned a lot, came across several mentors. Nelson Nash was one of them who wrote the book becoming your own banker. And you know, one of the big things is like that, that I took from that is like you’re in the business that you’re in, but you always have to be in the banking business. And you could do that through banking strategy. So whether you’re an entrepreneur starting and growing and scaling a business, or whether you’re a real estate investor building out a real estate portfolio, that’s great, that’s the business that you’re in. But you also have to be in the banking business and create a banking system through specific cash flow strategies, which kind of takes it to the next level. So again, that was the second big thing that I went through.

MC Laubscher:
And in 2015 I started a business called Producers wealth where we teach this. I started it completely virtually. So I was that guy on the Internet in 2015 consulting online. You know, I just, I kind of through doing some consulting in a, in a business, business school program, saw this at Amazon around 2011, 2012 of how everything was done virtually through Skype. Zoom didn’t even exist. So I figured the business that I was going to build, if I really want to exit and opt out of all these systems and not be constrained by geography, you know, can work from any place. This quote unquot laptop business, I have to figure out a way to build it virtually. And so I build Producers wealth where we serve business owners and investors and helping them implement certain cash flow management strategies and, and, and just helping them around a holistic wealth strategy.

MC Laubscher:
I built that completely virtual and we now help clients in all 50 states in the United States. That was in 2015. And then of course 2020 happened and we were positioned for that. You know, of course a lot of learning and educating people that you’re consulting with at that time too. Look, we’re, we’re not on a, we’re not on a phone and we’re not going to meet up at an office and you know, we’re not even going to meet up at, you know, just a lunch place. We’re actually going to jump online on Skype and consult. And then to add some rocket fuel to that, I started a podcast in 2016 called Cash Loan Engine. And it was basically just sharing certain things that I saw from clients that I was working with.

MC Laubscher:
They were creating cash flow and income in so many cool ways. I mean, it’s from everything business, different forms of real estate, commodities, cryptocurrencies and more. And I wanted to share that and that resonated with a lot of folks. So that kind of like took on a life of its own and with millions of downloads in 180 countries and it kind of turned into its own financial education company, which is also completely virtual and digital. So I love, I love not being tied to a specific place or a time zone. I love having businesses through systems operate 24, 7, regardless of, of what you’re doing. And that is, that has created a lot of freedom for myself and my family. So this year, for example, you know, we could just go and take off a month to go to South Africa for a month, right, and take the kids on safari and all that kind of stuff.

MC Laubscher:
Where it’s all about how you, you build and set up those businesses. Of course. Right. But that’s kind of me what I’m up to these days. And you know, some of the, the things that I, that I lived through in the past. What’s it, 24 years now?

Dana Robinson:
Yeah, yeah, that’s the, the, it’s been a long 24 years. It’s a long time coming from somebody who’s been through the 25 different businesses in the same amount of time. The what, what are some of the, the, the AHAs. Maybe, maybe they came for you at a, at inflection points that were challenging or, or maybe just some ahas around, you know, that were only positive. But I’m always interested to know and having your, your chops tested by failure and by, you know, challenging times.

MC Laubscher:
Yeah, I think that when I, when I got the book Rich Dad, Poor dad and I started reading that, my mother actually gave that to me and they went through a tough time financially because they had a advisor at that stage which lost a lot of their money. And I always remember my dad saying, you know, I could, I could do probably an even better job in losing that money than that guy did, you know, and it just stuck with me and I, and I felt like at that stage, you know, there was kind of a, you know, I, there was, I felt pain because I saw my parents and they were working really hard, but obviously they, they lost control. They lost control of actually their own kind of wealth building journey where they would work or just hand over the money that they were making to someone else, hoping that that person knows more than they do, what to figure out what to do with it. Right. And hoping it, you know, with. Within 30 to 40 years there’s a mountain of money for them. Unfortunately doesn’t work that way. I mean, I saw that and I’ve since seen it over the past 24 years.

MC Laubscher:
There’s, there are stories upon stories about stories of pain. So the biggest thing that I saw earlier on was like, look, nobody’s gonna, nobody’s gonna look after your money and, and is responsible for your wealth and building and growing it but yourself. And in order to do that, you’re going to have to become that person that can do it yourself, because I wasn’t at that point. Right. So I think that was like a big one. And then the other thing, besides figuring out, okay, I gotta grow into that person to become it, so I, I have to invest in myself. The other thing is that what I’ve also found and so is that people are always looking for something else outside of themselves. You know, they’re looking for a vehicle that they could just put their money in and hopefully that thing’s going to 10x and 100x and you know, just be a moonshot, which that doesn’t happen necessarily can.

MC Laubscher:
There are folks that, that have been able to do that. But for the most part, I would say your biggest, your biggest returns always come from your own stuff. So the business, if, you know, if I look at my, if I look at my career and the, my investments and then also the businesses that I’ve built, I can’t find anything outside of these businesses that can generate that, those types of returns. It’s just, I mean, and I would argue that most business owners listening to this, you’re not going to find anything else outside, outside of your own business that’s going to generate that type of returns. It’s just otherwise you’re doing it wrong. You know, 8% averages per year is just average. I mean, and your listeners are not here for average and average lives, average health, average marriages, relationships, you know, average money. We’re not in the game of average.

MC Laubscher:
So I think those were some of the big aha moments is like, look, you got to take control of this. You got to figure this out. And when I started to, I just realize that, hey, there’s nothing else outside of myself and my own stuff that’s gonna, that’s gonna generate the type of returns that I can in my own businesses.

Dana Robinson:
Yeah, that’s great advice. I mean, the, the, the entrepreneur, the business owner, the operator is, is surrounded by wealth management professionals who, who probably are constantly teasing with investment opportunities. Opportunities. And, and I’m sure, you know, the startup investments abound. I’ve been involved with a bunch of them. Some have worked out great, some of them haven’t. So it’s interesting, the Observation is the one thing that you have 100 equity in is that business that you’re, that you’re running right now. And your ability to move the needle on that, to produce outsized returns is, it’s only limited by you.

MC Laubscher:
Yeah. And I would, I would say that, you know, if you think about the journey, right? So a lot of people, people might be listening to this and they’ve started businesses and you know what it takes to start a business, it’s blood, it’s sweat and it’s tears. And if you don’t come from any money or your family doesn’t have any money, or you didn’t go and raise money, most of the time, it’s your resources, right? You’re all in. And it’s blood, sweat and tears and long hours of work. And at that stage, because you’re all in, you look like a broke person on a financial statement. You know, no financial advisor, bank, nobody’s gonna even talk to you. They won’t give you the time of day. I know because I was there.

MC Laubscher:
So they’re not gonna give you the time of day. But then you keep, you just keep grafting and keep chopping away at it and eventually it takes off. You’re like, oh, it’s working. And then all of a sudden it becomes profitable. And then all of a sudden now you’re growing and you’re getting just a nice pop and you’re, you’re growing the business. And at that stage, you look like a success. And of course, everybody, your friends and family that didn’t see the back end of this, like, oh, he’s so lucky, you know, he just got a nice pop out of that business. But at that stage, this is when the advisors comes in, financial, tax, legal and so forth.

MC Laubscher:
And what’s interesting is at that point of the business, at that time, the advice that you’re gonna get is, hey, you should diversify outside of your business. You’ve had this nice pop. Give us some of that money for inside of your business to take an. Invest in stocks, bonds, mutual funds, ETFs, and provide liquidity to other businesses. That’s what they’re doing, right? Yeah. So I’m like, hey, I love Apple. I’m recording this, you know, with you on Apple products. I, I love it.

MC Laubscher:
But Tim Cook doesn’t need any more of my money for liquidity. He’s doing okay. He could get a pretty good solid credit line. My business needs my own money at that stage. Now, again, in the game of phases, there’s a time and a place that you’re going to have to diversify. And there’s a lot of ways that you could do it with control, you know, acquiring other businesses with in a different vertical, but symbiotic to yours. You could buy the real estate from which the business is operating. If there’s a physical space, there’s a lot of ways to diversify outside of the business and use your business to acquire other assets.

MC Laubscher:
I mean, look at Elon taking Tesla shares as collateral and getting a line against that to buy Twitter now. X. Right. And then bring in the financing from all of the big banks eventually. So there’s a lot of creative ways that you can do that. I just feel like in the beginning especially, people diversify too quickly and then because you don’t have that focus, the, the business kind of plateaus and it just, just kind of treads water. And then you throw in cash flow management in there, where business is always even. It doesn’t matter how successful or unsuccessful you are, you always need access to liquidity.

MC Laubscher:
You know, we have a winter season, which is our slowest season. Everybody knows when their slow season is in their business. Mine is August, by the way. That’s why I went to South Africa in August. You’ve got the summer season, which is your busiest season, which is May, is mine. If any business owner that listens to this and they’ll be able to name their highest revenue months, their lowest revenue months. So you got all these seasons that you have to manage cash flow in your business. So summer months, peak of summer, pretty easy to manage cash flow when you got a lot of money coming.

MC Laubscher:
In winter months, not so much. You have a lot of fixed overheads, payroll, you have all these other expenses and you’ve got to figure out a way to, to carry the business during that time. And that’s when folks have to go to banks and set up lines or go on credit cards if you’re a small business. And the other seasons, you know, when you go of your peak season and summer, you go into the fall, things slow down, you go into winter, which is your lowest season. But to get to spring again, you need some investments and creativity. So you bring on new employees or people in your business, people that, that you’re going to work with. You incorporate some technology, some AI, you bring in new marketing campaigns. All that stuff costs money, right? So then you gotta figure out how to do that.

MC Laubscher:
So when you diverse, diversify too quickly, you’re gonna struggle because you’re like, okay, now I don’t have any money now because I diversified. So my business is plateauing. I’m struggling to manage cash flow. So those are some of the things that people then that I see every single time, kind of especially businesses around about that phase when they’re just ready to, to go to the next level and scale and grow that they’re experiencing.

Dana Robinson:
Dana Robinson here.

Dana Robinson:
Quick plug for my book, the King’s Fly Swatter. You can see it here behind me.

Dana Robinson:
If you’re watching this, I’ve got it in my hand. Hand.

Dana Robinson:
It’s a beautiful hardcover book printed to.

Dana Robinson:
Make it giftable, something that you can.

Dana Robinson:
Share with a family member, buy as a gift. So this latest book, it’s a fable about a person who has a really crappy job. Let’s just start there. This is a book that most people can relate to because we’ve all had crappy jobs. This is the story of Ubar, a servant in the court of a Babylonian king who masters his boring, monotonous job and then learns to listen to the king, hearing him rule the kingdom while quietly swatting flies behind a cane. Eventually, Ubar becomes the wisest and most successful man in the kingdom. The story is fun and it’s easy to read, but it’s not mythology. It’s my story.

Dana Robinson:
And as I shared the idea with colleagues and friends, I learned that it was their story. And guess what? It’s your story. If you’re at a job of any kind, one that you love, one that you hate, one that’s just enough to get by, this little book gives fresh perspective on how to leverage that job to get you something greater than a paycheck. The lessons in this parable are entrepreneurial lessons, but not what you might think from the current entrepreneurial zeitgeist. If you or someone you know are looking for a real pathway to entrepreneurship, here’s the secret. Your job is the way out of your job. It’s counterintuitive, but once you see how it works, you can’t unsee it. Learn the way of the Fly Swatter from the parable of Ubar and from the stories I share from my 30 year business journey.

Dana Robinson:
You can get a free copy of the King’s Fly Swatter by going to.

Dana Robinson:
Dana robinson.com sage sage advice the the tendency of people maybe is to feel the the sort of scarcity mentality about money. So they feel like I have some reserves now I better move these out of the business or the business will be this monster that gobbles them up. Which is probably a bad psychology, but also comes from having seasons where you’re like, well I just had a bunch of money and now it feels like it’s all gone. Do you think that there’s a, you know, advice around making that leap from the I better hide this money for myself, which is maybe part of that diversification. Your people are telling you well you’ll be making 10%, you’ll have liquidity from that but you really, you might not. And and a big hit to the market and you’re you, you know, you’re kind of lose liquidity unless you’re going to sell at a loss. Talk to me about the, you know, getting a business owner’s mind around the fact that that liquidity they’re providing to the market is for the market’s access to capital. And then they end up starving themselves, end up with an anemic business because they don’t have the liquidity.

MC Laubscher:
Yeah, no, great point. So I usually talk about, you have to know what, what you’re doing and what you want the outcome to be. So in our world, people talk about investing and throw investment around all the time. So they would say things like, I’m planning for retirement in buying, you know, in investing for retirement in a 401k, which I’m like, what are you, what are we talking about here? Because you have savings, you have investments, you have speculation and you have gambling. So with savings, you’re putting your money in a vehicle where you take on very little risk. Notice I didn’t say no risk. And in business school they were like, oh, you know, the treasury bonds, that’s like, you know, zero risk, right? Risk free assets. I’m like, no, no, no, no, no.

MC Laubscher:
There’s always risk. But you take on less risk in a savings vehicle for a smaller return. And the reason that you’re doing that is capital preservation. So that’s why you save. You save because you don’t want to lose that money. When you invest, you put your money in a bucket where now you’re taking on much more risk and you could lose some or all of it. Now, of course, if you’re investing in your own business, which you have control over, you know and understand your business, you are, you have systems and processes where like this has been tested, it’s been up and running for a couple of years. So we know a dollar in is going to generate, you know, two or three dollars out every single time.

MC Laubscher:
Well, that eliminates a lot of the risk, right? And a lot of the, and of course there’s uncontrollable variables. There’s economies, there’s, you know, regulatory environments and so forth, but you still have more control. And then, of course, speculation. We always talk about it as kind of like an art and a science to it. There are professional speculators. Good friend of mine, Doug Casey, is a professional speculator. He takes advantage of distortions in the marketplace. Position capital or emerging trends.

MC Laubscher:
And position capital, your goal there isn’t to get higher returns as an investments. It’s moonshots. So you buy Bitcoin, you know, in 2012, because you see an emerging trend. And that’s a speculation at that point. Most people now will claim they invested in it. It’s, it’s a speculation at that point. Which paid off. Right.

MC Laubscher:
I mean, of course, gambling, which it’s, it’s skewed so that the house always wins, even if you can count cards. Got it. Even if you’re a professional gambler, the house always wins. That’s why when you hit the jackpot, people run over to you and you know, they offer you a longer stay and so forth because they know if they could get you to stay, the money will come back to the casino. Now back to your question about what should businesses be thinking about? So the first thing is to create a system for your savings because you have to put your savings somewhere where you can access it to then invest, which is in, in your business, especially in the beginning, couple of years until you diversify later. So we always talk about, that’s the first thing in six months minimum in savings or 12 months minimum and savings right now for your business to have it in there. Then you know, we always have access to cash when we need to, either to manage all this cat these cash flow seasons or to reinvest in our business. But that’s the, that’s the one piece is, is listen, let’s put some savings, have a system for it, because if you don’t, money will find a way to disappear out of your business and out of your personal economy.

MC Laubscher:
So let’s have a system for savings and a system for investing and then structure it that way so it just makes a lot more sense than just blindly, you know, handing over money that’s coming into your business to someone else to provide liquidity to other companies on the, on the stock market. Right?

Dana Robinson:
Yeah. So what, what, what is like you said vehicle, you didn’t say savings account. So talk to me about you. You got a business throwing off some cash. You’re thinking, maybe I’ll invest this so that I’m kind of making it some, some remote to my mistakes or to the business’s ability to kind of, you know, burn that fuel.

MC Laubscher:
Yeah. So the first thing that you can do is if you look at where to park some cash. Banks. Right. You still gotta use banks for some reason. You, you have to have them to just to operate and manage a business. So that should be part of your cash flow management. And then the, the banks right now is, however, you still need it and you still needed to pay bills and so forth.

MC Laubscher:
I would keep, I would keep about three months of reserves in there and not really more because we, we are in a situation now at the time of recording where there’s a Lot of fun in the banking system. So we’ve already had seven banks go under. 11 has been downgraded by ratings agencies such as Moody’s. There’s 10 on a watch list. So there’s still a lot of fun that’s going to occur in banks. Why? Because of the other places you could pour cash, because bonds. So Silicon Valley bank, for example, and they went under because of all their bond, their bond position. And a lot of banks are in that situation because that’s where banks park the majority of their cash and they collateralize those bonds.

MC Laubscher:
Right. So that’s kind of part of their, their business model. And then we look at creative stuff. Well, first the other one is qualified plans. That ties up your cash though. You know, if you’re exiting and opting out, it’s very tough to have cash that’s in a, in a straight jacket, really. Financial straight jacket, because the, the outcome is different there that you want from building your business. You’re, you’re positioning cash there for a different reason.

MC Laubscher:
Even in Roth IRA accounts. Right. So that kind of, kind of takes that off the table. And then we look at life insurance and you know, for the past 15 years I just copied the most successful people and I met a friend a long time ago, one of my first mentors. They, they were massive real estate investors, also shareholders in a bank, but they warehoused all of their cash in life insurance policies and specifically design life insurance policies. And you do that because in mutual life insurance companies that’s your counterparty risk. So they’ve been around since, well, 170 years in these specifically designed contracts because the money’s guaranteed, it’s guaranteed to grow tax free. You get dividends because as a shareholder you’re a policyholder, which now you’re a shareholder in their business.

MC Laubscher:
And then you can access the money tax free through a line of credit. So you’re collateralizing the value of your life insurance, the cash value in order to get a policy loan, which you get tax free. And just as banks place bonds as collateral, playing the same game, you do it with your life insurance. And also you can add different things to it. So disability waiver, you can add to it. So if you ever become disabled, the carrier will pay the policy and you don’t lose the cash value or the policy. And then of course as a business owner to have a plan for your family and for the business, there is a death benefit because it’s a life insurance contract, a multiple usually of your, your cash value. So for 15 years, I’ve been doing that, just copy and pasting what the wealthiest folks I know are doing.

MC Laubscher:
And it’s been a, it’s been a pretty useful strategy knowing that you always have your cash, you have guaranteed access to that cash. The lesson I learned in 2008, 2009, when the real estate world is falling apart is a lot of my lines of credit was, was just canceled, right? They, you know, you have a HELOC or you have an unsecured line with a bank and you know, I had mortgages and lines with like Washington Mutual that didn’t even exist when it was done right. And Countrywide Financial, you know, folks that were in the real estate will probably remember all those names. So those just disappear where if you had it in the mutual life insurance carrier that’s been around for 170 years, you would have guaranteed access to cash. And you don’t have lines called on you. So that’s a way to position it so that you can always access it to grow your business, manage cash flow, grow and scale the business, get hire employees, bring in AI and other technologies and so forth. So that’s kind of, that’s kind of what I’ve personally done. And that’s, you know, one of the things that we help a lot of people do around the United States.

Dana Robinson:
Right. So let me, let me say it back to you and you tell me if I’m getting it right and then maybe if we flesh it out just a little more, I’m running a business. I’m, you know, I have the capacity to set a few hundred thousand dollars into some, some savings like vehicle. Instead I buy a whole life insurance policy and there’s immediately that amount, whatever I put in $200,000 worth of, worth of cash value. The, then the next year, winter gets hard. I need to borrow. I can draw 50, $100,000 out of that. Am I borrowing against my, am I paying myself the interest or is there an intermediary that’s making the interest? How does that work?

MC Laubscher:
Yeah, you can pay the life insurance, the interest which you’re indirectly benefiting from because you’re a shareholder. So that’s a profit center. So you get it in the, in the form of dividends, but you can overpay yourself. So right now, for example, to use your, your, your example, you could take a policy loan, let’s just say $100,000 if you needed it at 6% and then since you own the policy, you can loan the money to your business at 10%, which is not far fetched. If you look at interest rates right now, your business gets the money and you have a note with your business. So your business takes the money and let’s just say buys equipment or invest in technology, they get to write that off, they pay the loan back to you, which they can deduct from taxes. You get another income stream and your business was financed. So if you have this system running, you know, business owners that have been in business and then exit the business, usually without this system, they would, they could still get a great payday, right? I, I talk to a lot of people, you, you build something, you create an amazing business, you sell it, you get some capital up front and maybe sell or finance the rest of the deal.

MC Laubscher:
You walk away with some, some money in hand and an income stream. Well, what if you had a system like this and you walk away after exiting the business with millions of dollars in a life insurance policy, tax free, which you can access tax free or draw out another income stream and then you get money from the sell of the business and an income stream from the seller financing. So it’s just, you’re just adding, you’re adding a rocket fuel to what you’re doing, right? So it’s just, you’re just doing one different thing. You’re just putting money in a different place than what you ever thought of. And now you have all these other benefits. And I just copied and pasted this from, like I said, very successful people that I was very privileged to meet on early on and saw what they were doing. And everybody can copy and paste this and incorporate it in some scale into their own personal and business economy. I always say you don’t have to be a Rockefeller to do what the Rockefellers do.

MC Laubscher:
This by the way, is one of the Rockefeller family office strategies because you can do general wealth transfer through the life insurance too because the death benefits tax free if done correctly.

Dana Robinson:
Okay, so the death benefit is tax free. The businesses can write off the interest it’s paying to you. I mean you recognize some income on the, on the, on the interest. But is there, is there a way to diminish the taxes or not pay taxes on what you contribute to the life insurance policy or is that all post tax?

MC Laubscher:
That is post tax. That’s the one thing is that you, there’s other things that you can do. And obviously as a business owner and an investor, you’re generating income very tax efficiently and according to the US tax code. But this is all after tax money. That’s why you have the benefits one that once it’s in there. It’s not going to be, you know, through proper strategies, ever taxed again.

Dana Robinson:
Right. Unless you withdraw it. But you’re not going to withdraw. You’re just going to borrow against it. Right. So you’re, you’re continuing to grow the wealth. The, the size of that life insurance policy could be tens of millions of dollars. I guess if, if you have accumulated the wealth and, and then you access it by just borrowing it whenever you need to.

MC Laubscher:
Yeah. And I mean, I could give you a couple of examples. We had someone in our network, a business owner, he started implementing the system, and then he bought the real estate from which the business operated through this strategy. So now you use your life insurance, which was loaned to the business that bought the property from which it operated. And now there’s three other tenants. So now all of a sudden, there’s a real estate business. And this business, we have another client that in March of 2020, most people don’t remember that immediate, like I would say 24 to 48 hours, when the world basically locked down. It’s almost trauma for, for most people, so they don’t remember immediately what happened.

MC Laubscher:
Nobody knew what was going on. Right. This was before bailouts, before packages, PPP loans, none of that stuff. Nobody knew what was going to happen. And we had a client at that stage that saw, and he’s running a coaching business, but he saw, hey, no one is advertising right now running ads. Because everybody was so, so afraid. They were like, stop everything. We’re not doing anything right now until we figure out what comes tomorrow or if there’s light at the end of this tunnel.

MC Laubscher:
So he took a policy loan of a hundred thousand dollars. He ran all these Facebook ads, sold coaching. Coaching at that point, which I didn’t know was, I’m like, who’s buying this? You know, during this crazy time? But people would. And then, of course, you know, in the days that, that the, that followed the PPP loans came the bailout packages and so forth. He ended up with that hundred thousand dollars that he used in his advertising campaign and marketing, selling $1.25 million in coaching packages. Wow. Just because he got a competitive edge, because you could get leads for almost nothing, because nobody else is running ads. That was a pretty good return in his business.

MC Laubscher:
I mean, it’s not an 8% average return right. In the stock market, but I’ll take it. Right. So there’s a lot of different ways that you could position money to do different things, whether it’s in your business, whether it’s Other assets that you invest in, deals that you’re doing to generate passive income, which is a big part of course of opting out and living, living life on your terms. So yeah, it’s, it’s, it’s pretty exciting just to do one or two tweaks. Yeah. I mean, can make a massive change.

Dana Robinson:
What, what are some of the other things that you’re a guy that’s be, you know, behind the scenes consulting and, and mentoring you sort of see where entrepreneurs get stuck, where they make mistakes. You know, the. I, I know you, you, we can talk about it before we close, but you talk about thing you do as in terms of, you know, for what, what you do and how you charge for it. But in terms of, you know, I like people that have been through an entrepreneurial cycle and then are helping other entrepreneurs. Did like ask them, what, what do a lot of people not know that they don’t know that you do?

MC Laubscher:
I think the one thing that I’ve learned over the past 24 years, and it’s all through taking a couple of, couple of jabs and uppercuts and a couple of knocks. Right. The hard school of Knox is things are very cyclical. Everything is cyclical. You have economic cycles, you have market cycles. And so I really pay attention to all these things. And you do different things throughout the cycle. So for example, there are certain times in an economic and a market cycle where you have to be very, very offensive and go on the attack.

MC Laubscher:
And that’s the time where you’re going all in and you’re making aggressive moves and you’re in expansion mode. And then there are different parts of the cycle when you are playing more defensive and you’re not, you’re not taking your foot off the gas necessarily. Meaning, like you’re fearful. What you’re doing is you’re just preparing and building up a war chest so that when the market goes down, you’re gonna go in and be offensive again. Right. And go on the offense. So that’s the one thing if, if you’re an entrepreneur and an investor, you’ve, by studying these cycles because they happen over and over, you can position yourself. So right now, for example, I’ll give you an example.

MC Laubscher:
We’ve seen, what is it, seven quarters in a row, Warren Buffett has liquidated positions, equity positions. And why seven quarters? These guys have to submit trade plans, right? You can move an entire market if you just sell off everything. And they’ll probably lock you up because they like accuse you of market manipulation, yada yada. Yada. So he has to strategically submit a trading plan to the sec and that’s why he’s been doing it now seven quarters in a row, liquidating and especially financial stocks. So he’s bank of America positions, these positions in other banks and so forth. Berkshire Hathaway sitting in one of its largest cash positions ever. And then you look at other CEOs which are selling again, some of their own shares, which this is nothing nefarious here.

MC Laubscher:
It happens all the time. They’re just taking some chips off the table. Again, they have to submit trading plans as a CEO of, you know, a publicly listed company. But so these things are out in the open and if you look for it, you can start to see other people recognize that they’re cycles too. Now again, this is not a doom and gloom story that things are going to crash and da da, da, da da, which we’ve all heard ad nauseam in other places. This is just part of the game where you recognize the cycle and you recognize that now’s a great time to build up cash reserves and a, a war chest because you’re going to be able to pick up assets at a significant discount in a couple of months, in the next couple of months. So that’s what I’ve learned. I was, I was too young for the dot com bust.

MC Laubscher:
I was just in college, so that wasn’t something that I could, could say that I learned from that. But I was in Amongst it in 2008, 2009 in the real estate game and saw that and a lot of, yeah, and a lot of big moves were being made in 2000, end of 2006, end of 2007 by a lot of people which I wish I’d paid more attention to. I would have done things a little bit differently, you know, so that’s one of the things that I could share with folks. If you’re a business owner looking to expand and grow, there’s going to be massive opportunities when things cool down a little bit and come down and, and the valuations of other businesses and companies in the economy slows down a little bit.

Dana Robinson:
Thank you. That’s great, Great answer to my question and also very specific and, and interesting insight. If you’re a business owner, if you can build up some cash reserves at a, in, in the next, I’d say, you know, year or two even you might be able to deploy that on acquisitions. You might be able to hit a place, as you say, when other people fear settles in and the advertising costs go down, then you can come in aggressive on advertising and expand with your marketing budget that you’ve, that you’ve built up in your war chest. So there’s times to be defensive, but doesn’t mean you’re acting out of fear, right? MC so no, and this, and this.

MC Laubscher:
Is the, this is the other thing people say the, the quotes of Warren Buffett over and over. Oh, you got to buy low and sell high and you know, be, be fearful when others are greedy and greedy when others are fearful and so forth. And, and when I talk about these things, they’re like, well, you sound a little bit negative. I’m like, no, I’m really excited. If you, if you are an entrepreneur and you are a investor, you, you see opportunities regardless of the market cycle. There’s opportunities in, in markets that are going up. There are opportunities in markets that are going sideways and down. So it, it just, you are, you want to, you want to be in a position of strength when everybody else is caught off guard and shocked.

MC Laubscher:
That’s how you get an edge in your particular, you know, business realm and your business space.

Dana Robinson:
Love it. MC, how do people connect with you? Maybe a little bit of self promo here to be sure we catch it all. And, and of course, you know, MC lab sure is easy to find on, on LinkedIn, but where else can we point some people to connect with you?

MC Laubscher:
Yeah, so I put a page together together at producerswealth.com/optout. It’s producerswealth.com/optout and what people will find there is everything that we, we’re into. So there’s for example a webinar on strategies where I go over a lot of these different case studies. I also have made a, a copy of my book Get Wealthy for sure the number one financial strategy for business owners to multiply wealth predictably available so you can request a free paperback copy only pay for shipping at that page and there’s other, other just information and things that, that we, that we share information over there at that page. So. Producerswealth.com/optout.

Dana Robinson:
Awesome MC thanks for coming on the podcast and everybody else. Don’t forget to hit me up my personal email. Hello@danarobinson.com questions, comments, input. Love to hear from you. Thanks.

MC Laubscher:
Thank you so much for having me.

Dana Robinson:
Thanks for joining me on this episode of the Exit Plan podcast. I’d love to hear from you. Feel free to hit me up with questions or comments by emailing me at hello@danarobinson.com or leave comments and questions by calling 858-252-7785. Call 858-252-7785 and leave a message.