Living The Red Life - How To Build Your Business with Strong Credit Foundations

Episode Date: July 27, 2023

How should you use your credit card to fund your business growth? Rudy is flying solo in the hot seat today, offering us all the smart business advice we need to leverage our credit to get where we want to go with our business. As a Brit in America, Rudy's entrepreneurial game has always been strong. But he reckons he lost six to nine months of time scaling his business as fast as his ambitions because he was hampered by financial things beyond his control. The life lesson he's sharing with us all today is that you must establish credit as you grow your business to be super prepared for the day when that big deal comes through. Our Man in Red shares his backstory on how his Facebook marketing business was pushing so much money through his online bank accounts that the banks froze his account! And now that he's set up with credit for those cashflow rainy days, it's all good. And he doesn't want the rest of us seeking the Red Life to make that same mistake. So let's swipe that credit card smartly before stepping into Wonderland!"Most big companies are built off debt." ~ Rudy MawerIn This Episode:How most big companies are built off of debt Rudy shares on scaling so fast that he caused the banks to freeze!The best investments come at the wrong time - so prepare for thatHow establishing a line of credit line will get you a better interest rate Why doing the 'boring stuff' matters Connect with Rudy Mawer:LinkedIn - www.linkedin.com/in/rudymawer/Instagram - www.instagram.com/rudymawerlifeFacebook - www.facebook.com/rudymawerlifeTwitter - www.twitter.com/rudymawer

You've got to understand that at some point, if you want to build a big company, you're going to need to leverage credit, debt, investors, investment money of some capacity, right? Or financial money of some capacity. And again, don't get me wrong, there's a few people that got to 100 mil, probably a few that even got to a billion without, you know, crazy debt and investment. But I guarantee pretty much all of them were in the red at some point. So they needed some money, whether it was just credit lines to get there. OK, this is almost impossible to get a big company without ever needing any sort of credit line or debt. My name is Rudy Moore, host of Living the Red Life podcast, and I'm here to change the way you see your life in your earpiece every single week. If you're ready to start living the red life, ditch the blue pill, take the red pill, join me in Wonderland and change your life. Hey guys, welcome back to another episode of

Living the Red Life. Today I'm going to talk to you about using credit. Should you have a credit card? Should you use a credit card? How to accumulate points and how to build your credit in your business lines of credit and how to use credit smartly, okay, not irresponsibly to fund your business growth, okay? So we're going to sway between a little bit of personal and business, right? And how you can leverage debt and credit. Just know that, you know, I'm not a financial advisor. It's not financial advice. I'm not a credit expert either, right? These are things I've learned from many credit experts, many bankers, CFOs, big financial firms that I've hired, and then also many successful entrepreneurs, people that have

built $50, $100 million companies along the way. And something I was very naive of and naive to for many, many years. I want to share this today because I think it'll open your eyes, right? So we're going to talk about how to grow companies, leveraging money, debt, credit, all of those things. I think this is a super important topic for you. You might go, well, Rudy, this isn't the new sexy way to make a million dollars fast. But it's something that if you don't understand, and like I did in the early days, you'll hit a big roadblock. And then figuring it out, building it isn't instant. It takes a lot

of time and you'll get in a lot of problems, right? And I'll give you a bit of my backstory so you can understand why this became so important to me and why you should pay attention to it. Because if you don't, you might end up in the same situation as me that wasn't that fun, right? And it derailed our progress as a company for about six, eight, nine, 10 months. So for us, you know, we grew past 10 million and my entire life up until then never took capital and it didn't raise money, didn't take loans, didn't have big credit cards, self-funded a hundred percent, you know, didn't have investors, right? I just literally earned money when I was really small,

making 5, 10, 20 grand a month, use that money to go to 50 grand a month, use that money to go to 100 grand a month, and so on and so on, right? And then when I started, you know, a new business, I would just take the profits, right, and the money from the old business, and that would fund the new business. And that's kind of how I thought it was done. And then, you know, many years on now, I realize in hindsight, you know, most big companies are built off debt, right? One interesting fact and figure that's always stayed with me is Wayfair. The furniture store has,

I think they valued it like $18 billion. Wayfair is like the biggest furniture online store in America, probably, or maybe the world. $18 billion valuation and they never made any profit, right? They never had profit. So how can a company be valued at $18 billion without profit? Well, it's not a rich entrepreneur that's funding it. I can tell you that. There's not really many that are that rich. Okay. What are they? Maybe a couple. Right. But what they're doing is they're leveraging debt.

Right. They're leveraging investors and debt and all different ways to scale that company. And then I continue to see this happen. I got more into the private equity world. I work with private equity firms, which are the big funds that fund all the big companies. I went through, you know, funds that fund all the big companies. I went through, you know, some roll-ups being part of that. I went through, you know, working with private equity to build a portfolio of companies. And I nearly, with a couple of other guys,

raised a hundred million and we were going to roll up a bunch of companies. In the end, this was right as private equity was kind of shrinking and tightening in the last year. If you're listening to this in real life, you know, two years ago, there was money everywhere. In the last year with the recession coming, right, everything shrunk. So that never went through, but I learned a lot. And all of this, what I'm saying here is to say that a big life lesson and realization, or at least in a business lesson, is you're not probably going to build a giant company, a hundred percent self-funded. Okay. There are people that have done it, don't get me wrong, but generally most of the big companies that are being built in some capacity are leveraging

credit debt and different financial models. So what I want you to encourage is like, understand that. Can you get to a million, half a million, 2 million, 5 million, 10 million self-funded? Yeah, a hundred percent. But when you get in the, you know, big boys league, right past 10 million, which I entered going to a hundred mil, it became much harder to self-fund and grow as fast as I want and do all the different opportunities and ideas and initiatives I want. Right. And I'm not very good at just doing one thing. So partly it's, you know, my own fault, right? Because I'm always innovating. And that's, you know, a blessing and a curse, right? It's what makes me great and makes me successful and got me here today, but it can also make it harder for me, right? So you've got to understand that at some point, if you want to

build a big company, you're going to need to leverage credit, debt, investors, investment money of some capacity, right? Or financial money of some capacity. And again, don't get me wrong, to build a big company, you're going to need to leverage credit, debt, investors, investment money of some capacity, right? Or financial money of some capacity. And again, don't get me wrong, there's a few people that got to a hundred mil, probably a few that even got to a billion without crazy debt and investment, but I guarantee pretty much all of them were in the red at some point. So they needed some money, whether it was just credit lines to get there okay this is almost impossible to get a big company without ever needing any sort of credit line or debt and now the problem which I faced especially not being an American citizen is when I got to that

point past 10 million going to 100 mil working towards it is I didn't have all that established right so I had this situation where we were scaling, we were growing, nearly doing 2 million a month. And then we had some payments froze and a process, we changed banks and we had to change banks because we were spending so much on Facebook ads over 20 grand a day, that the bank was freezing every day,

no matter how many times we rang them, whitelisted the payment. It was just such a high volume of transactions. They were freezing the card and it was stopping our ads. So we had to change bank. Then we changed bank. And because we changed bank, the payment process now audited the accounts and then they audited the business. you know, nearly $2 million a month, right? Or closing in on it somewhere between a million and two, I don't remember at the time. And we had signed up and projected 100K two years ago, right? And we grew fast. Whoa, whoa, whoa, wait a second. Before we go into the rest of this episode, I'm going to interrupt abruptly and just ask you one big favor. I hope you're getting a ton of value, a ton of knowledge. I hope you're getting some breakthroughs from myself and the guests. And I want one thing in return. What I would love is for you to subscribe and leave a

review. The reviews and the subscription grows the podcast. It allows me to bring you even better guests. It allows me to invest even more time and money into this podcast to bring you the latest and greatest, the best entrepreneurs from around the world that are crushing life, crushing their business and giving you all the tools, the mindset hacks, the knowledge and the environment you need to be successful. So do me a favor if you've got any amount of value from today's episode so far or any previous episode or any of the content I've done, it would mean the world to me if you hit a five-star review, give us your feedback on the show, the episodes, and subscribe and download.

Plus, if you do that and send me a screenshot on Instagram at RudyMoreLife, I will send you a bunch of my free training, marketing courses, sales courses worth $499. Yes, $500 worth of courses for a simple 30-second review. It would mean the world to me. Send me that screenshot. I would love for you to leave that review and I would appreciate it very, very much so we can keep growing this show and make it awesome. So let's get back into the episode. I appreciate you guys and let's dive back

in. So they freaked out, froze the money. And then I was like, well, now I need some more money because they're going to hold it. It'll argue with me for six months. Right. But because I had none of this in place, it was very hard to get this money. And two, three years ago, you know, times change, right? Depending on where you are in the economic cycle of the world, sometimes it's easy to get that money, sometimes it's very hard. Now, what you need to do is get your credit in place, personal credit, business credit.

You need to get credit lines in place and established. You need to have an understanding of as you scale, there's going to be bad periods of the business, even if it's never happened to you before. If you're, you know, striving for big things, you're going to fail along the way, right? If you're running a hundred miles an hour, you're going to trip and fall. And when you trip, the bigger you get as you trip and fall, the harder the fall, right? And that's what I learned because when I was doing 2 million a year and we had a bad quarter, we lost 200K maybe as an example, I had that money in my bank account. So it's fine, right? It doesn't matter. But when you're doing, you know, nearly 2 million a month and you have a bad month and you lose 20%, 30%, well, you know, say we use 2 million for simple

maths, 30% of 2 million, 600K. And then say you do that for three months in a row, right? Or you do that for one month and then the next month they freeze half your money, which might be a million dollars. Now you're 1.6 million dollars all of a sudden out of cash, right? And the dynamics change a lot, right? And if your company was 10% of that size, say it was a $2 million company, then that issue would be 10% of the size too, right? You'd have a 160K problem, not a 1.6 million problem. So the bigger you get, the bigger the problems, right? So what happens now is it's like, that becomes hard to self-fund, okay? And no matter how rich you are, generally the richest people and people like myself and

people with big companies, we don't just sit with $10 million in the bank account. We're leveraging money all the time. So we're buying real estate where for me, I'm putting big quarter of a million down payments and celebrity deals and advances to get them on board. I'm expanding, opening offices, paying half a million dollars to furnish offices or whatever it costs. I'm spending half a million dollars on ads, which takes 60, 90 days to come back because it's the life cycle of that lead, whatever it is, right? You're leveraging money most of the time. It's not just accumulated in the bank accounts. What we generally teach is to not do. So you have to have these barriers and

perimeters and backup plans in place so when you get hit with this you have you have that access to capital and because i was british right not from america and i'd grown very fast and i didn't have good credit in america i was stuck it well it didn't matter that i was super successful it didn't matter that um i had a lot of wealth right i had big companies i had assets it got very hard very quickly to instantly say, hey, I never need money. I don't spend much on credit cards. I never need loans, blah, blah, blah, blah, blah,

to say, hey, you know, it'd be great to get half a million now until this payment processor releases it next month or in six months. And then, you know, they go, oh, well, it's the first loan we give you 50,000. I'm like, 50,000, I spend that in a day. That's not gonna do anything for me, right?

So then you have to change your operations, slow stuff down, and pivot a little because now you've got a different cash flow situation. And then that stunts your growth, right? So all in all, this kind of set me back half a year to maybe a year, which could have been super easy to avoid in hindsight, and that's life lessons, right? And hopefully, while you're listening to this today to learn from my mistakes and other experts' mistakes, I could have gone, oh, credit line's already set up. Hey, I need that half a million credit line, pull it out. And it's not on a crazy interest because it's pre-established,

pre-built, you build your credit up. And then it's like, and then all the money comes back in, in two months or whatever from the processor. And it's like, then you just pay the credit line back. Voila, easy. But it's not easy if it's not built. So, you know, the message today for a lot of you from my story, right? And we've been transparent with that story is two things. Many, many of you might not ever get to 10 million. You might not, not because you can't, it might not have the desire, the will, the risk, the whatever, right? And I'm not saying that to diminish. I think many of you have the ability to, if you dream big enough and work hard, and I would love to support you in that.

But many of you may not get there because you don't want that, right? You want maybe a million dollar business that makes 500K profit and spend time with your kids. That's great. But if you do want that, and you are growing big, and you're going big, and you're growing big, please, you know, learn from this and start to build those. Even if you think I'm never going to need half a million dollars, if you're going big, you're 100% going to need half a million dollars, right? Not because you have a bad business, or

you're not profitable, or you're poor, it's because you might get a knock on the door one day and says, hey, this big celebrity wants to work with you, or hey, we can buy this company today, right? And it's worth $5 million, but the owner's got a lawsuit, or the owner's parents are sick and they've got to move to Columbia, or the owner had a nervous breakdown and is exiting, right? You're never going to know. And the bigger you get, the more of these opportunities. And I was speaking with Gary Cardone. I was having a drink with him two nights ago. And he said to me, he goes,

you always get these opportunities. The best investments come at the worst times, right? And so I'll use that here today. And he's coming on the podcast and talk about that too. It's going to happen, right? So I've learned, have this money available, right? Have this excess money, whether it's through building my credit, credit lines, bigger budgets on like Amexs and stuff, investors ready that they can write you a note, right? Or a debt or six months, 12 month debt.

Have this money available because you'll be able to expand quicker. You'll be able to seize more opportunities and you have backup plans for when you do get hit in the face, right? Which is business like I did. And I didn't, right? Because I didn't really ever think, you know, it would happen. I had nine years and no problems with a processor, right? And then it was because we changed banks and we'd grown so fast. So it's like the downside to being too good at what you do, I guess, right? Too good at growing and growing too fast. But then it caused an audit. So this is hopefully like encourage you to start researching it, working on it, because I tell you when you do need it or when you have an opportunity, if it's much you want, you might not be able to get it. But even if you can get it, what generally happens is if you need it quickly, and it's not all pre-set up, you're going to get like 10 or 20% interest. So if you have a great deal, the deal might not be so great if you happen to loan it on a 20% interest. If you can loan it

on a 5% interest, it's a no-brainer, right? Or if you want the money to expand with ads, you need 100 grand to expand with ads, and it's like a 20% interest, well, that might not be so great, because your ROAS might not be high enough. But if it's a smaller interest rate, then that might work super well. So again, I'm not the expert right in like exactly what to do to build this. I have friends and people I can connect you with if you need it. And I'll probably bring one on the show on all these little minute steps. But I've learned and appreciated, you know, the importance of building my credit, right, which is a really big thing in America. It's less of a big thing in England, personally, because that reflects even if my business is massive, if personal is not as good. And then building business credit too, they're separate.

So start building business credit, get all your I's dotted and the T's crossed because you will have opportunities as you're growing to leverage it. Hopefully today's story motivated you a little to do it. It's a long process, but it's not super timely. You pay a couple of grand, hire the right people, they set it all up, start building it for you. Best couple of grand you can spend. It's like insurance, see it that way. And one day you'll probably message me hopefully and say, really, really thank you for today's podcast because I just was able to get this 200 grand really quickly and easily because I listened to this a year ago and I could buy a company because of it. Or I was able to 10X or whatever reason you need it for. Hopefully it's not a bad reason.

It will maybe become a bad reason. It will maybe become a bad reason. That's business, that's life. So having this as a backup plan, super important as well. And even if you want to get a better house, right? You want to buy a bigger house, you want a cool car, right? You're going to get way better rates, way more opportunity and options if you listen to today's episode. So work on it, be boring, do the boring stuff. Boring stuff matters, right? Hire the financial people that can help. I can tell you if you don't know who to hire,

I have some connections and people that I've used that have helped me that I would recommend. And that's the show. So hit me up if this was helpful. Leave a review as always. I would love to hear from you. And until next time, keep living the red life see you guys soon take care