Oh yes, that first job delivering newspapers and flipping burgers at McDonald’s. I almost had to go back to flipping burgers at McDonald’s after the financial crisis. In fact, I was hoping to avoid sharing that story with you, of how I lost 80% of my net worth, but some of you wanted to hear more than the one sentence I shared in Episode 1 when I said, “The last time we had a major financial crisis, I was in the throes of it because it cost me over 80% of my net worth and forced me to shut down my business over three years as I felt the impact from the bank failures in our country.”
This is Craig Willett, the Biz Sherpa. Thanks for joining me for our second episode. I appreciate the honest feedback and hope that this episode continues to inspire you to discover for yourself treasures that will enhance your life and give greater fulfillment in your business endeavors.
To continue on the theme of hitting the reset button, we’re going to focus on how to measure your accomplishments on a whole new level than just dollars and cents today by helping you create your own personal currency. A statement I often hear from entrepreneurs is, “The reason I started my business is to make money.” I say you can get a job to make money. If you want to build wealth and develop personal satisfaction for your achievements, start a business.
So I ask, is our reason for starting a business really to make money or is it to make a profit? To build wealth you need to consistently make a profit. We will talk about building enduring wealth in our third episode in two weeks. Today, we are talking about some money myths and creating your own personal currency. As you define your own personal currency, you will find it is a bridge to greater success and fulfillment. As you define your currency, you will be able to focus less on the money problems and more on customer satisfaction issues, which drive your market share higher, increase profit margins, and elevate the intangible satisfaction of doing business.
An anonymous quote I often hear is, “Success is getting what you want, however, happiness is liking what you get.” Now there’s a trap in there, right? We always have our mind focused on getting to a goal. Often when we get to that goal, we find maybe that what we got wasn’t exactly what we were hoping for. The simplest analogy I can think of that situation is going to a new restaurant for the first time.
Perhaps you read a review that highlighted the fact that the prime rib is to die for, or that you had a friend that referred you to the restaurant and said they had the best bolognese. Then when you get
there, the server begins to describe the special that evening that’s not on the menu, pan-seared grouper, and it so happens that grouper is your favorite fish.
Now you’re in a dilemma. Do I get the beef and listen to the reviews? Do I get what my friend told me, the bolognese? Or do I go for my favorite fish? And why is this a dilemma? Don’t each one of us when we go to a restaurant want to go away satisfied knowing that we spent our hard earned money for a good meal that we could enjoy with friends?
The point of the story is you just don’t know really what you’re going to get until after you finish the meal. So be careful what you order or be careful what you set your sights on in business and what your objectives are. Sometimes, setting goals to build a business just to make money can get you into trouble because you’ll find on the other side that money only brings more complications.
In 1994, I started a business called UTAZ Development. UTAZ developed office buildings for sale in a concept I called the “Professional Village.” The idea was that business owners and medical professionals could own their office for less than rent. The average size of the building was around 6,000 square feet, and the average Professional Village had about nine buildings or approximately 50,000 square feet in them.
The hallmarks of a Professional Village are drive-up-to-the-front-door parking. Imagine that your patients and your clients can walk right into your business. Ample parking ratio so your clients don’t have to spend time searching for parking halfway across the complex. Each building had its own unique architectural style in the village, so it was easily identifiable. The buildings were designed just the right size for the business occupying it, so you had no need to pay for space that you didn’t use. The ceilings were 13 feet high, keeping you from feeling like you were cramped or in space that was built many, many years ago, and probably the most important is that you had a building with your name on it located on a major thoroughfare with great visibility and easy access from many points on the street.
The concept was simple; own for less than rent. You put 10% down, get an SBA loan for 20 years, the payment in many instances was 30% less than comparable rent. The long-term benefit to the business owner occurred basically at retirement. They owned a building that is paid for with their name on it rather than having a stack of cancelled rent checks that they couldn’t do anything with.
In many cases, this could augment an owner’s retirement by the rent savings over time plus the value of the building, which in many instances exceeded a million dollars. Needless to say, it was received with great demand from its inception in 1999 to late 2008, when the impacts of the great recession or financial crisis hit.
At that time, UTAZ had eight professional village projects at various stages of development. Banks stopped lending to anyone, not the least of who were the professional village buyers. We had put our hard earned money into the land to start the development and we were borrowing money to build the buildings that in this case could no longer be sold. The bottom dropped out and the buildings all of a sudden over the next several months were worth 60 to 70% of their prior value before the onset of the crisis.
The lenders to all real estate developers were looking for ways that they could to get out of the loan commitments they had made. This was a very frustrating situation. In fact, the bank we used to finance a majority of our projects was the second bank in the country to be shut down by the FDIC.
That single event, closing the bank by the FDIC and having to work through the nightmare of working with their bureaucracy, such as the FDIC, was challenging to say the least, especially considering that the FDIC is an insurance company and not a bank.
After many unanswered calls and many unreturned emails, I finally turned to my Congressman to put me in touch with the FDIC. You see, we were in the middle of doing eight projects and all of our loan funds were tied up and stopped by the bank closure. We needed to finish the projects so we could continue producing our revenue and putting our customers into their buildings.
Now it’s not as if it were just so simple. We had put our equity in in the form of money before the bank loans, then the bank was lending for some of the construction costs. The FDIC continued to tell me they understand my situation, however, they’re not a bank and they didn’t intend to honor the loans. After all, they were an insurance company.
After several meetings, they decided to do a match with me where I would put in the money and they would match it, so I would put in 50% of the cost and they would let me borrow the rest while they were in the process of trying to find a lender to sell the bank loans to that I would have to work with after that.
Well, as you can imagine, this was not in the business plan that I had put together or had even imagined in a contingency. I could tell that at that point my positive nature was losing out to a once in a hundred year financial crisis that we hadn’t seen before. And you know, as I kept going, I kept thinking I just can’t give up. I see a lot of businesses closing, I think I can make it through here. Maybe it won’t impact commercial real estate in the same manner.
Well, I was wrong and I may have been better off not putting in millions of dollars more during that time. However, I have a painting in my office that I really like that’s titled Finishing Strong. It’s a
painting of a horse crossing the finish line of a race and winning. You know, we all like to be winners and none of us like to be losers, but we have to think about what’s important in life.
When I was dealing with the FDIC and the banks who were then trying to find out ways not to honor the loan commitments they had made to my company, I spent a lot of time realizing that maybe things weren’t going to work out the way I thought. I remember going with my wife one day riding to a golf tournament for our second oldest son who was playing in a high school tournament.
On the way there, the best way I could describe it to Carol was to turn to her and say, “Carol, this has been a difficult time. You know I’ve been trying to work through this with the investors on the loans and with the banks, and we may lose everything that we have.” And she turned to me and she said, “Craig, we can’t lose everything.” And I thought, what a car or something like that? And she said, “No, they can’t take away our marriage and they can’t take away our family.”
I will forever be grateful for Carol focusing me at that time on what’s most important. I decided that we had a son coming home from being away for two years and that he would be headed to college soon, and so closing the business at that time may have been a big distraction to me. So I set a date and I remember the date well, February 1st, 2010. Why do I remember that day? Because it’s my father’s birthday.
When it came to that day, I still had a glimmer of hope. I thought things might work out. I had a consultant that I had hired to help me work through that process; he was in my office that morning. It just so happens that his wife works in the critical care unit for cardiology at an emergency room.
When I got off the phone with someone who had called me during my meeting, I couldn’t speak, and my left arm and my left leg went numb. As I motioned to him what was going on, he grabbed some aspirin, had me swallow it, told my assistant to call 9-1-1. Next thing I know I was thrown down on my couch in my office, shirt ripped off, EKG monitors plugged to my chest, nitroglycerin put in my mouth by the emergency response team.
Next thing you know, I was put in the ambulance and off to the hospital I went. Carol was called while I was on my way to the hospital and she met me in the emergency room. While there I underwent many tests and after several hours, a doctor came into the room and he said, “What are you doing here?” I said, “Well, I was hoping you’d be able to tell me.” He said, “From the test results, you haven’t had a critical heart attack, so I think it’s just stress.” And I said, “Yeah, tell me about it. I know all about stress. I’m trying to write the book on it right now.”
Anyway, that day goes down in memory for me because it was a time that I had realized that I was going to continue to finish strong and have my head down. You’ll hear about that later in this episode, a story about me swimming and why I like to put my head down and keep going. But it was a date that I had set and I realized the hand of providence prevailed that day in my life and gave me an opportunity to step back.
As I was released from the hospital that afternoon, I told Carol, I said, “Drop me back at the office, I have my car there. I’m going to come home in a couple hours.” And she said, “What are you going to do? The doctor told you you’re under stress.” I said, “I’m going to get rid of the stress.” I had been working on a plan of how to unwind the company, but I hadn’t implemented it. So I sat down with the key executives of my company and put the finishing touches on that plan and started the process of unwinding UTAZ Development.
Now I realize this is the second time in two episodes that you’ve heard stories about me going to the hospital. I’ve only been to the hospital three times in my life, and you’ve heard about two of them. The third one is very unappealing. It was when I was eight years old, I had a tonsillectomy.
You can imagine what it’d be like spending three years instead of moving forward with your business plan and completing those eight projects with the other ten that were right behind it on the drawing board; I spent my time working with lenders and creditors to satisfy the company’s obligations and my personal guarantees.
There was no appreciation by the banks for us putting in our own funds, our excess cash, to complete the projects rather than draw on their loan funds.
At the end of the day, after gut-wrenching negotiations and countless hours of working with each lender and creditor to satisfy the obligations of the company, the result was that my net worth was 20% of what it was prior to the crisis.
Imagine the days and hours I spent over those three years trying to figure out how the situation could have been avoided. I even questioned my own ability to effectively operate a business. I felt to have experienced such a devastating set of unforeseen circumstances, I wondered how I could’ve seen this better. The pain was so great that one day I got on the floor and cried. I questioned my value as an individual and wondered if I could ever provide value to anyone ever again. I’m sure Carol, my wife, remembers that day.
At the end of the day, I was able to determine that among all my peers, none of us was able to survive to be in the same state of business we were, or even remotely similar to the way we were before the financial crisis.
I came away from this period in my career looking at the root cause of financial engineering and how it leads to a false sense of financial success. Prior to the crisis, I was looking to hire a president to replace me at the company so that I could focus my efforts on helping the next generation of entrepreneurs. Of course, those plans quickly had to be set aside to attend to the effects of the crisis.
After successfully settling all obligations, I chose to resume my plans to devote my time to helping the next generation of entrepreneurs be more successful. But I think the financial aspects tend to take care of themselves if we’re focused properly on changing and blessing the lives of those we interact with, which leads me to the topic of our episode today, Defining Your Personal Currency.
In Episode 1, we talked about hitting the reset button and how we can search for and find the activities within our business that we can do to bring us greater personal satisfaction and make the biggest difference in our business. Today, we will explore taking another step to hit the reset button by defining our own personal currency.
We live in a world with multiple currencies, right? Plastic in the form of credit cards, cash, electronic, ethereal electronic (like, think Bitcoin). If someone can invent and mine an electronic ethereal form of money, then I think it’s worthwhile that we take a few hours of our lives and determine what our unique talents are, and then figure out how we can apply those talents to the interactions our business has with its clients and customers to bring unsolicited appreciation and unparalleled satisfaction to our customers. This is our form of an ethereal currency.
Ken Blanchard refers to the appreciation I referred to from clients as “raving fans.” I think of it as exchanging our talents for the intangible gratitude and loyalty of our customers. Therein lies a personal level of emotional satisfaction that far exceeds making a profit.
I have experienced this form of emotional compensation many times in my life. I can say that its impact on your life can be greater than making a profit. These emotional exchanges provide greater personal fulfillment as your product or service makes a difference in someone else’s life. It goes beyond the dollars and cents of business.
As I struggled through the minefield of the financial crisis and its impact on me personally, and my business, I held on to the notion that my customers had sent me letters, sharing with me thoughts like this:
“I’m so proud to own my building with my name on it. The process was unique and so satisfying, I referred my brother who is also an insurance agency to buy a building from you in your newest project.”
The thanks continued when I ran into this buyer in the grocery store one day. Needless to say, I walked away with a big smile on my face and a feeling that all the effort I had made and my company had made to focus on achieving that level of satisfaction that he would not only refer his friends, but he would refer a family member to do business with us.
There was an unexpected result too of putting together the elements that I’ve already referred to that were part of the Professional Village that made it not only a successful investment, but that those elements would combine to help the business owners who bought in the Professional Village be more financially successful.
One of them said, “In my previous location, I averaged four new walk-in customers a month. In my new location, I average five new walk-in clients a week.”
I’d like to share another story with you. In business, we always run into what I would call the naysayer or the difficult customer. One day, I had an appointment to go meet with a potential buyer of one of our buildings. As I went to go to his office, I drove through a myriad of buildings, he was in the back corner, there must have been 20 buildings in the project. I parked and then I tried to find the front door. Then once I got in the door, I tried to find which door inside that building was his office.
As I sat down with him, he was a physical therapist, I sat down with him. He kind of surprised me. I thought he was interested in the building. He says, “You know, I live near where you just announced a new project. I would like to move there, but your buildings are expensive and I don’t think I need a prominent location. You can see, I’m back here buried in the corner and I get my referrals from surgeons, and so that’s my primary source of new business. I don’t think I need the prominent location.”
As I visited with him a little bit more, shared with him the information that I had, and then I shared with him some thoughts that I had. For example, I shared with him that a good friend of mine who is a dentist bought in one of our locations and he said that that building was so much more professional that his dental clients accepted his recommendations for cosmetic dental treatments at a 70% higher rate, due in his opinion to the professional look of his office. He kind of smiled and said, “Well, that’s a dentist.” And of course, I had to admit that was a reach, but I tried.
A few weeks later, I got a call from him and he said, “Craig, I think I’m going to go ahead and buy at that location anyway. I like how it’s closer to my home, it’s much more convenient, and so I’m going to go ahead and do that.” I was a bit surprised. Three months after he moved into his building, he called me and he said, “Craig, something interesting is happening here.” He said, “My primary source of business
was referrals from surgeons, but what I’m finding is I’m finding surgery patients who are asking their surgeons who don’t normally refer to me to refer to me, and the reason they give is it’s on their way to work, on their way to drop their kids off at school, or on the way to the store. And they saw my name and so they know that I’m a physical therapist because my building has my name and tells what I do on it.”
So you can imagine the feeling that I had to know that where he was skeptical, now he was a raving fan. That he found that his business was growing by leaps and bounds because of referrals he never thought of, and it gave me satisfaction to find that the things designed into the professional village brought him greater success.
So you can imagine these kinds of experiences were a source of satisfaction to me during the financial crisis as I spent three years trying to unwind a fairly large enterprise at that point in time. I made that emotional reward my currency. I made that reward my emotional currency before the financial crisis and it became even more important during it.
My wife Carol once asked me, “Did you really need to do that many projects? And therefore, did we really need to borrow that much money from the banks?” And you can imagine here are the banks talking to us and wondering how they’re going to get repaid on collateral that’s now been impaired because of the value and the collapse, mainly because banks weren’t lending and it led to lack of demand.
Of course, they were handing out money cheaply before the financial crisis, but I think Carol’s question was a really good one. The silver lining, I told her, is that we did survive with 20% of our net worth. In terms of dollars and cents, that would have been greater than had we not done so many projects and think of all the lives that were impacted by the projects that we did do.
And then the true blessing of the financial crisis is that I would still be engrossed in trying to do the professional village developments today or be flat broke. Had the crisis not happened, I’d probably still be engrossed in doing the professional villages today or as a result of the financial crisis, had I stuck with it over the next seven years, I’m pretty sure I’d be flat broke. Back to helping the next generation of entrepreneurs is weirdly where it got me focused again. It was a three-year distraction.
There’s one other valuable nugget that I learned through the process, what it means not only to define what is sufficient to satisfy my needs, but the value of staying focused on what you need to satisfy your needs. That’s the core of the message in Episode 3 in two weeks.
So on to some money myths. How many times have we had these thoughts? When I make a million dollars, I’ll be happy. Or when I make a hundred thousand dollars, I’ll be happy. When I have a second home that I’ve always wanted, I’ll be happy. When my company sells for millions of dollars and I can retire, I’ll be happy.
To dispel this myth, let me share with you briefly what David Hansson, who dreamed of being a millionaire and talking to his brother about it as a kid, what they would do if they each had a million dollars someday. Well, for David, it became a reality for him when he sold a minority interest in his management software company to Jeff Bezos, the founder of Amazon, for a few million dollars.
Of this event, he said, “I remember the weeks leading up to that day when the numbers in my checking accounts suddenly swelled dramatically. I stood at the doorsteps of The Dream, a lifetime of expectations about how totally, utterly awesome it would be to be a millionaire. I’d be able to buy all the computers and cameras I ever wanted and any car I desired.”
According to the CNBC Make It article by Catherine Clifford on July 6, quoting Hansson, he did buy things like a large screen TV and a yellow Lamborghini. And David went on to say, “Well, all very nice, very wonderful.” It didn’t, as we say, really move the needle of deep satisfaction. What did give him satisfaction was continuing to build Basecamp, as well as writing, photography, and computer programming.
Finally, he summed it up this way: “If anything, I began to appreciate even more intently that flow and tranquility were the true source of happiness for me all along. It was like I had pulled back the curtain on that millionaire’s dream and found, to my surprise, that most of the things that were on the other side I already had. But ultimately this was deeply reassuring to me.”
The truth is money doesn’t buy happiness. There’s always someone more hardworking, smarter, more intelligent, better-looking, better connected than we are. We don’t stand a chance to be like someone else, right? But we can be the best of who we are.
So this week’s exercise. By the way, if you’re listening for the first time, our resources are found on our website at BizSherpa.co under the tab “Resources.” They will help you work through this exercise to help you discover what is most important to you, besides money that is.
What you are going to do is design and create your own currency. There are two steps to this exercise. Step one is to define some feelings and emotions in your life that are feelings of satisfaction and what those feelings and emotions are associated with. For example, close your eyes for a minute. This isn’t your exercise, but it’s to put you in the mode to do the exercise, and think of how the senses of smell
might invoke a certain emotion or feeling to your mind. A warm plate of chocolate chip cookies. The smell of grandma and grandpa’s home. The smell of a freshly-popped bowl of buttery popcorn. This one’s for Carol: the smell of a horse stall. The smell of a rose. The smell of the air after a rainstorm. The smell of Thanksgiving dinner.
Okay, now that you’ve closed your eyes and you’re tuned into your senses and emotions, let’s personalize it. This is the activity: Think of something that you participate in that when you complete it you have a great sense of satisfaction. For me, and I’ll go ahead and give you my examples, for me I can think of two. One is swimming. I love swimming. I love to compete in swimming. When I was a teenager, it brought a great deal of satisfaction to me. I happened to do very well in the sport, but I worked hard at it.
Today, I like to swim a mile several times a week. There’s a sense of peace and silence in my head when my head’s in the water for 40 minutes or when I flip over on my back to do the backstroke once in a while, I see the blue sky and the trees. Or I see the glimmer of the water on the pool or my dog barking as I swim laps and he races to the other end of the pool trying to beat me there. The exhilaration I feel over the next several hours knowing that I can have a big bowl of ice cream tonight because I did my exercise, I feel alive. It makes me feel complete.
Another one for me is competing in a Fine Harness Saddlebred World Championship class. When I go into the arena, there’s a coolness in the air, there’s excitement of the crowd, the rhythm of the organ music, the beat of the strides of my horse, and when I feel all of that, it brings, without cue, a smile on my face to the point that one year, I asked the photographer in that event. He’d seen me compete for a number of years and he said, “Craig, I don’t get it. You can judge you just based on the smile on your face.”
Let me tell you, when we hit types of satisfactions in our life and strike chords like that where they innately bring us satisfaction for a job well done, something that we’ve worked hard for, that’s worth the reward. So I want you to figure out your personal activities, then you pick the top one, and then you’ll find on the resource page that you can take the face of a coin and drag a photo that symbolizes the activity.
So for me, I drag a picture of someone swimming, and then think of a slogan that represents why this is unique to you. For me, I always felt people were better than I was so I could make up for some of what I lacked by hard work. So I like the slogan, “Hard work brings rewards.” Even a bowl of ice cream.
Now I’m not the smartest business owner, I’m not the richest business owner. I started with nothing, so I had to rely on hard work. Both equestrian and swimming activities represent hard work, to train, to do something that was difficult for me. And I had to make a name for myself.
In fact, let me just tell you a quick story of something that I learned from swimming. I’m a swimmer so when I swim a mile nowadays, that’s hard work for me. I’d like to compete at 25 or 50 yard distances just to show you how I may. When I was a teenager, my swim coach got us all ready for a big event. We were going to go to a countywide event and he told me how when he was in college, he would shave down, so I’d take a razor and shave the hair off your arms and off your legs. Imagine that, right? I did it.
I went to the event. I was seeded fairly high. And in swimming, if you know, they line them up, the fastest swimmers get the middle lane so there’s no what they call “drag” in the pool. And so I was assigned lane five, that meant in lane four where we were competing was the fastest swimmer. And I was sitting there all ready, I hadn’t really lost a race that year, this was my specialty event, the 50-yard freestyle.
And as I was getting ready to head to the starter blocks, my coach came over to me. He goes, “Hey Craig, how are you doing?” I said, “Good, I’m getting ready.” And he said, “Do you know the guy that’s swimming next to you holds the state record?” My heart sank and I thought “Oh my gosh, what am I going to do? I’m going up against the fastest guy in the state. It’ll probably be my first loss.” Not that that really mattered, but being a teenager you like to win and something that I’d been training hard for. And I even shaved down thinking that might make the difference.
We got on the starting blocks, dove in the pool at the sound of the gun, and as I got to the other end of the pool, I started to do my flip turn. I looked over to see where the fastest swimmer in the state was next to me in lane four, and as I pushed off the wall, I noticed we were neck and neck. And then I started to swim forward and the thought came through my head. He was looking to see where I was and I was pushing him pretty hard for the lead. I buried my head straight forward and swam as fast as I could to the other end. When I touched the wall, I looked over to see I had beat him, just barely touched him out.
What I learned from this is, and it’s the symbol for me of hard work, that you can’t swim as fast where you’re distracted looking to be like somebody else and looking to see where you are in comparison to somebody else, but you can be the best that you can be and that has to be enough. And so I buried my head and knew that if I weren’t distracted and I worked hard to be there and I did my best, that maybe by chance and by luck I could win. Well, that day I did win. I didn’t set a state record and I never went on to do anything great in swimming, but it brought great satisfaction to me.
Now enough on that. So let’s get back to the activity. The second part of the activity is to think of a reaction you’ve had from a customer, employee, client, friend, family member, that brought you some of the similar emotions or happiness or completeness or bliss that you felt when we went through that smells exercise that we did just a few minutes ago.
Find a symbol for that emotion or feeling. For me, it’s the symbol of gratitude. When I know that I have made a significant difference in someone else’s life, like giving someone the chance to own their office
building for less than rent, all while enhancing their profitability and that they could, to top it all off, have a greater retirement than they otherwise would have. That means the world to me when I get the thank you.
In fact recently, one of my buyers retired and while it’s been 10 years since I unwound the development business, he reached out to me and thanked me for making his retirement much more rewarding. You can imagine how I feel. So it’s how you make people feel that is important, not the money you make, at least for me. So my inscription might read, “Impact lives by a job well done.”
Our free enterprise economy has developed to the point that we evaluate success based on money, and we measure that over periods of time. For example, at the end of the year, you have to submit tax returns and you have to put a financial statement to measure your rewards or your success during that period of time. You also may have to submit financial statements to your banks to be in compliance with your loans.
The results manifested there in those financial statements is a measure of success for most business owners, but as David Hansson, the founder of Basecamp said, and as I have experienced, “When you get to the other side of the money, the things that made you happy before are the same successes and same things that make you happy after.”
At the end of the day, making a profit may be important but we have to move beyond just dollars and cents and exchanging dollars for products and services. You have to discover, like on your coin, what is your unique talent and how can you make a life changing difference to your customers. Once you discover this, the profits will take care of themselves. I promise you, I’ve experienced it time and again. Your happiness will endure and will soar.
I look forward to our next time together for Episode 3, where we can discuss how to take the enhanced profits that you gain by applying the discoveries you’ve made in Episode 1 and in Episode 2, to building enduring wealth for you. This is Craig Willett, the Biz Sherpa.
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