Whether you’re in startup mode or trying to get to the next level, personal and business finance expert Jordan Goodman has some solid advice what to do and what never to do with your money.
There are some funding sources out there that would have been unheard of just a few years ago, including some that you must stay away from.
It might surprise you to learn you can also contact creditors, ask them to reduce your debt, and… they’ll do it happily. A perfect solution when you’re going through a rough patch.
Tune in to find out…
- The best place to put your cash for an 8% return – it’s definitely not the bank
- The unique way crowdfunding works for small businesses
- An easy process to make debt “disappear”
- Why you might qualify for Storybook Lending
- And more
Listen to Steve Gordon and Jordan Goodman now:
00:11 Today Steve speaks with “America’s money answers man” Jordan B Goodman, an expert in personal finance.
01:15 Jordan talks about how he got into business at age 12.
03:13 Jordan tells us about some of his pitfalls in business including a disastrous joint venture.
09:18 Jordan tells us how long it took him to bounce back.
09:47 Steve and Jordan explain how important it is to keep moving forward through adversity.
12:40 Jordan gives us great advice on how helping struggling businesses by accessing lesser know finance options like Story Book finance.
15:13 Jordan talks about the dangers of Merchant Cash Advances.
16:36 Jordan explains the problems with “Slow Pay”.
18:37 Jordan talks about how to prioritize debt and how not all creditors are equal.
21:47 Jordan talks about personal & business credit and how to separate them.
24:39 Jordan talks about investing in secured real estate.
26:48 Steve talks about investing and spreading the risk around.
27:51 Jordan talks about the benefits of the Jobs Act of 2012.
29:03 Jordan talks about how to refinance your car loan using myloangen.com.
30:58 Jordan gives us listeners our own landing page at go.moneyanswers.com/unstoppable
Mentioned in this Episode:
Steve Gordon interviews Jordan Goodman:
Welcome to the Unstoppable CEO Podcast. I'm your host Steve Gordon and today I've got a special treat for you. We're talking with Jordan E. Goodman. He is known as America's money answers man and he's a nationally recognized expert on personal finance and business finance, a regular guest on all kinds of radio shows and television call in shows across the country. He's appeared on the View, Fox News Network, Fox Business Network, CNN, CNBC, and CBS Evening News. I will tell you, I've had a chance to dive into some of what he does and he's the breadth of experience around finance as it relates to your business and as a business owner to your personal life. I think you're going to find pretty refreshing. I'm excited to bring him to you today.
Jordan, welcome to the Unstoppable CEO.
Great to be with you, Steve, really appreciate it and hope we can bring a lot of value to your folks.
Oh, I know we can. I guess, before we kind of get into the meat of things, I'd love for you to give everybody a little bit of background beyond just the bio, how you got into your career.
Well, I've been an entrepreneur/journalist since about age nine, actually. You want to go way back to the beginning and kind of get a sense of what happened later. My family had a place in Cape Cod in summers and at age nine, I started delivering the Cape Cod Times, the daily paper and I was kind of hanging around the paper. By age 12, I saw a business opportunity and that was they used to print many more papers than they would ever sell and they would just pile up.
I asked the pressman, "What do you do?" "We just throw them away." So I said, "Do you mind if I take them?" And he said, "Great, that would be great. You can get it off our hands and we don't have to throw them out." So I would take the newspapers from there and go down to the docks where the ferries go down to Martha's Vineyard and Nantucket and I would sell the papers on the boats. By the time the boat left, whatever 75 or 80% of the people had papers. I had zero cost of goods, 100% profit margin, my hands were filled with ink by the end of the day but it was great. I'd make 75 or 100 dollars per boat and just kept doing that.
I saw supply, I saw demand, I put the two together. It was kind of journalistic. That's what my mantra has been. See what the demand is, what people need, and then come up with solutions for them. Both in their personal lives and their business lives and it's worked very well. My whole model is kind of an affiliate model to bring great resources to people who wouldn't know about them otherwise. They benefit, the provider of the service gets customers, I get a little something in between and it counts as a win, win, win. That's kind of a brief how I've gotten to where I am.
I know just from the information that I've seen and what I've read about you, you've got solutions for everything. We're going to dive into those as we get further into the interview but going through from that level of entrepreneurship to where you are now, there had to be some bumps along the way, right?
Oh, yeah. There's always bumps. It's never smooth. People may tell you it's smooth but it's not smooth. I'll give you two examples.
Bouncing Back From a Big Setback
These were more than bumps in the road, these were ruts or crevasses, I guess you might say. I'll give you two. One, I've done 13 books on different aspects of personal finance. I did one in 1992 called, "Everyone's Money Book." 970 pages on all aspects of personal finance. This is when I was at Money Magazine. I did it so called co-authored with a guy named Sunny Black who was a major radio financial personality. He had been on the radio in all these major stations. 300 stations a year for 20 years and I had been a regular guest on his show for a long, long time.
He had kind of done seven other books. He never wrote a word but he had kind of been co-authored, I guess you might say, on seven other very successful books. He said we should really do kind of a broad based personal finance book. I wrote the thing 100%. We took a picture of the two of us on the cover and then soon after it came out, all kinds of bad stuff started coming out about him. He bought several radio stations, he was selling shares in those radio stations to the listeners of the radio stations, and the SEC went after him for selling unregistered securities without a license.
He then escaped. He divorced his wife of 25 years. He escaped to the Dominican Republic. He married a printing baroness who had this whole printing empire. He was there, he was broadcasting his show from the pool and he said, "FBI, you can't come and get me because there is no extradition treaty." Well, it turns out there was an extradition treaty with the Dominican Republic, they went and got him, he went to the Tombs, which is the jail in New York, splashing all over the New York Daily News. Sunny in jail, this financial guy.
I didn't do any of this stuff but here's a picture of me and him on the cover of this major book and it was not great for my reputation, let's put it that way. This is while I'm at Money Magazine, so I'm getting internal heat as well as external heat. So what did I do? I found out where he was in jail, I found out how to get a note to him, and he scrawled with whatever pencil he could get, "Yes, it's okay," and we did another version of the book with him completely expunged. Kind of like the Soviet days when the guys just kind of disappear. We came up with another edition of "Everyone's Money Book" with him off of it.
It was not good for my reputation, I must say. Even though I didn't do anything wrong. That was a major downer, I guess you might say.
How do you recover from that? I can think on many levels, first, the business hit and the publicity and all of that but it had to be personally, it had to just crush the confidence.
I knew that I hadn't done anything wrong but what I learned from it is if there are signs of things not being quite right, pull out before it collapses, basically. I've gone to some of his seminars where there are some things I was not too comfortable with what he was selling and the people around there. It just didn't feel classy, let's put it that way. I should have pulled out then but frankly, it was too late. The book was already out. It was too late to kind of pull the trigger on those kind of things. I remember telling him, I remember when we were going to the shoot for that cover photograph and I was saying, "This really isn't good, you shouldn't do it." He's a multi-millionaire, he had a huge Brownstone on 63rd Street, wife, kids, radio, network. I said, "Sunny, you don't need to do this, just don't be greedy." And he just couldn't stop. He had people coming to him and you'll make so much money if you sell this thing and he couldn't stop himself.
When you get powerful like that, you think you're untouchable and that's what happened with him. He was down in the Dominican Republic and he was broadcasting saying, "ha ha, you can't get me," and it's like, yes, they could get him. It kind of goes to your head when you're very powerful. That's what I learned from it. I admitted it. I was on the cover with him. I wrote the book 100%. The book content was completely fine. Sorry, I had nothing to do with it. I got rid of it as quick as I can. But you take a reputation hit when you're aligned with somebody when things go wrong. That's what I learned.
How did you rebuild?
Again, the book came out with me alone. The book did very well. I stayed at Money Magazine for a long time and quickly got it behind me as quickly as I could. Some people still remember and they joke with me about you and Sunny. You just kind of keep moving on and be persistent and don't let it drag you down.
Isn't that the answer for so many things that we come across? Just keep moving. Keep going.
Keep going. Don't let it drag you down. In particular if I didn't do anything wrong, which I didn't, really. Don't let it drag you down. If I did something wrong, that's different, but I didn't.
It's interesting, that's a reputation hit on a pretty grand scale but I hear all the time from business owners who get into a situation maybe with a partner or they get into a joint venture deal or whatever and it all sounds great in the beginning. It's going to be wonderful for everybody, all this opportunity in front of them, probably don't do all the due diligence that they should and then they get into a conflict. It might not be what you just described but it may just be that they don't ultimately see eye to eye and what happens at the end of that is they almost both end up having to go start over, not completely from scratch but they both take a hit in time, in energy, in money to kind of regain the ground that they loss or the time wasted during that whole process. How long did it take from when all of this hit to where you felt like you were back to where you were before?
Maybe six months later. Something like that. I still continue to do what I was doing at Money Magazine. I still did my radio shows and my TV shows and I didn't lose any of that because I didn't do anything wrong. It was like by association, basically.
Exactly. That's just it.
There are a lot of other people he brought down. He had them invest in all kinds of things that fell apart and all that. I didn't have anything to do with it or any knowledge about it but it's guilt by association, I guess you might say.
I love the advice to stay persistent just to keep pushing through.
**I do think, there is this kind of under appreciation for time as a healer for all of those challenges that we come across. Just keep going. Sometimes things will just work out and you keep pushing forward. Even when you're out of your control -
Keep integrity. Keep doing the right thing and when you've done something wrong, change it or get it behind you somehow. In this case, I wasn't going to keep the book with the two of us out there, even though it was a beautiful picture, and I changed it as quickly as I could so I could move on. The book sold very well and people got a lot out of it. Most people don't know Sunny was ever on there. You're one of the few that's... and remember, this is going back a long time. It's a bump in the road that you have to deal with.
Clearly you've been very successful since then. I want to take a quick break and I want to come back because you've got a whole toolbox for business owners. Particularly in dealing with their money, with cash flow, how to best handle debt, credit ratings, all that kind of stuff. Those are things we've never covered on the podcast before but I know that they are an issue. So we're going to take quick break. Hang on, we'll be right back with more from Jordan.
Welcome back to the Unstoppable CEO Podcast. This is Steve Gordon and I'm here talking with Jordan Goodman. Jordan, I think you described it best before. You're sort of the connector.
You go out and find all these really great resources that can help business owners on the money side of the business which we know is important.
I'm very careful to make sure that anybody that I talk about is actually delivering and doing a good service.
Sure, yeah and for all the reasons we just talked about, right? I'm sure you're much more careful. You've got these resources and I know that there are people listening that have that need. We talk to them all the time. I would love for you to just walk us through. For a business owner that's having issues, where do they normally start from your perspective?
Effective Alternatives for Financing From Traditional Banks
First, it's financing. People have a hard time getting loans from traditional banks these days. Banks want assets. They want widgets. They want stuff they can seize if you... they want collateral. And many businesses, they don't have collateral. It's intellectual property. It's apps. It's videos. It's virtual stuff so there is nothing to seize so they have a really hard time getting traditional bank loans. That's the bad news.
The good news is there's a whole bunch of new financing sources that have come up that understand that and they'll make loans based on cash flow not assets. They'll look at your bank statements, see what you got going, and make a loan based on your ability to repay as opposed to what they can seize as collateral.
These kind of clearing houses have come up where you as a small business person can go there, they vet you, then once they figure out that you're a legitimate business that's got good cash flow, they will present you to the right people that will fund your specific business needs. My favorite one is called corporatelendingsolutions.com. They've got a phone number as well, 800-261-6478.
For example, connect to hedge funds. Hedge funds are willing to invest in small business. There's just all kinds of places out there that you wouldn't traditionally think you could get a loan from and there's different kinds. There's payroll funding, there's equipment leasing, there's accounts receivable, financing, factoring. There's a bunch of different ways of getting small business loans and they're going to see what appropriate for you. Before they present you as a business to somebody, they're going to have gone through the whole vetting process. They call it story book lending. That's what they call it. Understanding your story and why you need the money and how you're going to repay it.
That's a resource that could help an awful lot if you folks get financing that have been turned down by traditional banks.
You know, early in my career, the mid 90s, the only real option you had was a traditional bank or there were some of these other things like factoring and receivables lending and all that. It always seemed a little bit shady and it seems like that stuff now has in large part kind of come out of the shadows. There are places now where you can go, like you say, there's a clearing house where you can go and see your options. More transparency to it all.
Right. These are the good ones. There is a shady side which I'll just tell you about which I would tell people to avoid if they could. They are called Merchant Cash Advances or MCAs and that's where the companies, often with hedge funds behind them, will lend you money, unsecured in a day, very quickly, based on your receivables. They'll take over your credit card processing and every time... say you're a restaurant and you're having a lot of credit cards, they'll take a little piece out of it every time. Seems like a small amount but the interest rates can be 40, 50, 60%.
And you kind of get on this treadmill. It's what I call the pay day lending of small business, basically. Last I heard there's about 600 billion dollars’ worth of Merchant Cash Advances outstanding. Those are the ones I would warn people against because it's very high interest and very high fees and I would go toward the legitimate clearing houses like corporatelendingsolutions.com.
How to Deal With Slow Paying Clients
One of the things that I know in my first business we always had to balance - thankfully we had some clients that paid us very quickly but we also had some pretty large government contracts and we knew that we would get paid, but it was going to take a really long time. We were essentially financing all the work for the government at the time, the agency that we were working for. That comes up a lot.
Oh yeah. Slow pay. Yup. What it does is it gets people into real debt if they've got cash flow issues. One of the things they offer is payroll financing, for example. You've got to pay your people and you might need short term pay roll to keep everybody working until you get paid by your clients. This is true particularly in the medical field, for example, where insurance companies will pay very slowly and you need medical receivables help. It's a problem, particularly if you're a small business. You don't have a lot of leverage to tell the government to pay you faster. It's not going to happen. Or even big companies. It's hard to get paid from Walmart, or Apple, or big companies. They can push little guys around and they do it all the time. You need a credit line or ways to get through those rough times and that's exactly what these people did.
Don't do the Merchant Cash Advances, which is very tempting because you can get the money real quick but it's extremely expensive and what happens is it's like a two week loan and after two weeks, you don't have enough money to pay it off so you take another one, you kind of dig yourself deeper and deeper and that puts down an awful lot of companies.
I've always thought that the way to look at these things are they are really temporary solutions to get through a period of growth. You want to ultimately grow out of the need for it and create your own cash but there are those times in business where to get to the next level of growth, it's going to take all the cash you have and then some.
I've always kind of seen that as things that fill that gap. You want to approach it from the perspective of, I'm going to pull this in. I'm going to have this plan to get it paid off and then move on. What are some of things that people are really successful with this, how do they approach it and -
Get it in advance so they're not scrambling at the last minute to get financing.
So you mean Thursday, day before payroll, they're not calling and saying, "Hey -"
Some people probably do but that's not the best way to get it, yes.
They can move pretty fast but not that fast. Anticipate what you might need before you actually need it. I always say with a loan, if you actually need it, you're not going to get it. If you don't need it, they'll give you all you want. It's the same thing. Apply for it when you don't need it so when you do need it, it's there. That's the best way to do it, for sure.
Then if you get into an awful lot of debt, there are ways to help you... the next resource I wanted to talk about helps small businesses that have a huge amount of debt that don't know how to prioritize debt. There's a whole science of what I call debt prioritization. What most small businesses do is they respond to the creditor who screams the loudest or is the most threatening somehow. But, now all creditors are equal. They have different leverage over your business. The electric company can turn your lights off and put you out of business in a second. Some lawyer that you did a contract with three years ago that you never went through with, has no leverage on you basically but the lawyer screams really loudly, maybe he'll get his money before the electric company and that's not a wise way to do it.
You can try to do this on your own but there are companies that will do this. My favorite one is called Corporate Turn Around and their website is helpwithpayables.com. They've got a very sophisticated system of prioritizing your debts. They've done this for 30 years. They've done thousands and thousands of small businesses. They know each creditor and how much leverage they've got over your business. They've ranked them from one to ten, one being a lot of leverage, ten being no leverage. They rank all your creditors by how much of a threat they are to you, basically. How much leverage they've got. They make different offers to different creditors based on the amount of leverage they've got.
The guy with a lot of leverage, you'll offer him 50 cents on the dollar in a month and the guy without much leverage will get ten cents on the dollar in a year. They don't all get the same offer. Then they negotiate back and forth and in the end, all your creditors agreed and you make one payment to them and they pay the creditors and you can actually think about doing your business. When you're in that circumstance, you're like hiding under your desk, not wanting to answer the phone or not opening the mail. You're just worried about creditors attacking you all the time. That's not a way to run a business.
Again, there's a free website to help you: helpwithpayables.com. They've also got a phone number which is 877-377-3669. They've been doing this for small businesses for about 30 years. They say about 75-80% of the businesses that they take on, they actually save that otherwise probably would have gone under.
Separating Business Credit From Personal Credit
Wow, that's a big statistic. In talking about credit, I think the one thing that business owners ignore, particularly small business owners, is the linkage between your business credit and your personal credit.
Having had to sign a number of personal guarantees for various businesses that I've been in over the years, you've got to pay attention to that stuff.
Some don't but you're correct, in theory your business credit should be completely separate from your personal credit but in reality -
It never is.
No. You want to manage your personal credit and your business credit. A lot of small businesses don't really look at their business credit very much. You have Dun and Bradstreet report and if you don't pay attention to it, it could be a lot worse and therefore, either you don't get credit at all or you get it on worse terms, smaller amounts, higher interest rates than you really deserve. What you want to do is manage your business credit separately, separate tax payer ID, separate bank accounts, and over time, build credit with your vendors totally on the business side. That's going to make a big difference to your situation because when you need credit, you've gotta get it. If you can possibly separate the two, that's really the best way to go.
So, you can establish it and then stay on top and get errors off it as many times as there's errors on these things. A place that can help you there is called Better Qualified and they're website is tourdebusiness.com. They've also got a phone number, 888-533-8138 and they work with small businesses to improve, establish their business credit, get errors off there and get your Dun and Bradstreet report score up so you get much better credit.
The best score you can get, which is called a Paydex score, is 80. If you have an 80 Paydex score, you'll get all the credit you want. It's how you pay your bills on time, the amount of credit you got. It's kind of similar to the personal side, but it should be... Dun and Bradstreet as opposed to the Equifax Experian TransUnion.
I think, importantly too, you don't want those business things bleeding over on to your personal.
Which they do in many cases. Particularly if there's a personal guarantee, they will bleed over to that. That's correct. The more you can... A lot of people start in small business as a self-proprietorship and so it's all mixed up. Their personal and business accounts, you can't tell a difference at all.
As quickly as you can, if not from the beginning, set it up as a separate corporation, sub chapter S, LLC, Limited Partnership, some kind of separate structure. Get its own tax payer ID, its own bank account, its own credit cards. That's really the best. It's really hard to untangle it once you're running.
Absolutely. So, we've talked about debt, we've talked about credit, and all that but I know you also have resources for business owners that maybe have some access to cash sitting around and sticking it in a bank these days is not exactly the best.
Securing an 8% Return in One Year
Correct. You will get zero and people just keep their cash there. It's ridiculous. Here's a solution. Something I'm involved in myself which is a way of getting an eight percent yield on your money over a one year time frame. You can get checks automatically, you can reinvest it. What are called secured real estate funds. The website is again securedrealestatefunds.com.
They are lending money, short term, like over a year or so to commercial real estate projects all over the country. Like, 30 different projects at once. Things like apartment buildings, medical offices, assisted living, student housing, parking lots. Just all kinds of commercial projects that have a hard time getting loans because they are probably too small. Banks want to do a 50 million, 100 million dollar project. This is like one million or less. They have a hard time getting financing. They're probably going to pay maybe ten percent, something like that, and they are going to pass eight percent on to you in something that's called a preferred return. Meaning, you, the shareholder, get the eight percent before the management gets anything. They get the two percent out of the return of the fund. The full amount you invest gets the eight percent. Minimum is 5,000 dollars. One year minimum hold. No commissions of any kind.
There's a way of getting yield and on top of the eight percent, when the buildings that they are lending to are sold at a profit, they share that profit with you, the shareholder. So it's a quarterly profit sharing distribution, as well.
For example, last year, 2017, the actual return on the fund was eight point seven, eight percent on the interest, point seven for the profit sharing. Over time, as there are more buildings and more projects coming to fruition, there will be more profit sharing distributions. The price of the shares doesn't change. It stays at ten dollars a share and that adds up value.
You can order as a business owner, you can order as an individual, you can do it in yourself directed IRA. I'd much rather get eight percent not have any volatility then keep my money either as a business or an individual sitting there earning zero.
Absolutely. I think one of the things that often we don't think about as we are running our business is taking money off the table. I see so many people taking all the profit and reinvesting it thinking that that's the thing to do. While I agree that it's important to reinvest, I also think that you reduce risk when you take money off the table whether you put it in something like this or put it somewhere else. When you take it out of the business, you immediately reduce the risk that you have from the business.
Oftentimes, we don't think of it that way. We don't think of our business as creating financial risk for us from an investment standpoint just as if we bought shares in GE that could go up and down.
The difference is it's not liquid for the most part.
Exactly, yeah. I think looking at something like this and whatever other options are out there is just a great way to spread out your risk a little bit. Take some of those profits and have them work for you elsewhere. The name of the website again?
It's called securedrealestatefunds.com. They've got a phone number, too: 888-444-2102. I'm in it. I'm on the board. I'm totally in this thing and it's been fantastic. This is a new thing. In 2012, Congress passed what's called the Jobs Act of 2012 which authorized what's called Crowd Funding, basically. These are kind of crowd funding funds. Technically, the SEC calls them regulation A plus funds. It's allowing the average individual in business to get into things that in the past you would have had to have 100 million in a pension fund to do it. Here you can get in for as little as 5,000.
That's on the investor side. On the other side, it's allowing small businesses to get funding for projects that they wouldn't have gotten done otherwise. It helps the borrower and the lender and it's a win-win for everybody.
Absolutely. I know we're running out of time but you've got one more resource and it has to do with that big fancy car that... You've got that big client, you went out and bought the car and now you're stuck with the payment. What do you do?
A lot of people are running into trouble, they are either getting repossessed or defaulting or coming delinquent with their car loans because they took on these bigger car loans than they can really afford and it's definitely an issue. What people don't realize is you can refinance your car loan to a much lower interest rate or you can change the maturity to a level that makes the payment more affordable.
Say you're at 500 dollars a month for three years. If you moved it out to six years, you might go down to 250 a month, for example. There's a free website that will help you do that which is called myloangen.com. You put in your current car payment, how much more you have to go, how many more months you have to go, the interest rate. Then it actually gives you a little dial where you can choose where you want your payment to be, what interest rate, and what maturity. You move it out on the maturity scale or you can go in for... You figure out what payment and maturity you want, you click submit, then a bunch of credit unions compete for your business.
That's a way of online within about three minutes, refinancing your car loan, both individual and a business car loan.
Wow, that's amazing. This has been like lightning round for business finance and it's been very different from anything we've done before.
I'm glad we've done it. Again, if you're listening, do your due diligence and figure out if you need any of these resources or which ones you need but when I found out about Jordan and the resources that he has, I thought, definitely worth making those available and sharing them with our audience because these things come up. Sometimes you need it to push the business forward and get to the next level or get through a rough patch.
Jordan, thank you so much for sharing.
I've actually created a landing page specifically for your people. I just want to mention briefly.
Absolutely. That's right, where is that?
Landing page is go.moneyanswers.com/unstoppable. On there, they'll see some of my resources, they can sign up for my free newsletter which comes out every month. Just get access to all kinds of stuff. I'd love to help you. This is just a small sample of the resources that exist.
Look at what we've done. We've helped people earn eight percent on their money, we've helped them get out of business debt, we've improved their Dun and Bradstreet credit report, we've helped them refinance their car loans, and we've helped them get the bar in the first place with the Corporate Lending Solutions that people don't know where to go to get loans. Hopefully some of these resources will make a difference in their lives.
We'll link to that page in the show notes so if you want to find out what those resources are and get linked up with Jordan, you can go there. Give them the website one more time, please.
Perfect. Well, Jordan, thank you so much. It's been great talking with you and thanks for sharing all these resources.
Thanks so much, Steve. Appreciate it.