During a crisis, you have to be equipped to make the choices that will positively benefit you in the long run, instead of panicking in the present and running out of resources for the future. In order to make the best possible decisions for success, you must be ready for all your worst-case scenarios, and be smart about how you’re going to go about everything. Merrill Chandler is joined by Brad Burnett, the COO and Senior Business Strategist of CreditSense. Merrill and Brad talk about getting properly informed before making decisions that have a huge bearing on your future. While the best-laid plans are made before a crisis hits, any preparations you make are important, so don’t miss out.
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Decisions For Success During A Crisis With Brad Burnett
I have got a treat for you. During this conversation, we have had this huge COVID-19 virus sweep the land and rock the foundations of our insanely progressive time of prosperity in the country. We had this ten years blazing, the stock markets are up, home values are up, everything is moving forward and I’ve been talking about a recession for some time now. I had no clue that it would be precipitated by a flu virus. In light of this, I did an interview with Brad Burnett, my partner and Chief Funding Officer and it was originally to address the issues of how to prosper and protect yourself during these times. It was just too good, I have to share it with you.
We’re talking about the doomsday protocols. The thing is the doomsday protocols are not just for when the bottom is falling out of the economy. It’s how to treat your business, how to treat your fundability like an asset, how do you protect that asset, and how do you slingshot into the future. We’re going to dive right in there and you’re going to love it. It’s how to implement the doomsday protocols and set yourself up to win during stressful times, whether it’s global or individually. Enjoy.
Not be a complete jackwagon, for lack of a better phrase. I mentioned that because I’ve seen it in our own grocery stores. I had to go to the store and I picked up a couple of things like hamburger and we’re going to make some enchiladas. No big deal, but there are still people in line stockpiling, even though the people at the grocery store are saying, “Please don’t take more than you need. We’re trying to keep things on the shelf for those people who need it. If you’re not in immediate need, tone it down a little bit.”
Take ten instead of fifteen. Emergency preparedness is one thing but panic is another.
That’s the thing. Especially entrepreneurs, they might get stuck and I’ve seen it happen. The guy who bought a whole bunch of hand sanitizer and then tried to jack it up to hyperinflated prices on Amazon. He’s upset because Amazon stopped him from price gouging. That’s an entrepreneur who sees a need and begins to tackle it, but in my opinion, he takes it a little too far. If you want to sell for a couple of bucks more, I’m all for capitalism, go for it. If you had the idea, you jumped on the opportunity, that’s good. You shouldn’t be selling a bottle of hand sanitizer for $200 and a big thing of toilet paper for $300. That’s how they’re taking advantage.
I’m a history major. This reminds me of I did a paper on Samuel Brannan who is the first millionaire in California. Do you know how he made his millions in California? He was the guy who was selling shovels and picks to the gold miners and it was a panic, this gold rush. It was literally tens of thousands of people coming from the East Coast and selling everything they had and they were capitalizing on this. Panic comes in many forms and there are people who are gouging. Amazon is the titan in the industry but there is a little bit of self-policing going on in the gouging.
That’s one of the things. As entrepreneurs, we want to get into that momentum zone. We want to continue our business. The key that I took away from listening and talking with Alex was the concept of processes. The best way to be able to make decisions in a crisis are to have processes in place that allow you to make clear decisions. He gave five tips in times of crisis. It’s the 50,000-foot view. Those are analyze and look at your options, prioritize and commit to a plan, execute the plan, and then don’t make new decisions while you’re executing the plan and then renew.
Revisit it at every new threshold or new level or otherwise.
If you don’t have these process and if you don’t know how to put these pieces of the puzzle together, ask. I am happy to help with some coaching and with some guidance in a lot of the stuff we can help you with. We only coach on what works. Definitely ask the questions. We’re happy to help. You have to have those processes in place to be able to minimize all the noise and all the garbage that’s going on around us. The reality is this, especially for entrepreneurs and real estate investors or people who are accustomed to making decisions and taking action. A lot of times, movement and activity becomes the misinterpretation of getting into momentum. People running out and stockpiling toilet paper, that’s not getting them in momentum. The guy who buys all of the hand sanitizers, that’s not getting into momentum. It’s activity, it’s action but it’s causing more noise. It’s causing more pressure. As entrepreneurs, we’re either in momentum, under pressure or spinning out. If you are in that space where you’re spinning out because you don’t know what to do, this is the process that you need to get into to help solve that uncertainty.
Brad and I talked about this with our team. I’ve been a prepper for a zillion years. The funny thing is I was in Northern California, in the Bay Area, when the freeways collapsed in an earthquake in the early ‘90s.
I was at Naval hospital in Oakland when it collapsed.Entrepreneurs see the needs of the people and tackle them #GetFundable Click To Tweet
The buildings are swaying in 30-foot spans. I was in Guatemala in service in my teenage years and I’m telling you, you’re literally riding waves of an earthquake. I’ve always come out doing well. I never had any harms. I get a little cavalier. That’s my whole personality type. The thing was I like something that’s out of the norm. That’s how I do. The problem was that’s my way of being that I brought to my team. When we had the earthquake warning, we were in the middle of a team meeting. A couple of people were getting panicked because we had an earthquake in the morning and then another one was predicted for the afternoon.
The size of the earthquake was rumored too high. The rumors were that it was going to be a 9.0. If you know the magnitudes of earthquakes, that’s insane. That’s house destruction level of earthquakes. It ended up being a near five, which was another rumble. I was insensitive to my team and I told them how to prepare, how to take down to protect their homes the best they could with enthusiasm and excitement, not grounded and clear. I didn’t go through the process that Brad is even going through. I was all excited. Part of making decisions in a crisis environment is to level head and be aware of your audience. You could freak out your wife or your children. There are a number of ways where we’re insensitive to somebody else’s experience and create even more problems, anxiety or stress than is ever needed. Brad, these are great things that I failed miserably.
First, know your audience, but then the other reality is you took steps and measures to be able to continue to be functional in a worst-case scenario. That’s one of the things. If you don’t do it as a regular process of your business and of your life. Tim Ferriss has a great podcast on this. It’s about fear setting and he practices like, “What’s the worst-case scenario? Could I live off of packets of oatmeal for five days if I had to?” It’s different things like that. Could I live sleeping on my floor if I wasn’t able to sleep on my bed? That’s the fear setting concept where you practice and prepare yourself mentally to be ready for the unknown. Most of us don’t do that, but the other part of that is in a time of crisis as entrepreneurs when we have something happening that we have absolutely zero control over. The government is now enacting quarantines. They are starting to become more of a mandate than a recommendation.
It’s one degree less than martial law. They call it social sequestering, which is a fancy term for not having troops yet in the streets.
That’s to enforce the curfew. We’re close right now. On one hand, I look at it and I think our country is being a little bit cavalier in its response in many regards. The thing I saw about Florida and all the people on the beach are like, “What are we thinking?” I’m committed to seven degrees of separation with Kevin Bacon. Nobody wants to come and visit us because we had a baby. I’m going extra cautious. He might be the healthiest kid on the planet, he might be Superman and never have a cold in his life, but I’m not going to risk it.
When somebody wants to come and see him, I say, “Who have you talked to? Where have you been? How are you feeling?” I had some friends who went out to a bar and I’m like, “You are on the never show up list. I’m sorry.” You don’t have any control over all the people you’re around. That’s one of the things in my mind. We’ve got to be prepared and this is a situation that is beyond what any of our expectations were. We knew it could be serious and the math is in. I like science and there are great ways to smash the curve and lessen the curve so it is not as bad.
It’s one of those things where if you don’t know and as an entrepreneur, if you haven’t taken the moment to accept that things have changed and business has shifted, don’t panic either in business. There are people at the other end of the spectrum of the hand sanitizer guy. They’re saying, “I’m going to give you my product because nobody is going to buy it anyway.” If you have things you give away, give them away. If it’s a lead magnet or if it’s something like that, give it away. If it’s a training that you give away, give it away. If it is something that you don’t traditionally give away, don’t default. Nobody will want what you have.
“The imminent collapse of the economy is here and I’ve got this whole supply. I might as well get it out from under me.” One of the greatest human foibles, the human personality, is that what is happening now, it will happen forever. We believe that if good times are happening, we believe they’re going to happen forever. If bad times are happening, we believe that it’s going to be this way forever. The thing is like those earthquake faults that I was riding in Guatemala, it’s up and down. There’s an oscillation between, “Yay,” and “Oh, Lord.” Nothing lasts forever especially this. We’re going to recover and there may be new social policy in place as a result. There may be great things and there may be worse things.
I’m going to tell you one thing that we did in the show a while back. It’s wherever there’s a new freedom, there’s also a new and equal limitation. There are many opportunities while we’re all sequestered at home in our different states or otherwise. Look for the opportunity that is now in front of you. What do you have time to do now that you didn’t have time because your priorities were different? You were socializing more, out and about more, whatever it was. They come in pairs. Limitations and freedoms come together in pairs. Find out what those are for your business. As Brad was saying, “For your business, what is the new freedom that you have?” We found some in our business because many of our real estate investor groups that we’ve met out in the world are not getting together in a group. All 50 or 100 people can’t get together and hold their meetings. We’ve been offering online education and online meetings for years. We’re pros at it now.
Not just online education, online live education.
We’re doing Facebook Lives and we’re delivering valuable content to individuals who can continue to grow their businesses and their entrepreneurial endeavors. The cool thing is we’ve already started to become the go-to because we’re prepared. This is part of our delivery function. We’re becoming the go-to. They’d say, “We can’t meet. I hear you are available to do online live presentations.” We’re like, “The 9th of April is available. We’d be happy to do one.” They’re going to have all on us. All of their people will join our platform and we’ll be able to interact in a way that they’ve never done before but may change the way they educate forever. Good things can come out of every situation. Find what new opportunities, what new freedoms are coming with this supposed limitation of being sequestered in our homes.
That is the perfect example of you’ve got to be optimistic. Commerce is happening. One of the biggest dangers that we could do as entrepreneurs and business owners is to go into that short-term thinking that this is how it’s going to be forever. That’s short-term thinking and short-term planning that leads to survival mode. If we fall into survival mode, that’s when we spin off the rails and it’s completely counterproductive in any semblance of momentum in business.
We’ll spiral down instead of expand and grow.
I want to bring a tip and bring it back to the thing you have to do with the worst-case scenario. What does that look like? Let’s walk through the steps so that you can figure out your worst-case scenario. You can do this in business and in your personal life just for entrepreneurs. Number one, to know your worst-case scenario in business, sit down and calculate what is and do the math. Don’t speculate and don’t guess, “I think I have.” Write it down. Use a spreadsheet. Use Google Sheets if you don’t have Excel or numbers or whatever but put it in a spreadsheet. Figure out, what is your business cash position, and then what is your burn rate at your current level of business? How long can you exist if the cash keeps going out and your doors have to shut and you have no more business, no more sales, no more revenue from now on? How fast will you be out of that cash? If you stop making money tomorrow, take into account how much of your personal burn rate comes into play. What is your personal life burn rate? I call it your doomsday protocols. It’s a little bit much, but whatever.
We had earthquakes, so let’s use it.
Let’s go for it. If you look at your personal burn rate in addition to your business burn rate, there’s going to be a point where that’s a magnified burn rate. What is it if you end up cutting out all of your business burn rate? None of us want to think about that, but if we’re talking 100% crisis mode, doomsday protocols, worst-case possibility, it’s the worst-case scenario. What’s your burn rate if you get rid of all your business burn? Now we’re looking at personal burn rate. How long can you exist? I’ll say it. There’s no shame in protecting your family. If you have to sacrifice the expenses of the business, do it. Before you sacrifice, let’s meet, let’s talk, let’s strategize. Look at everything you’re spending. Cut off anything you shouldn’t be spending.
We all have things that you go in and you look at your statement and you’re like, “What’s that $14 for?” It’s going out every month and you haven’t paid any attention to it and now you’re like, “I should pay attention to that.” Look at those things. Look at what’s mission-critical. This is where I would give a little bit of a warning because people who aren’t in business will oftentimes say, “Coaching isn’t mission-critical,” or “Being part of a mentor group isn’t mission-critical.” I would like to challenge that because in a time of crisis, it’s the time you need the most help, not the least amount of help. It can be with somebody like Merrill who went through 2008, went through the financial crisis, did well, expanded, helped people, helped the community and was able to do more. That’s the type of expertise that you want to be able to tap into.As entrepreneurs especially, one of the mistakes and foibles of our existence is that a lot of times, we believe that spending money is the way to get out of constraint and get into that momentum zone. It's not. Unless you're spending… Click To Tweet
You went to one of our coaches, cold hard cash to onboard a brilliant business coach. You went straight there for his coaching and now we’re all benefiting as a result of being able to be there. We depend on our subject matter experts to help us with our business. We encourage you to rely on subject matter experts who have financial. Brad and I went through in 2008 together in this business. We were able to literally save dozens of our clients who didn’t have to lose their home to foreclosure, didn’t have to do the doomsday scenario. They had us as coaches in their lives to protect their families and support their businesses. The first ones to go are not your group of advisors.
Regardless of who’s president, the group of advisors to keep somebody informed of the best possible decisions in every scenario, that’s your key group. We were keeping ours. They’re the last to go if this were to continue to devolve into mayhem because I want to know how to do a soft landing for my business. My account is not going anywhere. We want to know how to protect our resources the best we can. I’m a genius at fundability and I am not a genius at every other thing in my life except for prepping. We’ve got to make sure that you keep your people in play that can coach you and counsel you so you can protect your family because they have their levels of expertise that you and I do not.
The last step is to stop spending money. As entrepreneurs especially, one of the mistakes and foibles of our existence is that a lot of times, we believe that spending money is the way to get out of constraint and get into that momentum zone. It’s not. Unless you’re spending money purposefully in this time, the money has to be returning something. For instance, this is the other piece of this puzzle where we’re talking about. Have somebody you can work with and can help you have an aggressive plan to move out of this. I’ll lead into Merrill here. There was a gentleman that Alex referenced who has worked in hair care or some type of beauty products like that. The need for that has slowed down incredibly. In one of his coaching conversations, they said, “You create cleaning for hair already. How much of a leap is it to create hand sanitizer? Could you create hand sanitizers and sell that?” The guy was like, “Absolutely.” That would be a super easy pivot to start selling hand sanitizer within the next few days. This has all happened within a week. He completely pivoted what his product is and he’s shipping out five million units here. Could you do that?
Have the coaching team to be able to say, “What is the likelihood of us being able to do this? What are the pros? What are the cons? What’s in our way? How can this benefit us? What do we need to do to prepare for it?”
Even the idea. That guy was looking at what can I do with shampoo? What can I do with my hair care? What can I do with these products? He had such a narrow focus that it literally took somebody saying, “What about hand sanitizer?” He’s going to continue to thrive. Stop spending money because you don’t need to have unnecessary expenses. When you stop spending money, don’t stop paying your current obligations if you can avoid that. I’m not saying to the degree that it’s like 2008 where people were cashing in their stocks and their retirement funds to help pay for their mortgage because they didn’t have any money coming in. I’m going to tell you right now and this may not be the popular opinion, and this is my opinion. This is the opinion of Brad and nobody else. I’m not sponsored by anybody. I’m not on anybody’s team telling you this. If you are in a position where you have to cash in your retirement to try to save and do the honorable thing, give us a call and talk to me. We’ll talk what the advantages and possibilities with bankruptcy are and the different types of bankruptcy that might save you from decimating your retirement accounts. That to me becomes the unconscionable. That should never happen. If you can pay your obligations, you want to keep doing that. Merrill mentioned this in our conversation. When it’s time to start climbing out of the hole, how do we do that?
How deep is the hole that you create for yourself before we start climbing out?
How do we climb out?
We described the tool as creating, maintaining and leveraging your fundability. Fundability, we simply mean, are you in a position that a lender will trust you with their funds? There are going to be all kinds of programs that are starting to come out. We learned that you don’t have to pay your taxes until July 15th is the due date. We did a Facebook Live about a moratorium on a cessation of interest until further notice on student loans. There are going to be some economic things that are occurring. You can make short-term decisions that can impact you for literally 7 to 10 years. What Brad is saying is if you can, stop spending non-strategically, non-mission critical expenses. If you can continue to pay your credit accounts, especially the accounts that end up on your credit report, those are the first ones that are most important. If we’re going to look at the bullseye of fundability, maintain your auto loan, your mortgage, your credit cards. Make sure that you do not pay the minimum payments. If you want to conserve capital and not pay it off, call us so we can strategize. Do not make the minimum payment. Make $2, $3, $5 or $6 more than the minimum payment because what you want to do is not to pay the minimum payment ever. Our bootcamp is all about these kinds of strategies.
If you’re trying to conserve capital and conserve your cashflow, maintain and make sure you pay those out and those credit accounts up by the date and the time that they’re due. What you’re doing is you’re continuing to give a message that you are prioritizing money that has been given to you by lenders. You’re prioritizing that even in times of stress. How does a lender feel about you as a borrower if stress comes in to the economy and you continue to maintain those accounts? Your rating with them, which is called a borrower rating, continues to increase. There’s always opportunity in crisis and stressful situations. One of them is, “This borrower killed it with us. They totally took care of our interest. They had our back,” says the lender, “and we will have their back as a borrower.”
The reason why I said how deep is the hole we made is that you can make decisions right now where this could be a little bump or you could be in a gargantuan hole that you’re going to climb out regardless. Is it going to cost you seven years of bad credit and unfundability where lenders are not going to touch you for 4 to 5 years minimum just because you said, “I’m not going to pay my bills?” As Brad has gone through, prioritize and get rid of the unnecessary expenses. Focus on the things that are currently reporting on your credit report. Make sure you’re paying those bills and then negotiate with payments like your cell phone and all those things. If you don’t pay those for a certain period of time, they’re going to end up as collections. Those collections are worse. You’re going to take a hit on your score, but they do not count as much against you as a Chase late pay or a mortgage late pay or an auto loan late pay.
I personally would take a collection over a late pay any day, not a collection from Chase or any of your credit cards or your auto or mortgage. I’m talking about your service provider stuff, your utility bill, those things. We’ve got to keep our lights on. We’re going to continue to hold these meetings and we’re going to be sharing about Maslow’s hierarchy of needs. There’s a hierarchy of fundability and finances and we’re going to be sharing that. Stay tuned to people who know at least what makes you fundable and how you can use these strategies to protect your finances over the long haul.
One added piece to that is, especially now where the conversation is at the highest levels as far as how do we get through this with the least impact on business and on human life. Before you get to that point of that late pay or going late, call your lender. In your worst-case scenario, I would encourage you to figure out all your expenses and then start calling them and going, “I need some help. My business is slowing down. I’m not getting a paycheck,” or whatever it is. Give them a call. Now, more than ever, they will be amenable to the possibility of helping you out. What that looks like, I don’t know. It might be a moratorium on your payments. It might be dropping your payments. It might be dropping interest like they’re doing with the student loans. Call them. Have the conversation. Don’t be the ostrich and have your head in the sand and go, “It’s not happening to me,” because it is.
Remember, we’ve talked about this. Go down in our feed and look at the Facebook Lives we’ve done because we’ve addressed some of these. It is important to know that making a payment or if they say, “We’re going to forgive a payment and put a moratorium on those,” make sure that you also ask, “Is this going to harm my credit report?” Some lenders may count on you not knowing that there’s a difference. “Thank you. Save cashflow,” but over here you now have a seven-year, 90-day late on your Chase card and they close your account. Now, you’ve lost all this valuable stuff that you’re going to need later in the future.
The world is not going to crack in half and dissolve away. We are going to be back up like the massive crash of 2008. We had the greatest run-up of economic strength in the market for ten years straight. This is an opportunity. Let’s plan smart. Let’s plan for six months from now, twelve months from now, 24 months from now. Let’s establish strategies that are going to help us minimize the negative impact here and maximize our leverage in the future. We will rebound. We are in this together, but use your coaching teams to establish a progressive and well-thought-out plan for you. Clients who are reading this, talk to your advisors. We’re here ready to establish these emergency plans for your particular case. Students, we’re here. Ask your questions on Funding Hackers. Come to the bootcamp that we’re holding on April 18th and 19th. Let’s circle the wagons.
If you haven’t gone to the boot camp, go to GetFundableBootcamp.com and check out how to register. Those of you who are already Funding Hackers, let’s circle the wagons on this bootcamp and talk about how to prosper in these times, not recoil, throw up our hands and fade away, harming our family, our loved ones and especially our future. I wish you knew that you have total power over your future. If we plant the right seeds right now, they’re all going to grow and blossom over the next 6, 12 and 24 months when all of this is done. Let’s do that together. I’m telling you, we will knock it out of the park. That’s GetFundableBootcamp.com and check out how to register. For those of you who are already our students and clients, we’re circling the wagons and we’re going to have some more great stuff for you.
I wanted to go back to the thought about calling your banks and then making sure this doesn’t impact your credit. Also, if they allow you to skip a payment. Another thought to that is make sure you’re talking to the right person. It may not be that they have any nefarious intent. It may not be that they’re like, “This is going to allow them to default so that now I can charge them 29% interest instead of 18%.” That may not be the case. What might also happen in real-time is they have automated systems that they forgive your payment, but they don’t communicate that with their automated system. That automated system then does its job and 30-day late.
It reports you delinquent. Talk to the right people and as we say to everybody, whenever talking to your lenders, call until you get the same answer three times to your question. Until you get the same answer three times, that means it’s probably true. Make sure that not only are you talking to the right people, but they’re doing the math on their end. That’s why we’ve got to ask. Payments are different than how they report.
This is something that’s a little different than our normal coaching that I’m putting out there. I’m going to ask Merrill for forgiveness rather than permission on this one. If you need help doing the analysis of your business, prioritize those five steps that I talked about, reach out to us. If we have to do a webinar, reach out to us because there’s more to it than analyze. There’s a specific way to do it. There’s a process that allows you to get out of your own way, get out of that spin and get out of the constraint and the noise and get into that momentum zone. Do that and we can talk about personal stuff too. If you want to talk about the weight of use this in your personal life. Other than that, get out there, do some movement outside. Get some sun if you can.Talk to the right people and as we say to everybody, whenever talking to your lenders, call until you get the same answer three times to your question. Until you get the same answer three times, that means it's probably true… Click To Tweet
It helps with your serotonin and it helps with your mood.
Vitamin D helps strengthen your immune system. Be smart. Thanks for letting me jump on this, Merrill. I’m good.
Thank you and make sure that you’ve liked our pages so that you’re getting notifications of when we go live. I’ve got three on deck already. We may go to two a day for a couple of days because I don’t want to put these off. The announcements keep coming out. One quick announcement is they’re suspending the requirements to file your taxes on April 15th. They’re extending it until July 15th. Keep in tune and keep in touch and let us know. GetFundableBootcamp.com if you want to join our consortium of people who are already working on their fundability in this time of opportunity.
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