[00:00:00] Intro: Welcome to Private Banking Strategies Podcast with Vance Lowe and Seth Hicks, your secret weapon to protect your assets and never have to start over financially again. Vance and Seth help high net worth individuals, families, business owners, and investors structure and asset protected fortress for their families.
[00:00:21] Intro: Learn how to keep what you earn and use the velocity of money. To create your own private banking system. Join us on this journey as we explore the secret strategies of the rich and political elite and help you take total control of your financial security. Now onto the show.
[00:00:37] Seth Hicks Esq.: Hello and welcome to Private Banking Strategies Podcast, with Vance Lowe and Seth Hicks.
[00:00:41] Seth Hicks Esq.: Vance, how are you today?
[00:00:43] Vance Lowe: I’m doing great. Today we get to start talking about small business startups, and I’m looking forward to that.
[00:00:49] Seth Hicks Esq.: Yeah, we’ve been talking about the smart risk framework and how families make wise decisions in the a hundred year private family bank. We talked about what [00:01:00] smart risk frameworks are, how to avoid speculation and emotional decision making, how to protect your capital.
[00:01:07] Seth Hicks Esq.: Talked about some smart risk filters. Which include building a cash flow support model, making sure there’s clear, reliable repayments on your, your private banking loans, protecting the capital. And we talked at length in this lap last episode about the competence and experience of one when going into a, a new business or a real estate investment.
[00:01:31] Seth Hicks Esq.: And we really looked at the real estate side angles, and even from the perspective of a surgeon. Who’s in the medical profession, but began to venture into real estate investment in his medical profession, medical office pharmacy, things that dovetailed into what he already did. And so now we’re gonna talk a little bit more about the business startup.
[00:01:52] Seth Hicks Esq.: And let’s say we’ve got a, a private family bank with that’s in multi-generational structure and you’ve got a, a new. Up [00:02:00] and comer who wants to start a new business? And they come to you with this great idea. So they think, and maybe it is, maybe it isn’t. And what are the criteria that a family banking council would apply to make good loans, protect the capital, and expand their family bank?
[00:02:19] Vance Lowe: I think the very first step is a well-defined, well thought out financial. Structure goal of where this company’s gonna start. This new business is gonna start of the projection over the first year and maybe a projection out to five years, so that it can, it can be explained to somebody by number.
[00:02:40] Vance Lowe: Somebody can actually take sheets and look at it. And get the idea of where they’re coming from. That’s critical because that puts from abstract thought in a person’s mind, it gets it on paper and it starts to formulate an outline and a plan for success. ’cause we all have these ideas in our heads, you know, we sleep on ’em, it [00:03:00] changes or something goes goofy.
[00:03:02] Vance Lowe: So that makes it real. Then the next step I think is experience. Who has experience in actually doing that to verify the numbers. And Seth, both you and I, you know, in our history in real estate and business startups have maybe done these things. I know I have. But as things start to progressing, our numbers are off.
[00:03:27] Vance Lowe: And I remember which is next on the list. Once you’ve got the expertise, you have to have someone out on the outside looking in what I call, playing the devil’s advocate, a mentor to run the numbers by to see if they’re realistic. So give us an example of that, Seth, what something that you’ve done in the past here.
[00:03:46] Seth Hicks Esq.: Well, I think in the deployment of family Banking capital and in conservative principles, if there’s a new business opportunity that someone wants the family bank to loan on, they start with a business plan and they [00:04:00] demonstrate core competency either in themselves for the business endeavor or that they can hire it and manage it.
[00:04:07] Seth Hicks Esq.: I mean, you don’t need to know how to do every last detail of something to run a successful business. I doubt that that’s the case. The, the business plan, the core financial information that shows that you have those pieces in place, enough competency to make it work enough outside help or mentorship or hired guns to be able to make it successful.
[00:04:31] Seth Hicks Esq.: You’ve gotta have, like we talked about in the last episode, stress test numbers. What if everything does not go as according to plan? What if there are worst case scenarios that develop? How do you. Adjust and pivot to be able to pay the family bank. And if those things are well thought out and in a business plan and there are contingencies and worst case numbers and it still makes sense, that’s when you make a loan that someone may not have ever happened, [00:05:00] experienced in that business before.
[00:05:01] Vance Lowe: It goes back to what I think the concept of owning a grocery store. What advantage would you have if you got to own a grocery store? We know what they’re gonna say. Well, I get all my food for my family free. In Nelson Nash’s book, becoming Your Own Banker, he actually put you in that position as a grocery store owner and the devastation that that would cause from stealing for yourself.
[00:05:24] Vance Lowe: We’ve said time and time again in startup companies, 10 new startup companies, five are gone in the first five years, and four more are gone in the next five years, and one of the main culprits are stealing from themselves. They feel like they have an advantage because it’s their business. That is fatal thinking, and I guess I’ve gotten so far away from that now.
[00:05:47] Vance Lowe: I can’t even imagine thinking that way because in the grocery store story, he says all family members have to shop at the family grocery store. They do not even get [00:06:00] to pay the sales prices. They have to pay full retail price. Now everybody thinks, well, that’s outlandish. That’s not fair. So there’s one question he would ask and I would ask our audience today, who is going to make that money That’s gonna come right back to us, isn’t it?
[00:06:17] Vance Lowe: Yes. It’s gonna make the company more profitable. When you steal from a company, you’re manufacturing haul trailers or something. You’re a good welder and you’ve just got the experience and you make yourself up one, and you make your friends up one and give ’em a discount. What have you done? You’ve sabotaged your company and you force the customers to subsidize that loss.
[00:06:39] Vance Lowe: And we know in the retail business that theft is one of the highest expenses in retail to make it or break it. If we’re talking here a small business startups, do we understand and do we have the expertise? To literally put that together and make that thing profitable as soon as possible. So those are the kind of [00:07:00] the criteria that we need to look at when we’re starting up again.
[00:07:04] Vance Lowe: Does it align with the purpose of what we’re doing? Is it totally out here abstract that nobody knows nothing about? Or is this part of the big picture of what the family bank wants to go after? Those things need to all be part of that small business startup process.
[00:07:23] Seth Hicks Esq.: And when you have that well-defined plan and security, that’s when all the boxes are checked.
[00:07:29] Seth Hicks Esq.: Then you’re in line with your structure. That’s when you can make a good loan.
[00:07:33] Vance Lowe: And I would say this, and I did this. With the startup of ARS, which is part of a private banking strategy. I got smart when I started this company and I immediately formed a board of directors, and I think that’s critical.
[00:07:48] Vance Lowe: It’s like a loan approval board. You know, you get to the people in, but you meet on a regular basis. You find out where the company is, you go through, you divulge all the numbers, the expenses, the profits, [00:08:00] and the problems. What are the problems? How can we fix them? What are the successes so that we can repeat them?
[00:08:06] Vance Lowe: In a startup company, if a family set up an actual board that met on a regular basis, you would know. Which way to turn faster than any other way. You don’t want the loan to fail. You could find out in a meeting, you know, and going through the numbers and everything on a quarterly basis, every 90 days, if not monthly.
[00:08:27] Vance Lowe: What help that needs, or if we need to employ an exit strategy, which we’ve already talked about,
[00:08:32] Seth Hicks Esq.: right? Yeah. I mean, there’s consistent. Accountability and transparency in the loan transactions that make the expectations clear, and that’s how stewardship principles are instituted and the repayments are made cash flow fits, and that’s all done pursuant to documentation you have.
[00:08:51] Seth Hicks Esq.: I mean. Promissory notes or loan agreements and because those are the rules, just like when you play a sport, there are rules to the sport. Well, [00:09:00] there’s these rules and guidelines for family banking have to be in place for it to benefit different generations and multiple people. As your family grows, everyone has to know these are the rules of the game.
[00:09:12] Vance Lowe: So here’s a hard question, Seth. What happens if one of those categories falls out? We have to make a business decision within the family. You’re running a family business, you’re running a family corporation, you’re running a family private economy.
[00:09:31] Midroll: Did that story feel like it was about you? Do you feel like you are generating a lot of revenue but are not moving forward as fast as you would like?
[00:09:41] Midroll: Do you feel you should be making more progress toward your financial goals? Do you feel stuck? Let us help you get unstuck. Are you ready to take action and get your own private bank? Please visit us at www.privatebankingstrategies.com [00:10:00]
[00:10:02] Vance Lowe: This is the education that was denied us. This is how we are supposed to be living independent of the world.
[00:10:08] Vance Lowe: We should be able to be successful then using our society to benefit what we need and to contribute to society, but we don’t get to cut corners. The biggest push, the biggest success should come within your own private family economy. So now we’ve done the criteria set. Let’s go into how we back all this up, how we put in a procedure to document.
[00:10:35] Vance Lowe: And use stewardship to make sure this all happens correctly.
[00:10:39] Seth Hicks Esq.: Well, you do it in the same ways that your centralized banks do it. Like Wells Fargo and Bank of America. We actually have to create a loan agreement where the borrower agrees to a payment structure and. Interest rate and no term and amortization schedule that pays back the family bank.
[00:10:58] Seth Hicks Esq.: And there are [00:11:00] promises and representations and terms, contractual terms that that guide what the parties do. And if there’s not a repayment or a modification in the event that repayments not being made, the bank has to have their documentation in order to secure the collateral, take back the collateral, pay back the family, the loan, because the bank always gets the money back.
[00:11:21] Seth Hicks Esq.: We’ve made good loans to, on good investments, and this is worst case scenario, but the documentation has to be in place.
[00:11:29] Vance Lowe: Yeah. This isn’t a case of a family just lending a kid some money or a brother or something. Most in, in most of those cases, they don’t get paid back anyway. This is a bank. This is the future wealth of, you know, multi-generational family.
[00:11:45] Vance Lowe: This is how we move from poverty into wealth, and it isn’t by risking our assets on who said what? Who says this? Who says that? It’s all documented. So we [00:12:00] teach, we show people how to set up each and every loan so that it’s trackable. Just like you were saying. There’s amortization scheduled, there’s payment, there’s late payments, the whole nine yards.
[00:12:11] Vance Lowe: Everybody’s got into a contractual agreement that is required to be paid back. So that’s the, the structure of starting with documentation and stewardship. The stewardship part is, okay, we have a agreement and it as binding as with a real bank or a real lending institution as it is inside the family bank.
[00:12:37] Vance Lowe: So there’s really no difference, and we wanna treat it that way because. We need to be able to be practicing in such a way that what if we lend money to a friend outside the family? What if we become a lender to some of the public on a private basis? We’ve got to have all of our stuff organized, accurate, [00:13:00] and correct because once those loans go into force, they can’t be changed.
[00:13:04] Seth Hicks Esq.: I think that it’s, yeah, the stewardship expectation and the rules of engagement with the family bank. Sometimes it just depends on what type of family person you’re talking to. Are you talking to a Vanderbilt type of family or are you talking to a Rockefeller type of family? And if that doesn’t make any sense to you, folks, go back a couple episodes and listen to our case studies on the Rockefeller family and the Vanderbilt family.
[00:13:29] Seth Hicks Esq.: Why is that important? Because some children may think that I’m entitled to the family bank and dad, just because I’m your son, I’m your daughter. Doesn’t that entitle me to our family wealth? And the answer is no. Not in a private family bank. We’re not creating systems with private family banking where.
[00:13:49] Seth Hicks Esq.: Create dependency, and we create entitlement, and we create, you know, hand ups that, or how would you [00:14:00] call it? I mean, something that’s going to not help somebody effectively. The systems are in place so that they can help themselves, but entitlement is a dirty word.
[00:14:09] Vance Lowe: Right. It’s an environment where there’s a pool of money for legitimate needs that can be used and repaid, you know, with profit or with interest, and, and always grows.
[00:14:20] Vance Lowe: And that structure has to exist, and it has to have all these parameters so that all the expectations of each individual loan are in writing. The total agreement, what’s expected, the repayment schedule, how it is expected. Okay, who’s gonna monitor this thing? What are the expectations are all items that have to be put together and enforced, you know, in a way for success.
[00:14:45] Vance Lowe: Like I said, you prepare for that absolutely worst case scenario. And if a great opportunity turns south, it’s better to bite that bullet early and. Regroup so that we don’t, or the family bank does not [00:15:00] suffer and it’s much harder to come back from a loss than to keep growing in gains. One failure, you know, might breed another failure, might breed discord, just like you said, maybe entitlements or something.
[00:15:13] Vance Lowe: So sticking to. Documentation. Once the loan is approved and agreed and it is monitored, there’s somebody managing that loan is the proper way to do things,
[00:15:26] Seth Hicks Esq.: and the loan documentation and collateralization is part of the smart risk framework that creates a protection. Over the entire system, the private banking system.
[00:15:36] Seth Hicks Esq.: So the loan documentation is simply an extension of the smart risk framework and making sure all the T’s are crossed and all the i’s are dotted. It ensures that your capital is deployed with the right opportunities and wisely, and things are well evaluated and that everybody plays within. The rules and that creates the fortress that survives generation after [00:16:00] generation.
[00:16:00] Vance Lowe: It really does. It gets to the point that one of the things that also on that stewardship part is having a council that looks and reviews and. Makes decisions. We’re in multi-generational and we go beyond the initial parents and the second generation is now managing, or the third generation is now managing.
[00:16:21] Vance Lowe: There has to be a process to assure the values are upheld and the bank doesn’t suffer. So these checks and balances are absolutely critical. The Rockefellers, I read in a book on the strategy that he didn’t leave the money in inheritance. He left them access to money that needed to be managed correctly, and then a huge banking executor over the whole thing to stewardship the kids into action.
[00:16:51] Vance Lowe: They had to vote a president and they had to on a regular basis. Go through the loans that were successful and, and the loans that [00:17:00] were failing. And if a member, even extended member or someone else had a loan that was failing, they were sent a letter saying, we hope that you have enjoyed your inheritance, but uh, you’re no longer in good standing.
[00:17:16] Vance Lowe: And we hope you can take the payoff of this loan as your inheritance, but you’re outta the banking. Or you can make it up. The loan will stay enforced, the interest will continue, and if you make it up, then you can get back into good standing with the bank. So they literally had their policies and procedures and they had to enforce those.
[00:17:38] Vance Lowe: And they would choose a different president each term, and they had to grow the money. They had to put the money to work, so they had to find places that were secure to be able to invest in. They were taught how to follow and document their procedures to the success of the bank, and it’s beyond major.
[00:17:55] Seth Hicks Esq.: The rules and the structure are what create the engine. And so it’s [00:18:00] important that those are in place and it creates stewardship principles. But folks, if this content is resonating and you’d like to hear more, go to our website@privatebankingstrategies.com. And Vance and I have written a book which we titled How to Grow, which with the secret that banks don’t want you to know.
[00:18:19] Seth Hicks Esq.: We’re going to lay out some surprises, red pill issues that you can implement to create the banking opportunities that are taken from you if you’re not a private banker, and this book is gonna be available to you in audio or in a written version for putting in your name and your email. And more important than that, you’re gonna get an opportunity to schedule your own individual one-on-one call with Vance and an exploratory call where you can take a look at the numbers that you have in your family economy and see how private banking strategies will work for you.
[00:18:55] Seth Hicks Esq.: And an eight year roadmap, month by month, showing you exactly what to do. And if you [00:19:00] follow that plan, you’ll end up at the wealth trajectory and the curve that it tells you you’re gonna be at. How does that eight year plan fit for most people? What are people’s experiences with that?
[00:19:12] Vance Lowe: Well, the idea is we get you ready to take this whole strategy for a test drive, and we want to do that to actually show you a comparison month by month over an eight year period of time of a banking strategy versus the strategy or non strategy you are using right now.
[00:19:29] Vance Lowe: We all think we know something about money. But we can promise you, we really don’t. The only thing we know about money is what banks have taught us. How would you like to be in a system instead of spending your hard-earned dollars after taxes that you use, you put your dollars to work and you get it back while bringing in a new paycheck each and every month.
[00:19:48] Vance Lowe: Where would that put you? So that’s what we show you. We’re brutally honest. If anything, we hinder the strategy, but it’s just math. There’s no projections, there’s no growth. [00:20:00] It’s just pure math. Comparing the two of ’em so that it’s apples to apples. And you will know whether this strategy is something you’re gonna be better off with or without by the time we do that.
[00:20:10] Vance Lowe: So we encourage everyone to take that opportunity if you have the opportunity.
[00:20:16] Seth Hicks Esq.: Absolutely. Well, thanks for joining us folks on this podcast, and we hope to see you on the next one. Bye for now.
[00:20:22] Vance Lowe: Bye-bye.
[00:20:23] Outro: Did that story feel like it was about you? Do you feel you should be making more progress toward your financial goals?
[00:20:31] Outro: Do you feel stuck? Let us help you get unstuck. Are you ready to take action and get your own private bank? Please visit us at www.privatebankingstrategies.com.
[00:20:47] Outro: Thank you for listening to the Private Banking Strategies podcast. Click the subscribe button below to be notified when new episodes become [00:21:00] available.
