Designing Your $20M-a-Year Business with Charles Horton

Source: GeniusDen archive transcript checked against the recording. Administrative opening and closing material is omitted; the presentation wording is otherwise preserved with light readability edits.

Thank you for having me here, I am a serial entrepreneur, been going at it all my life, first of all, I'm going to give a book out at the end and one thing you will learn about me, I am relatively lazy, I want to do as little work as possible to get to the end result. In the old days you would go to these meetings, you would collect business cards, you would have to enter them into your contact management system and for me it just would never happen. So this is my contact management system, I am going to give away a book at the end of the night if you go to charleshorton.com/REG put your name, email address and at the end I will give a book away and you can stay up with me with my newsletters at the same time. Being an entrepreneur is a whole lot of fun but there is a lot of stress behind it. You need to, I believe, you need to find a group that you can make your peers.

I have been involved in CEO club for 25 years, the environment that Joe is creating here is fantastic. It gets you around people that have like minds that understand what you are doing, that motivates you to get your energy going. You need that because if you hang out with a bunch of regular friends that are working the nine to five, they are not going to understand where you want to go, they don't understand business and they are probably not going to support you there. So find a group of people that understand what you are doing and hats off to you. I love this environment. If you weren't an hour and a half away from me, I'd want to have a desk down here just to keep the energy up and going.

I am successful and I have learned to make a lot of money very quickly. I have gone through the ups and downs of entrepreneurship. I get my tax returns and I make money more and more every single year. My reasoning of doing that is really interesting. When I was growing up I had an extremely abusive stepfather. He put me in the hospital multiple times, he put my mom in the hospital multiple times, and I wanted to be independent. I wanted to make sure that I had money to not depend on my parents and about the only way I could leave the house was to have a job. So I started out doing vending machines, repairing games, then I started a lawn mowing business.

This lawn mowing business spiraled out of control. My stepfather sold sod, so we were laying grass. We were mowing lawns and at one point I had 150 kids working for me doing that. I told you earlier I was lazy. Here is what I found really quick. When dealing with doing business with a bunch of kids that are 15, 16 years old, they are not very reliable. So I thought it would be really cool to grow a big business, have a lot of employees, and I would be able to sit back and not do a lot of work. Wrong, half of them didn't show up. I'm mowing lawns all day long, you try to interview in between, trying to hire more people to mow more lawns.

And I just decided that that was way too work intensive for me. But I did learn that it was pretty cool at the time. I was charging approximately $20 an hour as a kid to do the lawn. And I was paying probably $5 an hour. So if I actually got somebody to do the work for me, I was making $15 an hour for not doing anything. So I learned the power of having a team and making money by creating a team and empowering the team. The next business came up, and the next business was flea market check cashing. I'm 15 years old, and I go to a flea market in Austin, Texas, and I want to write a check for something that I want to buy. And the merchant says, they don't take checks. I started asking around, nobody took checks.

My parents were living in a mobile home. We're poor. I didn't think about it that way at the time. But we were poor. But I never let any of that stop me. So I went to the flea market owner, and I said, would you let me build a booth and cash checks? It will help all of your merchants out here do more business. And the guy said, sure. So they built me a plywood booth in the middle of this flea market with a plywood flap that I'm surprised never broke and cut somebody in half at my check-cashing window. They cemented in a safe, and this is again a very open 400 merchant flea market in Austin. Next problem, what do you need if you're going to cash checks? I don't have any cash. I'm a broke kid. I can't even get to the flea market without a driver. I need me a driver!

So I raised about $10,000 from friends. That was my first business raising, but that didn't cover maybe an hour worth of check cashing. So the next thing I did is I went back to the flea market owner who owned all the concession stands in the flea market. I went to him and said, you know, you have all these concession stands. You have armored cars running in and out, taking your cash away, and that's a cost to you. Why don't you let me buy your cash? I'm 15, 14 years old. I don't even have a driver's license. And I'm telling this guy, I want to buy hundreds of thousands of dollars a weekend in cash from you. Will you trust me to do that? How many of you, if you were the flea market owner, would have kicked me out immediately? I guess most of your hands went up.

I guess I exuded a lot of confidence. The guy said, sure, so every hour on the hour, I went to their cash room. And I took all the cash they had. I wrote a check for that cash. I took the cash, went back, cashed a lot of checks. And I did that all week long. Generally, about $200,000 a weekend worth of checks, and I was charging a convenience fee of 10%. I was making a lot of money. I was a 14, 15-year-old kid. So I deposited all these checks on Monday morning, and then they deposited all their checks. And back then it took about 10 days to clear checks. And so I developed a flow of a lot of extra cash in the bank too.

I got so good with my bank that some days I would start cashing more checks than I would have cash from the flea market. Now I would go in with all the checks that I had just cashed, deposit it. They would give me instant credit and give me $40,000 or $50,000 more cash. So 14, 15 years old, making $20,000 a weekend. Now how many of you are now thinking, what about the bad checks? I'm hearing you thinking that? This is something that I never had a fear. I just don't have fears. That was not something that really concerned me. I wasn't afraid of the bad checks. I had no verification system. I'm taking checks from everybody who walks up. But I had a great tool. I had the district attorney's office. It's a criminal offense to write a bad check even if you're getting cash for it.

So I found out that that was a profit center. I found out that if I was cashing on average about a $100 to $200 check, so my fee is $20, with the check bounced, I made an extra $25 as a bad check fee. So I looked forward to the checks bouncing. I would send a letter. I would give them 10 days to pay. If they didn't pay, then I would file a warrant for their arrest with the district attorney's office. My bad debt was like next to nothing. Out of the $20,000 in a weekend that I may get in fees, I probably had $1,000 to $2,000 worth of initial bad debt. And through our collection efforts, when I closed the business down, I had very, very, very little bad checks, like a total of $5,000 or less worth of bad checks.

So that's really what started my career going. I learned that bad checks were a lot of money. Made a lot of money. So I started going out, and by the way, out of the check-cashing venue, I decided to get smarter instead of having lines of people and cash at my booth. I went ahead and got the merchants to go ahead and take the checks. Come into me at the end of the weekend. At the back of the booth, we had a merchant section, and we would sit there with the calculator typing up all of the checks, take our 10% discount, give them a check for their checks. So I was doing a lot of moving a lot of checks around. So I would deposit their checks. They would take my check, deposit my check, and then the bad, anything that went bad was my problem.

Then I started learning that there is a lot of money in that. So I started going out to other merchants, getting their bad checks. I started out just doing check collection, and then I learned about check verification. I had a data room at one point at my height on Christmas. We were processing like 10,000 checks a second in some cases. It was fun watching the computer screen just roll. You couldn't even see the transactions going up. I had [unclear phrase about the modem bank], and we had every check that was taken go through our database so we could stop bad checks. The next level is check guarantee. So I started out just doing check collection. Then I had a check verification, and I wanted to get every piece of the puzzle.

So I started doing check guarantee. So I would go to trade shows where people were in the business, and I'm there at like 25 years old now, and everybody in the business was 50 or older, they're wearing their polyester suits, and they're telling me that to get into the check guarantee business, you have to have millions of dollars behind you. And as they're telling me these stories, I'm thinking, thank God I did not know that, because if I would have known that it took millions of dollars to get into the check guarantee business, I would have never done the check guarantee business. What I did is I changed one little number in my contract that made this affordable. Most of my competitors bought checks at seven days.

So what that meant is the bad check would come directly from their bank to my office, and most of my competitors would buy that check within seven days, which did take a lot of cash flow. So I made myself just a little bit cheaper, and I changed that seven into a 45, and what that 45 did for me is it gave me 45 days to collect the check, probably put a warrant out for their arrest for the bad check before I ever had to pay for it. And so that made it to where the fees that I charged guaranteed the checks covered all of the bad checks, and I was never out any cash for the check guarantee, and by doing that, I became the eighth largest check verification guarantee business in the country.

How many of you have read Think and Grow Rich by Napoleon Hill? If you haven't read it, you should write that down. Whenever I'm attending one of these seminars, I write down thoughts, because you get in a creative environment and you get a lot of ideas. And sometimes those ideas aren't even on topic, but one thing that is on topic is if you have not read it, read Think and Grow Rich by Napoleon Hill. I read that at 18, and I set two goals. I set a goal that I would be a millionaire by the time I turned 30, and I would be a billionaire by the time I turned 50. I did everything that the book said. I worked it into my subconscious mind. I did it over and over. I saw myself having achieved those goals.

At age 29 and a half, I'm sitting looking at my business. I have a $20 million company, I have about 150 employees, and I've never made more than $60,000 in a year. I'm so competitive that I leave money on the table. I don't understand business enough to say, take a step back and do not do every deal. I was doing big, big, big company deals without making any money on it, just to do it, so my competitors wouldn't have it. I'm six months away from my 30th birthday, and I'm thinking, I set this goal of being a millionaire by 30. I can easily say that I am a millionaire because my business is worth more than a million dollars, but I don't feel like a millionaire because I've never made more than $60,000.

So what I did, right then, right there, I changed my goal. I added a word. I want to be a liquid millionaire by 30. So not having any money is one thing, having a bunch of money in the bank accounts is another. So I set that goal. I had been working with them back and forth many times. We were friends, they had made offers before, but never big enough, and entrepreneurs seem to think that their business is always worth more and more and more than any buyer will think that it is. As an entrepreneur, your price keeps going up and up and up, generally about 25% more than what your business is really worth. And so I always kept the number getting higher and higher. We could never come to terms, but I just took a big client away from them.

So we're back at the table. I have a goal of being a liquid millionaire by 30, so I have my motivation. They have their motivation because I just took a really big account from them, and I'm like a gnat. I'm kind of like a little stinging gnat in there. They keep swatting at me and missing. So they write a number down in excess of $10 million, and at that point I kept my straight poker face, and I said, 'Yeah, I'll take it.' So I took the deal, and as most of you would probably think, how many of you have done a cash-out in one of your businesses in excess of a million dollars? Anybody? Yeah, congratulations. So you would think that that's going to be the best thing in the world.

So understand, my last decade, all of my adult life has been about this company called SmartCheck. You could actually grow early on to the next one, so called SmartCheck. And I've been doing this all of my life. My company is all of my friends. They're my life. I have not traveled. I don't have any friends outside my business. How many of you recognize that in your own company now? You do nothing but work, and all of your friends work with you. That's where I was. All of a sudden I have, in excess, I had over $10 million after taxes. So I'm in a pretty good position. I had not increased my standard of living too high at that point. I could easily live off of that for the rest of my life.

And I'm thinking I'm going to do that. So I start day trading. I start just kind of doing those type of things. And within six weeks, I am depressed. I have no friends. I have no purpose. I'm watching my accounts go up and down. It's driving me crazy. I'm taking pills because the stress is so high. I tell one story, luckily it was a small amount of money, but I'm day trading. And I do decide to go to Hawaii, my first trip ever. I put all of my stock into two companies. One of them was AOL, and the other one was called NEON—New Era of Networks. Anybody remember that company? Are they even around anymore? I wouldn't think AOL's around, but I know John Brown uses an AOL email if you're out, so I guess they're still around.

So I put all of my money in those two stocks. I go away for two weeks. When I come back, I have a margin call, and my broker says, 'You owe me $5,000.' 'So go and take it out of my account.' 'No, no, your account's gone, and you owe me $5,000.' Luckily it was only about $100,000 that I was trading with, but that was my wake-up: day trading is not for me. So I find myself in a Tony Robbins seminar, and I learn that especially for men—and I believe it's everybody—I believe that we all need a purpose in life. And I no longer had a purpose in life. And so I immediately went out and started my next business. My next company that I've had now for 18 years is called Fast Bucks, and I've grown that. By the way, both SmartCheck and Fast Bucks were Inc. 500.

So I started growing Fast Bucks. I grew that up to 78 locations, roughly $20 million in sales, 150 employees, and I've been doing that for a long time. And at the same time I've learned that one business ain't enough. So one of my theories in life is once you get something going well, you hire good people, you let them run the business, and you get on and you do something else. We'll talk more of it. I see a lot of you going, thank you, thank you, thank you. You have that, you have that belief too. So I have done that in SmartCheck for probably the last 10 to 15 years. I have a great management team that's going. In the meantime, I've started doing a take on the Shark Tank and run something called the Boardroom locally, and I hope you guys have come out and join us. Very similar environment, entrepreneurs wanting to get together.

Every month we have one company do a pitch, and I've been doing that now for six years. We've had about 40 companies do pitches, and I have six investments of various levels between the companies that I've done, and I divide some of my time into that. I'd say my highlight, my highlight investment, we had any of you ladies in here ever shop at the White House Black Market? I'm looking, okay. So the founder of that chain grew it up to 600 stores. He sold it out, made a pile of money. That was about 15 years ago, and he has said I could share this in my stories. Three divorces, three businesses failed, and about 15 years later he's finding himself at 60 years old or so broke, but he did it once, and that's my kind of investment.

I look for racehorses. I look for racehorses. I look for people that are really smart, that have a proven track record, and I know can make money. So I'm his only investor, and we're currently at 15 stores in a new clothing concept called Bobo Nation. I'm going to tell you more about it at the end and give you the information. So I currently have three startups going at once. One of them is related to Fast Bucks, and it's a competitor to Fast Bucks, essentially. It's just a new way of providing financial services. Fast Bucks is a small lender doing installment loans and title loans. Also, I have a billion, what I intend to be, I told you that I had a billion dollar goal. This is a money story for me.

So at about age 45, I'm thinking, you know, life is really good. I'm comfortable. I'm not worried about money. I have a lot of things going. Maybe I don't want to work hard enough to be a billionaire. So I kind of let that sit around. The subconscious is a powerful thing. I find myself heading off to South Africa about three years ago, and I do crazy things. I walk with lions. I swim with great white sharks. I firewalk. I do all these kind of crazy things. And I'm thinking, this time, I got myself set up at a lion farm, and I've gotten them to allow me to go in with all of their lions, including the ones they won't go into. So a little bit of me is saying, you know, what happens if I die? I do have a decent net worth. I have money, but I don't have a will.

I really do, but nobody knows I have a will. So if I die, that lawyer isn't looking to see if I'm still alive or not. And none of my relatives know that I have a will anywhere, so they have no idea where to look. So I'm thinking, we really needed an electronic solution to that, so I started designing Secure Vital about three years ago now. We're currently out in beta. Finally, it's been a long process, but basically Secure Vital will be a platform to securely store your data. So everything from your bank accounts, your credit cards, your health information, things you're allergic to, medications you're on, things you like, things you don't like, insurance that you have.

Safe combinations. So it stores all of that, but it's also a platform. So we're going to help you. We're going to educate you on the legal documents you have. LegalZoom would be one of our partners. So if you need a dying declaration, we would explain to you what a dying declaration is and pass you off to LegalZoom to write that. We're thinking that we'll possibly partner up with OpenTable. So when you go into a restaurant, you open up your iPad or your smartphone, it is going to know you're there. It's going to know what your likes and your dislikes and your allergies are, but it's going to give you what you probably want to eat at the top.

And when you push place order, it puts in your allergies and that type of thing too. So I set a goal of that being worth a billion dollars in three years. I'm two years from my 50th birthday and it never dawned on me that at first my subconscious mind said I was going to be a billionaire by 50, and with having kind of consciously given up on it, my subconscious mind keeps going. And now I hope I know how to create a language as we do this. I know it's going to have me in my billion dollar goal by 50. So that's kind of what I'm into. Now you can press forward a couple more times. So that's what Secure Vital is about — a couple of lessons I got out of this. People asked me why I've been successful in life.

And I will tell you the number one thing that I say is from a young age, I know that I don't know everything. And whether you're 18, whether you're 25, whether you're 30, 40, 50 or 60, most entrepreneurs who have really big egos never get that. I think they know it all and they don't need any help. So from the time I started, when I started my check verification business, I started it in my bedroom basically. I went out and I found a salesperson who just got out of the military, had a paycheck, wanted something to do, wanted that purpose I was talking about. And so he went out and sold during the day, brought in the checks, I entered them into the computer, I made the phone calls at first, and I had no expenses in a salesperson other than commissions.

So he ate what he killed essentially and that worked really well. As the company could afford it, we got employees that made the phone calls and did the data entry. At some point we moved out of my house and then got a big office and kept going. And that whole time though, I knew I needed a good lawyer because this is a legal-oriented business. I didn't have money for a lawyer, so I found a lawyer that would take a small part of my company. He would be on my board of directors and he would do my legal work. I believe strongly, and so many entrepreneurs that I coach do not get this. I believe strongly that you must have accurate, timely financials. How many of you in here get accurate, timely financials so you know where you are?

About 25% of the room. That's another thing. If I were you, I would write down, you got to have accurate, timely financials so you know where you are. If you don't know where you are, you can't hit your goals. You can't figure out problems. In my company, we blow away our banks and our lenders' minds because of the data we have. I can get on my iPad right now and tell you to the second all of the key business elements that we look at, which would be net debt, profitability and payroll percentages. I can get that to you practically to the minute, and as far as into the month's financials, we have our preliminary financials on the third of the month and our final financials on the seventh of the month.

If you take longer to get them out and you're not regularly having meetings with your people, they're not going to understand the business flow. If you're making money, how do you make more money? If you're losing money, how do you stop that loss? So I created that team for stock and all of them from the first business did really, really well. So I had a financial guy, I had a sales guy and a legal guy that worked for me for free essentially and took a little bit of stock. Cost me in the end, but I had really good talent. Have a good strong group of advisors. I was talking to, I was at a Tony Robbins seminar one time and Tony was saying that you should be using your time in one of three ways.

Making money, giving back or having fun. One of those three ways you should be spending your time. So for instance, should you be, if you hate it, should you be cleaning your house? No, you shouldn't spend time cleaning your house if you hate it. So that was Tony's remark and he said, I absolutely hate cleaning my house. So before I had any money whatsoever, I would look at the value of my time, even if you don't have a value, even if you can't equate exactly what you're making now. I say a thousand dollars an hour is what my time value is and if I'm not making a thousand dollars an hour out of it or getting back or having fun, I'm not going to do it.

So what Tony did is he created coaching agreements with his housekeepers. They wanted coaching and he wanted housekeeping. So he didn't have money for housekeeping. That's how we got his housekeeping done. I've had multiple millionaires on my board since I was 18 years old. I find things that give them value. I've never paid them except in stock that they were able to turn around and cash out later. So I find things that they enjoy. People that are getting of age need the purpose as well. I have a gentleman that has been with me now as an investor for 15 years. He came in and was a partner in many of my stores, helped me grow, brought in other partners, and he got sick about four years ago. He had to cash out of being a partner because he thought he was passing.

He didn't. He's in good health now and he still comes to our monthly board meetings because he has fun. He feels value and he has a purpose. So the moral of all of this is make sure you have a good advisory team around you. Have people around you that are where you want to go. I always had millionaires on my advisory board. Frankly, I have exceeded all of their net worth. Actually, it's been six years now, but recently when I decided that the billionaire was where I was going, I went out and found a billionaire to be on my advisory board. And now I use him as my primary mentor, but I still keep all of the rest of them around too. Any questions so far?

I'm sorry? Excellent. I'm not wasting your time then, right? So by the way, this was originally an hour and a half presentation. Joe said people don't want to sit around and hear stories. So I kind of cut this down. So be sure you write down questions because at the end we're going to go to a question and answer session and I want you guys to make sure that whatever you want to know, you're getting out of me. Yes, sir? Joe and I were having this conversation last night. Many people here, teachers and mentors talk about surrounding yourself with strong advisors. What's your advice for people who maybe don't know where to look for them?

Right? Because there are some advisors that have no business being advisors and they're going to lead you in the wrong direction. So what are some of the key things to help you identify? One, is this a good advisor? And two, where are some of the areas you might look for those? So first of all, you're in the right place right now. This is the start of the place to go. Find a group of people that are going in the same direction you are. At the boardroom that I'm doing, I have now suddenly started having two, three billionaires in the room at a time that aren't even on the panel. So I'm attracting those people just to my group. So please come hang out at my group. The cost is very minimal. It's once a month and you will get a lot of education out of it.

And it's a great place to get your mentors. I found most of my mentors through the CEO Club that I joined. And I hung around people. I got to be friends. And then I handpicked the ones that seemed to have the knowledge and skill sets that I wanted. Is that a good answer? Any other questions about anything that I've asked or covered so far? You're pointing over here. Yes, ma'am? I'm on the other side of that question. So if I have too many people who approach me and want me to advise them, how do I sort of screen them out so they know those who will waste my time? Very good question. We send them to SCORE. That's a good answer too. And tell everybody about SCORE in a little while. Right as I end, I'd love for you to tell everybody about what you do.

So what I do is I believe that life is too short to not have fun. So I like to get to know people. I think everything's about relationships. I have a group of people that I've been working with ten years. If I need something, they trust me implicitly because I've always done what I say, but we all have a lot of fun. I take my employees on trips around the world. So last year we did Thailand and we did South Africa. It's an incentive trip. If your numbers are up, my mentors go with me because they have so much fun hanging out that they want to go and keep that energy going. So my answer to you is find the people that you click with. Find the people that you're going to have fun hanging around and the people that make your skin crawl and give you knots in your back.

And I love being helpful. I love working with entrepreneurs that are excited and have passion and energy. I love to give time to those people. But if I don't have fun doing it, life's too short, I'm sorry, you're gone. And you have to be working hard too. If you're not working hard, if you're not taking my advice, if you're not doing something with it, I'm going to back away too. Having said that, in my CEO Club, we do these things called PACs, Presidential Advisory Councils. And we get into groups of about 10 people and we get to know each other's business intimately. And I use the same structure in the boardroom. So the structure in the boardroom is you get 15 minutes to do a presentation.

You get about 15 minutes for the panel to ask you questions. And then you get 15 minutes where we give you advice. So the PACs were the same format, only about two hours each. So if it's my turn to present, I would have two hours to present my business, my financials, introduce you to the people in my company, give you what my issues are and what I want your advice on. Then the panelists would come back, ask me questions. I would answer the questions. And then the rest of the team would give advice. And the joke of the group was you would get this tape at the end that would give you all of the advice and you probably never used any of it. So you have to, a lot of most entrepreneurs are ego-centered and they're not going to take your advice.

And I want somebody to drop their ego, they want the knowledge, they want the advice, doesn't mean they're going to do everything I say. Not everything I say is probably a good idea. But they're going to at least listen and consider all of the advice that's given. Any other questions on what I've covered so far? Okay, we'll go to the next one. Jay Rogers came to me, one of my top mentors. Joe went to a group that we were both involved in called Business Owners Ed. And so Business Owners Ed meets for ten weeks and it's four hours a night. And you have two to three top notch speakers come in each night. It's kind of a master's in business education in a way.

You get a lot of good information from it. And Jay Rogers has been one of my long term advisors. He's the one that heads up the group I've known for 15 years. And he has two pieces of advice that I take really, really, really strong. The first one, your first job as CEO is to work yourself out of a job. The first time he told me that, I'm sitting back going, no, this is about me. I'm the only one that holds all this together. If it wasn't for me, this company wouldn't exist. And as I listened more and more to what he was saying, it made so much more sense. If your business is going to have an enterprise value, if somebody's going to come along and buy your business, it has to be able to operate without you.

Because if somebody's going to buy your business and give you value for it, they know you're not going to stick around. The people from SmartCheck, for instance, I had to stay for a year as part of my contract to help the rollover. So they give me my check. I'm around for a year. The second week the guys come and say, you know if we need you, we'll call you. They didn't walk me around the office. They needed to develop their own relationships with my employees, but they wanted to know that they could call me back if I was needed. And they did a great job of integrating the business into their own. They had that experience that had done it over and over.

Hire people that are smarter than yourself and motivate and empower them. To me, that's my job is the CEO of SmartCheck. I'm sorry, Fast Bucks. At Fast Bucks, that is my primary income source and it's a significant one. I probably spend an hour a day at most on Fast Bucks. I have a 15-minute call with my staff. I do that every day and we kind of consider it a stand up call. We talk about whatever we need to talk about during those 15 minutes and that's where I do the majority of the business. I then also handle fires. So if there's something that I need to get involved in, I'm the guy that gets involved and does that. About an hour a day is what I spend on my primary company because what I have done is I have hired people smarter than myself.

And I find ways to motivate and empower them. The executive vice president of my company was a banker until he turned about 30. And then he was a check casher. He ran check cashing stores. Then he got involved in mobile check cashing. Then he went and did a mobile armored car business. So he would have an armored van that would go up to businesses like fast food restaurants, convenience stores and they would take money but they also had a bank. So if you need change, they would give you that money back. Very successful entrepreneur and he failed in that last business. 9-11 came along and I don't know what 9-11 has to do with mobile check cashing but his business failed right after 9-11.

I was able to recruit him in and I have a very, very smart guy and I found a way to motivate him and give him and empower him. He runs the company. He runs the management or the administrative part of the company and it's pretty well his to run his way. He's very good at what he does, very smart at what he does. So top rule there, work yourself out of a job. Next slide. Create a business that serves you. Here's another lesson that I got out of Jay Rogers. I had never been traveling much and Jay Rogers is a very good salesman. I'm hanging out with him one day and he says, give me your credit card. I'm going like, why? Because you're going to go on this trip to South Africa with us.

And I said, no, I don't want to go to South Africa. Just give me your card. You can cancel later. You know, key words. So here I am getting my credit card out, handing him over, handing the credit card over to him. He signs me up for South Africa. $40,000 is what this trip costs for two. I try to get out of it multiple times and he talks me into going. Now I'm basically showing up at the airport with my shoulders down because I've been made to go on this trip that I don't want to go to. Watch Jay. He's good at this. So I show up in South Africa and there are 20 of the brightest people I have ever met. Other CEOs, guys that have $500 million companies, there was a billion dollar hedge fund manager in the group.

Just really cool guys. So the value in the trip was very clear that it was in the people that you were getting to know. But I also got out. I saw South Africa fell in love with South Africa. I'm really good with numbers. So on this trip, I broke down the rack rate of everywhere we went. And I made a good guess at the transportation costs. I looked it up online. And again, rack rate. I looked it all up. Rack rate. If I would have paid the asking price with no discounts on everything was $20,000. There were 20 couples on this trip. Jay Rogers made a quarter of a million dollars taking people that needed to be together, that had a lot to give each other, that had a lot of value, bringing the right people to the table, and he made a quarter of a million dollars in a two-week trip showing people around South Africa.

And he does this trip every year. Taught me a big lesson. Find ways to let all of your hobbies make you money. I was telling you that I've always been really good at money other than right after the check-cashing business when I was like 16 years old. Every other year in my life, I've made more money year after year after year. And I've started looking for ways to find, to whatever I do, I make money at. So for instance, I like to travel. I like Hawaii. I like scuba diving. I have a condo in Hawaii that I lease out when I'm not there. By the way, a lot of entrepreneurs, when they start their business, and I just heard this at the Federal Reserve recently, 50% of people run some sort of small business, and they don't know that they do it.

That could be babysitting, that could be doing some repair work for the person down the street, and they make the vital mistake of not creating a proper business entity and getting all the tax breaks. So here's a good example of why you create a business. My business in Hawaii is a condo. I need to go there to check up on it on a regular basis. So my flights are tax deductible when I go. So my stay when I'm there is tax deductible. All of the expenses related to that unit are tax deductible. I use it, and I let my employees go. It's a benefit for working for me. You get free time in the condo in Hawaii. And after 10 years, it's fully paid, so I pay for your travel and everything.

I rent it out nine months out of the year, and either use it or let my friends or employees use it three months out of the year. I make $50,000 a year, and I have all of these tax deductions for doing the things that I love. I'm doing public speaking around the world. I bought out the Firewalking Institute of Research and Education where Tony Robbins learned, T. Harv Eker learned fire-walking. And I do the four day courses that they learned on how to do those things. And Contessa here has done it. Joan back there has done the course there, two of my local Charlie's Angels, who love to help out in the fire-walking. But what that does for me is most places I want to travel, I have a business expense in going there.

I love South Africa now. I have a chapter in South Africa, so I go there and I talk. They give me speaking engagements. All of my travel is tax deductible when I go there. And I look for ways to make money. So firewalking, I consider a hobby, and I do $300,000 to $400,000 a year. And that's my hobby, so everything else makes more money. Work yourself out of a job and buying businesses that work for you. SmartCheck, sorry, Fast Bucks, gives me the lifestyle that I want. It keeps me at the standard of living, and it gives me enough money to start all of these other businesses. So Fast Bucks has become my incubator. I take the profits from Fast Bucks, and I put it into my other businesses, so it's not coming essentially out of my pocket.

Next slide. One of my first acquisitions. I had SmartCheck, and I got to getting to know your competitors I think is very important. I go to all the trade shows, and I make sure I know everybody and they know me. So anybody know Southland headquarters really close to here? Southland was my biggest client at one point. In the check verification/guarantee business, they decided to take all their business in-house, and they had their business divided among about 15, 20 of my type of businesses. They took it all in-house, and they put managers in charge of it, and they had their own business. Well, these managers got smart, sort of, and decided that they were going to buy the business from Southland and create their own check verification and guarantee company.

So they did that, and they ran it a few years. But if you're a middle manager, and suddenly you go from title to manager making $50,000 a year, and now you're a vice president or a president of this big company, what's the first thing you're going to change? Your pay. You're going to change your pay, so they took their pay from being $50,000 a year to half a million or more a year, and they had all these new business startup expenses, and they didn't understand it, and they came to me and said, Charles, we've signed on this, I think it was a $50,000 phone server. We personally signed on this $50,000 phone server, and we're losing, and I'm making up numbers, I forgot exactly what they were, but let's say I'm losing $750,000 a year, and they just want me to guarantee that note, and I'm saying, so if I understand you correctly, you want to give me your business that's doing making up numbers again.

Say $5 million, you're losing, say, half a million dollars, and you want to give it to me just so I assume a $150,000 note, am I correct? Yes, that's what we're saying. And I'm thinking, you know, so I just fire you and all of a sudden I'm making like a million dollars a year, right? I don't say that to them, but that's what I'm thinking. And so I bought the business, I got rid of them, and suddenly I was making a million dollars a year. That taught me a very good lesson, and I've seen this in entrepreneurs that I've coached over and over and over again, and that as businesses don't fail, people give up, and they give up for a lot of crazy reasons.

They could have dropped their salaries to $150,000 a year three times more than they were making at their jobs, and they could have had a profitable business, grown it, and made it more profitable, and made more money. Instead, they did the absolute, they made reality out of the worst thing that could happen, which is they would lose their business. They lost their business. I've seen that over and over recently. I have a friend that also came through the Firewalking Institute. He's a network marketing genius worldwide. He lived here locally, he moved a couple of years ago, but people that come to my Firewalk instructor training, no matter where they come around the world, if they have anything to do with business and network marketing, they know who this guy is.

He had a following. I was impressed. Doing $20 million plus in consulting, essentially, and doing seminars, highly, highly profitable. He brought in tons of people to go up to his tech zone, a lighthouse and hang out. Hopefully, I haven't told anybody too much to know that it's yet, but about six months ago, he just wrote this big long Facebook email. I quit. I gave up. I'm going to take some time off and figure what I'm going to do now. He could have sold his business for millions and millions of dollars, and he chose to give up. Ladies and gentlemen, I am here to tell you having been consulting, having opened multiple businesses and consulting for scores of businesses, there is always a way to get out of every problem.

I am in a business that's very litigious. I have said in my boardroom where my competitors closed down because of something an attorney general said, where we felt for about an hour like we were going to close down, and then we changed our reality. We said that's not going to happen, and we went out and made our reality come true. Always find a way to succeed. There's always a way out of everything. There's always a way to solve every problem. The easy thing for you to do is give up. Don't give up. Keep moving. Next slide. Managing your business. These are five steps, I'm sorry, that I use to manage my business. Step number one is remain calm.

That's a hard one to do. I'm not good at the day-to-day. I'm in a litigious business. There's generally two or three lawsuits going, and if you've ever been involved in a lawsuit, it is a roller coaster ride. One day you're celebrating the best thing in the world happened, and then the very next day you think it's all over and it's time to give up and go home. You've got to remain calm, and you've got to think about everything clear-headedly, because if you're thinking and making decisions from a state of panic, you're going to make bad decisions. Number two, do not give up. Find a way to solve the problem.

If you can't find a way to solve the problem, one of the things I like to do is put it in my subconscious mind, pray on it, whatever you want to call it, go to bed, sleep on it. It generally comes to me. I'll give you a good example. In SmartCheck days, Diamond Shamrock was 60% of my business, which I think is now Valero. So it was Diamond Shamrock. Now it's Valero. Big, big, big convenience store chain. Thousands of locations. They canceled on me. And in the check guarantee business, I'm charging a fee and I'm paying the money back, and it's not a pyramid scheme, but it kind of is. I need the fees to pay the bad checks. I need the fees to pay the bad checks. I need the fees to pay the bad checks.

And when suddenly I don't get fees, it becomes very difficult to pay the bad checks. So they cancel on me. I owe them $2 million. And I told you in that business, I've never made more than $60,000 a year. I owe them $2 million. I have no more money coming in from them. I'm thinking it's over. I'm thinking they're suing me, because this is a legitimate debt. I owe them $2 million. So I go to bed. I'm not good at contracts. I'm good at financials. I understand numbers. I'm not good at legal contracts. But when I read a contract, I can read it and think, oh, that makes sense. And then an attorney will tell me what it says and I'll go, oh my God, that didn't make any sense whatsoever.

So I typically trust my attorneys. I had in-house attorneys that wrote the contracts and all. And Diamond Shamrock had put, they put this clause in the contract and I forgot about it. They put a clause in the contract that said their checks were collateral for any money I would owe them. So the contract ended. I was able to take all of these worthless checks that I couldn't collect and give them back to Diamond Shamrock and I didn't owe them $2 million anymore. So I saved my life and it came to me overnight. Whether that be law of attraction, God answering my prayers, whatever your belief system is, it came to me overnight. I put a lot of trust in the law of attraction and praying and take advantage of it. Do things just come to you?

Same thing works for me for getting to the right people. So for instance, I'm planning on this Secure Vital. We're going to need potentially $50 million in advertising for the first year. I've done really well, but I don't have $50 million to put into advertising to flush down the commode. So my mentor, on a trip to Thailand, one of my incentive trips, my mentor finally caves in and says he'll fund it. And then a couple of weeks later we go to his favorite steakhouse, Bob's. I'm blanking on the guy's name right now, but the president of Hobby Lobby is there with him and he's interested in funding the whole thing. So the people that I need to fund the business, I just kind of put it out there and it comes to me. I just keep moving forward kind of like that baseball movie, build it and they will come. Back to what we were talking about here.

Remain calm, do not give up. See things as they are, not worse than they are. That one, you need to repeat to yourself over and over and over and over again. Because when you're in a state of panic, when you're not in a good mindset, when you're not remaining calm, you're going to see things in the absolute possible light and that's going to cause you to give up. Don't give up. Remain calm. See things as they are, not worse than they are. Next, see things how you want them to be. And finally make them how you want them to be. I started a story earlier where the Attorney General had decided that they were setting a probably an 18% APR rate cap.

In my business I'm making a $300 loan. An 18% interest rate would mean that for 25 cents you're coming into my office talking to my person, we're generating a loan and I'm taking a $300 risk on you without even checking your credit. How many in here would loan somebody that they don't know $300 for a quarter? Hopefully none of you. So that's essentially what the Attorney General was saying. It would wipe our company out of business. Many of my competitors quit and gave up. What we did is we said the Attorney General doesn't write laws. The Attorney General does not have the right to do that. The Attorney General enforces laws. So we sued the Attorney General.

We got an injunction against the Attorney General from trying to create law. Matter of fact, the judge said to her, if you want to be a legislator, give up your job, run, and become a legislator. These [unclear word] are so important. Until you repeat them over and over and over in your head, you probably think I'm absolutely crazy, but to be an entrepreneur, you've got to be a little crazy. You've got to be able to create your own reality, and that's really what entrepreneurship is to me: finding a vision, defining the vision, and making that vision come true, generally by leading and motivating other people. So just a pause? You sued the Attorney General and won.

I fought the law and won. You can do that with states. I would not try that with the federal government. They've got lots of deep pockets. So I want to take a moment before getting into The Boardroom and see if you have any general questions. Yes, sir. [Audience question is partly unclear.] I don't understand your question. So you have a great executive team. What if they're really great to you, but they're not the best? They're really not great at leading people. How do you know they're good all the way down? So I'm running into that now. I have an IT guy, for example, that is absolutely brilliant at IT, but he makes employees want to quit if they have to deal with him. He has Asperger's. He is not good with people, but he is brilliant at what he does, and he keeps our computers going. We've never lost any data. So what I do in that case is I take him out of the roles that he's not good at and I put him into the roles that he is good at. So now all of the IT-related questions have to

go to the district managers. The district managers are the liaisons to IT and then we have meetings on a regular basis and we do team building events so everybody works together and gets to know each other. If you're sitting on a phone call and a phone across from somebody it's really easy to be snide or smug with them but when you have to work in team building events and you have to figure out ways to do things and you have to work together as a team and you learn from it then all of a sudden you can work together in your offices. So we do developmental training to make sure all of our team works well together and then when they don't we look to move their assignments and their tasks in the area of their competency. Not everybody can do everything, in other words.

Yes, ma'am? What do you do if you have too much passion? Too much talent? Too many ideas? Just too too much. God just keeps pouring when we do this. I haven't done that yet. You know, I can't keep up with so much being poured onto me and I think I'm going to explode but I just have too much. Just take a deep breath? To me, it's a matter of where you are in business. When I started SmartCheck and when I started SmartCheck I did nothing but SmartCheck. I did one thing and I did one thing well until it paid me enough money to replace me in the talent pool and it let me go on to something else. So now in Fast Bucks, it affords me the ability to pay the people that need to run Fast Bucks and allows me to go out and do what I do best. So if you're not there, if you're not in a financially windfall position you need to find that one thing. You need to find the one thing to focus on and focus on that one thing until you get highly successful.

That's my advice to you from the little information you gave me. By the way, Contessa, Joan, did you pass out, give everybody one of those stickies? Thank you. Thank you. Are there questions? Yes, ma'am. How do I empower people smarter than me? How do I empower people smarter than me? So for me, as an entrepreneur, that's about giving up my ego. As an entrepreneur I could have the belief that I have to do everything and I have to make every decision. At SmartCheck, I had 150 employees all in the same building. I was there at 7 o'clock in the morning and I didn't leave until 10 o'clock at night. Literally, drastically exaggerating a little. If you wanted to go to the bathroom, even if you worked in the collections department and there's three levels of management above you, you had to come and ask permission from me to go to the bathroom. I controlled everything, and as I told you, I never made any money. When I went to Fast Bucks, I took a completely different

management approach and that was to trust everyone else, to trust everybody to make their own decisions. So in Fast Bucks, I've never had an office at my corporate office. I had a competitor open up five stores, and he had $5 million to do it, but I opened up one store with $100,000 and grew from there. He opened up five stores with $5 million, and his mentality was that everybody was out to steal from him. He made all the loan decisions. You had to call him for a loan decision, and you couldn't do anything without his permission. I always ran it exactly the opposite. The store managers were empowered to make the decisions.

They're the ones that knew what they were doing. They're the ones that had the relationships with the customers. The only time you had to call up was if you were going to decline a loan. You never had to call up to approve a loan. So fast forward, he had $5 million in five stores. I started with one store and $100,000. Everything else grew from there. I went to 78 stores. He closed. None of his investors ever got a penny. Difference in management style. And I think it comes down to that belief system. Because I believed that all of my employees were good, he believed that all of his employees were thieves and bad. I believed that all my customers were good. He believed that they were all thieves and bad.

We were in the exact same markets. He had better looking stores, which you think would attract better customers. I went to 78 stores and had been in business 18 years and did 500 multiple times. He went out of business. None of his investors ever got a penny. So I give my employees the power to do their jobs. The entrepreneur in my corporate office, he is an entrepreneur, but he's staying with me because he earns a piece of the pie. He gets a piece of the profits and he gets the power to make decisions within his business. One good thing I will tell you is my billionaire mentor right now. His name is DL Rogers. He has 230 Sonic stores. He has a little less than 10,000 employees.

His Sonic stores that are headquartered out of Grapevine. His Sonic stores, on average, do as much as 50% better than anyone else in the fast food industry. Why? Because he set up an environment where his store managers were owners. So his store managers own between 10 and 20% of the store. There is almost no turnover within the stores. There's a line full of people waiting to be managers and nobody leaving where if you go to any other fast food chain you probably see three different managers in there a year. Keeping people in there, getting a piece of the pie, keeping them empowered makes you far more money. His advice to me, he says Charles, if I was trying to run 230 stores, 10,000 employees and I had to make all the decisions and I was the boss I wouldn't be anywhere. But instead I lead, I motivate, I create the systems. I have 230 managers out there that are not managers. They're owners.

They own part of the business. They're looking for ways to make more money. So one of his employees, how many of you have had Sonic's ice? Who loves Sonic's ice? So back in the day, you couldn't buy Sonic's ice. One of their managers owners came to Daryl and said, Daryl, why don't we start selling ice and they started selling ice for $2 and I'm going to tell you even though I'm good at financials, I'm not good at remembering exact numbers. So I tell you over and over I'm making up numbers. I don't remember the exact numbers because what I remembered was it was a lot of money. But Daryl says he now makes say you know four, five, six million dollars profit a year because one of his managers came and said let's sell ice and not the drug kind.

Did that answer your question? Find people that are smarter than you, give them the power to do their job. Not a dictator in my business. We get together as a management team and we make decisions. Before, if anybody has ever done the DISC test, anybody in here ever done the DISC test? So I'm a high D, high I, no S, no C, whatsoever. And so the way I lead, I naturally would lead is I would come to you and I would say go out and make every call, every day and collect to keep your bad debt at 12% or less and you do it because I say so and if that's not enough it's because I'm going to fire you. That's how a DISC would manage. That's how a D-level guy would manage. So the I stands for influence. A manager that is leading through the I will come in and say take their top management team in, hey guys we have this problem. Our bad debt's at 18%, it has to be at 12%. What do you think we ought to do? Everybody goes

around the room, talks about it and if they're not doing what I'm thinking then I may add a little bit in. But we make decisions as a team and by doing that when we leave the management meeting everybody's empowered. Everybody owns that decision. They have a part of that decision so they leave as an owner instead of somebody saying I hate that boss, tell him what to do, he didn't know what's going on. We make our decisions as a team and we include all our store managers in every decision that we make, our store owners. Other questions? Yes sir? You have to say it louder in here. You have to have emotional value of your company in order to sell. Just sell it. So here's what I learned about business. I had time after time, after time, after time, after time, that I could have sold SmartCheck. And emotionally I didn't want to do that.

So I finally do it because I have a goal, I get depressed. Right now what I do is I have multiple businesses going at the same time and I simply have a belief that everything's for sale at the right price. So in my business about 10 years ago I got an offer of $25 million for the current business and I got an offer of $25 million for the current business. I didn't take it even though my goal was $10 million. I got into the meeting and it was with a pawn chain in Austin, Texas, we're sitting at the table and they wrote down on a piece of paper $25 million. My in-house attorney was a partner in the business and he spoke first. He took the paper, threw it down and laughed and said we're worth at least $40 million.

I was kind of wanting to pick the paper up and put it back over. No it's good but Steve assured me that the number would go up and we just needed to wait. And this goes through cycles. My business right now is on a big downhill cycle. President Obama when he took office made one of his top 10 campaign pledges to run our industry out of business. And so we've gone through a really fun eight years. He created the CFPB to kind of run us out of business. Three years ago we went through something called Operation Choke Point because they couldn't pass laws that eliminated our industries and so through Operation Choke Point they went and took away our access to the banking system. So imagine to yourself in the financial services business you're flowing millions of dollars you're writing checks, you're making deposits and all of a sudden all the banks shut you down.

So the FDIC would say I don't know why that's not happening and all the banks were shutting us down, our whole industry down, pointing over to the FDIC. We had to sue. Luckily it wasn't me at this time. It was our industry—the industry sued. Through due diligence they found the memos where the FDIC was telling all these banks to close the businesses down and we were able to get our banking relationships back. So business is up and down. There is no market for Fast Bucks right now. I couldn't sell it if I wanted to but I'm making a lot of money at it so I just take every challenge and enjoy it while creating other businesses. Did that answer the question? Okay I'll take more questions but everybody has a little yellow piece of paper on this yellow piece of paper what I would like you to do is write down one thing that you really want business wise one thing that you would do you think you would do most anything to get

so maybe that's a sales revenue number maybe that's an acquisition maybe that's hitting a profit goal whatever it is to you something that you really really really want and you think you would do anything for it write that down on that yellow piece of paper. Somebody not have a yellow piece of paper? Everybody has one. [brief room exchange unclear] So as I told you earlier I bought a fire-walking institute from Tony Robbins — I mean that's from the guy who taught Tony Robbins how to fire-walk, also taught T. Harv Eker most of the other speakers throughout the country so now one of the things I do is I go around the world and teach other speakers and trainers how to do fire-walking and a bunch of other metaphors that you use in these types of environments so what a

So what a metaphor activity like this is for is to reinforce the message have any of you in here firewalked before just the ones with me apparently actually so what you're actually walking on is you're walking on red-hot coals so we burn wood down to make red-hot coals we take our shoes off and we walk across the red-hot coals why would anybody want to do it? [Brief audience response unclear.] so here's kind of my story I found out anybody ever been to a Tony Robbins seminar and you didn't firewalk or do it? because they didn't do a firewalk there you didn't do it so I went to I found out about a Tony Robbins seminar I'm really into a high-energy so if you come to my boardroom you'll see that I have a 2,000 square foot meeting room on my property that's decked out with flashing lights and speakers and high-end music and lights and stuff so I like to do things that make impacts so with my employees they get together on a four-day boot camp twice a year half of it is personal development

and half of it is business development so you learn collections and customer service but you also learn personal development out of it too so I've been doing this all my life for all the businesses that I own and somebody told me about a Tony Robbins seminar and I went and it was fantastic the energy was great just really going you're dancing you're having a good time and then comes the firewalk and I had no conception of the firewalk whatsoever it didn't have a positive or negative impact to me but we go out and we see this big huge bonfire and all of a sudden I am scared to death I didn't think about anything before and during the process he gets you to make a definite decision you're going to do it here's why you're going to do it I get out there and I see this big mound of coals and all of those definite decisions went away and I suddenly