← How to Money
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- [00:00]
Podcast Host (Sponsor Announcer)
This is an iHeart podcast.
- [00:02]
Sponsor Voice (Indeed/Mint Mobile)
Guaranteed Human Indeed Sponsored jobs get you quality candidates when you need them most. Spend less time searching and more time actually interviewing candidates who check all your boxes. Less stress, less time, more results when you need the right person to cut through the chaos. This is a job for indeed sponsored
- [00:20]
Joel (Podcast Host)
jobs and listeners of this show will get a $75 sponsored job credit to help get your job the premium status in it deserves@ Indeed.com podcast terms and conditions apply. Need to hire this is a job for Indeed sponsored Jobs.
- [00:35]
Podcast Host (Sponsor Announcer)
Is it just me or is it getting really hard to figure out the best way to save for retirement? Fidelity can help you find clarity so you can save the best way for you. With a free personalized plan, goal tracking and timely insights, you'll be set to take on retirement your way. Get started@fidelity.com future expenses charged by your investment and other costs and fees associated with trading or transacting in your account. Apply Fidelity Brokerage Services Member NYSIPC I'm Brian.
- [01:07]
Phil Sanders (Guest Entrepreneur)
I work at UnitedHealthcare.
- [01:09]
Podcast Host (Sponsor Announcer)
So Brian, why do you care?
- [01:11]
Joel (Podcast Host)
I care because I don't want to leave anybody behind.
- [01:14]
Phil Sanders (Guest Entrepreneur)
I oversee one of the biggest resource centers in UnitedHealthcare.
- [01:18]
Joel (Podcast Host)
I see people walking in my office every day just like my parents. They have no idea about the healthcare. I feel like they are my uncles, aunties. I treated people like family.
- [01:30]
Phil Sanders (Guest Entrepreneur)
I'm Brian and I'm committed to care.
- [01:35]
Joel (Podcast Host)
Welcome to how to Money. I'm Joel and today I'm talking bouncing back from bankruptcy and business failure with Phil Sanders. Okay, so, so I met Phil halfway through a marathon a few months ago, literally in the middle of the race. He's a friend of a friend. We ended up running together, chatting for a few miles. And even, even though I liked him, I definitely didn't think, man, this guy should totally be on the podcast. But you can learn a lot about someone when you're running side by side for half an hour. And it was clear that I'd only scratched the surface of his story. Phil is a serial entrepreneur and like most entrepreneurs, not every venture has been a home run. He's experienced the highs, the lows, and everything in between when it comes to building businesses. Today he runs a company called Multiply, where he helps business owners sharpen their strategy and build more successful companies. And the more I learned about Phil's journey, the more I knew I had to bring him on to share some of that hard earned wisdom. So Phil, welcome to the podcast, my friend.
- [02:53]
Phil Sanders (Guest Entrepreneur)
Man, so excited to be here. And honestly, I could never have imagined 30 minutes into that run that I may be sitting here a couple months later on a podcast. That's cool.
- [03:04]
Joel (Podcast Host)
Pretty goofy, right? Pretty goofy, yeah. Amazing the way life works, isn't it? All right, so first question I ask everybody who comes on is what they like to splurge on. So craft beer is certainly one of my things, but, you know, I'm not spending so much on craft beer that I'm not saving. Investing for the future. What is that splurge for you, my friend?
- [03:23]
Phil Sanders (Guest Entrepreneur)
Yeah, I think over the last two years, it honestly has been running like it's the thing that kind of didn't make sense to buy a new pair of shoes every two months, you know, and all that gear that you need, like the gels and everything. But it's been running. But also, I'll say also this year, it's kind of been our kids. And we'll get into my story a little bit more later. But, you know, when you go through a season of bankruptcy and literally every dollar, you're wondering if it's going to come through, where it's going to go, how it's going to get to you. All these things, like some of the things you pull back on are those kids activities, like sports and stuff. And so this was a big year for us to kind of get back into this. We're getting the kids back into stuff. And dude, sports cost so much money. You got three kids, you know, and so it's. I would just say that that was something Anna and I. My wife Anna and I intentionally were like, it kind of still doesn't make a ton of sense, but we've got to do this, you know, and we can talk to that a little bit more. But that was a splurge, I will say, that we went for. And it's honestly been so good.
- [04:28]
Joel (Podcast Host)
I totally get that. And sports is one thing, and then summer camps is another that we. Now we've got two. Two girls going to summer camp next year. And so, like, the budget line item for summer camp is pretty big. And so you have to, like, carve it out as a priority and really start saving intentionally for it. And. And that's on top of sports and stuff like that. And not everybody chooses to do that. And some people say, oh, it's too expensive, or I'm not interested. Don't necessarily want that experience for my kids. But yeah, when you have kids and you want them to participate in some of those activities, the cost can add up pretty quick.
- [05:03]
Phil Sanders (Guest Entrepreneur)
Well, it's just the whole like, living now. Like, I get that the situation that we're in, right. Like, and we've been there a few times, but it's. We want to live now as well as be good stewards of where our future's going. You know, what we want for the future, and we don't want to sacrifice everything now in order to have that future. And so it's kind of this balance that my wife and I are constantly talking about, which is, hey, knowing where we are now, like, kind of what risk level are we okay with to invest in some of those things that we feel like are the live now things.
- [05:36]
Joel (Podcast Host)
Right? Yeah.
- [05:38]
Phil Sanders (Guest Entrepreneur)
And I think that's just always a conversation that we're having. But, yeah, for us this year, I mean, we just. We moved to a new city in the past couple of years, and just our kids are just now getting those friends, and once you get that invitation of, hey, do you want to play in the sports team?
- [05:50]
Joel (Podcast Host)
Team.
- [05:50]
Phil Sanders (Guest Entrepreneur)
It's just, man, we want our kids to have such a great childhood here. And those experiences typically are the things that we'll invest in, you know, versus some kind of thing. Right. To have at the house.
- [06:04]
Joel (Podcast Host)
So I think about, like, yeah, the, the swim team, the soccer games, and how much it means to the kids, but then also how much of a bonding and community experience it is for the parents. Like, it's. It's worth the money. You just have to make sure you have the money to be able to spend on it. Right. Let's talk about business. Because you. You started a slew of different businesses. Is that because you have an entrepreneur, entrepreneurial personality? And do you think some folks are more cut out for that lifestyle than others?
- [06:35]
Phil Sanders (Guest Entrepreneur)
I mean, that's such a nuanced question. I've been in entrepreneurship now for 16 years, and we started when I was 20, just turned 24 years old. So, like, I left being a Starbucks barista to be. Me and my wife were. Did, like, photography and graphic design, you know, so it wasn't like it took a huge leap. It was just me understanding, oh, if I shot like 10 weddings a year, I would double my income, you know, from being a Starbucks barista.
- [07:01]
Joel (Podcast Host)
So although you don't have the. Don't have those same benefits, right, that the Starbucks baristas have, you don't have the benefits.
- [07:07]
Phil Sanders (Guest Entrepreneur)
Yeah, for sure. But just, I mean, we. The responsibilities level that we had at that time, I mean, our house, we were very lucky to have a home that was like a family friend. We paid 500amonth for this home when you know, back in 2009. And so anyway, we just didn't have a lot of, like, financial responsibility. So jumping off this thing didn't feel like a cliff we were jumping on. It felt very feasible that we could do it. So I think that the answer of can everybody do entrepreneurship? Yeah, I think so. But I also think that, like, the. The longer we wait or the more complexities there might be in life, maybe can make it a tougher decision to make that jump, you know, so, like, if I. If it would be very difficult for me at 38 years old to get an entrepreneurship for the first time with three kids, you know, and like, this kind of level of life that we have right now. But, yeah, I think I see. I see people of all different personality sets of all different strengths being very successful. I think that the trick here, not even the trick, the opportunity is to. To be yourself in entrepreneurship. I think when you start a company and you try to be somebody different, you know, oh, I gotta be like this guy or this gal that I heard on this podcast, or I follow. Like, I think that's the real trap. So it's very freeing to be sure of who you are, what's your identity, and then build a company in line with those strengths. How you lead, how the clients you like, the product and services that you like to do in the way that you like to do it. Because if we try to build something in a different way, I think it's just filled with these traps, you know, we'll always feel like we're never there, I guess, if that makes sense.
- [08:47]
Joel (Podcast Host)
Yeah, I think it's probably easy, especially given the era of social media, watching Shark Tank, stuff like that, you're like, oh, maybe I should try to do what that person's doing. And that's a really hard path to entrepreneurship because you have to realize, like, well, what am I gifted at? And try to launch from there instead of trying to replicate somebody else's model. What. What advice would you have for someone who wants to start their own business? Not like a dollar business, because for most of us that's like, not going to happen, but like a decently successful lifestyle business. What. What would you suggest? How do people actually go about starting something like that?
- [09:24]
Phil Sanders (Guest Entrepreneur)
I think that in line with what I just said about knowing who you are, right? Because it's not a question of if it'll be hard, right? Like, I think there's a trap that a lot of people think that, oh, this is hard, so I might be doing something wrong. Like, it's just gonna be. It's just hard, right? And I think that when you get into entrepreneurship, your goal in the beginning just needs to be to. How does this thing. How can we be profitable from day one? Like, how can we be profitable from day one and keep sustained profitability as a trait in this business? Okay. Because we can do so much more with less than we think. And I think that there is, again, this thing where it's like, hey, I need to have these other things in this company, so I'm gonna go spend money on them because they will bring me this success. And so much of success is just discipline. Like, there are certain things within a business that just take time. They're lessons that just have to be learned. And so to remain profitable in those times is. Is so critical. Right? And so, you know, business is one of those things that moves incredibly fast, but also very slow.
- [10:28]
Joel (Podcast Host)
Right?
- [10:29]
Phil Sanders (Guest Entrepreneur)
So I'm always just kind of. It's the whole, you can do less than you think in a year, but more than you can imagine in 10. And so I think just giving your business that timeline, if you can give business, hey, I want to have X result over the next five years, at the end of five years, that's a whole different business than if you're saying, I need to have these things immediately. So that speed when we're rushing decisions that are out of line with the profitability, that's where people get into traps, and then we're in survival, right? Like, because then it's, oh, my goodness, like, now I. I am forced to do this thing, or because I'm already, like, underwater, right? So I think that, like, business is one of those things where you really have to have, like, the voices around you in line with your value. I mean, this is. Have a card with four to five people on it that you're listening to. Like, this isn't a democracy necessarily, or we're just listening to everybody and taking pieces. We got to know the thing that we're building, the thing that we're not building here. So, yeah, this is my fourth company, and I think that this. It's interesting how different this one feels after all that I've been through, because the last ones were very. Almost like this anxious energy when I started them of just like, hey, we. We've just got to build this thing up. And it's almost like just more like, the plan was just more like more revenue, more employees, more services or whatever it was. And this one now feels, like, very methodical. Like, it. For the first time, I'VE I've ever sensed this. It feels very methodical and kind of how we're building this. And again, it's still very difficult and we're, there's still risks to it, but it just, it just feels different than the ones I've done in the past.
- [12:15]
Joel (Podcast Host)
I like the longer timeline. I think it makes sense. I think lots of times people want to hit like instant success. Like they want to throw a couple ingredients in and they want a beautiful souffle to turn out or whatever. Like anything becoming a baker, right. It would take time to create that perfect souffle. But how do you know? Maybe if your business is just not, it's not likely to succeed, like you're throwing good money after bad, more time and effort into this thing. And it's just not a business that maybe you started off with a flawed premise or you didn't have a good understanding of who you were trying to serve or what you were trying to accomplish. And so it's time to throw in the towel and do something different. Do you have like a. How do people discern that?
- [13:02]
Phil Sanders (Guest Entrepreneur)
I think a lot of that is when you get very clear on what you want from the company. I think the company is there to be the vessel by which we create the lives that we want.
- [13:15]
Joel (Podcast Host)
Right.
- [13:15]
Phil Sanders (Guest Entrepreneur)
Or the impact that we want. So let's say that you're. There's a huge gap between your personal take home from the business, where it is and where you want it to be. If you can look at the company and reverse engineer what it would take for that company to correct that path, and if that timeline and path is so much longer for the company to actually correct and, and to get you that income or to get you that to that place where, hey, the time that you're putting in that business, the income you're earning from it, if it takes longer to do that than it would be to shut the thing down and start over again, you know, then maybe it's time we start over again. There's several clients I've worked with. One, you know, he was in business for 14 years and he just had a real hard financial like space that the business was in. He's like, I'm not giving this thing up. I'm going to dig in. And my, my thought process is like, it's a two year turnaround. Like, I think either way is about two years because there's the time it takes to get the clarity you need. Right? Let's call that six months. Just to find the clarity, get the awareness Then it's the initial action set to get the things going and then it's, you know, the time for those actions to yield results.
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Joel (Podcast Host)
Right.
- [14:29]
Phil Sanders (Guest Entrepreneur)
And so it's just going to take time for it to, to turn the ship around either, either way. But I think, you know, practically speaking, market demand, like, if there aren't people wanting the thing that you sell, we got to pull a lever to see, hey, is, is it priced correctly? Do they understand the value of the product? Am I fulfilling this correctly in a way that they're receiving value? Like, I think the number one thing we can do on that front is just talk to customers. I, there's a lot of entrepreneurs that just don't even talk to their customers. I'm sure you guys with a podcast, I mean, you're in conversations with the people that listen because it's like, hey, what do you want to hear? You know, I think that there's some parts of this business thing that are phenomenally easy. People are just resistant to this very like, kind of vulnerable and transparent conversation of like, hey, and the thing that I'm delivering to you is it. Do you feel like you're overpaying for it? You know, like, can we talk about how we can make this better? Because if you can get in those conversations, they'll tell you what they want, you know, they'll tell you what they want. And I think that that again, is kind of this thing I'm experiencing with this company that I didn't in my last. I thought I had to go create something, you know, like, hey, this is me creating something. And then the customers would come to it. Now it's like, hey, we're building this in collaboration, you know, like, I'm building this thing, all right, you're my minimum viable product. First customer I'm gonna check in with, what's, how's it going? Like, what can we do to be better? And they're gonna tell me. And I think that if we can just have almost this curiosity about what we build versus this pressure and the stress, I think we build something way more successful, you know, I mean, the, the profit and the, the financials of a company, a lot of time are they're, they're the lagging measure, like the lead measure is where we're spending our time, you know, what our attitude is within the business. Like those lead measures and then the results, those are the financials, like that your numbers will tell you what's going on.
- [16:25]
Joel (Podcast Host)
Right? Alright, so let me toss out an example here. One of my best Buddies is starting a business. And I mentioned baking. He is a baker. He makes some of the most delicious cookies in existence. And he partnered with a local coffee shop and he delivers cookies to them every Friday. They sell out, everybody loves them. And now he's trying to figure out, where do I go? I'm making these cookies at home. I can only bake 12 at a time. Like, I've got to expand and get a kitchen. But I'm also worried that, like, right now I've only proven that I can sell cookies on Fridays at this one coffee shop. Like, what would you suggest? Like, what's the next step? Is it to take a leap of faith and, and rent a kitchen and have that, you know, a lease tied around your neck for the next 12 months while you're trying to kind of ramp things up? Like, he's, he feels like he's in this place where he's just not sure where to go.
- [17:15]
Phil Sanders (Guest Entrepreneur)
Yeah, yeah. I think a quick, a quick financial model, like a ballpark model, you don't need any. Nothing's exact. The only thing, if you make a plan, the only thing that's going to be 100 certain about that plan is that it won't go according to plan. Right. Like, I think we all know that. So I think it's, it's getting this ballpark financial, hey, what would the front year of this look like? And then if he's married, you know, really having a conversation with his spouse around, like, hey, what level of risk are we willing to take? And what does worst case scenario look like? Like, what does it look like if this thing fails, we do all this and we fail? Like, what's that worst case scenario? And can we accept that? I think that this is a conversation my wife and I've had several times. Because if you can accept worst case, then it frees you to go do the damn thing, right? And then for him, you know, once you have the, the financial model, it, it. Because when you're having those conversations with your spouse and internally you kind of put this.
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Joel (Podcast Host)
The.
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Phil Sanders (Guest Entrepreneur)
You have the understanding of what the business needs to do. How many cookies do I need to sell to pay myself? How many cookies do I need to sell to afford this rent? How many cookies do I need to sell? Because there's only. There's a limit of time on him, right? So we really have to kind of make sure that those just things make sense all the way through. And it can kind of hit this place that he wants it to hit within that front three years, you know, but like I said in the beginning, I mean, the wisdom comes from those that have done it before. Like, the playbook doesn't change all the time. Find other bakers that have taken this path and just ask them in reality, you know, like, hey, what. What did it take to get where you are? You know, And I always, for my mentor set, like, I don't only talk to people that are in my industry. Like, because a lot of the times, like with my last business was in retail, I didn't want to become like the typical retail owner. Right. So like I wanted to talk to a few different people in different industries about how they built their business and kind of have this mixture of the value set, the model, you know, those kinds of things coming in and then I can, I could build the thing that I wanted to build. So. Yeah, and I think this is the last thing I'll say is just seasonal life has to match the season of business. Right. There's certain seasons in life where it's not a push season, you know, and we went through one of these as a family where new baby. You know, it's just not a season to just go and, and give it all to the company. And not only just from a time perspective, but it was just, I want to spend time with my new daughter. You know, I, I think looking back, I value the front three years of my kids lives different than when they're in middle school going to school. Like we can.
- [19:55]
Joel (Podcast Host)
Well, they don't want to spend time with you as much at that point in time. Right? You're right.
- [19:59]
Phil Sanders (Guest Entrepreneur)
Yeah. Yeah. So we're starting to learn, I think with our oldest, but he's, he's definitely going through his, you know, our first round of being like, I want my own space. You can leave.
- [20:11]
Joel (Podcast Host)
Yeah, no, I get that. I think that's, that's wise. The. Yeah. Recognize the seasonality. Is this a season that we can push into it or that we, that we can't really give it all that it deserves? How do you think about taking on debt, starting a business? And is it. Is the goal to minimize it? Is the goal to, to bankroll. To have enough money, let's say to give it a year without having any sort of like. I mean, you see some business owners starting stuff up and they're putting, they're racking up credit card debt, right. That sometimes like in, in their own name and often in their own name, right. And in an attempt to get this puppy going and it just, it's. It's almost like stacking the odds against them for success before they get even, get off the ground.
- [20:55]
Phil Sanders (Guest Entrepreneur)
Yeah, it's insane how easy it is to get money, debt, you know, to get access to this money. I mean, I get probably 15 texts a day, you know, saying what I like. The amount that I have access to. I'll say this is, as an owner, you have to have a point of view on debt. Like, you have to have it established. You know, if you're gonna have the debt, then what is it going to be used for and what is it not going to be used for? But even before we get to the debt conversation, entrepreneurs need to be able to sit with their money. Like, they need to be able to sit with their numbers and just understand them. Because the more you're around the numbers and those realities, the more that, that informs your actions. Right? So if a lot of times when an entrepreneur takes on debt, it's, it's a band aid, it's a, it punts a decision that needs to be made, like to be made now down the road by months or years. So I learned this the very hard way. I mean, originally, this is the hard part too. When you're a new entrepreneur and you don't have your own personal capital to put against the, the debt or to become more, you know, I don't know, a better deal for the bank. Like, you're gonna have to sign a personal guarantee. Like, and you have to understand, like you're putting your, your home, your things against this super high interest money. And so there's no other option. Like if you can't get like an investor, if you can't don't have the personal capital, then it's really like it's debt or it's just sweat equity and you just have to personally take the hit, like from a salary perspective. And so I think you just had to sit with those, those realities and just understand, hey, what's the actual best path here? Because when I started my last company in retail, I, I got one of those loans that was super high interest and it was like weekly payments. I mean it was crazy and, but it was the only money I had access to because we needed inventory. And then I ended up consolidating that debt through an SBA 7A, which is, I can't remember the term length on it, but it was like a 5%, you know, loan. And it consolidate, it went, it took my monthly payments from 40k down to 4. So like massive cash flow swing. So with the debt with a high risk, the kind of debt.
- [23:09]
Joel (Podcast Host)
Yeah, the interest rate, the risk level,
- [23:11]
Phil Sanders (Guest Entrepreneur)
like, those all matter.
- [23:12]
Joel (Podcast Host)
Yeah.
- [23:13]
Phil Sanders (Guest Entrepreneur)
And that, that, that debt payment, that 40k debt payment, like if, if you don't use your debt correctly and get a really good ROI on that money you spend quick, then that interest line item on your piano is going to become one of the biggest line items in your financials. So, yeah, I think that there's certain things where, hey, just like test the waters. Like, is the thing you're spending the money on, has it been proven to actually yield the result you think it will yield? Like, what are you looking at? That is saying if I take this debt and put it here, it's going to yield a result. Because again, it's just not going to all work out. Like, the inevitability is that there will be surprises. Right. I think it's, oh, man. Who was the psychology of money guy? What's his name? Oh, Morgan Housel Morgan Housel. He's like, it's not that this, you don't need to learn that the surprise is going to happen and that same surprise is going to happen again. It's just knowing that surprises happen. The, you know, the consistency is surprises happen, curve balls will happen. So if your business plan, you know, this goes with personal life, is needing to go perfect to win, the chances are just very slim it's going to do that. Like, where's the margin? Where's the margin for error here? Right.
- [24:32]
Joel (Podcast Host)
I think about, it makes me think about some of the real estate investors that I have known. And the most successful ones are the ones who underestimate what their returns are going to be and they talk about the potential headwinds that they might face. And the real estate investors who I've met, who are the worst at it or who lose money for their investors are the ones who assume that the trend of Austin being the hot market is going to continue in perpetuity. Right. And that market fundamentals won't catch up or that the building of additional units isn't going to hurt their apartment complex that they own. But of course it ends up doing that. And so it's over optimistic projections versus at least having some realism and maybe even leaning into pessimism just to kind of stress test what it could look like in reality. And I think the stress testing is helpful from multiple perspectives. Is that something you think that most small business owners need to do more of before they launch?
- [25:36]
Phil Sanders (Guest Entrepreneur)
Yeah, absolutely. And again, like, we're going back to the beginning. Can everybody start a business? Yes. So it looks different for different people because I think if you're pessimistic on like naturally, which is fine, you got to have more vision, you know, you got it. You probably need to actually think bigger, right? Because there's a lot of people that they start a business and they don't think big enough so they stay trapped. You know, they're not, they're not thinking like typically that entrepreneur maybe isn't charging enough enough like oh, they'll never pay that, you know, or things like that. And a lot of times they are over delivering for what they're they're charging for. If you're high, high vision and just think anything is possible, then yeah, you need to be mixed with some realism of just like, well, what happens if it doesn't? And this is just going to be a hard path no matter what. So what do we do in these scenarios? So I think a lot of times it's just like, hey, how seeing the other side of yourself and just thinking like, what does this conversation need to be that I'm not having? Like, and that's where mentorship really comes in. That's where a really good community comes in. Just people that care about you first and then the business, like if you can just kind of open the door to a few of those people that can help you with that. Like, I think that that is really where I've seen the most people find benefit in myself as well.
- [26:55]
Joel (Podcast Host)
Okay. Alright, I got a few more questions I want to get through with you, Phil. I want to talk about your bankruptcy experience. You kind of alluded to that a second ago. We'll kind of dive down that path in just a sec, Man. We've hired some great folks to work behind the scenes with us at how2money over the years. If you're a small business, you know this. The right hire can make or break things for you. Hoping the right people see your job. Posting is not the best growth strategy. So when the pressure's on and you need the right hire, this is a job for Sponsored Jobs. That's right.
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- [27:48]
Joel (Podcast Host)
When you need the right person to cut through the chaos, this is a job for Indeed Sponsored Jobs. And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves@ Indeed.com podcast just go to Indeed.com podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com podcast terms and conditions apply. Need to hire? This is a job for Indeed. Sponsored Jobs we live in a fast paced era. It can be hard to keep up with incessant messages, impending deadlines and looming big decisions. As AI resources are chomping at the bit to help us, it's crucial that we choose wisely. Because every message counts and sounding generic and rushed, it just doesn't cut it. Grammarly gives you one place to think, write and finish your work where you already write. It's loaded with agents that help you sound natural and engaging.
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Phil Sanders (Guest Entrepreneur)
That's right, yeah.
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Joel (Podcast Host)
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- [29:17]
Podcast Host (Sponsor Announcer)
it just me or is it getting really hard to figure out the best way to save for retirement? Fidelity can help you find clarity so you can save the best way for you. With a free personalized plan, goal tracking and timely insights, you'll be set to take on retirement your way. Get started@fidelity.com future expenses charged by your investments and other costs and fees associated with trading while transacting in your account. Apply Fidelity Brokerage Services member NYSE SIPC
- [29:48]
Joel (Podcast Host)
all right, we're back from the break. Still talking with Phil Sanders, talking about how businesses succeed and launching a small business. And they don't always succeed, Phil. Right. You said you're on your fourth business and the reality is when you look at the statistics that a huge percentage of businesses fail within the first year or two, why do you think it is that people, when people see those statistics, why is it that people continue to launch businesses? Like I don't know, to me I see those and I'm like oh, it frightens me. Like I don't want to go buy a brick and mortar shop. And like I've always had this idea of having a craft beer store or something like that. And then I see the statistics and I see how hard it is and I'm like, I don't think I want any part of that.
- [30:33]
Phil Sanders (Guest Entrepreneur)
Yeah, I mean, there are harder industries than others, right? I mean, restaurants, incredibly hard, like a lot of overhead, a lot of staff, the food product and then that inventory can turn to waste, you know, so there's just a lot of complexity to some of these businesses. So I think a lot of it depends on the industry you're talking about. But I think one of the main things that, that businesses fail, at least in my perspective, is they don't hit a point that can take care of the owner's personal income. Like, I think that there's, there's just, I see a lot of businesses that they're just giving everything. Like the owner is almost just breaking even and not paying themselves. So that's not sustainable. And they just, they just don't pass this level of sustainability where it can pay employees or have enough cash flow for employees to kind of take on the things that the owner's not good at and also pay for the, the owner to do the things that they are good at. There's a book called Scaling up and it's kind of like an old school book at this point. I don't know if you've read it, but he has these, Verne Harnish has these things called Valleys of Death. And it's kind of like this mathematical equation. At certain revenues, what the company needs, it can't afford. And so you have to like invest in that thing, thing and to take a hit and anticipate growth. And so the Value of Death isn't like a revenue dip thing like that. It's more of a, it's a tranche you have to move through. So for instance, when you build a company up to, let's say 500 grand and you're like, okay, we're going to a million at. From that distance, you're going to have to, you're going to need some level of management. So like one of the first thresholds you have to cross is, is a management threshold. Like, can you, can you let go of some things, give it to somebody else to manage and lead that team, right? And like move into things, the, the needed things that only you can do that actually push the company forward. So I heard this quote. I don't know who said it, but it feels true. It's like, I think the reason there's, there's real kind of respect for men and women that have Kind of conquered the business side. It's like to master business, you have to master yourself. I think to mast financials you have to master yourself. So there's a lot of self kind of mastery that has to go on because you're learning and building a new muscle group at these different stages. So when you see somebody that, hey, I bootstrapped a 10 million man, that he, that he or she has gone through probably five different levels of leadership and five different, you know, kind of phases of the business. So it's a pretty incredible thing to see. And I think a lot of people that, I'm not gonna say that fail because you can fail at any level, but it's stuck at that first level. It's kind of that, that management, they can't cross the management threshold or just initially like they can't be self disciplined enough to do kind of like all the things. There's just this real tranche of can you become the person that can sell and market and fulfill and you know, and manage your cash? Because you don't, you can't afford for anybody else to do it. Can you do all those things? Which is kind of a wild thing.
- [34:00]
Joel (Podcast Host)
You have to be like a jack of all trades in the beginning. And then at some point you have to figure out how to hire and to delegate in order to grow the business. And that can be for a business owner like a tough, tough to jump that gap. Right. Tough to go from like, I'm doing it all to then especially when you first hire someone, you're like, they're not gonna be able to do it as well as I can. And you have to learn, you have to train them up into doing it and eventually, hey, maybe they can do a better than you can. But, but crossing that threshold is, is not always easy.
- [34:29]
Phil Sanders (Guest Entrepreneur)
You go from generalist to specialists, right?
- [34:31]
Joel (Podcast Host)
Yeah.
- [34:31]
Phil Sanders (Guest Entrepreneur)
So the, the bigger you grow, the more you're hiring and becoming a specialist right at the very beginning, jack of all trades. But as you grow it, you're just honing in, honing in, honing in, you know, and eventually as the owner, hey, what are the top three things that I can do? And you're doing that thing. How much time can I spend in those three things? And then building the whole company around you. But I just want to take it back to this kind of beginning point of like identity, man. My identity in those beginning companies was so wrapped in my business, I think that there's just a real threat. When your business, you view your business as yourself. You, you take client Feedback way different, you know, like in an unhealthy way, like your worth becomes the worth of the company. I think that if we can build businesses that are really great and that's like a part of our identity, but if we can build business of like, hey, this is who I am, and the business is, this is what I do. But there's a separation between those things. I think that there's just kind of, again, almost more of this, like, curiosity in how we build a business versus this pressure cooker.
- [35:38]
Joel (Podcast Host)
Yeah, let's. Let's talk about one of the hardest times of your life, filing for bankruptcy. And I have experienced that, not personally as an adult, but as a child. Our family filed for bankruptcy and it had a incredible impression on me. And I've been reacting to that in many ways for years and decades. And I think it's a big part of why I do what I do. And that was from there's just like a lot of personal finance things. I was like, I don't want to do that. I don't want to do that. I don't want to put myself at risk of that. But when you start a business, it can put you at greater risk, right, of you're maybe throwing more of your assets into the business, or maybe you're taking on nefarious kinds of debt, it can put you in a more precarious position. Can you talk to me about what led you, I guess, to that place of eventually having to file for bankruptcy?
- [36:33]
Phil Sanders (Guest Entrepreneur)
How old were you when your parents went through bankruptcy?
- [36:36]
Joel (Podcast Host)
About 12 years old.
- [36:37]
Phil Sanders (Guest Entrepreneur)
12 years old. Okay. Was it chapter seven or were they. Did they renegotiate? Do you know?
- [36:42]
Joel (Podcast Host)
No. Yeah, it was chapter seven. And I still remember when our car got repossessed. It was. It was supposed to get repossessed, and then it was like, it stayed in our driveway for an extra couple weeks, and then one day it was gone. And I still remember being like, is when's it gonna get taken? And then it was. Wasn't there anymore. Yeah.
- [36:58]
Phil Sanders (Guest Entrepreneur)
Wow, man. Yeah, thanks for sharing that. You know, the risks that I took in that business were I just bit off more than I could chew in that business from the beginning. And this was a 27, 28 year old me that just wanted more. Like, it was just like, I wanted the big stuff. I wanted a big team kind of flashy business. Like, so there, there's a lot in here, right? But that, that business was like a house of cards, right? Like, I mean, it was huge retail space, 12,000 square feet, you know, big lease, 35 members on the team. Big team. You know, the way that we orchestrated our model was. I mean, it was cool. Customers loved it, but it just, it was, it was, it was there. There wasn't enough. Just stability anywhere. Like, like consistencies, like, everything was always new kind of thing. So tough industry, tough lease, hard. I go from having like one employee to 35. Like, there's a lot of tough things in there. Okay. And I would say with this business, like, I started it in 2015, and around the year of 2018 was when we finally broke through. You know, we broke through, we grew, and the financials finally started to make sense. 2018, we lost my wife's mother in a car accident. Like, sudden car accident. And. And she was.
- [38:24]
Joel (Podcast Host)
Oh, wow.
- [38:25]
Phil Sanders (Guest Entrepreneur)
Like, real integral to the family. And then like a week after that happened, my brother, my younger brother, he had cancer. So if you've ever been through a death in the family that's like very close to you or something, like a season of cancer or something like that. Like, those seasons of life, they just. They just dominate, you know, everything. And they should, like, I mean, it's the most important thing in your life. And so we. I went through this, this place from 2018, middle of 2018 to 2019, where my priority started to shift. So I started turning from being that guy that was just like, we're going to the moon to being like, hey, I actually, I want more. My pride is just sort of shifting a bit.
- [39:09]
Joel (Podcast Host)
Right.
- [39:10]
Phil Sanders (Guest Entrepreneur)
And so we had this thing happen where in 2019, I shifted a lot of things. I started, like, pulling back from the business personally, getting some investing in leadership in the company. So it started stabilizing and then like, kind of right when I felt like we hit that point of being
- [39:29]
Joel (Podcast Host)
more
- [39:30]
Phil Sanders (Guest Entrepreneur)
stable and like, this could be something that we could grow. Like Covid hits and you know, so 12,000 square foot brick and mortar with no real e commerce do. We went from making hundreds of thousands of dollars every month. April of 2020, we did $200. And it's just like to really.
- [39:46]
Sponsor Voice (Indeed/Mint Mobile)
I.
- [39:47]
Phil Sanders (Guest Entrepreneur)
It's such a big drop that you can't even really wrap your head around it. Like, what?
- [39:52]
Joel (Podcast Host)
Wait, what? What?
- [39:54]
Phil Sanders (Guest Entrepreneur)
Like, surely this is a joke kind of thing. And so those two years were. Were incredibly tough. But I'm going to tell you this. Like, those kinds of seasons sometimes are. They're like setup seasons. They're like set up seasons for what's to come, and so we can kind of dive into those. But I'll. I mentioned like, the Mentorship. At the beginning, I had a board on my company, and there were some. There were some mentors that decided to invest in the company. So they really were the ones that helped me navigate the conversation around, like, is this something we shut down knowing that, like, it would probably end up in a bankruptcy?
- [40:33]
Joel (Podcast Host)
Man. Yeah, that's. So that's. There's a lot in that answer. Right? And you're right. Like the personal. The personal life, like, it. It hits your business. Right. And if it's not, the business will not always take priority when other things are happening. And Phil, I mean, you said that you filed for bankruptcy. You told me, because you believed more in your ability to earn and recover than the fear of the pain that it would cause. And bankruptcy is just a painful process, especially when friends and mentors are involved in your business. Where was your anger head at, I guess, in that. In that time? And where did that self belief come from? Like, hey, this thing is like, not doing so hot. A dramatic downturn, and we feel like we got to close this thing down. But I think. Yeah, you said it was a setup season. What, what, what caused you to believe that this was not just like, failure and wallowing in misery versus, like, this is just the prelude to my next big thing?
- [41:31]
Phil Sanders (Guest Entrepreneur)
Yeah, the removal of fear, which takes time. I think most people just in general are living in fear. And when we talk about bankruptcy, building a business, financials, there's. There's a lot of fear around these things. And once you realize that the thing you fear does won't kill you. I mean, sometimes I guess there is healthy fear, but like, once I realized, like, truly, like, to my core, like, oh, I'm gonna be fine. Like, those priorities that I was highlighting in 2018, like, hey, these are the things I want to be for in my life. Like, my kids do not care what I do for a living. My wife, I mean, she has expectations and desires around, like, you know, what are, like, what my time is like with the family. Like, we committed to a life together. We committed to raising these kids together. So there's. There's definitely some. Some things there, but she does how I make my money and how we make the money. Like, she doesn't. She's like, go be happy, you know?
- [42:36]
Joel (Podcast Host)
Yeah.
- [42:36]
Phil Sanders (Guest Entrepreneur)
And I think that, like, again, this is that identity thing when I just really was like, oh, my. This is a thing that is happening. This is not me, you know, being destroyed or whatever, you know, and that took a lot of time. That took. That's honestly where running. We talked about running a little bit. Before the podcast, we moved from Atlanta to Chattanooga during this crazy season. And I just started running these trails. And so this was like, I would have. I would just get a call from a banker that's like, we're gonna take everything, go for a five mile trail run, and then come back and respond to that email, you know, and so
- [43:13]
Joel (Podcast Host)
I think get your head straight. Yeah, yeah.
- [43:15]
Phil Sanders (Guest Entrepreneur)
What's interesting with these, with the bankruptcy stuff is like, it is so heavy, but everything moves really slow. It's like you're going to talk to a banker or something like that, like an attorney once every two months, you know, like they're. Because their timelines, litigation, all this stuff is slow. So From October of 2021 through December of 2021, I spent the next 90 days winding down the business and like telling my landlord normal money, telling all the people that we sold products for, which is like, you know, a couple hundred vendors, you know, hey, we're shutting this thing down. We're not gonna. We can't pull in your spring inventory, you know, telling 35 employees, hey, you're laid off and I don't have any severance. You know, I mean, like massively difficult conversations. And I just. But then January 1st of 22, it's like you're just kind of sitting with yourself, you know, and it was in that space that I think those thoughts started coming in of just like, I'm going to just hope and believe that, you know, I can make it through this day, this hour. And eventually it's like, now I can make it through the week, now I can make it through the next two weeks, you know, and once I started seeing kind of like, really, that first year was. Was the hardest. But once I started kind of landing certain wins as far as, like my way forward and also settling the chapter that just closed. Once I started settling some of those things, my confidence would just go up a little bit more. A little bit more. But now there was almost this, like, the things I was learning on the identity front, like, kind of like who, who I was, the humility front. And let me tell you too, the one of the hardest things, but it ended up being the best thing for me was that my attorneys were like, you cannot go out there and earn money. Like, you cannot. You have to stay below. I think we set the threshold at like 60 something thousand dollars. Like, you don't go make more than that money. So it almost like gave myself permission to just like go get whatever job and just chill. Yeah, like, don't go try to scale the next thing. Don't. And I just had to sit and I just sat for like two years, you know, and I think that that kind of forced me to, to do the things like that I really needed to do but didn't want to do. And then over that 18 months, it just turned into this renewed confidence where the only way out of that last loan was to either pay it in full, which is $500,000, or declare bankruptcy. And so we chose the second route. And yeah, by that point I had really gained my confidence back. I think a confidence I'd never had before. And so walking in there, I was just a different person.
- [46:03]
Joel (Podcast Host)
Talking about one of the things you told me too is that you think if you had lowered your expectations in the short term that there was a much greater chance that you could have achieved financial success in the long term. Do you think you were like, we're trying to ramp things up too quickly. Do you think that's a common mistake that businesses make? Is not like the slow but sure path to create a business that can thrive over a long period of time and it's that all or nothing sort of mentality like, I gotta get this thing up and running. It's got a crush in, in a very short timeline. And because of that, you leave yourself open to an epic failure.
- [46:41]
Phil Sanders (Guest Entrepreneur)
Yeah, I think speed, speed is one of those things. I mean, you don't know what you don't know, right? So you just, I think if you move it too fast of a pace, the decisions you make when you don't know something, you're going to deal with those consequences later if you're making massive, huge, like very risky decisions that might come back to really haunt, you know, you and hinder you in the future. So I think that depending on your personalities, it's like, hey, move at a pace that is sustainable, like challenging. But it, it is a pace that is sustainable for five years.
- [47:16]
Joel (Podcast Host)
Right.
- [47:17]
Phil Sanders (Guest Entrepreneur)
Because we can't, we can't go 100 miles an hour all the time. It's, we've, we've got to go at a pace that is sustainable for us to endure. I just, I just wasn't listening to, to a few voices in my life of just like, hey, maybe you should step back and you know, take a beat on this model real quick. Like, I guess I went into a riskier industry, you know, just like, it's a very cash heavy. You're paying for your inventory, you're paying for a lease, you're paying for a team and you're banking that you can build up enough foot traffic to in conversion rate to, to sell those things right to cover that. So it just, it was just a complex model and I think that in those scenarios, dep on the unknowns like, yeah, go at the pace that allows you to learn the industry plus grow a business.
- [48:02]
Joel (Podcast Host)
All right, we need to talk about life after bankruptcy and what it looks like to start another business after seeing one fail. We'll talk about that with Phil right after this. Man. We've hired some great folks to work behind the scenes with us at how to Money over the years. If you're a small business, you know this the right hire can make or break things for you. Hoping the right people see your job posting is not the best growth strategy. So when the pressure's on and you need the right hire, this is a job for Sponsored Jobs. That's right.
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Joel (Podcast Host)
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- [49:22]
Podcast Host (Sponsor Announcer)
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- [49:51]
Joel (Podcast Host)
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- [51:24]
Phil Sanders (Guest Entrepreneur)
Yeah, time. I mean, when I left that business, when I had my last day of December 31, 2021, my wife was six months pregnant, didn't have a job. We just had moved to Chattanooga six months prior. We were living in like Airbnbs and our house was six months late. Like, we were renovating it, it was six months late on being delivered. So health insurance, all that stuff was going to end with the business. My wife wasn't working because she was pregnant and we had been moving. So there was just so many massive things going on. Like, I think the hardest things in life are moving, having a kid, finding a new job. Like, like we're doing, literally, I feel like all of these things all at once. My, my wife is, I mean, she's the best. Like, she's the best. Like, there was zero shame from her when she realized, like, oh, not only are we walking away with nothing from this business, but now we, we might lose the house and all these things. And so we really just, I think that in the beginning it was what has to get done today. Like, just, like, just today, you know, is it in my inbox, bankers? Is it something with my landlord from the past? Is it an employee thing that happened? And because I could not worry about, well, how's this thing gonna actually play out in the future? Like, who knows? Like, there's a million different ways it could go. And it just turned into this, hey, just this cadence for the day. The cadence for the day, you know, and then before Long enough went by. It had been a year of those days. And we could look back and, okay, we've settled this amount of debts. House finally got done. Daughter third, you know, our third kid came along in May and it just. It just. Things started happening and we. It's almost like we just established this rhythm, you know, like, and it was just this. It was really like a seven day rhythm, you know. All right, this is Monday, this is Tuesday. Okay, now it's the weekend, you know, and then we're gonna do it again. And then we're gonna do it again. Okay, now it's time. We're gonna bum a vacation off our parents and just so we can get out for a little bit. Okay, now we're back to our rhythm, you know, And I think that we have kind of kept that cadence going for the last three years. I mean, it's gotten deeper and we're in different things, but we are just like, what is the thing thing right in front of us that is. That requires us the most to be in it? You know, what is the most important thing? And it was just like that over and over and creating this durability, I think, in us. I mean, and she's six months pregnant and our general contractor building her house is a nutcase, and she's over here doing his job. And I, you know, so I've never been more proud of her. And she got to see me doing my stuff and we were just like a team, man. And then once you get out of it, you know, like, once you finally cross that line and you're like, okay, you're free now, there's a little bit of like, oh, what do I do now? But there's also just this, like we talked about earlier, the fear is removed. It's just like, hey, today is going to be hard, but whatever it holds, like, we can, we can do it. And even if it takes so much from us, like, man, we can. We're gonna be okay, you know? And I think that that is what is the real. That's what makes me grateful looking back, because, like, who I am right now would not. Is not possible without that extremely difficult season.
- [55:01]
Joel (Podcast Host)
I think that's the. Nobody, like, wants to go through tough times like that. But. And that's. That's the thing you often can't see where what can come out on the other side is superior. But when you're in it, like, you don't want anybody to tell you that because you're like, yeah, man, I'm in like the thick of a bunch of crap right now. And sure, like, two years from now, I'll be better off. Great. I look forward to it. But in the middle of it, it's really tough to hear that. I'm curious, like, two, just from a practical business owner standpoint, how did going through bankruptcy, how did seeing a business go from super successful to demolished, how did that impact your. The way you think about constructing a business now?
- [55:50]
Phil Sanders (Guest Entrepreneur)
I think it's the relationships of it. I mean, these are. I mean, we're talking about my life, but there are 35 employees, lives that are wrapped into this. I mean, there were people that were, hey, we believe in this thing. I'll take the salary hit and I'll stay working. I mean, there's a lot of nuances to this. And just understanding, like, stewardship, hey, they've, they. These employees, this team has given you, is giving you their time. You know, handle that well. Hey, this customer is giving you their money. Handle that well. You know, I think it's, It's. It's. What does it look like to build something well? And that, again, will require us to handle that root cause. Because to do it well, man, we've got to be kind of on the front lines of what's needed the most from us, right? And so I think that entrepreneurs and people in general have a pretty good gut. Like, I mean, there's a. Our gut is data. Like, it's the data from our life of just experience. And we can kind of tell, oh, this person is fishy. Or that doesn't seem like that's right. And one of the biggest traps for entrepreneurs, I think people in general, it's like, just ask questions. So you're sitting in front of your landlord, they're like, okay, this is the deal. Here's the terms and conditions. And you're like, okay, can you just tell me what this clause is? Can you tell me why? Like, just to be able to say that takes guts. But, like, so few people actually do it. You would be surprised at how much is so much easier in business just by saying, hey, I don't get this. Your bookkeeper sends you your numbers. Hey, what does this number mean? You know, because it's like, we, when we're in that fear space, all we're thinking is, we need to know everything, but it's impossible to know everything. And so if we can just kind of open this up and be like, hey, like, be more transparent and vulnerable with our team, with the people, you know, with the stakeholders in the business, all that stuff it feels uncomfortable at first, but once you realize that that's actually the key to it is it's, it turns into power, right? Not like unhealthy power, but it's empowering. Yeah.
- [57:59]
Joel (Podcast Host)
Philip, man, I really appreciate you coming on, sharing your story. I think it's gonna resonate with a lot of folks and also for anybody out there in the how to money audience who's interested in starting a business. Like I think these, there's just a lot of great, like practical advice in here, but then also just a lot to learn from your experience so that hopefully other people can avoid some, some missteps too. So where can how to money listeners find out more about you, man?
- [58:28]
Phil Sanders (Guest Entrepreneur)
Yeah, so our website is. It's kind of, you know, domain names are interesting now, so it's M L tply co. So multiply. And it's interesting, man. Like we talked about this before, like the thing that broke me is how I serve people. And maybe this is another podcast, but we do accounting and advisory now. Like that's, that's my company. And so I've partnered with CFOs and bookkeepers and controllers to now serve entrepreneurs in their financials. And so, you know, my, my hope is just that the fear of financials is removed from entrepreneurs. Like there, there is so much strength that comes from just like having authority over the money. You know what I'm saying? And it's like whether it's a lot, whether it's a, you know, a little bit, hey, like it doesn't own you, you know. And so we're in that conversation a lot and I, I've kind of taken time off social media. I'm on inst. Phil Sanders and then LinkedIn. You can find me Phil Sanders there. But I'm really focused more on just kind of one to one interactions right now. But the site and the LinkedIn is probably the best way to find me.
- [59:39]
Joel (Podcast Host)
Awesome. Phil, thank you for your time, man. I appreciate it. Yeah, you got it. All right. So thankful that Phil joined me on today's episode, man. Such and just his honesty, willingness to share his story and get into what that meant and what he learned about building businesses from the difficulties that he went through. And it was, yeah, just I think, revealing. And for anybody out there who's interested in starting a small business or who currently runs one, I think there's just a lot of information here for you to take away. And even just from on the personal finance level, there were certainly some things that you could extrapolate from Phil's business experience into how you handle your own personal finances. It makes me think of, you know, one of the big takeaways from this episode that I had was when he talked about debt being a band Aid. And that is so true. I think on the business building front, yeah, you might be able to build faster and there are times where it might make sense. But it is also when you think, extrapolate to personal finance. So often when we're taking on debt, it is to bring a purchase that we could make in the future into the right now. And it comes with a price tag attached to it and, and potential difficulties if we're unable to make that debt payment. That's why I think buy now, pay later is so nefarious. It's like get the thing now and pay for it low and slow over time. And that, yeah, you can do that, but it's not necessarily the best way to go. And it's a band Aid. It's a way to get the thing you want without having to wait. And that slow and methodical, when you think about it, it's like, man, if I'm doing great now, well, more of a good thing is just better. And I think Phil's experience highlights how that's not always the case and how even when he talked about those short term expectations, how he continued to raise those short term expectations and he was able to dial up some profitability in that moment. But then over the longer time, it put his business at bigger risk and he also just bid off a lot more in terms of hiring employees, buying more inventory, and that actually ended up putting him in a precarious place. If you build a little bit slower, if you take on less debt, that puts you in a stronger position even if you're not growing as fast. And he said success equals discipline. And I think there's a lot of truth to that, right. That the discipline of doing the hard thing, doing the right thing on repeat, that is what's ultimately going to lead to success. And if you try to take the shortcut, that is often a recipe for hardship. So hope you enjoyed this interview with Phil Sanders and we'll put links to his website up in the show notes on our website@howtomoney.com all right, until next time, best friend out.
- [62:49]
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