There are many challenges that come with some pretty big consequences when you own an agency. But the greatest consequence is when the agency owner does not build wealth outside the agency while they still own it.
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00:03 Hey, everybody, Drew McClellan here from Agency Management Institute this week, coming to you from Worcester, Ohio, where we are visiting our youngest son at college. You know, recently I was asked by an agency owner, a young agency owner, what was the biggest mistake that I saw agency owners make in an attempt, I'm sure, to avoid making that mistake. And I think my answer surprised her. The biggest mistake agency owners make, and we see it over and over again, is that agency owners do not run their businesses in a way that allows them to build wealth outside of the agency. Too many agency owners don't take enough money out of the business to create generational wealth for their family outside of the business. And you say, Drew, I don't know how to do that. 00:55 You have to figure out how, and I'm going to tell you why, and then I'm going to tell you how to figure out how. The why is because when you just have a job and you sacrifice all the blood, sweat and tears of years and years of effort, you get selfish and you get greedy when it comes to the end. And you are unrealistic about what your agency is worth or what someone should pay for it, or how it should get paid for, or worse. You end up just closing the door and you don't have anything to show for it other than what you might have put in your 401. That is not why you own a business. It's not why you're an entrepreneur, and it is not what your agency is meant to do. 01:35 Your agency is meant to serve you and your family and your goals and to build wealth for you, certainly for your own retirement, but also, ideally, that you can pass down to whoever or whatever matters to you. So here's how you do it. You have to start from the very beginning, and it has to be a mandatory as opposed to a nice two. So many of you have gone through seasons where you have not paid yourself because you wanted to keep staff or you have really been lean and mean with how you take money out of the business. The truth of the matter is, you wouldn't miss payroll. So why in the world do you miss payroll to yourself? And I'm not just talking your w two income. I'm talking about all the ways that you can make money as an agency owner. 02:19 So even if you start out small by taking $100 a month dividend, I want you to get in the habit of taking not only your paycheck, but also a dividend, something that only an agency owner can take. Start with $100. Start with $250. The dollar amount doesn't matter. What matters is the habit. And the deal you have to make with yourself is that you are never ever going to not pay yourself, and you are never ever going to not take a dividend. You are going to take whatever little bit of money that you can take out of the business, and you're going to put it into something else. You're going to put it into an investment account. You're going to put it into cryptocurrency. You're going to put it into the ponies. I don't care what you do, however you decide. 03:01 You want to build wealth outside of your core business, but begin investing in that every month. Why? Compound interest is a magic thing. So number one, even a little bit put away will grow quickly. But number two, it's about the muscle memory. It's about the commitment you have to yourself and to your family that you are always going to benefit from taking the risk of owning the business. So start out small and then incrementally increase that. And I don't care how tough things are. I don't care how lean things are. If you have to go back to only taking $100 a month and you've been taking $1,000 a month or $5,000 a month, great. Go back to taking $100 a month. But don't ever break the muscle memory of taking care of yourself first. That is why you own a business. 03:50 And that will tee you up to when you get to the final chapter and you want to sell your business or you want to close it down. You will be able to do that with integrity and with respect for the other person in the deal, because you've already taken care of yourself. So whatever you get out of selling the business is sort of a bonus on top of what you've already built for yourself and your family. All right? So number one mistake not building wealth outside of the business. Change that right now. This month, start making sure that you're taking care of yourself by paying yourself what you're worth. And by the way, for most agency owners, that's somewhere around $150,000 at the minimum and take dividends. 04:34 And if you're young and you're just getting started, this is a habit that will serve you well. Okay? So incremental amounts, but always take a little something out of the business and put it somewhere else so that you have generational wealth 1015, 2030 years down the road. Okay, see you next week.