Ten Reasons You Need to Diversify Your Income

If you are a C-level executive, or even on your way to becoming one, you need this episode of the HYS podcast!

Your income is in danger. Did you know? Everyone employed by another company is just borrowing their income. 

We have seen time and time again that executives who think their jobs are safe are blindsided and left out in the cold.

You should be owning your income–or at least part of it.

Nat and Pete go over ten reasons you should consider this on this episode.

Transcript

Pete: [00:00:00] Good morning, Nat. 

Nat: Good morning, Pete. 

Pete: Whoo! I'm pumped up. 

Nat: I'm not surprised. I'm not surprised. 

Pete: You're not surprised, huh? You're not surprised. 

Nat: It must be podcast time. 

Pete: It's something like that, yes. So, why am I pumped up, you ask? Well, that's interesting. So, I actually get to become a snowbird next week. Oh, man.

I'm jealous. Yes. So, I get to leave all this Great weather that we have and I get to go spend a little time in Florida So so I was looking at my little weather app today. And although it is, in the 20s Here it is 75 and sunny there. 

Oh, man Yeah, you're gonna be even even more energetic and happy and I 

well having sun makes me happy I may have to put a little sunscreen on the top of my head, but that's that's that's a quality problem for sure Right.

So, you know, what [00:01:00] I thought we would talk about today is that You know, one of our podcasts, we talked about corporations eliminating white collar positions and in why, why they were doing it. And so today, what I thought we'd do is talk about the 10 reasons why senior level executives needed to diversify their income and their assets with With investing in a franchise or business ownership sound good.

Okay. Yeah. Okay. So let's let's start So as we think about why executives as we we've laid out this In our the prior podcast in regards to executives are vulnerable If you're a senior level executive in your 50s, you're vulnerable. You may feel really good today and tomorrow it might be They they're asking you to leave right?

So What would be the first reasons why executives 

need to diversify their assets and their income? I always think it's important to manage your downside risk. So essentially risk mitigation. I think [00:02:00] having your own business is a good hedge against, you know, economic downturns or losing your job. So that's the number one, number one thing I, I think, I don't know.

I'm always like trying to manage my risk, even with you know, my kids are car insurance and all. I mean, that's why we have all, you know, car insurance, auto insurance. House insurance, like all these things, right? We're trying to manage our risk. Yeah, health insurance, right? Health insurance. Yeah, 

absolutely, right?

So I think a little bit about this, this idea that if I have a side business, so if I invest in a franchise, a side business, I got a manager place to keep my corporate job, keep my corporate income. And all of a sudden I get that side business where it's making some money. Maybe it's making 100, 000 a year, whatever it is, right?

And all of a sudden the corporation comes and says, Pete, we're done with you. Redundancy or we're just we're realigning whatever we want and they say we're done with you Well, at least you got that side income to cover your expenses until you find another corporate [00:03:00] gig, right? Or you supercharge that business you've invested in and then go after it, but you're not caught flat footed You have an income that can kind of cover stuff as you're figuring out what's next Exactly.

That's good risk Meta, mitigation. All right, we'll be a second one 

Well, if all things go well and, you know, in that scenario, you have your corporate job and you have a business on its side, you're going to really start to be able to accumulate some wealth. You know, it's great. It's great to have your own business and tax advantages and everything else that comes with that too.

Yes, you wiped out a few of them there. A 

couple of the reasons. So we'll go back to it is, it is wealth accumulation, though you're building an asset. And I think you're famous with your phrase, you know, when you have a corporate job, you're renting your income, right? When you have a business, you're building an asset that one, nobody can ever take away your income, but you've got that asset that you could eventually sell for multiple.

Right. And most wealth is [00:04:00] created by entrepreneurs, right? It just owning that business that helps create wealth. And I saw that when I was in Florida last year, most of the people that I ran into in Florida that had all these nice houses were, were entrepreneurs in some way, somehow they were entrepreneurs.

Nat: Yeah, I was trying to remember what we were saying a couple of podcasts ago, we were talking about how many jobs were created by small business. Do you remember that? Yeah, it was, it was a plethora. Yeah, a plethora. 

Pete: A plethora is very good because I can't remember what it was. But, but small businesses do create a good portion of the jobs out there.

They're a big part of our economy for sure. All right, what would be another reason why executives need to invest in a franchise to hedge against all this stuff? 

Nat: Well, I think the, a lot of people have an entrepreneurial spirit, so they just always wanted to start a business. So if that's an itch that somebody's always wanted to [00:05:00] scratch, I think a franchise is a great way to do that. 

Within a structured, in a structured way. 

Pete: Yeah, it's no question about it. I mean, I talked to executives and they say, listen, I've been a corporate executive for 30 years, but I've always had that itch to be an entrepreneur and now I'm at the point where I want to invest in a franchise because I want to, I want to be my own boss.

I want to build my own successful business where I'm rewarded for my hard work. Right? They have that spirit in them. And sometimes we just have to wait to take advantage of that spirit, right? We, we have kids to put through college and all that kind of stuff. And, and, and the bottom line is, is that it's a, it's a great feeling.

And if you could take what you've learned in the corporate world. Your leadership skills your business acumen and become an entrepreneur. It's it's an awesome feeling. I mean you did it earlier. I did it you know, I had a fair amount of time in the corporate world, but I mean it's it's a great feeling being an entrepreneur Definitely.

Yeah, what would be another advantage? To diversify your assets your income with the franchise business 

Nat: I like the idea of just [00:06:00] if you think about your income as a portfolio just as portfolio diversification. So just having different buckets of income, I think that, you know, that's always recommended in investments and why not apply it to businesses and jobs.

Pete: Yeah, there's no question about it. And when you think about it, is that if you can diversify and not have all your eggs in one basket, that's, that's huge, right? And, and eggs in basket is, you know, you could have a 300, 000 a year income from that corporation. But if again, they decide that you're not it, right, they're eliminating positions, eliminating expense, you're kind of screwed.

So if you can diversify your assets, your income, that's a really good thing. You know, one of the. things that I think the executives need to diversify their asset income is with the franchises that you can take advantage of the tax savings, right? So there are some real advantages from a from a taxing standpoint.

Nat: Yeah, you can your business you pay, you know, with [00:07:00] I guess pre tax dollars, right? So, yeah, that's a huge adds up. 

Pete: Yeah, it certainly for that standpoint. What would be another? Another reason why executives need to diversify, 

Nat: you know I'm a lot of guys like the idea of being able to Create a legacy for their kids or you know, the future Generational wealth transfer.

 I'm not one of those guys that's super, super into that, but, you know, I think my kids should have to make it on their own. They've already, they've already been given enough. I bet you, I bet they're happy about that. Yeah. But, you know, I guess realistically, you know, if you, if you built up, you know, this empire, it's definitely going to transfer to your heirs.

So that's not, that's not a terrible thing. 

Pete: It's not a terrible thing. And if, if you could have something where you're helping your kids or even helping your future grandkids, right, you build something where you can transfer a little bit of wealth to pay for your future [00:08:00] grandkids, college or stuff like that.

That's, that's where you kind of get ahead of the curve a little bit to give them an advantage going forward. So definitely generate. 

Nat: I feel like we're already transferring our wealth to our kids by paying for the college education. Don't even start with me, right? As I said in a prior 

Pete: podcast, I only have four tuition payments left, you know.

So, and, and we, we kind of laugh about that, but your, your, your point is taken because I've got four kids and I've had four, excuse me, eight years of double tuition payments. So two kids in college at the same time and the best way I can explain that In why I invested in businesses so I could cover some of this stuff It's it's like taking a brand new car every year and driving it off a cliff.

That's what double tuition payments are. So definitely the kids are i'm down to 

Nat: 14. I'm down to 14 payments pete. All right. 

Pete: Very good. Yes. All right Yeah, that's good for you. All right. Excellent. 

Nat: What would be [00:09:00] another one? I think everybody likes to have a little more control in their life. So, you know, with a franchise or owning your own business, you can have more control.

You're the one making the decisions. You know, you're building the team, making the hiring decisions and setting the direction for the company. Yeah, they 

Pete: want to be their own boss, make the decision, set the direction. But I think it's also, you know, people say, Pete, I want to take control of my destiny.

Right. So I want to live where I want to live. I don't want a corporation to say I've got to go to Des Moines, Iowa. Right. Bottom line is, is that you are in control. So if you got this business, if a corporation says you're moving, you say, no, not necessarily not quite interested. So you are in control.

What would be another reason why you would want 

Nat: to diversify your assets or income? I think Like finding a business that aligns with your values and goals, you know, can be very fulfilling. So I think personal fulfillment is kind of, you know, up there. Like I [00:10:00] said a little earlier, it's like sometimes some, some things are, some people just have something that they've always wanted to do and owning their own business or franchise a lot of times can't is one of those things.

So it can be very fulfilling to do that. 

Pete: Yeah. I think in many cases, it's making an impact, right? People say, I want to make a difference. And Oh, Basically, having that business allows you to make a difference, make an impact, the community, create jobs, satisfying customers from that standpoint. And that can be very fulfilling beyond having that corporate position, right?

You have that corporate position, but it's different when you own a business, and it's, it's real. When you're creating those jobs and creating an income for somebody to support their family or, you know, basically making a difference in customers lives, taking care of a need or a want that they have.

Excellent will be another reason why executives do diversify. 

Nat: Yeah, diversifying income is always a good idea, like having multiple buckets. I think we talked about that a little bit earlier, but you can [00:11:00] have your job, you can have your franchise. I always think it's a good idea to have your wife, you know, put your wife to work.

That's a good way to diversify. 

Pete: Well, certainly putting your spouse to work is yes, for sure. So absolutely. But I think, you know, the idea is that if you have that diversification, nobody can hurt you. As much right if something happens to one the other one zigs the other one zags, right? So you you have that ability to kind of absorb whatever may happen to you when you diversified your income for sure And then what about but what's the last one why executives need to diversify their assets income with investing in a franchise?

Nat: I think the Just the the fact that most corporate executives have a lot of expertise and bring a lot of value You And maybe it's not being appreciated at corporate, but when you own your own business, you can leverage all that expertise. You know, as you're building your business and [00:12:00] attracting the right people to your team and managing them and encouraging them and creating jobs.

So I think almost even one of the most rewarding things is just leveraging your, your skills. And You know, you have, you're your own boss, so, you know, you have control of the buck stops here, but you're, you know, you're leveraging all of your, your experience. Yeah, 

Pete: and the great thing about corporations is they're, they're very good at training you, right?

And you get the opportunity to learn and to build skills. And it's a, it's a great environment. And in fact, you can probably even have more responsibility. When I was forward, I ran a very large group, right? It gave me the ability to learn those skills so that when I became a business owner, I could leverage that expertise.

I could leverage that that leadership skills the business acumen. And so I think diversify, you can take all that great experience, get in the corporate world and apply it to, to your local business. All right, Nat, I'm [00:13:00] heading, I'm heading South. I got to get out of here. So 

Nat: So I'll give you, I'm going to donate some SPF 30 for you.

Yeah, thank you. I might need a little bit of that. So.