The Power Of Wealth Triangle: How To Transform A Small, Traditional Business Into A Money Machine with Sam Beckford

by admin | Nov 16, 2018 | Podcasts

Achieving millionaire status at age 34, Sam Beckford lives the ultimate life of success and fun. Sam is the top expert in small business and commercial real estate, and teaches a low-risk formula known as The Wealth Triangle that he has used to compound his own wealth which has led him to acquire more than $11 million in commercial properties. Through his coaching programs, he has taught thousands of business owners across North America to own commercial properties and create wealth. Sam is now semi-retired and enjoys life through his favorite hobbies with his family. Discover how he went from literally making $0 in income and from failing in five consecutive businesses to unlocking the true potential of small businesses, commercial real estate, and life itself.

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The Power Of Wealth Triangle: How To Transform A Small, Traditional Business Into A Money Machine with Sam Beckford

I’m about to bring you an individual that’s a successful entrepreneur and a friend of mine for many years. We’ve traveled together. We know each other well. I’ve been to his home many times. I’m excited to bring you my good friend, Sam Beckford. Welcome to the show, Sam.

Thanks, Dan. I’m glad to be here.

Let’s go back and share with us about how you got into the business in the first place. What were those businesses like and some of the lessons you’ve learned?

I’ve been in various businesses since 1992. For the first few years in my business career, it was a total disaster. I graduated with a business degree from the university and I started five different businesses in a row. They were all mild to massive failures and some were promising, exciting type ventures. There’s one venture I got involved in back in the old days of 1993. That was involved with making TV commercials and selling contact lenses. It was mail order back then because there was no internet. That business back then was cutting edge, unfortunately, it tanked. We were a little too soon in that business because there’s a great company called Clearly Contacts that started many years after I started that business. That business got sold for hundreds of millions of dollars. I had some great concepts but unfortunately, nothing was firing. Nothing was working. After I had blown a lot of money, made a lot of promises and burned through a lot of great ideas, contacts, and opportunities, it was 1995. My wife and I got married and we started business number six, which was a kid’s music and dance teaching school which doesn’t sound like a millionaire-maker business.

In fact, a girl I used to date, I bumped into her mother at a symphony one evening after we started the business. She said, “Sam, what’s keeping food on your table? Your wife’s piano teaching?” I’m sure she meant it as a compliment. People were making fun of me and they were saying, “That’s a girl business. How long are you going to do that little studio thing?” because it didn’t seem that was a business that would make you any money. We started that business and against all odds we started learning a lot about how to make that business work and investing in that business, trying to do it properly. The business started going well. We got up to hundreds of students and then up to thousands of students. We opened a second location and third location. We got the real estate bug and decided, “Instead of paying thousands of dollars a month for rent, we should own the commercial property that the business runs from.” Long story short, now we run a music and dance studio with about 3,000 students and we own about $11 million of commercial property that our studio runs from. My response is, “My wife’s piano teaching is putting food on the table.”

Take us back because a lot of people who are in those traditional businesses, music and dance, it’s not sexy, it’s not super glamorous. What did you do differently to grow the business or attract students or clients? What did you do differently from other people in the same industry?

When we started the business, we both had university degrees in business. My wife was a piano teacher through the years that we went through university. We didn’t have any experience in the dance studio business, which sounds crazy to open a dance studio if you don’t know how to do it. That can be a strength, not a weakness. If you go into a traditional-type business that you have lots of experience with and you see how it’s been done for the previous ten, twenty, 30, 100 years, you’re going to say, “This is how it has to be done.” Most innovation that’s groundbreaking doesn’t come from inside the industry, it comes from outside of the industry. If you get old-school with me, think of the Sony Walkman. Sony made the Walkman, which was the most popular personal music player of all time. They had Sony Records and they also make computers. Why did Apple, a computer company, come along and eat their lunch and make something called the iPod when Sony had all the pieces of the puzzle together? The innovation came from outside the industry, not from inside the industry.

With us in the position we’re in, we didn’t know what should be done and shouldn’t be done in a dance studio. We said, “We’re going to set it up in a way that’s going to be customer friendly, in a way that’s going to be profitable, and a way that’s going to make us a great business.” As far as being in a boring or a non-sexy type of business, I used to be embarrassed about being in a boring or not cutting-edge business. When you say that to people at parties, they don’t say, “You must be rich. Tell me all about your business.” If I were to say to you 30 years ago, two of the most successful businesses in North America will be a hardware store and a coffee shop. You’d say, “That’s stupid,” but Home Depot and Starbucks, if we’re in Canada, it’s Home Depot and Tim Hortons, there are few people who wouldn’t want to own a nice chunk of that business. It’s a great, beautiful business. The great thing about boring businesses is they haven’t changed much in the last years as far as content delivery and as far as how they do the actual technical aspect of the business. They’re probably not going to change a lot in the next years. That represents a great opportunity for long-term wealth building and long-term income.

Versus high tech, it’s based on new technology or anything like that. You’re basically reinventing it’s delivered, the way it’s sold or the business model to differentiate yourself.

Exactly because one of the problems is there are too many variables in what can change in the business. If you can change your delivery method, if you change your platform, if you change the actual product, then you’re changing too many things. With plumbing, if your toilet’s plugged, your toilet’s plugged. How will people find a plumber? It might be the internet or yellow pages. It might be the newspaper. It might be direct mail. It might be mobile, who knows what’s coming up next. The service itself doesn’t change a whole lot. You don’t want every aspect of your business in a state of flux and a state of change because it’s too hard to predict what’s going to come along in the future.

It almost forces you when you go into an industry where you cannot be the technician, like what Michael Gerber from The E-Myth talks about. You have to be an entrepreneur because you don’t know how to do the technical work. In this case, you’re not good at it. You don’t know how to do it. You don’t want to do it. You focus on building the business.

It makes you better. It makes you think like a customer. I see this all the time. The problem with technicians is they talk about what they do in terms that are highly technical and that are shop talk terms that are only understood by other people in the business. Their customers have no idea what they’re talking about. They want the basic questions of, “Will this solve my problem? Will this fill my need?” If I go into a restaurant, I don’t want the chef coming out and talking to me about what ovens he has, the training he’s taken, and the different levels of whatever that he’s involved in. I don’t want to know that, I want to know, “Is the food good? Will I like it?” That’s all I want to know, but people over complicate things too much.

I also know because within the music and dance business, let’s say piano. Most of the time if it’s someone teaching part-time. A piano teacher, they do stuff, you come to each lesson. The student pays cash. We book next time, maybe a week later for another lesson. You’ve done something innovative. I know you’ve added recurring to the business, even the way you attract students is innovative. You have a lot of independent contractors. I want to talk about a lot of those things because it’s not just one thing that you did. You probably did a dozen, maybe even hundreds of things well to build the business that you have now.

We had the freedom to innovate those things because we didn’t have many years of experience to say, “We can’t do it another way.” When we started the business, people said, “You can’t do it that way.” “Why not?” It’s because no one does it that way.” I do this thing called doing the impossible. Sometimes people think I’m crazy. I’m talking about The Secret stuff, but it’s not. It’s simple. I say, “I’m going to go and do this,” and people say to me, “That’s impossible.” I’ll say, “Do you know anyone who’s done it before?” They’re like, “No, because everyone knows it’s impossible.” “Do you know anyone that’s tried it?” “No.” “How’d you know it’s impossible?” That’s how I do the impossible. I remember one time I was buying a piece of real estate. I had a few days that I had to get $1 million from people and everyone said, “That’s impossible.” What did I do? A person I barely knew gave me $500,000 that I could use interest-free for six months to solve my problem. “That’s impossible. That never happens.” “Doesn’t it?” How many times have you said to someone, sat down across the table from them and said, “I’m in a bit of a spot here? I have to come up with $1 million and a few days to do it. Can you help me out of it?” You’d have to be crazy to even start that conversation with people. Don’t get the no in your own mind until you get the no in reality. Most people kill the opportunity in their mind before it happens in reality. It’s like getting shot down before you ask that girl out only in your mind, “I’ve replayed it a thousand times and she’s going to say no.” They’re never going to ask in reality if they think that’s how it’s going to be.

What are the two or three smart things that you did within the music and dance studio industry that you thought, “I came up with that.” Now, maybe it’s the industry norm because you’ve taught hundreds and hundreds of studio owners how to do that, but back then when you came up with two or three of those concepts and strategies that transformed the industry and that worked well for you.

The first one was definitely recurring. Before, everyone was taking cash on a monthly basis. They’d be chasing receivables. People would quit. You wouldn’t know they quit because they wouldn’t come back. I said, “This is stupid.” I remember one of my mentors said, “Rich people get paid before they do the work. Poor people get paid after they do the work.” If you think about the top lawyer in town, you want to retain their services. What does he charge you? A retainer. They’re like, “I’ll represent you. Give me $10,000 up front.” If you want to get a hotshot celebrity to appear at your event, what do you do? You have to pay a booking fee. I thought, “In my business, I don’t want to be chasing receivables. If I’ve done the work, I don’t want to be chasing after money and bad debt and stuff”. We started automatically charging credit cards and bank accounts when the only player that was doing it was the fitness industry. Now, we have hundreds of businesses that have followed suit and they do that and everyone said, “That’s impossible. People will never want to do that,” but I said, “How do you know? Have you asked 100 of them? Why don’t we see?” That was pretty innovative.

The second thing was getting people to focus on the total customer value or the long-term customer value. I tell this to people regardless of what business they’re in. When we have a student that spends $80 a month with us, people think, “It’s a student spending $80 a month.” I don’t view it as a student spending $80 a month. I view that as a student giving us $5,000. “That’s only $80 a month?” What’s the lifetime value of that student if they come to the studio, if they refer a friend and if they have family members? That’s $5,000 worth of business. How much could I pay to attract and keep that student that’s going to spend $5,000 with us, if I look at it that way? A lot more of my competitors are thinking $80 a month. You want to think of things in different ways. Imagine, you went to the cell phone store to get your new latest whatever phone. Can you imagine if instead of the price of the phone saying $0 or $79 or $199 beside the phone, it said $6,000? $5,126 plus late fees and penalties. It’s probably nicer to say, “This phone is $79.” By the time you get screwed with the data, the add-ons, and all that stuff, it’s $6,000. Plus, you’ve wrecked your credit forever. People never think long-term customer value. Even the people in the restaurant industry, I say, “What is your customer worth?” Spend some money. Don’t be cheap. I hate when businesses are cheap. I hate when they’re cheap and they don’t staff.

The Wealth Triangle: Most innovation that’s really groundbreaking doesn’t come from inside an industry. It comes from outside of an industry.

I had a person that was in the auto repair business. He said, “What can I do to get more business?” I said, “How much do people spend when they get their car fixed?” “We do stuff that cost anywhere from about $300 to about $1,000.” I said, “You guys are right beside a Tim Hortons.” If you are in the US and you don’t know Tim Hortons, it’s our big coffee shop equivalent to Starbucks but slightly different. I said, “All you have to do is this. When you’re in your car, fix it. Get a little thank you card and write, ‘Thanks. We appreciate your business.’ Walk across the parking lot to Tim Hortons. Depending on how much money they spent with you, buy a gift card for $20, $30 or $50 and stick it in the glove compartment.” If someone’s got a new transmission in their car and spent $800 with you, you stick a little something extra in their glove compartment. You give them the bill. No one is happy when they have to pay for their car repair. They’re like, “It’s $850, that sucks.” As they’re walking out the door say, “We want to say thanks and check everything out. By the way, we put a little something for you in the glove compartment, so open it up.”

What that leaves this person was a feeling of, “That’s nice. I was not expecting that at all.” More importantly, that will make people want to tell their friends, “I got this $50 gift card from my mechanic. Let me buy you a coffee.” What’s the next question? “Who’s your mechanic? My mechanic doesn’t do that to me. They take all this money from me and take my car away.” It gets people talking. If you think of the lifetime value if you get your car taken to a mechanic, how much will you spend there over one year? Two years? Three years? Five years? How many people can you refer? Many businesses will say, “$50? I don’t want to give them a gift card.” Why not? Let’s play a little game called, “I give you $50. You give me $5,000.” Do you want to play? How long do you want to play? I want to play a long time. I’ve used this approach in multiple different businesses I’ve done by not being afraid to spend money to get and keep good customers. It’s because I know the true value and people never understand it. I do it all day long. Your customers like you. Do you like to go out to dinner with a friend of yours that’s a real cheapskate? When the bill comes, he’s like, “I got to go to the bathroom,” or starts to figure out what his actual fair share of the bill is. “No, my appetizer was $1 less than yours,” or the person says, “This one’s on me.” That’s the type of business that people want to deal with. That’s the type of business owner people want to deal with, someone that’s generous and someone that’s cool and easy going to be around.

I always tell business owners if they say, “I can’t afford it. I don’t have enough money and this and that,” it’s like the tight-fisted approach that you’re talking about in your book. People step over dollars to pick up dimes. They think they’re saving money short-term, but in the long-term, they’re not building relationships. They’re not delivering the wow experience. They are not differentiating themselves when it’s easier. If you actually can’t afford it, then maybe there’s something within your business model. The lifetime value of your customers is so little that you can’t afford to you spend more upfront to acquire them. Is that what you’re saying?

Yes. When I do workshops with people, the first things I say in my workshop is that most people save their way into bankruptcy. You think, “It’s all the overspending.” Governments have a problem with overspending. Most businesses save their way into bankruptcy. They refuse to spend money on the things that are most important. Number one is marketing. Number two is education and how to become better at doing this thing. Number three is things to retain their customers and make their customers want to do business with them more. They save money in the absolute wrong places.

Share with us your Wealth Triangle Concept. That would be a good tie-in to what we are talking about here.

The Wealth Triangle is a little thing I came up with after I was doing this about several years and stuff started to work. Back in 1994, my actual income was zero. This was on my actual revenue Canada, not like, “I made no money,” but accounting legal tax life was zero. I remember having to write that down. It wasn’t like I took a year off and I was hanging out and stuff. I was working and hustling my business. Years later I had a year when our actual household income was over $1 million. I’ve been on both ends of the spectrum. With the Wealth Triangle, this is something that I realized I was doing and it was a powerful way to increase net worth in a predictable, relatively low-risk way. I want you to think of your business this way. There are three parts in the triangle. The first part is your conventional business. If you have a normal and boring business kind of business. A business that hasn’t changed much in many years. The actual service or business status won’t change that much many years from now. It could be mowing lawns. It could be cutting hair. It could be a restaurant. It’s a pretty basic business. That’s the conventional business. That’s the top of the triangle. That is designed to create income for you. It’s there to pay the bills and give you monthly income. The ideal thing to do with that conventional business is to set up in a way as the business runs whether you the owner are there or not. That’s using systems, duplicating yourself, and setting up in a way that it’s almost like a franchise-type model like McDonald’s without having to franchise it. That’s how we set up our dance business. We’re not there a whole lot.

You have three locations and thousands and thousands of students. You’re not there teaching the kids how to dance.

We’re not there anymore. The truth is most people don’t know we are the owners. I don’t even have a business card. People are like, “No business card” The first five businesses I started, the first thing I did was I ran and got a business card. I hand this to my friends with this cool logo, “Check it out. I’m in business.” They all tanked. The sixth business I was like, “Forget it. No business cards.” I don’t want to jinx it. With that conventional business, that’s the top of the triangle. The second part of the triangle is the real estate the business operates from. If you have a restaurant and you’re paying rent. Some of these restaurants will pay huge amounts of rent, $2,000, $3,000, $4,000, $5,000, $6,000, $8,000, $10,000. I have a hair salon client that I worked with. He had two salons and he was paying over $35,000 dollars in rent. You might think that’s insane. A typical small business will spend over $1 million on rent over the lifetime of its operation. Most of these people say, “It’s risky and stuff and commercial real estate’s complicated.” It’s not. Whether you’re renting or own the place, you are paying a mortgage. You’re paying your landlord’s mortgage or you’re paying your mortgage. You’re locked in and the truth is I’ve proven because I do some workshops and stuff on commercial property. It’s less risky to buy a place than to lease a place. You have more options and more flexibility. It sounds counterintuitive, but it’s not.

The second part of the triangle if trying to own your commercial real estate that your boring, normal business operates from. Even if your business is a weird one that wouldn’t necessarily own property, I’ve talked to people that are in invisible service businesses. They’ll have heating, ventilation, and air conditioning business. I said “Instead of renting a warehouse bay, buy a warehouse bay. It doesn’t matter where you are.” Start putting that rent money in your pocket because it adds up to $1 million pretty quickly. I had a guy, he’s a computer programmer. He can work from his house or be virtual. What he did using my advice, he bought an office-condo unit for his computer programming business. Even though he doesn’t have to be there that much, the reason he did it’s a great solid investment. He was able to use the strength of his business to buy that unit. He even has other tenants that are doing desk sharing and stuff. His mortgage is covered by all the other tenants except him even though it’s a small condo.

He’s getting to use the space and also building long-term equity.

You don’t have to be wildly speculative in commercial property to make money. If you’re running your business for the next many years, even if the value of the property went down, let’s say it did. If you spent the $500,000 on lease payments, I guarantee you several years from now, you will have zero of that money back. I guarantee it, 100%.

The Wealth Triangle: What is your customer worth? Spend some money. Don’t be cheap.

What if someone reading might be thinking, “The location that I want my business to be in, they’re not for sale,” or, “The high-traffic location is for lease, what should I do?” What advice would you have for them?

Don’t let what you can’t do get in the way of what you can do. It’s like I talked about with doing the impossible. People will have that no that’s in their mind, “That was easy for you to say because you did it this time, that time, and the other stuff. I won’t be able to do it. There’s nothing for sale. It’s too expensive. You don’t understand.” Get out there and ask them questions. What you can do is you can start looking. You can start asking questions. I have a client in Silicon Valley and his two neighbors are Apple and Google. He’s not in the high-tech business. He’s got a dance studio. The square footage price there costs $5 million per acre of commercial property. That’s the most expensive in the world because Apple doesn’t want to move to Wichita. You’re beside the company that has the most cash in the world. What do they care about the property cost? Just to get their employees that you’re paying serious money to not have to park far away to keep them.

This guy is there and has he given up? Has he said, “This is too expensive?” I talked to him and he’s still on this. He’s looking at properties. He had an offer on a property. You want to be optimistic that something will happen. You only need one property to change your life. Don’t let what you can’t do get in the way of what you can do and everyone can start looking. Everyone can start asking questions. Everyone can start educating themselves to what you have to do to be in a position to get a property. It’s a lot easier than you think. The first part is conventional business, the second part is a commercial real estate that you try to use as a home for your business. The third part is what I call an alternate business. An alternate business is something that can either be related to your conventional business or unrelated. I’ve done it both ways before. If we think of your conventional business, it’s paying the bills and its generating income for you. Your alternate business is something you can use to be speculative, be crazy, and go for that big score. Do some online thing because you don’t need that alternate business to pay your bills.

Most people, when they decide to do entrepreneurial things, they start with an alternate business idea first. “I got this whiz-bang thing. It’ll make a million. It’s great.” They have a conventional, secure source of income like a job. They leave it. They risk stuff. They stick with this high flyer, an unproven alternate-type business that might be in the internet. It might be some crazy startup. It might be something that doesn’t have the potential of being small because it’s all big. You want to have this alternate business once your conventional business is taken care of. I have a business that’s about to launch. It’s taken a couple hundred thousand dollars to put in. It’s an online-type venture. I didn’t need that to make money right away because my conventional business is taking care of that. Those three parts of the triangle are things that I encourage people to do. With alternate businesses, we have a client in common. Their alternate business was an offshoot of their conventional business and they just took it online. I’ve had other people get into an app that’s an offshoot of their conventional business. There are all kinds of ways to do it.

Part one throws off cashflow to pay your bills. Part two builds your net worth. Part three, you’re aiming for the highest return, maybe the big jackpot. Shoot for the moon and if it doesn’t work out, it’s okay because you still have your commercial real estate. That’s something to fall back on several years later, but also you still have the cashflow coming in from traditional business. That’s the Wealth Triangle.

Your conventional business is there to give you an income. The other parts of the triangle are there to create wealth. Some people think, “I’m a small business owner. I’ll sell my business and retire.” If I said, “Dan, I have a great stock for you. It has pretty decent returns but there’s a 70% chance that it will sell for zero or it’ll be worth $0,” do you want to invest in it? 30% chance? Probably not. Do you want to invest your life savings in this? Then why do you invest every waking hour, your time in this too? According to Inc. Magazine, there’s a 70% chance that small business that’s listed cannot be sold. Most people with a small business, they have everything tied up in their net worth, as far as that business they think, “It’ll probably sell for this.” I’ve seen many businesses that I thought were worth a lot of money close their doors. You want to have that hedge with the real estate and that hedge with an alternate business.

We’re talking about small business after they build long-term wealth and after they build some equity in the commercial real estate. What are some of the exit strategies? You were talking about maybe it’s difficult to sell a small business but if you have a commercial property, there are different ways that you teach that they could exit.

You have four great possibilities and I’ve helped business owners do all of these if you have commercial real estate. If you just have your business and you think, “It’s time to retire and then sell my business.” That’s one option you have. That option has a 70% chance of not working. Sometimes people will sell a business and the new owner will always want to finance over time. Very rarely does a small business owner will say, “Do you want $300,000? Here’s some cash,” like I didn’t have anything better to do with. “Here you go. Bye.” Usually, they want to pay you at over three to five years. Typically, in many situations, you’ll sell your business. The new owner will take it on. They’ll damage the business. It won’t go as well because there weren’t proper systems in place. They can’t make the payments to the person they bought it from. The owner has to jump back in and take over a damaged business and get back to work, which is not what you want to be doing if you want out.

Probably the business will sell for a lot less than what they thought they could sell for.

It’s like giving your car to someone, they take it and you are financing it. They take it up, dent it, scratched up, and depreciate more. If you have real estate, here are your four options. The first thing is you can sell the business with the real estate. This is crucial because it’s one of the key things you ask a business broker about buying a business or selling a business. The first question they ask you is, “What is the lease like?” The reason they ask that is that you wouldn’t want to buy a restaurant that had six months left on the lease. There’s no guarantee the rent won’t go up. There’s no guarantee you won’t get evicted. You want that stability. The first thing you do when you sell a business is they want you to lock in a long-term lease, the longer the better, five years, ten years or whatever. If you have a long-term lease with your building or you have a business that comes with the real estate, it’s automatically more valuable to a potential purchaser. They never have to worry about, “Is it the lease situation?” You can sell a business with the actual building.

The second option is you can sell the business and keep their real estate with a guaranteed tenant. If people want a long-term lease when they’re buying a business, as an investor you also want a long-term lease if you own the building. If you wrote a ten-year lease with your business and then you sold to a new owner, then you say, “You have a great landlord for the next ten years, me.” That way you have a long-term tenant and they have a long-term lease. It makes your business more valuable because they know that they have a good landlord that doesn’t want to get that business out of there because they have a vested interest. They want to see it run. The third thing is you can sell the business to a person and then you can sell your building to a separate investor. Investors in commercial real estate love long-term leases. If you walked up to someone and you said, “I have a commercial building with a ten-year lease. It’s a solid tenant in there. In fact, I used to run this business for the last many years, so I can vouch that it’s a terrific business.” That’s attractive because the thing that scares people as investors away from the commercial real estate is long-term vacancies. The last thing people want to do is buy a vacant building and they’re thinking, “What business is going to go in? Is it going to make it? Is it going to tank after a few years? I have this business with a great long-term track record.” Likewise, the business owner would enjoy the fact its long-term lease.

Option number four is an interesting one that some businesses have done. That’s where you don’t want to retire necessarily. You keep the business. Hopefully, the business itself runs without you having to be there a whole lot but you can sell the building and lease it back to yourself. This is called a sale-leaseback. A lot of people don’t realize that some big companies have done this to stay in business. The New York Times is the biggest example of this. They have a huge office tower in New York City and they sold that building and they leased it back. The New York Times was getting pounded down with the stock price. Newspapers weren’t doing too well compared to the internet. They sold this prime real estate that they were in. They had a huge chunk of cash to operate with and they paid a monthly lease to be there. In Canada, another company was the Hudson’s Bay Company right in downtown Toronto. They did that where they sold their space and they’re leasing it back.

What you’re saying also is even though the business may be paying their bills and not generating a lot of wealth but over the years, because now you’re paying your own mortgage for many years, you’re paying for the rent anyway not by accident, not even intentionally. You don’t even think about too much. You’re building wealth long-term. You’re doing the same thing you’re doing. It doesn’t change a whole lot but down the road, in many years you now have four different options that you could exit.

The Wealth Triangle: Everyone can start asking questions and start educating themselves as to what they have to do to be in a position to get that property.

I say this to the small business owners, “You’re going to spend $1 million anyways. Do you want to spend it with someone else or with yourself?” I have some happy stories and some sad stories. There’s a lady that I know back in 1992. She could have bought a building for about $300,000 around the area here. She didn’t want to do it because it would cost around $25,000 to change some things in the building. At that time, she thought that was a lot of money and stuff like that. Long story short, she didn’t do it. Fast forward to 2013, that building is worth $2.3 million from $300,000. It went up by $2 million. The lady that had the business that refused to buy it or didn’t want to buy it, her business went bankrupt because the market changed and everything worked against her. She couldn’t afford the lease because the lease went up. If she had spent the $25,000 on the extra upgrades that she didn’t want to do back then, that would have worked out to about $82 a month over the life of this period. Saving $82 a month cost someone a $2 million opportunity.

Share with us how you’ve applied the Wealth Triangle in your own life. You have the music and dance studio. You started with that, a traditional business. Share with us the process you’ve gone through.

When we started the business in 1995, we were broke. It’s not like, “We could start, get a bunch of money and it was all smooth sailing.” We started the business with $50 of photocopied flyers. I remember we went to Office Depot. It was $0.05 a copy, they were having a special. We got 1,000 copies so it was $50 and we cut them into three pieces so that’s 3,000. We went house-to-house and we rented space in the community center to set up. We eventually rented rooms in Sunday school basements and regular public schools and stuff to start the business. We didn’t even have commercial lease space to start the business. Fast forward a couple years, the business starts doing a bit better. The original landlord we tried to rent our first space from, he pulled us and said, “I don’t believe in your business. It’s not going to work.” He gave us all this negativity and said, “It’s not possible.” He said, “This restaurant I have in my plaza, that’s a good business. You guys should forget about this stupid studio thing and do a restaurant.”

In 1999, we were opening a new location in our business. We were onto location number three. Instead of leasing a space, we decided we’d try and buy it. We didn’t own a house and I thought this was going to be impossible. We went to the bank and talk to them. They said, “You guys are in your late twenties and you don’t own a home. Why are you trying to buy this commercial property? Don’t you want to buy a house instead?” I said, “Is that the rule? Am I allowed to buy this?” They said, “You can. It’s just a weird way of doing things.” There was a commercial condo that we bought for $245,000. I remember when I was looking at the space I wanted to see where I could hook up a shower in case we had to live there. If stuff hits the fan I was like, “We can sleep on the couch here and we’ll shower there. We’ll microwave and we’ll live.” We bought that piece of property and then stuff starts going well.

A couple years later, I saw a commercial building that was on the market next to one of our locations. It was on the market for $1.2 million but had some magic words on there. It said, “For lease or sale.” Anytime you see those words, those are magic words. What that says is, “We’re flexible. If you want to lease it, great. If you want to buy it, great. We’ll work with you.” What I did was I talked to the owner. I did not have $1.2 million, just a couple years later. I talked to him. The key in the commercial real estate is to remember with small, medium-sized buildings, this was 9,000 square-feet building. You’re still dealing with a person. I don’t care if it’s commercial. A commercial property of that size has an owner. It’s not a downtown, huge, multi-story skyscraper where it’s a conglomerate or a multi-national board that’s running it. When you’re dealing with small, medium-sized properties, you’re dealing with an individual, an owner. I said, “Can I get together and talk to you? Tell you my story.” I put in a proposal and it was a lease with an option to purchase the building. He said, “I’ll come talk.”

I showed him our business. I told him the story. I had our daughter who was six months old with us at the time, as a baby. It’s not that I couldn’t have got a babysitter. I was like anything I can do. This guy was in his 70s and stuff. The baby was there, my wife there with me I’m like, “Sir, we just need someone to give us a break.” As we’re sitting down there and this is a million-dollar property. He said, “You wrote this offer up. You say you want to lease it, with the option to buy. What do you want to do? Do you want to lease this thing or do you want to own it?” I said, “I’d love to own it. I don’t know if I can swing it. I’ll be honest with you.” I told him all about my business and ideas. I remember his exact words to me, he said, “You tell me how much cash you can come up with and I’ll tell you if we can do business.” I said, “What do you mean?” He said, “I’ll finance you.” I said, “Really?” I quickly sat down. I scribbled out the stuff. I still have the notepad of how much I could cash advance on credit cards, pull from savings, not pay some taxes and all that stuff. I came up and I said, “I could probably squeeze $200,000 if I gave every single thing, being optimistic of cash advances in every different direction. He said, “You do that and I’ll finance the rest.” I was like, “For real?” I was like, “Done.”

He financed the property for us. We ended up getting it for $1.32 million. Our rent at the time was $4,500 per month. The mortgage on that place was $6,000 a month, but we had a tenant that we got to move into that space with us and they were paying $4,500 a month to us. Our actual plus went down to $1,500 a month plus we had to pay property taxes. If you think of it that way, we are paying less. He financed us for a few years and the truth is I bounced our mortgage payment to him because I was aggressive on how much money we could come up with. I called and apologized, “I created a story. I’m sorry. I didn’t mean it and stuff.” He said, “Don’t let it happen again,” so it never happened again. That building got the latest tax assessment from the city. That building is worth $2.3 million after twelve years. Twelve years of paying less rent than you would have been paying just by asking. Doing that impossible and talking to a guy. Remember, you’re always dealing with a person, not a nameless face. Whenever possible with commercial property, deal with the owner so you can tell them your story. They’re business people too. There’s no person that owns commercial real estate out there that hasn’t had to take some risks and hasn’t had to take a chance. You want to be able to talk to people face to face. It’s powerful.

Afterward, you leveraged that and the equity and then also do a few more deals. Share with us one more deal that you did afterward. I like the karate studio, that’s quite interesting.

We found a piece of property a year after that which is bad timing. It was one year after doing what I thought was the most money in the world, a million-dollar deal. We found a piece of property for $1.7 million and I was like, “Great,” but the deal was compelling. I thought out, “If we can do one, maybe we can try another one.” This property had sat on the market for six months. We looked at it first when it came on the market. We walked away. It sat there for six months and no one even touched it. I talked to the realtor and he said, “A guy who owns a building down the street looked at this one as well and that’s when he passed on it.” That would make you think, “This building’s crappy. It’s not worth anything.” With that building, I was playing that game of thinking, “It’s impossible. We can’t do it,” so I thought, “There’s no way a bank would lend us money on that building.” I went and I started talking to a mortgage broker. I was sitting down with this mortgage broker and he said, “Why don’t you go talk to your bank?” I said, “They’re not going to finance us this. There’s no way they’d want to give us money and this much money.” He said, “You’re wasting your time talking to me. Go talk to your bank.” The mortgage broker talked himself out of a commission and a sale, which was nice.

I went and talked to the bank and to my surprise they said, “Sure.” What we did is we found a karate studio, which was a complementary-type business to ours. We got them to sign a pre-commitment that they would come in and lease the space. They would lease part of it and we’d lease the other part. The bank flipped the back cash loan even though it was an expensive building. They said, “We’ll do this deal,” and it was expensive and a bit tedious and stuff. I remember right after we bought that building, the guy that owned the property next door said, “You didn’t steal that building. You paid too much and made me feel like a complete moron.” The story has a happy ending. That’s a one-acre building. It’s 9,000 square feet that we bought for $1.7 million many years ago and directly across the street, there’s a one-acre commercial lot. There’s no building on it, it’s just a lot. The lot listed for $3.3 million with no building. Real estate is a way that you can get rich quick while getting rich slow. Every year, you’re building hundreds of thousands of dollars. Potentially of equity in your property, if you have enough of them without any risk.

What you’re saying is when you’re not talking about asking people, “You’re buying two or three properties a year or flip them.” You’re talking about just buy one property. Maybe you had own one property for a decade and you’re good. You’re in pretty good shape if you do the right deal.

The Wealth Triangle: The first thing to do when you sell businesses is to actually lock in a long-term lease. The longer, the better.

Let me tell you a little family history. This is in my blood. Back in 1977, I was seven years old. My dad bought a commercial building in downtown Toronto for $260,000. Back then, you better believe that people were telling him, “It’s crazy. Don’t do it. It’s risky.” This is something funny in Canada and the United States. If you buy a condo or a house, what do people say? “Congratulations. You’re smart. You’re great.” If you buy a commercial building, what do people say? “Are you crazy? Have you lost it? It’s risky.” What’s wrong with everyone? It should be the other way around. I want to mention that with my dad, even though he’s in business and bought a building for his business, I didn’t borrow any money from him to do my real estate deals. I did it all my own self because I wanted to prove I could do it. I’m helping him sell his building. His building that he bought for $260,000 in 1977 is listed for $7.5 million. That’s the power of real estate. That’s one deal. Will that change your life? Absolutely.

From the real estate, you take your procedure and systems and you launched a side business, which is helping other music and dance studio owners on how to improve their business, how to attract students. Talk to me about that business.

That is what I call the alternate business. I started doing seminars and consulting and stuff for people first in our own industry and how they can improve. There are 163 different things that have made a big difference in our business and we patched them up. For two days, I’d go do this and this and this. A lot of the stuff was counterintuitive and opposite of what everyone out there was talking about. When it comes down to success and business lessons and everything, people are more shocked at what I don’t do than they are at what I do do. People are shocked like, “You don’t do this? You’re not on that but you’re not doing the latest things?” I’m like, “No.” People are shocked, but the thing is a lot of people don’t know the real things that are the actual items responsible for results and success. We’re distracted these days. There’s this deluge of information, options, and technology. Everyone thinks to jump on the latest greatest thing. With my workshops and stuff, I teach 163 things. A lot of them are things that might seem basic, but my belief is that the things that are easy to do are also easy not to do. We talked about taking a $20 gift card and sticking it in the glove compartment of a car. Everyone can buy a gift card and everyone can put it in the glove compartment. It’s pretty basic. Are businesses out there willing to do that? No. The business I told to do that too, they didn’t do it.

You want me to tell you something complicated? Open up seven different social media accounts on dubious platforms that no one uses. Get more people to check in on Foursquare because that’s such a good idea. I tell them something basic. One of the things I teach people in my business and this will be shocking in this world of social media and the next digital thing. I say, “When you get a brand-new customer, a week after you get them, pick up the phone. Call them and say, ‘It’s me from the business. I’m doing a quick call to see how everything was.’” It’s called a follow-up call. People say, “Can’t I just email them?” No, pick up the phone. In our school, we have 3,000 kids going there. Every kid gets a handwritten birthday card. People say to me, “Can’t you just send them a birthday email?” It’s like, “Kid, how much mail do you get?” “None.” Every week, we have kids coming in and saying, “Thanks for the birthday card,” and every week their parents come up saying, “It’s nice you did that.” Isn’t it an extra step to spend $1 in Canada for a stamp and to sit down and write a greeting card? Yes, but let’s play a game called, “I spend $2 on a card and you spend $5,000 with me.” How often do you want to play that game? A lot of the stuff I teach is basic, but it makes a big difference for sure.

You’re being humble, but you are the number one business trainer and speaker in the music and dance studio industry. You’ve been doing it for many years. You’ve trained thousands and thousands of business owners. Fast forward to now, I know you’re not a bragging guy. What’s life like now? The place you live in, you’ve got the boat. Share with us, if you don’t mind.

I’m telling this stuff to everyone to inspire them, not to impress them. I want to differentiate that. I believe that your life is a creation. I believe we’re made in the image of our Creator. We have the ability to create things in our life. Several years ago, we were driving down the street and I stumbled across a piece of rare waterfront property. It was a three-acre waterfront property and it was 9:30 on a Sunday night. There was still light because we are on this time with the longest day of the year. I remember I looked at the sign and the sign said, “This rare waterfront property has not been off the market since 1917.” Then it said, “This property should belong to you.” I turned around. I looked left and right and there was no one there. I turned to my wife and she said, “It’s a sign.” I still remember the next line said, “Offers over $1.5 million.” My wife said, “This is one problem. You don’t have $1.5 million.” I said, “I’ve got an imagination. Let’s figure this out.” I called the owner the next day. We went out. We chatted. Long story short, we ended up owning the property. We built our house there.

It’s a nice house, like Hammertime but less tacky, 8,000 square feet of crazy fun. I built a conference center there, which I call the Creator’s Landing. It’s the place where I’ve had business owners from all over the world come here and do two-day workshops and training. We’ve got a great dock and awesome view of the mountains. It’s a beautiful, inspiring setting. We homeschool our three kids, so we spend a lot of time here. It feels like a vacation when I’m home, to be honest. My typical day, I get up without an alarm clock. We start with working out first thing in the morning. I do the cooking, so I make my wife breakfast and stuff. I make coffee and then we get into a bunch of stuff. It’s pretty free-flowing. I’m not overly scheduled on what I do on a daily basis. Some people say, “You have to be disciplined,” but I’m a much bigger believer in energy management than time management. I believe that with the right energy you can do more in two hours than you can do in eight hours with no energy and under compulsion. That’s why in a lot of cases if you’re entrepreneurial, having a job or set schedule is a terrible idea because you’re putting in the time.

As entrepreneurs, we get paid for what we create. If we’re in peak energy for an hour, we can rock it. A lot of times if you have to get something done to create a piece, if you’re feeling it, it’s effortless. 45 minutes later, it’s the best thing ever. You have to be able to surf the energy wave. If you have your peak energy at certain times, you have to capitalize on that. We’re too rigid as an entrepreneur like, “I’m scheduled to be here and there.” I once talked to a very organized guy, a retired accountant. I said, “Can I stop by and chat about some stuff?” I was shocked he said, “Come on by tomorrow.” I thought, “These are guys that charge $250, $300 an hour and he said, ‘Just drop by.’” It’s a busy firm. He has twenty people working there. He said, “Come by and we’ll hang out.” I was like, “That’s odd,” and he said, “Every day I’m there for eight hours but I only schedule myself for five or six so I’m available for any opportunities that come up.”

It’s almost being open to anything that shows up versus maybe because you don’t know. You might turn into a good client, you might give him some business or he might say, “I’m busy. Maybe it’s going to be a week from now,” then he might lose you as an opportunity.

Even if he’s making $250 an hour, which is great money, what if I was to discuss something that could be a $100,000 opportunity or a $1 million real estate opportunity with him and he missed it because he’s too busy? Most business owners say, “Do you want to do something new in your business?” Do you know what they say? “I’m so busy I can’t even think about anything new. I couldn’t even think about that.” That’s called a recipe for poverty in your business. If your mental energy is so tapped out that you can’t even think about doing something else, you’re in the wrong place. You’re doing it wrong.

We are getting paid to think if you think about it.

As an entrepreneur, you don’t get paid to do, you get paid to think 100%. I have a line on my bulletin board in my office and it says, “Replace your compulsion to do with the compulsion to be.” You don’t do entrepreneur, you are an entrepreneur. You have to be creative because what does an entrepreneur do? They enter a market, they take a risk, and they create. If you’re too busy doing the work of the business or being bogged down with multiple nightmares and babysitting people, it’s not going to happen.

I know the way that Sam operates and he walks the talk. Do you even have a social media account? As a friend, he’s not the easiest guy to get ahold of.

To preface this, people will think I’m a total Luddite, a technology hater and stuff. I use technology for two things. Number one, to make money. Number two, to make my life simpler and better. In my world, social media doesn’t do either. I don’t want to offend everyone, but the thing is I’ve tracked so many businesses. I remember back in 2008 people said, “You just don’t understand it.” I understand when you make money, it adds up to certain amounts. A lot of times it will be a lot of activity with zero productivity. Back in 2008, I still have the article on my shelf and it’s from Wired magazine. I’ve been following the tech scene for quite a while. Will the wall of Facebook take out Google? A few years later, the answer is no. If you’re trying to sell anything, Google is still the king. I don’t have Facebook, LinkedIn, Instagram, Twitter, Foursquare, Vine or Snapchat. I’m still in Pinterest.

Certain elements of those have their places but I can tell you reason that all of them, commercially, is more effort than actual productivity. When it comes to texting, my claim to fame is I’ve sent two texts in my entire life. One lady a couple months ago said, “How do you function in business without texting?” I said, “With minimal distraction and with great peace of mind.” That’s how I function in business because I’m not bogged down with the stuff. These days, the ability to communicate instantly with people has turned minor problems that aren’t your problem into your problem. When I go on vacation, I just go on vacation. I don’t have to update anything. I don’t have to check anything. I don’t have to change the status. When I’m gone, I’m unreachable and that’s how it’s supposed to be.

The Wealth Triangle: The key to commercial real estate is to remember that when you’re dealing with small to medium-sized properties, you’re still dealing with a person.

Even here, you’re pretty unreachable too. If I want to set up a time to do an interview with Sam, I would contact him days in advance. Even calling him. Usually, it’s a voicemail. He doesn’t pick up the phone, but I know that he might get back to me in a day or two. That’s expected because that’s the way he is. I know that’s the way he works and that’s the way he operates. I respect that. A lot of guys talk about the four-hour work week. He’s one of the few people that I know who does it. I don’t know if it’s four-hour work week, but definitely no more than ten hours.

Since I work on energy management, there’s a lot of times if I get up and there’s a bunch of stuff I have to do and I’m like, “I’m not feeling this. Screw it. The kids are going to Costco. Let’s go.” You’re better off doing something you enjoy. Keep in mind, this is after many years of me putting in serious hours and doing serious work to get into the right culture and state. You can’t just zone out, hang out, and do what you want if you don’t have your conventional business working. You do have to have good monthly income coming in. I have another phrase on my wall and it says, “When you strike, oil stop drilling.” There are a lot of people in the business that if business starts to do well, they start to make money but they take these stupid risks that they don’t have to take. They work way more hours than they have to work.

I talked to one household name that’s a speaker, and he just sold one of his companies for $64 million. On a yearly basis, he was making between $4 million plus per year. He was trying to brag to me about how he takes too much of the year off. I was like, “That’s it? That sucks. If I work up the days I’m productively working, it adds up to two months.” I wasn’t impressed, I was like, “Do you want me to help you with that? Should I quote you on that?” I can see how that would be a problem. If you strike oil stop drilling and they get their business to a certain level or they get things to a certain level, but they’re obsessed. They can’t say, “What the most important thing in my life?” It’s because after a while, more money does not turn into a greater lifestyle. In fact, it works against you. You have to be careful as an entrepreneur why you are doing this and what you want to do. I remember reading something about one of the high-ups in Google. At 50, he decided he wanted to bail out because he wanted to enjoy his life.

I want to get into the rapid round. I’m going to ask you a series of questions. I’m looking for a quick answer for each one of them. Windows or Mac?

Windows.

iPhone or Android?

The third option, an android with a broken keyboard. I can’t even use it. The truth is after I couldn’t repair it, I thought, “I’m going to see how long it can keep it broken if it makes a difference.”

What’s your favorite success quote?

You can be what you choose to be.

Are you a dog person or cat person?

I have two dogs.

What’s your dream car?

My Tesla Roadster. It was the first one in Canada.

What’s the number one thing a new entrepreneur should be doing?

The Wealth Triangle: When you get a brand new customer, a week after you get them, pick up the phone, call them, and say, “Hey, it’s me.”

The number one thing a new entrepreneur should be doing is not doing it. They should be thinking about what they’re doing.

What’s your favorite business book?

A toss-up between The E-Myth or The 80/20 Principle by Richard Koch.

What’s a tool that you use every day that you would hate to have to live without?

The most important business tool is my Krups coffee maker, which I use to make coffee for my life with.

What do you do for fun?

That’s a tough one because I don’t do things for fun, I am fun. That’s like asking water, “How do you be wet?” It’s like, “I don’t do anything to be wet, I just am wet,” so I am fun.

What’s the most rewarding thing that you have been able to do for someone else because of your success?

It’s giving stuff, definitely. It was to write a scholarship for someone to go to an expensive university when they weren’t expecting it. It’s to be one of the biggest donors for an African relief thing. I didn’t know I was the biggest donor, it was a startup where everyone was volunteering their time and I wrote a check. It was a sizeable check and they said, “You know you’re our number one donor.” I said, “I am?” He said, “If you don’t give us this check, we can’t build this thing.” In Africa, there’s not a high-cost structure to getting bricks and stacking up there. The labor is cheap. I didn’t realize that was the difference between this building existing there and not existing. It was very close to the ground.

The Wealth Triangle: When you strike oil, stop. There are a lot of people that when their business starts to do well and make money, they take stupid risks.

If our audience wants to get in touch with you, I know from time to time you do some training. That would be difficult. From time to time, you do the commercial workshop training a couple times a year, not very often. If they wanted to learn more about you, can you point them to a book of yours or what’s the best way to learn more about what you do?

If you go to www.SamBeckford.com, it will have details on the different workshops I do and the books I’ve done. Even though I’m a marketing guy, I’m not a hyper promoter of myself. That’s cool if you don’t have to be hustling. It proves that your stuff’s working. Just to remind your audience, you can’t connect with me on Facebook. You can’t follow me on Instagram. You can’t even email me.

If necessary, they could get in touch with us. If you want to get in touch with Sam, I could hook you guys up.

I’m pretty approachable otherwise. I’m open to helping people out for sure.

Thank you so much for inspiring us with your story and with your strategies. I appreciate it.

Thanks, Dan. This was a lot of fun. I appreciate it.

Important Links:

• The E-Myth
• Wealth Triangle Concept
• The 80/20 Principle
• www.SamBeckford.com

About Sam Beckford

Sam graduated with a University business degree in 1992 and started 5 different businesses in a row. All 5 were failures. Business number 6 was a dance and music school for kids, which he started with his wife in 1995, the same year they were married. Friends and family members thought that their dance studio venture was a nice hobby but would be a lifelong recipe for poverty. That little business surprised everyone and started doing very well and today they have almost 3,000 active students that come to classes each week at their 3 locations. Sam and Valerie Beckford at one of their music and dance studios In 1999 before Sam and his wife even owned a house they bought their first commercial property for their small business. Today they own $14.5 million worth of commercial property that they owe less than $1.7 million on. Since 2003 Sam has personally helped over 200 investors buy or build commercial property. His clients range from first-time investors buying $300,000 office condos, to bigger investors buying land and building 25,000 square foot, multi-tenant buildings. In 2017 Sam helped an investor buy a $1.4 million building with just a 6% down.