Why I Gave Up $400,000 of Passive Income
- Imagine making over $400,000 a year, and you don't even have to get out of your bed, but then one day you decide to give it up, to give it all away. Why in the world would anybody do that? - I don't know. - But that's exactly what I did. I poured my entire career, over 16 years, into building this business that was making me well over $400,000 per year. This was a business where I was the boss. I didn't have to commute to, I had a dedicated team that was taking care of 95% of the day to day operations.
It was literally a dream come true. This is the best dream ever. So many people chase passive income, and the way that I had my business, which was my financial planning practice, that way that I had this thing structured, I mean it was the closest thing to passive income, making over $400,000 per year of recurring revenue. So why in the world would I give this thing up? - Tell me more.
- So was I crazy for giving this thing up? Well that is debatable, but what I wanna share today is what was my reasoning, what was my rationale for giving up truly a passive income source? I wanna share with you what were my thoughts, what was the thought process so that you can understand the why, and also why it could help you make a very hard decision about something that's important to you that you may want to give up, but you might be too scared to do so. So we're gonna break all that down and more in this video, so let's get started. (upbeat music) What's going on y'all? Welcome back to the channel, Wealth Hacker Labs, I'm your grateful host Jeff Rose.
So breaking this down, why I walked away from a $400,000 business, recurring revenue, literally did not have to do a whole lot of work, I mean it was by far one of the wel, one of the best well-oiled machines that existed, and yet I walked away. - Don't just walk away. - Before I go into breaking down these different reasons why I walked away, let me first say this.
This was not an easy decision. This was very hard for me. And not just from the monetary aspect. This was my career. This was something that I had spent over 16 years growing.
My financial planning practice was my baby. It was my first baby. I started this before I had my first son. So for me to walk away, to give it away, I mean this was incredibly difficult. It was a ton of prayer, asking God to let me know, show me, is this is the right decision? - Please, help show me the way.
- The other thing was I tried to do a partial sell. This was a couple years ago, before I even made the move to the Nashville area. Then I tried to do a full sale to my former partner, and he declined it initially.
So it was like there were two different situations where I was trying to sell part of it and then all of it that those didn't work out. So I kept just running into this wall, is this really the right thing? Is this the best move? To where finally it got to the point that I recognized, yes, this is what I need to do. Even though I knew it, it still wasn't easy.
So what was my final reasoning? What was my final rationale of getting rid of this business? Well just sharing what was going on with my life and also my other businesses, let's break this down. The first reason why I sold or gave up a $400,000 passive income business was it was a distraction, which is so weird to say. To say that making $400,000 a year passively was a distraction.
- Don't get distracted. - When we think about distractions, I'm not talking about a distraction where you're sitting in a movie theater and somebody is talking, or if you have somebody and they're slurping a soda, that's really distracting. So you have to realize while I am, quote, unquote, running this business, even though I'm running it remote, my financial planning practice was three and a half hours away, I still had my online business.
That was thriving. And my online business, that was my blog, Good Financial Cents. We also had the YouTube channel. I also had brand deals that I was doing and sponsorship type deals. So I had a mastermind group that people were paying to be a part of.
I mean I had a lot of other things going on that the brick and mortar business that I spent 16 plus years growing was a distraction. And it was distracting me from the things that I really enjoyed doing because this was all the stuff that I absolutely love. This was what I, I've been referred to as my unique ability.
- You do have magic. - Of course. - This is the stuff that I was making a ton of money, and just thriving, enjoying every single minute of me doing this, but with the financial planning practice, it was a distraction. And I can remember clear as day, I was in the middle of recording a video, just doing something with the online business, and I got a call that a client had an issue with a check. Meaning that they were trying to have a check deposit in through their checking account. It was like a $500 check, so it wasn't a huge amount, but, this was an issue that my office manager could have totally handled.
My client did not need me to take care of this, but it was what she was accustomed to. So I had to stop what I was doing, and then take care of this client need, which I was still grateful to take care of them 'cause I liked the client, I enjoyed working with them, but it totally derailed me. - I'm getting derailed, okay? - It was a complete interruption to my day. And for those that get being creative and creating something, whether you're working on a project, working on a video, working on a podcast, writing a book, whatever that is, when you get interrupted it's hard to pick back up where you left off at. Maybe your wired differently, but that's how my brain is wired.
And I can just remember going to my wife, and saying gosh, this happened, I know it's not a big deal, but it just totally derailed me. And my wife at that time finally said "Wow, I get it, it's time. "It's time to move on," which I was blown away. - It's time to move on.
- Now the other part worth mentioning that I haven't mentioned yet, but with the online business, at the time, the online business was bringing in gross, it was greater than one mil that it was bringing on. So not only was the online business, or I'm sorry, was the brick and mortar financial planning practice a distraction, but the truth is is that this business was making three times more than the brick and mortar business. So it was really, really a distraction because man, this thing is humming, everything is great, everything is awesome, and I'm having to stop my day to work on a business that is bringing in less. So that was really the big epiphany of okay, it's time. It's time to walk away. It's time to start focusing on the online business.
- Focus. - So that brings us to number two, which is it was time. It was time. It was time to move on. It was time to start focusing, putting more effort on what I was doing up here.
The other part about this is that it being time was I enjoyed creating content. I enjoyed writing blog posts. I enjoyed publishing YouTube videos and the podcast. And at the end of the day, putting out information that I knew would help people. Help hundreds, thousands, maybe even millions. I don't know.
It's so funny, I moved here to the Nashville area where I live super close to Dave Ramsey, his brand new office, and love him or hate him, he has impacted millions of people with his radio show and his book, and all his different programs. And I had similar ambitions of wanting to help as many people as I could. And to also make really good money, take care of my family, support my family while I'm helping others.
That is such an amazing gift that you can't really fully comprehend that. It's still incomprehensible. Either way though, it was time to start focusing more of my efforts. And I knew that once I totally walked away from the financial planning practice and could focus on the online business, and every other, just other aspects, I just knew one, I had the potential to make more, but also I'm just going to enjoy it that much more.
Now did I know this for sure? Heck no, I didn't know this. This was all a pure act of faith, hoping, but based off prior experience, because there have been other risks I've taken in the past, I just knew that it was time. - It's time. - So that was the second reason. The third reason, and this one was a hard one to accept, was my clients, they deserved better. They did.
They deserved better. And what I mean by that is obviously my heart wasn't in it anymore. I had an amazing staff.
I had an amazing office manager, I had a junior advisor that was taking care of my people, but they deserved better. When I started in the business I was so, I was so excited to help people. I was so excited about billing the financial plans, and talking about investment portfolios, and rebalancing and reallocating, and required minimum distributions and 529 college savings plans. I was in it to win it. I absolutely loved every aspect of it, but it got to the point where I just didn't have the heart. ♪ Listen to your heart ♪ - My heart just wasn't in it anymore.
And I knew that my clients deserved to work with somebody that was in it. That their heart was in it, that they would get just a better level of service than even me on my best day my clients weren't getting 100% of me, they were getting 80%, 70%, just depends on whatever was going on with the other, my online business, what's going on with my family. They deserved better.
And that was a hard one to accept because I had so much pride in how much time and effort that I put into each client just building this relationship, and genuinely caring about who they are, and what they're doing, and the concerns they have, and the fears they have, and I just, that was me. I would wear all my clients' emotions. And whenever we had bad markets, and just seeing how that would effect people, gosh, I just, that was me. And so I just knew when I didn't have that same passion, I didn't have that same drive, that same desire, I knew that I needed to find somebody that was going to take better care of my clients than I had the capacity to. It was a hard one to accept, hard one to admit, but my clients did deserve better.
- You deserve better. - Now the fourth reason why I sold, and this is where I had the benefit of having some prior experience in understanding how this worked, otherwise, for somebody just to say this, you're like on yeah that sounds good, that's a good tweetable, that's a good quote, put that on Instagram so I can get some likes on that, but the fourth reason is big risks equal exponential growth. Big risks equal exponential growth.
Now every time you take a risk, does that necessarily mean that it's always going to work out? Of course not. Of course not. And I had several different instances in my life where taking a risk didn't quite work out the way that I had thought or hoped that it would so did I know that without a doubt that this was going to work? Of course I didn't. Of course I didn't. But I had prior experience to show me that in different aspects of my business, when I was willing or able to take a big risk, but what I mean risk, this is not a I'm gonna do this blindfolded and just hope it, cross my fingers and hope it works out.
These were calculated risks. These were risks that I had mentors, I sought council from other people before me so that I had the wisdom, I had experience, I had the knowledge before I did these things. One example I can remember was when I left my firm, so I started with a big box wire house firm, a regional firm, I left after five years and co-founded my own investment planning firm. That was a huge risk. It was scary.
And I had a lot of people tell me that it was a bad decision. Actually a former mentor of mine told me I was making the biggest mistake of my life. - A mistake.
- That was hard to hear. And yet 90 days after making the biggest mistake of my life, I was making three times as much per month. In 90 days. And that did not stop.
So that was a big risk to have exponential growth. The next one was I founded my own wealth management firm. So basically I left this firm, and then founded my own wealth management firm, Alliance Wealth Management, which was an RIA, which stands for registered investment advisor. That was another huge risk. I didn't know if my clients were going to come. I didn't know what people were gonna think.
I had no idea. It was also a monetary risk because that took a lot of money to get that thing off the ground. And yet because I did that I had, once again, exponential growth. - Another one. - Moving to Nashville was another huge risk. Scary.
I've lived elsewhere. I've lived on the West Coast, lived in LA, what up In-N-Out Burger, what? My wife though has never lived anywhere else, my family had never lived anywhere else, so moving three and a half hours away from everything we knew as a family, to move three and a half hours away from my business, that was a huge risk that also had exponential growth. And I'm actually gonna do another YouTube video on this where I share what I learned by going through this exercise that showed me by taking certain risks and what that lead to was basically exponential growth. More than 10X growth. And we're talking I don't know exactly how much, not 100X growth, but we're getting there.
So that was huge. So knowing that prior, looking back at all, and this is just a handful of things that I know that I did, there's others out there, when I look back at all these different situations in my life where I took a big risk, the payoff was there. As long as it wasn't a risk where I didn't talk to anybody, and I just acted on impulse, that's different.
These are all situations. We didn't decide to move to Nashville one day and move the next day, this was a year process. Founding my own investment firm, that was, gosh, that was, I think, at least a year process. And leaving my first firm, that was a, I don't remember exactly, but a six to nine-month process.
So these were all calculated big risks, but they all led to exponential growth. And the last reason, and this is a multi-part reason, but the last reason is remembering that life is too short. YOLO. - YOLO. - Life is too short.
I love this quote by Paulo Coelho that says "If it's still in your mind, "it's worth taking the risk." And that is such insightful, such insightful wisdom because when you get an idea, so I am so impulsive, that is just how I'm wired. I get an idea and I wanna do it immediately. And I've learned that I've got to tap on the brakes, hit pause, and just really think through what this looks like. But the things that I just keep thinking about and keep thinking about, and keep thinking about, when that is still there, that means there's something there. There's a passion, there's a desire, and chances are you are willing to do whatever it takes to make sure that whatever that idea is succeeds.
So with me selling the business, walking away from this cash cow, it was an idea, it was a thought that would not leave my mind. I knew, I knew that I had to start focusing on the online business first. I knew it. I knew it. I knew it. And so after a year, a couple years of finally distancing myself from the practice, moving three hours away, and then talking to other people that have sold their business, talking to different suitors, when the first deal fell through, the second deal fell through, I'm like gosh, I guess I can't find anybody that is willing to buy it that I think is gonna take care of my clients, and then finally finding the perfect buyer.
I mean it was actually right in front of me the entire time. It was right there. And that's when I knew it was time to move on. Now just a couple other tidbits that I wanna share. I think this is important to take note of, is that life is too short. So calculated risk.
I mean here's a couple of things you need to know is that we had a well-established emergency fund. We had over 12 months in cash when this happened. So we had a nice cushion. The other thing is I'm still getting paid.
That's kind of the funny thing about this was it was so hard, it was so hard to let this thing go 'cause I'm like gosh it's making so much money per month, how do I give this up? How do I walk away? But it's one of those you kind of forget that if you sell it, so the way the deal was structured is that I get paid a monthly check. And this monthly check is over a seven year period or longer, depending on if we hit whatever the purchase price was, the agreed upon price. So if it pays off in seven years, great. If what I have received over that seven year period does not match the amount that we agreed upon, then it goes up that much more. And the other reason is that, or the other thing that we had, we had a SOL plan, or a CYA plan, a things go to crap plan. I mean we had a contingency plan.
If this doesn't work out, if the online business doesn't work out, if I get hit with another Google algorhithim update, and the online business vanishes, then, then what? Then what am I gonna do? And I have looked back on my life, and looked at all these different situations, all these different obstacles I've had to overcome, and I was pretty confident that either I was gonna take a day job being a junior advisor again. I could go into sales. I could figure something out. So with having the contingency plan, I'm still getting paid, and also we have plenty of cash on hand, felt pretty confident that it was okay for me to sell. But I hope that you can see, this was not an easy decision.
A lot of money. It was my baby. It was all that I knew other than the online stuff. I just had so much of my identity tied up in my business that it was hard to walk away, but I am glad that I did.
I haven't lost any sleep over the fact that I sold the business at all. It's been really, really, really good. It's been awesome. I'm glad that I did it. And I hope that what I've shared with you today is helpful. It's helpful for a situation that when you think that you need to walk away from something but it is hard because there's just so many good things, or there's this, oh gosh, but there's this potential.
There is this potential there, do I really want to give that up? And I would have you look at what are the things that you need from the thing that you're working on right now versus what are the things that you need from whatever the new idea is. Whatever this thing is that you can't get out of your mind. Define what you need from that for it to be a success. That was something I struggled with until I joined a coaching program. I'm gonna have more about how to go through that, that thought process and that type of thinking, and answering those questions that will help bring some clarity in making some really tough decisions. But when you walk through that and you do that, gosh, you walk out of that and you feel so much more confident.
(applauding) - All right y'all, hope you enjoyed this video. I hope walking through my process and this big decision for myself and my family is helpful. Helpful to unpack some big decision you may have in your life. All right y'all, as always, this is Jeff Rose reminding you that it's your money, it's your life, and only you can make it awesome. Until next time, peace.