Episode 003 - Edward Collins - Part 1

(Part 1 of 2) 

Get ready for an engaging interview with Edward Collins, a highly successful entrepreneur who has built and scaled multiple businesses to six and seven figures over the past 25 years.

On Model the Master podcast, Christin delves into Edward's remarkable journey from being an absolute failure in business to becoming a multimillionaire with a flourishing family and personal life. As a JD, CFP, AAMS, and RFC, Edward has a wealth of knowledge and experience to share on what it takes to achieve entrepreneurial success.

Discover Edward's secrets to building and scaling businesses, and get motivated to take your own entrepreneurial journey to new heights! Don't miss out on this inspiring interview about overcoming failure and achieving lasting success.

Link to Part 2: https://www.buzzsprout.com/2122903/12480065

Transcript

Christin Gutierrez (00:00):

Welcome to Model the Master Podcast, brought to you by Increpreneur, where we believe the fastest path to personal and professional growth is to model those who have gone before us. I'm your host, Christin Gutierrez. We're speaking today with Edward Collins. Edward is a financial freedom coach for business owners in the United States with two and a half decades of experience building and scaling his own businesses up to and through 6 and 7 figures. He focuses much of his time now helping other entrepreneurs to do the same. A serial entrepreneur and a lawyer, specializing in tax business and family law matters, a business coach, a husband and a father. These are all common ways others might describe him, but if you were to ask Edward to describe himself, he'd likely tell you he's just a man passionate about helping his family and friends fight for financial freedom because it's one freedom that makes all other freedoms possible. Welcome to the show, Edward.

Edward Collins (00:55):

Christin, it's definitely a pleasure. Thank you so much for hosting this.

Christin Gutierrez (00:59):

Thank you for being on. So financial freedom coach. What does that mean and how did you become one?

Edward Collins (01:05):

Oh goodness. Well, essentially what I do is I help business owners figure out their own personal path to creating real wealth in their life, ultimately giving them choice, because that's what financial freedom boils down to. Having the choice to do the things you want to do in life and to impact the people you want to impact, and the causes you care about. My journey has been a long and winding road, so there's been many things that have occurred over the course of the past number of decades that have led me to where I am now.

Christin Gutierrez (01:37):

That's awesome. I’ve found that most entrepreneurs have this turning point moment, the moment where it's no longer possible to remain where they are, and often it's hitting rock bottom. Have you experienced something like that?

Edward Collins (01:51):

A thousand percent, yes. I agree with you. I think that most business owners, if they've hit or achieved any significant milestones of success, that's usually because they've bounced off of a bottom, whatever their particular rock bottom has been. Exactly. <laugh>, because it's those challenges that we go through that that help make us who we are, because ultimately the best form of learning is struggle. I mean, the baby learns to crawl when its toys are just outside of reach. So having struggles in life, it shouldn't be something that you sit back and say, “Hey, listen, I don't want to experience those things”, because they help to shape who you are. And again, the tougher the struggle usually the tougher the outcome of the individual. 

Christin Gutierrez (02:40):

So what was your personal struggle?

Edward Collins (02:44):

Well, I started my first entry into entrepreneurism as an adult back in 1998. So I'm dating myself a bit. I started my very first financial planning practice back then. I still own my practice today, but that's when I got started in financial services. 

Christin Gutierrez (03:02):

That's longevity.

Edward Collins (03:04):

Yes, exactly. But when I started, I was still very young. I did not have a large natural network of individuals to go out and serve. And so I made a decision that I was going to become extremely well versed in what financial planning was, understand what the markets were like, and how to manage portfolios. And I really became a student of that aspect of the business. But the problem was I didn't become a student of business, so I didn't really understand how to run or operate a business, and pretty much, I made almost every mistake that's possible when it comes to running a business. If there was a book that existed saying, don't do this, don't do that… Unfortunately, I did all of those things and -

Christin Gutierrez (03:49):

I think that's a common theme in entrepreneurialism. 

Edward Collins (03:52):

<laugh> yeah. I think, again, I think there's a lot of challenges with our education system here in the United States and really globally one of the big challenges is lack of financial literacy from an education standpoint. And also we don't really teach people how to create a business operation. We teach students how to memorize for tests, maybe how to follow directions, but not necessarily how to become independent entrepreneurs. So I didn't have any formal training whatsoever in business. And again, the challenges that occur from that are multifaceted. And ultimately the first four years of my business, I didn't make any money. In fact, I lost money. I went into debt to the tune north of $250,000. At my low point, I had 17 credit cards. I had seven personal lines of loans, and then I had multiple loans from family and friends. And at my low point, this is about four years now, my business at my low point, I was past due on everything.

(05:00):

And I can remember, it was one morning when I was getting ready to go to work, and it was a little bit after six in the morning and there was a knock on my apartment door, and I was very confused because obviously it was very early in the morning, but I went down, I can remember opening the door and standing there were two gentlemen, and they were there to take my car because I was way overdue. And  again, every individual is going to have their own definition of rock bottom. But for me, that was my rock bottom because I could remember I had to sign papers on a clipboard, and I can remember them putting my car on their flatbed and driving off.

(05:49):

And I still had to go to work that day. And I didn't have the car. This was way before Uber existed and there were no taxis or anything like that. I had no way to get to work that day. And I can remember walking back up my apartment stairs and I can remember walking past, I had a little small kitchen table, a small little round table that really, realistically speaking, maybe one person could sit at. The top of the table was covered in envelopes, most of which were unopened because I knew what was inside of them. I can remember walking past them. I can remember going right into the bathroom. The bathroom door was open. I can remember walking to the sink and mirror in front of me. And I can remember looking at myself in the mirror and I can remember saying, “Ed, what do you do? No matter what it is, it's not working.” And that was my give up point and, I say it in a way where I was giving up not living or trying, I was giving up my ego because up until that point, I had a huge ego. Huge. I did really, really, really well in school without having to try. And I thought that -

Christin Gutierrez (07:06):

So did I <laugh>,

Edward Collins (07:07):

But I thought that made me invincible. Right. And I was so wrong, but I was able to - 

Christin Gutierrez (07:14):

it’s a hard lesson.

Edward Collins (07:15):

It really is. But really, I was able to leave my ego at the door when I left the bathroom that morning. And again, everyone's going to have a different definition of rock bottom. My struggle does not, in any way, take away someone else's struggle, or what they've been through. I don’t even want to compare my struggle with anyone else's, because there is no comparison. Each individual’s struggle is unique to them. For me, that was my rock bottom. And when I was able to leave my ego at the door, that's when I was able to make a change in my life.

Christin Gutierrez (07:46):

That's amazing. So once you were able to make that change, then what happened for you?

Edward Collins (07:52):

So for me, again, because I had an ego so much in the entire process before then, I didn't listen to people who actually had real knowledge about the things that were causing me challenges in business. So because, again, I thought I knew everything, but when I left my bathroom that morning, that switch in my head just turned off. I was no longer going to ignore the obvious things that other people have done what I'm doing and made it through to a success point - a particular milestone of success. So I started reaching out to individuals that have been through it, made it to the other side, and they're now at or beyond a place that I was aspiring to. And I started saying to myself, well, I just need to listen to people who know more than I do and then just do what they tell me to do.

(08:47):

That, to a point, is when I stopped believing that I knew it all. I literally said to myself, “Okay, if you are where I want to be or beyond, I will literally just do exactly what you tell me to do without thinking about it. Without questioning it. I'm just going to do it. Because everything I was doing up until that point, it just wasn't working. So what do I have to lose? But it was amazing because when that happened for me, I was very fortunate with being able to connect with the right people at that particular point in my life. And within one year, by the end of that next year, so my fifth year in business, I had broken even for the first time. I was so happy. I was so happy I made zero income <laugh>. Right? Because at the end of the day, I didn't lose money. I didn't go further into debt. And by the end of the year, I paid off all my debt. It was a complete turnaround. I made money. I was able to live comfortably, and I paid off all my debt within that second year and after an amazing shift. So yeah, my life changed immediately upon actually reaching out to people who knew more than me.

Christin Gutierrez (10:01):

So your whole life shifted by modeling the masters.

Edward Collins (10:07):

Absolutely. And that's why I love what you're doing here, because you're creating an environment, an ecosystem for your audience, as to say “Hey, listen, there are people who know. Yes. Why not learn from them?” We go through exactly what we go through in traditional school -

Christin Gutierrez (10:24):

and we don’t learn from anything that's real world applicable - 

Edward Collins (10:26):

Not at all. But we invest so much time going there and even post traditional school, you go into university, not only you're investing time but now you're also investing your dollars. And the real question - 

Christin Gutierrez (10:38):

a lot of money - 

Edward Collins (10:39):

<laugh> certainly, but when you stop… so if you look at the vast majority of people when they finish school, for some reason they believe they're done learning.

Christin Gutierrez (10:49):

I was that way. 

Edward Collins (10:50):

I was that way. I thought I was done learning. And it wasn't until I had that moment where I was like, no, learning is a lifelong process.

Christin Gutierrez (11:01):

Lifelong, and the moment that you stop learning, you might as well just give up because you're not going any farther. <laugh>

Edward Collins (11:06):

a hundred percent, yes.

Christin Gutierrez (11:09):

Well, that's amazing. That really, really warms my heart to hear because it's very important for our listeners to understand that. Once they can get that deep inside of them and know that we don't know it all, no matter how smart we are, no matter how successful we have been, no matter if we've had our own struggles and our own failures and we've learned from them and picked ourselves back up and dusted ourselves off and started again, no matter what we've experienced, we don't know everything. And there's so many people out there that we can learn from if we'll humble ourselves and just accept their help and their wealth of knowledge.

Edward Collins (11:51):

And it's amazing. It's so remarkable that the people who have actually achieved milestones of success, at least the ones that I've been fortunate enough to share a company with, almost all of them are willing to reach a hand down to lift you up, right? The people who are pulling you down are usually the ones at or below you. I mean, it's usually not the people who are above you.

Christin Gutierrez (12:25):

I agree 100%. And that's why I'm so excited for Model the Master, because I really believe that all of those people out there that have had the wealth of experience that others can benefit from will be willing to lend that hand, like you said, and absolutely share their knowledge and share their experiences and what's worked and what hasn't worked, and share the path with the people that are coming after them. So that's wonderful.

Edward Collins (12:54):

It's truly amazing. I mean, we are so blessed to live in this time, this age that we're in, and all of the access to the information that's literally at your fingertips -

Christin Gutierrez (13:05):

Because it's right there. People don't even have to go to the library anymore. <laugh>

Edward Collins (13:08):

Like when I got started, I think a lot of my challenge was, in the beginning, I didn't even know how to get access to the information because it was before Google existed. It was way before YouTube - 

Christin Gutierrez (13:22):

We had it rough.

Edward Collins (13:24):

I had to go to the library or to the bookstore in order to learn things instead. You could just jump on a podcast and just listen to individuals that are being streamed to you to give you all the information you need now - 

Christin Gutierrez (13:38):

don't even have to leave your house.

Edward Collins (13:40):

Exactly. You stayed in your pajamas and learned more in an afternoon than you might learn in an entire experience at university. Now, I'm not saying that university doesn't have its benefits - a lot. Most of that's on the socialization side of the spectrum, getting relationship skills and building those. But unless you're really going into a true specialty, if you're going to be a brain surgeon or something that has very highly specialized skill sets that will require a significant amount of learning and repetition, yes.

Christin Gutierrez (14:13):

Then you better go to college.

Edward Collins (14:14):

You better go to university. Absolutely. A hundred percent.

Christin Gutierrez (14:17):

I don't want you doing brain surgery without your degree.

Edward Collins (14:19):

Exactly. Exactly. But I often say -  I use the phrase - don't waste your time going to university. And I say it a little bit tongue in cheek because I don't mean don't go to university. What I mean by that is if you're going to do anything, including going to university, don't waste that time. Meaning, do it well, do it fully. Absolutely. Get everything you possibly can out of that experience, because you should be looking at life as an opportunity for a return on investment at all times. What's more valuable than time is your attention. If you're going to invest your attention into something, you should get a return on that because you can never get that back. I mean, it's a quasi-play on the concept of time and it being a non-renewable resource, but at the end of the day, if you're investing your attention in something, it definitely better be -

Christin Gutierrez (15:09):

worth it.

Edward Collins (15:10):

Absolutely. Yeah.

Christin Gutierrez (15:12):

So as a financial freedom coach, you teach business owners how to create, accumulate and protect their wealth. One of the areas that you're really passionate about is taxes, right? So could you share the story behind that passion?

Edward Collins (15:26):

Yeah, I mean, so this goes back to the beginning of the shift in my life from a business standpoint. So when I actually started making money I was through the roof. I mean, I was over the moon excited about it, and I had always aspired to this seven figure environment. That was my target, right? Because again, I didn't grow up with money. My family had to work pretty hard just to get up to the poverty line. So I had always equated the concept of being a millionaire to being something that was way far off into the distance. So I set my sights on being a business owner. Once I started making real money, I was like, I need to hit this mark. I need to get to seven figures. And I struggled for a long while because even though I'd made the shift to start making money, I was well into the six figures,

(16:24):

I had plateaued for a while. And a lot of that was because I sort of lost sight of what it took me to change, where I was with the concept of learning new things. I thought I knew now how to do it, and no, I just knew how to make that six figures very, very comfortably. It was six figures, still, don't get me wrong. I'm not saying that it was horrible, but I was stuck there for a while. And then I started reaching out to new mentors that were even higher and then started learning new things. And I did get to this point, this amazing point where I was like, wow, I hit it. I was seven figures, and I was so excited. And that excitement went away the following year on April 13th, it was two days before tax time. I sat down, I was sitting across from my accountant and my accountant said something that I couldn't comprehend, but the moment he told me that I had owed $352,000 in tax, and I know this may sound like a joke and it's not, it’s true. I literally said to him, “did you just say that out loud?” Like I was so shocked. I had no idea that was even something that would've been possible. Now I know maybe you might think, “Wait, Edward, you're naive. You made money, obviously you have to pay tax.” Yes. Obviously. I just didn't realize how much exactly. I couldn't fathom it, because that was the one - up to that moment - that was the largest check I had ever written and ever thought I would ever write again. It was just like, what?

(17:55):

But I was so mad because I worked really hard to create that money. And I know there are some people out there thinking “Yes, you have to do your part, you have to pay back to society, and you got the benefits of living and operating a society, so you have to pay your fair share.” It's just every time people say that, I question, well, what's fair? Fair is a subjective word. And I am subjective. 
I was sharing the misery I was experiencing with anyone who would listen, and people kept giving me this quote back. They kept giving me this quote by Benjamin Fran that said “nothing could be said to be certain in this world except death and taxes.”

(18:44):

And I thought to myself, well, you can't do anything about the death portion of that quote. But I was like, are our taxes certain? Is that true? Because I had always heard stories. I mean, you've heard stories. I'm sure your audience has heard stories about people who make a lot of money that pay almost nothing in taxes. So yeah, we've heard that. If that's the case, then it's not certain. There has to be a formula. And I just sat back and said, well, I'm going to learn the formula. I'm going to learn everything I possibly can about how I can pay the absolute minimum that I'm required to pay when it comes to taxes. And that's when I learned the truth about the challenge with most business owners. See, there's this interesting statistic, and I'd love to share it with your audience. It says that somewhere in the neighborhood of about more than nine out of 10, to the tune of 93% of all business owners overpay their taxes every single year.

Christin Gutierrez (19:45):

That's a huge.

Edward Collins (19:46):

Huge number. It's ridiculous. And that's not according to Edward Collins, that's according to Forbes. Forbes did a study, they created this law article about it, and they basically talked about the fact that business owners are overpaying, and even those business owners that have high priced accountants are still overpaying. And the reason for that is, and this is what I learned in that moment and doing research thereafter, is that the vast majority of accountants are little more than glorified historians. They spend all of their time, their effort, and their energy just trying to figure out how to best tell the IRS what's already happened. Historians, they operate in the past. And don't get it wrong, tax preparation is vital. It's in fact, it's the law. 

Christin Gutierrez (20:38):

Or you're going to be <laugh> getting your own knock on the door.

Edward Collins (20:41):

Exactly. But the preparation is about yesterday, tax planning on the other, well, that's about tomorrow. What do I think about money in the weeks and months ahead so that in the next coming tax year, I'm less burdened by those taxes. And that's what I’ve spent now more than a decade just studying. I've put my head deep into the waters, and I've personally experimented with the strategies within my own life. And then once I've figured that yes, they work, and these are the things that actually are implementable by business owners, then I go and I show other business owners, and I can tell you that there's a secret of what it takes to get wealthy. And it starts with having the right structures in place for your business, meaning having the right systems and operations, and then also legal entities in place to really safeguard your entire financial life.

(21:43):

And once you've done that, you can overlay a concept that I've referred to as plugging the profit leaks, meaning if you look at the entirety of your financial life, there's you and you just imagine it to be a bucket. There's likely a lot of holes in your bucket, and the largest one tends to be tax. So a lot of people ask me, they say, Edward, well what should I do to make more money? And I say, well, don't do that yet. Just keep more. Make it right. If you can plug the leaks, that means you have more that you can do more with. So if I teach a business owner tax strategies, and let's say otherwise if they did not implement a tax strategy, they’d have to send a check of a hundred thousand dollars to the irs… if I can strategize where you get to keep half of that instead of sending it to the irs

(22:32):

so instead of sending a hundred, you only sent 50. That means you kept S50,000. So then once I have that environment, then I say, well, what do you do with that money? Because that's the third pillar in what I teach, is that compound asset acquisition brings you further in your journey to true financial freedom. Because everything is math. So people look at me and they're - especially after I have conversations with business owners and we uncover systems and methods for them to keep more dollars and how to implement them - and they say, “Edward, are you a magician?” And I say, no, it's not magic, it's just math. Everything boils down to being formulaic, and there's a formula for financial freedom. Would you like to know what that is? I would love to know what that is. Here it is, it's extremely simple, but don't let simplicity keep you from doing it, okay.

(23:26):

The simple formula is this free cash flow. So FCF greater than your daily needs and wants, DNW, if you have free cash flow greater than your daily needs and wants, you exist in the state of financial freedom. Exactly. It is. It's a simple formula, but it's not easy because in its most simple form, those individuals who experience this - I call those most people who experience this, I call them rich now, who doesn't want to be rich? Everyone, almost everyone's hand goes up when I say, do you want to be rich? But I actually don't want you to be rich. I want you to be wealthy. Because if you look at financial freedom and you have free cash flow, most of the time for a business owner, most of the time the business owner is the one who's generating the free cash flow.

(24:22):

Because most business owners really aren't business owners. They're job owners and their daily activity generates revenue. So if your free cash flow is being generated by your own personal activity, trading your time for those dollars, even though you own the business behind it, you're still trading your time for dollars. Well, that's not real freedom with permanence. In fact, it is never permanent when you're rich because being rich is generating cash flow. Whereas being wealthy is, it's the assets that we’ve accumulated over time that are generating the cash flow. Because yeah, that gives you the ability to then go away. My family and I, we went away for, I dunno, three or four weeks at the end of last year into the beginning of this year for holiday. And all of my businesses continue to operate. There was no reduction in revenue generation because I focus my time on building a business as an asset rather than an activity, right?

(25:22):

Yes. So we as business owners often get stuck in the activity of it. I have to work in my business, I have to do the things that generate the cash flow instead of working on the business so that the business becomes the asset. My definition of an asset is simply anything you control, which generates cash flow for you. And so if it doesn't generate cash flow for you, it does not meet my definition of an asset. That doesn't mean that there aren't accountants out there that have a different definition. There aren't bankers out there that have a different definition. But my definition, which is extremely simple, has made a major difference in my life and changed all the lives that I touch. Because if I teach you that all the acquisition of assets is focusing on something that can generate cash flow for you, anything that takes cash flow from you is a liability.

(26:09):

Well, then most people's perspective on life changes, because now a lot of people think of their home as their largest asset. And well, let's apply my definitions. Are you making cash flow from your home? If you're not, which most people don't, not their personal residence at least, if that's the case, then that's not an asset. In fact, the only thing that you could really call a home is a liability because it's taking money from you. You have to pay your mortgage interest, you have to pay your property taxes, you have to pay your insurance, your maintenance and upkeep so that's money that's continually going out. That doesn't mean that the thing doesn't increase in value over time, maybe. Mm-hmm. Called appreciation. But appreciation alone doesn't make something an asset for me under my definition. It could be something I would consider as a vault or a store of value that potentially goes up and down. But the sad truth is, most people, it's very difficult for you to spend appreciation if you want to go to the grocery store. You're not taking your house down to the grocery store to buy some eggs, although you may have to take your house to buy some eggs right now just based on -


Christin Gutierrez (27:19):

You need to get a second and third mortgage for that one.

Edward Collins (27:21):

Exactly. But when you have this very simple application of definitions of financial literacy terms, then now you can reorient to yourself. For example, let me go back: if I'm teaching business owners how to not send money legally, not send money to the IRS, instead of keeping it because we've created and implemented some tax strategies within our life, well then I want to teach that business owner how to use that money instead of what most people do. Most people go out and consume it. They'll spend it on acquiring liabilities. I teach them how to acquire assets with it. And over time, the acquisition of assets compounds because again, in the scenario, you earn, let's say you earn X dollars this year through your labor, through your ability to actually generate revenue in your business. You save, let's say $50,000 in taxes that you otherwise would have sent to the IRS if you didn't implement the strategy.

(28:19):

So I'm not saying spend new money to get a tax deduction. I'm saying figure out how to, within the current spending pattern that you're doing, just shift things around so that you can use more tax-advantage dollars so you keep more of it in your own pocket. Then take the 50 extra thousand dollars that you may have saved in taxes and then acquire an asset with it so that the next year, you have the income that's being generated by your business, you're saving money because you have tax strategy, but you also have income now being generated from the asset you acquired the prior year, with which you're also saving money. So now at the end of that year, instead of 50,000, maybe you have an extra 75,000, or 100,000 dollars that you acquire, and maybe one or two more assets. And then over a decade you may end up with 12, 15 different assets that are working for you, and your family, and you now exist in the state of financial freedom. And again, it all boils down to that: if you know what the different variables are in your equation, free cash flow is greater than your daily needs and wants. So if you have that DNW, your daily needs and wants are simply your burn rate. How much are you spending to live the life you have right now or the lifestyle you desire to have? Once you know that - 

Christin Gutierrez (29:39):

That’s important because so many people are spending way more than they're even making, they're using their credit cards -