Inflation, Taxes & Interest Rates: The New Reality for Business Owners

0:00Most entrepreneurs are on a collision course with massive failure. And the reason is directly hitting your cash flow, not your business plan. Tune in for an uncensored, no BS reality check as the hardcore closer Ryan Steumann exposes the crippling facts that force you to be average and keep you stuck in the middle. Stop chasing comfort and start fighting for your financial freedom. This is the brutal truth you need to hear to survive the current economic climate. The truth hurts, but God designed the truth to hurt us because we're only motivated by two things, pain and pleasure. And the truth hurts to motivate you because of pain to go do what you need to do.

0:38And we just hide as citizens, as humans. We're hiding from the truth and we're trying to get pleasure out of everything. But pain is a bigger motivator than pleasure. This is Right About Now with Ryan Alford, a Radcast Network production. We are the number one business show on the planet with over 1 million downloads a month. Taking the BS out of business for over six years and over 400 episodes. You ready to start snapping next and cashing checks? Well, it starts right about now. All the best practices in the world are set up to get average. And so when you're actually chasing the top of the mountain or you're aspiring things, the world is conditioning us.

1:20If you want to have a bigger life, a better life, to have impact, to do things, you have to take risks, break free from average. It never felt like it had an agenda because it felt like it was free. You were freed up. It was because if you want to chase past what everyone else has, you got to be willing to do what no one else is willing to do. That's a lot of the ways you've built your business. It looks like it. You know, the name of my company is Break Free Academy for that reason. I didn't even know it. I love it. What does that stand for to you? As human beings, we're fighting this force of average.

1:51We are fighting mental limitations. We're fighting financial limitations. Freedom means you have the time and the means to do whatever you want, whenever you want. Most people, they get into business because they want to be their own boss and then have time freedom. But then what happens for most people is they have neither of those. They have to answer to investors, the board of directors, employees, middle management, and they have no time left over to do the things that they want to do with the money that they've made. Just trying to help people break free from all of that stuff. What do you make of the business climate right now in America?

2:25The administration and the government has got in the way of my success. When I was a drug dealer and I was trying to be successful as a drug dealer, the government got in the way of my success. As I became a convicted felon and Dodd's Frank was passed in 2010, they wouldn't allow me to do financial stuff anymore because I was a felon. So they've intervened twice, but it hasn't stopped my success. Right now, think about this. Just two years ago, you can make money off of Rolexes, Lamborghinis, private jet charters, crypto, NFTs, Mastermind. anything we touched real estate houses and cars were selling for tens of hundreds of thousands of dollars over list price interest rates were dirt cheap gasoline was dirt cheap everything you touched you made money from and our government got to know what these people take it all the way from there's no time in my life i was a load officer in 2007 8 9 and 10 even though the mortgage market was crashing there was still people that were making money and it was only the real estate and mortgage market that was crashing.

3:31I never seen the government take everything away they have the last couple of years. What happens is we're chasing policy form. When Congress passed an act or a law or a president puts an executive order in, it takes a few years for it to catch up. It doesn't happen immediately. This is a test of IQ of America right here, where we're at. Common sense isn't so common anymore because we have parents that for two or three generations now have let their kids be raised by video games, iPads, computers. I was in school and get straight A's, got in trouble. And now there's all these grading curves, participation trophies for education and stuff like that.

4:09We're seeing the consequences of that. We're told the stove would burn your hand and you put your hand on it anyway. They laughed at you. They were like, you're an idiot. I told you the stove was hot. Now it's like, oh my God, we've got to get rid of the stove. It's just a completely different climate. We're seeing the consequences of that. Accountability is the word and it's gone out the window because we have conditioned everything to be convenient and comfortable. It's great. We want our kids to be comfortable. It's not that we don't want them to have a great life, but you don't learn or have a great life without lessons and consequences and accountability.

4:42You've nailed it. We're seeing the participation trophy. People are now running companies and government and other things. I mean, what's crime in California? You murder somebody, you're out of jail in 10 years. They don't even report it in some of these cities, L.A. and New York. They don't even report it anymore. The FBI put a report out there today saying crime's down by 4%, but that's because New York, Los Angeles, Houston, Texas, Chicago doesn't report crime to the FBI anymore. We're not getting real statistics. We're not getting a real education. We're not getting real accountability. And we wonder why we have fake-ass people running our economy that are in power.

5:18It's crazy. I'm independent as well. I've voted both sides of the line. I think my practicality and principles and morals probably lean right, but I'm not afraid to cross the aisle. I consider myself independent. What's the biggest thing that impacted you from a business with today's client? Number one, interest rates were at 3 % and 4%. You could go buy a rental property and you could cash flow it. Now you have to buy that thing for cash or put a significantly larger down payment down to get a cash flow at 6.5 % to 7.5%. Then on top of that, in a lot of blue states, they have capped the amount of rates that you can put on the rent.

5:52If you raise the rent every year, they've said, oh, you can only do 5%, you can do 10%. But they didn't cap the amount of tax increase because the property values went up. They didn't cap the amount of insurance. My properties in Florida, I've sold all of them but one and I'll sell it, is because I can't raise rent. But the insurance company raised my policy 300%. The government said, fuck the landlord, but we're taking care of the insurance companies and the municipalities. And a lot of business owners own real estate, whether it's the office that they have or whether it's the portfolio of real estate.

6:27And when that shit drops cash flow and then an HVAC goes out or a roof gets damaged or destroys the house on the way out, they're out every dollar that they've made for an entire year on it. The second problem is, let's say in 2022, you made a million bucks. 2023 you've got to pay taxes on that million bucks taxes are paid in the rear in 2023 in april may june july whatever it is you decide to pay taxes as a business owner depending on when you extend it you're having a year that is 20 30 40 percent less as good of cash flow as it was in 2022 now every dollar they save has gone out the window in 2023 and you can't take the loss in 2023 till this year.

7:08And this year, if your business is down again, we're trailing from better years and business going down and getting taxed in the rear. It's like, man, I'm already out of money. And now they're taxing me from a year ago. I thought things were going to continue to be good. So maybe bought more inventory, maybe got a bigger warehouse, maybe went and hired more people. Now I'm not making as much money and I still owe those taxes and I got to let these people go in order to do that. I hear these stories all day, every day. It's a combination of things, our cost of goods are up. Diesel is traditionally less expensive than gas.

7:40But a few years ago, they started making us put death fuel on top of diesel. And now diesel is more expensive than gas. And I'm watching great companies and trucking companies go out of business left and right because they've got to charge a higher price in order to pay for the expensive diesel. You're burning three, four gallons to the mile because you've got a big ass load in the trailer that you're traveling with. You can't take a loss on that. You've got to make some money. So you either lower your margin or you go out of business and watch a lot of that happen too so this is the lie the statistics we see from the government the cost of goods may only be up four or five percent but the lack of drilling new wells we haven't drilled a new well in america since 2017 we haven't opened a new refinery in forever and everything's operating at max capacity diesel is super expensive which means the transportation of goods to get to the floor to get to our doorstep is through the roof.

8:33And so now we're having to pay more for that. Even if you're making more money right now, you're actually making less money because everything else that you have to do is more expensive. For a family of six in my house, health insurance, and we're all healthy. None of us have anything wrong with this. It's three grand a month. That's$36 ,000 a year. If I wasn't a good entrepreneur, I either have to go take a job where they pay for my health insurance, which costs the company$36 ,000 a year. I make$100 ,000. I'm really only making$64 ,000 to live on just after health insurance. That's not mortgage.

9:05That's not gas. That's not food. That's not any of that shit. That was just a masterclass. What is happening in the economy right now that's impacting business? The impact of interest rates being high is having a huge impact. Things that aren't even related to real estate. The cash that it's keeping out of the everyday market because those rates aren't so high because people aren't doing what you're saying. flipping houses, doing things. When you stall real estate in this country, you have stalled the entire economy. There's not as much free cash flow and just business transactions happening. 47 % of real estate agents have not pulled a home in the last 12 months.

9:43The median home sales per real estate agent in the country right now is two in 12 months. It was three just a couple of years. That's been cut by a third. Traditionally, hard money rates, 8, 9%. Now they're 12 to 15. The SBA was 6 to 7%. Right now, the SBA is at 12 to 16%. You can't go acquire businesses. You can't acquire houses and profit from them. Even if you buy a primary residence, my home, I paid a million bucks for it years ago. It's worth$2 million right now. Prices have gone up in my area. If I were to sell that out and keep a million dollars, first of all, I'm going to be taxed on$300 ,000 of that because it's only a$700 ,000 non-capital gain primary residence.

10:23So I would be taxed on 300 grand of that. Then if I go buy another house that only costs me a million dollars, maybe I'm going further out of the city. So I'm paying more for gas, transportation, things of that nature. And that house at a million dollars costs more than my house right now with a low interest rate. I have a ranch house that I've bought for$440 ,000. The mortgage is more money per month on that than it is for the million dollar house that I bought six years ago and refinanced 2.875%. I'm paying$1 ,000 less a month for a$2 million house that I've owned for six years than a$400 ,000 home that I just a year ago.

11:02A guy like Ryan busted his ass, running businesses, creating jobs, doing these things, investments, but these are the impacts for him. Imagine what the impacts, talk about cost of goods, like everyday people, they're paying$7 for a loaf of bread and all this, but then that's back to the fuel, the cost of getting it there. You make$120 ,000 a year, which historically is excellent money, but you've got three kids. You're paying$2 ,200 a month or$30 ,000 a year for health insurance. You're paying 35%, 38 % in taxes. So you're really living on about$35 ,000 to$40 ,000 a year after just taxes and health insurance on a W-Q job with a couple of kids in$120 ,000 a year.

11:44It's crazy. And right now, I'm somewhat of a mainstream economist because I've been in the financial markets for 20 years. Anytime the Fed cuts rates, they're chasing problems. And unemployment is at an alternative high right now. You're not going to get that from a government statistic, but it is what it is. Inflation is actually going down a little bit. So the Fed cut rates because of unemployment. Companies can go out and pull cheaper money to grant and hire more people. But anytime the Fed has cut the rate, there is always in the next three to 12 months, a 20 to 55 percent decline in the value of the stock market overall.

12:19We haven't seen the market crash yet and the ramifications of what are to come from that because of this rate cut, because they don't just cut the rate because they're like, we want to be nice to people and give them more money. That's not how it works. The whole point in that is, yeah, we want the rates to come down, but they didn't need to get that high to begin with because these policies created, they're both the cause of the disease and the prescription. It's dangerous. How can I be a problem solver if I don't go create a bunch of problems? That's what these policies do. They go create a bunch of problems and then promise us that they'll solve them.

12:51You get this. The solution was not to raise rates six consecutive times in a row. 3 % interest rate is ridiculously low. That was great. But anybody with a half a brain knows the sweet spot in America for mortgage interest rates is 5.5%. That's enough to keep people buying. It's not too expensive. That's the sweet spot. They should have raised from 3 to 5.5 and just pay there. They went to 7.5. Yeah, and they flatlined everything else. And you don't feel it immediately. That's why we're starting to feel it now. Everybody tells you it's okay to be fat and you're beautiful and all this stuff when you're clearly not.

13:27Those people are lying to you and doing it wrong versus the person that calls you fat and hurts your feelings and tells you to get in the gym and start eating correctly and holds you accountable. Now, you're more likely to hate the person that calls you fat and tells you to get in the gym and eat right. But that person actually cares more about you, you as the person, than the people who care about your feelings and how you perceive them as nice people. The truth hurts, but God designed the truth to hurt us because we're only motivated by two things, pain and pleasure. And the truth hurts to motivate you because of pain to go do what you need to do.

14:01And we just hide as citizens, as humans, we're hiding from the truth and we're trying to get pleasure out of everything. But pain is a bigger motivator than pleasure. It's a cycle of comfort because the person that doesn't tell you the truth isn't not telling you the truth to make you feel good. It's so they feel good because they don't have to see you respond negatively and be hurt. They want to be liked too. Everybody wants comfort. Everybody wants to be liked, but it takes real strength, real courage, and real belief to tell you the truth because then that's what's truly good for the other person and not good for them.

14:34Where can everybody keep up with you? Instagram, at Hardcore Closer, Facebook, Ryan Steumann, both of those have blue checks. They're verified accounts. I'll never get you up for crypto or sliding your DMs from a backup page. If you enjoyed the show, if you got something out of what I said, just slide my DMs, say hello, say you enjoyed the show, let me know. It's me really managing that, not a team. So I'll talk to you on there. I love it. He's real and he's right. You know where to find us, ryanisright.com. We'll have links to all Ryan Steumann's stuff, hardcore closer. Go follow him. And you can find us over on YouTube.

15:05Watch this full episode. We're blowing up over there. We're taking it over. We're taking the BS out of business. We'll see you next time on Right About Now. This has been Right About Now with Ryan Alford, a Radcast Network production. Visit RyanIsRight.com for full audio and video versions of the show or to inquire about sponsorship opportunities. Thanks for listening.