Andrew Pierce – Stay Within Your Circle of Competence and Do Your Due Diligence

Andrew Pierce is an independent asset protection consultant and the creator of WyomingLLCAttorney.com. He helps business owners from nearly every industry and with almost any size company to effectively protect their assets through forming LLCs.   “The best neighbors are the ones with good boundaries, where you delineate the responsibilities and the rights from the beginning.” Andrew Pierce   Worst investment ever Andrew had an equipment leasing company in South Florida. He would lease out tractors and trailers to moving and storage companies; he started the company in college to make some extra money. The business, interestingly, turned out pretty well. Getting sucked in by overconfidence Seeing that his first business had gone so well, Andrew felt that he was now an astute businessman. He sold the business and moved to the Caribbean, at a large undeveloped Bay in St. Maarten on the Dutch side–it was about 150 acres. Falling in love and business Andrew loved the island and had a good time there. He reasoned that the island would be a great place to do business. He considered starting a jet ski and water sports rental company. He had a good friend who grew up on the island, and they decided to get into a partnership. The friend would secure the contracts and local licensing because he understood the island. Andrew would provide the capital. So, Andrew bought a few jet skis, but it turns out they couldn’t get the permit to run the jet skis because it’s an unprotected Bay. Trying his luck at something else Andrew didn’t lose hope. He came up with another business idea; landscaping. There were 160 acres at the island that needed to be landscaped. He sold the jet skis for liquidation value and added in more money to ship a bunch of plants. The business failed before it started. He tried to salvage the situation by putting up a community center, park, and restaurant on an oceanfront piece of land his friend had. Death of friend and partnership Andrew’s friend passed away unexpectedly. The business couldn’t take off because Andrew and his friend’s dad couldn’t come to a fair agreement on ownership. Andrew and his friend had never signed a single agreement throughout their partnership. They would shake on it. This made it difficult for Andrew to prove how much he had invested in the restaurant business. After three years of unsuccessfully trying to get a business take off in the Caribbean, Andrew was left with over $100,000 in credit card debt. Lessons learned Stay within your circle of competence If you’re doing moving and storage, don’t try to go start doing plastics, manufacturing, or something different. Stay inside your circle of competence. Perform your due diligence Do your due diligence before you commit to starting a business, especially if it is in a field or a location that you are not familiar with. Have contracts with people Whether it’s your best friend or someone you don’t know, the best neighbors are the ones with good boundaries, where you delineate the responsibilities and the rights from the beginning. So do your due diligence and have contracts with your business partners. This reduces the chances of having misunderstandings. Have exit points If you’re are going into a capital intensive industry, look at the liquidation values of the assets. Play out those worst-case scenarios, so you know where your exit point is. If you are already in business or trading in the markets, remember the reason you got into an investment, then list the reasons that make you’ll get out. That way, when you hit those reasons, you will know it is time to wrap it up. Andrew’s takeaways Don’t be fooled by overconfidence bias Many times when people are in business, and they are doing well in that particular area, they start to think that that could carry over into another space and expect the same success. So instead of getting yourself into a new area, double down on your current business, figure it out, improve it, make it better, and grow it. Have an agreement in place The best time to sign an agreement is before you start your business. But, if you didn’t get one back then, you can get it done today even if you’re one year, five years, or 10 years into it. There is nothing wrong with going back and trying to get it in writing. So if you’ve put it off, try to make it happen immediately. Actionable advice Make sure that if you have partners, you have agreements in place. It saves everybody from a heartache. No. 1 goal for the next 12 months Andrew’s number one goal for the next 12 months is to continue focusing on his company. Andrew and his wife will soon be parents, so he wants to keep his head down and continue working hard. Parting words   “Go listen to more episodes of these podcasts and try to avoid making bad investments. But don’t let fear keep you from trying to make some investments. Always keep trying.” Andrew Pierce   Connect with Andrew Pierce LinkedIn Website Andrew’s books How to Start Building Your Wealth Investing in the Stock Market My Worst Investment Ever 9 Valuation Mistakes and How to Avoid Them Transform Your Business with Dr.Deming’s 14 Points Andrew’s online programs Valuation Master Class How to Start Building Your Wealth Investing in the Stock Market Finance Made Ridiculously Simple Become a Great Presenter and Increase Your Influence Transform Your Business with Dr. Deming’s 14 Points Connect with Andrew Stotz: astotz.com LinkedIn <span...