How to Avoid Leaving Millions on the Table When Selling Your Business with Stephen Scoggins – EP 281

Justin Donald: What's up, Stephen? Good to have you on the show.

Stephen Scoggins: Bro, so good to hang out with you again, man.

Justin Donald: This is fun.

Stephen Scoggins: I absolutely loved our conversation on BUILD, dude. You killed it. You absolutely killed it, dude.

Justin Donald: Yeah. Thank you. For those of you guys that are unfamiliar, Stephen has a podcast called BUILD, and I was a guest on his, and we just had a ton of fun. And off-air, we've been talking about the mastermind and big exits, and tax strategy around those big exits. And maybe we can get into some of the specifics. We don't have to say actual numbers, but we can talk through some of this stuff because I think what you're going through is valuable to a lot of our audience, right? A lot of people have done this or are going to be having an exit and want to strategize the right way, but first and foremost, congrats to you. You just had a monster exit.

Stephen Scoggins: Thank you. Appreciate it.

Justin Donald: Feels good, huh?

Stephen Scoggins: Yeah. It was good. I spent 25 years building that company from the trash piles of the construction site when I was homeless.

Justin Donald: We’re going to get into that, too.

Stephen Scoggins: Yeah. We can go as far as deep as you want to. That's a whole, like, show just of itself. But, yeah, I think, after 25 years, I knew about five years leading into it that I wasn't the guy to take it to 150 million. It wasn't that I didn't care, but I took it from zero to close to 100 in top-line annual revenue, and I was just like, "Dude, I want to go do other things.” Like, I found myself leading leaders and helping people scale their own businesses and then helping people that have made money find meaning, and so yeah. So, it'll become like a beautiful thing. And, yeah, it was a big blessing. I didn't know this, and maybe you knew this already, Justin, but less than 1% of people ever sell their companies.

Justin Donald: Yes. Oh, yeah.

Stephen Scoggins: I had no idea.

Justin Donald: Well, it's crazy because, so basically you have 96% of companies fail in the first five years, and then less than 1% like ever have some sort of a material sale.

Stephen Scoggins: Yeah. I want to say my investment banker said it was like, “Less than two-tenths of a percent of companies that sell.”

Justin Donald: That's so crazy.

Stephen Scoggins: Yeah. So, I feel blessed.

Justin Donald: You defied the odds.

Stephen Scoggins: In more ways than one. I think my story is a lot like Joseph or Forrest Gump, depending on who you aspire to.

Justin Donald: I love it. Well, it's cool getting time with you. You're a faith-driven entrepreneur. You're a speaker. You're an author. You've helped a lot of people as they've kind of battled with some of the things you've already gone through. And we're going to definitely talk about your life back when you were homeless to really founding and scaling multiple businesses that generated over nine figures. And so, why don't we just start real quick with the exit? Because this is top of mind. You've got a large tax bill. I mean, everyone wants to have an exit, but then no one is deciding.

Stephen Scoggins: It could have been worse. I mean, I'll say that's a blessing. It could have been worse.

Justin Donald: Yeah. So, what did that look like? Was it a long, tedious process to get the sale? Who was it? Was it a strategic? Was it PE?

Stephen Scoggins: Yeah. So, here's the thing. I'll share this. In 2019, I went back to doing live events. I own a live event facility in Raleigh, North Carolina, still to this day, that both the company that I sold still occupies, as well as a church use in nights and weekends. It was weird. I bought a 27,000-square-foot facility, office space, warehouse space, and an auditorium in the middle, where we even did Ed Mylett’s book launch there, and stuff like that. It's a hybrid studio. It's one of three in the country. And I kind of got to that end of that, and I was like I know that I'm not the guy to take this to 150 million, like I told you. And I knew the guys that had helped me build the company, the guys that come alongside of me.

They didn't necessarily have all the pieces. They had a lot of the pieces, right? But you can only scale a company to what you've scaled it to without getting outside mentorship and advice and new systems and processes. And even our accounting system at the time was a dinosaur compared to what we needed to scale. And most entrepreneurs get that wrong. They feel like they can limp along forever from QuickBooks to Sage to I think we’re going to end up with NetSuite, which was a game changer. But in the grand scheme of things, I was courted by probably three different private equity firms, I think two strategic buyers, aka family office, and either the money was really good, but the people were terrible, or the people were really awesome, and the money wasn't great.

Justin Donald: Yeah. That's tricky.

Stephen Scoggins: So, I mean, that's just what I was batting with. So, I began thinking I shared with you on my show that I’m a person of faith, we share that in common, which is beautiful. And I knew I wasn't the guy, so I was certain about that, as far as to take it to the next level. I didn't want to destroy what had taken me 25 years of sleepless nights and payrolls and taxes and fires and firing customers and being fired by customers for crappy reasons and all the things that come into that.

Justin Donald: It's a lifetime of work.

Stephen Scoggins: Building leadership, building teams, building systems. We built one of the largest exterior services company on the East Coast. I had four competitors in the entire country that were our size. And we were the only ones that had done it from a trash pile. So, there was a lot of different ins and outs. We, fortunately, had a really strong brand, but one evening, we get into it a little bit, but I do a ‘be still’ practice, if you will. I would just go to my closet, and I would pray, and I would just like, “Hey, I'm looking.” So, I had a very vivid dream that night, and in that dream, I was the bank. And then I got into thinking, "Well, if I structured a deal, what would I need to structure a deal like this?”

So, this is where the strategic mind kind of gets into the visionary mind. I knew I had two really good guys. They were great operators, but again, they didn't have the natural skill sets to have a nine-figure plus. We wanted to resell the business at about $150 million, $180 million, net income or EBITDA being somewhere around $10 million to $12 million at that. If that rate, with the AI tech that we're trying to put in the business, that should give us anywhere from a 10 on the low side to a 20 on the high side, multiple. That's another huge money back...

Justin Donald: That's huge. Huge multiples right there. You don't see that in a lot.

Stephen Scoggins: Again, it's technology.

Justin Donald: It's because it's tech, it's because AI is incorporated into it. And so, for those of you listening, this is a very atypical exit multiple, but software's always king, and AI is king right now, so.

Stephen Scoggins: And if you could be the market initiator of it.

Justin Donald: Yep.

Stephen Scoggins: Right? You become the platform company for it. So, there was some strategies around that, that's still in very much in flux. Again, low side, if we can't get the AI stuff like really built in really well, then on the low side, if you get to $10 million, $11 million, $12 million of EBITDA net income, or cash on a cash flowing basis, and you can produce those numbers consistently for several years, you're still looking at 8 to 10 multiple. Still a good number. So, long story short is, in order to do that, I had to go out and find two other men, in this case, they happen to be men, and both of them had scaled companies pass nine figures and beyond. I merged the team together. I created a roadmap for everybody involved.

They brought some cash to the table. I did a seller finance deal. We all signed off on the multiple. We signed off on the valuation. We signed off on the execution plan for the next five years. And in late 2023, December 2023. December 29^th, I exited that company formally, and I've still served as board chair, selling 20% of the company and a minority stake, because again, I'm trying to help them get to the next bite, but also mentoring them along the way. So, that began my journey of learning how systems and stuff were built. I will say one thing real fast, and Justin, I don't want to talk too much because I'll run away on my own by accident. But one of the things that I think every entrepreneur that wants to sell their company needs to know is they need to position the company to be sold approximately three to five years before it's actually sold.

What happened to me was we got all the way to the point where we were starting getting courted by these different private equity firms and all this kind of stuff, and then you start working on I had an investment banker friend of mine. It was really good. Had done over $6 billion in exits for different types of ventures, including the service space, trade service space.

Justin Donald: That's great. Good person to have on your team.

Stephen Scoggins: Oh, absolutely. And I was like, "Dude.” I worked out a deal with him. I said, "Look, your compensation for helping me put this is to be directly tied to what I end up with.” So, we created a sliding scale. So, he got rewarded for making… So, of course, what did he do? He went deep, deep into our books. He basically said, "We want to be able to pass quality of earnings before we have to pass quality of earnings.” And in doing so…

Justin Donald: And by the way, for those that don't understand what that is, can you elaborate? Because when it comes to buying or selling a business, this might be one of the most important things, and I think a lot of people miss it. So, if you can just elaborate here, I think that'd be great.

Stephen Scoggins: Yeah. So, essentially, people will throw LOIs or letters of intent at you early stage, and they're going to give you the best number they can, knowing that by the time you get through the due diligence phase, which is them looking under the hood, looking at your compliance, looking at your financial matters, looking at your trademarks, looking at is the team around you? Is the company built around you or is it built around an executive team, et cetera? They'll use that to then come back to you and say, “Hey, the valuation we originally gave you, yeah, we don't think it was…”

Justin Donald: It was high.

Stephen Scoggins: Yeah, it's high. We want to massage it. And it's actually a common tactic in the private equity world.

Justin Donald: Yep. I'm going through it right now, by the way. We have an offer. They're renegotiating right now like as we speak.

Stephen Scoggins: Yeah. And they're going to come up with everything under the sun. And you have to have answers for everything. So, there's a process in the middle after you start going under the hood. It normally happens about a month after the LOI is executed, called the quality of earnings, which is a third party. I would say the most, especially if it's a big deal, the people that will be doing a third-party financial evaluation to justify your numbers for whatever you put in front of the last three years, last five years, whatever you put in front of them. It's a third-party company. They pay a couple of $300,000 to look under your hood, and then they do it at a forensic level.

Justin Donald: Yes.

Stephen Scoggins: Okay. So, this is not like they just trust. They trust and verify.

Justin Donald: That's right.

Stephen Scoggins: And they will pick apart anything and everything they can to lower the valuation, to still get you to close, because by the time you get an LOI, a lot of entrepreneurs are getting emotionally invested in the exit, right? And so, I'm a big believer in you need to do that work before that occurs.

Justin Donald: Yes. And by the way, I'm also going to say don't rely on someone else's QV. So, if someone's selling, they should do it. If someone's buying, they should do it. You should have your own set. Just throwing that out there so everyone knows.

Stephen Scoggins: Exactly. And so, I went ahead and hired both two. So, I actually went through an embezzlement thing in 2017. So, I was forced to understand forensic-level accounting at one point in time. But in that timeframe, I hired, again, my investment banker. This is what he does, right? These guys and gals are designed to get the highest valuation they possibly can, sell to appropriate buyer, and they get a cut of the deal, okay, in its simplistic form. So, it's in their best interest to go and scrub things before quality of earnings scrubs things. On top of that, I went ahead and hired a third-party MBA, CPA professional that did exit transactions to work alongside of him, essentially to validate things that needed to change.

Justin Donald: That's great.

Stephen Scoggins: And they came to me several times and say, “Hey, this doesn't make sense. We have to answer this now.” And sometimes I could answer it in a few days, and sometimes it would take me 30 or 45 days of pulling archive information to validate it. But the good news is once we got into the process of due diligence, our quality of earnings stood, right? So, that means that the acquiring partner has validated that the cash flow, the net cash flow, the EBITDA, if you will, that the business needs to kick off to validate the deal because they're going to want to get their money back in three to five years.

So, if your EBITDA or your cash or continual cash cycle doesn't support that, they're going to cut the deal all the way until it does. So, that process of quality of earnings alone takes 45 days. See, another thing that I don't think entrepreneurs fully understand is when they go to do the exit, they think they get an LOI, they get to close in 60 days, like a house.

Justin Donald: Much different.

Stephen Scoggins: Most times it's six to eight months.

Justin Donald: Takes much longer, yeah.

Stephen Scoggins: Six to eight months.

Justin Donald: Especially the larger the transaction, when you're in the millions, I mean, in your case, we're talking tens of millions.

Stephen Scoggins: Tens of millions. And in the grand scheme of things, it's again hindsight being 20/20, I could have exited probably two years earlier had I been prepared, rather than have to go backwards. I had to go back and fix things, not to show numbers. I'm not talking about cooking the books. I'm talking about fixing actual systems. Now, those systems actually helped me along the way because it actually brought light to areas in which I was having margin erosion.

Justin Donald: Yeah.

Stephen Scoggins: Well, margin erosion directly converts to cash.

Justin Donald: Yeah, fixes you can make now. That's right. So, you can fix it now to make the company more valuable for the upcoming transaction.

Stephen Scoggins: Exactly. And here's the thing, here's what your folks who are buying businesses are looking for. A lot of times, you have to understand that maybe your company's going to become what's called a platform company, meaning you're going to bolt on other companies around it. They're going to get their money when they roll up a bunch of companies together to do the same type of thing you do with a bigger geographic footprint, maybe you have better technology, and they're going to roll it up and resell it, and they're going to get a higher multiple. So, that's their plan, right? That's how it works. They want to make sure the business is not built around you, meaning you've already taken the time to create an executive team, operational leadership, administrative leadership.

Justin Donald: SOPs that support the business.

Stephen Scoggins: Exactly.

Justin Donald: Without the people running it.

Stephen Scoggins: Exactly. And you can't make these the week before in ChatGPT.

Justin Donald: Right.

Stephen Scoggins: These things have to be there, present, and tested.

Justin Donald: And so, this gets back to exactly what your buddy who does these types of transactions was telling you. You need the three to five years. We tell people this all the time. But sometimes you don't have that. You get an offer, and you're like, "Oh, I want to roll.” Well, that's why, to your point, like build to sell because you put the right systems into place now that even if you don't want to sell, it can create a better lifestyle business.

Stephen Scoggins: Yeah, a thousand percent. Well, the other flip side too is one of the things that a good investment banker can do, and I had a hell of a time paying almost seven figures for the cut, but I had to realize, like that money that I paid out or invested in that partnership 3X’d itself. I got 3X more because we did the work, right? A good investment banker is not going to do just the financial attunement and the machinery, if you will, to make sure you're most valued, right? They're also going to bring potential suitors to the table. So, the best solution is you get three different companies giving you three different offers, and then they will compete for the business if your machine is solid. So, you’ve got to build a machine.

Justin Donald: Yeah. And the right team is also going to future pace out a greater valuation than present day based on what can happen, right? So, you get the right team in place. Your company can be more valuable than what your present-day EBITDA states.

Stephen Scoggins: Exactly. Another strategy you can use with your management team, these people they're going to stick around because 9 times out of 10, you, as the founder, are going to be asked to stick around anywhere from two to four years after close. That's the acquiring partner, acquiring companies, or entities hedge against you getting money, dipping out, running away. In my case, because I sold to my own management team, I created my own deal by the time it was all said and done. We created an operation agreement with the new holding company, if you will, because when you do all of this, everything changes basically as far as structurally.

And one of the things we did is I went ahead and provided a path to equity for key team members in the forms of either a solid profit sharing for sticking around for the next two years or whatever. So, operational leaders got a solid cut at profit sharing if they continue to operate where they were or better. And for the executive team, they had a path to equity through phantom stock. And then for my actual equity partners, they actually have formal equity. But these types of mechanisms make the business sticky because what you don't want to happen is have the things sell, and maybe part of your agreements tied to what's called an earnout, which means your company has to perform at the same level or better post-close after you leave for you to get that money. And private equity firms are really big at putting at least 20% of that in the earnout phase.

Justin Donald: Okay. So, let's distill this down. You had a nice exit. You got part of the cash up front. You have part of the cash, 20% riding. Okay. And then you did a seller note on part of it.

Stephen Scoggins: Exactly.

Justin Donald: And so, we were talking about the taxes owed in year one, which was a big surprise. And now you've got another payment coming that's going to be even bigger, depending. If you do nothing, it's going to be bigger. If you use some good tech strategy, it could be pretty creative. Now, you did do something that I like, and I'd love for you to talk a little bit about the power of an F reorg.

Stephen Scoggins: Sure.

Justin Donald: An F reorganization.

Stephen Scoggins: Yeah. So, I wish I could tell you from a strategical place. Our combined CPAs, the CPA that was representing me, the CPA that had represented me for 15 years, and then the acquiring partners’ CPA, all recommended an F reorg. The F reorg in and of itself allows for a stock sell transition versus asset. So, a stock sell transition or a sell, historically, has a much lower tax burden than an asset sell. So, when I went and structured the deal, I knew that going into the deal, and I said, "This has to be a stock sell.” Okay. The F reorg allows for the stock distribution to go to the appropriate companies that own equity in the holding company, which then allows an entire different tax strategy to take place in something called in, gosh, well, I'm trying to think. It's on the balance sheet. Well, it shouldn't be on the balance sheet. It's on our management report, but essentially, it's goodwill. It's called goodwill.

Justin Donald: Right.

Stephen Scoggins: Okay, so this goodwill component, if structured well, allows for tax savings or overexposure to tax.

Justin Donald: That’s right.

Stephen Scoggins: Where I went wrong, in this particular case is I just didn’t know what I didn’t know, which I’m all about, like, I call them the five constraints. The second one’s ignorance. You and I hit this a little bit when you’re on my show, but I didn’t know what I didn’t know and I didn’t know I needed to know it. Okay? So, here’s what happened. So, part of…

Justin Donald: And this is the big negotiating point, the goodwill portion of it on both sides because it benefits each party and you kind of have to get to an agreement across the board.

Stephen Scoggins: Yeah. And there’s an asset list of allocate. I mean, there’s a lot of discussion back and forth about what’s the value, what’s the– and because it changes the financial picture. So, for the guys acquiring the company, if the goodwill is too much in my favor, then they pay more taxes, they have more exposure. If I pay too much in their favor, I pay it. So, we found a pretty down the middle line, which was good.

But because I structured it, a deal that allowed them to have cash at the time of close, as well as a portion, if you will, that is interest, because I’m the bank, so I set an interest rate, an amortization schedule, and I gave them interest only for the first year because I just wanted the transition to be smooth. Okay? There’s plenty of money in the interest only, and then they start making principal and interest payments there on after for the larger liquidity moments.

The interest only, the way the federal government looks at interest only, unless you’re a bank, it is considered non-taxable– or I’m sorry, I couldn’t tie expenses to it, let’s put it that way. So, on an average to run a thought leadership business, just organization, social media, or COO, director of social content, all these different pieces, it runs a 350k to 400k a year. Okay? What I didn’t know, in this particular case, was that is not an expense that that entity can use.

Justin Donald: That’s right.

Stephen Scoggins: So, I’m having to pay tax on fictitious profit.

Justin Donald: And it’s a high tax bill at that.

Stephen Scoggins: It is, yeah. In this particular case, it exceeded triple six figures.

Justin Donald: So, these are the scenarios I love. And for those of you that are in the mastermind, you know a lot of the work that we do around this. And it’s funny because you and I off air, we were talking about what would it look like getting you involved in the mastermind. You were asking a lot of great questions.

Stephen Scoggins: Hey, a lot of my buddies are already involved in it. I had no idea. That’s why I actually started watching some of the demo reels.

Justin Donald: I love it. Well, and it’s fun because you have another bill that if not done properly, I mean, this could be– this is what, potentially an eight-figure bill, for sure a seven-figure bill, potentially an eight-figure bill if the tax strategy isn’t bad.

Stephen Scoggins: It’s 25% to 30% of whatever’s received in interest only that year. Not to mention whatever the tax bill is on the principle, depending on when it comes in and time. Because, again, some of it’s tax already paid, some of it’s tax deferred, that kind of thing, but eventually, I still have to pay the tax.

Justin Donald: That’s right. So, it’s really fun now. We can actually strategize for the big tax bill that’s going to come hopefully in 2026 for you and minimize that as much as we can using the tax code. And a lot of people love using these tax-deferral. strategies. I don’t like using those until we’ve used all the tax elimination strategies first. So, you eliminate, you reduce it, and then if you can reduce it all, great. Or if you can reduce the majority or if you can reduce down to at least what is being taxed at long-term capital gains, you can make an argument. It might make sense to pay that now or pay a portion of that now, but anything that’s taxed higher than that, you want to offset it for sure.

Stephen Scoggins: Yeah. Well, and I’ll give you an example. So, believe it or not, I can’t tax everything. However, if you have a solid set of attorneys, they can structure the entity in such a way that I can pay myself a multi-six figure salary to manage my own company. That is actually tax deductible against the interest only. So, my folks are setting that up now. So, I don’t necessarily have to go through this again, per se.

Justin Donald: Love it.

Stephen Scoggins: And I love the fact you got more ideas.

Justin Donald: Yeah, there’s a handful of strategies that we’ve used over the years. We’ve had a lot of people. We’ve had at least 50 members and probably a lot more than that, I’d have to do an audit, but at least 50 members in the mastermind that have had an exit, a substantial exit. And so, I love– our database is 70 tax strategy, 70 plus, that most CPAs have literally never heard of. They don’t even know they exist. Sometimes they’ve heard of them, but they don’t actually know how to do it. We have tax strategists that advise the CPAs on how to actually put everything into play because CPAs generally don’t know the tax code that well. And you really want your own tax strategist involved.

Stephen Scoggins: Yeah. Part of me actually wants to bring to one of the masterminds, part of me wants to bring my own CPA because I love the guy. He’s awesome. He may or may not know some of the things we’re talking about, so.

Justin Donald: Well, and I love that. And we do have a handful of CPAs in. In fact, one of our preferred vendors has a program, he’s a tax strategist. He has a program where he teaches CPAs how to use his methodology.

Stephen Scoggins: Is it Tom Wheelwright by any chance? I love that guy.

Justin Donald: Well, we’ve worked closely with Tom. I actually wasn’t referring to him. Ed Lyon is a guy that we’ve done a lot of work with, Jeff Socha with Socha Capital, a guy we’ve done a lot with. I mean, we’ve got a handful, like our bench is pretty deep on the tax strategy piece.

Stephen Scoggins: Well, and the good news is, and I know, we want to kind of do some different things, but the good news is everything that I need to know, I can learn.

Justin Donald: That’s right. Yeah. And you want to get around the people that have gone through it, right? That can be like, hey, I didn’t find the mastermind in time, and therefore, I paid a lot of taxes. Or I did get to the mastermind in time and we did these strategies and this is fun because it’s all legal. It’s all in the tax code. This is not risky/iffy stuff.

Stephen Scoggins: Well, these are the vehicles that people that wrote the tax or had the tax code written put in place so they could compound their own wealth. So, all you’re doing is playing by the same game, but again, I think I told you off here that one of my goals, I need to think differently. Like I need to stop thinking like an eight and nine-figure earner. I need to think like a 10-figure earner.

Justin Donald: That’s right.

Stephen Scoggins: And whether I achieve a billion dollars of net worth one day or not, at least I have the principles and at least I can compound what I have, at least I can set things up for six generations deep, which is my goal because we both know that most people that have an exit or a liquidity event within the first or second generation, the money’s gone.

Justin Donald: That’s right. That’s right. It’s a shame, but I mean, statistically, it is incredibly high. I mean, it is a very teeny, small minority percentage that actually makes it to that third generation. It is so disturbingly small.

Stephen Scoggins: Yeah. Well, we could change it together. Let’s get out for it.

Justin Donald: Hey, I’m down with that. I’m excited about it. We have to hear the story though of how you went from being homeless to scaling these companies. So, tell us how you were even in that situation in the first place, and then like the mindset shifts that you had to have to elevate to a whole different stratosphere of thinking and action taking.

Stephen Scoggins: Yeah. So, obviously, I’ve gotten that question a lot and I’ve really sat and really pondered it and really thought about it so much so that when my new book comes out next year, One Part Lion, One Part Lamb: The Integrated Method to Rise, Lead, and Last, I’ve really wanted to come down and fully understand what were the shifts, right? What were the shifts that led me down that path? What were the shifts that brought me down, that brought me out of the path, and then further down the path?

And I didn’t have a drug addiction. I didn’t go to war and come back and have moral, kind of what’s called moral illness, which is you kind of get shell shocked from doing– there’s a lot of different reasons someone could become homeless, put it that way. In my case, without going too far back, I’d been on my own largely since I was about nine years old. Alright, so…

Justin Donald: Wow.

Stephen Scoggins: When I say nine years old, at nine years old, my grandmother comes to me and she tells me that essentially, she needs me to be the man of the house. She was raising me at the time. She had been diagnosed with cancer. I didn’t know it. I literally had a GI Joe in one hand and Transformer in the other. I just knew that the only woman that I knew, that I spent time with, that was encouraging and loving and empowering, if you will, was asking me to help. So, from that moment on, I was getting up by alarm clock, getting my little brother up, making meals with oatmeal, and pretty much anything I could make with milk or water, I was taught how to make to make sure we had sustenance. I became my grandmother’s physical crutch as she walked around the house using my shoulder.

And about 11 years, 11 and a half years old, she passed away. At that point in time, my brother and I were split apart. He went to live with my mom in Florida. I stayed in the Carolinas with my father, and the very next day, I was on a construction site. So, 11 and a half, 12 years old, which was how I grew up.

Justin Donald: That’s the real world right there.

Stephen Scoggins: Yeah. It’s how that family grew up, that side of my family, the Scoggins side. And what was interesting was, is that was when I actually met the man that would become my mentor of all mentors. A lot of times, if you hear me speak publicly or you see me on a podcast or a media something or other, I refer to him as Old Man Myrick. Okay? His name is Steve Myrick. He was a very astute businessman who was very generous, but he didn’t want you to know it. So, I’ll give you an example, and this will play into kind of a little bit of the story.

I once watched Steve go to a barbecue restaurant. And so, those you guys know here in the Carolinas, just like in Texas, barbecue was big, right? There’s competitions everywhere and stuff.

Justin Donald: Oh, yeah.

Stephen Scoggins: He would go to the regular barbecue place. My dad followed him around, little bit like a puppy dog. I didn’t know this then, but I know it now. He actually became a bit of my dad’s father figure, which was interesting. But I go and I watch him literally take a thousand dollars cash and this is okay. And keep in mind, this is in the mid-90s. So, a thousand dollars was big money. It’s good money now. But it was big money then, right? And slipped in her basket, hush puppies. He and his wife walk out. They get in their car, they leave, and this waitress comes out and she gets wrecked. I mean, she is wrecked. She is snot coming out of her face, crying on the floor, praising God, I can pay my rent, I can do this. She was a single mother, I think, of three.

And Steve found that out as a byproduct of just having a conversation and being present. See, sometimes, we got people waiting on us and we don’t realize that these people have their own lives too, right?

Justin Donald: That’s right.

Stephen Scoggins: We’re not present in the moment. So, I got to see this contrast. I got to see him be this really bit of a bulldog of a man with different things that he would do. He was a home builder, a developer home builder, and owned all the trades to build his houses. Okay? So, a multifaceted entrepreneur in one asset class, if you will, or what became an asset class. And long story short is I once watched him kick an officer off his road. He said, this is my road you get off of. And the officers got in his car, turned around and went and kind of left. So, I got to see this contrast, right?

Lo and behold, I’m forced to drop out of high school around 17 years old. I say forced, I chose because I was tired of the lights getting cut off. I was tired of cold water. I was tired of having a hard time. My dad was working as hard as he possibly could but never could seem to get ahead. Okay? It’s the way in which he thought about money, the way in which he saw money and stuff like that. He’s better now than he was because he’s watched me do some things. But in that season, it was still very difficult.

So, just before my 18th birthday, I walk in, check myself out of school. I go work for a trash company called Waste Industries. It’s a pretty large company around the country. Had got there 18, 19 years old, helped them run their parts of their business as far as like leading people who are three times, two times my age. So, leadership always found me, had a sense of it. They bring in a guy who’s probably still to this day, the worst leader I’ve ever seen in my life.

I eventually leave. I go straight to the job site. I start working and Steve comes to me and puts me in business for myself for the first time, buys me everything that I need, pays, basically takes care of the back office, gets the insurance, gets the equipment, gets everything. And from there, I basically for the next 12 to 18 months, I actually made a lot of money really fast because I had the work ethic. I was committed. He was partnered, he was like my– again, he believed in me before I believed in myself, before I even knew it, that I needed to believe in myself kind of thing.

And sure enough, I make a bunch of money really fast. I get very cocky, very arrogant, very egotistical. And I believe in God’s providence. He says, okay, buddy, I do have big plans for you, but you’re not going to operate like that in the future. And my humbling came in the form of a five-foot six brown eye girl, who took me on a ride of my life. And within about a year of that timeframe, I was dealing with severe depression, walked off the job site, walked away from that entire thing, and spent the next four and a half to six months finding myself and my identity.

Again, in God’s providence, at that time, I was a very deeply atheistic because of all the pain that I experienced up to that point from childhood. And I got to that experience and had a divine encounter. the reason I can say that I know that it’s true regardless of how people feel about it, it’s called the litter box moment. I invite your audience to go check it out on YouTube or something like that. I have described this experience. We just don’t have time for it today.

And lo and behold, I have a one-on-one encounter with Jesus. And I commit to surrendering in that moment. And he said, “Okay, now I can bless you.” I started the company that I exited in 2023, about three days later from the trash piles on a second chance from Old Man Myrick that I didn’t deserve in the first place. He didn’t buy me anything, any tools, but he said, “Okay, I’ll give you the second chance, but you got to figure it all out.”

And piece by piece, day by day for 25 years, I built what is now known as The CHE companies. It was a roll-up of custom home exteriors, CHE remodeling, CHE commercial, and CHE products and distribution. I had 400 team members, I say team members, people that work for our company across three states. It challenged me in ways that I cannot even articulate, but it built me in ways that I can articulate. So, when I have an eight-figure landscaper or an eight-figure retail person over here, I can speak into their lives in ways that would not have been possible without this and help them get out of it, so…

Justin Donald: Oof, that’s powerful.

Stephen Scoggins: That’s the very quick synopsis of about a four-year journey. but it is where it brought me back to. I mentioned the title of the new book due out next year around the summertime, One Part Lion and One Part Lamb. My grandfather told me I had started speaking probably in 2014, by osmosis. I was partnered with Dave Ramsey’s organization as an entree leadership client. I was their poster child for a number of years. One of their team members approached me about becoming a speaker while I never became a speaker for them. It opened the door to that world and began to go through the process.

And ultimately, what I’ve discovered, this is where I brought the contrast from Steve back again, right? So, Steve says, this very generous person meets this very astute, very frugal businessman, right? Lion-lamb. Okay? Immaturity, right? So, immaturity in the lamb is people pleasing pushover. Like you just say yes to everybody. You don’t stand up for yourself. You self-abandon. You over–what’s it called? Over-activate or overact, which is just you going out of your way to make somebody else’s life better, not realizing it actually impedes their progress. Immature lion is the very egotistical-driven thing.

However, when you have attunement and alignment, what you have is you have a bold, courageous, compassionate, empathetic leader. And that’s what I witnessed out of Steve. It’s what my grandfather taught me about. It’s what I saw in the contrast between King David and King Saul. It’s what I saw in the elements of Jesus even with him sitting down with the woman caught in the act of adultery, lying with the Pharisees and Sadducees. He was without a sin, cast the first stone. Hey, daughter, where are your accusers, like, in seconds, right?

So, what I’ve discovered is, is there’s really five main constraints and keeping entrepreneurs stuck that will prevent them from one day exiting and then one day really investing. And I’m going to take a sip of water because I just rattled off a bunch. And yeah, we’ll go over you want to go next.

Justin Donald: Well, Stephen, this has been awesome. And I wish we had more time. I feel like we can talk for another hour or two hours, but I think we’ll have to save that conversation for another day. But your story is just miraculous and it’s awesome. It’s just such a testament to who you are and really how you’ve chosen to show up and really shift your values and put your faith first. And so, I love it. I want to make sure that people know more about you. So, where can they find out about you, your podcast BUILD, your books that you’ve written? Give us all the goods.

Stephen Scoggins: Yeah. So, the easiest way is to visit StephenScoggins with a P-H. So, it’s S-T-E-P-H-E-N S-C-O-G-G-I-N-S.com and I put together something for your audience as well. It’s slash leaders. The reason I did that is this is an assessment that’ll take you probably 7 to 10 minutes. I want them to do it in quiet because I want them to really understand where they are on the sphere of the lion and the lamb.

And the reason I want them to do that is because it will predict with almost 100% accuracy where they’re stuck and what’s keeping them there. Because in order to get to a place to really amplify your calling, your vision, God’s giving you the ability to create wealth and stewardship, he wants you to be wise with it, that will help you get that there.

Build can be found on any podcast platform. It’s Build with Stephen Scoggins, YouTube as well. We always film at video. I’m excited to have you come out for Episode 2 here at Safe Haven in Person. That’s how we do them now is in person, more of extended episodes. And yeah, you can find me and chat with me on Instagram if you want to, stephen_scoggins. So, those are the three major ways.

Justin Donald: That’s awesome. Well, I appreciate you taking the time to share your story, share some of the details of your exit. There’s so much that our audience can learn from you and can start thinking about ahead of time. And I love ending every episode with a question for our audience, and so, the question is the same every week, but here it is. What is one step that you can take today to move towards financial freedom and really just move towards living a life that you desire on your terms? So, not life by default like most people, but life by design. And I just challenge you on picking one thing that you learn from Stephen today that can move you one step closer to that financial freedom goal. Thanks so much for joining us, Stephen, and thanks to everyone who’s watching this and listening to this. And we’ll catch you next week.