Client Success Story: Using Debt to Support a Growth Strategy

Speaker 1: I didn't really have an initial growth plan when I got started. I just had something that I felt was of value for other people. But once you get to a certain size where you need a group of people around you, and everybody has to be pointed in the same direction, you do need a plan. It has to be something that's very specific that other people can rally around. And so by that point in our evolution, we had some natural industries that we had built a reputation in. And so we wanted to concentrate our marketing dollars toward those specific industries rather than be a business that just threw marketing dollars out there widely. So we were one of the rare benefits firms out there that concentrated in specific industries. Even today, more than 80% of our businesses just in three specific industries where we've concentrated. So it's given us the ability to really understand those markets, be able to speak their language, understand their needs, develop customized solutions that are just specific to those industries, and it's really allowed us to grow more efficiently and spend our marketing dollars even better. I believe that a CEO's job is to maximize the use of capital within the firm, and opportunities that come along that you might want to invest in that can really improve your business are irregular. And so you can choose to sit on a tremendous amount of cash and just wait for the next opportunity to come along so that you're ready, or you can develop a partner in order to be able to have a place that you can go at any time that you need capital. And I'd say we evolved a little bit. At the beginning, we held a lot of cash on the balance sheet, but as a CEO of a business, you start to feel guilty looking at that money on the balance sheet, realizing you're not putting it to good use. And I think there was a moment when I decided that, " Hey, each of these opportunities that I'm looking at, if I'm interested in it and we go after it, we're likely to generate a much higher rate of return on that opportunity than I would pay in debt service." I don't advise anybody to go looking for debt. I think debt will find you. However, there are going to be moments when in order to capitalize on the right opportunities that are within the business, you need access to capital. And what I would say is be on the lookout for opportunities all of the time, whether they're acquisition opportunities, building infrastructure, software, whatever it is within your firm, you need to always be looking for those opportunities and have a partner that you know can go to so that when you do run across the right opportunity, you can act on it. And I think that the service that Oak Street provides people in our industry is critical. Very few of the banks that you can go to understand the value of your asset. And when that was one of the first things that we discovered in working with Oak Street was they weren't asking me to post a house. They weren't asking me to post land or other assets. They understood the value of the asset of our firm, and all of the concentration of discussions was really around that asset. And so I think it's an essential element to move beyond just being a one- person agency to really growing a business, is having the business be able to stand on its own two feet. And an important part of that is working with a bank that sees the value of the asset. In terms of growth, we've seen about maybe 50% or 60% growth since we started the relationship with Oak Street, and most of that has been organic growth that came from the investments that we made within the firm with infrastructure. But we also have had a couple of strategic acquisitions that we made that brought in some of that growth through acquisition. I would say that it's been a natural progression for the firm. We haven't grown too fast. We haven't grown too slow. It's really given us the ability, knowing that we have that capital has given us the ability to right- size our growth all along.