Dave's Story - A must listen for all aspiring entrepreneurs.

In this podcast, Dave shares the secret of how he makes business decisions.

We get an insight into his childhood & those gold nugget lessons that helped him achieve exceptional business growth.

He shares how he started his business during the 1970's recession, and how to structure a successful business partnership.

These Money Mentor podcasts is are a must-listen for all aspiring entrepreneurs, and if you'd like to get involved, join our money mentor Facebook group, ask your questions that we can answer in our future episodes.

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Here are Dave's finance companies below, but remember that you shouldn't borrow money unless you absolutely need to.

https://crester.co.nz/
https://alternatefinance.co.nz/

Loan types are  - Personal loans, debt consolidation, business loans, loans for beneficiaries, vehicle loans, and more.



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A Thinkroom production -  https://www.thinkroom.com/

Transcript

ASH HORTON:

Welcome to the Money Mentor Podcast, where you'll learn all about, you guessed it, money. Our mentor, Dave Diggs is a good, old-fashioned Kiwi bloke who came from zero to hero and established nothing short of an empire. Dave donates generously to his community. He owned several finance companies, including Cresta Credit, and yet he failed fifth form math in high school. His advice is gold, he's a street-smart genius, a man of integrity, and he'll tell you how it is, whether you like it or not. If you want to learn all about money, this is a great opportunity to learn from the very best on offer.

ASH HORTON:

In this podcast, Dave shares the secret of how he makes business decisions. We get an insight into his childhood and those gold-nugget lessons that helped him achieve exceptional business growth throughout his career. He shares how he got started in business during the 1970s recession and how to structure a successful business partnership.

ASH HORTON:

This podcast, it's a must-lesson for all aspiring entrepreneurs. And if you'd like to get involved, join our Money Mentor Facebook group, ask your questions and we'll answer them in future episodes.

ASH HORTON:

All right, Dave. Now, obviously, you've been very successful in life and we would love to know your story. How did you get started? What were you like when you were a little kid? I'm sure there's the good, bad and the ugly that we'd love to hear. I'd love to know what mistakes you made along your career journey in business, especially, or what were some of the biggest life lessons? So maybe you can start from when you were a kid and how you first got interested in business in the first place.

DAVE DIGGS:

Yeah. Made a lot of mistakes. I try not to remember too many of them, but some of them... The more painful they are, the more likely you are to recall them, but not something I dwell on. But I come from Waltham, which is a poor part of Christchurch. A happy childhood in a poor area. Everyone was happy and we went to school in sandals, and bare feet sometimes, and we had Marmite sandwiches. It was quite a pleasant environment, and as a child, I don't remember any great dramas.

DAVE DIGGS:

I didn't enjoy school much. I always took on jobs like being the milk monitor and did not much good at sports either. So, sports that I could easily not have to attend to, well, like areas where they never noticed you missing. So I took on those extra roles at school, more to get out of class than anything else. So, childhood was a happy time for us, and we had Mum and Dad both worked and Mum worked till 3:00, got home when we got home from school. Just that school was not a place that I felt... 

ASH HORTON:

Tell us about that. Why wasn't school very good for you? Or why did you not enjoy it? I mean, obviously you're probably one of the smartest guys I know. What didn't resonate for you?

DAVE DIGGS:

Well, blokes often don't do schooling like girls do, and girls are often more happy drawing and studying and reading. Whereas blokes probably want to play British Bulldog and ball, and I was probably just the typical bloke, really. I'd much rather be out doing something than studying. But some guys study, and they do it well. But for me, that didn't work, and school was designed... Teachers try and educate you to be in their light, which we all do because if you want to join my sports club, and I'm encouraging you, "Hey, come and do water-skiing, this is a really cool sport." It's what we do. We encourage people to be like us, but that's not really the case, is it, in real life?

ASH HORTON:

No. And you were telling me a story when you were young, you were in your math class and you were talking or whatever, and you got in a little bit of trouble and you had to answer questions. Tell us about that story, if you can remember.

DAVE DIGGS:

Yeah, that was probably in what we call fifth form, so it'd be year 13 in high school, and always talking and interrupting, etc. And the teacher yelled out, "Diggs. What's the answer to that?" Maths class. "92, sir." But, in fact, the answer was 94. But in real life, it doesn't quite matter, but to pass an exam, it's critical.

DAVE DIGGS:

And so, your best guess and gut feelings often near enough, and in business, we run on the policy if you've got 70% of the information, you should make the decision. Because if you wait until you've got 100% of the information, someone else would have done it. And to be that perfect is really difficult if you can pull it off. But run with your gut feeling rather than the absolute fact, because you normally are right. And if I get it wrong, I can live with my mistakes, that's just the way it is. But if I relied on someone else to provide me with information and made the decision on that and the decision was wrong, I'd be really angry. Especially if I'd had to pay to get the information. So run with your gut. If you get it wrong, well, that's just life. You learn something and move on.

ASH HORTON:

Well, it depends what you're doing, I guess. So if you're talking about aeroplanes and you get it just slightly wrong, then those planes might drop out of the sky. So it depends on the industry, of course, but you're so right. And that was such a valuable lesson that you taught me at the time, was that, "Ash, near enough, will actually be good enough in life." And I think your career is a really good example of that. You're fast at making decisions and the most successful people I actually know move faster than anybody else. So pace is your friend, and if you fall into that analysis- paralysis, you're right. Those people that really, really love the detail, a lot of them, they never get started.

DAVE DIGGS:

Well, momentum's your friend. And when you haven't got it, it's your worst enemy. So the problem with momentum is when you're on a roll, you're doing something, making decisions, and you're thinking, "Why am I doing this when I'm already busy?" But you've got a clearer vision at the top of the hill and when you're down in the valley, you can't see far. It's really difficult, in the valley, to see. So you're flat out, you're making lots of decisions, but when you're on the top of the mountain, you can see clearly and while it seemed an inappropriate time, it's worked for me and others. Not everyone has got that ability, of course, or the desire to put their business or their income in front of other things.

DAVE DIGGS:

And, hey, we're quite disciplined about our family time, but business, to me, is my hobby as well as my career. So, it's fun and I do it and 80% of that is just a different attitude to business than what a lot of people would have. You need a bit of an appetite for risk and, hey, it's been pretty tough the last nine weeks. And you feel like your business is decaying while you're seemingly holidaying. But for me, the holidaying was quite stressful because I just felt that business was slipping away from me while we couldn't leave the house.

ASH HORTON:

Yeah. So you're talking about coronavirus, obviously, and the lockdown that New Zealand's been in, but let's just go back to your story about you as a youngster. Obviously, what job did you do as a youngster and how did that look, and what are some of the basic learnings that you learned from that, that you still use today?

DAVE DIGGS:

One of my early jobs, probably when I was about 12, is I had to mow the family lawn, which I was happy to do, families have to chip in. And we had a lawnmower, a motor mower, just a Massey one, pretty basic. But I started mowing lawns for some of the neighbours and gradually built up a reasonable lawn mowing round, maybe 14 customers. Don't sound a lot, but if you've got to do that every 10 days, it was quite a bit of work. And so I would work after school.

DAVE DIGGS:

While my mates were standing on the corner, talking to their girlfriend, I'd be home mowing lawns. And some of my mates laughed at me, and that's fine. You're going to get ridiculed when you do something different. And on Saturday, I'd work most of the day, if it was a fine Saturday. I had a policy of spend half the money and save half. So, on Saturday night, I had a bit more money than my mates because it’s safe to say today, I might have earned 100 bucks. I had 50 bucks more to spend than they did. And I'd save $50, which I could invest back in the business, which in my case, I put back into buying a much better lawnmower that was much easier to start and did a much better job.

ASH HORTON:

Okay. So you invested back into the business, which made you more efficient. You could probably serve more customers in a shorter space of time. Is that right?

DAVE DIGGS:

And less energy. I wasn't so exhausted at the end of the day. Yes, and probably never been that good at saving money, but I have been really good at paying down debt quickly and avoiding debt and investing. Living on a set income because that's really what kills a lot of businesses, how much the proprietor is taking out of the business. They've spent too much money when they should be living on a set income.

ASH HORTON:

So when you say proprietor, you're talking about the owner of the business.

DAVE DIGGS:

Exactly. The owner, spending too much money. They've been holidaying or buying jet boats or whatever, too much. And flash cars. And not living on a lower income and investing back into the business.

ASH HORTON:

Yeah, for sure. One thing that I've, I guess, picked up over time in business is that when you're growing a business, there's a little sweet-spot that you can sit in. And if you can sit in that for a little while and enjoy the fruits that are coming to you and then go again, where you increase your overheads, have that little pause of enjoying those profits and then go again before spending money re-investing and doing all those sorts of things. So, it's a little bit like a staircase approach. Does that make sense to you as well, Dave?

DAVE DIGGS:

Yeah, earn the money before you spend it. And so many people, they get into business and they want a new car and live the business life and they haven't made the money yet. Earn the money first and restrict your personal expenses. So, if you can live on $50,000 or $60,000 a year and you're earning $100,000, then make sure you only spend a grand a week. Take it out of your company's or your private account. And just make sure you can control your living inside that band, and my wife's been very good at that and never asked for extra money. But we just set a wage that we can live on and we lived on that and the rest of the money then we had to develop the business and mature it as time went on.

ASH HORTON:

Yeah, so there's obviously the temptation of going and buying the jet skis and the new cars and all that, when a business owner comes in and then they realize, "Oh, no, I've got a tax bill down the track." So they get themselves into trouble. That's a big mistake that a lot of people make. But there's also, you want to reinvest, you want to buy the new gear, you want to buy a new software system to improve efficiencies. There's that kind of drive as well, which in my case, in my experience, I was probably a little bit too hasty in some of those areas. I should have just slowed it down, earned the money first, then gone. Whereas I always was driving at 7,000 revs, if that made sense. And it would have made a lot more sense to have that staircase approach. But let's come back to you and let's talk about your lawn mowing job. What did you do after that?

DAVE DIGGS:

After that, I was probably 17 years old by then, and mad on cars since I was two years old, like a lot of boys. And so, I started buying and selling cars quietly from home and presenting them beautifully. Fixing seats and doing mechanical work, which I knew how to do because I'd just learned it as we went or watched my dad. And in the end, I had a couple of cars on the forecourt at the local service station. McHolland was the service station, they were Suzuki agents.

DAVE DIGGS:

And he was kind to me I just paid him an amount each time I sold a car. And after a while, the local Dealers' Association come to me and said, "You shouldn't be doing this. You've sold too many cars, and you need to get a license or quit. " So, I thought, "Oh, well, I'll apply for a license." I had a friend who's a couple of years younger than me, Neil Barker was his name. And we started a partnership, Diggs Barker Sales, and we applied for a license. And then the Dealers' Association opposed our application on the basis that we'd had no experience.

ASH HORTON:

So hold on, they asked you to get a license and then they opposed it.

DAVE DIGGS:

Absolutely. And we couldn't really tell the court we'd had a heap of experience because we didn't have a license to be selling all these cars. So anyway, finally we got a license, after a whole lot of drama, and traded. But then we hadn't been trading long and we went into a recession. I'm talking about 1974, we had the oil crisis, so we had carless days, and it was pretty tough going. And I wasn't that good a car dealer. We could make money selling cars, but the English cars were a little unreliable and when people come back complaining, we were a bit too inclined to fix stuff, when retrospectively, we were too soft.

DAVE DIGGS:

We should have been a bit tougher, not really tough, but a bit tougher on what we were paying for, where people come back complaining and people abused that a little bit. And so, at the end of the month, we'd made money selling cars and spent most of it on fixing things, probably half of which we shouldn't have. And we might have had a little bit of grumpy customers, but firm but fair's been a policy I've adopted after that. And we were probably just fair, not firm. And so I never made any money at that, really. Survived. Made wages.

ASH HORTON:

So firm but fair has become a policy for you, whereas before you were too fair, not firm enough.

DAVE DIGGS:

Absolutely. And if you're firm but fair with people, they might be grumpy on the day, but in a few days' time, if you're fair, they respect that and, by and large, it's a policy that's worked for us.

ASH HORTON:

Okay. But one thing you obviously did do, because you're a little bit senior to me, so I don't remember your car dealership, but everybody else in Christchurch seems to. Everybody older than me seems to know exactly who Dave Diggs Cars or Motor Vehicles, or whatever the name was, who that was. So you've got obviously a very, very good reputation. So tell me how you transitioned, then, into a finance company after that.

DAVE DIGGS:

Well, we were selling quite cheap cars and the people wanted to pay weekly. So 50 bucks a week. Rather, 200 a month. So I went to the finance companies we were dealing with, two different ones, and said, "Hey, our clients want to pay weekly or fortnightly," and they just couldn't handle it. They had no ability to do that. They had no interest either because, in those days when you want to borrow money, you went pleading to the bank or the finance company, cap in hand. And this went on for a couple of years. And I thought, "This is ridiculous." And we decided we'd do it ourselves. So with next to no money, we started a wee finance company and the people just come in and paid us, and we just had a notebook, really. "You owed me $1,000 and you paid 50, and now you owe 950. Put a bit of interest on." It was accurate but it was not very efficient, but it was before the days of computers.

DAVE DIGGS:

And so we did that for about three years and then finally, we bought a computer and that wasn't that reliable or helpful either, but it enabled us to step up to another level. Still, pretty small players doing it, and we just gradually built the finance company up to the point where, in the end, we were finishing all our own cars and then we were able to provide loans to our own customers. And that was way more successful than being a car dealer, for me. And we never touched any of that money. I just lived on what I was able to make as a car dealer, and we let the finance company build up on its own so that over time you end up with a reasonable asset, and that's what happened. 

ASH HORTON:

How did you end up, I guess, closing the car company? That would have been a seriously bold move, to have closed the car dealership which was your main source of income for the finance company.

DAVE DIGGS:

The finance company kept growing. And after a long time, I mean, like 12 years, the finance company was earning quite good money, way more than the car company, which was doing hardly any better than my wages, really. And so we just made the call that... Well, my son came into the business and he did it for a couple of years, and he didn't enjoy it. And so we just closed it and it didn't much matter to me then, because we had significant income coming up off the finance business we'd built up.

ASH HORTON:

Okay. And then somewhere along the journey, you invested in a young chap, and he was in the waste management business. Do you want to tell us about that?

DAVE DIGGS:

Well, as a lender, you meet all sorts of interesting people and get all sorts of opportunities and insights. And so a friend of mine, Peter Roberts, introduced me to Sebastian Stapleton, that had a small rubbish company, I think five trucks and a couple of girls in the office and heaps of debt. And Sebastian was a pretty go-getter, young fellow, 22 years old, and honest, up-front. He needed a business partner because he couldn't really pay back any debt. And I didn't want to be a 50:50 partner because we're Christian, so that's an unequal yoke. So I took a 30% holding in his company and then advanced him some more money to keep the shareholding.

ASH HORTON:

Can we just go back to that? So you took 30% and you gave him 70%. And is that something that you would generally do? If someone's driving the business, you'd generally give them a majority share because they deserve that. And eventually, if you have too much, then resentment would kick in and things like that. Is that a purposeful tactic that you use?

DAVE DIGGS:

For sure. It worked well for us. I guess when you're in business with another person, what you've got to establish upfront is how much they want their wages to be. You don't want to be in discussions of, "How much for you? How much for me?" going forward in a business venture because you'll be opposing each other. So you need to set the boundary, so, "How much do you need? You want 70,000 per year as an income. Okay, that's your wages." Or whatever it is, and get that clearly defined before you start. "And so if you're getting seventy, then maybe I can have twenty as a director," and then you're not fighting all the time about who should get what, and you can get to enlarge the business. And Sebastian had had a previous business partner that kept wanting to increase his shareholding and take Sebastian out. But there was no great fear of me ever doing that because of our Christian beliefs.

DAVE DIGGS:

And we were happy with the way it was growing, and Sebastian was a good business partner. Hey, we had our disagreements, for sure, but we got through them and moved on. This was a long-term project and it turned out pretty good for us. We grew the company, mostly Sebastian, I hope. Although, that bit of wisdom along the way helps a young fellow. And we had seventy staff and forty-odd vehicles and three branches and recycling and curbside collection and running it up at Ashburton and Hokitika. There was a bit happening. And then finally, we sold that to EnviroWaste for an amount that we were happy with.

ASH HORTON:

So, if anybody's wondering which company that was, that was Mastagard and Sebastian Stapleton. Very, very talented young guy. Moved on to other businesses now. But Dave, I think what you said, you get someone older with a wee bit of wisdom, someone younger with a whole lot of energy and a bit of nous about them, and it's a very, very good combination.

DAVE DIGGS:

Yes, another friend of mine told me that early on. Ken Smith's a friend of mine, and he says, "Yep, a young guy with enthusiasm and an old fellow with some money and wisdom. Great combination." And it worked well for us, on that occasion and others.

ASH HORTON:

Ken was involved in The Warehouse when it first got started. Is that right?

DAVE DIGGS:

Yes. Ken is a very good friend of mine, most helpful. Gave me a lot of wisdom along the way, and mentored me, and helped me a lot.

ASH HORTON:

So, from this, obviously, you're one of my mentors and we're recording this audio as mentorship to other people. But what would you say to youngsters that are wanting to start out in business or maybe they're partway along the journey, and they need to find someone that can just calibrate them, steer them back on track when they... Because everybody derails from time to time. Everybody has bad days. They make dumb decisions and we have to clean them up. So how would you approach someone like yourself?

DAVE DIGGS:

They normally come from your friendship because this is not a job you do for pay. You've really got to want to do that. And so you've got to look around your friends or your father's friends or family friends for that person. Seldom will be a person your own age, although I had some very good friends not too dissimilar in age to myself. One was about 10 years older. A huge help to me, watching his mistakes as I went along, and helped me to avoid some of those. Hey, I've made enough of my own anyhow, without making someone else's mistakes. So, if you can learn from someone else's mistakes, way better than learning from your own.

ASH HORTON:

Yeah, but unfortunately you tend to see other people's mistakes, but you have to learn them yourself as well to really understand them. Okay, so let's wrap this up because we're 20 minutes into this podcast. But, Dave, can you think of two or three life lessons that you've learned throughout your business career that you may be able to share? The first one was firm but fair. Have you got any others?

DAVE DIGGS:

Control your personal expenses. That's really critical. If you're making a hundred grand a year and you start spending 120, it's only a matter of time. Three years later, you've spent 60 grand more than you've earned, it's going to bite. You've got to control your personal expenditure. That would be probably the key thing is to control your own expenses, and that's your motor vehicle, travel, all those things that are not absolutely necessary, more ego-related than success-related.

ASH HORTON:

Yep. You got anything else?

DAVE DIGGS:

Oh, bound to be.

ASH HORTON:

Bound to be.

DAVE DIGGS:

I just can't think right at this moment.

ASH HORTON:

That's all right. I've got one. And it was like when I first got into business, it was like picking up a rugby ball and running. I didn't really know the rules. I scored a few tries. Served my customers really well. They were really happy. The business was thriving from that point of view, but I didn't really totally understand tax. And to put it simply, if you and I, Dave, were to have a meeting and we went and bought a can of Coke for $1.15. And let's pretend, Dave, for a minute that I'm an employee and you're the business owner or business person, but it is a business meeting. I'm an employee. So I pay $1.15 for that can of Coke. But actually, in actual fact, I've paid, what, $1.30, $1.40, because I've already been taxed on my wages.

ASH HORTON:

So I've got after-tax money, right?

DAVE DIGGS:

Correct.

ASH HORTON:

So while I'm paying $1.40, you're paying $1.15. But that's not right either because you're the business owner, so you actually, because it's a business meeting, you get to claim 15 cents back, which is GST. So that lowers it to $1. So instead of my $1.40, it's $1. But in actual fact, because it's a business expense, again, you get income tax off it as well, which is 28 cents. So you're paying 72 cents and I'm paying $1.40.

DAVE DIGGS:

Sounds good.

ASH HORTON:

And that's a really, really massive advantage of being in business and to truly understand that, and that's a very simple way of describing it, but to understand that just changed the game completely. So I was playing the game, but I really didn't understand the rules. Like Richie McCaw, for example, why was he so good? Because he really, really understood the rules and then he was able to obviously exploit the rules, probably, as well. So anyway, let's wrap this up, Dave. Any last wise words from you?

DAVE DIGGS:

Warren Buffett says, "If you want to get really rich, you've got to live longer." And to me, that means it's a long journey. You're not going to make money in five years. Hey, maybe a few do, and you see those headline cases. But really it's steady-as-you-go you go, ups and downs over 10, 15, 20 years. And I had a goal when I got to retirement or close to that age, I didn't want to be in a position where I had good health and time and no money. And so that was a cost back at age 40 to 50, to build up a bit of a reserve in the background. So that I would not be at a later stage of life when you haven't got energy, where I would be able to enjoy that more when I did have time.

ASH HORTON:

Absolutely. Mate, this is absolute gold. Once again, thank you very much for your time. I'm sure everybody enjoyed listening to it.

DAVE DIGGS:

Pleasure. Talk again.

ASH HORTON:

Once again, the advice from our money mentor, Dave. That's gold. Recognize that this advice is for friends, so if you'd like to show your support, jump onto the Kresta Credit website or Facebook page and give them a great review. Please like and share this podcast to help Kiwi families understand money, making life just that little bit easier.