Why saving money isn't enough for small business owners

Key Concepts

• Financial Literacy: Understanding and effectively using various financial skills, including budgeting, investing, and debt management.
• Wall Street Mindset: Applying principles of wealth building used on Wall Street (investing, creating businesses, real estate) to small business and personal finance.
• Financial Trauma: Negative emotional and psychological responses to financial hardship or instability.
• Access to Information: The critical role of knowledge in leveling the playing field for financial success.
• Wealth Transfer: The significant movement of wealth from one generation to the next.
• Tariffs as "Draft": A street-level analogy for tariffs, framing them as a cost of doing business in a particular "territory" (market).
• 90-Day Hiring Rule: A strategy for evaluating new hires by setting high expectations and providing a defined probationary period.

Utilizing a Wall Street Mindset for Small Business: Insights from Leon Howard

Introduction

This discussion, hosted by Elizabeth Gore of Yahoo Finance and Hello Alice, features Leon Howard, known as the Wall Street Trapper, exploring how small business owners can adopt a “Wall Street mindset” to achieve financial success. Howard shares his journey from the streets of New Orleans to becoming a financial educator, emphasizing the importance of financial literacy and access to information. The core argument centers on the idea that the principles of wealth building – utilized by those on Wall Street – are accessible to everyone, regardless of background.

I. The Roots of a Wall Street Mindset: From the Streets to the Stock Market

Leon Howard’s path to financial literacy began during his time in prison. He recounts a pivotal encounter with an individual facing federal charges who highlighted the fundamental principles of wealth creation: “Wealthy people learn how to stop trading time for money. They learn how to make their money work for them. They learn how to give value to people.” This individual identified three key tools: the stock market, business creation, and real estate. He specifically pointed to the stock market as the “easiest way to build wealth.” Howard was struck by the fact that this individual, despite facing legal consequences for embezzlement ($2.8 million), was able to retain $2 million after paying $800,000 in restitution. This demonstrated the power of financial systems and motivated Howard to learn more.

He credits his prison experience with fostering a love of reading and the ability to apply street-level analogies to complex financial concepts. He emphasizes that his initial advantage wasn’t intelligence, but access to information: “I don't really think they smarter than me. I just think they have access to more information than me.” This realization fueled his determination to acquire that knowledge.

II. Investing vs. Saving: A Paradigm Shift

Howard stresses the crucial distinction between saving and investing. He argues that saving, while important for emergencies, is ultimately stagnant. “Saving keeps you stagnant.” Investing, on the other hand, allows capital to grow. He acknowledges the inherent risk in both, but highlights that investing offers the potential for expansion, while saving often requires replenishing depleted funds. He frames small business owners as inherently risk-takers, comparing their entrepreneurial spirit to “jumping out of the airplane” and building the parachute on the way down. This inherent willingness to take calculated risks makes them well-suited to embrace investing.

III. Building Awareness: From Flyers to the Freedom Center

Howard’s initial efforts to share his knowledge involved a grassroots approach. After being released from prison in 2015, he printed flyers offering to teach people how to “pay your bills with the stock market” and avoid returning to prison. He distributed these flyers in community spaces like barber shops, hair salons, AA meetings, and during New Orleans parades, even forming a group called “Wall Street Trappers” to raise awareness.

This evolved into the creation of the Freedom Center, a $5.5 million, 50,000 square foot facility in Marietta, Georgia. The Center provides education in entrepreneurship, investing, and real estate, aiming to normalize financial literacy in underserved communities. He purchased the building with $872,000 down, funded entirely from Wall Street investments. The Center hosts events like the “Trapper Family Reunion,” offering free financial education to 500+ attendees.

IV. The Next Vision: A Fund for the Underrepresented

Howard’s future plans involve launching a fund specifically designed for individuals earning $100,000 or less per year. He recognizes that traditional Wall Street investment opportunities often require substantial capital, excluding a large segment of the population. He aims to create a fund with a billion dollars in assets under management, comprised entirely of individuals with lower incomes, providing them access to wealth-building opportunities. He believes the largest wealth transfer is happening now, with baby boomers passing down assets, and he wants to empower his community to participate in this transfer.

V. Key Lessons in Business: Hiring and Recognizing "Draft" (Tariffs)

Howard shares a critical lesson learned in business: the importance of setting high expectations during the hiring process. He advocates for a 90-day probationary period, allowing employers to assess a new hire’s performance and fit within the company culture. He learned this from Michael Phillips, who emphasized that this period helps identify individuals who don’t align with the company’s values and goals. He stresses that in the fast-paced world of small business, a bad hire can set a company back an entire year.

He also offers a unique perspective on tariffs, drawing a parallel to the concept of “draft” in the streets. He explains that in certain neighborhoods, individuals must pay a fee to conduct business. He equates this to tariffs, arguing that they represent a cost of doing business that is ultimately passed on to the consumer.

VI. The Importance of Mindset and Value Creation

Throughout the conversation, Howard emphasizes the power of mindset. He highlights Jay-Z’s sentiment: “I might not come from a wealthy family, but one can come for me.” He believes that anyone can achieve financial success by acquiring knowledge and applying it strategically. He also underscores the importance of creating value for others, contrasting the destructive nature of his past with the positive impact he now strives to make. He notes that his current work brings him joy, unlike his previous life, and that he is able to offer free education to his community.

Conclusion

Leon Howard’s story is a powerful testament to the transformative potential of financial literacy and the accessibility of wealth-building principles. He advocates for a proactive approach to finance, encouraging small business owners to embrace a “Wall Street mindset” by investing, creating businesses, and leveraging real estate. His journey from the streets of New Orleans to building the Freedom Center demonstrates that with knowledge, determination, and a willingness to take calculated risks, anyone can overcome financial obstacles and achieve lasting success. The key takeaway is that the rules of the game are understandable, and with the right knowledge, anyone can “come for” financial freedom.