Nash's Grocery Store: The Business Case for IBC

The Forester Who Nearly Lost Everything

November 1980. Nelson Nash sits on his living room floor at 3 a.m., head in his hands, praying for a way out.

His 52-year-old brother dropped dead from a heart attack. His infant granddaughter was fighting cancer. Someone broke into his home and cleaned him out. And interest rates had just hit 23 percent.

Nelson owed $500,000. Not at prime—he didn’t qualify for prime. At 23 percent.

That’s $115,000 a year in interest alone. In today’s money, that’s over $350,000 bleeding out annually.

He’d done everything the financial gurus taught. Buy real estate. Use leverage. Other people’s money. But now other people’s money was destroying him.

And somewhere in those dark hours—praying for a miracle—the answer came to him like a baseball bat across the eyes.

You are standing in the midst of everything it takes to get out—but you don’t see it because you look at things like everyone else.

Nelson had been making premium payments on whole life insurance policies for years. Those policies gave him contractual access to capital at 5 to 8 percent. While he was paying 23 percent to banks.

The infrastructure to bypass banking middlemen had been sitting in front of him the whole time.

He just hadn’t known how to see it.

The Grocery Store Breakthrough

To explain what he’d discovered, Nelson used an analogy that every business owner could understand:

A grocery store.

Imagine you own a grocery store. You stock the shelves with food, customers come in and buy it, you make a margin on every sale. Simple business model.

But here’s the twist that makes the analogy brilliant:

You don’t just own the store. You also need groceries for your family.

So you’re both the producer and the consumer. You stock the shelves and you shop from them. You’re on both sides of the transaction.

Now think about what most people do:

They stock someone else’s grocery store (make deposits at a bank). Then they drive across town to buy groceries at a different store (borrow money at higher rates). They’re shopping at someone else’s store while their own store sits empty.

Sound familiar?

How the Store Actually Works

Let me break down Nelson’s grocery store step by step, because this analogy explains everything:

Step 1: Capitalization Comes First

Before you can sell anything, you need to build and stock the store. Land. Building. Refrigeration. Shelves. And most importantly—inventory. Actual food on the shelves.

You cannot open the doors with nothing to sell. An empty grocery store isn’t a grocery store. It’s just a building.

This is Nelson’s first point: capitalization comes first.

In banking terms, your premiums are not an expense. They’re capitalization. Every dollar you put into a whole life policy is inventory. It’s raw material that makes the banking function possible.

No capitalization, no banking. Full stop.

Step 2: Inventory and Turnover Create Profit

Once the store is stocked, what creates profit?

Inventory turnover.

You buy a can of peas from your supplier for 57 cents. You sell it for 60 cents. Three cents profit—razor-thin margins.

But if you can turn that inventory 15 times a year, you break even. Turn it 17 times, you’re profitable. Turn it 20 times, you can retire early.

In IBC terms, your cash value is your inventory. Every premium payment adds more cans to the shelf. The longer those “cans” sit there compounding, the more valuable they become. And when you take a policy loan, you’re not removing inventory—you’re using it as collateral while it keeps growing.

Step 3: You Are Both Producer and Consumer

Here’s where it gets personal.

You own the grocery store. Your family shops at the grocery store. You can’t stop being both.

Most people never think about this clearly. They supply capital to institutions they don’t own (stock someone else’s store). Then when they need a loan, they apply for credit and pay interest—on capital they helped create in the first place (shop at someone else’s store).

No rational grocery store owner would stock competitors and then buy groceries back at a markup.

But that’s exactly what most Americans do with money every single day.

The Back Door Problem (Don’t Steal the Peas)

This is where Nelson’s analogy gets serious. And where I see people destroy their IBC systems.

Imagine you own the grocery store. Business is good. Customers are buying. Money is flowing. But there’s a problem:

Your wife starts taking groceries out the back door without paying.

It’s subtle. Just a can of peas here, a loaf of bread there. No big deal, right?

Wrong. It’s devastating.

If you steal one can of peas, you don’t just lose 57 cents. You lose the turnover. The velocity. The compounding effect of that margin cycling through your business again and again.

A single stolen can requires 20 legitimate sales just to break even.

Nelson’s warning is direct: “Probably more businesses have been destroyed by this sort of behavior than anything else.”

In IBC terms, a policy loan itself isn’t theft. Your cash value keeps growing even while the loan is outstanding.

The theft happens when you consume capital without restocking it.

When you borrow and never repay. When you treat the policy like a piggy bank with no obligation to yourself. When you steal the peas.

I’ve watched clients build beautiful IBC systems and then destroy them this way. They take loans but don’t repay them. They skip premium payments because “the policy can cover itself.” They consume capital without replacing it.

Every dollar you borrow and don’t repay is a can that never makes it back to the shelf.

Charging Yourself Properly (The Extra Two Cents)

Here’s where it gets counterintuitive. Most people think that if you own the store and shop there, you should give yourself a discount.

Nelson says the opposite.

You should charge your family more than retail. Not less.

Why? Because your family members are captive customers. They’re going to buy from you anyway. So if you charge them 62 cents for a can of peas instead of 60, where does that extra 2 cents go?

Directly into additional capital. More inventory. More cans on the shelf.

In IBC terms, this means charging yourself a proper interest rate when you borrow. Not the minimum. Not zero. A real rate. Maybe even higher than what you’d pay at a bank.

Because every dollar of interest you pay goes right back into your own policy. It recapitalizes your system. It builds the warehouse that your children and grandchildren will eventually inherit.

You’re not paying someone else. You’re paying yourself.

The Equipment Financing Connection

Now let’s connect this to your business.

You need a new truck. $52,000. You can finance it through Ford Credit at 8.2% over 48 months. Or you can finance it through your own “grocery store”—your whole life policy.

Most people think: “If I’m borrowing from myself, I’ll just pay 3% and pocket the difference.”

That’s stealing the peas.

The disciplined approach is to pay your policy the same payment you would have made to Ford Credit. Same $1,275 monthly payment. But instead of that money vanishing into Ford’s system forever, it flows back into your policy.

The interest you pay to yourself becomes additional capital. Your cash value keeps growing while you use it. And you capture the financing function that Ford Credit would have profited from.

One Store Becomes Many

Here’s the part most people miss entirely.

Nelson asks: “Would you have much of a grocery business if you were the only customer?”

No. A grocery store with one customer is a pantry.

To prosper, you have to build beyond yourself.

Once you’ve successfully operated one store, what do successful grocery stores do? They open another location. Then another.

Banks have branch offices. There’s a reason for their behavior.

Nelson writes it plainly: “I am not describing one life insurance policy. This is to be a system of policies.”

One policy is a start. A system of policies is a banking operation that serves your family for generations.

The Business Application

Here’s how this applies to your business:

Your business generates cash flow. Currently, all that cash flow passes through someone else’s banking system before it reaches you.

The goal of IBC is to capture as much of that flow as possible—to run it through your own system instead of theirs.

You start with one policy on yourself. You build cash value. You finance business equipment through policy loans instead of bank loans. You pay the loans back to yourself instead of to Ford Credit or Wells Fargo.

The interest that used to leave your business permanently now stays inside your family’s system. It compounds. It grows. It becomes available for the next opportunity without asking anyone’s permission.

Eventually, you add policies on your spouse, your children, your key employees. Each policy becomes another “branch office” of your family banking system.

You become the bank your business borrows from.

What This Really Means

The grocery store analogy isn’t about life insurance. It’s about controlling the flow of capital.

Right now, capital flows through your business and out to various institutions. Equipment loans. Lines of credit. Vehicle financing. All of it bleeds out to someone else’s balance sheet.

What if that flow reversed? What if the capital your business generated circulated back through a system you owned and controlled?

What if you could be both the bank and the customer?

Nelson Nash figured this out while drowning in debt at 3 a.m. Not because he was smarter than everyone else. Because he was desperate enough to see what was right in front of him.

The infrastructure to eliminate banking middlemen. The ability to capture the financing function. The grocery store that feeds your own family first.

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In the next article, we’re going to look at real numbers from real businesses.

Equipment financing. Vehicle replacements. Expansion capital. The math that shows exactly how much wealth leaves business owners’ hands—and how the grocery store model captures it instead.

Time to stop stocking other people’s stores.

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This is educational only and not meant to serve as financial advice.