A Wiser Retirement®

291. How is Financial Planning Different for Entrepreneurs

• Wiser Wealth Management • Episode 291

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In this episode of the A Wiser Retirement® Podcast, we explore how financial planning is different for entrepreneurs. From managing fluctuating income and separating personal and business finances to building a strong emergency fund and maximizing retirement contributions, we cover the essentials of creating a stable financial foundation as a business owner. We also dive into choosing the right business entity, tax planning strategies, quarterly tax payments, and how to prepare for succession or unexpected events. Whether you're just starting out or running an established business, you'll gain valuable insights to help you make smarter financial decisions.

Related Podcast Episodes:
- Ep 247: Why It’s Crucial to Separate Your Business and Personal Assets
- Ep 283: How to Manage a Sudden Money Windfall: IPOs, Business Sale, or Inheritance

Related YouTube Videos:
- Why Business Owners Need an Exit Strategy
- Asset Protection Strategies for Business Owners

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- Schedule a Complimentary Consultation: Discover how we can help you achieve financial freedom.
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This podcast was produced by Wiser Wealth Management. Thanks for listening!

Managing Irregular Income as an Entrepreneur

Speaker 1

If you're a business owner, you cannot do your tax planning at the same time you're filing your tax return. It is too late. All your tax planning really should be done four times a year. Yeah, so you should be going in every single quarter for a tax meeting.

Speaker 2

Welcome to a Wiser Retirement Podcast. Entrepreneurs, are you curious about how to manage an irregular income? I'm Mikayla Dowdy and today I'm joined by Casey Smith. Each week, we bring you practical advice on retirement, investing and planning for your financial future. Don't forget to subscribe to the podcast wherever you're listening. Let's get started. Welcome back to the podcast, casey. It's been a few weeks.

Speaker 1

That was uh. That was pretty good, michaela. I feel like I'm, I'm, I'm it's it's uh, hard to sit on the other side of the table and listen to your own, listen to your own intro. But uh that this is episode 291.

Speaker 2

Yes, almost 300.

Speaker 1

291 times we've had a chance to say an intro.

Speaker 2

There you go.

Speaker 1

Not bad, not bad, yeah. So we haven't recorded a podcast in a few weeks. I'm not sure. I think I'm pretty sure I did the last episode. But we've been traveling, man, I've got kids that have ambitions. So not even traveling for my own self, I haven't gone anyplace super cool, unfortunately. But let's see. We started off with two golf tournaments back to back my son, who's 19,. He's a freshman, or I guess now a sophomore, in college. We did. Let's see what was the first one, the Magnolia at Druid Hills Country Club. It's an invitational. And then he played in the Georgia Am Georgia Amateur. That was fun.

Speaker 1

I was his caddy both times and no one should ever, ever, ever question my dedication to being a caddy because I was his caddy both times. And no one should ever, ever, ever question my dedication to being a caddy because I was having some health issues. I ended up trying to get rid of three kidney stones in the process of carrying a golf bag and excruciating heat for four days. It was a four-day tournament. I did not go to the practice round. I skipped that one, but we went four days, Ended up getting sixth place. Yes, amazing, I skipped that one, but, uh, we went. We went four days, ended up getting a sixth place.

Speaker 2

Yes, I was proud of him for that, uh, it's hard.

Speaker 1

Man is hard to close out at a golf tournament Like those last three holes on the final day. It's tough mentally, it's tough. Um, you probably could have been inside fifth or fourth, uh, but we fell the six after the at the end and then we went to Destin, florida, for a week for my son. He had like a World Series perfect game, world Series golf baseball tournament. Yes, but I would say World Series is a very loose term. I found that everything in the summer is called the World.

Speaker 3

Series yes, it is so anyway, they won their championship.

Speaker 1

That was fun to watch. We haven't had that great of a season. It's kind of a 50-50 season, so it was nice to go out and win. And then last week I was with my daughter up in Maryland for the Young Rider Championship, which is horses, and what happens is you get a team is selected from each region. I believe there are seven or I think there's seven regions, it could be eight regions in the country and they all end up in Maryland.

Speaker 1

So people are driving like three or four days with their horses to get to.

Speaker 3

Maryland which logistically.

Speaker 1

you think about that Like there's a whole Airbnb site just for traveling with horses.

Speaker 2

That's incredible.

Speaker 1

So you stopped in these people's farms and they can graze and they have stalls and stuff.

Speaker 2

That's awesome.

Speaker 1

Hopefully they have housing on site. Anyway, we didn't have to do that. We drove 12 hours, took about 12 hours to get to Maryland it's right outside of DC and she did well. She got third place overall, which is a actual silver medal.

Speaker 2

Oh wow, Amazing.

Speaker 1

And then the team got first, so the southern region won the, won the championship. And then we drove home, rolled in at two o'clock in the morning and here I am doing a podcast, uh. And then the same week, um, my son was another golf tournament down in columbus, georgia. Uh, man, he, he, uh, it was his to win and again got to close it out those last three holes.

Speaker 1

So he's working on his mental game over those last three holes, I guess. But it's been fun and I know we have so many clients that know my children since they were born. Some of them my 17-year-old, some of them not at the hospital but like four or five days after she got home they were holding her at the house.

Speaker 1

So a lot of people had vested interest in the smith children and, and what's in, what's going on, and, and, and. They always forget about owen, because owen came along way after. So everyone's like what, do you have a third child? I was the same way. Ethan went to college and I walked in. It's all right. Right, we got one out, we got one left. It's like wait a minute, no, there's one more. He's the little excitement.

Speaker 1

He's the he's the happy, quiet one, um, so he's, he's a lot of fun. Uh, his, his things are more he's. He's into his sport, which is baseball, but he's really more right now more into like race cars and he likes watching F1 and doing all that stuff.

Speaker 2

I mean can't go wrong with racing.

Speaker 1

No, no and thanks to everyone here, because I am able to be the best dad, because I have a great team here that, honestly, sometimes I'm like do they even need me? I don't even know why. I don't even know why. What is my purpose exactly? We'll talk about that today. But the you know entrepreneurship but but it's a weird feeling knowing that you could just like keel over and die and they might be sad for a day. But why is this going to run just fine without me?

Speaker 2

No, we'd be very sad. We would be very, very sad There'd be a lot of things that no one would know how to do. I've always said you hire people better than you.

Speaker 1

You always look for people that are better at things than you are, and I feel like that's what we've done. So we have a team of what? Almost 18 now.

Speaker 2

Isn't that?

Speaker 1

many, yeah.

Speaker 2

Well, because we have some people who work remote. Yes, that's true.

Speaker 1

In the office every day. That's a, so we have 18 experts and honestly, they all can problem solve, so we're in a great position as a firm right now.

Speaker 2

Yes, which I feel like you know, you speaking to that, it's really kind of the goal of an entrepreneur. So I feel like they want to have you know that ability, to have you know that time where, hey, I want to be able to make you don't make your own schedule by any means, but you know, being able to say, hey, my son has a golf tournament and I want to be there to be his caddy and like be present in those memories with him and like I think that's a huge driving force of entrepreneurship.

Speaker 1

The flip side of that is, you're also then working every hour, some some other, some other time. I mean I, I don't want to make a paint roses here. I mean my kids all the time go. Why is he always on his phone? Why is he always on his computer? Well, it's because you guys get to do nice things and I have flexibility. But we took a risk a long time ago and it's starting to pay off.

Speaker 2

No, definitely, and I feel like it just takes a while for that time to kind of pay off and find that overall, once you have the right team, and I feel like that's what you're kind of speaking to Once you have that huge team.

Speaker 1

That's something you have to learn, though, because so we were. I work with with so many business owners and, honestly, some are really really good at their jobs, but but they can't break away because they haven't hired the right team around them or they don't trust themselves or understand how to scale. How to scale a business is really difficult, and you have to let go of so many things and create processes for so many things that that, um, most people have a hard time with that.

Speaker 1

I remember a long time ago I was a consultant for people who own a couple of laundromats and it was up in North Georgia and I came to the conclusion, after working them for like six months, that they just needed to sell everything and they need to go work in a laundromat, because they were really good workers. They were horrible business owners.

Speaker 2

Yes. You know well it's a different skill set.

Casey's Recent Family Adventures

Speaker 2

I think 100 percent you know, and it's something that you really have to have a fine tuned skill for. Granted, I feel like, though, we live in a society, though, especially now, where it's like be your own boss, chase after entrepreneurship, and it's like not every like own boss, chase after entrepreneurship, and it's like not every like. And that's not to say you couldn't learn those skills, but I think it is something. It's a lot more difficult than just the roses that you see where people are getting to, you know, be a part of different events in their families, lives, and that kind of thing they can make it seem so exciting and great.

Speaker 2

There is a lot of you know also sacrifice. That comes into that as well.

Speaker 1

There's lots of sacrifice. Um, there's a book uh, michael Gerber's e-myth revisited. I would recommend every business owner read that at the same time every single year, because every time you read it you're going to extract something different out of it. But he talks about there's, there's a um entrepreneur inside us, there's a manager and there's a technician.

Speaker 1

And what happens is we're a technician, we're working in a firm, and then we get the entrepreneurial seizure that I can do this on my own and I can bill it. You know, $475 an hour and I get to keep all that, as opposed to my boss just getting most of it. And I get a little bit and I can do this better. You know, cpas come to mind when, when, when you think about this, but then what happens is, after you've had that seizure, you become a really good technician. You might be a really good CPA, or you might be a really good painter or whatever it is that you're doing, and what will happen is people will flock to you and then you have all this business, but then your quality of work goes down because you've got so much business and people are getting frustrated with you. And then, next thing, you know you forgot how to sell. You never learned how to be a manager.

Speaker 1

And he walks you through that process in that book. It's a great book. I have not read it. I didn't read it last year. I need to go back and read it again. I usually just listen to it when I I'm on a couple of boards up at Barry College and so it's an hour drive. So typically during board season I can get most of the book in on the drives up and down. So that's a good reminder for myself. But yeah, it can be difficult if you don't have time to plan and think. I think I did my best thinking and my best strategizing when I was a dual career person, when I was flying airplanes in the Delta system and then when I also was building the firm.

Speaker 1

Because you know, flying an airplane at times is like watching paint dry and you're just sitting there and so you, you know you're alert, you're, you're looking at the instruments, but autopilot's on and you're just thinking about things, and that that was my best strategy. So I I people pay 30, $40,000 for these coaches and sometimes I'm like you don't need a coach, you just need to, you just need to go, take a break. You need to turn your phone off and and be be incognito for for a few hours somewhere far away, and and you can come up with a lot of good ideas.

Speaker 2

No, definitely. Well, I wonder if, too, it was partially, you know, also having the security of knowing that you did have another income stream too while you were in the formation phase, that you know you, it does make you more apt to take more risks and that kind of thing, with, you know, growing your business, considering you had another income there.

Speaker 1

One of the main reasons why we're fiduciary fee only, uh, because I didn't have to go sell anything to put put food on the table when I first started the company. Otherwise, yeah, you'd be really tempted to sell that whole life insurance or sell that annuity to somebody who doesn't need it. You got to make bank this month and and yeah, I never had that pressure. Um, I, I had the pressure of exhaustion but I didn't have.

Speaker 1

I didn't have the pressure of um of of of the dollars because I had another career that I could, that I was supporting me and honestly, I kept doing it. Uh, I think as an airline captain my last few years I don't think I made more than $40,000 and it's because I dropped all my trips so I could be here more and kind of work the system.

Speaker 2

No, which I think that kind of leads into our first point, or really just kind of even the title of this podcast, of managing that irregular income and figuring out, you know, whether it is, you know, having that second job. How do we manage our finances in this in between, or even in the fluctuation of income where you don't know exactly what it'll fully look like month to month. And so I mean talking through that first, as we had kind of even spoke before, you know, starting this podcast today, of creating that personalized financial plan and building that you know, baseline budget. So you know what are like, casey, like some high points that you would say as an entrepreneur yourself, that have really helped you be able to manage both of those.

Speaker 1

Well, giving advice to entrepreneurs is very different, um, than working with a normal person who goes to work, even, even, uh, even, a CEO of a big company. Uh, it's different. So entrepreneurs, typically their brains are wired a little bit differently in how they think about things. Um, I, I, for me, personally, I am, I am an entrepreneur. I, my brain is wired slightly differently than others. I don't quite fit into the financial advisor world, who are kind of stuffy and, you know, very super conservative about, about things. I also didn't quite fit into the aviation world, although I loved it, but I wasn't the same as the mass. And so finally, one day I met some people and someone had told me he says well, you're not a, you love aviation, but you're not a. You know, you're not a pilot in personality. A, you love aviation, but you're not a. You know, you're not a pilot in personality.

Speaker 1

You're, you're, you're, uh, but you're also not uh, a financial planner in personality, so, but you actually you are as an entrepreneur and you you have the ability to be a lot of different things, but but so, so anyway, you have to embrace that. Um, so I, I say all to say you go work at a job, you put money into a 401k plan. Almost all of our podcasts are about this, about saving and how much you should be saving and keeping debt low. Uh, entrepreneurs may not think that way because there has to be a risk taken at some point. So you, you know, for me, I found a problem. The problem was that the financial service industry has over 90% of people who are trying to sell you a product, not giving you real financial advice. They say they'll say consult your tax person, consult your attorney, consult your, you know everything, but but giving you advice on all the stuff you need If you're a wealthy person?

Speaker 1

tax and estate planning are the two most important things right and so what was missing was this quarterback, you know, sitting at the table, going okay, this is our strategy, this is, this is, this is the CPA, this is the attorney. Let's coordinate all this into a, into a strategic plan, and I'll kind of be the the, the quarterback of the team, uh, obviously, was still working for the owner, right, and and and this analogy so when you, when you, when you, when we saw, when we saw that we wanted to solve a problem, um, a lot of times there's not a, the runway is very short to, to, to launch into your this, this new career as a business owner, and so when the runway gets short, uh, you start. You have to put everything you have into that concept. So you may not be saving into a 401k, you might have bare bones healthcare I've met some people have no healthcare. They're just trying to get this thing off the ground. Right, there's not.

Speaker 1

Everyone goes on shark tank and wins with their concept. And and if anytime you get to Shark Tank, you see there's been a lot of pain, typically before that point. So you don't fit into the box. You probably don't even have regular income. Honestly, the income is probably somewhat variable. So what I would tell people who are starting out in a business is that you, you have there's risk here. There's risk that you could fail and you could not. You cannot make it. But you got to give yourself a time, a time limit, and say I'm going to try this for five years, or it's three years, it might be two years, I'm going to try this. If it doesn't work out, I'm going to shut it all down and say this is a great learning experience. I'm going to move on to something else, that all down and say this is a great learning experience.

Speaker 2

I'm going to move on to something else that that that can support me and my family.

Speaker 1

Right, definitely. So in that case you're not saving. And so for those people that I work with, I don't even build a full retirement plan for them. Why would I sit down in front of an entrepreneur has these great ideas, who who's trying to solve a problem, who thinks they can go to market with it, and they think they can build a business. Why would I tell them you're not. You're not going to be able to retire, but they don't need any negativity in their life right now. So typically, what I tell them is sounds like you have a great plan. Here's a book uh, e-myth Revisited. Um, your marketing book, dollar Miller, mark. Uh, business may, or uh, uh, marketing. Oh, what is it? Uh?

Speaker 1

not building a story brand. Thank you.

Speaker 1

Building a story, brand 2.0. Uh, there's a 1.0, uh, 2.0, I think takes into more account with how AI can help you in building, building your marketing strategy. Uh, store, brand 2.0. And then, if you can get your marketing going, you can get your your, your concept out. Then maybe you can start growing a firm. I also have a business consultant that I'll refer people to and say hey, go see, go see or go talk to Marty Paradise. He's in Charleston, south Carolina. He'll do video chat with you and he can help you. He's an expert in, in, in, in all the business coaching. There's three main main systems and he's an expert in, in, in, in all the business coaching. Uh, there's three main main systems, uh, and he's an expert in all three, so he can really come to where you are and help you with that.

Speaker 1

Um, then the next phase is you have a business that's growing. You've had a couple of. You have a couple of people. This is where, okay, your business is maturing and so for these people, money could still be somewhat in flux. But now you have to start thinking about okay, I have a business, I want to make sure that I'm building value in my business. This business could be sold someday. But you could also start a 401k plan or a simple or a SEP or something that you can start putting money away, or a SEP or something that you can start putting money away, and so we can even just get a few thousand dollars away. Um, uh, I'm going to say each month, but even a quarter, um, but maybe a few hundred dollars every month.

Speaker 1

You're starting to build something that's separate from your business and then, once your business is has matured more and you have a good business, then you should be maxing out a 401k plan, but at that point, honestly, that's not going to be enough for you. So so now you have to start saying, okay, what's my exit strategy someday in my business, and what is? Uh, I'm maxing out, but I'm maxing out for tax benefits, um, but that money probably wouldn't be enough to sustain me. My value is still in my company. Yes, so a long winded answer, but the point is is that there are different phases and in those different phases, you need to be hyper-focused on, on, on really one thing, and that that's getting the business off the ground, getting the business matured and then and then getting the business where it's. You have an exit strategy and most people just think I'm going to sell my business someday. They've never talked to a business broker. They don't have any they don't have any evaluation metrics whatsoever.

Speaker 1

Their number in their head could be totally different than what reality is. They have no benchmarking on on for their industry and what things sell for Um. You have to start thinking about that three to five years prior to doing it.

Speaker 2

Oh yeah, minimum, For sure.

Speaker 1

So the point is that you don't fit into the box. There are other things that are consistent, like life insurance. If something happens to you, what's going to happen to your family and if you're doing this when you're young, it's a no-brainer You're going to pick up $3 $5 million of like term life insurance something cheap, knowing that your family's taken care of. The business will probably go under if you're not there, most likely uh, it'd be hard to sell cause it's all about you. Um, so there's a state planning. Those are all basic things that that we'd still get done, but the retirement projections are very, very different.

Entrepreneurship vs Traditional Career Paths

Speaker 2

Yes, I think you know you've kind of like just touched on how all the differences of entrepreneurship and, you know, making sure that while you're building that business you want to make sure that you're still feeling like motivated. I think if we had a client that walked in and they're like in the throes of building their business and we were to hit them with yeah, you can't retire, like your plan doesn't work, how defeating would that be.

Speaker 2

Like you don't need someone that's looking at you like that. Now, of course, if it's like, okay, we've been doing this for five years, 10 years, whatever, and it's like this is not showing success and maybe we do need to have a harder conversation, but at the point where it's, you know you're building a business and it's still definitely just in those throes of being built.

Speaker 1

And, to be honest, I don't meet with a whole lot of people that are in that phase. You know why? Because they're heads down trying to figure this stuff out.

Speaker 2

Right, exactly.

Speaker 1

Most people we get is more mature phased business owners who. I'm a business owner. This is what's happening in my business. Um, it might be second or third generation sometimes, but but, yeah, if I could reach out to the people who are, who are in in the, in the buildup phase, um, there's a lot of things that can make a big difference and it has nothing to do with financial planning. It's really more on the business coaching side, which we don't actually do, but I'm just teaching from uh, sharing information from my own experiences of therapy, and then they're like this is what my therapist said.

Speaker 2

You know, like this is like my little key token, like there was a thing for a while. I feel like online. That's what they were like. This is my like phrase. My therapist told me this today and it was just kind of funny. He's just like oh, that's a great token, but also, you know, you should also get your own at the same point. That's, you know, more based on who you are. But you know you're talking about all these different phases. So I feel like a common question that we get a lot with our business owners is well, what about an emergency fund? When does that need to be built? Because I know you're talking about this. Well, you have to put everything into your business. Well, where's the safety net and when does that safety net come into play?

Speaker 1

Yeah, you still have to have personal personal. You have to separate personal savings from business savings. I did a some consulting with a charter company airplane charter company many years ago now and and one of the one of the engines they fly king airs and so they had a hot section. I mean the engine had to get replaced and it's over a million dollars for a King air engine. And I said, okay, um, that sucks, how are you gonna pay for that and how much do you have in reserves?

Speaker 1

He's like I don't have much in reserves, I'm just going to get a lot of credit on my house and I was like, wow, so the there has to be, there has to be business planning done kind of like personal financial planning but inside the business, that that either have business line of credits, preferably not tied to your house, and or you're building reserves. So maybe you're not charging enough for your services because you don't have a bit enough reserve built up and the reserve can be built over time so you might have a low reserve. I like to have at least one quarter's worth of payroll in our firm and reserve. There's not many other things that would surprise us. You know, outside of a huge market dip and those are usually temporary. So I've thought about the worst case scenarios and to me, I'm comfortable with that and to me I'm comfortable with that. Um, you're another person's business might be, might be different, especially if you don't have recurring revenue.

Speaker 1

Um, you're selling like a retail store. Well, what happens if? If all of a sudden, a covid like thing happens, right, or or um the shop, um, you know floods or something crazy happens and you can't sell for an extended period of time? That how do you keep the business going? And then you personally would be separate from that. So I would still say it's in that, in that cliche but but accurate, you know, three to six month window of what you need to have set aside.

Speaker 2

Definitely no. That's a great insight overall of what to have. I think that's always just a big question for clients and business owners. What is that balance? Where do we find that balance of not hoarding cash in the business but also making sure that we're constantly having that innovation and those kinds of things? That kind of balance can be very difficult to find. You did already touch on this as well. Slightly of you know retirement. You know, once you do have that emergency savings bill or you know just your cash bucket overall built in your business, you know what does that start to look like? When do you start having those conversations for? You know retirement contributions, whether it's creating a solo 401k or even a full 401k plan or even looking at SEP IRAs, those kinds of things.

Speaker 1

It's tough. It depends on what you're doing. I had we have some clients that operate um sister living facilities. Uh, I would say that they didn't have a whole lot in retirement savings. Um, if you looked at it on paper and you didn't count the business, there wasn't much money there. But then one day, when those you know I don't know how many units are where let's say 10 units matured and were liquidated, all of a sudden there's $30 million right.

Speaker 2

Yes.

Speaker 1

So sometimes your rate of return is higher. Investing in something that you know you're an expert in In their case they were experts in assisted living, so you could be an expert in collections or expert, and you know that can go down a whole list of things and maybe investing in your business is the best rate of return overall. If you, if something happens and the business goes to zero, that's your risk. The stock market is not going to go to zero Now. If you're buying the index funds, you're not going to go to zero. If it goes to zero, there's a zombie apocalypse and it doesn't even matter anymore. You just need ammunitions and probably hard liquor or something A safe bunker to hide in.

Speaker 1

Well, when the USSR collapsed, that's all that mattered was cigarettes, ammunition and hard liquor that was the highest currency at the time.

Speaker 2

So I don't know if the index even matters if we get to that point.

Speaker 1

So again, um, oh, I will add to this. Uh, going back to planning, um, a lot of times business owners pay themselves to where they're not. They don't have to pay into social security. That's probably the worst thing that you can do. You should be paying yourself at least $160,000 a year as a business owner to max out social security benefit. It makes a huge difference in retirement.

Speaker 2

If you have social security, you don't have social security. Yes, it does, it's massive.

Speaker 1

And then also the same, the same people we're talking to are go, oh, it won't be there. The government you know they're very anti-government and no, it's going to be there. It's not going to collapse. It's 75% of it's funded. So 75% of it's going to be there. 75% is funded by people who are already working. So I, you got to do your planning to where you're maxing out in smaller businesses where you don't have partners. A lot of times I put the spouse as an employee as well and pay them 160,000. So both people get maxed out on social security. Uh, so, and then the rest you take as distributions, um, so that you don't have to pay the employment tax. Right, so it's, it's um. There's all kinds of strategies that should be happening there in a mature business where that is profitable. Um, but what was your? What was the question? Again, I'll make sure I stay on topic this time.

Speaker 2

No, it was good, it was really just talking about and through you know when and at what point saving for retirement, yeah, I think as the business matures and you start complaining about your tax bill, that's when you start maxing out 401ks because that cause that's $23,500 a year.

Speaker 1

That's not. It doesn't get taxed. And there's there's other programs that you could put in place defy benefit plans, profit sharing plans and a mature company that can reduce your tax liability substantially. But you gotta be profitable first to be at that point. So goal number one is create a product or a service that solves a problem. Goal number two is is then to create recurring revenue over that. And then number three would be okay, I'm going to start taking care of my future self and saving in these areas. But I'm telling you, most people who are successful business maxing out a 401k plan and and even maxing out profit sharing may not necessarily hit their lifestyle goals in retirement. So then you have to go focus on the business itself and and then that that goes back to business evaluation, exit strategy. Are we selling it to the employees? Right, exactly, session planning. No, I don't know of any one company that I've done planning for that had a succession plan in place.

Speaker 2

It is, I think, so difficult. It's like you know, we have families that come in and it's just talking about estate planning Well, what's going where? And it's such a difficult conversation to think about and, especially for business owners, it becomes so much of who you are.

Speaker 1

Yeah.

Speaker 2

I feel like it almost can feel like oh, I'm losing a part of myself If I start saying this is who it is.

Speaker 1

No one can do it as well as me. No, yes, yes.

Speaker 2

Who's going to do it like I do, it Like I can't give?

Speaker 1

it to someone else, which is the whole reason why your business can't scale, is because you have that same mentality, but yes, no, but that's what gets so caught up with people.

Speaker 2

It's like, well, I can't trust someone else to take this over.

Speaker 1

I go back to the Cathy family and Chick-fil-A. Do you think that Truett Cathy was like no one can make this chicken sandwich the way I can make it? No, he created a process. Yes, Right. And what people don't realize is Waffle House sold Chick-fil-A sandwiches before. There were Chick-fil-A's everywhere.

Speaker 2

I did not know that.

Speaker 1

They sold the Chick-fil-A sandwich to Waffle House. They have a process for sold the Chick-fil-A sandwich the Waffle House and they, they have a process for making the Chick-fil-A sandwich Right. Then they took it off the menu, Uh, and then I think Waffle House may have been canceled. Them. I don't know the difference, I don't know the the whole thing behind that, but but eventually it became, um, they did the. It's not really a, it is a franchise, but it's not a franchise.

Speaker 1

At the same time, it's really strange how they, how they do it compared to like McDonald's and all that. But um, but yeah, no, you create a process. Uh, I tell you guys all the time you know, you get the same Chick-fil-A sandwich in Atlanta as you do in Macon, Georgia. So, so, whether someone's working with planning, with, through me, through you, through Shauna, they get the same thing. You know why? Because we have a process and that process is repeated. It's the same Chick-fil-A sandwich. Hopefully, you guys say my pleasure, just like I say my pleasure, but it's, it's. You have to create a process. We have, we in the same way, workflows. How do we, how do clients call in and talk to different people but yet still get there were draws that they're asking for, it's because there's a workflow, and whether Kyle does it, Tiffany does it, right, it doesn't matter, because they just go through the workflow steps.

Speaker 2

Definitely. And it's like establishing those processes because it is something that, like I think as an entrepreneur you can get, so in like everything's in my brain, it's all here. But it's like if you're going to plan for the next generation or a succession plan where you can say I'm going to step back and enjoy retirement without this stress, then you have to be able to say, ok, I'm going to take this out of my brain and put it down for everyone else to replicate. Correct, and you know it's creating that process and that structure. And I'm still mind boggled that Chick-fil-A was at Waffle House.

Speaker 3

I'm just like thinking through processes, but like wow.

Speaker 1

It was a long time ago, very long time ago, before you were born, probably.

Speaker 2

But either way, I mean that does just go to show that, like one year to start wherever you start, and it's going to become successful if as long as you stay consistent and you know, disciplined within that and then finding, just figuring out exactly what that process is that has made your business successful. Are you a small business owner? If you're busy running a business, who's making sure your personal finances are on track? Download five reasons. Every small business owner needs a financial advisor, A free guide from Wiser Wealth Management. It's your blueprint for helping you keep personal finances secure while growing your business with confidence. Grab your copy at wiserinvestorcom. Forward slash guides today.

Building Systems and Creating Processes

Speaker 2

All right, let's get back to the episode. So then all the talk with you. You know going through the processes between you know just different things of trying to decide. You know what those processes are for your business. I think the big you know out there idea or really structure that determines those processes is what entity structure you choose. So you know who is it or how did you decide what type of entity for your business or even who did you bring into that kind of conversation overall.

Speaker 1

So I mean the process wouldn't matter how the business structure is, but it would. It's what your end goal is. So you know, I, when I started, I talked to an attorney about which business structure from a legal perspective it doesn't really matter LLC, s, corp or um, c corp. Uh, I, really it's more of it. It's a tax person. Question is really should be who be answering that? So? So I don't want to. You know we have other um uh podcasts and writings that we've done about the structure difference.

Speaker 1

That could be all by itself, but basically LLCs are probably the most fluid. You can have money flow in and out very easily. You can have an LLC that is taxed like an S-corp, meaning that you would take a W-2, but then after that you don't have to worry about employment tax. And then a C-corp is like double taxation because you're going to pay everything at the corporate tax level profits and then you're going to pay income tax on your W-2. So you get taxed twice.

Speaker 1

But there are benefits to having a C-corp as far as structure. I think most people would be fine with an LLC and then adding the S-corp privileges to it once you start having employees. S-corps can't have more than 100 shareholders. So if you think you're going to have a lot of partners someday or equity holders, you probably wouldn't want to be an S-corp. You'd have to be more like a C-corp or even a partnership like an LLC. So there's a lot of nuances but I think most people just opening up an LLC makes the most sense. I will say the structure when you sell a business, most likely they're not buying the company anyway. They're gonna buy all the company's assets in goodwill. So from that standpoint I don't know that it really matters Succession planning if you have more than 100 employees and you probably don't want to be an S-corp, you probably be a C-corp at that point. But for succession planning and people are going to own equity or member shares, then you'd want to be probably more of an LLC. If I had to guess.

Speaker 2

Okay, no, that's great feedback there and I know, of course, bringing know, bringing in the right other professionals tax planning, estate planning, all of that into that conversation, but definitely something to talk through and just be mindful of.

Speaker 1

You want to get it right the first time. So typically talking to a corporate focused CPA who has done some mergers and acquisitions, and then also an attorney that specializes just in business entities.

Speaker 3

And those are hard to find.

Speaker 1

I've worked with so many over the years who the websites say they only do corporate work. And you get there and you're just like, okay, you're you don't know any more than I do. This is not good. So yeah, we have a few references.

Speaker 2

We have a few. If you need references, we have a few references. Got to find the good apples?

Speaker 1

Yeah, we have a few. If you need references, we have references for both.

Speaker 2

No, perfect. Well then, I guess really the entity structure does really go into tax planning, though, like that's a huge part of your tax planning, which is why you want to have a CPA part of this conversation. So really, when it comes down to strategies for income and expense management, is there anything that you would recommend to you know business owners to be taking advantage of on the tax planning front.

Speaker 1

It's a combination of both. You have to use your profit and loss statement and your balance sheet I would say monthly for business planning. You should make business decisions based on what you see in your P&L. Wise Wealth Management does not do tax preparation. One, because we wouldn't have a life between February and April. Two, because when we looked at our P&L many years ago we were like we have a 3% margin on these things. We have to do a ton of tax returns to equal what we get in financial planning and asset management.

Speaker 1

And so we decide to outsource it and we do tax planning, which is the important part. A computer can do tax preparation, but tax planning needs to be done by humans, and we are much better at tax planning than we were at tax prep. So, that being said, you want to have a P&L profit and loss statement that doesn't just say income and expenses. I have seen this so many times. I am not joking. I've I've seen P&Ls that just say income and I'm like you sell five different things. How?

Speaker 3

much did you? How much did you sell the blue?

Speaker 1

widget. Oh, I don't really, I'm not sure it's, it's just, it's an income. I'm like, well, what, if, what, if? What? If you were making five widgets and the red, blue, green, yellow and purple, you find out that no one was really buying the purple yet it was really expensive to build, You'd probably say I'm not gonna do that anymore. Yeah Right, Cause the P and L is telling you that. That's why with flat fee planning is like I need flat fee planning to be really successful. Cause when I look at my P and L, it's only, like you know, used to be only 1% of our overall revenue. Well then, now it's like 10% of our revenue. So now I'm like, okay, now it's a legit, it's a legit vertical in the business of flat fee planning versus the traditional model.

Speaker 1

Um, so you, so you have to make decisions. Also, I can see what profit margins are. So if you do your books correctly so some people don't want to pay a bookkeeper $750 a month because, oh no, I can just do this myself but if that bookkeeper could, could provide you a weekly report saying this is this is your budget for the quarter. This is where you are actually. This is, this is your profit and loss over the last, maybe it's a rolling one year, or whatever it is that you need. You need that to make better decisions. So then, when you understand where things are financial wise, then there's other things that you can add to that. So then you go okay, we have a profitable company. Um, we have industry standard profit margins.

Speaker 1

I need some tax relief. That's when you start working in the retirement plans, Um, that's when you might buy a company car for yourself and you depreciate that either all at once or you can't do it all at once. This year, Um, some of that's been rolled back, but I think this year is like 60%, uh, or it could be 40. I get it confused because time's moving so fast. But there is a large chunk you can write off and then you write off the rest over over a short time period, Um.

Speaker 1

So there's other things you start working in into the business, um, to, to, to start saving on taxes. If you're a manufacturer, there's, there's other deductions that you can take as a, as a business owner, Um, there you know, if you're, if you're in the real estate, there are certain zones that you could buy, uh, um, commercial property in, or even residential property that you have, uh, additional tax benefits. So there's, there's other things that you can add and your, your, your, your CPA then would be able to tell you these are deductions that you should be looking for. But it all starts with a good P&L and balance sheet. The balance sheet, because if your company has debt, you want to make sure your debt's not getting excessive.

Speaker 2

Definitely Now for talking through the CPA. Would the moment that you decide you're opening a business, would you just start to say I'm going to have a CPA from this point moving forward? Or is there a certain point where you would say, hey, I can self-prepare up until it starts getting this complicated, and then I'm going to hire a CPA?

Speaker 1

Uh, I'm not so worried about preparation. Turbo tax is pretty good about that. Uh, If you have a little business that you're running and it's arts and crafts, yes, you need to do that by yourself because your margins are zero.

Speaker 1

If you're trying to create a real business generating a million plus in revenue, then you would go to the CPA first and say please help me set up a chart of accounts. So when you log into QuickBooks, there's these default categories that you can put your income in and your expenses in, but you are probably not default. No company should ever be default. So that's how they end up with income and expenses.

Speaker 1

So you just need to say I need help creating a charter of accounts to help me manage my business. And then at that point, if bookkeeping is not your thing, then that then that's when I would hire a? Uh a company like a belay, so belay is um uh, they will do that, they'll do personal assistance, but they also will do um bookkeeping controllers um, all the way up to a part-time like CFO Uh, but they'll source it. So you tell them what you're looking for, they find the person. If you don't like the person, they'll get another person Uh, so so that company um they're based I think they're based out of North Georgia. Uh is a great, a great example of finding, finding a bookkeeper quickly and and they'll help you do all that from the from the beginning.

Speaker 1

But that's like seven, 50 a month.

Speaker 2

Yeah.

Speaker 1

And so that that seems expensive. But if you can make better decisions because of it, then it's worth it.

Speaker 2

Definitely no, 100%, and I think even like understanding just from the business perspective of this is where our product really is and this is what we need to be selling, or this is what service we need to be focusing on versus you know, this expense and that kind of thing of just keeping churning the wrong thing over and over again. When really, if you just focused on this key area, I feel like that's where a bookkeeper can really come into.

Speaker 1

It's kind of like paying off debt. You know this is not part of the business owner conversation typically, but but you think about, we have someone a young person come in and they've got $80,000 in credit card debt and they said, yeah, but I send $25 extra each card per month.

Business Entity Structure and Tax Planning

Speaker 1

And they've got 10 cards and you're like no, no, no, let's focus on getting rid of one card, right? It's the same way with with products. The old Apple, the old Apple company, used to have three things it had a phone, they had a tablet and they had a computer Right those, and they had a computer, right those are three things that you could buy. Now there's like five versions of each.

Speaker 2

Literally minimum minimum.

Speaker 1

It's because they have to keep selling more in order to make the shareholders happy.

Speaker 2

And then keep changing the chargers every three series. Yes, exactly.

Speaker 1

I've wanted to, I've always have. I have to tell a lot of business owners just like, okay, you wanna start in these new verticals and you have all these great ideas, because many, the entrepreneurial seizure right, have these great ideas, but but let's master one first. Let's master product number one, and then, once you've mastered product number one, then go to product number two, then go to product number three, just like paying off debt, let's get that first card paid off. Let's own it and then the, then the next card, the next card.

Speaker 2

Yes, and it's like I feel like having those victories is always really like great to keep building upon too. Yes, you know, Um, but then last thing really for tax planning is quarterly tax payments. I feel like these catch you know every business owner by surprise. I don't even know if surprise is the right answer. I'm's called stress.

Speaker 1

I'm stressed and surprised every single year, every single year, because we grow at 30% a year. Every year I'm caught off guard.

Speaker 3

You're like what I haven't learned my lesson yet.

Speaker 1

So every year I'm going in and it's funny because you have a client complaining about a $5,000. They owe $5,000 this year. Oh my gosh, this is crazy. And and I'm sitting there going I would love to have 5,000 hard. Yes, I could buy a house. This is ridiculous, so yes, so this is where you have. It goes back to your P&L and owning your P&L and then forecasting. And what's that saying about the shoemakers?

Speaker 2

kids have no shoes, or something like you know what I'm talking about, the old saying Like they're like all worn out because you don't take care of your own, but you take care of everyone else's.

Speaker 1

Unfortunately, that's me some years, because I know I'm growing but I'm so busy helping other people I forget to help myself. But the point is is you have your P&L, you're forecasting what your sales look like and then, when you're sitting down with the tax planner or the CPA, you kind of know what's happening. The most important thing, I think, is if you pay in 110% of what you paid in the year before meaning you're on track to pay 10% more in tax, you'll avoid all the penalties for underpayment. You just got to get yourself to the one two that's the minimum number and then the next year to do it accurately, you probably want to every three months. You would say okay, this is my profit now, what's that trajectory? And then you pay it in.

Speaker 1

Some people are much more disciplined and we have many business owner clients that say I take 30% of all my revenue and I put it in this account and that's for my tax bill, and sometimes they're still caught off guard because 30% if they don't, if they're not paying any in either any other way, then what happens is that they're in a 37% tax bracket plus state tax. So they ended up being short.

Speaker 1

But they're better off by having some reserves set aside. Uh, donald Miller, um talks about this too, where he he has a cash bucket strategy for for. So 15% for him goes into the profit account and you don't ever touch that. Uh, and then he puts I think I think it was 25% goes to tax, you don't touch that, and then the rest goes to operating. Uh, so every time a dollar comes in it always goes in those categories and if he's having to dip into his uh profit account then something's wrong.

Speaker 1

Uh and so I'm not, I can't, I have a hard time doing that. I set it up one time. It's like this is what we're going to do, and it's really hard to revert back to something. But if you can start off that way, that's that's a good, that's a good strategy.

Speaker 2

No, definitely. Well, that's a great feedback on this.

Speaker 1

I feel like that's definitely something that everyone just gets caught up on and they can just taxes, just in general, I think, stress everyone out yeah um, especially if it's not something you're well versed in, it can just feel very daunting if you're a business owner, you cannot do your tax planning at the same time you're filing your tax return. It is too late. You're all your tax planning really should be done, uh, four times a year. Yeah, so you should be going in every single quarter for a tax meeting as a business owner especially, I'd say, a successful business owner when you're just starting out. You don't need that.

Speaker 1

You need maybe one time a year to have an idea, maybe a check-in in September, like most people would do. But as a business owner you need to be on top of that every single quarter.

Speaker 2

Yeah, 100%. Now going back a little bit to succession planning, so we've already touched on this quite a bit and we've talked about the importance of that. But I mean kind of just talking through, like if I were a business owner and I were to say what if I want to sell my business eventually, how do I plan for that financially?

Speaker 1

Well, first of all, you're ahead of most people because most people haven't thought about selling their business. Um, so there's, there's a couple things. One, your business is probably your biggest asset and if you don't have, if you get hit by the train or whatever, uh, you, you, what happens to your business? Like, who's going to take over? Is your spouse going to take over? Most likely, they're not engaged at all in that, in that business. Do you have employees that can take over? A lot of people go oh, I don't know, I don't think so, but you might actually have it. They may not do it exactly like you, but the business could be, could be okay. Do you do you have children that could step in and have the wherewithal to take over, or is there a partner or a frenemy?

Speaker 1

in your industry right that you would say, okay, yeah, we share ideas and stuff. It might be a good idea to have, like a buy agreement with them. So you have to have a succession plan. That's where you need to start. If something happens to the business or something happens to you, how does the business move forward? It could be immediate liquidation and it goes to X person and that's fine. You might have to buy life insurance. It could be a long-term term insurance or universal life policy, something that would allow that person to buy it, and so that's step number one.

Speaker 1

So a business is worth more if there is a succession plan. By default, it could be selling it to all the employees. There's so many ways you can do it and there's no one. There's no one right or wrong way. It's it's what all the parties agreed to in the end. So once you understand that, then that's going to send you down a different journey and that's business evaluation. So then you have to find someone. It could be someone within the industry. It could be industry organization, somebody that has a standard of. This is what the profit margin is. This is typically how your business gets sold. So I know how financial advisory firms get sold. I understand that If you had a sign-making company I don't know, I don't know I'd probably need to go to a broker and say hey, you know, is it 5X EBITDA, is it 3X EBITDA, is it 10X gross revenue?

Speaker 1

I mean, how do we look at this? Do you have equipment? That's worth something. If you have a trucking company, those trucks are worth something, so that's on the balance sheet. So once you understand the valuation, then you can go back to your succession plan and you can put a discount on that, because if you're dead, it's probably going to be worth less, unless your business is running without you, and that's the case and it's worth a lot more. So that's the case and it's worth a lot more. So that's another part too. You'll realize as you go through this journey is that you need your business to run when you're not there, and then your business is worth more. And then so once you have, once you've determined all that, then you're really. It goes back to that P&L and you're trying to figure out each year okay, how do I make this business look more attractable to a potential buyer?

Speaker 1

And some people try to cheat a little bit and they do things like well, if I didn't have all my personal expenses in here, then it's worth X and you're still not getting the best valuation. You have to separate you from your business. You're gonna have to pay more tax. The more tax you pay, the more profitable, more money. You're going to have to pay more tax. The more tax you pay, the more profitable. The more money you're going to get for that business and you're going to get a higher margin for that business than the tax you had to pay. So it's better to just pay. You want to pay as much tax as possible those last three to five years. If you have that opportunity, some people don't.

Speaker 1

I actually consulted a long time ago with the lady her husband passed away. He had a vet business and he, he, he, uh got cancer and he shut his practice down. He said well, I have cancer, I can't work anymore. So I sent he sent a letter to all the people who brought fluffy and to to to the vet and said you have to find a different vet. And I was. He'd already passed away by the time I had. She came in for help. But I was like, oh my gosh, why would he do that?

Speaker 3

Yeah.

Speaker 1

Like he owned his own property. He owned the vet building itself. Why, why wouldn't you have sold it to somebody coming out of medical practice or merged it with another practice? You have people who are regularly coming to your vet. He valued his business at zero and he just walked away. I'm not saying he walked away from millions of dollars, but even if it was $200,000, yeah. Right, he could have introduced a new vet.

Speaker 2

Yes.

Speaker 1

But my, I'm guessing what I think happened there is like no one can do it like me, and and or he just had no vision of how you would, how you would do that, if anything, they buy the building.

Speaker 2

Now you have an empty vet building, and how do you sell that? Cause those are, those are built very differently. Oh my goodness, that's heartbreaking, I know.

Speaker 1

I know so. You don't want that, something like that, to happen to your family, so you have to be thinking ahead as a business owner. That's why you've got to get out of your business. Go away somewhere, think about this stuff, don't do it at the business.

Speaker 2

Well, I also think it's important to understand your value too. I think you have where you're like the guy with the vet, where you're like my business isn't worth anything.

Speaker 3

I just come here every day and I pay all these people, these techs and it's worth.

Speaker 2

Not, it's not worth anything Like. It's just my passion, you know. But then you have other people that I think fall on the other side of the spectrum, where they're like my business is worth $10 million and you're like and they have like $500,000 in revenue. Exactly, and you're like, okay, maybe in the future. Maybe in the future, great to have goals, um, but I think it's like having that real conversation about valuing your business is huge and understanding what that value is.

Speaker 1

And you can get basic business valuations done for like $10,000. But the problem with a lot of that is, um, even people who evaluate businesses don't know how to evaluate businesses. So you see that in our divorce cases, people get divorced and, um, we had a case where orthodontists didn't divorced and they valued the business at like some stupid low number. I'm like what? There's no way. Like he's making a million dollars a year and he's worth $500,000. Like does that make any sense? So there's, there's situations like that, uh, that can make you go huh. Uh, that's why you need to find, um, you need to be a part of, like an industry organization that that can help people, help you in your, in your industry, make those decisions.

Speaker 2

Definitely, definitely. Now, last question here and I think we're trying to make this a new segment on the podcast is what I've been told is like a case study question. So this is essentially a question that we just get asked quite a bit is how much can I contribute to a solo 401k if I pay myself 60,000 in freelance income?

Speaker 1

Interesting.

Speaker 3

Yeah.

Speaker 1

Well, you can put in $23,500 a year if you're making 60 grand and you're under the age of 50. And then above that it would be basically 25% of the company's profits.

Succession Planning and Business Valuation

Speaker 1

So if you were, if you you know kind of a quick a trick question, I guess. But if you paid yourself 60 and that's all you made was 60, then 23,500. But if you paid yourself 60 and you made a company overall made like $250,000, then you can put in 25% of the $250,000. Uh, ideally you'd, you'd be more profitable and you could be putting away, uh, about $70,000 a year uh into a solo 401k. Um, of course, the trick on the solo 401k is you gotta be solo.

Speaker 2

Yes.

Speaker 1

So no employees. You can have husband and wife. So if you're working together maybe husband and wife is a consulting company or something like that you can both have solo 401ks. You could put away $140,000 a year, pre-tax which is crazy.

Speaker 2

We don't see that very often, but it is possible. No, 100%. Well, I mean, honestly, that was my last big question of today, just to pick your brain and see what your thoughts are for entrepreneurs. But is there anything we haven't touched on today that you would love for entrepreneurs to know?

Speaker 1

Well, you always want to make sure you answer the question that the podcast is titled. So, uh, you know we talked about fluctuating income. So let's well, let's just go back to. You have to maintain your P and L in the business. You need to have business meetings with yourself at least every quarter to understand the pulse of the business financially, uh, and then from there you can make better decisions which allow you to budget your cashflow better.

Speaker 1

Um, what I tell most entrepreneurs is you need to create a steady stream of income that comes to you, uh, and that's like the bare bones minimum that you need to live on. And then, above that, you can take draws, like in an S corp scenario. You would take draws on top of that, but those draws might fluctuate based on how profitable the business is. And then we didn't really touch on this If you take on partners just having, you need to make sure that you have good, a good legal structure. So many times we've seen partners with no agreements, and that's where bad things happen when there's, when there's disagreements. Uh, dave Ramsey even goes far as saying, uh, partnerships are the only ships that don't, that don't float. He doesn't, he doesn't like partnerships, but there's many partnerships. Most law firms are partnerships, um, so you just want to make sure that you always have good, solid business agreements in place and there's an exit strategy if something happens.

Speaker 2

No cause. I think that good faith can always come into like. It's kind of like your whole, you know, you're even talking through just families in general. They're like, oh, the kids won't fight. And it's like, oh no, they'll fight, you know, like, and so you just gotta you have to plan for the worst case scenario, put the guardrails out.

Speaker 1

I kind of look at it as like it's. It's much like dating and marriage. You know, you meet a dreamy guy or a dreamy girl and you. Everything's going to be great.

Speaker 3

Everything's going to be great, and then, yeah, there's no prenup and yeah, and then it goes really bad. Then you're like, oh my gosh this is horrible, so you gotta have a you gotta have an extra case in point.

Speaker 1

Um, I bought this from an oh seven and I had to use my exit strategy or use my termination clause, uh, with the person I bought it from after the first year, inside the first year. Uh, he went kind of nuts and so that, yeah, I and I, I didn't have it in there. I had a good attorney who said, casey, you need to put this clause in there If he'll agree to it. We added it and he was like, oh yeah, that cause he had dreamy eyes too. So he was like, oh yeah, that's not a problem.

Speaker 2

And then, yeah, less than a year later.

Speaker 1

We weren't making good decisions and so I was like, okay, your retirement starts today. It was only a year early. It's not like he didn't own any more equity in the company. I bought the company. It was more of an employment agreement, Uh, but you, you got to think about those things.

Speaker 2

No, definitely the attorney was like case in point. Um well, thank you, casey, for all of your advice today and to our listeners. Thank you for listening to today's episode. If you're interested in learning more about Wiser Wealth Management or want to schedule a consultation to meet with one of our fiduciary financial advisors, you can do so by going to wiserinvestorcom or you can click the link in the episode notes. We'll see you next week, but before that, just be sure to look at our related podcast episodes. So episode 218 is about budgeting tips for pilots with variable income. Episode 283 is for how to manage a sudden money windfall, that's, with IPOs, business sales or even inheritance, and then episode 247 for why it's crucial to separate your business and personal assets. Then we also have some financial education videos out there as well for why business owners need an exit strategy as well as asset protection strategies for business owners. So, with all that being said now, we'll see you next week.

Speaker 1

See you guys.

Speaker 3

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Speaker 3

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