A Wiser Retirement®
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A Wiser Retirement®
293. Retirement for Business Owners: Selling Your Business or Passing It On
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Whether you're planning to retire, sell your business, or pass it on to the next generation, having a clear succession plan is essential. Unfortunately, many business owners delay this process, putting the value of their life's work at risk. In this episode of the A Wiser Retirement® Podcast, we cover the key steps every business owner should take to successfully transition out of their business. business.
Related Podcast Episodes:
- Ep 283: How to Manage a Sudden Money Windfall: IPOs, Business Sale, or Inheritance
- Ep 247: Why It’s Crucial to Separate Your Business and Personal Assets
Related YouTube Videos:
- Why Business Owners Need an Exit Strategy
- Asset Protection Strategies for Business Owners
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This podcast was produced by Wiser Wealth Management. Thanks for listening!
The Three Ps of Business Succession
Speaker 1And if you're trying to sell a business, it goes back to the three Ps and you got to start three to five years prior. So people profit and processes.
Speaker 2Okay, right.
Speaker 1So so you have, you have. You have to have your books clean, get all your personal junk out of it, yeah, yeah, and, and you have, you have a probably one show, three to five years of a trend. So if you know you're gonna be selling your business in the future, you got to start treating it like a business.
Speaker 4Welcome to a wiser retirement podcast. Are you curious about how to retire as a business owner, whether that means selling your business or passing it on? I'm Shauna Theriault 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.
Speaker 1Let's do it.
Speaker 4Let's do it.
Speaker 1This is the second week I've been put on the other side of the desk. I don't know if I like this or not.
Speaker 4Weren't we supposed to switch spots, though I feel like it's backwards. Oh, that's true?
Speaker 1Well, they can probably flip the flip the video.
Speaker 4But the reality is, with this subject, you're the business owner, so this is a good subject for you.
Speaker 1I'm a business owner, I feel like more of a business owner in the last six months with uh, we got what 18 plus people here now.
Speaker 4Yes, yes.
Speaker 1I'm doing a lot of business owner stuff.
Speaker 4Yes, you know, yes, I was listening to a podcast the other day. It was very inspirational when I work out to listen to these motivate more diversity podcasts and it was talking about how someone like started a business and they grew it and grew it and I was thinking about you. It's really incredible what you've done.
Speaker 1Seriously, Thank you. It's a little bit of hard work, a little bit of Jesus and a lot of tears.
Speaker 4Sweat equity and all the things right and surrounding yourself with good people, and I love the team we have. So you know, it's just great.
Speaker 1I read a whole podcast on how to pick a team. My journey has been, we'll just say come from the school of hard knocks, you know.
Speaker 1Yeah, hired some people that are still here, probably with me for life, and we've had people that have come and gone. They're great people, um, they just they're. They're moved on to something else and um, and then hopefully we have a good core group that will be here for quite a while. It's, it's um. You know, hiring people is difficult. I firmly believe in you. Hire the heart and you can teach the mind. Yeah, uh, it takes a little longer to do that, but if you just you just find the right people, then then, um, it makes it. It makes everything easier, you know.
Speaker 2And there's been times.
Speaker 1There's been times, periods, periods where I didn't want to come to work Cause I was. I was just like. The one person was like driving me crazy, it's like, and finally I wake up and I go, wait a minute. I have the ability to change this. Everyone else everyone else still has to come here and deal with this, and I'm going to go change that today.
Speaker 4Yeah Well, and you know something about your gut. You know if it's bothering you, it's probably by you know that's probably bothering others too. Absolutely the team environment, right, I think we still have to work on.
Speaker 1Hey, you know I'm I'm struggling with this and our culture and getting people to talk and I don't think I'm big, bad and scary. But you know, sometimes people do and you even even with three month reviews every three months we do set number reviews you don't always get the truth and then later it comes out, or or later someone says you know, I'm glad that person left. I feel so much happier being coming to work every day. It's like, well, you've had so many opportunities to tell me this.
Speaker 4Well, it's like it's that open door policy, but some people are newer in their careers and they don't feel like they can really say what they think you know, and there's always that you know unsure if that's the right thing to say, and there's always that you know unsure if it's the right thing to say, and it feels like as you get older, you know you're more of yourself and can say in a positive, constructive way what your mind is.
Speaker 4You know, right, but it's when you're younger, it's new in your career, that's sometimes harder too. But, yeah, very true. So, with so, with that, you know, creating a business that's growing and you have, you know, a lot of clients and employees, you have to be thinking about succession planning because if something happened to you, you know you're the owner of the business, and we see this a lot with small businesses, and this is what we're talking about today. You know, if something happens to the main person or people, there has to be something in place to ensure that the clients have longevity, that the employees go on, et cetera. It's a smart thing to do. Or if you're just exiting as well, and so, starting with a succession planning, um, what would you say? Where would you start with that?
Speaker 1Yeah, that's a big one, I would say. I've never worked with a company that had a succession plan in place prior to working with us. Um, and that it's because that's, I think, it's one of the hardest things to do. You, you hire people typically to do certain jobs, but maybe you don't think of that, of them doing your job.
Speaker 4Right.
Speaker 1And there's a book I think I may have mentioned this in prior podcasts, but Michael Gerber E-Myth Revisited. That is a great book that every business owner should be reading or listening to once a year, and the purpose of that that book is to create processes in your business. So you have first thing you have to do is create processes where the business can run without you.
Speaker 4Repeatable processes.
Speaker 1Repeatable processes. When I tell people here, you get the same Chick-fil-A sandwich in Atlanta as you do in Macon, and that's because there's a repeatable process.
Speaker 4Well, that's great for training too. Yes, so for growing.
Creating Repeatable Business Processes
Speaker 1Correct. So once you have a process, your business suddenly becomes a lot more valuable, because the business can run a little bit less without you. It's also psychological in that business owners think that this is their baby and only they can do it the way that they.
Speaker 1they can do it, and it's it's getting them out of that mindset that yeah you know what, you're probably really good at this and maybe you have some key relationships. But you you can. If you have good clients in any industry, they would understand that, yeah, you're growing a business and if you're serving them in every single way, that's probably not the best thing, right.
Speaker 4Yeah.
Speaker 1And so I think the first step is creating repeatable processes. Once you've done that, you need to look across your your group and decide OK, who can take this position. The same way, if we lost Alexa, she's our VP of operations. That's multiple people taking her position because she does so much.
Speaker 1So the decision plan could be internal and you could say, hey, I can sell my business at this amount Because really, what you're trying to do is protect your family, because most business owners have most of their wealth built up in their business Right and rightly so in many cases there's nothing wrong with that. But you wouldn't be able to, um, find a succession plan internally. Uh, you may have to buy life insurance on yourself, um, use it. Use it in that way where actually, so the person who would buy it would be buying life insurance, um you you might have a life insurance policy on your life, for example.
Speaker 4Yes, but not paid by you be paid for.
Speaker 1Paid for by the person who would be buying it got it. Uh, you could do it the business way. Uh, we structured ours where the person buying the company, uh, pays the pace for the policy, uh, and there's other ways you can adjust comp to make up for that in other ways. That makes it a tax-free event to them, where they have the money to then pay your family to then buy the business. You could also do a structured note where you come up with the formulation the value could be so much times profits or so much times revenue. And then there's a note to the family the family's paid over time. So I structure it both ways.
Speaker 1So there's a large life insurance policy and then there's a note to the family the family's paid over time. So you, I structured it both ways. So there's a large life insurance policy and then there's there's a deal for a note, because our company grows at 20 to 30% a year, has been for 10 plus years, so so it's always running away from you the value. You saw it for this year, but then five years from now it's not going to be obtainable anymore. So you have to come up with with unique ways to do that.
Speaker 4So do you do you on the onset of that, when you're thinking of succession planning? You know, do you is it? Is it at that point that you look at what is a valuation a business valuation, or is it just when you're selling?
Speaker 1No, you should have a business valuation done when you're going through the process. So that you know how much interest you have Correct, and not the $30,000 one, but maybe the the the $10,000 one where it's just kind of a cursory look and say this is about what the value is worth.
Speaker 4So like a CBA could do that evaluation analyst, right, correct?
Speaker 1You could, um, sometimes if, like in our industry, there's there's kind of standards and there's companies that will do it. Um, my, my consulting firm that works with us, they, they do ours once a year, year, and I pay $500 a month to be a part of the program. Not a big deal, right? Right, other industries if there's like organizational groups, like if you own a dry cleaner, which is probably some national dry cleaner association or something, they probably have tools to help you determine for your industry what it's worth. Manufacturing would be the same thing. Which kind of gets me to my second point of maybe you don't have internal opportunities but you have a frenemies that own a business and you share information, but you're, you compete, but you don't really compete. You know you could always go to them and say, hey, I need a catastrophic agreement with you If I die, you'll buy my business from my family. Can I have to disclose? Unless it's just a no-brainer of a deal, you probably need to disclose your P&L balance sheet and say this is the situation.
Speaker 4Yeah, because who would sign up to buy something if they don't even know the financials of it?
Speaker 1Don't even know what it is, but in our industry with solo advisors, they might call me and say something happens to me. Will you buy my company out at two times revenue?
Speaker 2Yeah.
Speaker 1Oh yeah, absolutely. I don't need to see your books at all because I'm just I'm not even going to use your location anymore, I'm just going to absorb it into my in my business, if you're local, right.
Speaker 3And if you were?
Speaker 1in California. Well, that'd be a different story. I'd have to see it. Well, this would even be profitable with this. Would this kill me if I tried to buy you Right?
Speaker 4So it's really at first identifying maybe who it would be. So, either somebody internal, somebody external, so that way you can start putting your plan in place. I mean, that would be the first step is thinking of where you would want it to go if something were to happen to you, or if you're just exiting, or do you write it the same way. I guess you could change it if you're exiting and retiring.
Speaker 1Yeah, I think the first thing is the catastrophic you hit by the bus, right that's, I think that's. It's less likely, but it's also what. What ends up getting your family a goose egg instead of you know a million dollars or $10 million. $20 million is because you'd had no planning and the and the clients just kind of wither away.
Speaker 1I told a story with Michaela, I think, in our last podcast about a dry cleaner or it was a vet that the gentleman got cancer and he ended up just dissolving the business. He didn't sell it, he built it his entire life and he said, oh no, I'm not gonna do this anymore and just shut it down. But that business had value to it.
Speaker 4So you don't want that to happen to your family or to the employees and the clients, and if you build something your whole life like, I would think you know, correct.
Speaker 1Correct. Uh, so, so yeah, there's. The problem is that there's no. There's no, like one way. I can't write you a formula on how you do this. It's a conversation and it starts with something happens to you. You don't go to work the next day. Describe to me what happens with your company.
Speaker 4Okay, so that could be a consultant, that could be an attorney. Who? Who would they reach out to you to do that? Um yes okay, it depends on the industry, I suppose yeah, um, attorneys can be very difficult.
Speaker 1I've worked with so many. They don't, they just don't know, they just because they don't know your industry very well. First, draft of a succession plan was horrible. Um and then the consultants that I used had had documents that were boilerplate. I didn't like those. I ended up blending the two together.
Speaker 1I sent it back to the same attorney who was supposed to only do corporate law and I said, hey, this is what I'm thinking. Oh, yeah, we can do that. I was like, well, why didn't you help me brainstorm that to begin with? So it was a lot of me driving. This is what I want to happen, okay, and trying to piece it together.
Speaker 4I mean, you're probably the best person to think of that, since it's your business, and what it would look like.
Speaker 1I think that there could be key questions. They could ask Uh, and I didn't get that experience. Um, but again, that's why you go back to your association and and and figure, figure that out. It's really what two people agree to. So, in our case, alexa had to agree that this is the terms and she would accept those terms. Um, that's really, that's really part one for us, because, you know, part two is how do I get equity to employees? Well, in order to do that, I had to solve part one first. So so it's, it's like these steps as you, as you go through, we can do a whole different podcast on that. But I don't, I don't think that if you're, if you want to retire and sell the business, that's different, because you're not just gone one day, you're probably working it out over time.
Speaker 1We have a client who bought eight restaurants in Seattle Washington, eight little cute little diners and, um, the gentleman she bought it from is uh going to work with her for about a year and a half.
Speaker 1Yeah, and you know yeah, this is, this is how we do things, and he's been really open to, uh, I think, allowing her to make some changes and he welcomed that. Uh, he's probably just burnt out for all these years, but that that's a. That's a normal situation. She was a. It was a business for sale. She did not know him Otherwise. She found the business listed, she interviewed him, learned more about it. He'd gone through this try to sell journey, I think, for a couple of years. So for, that's a normal plan right.
Speaker 1And she'd got to see the book. She did her due diligence.
Speaker 4She understood those, what the value was. Uh, that would be a normal, which is true with a lot of businesses. So it's like dentist doctors I mean a lot of times orthodontists you know they'll hire an associate to come in learn the business and keep the face with you know, whoever built the practice and then slowly transition. And then you know.
Speaker 1It comes back, and if you're trying to sell a business, it comes back to the three Ps and you got to start three to five years prior. So people profit and processes.
Speaker 3Okay.
Speaker 1Right. So you have, you have. You have to have your books clean, get all your personal junk out of it. Yeah, yeah, and, and you have, you have, uh, probably you want to show three to five years of a trend. So if you know you're gonna be selling your business in the future, you got to start treating it like a business, okay, um, and our industry especially, it becomes like a lifestyle business. So all your personal stuff is kind of wrapped into into the, into the P and L. When you start extracting that stuff out, right, I'll tell you it's painful. You're cause your profits go up. That means you pay more taxes.
Speaker 4Right, right, and then your expenses are in taxes. Yeah.
Speaker 1Like like this last time I bought a car it was not a company car, it's the first time. I've ever not had a company car and I was like ow, that hurts, Cause I could have written off $80,000 of my taxes.
Speaker 4Yeah, exactly, right, but it didn't.
Speaker 1I can't do that because I'm I'm thinking I'm not selling my business, but I'm thinking down the road is okay If I have fellow shareholders.
Speaker 4I gotta.
Speaker 1I gotta clean this up so that they, they seal the real business. So it's, it's, uh, it's something that you have to, um, work toward. Uh, someone told me one time that, uh, uh, they said, well, we're going to show them two books these are the real books and then these are the books that I took all my personal stuff out and I'm like the buyer is just not gonna the buyer's not going to go for that.
Speaker 4No cause, it's what the actual numbers are. It's a negotiation.
Speaker 1So we're going to go no, these are the real numbers and the bank's going to look at the real numbers when they're giving that SBA loan, of course, of course. So paying more taxes as a business owner is not a bad thing when you're close to that liquidation standpoint.
Speaker 3Are 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 Weiser Wealth Management. It's your blueprint for helping you keep personal finances secure while growing your business with confidence. Grab your copy at weiserinvestorcom. Forward slash guides today. All right, let's get back to the episode.
Speaker 4Well, does it look any different if, like, you're wanting to pass the business on to family members or, you know, through your state, does it look any different than that? And pass it on to where you have new owners coming in that are maybe family members?
Speaker 1Yes, we had a case we've done recently where we actually created I say we, as a financial advisor, my goal is to be the quarterback and make sure that everyone's moving in the right direction. So I'm more of organizing the meetings and making sure that the CPAs and the attorneys understand the wishes of the client, because a lot of times to the client everyone's speaking a different language. So CPAs speak, speak accountant language and the attorneys are talking about all these different types of trust and everything, and then the eyes kind of glaze over. So what we did is we had dad owned a business. We wanted to pass it to his daughters, so he created a trust and he gifted over time he's gifting these, the business into the trust. Once it's in this trust, it's an irrevocable trust and it's really the beneficiaries of the grandchildren. So that's how you skip it to the next generation.
Speaker 1But the parents, the, his kids get to manage it and they reap a big benefit yeah, so so when it's in there, he created a kind of a management or a council, so it's of. It's the daughters, uh, and they make business decisions and then one of the son-in-laws is the president, and then one of the son-in-laws works in sales, and then one of the son-in-laws works in sales the other son-in-law I think it's a tech or something in the business and the daughters are the owners and they're all like stay-at-home moms. But the business will keep going through that entity and then, as you see, the next generation, they'll bring in them into the trust as owners right.
Speaker 1Right.
Speaker 4Equity holders.
Speaker 1If people pass away next generation, the third, I think the third generation down, we'll have to make, probably revamp some things.
Family Business Transitions
Speaker 4But uh, it's a that's just mere, if I'm correct, and I'm asking is that, gifting it out of your state over time. Yeah, he used his full exclusion so you're not getting paid on that, other than maybe your salary.
Speaker 1Well, the difference is the kids were getting just salaries, but now.
Speaker 4What about the owner?
Speaker 1The kids are owners.
Speaker 4Yes.
Speaker 1And so they're getting the profits.
Speaker 4Got it, so they went from. So what about like the original owner, like if it was you, for example? So it's like, if this is he has, he has he's gifting it.
Speaker 1He still has voting rights, so he doesn't. They don't receive voting rights until he passes away, so he still fully controls his business, but but the profits are able to then now get. This is in his case.
Speaker 1He's over the exclusion Right, so so he's going to they're going to have to pay 50 percent tax above the exclusion death exclusion so he's getting out as much as possible. And then we did the same thing. He had a bunch of rental properties, nice vacation type properties and we were able to put those into a separate LLC and hopefully divide those shares up. So when he gets valued, he's valued less.
Speaker 1It's the same way with his estate. It will get valued less because if each person owns a third, is is worth a third is less, worth, less than the whole Right. So it gets valued less, right, uh, discounted. Um. So all of this was, it was orchestrated through the um, the attorneys that we chose for the project, and I will say there had to be a lot of repeat meetings over the topic because it gets very, it gets very convoluted.
Speaker 4So complex? You're asking really.
Speaker 1These are educated people working in probably more of a blue collar type type environment. Yeah, so they're not for lack of a better word, they're not dumb people, but these concepts just get real, even even I mean even in meetings. I was like drawing little pictures to myself and with a little flow chart. It's going okay. This makes sense now.
Speaker 4And I try to repeat that, and you're in the industry so you know it's just complex situation.
Speaker 1And I'll give them a plug. Scott Scott, Gregory, Gregory Doyle. He's probably the best M&A guy, I'd say in the state of Georgia. He, he, he's, he's very calm. Uh, when you have, when you have by m&a type stuff, uh, people's emotions get, get the best of them and there's a lot of fiery eating sometimes, especially if it's a, a buyer trying to get a better deal, and you have the, and it's your life's creator of the baby, the life's work, and he's valuing someone's life, life's work.
Speaker 1He's just like super, super chill, but also a very smart, and he's seen so many deals. He knows how to, how to get the parties to come together.
Speaker 1And in this case no one was no one was, um, uh, upset with this inside the family. They were just didn't understand. And and so we're. You know it's like be trying to. They're like so how do we make another half million dollars a year? Is this possible? You know, talking to the children, I said yes, because it's the profits your dad is taking these. And now he's just shifting it toward you, because he doesn't need any more resources for himself.
Speaker 4He's trying to reduce his tax exposure, his estate and all that.
Speaker 1Correct. So it's. It's going to be great, uh, for the family, and and I I, you know when the client came in, uh, I saw this and I worked for the rest of the other family too, so they're all clients here.
Speaker 2Yeah.
Speaker 1And he says, well, I'm trying to sell my business. I said, well, why would you sell your business? Why wouldn't you just move it to this person? And he told me all the reasons why he wouldn't. And I said, well, that sounds like a problem from a long time ago. There's probably no longer a problem. People have grown up and and they're all successful in their own and their own right.
Speaker 2So why don't we?
Speaker 1revisit this so we're able to take something that cause he had a couple of failed public sales, Um and, and we're able to kind of move it back to keep it within the family and hopefully, hopefully, a multi-generational wealth is created out of this.
Speaker 4Yeah, and I know sometimes the family just don't want the business. So you know, very true, which is heartbreaking for a parent.
Speaker 1My kids are 20, 17 and 13. I have no idea if they want to be in finance or not. I certainly would never push them here. I I worked hard to get to this point and I want them to pursue their dreams just like I got to pursue mine.
Speaker 2Yeah.
Speaker 1Maybe with a little more efficiency, a little more resources behind them to kind of push them along. But but you, you want, you don't. You don't want to force someone into your, into your business.
Speaker 4I think it was they're not going to love it like you are if they don't want it.
Speaker 1No, and I would have to go back. I've read this in one of my books. I believe it was Rockefeller that, and I could be totally botching this, but I believe it was Rockefeller. His son did not take over the family empire. His son actually became the big, ran the charitable foundation, but his son had zero interest in being a business person but was more concerned about helping people. So so you have to figure out what people's strengths are and what they, what they want to do, and we see that in very wealthy families. You know, occasionally you see an artist and they don't make as much. They live off this trust fund or whatever, but they're pursuing their, their dreams, right? Uh, so I think the important, important thing is to raise kids that are productive members of society, and it doesn't mean it has to be in your business to do that, you know you're going to you think about it like the old coal miners I was a coal miner.
Speaker 1You're gonna be a coal miner, and so it's a coal miner. It's like come on we can't.
Speaker 4We've moved too much to society to to be that way so business planning and for succession planning, it's really it sounds to me like it's a lot like individual planning.
Speaker 4There's different stages and steps, and so you're planning initially for like the catastrophic yeah and then if you're selling or transitioning or maybe leaving your business to family, that's a different tranche of looking at it, right? So, kind of like when you're an individual planner, it's like you're starting your career, having kids, getting married, and then you're transitioning to college and then, you know, going to retirement. So it's, it's gotta, you know, just starting the business, the startup I don't know that you would do succession planning, then there's nothing potentially to plan for. But then as you grow it, the catastrophic, and then eventual the retirement or selling it or passing it on to others.
Speaker 1I think if I was starting over um well.
Speaker 2I couldn't have done it.
Speaker 1Maybe early on. I would have loved to have created a trust and just dropped in like 10% of my company's value in my name of my kids. You think about the impact that would be? Down the road where me doing it now is like here's, here's, 0.0001 of a share, Cause you know you can give $19,000 a year, but you know it's, it doesn't really make a difference at this point. Maybe it does if I live a long life, but if I died tomorrow, it doesn't make a difference. Um interesting.
Speaker 1So I you know, but no one really thinks about that. You're in startup mode? Um, I think, yes, if you're in, if you're in startup mode, um, it's probably not, it's not gonna be as important. Uh, now, if you have a partner, absolutely.
Speaker 1Yes, and that could be a whole nother podcast too. But if you, you know, dave Ramsey says, uh, partnership is the only ship that doesn't, that doesn't float, and there's some truth to that. There's been a lot of stories over the years of you know bad partners and how they left with people's money. And there's a guy here in Marietta that that, uh, that that has a store. I won't tell what it is, but it has a store. And every time I go in there to buy something I've heard the backstory of him and his partner and he was probably the guy that that was in the wrong and screwed his partner over. But he was probably the guy that that was in the wrong and screwing his partner over. But every time I go in there to buy something I think do I really want to be shopping here?
Speaker 4But it's like, well, no one else knows that you know, I just have the inside track. That's hard, but being partners with people, it's definitely hard.
Speaker 1So my point is you want to have agreements set up that where, if there's a split, there's a well defined um, there's a well-defined exit strategy. So you have to think of the worst case scenario. I'll tell you I bought Wiser Wealth Management so I started my own firm in 2001. In 2007, I purchased Wiser Financial Services, which got rebranded into Wiser Wealth Management. That's part of our company's history. And there was a man his name is Mr Wiser and Mr Wiser I never wanted to come to be about me and I, so I I just take, took the Weiser and made, put, added the owl and said invest smarter used to be our tagline back then Um, I actually had to use my get out clause after about four or five months. He was not comfortable on the other side of the table.
Speaker 2And.
Speaker 1I was like this is not going to work, like we, we, we we're going to start losing clients. Things are going to get really ugly. And so I had a great attorney that worked in a get out clause and I was able to execute it, um, and to this day, uh, you know, that was the saving grace to the whole arrangement. Yeah, so you, you have to have people who are not emotionally involved in helping you do this. To help you think of all the worst case scenarios.
Speaker 4Yeah, no, I love that part, since obviously you being the business owner and what you've done here and you're speaking from experience, and then you can help other business owners, because we do business planning here too, at Wiser, you know, and so being able to help other business owners navigate, that it's just extremely helpful for them.
Building Business Value
Speaker 1Yeah, you have to start with the e-myth book by Michael Gerber. That's gonna help you through, create those processes and then from there there's really there are some books. I just finished reading a book on equity and how to transfer equity and it made my mind just spin of the million different ways you can do it.
Speaker 2And.
Speaker 1I always subscribe to keep it simple.
Speaker 4Absolutely. You just want people to understand what's happening. If you don't understand it, then like yeah.
Speaker 1We've got in the past. We've gotten kind of crossed with our bonus structure here and people are like I have no idea how to calculate any of this and I'm like, all right, we have to make this simpler.
Speaker 4Right, make it so you can see through and understand what's going on.
Speaker 1So exactly.
Speaker 4Well, is there. Is there anything else? Um, obviously you know passing it on selling the business, just making sure your own retirement is secure, making sure you're you're getting enough out of the business to make sure that you're going to have longevity in your financial situation. Um, is there anything else? You think that you would want to add?
Speaker 1Most business owners create jobs for themselves. They don't actually know how to grow and scale a business and I'm not talking down to them. I was one of them and it's taken me 10 years to kind of figure that out, Partially from exhaustion of okay, I can't talk to 400 people anymore, how do I find more people to talk to people? Hopefully, these people don't want to talk to me, but I'm not the best person to do that anymore because I'm pulled in a million different directions where you're much better off talking with a person like you, like Michaela William.
Speaker 4Grace right.
Speaker 1Their sole job is to listen and advise. Right, Right.
Speaker 4The repeatable processes, the repeatable processes.
Speaker 1So how do I clone me? And, as you know, we have 80 something workflows, and the workflows help us make sure that the advice is being given the way that I've always given advice, right. So whether you work with anybody at the firm, it doesn't matter. You get the same sandwich, right? That's the important part, Right, right.
Speaker 4Well, and the other thing is is like our hiring process, right, I think it's, you know, having the right people in the right seats and you know, making sure they're fit culturally, and then hiring for the heart and training the job through the processes and procedures we've put together. And so I think that because the clients know and trust you and know what you build, they're going to trust whoever you have them work with, Right Right. So because it's the branding, so that's very important, the name you know and what you've created.
Speaker 1So, going back to my point, where, time up, people create a good job for themselves. The point there is if you're trying to save for retirement, if you want to don't want to work the rest of your life, you have to understand the business value. So you need to have to, early on, have an idea of what, what it is you're creating and potentially what you could transition the business for. Otherwise, you've created just a job for yourself.
Speaker 2You own the company.
Speaker 1You have additional responsibilities and you need to be maxing out a 401k plan. You need to be doing all the normal stuff that everyone else does.
Speaker 3Yeah.
Speaker 1Because maybe at the end your business is not worth as much, right? So some, some industries are like that, um, I would think, at recruiting. So if you're, if you're, if you're a recruiter, we have a client who's a very successful recruiter. She recruits, uh, I think, mostly finance type people. Um, uh, cfo type level.
Speaker 1Uh, it's all about her contacts, so she can probably hire an assistant or something to get more efficient. But when she's done, the business is probably done. So in her case it's like how much money can I make? How much can I stash away?
Speaker 4And then I'll just be done Right Now, if you're in your self-employed, you don't have a boss and you can call the shots and whatever Correct, so you, so you really have to, and and so maybe you're.
Speaker 1Start with the end in mind. Yeah, so you're. My point is maybe you have a business that isn't sellable or maybe like, and we have another client is doing his own tech startup and he's like, and I think, maybe year four now, so maybe he's he's building something with the end in mind. He's trying to solve a problem. Every business has to solve a problem. So he's trying to solve a problem, knowing that his payout should look like this and he has to he has to build his solution big enough that someone's willing to pay for that Right.
Speaker 1So probably a roll up of some sort into another company.
Speaker 4And so back to the company that isn't really maybe sellable or have value per se in the end, then you would just solve catastrophically for like any other employee, if you will, with life term life insurance.
Speaker 1Life term life insurance.
Speaker 4So, make sure that you have enough for your family if something happens to you.
Speaker 3Yep, yeah.
Speaker 4So disability and all that.
Speaker 1Most of the time, consulting companies are going to be along those lines of the time, consulting companies are going to be in along that those lines. If you're building, if you're building widgets and you have inventory and all that stuff, then that that's a whole different. That's a whole different. Ball game is how do you sell? How do you sell that business? We have a client that sold a business a very profitable business two years later bought it back for half the price because the new owners didn't know how to handle it.
Speaker 4Oh my God, I can't imagine selling and buying Can you imagine that that's like getting a divorce and remarrying the same person, which happens.
Speaker 1Right right, he's like well, I got all this money from him. Then I just took half of it, I bought it back and he built it back up to where it was. Then he just decided he would just run it until it just ran out.
Speaker 4Yeah.
Speaker 1And that's basically.
Speaker 4he's in his eighties now, or close to it, and and the business has kind of just kind of died out on its own, um, but but yeah he must've just missed it or loved it or something, cause you know that would be hard to like rebuild the same thing you've already built. I guess the challenge is back, though, so maybe it made it exciting. It's all about relationships Of course.
Final Thoughts on Business Planning
Speaker 1I'm back. And then I was like, okay, he's back, let's go back to that company, yeah. So, yeah, it's um, uh, so yeah, but just make sure that that you have. You do have the end in in the mind. You have a contingency plan. Uh, being a business owner has great rewards. Um my, my kids see me work all the time, but I'm also present. Um when I, when I, when I need to be present, you can go to all the golf things you know, the horse thing.
Speaker 4So I mean, you're able to do that so well, perfect. Well, you can schedule a complimentary consultation with our team If you would like to discuss your goals and create a roadmap for a successful transition, and just talk to us and we'll see. You know, maybe, what direction you need to go. Um, we have some other podcasts linked to the show notes below Episode 283, how to Manage a Sudden Money Windfall, and episode 247, why it's Crucial to Separate your Business and Personal Assets. There's a couple educational financial business related videos as well, but thanks 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 weiserinvestorcom or by clicking the link in the episode notes. We'll see you next week.
Speaker 1Good job, Shana.
Speaker 2Thanks for listening to a Weiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review.
Speaker 2If you have any questions about anything that was discussed today, head to wiserinvestorcom and reach out. This podcast is strictly for informational purposes only and is not to be considered as investment advice or a solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guests may personally own securities, digital assets or other investment vehicles mentioned on this podcast. Neither the host nor guests of the show are compensated for their participation and no referral fees are paid to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
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