Episode 137: Congruency and The Law of Diminishing Intent.

Ever wondered why authenticity is crucial for entrepreneurial success? This episode, Jim and Matthew take you into the vitality of living a congruent financial life. The guys unravel the importance of managing personal and professional finances with equal discipline, sharing insights on how authenticity fosters peace and gratitude. Learn from their own trials and triumphs how adopting disciplined financial behaviors can pave the way for greater success. They'll also guide you through the critical process of understanding your financial standing, likening it to a fitness routine that celebrates incremental progress over time by looking backward for improvement not at unrealistic horizons. The significance of knowing your net worth and understanding balance sheets can only benefit your business mastery. Decision making becomes much more clear when you know what the real picture looks like, what your profit and loss statements are telling you. 

The conversation then begs some work to tackle the tough topics every entrepreneur faces: from making swift decisions in critical situations to mastering the operational aspects of a business. Hear real-life stories about the complexities of balancing craft mastery with business management and the emotional journey of overcoming financial burdens. They'll discuss the often-overlooked necessity of personal and financial preparedness for life after business ownership. How was the business valuation prepared, what does your exit planning look like, if at all? And finally, what about that "burnout" and the significance of pausing to reassess and redirect your energy, ensuring your entrepreneurial spirit remains ignited? Learn to appreciate "The Law of Diminishing Intent" and how progress begins with telling the truth. That's where personal growth really shines.

To learn more about The Whole Wealth Journey, visit https://gebhardtgroupinc.com/
To get the book E-Myth Revisited by Michael Gerber, you can click on the link below: https://www.amazon.com/Myth-Revisited-Small-Businesses-About/dp/0887307280/ref=asc_df_0887307280/?tag=hyprod-20&linkCode=df0&hvadid=693671725874&hvpos=&hvnetw=g&hvrand=11518453818217731005&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9032466&hvtargid=pla-361791162205&psc=1&mcid=80e7fd31f3933957a8672d97925724d0

Chapter Summaries:
(00:00) Gratitude for Milestone Birthdays and Clarity
Joyful birthday celebrations, unique cocktails, and personal growth through Strategic Coach program in the Gebhardt family.

(04:25) Living a Congruent Financial Life
Embracing authenticity brings peace and gratitude, financial congruency is important for entrepreneurs, balancing personal and professional finances is challenging.

(10:37) Measuring Progress in Arrears
Understanding our financial status through balance sheets and consistent evaluation, similar to fitness routines.

(21:39) The Entrepreneur's Guide to Business Mastery
Triage in medical and business contexts, separating craft from management, and delegating tasks for business growth.

(30:42) Net Worth Assessment and Pro

You can learn more about The Whole Wealth Journey by visiting The Gebhardt Group. You can follow us on Instagram @thewholewealthjourney

Transcript

Matthew Grishman: [00:00:00] But then there's this whole other piece behind the backstage of running the business, which you can be the very best in the world at the craft. But if you absolutely suck at running a business like this guy, then unless you go out and hire somebody to do it, you're going to struggle.

Jim Gebhardt: Welcome to the whole wealth journey. Wealth with a Y. What does that mean? What does that mean? Are we spelling it funny? 

Matthew Grishman: Uh, no, I think we're using the 

Jim Gebhardt: word. Why 

Matthew Grishman: the word, why not the letter? Why the actual word? Why? 

Jim Gebhardt: Well, I know why, why? Because we want to help people get on their path. Then the path is all about their why.

Matthew Grishman: And it's about aligning your finances with the people, the experience and the passions that give their lives 

Jim Gebhardt: true meaning. It's getting way beyond the bank statements, the brokerage statements, the [00:01:00] trust documents, the life insurance. And taking a deeper dive into your why. 

Matthew Grishman: Well, admittedly, we're not for everyone.

This is different. We're for the bold ones who really want to dive deeper and seek a life that resonates with who they really are at their core. Who finds value in vulnerability? 

Jim Gebhardt: Well, 

Matthew Grishman: you and I do. You 

Jim Gebhardt: and I do, and that's where we want to play. But not everybody is comfortable with that vulnerability.

Matthew Grishman: Maybe we should introduce ourselves. What do you think? Oh, that's a good idea. Jim Gebhardt. And I'm Matthew Grishman. We are the co creators of the podcast, The Whole Wealth Journey. Ready to find your why? Then let's get started and get you one step closer to unlocking your inner wealth and well being.

What are you grateful for today? 

Jim Gebhardt: Well, it is much like your household a couple weeks ago, or last week and a couple weeks ago. It's birthday week in our house. 

Matthew Grishman: Oh yeah, birthday season is firmly upon us. Yeah, 

Jim Gebhardt: we are squarely in it with [00:02:00] three out of the six birthdays in the Gebhardt family. But two are back to back.

And these are milestones. These are, these are mega birthdays. Okay. 18 and 21. Oh, nice. Jack is 18 today. Grace is 21 tomorrow. Nice. And I'm grateful I get to witness that. I'm grateful to just see how these two young kids of ours have morphed into now, you know, as Jack was kind to remind me this morning.

He's an adult now! 

Matthew Grishman: Of 

Jim Gebhardt: course. And I said, well, that is fantastic. I will transfer all debts and future bills to you. Absolutely. So he's paying his own cell phone bill now. Since you're an adult. Right. A funny tradition started a year ago with, uh, dear, dear, dear friends of ours. Their daughter was turning 21, whose birthday happens to be yesterday.

And we caught wind of the fact that they were going to go, we have, we have one bar in our town and it's technically a saloon. This is actually one of the oldest [00:03:00] businesses in Lafayette, and it's a saloon. Oh, the Roundup. Yeah, the Roundup. Right, right. I remember that place. Not the weed spray. Right. So we caught wind of the fact that she was going to go, the daughter was going to go there precisely at 12 o'clock so that she'd be 21.

Sure. It's five o'clock somewhere. Go in for, you know, go in for her first official cocktail. Well Beth and I surprised her and we were inside the saloon when they were coming in and we put our noses up against the window and did all that. Well, it's turned into a bit of a thing. So we're doing that tonight.

So somehow I need to caffeinate myself, take a nap, exercise, eat all the above. So that I can be at the saloon precisely at midnight to, you know, buy my daughter a cocktail. 

Matthew Grishman: Well, isn't the cocktail nowadays an espresso martini? Isn't that like the cool, what all the cool kids are drinking? Yeah, that and the, uh, the Aperol Spritz.

Aperol, say that again? Yeah. Did you say Aperol Spritz? 

Jim Gebhardt: Yes, sir. What's Aperol? [00:04:00] It's a liqueur of sorts. Very Italian in terms of, uh, its heritage. Okay. It's a syrupy kind of liqueur that you serve with champagne. Oh, two of my, and yeah, no, that's a lovely summer, lovely summer cocktail. That, that tends to be one of the hot items right now, along with the expresso martini.

Unbelievable. But those are really not on my program. So we're going to apple juice. We'll do something else. Yeah. A little Martinelli sparkling apple juice, maybe a Guinness, but Guinness on this side of the pond is Harvey Blake. 

Matthew Grishman: Yeah. A little too cold. Very nice. That's not my, num, num, num, not my 

Jim Gebhardt: thing.

What's on the gratitude 

Matthew Grishman: wagon for you? Oh, thanks for asking. I am grateful for the time I spent hanging out with all those wonderful people at Strategic Coach last week. Nice. You have been sharing Dan Sullivan's work with me for A couple eons. Just about 20 years. Yeah, almost 20 years. In [00:05:00] fact, it'll be 20 years next year And if the best time to plant a tree was 20 years ago, well, you know, we met because of this program we did And it's almost like, uh huh, uh, 

Jim Gebhardt: and 

Matthew Grishman: yes, Shelby, if you're listening, I have so much gratitude for you and for strategic coach and, and how the desire to upgrade your thinking brought the two of you together and it created this.

So it's almost like it was a little bit of a full circle event last week. I got some really good clarity on how this 52 year old guy wants to spend his time. A little more clarity. Right? And one thing I'm feeling a lot of gratitude toward, and I got a little bit of validation from this down there, was how we just kind of get to show up as ourselves now.

With what we do and how we live and how we've chosen to live and what I mean by that is this this word [00:06:00] Congruency, you remember those orange bands? Yes. We had back in the day. We got it 

Jim Gebhardt: I'm sure I still have a few floating around. 

Matthew Grishman: I think we've got a couple of bags worth of them in the Roseville office I'll resurrect them for our big adventure next week.

There's something about just Being the same person Whether I walk into a conference Whether we're sitting here in the podcast studio sitting with a client out in public at home on my couch watching a baseball game just being that same person who's kind of comfortable in his own skin and doesn't feel like he needs to put different masks on based on Where he's going and to spend some time With some really really incredible entrepreneurs last week.

I didn't feel like the only one in the world Who's trying to live this way. There's more of us out there. Oh, there are. And it was nice not feeling like an orphan for a couple of days and being able to explore this idea of what living a congruent life looks [00:07:00] like and taking it deeper. So I just, I have lots of gratitude for, for that and for how we get to live our lives.

Jim Gebhardt: Fabulous. Yeah. 

Matthew Grishman: It's a lot of 

Jim Gebhardt: fun. And the, uh, the gift will keep giving. 

Matthew Grishman: It will be. Well, when you become comfortable. In your own skin, it's an incredible gift, and it's a start, 52 years, and for the first time, truly for the first time in my life, I've shared this now a couple times, I think the last couple times we've been in here, is I feel a level of just at peace with who I am.

It, you know, it's not perfect, I, I've got lots I'd like to continue to progress on, get better at. But I looked in the mirror, I don't know, a week or two ago? And it would be very easy to draw, to draw my attention to this lovely expanse called my midsection that I could very easily beat myself up over that.

Ah, yes. But instead I saw these really cool new lines in my shoulders that are starting to develop from the strength workout. Oh, not [00:08:00] tan lines? Like these muscle, well, I have tan lines, but they're lower because of all the golf you make me play. Oh, I see. These are like muscle lines up in my shoulders that I've never really had before.

And So did you, or did you get those at Costco or where, I mean, 

Jim Gebhardt: where'd you get them? No, 

Matthew Grishman: I got those at Lifetime Fitness. Thank you, Lifetime Fitness. They sell them there? Complementary with your membership. Oh. If you pay your membership fee and you show up every day. Yeah. And you spend extra money, or I should say invest extra money on a trainer.

Good boy. Good boy. When you invest extra money on a trainer and they give you an app that gives you the rest of your workouts for a week and you do those workouts, after six months of doing that, even if you still eat the way I eat, you start developing these lovely little muscles and lines in your body.

And it just, it felt good to see them. Hear me Now listen, Exactly. 

Jim Gebhardt: For our, uh, older listeners that remember 

Matthew Grishman: Hans and Franz Uhhuh. . Hear me now, but listen to me Leida. Yeah. I love it. I love it. So it just, a lot of gratitude for. Thank you. I love being comfortable in my own skin and [00:09:00] even though there's less of it, there is less of it.

It's much more comfortable now that there's less, there's a little lesser of it, it never fails to amaze me at how we can extrapolate that into the world of money and finance, into the world of the entrepreneur. Like what does it mean to live congruently? What does it mean to be the same person no matter where you show up?

For you now one of the applications to living congruently that I don't know about you But it's been pretty cool to see in some of the entrepreneurs We've met is that the congruency spills over into the financial life for me. I used to show up professionally Financially professionally different than the way I showed up in the financial world At home.

Jim Gebhardt: Yeah, I think we have 127 episodes about that. 

Matthew Grishman: Sure. Exactly. When I really dial into that though, the way I treated my [00:10:00] finances at work versus the way I treated my finances at home were different. In the end, it all felt the same, but they were different. And one of the things I've enjoyed as you and I are getting to know more and more very successful business owners is watching the most successful.

have this congruency with how they manage their personal finances Identically to the way they manage their professional finances. They run their personal finances like it were a business There's congruency there the best ones do the best that well, come on Are we here to talk about the I know shittiest ones or the best one?

I 

Jim Gebhardt: unfortunately know quite a few that almost abdicate their personal finances and I Certainly at times in my career, I was much the same because my personal finances really didn't matter. Right. At the end of the day, if the business finances weren't cooking because one fell to the other. Sure. Right. So if the lead horse in the [00:11:00] race isn't performing and winning the race with all due respect, ladies and gentlemen of the jury, the personal finances don't matter.

I mean, they, they matter. But there's not a lot I'm going to be able to do when you're an entrepreneur, which is different than a salaried individual that has a paycheck coming in every two weeks. Sure. And you're worried about making payroll. You're worried about covering the rent. You're worried about making sure the healthcare Invoices are paid for, for you and your employees, so 

Matthew Grishman: many people depending on you 

Jim Gebhardt: at the end of the day, there are times when there isn't always leftover scratch that flows to the personal finances, right?

So, you know, if you're listening to us today, talk about this and you're in that situation. I feel I, I know that pain. Yeah. And it's real and don't try to hide it and we could have a whole show on. All the different ways people mask it, but the sooner you can start to move in the direction of like Matthew's saying in terms of, you [00:12:00] know, best in class behavior, that best in class behavior is going to run their personal finances with a similar thought process, methodology.

Obviously we're going to get into that today as the business. Yes. 

Matthew Grishman: Yes. 

Jim Gebhardt: In the kind of very overly simplistic way of, of a profit and loss statement. And your balance sheet. Your balance sheet being really no different than a personal net worth statement. 

Matthew Grishman: Right. Up till this point, we've gotten started on this whole wealth journey by just kind of setting the foundation.

Right, that's, we've done that the last couple of episodes now. We're launching the whole wealth journey. We're going through the curriculum of what it takes. to be that entrepreneur who gets their financial house in order, who recognizes how to create alignment with all of their financial resources and the things that matter most in life.

And this is where it starts. So last time we talked about just some very basic things like what is financial security look like, what keeps us up at night about money. And now we're kind of taking it to that next level. of [00:13:00] how we actually manage the personal finances? Do we run it like a business? Have we taken the time to see where we are, to measure where we are?

Because every entrepreneur you and I have ever met has these incredible goals, these incredible visions, the ones that you and I seem to be most attracted to have visions and dreams of having massive impact, doing really incredible things for their tribe. And so to get there, We've identified a very necessary step in the whole wealth journey, which is figuring out where you are, knowing where you are, having complete clarity on where you are, and doing it in a way that's not judgmental.

That's not saying I'm succeeding or I'm failing. I just am. This is where I am. We gather data. And now we decide what we need to do going forward, depending on what that data tells us. So, full disclosure before we get into this. If you're with us today, and you're going to go through this with us today, [00:14:00] the most important part today is to recognize what we're doing is about gathering information.

It's not about judgment. It's not about, Oh God, I've done a good job or I haven't done a good job. We got to take that parking aside for a little bit. Cause today it's just going to get in the way. It exactly. Today is an analysis day. It's about details. It's about uncovering where we are so that we know what needs to happen to get in motion, to go forward.

So today let's, we're going to talk a little bit about how to measure where we are and maybe what some of those next steps are on how to move forward, depending What the results are, what you find out about yourself today as we go through these things called building a balance sheet and looking at a profit and loss statement.

Sure. So what's a balance sheet? Oh, that's a great question. I was going to ask you that question. Okay. I mean, a balance sheet, simply put, is a snapshot. It's a snapshot of where you are financially. It's a snapshot in time of what you have [00:15:00] versus what you owe. Mm hmm. And it gives you this thing. It's called a net worth, what you're worth financially, based on 

Jim Gebhardt: numbers.

In a balance sheet, it's really going to be pretty simple in terms of what you would break down as what are called your current assets versus your long term assets, your current liabilities versus your long term liabilities. A long term liability would be something like your mortgage, right? A short term liability might be something like you've got five grand on a credit card because.

You had surprise dental bills and holy smoly, we had to put that on a credit card. Current assets, cash in the bank, right? Traditional investments, longer term assets that have equity like your home, could be a long term asset, right? It's not something you're planning to live on, you're planning to live in it.

And, you know, for business owners that are going to understand the terms balance sheet and profit and loss, The balance sheet is really the equivalent in, you know, in our world of a net worth [00:16:00] statement. Right. Right? Right. A simple calculation of, like you said, what do you have, what do you owe? Take what do you have, minus what you owe, there's your net worth.

Yeah. And With our banking relationship, we have to do that like 42 times a year, it seems. It's part of my gratitude. It's, it does feel like 

Matthew Grishman: we have to do it a lot. 

Jim Gebhardt: It does feel like we have to do it a lot, despite we've evolved as a business where our relationship with the bank is more of them encouraging us to borrow money.

Matthew Grishman: Yeah. 

Jim Gebhardt: Versus periods in the 11 range where it was Can we borrow some money? Sure. Thank God that ship has passed, but I wouldn't trade it for the world because it taught me so many incredible lessons that, you know, have made us better entrepreneurs today. But the big thing about the exercise of going through and assembling that data to look at what he have, And what do you owe goes back to a very simple strategic coach concept that you learned 20 years ago, which is if you're going to [00:17:00] measure your progress in something, you have to do it.

The only way you can do it is to look in arrears. Right. Because otherwise you're trying to compare yourself to the horizon. You're, you're chasing something you ultimately can never get to. And I'm sure as I'm saying these words, people are thinking to themselves, you know, how that's felt, whether it's been.

a diet or some number in a bank account or, you know, it just, you can't get there. You just keep chasing yourself and chasing yourself. And it's the horizon keeps getting pushed out and pushed out and pushed out. You can't get there. And when you start to do this exercise on a consistent basis, it is quite powerful.

The wave of emotion that gets when you start to see the progress and you start to see the thing building. No, no different than your gratitude with, if you keep showing up at lifetime. And you keep walking up those stairs to the upper deck where all the weights are. Right. All those clunky machines. And you do them.

Matthew Grishman: Mm hmm. 

Jim Gebhardt: It is remarkable the [00:18:00] progress that happens over time. Right? Absolutely. Same applies here. Right. No, no different. 

Matthew Grishman: We're, and, and the most important thing In that process for me is I can very quickly get caught up in looking at all the specimens that walk around the gym and think to myself, my God, what a loser I am right that I don't look like that yet, right?

And that's measuring progress out the windshield. It's measuring progress in advance of where I think I'm supposed to be. Oh, I'm supposed to look like that 32 year old upside down triangle shit brick house. But the reality is I don't, I'm not. I'm a 52 year old. I don't know. What would you call me? Kind of life coachy kind of guy who helps people get unstuck disguised as a financial planner.

I don't know. Something like that. Do they look a certain way? I don't know what they look like. It's very easy for me to get distracted when I see that and [00:19:00] where you have helped me immensely, which has given me the courage to keep showing up at the gym, which has given me the courage to keep going through the balance sheet exercise, is that we measure progress in arrears.

I look at where I was a year ago, it's six months ago. Three months ago, a month ago, and I feel stronger than I was then. Progress. I love, love, love what Heritage Bank has asked us to do on a semi annual basis, which is create a personal net worth statement, and every single time we do this exercise, every time we have done this exercise for Heritage Bank, I have been able to measure progress, positive progress, meaning the net worth goes up.

The debts go down. The assets have gone up. The net worth goes up. Every single time we've done this exercise, it is one of the best feelings to protect my confidence that I've ever had as an entrepreneur. Well, who doesn't like progress? [00:20:00] Well, so We love progress right and one of the things that we've been taught our whole lives is how this idea of comparison Is evil.

It's the thief of all joy yet. Here's a place where comparison can be one of the most valuable tools For an entrepreneur to make progress in their life because we're redefining how we use the tool comparison. 

Jim Gebhardt: It doesn't take long to hop in your car and go somewhere and see somebody else's car or see somebody else's house or see somebody else's physique, right?

The comparison is a thief of all joy is, is one of my favorites because it's just, it's almost inescapable. You have to constantly remind yourself, no, no, I have no idea what's going on in their world, right? I have no idea what they've had to sacrifice to do that. Right. Right? That may or may not be a price I would have been willing to pay to have that thing or that body or that house or that car or that whatever.

Matthew Grishman: You're [00:21:00] comparing what you see on the outside to how you feel on the inside. Right. Right. Which is a complete disconnect. Right? Yet. Since we first began talking about this concept here on the show, we're also starting to learn where comparison can be a valuable tool. There's two sides to the comparison coin.

One is a very dangerous side, which leaves us feeling much less than. And then there's the measuring progress and arrears, where we're comparing ourselves One hundred percent. to our former selves. Yes. And the very best entrepreneurs in the world that we've ever met, the very best athletes in the world we've ever met, the best performers in the world we've ever met, the people who have chosen to excel and be the very best at anything in this world have separated themselves by no longer competing against other people who do what they do.

They only compete against themselves. And they compare themselves. To the former version of themselves. Yes, sir. Which is awesome. So back to our regularly scheduled program of of building the balance sheet here I 

Jim Gebhardt: feel, you [00:22:00] know, we've been talking about lifetime fitness and and Exercise and health and kind of stuff like that.

I feel yeah, I feel a different kind of exercise coming on. 

Matthew Grishman: Oh, yeah Yeah, what kind of exercise would you like to do now? We're going to do some push ups and crunches just going to be more of a writing exercise So something that'll strengthen the grip a little. Yeah You 

Jim Gebhardt: That's what I'm 

Matthew Grishman: feeling. Or maybe for me, it might loosen the grip a little bit.

Jim Gebhardt: Okay. 

Matthew Grishman: That's 

Jim Gebhardt: cool. 

Matthew Grishman: Well, depending on what the writing exercise is, we could be focused on strengthening the forearms or we could be focused on becoming a little bit more aware of where our money is. That will take time. How many entrepreneurs have you met, before we get into the writing exercise, who've never actually sat down?

In their business and taking a snapshot of where they are because they're just blowing and going. Not, not many. Not many? Not many. 

Jim Gebhardt: Because you, you, I mean, you reach a point where the consequence of that is you don't have a financial [00:23:00] statement and subsequently you can't file your taxes. Right. Now, have I met entrepreneurs that have not filed taxes for a period of time?

Yes, I have. 

Matthew Grishman: Yeah. 

Jim Gebhardt: Those are not our ideal clients. Right. But yes, I have, and I've tried to help coach them or counsel them on where they could go to get square with all that. Because really, there's nothing we can do for them in that condition. That, as we've said on the show many times, is a classic triage situation, right?

In a medical triage situation, You have to quickly assess where is this patient bleeding out? 

Matthew Grishman: Yeah. 

Jim Gebhardt: Right? And if you don't patch that quick, they're going to die. Sure. And this is a similar kind of, you know, not similar in the obvious context of a medical emergency. But in a business emergency, if you, if you can't stabilize the business and get square on your taxes and everything else, I mean, I'm, I'm thinking of [00:24:00] one entrepreneur that we met that.

She owed over 300, 000 to the IRS. And she was a sweetheart of a woman. And I still really want and still is. And I desperately wanted to help her. And it was through a confluence of events that she wasn't trying to pull one over. Right. 

Matthew Grishman: I think she just referred us a client. She's a wonderful person. Yeah, she did.

Jim Gebhardt: Yeah. And you know, in working with her, her CPA, I gave her some advice that the CPA found a bit shocking and I'm sure any other financial advisors listening to the show, it sounds shocking, which was. Wipe out your IRA. Wipe it out to liquidate it. To pay the bill. Right. To pay the debt. To pay the tax debt.

Get the monkey off your back. 

Matthew Grishman: Yeah. 

Jim Gebhardt: Right. There is nothing worse than having that kind of Hanging sense of dread over you and she's a very high performing entrepreneur and I'm like, you, you've got to get, I mean, you are, you are running record paces around the track and you've got hundred pound ankle weights on you.[00:25:00] 

I mean, we get these ankle weights off of you and you're going to run like a, like a thoroughbred, but that was pretty unconventional advice in the context of pay the penalties. Ultimately the IRS waived the penalty, but she still had to pay the income taxes. And she got that monkey off of her back. But anyway, that's, you know, that that's a bit of an aside.

Matthew Grishman: Whether you're an entrepreneur who's done the exercise of taking a snapshot of where you are or you're not, whether you're an entrepreneur who's done it before, but it's been a long time. If you're an entrepreneur who does that for your business or like you and I, you and me, we have somebody who does that for our business.

You and I don't sit down and put our own balance sheet together and our own profit and loss statement. We've hired somebody. Who does that? Cause remember in, in any business, there's the craft of what you do, right? What you and I do in this world of financial planning, how we've had this kind of impact in the lives of entrepreneurs, especially those [00:26:00] who want.

More from their money than more money, right? We've created this this very unique offering of Discovering wealth with a why right and that's a craft That's what we do, but then there's this whole other piece behind. Yeah the backstage of running the business Yes, which you can be the very best in the world at the craft But if you absolutely suck at running a business like this guy Then, unless you go out and hire somebody to do it, you're going to struggle.

Which, 

Jim Gebhardt: I think Michael Gerber has sold a couple billion books on his e myth. Which, if you're an entrepreneur and you haven't read it, it is required reading. That might be one of your book reviews. It is absolutely required reading, because ultimately Give us a synopsis. Well, the long and the short of it is, I mean, I'll tell you about the electrician I met yesterday.

As I said on the prior show, you know, we've gone over to the dark side and we own a Tesla. 

Matthew Grishman: Yeah. 

Jim Gebhardt: And we have to have a charger for that. Shocking. And we need an electrician to come to the house and in, you know, and, [00:27:00] and put in a two 20 to do the blah, blah, blah. Everything you need to own a Tesla. So electrician comes over and we get talking about a variety of things.

One of which was he loves what he does, he loves. Solving problems. He works with a lot of realtors on homes that they're trying to get ready to for market and they come across a Glockenspiel an 

Matthew Grishman: electrical glockenspiel. Yeah, 

Jim Gebhardt: and they're then they're that's hot that aha Ha and they call Cole and Cole comes in and saves the day, right?

He's a problem solver Yeah, I can smell him from 100 yards away. Sure, but He said, Oh man, if I didn't have my CPA, I mean, I don't know how to run a business. Right. I can't. I have no idea what I'm doing. This is all new to me. I'm only two years old. Right. I said, well, you're no different than a toddler that's two years old.

You're, you're standing, you're walking around and you're, you're all goofy and you have no idea what you're doing. Sure. Right. Really the e myth is much, much about that same fact is you, you [00:28:00] get good at a craft. 

Matthew Grishman: Yeah. 

Jim Gebhardt: But then the backstage of all the mechanics of actually running the business, paying the bills, staying compliant, having the insurance, paying your taxes, quarterly estimates, payroll, right?

Payroll, healthcare, HR rules, and regs of change in our world and finance with the compliance rules that change on a daily, weekly, monthly basis. SEC FINRA, 

Matthew Grishman: Department of Justice, Department of Treasury. 

Jim Gebhardt: Well, while you may be good at the craft, if you're not good at the backstage, and certainly in the beginning.

When you're a very small business, you're going to wear all those hats, right? And until you figure it out very quickly, our dear friend, Dan Sullivan and strategic coach would. Be one of the first to tell you this, but you got to start getting those hats off as quickly as possible as you as you possibly can.

Yes, and and have while I've also seen this hundreds of times with entrepreneurs is and I am much the same. They have tremendous allegiance and a desperate sense [00:29:00] of relationship with those that kind of help them early. 

Matthew Grishman: Mm hmm. 

Jim Gebhardt: You also have to realize when it's time for an upgrade. Sure. And whatever member of your team, your backstage team, either internal or external, there are times when, you know, in the same context we're talking about elevating your thinking, there are times you have to elevate your team.

Matthew Grishman: Yep. 

Jim Gebhardt: Right? And whether your CPA was your college buddy or your next door neighbor as a kid, or your wealth advisor was a college fraternity brother, or whatever, you know, your insurance guy, your banker, whatever, those are very hard relationships to separate from. Believe me, I know it firsthand. Mm hmm. But in the evolution of the business owner, you have to keep upgrading your internal team and your external team.

So we are very blessed that we have a wonderful internal and external team that helps us stay out of the, the danger path of all those, you know, not filing your, your 941s, whatever the HR posters that are supposed to be. I'm still 

Matthew Grishman: filing my 940s, let alone my 941. Right. I mean, I'll [00:30:00] get there though.

Exactly. Yeah. It's just one more. Okay, good. 

Jim Gebhardt: So that whole e myth, it's a great read. It's a quick read. Go devour it. 

Matthew Grishman: Yeah. We might even have a link to the book, which by the way, full disclosure, we get nothing for that referral. We've never met Michael Gerber, although one day we hope to. We just so believe in the work that he's done that we think it's such a great read that, uh, we're teeing that up for, for the Tribe today.

One of the things that's been great for me having the internal team that, uh, helps manage the business, that manages the business. And then we have Heritage Bank that asks us to sit down once or twice a year and actually create this personal financial statement. I would have no idea how to do that if we didn't have the backbone within our team doing this in the business on a regular basis.

What I'm grateful for is that I don't have to be a great business owner. I have to be great at the craft. And as long as I I'm able to go out and attract and find people who are great at running the [00:31:00] business. We can solve the e myth, right? But as a business owner, I can't tell you how helpful it's been for me, right?

You've always said our most important job is protecting each other's confidence as partners, as entrepreneurs trying to create. massive impact. One of the coolest ways you've helped me protect my confidence is by teaching me how to sit down and write out a personal financial statement, create my personal balance sheet.

And for just 30 minutes, a couple times a year, right? Make believe I'm a good business owner, right? Right. And so when I sit down and do this exercise, I can't tell you enough how much confidence that builds for me. At the end of that exercise going into the next six months before I have to do it again now I didn't have confidence the first time I did it sure because I didn't love what I saw sure Sure, but the progress that we've been able to measure by looking in [00:32:00] arrears has been nothing short of remarkable.

So yeah So, shall we tee up a little writing exercise? I think it's a lovely time for a writing exercise. Whether you have an iPad, a remarkable tablet, a yellow pad, a good old fashioned yellow pad and pencil, here's the time to do it right now. If you haven't taken the snapshot in, I don't know, six months, sure.

Then now is the best time to sit down and do it. We believe in this idea of the law of diminishing intent. So if you're saying to yourself, ah, I want to listen to the rest of Saturday. Yeah. I want to listen to the rest of these guys. They're really entertaining me today. Uh, and I'll do it when the episode's over.

Um, chances are you won't. Yes. And if you wait to do it on Saturday, you absolutely won't. With each day that goes by, your intent diminishes. Yes. So, push pause. Sit down. Let's take a snapshot of where we are. On the left side of your paper, write down everything you own. [00:33:00] From your house, to your cars, to your business, to your bank accounts, brokerage accounts, 401k, 

Jim Gebhardt: retirement accounts, 529 plans.

Gold, silver, trinkets, whatever, you know, 

Matthew Grishman: any asset you 

Jim Gebhardt: own left side of the 

Matthew Grishman: paper, 

Jim Gebhardt: add it all up and what you think it's worth. 

Matthew Grishman: Yes. 

Jim Gebhardt: Now there might be a little bit of, you know, you got to, might have to go on to Kelly blue book or one of these. Websites to figure out what a couple cars are worth. Sure.

They're not worth what you think they are Let's just let's just get that out there. You mean my 

Matthew Grishman: 2003 lexus es 300 is not a collector's item, right? Yeah, 

Jim Gebhardt: exactly. Uh huh. 

Matthew Grishman: It will be the cars for kids There you go 

Jim Gebhardt: Very now that theme song's in my head i'm stuck for that for the rest of the day. Thank you very much Depending on how detailed you are, if you're, you know, if you're somebody that, you know, needs it to the second decimal place, I understand and respect that.

That's not the purpose here. Right. The purpose is to get a quick sketch of what do you got in the bank? [00:34:00] What do you have? Brokerage assets. Brokerage accounts. Business assets. Business assets. Real estate assets. Real estate assets. Simple. Snapshot. That's the left side of the 

Matthew Grishman: page. On the right side of the page is what used to be some of my least favorite things to talk about that you have helped me.

think more favorably of the right side of the balance sheet because the right side of it is what we owe. It's the debt, it's the liabilities, and we've spent enough time beating up some of the other money talking heads out there that like to shame you for the debt that you have. We're 

Jim Gebhardt: not going to have Dave Ramsey on the show next 

Matthew Grishman: week?

I would, well, I tried to get him, but he was really unhappy with what we shared last time about. Got it. About his whole take on debt is evil. Got it. So, If half your balance sheet is evil, it makes this an impossible exercise to go through, which I think might be part of the reason why so many maybe non entrepreneur types have a tough time sitting down doing this exercise because they're listening to Yehus like him saying debt's evil, [00:35:00] so I can't even look at it.

We're going to suggest a different approach to looking at your liabilities. Yeah. You've said it before. Debt's only an issue if you don't believe. In the asset, the asset, why you went into debt, right? So you might have a home ownership, one of the greatest dreams in the United States. I love my mortgage. I especially love my three and an eighth percent mortgage.

I love mine maybe more than most. I love my mortgage. I love my business. And I love the assets that are behind these debts that I now have. Fortunately, there's no debt in the business. Exactly. There's a little debt between you and me. I owe you a little bit, but that's different. That's different. I still believe in the asset that backs that debt.

So on the right hand side, you're going to list and write down, even if you're not where I'm suggesting you might be one day, and you don't feel as much pride About the debts [00:36:00] that you have maybe there are some debts where you were living for a little while like gosh I'd look at my bank account at the end of the month and i'd kind of wonder where All my money's going I went to visa Exactly went to amex.

So let's get that on paper. Yeah, let's write it down all progress begins by telling the truth There you go Now if you've been with us on this journey for a little while I'm guessing the debt on the right side of that balance sheet is going to be debt you believe in If you're a little newer In the journey with us, you might have some scar tissue related to that debt.

Like we said in the beginning of the show, let's take all of that judgment, set it aside and let's just gather some data. Right. Push pause. Left side of the page, everything I own. Right side of the page, everything I owe. And then let's see what you got when it comes to that net worth. 

Jim Gebhardt: Yeah, when I did that in, uh, 2008.

Oh. Ha ha ha ha ha. There were brackets around the net worth statement. And, uh, do tell us what that [00:37:00] means, Jeff. For those of you that aren't familiar with what that means, that is, that's the, uh, universal symbol for negative. That is a negative number, Bob. Also, uh, also a red number, right? We like black numbers because that indicates profit in accounting terms.

Red are negative. Oh, I thought green was profit and red was negative. Nah, not in accounting terms. Ah, 

Matthew Grishman: okay. See, I'm glad we have accountants. 

Jim Gebhardt: And so when I, when I go back and I look at my personal net worth statements from 2007 and 8, You talk about measuring some progress. 

Matthew Grishman: Mm hmm. Mm 

Jim Gebhardt: hmm. I can't even begin to put into words what that exercise is like.

And I have them all in the same folder in, in ShareFile. And, I mean, I, I can't say I make a regular habit of it, but I could, I could pick any of those years in there between 2007 and 11. And if I'm using, if I'm measuring backwards from 2023 to 2012, 2013. Wow. It is, it is cuckoo. What's transpired. [00:38:00] That's beautiful.

And yet you and I are broken records on this. I think the singular, the, the, if I had to boil it all down, the singular contributor to my success over that period of time, looking at that net worth statement has, I kept showing up. I kept showing up when it was good, when it was bad, when it was ugly.

Transcribed When I didn't wanna, I just kept, I just kept showing up for pushing 20 years now. 

Matthew Grishman: Yep. One day at a time. 

Jim Gebhardt: One day at a time. Sometimes one hour 

Matthew Grishman: at a time. I just got to get out of bed and get out the door today. 

Jim Gebhardt: Right. The consistency is, and I, you know, there's a, I don't really know what to contribute that to, but in looking back on it and reflecting on it, like, well, it's holy hell, how did I Get through that phase with that overhang and that you know that near tragedy Oh, no that actual tragedy and I just you stayed two inches 

Matthew Grishman: in front of you showing up You showed up showing up and you stayed two inches in front of your nose.

Yeah, that's [00:39:00] awesome Hey before we leave balance sheet and move on to pnl statement and some strategies Is there, does it make sense, cause this was something that Glenn helped me with, our good friend Glenn Thomas, who our long time CPA and incredible friend and still incredible personal and business advisor today.

Glenn, if you're listening, thank you, my brother. We wouldn't be sitting here today having this discussion if you didn't instigate it with us, both of us. One of the things he helped me with a long time ago. Was this idea of an off balance sheet item to consider and this especially was helpful for me when my balance sheet wasn't as healthy My personal net worth statement wasn't as healthy as it is today And it's kind of like what you've reiterated Even more recently about as we make investments in the business We always have opportunity to make more money as an entrepreneur whose confidence is at an all time high I feel very secure about Our ability to create more wealth going forward [00:40:00] I wonder if there's a way to create an off balance sheet calculation Almost like a present value of future wealth That can be created.

Right? As long as I'm alive and healthy, what I can do over the next 10 years in my career, in my business, has to be worth something on a balance sheet today. Right? Present value of a future sum. Sure. Is that something? I mean, how, how would one even begin? I mean, you, you got the big, beautiful CFP brain in the room.

Well, yeah. I mean into that left side for a second and how would one start without the HP calculator that you and I use with clients, how would one just start to get an idea if my business has a million dollars in profit now and I have a growth rate of eight to 10 percent a year and I want to calculate the present value of that future growth just for the sake of protecting my own confidence, a little off balance sheet thing or improving my confidence.

[00:41:00] How, how would one. There's 

Jim Gebhardt: a look at that. There's a, there's a lot of things you could do in a spreadsheet. Okay. But if you have a business that has been consistently profitable, sure. I mean, you're wading into the deep end of a pool. That is gonna be a lot of future episodes. I mean, a lot of future episodes.

So I can't do it justice in the time that we have allotted today, but. You're a great 

Matthew Grishman: tier upper 

Jim Gebhardt: though. Oh, I'm a great tier upper. So, 

Matthew Grishman: feel free to tier upper here. Used to 

Jim Gebhardt: be a 5 handicap. I'm in a chronic state of decay with my golf game right now, so. That's 

Matthew Grishman: okay. 

Jim Gebhardt: Who knows, I shot 90 on Sunday. Nice, you're starting to get like me.

That doesn't move the handicap though. 

Matthew Grishman: No, it's a value golfer right there. Anyway, 

Jim Gebhardt: going back to your Enron off balance sheet stuff. The, the way you would look at something like that is, I mean, Subs by www. zeoranger. co. uk There's no simple answer. Okay. I wouldn't imagine. There's no simple answer. But if, if you have a business that is [00:42:00] consistently profitable over a span of, let's say, five years.

Matthew Grishman: Yeah. 

Jim Gebhardt: Right. You don't have a sparkler where you have a spectacular, I mean, you're going to have to normalize all that stuff, right? Which is just bring it back to a more consistent, you know, whatever the number is. And you're looking at that consistent profitability depending on your industry. And this gets very, very industry specific.

You can then start to look at some potential multiples of what that might be worth in the private market. 

Matthew Grishman: Hmm. 

Jim Gebhardt: Whether it was a strategic buyer, whether it was a private equity firm, whether it, you know, whatever it might be in terms of a business value, but there's so much that goes into assigning that, that multiple, right?

So, okay. If you're, if you've got a lifestyle business, Where it's really dependent on you, your partner, your partners, and you're having a good time and you're making money. And there's really not a lot of backbone. There's [00:43:00] really not a lot of structure. You haven't invested in people and you just. You're just side hustling.

You've got a very, you've got a very good lifestyle and the income that goes with that, that asset really isn't that transferable. Right. And, and we haven't really talked about it on the show yet, but I've, I've been swimming in the deep end of the pool with this group called the Exit Planning Institute.

And recently have embarked on a whole credential with them to learn a particular methodology on how you, how you go about Looking where your business is today in terms of value and having a very honest conversation with yourself and your partners on all of these different metrics that you would use to assess the readiness of the business.

But then more importantly, and this is right in our sweet spot, God bless America, is both personally and then financially. So, I'm leaving the business readiness over on one side, I'm crossing the [00:44:00] aisle and saying, how prepared are you personally for life after, after the business, let alone your personal finances and the, and the plan, all the planning work that goes into that, right?

Sure. I mean, the statistic that I think I've said before, but I'll keep, I'll say it another hundred times, is 75 percent of business owners from this, EPI state of owner readiness from a couple years ago, 75 percent of all business owners regret the transaction one year after they've sold the business.

Yikes. And it has nothing to do with money. Of course. It has to do with the lack of personal planning on what they're going to do. Personal preparation. And that is right in our sweet spot with Wealth with a Why and what we like to call Life 3. 0. 

Matthew Grishman: Yeah. 

Jim Gebhardt: So, that is a thousand word almost answer to your question, but the other thing that, you know, I, I, and I'm, I know I'm guilty of this, is most business owners overestimate what the value of their business is worth.

And this process, this methodology [00:45:00] that we're going to talk a lot more about in, in coming shows really helps to start. looking at the concept of exit planning as not in the future, but something you're doing now. It's a preparedness conversation, right? And how do you create more value? I know as a business owner, I have focused in retrospect, I focused too much on income on net income to the business.

Uh, not in the sense of being shy of making investments, right? God bless Dan Sullivan and strategic coach. I've learned long ago not to look at everything as an expense, But to look at things as investments. And, and I've also been able to translate that into the, into the personal life in terms of how we spend money as a family, I look at it as an investment in certain cases versus a traditional expense.

Oh, 

Matthew Grishman: you've almost, you've almost eliminated traditional expenses because anything you're using money for is an investment in something. Because it's intentional. Right. 

Jim Gebhardt: Right. It goes back to our favorite, you know, be intentional with your money. 

Matthew Grishman: Yeah. Yeah. Yeah. 

Jim Gebhardt: [00:46:00] In this context, you can start to look at it and apply a very small multiple.

Like, let's say you've got a business that's making a million bucks. Right. Put a multiple of two or three on it. Okay. Don't get any more excited than that. Okay. Could it be worth a lot more? Could it be worth 10, 12, 15 times your earnings? Sure. And there's a whole, There's all process to looking at the actual earnings of the business because really there's two numbers, right?

There's your tax number that your CPA and your your CFO earnings 

Matthew Grishman: that you pay taxes on that number, right? And then there's the real number the number after taxes, right? 

Jim Gebhardt: Okay, the number that comes from having the pleasure and benefits gift and grace of owning a business So your car your gas your internet Some meals, some entertainment, those are items that ultimately have to be reviewed and assessed and added back to that profit number.

Because if a clinical third party is coming in to buy that business, [00:47:00] those are what are called ad backs. You got to put that back in that million dollar profit number. Right. Because they're direct for me. Because you're paying the tax on that. You're paying that tax on the million dollar number. That's your tax number.

Right. But what's the real number? Right. When you add, when you add everything back, are you overpaying your salary? Are you underpaying your salary? Right. Because we have situations where we'll see a business owner that's paying themselves a million dollars a year. As president and CEO, really, if you do some homework on their, on their industry, it's really a 300, 000 a year position, right?

So they're overcompensating them, overcompensating 

Matthew Grishman: themselves. We've Is that a bank error in your favor when it comes to valuing the business or is that a bank error not in your favor? That is in your favor because you're 

Jim Gebhardt: overpaying, right? So your expenses for the business are being reduced 700 grand ad back.

Ah, okay. Uh, and we've seen, you know, cases where CPAs have recommended that, The owners keep their salaries very low for the purpose of trying to minimize [00:48:00] FICA and FUTA. But really, you know, I've seen them as low as 40, 000 and 60, 000. Wow. And it's the CEO of a multi million dollar business that that position would be a 300, 000 job, 400, 000 job, and they're paying themselves 60, 000 in the W 2.

Right. Salary. Salary. Right. So then you got to adjust for that. Sure. So anyway, it's a very long winded way to say, The lifestyle business, there's a lot of work to do to make it a legit, transferable asset. Right. That you could sell to somebody, but certainly if you've had profitability consistently for a long time, it's going to be worth something.

Okay, can I let 

Matthew Grishman: a little secret out now? Sure, yeah. Guess what, Tribe? What the Whole Wealth Journey is for entrepreneurs and what we're trying to help them do Is get prepared for that day for what's next for life 3. 0 and there's the business side of getting prepared and understanding what goes into that transaction and then there's the personal side of going into that [00:49:00] transaction and not being one of those freaking statistics of 75 percent of the people who regret the transaction after the fact and it is nothing to do with money.

Jim Gebhardt: That would be our mission folks. That is the mission and it takes time. We meet folks all the time that are burned out or they're tired from. The slog of, of running the business. And yeah, we've been there. Yeah. You and I have both been there and they went out, they went out now. Right. Right. Right. This year.

Right. This 

Matthew Grishman: isn't a, this year's conversation. Well, and part of what we've learned through our own journeys is it's not always about, I want out now. How do we take a pause and reassess where we are and redirect so that we can recreate energy within this incredible mission that We created 10, 15, 20 years ago.

Sometimes it's just a little redirect. It's not always, I'm done, I'm tapping out, I'm burned out, I gotta sell the business. There are other options. That's part of what we're here to give you in Wealth with a Why. If you haven't pushed pause yet to do the writing episode probably [00:50:00] now's a good time Now is a good time if the best time was 10 minutes ago The next best time is now because we don't want you to be a victim Of these laws of diminishing intent which will take you away from something you really want to do.

So let's pause Let's pause the conversation here. I was, I was on a roll. I know, but let's give our tribe a chance to catch their breath and catch up with us. Okay. Okay. Cause we got a lot more to do with this idea of congruency. We haven't gotten to the fun part. Well, I think this is the fun part, but the really fun part is yet to come.

So we'll be back. With the second half of the conversation, we've covered the balance sheet. Now we're going to talk a little bit about the profit and loss statement. Then the big aha of what do we do with the data? Once we've got it, that and more coming up next on the whole wealth journey. And with that, my friend, that's a wrap.

Thanks for joining us today on the whole wealth journey, whatever your path may look like. Our purpose is to make sure [00:51:00] that your way forward aligns with your core values and intentions. Are you ready to start planning for a future that's rich in wealth and well being? Then click like and subscribe and make sure you don't miss a single episode of the Whole Wealth Journey.

So if we've struck a nerve with you 

Jim Gebhardt: today, 

Matthew Grishman: where do people go? You can find us at GebhardtWholeWealth. com. That's G E B H A R D T WholeWealth. com. And once you get there, Make sure you connect with us so you can take the first steps to finding your why. We'll see you next time. 

Amy: Jim Gebhardt is a registered representative of and securities offered through Brokers International Financial Services LLC, member SIPC.

Jim Gebhardt and Matthew Grishman are investment advisor representatives of Gebhardt Group Incorporated, a registered investment advisor, Brokers International Financial Services. Services LLC and Gephardt Group Incorporated are not affiliated. The opinions [00:52:00] in this podcast are for informational purposes only, and are not intended to provide specific advice or investment recommendations.

To determine which investments or financial advice may be appropriate for you, consult a financial advisor prior to investing. Any reference to market performance is based on historical information, and there is no expressed or implied guarantee of future performance. Opinions expressed on this program do not necessarily reflect those of Brokers International Financial Services, LLC.

The topics discussed and opinions given are not intended to address the specific needs of any listener. Gebhardt Group Incorporated does not offer legal or tax advice. Listeners are encouraged to discuss their financial needs with the appropriate professional regarding your individual circumstance.