EP17: Unlocking the Secrets to Business Success | Matt Uhler | Amped Success

Discover the secrets to buying, selling, and growing successful businesses with veteran broker Matt Uhler. Learn how to evaluate business value, structure deals, and diversify income streams for long-term financial resilience.

KEY TAKEAWAYS

• The importance of exit strategies for small business owners
• How business valuation works, including key metrics like EBITDA and seller's discretionary earnings
• Steps to prepare a business for sale to maximize its market value
• The role of multiples in business valuation and typical ranges
• Funding options for acquiring a business, emphasizing SBA loans
• Strategies for diversifying income through business ownership
• The impact of market disruptions, such as COVID-19, on business operations
• Building a portfolio of multiple businesses for risk mitigation and income stability
• The psychology of wealth and the significance of mindset in financial success
• Book recommendations: Think and Grow Rich and Rich Dad Poor Dad

TIMESTAMPS

00:00 - Welcome and introduction to Matt Euler, business broker with 28 years of experience
 02:30 - What happens to businesses that don't transition to the next owner
 05:00 - Why business owners often leave their businesses to die or close
 08:20 - How to prepare a business for sale for better valuation
 10:45 - Understanding business valuation: EBITDA and seller's discretionary earnings
 14:00 - The importance of asset condition and risk factors in valuation
 16:30 - Funding sources: SBA loans and typical down payments
 21:00 - Business multiples: typical ranges and how they’re calculated
 24:00 - Managing a portfolio of multiple businesses for diversification
 28:00 - Monthly oversight: analyzing financials and operational health
 32:00 - The significance of income streams for financial security
 36:00 - Risks in business ownership and lessons from market disruptions
 39:00 - The psychology behind wealth building and mindset shifts
 41:00 - Recommended books for developing wealth mindset

Resources & Links:

• Think and Grow Rich by Napoleon Hill
• Rich Dad Poor Dad by Robert Kiyosaki

CONNECT WITH MATT UHLER AT ampedsuccess.com

Get Business Smart Coaching helps entrepreneurs and leaders build better businesses and better lives on purpose with purpose.

Learn more about Get Business Smart Coaching at TonyBradshaw.com

Transcript

SPEAKER_01 0:00

Welcome back to the Get Business Smart Podcast. I'm your host, Tony Bradshaw. And today on the show, we're going to have a lot of fun talking to Matt Euler. Did I get that right, Matt? Close. Euler. Euler. Euler. Okay. So Euler. So Matt is a owner of AMP Success. So they provide training, consulting, coaching on buying, selling, financing, and partnering in businesses. So he's been doing this now for 28 years, business broker for 28 years. He's facilitated over 800 transactions. And currently he's part owner, I believe you said 25 businesses, didn't you, Matt?

SPEAKER_00 0:32

Yeah, I do. I have an ownership interest in 25 different businesses now.

SPEAKER_01 0:36

So yeah, so I'm I'm excited about that because that's one of the things that when you're a small business owner, it's like, what's your exit strategy? So for some people, they're going to hand that off to their family, their family's going to take over. But in a lot of cases, that doesn't happen because the family members don't want the business. So then the business owner is left to figure out what to do with it, which is to offload it. Now I heard a stat the other day, Matt, and you might be able to clear this up, is how many businesses, what percentages of businesses don't really transition to like ownership to the next level of ownership that just died. What's that number? Do you know what that number is?

SPEAKER_00 1:10

You know, I I haven't heard a number that I actually believe. And I don't know how anybody would know because businesses, unlike real property, are personal property. So there's no record of the sale. And so a statistic on that would be challenging, but it happens a lot. And it it's a mind-boggling occurrence. I mean, that would be like deciding that, you know, you and your family want to move to a different home, so you just bulldoze your old one or burn it down or something. You know, a lot of people, when they're done with the business, they just leave it. They just close it. And for me in my world, since this is what I've been doing for so long, it's it's literally just setting an asset that's saleable on fire or something. It's comparable to that.

SPEAKER_01 1:48

Now, do you think that's because the business owners really they've learned how to run a business, but they don't know how to like they don't understand what to do after that. So they just go, I just quit. I just quit.

SPEAKER_00 1:58

Yeah, I do actually. I think you're right on track with that, Tony. It's the business buying and selling world, even though it it's it might be something that's more commonplace for you and your environment, a lot of people have no clue what that looks like or that anybody would ever want to buy their business, or where do I even start? And it can be it can be scary. And okay, somebody's gonna be looking at my tax returns, so I really want that. And so I think it has more to do with that than the reality, which is I've sold businesses you would never think would be saleable just because somebody else wanted it. And for me, in my world, it's really income producing. If it's generating an income for somebody, then there's a lot of people who are looking to buy an income in all different kinds of trades and skill sets.

SPEAKER_01 2:45

Yeah. So I had a friend uh several years ago, it might be a decade ago now, and uh he was uh he was just a worker, but then the guy that owned the business, it was a trophy shop business. I believe the how the name of the business was called uh Trophy House, I believe. And uh, and the guy wanted out, he was just done with it. I think he'd been doing it 20, 25 years. And so he did end up selling that business to my friend, and the model they used was a payoff model where he would pay, I think it was $100,000 a year or something like that for about three years, and so he bought the business out from under him with the profits from the future of the business. So that gentleman stepped away, he stepped in and kept writing him a check for three years of uh, you know, roughly $100,000 a year. And and that business transitioned very, very well. They're still very successful. I think he opened uh one or two more locations after that. I think maybe he shut down one of those locations that he opened because it would have been uh let's see, I guess during COVID, yeah. So he would have opened it and then probably had to retract a little bit, contract a little bit back down uh to get that. But they're doing really well. They bought a farm, uh, live uh bought some land and stuff. So that was a very successful transition for my friend's business. Um, I actually looked at investing in that business with him, but he didn't want to give me the returns that I wanted. So I was probably being a little bit greedy and maybe he wasn't, but you know, I was trying to look for those opportunities where I could float some cash and get some ownership and some stuff and make a little residual income. Uh that wasn't it, though. But so when you're doing that, why don't we just walk people through maybe a little bit what that looks like for somebody that's got a business? You know, what are those first early steps that they may need to go through if they're considering selling a business?

SPEAKER_00 4:23

Sure. Number one biggest thing is to think about what would you want to buy if you were buying the business. And so it's amazing to me that a lot of times people, when they come to me for assistance, either in exit strategy planning or to sell their business, that they're already done. They're like, I just want it gone. And again, back to the house analogy. I mean, most people, it's like, oh, we ought to sell our house in six months, let's get it painted, let's do this and that. A lot of people with businesses don't think that way. They just, I've hit the end of my rope, sell it. And and that's not the thing to do. The thing to do is to have it evaluated and to have your the business owner to have their financials clean, ready to be viewed by prospective buyers and lenders. From an organizational standpoint, if you think about it, Tony, uh, if there was a business that I showed you and the husband and wife are both working 60 hours a week, and then there's another business that I showed you where the owner's working 20 hours a week and they've got two key people and three other people, I mean, which one would be more attractive? And the answer is obvious. It's the one where the owners are a little less dependent. And so those are things that business owners can do and should do from day one because it makes their business more marketable and ultimately will sell for a higher price, which adds to their, you know, their wealth to move on to something else or to just retire with.

SPEAKER_01 5:39

Yeah. So in in this case, let's say you got two businesses, one's got, or both businesses have a hundred, a million, say a million dollars gross revenue, but you've got one that maybe has fifty thousand dollars in net profit a year, you got one that has a hundred and fifty thousand dollars in net profit a year, and uh you you start to wonder why one of them's even open at that level. But that's the kind of stuff you're talking about with the books, right? Like how much real profit is actually in the business each year.

SPEAKER_00 6:04

It sure is. And so that's a great point. Number one, businesses, in my experience and in my belief, are not valued based on gross because the gross doesn't mean there's anything left over, right? And so there's all these formulas out there about what a business is worth. The reality is gross income without anything left over for the owner isn't worth very much to most people, to the fair market, let me say. But the other piece is let's say it it is showing 150,000 worth of net income. In in the business opportunity world, we're looking more for sellers' discretionary earnings. EBITDA, there are these acronyms that tie into what's the true net profit on that business. So, as an example, if let's say you and your wife had a business and it's showing 150,000 on the bottom line, and as I'm doing my job saying, okay, Tony, what is your wage? And you say, Well, I take another hundred, okay, great. How many hours a week do you work? I work 35,000, 40, great. How about your wife? Yes, she doesn't work in the business. Okay, does she take a wage? Yes, she takes 50,000 a year, okay. Do you rent your home office? Do you each have leased vehicles? Do you have these things are all personal benefits that most small business owners are writing off to reduce their taxable income? But they are part of the valuation process. Because if you were to sell that business using you as an example, well, your wage is going to go away, your wife's wage is going to go away, your car expense is going to go away, your travel expense with your wife is going to go away. All of those things that were expensed get added back to the bottom line to create what's called seller's discretionary earnings. And that number is part of what supports a purchase price. Now, the huge mistake to take this one step further is a lot of people decide they're going to bury it. Well, every time I go to Costco, that's in cost of goods sold, and I built the addition on my house and I put that in cost of goods sold, that money's gone. And those are those are addbacks, which are very, very damaging when it comes time to sell a business. I'm working with a client right now where they've got $300,000 worth of discretionary earnings that I cannot identify. And so when you use multiples for that industry, that's $750 to a million dollars in sales price that they will not receive because that money is hidden in a way that it doesn't serve them. So yeah, so it's super important, in my opinion, to plan accordingly, like you would with any asset to try to optimize value.

SPEAKER_01 8:35

Now, in that example you just listed, would that be a case where they might want to change how they're doing things in their books for like a year and then delay the sale of the business for a year?

SPEAKER_00 8:45

Absolutely. Yeah, so in that specific case, we're looking at they may amend, and we're still in the middle of exactly what they did, but they may amend their 25 tax return and pay the tax that's due on what actually occurred to be able to demonstrate it for a buyer and a lender. But the other piece, Tony, that's important is that usually uh an astute buyer, broker, lender is going to be looking at two to three years. And this is where it catches people. You can't fix twenty-six as an example and expect to get value based on that without somebody taking into consideration twenty-three, twenty-four, and twenty-five.

SPEAKER_01 9:19

Gotcha, yeah. So now you mentioned EBITDA uh earlier, so why don't you run through that for the listeners? Yeah, so EBITDA is now transfer, like just to let you know, like I had not heard that term until last year for the first time. So I'll be a little transparent with you guys here. You know, that's you know something maybe I should have known, but because of where I grew up in business, we didn't use those kind of sophisticated terms. So uh give us an explanation on that, Matt.

SPEAKER_00 9:44

Yeah, so EBITDA is an acronym, and there's there's quite a few that fall into that, which is EBIT and EBITDA and all these acronyms. And they're generally used with mid-market companies. So in valuation of bid market company. So a mid-market company would be five million or more in revenue. And the huge distinction there is that with EBITDA, the owner's salary is generally not included. It's earnings before taxes, interest, depreciation, and amortization, EBITDA. And so if you have a tightly held company like the one we described, we made up for you and your wife, right? Well, then your wage and her wage would not be considered discretionary earnings because they're being valued, assuming that a manager is in place and will continue in place. And so the valuation changes depending on whether you're using seller's discretionary earnings or EBITDA. But for most main street businesses, and and you know, one of the businesses I own is up to we've got 12 million in revenue, and we'd still be looking at seller's discretionary earnings and not EBITDA. So it's it's a different formula for a valuation, but it is helpful if somebody's looking at buying to understand that EBITDA on a business that generates, you know, 200,000 in discretionary earnings is not the right formula. It's a different, it's a different world being mid-market.

SPEAKER_01 11:08

Gotcha, gotcha. So so we're talking about valuation on the business right there. That's one of the early stages you have to do. Now, sometimes when that's done, you know, I think you said you're doing that for some, but there's also firms that you can hire, I think locally here in Nashville. There's one called the LBMC Technologies or LBMC organization. They have a legal system side, but they also have a technology part of their business. But you contract with these local vendors that will come in and do evaluation on your business, don't you?

SPEAKER_00 11:38

You certainly can. Yeah, the distinction there is that uh, like in my transactions, the one I facilitate as a broker, about 70% of those are need to be appraised. So we arrange the financing and help the buyer with the financing on 70% of those. So the the distinction is that the appraiser who's evaluating the business that I put the whole deal together and determined what the fair market would bear because I've got the buyer, they never talk to this. I'm not gonna say never. It's very, very rare that that appraiser ever talks to the seller, ever analyzes the financials to really scrutinize the discretionary earnings, never sees the equipment and fixtures or the premises. And so to a certain extent, to me it's a it's a confirming appraisal that what I came up with or what the parties agreed to was the right number. And so if somebody's looking at using a firm, in my opinion, having a firm that has experience with the fair market is where it's at. Because otherwise it could be a book appraisal. And and I run into sometimes accountants will come up with a number that that is way more than than I can. And I just like I don't know what to tell you. I don't know how many businesses your accountant has sold, but I've sold a lot hundreds of them. And I'm talking to buyers every single day of the week. I will never, ever, ever be able to get you twice what I told you was the right number just because your accountant said so. And therefore, he should buy it. No, just kidding. Sell it to your accountant.

SPEAKER_01 13:08

Because that's a good number. Yeah, that's crazy. Yeah. Yeah, so the the valuation there using the outside, so that's that's interesting, using a confirming price versus that alone is the evaluation because you're saying they're not going to go in and do really what you're saying is the due diligence on the inner workings of the business. They're gonna more or less look at look at the financial books, maybe, and then try to square things away through that versus actually going into the, you know, hey, what's your equipment look like? You are you driving a 30-year-old truck that's on its last legs, or are you driving a five-year-old truck, maybe it's got a little bit of mileage left on it? So those kinds of assets and things.

SPEAKER_00 13:45

No, it's huge. And just one more example, since we're going so deep into this. If you take the exact same business, let's say it's uh it's a painting contractor, they paint houses, right? And you've got one that's generating $250,000 worth of sellers' discretionary earnings, and another in another town that's doing the exact same, but the second one, the key employee who had been there for 20 years, just left and started a new competing business in the same town. Is that worth the same amount as the one where there's been no change like that? Or you take one where 50% of their revenue comes from one client, and the other one's got 50 clients and it's well diversified. I mean, these are all factors that should be considered and will be considered by a prospective buyer to determine what the value is based on risk and likelihood of it continuing. So those are all the things, again, we I could I could talk about that all day, but those are the things that really matter when it comes down to it.

SPEAKER_01 14:40

Yeah, absolutely. Now, shifting gears a little bit, you gotta, you know, people that want to get into business, they're gonna go either buy a business, they're gonna start a business, they're gonna do a franchise. You know, I heard the numbers, uh, it's like 90% of small businesses fail within 10 years. I don't know if that's an actual number or not. You know, you get different numbers from different people. But the the return stat was like 80% of franchises actually end up being successful. So it's a complete flip. And and part of that is because there's a system in place to run that business or that franchise, so they have a higher likelihood of being successful because a lot of the stuff, you know, the marketing, the brand, the infrastructure is already uh set, defined, and in place. You just got to go copy their system, which is what a business is. A business is a money-making system. Uh, some money-making systems are better than others. Um, and so you got to go through that. Now, um, when somebody's trying to go acquire, say, said business that you're selling, what does that look like as far as them getting funding? Where do you see most of that most commonly, like your number one funding source, number two funding source, number three funding source?

SPEAKER_00 15:48

Yeah, so so back to what you described a minute ago, I I refer to that as a recipe. So whether a business is a franchise or an existing business, there's a recipe for creating a specific result, as opposed to a startup where they're reinventing the wheel and they're making it up as they go and they're learning the hard way. So that's the advantage of buying a business or buying a franchise. And from a funding standpoint, when somebody's ready to buy a business, unlike most things that people finance, the business needs to demonstrate that it can afford to pay for itself and support the new owner. So a huge amount of the weight for whether the deal is going to be approved or not is based on the business's performance, not on the buyer. So some people will come to me and say, well, you know, I haven't made a whole lot in the last two years. It doesn't make any difference to me or the lender. Because the reality is that income's gonna go away anyway. They're gonna leave that job and become an operator of the business they're buying. And so most businesses that are designed where the business is ready to pay for itself and support a new owner can be purchased with as little as 10 to 15% down, and typically through small business administration loans. And that's something that it's almost a four-letter word, even though it's only three in most people's mind. But the reality is we deal with them every day of the week, and they are great, they're a great loan to be able to obtain. They're just not easy. But again, if you can if you can replace your income or exceed it with 10 to 15% down and let the business pay for itself with what it's historically done, it really can make a lot of sense.

SPEAKER_01 17:21

Yeah, so let's use hypothetically, let's go through this. You've got uh a $2 million business, and you're gonna have to put 15% down on that, so that would be about $300,000.

SPEAKER_00 17:32

Yeah, $200 to $300, yes.

SPEAKER_01 17:34

And you're gonna put that down, and then you're gonna finance the rest of that purchase price through some kind of loan arrangement, small business. That's correct.

SPEAKER_00 17:43

Yep. And what it is, is it's actually a loan that's funded through a bank, but it's guaranteed by the small business administration. And what that means is that if the buyer fails, as long as that lender has checked all the boxes and followed all the rules, then the SBA will pay the lender back.

unknown 18:03

Right?

SPEAKER_00 18:04

So it's an SBA guaranteed loan, and that's why lenders like it so much. As long as they follow the rules, their risk is very, very minimal. And that's also, again, just because we're going so deep into this, that's also why most businesses include some portion of blue sky. You've got hard assets and you've got intangible assets. But in that example, a $2 million business more than likely is going to generate $700 to $800,000 a year in discretionary earnings, and they may have a few hundred thousand dollars in hard assets. All of the rest is what's called blue sky, which is the intangible. And why is that the case? I just went through this with a buyer. It's because the seller of that business is not going to sell you their seven or eight hundred thousand dollar a year worth of discretionary earnings for the value of their hard assets. Because it it makes money. And that's that's where this whole valuation piece comes in, and lenders who are cash flow lenders are willing to lend based on the business's historical earnings and the buyer's ability to continue that. So that's where they're looking at the buyer to have good credit, some experience that's either direct or transferable experience, and the down payment funds.

SPEAKER_01 19:19

Awesome. Now let's talk about multiples. So when you when you're buying a company and let's say it's got 500,000, I think what you're calling discretionary earnings. Yes. Um are you what is that what they're using to create the multiples off of? To go, hey, it's a 5x multiple.

SPEAKER_00 19:36

Great question. Um no, so the the multiple would be so let's say the $500,000 a year in discretionary earnings. Um if it was a million five price, that would be a three times multiple. Five hundred thousand times three equals a million five. And so most businesses, and this is a gross generalization, but most businesses sell for someplace between two and three times the discretionary earnings. Now, you'll hear of businesses veterinary right at the moment can be ten times if it's a strategic roll up, and there's all so it's all over the map. But at the end of the day, Main Street businesses most often need to demonstrate that they can afford to pay for themselves and support the new owner. And when you start getting to five, six, seven times multiple, it doesn't work. Right? The return on investment isn't sufficient to support that price, and so most buyers walk away. There are exceptions, but that's the rule.

SPEAKER_01 20:36

Yeah, it's just interesting because you're going, okay, if you're doing a five or six X multiple, that means you got six years of earnings to pay off the business. Um, and in some cases you can say, hey, that's not too bad. You work for six years and uh and then you own a business. I'm like, maybe. Other ones other ones you may be in a situation where you gotta earn for 10 years, you know. It's just, you know, like you said, it's all over the map, and uh people gotta look at because you could buy the business, it could tank, it could, you know, something weird could happen, it could go downhill. Uh but anyway. So uh all right, so let's shift gears a little bit. You're part owner in 25 different businesses, so you're probably having conversations with the leaders of these businesses, or are you yeah, talk about that a little bit.

SPEAKER_00 21:16

Yeah, so the way that developed was, you know, I was in the industry, so I was helping people buy, sell, and finance businesses, and I was taking my excess funds and investing for retirement in these things, and I'm sending it to a financial planner, and nothing against financial planners, but what they were doing was planning for long-term, right? Retirement age income and assets. And I honestly, even if they were doing their job perfectly, I just didn't understand it. Like, I okay, so what's moving these markets? Why am I making less now than I was before? And so what happened is these opportunities, I got this concept where what would happen if there was a great business that wanted to be sold, a great buyer to run it, but they needed Some help, financial or otherwise. And I offered that help, and everybody was okay with me helping. Then I would own part of that business and have a role, but own part of that business. And so that concept became what really for me is now a mutual fund of 25 different businesses that are, you know, some are providing now, some are not providing today, but they did last year, but we're saving money for other assets or what, you know, and so by having all this diversity that's given me the opportunity to have this, again, using the concept of a mutual fund, holdings and all of these different businesses that I have some influence over, people know who I am. I can I can uh I can guide them. You know, these are all things. And so for me, that fit much better into my plan. And really, my plan was not so much to invest for some day when I might not be able to enjoy the money. I wanted to replace my income now.

SPEAKER_01 22:57

Yeah.

SPEAKER_00 22:58

Yeah. And so that's the that's the concept, and that's what has occurred. So so through that, I've got quite a few different partners that are that are paid a fair and reasonable wage to run the day-to-day, but we all have an equity interest in the performance of the business.

SPEAKER_01 23:14

Yeah. And I think that's a genius way to look at things too. I'm guessing um, let's hit this number. Across those 25 businesses, have they all been what you call successful businesses or have there been some struggles?

SPEAKER_00 23:26

Uh, great question. No, there's definitely been some struggles. And just like there would be with, you know, the law of averages is really excellent, right? And that's why I've never, I'm not a I'm not a gambler. I'm I'm not gonna roll the dice on one and hope they just hit it out of the park. I'm spreading this out because I'll give you an example. One of the best businesses that I have an ownership interest in, we bought in September of 2019. And by February of 2020, we had over a million dollars worth of profit, which is what was right on track. And then on March 8th of 2020, I got a call from my partner saying, we've got a problem. And I remember exactly where I was standing when I was having this conversation. We was actually on a cruise with my family. It was the last cruise for over a year that ever went out. So we had just gotten off the ship, we got a problem. What's the problem? We've lost three and a half million dollars worth of future events this week. And by the time the week ended, we had lost four million dollars worth of future events. And it's just our business became illegal. I mean, we couldn't if you can't gather more than six people in a room, we had no reason to exist. And so we went through some hard, hard times, and that business shouldn't be around today, but that's that's actually the example of the business that's on track to hit twelve million in revenue this year, which is double what it was when we bought it. Yeah, so definitely there there's no guarantees when it comes to business or even real estate acquisitions. I mean, there's a risk.

SPEAKER_01 24:56

Yeah, spread it around for sure. Yeah, and you're talking about like was an event planning business or a venue center or something.

SPEAKER_00 25:01

Yeah, it was an event production company. So when somebody's gonna have their trade show and you know, 3,000 people are gonna show up, our company would drive our tractor trailers over there and put up the lights and the stage and the sound and the cameras and the whole nine yards getting ready for this event. And so when you can't have more than six people within six feet of each other, that all I mean, they just all stopped.

unknown 25:24

Yeah.

SPEAKER_01 25:25

Does it make you mad that that was all a scam?

SPEAKER_00 25:27

If I were to go down that road, absolutely, when you think about do we want to go down that road or should we not go down?

SPEAKER_01 25:33

No, no, we'll stay off of it. Yeah. If you guys listen to the show, picked up on what I just said, depending on what camp you're in, some of you are going, Yeah, tell talk about it. The other one's going, What's he talking about? Oh my gosh. Go research it. Go research everything. So, yeah, let's not let's stay off of that. That's not that's not in the scope of business, but it did have an impact on your business. So there's something about that. Now, saying that though, I will say this. My uh my former employer, they had an event planned, and apparently the venue, which I think was Disney World, said, Oh, you can't be down here without masks or something like that. And so they're he's like, Well, we're not having the event. If we can't have the event without masks, we're not having the event. So he totally canceled it. They got into some legal you know stuff going on, and I don't know where that ended up, but I know there was a bunch of stuff going on. So I commend him for sticking to his guns over that whole fiasco or deal. And then he's in another lawsuit from somebody that was an employee that got upset about the fact that the guy had to come to work. And then I'm just like, no, he did the right thing. He did the right thing. So, yeah, so let's go back to uh what you're doing. So you're you're your partner in these businesses. What are you doing with them? Because that's 25 businesses. You can't like be in all 25 businesses every week, right? So you're probably doing monthly check-ins with them or something.

SPEAKER_00 26:55

Yeah, and this is a whole framework that it's part of what I teach, actually, because it's proven. And it and the reason it's proven is because I've done it wrong so many times first. Yeah, I bet. So part of the model is that ideally the outside accountant provides the financial statements and tells us they're reconciled. That triggers me to have a meeting with my operating partners, because I've got silent partners and I've got operating partners, but with what I would call the boots on the ground, the people that are running the day-to-day. And we're analyzing the financials and we're talking about operations and we're talking about issues and equipment needs and operating capital, and this is all happens once a month. And, you know, a lot of times people will push back and say, well, why once a month? Doesn't that seem like a lot? Well, but why not once a quarter? And I'll I'll say as an example. So if we're gonna drive a car from Boston to California, how many times do we want to look at the gas gauge on the way? Should we look at it every three days or should we look at it every couple hours? And so I've become a real stickler that the monthly, even though it's a little bit burdensome, we're watching the dials. If something's off, we're gonna know it a whole lot sooner by looking at it more frequently than if we're not. And so that's part of it. So once a month, we're analyzing the financials and contributing whatever I can from my background around staffing issues or equipment purchases or legal matters or whatever might be going on in the day-to-day. And then at the end of the meeting, those people are going back to work to run the day-to-day. And I'm reporting to the partners, here's the financial reward, here's what's happening or not, based on what's happening, and that's kind of the system, and we just rinse and repeat month after month. And for the person who's the boots on the ground, so to speak, this is an opportunity to work on the business instead of in it. And most small business owners, again, five million in revenue or less, are so entrenched in it that they never step back and work on it. And that's part of the advantage of what this structure and this framework and myself bring to the table is it's a it's an opportunity to step back and evaluate where are we going? Are we are we heading the right direction?

SPEAKER_01 28:58

Yeah. Well, I think the genius of what you're doing is like some people are gifted to be operational guys. They're good at running things, some are good at being visionaries or strategists. Sounds like you're uh a little bit more on the visionary strategist side to me. Uh it sounds like that. You might be able to wear both hats. I kind of tend to wear both, but I prefer to wear the visionary strategist hat. I can wear the operational hat, but I don't enjoy that one as much. But if if there's an absence where there's no operational leadership around me, I tend to default to that to go, hey, they need this needs to be done. So here's a question. A couple things. If you got a business owner, what I see is a lot of business owners, when they're making their money, they're just putting their money right back in their business. So like everything goes right back in. So they're not diversifying their investments, they're not necessarily buying real estate, they're not doing stocks, they're not doing something else, which I think they should be doing because there's no guarantee your business is gonna be around forever. So you got to have that fallback. So you start to diversify into real estate. Um, you know, it could be gold, silver, cryptocurrency, could be uh, you know, stock market. Um, you could do that. What you've done is said, hey, I don't want to put money in the stock market, or at least not as much anymore. I want to move it towards something that I'm more familiar with. Um, have you seen when you're tracking, are you tracking your 25 company investment portfolio and watching how it's going up? And uh if you don't mind sharing, um that that accumulative portfolio, how is that actually performing for you year after year? Is that a 20% uh growth a year or where is it at? Some of them might be you know stagnant each year, but yeah, but they're producing they're producing cash flow. Yeah, they're producing cash flow possibly though.

SPEAKER_00 30:41

That's right. Yeah, I mean the cash flow is king for me. That's what that's what these are about. And so last year my average was 35%, and typically it would be 34, 37, somewhere in there. And some of the businesses, I've had them as high as 90% return on capital, and then some are zero, depending on what's going on. I mean, several of the businesses during COVID, we there was no distributable income. It was zero. And and again, the law of averages is part of what I'm working with here. And it it wouldn't for most people, owning 25 wouldn't make any sense. I mean, one, two, three, or whatever. But to your point, um, part of part of what people like to learn about is this multiple stream of income concept, because when you've got one income, it's it's a single point of failure. It's like having a table with one leg. Doesn't take much to knock it over. And unfortunately, life happens, right? You know, my mom is an example. I mean, she worked seven days a week for seven years as a single mom to keep food on the table for my brother and I, and a roof over our head, but the roof over our head became compromised a couple times. She'd hurt her back and couldn't go to work, or my brother got sick and she needed to be home with him, and all of a sudden we're getting eviction notices. It's scary. And it's so the diversification, even with a phenomenal high, high income WT, that's the reason that I'm less focused on contributing to something for when I'm 65 or 70, as opposed to I want some income stream now to diversify my needs and also to enjoy while I'm able to enjoy it.

SPEAKER_01 32:15

Yeah. Well, I love the model because you know you're you're really looking at almost like uh if you were doing the stock market, you'll be you would call those more like dividends-based stocks. You you own them, but they're spinning off a little bit, but they're not spinning off much, you know. You're spinning off 3% a year, 4% a year uh on your income. Whereas if you're in uh a business like you are, a VC kind of business, um, then you're getting uh better returns, but you're creating cash flow, and you've done 25 of those. So, you know, that's something I wish I had done when my income was up. I was in corporate working for another gentleman. And uh, you know, I had quite a few years over a half a million dollars in income a year, but I wasn't thinking like you're thinking. I was just doing mutual funds. And so I wish I wish I had taken some of that money and found some VC opportunities out there, at least for several years, that I could have, you know, invested in and got some residual out of those. You know, I probably could have probably could have set up maybe at least 10 of those during that time, you know, somewhere between $50,000 and $100,000 investments to have some ownership in some different businesses versus just going with mutual funds, which is what that's what I was trained on to do. So that's what I did. Being a lot smarter now, I would have invested totally differently. I probably will never buy another mutual fund in my entire life. It's it's just, you know, that's like 101 level investments. You know, it's better than nothing, but not that great. And uh just like what you were saying, you know, it's a 65-year-old play. It's not a uh, you know, five-year play, it's not a 10-year play, it's not a right now play. It doesn't create cash revenue right now income. And uh, I just said this to somebody the other day, when you look back over the stock market the last hundred years, you had two 25-year periods where the stock market was actually down, you know, from 1929 until uh the 1940s, the stock market was down. Same thing in the 1970s, from the 1970s up until the 1990s, the stock market was down and uh did not do well. It took it took uh 20 plus years, both of those times, for that for the market to recover to where it had been. So if you get caught in one of those times, which may be coming again right now, you're gonna be dead before you get your money back up. If your money, if your money, you know, in 1929, 20, uh, 30, 1929, 30, and 31, stock market dropped like 89.2%. And then in the 1970s, it dropped, I believe, like 75%. And it was a 25-year recovery for both of those time frames. And if that happens again, you know, I I most likely won't be around because I would be uh pushing ninety at that point. Um Is that true? 25, 25. No, I'd be pushing uh eighty. So yeah, there's a the hit or miss. I may or may not be around at 80. We'll see. I hope to I hope to make it to a hundred, but we'll see what happens.

SPEAKER_00 35:05

Yeah.

SPEAKER_01 35:05

But yeah, but when you're looking at investments, you're looking at diversifying that. You have more control the way you're doing it than if you were to just put it in the stock market.

SPEAKER_00 35:13

Well, and to your point, it for me, it's to a very large extent single point of failure, right? I mean, I have money in the stock market, so I'm not knocking the stock market. I have quite a bit of holdings in real estate, rental properties. I own part of a private money lending company that helps fund fix and flips and these things. So it's not just businesses, it but the but the trick for me is income producing. I'm not investing in real estate as part of this model for what it might be worth five years from now. I want income producing. And if it doesn't fit that criteria, then typically I'm gonna step away from it just because, again, that's that's what my focus is, is I'm trying to diversify my income in as many ways as possible to provide the lifestyle I enjoy, regardless of what happens to my brokerage career or my private lending money company or my piece of real estate or my stock market portfolio. So that's that's that's the mindset that got me where I am. And the other thing I'll share is that I've owned as many as 40 businesses, but I've been bought out of some, I've exited them, I've so on and so forth. And so probably the biggest mistake that I see most people make when they get into a partnership is that they anticipate it's going to last forever. And I design my partnerships with the plan for an exit because more than likely it's going to something's gonna change. And so talking about that up front and designing it up front so people can move on when the time is right has allowed me in most cases to remain friends with people and everybody got what they wanted, and we had a fair transaction. And you know, but if the partnership isn't serving anymore, then generally it's time time to move on, and that's okay with me. You know, it's just the way it is.

SPEAKER_01 36:57

That's good, Matt. Yeah, good good insight for sure. All right. So uh wrapping up, uh, what other words of wisdom would you have for people on the show today, just around the whole concept of you know, business buying, selling business, partnering with businesses, coaching businesses?

SPEAKER_00 37:11

Yeah, that so words of wisdom I think would be I'm involved right at the moment in a couple of startups. And even with my I just call it a vast background, having analyzed thousands and uh participated in hundreds of transactions, it's it's tough to figure out a new recipe sometimes. And so that's an example of what does not fit into my formula of income producing, because I don't know how long it'll take sometimes. We're we're making it up as we go. So in my experience, buying a business or buying an existing, let's call it a rental property or something where there's a proven history of income increases the likelihood of success and that it's gonna feed your family long term than if you're if you're trying to design it as you go. So whatever it is, I think if somebody's looking to emulate this multiple streams of income concept, income producing, and can i uh does the law of averages over the past three to five years demonstrate that if you had owned it, it would have worked. That eliminates, I'm gonna call it 75% of the potential failure just in that alone.

SPEAKER_01 38:22

I totally agree with you, Matt. You're setting you buying a set a system that's already set up and running versus trying to create a new system, which is very difficult. That's a startup model, it's very difficult to do that. So last question, uh which two business books would you recommend to the people listening today?

SPEAKER_00 38:39

Uh well, one goes back a long way and one goes back a long way. But since you asked the question, you know, think and grow rich is just a classic that goes back to the very fundamental principles of the mindset of wealth. I love that.

SPEAKER_01 38:58

It's right here on my table.

SPEAKER_00 38:59

That's amazing. Phenomenal. Let's see if the second one is on your table, which is Rich Dad, Poor Dad.

SPEAKER_01 39:06

No, it's not on my table right now. It is on my bookshelf, but not on my table.

SPEAKER_00 39:10

Okay. Well, the reason I like both of those is there's lots of books out there and great books that are very technical about what to do and what not to do. But what I have found is the psychology of wealth is where it's at, because the psychology of wealth will tie into whatever your core competency is. And then you can generate wealth through that, as opposed to as an example. I could read a book tomorrow that's phenomenal on how to make money in the stock market. It may or may not work for me because it just doesn't, I don't think that way. And so so those are the two books to answer your question that come to me as as very prominent, very prominent. And it's funny, I actually had on my cat on my podcast as a guest, Robert Kiyosaki. Matter of fact, that episode's coming out in a couple of weeks. And again, I read that book 20 years ago, and it was something that really made a difference in my life. And and I was able to actually meet Robert, but also meet the rich dad in his his book, the person who taught him those principles. So it that's been monumental for me.

SPEAKER_01 40:12

Yeah, Rich Dad Poor Dad is the number one book recommended on my other podcast when I asked that question. Yeah, it's it's definitely number one. By far, there's not really a close second. Maybe Thick and Grow Rich might be number two, but rich Rich Dad Poor Dad's definitely number one for the people that come on the show. So uh, Matt, man, really appreciate your wisdom, your insights. You guys listen to the show. Uh, diversified income streams could be diversified business ownership. Own more than just one business, not just the business you're in, but maybe a couple of other uh revenue streams. That way, if something goes south on the one you're in, you got something to fall back on. That's great wisdom. Uh Matt, really appreciate you. How do people find out about you, get in touch with you? They want to secure your services.

SPEAKER_00 40:50

Yeah, thank you, Tony. If if they were to go to Amped Success, which is again Instagram, YouTube, Facebook, everywhere you could find us, ampedsuccess.com is our website, and that will get you in touch with with everything that I do and and how I support people in these in these awesome, Matt.

SPEAKER_01 41:09

Well, thanks for your wisdom. Thanks for being on the show, and thanks for your reading recommendations.

SPEAKER_00 41:14

Absolutely. Thank you, Tony. I've enjoyed it.