Speaker 1: What they're looking for as an investor is a ten,
fifteen to twenty percent return. So what we have to
do on our mindset is you may be a solopreneur,
you may own your company, but we've got to shift
to the other side of the table and say, how
can I make my company where somebody's willing to pay
me cha ching serious revenue and then themselves be able
to look back and say, hey, I can get above
average market return.
Speaker 2: You're listening to Carrie Letz's Financial Survival Network, where you
get valuable information you just can't find anywhere else to
thrive in today's trying times. You need the Financial Survival
Network now more than ever. Go to Financial Survivalnetwork dot
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Speaker 3: And welcome. You are listening to and watching the Financial
Survival Network. I'm your host, Carrie Letz. My god, we're
just two days from the end of February of this
new year, and so much is happening, but none of
us me in particular, you as well are getting younger.
If you own your own business, you really need to
listen to what you're about to hear Justin goodbred an
expert in succession planning, building your exit plan, because if
you haven't done it right, it's going to be really
difficult to get top dollar for your business and to
move on to something else if that's what you want
to do, or retire. And I've been through this, owned
a number of small businesses, was fortunate enough to sell
a couple of them. No regrets for sure, But had
I known this information thirty forty years ago, I would
have done things completely different. Justin, it's great to have
you on the show. Hey, if you got a question
for Justin myself, email is kl at kerrie lets dot com.
Justin Blake, how'd you become an expert in succession planning?
Speaker 1: I would say that that comes like me of things
carry that we come through trial and error. So like yourself,
I started and sold at this point six companies, and
I became a major shareholder in the seventh and exited it.
But my first three, if i'd known now then what
I know now, Oh my goodness, it'd been in the
world difference. I'm talking to the two to seven figures
in terms of value difference. So just through the role
of Harbor Knox and then about ten years ago, I'm sorry,
twenty years ago now, I started consulting business owners, began
teaching at the Exit Planning Institute as one of the
founder of faculty members there. And now after two decades
of working in value acceleration, which is how you grow
the value of a company, and walking through exits bostht
my own and with hundreds of clients, I think that's
what led to the exits of the expert status that
you're asking about.
Speaker 3: So all right, so you got some experience in this,
and what are the three most common mistakes that business
owners make along these lines of not having an exit plan.
Speaker 1: Well, most of us as business owners were extreme control freaks,
and we need to be, especially because in the early
days of our business it takes a lot of tenacity
and a lot of vigor and vem to actually survive
the business world. And what happens, though, is that we
really don't understand the truth the income that we make
out of our companies. You know, a lot of business
owners will pay for let's say, our kids' education, will
pay for our vehicles, our health insurance, our trips, our travel,
you name it, through the company. On top of taking
a salary or distribution. And while we do that, when
it comes time to exit our company, we don't really
calculate the sheer amount of money we're going to need
in order to reach our long term desire. As you mentioned,
some people want to just exit and retire myself sounds
like you as well. We did and we want to
do something slightly different. So the first stake that people
make is they don't realize the sheer amount of money
they make in their company and how much they need
their companies to grow. For to grow too. I actually
run my own podcast called deca Millionaire Decoded. The reality
is is deca Millionaire is a new millionaire, especially for
US business owners. So for example, if you're making a
two hundred thousand dollars or three hundred thousand dollars in
take home pay as a successful business owner, you may
have another hundred two hundred thousand dollars of income that's
being sheltered by the company through good tax strategy. That
means you need somewhere north of ten million dollars in
value in order to maintain your lifestyle if you're going
to go into retirement. So the first mistake they have
is that we don't realize how much income our businesses
generated for us. The second one is is we end
up staying at the epicenter of our business. We all
know that we should work on our business working versus
working at our company. We know that we've heard it
if we've been around a while, but many of us
don't realize that we end up costing us ourselves millions
of dollars in terms of enterprise value because we don't
build a business that can operate without us. So that'd
be the second one. And the third one is is
we don't start planning our exit soon enough. A lot
of the words here. What I also see is business
owners will wait until a year before I'm like, Okay,
I'm tired, I'm ready to exit my company. The reality is,
as you know through your law practices in the past,
is there's certain state laws and there's certain tax codes
issues that if we start planning our exit three, four, five,
six years, perhaps even longer before we need to exit,
we can actually drive our value up and position ourselves
in a more tax favorite environment, as well as it's
in a better negotiating standpoint when we're negotiating with the
perceived buyer.
Speaker 3: In the future. All right, So if you were starting
over from the beginning, what would you do.
Speaker 1: What I do in terms of trying to grow a
company for value?
Speaker 3: Yeah, exactly, with the intention of selling it eventually. Right.
Speaker 1: Absolutely. We actually teach this when we're coaching business owners
on how they could double or triple the value of
their company. And this is what we talk about when
we do our free strategy calls. So the very first
thing we have to do is what we call a
relentless foundation. The foundation of anything has to be laid solid.
Most of us we because we don't know exactly where
we want to end up. We have a trade, we
know a skill set. Maybe we're a technician. I was
a financial advisor, you were an attorney. We knew our craft,
we go to school for that, we knew our trade,
but yet we don't think ourselves and a business owner.
So the very first thing we teach our business owner clients,
whether just starting out or when they engage us to
do relentless coaching, is we say, okay, let's lay the
foundation on where exactly do you want to be and
why do you want to be there? And then what
are the mechanisms that we're going to do to grow
to that particular point. So the very first thing we
have to know is our vision. What specifically do one
want to accomplish? Now, whenever I say vision, carry you
and I've been around the block a while, man, we
both are seasoned entrepreneurs. I get so tired of these
fly by night coaches. I come out of the corporate
world as they talk about vision, vision, vision, and they
don't understand that, actually, what are with? Where do I
exactly want to end up? I love shooting my bow
and arrow. It's like me trying to aim my arrow
at the bullseye on the target. I want to know
exactly where that era is going to end up. Many
business owners will take that position, So I would start
there right off the bat with any business owner, know
exactly where you want to end up, what your value
needs to be, what do walkaway numbers need to be,
and then we can backwards engineer the academic side of it.
Speaker 3: Okay, so you know, you got to have goals, you
got to have long term vision. You know, problem is
here justin It's like when you start a business, you're
so concerned with just trying to make it successful and
make it work that you just don't really focus on
these things.
Speaker 1: What happens is in the early days, you and I
both have founded businesses, and we know what it's like.
I founded seven and exited seven. And what is happening
is is we work with anybody who fog amerr because
we have to make income. And that's okay, but there's
so that comes a certain right point, and I challenge
our students, the ones at our clients and we have
the privilege to serve, I challenge them at some point,
usually within the first twelve to eighteen months. As soon
as we get a little traction where we're making a
little bit of income, we're able to feed our family.
We're no longer living on beans and duct taping our
families at that point. What we need to do is
when you get hyperniched, we talk about niche and down,
but some of us business owners we don't get super specific.
And here's where the problem lies because we don't know
specifically who we're going to serve. We don't know specifically
the marketing that we need to use to attract that person.
So we're going to serve we don't know specifically the
language and the syntaxes of which they're going to buy
from us, Nor do we align our offer whatever that service.
Whether you're in a law practice or mean and my
advisory practice, or maybe a dentist or an entrepreneur a
construction company, we don't know specifically the offer that needs
to align with that avatar. So what we do in
the early days that we cast a wide net to
work with anybody and everybody. The danger with that is
is that we cannot build scalable models that drive us
to that eight to nine figure exits that we need.
Most of us need to reach decka millionaire status in
order to in order to maintain our quality of life.
So the way that we drive this, the way we
work with our clients to drive them to their success metrics,
is we get super niched on who we're going to serve,
and then we align the entire ecosystem of the company
to serve one specific avatar. Now, when I say that
I've been doing this a long time've been a business
over thirty plus years. When we say that we as
business owners, often we fall into the scarcity mindset like, oh,
my goodness, you only want me to work with one
one particular type of person. Well, what about is all
these other ones I can serve. You know, the way
I talk about this is again back to my bow
and earrow. I like shooting my bow at my target
and the very center of the target. May have you
seen this in the Olympics. There's a red dot. We
call that the bull's eye. Typically that's where ten points.
If you get the air to land there, that would
be what we call our perfect avatar. That is the
person that we know that we can solve their problems.
We so we we've assessed sever of their problems. We
know our service can deliver them a phenomenal result like
they are raving fans. That's our center point, that's our
ten ring. But oftentimes the wind may blow the arrow, etc.
We may land on the nine ring or the eight
ring or the Severn ring. It's okay to work with
clients who maybe not fall in that exact avatar because
as wes, long as we shoot at that bull's eye,
where more often hit the bulls eye, which creates a
greater value for our company. So what we try to
coach our clients around is get hyper focused on serving
one person. One person. You can see their face, you
know where they work, you know what their syntax, you
know where they shop, you know their beliefs, you know
their you know their emotions. And in doing so, it's
okay if the economic winds come. If somebody hears your message,
you're like, dude, I know I'm not quite the person
you're looking for, but I want to work with you.
It's okay to work with them. But when we put
ourselves carry in the position of the buyer of a company,
not the owner of the company. The buyer's ultimately looking
for ROI, what is the return on their investments? And
the way that they drive the multiple up and the
value of our companies up is by us being able
to show a repeatable process, deliver it on a repeatable solution,
delivered on a repeatable sales process, et cetera, serving the
exact same person over and over and over without us
being in the center of our business.
Speaker 3: Yeah. So all right, So we're scaling and we're basically systematizing.
Speaker 1: Right, we're systematizing, but we're systematizing around one key word,
and that is value. And this is a huge paradigm
that most business owners don't think about. Literally, I'll be
on a call tonight with seven thousand attorneys CPAs and
financial advisors teaching this concept as we a third day
in a row with this coach of this group that
I'm teaching, most of even the professionals that work with
business owners, don't think in this light. You see, all
of us know we want to see our top line
revenue increase. We call it profit. Let's say we want
to see our profit increase. The problem is is we're
scaling systems. The Internet gurus and all the stuff I
see on YouTube and social media, a lot of stuff says,
let's go out and create more sales. You can get
more sales. You can make a million dollars in a day.
I've seen all this nonsense out there. We all kind
of scoff at because we know how hard it is
to get scales. Here's the reality, though, if we focus
on value, what we end up doing is we end
up driving our revenue. I say it this way, Carrie,
and it's a play on words. I'd love to have
your insight on this particular statement, especially with your past.
I've seen a lot of companies and I look at
thousands of financials and thousands of transactional documents what we
call due diligent documents. See thousands of them, per I
have yet to see a company I've seen any companies
who are profitable but are not valuable. Think about what
I call chuck in the truck. You know there somebody's
out there riding around do an HVAC work or landscaping,
or maybe they're attorney or financial values like you and
I are in our past life. They're making a good income,
but their business is not worth a lot of money.
They may get one at one time's revenue or four
times sde it's just not worth a lot of money.
But Carrie, I've yet to see a business that focuses
on value and builds a business that where value is
at the center where we're saying we're going to move
the enterprise value of the company up through systems, through decentralization,
through revenues, what I call the eight value drivers. Whenever
I see companies that focus on value, they are always profitable.
So it's the play on words. I've seen a lot
of companies who are profitable but not valuable, and thus
we end up having this workforce who ends up working
till they die or they just close the business down.
I've yet to see a company that's valuable, that's not
also profitable.
Speaker 3: All right, So there's a difference, all right, there is
a difference. So if you have a one man solopreneur business,
who's going to buy that from you? Right?
Speaker 1: That's correct? Then that's what happens. Most of us are
at the epicode of our business and an investor does
not want to buy a job. I saw this actually
just yesterday when in the teaching session there was an
attorney who's a tax attorney, slashed the state attorney, and
he was going through an M and A deal where
where he had a landscaper who was trying to sell
a business and it was a profitable landscaping company in
terms of top line revenue, but the company had not
been built for the investor. And the investor came in
and they're like, look, you only pay four and a
half million dollars with landscape company. But by the time
I end up replacing the owner, regrastructuring the company, putting
together the right systems and processes, my ROI is only
going to be four percent. Why in the world would I,
as an investor put money into a high risk, high
concentrated position of one company only get a four percent return.
What they're looking for as an investor is a ten,
fifteen to twenty percent return. So what we have to
do at our mindset is you may be a solopreneur,
you may own your company, but we've got to shift
to the other side of the table and say, how
can I make my company where somebody is willing to
pay me cha ching serious revenue and then themselves be
able to look back and say, hey, I can get
above average market return. Behind your background drop right there,
I see technical indicators, I see market movements behind your return,
behind your stream their carry what most investors, they're familiar
with the capital markets, what we call the capital markets,
and they realize that they're going to invest dollars into
what's called the private capital markets, which is where we
have small business owners and business owners live. Then they
should get a better return than the small cap market
would be or the S and P five hundred or
the Russell two thousand. They're looking for a better return
than that. And so we have small business owners and
we change the paradigm and say, hey, our business is
not our identity. It is not it's nothing more than
a wealth creation tool, and we've got to align it
for the future buyer. So my own story was I've
started three businesses. One was a landscape company, one was
an insurance based business, one was a small dental consulting practice.
Each of those were acquired by big national firms. I
built systems, and someone reached out and said, hey, Justin,
I want to buy these firms from you. But I
had not reached my personal goals. I had this desire
to become a deca millionaire so I could maintain my
quality of lifestyle that I was generating through my companies.
I had because I know that if I have ten
million dollars earning five percent, it's going to give you
five hundred thousand bey four taxes. And in reality, that's
where many small business owners live. When they backwards engineer,
what we call recast their income. They may be taking
one hundred and fifty, but all the benefits in the
company surely add up to a lot more than that
company vehicles, trips, and things of that nature. So I
can remember carry's sitting down. I said, you know, I'm
going to restructure my life. I'm going to build a
company from the investor's viewpoint versus my viewpoint. I'm going
to build it in a way to where an investor
would come in and say, man, I am willing to
pay you significant cash because I will get a better
return on the quality of this asset than I will
if I buy the S and P five hundred or
the wrestle two thousand. And it took me about forty
nine months. The company scale from a startup to an
eight figure exit in forty nine months. And the secret
to that, and the secret that we coach literally business
owners all over the nation, hundreds of business owners of
my career, the secret is is that we have to
change a paradigm and not look at our business as
our baby, but we have to look at it from
the investor's lens and make sure it's attractive to the
investor so when the time comes that they will be
willing to pay a significant cash for the business.
Speaker 3: Hmm, all right, I like it. I like it justin
how do we connect with you on the web? How
do we find out more about you? Where are you?
Speaker 1: Absolutely so for those of you who are interested in
perhaps a free strategy call to talk about how you
can look at your company and rapidly accelerated, I would
say go to justingobread dot com for slash free call
and we have a whole process there that'll hope you
get prepared for one of our strategies to hop on
the phone with you. For those of you want to
see what a life of freedom is as a business owner, Hey,
follow me on Instagram at Justin Gearbread. I'm the only
Justin Gearbread in the world. I promise you has really
unique name. Or if you want to learn like a
DIY self learning, I having a YouTube channel. It has
over one thousand videos of me teaching the technical side
of how to scale businesses. So I would challenge you
to look at either my website, our YouTube channel, our
Instagram channel.
Speaker 3: All right, I like it. Hey, if you got a
question for Justin or myself, shoot me an email Klatcarrie
Lutz dot com and you'll find a link to Justin's
site in the show notes to this interview on Financial
Survival Network dot com. Well you ask is when you
go there, please sign up for your free newsletter, as
over seventy thousand FSN members have already done. Justin been
a pleasure. We'll talk to you again soon.
Speaker 2: Thanks for having me, Kery, Thanks for listening to Carrie
Letz's Financial Survival Network your solution to today's trying times.
For the latest, go to Financial Survivalnetwork dot com. Financial
Survival Network now more than ever
Speaker 1: Clus