SPEAKER_01 0:00

For sure. No. I I have seen a lot of business making a million dollars and the business is unsellable because it just relies on the owner.

SPEAKER_00 0:09

Yes.

SPEAKER_01 0:10

And if and if the owner cannot transition down, exactly. Yeah, you cannot sell a soap. If you're a sophomore and you are making a lot of money, you cannot sell that. You are not building an asset. No, you are not building well. So that's where you have to transition. Hero. Business. Handard.

SPEAKER_00 0:33

Alright, let's get into it.

SPEAKER_01 0:34

Let's get into it. Let's get into it. Hey, can I ask you some stuff?

SPEAKER_00 0:37

Yeah, go ahead.

SPEAKER_01 0:42

Okay. So, how much was that beard? Is is that an hermit beard?

SPEAKER_00 0:48

Huh?

SPEAKER_01 0:48

That who has a hermit's?

SPEAKER_00 0:50

Yeah, this is this is my grandpa's gift for me. Remember for my birthday last year?

SPEAKER_01 0:53

Awesome. How much is that? That was cool though.

SPEAKER_00 0:56

Oh two grand, maybe.

SPEAKER_01 0:58

Really?

SPEAKER_00 0:58

Yeah.

SPEAKER_01 0:59

That's so cool.

SPEAKER_00 1:00

For hero.

SPEAKER_01 1:02

For hero?

SPEAKER_00 1:04

Yeah.

SPEAKER_01 1:04

Okay, it's it's that in Hermes brand or it's just your age in the.

SPEAKER_00 1:08

No, no, it's an Airmas.

SPEAKER_01 1:09

But the age, okay, cool. The age has stand for hero. Yeah. Your name. And then So that is why you like Hermes stuff?

SPEAKER_00 1:18

No, actually, it's funny because my grandpa's wife actually picked this out for me.

SPEAKER_01 1:22

Cool.

SPEAKER_00 1:22

I didn't even like really care about it. But I guess remember when they were in they go to Europe all the time, and in Europe there's a lot of Airmes stores. Yeah. There's one here now too, but they haven't been to this one. But I guess they were there shopping for her and she saw this one and they got it for me. But I think it's cheaper in Europe to buy it.

SPEAKER_01 1:40

That makes sense. What is the difference between that veil and a normal veil?

SPEAKER_00 1:45

Nothing.

SPEAKER_01 1:46

Like you can actually get the veil with an age.

SPEAKER_00 1:48

Yeah, for sure. And it's like but I know like it's real leather, whatever, good leather.

SPEAKER_01 1:53

It's actually real leather. That's cool. So I guess that will last forever. I guess that's would be a good fit.

SPEAKER_00 2:00

Well, like, yeah, the quality of it, right?

SPEAKER_01 2:02

It's actually the quality is good. It's not only that it's just selling a piece of brand.

SPEAKER_00 2:06

That you can be it's good quality compared to my other belts. It's funny because I actually wasn't even gonna wear this one.

SPEAKER_01 2:11

Yeah.

SPEAKER_00 2:12

But my other black belt that I have, my little loop thing kind of broke off. And that one was like a random belt from a random store.

SPEAKER_01 2:19

Cool. That's awesome. Yeah, I was just like, you know, the kind of the age and things.

SPEAKER_00 2:23

No, I I actually hate having like branding.

SPEAKER_01 2:25

Really?

SPEAKER_00 2:26

This is my only other belt that I had to wear.

SPEAKER_01 2:28

No, it is great though.

SPEAKER_00 2:29

Yeah, I mean, yeah.

SPEAKER_01 2:30

Why why do you hate having branding?

SPEAKER_00 2:32

I don't know, it's just the stigma of the what do you mean?

SPEAKER_01 2:34

What is the stigma?

SPEAKER_00 2:36

I don't know. It's just they're like, oh, that's AirMez. And also I feel like sometimes it's like silly to buy like these high-end brands. Like, I'm not big on like buying the high-end brand stuff, unless it's like the quality. So like the jewelry, I think jewelry is important because then it lasts your lifetime.

SPEAKER_01 2:53

That makes sense.

SPEAKER_00 2:54

So it's important to buy good jewelry.

SPEAKER_01 2:56

Yeah.

SPEAKER_00 2:57

But that makes sense.

SPEAKER_01 2:59

Awesome. Let's get into it.

SPEAKER_00 3:00

All right. So welcome to episode six, the sixth episode of our six episode series of going from a soulpreneur to an enterprise. So in this episode, we're going to talk about exit, expansion, and legacy.

SPEAKER_01 3:14

That's pretty sweet. That's pretty nice. Pretty nice. Uh so what is something you thought, I guess about expansion, legacy, and stuff like that. You kind of think about that whenever you are successful. What is something you thought success will fix? I guess are you successful, hero? You know? If you're successful, like why? Why why are we asking this question?

SPEAKER_00 3:39

Yeah, so I will say for me personally, no, because I know I haven't reached the level of success that I have in my brain, right? But I do think if I was a teenage me, or maybe even me looking at other people, maybe in this area, I would say, like, yeah, they're mildly successful.

SPEAKER_01 3:57

Mildly successful.

SPEAKER_00 3:59

Yes. But I don't feel like I am because I think like I know that there's levels that I can so you feel mildly successful. I don't feel successful at all. But I think if I was looking on the outside to someone in my position, if I just saw me on Facebook or something, yeah, I would think they're mildly successful.

SPEAKER_01 4:18

Has anybody said to you, Oh wow, you are so successful?

SPEAKER_00 4:21

Yes.

SPEAKER_01 4:21

When was when did that happen? When was the last time somebody said that to you?

SPEAKER_00 4:25

Probably within the last week or two.

SPEAKER_01 4:29

If you don't mind spending money, like what was the situation? Was this like a friend, somebody?

SPEAKER_00 4:34

Yeah, so usually it's like when I meet someone randomly who Awesome. Who I'm not meeting them as an accounting firm owner, but but I'm meeting them like with a group of friends or like for example, in this case that I'm thinking of right now, we were at a client event that we sponsored. This was last Wednesday, I believe, right?

SPEAKER_01 4:53

Yeah.

SPEAKER_00 4:53

So at that, when we were at a group of t a table um just speaking about what we do, when I explained what I did, um they were very impressed and they looked me up on LinkedIn, I guess, and they were like, wow, you're very successful. You have all these things going on. And I'm like, okay, thank you. But I also I also know that there's a lot of potential things that I need to do to achieve success in my brain.

SPEAKER_01 5:17

That makes sense. That makes sense. Have said have been people. I I know recently you got a new car.

SPEAKER_00 5:26

Yes.

SPEAKER_01 5:27

Something like that. Has people kind of think you are more successful now, or people have been stopping you because of the car?

SPEAKER_00 5:35

Not necessarily. I mean, I've had people who just you know take pictures with the who I happen upon when I'm walking out of the grocery store.

SPEAKER_01 5:42

That makes sense. Yeah, that's actually a good question.

SPEAKER_00 5:44

So I guess what about you? Do you think that you are successful?

SPEAKER_01 5:49

Uh I'm I don't think I'm successful. I'm like, I think I'm a failure. Yeah actually. I think I'm a failure. Really? Why is it? I fail every day. I fail every week. So I'm like, that's no success to me. Like, you know what I mean? I kind of like literally I'm a I'm a failure. I don't make, you know, I get money, or the money goes away. The only time I will feel successful is whenever I have kind of a ton of money in my bank account. Yeah. You know? Yeah. Right now I'm like, money comes in, money leaves. I'm broke, I'm broke as you can be. I'm like, I'll and then, you know, I'm not that successful at all. I I live with my mom. I still drive a beat-up car. You know, I go to church every Sunday morning.

SPEAKER_00 6:37

But but again, I think everyone defines their own success. Because I mean I feel the same way. I feel like I'm definitely not at a success level, but people from the outside, they see you as successful, right?

SPEAKER_01 6:47

So?

SPEAKER_00 6:48

Yes.

SPEAKER_01 6:49

Really?

SPEAKER_00 6:49

Yes.

unknown 6:50

Yeah.

SPEAKER_01 6:51

I think so.

SPEAKER_00 6:52

So let's talk about really quick. So right now you are hosting a podcast, right?

SPEAKER_01 6:58

Which I guess I'm not a very successful guy.

SPEAKER_00 7:01

It's not very successful, but but I think just being able to have that and branch out and do things. So then also you're running in a CPA firm, right?

SPEAKER_01 7:10

Yeah.

SPEAKER_00 7:11

Which which overall is is a successful firm.

SPEAKER_01 7:14

It is. I was I would tell you that is I think that is successful.

SPEAKER_00 7:17

It is successful.

SPEAKER_01 7:18

I am not successful. Yes. You know, like White Glove, the CPFM, is really successful. I'm not successful.

SPEAKER_00 7:27

And they do a lot of good work. No, I see what you're saying.

SPEAKER_01 7:30

I would say my mom is successful though.

SPEAKER_00 7:32

Yeah.

SPEAKER_01 7:33

You know what I mean?

SPEAKER_00 7:33

My mom has her own home.

SPEAKER_01 7:35

I would yeah, I think she's set up for retirement. Yeah. She doesn't have to worry about anything.

SPEAKER_00 7:42

So do you think in ten years that you'll be successful?

SPEAKER_01 7:46

Probably not.

SPEAKER_00 7:46

You won't see yourself as successful.

SPEAKER_01 7:48

Probably not.

SPEAKER_00 7:49

Okay.

SPEAKER_01 7:50

I don't know. I guess success. What does success look to me? Let's see. What does success look to me?

SPEAKER_00 7:56

Okay.

SPEAKER_01 7:58

This is what success would look to me.

SPEAKER_00 8:00

Okay.

SPEAKER_01 8:00

Sounds good? Alright. Success to me will be I don't have any worries.

unknown 8:09

Okay.

SPEAKER_00 8:10

I think you're always gonna have I mean everyone like no matter what it is, you're always gonna have worries. But I think having that like a big foundational, like monetary foundation, yeah, I think eases that's actually a good question.

SPEAKER_01 8:24

What is what is what will it be success?

SPEAKER_00 8:27

And we ask our clients these questions, like what are your goals, what are successes?

SPEAKER_01 8:31

I guess what does success look to you like in 10 years, 20 years for now? You you can you can look at yourself in 10 years and say, that is a successful person. What what what would that look like?

SPEAKER_00 8:44

Okay. For me, again, like I feel like definitely having white glove and being the maximum success or making it a top top 200 firm. So getting it to the level that it deserves to be, because it it's a great company. So I think if I'm able to help grow it to the level that it deserves to be, that's good. That would be one point. Number two would be um definitely like family oriented, like like a family portion of you know, having good family um relationships and good time with family. Um so having white glove is successful and then having that. Those two things. It's hard to do both.

SPEAKER_01 9:26

I agree.

SPEAKER_00 9:26

But those two things in 10 years.

SPEAKER_01 9:28

Yeah. No, that is great. I kind of I am on the same route. This is what successful success brings to me in 10, 20 years. Okay. You know what I mean? I have enough money that I don't need to look at my bank account and I can do whatever I want. For example, what would be successful this year? For example, I'm going on vacation. It would be good if if I could get everybody on a private jet and just like don't think about it. And just like just pay like $150,000 to like, yeah, I just want to travel with my family, you know, or be on the private jet, I don't have to go through the security. Then I can stay in whatever type of house I want. You know, and that is all comfort. I think it's comfortable to do whatever I want, wherever I want, with my family, and yeah, I would say too to have good family relationship, you know. You know, wife is good, mom is good, wife and moms can can can coordinate, can towards kids, yeah. Kids are learning, kids are experiencing a lot, and then I feel I could take my kids anywhere I want to take them. Sure. You know what I mean?

SPEAKER_00 10:49

Do kind of money solves all the problems, at least. So now that we talked about our goals, that is directly like associated with our business, right? We we talked a little bit about that for us is to be a top 200 firm in the next 10 years or sooner, right? Yeah. So then that's something that all business owners need to know, like what their goal is for their business. And I say you should know from the day that you start your business rather than the day that you're ready to let go of your business, right? So that's directly associated with exit. We're gonna talk about that. So, how do you know when to exit and if you want to exit, just having that plan in general? So when you start your business, that's something to think about. Say you're you grow your business to the level where you feel like it can run by yourself. Like, is the plan to exit the business, or do you want to keep the business and cash flow it? Um, and at some point at some point in your life, like there's going to be a time where you can't run the business and the business has to go to someone else. So having that, having a good attorney to set up all the paperwork for that, to say, okay, here's the transition. And is it going to be a heavy transition where you need someone to come in and help do an ownership transition or a leadership transition? And that's another thing where our sponsor, White Glove CPAs and Business Solutions, they help out with those every single day. That's something if you're needing an ownership transition or a transition of leadership, reach out to White Glove and they can help out with that.

SPEAKER_01 12:16

So, how many successful founders have you helped?

SPEAKER_00 12:19

Oh man. I mean, do you mean like clients that we've had just at the business or what what are you thinking?

SPEAKER_01 12:27

Yeah, clients, people that you have known, you know?

SPEAKER_00 12:30

I mean, if we're talking clients that we've dealt with at the firm, I would say between that and like random friends we've kind of given advice to, I would say at least 200.

SPEAKER_01 12:42

That is actually a lot of experience. So and then with them, with them, like uh, like those success feels what they imagine it to be, or it just or it doesn't feel what they imagine it to be. Like, and how different is the what was the perception versus the reality?

SPEAKER_00 13:00

I would say often people feel less successful than they are.

SPEAKER_01 13:04

Yes. And is that because of uh is that because per the business just grew too much and they don't have as much personal freedom or they're spending a lot of time in the business?

SPEAKER_00 13:18

I mean, I think there's a lot of different reasons. I guess it depends. So I think that probably is is a piece of it. The other piece is um people a lot of times founders put a lot of pressure on themselves. So even though maybe they got to a hundred million in their head, they're like, oh, I should have gotten to half a half a billion, right?

SPEAKER_01 13:37

That makes sense. Do you think success comes from income or from building wealth? Or from having wealth, having something that is making money without being there?

SPEAKER_00 13:47

And like, will you I mean I again it I think everyone kind of has their own vision of success in their brain, but I definitely think people feel more successful building wealth versus just creating revenue? Because again, at the end of the day, revenue is important, but a lot of times you can have revenue with very low profit, right? And then you can't really build wealth with very low profit.

SPEAKER_01 14:10

Do you think a business should be should be your worth, or you think, for example, like uh for example, let's let's say I'm running uh which uh uh we we will be there soon. Let's say like whenever I'm making a million dollars, whenever we're making a million dollars. Which which if you don't know her isn't trying to be making a million dollars next year. What I feel with a lot of business owners and successful business owners is that they don't feel successful because they are making a lot of money. They're making a lot of money, but they are also spending as much or more money and they are not investing back and to keep the lifestyle, they have to keep working and they and they and they have the majority of the wealth in their business. So if they ever want a big cash out to support the to support the lifestyle, they just have to sell their business, you know, get their 20 million, 30 million dollars and then invest that uh invest that well.

SPEAKER_00 15:16

So so the way that to answer your question about the income versus wealth for the business owner, some advice that I would give a business owner who's having constant and steady like um revenue increase, and as long as the profit is also there and you're paying yourself more money. Um, of course, like lifestyle creep is going to happen. It happens to everyone. We're only human, right? But setting yourself up success when you're at a mild or moderate revenue, um, where you're paying yourself, say like 100,000, 200,000, going ahead and saying, okay, hey, I'm going to put away X amount or X percentage to help build my like either a real estate portfolio for other investment opportunities, or maybe it's like, you know, Roth or 401k, some kind of investments just to continue to build your wealth. So not everything is relying upon your business. Um, and again, like that that I would encourage you to meet with like a financial planner or even just sit and analyze your goals for yourself and maybe invest in real estate instead of doing that route. Um, but I think you definitely need to have other sources and other ways to build your wealth and not only rely on your business. Because then it does get scary when it's time to exit. And if maybe the time frame when you need to sell your business is going to be like a poor sales time, right? So maybe all the um everything's being undervalued, which there are times in the economy where that happens, and then it's a fire sale to get out of your business, and then you take way less than you should.

SPEAKER_01 16:42

I agree, I agree for sure. I agree for sure. So, but in those times, like uh I feel sometimes business owners should be thinking about the future, being proactive, thinking about like expansion, maybe getting some good opportunities or optimization. Exactly. How what is the right balance between draining the business versus living or having money around to be able to make strategic investments?

SPEAKER_00 17:12

Yeah, definitely. So I would say always avoid draining the business of cash. Um, but the way to analyze that is we we kind of spoke about this in the episode four about just cash flow management, pricing, how much money you need to keep on hand. So for businesses that have a really consistent and reliable revenue source, I say just a couple of months, like close to three months of cash on hand is enough. Any excess, again, you're using your business as a piggy bank, and we don't necessarily want to do that. Um, again, every business and situation is different. So that's why working with a professional provides so much value on that front because they're different, there's different strategies and things like that to analyze how much money you need to keep on hand. Um, the other way to look at it is if it's a client or it's a business that relies on more of like random projects or like um they're not very consistent in uh income. I would say on that level, you want to have a larger amount in your bank account, maybe six months or so to cover any expenses.

SPEAKER_01 18:15

For sure, for sure. Uh for sure. Yes, and I think that it's all about being proactive. And I feel like uh something with business owners that are successful, or let's call it high endnel, a high income, is that they need to understand that it's even more important to be proactive. It's even more important knowing where the money is going to go. Because yes, you made a million dollars this year, uh, but you know, you're also probably going to owe in taxes around 300k. Now if you go and you go and spend all of that money, now you owe 300k and that put a lot of pressure into the business, you know. And then what I the way I look at it is whenever a business starts is successful, that is making, that is making money, uh, that is making money and constantly. You know, I feel the first thing business owners need to do that way to keep it up, that that way the person, the decisions don't affect their business, is on the stand what is going to happen with that money. Okay, cool. The business has a million dollars in free cash flow. Okay, what do I want to do with it? Do I want to take it out for my personal reason? If I want to take it out, okay on the stand, I need to pay taxes if I don't do anything with it. If you want to optimize for taxes, that's another conversation. But but maybe they just want to have a million dollars in cash in the bank account uh for security or or or all of that.

SPEAKER_00 19:58

So we we we kind of went on a rabbit hole there. So we we were talking about exit and why it's important to have that um exit plan and how you're going to transition your business eventually. So when you're in an enterprise level from that solepreneur to enterprise, when you're at the end and you're in the enterprise level, you that's when you need to make sure you have that exit strategy prepared. So you're not running into like a fire sale, right? If you sell it at a wrong time. Um, also another thing to consider is I mean, selling doesn't have to be a part of your exit strategy. There can be other things, or you can think about scaling your business if if you feel like there's options there. Um, so yeah, not every business should be sold, right? So instead you can also like transition ownership to like G2 or generation two or three, right? So your children or whoever to inherit the business, or maybe there's other leadership people on your team who you want to move up to that area. And from there you can talk about scaling as well.

SPEAKER_01 20:59

Yeah. So like w uh, do you think some founders sell too early?

SPEAKER_00 21:04

Absolutely.

SPEAKER_01 21:05

Why is that?

SPEAKER_00 21:06

So I think they sell out of maybe some fear, right? Maybe the economies, fear, maybe um health issues for the um founder or their family members, right? Or maybe they feel like the business is taking too much of their time and they haven't put together correct like operational structures, things like that.

SPEAKER_01 21:29

Uh that makes sense. That makes sense. That makes sense. That makes sense. So, like what what what do like what's what buyers look for that that way whenever somebody is selling their business, they can get prepared. Like, what can a potential seller, a successful business owner that they want to asset the business through a sale? What they should be looking for.

SPEAKER_00 21:53

So, first, if you're ready to exit, I would definitely hire someone, a professional, to help make sure that you're prepared and to get the Best price for your business to get what it's worth because there are some things you can put in. So for example, like the buyers are going to be looking for your structure and how like foundationally sound your business is. So is there a good internal structure? Is a good external cer uh structure? How's the marketing? Are there SOPs and processes in place? Right. Is there good accounting? Which that's a really, really big one. Because if there's not good accounting, if the data's unreliable, a lot of times buyers are going to completely pass you over because they can't trust the data that they're looking at. How can they know what the actual value of the business is? How are they going to know if it's can be successful or if it has been successful?

SPEAKER_01 22:40

Yeah, for sure. No. I have seen a lot of business making a million dollars and the business is unsellable because it just relies on the owner. Yes. And if the owner cannot transition down, exactly. Yeah, you cannot sell a soap. If you're a soprano and you are making a lot of money, you cannot sell down. You are not building an asset. No. You are not building well. So that's where you have to transition to building an enterprise and creating and creating and creating people and processes and creating and assets. And always keep in mind that like revenue gets gets attention, but profitability gets valuation.

SPEAKER_00 23:25

Yeah. Yeah, you can't fake operational maturity, that's for sure.

SPEAKER_01 23:29

Yeah. Where do revenue get valuations though? Because I see a lot of startup companies, softwares, they're selling this company for a billion dollars and they're making zero money. Well, what are they buying there?

SPEAKER_00 23:42

A lot of time there it's the intellectual property, right? That the asset, the value of, you know, maybe the software, the actual data, the information, right?

SPEAKER_01 23:54

Yeah.

SPEAKER_00 23:55

Interestingly enough, some founders think that due diligence is just sending over their QuickBooks login when when they're gearing up for like a sale, right?

SPEAKER_01 24:03

And then they open the QuickBooks and we might ask my accountant. So definitely if you're going to sell, if you're planning to sell, make sure you get ready. You're going to get a lot of money out of it.

SPEAKER_00 24:17

Yeah, absolutely. Yeah, they and when you say they they meet ask my accountant for you non-accountants in here, that's a very common expense. That's kind of an end-all be-all that companies love to put, you know, $30,000, $50,000. Sometimes I've seen like over $200,000 worth of transactions in the Ask My Accountants section in QuickBooks. And that's pretty much uncategorized expenses. Expenses where the business owner or maybe the accountant didn't know where it should go. Yeah. So those are definitely areas that you need to have cleaned up prior to due diligence phase.

SPEAKER_01 24:54

Yes. And if you need help, cleaning up, you'll ask my accountant or if you or if you're planning to sell or planning to buy a business and you need some people to help you out, or while sponsors can help you out.

SPEAKER_00 25:09

Yeah. So White Glove CPAs and Business Solutions sponsor this segment and they also provide free health checks. So basically, what that is, it's really good for people who are gearing up to sell their business because we'll go through and say, hey, here are all the errors, here are all the issues, and here's how we can fix it. So we can do that for any business, right? But it's especially helpful if you want to understand your true data. So to make good decisions, to make sure your data is correct, and also if you're gearing up for a sale.

SPEAKER_01 25:37

Awesome. Yeah, let's jump into a little uh advertising break here. It's good.

SPEAKER_00 25:42

All right.

SPEAKER_01 25:42

At White Glove CPS and Business Solutions, we help businesses move from reactive to strategy, not just bookkeeping, not just tax prep. RIOR, CFO Advisory, Tax Strategy, Operational Visibility, Business Growth Consulting, and Enterprise Level Financial Structure. We work with founders doing anywhere from 1 million to 25 plus million who are trying to scale correctly, increase profitability, prepare for acquisition, or finally get clarity on where the money is actually going. Because more revenue doesn't automatically create wealth, the structure does. Go up to whiteglovecpas.com.

SPEAKER_00 26:24

Absolutely good stuff. Thank you to our sponsors of WG.

SPEAKER_01 26:27

Yeah.

SPEAKER_00 26:27

For sure.

SPEAKER_01 26:28

Now the other stuff, as we think about exit strategies to sell for business, we always find that there is a lot of multi-entry staff and also a lot of real estate. World optimization strategy with God. And this is where people start thinking like Operator stop. This is where founders stop thinking like Operos and start thinking like ownership groups.

SPEAKER_00 27:01

Okay, now that we're back from the ad, let's continue talking about exit expansion and legacy. So that being said, we're going to dive further into the exit part, right? And how and expansion too. So so with all of that, there's entities that come in place. There's questions about that. There's real estate investments for the business or for you personally. So how like I guess you are a specialist in that jet. You have a lot of experience with multi-entity entity and different um real estate obligations and things like that.

SPEAKER_01 27:36

Yes. Thank you. Thank you for that. Thank you. I'm excited. So uh what is what it happens is like we have to remember these are like 10, 20 years old buildings, uh businesses that they have a lot of stuff going on. You know, like as you start your business, it's really important to separate everything by L or C to reduce risk by entry, by entries, L or C's, and all of that. And that is to protect your wealth, you know, to just to make sure if somebody sued one business, it cannot sue the other businesses, or it cannot go for your personal staff. Everybody knows that a lot of the wealth generator in a business is the real estate part of it. Like whenever you have a restaurant and you have been around for 20 years or you have a retail shop, where are you going to make the most of your money at the sale is on the real estate part of it. Because usually the real estate in the majority of small businesses, the real estate is worth more than the business itself. So if you definitely want to be aware, an advice I will give you is if you if your business is successful, you're already paying a lot of money in rent. You're paying uh if you're already paying a lot of money in rent, the first thing you can do, and you know your business is successful, you have a location, you need real estate, the first thing will be buy the piece of real estate where you are renting from. Because in 10-20 years, that rent money, you are paying the mortgage of OVED. And to be real with you, in commercial real estate, I'm pretty sure like wherever you're paying the person, it's it's being enough for them to pay the mortgage. But if they cannot pay the mortgage with that, they will be like bankrupt. So commercial real estate, like nobody's going to give you a free hands out. So most likely you're already paying a lot of money on rent. So what successful business owners do is that they make sure like instead of paying rent, they buy a piece of real estate and already the business is paying for it. And the more time you give it, like 10, 20 years, you know, that properties if it's in if it is in a good side of town, is going to go up in value, and also you have control over the rent. A business every year, rent goes up, and always commercial real estate, you know, because taxes go up, interest go go go up, so the tenant pass those stuff back back to the less hold improvement. So absolutely.

SPEAKER_00 30:22

So so then the business owner, right, if they're renting their their office space or their location for their restaurant, like you said, people are only going to rent out their building to make an income from it, right? So you're paying their mortgage and then some. Yes. Right? Yeah. So instead, the better option is to go ahead and make that investment in yourself and your business. Cause again, that at the end of the day, real estate, you can make a lot of money in that. You can have it really increases your net worth. So then in 10 and 20 years, you can sell it and be profitable.

SPEAKER_01 30:56

Yeah.

SPEAKER_00 30:57

Right.

SPEAKER_01 30:57

Yeah. And look at the biggest companies in the world, like McDonald, they own a lot of real estate. Why? They just want the consistency of the rent.

SPEAKER_00 31:06

Exactly.

SPEAKER_01 31:07

Or of the list. And and a lot of franchise models works like that too.

SPEAKER_00 31:11

So and it adds to the value of your business. Yeah. So if you're gearing up to exit, right? And then also another aspect of that is if you do want to focus on expansion and grow your business, the best way to get funding, right, is you take you take a HELOC out or something on the property.

SPEAKER_01 31:30

Yeah. And also something I others see too is I something I also see successful people doing is that they use the real estate as their passive money. You know, they have a bunch of real estate making rent. I'm like, hey, I'm okay if my business has a bad GL or two GL. You know, as long as I don't have to put money back, I might not be able to get paid myself. But I have the real estate paying me here, and and I can live, I can live off of that. Definitely like as you're planning to sell your business, as you're planning to asset, as you're planning to just sell everything, you need tax planning because a lot of those staff, a lot of those staff is going to have tax consequences in a different way.

SPEAKER_00 32:24

And then so talking about tax planning, you know, that's that's something interesting, is that everyone's situation is different, right? So tax planning isn't necessarily you can't just ask AI and get the good data and good information, right? A lot of people do that.

SPEAKER_01 32:38

It's so personal, it's so indicated. It's so personal.

SPEAKER_00 32:40

And you can't really watch TikToks and be able to rely on that. So then what's your recommendation, right, for a business owner for getting good tax strategy or tax planning?

SPEAKER_01 32:50

Figure out which type of tax planners you need and go to the right person. If you need income tax, business tax planning, go to your CPA. If you need estates tax planning, which usually older people need it with estates, you gotta get a good CPA and a good estate lawyer. Okay. With you for sure. And White Glove is really good at that. So if you if you need a CPA with tax planning and want some tax planning, uh the guys at White Glove can help you out. We'd love to help you out.

SPEAKER_00 33:21

And another add-on there, just to make sure the person who's doing your tax planning is familiar with tax planning and strategies. So not every CPA or every attorney, right? They're not all made the same. So some people are going to have that experience while others don't. So make sure you find a qualified person.

SPEAKER_01 33:41

Yes. And then uh the real thing is like real tax strategies start years before the assert. You know, and business owners don't just own businesses, they also own the outcome, they own the structure, they own the planning. It's just that proactiveness that has made them successful. And they gotta keep that through through everything.

SPEAKER_00 34:03

Absolutely. So then strategizing that exit for sure on a tax point too. So let's let's move in and start talking about the other option instead of exiting. Let's start talking about legacy building and building something that lasts, like some expansion, things like that. Yeah. Um, tax strategy is actually important on that aspect as well as having a good estate attorney, so making sure all of that stuff is lined up for the transition, whether that be upon like death, right, or maybe that is um sometime sooner. You just have something written and a good protocol to go through.

SPEAKER_01 34:38

Uh, for sure. Uh, for sure. Yeah. So and then like uh that's really important because that's how you build like generational wealth, family, legacy.

SPEAKER_00 34:50

Absolutely. So at some point the conversation stops being about proving yourself and starts becoming about protecting what you've built, right? Which that tax strategy, the estate planning comes into play, as well as just transition to like either family legacy or generational, or maybe that's to um a leadership team that you already have employed at your workplace.

SPEAKER_01 35:17

That's pretty good. Like I know you advise a lot of business owners through the asset and getting them ready through the asset. Well, what are some expertise you can share with the audience?

SPEAKER_00 35:29

Yeah, absolutely. So, first we want to make sure that we have a healthy foundation for the business, right? Before we transition to generation two or to that leadership team to take over. So going through and checking and making sure we have good SOPs and processes, we have good operational support as well as well as we all understand how the job's getting done and how we bring on new business.

SPEAKER_01 35:52

Uh what is one thing every business owner should do before selling?

SPEAKER_00 35:56

They should make sure they have everything in order and make sure that their data is correct so they have an accurate valuation.

SPEAKER_01 36:03

That's good. What is one thing one thing founders avoid that hurt them later?

SPEAKER_00 36:10

One thing they avoid is making sure that their operational team is supported and has the correct SOPs.

SPEAKER_01 36:17

Does all those does operational comes with accounting?

SPEAKER_00 36:22

Yes, I would say uh accounting can go under operation to make sure that you have good data and good numbers. Yeah. Um a lot of them do avoid that as well, for sure.

SPEAKER_01 36:31

So what do you think is the best investment outside the operating business?

SPEAKER_00 36:38

Definitely uh your accounting. Because how can you grow and make and answer any questions, right? Of are you profitable if you don't have good accounting and good data? So definitely can't sell your business without good data either.

SPEAKER_01 36:51

Yeah. What do you think is the most overrated found that flex?

SPEAKER_00 36:56

Hmm. I think the fancy office. Fancy office, fancy car for sure.

SPEAKER_01 37:02

How often people do that? I can see the fancy car, but another fancy office. I think I would rather an office versus a car, though.

SPEAKER_00 37:09

Fancy car, um, but usually that ends up being the owner's personal, so they're spending it theirself, not necessarily the business, right?

SPEAKER_01 37:17

Business and personal finances is the same thing.

SPEAKER_00 37:19

For I mean, yes. Yeah, yes, for sure. But I mean, yeah, I think definitely a fancy car, but also I have seen where companies move their offices or get a nicer office because they think they're doing well, etc.

SPEAKER_01 37:33

Perfect. What is the biggest green flag in a business?

SPEAKER_00 37:36

Biggest green flag is cash flow. It's just continuously make making sure that if the business has cash flow every single month and is profitable. Not only profitable, but has cash, because there's a difference. You can be profitable but not have any cash on hand.

SPEAKER_01 37:52

Biggest red flag in due diligence.

SPEAKER_00 37:58

Biggest red flag is going to be bad accounting, right? Because I mean you you can kind of almost explain anything else and kind of fix anything else, but if if a company is going in to buy you and they notice inconsistencies or problems in your accounting and your books, then there's no way they're going to do business with you because they can't trust the data.

SPEAKER_01 38:17

That was really good. That was a great rapid file question. That was great, guys.

SPEAKER_00 38:23

All right. So I guess that wraps up our six-episode series of Soulpreneur to Enterprise. Um this series really was never about making more money.

SPEAKER_01 38:34

It was about building something sustainable, something valuable, something that creates freedom.

SPEAKER_00 38:40

And something bigger than yourself.

SPEAKER_01 38:42

I agree. So what should what should what should be some plans that people should take out of this series?

SPEAKER_00 38:50

That's a good that's a good question.

SPEAKER_01 38:52

For example, I would say the IRS reward, not wholesale.

unknown 38:57

Yeah.

SPEAKER_01 38:58

Most founders focus on only on income. That's true.

SPEAKER_00 39:03

Okay. Um, your business should create freedom, right? Not perm not put you in permanent survival mode.

SPEAKER_01 39:12

Tax strategy is a long game.

SPEAKER_00 39:14

That's true. That's one that I wish people would pick up sooner. Yeah. For sure. Um, growth without operational maturity um honestly breaks the business.

SPEAKER_01 39:25

Yeah. Revenue creates attention, a struggle creates wealth. That's so true.

SPEAKER_00 39:31

That's a good one. That's a good one. Another one I would say is a healthy business gives founders options. If you have a healthy business at the end of the day, you have options to sell, to grow, right? To um to bring in generation two to to take over the business, to provide like a family model where your kids are able to come in and take over.

SPEAKER_01 39:52

For sure. Enterprise value is beyond long before the sale. That's pretty good.

SPEAKER_00 39:58

That's very good. That's true.

SPEAKER_01 40:00

And the goal is not just success, the goal is sustainability. I like it.

SPEAKER_00 40:05

The goal is uh the goal is sustainability, not necessarily a success.

SPEAKER_01 40:10

Yeah, not just success.

SPEAKER_00 40:12

Because I do think that a successful business is sustainable, right?

SPEAKER_01 40:16

Yeah, I agree. Uh perfect. First series in the podcast. That's good.

SPEAKER_00 40:23

And we have some exciting news for our next podcast, right?

SPEAKER_01 40:26

Yes, we are going to start bringing business actual we are actual business owners. Yes. But we're going to start bringing business owners and we are going to deep dive into the business and help them out. And ask them the really hard question of how to take them from solopreneur to entrepreneur to enterprises.

SPEAKER_00 40:48

Yep. So next episode, um, listen out and see who we're bringing on. But we have a business owner lined up to come on and we're going to talk through how to get them from solopreneur to enterprise.

SPEAKER_01 40:58

And that'll be a lot of fun. So Harold, thank you so much for being the brain behind this series, solopreneur to and to enterprise. And I know this this series is just is setting the the standard for the rest of this podcast and and what we are about. Thank you, thank you so much.

SPEAKER_00 41:20

Absolutely.

SPEAKER_01 41:20

So that being said, see you all guys next week. And yeah, I hope you're you'll have a good week. Bye bye.