Poised for Exit is the weekly show for business owners and advisors who want
smarter strategies, stronger companies, and better exit outcomes.
I’m your host, Julie Keys, award-winning certified exit planner, speaker, and
lifelong entrepreneur helping private company owners build value, plan well, and
exit on their own terms. Every exit has real stakes.
That’s why Poised for Exit brings in top experts to share practical insights that
help owners grow value, reduce risk, and create stronger outcomes.
Now, let’s jump in. Hey, everybody. Welcome to the “Poised for Exit” podcast show.
We have a treat for you today. Our guests are advisors in a wealth management firm
who we all know very well, who are also sponsors of this wonderful show, and they
are going to be addressing a topic that we have not covered in a while, and we’re
going to be taking a different angle at this particular topic about diversifying
your wealth well before a liquidity event.
So we’ve got, like I said, we have wealth managers who are going to be joining us
today, and we’re going to be talking about how that nest egg is tied up and what we
can do about it. Before we do that, though, we’re going to listen to all these
words from our show sponsors. So stay with us.
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world of exit planning, you’re invited to visit the Twin Cities chapter of the Exit
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Hello, Poised for Exit listeners.
We are here today with John Schwabeck and Greg Holmgren, who are advisors with
Freedom Financial Partners. John and Greg, welcome to the Poised for Exit show.
Thanks, Julie.
Yeah, thanks for having us, Julie.
Yeah. So good to have you guys here today.
There’s a lot that we’re going to try and cover today in a short time.
Lots of great content, so if you’re a business owner and you’re listening to this
show, you’re going to probably want to listen to it twice.
Anyway, but before we do that, we like to start by introducing our guests and
having them talk a little bit about their background so that you can get a window
on who they are and why they’re here. So we’re going to do that first.
Maybe, Greg, we’ll have you start.
Okay. Just tell us about yourself and how you got here and how you got to be working-
Okay. I spent 37 years working with New York Life, primarily with business owners
and estate planning, which go hand in hand, and I retired at the end of 2023.
And my son is a partner with John and Trevor.
He’s the chief operating officer.
And I had said to them just before I retired, “Hey, are you guys interested in
doing more estate planning, insurance, business owner type work?” And they said,
“Absolutely.” So I get the best of all worlds.
I get to work with my son, I get to work with these guys, I get to do things that
I’ve enjoyed. That’s
wonderful. And that was three years ago, and we have just had a terrific time.
Greg didn’t retire very well, Julie.
Yeah. Well, you have a convincing way about you, John.
I’m sure you talked him into it.
Yeah.
That’s great. What a great advantage for the firm, and it sounds like it’s a good
fit and a win-win for everybody, including the clients, right?
Absolutely.
We hope so.
Yep.
Yeah. How about you, John?
Yeah. Just like we had talked about before, started Freedom Financial about 14
years ago with my business partner, Trevor Christian, and I guess over time, we’ve
really morphed into becoming a firm that specializes in working with business
owners. And so-
Mm-hmm
… when Greg came to us and said he may be interested in coming out of
retirement and spending some time working with us, we immediately took him up on
his offer, just given the tremendous amount of expertise he brings to our team,
especially working with business owners in many different capacities.
And I’m excited to get into some of that today and what he provides for our clients
and what he’s done throughout his career.
Yeah, that’s fantastic. Maybe we could just spend a minute to just talk about how
this has shaped the offerings at Freedom Financial, because I know wealth
management, of course, is a huge strong suit of yours.
But when we think about a business owner who’s positioning themselves for a future
transition, many times there are other types of financial services products that
could be involved in that transition planning to make it a better outcome for the
owner and to prepare them and de-risk them, right?
So it sounds to me that’s some of the work that Greg does in conjunction with your
work.
Absolutely. Yeah. That’s what he does. And Greg, do you want to talk a little bit?
I don’t know if you want to get into just some of the things that you’ve brought to
the table since joining our firm, but I think it would be great to just talk about
that a little bit.
Please.
Well, and just at a high level to give you an overview, the work I did for New York
Life was national in scope, and New York Life has 12,000 advisors.
But I worked with the top tier and their top clients.
And so the advantage I had over John’s firm or most other financial planning firms
is I was talking to one of these or two of these or three of these types of people
each week, and had a real good chance to get to know how they think, what some of
the hiccups are, and be able to translate that into asking questions for the
clients at Freedom Financial and say, “What are you doing in these areas?
Let me help you think through.” Because although I didn’t know them, I’m meeting a
lot of them for the first time, I know a lot about them because I worked with
people like them. And so it’s just a matter of saying, “What are some of the issues
that I’ve seen over the years, and how do they impact this particular client at
this particular time?”
Boy, that’s some wisdom that can be beyond valuable, right?
So much of the work that we do as exit planners and as advisors is to help our
business owner clients make really sound decisions.
But we can’t do that if we aren’t equipped with the proper expertise within the
firm. So I’m happy for the two of you that you were able to come together.
Now, let’s get into some of our content for today.
We were talking about diversifying a nest egg over time and the reasons for doing
that. Now, obviously, right, we always say you should never have all your eggs in
one basket, but there’s so much more to that, that we’re going to talk about today.
And so Greg, I’m just going to have you start because you mentioned that you have a
business owner story where they were about ready to close on a sale, and then the
owner changed their mind.
Yeah. And from talking to some of our contacts in M&A, this happens often, not just
infrequently. This business was worth about $5 million, and he was taking out half
a million a year, which is a really nice living in almost any part of the country.
Mm-hmm.
And so when he started to think about the sale, one of the things that we
introduced to him is, if you sell, what will your income be after?
And that’s a pretty basic item for anybody who’s familiar with exit planning.
It’s one of the three legs of the stool to say, what’s the income?
But he hadn’t thought about it. And so we say, let’s say he did extraordinarily
well. He sells for $5 million. He nets $4 million after taxes and fees and
just does a terrific job. He carries it to a financial planner, and the most he can
get on an income basis is probably 4% to 5% a year.
In his case, 160,000 to 200,000, which is nowhere near the half a million he was
making.
Right.
And because he wasn’t being forced out, he said, “All right. U-turn.
I’m going to not exit now, and I’m going to keep going because that’s just not
enough for me to handle.”
But then how long can an owner realistically hang on and keep going, right?
That’s the quandary that they find themselves in.
So when we think about common characteristics, the things that you’ve
seen over the years with business owners, what does that look like?
You know what? It depends on their age and what you hope is that we get a chance to
talk to them before they are being forced out.
There’s a certain percentage that are being out, obviously, if somebody dies,
that’s an emergency situation. But being disabled, they may just wake up one day
and say, “I’m not interested.” COVID forced a lot of people into rethinking that.
Right.
And so, hopefully what happens is that we get with owners while they still have
time to correct some of these things.
And sometimes they don’t, but oftentimes we want to set a course to say, “Okay,
let’s try to give you a little more flexibility in the future by diversifying you a
little bit up front.” What I see is most owners think that exit is a lump sum
event.
Yeah.
And what we’re trying to help them understand is your exit can be a process over a
period of years. It doesn’t have to happen in one chunk.
So when you think about the typical owner that you run into, how concentrated in
this one nest egg area are they, generally speaking?
They’re fairly concentrated, and I would imagine that nobody listening would be
surprised by that.
Right. I
think the Exit Planning Institute puts that number at 80.
The Federal Reserve comes out with data every three years.
They just released 2025 data, and they’re basically saying it’s at least half.
And so the common picture for a business owner, if you were to stereotype, is that
they’ve got the business, they’ve got a house, they got a little retirement, maybe
something else, but most of it’s still concentrated there.
Right. And many times they also seem to have holdings in different places that
they’ve forgotten about, and if they don’t have advisors like you helping them get
their financial house in order, then they really don’t.
It’s like here and there, and I know that’s the experience that I’ve had when
I’m working with an owner that doesn’t have someone like you.
So John-
Well, it’s just not a priority, and-
No
… it’s not urgent.
Right.
And therefore, it gets pushed
off, and it takes sometimes somebody…
I think the value we provide sometimes is just saying to somebody, “Look, you got
to do something with this.”
Mm-hmm.
Yeah.
And push it to the forefront rather than let them slide it to the back continually.
Yeah. It’s not urgent until it is, right?
Hmm.
So John, you’re an owner.
Mm-hmm.
You are a partner, like you said at the beginning of the show, with Freedom
Financial Partners, and so you get it.
You’re living it, and you’re also advising clients.
Let’s talk about that for you as an owner.
Yeah. So I just think the reason it’s so hard to diversify out as an owner is
because the business is very familiar to us, right?
Yes.
We control it. We know our team. We know the culture. We know our customers.
We know our industry, right? So it’s something that’s like, “Well, why should I
diversify out of this? This is something I’m very comfortable with.” And so I think
a lot of owners just continue to reinvest into something that they know.
Mm-hmm.
I think secondarily, it can become a habit to just reinvest because when you think
of starting a business, if you’re a founder, and we founded Freedom Financial 14
years, we’re just trying to survive, right?
Of course.
There’s not a lot of money to diversify out of our business.
We’re trying to survive and just grow it into something that hopefully is
sustainable, and I think we often just get in the habit of continuing to
act like that instead of at some point recognizing that, “Huh, this is a pretty
successful business. Maybe there’s a point where I could take some of the money
from this and diversify out of that.” And I think another reason that maybe owners
don’t always do that is, and I hear this quite a bit, is there’s not always
financial advisors or financial professionals that are telling them to do this,
that they’ve met with actually saying, “This may be a good time in the life cycle
of the business to actually start looking at some of this.” And so-
Mm-hmm
… what I like to tell the owners that I work with is it’s good to bet on
yourself. It’s good to bet on your company, but you don’t have to bet everything on
yourself and on your company.
Yeah.
Right?
Good point. And I know you’re going to be touching on this later in the show about
why it’s important to diversify. I think that business owners have a common
misconception over why, because they’re figuring, well, they just want assets under
management from me. And, well, yeah, of course, that’s what you do for a living.
However, there are some really amazing strategies that can be implemented when we
are diversified, and it can definitely impact their outcome.
But we’ll get to that in a minute. We’re going to take a quick break, but we’ll be
right back.
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So let’s talk a little bit about the story that you were sharing a story with me
earlier. There was a business owner that you were working with, 59 years old, and
it was a case where there were an awful lot of risks.
And so maybe what are some of the ones that commonly business owners overlook when
it comes to looking at the future?
Well, there’s a couple that jump to mind.
First of all, we talked about one, which is the income gap, saying, “If I sell,
will there be enough?” And they don’t remember that maybe their business is valued
at 20 million because it’s five times earnings, and they’re putting off 20% a year.
And so you get that piece of it that’s there.
But another big piece of it that business owners don’t think about is the asset
protection angle, meaning if everything is tied up in their business, it all is
exposed to the asset issues or the protection issues that they have in that
business.
Mm-hmm.
If you manufacture dynamite, that’s a pretty significant thing.
If you run a trucking firm, it’s a pretty significant thing.
Yes.
And we had a ski boat dealer that he didn’t think it was a significant thing until
it wasn’t.
Mm.
And he sold ski boats. This was a few years ago, but they were
high-end dealer, and he had sold a boat and thrown in the ski rope, I’m sure for
free. I didn’t ask him specifically.
But yeah, you don’t charge $200 or $300 for the rope when somebody just spent…
And what happened is there was something went wrong with the rope.
Somebody was injured, and he was sued over that because he was part of the chain,
and they’ll sue everybody who can.
And it made him nervous, and he started realizing that, “You know what?
I have money in the business I don’t need to have here.”
Mm-hmm.
“And so maybe if I can find a way to diversify.”
Yes.
Or in some cases, maybe even set up another LLC if you’ve got partnership that
insulate each other.
Yes. But asset protection is a big deal because if you don’t diversify, then everything
is relying on that one piece, and any little thing can cause it to shrink or to
go down.
Right. And there are other people that are involved, other stakeholders, that if
something did happen and it went down, it would impact a lot of other lives.
So yeah, thinking about cash, I’m a business owner now, but it’s just me.
Everybody who works for me is a contractor, but I did have employees back in the
day, many of them actually, and I remember thinking, “I should probably pull some
money out of the business.” And my dad at the time was my financial advisor, and he
would tell me, “You should probably get this account started and that account
started,” which I eventually did, but I didn’t as soon as I should have, college
accounts and whatnot. Because I was so afraid, even though I had a lot of cash in
the business, I was afraid to pull cash out. What if I need it?
Or if something happens, right? And I think that maybe there are other business
owners that are feeling the same way.
Well, and it’s interesting along that line, Julie, that when you’re a flow-through
business and you pay tax on it whether you take it out or don’t take it out-
Right
… then you certainly could take it out.
And what owners forget sometimes is how easy it is to put money back into the
company if the company needs it.
Yes.
There’s a half a dozen ways you can get money into your company, and your CPA’s
probably been telling you get it out of there for years-
Mm
… and you’ve just been going there.
So the fact that sometimes they think, “What if I need it?” They kind of forget
about the fact that it’s really pretty easy to take it out and have it available
and put it back in.
Yeah. So John, let’s talk about what wealth could look like on the outside, right?
So outside of the nest egg, where we hold the majority of those assets in that
business, what could that look like, especially at the negotiating table?
Yeah. I think when you have assets outside of the business, one thing that it’s
going to create is just flexibility.
Imagine going into a business negotiation knowing that you have outside wealth
and that everything doesn’t have to be based on what that business is worth.
Because your best offer may not be your highest offer.
Exactly.
You know all the things that go into a business negotiation.
Mm-hmm.
It’s like, “What’s the culture going to be if I sell this?
What’s this going to be for my employees, for my clients, right?
For my legacy?” And so I think you want to go in knowing that you’ve got options,
and having wealth outside of the business I think just gives you options that you
may not have if all of your money is tied up in the business.
Because buyers are pretty smart, and I think they’re going to figure out during a
negotiation if they know you have everything tied up in the business.
Mm-hmm.
And if you’re asking for so much cash up front versus maybe being able to look at
some more creative structures, or maybe there’s earn-outs over the next few years,
or equity that could be a component that could give you a lot of upside, but you
need the flexibility of having outside assets sometimes to be able to ask for those
things or have some of those things be part of the negotiation.
So I think that really is an important thing going in, is just to make sure that
you have other assets to rely on so that the sale of the business, just getting
that highest price is not kind of the be-all and end-all for you.
Absolutely. Yeah. Like you said, it gives you the power to be able to say yes or no
versus being backed into a corner and not having the options, like you said.
We want to be able to say, “Okay, well, this does not offer the kind of flexibility
and security that I need. This isn’t the kind of deal structure that’s going to
work for me, and this is not my only asset,” right?
Right.
Yeah. And just being able to walk away from a deal, too-
Exactly
… and keep running the business, right?
If it’s not a good deal- Yeah
… we always have those options, and-
Mm-hmm
… I think that it’s a very important thing to go into any negotiation with.
So you guys, I want you to both address this. This is another scenario.
So there’s a business owner who is expecting to sell at 20 million, but the best
offer’s at 15. And so tell me about the difference between an owner that has two
million outside the business and one that has five million outside the business.
We were talking about diversification. Gives them a few more options.
I’ll let you both address that one.
Yeah. Well, just from the income side, if 20 million is what they have and
they net 15, then there’s ultimately less because of that lower price.
And as we mentioned, at 15 million, maybe it nets out at 11 or so after the
sale. You’re looking at the possibility of being short the income you want.
Right.
Or the income that your family is used to.
Now, a lot of us can look and say, “It’s still half a million a year.
They should do okay.” Yeah, but it’s not my plan, it’s theirs.
Right.
And so the numbers that are important to them are what’s important.
And if that’s in doubt, then it may mean that they need to walk away from
that rather than keep it. So from that standpoint, the income is one of the
challenges in it.
Definitely. John, to your point, many times owners will focus on that top
number, and it isn’t about the top number, it’s about the amount of money they get
to keep, right?
Yep.
And so when we talk about owners maybe not having
the kinds of options that they would really like to have, they may come back and
say, “Well, but I’ve got
an earn-out, and I’ve got some deferred comp or some deferred payments coming.
Doesn’t that make up for that?”
Right. Yeah, I think that when you think about things like earn-outs or even
equity, things that can be part of these deals-
All over you. Mm-hmm
… yeah, we definitely want to think about this from what the headline number is
versus planning around what is the actual cash number that’s going to come into
play here as well. And I think those can oftentimes be two very different things.
Yes. And Greg, like you were talking about, say there’s a $20 million kind of a headline
number, and I’m going to make the math simple.
Say it’s 15 million after taxes and fees, which is probably a little bit high, but
let’s just keep the math simple. Maybe 10 million’s the actual cash number that we
can plan with, and maybe the other five is in something like earn-outs or equity.
And those are great things to have access to, but we also have to be careful about
planning around those things as well, because sometimes I think owners go in and
say, “Well, that’s just part of the deal.
I’m going to get that,” knowing that, well, the economy could change.
Yeah. Maybe the new owner does something to the business that makes that earn-out much
harder, or that equity just isn’t going to achieve the levels we thought it was
going to. So from a planning perspective, that cash upfront plus the outside
assets, I think that’s how we like to do financial planning.
Yes.
And anything above that, as far as equity or earn-outs, it’s kind of just icing on
the cake to some extent-
Right
… in terms of how we might look at that from a financial planning perspective.
Definitely. And some security in case, like you said, there might be some
fluctuations. Having some things in the portfolio that aren’t quite as illiquid
or volatile is also super helpful, right?
Yes.
So but what about that business owner that’s got a business that’s got robust
margins, doing really well? They’re reinvesting because they’re like, “Well,
this is doing better for me than anything in the capital markets could do.” I’ve
heard that before.
Yeah. Right?
Yeah.
So let’s talk about that for a second.
Yeah. I think that the mindset is this should be both.
I think a lot of owners get into this, “Well, it’s either/or.
It’s either I put it back into my business and reinvest because I can make more,”
or, “Well, now you’re asking me to diversify all of this money out.” And I think
the right answer is really to do both, because it is important to continue
investing in the parts of your business that are going to keep growing the
enterprise value. Some of the best investments I’ve ever made personally were
putting money back into Freedom Financial, right?
Sure. Mm-hmm.
So I totally get that, but we want to have some outside assets
to really complement-
Yes
… that, like Greg was saying, maybe it is 80% of our net worth.
Whatever that number that the business is for us personally, we want something to
complement that large illiquid investment.
And so by and large, it’s going to be things that are more liquid, things that
maybe if we get in a cash crunch, that we have access to.
Right. And it doesn’t mean they have to be super conservative things either.
I think a lot of people have this misconception like, “Well, now you’re asking me
to put money in bonds and cash.” It’s going to depend on your time horizon, your
risk tolerance-
Mm-hmm
… how much income you need outside of the business.
And what we’re trying to help owners do is just build a diversified portfolio that
complements the business.
Right.
Exactly. So let’s talk a little bit about diversification.
What are some of those common misconceptions that business owners think is
diversification, but it’s really not? Greg.
Well, to start with cash in the company, it feels like it’s okay, but it may not
be. Obviously, it’s still exposed to creditors.
There’s a lot of owners that own the building that they lease.
Yes.
And there’s nothing wrong with that.
Mm-hmm.
And in fact, it’s probably a smart business move, but if the business struggles, so
does your tenant And it’s an all or nothing piece.
Sometimes people invest in similar businesses.
They have contacts, they have friends, or have several that are knowledgeable in
the industry. But if you’re in the same industry, you’ve got the same risk.
Yes.
And then finally, sometimes an owner forgets that they have some personal
guarantees on some of these things.
Mm-hmm.
And so, what might be free and clear really isn’t free and clear.
It’s still just part of the business because you’re backing it.
Yes.
And so it’s a lot of things that are good in and of themselves, but
sometimes they can disguise themselves and fool us into thinking we’re more
diversified than we really are.
Yeah, those personal guarantees, sometimes we forget about those too, right?
Because we signed them such a long time ago.
And yeah, it’s pretty tough to get by without having to do that anymore anyway.
So let’s talk about three to five years out, John, when we’re thinking about
getting serious. I’m a business owner. I own my building.
My business leases from my LLC that I set up that owns the building, and the
business is doing well. But I really don’t have anything else.
Maybe I have some insurance here and there.
Maybe I got a 401 or something like that, but otherwise, I really don’t.
Speak to me on three to five years out. What could I do?
The first thing I think that you really want to do is make sure you understand
what’s your personal vision, right?
Mm-hmm.
What are your goals? What are your values?
What’s the kind of life you want to live?
And I think so many business owners, we’re so busy just running the day-to-day
operations, we sometimes just forget to step back and say, “What am I doing this
all for?”
Yeah.
“What am I actually working towards here?” So-
Yeah
… I think that’s always the first step is, what is the vision?
Because once you have this personal vision, we can step back and say,
“Okay, what’s it going to cost to actually be able to create that vision
that you have for your life,” right?
Mm-hmm.
So the business is going to be a big part of that from a financial standpoint, so
we need to get really clear on what really is the value of the business, and what
is the value net of taxes and fees and other things.
So I think that’s going to be one of the first steps.
Then we’re going to want to bring in, if there are outside assets, okay, what do
those things look like to kind of surround the business so we have a handle on
everything? What’s kind of the complete picture?
Because once we have that, we can calculate what we call your freedom
point.
Mm. Which is just basically, how much do you need to live the life that you want?
And it’s surprising. Sometimes we’ll meet with people, and they’re already there.
They’ve gone through this vision exercise. We’ve gathered everything.
It’s like, you’re at this freedom point already.
I mean, how does that make you feel?
And oftentimes, it’s really a surprise to people that they’re there.
Mm.
Oftentimes they’re not there, right?
Sure.
And they have this gap.
Mm-hmm.
And that’s where we start to look if we’re three to five years out, how do we start
to close that gap to get you to that freedom point and really develop, I think, a
real systematic way of doing that, which could involve continuing to grow the
business, diversifying some wealth outside of the business.
But until we really get to what that freedom point looks like for our
clients, it’s hard to come up with strategies, and so I think it all really starts
there.
Yeah. You’re so right. Just knowing the business value, because if the nest egg is
the business and we found that the value of the business isn’t where it needs to be
in order to maintain the lifestyle after it sells, we have work to do.
Yep. We do.
Right?
Yep.
Yeah. So it’s important for our owners, if you’re out there and you, that your nest
egg is your business. The sooner you understand the actual value of it, not the one
that’s in your head-
Mm-hmm
… but the actual value, the sooner you’ll be able to take some action.
So we talked a little bit about how do you know if enough is enough, Greg, but
let’s talk about maybe a little bit with regard to an owner.
Say, for instance, what could some of the strategies be outside of the business
that could help them to close that wealth gap that we’ve been talking about that
may
exist? Well, one of the most common that people look at is a 401 or profit-sharing plan,
something that-
Mm-hmm
… they can set aside money and is tax-deductible to them.
In fact, tax-deductible seems to be the number one issue that comes up. “All right.
Can I do this? Is it deductible?” Now, in looking at profit-sharing plans,
especially where the company’s making a contribution, and sometimes you have to
look at how much of that goes to me-
Right
… and decide, because if I get 60 of a contribution,
and if I just pay tax and kept it, I might get 70%, then maybe I need to just take
it and not worry about deduction. So that’s one of them.
And then secondly, it’s not so much about where you put it, because we can figure
that out. It’s about set a policy that says, “This is what my business is
going to pay out as a dividend, and I’m going to do it as a targeted number, not as
something that I wait till the end of the year and go, ‘Do I feel like I can do
this?'” Build it in as part of your plan so that you’re in a place where you’re
systematically diversifying. Obviously, corporate dividends change for every other
corporation-
Mm-hmm
… so yours could change. You’re not locked in.
But at least it gives you an intention before you’ve made the money or spent the
money. Here’s what I want to do with it ideally.
Fantastic. Options are always the best, right?
So we, as advisors, have seen and witnessed our business owners making
mistakes. We all make mistakes, right?
All of us as business owners, all of us as professionals.
But what are you witnessing as being maybe some of the most common right now these
days? I’ll let both of you answer that question.
Yeah, I think the one that I see probably most often is just
business owners thinking that a successful business means that they’re going to be
sort of set for retirement, right?
And they haven’t done the work to really identify is what I’m going to get from the
business, along with whatever’s outside the business, going to be enough.
That’s a
good one. I think that’s just something that just isn’t maybe done to the extent that it
needs to be done, because business, we’re really diligent with our businesses.
We know our numbers backwards and forwards, right?
Mm-hmm.
And we take this very seriously, and we have all these systems in place to help us
run great businesses. I just feel like the personal side of wealth generally has
not caught up to that.
Mm.
There’s not as much intentionality put into that side of the equation, and so
that’s what we’re trying to bring business owners along with us in this journey is
you’ve built this great company. Let’s kind of build the personal side of wealth
with the same intentionality that you built your business.
That is so true. It is so true. Having a concept
that the business is going to support me into retirement, but not really knowing if
it can, and maybe even afraid to find out for sure.
Yeah. Right? And so then you couple that with a lack of personal planning and financial
planning, which the two are very important to work together, then that’s one of the
reasons why we have so many boomers especially, who are hanging on longer
than maybe they should be. Because the longer you hang on, the fewer, usually not
always, but the fewer options you have. So how about you, Greg?
What would you say to that?
I would say that it’s just waiting for the exit to think about diversifying, and
when you get too close, you don’t have time to work for you.
And it’s interesting, more of the work I’ve done has been with family succession.
Sure.
And when you’re talking about family succession, you’ve got a number of issues that
we won’t get into here, but that make it more complicated.
Yes.
Which is, where’s my income coming from? Do I have enough to let the business go?
Do I need to sell the business to my kids? What are those options?
And without personal wealth outside, the flexibility just isn’t there.
Yes.
And I’ve seen cases where a son may work for the business for a decade
and really
push it up and open it up and expand it, but he didn’t get any of the ownership
because dad and mom had to hang onto it for their income.
And so they hadn’t thought about it and it didn’t work.
So waiting to start usually doesn’t help you at all, and especially
if your exit isn’t a sale, it’s some sort of family succession.
And then, of course, you’re also talking about waiting too long will eliminate or
reduce your ability to utilize tax strategies, right?
True.
And so there’s all that, too, and that’s another whole episode that we’ll have to
get to another time.
We’re actually good at all
that stuff. It’s one that’s very popular all the time on this show.
We do end up talking about that a lot, I think just because it’s missing a lot from
business owner planning in general.
But one more question for the both of you to address, and that would be, if
someone’s listening to this and they’re a few years out from selling, what would
you recommend that they do over the next 90 days?
John.
Well, if you have a spouse, I would sit with your spouse, and I would talk
about, first and foremost, what is your personal vision?
I think that is the most important thing to start to really make sure that you and
your spouse are on the same kind of wavelength with that.
And it can certainly be different, but it has to be similar enough where you’re
kind of going the same direction. And it’s amazing when we sit with a couple for
the first time, how often they’re not on the same page with that.
And so I think just having a real open and honest conversation about this,
especially as it pertains to the business, and
if you’re the owner, your spouse may have a very different idea of how long they
want you to be in this business or run this business.
Yeah.
So I think just having that conversation, and from that, again, going back and
what does that really look like for our financial future and starting to put some
of these pieces together, and of course, I’m a little bit biased here, but I think
bringing a financial planner into the picture to help have these conversations,
figure out your freedom point, and figure out if there is a gap, that’s the first
thing that I would do because that’s going to give you the information you need to
make really good decisions going forward.
And that learning and education, regardless of what type of learning or education
it is, it helps us all make better decisions.
So when we have accurate data, not just a feeling, not just a hope or a wish, but
an actual data that can help us make sound decisions, I love that. Thank you.
Greg, what would you say about that?
Well, and we spent a lot of time today talking about income after the fact, and one
of the exercises that would be very helpful is do some estimating.
Say, “All right, if I net this out of the business and I take a 4% income,”
5% might be aggressive, but if you pick a number in there, how’s it going to feel?
And if you’re at the place where you say, “You know what?
That number doesn’t work for me. In fact, it’s not even close,” which is what
happens often, then re-look and say, “All right, what does the business need to
operate? What kind of margin do I have?” And look and see if some of that
shifted out, then well, how would that affect the number you just looked at with
the current situation you have? So it’s all about communication.
I like what John said, too, because too often business owners are thinking about
all this in their head.
Yes. And it’s not ever going to their spouse, it’s not going to sometimes their
management team, and so opening up and having some conversations I think is a great
way to get going.
It’s all about the communication. Absolutely.
Yes.
Yeah. Every relationship, I’ve read that before, that every relationship and its
quality is directly tied to the quality of its communication.
So there we go. So a couple things that I’m taking away here, that the strategy
that helps you to build the wealth that you have right now may not be the strategy
that protects you as you approach your exit, and that building wealth outside your
business gives you more control over the timing and the structure and the terms.
In other words, de-risks you from having a less than outcome
that would be favorable for the future.
You want to have the best outcome possible, and on your own terms.
At least that’s the way we try to do it in the exit planning world. Right, John?
Yes, indeed.
Yeah, for sure. So I just really appreciate the two of you being on the show.
Thank you so much for sharing your client stories and your philosophy and how you
help your clients. It’s really great.
Love the work that you’re doing and love having you as a sponsor of the show as
well. So we will have our listeners be able to find you as they normally do on all
the social channels and in the show notes and all those things.
And listeners, we encourage you to join us again next time.
You know how to find us. Thanks, guys.
Thanks, Julie, for having us.
Thanks.
Thanks, Greg. Thanks, John.
