Armando (0:00 – 0:46)
Hi, I’m Armand Roman, host of the Founders Guidepost. You’ve built your business over decades, and now it’s time to think about that once-in-a-lifetime exit. You’ve come to the right place.
Here, you will hear business exit professionals talk about what you should know before exit. Besides hosting the Founders Guidepost, I’m CEO and founder of Axiom Founders Family Office, working with founders to help preserve their American success story. And it all begins with a founder stress test.
We also host the Scottsdale Founders Forum for the founder considering exiting in the next 36 months. Here’s to your hard work and to your American success story. Enjoy.
Hi, Armand Roman with the Founders Guidepost here today with Neil Patel of Patel Advisory. Neil, how are you doing today? I’m doing great.
Neil (0:46 – 0:47)
Thanks, Armando.
Armando (0:47 – 1:30)
Good, good. Hey, well, thank you so much for having this conversation with me. I’m anxious to just expand the conversation and talk about the things that you do.
We’re often talking with business owners as they’re thinking of that exit, going through that exit. And often, one of the questions they have for themselves is, how do I make my company more valuable? How do I grow it?
And then after growing it to a certain point, then how do I exit? So you, of course, with your advisory firm are helping those companies grow, get systems together, and understand the financials they have so they can make good business decisions with them. Maybe you can talk a little bit, Neil, about just in the bigger picture, what do you do?
How do you help those companies?
Neil (1:31 – 2:56)
Sure. I think we all play a role in that whole process. So from our perspective and our vantage point in working with a client as a business CPA and a profitability and growth advisor is really to help tee up the systems and the process and the enterprise itself for the next level of discussion that the business owner may have in terms of considering an exit.
And that may sound a little convoluted, but there’s different focus areas in consideration when a business owner is thinking about exiting valuations, there’s legal matters, there’s insurance, there’s HR, there’s all these various focus areas, and it can get a bit overwhelming. So the area that we come in at is looking at it from a couple of different angles. We’re first focusing on it through the financial perspective and the financial lens to say, is the enterprise operating at its peak potential profitability wise?
Is the enterprise actually producing what the business owner may need it to produce for that exit? And then determining where the gaps are.
Armando (2:58 – 3:12)
Yeah. OK, good, good. And so when you meet them, ideally, given your expertise and how you help them, ideally, when do you want to meet them or when should they want to meet you?
At what point in their business cycle, in the business lifecycle?
Neil (3:13 – 4:50)
I think that most of the clients that we deal with are growth businesses. They have some runway left. There’s a three to five year period in which they have ample time before they’re actually going to go to that event of an exit.
And most of the clients that come to us are usually coming to us because of some sort of resistance or drag or pain point or frustration that they’re feeling in the business because they’ve reached that next level of growth and revenue. And what’s worked in the past doesn’t work anymore. And it’s getting to be a harder lift.
And now these other questions start to come up. So we typically like to work with them at that intersection where they’ve reached a certain level of growth and now they’re finding it difficult to continue growing. There’s some sustainability.
And usually with that, there is something in the back of their mind about, hey, I’m going to want to exit at some point. And a lot of clients that we work with are at a probably three to five, sometimes a 10 year kind of runway that they’re looking to want to exit. But the more time, the better.
You know, Rome wasn’t built in a day. A lot of the issues or challenges a business may face were created overnight. So it takes some time to kind of work through that.
And the more time that a business owner can give themselves, the better off they’ll be.
Armando (4:51 – 5:11)
Right, exactly. Planning ahead is always best no matter what the heck you’re doing. And definitely in a business, if the idea is to transition out at some point, then it’s got to be a window that gives you enough time for someone like you to come in, take a look at what they have and make the adjustments that will help them have a more successful exit when that time comes.
Neil (5:12 – 5:12)
Exactly.
Armando (5:13 – 5:51)
Yep. And I think you said to me before, Neil, that, you know, financials often often financials are in a small, closely held business. They’re often viewed by the business owner as a necessity to get the tax filings done.
And that is true for sure. But in terms of those same financials being used to help the business owner make business decisions going forward, that’s a different way to look at those financials. Maybe you can talk about the difference of those two and how you help make those financials, meaningful working tools for that business owner.
Neil (5:52 – 6:46)
Absolutely. So really quick, I want to say for the clients that we’ve had the privilege of working with and have trusted us for all these years, I think that their genius is in their own right. They’re brilliant people started most all of my clients have started from nothing and built their businesses, taken a risk.
So my respect for the number of hats they have to wear, the challenges that they’ve had to navigate and overcome over the years is really a testament to the resilience of the American entrepreneur. And it really is amazing to see how many things have to come together for them to to make this business work and have it be sustainable. So so from from that standpoint, it’s it’s been, you know, kind of an honor to to work with them.
Right. So back to your question. Maybe you can reiterate that.
Armando (6:46 – 6:51)
Yeah. Yeah. So the the the the idea in the close financial statements.
Neil (6:51 – 6:51)
Yeah.
Armando (6:52 – 7:05)
So often a necessity that, yeah, I just got to get that done, got to get taxes filed. But really, they’re a working tool when they’re put together correctly and they can really help that owner make business decisions going forward.
Neil (7:06 – 8:07)
And absolutely. So I think part of my job is to somehow try to make the because there are a visit. They are they are lenses into your into your business.
And and generally the optics that are presented to the business owner make their eyes glaze over. They don’t want to do it. They they feel there may not they may have, you know, some confidence or, you know, issues regarding not being able to read them.
And it’s difficult for accountants to make that fun and to create the optics to say, hey, this is the these are the consequences of everything that you did. Do you like that? If not, let’s break this down into what were the activities that drove us to these results and focus on the activities?
And I think it’s, you know, partly, you know, what we’ve kind of excelled at is to help business owners see their numbers through a different lens that actually excites them rather than makes their eyes glaze over.
Armando (8:08 – 8:53)
Yeah. And I’m glad you said that, because I’ve had as I’ve had conversations with different investment bankers and that one of the very first things they do is they look at those financials. Are they clean?
Do they make sense? Do they represent good numbers? Are the different divisions of the business separated enough so you can see that product line is doing X and product line other is doing Y?
And can you really understand do they make sense? So often before the investment bank can even get engaged, they’ve got to hire somebody from the outside to go in and clean up those financials and make them presentable and make them give provide good information so that a buyer can really understand and make an informed decision about that company.
Neil (8:54 – 9:53)
Absolutely. I think the nuances and the amount of data coming through any business in any industry is significant. And I always tell clients, I said, you know, accounting is really a lot about just classifying how your business makes money into these various silos.
And so we can see how much did we make? How much did it cost us to generate that revenue? And what do we have left over from that product line?
And to make it a little bit more understanding and also to help the business owner understand that, you know, when the time comes, when they want to exit, people that are going to look at their business are going to look at it this way. You know, we didn’t make up the rules. We didn’t, you know, we’re not trying to be difficult for that, but that these are the rules of engagement in how the business will be looked at.
Let’s just get really good at mastering the rules.
Armando (9:53 – 9:59)
Yeah. And the companies that you’re working with, Neil, they typically don’t have a CFO on board, right?
Neil (9:59 – 11:03)
Typically not. It’s cost prohibitive. And generally, you know, for the clients that we’re dealing with, they don’t really, financially, it doesn’t make sense to have a CFO on staff full time, nor does the business transactional volume and level of complexity rise to the level of needing somebody full time.
However, there is the need for them to take advantage of the perspectives of a CFO in helping to kind of lay the foundation and build that. And that’s where we come in, is to try to be that bridge in those SMEs to help them kind of understand that, hey, you’ve elevated the business to a certain level. And as such, the financial reporting and data that you need to be looking at is also elevated.
Why don’t we implement these things to get better visibility?
Armando (11:04 – 11:45)
Yeah, exactly. And as you said, it’s a transition. They got the company launched, they’ve got clients and customers, they’ve got revenues and sales and profit, and they got to a certain point.
But then you’ve got to, in a sense, rebuild the infrastructure of that company to continue growing. And so that’s where you can come in to help them to define that and organize it and really help them set that infrastructure in place. Then maybe they will, as they continue to grow, need to bring on that full-time CFO and bring on the whole C-suite of people like all the big corporate America companies have, but they’re not there yet.
Neil (11:46 – 12:13)
Yeah, absolutely, Armando. So there’s kind of a little gap here between helping them provide the tools and the perspectives that a CFO might provide. But then ultimately, the goal is that if they are going to retain the business, that they will essentially outgrow us and need to have those people on site to help.
Armando (12:14 – 12:49)
Yeah, exactly. And here in Arizona, we have so many small businesses that have, through blood, sweat, and tears, really grown into nice companies. And along the way, there are growing pains.
And one of those pain points or one of those junctures is where you can come in to help. So let me ask you then, when you typically come into a company and you first walk into there and you’re talking with the business owner, understanding what’s happening, what are some of the surprises that that owner will hear from you that you are helping them to actually address?
Neil (12:49 – 13:13)
Well, based on our experience, every time that we’ve gone into a client, there’s usually some frustration around financial reporting and what they feel and see from a sales and operational standpoint, but what they can’t reconcile to the numbers that they actually get.
Armando (13:13 – 13:13)
Okay.
Neil (13:16 – 14:33)
Or problems that they’ve faced with, I’m just not seeing a reflection of how we feel, how we think the business is doing against what the financials are stating, or just a complete state of uneasiness about the financial stability of the company because the owner, through gut feel and instinct, just feels that something is just not right. I don’t feel comfortable about this, about where we stand financially. And it could be an accurate assessment of that, or it could just be a fear, but generally the reporting is the first place that we start.
As you mentioned earlier, segments of the business or divisions of the business or revenue streams of the business are not properly articulated and defined. The reporting has not elevated to be able to give that type of information. There may not be the right method of accounting used to account for the transactions as they are happening, not to get into a big thing of cash versus accrual, but we want to 14:28 – 17:28 Some people, the numbers, some people just have an inherent problem in understanding the numbers.
Armando (14:33 – 15:11)
And if the numbers are not in a form that is understandable, then it just makes it difficult for them to really understand what is trying to be communicated with that information. And so your work that you do is so critical in helping them see nothing against them. Like I said, they’re smart, they’re successful, they’re working hard, nothing against them at all.
It’s rather getting them information that makes sense to them to where they can make those decisions. Once they understand the problem and see it, they can make a decision and choose the right path, but they need good data to do that with.
Neil (15:12 – 15:34)
That’s so true. And I think that’s probably the biggest part of my job is to convert these numbers sometimes into just context and plain English to basically say, if I were to use the analogy of levers in your business, these are the levers that we’re seeing in your business.
Armando (15:34 – 15:48)
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Neil (15:49 – 16:37)
And the business owner will say, oh, okay, great. Well, I understand that. So you’re saying that if I make an improvement here in an operational area where I really understand that, that if I do this, it’s going to produce this output and this is what it would lead to.
And that is, I think that’s my biggest mission with working with business owners is to not turn them into accountants, but to facilitate what we do and amplify their results by what we do, by giving them the feedback loop. We’re not generating the revenue, we’re monetizing what’s happening. They’re just needing to understand how is what I’m doing being monetized?
How does it show up? How should I read this?
Armando (16:37 – 16:57)
Right. And given how he or she should read it or understand it, what do they do differently? What changes do they make in the business?
Do they have the right people on board? Rather than go hire three new salespeople, maybe they need to just tweak their current processes and they can get to the same place without taking on that additional cost. Exactly.
Neil (16:58 – 17:38)
And working with clients, there’s also, I like to break down just as a doctor might get your vitals to determine state of health or whatnot. And they’re looking at your blood pressure and your pulse and your heart rate and how you’re breathing and this and that. So I like to use that analogy when I talk to a business owner to say, let’s construct your financial statements to look at the…
So you can pick out the vitals very easily. So you can monitor those vitals to make sure that we’re on track.
Armando (17:39 – 17:42)
Yeah. Give them a dashboard that makes sense to them that can help.
Neil (17:42 – 18:01)
Exactly. I don’t need to overcomplicate it and confuse them because that isn’t really going to serve them. And the idea would be to…
And that’s all they really want is to help me run this better. Help me get some peace of mind about how we’re doing and to get a feel on the vitals.
Armando (18:02 – 18:29)
Yeah. And then Nia, when you’ve done your work and helped go through and make those financials a little more understandable to them and now they can make better decisions, what are some of the outcomes that you’ve seen once you’ve gone through that process? Did they hire new people?
Did they add new lines? Did they get rid of current lines they were doing? Did they have to replace some people or processes?
What were some of the outcomes that you’ve seen as a result of that?
Neil (18:30 – 19:42)
Well, I think it’s a little bit of everything because I think that through the accounting department of the company, every transaction that washes through an enterprise, some way, somehow comes through the accounting department. Whether it’s payroll, paying your vendors, accounts receivable, how many invoices we generated, so on and so forth. So everything is kind of washing through that department.
But I like to tell business owners, I was like, it’s very difficult to push change out from the accounting department. It’s meant to monetize and record what’s happened and dollarize basically what’s happened. But what can we glean from that?
What can we understand from the numbers? Oh, well, perhaps like you mentioned earlier, well, we’re selling a lot. We’re just not making as much on each sale that we should.
You know, oh, we’re paying a lot in commissions. Maybe our incentive plan is not really where it needs to be. And I’m finding that, hey, maybe our business has grown 20% in sales volume, but my overhead grew by 30%.
Armando (19:43 – 19:45)
It’s going the wrong direction.
Neil (19:45 – 22:08)
It’s going the wrong direction. So I’m working harder to keep less. And so these are the kinds of discussions that it spawns, but it leads into sales and marketing, operations, and then finance.
And are all three of those working together to give the business owner a complete picture? So what they’re feeling and experiencing in operations is validated through the numbers we’re seeing. And then also, if you don’t like the results, what were the activities that drove those numbers?
Let’s change the activities. Let’s put a plan in place to change the activities. And sometimes, yes, that leads to analyzing your workforce, analyzing the performance and caliber capabilities of your salespeople.
Sometimes it requires an assessment of your administrative staff and how quickly you’re handling customer complaints and things like that. So it touches a lot of different areas. So when we work with the business owner, first and foremost, how we approach it is from our experience, every business owner is unique.
And every business owner, they have a different plan for their life and they have a different plan for their goals. And it really is important for me to understand what that is for them, to put some context around the work that I do, because I really need that to be in alignment with that business owner. I don’t want to propose doing things that go against what the ultimate goals are of that business owner.
So it’s very important for us to understand lifestyle, the culture of their business, what are they working for? This business is a vehicle for them to serve what purpose. And to amplify that through how we work.
And it’s not a one size fits all, unfortunately.
Armando (22:09 – 22:37)
Right. Right. And that makes a lot of sense because some people might want to grow their company.
Some might just want to make their existing company as efficient as it can be. So they can get maybe a little more time off and keep that as more of a lifestyle business versus killing 80 hours a week and just drive, drive, drive. Not everybody wants to do that.
And if you don’t understand what they’re thinking, it would make it more difficult to really hit the nail on the head for them.
Neil (22:38 – 22:52)
Absolutely. I could propose things all day long that might sound good to me and would actually make an impact to the business, but would have really no bearing or value for that business owner.
Armando (22:53 – 23:08)
So let me ask you, in that onboarding process, when you’re learning about them, how are you doing that? Is it questions, questionnaires, time with them? How do you get that information from them so that you can then help them?
Neil (23:09 – 24:51)
So we do a discovery meeting or call to understand if there’s alignment in the sense of, I really need to understand. So questions are our best weapon to do that and asking good questions about where they are, where they want to go, what the frustration really is. Maybe not what’s the symptom at the moment.
And to find out exactly what exactly is it that they’re struggling with and can we help them? And a lot of times we can, sometimes we can’t. And in the areas that they may need help, their interests are better served through somebody that might be able to help them at this juncture in their business with that specific issue.
But it’s very important to get alignment for this type of work because we are partnering essentially with our clients. I say that we are non-equity partners in their business versus a provider. So we are with them on the journey.
And it’s funny to mention that when we start off an engagement with a client of the direction that we think we’re going to go to sometimes where the direction actually takes us. Because there’s so many dimensions and facets to the business that what may seem on the surface as the pressing matter at hand to handle is really a symptom of something else that we need to work on.
Armando (24:52 – 25:05)
Exactly. So they might think they know where the problem lies, as you dig into it and uncover it, realizing that is a symptom. It’s not the problem, it’s the symptom and something else really is what needs to be addressed.
Neil (25:06 – 25:37)
Right. And going through that process, and it’s an iterative process, but I think in the opportunities that we’ve had to work with clients, it’s been rewarding because it really helps to get to the source of the problem for them. And then the relief that can come from working towards resolving that and improving, as you said earlier, the quality of life, ease of operations, not having to just carry that weight all the time.
Armando (25:38 – 27:01)
Yeah. Good, good. And then Neil, one other thing I just want to touch on.
Today, there’s just a shortage of CPAs and people in that space. So literally every CPA I know is just booked solid with work, doing the tax and compliance stuff. And the shortcoming of that to the client is that a lot of times the CPAs are just focused on compliance, meaning get the tax return done, get the financials done and move on to the next task because they’ve got so many tasks to get done.
What you’re talking about is not in that space really at all, because you’re looking instead of from how do we meet IRS’s due dates and deadlines, instead you’re kind of on the other end of that scale saying, okay, business owner, let me help you figure this out. I’m going to work with you to figure this out. We’re, yeah, your tax compliance is important.
Yeah, that’s got to get done too. But for that business owner to help that company really do what they want for their family and for the employees in that, that’s what you’re helping them accomplish. And yes, you can get the tax stuff done too, but your focus really is digging into that business and helping them there, right?
Neil (27:02 – 27:59)
Absolutely. And what you said is very true and it’s an acute problem in the industry. There’s just a shortage of CPAs.
And a lot of them, a lot of CPAs are generally tax and compliance focused, meaning they are taking the financials and preparing returns with them for the purposes of meeting the filing deadline. And we pivoted about 10 years ago. It’ll be 25 years this year that I’ve been in business with my practice.
And so about 10 years ago, we pivoted to shifting into, instead of handling the compliance matters, we really felt that we could provide more value on the front end because that is where the business owners value and needs really were going to be fulfilled.
Armando (27:59 – 28:40)
And that’s really more proactive and better for the business owner versus after the fact, now what do we do? You’re on the other end of that scale saying, well, let’s plan and let’s do things now that will have a new, a different result for you, which is just so much better for that business owner. Because if this is their biggest asset, their business is the biggest asset, which is typically the case, this is what’s going to be their family’s future once they sell it, transition it, whatever, then they really need to put time into that and maximize that and get the help that will help them get there, which is what you can help them do.
Neil (28:41 – 30:14)
Right. And that’s the conversation we have with clients is that the time is going to pass anyway. Where do you want to be at the end of that when the time elapses?
Do we want the same situation that you have now or do we want to really optimize this business, this asset in your portfolio, which like you said, a lot of times is the biggest asset. The business owner has a lot, if not everything riding on this asset. And they’ve taken a lifetime to build it.
So our shift focus when rather than being, and don’t get me wrong, there is absolutely a need for good tax planning, for tax strategies, and for minimizing the amount you’re legally paying to the government and retaining those dollars within your company. But that we found is not exactly going to fill the tank for our business owners in the sense of addressing some of these issues to fund their retirement, their kids education, their lifestyle, the journey along the way, and what this asset is being groomed and to do for them. So that’s where we felt we were best able to serve them in that capacity.
Armando (30:14 – 30:46)
Yeah. And that value that you’re adding, that you’re helping them to understand and improve on, that value, it’s every year, it’s repeating, it’s compounding. So it’s versus getting something on April 15th.
It has to get done, of course. One and done, just got to get there. What you’re doing can have an impact that can last 20, 30, 40, 50 years, even beyond the sale, because then the nest egg is larger, and they can do more with and for their family, for the community at large.
Neil (30:47 – 31:47)
Exactly. And sometimes it’s our job to help. We provide a necessary rest stop or a pit stop for business owners to get off that treadmill of working in the business so long and so hard that there hasn’t been an opportunity to really look at what’s possible anymore.
They work so hard, they work so many hours, they’re juggling so many things, they’re wearing so many hats that they’ve sometimes forgotten what it was all for, what was the end goal. And I think that’s the most rewarding part of this, to help them to see that and to say that, hey, you’ve got this golden goose here. It’s doing really well for you.
Let’s really optimize it and figure out a way to get you excited about what this can mean for you.
Armando (31:47 – 32:09)
So you said that they have maybe a gut feeling something just isn’t right. Maybe they’re kind of feeling stuck in a way. Then they have a conversation with you.
You begin to dig in there and see what’s going on. Are there common things that you see as you begin to do that work that maybe are surprises to them as you do your work?
Neil (32:10 – 33:56)
Yeah, there’s some focus areas that it typically comes down to. Generally, what we’re seeing is if they’ve got the sales and marketing side of their business down and revenue is growing, we generally see there’s margin erosion. They’re making less on every dollar of sale.
Where the business has grown to, maybe the team has not kept up in capabilities to support that level of growth. Processes and procedures that they’ve used for years, maybe since the owner started the business 10 years ago or 15 years ago, were outgrown maybe five, 10 years ago. So it’s taking longer and harder to do things requiring more people.
So there’s just out of sheer inertia of how the business has grown. It just kind of heaves forward every year and takes the owner with it and the team members with it to where some objective reflection and viewing of, hey, are the processes and procedures that got us here, will they get us there? And is the team that we have able to support the growth that the owner has a vision for?
Or has the owner’s vision been thwarted based on the circumstances of what they currently have? And sometimes the frustration and the overwhelm is just too much to bear of thinking about future growth because they look at it through the lens of that growth would come through the processes and the people that I currently have. Yeah.
Armando (33:57 – 34:22)
I imagine some of those can be difficult conversations, but it gets back to the point that you said about understanding what they’re really trying to get to. Maybe they don’t really want to grow. Maybe their team is more important.
And even if that team member or team members need to be replaced to grow, they have to understand that. Yeah.
Neil (34:22 – 35:38)
And that is a tough conversation to have with clients because most of the clients that I have, they’re very generous with their people. A lot of them, a lot of these team members have been with them since they’ve started. They’re like family.
It’s a very difficult consideration to think about what to do about John or Jane that’s been with me and helped me start the company, even though John or Jane may potentially be jeopardizing all of the other employees that rely on this business to put food on the table for their family or to grow. The psychology behind it is very challenging. So we try to work with business owners on a timeline that fits them.
It’s important to understand their goals and meet them where they’re at with what that is. It is not our practice or our philosophy to push that decision any faster or any sooner than what the owner is capable of doing.
Armando (35:38 – 36:04)
Yeah. Yeah. It’s got to be what they really want.
It’s their company. If they want to keep it the way it is, obviously that’s their choice. They want to change their choice also, but they have to, you know, it’s important that you help them see the landscape and then they can choose the path that they want to choose.
But they need to understand that landscape. And sometimes that needs somebody from the outside coming in to really help them see that and understand that.
Neil (36:05 – 36:43)
Yeah, exactly. And so we kind of provide that other perspective and let time take its course in terms of when the client is ready to say, okay, I’m ready to take on a new position or a new way of thinking. And that is a tough thing for many business owners to do that have collegial, closely held, almost family-like relationships with the people that helped start the company.
It’s a very common dynamic in the market that we deal with.
Armando (36:43 – 37:04)
Right. Exactly. Lots of small businesses where the people have really become a second family for that owner and the owner wants to take care of them because they realize the employees, they have their own families and those families depend on their job with that employer.
So it can be very difficult to have those conversations and make some of those decisions.
Neil (37:05 – 38:19)
Exactly. So we provide a sounding board and support and try to, you know, lay out the perspective of, you know, we can put the plans in place. We can create the processes to support the plans.
However, if they’re the people, the existing people on the team are not able to support those processes, then we won’t really get the results that we want. And we try to point, you know, paint that picture for them and then let them navigate that as best they can. And what we find is that, you know, it generally takes a couple of years sometimes before the business owner finally realizes that, you know, as much as they want to continue to do that and they’ll find they’ll do whatever they can to find a suitable option for that owner.
But they realize that to serve the greater good, the greater group of employees within the company that rely on this business to put food on the table for their family, that they must make the change and they ultimately do.
Armando (38:20 – 38:32)
Yeah. Not easy decisions, but again, it’s, you know, what’s most important to owner, what are they trying to accomplish and in that bigger picture, what needs to happen?
Neil (38:32 – 38:49)
Exactly. And so, it’s not our philosophy to agitate that or push that, you know, any faster. Ours is only to present the options and show the monetary results of what’s happened or not happened.
Armando (38:50 – 39:07)
Yeah. So, I imagine, and correct me if I’m wrong, but I imagine then, Neil, that often when you come into a business, you’re the first person like you that they really had helping them with these kinds of things. Is that what you typically see?
Neil (39:07 – 40:50)
Yes. And while there are a lot of business advisors out there, ours is a little bit unique because, you know, we are business CPAs in the sense that we understand other areas of the compliance world and also the business operational world. So, we’re not strictly operationally focused where we are primarily, you know, we tend to look more through a financial lens and we’re looking to see the activities, whether through sales and marketing or operationally that are driving these financial outcomes and providing our perspective through that lens.
And a lot of times for clients that this is, we are, this is, these are, this is like the first time the conversation is actually being held. And also conversations around, well, what does, what does financial leadership look like in your company? You know, and some clients have an accounting department with accounting leads, you know, and the question generally comes down into, well, what do they, what do they do for you?
What, what do you, what are your expectations of this department? And, and they’re like, you know, a lot of times clients still don’t, they don’t, they don’t know what they should be getting when. So, there’s not really a corporate calendar of events that are a meeting cadence or some sort of formality put into place that has elevated for the business owner to see certain things.
So, we, we provide that guidance.
Armando (40:52 – 41:09)
Yeah. And a lot of owners, they just don’t know what they don’t know. And so, they, they don’t know what they should expect until they talk with someone like you who can help them understand what they, what information they need and then help them get that with, from their own data.
Exactly.
Neil (41:09 – 42:32)
And a lot of our work, you know, after the initial conversation to find out, you know, if the client has a significant, you know, level of, or is that a threshold of pain with, or, or frustration or needing to make a change and is ready to make the change and that we are able to help them. The next step that we do with a client is really to do kind of a business assessment. And we really want to look, take a business right now as it stands in various areas of the business.
Before we start talking about changing things or whatnot, we really want to get an understanding of, of what is currently happening right now. And we found that that’s the better option rather than coming in and proposing that, you know, Hey, here’s some strategic intent ideas or objectives that we can focus on. You know, I think before we can grow revenue, I think maybe we should organize for profitability and growth, or perhaps there’s opportunity to optimize in certain areas, you know, and, and looking, if we don’t do the assessment, we can’t properly advise the client on, on which kind of directions they should move that best, best fits them.
Armando (42:33 – 43:17)
Yeah, exactly. Exactly. And that really gets to the individuality, you know, people are individual people and the businesses they create are individual businesses.
So yes, there are some business, business, you know, axioms, so to speak, or laws, so to speak, that are their tenants, that are the common in every business, you have to have sales, you have to have, you know, people on board, you have to have a facility or, you know, something, some lights for every business, but they’re different ways to get to the same place. And you’ve really got to dig in and understand what that owner is looking at what they what they have for their corporate culture, what they have built in for the culture, is that what they want to maintain? Do they want to change it, then you can really help them understand how to, how to get there.
Neil (43:18 – 44:54)
And I think it’s an iterative process. I don’t and I think that it ebbs and flows based on different, as things evolve in our discussions and our and how we work with clients, the conversation and flows tend to some, some areas will take longer to work on than others, you know, depending on the situation, or the current state of the business owner for that particular business. So it’s not a linear checklist type of an item, that we want to hurry up and get through the checklist, just to say that we’ve checked off everything.
It’s more of, you know, where is the business owner really at, you know, and does it make sense to move on to the next step, when we’re still working on ironing out the details of this, or they’re needing help in this area. So from that standpoint, I can appreciate the iterative process of what that is. And that’s kind of what I tell clients, I was like, you know, I don’t think we would dub ourselves as consultants, we’re more, more advisors, partnering with you on the journey, rather than trying to provide a solution to a fixed problem.
And that solution has a certain gestation period of timeline. Our work that we found doesn’t doesn’t typically work that way in order for our clients to get the results that they that they’re looking for.
Armando (44:55 – 45:30)
I like that you have such a solid, you know, CPA financial background, because the, the numbers can often be a mystery to people, they don’t know what they don’t know, they don’t know what they should see, they know their business, another industry. But sometimes that gut check tells them they need to, they need to look at something. And you can, you can help them look at that and identify where is that problem area, by starting with the data that are already running through their business, looking at those financials and digging in deep to help identify some areas that might need some attention.
Neil (45:31 – 45:49)
Exactly. And from your background, you can probably attest to that as well as that the numbers, they can be manipulated, they can either they can be arranged in such a way that they paint a story under this light. And they can be arranged in such a way to paint a story in a completely different light.
Armando (45:49 – 45:49)
Yeah.
Neil (45:49 – 46:20)
And which one is correct. And in our part is to try to help kind of take out the accounting games from the numbers. So we can really focus on the economic transaction itself to be able to provide the business owner with, you know, some truth that they can that they can resonates with their with their gut and what they’re feeling operationally.
And it ties back to they may not like the result. But they believe that that that result is more accurate and reflective of what’s really happening in the business.
Armando (46:21 – 46:44)
Yeah. Good, good. Well, Neil, this is all good information.
And I hope that, you know, a business owner who’s who’s listening, and maybe their gut is telling them that they need they need someone to come in and just kind of take a peek under the hood. If somebody reaches out to you, what is that first conversation? Typically, what is it?
What is that first conversation typically sound like with them?
Neil (46:44 – 47:45)
So we call it a discovery session. And it’s basically a no obligation call to talk about their business, to understand their business, to understand some of the challenges and whatnot that they may be going through, and and kind of giving them an opportunity to see what it might be like to work with us. And and if we are, in fact, the right fit for them, and we can actually, you know, add value to their situation.
That’s a big thing for us is that we have to be able to add value to their to their situation. And a lot of times, to be honest with you, business owners, sometimes they it’s a little bit of shell strike, they’re not really sure what’s going on. That they but they know something is amiss.
Or they know that, you know, hey, I’m done. I’ve had it. I want to I want to sell.
Armando (47:46 – 47:47)
I heard that yesterday.
Neil (47:48 – 48:38)
I can’t take it anymore. You know, and so, you know, and that’s a good place to start with them to find out, hey, well, tell me tell me a little bit about what’s what’s going on and what’s happening. And that’s usually how the conversation starts.
So from the discovery session, then we’ll we’ll move into either either a follow up conversation or, you know, we will be engaged to to work with them to help, you know, improve their their business and start off with the assessment and so on and so forth. And like I said before, you know, we have an intent or a direction that we start with. And sometimes, you know, that’s the direction we stay.
But more times than not, we have these different areas that we focus on to kind of get to that root cause problem.
Armando (48:39 – 48:49)
Yeah. And I imagine sometimes once you start and you find things that you didn’t expect to find, and that changes the direction of your focus, right?
Neil (48:49 – 49:51)
Yes, absolutely. Absolutely. There could be something that we discover in our work that where we’ve got to go to the client and basically say, you know, unless we fix this issue and address this issue now, addressing the other issues will not produce the greatest ROI for them.
And, but it all comes down to for us is really understanding the goals of the business owner. If there’s a uneasiness of operations and a lack of confidence and, and just anxiety and stress about what’s going on, you know, we tailor our work and engagements to support that and address that first, you know, and, and to build on that and to, to, to do things. So it requires us to really be listening to that business owner and what their, what their issues are.
Armando (49:52 – 50:04)
Yeah, excellent. So Neil, let’s say that, that someone’s listening to this and their, they’ve got their gut check tells them they really want to talk with you. What’s the best way for someone to reach out to you to begin a conversation?
Neil (50:04 – 50:55)
Well, they can go to our website, schedule a discovery call at pateladvisory.com. They can reach me directly at 480-626-9270. And, you know, let’s start the discussion.
So if most times than not, the more time that a business owner is in a state of suffering and constant suffering, that, that time can be shortened by, by, by taking some action. And we’d be, we’d be happy to talk to them. So they can book directly at again, at pateladvisory.com or reach out to us at 480-626-9270. And I would be happy to talk with them.
Armando (50:55 – 51:39)
Great. Neil, thank you so much for this conversation. I hope that the right person hears this, who really can use your help and that they’ll reach out.
You know, the purpose of, of, of having this conversation is the people here in our local marketplace here in the Metro Phoenix area can find the local expertise they need to help them with their business. We have tons and tons and tons of small businesses here in Arizona, and we’ve had some just phenomenal businesses come out of this state. And we’re at a place where companies are growing right and left like crazy.
And, you know, they all need help along the way. And there’s a, I’m sure there are many out there who, for them, you’re the right fit. And I’m hoping that they will reach out to you and just have a phone conversation with you, if nothing else.
Neil (51:40 – 51:53)
I appreciate that. I hope so too. There’s, there’s just a tremendous number of small businesses in the state and it’s continuing to grow.
So we want to be able to serve that, that community the best we can.
Armando (51:54 – 52:25)
Great. Fantastic. Neil, again, thank you for the conversation.
Really enjoyed it. And we’ll have to do this again. All right.
Appreciate it. Thank you so much Armando for having me on. You are the American success story.
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