Armando (0:00 – 1:16)
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.
Hi, I’m Armando Roman, Family CFO at Axiom Founders Family Office, a wealth management firm in Scottsdale for founders’ families. Here at Axiom, we know you want to be financially confident and secure. And the problem is, there’s so much noise and just plain bad information out there to make informed choices for your family, especially when you own a valuable business.
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You have nothing to lose. Enjoy this episode of the Founder’s Guidepost. Hi, Armando Roman here with the Founder’s Guidepost with John McAdams today at Pioneer Business Ventures.
John, how are you today?
John (1:16 – 1:23)
I’m doing great. It’s a cloudy day in the great state of New Jersey, but it’s warm.
Armando (1:24 – 1:25)
Sunny and blue skies in Arizona.
John (1:26 – 1:27)
It always is.
Armando (1:28 – 2:07)
So, John, we’ve known each other quite a while, and I’m very impressed with your career trajectory. And I’m really excited about what you’re doing today, because you have in the past done some really great things with big companies that are doing phenomenal things. And your focus as a private business consultant is helping those companies that really need your expertise.
And sometimes they know what sometimes they don’t. And we’ll have a conversation about what you do, how you help them, and what your focus is so that those who really could benefit from your experience, that they’ll be able to reach out and have a conversation with you. How does that sound?
John (2:08 – 2:09)
It sounds great.
Armando (2:09 – 2:17)
Good, good. And then, John, just a couple of things about you. I’ve got…
You shared a book with me a while back that you wrote, if you can see this, the One Hour Business Plan.
John (2:18 – 2:19)
Yeah, I’ve seen that.
Armando (2:20 – 2:23)
I bet you spent many hours on that years ago.
John (2:23 – 2:24)
Yeah, yeah.
Armando (2:24 – 2:56)
And then you’re, of course, a Wharton grad. And people who have the Wharton pedigree often go off with big companies, big name companies, international companies, and do great things as you’ve done in your career trajectory. Like I said, now, as I had the privilege of being at one of your group business sessions recently, I got to meet some of the people you work with.
And they’re people who are grinding every day to build a better future for themselves and family. And with your help, they’re getting there.
John (2:57 – 3:01)
They’re fun, aren’t they? So good group. Good group we have there in Scottsdale.
Armando (3:02 – 3:09)
Yeah. So let me ask you, the book that you wrote, the One Hour Business Plan, you wrote that 10 or so years ago?
John (3:09 – 3:11)
Yeah, 2013, it came out.
Armando (3:12 – 3:20)
And as you were drafting that, you had something in mind that you wanted to accomplish with that. Has it reached those goals you were thinking of?
John (3:21 – 4:25)
Yeah, I guess I taught at night at the Wharton School for 13 years, strategic business planning. And I had my students who were adults. There was a non-degree program.
And I really wanted to take what I did there and put it out in the business community worldwide instead of just in greater Philadelphia region. So that’s the impetus for it was. And I realized how much of the need there was.
There’s so many people that are successful in business but don’t have formal business training. And I guess they have a hunger for it. So a little bit of business planning can go a long way.
And I really wrote it for the guy that just got laid off or I wrote it for the guy that wants to start a new career or new American, the underprivileged. And really, we wound up using it. We’re the guys that were already successful that wanted to be more successful.
Armando (4:26 – 4:29)
Well, that just shows the versatility of the message.
John (4:30 – 5:44)
Yeah. I learned a lot. I learned that the marketing of a book is a hundred times harder than the writing of the book.
And it’s like starting a venture into itself because you’re on the speaking circuit. You’re doing workshops and talks everywhere as much as you can on podcasts, radio, TV. It really takes you away from your core business, which was unexpected.
But it’s one of those cool things. It exceeded sales expectations. It was in every Barnes & Noble store to read, of course, Amazon, Books a Million.
And it was on Barnes & Noble face out on the end cap. And I didn’t expect that. You got to walk into a Barnes & Noble store and see that.
And I asked them why. And they said, well, we plan to launch you and then we’re going to put you online. So you’re only going to be here for a little while.
And then we thought your book would sell well online, which it did. And then that’s what happened. They only had me there for nine months.
But it sold really well during that nine months.
Armando (5:44 – 5:47)
Well, that end cap space is coveted for sure.
John (5:48 – 7:26)
I didn’t expect that most of the readers would be women. I didn’t expect that the audio book to do as well as it did. And most of that was men.
The ebook sales I projected at 10 to 15 percent. It was more like 33 percent. People read it a thousand audio tech business book summaries.
It’s probably about 10,000 copies in all forms. And it was only meant to be in other English speaking countries, but it found its way into non-English speaking countries too, which is good and bad. The message did get out.
People like business planning about as much as they like going to the dentist. But if you do it, you’re going to have a great smile. I didn’t expect so many people to just do their value proposition and their marketing plan and then go into business and ignore the rest of the business plan.
And so many people did that for startups. They just started making money. And then the hell with the business plan, I’m making money.
What do you mean business plan? I didn’t expect that. Anyway, I hope my next book is not about business planning because I’m tired of talking about it.
When you lecture on it for 13 years and you’re on the speaking circuit for five years or so, I want to talk about something else. Business is fun when you’re making money, Raimondo, as you know.
Armando (7:26 – 8:21)
So John, a lot of founders who we talk with are towards the latter part of their career. They realize they have to get some succession in place, but there are a number of people who are in that spot who they really want to ramp up and grow the business. It’s been a lifestyle business for a long time and it’s done well for them.
And they realize that they can turn on the gas a little bit towards the end there and really increase that value and have a more substantial, more successful exit for them and their family when they go into that next stage. So you, having, as you said, taught at Wharton, had this book, worked with many, many small businesses along the way. If we can talk about about what you do to help those companies as they’re trying to get more efficient, more productive, more systematic and grow their companies, scale their companies, I think that would be really, really impactful.
John (8:23 – 10:56)
Well, that’s a full question. It really is. How do I approach it?
I guess, because I deal with, probably there isn’t an industry I haven’t dealt with, maybe not automotive, but the rest of them, I think I have. How do I approach that question? The business to have a well-articulated value proposition or a verbal written statement about what you do, what is it that you do, Armando?
And when somebody asks you that question, value proposition needs to be quality. If it’s quality, you will save so much time, so much money in marketing, where a lot of business growth energy goes, because people will understand what you do more readily. You won’t have to market and sell as hard, assuming that there’s demand for your product or service you’re offering.
So articulate the value proposition well. Even if you’ve been in business a long time, anyone can use a checkup on their value proposition. I have a written article for entrepreneur.com.
It’s called, Does Your Value Proposition Need a Checkup? Entrepreneur.com. So if any of your listeners are already in business for a while, you feel like they don’t need it, but they’re not sure, go to entrepreneur.com and you can read that article. It was probably over a million views, but they didn’t pay me so I stopped writing for them. But back to your question. So top tips.
Let’s get the value proposition right. If you’re looking to grow, let’s get your go-to-market right, your sales and marketing, advertising, public relations, how people find out about you, your value proposition and what you do. I mean, let’s get that right.
Let’s get that in a form where the customer’s comfortable and you’re comfortable. You’re good at it and they’re welcome to receive it. And that now you’re more aligned to engage in some business, right?
So let me give you one more. I guess the other business planning tip is what your question was focused on. It takes me so long to convince people there’s power in the writing.
If the business plan is in your head, it doesn’t count. It doesn’t count. You get an incomplete for the class.
Incomplete for the class from me.
Armando (10:56 – 11:01)
When you say power in the writing, they’ve got to commit that to paper and write that down.
John (11:02 – 11:39)
You really have to try it. Try writing down what you want to accomplish for the rest of this year and then write out some action steps that you’re going to take with deadlines and resources and people. Take some action and watch it happen.
That’s a simple way to test my words. Try it. So really, there’s the powers in the writing.
The powers of business planning is in the process, not in a format or plan style. Anybody that tries to tell you that, well, there’s probably 13 must-haves in any quality business plan. But after that, it doesn’t matter what the form takes.
It really doesn’t.
Armando (11:41 – 11:46)
But they’ve got to have those key ingredients that you’re talking about so that it works.
John (11:47 – 11:48)
You want me to list them?
Armando (11:49 – 11:49)
Sure.
John (11:51 – 13:55)
Okay. Well, you value proposition it. Let’s spend most of the time on that.
Then there’s the go-to-market, which is what the venture capitalists call it. That’s who’s going to buy your clients, by the way, or buy your listeners. They call it go-to-market, but it’s really how do you sell?
How do you market yourself? How do people find out about you? What’s your PR?
You’ve got to have that in your business plan. So the other thing is milestone action planning, what we just talked about. Really, what are the milestones you have for the rest of this year, next year, and maybe five years out?
Where do you want to be? Those guideposts, when you have those powers in the writing, it guides them towards that goal. You need to know what your competitors are doing.
Artificial intelligence has made that easier recently. It’s about to get better, but you need to understand how the business owners need to understand how they fit in their industry compared to who they’re competing for business with. When they do, they’re more competitive.
It’s a better business model. So know your competition. Know the enemy and know yourself.
And because your customer is ultimately making a buying decision with you compared to your competitors if you’re objective. But they’re not telling you what the salient attributes are. You got to figure it out.
So then, okay, what’s that four or five? How much money are you going to make? You don’t have to have a formal budget, but let’s at least get the basics right, the sales, the margins, the average transaction value, the number of customers you need to deliver those sales, how much money you need to make as a business owner, how much money you need to make, how much money can you afford to spend on payroll, occupancy costs, cost of goods, three top.
Armando (13:55 – 14:14)
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John (14:15 – 16:04)
Those are five. I’ll make this quick because I’m probably rambling on here a little bit. But the management team, even if this person’s a single lawyer, they have a team.
They have a paralegal. They have an admin. They have a secretary.
They have a junior lawyer, an intern. They have their accountant. They have their lawyer.
They hopefully have a business advisor. They got maybe a peer group. They got their office.
They got a team. Work your team out. Your information systems are a part of your team, as strange as that sounds.
But information systems, it’s another critical piece of any quality business plan, especially if you’re in the service business and you’re communicating with your customers. So there’s a management team. There’s human resources.
So that goes beyond management and into maybe more hourly employees, employees, frontline employees, people that are actually delivering. Operations is easy for any business owner, really, because that section, because it’s who, what, where, when, how do you deliver the perfect offering to your customer? That section is pretty key.
What else? One of my favorites is exit planning. I always teach exit planning because you don’t know where you’re going to end up if you don’t tell yourself where you want to be.
You got to figure out how to get there. It’s a lot easier when you know where you want to end up. If you know your dollar number that you need at exit, or your valuation, or your timeline, or the events by which you’ll exit, it really does help.
It makes your life a lot easier when you exit your business to have an exit plan. It’s part of a quality business plan. It really is.
[Speaker 3] (16:05 – 16:05)
Right.
John (16:05 – 16:12)
Do you want me to keep going? There’s 13. I think I’m at eight.
I think.
Armando (16:13 – 16:47)
Well, there’s a lot you put in there. Let me, and I think we’re going to come back and touch on some of those. I’m glad you threw all those out there because it gives a broader context of what needs to go into that successful business.
I’m going to shift gears just a little bit because you have a mastermind group that you run with clients of yours. I had the privilege of, you invited me in just to come have a conversation with folks. It made me a little bit nervous because you said, don’t prepare anything.
I don’t show up unprepared. It’ll get in your way. It’ll get in your way.
John (16:48 – 16:53)
They’re business owners, they’re entrepreneurs, they’re ADD. They don’t like homework.
Armando (16:53 – 17:25)
You said, think of it as a fireside chat. We’ll just have a conversation. And it was interesting to me to, we covered such a broad context of areas.
So from your perspective, as you run that mastermind group, you have a certain client, a business type in mind that is perfect for that, where they are coachable and you can really help them. And they’ve got to be in the right mindset, in the right place in their company to really make that work. Maybe you can just talk about what is a good fit for you in that group that you have that you run.
John (17:27 – 19:40)
First, let me preface that with financial management is a key part of any quality business plan, which is really what you do and what you have done. And it’s such a critical part. And what your work, Armando, is very sweeping in that it helps not only the financial management of the company, but also the funding of the company and the funding of the business owner when they retire from a number of perspectives.
And so we, when we flew, we also in Scottsdale, we, of course I thought of you and they all needed that. And they were very energized by your knowledge in those spaces and what you could do for them. We’re continuing to work on that.
But to answer your question, basically it is, I guess it takes a business owner that wants to be a better CEO, somebody that makes a really good group member, somebody that is interested in professional development, somebody that wants to know what other business owners are doing, somebody that can learn from others’ mistakes as well as their successes, really gets a lot out of it. And it’s interesting because it’s, I think they have to have at least 10 or, for my current group, 10 or more employees minimum, probably not more than a thousand. I think once you get more than a thousand employees, it’s a different level of complexity for conversation.
It’s more administrative level conversations where these business owners are side-by-side delivering. So it’s very emotional at times, very passionate at times. So somebody like that in a three to 50 million, a hundred million revenue space, 10 to a thousand employees, it’s coachable.
Some guys get a couple of hundred thousand dollars in their check-in account and they think they got it all down. That is not a good candidate for me.
[Speaker 4] (19:41 – 19:42)
You know what I mean?
John (19:43 – 20:06)
Or maybe somebody that treats it like a hobby probably isn’t a good candidate for me in this group anyway. Or somebody that, I don’t know, doesn’t want to, the energy it takes to grow, you got to work harder. And if you don’t want to work harder, if you don’t want to change, I can’t help you.
I can’t, nobody can.
Armando (20:08 – 21:01)
So I’ll make a couple of observations. But what I saw of them, I saw that they were people who really cared about their business, cared about their families, cared about their employees. And we use the expression, they don’t know what they don’t know.
And that’s true with anyone for anything. But what I did observe is that there was very much a kind of a student mindset where they wanted to grow. They realized they needed expertise on the outside to help them and really sometimes help them see what they themselves couldn’t see in their business.
And there’s that expression, the forest, the trees, you just can’t see. And having that outside perspective, your perspective can be very beneficial in helping to identify areas that they themselves might not be aware of, and also being able to help them address those in a way that makes sense for them at that time in their business.
John (21:03 – 22:08)
Well said. You’ve given this a lot of thought and I’m grateful for that, Armando. Thank you.
I do care. I don’t do it for the money, although I have to have it. I do it for the wins and watching people grow and make more money than they’ve ever made in their life.
Turns me on. And they are hungry. It does take that spit in your eye and a growl in your gut to want to grow and make more than you ever made or anyone in your family’s ever made.
It takes a certain mindset. Working on your business. So I guess if a business owner, they have to work on their business.
So if they feel like they can’t step away for an hour to talk about next month and next quarter and next year, a mastermind group is not going to work well for them or a business advisor is not going to work well for them because they’re going to cancel. And they’re going to think they have to deliver their product or service. If you’re sucked into that level of weed detail and that’s your priority day to day, stay small.
Stay small because that’s what’s going to happen.
[Speaker 3] (22:09 – 22:10)
Right.
Armando (22:11 – 22:21)
And for some, they’re happy to be in that space and that’s where they’re going to finish out their careers and that’s fine. But for others who want more, that’s where you can be helpful.
John (22:22 – 22:32)
Yeah. I mean, there’s 28 million small businesses in the United States, last census, right? 20 million of them are under $100,000 in revenue.
Armando (22:33 – 22:37)
Wow. That’s a lot of small companies.
John (22:38 – 23:07)
Yeah. Yeah. So I mean, most business owners just want a job, really.
They own a job. But I don’t know why you would do it. Well, take a job.
I mean, you’re risking your whole net worth for a job, for a job level compensation. Not me. Well, I mean, I’ve owned what, six different businesses in my career.
I mean, you got to be all in. Financially, you know that.
[Speaker 3] (23:08 – 23:08)
Right.
John (23:09 – 23:26)
So I mean, so I don’t understand why anybody would want to take work on a company for what they could make picking a job for. But if you’re willing to do the work and make a lot more money than you ever could on a salary position.
Armando (23:27 – 23:45)
Yeah. And you were saying that for you, really, 10 employees minimum, maybe 1,000 employees max, at least in terms of employees. What about revenue?
Are you looking for some type of revenue range where they could be a really good fit for you and you for them?
John (23:47 – 24:15)
Yeah. It used to be 5 to 15 million for the group, my mastermind groups. And now it’s more like maybe a million because information technology companies, high revenue per employee.
So a couple of, no, I’m really relaxed on the revenue side and more firm on the 10 employee side because once you have 10 employees, it’s like having 10 kids.
[Speaker 4] (24:16 – 24:17)
Right.
John (24:17 – 25:03)
If you don’t have kids, you don’t understand what it’s like and they got to be dealt with and they take most of your energy. And it’s nice to talk to other business owners and an advisor about how to handle it. So the revenue is far distant to the head count.
And I would say that includes subcontractors too. If somebody is just on N99, I think that counts if they’re actively working with different mentality, different mindset. But still, so yeah, to answer your question more directly, 2 million is probably what I start to wonder.
Yeah.
Armando (25:03 – 25:22)
And you make a good point, John, that sometimes employees are actually W2 employees who work for the company, but you can get in effect the same service level from independent contractors as well. And they are part of the team. They’ve got to be thought of that way.
And they all need attention just as your employees.
John (25:22 – 25:52)
Yeah. And to your point, Armando, one of the things that makes my work in the business center gel and successful is low turnover. If the business owner is having high turnover at W2 or 10 to 99 level, I can’t help them as much.
I can’t because they’re constantly replacing what they had, whereas I’m trying to add to what they had.
Armando (25:53 – 25:56)
Yeah. So they’re having to rebuild. Yeah.
They’re having to rebuild.
John (25:56 – 26:11)
The knowledge transfer never happens. It’s something you can only get from experience and getting your ass kicked. You know what it’s like?
You got to get your nose bloodied if you’re the first one over the wall. And if you’re new, it hasn’t happened to you yet.
Armando (26:14 – 26:22)
Right. Hey, John, you recently had a growth workshop in Chicago for your folks. Can you talk about that?
John (26:22 – 28:36)
Right, right, right. Oh, that was kind of fun. I did a lot of these before COVID.
And it’s like playing football. It’s a practice sport. So you have all this preparation work to do.
And when you actually have to play in the game, it’s a lot of fun. The practice is just awful. So, you know, 10 times as much frack as preparation to do a growth workshop as it is to perform the growth workshop.
When I get there, the business owner CEO is sick. Right. But I’ve been working with the guy for three years and he’s ready to scale.
So I show up and he can hardly talk. I didn’t realize how much of a benefit that was because usually the business owner CEO is dominant. Right.
And now they’re all looking at me. I knew about everybody in the room, the whole management team. I had some contact with them.
So they were comfortable with me and they all opened up and they got energized about the possibilities of growth, about having their compensation packages increase. Right. How much money they could make, how much money the company could make, the support staff that they would need to get to a certain growth level, which we did live.
We’re on the fly. We’re going to hire these people once you get this level of revenue in, but we need the revenue to come in before the expense to as much as possible. And we had a really, really good day.
And actually the company is taking off because everybody did a little bit of writing. Everybody contributed, everybody committed. And the CEO, the business owner is saying more, whoa, and sick them.
You know what I mean? If you’ve got to say sick them, you’ve got a problem. You’ve got to say, whoa, that’s a good thing.
So I think that was a fun workshop because now this guy has to say, whoa, wait a minute. We can’t go into all these markets right away. We have to prioritize this.
He’s being a CEO, he’s allocating resources and time and he and I together are watching his money, making sure he’s profitable growth. That’s a growing and it’s been a real kick in 2023, 2024. Thanks for asking.
Thanks for remembering.
Armando (28:36 – 28:46)
Yeah, certainly, certainly. Yeah. So sometimes this was an offsite retreat in effect where you were just talking about- Yeah, for one company.
John (28:46 – 28:58)
So it wasn’t part of my mastermind group. I flew in for a couple of days just to work on their growth for 2024. And they set a record last quarter.
Armando (28:59 – 29:33)
Wow, fantastic. And so, John, for a company that hasn’t gone through that type of experience, the one that you’re talking about, when would they want to do something like that? When would be the right time for them to really embark on that kind of a workshop with you?
And then by doing that, what should they expect their result in the next year, two, three, for someone who’s not, for a business owner who’s not taken their employees through that type of an exercise?
John (29:36 – 30:32)
Great question. I think that, well, first they have to want it. The top person has to want scale, has to want to grow.
Okay. So in advance, I wouldn’t recommend just calling me up and say, come in and do a growth workshop for me. I think it really does help to spend months working together to get the team ready.
Not just the team, Armando, you know, you got to get resources ready. You have to get processes ready. At least get them started.
Have some parameters around what’s going to be spent and what’s going to be done. Not a detailed plan per se, but some parameters around the management team, because the workshops don’t work well if the CEO, the business owner is the only one all in.
Armando (30:34 – 30:55)
Okay. So maybe some advance work to where they can be all in to help them be in the best position to receive the information and have a good dialogue and really get that inspiration, motivation, excitement to be beneficial.
John (30:55 – 31:41)
Yeah. I mean, it doesn’t work. If somebody were to just call me and say, hey, fly in to Scottsdale.
You don’t know me or my company and do a growth workshop. I could do it, but it wouldn’t be as successful because, you know, I’m intimidating. I don’t mean to be, but it is intimidating when an outsider comes in and look at you as a consultant and they’re going to take their jobs and they feel threatened by a reorganization or, you know, most of human thought is negative.
So you have to have time to prepare the positive thoughts, the positive and believe it, but I’m not there to hatch it or take anything away from them per se. And that trust takes time to build.
Armando (31:44 – 32:33)
So let me fast forward in that company’s life cycle a little bit. So let’s say that you help the company grow some, increase their profit, increase revenues, get that team in place, systems, processes, and really get a company that was humming and now it’s producing the profit that it has not done before. And now some time goes by and they’re wondering about their own succession, about the business beyond them.
And they’re thinking about their own family and stepping out. And that’s a whole nother endeavor, a whole nother effort to be undertaken. As you’re positioning that company for that stage, how are you helping them begin to navigate that and understand what needs to happen for that successful succession and or exit?
John (32:34 – 34:47)
Well, let’s face it. I’m a generalist. I mean, I know I’m good at a lot of things and great at nothing.
But you are a specialist in wealth management and in a more broad spectrum of wealth management. You’re probably asking this question because you saw the people I brought to Scottsdale, they’re ready. They’re ready to talk about ESOPs.
They’re ready to talk about trust, defined benefits. They’re ready to talk about exit planning. They’re thinking about what they’ve accomplished more than they thought they ever could.
Now, what am I going to do with my life? When I grow up, right? And one of the reasons we came to Scottsdale, it was for you.
But I haven’t seen you in so long. It was fun to see you and hang out with you for a while. And learn more about what you do.
And then you were a perfect fit for that stage of, okay, now I have all this money, what am I going to do with it? What’s my business worth? And I’ve been telling them for years, you’re going to make your most money when you exit, not when you operate.
I had an east coast transportation, a Midwest transportation company in that group you were in. And probably in the $38 to $45 million range, they had hubs up and down the east coast, but they’re based in the Midwest. My task was to get the EBITDA up so they could sell it.
The guys were in their late 60s, early 70s. They didn’t have the oomph they used to have. They worked on getting their EBITDA up and their cashflow up.
And they did. And they learned a lot. They learned a lot.
They got their team ready to transition on the operations side. They exited for what? $12 million.
And they’ll never have to work again.
Armando (34:49 – 35:14)
And then EBITDA, of course, is often a multiple, a number of times that comes out to be the value or value range, of course. So when you focus specifically on increasing that, making that a larger number, that means to them a larger dollar price tag when they sell that company. So it sounds like they were more focused on that than maybe an earlier stage company.
John (35:17 – 36:33)
Yeah. Great point. Great point.
And the earlier you can focus on it, the better. Because really how business owners can make the most money, and you know this, but I want to say it for your listeners, is if you can beat the industry average. There’s an average multiple that your competitors are going to go out for because they’re performing at an average profit level.
But if you can crush your industry average, you’re going to crush your exit value. For example, last month, I had a dermatologist. I got to keep it vague here.
Dermatologist’s client worked on cosmetic and medical dermatology, skincare. And most of the practice was in the aesthetic side because that’s where more of the margins were. But I worked with her for five years, but we got her EBITDA or profitability to a point where she probably exited for twice the value of her competitors.
Armando (36:35 – 36:36)
Yeah, that’s substantial.
John (36:36 – 36:53)
She’ll never have to work again. She doesn’t have to, but she loves medicine. And now she doesn’t have to worry so much about the business of medicine anymore.
She can just practice dermatology. And that’s good for her because she needed somebody like me because they don’t teach accounting in medical school, Armando.
Armando (36:53 – 37:20)
Right, right. And they don’t teach you what makes your business valuable. Is it this high profit margin services that you’re offering?
Or is it the stuff that’s more plain vanilla that anybody can do? Well, it takes somebody like you to come in and look at those, identify those, and maybe reallocate resources to make the company more valuable because you know what is driving value in that business.
John (37:21 – 37:25)
Well, let me give your business owner listeners some motivation if I can.
Armando (37:26 – 37:26)
Okay, certainly.
John (37:27 – 38:41)
Two quick tips for an enriching exit plan. So it’s just a part of a business plan. It can be a page.
It can be five pages. Answer two questions. What’s my business worth?
Know it. Know how the world values your business, not what your spouse wants you to make on exit. They don’t care what you put into it.
They don’t care what you paid for it. How does the world value your business? Know that formula.
That’s question one. What’s my business worth? Question two, who’s going to buy you?
Make a list. Write it down. The power’s in the writing.
Here we go again. Write it down. Make a list.
It could be suppliers. It could be friendly competitors. It could be private equity groups.
It could be angel investors. It could be whatever. Make a list.
And I want names. Put names down. Email, phone numbers, websites, addresses.
A short list of 10. You can do that pretty quickly. You can do it in half a day and you have an exit strategy.
Now they’re ready to work with you, Armando. Right?
Armando (38:43 – 39:07)
Now they’ll get all excited. Well, that is what happens. They’ve got a certain lifestyle that is paid for by that company.
And once the company goes away, nobody ever wants to go backwards in terms of living their lifestyle. They want to keep that lifestyle or make it better, meaning more vacations or more stuff or more impact.
John (39:07 – 39:09)
Yeah, they have more time to spend money.
Armando (39:10 – 40:10)
Right? Right. Right.
So yeah, so making sure that beyond the company that they have the lifestyle they want, that’s often an area that we focus on because that lifestyle is what we’re having to quantify and measure. And then it’s the lifestyle today. Well, what if you live to be 100 years old?
How do we support that for our entire time? And then often beyond for the next generation, the kids, grandkids, impact in the community. I met with a business owner this morning who’s been incredibly successful in her business.
And she was fortunate enough that she could actually fund her own private foundation and now is giving scholarships. Yeah, it’s amazing. It was just amazing to hear the success and the humbleness of her, but the impact she’s having on helping people with these scholarships in her private foundation, she realizes these are people who are often first in their families to go to college.
And she’s the one who’s helping that to happen.
John (40:11 – 40:36)
And she’s got a legacy. I hope you can, as I know you can, I hope she lets you deliver more of her legacy because we need people like that because there are a lot of people in the US that are disadvantaged and they just need a little help to make it through. And so we need philanthropists like your potential client.
I hope she lets you do that.
Armando (40:36 – 41:09)
Right. Yeah. It’s fun to talk with people when they’ve been able to have that kind of success and see them really impacting not just themselves and their family financially, but seeing them tend to the greater good because they can.
And they often tell me they feel blessed. They feel that they are stewards of these funds and they need to have some good impact beyond the family, including the family, yes, but beyond the family in their community and beyond that as well.
John (41:11 – 41:39)
Yeah. And I think that’s important to let philanthropy is a blast and I love doing it. I love going to the galas and the golf outings and I love writing the checks.
And well, they don’t have as many zeros as I’d like to put on them, but you still write them, and you meet some great people in those venues that you’ll never meet anywhere. Oh, can I digress just real quick?
[Speaker 3] (41:40 – 41:40)
Certainly.
John (41:40 – 42:33)
So I learned, I went to an East Coast competitor’s of yours, a webinar workshop. It was about annuities. And the one fascinating thing about the annuities I thought was, and I don’t have it in my portfolio and I need it.
So if you do something about annuities, either write or have a podcast, please forward it to me. But what I learned was, it’s insurance. It’s not pension.
It’s not social security. It’s not a 401k. It’s insured.
And to have that annuity, take care of your food, your housing, your health insurance, the clothes, you’re breaking even as a family. A person as a family. Do you agree?
Armando (42:34 – 44:20)
A hundred percent. Yes. We like to see clients have a certain level of their base income covered from some guaranteed source.
And typically that’s social security. It’s maybe a military pension. Maybe it’s a pinch from a company, but when there is not enough from that guaranteed source to cover the basis, then that’s where an annuity product, maybe a fixed index annuity, that is an insurance product, not an investment, but that insurance product is designed to provide that monthly, recurring monthly income for the family for the rest of their life.
And what I’ll often say is, if you’re planning that African safari, that once in a lifetime African safari and the world kind of goes down the tubes, we don’t want you to change your vacation plans. And you don’t want to change those either because something happened that threw you off. When you have enough to cover the base, the monthly income base of the family, then it gives you that the family, that confidence and assurance that whatever they’re planning and trying to do, they can still keep on that cadence without disruption.
And that’s what is having that base. That’s what it does for the family. It provides that stability and that consistency.
And many people today, they don’t have the pensions that provide that. There isn’t enough from social security. So the only way to really get that is to look at maybe an annuity product, or maybe even looking at some type of a mini bond portfolio, maybe U.S. Treasuries, but something that is secure, that’s going to provide that family that monthly income. So if things start going down, they’re not worried about it or as worried about it.
John (44:21 – 44:47)
I think when people worry about the retirement, they worry about running out of money, worrying about not having their healthcare, their medicines covered or whatever, or not enough to leave their kids. And I think that you should have a mix of them all. You know better than me.
And I guess I’m asking you because thank you for that. I need to know.
[Speaker 3] (44:47 – 44:48)
Thirdly, certainly.
John (44:48 – 45:02)
I’d love to learn more. I think once you have those, your monthly needs met, and that’s guaranteed until you die, I think it’s easier to enjoy retirement.
Armando (45:03 – 45:22)
Well, exactly. And there’ve been studies, numerous studies, John, that Towers Watson did one years ago. I think it was in 2012.
But the study was just retirees. Who are the happiest retirees? And you know who they were?
The retirees who had a steady monthly paycheck.
John (45:22 – 45:32)
No kidding. It makes sense then. Exactly.
God, I feel like I hit the lottery here with the knowledge anyway. Not the money, but with the knowledge.
Armando (45:32 – 45:37)
It’s getting that recurring because it takes the worry off. And it was kind of funny.
John (45:37 – 46:15)
Well, everybody worries about it. Everybody worries about running out of money. Everybody worries about stock market.
Everybody worries about Social Security drying up. Pension plans, they’re not secure. They could get raided.
Insurance companies, they’re under law. They’re highly regulated. They’re less likely to get raided.
They have reinsurance to back them up. I mean, it’s a very secure instrument, and I want to learn more about it. I’d love to talk online in the future.
Sorry, I don’t mean to take away from anything your clients want to learn about.
Armando (46:16 – 46:41)
No, I do want to ask you, though, one thing that is happening today that is fairly new is artificial intelligence. And you’re hearing about it. You’re seeing it, news articles every day.
As business owners are continuing with their quest to grow their business and scale it, how do you see AI having an impact or potentially having an impact that can help them get there?
John (46:43 – 46:48)
Great question. That’s a podcast unto itself, isn’t it?
[Speaker 3] (46:48 – 46:49)
Probably.
John (46:50 – 47:08)
Well, let’s start with where we are today as of this podcast. And here’s where we are. I mean, we’re on the precipice, on the dawn of a new era.
We are today where Netscape was in what, 1995?
Armando (47:08 – 47:11)
Right. Yeah, a long time ago. Ancient history.
John (47:12 – 50:09)
The internet, I watched it grow up. I’m showing my age here, but I watched it become bulletin board clunky, hard to use, to just go user-friendly and just get faster and faster, but more slowly over time. Armando, artificial intelligence, oh my gosh.
There are trillions of dollars flowing in, and they’re demanding performance now. I’m seeing research coming out of the Wharton School that’s not published yet that it will be published in the summer, I think, in the journals, professional journals. The research is conclusive definitively that human interaction and AI works best.
AI alone is not going to do a damn thing for you. There’s certain levels of human intervention that have to happen. That sums up a lot of research.
You have to guide AI with data. You have to guide it with proper questions, the proper programming, the proper tools. How can I help your listener?
If you haven’t started with AI, it’s okay. Just get a free account on ChatGTP, or Read AI, or even Zoom. We’re on Zoom right now.
I use Zoom AI every time I meet, and they give me a summary of my meeting notes. I can use those into action steps. It’s better now than it was last month, and it’s better now than it was six months ago.
Get started. If you haven’t started, embrace it to the extent you can. If you hate technology, I get it, but you’re going to get left behind.
I think some of the things that it can do the best for a business owner, monitor your competitors, monitor price changes, make changes, chatbots, unbelievable, customer service. You get those stupid surveys after everything you buy today from Amazon. How would you rate us?
Was it good for you too? The chatbot AI is going to go so much further, and it’s going to see if you need anything else. It’s going to be automated.
It’s getting better every month. Sales processes. It’s not going to sell for you, but it can clean up your databases.
It can make your sales calls. You’ll spend less time on it. It can inform you of best practices in your industry.
It’s like my peer group, my business owner peer group. We all know what each other is doing, and it’s like a best practice. Each industry is unique in a way, and AI can monitor that for you.
It’s exciting. It really is exciting, and it’s happening fast.
Armando (50:09 – 50:21)
It is happening fast. It is happening very, very fast, and we’ve probably barely, barely even scratched the surface on what it can do and what it might lead to, but it is here.
John (50:22 – 51:34)
I think it helps to embrace it. I think it helps to not think of the movie Terminator and Terminator 2 when you think of, was it Skynet in that movie? No, no, no, no, no.
I really don’t believe that. In our lifetime, we’re going to have Skynet want to take us out. I mean, it’s only as good as we make it.
It can do whatever it is you want to do. The writing capability of AI today, got to take advantage of it. It’s brilliant.
It can make a good writer great. I don’t think it can write a novel that will make you cry yet, but I think it would help you do it faster. I think it would give you some things to think about.
Think of it as a good Google search on steroids or turbocharge. It’s secondary research today. Unless you have human interaction, data set involvement, then you can take it to another level beyond secondary research.
Have it active in your processes. It’s fascinating. It really is.
Armando (51:34 – 51:36)
It is. It is fascinating.
John (51:36 – 51:37)
Let’s keep in touch on that one too.
Armando (51:37 – 52:19)
Yeah, we’ll see where that goes. John, let me just ask you, a lot of people start a company and they don’t know what they’re doing, but somehow they build a successful business and they get to a certain point and that’s kind of where they hover. Whether they really want to or not, that’s kind of where they hover.
There are many, I’d say, who would really like to talk with you and just have a conversation with you, but they might be asking themselves if they’re a good fit for you or not, based on where they are with their company, number of employees, industry. We’ve known each other a long time, you and I, and you’ve got a ton of experience that you bring with you to every conversation you have.
John (52:19 – 52:22)
You’re trying to say I’m old, Armando? You’re trying to say I’m old.
Armando (52:22 – 53:12)
We’re about the same age, John. So, for that business owner who just, they don’t know what they don’t know, but they see you as this savvy, experienced business consultant who’s done just a variety of different industries, and they might want to have a conversation with you, what would you say to them if they’re maybe a little hesitant or a little bit afraid to reach out to have that conversation with you? What would you say where they would want to pick up that phone and get in touch with you?
And reach out to you or get on the internet, send you an email and say, John, I want to talk with you. What would help them understand how much value you can help them achieve or attain in their business and otherwise by working with you, talking with you, and just seeing where that might go?
John (53:15 – 55:24)
Thank you for asking. A lot of times I wonder, don’t suffer alone. I don’t know if your listener is really stuck, has been flat sales for years.
Don’t do that to yourself. You’re watching your costs go up and sales are flat. Your competition is taking people away and you’re working your butt off just to hang on.
In a situation like that, don’t do it alone. That’s a good sign. You might need somebody like me.
You might have to meet somebody like me. If you’re hungry, if you got a growl in your gut, spit in your eye, it’s a good time. If you want to buy another business, a quick way to grow is acquisitive growth.
If you’ve never bought a company before, you better know what the hell you’re doing. Somebody that’s bought companies before knows. It’s a shark tank.
It’s a minefield. You don’t want to do that alone. It’s hard to grow your business at 10% to 15% organically every year, but just imagine growing at 40%, 50% or even doubling it a year.
That’s what you can do when you buy a competitor, a proper competitor. That kind of hunger. I guess if your employees are driving you nuts and you feel like you don’t have the right asses in the classes, or you feel like you don’t have the right team in place, are we still alive?
That’s a good sign that you might need somebody like me. You just want to pull your head out and screaming too much at the end of the day, give Armando a call first and yell at him, and then ask for my number if he thinks it’s appropriate. Seriously, I shouldn’t say this, but anybody that’s bought the one-hour business plan and reaches out, I give 15 minutes for free as long as they can speak English.
Any listener of yours, I’ll give an hour for free.
Armando (55:25 – 55:26)
Thank you. I appreciate that.
John (55:28 – 56:02)
Arm me with data. You can’t give me enough information. You can’t tell me enough.
And obviously, financial statements speak volumes. Business plans speak even more. Anything you can tell me about the situation you’re in and where you want to go is a really, really good start to a good relationship.
So reach out to Armando. You have his contact information and afford your mind.
Armando (56:02 – 56:33)
That sounds great. And then, John, it seems to me that if a business owner is thinking or wondering about retirement, their own retirement, their own stepping out of that company, that that would be another opportunity where it may be worth a phone call with you, a conversation with you to just kind of see where they are, gauge where they are, and are they in the right place where they might they might want to, they might benefit from having some time with you before.
John (56:33 – 57:21)
Yeah, I agree. I agree. And you as well.
So really, I know we’re probably running out of time, but if you’re losing money or breaking even, you’re not ready yet. You got some work to do. Let’s get the work done.
And we’ll make you a hell of a lot more money than you could ever make selling your business at breakeven or at a loss. Get you profitable. Let’s get your people interested.
Let’s expand the people who will potentially buy you and get your valuation up. And that’s what I do. And after I’m done, hopefully they have somebody like Armando Roman that’s been a CPA, that’s a wealth manager that cares and isn’t in it just for the money and wants to do good work.
Armando (57:21 – 57:54)
Right. And take care of the family. Because that’s…
Thank you for doing what you do too. Oh, thank you. No, it’s my pleasure.
We like working with people who are sticking their neck out to grow and build a company when not everyone’s willing to do that. And when they can do that and really build that wealth from nothing, it’s a beautiful thing. It’s impressive.
And we see them taking care of their family, their extended family, the community at large, and doing good things with those dollars that were not there when they came into this world. And everybody wins.
John (57:55 – 58:06)
Everybody. It sounds like a great retirement. Doesn’t it that way?
It really does. Makes me look forward to getting older, Armando. I can’t wait.
As long as I don’t act old, dude.
Armando (58:06 – 58:10)
That’s all I care about. Oh, good. Well, John, this has been great.
John (58:10 – 58:11)
Thank you, my brother.
Armando (58:11 – 58:31)
We’ve covered a lot. Thank you for the conversation. And what we’ll do, if anybody wants to get in touch with you, we’ll ask them.
If you like, they can reach out to you or reach out to us. We’ll be sure to connect to you. Thank you for that offer of any of the folks that we connect you with.
You’re going to give them more time than you normally would to somebody who’s not coming through us. So thank you for that, John.
John (58:32 – 58:37)
You’re welcome, Armando. It’s a pleasure. And congratulations on doing what you do and the success you’re having in Scottsdale.
Armando (58:38 – 58:38)
Thank you.
John (58:38 – 58:42)
The Founders Forum and the wealth management work that you do. It’s kind of impressive.
Armando (58:43 – 58:47)
Appreciate it. Thank you. I appreciate it.
Good. All right. Bye now.
John (58:47 – 58:48)
All right. Bye now.
Armando (58:48 – 59:33)
Hope you enjoyed this episode of the Founder’s Guidepost. When you think about exiting your business, that’s often a once-in-a-lifetime event with no do-overs and the stakes can be very high for your family. Before making that leap, ask for your free copy of our Scottsdale Founders Forum white paper, packed full with information that first-time sellers should know before exit.
And schedule your 30-minute Founders Strategy Call at axiomcorp.com. Your exit can be amazing. Everything you dreamed of.
When you plan ahead and take all the appropriate and necessary steps, that’s what’s possible. Until next time, I’m your host, Armando Roman.
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