Speaker 1: Hello, and welcome to another episode of the Mark Mos Show.
Speaker 1: We're always running through the changes that are happening in
Speaker 1: the world right now. Of course, we're always looking at
Speaker 1: through the lens of politics, finance, and technology, and today
Speaker 1: I got something a little bit different for you. Today,
Speaker 1: I want to talk about something else, another phenomenon that
Speaker 1: I've been studying for over a dozen years, and this
Speaker 1: is about a wealth transfer now that I guess fits
Speaker 1: into you know, finance, of course, but it's a little
Speaker 1: bit of a different angle now. Typically I talk about
Speaker 1: wealth transfers in regards to the economic cycle booms and bust.
Speaker 1: Whenever the market goes up really fast, it creates a
Speaker 1: lot of wealth, and then the crash happens, and then
Speaker 1: all that wealth transfers to somebody else, similar to what
Speaker 1: happened to me in two thousand and eight. I built
Speaker 1: up a massive amount of wealth leading into the boom cycle,
Speaker 1: and then when the bust happened, I lost most of
Speaker 1: that wealth and it got transferred to somebody else. So
Speaker 1: booms and bus create these wealth transfer cycles, which is
Speaker 1: why I study them. I want to make sure that
Speaker 1: I'm always on the receiving end of this wealth transfer
Speaker 1: other ways that these giant wealth transfers are through times
Speaker 1: of wealth. So, for example, with bitcoin, I believe bitcoin
Speaker 1: is one of the biggest wealth transfers that we have today.
Speaker 1: And people that are early are making a lot of
Speaker 1: money by owning bitcoin, and those that are missing are
Speaker 1: going to come in later and it's going to be
Speaker 1: too late.
Speaker 2: For a lot of them.
Speaker 1: So technology gives us that early adopters of technology allow
Speaker 1: this wealth to flow to us. Another way that this
Speaker 1: is going to happen, and what I'm going to talk
Speaker 1: about today is something a little bit different than I
Speaker 1: normally talk about, but it's going to lead to one
Speaker 1: of the greatest wealth transfers in history, and that is
Speaker 1: the largest segment of the population that baby boomers are
Speaker 1: all retiring. They've been retiring for the last year, they
Speaker 1: have about another dozen years or so left, and all
Speaker 1: of this wealth, trillions of dollars of this wealth is
Speaker 1: going to transfer, trillions of dollars, will be moving hands,
Speaker 1: tens of trillions of dollars. And so when this much
Speaker 1: money moves, all we have to do is get on
Speaker 1: the receiving end of it. All right, I've been on
Speaker 1: the giving end of it before, it's no fun take
Speaker 1: it from me. You don't want to be there. And
Speaker 1: so how can we do that, Well, we have to
Speaker 1: understand what it is that they own, how are they're
Speaker 1: going to be transferring it, and then how we can
Speaker 1: get in the middle of it. So that's what I'm
Speaker 1: gonna talk about today. Something a little bit different. If
Speaker 1: you are a baby boomer and you own a business,
Speaker 1: then this is for you. If you are a gen
Speaker 1: X or a millennial that want to get one of
Speaker 1: these business to flow to you, this it could be
Speaker 1: for you. If you want to take advantage of this
Speaker 1: transfer by.
Speaker 2: Any means, then this episode is for you.
Speaker 1: It's a little bit different than we talk about today,
Speaker 1: But just for some stats to sort of frame this up,
Speaker 1: baby boomers today make up about forty one percent of
Speaker 1: small business owners or franchise owners all right. Now, there's
Speaker 1: also the like sort of echo boom generation gen X
Speaker 1: that also owns about a forty percent share as well,
Speaker 1: But there's forty one percent that the baby boomers own.
Speaker 1: Total is about twelve million businesses. Twelve million businesses that
Speaker 1: will either be shut down, handed off to a kid,
Speaker 1: or sold off. All right, those are the three options
Speaker 1: that they have. This is tens of trillions of dollars
Speaker 1: of wealth that's going to be passed off, and so
Speaker 1: how can we take advantage of this. Let me break
Speaker 1: down a little bit of math so you can understand
Speaker 1: how big of a problem this is going to be.
Speaker 1: There's twelve million baby boomers and they own businesses, and
Speaker 1: these businesses they need to do something with them over
Speaker 1: this next dozen years or so. Now let me give
Speaker 1: you an example of this so you can understand. My
Speaker 1: father is a baby boomer. My father had a business
Speaker 1: for like thirty years, doing a construction business. Over thirty
Speaker 1: years of business, he built up a giant client base,
Speaker 1: massive amounts of good will, and he has a steady
Speaker 1: stream of business that just comes organically because you know,
Speaker 1: a word of mouth and goodwill and customers referrals things
Speaker 1: like that. His phone number rings. People want him to
Speaker 1: come do work. But yet he didn't want to do
Speaker 1: it anymore. He was tired.
Speaker 2: He wanted to retire.
Speaker 1: I didn't want it, and none of my siblings, none
Speaker 1: of my other.
Speaker 2: Brothers and sisters wanted it either.
Speaker 1: And so what did my dad do? Instead of selling
Speaker 1: that business, he just shut it down, literally just closed
Speaker 1: it Now, typically a service based business would be worth
Speaker 1: maybe three to four times one year's profit. So let's
Speaker 1: say that he was making, you know, just let's call
Speaker 1: it a million dollars a year of top line revenue.
Speaker 1: Let's say that he's making thirty forty percent, so he's
Speaker 1: made three four hundred grand. Well, now you can multiply
Speaker 1: that at times three or four, So three hundred grand
Speaker 1: times four is one point two million. So instead of
Speaker 1: putting one point two million dollars in his pocket, or
Speaker 1: maybe he would have done a deal for like two
Speaker 1: hundred and fifty down and then finance the rest over
Speaker 1: over time, and now he'd have an annuity stream as
Speaker 1: he goes into retirement. Instead of that he has zero.
Speaker 1: Shut it down. All those customers that want business now
Speaker 1: find a dead end number. Now this wasn't a smart
Speaker 1: thing to do, but that's about the rate of what's
Speaker 1: going on, which creates a massive opportunity for you if
Speaker 1: you'd like to get into businesses. But it's also a
Speaker 1: mass opportunity for business owners. They don't have to do that.
Speaker 1: So let's break down some of this maths. So twelve
Speaker 1: million business owners that need to do something with their
Speaker 1: businesses over the next decade or so. Let's just assume
Speaker 1: that about forty percent of those business owners decide just
Speaker 1: to close down their business or just give it to
Speaker 1: their kids. So forty percent of them don't sell their businesses.
Speaker 1: They just either shut them down like my dad did,
Speaker 1: or they handed over their kids. Now, that leaves seven
Speaker 1: point two million businesses that will try to be sold.
Speaker 1: They will seek buyers of some sort. Now, if we
Speaker 1: divide the seven point two million businesses that will be
Speaker 1: sold over let's just even be conservative, let's say fifteen
Speaker 1: years instead of ten years. Let's give it fifteen years.
Speaker 1: So we divide the seven point two million divided by
Speaker 1: fifteen years, gives us about five hundred thousand businesses per
Speaker 1: year that will go onto the market for sale. This
Speaker 1: is a massive amount, a massive wealth transfer. Now, five
Speaker 1: hundred thousand business per year. Now, let's just put this
Speaker 1: into comparison. Maybe you don't understand how big of a
Speaker 1: number that is. Last year, according to the old logic,
Speaker 1: in the United States, ten thousand, five hundred and ninety
Speaker 1: seven five hundred and nine seven businesses closed M and
Speaker 1: A transactions mergers and acquisitions. At least that's what was
Speaker 1: announced there was probably more, we don't know if they
Speaker 1: weren't announced, But let's just triple that number. So let's
Speaker 1: stay instead of ten thousand, five hundred, let's say roughly
Speaker 1: thirty thousand.
Speaker 2: Businesses changed hands.
Speaker 1: All right, Now, how does thirty thousand businesses compared to
Speaker 1: the five hundred thousand businesses that are scheduled to change hands? Well,
Speaker 1: that's about fifteen times larger instead of thirty thousand. That's
Speaker 1: about what the market can absorb. Right now. There's people
Speaker 1: buying those businesses, but we go from thirty thousand to
Speaker 1: five hundred thousand business there's not enough demand for the
Speaker 1: amount of supply that's about to hit the market. These
Speaker 1: baby boom baby boomer businesses will hit the market, and
Speaker 1: it's going to just completely overwhelm the demand. Now, what
Speaker 1: happens when this supply outstrips the demand when the price
Speaker 1: goes down, which means then these baby boomers that are
Speaker 1: selling these businesses or wanting to be selling these businesses
Speaker 1: are going to be getting a fraction of what they
Speaker 1: should be getting. It's not real good if you are
Speaker 1: trying to sell the business. Now, it's great if you
Speaker 1: want to buy a business, which is why I'm saying
Speaker 1: this wealth is going to transfer. So even if you
Speaker 1: don't own a business, even if you're a millennial or
Speaker 1: Gen x er and you want to get in, there's
Speaker 1: going to be a massive opportunity in front of you.
Speaker 1: Or if you do own a business, you have to
Speaker 1: understand that they're going to face massive selling pressure, and
Speaker 1: so you need to change your business so that you
Speaker 1: stand out that you're one of the best, that you
Speaker 1: can still command a premium when everybody else is getting
Speaker 1: discounted to you command a premium. And maybe you want
Speaker 1: to front run this trend once you find out about it.
Speaker 1: So there's a few ways that you can do this,
Speaker 1: a few ways that you can take advantage of this
Speaker 1: that I want to walk you through, and I really
Speaker 1: want to kind of give you this systematic framework. I
Speaker 1: want to talk about five pivotal stages to transform your business.
Speaker 1: To set that business up so it's highly desirable so
Speaker 1: you get massive amounts of money, or if you're buying
Speaker 1: that business, you know how to do that as well.
Speaker 1: So we'll walk you through that. And I want to
Speaker 1: talk about, you know, getting you out of the business,
Speaker 1: because the goal of the business, I mean, sure you're
Speaker 1: solving problems and sure your meeting needs and all those things,
Speaker 1: but ultimately you want to Most of us have started
Speaker 1: businesses to increase our income, but also to somewhat be free,
Speaker 1: financially free. And most people just have jobs. And so
Speaker 1: no matter where you're at in your career on a
Speaker 1: business or thinking about starting a business, this is information
Speaker 1: that you want to have. You don't want to be
Speaker 1: trapped as in owning a job. You want to own
Speaker 1: a business. The difference would be I mean, I guess
Speaker 1: just ask yourself a question, what would happen if you
Speaker 1: had a business and you took a month off or
Speaker 1: three months off, or six months off or twelve months off.
Speaker 1: Would that business still continue to run? And how could
Speaker 1: you make sure that you continue to run? And how
Speaker 1: could you really turn this business into a company. That's
Speaker 1: what the difference is, a business into a company that
Speaker 1: would systematically transform that and allow you to achieve your
Speaker 1: ideal exit or be exitable. That's what we're going to cover.
Speaker 1: I'm gonna give you five steps here when we come back.
Speaker 1: If you're just tune, you're listening to the Markmas show,
Speaker 1: something a little different for you. I hopefully enjoy it.
Speaker 1: I'll be back with more in a minute. Don't go away,
Speaker 1: all right, welcome back. If you're just tune in, you're
Speaker 1: listening to the Mark Maas Show. We're talking about the
Speaker 1: greatest wealth transfer in history that is coming our way.
Speaker 1: I don't want to show you to take advantage of it,
Speaker 1: whether you are the one transferring away or the one
Speaker 1: that you want them to be transferred to you. And
Speaker 1: we're talking about it through business. So if you if
Speaker 1: you have a business, own a business, want to own
Speaker 1: a business, and you want to take advantage of this transfer,
Speaker 1: you want to make sure you can command a premium
Speaker 1: over everybody else because there's going to be a massive
Speaker 1: amount of supply. And this is what you need to
Speaker 1: do now. If you want to buy one of these businesses,
Speaker 1: you still need to you still need to know this
Speaker 1: in information because what happens is for most people, the
Speaker 1: majority of these baby boomers that have these small businesses,
Speaker 1: they don't own. They don't own a company. A company
Speaker 1: sort of being like a separate entity that can run
Speaker 1: on its own The legal definition of a company would
Speaker 1: be like its own legal entity that has its own
Speaker 1: tax code all that, and so using that frame of reference,
Speaker 1: a company sort of can run its own it's separate
Speaker 1: from you, Its identity is separate from you as the founder,
Speaker 1: but the founder is more like a business where you
Speaker 1: run that. And so let's talk about the first stage.
Speaker 1: And this is where most people are and I want
Speaker 1: to show you the five exits. So the first stage is.
Speaker 2: You're a worker.
Speaker 1: You're a worker in the business, and typically you're a technician.
Speaker 1: So what do I mean by a technician. Well, let's
Speaker 1: say that you have a job as a baker or
Speaker 1: a dog groomer, or you fix cars, and you're like, man,
Speaker 1: I'm sick of working at this auto mechanic place and
Speaker 1: making my boss the owner all this money. I'm going
Speaker 1: to go start my own mechanic shop, or I'm going
Speaker 1: to go start my own bakery. I'm going to go
Speaker 1: start my own dog grooming business. So you leave the
Speaker 1: dog room or to go start your own dog grooming business,
Speaker 1: your own massage business, or whatever it may be, and
Speaker 1: you end up working in the business as a technician.
Speaker 1: I used to groom dogs for this other company, Now
Speaker 1: do I groom dogs for my company.
Speaker 2: I used to repair cars for.
Speaker 1: This mechanic shop. Now I repair cars, but for my
Speaker 1: own mechanic shop. So you're the technician, you're in the job.
Speaker 2: You're doing the role.
Speaker 1: Now typically this would be self employed small business. You know,
Speaker 1: maybe you have somebody in there doing the books for
Speaker 1: you and answering the phone, maybe someone's even trying to
Speaker 1: do some sort of ads for you, things like that,
Speaker 1: but at the end of the day, it's you doing
Speaker 1: the job, doing the work. You're the technician. And so
Speaker 1: at the stage you have a business, I mean there's
Speaker 1: a company that, there's a business there, there's employees there,
Speaker 1: there's business coming through, but you're in that role. You're
Speaker 1: in the business. Now. You could at this point, you know,
Speaker 1: you could start to hire other technicians, but the first
Speaker 1: exit is who leave this role, to exit the worker role,
Speaker 1: exit the line? And so how do we do that?
Speaker 1: What we want to do is we want to be
Speaker 1: able to hire other technicians to take our role. Now.
Speaker 1: One of the benefits is that, or one of the
Speaker 1: things that we should think about sometimes is starting businesses
Speaker 1: that we're not a technician in. So it might be
Speaker 1: better for the auto mechanic to go set up a
Speaker 1: dog grooming business, and a dog groomer to set up
Speaker 1: an auto mechanic business. The reason why is a dog
Speaker 1: groomer doesn't know how to fix the car, So the
Speaker 1: dog groomer would never go into that technician role. Vice versa,
Speaker 1: the auto technician would never start up a dog grooming business.
Speaker 1: They would be forced to go hire someone to work
Speaker 1: in that role. But let's assume that you're in that role.
Speaker 1: So we want to one, we want to hire other technicians.
Speaker 1: We want to move from being a worker to a manager.
Speaker 1: This is exit number one work exit the line going
Speaker 1: from worker to manager. We need to make sure that
Speaker 1: we're delegating and not relegating, meaning we're saying, this is
Speaker 1: how this role is done. This is the perfect recipe
Speaker 1: for the bread. This is exactly how I groom this dog.
Speaker 1: And this is your new plan to follow your standard
Speaker 1: operating procedure. You don't want to relegate it like, hey,
Speaker 1: I'm just going to hire someone and hopefully they do
Speaker 1: as good of a job as me. In order to
Speaker 1: do that, you have to have very well documented systems,
Speaker 1: and so if you're currently in this role, begin documenting
Speaker 1: what it is that you're doing. Here's what I say
Speaker 1: when I answer the phone. Here's how I make a
Speaker 1: perfect cup of copy. Here's how I treat my customer,
Speaker 1: Here's how I do a review, or whatever it is.
Speaker 1: Start to document these processes. That way, when you hire
Speaker 1: somebody else, then you can delegate using that well documented systems.
Speaker 1: The other thing that you're going to need to be
Speaker 1: doing is starting to establish a very compelling culture. As
Speaker 1: you start to grow to the business. You need to
Speaker 1: be able to track the right people to you, and
Speaker 1: you have to be able to coach them. As a manager. Again,
Speaker 1: you're going from the doing in the trenches doing the
Speaker 1: work to delegating. All right, that's exit number one. Exit
Speaker 1: number two then is now I've moved from the technician
Speaker 1: in the line. I'm now a manager and so now
Speaker 1: I'm starting to work on the business instead of in
Speaker 1: the business.
Speaker 2: Doing the work.
Speaker 1: I'm able to work on the business, which now allows
Speaker 1: me to see things at a higher level and start
Speaker 1: to think more about how do we set policies to
Speaker 1: handle customer service, or how do we do the marketing,
Speaker 1: how do we recruit staff and things like that. You've
Speaker 1: moved out of the business and now on the business.
Speaker 1: It allows you to now be proactive instead of reactive.
Speaker 1: You see, when you're in this technician role. It's like, Okay,
Speaker 1: what's under the hood. You pop the hood. Okay, here's
Speaker 1: the problem, let me fix it. You're reacting to what
Speaker 1: you see.
Speaker 2: You're a dog groomer.
Speaker 1: Okay, what does this dog have?
Speaker 2: What does it need?
Speaker 1: Okay, now I'm reacting to that dog. But as a manager,
Speaker 1: I can now be proactive and we can start to
Speaker 1: think about what it is that we want. What's our
Speaker 1: ideal client, what's our ideal process procedure, things like that.
Speaker 1: A lot of this was highlighting a book called The
Speaker 1: E Myth which stands for the Entrepreneurial Myth book. I've
Speaker 1: read it multiple times. There's a new book called The
Speaker 1: E Myth Revisited, sort of like a new version of
Speaker 1: the book. I'd highly highly recommend it. They talk about
Speaker 1: how the entrepreneurial myth is that most people think that
Speaker 1: if they can start their own business and become an entrepreneur,
Speaker 1: then they can be free. But that's a myth because
Speaker 1: what they have done is they've just created a job
Speaker 1: for themselves. Anyway, read the book. He kind of goes
Speaker 1: more into depth and detail into how to do this.
Speaker 1: But at this level, now, if you've exited from the
Speaker 1: line and the manager. You know, you're now proactive. But
Speaker 1: from here, we want to now exit the staff and
Speaker 1: then being a manager, and we want.
Speaker 2: To go to the CEO level.
Speaker 1: Right, we're working on the business, not in it, but
Speaker 1: we want to get to the next level. We want
Speaker 1: to go from delegation, being the manager that's now delegating
Speaker 1: these tasks to these individual workers, instead of delegation, instead
Speaker 1: of first it was doing, then it was delegation, and
Speaker 1: now we want to move up to leadership. We want
Speaker 1: to go from an operator, someone who's operation aiding the business,
Speaker 1: setting the schedules, paying the payroll, you know, running the
Speaker 1: marketing instead of operating the business. We want to go
Speaker 1: to a CEO. We want to go from a manager, well,
Speaker 1: you know, from an operator to a CEO. We don't
Speaker 1: want to be just a manager with a title. You see,
Speaker 1: most of you owning your own businesses have called yourself
Speaker 1: a CEO, but the reality is you're just a manager
Speaker 1: with a title. You're still managing the business. You're still
Speaker 1: managing the marketing team, managing the day to day, overseeing
Speaker 1: the customer service, managing the meetings and things like that.
Speaker 1: And so now we want to exit the manager and
Speaker 1: go to the CEO level. All right. Once we're able
Speaker 1: to do that, now things start to get very interesting.
Speaker 1: Now we're able to really start to think long term
Speaker 1: or really start to think about other types of the business.
Speaker 1: We can start to think about other businesses that we
Speaker 1: could buy or merge with or partner with. For example,
Speaker 1: you're a bakery, maybe you want to uh, maybe you
Speaker 1: only bake bread. Well, maybe you want to acquire another
Speaker 1: bakery that specializes in pastries. For example, maybe you're a
Speaker 1: dog groomer and now you want a partner or you
Speaker 1: want to buy a dog training business, or you want
Speaker 1: to launch a line of dog grooming or dog training products,
Speaker 1: and maybe you're able to buy that. So now from
Speaker 1: the CEO lens, now you're way up above and you
Speaker 1: can start to think strategically about the business because you're
Speaker 1: not bogged down with the technical work of doing the job,
Speaker 1: nor are you even bogged down with the management of that.
Speaker 1: All right, now, there's two more exits that I want
Speaker 1: to talk about. How we exit the CEO Where did
Speaker 1: we go from there? And how do we exit from
Speaker 1: that next stage? And then we're going to dig into
Speaker 1: exactly how to do this all right, So there's a
Speaker 1: little bit of high level theory. I want to give
Speaker 1: you some actual tactical steps that you can do this,
Speaker 1: but I gotta take a quick breakre just tuning in
Speaker 1: saying to the Mark ma Show doing something a little
Speaker 1: bit different today, talking about the great wealth transfer in
Speaker 1: history coming through the baby boomer's transferring all these businesses
Speaker 1: and how you can take a part of it. I'll
Speaker 1: be back with more in a minute. You don't want
Speaker 1: to miss it, so don't cool way, I'll be right back.
Speaker 1: All right, welcome back. If you just tune in, you're
Speaker 1: listening to the Markmash Show. We're always talking about the
Speaker 1: way the world is changing as we look at it
Speaker 1: through the lens of politics, finance, and technology. Today we're
Speaker 1: talking about well transfer. Specifically, we're talking about businesses being
Speaker 1: transferred from the largest segment of the population, the baby boomers,
Speaker 1: down to the next section. If you're in that role,
Speaker 1: you need to learn how to scale these levels of
Speaker 1: exit so your business becomes worth more. If you're running
Speaker 1: your business in the technician role, you're the one grooming
Speaker 1: the dogs and working on the cars or baking the bread,
Speaker 1: your business isn't worth much. You see, someone who's going
Speaker 1: to want to buy your business doesn't want to buy
Speaker 1: your business because they want.
Speaker 2: A big bread or groom dogs every day.
Speaker 1: Someone who's going to buy your business wants to buy
Speaker 1: your business because it produces cash flow and they don't
Speaker 1: have to groom the dogs. And so it's your job
Speaker 1: before you want to sell it, to be able to
Speaker 1: ascend these five levels of exit. It doesn't mean you
Speaker 1: have to do this, but it means you have to
Speaker 1: be able to do it. The business has to be
Speaker 1: exit a bowl. If the business cannot run without you,
Speaker 1: it's just a job, and no one will buy your job.
Speaker 1: They don't want your job. They can go start their
Speaker 1: own job. And so you need to do this if
Speaker 1: you want to get top dollar, if you want to
Speaker 1: compete in the massive amount of rush of businesses that
Speaker 1: will be sold, you have to do this. Likewise, if
Speaker 1: you want to buy one of these businesses, you might
Speaker 1: be buying one for very cheap because they don't have
Speaker 1: these five levels. But you could very quickly go and
Speaker 1: build all these in now. Depending on the business and
Speaker 1: how big it is and one industry it's in, and
Speaker 1: how many moving parts it is, it might take you
Speaker 1: twelve months to get through these.
Speaker 2: It might take you eighteen months. There's a lot of
Speaker 2: variable factors within this, all.
Speaker 1: Right, So we went through. Exit number one was exiting
Speaker 1: the worker bee, exiting the technician role and moving to
Speaker 1: become a manager where now instead of doing the job,
Speaker 1: you're now delegating the job, right, not relegated, not just
Speaker 1: hand it over, but delegate it. Given a well document
Speaker 1: system they can follow. Exit number two is to exit
Speaker 1: from the manager where you're actively managing the staff, to
Speaker 1: move into the CEO role. The CEO role is now visionary.
Speaker 1: They're the ones that are building the vision, the culture,
Speaker 1: they're building the business partnerships, the development the partnerships. Now
Speaker 1: you've moved that. Exit number three then is where we're
Speaker 1: at right now. And now this is where we want
Speaker 1: to go from being the CEO who's responsible for setting
Speaker 1: the culture, and the CEO is responsible for building the
Speaker 1: vision and setting up the partnerships, and we want to
Speaker 1: exit that. And ultimately what we want to do is
Speaker 1: we want to exit the organizational chart altogether. You see
Speaker 1: in an organizational chart, the CEO typically sets it at
Speaker 1: the top. You have the other executives there, you know,
Speaker 1: chief operations offered, chief, chief marketing officer, etc. And then
Speaker 1: below that you have all the other people. And in
Speaker 1: order to get to exit number three, we want to
Speaker 1: exit the ORG chart completely and we want to go
Speaker 1: from being a CEO to a board member. All right,
Speaker 1: So a business should have a board, a board of advisors.
Speaker 1: Even small businesses, you should still have a group of
Speaker 1: advisors that you can bounce stuff off to. And so,
Speaker 1: as you probably know or you might be aware, a
Speaker 1: board member doesn't work at the company. They're not at
Speaker 1: the business every day. They don't actively have any role.
Speaker 2: Or job that they do.
Speaker 1: Instead, they just advise. They get together potentially a monthly
Speaker 1: sometimes quarterly, they hear what's going on and they offer
Speaker 1: their input and that's all. So to exit the ORC
Speaker 1: chart completely, you'd be moving from the CEO who's at
Speaker 1: the top of the orch chard and sort of the
Speaker 1: buck stopping there and move to the board. Now at
Speaker 1: this point, instead of step number one X, number one
Speaker 1: was working in the business. Then you went to a
Speaker 1: manager and you were working on the business. And now
Speaker 1: going from CEO to board, you're now working above the business,
Speaker 1: not in it, not on it, but above it. Now
Speaker 1: the difference of being above it is. It allows you
Speaker 1: to sort of get that high level, zoomed out look.
Speaker 1: You can draw on your years of experience, you can
Speaker 1: look at what other people are doing, and you can
Speaker 1: advise the business. Now, this is not an operator. Okay,
Speaker 1: this is not an operator. You're not operating anything. You're
Speaker 1: not managing anyone. No one's reporting to you. You don't
Speaker 1: have a job to do. You should be able to
Speaker 1: be gone for months.
Speaker 2: At a time.
Speaker 1: Now again, right, they maybe meet monthly, maybe meet quarterly.
Speaker 1: You should be able to go months without being there
Speaker 1: because you don't have a job. You don't have a
Speaker 1: role to play. Your role to play is the chief visionary.
Speaker 1: If you will chief visionary, here's where I think things
Speaker 1: could go. Here's how I think you could do things.
Speaker 1: Why don't you try these couple variables, run these tests,
Speaker 1: things like that. Chief visionary, But you're not actively doing
Speaker 1: anything in the business. Doesn't that sound fun? Now again,
Speaker 1: most of us could achieve this role. Now if your
Speaker 1: business doesn't have the revenue to afford that today, your
Speaker 1: goal is obviously to get it there. You see, when
Speaker 1: you can go from exit number one to X number two,
Speaker 1: to go from the line to the manager. Now you
Speaker 1: can start to manage the marketing team. You can start
Speaker 1: to manage the sales team. If I'm busy under a
Speaker 1: hood fixing cars all day, at grooming dogs all day,
Speaker 1: I don't have time to deal with sales and marketing.
Speaker 1: Sales and marketing is what grows a business. But as
Speaker 1: I move to the manager, I can now manage the
Speaker 1: sales and marketing team and we could grow the business.
Speaker 1: By growing the business, you should grow the revenues and
Speaker 1: the profits, which then allows me to move to the
Speaker 1: next stage, which is the CEO, which now means I
Speaker 1: can do partnerships and acquisitions. I could grow the business
Speaker 1: even more. You see, if you're in the technician role,
Speaker 1: people don't want to buy your business because they don't
Speaker 1: want to buy your job, and it doesn't have enough
Speaker 1: profit either. If the business can't if I cann't buy
Speaker 1: your business and afford to hire somebody to come in
Speaker 1: and run it, it doesn't do me any good and
Speaker 1: it doesn't do you any good. You know, there's a saying.
Speaker 1: It says that you either sell your business or you
Speaker 1: buy it.
Speaker 2: Think about that.
Speaker 1: You either sell your business or you buy it. So
Speaker 1: if every day if you're not selling it, you're buying it.
Speaker 1: You're committing to stay there. And how much are you worth?
Speaker 1: How much do you want to get paid? Again, I
Speaker 1: wouldn't buy a business unless I could afford to put
Speaker 1: somebody there. And so your role, your job is to
Speaker 1: get your business to that role, and you're going to
Speaker 1: have to make that hard switch. Exit number one probably
Speaker 1: the hardest exit, to go from the technician to the manager,
Speaker 1: so you could really start to grow.
Speaker 2: The business and drive the revenue. All right.
Speaker 1: So then we've gone from the line to the manager, manager,
Speaker 1: to the CEO, CEO to the board and now exit
Speaker 1: number four. Exit number four is now exiting the board
Speaker 1: and becoming an investor. Now you could potentially be the
Speaker 1: board and the CEO at the same time. These lines
Speaker 1: get a little bit blurred here. Or you can just
Speaker 1: exit the board and you can just be an investor.
Speaker 1: And what am I talking about there? I own investments
Speaker 1: into lots of business. I mean technically, if we own
Speaker 1: stock and equities, we own a part of a business.
Speaker 1: We're an investor in the business. Obviously, if we own
Speaker 1: just a couple of shares of Apple, we have no
Speaker 1: say in the business. But we can be an investor
Speaker 1: in the business and we have no job, we have
Speaker 1: no role. We don't even have to advise them like
Speaker 1: we would if we were on the board. Instead, we're
Speaker 1: just an investor. Now, if you have sold a business,
Speaker 1: a lot of times you get put you know, you've
Speaker 1: gone through these exits. You've gone from the manager of
Speaker 1: the CEO, and now you've exited. You've sold the business.
Speaker 1: But typically what happens if your business gets bought up
Speaker 1: by like a private equity, is that they're not going
Speaker 1: to cast you out one hundred percent. When I when
Speaker 1: I had my first exit, they wanted me to stay
Speaker 1: on for two years to help them with the transition.
Speaker 1: And for me, that was like a deal killer. I
Speaker 1: was like, no, I'm not going to do that. I'm
Speaker 1: an entrepreneur. I don't work for people. Why am I
Speaker 1: going to go work for someone. I want to go
Speaker 1: start another business. And so at first I was like,
Speaker 1: that's a deal killer. I'm out, Like that ain't happening,
Speaker 1: I ain't working for nobody. As we got further through
Speaker 1: the process, I realized why it was important, why it
Speaker 1: was basically a deal killer, and then I decided, you know,
Speaker 1: I'll take this as learn opportunity and I'll just learn
Speaker 1: what I.
Speaker 2: Can from this.
Speaker 1: But I had to work, and so during this time,
Speaker 1: typically like what I had to do, I didn't get
Speaker 1: all my money upfront. I got a chunk of money upfront,
Speaker 1: and the rest was riding in the business. And so
Speaker 1: I was invested into the business. If the business did
Speaker 1: really good, I could make even more money, right because
Speaker 1: they only bought part of it, if I stay on
Speaker 1: as an investor, and so that would be the next
Speaker 1: stage to be. And then finally there's exit ownership, exit
Speaker 1: investment at all. And this is where so let's say
Speaker 1: that they give me, you know, thirty percent down, they
Speaker 1: financed the rest. Over twenty four months, I helped them
Speaker 1: continue to grow the business, and then they cash me
Speaker 1: out and I can walk away. I now have exited ownership.
Speaker 1: That's the fifth level of exit. I no longer am
Speaker 1: involved in any facet of the business. I have absolutely
Speaker 1: no say not say, I have no board, I don't
Speaker 1: have any money involved. I'm not an investor. I have nothing,
Speaker 1: and I have no cares. I don't care anymore. I'm
Speaker 1: completely gone, and now I can move on to the
Speaker 1: next stage in my life. So those are the five
Speaker 1: levels of exit.
Speaker 2: Now how do we do that?
Speaker 1: That's exactly what I talk next. If you're just tuned in,
Speaker 1: you're listening to the Mark Maus Show. We're always talking
Speaker 1: about the intersection of politics, finance and technology. Today we're
Speaker 1: going down a little bit of a different path, talking
Speaker 1: about the largest wealth transfer in history. So I'll be
Speaker 1: back with more. Tell you exactly how to advance through
Speaker 1: these five stages in the shortest amount of time. You
Speaker 1: don't want to miss it. Don't go away.
Speaker 2: I'll be her back.
Speaker 1: All right, Welcome back. If you're just tune in, you're
Speaker 1: listening to the Mark mass Show. Going down a little
Speaker 1: bit of a different path today, we're talking about the
Speaker 1: greatest wealth transfer in history. That's coming. Tens of trillions
Speaker 1: of dollars is going to be changing hands, and I
Speaker 1: want to help you get your hands on some of that.
Speaker 1: If you own a business and you want to participate,
Speaker 1: then this is for you. Or if you're thinking about buying.
Speaker 2: One of these businesses, then this is for you as well.
Speaker 1: Now we ran through the five exits, and I want
Speaker 1: to tell you now how to actually do it now
Speaker 1: real quick, just to recap these If you just tune in.
Speaker 1: The first stage is most people in small businesses they're
Speaker 1: small business owners. They're self employed, meaning they don't own
Speaker 1: a business.
Speaker 2: They own a job.
Speaker 1: They're groom and dogs or fixing cars or bacon bread,
Speaker 1: but they're in the business doing that work. So the
Speaker 1: first exit is to exit the line and go from
Speaker 1: a worker to a manager. Exit number two is to
Speaker 1: exit the staff completely, and now instead of being a
Speaker 1: manager that has to manage people, I move from the
Speaker 1: manager to become a CEO. The third level is to
Speaker 1: exit the org chart organizational chart completely and to go
Speaker 1: from the CEO to a board member.
Speaker 2: So now you have no job, no role to do.
Speaker 1: The fourth exit is to go from a board member
Speaker 1: where you still have a little bit of advisory role
Speaker 1: to just be an investor. I just have some money
Speaker 1: in it, but I don't really care. And then finally
Speaker 1: the fifth exit completely is I have all my money out,
Speaker 1: no longer involvement, no investment, no say, and I have
Speaker 1: no care what happens next. All right, now, like I said,
Speaker 1: easier said than done.
Speaker 2: So how do we do it?
Speaker 1: How do we do it? Well? It all starts with planning,
Speaker 1: like all things in life. So we have an idea,
Speaker 1: we think about it, we commit to that idea, and
Speaker 1: then we have to plan to execute on that idea.
Speaker 1: So how do we plan this out? Well, the best
Speaker 1: way to do any type of planning is to start
Speaker 1: with the end in mind? What is it that we want?
Speaker 2: Now?
Speaker 1: You have this dog room business, you have this car,
Speaker 1: car repair business, etc. What is it that you ultimately
Speaker 1: want with this business? I mean, do you want to
Speaker 1: just work on cars to the day that you die
Speaker 1: most likely not? Do you want to grow it? Do
Speaker 1: you want it to be small? Do you want to
Speaker 1: pass it to your kids your grandkids? Do you want
Speaker 1: to sell it? So you have to start with the
Speaker 1: end in mind. So that's where we always start. What
Speaker 1: is the goal that you want to achieve? Most people
Speaker 1: have never got to that level. Henry Ford said that
Speaker 1: thinking is such hard work. That's why so few people
Speaker 1: do it, and so most of us just don't take
Speaker 1: the time to sit and think about this. We don't
Speaker 1: think about the end in mind. So what is it
Speaker 1: that you want? What level of exit do you want
Speaker 1: to plan for?
Speaker 2: Now?
Speaker 1: You might have massive of enjoyment from grooming dogs, you
Speaker 1: might have great enjoyment from fixing cars. And so you
Speaker 1: might say, hey, I think this is cool, but like,
Speaker 1: I don't really want to be on the board. I'd
Speaker 1: like to just keep fixing cars. Well, there's nothing wrong
Speaker 1: with that. You can still keep that role in your
Speaker 1: organizational chart. But your business is still going to need
Speaker 1: to grow that way if you ever plan to get
Speaker 1: any money for it. All right, So you need to
Speaker 1: think about the end in mind. Okay, I want my
Speaker 1: company to be able to run without me. I want
Speaker 1: to be able to sell it one day so I
Speaker 1: can retire, but I like to sit in this role. Great, Okay,
Speaker 1: we'll just think about that. What is the end that
Speaker 1: you want to achieve and what level of exit do
Speaker 1: you want? Okay, so that's where it starts. The next
Speaker 1: thing is we have to get our financial house in order,
Speaker 1: and this is where most small business owners have completely
Speaker 1: neglected this. They don't understand the financial data. And of course,
Speaker 1: to grow from a technician where I'm just grooming dogs
Speaker 1: and fixing cars to go to a business that can
Speaker 1: have a CEO and a board and people to do
Speaker 1: all the work, it's a completely different business and it
Speaker 1: takes more money. I need more money, and I need
Speaker 1: to manage that money better in order to get those people.
Speaker 1: And so it starts with getting your financial house in order.
Speaker 1: And really there's three big reports that everybody needs to
Speaker 1: focus on, and most people aren't doing this. So what
Speaker 1: are the three reports? The first one is one that
Speaker 1: you maybe be looking at. It's called a p and
Speaker 1: L a profit and loss statement p and L, and
Speaker 1: it shows the profit and loss on the monthly, quarterly,
Speaker 1: annual basis, and then you should be able to compare
Speaker 1: them against previous quarters, previous years. Now, this is sort
Speaker 1: of the base report that, like I said, some people know,
Speaker 1: and in my opinion, you should be looking at this
Speaker 1: report every single month. And I look at it every
Speaker 1: single week because I want to understand how this is
Speaker 1: working on a weekly basis. That's the profit and loss.
Speaker 1: That's the first report. The second report then is going
Speaker 1: to be the balance sheet. This shows everything that This
Speaker 1: shows the value of the business. It shows everything the
Speaker 1: business owns and everything the business. So I add up
Speaker 1: all my assets. So I have a building, I have equipment,
Speaker 1: I have inventory, I have cash in the bank, I
Speaker 1: have investments in other businesses, et cetera. I add up
Speaker 1: all the asset values to those and then I deduct
Speaker 1: all the liabilities. Well, I have a loan against the office,
Speaker 1: I have a loan against the equipment, I have a lease,
Speaker 1: kind of things like that. At the end, assets minus
Speaker 1: liabilities gives you your total balance or your net worth.
Speaker 1: You want to understand that because that's what's going to
Speaker 1: determine what your valuation is, or one of the key
Speaker 1: determinations of what your valuation will be if you want
Speaker 1: to sell the business. So, if you're selling a business,
Speaker 1: your goal is to or hopefully should be a goal,
Speaker 1: to sell it for the most amount that you can.
Speaker 1: And that's the number that you need to manage too. Look,
Speaker 1: it's measure gets managed. You need to.
Speaker 2: Measure that number. Manage to that number. Okay.
Speaker 1: The third report that most people are not looking at
Speaker 1: all but might actually be the most important one is
Speaker 1: the statement of cash flows. So one tells you how
Speaker 1: much profit and how much loss you've had. One tells
Speaker 1: you how much your worth, what your balance sheet is.
Speaker 1: But the statement of cash flows tells you where your
Speaker 1: money's going. How many times have you got to the
Speaker 1: end of the month and wondered, where the heck did
Speaker 1: all my money go? Well, the statement of cash flows
Speaker 1: holds that secret.
Speaker 2: Now.
Speaker 1: Of course, some of it is done through proper planning.
Speaker 1: You can either get to the end of the month
Speaker 1: and wonder where your time went or where your money went.
Speaker 1: Time management is like money management, or you can make
Speaker 1: a plan for in advance. But of course there's always
Speaker 1: surprises that come up throughout the month, which is why
Speaker 1: we need to run the reports. We need to sit down,
Speaker 1: we need to reflect and optimize that. But the statement
Speaker 1: of cash flows unlocks that for you. Okay, then once
Speaker 1: you have that, we need to now set pro formas
Speaker 1: Typically for small businesses, I like what's called a thirteen
Speaker 1: week cash flow study, and so thirteen weeks is just
Speaker 1: pasted a quarter. Twelve weeks will be a quarter about
Speaker 1: a quarter, and it projects out where will be where
Speaker 1: our cash flow will be over the next thirteen weeks.
Speaker 1: So if you want to scale your marketing to grow
Speaker 1: your business, can I afford that?
Speaker 2: The thirteen week cash flow will.
Speaker 1: Tell you I need to hire a new manager so
Speaker 1: I can exit and move to the CEO role. Forward
Speaker 1: that when can I can I afford it? When can
Speaker 1: I afford it? Can't? I can't afford it now, but
Speaker 1: in six weeks I can In nine weeks and twelve
Speaker 1: weeks I can. So I need the three for the
Speaker 1: three reports, and then I need to make the thirteen
Speaker 1: week cashlow. Now, if you just go on to Google
Speaker 1: and type thirteen week cash flow, you can find templates
Speaker 1: spreadsheets to help.
Speaker 2: You do this all. Right.
Speaker 1: Then once I have that, then I can make the
Speaker 1: financial scaling plan.
Speaker 2: Right.
Speaker 1: The financial scaling plan is what will allow me to
Speaker 1: build this plan out where. Like I said, here's where
Speaker 1: I'm going to hire these key people, Here's where I'm
Speaker 1: going to launch this promotion. Here is where I'll buy
Speaker 1: this new piece of equipment that's going to make me
Speaker 1: a bunch of money. And so now I have this
Speaker 1: sort of plan of when to grow.
Speaker 2: Now.
Speaker 1: I don't know if you're like me, but I get impatient.
Speaker 1: You know, when I decide I want something, I want
Speaker 1: to grow, something, I want to add, add a new line, whatever,
Speaker 1: I want to launch something, I get impatient. I want
Speaker 1: it right now. What helps me to not be so
Speaker 1: impatient is when I put it down and I know
Speaker 1: when it is that I'm going.
Speaker 2: To to start it.
Speaker 1: If I know that I'm not going to start it now,
Speaker 1: I'm going to start it in one hundred and twenty
Speaker 1: days from now. I can sort of feel at ease
Speaker 1: with that. Okay, I can wait one hundred and twenty days.
Speaker 1: But it's sort of like when you don't know what
Speaker 1: it is that it bothers you at least bothers me.
Speaker 1: And so that that financial plan, that scaling plan helps you.
Speaker 1: And then finally, with the end in mind, are we
Speaker 1: building this to sell?
Speaker 2: Now?
Speaker 1: Again, you either sell your business or you buy it,
Speaker 1: so you should always be building your business to sell.
Speaker 1: But are you building it to sell? And specifically with
Speaker 1: your finances, how are you running your books? Are you
Speaker 1: running them on a cruel basis or a cash basis?
Speaker 1: Are you segregating costs properly? Are you running it like
Speaker 1: a bank account where you're pulling all your profit out
Speaker 1: for yourself personally? Are you categorizing that properly? Because if
Speaker 1: you want to go sell your business, they want to
Speaker 1: see the most amount of profit. Obviously, you're getting a
Speaker 1: multiple on your profit, and so you want your profit
Speaker 1: to be as high as possible, So you need to
Speaker 1: make sure that you're optimizing your finances preparing for that sell.
Speaker 1: I've got a couple more things I'm probably not kind
Speaker 1: of run out of time. But one of the key
Speaker 1: pieces of moving through these five exits is a mental shift.
Speaker 1: And it's a shift. There's a book written about it
Speaker 1: called who Not How?
Speaker 2: All Right?
Speaker 1: Entrepreneurs focus on how how do I get this done?
Speaker 1: How do I grow my marketing, how do I get
Speaker 1: more customers? How do I exit to the next level?
Speaker 1: Entrepreneurs focus on how. But what founders do is they
Speaker 1: focus on who Who can I get to do the marketing?
Speaker 1: Who can I get to manage this business? Not how
Speaker 1: do I do it? But who do I need? And
Speaker 1: so attracting good people is the key that unlocks all this.
Speaker 2: How do you do that?
Speaker 1: Well? It starts by setting a compelling vision, a clear
Speaker 1: picture of who it is and what it is that
Speaker 1: you're looking to have them do, and people will be
Speaker 1: drawn to that. In addition, we need to have systems
Speaker 1: in place that optimize all this because at the end
Speaker 1: of the day, somebody wants to buy your business that
Speaker 1: can run without you, and you need systems to do this. Now,
Speaker 1: if you're just tuning in, you're listening to the Mark
Speaker 1: maw Show talking about the greatest wealth transfer in history
Speaker 1: and how we can be a part of it talking
Speaker 1: about business, something I don't typically talk about it. What
Speaker 1: did you think about today? I'd love to hear from you.
Speaker 1: To hit me up on social media at one Mark Moss,
Speaker 1: leave me a comment on the podcast. I'd love to
Speaker 1: hear from you as well. If you'd like more business
Speaker 1: finance topics like this, let me know we'll do more
Speaker 1: of them. But this is a big deal.
Speaker 2: That you needed to be aware of, you need to
Speaker 2: take advantage of.
Speaker 1: So that's what I got today. Thanks so much for listening.
Speaker 1: Until next time,