Episode Transcription 

This is the ultimate advisor Podcast, the podcast for financial advisors who want to create a thriving, successful and scalable practice. Each week we’ll uncover the ways that you can improve your referrals, your team, your marketing, and your business operations, helping you to level up your advising practice, bring in more assets and create the advising practice that you’ve dreamed of. You’ll be joined by our hosts Brian sweet, who is moving fast towards a billion dollars in assets under management, Brittany Anderson, the driving force for advisors looking to improve their operations and company culture, and Draye Redfern who can help you systematize and automate your practices marketing to effortlessly attract new clients. So what do you say? Let’s jump in to another amazing episode of The Ultimate advisor podcast.

01:06

Welcome back to The Ultimate advisor Podcast. Today I have with me an extra special guest is somebody who you definitely want to pay attention to, because his perspective on business as a whole tends to be a little unique, a little different than what you hear all the time. So today I have with me, Jean Naphtali of why should you pay attention to Jean Who is this guy? Because your business is not as profitable as it could or should be? Because he is an expert at profit improvement strategies that don’t involve spending money from negotiating employee and consultant contracts to protecting intellectual property to making business units autonomous. Jean is uniquely qualified to steer you clear of the marketing sharks and into the bay of profitability. Working as a consultant with clients like Target American Express Kraft for Kraft Foods, and Procter and Gamble over the last 20 years has allowed Jean to bring you the lessons learned from the fortune 500 or even 50 to your startup or growing companies struggling to achieve profitability. Jean focuses on achieving results by improved efficiency through process reengineering, and operational optimization which we can all use. Most small companies focus the core of their spending on marketing and sales efforts, neglecting the parts of the company responsible for delivery and ultimately profitability. Because the focus of gene strategy is on refining what you already have, you will not be asked to invest 10s or hundreds of 1000s on increasing your marketing, you will end up with a tighter ship that is able to derive higher profits from your existing business. Help me welcome Jean to the show. Jean, I am so excited to have you here today. Welcome to our show.

03:03

Well, thanks for having me. Um, I am looking forward to it.

03:07

Awesome. Well, for our listeners, I’m gonna give you a little behind the scenes knowledge here, Jean and I actually talked on our dream architects life podcast or an interview for it recently. And he had so much good thing, there’s so many good things to share that we decided to do this special session for our advisor audience. The reason for it being gene is chock full of knowledge on not only how to run a more efficient and effective operation, but he has a really unique perspective on all things business. So, Jean, I want to start this off, let’s just go right to the nitty gritty and talk about your book Beyond sales. I just finished reading it. It was absolutely a game changer in how I look at the overall operation. So can you talk about the Cliff’s Notes version for our listeners? And maybe some of the highlight really key points to drive home?

04:01

Sure, by but you say to everybody that’s got a book too.

04:04

You know, I don’t. There are some people who wrote write books. And while I can appreciate the creativity and everyone and I encourage every human being to write a book, I truly enjoyed yours just because of the fact that it’s so different. I haven’t seen some of the spins you put especially when it comes to the equity component, which we’ll talk about in a little bit.

04:23

Yeah, yeah. No, I do have I think some some thoughts on different matters that are a little bit different from sort of industry standard, what’s taught in business school kind of mentality and, and certainly they’re the result of many years, over 20 years of working with lots and lots of businesses, probably over 250 companies. Some of them really large like the fortune five hundreds I work with them. Some are, you know, just doing a couple of million a year. But what I’m really good at is seeing patterns and then using that Pattern recognition to then come up with some generalizations and rules and and eventually test those with new clients and come up with some good strategies for everybody to use in the future is the one thing I say a lot, which is, every single one of my clients Barnatan has started off the conversation for me by saying, Look, we know you’ve done a lot of things, but we’re pretty unique. So we want to make sure that our uniqueness can be translated into what you’re doing. And I my my reply to that, as you know, if I had a buck for everybody that said they were unique, I’d have at least 250 more dollars right now. Because literally every business thinks that they are different from every other business. And in my experience, the problems that they’re having the solutions that we ended up implementing, and the general sort of path forward, line up very, very well with a lot of other businesses. So nobody’s really unique, you may have a different interpretation of what you’re doing and a slightly different path to get to where you’re going. But generally, the things that will improve, you’re getting there faster, sooner and with more money or pocket are going to be very similar. And that goes across both online businesses, and brick and mortar businesses. It’s really interesting to me how a lot of people seem to think that what really amounts to a minor difference, somehow makes their business completely unique and different from everybody else, it really doesn’t. So I’m not answering your question about the book, which is what you originally asked CliffsNotes version, I think that by the time people get done hearing, this podcast, they’ll have a much better idea of the kind of stuff, it’s in the book. But the book is broken down into about 50 chapters, it started off with 30. And then they got to 40. And then they got to 50. And each chapter focuses on some particular element of a business or a CEO that I helped fix. And so effectively, it’s looking at the common mistakes and problems that business owners and even CEOs that are not owners, but are hired to be CEOs that they’re making, and then how to avoid those mistakes, how to get past them, and how to use other people’s knowledge and mistakes, to get to a place where you don’t have to make those same exact mistakes yourself.

07:30

So gene, it’s interesting, you know, you’re talking about how every business thinks they’re so unique. And I’ll say this, across the board for the wealth planning industry, that any advisor that we have that comes through one of our programs, our mastermind, our coaching, you know, even some people who write in or call in off the podcast here, you know, we tend to get in this bubble, where we think our industry is special. So it kind of goes a little bit less granular where it’s like, well, our industry is unique to this. And it’s interesting, because, you know, being part of different masterminds, having conversations with, you know, great people like you, we’re finding that our problems are not anomalies. And our efficiencies aren’t necessarily anomalies, either. So I’m so glad you brought that to light, because there’s so much truth to it. Yeah. And go ahead, if you have any additional

08:20

comments, or I was gonna say that it’s not the takeaway from this is not that you should work with somebody that only has one approach that they’ve built, and they never want to deviate from it. And they think they’re going to fit, you know, you as a as a square peg into a round hole or something like that. That’s not it at all. Certainly, you want somebody that can learn and understand your business and look at the things that in your opinion, are unique to the business and then be able to figure out ways past them. But I’m just saying as my general experience of well over 20 years of doing this. Everybody thinks that unique, less than 1% of the people actually are.

09:03

I believe that statistic wholeheartedly. And I think that really sets me up for my next question, because I think that what makes your work so effective will say is that you do come in oftentimes as that interim CEO Oh, so you’re not just coming high level from, you know, some perspective of a process that’s worked over time. You’re actually getting into the nitty gritty and living in that business for a period of time to be able to point out inefficiencies. So I would love to know from your experience, what are some of the most eye opening things that you’ve seen in your work as an interim coo?

09:41

Sure. And I think to some extent, maybe some of my, my fun stories and Thunder has been lately stolen by Elon Musk’s, who’s come in after buying Twitter. And right now after laying off 3000 employees just laid off 4300 More contractors off Twitter. Now from all Most companies, it’s not that drastic. But I’ve certainly laid off well over 1000 people over the course of doing that probably over several 1000. At this point. You know, people are the single biggest expense of just about any business. Some businesses certainly don’t have people to the same degree. But for most companies, certainly most companies under 100 million, if you look at where the actual expenses of the business are, you will find that the human capital is going to be the highest one. So since it represents one of the largest percentages of your costs, it has to be looked at the most carefully when I come in to look at a business and evaluate it and try and come up with some strategies to improve efficiencies. Looking at the human capital aspects of it looking at are the right jobs staffed in the company. And, by the way, I’ve never seen a company that, even if they have a lot of people that don’t see B seem to be doing a whole lot, that don’t have any holes, either. It’s always a mix. So it’s not a matter of just coming in and lay off a bunch of people and saying great, I saved you money. Usually, it’s it’s a mix of the two, it’s like, Well, why do you only have one project manager, and you’ve got 70 People working as developers, let’s look at what those 70 people are doing. Oh, so if we get maybe another two project managers, and we lay off five developers, it’ll have a net positive cost savings to you. And the rest of the developers that haven’t been laid off, I actually going to become more efficient. So there’s an example of the type of a change that I might come in and do in an organization, because quite often, it is the strongest personalities that get it’s like the old saying, right, the squeaky wheel gets the grease, it’s the strongest personalities in the company, that get the most help that get the most promotions that get the biggest departments, not necessarily the ones that are necessary. So I’m not saying anything against people with strong personalities. I think that’s generally a good thing in business management. But there are often cases where certain departments or even within departments, certain areas are neglected, simply because there’s an introvert running things. And they may be overworked, but they’re just not speaking up enough to make a change, where there might be an extrovert, another department that is very loud and visible in the company. And and that extroverts, you know, they will make sure that they get whatever help they need when they need it. And quite often, it could be to the detriment of a budget and another group. So it’s really important to look at what does the company need? And what does it currently have. And so you do an analysis of the business at the starting point, you figure out exactly how much deviation there is between the needs and the haves. And then we can start looking at, okay, how do we make the adjustments that are going to improve things. And obviously, my goal in all of this in the thing that I effect, effectively I’m selling is the idea that I’m not going to do diddly squat to your sales that’s on your sales team, your marketing team, people that are in charge of bringing money in what I do is specifically focus on what the company is spending. And that is the number that ends up affecting the bottom line the most. So you can have people that are bringing in, that are doing great job bringing in sales. But if the rest of the company is inefficient, again, going back to Twitter, and what we’ve been seeing with musk, he’s seeing huge inefficiencies there to where the company is bringing in plenty of money, but they’re also spending all that money, all the money coming in. I’ve had one company I’ve worked with, I’m not gonna name obviously, but you know, they were doing a great job that grew to about 50 million little over that. Unfortunately, if you look at their books, every year, they were spending about a million more than they were bringing in running the business. So you have good growth, but you have a loss every single year. And that tells me that you’ve got the customers, you’ve got the opportunities for growth, it’s just a matter of getting in there and cutting those costs, getting rid of the trimming the fat, making sure that the company is actually running efficiently. And, you know, for that particular one, I think it took me about three, maybe four months to find about a million dollars a year in savings for that business and let them continue operating and growing but now being profitable instead of being unprofitable. You it’s it’s quite often the case that the CEO and I’ve told you this in our last podcast as well as this CEO is one of the biggest blind spots, and that there are not enough people willing to push back and challenge ideas of the CEO and by no means is the CEO infallible, and generally was somebody that has the ability to make changes. So drastic as the CEO, meaning in every single department, in the company, some things they’ll do a great job in, they have good insight, they understand. But then other things they don’t, maybe they’re a techie. And then they’re really good at that aspect. But they’re not going to be nearly as good at fine tuning the marketing stuff. Or maybe it’s the other way around. But whatever it is, no one’s going to be an expert across the board on everything. And quite often, after coming in interviewing the executive staff, the senior managers, and then really looking at the whys behind why the company is doing thing making the decisions it has been for the last year, and spending money the way it has. Not in every case, certainly, but in a lot of cases, more than you’d think the finger points back at decisions where the CEO was actually suggested a different path, but chose to go down the current path that the company went down, because they thought they knew better. And that was something that can be traced back to the origins of some of the problems that companies experiencing. So one of the things that I’m I’m able to do and coming in as an outsider, but also coming in at a high level is effectively more than one. So I’ve provided my recommendations report back to the CEO or the owner of the business, effectively saying, okay, biggest thing you need to do is find yourself, bring in a professional, bring somebody else in, that can manage the business and then provide you with a measurable result, achieving what you as the owner want, rather than you as the owner, having an unaccountable CEO, yourself, working and making decisions that may not lead to what you as the owner are trying to achieve, which is greater profits in the business. So it’s a it’s sometimes it’s a little surprising for people both on the employee side and the executive side, if I get to that level of, I guess brashness, but ultimately, that’s what I’m being paid for, you know, what I’m being paid for, is to figure out how to improve the profitability of the business because what you keep at the end of the day, is what you can reinvest into the future. And I think that ties in with what you guys do is you allow people to take the that job of like, how do I make sure that I have something to reinvest in my future, and then manage that for them for their personal side, so, but if the CEO isn’t making the right decisions within the company, then he’s not doing what you guys are doing, while he’s working on the behalf of the company. So we need to change that.

18:02

You know, Gene, it’s so interesting. So, you know, coming from the as of the perspective of the advisor that’s tuning into this, there’s two things I want to pull out of what you just talked about. So number one, you know, part of the reason that we have conversations and interviews on this podcast with people like Eugene is so that our advisor audience can actually take these resources back to their clients. So if you’re an advisor sitting here listening to this, going, Hey, I work with a lot of high level, business owners, entrepreneurs, you know, people who are moving and shaking gene is a great resource for people like that, if nothing else, I mean, again, the book Beyond sales, it’s a different, unique perspective. And I’m gonna highlight one key area on that in just a minute. So that’s, that’s point one. Point number two. It’s really interesting, because I think this is so relevant for our industry, many of the advisors that we’ve worked with over the years, they come into this business to be an advisor, they come into it, to build relationships with clients to be able to serve people, maybe they’ve got the sales hat on and they’re great at sales, most of the time, they did not get in this business to run a business if that makes sense. So we didn’t get in this thinking I’m gonna I can’t wait to manage a bunch of people and build teams and you know, scale up they got into this because they were kind of thinking the one man or woman operation and then it’s grown and they’ve hit new ceilings of complexity and all that good stuff. So Jean, one thing that we get asked a ton and I’d love for you to shed some light on this when people are looking at okay, now this is a real business like I’m really running something here. Do you have recommendations for percentage allocations on budget so maybe that’s, you know, your your team, your salaries, your bonus expense, your marketing department, your professional fees, your overhead, like, what’s the breakdown that people should shoot for?

19:55

Oh, you’re not gonna like this answer. Oh, I’m ready for it as little as is reasonable to achieve your goals. Interesting. Okay, elaborate. Yeah. And that’s because there is no magic number, it’s going to be different for different companies in different industries, obviously. And this is, I think, why some people do think that, Oh, we’re unique, even though you’re not unique, it’s just you have a five year instead of a two that some other company might have in your books. But the bottom line is, you have to start with goals in mind, right? So you have to decide, why are you doing this? Is it in order to build a nest egg? Is it to grow the biggest thing you can and then sell it? And then have a nice cash out that you can go play with? Is it an early retirement? Is it a Late Retirement, do you want to just have a company that you can work in and run and nobody can fire you for the rest of your life, those are all different goals. And there are percentages of each of those that people have. So no one’s going to do it just for one of those reasons, it’s always going to be a mix of those. But that mix is going to be different for different people. So starting with the goals, I think it’s important to, to really, I mean, I almost hate saying this, because I don’t do it myself a whole lot. But put those goals on paper, like have that written down. Make sure that at least a few times a year, you look at it, and you say to yourself, This is still what I want to do. Because that’s the other thing is as we progress through life, and we mature and in our outlooks, our goal, priorities will change. What seemed like my goal in my 20s is not necessarily my goal in my 50s. So with that in mind, you want to make sure that you’re not just remembering what your goals were, but that you’re reaffirming what your goals are. But if you do have those goals written down, or at least very well mentally in your head to where you can crank them out without thinking too hard about it, then I think it makes it easier to decide how you want to budget things, what you want to break down. But ultimately, I think for most people, you don’t just want to work to pay bills, you want to work so that you will have more freedom. And freedom is a goal that tends to come up more for people as they’re aging, as they’re getting a little older. You know, when you’re in your 20s, it’s about the money, it’s not about the freedom, you’re in your 50s it’s a lot more about the freedom than it is about the money. And, and so figuring out what does that mean, while money gives you freedom, money isn’t freedom, some people say, Well, money is freedom, I don’t quite buy that. I think that money can give you freedom, if used appropriately. And examples of that is, you know, if you remember what you were happy living like in your 20s I think for all of us, we can look back and kind of think about that. My budget was probably about 2000 bucks a month. And it seemed like plenty of money for everything, including toys, you know, including going out and buying the latest CDs or whatever I want to do back when music was sold on CDs. But But most people don’t stick to that type of budget as they get older. And so your needs are what your wants become your needs, I think is the phrase that I’ve heard used. Because we we might have plenty of ones. But quite often we don’t think of them as needs until our finances allow us to be able to spend on our wants as though they were needs. You know, I’ve been fortunate enough to go through a period of my time where I’ve done some things that I would now in retrospect tend to think of as dumb, but I was able to go in and buy a brand new BMW convertible for cash, just write a check out and say I don’t want to pay 1% interest. I have the money, I’ll just pay it up. Now. I think that was stupid in retrospect. But it was something I was able to do. And I think plenty of people get to that point. But I think thinking about what your goals are, and then using that to determine budgetarily what is appropriate. But you know, I know it’s kind of a wishy washy maybe sounding term, but the the lowest appropriate budgets to achieve the the desired results. So if you, if you can’t find somebody really good to hire for leading up a new department, or just replacing an old employee, at a certain price point, you will have to adjust that price point up. But it also doesn’t mean that once you have just that price point up once you’re prepared, let’s say to hire an HR person for 80,000 a year. You know, I mean, Amazon just fired 10,000 People Facebook just fired 12,000. Musk just fired 7400 People all within this week, by the way. I would say maybe it’s time to lower what you’re willing to pay. Because now the market is starting to become a little more of a buyers market for companies where in the The first half of this year sort of post QA a COVID. But, you know, pre elections, it seemed like the, there were very few people that were available to be hired. I was personally very surprising number of hires that I did for company I was working with earlier in the year, where like a project manager, I always hired project managers under 100,000, between 80 and 100,000, there was always a ton of good candidates couldn’t get one that was decent quality for under 130. Right now, I have the significance of 30% increase in the salary for a position that for decades has been in the 80 to 100,000 price point, I suspect for next January, you might be able to get somebody of the same quality for about 110. Just because the layoffs seem to be happening in corporate America a lot right now. So there’ll be more people in the market. So you have to be able to adjust those budgets, you know, just because you set a budget doesn’t mean magically, that the rest of the world will cooperate with you. But at the same time, you also don’t want to set a budget based on last year, and then say, well, we’re going to spend this much no matter what, because there are always opportunities to save money, you can always renegotiate things, I was able to do that for a number of companies about, you know, contracts that they had with service providers, the services that are year over year 1000s of dollars, anything from internet connectivity, to rent, even to you know, it doesn’t really matter any kind of long term contracting services. I my typical process is call them up and say, Look, we’re having a really tough year this year, we like working with you guys, honestly, we’re not going to be able to afford you guys soon as our contract ends, we’re going to have to look for a cheaper alternative. We know it’s not going to be as good, but this is where we are. Is there anything you could do for us? I’m not trying to beat them down, I’m using I’m appealing to their sense of sensibility here. It’s like, well, I don’t know how much room we have today. Well, I do like you said Be willing to sign a longer term contract. But I can’t do it at the prices we’re currently paying. Long Behold, about 90% of the companies that use this approach with they’ll come back to you and offer you a better quality deal for longer term. So you might go from one year to three year, but guess what you’re locking in that cheaper price for three years. And then it again, it’s some people you’re surprised at how many different types of businesses you can do that with, it really is just a matter of asking because most people don’t ask, most people just complain, and then they think it’s too high, they’ll cancel the service and go find somebody else cheaper. But if you like what you’re using is no reason not to push back a little bit and see if that can get you a better deal.

27:54

You know, it really leads me into, you know, when people are looking at this, I have to I want to make one comment here, because we do talk about hiring quite a bit on this podcast, because it’s been a hot topic for forever, right? Like, let’s just pull pull COVID poll, you know, recession talks, pull whatever out of the equation, you know, finding and keeping good people are, it’s always been a challenge. And I would say, you know, one thing we always stress is that, yes, you know, you want to keep your profitability in mind. And you have to look at the overall well being of the company, we also firmly believe, like pay for talent, don’t be so buckled up to one particular thing, because there’s give and take here. So you know, maybe you do have flexibility in your time off policy or, you know, different perks and things that come with the business. So don’t kind of tighten the reins, so much that you miss out on great quality people because of a $5,000 differential or something crazy, because we’ve seen that happen before. So Jean, I want to pivot into one of the most interesting parts of your book. And it has to do with, you know, how you look at ownership structure. And I want to give some context to this first, and that’s that we have a little bit of a pivotal time for a lot of Wealth Advisors. I think one of the recent studies or statistics that I was looking at, showed that the average adviser is around age 55, somewhere upwards of 60, depending upon which study you’re looking at. And what that means is they’re getting close to some form of retirement. They’re looking at succession, they’re looking at, you know, how can I maybe groom up junior partners to step into that ownership or take the succession path? So I would love for you to talk a little bit about equity structure. And maybe as it relates to the primary founder kind of starting to segue out or step away from some of the day today.

29:50

Sure, well, and I, you know, correct me if I’m not going down the path that you were thinking of here, but yeah, one of the things I know that I talked about a little differently in turn terms of equity is that I don’t believe in 5050 partnerships, I think they’ve never worked. There’s, they’re built on the theoretical on a theoretical that is almost impossible to achieve in the real world, which is an equal amount of effort. Now that effort can be different dollar rates and could be different amounts of hours. But equal effort will be where both people independently if asked on a blind poll where nobody else is going to know the answer will say that my partner worked exactly the same amount of equitable time and effort for the company that I did. It just doesn’t happen. There’s always somebody leading, and then there’s somebody that’s just kind of getting along. And it often is not, it mostly isn’t by intention is because life happens. You know, how many times we’ve been in companies that were started by two kids out of college, you know, male or female, doesn’t matter. But they’re single, their expenses are super low, they’re used to staying up all night and sleeping for three hours every night. And then they can work as crazy hours, maybe having multiple jobs. That happens, one of the partners, you know, focusing on the business, growing the business, the other partner ends up meeting, somebody falling in love, looking at a future together, getting married, having kids, before they even get married, before they even have kids, their ability to commit the same effort that they were before that the other partner may still be committing to the company is diminished. And so what does that cause in the 5050 partner ship resentment, because somebody feels like they’re dragging the other person with them. And the other person’s not putting in the full effort that they could be. And those could even flip flop where that happens in the first three years of the business. And then later, it goes the other direction, where maybe the person that was focusing on work, it kind of starts to family later and is now focusing on that where this person has kind of gotten themselves to a point where they’re, you know, I mean, we all kind of go through this, like, they don’t want to be around their spouse for a whole lot, because they like they’re away time, they like going to the office, they like spending a good chunk of their day with people that aren’t going to remind them of all the to do things that they should be doing and haven’t gotten around to doing for their families. So it happens all the time. And I think a very easy solution that most people seem to just ignore when they’re first starting a business, or when they’re bringing somebody in is you don’t need to have equal equity for both people to get something that they want out of the business. And so there are different ways to do that. But the shortcut answer is its contractual relationships that aren’t tied to the actual stock ownership. So somebody can be paid exactly in the same way, as though they were a 5050, owner of the business without being a 5050, owner of the business, just simply by setting up a contractual relationship, that that looks at different factors to calculate how much they’re paid. And whether the company is producing there, there are things called phantom stock, and there’s different descriptions for it. But in a sense, they all bought boiled down to the idea that legally, the ownership of the business remains with the founder or whoever is currently the owner. But the benefits of having equity are also split amongst a greater number of people. And I think that doing it that way, allows allows the company to sort of shift who’s benefit me you could very well get into a situation where the the person that owns the business is actually getting less money paid by the company, they’re taking out less than somebody else who doesn’t have the equity. But he’s actually doing more of the things that that contract is defined as being important for the business. So I think people get hung up on this whole like, well, I want to come in as a partner, I want 50% Blah, blah, blah, blah, blah. It’s, there’s no real basis for it. And honestly, even if you start off be 5149, you’ll probably be born happy in the long run.

34:39

You know, I think that there’s so much value to that, and I love your thoughts around, you know, being able to basically reward people incentivize people, make them feel like they have a sense of ownership and not having to feel like you’re so formally structured. So the other thing I thought that was really interesting is some of your commentary in the book about how you actually see equity shares being something that you would evaluate on an annual basis. So I’d like for you to talk a little bit about that, because I think that’s unique to.

35:08

Yeah. And that’s, that’s something I think mostly I was looking at doing earlier stages of business. Before there was a whole lot of money invested essentially, where people are investing more more of their effort and time. And that is to say that if you can develop a formula that essentially places equity as a moving target, rather than a static one, and you can do this by having a whole lot of shares in the corporation itself, that have not been sold slash given to any of the partners. So it’s actually you have like, let’s say, two partners, one owns 11%, the other one owns 9% of the business, but the business itself owns 80% of itself. And then you effectively are doing it’s like an Options Program, right, that you accept, it’s not tied to just pure time, it’s tied to certain measurements of effort within the organization, and allows whoever has actually done the most, to affect the bottom line of that business, to be rewarded in a stock ownership type program. Now, it’s obviously a little more complicated setup than simply filling out on a Secretary of State’s form 5050, like a lot of people do. But I think in the long run, I mean, if I was setting up a brand new business right now, I’d probably say each person should have set up their own, either LLC or corporation, and then those corporations are going to be members of the new company that you’re going to be doing. And then set up an arrangement kind of, like I described, where the majority of the stock in the company is actually competent, reserved for the company itself, and will be allocated accordingly over a number of years, rather than just all at once. And then diluted later. I mean, it in some ways, it’s kind of like, well, what’s the difference? It’s the same thing, if there’s only 20%. That’s, that’s actually owned, and it is kind of 5050. Yeah, true, but it’s just kind of in a way of how you can do it. I think it’s cleaner than just simply issuing brand new shares, at a later point in time, when everyone’s worried about Well, how’s that going to dilute me? You know, what is getting in the doing to my percentage ownership, versus my actual ownership? But but in the end, I think you just have to evaluate what are people looking for? And quite often, you know, you can find that somebody just wants more cash out of the business on an annual basis, and then somebody might, it’s more equity in the business? Well, you can, you could do both of those, like you can structure a contract that satisfies both people gives each one what they want, and makes both people happy, much better than just doing a 5050 ownership kind of deal. And then, you know, having arguments about how much owner equity, each person is going to end up taking out at the end of the year.

38:04

You know, and I think this is such a good framing for again, I go back to just kind of the shift in our industry, you know, the wealth management industry as a whole. And we’re constantly having conversations, where people are asking about succession, what’s effective? How do you structure so I think, if nothing else, taking some of these high level thoughts that you’re sharing here, and figuring out how it applies within your business as the listener, I think there’s a lot of value to that and merit to it. Plus, again, for so many of our advisors who work with business owners, this is a different framing, and it’s additional value you can bring to your client. That’s not just your basic wealth management. It’s it’s different ways of thinking and structuring things down the road. So, Jean, I wish I could remember verbatim how you said this. In the book, I was actually trying to find this page earlier, something about how a lot of times founders especially there’s too much emotional connection to the business. So can you just talk a little bit about that? And where or how, like the shift in perspective should take place?

39:09

Sure. Well, and there there is, I don’t remember what I said exactly, either. So we’re on this. We’re in the same boat where there were there. Yeah. But yeah, I think it is absolutely true that founders do typically experience a lot more of an emotional connection, which affects their decision making about the business, and sometimes in good ways, but sometimes in bad ways. And I think this is this is something that is difficult for a lot of people to overcome, because they don’t realize it’s happening. So I you know, kind of like in the 12 step programs or whatever. First step is admitting that you have problem and the problem is, you look at your business like you do as your kid. Now, the good part of that is it means that quite often you’re willing to sacrifice more for your business than you would if you were just an employee working somewhere. So that’s that’s a positive aspect of that the negative aspect is, you may be getting a great offer, the best you’re ever gonna get. And you’re hemming and hawing and thinking of turning it off and not accepting it. You know that that could be a negative thing, because you’re not sure what will happen. I had a client that had a, the ad agency, they were I don’t know, they were probably probably about a 20 person ad agency. So probably doing about 30 million 40 million a year, right that range. And it was coming up for the founder of the agency, the guy that started at the guy whose name was on the agency, Banner was getting close to retirement time. And the problem was, that happened there. And that’s very common as in his last three, four years, prior to retiring, he was spending less and less time at work, kind of getting semi retired spending more time with buddies on the golf course. And when it came time for him to sell, the agency has stopped. And what he always told people is, you know, when I retire, I want to sell agency off to the junior partners and see how it goes. And he gave him the offer. And they said, You know what? Not we really don’t need your name that badly. I mean, people are aching to know who we are. So effectively, all the senior partners quit. And they immediately started up their own agency. And he had contracts that he was still on the hook to fulfill. So here’s a guy in his 60s, that hadn’t really worked as an ad day for a decade, been just running the business, that all of a sudden have to finish projects that were contractually obligated, when these other guys left, who are now directly competing against them. So how do you prevent something like that? Well, you can’t just make these assumptions that there’s value in your name, that there’s value in the business, if there’s value for you, because you put in your blood, sweat, and tears, that’s a lot less value for somebody that didn’t, or somebody that put in their blood, sweat and tears, but it’s your name on the door. And so you have to you have to make sure that you come up with some strategies to start moving in that direction, way before you you think, just in general, my advice? Is anybody that’s got this question in their head of, should I sell my business? Or what would my business be worth if I sell it? The point at which you should sell your business is three to five years from the point that that question pops in your head. Most people have that question The same year, they want to sell the business, that’s, that’s too late. Like, you’re not gonna get good bang for the buck. If you do it, then if you start thinking about selling your business, let’s say three years, I mean, five is better. But let’s say three years ahead of time, what does that three year runway let you do, it lets you maximize the price of the business. It lets you start running the business. And this is one of the things that I do is I come into companies and help them get their business ready for sale. And that that’s not the same thing as like, you know, repainting the inside of a house that you’re going to sell, and making sure the carpets look clean. This is making some drastic changes, this is changing the way that your business is going to be perceived. And so if you think you’re wanting to sell your business, and you do it early enough, like three years, we can get three years of great looking books. Because usually it’s going to be three years that the buyer is going to be looking at. And we can make sure that the things that your business looks like it’s doing is expanding market share, which is going to be one of the biggest factors that the buyer is going to be looking at, if you’re used to taking out $800,000 a year out of your business just because you can afford it. And you have a great lifestyle that way and you move the money to yourself. And there’s still enough to just keep the business running, that doesn’t look great for a buyer. I mean, in some ways, it looks great for a buyer because they’re gonna get your business for a lot cheaper than a comparable business that isn’t doing that. So it’s not good for you, because you’re not going to get as much. But if you have the time to do it will actually will rearrange that will shift the way your business is actually operating those last three years, or even less, less two years or one year to make it more attractive as a high value target. Rather than simply are here’s a guy who’s retiring, let’s see if we can get his business for cheap. And I think one of the examples I use in the book I might as well use here as well as it was actually when I was running a company for somebody that you know as well my canings he had a digital marketing company did exactly making digital marketing software company and unfortunately he ended up getting cancer at a very Really age, a young age in his 40s. And during that time, I was the CEO of this company. And, you know, effectively the CEO, and the founder of the business is out of commission, you know, he’s in a hospital in a different state, getting chemo and radiation. And so I ended up having to run the business. During that time, one predictable and one, I think unpredictable thing happened. The business had about a, I think it was about 20%, lower sales volume than he did the previous year. So I’m not your sales guy. I’m not the marketing guy. I’m not the CEO that is really good at those things. But here’s what’s unexpected is, in that same year, that sales fell, they fell by over a million bucks. The profits went up by 72%. So because I didn’t have the CEO, spending money on a lot of things that, you know, may or may not have worked, someone would have worked, and he would have had more sales, but plenty of them, but have not worked very well, because I was a lot more calculating and careful in the spending of the money. The company was more profitable, even though the sales were down. And that’s something that I think a lot of people could have used during COVID Hey, we got Lord sales, oh, my god, we’re gonna have no profits, no, not at all, you may end up with greater profits if you structure things correctly. So being able to do that being able to make changes that refocus your business on a different aspect, rather than maybe personal income, you look at reinvesting in the company and making it grow faster. Or maybe you look at I don’t know, I mean, there’s a variety of different targets that we can go here, but in the end, looping back to selling the business, if the goal is to get the biggest price for the business, then you really are you need to evaluate and quite often change how you’re running the company to be able to maximize the sale of that business. So no better time than for people in their 40s to have those thoughts of like, How can I sell my business, because if you wait until you’re in your 60s, you may be running out of time to sell it and get the most out of it.

47:27

You know, there’s so many things there gene that that kept running through my head thinking about the balance between in effective, you know, how do I want to say this, and effective ce o ce o balance. And to your point, you know, if you have somebody that is maybe a bigger personality CEO, you kind of talked about these big personalities, you have somebody that’s a bigger personality CEO, they don’t have enough people around them that are saying no to them, or that are trying to redirect, I think that’s where there’s so much value. If you don’t have that internal structure, you don’t have the CEO that can come back and say, Wait a second, does this really make sense for the business as a whole, the CEO tends to get a little bit excited about things, especially the one that is geared towards the marketing, the sales, like that’s just how their brain operates. So I can really appreciate the work that you did for Mike. Because that’s amazing that profitability increase even in a down year. And there’s something to be said about that. So before we wrap it, I ask you my last couple questions here, Gene, if our listeners want to get a hold of you want to find out more about how you could potentially help them? What would be the best way to do that?

48:36

Yeah, so I would say the best way to do that is actually to go through you guys is to reach back out to you. And then you can make a connection pass their info on to me directly. And there’s two reasons for that. One is if I give them something direct, like my email or phone number or even LinkedIn connection, there is always a chance I’m going to not see something and then somebody will get mad I was I tried to reach out to him and never heard back. So I have so many people trying to, you know, send junk to me that the percentage of people that are actually something I want to read is pretty small, unfortunately. But like anything coming from you, or you know, other people within your company, I’m going to be able to see pretty quickly because it shows up in my like known people side of the mailbox. So if somebody wants to get a hold of me, that’s the easiest way to do it. The other thing I’d say is for any of your listeners that are going to be listening to this particular podcast, you know, you’re my demographic, my target is generally going to be either business owners or CEOs of companies that want to improve their their profitability and their efficiency really across business. But I’m more than happy just to have like a 25 minute conversation. Totally free with somebody that’s not in that demographic that just wants to understand better what it is that I do or how it can help it, maybe just provide some more insight beyond what they’re hearing on this podcast for somebody who’s there talking to. So if I’m, you know, essentially I’m saying if a advisor just has more questions after this podcast, not for their advisory business, but maybe they’re people they’re dealing with, they’re bringing up some of these issues I brought up, and they go, Oh, I heard somebody interesting. Feel free to reach out, I’m more than happy just to have a chat. You know, right now, between now and New Years, I’ve got quite a bit of time free. So I’m happy to use some of that time just to help people better understand, I think, in the end, my goal has always been the same, which is just to get the quality of American business to be better. I don’t, I don’t put any super high thing like and also people say, I want to create millionaires, I want to do this, I just want you to help them prove you as a business because we are competing globally. And in a lot of ways, we’re getting their ass kicked right now. And if there’s something I can do, and I think I can to help American businesses, that’s really my goal.

51:11

You know, Jean, I think that’s a huge, huge offer. So anybody listening, you know, if your antennas are up to how gene might be able to help you, you want to tap as genius, you want to gain some insights into your business. Take advantage of that and reach out to us. So you can email support at ultimate advisor coaching.com, the our team will ping me so I can formulate that introduction to Jean. I think that is such a huge give. And that is something that I know anybody who reaches out will get a ton of value from. So Jean, as we wrap today, I would love to know, is there anything that I did not ask you that I should have?

51:48

I think we’ve covered a lot of stuff. i The one thing I was thinking of earlier today is my upper out sort of program or policy for employees, which I’d show you read about in the book as well, yeah, which is also one of the things I think is different than the way a lot of people talk about treating employees. So I make a distinction between the roles within the company and people filling those roles, the roles for a company quite often they should be static, like, you know, you’re gonna need seven developers at a certain level, that may change as your needs change, but you’re still gonna need some variant of that, or support staff or HR or whatever. But generally, when a person comes in to work at a company, it’s not a good thing. And this is where I think I disagree with some people, if you hire somebody, and they stay there for a decade in that role, because most people are like, great, I want to keep my employees forever. This is awesome. They have all that experience. Yes, I’m paying him more money, but they’re, they’re doing a great job. It’s like, no, that’s bad, but you want our people that want forward movement, you want people that have goals themselves, people that want to grow in the business, and that just sit at the same job forever. And, and so I’m very much against this idea that it’s some kind of a Medal of Honor to say that all our employees, they never quit, they stay with us for a decade or longer, it’s like, Hey, you’re probably doing something wrong. Because what you want are employees that stay with you for a decade. And then that decade, they’ve now had seven different titles, because they keep moving up in the path within the company. And that’s great. Now, there’ll be other employees that want to move up. But for one reason or another, maybe bad timing, maybe they’re just don’t have quite the skill set. They can’t do it within your company. And so those people should be leaving. And you should be leaving on very good terms and not get pissed off. When somebody says yeah, I’m gonna take this other job, but it’s, it’s a better title, it’s a better paying job you should be, that’s awesome. We’re super happy for you stay in touch. You know, we love our ex employees. As much as we love our current employees, guess what that person is going to do for you. They’re going to be a point of reference for the next decade. For other jobs within your company. They’re going to talk about how it was a great starting job for them, or maybe middle job for them, they’re going to be happy about the time they spent working with you, because you took the effort and make sure that you wrap that relationship up in a good way. So some people will move up within your company, some people will want to move up, can’t do it in your company, they’ll go somewhere else. And then there’s that third group of people, which is the people that aren’t doing anything to move up. And they may within that group. Some of them will be, you know, strong enough in there. I guess self worth to ask for more money to do the exact same job. Other people don’t even go that far, they’ll just they’ll be the people that you, I find these in every company I work with, there’s always somebody that I’m sort of surprised by this, like, Oh, they’ve been in that job for six years, they’ve gotten one raise in that amount of time, they haven’t quit, what is wrong with that person, they should have quit, that Job was for where that person was in life, the year that they took the job, not right now. And so if you have somebody in that position where somebody who’s in your company, they’re really they haven’t altered or you haven’t altered where their position is, they haven’t either left of their own accord because they can’t be promoted, or really push hard for those promotions, you have to seriously think about just replacing that person. And that’s what I mean by upper out. And, and I think if you do replace that person, you will get somebody that’s way more enthusiastic, somebody that sees that role as just a stepping stone onto a much higher goal of jobs, somebody that’s going to do more than the minimal required effort, which is generally what people that have been in the same job for a long time to, and you’re going to be better off as a company. And you might even save some money if you’ve been giving raises to this person that’s sitting in the same job for a long time, because now you can have somebody with less experience doing the same job. Now, there’s two reasons that those people aren’t pushed out more, or why many, I think other people don’t focus on this aspect the way I do. And that is that that there is this prevailing, in my opinion, wrong notion that simply the longer you can keep an employee, the better it is for your company. And companies are willing to keep paying higher salaries, for the same jobs just in terms of yearly salary adjustments, and you know, next thing, you know, a job that really was worth 40,000, when they were hired that maybe would be worth 50, if you hired it today. And there’s somebody in it sitting making 75,000, just simply because they’ve been around long enough to get those raises. And those people are also they’re typically not let go, because their managers and maybe even the owners, but there’s a prevailing attitudes, like all well, they know how that works. Like there’s really nobody else in the company that knows how that works. They’ve been doing it for so long. There’s nobody else that understands that job. Well, that’s a failure of management, because the solution to that problem isn’t to keep giving raises to a person that doesn’t have a whole lot of motivation to move up. The solution is to create processes and procedures. Because if you have those, you will never have to say that about any person in your company. All of that is documented. Now I come from an audit background. So I’ve worked a lot with ISO, and other standards bodies, I was a certified auditor for many years. And it’s one of those things that companies typically do. Because they have to, they either have to because a contract somebody signed says and you have to get ISO certified at dammit, alright, I guess we’ll do it. Or they do it because, you know, for competitive reasons, they want to put that on their website, they want to be able to say, and we’re better because we’re certified. And that’s not just ISO, it’s different organizations, but but very few companies ever think of it this way that, you know, if I get certified, it means that’s a verification that all the processes are working efficiently in my company, and I’m going to be able to generate more profit at the end of the year. But that’s what it comes down to reality is that is the real goal you have to be thinking about when you start focusing on on standards and processes and procedures, and making your company more forward thinking this is what Edward Deming did in Japan Post World War Two. He was not taken seriously in the US. He went to Japan work with companies like Toyota and changed their little hokey you know, car manufacturing industries, to being the giant global glides that they are today. He was the guy that in a lot of ways is credited in Japan a lot more so than in the US as being you know, the father of the, the what it’s called the Deming Cycle which, you know, I’m sure a lot of people I’ve seen on PowerPoint presentations over the years. If you look at a circle cut up into different slices or with arrows around the circle. You know, it’s the I can’t even think top my head but basically do or plan do, check, improve. I think those are the fourth aspect of it. But in a nutshell. If you want to have people that are going to be top notch people working for your company, nobody should be be staying still, everybody should be moving up. And whether that’s in your company, or outside of your company, if you should not have people that are willing to just stick around in the same job for a long time. So I guess I can leave you with that.

1:00:17

Yeah, Jean, and I’m so glad that you went down this path, because these are conversations that are very much happening amongst our advisor audience is, how do you know when you know, it’s time to replace somebody, and there’s this guilt that can harbor and we could probably do a whole segment on this topic alone. But there’s this guilt, that advisor, not just advisors, business owners across the board, tend to harbor when they think about somebody who got them to this point. And the thing that we keep reiterating, is that what got you here often won’t get you there? Yep. And I think that ties into what you’re talking about here is you can have somebody that is, you know, they’re good at what they do, and they, you know, show up for work every day. But when you’re looking at creating an exponentially impactful company, and a culture of growth and movement, and learning and constantly excelling and focusing on excellence, it’s really hard to do that with people that are immobile. So I love that you brought that up. I’m glad that that’s the the parting thoughts that we’ll leave our audience with, because it absolutely ties into what we talked about a lot on this podcast and in our coaching, too.

1:01:23

Just don’t have them take the red stapler. Yeah.

1:01:28

Oh my gosh. Okay. For those of you listening, this is an office space reference. And I love it. I’m here for it.

1:01:35

Yeah, I’m glad you got that. I wasn’t sure if you’re gonna do but yeah. And what I’ve done a lot of people have described as being the Bob’s in the office space command to interview the employees figure out what who’s doing what actually. And and like when I watched that movie, and it’s a hilarious movie, of course. But the the fact that the main character, basically said the truth about what he was doing in his work, they in the Bob’s were like, Yeah, this is the guy we want to make sure. You know, when you listen to it, he’s moving forward. It’s actually not that unusual. It’s it’s similar to what I’ve done in the past as well, quite often the people that will say, Yeah, this company is just like, stuck in the rut, and they got me doing nothing. Well, he’s the only guy that’s saying the truth, everybody else is just telling you what you want to hear. So that person will definitely be seen as a positive, not a negative.

1:02:26

Hey, man, I love that. Well, Jean, I am so grateful that you took the time with us today. For our listeners, again, be sure that you reach out if you’d like to make a connection with Jean, see how you can help you see if we can help your your business owner clients. Also grab yourself a copy of a copy of beyond sales. I know it’s on Amazon, for sure. So I definitely recommend if nothing else, getting the book, going through it and looking at just a fresh different perspective on how you run and operate your business. So Jean, thank you so much for joining us today.

1:02:59

Thanks for having me.

1:03:00

That wraps up today’s episode of The Ultimate advisor podcast. Be sure to like and subscribe so that you’re the first to know when a new episode drops. We’ll catch you right back here next time. Hey there, Brittany Anderson here. If you are loving what you’re hearing on our ultimate advisor podcast, don’t keep us a secret. Share us with other advisors that you think would benefit from the messages that you are hearing. The easiest way to do that is to simply send them to ultimate advisor podcast.com. And if you want to learn a few other ways that we could potentially serve you as an advisor, go check out ultimate advisor mastermind.com. As always, we are so happy to have you here with us as part of the ultimate advisor community and we look forward to a continued relationship