403: Business Exit Planning with Joshua Winterswyk
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Podcast Disclosure
Advisory services offered through RPA Wealth Management, a registered investment advisor. Content provided for informational purposes only. It should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell securities. A professional financial advisor should be consulted before implementing any investment strategy.
Do you have an exit plan from your business? While it may feel like you’ll be working for the rest of your life, you will stop working eventually. Having an exit plan means taking the time to step out of your business in some way. Joshua Winterswyk, Certified Financial Planner with RPA Wealth Management, shares the strategies for exiting your business well. Josh walks through the various options you have as the business owner. He also discusses why you should build a strong team to guide you through the process.
Main topics:
What is exit planning
What are our options
Common misconceptions
Building a team
Main takeaway: When should you start planning to exit your business? Today!
About our guest:
Joshua had planned to study medicine—until a high school economics course changed his mind. That course ignited a passion for personal finance that propelled him to earn degrees in business and finance. After graduating from CSUSB, he launched his career in finance at Citibank—but soon realized it wasn’t quite what he wanted. Though he appreciated the wide-ranging experience the job provided, he wanted to help people more comprehensively than his work allowed. That’s when his mentor and RPA’s founder, Brent Pasqua, reached out to him. Today, Joshua helps clients achieve their goals by offering the comprehensive financial planning he had long envisioned. As an advisor, he helps meet the financial and investment needs of clients, including retirement planning, budgeting, and insurance analysis. He loves the process of putting a plan together that his clients can easily understand and deepened the impact he can have. Joshua attained his CERTIFIED FINANCIAL PLANNER™ designation. Joshua lives in Upland, CA with his wife, Brooke, their son Cruz, and their dogs, Memphis, and Mila. A lover of all thing’s sports, he is a Los Angeles Football Club season ticket holder and a member of the American Outlaws, the supporters club for the U.S. men’s national soccer team. When he’s not cheering on his favorite teams, he and his wife enjoy days in L.A. with Cruz, Memphis, and Mila and trying out new restaurants, breweries, and wineries. FUN FACTS Enjoys the global diversification of his pups, an American Boston terrier and French bulldog. Loves the variability of a dance floor, especially when 80’s are playing. Goes all in for soccer and is an American Outlaw and LAFC season ticketholder.
Links:
Previously on: https://www.petsitterconfessional.com/episodes/289
https://rpawealth.com/joshua-winterswyk/
The podcast: https://rpawealth.com/podcast/
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A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
business, exit, planning, employee, transition, questions, pet, gift, family member, sell, plan, conversation, people, work, josh, options, cpa, create, important, goal
SPEAKERS
Collin, Joshua W.
Collin 00:03
Welcome back to pet sitter confessional. Today, we're brought to you by time to pet and pet perennials. What's your exit plan in your business? I know it sounds like a long shot, and many of us feel like we're going to be working for the rest of our lives. However, you don't have to do that. And there are ways to exit your business and not just exit but exit. Well, because one day, you're gonna want to do something else or one day, you may need to do something else. But there is value in your business and there are ways to go about that in a smart and cohesive way. Today, we are super excited to have Josh winters like back on the show. As a Certified Financial Planner with RPA wealth management. He walks us through our options for exiting our business, how to create a team around us and the questions that we need to ask and then we tackle some common misconceptions about what it means to leave our business. Before we dive in, there is a little disclosure here advisory service are offered through RP Wealth Management, which is a registered investment advisor. This content is provided for informational purposes only it should not be construed as an offer to buy or sell, or a solicitation of an offer to buy or sell anything really, a professional financial advisor should be consulted before implementing any investment strategy. Now, let's get started.
Joshua W. 01:24
Yeah, thank you. And thanks for welcoming me back. Colin, I'm excited to be back. My name is Joshua winters like and I am a Certified Financial Planner. Like Colin said, with RPA Wealth Management here in California, we help with individuals and families basically achieve their financial goals through comprehensive financial planning, investment management and retirement planning. And I'm really excited to talk about an exit planning with you because I think it's a topic that we don't discuss enough. And it's a really, you know, can be a really big source of family's wealth, when you own a small business or any type of business. So excited to jump into that.
Collin 02:03
Yeah, and I guess to kick things off here, when when I say the word Exit Planning, I know things come to certain my mind. But for you when when you hear Exit Planning or talk about Exit Planning, what does that really mean, especially in the context of running and operating a business?
Joshua W. 02:18
Yeah, absolutely. So Exit Planning, when I hear that is basically a strategy to transition out of your business, whether that means selling it, it could mean passing it to a family member or a partner, or some other approach, right? Transitioning it to employees. So really, the strategy to exit the business, just like you kind of would have relating it to retirement planning, like you would retire from your company, right, you're exiting the company. This is just your own company.
Collin 02:50
And I think we tend to not focus on this, a lot of times, I know just running a business, because we're so focused on running the business, the day to day operations, the little things that come up the multi facets of growing and being concerned about revenue or hiring and adapting to markets. And suddenly, we look up and you know, we've been in the business for 1020, maybe 30 years and trying to figure out how to land that play might be a little difficult. But so is this is this something I guess when people talk about Exit Planning? Is this something that people should be concerned about? Only when ever they're getting ready to retire? Or look at that? Or is it something that could really be done and started a lot earlier?
Joshua W. 03:30
That's a great question. And I think that, that question, we can relate it to our last podcast, which is kind of planning for the future and retirement planning, which is, you should have started yesterday, I'm just being fully transparent. And why I say that is because it's really hard to not only guide your financial future financial freedom, but also guide your business without knowing what the ultimate goal is. Right? I think it all starts with setting setting a goal for the business, whether that's to maximize value, or it is to just build it in, you know, have a kind of a lifestyle business to where it's going to provide me with a very nice lifestyle, but eventually I do want to exit How am I going to do that. So without actually looking towards the future, setting those goals. It's really hard to you know, answer some of the day to day questions regarding your business. So I think that to answer your question of when you should start like end today because that's just going to give you a higher probability of success you know, for your future and for your business.
Collin 04:36
Never bad idea to start earlier than than later but it's it can be hard I know for me just going like I don't know like what 30 years looks down the line and and how do I start making plans for something that's so far down the road and I don't even know if I'm going to make it that long.
Joshua W. 04:52
Yeah, I think that that's a that's a good point. And you know, the goal could always change right? We will, I think going through life your back He's probably going to change or the measurement of that goal is going to change. But I think with, you know, having the discussion, discussion and just creating some awareness around, where I want to take my venture, I want to take my business because, again, going to help frame the day to day and then also help you achieve financial success going forward,
Collin 05:20
when we talk about Exit Planning, when I think of options for for exiting my business, so those are just things I can do to not work in it anymore.
Joshua W. 05:27
Yeah, and these options can vary. I mean, there's a few different options that you can take when exiting a business, like I had mentioned, you can transition the business and just sell it to a third party, a lot of people are familiar with this, you know, I created a small business, and eventually, one of my competitor buys me, right. And they can come in and offer you a valuation and $1 amount and you agree, and you sell that business to someone that's never been in part of your business. You know, what we've seen, whenever that happens is that's very difficult to do one because, you know, basically, your business is probably like your baby, you've been nurturing and growing this business for a very long time. So it is pretty difficult to say, and agree to $1 amount to sell it to a third party. And then you know, not necessarily know what's going to happen to that business after you leave. Another option, though, is to transition it to a key employee or a partner or a family member. And this takes very strategic planning as well. And this does take several years to making sure that the business transitions. And I think that also to mention, you know, when we look at all of these options to transitioning out of your business, again, going back to the previous question of when you should start, the earlier we start, the more options and more strategies, we have to make this transition more to not only tax efficient, but just again, successful. And then lastly, you know, we can liquidate the business completely just say hey, you know what, we're going to close up shop, and we're going to sell our assets, and we're no longer going to be in business, we shut the doors. We don't like that option, though, right, we want to get some sort of value, we want to generate some value to you know, for you, you've worked very hard at building your business. So but let's get something for it.
Collin 07:19
Well, I guess two, there could be some aspect of if you have a family, you know, you could be thinking of a legacy aspect to your business as well of having something to pass down to a family member or have something that can generate income and financial ease for your future generations from your, from your business as well. So there's, there's not just going okay, I'm, I think it's a lot of people in the Exit Planning. I know this is going, Oh, I just don't want to work on my business anymore. So I'm done. But going okay, but what can I I guess it's a lot of asking, like, what, what can it do for me, even if I'm not there anymore? What can they do for other people? If I'm not there anymore?
Joshua W. 07:57
Right and not, you know, probably maybe have some employees or like you said family members that this could benefit in or they're, they're interested in taking over this business, again, you know, this is what's great about opening up your own business is it does have value. So let's get the most out of that value, not only while you're working in IT and growing the business, but as you exit as well. And I think that planning or starting this Exit Planning conversation earlier, will allow you also to kind of find the right option or right strategy to exit. Because again, we're not having the conversation two years before you want to exit, we're having it 1015 years before you want to exit. And we can find out if that child or you know, that nephew really does want this business or is interested in taking it over. And we can really strategically plan this to making it a very successful transition.
Collin 08:49
Because there's the financial aspect, which is what you know, I focus on a lot just me personally going okay, we can get money from it, or how much it's going to cost or buying it. But then there's the Okay, you have to actually set it up for that to make that transition, a success. And I did want to ask a little bit about the tax aspects of this, because you mentioned that what kind of things do we need to have in mind as we look to exit plan? Or what kind of tax aspects are attached each one of these different options?
Joshua W. 09:18
That's a great question. So when we think of a business, we can think of it like as an investment, right? We talked about mutual funds and taxes in our last podcast as well. And when we buy an investment or we start an investment, there's an original cost or what we call cost basis or tax basis. And then there's also the dollar amount that what we sell the business at so let's just say that we started the business and it only cost us $50,000 And now the business is worth $5 million. Well, there's a taxable gain embedded into that business that we have to be mindful of. So you know, there are strategic and probably a different podcast to go deeper into like the strategic options, you have to not only reduce tax liability through a sell. But I think what we want to probably just touch on in this podcast is there are tax implications that we have to be mindful of. So again, going back to when should we start planning? The earlier we do, the less we can reduce that tax liability?
Collin 10:23
Yeah. Because that I may get focused on that, well, I could sell my business for a half million dollars, or I could sell my business for $200,000. But realizing that that doesn't come without some little strings attached to it that I have to make sure i i have accounted for on my part.
Joshua W. 10:38
Yeah, absolutely. And I think that what we, you know, a lot of probably listeners can relate to is like owning rental property, right? You know, I bought a rental property or rental home or an Airbnb home, and I bought it for 200,000. And I sell it for 400,000, I made $200,000. Well, no, you did it. Right, there's going to be Uncle Sam knocking at the door saying, Hey, we, you earn some money here, I need to tax some of it. And that's the same with the business. So that's just kind of my example, you know, that we do have to be mindful, because the valuation is just the start of what you're going to receive for the business as you exit or you sell it. And then we have to account for taxes and, you know, other implications that has by transitioning So,
Collin 11:23
right? Well, so of those as far as of selling and transitioning to somebody or liquidating, we'll just with those, how it gets, these are all gold dependent for us, as far as how we're going to reach them, what are some considerations of when it might be a good or bad option to move forward with one of those, as we're looking at this right now?
Joshua W. 11:44
You know, I think that understanding the value it has, and then also projecting that value into the future will be a good place to start. So, you know, I think a lot of industries have some general rules of thumb of how to evaluate your company. And when I say that, or what I mean by that is, you know, it's two times revenue. So meaning, you know, I had $100,000, in revenue, it's two times revenues, and my company is worth $200,000. And then we're going to add a growth rate to that and project that into the future. And this is stuff that we do with our clients. But also, I think this will give you a good idea of what to kind of expect to help you frame what options are best for you. But then I also think there's other variables that go into this decision, which is, like, do you even have a key employee that you can transition to or a family member, right, and if you don't, that option is not even for you, we're gonna have to find a third party to buy this business from us eventually. But it also could mean that if that's something more like meaningful to you that I'd rather transfer it to someone that I've trained and developed a relationship to, then we're starting to look for like that key employee, right to promote and to actually eventually take over the business. So it's more of a kind of a recruitment process than it is finding a third party
Collin 13:10
buyer. And that's a, that's a different way of looking at hiring now of going it, which is another reason why it's important to start this as early as possible so that you can nurture that because if you think okay, I would love to transfer this to somebody who I've trained, who has my oversight, who will continue my values and my goals for the business forward. Well, that may be a 15 year project, nurturing that person, developing them, training them, getting them equipped, working with them to develop SOPs, so that the business will persist without you. And going okay, that's a lot. That's that's just a lot of investment in a personnel at that point, to see the business continue.
Joshua W. 13:47
Yeah, and I think that this is something that I think a lot of business owners struggle with is, you know, we're not thinking about the exit, we're only thinking about today, which makes it harder to say, I'm going to transition more of my daily duties and responsibilities to a key employee. And we just see so many people that don't do that or delay that process. And then we're scrambling as we get closer to retirement are exiting the business. And we still don't really have that trusted key person to not only take over the business, but potentially transition into and by doing so, you know, it's kind of funny how it works. The more as an owner, that you are relieved of those duties and responsibilities, the more attractive the valuation is to the business as well. So when we're looking at it from a buyer's point of view, you know, if it's calling it's your business, and I don't necessarily need you to run it that makes it more valuable to me because we're not at risk to losing revenue or clientele by you not being in the business anymore. If I were to buy it from me.
Collin 14:52
Right well, and from a potential buyer, they may go, Oh, great. I don't have to come in and immediately learn all the ropes or do all these things because it's already running in this way that doesn't need that kind of oversight or that management so they can get an even larger kickback on their investment just from that aspect as well.
Joshua W. 15:11
Yep, absolutely. So you know, even if it is your grooming and key employee, and you know, grooming a key employee and grooming your staff and to making this business run without you is going to really increase the value in so many different ways.
Collin 15:29
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Collin 15:54
If you're looking for new pet sitting software, give time to pet a try listeners of our show can save 50% off your first three months by visiting time to pet.com/confessional. Earlier you had mentioned about how sometimes selling your business to a third party can be difficult because it is our baby and we have a hard time agreeing to $1 amount and then we don't have control over it. I know that the flip side of that is sometimes we may think that our business has no value, right? We don't realize the value that exists in the business. So why even bother moving forward in the business? So other than the, you know, the gross revenue and looking at how much the business makes? How, how can we start to realize more of the value that our business has?
Joshua W. 16:39
Once a good question. So you know, first one, we're tying business planning all together, is planning is going to take a team, not just a financial planner, a team to actually be created to creating a plan that's going to be successful to actually exit the business. And what I mean by that is it's going to take a CPA, most likely it's going to take an attorney, it's also probably going to take a business broker, and where normally we guide our clients to start is your accountant or CPA, because they should have a very good idea of what your profit and loss statement is your balance sheet your books, and they'll be able to give you an idea of really what the business is worth just from not only experience, but accounting formulas, that's always going to be like my first place to start, as you know, Hey, have you had the conversation with your CPA about, you know, how much is my business even worth? Or, you know, how do my metrics look? And hopefully, they're just very honest with you. And I think this can then start that conversation of like, what do I need to change? Or what I need to do? Or who else I need to implement on my team?
Collin 17:46
Well, because that's it, once you get the numbers down, you can go okay, well, if my goal is to sell this in X number of years, or if I need to sell this in X number of years based off of health or age or other plans that you have going on your life, you know, okay, now I have met metrics to measure against to see if I can get to that point where I can do something with this without me.
Joshua W. 18:06
Yep, exactly. And I think that it's really important to not only keep very, very accurate books, but having those conversations about your financials consistently and analyzing them to be able to predict Jack like you're you're saying, because that's really going to be one of the starts to this whole process. And if you don't have the answers to those financial questions, really hard to do any Exit Planning.
Collin 18:31
Right? How much is worth? I don't know.
Joshua W. 18:33
Yeah. Yeah. You know, just give me give me any offer I'll take.
Collin 18:38
Well, so you mentioned the CPA, attorney, business broker, should we be looking for people who have direct experience with Exit Planning? Or can they just have a general idea of, of businesses in general?
Joshua W. 18:53
Yeah, I think that, you know, any, any CFP or certified financial planners is probably a good place to start. And why I say that, not just because I am one, but they're going to have a good understanding of what your personal situation is. And we're going to build a retirement projection to see okay, well, where are you headed, and where you're going, we're going to have this conversation. So, you know, if we have a really good picture of your personal finances, then we're able to kind of better assist on building that team for you. So this is probably a good place to start with a CFP. And then I think the second question to the CFP is like, Do you have any experience with Exit Planning, because it might not be a CFP that actually works and you know, under that kind of umbrella. So, you know, I think that the starting with you personally, making sure your personal finances are in line, and making sure that your planner is also experienced in Exit Planning is kind of that second step.
Collin 19:51
And I know for me, when I start seeing all these these names, and these letters pop up, I start saying, oh, that's going to cost me some money and that's going to cost me some money and they're here. It goes. But I think what's important to remember here, if going this is this, this is this is a really important financial decision that's going to be 2030 years, possibly in the making, and to have good guidance is going to help make sure that you get the most out of it at the end.
Joshua W. 20:17
Yeah, absolutely. I think that when you, you know, it is going to add some cost, right, some expenses, to implement not only your team, but to get some of these questions answered. But I think that you're gonna have so much more peace of mind and so much more clarity, the earlier you start, it's kind of like, you know, we were just before the podcast talking about like, maintaining your house, right? Yeah, it's gonna cost you some more money. But is it going to make the house more efficient? Or is it going to, you know, provide you even more happiness, or make the house look better or increase the value. And it's the same with your business. And I think a lot of people can relate to, you know, purchasing a home and maintenance, seeing it and keeping it protected and updated. You know, and that's gonna be the same with your business, which, you know, ultimately could be your primary source of income. So you can make the argument that it's even more important than even, you know, your own is your well oiled machine business.
Collin 21:09
And that's a good analogy. And I really appreciate you bringing that up, Josh, because many times when he talks about value, again, just from our mindset, we tend to think of value that objects have, right, okay, I know when I buy a car, the minute I drive it off the lot, it's worth nothing anymore, but I need to make sure that I keep up, keep up with the maintenance and things like that, so that I, it works for me, but also, I know that's gonna maintain his value. Same thing with the home, like we were talking about earlier. And realizing that my business is the exact same thing, even though it might not feel like it because we'd even if we don't feel like business owners, or that we're even doing that big of a thing, because it's, you're just us, or maybe you us another employee, there is inherent value in that because of the revenue that's generated, it's paying our bills, right, that's not an insignificant amount of money, or value, and we need to make sure that we we do well,
Joshua W. 21:58
with that. Yeah, it's extremely important. And what I think it also indirectly will happen is like, you know, you're gonna build this team, and this team is going to uncover value. And I think through this process, even through Exit Planning, even if it's 30 years away, is going to not only answer so many questions and provide clarity, it's going to allow you to like, focus on what you do well, what you might not be, you know, do all of the financials, you might not be an exit planning expert, or a CPA, and you're spending a lot of time kind of wondering about these questions that are looming. So building, this team will, you know, directly and indirectly just create more time and allow you to focus on what's making you a great business, which is you're doing what you love so
Collin 22:47
well, and having that team there is going to is going to help you answer some questions that could end up costing you a lot of money. In the end, I'm thinking of things like, you know, if you have contracts or licenses or permitting things that you need to if you're transferring that to somebody, or if you're selling this or if you are trying to liquidate, seeing, Oh, am I going to be breaking any of these by going through this process that could have a financial repercussion from that, because that exists. Now the value that I thought I had my business, well, most of that money is going to go in paying off these contracts and these licenses because I broke them.
Joshua W. 23:21
Right? Yeah. And it's kind of like the idea of growing wealth and making sure you're protecting it right. Like that's, you don't want to lose out on the value due to an unfortunate event or something we didn't like a threat we didn't solve for, because a lot of the threats that, you know, are out there, as you know, there's probably some sort of solution to them in the short term, and in the long term. So planning this out ahead of time is going to, you know, close those gaps and really, you know, flame out those threats that are looming? Well, yeah,
Collin 23:52
again, I'm just thinking about the really the parallels between what we talked about last time and this time of when we were talking about investing in mutual funds, and all these things going okay, well, what other threats are out there? And can I cover those with insurance? Or can I cover those with other different types of investments, and just making sure that the holistically the picture for me, and whatever my goal is, is safe?
Joshua W. 24:12
Yep. Absolutely. And just to piggyback on one more thought on that is, like, if you're, if you're having this, you know, idea that we need to kind of think about our future and Exit Planning through this process, also, which should come out is like, What immediate threats are out there? Like, do I have a Buy Sell agreement? Do I have a contingency plan? Is there already a succession plan that's in place? So, you know, I think that again, starting earlier is going to uncover these things that, you know, potentially we need, and we have an implement, maybe just because we didn't know or we, you know, haven't went down this road before. And it's going to ultimately protect your business, you and your family.
24:51
Yeah, and realizing that you know, going okay, maybe I don't have a whole lot of money to set aside for investing for retirement, but I guess it Would it be appropriate Josh to view our businesses as a retirement aspect to us to help us into retirement?
Joshua W. 25:07
Of course, yeah. And a lot of times it's your your biggest retirement asset. So you know, making sure that this is protected and growing the way you want it into having a plan. Yes, to answer your question, it is a huge asset to you and your family and even to create generational wealth, so very, very important to manage it appropriately.
Collin 25:31
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Joshua W. 26:45
I think setting, going back to what we talked about earlier is getting evaluation done first, like whether that's through your CPA, or do some Google research of like industry multiples that are applicable to you. You know, and having the conversations I would imagine, you know, a lot of listeners already have someone preparing their taxes, if you don't find a good tax person, because that's going to be a very good lifeline and a financial planner that can really start to frame and ask the right questions to help you, you know, create the goals. Even if you haven't yet. I mean, our job, part of our job as financial planners is to help you uncover the goal, even if you don't know, you know where that goal is right now, or at least set something, you know, in the sand. Or write it in the sand for now. So I think that, you know, that's gonna be where I would start making sure you have good books, making sure we have an under an idea of evaluation. And then, you know, creating the first kind of legs of your team, to helping you frame what direction you'd like to go for in the future.
Collin 27:53
Is there anything different that we should be thinking about if we want to pass this on to a family member or key employee?
Joshua W. 28:01
Yeah, you know, I think that again, same start for me, as we just talked about, as far as you know, valuation and getting everything in line, but I think then it's having more of a conversation with any partners you have, or those key employees or those family members to see if there's any, any, any interest. Because it's, you know, something that you have to love, or want to do, right? You can't force anyone to take over a business, in my opinion, that doesn't probably equate to a successful outcome. But then also like other discussions, you know, we've seen it through other families and clients that how does it going to make the other children feel or the other family members feel that they only you know, one son is involved in the business? And then another one's not? So, you know, if we are transitioning the business to one sibling and not the other, like, do we compensate the other sibling in some other way to to make this fair? And do we have enough resources to do that? So you can see how this conversation can open up? So many more questions. And the earlier we have them, the better we can plan that out?
Collin 29:12
Yeah, yeah. Cuz it turns out when you start involving people, things get complicated. And it's, it's not. It's not just as easy as just decreeing and declaring something, there's that prep work that we have to do.
Joshua W. 29:25
Yep, absolutely. And I think that the sooner we have the conversations, the better the outcome is going to be. Because you could, you know, we've seen it to where we always thought that, you know, my daughter is going to take over the business and we get to that crossroads, and she doesn't want to write and the conversation was really never had. So that can lead to, you know, a not successful outcome which we don't want. Right? Well, so
Collin 29:51
what are what are our options out there? I know we've talked about how the plans can change and how you know, starting earlier the more options we have down the line. What How how do we make sure that we adapt well to changes of okay, I'm gonna give it to my, my, my son, but they don't want to give my daughter, okay, they don't want it. Okay, I'm gonna try and sell it like, how do we make sure that we personally navigate that process of change? Well,
Joshua W. 30:16
yeah, I think that, you know, some of the variables are consistent, whether you are going to, you know, transition it to a family member or a partner, or you're selling a third party, which is, like, we got to set your personal goal and like your departure day, and like, that's not necessarily going to change, right, we're also going to make sure that, like, your financial needs are being met through this transition, whether it's third party or transitioning to, you know, family members, and then even if like the successor is a third party, the employees or a sibling, we're still going to need like that valuation, like we talked about, and we're gonna need a very good projection of like cash flow going forward. So these are all things and this is going to look a lot under the hood, more of like the critical elements of a successful exit plan. And that's regardless of if it's, you know, transitioning to a sibling or child or sibling, partner, third party or even, you know, we can get a little bit more complicated and even a transition to like the employees when the company actually buys the shares of the business. So I think, though, that like, those critical elements will really be the same. And if you have them in line, and things do change, it's going to be a lot easier to maneuver around that change. Well, we just don't like to see is that we're just not going to plan and the you know, you do have a change, and it's going to make the situation even worse, if it didn't go the right way.
31:43
And then always going back to those those original goals going, do just think it's not realizing it's not a bad thing to go, what how much money do I need to make from this or get from this at the end, when as I'm leaving to help meet my personal goals and whether that's, you know, something that's reoccurring, if it's a one time thing, if this is whatever that looks like just going okay, as that changes, maybe my how I handle this exit plan will change or maybe I don't need to redouble on to that. And always checking in with with those, there's that really important connection between our personal finances and in the businesses that we run, and that they do influence one another and how we manage them?
Joshua W. 32:23
Yep, absolutely. And we haven't even seen it to where it's, you know, I want to take a step back in the business, I want to not work as much and without not knowing like what that valuation is and how much you need personally, like you just mentioned, like we can't really accurately make that decision. But we have seen that to where the business is actually maybe worth a little bit more than you originally thought or the cashflow is better than you originally thought as we make some adjustments. And you can go on vacation more you can take a bigger step back from the business or, you know, it could really change your lifestyle. If you've, you know, haven't had these discussions before.
33:01
Well, I guess that that's a that's an aspect of Exit Planning that I think is kind of a little tangential to the tangential, I can say that word tangential to this of going? Well, one aspect of Exit Planning is as you brought up a couple of times, Josh going okay, maybe I just don't work as much like that, in and of itself is a kind of a partial exit plan and realizing it doesn't have to be one day, one day I'm in there and then the next day, I'm completely gone.
Joshua W. 33:25
Right and not everyone has that goal of growing or maximizing value. It can just be creating like a better lifestyle, what we call like a lifestyle, business or lifestyle practice of you know, I just want it to continue to maintain and maintain my current lifestyle. I'm not very interested in selling it to a third party or transitioning, I just want to make sure it's a well run business that's going to provide me with the income I need forever or whatever
Collin 33:49
Josh, do you help people kind of navigate maybe some of the personal feelings they have about that of of going well, I'd like a lifestyle business but maybe I feel maybe I feel guilty for for benefiting from a business that I don't operate in on a day to day basis.
Joshua W. 34:04
Yeah, I think that's a very good point that you're making kind of the question that you have, but yes, because you are still indirectly helping people, right? Most of the businesses that we run in especially even like pet saving, you're providing a service that is you know, helping someone else and you know, we can help get you to that point of you know, finding that balance because that you bring up again that's a really good point that you could feel a little bit uncomfortable but I think that having the clarity financially setting the right goals and having these discussions were able to get you to feeling comfortable
34:40
and at the end day realizing that it's again it's it's okay to recognize this business would not have existed without what I've done what I've invested into this one who I've helped nurtured who I've helped grow and market and put in the all the SOPs and the policies like there is inherent value there that is residual II Even though you are not conducting the day to day work, a lot of that stuff is what is the structure that a lot of other stuff has been built up at that point?
Joshua W. 35:08
Yeah, it's your foundation that you built, and you still have oversight on. And I mean, the alternative is someone who's not running as a bit of a business or not providing the level of service that your standard could be serving that client that you really love, right. And we don't want that, you know, we want to make sure that the people that we work with and care about are taking care of a great way. And you know, you taking a step back from the business, we can get it to a point where that still happens, without giving that business to someone else that's not going to manage it the same way you would.
35:43
Right. And recognizing that that's, that, that that should be important to us. Right. Absolutely. Right. Like that's, that's part of that. What I guess the other question I had, Josh, is, what are some, what are some common misconceptions about Exit Planning, that that you that you encounter that you think more people need to be educated on?
Joshua W. 36:03
Um, I think that it's just a bigger topic than a lot of people think I think that it isn't discussed enough business owners and what we see in our field, all the business owners that we work with, it isn't even a discussion until we're getting closer to retirement. And it shouldn't be that way. It should really be as we're starting a business, we should have an idea of where we want to take it. And you know, what's the ultimate goal, right of this venture that we're going into. So I think that, if I'm going to say anything, or something to take from this podcast is, you know, really start to having this conversation and generating some sort of goal and implementing your team. Because, you know, you're basically losing out on value and efficiency by waiting. And it just needs to be discussed. And, you know, in America, where you're at, like we talked about, or to so many successful, small businesses, and we don't want to see that value, just diminish or vanish, you've worked very hard for, you know, your clients and to create a successful business, we want to make sure you get what it's worth at some point as you exit, so I think that, you know, really getting started is going to set the right, you know, valuation then set the right expectation. And then it's also going to allow you to, again, create a successful outcome, not only personally but for your business,
37:35
and realizing that no matter what stage of my business, there is value to be had, I know many of our listeners are solopreneurs, they run the business themselves, they do everything themselves, and they may be questioning going, does this my business, if it relies on me have have value? And I think the answer would be be yes. Because of everything that's involved in that process. And, and the the money that it generates to, again, to go back to pay those bills and recognizing that you don't have to be at a certain, you know, 100 employees before you your business magically has value, right? There's there's value at each step along the way. That's a
Joshua W. 38:08
great point. I mean, you know, there's other businesses like yours. And so there is value to be had by you serving your clientele, even if you are just a sole proprietor, I mean, it doesn't matter how, you know, small if it's just you, or you have 100 employees, like you imagine, you said, there's going to be some value that you generate, and let's find that out. Right, I think this is the calling card here. Like, let's figure that out, because we don't want that to be just forfeited. Right.
38:41
And that first step, as you've said, a couple of times, now, Josh, is to go, go talk to your numbers, person, your CPA, and just start making sure that all those are in a row. And if you have those questions, if you want to know, I guess, you know, that's an okay question to ask, Hey, how much is my business worth this year? Not how much did I make? But if I were to sell or do something with it, what's what's the value of that? And just start getting an idea from that person on your team to you can start realizing what actually is going on?
Joshua W. 39:08
Yep, absolutely. I think that's a great place to start. I always recommend, again, you know, starting with your planner, to kind of build that team with you, someone that's kind of the quarterback. But a great first step is making sure like you said, getting those financials in order and asking the question, how much is this worth today? That's gonna really, you know, answer a lot of your questions.
Collin 39:29
Josh, I really want to appreciate you for coming on the show for us today and walking us through this aspects of business Exit Planning and some questions that we need to ask and, and really encouraging us to get started today. But I know again, that this is a really big topic, and there's a lot more involved. So if people do have questions or want to get pointed in the right direction, or we could point to some more resources, how best can they get in contact with
Joshua W. 39:52
you? Yeah, absolutely. So visiting our website is going to be the best place which is www dot Rpa wealth.com on that not only has all of our information on what we do and how to contact us, but also allow you to schedule a complimentary consultation with us. Um, it also has links to our podcasts, which has great information just on financial planning. I think we even have a couple episodes on business Isaac planning in our podcast library on our website as well. So yeah, any questions that you have, or you'd like to schedule an initial consultation, don't hesitate to visit us on our website.
Collin 40:25
Perfect. And I will have those in the show notes. So the websites, people can click right to that and get connected with you, Josh, a lot to consider here and a lot to plan for. But starting early is always the best option. So thank you so much for coming on the show today and sharing all that with us.
Joshua W. 40:40
Thank you for having me back on.
Collin 40:42
My biggest takeaway from my conversation with Josh was the fact that the exit planning starts. Now with us with getting in the mindset that we have to understand that at some point, we will no longer be working in our business, whether by choice or force, we will not be doing this forever. And that that is okay. And that we have agency in deciding how that process goes. And the sooner that we start, the better and the easier the planning will actually be. Whether you know exactly how you want to exit your business, or maybe not having those conversations right now will set you up for success building that team. Now we'll make sure that you are that much further along the process when that time comes. And if you have friends, if you have family members who are involved in your business, this process is going to help make the transition for them all easier. If you are no longer around. It's not just about us passing away. It may be about us passing on or into a new passion. Maybe we fall out of love with the business and with the industry and we need to do something else. Well, we need to look at our business and decide what happens to this. That's all an exit plan is looking at our business and going what happens to this now. We'd love to know your thoughts on this and steps that you've taken or haven't taken it how you plan on moving forward. You can send that to feedback at petsitter confessional.com. Or we're anywhere on social media. We want to thank our sponsors today time to pet and pet perennials for making today's show possible. And we really want to thank you so so much for listening. We hope you have a wonderful rest of your weekend. We'll be back again soon.
