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How to Maximize your Business Value

Show Description:

In this show you will learn about:

– Strategies to extract value from your business while you are building and running it

– What tax strategies can you focus on to ensure that you are getting the most value out of owning your own business?

– How can an accountable reimbursement plan help you and your sales teams?

-What kind of company retirement plans exist to help owners extract value via retirement savings?

– Strategies to position your business for selling it

-What is EBOC and why does it matter?

-What role does net operating income, or profitability, play in getting the best valuation?

-What are acquirers looking for? How does this vary across industries?

-How to navigate the next phase after business ownership

View Transcript of This Weeks Show Here

Speaker 1 (00:00):

This is financial detox, helping you retire with confidence. Featuring Jason labrum, certified financial planner and founder of Ida wealth intelligence driven advisors. For over 20 years, Jason has shown people how to steer clear of toxic advice, achieve financial peace of mind and manage their wealth for maximum impact. Join Jason and cohost Alex Klingensmith. As they simplify the complex share industry secrets and provide proven strategies designed to take you from financial insecurity to financial independence. This is financial detox.

Speaker 2 (00:38):

Hello. Welcome to financial detox. I’m Jason labrum, your host in studio with Alex. Klingensmith. What’s up Alex? How are we doing, man? I’m doing good. I am great. Yeah. Um, we are out this morning and my buddy is for you. It was good. Every morning. I do that. I feel better about it, even if I didn’t want to do it and wake up at six, I have an alarm that goes off every morning. It says discipline equals success. That’s what comes up on my trunk. That’s what you meant the other day. When you said I was disciplined, I thought you, maybe you got in trouble, but from a discipline disciplinary action. That’s what I thought. No, I was not disciplined. Now. I was disciplined in that I got up and those days are always better. They’re wickedly more productive. You start off with a victory, you get up, you don’t pay attention to your phone or any other stuff, and you just do what you want to get accomplished that day.

Speaker 2 (01:25):

So it’s a beautiful thing. I’m my goal is to keep getting better at that. Yeah. They’re actually get good at four days a week would be a good trend for me. That would be awesome. And maybe you only set it up, so it’s four days and it’s realistic and it’s achievable, right? Yeah. Um, all that good stuff. Cool. Well, we’re going to spend some time today on our show, financial detox, where we invite you to check us We are going straight podcast here. So there’s this no radio show. So it’s going to be straight podcast, no breaks, no commercials or any of that kind of stuff. So it’s kind of fun. We just get a wrap out about one of the topics that is on our mind regularly, and that we talk about a lot and that is really business owners and maximizing value in your business.

Speaker 2 (02:09):

Or I like to also think of it, Alex, as extracting value out of your business. It’s coincidentally too, that we’re doing this show today because on the way to work today, I was listening to Jocko’s podcast and Jocko is awesome. Navy seal, retired sill, who now is a business coach. And he talks a lot to business owners about the things they’re doing. And man, he provides so much value and so much just straight common sense that all centers around leadership, right? And our typical human being inadequacies and the things that we do that constantly detract from us being the best we can be or detract from us being successful. And there’s four or five basic traits that he talks about all the time and seems to be repeated over and again, but it’s just, you can never get enough of it because to implement it in real life is tough.

Speaker 2 (03:03):

So this ties into it, right? Talking about business owners and how to be a leader in a business. And also not just owners, but like even if you’re employed at a business, how to be a leader, no matter where you are in the chain of command and knowing how to bring great ideas to the management team or the owners of the business to help make change. And now you’re being a leader, or even if you’re doing a job that’s temporary below your capabilities to be the very best at that and perform it. So that then future opportunities open up for you because you’re the best at what you’re doing at that time. Even though it may be below your pay grade, I love the content deceptive, decentralized leadership, which is where he coined that. I don’t know if he coined that term, but yeah, he uses it a lot.

Speaker 2 (03:41):

Yeah. We talk about it a lot now because of after reading his book meeting with, uh, David Burke, who one of his, one of his top guys and just learning about what that means in the workplace. And it has to do with building value in your business actually, because you really want decentralized leadership throughout the ranks, right? If everything rolls up to one person to make the decision, the decision-making process is going to be really slowed down. You’re not going to go very far, very fast, right? Because you just can’t one person can’t do that. So you’re totally right. I think that that’s something when we talk about maximizing business value, just to start with, as we tie it into that, and by the way, the Jocko podcast, check it out. It’s really good. If you’re a business owner or just any human being, wanting to learn better life leadership skills, the, um, but, but really setting up, uh, a business that you empower people and the way he talks about it, you know, and you empower people to know and understand the mission.

Speaker 2 (04:34):

Number one, they have to know and understand the mission and have perfectly clear, simple instructions. And then you got to let them go do it. And if they make a mistake, that’s okay, come back. Let’s reassess, figure out, learn from it and go do it again. Right. You micromanage at the beginning through education and understanding the mission. And then you let it go. Totally. And you don’t have to micromanage ever again. Right? Fortunately we’re not in the field. Like we almost certain death in many, you know, our obstacles. We’re not, we’re not out there to consequences are certainly less yes. For us fortunately than it was for them. Yep. Yeah. So that’s cool. But I think that’s a big one. I think, um, you know, we’re talking today in our show here at financial detox, it’s about all things financial, right? The whole concept of our consumer education brand financial detox is to help people avoid toxic advice, help people maximize their wealth and manage their wealth for maximum impact where for most business owners, the biggest piece of their wealth is their business.

Speaker 2 (05:32):

And so we often forget and we get into the day-to-day grind. We forget that this is my biggest asset. This is my most important thing. Am I maximizing it? Or am I extracting the most value out of it? Am I doing the best I can. And unique opportunity to this country is full of business owners on those mostly small business owners. And that’s one of the things that makes this country really strong and different from all the other countries of the world is, yeah, I know there’s 20 people listening to this show that it maybe appeal to them because they work for a big company and that’s fine. But if you ever want to own a business or you did own a business in many people, I bet half the people listening are business owners, maybe higher if our SEO is any good. Yeah. But, but um, most of our clients, when I say most, I think over 50% qualifies as most, at least more than half our clients are business owners or they are, or they’re, or it falls into two other categories, right?

Speaker 2 (06:21):

Your executives, you know, you’re at a big corporation. So you understand the business ownership mentality because you’re executing a business plan for a bigger organization. And the other one is, you know, professionals who are oftentimes very small business owners, attorneys, doctors, they’re small business owners are probably the very worst at managing their business there because they’re really smart at what they do. They’re good at their practice and their art, but they’re oftentimes some of the worst at actually managing the business aspect of it. All right. So you put a couple of notes down here. It’s probably worth talking about, um, probably you’re taking a risk as a business owner. You’re taking risk because you know, you’re putting your own money and your own credit and your house and personal collateral on the line, not to freak you out, Jason, but this is what you’re doing.

Speaker 2 (07:06):

But so you should be rewarded in many ways for that. You should be rewarded with income potential obviously, but you should also be rewarded with the tax system is designed as long as you use it and you understand it and you evolve as it evolves. And you have true professionals around you like CPAs and attorneys, hopefully helping you. If you’re not good at yourself, 401k retirement plan advisors, such as Bo Wheeler at IIDA ex Darren Evans and Jeff papilla on Jason labor, for example, is named yourself in there. I think that’s where you’re. Um, but you’re supposed to take, you’re supposed to use these methods of running a business to mitigate your taxes and T it that’s what the tax code is written for. Right? Well, and it’s written that way because they know that business owners who are incentivized to grow their business and spend money on their business and business expenses that tends to not tends to it.

Speaker 2 (07:55):

In fact does trickle down and it permeates throughout the entire economy fuels and fuels the economy. And so by stifling that expenditures through, you know, no tax benefits, then it makes it really tough. So it is designed that way. Let’s hope it stays that way. And that we continue to incentivize the engine of America, which is small business, that something like 90% of individuals in this country who are employed or employed by a small business. Yeah. I should get the fax number. I’m thinking it’s 90. I’m pulling that off of memory. So forgive me if this stats wrong. I don’t, I don’t mean it to be an official spot. It’s a huge percentage. That’d be a better way to say it. What percentage of Americans are employed by small businesses and by small business? I think they quantify a small business as a business doing less than $5 million a year on revenue.

Speaker 2 (08:47):

So it’s good to know as a business owner, if you break down your P and L, right, and if you’re a business owner also don’t have a P and L or you don’t know what that is, or you haven’t done it in a year or two, or it’s a really cute, like we do a quarterly thing where we look back and we look forward and we assess and reassess and see how far off our projections were. We also want to learn and bring in our CPA to tell us what, what could we be doing differently to get more tax benefit? Like what row should it be in? So it has more tax reduction than another one because they changed the rules on you. Sure. And you, and you can’t do certain things you could do last year. You can do them this year and next year is going to be different again.

Speaker 2 (09:17):

But if you just leave it alone, just like a financial plan, it’s probably not going to work. You have to come back to it. It’s not going to work, actually, it’s not. And I think that our business has evolved exponentially from the point at which we really started to dive into our financials. And we ha we hired an accounting firm because we weren’t capable of doing it to the level we wanted to, or we’re probably capable. We either didn’t have the time or the inclination or the ability, or maybe a combination of both, well, like a client who has a bunch of money and manage it themselves. At some point you realize like I’m probably not doing the best job that I shouldn’t be doing. And this is up matters, even though you’re smart enough. And even though you’re capable, you, maybe aren’t doing the best job because your hands aren’t on it all day, every day.

Speaker 2 (09:54):

Like for our clients, we look at every client’s account every single day. You, you just, you’re not going to do that as an individual, managing your money. We have insights into markets and investment strategies and things that are changing. That a person who doesn’t do it all day everyday is not going to have. So clearly we can add value, just like our accounting firm. They do accounting all day. They do books. They do profit-loss. They know which category this has to be. And they handle that. And then they report to us every quarter kind of like we report to our clients. But that’s one of the suggestions I would make, like as a business owner, if you’re doing a business, that’s run at a more, let’s say a million dollars a year or more in revenue, and you don’t have a really good handle. And you don’t have a quarterly review at least of your P and L your financials.

Speaker 2 (10:39):

What, what are the categories? Where are your expenses? How much of your, how much of your total revenue is going towards personnel? How much is going towards technology? How much is going towards marketing? Is that in line with your industry average, you know, are you really high or low? If so, why? Because it will help you absolutely make better investment decisions and better decisions with your biggest assets that your business. And I’ll give you an example of a client that I have, that when I first met them to help them build their financial plan, it was really hard because they had a bunch of financials, but it was, they didn’t understand them. They wouldn’t bring the, um, CPA or accountant into the conversation. I don’t know why it doesn’t matter, I guess, but so eventually I finally figured something out that is really interesting, and this is, they were doing it the right way, but they couldn’t answer the simple question.

Speaker 2 (11:24):

Like, what is your personalized style costs versus like, what are the business costs? And this is one of the benefits you have as a business is you can extract value legally following the tax rules from a business, but they look like personal expenses. Sometimes healthcare is a really big kind of area where people tend to, sometimes they might’ve been taking some liberties and notice I’m not using ourselves as an example, and this person will go unnamed, but there were some liberties here at being taken in terms of what healthcare could and should be run through a, there were large ticket items. And I’m like, so let me pretend like this business, all of a sudden you sold it, are you going to continue to spend money on these things? And they were like, well, no way. I’m like, why not? Because it’s going to the business and the business has gone.

Speaker 2 (12:04):

I’m like, I got it. Okay. You know, but that’s part of the puzzle, right. And this is where business owners can really, it’s a lifestyle practice is what was called many times. Right? Yeah. And it becomes a decision, right? So you’re running a business. Number one, the first takeaway here is, and we’ll, we’ll summarize these at the end, but number one is, you know, accounting, you need to understand your books, tons of business owners who just don’t, what are you doing in gross revenue? I don’t know about what is your profit margin? I don’t know about how much you take in income versus distributions. I don’t know about it doesn’t work. Right? You need to know that stuff. Um, not if you want to be serious and successful. And I think to your point, there’s opportunities for deductible expenses through the business, that a lot of people miss CPAs are typically really great at reporting data and taking accounting of what’s happened.

Speaker 2 (12:53):

One of the things that we see some general CPAs lacking on us, that planning aspect of like looking forward, okay, what are we doing now that you have the financials in place? Here we are. We’re looking at them, what categories, as you mentioned earlier, can these expenses be in and is there an opportunity to deduct them? So I think understanding accounting and that dovetails into kind of part B of that is one, B or one a is making sure that you’re using expenses appropriately and your business. Yes. Healthcare is a big one, right? And there are certain expenses in a business that you don’t pay FICA tax on. Yeah. You know, you’re better to deploy compensation towards a healthcare plan or a profit sharing plan than actual compensation, because that doesn’t go through the FICA payroll tax. So you save yourself, roughly, what is it?

Speaker 2 (13:42):

3% or something give or take. Yeah. Yeah. And that’s where we have specialty. We have, that’s really unique. I think a and B cannot only cause we do it because we do, it was so much passion and precision is, is the business retirement planning aspect, right? I mean, this is a big subject and we could have a whole show about it and we’re not going to do that today. But I guess Jason maybe give like two or three of the most common business retirement plans that we put in place for our business owner, clients of various sized businesses. Like let’s start with the smallest businesses, like 1 million in revenue. Okay. Up and down. Yeah. And if you’ll allow me, I’ll break that into like number of employees. So a lot of professional practices, one of the categories that just creates so much opportunity is with independent contractors, right?

Speaker 2 (14:24):

So we have a lot of doctors who are independent contractors, whether they’re pathologist or they’re doing something, they’re an independent contractor with a hospital. We have a lot of commercial sells, uh, real estate guys or real estate agents, uh, re whether residential or commercial real estate agents that are 10 99 independent contractors. So all of their compensation comes to them as their own independent business with no employees. Well, this creates the maximum amount of, for retirement planning because you don’t have to have a plan that treats everybody fairly because there’s nobody else to treat fairly. It’s only you. So you can really take advantage of what’s called a cash balance plan, which is a type of defined benefit plan. And you can put large numbers away. You can combine that with a 401k plan that everybody’s heard of. So you have a 401k cash balance plan and potentially have savings of hundreds of thousands of dollars a year that you defer tax on.

Speaker 2 (15:21):

So break down, like, let’s, let’s give some numbers out there for those that some people, I feel like abstractly understand this. And some people are kind of shy away from it and business owners I’m talking about, because I don’t want to, like, I don’t want to deal with this thing, but then if they’re, you know, they’re P and L or, or they’re, they’re, you know, we do the financial planning for them and I’m like, cool. You’re maxing out your 401k on the employee side. That’s the first step. 19,500. Yep. And then maybe 26, if you’re over 50 and then like even, okay, the next step is matched the other side of the employers side, because you control both sides, right? Yeah. Right. Good for you. You’ve got 58 or something. 58,000 or something, right? Yep. So then 59 or 60. Yeah. 61 or six just changed again, 61.

Speaker 2 (15:59):

Now then you’re like, what if that number could just quadruple, what if you’re saving 300,000 a year pre-tax and people would just like, well, I can’t, how do you do that? Right. And you can, I mean, so if you’re making six or $700,000 a year, it’s very possible as a independent contractor, as a self-employed individual to get a couple hundred thousand dollars, depending on your age, put away tax deferred. Now tax deferred, it’s not tax free. That money is you defer the tax today while you’re making lots of income, the money grows tax deferred. And when you take it out of that account, it’s like an IRA it’s taxable. It’s like a super 401k. It is. It’s like a super 401k. And it’s a pretty phenomenal vehicle. Because if you think about during my highest income years, if I make 700 and I can defer 200, I just deferred tax on $200,000, which brought my 700,000 taxable income down to 500,000 taxable income.

Speaker 2 (16:54):

So be probably around a hundred thousand dollars in tax. So it only costs me 100 to save 200, right? So defined benefit plans, cash balance plans, tied into a 401k can be remarkable. And the other thing that most business owners don’t realize Alex is as a business owner, inside a 401k plan, there’s no income limitation on the Roth 401k, right? So a lot of business owners have lost hope in having a Roth 401k or a Roth IRA because they make too much money. And there are income limitations. If you make over a certain amount of money, you cannot contribute to a Roth IRA. Well inside of a business sponsored 401k for self-employed individuals or for big companies or medium-sized or small companies, doesn’t matter if there’s a Roth option in there, which there should be any person, regardless of income, you can make $10 million a year.

Speaker 2 (17:46):

You can max out the Roth, which 19,000 or 26,000, 27,000, if you’re over 50. So that’s phenomenal. This is after tax money. That grows now tax-free for your entire life. And 10 years of your beneficiaries, life Roth is super important in 19 to 26. Doesn’t like a huge number. But if you do it, if you start early and do it every year, max out, you can also add to you can do, you know, the super mega weight, uh, you know, the conversion in plan conversions and stuff. Yeah. Okay. Oh my gosh. We did a whole talk on, this has been a long time. You can do backdoor Ross, but there’s also a component within it. If you follow these other rules where you can do the, the, you know, the other bucket of money and convert that as well within the 401k, I want to do this.

Speaker 2 (18:26):

Isn’t even on this part. But I think this is something that just, I just thought of in terms of how we do some business too, and how we’ve built, how you’ve built a Ida to very smartly take advantage of other tax strategies. But the whole, this whole topic part is extracting value while you’re building it and running it before you sell it right. One day, many people sell and think about this way. So you are a business. You typically need many businesses. Most businesses need a place to operate the business. Yep. Wouldn’t it be cool if you also owned the place, be pretty cool. And then you control both sides. You were both the landlord and the renter. That is a pretty, pretty cool way to then take, you know, leverage real estate, which is one of the benefits of real estate in general. Uh, you build a little symbiotic relationship across your empire, right?

Speaker 2 (19:12):

So that’s something business owners. If they’re not already doing which many I think, think about it, but it’s also kind of a, another unknown for many, it’s like a risk you’re taking like everyone to buy the building. I’m going to run in like it is. And I mean, and then you deal with the things of, what if I outgrow it now I own a building. Now I’ve got to become a landlord. So there’s complications. There’s a flood. Yeah, yeah, yeah. That’s happening to us twice. Right. But it is pretty neat that when you think about, instead of paying somebody else rent, of course, you’re paying yourself rent, you can’t massage those numbers. You shouldn’t cheat those numbers two months. I mean, it needs to be a market rate rent if you rent to yourself, but market rate, I mean, there’s some variability in what’s the market rate, right?

Speaker 2 (19:50):

You sign a certain type of lease. You can maybe have inflation clause. So you can kinda kind of now balance your passive income against our passive loss against other things that are going on in your financial situation. But wouldn’t a S a very savvy investor call that asymmetrical risk because you are, you own the other side of it. So it’s a smart bet that you’re probably a good tenant. Yeah. Yeah. You, you, you, you at least know the tenant really well. Right. And you control the things like you’re not going to have probably a lawsuit out of the blue, because that’s controlled, like all the things as a landlord, many of the things that are perceived as the giant risks, so no brain or negate, it’s kind of like the advantage of owning your own home versus renting a home or, or whatnot. So, yeah, that’s a, that’s a big one.

Speaker 2 (20:31):

Yeah. You know, going back to the retirement plans, we talked about small businesses, retirement plans, 401k. Everybody’s heard of it. It’s great. There’s a big difference between 401k is being set up correctly and not being set up correctly. Everything from the Roth option to now their Roth in plan Roth conversions, where you can convert your traditional 401k money tax deferred into Roth 401k money that you just have to pay the tax from outside sources. So if you have cash outside or you have an investment account and you can pay the tax from that converting that in plan is a pretty huge backdoor way to get a backdoor, which is another, sorry, that’s a separate, yeah. That’s I just came to now. So there’s way to get money into Roth. You’re just going to eat the tax now. Yeah. Going to pay some tax today, but it’s pretty sweet to do that.

Speaker 2 (21:20):

Right. Pretty, pretty good opportunity to do that. Particularly if you have a longer time horizon, you have longer longevity in your family, then you want to take advantage of that tax-free growth. I would also say that, you know, being aware of what’s going on in the tax code, right? Where are we today versus where are we going to be in 2, 3, 5, 10 years? Do we think taxes are going up with 30, almost $30 trillion of debt for our country taxes are probably going to go up. They’re probably not going to go down. Um, and so would you rather pay tax today at the lower rate and then have tax rate growth later? I think it seems to make a little bit of sense, right? To think that way. I think the answer is probably like most in life, you want to have options. So you want to have a little bit of, a lot of everything, a lot of, a lot of pre tax, a lot of tax-free and a lot of already paid tax.

Speaker 2 (22:02):

Well, and just think about the simple concept of, if you have a, if you take all your employee deferrals and you put those into the raw, whether you’re an owner employee, right. And you take the company’s contribution, always goes into the tax deferred portion. So automatically now you have these two buckets of money after tax money and pre-tax money as they grow and you get to retirement. Now you’re taking your income off of both of those, maybe equally, just assume. So you only half of your money is taxable in retirement, which keeps you in a lower tax bracket throughout all of retirement. Having that rock bucket, like you said, flexibility is a huge deal. So business retirement plans, there’s tons of opportunity for businesses in retirement plan savings, there’s opportunity in healthcare and health and welfare benefits and flexible spending accounts. There’s just opportunities there that you got to get the right advisors.

Speaker 2 (22:52):

We can certainly help you. We can help people at Ida with the retirement plan, any component there, we know have great partners in the health and welfare space and all that, as well as pivot to what to do when you’re trying to get positioned your business for sale. This is an interesting one. First of all, would you do anything different than when you were just assuming you’re running it and building it, and if you would change the way you run the business, what would that look like? Yeah. I mean, look, when you’re trying to get a business ready to sell, you want to maximize profitability, right? It’s just like, if you own real estate and you’re going to sell it rental real estate, you want to maximize rents because the price is going to be primarily based upon the rents and your business price is going to be primarily based upon how much money it makes.

Speaker 2 (23:36):

And so if you’re extracting all kinds of money out of the business for expenses that are quote unquote business-related and the business has no profits, you’ve a challenge. Or maybe this all for that, you could just have a really, really good set of books so that it’s easy to see if you do have great books, then you can, what we call is we add those back, right? So those are add back. So you say like, here’s an expense that if my business is sold, the new person is not going to provide those benefits to the executive. Hypothetically, for example, this other client, not our company, but sorry. Maybe like the daily massage thing, that’s going to the business right away. Right. The daily massage. So you’d want to be able to have good books to say healthcare, you know, personal health massage experience for it’s warranted, of course, because of joint pain or whatever needed.

Speaker 2 (24:24):

Yeah. Because of your desk was uncomfortable. You, yeah, that was good. But those things will go away. You know, maybe an airplane, for example, you own an airplane in the business and it’s really used for business, but the new people buying the business, don’t see the need for that airplane because they’re okay with commercial travel or whatever, or they’re not pilots or whatever the situation may be. So that airplane would be an add back item. But generally speaking, I mean the more profitable your business can be the better, the cleaner it is, the better the books, the intern, the accounting, you know, filing systems are really important. We work on that really hard, right? As our structure of documents and vials. Cause we’re electronically file things. Is it backed up? Is it secure? And can I go get files? Can I get everything I need?

Speaker 2 (25:10):

And can I transfer that to people easily? You brought up the secure thing, which scares me because I just wanted to, as a business owner, this is a pain point right now for everybody. I think it has to be. And if it’s not, then you’re, you’re naive. Yeah. Cyber crime. We’ve been talking about this stuff for a long term in cybersecurity importance. It’s so innovative and creative how these thieves are working. It’s every time I have another story that comes up, you know, knock on wood. We’ve never had a client actually lose money. And we work in the business of keeping people safe and peace of mind around their money. And so I thought about this, it’s like, this is a tangent, but those are we’re good at those. Usually I honestly want to do another thing. Bring back when we were, we were doing the workshops on DSP people about cyber.

Speaker 2 (25:49):

We got to do one of those. That was great because it blew me away. This client, you know, I don’t want to tell the whole story cause he might live here. I show, but they were duped and they were duped twice in a matter of a couple of days. Even after talking to me the first time and talking to our team, I just couldn’t believe how innovative is thieves were and how sophisticated their rerouting and the ability to take control over a phone and an email address. And it was crazy. Didn’t we even have somebody once have voice detection or voice disguising it, a phone number. So, so the person who answered him personally in the actual person, because they re-read their home phone number to a cell phone and tried to give them authentication of the email requests. Wow. So like, so what we’re looking out for is irregularities where we’re asking questions that hopefully no one will know all the things you know about.

Speaker 2 (26:34):

There’s things you can do to protect yourself better is the point. Yeah. First of all, be aware that somebody who’s trying to scam you right now. You’re yeah. I can tell you’re a target. You are a target. Don’t think you’re not a target. You are a target and a cyber crime is growing, unfortunately. And even most of it, most of it is almost common sense. Like you just got to be aware and know that you are a target. So when you get an email that says there used to be the old ridiculous ones, you know, the guy, the prince of Sherlock needs you, he wants to give you $12 million. If you’ll just help him get his money out of the stolen bank account, blah, blah, blah. But now there’s there. I mean, we get a fax like that looks like a fax and it’s an email, but then it opens up your computer so they can get into your computer.

Speaker 2 (27:19):

Mean you just don’t open stuff that you don’t know where it’s from. You just don’t open it. If it even almost looks even remotely suspicious in the bigger thing there that we’ve learned or on a simple, that big is on emails. Just because it says it’s from Alex. Klingensmith doesn’t mean it’s from out screens with he actually I have to hover over the email or click on the from and see the actual email address because what people will do, this is very basic low-level stuff, but they will disguise the name, put somebody they know that’s in your email address. Book is their name then is this why you never respond to my emails? I delete everything blocked down. I’d rather just talk to you anyway. Yeah, no, it’s better. I mean, it is dangerous, right? So you have to be aware of that. And the biggest one is somebody calling you asking for a pin number or somebody calling you asking for account information, you’ve gotta be really diligent as a business owner.

Speaker 2 (28:10):

You have to train your employees and make sure they’re diligent and they don’t open emails cause they can just nuke your business and employee open an email. I think about it when you’re going to sell is making sure that you’re really current and tight on your, on your protection, whatever your business is like whoever’s coming in to buy. It wants to make sure it’s safe, but there’s nothing weird and expose there where they take over and acquire and merge and transition. And then it starts falling apart for unknown reasons or something. Can you imagine that, like we go buy a small company and like a month or two in it gets their stuff gets hacked and it just, we spend a year trying to like, okay. Nightmare and hack it. Right? Yeah. Yeah. So I think it’s worth it to pay the right security teams to pay for the right antivirus.

Speaker 2 (28:50):

Good. It arm is critical nowadays. Um, and good education. So there’s lots of things. I think we kind of covered a gamut here and we’re going to keep this show, uh, short because we’ve got stuff to do. Well, the next, the last topic, easy answer by the way. So the question is this, what do you do once you, as you’re going into the sale mode and then you sell and extract the value exit, you got your, you got your pop, you got millions of dollars in money. What do people wish they do? Well, first of all, look, look for ways prior to that, sell to start thinking about ways to defer some of that tax, right? There’s [inaudible] qualified opportunity zone funds as a really good way right now there’s still 10 31 exchanges for real estate as of now. So if you own real estate, you sold it with the business or whatnot.

Speaker 2 (29:33):

Those are things that can, can save some serious money or at least defer the tax temporarily, get a good team to make sure you don’t mistakes. As simple as like making sure it’s capital gains and there’s a basis and all that, all the stuff that you’re just like, you assume it’s going to be done, right? You get somebody who’s done that kind of deal in that industry. They can mess up a big number, big deal. And whether you’re getting paid for contract for Goodwill or assets, right. That, that matters a lot. And so I think coordinating a team of advisory tax and legal together is a big deal. That’s why we have taxes done in house. And we’ll probably have legal at some point too, but, and they don’t all have to be in together, but they shouldn’t be talking to each other, your suite of advisors and coordinating with what they do.

Speaker 2 (30:18):

And then you want to figure out, Hey man, how do I build? How do I build this portfolio so that now it’s, I can have peace of mind. I can sleep well at night, but I know it can create stress tests that know that it can create income for the rest of your life. Cause a good portfolio. That’s the point of it, right? Is to provide you well, that’s one of the objectives is to provide you with income and if you don’t need the income, that’s great, then it’s to pass it on to heirs or give it away or whatever else I only think you should work with. And this is going to sound very self-serving. It is, but work with an advisor and advisor team. Who’s done this before with other people that have sold businesses for meaningful amounts of money, because there’s a lot of psychological change that goes on.

Speaker 2 (30:56):

And it’s really interesting to see a business owner who has been in control or perceived control, mostly control. Really. They really are in control to like, okay, now I have all this money is now out there in the universe moving around and I have no the control. How do I feel about that? Oh my goodness. You know? Yeah. And for young and younger business owners who sell our younger liquidity events, you know, it’s really easy to get caught up in all the glitz and glamor of SPACs and all these new investment trends in Bitcoin or whatever it may be. And you can really destroy lots of wealth. So again, don’t get overzealous and, and think you’re the greatest investor in the world because you sold your business. That doesn’t make you that smart and necessarily it may mean you’re that smart, but investing that money is a different deal.

Speaker 2 (31:37):

So seek advice, you know, it’s fun being a business owner or part of a business is a great opportunity to create wealth for yourself. There’s great opportunities to benefit yourself from a tax standpoint and provide an awesome place for employees and people to grow their careers and to provide financial security for themselves through the retirement plan and other methods. So lots of opportunities and business ownership that is, is really great. And you can put it to work. We’d love to help you if you need help. That’s financial detox and I’m Jason labrum, your host in studio with Alex Klingensmith and I think that’s probably good for today. What did he say, Alex? It sounds great. We’ll wrap it up. Give us a call. If you need any help. If you’re a business owner looking for guidance, looking to exhale, look at to just strengthen your business. We’d be happy to walk you through. Some of the things we’ve been doing that have helped us and share some other stories from other clients of ours who have, have done really well at putting their business on the right track. Thanks so much for tuning in it’s financial detox, where you can also give us a call at (877) 707-8889. We’ll see you on the next show

Speaker 1 (32:43):

To learn more about financial detox and to get access to today’s show notes, transcript and resources, visit financial Call Jason and the team at intelligence driven advisors. If you’re ready for financial detox and a better tomorrow, call 8 7 7 7 0 7 88 89. Get answers to your questions. That’s 8 7 7 7 0 7 88 89. That’s financial for podcasts and information. And if you like what you’ve heard, be sure to hit the subscribe button that way you’ll be notified about upcoming podcasts. You’ll take one more step toward financial peace of mind. This content is provided for informational purposes only and should not be considered investment advice or recommendations to buy or sell any types of securities. Mr. Labrum and intelligence driven advisors are not responsible for the consequences of any decisions or actions taken as a result of information provided in this program and do not warrant or guarantee the accuracy or completeness of the information provided the information discussed today, reflects the views of Mr.

Speaker 1 (33:46):

Labrum and his guests. As of the date of the show and are subject to change without notice past performance is no guarantee of future results. Any forward looking statements or forecasts are based on assumptions and actual results may vary from any such statements or forecasts. No reliance should be placed on any statements or forecasts when making an investment decision. Accordingly listeners should not rely solely on information provided today in making any investment decisions. There’s a risk of loss of investing insecurities, including the risk of loss of principle. Different types of investments involve varying degrees of risks, and there can be no assurance that any specific investment will be profitable or suitable for particular investors by natural situation or risk tolerance, asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses.


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