Just by way of background, I think actually you and I have known each other roughly 10 years now. First met through GGI, the international affiliation. And so I've done an introduction to Dave privately.

Dave, probably best for you to just quickly, before you dive into your conversation, into what you want to talk to us today, just describe what you do, who you are, the fact that you're a Calgary Flames fan and a Florida Panthers fan. Yeah, so actually my my first favorite team, and you're all going to laugh at me, it's fine, is the Islanders, because I grew up in New York in the 1980s. But they've been bad for so long that I've just kind of drifted from one team to the next.

And because I worked the second shift in a hotel growing up, the Flames were the only team that I that would still be on when I got off my shift. So I ended up, well, it was either the Flames, the Oilers or the Kings. And I mean, come on, what choice is there, really? So so that's how that's how I got.

And plus, I just love the I love the logo. And I wear I wear I wear Flames gear here in the US. And everybody kind of looks at me and wonders if I'm part of a motorcycle gang or something, which is which is kind of which I'm the last person that anybody would ever think of.

So that's kind of cool. I think it's I think it's pretty cool. Um, I so I've been a consultant, a business strategy consultant in my own firm since 2007.

And I began that journey. That was my Kim will talk to you. We'll talk to anybody who will listen, probably even in the supermarket about his second act and how he planned it.

And that's a I have a great deal of admiration for Kim about that. And that's what a lot of our time in my discussion period is going to be spent talking about second acts and why that's so important. But this is kind of my second act.

And I've been I've been doing it now for almost almost half of my career. And when I first started out, I only worked with professional services firms for seven or eight years. And then I expanded into working with family owned businesses, privately held companies.

And that's the majority of what I do. So I prepared a slide deck and I'll share it with you. And it's only for the purposes of stimulating the discussion on Zoom.

So if it's all right with all of you, I'll go back and forth. I'll show a slide and then we'll have a discussion about something. There's only like, I think, seven total slides.

So my preference would be for us to as much as we can here have a dialogue, but to stimulate some discussion among all of you while I'm here and then potentially after I'm gone. So the title of my presentation and this is always like a magic trick for me as to whether I can share this. It's you know, we went through all of covid and I still do some stuff on Zoom, but it's always a magic trick when I pull this off and it works.

So the title of the presentation today is called The End. All right. So how is Kim, can you see that? How's that? How does that look? Yeah, it looks good.

OK, so the title is The End. Three ways to add value to your business. The reason that this is even a topic for our discussion today and true to my word, I'm going to stop sharing.

The reason this is even a topic for our discussion today. And the way this came to be is because I was doing presentations when covid ended. I had to rebuild my business as a as a business strategy consultant during covid.

There was really kind of nothing going on for me. And my entire lead generation program was speaking from the stage. And I've written a couple of books.

And those books would generate phone calls into my office. And those phone calls would result in consulting engagements or speaking engagements. Well, during covid, there was none of that.

So when covid ended, I had to rebuild my business and I started doing half day CEO seminars for Vistage. So you're all part of Kim's McKay Forum Group. So, you know, that Vistage is similar here in the States.

Vistage has a large presence. I would do speaking engagements to rooms with people just like you. And my topic and it was very well received.

My topic was leadership, communications and persuasion. So I had to get people to do things that they, you know, they probably would need to be persuaded to do. So it was sales, employee motivation, that sort of thing.

But I would always open the talk by going around the room and asking the people in the room, how is this business going to end for you? And the reason I would ask them that question is because and I'll explain in detail my background in a sec. When I was in big ticket consulting and we did business strategy engagements for our clients, the strategy would always start with the end in mind. Stephen Covey's seven habits of highly effective, highly effective people begin with the end in mind.

So I thought to myself, let me make sure I'm delivering value to these people and let me figure out where they want to go with their businesses. What do you think the most common answer was when I asked that question? And these are CEOs just like you of businesses that are anywhere from a million dollars in annual revenue all the way up to in a couple of groups. I had businesses that were over 300 million dollars in annual revenue.

What do you think the most common answer to that question was when I would ask it? I don't know. Exactly, exactly. And to the best of my ability and based on my own personal experience, here's why I think that was the answer.

And you can all tell me if you feel the same way we and I'm putting myself in this. And I know this is true for Kim, because we've talked about his background in detail. We start our businesses because we got to pay our bills.

We start our businesses because we got to find a way to make money. And then if we're good at what we do and we demonstrate value to the people who are our clients, they tell their friends. And then maybe some of us have what my sixth grade teacher called the gift for gab.

We can we can talk to people and we attract people into our businesses. And the next thing we know, we need we need employees to help us. And then we've got something that really resembles the business that we have today.

We've got five employees. We may have twenty five employees. We may have two hundred and fifty employees.

But we built that because that's what we needed to do to serve the clients who are coming, giving us the money that we needed to pay our bills. Well, I don't know about you, but at one point I turned around and it was like six or seven years in. And I thought to myself, man, this is this is really something.

Maybe I should go somewhere and figure out how to do this the right way. And that's what most people who are in those vestige rooms were telling me. Listen, we don't know how this is going to end.

We just are here because we thought we had these unique issues. We thought that we had built this thing by accident and stumbled into it. And then we came to this room and we found that there's 10 other people or 12 other people or 15 other people who are having the same experience we're having.

They just may be in different industries. Does that resonate? Does that sound does that sound at all familiar? So I went from doing talks on leadership, communications and persuasion, and I still do those to helping people think about what the end of their business is going to look like. And planning their business so that it has the most value.

But more importantly, and this is the thing that I think might connect with all of you so that they have the freedom to choose how their business ends for them. So there's three things we're going to talk about today. We're going to talk a little bit about exit strategy.

We're going to talk a little bit more about succession planning and how those two things are different. And then we're going to talk about how you can add value overall to your business by improving the quality of your earnings through improved revenue. OK, so those are the three things we're going to talk about.

And the reason we're going to talk about those three things is because they will give you the most options and the most freedom to decide when your business will end, how it will end and how much it will be worth. And even if you want to die at your desk, I promise you this will be a much more pleasant death than if it just happens and you don't know what's going to happen to your business in the end. This is in no small part inspired by Kim Moody and his journey, because in working with him over the years, especially when he was leading his firm, his focus for about half the time I know him.

So if I know him 10 years, at least five of those 10 years, he was planning on his second act. And what he did made his firm more valuable. So when we talk about exit strategy and succession planning, I want to make sure that I'm clear on what I mean and the difference between the two of them, because I've seen people use these terms interchangeably.

Exit strategy is about how you extract the overall value from your business. That's what exit strategy is about. So if you turn your business over to your idiot son, Fredo, you're still exiting, right? Fredo from The Godfather, right? OK, so Fredo was weak and stupid.

So you didn't turn it over to Michael. You turned it over to Fredo. If any of you have a child named Fredo.

First, I'm sorry for the choice of name. Second, I'm sorry that I just insulted you. OK, so if you decide to even turn your business over to your son, your daughter, a family member, you're still exiting.

So that's still exit strategy. Now, succession planning is not just for you and planning who's going to take your place. Succession planning is for every role in the organization.

And when we work, my team and I, when we work with business owners, we work with them to look at every role in the organization. And we think about succession planning in two ways. We think about contingency planning.

So if, you know, Steve, the front desk clerk in the hotel, doesn't show up tomorrow, who can come in and check those people in? That's contingency planning. Steve calls in sick. Steve goes on vacation.

Who can fill in for Steve? That's contingency planning. Succession planning is how do I get Steve ready to be promoted from the front desk clerk to the front desk manager? And our focus on succession planning is to look at the business and build succession planning and contingency planning into the performance review process. So we'll talk a little bit about that as well.

And then the third and final point that we're going to talk about today is the quality of the revenue that's coming into your business, which leads to higher quality profit. When people talk to you, and by the way, there's a whole bunch of people out there who will try and baffle you with, and I heard Kim curse at the beginning, so I'm going to curse. They're going to try and baffle you with their bullshit when it comes to exit strategy, right? Quality of earnings just means better clients, right? And when people are talking to you about the quality of earnings of your company, it's the quality of that revenue that's coming in.

So when somebody is going to buy your business, they're really buying the future profit of that business. If you have recurring revenue, it's higher quality than if you have transactional or ad hoc revenue. So we'll talk a little bit about that.

That's an overview. And this is designed to be a discussion and the slides are designed to keep me on track so I don't keep rambling on and tell you all kinds of crazy stories. So those three levers that I discussed, why did these three levers add enormous value to your business? Well, first, they're going to drive the EBITDA, which I'm sure Kim talks to you about ad nauseum, right? They're going to, or your seller's discretionary income, your owner's discretionary income in your business.

These three things are three of the most important drivers of the true value of your business. If you improve the quality of your earnings, your business is going to be worth more. If you have a succession plan in place and standard operating procedures in place for every role in your business, your business is going to be worth more.

By the way, if your financials are clean, your business is going to be worth more. These three things also cut the risk that buyers will pay for your business and they're going to provide you with a business that is ready for a great exit, but it's also a better business to own. So let's pretend, let's suspend disbelief and pretend we're going to live forever and we're going to run our businesses forever.

What we're going to talk about today, if you focus on these three things, they're going to make your business easier to own. And if there's time at the end, I'll tell you how I encourage CEOs to incorporate each of these things into their daily habits. Okay.

So my background, the credibility piece is, I think it's important. And so with your permission, let me just share with you what I think qualifies me to have this discussion with you. I, prior to going out on my own and having my second act, I was a business leader for Marriott.

I grew up in hotels, I washed dishes, I carried bags, and I came up through the Marriott organization and I led the startup of Marriott's Execustay brand from zero to $50 million in three years. And I tell people it was a lot easier when I had the resources of a Fortune 500 company behind me. I then was recruited to join Gallup's consulting organization in New York City.

I started that and built it to $250 million in six years. I've written a few books. The last one did pretty well.

And then I facilitated over 70 sessions with Vistage. And my exclusive focus now is on driving value for businesses just like yours. So that's the reason why I think it makes sense for us to be having, those are the reasons why I think it makes sense for us to be having this conversation.

OK. So, yes, sir. Are you not going to tell your almost ultimate exit story as a result? I'll tell it at the end.

How about that? All right. So when it comes to X, I don't want to take up the valuable time with stories about me. I've already talked enough about, I'll tell you my story at the end, the reason for my almost exit, as Kim describes it at the end.

So let's talk about exit strategy for a minute and then I'm going to ask a question of those of you in the room. So the reason that this adds value is, and this is the number one reason to think about how the business is going to end. If you focus on your exit or how you're going to exit, even if it's 15 or 20 years down the road, you're treating your business like an investment.

What are the two qualities we look for in an investment? One, we want it to appreciate in value. And two, great investments pay dividends. And we want our business to pay us dividends in the form of distributions.

Okay. What I see most often is sometimes people think about the first part. They think about increasing the value of the business.

But we've been conditioned and it's been beaten into us so often and so hard to reinvest in our businesses that I find most business owners are not taking enough distributions. They're not taking enough out of the business while they're working in it. And one of the first things we look at when we come into an organization is we look at the distributions the owner's taking for him or herself.

And you don't need to take those in cash. My preference would be for you to fund your lifestyle. And once your lifestyle needs are funded, anything over and above that, put it in some type of a tax deferred vehicle that you can draw upon down the road when you're in a lower tax bracket.

And Kim is the perfect person to have this discussion with. But we find typically here in the States that business owners are not taking enough out of the business. I had a conversation just a couple of days ago with a business owner who has over two and a half times the amount of inventory he would need if he had his best manufacturing year ever.

And when I said to him why, because we were looking at his financials, and when I said why is this inventory so heavy, he said, well, tariffs. And I said, you've got enough here to manufacture and ship in your best year ever. Where are you trending now? He's like, well, we're at about 80% of where we were last year.

And I said, was last year your best year? He said, no, far from it. I said, oh, my God, stop investing it. You got more than enough inventory here.

But this is what we do. As business owners, we're taught that we need to invest in the business. And you do need to invest in the business.

But you need to have a conversation with your accountant as to the investment you're going to make and the return on investment you're expecting from that. And then anything over and above that that you have as far as money coming in, take that for yourself and put it into a tax deferred vehicle. Now, the second reason that exit strategy is valuable for you is that it gives you options when you're ready to exit.

There are two types of exit strategies that we talk about. And I'm going to take the slides off so we can have a discussion about this real quick. There are internal exit strategies and there are external exit strategies.

So internal exit strategies here in the U.S. We we have ESOPs and I think you have something similar that you can use in Canada, which is an employee stock, an employee stock purchase plan. OK, so employee you can set it up. Most of the time your business has to be doing about 10 million dollars in revenue for an ESOP to be cost effective.

We also do what's called an employee ownership trust. Which can be set up much more cost effectively for businesses that are below 10 million dollars in revenue. And there's also management buyouts that are good internal exit options.

So in Kim's case, if you if you talk to Kim about his exit strategy, Kim had a management buyout. His key management team was able to purchase the firm from him. And my contention is, and I'll let Kim speak to his own situation if he wants to tell you, you're always going to get a better deal from people internally than you would externally.

And you always want to have the option to have people ready, willing and able to purchase your business. So we like to have our clients look at internal options as well as external options. What are some external options? Well, there are strategic sales and a strategic sale looks like perhaps selling to a competitor or selling to someone who may vertically integrate your business into their business.

Or there's financial sales, a sale to a financial buyer. And that's private equity. Okay.

And everybody's interested in what they can get for their business from private equity. And yeah, private equity is buying a lot of businesses. The process is cumbersome and you need to do a lot of work to get ready.

I'm not discouraging you from that, but you need to get the three things that we're talking about today in order before you ever think about the financial buyer option. So the internal and external options, what should you be thinking about today? You should be thinking today about making sure that your management team are the people who could carry on the business in your absence, short term and long term. If they are, you may have a really good internal option for a management buyout.

If you have great employees and you have, I would say 20, 25 or more, and you have enough revenue to support the organization of an employee ownership trust or an ESOP, you could think about this now and you lose no control over your business. In fact, you can still, with an ESOP here in the States, you can still sell your business to a strategic buyer or a financial buyer, even with an ESOP. And if you wanted to take some of the chips off the table, so to speak, earlier, you could sell a portion.

And in fact, with an ESOP, you have to sell a portion of your business to your employees so you can reap the benefits of that and still maintain control. The key point I'm making here is to think about some of these options and begin having those discussions today because the way you organize your business is going to help you employ some of those options as you move down the road into the future. Now, if you're thinking, it's too early for me to think about this, I would tell you that the best businesses think about how they're going to exit, even if it's 20 years into the future, at formation.

And so, you know, I'm a convert of my own system. The business that I run today, Exit Success Lab, is a business that I run with a partner who's brilliant and she also happens to be 15 years younger than me. So we have a built-in exit strategy, which is already mapped out in our organizing documents in the form of a buy-sell agreement where if I want to exit, there's a mechanism in there for me to sell my portion of the business to her.

So how many of you, or if any, and it's fine if none of you have thought about this, how many of you have given some thought to this already? And is there anyone who'd like to share? Kim, why don't you point to people so they can share? Jim? Well, we've got a five-part shareholder group, and we've had shareholder agreements in place for a long time that deal with buy-sell provisions. If it's an internal sale, for example, we're talking to the little girl here, but also, we have a mindset that we're always building our company with the mindset that it's being sold to a third party. And we think that if we have that mindset, we're going to do the right things to create value and run the business properly, because if you're going to have a third party come in and buy it, they're going to look for all those things and you want to maximize the multiple, that's what it's got to deal with.

So I think we're in a pretty good spot from that perspective, but we haven't really tested that yet in terms of, and we haven't had an internal buy-out. So we'll see how that holds together when we get there. Can I ask you, can you give me an example of how that thinking, and congratulations on that thinking, I think it's fantastic, can you give me an example of how that thinking has influenced a decision that you and your partners have made? I think it creates alignment, because we've even started to talk timelines, in terms of, you know, how many years out? What value do we want to see? What kind of a company does it look like? So I think what it does is it creates alignment at the leadership level, because if somebody's going, you know, I think it's going to be X, and somebody thinks Y, or I think it's 15 years, and somebody thinks it's five years, you can start pulling the company in different directions.

So I think it's important to have that end in mind, and making sure that the people that are rowing along with you are seeing it the same way. Thank you, that's terrific. Kim, you want to do one more? I'll go with Jason.

Because, you know, sometimes when your father passes, you know, unexpectedly, then, you know, that can happen too. Sure. You're always, you know, kind of making the business more valuable and trying to run it with the least amount of input, like, so the managers are empowered, you know, so there's a lot of work there, that they're capable, and they've got the tools.

And we built a software, which is kind of a thing for a plumbing and heating company, but we've been building our own software since the 80s, and just did a rewrite, and the whole thing is, that keeps us together, and keeps our edge, and makes it more valuable. So, if someone were to, you know, we have, like, stats and statistics and measurements, like, crazies, and to the minute financials, like, so when you said, keep it clean, you know, it would be financially clean, you know, I think everybody likes it, or did like it, because we're clean, you know. You know, so there's just things like that, where, you know, we built it, you know, not necessarily to sell it, but, you know, that's something that's been on our mind, because we could see private equity coming in, wanting to pay a lot of multiples, maybe, so we're curious, but, you know, I'm also young and not too curious, and then I think I have an appetite.

Other members in the family don't have an appetite to sell, so it's sort of like, what is the exit strategy? I'm not too sure, but I think we're ready to sell if we wanted to. It is one of the most desirable businesses now. Private equity is buying them up like crazy, and there's a shortage, and here in Florida, the exam to be, like, a master plumber is incredibly hard.

So if you, if you're, and you can only, obviously, you can only buy and own a plumbing business in our state anyway, if you're a licensed plumber, you have to have a licensed plumber as the operator of the business. So listen, I, you're in a good spot, and if you need somebody to shake up your family members, let me know. I'm happy to, I'm happy to help you out.

Kim, we have to go to Catherine, because she really wants to talk about her exit strategy. Go ahead, Catherine. Well, it's, I'm filled, actually, with more questions, Dave, because I have built a business, sold it to partners, and then sold it to one of the largest executive search firms in the world.

So I've done the whole exit. However, now I want to do something different. In, let's say, 15 years, I want a community to own it, but a community of independence.

And it's like, I have all these Venn diagrams of what I'm building. Like, this book is called The Creative Moment, and it's, it's built with a New Yorker, Dave, a New Yorker, so he and I are building this together, but it's a whole other entity. So what have you seen in terms of exit strategies with multiple entities and community ownership? You know, here's how I think of it, and I don't know, I don't know the legal structure, and I really don't, I need to dig into your business further.

But here's how I'm thinking of it. I'm almost thinking of it, like, almost like a mutual fund, right, where you issue shares, and people buy the shares. So, like, I worked for, I worked for the Gallup organization for eight years, and they, you know, it was, it was a, we all became partners, and we bought these shares.

It was an internal market, so it's, you know, kind of like a complete scam, right? So, like, they decided what the price was. But, I mean, that's, you could do something similar to that, where you had shares, and the community would have shares, and they would be valued by a third party. Kim's the right guy to help you with that, for sure.

So maybe something along those lines, just shooting from the hip there. Great ideas, thank you. Yeah, and I appreciate all of you being willing to share.

So, if there's an action step for you to take away from this portion of our time together, pick one of those strategies and just start investigating it. Just go a little deeper and understand a little bit more about what that strategy is. So, for example, like an employee ownership trust.

Maybe do some homework and see how that works. You know, and like in Catherine's case, look for or investigate other groups or organizations that are sold to a mass of people with some type of shares, and whether there's a way to create that internal market for those shares. So, that's your action step for this section of the presentation.

Now, let's talk about succession planning. Okay, so what does succession planning do for you? Well, it removes key person risk, and key person risk, by the way, will drag your multiple down. So, if you have a plan for how everyone in your organization can be replaced by someone else in your organization, your business is more valuable.

It also ensures uninterrupted operations, which means that the continuity planning that you do protects your current revenue. So, you know, your top salesperson leaves. Well, you've got a number two salesperson who was integrated into some of those accounts, so you mitigate the ability of that person to take all of that business.

And I will tell you that succession planning signals professional management. So, if you want to demonstrate to investors, let's say you wanted to go out and get an investment in your business, or you were interested in selling your business and you were going to create an auction environment, which is my favorite way to sell a business, succession planning is a demonstration of the level of professionalism that you have in your business. So, the key components are short-term continuity planning, and I'll talk to you about this a little bit, long-term replacement, so if somebody's going to be promoted, how you're going to backfill that position.

And what we do, and you can do this on your own, is we create a risk scorecard, so we rate every role for the greatest risk if someone were to leave. So, for example, in a sales-driven business, if your key salesperson leaves, that's probably the highest risk. In a business that has significant research and development, if your R&D person leaves, that has the highest risk for your business, so you have to do a matrix and determine where the greatest risk is.

So, let's talk about this really quickly. The way to incorporate this into your business, regardless of the size, is to build succession planning into the performance review process. Every business can do this, okay? A portion of everyone's performance review should be related to how well they train someone else to do their job.

Another portion, and we can talk about how you weight these, another portion of their performance review should be contingent upon how well they prepare themselves for the next potential role. Now, in every business, there are two tracks. There is a leadership development track, and then there's an individual contributor track, okay? If you're an individual contributor, so you're in sales, and you love to sell, and you're always going to be a salesperson, but you're extremely competitive, that person's not preparing for the next role.

That person should be – that portion of their review should be contingent upon how well they're educating themselves to take their skills to the next level. So, one of the ways that we're talking to the people that we work with on helping individual contributors improve themselves is, how can you incorporate AI into what you're doing? And let me tell you, even the hardcore sales folks are loving the way AI can make their job easier, the way AI can help them improve the level of research that they're doing, the way AI can be a competitive advantage for them right now. So, every role has how you're performing today, right? How you're getting the job done, your key performance indicators, whether you're hitting them or not.

And then every role has how are you preparing someone to do your job short-term, if you can't come in tomorrow, who's going to do the work that you have to do? And then long-term, how are you preparing yourself to move into the next role? And I'll tell you that I obviously didn't invent this. This is what we did at Marriott. So, if you were a front desk clerk at Marriott and you had specific responsibilities, the front desk manager would say to you, Listen, you're really good at this.

I want you to teach every other front desk. You're really good at taking reservations. I want you to teach every front desk clerk how to take reservations.

That's going to be how we judge you preparing other people on your performance review that you're going to receive. And you have the potential to be a leader in the future. So, we offer these learning courses every month.

They're voluntary. I want to see you take three learning courses in the next six months, and that will be on your performance review for how you prepare yourself to move into the next role. So, what are we doing? We're measuring people's performance not only based on what they're doing today, but what they're doing to get themselves ready for the future, and what they're doing to help get the company to be ready in case they're not going to be able to be here tomorrow for whatever reason, or get the next person ready to step up and into their role.

So, we are encouraging everyone not only to develop themselves and seek development opportunities. We're also encouraging them to bring the next generation along with us. Now, this requires a couple of things that you need to put in place.

It requires good job descriptions. It also requires standard operating procedures, okay? Both of those things, AI has made much, much easier to incorporate into your business, and it is incredibly cost-effective to get that done. But those things, job descriptions and standard operating procedures in and of themselves, will improve the value of your business.

When you incorporate them into a succession plan that is part of the performance review process, it takes the value of your business and creates an exponentially greater opportunity for someone to buy your business, as opposed to a competitor's business who doesn't have this in place. Even if you only have three or five employees, if you're doing this with them, your business is automatically more valuable. Anyone want to share any thoughts about that succession planning model that I just gave, or how you do succession planning in your business? Anyone doing this currently? Dave, I'll just chime in.

We did that at the firm quite routinely, but it's interesting. The one fellow that you know, Alex Moreno, who was in charge of the largest revenue generator in the firm, which is renunciation, we wanted him to train somebody, but he ultimately said, Nope, I'm not going to do it, and basically kind of forced our hand. We either fired him or locked him down.

In hindsight, we made a mistake when we locked him down as a partner, which then made it even worse, because he wouldn't share his so-called secret sauce, which was nothing too secret, but he wouldn't train anybody. Which was just ketchup and mayonnaise mixed together, yeah. That's the only time I've ever experienced that in my career, but it was something I couldn't resolve, and ultimately I resolved it by just moving on.

But even today, as one of the partners and leaders of the firm, everything is with him, which is fine, I guess, because I'm not there, but it is a problem in some cases. Yeah, so what I would encourage all of you to do is think about, this is your action step from this section of our time together. Think about a continuity plan for the members of your management team.

And I don't want you to do the work, I want them to do the work. So go to your top person and say, Here's what I'd like to do. I'd like you to develop a performance review process for yourself.

And what we do with our folks is we do a third, a third, a third. So a third of their performance review process is based on how they're training someone to fill their role, long-term and short-term. A third is based on how they're sharpening the saw and how they're getting better in the future, how they're going to prepare themselves for the next role.

And then one-third is current performance with key performance indicators and that sort of thing. This is for their performance review process. You can do whatever you want.

You can do 10%, 10%, and 80% in the middle, whatever you choose is fine. The fact that you're focusing on it at all is the key thing. So I would encourage you to go to your most trusted people, discuss this concept, and ask them what they think, and have them come up with a plan for their role and see what they come up with.

Because here's the thing. Nobody's going to know their job better than them. So let's see what they come up with, and then maybe you can model your program based on that.

Okay, we're moving into the homestretch here, and this is going to be the thing that I think excites Kim the most. So that's why I saved it for the end. And this is the quality of earnings.

And again, this is the baffling with bullshit segment. So you're going to go to sell your business to private equity, and they're going to want a very expensive quality of earnings study done. And I'm sure Kim's firm was doing those, probably still doing those when he was there, and they're charging a fortune for it.

And it's fine because the quality of earnings is really what they're buying. When somebody's buying a business, they're buying future profit. So what we're going to focus on is what we can control, and that's the best clients we can possibly attract.

So I want our clients to have predictable revenue and predictable profit. I want our clients to have clean financials. So I do a lot of work.

I have a license here in Florida. In 11 states in the U.S., you have to have a license in order to sell businesses. And since we get businesses ready for exit, occasionally people come to us and they want to sell, so I got a license so that I could have those discussions with people.

Well, I go to business broker meetings, and I go to M&A meetings here. And everybody in those meetings is constantly harping on the fact that there is no perfect business, and the financials always have supermarket receipts in them, and the financials always have people who are buying boats and charging it to the business. And I look at these people, and I think to myself, just because you can doesn't mean you should, right? Just because you can buy whatever you want out of your business doesn't mean you should.

A clean business is always going to sell for more money. A business with clean financials, a business that doesn't have a ton of what Kim would call ad backs, right? A business that doesn't have to have normalization of the financials is always going to be more valuable. If for no other reason, the due diligence process is easier, the deal can get done faster, and you can get the hell out of there quicker.

So I can't stress enough. As a guy who hates the math associated with anything running a business, I just like the math in my bank account. I can't stress enough to you the value of having clean financials.

And this is going to really make Kim smile. For God's sake, make sure you're on accrual accounting, please. Those of you who are on cash basis accounting, do yourself a favor.

Work with Kim to get with somebody who can put you on accrual accounting. You're going to save yourself a ton of heartache when people come to do valuations of your business. So my focus for revenue that will lead to higher quality of earnings is on recurring revenue, okay? If you're in a business now where you don't have recurring revenue, talk to Kim.

If you want to talk to me, I'll share my LinkedIn, and you can have my contact information. But one of the things that I focus on in our business, the only area where I still do direct consulting in our business, is on revenue models and recurring revenue models because recurring revenue is the key. It is totally the key to getting a better multiple for your business.

If you're in a business that doesn't have recurring revenue now, we can work on that. And there's a number of different things we can do. In fact, let me stop sharing this slide for a minute.

Kim and I know somebody. Bridget Ferraro, she is now the sole owner of a medical records company. And when she was going to buy her partners out, the recurring revenue was a little light.

So one of the things we did was we negotiated the deal for her to buy her partners out while the recurring revenue was light. And immediately after the buyout, she bought two smaller businesses that had recurring revenue models that were the drivers. We bolted those two smaller businesses onto her business, and she's now almost 18 months post-sale.

And her business is probably worth double what it was worth when she bought it because of the recurring revenue that she was able to add on. So the action items from this one, I don't need to show you the action item slide. I'll just tell you.

Number one, OK, think about your revenue and think about ways to add recurring revenue into your revenue model. OK, if you don't have a subscription program now, there are things we can do, things we can talk about, ways we can brainstorm helping you add recurring revenue. Second thing is clean up your financials as quickly as you can.

If you need to pay yourself more so that you're not putting the supermarket receipts through your business, pay yourself more. OK, the money that you're saving on taxes today is harming the value of your business. So penny wise, pound foolish as the expression goes.

And then the third thing is, for goodness sake, get onto accrual accounting. It's going to be painful while you convert, but take the bullet now so that you don't have to deal with it down the road when you're when you're looking to to get a valuation. Kim, you got any thoughts on that? Real quick, the only thing I'll just let you know, the conversion to accrual accounting is usually not much of an issue in Canada.

OK, because you require to have accrual accounting. The only exception is farmers and fishermen per tax. So 99 percent of small businesses comply with accrual accounting, whereas in the States, of course, it's completely different.

Yeah, it's another reason you're better than us. And there's about a thousand these days. I mean, so it's just yet another reason why you're better.

Every business owner I know when I come in, it's like, you know, I don't understand. I have all this revenue today and I got I had no revenue last month. And it's not really revenue.

It's cash in. So you guys, you guys have that all figured out. So focus on focus on the potential for recurring revenue.

All right. I promise. And I'll take whatever questions you have.

I promise I would wrap up with the story that Kim wanted me to tell you. So here's the deal. I worked for Gallup and during the last during.

And by the way, when I was at Gallup my last couple of years, I did. Financially, I did very well. I did.

I had I had a lot of success, more success at Gallup than I had. I've had in business in any single year as an entrepreneur because I was selling big ticket consulting engagements. But my lifestyle, my life was a shambles.

I was like 60 pounds overweight. I was divorced. I was grossly unhealthy, traveling constantly, literally traveling from Sunday night to probably at least Friday afternoon, sometimes Friday night.

So maybe spending a day and a half at home. I was I was pretty miserable, but good fortune would have it. I met the woman who's now my wife and we were scheduled to get married.

We were engaged and I was just wrapping up a study for Pfizer. We had done a study. This is probably three years before Lipitor was due to come off of patent protection.

We did a year long study on Lipitor and how we could increase physicians writing prescriptions for the brand name and putting dispense as written on the prescription so that when it came off of patent protection, they could retain some of the revenue. Because typically a drug will lose almost 80% of its revenue when it comes off of patent protection and goes generic. We were trying to protect two to three percent of that.

So we did this study. It was a year long study. We had come out of the field.

This is in December and we're due to deliver results to Pfizer's management team the second week of January. So it's the middle of December and I've got raw data and I'm looking it over and we have plans to put a presentation together. This particular day I have plans to have lunch with my future wife, my fiancee at the time.

There's no consulting going on, no activity really. All of our people are in from the road because there's two weeks until Christmas. It's a pretty casual time.

Phone rings in my office and my assistant comes in and she says it's Jeff Kindler's office on the phone. Jeff was the CEO of Pfizer at the time. His assistant says to me, Jeff would like you to give him top line of your Lipitor report.

In consulting, top line means come over and tell me what you're going to tell the people so that I can change what you're going to tell them because we're paying you. So you usually do that for your sponsor, your consulting program sponsor. You give them top line ahead of time.

I said no problem. I said give me a week. I got some raw data.

Give me a week. I'll put it together. We'll come over next week and tell me what day it works for Jeff.

She said no, you don't understand. He wants you to come over right now. And he's my best client and I'm due to meet my wife in an hour, my fiancee at the time, in an hour for lunch.

But what do I do? My best client worth $10 million to the firm. This study alone was worth like $5 million that year. So I dropped what I was doing and I said sure.

I go ‑‑ I get in my ‑‑ I put on a shirt and tie. I was casual. I had a sweater on.

But I kept a suit in the office for all those consulting emergencies that pop up, right? I put on a shirt and tie and a jacket. I get in the elevator, go down, get in the crosswalk. I'm at the corner of 6th Avenue and 43rd Street.

And there were probably 30 of us in the crosswalk. 29 people were successfully able to avoid the taxi. That struck me.

So I don't really remember very much for the next few minutes after that. The police report said I flew 23 feet 7 inches. I guess they were able to determine that by where they found me and the skid marks or whatever.

The next thing I remember is being strapped to a backboard on a hospital gurney, being wheeled down the hall of St. Vincent's Hospital, looking up at the ceiling with no feeling from my armpits down. And that was the day that I basically did, you know, I'm ‑‑ I grew up like Kim. I grew up Catholic, but I'm not very religious.

Kim is more religious than I am now. And I made a deal with God in that moment. And basically I said, look, if you get me out of this, I'm going to make some changes.

I'm going to change my priorities. I'm going to focus on the reasons that I work and not work as the reason that I have a life, right? So everything worked out. I'm perfectly fine.

I've had two kids since then. So everything works, just so you know. And it's important for me that you know that.

No, everything worked out perfectly fine. And the thing for me is that I wanted to create a business that enabled my lifestyle. And then my mission became to help people like you create businesses that enable your lifestyle.

And this work that we do now, planning for the future, is just an extension of that. And I want you to have the freedom to choose to work forever if you want to or to be able to choose how you exit and to choose what is most important for you when you exit, whether that's legacy or financial contribution or a combination of the two. The three things we talked about today hopefully will give you something to think about, at least one thing to think about that will enable that as we move forward.