All of us service clients out there,
and all of us have stepped in,

worked with clients and seen the
messes that they've brought to us.

And our job as professionals is to clean
up that mess and leave them in a much

better position than they came to us in.

And we use those mistakes to educate
other folks that we work with,

other businesses that we work with
as we move forward. And frankly,

some of those mistakes and what we've
seen and helped companies through and

individuals through really have
helped us become such better advisors.

So we wanted to take this opportunity
this morning to go through 10 of the

biggest mistakes that Jon Fonzi
and Harry Roski have seen business

owners make with their financial
management. So let's kick this off, Harry,

let me take it to you first
for number one out of the 10,

what is the mistake and
how can we learn from it?

So I'd say the biggest mistake is when
Dave mentioned earlier when people have

sold a business or retired and they
want to invest in other businesses,

is having a lack of discipline,

real discipline about
why they're investing,

why they're looking at these companies

and doing it in a way that they
would've run their business prior.

So sometimes there's this
light switch that goes off,

they feel that their deal junkies now,

and so they're going out and they're
doing things they wouldn't do.

So what we try to do with them is
to say, look, you need to have,

let's take 10% of your liquid
assets or whatever the amount is,

but a relatively small percentage
and say, if you want to go play,

go play and do these other type
of deals, but the other 80 or 90%,

we're not going to do that with.

We're going to make sure that
your principal's protected.
We want to make sure

we have systems in place.

And the other thing they don't do is
to make sure that they demand what the

structure is going to
be. That's the big issue.

They'll go along if somebody
has an SCORP or something like,

we want to allow our
clients to invest in scorp.

We make them go through a reorganization.
We made them drop down assets.

So you need to create that. And it's very,

very difficult sometimes to get
clients to get that started.

So we have to talk about what's the
long-term impact of that. It's huge.

So that's one of the things we find
difficult to implement. But once you do,

client comes back to you a couple years
later when they're talking to their

friends, they go, well,
I'm glad I did that, John.

Yeah, I mean, just pig
back off of that. I mean,

the one thing you guys have heard me
talk about this hundreds of times is a

lack of an exit strategy.

Nobody plans at the get-go
of what that exit strategy is

going to be.

And a lot of that gets to you've
created or started your business in the

wrong legal form, whether
it be an S corp or an LLC.

Obviously Harry has
spoke about QSBS before,

or C corp are the only way that
that's otherwise going to give you the

benefit of that.

But especially when people are
taking on a partner far too many

times they just say, we love each
other right now. We'll work it out.

At the end of the day,

whether it's getting one partner
out of the business or selling the

business,

you got to know where you want to end
up at. And that's far too many times

people ignore that. The
one thing that I would say,

I've never ranked these as the top 10,

but one of the first things that comes
to mind is from a business owner from

operating their business is not
reinvesting in their business.

A lot of times people say, I'm
going to take all that cashflow,

and yes,

they're going to do something with it
from a personal perspective or save it

or do investing outside of the
business, but at some point,

if you don't reinvest
in your core business,

your competitors are going to pass you by.

You're not going to have anything that's
as valuable as you have right now.

You could take a look at it and
say, yep, I'm making all this money,

I'm pulling all this cash out.

But if you don't reinvest
and keep up with the market,

your competitors are going to
pass you by and become more

valuable. And whoever that exit plan is,

they're going to see that and
think it is not as worthwhile

as what you otherwise think it is.

Piggy being one of the things that we
said where Harry had mentioned about

somebody that wants to sell versus
willing to sell, I just did evaluation,

it was for a personal
divorce, and this guy said,

one of the things I always
ask the business owner is,

how much do you think
your business is worth?

Or Have you ever been offered to sell
your business? And he said, yeah,

but they're always way too low. The
offers are always way too low. Well,

I valued the business and he said, yeah,

everybody offers me three
to five times ebitda.

He was in the industrial
manufacturing space. Well, guess what?

I valued the business and I came at
a little between three and a half and

four times ebitda and I told the
guy, I hate to tell you this,

but that's what your business is worth.

If you're expecting somebody to
come in with a seven or eight times

multiple,

that ain't going to happen unless you've
got something special or different.

And one of the things that he
didn't do was reinvest in new

technology, new equipment,

state-of-the-art stuff that was going
to give him those higher multiples.

So I see people that don't reinvest in
their business and then still expect that

they're going to get these
high multiples on exit.

David, thank.

You. Had a follow up?

Yeah, I have a quick follow
up. So we've covered,

for those of you who are
keeping score at home,

mistake number one was investing too much
of the proceeds into other businesses

after a sale and not holding some back.

Mistake number two from John
was lack of an exit strategy.

And if you're in this room with us,

you know how much we value exit strategy
because we beat the hell out of you all

day long about that.

And then number three from John was not

reinvesting in the business,

enhancing your competitive advantage,

kind of building your
moat around the castle.

So I have a follow-up question for

that specifically for
both of you guys about

reinvesting, about
investing in the business.

And this is a question that Nicola
and I get all the time because

we're real hawks about making
sure that the business owner

is taking profit out of their business.
So there was a book

that was written and there's
a whole methodology on that
called the profit first

methodology. And our contention
with business owners,

especially Main Street business
owners who have six figure businesses,

but they're not quite breaking
a million dollars yet is okay,

so we've all heard that you
got to sacrifice to make
your business successful,

but if your business isn't
funding your lifestyle,

eventually you're going to go broke
and you're going to have to take a job.

So you need to be taking money out of
your business to make sure that your

business is actually producing
value for the shareholder. For you,

the purpose of a business
in the first place,

what is the appropriate
amount on a percentage basis?

Let's say the owners are taking
out enough to sustain their

lifestyle.

What is the appropriate amount to
reinvest and kind of break it down for us

into aggressive, moderate,
and conservative.

What would you say on a percentage basis,

if the owners are fine and the business
is doing a million plus a year,

but it's still a main street
business, it's still a small business,

what is the appropriate amount to reinvest
to continue to build your competitive

advantage?

Go on.

John.

Oh, throw the hard balls to me,
Harry, thanks. No, no. I'll add in.

I would say, Dave,

it's impossible to put a percentage on
anything because it's going to depend

on the business, the state of technology
and the industry that they operate.

If you assume that the owners
are okay, they have enough money,

they don't need to pull anything more,

a lot of it's going to depend on what
kind of return on an investment that

you're going to get.

If you can get a higher rate of return
of investment by reinvesting in the

business and you're already
set from a personal level,

you don't need to pull any
more money out of the business,

well then reinvest a hundred percent of
it back into the business if you think

you can get a higher rate of return on
your personal investments than what the

business is otherwise providing you.
There's an issue there that says,

Jesus, this business
otherwise going to survive.

Are they reinvesting enough
or keeping up to my point?

But then there may be they're
better off that says, no,

we're better off taking the money
out because the personal needs of the

family are greater than what we
could otherwise do for the business.

And it depends a lot on how you
measure a return on investment.

It's not always just going
to be dollars and cents.

There's always going to be this
element of taking care of my family.

I think I've given you that story
before about the one gentleman that said

he would obviously sell the business,

he could make a ton of money
by selling the business,

but he otherwise chose to
keep it because he felt he had

a obligation to his family members
to provide them jobs that he

knows they would not otherwise have
if he wasn't letting them work in the

business. So that gets to one of my
other things, which is nice segue,

I'm going to steal your thunder
or your question here is

impulsive spending.

People that don't look or determine
what a return on investment is

before they make that investment.

A lot of times people like to chase that
shiny new thing that's out there like,

Ooh, this is the coolest new
technology out there. I got to buy it,

I got to invest in it.

But they never take a look at what kind
of return on investment am I going to

get on that from a valuation perspective,

financial modeling,

we all talk about the capital
asset pricing model, cap M,

that's always kind of that rate of
return, that hurdle that we all look for.

But there's other, so first off,

people may not look at that when
they are investing or reinvesting,

and the other is tying in that
personnel element that says,

am I really better off or would
I be better off by doing this or

giving my family money rather
than reinvesting? So again,

not planning or having that
impulsive spending that just says,

I'm going to chase the newest and
greatest thing. Like, Ooh, look at that.

I'm going to go for that.
No, that one's cool.

I'm going to invest in that
without knowing what that plan is.

Or you talked about starting
off the session about

your goals of whether or not they're
achievable or having some sort of

deadline or being able to
measure those that m in smart.

Far too many times people just chase
something because it's the latest and

greatest thing, but not knowing whether
or not it's a measurable return.

And I would add on to that, John,

it's not only the measurable return is
how are you being distracted in your

business and is that really going
to be helping you build value in

the business that you've created?

I think those distractions
are not going to be like us.

If we said tomorrow we
wanted to be experts in

pension plans, how much time and
effort would we have to put into that?

And then you're pulling away from the
blue ocean about all the other good things

that you're working on,

so you're actually diluting your other
business that's delivering all this value

and then all of a sudden, at least in
our business, then you're looked upon as,

well, wait a minute here, how can
you be an expert in all these areas?

And now you've gone off into the
pension area. That's just one example,

but it's the same thing
in the business line.

People want to buy your business because
you have a certain business line.

If you start adding onto that,

I think it's a distraction that money
could have been used other places and

it's just you got to be very strategic
on why you're doing it and it has to

be.

I was going to say the cost of
investing in something like that.

So if you're going to say, yeah,
I want to become a pension expert,

and you look at all the revenues that
you could otherwise generate from doing

pension valuations, actuarial
work, whatever it is that you want,

but yes, you either got to
go out and hire somebody,

but there's a time then that me,

you have as far as hiring,
finding that person,

training them. And again, yes, it
takes away from what we're doing.

So not to say that we're
all about the billable hour,

but every hour that you take away
from me of doing what it is that I do,

that's less revenue coming in the
door and that's part of the cost of

reinvesting that maybe somebody doesn't
realize as part of this analysis that

they're looking at. Absolutely.

Yeah, and I would argue on the flip
side, by you investing in something else,

use our parlance and our type of
business is we could have hired

that super smart valuation person that
came across our desk that we thought was

maybe getting paid a little too much,
but we really wanted them on the team.

And then therefore you've strained your
resources maybe not to be able to buy

that person, not buy them,
I mean get them on board.

The other thing is that
I just look at it, Dave,

to answer your initial
question is you're right.

You've got to be treated
as a shareholder first.

If the company's not returning a
dividend every year on your investment,

then you've got to question
whether why are you in business?

Because if it's just for the
compensation, that gives you a job.

So you should be building up value.
On the flip side of that,

you don't want to keep too much
money in the company because

when you do go to sell, somebody says say,

why do you need that much working capital?

What's in the business that you
need that much working capital?

So there's a delicate balance there.

I think that's important because if their
perception is they need more working

capital to buy you,

that means it's be a lower purchase
price no matter what you say.

That's be their first impression and
I think everyone knows what first

impressions are. They're
hard to get rid of.

Yeah, I mean as a business owner,

you are the shareholders and you
should operate the business with a

fiduciary obligation to that shareholder,
to the investors that says, yes,

your return can come in one or
two ways or a combination of both.

One is a current dividend cash payout,

the other is increase in
value of the business.

And if you're only viewing one
and not considering the other,

you're doing a disservice
to your shareholders.

I'm talking about investing top dollar.

I'm going to not pick on Carrie,
I'm going to use her as an example,

even though her properties that
she sell probably don't have

projects.

But I watch enough HGTV to say that
when people are buying a house,

they're always, do I want to buy move-in
ready? I don't have to do anything.

If you do that,

you're going to pay top dollar for that.
Or am I going to buy something that has

projects that I know I'm going to have
to put some dollars in and increase the

value myself? It's similar in a business
or the people that you're hiring.

If I'm going to buy
that top dollar expert,

it's going to take a while for me to get
that return on that investment because

I paid top dollar for
it Carrie's properties.

If you follow her on LinkedIn, she's a
member in Chicago and provisors with me,

I don't know, Carrie, do you guys,
those types of level of buyers,

are they looking for projects or.

It's so interesting that you brought
this up and most of the buyers are not

looking for projects at that
level. They want it done.

So your exit strategy in your
world is very similar to the

residential world.

And that's what I tell my clients is
you have to put in if you want the right

exit, and you can't just
do it at the very end.

You have to maintain it and grow it and

always be thinking about
that exit strategy.

And there's some homeowners or sellers
that don't agree with that and they'll

see that on their exit, they
won't get the return on it.

And then buyers will not value that
property the same. That's actually,

there's a bigger discount on that
piece of property if there has to

be work put into it because they
take time and energy and they value

their time more than they
do the project itself.

It's funny that you guys,

you've hit on this because
the perspective that

Nicola and I have used
when we're doing a session

at our monthly breakfasts or when
we're teaching a topic in our

professional development sessions
for the members is typically we

cover things from the
perspective of an investor in the

business. So about 25 years ago,

there was a book written
called the E Myth.

It was written by an author
named Michael Gerber.

And the famous expression that
came out of that book was,

you want to work on the business
and not in the business.

Well, that thinking is good thinking,
but it's not the best thinking.

If you're working in your
business, you have a job, right?

If you own a convenience store
and you work the seven to three

shift and your brother works the three
to 11 shift and your cousin works the

11 to seven shift,

you basically have purchased a
job for yourself now that you're

working in the business.
If you are working on the business,

you have a staff that works,

the am the second shift
and the third shift,

and then you're working on the
business constantly figuring out how to

strategically reposition your business
and reinvest in your competitive

advantage to make the best convenience
store you can possibly have so that you

drive the other convenience stores on
the other three corners out of business.

So that's the difference between working
on the business and in the business.

There's a third aspect that nobody
else talks about that Nicola and

I focus on an exit success lab,

and that's working over the business,

that's treating the business.

It's a separate investment and
looking at that business and saying,

how can I take this convenience
store on 85th Street and Second

Avenue and parlay it into
convenience stores on

every 10 blocks in the city so I can
get a second convenience store on 72nd

and second Avenue and a third on 62nd and

second Avenue that's working over the
business and viewing the business as

an investor. And that's the aspect
that we're talking about right

now that everybody else misses.

Everybody else is out there.

I mean the unwashed masses
are working in their business,

the minimally educated Michael Gerber
crowd is working on their business and

they're thinking about strategically
positioning their business,

but there's no place else that you
are going to hear about treating your

business like an investment so
that it can become something

more if you want it to.

And that's what these guys are so great
at pointing out. Alright, so Nicola,

here's what I've heard so far. Check me
on this, right? I'm taking notes here.

I've got number one, investing too much
of the proceeds into other businesses.

Number two, lack of an exit
strategy. Number three,

not reinvesting in the
business. And then number four,

which is a great one that I
have three clients right now.

Impulsive spending, right? Ooh,
shiny object, shiny object,

squirrel on the fence,
invest in the squirrel on the
fence. I need new software.

I got a guy I work with gets new software
every year, new CRM system every year.

Next biggest thing is going to help
'em be more productive. All right,

gentlemen, what's number
five? And then back to Nicola.

Barry, your turn.

Hey, I'm sorry, what
was the question again?

Number five, biggest mistake the business
owners are making with their finances.

So what I would say is
lack of true preparation

is the biggest item.

Not realizing how long it's going to
take to get everything up and going,

looking inward to the company and
trying to shed expenses that you really

don't need and look at things that
really spruce up the car, get it shiny.

I think that is complete lack of
planning. People say they don't have time.

It's hard to get the owners to focus in
on that's going to cost them real money.

Again,

it kind of goes back to we're a
firm belief that every year what you

should be doing is updating
your A due diligence file.

Where is all your
information? What's going on?

Where are all of our contracts? It
helps you also in business to say,

what are my liabilities? What are
my obligations? And if you do that,

and then the idea there is if
you're that well organized,

then you're going to be focusing
in on who are your competitors,

what's going on in the marketplace. It
becomes this whole process. So to me,

it's that whole process of getting
ready for selling the company.

And that means understanding
everything that you have internally.

And it goes back to that first impression.

If you are highly organized and you have
all this information when somebody's

talking to you,

I think you're going to get more favorable
terms than you would've otherwise.

John, anything else on that point?

Yeah, because my next ones are
kind of similar and related

from what I see is a lot of times
business owners fail to budget.

They just assume that I'm going
to go out, start my business,

and we're just going to, things
are all going to work out.

No one goes into a business
expecting to go out of business.

We're all expecting to survive and make
money from it. But how do you get there?

You got to have a budget. Everybody's
got to have a goal to shoot for. Dave,

Nicola, you mentioned it to start us off,

what were our goals for the next six
months or the last half of the year?

You got to have something not only
for the business, but your employees,

especially the key employees to shoot for.

Because one of the things we talked
about reinvesting in the business is

incentivizing your employees.
When you talk about the line people,

if they don't know why
they're doing something,

I wouldn't say maybe they're
not the right people,

but everybody should have
an idea of what they do.

How does it contribute to the
business? So backing up here,

failing to budget for something,
coming up, a forecast,

a projection, a budget, all
three of those are different.

So a budget is,

what am I shooting for?

A projection is basically
a what if analysis and a

forecast is what do I
most expect to happen?

So from my perspective in valuations,
I love it when somebody has a forecast,

a budget is good, but if nobody,

this gets to my second part, which is
a lack of monitoring in an analysis,

okay, you've got a budget,

but if you never compare yourself
to the budget and analyze why did I

miss or why did I exceed my budget,

then you're going through the machinations
of just because somebody says,

oh, I'm supposed to do this.

This is part of the planning
is I got to have a budget.

But if nobody compares how you're doing
to that budget and explaining what

those differences are,

then you're missing the boat
completely of why you're doing this.

But John, sorry, go ahead, John.

Don't you also think though that
as part of that three-part process,

the budgeting, the forecasting
and everything else,

you should be looking to what's
the competitive set out there?

Get information from the banks or from
people like you in your industry to

say, Hey, look,

why is our cost of goods sold going
up 8% when they average the only 3%

or whatever the case may be.
Those operating stats like RC,

those tend to be 125 days, but
industry standards 32 days.

Absolutely.

That's part of this whole process
that says I'll pick on other

valuation people because one of our
standards says we have to do economic and

industry research. Our
reports have to include that.

And a lot of people just go through the
gyrations of grabbing something off the

internet and plugging into the
report because they have to do it.

And when you read the report,
something doesn't jive.

The economic indicators
say things upswing,

the industry is all
doing exceptionally well.

Growth potentials are high, but
yet when you look at the valuation,

the numbers that they do,

it's doom and gloom without
an explanation of why are you

so different than what all of
the indicators are. But so yes,

you have to look at those indicators
to figure out what a proper budget

forecast projection is
otherwise going to be.

Something's got to go into that where
you're looking at it, and to your point,

I did evaluation.
It was for gift tax planning,

turning it over to the second generation
and the business owner where I was

going through it with him, and he is
like, it's fine, fine, whatever it is,

the number is what it is. But this is
the stuff that I find more interesting.

I did a benchmarking of his
company against industry averages,

and he said, it's exactly what
you said here. He goes, wow,

we're that much slower collecting
our receivables than the industry.

And he asked his son, he goes, did
you know that? And he is like, Nope,

never looked at it. And he's like, geez,

that's something we should
be focusing on. That's where

the value of the valuation was,

wasn't in what that bottom
line dollar amount was.

It was the analysis that went into
it that was an eye-opening surprise

for 'em.

Thank you for that. And the last
two examples That you've given us,

it really touches on what Dave and I are
out here doing with Exit success lab,

which is getting in front of
business owners and saying, Hey,

you've got to stop and focus
on, for us, it's the exit plan.

How are we going to get there?

And that's at a very high level of what
both of you have touched on is we're

saying,

you got to take the time out to do this
now because not only is it helping you

build your future and giving you a plan,

but it's also helping you
increase your value today,

which you're missing out on.

And that's one of the ways we really
get to have those conversations.

And so my follow up to both of you is
it's tough to be able to get in front of

these business owners and say,

let's sit down and talk about some of
these things. Like what you're saying,

Harry, the lack of the true
preparation and planning and John,

the failing to budget and going back
and monitoring and analyzing it.

How are you? I mean, just give
us your top one or two ways.

You're getting the business owners to
have those conversations with you and

focus them to be able to do that.

What we try to do is focus
with them on increasing the

value of the company. And it comes
up in a lot of different ways.

It's a lot of what John
and I mentioned earlier,

but one of the other things that we didn't
mention that I think is probably top

part of the list is how are
they incentivizing the executive

team to increase the value?

Do they have a stake in the ultimate
sale by having stock ownership?

There's ways that you can give people
what's called a profits interest if

they're providing services
depending on their corporate setup,

how do you get them to step up because
then they have a vested interest

in getting more money for the company,
but you're creating more value.

So that's the one thing that
we see that they just, yeah,

John's doing this and Walt's doing this,

but you got to think about if I get those
guys on board and I give them part of

the equity,

my part that I'm still retaining is
going to be probably worth a lot more

because now I have a team in place that
the buyer's going to want to keep in

place and everyone's made money in the
process. So you got to look at that

bigger picture.

I think that's as critical as all the
other things we've been talking about.

Absolutely. So I think I've
mentioned this again before,

to the sake I'm being repetitive.

Of course you did, John.

Of course I am.

That's why those interviews ended up
being 180 minutes. I talk too much.

So two of the key drivers that in the
m and a world that people look for

is one is recurring revenue.

Companies with recurring revenue sell
at higher multiples than businesses

with non-recurring revenue. Dave,
you absolutely champion that.

The other that they look at
is turnover in key employees.

How often are those key people
turning over in your business?

The longer you have that high
level that management team in

place, the better off you're going to
be, the higher value you're going to get.

And the way you do it is exactly what
Harry said is you have to incentivize

those people in order to
work for not only for them

to understand that what's better for
them is also going to be better for the

business because what's better for the
business or what's good for the business

is also going to be good for me because
I'm going to share in a piece of that.

So those, again,

they will look at those as being
the two of the critical factors,

recurring revenue and low
turnover of key employees.

There's a story out there when
Steve Jobs was doing something with

Starbucks coffee and the original owner,

Steve Jobs said, your executive
team isn't worth anything,

they should all be fired.

And it was interesting when you
go back and look at that story,

I think it was within
either 12 or 18 months,

every single person that was on that
executive team left the company Starbucks,

which means sometimes you got to have
outsiders come in and kind of what are you

doing? And that's where if you're smaller
businesses even had an advisory board,

let alone a regular board of directors
could be very helpful in assessing who's

on your team and what are they really
bringing to the table because that's

obviously going to create
the value for your business.

I had this exact conversation,

I think I've had this
conversation with you, Pete,

I've had it with a couple of people
where we talk about the team that gets

you to 5 million is not the team
that'll get you to 10 million or

20 million.

The team that gets you to 20 million is
not the team that's going to get you to

a hundred million. Here's the thing,

all of us as business owners,

we have to become that next level founder,

that next level CEO.

And the only way we can go from
being a $5 million CEO to being

a $20 million CEO is by
surrounding ourselves with

people who are 50 million or a
hundred million dollars CEOs or

advisors to $50 million or
a hundred million dollars.

So your point about the
advisory board I think is

incredibly powerful because
you don't realize you're so

close to your team.

You don't realize you've only got a $10
million team and you want to build a

hundred million dollars business.
But if you have an advisory board,

and on that advisory board are two CEOs
who've had a hundred million dollars

businesses and exited, and three
advisors who advise people who have 300,

400, 5 million businesses,

and they look at your CFO and they look
at your chief operating officer and they

say to you, listen,

those people are not capable of doing
this and they have a laundry list,

that's what you need.

And they're not capable of thinking like
this and they demonstrate a completely

new level of thinking that will take
your business to the next level.

If you don't have people
sharing that with you,

you don't grow to go from being
that $5 million CEO to being the

$20 million or a hundred
million dollars CEO.

That's the value of
having an advisory board.

That's the value of being part of a peer
advisory group if you have the right

people in that room.
Now,

if you're a $20 million business and
you're surrounded by $5 million CEOs,

nobody's pushing your thinking, you're
in the wrong room. The expression,

you never want to be the smartest
person in the room as a CEO,

being the smartest person in the
room is the kiss of death for you.

That's stagnation for you
as the business leader.

So you can't be the
smartest person in the room.

You have to be the person that's
always learning, that's growing,

that's coming away.

The best thing for you is to walk out
of a conversation with 15 business

owners with three pages of notes,
embarrassed about what you didn't know,

because that means that now you have
the capacity to grow your business.

I mean, that level of self-awareness,
people ask me all the time,

what do I need to build a
hundred million dollars business?

What do I need to build a $300 million
business? And that the best answer that I

can give to that question
is self-awareness.

You need to be so
self-aware that you have the

capacity to learn and grow at 40, at 50,

at 60, at 70.

If you have self-awareness and you
realize the areas where you're ignorant,

the areas where you have blind
spots and you have the ability to be

intellectually curious and
assimilate information,

you've got the capacity to build a big
business if you can execute or if you

have a team that can execute.
All right, here's what I got.

I think we only got one left. I'm turning
it back to you, Nicola. So number one,

investing too much of the proceeds
into other businesses. Number two,

lack of an exit strategy. Number
three, not reinvesting in the business.

Number four, impulsive spending
shiny objects, squirrel on the fence.

Number five, lack of
preparation. Plan more,

prepare more. Number six,
failure to budget. Number seven,

lack of monitoring and lack of
comparing your budget to reality and

lack of benchmarking against
other industry standards,

which I thought was a fantastic takeaway.
That's number seven. Number eight,

not incentivizing key staff
because that is one of

the two key areas that people look
for, which leads into number nine,

and that's not focusing on
recurring revenue and reducing key

employee turnover. So those
are the nine. We got one left,

Nicola.

All right, who wants to take it?
Harry, John, give us our last one.

I'll take it. It's called personal
budgets and estate planning.

You got to have a personal budget.

How much money are you really pulling
out of the company for your lifestyle?

What are you going to
have after down the road?

And then how are you going to maintain
whatever you want to maintain and do the

things that you want it to do?

And along with that comes your
estate planning for you and your

family and to protect
the economic interest.

I would add one thing into that section.

We have RIAs here on the call today.

The idea here is you got to go out and
interview two or three of them at least

to make sure they're going
to be able to fit your goals.

That's all part of this budgeting
because you just can't listen to one.

You got to listen to two
or three to say, okay,

if I assume a certain mix of
investments and things of this nature,

can I do that? You just
can't listen to one person.

You need to talk to two or three.

Just make sure that all the information
you're getting is well utilized.

Well.

Speak to buy agreements as
part of that guys please,

because that should be part of it, right?

Your buy sell agreement
has to be in there.

That's all part of your structure. I
mean, what do you have in there? I mean,

the biggest thing that we see on the buy
sell stuff that people get caught up on

and really don't plan for are disability.

One of the key people get disabled going
to, how are you going to take them out?

How are you going to work it?

And then obviously you have to
have the right structure for that,

for both financial and tax standpoint. But

you got to look at,

like Sheldon mentioned about the
franchise and having the right leases,

you got to have the right
buy sell agreement and you
got to have someone who is

knowledgeable enough that can say,

these are the 40 different examples
that you need to factor in to your

situation. And then that
buy sell agreement, John,

I know John's talked about this before,

that needs to be updated every
year or two because the companies,

the value changes, people
change, whatever the case may be,

it's not the same company.

So if you had a formula and then that
formula may not apply because the business

world has changed. So I mean, it's
all part of this whole process.

So I think you have 11 or 12 now.

Well, I put buy sell agreements in with
estate planning and asset protection.

Kind of stuff. That one in there, look,

personal budget is a great one
to end on. This is a big issue.

It's making sure we're corralling,

what are you spending and what do you
really need for the rest of your life?

What are you planning for your retirement
and for your eventual exit out of

this business. So I think it's great
to be able to talk to that issue.

And Harry,

I'm really glad you mentioned working
in the other advisors because really

oftentimes most of these
folks have multiple advisors,

and you've got to be on the same page
with those other advisors and make sure

you're all working together for
what's best for that client.

And that's really important. So
thank you for highlighting that.