Episode #6 – Stocks in Free Fall: Here’s What to Do in a Market Meltdown

Welcome to the Millennial Money Moves Podcast. For the month of April, Blake and I wanted to dive head first into the American dream, being a true entrepreneur and running a business.

We’ve gotten a lot of requests from business owners listening that are asking us, hey, how can we apply some good personal financial planning practices to our business and make sure we’re running our business to the best financial ability, as well as

our personal finances? So we wanted to bring some guests in from all over the industry to give you some insights into maybe how you can better operate your business more financially secure and things you should be thinking about, where you can

leverage your business to help save for you and your family. We hope you enjoy. This content is purely educational, does not tend to be financial advice or financial planning.

Please consult your professional financial advisor or tax professional to receive tailored advice to your personal situation. Babin Wealth Management is not responsible for action taken by listeners based on educational content provided.

If you would like to receive personal financial advice, please reach out to Babin Wealth Management directly at babinwealth.com. Let’s make moves. Welcome everybody to another episode of the Millennial Money Moves Podcast.

I’m your host, Sean Babin. With me as always, Blake Bandani. Good to see you, Blake.

The one and only.

Always good to see you. Hey, we’re on video now, Sean. Look at this.

Yeah, man.

We’ve kind of been told if we want to take this even more serious, instead of just doing podcast sessions or recordings in the studio, we need to do some video and get it out there in the world. So I’m excited to see you.

And I mean, we got to introduce Dale now. He’s right here next to us. So we got an awesome guest for you guys today.

We’ve got Dale Schafer in the, I want to say the building, but in the podcast and the virtual webs.

In the building.

So the month of April, we are going to focus all on the entrepreneur, the American dream, being a business owner.

And we’ve gotten some requests from business owners out there, just, hey, you know, what are some things I should be looking at in my business and my personal? How do I keep it separate?

Just a lot of intricacies when you’re running a business and also trying to save for you and your family.

So I brought Dale in to speak with us today because he has built a whole financial advising practice with the niche of working specifically with business owners. So he’s a great way to kick it off.

And yeah, that’s kind of what we’re up to this month. So we’re going to, like I said, we’ll have a financial advisor on.

We’re going to have some payroll people potentially, some benefits people, and just kind of give you the entrepreneur some different insights and maybe run in your business better financially. So anything, Blake, from you on those lines there?

No, I’m excited. Dale, great to meet you and excited to hear what you do and how we can help some of our viewers. So I appreciate you coming on.

Thanks so much for having me on.

I really appreciate it.

So yeah, man, let’s dive right into it.

Dale, love for you to share with us just kind of your journey, man, how you got to a point where you’re at, where you’re specifically working with business owners and building a financial advisor practice around that.

And heck, you’re an entrepreneur too. So let’s dive into that journey.

Yeah. So I’ve been in this industry, which I always kind of like hate to call it the industry. You know, it’s like we do such great work here.

So it’s just kind of like weird to call it an industry. But anyway, I’ve been in for 10 years. And prior to that, I had P&L responsibility.

I was GM of a specialty construction company back in the Midwest.

And we did, you know, basement waterproofing and deep earth anchors and some really cool stuff that I still sometimes I’m like, man, like we did some cool stuff, but I like manly stuff, you know, big machinery and deep earth anchors.

Like, let’s talk about that for 20 minutes.

Yeah. So that was a lot of fun. And just kind of running that business really taught me a lot about business.

I mean, it’s one thing to have and it’s the same in this industry or this business or this, you know, services that we provide. It’s one thing to have the academic knowledge and it’s quite another thing to have the applied knowledge.

And so I had the benefit of, throughout my entire career, I’ve almost always worked with business owners in the various stops that I’ve had. And so I just kind of learned how to run a business.

So for the first, you know, probably, I’d say seven years of the 10 that I’ve done this work, I just was kind of trying to find a niche. And then a couple of years ago, one of my clients, who is a business owner, we sat down for breakfast.

I thought it was just going to be like a casual, you know, catch up middle of the summer. Nobody usually wants to hang out with me. And this client wanted to have breakfast.

And I was like, score. Like somebody wants to talk to me in the summer. We did it.

Awesome. Yeah. Like we’ve arrived, baby.

And we sit down and the very first thing he asks is, hey, how do I sell my business if I want to do it in the next year? And so conceptually, I think I know how to do that, but I figured I didn’t know enough to really provide good advice.

So that kind of started my journey down what the industry calls exit planning.

But really, the way that I’ve structured that, Sean, to your point, is I’ve kind of built my entire financial planning process or rebuilt the financial planning process around serving business owners.

So I like to say that I do exit planning, but it’s through a financial planning lens because I’m not waiting for the transaction or the exit, right?

We’re doing all of the work long before we get to the finish line because you don’t run a marathon with a mile to go. You’re right, you run a marathon all 26.2 miles or whatever it is, right? Because I personally feel like…

I think that was close enough, Dale.

I think that was right.

Yeah, I kind of feel like running anything more than the 5K is probably not necessary. So, you know, I don’t know how they do it.

5K is pretty much all I’ve gotten me.

Yeah. So, but all that, even just across the finish line, it takes a long time to prepare for that and to train correctly and to run your nutrition and all of that.

So, if we parlay that into being a business owner, there’s a lot of steps that need to be taken before you’re ready to transact or transition the business. And so, that’s where my financial planning process comes in.

And it’s really been great and helpful for business owners because a lot of them really don’t… They’re kind of locked out of advice until they have a lot of money to manage.

And so, the nice thing about being independent, Sean, like you and I are, is that we’re able to kind of structure our fees the way that serves the clients best and it doesn’t necessarily have to just wait for money to manage or it doesn’t even have

to be built around assets under management, right? So, we… I’ve been able to create a process where they can pay for advice all along while we’re executing that plan years in advance. It’s been a great journey over the past couple of years.

All right, Dale, I got to ask a question, Sean, if you don’t mind.

Just hearing that, Dale, I’m just curious is like, to your point, you don’t just get out of bed one day and say, I’m going to run a marathon, right?

You start training and you do the reputation and repetitions, excuse me, and you know, you get ready for that day of the marathon.

So, I say all that because when I think of a prospect or a potential client coming to you about succession planning, it’s probably because they’re already thinking that they’re ready to sell the business.

So, how do you approach prospects and clients to give them that mindset that like, hey, you don’t necessarily have to come to me just because you’re ready to sell. You really should be thinking about this ahead of time. How do you manage that?

Yeah, that’s a great question.

And it tends to just kind of move around a little bit based on who the person is and what’s going on in the business.

What I really try to get to is kind of no different than just a standard financial planning prospective client, which is just, hey, why are we, why today? Why are we meeting today? What’s happening today?

What’s most important? And so you kind of start to get a sense of where their mindset is. And then, you know, from there, I start with, let me understand what’s happening in your personal life.

Get a good handle on that. Okay, now let me understand what’s happening in your business life. Because a lot of times there’s a lot of conflict between the business and the personal.

And I see a lot of business owners, especially for smaller businesses, kind of living what we call living out of the business or they’re running a bunch of personal expenses through the business, P&L and balance sheet.

And so there’s some process of, okay, let me understand how you’re funding your lifestyle. Let me understand how chaotic your personal finances are. Let me understand how chaotic the business finances are.

And then tie those two together. Because oftentimes business owners, I think have a kind of a, what I like to call like a T box value of what their business is worth.

And they kind of think of it like their house where, I know my buddy down the street is selling his house, but I have a bigger lot and a pool and we’ve upgraded their shingles or whatever, right?

And so they think about their business that way, but that’s not the way that businesses are valued. And so that is really for some people kind of a wake up call.

And sometimes even just getting an understanding of how they’re running the business, you can say, hey, I understand that you’re ready to go. Let’s talk about why you feel like you’re ready to go.

And then let me help you understand where you’re not really ready. And we have to do some things to clean up the business to make it attractive for the next buyer, internal transfer, however, we’re going to transition that business.

It’s an asset that needs to be prepared. It’s really, I guess, kind of to do the plus and minus of using the real estate analogy. If you think you’re going to sell your house, you’re probably going to do some things to dress it up.

And we need to do the same thing for the business. There’s a lot of cleanup that needs to happen before you can just put it on the market, especially if you want to get a transferable value that’s worth transfer.

Well said.

Yeah, so that’s definitely towards the back end of their business.

I think our niche on this podcast with the Millennials would be kind of more people out there with the five years in, maybe 10 years in if they started it, or maybe heck, they’re thinking of maybe starting a business right now and they’re just kind

of daunted by the whole task. Do you come across individuals like, hey, I’m five years in, just kind of help me manage my money better in regards to my one personally and two on a business level?

And then maybe you could speak to a little bit like, here’s some best practices if you’re out there running a business and you’re a couple of years in.

I’m going to take note because I’m six months in, so I’ll be over here diligently writing things down. I think that’s what I would love to get into.

I think that would just really excite the listeners in regards to giving them some best practices and tips of like, hey, here’s some things to be thinking of while you’re running it and make sure you’re looking out for Numero Uno too.

Yeah, such a great point. I really, I think I would prefer if I had a choice to work with people who are in the middle of their career because that gives you a long runway to really build value into that business over time.

I’m very much a big believer in the Stephen Covey. If you read the seven habits of successful people, you begin with the end in mind.

And so if you’re starting a business, I think it’s very helpful along with part of your business planning is to think about how you might eventually want to transition.

Are you building the kind of business that you want to eventually get private equity money or maybe even take public? If that’s the case, then knowing that that might dictate how we set up your entity or change the way your entity is set up, right?

So if you’re an LLC, but you want public money, we probably need to shift you over to C Corp at some point so you can receive that well. And there’s a lot of pluses and minuses there. And usually, we want to get a tax professional involved.

But if you’re thinking that’s the case, or if you want to transition to one of your children or to a family member, or if you have a partner that’s younger than you or older than you or whatever it is, understanding what you eventually want to have

happen with your legacy, it’s not all that different, guys, than basic financial planning. When we talk to somebody about how they want to retire, they probably have some thoughts around that.

And usually with my client’s retirement is one of those swear jar words, because I don’t know what the H it means. Yeah. And they often haven’t thought about it enough to know what it means either.

So we want to get some definition around what does the next 10 years from now look like? And that’s really hard to imagine other than we might have less hair. You guys might.

I’ll have the same hair. But we might have less hair and maybe a few more wrinkles outside of that. Who knows, right?

But we still want to get an idea of what they want from that. So I would say anybody who’s in the building years, which is really the first five years.

And quite honestly, if you’re a business owner and you’ve hit that five-year mark, you are incredibly successful because statistically, you should have already failed.

So if you’re still in business and you’re profitable five, six years in, congratulations. You’re at a point now where the business has life.

It has the ability to generate revenue often without you having to do all of the work that you had to do the first three and four years, right?

Because if you get to year three, that’s where it’s even in year three, you’re like, I don’t think this is going to work. I just, I’m holding on for dear life. I don’t think it’s going to work.

Year four, you start to go, maybe this is going to work. In year five, you’re like, hey, I’m starting to earn money. That’s cool.

And so if you’re at that point, it’s very, very helpful to find somebody who can be, whether it’s an ops coach or, you know, I like my role as a financial planner for business owners because I go into what’s happening in the business and that’s where

it’s easy for me to spot opportunities where, hey, maybe we need to bring in a fractional CFO, or maybe we need to have a marketing agency come in and help you push, you know, this next initiative or this next product launch, or maybe we need an ops

consultant to come in because you’ve been running the business and now it’s a little bit messy and you’ve had to add employees and you’re growing faster than your processes. You know, you’re hitting bottlenecks. And so maybe we need to look at that

and look at the way you’re pricing yourself. So maybe you slow down sales by increasing prices, right? So a lot of that strategic business stuff, somebody like me is not supposed to do or even really ever does.

But for me, what I’m helping them do as business owners is for a lot of them, roughly 70 to 80 ish percent of their total net worth is the business value in their personal real estate.

They don’t have company sponsored 401ks that they’re contributing fully to and they’re getting a match on most of them. And Blake, you probably see that more than any of us, right?

Percent, and I would say to your point, Dale, is a lot of times when I’m talking to business owners about maybe setting up a qualified plan, they’re like, hey, I’m putting all my money back into my business, right?

To your point exactly, but maybe working with someone like you can figure out, well, why are we so cash tight? Why can’t we set up a qualified plan? Right?

So I think that’s the key of working with someone like you, Dale.

Yeah. And so for them, to that point, the business kind of is their 401ks. So I see it as I’m helping them, helping them kind of refine and build asset value there.

But there is a point where we need to diversify the concentration of net worth, because having all of your eggs in the business basket is just as risky as having all of your money and pick your stock.

Bingo.

And maybe even more risky. Business owners see it the other way, though, because when you have all your money in a stock, you can’t control what happens.

But if you own the business, you feel like you have an illusion of control and it’s the same risk. It really is.

Well said, Dale. Curious, do you see yourself working with specific owners of specific industries? Or if you own a business, come talk to Dale kind of thing, right?

Yeah, I’m a little agnostic for that.

I will tell you that probably because of where we live in the country, it’s a lot of service businesses that tend to be my business owners. And so they’re doing things like I have a financial coach who’s a client.

I have two financial advisors who are clients, which is always fun. I have insurance agents and car guys and contractors. Yeah, it’s just a lot of service stuff.

Do you think the blueprint of what you want to accomplish changes based off of the industry that they’re in?

Or is it pretty similar across the board?

Yeah, I would say that the framework is the same. The individual application or maybe some of the order of some of the steps might look a little different.

And they’re individual scenarios too, right? That’s always going to have variables, for sure.

What is kind of the…

From my understanding, I would love to know kind of the difference between financial planning for like a business, I don’t know, the owner versus like, you know, I work mostly with kind of the Henry clients, 30, 40 year olds making, you know, their

W2 money, not sure exactly what to do with it. We’re looking at 401k, basically that kind of traditional financial planning aspect. What is it? Where does it start on like a business side?

Are you just diving deep kind of into financials first and then diagnose from there? How does that work?

Yeah, so I start, everything starts with personal financial planning. That’s the doorway.

Okay.

Once I have a good handle on the personal financial planning, so I’ve done the analysis there. So certified financial planner, so there’s a process, right, that we do for that. So once I know where that is, I say, great.

Now the only asset that I don’t have a good handle on is the business. So I need three years of financials. I want to see P&L’s balance sheets.

I want to see income statements. And then I’m going to take that. I’m going to run it through a separate piece of software that is kind of like a financial planning for business.

And so it helps me understand what their growth rate is, what concentration of customers is, so we can see what the risk to the business is. Do they have key employees that if they left, would damage revenue or damage reputation, right?

So we’re doing all of that kind of risk stuff for the business, and then it gives me a range of values, and it gives me some things to look at for identifying risks. So then we take that, it couples into the personal financial planning.

Now I have all this insight into the business, and so everything that you think of, right?

So if we look at the seven key areas of financial planning, which the way that I do it is net worth, it’s cash flow, risk management, investing, tax planning, retirement planning, and estate planning.

All seven of those directly apply to the business as well, because every business decision impacts the worth of the business or the value of the business, the cash flow, the risk, right? All of it gets touched.

And so for me, kind of the tongue in cheek, and because I’m not really that creative, I just call it financial spaghetti. It all touches when it goes in the bowl, right? You can’t keep it separated.

So if the business owner’s personal cash flow is a mess, 99% of the time, the business is as well.

And vice versa, they weigh on each other, especially since a lot of the business owners that we’re going to work with, they’re going to have flow through or pass through entities anyway. So they have to be done. It’s really kind of the same approach.

It’s just you have an entity that’s a little bit bigger over here that you’re planning around.

I got to say, I’m more impressed that you just ripped those seven keys like you were reading it off a screen, Dale. That’s all good stuff.

I’m sure he’s used it a few times in some present day.

Vice, yeah.

That’s great stuff, Dale.

Yeah.

So, okay, so we’ve got kind of, so yeah, basically it’s like their child, their business is their child. You’re planning for them, you’re planning for the business, you kind of dive deep into that with them.

What are some kind of classic mistakes that you see from business owners on like, wherever you want to take this, just running their books, their finance, running their business.

I’m sure you’ve got just like the top three that you see kind of consistently, like we see with people who pretty much…

Cash flow, something, right?

Yeah, don’t save enough, don’t understand their cash flow, aren’t thinking of themselves enough and just having too much fun maybe.

Yeah, and I would say, I don’t know that it’s necessarily a mistake per se, but what happens is there’s a beautiful thing about owning a business and a business that has cash flow because now you can, when you work for yourself, you can pay things

through the business. And it seems appropriate, right? So if you have a home office, then the business pays the mortgage.

And if you have a vehicle that you run to the post office with, the business pays the car payment and maybe pays the car insurance and pays for the gas. And then if you go to Starbucks or I prefer the local coffee shops, right?

My favorite coffee shop in town is the, it’s the Deluxe Max NX. It’s Scottsdale Road just south of Frank Lloyd, right? I love that place.

They have like big pink furniture and these giant like orbs hanging from the ceiling and they’re always playing great music. So anyway.

Well, and disclaimer, you didn’t get paid to say that.

I didn’t get paid to say that.

I gotta check it out too.

Dude, it’s my favorite place. We should go.

Awesome.

So anyway, so all that stuff starts running through the business and it looks great because what you’re doing is you’re driving down your net income. And if you drive down your net income, what happens?

Taxability goes down.

Yeah, you pay less in taxes. The problem with that is what that lends itself to is that the more that you co-mingle personal and business, especially money and expenses, you’re going to have the effect of what’s known as piercing your corporate veil.

And what that means is that the court, in the case of a liability, so say something happens and you get sued, if the court sees that you’re running your personal and your business through the same thing, they’re going to assign all of the liability

to you directly. And the whole point of having a corporation is you get liability protection. But the only way that that actually truly works is if you run your business clean.

So if you want to pay the mortgage out of the business, pay yourself out of the business and then pay the mortgage, right? Because the more that you have your personal stuff locked in, you’re going to run into legal issues.

And it’s really convenient to have liability protection when you need it. But if you want all the benefits and then you suddenly say, oh no, no, no, no, I’m an LLC, I have liability protection. Well, you’re not operating.

Do you?

Yeah.

Right. So you kind of screw yourself over. And so I see that a lot.

And so when I get business owners and it takes about three minutes of me looking at a P&L to know if they’re living out of the business. And so we’ll do a painful exercise of, and I’ve had to do this a couple of times.

I’m like, okay, here’s a spreadsheet. You’re going to love this. Mr.

and Mrs. Business Owner, here’s a spreadsheet. I want you to go through every expense that you’ve made from the business over the last 30 days and put it in one of two categories.

One is P for personal and one is B for business. And I want you to be very, very precise. Every single dollar you’ve spent in the last 30 days.

If you’re unclear, put it in the personal bucket. And so then we get down to it and I say, okay, everything that we just identified as a personal, immediately, like right now, stop paying through the business.

Let’s get you set up on some sort of way that you can pay yourself.

Payroll, yeah.

Yeah, because even there are business owners who will make an S-Corp election and then not pay themselves, which is a violation of the S-Corp requirements.

Yeah, totally.

Right. And so let’s set up payroll. If the business is not cash flowing for that to happen, then we need to resend your S-Corp.

So good, Dale.

Right.

And then we need to get the business cash flowing appropriately, take owner distributions, which are going to be taxed on anyway. You may as well pay yourself.

And then when the business is ready and we’ve gone through that IRS required window, yeah, then we can go back and revisit how you’re structured and how you’re taxed.

Do you see it as like just unknowledgeable about the situation, just easier to have that business card and just run everything through the business because that’s where your income is obviously starting at the top there.

And okay, we’ll just run it all through there versus like, you know, pay myself at the end of the month into my personal checking, keep the separate business. Like, is that just it?

It gets a little too complex or they’re just uneducated in kind of those moments.

Yeah, I think it might be a little bit of, I mean, there’s definitely an education gap. But yeah, I think some people might look at it and they might go, well, if I’m going to pay myself anyway, it’s the same dollar. What’s the difference?

And the difference is the source of the dollar.

And also, I think that sometimes there’s a conflict with tax advice because often, tax advice runs counter to financial advice because I tell clients, like, I love a good CPA, somebody who really understands business financials and can be creative

within the bounds of the tax law to do tax planning appropriately and save us on taxes. However, we need to make sure that whatever they’re doing to save you on taxes doesn’t negate your ability to do all the other financial planning things we need

to do. Like, by the way, if you’re going to buy a house or a car or something big in the next two years, we probably ought to not be driving down your net revenue or your net income.

We probably ought to leave some there on the P&L because that’s going to show up in two years and the underwriters are going to want to see that you’re profitable because they’re not going to do the adbacks. Right?

So we need to make sure that those two things are talking. And so sometimes I think tax advice is, you know, let’s get to the end of the year. Oh, I need to check my P&L.

How much money have I made this year? Oh, no, I need to go buy something. I need to spend money.

Yeah, go buy a car.

Yeah.

We would appreciate it fully this year.

Exactly.

Yeah. So I can get the deduction and I can get some of this profit off my P&L. Well, unfortunately, that’s not tax planning, nor is that good, sound financial planning.

Well, and then…

Famous last words, though, right Sean?

My CPA told me I should do this.

Yeah, exactly. Yep. I had a tax bill and then they told me I should do this, and then I didn’t anymore, and I maybe even got a refund.

Like, how cool is that?

Yeah, and oftentimes, I want…

If a client comes in and they have an existing tax professional relationship, I want to have an introduction to that person because I want to make sure that we’re working as a team for that client rather than giving the client conflicting advice

because in the relationship, who’s going to earn more from the client? The advisor or the tax professional? The financial advisor. So it’s going to be easy for the tax professional to go, how much money are you paying them?

What did… Oh my gosh, look at all these gains. They are losses that they did last year, right?

Which they’re just looking at it in dollars and cents with no insight into the plan. And so we’ve got to be on the same page so that way the client’s not stuck in the middle trying to interpret who is giving them the right advice.

Yeah. And then back to kind of running your books clean for the listeners out there, it just sets the precedence for your business going forward.

Imagine you do get to the point where you want to sell or somebody comes knocking that you’re interested in working with.

Like having that clean books or shows that you’re running it properly, and they don’t have to go through and do all the ad backs. And then what you thought you had, you don’t have, because it’s not, you know, you’re not running it like you should.

And really what ends up showing is all these personal stuff versus business stuff. So, yeah, I think that is a great place for just the listeners out there to start.

Is make sure you’re running your business like your business and keeping your personal stuff on your personal stuff. So, you’re not merging the two and living all through your business.

Yeah, to that point, Sean, statistically, the current stats are that less than 30%. And actually, depending on your industry and how you want to transition, that number gets smaller. It gets closer to like 17%, 18%.

But of all the businesses that are currently operating, less than 30% of them will have a successful transition, which means businesses just close, right? We lose jobs, we lose suppliers, we lose supply chain. You know, all of that happens.

And the reason why that largely happens is because, I mean, sure, there’s going to be death, disability, divorce, right? Like, you know, lack of liquidity is the biggest. Yeah.

But part of that reason is also because there are some businesses where the business owner has basically, they haven’t ran it like a business, they’ve ran it like just a good high paying job that they created for themselves.

And that’s a massive difference. And what happens is they have a willing buyer, and the buyer takes the financials to the bank, and the bank’s like, I can’t, we can’t lend on this business, it’s not profitable.

And then you’re doing all, you’re trying to do the ad backs, you’ve got to get the lender to see the vision of how the business could run under new ownership, and it’s an uphill slog.

And there are some times where really good businesses that have just been ran poorly can’t transition, and it’s sad for all involved.

Does it just become like, obviously it’s too big of a risk at that point, like hey, your financials are so muddied, we can’t really make heads or tails of exactly what’s going on here, because you’re telling us that these 13 trucks that you bought

were a legitimate business expense or whatever the case might be. Is that kind of what it comes down to at that negotiating table?

Yeah, it’s a little bit that.

I also think sometimes the bank will say, you know, okay, we’ll lend this, right, this amount of the value, and maybe you can get a seller carry back, no, for part of the value, but you as the buyer need to come with a higher deposit down because the

bank wants to mitigate their risk. Well, so does the seller. They don’t want to be tied to the business forever.

And the problem is that sometimes the buyers get priced out of being able to buy the business because, you know, if you have to, if you’re doing an SBA loan and you can line everything up where you can put 5% down, that’s way better than if they’re

telling you that you need to come with 20. And some business deals, that’s almost, I mean, it’s not doable for a lot of people unless they’ve just been sitting in cash.

And for all of us on the call, anybody sitting in cash is inefficiently managing their assets. So it’s like a catch 22 all the way around.

Interesting. Alright, point number one, let’s run the books cleanly, keep personal personal and business business. Back to kind of this, you alluded to having a good CPA and creating a good communication from the financial advisor standpoint.

What’s kind of the dream team for a business owner of who they should surround themselves with professional wise?

Yeah, great question. So, I’m biased, but a great financial planner, and I’m not talking about an investment advisor. You need somebody who understands more than just stocks and bonds.

And a lot of that, and this is my personal opinion, and I hope nobody is offended by any of this, but a lot of that comes back to how that advisor is compensated.

And that’s going to tell you a lot about what they’re able to do, how they’re willing to advise you.

And if all they have is stocks and bonds, you’re probably not going to get good financial advice because you probably don’t have enough money for them to really serve you well anyway.

All right, let’s test Blake for a second, Dale.

Let me hear it.

Do you remember the difference between fee only, Oh, don’t do this. fee based and fee for advice?

Well, it’s funny. It’s exactly what we talked on our last podcast, right?

Yeah, then what are you bringing it up? And we didn’t even mention it.

We didn’t pay Dale to say this, but we talked about this, Dale, right? It’s like, well, what are you paying that advisor for? And how does that advisor get paid?

And I think you just nailed what we talked about on the last session, right? I think that’s where you start.

And having a great understanding of what that person’s compensation is and how they make money. What products do they have access to? Is it a million different ones?

Or if it’s like, hey, here’s how you work with me. Here’s how I get paid. And does it align with what you’re trying to accomplish to?

Yep.

So yeah, I prefer somebody who is well versed in and I hate to use comprehensive because it’s such a buzz.

Oh, hey, that’s what I call modesty, you can call it.

But somebody who does like even holistic is like, you know, right? So but somebody who like does the whole darn thing, like you really want somebody who…

Yeah, I mean, just like the amount of people who don’t even dive into the cash flow part, because it’s just difficult to get people to talk about their budget.

But where are you going to start other than understanding what they’re making and what they’re spending?

Yeah, I tell clients like even just a simple question like, hey, Dale, how much should I be putting into my 401k as a contribution? You just asked me a cash flow question. You just asked me a net worth question.

You just asked me a risk management question. You just asked me a retirement planning question, an investment question, and a state planning question. Why aren’t we doing financial planning?

You just asked me all the questions.

If they ask me, Dale, I’m saying you should be maxing it out. Let’s just call it what it is.

I mean, that’s the ultimate answer, sure.

But does it make sense?

Yeah, because it’s one thing if we say, hey, just max it out, and then they don’t have the capacity and the cash flow to do it.

We’re not going to have a great relationship because they’re going to be like, man, this guy wants me to do something I can’t do, and now I’m embarrassed because I can’t do it, right? So we just need to understand that.

So anyway, I lost train of thought of-

Back to the professional.

Thank you. Dream team. Good financial planner, obviously.

A good tax professional, and really the hardest thing to do, I’m just going to say it, is to find one.

I know. It’s so hard.

It’s so hard, and it’s often not their fault because I think all CPAs, all tax professionals, all enrolled agents, they want to do tax planning, but they turn into return factories, and it’s out of their control, right?

It’s just the way that they can make money.

The demand is up here for them and their supply is here, so they just take returns, returns, returns, and they can’t do the folk.

They don’t have the capacity to sit there and actually plan stuff out come November, December of what we really need to accomplish for the rest of the year.

Exactly. And come April 16th, most of them are gone for a month, right? Because they’ve been working from 4 a.m.

to midnight every day for three months because of the way our tax law is set up. So yes, you need a good tax professional, you need a good financial planner, you need a good attorney.

And the attorney is often overlooked because people are like, it just only cost me $85 to set up my LLC on the Arizona Commerce Corporation or whatever.

Yes, however, if you have one employee, you have labor law requirements for unemployment insurance.

And by the way, once you have the first employee, or if you have a business partner, you need an operating agreement, and you need to make sure that you have good contracts that protect you legally from a client who won’t pay you or will sue you for

non-performance or something like that. So a good attorney is going to help you make sure that your risk is covered. And then, you want…

What kind of attorney in that situation? Are there just business attorneys? Like, is there a specific name?

Estate, wills, you know?

Yeah, I mean, so your financial planner is going to get somebody who can do your estate plan.

They’re going to get in, they should get an estate planner involved in the process. That’s one thing.

Some estate planners also do business planning and vice versa, but you need somebody who is well versed in business law because they’re the ones who are going to be able to set up the contracts. They’re going to write your operating agreement.

They’re going to make sure you’re compliant with, if you need guidance with getting everything lined up for the IRS, your tax professional can help you file certain IRS forms that are needed for certain things or whatever.

So you need a business attorney who understands contract law. You don’t need somebody, like you don’t need a massive law firm to do this. You don’t.

But there’s not like a specific, like there’s a state planning attorney.

You know what they’re getting. It’s just called a business lawyer is pretty much what they’re called.

Okay. Yeah. Yeah.

Somebody, it’s business law. And by the way, if anybody listening needs a referral to a great suite of attorneys, I have a couple on the business side and a couple on the estate planning side.

Sean and Blake, I’m sure that you have professionals that you know as well. Sean, you know some of the same professionals that I know because we have coffee with them once a month, right?

So yeah, we finally found great people to work with. And that’s like you said.

Wait, where’s this coffee once a month? I haven’t been part of this. What’s going on?

Yeah, you probably should be invited, right?

Yeah. So anyway, that’s really the good dream team. And then as the business grows, then you kind of separates into, now maybe you need a good bookkeeper that’s now working with the tax professional and the advisor, right?

And so you need somebody other than the business owner who can run points and kind of be the shepherd of all of that.

And sometimes it’s a, if you have an internal business manager or a GM, or if you have a CFO, if your business is big enough for a non-staff CFO, they may run point on all of that.

But in the meantime, the person who likely has the most capacity to do that will be the financial advisor, just because they’re going to have the tentacles into all the parts and they’re going to see all of the parts as they are moving, probably

faster than the attorney or the CPA or anybody else will. Sometimes, often, we see it faster than the business owner does, because they’re often here working in the business and our job is to help them get up here where they’re working on the

Yeah, going from entrepreneur to business owner is a fascinating switch that some never actually make the switch and some don’t know how.

And separating the two seems extremely difficult and one that I’m gonna have to navigate myself.

And I just think that’s a wonderful conundrum, I guess you could say, of like understanding when you need to go from being the entrepreneur to actually running the business and making it so it’s sustainable and becomes something that isn’t heavily

Yeah, yeah, and in my process, I call it, it’s basically the shift between going from an operator to being an investor of your business.

And that’s the same mindset shift that you’re talking about, and it’s a big one, because if you can see the business as an investment that you control, well, you’re going to make decisions differently than if you’re in the day-to-day, and all you can

see is what’s happening directly in front of you. And that often takes, it takes time, it takes people, it takes trust, it takes a little bit of cash flow.

But once you reach a point, you really, as the business owner, need to make that business less dependent, as you were saying, Sean, upon you.

Because one of the things that drives down the value of your business faster than anything else is high owner dependency. So that’s a very important shift.

Yeah, go for it, bud.

I gotta say, Dale, this is powerful, man. Appreciate your time. Thanks for jumping on, giving us the insight of what you do every day.

How does someone reach out to you, Dale? How do they get in contact with you?

Well, I’m going to tell you, so I appreciate the question. I will answer it. But first, if you’re listening to this podcast, you better call Sean.

What a guy.

Yeah.

Sean’s my homie. So you better call Sean.

But no, to answer your question, I mean, if you’re deep in business and you need that little bit level of different expertise, I would say talk to both of us, because there’s definitely going to be some opportunity where one of us is going to look at

it and say, you know what, he’s going to be better for what you’re looking for. And so we, Sean and I have that kind of relationship.

And so we want to get, I mean, the goal is we got to get people to the right people so they can do what they’re trying to do successfully. And it doesn’t make sense for any of us to bottleneck that process. So, what I would say-

Do you want LinkedIn or what?

How do I find it?

LinkedIn, Dale Schafer. I often tell people start at lifemoveswealth.com.

Awesome.

Right on the homepage, you’re going to see right off the bat how the process starts. I just recently got it trademarked. It’s called the BOSS method.

Love it, nice. Thank you. BOSS is an acronym for Business Owner Strategic Success.

And then the process breaks down each of those letters a little bit further based on where they are in their business journey. And there are steps to take.

So go to lifemoveswealth.com, go to LinkedIn, you can go to YouTube and search Life Moves Wealth. You can listen to the Financial Purpose Podcast. I am not hard to find or get a hold of.

I’ll tell you that.

Awesome, love it. All right, well, is there any last tidbits that you could leave a Business Owner listener out there? Again, I think our podcast is obviously the Millennial Money Moves podcast.

So like I said, somebody five years in, maybe starting to make some money that they’re really not sure of. Is there just any good nuggets that we could leave the listeners with before we end the episode?

Yeah, I would say this. Being a Business Owner is the hardest and most rewarding work that you can do. Most of us who decide to become Business Owners are not employable.

We are just terrible employees.

In fact.

So we go do our own thing.

And what I would say is that there’s a period, and I went through this myself, and it’s between years two and three, where you’ve just, you’re tired, and you put so much into it, and you’re sitting on the interstate, and traffic’s backed up, and

you’re banging your head against the seat rest, wondering why isn’t this working? Push through that, push through that as hard as you can, because the reward is on the other side, and it just takes an awful lot of farming to get the crop, and you

have to keep tilling the soil. So, plant the seeds, till the soil, push through the hard times, the reward’s on the other side, and don’t give up.

And if you feel like you’re just at your wits end and there’s nothing left to do, I would say get in touch with somebody who is further down the road with you, and let them, buy them a cup of coffee and ask them for advice on how to move to the next

level. And if you’re listening and you want me to be that person, I will buy you coffee and happily listen to where you are in your business journey and give you some direction that may or may not be helpful. Hopefully, it would be helpful.

But I’m an open ear because oftentimes business owners are fighting the fight alone. Yeah, we don’t often have anybody.

Yeah, I mean, I think you’ve had it. I’ve had the days. It was probably year two, three, where I was just looking at myself going, what the hell am I doing?

This isn’t working at this rate. I’m never going to get to where I want to get to. And I was contemplating everything.

I’m pretty sure we had that conversation over sushi one day.

Yeah, we definitely did.

Where I was telling you, like, hey, I think I might go back to this W2 job where income is a little more secure. And you were telling me the same thing that everyone else was, is keep pushing, keep pushing. And it’s so fascinating.

It literally is that four and a half, five year mark where it just kind of snowballs. I don’t know if you just get your swagger about you or your confidence just starts coming through and people pick up on it.

I think you kind of just become a consummate professional at that point, too. And you just kind of carry yourself a little differently. It isn’t kind of that fake it to make it.

You are a professional and you’re more confident in your offering. And so, yeah, I love that advice because I hit that wall. And damn, I’m glad I just busted through it because like you said, I could never go work for anybody ever again.

No, I mean, we celebrated when you launched your firm.

It was so awesome to see you do that. Now, candidly, I was like, how do I grow my revenue enough to bring Sean on with me and we can partner? And then he went and started his own firm.

So I got to support that. I got to support that a lot. So yeah, man, just you got to push.

Because when you reach a point where you’re like, you know what? I don’t have to take this piece of business to pay the rent.

That’s where it becomes liberating because that’s when you know that you’re growing your business the way that you want to grow it. You’re attracting the customers and the products that you want to offer and serve.

That’s where business ownership really becomes fun because now you’re really are in control of the direction that you’re going.

I’ll never forget the first time I told a prospect, no, I don’t want to work with you. And that was the most liberating.

I left more fired up about that than landing a big client in our world because it was like you said, like you finally hit the moment of like, I have some type of standards and I don’t have to say yes to everybody anymore just to put food on my

family’s plate, like just to be able to pay the bills. I can, I’m in a good enough spot where I can turn somebody down if I don’t think they’re going to be in alignment with what I’m trying to do.

Yeah, because the more you say yes to that, the harder it’s going to be to work with them.

Oh yeah, no, and you know it. You know that some of those contractors or business lines that you have of people that you’re just not stoked to work with.

And when those phone numbers show up on your cell phone and you really don’t want to pick it up, you know the gut feeling.

And so yeah, being able to understand, hey, this isn’t going to work, or we just don’t really jive the direction or the people who complain about costs all the time. Man, is it nice to just be like, we’re moving on from you. But yeah, we digress.

Well, man, Dale, thanks again so much for joining us on the podcast. You are an amazing human running an awesome practice, and it’s very cool what you’re up to. So we appreciate your insights.

Blake, love you, buddy. Good to see you.

Always good to see you, dude.

Everybody have a good rest of the week. And yeah, we’ll see you next week.

And I would just end with, you’re not alone. And worst case, you can get a free cup of coffee from Dale. So take him up on it.

100% take me up on it.

Thanks, guys.

Thank you, Dale. Great to see you, Sean.