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Ep #034: Interview on Business Succession, Exit Planning Tips, and Importance of Aligning Business, Personal, & Financial Goals (Not Minding My Own Business Podcast) Thumbnail

Ep #034: Interview on Business Succession, Exit Planning Tips, and Importance of Aligning Business, Personal, & Financial Goals (Not Minding My Own Business Podcast)

I was interviewed by Russell Farbiarz from the "Not Minding My Own Business" podcast and really enjoyed our discussion on:

  • What is exit planning and why it's important for owners in all stages of business
  • Exit planning tips to regain your freedom
  • Strategies to make your business more attractive to a buyer
  • How to delegate more
  • Knowing how much you would need to sustain your lifestyle post-transition
  • Answering the question, "What's Next?"



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Episode Transcription

Tom: Hey, everyone, before we get into this episode, I just wanted to thank Russell Farbiars for inviting me on to his podcast called Not Minding My Own Business where he interviews local business owners on their expertise and how they add value to their clients and customers. Russell is an estate planning attorney in southeastern PA and I just had a lot of fun and enjoyed our conversation around the importance of business succession exit planning strategies. What owners should focus on to build an attractive and efficient business, and much more. I will include links in the show notes for any resources that we mentioned throughout the episode, and I hope you all enjoy.

Russell: Good afternoon and welcome to not minding my own business. I am your host, Russell Farbiarz, and I am joined here today by Tom Poltersdorf. I get that right Tom?

Tom: Nailed it. Thank you.

Russell: Welcome, Tom.

Tom: Thanks, Russell. Yeah, I appreciate you having me on man. Looking forward to our conversation.

Russell: So, Tom, why don't you tell us? A little bit about your line of work.

Tom: Yeah, absolutely. So I'm a certified financial planner and certified exit planning advisor. And so I'm a wealth manager, right? So my niche client is working with business owners specifically around exit planning. So that can encompass financial planning, business advisory services, and our. Our main objective is to help business owners exit and retire with confidence.

Russell: I said to you before we got started, I think it's really important for people to think about. The end while they're in the middle of running their business because there really can be things that you can do early on. So what are some strategies or tips that you typically would give client give your clients?

Tom: Yeah, and I'll, I'll take a step back real quick to think about it conceptually. When you think about exit planning, a lot of owners are like, well, I'm not ready to exit yet, right? I want to grow my business. I want to hire more people, etcetera. So just think of exit planning as good business strategy that you can start doing. Right now. And our main objective is to kind of look at 3 buckets and that's aligning your personal and financial goals with your business goals, because I think a lot of U.S. business owners are personal and businesses is entangled together. And it's just making sure that we can kind of break that apart a little bit, be very specific on what we're trying to achieve in both of those areas of our life and then set a road map to start working on it in sync together overtime.


Russell: Sure, sure. So I know in the legal profession. Lawyers pretty much never retire. They just sort of wilt away that.

Russell: And I'm sure.

Tom: Not Just lawyers, there's a. Lot of other ones out. There too.

Russell: Yeah and I'm sure that is a common phenomenon, but when you do that, I would imagine you're really leaving a lot of money and expertise on the table. Because you're not positioning yourself for a sale so.

Russell:  You know, things as simple as the name of the business, you know. Whether it's a name that's identifiable with one person versus a brand. So do you give your clients advice on how to name their business, and how to brand their business so that it's not all about them?

Tom: Absolutely. And that's kind of the foundation to even going down this exit planning road map because the foundational part is removing yourself as the owner from your business as much as possible. So if you if you can kind of take a look at your business from a buyer's perspective, if your name is on your front door and you want to sell it and leave, that's going to be very difficult to be attractive to a buyer, right? Because the business is you. So yeah, there are some strategies where it's trying to position you, your mission, your core values, and what you're trying to achieve as a business to be separate from yourself. And be this outside entity that you are essentially going to be an investor in, right, because you're trying to build this asset up to sell, hopefully down the road, but you want to kind of separate that from yourself as much as possible.

Russell: So that's why you say it's important to disentangle your personal and business goals because you have to start looking at your business more from an arms length as opposed to it being sort of an extension of.

Tom: So yeah, absolutely, yeah. And I'll be honest too, a lot of business owners at least in my experience don't focus on the personal side. It's very business driven, which is rightfully so. They want to grow it and they want to, you know, get revenue and take care of their employees but just sitting down and having that conversation. So again, planning in mind, whether that's 5, 7-10 years down the road. How much do you need to live on if you were to sell your business? Right. How much do you need to support your lifestyle and a lot of owners don't know because, I mean, we all do this, we use our business to pay for our personal stuff. Rightfully so. There are a lot of tax benefits to it and write-offs, but again, if you can imagine yourself where, OK, the business is gone. How much do you truly spend in a year? And is your business worth enough or are you saving enough outside of your business to fund those living expenses. So bringing clarity around that enlightens a lot of owners to find out that there is this big gap that they need to close over the next X amount of years. And yeah, so that's that kind of sets the stage for going down that exit planning route.

Russell: OK, so now when you find that gap, is there something, some strategies that you use or some advice that you provide you know again keeping it very general about?

Tom: So yeah, so there's essentially a couple of paths that you can do and usually it's a combination of both. It's a matter of saving and investing outside of your business, right? So building up assets and growing your wealth that's not tied to your business. So that could be anything. Again, being very high level, having outside real estate investments, having a 401K, having a Roth, these outside accounts that don't depend on the performance of your business that you can contribute to and save and invest in. So that's bucket one. Bucket two is then the actual value of your business, which is increasing its value over time and for many owners when we look at the gap of where they need to be, it's going to require a combination of both. So saving more outside of the business, while also enhancing the business over time to increase its value and hopefully make it in a position where. It could sell, and that can contribute to their retirement bucket. When that time comes.

Russell: So now, if you're, if you're someone who's somewhat earlier in their career mid-career but still wants to plan for, you know, I know I'm going. To I'm going. To exit, you know, and hopefully. It's not by death or or wilting away. Are some things that that someone in that situation should sort of keep in their mind as the as the you know exiting maybe is 15-20 years away, but they still want to make sure they're set up for success.

Tom: Yeah, so exit planning is great, it's something young owners can do too in thirties, 40s or even younger and think of exit planning. It's just like retirement planning. So the old motto of just putting away $100 a month into some kind of an account so that it's growing and compounding over time, those same principles can be applied to exit planning. And that's just trying to have this idea or vision that if you are trying to build a business that you want to sell. Because there's two ways you can build a business and there's not, right, any right or wrong way. It depends on the owners goals. You can have a lifestyle business that is, you know, focused around you where you have flexibility. You don't have employees that you gotta worry about managing and you can make a great income. It won't be sellable because it's just you. But some folks are perfectly OK with that. You can do that, but if your goal is to build something that's bigger than yourself. Want to have an opportunity to sell and have transferable value. It's again trying to build a team around you. OK, so you want to hire good people that can do your job. Just as in the same way that you would like them to do. You want to have a diversified customer base. You want to try to have recurring revenue, so there's all these, they call them value drivers on different characteristics of the business they can build in over time. But if you go with the sole mindset you're trying to build a business that focuses around you as opposed to just going through you, that's a good story.

Russell: Yeah, it sounds like and it will make your business stronger, yeah. In in the short. Run too, because it's a matter of putting systems and whatnot in place so that not everything has to run directly through you. So I could see that as beneficial both for the long term and the short term.

Tom: Yeah. And here's one thing. Real, real quick that I'll mention that.  If you want to go down this road, just start documenting your processes. So how do you hire somebody? How do you do your marketing and to document it. I hate physically writing stuff, right? I'm sure a lot of people do these days. You can type it out. I like videos. So you can use these companies like Loom or Vimeo and I have no affiliation with them, but just record yourself on your screen doing a task. And then file it away so that when you do bring on someone to hire, you could be like, hey, I need you to do these three things. Here's how you do it. Go watch the video and do it, and let's see how you did and that's how you can delegate more to get off your plate. Hence saying again, building people around you to do what you want them to do.


Russell: Yeah, and that's a great tip. I can. I'll tell you that during the pandemic I I started doing that because it was the easier way to communicate with staff. And I found it helpful that now if I bring someone. And I don't. It's so I've done the training already. I just need them to do the training so it's a  huge time saver too, in terms of onboarding staff and whatnot. So It's a great tip now, Tom, how did you get into Exit planning as your line of work?


Tom: Yeah, great question. So I started in the industry in the financial planning industry going back to 2010. That's when I first started and you know, you started out at these big firms. I worked at Morgan Stanley for a little bit. Then I was at TD Ameritrade and then a couple of other wealth management firms but I found out the more that I've been in the industry I wanted to work with business owners in a different way as opposed to, you know, setting up a retirement plan or showing them life insurance. And I came from that world. It’s very product based. And it’s a model that doesn't allow you to talk about the business itself. And so a few years ago, I got my certified exit planning advisor designation, which teaches us as professional advisors how to advise owners on a business to make it sellable over time so they can exit. And so I branched off and started my own firm so I can offer this specific service in addition to financial planning to fill that gap and work with owners in a different way. So that's kind of what kicked off starting my own firm.

Russell: Nice and that's such a nice niche to be in now you also, do traditional financial planning for your clients.

Russell: Yeah, that is foundational. So we won't even talk about, you know, the value growth strategy or exit planning strategy until we have a basic foundational financial plan in place. We need to know your income, your true income, cash flow. You need a tax plan, an estate plan. All of that's done first, and then the second or third step is talking about the business strategy, yeah.

Russell: Now do you only work with business owners? Or do you work with individuals as well?

Tom: So my firm is titled Beyond Your Exit Wealth Management. And the reason it's titled that way is because my strict niche is helping business owners plan for what they want to do next because that's usually not identified and then work backward as to where they are to form the exit plan. So my sole market is typically a small business owners. You know their core values are time, they want more of their freedom back because they are the epicenter of their business. Revenue can range. I mean some of the businesses are ranging from a minimum of a million in annual revenue. All the way up to 10 or 12 million in revenue. So it just depends on what the owner is trying to accomplish and where they're at in life.

Russell: OK. And now I know you're physically located in Harrisburg if I remember correctly.

Tom: Yeah, that's the main city that I'm closest to that people will recognize.

Russell: Or are you in Hershey? I can’t remember.

Tom: Closer to Hershey, PA

Russell: Ah, so it smells like chocolate whenever you're working.


Tom: All day, man. Yeah, I'm a frequent visitor of Hershey Park with my 2 kiddos and wife. It's a good time. To go, yeah.

Russell: Very, very nice, but. You, but you work with clients all over Pennsylvania do you work nationally as well?

Tom: Yeah, all throughout the country. So again, this this, you know when COVID took place, it made everyone get really efficient to work virtually and a lot of especially business owners because they're usually very busy and crunched for time. So yeah, I work with anybody in any state, and meetings can be over Zoom. And if you're local to me, you know, happy to have a face-to-face meeting as well.

Russell: Are you originally from the Hershey area?

Tom: No, I grew up in the Poconos, so Northeastern PA. The middle of nowhere but good area if you like outdoors activities. Biking, hiking, camping, fishing, all that good stuff. So that's where I grew up. I moved more towards Central PA because that's where I met my wife and that's where we still are today.

Russell: When you're not working, what do you like to be doing?

Tom: Yeah, not working so.

Russell: Novel concept, right?

Tom: Yeah, yeah, absolutely. See, it's mostly spending time with the family. So I mean, I like to get up early. I work out, I run. That's kind of like my own personal time, but I'm very involved with my kids, so I coach T-ball, I Coach flag football, which is always a good time. But yeah, we travel. You know, we take trips together, a lot, have fun with the kids and family, and very close to my siblings as well. So but yeah, staying active, I love listening to podcasts, working out doing, you know, runs, and always trying to learn something new big on personal development. All that, all that good stuff.

Russell: What's your most recent endeavor in personal development? What are you working on right now?

Tom: Man, that's a good question cause that's always an evolving subject.

Tom: Yeah, to be honest, it's more like journaling, so I don't know if I'm a big believer in it, but that's kind of my head trash going into it. So I'm trying to push myself to do something new and be consistent. But I think it helps, especially when for a lot of business owners out there, especially if you're creating. Content just to put ideas and your thoughts in written down form is a great exercise. I found lots of benefits to it so far, so identifying your personal goals, and what you're trying to achieve in business and in life is something pretty important to me and that's kind of what I talked to my clients a lot about, right? Having that balance between personal, financial and business, and so writing that stuff down tracking. Are you making progress towards any of that stuff is a great way to hold yourself accountable. But then you start coming up with these concepts and I love reading business, business books. A couple of good ones out there to even start going down operations and all is Traction by EOS and I'm sure a lot of folks are familiar with that. But yeah, just writing down ideas of concepts and how to live life, how to think about things, how to process business ideas, different ways to market. There are so many things that you can talk about, but just that practice of writing it down, journaling it, and just, you know, documenting it is been very helpful.

Russell: I'm happy to hear you bring up traction because I'm a very big, big fan of traction and it's the entire library, and try to implement it in my business. Do you implement it in your business or do you advise your clients on traction?

Tom: So II take some principles from it. I love the templates they offer one of the big things that I like to use and maybe I have a different term for it, I think traction uses you know quarterly rocks, right? So setting these goals for the quarter and you know trying to accomplish it right, so I call 90-day action plans, which is part of the exit planning institutes process that we were talking about. So just these little goals that you're trying to accomplish in the next three months to keep laser-focused on making progress has been huge and I use that a lot in my business and in with my clients as well.

Russell: Right. Why don't we just take a step back and if you want to just explain a little bit about what traction is because there? Might be some. Listeners who aren't as familiar.

Tom: Yeah, sure. So I'm not a part of them. Again, this is just a book that I highly recommend for folks to read. But it's an operating system for business owners to really get a grip on their business. So it helps you have a process to document your vision, to identify core goals that you're trying to accomplish out to three years and break it down on a quarterly basis to identify it, list out exactly what the tasks are that you need to do to achieve it. And not just you for your team. So assigning folks to be like, hey, you need you need to do this XY and Z. I'll do this and we'll see where we're at in three months. It's then got other things in there that assist you on how to address issues within your business. So there are strategies on how to hold meetings. To address any friction within a business and listen if you're a family business owner or your work or family business, there is constant friction. I've seen this, I've dealt with this. It's super common, but to have a process to address it, fix it, and make progress to move past it, is huge, so that's some of the things in there. So again, think of traction this very laid out, very simple-to-understand book that shows you how to run a business efficiently and if you follow it to a tee, you're most likely going to build an asset that is sellable, you know X number of years down the road.

Russell: Right, because it fits right into your paradigm. The paradigm we were talking about earlier about sort of taking the owner and having someone else be able to replace the owner because just the way that it's structured. So I'm not surprised to hear that that's something that you utilize.

Tom: Yeah, 100%. And you know, delegating and again I can, I can kind of ramble on about this stuff for a long time. But yeah, it's building culture too, so having your employees take ownership right within the business and I'm sure a lot of us can relate where we have someone kicking in our door because they have a question where they want to put their problems on your lap to fix. And I think a lot of owners, they can relate to having to put out fires all day. So it's building this ownership culture within your business to have your employees start acting like an owner themselves, Which can help you again build an asset that's transferable over time.

Russell: When you empower your employees, then they solve some of the problems before they become fires. You have to put out. Yeah, that is what I found it can be incredibly helpful. Oh yeah, well. Tom, what is there? Is there something about what you do that most people aren't aware of that? You think they should be aware of?

Tom: Yeah, it's again relating to my specific niche, right. I mean, with a lot of owners and they always want to talk about the business. Which is very important. Obviously, it's your largest asset. It's where the majority of your net worth is. It's very important but for a lot of owners, we need to talk about, which is a difficult conversation, is your personal passion in life outside of your business? So helping go down this path of answering the question, what you're going to do next? A lot of businesses, when we go in and we start talking, they don't expect to be like, OK, you left your business. What are you going to do with your time? The business is gone. What other things do you like to do? And they can say golf or you can say hunt. But if you leave your business at age 60, you at least have another 30-40 years to live if you're healthy. You're going to hit golf balls for 40 years. There's no way you're going to get bored and some folks actually get depressed. There's a statistic that 75% of owners that sell are unhappy. Because they don't know what they're going to do next. And so having that conversation, not about business, about what your passions are, what you're actually going to do with your time is something that can catch some owners off guard when we go down that road.

Russell: Yeah, that's definitely a good point that you want to have your next act planned. And it could be, you know, maybe it's charitable. Maybe it's. For some people, some people might be another business.

Tom: Absolutely could be starting another business, yeah. Could be anything you want. Doesn't have to be retirement. Could be a hobby, travel, family, kids, start another business. Turn your hobby into a business. It could be anything, right?

Russell: Right, maybe. Maybe coaching younger, younger business owners in your area, yeah.

Tom: It's super common. Become a consultant. Yeah, absolutely.

Russell: Yeah, I see. I see that. I see that a lot. Well, Tom, thank you so much for taking the time to be here with us. Many of our listeners are looking to connect. With you, what's the best way to do that?

Tom: Yeah. So I have a website beyondyourexitwwm.com. I also have a podcast business exit success. You can find me on Twitter, Facebook. Just Google my name or my firm beyond your exit wealth management you’ll be able to find me.

Russell: Alright well, thank you again for being here on not minding my own business.

Tom: Thanks, Russell. Appreciate it.