Hello, and welcome to another episode of the Mark Mos Show. We're always running through the changes that are happening in the world right now. Of course, we're always looking at through the lens of politics, finance, and technology, and today
I got something a little bit different for you. Today, I want to talk about something else, another phenomenon that I've been studying for over a dozen years, and this is about a wealth transfer now that I guess fits into you know, finance, of course, but it's a little bit of a different angle now. Typically I talk about wealth transfers in regards to the economic cycle booms and bust.
Whenever the market goes up really fast, it creates a lot of wealth, and then the crash happens, and then all that wealth transfers to somebody else, similar to what happened to me in two thousand and eight. I built up a massive amount of wealth leading into the boom cycle, and then when the bust happened, I lost most of that wealth and it got transferred to somebody else. So booms and bus create these wealth transfer cycles, which is
why I study them. I want to make sure that I'm always on the receiving end of this wealth transfer other ways that these giant wealth transfers are through times of wealth. So, for example, with bitcoin, I believe bitcoin is one of the biggest wealth transfers that we have today. And people that are early are making a lot of money by owning bitcoin, and those that are missing are going to come in later and it's going to be too late.
For a lot of them.
So technology gives us that early adopters of technology allow this wealth to flow to us. Another way that this is going to happen, and what I'm going to talk about today is something a little bit different than I normally talk about, but it's going to lead to one of the greatest wealth transfers in history, and that is the largest segment of the population that baby boomers are
all retiring. They've been retiring for the last year, they have about another dozen years or so left, and all of this wealth, trillions of dollars of this wealth is going to transfer, trillions of dollars, will be moving hands, tens of trillions of dollars. And so when this much money moves, all we have to do is get on the receiving end of it. All right, I've been on the giving end of it before, it's no fun take
it from me. You don't want to be there. And so how can we do that, Well, we have to understand what it is that they own, how are they're going to be transferring it, and then how we can get in the middle of it. So that's what I'm gonna talk about today. Something a little bit different. If you are a baby boomer and you own a business, then this is for you. If you are a gen X or a millennial that want to get one of these business to flow to you, this it could be
for you. If you want to take advantage of this transfer by.
Any means, then this episode is for you.
It's a little bit different than we talk about today, But just for some stats to sort of frame this up, baby boomers today make up about forty one percent of small business owners or franchise owners all right. Now, there's also the like sort of echo boom generation gen X that also owns about a forty percent share as well, But there's forty one percent that the baby boomers own.
Total is about twelve million businesses. Twelve million businesses that will either be shut down, handed off to a kid, or sold off. All right, those are the three options that they have. This is tens of trillions of dollars of wealth that's going to be passed off, and so how can we take advantage of this. Let me break down a little bit of math so you can understand how big of a problem this is going to be.
There's twelve million baby boomers and they own businesses, and these businesses they need to do something with them over this next dozen years or so. Now let me give you an example of this so you can understand. My father is a baby boomer. My father had a business
for like thirty years, doing a construction business. Over thirty years of business, he built up a giant client base, massive amounts of good will, and he has a steady stream of business that just comes organically because you know, a word of mouth and goodwill and customers referrals things like that. His phone number rings. People want him to come do work. But yet he didn't want to do it anymore. He was tired.
He wanted to retire.
I didn't want it, and none of my siblings, none of my other.
Brothers and sisters wanted it either.
And so what did my dad do? Instead of selling that business, he just shut it down, literally just closed it Now, typically a service based business would be worth maybe three to four times one year's profit. So let's say that he was making, you know, just let's call it a million dollars a year of top line revenue. Let's say that he's making thirty forty percent, so he's made three four hundred grand. Well, now you can multiply that at times three or four, So three hundred grand
times four is one point two million. So instead of putting one point two million dollars in his pocket, or maybe he would have done a deal for like two hundred and fifty down and then finance the rest over over time, and now he'd have an annuity stream as he goes into retirement. Instead of that he has zero. Shut it down. All those customers that want business now
find a dead end number. Now this wasn't a smart thing to do, but that's about the rate of what's going on, which creates a massive opportunity for you if you'd like to get into businesses. But it's also a mass opportunity for business owners. They don't have to do that. So let's break down some of this maths. So twelve million business owners that need to do something with their
businesses over the next decade or so. Let's just assume that about forty percent of those business owners decide just to close down their business or just give it to their kids. So forty percent of them don't sell their businesses. They just either shut them down like my dad did, or they handed over their kids. Now, that leaves seven point two million businesses that will try to be sold.
They will seek buyers of some sort. Now, if we divide the seven point two million businesses that will be sold over let's just even be conservative, let's say fifteen years instead of ten years. Let's give it fifteen years. So we divide the seven point two million divided by fifteen years, gives us about five hundred thousand businesses per year that will go onto the market for sale. This is a massive amount, a massive wealth transfer. Now, five
hundred thousand business per year. Now, let's just put this into comparison. Maybe you don't understand how big of a number that is. Last year, according to the old logic, in the United States, ten thousand, five hundred and ninety seven five hundred and nine seven businesses closed M and A transactions mergers and acquisitions. At least that's what was announced there was probably more, we don't know if they
weren't announced, But let's just triple that number. So let's stay instead of ten thousand, five hundred, let's say roughly thirty thousand.
Businesses changed hands.
All right, Now, how does thirty thousand businesses compared to the five hundred thousand businesses that are scheduled to change hands? Well, that's about fifteen times larger instead of thirty thousand. That's about what the market can absorb. Right now. There's people buying those businesses, but we go from thirty thousand to five hundred thousand business there's not enough demand for the
amount of supply that's about to hit the market. These baby boom baby boomer businesses will hit the market, and it's going to just completely overwhelm the demand. Now, what happens when this supply outstrips the demand when the price goes down, which means then these baby boomers that are selling these businesses or wanting to be selling these businesses are going to be getting a fraction of what they should be getting. It's not real good if you are
trying to sell the business. Now, it's great if you want to buy a business, which is why I'm saying this wealth is going to transfer. So even if you don't own a business, even if you're a millennial or Gen x er and you want to get in, there's going to be a massive opportunity in front of you.
Or if you do own a business, you have to understand that they're going to face massive selling pressure, and so you need to change your business so that you stand out that you're one of the best, that you can still command a premium when everybody else is getting discounted to you command a premium. And maybe you want to front run this trend once you find out about it.
So there's a few ways that you can do this, a few ways that you can take advantage of this that I want to walk you through, and I really want to kind of give you this systematic framework. I want to talk about five pivotal stages to transform your business. To set that business up so it's highly desirable so you get massive amounts of money, or if you're buying that business, you know how to do that as well.
So we'll walk you through that. And I want to talk about, you know, getting you out of the business, because the goal of the business, I mean, sure you're solving problems and sure your meeting needs and all those things, but ultimately you want to Most of us have started businesses to increase our income, but also to somewhat be free,
financially free. And most people just have jobs. And so no matter where you're at in your career on a business or thinking about starting a business, this is information that you want to have. You don't want to be trapped as in owning a job. You want to own a business. The difference would be I mean, I guess just ask yourself a question, what would happen if you had a business and you took a month off or three months off, or six months off or twelve months off.
Would that business still continue to run? And how could you make sure that you continue to run? And how could you really turn this business into a company. That's what the difference is, a business into a company that would systematically transform that and allow you to achieve your ideal exit or be exitable. That's what we're going to cover. I'm gonna give you five steps here when we come back. If you're just tune, you're listening to the Markmas show,
something a little different for you. I hopefully enjoy it. I'll be back with more in a minute. Don't go away, all right, welcome back. If you're just tune in, you're listening to the Mark Maas Show. We're talking about the greatest wealth transfer in history that is coming our way. I don't want to show you to take advantage of it, whether you are the one transferring away or the one that you want them to be transferred to you. And
we're talking about it through business. So if you if you have a business, own a business, want to own a business, and you want to take advantage of this transfer, you want to make sure you can command a premium over everybody else because there's going to be a massive amount of supply. And this is what you need to
do now. If you want to buy one of these businesses, you still need to you still need to know this in information because what happens is for most people, the majority of these baby boomers that have these small businesses,
they don't own. They don't own a company. A company sort of being like a separate entity that can run on its own The legal definition of a company would be like its own legal entity that has its own tax code all that, and so using that frame of reference, a company sort of can run its own it's separate from you, Its identity is separate from you as the founder, but the founder is more like a business where you run that. And so let's talk about the first stage.
And this is where most people are and I want to show you the five exits. So the first stage is.
You're a worker.
You're a worker in the business, and typically you're a technician. So what do I mean by a technician. Well, let's say that you have a job as a baker or a dog groomer, or you fix cars, and you're like, man, I'm sick of working at this auto mechanic place and making my boss the owner all this money. I'm going to go start my own mechanic shop, or I'm going to go start my own bakery. I'm going to go
start my own dog grooming business. So you leave the dog room or to go start your own dog grooming business, your own massage business, or whatever it may be, and you end up working in the business as a technician. I used to groom dogs for this other company, Now do I groom dogs for my company.
I used to repair cars for.
This mechanic shop. Now I repair cars, but for my own mechanic shop. So you're the technician, you're in the job.
You're doing the role.
Now typically this would be self employed small business. You know, maybe you have somebody in there doing the books for you and answering the phone, maybe someone's even trying to do some sort of ads for you, things like that, but at the end of the day, it's you doing the job, doing the work. You're the technician. And so at the stage you have a business, I mean there's a company that, there's a business there, there's employees there,
there's business coming through, but you're in that role. You're in the business. Now. You could at this point, you know, you could start to hire other technicians, but the first exit is who leave this role, to exit the worker role, exit the line? And so how do we do that? What we want to do is we want to be able to hire other technicians to take our role. Now. One of the benefits is that, or one of the things that we should think about sometimes is starting businesses
that we're not a technician in. So it might be better for the auto mechanic to go set up a dog grooming business, and a dog groomer to set up an auto mechanic business. The reason why is a dog groomer doesn't know how to fix the car, So the dog groomer would never go into that technician role. Vice versa, the auto technician would never start up a dog grooming business. They would be forced to go hire someone to work in that role. But let's assume that you're in that role.
So we want to one, we want to hire other technicians. We want to move from being a worker to a manager. This is exit number one work exit the line going from worker to manager. We need to make sure that we're delegating and not relegating, meaning we're saying, this is how this role is done. This is the perfect recipe for the bread. This is exactly how I groom this dog. And this is your new plan to follow your standard
operating procedure. You don't want to relegate it like, hey, I'm just going to hire someone and hopefully they do as good of a job as me. In order to do that, you have to have very well documented systems, and so if you're currently in this role, begin documenting what it is that you're doing. Here's what I say when I answer the phone. Here's how I make a perfect cup of copy. Here's how I treat my customer, Here's how I do a review, or whatever it is.
Start to document these processes. That way, when you hire somebody else, then you can delegate using that well documented systems. The other thing that you're going to need to be doing is starting to establish a very compelling culture. As you start to grow to the business. You need to be able to track the right people to you, and you have to be able to coach them. As a manager. Again, you're going from the doing in the trenches doing the
work to delegating. All right, that's exit number one. Exit number two then is now I've moved from the technician in the line. I'm now a manager and so now I'm starting to work on the business instead of in the business.
Doing the work.
I'm able to work on the business, which now allows me to see things at a higher level and start to think more about how do we set policies to handle customer service, or how do we do the marketing, how do we recruit staff and things like that. You've moved out of the business and now on the business. It allows you to now be proactive instead of reactive. You see, when you're in this technician role. It's like, Okay, what's under the hood. You pop the hood. Okay, here's
the problem, let me fix it. You're reacting to what you see.
You're a dog groomer.
Okay, what does this dog have?
What does it need?
Okay, now I'm reacting to that dog. But as a manager, I can now be proactive and we can start to think about what it is that we want. What's our ideal client, what's our ideal process procedure, things like that. A lot of this was highlighting a book called The E Myth which stands for the Entrepreneurial Myth book. I've read it multiple times. There's a new book called The E Myth Revisited, sort of like a new version of
the book. I'd highly highly recommend it. They talk about how the entrepreneurial myth is that most people think that if they can start their own business and become an entrepreneur, then they can be free. But that's a myth because what they have done is they've just created a job for themselves. Anyway, read the book. He kind of goes more into depth and detail into how to do this. But at this level, now, if you've exited from the
line and the manager. You know, you're now proactive. But from here, we want to now exit the staff and then being a manager, and we want.
To go to the CEO level.
Right, we're working on the business, not in it, but we want to get to the next level. We want to go from delegation, being the manager that's now delegating these tasks to these individual workers, instead of delegation, instead of first it was doing, then it was delegation, and now we want to move up to leadership. We want to go from an operator, someone who's operation aiding the business, setting the schedules, paying the payroll, you know, running the
marketing instead of operating the business. We want to go to a CEO. We want to go from a manager, well, you know, from an operator to a CEO. We don't want to be just a manager with a title. You see, most of you owning your own businesses have called yourself a CEO, but the reality is you're just a manager
with a title. You're still managing the business. You're still managing the marketing team, managing the day to day, overseeing the customer service, managing the meetings and things like that. And so now we want to exit the manager and go to the CEO level. All right. Once we're able to do that, now things start to get very interesting. Now we're able to really start to think long term or really start to think about other types of the business.
We can start to think about other businesses that we could buy or merge with or partner with. For example, you're a bakery, maybe you want to uh, maybe you only bake bread. Well, maybe you want to acquire another bakery that specializes in pastries. For example, maybe you're a dog groomer and now you want a partner or you want to buy a dog training business, or you want to launch a line of dog grooming or dog training products,
and maybe you're able to buy that. So now from the CEO lens, now you're way up above and you can start to think strategically about the business because you're not bogged down with the technical work of doing the job, nor are you even bogged down with the management of that. All right, now, there's two more exits that I want to talk about. How we exit the CEO Where did we go from there? And how do we exit from
that next stage? And then we're going to dig into exactly how to do this all right, So there's a little bit of high level theory. I want to give you some actual tactical steps that you can do this, but I gotta take a quick breakre just tuning in saying to the Mark ma Show doing something a little bit different today, talking about the great wealth transfer in history coming through the baby boomer's transferring all these businesses and how you can take a part of it. I'll
be back with more in a minute. You don't want to miss it, so don't cool way, I'll be right back. All right, welcome back. If you just tune in, you're listening to the Markmash Show. We're always talking about the way the world is changing as we look at it through the lens of politics, finance, and technology. Today we're talking about well transfer. Specifically, we're talking about businesses being transferred from the largest segment of the population, the baby boomers,
down to the next section. If you're in that role, you need to learn how to scale these levels of exit so your business becomes worth more. If you're running your business in the technician role, you're the one grooming the dogs and working on the cars or baking the bread, your business isn't worth much. You see, someone who's going to want to buy your business doesn't want to buy your business because they want.
A big bread or groom dogs every day.
Someone who's going to buy your business wants to buy your business because it produces cash flow and they don't have to groom the dogs. And so it's your job before you want to sell it, to be able to ascend these five levels of exit. It doesn't mean you have to do this, but it means you have to be able to do it. The business has to be exit a bowl. If the business cannot run without you, it's just a job, and no one will buy your job. They don't want your job. They can go start their
own job. And so you need to do this if you want to get top dollar, if you want to compete in the massive amount of rush of businesses that will be sold, you have to do this. Likewise, if you want to buy one of these businesses, you might be buying one for very cheap because they don't have these five levels. But you could very quickly go and
build all these in now. Depending on the business and how big it is and one industry it's in, and how many moving parts it is, it might take you twelve months to get through these.
It might take you eighteen months. There's a lot of variable factors within this, all.
Right, So we went through. Exit number one was exiting the worker bee, exiting the technician role and moving to become a manager where now instead of doing the job, you're now delegating the job, right, not relegated, not just hand it over, but delegate it. Given a well document system they can follow. Exit number two is to exit from the manager where you're actively managing the staff, to move into the CEO role. The CEO role is now visionary.
They're the ones that are building the vision, the culture, they're building the business partnerships, the development the partnerships. Now you've moved that. Exit number three then is where we're at right now. And now this is where we want to go from being the CEO who's responsible for setting the culture, and the CEO is responsible for building the vision and setting up the partnerships, and we want to exit that. And ultimately what we want to do is
we want to exit the organizational chart altogether. You see in an organizational chart, the CEO typically sets it at the top. You have the other executives there, you know, chief operations offered, chief, chief marketing officer, etc. And then below that you have all the other people. And in order to get to exit number three, we want to exit the ORG chart completely and we want to go from being a CEO to a board member. All right, So a business should have a board, a board of advisors.
Even small businesses, you should still have a group of advisors that you can bounce stuff off to. And so, as you probably know or you might be aware, a board member doesn't work at the company. They're not at the business every day. They don't actively have any role.
Or job that they do.
Instead, they just advise. They get together potentially a monthly sometimes quarterly, they hear what's going on and they offer their input and that's all. So to exit the ORC chart completely, you'd be moving from the CEO who's at the top of the orch chard and sort of the buck stopping there and move to the board. Now at this point, instead of step number one X, number one was working in the business. Then you went to a
manager and you were working on the business. And now going from CEO to board, you're now working above the business, not in it, not on it, but above it. Now the difference of being above it is. It allows you to sort of get that high level, zoomed out look. You can draw on your years of experience, you can look at what other people are doing, and you can advise the business. Now, this is not an operator. Okay, this is not an operator. You're not operating anything. You're
not managing anyone. No one's reporting to you. You don't have a job to do. You should be able to be gone for months.
At a time.
Now again, right, they maybe meet monthly, maybe meet quarterly. You should be able to go months without being there because you don't have a job. You don't have a role to play. Your role to play is the chief visionary. If you will chief visionary, here's where I think things could go. Here's how I think you could do things. Why don't you try these couple variables, run these tests, things like that. Chief visionary, But you're not actively doing
anything in the business. Doesn't that sound fun? Now again, most of us could achieve this role. Now if your business doesn't have the revenue to afford that today, your goal is obviously to get it there. You see, when you can go from exit number one to X number two, to go from the line to the manager. Now you can start to manage the marketing team. You can start
to manage the sales team. If I'm busy under a hood fixing cars all day, at grooming dogs all day, I don't have time to deal with sales and marketing. Sales and marketing is what grows a business. But as I move to the manager, I can now manage the sales and marketing team and we could grow the business. By growing the business, you should grow the revenues and the profits, which then allows me to move to the next stage, which is the CEO, which now means I
can do partnerships and acquisitions. I could grow the business even more. You see, if you're in the technician role, people don't want to buy your business because they don't want to buy your job, and it doesn't have enough profit either. If the business can't if I cann't buy your business and afford to hire somebody to come in and run it, it doesn't do me any good and it doesn't do you any good. You know, there's a saying. It says that you either sell your business or you buy it.
Think about that.
You either sell your business or you buy it. So if every day if you're not selling it, you're buying it. You're committing to stay there. And how much are you worth? How much do you want to get paid? Again, I wouldn't buy a business unless I could afford to put somebody there. And so your role, your job is to get your business to that role, and you're going to
have to make that hard switch. Exit number one probably the hardest exit, to go from the technician to the manager, so you could really start to grow.
The business and drive the revenue. All right.
So then we've gone from the line to the manager, manager, to the CEO, CEO to the board and now exit number four. Exit number four is now exiting the board and becoming an investor. Now you could potentially be the board and the CEO at the same time. These lines get a little bit blurred here. Or you can just exit the board and you can just be an investor. And what am I talking about there? I own investments
into lots of business. I mean technically, if we own stock and equities, we own a part of a business. We're an investor in the business. Obviously, if we own just a couple of shares of Apple, we have no say in the business. But we can be an investor in the business and we have no job, we have no role. We don't even have to advise them like we would if we were on the board. Instead, we're just an investor. Now, if you have sold a business, a lot of times you get put you know, you've
gone through these exits. You've gone from the manager of the CEO, and now you've exited. You've sold the business. But typically what happens if your business gets bought up by like a private equity, is that they're not going to cast you out one hundred percent. When I when I had my first exit, they wanted me to stay on for two years to help them with the transition. And for me, that was like a deal killer. I was like, no, I'm not going to do that. I'm
an entrepreneur. I don't work for people. Why am I going to go work for someone. I want to go start another business. And so at first I was like, that's a deal killer. I'm out, Like that ain't happening, I ain't working for nobody. As we got further through the process, I realized why it was important, why it was basically a deal killer, and then I decided, you know, I'll take this as learn opportunity and I'll just learn what I.
Can from this.
But I had to work, and so during this time, typically like what I had to do, I didn't get all my money upfront. I got a chunk of money upfront, and the rest was riding in the business. And so I was invested into the business. If the business did really good, I could make even more money, right because they only bought part of it, if I stay on as an investor, and so that would be the next stage to be. And then finally there's exit ownership, exit
investment at all. And this is where so let's say that they give me, you know, thirty percent down, they financed the rest. Over twenty four months, I helped them continue to grow the business, and then they cash me out and I can walk away. I now have exited ownership. That's the fifth level of exit. I no longer am involved in any facet of the business. I have absolutely no say not say, I have no board, I don't have any money involved. I'm not an investor. I have nothing,
and I have no cares. I don't care anymore. I'm completely gone, and now I can move on to the next stage in my life. So those are the five levels of exit.
Now how do we do that?
That's exactly what I talk next. If you're just tuned in, you're listening to the Mark Maus Show. We're always talking about the intersection of politics, finance and technology. Today we're going down a little bit of a different path, talking about the largest wealth transfer in history. So I'll be back with more. Tell you exactly how to advance through these five stages in the shortest amount of time. You don't want to miss it. Don't go away.
I'll be her back.
All right, Welcome back. If you're just tune in, you're listening to the Mark mass Show. Going down a little bit of a different path today, we're talking about the greatest wealth transfer in history. That's coming. Tens of trillions of dollars is going to be changing hands, and I want to help you get your hands on some of that. If you own a business and you want to participate, then this is for you. Or if you're thinking about buying.
One of these businesses, then this is for you as well.
Now we ran through the five exits, and I want to tell you now how to actually do it now real quick, just to recap these If you just tune in. The first stage is most people in small businesses they're small business owners. They're self employed, meaning they don't own a business.
They own a job.
They're groom and dogs or fixing cars or bacon bread, but they're in the business doing that work. So the first exit is to exit the line and go from a worker to a manager. Exit number two is to exit the staff completely, and now instead of being a manager that has to manage people, I move from the manager to become a CEO. The third level is to exit the org chart organizational chart completely and to go from the CEO to a board member.
So now you have no job, no role to do.
The fourth exit is to go from a board member where you still have a little bit of advisory role to just be an investor. I just have some money in it, but I don't really care. And then finally the fifth exit completely is I have all my money out, no longer involvement, no investment, no say, and I have no care what happens next. All right, now, like I said, easier said than done.
So how do we do it?
How do we do it? Well? It all starts with planning, like all things in life. So we have an idea, we think about it, we commit to that idea, and then we have to plan to execute on that idea. So how do we plan this out? Well, the best way to do any type of planning is to start with the end in mind? What is it that we want?
Now?
You have this dog room business, you have this car, car repair business, etc. What is it that you ultimately want with this business? I mean, do you want to just work on cars to the day that you die most likely not? Do you want to grow it? Do you want it to be small? Do you want to pass it to your kids your grandkids? Do you want to sell it? So you have to start with the end in mind. So that's where we always start. What is the goal that you want to achieve? Most people
have never got to that level. Henry Ford said that thinking is such hard work. That's why so few people do it, and so most of us just don't take the time to sit and think about this. We don't think about the end in mind. So what is it that you want? What level of exit do you want to plan for?
Now?
You might have massive of enjoyment from grooming dogs, you might have great enjoyment from fixing cars. And so you might say, hey, I think this is cool, but like, I don't really want to be on the board. I'd like to just keep fixing cars. Well, there's nothing wrong with that. You can still keep that role in your organizational chart. But your business is still going to need to grow that way if you ever plan to get any money for it. All right, So you need to
think about the end in mind. Okay, I want my company to be able to run without me. I want to be able to sell it one day so I can retire, but I like to sit in this role. Great, Okay, we'll just think about that. What is the end that you want to achieve and what level of exit do you want? Okay, so that's where it starts. The next thing is we have to get our financial house in order, and this is where most small business owners have completely
neglected this. They don't understand the financial data. And of course, to grow from a technician where I'm just grooming dogs and fixing cars to go to a business that can have a CEO and a board and people to do all the work, it's a completely different business and it takes more money. I need more money, and I need to manage that money better in order to get those people. And so it starts with getting your financial house in order. And really there's three big reports that everybody needs to
focus on, and most people aren't doing this. So what are the three reports? The first one is one that you maybe be looking at. It's called a p and L a profit and loss statement p and L, and it shows the profit and loss on the monthly, quarterly, annual basis, and then you should be able to compare them against previous quarters, previous years. Now, this is sort of the base report that, like I said, some people know, and in my opinion, you should be looking at this
report every single month. And I look at it every single week because I want to understand how this is working on a weekly basis. That's the profit and loss. That's the first report. The second report then is going to be the balance sheet. This shows everything that This shows the value of the business. It shows everything the business owns and everything the business. So I add up all my assets. So I have a building, I have equipment, I have inventory, I have cash in the bank, I
have investments in other businesses, et cetera. I add up all the asset values to those and then I deduct all the liabilities. Well, I have a loan against the office, I have a loan against the equipment, I have a lease, kind of things like that. At the end, assets minus liabilities gives you your total balance or your net worth. You want to understand that because that's what's going to determine what your valuation is, or one of the key determinations of what your valuation will be if you want
to sell the business. So, if you're selling a business, your goal is to or hopefully should be a goal, to sell it for the most amount that you can. And that's the number that you need to manage too. Look, it's measure gets managed. You need to.
Measure that number. Manage to that number. Okay.
The third report that most people are not looking at all but might actually be the most important one is the statement of cash flows. So one tells you how much profit and how much loss you've had. One tells you how much your worth, what your balance sheet is. But the statement of cash flows tells you where your money's going. How many times have you got to the end of the month and wondered, where the heck did all my money go? Well, the statement of cash flows holds that secret.
Now.
Of course, some of it is done through proper planning. You can either get to the end of the month and wonder where your time went or where your money went. Time management is like money management, or you can make a plan for in advance. But of course there's always surprises that come up throughout the month, which is why we need to run the reports. We need to sit down, we need to reflect and optimize that. But the statement
of cash flows unlocks that for you. Okay, then once you have that, we need to now set pro formas Typically for small businesses, I like what's called a thirteen week cash flow study, and so thirteen weeks is just pasted a quarter. Twelve weeks will be a quarter about a quarter, and it projects out where will be where our cash flow will be over the next thirteen weeks. So if you want to scale your marketing to grow your business, can I afford that?
The thirteen week cash flow will.
Tell you I need to hire a new manager so I can exit and move to the CEO role. Forward that when can I can I afford it? When can I afford it? Can't? I can't afford it now, but in six weeks I can In nine weeks and twelve weeks I can. So I need the three for the three reports, and then I need to make the thirteen week cashlow. Now, if you just go on to Google and type thirteen week cash flow, you can find templates spreadsheets to help.
You do this all. Right.
Then once I have that, then I can make the financial scaling plan.
Right.
The financial scaling plan is what will allow me to build this plan out where. Like I said, here's where I'm going to hire these key people, Here's where I'm going to launch this promotion. Here is where I'll buy this new piece of equipment that's going to make me a bunch of money. And so now I have this sort of plan of when to grow.
Now.
I don't know if you're like me, but I get impatient. You know, when I decide I want something, I want to grow, something, I want to add, add a new line, whatever, I want to launch something, I get impatient. I want it right now. What helps me to not be so impatient is when I put it down and I know when it is that I'm going.
To to start it.
If I know that I'm not going to start it now, I'm going to start it in one hundred and twenty days from now. I can sort of feel at ease with that. Okay, I can wait one hundred and twenty days. But it's sort of like when you don't know what it is that it bothers you at least bothers me. And so that that financial plan, that scaling plan helps you. And then finally, with the end in mind, are we building this to sell?
Now?
Again, you either sell your business or you buy it, so you should always be building your business to sell. But are you building it to sell? And specifically with your finances, how are you running your books? Are you running them on a cruel basis or a cash basis? Are you segregating costs properly? Are you running it like a bank account where you're pulling all your profit out for yourself personally? Are you categorizing that properly? Because if you want to go sell your business, they want to
see the most amount of profit. Obviously, you're getting a multiple on your profit, and so you want your profit to be as high as possible, So you need to make sure that you're optimizing your finances preparing for that sell. I've got a couple more things I'm probably not kind of run out of time. But one of the key pieces of moving through these five exits is a mental shift. And it's a shift. There's a book written about it called who Not How?
All Right?
Entrepreneurs focus on how how do I get this done? How do I grow my marketing, how do I get more customers? How do I exit to the next level? Entrepreneurs focus on how. But what founders do is they focus on who Who can I get to do the marketing? Who can I get to manage this business? Not how do I do it? But who do I need? And so attracting good people is the key that unlocks all this.
How do you do that?
Well? It starts by setting a compelling vision, a clear picture of who it is and what it is that you're looking to have them do, and people will be drawn to that. In addition, we need to have systems in place that optimize all this because at the end of the day, somebody wants to buy your business that
can run without you, and you need systems to do this. Now, if you're just tuning in, you're listening to the Mark maw Show talking about the greatest wealth transfer in history and how we can be a part of it talking about business, something I don't typically talk about it. What did you think about today? I'd love to hear from you. To hit me up on social media at one Mark Moss, leave me a comment on the podcast. I'd love to
hear from you as well. If you'd like more business finance topics like this, let me know we'll do more of them. But this is a big deal.
That you needed to be aware of, you need to take advantage of.
So that's what I got today. Thanks so much for listening. Until next time,