EP01: Navigating Business Exits: Strategies From Eric Cooper, Certified Exit Planner

Josh St. Laurent: Welcome to The Wealth and Yourself Podcast, where we help people to design their ideal life and take control of their time and money. I’m your host, Josh St. Laurent. Today we’re joined by Eric Cooper, founder and managing partner at Sooner Business Advisors. He’s a Certified Exit Planning Advisor and helps businesses maximize their value. Coop, I’m so glad you’re here. I’ve been looking forward to this. 

For those listening who maybe don’t know you and aren’t familiar with your work, tell us about Eric Cooper and what you do.

Eric Cooper, CEPA: Love to, Josh. Really my pleasure to be here. I’m really excited for this conversation. Anytime we talk on the phone or anything, it’s just such a dynamic energy, so I’m really excited for the people that listen to this podcast. 

So for those listening, as Josh said, my name is Eric Cooper and I’m the Founder of Sooner Business Advisors. I’m also a financial planner, as well. That’s the background that I have and how Josh and I met each other. 

So really what we do is really simple. We help business owners maximize their businesses for themselves and their family. You think about the wide, wide world of financial planning and, you know, goal achievement and actualization and transforming outcomes.

And we deal with that in the sense of money quite a bit in the planning world. But really the number one variable on the table for a business owner is their business. It’s usually where most of their cash flow goes. It’s where most of their wealth is stored. It’s the variable that’s going to most determine their quality of life now, their quality of life later, and their financial viability now and later.

So, how do we understand how to manage the interrelated decisions between the personal and the business and the financial over time so that somebody can write their own story with intention? As a business owner, how do we maximize the impact that they wanna see their business have in the world? How do we make sure that that business doesn’t rule them but they rule it?

How do we make sure that they can exit on their own timeline in terms whether that’s a year from now or 20 years from now? Those are the conversations we like having. Those are the questions that we answer. And that’s why it’s fun ‘cause there’s a lot of people that really haven’t had those conversations and are really excited to be led through a process where they can really start to invest in the wealth in themselves and they can write their own stories with intention.

Josh St. Laurent: Man. I love that. I love that. And it’s so important. I know you and I talk a lot about kind of accidental business owners, right? A lot of these people follow their passion and one day realize, “Hey, I’m running a business and maybe I don’t know all the things I need to know.” So I want to revisit that talk a little bit about that in the podcast.

But can you tell us a little bit about your story? How’d you land in this position of being a business advisor? I know your story, I know your background. I love how you’ve specialized in different areas, so can you talk a little bit to that?

Eric Cooper, CEPA: Yeah. I’m not known for being brief, so I’ll do my best here to give you the cliff notes version. I’m an entrepreneur first. I’m a finance guy second. I started my first business when I was 15 years old. I raised some money from my brother and a couple friends and researched what business that I could start for under $5,000 profit margins and all that kind of stuff.

And at 15 years old, I settled on a mobile auto detailing business. So I self-taught myself how to detail cars, found a company and sourced all the equipment and used my dad’s garage as kind of a staging area for all the buffers and the waxes and the carpet cleaners and all that kind of stuff. And I learned a lot of valuable lessons in that experience. I learned more about business and that experience than anything that I’ve done since. And, you know, really how I came to choose that business. I was already thinking like an exit planner. I was thinking, what can I do now? Knowing that I’m 15 and my life is gonna take all sorts of twists and turns.

I can’t anticipate what can I do now that can operate without me and that I could sell one day and make money on the way out. And that’s how I ended up choosing auto detailing. I had never done it before. I didn’t have acute passion for cars. That’s what really drove the decision. 

Now based on various business missteps that a lot of young business owners face or commit, I didn’t end up selling that business.

I ended up closing up shop, closing the doors. I barely broke even. But man, what a valuable experience that was. So since that point, I’ve done sports podcasts. I’ve been a farm and agriculture insurance agent. I’ve been an investment manager and a retirement planner at Fidelity. I’ve been a life insurance guy.

I’ve been a portfolio management guy. I’ve been a business consultant, right at a bunch of different companies. And now I own my own independent firm, right on the financial planning side and both the business consulting side. But really what’s informed that journey. Right? And I can’t stress this enough.

Everywhere I went, all these different companies that I went to, there were belief systems and attitudes and predispositions around certain products, certain strategies. How a doctor should plan for their future financially versus, you know, say some C-suite executive that’s getting RSUs as compensation, these weird tax tricks. 

Look, there’s so many tools that we can use in the world of finance, in the world of business to improve outcomes. And there’s more than one way to skin the cat. I really learned is that any allegiance or predispositions or attitudes around strategies or products is bias and it’s loyalty to something that isn’t in the best outcomes of the client.

I don’t care what tool we’re using, I don’t care if you’re a business owner or not a business owner, I don’t care if you like the markets or don’t like the market. I don’t care. What I do care about is how do we use all the resources and tools available to us? To maximize your wealth, maximize the spend ability of your money, reduce the amount of money you give to financial institutions and reduce taxes, and allow you to create a life of intention.

Money doesn’t mean anything to anybody, it’s just a means to an end. My job is to understand that end so that what I know about money and business can now connect with the ends that you uniquely find value in. People don’t find value in money for the same reasons. And until I understand that it’s hard for me to be an advisor, I can easily be a strategist. I can be a vendor, I can be a tactician, but I can’t be an advisor. And that’s one of the biggest things I learned being in all these different companies that had different things. They were pitching and pitching in different ways of doing things. And when it comes to the accidental business owner, it’s so important that you really have an advisor because what they’re looking for is, I think one person that I talked to and they ran a cement company.

They had started pouring cement for somebody when they were in their teens. And eventually they figured out, you know, my boss is ripping me off. I’m not getting paid enough. He’s not actually giving these clients great customer service. I could probably do this myself and make more money. So they went off on their own and they hired their buddy part-time to just help him do driveways.

Well, that graduated and escalated, graduated and escalated, and people they did driveways for and now wanted him to do other stuff. And so they learned how to do those things. Fast forward 30 years, and now that’s a 40 person company doing all sorts of specialty cement work. He didn’t get into that business because he wanted to be an entrepreneur.

He just thought he could do it himself and be his own boss and not get screwed over and maybe do a better job, make a little bit more money. And now here he is with this behemoth. He didn’t get into it to know about benefits, about 401k, about HR, to be recruiting, to be making job postings on LinkedIn, to have to pick a CRM, no billing taxes, not any of this stuff.

What he needs is an advisor that can show him, okay, here’s the way of the land and here’s how we align the personal, the business, and the financial to create the outcomes you wanna see and translate all this stuff into the life you want to be living. And that’s why advisors—Josh, I know you believe this—are so important.

And advisors not somebody who knows stuff about money and advisor is somebody who knows how to translate that into your unique value system then manage the interrelated decisions over a period of time to create those outcomes that you wanna see.

Josh St. Laurent: I love that. So many good nuggets in there. You know, I think one thing I keep hearing is the value of all the different experiences, right? I don’t know about you, but when I first launched I actually looked at it as a negative thing. Hey, I’ve done all these different things, you know, maybe I should have spent more time here or there.

But I think you made a good point. You know, the insurance guy believes, you know, 100% in the insurance, he has a lot of conviction there, but there’s some bias, right? Maybe he hasn’t learned about different avenues. So it’s really cool as an advisor when you have lots of different avenues, “Hey, I’ve done all these different roles, I’ve seen different perspectives” I think is crucial.

And I just wanted to, kind of throw at you just a real generic question. For any business owner listening out there, why exit planning important and when should they start? 

Eric Cooper, CEPA: Oh, I love this question. Why is exit planning important? Because the way that you run your business is inextricably linked from the way that you exit your business. And because planning is just bringing the future into the presence. So you can do something about it. Now, let’s pretend you’re not a business owner and we’re just talking retirement planning.

got 30 year olds putting money into 401ks. We got 30 year olds that are looking to buy investment properties to improve their cash flow and their overall net worth. They’re not doing that for today. They’re doing it for a retirement or, you know, whatever retirement means. ‘Cause people don’t think about retirement the same way now that they used to.

Right? Work, work, work — at 65, stop all meaningful work and die in a rocking chair. Nobody does that, right? But whatever, you know, slide into, whatever their second act is, right? Whatever you wanna call retirement. People are planning for that way ahead of time with the money that they’re making today.

It’s no different with your business. If we start with how do we maximize the strength of the options that you have to maximize the financial harvest from your business, and also bring the timeline in which you make those decisions onto your own terms. Those are also the same components that are gonna drive your profitability today.

They’re the same components that are gonna drive your quality of life today. The business being able to run without you and not having an owner dependent business. They’re the same things that are gonna drive your growth. The same things that are gonna drive your culture. The same things that are gonna drive your employee retention, the same things that are gonna drive your tax efficiency.

It’s all the same stuff. So in a very real sense, exit planning and value creation or value acceleration on the business side are the same thing. You know, whether you’re looking at exit one year from now, or 20 years from now, success are driven by the same components. Just like in your personal life. You know, it doesn’t matter if you’re looking to retire five years from now or 30 years from now.

Saving is important. That’s why is investing is important. Creating a money supply is important. Reducing taxes is important. Like all those things are important regardless of what stage you’re at. So the reason why people should pay attention to this is because all we’re doing is we’re, looking out to the end and then moving backwards and how that translates into how you build, manage, and harvest.

Now when should you start? If you’ve got a profitable and successful business, you should start that now because the way you hire now, where you put your capital investment, when you put all that cash back into the business and you don’t take it to your own pocket as income, where’s that money getting invested?

you recruiting and hiring people? Is it in your infrastructure, your technology? Is it protecting your ip? Is it in education so that you can[00:10:00] learn how to do a wider variety of jobs or, is it in marketing so that you can maybe niche down or access? All those are strategic decisions that business owners are making all the time throughout the year.

How you make those choices today is directly governed. By the strength of options that you want to have at the end and the shortest path to the life that you want to be living and effectively transforming outcomes is to take all the variables and put them on your own timeline and terms. That’s all exit planning is.

Josh St. Laurent: I love that. I love that. I wanna keep running with this. say you know, you’re a business owner listening right now and they want to come work with, Eric Cooper. should they be expecting? What does that first meeting look like? What do they need to come prepared with? You know, what does that process entail? 

Eric Cooper, CEPA: Yeah. So really the way the process starts is it’s very informal. The first thing that I want to understand is how you behave and how you’re wired psychologically. The first thing I want to understand is how you derive value, right? So, for example, we see in different industries, or even between different genders, right?

Men and women, How they derive value from money is very different. Some people are more long-term thinkers, some people more short-term thinkers. Some people’s personal identity is wrapped up in their professional location, whereas other people have their identity bankroll placed elsewhere. Every individual person is different, the purpose of that first meeting for me is to understand what your pain points are and understand how you derive value from money.

Goals are just a best guess. Loosely held goals change all the time. Whether the goal was to sell for 5 million or to give the business to your kids, or to save X amount of money or have X amount of investment properties in your portfolio, or work X months outta the year. All of those are non objective points that are your best guess. It represents what you want your life to feel and look like. And depending on what your expectations are, and depending on what the outside environment that you can’t control around you is, those goals are gonna change constantly. What’s not gonna change is the underlying value system that you’re picking those goals to reflect.

So really the first conversation is understanding how you derive value from money. Like what? What do you want? I think kids just research did a study, I think it was 86% of clients do not like talking about goals with their advisor because goals are largely mimiced, well, my goal is to have X amount of money by retirement because my friend’s dad had this amount of money at retirement and he seems to be living a life that I would like to be living, right?

But all we’re doing is copying other people or taking the inputs we’ve had over the course of our lifetime and making our best guess. Most people don’t know what their goals are or whatever their goals are, is some sort of loose extrapolation of some monic rubric that they picked up somewhere along the way.

So in that first call, I’m not as interested in the goal as I am in the value system. Once I understand your pain points and your value system, that’s when we can kind lay it out and say, okay, here’s the process. Here’s the types of things we talk about. Here’s the areas where we can help. And then craft a solution for you.

Right? I mean, there’s standard ways we work and we have our packages and our offerings, but ultimately it’s about matching what we know money, about exit planning, and about value creation in understanding how that fits into your world to help you create outcomes with intention. And it’s really very simple, right?

I mean, we work with folks in two main ways. The first is our blueprinting phase, which is really a thorough, comprehensive planning phase. It’s a flat fee project. And what comes outta that project is not only a business valuation and the personal financial planning and understanding where you are and where the gaps are but it’s a sequence and a hierarchy and a roadmap on how you actually go eat this elephant to create the outcomes that we have mutually understood and you’ve articulated that you wanna see.

And then people work with us on an ongoing monthly retainer to help them realize that over time, Rome wasn’t built in today. So nobody built a successful business in a year, right? Getting a report or going through a six month process, or a three month or a two month or one month process with me to have discussions is not gonna transform anybody’s outcome.

You gotta do the work over a period of time. So we serve as that quarterback to actually run that board of directors, quarterback that team of professionals, and sit right in the co-pilot seat along with that business owner help them sequence and hierarchy all the interrelated decisions that they need to manage over a period of time to create the outcomes that they want to see.

Josh St. Laurent: I love that, man. That’s powerful. I love that you brought up the psychology emotional aspects of financial planning, you know, so heavily in that first meeting cuz it’s so important and I think a lot of people here, financial advisor and rightly so, think, you know, hey this is a numbers guy, you know, and that’s, only a part of what we do.

I wanna revisit that. But before we do, I’m curious—and I’d imagine some listeners are too—are there common things that you run into, maybe common scenarios business owners come to you with that you tackle on a regular basis?

Eric Cooper, CEPA: Yeah. Yeah. I would say really everything boils down to, to, to mainly one thing, right? Everything boils down to I’m wearing too many hats and I don’t have time. I understand, Eric, I understand all this stuff needs to get fixed and you know, I understand that, you know, maybe I should be paying more attention to my personal finances, not just the business finances.

maybe I sh yeah, I should probably know what my business is worth. I should probably have a strategic game plan on how to maximize value in my business. I should probably think about it. I should probably do all these things. I’m trying to run a business that’s an 80 hour a week job. I don’t have time to solve all these problems.

Some of it is fabricated, some of it is psychological. The pressure that business owners put on themselves. They tend to be very driven. They tend to be very ambitious, right? So they tend to sell flog a lot. But a lot of it, the structures aren’t in place to allow them to be strategic. The structures aren’t in place to allow them to look 20 feet forward instead of five feet forward.

So really, most of the problems are translated back to something like that, right? I can think of one guy that I talked to, and he was 64 years old, this was an exit conversation. And he had like a specialty machining company with, you know, working on government contracts and he’d be doing it for a while and you know, he’d only owned the business for 12 years, but he’d been in the industry for like 30.

And his thing was, it was just too much for him and he wanted to sell within 12 months and he had a number he wanted to sell for. Now he was never gonna sell for that amount of money in 12 months cuz you look under the hood of the business. It was totally unsellable, right? But when we had a two hour meeting to kind of uncover, okay, why is there a fire burning for you to get out in 12 months?

After that 12 months? What does your life look like? he didn’t really have answers to any of these questions. It all boiled down to he was stressed, his body was breaking down, he was sick of his time being co-opted. So he threw his hands up and he said, I need to get outta here. Whoever can help me get outta this business, the fastest wins.

had a great conversation. He didn’t end up doing business with me. He ended up working with a business broker that told him in the first meeting, we guarantee we’ll get your business sold within six months. Dunno what happened to ’em, but I bet if they did do it I think the latest E P I research is 72% of business owners regret selling their business within a year after doing it.

And none of it has to do with how much they got paid. They had no life after plan. Their identity, their emotional bank role was placed entirely within that business and there was no planning done on where else that was gonna go. Right. And I betcha if he sold within six months, he got 20 cents on the dollar for that thing if it was sellable at all.

Cuz it really wasn’t sellable when we had that conversation. But similarly, right, I can think of a 34 year old in Texas that is running a really successful business. And we had a conversation and, his, the reason why he ultimately didn’t work with us at that point in time was, you know, we’re growing really fast.

I’m hiring people. We got so much stuff going on. We’re trying to get a social media campaign going. We’re talking to a marketing company to try to expand our stuff. Stuff, stuff. Shiny objects, stuff, stuff, stuff, stuff, stuff. We just don’t have time to sit down and think strategically because we’re trying to capture the short term opportunity that’s here.

I would submit to those guys and the very opposite ends of the spectrum, right? One of them was looking to retire and get out. The other one just started its business four or five years ago and is making good money and it’s doubling year over year. But I would submit to both of those gentlemen, you don’t have time to not think strategically.

Because there are so many business owners that have built a cage that they can’t break out of. They’ve got the golden handcuffs, their entire lifestyle, their entire kids’ college education, their cash flowing of their investment properties. Everything depends on this business. And in order to count, I mean, you can grow a little bit, right?

If you’re a one-man show, or even if you’re not a show, you can have 40 employees. You can have managers, you can have a leadership team. It’s not necessarily about the team structure, but if you don’t have a business that is capable of operating entirely outside of you, that you man is like an investment instead of as an employee, there’s only so far you can go.

You don’t have control over your time. You don’t ultimately have control over your life. You don’t have strength of options. It’s why you see so many business owners dying in the chair, whether it’s their personal identity, whether it’s their, the reliance of their finances, they can’t afford to leave.

So I would submit to business owners, you don’t have time to not think strategically cuz the decisions you make in year three and four as you’re doubling in size. Are directly gonna correlate with the corrective actions you need to take in your five, six, and seven, or if not corrected earlier, your strength of options and the life that you ultimately live in.

Your forties, your fifties, your sixties, right? It’s all connected. We have to do it right the first time, and if we don’t do it right the first time, we need to give yours. You need to give yourself the time to be able to take a couple steps back to go forward on the right track before you get to the point where you need to make a decision.

And the last thing I’ll say on that is the other reason why business owners need to think about this, and we don’t like talking about it, but most business owners exit their businesses under one of the five Ds. And now that I said five, I’m gonna, I guarantee you, I’m gonna forget one of them. There’s divorce, there’s distress disability disagreement with partners, and I forget the fifth one. 

Josh St. Laurent: What about debt? 

Eric Cooper, CEPA: Debt. I don’t think that debt’s on there, although you probably could put debt on there, but most business owners don’t go to the next chapter because they decided it was time. Most of the time they didn’t have the types of conversations that we’re talking about right now, and they haven’t done the proper planning and variables. They can’t control it, they force their hand because they have not insulated themselves from the inevitable variables that are going to present themselves without warning at some point along the way.

You think about health challenges, you think about a partnership disagreement and a business separation. You think about a lawsuit. You think about, and I’m not trying to be that guy, right? But these are things we have to think of as business owners. Every business, if you have a business and that’s successful and you’re around for a long time, you lose a key employee, somebody dies, you’re sued, you make a mistake, whatever the case is, right? You go through an economic cycle where you lose half your business, right? You go through this inflationary cycle and cash flow is tight. Whate, I don’t care what it is. There’s things you can’t control that happen. And the businesses that stay around for 20, 30 years are the businesses that have prepared and insulated themselves so that those variables aren’t going to be fatal.

The businesses that don’t insulate themselves, they don’t have the strength to withstand that wave when it hits. So that’s only part of the overall planning process, right? There is the protection element of it, but then there’s also the, how do I create the outcomes that I wanna see with intention.

But there’s all sorts of reasons for people to do this now, cuz really, I mean, exit planning is somewhat of a misnomer. This is just good business planning. Every business owner that’s growing a business should be thinking about it in terms of how do I maximize the value of my business? How do I maximize my strength of options?

How do I get as much money as I can outta this business? How do I maximize my investments outside of the business? How do I reduce taxes? How do I make sure I’ve got a great culture? How do I make sure I retain and attract employees? How do I make sure that I do a great job for my customers? How do I make sure that I have a structure that can operate outside of me so that if I ever need to move on, it can be handed to somebody else and my business can continue having impact that it’s having. These are just tenants of good business planning. So, you know, it’s kind of interesting, even as an exit planner, you know, I talk to businesses all over the spectrum. 70 year olds, 28 year olds, 35 year olds, 45 year olds, partnerships, single people operations cuz it’s all the same stuff.

Josh St. Laurent: Yeah, I think you nailed it. I mean, I really love what you said about give yourself the time back, you know, cuz we hear that all the time. I don’t have the time. You know, it’s one of the most common excuses we hear, but it’s funny because some of the deepest goals that people have of all different ages is to get more time back.

 I’ve noticed in my own practice, I’ve had a lot of client interviews lately with people in their seventies, they’re retired, they sold their business by all spreadsheets. They are successful. they’re not gonna run outta money, but they’re unhappy. Work is bogging them down.

They can’t seem to stop working. They need to find that purpose and what is driving them. And it’s no different with people in their fifties, forties and thirties as well. So I love that you said that, you know, give yourself that time back, build those systems. 

Eric Cooper, CEPA: And let me add this real quick for you, Josh. It’s not just about the time, it’s about the self coercion. If I walk up to you and I push you, And you see it coming where I guess even if you don’t see it coming, you’re probably not gonna fall. If I give you a stiff push and the reason you’re not gonna fall is because you’re gonna brace yourself and you push back to counteract the force with which I’m pushing you, you don’t just tip over. Right? 

The natural tendency that everybody has a business owner or not is when you’re pushed to push back. I think back to our days working at the firm that we started at, and being in that phone center, pounding those calls and getting pressured to work overtime and to stay until 11 o’clock midnight and take more calls because the call volume was high and this person was on vacation, or whatever the case is, every fiber of our being, I mean, I remember those walks that we would take behind the building back by the pond, just to get out of there and just to have some sort of semblance of normalcy and not be treated like cattle and talk about something that wasn’t work.

You and I, we didn’t want to be in there. And yeah, you know, we were part of a team, quote unquote, and there were customers that needed our help. But when we’ve got our bonuses being threatened, if we don’t do overtime, and you know, we want to get home to our families and our managers are trying to coerce us to stay, our natural tendency is to push back. Since I started my own firm, I’ve worked more than I have at any other job ever, but I’m choosing to work. I’m putting it in because it’s mine. I’m putting it in because there’s a value system, there’s a purpose, there’s an ambition, there’s an identity with it. It’s not somebody else that’s pushing me to do it. Every business owner, right? Most of them are busy bodies. Most of ’em are incredibly aspirational people. They’re not people that really value sitting around and doing nothing. So the point isn’t that you want time because you’re just gonna hang out on the beach and do nothing. You want to be able to allocate your time with intention.

Because if you’re allocating 80, 90 hours to the business because you have to, because you’ve built this castle or this cage masquerading as a castle, your natural tendency will be to push back because it’s self coercion. If you create the space to bring your business onto your own timeline and terms, it’s not that you won’t work, but you’re gonna work because there’s purpose and there’s value, and you want to do it.

And those are very, very different things. This is not a process designed for people that wanna be lazy or just don’t wanna work. This is designed for people that want to have more control how they spend their time, resources, their intellectual resources, and their emotional resources. And at the end of the day, isn’t that what we all want?

Josh St. Laurent: Absolutely couldn’t have said it better myself. Yeah. It’s about that intention. I love it. Could you talk about let’s say those business owner listening, are there common things that you could say that people can enact, next week in their business to increase the valuation, set themselves up for success?

Common things that you see a lot of business owners, maybe mistakes that business owners are making? 

Eric Cooper, CEPA: Sure. I’ll give you a couple, and I don’t know what applies to every individual business owner, right? There’s a lot of different places that they could start. Part of the reason we do a blueprinting phase is to create a sequence and a hierarchy of how to go about this cuz there’s so many places that people could start.

But I’ll give you three things, three nuggets that should apply to everybody fairly universally, right? the entire, what we call the structural capital of your business, the chassis that your business runs upon. For most business owners, it’s themselves. They make all the decisions, they set the processes, imagine if you took three months off from your business. You went to Costa Rica today, and you were gone for three months, and then you come back. If you can’t do that and come back and just fold right in without skipping a beat, simulate that in your mind. Think about all the areas where it would break and translate those problems into a process that you can write down on paper.

Now, when I say process, I’m not talking about an operation necessarily. The operation comes after the process. I’m not talking about a crm, I’m not talking about like I’m, you don’t need to get granular with it. But just simulate in your mind whether it’s, well, the pipeline would dry up cuz I’m the one that brings prospects to the table and closes all the sales.

Or whether that’s, well, I’m the one that actually does the fulfillment on the work, or I don’t really trust my crew to work without my supervision, without me physically being there to boots on the ground or I’m doing the bookkeeping. No one would be doing the bookkeeping. That would be a mess. I’m the one doing the billing. That would be a mess. Right? 

I don’t know what it would be in your individual situation, and there may be some exceptions, but think about all the places where the dam would break and make a list and prioritize. There’s a question from the book that Gary Keller wrote called The One Thing and the focusing question in that book is, what can I do such that by doing it, everything else becomes easier or unnecessary. Simulating in your mind, I’m gone for three months, where does the dam break? And then, sequence how you go to work on those problems based on that focusing question, what can I do today such that by doing it, everything else becomes easier or unnecessary. 

The second thing that I would suggest, and this might sound a little counterintuitive, but think about out of all the time you spend on finances, what percentage is spent on the business finances versus the personal finances.

We can look to optimize the business and the business value and all this kinds of stuff, and that stuff is good. We should do that. But ultimately, if you’ve got no financial agency outside of this single asset, you’re not in a position of strength. What side cards of money are you funding outside of the business?

How confident are you and how attentive are you in your financial planning and wealth building outside of the business? Because ultimately you have more space to be strategic and to treat your business like an investment When. The business is not both your long-term plan and your old crap plan, we need to separate those pressures there.

Become as financially independent of the business as you possibly can. That could be additional streams of income, that could be wiser investing, that could be more efficient. Tax planning could be a bunch of things, but how much time do you spend in finances on the business versus personal? And if that’s super lopsided, then there’s probably some meat that you’re missing on the bone on the personal finance side. Okay. And then the third thing I would say I would probably actually recommend and I’m not sponsored by this company or anything like but the entrepreneurial operating system I have seen helped so many business owners and we incorporate a lot of those concepts into the work that we do with business owners.

There’s a book called Traction Written by Gino Wickman. Read that book. Read that book. It is the best book that I’ve found that can help. You understand how as a leader and a business owner, how you can run a simple and effective process as a leader to have the agency to impact any of this stuff, right?

Business owners own everything. So technically they have the decision making power, but being an effective leader and an effective owner to be able to make a decision and actually then affect that change, that’s a whole other art and science. And the book Traction has really been helpful for me in running my businesses.

It’s been helpful for almost all of my clients. So if you haven’t read Traction by Gina Wickman, read that book. Do yourself a favor. What I love is that book, it does give you concrete things you can do now.

It’s not a rah rah, get you fired up, and then you finish the book and you come outta the gate full of juice, but you have no idea where to place it. It will direct where to place it right now, and it’s been very helpful. So it’s a good self implementation tool that can get you to the point where you could work with somebody like myself or an eos implementer and be much more effective, much more quickly.

Josh St. Laurent: I love that. I love those three points. Number two, I see all the time, right, that separation of business and personal finances. You tell me what you see, but I see a lot of it’s one or the other, right? Like, hey, my business is crushing it. I’ve been reinvesting all this money into it for years, you know, but, but hey, over here, I’ve never saved for retirement or I don’t have a brokerage account, or vice versa. Do you see that commonly?

Eric Cooper, CEPA: Oh yeah. almost 80% of business owners don’t know how much money they make. I was looking at a tax return for a business owner recently. Older, older couple. And according to their taxes, they made 72 grand last year. And they had a business that did like two and a half, $3 million in revenue. And it’s like, okay, whatever shows up on the tax statement, you can, you know, that’s fungible. You can manipulate that however you want, right? But when you look at the kind of the soft money, like depreciation and all sorts of things that reduce your income that go against the hard money that you did take, but it kind of gets lost in the shuffle cuz it doesn’t show up as income on your taxes.

The business paying for your internet, the business paying for your car, the business paying for half your meals, right? This and that and the other, right? So if you were to sell the business, right? Part of the due diligence is all of that transaction and bookkeeping data would be gone through and whoever’s buying the business would be looking at, okay, what’s the true owner’s comp?

Right. What are the add-backs that we need to take out of the EBITDA that’s really going to support the owner’s personal burn rate of their right? Most owners don’t even understand how much money would I need outside of the business in order to sustain this without the business paying my bills. Most of them don’t understand what are the options on how I could exit the business?

What would be the most lucrative? Well, where would I get money up front? Where would I get money over time? How does that affect how I invest my money or how many investment properties I hold, or whatever the case is outside of the business. So separating the finances from the business and the personal.

And I understand there can be efficiencies, right? With writing stuff off against the business and whatnot. Particularly if you’ve got a pass through, like an LLC or something. However, regardless of how you do it for taxes, having an understanding of how much money is getting sucked out of the business into your personal life and where that money is being deployed.

I have a good friend and he has a common phrase. He says, all progress starts with the truth. Whether you’re taking too much out money out of the business, whether you should be taking more money out of the business, whether we can add some financial tools on the personal or business side that can improve things how prepared you are for retirement, order to understand any of that, we need to understand how much the lifestyle you’re living now and the lifestyle you want costs in the first place. So we need to separate the personal finances from the business, finances and put an equal amount of focus and attentiveness and efficiency and execute as well on the personal side as we do on the business side.

Josh St. Laurent: So true. I’m sure there’s some listeners wondering about like a success story. Maybe start to finish, could you talk us through, hey this person came in, this is the position they were in. Here’s what we did, here’s kind of how they left the conversation and went on to success?

Eric Cooper, CEPA: Yeah, so I can think of one gentleman that a partner of mine used to work with, and he implemented essentially this process. And this, this dude already had a really good business, his business was probably worth 5 million bucks. He met our team similar to most business owners.

He was living a decent life. I mean, he wasn’t extravagant, but he was living a decent life. He had no idea how much money he actually made. The personal and the business finances weren’t separated. was very owner centric. He was kind of the only decision maker in the room. Everything ran through him.

Now he happened to be in an industry that during COVID-19 really did well. He was in some sort of, a PPE business, right? So naturally there were some wins of the Covid Pandemic that really took his business and catapulted it to the moon from a revenue standpoint.

But that doesn’t mean that it gets catapulted there from a value standpoint, because if the customer relationships are all his, if the business is dependent on him, the IP isn’t protected, right? Like, you know, there’s a whole bunch of things that can go into into play there. The first thing that we did with him was really on the personal side.

It was understanding what he needed to be economically independent of the business thankfully for him, he was looking at an opportunity to really fund the rest of his life. If he did this right because of the manic growth that had occurred in the business. So that’s where we started and we were able to make improvements across his entire net worth.

I’m talking about reducing taxes by almost, $200,000, $300,000 a year. I’m talking about improving his portfolios by a long shot. I’m talking about adding investment properties to his portfolio opportunities to depreciate and wipe out gains against his C-corp that didn’t, that he could carry over for 30 years, like all sorts of things that we worked through his personal finances to maximize the wealth outside of the business.

We went to work on the business. Now there’s four Cs of capital other than the business finances that are gonna drive the value and the transferability of a business. It’s your structural capital, which we’ve talked about a little bit here today. It’s your human capital. What’s the quality of your people, the longevity of your people, the development path they have within the firm, the tools you have in place to attract and retain, right?

Like all those sorts of things. There’s your customer capital. How are you getting clients? What’s the retention of those clients? How much of your revenues are concentrated in what types of clients? There’s anything protected by contracts. What’s a competitive landscape, right? All that kind of stuff.

And then the fourth is going to be your social capital. Now, most companies don’t have social capital, and that’s the hardest one, but that’s the quality of your culture, and it’s the quality of your brand. There’s a lot of brands that are recognizable, but they don’t carry any brand value, right? I mean, you can probably think of a longstanding business in your community that you recognize, you know, Fratello’s restaurant or whatever.

And it’s been around for 70 years and everybody knows it, but nobody’s going there because. The brand name carries any value, they might be going there cause their parents went there, they grew up with it. It’s a good local joint, whatever the case is. Right? But, you know, if a Fratello’s opened up 60 miles from here, they’re not going to it just because it’s a Fratello’s. Right.? 

Or a business with the same name or the same logo. So social capital is the fourth one. So there was a process that my partner went through with him to really strengthen the non-financial elements of the business that could have the maximum impact on the multiple if he ended up selling the business. So it was about a two year process. And this is, this is a huge success story. They’re not all this crazy, but when he came to the team, his business was probably worth about 5 million. I think he ended up selling for for 41 million. And in addition to that, he was able to create About a hundred thousand dollars of tax-free income for 20 years, not including the money that he got from the business sale, just based on the wealth that he had amassed previously and doing an effective job with it. And then in combination with all the tax stuff and the carryovers, et cetera, et cetera.

I mean, he got a really good deal, right? He sold in an opportune time. You know, not everybody’s going from 5 million to 41 million in two years. That’s probably one of a kind story, but that is a success story in the sense of what allowed him to take advantage of that opportunity window is he got ready.

‘Cause guess what? If a private equity firm comes in and they show interest because your revenues are good and your profits look good, if they look under the hood and they don’t have confidence that they could replicate it right without you being there, and the plan is for them to buy it and for you to go, you’ve got nothing.

It doesn’t matter how much money you make, your business isn’t worth anything. so he was able to sell for quite a bit of money. So that’s just one success story. But really what drove that is he got ready before the opportunity window was there and he was also able to take his time negotiating the terms cuz not only did he have an attractive business, but he didn’t need it because he had done what he needed to do with the wealth outside of the business to be independent of the business.

So he’s like, I can stick around and I can keep running this thing. I can sell this thing, I have the options in my corner and I can now determine my outcomes with intention because I’ve done the work before the opportunity window presented itself. That’s a perfect example of why every business owner should be running their business with an eye towards the end, whether the end is, I’ll tell you what, selling had not even crossed his mind he met my part. It had never even crossed his mind. So this did not start off as a, I wanna sell my business. This started off as just personal financial planning. I need to improve my investments, take a look at my stuff, how do I save on some taxes? And it morphed into what I just described to you.

Josh St. Laurent: Wow, man, that’s compelling. I could talk about this stuff all day long. I got so many follow ups there, like systems and processes, business owners can build out, right? Tax strategies that they can implement. And, something I’m fascinated with is like, how do you use that exit to define your next chapter, right?

How do you use that as a launching point for what’s next? So we’ll have to save that for, part two. You ready to jump into our Big Three? 

Eric Cooper, CEPA: Let’s do it.

Josh St. Laurent: So question number one. What does living a wealthy life look like for you?

Eric Cooper, CEPA: Well, living a wealthy life looks like my faith is very important to me and I’m very, very involved with my local church. Being able to take my talents and my time to serve the Lord Jesus is primarily how I define wealth, right?

Regardless of what I’m doing. I would say secondarily what wealth means to me is control over my time. It’s control over my time, right? Like, I mean, I could live a life that I wanna live making 5 million bucks a year or like 80 grand a year, honestly, but you know, I’m a huge outdoors man.

I raise chickens. I’m trying to add some goats and some other livestock. I’m a big time hunter. I want my kids to be connected to nature and God’s creation. I want them to be self-sufficient. I think there’s a lot about life that you learn in those types of things that are on screens. It keeps me young.

I mentor youth, right? and it’s a huge conduit for how I’m able to teach them. So I’m a huge outdoorsman. I’m a huge athlete. I play basketball, I play baseball, and all this kinds of stuff, right? So really being able to invest in my body, maintain my health, and have control over my time I’ve got a goal within the next five years to own property out in the Idaho panhandle and some hunting property and put a camp on it or build a cabin or whatever the case is.

And not only use it for myself, but also use it for my friends and my clients to give them retreats and give them experiences out in the wilderness they otherwise wouldn’t really be able to get, unless they had money to pay a guide or, or had a, another private hookup or something like that. So for me, it’s really being able to use my time and my talents to pour into other people.

And really how I get to do that is by having control over how I invest my time. I’m a busy body. I’m never gonna sit around and do nothing. But I wanna be able to diversify where I put it a little bit.

Josh St. Laurent: I love that. It’s a good answer. If you could give one message to someone working to gain financial freedom, who isn’t there yet, what would that be?

Eric Cooper, CEPA: This isn’t the answer I would’ve given a couple years ago, but from experience, I’m gonna give this answer. Have you heard of Occam’s Razor? The simplest explanation is, the most likely explanation. Save money. I cannot tell you how many people that have done a terrible job with how they deploy their money end up with sub modicum stability because they were good savers.

And I cannot tell you how many really intelligent people, PhDs, people that ran, companies that got funded by venture capital and all this kinds of stuff. Were constantly looking for the quick fix. They were looking for the thing that they could do, where they can make chunks of money, where they can make a 200% return and cash out of Bitcoin at the right time or whatever the case was that end up with nothing ‘cause they’re trying to cheat the system.

Guess what? If you are good at systematically and habitually saving money, if that becomes part of your identity and not something that you just do, when you see an opportunity window, now you’re in position to do all those things. You’re in position to have all the investment properties. You’re in position to do the Bitcoin thing, you’re in position to buy a business.

You’re in position of being an angel, whatever the case is, and you’ve got some runway, you’ve got some tarmac to recover from mistakes because maybe you didn’t invest it properly and that’s why you talked to a Josh, because he wanna improve that and he wanna improve your holistic strategy across not just investments, but how you handle money in general.

But you have something to work with. There’s no way to cheat the system. And I don’t care who you’re talking about. Yeah. There’s the person who had a great idea that in five years ended up with a billion dollar company and they cashed out. That’s playing the lottery. You’re not that guy. You’re not that girl. It’s not gonna be you. If it is, great, but it’s probably not gonna be you. This is a marathon. It’s not a sprint. And in order for the car to go the distance you need to put gas in it and putting gas in it is having a tight control over your money supply and it’s saving money. The strategy can always be improved. Great strategy with no critical mass equals no money. I got for you.

Josh St. Laurent: Simple answer is the best answer. I love it All right. Last but not least, if you were starting over, say you got a thousand bucks, you’re starting over, what would be the first thing you would do with that money?

Eric Cooper, CEPA: A thousand bucks, just starting my business?

Josh St. Laurent: Just starting over from scratch. Yeah. You don’t have a business, you know, you’re just starting out. Maybe you’re 21 years old, you got a thousand bucks. What are you doing?

Eric Cooper, CEPA: 21 years old. I’ve got a thousand bucks. A thousand bucks. Oof. Today’s world, it’s hard to find something you can do for a thousand bucks. This is a good question. 

If I had a thousand dollars and I was starting over at 21, knowing that I wanna start my own business, right? Once I settle on an idea, probably the biggest mistake that I made when I started my businesses is I got so excited about branding and the value proposition and the marketing and the process and the website and all those things that make you feel like you’re somebody to the world.

And I wanted to get those things up to snuff so that I could have the confidence to go out into the world and ask people to do business with me. What I found out was if you’ve got no pipeline and nobody to do business with, all the rest of that stuff doesn’t matter because you’re shouting into a void.

If I were to reverse it, that thousand dollars I would spend on getting in front of people and now that doesn’t necessarily mean like a lead list, a cold call, but whether that’s memberships to organizations where the niches that I wanna work with are pooling so that I can gain access to those people and just show up to the events and have a cocktail and meet a couple people and make a good impression, or whether that’s, you know, spending the money to, on a plane ticket to go talk to a mentor, that can really help me.

I would spend that money on ways that directly add people to the pipeline and deal with all the other stuff as I go along ‘cause I didn’t do it that way. And I gotta tell you, you know, I had an answer for everything. I had a strategy for everything. I had a brand for days. But no clients and ultimately helping people is how business owners make money.

And that’s where, you know, you gotta keep the main thing, the main thing. And the plane thing. The plane thing. So, you know, I would reverse my order of operations in Capital Investment. If I were to start over again,

Josh St. Laurent: It’s a great answer. It’s all about who you know. I’m gonna throw it back to you here. All the listeners who are looking to connect with Eric Cooper, where do they find you?

Eric Cooper, CEPA: You can go to www.soonerbusinessadvisors.com. That’s my website, Eric.Cooper@SoonerBusinessAdvisors.com is my email. Those are probably the best two ways to get ahold of me. I do my best to respond to all the emails individually and personally. So if you have, you know, whether you’re just interested or you have a follow up question from anything you’ve heard or if there’s any way that I can help you on your journey along the way. I’m an abundance mentality person, so any way you can leverage the fact that you now know who I am to your benefit, I invite you to do it. And, don’t hesitate to reach out.

Josh St. Laurent: That’s a wrap everyone. Thank you for listening. This has been Eric Cooper, a Certified Exit Planner with Sooner Business Advisors on The Wealth and Yourself Podcast. Thanks for listening and until next time, this is Josh St. Laurent, signing off.