Q&A: How to Spot Investment Scams Before You Lose Everything

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30:07That was when I got on Gusto and I'm still there today. Try Gusto today at gusto.com slash Paula and get three months free when you run your first payroll. That's three months of free payroll at gusto.com slash Paula. One more time, gusto.com slash Paula, G-U-S-T-O dot com slash P-A-U-L-A. Introducing your new Dell PC with the Intel Core Ultra Processor. It helps you handle a lot, even when your holiday to-do list gets to be a lot. Like organizing your holiday shopping and searching for great holiday deals and customer questions and customers requesting custom things, plus planning the perfect holiday dinner for vegans, vegetarians, pescatarians, and Uncle Mike's carnivore diet.

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31:19Welcome back. Our next question comes from Rob. Hi, Paula and Joe. This is Rob Brown, a San Diego broker, investor, and loyal listener since the 2017 J Money Days. We met briefly at the Choose 5 San Diego meetup. You've graciously answered two of my questions before, one on stock versus real estate allocation, and another on choosing a value-add deal versus buying more VTI. I bought the deal, which was your advice, and my net worth is up over$3 million since then. Thank you so much. Today's question, I'm at$11 million net worth with a$17.3 million real estate portfolio and$9.8 million in equity.

32:01My liquid side is 100 % VTI or cash reserves for the real estate portfolio, no bonds. If more than half of my wealth is in diversified income-producing real estate, do I still need a bond allocation? If so, how much and why for someone whose career and balance sheet are already heavily tied to property and split between index funds and real estate? Thanks in advance for hopefully taking my third question and keep up the great work. I really appreciate all you do. Rob, first of all, congratulations on everything that you have built. I am so thrilled for you. What an incredible success story. As to your question, and Joe and I have not discussed our answer beforehand, so I am very curious to see if we are going to agree or not.

32:51My answer is very straightforward. No, you do not need a bond allocation as long as you are not currently in retirement, as long as you are not currently in the drawdown phase. And frankly, even if you are in retirement or in the drawdown phase, you still may not need a bond allocation. If you're actively earning income, you definitely don't need a bond allocation. That's my position. Joe? I think, Paul, you're completely wrong. And no, no. By the way, before I get to my answer, I have to say, Rob, I follow you on social media and my favorite Instagram post of yours are the ones where you have a cigar in one hand, a glass of wine in the other.

33:31You're in your hot tub. I don't see the hot tub. I just see the glass of wine in the cigar and I see the ocean across the street from you. I'm always jealous, Rob, every time. But had I known that those cigars and glasses of wine had to do with Paula's success at helping you, I would have felt differently about those.

33:54So I think there's a difference between need and want here. I agree with Paula that if you have enough income producing property in your portfolio, that even if you needed income streams, that that gives you enough. There is zero need for a bond allocation. Also, the fact that you have seen over the last several years when the market takes dips. You've watched your own behavior to see how you act. That tells me you're comfortable with what we call the standard deviation of the portfolio or the wiggle in the portfolio, right? And if Rob doesn't have any bonds now and has not responded negatively to that and can imagine yourself in a place where you're withdrawing income and you're still comfortable with that, I would still stick with your allocation that you have currently.

34:49There is, frankly, the only thing that bonds are going to do is cap your upside potential. I mean, that's in the big long world. What it will do as a positive measure is while it caps your upside potential, it will also make the ride smoother for people that don't like the gyration of having money all in long-term assets like real estate and stocks. But for you, no. I think just the little bit that you described and a little bit that I know about you, I think you don't need a bond. Oh my goodness. We agree, Joe. Well, the place that I disagree - Rob does not need a bond allocation. Well, but just to be clear here, that doesn't mean everybody doesn't.

35:31Because I've met so many investors who have said, I'm very comfortable with risk. And then they're not, right? There's a lot of know yourself here, which is why need versus want. I want to draw the line there. You know what's interesting? I was thinking about, remember back in early April when the markets just tanked? Yeah. Do you remember that? Yes. We started getting emails, DMs. I started getting, I'm sure you did too, Joe, flooded with messages from people who were like, I'm so worried. The sky's falling. The sky is falling. My portfolio is crashing. I look at what my portfolio balance used to be, and it's not that anymore, and I'm freaking out.

36:21What's funny is that when the market recovers, I never hear the opposite, right? No one ever messages. We don't get inundated with messages from people being like, I'm so happy. Look at the recovery. We're essentially the negative of Yelp review of the stock market. Like when the stock market is doing poorly, we get flooded with messages. And on the stock market's doing well, it's crickets. It's just total silence. Everything's like it should be. But Paula, when it goes up like that, that's not your fault. That's their fault because they're a phenomenal investor. You mean it's their win? Well, yeah.

36:57I just like the emotional roller coaster. Like when you're high-fiving yourself and you think that the world's great and you're incredibly smart as an investor, That's actually the time of greatest risk, right? When the market is low and you are in this state of complete despair, it's generally, not always, but generally the time of greatest opportunity during those times. I remember a mentor of mine early in my career saying, imagine if you were on an elevator every day where your two choices were soar or plummet, because that's the way the media is going to describe what happens every day of your career.

37:38The stock market soared today. The stock market plummeted today. And so you just got to get used to that roller coaster. And clearly, if you're somebody who wrote on social media that you're worried, and by the way, no judgment here, because I get worried, which is why I have a more conservative allocation than I would if I didn't have those feelings. Because for me, it does matter. It does matter. And I don't sleep that well at night. So I've realized that my picks, my investment picks are not as aggressive as they could be. And it's purely sleep at night. And do I understand the fact that I'm holding back from some potential returns?

38:18A hundred percent. Absolutely. Well, and it's a very rational fear. If you look at the history of the stock market, The history of the stock market is littered with crashes. Look at the flash crash of 1962. Look at pretty much the entire decade of the 1970s with high inflation, right? Look at the 1980s with stagflation and a bull depression. And then you had Black Monday of 1987. And then you look at the dot-com crash, the big run-up in the 90s followed by the dot-com crash. And then there was 9-11. And then there was the Great Recession of 2008. The history of the market is the history of lots and lots of crashes.

39:00And frankly, in the United States, historically, so far, we've been lucky. We haven't been Japan. But we could be. We did have a time from the early 2000s, Paula, a long time where the S &P 500, it took it forever to get back to zero. Right. Just to get the last decade. Exactly. We had a lost decade in there. And so it is absolutely rational to be worried about the stock market and to choose to invest more conservatively if that's how you feel. And so, Rob, you and I, as real estate investors, are hedging our risks in a different way. because as buy and hold real estate investors, we have a significant portion of our portfolio that is oriented towards a predictable and reliable stream of income.

40:03That's what we've created by virtue of creating rental income. And that is our way of offsetting some of that risk. And because real estate is the income portion of our portfolio, we don't need bonds because bonds otherwise would be an income portion of a portfolio. So as real estate investors, we can have a portfolio that is all equities on the stock side, all VTI or other broad market index funds, and all rental real estate on the income side. So it's perfectly fine for anyone who has a large allocation of rental real estate holdings to not have a bond allocation. But I also do want to say, for the sake of everybody, if you choose to have a bond allocation, there's no shame in that.

40:58I support either decision. But I myself, Rob, follow the same example that you've outlined. I have no bond allocation. I think of the rental income portion of my portfolio as my income investments and bonds are an income investment. What's funny for me is that I'm all stock allocation as well, but I'm further down the efficient frontier than I would be if I was more comfortable with a higher standard deviation. So my portfolio has more large companies, more boring companies in it because of that. But I think there's a lot of people, certainly a lot of people that were clients of mine, that would still look at my allocation and go, you're really aggressive.

41:41But I backed it down specifically so that I don't blow up my own plan. You know, I realized I shared in a previous episode my allocation for my Roth IRA, my 401k, and my taxable brokerage. But there were two accounts that I forgot to mention. One is my HSA and the other is my donor advised fund. Since you brought up asset allocation, just to talk about both of those real quick. My HSA, I have invested in the Paul Merriman four fund portfolio. So it's 50 % large cap, 50 % small cap. And my donor advised fund, technically, I can't reallocate it. I can only issue a recommendation because once you put money in a donor advised fund, it is technically no longer yours.

42:27but just last week I issued a recommendation for the donor advised fund to get reallocated into purely a one fund portfolio, which would be a total stock market index. So yeah, I'm going zero bonds on, on all of them. No bonds. Across the board. Yeah. Across the board. No bonds in taxable, in 401k, in Roth IRA, in HSA, or in, uh, not even, not even in the donor advised fund, which is where withdrawals come out more frequently. Assuming they take my recommendation. I don't think it's common that they would reject a recommendation, but it would be, it'd be interesting if they did. Could I appeal that?

43:14Congratulations on the success, Rob. Yeah. We're going to take one final break to hear from the sponsors who support our show. and when we return, we're going to put the E in entrepreneur.

43:29This Friday, the NBA on Prime tips off with their debut doubleheader. First up, Boston brings the action to the garden as the Celtics face the New York Knicks. Then out west, it's a battle of the superpowers as the Lakers try to poster the relentless pace of the Minnesota Timberwolves. The Celtics and Knicks, who has the most hustle and defense? This game will come down to who wants it more. And the Timberwolves and the Lakers. It's two Western Conference heavyweights going toe-to-toe. Buckle up, folks. This one's going to be electric. Celtics-Knicks. T-Wolves and Lakers. Coverage starts Friday, 7 o 'clock Eastern, only on Prime.

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46:20Welcome back. Our final question today comes from Dan. Hello, Paul and Joe. This is Dan, and I was recently contemplating my retirement. I have a question and a brief challenge. For background, I'm 56. My wife is 55. We have about$1.7 million in retirement,$600K in a Roth, and the balance in pre-tax. We bought$450K in after-tax. My wife and I started side hustles recently, hers in 2022 and mine in 2024, and they cover about 20 % of our living expenses. Our current plan is to continue my W-2 job and plan to work another three to four years and then sometime around age 60, start living off of our savings, after-tax savings, plus our side hustle for about five to seven years.

47:09After that, we'd be able to go into full retirement knowing we've got the last double on a retirement money. We're definitely post-fined and probably pull the trigger now if we were frugal and or included Social Security in our plan. My question, I was recently presented with an opportunity for the purchase of a business in which I would work full-time. I signed the MBA, reviewed the financials, talked to the bank about an SBA loan, etc. I'm not sure this specific purchase works out, but it got my brain working. What if I purchased a business to replace my income? I've enjoyed running my side hustle, but would not scale to full time.

47:43I read the Cody Sanchez book and really enjoyed your recent podcast with Grant Sabacier, and I'm in the process of getting his book. My questions are, how would this fit into my FI plan? I'd likely take the down payment for my retirement savings using Rule of 55 or using other after-tax money. What are some good sources to learn about buying a business? Unlike FI, there are very few trusted resources in this area. How do I find a good advisor for this? Overall, what framework should I use for making this decision? Lastly, my challenge is for you and Joe to lean into the E from the double-I fire.

48:17You both have started multiple businesses, and I really think the community could benefit greatly from your sage wisdom and entrepreneurship. Thank you for your help. Dan, thank you for the question. I love the plan that you have. I love the mindset. I love when you talked about taking advantage of the last doubling because that is so critical. With all of that said, let's get to the heart of your question. What if you purchased this business? So a couple of things come to mind right away. One is that purchasing a business, buying a business is a very different game than starting one from scratch.

48:57and one could argue that buying a business in some ways might have less risk associated with it because the business has a solid track record. It has an established brand. It has an established customer base. It has operations. It has employees. And to that extent, it has some degree of stability and some degree of predictability. By contrast, it also has all of the flaws, problems, weaknesses, pain points that have already been part of it. If you imagine, I guess the analogy that I would use would be buying an older home. An older home has a lot of character. And it's got some things that need to be fixed, but it's also got some things that are really unique about it that are difficult, if not impossible, to replicate.

49:59Now, with regard to how much risk this is going to carry, a lot of that is going to depend on what type of business we're talking about. If this is a doggy daycare, I have literally no idea what type of business this is. Let's just say hypothetically, this is a pet boarding and daycare facility that is in a small to mid-sized city. All right, that's a relatively stable business. It's not going to get replaced by AI. AI can't board your dog. Even if it does have some operational pain points, Maybe it has kind of a weak tech stack. Maybe it has messy SOPs. Those are all very, very fixable problems.

50:50And you can come in and add quite a bit of value and make it run a lot better. So I would be far more inclined to go for a business like that, where the brand is established, the customer base is loyal, the offering itself, you know, dog walking, or dog boarding is not something that is at risk of getting usurped by big technological changes. And any problems it may have are likely going to be highly fixable. By contrast, if it is a graphic design shop, I'd be a little bit more wary, particularly because we don't know where we are going to be with AI in five years. I want to talk just big picture, Paula.

51:38This idea, Dan, of owning a business, I think can either be your best friend or your worst enemy, just depending on how you approach it. It is your best friend when the business works for you, especially as close to a full retirement as you are. It's your worst enemy if you end up working for the business. And this is the problem and the trap I believe most entrepreneurs fall into is that you start off with great intentions. Your goal is to bring something to market, but also have it be something that supplements your lifestyle and fits into your lifestyle. You get to use some creativity, you get some nice cashflow, you're a part of a community, you're leading others.

52:21What tragically usually ends up happening is you end up at the whims of whatever the business needs and you find yourself working around the clock to satisfy needs of fickle customers and you become a victim of your own success in a lot of ways. It's not that you're failing. It's that you're so good at things and the business is doing so well that you end up just. So Joe, what I hear you saying is the question then becomes, the first question is, do you want this to be a lifestyle business or do you want this to be a business business? Yeah. And based on where Dan is in life, I'm assuming he wants it to be a source of cash flow and of purpose and not something that he's working 24 seven.

53:14I could be wrong, but when he leads off with, I've got this side hustle and I have this career that I work in, but I'm thinking about instead buying a business that supplements my income enough that I can get rid of the job working for somebody else. I think the intent then is to go more smoothly into this full retirement. Yeah. Well, Dan, I guess that would be the first question I would ask you. Are you looking for a lifestyle business or are you looking for a business that you can really scale and grow and see what this can turn into. And there's no right or wrong answer there. Sure. It's whatever you want it to be.

53:53But if you are looking for a lifestyle business, then there are a couple of points that I would make. One is don't have any type of a business in which you yourself become the bottleneck. Katie talked about this. Money with Katie, she sold her business. She said this in the interview that we did. You can go back and listen to that episode. But she made this comment in that interview. She said, hey, word to the wise, don't put your name in the title of the business if you ever want to exit. She was like, I started a business called Money with Katie. Then I sold that business because she sold it to Morning Brew.

54:31And she was like, but I could never really exit it because it's called Money with Katie. What am I going to have money with Katie without Katie? We got to find a Katie. Got to find some buyer named Katie. So there are certain types of businesses in which you yourself become the face of the business or for some other reason, even if you're not necessarily a public face, there's some reason why you are the bottleneck in that business. And when that happens, you functionally own a job. You are the owner of the job that you have. And that's great, but that is not a lifestyle business. That is owning a job.

55:11Yeah. And even if your goal is to have a job-based business, I think that still becomes a problem because of the fact that the business then is tied to a single person instead of tied to a series of actions that the business needs to take. Right. So even for companies where it's not a lifestyle, where my goal is to grow it big. If I want to grow it big and I call it Money with Joe, So I then have just in the naming, completely to your point, Paula, I've created the bottleneck in the name. Well, look at the Dave Ramsey podcast, right? Ramsey Enterprises is massive. That's obviously not a lifestyle business.

55:49That is a massive, I mean, a behemoth of a company. From sitting at your and my vantage point where we are watching Ramsey, not every day, but of course, they work in a spot where they're very visible. and you and I being in that arena, we see what they're doing, the struggle they had over the last 15 years of broadening out the brand away from Dave Ramsey. And I would suggest that while it's going very well, finally, it still is. And it took a massive undertaking to turn it from Dave to Dave and company. So I think you just want to always ask yourself, Is the business working for me or am I working for my business?

56:31Which one's happening? I like the books that you're talking about. I love Grant's work, read that. I like what Cody says. I also like the way that Cody coaches. I love Cody. There are a couple of other books though that I would say are really the first two that are spot on for me. Number one is the E-myth, because I think you'll realize that then the less you're there, the better the business is going to operate, which is the conundrum that entrepreneurs deal with all the time. You want a system-oriented business, not a personality-driven business. And the E-myth will teach you to do that. I think that's required.

57:13I'm going to put an asterisk here. I want to first kind of take the step to establish the different types of businesses, because there's nothing wrong with having a personality-driven business. It's just that if you have a personality-driven business, then you own your job. And if you want to own your job, that's great. Do it. Absolutely. You could have a great deal of joy doing that. But that is a very different type of undertaking than having a system-driven business. No, no, it's not. No, it's not. It shouldn't be. Because even if I'm doing it all by myself, what the E-Myth will help you do is still compartmentalize.

57:52I need to spend time on this division of tasks. Then I need to spend time on these divisions of tasks and these divisions. I'm not talking about doing it all by yourself because obviously you have an entire back office of support. I'm talking about if you have a personality driven business, then you yourself are very, very tied into that business. You can't leave that business for a prolonged period of time because you're so tied in. By contrast, if you have a system-driven business, let's look at the doggy daycare, for example. If you can get that doggy daycare really running smoothly and you have a great team, great operations, great SOPs, a great manager, you can completely exit that business and it can become very passive or very residual in a way that owning a job with a personality-driven business never could be.

58:41I'm not talking about doing it, you know, a one-person entity versus a multi-person team. That's separate. I'm talking about with a personality driven business, you must always be there. And with a doggy daycare, it could become a residual business in time. I still think even so, The E-Myth is the first book I would read. It is still the first book because whether you're present or you're not present, And I'll tell you what happens if you are present, which is actually the person in the book, because the book's written like a story. The big problem that entrepreneurs have is that they are passionate about one piece of the business, but the piece that they're passionate isn't where they end up spending their time often.

59:28And if they are able to organize it so that they spend their time on the piece that they're passionate at, that's one win. But the second win is you can't just, and these are Michael Gerber's words, the author of the E-Myth, you can't just abdicate the rest because this is what people do. Paula, I do not like bookkeeping. You're going to be my bookkeeper. You're going to take that. Okay, thank. Oh, thank goodness. I don't got to deal with bookkeeping anymore. Then Paula has all kinds of questions about doing the bookkeeping. The next thing you know, Paula's like, screw this. Why am I doing it?

1:00:01I'm not getting any leadership. I'm not getting anything. I'm not getting any, I mean, people that work for you also have to have a way that they're delegated to. And I think the E-Myth really fleshes out how to get that done. So I think regardless of what type of business, if you're going to be an entrepreneur for the first time, I still think read the E-Myth first. And then second, I mentioned this guy before, but I think you need to then also think about, especially where you are, Dan, you need to think about building a business to sell. And even if you have no interest in selling your business anytime soon, the frustration that I've always had is some event comes along that changes your time horizon and you have not built the business to sell and suddenly you need to sell and you can't sell and your business goes by the wayside.

1:00:55Not only can the business bring in cashflow, But what a lot of mom and pop, as they call them, entrepreneurs, a mistake that they make is that they don't realize the business also has value to a potential investor in the future. And if you build it right from the beginning, not only is it going to work for you instead of you working for the business more because you built it to sell, it will then operate without you, which makes it easier to sell. and you will have more life satisfaction regardless of whether you're building it for something, for the passion that you have to do this thing or just to create an income stream.

1:01:33Regardless of all that, if you think about building it to sell from the beginning, you're gonna make a lot of decisions that you won't regret later. And let me give you the biggest one that I see. I see entrepreneurs that are ready to sell their business, Paula, and I'm the person evaluating their business and whether I want to buy it or not. And I come in and I go, Hey, so let me see the books. That's the funny thing about the book show that I only make$35 ,000 a year. Wink, wink, wink, wink. The business really makes three times that, but I've been organizing things in a way with my accountant or without my accountant, whatever, that this business minimizes cashflow so that I now don't have to pay much in taxes.

1:02:18If I were organizing my business to sell, I wouldn't have done any of that. And I would also sleep better at night knowing that the IRS is not just one or two steps away from me. But Paula, the number of times I've had conversations with business owners that over the short run think, oh, hey, I could live on more tax-free because I run this business. So you're talking about heavily cash-based businesses? Heavily cash-based businesses that are taking money out the back door. it's almost impossible to sell that business. I don't want to buy a business like that. I don't want to be involved with a business like that.

1:02:55Even if it's cash-based, I want all that above the board on the books. I want it all systematized because the multiple that I'm going to get on selling that business is going to be way unbelievably higher. And I'm going to have more people that are going to go, okay, yeah, I want to buy this business. But if I have to figure out the IRS the day after you sell to me, let's say you sell to me and then the IRS comes knocking a week later. Hey. Yeah. You don't want that on your, you don't want that headache on your hands. Yeah. Like all of this is just, it's a massive short-term and obvious trap that a lot of, sadly, a lot of entrepreneurs I've run into, run into that trap and you want nothing to do with that.

1:03:40So for that reason, I like John Warlow's, and I've mentioned him before too, John Warlow's built to sell. John, by the way, also is a good advisor in that area because you talked about who's a good advisor. John Warlow is a guy I have a ton of respect for that. The reason he has the whole built to sell brand is that he coaches people on setting up businesses that are built with that end game in mind. Dan, I'll tell you what I did that I have found most valuable inside of my company is I hired a fractional COO. Oh, this is really cool. Oh my goodness. One of the best things I've ever done because we were growing and we were adding these team members, but it was all very hodgepodge.

1:04:23There were all of these tasks and there was ambiguity as to what task would fall to whom and who was responsible for what. And so I hired a fractional COO and she came in and she just cleaned everything up. She built a better organizational chart. We had an organizational chart. She built us a better one. And then she wrote very clear job descriptions for every single person on the team. And she kind of gave new job descriptions and job assignments to various people on the team based on our skills assessments. So she had us all take the Colby A assessment. She did in-depth interviews with us. There's the Colby, there's the DISC assessment.

1:05:09There are all kinds of assessments in which you find various strengths and weaknesses of different types of team members. And you can use that to make sure you put the right people in the right role. She looked at our Colby. She looked at our disk. She looked at what it is we're already doing. She looked at what it is the company needs to do. And she kind of reassigned all of our roles and gave us very, very clear job descriptions and then created an organizational chart. So we all knew how, what we were doing and how that fit into the broader scope of things. And then the next thing she did was she put us on much, much more robust project management software.

1:05:48She helped us streamline and really tighten our tech stack. Now we're currently in the process of her guiding us in how to create these SOPs, standard operating procedures that then integrate with this far more robust project management software. We had a knowledge base that was like kind of floating around like a big Google Drive folder and then also a Dropbox folder. Like we were really running out of this company out of a lot of like Google Drive and Dropbox. And she pulled us out of that and cleaned up our knowledge base, cleaned up our SOPs, cleaned up our project management system overall.

1:06:32Hiring a fractional COO was probably one of the single best business decisions I've ever made. Dan, what I would do if I were you, if I were looking to buy a business, the first questions that I'd ask beyond can I see your books operationally are, can I look at your project management system? Can I look at your SOPs? Can I see your org chart? Can I see your job descriptions? And can I see your onboarding process for new employees? Those are five things, right? Let me tell you, Dan, I get excited if they don't have those. And the reason I get excited is because I can put those in place and I understand how valuable those things are and the current owner does not.

1:07:22And if they don't, I can then drive value into this business that did not exist. But if they don't have those, then you need, it should be priced accordingly. Absolutely. You need a discount premium. We talked earlier about a risk premium. For this, you need a discount premium if the company doesn't have those. No, but I think, Paula, it will be discounted already. And most of the businesses that I've looked at, it's discounted already because I can build the multiples that the business is making much more quickly. Businesses are sold based on profit, right? I mean, there's different ways to buy business, but the most popular way is X times profit that that business brings in.

1:07:59So if the business right now is earning X amount of money and I can drive this system down and I can then double that or triple that because of better systems, I can take advantage of the fact that this business has intrinsic value. there's gold in those hills that the current owner does not realize. My biggest problem when I go buy a business, if I buy a business that's already optimized, that business that's already optimized is going to demand a multiple that I can't squeeze any more juice out of. Well, just because it's optimized doesn't necessarily mean that the revenue reflects that. I can think of certain businesses that have much, much better SOPs than we do.

1:08:51And, uh, but their revenues are a lot lower. Where you can, you can make it a higher revenue number. If you went in and bought it, could you make it then a higher revenue number? Like, how do you, how do you justify the upside in that purchase then? Yeah. So the, well, there's the, there's one particular business that I'm thinking about in which I know, and this is much more of a one person shop, but, um, I know the proprietor, the tracking, the UTM codes, the tagging, the segmentation. I mean, the back end is so just perfect. I mean, it beautifully, beautifully run. But the front end, the marketing, the sales, the public-facing element just isn't there.

1:09:50There has to be some place. There has to be something that you can improve fairly easily, I think. When I'm evaluating a business, there has to be something that I can improve easily that's going to make this a business that I want to buy. I do not want to just sign up for something that is so optimized is going to be incredibly difficult. Right. And so then my point, Joe, is that the back end can be absolutely optimized. But if the front end, the public facing side isn't there, then that actually might be the best possible business to buy because the operations are totally nailed in. but the revenues don't reflect it because of the fact that the marketing just isn't there.

1:10:44Right. And so then that's the element that you come in and bring in. Beautiful. So in that regard, I mean, personally, I would rather buy a business like that where the operations are in place, but the marketing sucks because for me, I'm better at the public facing side than I am at the backend side. Well, that's what I was going to bring up next, Paula, because that reflects your individual expertise. I think Dan looks at his expertise and go and says, what am I really good at here? And if this is what the business is not as, doesn't excel at yet, and I can bring that to bear with my unique talent and the rest of it, the stuff that I'm not great at, it's already optimal.

1:11:28Yeah. So then, so Dan, my question to you is, are you a better operator? Are you a better marketer? Are you a better brander? Are you better at sales? Where are your strengths? And how do you find a business that is solid at everything else, but that lacks in the area where you're strong? Going back to my previous statement, part of the reason for me that hiring a fractional COO was such a game changer is because operations is where I'm weak. And so functionally, I hired someone who had a specialized skill set in the area of in which I'm weak. So Dan, I think that's how I would approach this. Start with, do you want this to be a job that you own or do you want it to be a lifestyle business that can become residual in time?

1:12:18And either answer is fine. It's just, what do you want? And what's your intent? And then, yeah, from that, how do you find a business that is strong in the areas in which you're weakest and that is weak in the areas in which you're strongest? Those are the two questions I would ask, the two broad questions I would ask to get started. I hope it's a doggy daycare. That sounds like a fun one, doesn't it? That just sounds like a fun business to operate. No, for you. And that's why you start with what lights you up. Because no. Reptile and amphibian daycare? aviary daycare. Could you imagine that? Bird boarding, right?

1:13:13That'd be great. Just make sure they don't fly away. I have good news and bad news. Your bird seems very happy. That's the good news. The bad news is it's up there. so thank you dan for that question what a great discussion i love love love love love love just that question and i ask myself this all the time with stacking benjamins paula is the business working for me or am i working for the business and there are times when i am working for the business and that makes me think what needs to change because the business should always work with me that's the great thing about being an entrepreneur that's why we get into it that's why Anybody would own a business so it works for you, which goes back to your question of intent.

1:14:01Right. Well, Joe, I think we've done it again. Again. High five. Joe, where can people find you if they'd like more of your sage wisdom? Sage wisdom at the Stacky Benjamin Show every Monday, Wednesday, and Friday. Mondays, we dive into a current topic like all the new tax law stuff that's come out recently, Paula, and starting to sort through those. How do we make the most of that? On Wednesday, we have phenomenal mentors like the Paula Pant diving into negotiating some of the greatest minds. On Wednesdays and then Fridays, we have a nice, fun roundtable discussion with a topic like, are you in or out?

1:14:41Which we're getting ready to record right now. So I deliver to our roundtable contributors a statement that is controversial. And then Paula has to tell me and Jesse, and in this case, it'll be Don McDonald from Talking Real Money joins us. Are you in or out on that statement? And it's interesting because then we start talking about how cool it is that we disagree on some of these things, but also how nuanced a lot of these things that we think are black or white truly have some nuance. And I love what all three of you, we haven't even recorded yet, and I know I'm already gonna love what the three of you are gonna bring to the table on each of these statements.

1:15:27You've already heard some of the in or out and they're good ones. They're great ones. So thank you, Joe. And thanks to all of you for being afforders. If you enjoyed today's episode, please do three things. First and foremost, share this with your friends, family, neighbors, colleagues, your dog walker, dog border, bird border. So it was Michael Gerber who wrote the E-Myth. Oh, I was going to say your reptile and amphibian border. Share it with. Share it with your real estate customers, Rob. Share it with the person on the other side of Zoom who's holding his ID up to the Zoom window as he's telling you the wire instructions.

1:16:06Share it with the gate agent that's letting you on the plane. Right. exactly because you're flying to take that cashier's check, share it with the Uber driver when you land at your destination with the cashier's check burning a hole in your pocket. Sell it to that person that sold you the cigar that's in your picture while you're in your hot tub, Rob. I'm speaking directly to Rob over and over. Sell to the guy that - All the people Rob should share this with. I don't care what anybody else shares. Rob, here's who you need to share it with. No pressure, Rob. In that case, Rob, you should also share it with the guy at the wine store and the hot tub repair person.

1:16:47I don't know if that hot tub breaks down because he's in it a lot. There's got to be a maintenance person, isn't there? There's got to be. If not, share it with the people, the other people who come to the ocean, those beach people. Yeah. Yeah. The people biking by. Yeah, exactly. Share it with the tenants, the mobile home park, share it with The banker who's like, why are you in here for a check? You can just send a wire. Because that's literally what they told me when I walked into the bank. I physically went there and they tried to send me home. And I was like, nope, I'm here. I'm doing this in the flesh.

1:17:18And she sat down in the lobby, said, I'm not moving. Yeah, more or less. It was nearly closing right before they closed for Christmas. So I think they just like didn't want to be there. Yeah, please. I walked in like an hour before they were about to close for Christmas. Oh, that's great, Paula. Yeah, yeah. You're their favorite person to see already. Oh, God. Well, I wanted to get it done before they shut down for the holiday. I have a complex transaction and you're about to go home. Yeah, exactly. Exactly. Share it with the customer who walks into your place of business an hour before you close for a long holiday.

1:17:56Share it with that person. Share it with all of those people and birds and frogs and turtles and dogs and more. aviary boarding come on someone's got to buy this business it could be you um because sharing it with all those people in your community that is how you spread the message of f double i r e this is like the best who are the people in your neighborhood is what this has turned into said this is the sesame street who are the people in your neighborhood of personal finance oh boy What are the other things you should do if you support the show? Make sure you hit the follow button. Leave us up to a five-star review.

1:18:41Share a few sentences in that review about what you enjoy about the show. Subscribe to our newsletter, affordanything.com slash newsletter. I think we've covered all the bases, haven't we? I think so. All right. Well, thank you so much for tuning in. I'm Paula Pan. I'm Joe Salcihai. And we'll meet you in the next episode.