Episode 45 – Business Continuity Planning with Business Coach Rick Campfield
47:30
Todd Pisarczyk & Rick Campfield
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TRANSCRIPT
Welcome everybody to the Momentous Wealth Podcast, where we discuss current issues in the world of finance and break them down into understandable terms to further your education. Momentous Wealth Management is a financial planning and investment management firm based in Washington. We've been serving clients for more than 20 years, and on this show we take that experience and put it to the microphone in an effort to educate investors in the complex world of finance and financial markets. Hello everybody and welcome to episode 45 of the Momentous Wealth Podcast. And we have a very special episode today. We're here with a great guest, good friend of mine, Rick Campfield. Really excited to have Rick. And we're gonna be talking about planning for a successful business transition. So Rick is actually a business coach and he helps families and co-own businesses. And Rick's someone who's been doing this a long time, he's been in the business 38 years, he's seen it all. So we're really excited to learn from him today. So he's developed a framework, which we're gonna talk about. But Rick, thanks for being here. Thanks, Todd. Yeah. So tell, tell, tell us a little bit about your, your history and in the business. I know that I've known you in many roles and I know you've helped a lot of different businesses over the years and even given me some great tips for my own business. So what are you up to these days?
Yeah, so it's been a interesting 38 year jour journey. The Lord's taken me on from 12 plus different industries to non-profit for-profit from Siemens executive down to a small family business. Very diverse. Yeah. Very unique. Yeah. And I made myself into this individual that has these diverse skills and war wounds and scar tissues that I can sit down with a family and really understand what's going on behind the scenes pretty quickly and yeah. And get a feel for what's happening and why is the family reaching out. Yeah. And I'm usually pulled in 'cause they need a lifeline. Yeah. Yeah. And so my entire career has been built just for this to help figure out with businesses, how do you create harmony back into the family while you build wealth. And those two can compete. Yeah. Yeah. And so that's, that's what I'm doing these days. It, it was about three years ago, I decided to stop working for the man and just do this. Yeah. And I immediately got into fractional work, so I was right. Kind of back into it. Yeah. But it, it's something I really enjoy. It's a passion and it's, I feel it's like a superpower. The lord's given me to be able to work on the emotional side of the things and the business side with tips and insights and the scar tissues that he's taken me on. Yeah.
And from a relationship standpoint, my wife of 38 years and all of our family and kids, et cetera, gives me a good solid foundation to work from, from a family harmony's per perspective. So yeah, that's, that's what I'm doing these days. That's awesome. And I love it. Yeah. I enjoy it. It's a great perspective and I'm excited today. 'cause a lot of the clients we work with are business owners, and that's why I thought it'd be great to have you on. 'cause you know, we deal with people in transition and life events and oftentimes we get clients that come to us 'cause they're talking about selling their business and we'll help 'em through some of the financial planning stuff. But, but you can really get in the weeds. And one thing you mentioned is when you, you know, creating health and wealth, I mean, obviously that's hugely important. Once, once you do your work, I guess that allows us to have a little bit more wealth to help, help, help the business owners invest. So that, that's a good thing. Yeah. But I also think about it in terms of myself.
'cause you know, I've, I've kind of gotten to a point, and you and I have talked about the fact that, you know, like I'm not a spring chicken anymore and starting to look towards the future and, and how it might look to, you know, for me to some someday transition, you know, our business. So I'm excited to learn today as well. Yeah. So, so yeah. So I'm excited to jump in. So Rick, Rick's developed a framework for businesses to help create health and wealth, which ultimately is, is meant to help ensure a successful transition. Yeah. So that's what we're gonna talk about today. So I'd love to just jump right in to Okay. To this framework. Yeah. So the framework is really built upon five Cs, communication, culture, clarity, cash, and counsel. Okay. So all the things that I bring to the table really fits in those five buckets. Yeah. So the first one, communication. You want me to just go dive through 'em? Yeah, yeah, let's do it. Number one, communication. Really every engagement, I'm usually dealing with these first two C's, communication, clarity. Somewhere along the line there's been a breakdown in communication. Either I forgot, I didn't understand, my expectation wasn't met. When you think about even in your business, even in family engagement, somewhere, something broke down and it's has to do with communication. Yeah. So I spent a lot of time building that framework.
First it looks like establishing a code of conduct, and I asked two questions, how do you want to be treated? How should we treat one another? And then you get this list of a dozen things. Plus after you, you go through the exercise and you define, okay, these are the things that are really important to all of us that we want to be treated like. Yeah. And how we want to be treated and treat others. Second question is, okay, what happens if someone doesn't do that? Outline the steps. Yeah. Ultimately, Matthew 12 comes into play. Yeah. The first one is treat, treat others how you want to be treated. Right? Yeah. Yeah. And you define what that looks like. And you don't get to say, well, with respect, what does that mean? Right. Tell me what that means, or in honesty, or tell me what that means. So you really stay, spend time unpacking specific tactical things, how to treat, and then the second part, what steps do you take ultimately in a family business step? The last step letting them go is extremely difficult. Yeah. Yeah. It is the probably one key difference between family, business and non-family business. Right. And there's some family businesses that they've decided they're not handing it down. Kids are too entitled. They don't understand it, they don't like it, and so they move on. Yeah.
But for the majority of family businesses like you, you've got kids, you're hoping that someone would take notice and gravitate towards it. And yet as a parent, you don't wanna force anything like that either. Right. Right. So that dynamic of understanding the steps to take is really important. And recognizing that if the last step is, Hey, I'm sorry, we have to separate. Yeah. That has to be real. Yeah. You can't just put it aside and just ignore it. Right, right. Because that may have to happen. Yeah. Have you dealt with that much like with, with families having to actually get rid of their own kids? One of the first businesses I worked with early on in my career, they had made that decision prior to me even getting involved. And they had a fam, they had several family members, and one day he came in and just let 'em all go. Wow. Except for a few, it was a, it was a family shock. Yeah. And it created disruption that I think probably this is probably well over two decades ago Yeah. That they're now back to health. But I think there's still some estranged family members Yeah. Because of that. Yeah. But that, that's, that, that was a shocking event firing all family members. And there's like eight or eight or so of them in there. Yeah. Yeah. So, wow. Yes, I have seen it. Oh, wow. Yeah.
Second portion of the communication is the code of conduct is establishing an understanding of your working genius. So Patrick Lencioni wrote a book on working genius, which is establishing an understanding what is your strengths, what is your true strengths? It's different than the four quadrant disc or Myers-Briggs Right. Core values. This, this particular assessment really identifies your working genius, your working competencies, and your working frustration. And a lot of times people are doing things that are frustrating. And what happens is you this understanding, this working genius, two things result. One is the person that's being given the task Yeah. Doesn't feel guilty because that's not their strength. Right. Right. And everybody recognizes and sees it. And then the second is the frustration that builds, gets minimized. Because now I know I'm giving you something that's in your working frustration, but we'll get through it. Right. And then the, the, the, the last component to communication is identifying expectations. You have expectations of everybody and everyone has expectations of you. And so when you establish a project or something to do, the most important thing is to, to talk about what is my expectation? It could be expectation, how much time it takes, what you do, how long you do it, et cetera. But really getting on the table, what are your true expectations of one another? Yeah. That's step one. Yeah. That's, that's, I mean, just that step one alone is incredible.
There's, it, it usually takes about, most engagements take about seven months. Okay. Okay. Give or take. So, so with, you know, I think one of the things that, I mean, that stuck out to me on that first step is, is just the, the clarity of roles. Right. Like having that, have you read the book Rocket Fuel? Yes. Okay. Very good book. Yeah. I just, I'm actually just, I don't know, someone told me the first six chapters are really good, and I think I've read the first six because it's getting a little boring. But, but just this notion, I mean, it helped me realize like the whole visionary integrator thing. Right. Is that kind of what this is in a, in a different way or Yeah, it really is. I mean, it's very similar. And the fact is you wanna put seat people in the right seat on the bus. Yeah. And when they're not in the right seat on the bus, everybody knows it. Yeah. I would submit that everybody knows who should be on the bus and who should be off. Yeah. And when, when family members, leaders, executives don't deal with those people, it creates issues. Yeah. And those issues result in, others have to step up to the plate and do more. It results in frustrations with everybody. Yeah. So this whole assessment, this, the same concept of the book is really identifying what is your true grif giftings and Right.
Put people in that space. Yeah. Now, when you're a small business, one or two shop, you gotta do everything. Yeah. You're wearing multiple hats. Yeah. Yeah. But as you grow and develop the, the less hats you have to wear. Yeah. And you can put people in in the right seat on the bus Yeah. As the bus gets bigger. Yeah. For me, when I went through reading that book, it helped me realize as the CEO of this business, like I do so much. But like you said, it made me realize, oh, there's actually a group of things that I really love to do and I'm passionate about. And, and those are more like visionary type things and the integrator type things. Like I can do and, and I'm, you know, I'm, I'm proficient at it. Okay. But I really don't like it. Yeah. You know, that, that Exactly. Working genius. Yeah. You just described working, working competency, frustration and genius. And when you're in your genius, you never work a day in your life. Yeah. Yeah. You could do it all day long. Like, like working with family, family members, engaging with them. I could do that all day long. Yeah. Yeah. But if you put me in front of having to do specific executive TA or tactical tasks Yeah. Over and over, I can do it, but I get frustrated. Yeah. Yeah. And I get burned out. Right. So, okay. Yeah. That's huge.
So culture, that's the next c culture. Culture is really, at the end of the day, you can have the best processes, tech stack, leadership team, their pedigree, but if you don't have the right culture, it doesn't matter. Yeah. Because culture eats strategy all day long. Yeah. Yeah. And I spent a lot of time in the first and the second. And the culture is really, most executives, most patriarchs look at the culture and they think it's one thing, but the team and the staff at the floor say it's another. And the, the question is, is what is the true culture and how do you reshape it to, to the culture that you really need to have? And so I go through an exercise, it's a three step process. Process. One is you identify, or you interview all, all key stakeholders. Interview the patriarchs, interview the kids, interview some of the stakeholders and the family member outside of family, and ask 'em the same questions and understand what is the culture. And I ask them, give me words, not statements, not discussions. Yeah. Words that describe culture. Yeah. And ultimately what happens is I get some positives and some negatives. Then I'll ask what culture do we need to have moving forward? And that'll be another set of list of questions. The more those line, those questions, those words line up, the better. Yeah. But usually the first is completely different.
Or there's very few same words in the second list. Okay. And so you sit down with the, the, the leadership team and the family and say, okay, here's what it is, whether you like it or not, this is the truth. Here's what you say and what the team says the culture needs to be. Let's develop strategies to go from this word to that word. And I, and I tell, I tell the team that the executives and the, the patriarchs, the parents, this whole five steps C process, you have to be engaged in it. And you have to recognize you may need to be the one that needs to change. Yeah. And if you're not willing to do that, let's not even go down the path. Yeah. So this whole culture discussion, I'll have it again. I'll say, Hey, look, Bob, Mary, if you're not willing to adapt and change your behavior of how you treat others and what you expect, et cetera, let's not even go down this path. Because what you're gonna create is hope deferred. And if we go through the exercise and everybody gets to get interviewed and what it should be, et cetera, and you don't drive it, guess what? It's gonna fall apart. And the, and everyone's gonna be even more ticked off Yeah. Than be forced. So let's not even go down the path. Yeah. And culture is one of those things that it is top down driven.
You can't create culture from bottom up. Yeah. So that is one of the key places I spend time on. And then after every meeting that I have with them, I grade them on how successful are we with the code of conduct abiding by the culture that we want. So we'll grade every meeting with an A through D letter for those two categories. Wow. How easy is it, or I guess, to change culture? 'cause that seems really hard. It's very hard. Is it, is it, is it a situation where you can make steps? Or is ultimately, like, do you have to find different people? Because like you say, having the right people in the seats on the bus, I mean, is it, is it a certain point? Do you need to get different people or combination of both. Okay. Yeah. It really is. It culture is very hard. You can shape the culture, but it didn't get there overnight. And so it's not gonna, it's not gonna change overnight. So you have to be very deliberate. Yeah. And the only way you do that deliberately is grade meetings. That's a good, that's a good step to make it at the forefront of everybody's mind. And number two, re reviewing on a monthly basis and quarterly basis your strategies Yeah. Of are they working or not? And then self-reflection and grading. Yeah. Grading the team members. Yeah. So dad, here's your score, son, here's your score. Yeah.
Let's talk about that. Using the code of conduct it is extremely difficult. Do you find that, is it common for the culture of a company or like the current business owner to want to have a certain culture, but then the people that are taking over want the culture to be completely different? Yeah. Yes. And so do you go towards what the new culture will be? Or do you say, okay, we're gonna go with the, you know, with dad's culture for a while, but you know what, what, until he is out here? Yeah. Just, yeah. When he's gone, we're turning this thing around. Great question. So one of the things I do that, that kind of envelops these five Cs is I create, if you think about this pyramid, and on the left hand side is the, the attributes that needs to be shown in order to go from the base of the pyramid to the top. The base is parents own a hundred percent of the business kids don't. At the top is flip flop kids that own it all, and the parents don't. And then there's graduating steps in between. Yeah. So you think about this pyramid, and in the middle of the pyramid is content of what things are we gonna accomplish to get to the top Yeah. To transition. And, and I call this the lane change. Yeah. It's the roadmap lane change. Ah, got it.
And on the left hand side is this scale of what attributes are we going to see to validate that we've moved to the next level. Okay. And then on the right side is what's the measurements we're going to use to see, okay, have we, we achieved it. Yeah. And one of those measurements typically is always culture, right. Related the culture's this, but now it's this. Yeah. Yeah. And over time, it, as I said earlier, you can change the, you can shape the culture and if the parent or the one of the co-owners is driving the majority of the culture and they don't want to adjust and change, then maybe it's not the right time. And we at least create the roadmap for them to see when is it the right time? And on this pyramid, the next ladder up could be some other event that they have to see. Yeah. Yeah. And a lot of times it's that they see that the kids or the other co-owner gets it. Right. They, they now understand how hard it takes and they have to work hard. And the whole proverbial golden spoon is not sitting in on the table. Right. Right. Okay. Does that make sense? Yeah. I love the concept of the lane change. Yeah. Because I picture this like, hey, we're, there's this destination.
And obviously like, you know, if you're a certain business, you're doing a certain thing, which is obviously taking you to a certain place. But that concept of a lane change, like we're still doing the same thing, but we're gonna be over here and Yep. And you gotta merge in and figure out how to get into the traffic and Yeah. Yeah. And eventually the lane change entrance persons, which is the siblings of the other co-owners, yeah. They just take off. Yeah. Yeah. That's awesome. Okay. Culture, culture's huge. Yeah. I love talking culture. Yeah. Number three, clarity. Clarity. So clarity is really aligning everybody to the same vision, mission, purpose. Okay. So I start with defining what's the vision, what's the mission and what's the purpose and the, and the ultimate objectives of the business. Everybody gets into a business, they start a business for some reason. It could be I was ticked off and frustrated with the previous, and I can just do it better to, I want to create wealth to, I want to pass something down. So I go back and revisit what is the objective you're trying to accomplish. Yeah. And notoriously, based upon age clarity begins to see, I gotta do something with it. I gotta either hand it down, turn it over, increase the value of it to be able to sell it, or maybe bring other partners and fade out to black.
So it's really identifying the objectives and then beginning with the vision, purpose, and mission. Okay. I can't tell you part of my interviewing process, I'll go into a business and I'll ask, I've got about 25 questions I ask everybody. Yeah. Just to triangulate. And one of the questions I ask is, can you tell me what's the vision of the business? Every time There is no, there's not one time where I've had anybody clearly articulate that, except for few exceptions Yeah. By the owners. Interesting. But it wasn't very defined. And one of the things leaders need to do is have a very compelling vision and communicate that on a regular basis. Yeah. Too many times the CEO or the president of the business, they don't communicate that often enough. And that really becomes, that, that's kind of your rally cry. It's like watching the masters, right? Yeah. We are there. There's a rally cry super bowl, there's a rally cry, a high school football or baseball or whatever it is. You need to have that rally cry that everybody gets behind and goes, yeah, we can do this. Yeah. That's part of what your vision is. Yeah. And if they don't hear very often or they can't even articulate it, what, what, what's your rally cry? Right. Right. So that is, I spend a lot of time talking about vision, mission, and purpose, and the, those words everybody hears and they'll go, yeah, yeah. That's important.
Not too many really completely understand why they, they're important. Yeah. And just getting everybody on the same page, to put the same words on the paper is significant. Yeah. It goes back to number one cult, the communication and expectations that helps to drive uniformity and clarity. Then once you've got that established, then you can develop strategies that achieve the objectives, which fulfills the mission, purpose, and vision. Yeah. So too many businesses, everybody's coming into work, they're all doing their thing. Yeah. Rock and rolling. Yeah. And you're hoping you make some revenue and you make some money. You talk about financials, what are we all doing? Yeah. If it's not clearly connected to objectives, mission, purpose, and vision, we're just doing busy work. Right? Yeah. Yeah. And so I, I help to realign and, and recreate that rally cry. Yeah. And making sure everybody understands what they're doing and having purpose. Yeah. That's really important. Yeah. I think that, so, you know, I see that in our business where, you know, I think we, we talked to someone about, Hey, am I doing the right thing? Am I saving the right amount of money? Am I using the right type of accounts? Right. And it's like, well, one, it depends on what's your goal. Right? But I find that, you know, everybody, a lot of people that we work with, they're saving for retirement. So like, okay, my goal is to retire at whatever age, 65. Great.
But once they start thinking about like, okay, but what are you gonna do? Yeah. Right. Like what? 'cause I find that people, like, oftentimes I'll start working with them and, you know, take example, client starts working with, with me at 50 55, and they say they wanna retire at 60, so we put together this plan, they're doing the thing, we get to 60. And all of a sudden it's like, okay, you can retire. You did it great. You saved enough money, but they never stop. Right. And it's like, it's 'cause they don't have this, there's no passion. It's like, well, what am I gonna do? You know? So we try to help clients too at the same thing. It's like, okay, start to like, like, what's your vision? You know, what, what do you want your life to be about? Like once you're done working and then, you know, clients of ours that have that, that are like, I want to retire so that I can do whatever, you know, whether it's travel or work more, or volunteer more for my church, or, you know, all that stuff. It's like, those are the people that are really successful in retirement. 'cause they've developed this vision and passion and it just kind of drives everything else. So, and, and what you're defining is ultimately creating some strategies, right? Yeah. Yeah.
Really, I don't think there's, I I, I could be corrected, but I don't think there's any, anything about retirement in the Bible, right? No. It's kind of, actually, it's, we wanna do a podcast on that. 'cause Nick, who, you know, we only have two mics. So normally people are used to hearing Nick and me, but he actually went to school to be a pastor. And I want him so badly to do. 'cause 'cause I've, I've heard different, different directions like that. I've even heard some people say like, full on retirement is not necessarily biblical. Yeah. Yeah. Well, here, I mean, here's the painful reality. I think there's plenty of stories to, to that you can reference back in your own life. My parents, mid eighties, they were pastors just a couple years ago, they resigned. Yeah. And they were both doing extremely well. Sharp, physically Well Yeah. They had something that they were responsible for to do. Yeah. Yeah. And they retired and they started failing faster. Yeah. And we're moving 'em closer and the place we're moving 'em into, we told 'em, I said, Hey, our dad's a pastor. And they're like, what could you, could he do a Sunday service? Yeah. It was like, and so I told dad, dad's like, he's starting to work sermons on right now. That's awesome. He picked up his podcasting again. He's, he's getting back into it and mom's gonna play the piano. So I think it's important.
Yeah. One of the, one of the questions I ask early on during the communication discussion is, forget about retirement for a second. Everyone's at a church and you're in a box and someone's gonna read your obituary. What do you want them to say about you? Yeah. Think that long term. Yeah. So now let's back that up. What are you doing today for that story to be written, let alone your business? Yeah. Yeah. So that's powerful. It's, it's a really good exercise. Todd, if you haven't done it, you should. I haven't. Trying not to think about death quite yet. It, it, it's a bit morbid. I'm only 47, so I'm not quite there. So we went through communication, culture, clarity. Yeah. Cash. I like the next one. Cash. Yeah. That's what we deal with. How, how do you deal with cash? Well, I mean, I don't know what you're gonna say, but I will say this is, this is kind of the part that I think that we generally get involved in is, is I find that it can be helpful because especially with, you know, you deal a lot with family owned businesses. And I think that when you're dealing with businesses that aren't necessarily family owned, it's kind of like, well, obviously I want to get the most amount of money I can. Right.
But with family owned businesses, maybe, maybe not, but I would assume it's a little different in that, you know, you know, we'll, just using dad as an example, probably doesn't necessarily wanna, like, you know, he wants a fair price probably to be compensated. So what we do oftentimes is simply help the business owner with, okay, like, you retire from this business, you sell, like, what do you want to do? Like, and so we'll help 'em budget for like, Hey, I want to do this. I wanna travel, I want to, you know, so we create a budget and we say, okay, if, if these are the things you wanna accomplish in your retirement and here's your income needs, we'll help them come up with, okay, here's the amount of money that you need to realize from that business. And oftentimes that can kind of help with the sales price. 'cause maybe it oftentimes can be just more about, okay, if dad can get this, then that allows him to go do what he wants to do. You know? And, and then, you know, obviously the kids need to be able to afford that or, you know, but again, I think it's a little different when we deal with our end of it on the family transitions. Yeah. Because, you know, again, if you're just selling to a random stranger, it's like you're gonna get the most you can get. Right.
Not necessarily, obviously you want a good fit and make sure the business is gonna be successful. But anyway, is that your experience? Yeah. So this, this category of cash really, there's a, there's a lot of moving parts to it. Obviously a business, whether it's non-profit for-profit family or not, you have to make some money some way somehow. Yeah. Yeah. You can't have a business without eventually making some money. So the focus in this category for me is really understanding what is the revenue stream. Yeah. And are, are you, are you producing cash? Right? Or are you just always in debt? Yeah. Yeah. Now there, there are significantly large family businesses. So I think to recalibrate, when you think about family business, it may be the small three to 5 million kind of business. But there's, there is plenty of large family businesses out there. Yeah. And so, and by the way, these five C strategies, they apply to family business, common business, public traded company, it doesn't matter. Yeah. But this, the framework that I've used in the first categories is really focused on more the family side. Yeah. Things. But my, my point is that in this category of cash, you really have to be focused on are you, are you somehow printing money at some point in time? Right. And what does that look like? And what are the strategies that you're using on the top line side on the revenue side?
And is there any room for a RR annual recurring revenue? Is there a, is there a way that you can create some sort of service that's automatically credit card debt, monthly payment that is just you don't even see it Yeah. As a consumer. Yeah. Like think about Microsoft Office. We have it sitting here on our laptops. Right. Or any other software, QuickBooks or whatever. That's a, that is a SaaS model and an A-R-A-R-R model, it's automatic. They got this just recurring revenue. Yeah. Your insurance company, that's reoccurring revenue, right. If you're a service company, you can create maintenance contracts for reoccurring revenue. So is there any way to get reoccurring revenue in your business on the top side? Yeah. And then can you diversify that revenue stream? The second is looking at opex, the operating expense. Have you done any value stream mapping? Have you really fine tuned the profit you could extract out of the business? Are you being smart with the money? And then the, the, the other category area that I look at is, are you even doing any reviews? A lot of times family business will look at the income statement and that's all they look at. They don't pay attention to the balance sheet. Right. And the cash flow statement is important, but they just look at the bank. Right. The three financial statements are telling a story. Yeah.
Too many times the stories have been being read and you're not anticipating what the chapter should look like moving forward. And so part of this category of cash is looking at the financial statements and putting in place structure to review them and understand them because they tell a story. Yeah. Yeah. And then the other category this gets to you is really understanding, okay, what are you doing with the cash and what are you doing to maximize cash and minimize tax? Right. So that's all the strategies of the 4 0 1 Ks setting up with the TPA services, five 20 nines, whatever, whatever mechanisms that make sense for that family where they're at in their journey of the business. Right. And understanding there are strategic things you could do with this cash and just having it in the bank isn't good enough for long term. Yeah. That's, that's, that's huge because we, we deal with so many businesses where they wanna have cash. Right. And, and it, and they need to because you know, like in a business, things happen. So you gotta have that money aside to pay employees, et cetera. But, you know, oftentimes we see businesses that are, that are piling away cash. It's like, it's like, okay. Example, there's, there's an element of that money that you probably know like, okay, no matter what happens, we're not gonna need this amount of money in the next three months, six months, one year, two year. Right.
And I find that so many businesses leave so much money on the table because, you know, they could be going out and investing in bonds or something like that. Or even, you know, we've helped a business lately that was like, you know, they, we said, okay, how much of this cash are you gonna need in the next three months? Well, zero. Okay. How about six months? Okay, well maybe this much. And you can build a portfolio of really safe things like US treasuries, things like that, but that are gonna pay you much higher rates. And a lot of these businesses you're probably dealing with, that's a lot of cash. Yeah. That's a lot of interest. They're leaving on the table. Yeah. And I think that far too often businesses overlook that, you know, 'cause they think it's like, well I don't wanna invest in the stock market. And it's like, well, okay. There's plenty of other things, you know? And especially now with interest rates doing what they've done, you know, for the last, you know, since, you know, we've done episodes on this, but, you know, interest rates since the global financial crisis back in 2008 and 2009 we're basically at 0%. So people kind of forgot about the fact that stuff paid interest. And you know, obviously there's downsides for borrowers of rates have gone up here.
But, but there's huge opportunity now for, you know, people putting money in cash accounts and money markets and treasury bonds and things like that are all paying pretty, you know, much better rates than they paid in the last 15 years. The small to medium sized family businesses. This is one of the, the spaces that I see that they're not doing much with that cash. Yeah. And it's not out of design, it's out of ignorance. Yeah. Yeah. Not knowing what's available. Yeah. Yeah. And that's so what, what I bring to the table is recognizing, Hey, let's use this cash to do something for you. Yeah. Besides just sitting it there knowing you got a good rainy day fund. Yeah. Yeah. And I can tell you one of the differentiations between current generation boomers like me and the younger generation is they're more keen to look into that. Yeah. Yeah. So that, that's a space that's right down your alley. Yeah. Yeah. And I think diversification's huge. 'cause the other thing I find is that far too many business owners, they put all of their wealth into their business until they sell. And then once they sell, they have this huge liquidation event. And now all of a sudden they're going and looking to diversify. But it's like, Hey, what if something happens unforeseen?
So while that business is earning that cash, it's like, hey, that's a good opportunity to maybe diversify by looking at some other things besides just necessarily pine piling everything back. Especially if you're, you know, and I think too, if you're, again, someone to look into to sell to a family, that's also a huge benefit because you, you know that if you've built up a nice nest egg outside of the business, that allows you a lot more flexibility with how you transition the business financially to the family. You can allow for some better terms or whatever to make it absolutely. Work for both parties. Yep. So yeah. One of the last components in the cash category is identifying, developing a budget. Yeah. Now this is directly proportional to the appetite and attitude of the patriarchs and the kids Yeah. Of how defined and how robust of a budget and how detailed it is. But a budget nonetheless is the most, one of the most important things in this category of cash. Yeah. So they can see where things are at and then start thinking about strategies on the cash, cash side. Yeah. Yeah. That's great. I'm I, the last one I'm excited about, 'cause you've told me about this before and I love this idea council, the council, you know, it's the family council. The family council. It, it's a term I've, I've used instead of a board of directors.
The, the concept here is really, whether it's voting or not, it's important to make sure that you don't get too in the forest in a business. Now this really applies to any size business, whether it's a small single shingle to an Amazon big company, right? Yeah. Having some sort of system res resources to have people speak into the business Yeah. Into you. Yeah. Call it a coach, call it a consultant, call it a board of directors. Call it a family council. So I've, I've learned that the, that that the words family council makes sense that the family council's comprised of the family that's involved. Yeah. And maybe some that are not. Yeah. And they each get a equal share vote. I've got one family I'm working with, there's parents, two kids and their wives and each represent three votes. Huh. The parents get one vote, the son one, and, and, and wife gets second vote and son two and wife get vote three. Yeah. And so everything, and so we define what are the things that need to be voted on. Yeah. As a family council, let's identify what should we bring to the family council for vote. That the balance here is making sure that people in their space field, that they have the respo roles and responsibilities and the authority to make a decision. This is defining what authority do you have? Yeah. And what do you need to bring to the family council.
Yeah. And then we talk about rules of engagement, code of content as part of the family council discussion. So you're identifying the things that require family engagement, voting on the budget, that's a family council vote. Yeah. So it's really important to have that structure. And then having a lifeline. It could be your lawyer, it could be your accountant, it could be a business coach, it could be you. Yeah. But having somebody that may sit on that family council once a year, maybe twice a year, just as another person as a vantage point to force you to think through what, what this looks like and have another input as opposed to just family talking. Same old samo. Yeah. Yeah. Does that make sense? Yeah. How many people do you usually recommend outside of the family? Are on these just one person? Or do you typically see multiple? I, I, I've, I recommend at least having one. Okay. But if they have an appetite to have more Yeah. Usually there's a lawyer or CPA. Yeah. And so I'll talk with them to say, Hey, look, we're talking about establishing a family council and I know your rates are this, could you give us a discount? Yeah. To be part of the family council. Yeah. We're only looking for advice. There's nothing for you to go do extra than what they've already asked. Yeah. It's just advice. Yeah. Yeah.
And usually it's, it's very a hundred percent hit rate Yeah. For them to engage Yeah. And be involved. Yeah. Because they're so integral to the business. Yeah. Yeah. That's great. Yeah. Awesome. So what is the right time, you know, for somebody to start going through this exercise? Yes. There's really no wrong time. Okay. It really, it it, I said earlier, I'm, I'm usually pulled in when they're grasping for straws, there's frustration, there's a decision to be made. Yeah. That, that event of transition is getting closer. Right. Everybody knows it and they just can't figure it out. Yeah. If these families would've come to me a whole lot earlier there, there's a, there's a, a strong percentage of those that would get there faster and easier and less painful. Yeah. Yeah. Do you find that if somebody went through this exercise, like let's say they're in the process of trying to consider if they even should involve or the family or, or even, you know, like you said, this framework really works, whether it's a family business, non-family, whatever. But we see a lot of like transitions to, you know, just like the closely held, maybe you wanna transition to some team members or employees that have been with you for a long time and really help you get things started. Do you find that this can be a useful exercise to even help determine if that's a good idea? Absolutely.
Or whether you should just sell to an outside source. Absolutely. One of the, one of the exercises we'll go through is grading the team. Okay. A through F letter. Yeah. And we'll go through two categories for every individual that's in leadership team where key stakeholders for succession planning, performance, behavior, I could have a rock star, but man, they're horrible to work with. They're always late, et cetera. That's behavior. Yeah. And then I've got great people to work for. You'd love to work with 'em, but their performance stinks. Yeah. Yeah. So you grade every individual in those two categories, A through F and then then determine how do you move that grade up Yeah. And put in place strategies to do that. Yeah. And if they can make it great. If they can't, maybe you got the wrong people on the bus. Yeah. Yeah. And maybe you do need to look outside. Yeah. And I said it earlier on as a, as a parent, you don't wanna force your kids to take over the business. Yeah. You'd love for them to have a disposition to want to do it. And they love that, but not because it makes money. Right. That's not the, that shouldn't be the only reason. Right? Yeah. Yeah. So this whole, this whole five C category approach is really, this framework is, is about building the health of the family and the business. Yeah. The healthier the company.
You, you think about it just like our, our bodies, right? Yeah. The healthier you are, the more productive you're gonna be. Yeah. And the longer sustainable life you could have. Yeah. Yeah. Just like business. Yeah. There's some certain things that you could do to make it healthier. Healthier meaning better employee, employee engagement, raving fans. Yeah. Great cash coming in. Everyone loves the culture's. Great. Yeah. That's a healthy company. It's got a competitive advantage. Sta statistics and data shows the more competitive you are. Yeah. Or excuse me, the more healthy you are, the more competitive advantage you have in this marketplace. Yeah. And to be clear, markets up the ebb and flow. Right. You've seen that from the financial side. Right. Right. The healthier you are, the more resilient you can become. Yeah. And if you do this structure of establishing these five Cs early on, you build a healthier company. And if you do have to get to the point where you know what, the kids aren't ready or they don't want it, you've got a more healthier business that has higher valuation. Yeah. One of the thoughts I, I kept have going through my head and I, I was thinking as we were talking, I wanted to ask you this at the end, but I think I've answered it for myself, which is just this notion of like, Hey, is it a good idea to sell your business to family?
Or, you know, is that just, you know, setting, setting yourself up for disaster? And, and what just hit me a minute ago was like, I don't think it's a question of if you should, it seems to me like going through this process. It's like, no, it's, it's a good idea as long as you go through a process like this to make sure that you're, that you're looking at this the right way. And, and it seems to me like if you do it the right way, it can be done very well. Yeah. And like what you just said at the end is key. Like, well, if you go through this process and it turns out that it doesn't work, you've created a much stronger business. It's gonna help you to sell to someone else. So, and did I answer it right to myself? Yeah. You great job, Todd. You also, the journey you take through this process, everybody sees it. Yeah. It's no big surprise. And, and, and the kids could say, you know what, my working genius is very much to be a tactician. Give it to me and I can go knock it out. Yeah. Well, okay, maybe they do transition the business, but that person brings on a president or CEO that may not be a family member. Yeah. Nothing in the book says that a family member has to be the CEO or president. Yeah. Yeah.
Same with publicly held, or privately, or excuse me, publicly held companies. The founder that started it, they may be the CTO or the vice president of engineering. Yeah. And they had, they've hired somebody else to run the business. That's been my career. Yeah. Is, I haven't started the business. I'm more of an entrepreneur as opposed to an entrepreneur. Yeah. Family members high up have realized they're not a good CEO president, so they hire me. Yeah. You could do the same with your family business. Yeah. Yeah. Have you ever fired a owner? I, yes, I have. I, well, let me, lemme rephrase. But then they fired you? They they hired me. They hired me and then I fired them. I by walking away. Oh, okay. Yeah. I've, I've, I've deployed this model Yeah. And I've had to walk away from some businesses because they just Yeah. They're, they're not willing to go top down. Right. Right. I, I could see how this is like, from a culture standpoint, it's like, hey, like, you're either in or, I mean, or you're not. I mean, it seems like once you establish this, it's like you gotta be bought in or else it's not gonna work. You're swimming upstream. Yep. So, yeah. So Rick, where, where can people find you?
Like where, I mean, thi this, this is, I mean, I've, again, thinking through my own future and I, you know, I don't have any plans to go anywhere yet, but I'm, you know, the, the older I get, I realize like, all right, you know, and at some point this is gonna happen. It's real. I don't wanna work forever. I, I sit here and help people retire all day long. So I get a little jealous. You gotta think about it for yourself. Makes me excited someday. But, you know, where can people find resources? Find you, I know that you have a lot of resources on social media and things like that. Yeah. So probably the easiest is just my name, Rick canfield.com. Okay. And we'll put that in the show notes and everything as well. So yeah, very simple that, that'll give you a pretty good indication as to this framework. I've got it listed there in the Business Health academy and some of the services I provide. Yeah. At the end of the day, I, I said earlier on, I, I love the space that I'm in. I'm passionate about it and I love having an impact on people's lives. Yeah, we do. Yeah. Yeah. I mean, I can see how that would be very inspiring. 'cause this is really cool stuff and I've Thank you.
You know, I've, I've known you for a while and seen you in all sorts of different roles and you seem very excited about what you're doing. It's awesome. Thank you. It shows well, thanks for having me, Todd. Yeah. This has been fun. Yeah, this is great. We'll have you on again. Okay. Alright. Thanks for joining us, Rick, and thanks everyone for listening. Look for Rick and, and like we always say, if, if you enjoy listening to this podcast, we'd appreciate you leaving a review and, and subscribing to it. And we try to put out episodes about every two weeks, so thank you. The opinions expressed in this podcast are for general informational purposes only, and are not intended to provide specific advice or recommendations for any individual or specific security. It is only intended to provide education about the financial industry to determine which investments may be appropriate for you. Consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results, any indices reference for comparison or unmanaged and cannot be invested into directly. As always, please remember, investing involves risk and possible loss of Principal capital. Please seek advice from a licensed professional. Momentous Wealth Management Inc. Is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Momentous Wealth Management, Inc. And its representatives are properly licensed or exempt from licensure.
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