You might be focused on growing your business, but what do you have planned after that? Maybe it’s time for you to start an exit strategy the BraveHeart way with Randy and Ellen Long to teach you how. Randy is CEO of Long Business Advisors, LLC, creator of the BraveHeart Planning Process, and author of the book, The BraveHeart Exit: 7 Steps to Creating Your Family Business Legacy. Ellen is a mentor at TekMountain and continues the Long family’s commitment to excellence by providing business consulting services for clients and coordinating the BraveHeart Planning Process. Randy and Ellen are passionate about helping business owners prepare for a transition to the next generation or prepare for a third party sale.
I’m very excited to have Randy Long joining us. Randy, welcome.
Thank you. It’s great to be here. I’m looking forward to our time together.
Randy, for those who aren’t familiar with your work, explain what you do.
We run a consulting company that helps business owners prepare for a transition to the next generation or prepare for a third party sale. Sometimes it goes to employees too, but largely, we work in the other two markets the most. That’s a simple statement of it anyway.
You consult on helping companies to prepare for our sale or a transition. What were you doing before that? Take us back to the beginning. How did Randy Long get to where he is today?
I’m going to take you way back. As a kid, I started working at literally age six. I know that’s illegal these days. I had my first little job picking cucumbers when I was a little kid, which was cool actually. Anyway, I’ve worked through a bunch of entrepreneurs when I was growing up and I really had a lot of respect for them. I learned a lot from ones that did it well and also learned from ones that didn’t do it so well. I learned to love them and also their lifestyle. I appreciated over time the fact that these guys and ladies, for that matter, go out and they signed checks, they don’t receive them. They put their net worth and their whole self on the line every day when they’re out trying to make a living for their family and their employees too, that they’re working with. I respect those people. When I went to college, my undergrad was in Personal Finance. From there, I went to work with a Wall Street firm. I was working in their Newport Beach, California office which was their most profitable office at the time. It was a lot of fun and I learned a tremendous amount and I became a certified Financial Planner and all that kind of stuff.
My family then had some issues. My mother-in-law had some health issues and so we moved up to be near her, further north in California. At that point in time, I started my own practice. It wasn’t long before I realized that the kind of work I was doing was working with business owners and their families. I realized that I didn’t know as much as I thought I did, and so I went to law school at night and continued to work my practice in the day. After I did that for about twenty years roughly, I ran a law firm on one side of this office building. It was 5,000 square feet or so. Half the building was a law firm. The other half of the building. They’re different addresses and different employees, but I was the only person that worked in both businesses. I ran both of them, but I had professionals and support and all that on both of those other businesses. I have worked in a dual world my whole career. We did business work and estate planning. We ran the wealth management firm too. I have that little broader background than most people have.
From there, I started doing lots of transitions to next generations, sales of businesses and just the transactional side of it. In doing that over the years, I realized that the transactional side is really the end of it. People that don’t prepare well either can’t sell our transition. If they do, they leave a lot of money on the table because they haven’t done it well. About five years ago, we flipped. I flipped my work here in this exit planning work into a consulting firm instead of doing the work through the law firm.We plan through the business instead of through the personal side. Click To Tweet
I want to go back now and peel back a few layers of the onion. You mentioned that you went to law school after your undergrad. What age were you when you actually decided to go to law school?
I started when I was 26.
You were still young. At 26, you had started your own firm after leaving the Wall Street firm and decided to go back to school. What was that transition like for you when, when you transitioned from working for the Wall Street firm and then to essentially consultant business owner running your own show. Was that an easy transition or was that just a real challenge for you?
It was a bit of a challenge because with the Wall Street firm, I had lots of support people and structure and just pretty much everything taken care of. It felt like the cradle to grave kind of a thing almost. Whenever I started my own, I realized I don’t have people yet for this or that and I’ve got to do it. It really did give me a good grounding, if you will, to understand the jobs of people that would later work for me, and also to understand all the little pieces about running a business on my own too. One of the reasons I believe that has made me more effective is that I have run businesses as well. I’m not just a consultant. I have built businesses. I built a farming operation and I had a fairly good size clientele in agriculture in California. I built a farm so that I could understand agriculture better. It’s a decent-sized one, frankly, that I ran. It gave me an unbelievable insight into what the farmers deal with and the complexity of getting tree fruit, for instance, out of the Central Valley of California is a complex business.
You made the transition. How did you get your first clients?
Believe it or not, I sat down and I went through the community. It was a small community. I went through the community around there and I figured out the people that I thought that I would like to have as clients and then I wrote a personal handwritten letter to every single one of them. There were ten of them. Believe it or not, every single one of them became clients.
What did that letter say?
I don’t know. I get asked all the time, “Did you save a copy of those letters?” I was too young and too stupid to do that at the time.
You don’t know what the letter said. What do you think made it work? Just from your recollection and memory?
I don’t have perfect clarity of memory on it but I basically told them where I came from, what my passion was, what I’ve done towards educating myself to better learn and to serve business owners. The business owners I went after were actually pretty diverse. I had a couple of doctors that own their own practices. I had a few large manufacturing companies. I had a few large agricultural companies. I had a couple of trucking companies. They were diverse, but I understood both academically and personally that being in business was a job. I didn’t really see the business market at the time being well-served and I still don’t. That’s the reason why our consulting, we plan through the business instead of through the personal side. The typical financial planning world they deal with the personal finance side, but 70% to 90% of the business owner’s net worth is generally tied up in the business, not in the personal assets. We have flipped the world around where the business hires us. We plan through the business, we will also go down in and do work with the major shareholders, and we collectively work with them because it’s a collaborative process, the one that we’re trying to build both the business and the family.
I love the hustle of just the idea and the execution on writing those letters. I remember many years ago when I was trying to raise some money to be able to go overseas, I was just thinking, “I would do any job to make some money.” Back then there was this thing called a telephone book or a directory and I’m picking up the yellow pages, flipping through and just calling like almost every single company that I could find that until one of them said, “We have a job available for you.” I started the next day. I think it’s that type of entrepreneurial spirit and that hustle and just the attitude of I’m just going to put stuff out there and just see what happens, rather than sitting and thinking and planning. You could’ve written an extensive business plan and try to explore and investigate all the different angles, but instead, it sounds like you just got started with it and made something happen. Is that correct?
Yes, I did. Thank God. I was probably too dumb at the time to think that I need to do tons of research and all that kind of stuff. I just figured out that I really just needed a clear message and I needed to put it out there. You can learn and grow and learn and grow and test and test and test, but if you don’t ever get started and you’re not moving, you just can’t accomplish anything. You’re just like a deer in the headlights.
I think that actually what you just mentioned right there around you is a very good point that actually sometimes, it might sound bad, but being a bit dumb, being a bit ignorant, can actually be a really great advantage because what I’ve seen and observed a lot of people do who are very, very smart people who have had high level positions in Fortune 501 or other organizations or those that have MBAs and PHDs. They’re very, very well educated, and very smart, but what typically tends to happen is they overthink a lot of stuff and not everyone’s like this. They overthink and they overanalyze and that really holds back them taking action and action is what really creates the ability to achieve progress and results.
I don’t know if its fear or pride, it depends on the person probably, but there’s a combination of fear and pride that keeps people from wanting to do something that they think they’re not quite like perfect for that almost. They have a hesitancy to put things out there because they don’t want to be judged for being not as good as they think they should be, but it becomes a significant hindrance to their ability to grow as individuals and also to grow the company. It is a big deal. You did a podcast recently about this, frankly which was really good. That whole thing you were talking to the consultant person and I think the question you asked was, “What was the most important step to take right now to get new business?” That is a really big question. Too many people are stuck doing things they shouldn’t be doing. They need to put it out in the wind and have a little guts and a little courage here.
Let’s fast forward a little bit. You got to this point where you now have your law degree, you have your certification as a Financial Planner, you’re running two separate businesses at the same time. You’re the owner of both businesses. How do you do that? I’ve experienced myself as well running two businesses at the exact same time. We actually just sold one of the businesses a few months back. How many employees did you have in each of those businesses?
They were small businesses. I would say about five in each business besides me.When we're dealing with the kinds of people we like to deal with, they are people that focus on what we call family, freedom and profit. Click To Tweet
Small but still two living businesses that need attention and need support. I just think about all the people who come up with excuses and reasons why they can’t do something. They’re so busy and they can’t write an article or whatever it might be, and here you are running two businesses. What was your secret to productivity? How did you ensure that both businesses could thrive?
I designed the businesses so that everybody was working at their highest and best use and that included me. I hired and trained people to do different pieces of those businesses. To the extent possible, I was only working at my highest value to both companies. I did well, honestly. It’s the same kind of thing that we do when we’re working with business owners. We figured out that the business owners really working with his head down in the weeds. We need to get him to where he’s working on the business more than working in it so that we can use that vision and the clarity and also the creativity which it needs to have. It’s hard to have that when your head’s down in the weeds all the time.
Let’s elaborate on that a little bit more because you’ve worked with a lot of business owners over the years. For those especially that are service-based business industries, what are some of the biggest mistakes or challenges that you see those people facing?
I think too many of them approach it as a job instead of as a business. They think that what they do is really limited to their own particular knowledge and so that nobody else can do the large parts of what they do until they retain too much. Ultimately, they themselves become the bottleneck for why the company can’t or won’t grow. Right now, we have a couple of consulting companies we’re working with to help them grow to sell because consulting companies can’t sell. If the business is too tied to the owner and there is not a set of processes and intellectual capital that is built into that, there’s nothing to buy. You just have a job. You don’t have a business. That’s the biggest mistake that I see.
It also goes back to the approach of working in the business versus working on the business. The person who’s really treating their work as a job. I often talk about the difference, Randy, between a consultant and a consulting business owner. There are many people who are consultants, but those people essentially are just focused on their craft. They could be essentially employees, or contractors within any company, but a consulting business owner is one who is actually running the business. They’re not only working in the business, they’re ensuring they’re working on the business in terms of marketing and IP and growth and so forth. I think that that’s a really great point that you just made. You wrote a book The BraveHeart Exit. How has that impacted your business since writing it?
I think it’s been helpful to us to write it because part of the reason I did it was because my daughter, Ellen, works with me. She’s been with me about four years or so. My son, Michael, worked with me right before he went to law school. He’s graduating this spring. I have five kids so all my kids have worked up through my businesses to try to teach them how to work and to give them a big, big, broad view of what’s possible in the world. The book itself, I started to write it because I realized that I really wasn’t seeing in the marketplace the broad planning that I think needs to be done for the business and the family because the family should be benefiting the business and the business should be benefiting the family. There are lots of opportunities that are missed in that part of it. There are also a lot of it just missed because the business is considered to be the byproduct. We work, we’d have a business, we make a living out of it but nobody’s really looking ahead.
I wrote the book because I realized I can only deal with so many people. We wrote the book as a road map to people, especially on the smaller end of the scale, that typically don’t usually employ lots of professionals around them. We wanted to give them a sense of the steps that need to be taken because they need to realize the value from the business. It is just a big deal to me that over the years I’ve had to deal with a number of people that have come to see me whose husbands had died or somebody became disabled. Now, the company basically has to be shut down because the employees all run. There’s no value left because there was no planning to retain people. There is no backup. There is no business built. It was too much of a job. When the owner’s gone, the family that used to live really well, has nothing. I got really tired of seeing that. I decided I was going to write a book to give everybody the chance to understand the issues and see what the possibilities were going to them.
You only have a business worth $500,000 and that’s really what you have. If you lose the value of that, that’s substantially hard for you and your spouse. If you can realize it and put the company in a position where it can be solid when you get your $1 million. Even if you’re living modestly, that’s a decent retirement for many people, and so whether it’s a small company or we worked up to a couple hundred million sized companies, but whether it’s really small, like for the purpose I wrote for the book, for everybody to understand, it’s still all you have. You need to maximize what your assets are to the extent possible.
Let’s talk about that because I think there are a lot of consultants who might be generating $300,000,$500,000, they’re maybe around the $1 million mark, but they have intentionally chosen to keep their business more as a lifestyle business. They’re not interested in having five or ten employees that they need to manage. They want to keep things very simple and clean. From your experience, they’re building up wealth, they have a great lifestyle, they have lots of freedom and lots of flexibility. What’s important for them to be thinking about in terms of planning and protection and preservation of their wealth and of their legacy?
When we’re dealing with the kinds of people we like to deal with, they are people that focus on what we call family, freedom, and profit. With regard to the profit side here, we typically like to see business owners run the company in the most profitable manner. Not necessarily just a top line growth. I see that often too. Everything’s measured off of top line growth, but all growth isn’t great growth, frankly. Sometimes you can destroy profit. You can hurt. You take on business lines, maybe you shouldn’t have taken on and they’re sucking the life out of the company. There are all kinds of different issues there, but we like to see the family benefit the business and the business benefit the family. Part of the point that we make along the way with all of our business owners is that we’d like to see them diversify out of the value of the company. In other words, if right now the company makes up 70%, 80%, 90% of your net worth over time, we like to go ahead and try to squeeze money out either into pension plans or different ways of pulling money out of the company and creating a net worth that is not based solely on the company.
For example, that might be let’s say buying or investing in real estate or having other types of equities or securities or any other cash flow producing assets?
All those things. You and I have seen too many of these companies that have been successful and strong, and over time, either international competition is affecting their business model. I’ve got a case I looked at just recently in Seattle and that’s what’s happening. The Chinese are basically dumping into their market. What’s been an extremely profitable business for many, many years is all of a sudden on the edge. We always tell the people, ” I don’t know what your future is. I don’t know if technology will take your company out. I don’t know if the public’s whim of what they like and don’t like.” There are a lot of possibilities: death, disability, all these other things. There are always risks to business. When we come in, we do this top down work where we come in and we look at the business and the family and part of what we do is look for the risks to the business and the family, and then we start shoring up those risks. We want to mitigate them or eliminate them, but we want to deal with them in way too many business owners are looking just at the rosy side of life and they don’t realize all the ways that they can be stung. A wise man looks into the future and recognizes the risks and does something about them before they get too close.A wise man looks into the future and recognizes the risks and does something about them before they get too close. Click To Tweet
I think that there are some really great points there. The first one you start off is, and I’m a very big believer in this as well, that there are so many people out there who talk about top line revenue. They make a big deal about, “I’m generating $10million or $20million,” or whatever it is. When you ask them, “How much are you taking home?” “I took home $150,000.” “That’s exciting.” For some people, that number might be exciting, but you could find someone who has half a million-dollar business or a million-dollar business and they’re personally taking home $300,000,$400,000, $700,000or more, depending on what those numbers are like. That’s really what matters at the end of the day is how much are we actually taking home? The second point that you’re making here, which is a really important one, is finances. There are so many people who are building business, they might be generating some good revenue, but they don’t have the right strategy or the right mindset around money. Of how they invest their money or how they look for opportunities to work with a good accountant or a good tax planning person, because in many cases, they can be saving a lot more money or keeping a lot more money than they are right now.
Eventually, we want them to get to the point where the capital is going to work for them and not them work for the capital. If you don’t do that wisely and strategically, you end up being somebody that the more money you make, the more you just continue to raise your standard of living and your family never becomes worth anything. It just lives really well. When tragedy intervenes, like I’m talking about something for whatever reason goes wrong in the business, you used to live like you make two million bucks a year, now the company has gone down and you have no assets, and so you’re absolutely broke. I have just seen way too many people in my time think that cashflow is all that matters. They live on the cashflow and when the cashflow is gone, their lives are completely different.
I’m going to switch up for a moment here. You’ve built multiple businesses and you and your wife, your family, you’ve raised five kids. How did you do that? That’s a lot of kids.
By the grace of God. It’s funny you say that. I think of it as being a lot too. I met somebody the other day who told me they had eleven and he was younger than me. I thought five was a lot.
I’m really interested to know what I mean in terms of from a work-life balance and from a time-management perspective. Because I get the sense and the feeling that you are a family-focused person, that family is the number one priority for you, yet you’ve also built multiple businesses that have been successful. I feel the same way in terms of family first but also making sure that the business continues to grow and serving clients and all of that. I’m just interested in your approach and your mindset and thinking around that.
My kids turned out honestly so unbelievably well. I know it was a truly a gift of God, not just because I was so brilliant or my wife was so brilliant. We did do early things like my wife decided when our first one hit kindergarten age, she wanted to teach her how to read at home instead of sending her to school and all that kind of thing. I didn’t even go to kindergarten so I don’t see a big downside in that one. My wife taught her how to read. I think she was five and she could read like unbelievably well. She just kept going. For the first four kids, my wife home schooled those kids until they were in the eighth grade and then we put them in private school. We would do things too that we’re probably pretty unique. When my wife was teaching the older kids, she wanted them to learn Latin. Of course, I know people don’t do that very often these days but it has a good foundation. The English language is largely built on Latin anyway. It gives us a lot of word meanings and that sort of thing. Whenever she got to a certain level, I hired the university professor to come teach my kids Latin once a week. We did things with our kids when we were in California.
In the fourth grade you’re supposed to learn California history. Nobody learned history anymore I think. They had the mission system in California that went the length from the bottom to the top of California, pretty much. While the other kids were sitting in class, I’m looking at pictures, my kids were visiting all of them. We went on vacations when everybody else was in school. I spent time with them. I would say that in hindsight I probably worked a little bit too much, especially in the early years. My wife would tell you that. The funny thing about it is that my kids don’t remember that. All they remember is by the time they were up and loose at about everything, I was realizing that I really needed to spend time with my wife and children. It wasn’t just about building business. I think I was a little bit too distracted early but thank God I got that clear before it impacted very hard.If we don't spend the time with our children when they're young and growing up, they will not spend the time with us when we're older. Click To Tweet
It’s a something that a lot of us come to. Just putting things into perspective. Many of us work so hard to build our businesses and hopefully we realize early on that there’s reason why we’re working so hard to build those businesses. Not just for the sake of a business, but it’s for family or for community or for creating a legacy. I’m putting that all into perspective. It can really help us manage how we approach things and how we make decisions in our life.
I would just love to encourage your audience, too, because I’ve sat in a number of meetings where many people have no relationship with their children and they can’t see their grandkids. Everybody worked too hard and too long when they were young and there was no time for the kids. When they got older and the business was under control and they want time with the kids, the kids don’t want to spend any time with their parents anymore. You remember the song Cat’s in the Cradle? I try to play that thing for myself every six months or so to remind myself and I recommended just the idea that if we don’t spend the time with our children when they’re young and growing up, they will not spend the time with us when we’re older.
Randy, this has been a really fun conversation. I’ve enjoyed it immensely. I want to thank you again for coming on and what’s the best way for people to learn more about your work and to connect with you?
Our website is TheBraveHeartBusiness.com. You can even just Google Randy Long BraveHeart Exit, that’ll show my book which is on Amazon and it will also pull you to our website LongBusinessAdvisor.com.
Randy, thank you so much.
Thank you. Love the time with you. That was as good as I thought it was going to be. Thank you for the interview.