Steven (00:51):

Hello, everyone, and welcome to the next episode of the Retirement Tax Services podcast, Financial Professionals Edition. I’m your host, Steven Jarvis, CPA, and this week I’m excited for a fun discussion about how there is more to life than just the numbers. Joining me to talk about this is Jerome Myers, the founder of Exit to Excellence. Jerome, welcome to the show.

Jerome (01:11):

Steven. Thank you for having me, man. It’s such an honor to be able to hang out with you today.

Steven (01:16):

That’s going to start my day off on a high note, just you saying that. So this conversation, we’re going to talk about a few technical things. Maybe we’ll talk about some taxes, but really this comes back to a theme that I’ll touch on. But I mean a lot of times I’m more focused on the tactical planning, but the concept here is that yes, I mean, especially for the audience that listens to this podcast, we’re all numbers people. We get focused on quantifiable goals, on how we measure things. But at the end of the day, if we don’t have something bigger to tie this stuff to, it doesn’t satisfy. It doesn’t really have that lasting impact. We want it to, whether we’re talking about doing Roth conversions or we’re talking about how we exit our business someday, there’s got to be more to it. Jerome, give a little bit of background on who the heck you are and why you’re focused on this topic.

Jerome (02:00):

Man, I could go down a rabbit hole there. What I will say is I’m a numbers guy. So I started out as an engineer, believe it or not, got my civil engineering degree, played football in college and left there, started out as an engineer doing transmission line design in the power industry. And the only reason that that is relevant is because I was one of those people who thought the only thing that matters is the things you could count, right? Quality was a thing, but it was only a thing based on if you could count it or not. And as I got older, I learned pretty quickly that the quality is so much more important than quantity. And if I make it super personal, once I got divorced, I went from seeing my kids every day to seeing them 66 days a year. And so how could I make up for that time?

(02:51):

I basically got 20% of the time that I used to have with them and I wanted to make the most of it. And so that was of the foundational things that shifted my thoughts around quality and quantity. So I move on through my career and my last role, I built $20 million division for a Fortune five 50 company. I’m employee number two. We go to 175 folks. I started January 13th, September 30th, 175 people on my team. End of the year, 30% profit margins, $20 million in revenue. And I get a phone call on December of 24th at 4:55, and the guy says, Hey, we’re going to lay half the team off. I’m like, no, we’re not the answer. He’s like, we’ve been going back and forth for about this, but that’s what we’re going to do. I was like, no, I’m pretty stubborn, Steven. So I was like, nah, we’re not going to do that.

(03:38):

And he says, look man, I called to let you know that I made a decision. This isn’t a debate, this isn’t a negotiation, this’s what we’re going to do and still going. He is like, look, man, it’s five o’clock on Christmas Eve. I’m going to spend the rest of your with my family. I’ll talk to you in a new year. And so I spend that week figuring out who’s going to stay, who was going to go. And we put Humpty Dumpty back together again. And when I started telling the story, it was about they made me do it. Wow, right? I wanted the bonus. I had the vehicle, you get the trip. And it was like, well, I got to do it. And in that I realized the buck didn’t stop with me. It felt like entrepreneurship. I saw him once a quarter. I talked to him every other Friday when I was given the update. And that was kind of the beginning of the end of oversight. So for me, that was the beginning of the end. I wanted to be responsible. I wanted to be in charge. I wanted to have the final say. And so eventually that year I drop out of corporate America and I’m like, okay, well what am I going to do now? Start real estate,

(04:35):

Build a portfolio, a few million dollars of apartments. I’m like, okay, this is pretty cool. But it’s lonely. There’s no connection with people, there’s no real understanding of what’s happening in folks’ lives. We’re just providing housing. And the people who talk to me want to know when they get a distribution, my partner’s in the deals, I was like, this isn’t it. And so people may be wondering, well, it’s about making money and it’s about freedom of time. So by owning the assets and renting the assets out, I figured out how to decouple my time for money. And that becomes a really important theme going forward because what I realize is once you have your time freedom, you really have to be a great steward of it.

(05:22):

In our industry, we talk about fiduciaries, right? But it’s always focused around money. It’s never around the other resources that we get to allocate. We believe there’s three resources. There’s our energy, there’s time and money. Everybody focuses on being a good steward of the money, but what about the time and the energy and how you allocate those? And we’ll come back to that later in conversation. And so if I get through the rest of the background, standing in the back of a business conference and a guy is giving his seven step plan to have a double unicorn exit, and I get the mic at the end, I said, all right, you ready? Oh, that’s an interesting way to start a conversation. Yeah. I said, how’d you get out of your existential crisis? He said, I’ll let you know when I do. So kind of fill in the gap. I might’ve lost some people there. So this guy was a president or CEO Kajabi. They sold for a couple of billion dollars. I don’t know what the deal looked like. We had hundreds of millions of dollars on the low side. And he didn’t know what he was going to do.

(06:26):

He didn’t know that he was in trouble. His wife told him to pick up an application, an in and out burger when he was going to get a burger that day because he was sat panda on the couch. And she understood that there was a difference between when he was working on stuff and when he wasn’t. And he surmised that he was having an existential crisis because he got out of his business and didn’t know what to do. And he had what I consider to be all the resources in the world in order to figure out what his next was. He didn’t know what he was going to do. And the best idea most people had was, well buy a business or start another business. For him, that wasn’t the answer. It wasn’t a solution. And buying another watch or another car wasn’t actually going to scratch the itch form. And so I went and started doing research, and this is how I got to this place of doing what we do. And there was one article that I found in the initial research, and it was published by Harvard Business Review and it said, congratulations, you sold your business now prepare to be depressed.

(07:31):

Now, I personally don’t believe that most founders are depressed. I don’t think they have a diagnosis, nothing in a DSM. I don’t know that they actually need a therapist, counselor, psychotherapist, whatever you want, but I do think that they are scared. I do think they are uncertain. I do think they are concerned. I do think that they feel detached or ungrounded or not anchored in a way that they did prior to selling their business. And so that problem is called the founder’s Exit paradox, and we’ve created a process to help people move through that with grace and ease, go through the portal of the exit so that they have transformation and that they can exit with clarity and confidence. And it was all because of my experience when I exited doing something that didn’t actually really bring fulfillment to me. And then watching a guy on the other end of the spectrum, having all of what I consider to be the resources, not having the resource he needed in order to have a pleasant experience on the exit.

Steven (08:37):

Yeah, Jerome, there’s so much great insight in there. I appreciate you sharing it and getting personal with it. I love being able to tie this to real life, especially on a podcast around the internet. It can be really easy to oversimplify things and leave out the important messy details. So I want to go over a couple of things before we dive in a little bit more to then how you help people get through that portal and get to a place where they’re excited about life and not just trying to start over counting new numbers because there’s a whole spectrum of things in life that can feel easier to just focus on which piece of it can we count even? I love your comment there about are you being a fiduciary with the other resources? That’ll probably be a whole LinkedIn series for me now because you’re right, the fiduciary duty gets hyperfocused on just the money and so many other things in life.

(09:20):

It’s probably because that’s the easiest one to count. Same with tax planning. So much tax planning gets focused on how many dollars can we save right now? And I’m guilty of talking about it in those terms at times, again, on these short form forums. But when I talk to clients, we’re always focused on what does this allow you to do? What’s the bigger thing? Because that’s what creates more impactful outcomes, and that’s also what creates better execution. If I can maybe pressure a client into doing a tax planning strategy that’s going to save them tens of thousands or hundreds of thousands of dollars, and they might’ve left my sales pitch believing that they can save this money, but if I haven’t tied it to their bigger purpose, it’s going to fizzle out. The motivation’s not going to be there. The consistency’s not going to be there.

(10:01):

And that’s with relatively small dollar things when we talk about somebody exiting and whether you run a business that might exit for six figures, seven figures, eight figures, someday, most of us probably won’t get to the Kajabi level and be at nine figures, but I don’t want to hold anybody back regardless of what the dollar amount is, there’s more to life than just what we can count. So I love the way that you’re framing all this. I mean, this clearly isn’t just something you came up with one day and said, let me put it on the internet and see what happens. You’ve got personal experience in here, and now you’ve helped a lot of other people go through this process,

Jerome (10:33):

And it’s backed by, I talk about counselors, therapists, and so on. It’s backed by their research. I mean, positive psychology perfectly aligns with our models. And while we think we’ve enhanced what’s been offered in researche, we do have that type of hard backing, research backing. I always smirk when somebody says, well, it’s just a little exit. If you exit, it’s likely that you have more money in your bank account now than you’ve ever had at one time. And fact of the matter is 80% of most business owners’ wealth is tied up in their business. And so we know that there’s only three ways out of a business. You sell it, you give it away, or you close it. And in those three ways, there’s only one that really ends up putting a lot of money in your bank account. The sell is the only one that actually allows you to harvest the investment that you make. So if people aren’t thinking in those terms because they’re going to die in a meeting, that’s one of the things I hear financial advisors say all the time. Yeah, I think they’re missing the boat.

Steven (11:48):

Yeah, I love this conversation again, because especially as numbers, people listening to this number person myself, if we’re not intentional about it, we can get really hung up on just the number side of it. The person that introduced us that the question they relayed that you had asked was, Hey, how long did the high last of getting that wire when you sold your business? And because when people exit, they usually focus on that giant chunk of money that just hit their bank account because it’s this new thing that’s never happened to ’em before. It’s more money than they’ve ever seen it once in their whole life. It’s understandable to get excited about the dollars, but especially for entrepreneurs who are so focused on, Hey, what comes next? What’s my next goal? What do I keep driving to? So for listeners of the podcast, whether it’s you yourself that in a year or five years, 20 years you think you might sell or you work with business owner clients, this is your reminder. This is your framework for how to take it beyond just the numbers.

Jerome (12:39):

So I think most people believe that the money actually solves a problem.

(12:46):

It’s just the tool. It’s an amplifier. So if you don’t like your wife or your husband before you have the payday, you’re going to dislike them even more after the payday. If your relationship with your kids isn’t right before the payday, it’s going to be even worse after the payday. If you are in poor health before the payday is likely to be worse after the payday, and we could keep going down the list. If you don’t feel your relationship with prosperity and we think time, talent, and treasure’s there, if you’re not using those things well, it’s only going to make it worse. And so many people are like, oh, I don’t need to think about that. Now, there are four things that force business owners into. We could call it early retirement. I call it an unforeseen exit, right? It’s burnout, death, divorce, and disease.

(13:40):

And so if any one of those four things happens and you haven’t spent any time prepping your business for sale, you’re going to get a whole lot less from a value standpoint if you sell it than if you spent some time actually being proactive and readying the business for sale. It’s like, well, it’s not ready. I need to scale it, et cetera, et cetera, et cetera. The fact of the matter is this, the better your business or the more attractive your business is for somebody else to buy, the more you’ll enjoy owning it. And this was one other thing that just kind of popped my bubble in the same vein, the more your business relies on you, the more valuable you are to your business, the less valuable your business is. And so I watch people time and time again, do all that they can do to justify why they are the owner of the business or why they get paid the most. And all you’re doing is devaluing your company. Last year, 2024, I was out of office for 194 days, so 194 for 2024. Why do we believe that the more time we spend on the thing, we get more productivity out of it. It’s not a real thing. And so getting to the place where your work optional is I think extremely important, but then that’s when the fiduciary work comes back. And so let me stop there. I could go on a rant for like 20 minutes on this.

Commercial (15:11):

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Steven (15:51):

No, there’s so much good stuff in there. I do want to pivot just a little bit, just because you brought it up of the qualitative side of this is such an important discussion that gets almost no attention. And so I love that we’re having that piece of it, but you started talking about the qualitative can’t just replace the quantitative. There’s still real things you need to do if you want to have a successful exit in terms of both valuation and your satisfaction with life. We do need to spend time on both of these things. And so I love that framework you presented there of, hey, if these things aren’t right in your life, your health, your relationships, whatever that might look like, those aren’t right before you exit. Having a pile of money isn’t going to suddenly make you disciplined. It’s not going to suddenly make you more compassionate or patient or open to feedback.

(16:31):

It’s not going to change these things overnight. And so those are things we need to start working on before an exit so that our life can be amplified after it. But I want to dive into this a little bit further. You started talking about if we put off doing those things to improve our business tactically on the measurables, if we’re not thinking about those things ahead of time, we could really do some harm on what that exit looks like from the number side. And this is a hard concept for a lot of people because most transactions up to the point of selling a business that we’ve encountered in our life don’t require the same amount of lead time and prep time that selling a business does. Even if you look at buying a car or buying a house like some of the other semi major things, they don’t even see major compared to selling a business.

(17:17):

But for most of us, that’s the only exposure we have that we can probably wait until close to the last minute and still get the job done that we need to. But this is why we work with our friends over at JPTEBITDAD partners on this kind of stuff because the earlier that we can be talking about what an eventual sale looks like, the more we can get these things done. So Jerome, when you work with people on the quantitative side of selling a business of going through that exit, what are things you are on the lookout for to say, Hey, Steven, if you don’t get X, Y, and Z straight in your business, the qualitative is not going to matter because we’re not going to get this thing done.

Jerome (17:51):

Yeah, so quantitative, I mean, you want to make sure that you’re doing the revenue that you need to do, whether you’re getting a top line valuation or EBITDA valuation or SD valuation that fits the number that you need personally, right? And that’s kind of the beginning and the end of how much money that we need to generate from the transaction. Then from there, it’s all about terms. So do you want to work in the business after the business is sold, or do you just want to walk away? Do you have a bunch of your personal expenses running through the business that are harming your SDE or EBITDA? And how do we get those out or how do we make it very clear that those are add-backs so that when the business is marketed, we get the valuation we need to get?

Steven (18:41):

Jerome, real quick, just the CPA side of me, since you mentioned, I feel like I’ve got to reinforce this as often as I possibly can. I know that if you listen to TikTok, every business owner’s dream is that my business is now my slush fund and everything’s a write off and just jam it all in there. Why not? That’s a bad idea for plenty of reasons, but if none of the following the tax code, things matter to you. Let’s at least talk about what this means for an eventual sale of your business that if you’ve treated it like a flush fund and this constant overlap of your personal and professional life that doesn’t impress buyers, that will impact your valuation, the more caveats and carve outs and explanations you have to give about your P&L of Oh, oh, no, no, no, no. Actually I have a higher cash flow. It’s just that I wanted to buy the GWA this year, and I called it a business expanse or well, no, only 10% of those trips were really travel. The rest are just my family, but we talk about business, so it’s fine from a tax rule standpoint, you shouldn’t be doing that crap anyways, and the IRS would come after you if they knew about it, but you’re harming your business by doing that.

Jerome (19:46):

It’s so true, and I think so many people are guilty, and I understand why they do it. They don’t want to pay the tax man. I also see this getting really unhealthy on the backside of exits, right? And and I talked about this a little bit, and this kind of goes to your relationship with money, but look, man, the tax man isn’t the bad guy as much as some people like to vilify him, and if you make it your life’s work trying to figure out how to make sure that you stiff the tax man, you’re missing out on a lot of other things, and I know you’ve got a perspective on that as well.

Steven (20:29):

Yeah, so I recently started using a new office space. It’s a shared coworking type office space. I have a private office, but there’s receptionists there that aren’t by employees, but I talk to ’em. I try to be friendly with everybody, and they really quickly find out that I do taxes. So of course they immediately want to ask me tax questions, but one of the things that came up was that one of them made a comment about how, oh yeah, I hope my tax bill just keeps going down. I said, not me. I actually hope my tax bill goes up every single year. And then I just left a huge pause because they were clearly taken aback by that. Then finally, one of them said, why would you want to pay more in taxes? I said, well, because it means I made more money and there was a little bit tongue in cheek because really I didn’t want to spend my afternoon giving them free tax advice, but I want to pay every dollar I owe. I’m going to be intentional so I don’t leave a tip. But if I had to pick, Hey, should I pay no taxes or lots of taxes, the biggest thing I can tie that to is, Hey, did I make no money or did I make lots of money and I’m going to work hard to make lots of money?

Jerome (21:26):

I think it’s fair. I mean, the more you make, the better off you should be conceptually. So

(21:33):

I bring that up because I think when people get a whole lot of time and they get a whole lot of money, if they don’t have a plan for allocating those resources, they find really silly things to spend their time and money on and things that aren’t going to make anything better for anybody else, and in the end probably just make them a little more upset. And so this is why we think it’s so important for people to find their knacks and we want them to exit to their knacks versus exiting from the business that they’ve built. We want them to exit from being a business operator to being a legacy builder, and this is the stuff that we get really excited about because once you buy your freedom, and it’s crazy, people are like, well, slavery was over a long time ago. Once you’re able to buy your freedom and you are work optional…

(22:27):

Retirement seems to be a curse word these days, once you’re work optional, then you can invest that time and money and your energy in a way that solves a really big problem for a special group of people. And I believe that that’s why we’ve been placed on this planet. It’s usually not our first business or the businesses that we sell early on that are truly tied to our legacy. It’s the things that we do when we have the freedom, when we not trying to figure out the money problem that really is the art that we were here to create for the world.

Steven (23:02):

Well, and having an audience here of financial advisors, I just want to point out, hopefully this came intuitively to most people listening that this problem applies not just to business owners. This applies to W2 employees as they retire as well. This applies to anyone who has spent their life working hard at something and then that thing is suddenly gone. And yes, the amount of money we have at that point is going to impact how much we can spend some of the resources that are available to us,

(23:27):

But that pile of money is not going to inherently impact our happiness. Like those things we talked about before, what you had before, that payday is still going to be there after that payday, and so the sooner in life, the sooner in that journey, we can start identifying what is it I’m really trying to accomplish? What is it I’m going to spend my time on? If I look at these resources and really think about being a fiduciary of all of the resources I’ve been given and not just the money, then I have to have a different conversation with myself. And yes, money is still going to be the easier one to track, but it can’t be the only one we care about.

Jerome (24:00):

It is the easier one to track. There’s apps and all these other things for it, and you can see it go up back to your comment around, oh, maybe my milestone should be how much I pay in taxes instead of how much is in my bank account, tongue in cheek, right? That’s not really what I want people to measure,

(24:17):

But think about this from a qualitative standpoint. Think about if you actually spent time thinking about your satisfaction with your self image, the relationships in your life and what you’re doing for work. What if you were on a quarterly or annual basis thinking about how satisfied you are with those things? I think many people justify their dissatisfaction with how much money they made, and what if you couldn’t make that trade off anymore? What did you actually do? And when people actually start having those types of internal conversations, you start to see a chef in their approach. They don’t buy the Ferrari anymore to demonstrate or illustrate how successful they are. They might drive a Subaru, and I’m not encouraging anybody to drive a Subaru if they want to drive a Ferrari, but what I am saying is you don’t have to buy that thing in order to make you feel better about the stuff that you’re doing that you don’t like doing to get money only to buy a thing that you barely get to enjoy because you’re spending so much of your time doing something you don’t want to do to get that money.

Steven (25:31):

We’ve got just a couple of minutes here, so for people listening, if you’re listening to what Jerome is talking about and you’re thinking, yeah, I need that in my life, absolutely check out what he’s doing. Exit to Excellence is the name of his company. You can find him on LinkedIn. We’ll have links in the show notes, but I want to make sure we also give everybody something tangible they can do right now, and you tell me if I’m misinterpreting this, but I know it’s made a difference in my life. Even just that comments you made about taking the time to think about these other things. You don’t need to hire a coach to set aside a day each quarter to get away from your office. Maybe this is with your significant other. Maybe this is just by yourself, out in nature, on top of a mountain. I don’t care where it is, but you’ve got to get out of your normal setting, and you’ve got to be willing to sit in discomfort and really think about what’s important and what you’re measuring besides just the money and how do we amplify the difference we really want to make. You’ve got to give yourself time to think about those things or you’re never going to make progress.

Jerome (26:26):

Never going to make progress. It is all about intentionality. You said it so well. You don’t have to hire a coach. A hundred percent. I think your outcome will be better with the right coach, but you don’t have to, right? We don’t want to use that as an excuse not to do the thing and just stay in the status quo. And so yeah, man, if you can really tap into the things and we’ve built a whole framework around satisfaction and fulfillment, you will then begin to make different decisions than the ones you’ve been making and those decisions. You’re already living a phenomenal life, I know, but those decisions are going to dramatically small tweaks, dramatically change the outcome, small decisions, and then taking action on the backside of those decisions will dramatically transform what your legacy actually ends up being versus the thing that might show up by default by continuing to walk in the status quo.

Steven (27:23):

And Jerome, I love all of that, and from what I’ve seen of what you’re doing, I would highly encourage people who are looking for a coach to look you up to learn more about how you approach this. Because I’m a huge fan of coaching. I use coaches for all sorts of areas in my life, definitely can accelerate what you’re doing. For everyone listening, really, there’s two things that come to mind as we wrap up this conversation. Pull out your calendar and pick a day right now. If it’s a month from now, if it’s two months from now, three months from now, I don’t care. Give it a place on the calendar to step away and go back and listen to this podcast episode. Go look at that article that Jerome talked about from the Harvard Business Review. Find something to start this conversation for yourself so that you can spend more time on it. The other thing, of course, that I’ll throw out is that we love the thousands of advisors who listen to this podcast. We’d love to see it continue to grow. So take a minute, give us a five star review, leave a comment, make sure that you’re spreading the good word around tax planning around all these topics that we talk about. Jerome, anything else that you’d like to leave people with as we wrap this up?

Jerome (28:18):

I don’t know if it’s okay with you, but I’d love to offer them the opportunity to download our white paper. It’s a five mistakes every business owner should avoid when they’re exiting. I think it will just open up their eyes if they’re even remotely considering exiting, they can grab that at excellence.com and we’ll have to make sure we get the right extension, but it’s under the resources tab.

Steven (28:43):

We’ll make sure the exact link ends up in the show notes. Yes, I love resources, so I appreciate, appreciate that offer. Jerome, thank you so much for spending your time and coming and sharing your insight and experience. Really appreciate you being here.

Jerome (28:53):

Steven, this was awesome. Thank you, man.

Steven (28:55):

And to everyone listening, thanks for being here. And until next time, good luck out there. And remember to tip your server, not the IRS.