For many, it could be about what you can buy or where you can take a vacation. But have you thought about the difference between being rich and being wealthy?
There are many key differences between making money and being wealthy, including the ability to freely take your time to live your life away from work. In this episode of CEO Sales Strategies, Doug C. Brown talks with Financial Management Advisor Randy Jones about building wealth, how to make your money work for you versus the other way around, and more.
I’m with Mr. Randy Jones coming up as our guest. He is a wealth generation expert. He is living the life that everybody would like to live. He has got a good deal going for everybody. What I want you to do is pay attention to some of the concepts that we are talking about because a lot of times, we all make money. What we do not look at is what do we do with the money? We are all thinking, “Let’s get rich,” versus thinking, “How do I create wealth?” The difference between the two is wealth has discretionary time built in.
Discretionary time, meaning, “I want to take five days off and go sit by the ocean, the lake or out in the woods,” or whatever you want to do. You do not have to worry about it because you can come back and things are moving along. I’m not talking about recurring revenue. I’m talking about the ability of choice. That is what this show is all about, this particular episode.
We talk a lot about how to sell to CEOs and how to get into the top 1% of sales globally but what do you do with the money once you have it that you can leverage through the process? Pay attention to a lot of the concepts we are talking about around not the application of what to do but the mindset of what you need to have. Without further ado, let’s go to the interview.
Randy, welcome to the show. Thanks for being here.
Thanks for having me here.
I’m excited to have this conversation with you because we focus mostly on CEO sales strategies on how do you get the top 1% and be in the top 1% of closers, not only individuals but businesses so we deal with a lot of business owners and how to sell to CEOs of large companies and things of that nature. One of the things that I keep coming across over and over again especially with privately held companies is a lot of companies have been in business for a long time but they have no exit strategy.
You are a wealth generation specialist or an expert. I was excited to have you on the show because I was like, “Let’s talk about exiting companies.” My feeling is a lot of companies build. They make a living, they get to a place where it is comfortable and some are more than comfortable. The challenge is, several years later, they are still stuck in that same process because they have not looked at the investing components of how to create that recurring residual after they exit.
If there are things like old doc Potter or accountants, they have a base of clients and they make a healthy living, when they try to go sell that company, they do not get a high multiple on there and sometimes, they get a single value or even less. They are back into the place where they have got to work over and over again into their twilight years if they have to.
What I wanted to talk about in this episode and I thought it would be valuable for the audience since you are an expert in it is how does one create wealth outside of the business world? I know we have got to take earned income and move it into recurring income. Let’s start with how does one creates wealth outside of the business so that they can get a leveraged and free life?
I truly believe that the business owner is a cure for the economy. They have knowingly or unknowingly decided to be more than a provider for their families. They are now the provider for other people’s families and their employees. For taking on that type of risk, they need a special type of support. I look at how the companies are structured. They do not come to me and say, “I want financial advice, Randy. I want to hire more people. I want the right people in the right seats. I want to expand my company. I want to buy new equipment or I want to put more money back in my pocket.”
When I look at their companies and see how they are structured, they often have multiple dollars doing one job versus $1 doing multiple jobs. The challenge with the business owner is that they get advice from a lot of people telling them what they should do. The business owner, when I talked to them, I said, “Let’s talk about planning or your retirement plan.” They say, “My business is my retirement plan. I’m going to sell it one day.” I said, “To who?” They pause. I said, “Who are your top three companies that want to buy you? Why should they buy you?” It is like selling your house, “We have got an extra 13 feet on the back of our backyard. That is why we are worth an extra $100 million.”
When I sit down with and have a conversation with business owners about, “What is going to be your exit strategy?” I often like to refer to it your success shouldn’t plan. Business owners started a company one day because there was a problem that they wanted to solve. In their 9:00 to 5:00, they thought, “I can do this better than where I am. I want to have this impact, not just for people in the world but also for my family.”
When we drill down to it, I say, “Have we had a conversation?” Business owners are busy driving. They won’t even stop and get gas. They run their companies all the way to the top. At some point, I say, “What is going to be the plan?” “I’m going to sell my company. I do not know who I’m going to sell it to.” They wait too long to start having the conversation. That is something that needs to start sooner than later.
I had a friend who exited the business. He was in it for several years. He got a high multiple for his business and he had a recurring revenue company with massive clients. That is one case. If you take the majority of businesses, they have no idea how to exit. If they can’t, many people throw money into a 401(k) but when they get to the end of that, it is like, “I can’t afford to retire at this point.”
I turned 60 in 2022. That was one mistake that I made much of my adult life. I was earning lots of money but I was not looking forward, taking that and putting it into investment money. I tell my kids all the time and they were 20 and 22 years old in 2022. I was like, “Here is where dad messed up. You see dad making high hundreds of thousands of dollars per year, millions of dollars in some years. That still can’t stop working. I have businesses and investments, I could stop in theory but I could not live the lifestyle that I’m living. I’m going to continue on.”
A lot of business owners are in that position because, like them, Randy, I did the same thing. I was busy trying to build the company, pay the bills, send the kids to college and do all the things that we generally do. I stopped doing what I was doing in my early 30s and stuff, which was building real estate portfolios and things like that.
I added it up that if I had to keep the real estate portfolio that I have now, I would have an extra $20 million to exit it out on. Let’s talk the small to medium-sized business owners. How can they set themselves up if the company does not sell because when we build a company, we should always look at it as like, we are going to hold onto it for life because we might have to? Who are you going to sell it to? Everybody wants to sell but it may not be a buyer.
In lieu of that, what should they be doing? Should we be taking a percentage of income, a percentage of sales or whatever in the company? Saying, “We are going to deal no matter what, X percent is going toward financial future investments. Even if I have only got twenty years to do this or whatever it might be, I got to be here at that certain point.” What would you advise somebody that is in the fray now and they are thinking about it but they are not doing it.
First, we have a conversation about, tell me what it is and what does life looks like after work? The business owner has been working long. They do not think about life after work. When they started, they said, “I’m going to start this business. This is what it is going to do for my life. When people tell me, “I want to start a company.” I say, “Pick any twelve hours you want. It is a part-time job.”
I have the conversation like, “What are we going to do after this?” Some people said, “I’m going to relax. I’m going to do more stuff with my kids, my grandkids or something like that.” I said, “We should have a conversation.” The number one challenge or mistake that people talk to do when they are talking to business owners is that they only talk about their business and the value of the business, where they should put money. You made suggestions, “Should I put money in my 401(k)?”
401(k) is great for employees but you can’t save enough money in a 401(k) for a business owner. They are going to need other things, deferred comps and things like that. The business owner can sell to their kids. The kids are ticked off because they are at work all the time. They are like, “I do not want to run my mom or dad’s business.”
You could sell it to a third party but they want to give you the lower dollar but you need the highest dollar or you could sell it to your employee. As a matter of fact, in 2018, they passed legislation called The Main Street Employee Act, which the government was saying that a rising tide lifts all ships. If we could sell to the same people who helped us become successful, our employees, we say, “We are all in it together.” The business owner rides off into the sunset and the employees are like, “John was good but who is here now?” That is a solution to creating a buyer when one does not exist.
The business owner, when they sit down a year out and I get this phone call, “I’m thinking about selling my business. Now I got some time to meet with you.” We have to do what we can because a $10 million business sale is only $163,000, a recurrent income. If a business owner has grown the value of the company to $10 million, they are roughly drawing off 10%, which is $1 million a year.
When you go from $1 million to $163,000, the business owner says, “I was ready to retire but I can’t take that type of pay cut because I can’t maintain my same lifestyle.” I said, “What is the alternative, dying behind your desk?” They are like, “No, do you got a suggestion?” I said, “We got different strategies whether it be trust or charitable things.”
I look at them from a personal standpoint. How much money do you need to maintain your lifestyle? Saying that I got to sell my company for $10 million, when I looked at it, I said, “You could live your lifestyle off of $6 million.” Now we might have ten buyers. It is looking at their personal life, in combination with their business life and how do they combine so that we can come up with a real plan that works.
I’m in that same position. I could stop but my income would drop significantly. It is like, “I do not want to cramp my lifestyle to that point.” Even though I could feed myself and the house has paid off, it is one of those things that you do not want to go from $1 million income down to $163,000. We could make an argument that you could still live a decent quality of life, depending on where you live on $163,000.
That might be the difference between taking your kids and grandkids on vacation or not. It might be one of those types of decisions. I would not do that and most business owners would not. It is an interesting quagmire that we all get into. We have a lot of Millennials and generations reading as well. They are younger. What would we give her advice for the kids?
If we would have a conversation with ourselves several years ago, now we sit who was several years younger, we would say, “Do not do this, do not do that.” I do not know. Life is full of lessons that make us who we are. When I talk, even with my kids, the conversation is what needs to be had. You often hear people say, “I did not grow up with the money. We did not talk about money. We had a lifestyle. I did not know what we did not have.” Families need to do, parents and business owners need to have more conversation, I do with my kids and I say, “Here is what we have.”
People think about generational wealth as a pot of money that I’m going to leave behind. The business owner says, “I spent 39 hours in a 24 hour day at work. I do not want to leave that. My kids started got to do for themselves.” I say, “There is a way to do it both ways.” I do not think that you have to sacrifice your enjoyment of retirement and neglect them at the same time. I would say, “How do we figure it out?”
Here is an example. This is specifically to your question. The goal in retirement is to be able to live off roughly 80% of your pre-retirement income in retirement. Most people want to live according to the lifestyle that they have grown accustomed to. What I teach my clients, even business owners, I say, “We are first with the business owner. I’m going to look at how you are structured whether you are an S corp, an LLC, a C corp or whatever, how you do or do not pay taxes, the benefits that you provide for yourself and your employees, we are going to recap your 10% to 20% of your gross revenue.
In the 80/20 rule, they say 20% of what you do produces 80% of what you have. Eighty percent of the people that you have been consuming and not contributing to the top 20%. The 80/20 rule when it comes to wealth or money is that if we save 20% and live off of 80%, we take the 20% and reproduce the 80% of that so that when we live during our working years on 80% and we transition, our retirement years on the 80%, we have the same lifestyle that we have grown accustomed to. I tell kids, “Save sooner.” Here is the challenge with saving. I often tell people wealth is hidden in the words that define it. If I put a $10 bill on the table and I say, “Doug, can you pick up the $5 bill?” What would you tell me?
I do not see the $5, Randy. I can see $10.
If I put a $10 bill on the table and say, “Doug only spend $5 of it because you do it.” That is the problem with savings. Savings has you looked for something that you can not see why you ignore what is in front of your face. I would tell younger people, “Less learn how we are going to spend 80% of what we make.” When they offer you a job and say, “I’m going to pay you $100,000.” You only make $80,000.
If you think that way, when I say, “Let’s save 20%.” It is not like you are missing anything. When you are negotiating your jobs or starting a company, you think, “We made $1 million in revenue.” No, we made $800,000 in revenue. We take our taxes and everything out of that $800,000 because that $200,000 is for the date that we say we want to exit out of here. Think about this. If we can live to age 100 and we were retiring at 60, you can be living longer without a paycheck than you do with one now. What are we going to do now that allows us to live the life that we have been working so hard to enjoy?
We are talking with Randy Jones. You can find him at www.RealRandyJones.com. Randy is there any other contact information that you want to put out there?
You could call me directly. It is (703) 919-6258. I often tell people this. My goal is not to make you a client. It is to tell you the truth. If you want somebody who will always tell you the truth, you might be able to become a client. I think a lot of people are misleading people. Years ago, I was a combat medic in the Army and a nurse in the VA hospital.
When we were doing our nursing rounds, my instructor said to the students, “Medicine is not designed to hear you. It is designed to sustain you.” I thought that was crazy. I was like, “What are we doing in this hospital?” A lot of the information here that we get on the internet and from different places about finance is not designed to create financial freedom but financial maintenance. It is enough to keep you going. I managed money but I often tell people, “If everybody in Wall Street could tell you the best thing to do with your money, why would they need your money?”
They need you to be a part of the system so that it exists. Wealth, I tell people is hidden in the words that define it because the only difference between wealthy people and everyday people is not their money. It is the way that they think about their money. When I talk to business owners, “We are going to have to change the way that we have been thinking and that is hard.” It is not complicated but hard.
I wrote down mindset about several minutes ago. What does it take to think that way? We are not taught this in grade school or college. We learned this in the streets of life in business a lot of times. You can look at it and go, “There is an opportunity for me to leverage.” We are not taught leveraging. We are taught to get a good job, get good grades, go to school, do all that stuff. What is the mindset that somebody has to have whether they are young or older or whatever? I love what you said, “Financial freedom versus financial maintenance.”
When I have a conversation whether it be an individual or a business owner, I got to reset your mind. We have to a paradigm shift in the way that we think. Most advisors will come to you and they talk about your money. They will say, “Give me $100,000 and let me show you this strategy. You are short on retirement. Give me $100,000 and I’m going to turn it into a bazillion.” I do not meet people who want to give up $100,000.
The business owner is like, “I do not want to put $100,000 in the market. I get a better return betting on me. That is why I keep putting it back into the company.” I say, “We have other assets.” When we are having this conversation, the mindset or the shift in your thinking is talking about the other assets in our life. We have our physical assets, our health and our wellbeing, our ability to take care of ourselves and our family.
They say most people give up their health to gain wealth to, later on, give up their wealth to try to reclaim their health. We have our intellectual assets. These are the things that we learn, we teach, memories and experiences that we have. We have our ethical assets. I believe in the system, our moral compass, how we make decisions and, more importantly, why we make those decisions. We have our material assets.
When I had this conversation with the client, I asked them all the same question, “If you had a choice and you could only keep three and give up one, which one would you give up?” I say, “Would you give up your health?” They say, “No.” I said, “Would you give up your mind?” “No.” “Would you give up your belief?” “No.” “Would you give up your money?” They go, “No.” You got to give up one.
I said, “Let me help you. Which one could you get back easier?” They go, “The money.” I said, “Money has come and gone in your life.” “I have won and lost many times. That is why I’m so graded on who I am.” I said, “How about we align your money to grow the important things in your life?” Saving and growing money is not exciting. There are more people chasing the rich versus pursuing wealth. There’s a difference. Rich is sexy, exciting, Bitcoin, crypto so-and-so. Wealth is a system, “I’m saving.” I say, “We are not saving for tomorrow. We are going to be living for now at the same time.
Having a conversation about something bigger than their money and refocusing them on why you are living because most people say they want to live life but they are spending 95% of their time focused on their money. When we realign a person thinking about the most important things in their lives, there is nobody talking about the money on their deathbed.
They talk about the experiences that they had. I’m able to change and say, “Now that you are thinking about the right thing is the reason why you started your company. Now let’s talk about how we start to align your money, close the gaps in your retirement, find the right value in your company so that we can grow the important assets in your life.”
A friend of mine, Alan Weiss, I asked him that question one day because he is in his late 70s and he is there. He does not have to do anything. I said, “What is the difference?” He said, “Wealth is measured in discretionary time.” The more time we have to do whatever we want to do, the more wealthy we are. He said, “For some people, that is $80,000 a year. For other people, it is $20 million. Everybody always got a bigger boat.” I love that and it is right in alignment with what you are saying. We are talking with Randy Jones, find him at RealRandyJones.com and Randy’s number is (703) 919-6258. Give him a call there.
Randy, I appreciate you being here. I have one question I would love to wrap up on because I know you run into that. I talk to entrepreneurs every single day of my life. They are always saying the same thing, “I’m never going to retire. You are going to find me in this chair and that is going to be the end.” The reality is probably not the case for most of these people. What do you tell people who have that conviction of, “I’m going to work until the day I’m dead.”
If you like it, I love it. I believe that you are going to do exactly what you said you are going to do. Let’s put some real definition around that. Most people are working because they have to work. The business owner and the entrepreneur grow to a point where their goal of retirement or their view of retirement is not stopping work but they go from half to work to want to work.
I come to work because I love to work. Not that I need to work. You retire at 60 and by 65, you are dead because you were sitting at home on your porch versus on a plane, sipping lemonade and you were drinking lemonade in your rocking chair. They were like The Walton. I’m dating myself but you remember this. I tell people, “If I can help you transition from have to work to want to work, I do not care how long you work. I truly believe retirement is not a destination. It is a jumping-off point.”
If we go to school, we get an education to get an A. To get an A in elementary school to go to middle school. You get an A in middle school to go to high school. A in high school to go to college, A in college to get a job and we are getting C and B in jobs doing our work in life. They are like, “You have been here long enough. We are going to push you out until retirement. We need to start getting As and Bs in our working life.” Retirement is the opportunity to take the years of experience and start doing it everywhere with everybody. Not because we have to but because we want to. I help my clients transition from have to work to want to work. I say, “Work as long as you want.”
I do not think people look at their life as grading it, like what they did in school. Is your life an A, B, C or D? Would you give yourself an F and redline it as the teachers use now I’m dating myself, as they used to do years ago. I challenge everybody to look at it that way.
I tell people, “Do not be so hard on yourself.” Sometimes people say, “I should have done this years ago.” I said, “You did what you thought you were supposed to do when you did it. The only person you are in competition with on a daily basis is the person you see in the mirror.” Stop beating yourself up because you are making it harder for you to say, “From this point, moving forward, I’m going to do something different.”
I always tell people, “I should have asked Karen Fitzgerald to the dance when I was ten years old.” I did, even though I found out later, she wanted a go with me. I still never asked her. My brother did and he went with her, that worked out. We can’t look back, beat ourselves up, put us on some guilt shame and all those things that we tend to do as human beings.
No matter what age a person’s at, 60 or 70, whatever, you still have a longevity period of time and you could still turn your life into the direction you want than those that are in their 20s. I was having a conversation with a 24-year-old. We were having this conversation about, “Everything is expensive. My mother made it on $9 an hour. I can’t do that anymore.” They get this thought that it is like, “I have got to do it all now.” At our stage in life, we looked at it and went, “No kid, you do not. You got a long way to go.” They look at it as, “Everything is right now.”
All the advertisement out there says, “Life is short.” I keep reminding my clients, “Life is long. Let’s not try to cram life into the next 2 or 3 years. I do not want you to burn out and then we got to spend 4 or 5 years trying to rebuild you. How about we talk about the things that are important? If you have a good advisor, they are going to talk about more than your money.” They are going to say, “Here is how we help you become the best you, you can be and how we align your money with that goal.” We begin with the end in mind and know that if we keep the main thing, all of the things that we want to happen the way that they are supposed to.
For those of you who don’t know who The Waltons is, I’m going to challenge you with this one statement, “Goodnight, Johnny boy.” I can imagine people especially younger, “What is The Walton?” Randy, I want to thank you for being here. I personally want to thank you from one veteran to another for your service as a combat medic and serving the VA.
For all of you reading, veterans still need your help. If you can volunteer in the VA or do whatever you do to help out the VA, those veterans who have come back or served a long time, please do so. RealRandyJones.com, this is the real Randy Jones speaking to you now. Randy, thanks for being here. I appreciate it. This was a great interview.
I love being here. Thanks for inviting me.
I love the fact of looking at the 80/20 ratio because I can say from my own personal life, I never looked at it that way. If you take 80% and you can make your business work on 80% but you are now taking your 20% and you are moving it to vehicles that create leverage for you, what happens over time? You get the leverage and the freedom.
Wealth is measured in discretionary time. From this show some of us understand, I can say for a fact, what it is like to have 7 figures to 8 figures, those types of things in the bank. The reality is it is great. You get a security feeling but the reality comes down to, are you free? If you have $3 million in the bank, are you free if you stop working now? Even if you could get 4% interest without risk to $120,000 a year. It is not bad. You could pay some bills but are you free?
Freedom is what is wealth and people have found what happens in entrepreneurial life. Many times we are trying to focus on, “We got to grow our company from where it is now. We got to get out another 15% or 20% because that is going to make us wealthy.” Not necessarily. It might make us richer. It might allow us to do some more things. It certainly allows us to arrive at our problems with more style but it does not necessarily set us up for wealth.
I can certainly help you with the part of getting rich. I can get your people into the top 1% of sales globally. If they have the stuff, if they are not, we can figure that out. I can help your company optimize your sales. I can help your company grow. I have one client now that we have worked two and a half months together and the numbers came back. They have one sale. That is 9X what they normally sell. They are up 32% year over year from the previous year to now. Their average order sizes were up 50% more than it was year over year. Those things I’m very skilled in and I can certainly help you.
I wanted to bring this particular show because I wanted you to understand that there is a step after this and that is why I brought Randy on. As I always say to you, if you need help on help, reach out to me. Doug@CEOSalesStrategies.com is the best email. You can call us at (603) 595-0303. My LinkedIn is @DougBrown123. I would love to hear from you. I would like to know what you would like for particular episodes. If you have not subscribed and you are reading this, please subscribe. The more you subscribe, the better the rankings get for me.
If you would not mind, leave a glowing review. That always helps as well for other people going, “Is this the real deal or not?” I appreciate all of you who reached out to me and said, “I love this component of it.” To your success, go out, sell something, sell a lot of stuff, make some money and think about wealth versus getting rich. Until next time.
Randy Jones is a Wealth Management Advisor with over 26 years in the Finance Services industry. He believes that “we are here for the benefit of others.” He specializes in seeing patterns in money that tell the truth about a person’s habits then makes recommendations that help his clients live their best lives. Randy lives his mission daily and serves his clients based on his breadth of experience in many different aspects of the Finance industry.