[00:00:00] Speaker A: Sa.
Welcome to power of CEOs, the truth behind the business. I'm Jen Goade, your fearless host, investor, entrepreneur, and business strategist. Why are we here? Because iron sharpens iron. And when we bring industry leaders, experts, people who have been there and done that, to share what's working in business and even some of what's not, we're all able to learn and grow. As a result, our businesses grow and the ripple effect impacts not only ourselves and our teams and their family, but but also our communities and our world. You are in for a treat today because we're going to dive into one of the most misunderstood areas for entrepreneurs, the difference between income and actual wealth. Our guest today, Anthony Englert, has helped hundreds of founders, from 1 million to 100 million plus, design the wealth they envision.
After 15 years at Goldman Sachs, he launched Alfa Advisory to fill the gap he saw over and over again.
We as founders are really good at building business, but we're not so good about building wealth. So with his background shaped by his family's business and Wall street expertise, Anthony is teaching that wealth isn't something you stumble into, it's something that you intentionally design.
So I'm really excited to introduce you today to Anthony. Welcome to the show.
[00:01:44] Speaker B: Thanks so much, Jen. I'm so happy to be here, man.
[00:01:46] Speaker A: I know we have been a long time trying to get you on.
[00:01:49] Speaker B: Well, we're here today and we're gonna drop some knowledge bombs. I can't wait.
[00:01:53] Speaker A: All right, well, let's just dive right in because this topic really hits home to pretty much every founders. We believe that increasing revenue is automatically going to create wealth. But the challenge is sometimes we unintentionally build businesses that are dependent upon us. We reinvest everything we have into our business and into our operations and we confuse growth with that long term financial security.
So let's dive into that.
How do we not equate success with revenue, but instead, what mindset keeps us trapped in that income mode and shifts us towards generating wealth?
[00:02:31] Speaker B: Yeah, it's a great question. It's the most important mindset shift that an entrepreneur can have is the thinking about the difference between income and wealth. So when I hear income, I hear taxes, and when I hear wealth, I hear wealth creation, I hear strategic planning, I hear a focus on the future.
So often when we get focused on revenue, all that we are doing is trying to find a way to grow that number, but it doesn't actually matter because that's not the goal. The goal, right, is profit. And so we have to transition from a focus on income to a focus on profits and wealth. Let me give you an example. How many of your audience have thought about taking $100,000 out of their business as a hard earned distribution? They absolutely deserved it. But every time you take that distribution out, you're taking a million dollars out of the value of your business. Right? Because that's a million dollars that if invested strategically, could go back in and increase the enterprise value. And the other problem with distributions and income is that it's the least tax efficient. When you sell a business, you have a capital gain, which is a worst case scenario, 23.5%. But when you're taking income, you're at 37%. So the entire system is designed for equity, for growth, for value. It's not designed for income. And so that's the most important first shift that an entrepreneur has to make in their thinking.
You know, this is one of the things that I learned firsthand during my time at Goldman Sachs is that, that, that idea, that concept of we need to focus on revenue, excuse me, on profit, rather than just revenue. And it's just a total different shift in mindset.
[00:04:03] Speaker A: It really is. And let's be real. And as an investor, this is the same kind of mindset that you have to have. You have to look at what is the cash flow, because I'm not gonna.
So what if you've got hundreds of millions of dollars if you're not breaking even or making a solid 10, 20% profit? At the end of the day, I don't have any security.
[00:04:20] Speaker B: So there's two cliches you always hear right, Cash is king, and that more marketing solves every problem. And those are true if you're a six figure business or a really low seven figure business. Because cash is like air, right? We have to have it to breathe. But I don't know about you. There's a lot more I want to get out of life than just breathing. Right?
[00:04:38] Speaker A: That's right.
[00:04:38] Speaker B: So cash flow is absolutely important. But then we have to translate that to ebitda, to profit and then into value. And that's how you create wealth.
[00:04:46] Speaker A: Absolutely. Oh, you are preaching to the choir. I know everybody's loving this. Okay, so recently you wrote that business is built around the founder. It's not actually an asset, it's a liability waiting to happen. What are the red flags that investors are looking for when evaluating a founder run company?
[00:05:03] Speaker B: Independence is first and foremost, right? Because they don't want to buy a job. And unfortunately a lot of Founders who are treating their business as a source of income.
Those founders are, you know, they're so focused on the income that it just, it doesn't work. Right. And so the most important shift that they can make is to get back to that long term growth, that long term revenue focus, rather than being hyper focused on the income. And so to do that, you have to invest in your team. So you have to first and foremost replace yourself. That's the very first thing that the investors are going to look for, is are you the biggest salesperson, Are you the most connected to all of the distributor, the distributors, the suppliers, the major clients? Is it your buddy that you golf with or, you know, that you went to high school with? Those are all red flags because that's not a transferable business. I can't, as a buyer, I can't take that and run with it.
[00:06:00] Speaker A: Because you don't own the relationships.
[00:06:01] Speaker B: Exactly. Right?
[00:06:02] Speaker A: Yeah, yeah. And so, like, it's really funny. You're preaching to the choir here.
And I'm loving this. This is why I wanted you on for so long. That's why those of us who are in consulting have a job, because it's so hard for the founder to let go.
So let's talk about that one shift because you've worked with a ton of founders and you actually helped them shift from thinking about income and generating income to thinking about long term wealth. But how do you shift that mindset to allow them to let go and pour into their team and hire people smarter than them to do the job and exit their role when they're in mind going, I'm gonna die doing this. This is what I do. This is my, it's an identity thing.
[00:06:43] Speaker B: It 100% is. And that's why the most important part of your exit planning is what are you gonna do with your next chapter? Because if you don't have a next step, if you don't have a bigger mission, vision, purpose, identity, then yeah, you're gonna do things to keep that business in your control and to blow up deals. I like to say that entrepreneurs, a synonym for entrepreneur, is a control freak. And I say that lovingly because that's a lot of times what it takes to start a successful business. But this is a classic case of what got you here won't get you there. And so I think you hear the advice all the time to work not just in your business, but on your business.
And I think too many entrepreneurs think that that means, well, I take Friday afternoon. A strategic plan for the future, right what it really means is in your mind, bifurcating the roles that you're doing. And so an easy mental accounting way to do that is don't think about the business as your source of income. Split into two roles. Whatever you show up and as an employee, do for that business, general manager, CEO, head of sales, whatever it might be, pay yourself a competitive salary for that and then have actual owner distributions. And it's amazing, once you split that out, you stop saying I make $500,000 a year as a business owner. You start saying I make $100,000 as head of sales and 400,000 as a business owner. Where should my time and energy be going? And then you're motivated to hire yourself out, replace yourself, no longer have a, or to no longer be the head of sales. And that puts you on that path of creating real value in your business.
[00:08:06] Speaker A: That's fantastic. So we're gonna shift a little bit now.
Say I'm a 35 year old founder, 100% of everything that I have from a net worth standpoint is invested and reinvested into my business.
I'm a founder, I've got a growing business.
What other things outside of the business? When we think about diversification, so let's just say I've hit it and now I'm like cash flowing. A million dollars a year, whatever that number might be for people.
How do I think about diversification? What asset classes should I think about? What protections should I be thinking about? What structure should I be thinking about that maybe I'm not getting from my normal everyday advisory?
[00:08:44] Speaker B: Yeah. So when we, when we think about wealth, we talk about it as eight dimensions, right? And those eight dimensions, nobody has to remember this, but just really quickly for context, it's your mindset, your cash flow, your tax plan, your exit strategy, your insurance plan, your retirement accounts and investments, your estate planning and giving and, and your capital, your debt, how that comes together. And the unfortunate thing about the financial services industry is everybody operates in silos. And it leaves you as the founder trying to figure out, well, this guy said go left, this person said go right, what do I do? And so I think that's the first and foremost is to recognize the system is not set up to be simple and easy. It's set up to be complex.
And one of the things that we like to help people do is to sit in the middle of all that and create clarity from all that noise. But what that starts with is a clear vision of what you want to do. So back to your question of the 35 year old making a million dollars a year. Well, what do you want to do? If that business is going to be yours for forever, then there's ways to extract income in the most tax efficient manner. If you think, you know, I could move on from this, then perhaps we need to position it for a sale. Those are two entirely different paths. Right. And so beginning with the end in mind is such an important principle here. Because if we're just focused on, well, what's the best strategy? There is no one best strategy.
[00:09:58] Speaker A: That's right.
[00:09:59] Speaker B: I compare it to going to Home Depot, right? Say you went to Home Depot and you said, I need a paintbrush because I'm going to paint a room. And they said, check out these shovels over here. I don't need a shovel. No, no, no. But this one has a foam handle, right? Like it's better than the other shovel. That's irrelevant because you don't need a shovel. And that's how financial services works. If you go in there looking for a paintbrush and someone's trying to sell you a shovel, it's not going to do the job that you need it to do.
[00:10:21] Speaker A: That's absolutely right after the break. Let's, and let's flip that to some of us who are a little bit on the older side of that spectrum. But I just want to highlight to those of you at home, you need to understand where you're going in life. No matter what your age is, no matter what your business level is, no matter where you are. If you are an entrepreneur and everything is wrapped up in your business, start thinking about where do you want to be and let's create the life that you want and that includes the financial plan that you want as well. Coming up next, we're going to go into what are the exact steps that founders need to take before they even think about selling. So stay with us. You're not going to want to miss this.
Foreign.
Welcome back to power CEOs. The truth behind the business. Want more of what you're watching? Stay connected to power CEOs and every now media TV. Favorite live or on demand, anytime, anywhere. Download the free Now Media TV app on Roku or iOS and unlock non stop bilingual programming in English and Spanish on the move. You can actually catch our podcast version right from the website www.nowmedia.tv. from business and news to lifestyle, culture and more, we are here streaming around the clock. Ready when you are. We're going to dive right back into the topic of conversation because we're here with Anthony Englert. And before the break, we were talking about, okay, if I'm a younger founder, I'm all of a sudden having success, my business is growing and I'm, and I need to think about diversification. But Anthony has promised talk to those of us who are on the other side of the spectrum. We're grandpa, I'm a grandparents, right? And so no, maybe, and this is not, this is not necessarily me, but there's a lot of founders that are coming to me because they just want to exit their business.
And it's because they're 55 to 65 years old, maybe a little bit older, and they're like, okay, I'm ready to retire. But they haven't planned. You haven't planned for your business appropriately. You just kind of wake up one day and you're burned out and you decide you want to exit. So that's usually the case.
So talk to me about how that looks different than the 35 year old who has, you know, a pretty healthy growing business.
[00:12:47] Speaker B: So that's the sad reality, right, is most business owners are pushed into a sale because of death, divorce, retirement, there's some trigger. And what that does is it gives us no time to plan. So the best exits are planned between three to five years ahead of time. And so please, if you're considering this at all, if it's crossed your mind, we need to have a conversation so we can start that plan.
Because the difference between tax planning and tax evasion is just time.
So if we have that time, if we have that two to three year own way, then you have all your options, you have all your choices. When you come to us and say at the last minute, I got to sell this business because we have so few options left on the table. And that's just the unfortunate reality.
[00:13:26] Speaker A: So let me ask you, is there in your mind a time maybe we're thinking about exit and we're like, oh, I'm gonna do this one. I'm exit when I'm 60 or whatever, and I may be 45 or, you know, whatever that may be. And I'm like, okay, that's a then thing in the feedback future.
[00:13:40] Speaker B: Yes.
[00:13:40] Speaker A: At what point in time does it shift? Even if we're not ready to think about this, at what point in time is it not healthy for us financially to have all of our eggs in our business bank basket?
[00:13:51] Speaker B: Yeah, I would say as soon as you hit a million dollars in revenue, you should start thinking about your exit plan. And the reason for that. Even if your plan is to never, ever sail the business is that having a plan is what gives you the options. Right? And so a well run business, a well structured business, a independent business that doesn't require you as the owner, that business has the greatest value, but it also has the greatest income. So that is kind of the, you get the best of both worlds because you have a business that runs with or without you. And so you show up and you do whatever. Your 4% is your zone of genius, your unique ability. If you want to keep contributing to that, to the business, you have the option to do that as long as you want. But anything that falls outside of that, you have delegated, you've reprogrammed, you have invested in teams and people and processes. You, you have consistent client experience so that you get consistent results for your clients and they're happy. And that leads to referrals, you've built in. The financial systems of cash conversion cycles are optimized and your balance of debt and equity is optimized. If you've done all of this now, you're in the driver's seat and that gives you the options as well as helps us pick a strategy for which strategies we use. Right. So just back to that simple example of I'm making all this income, what should I do? Well, if you're going to keep the business and continue to pull income out of it, then maybe it needs to stay in S corp or maybe it needs to be, we need to talk about a dividend recapitalization, which specific thing. But it's how you can extract money in a tax advantage way out of the business if your intention is to sell. We're not going to talk about either one of those things. We're going to talk about why aren't you a C corp and how are we going to get you ready through the lens of the buyer. Right. So this is another important piece is private equity buyers or what we call a financial buyer. They're just all about the numbers and they're going to be the most aggressive on price. A strategic buyer is somebody who sees a bigger vision, purpose behind your mission. Maybe it's a competitor that wants to fold you in or something like that. They tend to pay a higher premium. And then maybe you say, I don't like those institutional, the big money, right. I want to take care of my employees. So maybe you're going to sell your employees all of those different paths have different tax ramifications. And so that's why I say it's never too early to plan you know, people don't like to hear that, but it's never too early to plan because when we set the plan, that's what gives you options.
And for most of the entrepreneurs I've worked with, their biggest value is freedom. And so, you know, one of my beliefs is the more options you have, the more freedom you can create.
[00:16:11] Speaker A: That's absolutely right. And it's really funny. Like, whenever people come to me and they're like, I need to exit my business the first thing. Of course, their, their books are a mess. They don't have like their. All the SDEs and everything. We need to talk. We have to have the EBITDA conversation. And we have that.
Exactly, exactly. So we have to have the conversation. So, like, if you're thinking about this and you've watched the show a lot, you should know what these means. But it's really important to be financially ready in your business, but also to be structured for exit. And so everything that Anthony just said is so incredibly important.
Even if you don't want to exit your business today, your action step is to write down all of the things that you're doing that make your business run and then ask yourself, who do I need to hire and what do I need to pay those people in order for my business to run without me? Because the reality is, is it might not be our choice to exit our business. We don't know what the future holds. Something might happen to us where all of a sudden, if we're not there, what's going to happen? We have a responsibility to our team, to our clients, and to our greater community. So it's really important, and I like to say, begin with the exit in mind.
Anthony's advice. If you're at a million in revenue, it's time to start thinking about exit readiness.
And if you're going to buy a business, buy with your exit in mind. Because I know a lot of you are looking at buying your first or your next business. If you don't buy with an exit in mind, then it doesn't. It sort of sets you up for less optimal results in many cases. If you're trying to do it on the, on the other side of this, you don't have the best plan going in and the most options. So it's really, really important. No matter who you are, whatever stage of business you are, even if you're just thinking about starting a business, what is that end goal? Have that in mind, and let's make sure that you're structured appropriately. So talk to me, Anthony. About what is the. Maybe the governance, the compliance, the structural. Like what in your experience most often kills valuation?
[00:18:05] Speaker B: I think most often it's a reliance on the founder.
And then second, it's the founder's mindset where they say they want to exit, but they don't actually. So I'd like to share two frameworks that I think will help people kind of think through this. So the first one we talk about is lifestyle businesses versus legacy businesses. And we compare a lifestyle business to a car, right? So it's easy to operate by one person, easy to drive, simple, relatively efficient, low maintenance, all those great things. And we compare a legacy business, which by the way, doesn't mean you're selling for hundreds of millions of dollars, doesn't mean an ipo. It just means a business bigger than you that's going to outlast you. That's our definition of a legacy business. And so we compare those legacy businesses to airplanes. And airplanes are inherently more complicated than cars. They are very clumsy on the ground. They're super inefficient down here, right. But once we get up to cruising altitude, they are more efficient than a Toyota Prius, right? So they are the right tool for the, for the right job for the long term. And so that's how we think about a legacy business versus a lifestyle business. So ask yourself, first and foremost, am I driving a car or am I building an airplane? Because that's going to influence the types of investments that you make in people and systems and process and your exit strategies, all those things. The next part of this frame is if you do decide I'm a legacy business, this is going to outlast me, it's going to be bigger than me. Then we need to think about your business as a flight plan because it's an airplane, right? And so as we were talking about earlier, the Runway is the 0 to 1 million. And in there you do just need to get more revenue and more customers and more traction.
Product, market, fit, all those things. Once you get past that, most often people jump right into scaling and that's a mistake. Actually.
The next phase we call actually is takeoff. And you got to get all the way up to altitude. And that's the phase in which you're really getting the systems and the structure and the team in place to make sure that you know how this business operates and how to fine tune it once you get up to altitude. And it's different for every business and every industry, but generally we'd say $5 million of revenue and is when you hit altitude now you can really start scaling, right? You can copy and paste this model that you've perfected. And that's the first half of being at altitude. The second half is what we call surge. And there you're doing the financial engineering bolt ons acquisitions, really bolstering this business to make it not just a really amazing one trick pony, but a whole staple full of ideas and revenue and channels. And then you're ready to start considering an exit and ready to land. Because if you're not going to sell a business for 25 million, which would be 5 million of profit times a five times multiple, it's really not worth your time. It probably does make more sense to stay as a lifestyle business, to stay as a car, to keep it simple and easy and just pull cash out.
You just have to have economies of scale to make that exit work.
[00:20:42] Speaker A: That's exactly right. And for those of us who have multiple businesses, sometimes we have a lifestyle business in one area and we have legacy businesses and the other.
So if you're listening this and you have multiple businesses, I mean that's me. I'm. My coaching practice is it's a lifestyle business because I will coach until the day I die. But I still have teams in place and systems in place in case something were to happen to me. So it's important in that as well as when I'm looking at, you know, the other businesses that I partner in, the AI companies that I have, whatever it is that is a legacy business that I'm planning to exit. So it's, it doesn't matter where you're starting or where you are today.
It is important that you get on the roadmap if you're, if you're in your lifestyle or get on your flight plan, as Anthony said.
[00:21:25] Speaker B: So can I say one more thing on that, Jen?
[00:21:27] Speaker A: Yes.
[00:21:27] Speaker B: There's no judgment here, right. So I don't want anybody to think, oh, I'm a lifestyle business, oh, I should be up airplane or legacy business or I guess I'm a legacy business, but I don't want that. Right. It's all about aligning what you want with what the tools and strategies and the plan plan is to get that positive outcome. So no judgment here.
[00:21:46] Speaker A: I totally agree with you. And you know, for some of us, like it depends, it's what's aligned with our passion, our purpose or how we want to spend our time. But I want to highlight something that Anthony said earlier. Before you even think about your roadmap or your or your flight plan, really have an understanding of where you're going because what you want and where you're going will dictate if you have the business, if you have a business. Because some businesses can only be a lifestyle business. If you have a flight plan goal in mind and you're in a lifestyle business, there may be some hard decisions that have to occur because some industries just don't support. There's some, there's just some companies that will never get to that level. And so understanding where you're going also helps you look objectively at where you are today and what you're doing today and ask is what I'm doing today ever going to be able to get me where I want to be? To able so you can make those informed decisions. And it's really important to reach out to people such as Anthony and myself so that you can make those decisions with outside counsel that has been there, has done that and can lead you through the process. How can people reach out to you?
[00:22:48] Speaker B: They can reach me on my
[email protected]. they can also reach me on LinkedIn. AnthonyEnglert. It's a pretty unique spelling so it should be easy to find.
And one other bonus that we wanted to give you for the audience is if you go to alphaadvisory.com you'll find a quiz there, 20 question quiz that will help you figure out where you are on that flight plan, on that path. And there's no, it's not a hard sell. You know, you're not going to be spammed by email from our team. It's really a tool designed to help entrepreneurs get a handle on where they stand today so they can make the best decisions about their future.
[00:23:27] Speaker A: That's awesome. Thank you so much for that. We do have to take a brief break but we're going to step into the future and legacy planning.
Up next, stick around.
The holidays bring joy and pressure. Long to do lists, family dynamics, financial stress, travel, kids home from school, end of year business deadlines and somehow we're expected to smile and move through it all. But here's the truth. If your nervous system isn't trained, stress is going to hijack your performance at work, in your business, at home, in your body.
So how do you stay grounded when that chaos kicks in?
I'm Jen Gode with vital signs and today I'm here to introduce you to Rachel Vickery. She is amazing. Former elite gymnast turned performance coach to top tier athletes, elite military units and high stakes leaders. She helps people to train their nervous system so when pressure hits, they don't crumble, they execute and can continue on. I'm super excited to have you on here today. Welcome to the show, Rachel.
[00:25:23] Speaker C: Thank you, Jen. It's such a pleasure to be here.
[00:25:26] Speaker A: So you work with the toughest situations, you help leaders through crisis.
But now we're talking about this on a personal level. Stress and the holiday season, Christmas, whatever you celebrate, New Year's, all of this time off from school, kids around, we're supposed to love this time of year. It's supposed to be nothing but excitement.
But it leaves us feeling burned out, overwhelmed, reactive in a lot of cases.
What can we do or why does this happen and how can we prevent it proactively?
[00:26:03] Speaker C: Yeah, Jen, it's such a funny time of year, isn't it? For all of the reasons that you just said. I think, I mean, if you think about what we do in our normal life versus what we do over the Christmas, you know, the holiday season, you know, there's more alcohol, more sugar, you know, we disrupt our sleep cycles, you know, you know, go to bed so much later, sleeping in the morning, you know, and then all of that pressure for, you know, shopping and entertaining and having people in your space that you might not normally have, you know. And so, you know, to your, to your point, right, our nervous system just gets overloaded and it triggers us into that fight and flight, you know, nervous system which can just become absolutely exhausting. And I think there's two ways to approach the seasons, right? You can either look at it and go, all right, I know it's going to be like that and I'm going to have that buffer out the back end for recovery effectively after the holiday season.
Or, you know, can I just front load a few strategies in the, you know, before we hit the season to know how am I going to keep myself relatively calm so that it's, you know, so I'm not just losing it at the family dinner table because I've just hit that over stimulus and it just like comes out sideways, right? And so, and I, you know, there's this, obviously when we're talking pressure, stress, there's the mental and emotional perception of stress. And I think this is where we often trip ourselves up, right, because it is holidays, there's laughter, there's love, there's joy, there is pressure. And sometimes that can hit more the mental and emotional side of it. But we've got to be aware of what's actually happening in our nervous system at the same time. And a Lot of that does tend to turn on that fight and flight nervous system. So we do become a little bit more short, we become a little bit more reactionary.
We just feel frazzled all the time. So I think there's a couple of things we can do. We can be aware of what are our triggers is alcohol, sleep deprivation, is sugar, are those things negatively impactful for us? And my advice would be moderate and choose which of those are you going to put in your system and the lead up into it.
But I think the other strategy that can be really powerful is how do I de escalate myself? How do I know that I'm getting to that point that I'm feeling like I'm about to lose it?
And how can I just do a long slow exhale, breathe out, be in my feet, have a thought that might be gratitude or opportunity or something like that that I just trigger into just to pull myself back out under control. Take that, you know, that tactical pause, so to speak, before we do the next thing.
[00:28:30] Speaker A: So you, you've hit a bunch of key topics and I want to kind of highlight it and then dive a little deeper. You talked about, you know, that we're eating all the things but we're undernourished, right. During this time, which is a physiological stressor. We're tired, we're not sleeping well, another physiological stressor. And then we're over scheduled and emotionally raw sometimes, which is the psychological stressors. So what everybody here is, is experiencing might be different but your, your tactics and your strategies really apply to all. So let's break down. If we know we're going to a holiday party and maybe we're off schedule with our, our fueling, maybe we have a really good regimented diet and exercise routine and we know it's about to be hectic. What are some strategies or some things we can plan before that can keep us at, you know, a lower level of stress entering into maybe that stressful family situation, if you will.
[00:29:29] Speaker C: Yeah. Awesome. So trying to, you know, Christmas, let's say Christmas, right. Christmas is one day, right. But somehow we let that disrupt our nutrition or our sleep for weeks. Right. And so I think as best as possible eating really well in the meals leading up into that, that, you know, so a great breakfast if you're a breakfast eater, you know, whatever your other meals are trying to front load some sleep, you know, so having some really good sleeps in the, in the days leading into that, you know, there is some recent research that shows although we can't kind of bank sleep we can certainly offset, if we have good sleeps before we're going to have disrupted sleep. It certainly does help us be less negatively impacted by that, by that poor sleep. You know, perhaps if you just, you know, don't drink as much alcohol if, you know, if you're just at home, you know, with your partner or whatever and you would like normally have a couple of glasses of wine or whatever in the nights, just be alcohol free during the week. So you're limiting the overall alcohol that's going into your system and trying as best as possible is to take some quiet, just downtime. It doesn't need to be a whole lot but you know, just taking a minute sitting with no stimulation, just breathing into your belly, you know, being calm, being whatever before you actually to enter that into that, you know, high rails or whatever it is, the meeting or you know, meeting with family or, you know, whatever. Right. Is so you've got buffer in the system is basically the phrase I like to use, you know, so that we can absorb between whatever our threshold is and wherever our arousal state is. We've got enough buffer to absorb. Yeah, I'm going to get overstimulated, I'm going to get physiologically taxed when I step into that. And that's okay and totally normal and to be expected. But I've got enough buffer in my system to absorb for that without me crossing my threshold and tanking out the.
[00:31:18] Speaker A: Other side, you know, I think that's really fantastic. So folks at home, build a buffer fuel, get your nutrition in during the day before that holiday party when you know it's always it's going to be snacky bits that have all the sugar and all of the empty calories without any of the nutrition. Get what you can in plan for it. Now let's talk about you. You mentioned when we're escalated to just have that long grass when we're in the event and somebody sets us off, how do we take that tactical pause? You use the word tactical pause. And so for the audience, what is a tactical pause and how do we de escalate the situation within ourselves? How do we notice it? How do we know to take the pause and how to like what does what transpires so that we can continue and not create a scene or have it really throw off the rest of the day or evening?
[00:32:13] Speaker C: Yeah. So in an ideal world we've done some front loaded work. Right. So you've got an awareness of how do I know in my own self that I'm feeling escalated?
What are my warning signs. Do I feel my heart pumping in my chest? Do I feel my jaw tighten? Do I feel my breathing get a bit tight? Do I feel my shoulders clench? Like, what is my warning system that my physiology is getting escalated? A tactical pause is just taking that moment between when you feel the trigger and we're all human. We are all going to be triggered in that, in that fight and flight nervous system. And that's really normal. But the thing that's in our control is how do we react then to that, to that trigger when we feel ourselves get escalated. And that's what the tactical pause allows us to do. It's just that moment that has us go, oh, I'm feeling up.
And I'm not just going to react out of, like, habit or let it fly out sideways. I'm going to just take control of myself. And so that tactical pause being taking a long, slow exhale because our heart rate actually slows down when we are breathing out. You know, a lot of people hear the phrase take a deep breath. The challenge with that is when most people take a deep breath, they'll do this big upper chest breath, which actually turns on the fight and flight nervous system. So that's actually the opposite of what we want, right? We actually want that. Just breathe out really slow. No one needs to know that you've actually done it. You can do it, you know, quite subtly, but just a long, slow out breath, maybe one or two breaths into your belly. Actually feel your, if you're standing, really just be in your feet. Feel your feet connected to the ground. Or if you're sitting at the dinner table, just really feel your backside on the, on the chair. So you're pulling yourself into your body and out of, out of your head.
And, and even if you've got a bit of time, just even using your vision, cueing in with that as well. So just, you know, just looking up or looking behind someone or just, just basically just disconnecting from whatever that loop is of trigger reaction, trigger reaction, breathing out, slowing down. It just pulls our arousal state back under our threshold. So now our smart brain is back online. So we're not going to say something stupid that we just wish we hadn't said, you know, particularly if you've got alcohol in the mix and, you know, all of those other things as well.
[00:34:25] Speaker A: Absolutely. So I think that was pure goal. It's basically creating a moment of calm and pausing in, in the moment when you feel elevated. So for takeaways fol, I want you to think about how can I set myself up for success before I go to that event or series of events. And that looks like making sure I'm well rested, managing my diet, my exercise, whatever my routine is and getting it front loaded so that when I will be up late or I will miss some some of my nutrition later on, I've already sort of put those deposits in the nutrition bank. And then on the other side, practice the long exhale because when we exhale it brings that, that whole stress response down and allows us to have clarity of thought. And I do want to add just one more thing. There's nothing wrong with when you're in an altercation situation, especially with family gets escalated very rapidly because maybe our family doesn't practice these things. It's perfectly okay to say excuse me, I need a moment and change your physical space as well so that you can take that time to reset if you're feeling that pressure.
Rachel, this has been really amazing. Holiday is not just about logistics. It's emotional.
There's shifts that happen. There's sometimes loneliness, grief and a lot of other emotions that come up and pressure could be on. Thank you for giving us some practical advice. I know we're going to have you back again to dive deep into all of these topics of regulation. How can people reach out to you in the meantime?
[00:35:51] Speaker C: Yeah, awesome. Thanks for asking that. Jen on LinkedIn. I'm Rachel Vickery and rachelachelvickary.com is my email address.
[00:36:00] Speaker A: Thank you so much. I can't wait for our deep dive in January, but for you who are watching, stick around. We do have to take a brief break, but we will be right back after these messages.
[00:36:11] Speaker C: Thanks, Jane.
[00:36:24] Speaker A: Foreign.
Welcome Back to power CEOs the truth behind the Business. As we wrap up today's conversation, we're going to zoom out to the macro level. Risk, AI legacy, the future of wealth.
Many entrepreneurs and founders feel overwhelmed by rapid economic and technological change. But the truth is uncertainty can be your greatest strategic advantage when you prepare intentionally.
Anthony and I are going to dive in to talk about how to future proof your wealth through diversification, responsible use of AI, risk mitigation and legacy design. Because the reality is when we as founders have clarity that actually protects our generational impact and legacy. So Anthony, I really want to talk about this. How should entrepreneurs think about risk and diversification in today's very rapidly changing economic climate?
[00:37:31] Speaker B: It's a great question. I think the I go back to the Warren Buffett saying of that wealth is, or excuse me, concentration is what produces wealth and diversification is what preserves it.
So there's no greater investment than what you can do through your business. The tax structure is on your side and the ability to leverage your human capital and the human capital of others. There is no greater investment. Right. It's not unrealistic to make multiple percent or hundreds of percents multiples in your business.
That's unrealistic in any other investment. They're great investments that can make 10, 20, 30% but not anywhere near your business. So start there from there. I think once you have income that pulls you out of the rat race that is a huge freer and allows you to diversify in the ways that you think is the, is the best for your lifestyle. And so when I coach people towards an exit of any kind, we're always focused on creating what we call a freedom fund. And that freedom fund is basically a dollar amount that's going to generate the income that you need so that you aren't relying upon any of your businesses for income. For most people they'll say something like $200,000 a year and as a kind of like a base minimum. And if you just multiply that by 20, that's a good rule of thumb. That's the size of your freedom fund. So if I need 200,000 of income, I need $4 million. If I need 250,000, it's $5 million. That's a good base. That will then cover your day to day expenses and put you in a position where the business is not your source of income. Your investments are your source of income. And now you can focus on doing what you want with your businesses and growing them up over time.
[00:39:02] Speaker A: And it's, you know, it's funny because we also talk about that when, when people are looking at leaving a career because a lot of people want to think about that in basic retirement, like executive. We have a lot of executives who are very highly compensated who watch this show. And so this applies to you too. If you're an executive. Like what is your, what is that freedom number for you? It's really important, just like you said. I mean this has been the theme, folks. Get to know where you're going. If we want to get to, we're in Houston now. If we want to get to Mexico, for example, we're not going to go up to the city. You know, we need to know where we're going to set that course so that we can actually plot our path.
So we are in a rapidly evolving tech climate. There's a lot of financial tools that are Constantly being thrown at us and vehicles and whatnot. What are the tools that deserve our attention and where should we, where are the hidden risks to some of the tools that have come out, especially in the AI?
[00:39:55] Speaker B: Yeah. So last year I was approached to be on the board of a company that is developing AI based trading models. And their mission is to democratize the Wall street kind of trading environment. But having worked on Wall Street, I can tell you that things go according to the model 99% of the time and 1% of the time they go off the rails. And we have what we call black swan events or tail events. And so I actually declined the board invitation because the model was 99% effective and I believe that it was actually going to do more harm than good. So I think the most, the thing I want to leave you with when it comes to AI is that it's not a silver bullet. I think too many people hold it out as like, oh well, this was just going to change everything. It will change everything in the way that cell phones changed everything. The personal computer changed everything. It is a transformational technology. Don't mishear me that I'm anti AI, but what I'm anti is that every single business business is going to be totally changed 180 degrees by AI. And my perfect example for this is if you look at the S&P 500, the second to last company in the S&P 500 is CarMax.
I would love to hear what is it that CarMax can do with AI to change its business model. It can improve maybe the processing speed with which it does your loan. It can maybe have a chatbot that tells you at 3am here's the perfect car for you rather than me having to put on filters. But in the grand scheme of things, I don't see how AI is going to take CarMax and multiply that business five, 10 times. Right. There are other businesses where it will. And so I just, I think it's important to recognize that it is not universally applicable and that some businesses are going to benefit more. That doesn't mean you shouldn't be figuring out how to implement it in your own business. But when it comes to portfolios, you know, it's very helpful in doing a bunch of research. I don't think it's there yet on making decisions. And so back to that model I was talking about. I am confident that we can use the AI to take a universe of things and whittle it down and then leave it to a human to decide do we Pick in this company or that company, it can speed up those processes. But I think we're a long way from it being able to make decisions. So don't turn over your financial decision making to ChatGPT.
[00:42:00] Speaker A: I mean, I believe that about pretty much anything. I think that. But the thing that we are going to maintain is our strategic and creative problem solving and decision making. And it's really funny because a lot of people do think it's magic bull, and we preach against that on this show, by the way.
We have to know what the business use case is in order to determine is this predictable, reliable, how are we going to use it in order to set metrics, in order to choose a tool. This is not. We buy a tool and then we try to fit it into every situation. So it's really funny you're saying you're preaching to the choir.
And so I want to ask a question that's really moving a lot in the founder space. It's family office.
[00:42:36] Speaker B: Oh, great.
[00:42:37] Speaker A: I know you said that this term is overused. We've talked about this actually before.
What is a family office and why does that matter for legacy?
[00:42:45] Speaker B: Yeah. So the history of family offices was very large families, billionaire type families having so much wealth that they started asking themselves, why am I paying my Wall street firm 100,000 or tens of millions of dollars when I could just take that and I could spend $5 million and hire an incredible staff. And this staff will create unique investments, unique opportunities. They'll handle my paying for all my household employees, my gardener, my driver. Right. That was kind of the genesis of family office.
Then over time, people with hundreds of millions of dollars of wealth instead of billions, they said, well, we want that too. And they started pooling them together. And now today, the term can really mean anything.
And so I think that it's just become so opaque that nobody really knows what a family office is or what it means or what it does. But when it comes to legacy. Right. I think the power behind the family office is a team of people dedicated to your vision and executing on that and making sure that both you're accountable, but also the people involved, the team behind you are accountable. And so I think that's something that everyone entrepreneur needs and deserves to have in their financial portfolio. Whether or not we call that term family office, whether or not we tell you you have to have hundreds of millions of dollars, that's not the case anymore.
We purposely choose not to use that term when we describe our firm. But if I had to, yeah, I would agree that we more or less serve that role.
[00:44:06] Speaker A: It's really funny because, like, when I think about it, to me, in today's world, family offices just means that it's the business of investing.
It is creating a business that runs without me for investing, that's following my vision. It's like I'm the founder of my investment portfolio and the team is running that. Like when I think about that, it's just. It's just that. Yeah, in my mind.
So I'm going to ask the next question because I think that this is a great one to one to end on. Because most of us are problem solvers, we become entrepreneurs because we like to solve problems that we want to add to the world. So how do we balance impact and purpose with profit when we're building generational wealth?
[00:44:49] Speaker B: Why can't you have both? Right? So I think if we begin with the end in mind or the exit in mind, as you so appropriately said, if we begin with the end in mind, we can build and design a plan that maximizes profit and maximizes impact and maximizes legacy. I think it's just being purposeful. Right. Too often we put these decisions off. We say, well, when I hit this number of customers, this amount of revenue, this income, this net worth, it's these arbitrary numbers. And we say, then I will take action. But unfortunately that's exactly backwards. Right. You have to have a plan, you make a plan, you pick a destination, you start executing. That's the way that you build wealth. That's what I learned from my time on Wall street and seeing behind the curtain of families that had built it and had hundreds of millions of dollars.
That really is the best path and the best way to do it.
[00:45:37] Speaker A: Absolutely. So this has been awesome. It's been incredibly insightful for everyone. Where can people who are watching if they want to explore wealth, design, exit readiness, any of the other things that you offer, how can they find you?
[00:45:48] Speaker B: Yeah, find me on LinkedIn. Anthony Englert, last name is a pretty unique spelling, so you should be able to find it and a whole also on our website, alphaadvisory.com that's a l faadvisory.com and then also as a bonus for your listeners, we have a link to a survey, 20 question survey to help you figure out where you are on your flight plan. And that link is just Alpha advisory.
[00:46:13] Speaker A: Powerceos, thank you so much for coming here. You've shared a ton of wisdom for us. You've shown our viewers wealth isn't just an accident, it is a Strategy, folks. Of course, as with everything, we need to be strategic about our wealth building. It's an intentional design. And from shifting out of income mode into preparing for the strongest possible exit, if that is what our goal is. Building the legacy business that endures. You're giving founders a road map that can really take action right now. And, folks, I highly recommend that you reach out to Anthony. Anthony and I speak offline.
Take that survey. He did that.
Thank you so much for being here today.
[00:46:49] Speaker B: Of course. My pleasure. Thank you, Jen.
[00:46:50] Speaker A: And you. Yes, you. Unfortunately, all good things do come to an end, including this show. But now is the moment to take your time to think about what is your bigger plan? What is it that. Where are you going? Are you on. On the ground? Are you going to stay in your lifestyle business? Are you taking flight? Do you need that flight plan? Today is the day to make that determination. What do you want? What are you building for so that you can plan smarter and lead from that place of clarity and courage. Wealth isn't just what you build. It's what lasts.
As with all things, this show does come to an end, unfortunately. But we will be here same time, same station next week. So until then, win today, win this week, and I'll see you next time.
