Dave Tabor 0:04
This is the ProCO360 podcast for people who love Colorado and love hearing from Colorado’s great entrepreneurs, entrepreneurs who have something special going, something that drives my curiosity. I’m Dave Tabor, host of ProCO360 I’m a former tech entrepreneur, and I love having these conversations and sharing them with you. Today’s episode features Firestone Financial Group. Its founder, Nelicia Firestone, is in studio with me. And what excites me about Firestone Financial Group, really what excites me about any company, is when a company is brave enough, and in my opinion, really smart enough to commit to a niche, that’s what Firestone has done. It helps business owners with the financial planning and the business planning to turn an exit into a business strategy. There’s a lot to unpack in that. So, Alicia, glad you’re on ProCO360

Nelisha Firestone 0:58
Me too, Dave. Thanks for having me. Excited to be here.

Dave Tabor 1:00
Well, yeah, and I really am curious about this niche that you have, and I introduce it by highlighting the niche, but start, let’s say, maybe by defining that. Define exit planning as a business strategy.

Speaker 1 1:15
Well, it’s exactly that, and I think that’s what’s missed with business owners a lot, is business owners don’t start thinking about their exit until it’s too late, and so I like to educate business owners that exit planning is a business strategy that you don’t save till the end, because there’s so much to unpack there, and if you wait until the end, you’re going to miss opportunities.

Dave Tabor 1:34
So, when you say it is a business strategy, are you thinking like when you start your company, are you thinking midway through? Are you thinking when you’re when the horizon is in view? What’s that mean?

Speaker 1 1:45
That’s a good question. And, honestly, the way I answer that for most people is, you know, once you get past there’s a, there’s a business cycle, right? Once you get past the survive stage of your business, and then you’re in the thrive stage, you really should start thinking with the end in mind, right, and start looking at your business through the lens of a buyer, and a lot of times business owners don’t do that.

Dave Tabor 2:09
Wait, but I mean, a lot of companies are owned for 3040, years, so at one point, I mean, they’re just chugging along, chugging, I mean, are you talking about from five years in, from 10 years in, they should be thinking about building a business that someone else wants to buy.

Speaker 1 2:24
Well, it’s different for everybody, right? But if you’re looking for a time frame, I think the biggest mistake business owners make is they wait too late, so, or they wait too long. So, I think if you’re looking for a time frame that fits for most business owners, I think within five years of an exit, you definitely need to start looking at your exit. Okay,

Dave Tabor 2:43
that makes that feels normal, natural, whatever. I couldn’t quite get my head around 2030 years in advance, but I suppose some people do that. But I’m gonna back up just a little bit. How did you find this niche, and why is it meaning so much for you?

Speaker 1 2:58
Yeah, there’s a personal story there, and so I don’t think the niche found me, or I don’t think I found the niche, I think the niche found me. And it really starts with my dad’s story. So my dad is kind of a rags to riches story. My dad grew up poor in the South, and he told my mom when they met that one day he would be a millionaire. And my parents now have been married over 60 years, and my dad left corporate America in his 30s and took a chance on himself and started his own business, grew it from the ground up, built it into a seven figure business, and ended up selling it in the late 90s when exit planning wasn’t really a discipline, and so my dad ended up exiting the business largely, you know, on his own, and with a couple of missteps during the exit phase, my parents are living a very different retirement than they should have, and so watching my dad go through that really it stuck with me, and really that’s what led me to this work.

Dave Tabor 3:54
So, so, okay, add some color to that. When you say missteps led to a different lifestyle, okay, elaborate on that.

Speaker 1 4:01
He didn’t have – he didn’t build the team around him to help him navigate the complexities of the sale, you know. He didn’t bring a team in to help, you know, check his blind spots, if you will. I tell business owners all the time, like, you’re not an expert in my business, you’re an expert in your business, and it’s my job to check your blind spots, and you don’t know what you don’t know, and my dad didn’t have a team to really help him navigate the complexities of that. My dad sold the business to his manager at the time, self-financed the note, and took the money, and at the time, back in the late 90s, you may remember tech stops were like on fire, right? We’re at the end of a very hot decade in tech stocks, my dad invested a lot of the proceeds of the business into two tech stocks and lost half the money overnight in a bad trade, so a lot of lessons there. It was, it was hard.

Dave Tabor 4:52
Wow,

Speaker 1 4:53
hard lesson learned.

Dave Tabor 4:54
Now, did you understand anything about finance when this happened?

Speaker 1 4:57
I did not. No, I was 29 And they talk to

Dave Tabor 5:01
you about it, did they share this actually with you?

Speaker 1 5:04
It’s funny you asked that. My dad is.. I love my dad, you know. He’s still around, he’s not a real emotional guy. And I remember after the fact, my mom told me that she’s only seen my dad cry a handful of times, and that was one.. you know, when you.. when you make a bad, you know, you, my dad is a smart guy. He just made a bad investment choice, and it ended up costing him dearly.

Dave Tabor 5:31
All right, so I gotta ask you this, and it’s gonna sound cold and callous, and everything else, but the decision he made had nothing to do with his business exit. It had to do with how he manages money afterwards, right?

Speaker 1 5:42
But that’s part of it, right. And so, if you have the right team around you, a big part of what we advise on is how do you take that business equity and create a sustainable sound investment strategy and create retirement income from that equity. Yeah,

Dave Tabor 5:56
that makes sense. That makes sense. Once you’re working with a trusted advisor about exiting your business, you would also trust them to help you plan your financial future, right? Because that’s what you.. yeah, so that makes sense. All right, as you describe what you do, do people get it right away, or do you have to do a bunch of explaining to help them understand that it’s not just what they think, it’s something much more?

Speaker 1 6:17
Yeah, absolutely. Because you know, not everybody goes through an exit all the time, right, and also not all financial advisors slash planners practice the same. So one thing that that that I did, to you know, because I want to work with business owners in this phase, I got my SEPA designation, which stands for Certified Exit Planning Advisor, so that specifically helped me build up skill sets to help advise or business owners navigate this transition in their lives.

Dave Tabor 6:47
I never heard of that. A

Speaker 1 6:48
SIPA,

Dave Tabor 6:49
no.

Speaker 1 6:49
Yeah, it’s been around for a while.

Dave Tabor 6:51
Huh? And so, all right, so you don’t have to give us some examples now. What is missing when people plan exits that aren’t properly thought out by an extra expert like you, like what do they miss constantly, the big blind spots.

Speaker 1 7:07
Well, let me give you like an example of a case study. Okay, so we had a client who owned a manufacturing company, they generated about eight and a half million in revenue annually, they wanted to exit their business in 12 to 18 months, so we went through the valuation process, and some things were uncovered in that process, such as, you know, there’s certain things that are detractors to your sales price, one being owner dependency, you know, if the owner, if the business is too owner dependent, that’s a, you know, you can’t sell

Dave Tabor 7:41
it if you, someone needs you to run it

Speaker 1 7:42
right. Customer concentration can be a problem in this case. The financials weren’t really clear, they had, they didn’t have clear books and records, so when the valuation came in, it came in 30 to 40% under expectation, and that’s a big number, right? Yeah, so the owner didn’t like that, so we, we pushed pause on the sale, and what we did is we brought value drivers, professionals to the table to help this business owner clean up some of these areas to basically be able to take it back to market, and eventually what happened was the owner was able to take it to market at a higher multiple, and it resulted in 4 million more net dollars in his pocket,

Dave Tabor 8:20
so I can imagine, though, that not only did it make the business more valuable, but it actually probably made the business run better.

Speaker 1 8:28
Absolutely,

Dave Tabor 8:29
yeah.

Speaker 1 8:30
And that’s another thing that I meant when I said, you know, people need to look at their business through the lens of a buyer. I think sometimes business owners get, like, like a homeowner, you get too emotionally attached, right? Yeah, and you’re not looking at it objectively, and so when I mean look at it through the lens of a buyer, you can do that at any stage in the business cycle, right? And that’s never a bad exercise, because I think it gives you a different perspective on your business.

Dave Tabor 8:53
Is that it seems like it’s a whole mindset shift rather than just like, can I operate my business better, or how do I, what do I do to make it look better? I mean, it really is. I would think that the most successful people you work with are willing to make a mind shift around this.

Speaker 1 9:10
Yeah, ultimately, I think if you ask most business owners, their goal is to, you know, get maximum sell for best in value, right? You want to sell for best in value in your industry, and sometimes that requires taking a different look at your business.

Dave Tabor 9:26
Yeah, so now you ask them questions, but what are the first questions they ask you?

Speaker 1 9:30
They are trying to figure out what role their business equity plays in their personal balance sheet. So, for instance, let’s say you have a business owner, and they’ve been told that they can sell their business for $5 million Well, is that enough if you’re 55 years old and you’re going to sell, is that enough money to last your lifetime? So, what our team does is we do what’s called a gap analysis, and we will use the valuation from the business, aggregate it with their other. Income, you know, whether it be investment income, pensions, social security, and then we will do a cash flow analysis to

Dave Tabor 10:09
similar to what many financial planners do, but from a perspective of a business owner,

Speaker 1 10:14
right?

Dave Tabor 10:14
Yeah, so now let’s, let’s shift gears a little bit, because I want to talk about the services that you actually do perform for these folks when they come in, so if I’m a business owner and I’m like, I don’t know how to exit, I want to get, I want to figure out how to do this thing. The first thing you’ll do, obviously, ask them some questions, but what service, what does your life look like helping me sell my company?

Speaker 1 10:39
Well, it depends on how they come to me and where they are in their process, right? But one of the things that we do, obviously, we ask a lot of questions because we need to understand exactly that, where they are in their process. And then I think the one gap in the marketplace is people haven’t been taught a process, and that was the problem with my dad, right? There was no process that existed, so I help teach clients. Okay, this is the process. If you want to sell your business soup to nuts, this is the process that you need to follow. And depending on the nuances of your business, these are potentially the different professionals that we need to bring to the table to help you navigate

Dave Tabor 11:16
it. Yeah, so one thing that crossed my mind, we were talking earlier, is that you know, you, you do get referred clients by others. It must be kind of there. Must be times when people don’t want to refer clients to you because they think they can do it, you know. And do you ever have that happen like people say, “Well, why can’t my regular financial planner do this for me

Speaker 1 11:37
all the time? And that’s one of the biggest blind spots, I think, for people, and I think a lot of people have an advisor, but I think the risk there is we don’t all practice the same, right? And because of my SIPA designation and because of my personal experience, I think I’m uniquely qualified to come up alongside business owners and help them walk through this journey. How

Dave Tabor 12:00
many people have you done these kinds of things for?

Speaker 1 12:04
I, you know, 10s of 1020, 30. I mean, there’s.. I’ve been in business since 2004 Now, granted, I didn’t start coming out of the gate with helping business owners. My business has grown to that, but largely that’s the bulk of the clients that we work with today, yeah,

Dave Tabor 12:22
and so are you, must be better at helping them understand now than you were when you were first starting out. Absolutely, how, how important this is to do right.

Speaker 1 12:32
Absolutely, and I use my dad’s story a lot as sort of a frame of reference, right, because you know for most business owners, their business is their largest asset. I mean, it was true for my dad, it’s true for me. And so I always think it’s interesting that people spend more time preparing to sell their personal home than they do their business.

Dave Tabor 12:52
That is weird, don’t you think? It’s very weird. Yeah, and I wonder, is it because there’s.. I mean, business people are wrapped up in their own, their own business, but I mean, homes are even more emotionally connected, right?

Speaker 1 13:04
Yeah. Well, businesses are people are emotionally connected to the businesses too. I mean, you spend 20, 3040, years building this thing, it’s your baby, and there’s a lot of emotion attached to that.

Dave Tabor 13:14
So, when you bring out a new client and you start talking them through this process, like, what are some of the key things? Are like, I didn’t realize that I didn’t think of that.

Speaker 1 13:26
I think I think some of the key things are, well, number one, I think the biggest thing is people realize, like, oh shoot, I should have started thinking about this three years ago, right? Because a lot of the things that we can do to help take time, and if you don’t get the right advisory team around you and start this process with, you know, a little bit of a runway, then you’re going to be somewhat limited in your opportunities.

Dave Tabor 13:55
Yeah, I sold, when I sold, I built and sold one company, and when I did it, I decided, sort of, the time to sell it. I felt like, okay, now’s the time. And then I started trying to sell it. Having talked to you, I’m like, wow, that was stupid. I mean, it just is the wrong way to do it.

Speaker 1 14:15
I don’t know about that. I mean, you know, I, and I don’t want to make business owners feel like you know they’re stupid or making you know bad choices, there’s just another way, and I think that’s the thing I’m trying to get, there’s a better way, there’s a better way, and at the end of the day, if you give yourself a little bit of a runway, then you’re going to have more options to really increase that value, and going back to the case study that I just shared, I mean, that’s real dollars in somebody’s pocket. Yeah, so going through that process, it’s tangible stuff that you walk away with,

Dave Tabor 14:46
and it occurs to me as we’re talking that doing it sooner rather than later. I mean, I remember the emotion I had when I was ready to sell the business and started selling it, that it once you get to that place, it’s almost like a switch is flipped. And you’re like ready to be done, and that’s like the worst time. It’s

Speaker 1 15:04
the worst time

Dave Tabor 15:04
to try to make changes to the business.

Speaker 1 15:07
It’s the worst time because you’re desperate at that point, for whatever reason is driving you. I mean, think about Covid. I mean, that was a really hard landscape for business owners to navigate, and there were a lot of people I talked to during that time frame that were just ready to call it quits, you know. You know the last thing you want to do is unwind your largest asset at a time when you’re not thinking clearly, and you know you’re letting emotion drive,

Dave Tabor 15:31
or lack of emotion. I mean, at some point, like, I remember feeling like I don’t want to do this anymore.

Speaker 1 15:37
Yeah,

Dave Tabor 15:37
and that’s a terrible time to sell your company, right?

Speaker 1 15:40
Terrible time.

Dave Tabor 15:41
So, there’s, but it’s not just about the money. A lot of times, there’s also you mentioned people who built a business for 20 years, 30 years. There’s yes, there’s cashing out, but there’s so much more. There’s like the whole notion for some people of legacy, of taking care of one’s employees, of, you know, those kinds of.. how do you.. So, how do you approach those conversations? I suppose everyone’s different, because some people care about that stuff. Some people just want to check and go walk away.

Speaker 1 16:07
Yeah, fair question. And that those are all the questions that we ask in a discovery meeting, right? Because there’s no one size fits all. I mean, it’s like a sleep number bed. Everybody that comes in front of me has a different story and a different goal, and you know, money’s a tool, so what we try to understand from our clients is, okay, money’s a tool to really accomplish what’s really important to you, and to your point, it could be, you know, buying or building your dream home, it could be leaving a legacy to your kids, it could be taking your family on a world cruise, whatever that is, it’s important for us to understand what the purpose and intent is behind the money, and then the rest of it is just part of the process. Yeah,

Dave Tabor 16:49
what would you have done if I had come to you saying I’m ready to sell my company right now, you know, and I’m already kind of there emotionally. What do you? I’m sure that’s happened with you. I guess you talk me off the ledge or just go with me.

Speaker 1 17:05
Well, so that’s when we really say, okay, we hear you, you know. And that’s that’s a valid point. What do you have? You gotten a business valuation done? And you would be surprised how many people say no, they think they have a number in their head because, oh, well, my competitor down the street sold for this, I’m sure I can get the same amount. Well, maybe you can’t, because we haven’t looked under the hood in your business, you know. So, really, what I try to do is say, okay, let’s let’s slow down a little bit, let’s get a business valuation done, and see what you can go to market for, based on, you know, that analysis, and then that’s when the light bulb sometimes goes on for business owners, like, oh, well, I thought I was going to get double that, and then all of a sudden the brakes go on, right, because people realize, like, oh, well, that’s not enough for me to live on, and then that’s when we can come up alongside people and say, we can help you fix this,

Dave Tabor 18:00
so they may recalibrate their decision timeline,

Speaker 1 18:03
right?

Dave Tabor 18:03
And does that happen?

Speaker 1 18:04
Absolutely, all the time.

Dave Tabor 18:06
I would think so. All right, there are other things involved too, beyond that. There’s all kinds of cash management things, there’s tax. I’m sure you have to get into all that stuff.

Speaker 1 18:16
Yeah, of course. I mean, taxes are huge, right? I mean, there’s not a business owner in the world that’s going to tell you I want to pay more. Yeah, so a lot of what we do is around, you know, tax mitigation, tax planning, and it’s not just that’s not just my role, you know, there’s a lot of other professionals that can come to the table and help with that, such as, you know, obviously CPAs, estate planning attorneys can help with, you know, doing different trusts type setups to help transfer wealth to the next generation. Maybe restructuring how your business files is a way to save money on taxes. So, there’s all kinds of different disciplines that we can bring to the table to help you know when all of those disciplines are working together. That’s really when good things happen.

Dave Tabor 19:01
So, in some ways you’re kind of like a general contractor over this process. We

Speaker 1 19:04
call ourselves a quarterback. Yeah, I mean we don’t do all of the things, we fill a role. I mean, there’s a lot of people that need to come to the table, and we’re sort of the quarterback, and luckily we have a deep bench of professionals that we can call on, depending on what the client needs are, and.

Dave Tabor 19:20
and I got a guess that, well, in the example you gave earlier, where a business owner made $4 million more, that the services you brought to bear cost a lot less than $4 million

Speaker 1 19:31
Well, and that’s true, and that’s what I always tell folks, I’m like, you know, I, my planning fee, I should pay you, my planning fee will be paid for by the money I save you or the money I gain you.

Dave Tabor 19:42
Yeah, so

Speaker 1 19:42
it’s negligible.

Dave Tabor 19:43
Yeah, I would, I would think so. I’ve learned over over the years that bringing smart people to complicated problems tends to be pretty cost-effective.

Speaker 1 19:52
Well, and that’s what we like to do. I mean, we like to deal with the hard stuff, because I think that’s really where the opportunities and the risks are for families. Yes,

Dave Tabor 20:00
yeah. Now I watched a video on your website, and you, you shared a story about your mother being widowed. My

Speaker 1 20:08
grandmother,

Dave Tabor 20:09
grandmother, okay? That makes more sense, because your parents are so all right. I was trying to figure out how that’s gonna work. Okay, so your grandma, and she wasn’t prepared to say, well, just, you know what, tell that story.

Speaker 1 20:21
Yeah, my grandma, I mean, it’s my mom’s mom, and she’s a great woman. She grew up in Kentucky, born, lived in the same town her whole life, lived a very simple life. My grandpa died on my mom’s wedding day, so my grandmother was widowed at age 49 happened to happen on my mom’s wedding day, and she never thought she would lose her husband at 49 and I remember growing up going to visit her, and she was widowed young, right, and he didn’t leave her with a lot, and so she did everything she could to make ends meet, I mean, she rented out the top floor of her house to college students, she volunteered at night at the hospitals, and you know, did some work there, and I don’t know that that’s another family story that stuck with me, you know, because I love my grandma, and I saw how hard it was on her to be widowed at such a young age, so I have a special affinity for, you know, women navigating those transitions, is

Dave Tabor 21:22
that part of what you lean into as well?

Speaker 1 21:24
I do. I mean, I love women. Women in finance has changed a lot over the years. Women are becoming more of a voice at the table. I think I just read recently that we control a third of global assets now, so that’s quite a change for my grandmother’s era. Yeah, so it’s nice to see more women coming to the table and being decision makers in the family finances, and I’m always happy to be a partner with them.

Dave Tabor 21:48
Now, this is the ProCO360 podcast, so I feature companies based in Colorado. Is you know what does that mean for Firestone Financial Group being here? Anything special, different?

Speaker 1 22:01
Yeah. Well, I love Colorado. I mean, I married a native. I moved here in 99 because I love to ski, and that, that still is the case. I married a Colorado native. I have two daughters who we’ve raised here, so I’m a big fan of Colorado. But as far as business in Colorado, it’s changed a lot, right, over the years. I think current laws and current local administration has made made a little bit harder on businesses, so I’m a part of the WPO group here in Denver. It’s called Women’s Presence Organization, and it’s comprised of it’s a group made up of female business owners, and we meet once a month. We kind of act as an advisory board of sorts for each other, and we talk often about, you know, Colorado and FMLA, and all those things that are making doing business here a little bit harder these days.

Dave Tabor 22:49
It has gotten tougher, and we’ll hope that that trend shifts the other direction. I know. Yeah, now going forward, I mean, you talk to a lot of businesses, you see a ton of businesses, you spend most of your time helping them, but how have they helped you run your company? What have you learned from them?

Speaker 1 23:09
Well, I give you an interesting answer, but I think that, you know, I think business, I think people that decide to go into business for themselves are a special breed of people, right? I don’t think everybody can do it. And I think what I’ve learned from my business owner clients is that, you know, someday I too want

Dave Tabor 23:29
to exit,

Speaker 1 23:29
you know, because I’ve also watched, you know, as my parents have gotten older, they’re in their 80s now. You know, I talk to clients like, yeah, you might live until you’re 90, but you may not be fully healthy up until 90, right, and so usually what I see is people are really active in their lives up to 75 or 80, so you know, I don’t want to work until I’m 75 and have five good years, right? So I see I go, I journey with people as they age, and so I’m very keen to the aging process, and I, as well, want to exit my business, and you know, spend time doing, you know, what I love, other things. Yeah, yeah.

Dave Tabor 24:06
Wrap us up. What should, as business owners, think about all the things that we’ve talked about, all the things that you do? What are some sort of guiding principles that they should think about relative to what’s the term we talked about, exit planning as a business strategy, right. So, wrap that up.

Speaker 1 24:25
I think that business owners just need to take a hard look at, you know, where they’re at. I think one thing that business owners don’t do is they’re so in the grind of the day to day, right, and they don’t really allow themselves the time to like really visualize and think big, right? I would, I would invite business owners to take a little respite from the business and really think about, okay, what it, where, what is my end game, where do I want this to go, right? And start to look at the advisory, you know, the people that you have at your advisory table, make sure you have the right p. Able to help you journey, because journey through to the end, because just because you have advisors doesn’t mean that they’re equipped to help take you through the end.

Dave Tabor 25:07
And what we know, what you’re making me think is that even if somebody thinks they’re the end of the horizon is 20 years, 25 like they could come talk to you today and just sort of brainstorm, like here’s where I’m thinking I’ll be in 20 years, and even that could be helpful, right.

Speaker 1 25:21
Well, yeah, you’ll learn a lot. I mean, one thing that comes to mind is, you know, people again, I go back to our goal is always to solve problems you don’t know you have, right. And time on the runway is important, so that you can do things now. So, for instance, you know, maybe you’re not paying yourself enough in a W-2 wage. Well, that’s going to impact how much you can put in a retirement plan, right? Well, that’s one thing that we can advise you on now to tweak and change that will only help you later. So, it’s things like that. I think the business owner needs to realize, don’t wait till the last minute. It’s important to start asking these questions now, because it can make a big impact in the end.

Dave Tabor 26:02
Cool. I think that’s a good note to end on. And let’s do that. I’m your host, Dave Tabor. And today on ProCO360 you’ve been listening to my conversation with Alicia Firestone of the Firestone Financial Group, and it’s been fun having you on ProCO360

Speaker 1 26:16
I really appreciate you having me, and yeah, it’s been great talking to you.

Dave Tabor 26:20
I wish I’d known you many, many years ago, before I went through my process. Anyway, listeners, glad you’re here on ProCO360 where we say live, work, love Colorado, because you and I and my guests can be successful anywhere and choose Colorado. You make the show successful by subscribing to the ProCO360 podcast. If you haven’t yet. It’s a huge help if you submit a review in your app. That’s the show Lit Work Love Colorado,

Unknown Speaker 26:46
you

Transcribed by https://otter.ai