Building Wealth & Preparing Your Business for Sale | Dan Pascone with Chris Poff | Ep #06

Chris Poff is the founder and creator of Wizard Brain Trust, an advisory group for small business owners. He has a background in real estate, entrepreneurship and small business development. He grew up in Ohio and describes himself as a diehard Buckeye with a drive for success from an early age. He started reading success books in the third grade, started his first business at 17 and fell into serial entrepreneurship: starting, buying and selling businesses.

He wasn't born into money. His father was a salesman. Wizard Brain Trust grew out of his real estate company, because he kept running into small businesses that either wanted to start up or wanted to create more wealth. He found a formula that worked, and he built the group around it.

Chris describes Wizard Brain Trust as an advisory group where the first thing they do is educate. Many people launch into selling right away. His team starts by asking about the challenge: what's going on, what the owner would like to see done differently, what kind of lifestyle they want and whether they're living it. Then they educate on what's next for that person.

We run our own business on a similar idea, which is why this conversation clicked.

Chris isn't limited to one group, but he does a lot of work with Gen X and Boomer entrepreneurs. Many are facing questions like: I'm getting older, so do I cash out, build an exit strategy, or pass the business to my kids?

He told us that before you get there, there's a big difference between how your company looks financially and how much you can get if you want to cash out. There's also the question of putting systems in place so a business can pass to the next generation without the second generation blowing it. We cover that side in Legacy Is Built, Not Inherited. On top of that, he pointed to IT and AI challenges that are driving all business owners crazy right now.

Chris said it always starts with the same thing: an assessment, or what he calls a roadmap, to see where you are on the road to wealth or lifestyle. It goes beyond sending over the P&Ls. He asks whether you're happy with your lifestyle and where you want to be, and he looks at the systems behind the P&Ls.

He listed 3 reasons businesses fail: a faulty business plan, inadequate funding, or a faulty or inadequate management team. So the first thing he looks at is whether the owner built a rock-solid foundation, or whether there are chinks in the armor to shore up. Even if an owner says their problem is AI and tech integration, he still starts with the same assessment, because there may be a bigger problem with funding, capitalization or systems.

The work is custom-tailored to the owner's budget. He pointed out that a business doing $150,000 a year gross is a different animal from one doing $5 million that wants to scale.

Funding came up as a big one. Chris said many owners haven't tapped into the ways to get funded and don't know the first step, which is having a plan based on where you are right now. He described an owner going after a line of credit: before applying, they shore up everything in the business so it looks good to lenders. In his view, the difference between the owner who wants money and the one who gets it is a solid foundation and a funding plan in place before anyone applies.

The options depend on the business. At $150,000 gross, he said an owner's only choice may be the bank they already have a relationship with, or something like hard money lending or credit card stacking. It's different for each person.

Chris said many small businesses start out of the owner's back pocket. He used the example of a good plumber who learned the trade, gets tired of making a wage and starts a business. Friends and family become the first customers, revenue reaches $50,000, $80,000 or $100,000 a year, but there's no business plan and no look at the management team.

He said even businesses up in the million-dollar range often haven't made the shift. They're still trading hours for dollars and aren't actually running a business. If an owner wants to pass the business to their kids, he'd say get the accountant involved and look at the whole structure. His analogy: your business is another baby, and you have to feed it first so it has the foundation to grow.

The question he asks owners is simple: do you want to run a business, or keep growing something you run out of your back pocket?

We asked about partners. Chris said he's constantly searching for professionals across legal, accounting, financial planning, virtual assistants and tech, and he wants at least 2 of each on his team. He's not looking for people who just send details. He wants A-players he trusts to take care of anyone he sends their way, because it comes back on him.

Dan said that matches how we work: we like to be the quarterback of a family's financial situation and bring in other specialists as needed. If you're weighing what to look for in a planner, we share our thinking in our guide to finding a financial planner.

Chris called this a catastrophic perfect storm for small business, and he was clear that it's his personal opinion. He pointed to a landscape of mega-corporations on one side and small companies struggling to survive on the other. His example: AI might cost a small business $5,000 to $30,000 to embrace, while a mega-corp might throw $1 million or $5 million at it. He believes tech combined with AI is changing the world more drastically than the industrial revolution.

For owners who are hiding their heads in the sand, especially Gen X and Boomer owners, his question is where they are, because maybe they just want to cash out. In that case, his approach is to get the business to its highest valuation. For owners who want to grow, the challenge is how to compete with the tools and budget they have against companies with multi-million-dollar budgets.

Dan noted another side of this. A recent guest buys blue-collar small businesses, and one opportunity is that many Baby Boomer owners want to sell and retire, while a buyer can digitize a business with a strong brand and cash flow. Chris agreed it's an exciting time, but a challenging one if you don't embrace the changes quickly. If you're considering a sale, the U.S. Small Business Administration has a guide to closing or selling your business.

Chris said one of his biggest challenges started around age 30 and continues: he can't do it all himself. At 30, he said, he was arrogant and thought he knew everything. Every decade, he realizes how much he doesn't know. Even at the peak, when he was making a lot of money, the lesson was the same.

He described a partner, a crusty old British accountant, who balanced him out. Chris was the one out meeting people and generating creative ideas, and the accountant was in the back with the numbers. He said you're not an island, and you have to ask for help. When owners say they'll learn the next step on the internet, his response is that AI can't teach you the next step the way someone who has been there can.

• Coffee or tea, cats or dogs: Coffee and dogs.
• Tech he can't live without: An autoresponder and CRM.
• Favorite quote: “The two most important days of your life are the day that you were born and the day you figure out why.” He attributed it to Samuel Clemens.
• Favorite book: Think and Grow Rich by Napoleon Hill, with Rich Dad Poor Dad among the others he named. He said books are part of your toolkit.
• Personal hack: Be thankful for whatever is in front of you, good, bad or ugly, because you'll learn from it. He also said it isn't a failure until you don't get back up.
• Bucket list item already checked off: At 20 he set a goal to have his own human performance facility by 30. Just before his 30th birthday he assembled a team and asked for help, and he said he raised the money within 90 days and opened a facility in Cincinnati that tested athletes and executives.
• Milestone he's working toward: Becoming a billionaire, which he said isn't about focusing on money.
• Advice to his younger self: Ask for help. Humble yourself.

Many owners think of the sale as the event. Chris's point is that the sale price is a result of what you built before it. Systems, funding, a management team and a business plan are the foundation, and he says to shore it up before you go to a lender or a buyer.

The other thing is the owner's own role. A business that depends on the owner trading hours for dollars looks different from one that runs on systems and a team. Asking for help early, from an accountant, an advisor and the right experts, is a theme he returned to more than once.

Assume a business earns $400,000 a year in profit. These multiples are assumed, and real multiples vary widely by business and buyer.

• Before cleanup: A buyer sees thin documentation and an owner-dependent business and values it at 3x profit: $400,000 × 3 = $1,200,000.
• After shoring up the foundation: With cleaner books, documented systems and a team in place, a buyer values it at 3.5x: $400,000 × 3.5 = $1,400,000.
• The difference: $200,000.

This is an illustration of why preparation matters, not a prediction. It isn't a valuation, and it isn't a claim about what any business would sell for. A valuation professional, your CPA and your attorney can give you real numbers. Taxes and transaction costs also reduce what you keep, so the amount you net is what drives your plan.

We're not business brokers or valuation professionals, and we don't evaluate or recommend Chris's firm or any advisory group. What we do is connect a business owner's exit to the rest of their plan. We use Life-Driven Planning, our 6-phase process (Cash Flow, Retirement & Hybrid Retirement, Risk, Expense & Goal, Tax and Legacy), to look at the whole picture. Hybrid Retirement is a phased approach where full-time work gives way to flexible, optional work rather than an abrupt stop.

For an owner thinking about selling or passing the business on, the Tax and Legacy phases matter early, because the decisions around structure and timing come well before the closing date. To see what a plan covers end to end, watch What a Real Financial Plan Includes.

This episode is for small business owners, especially Gen X and Boomer owners, who are starting to think about an exit, a sale or passing the business to their kids. It's also for executives and owners in their 40s and 50s with complex income who want their business, taxes and retirement timeline to work together.

If you own a business and want to see how a sale or transition would fit into your retirement, tax and estate picture, we're happy to talk it through. It's a low-pressure conversation about your situation. Book a Free Wealth Strategy Call.