In this high-ROI episode, Keith Blackborg, Owner of Financial Journey, LLC, shares how you can make the leap from founder/owner to investor and put your wealth to work for you all in the context of a community of fellow founders and investors.
You will discover:
– How a community of investors will help you avoid the biggest mistake successful founders make once they exit their business
– How to achieve “work optional” without being put out to pasture
– Why the sophistication of your wealth strategy has to expand beyond your business
Episode Transcript
Scott Ritzheimer
Hello, hello and welcome. Welcome once again to the secrets of the high demand coach podcast. And here with us today is the one and only Keith Blackborg, who is a CPA, a proud father, husband, wealth optimizer and tax strategist. He transitioned to wealth as the business and reached work optional by the age of 30, he helps people build their ideal life financially and creates actionable strategies to achieve those goals. He has a unique, advanced tax strategy that his clients can take advantage of, and he shares his deal flow processes and strategy for when to diversify and when to concentrate when investing. And he’s here with us today. Keith, welcome to the show, because your world can it just touches so many things. I want to dial us in for this conversation too. That business owner who’s founder, they’ve spent the bulk of their life, or working life, at least, building this business. They’re thinking about moving from, you know, CEO to owner. They’re starting to shift mindsets. And it’s all completely foreign, right? It feels like, you know, yes, they built this great business, but like they they, many times feel so unprepared for what’s next, and kind of find themselves thinking like, what do I do with my hands? It’s like this Ricky Bobby moment. So how should a founder, CEO, still active in their business start preparing for life after actively running that business?
Keith Blackborg
Well, I think it starts with first giving yourself permission to not retire. I know that sounds like the opposite of what you’re expecting you to hear but if it’s work optional, the thought of for most business owners and entrepreneurs to turn around and do nothing at the end of a long career is often sounds terrible for a lot of people who like to stay busy. So the point is, for us, it’s about work optional. It’s a freedom on whether or not you’re going to work and setting that business up in a way that requires little to no effort from your part. And so part of what we do when we’re helping members of our community is we help people prepare the business for sale. And that takes that’s usually a three to five year process of getting the financials right, the team, right? And really selling a true business, not a job. And so that transformation of really running things like a business that can be sold. At the end of that process, you’ve got a few things that will happen. One, you’ll be able to sell it for a much higher multiple. Two, it’ll operate with less time from you. And lastly, you get to decide if you actually want to sell, if it is now operating in a way that works so well, it’ll it’ll be much more efficient. It might be something you want to hold on to. And then lastly, we really transition to wealth as the business, and it’s a much more encompassing framework and approach.
Scott Ritzheimer
Yeah, I love that idea. I want to get to get to wealth as a business here in just a second first. I want to kind of capture that three to five year product. That’s a real number. It takes some time to do some of these things right. And one of the things that I’ve found founders do is to not really broach tissue. Do I want to work? Do I not want to work until they’re on the edge of burnout, and then they don’t really have the luxury of time, or don’t feel like they have the luxury of time to do those things, right? And so I really love that one. You set the permission right out of the gate, because the goal isn’t to get out of work, it’s to make works optional so that you can do it if you love it, or do whatever else that you love. Love that okay? So there was a word, and you kind of snuck in there, and it was something that I saw as I was getting ready for this episode that just fascinated me, and that is community. So why is community so important once you enter that work, optional stage of life?
Keith Blackborg
Well, community, I think, is the best accelerator of anything out there. You can have go to events. You can hear all sorts of education where you get the sage on the stage, but getting a group of people that are actively trying to apply whatever it is you’re getting into and working alongside of you is the biggest thing that I think is going to help you make progress. So if you’re in a certain if you’re a plumber, get in a mastermind with other plumbers. Hopefully you’re not too competitive with each other, and so that you’re able to share ideas with each other. Same token applies to when you’re reaching for work optional or wealth optimization, getting around a community of other business folks, people who have or people have really transitioned to work optional, seeing what kind of investing they’re doing, how they vet investments, how they have reoriented their finances in our community. So in America, a lot of people aren’t willing to share their numbers. They don’t really want to share their personal finances. They don’t want to share their portfolio. On a recent call, we had somebody who got up and it’s a monthly thing we do, if not more, where somebody will share their actual portfolio numbers. You see what their cash flow is, what they’ve invested in, what’s gone right, what’s gone wrong. And as a result, you really learn from real people, real experience. And then the community comes around them and gives them suggestions on what they could do better, or acknowledges some of the fears they might have as they transition to a new stage of life, and help them through that.
Scott Ritzheimer
Yeah, there’s so many things that I love about that, not least of which is, when you go from you’re leading your business as your primary occupation to owning your business, there is a massive temptation to go back into leading your business as your occupation.
Keith Blackborg
Nobody can do it as good as you.
Scott Ritzheimer
Yeah. And even it’s just like, those are your friends, right? Like that. It’s what you’re used to, you know, even just the comfort of it, it’s like a magnet, right? I have two boys. They’re 13 and 11 now, and I call them angry magnets, because no matter where one of them is in the house, the other one is just attracted to him, and then they start banging into each other. And I find like that similar pool that one of my sons has to the other is the same thing that will pull an owner has done all the work of becoming an owner, and then undermine that and pull them back in. And what I love about this community is that it gives us something really clear to go to right? Not just getting from our business, but going to this, this world of wealth management. So talk to us about this concept that you have. I believe you called it wealth as a business. Correct me, if I’m wrong on that, but this idea that it’s not just about being the owner of your business, but there’s more to it.
Keith Blackborg
So there’s this important transition that most entrepreneurs miss, and it costs them a lot of money in the background and on the back end. So for example, if you’ve got $1,000 to invest, and you can earn an amazing 20% return on that investment, that’s $200 you probably need to go work and put more time and effort into earning growing your net worth. However, if you have a million dollars net worth and you can earn an amazing 20% return, that’s $200,000 a year. Now, not saying that everybody’s going to be able to earn 20% there’s different factors. However, the point is, as your net worth grows, so does your focus on your net worth, your the size and sophistication of your wealth, legal and tax strategy needs to match the size and sophistication of your net worth and your business. So as you’ve grown, most people in our community are in that three to $30 million net worth range, you’ve got to become a better manager of your wealth. And so some of it is recognizing that wealth is the business. There’s these different divisions within it. So your business or your work income is going to feed income into it. But we know long term, it’s not high income that makes you wealthy, it’s assets. So we’ve got to convert though that income to assets over time that fit you, that fit what you want to be in, and then manage those assets in a way to provide for your lifestyle, your impact, and all the other things that go along with that.
Scott Ritzheimer
Yeah. And so what are, what are some of the mistakes then, uh, for one, I’ve heard this so many times, and it’s a little bit of a myth, but it has happened to real people. One of the things I’ve seen founders are afraid of is to build all their wealth in one business and go into the next and then lose it all in the next transaction. So what are some maybe that’s a big mistake that they make. What are some other mistakes that owners make when they’re making the transition out of being CEO of their business into being more of an owner investor?
Keith Blackborg
So one of the biggest things is especially right after exit, people will get that seven or eight figure check, and now they feel like they need to invest it. For a lot of people, they’ve got little to no experience on how to invest that. If you grew your business, if you’re successful, you likely did it over time, and you learned some lessons along the way. You made some mistakes along the way, and you’re able to learn from those and improve, but it wasn’t catastrophic, because you just keep earning. We recently had somebody who went through a business exit, and everybody’s free to make their own business decisions, but I will frequently see owners who get that big check, they’re like, Oh, I like that person. I like that idea. So they’re going to put a million dollars here, $500,000 there, and quickly, that big nest egg that they’ve accumulated can dwindle away, and it might not be through the best investments. And so one of the ways we solve that in our community is we’ve got a due diligence Council. We take billionaire strategies that we see at the large family office level and we apply them to millionaires, and one of those is an investment community. So what we do is we’ve got seven volunteers within our community that go out vet the deals. They do their own independent due diligence. For example, our doctors and lawyers in the group know nothing about vetting oil and gas deals, but we’ve got the chief drill officer of a publicly traded company in our deal who’s able to weigh in on that. Separately, we had a medical practice buying fund come in and. Doctors and lawyers could weigh in on that experience. So we’ve got a three to seven people, core members, who look at all the documents, the team, the asset, and then we bring in outside experts, either with within our community, or we’ll tap other consultants, and they will really vet those deals. I don’t get paid based on how you invest. That’s really important. So you know that there’s no conflict of interest from me or the community. It’s a group of people that are trying to do life together, vet the best investments and really bring the best opportunity back to our community members. We always tell people to do their own due diligence, but you probably have a lot more confidence investing in something that you’ve known has been vetted by all these other people.
Scott Ritzheimer
Yeah, I love it. Another huge plus for doing things in community. What’s really cool about that is it’s not just relying on other people who know what they’re doing, right, but also being in an environment where you can learn from that, yeah, yeah, it’s so, so good, because it’s a skill, right? And one of the big challenges for founders and folks who listen to the show know what I’m about to say, but just because you succeed in one stage does not mean you have the skill set to succeed in the next stage. It means you qualify to get there, but you’ve got to learn how to play that game. And so again, I love the your approach to that, and creating an environment where folks can kind of get their toes wet, you know, without just falling right off the deep end. So one of the one of the other big questions for this space is you’ve primarily built all your wealth by focusing on building your business, right? For many founders, for a long time, that’s the number one strategy in terms of total return. And we’re quickly moving away from that, even just for the fact that you’re not there leading it anymore, right? You don’t have your hands on it. That’s probably not as smart to have all of your eggs in one basket. How do you help the folks in your community to approach the topic of diversification versus concentration?
Keith Blackborg
So the point is, concentration is where you really grow, and you grow that nest egg quickly. And growing a business is the greatest, quickest way to grow a lot of wealth quickly. So over time, as you create that wealth, it’s important that you systematically, and from a tax efficient perspective, really weave that into how you’re converting that to assets, and so that you are able to diversify and survive. And so as a CPA I used to own a CPA firm, we really focus in on how it’s not just about what you earn, but what you keep. And there are some certain tax strategies along the way, and depending on how we structure your exit, to really take that money over time and invest it wisely in an diversified portfolio of there can be stock investments, but a variety of things out there could be oil and gas, could be real estate, could be other businesses. Maybe you just want a board level role. It starts with identifying your background, your expertise and what you have to work with, and then using that in the most optimal fashion possible. And then in time, talking about how we’re going to pass that on to your kids or any other impacts you care about.
Scott Ritzheimer
Yeah. So good, so good. Well, Keith, there’s a question that I like asked I like to ask all my guests. I’m going to ask it of you here as well. What would you say is the biggest secret that you wish wasn’t a secret at all? What’s that one thing you wish everybody watching or listening today knew?
Keith Blackborg
No, probably the biggest one for me personally is enjoy the journey, because the destination is the same for everyone.
Scott Ritzheimer
So true and so true. So again, is something that folks have heard on the so many times on this podcast. But what’s so cool about this stage for folks, whenever you can, when you can let go of the things that you’ve lost, and not being CEO and not being hands on, and it’s a lot of little things, right? Let’s just be honest and true about that, when you can grieve some of those things and then look ahead to what’s available to you right now. It’s a really, really cool journey, like being able to move into some of these things that you’re talking about, doing it along with other folks who are in the game as well. It’s a really, really cool journey that I think folks can, can openly embrace but I do think you have to grieve some of those things that you’ve you’ve lost to be able to do that fully.
Keith Blackborg
Yeah, I think it’s, it’s, in some ways, about priorities, letting go the fact that I can’t do everything I’d want to do in this lifetime. I only have one lifetime, so I’m going to make the most of it. I want to have some fun along the way. I’ve done the long hours, and I’ve really appreciated reaching work option at a younger age has allowed me to really prioritize some time with my my boys. It’s it’s much more fun that way, and it makes a difference. Even with the mastermind, wherever we’re doing stuff, we want to be doing them in neat. Fun places and continuing to do business as long as it’s fun for you.
Scott Ritzheimer
Yeah, so good. Keith, there’s some folks listening to this, and it’s just what they needed at just the right time. They’ve had some of these thoughts going through their mind, and they want someone, and a group of someone’s, in fact, to be able to help lead them into this next stage of their life. Where can they find more out about you in the community that you lead?
Keith Blackborg
Yeah, you can find me. I’m Keith Blackborg. You can Google me. You’ll see me all over but [email protected], my website, and I’d say for your listeners, knowing that the New Year is coming now is a great time to reset your vision and reset for your life and make some some different priorities for this year, which could be growing and scaling your business, or if you’re approaching that exit time even thinking about what an exit might look like and how to prioritize your own wealth growth so you’ve got something beyond that business.
Scott Ritzheimer
So good, so good. It’s this time of year that I always like to do just that, to take some time in that break between Christmas and New Year is not a whole lot of business going on for a lot of folks, not everyone, but for me and my world slows down a little bit and is a great opportunity to look ahead. And so I love that great advice. Well, Keith, thanks so much for being on the show. It’s just a privilege and honor having you here. Love what you guys are doing, the community that you felt so powerful. I can’t wait for folks to get more involved. And so thanks for being on the show, and for those of you watching listening today, you know your time and attention mean the world to us. I hope you got as much out of this conversation as I know I did, and I cannot wait to see you next time. Take care.
Contact Keith Blackborg
Keith Blackborg is a CPA, a proud father, husband, wealth optimizer, and tax strategist. He transitioned to Wealth as THE Business and reached “Work Optional” by age 30. He helps people build their ideal life financially and creates actionable strategies to achieve those goals. He has unique advanced tax strategies that his clients can take advantage of, and he shares his deal flow processes and strategy for when to diversify and when to concentrate when investing.
Want to learn more about Keith Blackborg’s work at Financial Journey, LLC? Check out his website at https://www.financialjourney.life/
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