September 12, 2025 • 31 mins
Episode Summary:
Your best client just sold their business for $8 million and calls to say they're moving everything to Goldman Sachs. This devastating scenario happens to 70% of advisors, but Jeff Armstrong has the antidote. As a former business owner who ran a company for 23 years, Jeff reveals the blind spot costing advisors their most valuable relationships. While most advisors focus on managing wealth outside the business, Jeff shows how becoming the expert on your client's largest asset creates unbreakable loyalty. He shares why 97% of business exits disappoint owners and the actions that transform you from replaceable vendor to irreplaceable quarterback.
About the Guest:
- Jeff Armstrong built and ran a laser printer repair company for 23 years before joining Cultivate Advisors. He helps financial advisors avoid losing clients to "big league" competitors by becoming business optimization experts.
The Brutal Reality:
Devastating Statistics: 50-70% of business owners fire their advisor after liquidity events when investment banks suggest they need "serious players."
Hidden Epidemic: Only 30% of businesses attempting to sell complete transactions. Of those that sell, 90% disappoint owners. This means 97% of exits fail expectations.
Shared Blind Spot: 99% of business owners cannot answer: What's my business worth? What multiples apply? What drives value? Most advisors share this blindness.
The Cultivate Solution:
Target Market: Businesses generating $1-15 million annually, matched with former business owner advisors who've successfully exited.
Partnership Model: Cultivate functions as team extension, creating "alley-oops" for investment planning and tax strategies as business performance improves.
Process: Free business valuation, gap analysis, prioritized roadmap. Owners implement independently or engage ongoing support.
Creating "Stickiness":
Becoming Irreplaceable: Help optimize their most valuable asset, and Goldman Sachs becomes irrelevant. You're their strategic partner, not just money manager.
Personal Trainer Effect: Business owners need accountability and implementation. You become associated with success at the source.
CEPA Training Revolution:
Implementation Gap: Traditional training provides knowledge without application skills. Cultivate's immersion events bridge this gap.
Viral Success: November event sold out after going viral within Edward Jones's 1,400 CEPA network.
Implementation Strategy:
Start Small: Pilot with one client. Cultivate includes you in calls and provides quarterly reporting.
Full Integration: Real-time business metrics create natural wealth management conversations.
Connect with Jeff:
LinkedIn: Jeff Armstrong
Email: jeffa@cultivateadvisors.com
Website: cultivateadvisors.com
Bottom line: While other advisors wait for liquidity events, smart advisors help create them and build unbreakable relationships.
Claim your free audiobook copy at: www.theshortbookformula.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Imagine your best client, the one you've worked
with for 15 years, calls youthree weeks after selling his
business for $8 million.
Your heart races, thinking hewants to celebrate and plan his
next chapter.
Instead he drops a bombshellI'm moving everything to Goldman
Sachs.
I'm in the big leagues now yourstomach drops 15 years of
(00:21):
relationship gone in one phonecall.
Here's what nobody tells you.
This nightmare happens to 70% offinancial advisors when their
business owner clients exit.
But the advisors who avoid it.
They did one thing differentlyduring the relationship they
became the expert on theirclient's most valuable asset
before anyone else even thoughtto look.
(00:43):
Jeff Armstrong has cracked thecode on this.
As director of strategicpartnerships at Cultivate
Advisors, he's discovered why97% of business exits fail to
meet expectations and how smartadvisors are positioning
themselves as the indispensablequarterback throughout the
entire journey.
Today, on the InfluentialAdvisor podcast, jeff reveals
(01:08):
the blind spot that's costingadvisors millions in client
relationships and the specificstrategy that makes you more
valuable after the exit, notless.
He'll show you exactly how tobecome the advisor they can't
replace, even when Goldman comescalling.
Tell us a little bit about one,who you are, your background,
(01:36):
and then two who is CultivatedAdvisors and what is your
mission?
Speaker 2 (01:42):
What do you guys do there?
Yeah, absolutely yeah.
(02:08):
My background is I'm anentrepreneur.
I started my first company whenI was 25 years old.
I started business owners havebecause I'm a poster child for
all that stuff.
They don't really teach that inbusiness school.
It's a school of hard knockswhen you're a business owner
most of the time, and CultivateAdvisors is an organization that
helps business owners like melike I could have used Cultivate
Advisors when I had my businessbut they really help identify
what are the blind spots.
(02:28):
We're really the co-pilot, alongwith that business owner, to
help them grow, scale, gethealthier, more profitable, more
valuable.
And so we do one-on-oneadvising with small business
owners.
I would say 80% of our clientsdo between a million and 15
million in annual sales.
That's where we niche inIndustry agnostic, but we pair
(02:51):
them with an advisor on our team.
All of our advisors we have 30,are all former business owners
and so they've all scaled andsuccessfully exited their own
businesses and now they workalongside other owners and
entrepreneurs who are looking todo something similar.
So there's been there, donethat experience and also we work
within a methodology to helpgrow and scale businesses, and
(03:13):
we work within a tech platformas well to keep everybody very
organized.
Speaker 1 (03:17):
Why do business owners come to you and what I
mean by that is that I'm abusiness owner myself, so I fit
into that category and what'stypically the pain point or the
desire that leads someone toyour doorstep?
Versus the other services, whynot hire a marketing person?
Or why not hire XYZ?
What is it specifically thatyou find gets business owner
(03:39):
interested and to your services?
Speaker 2 (03:44):
Yeah, I would say it probably falls into one or two
buckets typically.
Oftentimes they're stuck at acertain revenue plateau.
They can't seem to get to thatnext level.
They don't know what that wouldentail or what they could do
differently.
They often feel overwhelmed inthe business, and so it's a kind
of a growth issue.
The other issue is we meetcompanies that don't have a
(04:06):
problem growing, but they have apeople problem or keeping
capacity.
How do I have the right systemsor the right people?
And so that growth or capacityissue it's oversimplifying it,
but that's typically one of thethings that they want to solve.
Also, we get introduced to alot of businesses that are
looking to transfer ownershipdown the road.
Typically it's three to fiveyears or they know the number
(04:29):
they need to hit and they needhelp reverse engineering.
That Business owners arehistoric.
They have a blind spot aroundthe asset value, the enterprise
value of the business.
Businesses aren't being builtto sell.
The stats on that are prettybad.
Actually, only 30% ofbusinesses that go to market
actually do sell.
The stats on that are prettybad.
Actually Only 30% of businessesthat go to market actually do
sell Really bad stats.
That was our houses.
(04:49):
We'd be turning ourselvesinside out to figure out how to
get in the top 30%.
So oftentimes they'll come, getintroduced to us.
We do a business valuation andthen we build them a plan to
increase their enterprise value,decrease the health and the
value of the business.
So that's another category.
They come to us but it's hard Aposter child again for all that
stuff.
(05:09):
I didn't have an awarenessaround my enterprise value.
But most business owners getinto business because they're
technically proficient atsomething, or see an opportunity
, they're passionate aboutsomething, or ideally all three
right.
And then they have to knowfinancials.
And they have to knowfinancials and they have to know
marketing and sales andleadership and recruiting all
these different hats you have towear.
(05:30):
It's near impossible to be anexpert in all those different
areas.
And so we identify hey, where'sthe low-hanging fruit, the way
that we can optimize thebusiness in pursuit of what the
vision and goals are for thebusiness owner.
And then we play matchmaker.
We match the right advisor tothe right business, the one that
we think would move the needlein the company the best.
Speaker 1 (05:50):
Yeah, have you read Michael Gerber's the E-Myth?
Oh yeah, I've listened to theaudio.
He has a great voice.
I've listened to the audiomultiple times and it just has a
great.
It just outlines it so nicely.
Just, the technician becomes abusiness owner and it's a
completely different thing thatthey're doing.
So it's just a greatarticulation of that.
Where does the financialadvisor fit in with what you do?
(06:13):
And I guess part of thequestion is do these business
owners do they typically come toyou directly, or do you partner
with financial advisors whowork with business owners to
help with these things?
Help us understand that alittle bit better.
Speaker 2 (06:30):
Yeah, they both.
They come to us directly andthey also come to us as being
introduced by financial advisors.
I would say financial advisorsis our biggest bucket for
strategic partnerships and it'sone that I'm fully niched into.
So I spend my week, I probablytalk to seven new financial
advisors a week and I talk tofive business owners a week that
they introduce to cultivate theway it works with financial
advisors.
(06:50):
And we work with a lot of SEPAsCertified Exit Planning
Financial Advisors who areniching into the business owner
space.
They want to expand into thebusiness owner space.
We work with non-SEPAs as wellthat work with business owners.
The idea is the business is theowner's largest asset Yep, by
far, it's the big stock, it'sthe big mutual fund that they
(07:12):
can directly influence theoutcome over.
And so a financial advisorthat's working with business
owners, trying to help them hittheir financial goal and close
the wealth gap.
The big lever to pull isoptimizing the business and
where the opportunity is, mostbusiness owners don't know the
enterprise value of theirbusiness.
They're mostly guessing, orthey just simply don't know the
(07:32):
enterprise value of theirbusiness.
They're mostly guessing, orthey just simply don't know, or
it's anecdotal evidence, like mybuddy at the country club sold
his business for this.
They just don't spend a lot oftime into it.
So we do a business valuation.
We'll let a business owner knowwhat we think the business is
worth, what the multiple rangeis for their industry, what are
some of the things that woulddrive the multiple to the top
(07:52):
end of the stick.
If you're a managed IT company,you have a multiple range of two
times profit or two timesEBITDA, and that the best in
class is 10.
That's a large range betweentwo and 10.
So how do you move to the topend of the stick?
What does the company look likenow and what would it make
sense to spend a little time andenergy on via Michael Gerber's
the E-Myth right sense to spenda little time and energy on, via
(08:14):
Michael Gerber's the E-Mythright, in pursuit of working on
the business, but in pursuit ofincreasing the health and value
of the business.
And so we work with financialadvisors who want to quantify
the asset value of the businessand they're interested in
increasing the asset value ofthe business.
So we work on how do weincrease the wealth inside the
business, partnering withfinancial advisors who want to
(08:35):
create the wealth outside thebusiness.
And it can be a killer.
One-two punch.
Speaker 1 (08:39):
How do you ensure comfort, and what I mean by that
is that, for example, financialadvisor and a CPA when they
have a good relationship, theytend to work seamlessly together
and it benefits the client.
When they don't work together,it tends to not be the best in
it.
The client might get confusedin terms of advice.
How do you manage in such a waythat gives the financial
advisor a high degree ofconfidence that what you're
(09:00):
doing A is going to make themlook good and B is going to help
them build their own business,not siphon it away?
Speaker 2 (09:06):
Great question and it's something that we,
especially early on, seem to beaddressing a lot more of.
We're not doing it as much nowthat we have a bit of a name
brand around, cultivate,especially in the SEPA community
.
We do a lot of trainings forthat community.
We want to be an extension ofthe financial advisors team.
We're there, the quarterback,and we just stay in our lane.
(09:27):
In business optimization we alsotake a crawl, walk, run
approach.
Hey, let's pilot one of these.
Let's have you come in on thediscovery call, lay eyes on it.
We'll share as this businessowner comes through the free
steps of our process.
We'll keep you posted andlooped in on all the
communications because we're anextension of your team.
We just want to make you looklike a rock star.
(09:49):
And then if a business ownersigns on with Cultivate, then
we're as collaborative as thefinancial advisor would like us
to be.
We're pulse, checking what'sgoing on in the business every
quarter and rolling thosestories, those metrics, up to
the financial advisor, either ona quarterly basis or on two
times a year basis, whateverthey'd like to see.
(10:09):
They can also log in, if thebusiness owner is good with it,
into the software that we use tokeep everything organized so
they can get a high level macro30,000 foot view into what's
going on in the business andthey can get as micro as they
want to.
The business owner can sharethe login credentials so they
can be as involved as they wantto be, and we're very cognizant
(10:29):
of the fact that they'respending relational equity with
us by making introductions, andso we do everything we can to
again make them look like a rockstar and just deliver a
world-class experience for thebusiness owners that come
through.
And the wealth advisor is goingto get good data and
deliverables from the free stepsof what we do, and I can talk a
(10:51):
little bit about what thatprocess looks like.
But the first deliverable is abusiness valuation.
So it's going to we ask, hey,what does the business owner
think the business is worth now?
What do they want it to beworth?
A lot of times this is thefirst time they're processing
through that Then we give themthe valuation, we give them the
health score, what the potentialvalue of the business would.
So this is a lot of good datafor the financial advisors that
(11:14):
they can pull and use in theircomprehensive planning.
Speaker 1 (11:17):
Aside from serving the client.
How does the financial advisormake money?
In other words, the motivationis I want to help my client the
best, but I also want to makesure I protect my relationship
and, ultimately, I'm looking forways to grow my own business
and make more money.
Speaker 2 (11:32):
We call those alley-oops and ultimately I'm
looking for ways to grow my ownbusiness and make more money.
We call those alley-oops.
When we're alley-ooping for thefinancial advisor to make a
slam dunk, financial advisorswin.
When a business is growing andscaling and getting healthier
and opening up the cash flowpipe, a financial advisor wins.
So we'll set them up for whatwe call alley-oops.
We'll also advocate for thingsthat the business owners should
(11:54):
be doing that we don't do.
But if it's a partnershipagreement, do you have a
buy-sell agreement?
Is it funded at the appropriatelevel?
No, you should go talk to thefinancial advisor, right?
Whoever that referring partneris.
Oh, you've got a big cash flowpipe, you've got a repeatable
recurring profit and we got totake a look at tax mitigation
strategies.
(12:15):
Maybe you should look into acash balance plan.
Go talk to ex-financial advisor.
Those are.
We've got this money that'ssitting in the checking that's
not being used to support thegrowth of the business.
Let's look at diversifying andstripping some of that wealth
out of the business anddiversifying it.
We're creating those alley-oopsfor the financial advisor and
also for tax and legal too.
(12:36):
There's implications that wesee.
We'll advocate for that.
Again, we don't do those things, but we typically will send it
to the financial advisor.
If we don't have somebody atthe table for that, then
sometimes we can pull a partyinto it.
But we really look for thefinancial advisor to be the
quarterback make those decisionsaround.
Who do they want at the table?
Speaker 1 (12:54):
Additionally, I think , the business owner, especially
the growing, more successfulbusiness owner, if the financial
advisor doesn't bring in theresources, such as yourself, or
have those resources internally,what's the likelihood that the
client may outgrow the financialadvisor or feel that they're
outgrowing the financial advisor.
That's part one.
The other part is that I thinkpart of the payoff could be is
(13:15):
when they actually sell theirbusiness, ideally for a higher
amount, and then now they have agreat problem of what do I do
with all this?
Speaker 2 (13:22):
money.
Yes, thank you, paul, forbringing us back to that, and
that's why financial advisorsget their SIPA right, like they
want to get connected to thatliquidity event and it is that
pot at the end of the rainbow.
That's the big prize for sure.
The alley-oops are like littlethings that we can do along the
journey, and the research thatI've found says 50 to 70% of
(13:44):
business owners leave theirfinancial advisor when they have
a liquidity event.
I've got plenty of stories fromfinancial advisors where that
actually prompted them to lookinto certified exit planning and
how can they provide more valueto a business owner around the
entrepreneurial journey.
So if that data is correct,those are more scary stats right
.
50 to 70% of business ownersoutgrow or move over to another
(14:08):
financial advisor when they havea liquidity event.
A lot of times that comes fromthe investment bank or the M&A
advisor or the business attorneysaying, hey, congratulations,
you just joined the big leagues.
You've got to have a playerthat does this.
What we found is that if afinancial advisor is adding
value along the business owner'sjourney, as it relates to the
(14:29):
value of their business, ie whatis it going to sell for If
they're looking at through thebusiness through that lens From
my perspective.
I think they should be, becauseit's an asset and they're
managing assets that they shouldbe looking and quantifying what
is the asset value of thebusiness.
If they're providing valuealong that journey, they create
(14:49):
that stickiness where thatbusiness owner isn't going to go
anywhere because they've beenthe guy that's helping them
understand what is the value,what are the things I can do to
increase it, and they're alongwith that journey.
So it creates that stickinesswhere they won't move.
Speaker 1 (15:04):
Yeah, I'll just share just from personal experience.
So I've hired my own financialadvisor just in the past year
and it's really resonated withhis.
So he's a client of mine, hewrote a book with us and I just
really resonate with his messageand so I've been working with
him for a year and it's beenfantastic, and I don't call it
an issue.
But my only place where I'dmaybe be a little bit
dissatisfied is that even he'sviewing me through more of a
(15:27):
lens of simply the traditionalmetrics or at least that's how I
feel right, how much have yousaved in retirement, et cetera,
and which is great.
I'm making progress there andthat's fantastic.
I'm diversifying all those goodthings.
However, there's not enoughconversation about what's the
valuation of your business, howdoes this play a role and how do
we increase that?
There's really none.
(15:48):
I've brought it up severaltimes.
I'm like you need to add thisinto the overall pie so that we
actually have a more accuratepicture, and because I don't
think that's the sweet spot ofwhat he and his team do.
Those tend to be overlooked,and that's probably my only
point of dissatisfaction, and soif I were to leave at some
point, it would likely bebecause of that right Is that I
need an advisor or a team thatmore carefully delivers on my
(16:11):
biggest asset, which is mybusiness.
Speaker 2 (16:14):
The interesting thing is, the biggest blind spot that
business owners have is thebiggest blind spot that
financial advisors have, in myhumble opinion, and that's the
enterprise value of the business.
Business owners aren't thinkingabout it, financial advisors
aren't thinking about it.
This is the big opportunity forfinancial advisors to step into
this new awareness and shiftthe paradigm of the business
owner around.
(16:36):
Hey, my business is more justthan a job and an income.
There's asset value to it, orwhat would it take to create
asset value in the business.
But before a financial advisorcan do that, they often have to
shift their own paradigm aroundenterprise value.
And so I think the challenge islike they're not just they're
just not getting trained thisway, like it hasn't been a thing
(16:58):
.
Therefore, it's like thishidden epidemic that businesses
aren't being built to sell.
Nobody's thinking about it.
Now the SEPA in the EBIcommunity, the Exit Planning
Institute and the accreditationhas done a lot of good work
creating more awareness withfinancial advisors around this,
but in my opinion, there's stilla gap.
They come out of the SEPA.
They realize how important itis to leverage the business to
(17:20):
hit financial goals, but there'sa bit of a gap.
And how do I bring this tobusiness owners.
What do I say?
What's my new strategy?
What's my new talk tracksaround this?
And so we've met so many SIPAfinancial advisors that we
identified this.
We've worked with EPI and we'vecreated what we call the SIPA
immersion event, which is andyou don't have to be a SIPA, but
(17:41):
it's really a it's an in-personlearning event that we've done
here in Chicago.
Our third one is going to be inNovember.
It's already sold out, so it'sa hot topic.
It's proving to be a hot topicof how do you become a business
owner specialist as a financialadvisor, like, literally, what
are the tools, strategies andtalk tracks that you use to
(18:02):
connect with business ownersaround this?
Speaker 1 (18:04):
If I'm not mistaken, just in terms of how you help,
is that you not only.
For example, they get certifiedwith what was it called the
Exit Planning Institute.
Speaker 2 (18:13):
Exit Planning Institute.
Speaker 1 (18:14):
Yep, and they work with you.
You have training, but you alsojust underscore.
You go that extra step whereyou work with them hand in glove
in terms of helping theirclients.
In other words, it's, it's notjust this certification Great,
you got the paper, go out and dogood work, which I think you
said it but I think that's thebiggest block is having my name
on a piece of paper really ismeaningless until I actually put
it into action and develop theskill and the muscle.
(18:37):
There's some great adultlearning statistics.
I believe, just off of memory,it's 10% come from books and
training courses and learningand I think it's like I forget
the exact numbers, but it's 20,and then 70 actually comes from
implementation and coach, or 20comes from coaching and then 70
comes from implementation.
But if you never get from pointA to point B and you don't have
someone that can reallyconfidently guide you and you
(18:58):
can trust with your businessowner clients to collaborate
with, you're going to be stuckjust with that piece of paper
without a lot to show for itwould be my guess.
Is that what you're saying?
Spot on.
Speaker 2 (19:08):
It's spot on.
Yeah, there's four lettersbehind their name now C-E-P-N-A,
but they need action-basedlearning, right, they need those
reps.
We do really two things withfinancial advisors.
Yeah, we help their businessesand their portfolio grow and
scale and increase the assetvalue to help hit their
financial goals.
But we're also training themand educating them on how to
(19:32):
work with business owners sothey can make this accreditation
work for them, so they canbecome business owner
specialists and create moreawareness around the enterprise
value.
They don't have to go deep.
I got a guy for that.
Right, they're not going to dotheir estate planning.
They're not going to do theirtaxes.
You've got a guy for that.
So a lot of what we do is andthen we have them along for the
ride where they watch us do it,and we get a lot of great
(19:55):
feedback of oh, that's sohelpful that there's such a good
training and educationalcomponent allowing me to ride
shotgun and observe what you'redoing.
And so, yeah, it's two differentpieces, like helping the
business owner clients and wejust saw this gap with SEPA
financial advisors or financialadvisors that work with business
owners Like, how do theyconnect with business owners in
a new way?
Nobody's training or educatingthem on that.
(20:16):
So we said, hey, we'll do it.
I'm more than 3,000 businessessince we've been around, so
we'll open source everythingthat we've learned and
everything, and even the toolsthat we use to quantify the
health and the value of thebusiness on the front end.
We raised our hand.
Epi gave us the blessing to runthese training programs for
(20:36):
financial advisors and we're offand running and, like I said,
the November 20th event isalready sold out.
We're at max capacity.
Speaker 1 (20:43):
Yeah, I know from a previous conversation that you
work with financial advisorsacross the board, but there's
one company in particular thatseems to be really excited about
what you're doing at a highlevel.
Tell us more about what'sexciting and you can share names
if you want.
I don't want to do it on yourbehalf, but what has them so
excited about collaborating withyou to help their advisors?
Speaker 2 (21:02):
So we have run three SIPA immersion events and this
is training for financialadvisors.
The first one was in April.
We did it in Chicago for 13financial advisors we know in
Chicago and so they came in.
We said, hey, we want feedback.
We got great feedback.
They seemed to think it wasreally valuable and really
helpful.
So we got a lot of positivefeedback.
(21:22):
And then we got feedback onwhat we could change.
So we went into July and we didthat in our office.
The one in April was in ouroffice here in Oak Brook
Illinois.
Then we went offsite to atraining facility in Rosemont,
illinois, and had SEPAs come infrom around the country
financial advisors Again somenon-SEPAs, but primarily SEPAs
and then we ran this trainingprogram and by all accounts it
(21:45):
was a home run.
Financial advisors saying, hey,this is the best two-day
training I've had ever.
This is the best training I'vehad in 15 years.
I wish I knew about this sooner.
They were just like it wasawesome to get this feedback.
And then now we're doing thenext one in November.
So one of the firms, EdwardJones.
All different firms wererepresented there, but Edward
Jones has the most SEPAs.
They have probably 1400 SEPAsand so it's very they've got a
(22:10):
good population.
They have a monthly call whereall these SEPAs come in and they
do learn, they do bestpractices and they're really
just trying to like raise thetide with that.
And so, following our SIPAimmersion event in July, their
call was all about that eventand they had people share their
feedback, what they thought ofit, and the feedback was very
positive and glowing and it wentviral.
(22:32):
It literally went viral withintheir 1400 SIPAs and, like they
sold out we sold out all thetickets in August and they're
all 99% of them are Edward Jonesadvisors.
Speaker 1 (22:43):
Good problem to have.
It is Sold out.
Yeah, yeah.
Speaker 2 (22:47):
So they're really an early adopter.
Speaker 1 (22:49):
That's fantastic.
What's your vision for thefuture, whether that's the next
six months, year, five years?
How do you see yourselfpartnering with financial
advisors and helping them overthe upcoming years or so?
Speaker 2 (23:02):
I'll go back to what I call the hidden epidemic with
business owners.
I've talked to a thousandbusiness owners in my role here
at Cultivate over the past fourand a half years, almost five
years.
99% of them can't answer allthree of these questions what's
the value of my business, what'sthe multiple range for my
industry and what drives valuein my industry and in my
(23:25):
particular business that can't?
99% of business owners can'tanswer those three questions.
And what's funny?
We were talking about AIearlier.
You could literally plug thatinto AI and get it in a better
setting.
Speaker 1 (23:35):
Well, I was going to push back just a little bit
because I've had those thoughtsand I put it into AI and it
gives it spits out someinformation.
It doesn't mean I'm going to doanything with it necessarily.
It just means that I have aheightened awareness because of
AI.
Speaker 2 (23:46):
Yes, we just want heightened awareness.
Awareness is the precursor totransformation.
So you've got to start withawareness.
You've got to understand whatis the current state in order to
understand where can I go forthe future.
Say, like a GPS right, likeyou're never going to get to
where you want to go unless youplug in where you're at right
(24:06):
now or the GPS is reading whereyou're at right now, then it can
give you a path around.
So just knowing where we're at,with the businesses not being
able to sell, only 30% ofbusinesses that go to market are
able to sell.
I've stress tested that numberbecause when I first heard it I
was like this is insane.
This is true, this is insane.
So I was asking M&A advisors,business brokers, even at the
immersion event.
They're like, if anything thatis generous, that's rosy, it's a
(24:30):
rosy number.
I was like, oh my gosh, we hadan M&A advisor at the last
immersion event.
He goes yeah, I put it morearound 10, 15%, at least the
ones I talk to.
So you've got that right.
And then you've got they do goto market, they do sell.
Of the businesses that do sell,what's the number?
90% of business owners selldon't feel like they got the
(24:52):
value they expected.
You do the math on it, that's97% of businesses aren't going
into the sunset the way theythought they would.
This is such a massiveopportunity for financial
advisors to orient themselvesaround this.
It's what we do at Cultivate.
It's a very successful formulaand nobody has a better commonly
(25:13):
aligned goal than the financialadvisor and that's hitting the
financial goals for thisbusiness.
So that's where the opportunityis.
That is.
And so where you say where do Isee the future is like, how do
we make those numbers better?
Those are hidden, epidemicnumbers and nobody's talking
about it.
And we hear a lot about thegreat wealth transfer.
Right, big part of that istransferring business ownership.
(25:33):
Most of these companies aren'tbuilt to sell.
They're not going to sell.
And EPI talks about how do weget more significant companies
out there Successful versussignificant.
Where successful is, hey, it'sa profitable business, it's
employing people, it's good forthe community, significant
business is all those things,but it's a business that's able
(25:54):
to transfer its ownership tosomebody else.
That's the difference between itand business owners.
50% of businesses, businessowners, just get separated from
their business due toinvoluntary reasons.
I talk about the five Ds death,divorce, disease, disability
disruption, and so life throwsyou a curveball.
Right, life throws you acurveball.
(26:14):
If you don't have, if you'renot building your company in a
way that you can transferownership, chances are you're
not going to get any money outof it.
Or if this offer comes out ofthe sky and then you go through
due diligence with somebody andthey beat you up over the value
drivers and it ends up beingpennies on the dollar.
Business owners get a littlejaded when they go through a
real long process and the numberisn't what that was initially
(26:37):
posed as the point is that I goto AI for everything.
Speaker 1 (26:40):
Right, so I can okay, value, I can go get detailed
stuff, great thought partner.
However, I think it's like it'slike I recently hired a
personal trainer.
I can go to AI and be like,okay, what should I do to lose
weight and build muscle?
And it's going to be like youshould do this and this.
I'll be like that's great, andthen I take no action, right, I
just sit there and say, okay,that was good information, I did
nothing with it, but I hiredthe personal trainer.
(27:08):
So I'm actually in the gym threedays a week doing stuff that I
would rather not do, and I thinkthat analogy that stands out to
me is that, however, awarenessis the precursor, and I think
it's talking about it.
It's one way to createawareness.
Ai can play a role in that, interms of creating awareness, but
, at the end of the day, for abusiness owner and a financial
advisor, you actually need theanalogy that personal trainer,
who knows what they're doing,can give you specific advice and
(27:31):
hold you accountable and, overtime, you're going to deliver
the results in a way that justbeing aware of it is not going
to happen.
Speaker 2 (27:37):
Totally.
I don't know this to be truefor a fact, but I think the vast
majority of business owners arehiring us to be their
accountability partner.
Yes, it's strategic.
Yes, we have templates that wecan plug in and customize for
their own thing and make it alot easier.
But they just need thataccountability.
They need to know they're goingto meet with their advisor two
times a month for two hours asession and we're going to do
(27:58):
this work together and they'regoing to be responsible for some
things.
We're going to be responsiblefor some things and we're going
to hold each other mutuallyaccountable to hit these goals
faster and ensure it happens.
That's a big reason.
They just need theaccountability, because they put
out fires, they pulled kittensout of trees, all this stuff
right Like they got all theshiny objects and a lot of
(28:19):
entrepreneurs have ADHD anywaysand so it's just like they get
easily distracted.
It's like how do we stay ontrack, how do we follow the plan
and how do we ensure that thesegoals and these initiatives are
being accomplished?
Speaker 1 (28:29):
Is there anything that I haven't asked you that
you think is important for thisconversation?
Speaker 2 (28:32):
You know what I think is funny I'll just mention this
because this is happening moreand more.
Financial advisors are businessowners too, you know.
So they can relate to businessowners as being a business owner
like peer level relatability.
And so a lot of financialadvisors will go hey, I want to
go through your process, becausewe have a complimentary three
steps of our process.
We'll do a business valuation,we'll do a gap analysis and then
(28:54):
we'll create a prioritizedroadmap for them.
They can take it and run withit, make it a DIY project, or
they can hire us for theaccountability and the strategy.
So a lot of financial advisorswill say I want to go through
this process for my own practice.
I want to do the businessvaluation, I want to meet with a
strategist and a businessadvisor to create a tailored
(29:14):
business plan.
We'd always go yeah, sure, thatmakes sense.
We wouldn't really advertise it, we would make it available to
them.
Yeah, you can go through it.
The funny thing is about 50% ofthe time they ended up signing
up with we're now working withfinancial advisors as clients to
help them grow and scale theirpractice, and so I put that out
there, just because the way thatwe're not really marketing it
(29:35):
that way, but maybe we should.
Speaker 1 (29:36):
I think it's fantastic.
It's.
I've started just kind of in asimilar vein.
It's like one of the things wehelp our clients do is, once
they have a book, it's need togo get on podcast as a guest to
promote the book and yourmessage and et cetera.
And everyone comes withdifferent skill sets, right, and
so one of the things that we'vedone is that we now person our
team, that we have them do apractice session with before
(29:56):
they come on my podcasttypically and it's an hour, etc
and then after that we give themoptions.
Hey, we have a paid servicethat you can do more if you want
to, and half of them end updoing it because now that
they've seen the process andthey've been exposed to it, now
the gap between where they areand where they want to be is
more clear, whereas if they'dnever done the initial thing,
then it'd be like they wouldn'tbe interested because there'd be
(30:18):
a lack of awareness, and so Idefinitely can see how that's
actually, whether it'sintentional or not, is a
powerful way to get people tosign up.
That's kind of like aninteresting byproduct I listened
to back in the day there was Iforget who did this, but I think
it was Brian Tracy, if you knowwho he is, but he called I
think it was him.
He called it the puppy dogclothes, and it's the kid and
the dad go to the, go to the petstore and the kids I want the
puppy and the dad's like wedon't need the puppy and the pet
(30:39):
store is like, hey, you canjust take it home for the
weekend and don't like it, youcan bring it back and oh no,
we're getting a puppy.
Speaker 2 (30:50):
Once, no way.
Speaker 1 (30:51):
I've enjoyed the conversation.
Where can people find you Ifsomeone's interested, whether
it's a financial advisor, whomostly are listeners where can a
financial advisor go to eitherconnect with you or to learn
more about Cultivate Advisors?
Speaker 2 (31:02):
Yeah, I think.
Connect with me LinkedIn.
I'm on LinkedIn, jeff Armstrong, and then my email is Jeff A,
because I'm not the first Jeffat Cultivate, jeff A at
CultivateAdvisorscom, and youcan also go to
CultivateAdvisorscom to checkout what we're up to.
Speaker 1 (31:18):
Perfect.
All right, Jeff, it's been apleasure.
I've enjoyed the conversation.
Thanks, Paul.
Speaker 2 (31:22):
Thanks for having me on.
Imagine your best client, the one you've worked
with for 15 years, calls youthree weeks after selling his
business for $8 million.
Your heart races, thinking hewants to celebrate and plan his
next chapter.
Instead he drops a bombshellI'm moving everything to Goldman
Sachs.
I'm in the big leagues now yourstomach drops 15 years of
(00:21):
relationship gone in one phonecall.
Here's what nobody tells you.
This nightmare happens to 70% offinancial advisors when their
business owner clients exit.
But the advisors who avoid it.
They did one thing differentlyduring the relationship they
became the expert on theirclient's most valuable asset
before anyone else even thoughtto look.
(00:43):
Jeff Armstrong has cracked thecode on this.
As director of strategicpartnerships at Cultivate
Advisors, he's discovered why97% of business exits fail to
meet expectations and how smartadvisors are positioning
themselves as the indispensablequarterback throughout the
entire journey.
Today, on the InfluentialAdvisor podcast, jeff reveals
(01:08):
the blind spot that's costingadvisors millions in client
relationships and the specificstrategy that makes you more
valuable after the exit, notless.
He'll show you exactly how tobecome the advisor they can't
replace, even when Goldman comescalling.
Tell us a little bit about one,who you are, your background,
(01:36):
and then two who is CultivatedAdvisors and what is your
mission?
Speaker 2 (01:42):
What do you guys do there?
Yeah, absolutely yeah.
(02:08):
My background is I'm anentrepreneur.
I started my first company whenI was 25 years old.
I started business owners havebecause I'm a poster child for
all that stuff.
They don't really teach that inbusiness school.
It's a school of hard knockswhen you're a business owner
most of the time, and CultivateAdvisors is an organization that
helps business owners like melike I could have used Cultivate
Advisors when I had my businessbut they really help identify
what are the blind spots.
(02:28):
We're really the co-pilot, alongwith that business owner, to
help them grow, scale, gethealthier, more profitable, more
valuable.
And so we do one-on-oneadvising with small business
owners.
I would say 80% of our clientsdo between a million and 15
million in annual sales.
That's where we niche inIndustry agnostic, but we pair
(02:51):
them with an advisor on our team.
All of our advisors we have 30,are all former business owners
and so they've all scaled andsuccessfully exited their own
businesses and now they workalongside other owners and
entrepreneurs who are looking todo something similar.
So there's been there, donethat experience and also we work
within a methodology to helpgrow and scale businesses, and
(03:13):
we work within a tech platformas well to keep everybody very
organized.
Speaker 1 (03:17):
Why do business owners come to you and what I
mean by that is that I'm abusiness owner myself, so I fit
into that category and what'stypically the pain point or the
desire that leads someone toyour doorstep?
Versus the other services, whynot hire a marketing person?
Or why not hire XYZ?
What is it specifically thatyou find gets business owner
(03:39):
interested and to your services?
Speaker 2 (03:44):
Yeah, I would say it probably falls into one or two
buckets typically.
Oftentimes they're stuck at acertain revenue plateau.
They can't seem to get to thatnext level.
They don't know what that wouldentail or what they could do
differently.
They often feel overwhelmed inthe business, and so it's a kind
of a growth issue.
The other issue is we meetcompanies that don't have a
(04:06):
problem growing, but they have apeople problem or keeping
capacity.
How do I have the right systemsor the right people?
And so that growth or capacityissue it's oversimplifying it,
but that's typically one of thethings that they want to solve.
Also, we get introduced to alot of businesses that are
looking to transfer ownershipdown the road.
Typically it's three to fiveyears or they know the number
(04:29):
they need to hit and they needhelp reverse engineering.
That Business owners arehistoric.
They have a blind spot aroundthe asset value, the enterprise
value of the business.
Businesses aren't being builtto sell.
The stats on that are prettybad.
Actually, only 30% ofbusinesses that go to market
actually do sell.
The stats on that are prettybad.
Actually Only 30% of businessesthat go to market actually do
sell Really bad stats.
That was our houses.
(04:49):
We'd be turning ourselvesinside out to figure out how to
get in the top 30%.
So oftentimes they'll come, getintroduced to us.
We do a business valuation andthen we build them a plan to
increase their enterprise value,decrease the health and the
value of the business.
So that's another category.
They come to us but it's hard Aposter child again for all that
stuff.
(05:09):
I didn't have an awarenessaround my enterprise value.
But most business owners getinto business because they're
technically proficient atsomething, or see an opportunity
, they're passionate aboutsomething, or ideally all three
right.
And then they have to knowfinancials.
And they have to knowfinancials and they have to know
marketing and sales andleadership and recruiting all
these different hats you have towear.
(05:30):
It's near impossible to be anexpert in all those different
areas.
And so we identify hey, where'sthe low-hanging fruit, the way
that we can optimize thebusiness in pursuit of what the
vision and goals are for thebusiness owner.
And then we play matchmaker.
We match the right advisor tothe right business, the one that
we think would move the needlein the company the best.
Speaker 1 (05:50):
Yeah, have you read Michael Gerber's the E-Myth?
Oh yeah, I've listened to theaudio.
He has a great voice.
I've listened to the audiomultiple times and it just has a
great.
It just outlines it so nicely.
Just, the technician becomes abusiness owner and it's a
completely different thing thatthey're doing.
So it's just a greatarticulation of that.
Where does the financialadvisor fit in with what you do?
(06:13):
And I guess part of thequestion is do these business
owners do they typically come toyou directly, or do you partner
with financial advisors whowork with business owners to
help with these things?
Help us understand that alittle bit better.
Speaker 2 (06:30):
Yeah, they both.
They come to us directly andthey also come to us as being
introduced by financial advisors.
I would say financial advisorsis our biggest bucket for
strategic partnerships and it'sone that I'm fully niched into.
So I spend my week, I probablytalk to seven new financial
advisors a week and I talk tofive business owners a week that
they introduce to cultivate theway it works with financial
advisors.
(06:50):
And we work with a lot of SEPAsCertified Exit Planning
Financial Advisors who areniching into the business owner
space.
They want to expand into thebusiness owner space.
We work with non-SEPAs as wellthat work with business owners.
The idea is the business is theowner's largest asset Yep, by
far, it's the big stock, it'sthe big mutual fund that they
(07:12):
can directly influence theoutcome over.
And so a financial advisorthat's working with business
owners, trying to help them hittheir financial goal and close
the wealth gap.
The big lever to pull isoptimizing the business and
where the opportunity is, mostbusiness owners don't know the
enterprise value of theirbusiness.
They're mostly guessing, orthey just simply don't know the
(07:32):
enterprise value of theirbusiness.
They're mostly guessing, orthey just simply don't know, or
it's anecdotal evidence, like mybuddy at the country club sold
his business for this.
They just don't spend a lot oftime into it.
So we do a business valuation.
We'll let a business owner knowwhat we think the business is
worth, what the multiple rangeis for their industry, what are
some of the things that woulddrive the multiple to the top
(07:52):
end of the stick.
If you're a managed IT company,you have a multiple range of two
times profit or two timesEBITDA, and that the best in
class is 10.
That's a large range betweentwo and 10.
So how do you move to the topend of the stick?
What does the company look likenow and what would it make
sense to spend a little time andenergy on via Michael Gerber's
the E-Myth right sense to spenda little time and energy on, via
(08:14):
Michael Gerber's the E-Mythright, in pursuit of working on
the business, but in pursuit ofincreasing the health and value
of the business.
And so we work with financialadvisors who want to quantify
the asset value of the businessand they're interested in
increasing the asset value ofthe business.
So we work on how do weincrease the wealth inside the
business, partnering withfinancial advisors who want to
(08:35):
create the wealth outside thebusiness.
And it can be a killer.
One-two punch.
Speaker 1 (08:39):
How do you ensure comfort, and what I mean by that
is that, for example, financialadvisor and a CPA when they
have a good relationship, theytend to work seamlessly together
and it benefits the client.
When they don't work together,it tends to not be the best in
it.
The client might get confusedin terms of advice.
How do you manage in such a waythat gives the financial
advisor a high degree ofconfidence that what you're
(09:00):
doing A is going to make themlook good and B is going to help
them build their own business,not siphon it away?
Speaker 2 (09:06):
Great question and it's something that we,
especially early on, seem to beaddressing a lot more of.
We're not doing it as much nowthat we have a bit of a name
brand around, cultivate,especially in the SEPA community
.
We do a lot of trainings forthat community.
We want to be an extension ofthe financial advisors team.
We're there, the quarterback,and we just stay in our lane.
(09:27):
In business optimization we alsotake a crawl, walk, run
approach.
Hey, let's pilot one of these.
Let's have you come in on thediscovery call, lay eyes on it.
We'll share as this businessowner comes through the free
steps of our process.
We'll keep you posted andlooped in on all the
communications because we're anextension of your team.
We just want to make you looklike a rock star.
(09:49):
And then if a business ownersigns on with Cultivate, then
we're as collaborative as thefinancial advisor would like us
to be.
We're pulse, checking what'sgoing on in the business every
quarter and rolling thosestories, those metrics, up to
the financial advisor, either ona quarterly basis or on two
times a year basis, whateverthey'd like to see.
(10:09):
They can also log in, if thebusiness owner is good with it,
into the software that we use tokeep everything organized so
they can get a high level macro30,000 foot view into what's
going on in the business andthey can get as micro as they
want to.
The business owner can sharethe login credentials so they
can be as involved as they wantto be, and we're very cognizant
(10:29):
of the fact that they'respending relational equity with
us by making introductions, andso we do everything we can to
again make them look like a rockstar and just deliver a
world-class experience for thebusiness owners that come
through.
And the wealth advisor is goingto get good data and
deliverables from the free stepsof what we do, and I can talk a
(10:51):
little bit about what thatprocess looks like.
But the first deliverable is abusiness valuation.
So it's going to we ask, hey,what does the business owner
think the business is worth now?
What do they want it to beworth?
A lot of times this is thefirst time they're processing
through that Then we give themthe valuation, we give them the
health score, what the potentialvalue of the business would.
So this is a lot of good datafor the financial advisors that
(11:14):
they can pull and use in theircomprehensive planning.
Speaker 1 (11:17):
Aside from serving the client.
How does the financial advisormake money?
In other words, the motivationis I want to help my client the
best, but I also want to makesure I protect my relationship
and, ultimately, I'm looking forways to grow my own business
and make more money.
Speaker 2 (11:32):
We call those alley-oops and ultimately I'm
looking for ways to grow my ownbusiness and make more money.
We call those alley-oops.
When we're alley-ooping for thefinancial advisor to make a
slam dunk, financial advisorswin.
When a business is growing andscaling and getting healthier
and opening up the cash flowpipe, a financial advisor wins.
So we'll set them up for whatwe call alley-oops.
We'll also advocate for thingsthat the business owners should
(11:54):
be doing that we don't do.
But if it's a partnershipagreement, do you have a
buy-sell agreement?
Is it funded at the appropriatelevel?
No, you should go talk to thefinancial advisor, right?
Whoever that referring partneris.
Oh, you've got a big cash flowpipe, you've got a repeatable
recurring profit and we got totake a look at tax mitigation
strategies.
(12:15):
Maybe you should look into acash balance plan.
Go talk to ex-financial advisor.
Those are.
We've got this money that'ssitting in the checking that's
not being used to support thegrowth of the business.
Let's look at diversifying andstripping some of that wealth
out of the business anddiversifying it.
We're creating those alley-oopsfor the financial advisor and
also for tax and legal too.
(12:36):
There's implications that wesee.
We'll advocate for that.
Again, we don't do those things, but we typically will send it
to the financial advisor.
If we don't have somebody atthe table for that, then
sometimes we can pull a partyinto it.
But we really look for thefinancial advisor to be the
quarterback make those decisionsaround.
Who do they want at the table?
Speaker 1 (12:54):
Additionally, I think , the business owner, especially
the growing, more successfulbusiness owner, if the financial
advisor doesn't bring in theresources, such as yourself, or
have those resources internally,what's the likelihood that the
client may outgrow the financialadvisor or feel that they're
outgrowing the financial advisor.
That's part one.
The other part is that I thinkpart of the payoff could be is
(13:15):
when they actually sell theirbusiness, ideally for a higher
amount, and then now they have agreat problem of what do I do
with all this?
Speaker 2 (13:22):
money.
Yes, thank you, paul, forbringing us back to that, and
that's why financial advisorsget their SIPA right, like they
want to get connected to thatliquidity event and it is that
pot at the end of the rainbow.
That's the big prize for sure.
The alley-oops are like littlethings that we can do along the
journey, and the research thatI've found says 50 to 70% of
(13:44):
business owners leave theirfinancial advisor when they have
a liquidity event.
I've got plenty of stories fromfinancial advisors where that
actually prompted them to lookinto certified exit planning and
how can they provide more valueto a business owner around the
entrepreneurial journey.
So if that data is correct,those are more scary stats right
.
50 to 70% of business ownersoutgrow or move over to another
(14:08):
financial advisor when they havea liquidity event.
A lot of times that comes fromthe investment bank or the M&A
advisor or the business attorneysaying, hey, congratulations,
you just joined the big leagues.
You've got to have a playerthat does this.
What we found is that if afinancial advisor is adding
value along the business owner'sjourney, as it relates to the
(14:29):
value of their business, ie whatis it going to sell for If
they're looking at through thebusiness through that lens From
my perspective.
I think they should be, becauseit's an asset and they're
managing assets that they shouldbe looking and quantifying what
is the asset value of thebusiness.
If they're providing valuealong that journey, they create
(14:49):
that stickiness where thatbusiness owner isn't going to go
anywhere because they've beenthe guy that's helping them
understand what is the value,what are the things I can do to
increase it, and they're alongwith that journey.
So it creates that stickinesswhere they won't move.
Speaker 1 (15:04):
Yeah, I'll just share just from personal experience.
So I've hired my own financialadvisor just in the past year
and it's really resonated withhis.
So he's a client of mine, hewrote a book with us and I just
really resonate with his messageand so I've been working with
him for a year and it's beenfantastic, and I don't call it
an issue.
But my only place where I'dmaybe be a little bit
dissatisfied is that even he'sviewing me through more of a
(15:27):
lens of simply the traditionalmetrics or at least that's how I
feel right, how much have yousaved in retirement, et cetera,
and which is great.
I'm making progress there andthat's fantastic.
I'm diversifying all those goodthings.
However, there's not enoughconversation about what's the
valuation of your business, howdoes this play a role and how do
we increase that?
There's really none.
(15:48):
I've brought it up severaltimes.
I'm like you need to add thisinto the overall pie so that we
actually have a more accuratepicture, and because I don't
think that's the sweet spot ofwhat he and his team do.
Those tend to be overlooked,and that's probably my only
point of dissatisfaction, and soif I were to leave at some
point, it would likely bebecause of that right Is that I
need an advisor or a team thatmore carefully delivers on my
(16:11):
biggest asset, which is mybusiness.
Speaker 2 (16:14):
The interesting thing is, the biggest blind spot that
business owners have is thebiggest blind spot that
financial advisors have, in myhumble opinion, and that's the
enterprise value of the business.
Business owners aren't thinkingabout it, financial advisors
aren't thinking about it.
This is the big opportunity forfinancial advisors to step into
this new awareness and shiftthe paradigm of the business
owner around.
(16:36):
Hey, my business is more justthan a job and an income.
There's asset value to it, orwhat would it take to create
asset value in the business.
But before a financial advisorcan do that, they often have to
shift their own paradigm aroundenterprise value.
And so I think the challenge islike they're not just they're
just not getting trained thisway, like it hasn't been a thing
(16:58):
.
Therefore, it's like thishidden epidemic that businesses
aren't being built to sell.
Nobody's thinking about it.
Now the SEPA in the EBIcommunity, the Exit Planning
Institute and the accreditationhas done a lot of good work
creating more awareness withfinancial advisors around this,
but in my opinion, there's stilla gap.
They come out of the SEPA.
They realize how important itis to leverage the business to
(17:20):
hit financial goals, but there'sa bit of a gap.
And how do I bring this tobusiness owners.
What do I say?
What's my new strategy?
What's my new talk tracksaround this?
And so we've met so many SIPAfinancial advisors that we
identified this.
We've worked with EPI and we'vecreated what we call the SIPA
immersion event, which is andyou don't have to be a SIPA, but
(17:41):
it's really a it's an in-personlearning event that we've done
here in Chicago.
Our third one is going to be inNovember.
It's already sold out, so it'sa hot topic.
It's proving to be a hot topicof how do you become a business
owner specialist as a financialadvisor, like, literally, what
are the tools, strategies andtalk tracks that you use to
(18:02):
connect with business ownersaround this?
Speaker 1 (18:04):
If I'm not mistaken, just in terms of how you help,
is that you not only.
For example, they get certifiedwith what was it called the
Exit Planning Institute.
Speaker 2 (18:13):
Exit Planning Institute.
Speaker 1 (18:14):
Yep, and they work with you.
You have training, but you alsojust underscore.
You go that extra step whereyou work with them hand in glove
in terms of helping theirclients.
In other words, it's, it's notjust this certification Great,
you got the paper, go out and dogood work, which I think you
said it but I think that's thebiggest block is having my name
on a piece of paper really ismeaningless until I actually put
it into action and develop theskill and the muscle.
(18:37):
There's some great adultlearning statistics.
I believe, just off of memory,it's 10% come from books and
training courses and learningand I think it's like I forget
the exact numbers, but it's 20,and then 70 actually comes from
implementation and coach, or 20comes from coaching and then 70
comes from implementation.
But if you never get from pointA to point B and you don't have
someone that can reallyconfidently guide you and you
(18:58):
can trust with your businessowner clients to collaborate
with, you're going to be stuckjust with that piece of paper
without a lot to show for itwould be my guess.
Is that what you're saying?
Spot on.
Speaker 2 (19:08):
It's spot on.
Yeah, there's four lettersbehind their name now C-E-P-N-A,
but they need action-basedlearning, right, they need those
reps.
We do really two things withfinancial advisors.
Yeah, we help their businessesand their portfolio grow and
scale and increase the assetvalue to help hit their
financial goals.
But we're also training themand educating them on how to
(19:32):
work with business owners sothey can make this accreditation
work for them, so they canbecome business owner
specialists and create moreawareness around the enterprise
value.
They don't have to go deep.
I got a guy for that.
Right, they're not going to dotheir estate planning.
They're not going to do theirtaxes.
You've got a guy for that.
So a lot of what we do is andthen we have them along for the
ride where they watch us do it,and we get a lot of great
(19:55):
feedback of oh, that's sohelpful that there's such a good
training and educationalcomponent allowing me to ride
shotgun and observe what you'redoing.
And so, yeah, it's two differentpieces, like helping the
business owner clients and wejust saw this gap with SEPA
financial advisors or financialadvisors that work with business
owners Like, how do theyconnect with business owners in
a new way?
Nobody's training or educatingthem on that.
(20:16):
So we said, hey, we'll do it.
I'm more than 3,000 businessessince we've been around, so
we'll open source everythingthat we've learned and
everything, and even the toolsthat we use to quantify the
health and the value of thebusiness on the front end.
We raised our hand.
Epi gave us the blessing to runthese training programs for
(20:36):
financial advisors and we're offand running and, like I said,
the November 20th event isalready sold out.
We're at max capacity.
Speaker 1 (20:43):
Yeah, I know from a previous conversation that you
work with financial advisorsacross the board, but there's
one company in particular thatseems to be really excited about
what you're doing at a highlevel.
Tell us more about what'sexciting and you can share names
if you want.
I don't want to do it on yourbehalf, but what has them so
excited about collaborating withyou to help their advisors?
Speaker 2 (21:02):
So we have run three SIPA immersion events and this
is training for financialadvisors.
The first one was in April.
We did it in Chicago for 13financial advisors we know in
Chicago and so they came in.
We said, hey, we want feedback.
We got great feedback.
They seemed to think it wasreally valuable and really
helpful.
So we got a lot of positivefeedback.
(21:22):
And then we got feedback onwhat we could change.
So we went into July and we didthat in our office.
The one in April was in ouroffice here in Oak Brook
Illinois.
Then we went offsite to atraining facility in Rosemont,
illinois, and had SEPAs come infrom around the country
financial advisors Again somenon-SEPAs, but primarily SEPAs
and then we ran this trainingprogram and by all accounts it
(21:45):
was a home run.
Financial advisors saying, hey,this is the best two-day
training I've had ever.
This is the best training I'vehad in 15 years.
I wish I knew about this sooner.
They were just like it wasawesome to get this feedback.
And then now we're doing thenext one in November.
So one of the firms, EdwardJones.
All different firms wererepresented there, but Edward
Jones has the most SEPAs.
They have probably 1400 SEPAsand so it's very they've got a
(22:10):
good population.
They have a monthly call whereall these SEPAs come in and they
do learn, they do bestpractices and they're really
just trying to like raise thetide with that.
And so, following our SIPAimmersion event in July, their
call was all about that eventand they had people share their
feedback, what they thought ofit, and the feedback was very
positive and glowing and it wentviral.
(22:32):
It literally went viral withintheir 1400 SIPAs and, like they
sold out we sold out all thetickets in August and they're
all 99% of them are Edward Jonesadvisors.
Speaker 1 (22:43):
Good problem to have.
It is Sold out.
Yeah, yeah.
Speaker 2 (22:47):
So they're really an early adopter.
Speaker 1 (22:49):
That's fantastic.
What's your vision for thefuture, whether that's the next
six months, year, five years?
How do you see yourselfpartnering with financial
advisors and helping them overthe upcoming years or so?
Speaker 2 (23:02):
I'll go back to what I call the hidden epidemic with
business owners.
I've talked to a thousandbusiness owners in my role here
at Cultivate over the past fourand a half years, almost five
years.
99% of them can't answer allthree of these questions what's
the value of my business, what'sthe multiple range for my
industry and what drives valuein my industry and in my
(23:25):
particular business that can't?
99% of business owners can'tanswer those three questions.
And what's funny?
We were talking about AIearlier.
You could literally plug thatinto AI and get it in a better
setting.
Speaker 1 (23:35):
Well, I was going to push back just a little bit
because I've had those thoughtsand I put it into AI and it
gives it spits out someinformation.
It doesn't mean I'm going to doanything with it necessarily.
It just means that I have aheightened awareness because of
AI.
Speaker 2 (23:46):
Yes, we just want heightened awareness.
Awareness is the precursor totransformation.
So you've got to start withawareness.
You've got to understand whatis the current state in order to
understand where can I go forthe future.
Say, like a GPS right, likeyou're never going to get to
where you want to go unless youplug in where you're at right
(24:06):
now or the GPS is reading whereyou're at right now, then it can
give you a path around.
So just knowing where we're at,with the businesses not being
able to sell, only 30% ofbusinesses that go to market are
able to sell.
I've stress tested that numberbecause when I first heard it I
was like this is insane.
This is true, this is insane.
So I was asking M&A advisors,business brokers, even at the
immersion event.
They're like, if anything thatis generous, that's rosy, it's a
(24:30):
rosy number.
I was like, oh my gosh, we hadan M&A advisor at the last
immersion event.
He goes yeah, I put it morearound 10, 15%, at least the
ones I talk to.
So you've got that right.
And then you've got they do goto market, they do sell.
Of the businesses that do sell,what's the number?
90% of business owners selldon't feel like they got the
(24:52):
value they expected.
You do the math on it, that's97% of businesses aren't going
into the sunset the way theythought they would.
This is such a massiveopportunity for financial
advisors to orient themselvesaround this.
It's what we do at Cultivate.
It's a very successful formulaand nobody has a better commonly
(25:13):
aligned goal than the financialadvisor and that's hitting the
financial goals for thisbusiness.
So that's where the opportunityis.
That is.
And so where you say where do Isee the future is like, how do
we make those numbers better?
Those are hidden, epidemicnumbers and nobody's talking
about it.
And we hear a lot about thegreat wealth transfer.
Right, big part of that istransferring business ownership.
(25:33):
Most of these companies aren'tbuilt to sell.
They're not going to sell.
And EPI talks about how do weget more significant companies
out there Successful versussignificant.
Where successful is, hey, it'sa profitable business, it's
employing people, it's good forthe community, significant
business is all those things,but it's a business that's able
(25:54):
to transfer its ownership tosomebody else.
That's the difference between itand business owners.
50% of businesses, businessowners, just get separated from
their business due toinvoluntary reasons.
I talk about the five Ds death,divorce, disease, disability
disruption, and so life throwsyou a curveball.
Right, life throws you acurveball.
(26:14):
If you don't have, if you'renot building your company in a
way that you can transferownership, chances are you're
not going to get any money outof it.
Or if this offer comes out ofthe sky and then you go through
due diligence with somebody andthey beat you up over the value
drivers and it ends up beingpennies on the dollar.
Business owners get a littlejaded when they go through a
real long process and the numberisn't what that was initially
(26:37):
posed as the point is that I goto AI for everything.
Speaker 1 (26:40):
Right, so I can okay, value, I can go get detailed
stuff, great thought partner.
However, I think it's like it'slike I recently hired a
personal trainer.
I can go to AI and be like,okay, what should I do to lose
weight and build muscle?
And it's going to be like youshould do this and this.
I'll be like that's great, andthen I take no action, right, I
just sit there and say, okay,that was good information, I did
nothing with it, but I hiredthe personal trainer.
(27:08):
So I'm actually in the gym threedays a week doing stuff that I
would rather not do, and I thinkthat analogy that stands out to
me is that, however, awarenessis the precursor, and I think
it's talking about it.
It's one way to createawareness.
Ai can play a role in that, interms of creating awareness, but
, at the end of the day, for abusiness owner and a financial
advisor, you actually need theanalogy that personal trainer,
who knows what they're doing,can give you specific advice and
(27:31):
hold you accountable and, overtime, you're going to deliver
the results in a way that justbeing aware of it is not going
to happen.
Speaker 2 (27:37):
Totally.
I don't know this to be truefor a fact, but I think the vast
majority of business owners arehiring us to be their
accountability partner.
Yes, it's strategic.
Yes, we have templates that wecan plug in and customize for
their own thing and make it alot easier.
But they just need thataccountability.
They need to know they're goingto meet with their advisor two
times a month for two hours asession and we're going to do
(27:58):
this work together and they'regoing to be responsible for some
things.
We're going to be responsiblefor some things and we're going
to hold each other mutuallyaccountable to hit these goals
faster and ensure it happens.
That's a big reason.
They just need theaccountability, because they put
out fires, they pulled kittensout of trees, all this stuff
right Like they got all theshiny objects and a lot of
(28:19):
entrepreneurs have ADHD anywaysand so it's just like they get
easily distracted.
It's like how do we stay ontrack, how do we follow the plan
and how do we ensure that thesegoals and these initiatives are
being accomplished?
Speaker 1 (28:29):
Is there anything that I haven't asked you that
you think is important for thisconversation?
Speaker 2 (28:32):
You know what I think is funny I'll just mention this
because this is happening moreand more.
Financial advisors are businessowners too, you know.
So they can relate to businessowners as being a business owner
like peer level relatability.
And so a lot of financialadvisors will go hey, I want to
go through your process, becausewe have a complimentary three
steps of our process.
We'll do a business valuation,we'll do a gap analysis and then
(28:54):
we'll create a prioritizedroadmap for them.
They can take it and run withit, make it a DIY project, or
they can hire us for theaccountability and the strategy.
So a lot of financial advisorswill say I want to go through
this process for my own practice.
I want to do the businessvaluation, I want to meet with a
strategist and a businessadvisor to create a tailored
(29:14):
business plan.
We'd always go yeah, sure, thatmakes sense.
We wouldn't really advertise it, we would make it available to
them.
Yeah, you can go through it.
The funny thing is about 50% ofthe time they ended up signing
up with we're now working withfinancial advisors as clients to
help them grow and scale theirpractice, and so I put that out
there, just because the way thatwe're not really marketing it
(29:35):
that way, but maybe we should.
Speaker 1 (29:36):
I think it's fantastic.
It's.
I've started just kind of in asimilar vein.
It's like one of the things wehelp our clients do is, once
they have a book, it's need togo get on podcast as a guest to
promote the book and yourmessage and et cetera.
And everyone comes withdifferent skill sets, right, and
so one of the things that we'vedone is that we now person our
team, that we have them do apractice session with before
(29:56):
they come on my podcasttypically and it's an hour, etc
and then after that we give themoptions.
Hey, we have a paid servicethat you can do more if you want
to, and half of them end updoing it because now that
they've seen the process andthey've been exposed to it, now
the gap between where they areand where they want to be is
more clear, whereas if they'dnever done the initial thing,
then it'd be like they wouldn'tbe interested because there'd be
(30:18):
a lack of awareness, and so Idefinitely can see how that's
actually, whether it'sintentional or not, is a
powerful way to get people tosign up.
That's kind of like aninteresting byproduct I listened
to back in the day there was Iforget who did this, but I think
it was Brian Tracy, if you knowwho he is, but he called I
think it was him.
He called it the puppy dogclothes, and it's the kid and
the dad go to the, go to the petstore and the kids I want the
puppy and the dad's like wedon't need the puppy and the pet
(30:39):
store is like, hey, you canjust take it home for the
weekend and don't like it, youcan bring it back and oh no,
we're getting a puppy.
Speaker 2 (30:50):
Once, no way.
Speaker 1 (30:51):
I've enjoyed the conversation.
Where can people find you Ifsomeone's interested, whether
it's a financial advisor, whomostly are listeners where can a
financial advisor go to eitherconnect with you or to learn
more about Cultivate Advisors?
Speaker 2 (31:02):
Yeah, I think.
Connect with me LinkedIn.
I'm on LinkedIn, jeff Armstrong, and then my email is Jeff A,
because I'm not the first Jeffat Cultivate, jeff A at
CultivateAdvisorscom, and youcan also go to
CultivateAdvisorscom to checkout what we're up to.
Speaker 1 (31:18):
Perfect.
All right, Jeff, it's been apleasure.
I've enjoyed the conversation.
Thanks, Paul.
Speaker 2 (31:22):
Thanks for having me on.
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