As business owners, your goal isn’t just to build wealth–it’s to find purpose and create a real legacy. However, so many entrepreneurs make the same mistakes, day in and day out, leaving them undervalued and stressed out.
Author Jim Muehlhausen has learned this well. Over the course of over 11,000 coaching sessions with business owners, he’s come to understand not only the fatal errors that they make, but why they keep happening and how to turn these pitfalls into income streams.
His work has led him to create the Half-Retire movement: a way for entrepreneurs to have the best of both worlds. He helps people keep their businesses, do right by their best people, and live a life of profit without the neverending grind.
In this podcast interview, you’ll learn:
Andrew Rafal: Welcome back to a brand-new episode of Your Wealth & Beyond, and I’m very excited to introduce all of you listeners to Jim Muehlhausen. Jim, welcome to the show. How’s it going this morning?
Jim Muehlhausen: Great to be here. Thank you, Andrew.
Andrew Rafal: Love that background. Beautiful office. So, you’re out, and where are you, in Indianapolis right now?
Jim Muehlhausen: Correct.
Andrew Rafal: And are you a Midwest guy through and through or where did you…
Jim Muehlhausen: I was raised in Chicago but moved here for law school and ended up staying. Chicago is a little crowded for me. So, I moved here.
Andrew Rafal: I used to live in Lincoln Park back in the day after school. I’m actually heading over there this weekend for some Dead & Company shows at Wrigley Field. So, it should be a good one.
Jim Muehlhausen: Oh, nice. That would be fun.
Andrew Rafal: So, well, great to have you. As you listeners know, a lot of the podcast is built around helping business owners not only build wealth but find a purpose. And that’s why, Jim, today, I think a great time for us to chat a little bit about that legacy, that purpose, and really your core value of why you are so passionate about helping business owners formulate kind of like what their ideal life looks like. So, before we jump in, this Half-Retire movement that you started, what does that mean? Because if I’m a listener, I hear that and I say, “Well, I’m kind of in, I’m out,” but walk me through what does Half-Retire mean, and then we’ll dig into the details.
Jim Muehlhausen: Well, you’re talking to a guy who’s done 11,000 coaching sessions with business owners. So, eventually, you start to see some repeats once you do that many. And I started to see people with three things going on. Number 1, they started to run their math, in your world, and the math did not work. It’s like, well, I’m making $350,000 a year and I’ll bet I could sell this for $3 million. And then they go get it valued, and it’s not worth anywhere near what they thought. And then they go, “Well, wait a minute, I can back of the napkin this, and it’s not going to work to turn the income asset into a lump sum and pay a lot of tolls on the way, the government, in particular, in order to get it back to an income stream, right? It just doesn’t make any sense. Let’s take an income stream that’s working, turn it into a lump sum of cash, pay a bunch of tolls along the way to do it, and then turn it back into an income stream so that I can enjoy my life after all those polls.
The problem is the nonfinancial toll of owning a business starts to add up, and it gets exponential as you get older because it’s like, I just don’t want to deal with this B.S. anymore and I don’t want to do this particular kind of work. And so, I started asking myself, what if there was a way to get rid of the B.S.? What if there was a way to keep that income stream in a much more human-friendly fashion? And that’s where Half-Retire started. The people that– everything I don’t want to retire, a lot of baby boomers don’t want to retire or fully retire, they don’t want to sit on a rocker, drinking lemonade or play golf every day. They want to stay active. And so, there’s that crowd. There are people that want to pass it to their kids or their employees, but they’re not ready and they need to transition it. And so, what they have in our program does is eliminate the stress of owning a business, but allow you to keep that income.
Andrew Rafal: I mean, so in theory, Jim, that sounds awesome, right? Every business owner, it’s kind of like let’s have best of both worlds. And you’ve said, you walked through and helped over 11,000 business owners. And I believe you’re also a business owner beyond the current business you own, but you’ve been an entrepreneur in the family. You grew up in an entrepreneurial family, and me being a business owner as well, I think the other you touched on is that emotional standpoint, right? Okay, we’ll talk to you on the math and we can get that to work great, but for a business owner, what do you tell him when it’s like that has been who you are both financially, but also in a sense socially for 20, 30 years. So, you’ve got that in play. You’ve got now, maybe 15 employees, and 10 of them have been with you for 20 years. So, how do you coach a business owner on that? And is that one of the things that a lot of times when you’re talking to them about selling the business they’re afraid of is, what does that look like emotionally and what happens to my employees, regardless of how much money they get paid?
Jim Muehlhausen: Well, those are big reasons why people are reticent to talk about selling the business. I think that that’s a lot of the attractiveness of Half-Retire is that you don’t need to deal with that, that you can keep those long. I’ve got a very successful half-retiree in Pittsburgh that makes several million dollars a year, but he goes, “These people have devoted their lives to helping me build this company. I’m not just going to sell it to someone that may get rid of half of them.” And that’s the stat, half the people are going to lose their job when you sell. That’s historically what’s going to happen. And everyone tries to make these contracts where they go, “No, no, no, you’ve got to keep all these people around. And I don’t want to be the doomsday.”
It doesn’t matter, you basically are not going to be able to dictate that the new owner of the business is going to keep Bob or Mary around. They have a business to run and if Bob or Mary doesn’t fit, usually, they’ll give them a try, but I could tell you a lot of stories about keeping someone around. And usually, it’s the employee that doesn’t want to be around. I’ve had people that cut deals to keep someone around for two years and a month in. This guy goes, “You know, I haven’t been passionate about this for the last five years. I think I’m going to do something else.” And they held up selling their business for a year for this one person that had been there 25 years. So, it turns out none of it mattered.
Andrew Rafal: None of it mattered. So, when you’re working with business owners and trying to shape up that vision, what’s the best time age-wise or business-wise? Is it when I’m thinking of selling two years or five years or ten years? Where do we want to start working on this long-term ideal vision of what the next chapter looks like, whether it be half-retire or whether it be to completely get out of the business? What’s the ideal?
Jim Muehlhausen: I think that what you’re describing is the exception, not the rule. I think a lot of people struggle with that. What’s going to happen in five years or ten years? And sure, you can plan, but going into work every day and doing something different towards that is difficult for most business owners. They’re just trying to make it work this month, this week, this day, this hour, and that’s difficult. And so, we don’t focus on that, frankly. What I want to focus on is making the business more enjoyable to show up every day while preserving that income. We could just go hire a bunch of people that won’t lower your stress, that will raise your stress, hire a bunch of people or raise your stress, but it might reduce your workload. And so, it’s a challenge, right?
We’ve got to maintain that income, which means that we’re not going to add a bunch of expenses and decrease the stress. And so, we’ve got a bag of tricks that we use to help people do that, one of which we call discovering your Picasso Work. So, every business owner has what we call Picasso Work. And the analogy that we use is a painting that if I’m going to create a painting worth a million dollars, there is only one thing that the artist needs to do in order to make that process happen, and that is touch the brush to the canvas. There are lots of other work, stretching the canvas, getting the paint, what to paint, selling it, marketing it. All of that could be done by someone else in theory. The one thing that cannot be done, is impossible, is having that artist do the work done by somebody else, the painting of the painting. And we all have that super valuable Picasso work that the business cannot live without, but really doesn’t take a lot of time.
And what ends up happening is we create this hairball of other work that feels like it’s all important. And inside that mess of a hairball is that Picasso work. And so, what we do is we’re going to untangle that hairball, get it down to just your Picasso work, and offload as much of that other work as we can. And we usually do it in five stages. We’ve got a five-stage process that will work. Some of it’s really easy. You can make some big progress early, but then it gets harder as we get the higher value work, the work that’s more intricate. It gets harder to do, but it’s possible. That’s really my message. People think it’s impossible. They’ve given up on trying to get rid of their work. It is possible. You just have to go about it differently than you have in the past.
Andrew Rafal: And you mentioned in your work, don’t use the word delegate. Delegate. And a lot of business owners think, let’s just– okay, I got, here’s what I love to do. My best KPIs are here. All these other things I’m going to delegate. Well, what’s wrong with that? What are we thinking wrong as business owners?
Jim Muehlhausen: Never met a business owner that’s worked for?
Andrew Rafal: Let me check myself. It came out there. It doesn’t work.
Jim Muehlhausen: It doesn’t work, and there’s a reason it doesn’t work. It doesn’t work because (A) it doesn’t take a Picasso work into account. Picasso work is nondelegable, it is impossible to delegate. So, if I take something that a portion of which is impossible to delegate and then I try to delegate all of it, it will fail. So, that’s one reason that it fails. The bigger reason that it fails is business owners are busy, and doing delegation correctly is very time-intensive, backbreaking work that not one business owner wants to do it. And so, they shortcut it. And what they do is they go, “Hey, you know, I just realized I don’t like doing spreadsheets anymore. Andrew, do the spreadsheets.”
And I guess the gist of the delegation is I’m not going to do it anymore. You were going to do it, and then that fails. This is what I call the first full-circle story, right? I’m sick of doing this. I’m going to find someone else to do it. Go find another person to do it. Give them the work. Occasionally, check with them, maybe even train them a little bit, but then it doesn’t work the way I want it to. It doesn’t work as fast as I want it to. It doesn’t work in the method that I want it to. And then I get back to that. It’s just easier to do it myself. And now, I am trapped. I’m trapped. So, if we stop thinking of it as delegation and we call it offloading, but there’s a way to get rid of that work or better yet, a portion of that work for actualizing it, getting rid of that hairball that we call one thing when it’s really 20. If we could get rid of one of those 20 things, we’ve made progress, but they never do that. They’re trying to just hand the hairball off to somebody else, and hairballs are delegable.
Andrew Rafal: And so, in this case here, some of these top things that we want to delegate or offload its stain in the mix, knowing that you have the wherewithal as a business owner, not that they don’t have the passion to do it, but those spreadsheets, let’s say, you know how to do them, you know what is needed on it, but I still don’t know. So, if I wanted to offload that to somebody, am I staying involved then forever? Is that stain on my plate? It’s just that they’re handling all that, and I’m just doing the review of it. What does that actually mean? Because I want to get that spreadsheet off my table. I know I do it the best, but if I get 90% of them, of the employed to do it, and they do it 90% of mine, is my time better spent that even though we’re missing that 10% on whatever the activity is, how do I get my hands out of that if I still have to be involved in it?
Jim Muehlhausen: You have to be involved in something as simple as spreadsheets, a pretty simple one to get– maybe a simple one to get rid of. You know what the real cursive delegation is? Scale.
Andrew Rafal: Yeah.
Jim Muehlhausen: Yeah. You probably have a very similar, like to me, and you probably do 500 things in any given month. And you go, “How do you delegate one of those 500 things?” And maybe it takes you an hour a month in four different pieces of 15 minutes. Good luck delegating that. That is tricky to delegate and that’s why a lot of people have that hairball. It is just so much little task, so much variety that it becomes a mess, and it can be done. And you have to figure out what the commonalities are. You need to figure out what the skills and traits of people that you want to do it. We’re big on automation. I mean, anything that a machine can do instead of a human, you want to do that, or you can just eliminate. I mean, I have had people that stop sending invoices. I had a person in the veterinary industry that we literally just stopped sending invoices. It’s much easier to not have to delegate it if you just don’t do it anymore.
Andrew Rafal: And I’ve been part of EO, Entrepreneurs’ Organization, for many years. So, it sounds a lot of what you’re doing when helping these business owners is a lot what we’re trying to do in the EO program that’s scaling up and having your forum, your mastermind, you’re together working to help understand our pain. What is our pain? Where do we want to be? How do we get there? And that scaling up is something that I think most of us struggle with as we’re at that 10 to maybe 50 employees. As you get to the hundred employees, those are what more of the bureaucracy and the more corporate, and they’re maybe harder and harder to change that culture. Would you say that the majority of people and business owners that you work with are these family businesses that are maybe less than 30 people?
Jim Muehlhausen: Probably, the bulk. I mean, we have people that have thousands of employees that do it because there’s still one person at the helm of that company that wants a better life and that this is a six-step process to get that better life. So, it doesn’t matter whether you’re a one-person company or a hundred-person company, it still is about the goal. And I think some of the difference between, say, scaling up, which is about leveraging the assets that you have better and figuring out how to take it to that next level, that’s not really what half-retire is about. They’re kind of at where they’re at.
Half-retire is not about growth. I’ve actually walked away from the client. They’re like, “Boy, I really need to double sales and half-retire.” I’m like, “Go double your sales first.” And then we’ll show you how to half-retire because it’s not easy to maintain income and cut the owner’s work to a day a week without taking a hit in income because they provide actual value. I’m guessing that when you show up for work, you do things that directly or indirectly make the company money. And if you don’t show up for work, the company doesn’t get the value of that, which means it’s a negative. And so, step five in our process is we leverage assets that we have to get in there and say, “What assets do you have that are under leverage so that we can add some value that makes up for the subtraction call that you’re not there as much?”
Andrew Rafal: So, that’s step five of the six-step process or five-step process that you walk through.
Jim Muehlhausen: Yep.
Andrew Rafal: And it really does come down in half-retire, this quality of life, and that’s the challenge of a business owner as we get into this business or our business because we don’t want to work for somebody. Then we go and we build a great business. We help whoever. We’re helping clients, we’re helping support employees. And now, though, as you stated, the bigger you get, the more pressure. The business becomes more selfish, needs more of you, and then it becomes this hamster wheel of wait, I just wanted out of this grind. And now, I’m stuck in it and I’m thinking about it. I’m working on it. And maybe I fear that I don’t have the team to help me get to this next stage, which is why I wanted to do all this. So, I have the quality of life of traveling or whatever my purpose is going on, being more with family, or golfing or riding your bike or whatnot. So, that’s the crux that we all face, and without that direction, we can’t get there, right? So, that’s really your first step as you sit down and you go, “What is that?” Let’s map that out. What does that idea look like to you if you didn’t have to spend 75 hours a week in the business, and it still could maintain a good income, and the business could survive with only 20% of you?
Jim Muehlhausen: Correct. That’s actually step 1 in the process. We call it the magnet that if you don’t have a strong and powerful magnet pulling you towards half-retirement, it’s probably not going to happen. And I’ll tell you what, it seems simple. You go, duh. Yeah, you have to have a reason to want to do something. Sure. But you’ve seen business owners. You’re a business owner. I’m a business owner. You get so used to just doing it. I think the best example. Have you ever taken a two-week vacation versus a one-week vacation?
Andrew Rafal: Yeah.
Jim Muehlhausen: Did the two-week vacation feel different than the one?
Andrew Rafal: 100%.
Jim Muehlhausen: Yeah, because you actually spent the first week kind of getting out of workboat, and the second week was actually vacation, but a lot of business owners complain about two-week vacations. I have some that won’t take them because it gets them out of the group, and then they come back and they go, “Oh my God, I don’t want to have to mess with these TPS reports anymore because now, I’ve walked away far enough that I realize the B.S. that I put up with every day. A one-week vacation, you don’t quite get that. You just kind of come back.
Andrew Rafal: Right, yeah.
Jim Muehlhausen: But they can’t envision it. They literally can’t envision. I wonder what it would be like to go on a three-month cruise or something because it seems impossible right now. And so, we have an exercise we called Dare to Dream where you go, “Okay, put an X through all the things, all you can’t, all the shouldn’ts and the coulds.” And what do you actually want? Do you want to just woodwork in your garage all day? I’ve got a client that wants to do that. And one day a week, he goes in his garage and he does woodworking. And he never had the time for 30 years. He was telling himself he was too busy.
Andrew Rafal: So, when you map that out, we have the magnet. We know where we want to be. Fear for any business owner we’ve talked about is I am bringing the value, without me, even if I step back a little bit, my income is going to drop. So, here, this is a fear that you work through, obviously, right? So, you have to have, I assume, a good team. We’re not selling to this other person or entity, but are you recommending that we tie key people in now where they are, maybe not owners, per se, but they’re tied into profit-sharing, or how do we step away? And then everyone else is thinking, well, now, if he or she isn’t here anymore, but they still own and they’re taking whatever profit in their mind. They don’t know really sometimes what goes on, on the balance sheet and the income statement and, oh, no, how do I make payroll? The risks we take as business owners, but what’s that for you look like then is, or how do we shape that in tying into the employees that are going to have to step in and carry the weight that the main founder, owner, etc., has now stepped away and is only working part-time in a sense?
Jim Muehlhausen: Sure. I’m actually going through this with a home remodeling right now where we’re going to just do a phantom stock plan, which is effectively– by the way, never give stock to your employees, just a really short version. It never works out well. I’ve seen it a hundred times. It almost never works out. Do you really want to share your books with your employees? Do you really want them to be able to go, I’m a shareholder? The phantom stock has none of those problems but all the benefits. It is effectively equity. It’s not only profit sharing, but it’s also equity participation. And usually, you’re going to benchmark it, to be, okay, the company is worth a million dollars today. You can share in everything over a million, but people do it all the time. They give them stock and you just realize that you gave them 1% of your million dollars that you earned. That was yours today, and you just gifted it. Not to mention the tax consequences of all kinds of messy stuff, but phantom stock is a much better way to lock down employees than other methodologies.
However, the bigger issue is I think that people forget if I work at Amazon, even if I’m an executive, when Jeff Bezos was there, how many people do you think were worried about where Jeff Bezos was or whether he was off in Saint Kitts having fun or he was down the hall in the office? I think this is going to have a lot of baggage around this that is self-imposed problems. Were they the ones that were sweating payroll every Friday? Were they the ones that worked on Saturdays? No, their employees. And I’m not saying they’re not valuable and I’m not saying do not treat them right, but they have not earned the rights that you have earned through 20 or 30 years of business ownership. And it’s none of their dang business whether you want to take off Fridays or not.
Andrew Rafal: That’s a good point and that’s a mental block for a lot of business owners as they feel that because they’ve been working and grinding and they feel they should be in the weeds and working side by side, and if not, it’s almost that imposter-type syndrome. Well, do I deserve this? And the answer as you would tell them is yes. You put the risk and you spent the time. You’ve been away from the family. You do deserve it.
Jim Muehlhausen: Did the bank have a second mortgage on the employee’s house when you had your first line of credit? Did their wife have to sign everything that you own away? None of that, the employees, that’s why that’s the advantage of being an employee, right? That you don’t have those risks. You have security, but they have chosen to trade security for the things that business owners have. And I think that business owners deprive themselves of things that they are worth. This would fall into step 2, by the way, mindsets, a lot of half-retire, it is step 2 for a reason. If you don’t have your mindsets in alignment, half-retirement is either hard or impossible or just never as successful, but we’ve got all kinds of great stories about how mindset realignment to a half-retire mindset absolutely changes people’s lives. We had a woman that cut her workload in half in about a month solely from looking at it a different way.
Andrew Rafal: And I assume over the last 18 months, COVID has really pushed some of this into overdrive, got people to think about what’s important to them taking that time to breathe. And they realize, maybe I don’t need to do all of what I was doing. And it is time to figure out the strategy that you can help them understand, which is okay, how do I get there? Let’s make it happen. Is that accurate? Or have you seen more uptick in people that are looking to the services of your company and the coaches that you have and the framework that you have to get them to this half-retire mindset?
Jim Muehlhausen: That’s no different than the work that you do, right? The sooner you pull the trigger on getting your financial life together, the better that you’re going to do. So, I’ll run a little math. If you’re a business owner that makes $300,000 a year, the average half-retiree may stay half-retired for five years. We all will stop running our business. It’s called being put in a box. It’s going to happen. You may be 108, but it’s going to happen. At some point, you will not be running your business. It’s just a question of when and whether that’s a proactive decision on your part or whether you just can’t do it anymore.
And I just had a client that had seven vertebrae fused together, and he is not getting around like you. So, he’s not golfing with clients anymore with seven fused vertebrae. And it’s these life events that all of a sudden, people are like, uh-oh, now I need to think about selling the business, but then they haven’t spent the last three years adding value to that business. So, back to the map. Five years, $300,000 a year, the financial impact of half-retiring for five years versus just slogging or selling today $1.28 million. So, that’s 1.3 million bucks in your pocket. If you make 300 grand to half-retire versus slog away or give up and sell it.
Andrew Rafal: Yeah. And then, you have to have the game plan of how do you invest it, what’s the proper way to do it, plus, as you know, with business owners, a lot of things are built-in for expenses that they don’t have anymore. They don’t have maybe the company car or the entertainment that they’re taking clients to a game, that type of again, going back to the social, it’s my social aspect of who I am. And now, it’s that, and then we’ve seen it, whether they’re a business owner or not, in our business, just working with clients for the last almost two decades.
As you see it, when they stop working, no matter how many hobbies they have or how many travel trips they do or golf trips and things like that, is that they lose some sharpness and they lose that maybe motivation. And that’s something that you can’t teach that, you can’t train that, it’s just either somebody is going to step up and continue doing things and keeping their mind fresh or not, and that’s, I think, a lot of time that business owner that they get afraid of that. What’s that going to look like? And then, financially, what do I do with the money? What am I going to do with it? And that’s the big challenge.
And it depends on, too, where we are with the recession versus non-recession versus my cash flow can continue on and on and on and on. So, what are some of the mistakes that you’ve seen? Because I know one of the first books you wrote was like mistakes business owners make. So, what are some of those top things that you’ve seen over the years, working with 11,000 business owners and even yourself and your own family, some mistakes that are out there that we can try to avoid?
Jim Muehlhausen: Well, we’ll put it to half-retirement. So, if we want to drift into The 51 Fatal Business Errors, we could do that because most of them are mine. That was back to my early days. You start to say, “Oh, my gosh, these people are doing some of the same things that I did.” And it’s really just 51 best practices couched as worst practices, but I was funny, I was having a conversation yesterday with somebody, one that I call “Field of Dreams” Thinking. And actually, our marketing firm was talking about one of their clients who was kind of complaining that they had built this robust trading portal and that they wanted someone to figure out how to sell it. It’s like, “Here’s what I built. You figure out how to sell it.” And he goes, “I hate it when they do this backward.” You should figure out what people want and then you should make something that fulfills that need, that make what you want to do, and then say, “Well, everybody should want this because it’s my baby. It’s my masterpiece.” And it may be a masterpiece, but plenty of famous artists have not sold any work until they died because no one appreciates it while they were alive. And that’s not a great way to make money in business is to not be appreciated. So, I always talk about “Field of Dreams” Thinking. If you build it, they will come. That is not true. If you build it, they may not come, so.
Andrew Rafal: I guess going with an artist unless you’re taking your painting and moving it to an NFT, then that’s a whole different ballgame, but that’s a whole system I don’t even know. And it does come down to when you’re trying to shape the business, have it run without you. And I guess every business is a little bit different, but recurring revenue is ideal versus non-recurring revenue, ultimately, but you can’t. Some businesses are based on what do we start every year. We’re at zero again, right? And that just comes down to how you would probably shape your coaching with them is what other type of business that they run. So, you don’t work with just any niche. As long as they cover and want to meet this half-retire mentality, you guys will work with them?
Jim Muehlhausen: Sure, because it’s a series of steps. And now, you actually have teed up my second book, Business Models for Dummies, quite nicely, because what you’re really talking about is business models. I’ll go back to the veterinary guy. His business model just really had some opportunities to be improved, not to make money. I think we probably left the revenue neutral, okay, but his whole thing was travel. This is a guy that was traveling 100% of the time and he was like, I don’t want to travel at all in a perfect world. Like, what are you willing to travel? Well, I got the RV, I got the wife, I can drive. I’m mostly out west. If I travel 20% of the time, that would actually probably be fun.
Well, we were able to do that by just shifting the nature of his business model to accommodate. Now, he’s got the magnet, right? I know what I want. He’s got a mindset, okay, well, I’m going to have to make some changes in order to do that. The way I’m doing it yields 100% prep. So, I’m going to have to make some changes. We streamlined the back office. We streamlined the sales process. I think he had more leverage with his customers than he gave himself credit for. That’s the advantage of having a sounding board is, as he was talking to me, I’m like, you have way more leverage with these people than you’re giving yourself credit and you’re acting like a beggar. Why don’t we just shift that and say, “If you’re lucky, I’ll come and do what I need to do for you that is a requirement of law, and it’s hard to find somebody else.” And once we did that, it was like poof.
And he was able to, I don’t know that I got him to raise prices. I wanted him to raise prices too. Nothing better than that, to take care of some of the half-retire pain of just putting it straight on the bottom line, but looking at the business model, how do we do it? Can we accommodate more recurring revenue? Can we change to a membership model instead of a one-hit type situation where we’re always having, I call it the buffalo hunt, right? We go find a bunch of buffalo. We eat like kings and then eventually, we go back to where the buffalo were and they’re gone. And we got to go on the buffalo hunt again. That’s just not a fun business model, and there are better ways to do it sometimes.
Andrew Rafal: So, helping to make sure the business model is on point. That’s also part of your coaching or the process of this half-retire you talk about then. So, we have the magnet, we’ve got a good business model that’s going to work. What else is in the steps here for us to determine or help us get to this point of really pulling the trigger on half-retiring?
Jim Muehlhausen: Well, there’s some, I would call it similar to the E-Myth-type stuff that there certainly our systematization of the business that could be anything from automation, mechanization, I.T. There’s a lot of tools out there that you can use these automated workflows. And I’m talking to an older crowd. A lot of times, 60-year-olds aren’t as open to mechanizing or automating something that a 35-year-old might be. And they just need to be shown that some of these tools exist, and someone that understands the business.
There’s a lot of fear. I think you said something before about, oh, I’m going to take this financial hit, or I don’t want to leave my employees hanging if I sell the business. I think the bigger issue is just what happens if I step away. What is going to happen if I stop? I always ask people, if you were hit by a bus and you’re in the hospital with your jaw wired shut and your hands are broken and your legs are broken, meaning you can’t touch a computer and you can’t talk for a month, what happens to your business? And usually, the answer is a train wreck. It’s not good if I cannot participate in my business for a month.
Andrew Rafal: Yeah.
Jim Muehlhausen: And that is what they’re afraid of. And that’s what needs to be fixed. I mean, blah, blah, blah, details, but that’s what needs to be fixed.
Andrew Rafal: Yeah. Ultimately you have to have that, whether it be on the automation, having a good company culture, having each employee know where they fit into the company. And I think too, with having younger employees now, which a lot of the businesses do, is trying to figure out, okay, the millennials, what’s important to them is they are now shaping the workforce and making sure you’re building the culture the right way, where sometimes it’s not just about the money, it’s about other things. It’s about, hey, are you listening to your employees? Are you having one-on-ones? Are you providing them what their magnet is? I think that is an important thing that we walk through with our business owners or clients. Okay, what’s your passion, but do you know what theirs are? Because they’re coming, working for you every day and working to help grow your vision. Let’s find out what’s important to them and help build the culture around them because then, ultimately, if you get the right culture in place and you do step away for a couple of weeks or a month or have to or want to, then you’ve got the confidence that it’s going to be there, that they’re going to continue on and they know where the rules are.
Jim Muehlhausen: It’s very difficult to kind of let that birdie fly, right? You know what works when it’s in your hand, and a lot of people have experimented and failed. You asked before what were some of the mistakes? And the biggest mistake that I see in the half-retire world is people latching onto the concept and then not following the steps. We’ve got a private Facebook group for half-retirees, and somebody got on there, so much for my half-retirement. It totally blew up, and a bunch of my employees quit, and I typed in. I said, “Did you follow the step process?” And the answer I got back was question mark, question mark, question mark. Like, what’s that? And I’m like, well, you can’t just say you’re half-retired. Occasionally, you bump into someone that’s managed to pull it off and get pretty close to what our vision of it is, but it’s work and it’s just easier with all, we’ve provided as a blueprint. Here’s a blueprint. You can get it in the book. You can download it off of our website. You can get the blueprint, but it’s work. And you’ve got to be willing and able to put in that work if you want to get the benefits. And like I said, $1.3 million is a pretty significant benefit
Andrew Rafal: Yeah. In your coaching, when you’re helping them get through all of these steps, what does it look like? Is it a year program, a six-month program? Are we working just off of webinars? Or do we have direct contact as any coaching program, right? So, you’ve got the blueprint. You’ve got the steps. How do I then make sure I’m being held accountable?
Jim Muehlhausen: Yeah. So, we have what I would call a training program. It’s a learning management system step by step, typical, bite-sized pieces that you can go through at your own pace. And then, we also do bundle that with a certified coach. So, we have certified coaches that will go through that with you. And certainly, I bump into people that are half-retiring from the book. They buy a copy of the book and then they’re going through it, but then some of them land on our doorstep. They go, “Hey, I made a lot of progress with the book, but now, I’m stuck.” And I think that there’s no substitute. I’m sure you’ve learned from your EO experience that there’s no substitute for a sounding board. It’s not that you need me or any of the other half-retired coaches to come in and go, “Here are all the things that you need to do that you’re not doing.” That’s never what happens. It’s talking about what’s going on.
I’ve got this key employee. I’ve got a situation going on right now where he’s got a key employee. He pays them well, he treats them well, but he’s still worried about turning them over. And you go, “What do you do about that?” The guy’s done everything right. And what the conversation ended up being was, I said, “Here’s what I think your issue is or here’s what I’m hearing. Your expectation is, is that you will never have turnover.” You’ve been in business for 20 years. Is that a realistic expectation that in 20 years, you will never lose an employee? And is that even a good thing if you never lose an employee? That’s probably a bad thing. Your problem is you don’t have a plan. For what? For bench strength, for recruiting, for what do I do when there’s turnover, and you could see the light bulb going off over his head, but that isn’t, “Hey, Bob. You need to do X.” That is just two business people talking about it and coming up with a solution and kind of holding up a mirror to what I saw was going on in his business.
Andrew Rafal: Yeah, I know that. Very true. And I think that’s a good point is if you don’t have turnover over 20 years, then that could be a problem. It’s not all about, hey, we’re loyal to everybody. You need sometimes new blood. You need not all of your 20 employees, especially those that you hired in the beginning, maybe are up to the same task of what the company has evolved into. And that just comes down to a lot of business owners. The loyalty, they were loyal. They were there from the beginning. I know they’re giving me 50% of what I should get and I can’t teach them, or they don’t want to learn the new tricks, but I can’t get rid of them because they’re loyal to me. And that sometimes having somebody like you to tell me, you know what? You need to think about this, this, and this because it comes down to your family and the legacy of your business. And as hard as it is, you’re going to get through it, and it may be better for them too, to have a new stepping stone and maybe they get reenergized from doing the same thing all the time to then they move on and go somewhere else and excel.
Jim Muehlhausen: I’ve been doing this too long and I’m too much of a pragmatist. I used to handle that one exactly like you said because that is in fact the right answer, but you learn very quickly that people own businesses for reasons, and it’s because they’re independent. And I’ll tell you what I’ve learned in that particular situation, whether it be you need to fire your brother, or this person is great, but you could do much better if you upgraded type thing. I just tell them, listen, the right business decision is pretty clear, and we both know what it is. It’s what you said, okay, but you’re allowed to make a personal decision that is, in fact, a bad business decision. You can keep someone around that is horrible, but don’t pretend, don’t try to justify it as a good business decision. It’s a lousy business decision. It’s a personal decision, and you get to do that. Is your suite at the Colts game an investment? No. It’s something you want to do, and you get to deduct it for business. And it probably has some benefit, but it probably is not a good ROI, but it’s a personal decision, and you’re allowed to do that because it’s your business. So, go for it.
Andrew Rafal: Yeah, I like that. I know you give advice all day, all week. What’s the best piece of advice or something? A good piece of advice that you’ve received over the years when it comes to life or business, what sticks in your head?
Jim Muehlhausen: I think the biggest thing, I was in a peer group back in the 90s. I had a manufacturing company for 10 years, it was an automotive business. And one of the things that I learned from participating in a mastermind group was that you’re pretty stupid left to yourself. I got a law degree of a CPA. I’m a relatively intelligent guy. I always had a knack for business, did it as a kid, but I’m an idiot when left to my own devices in certain situations because everything is personal. You don’t see things from different angles. And the best thing that you can do is to suck it up and swallow your ego. And a lot of people struggle with it because I don’t want to feel stupid, right? I’m a successful business guy. You’re a successful business person. I want to feel like the success that I am. And so, being challenged makes you feel like you’re not as smart sometimes, but you either want the results bad enough to do everything that you can to get them or you don’t. And I see a lot of people that when it really comes down to it, this may sound harsh, they don’t. Protecting their ego wins over getting it right.
Andrew Rafal: And especially a business owner usually has an ego of some sort, whether they’re doing it because of how they grew up, they’re trying to prove something to the family, especially trying to get into taking over the family business. You see most of them fail. I have got a couple of success stories out here where the third generation, and then they’re doing better than ever, but that just takes an even keel. So, good advice there, leadership is an important factor in any business, and especially whether you half-retire or in growth mode. Any specific books that you recommend besides obviously, Half-Retire, great book, but what about any books that you recommend for business owners? Doesn’t have to be new, but anything that you’d say you got to read this book or this book, it’s going to help you.
Jim Muehlhausen: Gosh, the last good book that I read is not a leadership book, but I actually went through with some of my crew, a book called Sales Management Made Simple. And it was one of the best sales books I’ve ever read because it really was sales management made simple. And you see a lot of business owners of this size that are either self-managing sales or trying to, and it is not something that business owners enjoy. A lot of times, they maybe should not be doing it, but that’s a story for another day. You know books I like, I like books that give you a blueprint. I don’t want to rah, rah, I don’t want to be fired up. I want to say, if you want to accomplish X, do A, B, and C. I won’t read a book that doesn’t have that. And so, I felt like it had it.
Andrew Rafal: Blueprint is important in our space, too, because in the financial space, it’s so much more evolved over with just the investments. It’s an important piece, but having a blueprint, we call it The Bayntree Blueprint to help them get to and through retirement and looking at all aspects of their financial wherewithal. And that’s estate planning, it’s tax strategies, it’s risk tolerance. It’s where’s my income going to come from in retirement, whether they’re business owners or not? And you have this blueprint that whether they are coaching clients or not, they can download, and at least, it helps them start building out and shaping the steps they need to take to start envisioning this ideal situation for them.
Jim Muehlhausen: Right. To get moving. If you get moving, the other thing that I think is so powerful about half-retirement or even just exit planning, if you were going to half-retire and you just hired an exit planner, that’s a great move as well, but as you’re doing that, you are making more money by getting your business right than you would without it and you’re also making your business more sellable and more valuable. And I think that is just one of the painful things that I’ve had to see with business owners is they all decide, they kick the can, kick the can, and now it’s time to sell. And when do I want to sell? Sometime in the next 30 days. I hate to break it to you. That’s probably not going to happen.
It can take a year to sell a business. And no sophisticated buyer that will throw you a big check is dumb. You don’t get a million dollars by being stupid barring a lottery winning, and they don’t buy businesses typically. They’re going to find all those warts that you’re hoping they don’t find. All that stuff that you don’t want to come out is going to come out, the fact that your books are a mess, or that this person will only work for you and they’re going to quit the day that you quit, or that the sales function doesn’t work without you, all that stuff is going to get figured out. And then what’s going to happen is they’re either going to not buy the business at all because it doesn’t work well without you or the price is just going to continue. They’re just going to keep on whittling away at what you think the business is worth. And wouldn’t it be better to fix all that stuff ahead of time so that you have a great business that someone can say, oh, my gosh, I got this business over here? And yeah, they make $300,000, but it’s really a $300,000 job. Or I got this one over here where the person goes in a day, a week, and they make $300,000. Which business would you want to buy?
Andrew Rafal: I know it’s reframing and building it from really the ground up or modifying and optimizing it to get it to where it needs to be because you’re right, a buyer– and that’s why nobody sells because they come in and the buyer is like, well, I’m going to give you X, and they’re like, well, I’m going to just work a few more years. And then by the time they really want to sell or they get health issues, then the business is worth even less. So, I know, listeners, we covered a lot today. You can hear how Jim is just a little passionate about helping you as a business owner find that ideal landscape, what that looks like in giving you the steps, the actionable steps to get there, whether you work with their team or not. Great book. Read through it. Learn, pull out the nuggets that can help you grow the business to where you want to be because ultimately we’re in business for many reasons, but most importantly, we want to have that quality of life or build it so we can have that quality of life. So, love what you’re doing. Think the messaging is never going to get old. Too many business owners need this guidance and that support and that sounding board. So, Jim, I really appreciate you coming to the show. Listeners, hopefully, you enjoyed it. Jim, any last words before we send you on your way there in Indianapolis?
Jim Muehlhausen: No, I appreciate the opportunity to be on the show. A great discussion. Obviously, you’re a great business guy as well as a financial consultant. So, I think that that’s always nice to find. You get these people that just, here is the stock I want you to buy or here’s what the portfolio needs to look like, but they don’t understand what it’s like to be a business owner. And clearly, you do. So, I appreciate that.
Andrew Rafal: Perfect. I will sign– he’s got me now as a coaching client. Look at that. A little stroking of the ego and here we are. No, but I appreciate that. I did something, trying to be a better business owner, it’s a challenge every day, and the trials and tribulations, getting the right team involved, especially in all different lines of business but in ours, trying to build it where it can live without me. And that’s ultimately what, I guess in a sense, I’ve been building it too, almost at some point half-retire without even knowing it. So, awesome stuff. We appreciate it.
Listeners, all the show notes will be underneath and also, a way to reach Jim and his team at Half-Retire, as well as to download the blueprint, as well as to get a copy of the book. We appreciate it, listeners. Thanks so much. And stay tuned for a brand-new episode later this month. Happy planning, everybody.
