EP44: Business Finance Expert Andrea Travillian Breaks Down Wealth Plans Outside Of Your Startup

Hey, Entrepreneurs and Let's Talk Serious Startups, Episode 44. Do you have a fantastic startup idea? Do you want to know what it takes to be an entrepreneur? Join John Maddox as he talks with startup founders, angel investors, marketers, and industry pros to help you know what it takes to become a serious startup.

I guess where you are now. I know you have a kind of interesting backstory, so can you give us your version of the story and let us get to know you on the human level a little bit? I have a very random backstory on how I got to be an entrepreneur and where I am today. And I started out in the regular corporate world.

Finance was my specialty, got my MBA, kind of climbing the corporate ladder and decided I'd had enough and started an event planning business, left finance behind, did that for a while. And then when my son was born, jumped to just doing bookkeeping. And it slowly over the years evolved to what it is today. You're talking about climbing the corporate ladder and staying focused on the whole piece.

I'm assuming that it's pretty quick that you get burnt out on that, trying to hyper focus for a long period of time, even though there's, in theory, all this return, it's not necessarily rewarding. Is that a fair supposition? It is, and I actually enjoyed what I did, but the thing with finance, when you work in corporate finance, you basically have a whole bunch of crazy, detail-oriented control freaks. So you basically just, depending on your boss, it's hours and hours of meticulous, like the commas aren't lined up right.

It was enough to make you want to pull your hair out. That's one of the reasons I've stayed out of the corporate world. If it's going to come down to a comma between you and I having a confrontation, yeah, it's not going well for me. Now, throughout your career, have there been any particular anchoring mantras or success quotes that you've found, been told, and said, you know what, I'm going to hold on to that one?

because anybody that's ever been in the world of entrepreneurship knows that there's going to be a lot of things you face and challenges, and sometimes you need that kind of nugget and the truth in the back of your head as you're going through. You know, my driving one has always been about persistence and doing things that aren't exactly easy. And John Kennedy, when he was talking about going to the moon, has a fabulous quote, and it's really long, and I can never have it memorized.

But the gist of it is we wouldn't want to do this if it wasn't hard. If there's no challenge and it's not hard, what's the point? So that keeps me going and motivated that, yeah, it's hard, but that's why we want to do it. That's a very good point.

The self-satisfaction and self-worth, I guess, that comes out of entrepreneurship is unparalleled, if you ask me. And until you've experienced it, you don't know. But to your point, the challenges definitely exist. But after you conquer them, you get that sense of self-worth and accomplishment just explodes.

Yeah, and it is, you know, and I guess the other part of that quote that I love is it's very comparable. You know, they were going to the moon, which they had never done before. When you're an entrepreneur, even if it's a small business that's like a service base that you're not creating something new, you still are creating something from scratch, learning it as you go, figuring out how things adjust as the world changes. And that is a certain level of hard that is so rewarding.

Absolutely. Now, obviously, you, you know, your clients are startups, business founders, successful business people, you know, a broad swath of people there. You know, what are some of the things that you've noticed are holding entrepreneurs, you know, early stage entrepreneurs back from success you've been able to witness from the ones further down the road that are successful? Two things really stick out to me.

The first is the boring finance side. Nobody really wants to take the time to learn the numbers. Nobody's watching the revenue line. Nobody's watching all the factors that kind of roll up.

And it's a shame because that is where you will get the best information about what is truly driving your business or when your business might be hitting trouble. So not taking the time early on to learn the numbers and pay attention to them. And then the second one, it kind of is related, but not seeing your faults and working to improve them. That's interesting.

You're saying that ego can sometimes blind you to reality. Yeah and sometimes what I have found with some of my clients is it not even ego They don realize that that there is a problem You know when you don know what wrong you don know what wrong So like one of the things I do with my clients is we do a giant HR test and it ends up showing them like, here's your skill sets. Here's where you're off, where you need to improve. Here's where you're great.

And I will tell you, it is amazing how many times they look at it and go, really? Wow. Okay, that makes sense. But until they know, it's hard to solve that problem.

So sometimes it's ego, and sometimes they just have never taken the time to stop and go, okay, where do I need to be improved? Right, right. That makes sense. Now, let's kind of dive into the nuts and bolts of you being a financial coach for entrepreneurs.

I'm guessing it can be quite a challenge working with all these different types of ambitious people, as you've kind of been talking about that example there. Tell us a little bit more about what you do and why it's something, you know, from a macro view of trying to become successful, we really need to take into account. Well, one of the things that it's so important to actually pay attention to this stuff is entrepreneurs have this tendency to think financial planning will be the next business, the next big break.

Oh, when I sell this, I'm going to start this, and then that's going to be all the money to retire. We're not very good at doing the long-term planning and thinking, oh, hey, what if that next one doesn't work out and I end up being 60 with no money? So that's one aspect. The other aspect is, you know, I had always worked with business owners on some front, whether it was their bookkeeping or business coaching.

And when they turned to get financial advice on investing and how to plan for the future, there was nobody out there that understood their perspective. It's not like you can go to a traditional Dave Ramsey trained person who does a zero sum budget because entrepreneurs don't live that way. And there might be some equity in their company. There might not be.

There's different tax requirements. There's different, you know, if it's just you, you have options besides the 401k. There's so much more detail that goes into an entrepreneur's personal finances that you kind of need somebody who understands the whole picture and understands how your life is tied to your business too. Yeah, that makes a lot of sense.

Now let's kind of address an issue that I know a lot of startup founders face, which is knowing when and how to pay yourself personally. That's a major challenge, right? Hey, we've got to hire these new people. We're trying to grow the company.

I'm just not going to pay myself, right? For the companies that get investment capital isn't that big of an issue, but for everybody else, it's kind of a make or break aspect of the company, in my opinion. What advice, hey, do you agree with me? And if so, what advice do you have for founders on what I view as a very, very important issue?

I love this question. I love it so much I wrote an entire report on it. So here's the thing. You have to keep in mind that you're growing your business.

Now, not everybody is growing it to sell it, but you're growing it so that you can live on it. And if you're growing it to sell it, somebody is not going to buy it if they can't pay a manager. So it really truly needs to be one of your top priorities to begin to pay yourself because if you can't make it profitable enough to support you financially, then you've got more issues than timing of payment. So it needs to be something that's built in almost from the get-go.

Obviously, there's startup time and ramp-up time, but as soon as you can add it, you need to add it. And here's the thing. It doesn't have to be like a paycheck like you would get from a regular company. People kind of have that in their mind.

Like I need to be able to pay myself a paycheck. And it doesn't have to be like that. You can put yourself on commission only, you know, so every time you make a sale, you get 10 percent of it. Or perhaps it's quarterly bonuses, just something to start getting you writing yourself a check.

Just set your standards and then go from there. One of the things that I did when I first started out is I had two different services. And so I said, okay, the funds from this service, we're going to go back into the company to grow it. The funds from this service went 25% to me and then the rest to the growth.

So I kind of divided it out knowing what the percentages were and made a plan going from there. And if you're setting the foundation of even if it's small, you're still being able to show a percentage of growth, right? like year-over-year growth, if things start to take off and now you're able to pay yourself more steadily, that kind of thing, you're being able to showcase that, which from an exit standpoint, it has a lot of value, doesn't it? Absolutely.

Absolutely. When somebody going to come in and buy your business they not going to most of them aren necessarily going to look to run it full And if they are they going to want to make money from it Otherwise why would they be buying it They want to see a cash flow. They want to see a manager's salary there. If that is not there, then it's really hard to sell your business.

Now, often business owners are so focused - and you kind of touched on this earlier - so focused on building the company, it's easier to forget what happens 5, 10, 20 years from now, right? What are some of the elements of having a wealth plan outside of just the money you're making from the business and the potential acquisition down the road? Well, you know, one of the things that I do with all my clients is we actually create a life plan. And this kind of triggers the entrepreneur to think, OK, maybe there is a life after this.

And at that point, some of the elements that we typically put in place can even be super small, like setting aside $100 a month into an index fund to just kind of get that going. or starting another business that might have a stream of passive income. You know, and here's the hard part about what the question you just asked is, it is very focused to the person. So what might be right for me and what might be right for you are two very different things based on skill set, personality, time availability, how young you are, how old you are, how new your business is.

If your business is really new, there's not a ton we can do. The older your business is and the more successful it is, that opens up a whole new set of things. But what I would say is the element is truly where do I truly want to be in 10 years, and then what's the best way for me in my circumstances to get to that point. That makes a lot of sense.

And I know you, I was researching a little more about you. I know that you follow a business growth pyramid when you're working with your clients. Can you kind of explain how that works and correlates what you were just talking about there? And then what are some of the most important aspects of the plan that we need to make sure to account for?

So I created the growth pyramid because I really do, when I take on a client, you have to get into the business and the personal because I know you know this, it's all one. It's not separate. You should keep your account separate, but they're all intertwined. So the growth pyramid is how you grow your business.

That first level is strategy, and it needs to be the personal strategy and the business strategy. And then you go through and you set up all the foundations. You get your money set up correctly. You get your revenue set up correctly.

Just all your legal requirements set up, all the stuff that most people consider very unfun. And then you start to grow. You have this phase where you're figuring out what works and you're playing with pricing and you're playing with your services or your products and you're tweaking and you're putting like stuff in place. And then you kind of start to add this level of processes.

So I know this works. This is how we do it. These are the steps to get it done. And then you have this other growth stage where you really start to skyrocket the business, add staff if you want to add staff.

And that's why that process part is so important. If you grow without processes, your employees don't know what to do. And then through this all, you eventually get to this point where you're filtering money from the business into outside assets so you can eventually retire. And retirement is the top of the pyramid.

And most entrepreneurs think I'm never going to retire. I'm having fun. But the thing to really keep in mind is life changes. And sometimes it's not because of you.

An overwhelming majority of people retire because they physically can't work anymore. Something happens. Maybe your business ends up going bankrupt because the industry changed and they're gone. So there's a lot of things that can come in.

No matter how bad you want to work and stay in business, you have to kind of follow this path of planning so that you have options for the future. You might work until you're 80, but if you decide at 60 you want to stop, at least then you have what you need to be able to stop. Now, let's assume we've accounted for things on that side, more on the personal side of the equation, and also growing the company successfully, right? Let's talk about preparing for an exit.

I've gone through this myself, and I had not planned it. What are some of the things we need to account for to maximize our exit and also to make it as smooth as possible? Because it can definitely turn into a giant convoluted conundrum and conflict. You know, the number one most important thing to make for a smooth exit is actually growing the business correctly.

If you have a business that relies 100% on you or even 50% on you, it's not sellable. Nobody's going to come in because it's all in your head. And that's why those processes are important. That why everything needs to be detailed out So that the number one thing If you want a smooth exit you have to create it the correct way So if it been created the correct way and you find a buyer or maybe one of your employees is taking it over, whatever it is, it's really important to pull in professionals to help with that exit.

CPAs, attorneys who know to get the contracts right so you can negotiate things like, you know, is it a is a payment over multiple years? Are you still going to be on board for a certain amount of time? There's a lot of details that have to get worked out that if you've never sold a business before, you really need help with that. So hire somebody to help make it smooth.

And then on the personal side of that, make sure you have a plan of what you're going to do afterwards because it's really hard to go from running something and being busy working to not having anything to do. You might enjoy it for the first couple of months, but eventually you're going to start twiddling your thumbs and start thinking about opening that next business. But if you have a plan for what you actually want to do during your retirement, then it makes that transition that much easier.

I can definitely tell you the reality of the twiddling your thumbs and trying to figure out the next thing. That is 100% true. Everybody who's listening, you definitely need to listen to Andrea because she is definitely telling you the truth. All right, let's dive into what I like to call the lightning round.

Can you share one of your personal habits that you believe contributes to being able to build your company to where it is today and garner that success? I'm stubborn and very persistent. So even when probably most people would be like, okay, I'm done, I have this strange desire to never, ever stop. So that's probably it.

The good one. If you don't have that one as an entrepreneur, you're probably not really an entrepreneur. You're a want-tra-preneur. Yes, yes.

In my opinion. Do you have any tools, whether it be web apps, mobile applications, just resources in general that you can share with the listeners that you've seen help really improve efficiencies and maximize your time? Two, Evernote and Dropbox. And without those, it would be really hard because I have multiple laptops plus my phone.

And so when we're traveling or anything, it's just nice to have everything, no matter what I have with me. That's a very good point. Before we started doing this live, you and I were talking about the importance of books, and there's so many great ones out there. Do you have any that you would recommend to entrepreneurs?

Hey, you better go read this one. This is like a foundational piece of knowledge that can help you be more successful. The E-Myth Mastery, or just the E-Myth. You don't have to do the Mastery one.

Start with the E-Myth, then go to the Mastery one. it talks about building out this business that you're not the only person. And it gives you - it kind of walks through an example, and it is a must-read for anybody in business. All right, so this is the question I like to kind of wrap up with.

There's this classic episode of The Office where Jim sends Dwight faxes from future Dwight, warning him all these ridiculous things that might happen in The Office that day. If today you could be future Andrea and you could fax yourself one sheet of paper back 10 years, what would you write on that piece of paper to tell your former self? Don't give up. Just keep doing what you're doing.

And I say that because even with being super persistent as entrepreneurs, we all have those days where you're like, really, what am I doing? That is a very - that's a very true statement. And if you can't, one of the things I like to follow is the, I didn't hear no bell. Get up one more round.

Because that is just the reality of entrepreneurship. I give up, right? Yeah. Well, thanks so much for your time today.

I really appreciate it. I really enjoyed it. I know that there's a lot of the nuggets of truth that you were talking about today that are extraordinarily vital to the success of a growing company. So thank you so much for sharing your knowledge.

Before we wrap up, how can people get in touch with you? And is there anything that you'd like to share with the audience before we wrap up? Well, you can find me at my website, takeasmartstep.com.

And then I'm on Twitter at SmartStep. And you can find me there. If you are interested in finding that report I wrote on how to pay yourself, I actually have a different website for that. And it's smartstepbusinessadvisors.

com. Thank you so much for your time. I really appreciate it. Thank you.

I enjoyed it. Hey, everybody. Hope you enjoyed the latest episode of Let's Talk Serious Startups. Make sure you go on Twitter and follow us at Serious Startups.

Also, follow me personally at John Maddox. And if you have a campaign that you're currently running on Kickstarter, Indiegogo, reach out to me about coming on the crowdfunding pitch show, which is another radio show that I have, by emailing me, john at Serious Startups dot com. Look forward for your feedback and hope you all are doing great and having a great time building companies and becoming successful, serious entrepreneurs.