In this episode Josh talks with Ron Nakamoto from Empowered Wealth. They discuss private business and what does success looks like.
Ron Nakamoto is the CEO of Empowered Wealth Partners and a major contributor to Empowered Wealth group of companies. He was one of the founding Quadrant Living Architects and a long-time proponent of Empowered Wealth principles, concepts, and tools.
A Certified Financial Planner since 1987, he is now focused on empowering entrepreneurial families through his leadership and work at Empowered Wealth.
In todays episode you will learn:
- What does success look like
- How family business can achieve success
- Different approaches from specialist and generalist
- Do advisers and/or business owners make things more complicated than they need to
Narrator: Welcome to “Cracking the Cash Flow Code”, where you’ll learn what it takes to create enough cash to fill the four buckets of profit. You’ll learn what it takes to have enough cash for a great lifestyle, have enough cash for when an emergency strikes, fully fund a growth program and fund your retirement program.
When you do this, you’ll have a sale ready company that will allow you to keep or sell your business. This allows you to do what you want with your business, when you want in the way you want. In Cracking the Cash Flow code, we focus on the four areas of business that let you take your successful business and make it economically and personally sustainable.
Your host, Josh Patrick, is going to help us through finding great thought leaders as well as providing insights he’s learned through his 40 years of owning, running, planning, and thinking about what it takes to make a successful business sustainable and allow you to be free of cash flow worries.
Josh: Hey, this is Josh Patrick. You’re at Cracking the Cash Flow Code. My guest today is Ron Nakamoto from Empowered Wealth. Ron’s been a friend of mine for at least 20 years, if not a little bit longer. We’ve always had these really interesting conversations along the way about all things that relate to private business, but we go way past that.
Today, we’re going to talk a little bit about private business. The reason I’m asking you Ron on today is he sent out this email from his group a couple of weeks ago, which I found really interesting. I said, I want to have you on our podcast. We’ll talk about this.” I’m going to bring Ron on and we’ll have him give us a short explanation of what was in that email.
Hey, Ron, how are you today?
Ron: I’m good, Josh. I’m good.
Josh: This really dense email which I found really interesting. What was your purpose for sending out and what do you think the main message and it was?
Ron: My purpose was to be a provocateur.
Josh: You were successful there.
Ron: Okay. The email itself was about what success look like for a small business or a family business. The person who drafted the original material was a fellow. I both know, a very accomplished individual in financial services. He in turn had called upon a local attorney who drafted up a bunch of bullet points, throw it on a PowerPoint and put it out there. He had used that as discussion material for what constitutes success and then use that as a platform to talk about how and advise us what were missing the mark in terms of helping their clients become successful.
I resurrected that question, what does success look like and pointed out that this particular expert in her field, which was the law had a certain take on it. That from my perspective, and probably yours as well, Josh, I think there’s more to it than just what’s here.
Yet, because there’s a lot of detail, you can’t overlook some of the things that she pointed out that Matt Wesley was the fellow who wrote their original article what they were pointing out. They’re obviously very bright people with lots of experience and a lot of insights into business. As you and I have discussed offline, they tend to focus on larger businesses.
Josh: They’re typical family. They work with his is a billion dollar family.
Ron: Sure, which is not true every day mom and pop business and certainly you and I have focused for the most part in our careers on bar businesses who day in and day out are out there trying to make a go of it and with fewer resources trying to be resourceful and successful nevertheless and do good things for themselves and for their families.
Josh: Ron, out of curiosity, where did Matt feel like advisors were missing the mark?
Ron: For him it was that family dynamics are complex and that most professionals are, they’re specialists and they’re domain specialists. They tend to be he’s term structuralists. But deconstructing that, if you’re a lawyer, you see things in terms of the law, if your financial advisor you see things in terms of money.
Accountants, it’s about the orderly arrangement of assets and things like that and balance sheets and whatnot. I’ve got some training in accounting. I’ve noticed that for example accountants just because they produce a financial statement don’t mean that anybody understands them.
Josh: I always say with my clients, once you get past the profit and loss statement, there is zero understanding.
Ron: Yeah, yeah. Well, you and I both work with a lot of small businessmen and most of them, “Hey, if there’s cash in the bank that are going good, and if there isn’t, then maybe they’re not doing so good.”
Josh: We found this and call it check book accounting and for an awful lot of businesses. It works.
Ron: Yeah, absolutely. I would say just kind of on that on that note, I think that where advisors kind of miss the boat is that they are trying to think along with their clients and understand how their clients thought processes well enough to say, “Well, I understand how you’re looking at things and be able to point out some of the things that people do this.”
I think there are advantages to being farsighted to seeing what’s coming down the road, what’s predictably coming down the road, and then also being able to plan with some margin when the unpredictable happens is all too frequent.
Josh: We were talking just now you. I haven’t done a lot about this, but I probably should do more as far as content we produce, which is a conversation about specialist versus generalists.
Ron: Yeah, yeah.
Josh: You and I are both generalist.
Ron: Absolutely, by default.
Josh: We do have specialties. We’ve studied long and hard about certain things that make us specialist. We approach the world through the lens of a generalist. Meaning that we have enough knowledge about almost anything our families or business clients get into. You can get ourselves into a bit of trouble meaning we can have an intelligent conversation about it.
Now, most people that business owners hire are specialists. Specialists are really good at doing a thing, but they’re not really good at what you just refer to. I refer to as being a thinking partner, which is having a broad vision and a broad view of how the world works. It just seems to me that if I’m a business somewhere, the first person I want to put on my team as an outside adviser is a generalist who has a worldview that’s wide and non specially knee deep, but why it can have an intelligent conversation and help me get to a solution with a broad range of issues. Because the truth is, I don’t have that much money. I can’t afford to spend $150,000 on these really high level folks that that’s all they do.
Ron: I tend to agree with you, Josh. To add to it, I would say that nobody has a monopoly on good ideas. I think that somebody who I think has a broad background and can ask insightful questions and does the legwork in order to get to know a client. In other words, if you’re the business owner, I think one of the things that you’re looking for somebody who makes the effort to try to understand you and understand what makes you tick, where you’ve come from, what scares the crap out of you and what excites you and what keeps you up at night and all that stuff.
Kind of to the point of the article that I sent out, what does success look like for you? Then could ask questions and maybe show you a different perspective that is in your best interest, not necessarily something that you would have thought of yourself and maybe they can shine a light on a different way of looking at things that would be helpful to you. We all have blind spots. What I found when I was in the hot seat as the business owner was somebody who could show me my blind spots in a kind way. It kind of helped me out of it. You know what I mean?
Josh: I would even take unkind most of the time.
Ron: Well, some people don’t take that very well as you know. [Laughs]
Josh: I’m not sure I took it well, but it got my attention.
Ron: Yeah, well, we’re all various levels of maturity or immaturity, but I looked at it. I’d like to think I can handle it a little more gracefully now than I could 30 or 40 years ago. I was much younger. I was a notorious hothead. When I see younger people get fired up about stuff that doesn’t really matter. I have a little bit of compassion for that. I just don’t want to be around it for a long time. That’s all.
Ron: Well, the way I look as anybody who has the patience to be around, someone like that in some ways earn some respect to simply because probably maybe me more than you. I was my own worst enemy certainly with my temperament. I see it a lot with entrepreneurs these days. It’s stressful being an entrepreneur and stressful being a small business owner. You say and do some unfortunate things sometimes.
Josh: My first five years in business, I was [inaudible 00:09:49]. I actually don’t know many people who were more poorly behaved than I ever.
Ron: Okay, you’re in tough competition [inaudible 00:10:00]
Josh: I would agree with that, but the truth is, it doesn’t serve us very well when we do that.
Ron: Right, we all have these kinds of behaviors and habits that don’t necessarily serve us so it’s a sign of maturity, I think to be able to grow and evolve beyond that. So kind of back to advisors, I think the best advisors can help you with that and can help a business owner, who’s sort of chronically overwhelmed and kind of dealing with million things.
I think that a really good generalist can kind of calmed things down and help you grasp things more clearly, kind of think in a more orderly fashion than you might otherwise do. In that sense, they would certainly earn their fear and their wage just by helping slow things down and helping people make more informal rational decisions.
Josh: I have a question. Do you think that business owners make things more complicated from themselves than they need to?
Ron: Well, do human beings make things more complicated for themselves on a day to probably.
Josh: I would submit that advisors almost 100% make things way more complicated they need to. I was just wondering as I was thinking that, do business owners do the same thing, do they make things more complicated and difficult for themselves than they actually need to?
Ron: I think we all tend to do just simply because the challenge is to discern what matters, kind of this sea of information and sea of competing opinions and perspectives and all that. It’s hard to sort through all that for most people. Before we started, we touched on values and perspectives and whatnot. Human beings are complicated. We say we value this or that, but then our behavior contradicts that. We have these highfalutin beliefs, but yet we have these base instincts, too.
Josh: I was having this conversation yesterday with a chief operating officer of a client of ours. We were talking about values. In the conversation, I was talking about telling yourself the truth about your values, whether they’re really a core value or an aspiration value. If you’re saying that something is a core value and it really is an aspiration of value, which means that you would like it to be a core value, but it’s not there yet. You’re seen as being a fraud within your company.
Ron: Because your income grows.
Josh: Your income grew and you say, for example, this particular company would often see, “Gee, we are learning an organization.” The truth was it weren’t a learning organization at that time. I think frankly, we do ourselves a big disservice who we say this is a core value and not to me— for me, I think it’s fine to say to your people say, “Hey, this is a value that I really think is important.” I know I’m not there yet, but we need to be there which kind of speaks to vulnerability.
Ron: I think it does. Yeah, I think that’s a good point, Josh. I think people they do pick up on that in congruency.
Josh: I was like the poster child. When I was a very early in my business career, I went and took a new a seminar, which you and I have talked about.
Ron: Oh, sure. Yeah. I know exactly what you’re talking about.
Josh: The word responsibility as above the line and blaming the justifies below the line. I went back to my company saying, “Okay, our value now is responsibility.” Here I was blaming everybody for everything went wrong or justifying why it wasn’t my fault.
Ron: You irresponsible sob.
Josh: I was seen as a fraud.
Josh: I eventually got there.
Ron: Well, first of all, I commend you for your idealism. AT the root of it, taking responsibility is an important aspect of running an effective and successful business. I can imagine that we were once young man and we’re kind of hypocritical.
Josh: It’s part of growing up though.
Ron: It is. It is.
Josh: It’s one of those things where my own particular practice, I really do work with children of owners, but most of the people I work with are over 50 years old. That’s a choice I make is when I work with people under 50 who are not children, a business owners are actually the CEOs of their company that really fully formed in my opinion as human beings.
It’s really hard to get them to do the right things in their business because they haven’t done enough wrong things along the way where they realized they need some help.
Ron: I could understand that perspective. I, too, work primarily with people who I would say in their late 40s or early 50s. There are two generations a generation and a half younger than me. I’m looking for people who want to be mentored. That’s not everybody, certainly.
Josh: I would actually say it’s a very small minority.
Ron: Yeah, I think there are opportunities. By the same token, I’m also looking for people that I can learn from because I think that there are a couple things about business nowadays and life nowadays that I think are different than in the past. I did not grow up with technology. I did not grow up with social media. Here’s a symptom, it’s like whenever there’s like an Emmy program or an Oscar program or Grammy Award program, I have no idea what’s going on.
Josh: I have the zero idea.
Ron: Yeah. But nevertheless, there are people who are influencing for good and for bad and not aware of what I’m not aware of. There is an opportunity for kind of reverse mentorship too that I’m reluctantly, but still open to the idea of trying to find those people who are willing to show me what it is I’m missing that’s worth paying attention to.
Josh: Actually, I really love the concept. I’m about to write a blog post about concept of reverse mentoring. I first ran across a book by Chip Conway was writing about his experience. So going [inaudible 00:16:21] which is his hotel chain he started and how he started working with Airbnb. He was mentoring, but he also became a reverse mentor especially when he first got there.
I just found that concept, they are really an interesting one. I hear people whine about millennials. I keep thinking is there’s a lot for us to learn from millennials who are working with us and instead of demeaning them as being lazy, or whatever we think they are, which I don’t find to be true. Maybe you should ask them about what’s important for them and what they would have us too that would be different.
Ron: Well, I’m really glad you’ve mentioned that, Josh. I’ve found that some of the guys I work with who are in their 40s have helped me immensely understand what it is that they’re going through. Also some of their strengths that I don’t have that have been helpful to me.
Josh: You have a four year old and a five year old and an eight year old grandchild and it’s all about screen time with most of them. Tries me out of my mind, but it’s a different world, I guess.
Ron: Yeah. You’ve you translate that to these business owners, these younger business owners. That’s what they have in their lives, too. They’re juggling in a parent nowadays and dealing with this avalanche of data and information and still trying to function as the decision maker and the visionary and whatnot in the business and it’s just different.
Josh: Ron, unfortunately, we are just about out of time. I just want to bring up one thing which is really something we talked about what they’re actually two things that we’ll talk about today, which I think are really crucial for folks listening as podcast. One is, as you’re thinking about hiring advisors, think journalists first before you go for a specialist and have your generalists help you come up with a strategy for how to hire the specialists that you need.
Probably ends up saving you a lot of money and you’ll go a whole lot faster when you do that. The second thing is especially as we’re starting to get in our 60s and 70s, those of us who are there the world is a different place today that was when we were 30 years old. We need to learn about what that 30 year old world means. If you’ve never really heard about the concept of a reverse mentor, reach of Connelly’s book and think about how you can do that in your own company.
I think that’s a really important thing to do. Ron, you do some really interesting things. I’m going to bet some folks listening today would like to maybe contact you and find out more about what you do. How would they do that?
Ron: With great difficulty, I’m on LinkedIn. That’s probably the easiest place. As I mentioned to you before we started Josh, I’m developing new material having spent a career in financial services, work primarily with advisors. I’m trying to help them get to that point where they’re that generalist, where they’re that mentor to their clients and they’re the guide. We use guide as a metaphor. I’m actually trying to train people up to that stage where they can be effective at that.
A lot of things we’ve talked about today are things that I’m gearing my training towards them. It’s just that it’s training. It’s not like I’m the big expert on all of this stuff, but I feel like I’ve got some insight and some experience and with a background in teaching so there you go.
Josh: You’re cool. I have something I’ve been– for about forty years and it really started off with me running out of cash four times and coming like with an issue going bankrupt four times. I’ve been working on the site called the Four Boxes of Financial Independence, which I’ve been doing for years and a yellow pad with people. I finally said, “Gee, maybe I can make this thing into a little app which I’ve done. So if you’re interested in finding out if you’re on the road to cashflow, freedom or not, I have this cool little free app you can do. It’s a quiz takes about seven minutes to do it.
All you have to go to is go to thecashflowcode.com. That’s thecashflowcode.com. Click on the big orange button, start filling in the information then seven minutes later you’ll find out whether you’re on the road to financial information or not. Thanks a lot for stopping by today. This is Josh Patrick. We’re with Ron Nakamoto. You’re at Cracking the Cash Flow Code.
Narrator: You’ve been listening to the “Cracking the Cash Flow Code” where we ask the question, “What would it take for your business to still be around a hundred years from now?” If you’ve liked what you’ve heard and want more information, please contact Josh Patrick at 802-846-1264 extension 102. Or visit us on our website at www.sustainablebusiness.co. Or you can send Josh an email at firstname.lastname@example.org. Thanks for listening and we hope to see you at Cracking the Cash Flow Code in the near future.