10 WORST MISTAKES GRANDPARENTS CAN MAKE WITH MONEY
(AND HOW TO AVOID THEM)
What to Do Instead:
• Have an open dialogue with your children (the parents) before providing financial support.
• Coordinate contributions to college savings or 529 plans with parents to avoid negatively impacting financial aid eligibility.
• Make sure your financial assistance aligns with family goals and values.
• Stay within the annual gift tax exlusion limit.
• If you plan to give larger gifts, consult a financial advisor to understand the potential tax implications.
• Consider “gifting” via 529 plans or other college savings accounts, which come with tax benefits.
3. Not Coordinating Financial Gifts with Parents
Mistake: Offering financial help to grandchildren without discussing it with their parents.
While your intentions may be pure, direct financial gifts to grandchildren can unintentionally disrupt the financial plans of their parents. For
4. Mismanaging College Savings (Like 529 Plans)
Mistake: Contributing to college savings accounts without understanding the impact on financial aid.
While saving for a grandchild’s education is admirable, doing it incorrectly can reduce their eligibility for financial aid. Grandparent-owned 529 plans used to count as student income, which could reduce the amount of aid a grandchild received. Fortunately, recent changes have made grandparent-owned 529 distributions non-taxable and no longer counted as student income.
What to Do Instead:
• Research the latest rules on 529 plans to ensure you’re taking
advantage of every benefit.
• Consider making contributions to parent-owned 529 plans if you want to avoid confusion over aid eligibility.
• Use 529 funds strategically during the later years of college when financial aid has already been established.
5. Not Updating Your Estate Plan Regularly
Mistake: Failing to update your will, trusts, and beneficiary designations. Many grandparents put off estate planning, assuming everything will “work itself out.”
But life changes— grandchildren are born, relationships change, and tax laws are updated. If your estate plan isn’t current, your money may not go where you intended it to.
What to Do Instead:
• Review your will and beneficiary designations every few years or after major life changes (births, deaths, divorces, etc.).
• Work with an estate attorney to protect your assets from excessive taxation.
6. Overextending Financial Support to Adult Children
Mistake: Constantly bailing out adult children financially.
It’s natural to want to help your kids, especially if they’re struggling. But constant bailouts can drain your retirement savings and create a cycle of dependency. If you deplete your savings, you could end up needing financial support from them in the future.
What to Do Instead:
• Set limits on financial help and offer support in non-financial ways (like childcare).
• Have honest conversations with your adult children about money boundaries.
• Consider setting up a trust to ensure that your assets are distributed according to your wishes.
• Avoid co-signing loans or taking on debt for others unless you’re financially secure.
7. Failing to Plan for Healthcare and LongTerm Care Costs
Mistake: Underestimating future healthcare and long-term care expenses.
Medical costs are one of the most significant expenses in retirement, and many grandparents fail to plan for them. If you don’t have longterm care insurance or sufficient savings, the costs of assisted living, nursing homes, or inhome care could wipe out your retirement savings.
What to Do Instead:
• Factor healthcare costs into your retirement budget.
• Research long-term care insurance policies to see if they fit your financial plan.
• Use Health Savings Accounts (HSAs) if you’re eligible, as they offer tax-free growth and withdrawals for medical expenses.
8. Not Teaching Grandchildren About Money
Mistake: Giving money but not financial literacy.
Providing gifts and support is generous, but giving money without teaching financial literacy can create dependence rather than independence.
Children and teens need to understand how to manage money, not just receive it.
What to Do Instead:
• Teach your grandchildren the basics of saving, investing, and budgeting.
• Involve them in simple financial decisions, like planning for a family outing within a budget.
• Share your own financial journey and the lessons you’ve learned about wealth, debt, and saving.
9. Taking Investment Risks Late in Life
Mistake: Making risky investments to “catch up” on lost savings.
It’s tempting to take on risky investments when you feel behind on retirement savings, but doing so can backfire. Unlike younger investors,
grandparents don’t have decades to recover from market downturns.
What to Do Instead:
• Avoid “get-richquick” schemes and speculative investments.
• Diversify your portfolio to balance risk and reward.
• Consult with a certified financial advisor to create a strategy that prioritizes stability and income generation.
10. Not Planning for the “Great Wealth Transfer”
Mistake: Failing to prepare for the largest transfer of wealth in history.
In the next 20 years,
Baby Boomers are set to transfer trillions of dollars to younger generations. Without a plan, much of this wealth could be lost to taxes, fees, and family disputes.
What to Do Instead:
• Discuss wealth transfer goals with your family to avoid future conflict.
• Use estate planning tools like trusts, wills, and life insurance to
protect your assets.
• Work with an estate planning attorney to maximize tax efficiency for heirs.
The Bottom Line
Being a grandparent is a gift, but being a financially wise grandparent is a superpower. You can make an enormous impact on your family’s future without jeopardizing your own financial security. Avoiding these 10 mistakes will give you peace of mind and ensure that your legacy is one of financial wisdom, not financial worry.
Here’s your next step: Take time to review your estate plan, discuss family financial expectations, and educate the next generation on smart money habits. If you’re unsure where to start, reach out to a financial advisor for personalized guidance. Remember, it’s never too late to take control of your financial future. Your legacy—and your peace of mind—depends on it.
WHY YOU NEED A MEDICARE SUPPMEMENT PLAN:
The Complete Guide to Medicare Part A, Part B, and Beyond
Navigating Medicare can feel overwhelming. With terms like Part A, Part B, and Medicare Supplement Plans floating around, it’s easy to get confused. But here’s the truth: If you want full healthcare coverage and financial peace of mind, you need to understand how Medicare works— and why a Medicare Supplement (Medigap) plan is essential.
This blog will break it all down for you. By the end, you’ll understand:
• The difference between Medicare Part A and Part B
• Why Original Medicare leaves “gaps” in coverage
• How a Medicare Supplement Plan protects your health and your wallet
What is Medicare?
Before we dive into Medicare Supplement Plans, let’s review the basics of Medicare itself. Medicare is a federal health insurance program for people age 65 and older (and certain younger people with disabilities). It’s divided into multiple “parts” that cover different types of healthcare services.
• Medicare Part A (Hospital Insurance): Covers inpatient hospital stays, hospice care, skilled nursing care, and some home healthcare services.
• Medicare Part B (Medical Insurance): Covers outpatient care, doctor visits,
tests, preventive services, and medically necessary treatments.
When you have both Part A and Part B, you have what’s called Original Medicare. While Original Medicare provides solid coverage, it doesn’t cover everything. This is where the need for a Medicare Supplement Plan (Medigap) comes in.
Why Medicare Part A and Part B Alone Aren’t Enough
Many people assume that once they have Medicare, they’re fully covered. Unfortunately, that’s not the case. Original Medicare comes with “gaps” in coverage that can leave you exposed to high out-of-pocket expenses.
Here’s a quick look at what Original Medicare doesn’t cover:
• Deductibles: You’ll pay a deductible for both Part A (hospital stays) and Part B (outpatient services) before Medicare kicks in.
• Coinsurance: Even after you’ve met your deductible, you’re responsible for 20% of your medical bills
under Part B. That’s right—Medicare only covers 80% of approved medical expenses.
• Copayments: For hospital stays longer than 60 days, you’ll pay daily copayments that can add up quickly.
• Foreign Travel: Original Medicare provides almost no coverage for international healthcare services.
If you’re relying on Part A and Part B alone, you’re exposed to these high, unpredictable costs. But that’s where a Medicare Supplement Plan (also called Medigap) comes in.
What is a Medicare Supplement Plan?
A Medicare Supplement Plan is private insurance that works alongside Medicare Part A and Part B. Its sole purpose is to “fill in the gaps” left by Medicare. When Medicare only covers 80% of your medical bills, the supplement plan can cover the remaining 20%—as well as deductibles, copayments, and more.
Here’s how it works in
simple terms:
1. Medicare pays first (for any covered medical expense)
2. Your supplement plan pays second, covering the remaining balance (depending on the plan you choose)
There are 10 types of Medicare Supplement Plans (Plans A, B, C, D, F, G, K, L, M, and N), and each one offers a different level of coverage. Plan G is the most popular option because it covers almost everything except the Part B deductible.
Why Do You Need a Medicare Supplement Plan?
So, why can’t you just stick with Original Medicare? Here’s why:
1. Protection from Out-ofPocket Costs
Without a Medicare Supplement, you’ll face 20% of every doctor’s bill and outpatient service. If you need surgery, chemotherapy, or expensive outpatient treatments, this could add up to thousands—or tens of thousands—of dollars.
Example:
• Outpatient Surgery Cost: $15,000
• Medicare Part B pays 80% = $12,000 paid by Medicare
• You pay 20% = $3,000 out of your pocket
• With a Medicare Supplement Plan, your out-of-pocket cost for that same surgery could be $0 (depending on your plan).
2. Freedom to See Any Doctor, Anywhere in the U.S.
Unlike Medicare Advantage plans (which require you to stay within a network), Medicare Supplement Plans let you see any doctor, anywhere in the U.S. as long as they accept Medicare. There are no networks or referrals required. This gives you ultimate flexibility and peace
of mind, especially if you travel frequently or live in multiple states throughout the year.
3. Covers Skilled Nursing Facility Costs
Medicare Part A only covers skilled nursing care for 20 days, and after that, you’ll have to pay daily copayments of over $200/day. A Medicare Supplement Plan can cover this expense, saving you thousands of dollars.
4. No Medical Surprise Bills
With a Medicare Supplement Plan, you can feel confident knowing that nearly all of your medical expenses are predictable. You won’t receive unexpected medical bills for deductibles, copayments, or coinsurance. This is crucial if you’re living on a fixed retirement income.
5. Covers Emergency Medical Care While Traveling Abroad
Love to travel? You’ll want
to know that Original Medicare does NOT cover medical care outside the U.S. However, certain Medicare Supplement Plans (like Plan G and Plan N) cover emergency medical care abroad, giving you peace of mind when traveling internationally.
6. No Referrals, No Networks
With Medicare Advantage plans, you’re limited to a network of doctors, and you often need a referral to see a specialist. Medicare Supplement Plans have no such restrictions. You’re free to see any doctor, specialist, or hospital that accepts Medicare—period.
7. Lifetime Coverage with No Renewals Required
Once you purchase a Medicare Supplement Plan, it automatically renews every year as long as you pay your premiums. You’ll never be dropped due to health issues, age, or medical conditions.
8. Simplicity and Peace of Mind
With Medicare Part A, Part B, and a Medicare
Supplement Plan, you’ll know that 99% of your medical expenses are covered. No surprise bills. No complicated networks. Just peace of mind.
How Much Does a Medicare Supplement Plan Cost?
The cost of a Medicare Supplement Plan varies depending on your age, location, and the specific plan you choose. Here’s a general breakdown:
• Monthly Premiums: Plans typically cost $100 to $250 per month.
• No Hidden Fees: Once you pay your monthly premium, most other medical expenses are fully covered (depending on your plan).
If you’re worried about cost, consider the alternative: paying 20% of every doctor’s visit, every outpatient procedure, and every emergency room visit. With healthcare costs rising, having predictable monthly premiums is often more affordable than dealing with unpredictable medical bills.
How to Choose the Right Medicare Supplement Plan
There are 10 different types of Medicare Supplement Plans, but the most popular are:
• Plan G (most comprehensive)
• Plan N (lower premiums, but you may pay copays for doctor visits)
Plan G is the gold standard because it covers nearly everything except for the Part B deductible. Once you meet the annual Part B deductible, all future medical bills are fully covered for the rest of the year.
How to choose the right plan:
• If you want comprehensive coverage, choose Plan G.
• If you want to save on monthly premiums and don’t mind small copays, consider Plan N.
a Medicare Supplement Plan, you’ll be on the hook for deductibles, copayments, coinsurance, and excess charges. These costs can add up quickly—especially during a medical emergency or serious illness.
But with a Medicare Supplement Plan (like Plan G or Plan N), you’re protected. You’ll enjoy comprehensive coverage, predictable costs, and peace of mind knowing that you can see any doctor, anywhere, with no surprise bills.
Don’t wait until it’s too late. If you’re approaching 65 or have questions about your current coverage, reach out to a Medicare Supplement Insurance Agent for a personalized consultation.
Your health deserves it. Your peace of mind depends on it.
If you have Medicare Part A and Part B, you still have significant “gaps” in your coverage. Without
Need help selecting the right plan? Contact a licensed Medicare Supplement Agent today for guidance and support. The right plan can protect your savings, your health, and your financial future.
Overcoming Key Challenges for Finance Professionals in 2025 & Beyond
In the ever-evolving world of finance, change is not just inevitable, it’s accelerating. Finance professionals today must navigate a rapidly shifting landscape defined by technological advancements, shifting skill requirements, and increasing demands for real-time data-driven decisions. While the opportunities for growth and transformation are immense, so are the challenges.
Gone are the days of traditional number-crunching roles. Today’s financial experts must be agile, techsavvy, and emotionally intelligent to thrive in this new era. This article explores the key challenges facing finance professionals and offers actionable insights on how to overcome them, ensuring that you remain ahead of the curve in a fiercely competitive industry.
Technology is Replacing Traditional Accounting Functions
The Challenge: Automation is Taking Over Manual Tasks
Automation, artificial intelligence (AI), and machine learning (ML) are no longer buzzwords — they are transforming the very fabric of the finance sector. From data entry to expense tracking, previously manual processes are now being handled by advanced software and AI-driven solutions. Tasks that once required entire teams can now be managed by intelligent financial automation tools like robotic process automation (RPA).
What It Means for You:
Finance professionals are no longer required to spend hours on repetitive, manual tasks like bookkeeping or reconciliations. Instead, automation allows them to focus on higher-value activities like financial analysis, strategic forecasting, and risk management. But, if you’re not prepared for this shift, you may be left behind.
How to Stay Ahead:
1. Embrace the Tech: Get familiar with the software and tools driving this change. Cloud-based accounting systems like Xero, QuickBooks, and Oracle ERP Cloud are now essential tools for finance professionals.
2. Develop Tech Proficiency: Learn how AI and automation work and how they affect your role. This includes mastering AI-driven financial forecasting tools and automated data processing platforms.
3. Focus on Value-Added Activities: Spend more time analyzing data
rather than collecting it. The insights you generate from the data will be far more valuable than the manual process of compiling it.
The Urgent Need to Learn New Skills
The Challenge: Your Current Skillset May Not Be Enough
The rise of financial technology (FinTech) and data-driven decisionmaking is rendering some traditional skills obsolete while creating demand for new competencies. Technical skills like data analytics, cybersecurity awareness, and proficiency with financial modeling tools are becoming “must-haves” for finance professionals.
What It Means for You:
The finance professional of tomorrow is no longer just a “numbers person”they’re a datadriven storyteller. While accounting principles remain important, you’ll also need to understand advanced data analytics, visualization, and tech integration.
How to Stay Ahead:
1. Invest in Continuous Learning: Enroll in certification programs such as Data Analytics for Finance Professionals, Certified Management Accountant (CMA), or Certified Financial Analyst (CFA).
2. Master New Tools: Learn how to use financial modeling platforms like Power BI, Tableau, and Google Data Studio to visualize and interpret complex financial data.
3. Cross-Train in Data Analytics and Cybersecurity: As finance departments handle sensitive data, understanding cybersecurity best practices will set you apart from your peers.
The Growing Importance of Soft
Skills
The Challenge: Financial Expertise Alone Isn’t Enough
Traditionally, finance roles focus on technical know-how—being able to crunch numbers and analyze spreadsheets. However, in today’s collaborative and fastpaced environment, this
is no longer sufficient. Finance professionals now need a blend of analytical thinking and emotional intelligence. Companies are looking for finance leaders who can present complex data in simple, relatable ways, make strategic decisions, and lead crossfunctional teams with confidence. In short, soft skills are no longer “nice-to-haves”—they’re essential.
Key Soft Skills for Success:
• Communication Skills: Finance professionals must be able to articulate complex financial data clearly to executives, stakeholders, and team members.
• Adaptability: Change is constant, and the ability to shift gears quickly is critical.
• Leadership and Empathy: Building and managing highperformance teams requires leadership skills that focus on motivation, empathy, and clear communication.
can fast-track your soft skill development, especially in areas like leadership and communication.
The Demand for Real-Time Data and Agile Decision-Making
What It Means for You:
• Problem-Solving: As automation takes over repetitive tasks, problem-solving will become the most valuable human skill in finance.
How to Stay Ahead:
1. Invest in Leadership Development Programs: Many companies offer in-house training programs that develop leadership, teamwork, and problem-solving skills.
2. Practice Public Speaking: Join a local Toastmasters group or participate in team presentations to become a more effective communicator.
3. Seek Mentorship and Coaching: Mentorship
The Challenge: Real-Time Financial Data is NonNegotiable
Gone are the days of waiting until the end of the quarter for financial reports. Executives and stakeholders now expect real-time access to financial data. The speed at which businesses operate requires realtime decision-making, especially during market fluctuations, supply chain disruptions, or other financial crises.
Finance professionals must be able to collect, analyze, and present data in real time. They must also be ready to offer insights and recommend strategic actions on the spot. If your financial analysis is delayed, your business could lose out on opportunities for growth and innovation.
If you want to be seen as a true “financial strategist” rather than just a “numbers cruncher,” you’ll need to be able to offer realtime financial insights. Decision-makers at the executive level need to see live dashboards and performance metrics at a moment’s notice.
How to Stay Ahead:
1. Use Real-Time Reporting Tools: Leverage tools like Google Data Studio, Microsoft Power BI, and Tableau to create realtime dashboards that update automatically.
2. Master Predictive Analytics: Use AIpowered predictive models to forecast trends and provide strategic guidance to senior management.
3. Build Data Governance Policies: Ensure that real-time data is clean, accurate, and properly governed so that it can be trusted for decision-making.
How to Thrive in the New World of Finance
Finance professionals
who embrace adaptability, continuous learning, and a growth mindset will be best positioned to succeed in this new era. If you want to remain indispensable in a world where automation is taking over manual tasks, your role must shift from “doer” to “strategist.”
Here’s how to get there:
• Be a Proactive Learner: Stay ahead of trends by continuously learning about data analytics, AI, and automation software.
• Showcase Your Leadership Skills: Speak up during team meetings, participate in decisionmaking, and seek out leadership roles within your department.
• Embrace Agility: Be willing to pivot quickly as new challenges arise—whether it’s a financial crisis, technological shift, or market opportunity.
Final Thoughts: Turn Challenges into Opportunities
The world of finance is rapidly evolving, and technology will only
continue to disrupt traditional accounting and finance roles. But every challenge presents an opportunity. By embracing automation, developing soft skills, and mastering realtime data analytics, finance professionals can position themselves as indispensable assets in their organizations. Don’t resist change— be the change. Focus on building skills that technology cannot replicate leadership, strategic thinking, and empathy. Invest in technology, learn continuously, and be a driver of innovation in your company. By doing so, you’ll futureproof your career and maintain your position as a vital contributor to your company’s financial success. Ready to future-proof your financial career? Start by investing in your skills, embracing new technology, and developing the soft skills that set you apart from the competition. Remember, those who adapt and evolve will lead.
Paul Clewell is a 10x Elite Coach and part of Derik Fay’s 3F Management C-suite. He helps small business owners expand and scale their businesses. After discovering a love for making money grow as a child, Paul has dedicated years of his career to helping others build their businesses and live out their entrepreneurial dreams. Read on to learn about Paul’s 5-P business scaling and growth method.
Dennis Postema: What are you known for right now?
Paul Clewell: I work at the C-suite level of Derik Fay’s company, 3F Management. We help small businesses grow and scale. Sometimes we take equity positions in those organizations and help them exit at a minimum of a 10x return.
I also work with Grant Cardone as a 10x Elite Coach, focusing on revenue and small business owners.
Dennis: What advice do you have for coaches who speak at events?
Paul: Speak from your
heart. I never overprepare for speaking events. Many people do and they get stage fright. They wonder if they’re going to say the right things. It doesn’t matter to me if I say the right thing or the wrong thing because I speak from the heart. What you see is what you get. I maintain authenticity and self-awareness when speaking, and while I try not to offend anyone, speaking my truth and sharing what I’m feeling can lead to that sometimes, but it’s the only way.
Dennis: What led you to entrepreneurship?
Paul: I grew up in a small northeastern town.
During the summer, I rode my bike around this little village, where I’d find money people dropped in gas stations or outside on the sidewalks. I’d use whatever change I found to buy packs of baseball cards for $0.25 apiece.
Growing up in a rural community meant all the kids got on one bus and went to a centralized school, so I brought my baseball cards to school and sold them for
$0.50. At age nine, I was making a 100% return on my $0.25 investment. I thought it was the greatest thing in the world.
In retrospect, that’s when I got hooked on turning money into more money. We didn’t learn about entrepreneurship in the 1970s. It was just something I did.
As I grew older, I started working a paper route and earned money that way. I thought, “Wow, I can give somebody something and they’ll pay me for it.” That’s where the bug started, I guess you could say.
As an adult, most of my career was in the oil and gas industry. I designed data centers for gas and oil companies around the world.
In 2012 I was coming home from a trip to the Philippines. My wife and our toddlers were at home. I spent a lot of time away and it weighed on me. I felt guilty, like I was being called to be a good dad and husband, but I didn’t know how to balance that with my work, where I was creating millions of
dollars in revenue.
That year, I stopped cold turkey. I said, “I can’t do it anymore.”
I tried making up for lost time by staying at home, getting my kids up for school, making their lunches, and catching up. The first lesson I learned is you can’t get time back. Once it’s gone, it’s gone. That was a huge awakening for me.
A few months later, people in the industry and in corporate reached out to me. They were like, “Hey, where’d you go? Have you been hiding underground?”
And I said, “Yeah, kind of by design,” because I needed that break. They asked me for help with consultations and other work. Before I knew it, I’d hopped back into the rat race.
Fortunately, I had also jumped into real estate, investing, and other financial avenues so I didn’t depend on the work I was doing. I did it because I wanted to and because I had purpose there. I still had a lot of fuel left in my tank and I
couldn’t sit around doing nothing.
I needed to serve others, and I have a heart for small businesses, so I got into consulting with small businesses, helping them build and scale. Seeing their smiles after we helped them successfully exit felt amazing. They could ride off into the sunset.
All of that work to have somebody say, “Thank you,” as they get their millions of dollars and build their businesses. It energized me.
One day, I got a call from the Cardone camp. They said, “Hey, we’ve been following you on social media and we’ve heard some things about you. You should join our ecosystem.”
It took them a while to convince me, but now I’m happily part of their group as an Elite Revenue Coach.
The same thing happened with Derik. He said, “Hey, man, come join my C-suite. Let’s go crush it together.”
I was like, “Dude, that’s all you’ve gotta say. Say the
word crush and I’m in.”
I’m in a beautiful place now, where I do what I want when I want and, most importantly, with whomever I want. My purpose is to touch as many lives in the business world as possible before they put me in the ground.
Dennis: What is the difference between growing and scaling?
Paul: As entrepreneurs, we communicate with other business owners daily. How many times have you heard someone say they want to grow their business or that they need more revenue? We all say it and we all hear it.
Growing a business, although a good thing, is different from scaling a business. One requires the other. You can scale in spite of growth, but ultimately, they’re different.
If you ask a business owner with sales widgets how they’re going to grow their business, usually their answer is, “I need to work harder, put out more quotes, get more capital to
buy another widget production machine, make a strategic hire, get more office space,” and while those are all correct answers, if you ask them how they plan to scale their business, they’ll give the same answers.
But growing requires more effort than scaling. Growing is about putting $1 in to get $1.50 out, in essence. Scaling is using that $1 and instead getting $10 in return. Growing is more revenue, which requires more effort and skill. It’s trading more time for potential dollars.
Scaling answers the question, “How do I use that same time to be smart about what I’m trying to accomplish with systems, processes, strategic hires, or product offerings?” It’s a different beast that requires a different mindset.
In today’s world, you can grow for the sake of it. Let’s say you build a $10 million empire all by yourself. It’s not possible to do that by yourself, but for the sake of the argument, let’s say you’re the sole proprietor of that entity.
What happens if you break your back and you’re on bed rest for six months? What’s the value of that $10 million business if its creator is no longer able to run it? It dies on the vine. It breaks, for sure.
With scaling, if you break your back and are unable to work for six months, you have systems, processes, and people in place to carry on without your presence.
If you go out of commission for health reasons and you don’t have systems and processes in place to run your business, then you don’t have a business, you have a job or a side hustle. That’s a big differentiator between growth and scaling. If you can’t walk away to take your spouse and children on a vacation somewhere without worrying about your business, you don’t have a business, you have a job.
Dennis: What are the foundations of scaling?
Paul: Foundationally, there are five Ps you must have in place if you’re considering scaling: product, promotion,
profitability, processes and people.
You need a product that you can promote profitably so you can use the revenue to purchase processes, and only then can you hire the right people.
If I were to ask an aspiring business owner, “What’s the first thing you need to do?” Nine out of 10 people would say, “I need to hire the right person.” OK, so you’re starting a business, and you need to hire someone. How are you going to hire them? How are you going to pay them? What do you have to offer them?
I stole this from my mentor Brandon Dawson: Great people will never work for a shitty company.
During an interview, the interviewee is vetting the company equally to make sure you have systems, processes, market reach, the right product, and the budget to bring them on.
So, no, hiring someone is not the first thing you should do as a business owner. It doesn’t work. It’s out of sequence. It’s important, of course, to
have the right people, but it’s not the first step. You need to start out with a product or service and prove to yourself that you can sell it, which is where promotion comes in.
After you make a profit, you’ll set some of it aside, and over time you’ll buy your QuickBooks system or implement a customer relationship management (CRM) system or a quoting system—some type of system to increase your business’s effectiveness and efficiency.
Once those are in place, you can begin searching for employees. Interviewees will see you have the tools for them to succeed at your company.
The biggest pitfall entrepreneurs fall into is the idea that they need to hire a salesperson when they can only afford to pay them $50,000 a year and commissions. Yeah, you can find somebody, but it won’t be somebody good. Good employees are always looking. They’re hunters seeking the next great thing, and they know offers are always on the table,
but you need to have your shit together before they’ll apply.
Dennis: Do you think growth eventually leads to burnout?
Paul: Yes.
In business, we have what’s called break points. Think about them like stairs that your business climbs. Every business is going to break, likely multiple times.
This is why the majority of small businesses in the United States fail: They reach the first break point, which is $1 million, and they don’t know what to do. They give up because they don’t know what’s next.
The business owners who get burned out fail to understand or discover that scaling a business is an algorithm, a simple equation. It’s not rocket science. Most people reach $1 million and go, “Oh my gosh, I’m at a million dollars! I’m at a break point. I can’t do any more. I can’t put in any more hours. I physically can’t do any more.” They stop and give up.
They don’t know they’ve hit their first break point, and now they have to pivot and learn the algorithm. It’s like solving for X in algebra. People overcomplicate it.
At that $1 million break point, a business should have two or three people on board as employees or partners. If you do the math, each person in your organization should represent somewhere between $300,000 and $500,000 of top-line revenue.
If you and I were partners in a business, just the two of us, and we were at $750,000 a year, then we’re in a good place because we wouldn’t be able to afford to bring someone else on. When we reach $1.3 million, we could afford a third person; when you divide that $1.3 million into thirds, each of us would represent about $433,333. That’s a sweet spot. Take your revenue and divide it by your head count. If that number falls between $300,000 and $500,000 per person, your business is optimized in terms of human capital. If it’s less
than $300,000, somebody needs to be let go.
If you’re above that $500,000 mark, somebody is being overworked and you need to add a strategic hire into the mix.
When a business owners says, “We are earning $1 million per year, but I’m not making any money,” I ask them how many people are on their team. If they say they have eight employees, well, there’s their answer: They have too many employees for the profits they’re making. At that point, you must choose between letting people go or finding another route for increased revenue as soon as possible, or your business will die.
Even if you have some people working by commission only, they count as part of your total head count in the equation.
Dennis: How would you clean house properly to reach that $300,000 to $500,000 range if your business is overemploying people?
Paul: Let’s say your
business is bringing in $1 million annually in revenue and you have 10 employees. Each employee represents $100,000.
I would hold a team meeting to share the numbers. Transparency is crucial. Tell them that the business cannot sustain that cost, and we must figure out how to quickly pull in more revenue. Collaborate with your team. How do we pull in more money right now? For 10 people, we need to make between $3 million and $5 million in revenue.
Get people on board with being solutions to the problem, and not complainers. You don’t need complainers around. Holding a meeting will show you who the leaders are. Those people will step up and bring ideas to the table.
My first inclination is never to let heads roll. Pulling people in to participate and collaborate will get those profit numbers up so you don’t have to weigh who gets to stay and who gets dropped. Some people will weed themselves out. They’ll say, “I see
the writing on the wall,” and leave. You’ll always have that bullshit answer. It’s great. You go, then. Goodbye. The sooner, the better.
But those leaders who step up to the plate may surprise you with their ideas. You may never have considered the solutions they present.
After that meeting, hold out for a few more months, and if revenue doesn’t reach the goalpost, you need to make the choice to let people go or switch things up again.
Dennis: Do you have an efficiency system you recommend, or do you think at that point a business owner will know who to let go?
Paul: As leaders, we must understand that we are responsible for the problem we’ve created, even if we did so unknowingly.
People falsely assume that since they’re building a business, they need people immediately, but they don’t have the revenue to support their employees, so they’ve created the
problem.
The first step when you’re at this point is to make sure the team doesn’t feel like it’s their problem. It’s your responsibility. You didn’t have the insight as a business leader to understand what you needed when you needed it and the results you were aiming for.
Your first priority is ensuring that your employees have the skills and tools they need to sell your product or service.
It’s not your salesperson’s responsibility to approach you and say, “I need training to improve.” It’s up to you as the business owner and leader to proactively approach your salesperson and tell them you want them as good as they can be, and therefore you’re going to set them up with mandatory training.
Business owners complain about their employees, but their employees are a reflection of them. Why is half of your team bad?
Look at the NFL. If a team isn’t good, it may be true
that they don’t have the marquee players like other teams, but at some point, you have to look at the coaching staff in the front office and ask, “What are they doing wrong?”
As successful business owners, we all come to the table with an ego. Those who know how to check their ego at the door are the leaders who serve the people there on their behalf. That’s where good leadership evolves into great leadership.
When you run a business, your title doesn’t matter. CEO, sales manager, whatever. It’s irrelevant. Your goal is to clear obstacles so your employees can be great. It elevates the business. Leaders must take accountability and responsibility for their company culture and the performance of their employees.
If you don’t have the right arrows in your quiver, look in the mirror to figure out why.
Dennis: How does a business scale to reach the second break point?
Paul: The next break
point is typically between $3 million and $5 million. That’s when business owners have figured out the head count thing, either through conversations with their peers or by training with a coach like myself. I don’t think they accidentally figure it out, but through trial and tribulation it’ll eventually surface. You can’t reach the second break point without that knowledge. The second break point is when you need to make sure your CRM is in place and that everybody is on board with your systems. Make sure your marketing systems are integrated, your outbound is spot-on, income is being received, and nothing’s falling through the cracks. At $3 million to $5 million, it’s all about process. How many times have you heard a business owner say they have leads, but nobody followed up on those leads? It makes me want to pull out my hair and their hair when I hear that.
It’s like a car leaking oil.
You don’t necessarily know it’s leaking oil because it’s still drivable, but you don’t know what’s going on underneath. You might smell something off once in a while, but you don’t know that there are fluids leaking. You’re sitting in your nice, upholstered car, thinking everything’s fine. You have tunes playing and it’s a sunny day. That weird smell must be coming from the truck in front of you.
When your business is unoptimized, money is leaking. Maintain the processes you have in place. Keep them predictable, sustainable, and continual. You need them to be reliable. Your accounting packages, your inbound and outbound marketing, your social media presence—all of that is key to a healthy business.
To stick with the car analogy, it’s like each of those business components are different parts of the car breaking down. One represents the leaking oil. Another represents the brake fluid leaking. Yet another is the power steering fluid.
Usually at that second
break point, something is hemorrhaging, but it can be fixed with processes and systems. You’d drive your car to the dealership for a checkup and diagnoses of those leaks. You don’t know what you don’t know.
After your vehicle’s issues are brought to light, you take it to the mechanic to get it fixed. Now you can hit the accelerator. In business terms, once you fix those processes and get systems back in place, you can begin scaling again.
Dennis: How important are mentors and coaches in business, and how have they impacted your life?
Paul: As a coach, I am biased, but I would say it’s critical to have coaches and mentors as a business owner.
To use sports as an example, coaching is only as effective as the athlete’s willingness to receive it. If you’re a prima donna who knows it all, and I’m a Hall of Fame wide receiver coaching you, it won’t go well. If I’m trying to show you some footwork that’ll help you get past a quarterback a
little quicker, and you say, “Thanks, but I don’t want to listen because my way is better,” but you’re only making one catch per game and failing to get any touchdowns, then clearly your way is not better.
How willing are you, as a business owner, to set your ego aside and open yourself up to another perspective? How willing are you to listen to different insights on running your business? What will you do to implement those suggestions?
When I was in my thirties, I thought I knew everything. When I was in my forties, I thought I knew a lot. Now that I’m in my fifties, I know that I don’t know shit. That’s the definition of wisdom.
Be trainable. I’m always seeking new understandings, new knowledge, and new perspectives. It doesn’t matter if it comes from somebody my own age, or my recently deceased mentor who was in his late seventies, or from a thirty-two-year-old. It doesn’t matter who it comes from. You have to continually seek
knowledge and improve yourself.
If you’re not getting better, how can you expect the people in your ecosystem to look up to you and follow your lead on improving themselves? Flatlining is unacceptable.
Dennis: What’s the next break point businesses typically reach?
Paul: At about the $8 million to $12 million revenue mark, your business will hit its third break point. It’s typically too big for the existing team to handle. You need to bring in a new level of leadership. Start asking yourself if you need a COO, or maybe a CMO. Whoever you bring in doesn’t need those titles necessarily, but you have to consider whether to pull someone in to help you run the business on a daily basis so you can maintain altitude and keep that 30,000-foot view of where the business is headed.
At the $8 million mark, you’re doing
amazing things, but you’re flying at Mach 2 speeds, so if an obstacle comes up, chances are you won’t have enough time to veer off, and you’re going to crash.
That marketing person can continue driving outbound and support sales. Those leadership positions are crucial.
At that point, it’s less about the team around you and more about bringing in someone to take on some of your duties so you can focus on additional scaling.
Dennis: Why?
Paul: The person who got you to the $1 million break point is you. You got there by working
your ass off and juggling your work life with your home life.
At the second break point, you and two or three other people brought the business there. You needed them. At that stage, you needed to plug gaps and holes and go, “Hey, come work with me and I’ll give you a piece of the business if it works out.” You’re desperate to find good people at that stage.
At the $8 million to $12 million range, you’ve done enough. You don’t need to prove anything. You need to hand over the reins to someone who’s more capable.
As businesses get bigger, one mistake I often see is owners thinking they need to be involved every day. In most cases, entrepreneurs are innovators. They’re visionaries. They have big ideas, and they believe the only route to longterm scaling and success is by being involved in the business’s day-to-day.
But it all goes back to knowing what we don’t know and setting our egos aside. Sometimes you need to put people in
place who are better than you. Let go of being in control. Surrender to not being in charge anymore and know that you can be in control even when you’re not in charge. It’s nuanced.
Put someone else in charge but maintain overall control because it is your business. The key is letting go of that small-scale, day-to-day supervision. If you don’t, it’ll be a setback at the next break point.
You often hear about businesses that get stuck at, say, the $5 million mark for several years, or their revenues start sliding back to $2 million or $3 million. The owners wonder what they’re doing wrong.
They’re unwilling to let go. They’re trying to run a $5 million business the way they were running it when it was pulling in $500,000. Those are two different animals, and they need to be handled differently.
Many business owners are so far out of their knowledge zone that they don’t know what to do. They inadvertently scaled even though they
didn’t know what that meant. Just because I know how to get to the moon doesn’t mean I can navigate to Mars.
Once you have those people in place for your business, it’s easy to scale from there. Ironically, once you hit the $20 million to $22 million revenue point, the principles required to scale up to $1 billion circle right back to those Ps we talked about earlier. Never stop reevaluating those five Ps.
Go back to basics. Do you need to change your product and offer something different? The iPhone is a perfect example of tweaking design and adding more bells and whistles with every iteration.
Are you still making money? Is there room for higher margins? What are you doing to promote the business? Ten years ago, marketing looked very different than it does today. Social media is a fixture of many large companies now. Are you incorporating modern technology into your marketing efforts to ensure you’re getting as
many eyeballs on your product as possible?
Businesses that don’t make it often fail because they don’t evolve with modern practices. Is your team still going strong, or are they getting complacent? Are you incentivizing them? Are they excited to show up to work? Are they reaching their goals? Are they taking care of their families?
People are crucial. Those employees will take you from $20 million in revenue to $1 billion if they’re the right people and you’re taking care of them the right way. Look at all the people who have stuck with companies like Amazon and Microsoft from the start. They understood the algorithm because they’re whizzes in their own right.
Dennis: How does mindset play a part in the scaling and growth of a business?
Paul: Your mindset is magnified as the business reaches higher levels, one way or another. A negative mindset, where you’re overcomplicating things, or you don’t think
you’re smart or deserving enough to earn more, becomes a self-fulfilling prophecy. Those fears are all lies.
Stress and self-doubt strengthen the further you get in business. It’s like climbing a ladder. You take it one rung at a time, and before you know it, you’re 80 feet in the air and you look down, wonder how you got up that high, and then you’re frozen in fear. You don’t know what to do.
Is the next move the right move or the wrong move? It doesn’t matter. You have to make a move. Many business owners don’t want to back down because they’ve gotten a taste of success and money, and their egos have grown, but they’re scared to move forward due to the uncertainty or a lack of confidence.
As a coach, it’s my job to teach them that either choice is OK. If you want to retreat or move forward, either way, that’s fine. But you can’t not choose. Sometimes I make decisions for people, which I shouldn’t be doing, but I have to. I’ll
say, “Hey, are you ready for a coaching moment? You need to move, or your business will die.”
Dennis: What suggestions do you have for companies looking to bring in investors or outside money to help them scale?
Paul: My expertise isn’t in the financial side of business per se, but here is my anecdotal advice: At least half of business owners will say they’re struggling with money, that they need more capital to grow their business.
From there, I ask how much they need. They throw out a number, like $1 million. How would they allocate that money if they got it?
“Oh, I’ll spent $200,000 on a marketing director. I’ll do this and that.”
OK, but how does investing somebody else’s $1 million generate new revenue? How will your plan make them feel comfortable enough to loan you the money in the first place? Nobody has an answer for that.
They don’t have an answer because they say they’ve lost control of what’s going on in their business. That’s when my team and I come in and analyze their business’s financial health. We often discover hundreds of thousands of dollars’ worth of leaks, if you will, and if we repair those leaks, your business won’t need a full $1 million anymore. You might still need a few hundred thousand dollars, but
pay a mechanic to fix it.
that’s easier to borrow than $1 million.
When your business needs more capital, the first thing you should do is an internal diagnostic run. Open the hood. Let an experienced mechanic, so to speak, go in and point out your monetary leaks.
If your car has brake fluid leaking, you don’t say, “Oh my gosh, I need a new car,” right? No. You
If you’re going for capital, that capital should always come from a strategic capital investor, not like a “hard money” source. A strategic partner brings money to the table and something more: their network and their skill set. They want to serve on your board or as your CEO, and that’s great too, but their network is worth way more than any money they could ever give you. You want an investor with skin in the game. That way, you know they care, and they’ll take an active role to ensure they get their money back with interest, or whatever the contract is.
If you go for hard money, they don’t give a shit about your business beyond making sure it doesn’t fail. “Yeah, we’ll give you $1 million, but we want a 30% return over the next two years. I don’t know how you’ll do that, but good luck.”
There’s no collaboration
there. I’ve never seen a deal outside of the spirit of the collaboration that has worked out.
Letting investors in builds an ecosystem with them that you protect with your life. You have to trust each other, and you have to be careful about who you let in. One bad apple ruins the bunch.
Strategic relationships, as they relate to identifying capital and executing scaling strategies, are the best place. Once it works out, you have many people in your court cheering from the sidelines saying, “Let’s keep going.”
Dennis: What is the best way for one entrepreneur to scale multiple businesses?
Paul: Identify whether the businesses have synergies. How do they support each other? Are they sister businesses? Are they congruent? Or do they cover totally separate industries?
If three separate businesses have only you in common, you must treat each one as its own silo. Don’t mix the oats with the cotton or
the peanuts, right? Treat them as independent entities, because they are. If there are no synergies and they can’t feed off each other, don’t crosspromote them.
If you own a NASCAR racing team, you have four drivers with four race cars. Those are your four separate businesses. They’re all competing in the same races, and you’re happy if any of them win, but you’d prefer if all four of them finish in the top 10 rather than one winning and the other three crashing mid race.
You must strike a balance with your businesses. How do you get out on the track, be aggressive with scaling, and get through the race without being so aggressive that you crash and take down an affiliate along the way?
If one of your businesses fails, that leads to a plethora of other issues. How do you make up for all that revenue? There are costs associated with a business failing. Do you have to pull revenue from one of the businesses still standing to cover the costs of the dead
business? It’s a domino effect.
There are hard expenses that come with closing a business, and when you’re at that point, clearly you can’t pay those bills. But the money has to come from somewhere, whether that’s your personal bank account or from your other thriving business. Once you tap into that money, your other business won’t thrive anymore.
In order to scale those businesses, remember that they will do so at their own rates, depending on the product, the market for the product, the skill sets of their teams, and other factors. The one constant is you. You must consistently apply pressure and divide your time and effort.
Dennis: How do you plan an exit strategy with business owners?
Paul: When you’re at the point of looking for an exit strategy, you have to look closely at the value of your company. Don’t be misled by this, as many people are. I don’t mean the valuation
itself, but whether you followed the algorithms and whether you built a sustainable, bulletproof business with good products.
Did you serve your client base? Do you have solid testimonials and repeat customers? Did you build the processes and systems?
Much of a business’s value is intangible.
I could build a $1 million business in 90 days. You tell me what business you want to create, and I’ll build it. But if you want to then purchase it from me and I tell you the price is $10 million, you’re going to say, “Dude, you’ve only been in business for ninety days and you’re at $1 million in revenue. Why?”
Well, it’s only me running it, right? If I get hit by a truck, you’re screwed out of this business. I don’t have a solid team in 90 days. I haven’t had time to put processes or systems in place to stabilize and optimize my business. I probably haven’t even figured out what my product mix, sales pitch, sales cadence, or scripts are.
All of those factors create value for the business. If I created a $1 million business in 90 days, I could probably only sell it for $1.2 million.
If I built you a business, sold it to you for $1 million, and left, you might not know what to do with it next, especially if you know nothing about the product, so ultimately the value of the business is $0.
When we’re looking at exit strategies, we need business owners to understand that value has to be there inherently. If you’re exiting, we’re operating under the assumption that you’re looking for someone to buy the business. Buyers do their due diligence. They’ll look under the hood.
They’ll ask, “What’s the value? Where are the people? What systems are in place? What contingency plans are there? What does the product mix look like?”
Valuation is completely determined by the market, not by the business’s internal makeup. Your 1968 Willie Mays baseball card may be worth $1,000 to you,
but it’s only actually worth what somebody else is willing to pay you for it.
Your business has to have both high valuation and a strong structure to be valuable.
Dennis: Is there anything else you’d like to share?
Paul: 3F Management is involved in many acquisitions. We’re seeking like-minded people to collaborate with. We want people who are humble and who can admit that they don’t know something. We love seeing that in successful business owners: People who admit that they need help are often entrepreneurs who can be wildly successful with the right coaches.
If you’re not sure how to get to the next level, reach out. We’d love to work with you and to help you scale your business.
To learn more about Paul Clewell, you can text him at (678) 595-0039 or email him at paulclewell22@gmail.com. Find him on Instagram: @Paul_Clewell21.
