Do you think a CPA has the ability to transform your life and your family’s ?
I mean, let’s be real. Most people believe that CPAs just count numbers and file tax returns?
Before you respond, let me share an incredible transformation story about a client of mine. He’s a small business owner who faced extremely challenging circumstances. The stress of running his business was taking a serious toll on his health. Although he hoped to retire at 65, his current circumstances were making his retirement plans look like an impossibility.
You won’t want to miss this. So, let’s dive in.
BACKSTORY
So let me give you some quick backstory to start things off.
My client, whom we’ll call John, faithfully poured his heart and soul into his RV business for over four decades. What once brought him great joy and energy had become a constant source of stress and exhaustion. He literally lived at his place of business, and this certainly did not help his stress levels.
He was completely overwhelmed and to make matters worse, his health was declining. Even the simple thought of selling his business filled him with fear.
He was constantly worried about losing tenants and how much he was going to be able to sell the business for. Would he be able to get the true value of his life’s work?
To put it plainly, John was not in a good place. With his declining health, loss of motivation, limited energy, and no retirement savings, his business was all he had. His future was riding on it and there was no plan B.
Sadly, this business was barely making ends meet, he truly was between a rock and hard place.
Assessing and Understanding the Business
Now, when John first contacted my CPA firm, he became a bookkeeping client. At the time, he did not see the value in us helping him build his business, nor in tax savings advice or tax planning.
I did tell him when we started that if you decide to sell, make sure you let me know first, so my team and I can review your situation and make the most of the sale.
When he finally came to me asking for help, I could not believe all that he was telling me. His situation really did seem hopeless.
But thankfully, I had been down this road before with other business owners, and I felt confident we could help John turn his situation around.
Once John hired our advisory services, we really wanted to waste no time. I first started with a thorough onsite visit. I needed to understand his business inside and out — the land, buildings, equipment, and all the little nuances of its operations.
Next, it was on to his balance sheet, which turned out to be an absolute mess. As it turns out, some of the assets he had reported to us over the years were non-existent, and there were so many other assets he failed to tell us about that were essential.
In fact, he had 3 additional buildings on his property that drastically increased his sales price, but again, I would never know this unless I visited his property first.
So my next task would be to correct all discrepancies in an effort to reveal the true value of his business.
As we began to steer John’s life and business back in the right direction, I could not help but think to myself: wouldn’t it be great if John could sell this business and enjoy a nice retirement without all of his current stress?
A sale of this magnitude would change his life. He would actually be able to enjoy his latter years rather than lament them.
But I knew it would not be an easy road to get there, and this is where the real work began.
GETTING STARTED
With our next step, I knew we had to learn exactly how revenue was generated in John’s business and then categorize the different types of income.
Once we did that, we got a much clearer picture of where the money was coming from and where he could potentially grow, and we could also identify what was a complete waste of his time and money.
One of the first areas we started analyzing was how much he was charging for RV rental space. We quickly realized he was undercharging by a lot, and this shortage was causing him to fall behind on properly maintaining the business, since it required constant cleaning, hauling, and road maintenance.
Unfortunately, undercharging was having quite the snowball effect on the business losing value, and it was going to make it nearly impossible for him to retire if left unchanged.
After we got a better feel for his profit centers, we recommended price increases, and it was then, we were faced with one of our biggest challenges, which was John himself.
He was making up every possible excuse not to do it. As he saw it, my customers will all walk out on me. I will price myself out of the market, and I will be out of business. And then I’d really be in trouble, or so he thought.
To overcome John’s reluctance, we had weekly meetings and continuously talked to him about how this could be done.
We even suggested books for him to read so that he could better understand the process.
Planning for the Future and Continuous Improvement
During our meetings, I introduced cash flow charts and predictive models, helping John see what would happen if business declined. This empowered him to make informed decisions about expenses and investments.
Throughout this process, our weekly meetings were absolutely crucial to getting John onboard with our plan.
We discussed changes to revenue and expenses while refining our strategies together. At the same time, we could only do so much on our own, we needed John to do his part because we could not do it for him. It was truly a team effort.
In our first year of working together, we managed to increase business revenue by about 30%, even with John’s resistance. And guess what? None of his customers walked out. As it turns out, most of his tenants knew they were being undercharged all along.
Preparing for Sale and Finding the Right Broker
Next, we were on the hunt for a broker who specialized in business sales.
We knew this was not going to be an easy sale, and time was not on our side. However, getting a quick sale for top dollar was vital because of John’s declining health and his lack of retirement savings.
We started reaching out to brokers but were continually turned down.
Why did they turn us down? Well, they felt his land was too small and needed too much maintenance.
But my team and I were persistent. We made sure we employed the right appraisers and we made certain every asset was accurately valued after the revenue changed.
Our hard work paid off; we finally hired a professional broker who was not afraid to put his skills to the test. Within just 3 months, our busines broker turned what initially looked like a difficult situation into a $1.2 million-dollar closed sale.
Not So Fast
We were all so excited for John. His business sold, but we all knew that the work was far from done. Uncle Sam and the IRS were waiting right around the corner and they wanted a big payday on the sale of John’s business too.
If not navigated properly, John would lose a lot of his money to taxes, possibly $135,000, and that would certainly put a dent in John’s retirement plans.
Immediately, we put our tax plan into place that included his social security, where he would live next, and how to take advantage of the $250K deduction on primary home capital gains, all while bringing his federal taxes from $135,000 to $0.
Can you believe it? John did not have to pay a single penny on his federal taxes.
To say the least, John was elated. He loved our plan. After all, no one wants to pay more taxes than they need to.
And as for Uncle Sam and the IRS, well, better luck next time.
A Happy Retirement
So, how’s John doing today?
I called John a few weeks after the sale of the business. I wanted to check up on him and see how his health was doing.
To my great surprise, he told me, I am feeling really good; the stress is killing me. I am now fully retired and building my new life.
Then he said to me, You must be really proud of yourself with this sale. I said I am, but most of all, I am able to make a difference in your life.
Today, John is retired, healthier, and happier. He enjoys the peace of knowing his life’s work was justly valued and is in good hands today.
And he does not have to worry about how he can afford to retire anymore.
For me, this story isn’t just about numbers; it’s about making a difference in people’s lives.
As a CPA, I help clients connect with a more disciplined aspect of their finances, which has a huge impact on everything they do.
John’s transformation is a testament to the power of trust, overcoming fear, and the profound impact that dedicated financial guidance can have on someone’s life.
Free Complimentary Consultation
If you don’t already know me, my name is Sonia Narvaez. I’m a licensed CPA in Orlando, FL and wealth-building strategist with over 25 years of experience.
If you have any questions about how to take advantage of the latest tax savings strategies, don’t hesitate to contact us.
To get your FREE complimentary consultation with a member of my team, simply click this scheduling link, and pick the time that works best for you. We would love to help and meet with you.