Succession Stories host Laurie Barkman, The Business Transition Sherpa(™), welcomes Elliot H. Kallen, President of Prosperity Financial Group, a financial planning and advising firm. Elliot is a three-time CEO with a passion for working with family businesses to achieve a meaningful life beyond financial measure.
Listen in as they discuss the emotional aspect of family businesses and the hypothetical umbilical cord that’s hard to sever. It could be a reason why family business owners want their kids to take over– so they can stay close to the action. Or, they may be reluctant to let go of their company baby and plan to work until they die.
Does the next generation even want to own the business, or do they want the wealth from an exit and the ability to move on? And what’s your retirement strategy? Make it more than watching four hours of TV a day.
Elliot is a proponent of creating a meaningful life. He shared the heart-wrenching story of his youngest son’s death by suicide, and how he’s honoring his memory by taking action to help other families. A Brighter Day charity unites stress and depression resources with teens and their parents with the goal of stopping teen suicide.
Enjoy this Succession Stories episode about meaningful transitions with Elliot Kallen.
Find Elliot here: https://prosperityfinancialgroup.com/
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TRANSCRIPT:
Laurie Barkman
Elliot Kallen, welcome to Succession Stories. I’m excited to speak with you. You have a new book that’s just launched. I feel like I’m part of your book tour. This is exciting.
Elliot Kallen
Laurie, thanks so much for having me on. I’m excited. Let me do my shameless plug here.
Laurie Barkman
Shameless plug, here it is.
Elliot Kallen
It’s Driven by Elliot Cowan and Taurus too. We hooked up about a year ago when he interviewed me on his podcast in which he has hundreds and hundreds of podcasts, writings and editions. Then he got so fascinated, I put them on mine. Ultimately, we collaborated and we wrote a book on leadership and entrepreneurship, about a road less taken, or that we think is always taken. There’s a lot of humor to here because nobody makes fun of me than me. I’ve not had a straight line in my life but I’ve had some great stories to tell from it, and some really good success as well.
Laurie Barkman
Oh, congratulations and that’s very exciting. It’s a book about leadership and entrepreneurship. Everybody should check it out. Get it on Amazon. It’s called Driven. Elliot, why don’t we start by talking about you just a brief introduction? Help us understand what makes you tick. Who are you? And what is it that your businesses focus on?
Elliot Kallen
Thanks, Laurie, for having me on. I am on only account when I’m here in Northern California. I own and run financial service organizations. I’m CEO of two wealth management groups and CEO of a charity at the same time. Three CEO hats that I wear. In my free time, I wrote a book. In your free time, you don’t sleep much to know now, I get up at 4:45 and hit the gym because it’ll never happen if I don’t do it. I’m in that peak performer crazy thing that I’m not sure that’s the right thing to do, but we do it because it accomplishes a lot during the day.
Laurie Barkman
You’re also a podcaster, you also have a show.
Elliot Kallen
I have a great podcast called Meet the Expert with Elliot Kallen. It’s got 55 or 60 episodes out there and it’s the top 4% financial podcast globally in the world. So yes, I’m doing that. We manage money, I manage money, manage relationships, that’s probably a better way to say it. Because if it’s money, it’s personal. I own that trait. I trademark that phrase. I have my clients that I have a whole series of people that work for me one company, and then another company has 55 people, and then a charity to make a difference in the world. Then I married, I have two children from my first marriage, my original kids are 29-year-old twins, and I’ve got two stepchildren and three grandchildren.
Laurie Barkman
Wonderful. Well, there’s a lot of joy that’s in your family, I’m sure and in your businesses, lots of challenges. With your clients, you see that too, that there’s always the balance of joys and challenges. I know in today’s show, we’re going to talk about that. Tell me a little bit about the organizations that you’ve led in the past, I think I read in your bio, that you’ve had a few exits.
Elliot Kallen
This is my third organization that I started in a major way, set like it’s a third set of organizations that I’ve started, because there’s really three of them, but we’ll call it the third set. When I graduated from Rutgers, a little bit east of you. I graduated as an Accounting and Economics major and I wanted to be in economics, but my brain said you can make instant money with the big eight accounting firm that was recruiting me and I did and it was a really bad fit. That didn’t last as long as I would have liked but it put me in a position of having to start something and I did, I started the industrial packaging business. I built that up until 1987 and then I sold that.
The reason I sold that is because we had expanded so dramatically, so many resources worried to the growth and a debt with expansion. So I understand that as a business owner, just because you’re growing doesn’t mean you’re not getting into more debt than we were doing that at an alarming speed. I went to a New York Jets football game that we had season tickets for. My wife and I went there and we argued the entire game about my company. I knew at the end of that day I needed to sell the company that was. It had a vision of who should be the buyer.
It turned out to be my employees, which is great. I sold and they saw both the assets of the company I sold which included the receivables, I sold the clients and I retained the payables and the debt because they could never have afforded to carry that debt and payable so it gave them a fresh start. It gave me the ability to renegotiate all the debt that was there and pay them back in an orderly manner with it without doing something like bankruptcy or whatever like that. Then I look for something to do and I ended up going to the environmental cleanup business scrubbers in the air and water, and did that with 1000s of reps around the country. It was a great time because there’s a lot of money going from the federal government through Superfund. You can hire people and clean people up. So the sticks smokestacks there.
In Pennsylvania, I was one of the few people certified to walk into a nuclear reactor that was under construction and certified that there was nothing that was going to melt down in that reactor that was part of the installation. Because they had to have it certified, called no load, no low melting point metals, not to belabor or something or really boring topic but we did that. Then the Superfund money dried up. I knew I wanted to get back into finance. Lo and behold, living in Pennsylvania, living in New Jersey, came to California had my set of twins, and ended up getting into the financial business, and I’ve been there now 30 years.
Laurie Barkman
One of the things you and I talked about in preparation for this interview were challenges that you see most frequently with your clients. One of the things that came up was the idea of a family business transitioning to the next generation of family, however, that next-gen might not want it. You told me you’re seeing that more and more. Let’s talk about that. Do you have any client examples, no names, we don’t need any names. But any client examples where there was, at some point, a realization that the next generation didn’t want the business?
Elliot Kallen
It will store its glory, was really the three phases of growth of an entrepreneur. Phase one is the startup, the beginning, the building, the excitement, you’re doing everything, or you’re coming in on weekends, you’re emptying the garbage can, you’re talking to me every day is exciting. You’re having to negotiate with banks, sometimes lenders, and sometimes private money. This is really exciting. Then you reach the point of, I’ve got something going here, I don’t want to lose it, I don’t want to stop, but I wanted to grow. I want to grow smartly. You begin to enter another phase of your life, you’ve now bought a house, a couple of cars, you got some hobbies, you got a management team in place–there are some good things happening.
You have your struggles, possibly, as an entrepreneur, because sometimes you go back and forth, and back and forth, and back and forth. It’s the third phase that is really interesting and that’s what you’re talking about. That is now I’m a little bit older, I’ve arrived, I’ve got my kids either in college or through college, they’re now adults, I’m getting a little tired, I will still like what I do. I love what I do, baby, but maybe not quite as much as I did, when I was in that exciting growth phase of my life, and everything was new. Because let’s face it, new is exciting. I don’t care whether you’re in a relationship with an automobile, or you’re writing a book, or whatever new is exciting to all of us. We all we all chase shiny objects. So we are what we do.
But now I’m in that phase three, I’m thinking of what do I do now? What’s my exit plan? What’s my strategy to cash out? How do I get the legacy of this business to continue. And either I don’t care about the legacy, I just want the cash, or I don’t want to give up the name, I worked really hard for this name, I developed the band-aid brand, and I don’t want to give it up, so to speak. You begin to look at sometimes, inwardly, your family. You’ve got a few children that have maybe even worked in the business as you were growing up and they’ve been here and they’ve worked in warehousing and shipping and office management and sales. Boy, they’d be really well qualified to take it over. We get approached with this subject all the time because in our industry, the wealth management business, your clients tend to reflect your values, your looks at the people look like me, I wouldn’t want that on anybody. That little bit of gray hair and a beard or whatever is you.
They’re now entering phase three or the middle of it, and you’re thinking, this would be great. Then this is what happens. This is why there’s greater than a 90% failure rate in businesses that go to the next generation, it’s really high. I just want to say that again, nine out of ten businesses fail when they are passed off to the next generation. The reason for that is not competency. We always think that my son or my daughter is very competent and can handle this and they are I don’t want to discount anybody because I just had a large cemetery business that the daughter took over for the father who took over for his father. It’s a third generation now. I asked her privately, what made you want to get into this business? Everything about your persona, your stereotype your age, is not related to the funeral and cemetery business. She said I’m destined for it. You don’t hear that very often. Most children have watched their parents, let me pick out let me call it dad for a woman, just instead of parents, they watched their dad. I don’t mean to be sexist here, I’m just gonna pick the debt. Then watch the dad. Now they’ve watched the parents go on some spectacular vacations. Maybe a house in Tahoe, or Florida or Canada or a secondary home. Maybe if it’s some, they’ve had been able to parlay that with rental properties and investment properties, and so forth. They look at their parents today are envious, in a positive way of the life that their parents have created. It’s a pretty good life. They go to Florida every month, every year. They go to Hawaii in a weird time. They do all these cool things. You’re in the middle of Pennsylvania, who wants to be in Pittsburgh in January. Oh, come on.
Laurie Barkman
Don’t you know that snow is great for skiing?
Elliot Kallen
You’re even on the wrong part of the state for that? Get only so good so many times to Camelback before I get that. They want that life but they don’t really understand what the parents, what the father or the mother, did to get that life. They work sometimes six and seven days a week. They were slipped upright because they stayed up all night, worried that they couldn’t meet payroll, or the bank loan wasn’t going to go through, because they didn’t have enough credit personally, or that they couldn’t get the materials from offshore to get to make the products they needed. He would lose the contract and be sued out of business. All these things happen in small business owners’ lives and they want the results of it.
I’ve seen this happen so many times, where I’ve said to the parents when they told me this, this is your child, your son or daughter prepared to come in on Saturdays, do extra work, and empty the garbage cans. As you used to be the only one to empty the garbage cans. Once upon a time, you clean out the refrigerator on Fridays so that wouldn’t smell on Monday. That was a snack room, you went and cleaned up after your employees in a snack room, or the kitchen area, because you knew it had to be clean. Just because that’s you. That’s your personality, you made sure there were flowers on the front desk because you didn’t want to miss a birthday. Little things that no one notices that you did to stay in business and keep a happy team together.
Or for your clients, you make sure to reach out to them even when you knew you were gonna get yelled at because it was better to confront the problem than hide from it. As you could always apologize. bt you could never hide from running away from the problem. It was you were going to lose the client, they could have lost them anyway but you knew it was the right thing to do. To renegotiate with your vendors or to be yelled at. Even though because you didn’t want to but you knew that if that person could just let off steam, we’d get through this, I could deal with it. I bet big broad shoulders 49-inch chest broad shoulders, it’s you could deal with that, right?
They want the results of your hard work but not the hard work. We haven’t happened so often. So the best thing you could do, and I recommend this almost all the time unless you have like a situation where the door was groomed to be in a business. They want the money. They want the receivables on the five-year note that mom and dad are going to get for the business. They want to take over the stock of the company, they want to maybe change it around because they have their own ideas, and that could be really good ideas.
By the way, I’m not knocking that. That’s what they want. So more often than not, if the best thing you could do for your children is to say I’m going to sell this business for 5 million, 50 million. Finally, I’m going to sell that I’ve got three children, I’m going to split that in quarters, I’m going to give each one of you one-quarter of the money rather than one-quarter of the business. Maybe you could hold on to the real estate and have the new business pay rent to you. That would be a cool thing for your kids. But I’m going to split that in quarters. So each of my children gets 25% of the business and I will take 25% for myself.
I’m gonna go and develop what I want to do now that I have the money to do anything I want to do. And then we ask the question there. Laurie, what would you do if money wasn’t the issue? Now for most people, the number one answer by far is I would travel more. I want to see the world. Some people don’t want to see the world they just want to see more the US or Canada. They don’t want to go offshore. They don’t like that. That’s number one.
Laurie Barkman
Let’s talk about other things that give you purpose. We, we learned about Brighter Day Charity was talking with you about that off-air. I understand that your book, a percent of the revenue of your book is going to go towards the the causes you care about. Why don’t we talk about that? Tell me about the Brighter Day Charity and how it came to be.
Elliot Kallen
Laurie, it’s a fabulous charity. What we do is we help teenagers and their families deal with stress and depression with the goal of stopping teen suicide. We do it with 24-hour texting for teens. In all 50 states, we do a live Zoom program and counselors all 50 states, a robust website at abrighterday.info. That’s one of the best, if it’s not the best. In a teenage mental health world. It’s right up there. It’s that good. Then we’ve got a bunch of other programs as well. It started because my 19-year-old son, eight years ago at the University of Montana sophomore, walked up to the highway, jumped in front of an oncoming truck, and took his life. In his suicide note to us, which arrived via Federal Express after he was dead. It said Mom and Dad, I’ve been thinking about this for a long time, I never would have told you how I felt, I never would have asked for your help, and I never would have taken your help. That paragraph amongst six pages long. But that paragraph was the impetus to saying we’ve got to stop this destruction and devastation for reaching other families. That was the goal.
We came up with the idea of a charity. It started as a musically based charity. Now it’s way broader than that but it’s very focused on teens and their families with stress and depression. It’s not a big broad mental health, charity, there are a million of those out there. It’s stress and depression. Every teen today is feeling stress or depression. I write two articles a month that are nationally published, I’ve got a full time writer on staff that writes four articles a month that get published. We’re everywhere with teens that we can be. And we give out free work resources to schools to parent groups to rotaries, and whoever wants our resources, they’re absolutely free.
Laurie Barkman
The resource of the website, if a teen is feeling like they wanted someone to talk to or they want to reach out, what are the services that they can get from your website?
Elliot Kallen
I have to tell you because you and I know that teens are not really big into reading. The website, obviously, it has a teen toolkit, survival toolkit as a parent around the toolkit. Some teens look at it, but not many. When teens are really into texting. It’s this. Unfortunately, social media is their enemy but it’s bigger than you and I instead of texting. What teams love about this is that they could do one of two things. They could text 24/7 in all 50 states, the word brighter, 2741741, and within five minutes, again, all 50 states any day of the week, they can get counseling for 40 minutes at a shot, and then hang up and do it again.
They can they could walk out of chemistry class and get help because they hate chemistry. They could do it at midnight. In invariably because we monitor these. In the first five minutes. Almost every team texts, the same question. Am I the only one feeling this way? They’re totally isolated. But that’s not for everybody. So they need to get a zoom, they need to get some counseling in the United States. If you’ve got a teen Lauriei, and your teenage daughter or son comes up to you and says Mom, I think I’m thinking about hurting myself.
You’re going to take some action. They might not know what to do, but you’re going to take some action. You call around and you get some referrals for counseling. They say great, thanks for calling Laurie. I’m good in eight weeks. We can have a daughter here because it takes six to 10 weeks.
We can get your daughter on counseling, your teen daughter or son counseling in seven days. It would be Zoom. Not since somebody’s office with a licensed therapist, not an unlicensed therapist, not me. I’m a parent Zoom counseling. That’s in counseling in all 50 States again, it works. That’s the beauty of Zoom counseling is that that costs money. It costs $250 an hour, but counselors cost if they go through our website.
We will pay for it for the first three months, and we do it for three months. because, again, when we tracked it with a third party or partnerships out there, we found that the average teen is out of crisis in 90 days. We’ll pay for it. Because Laurie, we don’t want you having to decide between feeding your other children and getting the one that he’s helped the help they need. Because you might be competing dollars. That’s what the charity does.
Laurie Barkman
That’s so important. It’s beautiful what you’re doing. Gosh, I don’t have words for what you and your family must have went through, but how you’ve come out on the other side of that eight years later, you said it was eight years ago that that happened to your son. What you’ve done and his honor, and how you’re helping other families is just beautiful. So thanks for sharing that. So as we wind down this conversation, with all your experience as an entrepreneur and working with business owners, this is kind of a mic-drop question, right? What are the two to three things that you think business owners should start doing now? To be better prepared, and have a successful exit without regret?
Elliot Kallen
I think that is a great question. It’s a lot tougher question than just the words that you said, because it needs to be talked out. You need to have that conversation. It’s a tough conversation. First, that conversation has to happen with you, or your partners, your business partners, then it has to happen with your spouse because that is your partner. Then it needs to happen with your family.
Even if you’re selling it, let your family be on board here that you’re selling your business so they can support you. You’re gonna go through huge highs and lows during this process so talk it out. In this conversation, when you’re not just talking about the money side of it, talk about your life, what are you going to do? What are we going to do Laurie as partners, life partners with each other for 30 years already? What are we going to do to enjoy life? Do we have anything to do? Make sure it doesn’t include the TV. Let him include your life because I know when I talked to my wife, and I just had this conversation with her yesterday. I said, because we talked about travel, we’re not waiting to retirement to travel. We’re traveling now. It’s where do you want to go? And do you really care where we go? See, because Laurie, if you and I are partners, and you said I want to spend a month in France. I say I want to spend three weeks in Yellowstone. We’re a long way off. Now we have to talk it out because maybe it’s Yellowstone this year or France next year. Or let’s blow both off and just spend three weeks in four weeks on the Amalfi Coast in Italy as a compromise.
Laurie Barkman
Just having the conversation and talking and looking forward is great advice you can’t eat. Now you really can’t turn off the TV and have a conversation. I asked all my guests if they have a favorite quote or something that inspires them and I know that you do. Would you like to share it with me?
Elliot Kallen
I’d love to there’s a there was a philosopher from Germany, Goethe, putting on how it’s pronounced to eth from the 1800s. We’re talking about two centuries ago. I read this when I was in high school, I wrote it down. I know you can’t see it, but it’s in orange letters and silver forage letters above my credenza. It’s very cool. It says, “Whatever you do, or dream, begin it.” Boldness has genius, power, and magic in it. I’ve always thought for me, Laurie, that meant, just do it.
I don’t have to quote yet, like yet. But if you’ve got a vision, put it down, share it, and find a way to make it happen. You can adjust it you can alter it doesn’t have to be perfect. But if you don’t have a vision, then you’re going to be 65 years old, in a blink of an eye. Trying to figure out what your vision is.
Laurie Barkman
Your vision and make it happen. I love it. Elliot, if people want to get in touch with you to learn more about your business or about the charities that we talked about, what’s a good way to get in touch?
Elliot Kallen
Sure. From an email, it’s elliot@prosperityfinancialgroup.com.Of course the website is prosperityfinancial group.com. The cell number is my cell number and I give it out. People call me all the time 511- 206-1103. The charity is abrighterday.info.org Wonderful, and get any information and we’d love to talk to you and I’d love to talk to you. I’ve got clients in about 35 states.
Laurie Barkman
Excellent. Elliot, thank you so much for your time. Thanks for coming on Succession Stories and being with me today.
Elliot Kallen
Thank you so much, Laurie, and good luck on the book. How long has it been out?
Laurie Barkman
It’s been out since May, and we were recording in August. It’s been out for about three months.
Elliot Kallen
Real, very exciting. It’s a topic that most business owners take for granted.
Laurie Barkman
Yeah, thank you. I know it’s very difficult to find the time to write a book, you got to really be committed to it. You’ve done that and congratulations to you on the launch of your book driven and again, everybody should check it out. So thanks once more for coming on the show. Eliot.
Elliot Kallen
Thanks for having me. Appreciate it.
Laurie Barkman
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