TONY: Welcome back to the podcast. Now every business owner knows how to push for growth. What most don't spend enough time thinking about is what happens when something goes wrong. A delayed payment, a customer leaving, an unexpected expense, a shift in the economy. Individually, none of those things should take a business down. But when there's no margin for error that can expose how fragile things really are.
One of the biggest misunderstandings I think I see among entrepreneurs is assuming that cash flow equals safety. Well, guys, cash flow helps you operate. It doesn't necessarily protect you. My guest today, David C. Barnett, has spent decades working directly with small and midsize business owners. I've had him on the show before. He helps owners buy businesses, grow them, finance them, and eventually exit them. And through all that work, he's seen the same issue repeat itself. Most owners don't really know how exposed their business is until they're forced to find out.
David is the co-author of The Business Fortress. It's a practical look at how business owners can reduce risk, create real liquidity, and build companies that are more resilient, not just profitable. We're going to talk about how to look at your business the way that banks and landlords do, why liquidity matters more than revenue in difficult moments, and how to think about protecting what you've built, especially as your business grows.
Guys, if you're building something that supports your life, not just your workload, this is a conversation worth listening to. Let's get into it. Let's go. Bring them on. Hi, David. Welcome to the show.
DAVID: Hey, Tony, thanks for having me. It's great to be here again.
TONY: Yeah, definitely great to have you on again. I've seen you grow and grow over the years, and it's always wonderful to have a conversation with you. This is something near and dear to all our hearts. And to frame it, we're going to talk about how to bulletproof a business, basically before it's too late. So let's start here and let's kind of get more into this and get more understanding on this. First, let's start with your backstory. How did it all start for you, David?



INTERVIEW – PART 1 (BACKSTORY & BUSINESS EDUCATION)
DAVID: Yeah. Thanks, Tony. So I'm one of those lifelong entrepreneur type of people. You know, back when I was a teenager, I always had those after-school little businesses and jobs that teenagers get into. You know, shoveling snow or mowing lawns and things like that. And it led me to want to study business when I got into school.
It took me a few years to realize at university that they don't really teach you how to be a business person there. They teach you how to be more of a, what I call a Fortune 500 bureaucrat. You know, working in a big company. And my real education came after university when I joined the Yellow Pages, because I was a sales rep and my job was to go out and meet with the owners and managers of all the small businesses that we see when we're driving around our towns. And that's where I really got an insight into what it's really like to own and manage a regular everyday mom-and-pop small business.
Eventually I got into the world of business brokerage. So I was helping people buy and sell businesses as a broker. And Tony, I did that for three years. I sold thirty-six companies for other people and eventually got out of it because of the crazy up-and-down cash flow rollercoaster. I became a banker for a while, but eventually got back into the world of helping people buy and sell businesses, but with a different business model.
Nowadays, I work as a consultant, and part of what I do to just raise awareness and to bring people into my orbit and help find clients is I work on things like books like the one we're going to talk about today. So this is actually my tenth book that I've put out. It's the first time I've worked with a co-author. And then like you, I've got a podcast as well that's been on the air for over ten years. Always talking about buying, selling, financing and managing these small businesses.
TONY: It's very interesting. And yes, you've written quite a few books. So I think we've spoken about some of them. And now this one's called, as I mentioned, The Business Fortress. So I'm thinking, there we go. For those that have the video, it looks on the screen here. So I'm curious, what is the problem? Because you've been with businesses and you've seen people grow. You've seen people work on cash flow. You've seen everything that I've just mentioned. So what's the problem that you see, let's say repeatedly in businesses that you said, "Hey, I've got to write this book. I've got to help these businesses grow"?

INTERVIEW – PART 2 (THE PROBLEM: NORMALCY BIAS & GROWTH OBSESSION)
DAVID: Well, there's two problems. The first problem is one that I think is kind of psychological. I believe it's called normalcy bias, where people believe that tomorrow's going to be a lot like yesterday. And so people get into a certain rhythm of how things are going. And if they get comfortable with a certain cash flow in their business, they tend to believe that that is going to continue and carry on off into the future.
And the reality is, what we very much know is that there's ebbs and flows to the economic cycle. You know, businesses come and go, industries grow and then shrink, etc. And so the normalcy bias is one of these.
But the second thing that I've seen is I've just seen people get really energized and hyped up on this idea of rapid, rapid growth. And when you get a good, profitable business, you need to push the pedal as hard as you can to grow this business as much as possible. And what people I don't think realize is that when you grow, your business consumes more resources. It requires more and more operating capital. You have to finance maybe more receivables if you sell to other businesses. You've got to finance more inventory if you sell to anybody and you have to carry an inventory. And so growth actually costs. And so you have to fuel that investment.
And what I've seen over the course of my career is over a thousand sets of financial statements from small and medium-sized businesses as I've helped people buy and sell these companies. And people can put themselves in a very precarious situation by chasing some of these ideas that they're after.
And what I noticed over the course of time is that some entrepreneurs were not in that situation. Some entrepreneurs had very solid businesses that were very resilient to any kind of downturn. And in fact, when the downturn came, these were the people that went out and bought the assets of their competitors when their competitors went under and were able to grow their business and really approach business from a position of strength.
And it's, you know, some of this stuff I've lived through in my own businesses. So when I started to notice the pattern, and then when I met Mark Willis, who is the co-author of the book, and we started to work on certain deals together, and I started to see how some of his clients were approaching things with his products, I said, "You know what? There's something here we should be talking about this because we're talking about a point of view in business that I don't think gets much airtime these days."
TONY: Very interesting. We're speaking with David C. Barnett. We're talking about The Business Fortress Blueprint, basically how to bulletproof your business before it's too late. And you can find him and his book and more information at DavidCBarnett. That's B-A-R-N-E-T-T dot com. DavidCBarnett.com. Did I get that right?
DAVID: Yeah. Absolutely.
TONY: Beautiful.

INTERVIEW – PART 3 (CASH FLOW VS. BALANCE SHEET)
TONY: Now I'm thinking with this and I'm going to—I have a couple questions to pose. One is, basically as we said, we've said a few times already in just a few short minutes, cash flow, even strong cash flow is not enough. Now people thinking strong cash flow—I know some people that are out there as the expert financial guru of the day and they say, "You know, get your strong cash flow and you're good," but you're saying it's not the same as financial security or safety. So let's kind of take this apart.
DAVID: Sure. So when I meet business owners that want to do a deal, the very first thing I ask for is financial statements. I want to see what's going on in the business. And I would say about half of the people send me their profit and loss statement and that's it. Then maybe they send it for a couple of years. And the profit and loss statement is where a lot of entrepreneurs focus their energy. They want to know, how much did I sell? What did it cost me to bring those goods in or to provide the services? What were my expenses and how much money did I make?
But the P&L only tells half the story. The other half is on the balance sheet. And what's remarkable is that when I chase people for balance sheets, I'll often get documents sent to me, and there are more errors on balance sheets than there are on P&L statements. And I believe that this is because entrepreneurs actually read their profit and loss statements, because they're interested in profit, and they want to know what their profit is. And when they see something that's not right, they probably go back to their bookkeeper and say, "Hey, can you explain this to me?" And then they get those things fixed up.
But the balance sheet often have errors on them. And what I learned is that a lot of these entrepreneurs never look at the balance sheet. They don't have any idea what the balance sheet is about or why it should concern them. But the reality is, is that the balance sheet describes the physical strength of your business at any given point in time.
And if you go to a bank to get a loan or you go meet with a landlord, for example, who's thinking about signing a lease for some prime real estate for your business to move into, they want to make sure they're doing business with solid people who are going to be able to pay their bills going forward in time. And when they look at a business, the first statement they look at is the balance sheet. Because the balance sheet describes your assets versus your liabilities and how much of the business is your own skin in the game, the equity.
And so very often people will build a strong cash flow position. But if none of that cash flow ever ends up building the strength in the balance sheet, then your business doesn't ever become any stronger. It never evolves because the fuel to, or the materials to build those walls, if you want to think about it in a fortress analogy, isn't being used to build a defensible structure to make your business stronger.
TONY: David, I don't usually live in that world. And perhaps some of the audience doesn't. We're, you know, a mix of entrepreneurs, business owners here. And I'm trying to think with this. Like we have to think like a banker. We have to think like a landlord. I'm thinking, you know, and I know you've just explained it and I'm still thinking, "Well, why? If I know how much I've made and if I know how much it's cost me, I mean, why do I need to go further?" And I know you've just explained this, and I'm just trying to understand the shift and why it's so valuable to growing my business. So can you give a little more on that?
DAVID: Yeah, sure. So remember how I talked about normalcy bias before? What we're talking about is we're talking about treating your business in such a way that it gets stronger every day because of your cash flow, so that when the cash flow is interrupted, when something goes wrong, you have options. You know, you've got resources available to be able to give yourself time.
Whenever I'm talking with somebody who is running into some kind of problem in their business, one of the biggest risks to that person is panic, because if they've been living paycheck to paycheck in their business, if they've got a good, strong cash flow, but they've been taking all the money out to support their lifestyle, for example, then what ends up happening is when that cash flow is interrupted because they don't have resources in their business, a strong balance sheet, then they don't have time to figure out what exactly is wrong and what sorts of actions they can take.
And when you don't feel like you have enough time or, you know, some people call it runway in the startup community, enough money to pay your bills until you can make a maneuver, then you start to be seized with panic and you feel like you have to do something. And so then people start to act without necessarily knowing if what they're doing is the right thing to do in their business.
If you compare that to somebody who has paid down debts, has, you know, different pools of capital or savings in their business, a strong equity position, someone who could afford to pay their bills for a couple of months, even if they're losing money on the P&L, that person can calmly assess the situation and try to figure out what's going on, and what sorts of courses of action might make the most sense.
I most often see these differences when I'm looking at somebody who's been a younger, faster-growing business where all they've really known is success, versus maybe a business owner who's been around for thirty years or something, who's been through some of these ups and downs. And so the downturns, when we suffer them, if we can survive them, often will lead people to start making some decisions and behave in certain ways that are kind of in alignment with what we talk about in the book.

SPONSOR BREAK – NOTION
TONY: You know what David just said there is worth sitting with for a moment. A lot of business owners think they're fine because things are working. Revenue is coming in, customers are active, operations are moving, but alignment isn't really tested when things are going well. It's tested when something shifts. That's where structure matters. That's where clarity matters. And that's where having systems that actually support how you think and operate becomes critical.
And that brings me to something that fits right into this idea of working smarter and staying aligned. You know, one of the things that comes up again and again in conversations like this is how much time business owners spend just trying to stay organized. Not the big decisions, the small things. Tracking updates, following up, and keeping everyone aligned. That's the kind of work that quietly eats up your day.
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And now let's get back to David Barnett, where we're talking about how alignment in a business isn't really tested when things are going well, but when something shifts.

INTERVIEW – PART 4 (SELLING YOUR BUSINESS & BALANCE SHEET STRENGTH)
TONY: Now, one of the things that comes to me is if there's ever a chance of selling your business, if there's ever a chance that you're going to exit, this is something you really have to pay attention to. You can't just ignore it. You can't just say, "We've got tons of money. We're good. It's all rolling. It's fine. It's strong. It's medium despite the market." If you're ever going to sell, if you're ever planning to move on, ever, you have—this seems to be very vital to get in place and start addressing now. You kind of have to build a really strong empire in a way.
DAVID: Well, you know, to extend it a little bit further, actually, Tony, you're talking about building a better business so that it could be sold one day. But one of the things that many small business owners don't realize is that of all the businesses that get put up on one of the big websites where we advertise businesses for sale called BizBuySell, eighty percent of the businesses put on that website do not sell.
And people are surprised when they hear this, because a lot of people operate under the assumption that when they decide one day they want to sell their business, they can just put it up for sale and someone will come along and write them a check. There's a very big difference between a business that is sellable versus one that is operating under your stewardship and is earning good money for you.
You can be a very good operator and make a lot of money with your business, but there could be a lot of risks that a buyer would see in your business and the way you're running it, that would make them not want to do a deal with you. And so if you do end up at the end of your career of ownership and you want to move on to something else, if you have not built a sellable business or if you can't find a buyer or if you can't find a buyer but they can't get the financing, there's a whole bunch of reasons why you may not be able to hand the keys over to someone else and get a huge amount of money on closing day.
And in that scenario, if your business has tremendous value, if you've paid off the debts, if you've accumulated capital within the business, etc., then even closing it is going to represent a payday for you. So it's the ultimate in sort of Plan B's for entrepreneurs and business owners that are trying to build wealth. Even if you can't sell the business by acting in a balance sheet-oriented way, you're going to build something of more value that you'll be able to enjoy in the future.
TONY: That makes sense and makes sense.

INTERVIEW – PART 5 (FINANCIAL RISKS & DEBT TYPES)
TONY: Now, there are financial risks that us entrepreneurs and business owners overlook, but we also have some blind spots there. So let's kind of go into what should we be looking at? I know we talked about it already, the balance sheet, but there's more to it.
DAVID: Yeah. Let me point out just a couple of things. So in the book, we get into things like, you know, debt. Sometimes you need to have debt in a business. You need to buy some equipment, machinery, you need a delivery truck or something like that. And you don't have the money. So you go and you borrow.
So one of the things that we talk about in the book is understanding the qualities of debts as they come from different sources. So you could get a loan from a bank, for example, to buy a truck. And that loan may be a demand loan. And so people don't notice the differences in these things when they sign up for them, but they're important to understand.
So a demand loan—actually the bank can demand you repay the outstanding balance at any point in time versus something like an operating lease or a capital lease on that same truck, which tends to be a contract for a certain number of payments. What we would call a term debt. And on a term debt, as long as you make the payments on time, then you get to keep and use the truck. You're keeping up your end of the bargain.
And so why this kind of thing is important is that things change in the economy outside of your control, and even maybe outside of your region. I've had several clients before that were in certain industries, maybe they were in the forestry sector or something like this. And then changes happen in the economy and the banks decide, "We don't want as much loan exposure to people in forestry," and all of a sudden, someone with a perfectly healthy, good operating business can get a phone call saying that their line of credit has been cut or that they want to call in a loan.
And so you want to understand what are the qualities of debt that you're using in your business and how can you build over time other tools that give you access to liquidity that may not be in someone else's control. It's not just what you owe, but who you owe it to and under what conditions, for example.
And people can build that resiliency in a lot of different ways. You know, you can set aside money in savings. You can have investments. For example, you could build up equity in real estate, then use a line of credit to draw money back against that. Mark, my co-author, he's involved in life insurance. He talks in the book about how people use those vehicles for this kind of thing. But we talk about that in the book so that people have an understanding of the different tools that you have access to and why, even if you do have to, for example, take on debt, there's smarter ways to do it than just simply using whatever facility the bank gives to you.

INTERVIEW – PART 6 (CASE STUDY: LANDSCAPING BUSINESS)
DAVID: In the book, there's actually a great case study. I had the pleasure of interviewing a fellow three times, and each of the interviews was a year apart. And in the first interview, he bought a landscaping business, and he didn't understand the operating capital needs of the landscaping business very well. And so he bought it and didn't have enough money to make the business function, because he bought it in the wintertime before the busy spring season started.
So in that first call, I coached him on the different options he had to get his hands on some kind of cash, which meant turning to some higher-cost borrowers. He was able to survive. He borrowed money at higher interest rates, but over the course of that first season, he was able to pay those guys off. He built up a bit of a nest egg.
He felt very confident in year number two. He called back and in that conversation, he felt really on top of the world because he had money in the bank. And what do you think he wanted to do with it, Tony? He wanted to take all that money and use it as a down payment on another business. He wanted to grow, right? Because again, it's this idea of constant growth. Bigger is better. Move, move, move.
And I cautioned him because he had taken out a ten-year SBA loan to buy the first business, and he was only one year into that loan. He had made payments for one year. And I said, "You know, I think you should work on strengthening your balance sheet. I think you should pile up some more cash. You should try to pay down some of your debt even more and just build resiliency in case something goes wrong."
Well, a year later, he calls back and some major customers of his had decided that they would take their landscaping in-house, meaning they were going to do it with their own employees. So he had a big drop in his revenue. I think it was close to twenty percent. But here's the thing. In the world of small business, you can have a twenty percent drop in sales, but that could translate into a forty percent or fifty percent drop in your profit, especially if you have a lot of fixed costs in your business.
And so he said to me during that call, "I am so glad I did not go and buy that other company," because the cash he had in the bank gave him that runway to figure out what he was going to do. And what he ultimately decided to do was simply to replace those customers with other new customers. But he needed to ramp up and build more of a sales organization. You know, when he bought his business, it came with a clientele, and he was kind of coasting on that client load without really having created the systems or efforts required to grow the business organically. He was looking to buy again.
So, I mean, those were the kinds of things we talked about. And because he made the decision to grow the balance sheet, to strengthen it, he was then able to have time to make those other decisions when he lost the big customers.
TONY: Very interesting story. I appreciate you sharing that.

INTERVIEW – PART 7 (STEPS TO BUILD STRONGER LIQUIDITY)
TONY: All right. Well, we want to create stronger liquidity. We want to be more resilient financially. You mentioned a few things. Let's kind of go into some of the steps that we should really take a good look at to implement in our business.
DAVID: Yeah. So the very first thing is that you got to have a view towards profitability. Now, that might sound strange to say, but many people go through great lengths to make sure that their business does not have too much profitability because they're trying not to pay taxes. And so people get caught in these traps where if they have extra money at the end of the year, they might be tempted to spend it in certain ways so that they can reduce the amount of taxable income that their business has.
And I'm here to tell you, you got to stop doing that. There is no greater indication of your success than having to write a check to the taxman. It means that you are making money and you're being successful. And profits, real cash profits that you declare are the fuel that helps to grow or strengthen your balance sheet, because you use that cash to build up savings vehicles like cash balances, investment accounts, etc., and you use it to pay off debts, which then give you more options in the future. So it's about becoming profitable and becoming intentional about your profits.
You mentioned selling your business earlier. A lot of small business people will also do things like they'll put personal expenses of theirs in the business with the idea that, "Hey, it's cheaper for me to have the business pay for my teenager's cell phone than it is for me to take a profit out of the business, pay tax on that money, and then me go use my cash to pay for the cell phone for my teenager."
But what you're doing is you're actually making your business look less attractive to a prospective buyer. And believe me, I'm in the business buy-sell game. I see sellers say all kinds of things where they will explain all of the different expenses that they have of a personal nature that they're hiding in their business. And a buyer may absolutely believe you, and they might absolutely agree that the real cash flow is there the way you state. But the problem is, is that their banker is going to use the tax returns to determine if they can get a loan or not.
And so I always say to people, the cost of playing games with the taxman is that you may end up being the banker because if you don't show profits and no one can get a loan to buy your business, the only way you're going to sell it is if you finance it, which is not something that business owners like to hear. But I've been a part of deals before where buyers have put twenty-five, thirty percent down and the seller has been the one to accept payments over the next ten years instead of a banker.
TONY: Very interesting.



INTERVIEW – PART 8 (BUILDING A PRIVATE FINANCIAL MOAT)
TONY: One of the things you talk about is building a private financial moat. M-O-A-T. Tell us what's the moat in this sense and why is it important for us?
DAVID: Yeah. So what's interesting about small businesses is that small businesses and their owners are very integrated. And so in the book, we talk about the idea that it's not just entirely the business that we want to be concerned with. We want to also be concerned with the owner and their personal finances.
So I have crossed paths with a lot of bankers in my time, and I've even had bankers who have looked at really strong businesses that don't have much debt and have good earnings, and they've still declined those businesses for loans when they learn what kind of debt and liabilities the owner personally has for RVs, boats, you know, other toys, that kind of thing.
And so you want to be building the business and growing the balance sheet of the business, but you also want to be doing the same kind of thing in your personal life as well. Because really, at the end of the day, there's a revolving door at times where money can flow back and forth between both. Ultimately, you want money to flow from the business to yourself, but at different points in time, particularly if there's an opportunity, you might be putting more money back into your business, or you might have to backstop your business with a personal guarantee on a bank loan or something like that.
So it's not just the business, it's you as an individual as well. And, you know, Mark talks a lot about that in the book because he's a life insurance expert. And so he talks about how people can use those kinds of products for building personal liquidity and things of that nature while also working towards protecting your family and your heirs.
When I met Mark, and as I've said, he's a life insurance guy and we talked about making this book, I said, "Mark, one of the things I want to make sure about this book is that I want to make sure that if people buy this book on Amazon, they don't walk away saying, 'Oh, this is a book about buying life insurance.' This is, number one, a small business book and a small business mindset book." And we do mention things about different tools you can use in the process of achieving those goals, but it is definitely not a book all about just selling you insurance or something like that.
TONY: That's an important distinction.

SPONSOR BREAK – SHOPIFY
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And now let's get back to David Barnett, where we're looking at the difference between theory and the real practical side of building and protecting a business.

INTERVIEW – PART 9 (NAVIGATING UNPREDICTABILITY & MAJOR CHALLENGES)
TONY: And you've given us an example of where you've mentored or coached someone over a couple of years to help them. And I'm just wondering—it's so unpredictable what's going to happen tomorrow, next week, and next year. There's just too much happening in the news. There's too much happening in the world. Gone are the days when you were growing up as well as I, companies were doing, you know, long-term strategies, long-term planning. The challenges they had were of different sorts and they were able to deal with those in a different way.
Today, it's a whole new ballgame. We don't even know what's going to happen tomorrow. And I'm trying to think of, we want to take these strategies and you've mentioned it, but I kind of want to maybe collate it a little bit of how important this is to navigate, especially when we think, "Hey, you know, I just bought a business, I've got clients, I'm good. I'm doing my seven figures, whatever. I'm in great shape," but just a couple little shifts. As you've mentioned, your existing client base decides something changes in their sector, and now you no longer have that. Even if you have contracts, contracts can come and go.
And so I want to kind of see how—take that bulletproof part of your book and your theme, your premise here, how it can allow you to survive major challenges. Maybe give some examples, different examples where you've seen this happen so that, you know, because my audience is diverse, they're in all different fields. So maybe a couple of different examples might help them think of how important this is for them.
DAVID: Well, how about I give you an example of someone in a position where they don't have much resiliency. So back in my business broker days, you know, I was attracted to business brokerage because I thought that it was going to be a great business where I could earn a lot of money. And most business brokers charge ten, twelve or fifteen percent commission on the sale of a business. And if you think about a lot of businesses, even small Main Street businesses, they sell for hundreds of thousands or a million dollars even. So in my mind, I thought, "I can sell just a few businesses every year. I'll have a great income."
The reality of that industry, though, is that it can take you several months to a year to convince a business owner that you're the one that's going to be able to sell their business and they should hire you. And then once you prepare the business for sale and you go out and start meeting with buyers and you advertise it, then it can take months and months or actually more than a year to meet the right buyer who's going to be qualified to buy it.
So there's long time stretches, and over those time stretches, you've got all kinds of expenses. So for me, at the time I had an office, I had a receptionist. I was doing advertising on the radio. I had billboards at one time. I was doing direct mail. We were doing several deals every year. However, we might do one, two, three deals in a row and then go seven, eight, nine months without another deal closing.
And so what ends up happening is you get into a position where the money runs out, you get into your bank lines of credit, you get into your credit cards, etc., and very slowly your back gets up against the wall. And this is what it's like to be not resilient, right?
And so there was one situation where I was selling a fried chicken franchise, and the commission I was owed was going to be almost one hundred thousand dollars. And the buyer kept trying to get the price as low as he could. And the seller, of course, wanted the most amount of money. And I remember at the very last moment, the buyer made a final counteroffer. And the seller looked at the number and he looked at me and he said, "I'll sign this right now, but only if you cut your commission by thirty percent." And he kind of put it right in my face.
Now, I had a contract saying I was entitled to a certain percentage of a commission. But I also knew that if we didn't do that deal right away and I didn't get the money, that I was going to have a problem paying my bills. And so my lack of resiliency put me into a position where I had to agree to that. And it felt awful. It cost me a lot of money.
Whereas if I had been better at building a resilient business, if I had more resources, more cash stowed away, if I had been in a stronger financial position, I would have been able to look at them and say, "No, I'm not doing that," knowing I still had another six months left in my mandate. I would just say, "Oh, we'll find a new buyer," right? Maybe he would have given in, I don't know, but it was a game of chicken I couldn't afford to play because I was not in a resilient position.
And this is the kind of thing that I see happening to people when they've got to make payments on things and they don't have enough money available because of a prolonged downturn. They're then forced to do things they don't necessarily want to do because they've got to get money through the door. Some people might say it’s encouraging, its hustle, etc. I'll tell you, I'd much rather be in the position I am today in my business, where I have the power to say no to people that I don't want to do business with, because I literally don't need the money. I've got other resources, I'll be okay.
And so it means you get to pick and choose who you work with. And business becomes so much more pleasant, Tony, as I'm sure you know, when you're dealing with people you want to work with and you're helping people that want to work with you and that are happy to pay you your fees and they see value in what you do versus being in a position where you've got to take everything that comes your way.
That's one of the big messages of this book is that you need discipline when times are good. You need to build those walls so that when times go bad, you can protect yourself from the barbarians.
TONY: It's a good example. I appreciate that, David. Very, very good. I get it when your back's up against the wall, that's a tough one.
INTERVIEW – PART 10 (IMMEDIATE ACTIONS & TACTICS)
TONY: And I'm thinking here on behalf of the audience here, I'm thinking, okay, we want to safeguard our business. Have you covered the key points or are there immediate actions that we need to take? We've talked about a few things. Is what we've discussed the immediate actions that we need to take to safeguard things or is there something more?
DAVID: Well, throughout the book, there's all kinds of other tactics. You know, I've been talking here about saving money or paying off debts. And for a lot of people, they're like, "Oh, well, duh, of course I want to do that." But I talk about things like how changing the credit terms in your business or how customers pay you, what the timelines are, what the invoicing is, whether you take deposits or not—all of these kinds of things can have a huge impact on the cash flow and the resiliency of your business.
And we go into that in the book and show people examples of how you can change your business model to be much more resilient and less risky. And yeah, it's basically we've tried to fill it with useful advice that people will be able to think about and apply in their business and get more control over time.
Like all strategies in business or personal finance, there's a compounding effect. And so the earlier you start and the longer you devote to building a financial fortress, a business fortress for yourself, the better and more resilient it's going to become.
And there's a lot of people talking about, perhaps we are in a recession right now. I don't think it's been officially declared, but the last recession was in 2009. That was seventeen years ago. And earlier in my life when I was studying in university, we were generally told that there was going to be a recession every ten years or so. It was a pretty regular kind of thing. And so we're more than due for some hard times. And so for people that have been doing really well in their business, now is the time to start acting, to make sure that you put yourself in the best position you can to survive whatever might be ahead of us.
TONY: Very wise. I totally agree on that.




INTERVIEW – PART 11 (GROWTH THROUGH ACQUISITION – THE RISKS)
TONY: Now, some of the big financial experts, I've mentioned them generically earlier, they've got it all worked out. They may charge us good money too, for us to buy their books or webinars, their courses, whatever. But it's really easy, David. You just keep buying more businesses. You just grow through acquisition. Just buy more, buy more. You know, I've got such good cash flow. I don't even need the money anymore. I could use the cash flow and the assets of the other business to buy more businesses. I could just keep growing. Now you're smiling. You're laughing. Yeah, I know, I see it as a house of cards, a literal house of cards that can collapse at any time. But you're the expert here. Tell us about what advice you would give to people that are convinced that that's the route for them.
DAVID: Yeah. So when you buy a business, if you use leverage, so if you borrow money to do it, the moment you buy it is the riskiest moment because that's the point of maximum leverage, right? That's the point you owe the most. And so when you buy a business and you have guaranteed to pay a certain amount to the bank every month, what you have to have happen then is you have to have the cash flow continue. If the cash flow starts to go down, then you may not be able to make payments to the bank.
Let's compare that with starting a business from scratch. If you save up a little bit of money and maybe borrow on your credit card and you start a business and it fails, well, you've lost the money you saved up and maybe you have a credit card balance. But if you go and borrow a million dollars on an SBA loan, and then you buy a business, and then over the course of the first two years, the sales drop by twenty percent and your profits drop by fifty, and now you can't afford the bank loan, well, you still owe the bank that million dollars or whatever it is you borrowed.
It can be even riskier to buy a business than it can be to start one if you don't do it under the right circumstances and if you don't have additional resources available.
One of the common things that I have to coach people back from the edge of is that they will save up a certain amount of money and they'll want to maximize their leverage. They'll say, "Hey, I've got one hundred thousand dollars here. I can put ten percent down on a million-dollar business." And I'll immediately say, "What happens if you need to buy a new light bulb on day two? You've got zero dollars left." If you put your last nickel into a deal—and people seem very comfortable doing that—they seem to think that just because the business has performed in a certain way over the last few years, it will continue to do so.
The risks are huge. There's so many different ways and reasons why a business can perform more poorly after its changed hands. You know, you don't know how much of that business is tied to the efforts of the owner, how loyal employees or customers are to that individual person. We don't know if that's all going to transfer over to you when you become the buyer of the business.
We're also taking a business that may have had an expert of twenty or thirty years running it, and we're handing it now to someone who maybe has never run that kind of business before. I've seen people buy businesses and make huge mistakes with them and have the sales drop off and earnings drop off. I've seen people try to implement what they thought were smart new compensation packages for employees, only to have half of them quit in the first month because they didn't like it.
There's one hundred and one things that could go wrong with the business. And I'm a firm believer that if you're going to buy a business, you need to be an expert in the industry that you're getting into. And that often means that you have to have some kind of experience in that industry or a highly analogous industry. You know, so like, could a roofer get into building fences? Sure. It's the same kind of thing—you're selling to homeowners. You're showing up at people's homes to do work. You're getting your labor and your materials there on time and all that kind of stuff.
But if you've only ever worked at a Fortune 500 company in a big corporate setup at a desk and you've done your job really well, and you think that because of that, you can go run a small business really well, those are often the people that have trouble because in that corporate environment, all of the other employees are doing their thing to the best of their ability. There's so many things in that business that you are just not aware of that are being handled by other people who are specialists, just like you.
When you get into the world of small business, everything falls on the owner. And so, you know, it's not uncommon for someone to have to learn a new business when they buy it, figure out how to run the day-to-day, and then they spend their evenings doing paperwork. And when a letter arrives from the government, then they have to go deal with that. And the buck always stops with the owner. And it can be a little bit treacherous at times for some people.
TONY: Yeah. I was thinking of some things while you're saying this, that I got caught up in that too a couple decades ago, because it all boils down to you. The future is not guaranteed. Things can happen that you have no idea whatsoever. You don't expect it, no matter how well in control you are of your business. Something could happen to a peripheral business. And you're not the expert in their business and boom, it changes everything. And that can happen.

INTERVIEW – PART 12 (BALANCING LONG-TERM STRATEGY & SHORT-TERM PRESSURE)
TONY: So as I'm thinking with this, I'm thinking, okay, I've got the long-term strategy as best as I can determine. I've got the short-term pressure. I'm thinking, how do I balance these, David? What do you recommend?
DAVID: Well, that's the challenge of being an entrepreneur is managing risk. And I think that one of the things, like I mentioned the word before, the D word, its discipline. It's seeing that extra profit or that extra cash flow or whatever that might show up. Seeing it as an opportunity to build the strength of the business versus seeing it as an opportunity to expand your lifestyle, right?
And as you get things under control with your business, you build that strong fortress and then later you can enjoy the fruits of your labor and the better things in life. I think that, you know, there are a lot of people that get sucked into the idea that they somehow are entitled to a very extravagant lifestyle because they are a business owner and, you know, they get into credit and financing of all the toys and the doodads and the fancy cars and stuff like that. And that's not really what it's about.
It's, you know, being a business person is about learning how to manage risk so that you can come out on top even if things go bad. And that means if you happen to be the one with resources when things are going bad for everybody else, you can have huge opportunities to grow and expand your business when other people start to fail. And that's where I'd like to see my readers end up, is in a position of opportunity when other people are having all the bad luck.






INTERVIEW – PART 13 (CHOOSING A FINANCIAL ADVISOR)
TONY: David, can you give our audience here, our listeners some advice on how to choose a financial advisor? It sounds so simple and so basic. We could go ask AI. "Hey, what do I need to know?" But you have the experience. How can we tell whether a particular advisor is the right fit for us?
DAVID: Yeah, that's a great question. You want to find out what their experience is doing the thing that you need them to do. And it really surprises me, you know, with a lot of different professional advice, that people will really trust titles, monikers or letters after someone's name.
There are a lot of different attorneys out there, but many of them deal with family law, estate law, real estate, that kind of stuff. Only a few of them deal with business transactions. And so you can ask a lot of lawyers, you know, "Can you help me with this deal?" They might nod and say, "Yes," but if you say, "Well, how many small business deals have you done in the last year?" And they say twenty-five or thirty or whatever, then you can actually probe and figure out, "Yes, this person does have the qualifications that I need."
And so when it comes to some other kind of financial advisor for your personal investing or what have you, you want to ask them, "How many clients do you have that are in a situation like mine? How many of them are business owners that have this kind of income, that have this kind of outlook or these kinds of goals with respect to their family, retirement, etc.? Can you give me some examples of other people like me that you've helped? Can you connect me with those people?"
For a financial advisor, what I always want to ask, and this is the best question you can ask them, is "Show me your portfolio. How are you doing with your money?" And you know, people never ask this stuff, but you cannot be afraid to test the people that you're going to hire. You know, if you're going to hire an employee for your business, you interview them, you ask about them, you check out their background, you find out if they're lying to you or not.
Yet people will go to, you know, a professional in any respect and blindly trust them because they have a certain title or letters after the name or something like that. But throughout every industry or every group of advisors, there are good ones and there are bad ones. And you really have to take the time to talk to people and figure out if you feel that they are qualified and that other people you respect also feel that they're qualified.
I'm a big fan of getting some help in choosing advisors as well. And if you're a business owner and you don't have other business owner friends, that's actually the place I would start. Expand your social network to include other business owners, in particular a few that are a little bit older than you in your community so that you can actually have access to a grapevine where you can check out people's reputations.
Because I'll tell you, I've been a member of many different organizations of business owners and, you know, to say, "Hey, you know, I'm thinking about doing this deal and I'm thinking about using this CPA," and to have a bunch of people groan and then tell you stories about how that CPA messed something up for someone they knew. That's invaluable kinds of feedback.
And people today are all in their phones and they're not connected to their local networks. And you've got to have a social circle of entrepreneurs around you.
TONY: Very wise advice. I like that. That's very, very important.

INTERVIEW – PART 14 (TRENDS: THE SILVER TSUNAMI)
TONY: And we just got just a minute here. I'm just curious, while we've talked a few times, we can't necessarily determine what's going to happen in the future. We see trends. We see patterns. Can you share some trends and patterns that you do see with us to kind of give us an idea of what maybe we should prepare for or could prepare for?
DAVID: Yeah. Well, I think one of the big trends that we see all around us is the baby boomers retiring. And I know that there's a big, sort of, I don't know what you would call it, but people are describing it as the silver tsunami. You know, the big wave of retirement. And that's real. People that are in the baby boom generation are retiring.
But people will then also say, "Therefore, there's a whole bunch of businesses that are going up for sale." And somehow that the flood of businesses is going to represent opportunities for people that want to buy a business. I'd like to go back to that stat I mentioned earlier that eighty percent of small businesses don't sell.
The opportunity in the silver tsunami is not necessarily in buying a business from a baby boomer, but in being in the industries that they own businesses in. Because even if those people close their business, the customers have to go somewhere. And so there will be a transfer of business activity from baby boomers to other people, but it won't necessarily be through the sale of the businesses. It could also simply be through people moving their business to someone else when that older owner gets to the point where they're going to close down or retire or what have you because they haven't properly prepared their business for transfer.
TONY: Very good point to think about for our business and for whatever we're going to do.

OUTRO
TONY: Once again, this is David C. Barnett. Talked about The Business Fortress Blueprint. You can go to DavidCBarnett, B-A-R-N-E-T-T dot com. Get his book and learn how to bulletproof your business before it's too late.
Now, David's title doesn't say "if it's too late" or "it could be too late." He said "before it's too late." Very important point there. There's a little nuance there. Check it out, guys.
David, I just want to thank you so much. Great. Always great to have you on and go over this. And it's very simple, wise, you know, you didn't tell us to go out and go buy things with wild abandon. Just very well-grounded advice. I just want to thank you so much, which is very good.
DAVID: Oh, thanks for having me on, Tony. It's been great to talk with you this evening, and I hope your listeners enjoyed the program and they pick up a copy. You can get it at Amazon too. It's in Kindle and audio as well now.
TONY: Wonderful, wonderful, and wonderful. Thank you once again. That was just great. Good advice. Good to have you on. And guys, if you like this, share this with your friends. Tell them about David C. Barnett. Tell them about how to bulletproof your business. You know, it's something—if it gave you a couple light bulbs, if it gives you one "aha," it's worth a couple bucks to get the book and to check them out on his website.
It's us helping each other to get through whatever's going to happen. We don't know what's going to happen tomorrow. We've got a silver tsunami happening. Let's make the best of it. Let's do something with it, huh? Let's see if we can leverage that properly.
And guys, wherever you're getting this, please follow the show. It helps to bring in more amazing guests to you. I appreciate you, I thank you. All right, let's use this and let's help you move on your journey to success. Thanks.
Remember, just take action. Success awaits those who persevere and remain steadfast despite the odds. Sow good seeds, do good deeds. And I'll see you on the next episode.