Episode 171: You Can’t Sell Chaos: The #1 Mistake Killing Your Canadian Financial, Retirement, and Business Plans

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What’s the real reason your business—or your wealth plan—isn’t worth as much as you think?

Whether you’re planning to sell your business in Canada or just want to build lasting wealth, most owners overlook the systems that quietly drive long-term value. If your plan is chaotic, unclear, or overly dependent on you, you’re not building freedom—you’re just building another job.

In this episode, you’ll discover:

• Why “you can’t sell chaos” and how that applies to your personal wealth journey.
• The four essential phases every Canadian business owner must master to prepare for sale or financial independence.
• How to give every dollar in your business two jobs—so you build assets while staying tax-efficient.

Press play now to rethink how you’re building value—inside your business and beyond.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Building long-term wealth in Canada requires more than just smart investment—it demands a clear financial vision, optimized systems, and a comprehensive Canadian wealth plan. Whether you’re preparing for a business sale or strategizing your early retirement, aligning personal finance with corporate wealth planning is essential. Key areas like RRSP optimization, salary vs dividends Canada, and capital gains strategy can unlock significant business owner tax savings. By leveraging financial buckets and passive income planning through real estate investing Canada or corporation investment strategies, Canadian entrepreneurs can create scalable, tax-efficient investing systems. From personal vs corporate tax planning to estate planning Canada, each decision impacts your path toward financial independence Canada. The goal isn’t just financial freedom—it’s generational wealth, supported by financial systems for entrepreneurs, corporate structure optimization, and real estate vs renting considerations. Embracing financial diversification Canada and legacy planning Canada ensures that modest lifestyle wealth and retirement planning tools work together to support a truly optimized, sustainable wealth building strategy.

Transcript:

Jon Orr: A days ago, we sat in a room full of business owners learning how to prepare a company for private equity investment or sale. by the end of it, there were some really great takeaways, some really great speakers, some really insightful nuggets for business owners, for investors when thinking about their own businesses. by the end of it, we both realized, I think we turned to each other and we kind of jotted a couple things down and we said, you know,

The principles that were brought forward about how to prepare your business for sale or for investment, or if you’re investing in a business and you wanna choose a business and you’re gonna be being assisted in that, or how do you go down those pathways? The principles that were unpacked in this seminar were very much in parallel to

what we’ve been talking about lately about our Canadian business owner and investor wealth planning system, which is our four stages that we’ve been working with our clients on and talking about here on the podcast on the four stages, the four phases that we need to think about plan for structure around for optimal wealth and achieving your financial freedom numbers. so in this episode, what we want to do is unpack those parallels between

preparing your business for sale or for investing in businesses and how they relate to those four stages of the wealth, an efficient wealth planning system. And so that’s what we’re gonna dig into today, right Kyle?

Kyle Pearce: Absolutely, absolutely. And you know, I really appreciated the time and actually, one of the event organizers from PE gate was there and was one of the speakers as well. And we’re hoping to have a collaboration coming up with them on the Canadian Well Secrets podcast coming up soon. But one of the speakers on this panel had said, you can’t sell chaos. And

You know, that was the moment where we both sort of looked at each other and thought like this all is the same. And if you really think about it, sure, we’re they were talking about selling a business, but think about other aspects of your life. We might not be needing to sell our wealth plan, but it’s definitely one where if there’s chaos going in our own personal or corporate financial journey, if there is chaos going on there,

It’s a tough thing to sell to somebody else to say, Hey, like come and join me in doing something like this, right? People want it to be orderly. They want it to be organized. You know, they said, if your systems aren’t dialed in, you’ll leave millions on the table. And that line right there says it all because if we’re looking at our own personal or corporate wealth journey and there aren’t systems, there isn’t organization, there isn’t

clarity around what it is we’re trying to do. And we don’t mean that eventually one day I want to retire or eventually one day I want to quote unquote only work if I want to work like I think we all generally would like that. But that is not clear. That is not you know what’s the path look like to help you get there and whether it’s selling a business where I want to you know sell this business for a certain amount of money one day or whether it’s

I want to just be financially free to a point where I can decide if today I want to do something work wise charity wise or just you know entertainment and and and maybe relaxation wise. It really all comes down to being clear on what that is and here’s here’s the troubling part it’s it’s scary right because I think a lot of us don’t know exactly what that looks like so.

We’re going to be walking through some of what we feel we walked away with. We always talk about these epiphanies, right? And it was sort of like we had this epiphany that, you know, our wealth building system that we utilize with business owners and with investors, we call it the Canadian business owner and investor wealth system. There’s four stages or four phases here. And the epiphanies we had really centered around

the first and the third stage. And what we want to do is make some sort of parallels between both. And we’ve already dug into the first one here, which is around the vision. So John, tell me more and like, how does it relate to someone who may be trying to maybe sell a business and also their vision for their own wealth journey?

Jon Orr: Yeah, yeah. So just just a quick recap. The four stages are stage one is vision and financial freedom. Stage two in the wealth, you know, the business owner investor wealth planning system is establishing your corporate or your wealth reservoir, which is your emergency fund, your opportunity fund. Stage three is, you know, optimizing structure, optimizing the available containers and structures you have available.

to optimize for tax purposes or for cashflow purposes in your life. So this is an important component. And then the fourth stage is legacy planning and estate planning and thinking about those next level moves, those next pieces. And those are the four things we just need to make sure every healthy wealth planning system in your personal life or in your business has to…

plan for each of four of those things. So in today, like what Kyle is saying is that the parallels are in all four. When you’re thinking about say, succession planning in business, or investing in business, whether you’re a private equity investor, or whether you’re going to sell to private equity, or just sell to say, the next owner, and you want to leave the business, we want to talk about our takeaway specifically on stage one and stage three. So stage one being the vision for financial freedom.

And how that relates to say preparing your business for sale down the line is, which is really like defining your exit or defining like where you want to see equity come into your business and sell pieces of your business, whether it’s like, I want to sell a certain steak at this time and later on, and I’m trying to maybe gain some cashflow to do that. And I’m willing to like talk about those things or go down those avenues.

I think it’s like what you said about that, that kind of, can’t sell chaos. It’s like, have to be clear on in both of these scenarios, whether it’s your personal side, your corporate, you know, financial system, you have to start thinking about like, what do I want five years to look like? What do I want 10 years to look like? Oftentimes, we think we’re doing good moves, or we’re doing the right thing, but we haven’t clarified what the end result is going to be.

You know, we often talk about like, hey, I want to I want to sell this asset, or I want to all of a sudden, like, go over here. But like, okay, so what are you what is what are you going to do with, say, that chunk of change? Or what are you going to do with like, if you get that, like, how does it help you reach your 30 year goals, 20 year goals, 10 year goals, five year goals, like a lot of times, we just say the goal is to be free, you know, but we haven’t really mapped out what that actually is, in our in our own personal side or business.

The same is true when you’re going to say, sell your business. Like, am I fully exiting this business? What am I gonna be doing after that? How do I wanna make sure that exit is like seamless? Like we have to be planning for these things. We have to have a very clear picture of what that process looks like and where do you wanna go next or what this end result actually is because you can’t make decisions now without knowing that because they affect your decision.

it affects what pathway you want to go down. you know, you might, you might, might all of sudden be like, well, I could have been made this decision over here, but, but all the all the roads are going to lead to some spot, but that spot will be right for everyone. But you haven’t, you haven’t clarified where you’re trying to go.

Kyle Pearce: Right, right. And I see some parallels to our real estate investors who sometimes might not think of themselves as business owners, but you really are. When you think about it and you go to sell or buy a property, if that property is not at its best use, if we have not seen that property turned around, rents have been raised, they’ve done some renovations, they’ve beautified the building, they’ve done all of this work in that particular property, you can’t expect to get

the same price for that property. And of course, you would never buy the property for what its best use price point would be, right? So the same is true in our businesses. And the hard part in a business is that it’s not as easily repeatable as in real estate. In real estate, it’s all the same business, right? You go in, you buy the property, you find ways that you can improve the value, you can raise the rent, you can do whatever it is you need to do to try to get expenses down and try to get profits up.

And then you might be rewarded if you want to go ahead and sell that business. Well, the same is true here in any other business. And one of the key pieces that I think people struggle with is that their vision for why they want to eventually sell their business is because it’s a lot of work. And that right there is sort of a big indicator that we probably haven’t done enough thinking about what does this pathway look like?

if I truly want to sell the business for any real amount of money. Because if you think of it another way, really, if you’ve grown a business where you earn a large portion of your income directly by the actions that you’re taking in the business, you’ve just created yourself a T4 job. And just like when you retire from a company that you worked for as a salaried employee or an hourly employee, guess what? You don’t get to sell your position to somebody else. You leave.

And the same is true in a lot of businesses when we’re small business owners where, you know, I’ve got a business that does not operate well without me there. Or if I’m on the beach somewhere and my phone won’t stop ringing off the hook, you have to really pause for a second and take a take a step back to think who in their right mind would want to pay me to do what I’m doing right now. Now somebody might be willing to take it over for you with no money out of pocket, but

they won’t want to actually pay you for it. So really, we have to start being clear about what the purpose is for. And then if you get to a place where you’re able to sell, usually the value of that business is only there just like with the rental property, if we’ve done all the work in order to get those systems in place where someone goes, you know what, that looks like a great business that can be scaled based on the systems that I see there.

And this is one of the biggest, biggest challenges that we have, because guess what? It’s a lot of work to do that, to do that planning. And if you’re so in the business that you can’t be thinking about the business, then this is a huge, huge roadblock for folks. And guess what? We’re just sort of tying into this first stage of our wealth planning system, which is all around vision and knowing what it is that we’re trying to build here.

Jon Orr: For sure, for sure. And I know you had a quote that, I don’t know if you wanna chat about that quote right now before we move on to the third stage, because you brought this up the other day specifically. Go for it.

Kyle Pearce: Yeah, what what pops into my mind and I think about this again that you know we see these these connections in all aspects of our life you could think about it from just how you live your life when you get up in the morning on a personal level with your family in a business in investing. It doesn’t matter where but in outwitting the devil this is a Napoleon Hill book a great book I know that thinking grow rich is sort of there you know Napoleon Hill sort of like.

You know, flagstone, everybody knows it, everyone’s read it. Well, you should read outwitting the devil, the devil and they define this thing. They call it a drifter and that the vast majority of people drift through life. And when we talk about that and you think about it, think about your own experience in how you got to where you are now. Like you probably drifted to where you are. Why? Based on the experiences you had, the people you hung out with, right? You’re the average of the five people you hang around with the most.

you sort of drifted through and along the way you may have made certain choices. One for investors or business owners is to maybe do something a little bit different. Well, he says drifting without aim or purpose is the first cause of failure without a plan for life, concentrated effort and persistent activity. You will have no means of controlling your own destiny. And if you really think about that again, business owners, investors,

folks that are just trying to do something a little bit more with more intentionality on a personal level. Like really what you’re doing is you’re trying to figure out how can I do less drifting? I bet you it’s almost impossible to not, you know, allow yourself to drift a little bit in life and different aspects, but how do we do less drifting and do things with more aim and more purpose?

so that we have control of that outcome. Because if I’m selling in five years or 10 years and I’m not doing that work now, I can almost guarantee you, you’re going to be disappointed. It’s not gonna look the way you had maybe hoped and prayed for. So let’s do something more than hoping and praying.

Jon Orr: Mm-hmm. Yeah. Now I’m going to read the second part of that quote because I think it ties directly into where we’re going to go next, which is jumping the second stage, which was establishing our corporate and personal wealth reservoirs and how that’s tied to making sure your balance sheet, your working capital, like all of these things are tip top. But we’re going to jump that because we want to talk about the parallels in the stage three, which is about systems. And so in that quote,

The second part says without a plan for life, concentrated effort and persistent activity, you’ll have no means of controlling your own destiny. And when we talk about persistence activity, we often ask the question, well, what activity? What does that look like? What does that sound like? And I feel like that’s where stage three parallels right now are coming in between optimizing our wealth plans and our structures with ensuring that our business is actually operating efficiently in doing the right

things because that’s how you prepare the business for sale. You have to prove that this business actually is this standalone operational component that just moves and chugs along. Otherwise, you’ve got a lot of risk because maybe you key man risk and you don’t want to have that if you’re going to sell. You can get a lot more multiple by eliminating some of the key man risk in your business. when I think about stage three, we have to say like,

what are the structures, the systems, the persistent activity that we want to focus on to actually make the machine operate in the right way. So personally, if you think about the personal side, it’s like, okay, if I have my income, my income is coming in, what am I doing with the inputs to optimize so that I actually achieve the output, which was your stage one goals? And how do I use the puzzle pieces, the

the components of this machine, the levers, like what are these things that I actually put into motion to create the outputs and how do I use them efficiently? Like what structures am I using personally? Like am I taking these inputs and maximizing the use of my RRSPs? Am I maximizing the use of my tax-free savings accounts? Am I maximizing use of other structures that I could be utilizing for tax purposes? Oftentimes we’ve talked a lot about.

whole life policies as a structure and a pass through structure for optimizing tax efficiency, but also wealth planning and legacy. Like, are we using these structures efficiently to achieve the outcome? And so there’s a lot of optimization that has to happen personally when we do that. Thinking business wise, that’s like the machine. have like, how is this business operating as a machine so that I could pass it on easily?

are these pieces moving? Like when every dollar comes into my business and I’ve got a dollar of retained earnings after the, you know, the operational expenses are covered and all these other commitments are there. What am I doing with that dollar? Am I actually reinventing? Like we talked to a lot of business owners that day and it was like they were just dumping it back into the business just to keep things moving. But it’s like, well, is that dollar actually optimized so that you’re building assets?

because you could put it back in to go, I don’t want it to go to tax, so how do we use it here so that I can optimize my tax? Isn’t that optimization, guys? We’re like, well, it depends. If it’s going to be an expense that’s actually not towards building an asset, it might be a wasted expense.

Kyle Pearce: Right. There was a great example that they had used. said, you you run across these, and this is a gentleman on the buy side of the private equity firms, right? So on the buy side, they were saying, you know, they go into a company and they look and they just got a brand new fleet of vans for, you know, if it’s an HVAC company or whatever the company is.

They just spent all this money. But at the end of the day, it’s like what you just did is you sort of just gifted a brand new fleet of vans to the new borrower, the new buyer, because those vans actually don’t help your bottom line at all. Right? Those vans and how you need a van. If the van doesn’t work anymore, then sure, you need to replace. oftentimes, what you see happening is just like you said, we don’t have intentionality behind each dollar that comes through the door. When I send that dollar off, and I send it off to do something,

I need to make sure that not only do I know what that dollar is going to do. So by the van, let’s say, but I also need to have some sort of metric in mind as to like, what am I going to get back for that dollar? And if the answer is, I don’t know, then it’s probably we need to pump the brakes here and we need to go, what is, what is my goal for this dollar? Because it shouldn’t just be to pay less tax, right? I’ll tell you that much taking a dollar and keeping a portion of that dollar is a lot better than

losing the entire dollar just because I didn’t want to lose some of it to tax. really having a purpose for those dollars, I think is so key. And here’s one of the nuances that makes this really hard is that oftentimes we get on this, you know, they talk about it for content creators, you get on the content treadmill. Well, the same is true in the business where you’re just on this treadmill of trying to grow in scale, but you don’t have the clarity and you don’t have the real plan in mind as to how this is going to work.

you’re now using hope and pray. And here’s the problem. Every dollar that we commit to do a thing that we don’t know the outcome on, we’re basically gambling. So we’re taking that dollar, we’re throwing it on a penny stock basically, and hoping that it’ll hit when at the end of the day, what ends up happening is people come back and they want to sell their business. And then it becomes a real, real problem for them because they haven’t taken care.

of giving that dollar a real job. that dollar can’t, if I can’t predictably like know that it’s going to do something in a benefit in my business, I should be redirecting it to other assets so that I can protect myself. Should I struggle to sell? Should I not be able to work anymore? Should the business go away? Because basically I’ve got all of my worth, all of my net worth, all of my investing dollars are tied up in this one business that is requiring me to be there to keep it going.

Jon Orr: Yeah, like on the way I think we look at it now, and why I say now is because I think this has changed over the years is that we are saying every dollar should have two uses, at least two uses. And if we can only find one use, then maybe let’s pause and figure out where’s the second use so that I actually maximize that dollar. You’re doing this on both sides of the corporate border, right? Like you’re saying personally, when I have income coming in, how do I get two uses of that dollar?

Like, can I invest that dollar or can I put it in this structure over here and then all of a sudden reuse it over here? Like we’ve talked about, like the Smith maneuver on the personal side was a great way of getting two uses of the same dollar. Using your whole life policy as the pass-through structure was a great strategy and structure to get two uses of the same dollar. It’s growing passively over here at a certain rate, but then you get to reinvest it in a certain asset. On the business side, you know, you’re doing the same type of thing as like we’re saying like,

I could go buy those vans, but I could also go, could I put it here like to first and then buy those vans or could I buying those vans does that actually build something that is an asset? on the business side, like this is where we’ve, I think shifted over the last few years is to say like, okay, I have an expense that I have to pay a dollar for. It’s maybe maybe I have to train this employee or maybe I have to say buy this piece of equipment. But if I if

And this is the key thing is like, use like an if then how kind of framework is like, if I go down that road, then what impact am I going to see and how will I know? But then also go, if I spend that dollar on that expense, can I also structure how that dollar is actually building an asset in the business if the money has to stay in the business? Because then it’s like, okay, I’m going to train this employee, but what systems are in place?

to make it more asset-based, which means that I don’t have to be the trainer the next time. I’m documenting, I’m making a system, I’m making a standard operating procedure. I’m building assets every time I do that type of thing, which is two uses of the same dollar. I’m creating the expense, but I’m building an asset with that money. So there’s, that’s what you wanna think about because some of these business owners were like, this is, I’m going to…

I’m going to all my money stuck in retained earnings and then it’s there, but like, okay, well, what do I do with it? Okay. I’m going to invest passively over here in the business. And so then it’s like, okay, you could do that road. You could go down those two, that pathway is like, okay, I’m going to, I’m going to use the machine. You know, the machine is going to generate income. The machine is going to generate retain earnings and every dollar I’m going to put over here. That’s going to be all of sudden passive. And it’s going to grow over on this side inside my corporate structure. But then.

Maybe what you’ve been missing this whole time is actually restructuring inside the business to make it saleable. Like, did I build assets or was I just building this asset outside over here? And ideally you want to do both, right? Ideally, that’s where the two uses come from. Can I build assets inside my business so that it’s not relying on me, it’s not relying on systems, this machine operates without us. And then all of a sudden I’m building the asset over here at the same time. And then

I can transition over to this machine on this side that just continually spits out money. We talked about that as that flywheel effect in previous episodes.

Kyle Pearce: Absolutely, I was that’s the vision I had in my mind is like, you know, your business, we want to generate a flywheel. But then with your investments, we want to generate a flywheel. So if you’re a business owner, you actually want both flywheels to support one another. Right. And there are tools and ways that we can do that. We’re not going to dig into that here today on today’s episode. But this idea that the money we’re generating from this business, this flywheel, I get it. There’s going to be early on in the process, you need

to keep funding and you need to keep doing things to get this flywheel going. But once that flywheel is going, we have to be strategic about taking some of that profit without slowing down that flywheel to start this other flywheel, which is my investing flywheel. And that will give me so much more control and clarity when it does come time where I might want to exit my business as to whether do I have to sell this business? Is it easier for me to just wind this thing up?

Is it something that I just want to pass on to someone and take some dividends from by just selling a portion of the business? So there’s so many ways that we can go here. But what often happens is we just get this one flywheel going and it’s you at the bottom, like pushing it along just to keep it going. And what we want to see people doing is generating both flywheels, get them working independently. And then when you get there, it’s just like financial freedom on any level.

When you get there, you get to decide what makes sense for you instead of having to try to get a certain amount of money because it’s your only investment plan for the rest of your financial future.

Jon Orr: Right. Here’s in summary, you know, we’ve talked about, you know, the the four pieces, we only really touched on the parallels between two of the pieces. But I feel like this, this comment, or this this line summarizes your your your main your your main takeaway here today, which is like, in both your personal wealth creation and planning system, your business wealth creation planning system, or whether it’s the parallel we’re talking about here.

we were taking away from the seminar on private equity investment for sale or for buying businesses. The real value of your business or let’s say your personal wealth creation system, your financial freedom, isn’t just in the revenue. It isn’t just in the amount of your pile. That’s not it. The real value of the business and your pile is in the systems.

that generate that revenue or generate that pile. That’s where the real value actually lies. And so when businesses have those systems in place that generate, that’s why you get multiple times the value of your business than ones without. Inside our personal systems as well, that’s true. Like this is the way I’ve been thinking about it lately is that because we’re establishing vision, corporate and personal wealth reservoirs.

because we’re establishing and optimizing and learning about structures that actually help us get there faster, because we’re doing legacy planning and thinking about that, actually like is the value of the system there is generational. And I think why I say that is because when you know that and then you can share that information, you’re creating generational wealth, that’s where the value actually lies is in the systems.

and that you’re sharing those systems across the people that you love, the people that you can connect with on the personal side. Obviously, in the business side, when you create those systems, you’re passing it on to the next owner. But that’s where the real value lies when you do this type of work. So today, we talked about those four stages. And if you want to know more about those stages, if you want to kind of get your assessment on where you are on those four stages, we’ve built a customized assessment.

wealth and planning assessment tool, you can head on over to canadianwealthsecrets.com forward slash pathways. Fill out that assessment, what we’re going to do is you’ll get a say, your score on each of the four stages. also get a custom report that gives you next steps on what your immediate next step should be on each on the four stages so that you can take action and get this system operational get the systems flowing. Thanks for listening everybody.

Just as reminder, the content you heard here today is for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Kyle Pierce is a licensed life and accident and sickness insurance agent and the president of corporate wealth management with Canadian Wealth Secrets. Take care.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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