Navigating Legal Challenges as a Real Estate Entrepreneur with Business Attorney Nick Troxel

Nick Troxel: 0:00

Oftentimes the best opportunities are those that come with some risk. Your role is really to help your clients mitigate as much risk as possible, while not getting in the way of them being able to take these kinds of homerun swings, because ultimately, you know, if you don't take any risks, it's not how entrepreneurship works, right? There's no risk free way to grow and run a business.

Announcer: 0:23

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Jason Muth: 0:47

Welcome to another episode of The Real Estate Law Podcast, great episode as always, that we have ahead of you. Rory, we're talking about entrepreneurship. And we are going to talk about some of the legal things that people need to be focused on as they're starting businesses grow their businesses, whether you are going to open up an ice cream stand down the street, or you're seeking venture capital money from some of the biggest angel investors that are out there. Rory, we should introduce you first Rory Gill from NextHome Titletown Real Estate and UrbanVillage Legal in Boston. I know you love it whenever we have other attorneys on right?

Rory Gill: 1:19

We do, and we're going to try my best not to go down the deep technicalities here. But this will be a good episode for anybody who wants to get in business or wants to grow their their real estate business into something a little bit more professional and really kind of think about what strategies you have to protect yourself, but also to define your relationships with yourselves to your clients, your compatriots and everybody. So with that Jason do you want to introduce our guest.

Jason Muth: 1:42

Yes, yes, we today we're gonna be talking to Nick Troxel. He's with Troxel Fitch, which is a law firm based in Denver, Colorado. Troxel, Fitch was founded to provide high quality legal services to entrepreneurs in all walks of life, from venture backed CEOs to backyard bootstrappers. Nick, welcome to the podcast.

Nick Troxel: 2:01

Thank you very much for having me.

Jason Muth: 2:03

Yeah. How is life these days? We've had a crazy couple of year, a couple of weeks with the financial systems that we're all seeing in the news, I'm sure that a lot of entrepreneurs are wondering what's going on with credit and their money and their accounts and things they never really thought about when they started their businesses. They had an awesome idea to launch business X, you got to worry about banking, and now banks are starting to fail. It's never it was a fun time, you know, with the macro issues that affect us on the micro level. So, not to have to talk about begging and Silicon Valley Bank and all the issues that are happening there. But But Nick, what do entrepreneurs have to start to think about when they want to launch a business and don't even know what attorney to talk to?

Nick Troxel: 2:51

Yeah, absolutely, no. So I'll unpack a couple other things. You know, first, luckily enough, none of our clients were severely impacted by any of that smdb stuff. So we're certainly grateful for that. I know our clients are as well. But it can definitely be a shock to the system, right? I mean, these are companies who are typically strapped for cash or not necessarily strapped for cash, but always kind of pursuing raising money, keeping tight lock on their runway, things like that. And then to have the bank which is supposed to be where it's safe, be seen as maybe less safe, it's definitely caused shockwaves. You know, I'll say, though, in what I've seen a lot in the m&a work that we're doing, or I should say, kind of the general work we're doing is I've actually been doing more small business m&a, that's kind of cash flowing businesses, more than I've seen venture stuff, at least, kind of locally. So I wonder if this will be another kind of factor that pushes, you know, private equity and things like that to doing more, you know, kind of blue collar roll ups, things like that, versus investing in some of these kinda, you know, that that model where, hey, we're raising money constantly, and then looking for an exit. So it'll be interesting to see and, you know, an interesting shift. But yeah.

Jason Muth: 4:10

Rory, I've always been amused by these, I've never worked for a massive tech company. But, you know, tech up, we have a lot of friends that work in technology. You know, it certainly drives the economy here in Massachusetts, and in many states, and you know, a lot of these companies, they're in growth mode, they're raising money, they're really never profitable. And somehow they have an exit worth lots of money. Meanwhile, the small business entrepreneur is so focused on cash flow, and I know a lot of our listeners are in the real estate space. You know, we are The Real Estate Law Podcast, and cash flow is king in the real estate world. I mean, appreciation is great tax benefits are cool, but you need cash to pay all the bills. So it's interesting to hear that, you know, cash is, once again, more and more important for some of these people that are bootstrapping these businesses that you're seeing these days, Nick. Let's take a step back and let's figure out how you started this business because you started right out of Law School and you know, you, you've probably seen an awful lot in the years in which you've been operating.

Nick Troxel: 5:05

Yeah, absolutely no. So, you know, when I came to law school, I had an entrepreneurial passion already, I knew, you know, initially, my plan was, hey, I'll get my undergrad degree in accounting and get a law degree. And then I'll practice, you know, in big law for a while, make some money, but I always knew that I eventually wanted to be an entrepreneur myself, you know. And throughout law school, I think I, in some ways, drank the Kool Aid a little bit that you do in law school, and that, you know, big law, big law, you need to go do that. And so I was pretty set on on wanting to do that. And actually interviewed you know, with like, my top choice right after graduation, I thought I would be, I thought I would be a shoo in, and then ended up just never hear back from anybody. And, you know, it was pretty jarring at the time, because I was still studying for the bar exam. At the time, I was kind of like, hey, what do I do now. And it was a really a blessing in disguise, because it gave me the ability to take on what I really wanted to do with my life. And it was really the first time I've been able to look at it through that lens, because I had come straight, you know, through undergrad through law school, and it always kind of seemed, hey, you go work, big law and things will we'll figure themselves out. So going through this process, at the time, my roommate, my, my roommate from law school, Josh Fitch, who's now my business partner, so we were roommates in law school. And he, you know, he went through a personal tragedy close to graduation, that pushed, you know, he lost his brother, actually, that pushed him to really think about, you know, life's too short, I don't want to work for anybody else really ever. And so he had started thinking, hey, I want to do my own thing, you know, fresh out of the gates first. Now, at the time, I was still, you know, pursuing these big law gigs. And, you know, for me, you know, neither my parents ever made over 100k in their life. So I was like, you know, those numbers they throw out at you are insane. But throw over the course of us living together, studying for the bar, things like that, he kind of whittled me down and started thinking more and more about what I wanted, with my life. And I thought back on, like, into law school, and wanting to be an entrepreneur, and, you know, I kind of just looked at the lifestyle of a lot of big firm attorneys versus what I eventually wanted, right, wanted to be able to pursue hobbies, and have a family and things like that enjoy in my life, kind of be the captain of my own ship. And so probably about six months, I decided to, Josh, hey you know, it's funny, the first thing he told me was, Well, hey, you could have your your name first. You know, after about six months of chatting I was like, hey, look, you know, let's do this. And so we dove in right away. And we, we, it was interesting for us, because so when we graduated law school, I was 25. And he was 26. And people always think about, you know, when is there a better or worse time to start a business? And, you know, for me, I don't know if there ever is a perfect time, because when we looked at it, it was like, Hey, you don't have any clients. We don't have any money. You know, we don't have, you know, it's going to be a slog. But then we looked at it like, hey, you know, in the future, you may have life, kids, commitments, you know, mortgage, things like that, at the time, you're kind of like, hey, what do we really have to lose? So actually, we sat down the day after we were sworn in and kind of mapped out the plan for the first year. And we actually drove Lyft. For the first probably four months. We would go in, and we would work in the law firm from like, 6am to 3pm. And then we go drive Lyft til 10 pm to just make some money to keep the lights on a lot of can beans or ramen noodles during those times, too. But like I said, I mean, we you have a we have a vision, and we have a dream. It was kind of fun. I mean, I even though we're very successful now. And, you know, certainly I, you know, life is better objectively, and in a lot of ways. You kind of miss that excitement of the, you know, having your back against the wall when you first start in this kind of sick way right to when, when it's just kind of you seeing if there's any, you know, proving that you you can do it. So, yeah, we sat down that day, mapped out how we were going to do it. And then we just started pounding the pavement.

Rory Gill: 9:28

It's as somebody who's also started a practice right out of law school. I mean, there's a lot that people don't see and it's a very different course though, then going into big law and doing like that. So congratulations on all the work and you know, getting to where you are today. But that leads me to have questions for you because studying law is one thing and learning law and having the resourcefulness to help your clients out that way is one thing, but going through this experience yourself, how does that experience help you inform your clients above and beyond just learning the law for their business?

Nick Troxel: 10:12

No, that's a great question. And that's actually one of our branding pieces is that we are a law firm built by entrepreneurs, for entrepreneurs. And that's based on kind of going through those those struggles and figuring out how to run the business while practicing law, right. And so, you know, we come across those those kind of forks in the road where you have to make decisions on hey, what are the most important expenses? You know, how do we view this in real life? And I think that helps us because the law a lot of the times, when you've never owned a business, or kind of been in the trenches, you're only thinking about it, theoretically, you're only thinking about risk, theoretically and opportunity theoretically. And so that's why lawyers get the reputation out there. You know, they always say no, they say, hey, no, there's a risk here, there's a risk here. Whereas for us, you know, having gone through that, and seeing that, hey, you know, oftentimes the best opportunities are those that come with some risk, we learn that, you know, your role is really to help your clients mitigate as much risk as possible, while not getting in the way of them being able to take these kinds of homerun swings. Because ultimately, you know, if you don't take any risks, you know, you're just not really, it's not how entrepreneurship works, right, there's no risk free way to grow and run a business. And so, you know, having had those times where, you know, we didn't know if you're going to keep the lights on having to drive Lyft and, you know, do, you've always marketed the brand the same way or market branded the firm the same way in terms of helping businesses grow and sell. But when we first started, we were representing people getting sued by their credit card company, you know, for modest flat fee. So kind of just that mindset of understanding that, you know, hey, that entrepreneurial mindset of just figuring it out, right? You know, the number one rule is survival has helped us a

Rory Gill: 12:12

And how did you stitch together the resources in lot. the beginning to put together your practice? I know, when I first started mine, the very first thing I went to a local bar association was having a seminar on how to open your own practice. And then they spent the first half of the meeting, telling us how to break up with your big law partners and how to shop for Class A office space in Boston. It was completely irrelevant, and yet unhelpful. And I found that it was actually very difficult to find a lot of the resources and support to open a business. How did you and your partner go about putting that together when you open the business?

Unknown: 12:54

Absolutely, yeah. So we actually, it stopped, there's not a ton of resources. But luckily, we sat down and thought about what we wanted to do. And it ended up working out the way we saw it was there was going to be three, three buckets that we pursued. The first bucket was, hey, how do we keep the lights on, because you realize quickly that any type of legal work pays better than driving Lyft. And so that's when we were doing, you know, people getting sued by their credit card companies. Funny story on that, actually, at the time, I didn't have any money to buy a suit. And I had to go to court one time. And I was wearing like a mismatched pinstripe gray pinstripe jacket with brown pants, because I just didn't have any other suits to wear. Anyway, so we have that bucket, you know, do a ton of residential landlord tenant stuff, like tenants getting evicted. Really anything, you could take it taking anything that you get, and a lot of those were through these legal insurance plans. So there's these legal insurance plans where people will get them with their job or pay into them. And then if something comes up, they get, you know, they have lawyers come in and help you get a pretty modest flat fee. For you know, things like title review, landlord tenant, getting sued by a credit card company. So anyways, that was the keep the lights on bucket. That was the mode, you know how we made money initially. And then we recognize, hey, the type of work we want to do, you know, corporate transactional work helping startups, we don't want to just be good at it. We want to be great at it, right? And some things in law that you just can't read about. And so you're like, how do we get that expertise? How do we build that almost associate path for ourselves without actually working for someone else? And so what we did is we reached out to a lot of the other small and medium sized business corporate law firms in the area. And we basically said, hey, you know, if you're looking for contract, help on deals or financings or anything like that, you know, we'll work for a very reduced rate, just to kind of get that feedback. So we did, you know, bigger m&a deals, financings, and we were the idea was, you know, we might be working for 40 bucks an hour, 50 bucks an hour, which as you would know, like, fairly low, like per billable hour. And with it with the caveat that, hey, we want this feedback, we want to be able to get this expertise. And then the third bucket was, you know, the corporate work for ourselves. And obviously, this one was pretty dry when we first started, but over time, we kind of shifted, you know, And now and now we're able to have that practice. But that was our strategy to start write something to keep us above water, something to help us gain the actual expertise to become great attorneys, and then the work that we could help with?

Rory Gill: 15:47

And when did you feel like you first have the traction behind you that you are actually starting to grow and you can feel yourself, you know, growing into the practice that you want it to be not just one that kept the lights on?

Nick Troxel: 16:00

Yeah, so I would say so, the first year was tough going. And, you know, it was, as you know, that, you know, people don't just want to work with a lawyer, because you have a website. But the second year, we started getting a little bit of traction and started phasing out some of that stuff. I would say that the beginning of 2020, which is the beginning of our third year, that was really when we, you know, hit that proverbial tipping point. But of course, you know, we kind of hit that in January, February 2020, we moved into a new office space, quadrupled our fixed expenses, and then COVID hit and the phone stopped ringing for like six weeks. And so it was nervy. Luckily, for us, things came back online. And basically, since June, May, or June of 2020, it's been, you know, frankly, more work than we can handle. It's a lot of times having to kind of turn people away and things like that. But that that, that's what I would say is when it really took that shift. And since then, it's more been about how you balance. Because as you would know, right? It's like, when you're trading your time for money. As you make more you get oftentimes working very long hours. So now it's more about hey, how do we how do we work with, you know, how do I say, like, get clients when you really want to work with right.

Rory Gill: 17:24

So, today, what does it look like? What are you spending your most of your time working on with your clients? And what kind of clients are you working with today?

Nick Troxel: 17:31

Absolutely, yeah. So we do a lot of small business mergers and acquisitions, there's been a big trend recently, people buying businesses on by baby boomers, blue collar, HVAC, plumbing, things like that, almost acting in like a private equity manner. So we've been doing a fair amount of that. We also do a lot of entity structuring. So people owning real estate and wanting to - I worked with a guy recently, who owns several properties, and he Airbnb's out all of them. And so we had an interesting discussion around, you know, which, like, which entity technically owns the Airbnb account, which is the one that's you know, it contracting with the person coming into the space and if we could separate that account actually into a different entity than the one that owns the property potentially. So we've been doing a little bit of research on that to see if we can even separate out something like that, right. So if something happened, are you going after the company that chose to go in with Airbnb with and potentially try to help the real estate itself but do a lot of things like that complex, corporate structuring, doing financings typically for us when we are doing a financing, it's more, it's non non venture capital just from our experience the VC's like to work with the big law firms. That's, you know, we really, that's the biggest piece of I would say, helping people set up their business at the beginning, whether that's ongoing business, or setting up real estate or other asset holdings, and then the small business m&a work.

Rory Gill: 19:16

So noting that you are not giving legal advice to any individual and that things vary immensely by state and by particular situation. Here's kind of the first layup question that I get a lot. You know, it's basically when should I consider getting an entity for my business?

Nick Troxel: 19:39

Yeah, so I mean, I think right away, I think that but I think it's, you know, frankly, a little foolish to not get it right away, because the thing about it is, if you believe, you know, if you don't believe in your business enough to to invest at least some at the beginning to mitigate some of your risk, then, you know, it doesn't make sense to really pursue do it anyways. Right? I mean, that's at least what I say is that, you know, if you're if you believe in it, you want to pursue it, do you want to put in all that work to eventually, to potentially have an event that happens in the future, that not only puts the business at risk, but all of your personal assets? So I think, you know, people should really start it, you know, right away, if possible.

Rory Gill: 20:21

And then hand in hand with that. And as somebody who built your business as a partnership, you know, when and why should people should consider partnership agreements or putting down their roles in writing?

Nick Troxel: 20:36

Yeah, I think if you have a co-owner, you have to do that right away. And when I tell people is because people come all the time, like, oh, well, we're in agreement. And so I start asking questions, well, what do you do if this situation arises? Right? What happens in this scenario, and then people don't have answers. And what I always tell people is, hey, having these discussions and getting on the same page, when things are are when there's no money on the table, is paramount. Because once there's money on the table, people will do crazy things. I mean, we've seen being a lawyer working in this area, you see friendships, you know, get ugly, and things like that when people don't have written documents in place. And so I think that with having a co owner, it's very important to go through that process right out of the gate. So that that way, you're on the same page right away, not not only in case, something goes wrong, but I think it also makes sure you're aligned going forward. So that, you know, you go through all those details right away, and everybody knows their role, what's expected and everything like that.

Rory Gill: 21:37

Now, here's my gotcha question on that point. When you open up the law practice, did you have a written partnership agreement in place?

Nick Troxel: 21:45

Yeah, we actually. So the first day, we went and went to the coffee shop, set up all the entities and put together our operating agreements and everything like that.

Jason Muth: 21:57

Look at that, practicing what you preach. Yeah, that's amazing. I'd expect nothing else though. I mean, this is what you do. You're working with entrepreneurs and businesses of all sizes. But if you're recommending that they start from day one, basically, and getting your your structure correct from the start, that's exactly what you did. And that's great to hear. Rory just helped me get all that stuff set last year, because we kind of are now taking our real estate investing business much more seriously than it being the side piece and the side hustle. So you know, the end of last year, we got our entities all set. One that we did, which is related to a comment that you made earlier, with your client that's working on Airbnbs. You know, we set up a management company to manage our own Airbnbs. So even though I'm the only client, like our properties are the only client and an LLC is the client, we did that to have a separate entity for the management, you know, and who knows, it could even scale into a separate sellable entity by having it that way, instead of just managing the properties yourself. It's kind of a common thing that happens with a lot of short term rental operators, which is what I've learned of late. Talk about how people were finding you, you know, the first couple of years, you were taking any business that came your way to keep the lights on, I get it. But now that you're a little more established, you know, was there a turning point somewhere along the way, where you landed a client or two that turned into 3-4-5 and 10? Are you doing a lot of external marketing, digital marketing, word of mouth? Like, how do you grow your business?

Nick Troxel: 23:27

Absolutely, yeah. So it's a good question, Jason. So we actually when we first started the firm, that first year, we made a commitment that we would each go to 150 networking events in that first year. So that was three a week. And so our initial mindset was, hey, we're going to just pound the pavement we're going to try to meet as many people as possible in the local community. And so that really helped us get our name out there. I mean, I'm the also kind of there was a little bit serendipitous with the with the pandemic but we pushed hard for digital marketing right when we started got paid for, you know, a better looking more modern website with headshots and, you know, pushed for Google reviews and things like that, and SEO search engine optimization. And, you know, over time that building up and especially with the pandemic, now that people are using digital means to vet service providers a lot more, we've seen a huge that's become a huge stream of business for us actually, as people just finding us via the internet. But I would say the number one way you get business is just providing five star service to the people who choose to work with you. It obviously is a slower drip because you have to get business and do good business and things like that over time. But that definitely is the is the best way to get good qualified business because the referral from somebody who was pleased to somebody else that might need some help is always a warm handoff. But I would say those are the, those are the three ways we really built it. And some of the a lot of the in person networking has shifted more to pushing more on the digital side now, just because, you know, you start getting enough work, it gets hard to take, it gets hard to go to three events a week and things like that. I mean, you're spending a lot of time. So now and also you meet other people who, instead of having to do kind of a shotgun blast, right, you find people who you resonate with that are in similar industries, and you can spend kind of more targeted time with with those people, instead of just going to the big room with 150 people and shaking hands and kissing babies. Although I do think that that was a great thing, I would tell people, a lot of people, just as a slight side note that oftentimes people are afraid of entrepreneurship, because they feel like they're not able to go in and work a room or network, or they're afraid of doing these things and they're just you know, hey, I'm not that type of person. I really think it's a learned skill, almost like anything else. Certainly Josh and I were already pretty comfortable doing it just naturally, as you know, to begin, but we definitely got much better at working rooms, and how to network and things like that, and how to kind of meet people and things like that over time. So that's just my plug of, you know, if anybody's discouraged from entrepreneurship, or things like that, just know that, you know, it is something that you can get better at over time, if you're willing to just dive in.

Rory Gill: 26:32

Well, that leads me to like a really kind of just maybe specific question on it. So if you're investing a lot of time, or were investing a lot of time going to networking events, what was your follow up strategy when you made a connection out and about?

Nick Troxel: 27:10

Yeah, I mean, so it was pretty, it was pretty straightforward. I would just get everybody's business cards and then go to lunch, or coffee or happy hour. And really just the people I resonated with the most I stayed in touch with or people who seemed like they were in similar industries. And I mean, because when we first started, right, I mean, he had all the time in the world. I mean, we were working like crazy driving Lyft, things like that. But, you know, it's not like, you don't have money. It's not like you're going on long lavish vacations and things like that. So it was easy to really do five coffees in a day or something like that. And then over time, you know that the amount of people you're following up with kind of whittles down as well. But initially, that is how, how we did it.

Jason Muth: 27:59

Were you driving Lyft home from the networking events?

Nick Troxel: 28:04

Not always. But it was funny. I actually thought when I would drive Lyft, I could tell people, I was a lawyer and give them my card. And the reaction I always got was that like, wow, you must be a shitty lawyer if you're driving Lyft.

Jason Muth: 28:18

Yeah, I mean, they didn't see the hustle. I mean, when you're in a lift, you're going to the airport from the airport, you're going out drinking, you're coming home there, you know, it's probably not the most qualified customers, but you never know. And you know, it's worth the, it's worth the question, because if you don't ask it, then they'll never know, right? I actually just took an Uber home from the airport yesterday, and my Uber driver didn't speak English, and he spoke Espanol. And I speak really, really poor Spanish. But I did take a year of it about 15 years ago, and it all just came flooding back to me. And we had the most broken conversation in Spanish that was probably very, very high level. And I think he was amused that I was at least trying. But you know, had I not tried, I would have never had delighted him for that ride. And had he not said that he didn't speak English, we would have just sat there and quiet. So it's good that you're asking that question. Going back to the networking, though, you know, that is a, that's a lot three a week for each of you. You know, this is when you're probably single and didn't have tons of commitments are anything but that hustle is is what it takes sometimes. And networking events, scare the bejesus out of some people, and others, they love them. When you are at the networking event, I'm guessing that you found these things on Facebook or Meetup or any of those local sources. I'm guessing you could correct me but where they have all different types of categories as well, you know, like digital tech entrepreneurs and real estate investors and people that are, you know, looking to connect over their financial, you know, commonalities or anything. Did you try to meet everybody in the room? Or did you nurture a couple of those relationships at each of those events?

Nick Troxel: 30:01

You know, we were really taking the shotgun approach at first because a lot of the times we were just at so many different events. Sure, we would see some of the same people but at least initially, we were trying to, you know, not avoid talking to the same people but as much as possible just talk to new people to see who you know, just just to kind of bring more awareness to our firm and everything like that, because, you know, we, we did find that, you know, because at networking events are either they're from people who kind of bounce around a lot there. But they're also some people get, you know in one conversation and ultimately what we got to is it was like, hey, if I've already met this guy and I have his contact info we've already met outside of a networking event, you know, I didn't come to the networking event to just only talk to this guy again. So for us, at least it made more sense to, to meet other people, because it also kind of sharpened the skill of being able to have him connect with new people instead of having that comfortability of someone we already knew.

Jason Muth: 31:06

Yeah, and people go to these events for a variety of reasons. I mean, I just mentioned, I took an Uber back from the airport, I was at a conference in Nashville, and I tried to balance sticking with people who I knew, with connecting with people that I had never met in person and meeting some new people for the first time. And I was also trying to be cognizant of the people that I was spending time with, if they wanted not to have the lurch of me asking lots of questions of them, and have them you know, if they wanted to go out there and work the room as well, I was I was trying to get the cues of does this person want to continue sitting down with me and having lunch or whatever, or do they want to kind of go out as well? And it's, it's a challenge sometimes, because I've also had those people that will will see me at the event and they hightail it over to me, and then it's hard to kind of get rid of them when you're done with the conversation. It's a skill.

Nick Troxel: 32:01

I've definitely had that happen before I, for whatever reason about my personality type, a lot of shyest people at events, like find me and then I'm like cornered by like for people who don't none of them want to go talk to other people, so.

Jason Muth: 32:20

Nick, you you must have that demeaor at the events. I mean, you are very easy to talk to so far in this conversation. So I'm sure that's the case. Maybe you can come across as non-threatening. I wanted to get to some of the final questions that we asked all our guests but actually did want to ask one of the questions first, that that your your, your team sent over to me and Rory has a question too. So Rory, you do yours first. And then I'm gonna get to one of the one of those questions.

Rory Gill: 32:48

It's I mean, I'd be remiss if I didn't ask, ask you while we have your expertise here. One thing I've kind of noticed anecdotally in the real estate world is that a lot of the the real estate brokerages that are old owned by older people are now starting to retire. And there's seems to be a wave of sales of these small businesses to younger business owners. Am I crazy with kind of that anecdotal observation? If you are thinking about buying or selling your service business, what are some things that you shouldn't be thinking about?

Nick Troxel: 33:24

Yeah, absolutely. No, I don't think you're crazy at all we've seen, we've seen it in real estate and accounting, you know, multiple kind of service based businesses like that, that, that that's starting to happen. You know, for me, I think what I always tell people, if they're, if they're looking to sell the business is valuable business is one where they're going to be less involved in the day to day. So as much as possible, if you're looking to sell if you can figure out a way to, you know, build processes and things like that, that kind of make you less important to the operation of the business, you're going to be able to get a much higher valuation, because then somebody can buy it and they don't need to take over your role, right, they don't want to necessarily buy a job, they want to buy the business a lot of times. Now with a lot of these businesses where you're more or less buying a book of business, you know, the thing that you just want to make sure is one when you're selling the business that you sell to the right buyer, because oftentimes, these deals are going to be structured with some yield component of an earn-out where hey, how many clients do we retain over X amount of time, things like that. And so you want to make sure you sell to the right buyer so you don't have somebody come in that has a totally different culture way of doing things that drives away your old clients. You know, with things like with things like real estate, right, where you may be kind of buying more of the brand or things like that, you know, just making sure you really understand what you're buying, you know what that brand means and things like that. Do your due diligence. Yeah, did I answer all the questions, sorry, you got a couple.

Rory Gill: 34:59

That was good. And maybe think I know. And in our businesses, the earnout is the most important, negotiated part of the contract because you need that smooth transition. And I've always thought of that from the value of the earnout terms to the buyer or the business because they want to make sure that the old owner is going to help facilitate the transition as much as possible, but I've never really thought of it the other way around as a seller, you want to make sure that the buyer is actually doing their job to retain the business for the sake of the earnout as well.

Nick Troxel: 35:34

Well, especially, you know, because I just actually think about that specifically because my, the accountant for our law firm recently sold her practice. And so we've been going through that transition. And if you don't like the person who's, who bought the business, right, you're not consulted in whether that happens or not. And so, if you didn't like him, you didn't want to work with them, then you're gonna go work with somebody else. And so it's, you know, it's important, it's important from both sides that they dig through those things.

Jason Muth: 36:08

I mean, going back to the networking, people like to do business with people who they like, and or you're shaking, shaking hands with people and following up and having coffee and drinks and meals and stuff with them, you know, that's probably a better strategy, or a good strategy to grow your business and retain business because of that customer relationship, you're not just a face on the internet, I mean, the internet could facilitate that first conversation. But, you know, it really comes down to doing business with people who you like, and, you know, not 90 minutes ago, Rory and I were just having the same conversation about earnouts and, you know, selling, not that Rory selling anything, or I'm selling anything, but you know, he went to a conference, we were talking about selling franchises, and you know, how to value a real estate company that has a broker and X agents and X business. I went to a conference that you know, was talking about short term rental operators and how to value your business, what multiple off of your EBITDA do you have, if you want to sell your co hosting real estate business, co hosting short term rental business to a larger company, and what the earn out period is, so, you know, if you're listening to this, and you're an entrepreneur who is looking to get into business, don't just think about the beginning and don't just think about operating your business, but think about the exit, just like the big companies do. You know, you don't have to exit your business. But someday, you might pass it on to your heirs, someday, you might want to go do something else. And, you know, there's certainly a way to get value for all the hard work that you've done. But that leads into like, my last question, which was actually is on the front side of it, like what are some things like two or three tips that you might have to a new entrepreneur that might reach out to for the first time as to how they can best protect their business when there's just launching it?

Unknown: 38:35

Yeah, absolutely. So I think that the first piece, right is what we said before, is you got to have some type of limited liability entity in place, I think, right away out of the gate. And what I say is, you know, legal, what we do, right, legal in this sentence is really risk mitigation. And I like to tell people to think about it as kind of being on a spectrum, right? You know, hey, doing nothing, is the worst thing you could do. And so even if somebody's like, Hey, I don't have the money to pay an attorney, you know, there, there are faults to things like Legal Zoom and things like that. But, you know, it's going to be better than doing absolutely nothing, right. Even just filing for your own, you know, doing some Google searching, and even just filing with the Secretary of State. And getting, you know, in Colorado, the Secretary of State website, it's very user friendly. And it doesn't take a rocket scientist to do some of the real basic, just a file with the leasing Colorado, certainly don't encourage people to do their own legal work. But oftentimes, if you're at that, you know, fork in the road, where it's, Hey, do nothing, because I have don't have the money to pay a lawyer or at least to do something. You know, myself, you know, we often say, hey, think about that on the spectrum, I least you're getting a little bit closer to risk mitigation, right. So that's the that's the first big thing, make sure that you have an entity in place. I think that the second big thing to mitigate risk, right out of the gate is, is just make sure when you're you're doing business, you have some type of written documentation. Because if you don't have things in writing, then oftentimes that's where disputes arise. You know, you know, insurance is obviously something that you should consider, depending on your industry, right? If you're doing different things that carry higher risk, that's going to be even more important. But I would say the biggest thing is making sure that you have those legal documents in a row, really starting to at least talk to an attorney. I mean, even though the price tag can sometimes be intimidating. establishing that relationship and having somebody that you can go to that can help you out on things is is is big. But I would also say one other thing that to think about when you start a business that's not necessarily purely a risk mitigation is, you know, figure out what your business is the industry and try to find industry groups or something where you can have a little bit of a sense of community because I think, in my experience perseverance is the number one trait in successful entrepreneurs like staying in the game and being willing to keep at it even if you suffer short term failures. And it can be discouraging when you're out on the path alone, even if you're with, you know, one business partner, if you don't have people that you can kind of lean on when you're in downtimes, and things like that it's going to be hard to be successful.

Jason Muth: 41:31

Yeah, I agree. I think that free information online only goes so far. networking groups online are great, but they're often a lot of noise and clutter. I'm in a mastermind myself, where I'm talking to a lot of people that are in our real estate investing and short term rental space, and like just running ideas by them getting, you know, people to talk to, if it's a attorney reference an insurance company reference, getting your insurance company to talk to your attorney, you know, because oftentimes, when everyone's talking together, your CPA, your attorney and your insurance company that usually leads to more success. But yeah, no great words of wisdom. I'm sure that we could probably go on for many, many hours. But you know, that's been enough free advice you've given us, Nick right now. So we'll, we'll make sure that we get to the our final questions, then you could tell everyone where they can reach out to you so you can get some more clients and, and earn even more business and you are right now. I know that you're really swamped, but hey, we all gotta keep growing right? Final questions do you have for you just as a way to wrap it up and get to know you a little bit better. We ask these of all of our guests that come on The Real Estate Law Podcast, first question, if you could get on stage for half hour and talk about any subject in the world with zero preparation. And it doesn't have to be about law, or anything related to that. What would that be?

Nick Troxel: 42:53

You know, I would talking about how starting a business and entrepreneurship can give you a life that is, is better and different than what anybody else really are kind of the typical life, I think that I'm passionate about showing people that, hey, if you're willing to dive in and bet on yourself, you can build a life for yourself where you're in control, where you could spend time with your family and go on vacations and do the things that you want to do and live a life well lived. That's what I could talk about for a long time.

Jason Muth: 43:24

Yeah, there's no good or bad time to start a business, like you're never gonna get the green light that says this is the perfect time to do it. And it's never gonna be a red light saying, do not start a business by any means, right this second. You know, when it's right for you, you know, could be a work event, people are getting laid off a lot these days at a lot of companies. And a lot of them are reevaluating and saying maybe I can finally launch a business that I want to launch or some of you are coming into school just like you did. They're either saying I don't want to go to the job market, or it's not responding well to them, or they just have a great idea that they want to work for themselves. And then they jump into that entrepreneurial spirit. And I think that would be a well attended conversation that you have on that stage. Second question we have, if you could tell us something that happened early in your life or career that impacts the way that you're working today?

Nick Troxel: 44:15

Hmm, yeah, absolutely. I mean, so I think that the biggest thing was that process when I was studying for that, for the bar exam where, you know, because for me, you know, it kind of always been, hey, do well in college, go to a good law school, go do well, in law school, go work for a big law firm, things will kind of makes sense that the path will open up. I think that that time period of being able to assess, Hey, what is what does that end goal look like really transformed my whole life and how I how I work, I had a mentor once tell me, if you don't know where you're going, any road will take you there. And so for me, that resonated with me, because it was like, hey, figure out what that end goal looks like a little bit better. So that you know what that first step looks like, right? It's tough to know which direction to go if you don't know where you're headed.

Jason Muth: 45:05

And sometimes the circumstance that you are in is, is what helps guide you. You know, Rory had the same situation when he came out of law school.

Rory Gill: 45:15

And absolutely, and it was, you know, I had the same expectations that I was going to do well in law school, go to a big company, and, you know, make the six figures out of the gate. But, I graduated into a recession, the big law companies were still, you know, had people on backlog that they committed to hire years prior. And that wasn't an option, so and I instead of looking for an index place to work, I look for clients instead and then I haven't looked back.

Jason Muth: 45:46

Finally, Nick, tell us something that you're listening to or watching or reading these days.

Nick Troxel: 45:52

Yeah, so I actually just got done watching that The Last of Us on on HBO, about about kind of zombies, which I usually don't like zombie stuff much, but I thought it was well made. I thought I was interesting. Of course, being in Colorado I watched, I watched South Park pretty regularly and too.

Jason Muth: 46:14

Yeah, I mean, that is the show that just keeps on going. Ha, I remember that, from what 20-25 years ago, I didn't even know when it started. But The Last of Us, we watched a couple episodes of that ourselves. I was a big Walking Dead fan when it first came out and then it kind of kind of tailed off and you know, it's tough having like an almost four year old to really sit down and watch a show that where am I gonna fall asleep during it after we get her to bed. But the last of us is it was it is really well done. It makes makes you think twice about eating mushrooms and fungus.

Nick Troxel: 46:47

It's interesting you say that about Walking Dead, right? Because I thought the same thing. I think that it's the nature of the genre. Like how do you do a zombie show that's too long because it right if it happened, it's like everybody either dies, or like they figure it out? And then do you really care to watch a show that's about seven people rebuilding the world or something like that. That's less interesting than running from the zombies and things like that.

Jason Muth: 47:14

I do think that the most interesting part of all those shows, and I'm going to throw The Handmaid's Tale in there too, because we haven't seen the most recent season of that. But we've watched all the other seasons. I think the most fascinating part is the very beginning as to how on earth did this happen, right? So Walking Dead, it was the same thing. It was like How how did we start down this road? And The Last of Us, you know, you see life as as we know it, and then suddenly, things start going really badly. You know, one thing after another same thing with Handmaid's Tale, I mean all the shows that lead into the apocalypse that's happened. I love the beginning part of it that explains like, Oh my God, how did this happen? Well, great. Well, Nick, we've enjoyed this conversation. Thank you so much for being here on the show. Can you tell everybody how they can reach out to you if they want to say hi, and learn more about you and your firm?

Nick Troxel: 48:03

Yeah, I'll keep it simple. The best way is really just going to our website. That's troxelfitchlaw.com. And there you know, our phone number or email, things like that will be there. Yeah. So that's the best way just keep it simple. And we'd be happy to you know, just deep so people know we do free 15 minute consultation calls. So if you ever have questions or things like that, we're always happy to chat.

Jason Muth: 48:28

Awesome quarter hour not billable. And that's a good savings in the in the law world. Rory, how can people reach out to you?

Rory Gill: 48:35

People can find me through my law practice UrbanVillage Legal, that's urbanvillagelegal.com, or my real estate brokerage. NextHome Titletown, nexthometitletown.com.

Jason Muth: 48:45

And as always, all this goes into the show notes. So you don't have to write it down if you're driving, just go check us out online and you will link over to Rory stuff and Nick's things. And you can reach out to me jason@nexthometitletown.com. If you'd like to be on this podcast, you have comments for us feedback for us feedback for Nick or anything we read all of that. So if you enjoyed the episode, please give us a five star review. We love those. Nick, we learned that from you right earlier on ask for the review and get them on Google. But yeah, it really does help us with the podcast. And we read all of our comments. And we'd appreciate it if you could just drop us a quick review. And we thank you so much for listening. Hey, Nick, it's been a great conversation. Thanks for appearing on The Real Estate Law Podcast. We'll have to follow up.

Nick Troxel: 49:27

My pleasure. Yeah. Thanks so much for having me. Guys.

Jason Muth: 49:30

We'll have to reach out again and have like a follow up to this conversation and see how things are going with you if we all survive the fungus apocalypse that The Last of Us is, is telling us it's happening. Rory, thank you very much for being part of this. And thank you to the listener or viewer. We really appreciate it and we'll see you next time.

Announcer: 49:48

This has been The Real Estate Law Podcast. Because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom arguments. were powered by NextHome Titletown, greater Boston's progressive real estate brokerage. More at nexthometitletown.com and UrbanVillage Legal, Massachusetts real estate counsel serving savvy property owners lenders and investors. More at UrbanVillagelegal.com. Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at the realestatelawpodcast.com Thank you for listening