17 - The SureStep Forward: Turning Business Endings into the Next Generation's Business Beginnings with Colette Kemp - Revelizations

Episode Transcript
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(00:08):
This episode of Revelizations is brought to you by Cousin Nickel Sack's Get Out of Jail Free card.
You've always been elusive when it comes to taking responsibility for your actions.
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Your parents warned you not to play ball inside.

(00:28):
You nodded and waited until they walked away and then immediately began playing ball inside.
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(00:50):
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(01:10):
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Do the crime, but not the time.

(01:56):
Hi everyone.
Welcome to Revelizations.
I'm your host, Brian James.
I'm extra excited for today's episode because it came together somewhat serendipitously.
Why serendipitously?
Because how often do you get to use the word serendipity, in any form, throughout your day?
Allow me to expound a little.

(02:16):
Not too long ago, I was at one of my nephew's sixth birthday party.
It wasn't a drop-off party, so the parents of my nephew's friends were at the party as well.
I was talking with one of the parents and I was at the point in the conversation where I had
completely exhausted every talking point I had about the weather, but thankfully,
I had other small talk prompts to work with.

(02:37):
I asked him what he did for a living.
He told me he owns a sign shop.
He makes banners, storefront signs on buildings, neon signs, Bill Engvall signs, and so on.
I thought that is a unique business to get into.
What paths in life do you take where your passion for signs take you from admiring signage
to owning your own business dedicated to making signs?

(02:59):
Turns out, he isn't too passionate about signs.
It was a business opportunity presented to him by his business broker.
He told me that his business broker was telling him that
now is a really good time to purchase a business because the baby boomer generation
is retiring and looking to sell their businesses.
Now, before this, I heard on several occasions how the baby boomer generation is leaving the

(03:23):
workforce. It seems obvious and it probably is to a lot of other people, but I never really
considered what would happen to the businesses owned and operated by the baby boomers.
I left my nephew's party thinking that topic would be fun to learn more about
with no real plan on how to accomplish that.
The following day, I am looking through LinkedIn and LinkedIn has a little section on your home

(03:46):
page dedicated to recommending different people that you may know and should follow.
One of the profiles highlighted to me was a person whose occupation was,
and I quote, helping baby boomer business owners sell to next generation buyers,
keeping their businesses locally owned.
What an amazing coincidence, or as I'm taking the opportunity to say, how serendipitous.

(04:11):
The thing that I just learned about and was wanting to learn more about
was now right in front of my face.
That profile belonged to today's guest, Colette Kemp.
Colette was born in London and has the charming accent to prove it.
She later emigrated to the U.S. to pursue career aspirations.
Colette started off as a stewardess on private yachts where she met someone who she would

(04:33):
eventually start a marine engineering company with.
After 15 successful years of co-owning and operating that business,
she decided it was time to explore a different industry.
Business ownership through acquisitions.
While she was inquiring about businesses to acquire,
she was invited to join a business brokerage group.
It was there that she transitioned from looking for a business for herself

(04:56):
to helping others buy and sell businesses.
In that time of working under the brokerage firm,
she pursued further education and became an accredited small business consultant
through the AASBC and achieved the designation of an accredited business intermediary.
Not too long after that, she saw her own father close his small business upon retirement

(05:16):
only to deeply regret it.
Not because it wasn't the right time to retire,
but because he didn't know all the options available to him for his business.
That's what led Colette to start SureStep Business Advisors.
She couldn't change her father's decision,
but she could help other baby boomer business owners write a better retirement chapter
by guiding them through the planning and preparation that leads to a successful sale.

(05:40):
She has a passion to help retiring business owners sell to next generation buyers
ensuring their businesses remain locally or family owned.
Today, Colette joins me as we talk about her journey from stewardess
to entrepreneur to business consultant,
the importance of a business valuation,
the role of a broker in a business sale,
finding the right broker,

(06:01):
the emotions involved in selling a business,
connecting buyers and sellers,
strategies for business owners facing challenges,
the baby boomer business acquisition opportunity, and more.
I hope you enjoy today's serendipitous episode of Revelizations with Colette Kemp.
Thanks for listening.
Colette, I'm very excited to meet you

(06:24):
and that we're going to sit down and have this conversation.
I've been for weeks just super excited about this conversation and being able to meet you.
So, thank you.
You're welcome. It's great to be with you.
It's really nice to meet you.
Great. So, we'll start with something hopefully a little bit easier.
But who is Colette Kemp?

(06:46):
Okay. So, I am an English person originally from London, England,
and I live in the United States now.
I live in the, I live in Virginia on the Virginia North Carolina border.
I'm an only child.
I am a serial entrepreneur.
I used to be a stewardess on private yachts.

(07:07):
Oh, wow. Wow.
And then I transitioned in, that was in my 20s,
and I transitioned into owning an engineering business.
And since then, I have transitioned into business brokering and business consulting.
I am a wife.
I am a stepmother.
I have rescue horses.
I rescue Mustangs and I have rescue pit bulls and a mini farm in Virginia.

(07:31):
So, that's me in a nutshell.
How did you become a stewardess for private yachts?
How do you do that?
Is it just an ad in the newspaper?
Yeah. So, that was actually before the internet.
So, that was back in the day, you know, people went,

(07:52):
it was really popular in Europe to go backpacking.
You kind of either went to university and you went that route or you went off backpacking.
And so, I decided to, I wanted to get out of London
and I actually went to live in Israel.
I lived in Israel for a year and a kibbutz and that kind of gave me the travel bug.
So, then continuing on to travel, part of my travels brought me to Spain.

(08:14):
And I was actually at the end of one of my backpacking trips
because I used to work, save money and then go travel.
Work, save money, go travel.
And so, I was in Spain and I was down to like my last 50 pounds travellers check.
So, 50 pounds is like $50.
You used to carry travellers checks with you back then.
And I was like, oh, well, my friend and I, we were like,
okay, well, we're at the end of our trip.

(08:35):
We'll just go to this cute little bar in this place called Puerto Buenos.
We'll have a drink.
And in there, we met, we didn't know that it was a marina
with all these luxurious yachts in there,
but we met a crew that were in there having drinks
and they started talking to us and they said, oh, we need a stewardess.
So, we both applied for the job
and the stewardess would be joining the yacht

(08:56):
and then going off to Greece for the summer.
So, we were, you know, two days away from going back to England
to get jobs there to save up more money.
They only had one job.
So, we made a deal.
We agreed we'd both apply and whoever got the job,
we would, you know, be okay with it, with the other one.
And it turned out I got the job.
So, but I did pull a bit of a fast one on my friend.

(09:16):
I offered to clean because she actually had experience in hospitality
and so I was sure she was going to get the job.
So, when I went for my interview,
I offered to clean one of their cabins for free
and they let me and I got the job.
So, I did like a couple of hours of free labour
and when I came back, she was like, what took you so long?
I was like, oh, nothing.

(09:36):
You just did a little impromptu internship.
Yeah, I did, right?
So, detailed the cabin and off we went.
I joined the boat and yeah,
we went to Greece for the rest of the summer
and I worked, I ended up working on yachts for eight years.
So, it's once you get into that line of work,
I mean, it's easier nowadays with the internet,
but back then you kind of had to know either speak to somebody

(10:00):
or there were no, I never even heard of that industry
before I stumbled across it.
Yeah, I'm always so fascinated about like this,
the random adventures of life.
Like you just decided to go into a bar,
it happened to be this Marina bar
and then there's people working there,
just all the little chances that impacted the next eight years of your life.

(10:21):
It's just like, you can't predict that kind of stuff
and it's just so fun because it's just, it makes you who you are.
That's right.
And you have to, I mean, because I'm very,
do lots of stuff online, like we're doing now,
but it does remind you that you still need to connect with people
because people open doors for you,

(10:44):
you bring value to other people, people offer you opportunities
and that's a good example of that.
Yeah, and that kind of brings you into business consulting
and like that relationship with people
and helping figuring out what that need is
and then helping that person get to that goal.

(11:04):
So how did you get into business consulting?
So when I worked on yachts,
at the end of my career there,
I teamed up with an engineer and we started a business
and I co-founded that business with him
and then for 15 years I ran that business.
We grew it to a decent size

(11:25):
so through that process he was the talented person
who could do the thing and then I did everything else.
So we went from like two people to 50 employees
with 50 subcontractors and government contract work
and the reason I explain all this is because I went through
the nuts and bolts of everything to do with running a business,

(11:45):
operations-wise and we got to a point where he,
career-wise I had a much steeper learning curve than him
and I kind of wanted to keep learning.
I wanted to keep doing different things
and he was quite comfortable with the business that we had.
So we agreed that I would step out
and I started looking for a business to buy

(12:07):
and through that journey one of the business brokers
that I was working with he just kept hounding me
like you'd be really good at,
it was business brokering,
you'd be really good at brokering
and eventually I gave in
and I went to work under him for about a year and a half
and just learned the business of brokering
and then just decided I wanted to do my own thing.

(12:29):
So I set up my own consulting firm
because I wanted to work more with baby boomers
and kind of like the more mature business owner.
So I just through that process of transitioning out of a business
into brokering I also then became an accredited
small business consultant.
So I just kept education along with work,
just studying alongside of the work that I was doing

(12:51):
because there was a lot to learn
and then I launched SureStep Business Advisors
which is my firm in the beginning of 2024.
AC What's the difference between consulting and brokering?
KS So the difference would be,
let me think about the question, what is the difference?
Well, there is no difference.
I guess I'm just interchanging words.
So for me...
AC That's great.

(13:13):
KS Yeah, that's a really good question.
So business brokers want to be called business brokers
but what I find is that the general public doesn't know
what that is and because I went through
so the consulting training that I did
and the kind of becoming accredited at this
was very accounting based
and lots of operational improvement.

(13:35):
And so I think I use the word consulting
because I've got a deeper insight than some business brokers.
Many business brokers are focused on the deal.
So getting the listing, looking at the transaction.
But for me, I've got more of a holistic approach
because I have such a deep understanding
of running a business.
So let's just say if a business owner gets evaluation done,

(13:57):
I can kind of see where they may need to make improvements
to get a little bit more money for their business.
So I think that's probably where I tend to lean more
on the consulting side.
AC Yeah, it's kind of like that,
the nuance between what is a realtor
and a real estate agent.
And if someone explained it to me,
I probably still wouldn't understand it.

(14:18):
But what you said made a lot of sense.
Like the brokerage is about making the deal
and like you as a broker and a consultant,
you're helping make the deal
but also make sure that your client gets as much value
for their business as possible.
What made you kind of specialize
with the baby boomer generation

(14:40):
and their businesses?
AC While I was brokering with somebody else,
my father, so I was still very, very new.
And my father, he decided he was going to retire.
And he's a baby boomer.
And he had his business for, I want to say like 30 years.
He has had this cute little boutique style business

(15:03):
and he ran it for 30 years.
And his wife said, okay, I'm ready.
We want to retire.
And they didn't even think to say get a valuation
or they just said, okay, we're going to retire.
We're a mom and pop shop.
We're probably just going to close.
And that's what they did.
They made that decision.
So I remember when they made the announcement,

(15:24):
I was like, huh.
And it's tricky with your parents because,
or with my dad, because he's not going to listen.
No matter how qualified you think you are
or how old you get,
your parents just really won't take advice from you.
You know, my fingers.
So, you know, I remember saying to my dad,
you know, I didn't get a valuation.
No, no, no, nobody's going to buy the business.

(15:44):
We're just, we're going to close it.
So for about six months, they wound it down.
They had, you know, all sorts of retirement events and sales
and they closed at the end of 2022.
So in 2023, I got to see what happened to them afterwards.
And that's when I was working under another broker

(16:05):
and I hadn't started my own firm yet.
But what happened to them was they closed their business
and then they went, oh, now what?
But they had closed it.
So for the next six months, I saw them go through something
that they shouldn't have gone through at that age.
They were in their early seventies and they were,

(16:26):
they had a lot of regret over closing.
They were just kicking themselves
and they were in this small local community.
Everybody knew them.
And there was just like disappointment everywhere.
So watching, being able to have a seat next to them
through that and see what it did to them,
that's when I decided I would,

(16:46):
instead of specializing in a niche or a sector,
I would specialize in a type of business owner.
That's why I started my firm.
I saw what my dad did.
Today, if we could go back in time, I could fix that.
And I can't, but I can certainly help other people
to avoid making similar mistakes.
Yeah, that's, it's very heartbreaking.

(17:07):
Sometimes there's just like this, like you're in these roles
and as the parent, you kind of feel like there,
there's like this precedent of like, oh, I got it together.
I'll figure this out.
And like, oh, she's still wet behind the ears,
even though you've had so much life experience that, yeah,
it's hard to kind of relinquish those roles
and take a second to hear some,

(17:29):
which would have been much appreciated and wisdom.
Would there have been any risk
if your dad decided to do a valuation
instead of just shutting the business down,
winding it down and closing it?
No. So I think, you know, let's just say
if he would have had evaluation done on his business.
So there wouldn't have been risk for him.

(17:50):
Let's just say when he,
so him and his wife had made the decision to close.
Now that's a tricky time to start evaluating the business
because you don't have that much runway
if the valuation doesn't come in as to where you want it to be.
But if they would have got evaluation done at that time,
they would have known where they were at.

(18:10):
When you sell a business, there's two different things.
There's price and there's terms.
And, you know, with a business like theirs,
which is a business that had no debt
and they owned a building, they had a lot of wiggle rooms.
So no, I feel like they just didn't even know about evaluation.
You know, we talked about it after the fact.

(18:30):
I listened to my dad a lot when he was
expressing all of his grievances and disappointment
and just kind of really kicking himself.
And then, you know, we talked over a bottle of wine
about what he could have done.
And, you know, he's like, why didn't I just do that?
Why didn't I listen to you?
And, you know, he was kind of going back to his wife,
like we could have sold the business.
So no, there's definitely no risk in getting evaluation done.

(18:53):
And I'm really, you know, with a lot of the marketing that I do,
I'm trying to help to educate people to say,
just get one done, even if you're 60, 55,
because then you'll know how much your business is worth.
It's similar to going for a health checkup.
You don't say, well, I won't do it.

(19:13):
Actually, I'll get my health checked when I'm retired
and I'm ready to see if there's anything wrong with me.
You do it all the way along as a maintenance.
And I think this could be a tool that people use for that.
And if my dad would have done something like that,
it could have been such a different outcome.
Your dad's just a human and humans can make mistakes.
It just happened to be like a bigger mistake,

(19:34):
but you don't know what you don't know.
And so he didn't even necessarily know that was a route.
So it's great that you're in there and you're in that space
and people are going to become aware that,
hey, this is an option for you.
It's not just you've made your money
and now that chapter of your life gets closed,
like that you built this thing up, this business up.

(19:58):
And now it's just like, okay, I'm at an age.
I have enough money.
I feel like I can just live the rest of my life
off the work that I've already done.
But instead there's like, okay,
there's another opportunity for you to make money
or to continue this legacy that you've created and built.
And how just having that extra option

(20:19):
to be able to exercise that is so wonderful.
And Brian, that's the thing that I saw.
It was even beyond the money.
It was the emotional side of it.
Because when they were preparing to close,
they were busy, right?
So they were kind of, okay, just all go, go, go, go, go.
We've got the state.
We're going to close.
We're going to travel.

(20:41):
But when they closed and it was kind of like,
the air went out of the room, I got to see their emotions.
And that's the thing with people that have businesses
for a long period of time.
It's a part of your identity.
It's a part of who you are.
Yeah, there's someone that I really enjoyed their podcast.
His name is Chris Hardwick.

(21:02):
And he talks about how a lot of times
we're so focused on the result
that we don't think about once we're finally there,
what it will feel like.
And so let's say you want to sell the business
like your dad did.
Then once you sell the business, you're like,
okay, well, what now?
Because this is what I was going for for so long.

(21:23):
And now that I'm here, I don't know what to do.
And that can be in anything.
Let's say you're a successful movie star
or something like that.
Once you're a successful movie star, you're like,
oh, I feel the same that I felt before
when I was just out doing auditions.
Now I've reached this level that I was trying to get
and it feels empty almost, even though I've done the thing.

(21:44):
And so where do you go from there?
How do you help someone get ready to sell their business?
I guess before that, what I'm really excited to talk about
is this niche that you've found yourself
in this baby boomer generation business sellers.
Because you hear all the time, at least I do,

(22:06):
about this big generational transfer of wealth
from baby boomers to this next generation.
And I've never really looked into it much more.
And then I stumbled upon your business
and what you're doing.
And I was like, this just makes so much sense.
There is so much opportunity here.
And if you are wanting to get into a business,

(22:29):
there's this whole generation that is about to retire.
On one of your posts, I saw that 50% of small business owners
are over the age of 65.
There is so much opportunity.
And it blew my mind.
And so I'm so happy that you're having this conversation with me.

(22:49):
So if you're helping a baby boomer sell their business,
what does that look like?
What does setup look like to start that process
and to go through with it?
So the process to help them get ready
is the first thing that we have to do is the valuation.
So typically, when I speak with a baby boomer business owner,

(23:12):
they, the one thing they don't know is what the business is worth.
They know everything else about the business inside and out,
but they have no idea what it's worth.
So we start with that.
So usually, it's a matter of gathering up
the right financial documents and reviewing them
and doing a valuation for them.
OK, that's kind of step one.

(23:33):
And then we sit down and we go through the valuation
and we talk about it and we talk about the business.
That takes, that's not a quick process.
It's not lengthy, but it's not quick, it's detailed.
And then we go through the valuation together.
Usually, they will have a number in mind.
So it's always helpful to extract that from them right up front

(23:55):
because it's, when you do a valuation,
you want to do it independently of any opinions.
You're looking at the numbers, you're analyzing the business,
but then knowing where their number is is helpful
because when you do the valuation,
if it's going to be bad news,
we have to have that discussion ahead of time.
But let's just say it's good news, right?

(24:16):
The number is relatively close
to what they would like to sell their business for.
So then what we'll do is we'll agree on the number
and then I'll walk them through the process
of what it's going to look like, what the next steps are.
Because the biggest thing that's going to happen,
especially with somebody that's older,
no, this could be for a younger business owner too.

(24:38):
I'm not isolating it to older people,
but someone that's had a business for a long time
is that they've just, they've been in that business running it.
They don't know what to expect.
So we'll walk through the process of what it's going to look like.
We'll agree to the price.
And then for me, where my process is a little bit more unique
is I will sit down with them and I want to build out a profile

(24:59):
of what their ideal buyer looks like.
Because they won't know the value,
so we get the value established, right?
We agree that that's what we're going to ask for the business.
But then the next thing I find
is that they do know what they don't want.
So for example, a business that I sold, the owners knew,
they knew who they didn't want to sell the business to.

(25:21):
So in order for me to be able to market the business properly
and prepare all of the, it's called a SIM,
it's a confidential information memorandum
that presents the business.
But in order for me to market it properly,
I want to know who they want to attract.
Because then I know as people start to come in,
what I'm looking for and how to screen people properly.
And it's a funnel, it's a process.

(25:43):
So then the job of the business broker or the consultant
is to make sure that we are actually pre-qualifying people
and bringing them the right types of buyers.
So I really enjoy building out that ideal buyer profile.
And that's kind of a brainstorming session,
almost like how you would recruit for a candidate
for an important position at your company.

(26:03):
What I like, or at least what I'm inferring
about your specialty of being a broker and a consultant,
is if that number is lower than what the person is thinking,
because there's emotion attached to it
and you're kind of, there's the propensity to overvalue it
just based off of emotion and what it means to you.
But someone buying it won't have that same attachment to it.

(26:27):
It's going to be a lot more logistical.
But your skill set, you can help them get to that number.
It's like, okay, well, you want this number.
Here's what you can do to help build up your business
to get it to that number to then be able to sell it.
How does a business buyer and a business seller meet?

(26:47):
Does someone just walk in and be like, hey, I like your business.
I like your, these cannolis that you make are delicious.
I need to buy this.
I need to own this product.
Is it something just so coincidental like that?
Or is there like, when someone's buying a house,
they can look on Zillow or get in touch with Realtors
or something like that?
What does that look like?
There's a couple of ways that I see this typically happen.

(27:09):
So there are a lot of business owners
who will already have been approached by somebody
or they'll have someone in mind.
So that's kind of your off-market stuff that happens.
They may have a friendly competitor
or they may have like this one person
that was talking to one of their biggest customers
that wanted to acquire them.
There's those types of conversations that happen

(27:31):
in the industry, in the field type of thing.
Just organically, yeah.
Yeah. And those conversations will happen.
And then, you know, sometimes those buyers
will find their way to a business broker
because they realize they just want to get information.
They don't know what the business is worth,
but they're already speaking to a buyer.
So that happens quite a lot.
There is a website called BizBuyCell.

(27:54):
There's no MLS per se,
but there's a website called BizBuyCell,
which is a marketplace.
And that's the largest marketplace
where you can find business listings.
So brokers will list on there.
I believe they have an option
where you can list your business yourself.
But if you wanted to just go out
and start looking at businesses,
that's where you would go.

(28:14):
And then there's all kinds of other sites now for,
like I think Flipper has more of your technology sites,
more of your websites and things like that.
But as far as an MLS, there isn't one,
nothing that's comparable.
And what is an MLS?
For the realtors, that's where they will have
all of the listings on there.

(28:35):
So you can see everything that's days on market,
houses that have sold.
So that's like in the real estate world.
But in the business brokerage
and the world of selling businesses,
and there's no MLS.
Okay. Okay. That makes sense.
So you've got your baby boomer
and they're selling their business.
You got their evaluation.
They're happy with it.

(28:56):
You're happy with it.
And you're moving them towards the next step.
What does that look like
in order to protect the person
that you're doing business,
their best interest of getting
the most money for their business,
but also continuing the legacy
that they've built out.

(29:16):
Let's say they take their employees,
they take care of their employees well.
They offer a good product.
They're not cutting corners.
Like let's say like the cannoli.
Let's go back to the cannoli.
They make really good cannolis.
They're not going to skimp on the filling.
They're not going to...
I think you like cannolis, Brian.
For some reason, that's the business model

(29:37):
that's in my head.
But to maintain that standard
that they built throughout their whole career,
how can they make sure that a buyer...
Is there something that you can write into the contract
that you need to continue this level
or what does that look like?
Okay. So what that's going to look like,

(29:58):
let's just assume that the purpose
of this conversation,
they're working with a consultant or a broker.
They have that representation.
So what that looks like is all of the work
that you do behind the scenes
with the business owner is understanding
what's going to be a deal breaker for them,
what they're willing to bend on.
So you do a lot of fact-finding

(30:20):
before you take that business to market.
And then your job as the representative
is to make sure that you're not, to your point,
letting people just go to the business
or there's a high level of confidentiality.
That's why selling a business
is very different from selling real estate.
When you sell real estate,
you put a sign out front and some balloons

(30:41):
and you want everybody to know
that this house is for sale.
Well, in the world of selling a business,
you want nobody to know
that the business is for sale.
So you have to not only screen the people
as they come in and inquire,
but you also have to give them enough information
that they're interested.
So you're looking for a good fit.
So how you're protecting the owner

(31:03):
is A, by making sure that it remains confidential,
because if they have 10 employees
and somebody finds out the business is for sale,
they're going to all get spooked and very scared.
So there's that side of things.
The thing that's really important
that is hard for business owners,
but it's in their best interest

(31:24):
is having all of the documents available
that a buyer is going to need.
So the more that we have
and the more that everything's been verified,
so part of our job is to review all the financials,
make sure that everything is reconciling.
I won't go too in the weeds on this,
profit and loss with tax returns

(31:45):
and just checking all of the reports,
and so that when a buyer goes to dive in,
they're not finding things
that the business broker should have already found
and questioning things.
So you really have to have this business prepared
in such a way that when a buyer receives information,
trust is built,
because that's one of the important things too.

(32:05):
You're protecting the owners,
you're protecting their privacy,
you're receiving inquiries
and you're making sure you're bringing them
the best buyers,
but then you're also having to make sure
that the owners don't get rattled,
because they're going to have to answer
a lot of questions.
When they do have a buyer that's interested,
they've signed a non-disclosure,
which means that everything's confidential,
but then they start asking questions.

(32:28):
What was this charge for?
What did you spend here?
And that for a small business can be hard,
so preparing them for these things,
just letting them know that this is normal,
don't worry, and here's what to expect next.
Almost like you're their guide
through the process as well,
because otherwise they can get rattled
about things that are completely normal

(32:49):
when someone's looking to buy a business.
Yeah, because I would imagine,
if I was purchasing a business,
I would want to know everything,
I would want to know the same thing
like if you're buying a house or something,
you want to know,
hey, is this roof still good
or is your profit margin good?
And so, of course, you dive into a lot of things

(33:10):
and almost that would be rude otherwise
in that type of situation
to ask for that type of information.
But how come I get the employee aspect of it
because you can't have a business
if everyone's like,
okay, you're about to sell,
I'm going to lose my job,
I just need to jump ship
before you have the opportunity to even fire me,

(33:31):
or before the next business owner
potentially lets me go.
But wouldn't it also seem like a good idea
to have people bid on this business?
Hey, the cannoli shop is finally going up for sale,
what are we going to do?
We need to get in on this
and to have multiple bidders go at the same time?

(33:52):
Or is that counterproductive in the business world?
No, that's actually a great situation to be in.
So that's part of,
if you have a good business
and you have a good business broker,
they will create that environment.
An ideal situation is the broker is
fielding buyers as they start to inquire,

(34:14):
giving buyers information in a timely manner,
feeding that information back to the business owners,
coordinating additional information that may be needed,
coordinating any phone calls that may be needed.
I mean, early on,
they'll have a conference call with the owners
if they're serious,
if they've actually looked at a certain amount of information.

(34:34):
But yes, you'll want to,
and you want to keep everybody moving along as well.
Because let's say if you have four interested buyers,
so your goal is going to be to make sure that,
because you don't disclose anything about the buyers,
but you tell them that there's other interest.
So let's keep things moving along through the process
and then you accept offers,

(34:56):
you give them to the owners
and you go through the offers with the owners.
So yeah, an ideal situation is multiple offers
because then people will nudge up,
they'll give you their best offer.
And it gives the business owner choices.
So that is definitely common,
especially for really good businesses.

(35:16):
So you're more so keeping the business sale quiet
for the sake of employees
and probably for customers as well.
Because if you are offering a service
that can be changed or something like that,
you're like, well, I don't want to take a chance
with this new business owner.
I'll just go find someone new.
So is that also why you would keep it quiet?

(35:39):
Yeah, so if you think about a business
and all the people,
all of the kind of moving parts of that business,
you have employees, you have clients,
you have the goodwill of that which creates value.
And then you even have vendors
who are probably extending credit to that business.
You have a landlord who has a lease probably,

(36:00):
there's a contract there.
So all of these people could really affect
the business negatively if they get wind of it.
So in order to keep control,
everything has to be confidential
because everything has to be tackled individually.
One of the biggest ones is going to be the landlord.
But again, you don't want to let...

(36:22):
It's a fine line because you can't let people know too soon
because that particular buyer may not move forward.
To answer your question about
why is it so important to be confidential?
It's because there's so many pieces of that business.
You're not buying a building, right?
You're buying a going concern

(36:44):
and everything has to remain the same.
So even when a buyer has made an offer,
one of the things that the business owner has to focus on
is keeping everything the same all the way to closing
because you're buying something that's very complicated
and it's relying usually on human beings.
Which are complicated and overly convoluted at times,

(37:06):
especially when it comes to...
Emotional.
Everyone wants to get the best deal possible
and no one wants to feel like they're on the receiving end
of not getting the best deal.
So keeping everything consistent for the buyer and the seller,
but that next step, let's say the buyer is emotionally attached
to the product and the business and the employees,

(37:29):
is there a way to safeguard that with the next owner
or is that kind of just like you have to release the control?
You're no longer the business owner
and that's none of your business technically.
I think that...
So yes, let's just say if you get paid 100% cash at closing,

(37:50):
even if that's through a loan,
even if the buyer gets a bank loan,
if you get paid cash at closing
and there's nothing in your contract that says
X, Y, Z thing has to happen
in order for you to get a partial payment
or something like that, 100% cash at closing,
you can do your handover period and you can be done with it.

(38:12):
But what I find is that most business owners
are really concerned about what's going to happen
to the business after it sells.
Especially because some may move away when they retire,
but most will stay in the community.
They're going to be seeing that business,
they're going to be hearing about the business.
Even after closing, people will want to...

(38:37):
When people have a bad experience,
they kind of want to tell people,
let's just say if post-closing,
maybe the buyer doesn't do such a great job,
people will want to complain.
So just with this whole...
I think with the emotional attachment to the business,
because it's something that you've built,
I think even if they didn't have any financial burden

(38:58):
after they sell, I think emotionally,
they still want to see it do well.
And they are always concerned about the people
and how the business will be run and will the people stay.
Because it seems like the management style
of a lot of the baby boomers
is they keep their people for a long time,

(39:18):
17 years, 20 years.
I spoke to somebody recently and I asked,
would you like to sell the business to one of your employees?
And they still know I can't.
They're all as old as I am.
And they've been genuine.
They've just all gone through the life cycle together.
And I know that nowadays,
we don't really have that mentality.
Job is one or two years.
But I think in that generation,

(39:38):
they've created a lot of loyalty with their team
and they're concerned about that.
Yeah, that makes a lot of sense.
And that is more so my preference,
not to dive too much into it.
But yeah, get as much profit as you can
really comes at the expense of the employee

(40:00):
for the most part when you get into that corporate world.
So I really like this small business world
to where you're a little bit more
than an employee number or something like that.
You're actually a person who can have life happen to them.
And then you can have an understanding boss
rather than just like this corporate oversight individual
who says, no, you get five vacation days a year

(40:23):
and outside of that, well, you just better show up to work.
Good luck.
So I do like the small business model a little bit more
and the flexibility and the cultures
that can be developed in there.
And yeah, it can make sense that like this person
helped me reach my level of success
that now I do get to go into this next chapter of my life.

(40:43):
And I don't have to worry about any financial stress
because this person helped me get there.
And I want to make sure that they don't have that stress
as well with this new person that comes in.
And that's a little bit more of a gamble,
but you can hopefully, if that is a priority,
you as a business owner can get a feel for the person.

(41:05):
And if you're selling to like a company
that's just acquiring a bunch of your types of businesses,
and that can be something that you can just pay attention to.
Yeah. And I think, and when I was mentioning to you that
business owners know who they don't want to sell to.
And sometimes it's, sometimes it's reasonable like that.
They just don't want to sell to,

(41:27):
there's a kind of a group of buyers that are called,
they're called searchers.
And then it's entrepreneurship through acquisition.
They've gone to school,
they've gone to very good business schools,
they've got degrees,
and they're going to make their own portfolio of companies.
You know, they're going to go out
and buy these types of businesses.
But I've actually, I've had a couple of those buyers

(41:48):
look at one of my businesses,
and it looked great on paper,
and they're really articulate and intelligent,
but they were just missing some of the people skills,
some of the nuances.
One actually went out to meet with the owners,
and the owner said that, you know, it's the strangest thing,
just these people are old school, you know,

(42:10):
and they said, no, they came into the office,
there were two of these buyers,
they came into the office and the wife said,
and they put their balance on Mr. So-and-so's desk,
and that's the owner.
You know, this guy's like 75,
and they came in and they just, he was at his desk,
and they just put all that, you know,
took their backpacks and put their stuff on his desk,

(42:31):
and that for them was just kind of like,
what's, it's, there's a gap,
and they can tell, the business owners can tell
when it's too spreadsheet-ish.
It just, it turns them off, they don't like it,
and I think if I was that type of buyer,
I would try to personalize myself as much as possible,

(42:52):
but yeah, it's definitely important to them
who they're dealing with,
and it's more popular for them to,
if they can find, you know, another younger couple,
it's more popular for them to sell to somebody like that.
That makes a lot of sense, but yeah,
there's so much in communication that is nonverbal,

(43:13):
that we as humans who are just social creatures
have learned to pick up on certain behavior,
or like, hey, that's a flag,
I don't know why that's off-putting to me, but it is,
and especially for someone who is in business,
I imagine you have to rely on that discernment,
almost instinctual discernment that you have,
it's like, hey, I got this far,

(43:35):
obviously I've made some mistakes in life,
but that type of person is familiar to me in a bad way,
so how do I, I need to get out of this deal
as fast as possible, like just not humor this anymore,
and you don't know until you meet them.
Yeah, it's so true.
So if you're on the other side of that,
if you are not necessarily a searcher,

(43:58):
but you have an entrepreneurial spirit,
and you have just learned about this opportunity,
that half of businesses are,
half of small businesses are owned by baby boomers,
and they're potentially looking to transition out of an owner,
a business owner to this next season of their life,
and you are trying to become a business owner,

(44:22):
what can you do, how can you find businesses
that you can invest in and buy,
and again, not to build a portfolio,
but like you want to continue this mom and pop store,
and then go from there.
So I would establish,
let's just say if I have a business in mind

(44:44):
in my local community, that could be one way that,
you know, maybe you frequent somewhere,
and you know the owner's a little bit older,
that could be one scenario,
or another scenario is if you just think,
well, you'd like to buy a small business,
and you're not sure what type, figure out your skills,
and figure out which industry you'd like to be in,

(45:05):
and then if it was me, what I would do is,
I would do some direct outreach.
If I found a couple of businesses that I liked,
that were not for sale,
but I could see the owners were older,
I would send them a letter.
I would write a letter about myself,
say, you know, if you've ever thought about selling your business,
give them your phone number,

(45:25):
and put a nice handwritten envelope,
if you want to put a card in there,
or, you know, just send them something in the mail,
because it surprises me,
so people will be looking for businesses to buy,
the types of people that you're talking about,
and the only thing they've done is reach out to a business broker,
and, you know, that's great, you should,

(45:46):
but then there are tons of businesses in your community,
you could go to the local chamber,
you could talk to the people there,
and, you know, just start socializing,
if you're actively, if you're really looking,
you know, if you think this is something I want to do,
I have a corporate job,
I want to find a business,
yeah, figure out, you know, if you want to be locally,
if you want to relocate, I mean,

(46:06):
there's so much information now available on the internet,
and I don't think anybody would be offended
by a nice letter or a card in the mail,
hi, I love your business, I come here,
but, you know, or I see it all the time,
or, you know, something that you genuinely appreciate
about the business, compliment it,
and then give them a call,
and I'm sure they'll talk to you.
I mean, it makes a lot of sense,

(46:28):
because the risk is so low,
because you're saying, hey,
I like this thing that you're doing,
and it'll be flattering for the person,
as long as you're not trying to, like,
lowball them or something outrageous,
but if you're just being genuine,
like, hey, I've enjoyed this business,
I've seen it grow,

(46:48):
I'm very interested in being a part of this next chapter,
you hear so many stories about people who are buying houses,
who may not be able to outbid that highest bidder,
but they write a letter to the owner and say,
hey, like, I see myself growing old here,
I see my kids growing up and having so many memories here,

(47:11):
or whatever it looks like,
you paint them a picture of the continuation of this house
that they are more than likely emotionally attached to,
and don't want to necessarily just give it to the highest bidder,
who may just be a cash buyer,
who works for some real estate company,
but like that human element can really shine through,

(47:31):
and that makes a lot of sense,
and just to, it's like a preliminary,
is this person even interested?
And maybe they haven't even thought about that,
but they are at that age,
but you've planted a seed and be like,
oh, maybe I do want to do that.
Yeah, and I mean, it's definitely,
so it's something that business brokers do anyway.

(47:54):
I mean, they're doing outreach,
they're sending direct mail to people,
they're making calls, they're networking,
but I think if you really wanted to just find a good business
and reach out to that owner, that would be a great way to go.
I mean, you're going to need,
let's say you're looking to buy,
you're going to need to spend money and get yourself ready.

(48:15):
You're going to want to figure out a lender
and have a lawyer and all of these things,
but all of the beginning point is just, it's a conversation.
And the one thing that I think I see that baby boomer business owners,
it sounds like a mouthful.
The one thing that they love though is talking about their business.
I mean, and if you're, I think if you're going to buy a business
and we're talking like keeping businesses locally owned,

(48:38):
that's the perspective that I'm talking about.
You know, you should be interested.
There's so much you can learn.
I mean, if I'm working with an owner,
I pretty much know their business inside and out by the time,
you know, we're talking to buyers and it's interesting.
It's, you know, they've got so many stories,
how they started the business and they would love to,
I'm sure it'd be very easy to buy them coffee,

(49:01):
send them a letter, invite them for a coffee somewhere
and talk about their business.
And you could find yourself a deal that way.
It's not helping the brokerage community,
the business brokerage community,
but I think that's a great way to go.
And there are so many, you know,
there are so many business owners, like you said.
Yeah, getting ready to go on this next adventure.

(49:23):
But if you're selling your business,
there's a lot of moving pieces.
There's an attorney, the brokers,
how much, what percentage does that owner walk away with
after the sale?
Like how much do they have to pay
the people who are helping them make the deal?
So if they're working with a business broker,

(49:45):
they're going to pay what's called a success fee,
which is a percentage of the sale price.
And that's typically going to be between 10 and 12%.
And that's paid at closing.
And then they'll have other, you know,
they'll have attorney's fees.
Those could be, you know, five to 10,000.

(50:07):
But if you have a good broker working with your attorney,
you can manage that cost.
You'll have, I mean, let's just say
you don't have to clean up your books
and do any of that type of work.
You won't have too much on accounting,
but your accountant may need to step in
and help answer some questions.
So you could have that.
But for the brokerage fees,

(50:27):
it's going to be 10 to 12% of that purchase.
That's the big chunk of what they end up spending.
And then you've got some closing costs,
which are split between the buyer and the seller.
So all in all, maybe, you know,
maybe they're looking at 15% being set aside of the total.
And that's just a guesstimate.
Yeah, but that's just part of doing the business.
And again, it's very cleverly marketed as a success fee.

(50:50):
So you're like, hey, success.
So everyone's kind of excited.
So on the other side of that,
do brokers only get paid that percentage
if the sale goes through,
or is there some sort of hourly rate
that goes along with that?
So every firm is different.
Kind of the standard practice is its success fee.

(51:11):
So if you don't sell the business,
it's a bit like realtors.
And then if any brokers see this,
I know you don't like being compared to a realtor,
but it's an easy comparison.
So apologies.
Well, that's why I've been making it constantly.
So no offense.
I'm just a lay person.
I mean, it's a tough one
because it's the most relatable, right?

(51:32):
But for some reason, the industry itself is just like,
we are not realtors.
Okay, we're brokers, but fine.
Yeah, so if they don't sell the business,
they don't make a fee.
So they're incentivized to sell the business.
And so the broker is working,

(51:54):
are they working for both the buyer and seller,
or are they working more for the buyer?
Because I can see some sort of conflict of interest arising
with the final negotiated selling price.
Yeah, so the broker typically,
brokers can choose.
They can work for buyers or they can work for sellers.

(52:16):
So they can do either or,
but they're typically representing the seller.
But then they have a responsibility to make sure
that the transaction itself moves forward.
So we have a lot of the forms and information
that the buyers need,
and we help to educate the buyers
just on how they can get financing.
We have lenders that we can recommend them to.

(52:37):
So you're representing the seller,
but then you're also making sure
that the buyer has everything they need from the seller.
So you're in a very cooperative role
making sure that you're representing
the person selling the business.
So it's possible that there could be two brokers though
for the buyer and seller, potentially?
Yeah, it is.

(52:59):
For some reason, the industry itself doesn't,
people don't lean towards that.
Some people will say that they do co-broke,
but that's another difference
between selling businesses and how it is.
Realtors just co-broke.
I just sold some property in Florida
and I'm pretty sure that they were co-broking
and it didn't make any difference to me.

(53:22):
But with business brokering, it's different.
Brokers tend to not want to co-broke.
That's probably a different discussion.
I was just more so thinking about it
in the lens of if you earn a certain percentage,
if both people earn a certain percentage,
then it would make sense

(53:42):
that you would want the business to sell
for as much as possible,
but that could potentially hurt the buyer.
So you would do it,
and this would be ethically not the right move
if you were the broker for the seller,
if that was an actual person's position.

(54:03):
And so is there any way to...
Who is overseeing this to make sure
no party is getting taken advantage of
during the buying and selling of a business?
So the broker's responsibility.
So the buyer and the seller
are going to have their own lawyers,

(54:24):
which is great because that's where
all the checks and balances are happening
and then the broker is making sure
that it's not going too far one way or the other.
So let's just say if the buyer wants
to renegotiate something,
we will accept information from them
and see their point of view,

(54:45):
bring it to the seller, explain their position.
The seller makes all the decisions.
It's their business in the sense
of whether they agree to something or not.
But then, yeah, you have the attorneys involved,
and that's one of the really important things
for someone, especially if you've had a business
for 30 years and you're mature, you're a boomer,

(55:06):
you've been using a lawyer for a long time
that probably does nothing to do with selling businesses.
They may have drawn up a contract here or there for you.
They may have done an employment contract.
I don't know, but I even worked with somebody
that they were using a service for a lawyer
and it was Legal Shield or something.

(55:27):
It's like you pay $50.
LegalZoom does the, it's similar.
They'll incorporate you, but Legal Shield,
you pay $50 a month and you get like four hours
with a lawyer.
So it's a subscription model.
But all they'll do is phone calls.

(55:48):
They won't do anything with documents.
They won't email.
They refuse to email.
So I actually went on a call
with one of these services with my client
and when we got off the call, I was like,
you can't use them, but he's like,
but it's a really good deal.
And I'm like, no, but you can't use them.
They won't email because they don't want anything
to be discoverable, but they're your attorney.

(56:09):
It doesn't work.
So yeah, that's actually one of the challenges
ahead of time is really educating
actually both parties sometimes,
because if the buyer doesn't have any representation,
it is important that they have their own lawyer
because you're right, there can be conflicts
really quickly.
So I like to make sure that everybody's got
their attorneys ready to go.

(56:30):
And then the broker can do a whole bunch of heavy lifting
to save on some of that work
that could cost the buyer and sell them more money.
Yeah.
And I wasn't trying to insinuate or imply
that like this is brokers are going to be looking out
for their own best interest or anything like that.
It was just like how, because there can develop

(56:52):
like anything, there's going to be people
who are good at their jobs and people
who are a little bit more self-interested.
And so what is those safeguards?
And as soon as you said lawyers was like, oh my gosh,
of course, of course that makes sense.
And they have no skin in the game potentially
other than trying to get as much money per hour as possible.
Like you said, with the legal shield.

(57:15):
Like, yeah, you get me for $50 for four hours,
but that's going to look a certain way
because my billing hours are actually $400 an hour.
So you're going to get the $50 discount.
Yeah.
And that's why there's resistance once we start saying,
hey, we've got to make sure we've got lawyers ready
because everybody knows that.
And especially if you've been in business for long enough,

(57:37):
there's pushback on that.
Nobody, people don't really want to deal with lawyers
because it's expensive.
So yeah, I mean, I think that's one of the benefits
of selling a business with a business broker.
Is there a professional, they have it,
all the tools ready to go.
And they can have a lot of things that you won't have
to get a lawyer, especially for the seller,

(57:58):
you won't have to get a lawyer to draft documents.
They can have everything organized
and almost be the person that's pushing things forward.
Yeah, that makes a lot of sense
because it's already such a complicated process.
You don't want to involve any parties unnecessarily
or just invite a whole bunch of people.
Hey, my neighbor, he has an opinion.
He's going to sit in on this next meeting.

(58:19):
He's got a really good intuition.
Oh, yeah, yeah, yeah.
No, and Brian, actually that happens and it's awful.
It's not awful.
You know, I'm really trying to be,
I think the most important thing to do
is to really understand the business owner's position
and the buyer's too.
But I can see like when you first start doing calls
with somebody and you just start working with them,

(58:40):
they do want their uncle on the call or their,
and surprisingly somebody did bring an uncle
and it was Baby Boom and their uncle.
And then they switched out and it was like their son.
And I was patient, but it was like they,
and finally their family members were like,
listen, we trust her.
She knows what she's doing.

(59:00):
We don't want to be on these calls with you anymore.
Just go with your broker.
But I know that in the beginning, some of that is,
you know, they've got guardrails up
because they don't know what they're doing.
And how do they know who's telling them the truth?
They've never done this before.
Yeah, that's why it's great that you're involved
and you do have that emotional attachment to it of like,

(59:22):
not that you see your father in everyone,
but like there's a human element to you.
You're not just doing this because it's,
the potential is so lucrative.
And you're like, I can make a lot of money doing this,
whether that is true or not.
There's that element of like, these are people
and I want to help these people get the result that they want.

(59:45):
So I'm here to intercede for you
and make sure this goes as smoothly as possible.
So it's fantastic that people like you are out there,
especially you and just have like,
almost kind of like a calling to this
because it can get very gray and very,

(01:00:06):
like if you have this legacy that you're trying to continue,
it can get emotional and can get a little bit messy.
So to have someone level-headed who cares is fantastic.
And there's just one other point I think that's important.
And business brokers, they do have the ability

(01:00:26):
to make a lot of money because obviously the fees are,
we just discussed what they were,
but they are taking a lot of risk.
So you're very much aligned with your business owner
and you're in it with them
because if for some reason everybody gets cold feet halfway through,
you'll have done a lot of work that you won't get paid for.

(01:00:49):
So where the accountability comes into play for the business owner,
and this is where I think brokers have to do a really good job of building rapport,
is that you must tell us everything.
You have to tell us what could be wrong
or is there something unpaid over here that's going to come up

(01:01:10):
because if you tell the broker, they can get out ahead of everything.
If it turns out that, let's say you can't, I'll give you an example,
say you can't sign a non-compete agreement
because you have interest in another local business,

(01:01:31):
you need to tell the broker that before you take the business to market
because the buyer might find out.
And then we have a big speed bump.
So that's kind of where I think,
I do make fun of some of the stuff in brokering,
but I think there is a lot of risk because we are trusting
that people are telling us everything

(01:01:53):
so that as we move forward with our businesses
and working towards that goal,
we have everything available to us to do a good job.
And sometimes people do keep things from you
and it's not for anything, any reason that's bad.
You know, it's your business.
It's like bringing someone into your house.
Like what's under the bed?
Nothing.

(01:02:14):
But you've shoved all, as a teenager,
you shoved all the dirty clothes under there.
You know, your mom goes, is your room tidy?
Yeah, yeah, under there.
No, there's nothing there.
That's because you're embarrassed or it's just,
it's very private, it's very personal.
Yeah.
Mind your own business, if you're inviting people into it.

(01:02:34):
Yeah.
And you're just, you're working with some goofballs.
Maybe some people you're working for a business owner
who just likes to be courted.
So they don't really want to sell their business,
but you're doing all this work
because they just like to hear the deals.
They like to hear how much they're worth.
And you don't know that until you're one year into working with them.
Be like, hey, look, you keep getting all these deals

(01:02:55):
and you don't budge.
What's happening?
I've had that happen where somebody received,
and it wasn't for that reason, but they received offers.
And then they, for a different reason, could not accept the offers
and they were full price offers.
And, you know, I did a lot of work.
So yeah, there's risk to it.

(01:03:15):
So it's definitely, you know, there can be a big payday,
but it can be a tough business, especially for new brokers.
First year, you're not going to make any money.
Yeah, potentially you're working for free until
that success fee comes into, comes through the door.
So someone wants to buy a business.

(01:03:36):
And I don't even know if this scenario is going to be possible,
but they bought a business because the price they thought was a bargain.
But once they own it, it turns out that
they're not able to make the profit that they thought they were going to.
Nothing shady or anything like that.
Someone bought a business.

(01:03:57):
It's not putting out the returns that they thought it was going to do.
What can someone do to attract new customers or to decrease overhead
without going to the very lazy, like firing employees
or cutting down on the actual quality of what you're doing?

(01:04:18):
What are other ways to bring in money without doing,
the less ethical ways of following through with that?
I guess my thoughts would be if I was speaking to somebody
that was in that situation, what happened?
Because something must have happened.
Did you lose a customer?

(01:04:38):
Is the business just not as you thought it was?
Did you miss something in the due diligence?
And then of course you now own the business, so you're stuck with that.
Well, I think the first thing I would do is sit down and do a SWOT analysis.
I would just go through everything,
look at the strengths of the businesses,
the weaknesses, the opportunities, the threats.
You're obviously going to know the threats

(01:04:59):
if you're not as profitable as you thought you were.
Sitting down and doing that analysis,
you would be able to determine exactly where the real issue is.
Because it's going to be a root cause, right?
Because it may not be savable if it's something, Brian,
that you just missed on due diligence
and you haven't bought the business you thought you bought.

(01:05:22):
So if you're a buyer that's used a lender,
you've gone and got an SBA loan, let's say,
because that's how most people buy small businesses like this.
That is going to be a little bit of insurance for you
because they won't fund a business that's losing money.
So that is something that if you're somebody that you see this
and you think, oh, I'd love to buy a small business,

(01:05:43):
use a good lender and they will educate you as well.
So I'm going to have to assume then if they did seller financing,
let's just say the seller financed the deal, okay?
They said, you can buy this business from me,
you can pay me over five years.
And when the buyer takes over,

(01:06:05):
the business isn't doing what they thought.
Well, you're going to have to go back to that seller
and negotiate a grace period
while you figure out how to increase the revenue.
And I would pull them in and have them help me,
like I need a plan.
I don't want to let people go.
It's not making the money I thought it was.
We're going to have to come up with a game plan.
So if the seller has skin in the game,

(01:06:26):
you can leverage them to help you in that situation.
Let's just say if it's not what you thought it was, right?
But I mean, you shouldn't never get yourself in that situation
if you're buying a business.
You really have to know what you're buying.
Yeah, you've got to do your due diligence.
That makes perfect sense.
The parallel I'm trying to draw

(01:06:47):
and having a broker and then lenders
and it seemed like the safeguard against this,
but I see this so frequently in a commercial center.
You'll see a restaurant business
that just went out of business.
They didn't have customers.
And then they clear out and a month later,
you see a new business owner there running another restaurant.

(01:07:11):
And you think the hubris that this person has
that a business just like yours just failed
and then you're going to go move into that space
and think that you're going to be successful.
And so that's why I was saying like,
I don't even know if this question is going to make sense

(01:07:32):
because the setup is completely different.
This is more so, okay, there's just commercial availability.
So I'm going to move in with this business idea
rather than here is a business who has been successful
for X amount of years and they're trying to transition out.
So I was just wondering what that looks like more so
as your business consultant background of how can you,

(01:07:56):
because again, to me, you can go at just like,
I've been wounded by corporations.
So I have a very jaded opinion of them,
but I know how corporations make money
because I've seen you do it so often.
The service gets lowered.
The quality gets lowered.
How much you're paying gets lowered.

(01:08:18):
You let go of people and that is the quickest and easiest
and to me, the mentally laziest way
to decrease your overhead and increase your profits
that say you're traded publicly.
And it's time for you to announce your quarterly,
how much money you've made.
And so you do all this unethical stuff

(01:08:38):
at the very last moment to show,
oh, look how much money that we're suddenly making.
And so I'm wondering if your business isn't performing as well.
And I don't know if you can answer this question
with it being so vague,
but what are some other ways that businesses can make money
without having to do, not take care of your employee

(01:09:01):
or instead of the really good cannoli filling,
you go to the grocery store
and just use the grocery store cannoli filling.
It just seems like that's always the answer.
So is there another way?
Am I just naive?
I don't understand how business works.
But I think there's another way.
I think you look at your marketing.

(01:09:23):
I mean, we're living in a very different time now.
So when I started my first business,
there wasn't social media.
I mean, we had to do everything.
Everything was more putting an ad in the magazine.
You had to pay $7,000 to get a website.
You had to go out.
I mean, I would be out three nights a week
networking and meeting people.

(01:09:44):
And where now you have the internet.
So I think you can increase your marketing exponentially.
There's so many books and resources and tools
and YouTubes and the Gary Vaynerchuk's of this world.
You can learn to market and then you can increase sales,

(01:10:05):
bring in a couple of salespeople
or do some sales training with the team.
I mean, I guess we would have to look at,
just as we do when we look at a business that's selling,
how's the industry?
Is the industry struggling?
Because that's tough, right?
But even with that, I was just,
I was talking to somebody the other day
about brick and mortar retail businesses.

(01:10:25):
And I've been listening to loads of marketing podcasts.
And Gary Vaynerchuk says that TikTok shop is huge now.
Social selling is going to be huge.
He calls it commerce attainment is coming.
So if you have a shop and I went on TikTok
and I put some of these lives on
and people are literally in their businesses doing the thing
and they're live on TikTok.

(01:10:47):
So I don't know what the answer is,
but there's an answer.
It's just how creative do you want to be
and how much sweat equity do you want to put into it?
I've made suggestions to people and they've said,
well, that would take resources.
That would take people.
Well, I have a really small business
and I do all my marketing online.
I've met you online.
I've met other business.

(01:11:11):
Do we want to do something different
to increase the sales or what else could we sell?
Could we upsell something?
Could we increase the prices but add more value?
I mean, it's a hard question to answer because it's broad,
but that's where my brain would start going.
And if I was working with somebody that was open-minded
because sometimes people aren't,

(01:11:31):
that's where I would start.
Yeah, I like hearing that just that there's other ways
because I was thinking, maybe I am just naive.
Maybe that's just how business works.
Like you just, you get to a certain point
and that's just what you have to do.
It's like you have too many employees
or you overshot the quality or something like that,

(01:11:52):
which again, to me is being generous
to some of these companies.
And I do agree with you, Brian.
So I had the experience of being a small business
and really getting squeezed by a corporate customer.
So I've actually been through that pain.
So when I had my engineering company,
we landed a really big multi-year contract
with a government prime contractor.

(01:12:14):
So we ended up, I mean, it probably,
it tripled the size of our business.
It was a support role and we had to bring on
immediately 25 more staff
and just start running all over the country
providing service.
And we did it, we fulfilled everything,
but they experienced that, gosh, it's tough.

(01:12:36):
Like it's really tough.
When they wanted to cut our,
what they were paying us by the hour,
they cut it and they cut our margins so thin.
I remember being on a conference call and they said,
okay, this is what we're going to pay now.
We need to update the budget.
I remember telling them we're already on ridiculous margins

(01:12:57):
and we're running massive payrolls.
And the thing is as well with the type of client
that they were, they were burning our cash
because they would funnel purchases through us.
Because we're a small business, we weren't regulated.
So they didn't have to do the purchase order system.
But to your point, I've been on the receiving end of that
and it is absolutely cutthroat.

(01:13:18):
And then at the end, they did decide
that the contract was going to end
because the company sold.
It sold to an even bigger company.
So they came in and said, oh yeah, this contract is,
we're giving you notice.
And I said, well, when is it going to end?
What's the grace period?
And they went, oh, we don't need you Monday.
And we had 50 people.

(01:13:39):
So I have experienced that exact thing.
I know what you're talking about and I have no time for it.
It's just unfortunate.
That's how certain people operate their business.
And it's, yeah, that's why, yeah, I'm just so happy
to like meet you and get to talk with you
and like that you do have, like, it's not about the money.

(01:14:00):
Obviously it's not a charity.
You're not doing it for free,
but like you have a vested interest in this
because you know the human element of it.
And not just like, oh, my dad got screwed
because he worked with someone who was unethical
when he was selling his business and he got less.
It's like, oh no, there's other avenues to pursue
that he didn't know.
Like I'm going to help educate because technology

(01:14:22):
and information, we live in the information age.
Everything is changing so fast.
The terms that you just said with marketing
to think that you can live stream what you're doing
is to a baby boomer and not having the internet
and maybe going back to that, don't look under the bed,

(01:14:43):
mind your own business.
Why would I invite people to see how the cannolis made?
Why would I do that?
But like people just love that.
And you can build a business in such a novel way
that there's so many different ways to run a business
and to make a profit that it doesn't have to look that way
or you don't have to be so self-interested

(01:15:03):
that you're only worried about yourself
and growing your own businesses can be symbiotic.
And that's the business that you're in.
And I think it's a very good and noble pursuit,
which sounds like I'm closing the podcast, but not quite yet.
So maybe I'll move that to the end of the podcast.
I don't know.
But with what I imagine is an influx of people selling

(01:15:31):
their business.
And when there is a high supply and maybe a lower demand,
you have to make your product stand out.
So what can a business owner do who is looking
to sell their business, make their business stand out
against maybe three or four other businesses
who are on the market as well with them?

(01:15:53):
How can they make their business stand out more?
Well, there's a couple of things to unpack there.
So I'll indirectly answer the question.
The first thing is that many of the businesses
that are on the market for sale are not going to sell.
So the statistics are of all the small businesses

(01:16:14):
that go on the market, only 20% sell.
Well, okay.
Yeah. So that's a narrow number, right?
So I think that you have less of a concern
of being lined up against a competitor than you do
of actually being a really good business to sell.

(01:16:35):
Because if you have a very good business,
your business isn't going to sell.
It's this way at the moment.
It's very light on good businesses to sell
and it's very heavy on buyers.
So for me, my phone will ring two times a day

(01:16:59):
or I'll get three emails from buyers.
This is what I'm looking for.
But with regards to business sellers, it's a lot less.
So there are way more people looking for businesses.
So I think if you were stacked against a competitor,
so long as you're both in good shape, both businesses will sell.
And I've been in a situation where two businesses were side by side.

(01:17:22):
One of them decided not to sell.
They ended up actually deciding,
understanding this acquisition thing.
I'm going to buy a couple of my smaller competitors
and they continued on down that path
and then the other business sold.
So less of a worry about, will it be competitive?
More of a concern of get your business actually so it's sellable.
Because there's a lot of them that aren't.

(01:17:45):
And so those businesses that are not sellable, those 80%,
I imagine that's an opportunity for you to shine through
of offering your services to help that business
to transfer out of that 80% to that 20% sellable.
So how would you help that business that initially is unsellable

(01:18:05):
to get them to have a buyer be interested in their business?
So there are, sometimes you can do that and sometimes you can't.
So I think ethically, you have to analyze the business properly.
And if you can't help that person to sell their business,

(01:18:27):
and I'll give you an example of how a business wouldn't be sellable.
Just like when we had the financial crisis
and people were upside down with their houses,
they had negative equity.
If a business has too much debt, it's going to sell,
because the valuation is going to be slightly controlled by the market,
what other similar businesses sell for.

(01:18:49):
So if you're upside down in debt
and you've got a little bit of a mess on your hands,
you may need to work for five to 10 more years to bring that debt down.
But if you're 65 and you've fallen on ill health,
that's going to be really hard.
Is there a family member that can step in and help you?

(01:19:10):
So if the business seems like it's not in a strong position to sell right now,
how is the owner?
Do they have the runway to be able to turn things around a little bit?
And many times, when I've spoken to people,
it's a situation where they just they want out.

(01:19:33):
And sometimes those businesses will close.
But if they have the bandwidth, if they say,
okay, I've got five more years, I can do this.
You can make a plan.
You can do the valuation.
We can find where the improvements can be made
and certainly implement that and put a plan in place.

(01:19:56):
It depends.
Again, sorry to all the realtors out there,
but if a house is just absolutely in disrepair and dilapidated,
you're not going to sell it.
It's just going to become an abandoned property.
So that makes a lot of sense.
But yeah, you also have to be selling or have created

(01:20:16):
a really good product that is going to continue on.
And because that's why someone wants to buy it is because there's potential there.
If someone is looking to buy a business,
how do they find a good broker?
How can they tell a good broker from a bad broker?
So there are websites.

(01:20:39):
The IBBA is the International Business Brokers Association.
And this is a great place to start because it's kind of the gold standard.
It's an association, but good brokers typically will join there
because they provide a lot of education, a lot of training.
They offer kind of like codes of ethics and things like this,
or you can also look at your local associations.

(01:21:01):
So each state or region will have a broker's association.
And you can talk to them.
You can certainly look and see.
You can look for reviews.
I mean, speaking to the broker as well, asking for references,
many ways to kind of vet the broker.
But I would start with some of your local associations and the IBBA

(01:21:21):
because then you can read about because brokers specialize in different things
and some specialize in areas, some specialize in types of businesses.
So you can kind of get a feel for what's going to be the best match for you.
Can you work anywhere?
Let's just say in the United States, are you contained only to Virginia
or are you allowed to help people in different states as well?

(01:21:46):
Yes. So my business services all of the U.S.
There are other types of brokerage firms.
Some are independent, but then mostly you'll have franchise businesses.
Transworld is a great brokerage business and I think they're global,
but they're territory based.
So if you're looking for a business in Virginia,

(01:22:06):
they'll route you to the office in Virginia.
So they're all individual franchises.
But my firm is independent and national
because of course I want to help a specific type of owner.
I didn't know if there was some sort of like,
if you're a lawyer, you can only practice law in the state
where you have passed that bar exam.

(01:22:28):
So I didn't know if broker had a similar umbrella
to where you can only work because real estate laws will vary from place to place.
Yeah, and some of the rules do vary.
So some states do require that you have a real estate license to sell a business
and then most states require that in order to sell the real estate
of the business, you have to have a real estate license.

(01:22:50):
So in those instance, I don't focus on the real estate.
I focus on the businesses.
But then I have partnerships with people
that would be licensed realtors that can partner up with me.
That makes a lot of sense.
Colette, this has been so much fun
and you've just been an absolute well of knowledge.
If people want to find you and learn more about what you do,

(01:23:14):
where can people do that?
I have a website.
It's surestepbusiness.com
and I'm also very active on LinkedIn.
Colette Kemp is my name.
You can find me there.
And I do have some things for business owners.
I have two things that I do.
Number one is I have a self-assessment that you can take on my website.

(01:23:36):
It's 12 questions, 60 seconds,
and it will give you an evaluation of your business
and if it's ready to sell.
And then every Thursday, I was doing it at 11 a.m.
but I'm going to do it 12 to 1 now.
Every Thursday, 12 to 1, I run a free online workshop
that is an introduction to valuing and preparing a business for sale.
So you can join me there.

(01:23:57):
There's no sales day.
I'm not pressuring.
It's just education.
And it's 12 to 1 Eastern time?
Yeah, I'm going to do 12 to 1
because I think 11 is tough for business owners at 11 a.m.
Okay.
I was just making sure it was the Eastern time zone and not like...
That's right.
Yeah.
So yeah, that's right.
If you're out on the West Coast, we've got to have coffee.

(01:24:19):
This has been so much fun.
Thank you so much for the time
and I think more importantly, like your passion for this
because you can get into these types of situations
for the wrong reasons and you can hurt a lot of people.
So it's just great to hear someone whose motivation is good
and out of like a personal story of like your dad

(01:24:41):
and like there's more to it.
You see you're small enough to where you see the people.
They aren't just money.
They're not just a resource to you.
So seeing people as people and it's just so great to
come in contact with those people
and have a lovely conversation with them.
So thank you so much, Collette.
I really had a lot of fun and I appreciate your time.

(01:25:01):
Such a good chat.
Thank you, Brian.

(01:25:23):
Recently, I was in a real bind.
It was my wife's and my 15th wedding anniversary
and I completely spaced it.
Not so much to spaced it as put it off
thanks to Dr. Perry's Procrastination Pills.
So when my wife came to confront me,
I thought my number was up until I remembered

(01:25:44):
that I had Cousin Nickel Sack's Get Out of Jail Free Card
in my wallet.
I simply presented it to her
and all accountability melted away.
She stormed off mumbling something about this time
following through with finding a divorce attorney
and I went back to watching Netflix.
I lament all the years wasted where I felt guilty
or owned up to when I messed up.

(01:26:06):
Now, I don't leave the house
without my Get Out of Jail Free Card.
Thanks Cousin Nickel Sack's Get Out of Jail Free Card.
Cousin Nickel Sack's Get Out of Jail Free Card.
Do the crime, but not the time.

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17 - The SureStep Forward: Turning Business Endings into the Next Generation's Business Beginnings with Colette Kemp

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}17 - The SureStep Forward: Turning Business Endings into the Next Generation's Business Beginnings with Colette Kemp