March 27, 2025 • 32 mins
In this episode of Monkey Business Radio, hosts Chris and Dennis dive into the importance of valuing your business. From financial metrics like balance sheets and P&L statements to the intangible value of Intellectual Property and Goodwill, they explore the methods that business owners use to assess their company's worth. Whether you're growing your business, considering investment, or planning an exit strategy, this episode provides practical insights on how to calculate your business's value and make informed decisions. Tune in to understand how valuing your company can shape your future success!
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Episode Transcript
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Chris (00:03):
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it Really what
it's threatening is theirlivelihoods, their jobs.
Dennis (00:15):
It's threatening the way they do things and every time
that happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:28):
I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:48):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:10):
Business Radio.
Hello everyone, welcome toMonkey Business Radio.
Episode 7, valuing Our Business.
So today we're going to breakdown how to value our business.
Whether you're growing, seekinginvestment or thinking about
the future, we'll talk about thefinancials, intellectual
(01:30):
property, goodwill and how didthose factors come together to
figure out your company's trueworth?
Hello Dennis, chris, how youdoing?
I'm doing great.
We got this great quote you'vebeen hanging on to for a while.
Why don't you go ahead and hitus with it?
Which one is this?
The?
Dennis (01:46):
hockey analogy the Wayne Gretzky hockey analogy.
Yeah, it's one of my favoritemantras these days.
Some people go to where thepuck is.
I want to go to where the puckis going to be when I get there.
And then there is a thirdcategory and that's the folks
that just don't know thatthere's a puck and they stand
around getting hit in the shins.
Chris (02:06):
I love that.
Dennis (02:08):
Yeah, you don't.
You don't want to be in thatgroup and I say it jokingly, but
but seriously.
You want to be able to seewhere the puck is going to be
when you get there.
You want to have a good vision,a broad vision, a deep vision.
Chris (02:21):
Yeah, so that's perfect, perfect analogy for business,
right, which is what we'retalking about.
Yeah, yeah, yeah.
Dennis (02:26):
To see where you want to be six months, 12 months, 18
months from now.
Chris (02:31):
Okay, let's get into it, figure out where the puck is
going, all right.
So let me ask the firstquestion.
You know I'm not a businessmajor or anything like that, so
I kind of understand that youknow I need to know my business
value.
I'm eventually going to maybesell my business, but that's not
until 30 years from now orsomething like that.
So why is it important thatyour average business guy, your
(02:52):
guy just starting out orwhatever, why is it important to
be able to value your business?
Dennis (02:57):
Yeah, I do my balance sheets for my three companies
annually, my balance sheets formy three companies annually.
And so, for internal purposesjust me, my staff, my inner
circle we want to be able tomake comparisons year to year to
see where we're growing, howwe're growing, where our
strengths are, and we want tofortify those strengths and
(03:18):
eliminate the weaknesses.
Another reason that you want tohave a good valuation on your
business is if the owner or themanager wants to apply for a
loan or a line of credit andyour banker is going to do a
risk assessment and he or she isonly going to loan you as much
(03:41):
money as they're comfortable,very likely based upon your
assets, and your assets would beyour balance sheet.
Also, if the owner wants tosell stock in his or her company
, you want to know what thevalue is.
Chris (03:55):
Yeah, that's an interesting one because I know
I've joined American GunnerMonkey and we kind of went
through this when we wereactually discussing about
joining.
Dennis (04:02):
It's actually what's the value of the company, what was
the value and even since you'vebeen here, we've been wined and
dined two or three times overthe last two years by investors,
venture capitalists.
They're oftentimes interestedin a company and we seem to have
hit on some of their radars.
So I have a process now where Ican tell in 15 minutes if we're
(04:27):
going to go any further,because I know my valuation.
I know it before they call hereand I will always have that
conversation with a potentialinvestor, even if I'm not
interested in selling.
It's always interesting.
But I have a pretty accuratevaluation.
So I want to know if thispotential investor is coming in
(04:48):
low, looking to maybe scoresomething for less than it's
worth, or if he's a real playerand he really wants to come in
and buy the company at marketvalue.
So for me it's important.
Another reason too, too, is ifyou do decide to sell Sure, and
everybody's company is worthsomething, and we're going to
(05:10):
talk about that in the next fewminutes Everybody's company is
worth something and it alwayshelps to know that you and I
were talking before we come onthe radio here.
I have a friend he's a relativeof mine, mine and he's buying
into a company and he and Irecently had a meeting.
(05:30):
He's been a manager of thatcompany for seven or eight years
and now he's going to verylikely purchase 25% of the stock
and become an owner and he andI sat down and we did a rough
business valuation last weekend.
So he has a much better idea asto how he wants to approach his
good friend who owns thecompany.
(05:52):
So it's important for thosereasons and many others to know
the value of your company.
Any thoughts, chris, on that?
Chris (05:59):
Yeah, it's interesting.
Yeah, especially the stock one.
Now you mentioned it and westarted talking about it.
You know it hit me.
Oh yeah, this is exactly kindof what we did, you know, two
years ago, whatever.
Sure, yeah, that's reallyinteresting, very interesting.
So, in terms of like figuringout your value, now, what's your
?
What sort of metrics do you use?
I'm not familiar with all thedifferent things you can use to
(06:21):
get your value.
I know we used a balance sheetfor that purpose, but you know
what other yardsticks are therethat I can?
Dennis (06:26):
use.
There's a there's a lot of themDepends on what stage of your
business you're at.
If you are starting a homeservice landscape company and
you buy a truck, a couple oflawnmowers, a string trimmer and
a few rakes, you know youprobably have 60, $70,000 worth
of trucks and tools andequipment, but you don't have
(06:48):
any business value because youhaven't cut a lawn yet, right?
So all you have is your assets,your hard assets.
So what you have there is astartup company.
So the metrics that you coulduse, that that owner would use,
would just be a basic value ofthe hard assets the truck, tools
and equipment.
(07:09):
But other startups may want youknow they've been in business,
say, a year or less.
They would take a series ofmonthly profit and loss
statements which demonstratesthe profitability month by month
, demonstrates the profitabilitymonth by month.
At the end of the year you'regoing to have gross annual sales
(07:29):
and you're going to have yourannual profit and loss and your
annual P&L will be what you usefor your taxes.
That's going to give you avalue based on the profit and
sometimes that value would be ameasure of 3x or 5x of pre-tax
profit, or EBITDA is what it'scalled, and that's the next
(07:51):
level of yardstick measure forprofit-friendly value.
Some of the best things arewhen you have several years of
profit and loss statements,three to five-year history of
financials, including yourbalance sheet.
Eventually, the business owner,after two, three, four years,
is going to want to produce abalance sheet, because that is
(08:12):
the Bible.
That is what tells you exactlywhat your company is worth.
Now there are some variables inthere, but the balance sheet is
a great tool for determiningvalue.
Chris (08:25):
So in terms of like the profit and loss statement,
that's kind of telling you whereyou're going, you know how
you're moving along in terms ofprofitability, and then the
balance sheet is kind of whereyou are on that day, sort of
what your current standing is.
Dennis (08:39):
Yeah, actually we'll talk more about balance sheets
in just a few minutes on what itis and how it's built.
A couple of little points I'dlike to make is methods of
valuation.
There's a cost-based method andthat's kind of what we talked
about with the startup companywho owns a truck and a couple of
(09:01):
lawnmowers and some tools andequipment.
It's a cost-based method.
What would it cost you toreplace those items?
You don't have any business yet.
You don't have any intellectualproperty.
Your trademark name isn't worthanything yet because you
haven't really cut a lawn.
It's based on cost, Right.
(09:21):
Maybe, a liquor store orsomething like that.
Sure, and you do comps withinthe industry as well.
There's a market-based andthat's basically.
You look at other businessesthat have sold, other businesses
that maybe are on the marketbut haven't sold yet, and what
are they valued at?
What are other companies inyour space selling for the
(09:46):
sales-based?
You know there's someindustries that are basically
sales-based companies.
If you are a salesman and yousell widgets, then you are a
widget salesman.
But if you sell software,there's very little cost to the
software once it's built, allthe cost is upfront.
(10:07):
So if you are a sales companyselling software, a lot of times
it's just based on sales.
There's not a whole lot oftools and equipment and
infrastructure in the industry.
And coming back around to ourasset-based valuation, which is
the one I like the best, theasset-based valuation really
(10:30):
hints at the balance sheet andthat's when you take all your
assets back out, yourliabilities, add any other
variables in there and you get avalue, a bottom line, that this
is what your company's worth.
Chris (10:44):
So you previously mentioned that the balance sheet
is the Bible of the financialstatements, and it sounds like
it's a big part of asset-basedvaluation, so maybe we should
dive a little deeper into how touse the balance sheet.
What it is.
I love the balance sheet I do.
Dennis (10:56):
You can always tell your sales at the end of the year by
the number and how they grewover previous years.
Profitability is a prettysimple concept to understand,
but the balance sheet is whereit's at.
That tells me what my company'sworth.
It's called a balance sheet fora reason.
The balance sheet is balanced.
You have your assets, which isa piece of value, and the
(11:19):
liabilities, which is afinancial obligation that you
must pay on either side of theequation, and they have to
balance out.
The asset-based valuationmethod of building the balance
sheet is very, very objectiveand for year-to-year comparisons
, we always want to use the samemethod.
Very, very objective.
And for year-to-yearcomparisons, we always want to
use the same method, so thatwe're always comparing apples to
apples.
And this is just going to giveyou.
(11:40):
The balance sheet will give youa different view of your growth
for the year and over the years.
So what it does is it startsout with all the assets.
Now, an asset is an item ofvalue.
It's a piece of value that youown and for our purposes today,
there are three types of assets.
You got current assets, fixedassets, and then intellectual
(12:04):
property A current asset, or, inthis case, cash.
A current asset is an assetthat is easily convertible to
cash and for today's purposes,again, cash accounts receivables
that's work that you've alreadycompleted but you haven't got
paid for yet.
That's an asset.
(12:25):
Prepaid expenses If you prepaidyour quarterly taxes, for
example, or if you've prepaidfor something but you haven't
received delivery on thatsomething, that's an asset.
And the final one that we'lluse for today's purposes is
inventory.
Inventory could go either way.
It could be a fixed asset, butit really isn't.
(12:47):
Inventory is our product andmaterials.
That converts to cash as soonas we put that out into the
market and either sell it or useit in our line of service.
So the first asset is currentassets.
You add the cash, the accountsreceivables, prepaid expenses
and inventory.
(13:07):
You add that together and yougot a number.
And then we go to our fixedassets.
A fixed asset or a long-termasset is things like your
building.
Do you own the building youlive in?
Trucks, tools, equipmentinventory could be, because some
inventory is long-term officefixtures, desks, computers they
(13:32):
all fall under the umbrella offixed assets.
So, again, we add them all up.
You're going to have this on.
You put this on your balancesheet.
You add up the value of yourbuilding, the value of your
trucks, your tools, yourequipment, the office fixtures,
the furniture, the chairs on thetable, everything and you add
(13:54):
that together and you have anumber and that becomes your
number for fixed assets.
And then, chris comes to thetricky one the intellectual
property.
What is the value of the nameof your company, the trademark,
the patent, the service marks,the goodwill you have in the
community?
Chris (14:14):
Yeah, that's an interesting one.
You know I'm from the high-techworld so you know I can
understand the trademarks,patents that's what I'm familiar
with.
But this idea of your company'sstanding in the community being
part of your valuation isfascinating to me.
It is, yeah, especially whenyou come to things I mean, of
course, cape Cod gutter monkeys.
You spend a lot of timecultivating this idea of the.
(14:37):
Bobby Downspout is yourspokesman.
You've put hundreds ofcommercials out there very
popular.
Today I'm wearing my Cape Codgutter monkey sweatshirt and you
walk into a restaurant.
They all know you Walk in thedoor.
Oh, it's the gutter monkeys arehere.
It happens a lot yeah, you wereon the phone the other day.
I was here and a woman wantedto know if this was Bobby.
She was speaking to BobbyDownspout.
She recognized your voice asbeing Bobby Downspout.
(15:00):
Yeah, you talked about thestory about the one who called
in and said oh, is this BobbyDownspout?
Dennis (15:04):
Use your Bobby Downsp financial guy and I was sitting
in the back and there's a knockat the door and an older
gentleman comes walking in andhe asked are you the guy on the
(15:25):
radio?
Because he saw my truck in theparking lot and the bank
apparently wasn't that busy.
So the only other person was meand he was funny.
He said you guys do my guttersevery year.
You do a great job and thenit's flattering.
Yeah, yeah, but, chris, to thatpoint, yeah, we have a good
reputation in our region andthat's called intellectual
(15:46):
property.
That's the value of yourcompany name, my company name.
We could be cool and we couldbe hip and people think we're
funny.
That's all well and good.
But if my phone doesn't ring,if I don't get clicks on my
website, if people don't comeinto my restaurant to eat my
food, all that popularity isn'tworth anything, right?
Chris (16:07):
So on its own it's not really worth anything.
It's sort of the multiplier ofthe other things that you're
doing the assets, your business,your revenue.
Dennis (16:17):
So, yeah, let's take for example, gross sales.
You mentioned one of ourcompanies, the Cape Cod God of
Monkeys.
Okay, we are in the homeservice industry.
That typically is going tovalue itself somewhere between 1
and 3x.
So if you're doing a million insales, it means your value of
(16:38):
your intellectual property isgoing to be one to three X, one
to three million.
Now there's other factors thatwill come into play, but
basically, for your own internalbalance sheet purposes, choose
an accurate method.
Talk to a business consultant,talk to your accountant, come up
with a formula Is it 1x, is it2x?
(16:59):
I know the one that we use andwe're consistent with it year
after year, and it's a functionof what we do for sales.
So I take my annual sales and Imultiply by 2.5x, because I
believe that's a fair valuationand that's what we use.
So what you have is a totalvalue of your assets current
(17:22):
assets like cash accounts,receivables, inventory, fixed
assets, your buildings, yourtrucks, tools and equipment and
office furniture, fixtures,equipment, that type of thing,
and then your intellectualproperty.
Add them all together.
That's your whole set of assets.
Right there On the other sideof the equation, is the balance
(17:45):
sheet portion.
The balance of the assets is theliability.
Assets is a piece of value,it's something of value that you
own.
A liability is the opposite.
The liability is a financialobligation.
So if you have a long-term debt, a mortgage on your building,
(18:06):
or you have a truck loan or twoon your trucks or fleet of
trucks, that's a liability.
You have current liabilitiesand those are financial
obligations that are due between30 days and one year a shorter
term.
There's others that I don'teven want to bring up today
shareholder equity, retainedearnings and stuff like that.
We'll leave them off the tablefor today's discussion.
(18:27):
So your liabilities is going tobe a total of any loans, any
long-term or medium-range debtthat you owe, and you add them
together and you have a numberfor liabilities.
You take the total number ofdollar value of your three
assets, your three categories ofassets, and from that you
(18:48):
deduct your liabilities andthat's what you get.
Your bottom line is your networth.
Your company is worth this andis a dollar amount, and that's
what it's worth.
When you use this method, two,three, four years in a row,
you're going to get a picture asto the value of your company,
year after year after year, andyou're going to see that value.
(19:09):
Most likely you're going to seethat value grow.
And as you add trucks, you getthose trucks paid off.
If you're the restaurant owner,you purchase some new
restaurant equipment.
You pay it off in two years.
You now own all that brand newrestaurant equipment.
That falls into your assetcolumn.
If you add more tables to yourrestaurant, more chairs, you
(19:31):
build out a bigger platform.
It's going to show up in yourbalance sheet.
It might not show up in yoursales every night.
You might just be thatrestaurant owner that's
bolstering for your Thursday,friday, saturday night run.
The rest of the week it mayremain very similar, but you
built out your restaurant alittle bit.
So those three nights of theweek you can capture those extra
(19:52):
customers and clients and thatshows up in your balance sheet.
That's why we want to keep abalance sheet every year.
So, chris, in my opinion that'smy most important financial
document is the balance sheet.
But let's go back and talk aboutsome of those other methods of
valuation.
(20:12):
So we're going to talk aboutsales.
If you're the restaurant ownerand you sell $600,000 worth of
food and services, that's yoursales for the year.
Next year you do 600 more.
You do 1.2 million.
You just doubled your sales andyou want to continue that
(20:32):
pattern of growth.
Another method of valuation isprofitability.
As a new restaurant owner,maybe that $600,000 in sales you
only broke, even because it'syour first year You're a startup
company you haven't paid off alot of the short-term loans that
(20:53):
you took out to get thebusiness started.
So maybe that first year youwere not profitable, but the
second year you doubled yoursales but your profitability
went from zero to 300,000.
This is part of that process.
So you want to keep monthly andannual records of gross sales,
but also pre-tax profit.
(21:13):
And then the third item thatyou want to maintain annual
records of is your balance sheet.
What is your balance sheet?
What is your company worth?
And in my opinion, those arethe three.
Chris (21:27):
Those are the three key pieces, with the balance sheet
being the most important of thethree, and since there's some
variability in determiningparticularly in the last one
there the balance sheet,consistency of doing it the same
way year after year, using thesame consistent formulas, and
things like that are veryimportant to make sure that
you're getting an honest pictureof your year to year.
Dennis (21:50):
Well, and there's a lot of information out there too.
Everyone has a computer.
There's so much information outthere on how to build a balance
sheet, and many, many websitesare going to give you three,
four or five different methodsof building a balance sheet.
Choose the one that makes themost sense for you and again,
talk to your accountant.
Yeah, get help.
(22:10):
Yeah, get a second or thirdopinion.
Chris (22:13):
Yeah, you guys are all Bentley graduates.
Financial.
Dennis (22:15):
We're all accountants at heart.
Chris (22:18):
So you're all set.
But yeah, for the averagebusiness guy who's going to need
some help.
Dennis (22:22):
But honestly, Chris, I still go online, I look stuff up
, because this isn't you know.
We go into the real world.
I've been in the trades mywhole life.
We get good at what we do.
We get really good at one thing, and when I sold my
construction company 15 yearsago, I really didn't have a job
and prior to starting ourcurrent businesses, I did a
(22:44):
little bit of consulting and alittle bit of freelancing.
But when we started the GutterMonkeys, I pulled out some of my
old books, I went online and Idetermined what type of P&L,
profit and loss statements we'regoing to use, what type of
balance sheets we're going to gowith.
Chris (22:59):
Yeah, because it was a little different than your other
businesses.
You had a construction businesswhich is very different than
this gutter business andparticularly this gutter
business because you do have theaspect of you know the Bobby
Downspout aspect of it, thegoodwill, the marketing, the
amount of marketing you do ishuge and you know your standing
in the community is amazing.
So yeah.
Dennis (23:19):
So, chris, let me tell you this is the one thing that I
really like about what we'rediscussing here today the
overall US economic inflation inrecent years.
According to an article that Iread in inflationdatacom
no-transcript and people areoutraged Inflation is soaring at
(23:43):
3.4%.
Yet the stock bond and mutualfund market, which historically
averages 11%, has been bangingaway at anywhere from 14% to 18%
, other than the one I think itwas.
2022 was a rough year, but ingeneral it's been averaging
between 14 and 18%, but it'salways going to average roughly
(24:07):
11 over any 25-year period, any25-year slice of that pie.
And I'm looking at a growthchart from one of our companies
and I look at the growthpatterns and we had growth years
, in the beginning, of a hundredpercent, when we went from 300
to 600, that's a hundred percent.
(24:27):
Then the next year we went to900, that's a 50% growth.
And as you grow, you know youget up to 1.5 million.
And let's say you grow 300,000,you're still growing the same
300,000, but it becomes asmaller and a smaller and a
smaller percentage until, let'ssay, you hit 3 million and then
the next year you go to 3.3, youonly grew 10% and the next year
(24:50):
it's like 9%.
You're growing the same amount.
It's just a smaller portion,relatively speaking.
However, if you look at thatsame group of sales and
alongside of it you takeprofitability, or, in this case,
let's take the value of thebusiness, and I'm looking at the
(25:13):
value that we had throughoutthese years, based upon this
company's balance sheet, and itgrew 50 percent, then 33 percent
, but then we bought a buildingand that year it grew 144%.
Remember, inflation is 3.4% andthe stock market will produce
(25:34):
somewhere between 11 and 16%.
That year, my company valuegrew 144% because we bought a
new building and then it wentback to 27%.
Then we built this big buildingthat we're in now and boom, it
grew 140% and then we just went.
We kept doing what we're doing18%, 16%, 12%, 11%.
(25:57):
It's diminishing my company.
This particular company, isstill growing in value, but now
it's becoming a smallerpercentage of the whole pie.
But as I look at these twonumbers, over the past 10 years
this particular company hasaveraged 34% increase in sales
(26:18):
each year and it's averaged 50%growth in balance sheet value.
What this tells me is let's say, my company has an extra
$200,000 at the end of the yearMe and my partner, the other
owner.
We could split it.
We could each take $100,000bonus and I could put that in my
retirement portfolio and earn11%, or I could turn it back
(26:42):
into the company where we'reaveraging 50% value.
Yeah, so you got a clear path.
This is a very clear picture asto where I want my money to be
invested and this is why I wanteverybody that's listening to
create a balance sheet for hisor her own company.
It's that dynamic.
(27:03):
It helps you plan for thefuture and that's the lesson
today.
Chris (27:07):
Yeah, that's interesting because we always tell our
franchisees you know the purposeof this is, you're going to
build real wealth throughbusiness ownership and, when it
comes down to it, brass tacks.
This is it right here.
Dennis (27:17):
It's exactly what it is.
Chris (27:18):
This is where you, all of a sudden, you're building real
wealth.
You know you could take thatmoney.
You know, should I buy a newbuilding?
Should I buy a new truck?
I don't know, you know.
I don't know if I have thebusiness just yet, but when you
do do these things, you knowyou're building this real wealth
.
Where you could put that moneyin the stock market or you could
put the other thing too is,let's say, the example that you
just used.
Dennis (27:46):
I was meeting with one of my franchisees the other day
and we had this veryconversation.
He is at the point where he'scurrently approaching maximum
capacity in his current facilityand I really would like to see
him go to 4,000 square feet withan additional 1,000 square feet
, with an additional thousandsquare feet of office space,
because I know that thatplatform can take him to four to
(28:10):
six times of what he's doingnow.
That'll take him six, sevenyears, eight years into the
future.
Also, parking spaces, like allthese little things.
The restaurant owner he needsparking.
He wants to increase sales.
What does he need?
He needs more tables and morechairs, but he also probably
needs more parking spaces.
(28:31):
And if he can take a certainamount of money and invest it
into these things now, rightaway, now, his building is worth
more and that makes his balancesheet a little stronger.
Building is worth more and thatmakes his balance sheet a
little stronger.
Also, if he has 20% moreparking and 20% more tables and
chairs, he can increase hissales 20%, which puts more cash
(28:54):
in the bank, which builds yourbalance sheet.
It all comes together on thebalance sheet.
Chris (28:59):
But it can be scary.
You're going to have to stepoff the ledge.
You have to have faith in thesenumbers and have faith in your
balance sheet, and then you cankind of move forward without it.
What are you going to use to,you know, to give you that
little kick, that amount ofcourage?
You're going to need to spendthat money, maybe spend that
build that building just beforeyou actually need it, you know,
maybe a year in advance.
Dennis (29:19):
We have some clients that there's two or three in
particular that come to mind.
They do exactly what I tellthem.
It's almost scary because I'mafraid if it doesn't, you know,
come up roses, it'll make melook bad.
It'll be on you of mine forthree or four years now and he
(29:46):
really adheres to the I don'twant to go to where the puck is,
I want to go to where the puckis going to be.
When I get there, he's alwayslooking six, eight, 10 months
out and his company is verystrong.
They had a great year last yearand a lot of it is based upon
him seeing the big picture, andone of the things he does is he
asks my advice on certain things, and that's one of the things I
(30:09):
would like to see.
All these small business ownershave an advisor.
Talk to your banker, yourfinancial planner, your attorney
, your accountant.
Surround yourself with somegood people who are going to
give you good, solid opinions.
Chris (30:24):
And again, this is a reoccurring theme.
On our last at least threepodcasts, we've been saying this
over and over again Surroundyourself with good people.
You know, you're the measure.
What is it?
Dennis (30:34):
You're the measure.
You're the average of the fivepeople that you're mentally and
emotionally closest to.
Yeah, and it's so true.
It's so true, and to me, that'sthe lesson for the day.
Put together these financialsevery year, your profit and loss
statements, your sales growthstatements and your balance
sheets, and over time you'regoing to have an incredibly
(30:55):
valuable set of tools thatyou're going to use all the time
.
I pull one or two of thesesheets out at least a couple of
times a week when I'm working onsales forecasts or growth in
certain areas, and I use it allthe time.
It becomes second nature to you.
Chris (31:11):
It's like a hammer.
Yeah, that's so important.
And then you have the trust inthe numbers.
You've experienced the numbersover the years.
You have trust in it.
You've made a few calls basedon those numbers.
It worked out.
So now you have even more faithin it and so you can really
really throw yourself behind it,your decision making.
Dennis (31:28):
Okay, I think that's the lesson for today.
That sounds good.
Chris (31:32):
No monkeys were harmed in the making of this podcast.
That's right.
That's right and we'll see younext time, episode eight.
We'll dive a little deeper intosome of these topics going
forward, but thanks forlistening.
See you next time.
Bye, thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
(31:53):
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
the episode valuable, and makesure to share it with anyone who
might benefit from our tips andstories.
(32:14):
We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it Really what
it's threatening is theirlivelihoods, their jobs.
Dennis (00:15):
It's threatening the way they do things and every time
that happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:28):
I'm Chris Collins, your host.
In this podcast.
We dive into stories ofinnovation, resilience and what
it takes to shake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:48):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:10):
Business Radio.
Hello everyone, welcome toMonkey Business Radio.
Episode 7, valuing Our Business.
So today we're going to breakdown how to value our business.
Whether you're growing, seekinginvestment or thinking about
the future, we'll talk about thefinancials, intellectual
(01:30):
property, goodwill and how didthose factors come together to
figure out your company's trueworth?
Hello Dennis, chris, how youdoing?
I'm doing great.
We got this great quote you'vebeen hanging on to for a while.
Why don't you go ahead and hitus with it?
Which one is this?
The?
Dennis (01:46):
hockey analogy the Wayne Gretzky hockey analogy.
Yeah, it's one of my favoritemantras these days.
Some people go to where thepuck is.
I want to go to where the puckis going to be when I get there.
And then there is a thirdcategory and that's the folks
that just don't know thatthere's a puck and they stand
around getting hit in the shins.
Chris (02:06):
I love that.
Dennis (02:08):
Yeah, you don't.
You don't want to be in thatgroup and I say it jokingly, but
but seriously.
You want to be able to seewhere the puck is going to be
when you get there.
You want to have a good vision,a broad vision, a deep vision.
Chris (02:21):
Yeah, so that's perfect, perfect analogy for business,
right, which is what we'retalking about.
Yeah, yeah, yeah.
Dennis (02:26):
To see where you want to be six months, 12 months, 18
months from now.
Chris (02:31):
Okay, let's get into it, figure out where the puck is
going, all right.
So let me ask the firstquestion.
You know I'm not a businessmajor or anything like that, so
I kind of understand that youknow I need to know my business
value.
I'm eventually going to maybesell my business, but that's not
until 30 years from now orsomething like that.
So why is it important thatyour average business guy, your
(02:52):
guy just starting out orwhatever, why is it important to
be able to value your business?
Dennis (02:57):
Yeah, I do my balance sheets for my three companies
annually, my balance sheets formy three companies annually.
And so, for internal purposesjust me, my staff, my inner
circle we want to be able tomake comparisons year to year to
see where we're growing, howwe're growing, where our
strengths are, and we want tofortify those strengths and
(03:18):
eliminate the weaknesses.
Another reason that you want tohave a good valuation on your
business is if the owner or themanager wants to apply for a
loan or a line of credit andyour banker is going to do a
risk assessment and he or she isonly going to loan you as much
(03:41):
money as they're comfortable,very likely based upon your
assets, and your assets would beyour balance sheet.
Also, if the owner wants tosell stock in his or her company
, you want to know what thevalue is.
Chris (03:55):
Yeah, that's an interesting one because I know
I've joined American GunnerMonkey and we kind of went
through this when we wereactually discussing about
joining.
Dennis (04:02):
It's actually what's the value of the company, what was
the value and even since you'vebeen here, we've been wined and
dined two or three times overthe last two years by investors,
venture capitalists.
They're oftentimes interestedin a company and we seem to have
hit on some of their radars.
So I have a process now where Ican tell in 15 minutes if we're
(04:27):
going to go any further,because I know my valuation.
I know it before they call hereand I will always have that
conversation with a potentialinvestor, even if I'm not
interested in selling.
It's always interesting.
But I have a pretty accuratevaluation.
So I want to know if thispotential investor is coming in
(04:48):
low, looking to maybe scoresomething for less than it's
worth, or if he's a real playerand he really wants to come in
and buy the company at marketvalue.
So for me it's important.
Another reason too, too, is ifyou do decide to sell Sure, and
everybody's company is worthsomething, and we're going to
(05:10):
talk about that in the next fewminutes Everybody's company is
worth something and it alwayshelps to know that you and I
were talking before we come onthe radio here.
I have a friend he's a relativeof mine, mine and he's buying
into a company and he and Irecently had a meeting.
(05:30):
He's been a manager of thatcompany for seven or eight years
and now he's going to verylikely purchase 25% of the stock
and become an owner and he andI sat down and we did a rough
business valuation last weekend.
So he has a much better idea asto how he wants to approach his
good friend who owns thecompany.
(05:52):
So it's important for thosereasons and many others to know
the value of your company.
Any thoughts, chris, on that?
Chris (05:59):
Yeah, it's interesting.
Yeah, especially the stock one.
Now you mentioned it and westarted talking about it.
You know it hit me.
Oh yeah, this is exactly kindof what we did, you know, two
years ago, whatever.
Sure, yeah, that's reallyinteresting, very interesting.
So, in terms of like figuringout your value, now, what's your
?
What sort of metrics do you use?
I'm not familiar with all thedifferent things you can use to
(06:21):
get your value.
I know we used a balance sheetfor that purpose, but you know
what other yardsticks are therethat I can?
Dennis (06:26):
use.
There's a there's a lot of themDepends on what stage of your
business you're at.
If you are starting a homeservice landscape company and
you buy a truck, a couple oflawnmowers, a string trimmer and
a few rakes, you know youprobably have 60, $70,000 worth
of trucks and tools andequipment, but you don't have
(06:48):
any business value because youhaven't cut a lawn yet, right?
So all you have is your assets,your hard assets.
So what you have there is astartup company.
So the metrics that you coulduse, that that owner would use,
would just be a basic value ofthe hard assets the truck, tools
and equipment.
(07:09):
But other startups may want youknow they've been in business,
say, a year or less.
They would take a series ofmonthly profit and loss
statements which demonstratesthe profitability month by month
, demonstrates the profitabilitymonth by month.
At the end of the year you'regoing to have gross annual sales
(07:29):
and you're going to have yourannual profit and loss and your
annual P&L will be what you usefor your taxes.
That's going to give you avalue based on the profit and
sometimes that value would be ameasure of 3x or 5x of pre-tax
profit, or EBITDA is what it'scalled, and that's the next
(07:51):
level of yardstick measure forprofit-friendly value.
Some of the best things arewhen you have several years of
profit and loss statements,three to five-year history of
financials, including yourbalance sheet.
Eventually, the business owner,after two, three, four years,
is going to want to produce abalance sheet, because that is
(08:12):
the Bible.
That is what tells you exactlywhat your company is worth.
Now there are some variables inthere, but the balance sheet is
a great tool for determiningvalue.
Chris (08:25):
So in terms of like the profit and loss statement,
that's kind of telling you whereyou're going, you know how
you're moving along in terms ofprofitability, and then the
balance sheet is kind of whereyou are on that day, sort of
what your current standing is.
Dennis (08:39):
Yeah, actually we'll talk more about balance sheets
in just a few minutes on what itis and how it's built.
A couple of little points I'dlike to make is methods of
valuation.
There's a cost-based method andthat's kind of what we talked
about with the startup companywho owns a truck and a couple of
(09:01):
lawnmowers and some tools andequipment.
It's a cost-based method.
What would it cost you toreplace those items?
You don't have any business yet.
You don't have any intellectualproperty.
Your trademark name isn't worthanything yet because you
haven't really cut a lawn.
It's based on cost, Right.
(09:21):
Maybe, a liquor store orsomething like that.
Sure, and you do comps withinthe industry as well.
There's a market-based andthat's basically.
You look at other businessesthat have sold, other businesses
that maybe are on the marketbut haven't sold yet, and what
are they valued at?
What are other companies inyour space selling for the
(09:46):
sales-based?
You know there's someindustries that are basically
sales-based companies.
If you are a salesman and yousell widgets, then you are a
widget salesman.
But if you sell software,there's very little cost to the
software once it's built, allthe cost is upfront.
(10:07):
So if you are a sales companyselling software, a lot of times
it's just based on sales.
There's not a whole lot oftools and equipment and
infrastructure in the industry.
And coming back around to ourasset-based valuation, which is
the one I like the best, theasset-based valuation really
(10:30):
hints at the balance sheet andthat's when you take all your
assets back out, yourliabilities, add any other
variables in there and you get avalue, a bottom line, that this
is what your company's worth.
Chris (10:44):
So you previously mentioned that the balance sheet
is the Bible of the financialstatements, and it sounds like
it's a big part of asset-basedvaluation, so maybe we should
dive a little deeper into how touse the balance sheet.
What it is.
I love the balance sheet I do.
Dennis (10:56):
You can always tell your sales at the end of the year by
the number and how they grewover previous years.
Profitability is a prettysimple concept to understand,
but the balance sheet is whereit's at.
That tells me what my company'sworth.
It's called a balance sheet fora reason.
The balance sheet is balanced.
You have your assets, which isa piece of value, and the
(11:19):
liabilities, which is afinancial obligation that you
must pay on either side of theequation, and they have to
balance out.
The asset-based valuationmethod of building the balance
sheet is very, very objectiveand for year-to-year comparisons
, we always want to use the samemethod.
Very, very objective.
And for year-to-yearcomparisons, we always want to
use the same method, so thatwe're always comparing apples to
apples.
And this is just going to giveyou.
(11:40):
The balance sheet will give youa different view of your growth
for the year and over the years.
So what it does is it startsout with all the assets.
Now, an asset is an item ofvalue.
It's a piece of value that youown and for our purposes today,
there are three types of assets.
You got current assets, fixedassets, and then intellectual
(12:04):
property A current asset, or, inthis case, cash.
A current asset is an assetthat is easily convertible to
cash and for today's purposes,again, cash accounts receivables
that's work that you've alreadycompleted but you haven't got
paid for yet.
That's an asset.
(12:25):
Prepaid expenses If you prepaidyour quarterly taxes, for
example, or if you've prepaidfor something but you haven't
received delivery on thatsomething, that's an asset.
And the final one that we'lluse for today's purposes is
inventory.
Inventory could go either way.
It could be a fixed asset, butit really isn't.
(12:47):
Inventory is our product andmaterials.
That converts to cash as soonas we put that out into the
market and either sell it or useit in our line of service.
So the first asset is currentassets.
You add the cash, the accountsreceivables, prepaid expenses
and inventory.
(13:07):
You add that together and yougot a number.
And then we go to our fixedassets.
A fixed asset or a long-termasset is things like your
building.
Do you own the building youlive in?
Trucks, tools, equipmentinventory could be, because some
inventory is long-term officefixtures, desks, computers they
(13:32):
all fall under the umbrella offixed assets.
So, again, we add them all up.
You're going to have this on.
You put this on your balancesheet.
You add up the value of yourbuilding, the value of your
trucks, your tools, yourequipment, the office fixtures,
the furniture, the chairs on thetable, everything and you add
(13:54):
that together and you have anumber and that becomes your
number for fixed assets.
And then, chris comes to thetricky one the intellectual
property.
What is the value of the nameof your company, the trademark,
the patent, the service marks,the goodwill you have in the
community?
Chris (14:14):
Yeah, that's an interesting one.
You know I'm from the high-techworld so you know I can
understand the trademarks,patents that's what I'm familiar
with.
But this idea of your company'sstanding in the community being
part of your valuation isfascinating to me.
It is, yeah, especially whenyou come to things I mean, of
course, cape Cod gutter monkeys.
You spend a lot of timecultivating this idea of the.
(14:37):
Bobby Downspout is yourspokesman.
You've put hundreds ofcommercials out there very
popular.
Today I'm wearing my Cape Codgutter monkey sweatshirt and you
walk into a restaurant.
They all know you Walk in thedoor.
Oh, it's the gutter monkeys arehere.
It happens a lot yeah, you wereon the phone the other day.
I was here and a woman wantedto know if this was Bobby.
She was speaking to BobbyDownspout.
She recognized your voice asbeing Bobby Downspout.
(15:00):
Yeah, you talked about thestory about the one who called
in and said oh, is this BobbyDownspout?
Dennis (15:04):
Use your Bobby Downsp financial guy and I was sitting
in the back and there's a knockat the door and an older
gentleman comes walking in andhe asked are you the guy on the
(15:25):
radio?
Because he saw my truck in theparking lot and the bank
apparently wasn't that busy.
So the only other person was meand he was funny.
He said you guys do my guttersevery year.
You do a great job and thenit's flattering.
Yeah, yeah, but, chris, to thatpoint, yeah, we have a good
reputation in our region andthat's called intellectual
(15:46):
property.
That's the value of yourcompany name, my company name.
We could be cool and we couldbe hip and people think we're
funny.
That's all well and good.
But if my phone doesn't ring,if I don't get clicks on my
website, if people don't comeinto my restaurant to eat my
food, all that popularity isn'tworth anything, right?
Chris (16:07):
So on its own it's not really worth anything.
It's sort of the multiplier ofthe other things that you're
doing the assets, your business,your revenue.
Dennis (16:17):
So, yeah, let's take for example, gross sales.
You mentioned one of ourcompanies, the Cape Cod God of
Monkeys.
Okay, we are in the homeservice industry.
That typically is going tovalue itself somewhere between 1
and 3x.
So if you're doing a million insales, it means your value of
(16:38):
your intellectual property isgoing to be one to three X, one
to three million.
Now there's other factors thatwill come into play, but
basically, for your own internalbalance sheet purposes, choose
an accurate method.
Talk to a business consultant,talk to your accountant, come up
with a formula Is it 1x, is it2x?
(16:59):
I know the one that we use andwe're consistent with it year
after year, and it's a functionof what we do for sales.
So I take my annual sales and Imultiply by 2.5x, because I
believe that's a fair valuationand that's what we use.
So what you have is a totalvalue of your assets current
(17:22):
assets like cash accounts,receivables, inventory, fixed
assets, your buildings, yourtrucks, tools and equipment and
office furniture, fixtures,equipment, that type of thing,
and then your intellectualproperty.
Add them all together.
That's your whole set of assets.
Right there On the other sideof the equation, is the balance
(17:45):
sheet portion.
The balance of the assets is theliability.
Assets is a piece of value,it's something of value that you
own.
A liability is the opposite.
The liability is a financialobligation.
So if you have a long-term debt, a mortgage on your building,
(18:06):
or you have a truck loan or twoon your trucks or fleet of
trucks, that's a liability.
You have current liabilitiesand those are financial
obligations that are due between30 days and one year a shorter
term.
There's others that I don'teven want to bring up today
shareholder equity, retainedearnings and stuff like that.
We'll leave them off the tablefor today's discussion.
(18:27):
So your liabilities is going tobe a total of any loans, any
long-term or medium-range debtthat you owe, and you add them
together and you have a numberfor liabilities.
You take the total number ofdollar value of your three
assets, your three categories ofassets, and from that you
(18:48):
deduct your liabilities andthat's what you get.
Your bottom line is your networth.
Your company is worth this andis a dollar amount, and that's
what it's worth.
When you use this method, two,three, four years in a row,
you're going to get a picture asto the value of your company,
year after year after year, andyou're going to see that value.
(19:09):
Most likely you're going to seethat value grow.
And as you add trucks, you getthose trucks paid off.
If you're the restaurant owner,you purchase some new
restaurant equipment.
You pay it off in two years.
You now own all that brand newrestaurant equipment.
That falls into your assetcolumn.
If you add more tables to yourrestaurant, more chairs, you
(19:31):
build out a bigger platform.
It's going to show up in yourbalance sheet.
It might not show up in yoursales every night.
You might just be thatrestaurant owner that's
bolstering for your Thursday,friday, saturday night run.
The rest of the week it mayremain very similar, but you
built out your restaurant alittle bit.
So those three nights of theweek you can capture those extra
(19:52):
customers and clients and thatshows up in your balance sheet.
That's why we want to keep abalance sheet every year.
So, chris, in my opinion that'smy most important financial
document is the balance sheet.
But let's go back and talk aboutsome of those other methods of
valuation.
(20:12):
So we're going to talk aboutsales.
If you're the restaurant ownerand you sell $600,000 worth of
food and services, that's yoursales for the year.
Next year you do 600 more.
You do 1.2 million.
You just doubled your sales andyou want to continue that
(20:32):
pattern of growth.
Another method of valuation isprofitability.
As a new restaurant owner,maybe that $600,000 in sales you
only broke, even because it'syour first year You're a startup
company you haven't paid off alot of the short-term loans that
(20:53):
you took out to get thebusiness started.
So maybe that first year youwere not profitable, but the
second year you doubled yoursales but your profitability
went from zero to 300,000.
This is part of that process.
So you want to keep monthly andannual records of gross sales,
but also pre-tax profit.
(21:13):
And then the third item thatyou want to maintain annual
records of is your balance sheet.
What is your balance sheet?
What is your company worth?
And in my opinion, those arethe three.
Chris (21:27):
Those are the three key pieces, with the balance sheet
being the most important of thethree, and since there's some
variability in determiningparticularly in the last one
there the balance sheet,consistency of doing it the same
way year after year, using thesame consistent formulas, and
things like that are veryimportant to make sure that
you're getting an honest pictureof your year to year.
Dennis (21:50):
Well, and there's a lot of information out there too.
Everyone has a computer.
There's so much information outthere on how to build a balance
sheet, and many, many websitesare going to give you three,
four or five different methodsof building a balance sheet.
Choose the one that makes themost sense for you and again,
talk to your accountant.
Yeah, get help.
(22:10):
Yeah, get a second or thirdopinion.
Chris (22:13):
Yeah, you guys are all Bentley graduates.
Financial.
Dennis (22:15):
We're all accountants at heart.
Chris (22:18):
So you're all set.
But yeah, for the averagebusiness guy who's going to need
some help.
Dennis (22:22):
But honestly, Chris, I still go online, I look stuff up
, because this isn't you know.
We go into the real world.
I've been in the trades mywhole life.
We get good at what we do.
We get really good at one thing, and when I sold my
construction company 15 yearsago, I really didn't have a job
and prior to starting ourcurrent businesses, I did a
(22:44):
little bit of consulting and alittle bit of freelancing.
But when we started the GutterMonkeys, I pulled out some of my
old books, I went online and Idetermined what type of P&L,
profit and loss statements we'regoing to use, what type of
balance sheets we're going to gowith.
Chris (22:59):
Yeah, because it was a little different than your other
businesses.
You had a construction businesswhich is very different than
this gutter business andparticularly this gutter
business because you do have theaspect of you know the Bobby
Downspout aspect of it, thegoodwill, the marketing, the
amount of marketing you do ishuge and you know your standing
in the community is amazing.
So yeah.
Dennis (23:19):
So, chris, let me tell you this is the one thing that I
really like about what we'rediscussing here today the
overall US economic inflation inrecent years.
According to an article that Iread in inflationdatacom
no-transcript and people areoutraged Inflation is soaring at
(23:43):
3.4%.
Yet the stock bond and mutualfund market, which historically
averages 11%, has been bangingaway at anywhere from 14% to 18%
, other than the one I think itwas.
2022 was a rough year, but ingeneral it's been averaging
between 14 and 18%, but it'salways going to average roughly
(24:07):
11 over any 25-year period, any25-year slice of that pie.
And I'm looking at a growthchart from one of our companies
and I look at the growthpatterns and we had growth years
, in the beginning, of a hundredpercent, when we went from 300
to 600, that's a hundred percent.
(24:27):
Then the next year we went to900, that's a 50% growth.
And as you grow, you know youget up to 1.5 million.
And let's say you grow 300,000,you're still growing the same
300,000, but it becomes asmaller and a smaller and a
smaller percentage until, let'ssay, you hit 3 million and then
the next year you go to 3.3, youonly grew 10% and the next year
(24:50):
it's like 9%.
You're growing the same amount.
It's just a smaller portion,relatively speaking.
However, if you look at thatsame group of sales and
alongside of it you takeprofitability, or, in this case,
let's take the value of thebusiness, and I'm looking at the
(25:13):
value that we had throughoutthese years, based upon this
company's balance sheet, and itgrew 50 percent, then 33 percent
, but then we bought a buildingand that year it grew 144%.
Remember, inflation is 3.4% andthe stock market will produce
(25:34):
somewhere between 11 and 16%.
That year, my company valuegrew 144% because we bought a
new building and then it wentback to 27%.
Then we built this big buildingthat we're in now and boom, it
grew 140% and then we just went.
We kept doing what we're doing18%, 16%, 12%, 11%.
(25:57):
It's diminishing my company.
This particular company, isstill growing in value, but now
it's becoming a smallerpercentage of the whole pie.
But as I look at these twonumbers, over the past 10 years
this particular company hasaveraged 34% increase in sales
(26:18):
each year and it's averaged 50%growth in balance sheet value.
What this tells me is let's say, my company has an extra
$200,000 at the end of the yearMe and my partner, the other
owner.
We could split it.
We could each take $100,000bonus and I could put that in my
retirement portfolio and earn11%, or I could turn it back
(26:42):
into the company where we'reaveraging 50% value.
Yeah, so you got a clear path.
This is a very clear picture asto where I want my money to be
invested and this is why I wanteverybody that's listening to
create a balance sheet for hisor her own company.
It's that dynamic.
(27:03):
It helps you plan for thefuture and that's the lesson
today.
Chris (27:07):
Yeah, that's interesting because we always tell our
franchisees you know the purposeof this is, you're going to
build real wealth throughbusiness ownership and, when it
comes down to it, brass tacks.
This is it right here.
Dennis (27:17):
It's exactly what it is.
Chris (27:18):
This is where you, all of a sudden, you're building real
wealth.
You know you could take thatmoney.
You know, should I buy a newbuilding?
Should I buy a new truck?
I don't know, you know.
I don't know if I have thebusiness just yet, but when you
do do these things, you knowyou're building this real wealth
.
Where you could put that moneyin the stock market or you could
put the other thing too is,let's say, the example that you
just used.
Dennis (27:46):
I was meeting with one of my franchisees the other day
and we had this veryconversation.
He is at the point where he'scurrently approaching maximum
capacity in his current facilityand I really would like to see
him go to 4,000 square feet withan additional 1,000 square feet
, with an additional thousandsquare feet of office space,
because I know that thatplatform can take him to four to
(28:10):
six times of what he's doingnow.
That'll take him six, sevenyears, eight years into the
future.
Also, parking spaces, like allthese little things.
The restaurant owner he needsparking.
He wants to increase sales.
What does he need?
He needs more tables and morechairs, but he also probably
needs more parking spaces.
(28:31):
And if he can take a certainamount of money and invest it
into these things now, rightaway, now, his building is worth
more and that makes his balancesheet a little stronger.
Building is worth more and thatmakes his balance sheet a
little stronger.
Also, if he has 20% moreparking and 20% more tables and
chairs, he can increase hissales 20%, which puts more cash
(28:54):
in the bank, which builds yourbalance sheet.
It all comes together on thebalance sheet.
Chris (28:59):
But it can be scary.
You're going to have to stepoff the ledge.
You have to have faith in thesenumbers and have faith in your
balance sheet, and then you cankind of move forward without it.
What are you going to use to,you know, to give you that
little kick, that amount ofcourage?
You're going to need to spendthat money, maybe spend that
build that building just beforeyou actually need it, you know,
maybe a year in advance.
Dennis (29:19):
We have some clients that there's two or three in
particular that come to mind.
They do exactly what I tellthem.
It's almost scary because I'mafraid if it doesn't, you know,
come up roses, it'll make melook bad.
It'll be on you of mine forthree or four years now and he
(29:46):
really adheres to the I don'twant to go to where the puck is,
I want to go to where the puckis going to be.
When I get there, he's alwayslooking six, eight, 10 months
out and his company is verystrong.
They had a great year last yearand a lot of it is based upon
him seeing the big picture, andone of the things he does is he
asks my advice on certain things, and that's one of the things I
(30:09):
would like to see.
All these small business ownershave an advisor.
Talk to your banker, yourfinancial planner, your attorney
, your accountant.
Surround yourself with somegood people who are going to
give you good, solid opinions.
Chris (30:24):
And again, this is a reoccurring theme.
On our last at least threepodcasts, we've been saying this
over and over again Surroundyourself with good people.
You know, you're the measure.
What is it?
Dennis (30:34):
You're the measure.
You're the average of the fivepeople that you're mentally and
emotionally closest to.
Yeah, and it's so true.
It's so true, and to me, that'sthe lesson for the day.
Put together these financialsevery year, your profit and loss
statements, your sales growthstatements and your balance
sheets, and over time you'regoing to have an incredibly
(30:55):
valuable set of tools thatyou're going to use all the time
.
I pull one or two of thesesheets out at least a couple of
times a week when I'm working onsales forecasts or growth in
certain areas, and I use it allthe time.
It becomes second nature to you.
Chris (31:11):
It's like a hammer.
Yeah, that's so important.
And then you have the trust inthe numbers.
You've experienced the numbersover the years.
You have trust in it.
You've made a few calls basedon those numbers.
It worked out.
So now you have even more faithin it and so you can really
really throw yourself behind it,your decision making.
Dennis (31:28):
Okay, I think that's the lesson for today.
That sounds good.
Chris (31:32):
No monkeys were harmed in the making of this podcast.
That's right.
That's right and we'll see younext time, episode eight.
We'll dive a little deeper intosome of these topics going
forward, but thanks forlistening.
See you next time.
Bye, thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
(31:53):
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you got a question ortopic you'd like us to cover,
leave a comment or reach out tous on social media.
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
the episode valuable, and makesure to share it with anyone who
might benefit from our tips andstories.
(32:14):
We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
For details, visit us atAmericanGutterMonkeyscom.
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