November 17, 2025 • 38 mins
Join host Dave Miller on this episode of "Inside the Vault" as he welcomes Laurie Barkman, founder of Business Transition Sherpa. Laurie brings over 30 years of experience in both startup and corporate environments, specializing in guiding business owners through growth and succession planning.
In this episode, Laurie shares her insights on the critical importance of planning for business transitions from the very beginning. She discusses the common challenges small business owners face, such as being too focused on day-to-day operations to think about their exit strategy. She emphasizes the need for business owners to build with the end in mind, highlighting that proactive planning can significantly enhance the value of their business. Laurie provides actionable insights on how to prepare a business for a successful transition. To learn more about Business Transition Sherpa, visit www.btsherpa.com. Catch Dave's guest appearance on Succession Stories Podcast here: Succession Stories Podcast
Thank you for listening to this episode of "Inside the Vault". Subscribe today and follow us for updates, and if you have any questions or topics you would like to hear about, please email us at insidethevault@enterprisebankpgh.com!
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Episode Transcript
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(00:05):
Welcome to Inside the Vault, Enterprise Bank's podcast series where we
talk about items of interest to the small business community. Today,
we're going to talk about something that should be on the radar of every
business owner, which is how to transition their business
in the future. With me today is Lori Barkman. Lori
is the founder of Business Transition Sherpa. So
(00:29):
Lori and I met recently and was really interested in
how she guides business owners through both
growth of their business and then ultimately, you know, some
type of succession plan or exit. So Lori, welcome to Inside the
Yeah. So, um, you know, before we get started with
(00:50):
kind of, um, you know, what business owners need to
be thinking about in, in, uh, the regard of growth and
exit ultimate exit, let's get a little background on you. So, um,
you have some, some really relevant, varied background kind
of in this, in this whole business transition process. Can you
give us a little bit of your professional background and, some personal background as
(01:11):
Yeah, thanks. Yeah, I've been in Pittsburgh over 30 years. What brought me here
was grad school and the kind of long story short story
is after I graduated from Carnegie Mellon with an MBA, I
wanted to work in startups and get an experience there. It
was in the late 90s. So there was a lot going on. Big start to
the tech community here in Pittsburgh. And that was
(01:32):
so interesting because I really got up close with how do you build a
business, right? What does it take? And it's a lot of blood, sweat and tears. You'll
hear a lot of stories about the 10-year overnight success, right?
And then I think startups and other privately held
companies experience that. So I went through that and a lot of
my experience was on the growth side, you know, top-line growth,
(01:53):
marketing, partnering with sales. Again,
rolled up my sleeves and just kind of understood what does it take to run these
small businesses and help them scale. Later
on, I realized, wait a minute, there's another side to this whole career thing
with a big enterprise, a corporate enterprise, a global enterprise.
And I spent time there too. And I found myself as
(02:15):
the intrapreneur, the person who was always looking for change. I never heard
that term before. Yeah, the intrapreneur. I did not invent it.
I can't take credit for it. But it's really a term that it describes somebody
who I think is a change agent. And I wanted to bring
what I was learning and seeing in these small companies more nimble,
you know, more about how, how do we keep improving? How do we stay
(02:38):
close to the customer? And so in these
larger company experiences, I brought that with me. And so I was this
flip-flopper. I would go big company, small company, small company, big company.
And I think that helped make my experiences as
a professional and eventually as a CEO really valuable
(02:59):
How different is it, Laurie, in the, in a big corporate environment versus
small business. So here at Enterprise, we focus on the small business side.
But what are some of the major differences that you've seen?
You get a lot closer to the customer when
you work with the founder. I mean, there's no question, right? The founder is
(03:19):
typically, especially in a tech company, very
attuned to what is the problem. Now, if we
don't know what problem we're solving, then that is something that
the rest of us have to try to articulate and help with. I
found myself in a marketing role needing to stay close
to the customer. I always enjoyed that. And understanding from the
(03:40):
customer directly What pain points do they have? In
a big, big company, you start to understand the pain points of
your internal customer more than your external. And
that can be a challenge, especially for privately held companies who are
in the lower middle market, which is where I specialize today. The further and
further away we get from the founder, why
(04:01):
did they start doing what they're doing? The further away we get from
these entrepreneurial roots, the more internal we
can become. And that can become a challenge. as our company
Gotcha. Gotcha. So taking this kind of, you
know, full spectrum experience at different size companies, you
went out on your own to try to give this intelligence to business owners. So
(04:25):
Yeah, absolutely. And just one more piece of the story I think will help, you
know, put this puzzle piece. Eventually, I found myself
as a outside hire at a third generation company. I
was hired to lead a subsidiary. So I had a CEO title,
it was pretty large transportation logistics company
headquartered in Pittsburgh. And they wanted me
(04:47):
to come on as part of a long-term succession. And
so I think this is part of the story for privately held companies that are
saying, hey, what's our future look like? We need to make sure we have a pretty strong
bench. Now, at the time, I was in my younger 40s.
And this was a pretty big leap for me to go from, you know, this
is my first CEO role. And I got the green jacket,
(05:09):
so to speak, for all the golfers out there that can understand that. that
analogy. And it was a very exciting time. And they said, you know, we're
interviewing you not for the next two years, which is kind of startup land,
right? You'd be somewhere for two years. We're interviewing you for the next 20. Now,
as stories go, I wasn't there for 20. I was there for three. And
the reason why is because we were acquired by
(05:31):
a global company. And this global company had
approached the enterprise and said, we've been watching you from
afar for the last six, seven years. And we had no idea.
My boss was the chairman. He was third generation. And
he, at the time he was in his mid sixties. And that
really gave me the start to understand not
(05:52):
only seeing from the inside, um, from
the third generation, right? He was third gen when, The
generation gets the baton, what do they do with it? And then also, when
you have a successful transition and transaction, what
does that look like? Now, this was a very significant transaction. It was
$1.4 billion. There is a press release on it, so I'm not revealing anything I
(06:13):
shouldn't. And it was very, very sizable. It was very significant.
It was myself and about 12 other executives that had employment
agreements with the acquirer. And it was a very, very, again,
meaningful transition for the family, for the stakeholders. There
were several people, I don't know the number, that
became millionaires in this transaction, long-term employees.
(06:36):
It was very, very meaningful in a lot of ways. And I think that the
family did a lot of things right. And that, to answer
your question, is what influenced me to say, hey, how can
I help? How can I inspire change? How can I
inspire? proactive work for privately
held companies, family businesses, to try to have that
(06:57):
build with the end in mind point of view. We don't actually know where
things are going to go in life, but that transaction, going through the
transition, seeing it from the inside, is really what got me
started and then created the business,
Just curious. this company you were involved
with that got acquired, was this a vertical integration? Was it a buying
(07:22):
It was a vertical integration. They, it was a global
transportation company and we were in transportation logistics.
We were in reverse logistics and it was a niche. There was a forward
logistics, which is, Hey, we have boxes. We got to get to retailers and
you know, others. So we had warehouses and we had trucks and
we had people that moved product all over the North America and
(07:45):
an expertise in what's called reverse logistics,
which is, well, what happens when we have overstock damages, returns,
where does all that product go? Think about when there's a drug recall,
we got to move that product out of the retailer. We got to get it somewhere. We got to destroy
it. We got to have chain of control. So we had different industry verticals,
(08:08):
Okay. So when, when did you found Business
Okay. Yeah. So kind
of high point, what is kind of the mission statement or the
We work with business owners who are building with
the exit in mind. They're trying to build, grow, scale, and
(08:30):
eventually say, I want to transition with success. We
understand that business owners are doing this
for a lot of reasons. But for a lot of people, it's because they want
a freedom. They want a freedom that they can't get anywhere
else. Being a business owner, you're tied to your business in a lot of
ways. We don't want our clients to be
(08:51):
tethered in a way that's not what they want, right? We
want them to find the freedom and the balance. And so let's
get back to the fundamentals of
the business so that it's not only
about, hey, 10 years from now, I'm going to sell this thing. No. We want
you to have a healthy business today. And guess what?
Here's a little secret. You ready? All the things that you're going
(09:14):
to do to run your business in a healthy way today are going to create that value for
the future. So why would you wait? Why would you wait for the future? And
Yeah, well, on my side of the table, dealing with small businesses for
30 years now, you know, in a in a small family held
company or in a small private company, you know, you're
(09:35):
so mired in the day to day operational things that
tend to be reactionary versus proactive. So
So with regard to, you
know, that thought, what are typical when
should a business owner really be thinking about
(09:57):
their exit? Is it from the day they found? Is it when they get
to a certain scale? I mean, what are the time horizons
I think ideally, it's when we start the business or we are with the
business, we're starting to really form that idea of, well,
who might own this business after me? Who might be my ideal buyer? Because
it ultimately helps us reverse engineer our exit.
(10:20):
But let me unpack that a little bit. A startup that is
a tech startup is going to be asked, what's your
exit strategy when they're going out to raise money? It's a
very normal question to get from a venture capitalist. Why is
it that that question is only reserved for tech startups?
That doesn't make sense to me. I think for any business, let's
(10:41):
call them the everyday, kind of the everyday mainstream business, It's
the same thing. What's your intention? Maybe one way to talk
about it is, well, are you building a business as a lifestyle type
of enterprise? Because it's something you enjoy. And
we can talk about it in that context. The other context is we're building something
that's an asset that we want to grow that value
(11:04):
of the asset, just like you're going to buy gold bars. You would expect
those gold bars to go up in value. Or you buy real estate. You would
expect that real estate to go up in value. Well, if we
are putting a lot of money and time and sweat equity
into building a business, that isn't increasing in
enterprise value, then that's okay, all
(11:24):
right. But if we do have an intention for
building that value and protecting it, then We've
got to curate that. It's not going to happen on its own. We
have to shepherd it along. And the idea behind the term
business transition Sherpa is that this is a journey. We
are on a journey as business owners to get our business from
(11:47):
here to there. And this concept that we're building an asset
for one day to transfer in value so that we can benefit
and continue to have that freedom and things that we enjoy, the freedom of time, the
freedom of choice of how we spend our time, the high return on
time, all those things. I think time is our biggest asset, really,
truly, as people. And for some
(12:09):
founders and for some entrepreneurs, it's really a mechanism to
find how they choose to spend their time. So
let's create this asset that one day lets you have
And let's be honest, the world is a very uncertain place. So
waiting till you're closer to whatever
it is, retirement or your next phase of
(12:32):
your life may be too late because anything
can happen to any business owner at any point. So I
guess the mantra is start as early as you can, even
if your ultimate exit goal is, you
Absolutely. You know, just in the context of the why
wait, you know, theme, um, there's some great quotes out there,
(12:55):
you know, Chinese proverb, you know, proverbs that have been out forever and ever, like
when's the best time to plant a tree? You know, it was yesterday or
when's the best time it's typically, if
you're, If you want to be realistic, though, a
lot of business owners get distracted. Let's face it. They're working in their business. They're
working really hard to make payroll. I get that. So a lot of what I
(13:16):
talk about here is with the understanding and the empathy that
this is hard. But to kind of go back to your question,
I think realistically, especially let's just talk about Gen X business
owners. That's the age category that I'm in, and I tend
to work a lot with folks in that age category. And
I think the survey data has shown that the
(13:37):
Gen Xers are saying five to seven years. I
think COVID, now COVID time when we did surveys, it
did back it up, but of course that was five years ago. What was interesting though
was a transition from people saying 10 years to then shifting
it closer in five to seven. I think COVID alongside
of changes in the economy, 2008, et cetera, 9-11, we've kind of been through a lot.
(14:02):
The boomers, too. If you're asking about the Gen Xers,
I'm going to say five to seven. And I think, when do you start to
work on this? Well, you really need to start today. If somebody comes to me and
says, hey, Lori, we're interested in selling the business next
year. OK, well, we don't have a lot of time to prep it. If they say three
years, honestly, that's actually code for, we've got to get started right
(14:23):
now. If they haven't started, and the thematic of
all of this, Dave, is the more time that we have
to make change and impact, There's always going to be things in
the business we need to improve. It's all about risk and
reward. And it's risk and reward from the buyer side. So we
can talk about that as well. But boomers are in that mode
(14:43):
of, if they haven't been prepped to sell and
have a sellable business, attractive business, transferable business, they have
what they have, you know, they don't, they don't have the wherewithal and the
probably the interest in and making the business ready, so to speak. And
for some, they'll just close for some, they'll sell at
a discount. And for some, they'll sell at a decent, a
(15:05):
decent valuation, but not maximum, but probably not maximum.
And maybe there's some, you know, I know you asked earlier, you know, we were talking to talk
about internal transitions. But yeah, there's all kinds of options.
Closing the doors is one of them. And so I think if we get
back to the idea of building an asset that's transferable, well,
to me, that's really sad. It's sad that if we
(15:27):
have to close the doors because we haven't planned accordingly. And I
Yeah. And the byproduct, I'm assuming, of this whole process is
even before your ultimate exit or transition of
your business, You're putting fundamentals in the business that are going to improve cash
flow, improve profitability. So everything that a buyer
(15:48):
is looking for can benefit the business owner in this process
as well during that prep phase.
Well, 100%. Yeah, everything you're going to do to prep the business, financials,
growth potential, cash flow, the consistency
and quality of reporting, the customer
(16:10):
metrics for customer satisfaction, retention, acquisition, You
know, I could go on and on, differentiation, recurring revenue,
all of those things I just rattled off, probably about eight categories sound
easy, and they're not. I could take one of them and talk
with you for an hour at least about just one of them. There's
(16:30):
so much to talk about and so much to dive into. And guess what? That's
only one leg of a three-leg stool, right? The three-leg
stool for kind of big picture here, if you take
away a leg, what happens? The whole thing falls down. So that's the whole idea about
balance is when we're talking about business growth and
transition, it's personal, it's financial, and
(16:51):
it's business. So largely what I've been talking about here is
business. Right. I haven't yet really dove into the other two. But
they're there. And if we ignore them, guess what? We're kicking the
can on a whole real important thing. So what
I try to do in working with our clients is
really be balanced. We have a balanced perspective. I just had a call yesterday with a
(17:12):
prospect. And he was saying, well, I have these
transition options, A, B, C, D, and I'm 50, and I
don't really know what I want to do, and yada, yada. And I said, you know what? I
just have a whole other question for you. He goes, what's that? but
what would make you feel fulfilled? And we had a whole conversation
about fulfillment. Yeah. And he was like, Oh. Gee,
(17:35):
and I said, yeah, you know, depending, because you're, you know, I said, look, you're a lucky guy.
You're in your 50s. You've got a very successful business. You know, cash
flow is not an issue. You're very profitable. So money is not the question.
It's time, money, or people, right? It's generally one or more of those
things. For him, if we say it's the kind
of time, right? How is he going to choose to spend his time? What
(17:56):
a lovely choice, right? To be able to say, what is it that will help
me feel fulfilled? A lot of business owners, they get to this level of
success, and then Like, I don't know, I don't know what
I want to do. And so based on that path, we
can reverse engineer. So let's say in this example, we have a
successful business who's reached a level of financial
success, and yet we're still wondering what is it,
(18:19):
right? What is it that we're striving for? This is that journey, you know? Let's
take a business owner that is on the opposite side. I
had a call from a woman, she's a niece and
a daughter, and she said, look, you know, my dad, my uncle, They
own this company together, and they're now in their 70s.
They have had some health issues. They haven't been working
(18:41):
as much, so now they've reduced staff. They're the
only ones in the business, so they're not really even driving that much revenue. You can see
their year-over-year revenue is declining. I said,
do they have any contracts and paper? No, just really handshake, longstanding.
Okay, interesting. Other aspects of the business. And
what I was trying to do and understand in that conversation is what's attractive,
(19:02):
what's transferable and how these owners are.
Well, one of them has health issues. So translation, I
told her, look, I'm sorry to tell you, I really don't think this is a business of
value. Here's the biggest reason why. I said the competitors who
might wanna buy them, are probably
going to be better off if this business just closes, because
(19:24):
they'll just pick up the clients. Right, right. And I don't see
the transferable value. They're not going to stay on. They've
got health issues. They're older. They don't want to work that hard. We've seen that in the financials.
What is it that's actually transferring in this business? Now, if those
two gentlemen were my client 10 years ago, it would be a
very different story. Absolutely. We would have identified these things. We would have
(19:44):
put some things in place. So the list can go on
and on and on of what could thwart a potential transaction, which is
why I think your question about, well, when do you start is so important. It's
the, who might we sell it to part? And then what do
we need to do to make this attractive transferable? And how
do we get ourselves ready? How do we get the business ready? It is not an
(20:07):
So let's fast forward to the, to the exit.
So. It's very different depending on,
I guess, who the target buyer is, right? If
it's a third party, could be a vertical integration like
you went through, could be a competitor, that
(20:27):
third party buyer versus generational transfer of
the business. How is it different from a high level?
At a high level, it's best to just consider who
is the best fit buyer. And for many
owners that you're looking to sell, it's fit, it's
(20:47):
cultural fit. And they want
to have either because of legacy and
aspects of family that are important to them. Others
find the identity continuation important, the
brand, et cetera. For others, it's maybe
(21:07):
not so much the legacy kind of outright and like, you
know, sort of name on the door kind of stuff, but more the
legacy with their employees. I really, you know, they'll say things like, you
know, we have a family culture, whether it's a family business or not, we
have a family culture. We have these different
benefits and things that our employees have been
(21:29):
very loyal to us. They have long-term employment. A
lot of folks will say 10 plus years. And they want to honor
that. They want to continue that. Others care about other aspects
of their stakeholders. But I think employees is probably the number one. So
whether it's literal family or kind of feels like family with
employees, that tends to be a pretty major criteria where
(21:52):
culture and fit. You know, I've had so many conversations with
people about their sales of the business and that
next to financial, right? And so a lot of times on
my show, I ask the question, well, you
know, was it the highest bidder? And quite often it's not. So
yes, it's the financials and it's the numbers and it has to work out. But
(22:14):
again, I think a lot of times fit comes down to culture and so on. So
why would an owner choose an insider or
family? Let's describe insider. What do I mean by that? Well, in
the realm of who could buy your business, there's three categories, strategic, financial,
and what we call related. So insider is a good word
(22:35):
because related could insinuate family, but related also basically
means insiders, kind of how I say it. So they're very synonymous. So
either in a family, we could have management. And this is
where it's really, I think, really interesting. And I
want to talk about this with you, is sort of the
balance of risk and the upside. And the
(22:56):
insiders, if they're highly qualified, they know a lot
about this business. And maybe they haven't run a business before, but
they know this business. And maybe they're motivated to own it.
And that's meaningful to the sellers. It's
meaningful for them. to have that continuation, especially
if they've hired with those folks in
(23:17):
mind to maybe one day own the business. That's very exciting to
me, to explore that with people. And then on
the family side, sometimes there's the foregone conclusion
about junior. Juniors started when they were 17, and
sweeping floors, and they worked their way up, and juniors
earned the respect. has the capability and
(23:40):
the talent to be in the right seat and has the right kind
of growth mindset, owner mindset, that lines up wonderfully. When
junior does not have the interest or if junior does not
have the capacity or capability, that's going to be a
challenge. And those conversations are probably harder. So
for some owners, they might have a choice, like is it junior or is it management?
(24:03):
For others, it's, you know, in some situations it's more clear. I had
a client who wanted me to assist the husband
It was interesting. Yeah. None of them were working in the business. I
think they had varying experience sweeping floors and
things like that as teenagers. They
(24:26):
wanted to understand the capacity and the interest, and
they felt like it was important to get an independent point of view. And so
we used some diagnostic tools in addition to interviews to
help give a perspective back to the parents, and
So I can tell you from a lender's perspective, you know,
(24:46):
there's two primary risks in a business acquisition, leveraged
business acquisition, where we're financing. One is
obviously the financial risk. The other is the management
risk all day long. I'll take a qualified
insider who understands the technical aspects of
the business. And, uh, even if they've not
(25:09):
been, you know, the overall manager of
the business versus someone coming in cold, even
if they have a lot of cash. So, uh, I'm a
big fan of, with qualifications and
the kind of assessments that you all do, qualified insiders
minimize the risk to a lender and
(25:33):
Yeah, absolutely. I can understand that perspective. I think it's
really important. And it's eye-opening for people
to hear it. I'm sharing that with folks.
You're sharing that with folks. And it's like, oh,
yeah, OK, I get that. how
do we have the perspective in our
(25:56):
hiring process is one of the things that I'm working on
to try to get, you know, in that realm of the question
of how do we prepare? Well, if one day you
think that maybe you would like your management team
or key manager to own your business one day, did
you go through a hiring process with that in mind? Most,
(26:20):
no, they don't. They hire for skills and capabilities and
the resume and so on. And what happens is, is like, those
folks emerge as key leaders, and then we have faith in them, and
they're loyal, and we want to grow them. And then we think, well, one
day, they might want to own my company. I've had other sob
stories. I had one, I work a lot with engineering firms,
(26:41):
technical owners. I like to describe my clients as
analytical owners. A lot of these folks are
hiring from within, growing from within. developing
their people, which is wonderful, and I definitely encourage that.
But it gets to a point where, again, you might not have the right person in
the right seat when it comes to ownership. Because there's a difference between
(27:04):
succession of leadership and succession of ownership, just
to be distinctive about that. And I think owners don't,
they assume too much sometimes. So I get calls like
this. Lori, I'm calling to sell my business.
Oh, OK. Have you considered any other exit options? Well, I
thought that I wanted my second in command was going to buy my
(27:25):
business. This is a real conversation with an engineering company.
I thought that the second command was going to buy my business. Not only did he not want
to buy it, he quit. And it hurt him
deeply. He was very upset about that. Now, I
think that that's a sad story. It's a very sad story because that
saying, If you assume, makes a blank
(27:48):
out of you and me. Yeah. So it comes back big time here in
this story, because it's a good lesson to learn. And we learn
from his pain, essentially, that you can't just
assume. I had another client situation where he
assumed that his number two was going
to be his long-term successor, and that number two, during COVID, he
(28:09):
and his wife moved to Europe. Well, that kind of went out the window right
So you basically walk
business owners on, as you said, it's a journey. It's a long term
journey through kind of a framework. Can you talk
about the kind of the outline of the steps in
(28:35):
Yeah, absolutely. We call it the built framework. And just
really at a high level, we start with diagnostics for
where are we today? What are some of the aspects of
the business? We need to get a good baseline. We need to understand, if
we can, what is the value of the business today? Because again, if we're building a
business that we intend to have an asset value that
(28:57):
one day someone else will want to own, regardless of who that owner is,
it's going to have a value. Well,
you've been putting a lot of time and energy into that, so let's make sure to measure
it, because what gets measured gets improved. So, baselining and
measuring the value of the business as an enterprise is
what I call the owner's metric. And many, many owners, I'm
(29:17):
going to say 90%, have no idea what their business is worth today. Also,
startlingly important is, well, what could it be worth? Because
if we can 5X the value of your business, chances are
we're talking about millions and millions of dollars. gee,
let me calculate my ROI, and we're talking thousands of dollars.
No, this is millions of dollars. And it's also meaningful probably
(29:40):
for your family and could mean for generational wealth. If
we're talking about businesses that, let's call it even lower middle market,
these are not huge, huge companies, but they're sizable. 2 to
20 million in revenue. Let's take a 2 million revenue business. We
5x the value of that business to 10x. or
excuse me, 10 million, we've now entered
(30:02):
an elite club. Did you know that only 1% of privately held
That's an interesting metric. That is not a big percentage.
So let's join an elite club. Let's get your company to scale,
right? Let's grow it. So the built method is really about that. What
are the aspects of the business that we can capitalize on for you? And
do it so we have a sense of, and
(30:26):
doing it in ways that are also going to unblock. So the U
is for unblock. How can we unblock? We need to look at what are the
risks in the business. We've got to look at your business through a buyer's lens. We
have to look at it and say, huh, how would a buyer view our
business? Because that perspective helps us see what
are the risks? How do we mitigate them? How do we increase value? How
(30:47):
do we prioritize? There's an infinite number of things we can be working on.
Those aspects and then the leadership side, as a leader, as
an owner, how do we find that clarity? A
big part of this is finding the clarity so
you can lean in. And the T is ultimately transition. How
do we transition with success and set that intention so
(31:10):
that we can reverse engineer our exit?
So you have some great resources outside
of your own one-on-one Sherpa
concept where you're walking through these business owners. So you
(31:32):
I did write a book. It's called the business transition handbook. What a shocker. It's
all about business transition, but it's, I, you know, it's a really good read.
The feedback on it has been wonderful because, uh, the
show that I have called succession stories where you, you are a guest
on, uh, on my show and it it's got snippets from
real stories, real experiences. And then my, you know, weaving in my own
(31:54):
and, and some client experiences anonymized, of course. And
ultimately, it is something I want owners to read and dog ear
and write in it and get tools and actions and
be actionable, set that intention to do something. This
is not a read and forget, this is a read and come back to and hold yourself
accountable to it. And then from that book inspired a
(32:16):
course that I've put together It's in a couple of
different ways, kind of a course one is we call Built Freedom, which
is what are the things that we need to be doing today to have the
mindset for transition that helps us increase value, helps
us increase personal readiness, and also understand some
of the baselines of where are we in our business. In
(32:36):
addition to that is about kind of the scaling
and multiplying value and eventually letting go.
And eventually it's that kind of strategic sale or
transition with family, whoever we determine. So all
three of those buckets are really big buckets. And I thought, you
know what? Maybe it would help people. People learn in different ways. So some people
(32:57):
learn by reading, and the others hold
themselves accountable. Others need people to hold them accountable. It's
like, do you go to a gym class or do you exercise on your own? I
go to a gym class, so I like having coaches. And
that's kind of what I've set up, is a coaching framework
and methodology with peer groups so that not only do you get the
(33:18):
benefit of, hey, here's kind of a Sherpa helping lead
you on your journey here and holding you accountable to it, but also how
can you benefit from the perspective of other business owners. Technical,
like I say, my analytical owners who appreciate the math. We
So tell our viewers and listeners a
(33:41):
Yeah. So again, I'm super excited for our recording. The
show is called Succession Stories and it's over five years old. And
you know, this is a kind of a funny story. Did you know that this conversation
in person is only the second one that I've ever done. In
person. In person, because when I first recorded
(34:01):
Succession Stories, it was February, 2020. Wow.
Yeah. So I'm so excited to be in person with you. Yeah, here we are.
Um, yeah, it's an award-winning show. Really proud to say it's
top 2% globally that we have listeners all over the world. And
the intention of the show is to have people who orbit
the world of entrepreneurship. So sometimes it's entrepreneurs with
(34:22):
an exit. Sometimes it's entrepreneurs who have had other challenges, um,
It's teaching by example, and it's experts like yourself and others who work with
business owners to help them, you know, grow scale
Yeah. So how can our
viewers and listeners and small businesses that, as
(34:43):
I said at the very onset of the podcast here, need
to put this on their radar? How do they learn more
about what you provide? You mentioned, we
mentioned the podcast, we mentioned the book. How
Yeah, that's great. One place to go is my website, which is btsherpa.com
(35:03):
and they can get a download of my book, a PDF download of
my book for free if they would like. They can subscribe
to the podcast, listen to the podcast. It's on all the podcast platforms. And
I have a whole library and catalog on
the website of the show. And then in addition to that, I
have an entire YouTube video channel where they
(35:25):
can find all the kind of catalog of webinars and things too.
Yeah. So how do you initially engage with a prospective client?
I think the best way to describe that is kind of like a 90-day baselining, where
we do a series of diagnostics around personal readiness, business
attractiveness, business readiness, and business,
(35:48):
some of the financial, personal financial things. Having that
perspective on those three areas gives us a sense of where
do we need to prioritize. On the business side, if there's some firefighting and
some real important things we've got to work on, whether it's
cash flow, whether it's marketing or sales, we, we really
need to understand too, like what fires burning that we need to address.
(36:11):
And then I like to work proactively with the owner and
we, we work together and this is, again, this is a marathon, not a sprint. So
the 90 day is just really like, Hey, let's just get started. And then from
there is how we prioritize those three legs of the stool.
Yeah, absolutely. And I like to say, you know, my Rolodex is my
client's Rolodex. That's a huge value add because it can save a
(36:32):
lot of time if they need another professional If they need an
introduction to a banking advisor, financial advisor,
wealth management or legal, that's the collaborative approach
Yeah. So as I always do, parting
words, I always ask our podcast guests, what's your
(36:53):
advice for either existing or aspiring entrepreneurs
I think the best nugget is recognizing that 100% of
business owners are going to leave their company one day. And
will you be prepared? You know, that's really, if you have that mindset,
you'll have the owner mindset because you're a founder. But if we're buying a
(37:14):
business, if you have a transition mindset, you
will also build with exit in mind to
Excellent advice. Excellent advice. Lori, thank you so
much for the insight, for our viewers and listeners. Great
resource local here to the Pittsburgh market where most of our viewers and
(37:34):
listeners are, but you're not limited to that, obviously. For
those of you that have any advice on
future episodes of Inside the Vault or any questions, you
can email us at insidethevault at enterprisebankpgh.com. You
can check us out in audio format on all the major podcast
(37:55):
platforms and in video format on YouTube. Lori,
Welcome to Inside the Vault, Enterprise Bank's podcast series where we
talk about items of interest to the small business community. Today,
we're going to talk about something that should be on the radar of every
business owner, which is how to transition their business
in the future. With me today is Lori Barkman. Lori
is the founder of Business Transition Sherpa. So
(00:29):
Lori and I met recently and was really interested in
how she guides business owners through both
growth of their business and then ultimately, you know, some
type of succession plan or exit. So Lori, welcome to Inside the
Yeah. So, um, you know, before we get started with
(00:50):
kind of, um, you know, what business owners need to
be thinking about in, in, uh, the regard of growth and
exit ultimate exit, let's get a little background on you. So, um,
you have some, some really relevant, varied background kind
of in this, in this whole business transition process. Can you
give us a little bit of your professional background and, some personal background as
(01:11):
Yeah, thanks. Yeah, I've been in Pittsburgh over 30 years. What brought me here
was grad school and the kind of long story short story
is after I graduated from Carnegie Mellon with an MBA, I
wanted to work in startups and get an experience there. It
was in the late 90s. So there was a lot going on. Big start to
the tech community here in Pittsburgh. And that was
(01:32):
so interesting because I really got up close with how do you build a
business, right? What does it take? And it's a lot of blood, sweat and tears. You'll
hear a lot of stories about the 10-year overnight success, right?
And then I think startups and other privately held
companies experience that. So I went through that and a lot of
my experience was on the growth side, you know, top-line growth,
(01:53):
marketing, partnering with sales. Again,
rolled up my sleeves and just kind of understood what does it take to run these
small businesses and help them scale. Later
on, I realized, wait a minute, there's another side to this whole career thing
with a big enterprise, a corporate enterprise, a global enterprise.
And I spent time there too. And I found myself as
(02:15):
the intrapreneur, the person who was always looking for change. I never heard
that term before. Yeah, the intrapreneur. I did not invent it.
I can't take credit for it. But it's really a term that it describes somebody
who I think is a change agent. And I wanted to bring
what I was learning and seeing in these small companies more nimble,
you know, more about how, how do we keep improving? How do we stay
(02:38):
close to the customer? And so in these
larger company experiences, I brought that with me. And so I was this
flip-flopper. I would go big company, small company, small company, big company.
And I think that helped make my experiences as
a professional and eventually as a CEO really valuable
(02:59):
How different is it, Laurie, in the, in a big corporate environment versus
small business. So here at Enterprise, we focus on the small business side.
But what are some of the major differences that you've seen?
You get a lot closer to the customer when
you work with the founder. I mean, there's no question, right? The founder is
(03:19):
typically, especially in a tech company, very
attuned to what is the problem. Now, if we
don't know what problem we're solving, then that is something that
the rest of us have to try to articulate and help with. I
found myself in a marketing role needing to stay close
to the customer. I always enjoyed that. And understanding from the
(03:40):
customer directly What pain points do they have? In
a big, big company, you start to understand the pain points of
your internal customer more than your external. And
that can be a challenge, especially for privately held companies who are
in the lower middle market, which is where I specialize today. The further and
further away we get from the founder, why
(04:01):
did they start doing what they're doing? The further away we get from
these entrepreneurial roots, the more internal we
can become. And that can become a challenge. as our company
Gotcha. Gotcha. So taking this kind of, you
know, full spectrum experience at different size companies, you
went out on your own to try to give this intelligence to business owners. So
(04:25):
Yeah, absolutely. And just one more piece of the story I think will help, you
know, put this puzzle piece. Eventually, I found myself
as a outside hire at a third generation company. I
was hired to lead a subsidiary. So I had a CEO title,
it was pretty large transportation logistics company
headquartered in Pittsburgh. And they wanted me
(04:47):
to come on as part of a long-term succession. And
so I think this is part of the story for privately held companies that are
saying, hey, what's our future look like? We need to make sure we have a pretty strong
bench. Now, at the time, I was in my younger 40s.
And this was a pretty big leap for me to go from, you know, this
is my first CEO role. And I got the green jacket,
(05:09):
so to speak, for all the golfers out there that can understand that. that
analogy. And it was a very exciting time. And they said, you know, we're
interviewing you not for the next two years, which is kind of startup land,
right? You'd be somewhere for two years. We're interviewing you for the next 20. Now,
as stories go, I wasn't there for 20. I was there for three. And
the reason why is because we were acquired by
(05:31):
a global company. And this global company had
approached the enterprise and said, we've been watching you from
afar for the last six, seven years. And we had no idea.
My boss was the chairman. He was third generation. And
he, at the time he was in his mid sixties. And that
really gave me the start to understand not
(05:52):
only seeing from the inside, um, from
the third generation, right? He was third gen when, The
generation gets the baton, what do they do with it? And then also, when
you have a successful transition and transaction, what
does that look like? Now, this was a very significant transaction. It was
$1.4 billion. There is a press release on it, so I'm not revealing anything I
(06:13):
shouldn't. And it was very, very sizable. It was very significant.
It was myself and about 12 other executives that had employment
agreements with the acquirer. And it was a very, very, again,
meaningful transition for the family, for the stakeholders. There
were several people, I don't know the number, that
became millionaires in this transaction, long-term employees.
(06:36):
It was very, very meaningful in a lot of ways. And I think that the
family did a lot of things right. And that, to answer
your question, is what influenced me to say, hey, how can
I help? How can I inspire change? How can I
inspire? proactive work for privately
held companies, family businesses, to try to have that
(06:57):
build with the end in mind point of view. We don't actually know where
things are going to go in life, but that transaction, going through the
transition, seeing it from the inside, is really what got me
started and then created the business,
Just curious. this company you were involved
with that got acquired, was this a vertical integration? Was it a buying
(07:22):
It was a vertical integration. They, it was a global
transportation company and we were in transportation logistics.
We were in reverse logistics and it was a niche. There was a forward
logistics, which is, Hey, we have boxes. We got to get to retailers and
you know, others. So we had warehouses and we had trucks and
we had people that moved product all over the North America and
(07:45):
an expertise in what's called reverse logistics,
which is, well, what happens when we have overstock damages, returns,
where does all that product go? Think about when there's a drug recall,
we got to move that product out of the retailer. We got to get it somewhere. We got to destroy
it. We got to have chain of control. So we had different industry verticals,
(08:08):
Okay. So when, when did you found Business
Okay. Yeah. So kind
of high point, what is kind of the mission statement or the
We work with business owners who are building with
the exit in mind. They're trying to build, grow, scale, and
(08:30):
eventually say, I want to transition with success. We
understand that business owners are doing this
for a lot of reasons. But for a lot of people, it's because they want
a freedom. They want a freedom that they can't get anywhere
else. Being a business owner, you're tied to your business in a lot of
ways. We don't want our clients to be
(08:51):
tethered in a way that's not what they want, right? We
want them to find the freedom and the balance. And so let's
get back to the fundamentals of
the business so that it's not only
about, hey, 10 years from now, I'm going to sell this thing. No. We want
you to have a healthy business today. And guess what?
Here's a little secret. You ready? All the things that you're going
(09:14):
to do to run your business in a healthy way today are going to create that value for
the future. So why would you wait? Why would you wait for the future? And
Yeah, well, on my side of the table, dealing with small businesses for
30 years now, you know, in a in a small family held
company or in a small private company, you know, you're
(09:35):
so mired in the day to day operational things that
tend to be reactionary versus proactive. So
So with regard to, you
know, that thought, what are typical when
should a business owner really be thinking about
(09:57):
their exit? Is it from the day they found? Is it when they get
to a certain scale? I mean, what are the time horizons
I think ideally, it's when we start the business or we are with the
business, we're starting to really form that idea of, well,
who might own this business after me? Who might be my ideal buyer? Because
it ultimately helps us reverse engineer our exit.
(10:20):
But let me unpack that a little bit. A startup that is
a tech startup is going to be asked, what's your
exit strategy when they're going out to raise money? It's a
very normal question to get from a venture capitalist. Why is
it that that question is only reserved for tech startups?
That doesn't make sense to me. I think for any business, let's
(10:41):
call them the everyday, kind of the everyday mainstream business, It's
the same thing. What's your intention? Maybe one way to talk
about it is, well, are you building a business as a lifestyle type
of enterprise? Because it's something you enjoy. And
we can talk about it in that context. The other context is we're building something
that's an asset that we want to grow that value
(11:04):
of the asset, just like you're going to buy gold bars. You would expect
those gold bars to go up in value. Or you buy real estate. You would
expect that real estate to go up in value. Well, if we
are putting a lot of money and time and sweat equity
into building a business, that isn't increasing in
enterprise value, then that's okay, all
(11:24):
right. But if we do have an intention for
building that value and protecting it, then We've
got to curate that. It's not going to happen on its own. We
have to shepherd it along. And the idea behind the term
business transition Sherpa is that this is a journey. We
are on a journey as business owners to get our business from
(11:47):
here to there. And this concept that we're building an asset
for one day to transfer in value so that we can benefit
and continue to have that freedom and things that we enjoy, the freedom of time, the
freedom of choice of how we spend our time, the high return on
time, all those things. I think time is our biggest asset, really,
truly, as people. And for some
(12:09):
founders and for some entrepreneurs, it's really a mechanism to
find how they choose to spend their time. So
let's create this asset that one day lets you have
And let's be honest, the world is a very uncertain place. So
waiting till you're closer to whatever
it is, retirement or your next phase of
(12:32):
your life may be too late because anything
can happen to any business owner at any point. So I
guess the mantra is start as early as you can, even
if your ultimate exit goal is, you
Absolutely. You know, just in the context of the why
wait, you know, theme, um, there's some great quotes out there,
(12:55):
you know, Chinese proverb, you know, proverbs that have been out forever and ever, like
when's the best time to plant a tree? You know, it was yesterday or
when's the best time it's typically, if
you're, If you want to be realistic, though, a
lot of business owners get distracted. Let's face it. They're working in their business. They're
working really hard to make payroll. I get that. So a lot of what I
(13:16):
talk about here is with the understanding and the empathy that
this is hard. But to kind of go back to your question,
I think realistically, especially let's just talk about Gen X business
owners. That's the age category that I'm in, and I tend
to work a lot with folks in that age category. And
I think the survey data has shown that the
(13:37):
Gen Xers are saying five to seven years. I
think COVID, now COVID time when we did surveys, it
did back it up, but of course that was five years ago. What was interesting though
was a transition from people saying 10 years to then shifting
it closer in five to seven. I think COVID alongside
of changes in the economy, 2008, et cetera, 9-11, we've kind of been through a lot.
(14:02):
The boomers, too. If you're asking about the Gen Xers,
I'm going to say five to seven. And I think, when do you start to
work on this? Well, you really need to start today. If somebody comes to me and
says, hey, Lori, we're interested in selling the business next
year. OK, well, we don't have a lot of time to prep it. If they say three
years, honestly, that's actually code for, we've got to get started right
(14:23):
now. If they haven't started, and the thematic of
all of this, Dave, is the more time that we have
to make change and impact, There's always going to be things in
the business we need to improve. It's all about risk and
reward. And it's risk and reward from the buyer side. So we
can talk about that as well. But boomers are in that mode
(14:43):
of, if they haven't been prepped to sell and
have a sellable business, attractive business, transferable business, they have
what they have, you know, they don't, they don't have the wherewithal and the
probably the interest in and making the business ready, so to speak. And
for some, they'll just close for some, they'll sell at
a discount. And for some, they'll sell at a decent, a
(15:05):
decent valuation, but not maximum, but probably not maximum.
And maybe there's some, you know, I know you asked earlier, you know, we were talking to talk
about internal transitions. But yeah, there's all kinds of options.
Closing the doors is one of them. And so I think if we get
back to the idea of building an asset that's transferable, well,
to me, that's really sad. It's sad that if we
(15:27):
have to close the doors because we haven't planned accordingly. And I
Yeah. And the byproduct, I'm assuming, of this whole process is
even before your ultimate exit or transition of
your business, You're putting fundamentals in the business that are going to improve cash
flow, improve profitability. So everything that a buyer
(15:48):
is looking for can benefit the business owner in this process
as well during that prep phase.
Well, 100%. Yeah, everything you're going to do to prep the business, financials,
growth potential, cash flow, the consistency
and quality of reporting, the customer
(16:10):
metrics for customer satisfaction, retention, acquisition, You
know, I could go on and on, differentiation, recurring revenue,
all of those things I just rattled off, probably about eight categories sound
easy, and they're not. I could take one of them and talk
with you for an hour at least about just one of them. There's
(16:30):
so much to talk about and so much to dive into. And guess what? That's
only one leg of a three-leg stool, right? The three-leg
stool for kind of big picture here, if you take
away a leg, what happens? The whole thing falls down. So that's the whole idea about
balance is when we're talking about business growth and
transition, it's personal, it's financial, and
(16:51):
it's business. So largely what I've been talking about here is
business. Right. I haven't yet really dove into the other two. But
they're there. And if we ignore them, guess what? We're kicking the
can on a whole real important thing. So what
I try to do in working with our clients is
really be balanced. We have a balanced perspective. I just had a call yesterday with a
(17:12):
prospect. And he was saying, well, I have these
transition options, A, B, C, D, and I'm 50, and I
don't really know what I want to do, and yada, yada. And I said, you know what? I
just have a whole other question for you. He goes, what's that? but
what would make you feel fulfilled? And we had a whole conversation
about fulfillment. Yeah. And he was like, Oh. Gee,
(17:35):
and I said, yeah, you know, depending, because you're, you know, I said, look, you're a lucky guy.
You're in your 50s. You've got a very successful business. You know, cash
flow is not an issue. You're very profitable. So money is not the question.
It's time, money, or people, right? It's generally one or more of those
things. For him, if we say it's the kind
of time, right? How is he going to choose to spend his time? What
(17:56):
a lovely choice, right? To be able to say, what is it that will help
me feel fulfilled? A lot of business owners, they get to this level of
success, and then Like, I don't know, I don't know what
I want to do. And so based on that path, we
can reverse engineer. So let's say in this example, we have a
successful business who's reached a level of financial
success, and yet we're still wondering what is it,
(18:19):
right? What is it that we're striving for? This is that journey, you know? Let's
take a business owner that is on the opposite side. I
had a call from a woman, she's a niece and
a daughter, and she said, look, you know, my dad, my uncle, They
own this company together, and they're now in their 70s.
They have had some health issues. They haven't been working
(18:41):
as much, so now they've reduced staff. They're the
only ones in the business, so they're not really even driving that much revenue. You can see
their year-over-year revenue is declining. I said,
do they have any contracts and paper? No, just really handshake, longstanding.
Okay, interesting. Other aspects of the business. And
what I was trying to do and understand in that conversation is what's attractive,
(19:02):
what's transferable and how these owners are.
Well, one of them has health issues. So translation, I
told her, look, I'm sorry to tell you, I really don't think this is a business of
value. Here's the biggest reason why. I said the competitors who
might wanna buy them, are probably
going to be better off if this business just closes, because
(19:24):
they'll just pick up the clients. Right, right. And I don't see
the transferable value. They're not going to stay on. They've
got health issues. They're older. They don't want to work that hard. We've seen that in the financials.
What is it that's actually transferring in this business? Now, if those
two gentlemen were my client 10 years ago, it would be a
very different story. Absolutely. We would have identified these things. We would have
(19:44):
put some things in place. So the list can go on
and on and on of what could thwart a potential transaction, which is
why I think your question about, well, when do you start is so important. It's
the, who might we sell it to part? And then what do
we need to do to make this attractive transferable? And how
do we get ourselves ready? How do we get the business ready? It is not an
(20:07):
So let's fast forward to the, to the exit.
So. It's very different depending on,
I guess, who the target buyer is, right? If
it's a third party, could be a vertical integration like
you went through, could be a competitor, that
(20:27):
third party buyer versus generational transfer of
the business. How is it different from a high level?
At a high level, it's best to just consider who
is the best fit buyer. And for many
owners that you're looking to sell, it's fit, it's
(20:47):
cultural fit. And they want
to have either because of legacy and
aspects of family that are important to them. Others
find the identity continuation important, the
brand, et cetera. For others, it's maybe
(21:07):
not so much the legacy kind of outright and like, you
know, sort of name on the door kind of stuff, but more the
legacy with their employees. I really, you know, they'll say things like, you
know, we have a family culture, whether it's a family business or not, we
have a family culture. We have these different
benefits and things that our employees have been
(21:29):
very loyal to us. They have long-term employment. A
lot of folks will say 10 plus years. And they want to honor
that. They want to continue that. Others care about other aspects
of their stakeholders. But I think employees is probably the number one. So
whether it's literal family or kind of feels like family with
employees, that tends to be a pretty major criteria where
(21:52):
culture and fit. You know, I've had so many conversations with
people about their sales of the business and that
next to financial, right? And so a lot of times on
my show, I ask the question, well, you
know, was it the highest bidder? And quite often it's not. So
yes, it's the financials and it's the numbers and it has to work out. But
(22:14):
again, I think a lot of times fit comes down to culture and so on. So
why would an owner choose an insider or
family? Let's describe insider. What do I mean by that? Well, in
the realm of who could buy your business, there's three categories, strategic, financial,
and what we call related. So insider is a good word
(22:35):
because related could insinuate family, but related also basically
means insiders, kind of how I say it. So they're very synonymous. So
either in a family, we could have management. And this is
where it's really, I think, really interesting. And I
want to talk about this with you, is sort of the
balance of risk and the upside. And the
(22:56):
insiders, if they're highly qualified, they know a lot
about this business. And maybe they haven't run a business before, but
they know this business. And maybe they're motivated to own it.
And that's meaningful to the sellers. It's
meaningful for them. to have that continuation, especially
if they've hired with those folks in
(23:17):
mind to maybe one day own the business. That's very exciting to
me, to explore that with people. And then on
the family side, sometimes there's the foregone conclusion
about junior. Juniors started when they were 17, and
sweeping floors, and they worked their way up, and juniors
earned the respect. has the capability and
(23:40):
the talent to be in the right seat and has the right kind
of growth mindset, owner mindset, that lines up wonderfully. When
junior does not have the interest or if junior does not
have the capacity or capability, that's going to be a
challenge. And those conversations are probably harder. So
for some owners, they might have a choice, like is it junior or is it management?
(24:03):
For others, it's, you know, in some situations it's more clear. I had
a client who wanted me to assist the husband
It was interesting. Yeah. None of them were working in the business. I
think they had varying experience sweeping floors and
things like that as teenagers. They
(24:26):
wanted to understand the capacity and the interest, and
they felt like it was important to get an independent point of view. And so
we used some diagnostic tools in addition to interviews to
help give a perspective back to the parents, and
So I can tell you from a lender's perspective, you know,
(24:46):
there's two primary risks in a business acquisition, leveraged
business acquisition, where we're financing. One is
obviously the financial risk. The other is the management
risk all day long. I'll take a qualified
insider who understands the technical aspects of
the business. And, uh, even if they've not
(25:09):
been, you know, the overall manager of
the business versus someone coming in cold, even
if they have a lot of cash. So, uh, I'm a
big fan of, with qualifications and
the kind of assessments that you all do, qualified insiders
minimize the risk to a lender and
(25:33):
Yeah, absolutely. I can understand that perspective. I think it's
really important. And it's eye-opening for people
to hear it. I'm sharing that with folks.
You're sharing that with folks. And it's like, oh,
yeah, OK, I get that. how
do we have the perspective in our
(25:56):
hiring process is one of the things that I'm working on
to try to get, you know, in that realm of the question
of how do we prepare? Well, if one day you
think that maybe you would like your management team
or key manager to own your business one day, did
you go through a hiring process with that in mind? Most,
(26:20):
no, they don't. They hire for skills and capabilities and
the resume and so on. And what happens is, is like, those
folks emerge as key leaders, and then we have faith in them, and
they're loyal, and we want to grow them. And then we think, well, one
day, they might want to own my company. I've had other sob
stories. I had one, I work a lot with engineering firms,
(26:41):
technical owners. I like to describe my clients as
analytical owners. A lot of these folks are
hiring from within, growing from within. developing
their people, which is wonderful, and I definitely encourage that.
But it gets to a point where, again, you might not have the right person in
the right seat when it comes to ownership. Because there's a difference between
(27:04):
succession of leadership and succession of ownership, just
to be distinctive about that. And I think owners don't,
they assume too much sometimes. So I get calls like
this. Lori, I'm calling to sell my business.
Oh, OK. Have you considered any other exit options? Well, I
thought that I wanted my second in command was going to buy my
(27:25):
business. This is a real conversation with an engineering company.
I thought that the second command was going to buy my business. Not only did he not want
to buy it, he quit. And it hurt him
deeply. He was very upset about that. Now, I
think that that's a sad story. It's a very sad story because that
saying, If you assume, makes a blank
(27:48):
out of you and me. Yeah. So it comes back big time here in
this story, because it's a good lesson to learn. And we learn
from his pain, essentially, that you can't just
assume. I had another client situation where he
assumed that his number two was going
to be his long-term successor, and that number two, during COVID, he
(28:09):
and his wife moved to Europe. Well, that kind of went out the window right
So you basically walk
business owners on, as you said, it's a journey. It's a long term
journey through kind of a framework. Can you talk
about the kind of the outline of the steps in
(28:35):
Yeah, absolutely. We call it the built framework. And just
really at a high level, we start with diagnostics for
where are we today? What are some of the aspects of
the business? We need to get a good baseline. We need to understand, if
we can, what is the value of the business today? Because again, if we're building a
business that we intend to have an asset value that
(28:57):
one day someone else will want to own, regardless of who that owner is,
it's going to have a value. Well,
you've been putting a lot of time and energy into that, so let's make sure to measure
it, because what gets measured gets improved. So, baselining and
measuring the value of the business as an enterprise is
what I call the owner's metric. And many, many owners, I'm
(29:17):
going to say 90%, have no idea what their business is worth today. Also,
startlingly important is, well, what could it be worth? Because
if we can 5X the value of your business, chances are
we're talking about millions and millions of dollars. gee,
let me calculate my ROI, and we're talking thousands of dollars.
No, this is millions of dollars. And it's also meaningful probably
(29:40):
for your family and could mean for generational wealth. If
we're talking about businesses that, let's call it even lower middle market,
these are not huge, huge companies, but they're sizable. 2 to
20 million in revenue. Let's take a 2 million revenue business. We
5x the value of that business to 10x. or
excuse me, 10 million, we've now entered
(30:02):
an elite club. Did you know that only 1% of privately held
That's an interesting metric. That is not a big percentage.
So let's join an elite club. Let's get your company to scale,
right? Let's grow it. So the built method is really about that. What
are the aspects of the business that we can capitalize on for you? And
do it so we have a sense of, and
(30:26):
doing it in ways that are also going to unblock. So the U
is for unblock. How can we unblock? We need to look at what are the
risks in the business. We've got to look at your business through a buyer's lens. We
have to look at it and say, huh, how would a buyer view our
business? Because that perspective helps us see what
are the risks? How do we mitigate them? How do we increase value? How
(30:47):
do we prioritize? There's an infinite number of things we can be working on.
Those aspects and then the leadership side, as a leader, as
an owner, how do we find that clarity? A
big part of this is finding the clarity so
you can lean in. And the T is ultimately transition. How
do we transition with success and set that intention so
(31:10):
that we can reverse engineer our exit?
So you have some great resources outside
of your own one-on-one Sherpa
concept where you're walking through these business owners. So you
(31:32):
I did write a book. It's called the business transition handbook. What a shocker. It's
all about business transition, but it's, I, you know, it's a really good read.
The feedback on it has been wonderful because, uh, the
show that I have called succession stories where you, you are a guest
on, uh, on my show and it it's got snippets from
real stories, real experiences. And then my, you know, weaving in my own
(31:54):
and, and some client experiences anonymized, of course. And
ultimately, it is something I want owners to read and dog ear
and write in it and get tools and actions and
be actionable, set that intention to do something. This
is not a read and forget, this is a read and come back to and hold yourself
accountable to it. And then from that book inspired a
(32:16):
course that I've put together It's in a couple of
different ways, kind of a course one is we call Built Freedom, which
is what are the things that we need to be doing today to have the
mindset for transition that helps us increase value, helps
us increase personal readiness, and also understand some
of the baselines of where are we in our business. In
(32:36):
addition to that is about kind of the scaling
and multiplying value and eventually letting go.
And eventually it's that kind of strategic sale or
transition with family, whoever we determine. So all
three of those buckets are really big buckets. And I thought, you
know what? Maybe it would help people. People learn in different ways. So some people
(32:57):
learn by reading, and the others hold
themselves accountable. Others need people to hold them accountable. It's
like, do you go to a gym class or do you exercise on your own? I
go to a gym class, so I like having coaches. And
that's kind of what I've set up, is a coaching framework
and methodology with peer groups so that not only do you get the
(33:18):
benefit of, hey, here's kind of a Sherpa helping lead
you on your journey here and holding you accountable to it, but also how
can you benefit from the perspective of other business owners. Technical,
like I say, my analytical owners who appreciate the math. We
So tell our viewers and listeners a
(33:41):
Yeah. So again, I'm super excited for our recording. The
show is called Succession Stories and it's over five years old. And
you know, this is a kind of a funny story. Did you know that this conversation
in person is only the second one that I've ever done. In
person. In person, because when I first recorded
(34:01):
Succession Stories, it was February, 2020. Wow.
Yeah. So I'm so excited to be in person with you. Yeah, here we are.
Um, yeah, it's an award-winning show. Really proud to say it's
top 2% globally that we have listeners all over the world. And
the intention of the show is to have people who orbit
the world of entrepreneurship. So sometimes it's entrepreneurs with
(34:22):
an exit. Sometimes it's entrepreneurs who have had other challenges, um,
It's teaching by example, and it's experts like yourself and others who work with
business owners to help them, you know, grow scale
Yeah. So how can our
viewers and listeners and small businesses that, as
(34:43):
I said at the very onset of the podcast here, need
to put this on their radar? How do they learn more
about what you provide? You mentioned, we
mentioned the podcast, we mentioned the book. How
Yeah, that's great. One place to go is my website, which is btsherpa.com
(35:03):
and they can get a download of my book, a PDF download of
my book for free if they would like. They can subscribe
to the podcast, listen to the podcast. It's on all the podcast platforms. And
I have a whole library and catalog on
the website of the show. And then in addition to that, I
have an entire YouTube video channel where they
(35:25):
can find all the kind of catalog of webinars and things too.
Yeah. So how do you initially engage with a prospective client?
I think the best way to describe that is kind of like a 90-day baselining, where
we do a series of diagnostics around personal readiness, business
attractiveness, business readiness, and business,
(35:48):
some of the financial, personal financial things. Having that
perspective on those three areas gives us a sense of where
do we need to prioritize. On the business side, if there's some firefighting and
some real important things we've got to work on, whether it's
cash flow, whether it's marketing or sales, we, we really
need to understand too, like what fires burning that we need to address.
(36:11):
And then I like to work proactively with the owner and
we, we work together and this is, again, this is a marathon, not a sprint. So
the 90 day is just really like, Hey, let's just get started. And then from
there is how we prioritize those three legs of the stool.
Yeah, absolutely. And I like to say, you know, my Rolodex is my
client's Rolodex. That's a huge value add because it can save a
(36:32):
lot of time if they need another professional If they need an
introduction to a banking advisor, financial advisor,
wealth management or legal, that's the collaborative approach
Yeah. So as I always do, parting
words, I always ask our podcast guests, what's your
(36:53):
advice for either existing or aspiring entrepreneurs
I think the best nugget is recognizing that 100% of
business owners are going to leave their company one day. And
will you be prepared? You know, that's really, if you have that mindset,
you'll have the owner mindset because you're a founder. But if we're buying a
(37:14):
business, if you have a transition mindset, you
will also build with exit in mind to
Excellent advice. Excellent advice. Lori, thank you so
much for the insight, for our viewers and listeners. Great
resource local here to the Pittsburgh market where most of our viewers and
(37:34):
listeners are, but you're not limited to that, obviously. For
those of you that have any advice on
future episodes of Inside the Vault or any questions, you
can email us at insidethevault at enterprisebankpgh.com. You
can check us out in audio format on all the major podcast
(37:55):
platforms and in video format on YouTube. Lori,
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