October 29, 2024 • 32 mins
Let's talk about building a business that not only thrives but is also primed for a successful sale. We promise you'll gain invaluable insights from our conversation with Denver business coach Steven Kohnke, as we explore strategies that transform a "mom and pop" operation into a saleable, structured entity. Together, we'll discuss the necessity of having an exit strategy from the start, inspired by Steven's wisdom to "begin with the end in mind." Discover why reducing dependence on a single individual is crucial for increasing your business's value, and learn how to prepare for potential unforeseen circumstances that could force an unexpected exit.
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Episode Transcript
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Speaker 1 (00:00):
This is Small Business Big World, our weekly
podcast prepared by the team atPaper Trails.
Owning and running a smallbusiness is hard.
Each week, we'll dive into thechallenges, headaches, trends,
fun and excitement of running asmall business.
After all, small businesses arethe heartbeat of America and
our team is here to keep thembeating.
Hello and welcome to SmallBusiness Big World, our weekly
(00:24):
podcast where we talk about allthings small business.
Today, my guest is StephenConkey, the Denver business
coach.
Welcome, stephen, thanks,thanks, chris, good to be here.
Well, today we're going to talkabout building a valuable and
saleable business, which iscertainly a lot of people's
goals when they own a smallbusiness.
So that'll be fun to talk about.
Before we dive into that, alittle bit of housekeeping,
(00:48):
don't forget.
Forget.
Please like, follow, share,rate, review, subscribe.
I think I got them all.
We are at small business bigworld everywhere.
You get your podcasts on allthe social platforms, of course.
If you have any questions forus or any of our guests, you can
always email us podcast atpaper trailscom and we will get
you in touch with who you needto get the answer from.
All right, steven, stephen.
So I'm early in my career,hopefully building my successful
and saleable business right.
(01:09):
When you work with clients, youknow who might be starting to
think about getting ready to getout of their business, maybe in
a few years.
Where does that process startand how far before you think
about an exit should you bethinking about and planning?
Speaker 2 (01:23):
Yeah.
Well that's the Stephen Coveyquote right Begin with the end
in mind.
That's kind of how we talk withour business owners about it.
It's 100% of us all businessowners 100% will exit their
business.
It's just how do you want to doit?
How do you want to exit?
Do you want to do it on yourterms or do you want to be
forced out?
Do you want to exit?
(01:44):
Do you want to do it on yourterms or do you want to be
forced out?
You know there's all the on thenegative side of exits.
There's all the things of beingforced out of your company.
You know some type of illnesshappens and you have to shut it
down.
So there's all of these thingsthat go into.
You know the dark side of exitsthat aren't as happy.
That we also plan against.
And if you're building yourcompany from the moment you
(02:06):
started with an exit in mind,really doing the things that
make businesses valuable,mitigating those risks from day
one and start thinking about it,then you protect yourself
against a lot of that unforeseenexits that happen quite often.
So we always right when youstart.
Speaker 1 (02:27):
Yeah.
So I think most small businessowners sometimes get caught up
in just running the business andworking the business and they
don't necessarily think aboutthat end game.
And I've been actually workingon my estate planning the last
couple of months and it's kindof forced me to think about that
right For that unforeseenhappening.
And I would say, fortunately mybusiness has grown to a point
where it's not necessarily fullydependent on me because we've
(02:49):
worked on building some of thoseprocesses and things like that.
I'm sure you guys do the samething with your clients, right?
Speaker 2 (02:55):
Oh, yeah, yeah, so it's a lot about people in
process are kind of the areasthat we'll look at.
A business first.
It's what is documented, who'sdoing, what are they in the
right seat, what's theorganizational structure look
like?
So a lot of the value.
And to kind of oversimplify,overgeneralize the more the
(03:15):
business relies on any oneperson or customer or vendor,
customer or vendor, the higherthe risk is at transferring that
business.
So if you are running a business, this happens a lot in business
owners that we work with intrades and home services, like
(03:36):
plumbers and electricians, andthey've been working in their
business for 30 plus years andthen want to retire or go and do
something else and they mighthave one or two people working
under them.
But the business will notsurvive without that owner's
involvement, whether it's insales or the financial component
or doing the actual work.
The more that business isreliant on the owner themselves,
(03:59):
the less valuable it is.
Value and risk have the inverserelationship and heavily
dependency on any of those areasthat I mentioned is going to
significantly devalue thecompany.
Speaker 1 (04:14):
And we see that a lot with our client.
We have a lot of those mom andpop, onesie, twosie type
businesses and a lot of folkssay, well, I can't sell my
business right, because it is sodependent on me.
They may not think in thatterms, but they say, gosh, I
don't have anything that's worthanything.
But how do you work withclients to help them develop
that and help them build a morevaluable business so that
(04:35):
someday when they do retire,they don't just sell the truck
on the front yard and I'm nottaking service calls anymore?
How do you sell that clientbase and that business?
Speaker 2 (04:45):
Yeah, it takes time.
You know that's one of thefirst things I'll talk to with
any business owner that'sconsidering working with us is
you know what's your timeline?
Because going from mom and pop,a couple people, to building
something that is what we referto as an asset right, it's an
(05:06):
asset business that you canactually transfer ownership of
it takes time because, when itcomes down to it, it's people,
and process is a big componentof it, and to be able to be big
enough to hire and supportpayroll, you have to grow the
business, the revenue and allthose components as well.
(05:26):
So if we're not big enough tosupport payroll, we look at
those issues first.
What is marketing looking like?
How can we improve lead flowwhere it's not dependent on the
person, for instance, going outand doing their own networking?
Getting referrals is great.
(05:47):
Having a digital marketingpresence with inbound leads is
better, right, because it's notreliant on the individual
themselves all the time.
So we'll look at thosecomponents too and try to solve
that problem first.
Speaker 1 (06:16):
Then we say how can we diversify workflows, roles
and responsibilities?
Bring on some good people,create a management team if we
can.
So I didn't have, and I have 15employees to add, you know,
three, and it was a littleslower in that growth but it, as
time went on, you know, we wereable to build that and kind of
create those processes and makeit so that I wasn't the only one
(06:36):
that know how to do everythingRight, right, certainly.
Again, like I said, I've beenworking on my estate planning
and you know everyone's likewell, what happens if you get
hit by a bus, right, and nowwe're having those conversations
today so that I'm, if somethingdoes get happened to me, you
know it's hopefully it's not uhgetting hit by a bus, right, I'm
going some fun, but uh, how theuh, you know it's it's really
(06:58):
making sure that you're buildingthat process so that there,
like you said, isn't one personthat is reliant on that.
And that's hard.
I mean, I will say that's hardfor me as a business owner,
because there were things likeour financials that I have to
give up, right, in order tocontinue to grow and scale.
But I have to be willing to letsomeone in on that and you know
(07:19):
that is obviously somethingthat's hard and I'm sure you
deal with that when you look atthe people aspect of that we
certainly see folks arestruggling with recruitment.
How are you having your clientsdevelop and grow their people?
That's one of the biggestchallenges we all have is our
people.
What are you kind of using inthe toolbox for that?
Speaker 2 (07:41):
Yeah, that's a great question.
There's a lot of things that gointo the people component.
Right and people.
My background is in changemanagement.
I used to do a lot of changeconsulting with big companies
and we would always say you canhave the most efficient, the
most effective processdocumented, but if you don't
have the right people to executeit, it doesn't matter.
(08:02):
The right people to execute itdoesn't matter.
You got to have the people inthe company doing the right
things to make anything work.
And it does start from therecruitment process, right, and
the interviewing process andmaking sure that you're setting
the right expectations andworking on trainable components
(08:22):
of the business as well.
We work with clients on thatside of developing you may have
heard ideal client profiles,icps.
We do it on the employee sideas well.
What is your ideal employee?
What do they look like from acultural perspective, from all
different components?
Who's going to be a great fitfor you in this position?
(08:44):
Maybe not even on the technicalside of actually analyzing the
P&L, for instance, or if you'retrying to bring on an accountant
in some way or doing the salesprocess.
Culture fit is going to benumber one that we're really
looking at, and more and more.
When I talk to people that arein M&A those investment bankers
(09:06):
and private equity firms theylook at culture.
It's one of the first thingsthey look at is what does the
culture look like?
What are the people?
How do they interact?
It's becoming a bigger andbigger component of investing in
companies, more than evenfinancial performance.
Speaker 1 (09:25):
Well, even before investing, think about operating
right.
I mean, I've spent a lot oftime the last few years trying
to.
I would say hiring is just likeselling your product, but
you're selling yourself toprospective employees.
And we've spent a lot of timedeveloping our website to our
careers page of our website tosay about all the great things
that we do, how great ourculture is.
(09:46):
And we just did an escape room,we do a boat ride in the summer
and we do our year-end partyand you know I buy lunch every
once in a while.
You know, I mean, obviously it'snot all about money, but right
uh, you know we've just beennominated as one of the best
places to work in maine andwhich that's true.
You know surveys and you knowof your employees and making
sure your benefits are good andall that stuff, right.
And I tell clients that arehaving a hard time finding
(10:07):
people to go through and andtake a look at themselves and
say, okay, what am I offering asan employer?
Right, even if you're aseasonal business or you know
something like that, what areyou offering?
There are we have severalclients that were in Maine,
coastal Maine.
You know we have a lot ofseasonal businesses here.
We have a big resort that'sonly open six months a year and
(10:28):
they only hire 10 to 20 people ayear on the 200-person payroll
because they have such retentionyear after year after year.
Speaker 2 (10:36):
That's fantastic.
Speaker 1 (10:37):
What are they doing right?
They have the culture and theyhave the process and the people,
people and the team that wantsto come back every April, and
you know so it has taken them along time to build that, of
course, but you know, buildingthat culture and selling
yourself to respected employeesis really big, and I think not
only in your you know, if you'rethinking about selling your
(10:59):
business but also just inoperating and running
headache-free business.
Headache-free, that's key,right.
You should never right, youknow.
I definitely think that makingsure that you have the right
team in place is important.
So that's, you know.
I would say look at yourselffirst.
Why can't you find it?
Speaker 2 (11:20):
Right, yeah, I mean, especially this day and age too,
with hybrid work environmentsbeing so much more common and
virtual work environments.
You know, how do you facilitateculture?
You know, we have our oneclient I've been working with
for a long time.
They go on quarterly retreatswith their team, though they
have people all over the countryand he'll bring he lives in
(11:44):
Southern California and he'llbring everyone into the area.
They'll get a hotel or anAirbnb and go do some adventure
thing.
So it's.
It's.
How are you kind offacilitating that culture, Even
if you are virtual too?
Speaker 1 (11:56):
Yeah, absolutely.
I think that's something thatwe're struggling with for sure
as we continue to grow is howcan we develop that team from a
remote, how do we build aculture with our remote
employees?
And actually a peer of mine inour industry kind of said the
same thing.
They do full, everyone's onsite.
(12:16):
You fly in from wherever youare.
This know, this guy hasemployees in 10 or 11 states.
He flies everybody in for twoweeks a year.
Basically they, you know, do acoworking space, so they have
meeting space, they have extraspace, whatever they need and
really gives brings everyone onsite so that you see it, feel it
, touch it, you know, twice ayear or a couple of times a year
.
And I think that that's reallyimportant, especially nowadays,
(12:43):
where our heads are down we'reat our, you know, basements or
wherever we are, you know,working remotely and it's
certainly important to keep thatpersonal touch, because I think
that's why we're successful.
Speaker 2 (12:52):
Oh yeah, we do an annual one, so we only do it one
time a year.
But one of our advisors on ourteam she has a ranch out in
Ridgeway Colorado, so we'llbring everyone to her ranch and
have a good long weekend witheveryone, which is always fun.
Speaker 1 (13:08):
So we talked about the people.
What about process?
What kind of processes are youhelping clients develop, or what
are the key processes that yousee universally that businesses
should really be getting theiract together on in order to
build the strength solidifyingthe current business, but then
getting it ready for someone totake over?
Speaker 2 (13:28):
Yeah, I think one of the most important and this is
all debatable, right, but Ithink one of the most important
processes relates to the peopleand it's your onboarding process
and really understanding howyou get someone up to speed.
How do you facilitate theculture from day one, how you're
setting the right expectations,how quickly can you get them in
their role?
I forget what the stats are now, but when someone leaves your
(13:52):
business, it's really expensiveto replace that person and to
get someone up to speed reallyexpensive to replace that person
and to get someone up to speed.
So we're always looking at howcan we cut that the timeline to
get someone up to speed withoutcutting the effectiveness of
that person, that individualperforming in that position.
We've really turned to pictures, written and video
(14:20):
documentation of how to dopositioned processes.
So, if you're a salesperson,what's your sales playbook look
like?
What are those steps, what arethe scripts that you're going
through, what is your valueproposition?
And they're all documented andeasily found on whatever
centralized location that yourinformation is on.
(14:42):
We, in particular, use Trainualand we also set up Trainual
accounts with our clients.
But it's a really greatmultimedia resource to be
housing what we refer to asplaybooks what's your positions
playbook and how do you do itand then you can walk a new
(15:03):
person through, onboard them,and then they always have that
reference guide for as they gothrough their position Maybe
they haven't done something in awhile.
They can always go to thatplatform and say how do you do
this again, and then there willbe a video I will show them how
to do it.
So being able to make yourprocesses trainable and
duplicable is is pretty key.
(15:24):
So the onboarding one, I thinkis really, really important.
And then I kind of generalizeit to say your buyer's journey.
You know how are you actuallyworking someone from when they
first find who you are, all theway through service delivery.
We're mainly working withservice-based businesses.
So what does that wholedelivery of your service look
(15:45):
like and what is trainable onthe delivery side of it and can
you scale those components too?
So that's on both sides.
Internally and client-facingare going to be two big, big
ones that we'll look at and tryto figure out how to document
and scale those areas of thecompany.
Speaker 1 (16:05):
Yeah, like you said, that creates a great repository
for ongoing.
One of the things I'm thinkingabout, just as a business owner
myself how are your clientsfinding the time to develop
those processes and record thosethings and create those
presentations?
That's what you're helping themwith, or are they just buckling
down?
Speaker 2 (16:26):
Yeah, that's tough, that's the hard one, right,
because no one likes to documentwhat they're doing, especially
business owners.
Yeah, so that is an offeringthat we have.
So we will work with their teamand really extract what they're
doing, just have recordedinterviews with them.
(16:46):
We'll do screen shares andreally try to capture components
that they're doing.
But we can't do all of it right, so we'll do as much as we can.
We'll get someone up toprobably 90% of the way there
and then we'll create just a a ahit list and say, hey, we need
a video of you narrating andpretending like you're training
(17:07):
someone to do you know, to dopayroll in your company.
How do you actually do that?
How do you document that?
Where would you click on one ofthe steps?
Do a two to three minute video,break it up if you need to, but
we'll just create that list forthem to do and that it's a
continuous process, improvementin itself to document processes.
Speaker 1 (17:31):
So the first step is just doing it right.
Yeah, I mean I can't tell you,in our industry alone,
everything has changed the lastfive years.
I mean, we're not doing hardlyanything like we did four or
five years ago.
Uh, just because the way theindustry has changed services,
clients are demanding how thingswork, the tools that are out
there uh, you know, if you askedme, five years ago we didn't
even have a zoom right.
(17:51):
We were using right, we weredry clients.
They were coming to us.
I don't.
I see maybe one or two clientsa week now, you know, because
just things have happened and uh, I I think code was really good
from an efficiency perspectiveand some of those things.
I definitely think we lost, youknow, some of the personality
and now we're seeing all thekeyboard warriors out there
right screaming and hot, andnone of them no, that is very
(18:15):
true.
Speaker 2 (18:17):
Text me normally right like drives me crazy,
sorry but there's so many moresoftware systems that are
popping up left and right of howto do something, so it's, it's.
I've tried.
I've found it rare that anyonesticks with a software system
for more than you know, fiveyears, um so being able.
And then that comes with awhole slew of other things to be
(18:37):
doing, of documentation, how wedo certain things, so on and so
forth.
So I help my clients overcomethat overwhelming feeling of
documentation by saying it's not.
You break it up into little bitsand it's never going to be
perfect, especially the firsttime you do it.
You just got to start and thenyou can always go back and
refresh and kind of do that.
(18:59):
I always think of it as like aRolodex.
If you remember, back in theday I was just kind of going
through all right, here let'sreview our sales process Are we
still doing it this way?
Let's review our payrollprocess Are we still doing it
this way?
And just kind of looking atcontinuously building and making
those processes better.
But it is a Indeed, it is.
Speaker 1 (19:20):
So, once you've got all your processes built and
documented and you've got thebest team in the world, and now
you're ready to retire, ready tomove on, ready to go.
So where are you seeing yourclients?
You know, look for buyers.
How are they going out thereand finding buyers?
You know, are they getting abroker?
Are they, you know, justreaching out to peers?
What's the?
What are you seeing?
(19:40):
What?
Speaker 2 (19:41):
are you seeing?
Yeah, that's a great questionbecause it's a mystery right For
a lot of business owners of howokay, I'm ready, how do I
actually do it?
Speaker 1 (19:51):
And I can tell you my business is worth a hundred
million dollars.
Right, of course it is, youknow, and I'm wired to the
Bahamas.
Speaker 2 (20:00):
Yeah.
Speaker 1 (20:01):
I think real challenge for business owners is
figuring out where to start.
Speaker 2 (20:07):
And there's a whole.
There's a lot of things toconsider, right.
There's a lot of differenttypes of exits.
You can pass it down to thenext generation within your
family that's an option.
You can go to private equity,you can go to an owner-operator,
you can transfer it to yourmanagement and there's a bunch
(20:28):
of other different ways to exit.
So that's why we always saythink about it sooner than later
.
But I'd say a lot of our clientsknow a buyer ahead of time,
either through their ownprofessional networks.
A common one is a strategicacquisition I shouldn't say
common but what some of ourclients have seen is some of
(20:50):
their competition will look tobuy them for whatever reason.
I have a waste managementcompany that is being pursued
right now because it's an EastCoast company and they want to
break into Colorado and startmaking their way westward.
So they're looking at one of myclient's businesses to
potentially acquire, just toexpand their geographical
(21:13):
location.
With the more commontransactions that occur, the
business owner does not know whothey're going to sell to.
They're not really sure whatthe value is.
So we do have really goodrelationships with business
brokers, M&A professionals, whowill do the valuation, and their
role is to go find a buyer.
So we'll work with our clients,get the business ready to be
(21:35):
sold and then we'll be in theadvisory component throughout
the duration of the sellingprocess, talking with the M&A
banker or broker throughout thatwhole process as well, helping
them through due diligence.
So we're preparing thebusinesses for a financial buyer
, which is someone who wants toreturn on their investment, them
(21:59):
buying a company.
So that's when most casesyou're going to be using brokers
or M&A bankers to market yourbusiness, put it on the market
if you will, but in some casesit's going to be your
competition or someone youalready know within your network
just looking to grow their owncompany.
Speaker 1 (22:20):
And how are businesses valuing their
businesses?
I mean, I think it's differentin every industry.
Burnley right, we were seeing100X returns on tech companies
and AI and all this crazy stuff.
Speaker 2 (22:34):
I don't know.
Speaker 1 (22:35):
Standards, small businesses Are you just seeing a
multiple of bottom line?
How are you seeing folks?
Speaker 2 (22:43):
How are you seeing folks?
Yeah, I think, and you're right, it's hard to kind of say have
a blanket statement, becauseeach industry is different, each
business performs differently,but there are resources out
there.
One we use is businessvaluation resources BVR deal
stats, I think is what it wasformerly called, but that's just
a database of all businessesthat have transacted, of all
(23:05):
different sizes.
So that really helps us narrowin and benchmark where multiples
are being applied.
In most cases of the businesseswe're working with anywhere
between $1 and $20 million inrevenue.
We're looking at EBITDA or we'relooking at SDE seller's
discretionary earnings.
So that's your P&L statementwith ad backs, basically, and
(23:29):
then a multiple is assignedbased on all the intangible
components.
So like what we talked about,the culture, the risk,
dependency, all those otherpieces that go into a business,
with the EBITDA and or SDE asthe numerical number to multiply
against a multiple, dependingon the industry.
(23:52):
But there are some rules ofthumb, like the private equity
groups that I know and have beenworking with and M&A people.
Once a business crosses amillion in EBITDA, their general
multiple will jump about twopoints just because of the size.
Speaker 1 (24:13):
Well, sure, right, right yeah.
Speaker 2 (24:19):
But it's all risk right, and there's always a
range of multiples of what'sbeing assigned and the higher
the risk, the lower you're goingto pop up on that range of
multiple.
If you're selling a book ofbusiness, it might be you're
(24:46):
going to increase your multipleand increase your payout when
you sell it.
Speaker 1 (24:52):
What are you seeing for a timeline when folks are
getting ready to sell?
Is it 72?
It closes in 90 days, right Ayear or two.
What are you seeing in terms ofthat?
Speaker 2 (25:04):
Yeah, I think the fastest I've seen is maybe six,
six months or eight months, um,somewhere around there.
Uh, the whole it all depends onsize of the company too right.
You can have, you know, a 50million dollar company that can
take two years for due diligenceto to go through um, and you
know on the on the other sidetoo.
(25:24):
So timeline we always say giveus three years, three to five
years from the day you want togo to market.
Then we can really button somethings up, make sure everything
is looking real nice and get themaximum value you can for the
business.
From the point that you list tothe point that you sell,
(25:46):
assuming everything is doneright on the back end, we're
looking at a year andpotentially another year for the
actual transition of thebusiness going through.
I think the average I've seenis like nine to 10 months from
the day that you list to signingon the dotted line, if you will
(26:08):
, to actually transfer thebusiness.
And then after that pointthere's the actual transition
period of where most owners aregoing to be working in their
company, either as a consultantin some form or an advisor or an
actual employee, for a periodof time too.
Speaker 1 (26:25):
Are you seeing any clients of yours getting
creative with their dealstructure to manage taxes?
Or is it straight hey, we'regoing to do an asset sale and
I'm going to pay my capitalgains and move on.
How are you seeing thingsstructured these days?
Speaker 2 (26:43):
Yeah, that's part of the fun part.
Right like we, we will bring in, uh, financial advisors, wealth
advisors, to help us with thatcpa is to really understand what
are some good tax strategiesthat we can be looking at.
How can we defer some of thepayments?
Um, is it big enough to set upa trust and and be working
things in that way?
Um, you know way, if they arecharitable people, we can work
(27:08):
in charities and donations ofmoney.
You may not be walking awaywith more money in that sense,
but you're paying less in taxes.
So there's different ways thatyou can do it.
I think, where most of ourclients are coming in weighing
all the pros and cons of it,they're more willing to just
work with the capital gains andtake what they can in that way.
(27:30):
But once we start getting up tomultiple millions of dollars of
transaction value and actuallygoing through, we're bringing in
a team to help mitigate some ofthose tax burdens and trying to
help our clients walk away.
But I haven't seen any likethis is the way to do it.
(27:50):
I have one guy that doesmineral rights and helps people
do exchanges in that way and say, hey, we can really reduce the
tax bill by funneling some ofthe money into mineral rights.
So it's different every time.
I've seen it so that's.
Speaker 1 (28:07):
You know the importance of finding good
advisors, right?
Yeah, financial advisor, goodattorneys, all those things are.
And you know, I think in ourarea we have some really great
general purpose.
You know, small businessaccountants or attorneys and
things like that.
But sometimes it makes sense tofind someone that might be a
little more specialized.
You know, go to a area, findsomeone that does this for a
(28:30):
living.
How they do is they don't.
You know, johnny needs cpa downthe street's a great guy.
He's helped you for 30 years.
But, right, you know when, andsome time comes.
I mean, I've, I've heardaccountants say to our clients
well, that just is what it is.
You made the money.
You have to pay the taxes,right?
Not that it's not true, right?
Speaker 2 (28:48):
Right.
Speaker 1 (28:48):
You have to pay the taxes, but are there ways to
play the tax game?
Speaker 2 (28:53):
Right.
Speaker 1 (28:55):
There's hundreds of thousands of pages of tax code,
and finding the way to make itmost take advantage of that for
your benefit should be what weshould all be doing, right?
Speaker 2 (29:04):
Oh yeah, and yeah it's.
Each situation is different,right?
So it's like you said.
It's making sure that you havethe right team around you, that
that knows what to be doing.
It isn't just saying, oh, youmade this much money, now you're
going to pay this much in taxes.
It's like, ok, how how can wework the tax codes to our
advantage to help set up ourkids or someone else for the
(29:27):
long term?
There's a bunch of differentways to be looking at it.
Speaker 1 (29:32):
Well, and of course those conversations should be
starting before there's even aletter of intent signed.
I mean, we'll wait until you'reunder contract, right?
No?
Speaker 2 (29:39):
no, no.
Speaker 1 (29:40):
Well, awesome, I think we've covered a lot of
ground today, stephen.
So if you had one takeaway youwant people to know about
building their business up toget it ready to sell, what would
you say?
That one thing would be.
Speaker 2 (29:52):
Yeah, I think we will look at the ownership risk of
how involved the owner is, andone of our litmus tests is how
long can you be away from yourbusiness without it falling
apart?
And our goal is to get ourclients up to three months of
(30:14):
unplugged time away from thebusiness and then we'll know
we're at a pretty good spot.
So that's a question I alwaystell everyone to continuously be
asking themselves.
It's what would fall apart if Iwasn't in the business?
And then, when you have your onthe business time, focus on
(30:37):
mitigating the risk in thoseareas.
What would it take for this notto fall apart if I were gone?
That's a pretty great questionIf you're continuously asking
yourself that you're going tofind your list of how to
increase the value of yourbusiness.
Speaker 1 (30:52):
So I just walked out to Houndas, the business owner.
I'm going to walk down to mymanagement team and say okay,
I'm going on vacation for threemonths.
Yeah, Exactly.
Speaker 2 (31:02):
That's one of our I call it the vacation strategy.
That's one of our favoritethings to do with clients, Like,
all right, let's take longerand longer times away and then
see what breaks, and then that'sgoing to be our action plan for
the next.
You know, however long.
Speaker 1 (31:13):
I like that.
Yeah, it's great.
Well so, steven, if folks wantto get in touch with you, what's
the best way to do that?
You guys have socials, email.
What's the best way to find you?
Speaker 2 (31:23):
Yeah, we're probably most active on LinkedIn, so
Denver Business Coach is ourLinkedIn page.
Our website isdenverbusinesscoachcom.
It has a lot of greatinformation on there, and then
people can reach out to medirectly as well.
Steven atdenverbusinesscoachcom.
Speaker 1 (31:41):
Well, thank you so much for joining us.
I think it was a really, reallygood conversation and certainly
don't forget to all of ourlisteners like, follow, share
rate, review, subscribe andcertainly, if you have questions
for us and can't find Stephen'sinformation, shoot us an email
at podcast at paper trails dotcom, and we will get you in
touch.
All right, chris?
Well, much talk to you nextweek.
Everybody, thanks for listeningto this week's episode of a
small business, big world.
(32:02):
This podcast is a production ofpaper trails.
We are a payroll and hr companybased in kennybunk, maine, and
we serve small and mid-sizedbusinesses across new england
and the country.
If you found this podcasthelpful, don't forget to follow
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As a reminder, the views,opinions and thoughts expressed
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The material presented in thispodcast is for general
(32:23):
information purposes only andshould not be considered legal
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By inviting this guest to ourpodcast, paper Girls does not
imply endorsement of oropposition to any specific
individual, organization,product or service.
This is Small Business Big World, our weekly
podcast prepared by the team atPaper Trails.
Owning and running a smallbusiness is hard.
Each week, we'll dive into thechallenges, headaches, trends,
fun and excitement of running asmall business.
After all, small businesses arethe heartbeat of America and
our team is here to keep thembeating.
Hello and welcome to SmallBusiness Big World, our weekly
(00:24):
podcast where we talk about allthings small business.
Today, my guest is StephenConkey, the Denver business
coach.
Welcome, stephen, thanks,thanks, chris, good to be here.
Well, today we're going to talkabout building a valuable and
saleable business, which iscertainly a lot of people's
goals when they own a smallbusiness.
So that'll be fun to talk about.
Before we dive into that, alittle bit of housekeeping,
(00:48):
don't forget.
Forget.
Please like, follow, share,rate, review, subscribe.
I think I got them all.
We are at small business bigworld everywhere.
You get your podcasts on allthe social platforms, of course.
If you have any questions forus or any of our guests, you can
always email us podcast atpaper trailscom and we will get
you in touch with who you needto get the answer from.
All right, steven, stephen.
So I'm early in my career,hopefully building my successful
and saleable business right.
(01:09):
When you work with clients, youknow who might be starting to
think about getting ready to getout of their business, maybe in
a few years.
Where does that process startand how far before you think
about an exit should you bethinking about and planning?
Speaker 2 (01:23):
Yeah.
Well that's the Stephen Coveyquote right Begin with the end
in mind.
That's kind of how we talk withour business owners about it.
It's 100% of us all businessowners 100% will exit their
business.
It's just how do you want to doit?
How do you want to exit?
Do you want to do it on yourterms or do you want to be
forced out?
Do you want to exit?
(01:44):
Do you want to do it on yourterms or do you want to be
forced out?
You know there's all the on thenegative side of exits.
There's all the things of beingforced out of your company.
You know some type of illnesshappens and you have to shut it
down.
So there's all of these thingsthat go into.
You know the dark side of exitsthat aren't as happy.
That we also plan against.
And if you're building yourcompany from the moment you
(02:06):
started with an exit in mind,really doing the things that
make businesses valuable,mitigating those risks from day
one and start thinking about it,then you protect yourself
against a lot of that unforeseenexits that happen quite often.
So we always right when youstart.
Speaker 1 (02:27):
Yeah.
So I think most small businessowners sometimes get caught up
in just running the business andworking the business and they
don't necessarily think aboutthat end game.
And I've been actually workingon my estate planning the last
couple of months and it's kindof forced me to think about that
right For that unforeseenhappening.
And I would say, fortunately mybusiness has grown to a point
where it's not necessarily fullydependent on me because we've
(02:49):
worked on building some of thoseprocesses and things like that.
I'm sure you guys do the samething with your clients, right?
Speaker 2 (02:55):
Oh, yeah, yeah, so it's a lot about people in
process are kind of the areasthat we'll look at.
A business first.
It's what is documented, who'sdoing, what are they in the
right seat, what's theorganizational structure look
like?
So a lot of the value.
And to kind of oversimplify,overgeneralize the more the
(03:15):
business relies on any oneperson or customer or vendor,
customer or vendor, the higherthe risk is at transferring that
business.
So if you are running a business, this happens a lot in business
owners that we work with intrades and home services, like
(03:36):
plumbers and electricians, andthey've been working in their
business for 30 plus years andthen want to retire or go and do
something else and they mighthave one or two people working
under them.
But the business will notsurvive without that owner's
involvement, whether it's insales or the financial component
or doing the actual work.
The more that business isreliant on the owner themselves,
(03:59):
the less valuable it is.
Value and risk have the inverserelationship and heavily
dependency on any of those areasthat I mentioned is going to
significantly devalue thecompany.
Speaker 1 (04:14):
And we see that a lot with our client.
We have a lot of those mom andpop, onesie, twosie type
businesses and a lot of folkssay, well, I can't sell my
business right, because it is sodependent on me.
They may not think in thatterms, but they say, gosh, I
don't have anything that's worthanything.
But how do you work withclients to help them develop
that and help them build a morevaluable business so that
(04:35):
someday when they do retire,they don't just sell the truck
on the front yard and I'm nottaking service calls anymore?
How do you sell that clientbase and that business?
Speaker 2 (04:45):
Yeah, it takes time.
You know that's one of thefirst things I'll talk to with
any business owner that'sconsidering working with us is
you know what's your timeline?
Because going from mom and pop,a couple people, to building
something that is what we referto as an asset right, it's an
(05:06):
asset business that you canactually transfer ownership of
it takes time because, when itcomes down to it, it's people,
and process is a big componentof it, and to be able to be big
enough to hire and supportpayroll, you have to grow the
business, the revenue and allthose components as well.
(05:26):
So if we're not big enough tosupport payroll, we look at
those issues first.
What is marketing looking like?
How can we improve lead flowwhere it's not dependent on the
person, for instance, going outand doing their own networking?
Getting referrals is great.
(05:47):
Having a digital marketingpresence with inbound leads is
better, right, because it's notreliant on the individual
themselves all the time.
So we'll look at thosecomponents too and try to solve
that problem first.
Speaker 1 (06:16):
Then we say how can we diversify workflows, roles
and responsibilities?
Bring on some good people,create a management team if we
can.
So I didn't have, and I have 15employees to add, you know,
three, and it was a littleslower in that growth but it, as
time went on, you know, we wereable to build that and kind of
create those processes and makeit so that I wasn't the only one
(06:36):
that know how to do everythingRight, right, certainly.
Again, like I said, I've beenworking on my estate planning
and you know everyone's likewell, what happens if you get
hit by a bus, right, and nowwe're having those conversations
today so that I'm, if somethingdoes get happened to me, you
know it's hopefully it's not uhgetting hit by a bus, right, I'm
going some fun, but uh, how theuh, you know it's it's really
(06:58):
making sure that you're buildingthat process so that there,
like you said, isn't one personthat is reliant on that.
And that's hard.
I mean, I will say that's hardfor me as a business owner,
because there were things likeour financials that I have to
give up, right, in order tocontinue to grow and scale.
But I have to be willing to letsomeone in on that and you know
(07:19):
that is obviously somethingthat's hard and I'm sure you
deal with that when you look atthe people aspect of that we
certainly see folks arestruggling with recruitment.
How are you having your clientsdevelop and grow their people?
That's one of the biggestchallenges we all have is our
people.
What are you kind of using inthe toolbox for that?
Speaker 2 (07:41):
Yeah, that's a great question.
There's a lot of things that gointo the people component.
Right and people.
My background is in changemanagement.
I used to do a lot of changeconsulting with big companies
and we would always say you canhave the most efficient, the
most effective processdocumented, but if you don't
have the right people to executeit, it doesn't matter.
(08:02):
The right people to execute itdoesn't matter.
You got to have the people inthe company doing the right
things to make anything work.
And it does start from therecruitment process, right, and
the interviewing process andmaking sure that you're setting
the right expectations andworking on trainable components
(08:22):
of the business as well.
We work with clients on thatside of developing you may have
heard ideal client profiles,icps.
We do it on the employee sideas well.
What is your ideal employee?
What do they look like from acultural perspective, from all
different components?
Who's going to be a great fitfor you in this position?
(08:44):
Maybe not even on the technicalside of actually analyzing the
P&L, for instance, or if you'retrying to bring on an accountant
in some way or doing the salesprocess.
Culture fit is going to benumber one that we're really
looking at, and more and more.
When I talk to people that arein M&A those investment bankers
(09:06):
and private equity firms theylook at culture.
It's one of the first thingsthey look at is what does the
culture look like?
What are the people?
How do they interact?
It's becoming a bigger andbigger component of investing in
companies, more than evenfinancial performance.
Speaker 1 (09:25):
Well, even before investing, think about operating
right.
I mean, I've spent a lot oftime the last few years trying
to.
I would say hiring is just likeselling your product, but
you're selling yourself toprospective employees.
And we've spent a lot of timedeveloping our website to our
careers page of our website tosay about all the great things
that we do, how great ourculture is.
(09:46):
And we just did an escape room,we do a boat ride in the summer
and we do our year-end partyand you know I buy lunch every
once in a while.
You know, I mean, obviously it'snot all about money, but right
uh, you know we've just beennominated as one of the best
places to work in maine andwhich that's true.
You know surveys and you knowof your employees and making
sure your benefits are good andall that stuff, right.
And I tell clients that arehaving a hard time finding
(10:07):
people to go through and andtake a look at themselves and
say, okay, what am I offering asan employer?
Right, even if you're aseasonal business or you know
something like that, what areyou offering?
There are we have severalclients that were in Maine,
coastal Maine.
You know we have a lot ofseasonal businesses here.
We have a big resort that'sonly open six months a year and
(10:28):
they only hire 10 to 20 people ayear on the 200-person payroll
because they have such retentionyear after year after year.
Speaker 2 (10:36):
That's fantastic.
Speaker 1 (10:37):
What are they doing right?
They have the culture and theyhave the process and the people,
people and the team that wantsto come back every April, and
you know so it has taken them along time to build that, of
course, but you know, buildingthat culture and selling
yourself to respected employeesis really big, and I think not
only in your you know, if you'rethinking about selling your
(10:59):
business but also just inoperating and running
headache-free business.
Headache-free, that's key,right.
You should never right, youknow.
I definitely think that makingsure that you have the right
team in place is important.
So that's, you know.
I would say look at yourselffirst.
Why can't you find it?
Speaker 2 (11:20):
Right, yeah, I mean, especially this day and age too,
with hybrid work environmentsbeing so much more common and
virtual work environments.
You know, how do you facilitateculture?
You know, we have our oneclient I've been working with
for a long time.
They go on quarterly retreatswith their team, though they
have people all over the countryand he'll bring he lives in
(11:44):
Southern California and he'llbring everyone into the area.
They'll get a hotel or anAirbnb and go do some adventure
thing.
So it's.
It's.
How are you kind offacilitating that culture, Even
if you are virtual too?
Speaker 1 (11:56):
Yeah, absolutely.
I think that's something thatwe're struggling with for sure
as we continue to grow is howcan we develop that team from a
remote, how do we build aculture with our remote
employees?
And actually a peer of mine inour industry kind of said the
same thing.
They do full, everyone's onsite.
(12:16):
You fly in from wherever youare.
This know, this guy hasemployees in 10 or 11 states.
He flies everybody in for twoweeks a year.
Basically they, you know, do acoworking space, so they have
meeting space, they have extraspace, whatever they need and
really gives brings everyone onsite so that you see it, feel it
, touch it, you know, twice ayear or a couple of times a year
.
And I think that that's reallyimportant, especially nowadays,
(12:43):
where our heads are down we'reat our, you know, basements or
wherever we are, you know,working remotely and it's
certainly important to keep thatpersonal touch, because I think
that's why we're successful.
Speaker 2 (12:52):
Oh yeah, we do an annual one, so we only do it one
time a year.
But one of our advisors on ourteam she has a ranch out in
Ridgeway Colorado, so we'llbring everyone to her ranch and
have a good long weekend witheveryone, which is always fun.
Speaker 1 (13:08):
So we talked about the people.
What about process?
What kind of processes are youhelping clients develop, or what
are the key processes that yousee universally that businesses
should really be getting theiract together on in order to
build the strength solidifyingthe current business, but then
getting it ready for someone totake over?
Speaker 2 (13:28):
Yeah, I think one of the most important and this is
all debatable, right, but Ithink one of the most important
processes relates to the peopleand it's your onboarding process
and really understanding howyou get someone up to speed.
How do you facilitate theculture from day one, how you're
setting the right expectations,how quickly can you get them in
their role?
I forget what the stats are now, but when someone leaves your
(13:52):
business, it's really expensiveto replace that person and to
get someone up to speed reallyexpensive to replace that person
and to get someone up to speed.
So we're always looking at howcan we cut that the timeline to
get someone up to speed withoutcutting the effectiveness of
that person, that individualperforming in that position.
We've really turned to pictures, written and video
(14:20):
documentation of how to dopositioned processes.
So, if you're a salesperson,what's your sales playbook look
like?
What are those steps, what arethe scripts that you're going
through, what is your valueproposition?
And they're all documented andeasily found on whatever
centralized location that yourinformation is on.
(14:42):
We, in particular, use Trainualand we also set up Trainual
accounts with our clients.
But it's a really greatmultimedia resource to be
housing what we refer to asplaybooks what's your positions
playbook and how do you do itand then you can walk a new
(15:03):
person through, onboard them,and then they always have that
reference guide for as they gothrough their position Maybe
they haven't done something in awhile.
They can always go to thatplatform and say how do you do
this again, and then there willbe a video I will show them how
to do it.
So being able to make yourprocesses trainable and
duplicable is is pretty key.
(15:24):
So the onboarding one, I thinkis really, really important.
And then I kind of generalizeit to say your buyer's journey.
You know how are you actuallyworking someone from when they
first find who you are, all theway through service delivery.
We're mainly working withservice-based businesses.
So what does that wholedelivery of your service look
(15:45):
like and what is trainable onthe delivery side of it and can
you scale those components too?
So that's on both sides.
Internally and client-facingare going to be two big, big
ones that we'll look at and tryto figure out how to document
and scale those areas of thecompany.
Speaker 1 (16:05):
Yeah, like you said, that creates a great repository
for ongoing.
One of the things I'm thinkingabout, just as a business owner
myself how are your clientsfinding the time to develop
those processes and record thosethings and create those
presentations?
That's what you're helping themwith, or are they just buckling
down?
Speaker 2 (16:26):
Yeah, that's tough, that's the hard one, right,
because no one likes to documentwhat they're doing, especially
business owners.
Yeah, so that is an offeringthat we have.
So we will work with their teamand really extract what they're
doing, just have recordedinterviews with them.
(16:46):
We'll do screen shares andreally try to capture components
that they're doing.
But we can't do all of it right, so we'll do as much as we can.
We'll get someone up toprobably 90% of the way there
and then we'll create just a a ahit list and say, hey, we need
a video of you narrating andpretending like you're training
(17:07):
someone to do you know, to dopayroll in your company.
How do you actually do that?
How do you document that?
Where would you click on one ofthe steps?
Do a two to three minute video,break it up if you need to, but
we'll just create that list forthem to do and that it's a
continuous process, improvementin itself to document processes.
Speaker 1 (17:31):
So the first step is just doing it right.
Yeah, I mean I can't tell you,in our industry alone,
everything has changed the lastfive years.
I mean, we're not doing hardlyanything like we did four or
five years ago.
Uh, just because the way theindustry has changed services,
clients are demanding how thingswork, the tools that are out
there uh, you know, if you askedme, five years ago we didn't
even have a zoom right.
(17:51):
We were using right, we weredry clients.
They were coming to us.
I don't.
I see maybe one or two clientsa week now, you know, because
just things have happened and uh, I I think code was really good
from an efficiency perspectiveand some of those things.
I definitely think we lost, youknow, some of the personality
and now we're seeing all thekeyboard warriors out there
right screaming and hot, andnone of them no, that is very
(18:15):
true.
Speaker 2 (18:17):
Text me normally right like drives me crazy,
sorry but there's so many moresoftware systems that are
popping up left and right of howto do something, so it's, it's.
I've tried.
I've found it rare that anyonesticks with a software system
for more than you know, fiveyears, um so being able.
And then that comes with awhole slew of other things to be
(18:37):
doing, of documentation, how wedo certain things, so on and so
forth.
So I help my clients overcomethat overwhelming feeling of
documentation by saying it's not.
You break it up into little bitsand it's never going to be
perfect, especially the firsttime you do it.
You just got to start and thenyou can always go back and
refresh and kind of do that.
(18:59):
I always think of it as like aRolodex.
If you remember, back in theday I was just kind of going
through all right, here let'sreview our sales process Are we
still doing it this way?
Let's review our payrollprocess Are we still doing it
this way?
And just kind of looking atcontinuously building and making
those processes better.
But it is a Indeed, it is.
Speaker 1 (19:20):
So, once you've got all your processes built and
documented and you've got thebest team in the world, and now
you're ready to retire, ready tomove on, ready to go.
So where are you seeing yourclients?
You know, look for buyers.
How are they going out thereand finding buyers?
You know, are they getting abroker?
Are they, you know, justreaching out to peers?
What's the?
What are you seeing?
(19:40):
What?
Speaker 2 (19:41):
are you seeing?
Yeah, that's a great questionbecause it's a mystery right For
a lot of business owners of howokay, I'm ready, how do I
actually do it?
Speaker 1 (19:51):
And I can tell you my business is worth a hundred
million dollars.
Right, of course it is, youknow, and I'm wired to the
Bahamas.
Speaker 2 (20:00):
Yeah.
Speaker 1 (20:01):
I think real challenge for business owners is
figuring out where to start.
Speaker 2 (20:07):
And there's a whole.
There's a lot of things toconsider, right.
There's a lot of differenttypes of exits.
You can pass it down to thenext generation within your
family that's an option.
You can go to private equity,you can go to an owner-operator,
you can transfer it to yourmanagement and there's a bunch
(20:28):
of other different ways to exit.
So that's why we always saythink about it sooner than later
.
But I'd say a lot of our clientsknow a buyer ahead of time,
either through their ownprofessional networks.
A common one is a strategicacquisition I shouldn't say
common but what some of ourclients have seen is some of
(20:50):
their competition will look tobuy them for whatever reason.
I have a waste managementcompany that is being pursued
right now because it's an EastCoast company and they want to
break into Colorado and startmaking their way westward.
So they're looking at one of myclient's businesses to
potentially acquire, just toexpand their geographical
(21:13):
location.
With the more commontransactions that occur, the
business owner does not know whothey're going to sell to.
They're not really sure whatthe value is.
So we do have really goodrelationships with business
brokers, M&A professionals, whowill do the valuation, and their
role is to go find a buyer.
So we'll work with our clients,get the business ready to be
(21:35):
sold and then we'll be in theadvisory component throughout
the duration of the sellingprocess, talking with the M&A
banker or broker throughout thatwhole process as well, helping
them through due diligence.
So we're preparing thebusinesses for a financial buyer
, which is someone who wants toreturn on their investment, them
(21:59):
buying a company.
So that's when most casesyou're going to be using brokers
or M&A bankers to market yourbusiness, put it on the market
if you will, but in some casesit's going to be your
competition or someone youalready know within your network
just looking to grow their owncompany.
Speaker 1 (22:20):
And how are businesses valuing their
businesses?
I mean, I think it's differentin every industry.
Burnley right, we were seeing100X returns on tech companies
and AI and all this crazy stuff.
Speaker 2 (22:34):
I don't know.
Speaker 1 (22:35):
Standards, small businesses Are you just seeing a
multiple of bottom line?
How are you seeing folks?
Speaker 2 (22:43):
How are you seeing folks?
Yeah, I think, and you're right, it's hard to kind of say have
a blanket statement, becauseeach industry is different, each
business performs differently,but there are resources out
there.
One we use is businessvaluation resources BVR deal
stats, I think is what it wasformerly called, but that's just
a database of all businessesthat have transacted, of all
(23:05):
different sizes.
So that really helps us narrowin and benchmark where multiples
are being applied.
In most cases of the businesseswe're working with anywhere
between $1 and $20 million inrevenue.
We're looking at EBITDA or we'relooking at SDE seller's
discretionary earnings.
So that's your P&L statementwith ad backs, basically, and
(23:29):
then a multiple is assignedbased on all the intangible
components.
So like what we talked about,the culture, the risk,
dependency, all those otherpieces that go into a business,
with the EBITDA and or SDE asthe numerical number to multiply
against a multiple, dependingon the industry.
(23:52):
But there are some rules ofthumb, like the private equity
groups that I know and have beenworking with and M&A people.
Once a business crosses amillion in EBITDA, their general
multiple will jump about twopoints just because of the size.
Speaker 1 (24:13):
Well, sure, right, right yeah.
Speaker 2 (24:19):
But it's all risk right, and there's always a
range of multiples of what'sbeing assigned and the higher
the risk, the lower you're goingto pop up on that range of
multiple.
If you're selling a book ofbusiness, it might be you're
(24:46):
going to increase your multipleand increase your payout when
you sell it.
Speaker 1 (24:52):
What are you seeing for a timeline when folks are
getting ready to sell?
Is it 72?
It closes in 90 days, right Ayear or two.
What are you seeing in terms ofthat?
Speaker 2 (25:04):
Yeah, I think the fastest I've seen is maybe six,
six months or eight months, um,somewhere around there.
Uh, the whole it all depends onsize of the company too right.
You can have, you know, a 50million dollar company that can
take two years for due diligenceto to go through um, and you
know on the on the other sidetoo.
(25:24):
So timeline we always say giveus three years, three to five
years from the day you want togo to market.
Then we can really button somethings up, make sure everything
is looking real nice and get themaximum value you can for the
business.
From the point that you list tothe point that you sell,
(25:46):
assuming everything is doneright on the back end, we're
looking at a year andpotentially another year for the
actual transition of thebusiness going through.
I think the average I've seenis like nine to 10 months from
the day that you list to signingon the dotted line, if you will
(26:08):
, to actually transfer thebusiness.
And then after that pointthere's the actual transition
period of where most owners aregoing to be working in their
company, either as a consultantin some form or an advisor or an
actual employee, for a periodof time too.
Speaker 1 (26:25):
Are you seeing any clients of yours getting
creative with their dealstructure to manage taxes?
Or is it straight hey, we'regoing to do an asset sale and
I'm going to pay my capitalgains and move on.
How are you seeing thingsstructured these days?
Speaker 2 (26:43):
Yeah, that's part of the fun part.
Right like we, we will bring in, uh, financial advisors, wealth
advisors, to help us with thatcpa is to really understand what
are some good tax strategiesthat we can be looking at.
How can we defer some of thepayments?
Um, is it big enough to set upa trust and and be working
things in that way?
Um, you know way, if they arecharitable people, we can work
(27:08):
in charities and donations ofmoney.
You may not be walking awaywith more money in that sense,
but you're paying less in taxes.
So there's different ways thatyou can do it.
I think, where most of ourclients are coming in weighing
all the pros and cons of it,they're more willing to just
work with the capital gains andtake what they can in that way.
(27:30):
But once we start getting up tomultiple millions of dollars of
transaction value and actuallygoing through, we're bringing in
a team to help mitigate some ofthose tax burdens and trying to
help our clients walk away.
But I haven't seen any likethis is the way to do it.
(27:50):
I have one guy that doesmineral rights and helps people
do exchanges in that way and say, hey, we can really reduce the
tax bill by funneling some ofthe money into mineral rights.
So it's different every time.
I've seen it so that's.
Speaker 1 (28:07):
You know the importance of finding good
advisors, right?
Yeah, financial advisor, goodattorneys, all those things are.
And you know, I think in ourarea we have some really great
general purpose.
You know, small businessaccountants or attorneys and
things like that.
But sometimes it makes sense tofind someone that might be a
little more specialized.
You know, go to a area, findsomeone that does this for a
(28:30):
living.
How they do is they don't.
You know, johnny needs cpa downthe street's a great guy.
He's helped you for 30 years.
But, right, you know when, andsome time comes.
I mean, I've, I've heardaccountants say to our clients
well, that just is what it is.
You made the money.
You have to pay the taxes,right?
Not that it's not true, right?
Speaker 2 (28:48):
Right.
Speaker 1 (28:48):
You have to pay the taxes, but are there ways to
play the tax game?
Speaker 2 (28:53):
Right.
Speaker 1 (28:55):
There's hundreds of thousands of pages of tax code,
and finding the way to make itmost take advantage of that for
your benefit should be what weshould all be doing, right?
Speaker 2 (29:04):
Oh yeah, and yeah it's.
Each situation is different,right?
So it's like you said.
It's making sure that you havethe right team around you, that
that knows what to be doing.
It isn't just saying, oh, youmade this much money, now you're
going to pay this much in taxes.
It's like, ok, how how can wework the tax codes to our
advantage to help set up ourkids or someone else for the
(29:27):
long term?
There's a bunch of differentways to be looking at it.
Speaker 1 (29:32):
Well, and of course those conversations should be
starting before there's even aletter of intent signed.
I mean, we'll wait until you'reunder contract, right?
No?
Speaker 2 (29:39):
no, no.
Speaker 1 (29:40):
Well, awesome, I think we've covered a lot of
ground today, stephen.
So if you had one takeaway youwant people to know about
building their business up toget it ready to sell, what would
you say?
That one thing would be.
Speaker 2 (29:52):
Yeah, I think we will look at the ownership risk of
how involved the owner is, andone of our litmus tests is how
long can you be away from yourbusiness without it falling
apart?
And our goal is to get ourclients up to three months of
(30:14):
unplugged time away from thebusiness and then we'll know
we're at a pretty good spot.
So that's a question I alwaystell everyone to continuously be
asking themselves.
It's what would fall apart if Iwasn't in the business?
And then, when you have your onthe business time, focus on
(30:37):
mitigating the risk in thoseareas.
What would it take for this notto fall apart if I were gone?
That's a pretty great questionIf you're continuously asking
yourself that you're going tofind your list of how to
increase the value of yourbusiness.
Speaker 1 (30:52):
So I just walked out to Houndas, the business owner.
I'm going to walk down to mymanagement team and say okay,
I'm going on vacation for threemonths.
Yeah, Exactly.
Speaker 2 (31:02):
That's one of our I call it the vacation strategy.
That's one of our favoritethings to do with clients, Like,
all right, let's take longerand longer times away and then
see what breaks, and then that'sgoing to be our action plan for
the next.
You know, however long.
Speaker 1 (31:13):
I like that.
Yeah, it's great.
Well so, steven, if folks wantto get in touch with you, what's
the best way to do that?
You guys have socials, email.
What's the best way to find you?
Speaker 2 (31:23):
Yeah, we're probably most active on LinkedIn, so
Denver Business Coach is ourLinkedIn page.
Our website isdenverbusinesscoachcom.
It has a lot of greatinformation on there, and then
people can reach out to medirectly as well.
Steven atdenverbusinesscoachcom.
Speaker 1 (31:41):
Well, thank you so much for joining us.
I think it was a really, reallygood conversation and certainly
don't forget to all of ourlisteners like, follow, share
rate, review, subscribe andcertainly, if you have questions
for us and can't find Stephen'sinformation, shoot us an email
at podcast at paper trails dotcom, and we will get you in
touch.
All right, chris?
Well, much talk to you nextweek.
Everybody, thanks for listeningto this week's episode of a
small business, big world.
(32:02):
This podcast is a production ofpaper trails.
We are a payroll and hr companybased in kennybunk, maine, and
we serve small and mid-sizedbusinesses across new england
and the country.
If you found this podcasthelpful, don't forget to follow
us at at paper trails payrollacross all social media
platforms and check us out atpaper trailscom for more
information.
As a reminder, the views,opinions and thoughts expressed
by the hosts and guests alone.
The material presented in thispodcast is for general
(32:23):
information purposes only andshould not be considered legal
or financial advice.
By inviting this guest to ourpodcast, paper Girls does not
imply endorsement of oropposition to any specific
individual, organization,product or service.
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