BIZ BUYING SAFARI: OH MY!

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welcome to headbands and handkerchiefs where buying banter meets no BS reality

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get ready to dive into the world of buying and selling businesses without the fluff and fancy jargon we cut

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through the BS to bring you raw unfiltered insights from industry experts seasoned entrepreneurs and no

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holds bar discussions they get straight to the point whether you're a seasoned

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business buying Pro or a curious aspiring entrepreneur this is where the

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real talk happens buckle up for headbands and handkerchiefs because in

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business there's no room for sugar cooing let's get down to the Brass

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TXS no room for sugar coating I like that isn't that right

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Richard Amen to that I love it you don't you don't sugar coat anything do you oh

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I've never been accused of that that's for sure never welcome everybody maybe I

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should start trying yeah yes yes welcome everyone to headbands and handkerchiefs

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if you are with us um give us a shout in the chat we'd love to know that you're joining us we're here every Thursday on

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all of your favorite streaming platforms live with my dear friend Richard Parker who's been in this

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industry what 30 years 30 yeah coming up February 1 it'll be 34 years that's it I

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don't know what happened yeah yeah and and I myself I've it well I've been in

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small business lending uh at least 20 of my 30 years um and business acquisition

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lending for sure the last five to 10 uh Focus because it's a transaction I love

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and uh hello jod lamb good to see you in in the chat see is here in the house thank you you miles Woodburry saying hi

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Richard Parker you're called the man that's miles who I was referring to last week my adopted son miles so he's joined

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us this week and he's a he's a budding entrepreneur so I'm I'm thrilled you're here miles I love it I love it and Lola

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gold thank you thank you everyone that's coming in and um we're gonna get started right away on topic because we don't

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dilly dally we don't have time these transactions do not have time for dilly

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dally and today we're we want to talk about well we called it the business buying Safari oh my and uh we think of

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Wizard of Oz lions tigers and bears oh my but what were you saying earlier Richard buyers and Brokers and lenders

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oh my there you go there you go buyers and Brokers and lenders oh my

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yeah that's a big old M and we got to get them all to work together so business Safari we're g to give all of

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you that are listening in ideas on where do you go to find these business

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listings right um but before you search ladies and gentlemen before you

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search for a business please speak to a professional like Richard or I or

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someone that knows how are you qualified right and maybe you can talk about that

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a little more Richard what well there's qualified there's there's there's two veins to that right

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so there's there's the qu being qualified financially to to be able to um Finance

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the deal so it's qualified with a lender or lenders or whatever that may be and then there's the whole qualification

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process related to what do you qualif for qualify for skill-wise for the type of business that you should

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be buying and they're two very distinct disciplines but they're equally important and if you start off this

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process without qualifying for both and we say qualifying meaning you know what

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the lending process is all about what you what you will be able to qualify for

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financially and equally important if you don't know what type of business is

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right for you this is where people get off the track um they go off the reservation they make terrible mistakes

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because they start this process by jumping into the deep end full blast without knowledge without knowing

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financially what they're able to afford what type of business is right for them and that's you know by and large a big

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reason why 90% of the people who begin the search to buy a business never complete a transaction Amen to that and

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and what you just explained makes me think of fishing with my dad in my younger days

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if you put a big chunk of bait on a hook and you dump it in a lake with a school of fish they're all coming at you

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they're all going to come at you but what is what is the right business that's a fit for you you um we're here

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to change a narrative Norm Richard we want to um Mentor individuals that want

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to buy these businesses to do it smarter and start with the people that know how

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to qualify you because there's a lot of questions that the buyer that I need to

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ask them to make sure that they're going to pass the SBA muster as you call it

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right you know there's a lot of Background Checks Plus the bank guidelines you know you you may have

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cash to put down but what do you have left behind um and and not one transaction is the same as the other we

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know that's for sure right yeah and I I just went in I just had an example today with um with someone who was looking to

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buy a business they were going through their projections for the future and they they um asked me to give them a

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second set of eyes on it and they had it the timing is just happened to turn out

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but this is usually not the case typically this convers let's assume this conversation took place in June well

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they give me a a pro fora that goes July through December and I said okay well that's great what happens if you buy the

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business in June right you're looking at it now but you've buying June said well well what's the difference well here's the difference if that business has high

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season or low season anything other than 12 months a year of stability if they have high season or low season in that

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you know you're buying it in in in June and from June to November happens to be

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their low season or their High season you have working capital requirements

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yeah if no if not enough sales are coming in you have to fund it if it's in

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you even though revenue is coming in you may still have to purchase have to fund purchase of certain inventory so it's

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not just like you have X amount of dollars you put it down on the business you complete the transaction you have to think about what happens after the day

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you take over because if you don't think about it you'll be out of business before you've really been in business

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yeah I like how you brought up the seasonal businesses because they can be

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financed and and Underwriters understand there will be downtimes in the year but what is a good

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mitigant to that and it depends upon the buyer but a good mitigant might be

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you're married and you have secondary spousal income to kind of help support you know the personal expenses during

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that slow season and or have sufficient working capital where when you're

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working with quality lenders they're going to know if you need that working capital to support payroll and

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pay pay the short-term operating expenses during the downtime right right um so not every buyer might be a fit for

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a seasonal business but there are plenty of buyers out there that are right of course and you also have a situation

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where quite often the business declines after a new owner takes over I mean it's just inevitable they're just getting

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used to things um for for whatever reason and you want to be conservative when you do your your forecast and this

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you know I always like I always tell people do a 5 to 25% decline for the first 3 to six months because very often

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they do to client you're just getting your footing and so it is entirely possible some clients may leave but

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you're just you're the business is is just getting under way again under you as the owner and so you have to you have

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to account for that that there may be a temporary decline in the business and um so when you couple that with the

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seasonality you have to make sure that your working capital is in place because you know the the old you know like my

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mother used to tell me save money for a rainy day the rainy day could be the first day you open the business that's right and I I would like to add to that

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working capital piece Richard for our listeners uh every bank has their own

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in-house credit policy when it comes to business acquisition Finance transactions some banks recognize the

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value of working capital so therefore they will include up to three months of

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the uh post uh closing transaction of short-term operating expenses they'll

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give you the buyer that cash right into your new business checking account and then other banks on top of that will

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give you a revolving line of credit but now let me spin the bottle a little bit

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further there are other Banks out there that say no Richard you want to buy a

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business you come up with the working capital in your personal savings so here

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we go again just like we talked last week every bank has their own idea on

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how they're going to approve this business acquisition loan for you the buyer so the question is are you really

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working with the right bank that's going to set you up with the best loan structure to make sure you're successful

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from day one right yeah and part of the pro part of the issue is you know most

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people who acquire a business outside large transactions are first-time buyers so they don't even really think about

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this and who can blame them they don't have you know they don't have an experience of buying businesses and so these type of issues that um surface are

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things that are just foreign to them and so if you're not working with the right people right resources in other words if

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you don't have the right team surrounding you yes it's highly possible that something um significant gets

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overlooked not because of negligence but simply by for by lack of experience or

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knowledge that's right yeah and I'm glad you brought that up too and it the same

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as a applicable in every industry but experience and knowledge I mean we're

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talking 30 years with you Richard 20 years with me we walk through the fire on several

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transactions these days SBA lenders listen we're getting older we're gen

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xers there are baby boomers they're exiting not everybody Baby Boomers baby boomer baby boomer yeah not everybody

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wants to be an SBA lender and not everybody wants to be a business broker so the ones that are they're younger but

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the experience isn't there so that's really important all right well let's Circle back to the topic for of of the

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hour here where do we go to find these business listings and uh everybody just

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assumes right away to go straight to the broker uh websites right um so the

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question is speaking of experience Richard we have really really decent

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Brokers that know how to vet the sellers and know how to make sure ready to be

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listed on the market but then we also know there is a plethora of

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inexperienced Brokers that are just hungry because they're 100% commission-based they just will take

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anything and slap it on the market maybe you can expand a little further on that for our audience so what are your

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thoughts on that I mean how do you look at a business broker online listing summary and determine what's what okay

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well you know I I I put together a couple of Stack an anticipation of you know the conversation so to make people

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aware and and and if anything is said disparagingly about business brokers I

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do that so I'm in the same world and so you know we're just pointing out facts

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about what exists in in in in the real world that buyers are going to encounter if you take a look at the um the first

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step that most buyers have is they jump in and they go to this you know the business for sale websites the online

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databases of business for sale websites and that's what those you know those

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those uh particular websites is they're typically controlled by business brokers you have some for sale by owner you have

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some franchising there but by and large they're controlled by business owners by business brokers now business brokers

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only sell around 10% of the businesses that that transact in the United States yet they yet yet they control 90% of the

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listings on there right can you say that one more time because when you told me that earlier I did not realize that

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statistic only 10% say that again yeah business brokers only transact about 10%

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of the businesses that are sold in the United States on an annual basis now the numbers may have changed somewhat a

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little bit but so they're 12 or 14% but that's really the number so you have that number combined with the fact that

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the majority of businesses listed for sale on the publicly on the public business for sale websites are for the

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most part all business broker listings or there's some for sale by owners or some franchises but by and large right

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so you at so you're starting out with the concept that the vast majority of businesses that are available for sale

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are not visible you're not seeing them you're on the business for sale website you're not seeing them now

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statistically and these are numbers that are given to me at the highest level from the business brokerage community

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that typically of all the listings of business brokers and and and I get it I've done it I've done it at the low end

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you want you have to have it's a it's a it's a listing business because you've got to get a lot of listings because not

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all of them are going to sell and you're on commission so I get all of of that however the numbers typically fall out

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that only about 25% of their listing sells some companies do better there's a you know large brokerage national

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International Brokers they sell about 33% of their listings so the majority of listings don't sell so let's take a fact

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that on these business for sale websites the vast majority of businesses or

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listed there are are not going to sell probably 75% of those won't sell and

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they're only representing a small amount of what's available for sale and so when a buyer starts

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out and they're looking at these business for sale websites their sample is not good yeah now now with that said

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don't get me wrong it's a terrific place to start in one particular um uh with

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one particular idea in mind most people have no idea what type of business is right for them and so if they want to we

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do this as a weeding out process it's a very good place to be your laboratory because you could pick out three or or

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four categories pick out five three or four sellers within each category meet with those sellers of those type of

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Industries have a good back and forth questions um with the seller learn more about the business do your research

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after and then determine well of those you know those four categories three for sure I'm not interested in so one may be

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interesting or you rinse and repeat and you pick out three and four more but if you pick out four categories speak with

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five sellers you then have a sample or a laboratory of 20 businesses that you can have a conversation with so it's from

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that perspective it's really terrific right um but also have to understand you

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may not find your business there so you have to go beyond that yeah right on right on and out of the the all of the

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businesses that are for sale since the broker list you say 10% we all know if it's still true today

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that 80% of that 10% probably won't get Bank financing would that be accurate oh

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I would believe so I know when when I used to do lower Market um brokerage number of years ago the the the

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percentage of deals that got financed was 6% wow wow now I don't know what

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that number is now you're in a much better position than I would be to say what you know what percentage of all the transactions get Finance but it used to

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be 94% were a combination of cash Andor seller financing um I'm sure that

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numberers changed and gotten better over the years just because the criteria's loosened up a little bit um and people

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have become more uh comfortable with that further you know as interest rates if they've risen you know in the last

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year or so but we had this we had this window of you know 10 years where we had some really low interest rates so that

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would more incentify people to look for you know third-party leverage right on

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so would it be fair to say I I I know where I stand on my thought on this um

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are are business buyers wasting too much time for two reasons number one they

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don't know pardon my friend what the hell they qualify for right or right I think that that's

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a and and my business broker friends out there and yours too would say bingo and

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they're tired of the phone calls and they don't want to take all the phone calls because probably 90% of the phone

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calls in a day are people that aren't don't even qualify to buy a business and they're wasting their time so number one

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we're not qualified number two if 80% of the 10% of the businesses on the market

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are represented by Brokers and they don't qualify we're wa we're wasting too much time right Richard you're was

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they're wasting too much time in a lot of ways right so certainly in the example that you cite Deb I mean that's

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spoton you also have the scenario where the majority of people because the

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statistics in this business are are really abysmal right the amount of people that qualify the numbers that

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don't get to the Finish Line the percentage of businesses that are listed for sale that don't sell I mean there's

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one horrible statistic after another I mean we're very lucky in our business we have almost 180 degree opposite within

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amount of people who use our materials and buy businesses but I'm not here to to sell programs want to talk about you

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know how these people go down the the road incorrectly and it's very easy to

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teach and preach education and knowledge but it's a perfect example where the data backs

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up the theory or the thesis that you have these ridiculous

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amounts of people entering the market when I say entering the market entering the market to buy a business that fail

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and so there's a reason why and if you were do a a vend diagram between called not qualifying for Lending not knowing

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the skill um what business is right for them too many garbage businesses for sale disinformation on the website if

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you did a vend diagram The Hub of that would be a lack of knowledge I mean it's a very generic statement to say but it

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it's it's so true because it's too easy for someone who wants to buy a business to jump in start looking at business for

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sale websites contacting Brokers and sellers they're not right for the business they don't qualify financially

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they think they're going to buy businesses at no money down they think they're goingon to buy Microsoft you know like Microsoft for no money down

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yeah they're they're they have no uh prior experience they've gotten

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misinformation and so they they they're they're on the wrong road immediately

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heading in the wrong direction right and and there used to be this quote what's the use of running if you're running down the wrong road and so with every

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component of this it's you take got to St take a step back sure there's some things that you start to Pioneer and and

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have to learn as you go like the example that I gave with looking at different types of businesses to try to help um

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weed out the ones that are wrong for you and and get to the point of which ones that are right but you got to take a

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step back if you're going to do this if you're serious about buying a business the first thing you got to do is is take a step back and say I got to get

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knowledge right I got to get good in good knowledge not just information good knowledge and that is related to how

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this works related to lenders how it works related to valuation how it works related to what type of business is right for me how I go about the process

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how do I negotiate the valuations the due diligence all those components if you don't do it that way well there's

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chances are you're going to become another one of those 90 perers that never buy a business and it's not

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because you don't want to it's not because you're not capable it's just because you haven't equipped yourself with the right information and

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surrounded yourself with the right people I mean the failure rates they back up you know it's very simple why

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all these people fail and that's my belief is the Hub or the reasoning is they just don't educate themselves

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properly right from the get-go right right and and I I believe where they're

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starting if they're going right to a business broker that's selling the business or businesses and and that

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business broker is inexperienced we got basically inexperienced and uh broker

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and an inexperienced buyer and we're heading down disaster and and then then what happens they just blame it on

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everyone else yeah of course and and you know I understand you know from business brokers get besieged with inquiries it's

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hard for them to vet all of them you know I I've had you know examples when

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I've spoken with people and they tell me you know I've been looking for 6 months they finally you know found their

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website and or or did or did not buy a program that it's immaterial and they said they keep sending broker inquiries

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now not all of them are perfect and plenty of them don't answer their emails but one of them was I'm sending out all these inquiries and I can't get an

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answer and they were using one of the websites I might have been bis byell or whatever I said well tell me what your email looks like you find a business you

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think you know what you tell me what your business I said give me a sample he said well like you know I told him you know I want to get um I want to get

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three years of tax returns and that I said well that's your that's your opening shot like you're

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contacting the seller the broker and say you know please send me three years of tax returns like there's nobody in the

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right mind going to send you that the inquiry has to be I'm serious about buying a business I'm looking to I need

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to buy a business I'm serious about buying a business I'm I have the resources to close a transaction as long

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as you do I understand that I um there's some documentation like a non-disclosure or whatever that I have to execute

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please send me whatever you need so we can start the conversation you're not asking for tax return sometimes you don't even get that till due diligence

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so even if these people who know what type of business that may be right for them the lack of knowledge and

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experience they they don't even ask the right questions from the beginning so if you're a business broker and someone sends you an inquire and says send me

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the tax return I mean chances are you don't even respond to that email and who could blame them right and that's why

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I'm trying to change the narrative Norm now that I'm outside of corporate America and outside of the banks as the

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direct Bank lender now now I after the 20 years of doing this I help I help the

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business buyers prepare and what are your goals what do you want to where do you want to be what what kind of cash

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you gonna have available today what will be left over after the transaction what's your background what's your

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criminal background my gosh there was so many things so many things that need to

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be vetted before there's even that contact with the broker so what I am

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doing now is is fully vetting business buyers as if I'm the underwriter asking

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these questions and let me tell you I'm pretty hard on my clients saying you better be truthful because if you're not

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the skeleton will come out of the closet and your deal will go backwards um but when I fully vet them and see what they

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all have for cash on hand if they have any equity in their home you know if they have any kind of secondary

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household income I look at the whole picture now I know this is what you qualify for and based on on your

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resume these are the industries that an underwriter would be comfortable for you to take over um can we Juke and jive a

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little bit well sure but it's a start and if I give that buyer Richard a fully

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vetted s pre-qualification letter as a buyer and they call the broker and say

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listen I've been vetted here's my proof of funds as a business buyer and a

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personal guarantor to the to buy this business have me sign an NDA and let's

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start talking about the tax returns you know because that's that's the proof and the pudding that's going to make the SBA

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loan project payment and you know I think we need to expedite both

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ends in a better way than what we have over the last 20 to 30 years there's too

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much frustration because we're we're dancing around stuff that we don't know is true on both sides of the transaction

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well and and and and there's no standardized process right so you know I I saw something recently which mired

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what I've been talking about Fe and I called it business brokerage not business brokerage and I don't want to sit here and you know harp on on the

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business brokers being the the um you know the the focal point of the problems within the industry because there's

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everybody's at fault and and you know the when when a buyer you know it's

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similar to if you're looking for a house well it's great to start out and you want to go look at these fancy Estates

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and it's fun for the open houses and see how to rich people live in their five And1 million houses but the reality is

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if you're can afford to buy a three or 400 or $500,000 house or less whatever the case may be you got to get qualified

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from the bank to know what you're able to shop for the beginning so going to look for businesses that are way out of

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your range I mean if if that's how you get your jollies good luck to you maybe you'll learn something but you're not going to be able to execute that and get

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to the finish line and so qualifying from a financial standpoint and having that document in place certainly raises

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you um you know raises you above a lot of the buyers and keeping in mind that regardless of how a business is listed

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or not listed or not publicly listed for sale if sellers or Brokers or anyone

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have any types of inquiries related to prospective business buy they're bombarded and it's good buyers stand out

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and how do good buyers Stand Out number one they demonstrate that they have a need to buy a business most people want to buy a business but there's a

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difference between wanting buy and needing to buy whether it be to generate an income replace an income or because you want to be an entrepreneur so if

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you're able to demonstrate that you need to buy a business that you able to disclose your personal financial state

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which is a whole other thing because some buyers don't want I don't want to give my personal financial State and say wait a minute time out you're asking for

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their financials yes you've signed an NDA so reciprocally they should be they can ask for your financial statements so

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if you have a need to buy you demonstrate your serious you demonstrate your educate you're you're educated you have the right team around you you're

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financially qualified versus someone else who comes in who's just flying by the seat of their pants sending in

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inquiries like send me your tax return well who the hell do you think is going to get the answer from a broker or a seller of course the individual who

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looks to be more prepared for the process and so all you're doing is yourself a favor because this is this

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this isn't difficult but it's complicated and there's a lot of stages to it and people and and finding a

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business for sale goes well Beyond business brokers and even when you do find it that's when the work really

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begins and so not coming across or not being prepared not only coming across

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and being presented as a qualified buyer for all these reasons but knowing that you have the Acumen you may not know

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everything that's why you bring in professionals but you have a good understanding of this process and knowledge if you have that in place you

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your chances of being a 10center versus a 90 percenter increase exponentially in

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all facets yeah I I think of um fully vetted proof of funds letter from for

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that the buyers present to the Brokers I look at that like a speed pass at an

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amusement park to get to the front of the line right good analogy it's true it is right it's a speed pass and um but

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let's make sure whoever's doing the vetting similar to SBA qualified

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listings let's make sure whoever's vetting those are credible and experienced enough because we talked

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about that last week we can see a lot of listings that say SBA qualified and they're not perhaps because the SBA

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lender that handed it out was inexperienced and they're just trying to drum up business because they're bosses

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all over them for Loan Production I lived in that world right of course yeah that's part and that's part of the

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problem but it's it's it's uh you could you could certainly navigate it right yeah yeah exactly all right so I'm I'm

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looking at my cheat sheet here because we talked about finding these businesses that Brokers list online and would you

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agree that a lot of the websites like Bisby sell.com businessesforsale.com

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bizquest.com are a compilation of those broker listings and what maybe just

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sellers trying to sell on their own yes exactly so you have those ones and bis

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Quest is owned by bis Buy sell so you're going to see a lot of the businesses listed on both um businessesforsale.com

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they're they're they're good resources generally speaking but yes those you know as mentioned earlier for the most

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part they're controlled by business broker listing some for sale by owner some franchises and they are good laboratory as we alluded to after to get

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you you know get the marbles out of your mouth try to narrow down the scope a little bit of what type of business is

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right for you but very often what happens is those type of those markets help you get to what type of business

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may make sense for you or believe based on your skill set and then you have to expand your search whether that be direct search direct solicitations CU

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I'm of the belie I'm doing this 34 years I bought 13 companies one co-investment I'm of the belief that every business is

30:02

for sale some owners just don't know it yet and so so sometimes not not sometimes often you have to go beyond

30:08

those databases and do either direct solicitations get the word out to accountants and attorneys and the Chamber of Commerce and everybody in

30:14

your brother-in-law and whoever take you know Cuts your uh your dog's hair get the word out that you're looking to buy a business because very often that the

30:22

the the search process goes Way Beyond the publicly listed businesses for sale plus

30:28

having using those listings for sale as your general lab laboratory is is is effective plus speaking with brokers who

30:35

are generally recognize you as a as a qualified buyer oftentimes some of their listings don't even get it to don't even

30:41

get to those websites you know they have some real good businesses they have a Pooler a stable of buyers excuse me they

30:47

know that this business good business solid books you know solid financials no major problems can transition well to a

30:53

lot of buyers um they'll put it out to their stable of of buyers you know that they've already recognized as being

30:59

serious individuals and it may not even see those databases and so this hunt

31:04

this Hunt is like a this has got to be a shotgun this is not a laser beam this is a shotgun you have the business for sale

31:10

websites direct solicitations which we can cover off at some point direct solicitations getting the word out to

31:16

everybody your search for a business must go Way Beyond the publicly listed

31:22

businesses for sale websites for all of the reasons we just talked about garbage business businesses not many sold

31:29

controlled by a a few not representative of what's really out there for sale so

31:34

it's a good starting point but you got to go way beyond that or you're gonna pull your hair out looking at or you're

31:41

gonna fail right after a certain amount of time you say I'm going in circles here you know it's time to uh

31:46

get my resume out because I'm not to buy a business which is unfortunate because you do it you know if you do it in a

31:52

practical um knowledgeable way this is doable by anybody that's right yeah I

31:57

want listeners to think too if they're aspiring to buy a business one day if you're working for a smaller company a

32:05

lot of the transactions I have funded over the years were the buyer was the

32:11

key employee working for the hfac company yes yes right and and it's

32:17

beautiful and and I have seen I have seen banks will approve established key

32:25

employees that have been working for the business that's now selling Finance 100% of the deal why

32:33

they know Sweat Equity right and they yeah and there's no learning curve for them I mean they may need to learn some

32:39

of the administrative pieces but yes and and it's um you know for business buyers

32:45

to really think about that type of idea whether or not if they want to stay in that industry or not but oftentimes the

32:52

business to be purchased is staring them right in the face yeah yes yeah and how

32:59

about um the competition a lot of times you're a business owner and you're like

33:04

gosh I want to grow it's your your competition make friends with your competitors I've done a lot of those

33:11

yeah I mean competition or ancillary businesses you know if you're in um you see this a lot up north where people are

33:17

in you know Commercial Landscaping well that's great in the summertime but you need to do snow removal or that type of thing in the winter time adding those

33:23

type of businesses or ancillary Services where you can add various products and services to your own um Suite of

33:31

services or products sell them to the same clients um growing through competition it is much easier to grow

33:36

through acquisition than it is through um organic growth and very often small

33:42

business owners and and and regardless of the size I mean we could reduce this to almost the Absurd if someone you know

33:48

if some real small business if someone owns a you know a dry cleaners in a Plaza in a small town well buy another

33:54

dry cleaners or buy a shoe repair place yeah right you know another alteration place

33:59

or you know those type of things so the the growth through acquisition is a is a

34:05

real viable growth opportunity for existing business owners and to your point sometimes the financing can be

34:12

incredible exactly yeah and there are a ton of places online too I mean there's

34:19

online directories there's there you can pull nakes codes you can get business names and numbers easily today um and

34:27

and as with every industry there are people and companies out there that

34:33

will charge you to do searches when a lot of it can just be done for free online so be careful where you click

34:41

click the mouse to purchase something because sometimes it's free it's just a fabricated tool that somebody created um

34:48

and it's worth the price you paid right I yeah but um how about um local

34:54

Chambers uh talking you know to anybody you know sometimes small business owners will mention hey I want to sell I'm

35:01

looking to retire uh it's just that n networking think of LinkedIn Richard if

35:07

you want to buy a business there's no better place to look than LinkedIn and you can announce it hey I'm looking to

35:15

buy this type of company with this much cash flow or this industry and why not

35:22

and you can do searches even on LinkedIn for business owners in industry specific

35:27

and state specific I mean LinkedIn itself is a wonderful little engine that

35:33

you can really Niche down and find business owners in the industry and

35:39

Market that you're interested to possibly acquire boom I mean right right

35:44

and you know deal flow is difficult at all levels right that is the that's the

35:49

be in the Bonnet for everybody involved in this world whether you're looking to buy a small little business generating

35:56

50 $50,000 in revenue or you're looking to buy A5 billion company as a private Equity Firm deal flow is always the

36:04

challenge it's everybody's challenge it's the challenge of business brokers to get listings everybody suffers from

36:10

the same thing there's no Silver Bullet there's no one way that works there's no lead generation tool that on its own

36:16

Works um you know flawlessly or has been proven to work um you know uh

36:21

exclusively as as as a as a vehicle to get listings so the answer lies in you

36:26

got to do everything yes you got to do everything speak with broker speak to Bankers speak

36:32

to accountants speak to attorneys speak to the Chamber of speak speak to business owners speak to your brother-in-law speak to the people that

36:37

service your house the people that may come to be doing you know doing work at your home anybody and everybody every

36:43

business that you walk into where there's a manager or an owner in place you get the word out now some buyers

36:49

might be worried say well you know I work for a company I can't be that vocal about it they don't know that I'm leaving or whatever so then you have to

36:54

be cautious but for someone who you know is is is in the hunt and is serious or maybe doing this full-time at this you

37:01

know uh full-time rather than under the radar um from their company you got to speak to everybody that's how you get

37:09

potential leads I mean that's where they come from if if you were to ask me what's the best lead source to generate

37:15

deal flow the answer is simple everything and none of and none of them right right it is talk with everybody

37:22

but I I um I think of exit planners I know a lot of exit planners and and I love business exit planners because they

37:30

see the value and how to prepare the business for the planned exit or the

37:37

unexpected exit you know I I can think back to my younger days as a as a

37:42

commercial portfolio manager walking into businesses and asking them what is your succession plan Exit Plan it was

37:49

always I a going worry about that till I'm ready okay you don't know when ready

37:55

is only the man upstairs know is when you're ready is that you're going to exit Okay that's right so get get your

38:01

act together and and start doing what the professionals tell you the small

38:07

business owner you need to do to get ready to sell um so kudos to all the

38:13

business advisors and exit planners out there today and the good Brokers because

38:18

there are some damn good business brokers yes out there that speak truth

38:24

truth hurts but you know what but it only hurts for a second hurts but it

38:30

makes you grow and if you're going to grow to get more value and a higher

38:35

dollar for your business when the time comes to exit take the hurt take the

38:41

truth shape up people let's go there are so many freaking business buyers out

38:46

there today that are eligible that have money that have experience they are

38:52

ready to buy but part of the issue is our supply is weak as far as eligible

39:01

businesses well good businesses there's so much Garb there's so much garbage and you know business is if you take if you

39:08

run your business like you have to sell it and and and this could be a whole you know show by itself but putting things

39:13

into place making sure your books and records are in good shape make sure there's no um overarching massive

39:20

problems for for the business what you know I always ask sellers what keeps you up at night about the business or if there's customer concentration keeping

39:26

in mind that any problem with the business that the seller recognizes for example customer concentration or

39:32

difficulty recruiting employees any problem that the seller the owner recognizes as a problem within their

39:38

business that's going to be magnified to the power of 10 in the eyes of the buyer because the buyer has no experience with

39:45

that business so if it's a problem in your business you could rest assured it's a big problem for a buyer and so

39:50

getting those taken care of is important and you want to improve the buyer pool

39:55

and expand the buyer buyer pool so the more people that could potentially buy the business the more value you're going

40:01

to get for the business there a bidding process I mean that's just math that's just math so when you talk about the

40:06

exit planners and what they do these are things that often a seller should be doing a business owner never mind a

40:12

seller long before you become a seller should be doing it on your own from day one you run your business like you have

40:18

to sell it and it forces you to have good processes and procedures in place and systems and your you know your your

40:23

financials are in good in good order because not only is it going to make it more valuable when the time comes to

40:29

sell your business is going to do better it's going to make it in a better into a Better Business immediately because

40:35

you're going to have a better handle on the financials the big issues that you have or problems are going to get mitigated it's going to force you to run

40:41

your business in a better way so it not only does it pay dividends down the road as you're the owner even if you're three

40:46

five 10 or eternity away from thinking that you want to sell your business if you put it in that context of running it

40:53

like you have to sell it everything is going to be better that's right and part of the process with with um SBA lending

41:01

with the banks as the business buyer you put together a business plan and you

41:06

will not pass my Gates of submission until you have in your business plan

41:12

your succession plan it sounds pretty tough the dev Curtis Gates of submission listen I I'm sniffing that stuff and and

41:20

I I learned the hard way I had Underwriters say Deb what the heck there's no exit plan or succession plan

41:25

in here so you don't want to you don't want to tick off an underwriter so I've learned the decades so buyers when they

41:33

put their business plan together I better see a succession plan in there what happens if Richard you get hit by a

41:39

bus and you just bought the business a week ago who's going to take over the business you have to know who that is

41:46

already even before you even are in the business or the business so these things

41:52

because they happen these things happen it's reality um you know I know we have um I'm not sure what we're TimeWise

41:58

because I don't have my glasses on so I can't see but um have a couple questions if you want to um maybe

42:04

address those because I know we have lots of people and some good questions I believe yes I want to thank everybody that's been here so far I like the I

42:11

gravit to the one that I see here and sorry will be looking off to the side I'm not checking my phone or whatever but this is where the chat comes up on

42:18

the side where someone says I just noticed that title can I ask an edgy question so I like edgy questions are

42:23

there are there additional or edgy people are there additional challenges for minorities or a business that is

42:30

oriented to serving the minority Market great question you want to take a stab

42:35

at it well yes I mean for me and we

42:41

talked a bit bit about this on last week's episode is if you're buying a

42:46

business that's 100% women-owned or veteran owned or minority owned as the

42:53

buyer are you the match for for that owner today and why I say that is

43:00

because certain businesses have um contracts with bigger guys for vendors

43:07

to support the minority owned businesses or the customers only want to work with a minority owned business and if you're

43:14

not that matching minority and you don't know about that you need to know about that pay attention right so that would

43:22

be my ad what what would you add to it Richard well I think it's very important because some businesses they may not

43:28

transition could there could be government breaks and tax breaks associated with um you know some of the

43:33

categories that you identified minorities veterans women owned businesses um there's one I'm I'm I'm

43:39

working with right now which is a similar situation in order to get their ongoing benefits and they have a certain

43:45

contracts that have been put into place as a result um of them being a um minority-owned business so those those

43:54

are what you really need to look for point even if none of those legal um standpoint or points exist as far as

44:01

getting favorable tax treatment or favorable contracts or vendors I think

44:06

the point that's really important is that business May Thrive and survive

44:13

because who's the face of the business yeah and if the customers if the customers are dealing with a minority

44:19

because you're in in a community that's that you know caters to that particular minority suddenly if you're not of that

44:27

Minority to come into the business you stick out and they may not want to deal with you and it's not discrimination

44:33

it's not racism it's just culture and so understand that you may not be the right

44:39

person to operate that business in the eyes of the customers or the employees right on right on yeah that was a great

44:47

question and and and and something that every buyer and seller needs to pay

44:52

attention to uh transparency on the seller side you know what's underneath it all that a buyer needs to know and

44:59

vice versa yeah and there was one question regarding if there any particular I think I saw earlier uh sea

45:06

and seia is working in the background she's very quiet today because we usually have all these great noises and

45:12

sound effects I shouldn't say noises sound effects to add to the equation um but she's doing a stellar job of I see

45:19

posting questions and there was one sea that someone brought up related to right there it's up there specific

45:26

Industries or markets that tend to sell better than others yeah yeah and there are go ahead

45:34

you go ahead because I've got some comments too but please go ahead for for me being the bank lender that that know

45:41

is all of my bank Underwriters and decision makers essential needs is is

45:47

the winner winner winner industry um and when I say essential needs what do we

45:53

need as humans to keep living but we also have to pay attention to as well are there threats like AI threats in

46:01

some of the essential needs businesses but I think of landscaping Health Care

46:07

HVAC we need air conditioning we need our cars repaired you know we we need

46:13

what are the things that we need as humans to keep on living those are essential needs businesses and they do

46:18

well now now people could say e-commerce does well which yes it does and they're

46:26

very profitable but the underwriter is going to dig really hard to understand

46:32

is there any kind of big amazon takeover of this little e-commerce business that

46:38

could happen you know what are the big dogs gonna do so I'll I'll just yield

46:43

the mic and let you respond now well I think you know from essential Services clearly from A lender standpoint they

46:49

there there's a love of that they also like some franchises but and that also

46:55

um ports over to you know markets that tend to sell better than others if assuming if there wasn't a third-party

47:02

lender essential services are always um attractive for people because

47:07

individuals know for the most part you don't go through these wild swings as the economy goes up and down yeah but

47:14

from the type of in markets that tend to sell better than others if you're carving out you know the the The Lending

47:21

piece which is very important I don't want to discount it the businesses that are poised to sell are good businesses

47:27

across markets and across Industries managed well above and beyond everything

47:32

else they're going to transition to the greatest number of people they're not overly complicated um individuals that

47:38

have General business Acumen can take them over and run them successfully and certainly you know the ones that

47:45

essential Services become attractive also to the buyers because they know that that's not going to disappear so

47:50

the Bland boring unsexy businesses not complicated that are easy to run and and

47:56

are run well at this point with good books and Records I mean those businesses regardless of the economy

48:02

good businesses which under though under that term F you know are the ones with

48:07

good books and Records no major issues and have a a large buyer pool those businesses sell fast there's always a

48:14

market for them and and I would add too the absente owned you touched on

48:21

this earlier don't be the business owner working in the business and now you want to sell it because when you sell you are

48:28

the business and you're leaving that's right the good businesses that are truly absentee owned and a chief of credit of

48:35

mine used to always say as long as there's cash flow that's a good business

48:40

yeah yeah yeah that's pretty basic but pretty accurate yep consistent cash flow

48:46

that is gonna stick um yeah um wonderful we're good I we're getting a message

48:53

here from seia we're getting close to our limit this was great how about let's give a a round of uh

48:59

recognition to our sponsors for for headbands headbands and handkerchiefs um

49:05

missa would you be so kind to maybe put up a couple of our sponsors here at one

49:10

at a time are you able to here we go look at that we've got the hounds of

49:16

business community and this is a wonderful Community led by and founded

49:22

by Mike a we'll call him Mike Mike ashab Broner and if you take a picture of that

49:27

QR code you can apply to join this community and it's it's truly a

49:34

community where of small business owners worldwide uh that just support one another on LinkedIn and and even off

49:41

LinkedIn and a lot of great friendships have come out of this community but the

49:47

best thing that Mike teaches is kindergarten skills as the leader the founder of this networking Community

49:54

it's all about reciprocation if I'm saying that word right from the Midwest here you

50:00

know we don't understand you all together I'm a Canadian and so between you and me the oot in the boat is must

50:07

be driving people Bonkers right right but but we all love Mike a he's um the

50:13

redneck Financial guy does he look like a redneck in that picture Richard he

50:18

looks like a guy that I'd like to hang out with that's what he looks like and he is everybody likes to hang out with

50:24

him yeah no TW I like yeah I like him already we have to get him on one of

50:29

these shows because he's quite a character to talk to uh but anyone that's watching the show now live or

50:35

even the recorded scan that code reach out to Mike and say hey uh the hounds uh

50:43

it sounds like a community I want to join and um mention our H headbands and

50:49

handkerchiefs live stream here and let Mike know we sent you there so thank you for your sponsorship Mike who else we

50:56

got CIA Walking Tall uh this is another great uh

51:01

organization they um are a group of three guys two are um uh survivors of

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massive shootings The Last Vegas shooting a couple years ago with the Jason Aldine concert and then the Fourth

51:16

of July shooting in Highland Park Illinois and then the third partner of

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this organization um is a doctor and their focuses on Mental Health okay

51:28

think about all the victims of these mass shootings they go back to work or

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sometimes same day and just continue on with life as as as survivors that

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witnessed the horrific Walking Tall is a movement that's going to grow big and

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I'm proud to call them one of our sponsors because they want to support

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people that have major life events happening to

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them and they're all about mental health and and we rise together um by by

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Walking Tall just exactly what they are and I love the picture uh their logo here of a hand picking up a person

52:12

that's on the ground that's what we do Richard that's what we do yeah it's actually uh yeah great great logo so

52:20

please ladies and gentlemen make sure you scan walking talls um uh code there

52:26

and then we would not be here today if it wasn't for brilliant beam media yes

52:33

founded by CA and and led by CA and her team uh what I what I call them they

52:39

they take the Gremlins out of um it and uh live shows and social media they

52:47

support big companies and know if you're a bigger company and you're looking for a team of people to handle your social

52:53

media your um live shows your podcasts let me tell you CA and her team are the

53:00

way to go uh you talk about customer service above and beyond

53:06

would you agree Richard yeah and and I'll tell you the one thing I I you know I've gotten to know C over the N last

53:12

few weeks as we've gotten involved in this project and the one thing I absolutely um love about her besides the

53:18

fact that she's really nice and got a great sense of humor is she doesn't talk in code you know like every time I'm in

53:24

a convers with someone who's a techie like at probably about 15 seconds into the conversation I'm gone like I have no

53:31

idea what they're even referring to and so I you know when when I get into Tech

53:38

talk I just feel like a complete idiot and because I have no I mean I just don't I have a the most basic

53:44

understanding and they're going off and speaking a different language and CA explains things it's perfect like she she she understands who I am for example

53:51

because she makes it idiot proof you know which is which is great cuz it's soon as you make it idiot proof they invent the better idiot but she really

53:59

explains things in in a common sense logical way that makes it understandable and and if whether it has to be linking

54:05

or social media whatever may be I found that even in a bunch of conversations so far I understand what she's talking

54:11

about and when something has to be done and she explains it it makes perfect sense to me yeah so she she's really for

54:16

anybody looking for you know talented digital marketing space I mean she's

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just spot on and she understands people's knees and she again they they explain them in a very meaningful and

54:28

understandable way and what I also like about brilliant B media is there's there're small they're a small business

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but a big heart and a team to handle the big companies right you know I think

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sometimes the big companies they they want to hire SEO experts and digital

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this and this and that and everything with by hiring other big companies right

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um You don't get the special one-on-one touch as you do with a small company like brilliant beam media uh so I highly

54:59

recommend them and very thankful for their sponsorship give yourself a hand you yeah yeah and maybe we should put up

55:07

the QR code and Richard can speak again to the uh uh the list there sellers 10

55:13

things sellers won't tell you explain what that's all about Richard so this is a a a special report that I compiled and

55:19

and in uh um conjunction with Deb and really walks people through especially

55:25

business buyers things that a seller will not disclose to you not because it's being fraudulent not because they

55:30

may be things that are material because they are contractually obligated to do that but things that they're not necessarily going to to speak to you

55:37

about whether it related to any you know issues related to customers where they continue to buy from you um whether you

55:43

know how they're looking at the financing their their level of of of wiggle room on the asking price um all

55:49

these components that I found over looking at well thousands of businesses and decades um and the core 10 of what

55:59

sellers typically do not disclose and again it's not because they're lying not because they're fraudulent they don't have to tell you these things but

56:05

they're critically important so you know it's a great report it's very in depth it's taken a lot of examples um from

56:12

years of experience I think it's about 40 pages but some really good examples it it proves to be a terrific document

56:18

for uh prospective business buyers easy to download you you just uh subscribe and you'll get an email and then there

56:24

we have an ongoing series of 14 emails that'll go out to you um every day um for for a couple of weeks with great

56:30

helpful tips so if you're in the market looking to buy a business helping people buy businesses whatever the case may be

56:36

I guarantee you you will find this to be a terrific helpful resource I love that

56:41

it's like a it's like a free master class that just comes week after week each chapter right yeah yeah except if

56:48

yeah right if we one of those full of gurus who are selling business programs for zero money down we tell you

56:54

this is the master class it only cost you $5,000 my go it's a but it's a great report so take advantage of it it's it's

57:00

going to be up for a little while so great de thank you 30 years of experience in um this uh 10 things

57:07

sellers won't tell you and you know what we could probably add more pages to the

57:12

report as time goes by Richard yes oh guaranteed so and the 30 years and you've got 20 so 50 between the two of

57:19

us so I like to say I'm not that smart I'm just old you're very smart you're not old so anyways hopefully the two of

57:25

us we'll be able to keep dispensing some advice that people find helpful and you know the agenda to educate the world in

57:31

the world of business broke business buying and selling you know it's something we feel obligated to do and uh

57:38

and I'm honored to do it with you by the way Deb I keep telling I keep telling you that but I'll tell you again yeah

57:44

and you know I I don't want to rip on sellers not being transparent because there are many out there that are I just

57:50

want to remind everyone if you're a buyer you better be transparent because the underwriter will find it or I will

57:58

find it and the world is easier that way yeah transparency wins every time yeah and

58:06

you know what if we all have baggage of some sort just tell me what it is and

58:12

we'll get around of course the surprises always come out and even when represent sellers tell them you know disclose

58:17

everything and this this way you know who can handle what and if a buyer can't deal with a particular problem better off to get them out of the way early on

58:24

yeah I Deb I I uh I enjoy spending this time with you and I'm looking forward to next week as well well let's remind all of

58:31

our listeners that um headbands and handkerchiefs are here on all your favorite social media platform channels

58:39

live every Thursday at 2 pm Eastern uh today's topic was business buying Safari

58:47

kind of where do you go we got a whole lineup of fresh topics coming up all the way through the end of January and we're

58:53

just going to keep rocking and ring and uh until next time Richard anything else

58:59

you want to say no thank you it was great seeing you as always and enjoy your time together and uh I'm sure we'll

59:05

speak about a hundred times between now and next week and support small businesses everybody let's keep them alive and thriving Amen to that yeah bye

59:17

[Music]

59:22

now