TT123 Transforming Struggling Ventures into Sellable Assets: Insights from Tracy Gunn

Have you ever found yourself on the precipice of burnout? Ever wondered how to turn around a struggling venture into a sellable asset?

Join me as I chat with the phenomenal Tracy Gunn, a serial entrepreneur who has not only been there but has also triumphantly bounced back. Tracy's riveting journey is a testament to resilience, strategic thinking, and the vitality of maintaining a healthy work-life balance. Listen in as she shares fascinating insights from her experience of turning around four businesses on the brink of liquidation.

But that's not all. Tracy and I also delve deep into the heart of long-term business planning and the often overlooked art of business succession planning. Through Tracy's gripping narrative, you'll discover how she navigated the labyrinth of entrepreneurship, transforming from a novice into a seasoned business owner. Moreover, learn from Tracy's experience of aiding a business owner struggling to sustain his 52-year-old venture amid a global pandemic. Together, we unpack the idea of setting up a business with succession planning in mind right from the start.

In the final leg of our discussion, we dissect different exit strategies and the importance of ensuring business continuity – a must-listen for any aspiring or current business owner. Tracy generously shares her expertise on topics like bringing someone on board to eventually take over the business and having a backup plan. We bust common myths about how to value a business and explore the effects of businesses closing on our economy. This episode is a gold mine of real-world insights for anyone yearning to learn from an established entrepreneur's trials and triumphs. The wisdom Tracy imparts is invaluable, offering guidance on not just surviving, but thriving in the world of business.

Enjoy!

Are you thinking about exiting your business? Maybe someday?

Every business is created - with the intent to sell.

It is never too late or too early to start to plan for your exit. Access Tracy’s free training to help you get started with your exit strategy.

https://www.getexitable.com

Links:
Roberto on Instagram http://www.instagram.com/robertorevillalondon
Tailoring Talk on Instagram http://www.instagram.com/tailoringtalkpodcast

Credits
Tailoring Talk Intro and Outro Music by Wataboy on Pixabay
Edited & Produced by Roberto Revilla
Connect with Roberto, head to https:

Chapters

• 0:10 Preparing for Business Exit
• 10:57 Business Planning for Long-Term Success
• 21:32 Business Succession Planning Importance
• 28:46 Exit Strategies and Business Continuity
• 42:46 Business Value and Exit Planning Simplified
• 51:09 Podcast Discussion With Taylor and Tracy

Transcript

Speaker 1: 0:10

Welcome to the Tailoring Talk Show with your host, roberto Rivilla. I'm a bespoke tailor, menswear designer and owner of Roberto Rivilla London Custom Clothing and Footwear. I activate your superpowers through the clothing I create and the conversations on this podcast will meet self starters and creators to learn about their journeys, while they share valuable lessons to help you be the very best you can be. Please support the show by subscribing, and it helps so much if you take a few seconds to leave a rating and a review. Today's guest is a serial entrepreneur who spent the last 16 years launching and running four businesses until she burnt out and couldn't sell. But she fixed the business and found a buyer within three months. Now she helps business owners prepare for exit so they know the precise steps to ensure they can fix their business so they can work less, make more and create a sellable business so they can get their big exit. Here to show us how we can make our big exit. Tailoring Talkers, please welcome Tracy Gunn to the show. Tracy, how are you?

Speaker 2: 1:14

I'm great. Thanks so much for having me. Sorry, that was a lot of stuff I do. I love it, though. I'm so excited to be able to talk about this.

Speaker 1: 1:22

This is like my jam I love talking about this Exactly, and I know from just the last couple of minutes of getting to know you that you are so passionate about this which I was really excited to be jumping on the call with you today. You are joining us all the way from New Hampshire. Yeah, it's in the fall.

Speaker 2: 1:38

It's beautiful New Hampshire. I'm originally a New Yorker, so occasionally you'll hear a little bit of New York in me. You can't take the New York completely out of the girl, but New. Hampshire is where I am right now and looking to go south, but anyway, yeah, yeah, like where's south of Hampshire, like Carolina.

Speaker 2: 1:57

So North Carolina. Yep, that's where my grandkids are, so I'm looking to go down there and that's part of why I do this kind of virtual, so I can do it from anywhere, which, when you figure out the things we're going to talk about, if you do them again, you can plan ahead to not be locked in by a location or by demands. You set it up by design as opposed to reacting.

Speaker 1: 2:23

So, that's kind of I'm excited to be able to share about it, so yeah, so let's give the listeners a little bit of who Tracy is and how you kind of got to where you are today, because you got quite an interesting story, having built businesses and run businesses and then all of a sudden hit a brick wall. Just kind of take us through, kind of how you get to be here with us today and some of the highlights and maybe even some of the lowlights, and then I'll probably jump in on you because I definitely can see some parallels.

Speaker 2: 2:56

Right, oh, I mean, it's not so. Honestly, we all feel like our businesses are special, but there's so many commonalities between all businesses, no matter whether you're retail or manufacturing or importing or no matter what it is. So for me, I stayed home for 14 years. I homeschooled. I have three kids who are all grown and gone now, and they all decided to go to school, and so I started my first business and I love business. I love. I wanted to create this little world that I was in charge of, like nobody else. If it failed it was because of me, not because of anybody else. Like I wanted that, without anybody messing with my little world, right, and so I made that work. And so, over time, over the next oh gosh, it was, that was 2006, 2016.

Speaker 2: 3:46

When I opened my first restaurant, because my candy store was running pretty well without me, I was kind of bored, thinking, like, what else should I do? So I started restaurant, which is one of the hardest businesses not to pat myself on the back. It's just low profit margins and huge dependence on staff. So, first restaurant 2016,. Couple years later, started a 6,500 square foot restaurant, night club, dance band, big bar, catering, that kind of thing. That was 2018. And 2019 had my first grandchild and was like I don't want to do this anymore. Like I. It's amazing how one little thing can just shift you completely from everything you're in to wanting something completely different. And I don't think that is unique to me. I think everybody kind of things happen, no, whether it's the floor or so you get health concerns or grandchildren, or you just hit a point. You're like I don't want to do this anymore, and so that's kind of what happened for me and I thought I'll just sell right, like everybody, I'll just sell it to be fine.

Speaker 2: 4:51

And so I hired a broker. I knew him. I was like okay, this is cool. And he went through all my books for all four of my businesses I had two candy stores, two restaurants and when he sat down with me I knew it was going to be bad, because he was quiet and he was like you know, your best bet, tracy, is to just liquidate. I'm like what do you mean? We're doing over a million in sales, we have 42 staff. Like what do you mean? Just liquidate. And he really didn't get into the details because it's not really his job. I mean he just was like your best bet is just to liquidate. This is not sellable. And so, after I cried a little bit, I just decided what, if he's wrong, I could do this for another six months, let me see what I can fix, and if I can't, then I'll just do what he says right?

Speaker 2: 5:43

But I gave myself another six months, and so what I found was I didn't know anything Like I knew how to run my businesses. I was working from seven in the morning until probably midnight every day of the week. I was managing everything. Some were a little bit more independent than others, but I really didn't know anything about my end game, because I had always just built willy-nilly, like, oh, I'll start another restaurant. Oh, I'll start another candy store. Oh, thinking I would just handle it.

Speaker 2: 6:13

And I did Not perfect, but I did, but with no end in sight. And that's where I realized my biggest mistake was. And then I thought to myself why did anybody tell me that this should have been a priority? Like what does that end game look like? So for me now, I set the deadline for myself and I figured out OK, my end game is I want Adi here. And so I start like what would make this attractive to a buyer? I started looking at my business differently, right, not?

Speaker 2: 6:45

And the other part I did was I shifted. I went from growing and surviving and continuing, shifting all of my focus to what can I do that is going to make this sellable. And so now I started to tackle those problems, all those 16, 17, 18 hour days where my focus was on just getting through the day, right, growing. Now we're focused on fixing. And so I took my big restaurant.

Speaker 2: 7:13

I made some things we could talk about some specifics, and I found a buyer in three months and it just realized like if you just it doesn't have to take a long time, it doesn't have to be perfect, you don't have to fix everything, but just by understanding and figuring out those things, it really made the difference. So, like that's my passion project now, now that I'm out of those restaurants and I still have my candy store, because I had a partner who earned in and then she changed her mind, right, I was out of all three, all of them. And then now I'm back in the candy store just because she decided she changed her mind. So now I'm like letting it do its thing while I open it. But yeah, so hopefully that wasn't too rambling.

Speaker 2: 7:57

But I mean, I think you know, we all start our businesses because we have this idea and this passion, right, and we have a plan, usually at the beginning, about how we're going to do it.

Speaker 2: 8:07

We adapt, we course correct as we move, and then things kind of start to chug along and we probably most of us, I would say 95% of the people that I talk to never think about it again, about a new plan.

Speaker 2: 8:24

Right, we think about, like, expanding, we think about growing, we think about scaling, but very, very rare is the person who's thought about how do I get out of this thing eventually? Right, and whether that's we call it exitable because and it's not a real word but it defines it right that means getting yourself out of the business, and whether you get out of the business and sell it, or get out of the business and continue to own it, or whether you get out of the business and you share it with somebody. Right, there's a lot of different ways, but first step is getting exitable meaning getting it so it's not dependent on you, because the value of your business is dependent on how much or less the business is dependent on the owner. So that's the way it is Thank you, thank you, thank you, thank you, thank you, thank you, thank you.

Speaker 1: 9:20

And I think you know from what you've said and certainly something I've been thinking about a lot recently is, I guess really the first step is to take yourself out and put yourself in the future and work out what that means for you. For some people it's when they hit certain milestones, whether that's in life or the business, or in life through the business. For some people that's an age. So I don't want to work past the age of 55 or 60 or whatever. I definitely want to be out. Okay, so that's great, you've worked that bit out. But what do you want to be doing? Because then you need to connect the target date with okay, well, what does that actually look like For me and my wife? It's.

Speaker 1: 10:09

I mean, she would go tomorrow if she could, but that's not going to happen. But you know, for her, her exit plan is that within 10 years she wants to be back in Spain. She doesn't want to be here anymore in the UK and obviously I want to go with her. But I in my mind haven't fixed you know kind of fixated and worked out exactly what my cutoff point is. Right. I know that I want to get out, so I've done that bit and I know what that looks like I just don't know how old I am when that's all going on.

Speaker 1: 10:45

So I need to figure that out and then I guess, once you've got that, then once you've got the destination, you can start working out the route and looking at your business.

Speaker 2: 10:54

Right, that's exactly right, it's like, but how? Very few of us, because we're this is not a criticism in any way, shape or form but how many of us are thinking about what do we want? Most days, we're just getting through the day, right, because we're working our socks off to get what we think we need. Right and you know when you speak to any yeah, any small medium business owner.

Speaker 1: 11:21

When you say to them, you know you need to take some time out sometimes, right, you need to get on top of it and get yourself out of it for a little bit to kind of work things out, I'm the same.

Speaker 1: 11:31

Yeah, you immediately have this sense of fear and dread that comes up because you're like I can't possibly take any time out of the business. I mean, I don't even take time off to go on the holiday. If I take a few days out of the business to work on it, I'm going to lose income. How am I going to pay my mortgage? How am I going to pay this and that and so on? And what are my customers going to think, you know, if I take time out of the business and I'm not available to them anymore? All of that and more goes through people's heads and then, before they know it, every single time they either consider or someone tries to impact their thinking, to set them on the path to. They've gone through that cycle so many times that suddenly they're 65, 75 years old or whatever, and they're in a situation that they've probably never, ever wanted to be in.

Speaker 2: 12:22

Correct, correct, I mean. So I have one of this one guy his name's Don. He was in his business 52 years, like can you imagine, 52 years. He started when he was 20. And he had built it and he's forgotten more about business than most of us ever will know. Right, he had, like manufacturing, he had overseas factories, he had. I met him at the tail end of COVID-21. But he was 72 and like, tired and wanting to sell and, knowing that the way his business was, he finally was tired enough and took a minute and thought there's no one who's going to buy this because there were so many pieces he was doing. He had factories, he had importing, he had e-com, he had retail, he had full sale. All those pieces are really five different businesses.

Speaker 2: 13:20

Yeah yeah, and he's running them all. Now that right. So we had to come up with a strategy for him of like, okay, what makes sense for you? But it always starts with what do you want? What do you want? What do you want now and what does that look like? And that includes a date. That includes a number. You know, for a lot of people like him, he wants to retire. I found this stat recently that said nine sorry, one out of 10 businesses will sell out one, just one. Okay, not great. But the worst statistic is most businesses excuse me, 80% of their net worth is tied up in their business. So that means nine out of 10 businesses are going to lose 80% of their net worth at retirement where they don't have any retirement. Like, it's not a great outlook. I don't mean to be like negative Nancy, here, but that's the reality and nobody talks about it because nobody thinks about it, because you know like it's the rare business that sells.

Speaker 1: 14:31

Yeah, I mean I think that you know. There's a conversation I had with someone recently and I was talking about the fact that our business has thankfully grown since we came out of the pandemic. We launched footwear early in the year and that's going well, but that's now becoming its own little monster that needs feeding and so on. We need to find a bigger space, we need to hire more people. I'm in what I call good chaos now because it's stretching me and anything that's stretching you but not killing you, I think, is growth, and so I've got new problems that I need to sort out. My Rubik's Cube has just maybe got a little bit bigger and I'm seeking the help where I can with that and I'm working through it. I was like you know it's so funny because you get the thought and you think you know I need to step back, tracy, and I need to just kind of look at everything and then sort of work out where I need to start moving the pieces. You know making the moves.

Speaker 2: 15:45

It becomes the filter. It becomes the filter by how you make every decision right this shoe, liner or whatever. If you had that in destination in mind before you started that, it would have filtered. Whether or not you did that, it would have been a good or bad, yeah.

Speaker 1: 16:06

I mean, here's the thing, right. So the shoe business we started in and we did think about it before we went into it. We thought how can we? Because our tailoring business relies on myself and my wife, right? So unlike your candy stores. So you said something really pertinent earlier that the restaurant was all consuming. I think most of us that have any sense of what goes on in the hospitality business know how hard it is, right, but your candy store was running without you, correct, so that if you, out of your four businesses at the time, if you took that one, if you probably wanted to shift that one off and package it up and sell it, that was probably the one that you would have gone for first. The problem with us is that the tailoring business is all me and her. So when people come to us, they want us, they don't want anybody else. Right, when we, when we developed the shoe business, we did it in such a way where we went in thinking we need to build this in a way that it doesn't ever need us.

Speaker 2: 17:12

Smart, it's scalable. That's the planning. That's the planning part. That's exactly what you did, yep, because you learned based on what your first one or your first endeavor right is all consuming. So anything else you do you know cannot. So when you build it, you're thinking about that.

Speaker 1: 17:31

Yeah.

Speaker 2: 17:31

It can't work if it needs you, right, because this one needs you, that's it. Which is exactly what we're talking about, just from a further end game right and working it backwards. Yeah, if that filtered, why or how you did that second piece?

Speaker 1: 17:47

Yeah.

Speaker 2: 17:48

It's the same exact. You just proved the point right.

Speaker 1: 17:50

Yeah, so the conversation I was having with this guy also then led to something that I had never thought about before. So he said to me so you need to take some time out and you need to step back and you need to work on your business, which means you probably need to take less clients at the moment and just maybe focus on your top 20% of clients, because we've done the numbers Again.

Speaker 1: 18:13

It's Pareto's principle in action 20% of our clients bring 80% of our revenue profits. The other 80% if we lost even half of them, we would probably increase our profit by like 12%, 13%. So he said so you need to get yourself into a mode where you can have that focus, because that will free up time. But you also need to be in a position of A level of abundancy so you don't feel that you need to be there every single day taking money right, which is the problem that a lot of us have. And he said let me ask you this so if you stopped working tomorrow, if you shut the business tomorrow and you had no income, how long, based on the savings that you and your wife have and so on, like your net worth outside of the business, how long could you two survive?

Speaker 1: 19:12

And I thought about it for a second, and only a second, because I know the answers to this question, because it's the one thing I'm personally very, very adamant and passionate about. And I said to him we could survive for 12 months to 18 months 18 months we could stretch it to if we were kind of careful with things. He fell off his chair, tracy. He was like rare, like, wtf, like are you really? What the hell are you waiting for, dude? Like you're in a position right now, you're in a position that most business owners are never in.

Speaker 2: 19:50

Reema.

Speaker 1: 19:51

Yeah, you can start doing it now. And I was like, yeah. And I knew his next question was going to be how? And I said to him well, since even before I started my own business, even when I was an employee, I just got into the habit of every time I got paid at the end of the month, I'd put 10% of my take home pay into savings and my goal always was to build up the magic six months of salary so that, if the worst, thing, happened and I lost my job, I'd be able to survive for six months whilst I found the next gig and that's just continued.

Speaker 1: 20:27

But then when you start learning about putting your savings into the right areas so that your interest compounds and all of that kind of stuff, and you know, there have been times where I've had to wipe the bank, like our wedding, for example.

Speaker 2: 20:42

Yeah, honey, if you're listening?

Speaker 1: 20:46

you're not, honey, I'm talking to my wife. We'll listen to this in about five years time. If you're listening to this, it was worth every penny, so nice. So then it's just grown over time, and I guess the reason I'm telling this story is not to brag. It's, I guess, for anyone that's listening, that was nodding their heads when Tracy was saying you know, when you touched on the fact that people aren't in that situation to be able to give themselves the grace and the space.

Speaker 2: 21:20

Correct.

Speaker 1: 21:21

That you've got to start at some time and obviously you know when was the best time to plant a tree, like 50 years ago. When's the next best time now?

Speaker 2: 21:30

Now.

Speaker 1: 21:30

Right, start doing it.

Speaker 2: 21:32

Well, and the thing is is I mean you had a life habit before you opened your business that you carried into your business of saving, but we are not, in general, in a culture of saving, especially in America.

Speaker 1: 21:49

It is not.

Speaker 2: 21:50

And I'll tell you, like when we shut down for COVID, the idea that we could be closed for two weeks to get ahead of the curve which turned into months obviously.

Speaker 2: 22:03

But the idea that we would stop all cash flow. That's how we live. You're going to stop it for two weeks, like, are you struck? Fear and terror into everybody Because that is not how we operate. It's just not so. We operate on credit and cards and the cash flow funds the last week and the next week and payroll, and you see what I'm and that's so your great habit came through in your business because it was a life habit. But that's not the reality for most people and you know I think about so.

Speaker 2: 22:47

The other passionate reason I thought about doing this was that I heard this statistic about the baby boomers who changed the whole world. Right, there were so many of them after World War Two that, like it, changed whole industries because all of a sudden there were so many. The population grew so quickly, right, and you know, those boomers are in their 70s. If they're not retired yet, they're ready. But there's no, there's number one. So in America there's, I think, 38 million small businesses, which is, I think, 99% of our economy. Right, but whatever. So 12 million of them are boomers. So 12 million in the next five years they will retire one way, shape or form because they're older, they're tired health, whatever right. So that means 12 million businesses are going to be for sale.

Speaker 2: 23:47

Well, if only one out of every 10 sell, what happens to the rest of those businesses? They're valuable, they're part of community, they are the basis of our economy, and yet they're going to disappear. Because they're, because they are not going to keep going right, they'll figure, they'll work at Walmart, you know, as a greeter, they'll do something else, because they're just not going to do it forever and then, and a lot of us won't be able to, and so we have this thing. So you have like OK, half of them are, most of them are not sellable yet. But the flip side of that is there's not enough buyers to buy them. So you have this. But what if? If only one out of every 10 cells, which are not great odds? But what if you were the one? What if you could be the one right?

Speaker 1: 24:40

Yeah.

Speaker 2: 24:41

Knowing 12 million are going to be for sale, why not If you could right? So, like we talked about, like If you have your destination in mind and what that looks like for you. I mean again, I think we are often selfless in our businesses. We don't often think about what we want, we think about what's best for the business, but it's. I challenge that and say, ok, if you're going to think end game, what do you want, what do you want that to look like, and define it Time, money, right, time frame, what, how much do you need? Need versus want and then you can reverse engineer that.

Speaker 2: 25:19

Who, who, who would buy it? What, who are you going to market it to? And how you structure it and fix things Really is kind of defined on who the buyer could be, all of those things. But having that initial Talk with yourself and defining some things, even really from a 30,000 foot height, really helps you figure out the rest. Yeah, and it's really hard for us if, like you know, we go on vacation, if you can't leave your business for a couple of weeks without everything falling apart, right, it's debatable how valuable business.

Speaker 1: 26:00

You have a job, I guess.

Speaker 2: 26:02

Correct, correct and that's, and so you know. I don't know if you've read the E-Meth, which is a very simple book by Michael Gerber. Yeah, ok, but when someone gave me my, when I first started my candy store, somebody gave me that book, somebody I was in a business group with, and it defined how I set up that store, because as much as I loved owning my candy store, I didn't want to be the candy lady behind the counter forever. I didn't. I knew that about myself. I wanted to do other stuff and because of the way I set it up and the consistency of the experience and the training of the staff to do all those things, those systems, I was able to start two other restaurants and another candy store Right that base, because somebody gave me that book. But if I hadn't had that book, I probably wouldn't have done those things. So I would have and I probably wouldn't have done two other restaurants because I probably would have still been there the candy lady behind the register.

Speaker 1: 27:01

Yeah, I guess the other. We talked about the end game. Having the end game in mind for yourself, I guess we should probably talk about the other thing that we probably want to be thinking about as business owners that are looking to While you were talking I was also because I have my hyperactive imagination. You know my business morphed into a dog.

Speaker 2: 27:23

Yeah, at the moment Right.

Speaker 1: 27:25

So if you're going to, if you're going to leave your dog with someone for a few weeks while you go on vacation, people would much rather take a dog that is trained and does its thing outside and walks nicely on the leash and comes when it's called and is fairly relatively kind of maintenance free like a cat. But you know, at the moment I know that my, my dog kind of cocks its leg up all over the place when it feels like it and I couldn't give it to someone else, right? So I need to kind of try and work out all of those bad things and sort of retrain the business so that I can give it to somebody to look after and be a custodian of in the future, aka the person that I'm looking for. And I'm looking for somebody to be the person that buys the business, because I would guess that a lot of investors and buyers of businesses they they don't really want to buy someone's business to then take it over themselves. They want to buy the business.

Speaker 1: 28:21

And if it's something that's kind of just running itself because all the systems are in place and the people in place that I can buy this business, I can make money off it, I can just put someone else in charge of it from my team, and then I've just got something else. I've got a portfolio that's making me money. Is that? Is that a sensible way to think? To also come at this when you're trying to work out what you need to fix Right Exactly.

Speaker 2: 28:46

I mean, the thing is we start often we created this in case of emergency plan, like it's a small mini course just to kind of like, introduce people to right. Like if something happened to me on the way to work and and I had a car accident, I paid, would things get ordered? Would they know what to do? Would they know who to call? Would they know where to even deposit the money? Right? What would happen if you just, in an emergency, should remove me from everything? What would happen to the business? Would it tank? Would it continue? Would it grow? Right? It's something to think about. It's not something we all just believe inherently, because we're optimist in general Is that everything's going to be fine. But these things happen to people, right? Sometimes people die, have a car accident and die, but sometimes let's just say it's happy and it's okay. You had an accident but you're going to recover, but you're out for three weeks. What happens? Do you shut down? Do you know? Like, and thinking about that or same rate. Let's say it's a happy reason, you're on vacation for four weeks and you're out, you're in Antarctica and there's no service, like you can't use access to wifi, nothing. What happens? That's the easiest way to start to think about your business, because you're exactly right, most businesses don't sell because they're not really businesses, they're jobs. It doesn't. That doesn't mean it's a death. Now, like you can fix that Right. You can replace yourself in your business. But remember, I talked about how many businesses are going to be for sale.

Speaker 2: 30:30

The other part of that is really being creative about what the exit looks like. Because here's the thing If you get yourself out of your business and you're making money and you don't have to work it, why sell? If you don't want to do it anymore, that's fine. But what if you could bring somebody in to earn in? Which was a strategy we had for a gentleman who had a catering business for 35 years and he was tired. His parents had started hitting his brother running it. He said why can't you find someone from a culinary school to earn it? You don't think somebody who graduates from culinary wants to have their own. And then you just retain ownership and the goal is to give up half. Eventually they earn it. They don't even have to give you any money, but eventually you teach them your way, which you'd have to do that anyway. But now you make half with doing nothing. There's just a lot of different ways you can exit and if there's not enough buyers, making it sweet and creating a creative scenario where you get the exit you want, it's about being open to that. But you have to be out of it to even consider those things, or you have to at least have the plan of getting out of it.

Speaker 2: 31:53

I don't know that you want to be tailoring in 20 years. Somebody's got to do it, or you're just not going to do it, and so at some point you've got to figure out OK, who are we going to get in here to teach, or whatever that looks like. For me it was. I didn't want to be the candy lady forever and I mentioned that I had. You can liquidate, which is fine that gentleman for the catering. He didn't want to do it. He was tired. After 30 years he didn't want to do it and the business had given him enough over the decades that he didn't care. He was going to sell the building and he was cool with liquidating Because it didn't require more from him.

Speaker 2: 32:40

And that's why he was making that decision from a wisdom right, like an educated place, versus reaction.

Speaker 1: 32:47

And if you've managed to build your business up in a way that it has. So, if you liken it in a domestic situation, you buy a home, if you can get on the property ladder, and then you take out a mortgage and for most people in the modern era that mortgage is almost the value of the actual house itself. But then you're there for the long term and then eventually you get older, you don't want this big old house anymore and you want to get downsized or move away or whatever it is. And so you look at how much equity you've got left and you're like, oh, actually I could sell it because it's increased in value over the years. My mortgage has gone down because I've been paying it off. I've got that much as a net worth or liquidity that I can pull out a bit.

Speaker 1: 33:26

So if you liken that to the business, if you've built your business in a way where and again, we follow the savings plan that I have personally with the business as well, so my kind of first step in exit strategy as well if the worst thing happens and I don't manage to get the business to a stage that I can package it up, put a pretty bow on it and then sell it to somebody and I do have to liquidate. At least my contingency plan is that when I liquidate, the business has got so much profit sitting inside it that I can take that lump sum as like a retirement payday and then I can go, hopefully, live a happy life and do your thing and do my thing Exactly.

Speaker 2: 34:15

That's a different exit strategy. That's all.

Speaker 1: 34:17

Yeah, but I guess having that kind of mentality to build your business in that way, obviously the better exit strategy is to have a big exit strategy. Yeah, sure, but you could have that as your kind of fallback in your contingency. So I'm guessing what your guy did there. He obviously had assets in terms of the building, probably had a bit of cash in the business as well. And do you mind me asking how old he was? Was he in his 70s?

Speaker 2: 34:49

He was in his early 60s.

Speaker 1: 34:51

Okay, so still young.

Speaker 2: 34:53

Yeah, Young enough but just tired and he was coming off of again. He had a huge catering business coming off of, COVID, so his numbers were way down compared to years before.

Speaker 2: 35:07

So, put him in a hard spot and was he interested enough in working. But again, it's a part of working through that, right, it's working through. What are the options? What are? You know, we had another guy who he's still working on his exit, but he owned an electrical company. When he came to us he was like I'm going to sell to my employees, okay, that's fine. So we worked through the exit planning, right, because that's kind of what we do, is we help you, like, figure out what you want and what your options are. We define, like, what the value is right now, and then we kind of help you bridge the gap to where you want to be, right, and what do we have to do? And so we kind of build the roadmap for you to follow, right, so that's kind of what we do. And so he was like I'm going to sell to my employer, so like, okay, I mean, sounds like you've made your mind up, but okay, but let's talk about it. So he owned the building. Well, he was going to just put it all to them and then it up, well, and I was like, well, okay, technically you have two assets you have your business and you have the building. So it's two assets, right. So my suggestion would be okay you're going to. If you're insisting on selling to your staff, that's fine, but rent them the building. Now you have two streams of income because chances are they're not going to come up with the full money. Be open to owner finance, right, so you can get it back if something happens. I said, but that's now you've got two income streams for you. But second, maybe consider not selling to your staff. Maybe consider so we actually introduced the idea of growth by acquisition so you can exit at a higher multiple Because a lot of people and I don't want to get too numbery because people tune out.

Speaker 2: 36:46

But you know your value is often based on your profit level Okay. So if your business is professionally run, the multiple of your profit, of your annual profit, is way higher. So if you have a profit from, let's just say, zero not everybody has profit, but zero to 200,000, you're probably looking at a one to a one and a half multiple, okay. If you go a little bit higher, it's two. If you go a little higher, it's three, all the way up to like 1.5 million profit. That's when the business that's we call that SDE, seller discretionary earnings, and that's how we figure out the value.

Speaker 2: 37:26

If the owner is involved in the business, okay, if it's professionally run, that would be EBITDA, and EBITDA has a multiple, usually from four up to 20, 30, 40, right, it's a professional run business. Let's like think, full C-suite they don't have to all be full time, but, like you know, the CMO, cfo, c-e-o, you have those pieces. You're not driving the business forward, the team is, and that's your main difference. But what if you professionalize your business, which is kind of what we're talking about, right? Or what if, like he, he was gonna now add on? So now you have a chain, so he, all of his friends in the same industry, retire. So what if he buys over, takes over their businesses Now he's got three takes on their customers Now his profit is higher. He went from a one to a four just by taking on. So do you see, it's a different strategy.

Speaker 2: 38:23

But, figuring out that there's just a lot of ways to do it. So he thought he wanted to do that. And instead he's actually gonna carve up pieces and he's expanding and increasing his profit to get to that higher multiple. And so he wasn't completely bought in because it seemed overwhelming to him. But for him, I mean, that would have been an easy play, because all of his friends are doing the same thing as he's doing, which is working in their businesses, and they wanna retire and there's nobody who wants their business. So he very easily could have said I'll pay you over time, I'll take it over. Now he's tripled it and he could sell as a chain if that makes sense I just find it fascinating.

Speaker 2: 39:06

There's a lot of different ways and if you get creative there's a lot of things you can do. And I liked your analogy about the house. Right Now, a lot of people started their businesses before they bought their house, so they didn't have as much. It's a lot harder in America I don't know about UK, but like to get a house because you have to really show things self-employed on paper. That's different than a job. It's just harder. So a lot of people don't always have the house or they haven't had this long, but I mean at least.

Speaker 2: 39:36

But let's say you had a house, built it and you lived in it, and now you want a downsize, would you just take apart the pieces and sell off the wood? Or would you sell the thing right Same in your business, like why take it apart? It's working, even if it's not uber profitable? There are people teaching other people nowadays. There's a number of people I could name off the top of my head who are teaching young people to buy businesses that are already running. Why? Because there's not enough buyers and they can get really good deals. But sometimes business owners haven't changed prices in a long time. They see an opportunity, right.

Speaker 2: 40:18

Sometimes business owners have been so evolved they haven't kept up with the tech, right? There's a lot of things that somebody could see in your business that they gosh. If I make these two moves, that business could be double in profit, right? So there's a lot of things out there, but why not be prepared for that? I call them the sharks. They're coming. Better to sell than not sell, but why not sell for more if you can? Right?

Speaker 2: 40:49

So anyway but yeah, I mean, I always think about it like the house. There's a lot of parallels with business in the house. The biggest difference is it's very difficult to comp out a business because they don't sell very often and they're all so different. It's hard to really, which is why we kind of go basic of okay, what's your annual profit? Like that you tell the government.

Speaker 1: 41:11

So I don't know if that makes sense.

Speaker 2: 41:12

Sorry, I go on my team just like get very excited and I'm just serious. Hopefully that makes sense.

Speaker 1: 41:18

But here's the thing, right. Hopefully we've impacted the thinking of some people who maybe didn't even want to think about this, and then maybe we've piqued the curiosity of some people, because the interesting angle that you've given to this is that there isn't one way to figure this out. There isn't one way to create an exit strategy. The exit strategy might be different, the path might be different for everybody, because ultimately, we're all different people and what we want out of life is gonna be different, right? So-. Exactly, exactly. For people listening who wanna kind of pick up this conversation and take it further with you, obviously they can go to the website get exitablecom. I'll make sure I put the links in the show notes, oh thank you.

Speaker 1: 42:05

And if you are starting to kind of formulate your thoughts now, and if this episode has helped you guys and girls to really kind of get a little further ahead in your thinking or even actually just start opening up the possibilities in your mind, definitely you need to head over there. And well, tracy, why don't you tell us what they'll find when they get there? Cause you've got some surprises, haven't you?

Speaker 2: 42:28

Yep. So for me, like I've done this for myself and we've been working one-on-one with people and we actually just started this year like working with groups, so we started talking about so over there are some free resources to kind of get people thinking about it, because it's like a big long conversation. If you've never thought about your exit at all, you're very far away from where you want to maybe work with us, right. So we have to like help people to get there. So number one like if somebody asked you what your business was worth today, would you know how to value that? I would say nine out of 10, no, right, cause you did, cause it's just not something you thought about right.

Speaker 2: 43:07

And so we have a calculator on there. You can get free access to that, which will help you not only work through kind of figuring out what your business is worth right now, but it'll also explain what the terms are and how things work together, where the value comes from, cause how do you build more value in your business if you don't know where it comes from right? So that's one of the things. We have a calculator there. We have a free workshop you can come to where we kind of debunk some misconceptions about selling. And also we give you three things you really should implement in your business to make it a sellable, valuable business. So we have that there. We can sign up for free. And then the oh, we also have our quiz over there. It's like how sellable are you Quiz. It takes two minutes, but it will kind of ask you all these questions. You kind of just answer it and then it'll give you a score at the end of, like your sellability score.

Speaker 1: 44:01

And it just makes you start to think it's really really easy to use, by the way, yeah, oh good, I'm glad.

Speaker 2: 44:06

So there you go, and it's just a, and it's like you don't have to opt in. I think at the end it asks you if you want to, but you don't have to. I just want people to just start thinking about it. Right, our goal is whether you work with us or not. That's fine, but start thinking about it for your sake, for your family's sake, for your community's sake, for our economy's sake. It's in. What we do is important for all of those reasons. Right, and there is value there and you can maximize the value. But there is value. Even if you're not super profitable, there's value. You probably have staff right. Other businesses you buy from. They're dependent on you, like, we are all so interconnected and acted. So when a business goes out, that value just disappears and it impacts like a ripple other businesses. So we're just hoping to be able to help business owners to really think about making it designed by design instead of by default, if that makes sense.

Speaker 2: 45:11

So yeah, so getexamplecom and you can always reach out, contact us. We have some blog stuff, we have some content on YouTube. You can reach us wherever, but we'd love to help. We love talking about this. Actually, my partner, karen, is from England and so we kind of do this. You know, cross the ocean thing.

Speaker 1: 45:29

Across the pond. We're on different time. Yeah, exactly yeah.

Speaker 2: 45:33

So she did more corporate stuff she does this? For big companies. I'm going to tell you something that I think was really helpful for me Is that big companies like that have they're worth billions of dollars. They're not organized either. They don't have their exit. Think Blockbuster, do you think?

Speaker 2: 45:50

they thought about their competitors. The thing is is this is a business problem, not a small business problem. Like big companies, you'd be surprised how unorganized they are, how how they don't have an exit plan in place, that they don't have systems in place, that they haven't kept. They do things they don't even know why they do them. They don't have KPS. We often feel like it's us because we're not good enough, and that's not what it is. It's just we're busy, right, yeah, and even big companies don't do this. So it's not about resources, it's about prioritizing. I think For me, that was really helpful, because you know, we have this imposter syndrome and all this pressure on ourselves that we're not doing more, we're not better, we're not further, but we're carrying it all right. If these big companies, who have, you know, all this money and all this support staff, if they're not doing it, isn't any wonder we haven't done it right.

Speaker 2: 46:55

So if that helps anybody, it helped me a lot when I was like, feeling like you know, when he told me my business wasn't sellable and I was feeling like a loser, and even though I had four to two staff right, it's just a different way of looking at it I had to spin it, which we do as business owners. We we're optimistic in general. So it takes us a little bit to get back on track, but anyway. So thank you for letting me share all this. I hope it just at least sparks some thoughts. Oh, I think.

Speaker 1: 47:23

I definitely I mean it's definitely got me thinking. I can't wait to get my results back. Oh yeah, you'll know who it is when it learns. All right, excellent.

Speaker 2: 47:34

Yes, I will. Yes, I will Chacey. Thank you so much.

Speaker 1: 47:37

I ask everybody this have you had fun today?

Speaker 2: 47:42

Oh, totally, you made this super easy and fun and obviously I'm passionate about it and you just let me ramble on. So thanks for that.

Speaker 1: 47:48

Oh, no, well, listen, you're the expert in your subject, not me, so you know it's so exciting. You know, it's at least 70% of you talking, and 30% of me is probably still too much of me, so thank you so much You've been so generous and gracious with your time.

Speaker 1: 48:06

But you know I don't think you are any. You would be any different, you know, if you were sitting down with someone, a business owner, who's kind of worried about what their journey is going to be, even starting embarking, I think I couldn't think of someone better to handhold someone through that process and help them figure it out. Coming from a place of wanting to genuinely help someone, you know as opposed to.

Speaker 1: 48:32

you know a lot of people get scared about talking about this with businesses that specialize in creating exit strategies, because you know it's always about. Well, you're just looking at this from a what's in it for me point of view, right?

Speaker 2: 48:45

Well, and it's also you can be, you can, you can let your pride get in the way. Right that you're going to feel judged or embarrassed about what you didn't do, that you think you should have right, and really it's just bringing it to life. It just is. It already is what it is. So acknowledge what it is and let's make it better. That's it. And if you could do it really easily without having to figure it all out yourself, why not?

Speaker 1: 49:15

Yeah.

Speaker 2: 49:15

I did it. If I could do it, anybody could do it.

Speaker 1: 49:18

Exactly Now. My ready to sell score has just come through, so let's just share that before we say goodbye.

Speaker 2: 49:24

Oh, my good Okay.

Speaker 1: 49:26

So apparently, my ready to score score, my ready to sell score is 70. Okay, is that good? Well, that's good. Okay, so we're on the right track.

Speaker 2: 49:39

You're on the right track. Listen, nobody gets 100. It's really about just shoring up the pieces and it probably when you were checking off what you already have versus what you don't have, those things. That is there specifically to kind of start you thinking about the pieces that are missing without giving too much away, right yeah?

Speaker 2: 50:00

And so it's just to kind of show you huh, there's some gaps here with very quickly, very easily be able to see. Shoot, I never thought about that. I'm dependent on even even just as simple as like. Are you dependent on one customer, like you talked about your 80, 20, right, if you're too heavily dependent on one contract, that's a negative. Actually, it's great for you right now because it makes it easy, but it's not so great because what if something happens? Right. So it's just supposed to be inspiring you to think about the category. So I'm so glad you did it and congratulations.

Speaker 2: 50:37

That means you built something that really could be sellable, and that's the and the gap is not so big. Right, I found a buyer in three months. I didn't fix everything, I just fixed some key things and the buyer could recognize that and saw the opportunity. That's all it is, and it's about us going as far as you want to go, so congratulations, that's awesome.

Speaker 1: 50:59

Yeah, thanks, that makes me feel better. So anyone listening to this, I've done it, so now you do it as well. Exactly, Go to getexasitablecom and take that survey. Literally, it does take two minutes, Tracy. Thank you so much for joining me. Let's keep in touch. And yeah, again, just honestly, you've been an absolute delight. Thanks all of you as well for joining Tracy and I on this episode. Don't forget that Taylor and talk is on Instagram at Taylor and talk podcast. You know I love feedback, so email me and remember to subscribe right and review. You can also click the share button in your player to send this episode on to people you know who might get some help or be inspired by what Tracy and I discussed today. And if you're enjoying Taylor and talk and you want to support the show, you can find all the links in the show notes. Have a great week, Be good to each other and I'll see you on the next one.