Podcasts about quiet light brokerage

Pat Yates is a seasoned entrepreneur with a focus on e-commerce.  In 2014 he struck a deal with Robert Herjavec on the Emmy Award winning show “Shark Tank”.  Pat grew a single slipper kiosk business into a multimillion-dollar e-commerce focused business.  During that time Pat has done licensing deals with DreamWorks, NCAA, NFL and Disney.  In 2015 he struck up a relationship with Mark the founder of Quiet Light and continued eventually leading him to becoming an M&A advisor. He speaks on stages around the world and is an expert in the Ecom space.> Here's a glimpse of what you would learn…. Impact of "Shark Tank" on brand visibility and entrepreneur experiences.Importance of networking and community among entrepreneurs.Process and considerations for getting featured on "Shark Tank."Current challenges in the e-commerce market, including inflation and interest rates.Strategies for improving business performance before selling.Understanding business valuations and the significance of EBITDA multiples.Importance of preparation and accurate financial records for business sales.Actionable strategies for enhancing business value and growth.Role of technology and data analysis in e-commerce decision-making.Value of attending industry events for networking and learning opportunities.In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley welcomes back Pat Yates, a seasoned entrepreneur and M&A advisor at Quiet Light Brokerage. Known for his successful "Shark Tank" deal with Robert Herjavec, Pat shares insights on leveraging the show's exposure, the importance of networking, and the current e-commerce landscape. He emphasizes the need for thorough preparation before selling a business, understanding financials, and maintaining realistic expectations. Pat also highlights the value of data-driven decision-making and the potential of AI tools to enhance business operations. This episode is a must-listen for entrepreneurs aiming to scale their businesses to new heights.Here are the 3 action items that Josh identified from this episode:Action Item #1 Consider "Shark Tank": Entrepreneurs with products that appeal to a broad audience should consider applying to "Shark Tank."Action Item #2 Maintain Accurate Financial Records: Running both accrual and cash basis books is crucial for understanding the business's financial position and preparing for potential exits.Action Item #3 Focus on Growth: Entrepreneurs should prioritize growth, especially if they are considering an exit.Resources mentioned in this episode:Josh Hadley on LinkedIneComm Breakthrough ConsultingeComm Breakthrough PodcastEmail Josh Hadley: Josh@eCommBreakthrough.comQuiet Light BrokerageExit Preneur PlaybookAmazon Business ReportsGoogle SheetsClaude AIChatGPTProsper ShowBillion Dollar Seller SummitThe E-MythDelivering HappinessScattered MindsShark TankBeyond the TankSpecial Mention(s):Adam “Heist” Runquist on LinkedInKevin King on LinkedInMichael E. Gerber on LinkedInRelated Episode(s):“Cracking the Amazon Code: Learn From Adam Heist's Brand Scaling Secrets” on the eComm Breakthrough Podcast“Kevin King's Wicked-Smart Tips for Building an Audience of Raving Fans” on the eComm Breakthrough Podcast“Unlocking Entrepreneurial Greatness | Insider Secrets With E-myth Author Michael Gerber” on the eComm Breakthrough PodcastThis episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures. I started my business in 2015 and grew it to an eight-figure brand in seven years.I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.If you've hit a plateau and want to know the next steps to take your business to the next level, then email me at josh@ecommbreakthrough.com and in your subject line say “strategy audit” for the chance to win a $10,000 comprehensive business strategy audit at no cost!Transcript AreaJosh Hadley 00:00:00  Welcome to the Ecomm Breakthrough podcast. I'm your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Aaron Cordovez and Michael E Gerber, the author of the E-myth. Today I am speaking with Pat Yates. He's actually a returning guest here to the ...

Episode 682: Sam Parr ( https://x.com/theSamParr ) and Shaan Puri ( https://x.com/ShaanVP ) talk to three high school founders about their biggest business problems.   — Show Notes:  (0:00) Intro (5:02) Sunshine Exteriors (29:16) Teens2Table (45:53) Totally Mums — Links: • Formidable Fellows - http://formidablefellowship.org/  • Sunshine Exteriors - https://www.hhpressurecleanings.com/  • Teens2Table - https://www.teens2table.com/  • Totally Mums - https://www.instagram.com/abigayle_lett  • “Getting Everything You Can Out of Everything You've Got” - https://tinyurl.com/4rb9z8jd  • How to Cold Email Like a Boss - https://copywritingcourse.com/heres-how-to-cold-email-like-a-boss/  • Gary Halbert Letter - https://swiped.co/file/famous-dollar-letter-by-gary-halbert/  • Sonith on X - https://x.com/sonith__/highlights  • NextDoor - https://nextdoor.com/  • 1-800-Got-Junk - https://www.1800gotjunk.com/  • “The Sweaty Startup” - https://tinyurl.com/2eftpkv6  • Quiet Light Brokerage - https://quietlight.com/  • Future Titans - https://www.youtube.com/@future_titans  — Check Out Shaan's Stuff: Need to hire? You should use the same service Shaan uses to hire developers, designers, & Virtual Assistants → it's called Shepherd (tell ‘em Shaan sent you): https://bit.ly/SupportShepherd — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam's List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

Michael Frew worked for two decades as an engineer, developer, and software architect on hundreds of consulting engagements with corporations including Lockheed Martin's Artificial Intelligence Labs, IBM, Microsoft, Amazon, Salesforce, and FireEye/Mandiant. He received his B.S. and MBA in Business and Economics while studying in China, Hong Kong, and The Netherlands, as well as several postgraduate information security certifications. Following his corporate career, Michael pivoted to Acquisition Entrepreneurship, acquiring software/SaaS companies, and using his boot-strapped funds to purchase multiple 6 and 7-figure businesses from brokers such as Empire Flippers, FE International, and Quiet Light Brokerage. Currently, Michael manages a growing 8-figure portfolio of cloud-based software companies, collectively generating a 7-figure pre-tax income annually. Michael's insights on digital business acquisitions and operations have been featured in dozens of media outlets like FE International, Indie Hackers, and Empire Flippers. Interview Links: Michael Frew's website: https://www.michaelfrew.com/. Subscribe To Our Weekly Newsletter: The Wealth Dojo: https://subscribe.wealthdojo.ai/ Download all the Niches Trilogy Books: The 21 Best Cashflow Niches Digital: ⁠⁠https://www.cashflowninjaprograms.com/the-21-best-cashflow-niches-book⁠⁠ Audio: ⁠https://podcasters.spotify.com/pod/show/21-best-cashflow-niches⁠ The 21 Most Unique Cashflow Niches Digital: ⁠⁠https://www.cashflowninjaprograms.com/the-21-most-unique-cashflow-niches⁠⁠ Audio: ⁠https://podcasters.spotify.com/pod/show/21-most-unique-niches⁠ The 21 Best Cash Growth Niches Digital: ⁠https://www.cashflowninjaprograms.com/the-21-best-cash-growth-niches⁠⁠ Audio: ⁠https://podcasters.spotify.com/pod/show/21-cash-growth-niches Listen To Cashflow Ninja Podcasts: Cashflow Ninja ⁠https://podcasters.spotify.com/pod/show/cashflowninja⁠ Cashflow Investing Secrets ⁠https://podcasters.spotify.com/pod/show/cashflowinvestingsecrets⁠ Cashflow Ninja Banking ⁠https://podcasters.spotify.com/pod/show/cashflow-ninja-banking⁠ Connect With Us: Website: http://cashflowninja.com Podcast: http://resetinvestingsecrets.com Podcast: http://cashflowinvestingsecrets.com Podcast: http://cashflowninjabanking.com Substack: https://mclaubscher.substack.com/ Amazon Audible: https://a.co/d/1xfM1Vx Amazon Audible: https://a.co/d/aGzudX0 Facebook: https://www.facebook.com/cashflowninja/ Twitter: https://twitter.com/mclaubscher Instagram: https://www.instagram.com/thecashflowninja/ TikTok: https://www.tiktok.com/@cashflowninja Linkedin: https://www.linkedin.com/in/mclaubscher/ Gab: https://gab.com/cashflowninja Youtube: http://www.youtube.com/c/Cashflowninja Rumble: https://rumble.com/c/c-329875 --- Send in a voice message: https://podcasters.spotify.com/pod/show/cashflowninja/message

Chris Duty is back on the podcast as a special guest to talk about all the types of add backs you need to know when selling your ecommerce business. The inspiration for today came from a listener submitted question, which asked "what type of add backs can I negotiate when selling my ecommerce business?"   When selling an ecommerce business, its important for owners to be compensated for the stressful one-time events that was experienced in the last 12 months when going to sell.    These are called "Add Backs", but what are they exactly?    I've invited Chris Duty, an advisor from Quiet Light Brokerage, to talk about the various types of Add Backs that you need to know about, why they matter, and how it can significantly impact the valuation of a business to potential buyers.    Here's some timestamps for your convenience:  0:00 - Introduction  0:31 - Ad Spot  2:46 - Background of Today's Subject 4:50 - What is an Add Back?  7:16 - Accrual Accounting 11:04 - Owner Salaries  13:20 - Value of Working Less  16:13 - Payroll Taxes / Income Taxes  17:53 - Trademarks, Copyrights, Patents and Other Legal Fees 19:44 - Change in Service Provider Costs  20:26 - Employee Removal Costs   22:21 - How Mike Views Add Backs  27:33 - Cash Back / Points Credit Cards  30:26 - What if you use a regular credit card? 31:51 - Masterminds & Ecommerce Courses  32:27 - Lowered COGS  37:46 - Negative Add Backs  39:51 - Price Changes  43:33 - Conclusion  We hope today's episode was useful to you. If you want to get in touch with Chris you can find him at Linkedin or you can check out the company at QuietLight.com. If you want to check out Chris' previous episode, click here.   If you have any questions or any topics you'd like us to discuss on the podcast, you can now email us directly at support@ecomcrew.com! Also, we would really appreciate it if you would leave us a review on iTunes.    Thanks for listening!  

Michael Frew worked for two decades as an engineer, developer, and software architect on hundreds of consulting engagements with corporations including Lockheed Martin's Artificial Intelligence Labs, IBM, Microsoft, Amazon, Salesforce, and FireEye/Mandiant. He received his B.S. and MBA in Business and Economics while studying in China, Hong Kong, and The Netherlands, as well as several post-graduate information security certifications. Following his corporate career, Michael pivoted to Acquisition Entrepreneurship, acquiring software/SaaS companies, and using his boot-strapped funds to purchase multiple 6 and 7-figure businesses from brokers such as Empire Flippers, FE International, and Quiet Light Brokerage. Currently, Michael manages a growing 8-figure portfolio of cloud-based software companies, collectively generating a 7-figure pre-tax income annually. Michael's insights on digital business acquisitions and operations have been featured in dozens of media outlets like FE International, Indie Hackers, and Empire Flippers. https://www.michaelfrew.com/weinvested/

Richart Ruddie, the founder of The Reputation Management Company, talks about how he sold his business and the journey leading up to it. He discusses the importance of due diligence on potential buyers and shares an interesting story about a competitor who quit the industry to become a pastor. Richart also explains how he accidentally got into the online reputation management space and how his business grew over time. He mentions that he brought in a professional management team to make the business less reliant on him before eventually selling it in 2023. Throughout the conversation, Richart highlights the challenges and successes he experienced while building his agency.Richart initially spoke to another reputation agency owner but they were not interested in acquiring the business. He then connected with a consultant and used a site called Biz Buy Sell to find potential buyers and investors, including a private equity company. Richart also sought advice from friends who had sold similar companies and worked with Quiet Light Brokerage based in Charlotte, North Carolina. Ultimately, Richart chose to pursue the private equity route for a partial sale of the business. Biz Buy Sell was effective in reaching potential buyers and even attracted some clients. The broker at Quiet Light helped organize financials and facilitate buyer-seller calls. Having good organization and video demonstrations made buyers comfortable during meetings with the team in Utah. Richart had multiple offers but waited for the right one because they didn't have to sell urgently due to strong cash flow. Reputation played an important role in choosing the buyer since bad reputations can negatively impact deals. Meeting potential buyers through video calls was common, but there were also some in-person meetings, including one with a successful internet marketer based out of DC Virginia area who ultimately lost out on their offer due to financing issues.Richart discusses the challenges and complexities of selling a business, particularly an agency. He emphasizes the importance of preparing for the sale process by diversifying revenue streams and building a strong team. The value of an agency lies in its talent, making it a risky acquisition if key staff members leave. Richart also reflects on their own experience, highlighting the need to avoid certain mistakes and regrets in hindsight. After selling his agency, he remains actively involved as a consultant while pursuing other ventures.

In this episode of Acquisitions Anonymous, Bill and Heather analyze a nine-year-old Amazon FBA brand listed by Quiet Light Brokerage, emphasizing the challenges of securing SBA financing for businesses in the $2-3 million EBITDA range. They highlight the complexities of working capital management, especially for seasonal businesses with perishable inventory, and raise concerns about the misleading nature of pricing deals with including inventory. The episode offers valuable insights into the nuances of e-commerce business valuation and financing.Thanks to our sponsors!Rejigg - Get connected to owners looking for exits.Rejigg is a platform built for searchers who want to meet directly with small business owners. They have an in-house team doing outreach, finding owners who are excited to meet with people ready to buy their companies. Searchers who join their platform often have 5-10 meetings scheduled directly with owners for the very next week. Their sweet spot is $500k-$10m in revenue, but they have other opportunities as well.Get started on their platform to fill your calendar with owner meetings. Rejigg does the calling - you do the closing.-------------Double Jump Media is your one-stop shop for creating engaging, high-quality videos.Double Jump is a boutique video production company with over a decade of experience creating professional, memorable videos for clients from around the globe and in various industries. All while helping those clients generate millions in sales through video content.So, whether you're rebranding a business you recently purchased, launching a new product or service, or want to look awesome, Double Jump is down to clown.Visit www.doublejump.media to check out their portfolio and schedule your free consultation today. Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.

In this episode of Acquisitions Anonymous, Bill and Heather analyze a nine-year-old Amazon FBA brand listed by Quiet Light Brokerage, emphasizing the challenges of securing SBA financing for businesses in the $2-3 million EBITDA range. They highlight the complexities of working capital management, especially for seasonal businesses with perishable inventory, and raise concerns about the misleading nature of pricing deals with including inventory. The episode offers valuable insights into the nuances of e-commerce business valuation and financing.Thanks to our sponsors!Rejigg - Get connected to owners looking for exits.Rejigg is a platform built for searchers who want to meet directly with small business owners. They have an in-house team doing outreach, finding owners who are excited to meet with people ready to buy their companies. Searchers who join their platform often have 5-10 meetings scheduled directly with owners for the very next week. Their sweet spot is $500k-$10m in revenue, but they have other opportunities as well.Get started on their platform to fill your calendar with owner meetings. Rejigg does the calling - you do the closing.-------------Double Jump Media is your one-stop shop for creating engaging, high-quality videos.Double Jump is a boutique video production company with over a decade of experience creating professional, memorable videos for clients from around the globe and in various industries. All while helping those clients generate millions in sales through video content.So, whether you're rebranding a business you recently purchased, launching a new product or service, or want to look awesome, Double Jump is down to clown.Visit www.doublejump.media to check out their portfolio and schedule your free consultation today. Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations.

Account transfers are relatively painless with 1 exception. Inventory.You can't transfer FBA inventory.You must ship it out of FBA on the old account to the warehouse and then back into FBA on a new account. ORSell it down on the old account while restocking the new one.You can change the name, email, and banking info on an account. Just be careful to change the bank deposit AFTER a scheduled deposit. And not say 3 days before a deposit. It will cause a security check and you can lose access temporarily.I do not know what's better on asset/equity sale. This is a great question for Quiet Light Brokerage.  Deanna Berardi - Deanna@quietlight.com 

Mike Jackness talks to Chris Duty of Quiet Light Brokerage to dive into the challenges that they faced when trying to sell one of Mike's most recent business acquisitions, and the string of bad luck that Mike faced along the way.   After 3 years, I'm glad to announce that I've sold one of my businesses.    Joining me today is the broker that helped me with the transition, Chris Duty from Quiet Light Brokerage. Chris and I explore the process of selling a business that I, alongside investors from ECF Capital, acquired in late 2020, and what transpired along the way (which includes some unfortunate events).    One of the key takeaways from this episode is that the process isn't over until it's over.    Some roadblocks might pop up along the way, but it's always important to move onto the next step until the whole process is complete. If you're considering on selling your business, or if you want to hear the fun (or unlucky) details of my journey in trying to sell this business, today's episode is definitely one to save.    Here's today's main points 00:00 - Introduction 01:50 - Ground rules of today's discussion 03:04 - The backstory of our sale  08:39 - Today's main takeaway: It's not done until it's done.  14:41 - How Chris approaches a business sale   16:28 - Building trust and credibility with buyers 24:18 - Tax returns and SBA pre-qualification 31:05 -The impact of having your priorities in order 33:43 - Finding the right buyer who recognizes the long-term value of the business 42:38 - The importance of early preparation for selling your business   We hope today's episode was useful to you. If you want to get in touch with Chris you can find him at Linkedin or you can check out the company at QuietLight.com. If you want to check out how Mike planned to grow this ecommerce business back in 2021, you can check it out here.    If you have any questions or anything you'd like us to discuss on the podcast, you can now email us directly at support@ecomcrew.com! Also, we would really appreciate it if you would leave us a review on iTunes.    Thanks for listening!

Joe Valley is a serial entrepreneur and partner at Quiet Light Brokerage. He's also an expert at building sellable companies. He's also learned the secret to winning more deals: Don't be an a–hole. The people who win more deals do their research, carry intelligent conversations, and are polite, professional, and likable. Why are these qualities so important? Joe Valley covers the topic in detail in this throwback episode of the Negotiations Ninja podcast! 

Mark Daoust is the latest guest on the Niche Pursuit podcast. Mark is the founder of Quiet Light Brokerage. He talks about developing websites correctly and offers some excellent advice for those looking to sell their business in the future. We're talking expert tips and advice from a guy who has been on both sides of the fence.

Are we in for a correction? Recession? Depression? Is now a good time to buy a business? Today we talk with Ryan Condie - M&A Advisor at Quiet Light Brokerage. He gives us a deep dive on the analytics for whether or not now is a good time to be apart of Acquisitions. A great listen - tons of value this week. Follow Ryan Condie here: https://www.linkedin.com/in/ryancondie/ https://twitter.com/RyanPaulCondie/with_replies His Podcast: https://letsbuyabusiness.com/ Follow Raleigh: https://twitter.com/Raleigh_will https://www.linkedin.com/in/raleigh-williams-32477042/ https://www.instagram.com/raleighw/ https://www.tiktok.com/@raleighwilliams1?lang=en Join the Newsletter: https://dodealsgetrich.com/

Learn the Four Pillars of ValueWhich deal types are available (its more than just cash)As interest rates rise, why you want to be SBA qualifiedWhy you want to use accrual accounting to clean up your booksElaine is an advisor at Quiet Light where she helps online-based businesses exit. She has a background in e-commerce and a track record of success in online business. She started her first profitable eCommerce business on Etsy in 2009 and has built 3 more businesses since, including a content site, an online subscription service, and a multi-million dollar fitness eCommerce brand that she exited through Quiet Light before joining their team as an advisor.Show LinksQuietlight - They offer free business valuations and help with exit planning for online business owners. Anyone interested can contact Elaine at elaine@quietlight.com.SponsorsFree 30-day trial of Zipify OCU - To get an unadvertised gift, email help@zipify.com and ask for the "Tech Nasty Bonus".Back up your store with RewindTry Bold Product Upsell, free trialPrivy: The Fastest Way To Grow Sales With Email & SMSNever miss an episodeSubscribe wherever you get your podcastsJoin Kurt's newsletterHelp the showAsk a question in The Unofficial Shopify Podcast Facebook GroupLeave a reviewSubscribe wherever you get your podcastsWhat's Kurt up to?See our recent work at EthercycleSubscribe to our YouTube ChannelApply to work with Kurt to grow your store.

Did you know considering the selling factor for your business is something you should always keep in mind?  On today's episode, host Roland Frasier speaks with guest Mark Daoust who shares the secrets you need to ensure your business thrives to its potential. As a business broker and founder of Quiet Light, Mark has had personal experience of brokering billions of dollars of acquisitions and mentions the importance of honesty when doing deals. Mark talks about how businesses today can improve their valuation and  a big mistake that business owners make by viewing their business simply in terms of cash flow. His philosophy is that your business is an asset, and growth and profitability can improve your businesses' valuation. He also shares some things that can be done to enrich your business to its best state before considering selling it. Listen in to discover how you can avoid underestimating your business asset with or without a business broker, and why the guidance may be worth it. IN THIS EPISODE YOU'LL LEARN: Why you need to start viewing your business as an asset for future revenue instead of focusing on cash-based accounting. How a broker can help you calculate working capital. At what point do you absolutely need a business broker? The difference between an M&A attorney and an investment bank advisor - does it matter in the face of brokerage companies like Quiet Light? How to assess and add value to your company before contacting a broker What quality of earnings is and why it matters LINKS AND RESOURCES MENTIONED IN THIS EPISODE: https://quietlight.com/ (Quiet Light Brokerage) https://quietlight.com/learn/podcast/ (The Quiet Light Podcast) https://www.amazon.com/Buy-Then-Build-Acquisition-Entrepreneurs/dp/1544501137/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr= (Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game) https://www.amazon.com/EXITPreneurs-Playbook-Business-Reverse-Engineering/dp/1544522223 (The EXITPreneur's Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success.)  OUR PARTNERS: https://scalable.co/7-levels-assessment/?utm_source=business-lunch&utm_medium=podcast&utm_campaign=lead-gen (7 Steps to Scalable workbook) Get a free proposal from https://conversionfanatics.com/ (Conversion Fanatics) Get 3% cash back on your ad spend with https://www.funneldash.com/adcard (AdCard) https://yourzerodownbook.com (Get my book, Zero Down, FREE) Thanks so much for joining us this week. Want to subscribe to Business Lunch? Have some feedback you'd like to share? Connect with us on https://itunes.apple.com/us/podcast/perpetual-traffic-by-digital/id1022441491?mt=2 (iTunes) and leave us a review! Mentioned in this episode: Get 3% Cash Back on Your Digital Advertising! The Highest Cash Back Card For Your Digital Ad Spend. Made By Advertisers. https://business-lunch.captivate.fm/adcard (Ad Card) Optimize Your Website with Conversion Fanatics Put A Creative Team Of Fanatical Split-Testers To Work On Your Site! https://business-lunch.captivate.fm/conversion-fanatics (Conversion Fanatics) Get Roland's Training on Acquiring Businesses! Discover The EXACT Strategy Roland Has Used To Found, Acquire, Scale And Sell Over Two Dozen Businesses With Sales Ranging From $3 Million To Just Under $4 Billion! https://business-lunch.captivate.fm/epic (EPIC Training)

Joe shares insights from decades of selling companies that will help you get the most money for your company when you sell it. About Joe ValleyJoe Valley is a serial entrepreneur, EXITpreneur, M&A Advisor, Podcaster and Partner at Quiet Light Brokerage, one of the top online business brokerage-advisory firms in the world. Joe has also built, bought, or sold over half a dozen of his own companies. And over the last nine years, he has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. He is a ​Certified Mergers & Acquisitions Professional, and a frequent guest expert in mastermind groups, AMAs, on podcasts, and at speaker events for entrepreneurs worldwide. EDGE's Weekly NewsletterJoin over 17,000 others and sign up to receive bonus content. It's free sign up here >>> EPISODE LINKS: EXITPreneur Quiet Light Brokerage PODCAST INFO: Apple Podcasts: EDGE on Apple Podcasts Spotify: EDGE on Spotify  RSS Feed: EDGE's RSS Feed Website: EDGE Podcast SUPPORT & CONNECT EDGE's Weekly NewsletterJoin over 17,000 others and sign up to receive bonus content. It's free sign up here >>> Please Support this Podcast by checking out our Sponsors: Mad River Botanicals 100% certified organic CBD products. The product is controlled from seed to end product by it's owners. Use code: EDGE22 to get 10% off all your orders. Shop here>>> *We respect your privacy and hate spam. We will not sell your information to others.  

Joe Valley is a bestselling author, guest speaker, podcaster, EXITpreneur, advisor and partner at Quiet Light Brokerage, one of the world's leading online-focused M&A advisory firms. His book, The EXITpreneur's Playbook, teaches you how to reverse engineer a pathway to your own incredible exit.00:00 The Fall of the Aggregators - Blunt Q&A with Joe Valley00:45 Joe Valley's take on the aggregators02:47 Latest news on the aggregators04:40 Selling to an Amazon aggregator05:13 What do with instability payments08:02 Exitpreneur's Playbook08:22 The Amazon Aggregator website09:01 Biggest mistakes the aggregators made in 202110:44 Aggregator versus rand owner16:31 Predicting when the first aggregator goes public17:17 How to start with zero capital18:28 Is having too many LLCs bad for business credit?21:14 Inflation rate23:11 Why buying a business is a good time right now 25:23 Best practices on creating different brands/seller central accounts28:15 The e-commerce lending28:46 The D&B number29:37 The downgrading of aggregators32:47 Aggregators and US LLC34:37 Main reason to buy Joe Valley's book38:31 The Quiet Light podcast39:11 Prediction on the Amazon space in 202241:48 Books that influenced Joe Valley's lifeSupport the show

Join our next web class - https://buildassetsonline.com/playbook Enroll in the Elite Fleet NOW - https://www.buildassetsonline.com/elite-fleet-plus/ ABOUT US Joe and Mike Brusca own and operate a digital portfolio of over 10 websites including 4 high ticket dropshipping stores. The duo have created over 6 high ticket dropshipping stores, all in operation and profitable. 3 have been sold for a total of over $300,000K

Join our next web class - https://buildassetsonline.com/playbook Enroll in the Elite Fleet NOW - https://www.buildassetsonline.com/elite-fleet-plus/ ABOUT US Joe and Mike Brusca own and operate a digital portfolio of over 10 websites including 4 high ticket dropshipping stores. The duo have created over 6 high ticket dropshipping stores, all in operation and profitable. 3 have been sold for a total of over $300,000K

Like so many founders, Lauren Gaggioli had been heads down in her Higher Scores Test Prep business for so long, she didn't realize how valuable it was. She wanted to know: was this course business sellable? In this episode, you'll learn how Lauren leveraged her podcast, consistent passive income, SEO traffic, list size, and course offerings to exit for $180,000.For more stories like this one, sign up for newsletter: https://TheyGotAcquired.com/newsletterFor the transcript, go to: https://theygotacquired.com/podcast/lauren-gaggioli-higher-scores-test-prep 

In this episode of Return on Podcast, Tyler and Joe Valley talk exits, avoiding business owner burnout, and why you should stop multitasking. After building, buying, or selling a 1⁄2 dozen of his own companies, Joe Valley helped build Quiet Light Brokerage, one of the leading online-focused M&A Advisory firms in the world. Now, after facilitating over 1⁄2 billion in exits, Joe has written the bestselling book The EXITpreneur's Playbook - to help online business owners get the maximum value and best deal structure when they seek their own incredible exit. Where to Find Joe: Linkedin: https://www.linkedin.com/in/thejoevalley/ Instagram: https://www.instagram.com/exitpreneursplaybook/ Facebook: https://web.facebook.com/exitpreneursplaybook Twitter: https://twitter.com/TheJoeValley Tiktok: https://www.tiktok.com/@thejoevalley Youtube: https://www.youtube.com/channel/UCMLL54nrH0u_yswj9OgVF0A Also mentioned in this episode: https://quietlight.com/ https://exitpreneur.io/ The EXITpreneur's Playbook - Joe Valley Atomic Habits - James Clear The ONE Thing - Gary W. Keller and Jay Papasan Deep Work - Cal Newport Stolen Focus - Johann Hari Welcome to Return on Podcast, the show where we help e-commerce sellers improve their ROI in business and in life. Hosted by Tyler Jefcoat and in affiliation with Seller Accountant, Return on Podcast aims to leave listeners with new insights and actionable life and business hacks at the end of each episode.

This episode of Builders Build we switch up the 3 musketeer format and bring in an amazing guest, Joe Valley. Joe is a serial entrepreneur, EXITpreneur, M&A Advisor, Podcaster and Partner at Quiet Light Brokerage, one of the top online business brokerage-advisory firms in the world. Joe has also built, bought, or sold over half a dozen of his own companies. We cover everything from setting goals for your business, tools and strategies to help document your processes and resources from the start (SOPs, metrics, accounting, etc), picking metrics for your business, valuing businesses, where to sell, and more. Want to learn more about Joe Valley, his book, or some of the links we touch on in the pod? Check the links below: Joes Book - The EXITpreneur's Playbook https://exitpreneur.io/ Places to sell online businesses Quiet Light Flippa FE International Microacquire Make sure to to check out our past episodes and get access to more tools and tips to build your business at https://builders.build

Entrepreneurial Tips you'll learn today on The Sales Podcast... He used to focus on the money Now he focuses on how many people he can help Now he makes more money Self-employed since 1997 Was a media buyer back then  We present good information and let people make a decision." In 2005 he launched his first online business Came out the other end tired and woke up and just decided to sell his business His advisor told him to hold on for another six months because the market was turning around in his opinion He put together some SOPs and sold in 2010, took a year off, and joined the Quiet Light Brokerage then (a team of two) Last year they did $250 million in transactions Grown 55% a year on average the last four years They represent the sellers They don't "sell." Considers himself an educator When you're desperate you can't give it away He was a typical entrepreneur He ran his business and got sick of it and wanted to move onto the next venture, but he wasn't prepared for it Most entrepreneurs don't have accounting in place Most entrepreneurs don't have accrual accounting He didn't outsource his accounting Outsource your e-commerce accounting Set a goal to sell and reverse engineer your business You need to know your exit goal in dollars to know if it's a pipedream or a reality Buyers are looking for four things Risk Is it a single-channel vs. multi-channel? Is it a young business? Buy a bigger business with more history Growth  Transferability Documentation Gets 300-400 leads a month The valuation call is free Buying with an SBA loan is fantastic But SBA loans are tough for online businesses since they might be too young or they co-mingled their finances You need to qualify as a business and a buyer for an SBA loan E-Commerce Lending in Florida is a great SBA broker/lender His median transaction size was $1.8 million and 90% were all-cash SBA deals are usually more stable and more likely to close, but they take longer It's emotional It's hard to find a buy-side broker He has to help the buyer as much as the seller He creates a detailed P&L He asks all of the tough questions upfront There are lots of reasons to sell a business Entrepreneurs get shiny-object syndrome and want to move on In the vast majority of businesses, the bulk of the money is made when the business is sold, i.e., when Elon Musk or Jeff Bezos "sold" by going public Most people don't take a lot of money out in the early years In 2021, about 30% of buyers were FBA Aggregators—Fulfilled By Amazon This is new in the last five years, Thrace.io is the biggest The other 70% are private equity firms (20%) and smaller entities buying for themselves (50%) "Acquisition Entrepreneurship" - "Buy Then Build" You should like what you're doing There will be tough periods so it helps to have a passion Training and Transition period Hold back 20% to keep the seller around 2013 he closed 23 transactions that were sold by what he'd call kids today We're in a different world now People know what an online business is today Transaction size has grown 10-fold 3.7 offers per listing But it's not as crazy as real estate Younger businesses are growing quickly This is not a passive investment You're buying a job Most transactions are done remotely, without meeting in person He does best when he focuses on one thing His one thing is M&A, so he doesn't mess with crypto See Cryptocurrency-Related Posts J. Hunter: Crypto Gaming Nik Bahtia: Layered Money author Erik Voorhees: Bitcoin Explained He has never had his entire team of 15 in one place He has never met his business partner's spouse in the decade they've been partners The book is a playbook for the seller If you're buying an online business, get his book and, "Buy Then Build: How Acquisition Entrepreneurs Outsmart the Startup Game" Sales Growth Tools Mentioned In The Sales Podcast Get a free download of "The EXITPreneur's Playbook" Get his book, "The EXITPreneur's Playbook: How to Sell Your Online Business for Top Dollar by Reverse Engineering Your Pathway to Success"

After building, buying, or selling a 1⁄2 dozen of his own companies, Joe Valley helped build one of the leading online-focused M&A Advisory firms in the world. Now, after facilitating nearly 1⁄2 billion in exits, Joe has written the bestselling book The EXITpreneur's Playbook - to help online business owners get the maximum value and best deal structure when they seek their own incredible exit.Over the last nine years, Joe has mentored thousands of online entrepreneurs whose goal is to achieve their own eventual exit. He is a ​Certified Mergers & Acquisitions Professional, and a frequent guest expert in mastermind groups, on podcasts, and at events for entrepreneurs worldwide.Joe's book, The EXITpreneur's Playbook - How to Sell Your Online Business for Top Dollar - shares real-life stories of successful and failed exits, and teaches readers how to reverse engineer a pathway to their own eventual exit.Before joining the team in 2012, Joe sold his own business through Quiet Light. Joe is a Bestselling Author, Guest Speaker, Podcaster, EXITpreneur, Advisor, and Partner at Quiet Light Brokerage.--------------------------------------------------Contact Joe onLinked: linkedin.com/in/thejoevalleyWebsite: quietlight.comGet a free copy of Joe's EXITPreneur's Playbook!: https://exitpreneur.io/how2exit/Book: https://read.amazon.com/kp/embed?asin=B094DRTJZ8&preview=newtab&linkCode=kpe&ref_=cm_sw_r_kb_dp_5CV4DQ4GWWF7KT9PGVHN&tag=how2exit-20As an Amazon Associate, I earn from qualifying purchases. Each purchase supports both the author and this podcast. If you'd like additional ways to support this podcast, you can become a patron here: https://www.patreon.com/bePatron?u=66340956----------------------------------------------------------------------------------------------------Reach me to sell me your business, be on my podcast or just share some love:Linkedin: https://www.linkedin.com/in/ronskelton/Twitter: https://twitter.com/ronaldskeltonFacebook: https://www.facebook.com/How2ExitHave suggestions, comments, or want to tell us about a business for sale call our hotline and leave a message: 918-641-4150----------------------------------------------------------------------------------------------------Listen to it on Spreaker: https://www.spreaker.com/episode/48749292Apple Podcast: https://podcasts.apple.com/us/podcast/how2exit-episode-17-joe-valley-certified-mergers-and/id1561038705?i=1000551277154Spotify: https://open.spotify.com/episode/15m9tmMXjwga6WhljVCuKx?si=DqgaDGMrTLak0-ygGWWItQ----------------------------------------------------------------------------------------------------Other interviews:Lana Coronado: https://youtu.be/6pxWPbDvMb8Ali Tarafdar and Brucker Krafft from Labruta Capital: https://youtu.be/q_XGvUujdVMRudy Upshaw: https://youtu.be/r3hey09geG8Aaron Bud: https://youtu.be/ObBZoOdrkmMJosh Ploch: https://youtu.be/a0kYduCvP_YJoel Ankney: https://youtu.be/JV9oTuehzlQDana Derricks: https://youtu.be/ETVP058IumkScotty Schindler: https://youtu.be/G9MbE_8SQ94Joshua Johnston: https://youtu.be/-pb5UatK0v0Sharon Brown: https://youtu.be/sOYT1HjXwME--------------------------------------------------

Welcome to the new episode of High Voltage Business Builders! Today's guest is my friend Joe Valley, a serial entrepreneur, EXITpreneur, M&A Advisor, Podcaster, and Partner at Quiet Light Brokerage, one of the top online business brokerage-advisory firms in the world.Joe has also built, bought, or sold over half a dozen of his own companies. And over the last nine years, he has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. He is a ​Certified Mergers & Acquisitions Professional, and a frequent guest expert in mastermind groups, AMAs, on podcasts, and at speaker events for entrepreneurs worldwide.Today he's making some predictions about 2022 and sharing valuable pieces of advice for people that are running and/or selling online businesses, and everybody in between.So make sure you stick around! Additional sources:If you're a passionate business builder yourself, visit http://voltageb2b.com to get in touch now.

Joe Valley is a serial entrepreneur, EXITpreneur, M&A Advisor, Podcaster and Partner at Quiet Light Brokerage, one of the top online business brokerage-advisory firms in the world. Joe has also built, bought, or sold over half a dozen of his own companies. And over the last nine years, he has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. He is a ​Certified Mergers & Acquisitions Professional, and a frequent guest expert in mastermind groups, AMAs, on podcasts, and at speaker events for entrepreneurs worldwide. Joe's book, The EXITpreneur's Playbook – How to Sell your Online Business for Top Dollar – shares real-life stories of successful and failed exits, and teaches you how to reverse engineer a pathway to your own incredible exit. On this episode you'll learn: Emotions: When Brings On A New Advisor/Broker Managing The Sellers Emotions Is Important Aggregators Guys A Cautionary Story When Handling Aggregators Guys Earnouts Aren't Called “Profit Sharing” Understanding DIY and Setting Up A Competition Working with An Advisor The Importance of Valuations Rolling Equity Explained The Trick with Aggregators

Joe Valley is a serial entrepreneur, EXITpreneur, M&A Advisor, Podcaster and Partner at Quiet Light Brokerage, one of the top online business brokerage-advisory firms in the world. Joe has also built, bought, or sold over half a dozen of his own companies. And over the last nine years, he has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. He is a ​Certified Mergers & Acquisitions Professional, and a frequent guest expert in mastermind groups, AMAs, on podcasts, and at speaker events for entrepreneurs worldwide. Joe's book, The EXITpreneur's Playbook – How to Sell your Online Business for Top Dollar – shares real-life stories of successful and failed exits, and teaches you how to reverse engineer a pathway to your own incredible exit. On this episode you'll learn: How to Sell your Online Business for Top Dollar Joey Valley's Background Setting Goals Aiming for freedom and flexibility How do you set goals 4 Pillars of Value How to package the business Venturing Listing business - creating competition for buying Understanding Deal structure How do seller notes work? Why use a Broker? Why not go direct to Aggregators?

The buying and selling of online businesses has been going on long before the explosion of aggregators. (no really!) On today's episode of Link Up Leaders, Francois and Lisa are chatting with Joe Valley, Author of The EXITpreneur's Playbook and serial entrepreneur who will discuss with us how to get the greatest value out of your business. --

Starting and running a successful business is only half the battle. Do you have an equally successful exit strategy?After building, buying, and selling 6+ of his own companies, Joe Valley helped build Quiet Light Brokerage, one of the leading online-focused M&A Advisory firms in the world. Now, after facilitating nearly half a billion dollars in exits, Joe has written the bestselling book The EXITpreneur's Playbook - to help online business owners get the maximum value and best deal structure when they seek their own incredible exit.If you want to learn how to become an ‘EXITpreneur' then dive into this very tactical episode to learn from the master of exiting himself.Things you will learn in this episode:[00:01 - 05:53] Opening Segment I introduce today's guest, Joe ValleyJoe gives us a bit of his backgroundAlways entrepreneurial at heart Parents and upbringing Joe's thoughts on the internal desire to work for himselfCollege experience and education  Learning what you DON'T want to do for a living Taking the leap into entrepreneurship [05:54 - 18:10] How to Become an 'EXITpreneur'Joe talks about his first venture into ownershipStarting a company called “Wrong Number” in college Making half a million dollars in his first year “I'm can not be my business” Joe's lessons from his early mistakes selling his businessWaiting too long to sellYou need to make goalsKnow your when, what, and whereYou don't want to ‘decide' to sell, but ‘plan' to sellHow to detach your name from the business Examples of how to make the transition Seek the buyers who are looking to add value How to choose your buyer instead of courting them Joe shares how he's utilized networking to make a good exit Making connections with like-minded peopleCreating mutual benefitsA quick word from our sponsors[18:11 - 31:39] Creating a Sellable BusinessJoe talks about the reason behind his book Making people comfortable with planning to exit The value of helping and connecting people Why the goal should be to help people 50% of the money you make on your business comes from selling What makes a good, sellable business: an in-depth approachWhat buyers are looking for:Risk, growth, transferability, and documentationSmall businesses carry a bigger risk If your business is growing, buyers can make predictionsUntransferable assets is an unsellable business The importance of good documentation and bookkeepingHow to calculate Seller Discretionary Earnings (SDE)Joe's advice around Acquisition Entrepreneurship[31:40 - 35:28] Closing Segment The example of Amazon sellersHow to connect with Joe and his work - links belowFinal words  Tweetable Quotes: “I am the mistake that I try to help everybody not make.” - Joe Valley“That's the thing I want people to avoid, is waiting till the point where they wake up and say, ‘I gotta sell this.' What they really should do is set some goals.” - Joe Valley“I make more money by helping people than when I was focused on making money.” - Joe ValleyResources Mentioned:The EXITPreneur's Playbookexitpreneur.io You can connect with Joe on Twitter and LinkedIn. Be sure to check out https://quietlight.com/ if you want to exit with more money and better terms!This podcast is sponsored by BetterHelp and Build Your Network listeners get 10% off their first month at https://betterhelp.com/buildyournetworkDid you love the value that we are putting out in the show? LEAVE A REVIEW and tell us what you think about the episode so we can continue putting out great content just for you! Share this episode and help someone who wants to connect with world-class people. Jump on over to travischappell.com/makemypodcast and let my team make you your very own show!If you want to learn how to build YOUR network, check out my website travischappell.com. You can connect with me on Facebook, Instagram, and Twitter. Be sure to join The Lounge to become part of the community that's setting up REAL relationships that add value and create investments.Advertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Today's guest is Joe Valley, who after building, buying, or selling half a dozen of his own companies, helped build one of the leading online-focused M&A Advisory firms in the world. Now, after facilitating nearly 1/2 billion in exits, he has written the bestselling book The EXITpreneur's Playbook - which shares real-life stories of successful and failed exits, and teaches readers how to reverse engineer a pathway to their own eventual exit. Over the last nine years, he has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. Joe is also a Certified Mergers & Acquisitions Professional, Bestselling Author, Guest Speaker, Podcaster, EXITpreneur, Advisor, and Partner at Quiet Light Brokerage. Watch now and learn how Joe was able navigate through the pitfalls of an entrepreneur while also perfecting the art of being an EXITpreneur.   Love the show? Subscribe, rate, review & share! https://therealjasonduncan.com/podcast/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Walker Deibel is a best-selling author, advisor, and Founder of Buy Then Build. He is a serial acquisition entrepreneur with over 10 years of experience whose company launched the Acquisition Lab that helps first-time buyers navigate through the process. Walker has acquired over seven companies, co-founded several companies, and is an M&A advisor at Quiet Light Brokerage. Walker earned his MBA from Olin Business School at Washington University in St. Louis. He is a Certified M&A Advisor, Certified M&A Professional, and Certified Exit Planning Advisor. In this episode… As an entrepreneur, how can you acquire and sustain a profitable company? How do you extract the highest value from your brand? Walker Deibel knows the difficulties of exiting a business. In his book, Buy Then Build, Walker skips the messy startup phase and details how to generate profits, maintain, and scale for a maximum exit. He has successfully helped businesses negotiate and reach their financial exit goal. In this episode of Amazing Exits, Paul Miller is joined by Walker Deibel, best-selling author, advisor, and Founder of Buy Then Build, to discuss how to efficiently become an entrepreneur. Together, they talk about the importance of an acquisition aggregator, accelerating your exit, and what you should be thinking about when selling your business.

Joe Valley is the Co-owner of Quiet Light Brokerage, one of the world's leading online-focused M&A Advisory firms. He helps business owners and entrepreneurs sell and buy profitable businesses. As an EXITpreneur, Joe has mentored thousands of entrepreneurs over the past nine years at Quiet Light. He has a long career of founding companies, including Bedtime Solutions, Inc., JVI Media, Inc., and Abbott Industries. Joe is the author of the best-selling book The EXITpreneur's Playbook - How to Sell your Online Business for Top Dollar and is the host of The Quiet Light Podcast. Joe Valley has personally closed nearly 100 million in transactions and touched almost a half-billion in online exits through the entrepreneur-led team of Quiet Light Advisors. In this episode… Are you an entrepreneur ready to make the leap and exit your business? Do you worry about all the moving pieces in the exit process? How can you be sure you choose the right advisor for your company? Joe Valley is here to help. Joe Valley has been helping entrepreneurs and business owners exit and sell their businesses for most of his career as a self-proclaimed EXITpreneur. As the Co-owner of Quiet Light Brokerage, he knows the ins and outs of how to get the most money out of your exit. He's here to tell you all his tips and tricks and give you advice for your next exit along the way. On this episode of the eCommerce Profits Podcast, Joshua Chin talks with the Co-owner of Quiet Light Brokerage, Joe Valley, all about successfully exiting a business. They discuss how to train for an exit, choosing the right advisor, the mindset of entrepreneurs, and much more. You won't want to miss this jam-packed episode!

Joe Valley is a best-selling author, EXITpreneur, podcaster, advisor, and Partner at Quiet Light Brokerage. He is a ​Certified Mergers & Acquisitions professional and has personally closed over 100 million in transactions and nearly a half-billion in online exits through Quiet Light Advisors.  Over the last nine years, Joe has mentored thousands of entrepreneurs whose goal is to achieve their own eventual exit. His best-selling book, The EXITpreneur's Playbook, focuses on the online world of exiting a business. In this episode… Do you understand what your business is worth? How can you ensure a smooth transition and a stronger bank account when selling your business? Joe Valley takes the difficulty and frustration out of selling a business. In his best-selling book, The EXITpreneur's Playbook, he takes you through key steps to understanding how to sell your business. Joe has mentored thousands of entrepreneurs over the last nine years, and through his team at Quiet Light Brokerage, they have successfully closed nearly 100 million in transactions.  In this episode of Amazing Exits, Joe Valley, best-selling author and Partner of Quiet Light Brokerage talks to Paul Miller about how to avoid underselling your business. They discuss how to take the mystery out of selling a business, the importance of training for a business exit, and what you should be thinking about when structuring a deal. Become a part of the EXITpreneur experience and learn how to reach your full selling potential.

In this episode, our guest is Joe Valley, Co-Owner of Quiet Light Brokerage - a leading authority in the emerging niche of selling and buying profitable online businesses. Topics covered: Deciding and planning to sell/exit Real-life stories of business exits Things to watch out for scaling Fortifying your business Building a great business to sell Finding out the true value of your business LET'S CONNECT: LinkedIn Instagram MultiplyMii Escala Successful Scales This podcast is also available on the Successful Scales YouTube channel.

Brad Wayland is an entrepreneur with almost 20 years of experience in marketing and operating online businesses. Starting in 2003, Brad helped create an online custom t-shirt company that later developed into a multi-million dollar enterprise. In the last 10 years, Brad has constructed, purchased, or sold more than 30 web properties.  In 2017, Brad became an advisor at Quiet Light Brokerage, a company that helps entrepreneurs effectively and profitably sell their online businesses. In this episode… Do you lose sleep over planning an exit strategy for your business? Well, you're not alone! Exit planning can be stressful, confusing, and overwhelming, but it doesn't have to be that way.  With almost 20 years of experience in the ecommerce industry, Brad Wayland of Quiet Light Brokerage has faced all of the ups and downs involved in exit planning. Unsure how to start your exit planning, when to sell your business, or the knowledge about your company you should prioritize at every point of the planning process? Brad's here to help.  Figuring out the timing of your exit strategy can be one of the most frustrating aspects of exit planning. In this episode of the Amazing Exits Podcast, Brad talks to co-hosts Kellianne Fedio and Paul Miller about practical tips and tricks for successfully planning your own amazing exit. Stay tuned.

Joe Valley is the Co-Owner of Quiet Light Brokerage, a business brokerage firm that helps entrepreneurs sell their online businesses. Joe is also the Founder and Co-Host of the Quiet Light Podcast with his partner, Mark Daoust. As an expert in advising and brokering for web-based niches, Joe is a successful speaker, frequent podcast guest, and soon-to-be-published author. In this episode… How can you effectively prepare for a successful exit? This is a question that plagues entrepreneurs across the globe. If you want to achieve a profitable and clean exit but don't know where to start in the preparation process, you are not alone! Today on the Amazing Exits podcast, Kellianne Fedio and Paul Miller sit down with Joe Valley, the Co-Owner of Quiet Light Brokerage, to discuss how to prepare for a successful exit. As an advertising and brokering expert, and the Co-Owner of Quiet Light Brokerage, Joe Valley understands the stress and frustration involved in exit planning. Thankfully, Joe is on the Amazing Exits podcast to offer practical tips and tricks for Amazon entrepreneurs who are in all stages of the exit planning process. Tune in to hear Joe, Kellianne, and Paul discuss how to make your Amazon brand sellable, knowing the value of your business, and how to optimize your exit options.

Joe Cochran had a rough start in life, but eventually came out on top. Through perseverance and a hard struggle, he finally has a success story. Tune in to hear our chat with Joe and learn about his process, his early struggles, and why he finally decided to sell his company. Topics: The emotional rollercoaster of being an entrepreneur. His early struggles. Launching his business with $5000 in credit. Sacrifices Joe had to make to keep his business afloat. Siphoning vs. reinvesting. How he ran his initial campaign. Which accounting resources he used on a tight budget. His competitive nature and how it drives him. Making the decision to sell. Transcription: Mark: Joe, we've had the opportunity to work with some pretty amazing entrepreneurs over the years and I never get tired of hearing about these success stories, especially for people that have gone through some of the dark periods of life that come out through the end. And often we get to be a part of the process when that reclamation, that coming back from some difficult times in their life comes to a head and comes to that real big victory point of an incredible exit. Joe Cochran is one of these stories. Joe: Yeah, he had his first child two days after his 17th birthday. I think that changes somebody's life forever. He didn't quit. He stayed in high school and he says his girlfriend at the time does his homework, helped him cheat to graduate. Mark: His girlfriend helped him cheat? Joe: Doing his homework, yeah, she did his homework. He helped in graduate high school. Mark: True love, I love it. Joe: Yeah, he worked full time. He just got out and hustled and went through some dark times after that in terms of business with his father, major debts, substance abuse, and came out the other end of just fighting and launched an Amazon business in 2016 when he had about $40,000 in debt. He thought through it and came out the other side in January of 2020 with a seven-figure exit. And as he said at the beginning the podcast interview, he said he felt like an incredible burden was lifted off his shoulders. So it's a great story; great success story. A lot of golden nuggets in there throughout the whole interview that I did with him and just one of these inspiring people that you just got to listen to the whole thing. Joe V.: Hey, folks. Joe Valley, here from Quiet Light Brokerage, and today we've got another episode of Incredible Exits. This one is with Joe Cochran. Joe and I've been working together for I think I want to say, a couple of years Joe, in the process of planning your eventual exit or as I like to call it, training. You came to me as a referral from our good friend Mike Jackness in EcomCrew and I think you were living in one state when we first chatted and eventually moved to another. And then I think we closed the transaction in January of 2020 is that right? Joe C.: That's correct. Joe V.: All right. Well, welcome to the Quiet Light Podcast. The first question I have for you; normally, by the way, I ask people to introduce themselves and give a little background but I want to actually just know how you felt when you finally closed this transaction. I shouldn't say finally because you weren't under LOI by the time we listed it to the time we sold it was 45, 60 days something like that. How did it feel? I don't want to know about the money and that kind of zeroes and this is a seven-figure exit but how did it feel when you finally had the money hit your account and you knew that this was real and the transaction was closing and assets were transferred? Joe C.: Yeah. So, I mean, that was kind of a roller coaster, to be honest. I think since I started the business all through the business to selling the business and even shortly after selling the business, emotional roller coaster. I just think as an entrepreneur, it's probably one of the hardest things to do is manage your own feelings and emotions around your business and what's going on. I would say the second that I signed the paperwork, it felt like the weight of the world kind of lifted off my shoulders because a big part of my why was always to be able to provide for my family and kind of have a security if you will. That was something that is always very important to my wife and I as far as something that we strive for. It's just having financial security and things like that so it was definitely that life-changing feeling. But shortly after, other fears and worries crept in. It was short-lived, but it did feel great. Joe V.: Yeah, life of an entrepreneur, it's not necessarily just because you sold the business and you've got some money in the bank that you don't stressing about other things. It is what it is. So your big why was to be able to provide for your family; we didn't talk about this. You haven't given me permission and cut if we have to but your story is interesting. You ended up becoming a dad while in high school if I recall correctly. Is that right? Joe C.: Yeah, I got my high school sweetheart pregnant when I was 16 and had my son a couple of days after my 17th birthday. Joe V.: Wow. And you finished high school, kept working, provided for your newborn family at the age of 17. You were working and going high school at the same time, right? Joe C.: Yeah. I basically cheated my way through high school at that point because I was working 30 to 40 hours a week going to school as little as possible. My girlfriend at the time was doing my homework for me, helping me through. And it was important to my family that I finished school and it wasn't as important to me that I do, but just felt like I needed to finish that. That was my junior year when my son was born. Joe V.: How many years ago was that, Joe? Joe C.: Well, I was 17 when he was born. I'm 41 now. Joe V.: Okay. Joe C.: I don't try to do math in public. Joe V.: When I do I usually get around but I would say 23, 24 years-ish. Joe C.: Yeah. Joe V.: So you went from… Joe C.: It's a bit easier this way, how old is my son? He's 24. Joe V.: I was hoping you were going to just go there. Yeah. We're doing math instead. So you've gone from a situation that is the worst fear of parents that you're becoming a dad a couple of days after your 17th birthday to 23, 24 years later, you're having a seven-figure exit of your own business. The weight of the world lifted off your shoulders. You're able to provide for your family, which is very, very important; a great success story. Let's talk about your path to it. I'm going to shorten it a little bit because we just talked about that and I know that you went to work into sales and eventually with your dad in the hot tub parts business, pool parts business, and eventually exited that. But then you started this brand that you built primarily as an Amazon business. Talk about how you came up with the idea of selling on Amazon and building your brand and what that path was like a little bit. Joe C.: So when I was working for my dad, we started to get into the Amazon business model in his business probably around 2009, 2010. Somewhere in there we dabbled, didn't really jump into it seriously until closer to the end of that business cycle. But we had kind of been playing with ideas. We started our own brand at one point in the fireplace and arts niche. And so I had some experience there, but I just wasn't ever passionate about any of the products my dad and I were selling. I was passionate about business. I was just a student of business. I studied all the time at marketing, sales, e-commerce in general and so when I realized that he was going to sell the business and I was essentially going to be out of work and need to define and figure out an income, I started really focusing on what kind of business would be right for me? If I was going to start my own thing what would be the best model? How can I get into it inexpensive, because I didn't have much money, matter of fact I have a pile of debt. And it just ticked all the boxes for being I want to work from home, start small and scale and potentially exit in a large exit. So I wanted kind of all those things; I needed all of those things and it just ticked all the boxes for me. Joe V.: And you're 41 now, how old were you when you started the business? I'm going to make you do math again. Joe C.: So I started a business in 2016 so it's been like four years ago. Joe V.: Four years ago. Okay, and how much money did you have when you launched the business in terms of cash? I know that you had a pile of debt at the time, but how much money did you pull together to make your first order? Joe C.: So I had about $5,000 on credit card that was available. Joe V.: You did it with $5,000, you had a pile of debt and you took $5,000 on a credit card to launch this business and four years later, you got a seven-figure exit. Am I doing this right? Joe C.: Yeah. Joe V.: Wow, incredible. Joe C.: I've had about $40,000 in debt personally. We have just started making progress with paying off credit cards and stuff because we started doing Air B&B and kind of renting out bedrooms in a house that we were renting. And so by doing that, we had started to make some progress in paying off our debt and like any good entrepreneur person as soon as I saw the light at the end of the tunnel I decided I'd took on more debt and started our business. Joe V.: Was it a success out of the gate; did you immediately start selling and say oh boy now I've got an inventory problem, I've got to buy more and keep up? Joe C.: Yeah, so I have the; I don't know what to call it, good luck also good sense that I did develop a product that really spoke to my target market. That was kind of easy for me at the time because I was my target market. And so I simply created the solution that I thought was amazing. When I showed it to my friends and family, they all kind of agreed that it was amazing. And so it was kind of like I knew the product was great and I knew how to create the offer because, again, I was the target market. So I literally was able to craft a story that really hit home with my ideal customer. And so when I launched, it was hockey stick growth. I mean, in the first six months we broke a million dollars in revenue. Joe V.: In the first six months, incredible. For those listening on audio, we decided not to mention the brand or the buyer and things of this nature just for confidentiality purposes. But if you want a hint, go to YouTube and watch the video or go to I think it's Quiet Light Academy on YouTube or go to the Quiet Light website ant take a look at our podcast. There's a hint in the background; a big giant silver one way back there somewhere in the video at Joe's home office there. Let's talk about the how; okay, you had hockey puck growth, you said in the first six months you did a million dollars in revenue by creating a product that solves your own problem in a niche that you knew very, very well. How did you get to know and learn about Amazon; what resources did you utilize to become that person that knew how to create the right photos or videos or ads and things of that nature? Joe C.: I basically do what I've always done, which is tried to cheat. And at first, I bought several courses, which kind of worked. Yeah, so the first course I really bought was the Amazing Selling Machine. And then for a short time, I decided I was going to create an information product and I started thinking about doing uninvolved course on e-commerce because of course, that's what I had experience in for the previous 12 years. I came across guys like Andrew Youderian from eComFuel. I came across as Ezra Firestone from Smart Marketer, and somewhere in there, I think in eComFuel I was put in a Mastermind with Mike Jackness and a couple of other guys. And so that was sort of my network and I bought all their products and I just dug in and followed and studied everything I could. Joe V.: So for those listening a lot of times from the thousands of entrepreneurs I've talked to that sell physical products in e-commerce, they're part of a Mastermind group. And I think it's critically important that you connect with peers either on the free Facebook groups to start off with and understand that free means free and the quality of information that's shared there is not going to be as deep as a Mastermind group like eCommerceFuel or Ecom Crew or Smart Marketer or Ezra's Blue Ribbon Mastermind group but there's a lot of podcasts that you can listen to as well. Mike, at the time, did he have Ecom Crew podcast, or is that something new since you met him in 2016 and connected with him in ECF, which is eComFuel? Joe C.: Yeah, so that was new for him. He was starting to work on the project but didn't have the podcast yet and it was just kind of an idea in the background that they're working on. Mike was still very involved in his e-commerce business or businesses at the time. Joe V.: Okay, cash flow; what I see is when you've got a hockey puck growth, there's always a cash flow problem. How did you manage to keep up with the inventory needs, which is a cash flow drain on the business? Joe C.: Yeah. So my first order I think was $1,500. I placed that order. Well, when I received that order and launched the product, I did a really dumb thing and went on vacation to my parent's house here in Florida, which I now own and in right now. But so I came here and within the first couple of days of launch, I could see that I was going to run out of inventory very quickly. So I placed my second order for $1,500 now the vacation was five days and that happened on day one when I got here. So like I literally launched the product day two or day three after launch I came here. I stayed here for five days and by the end of that week I had to place a second; a third order. So like I was here on day one when I realized I was going to have to place another order and by day five I realized that wasn't going to cover it and I'm going to have to place another order and I didn't have any money. The first call to my wife for that first follow up order was like hey dear I know we just opened this new credit card for this business and we just spent 1,500 bucks but I think it's going to work. We need to place another order, send me another 1,500 bucks. And she was like yeah do whatever you think. Joe V.: Awesome. Joe C.: And I'm behind you, so cool. So then by Friday when it was time to come home and I realized this isn't going to be enough, I had to make that call again. And I said, hey, you know… Joe V.: Wait a minute; hold on, for all those people listening in the audience I want to just ask a question that they're asking. You're on vacation in Florida without your wife. Joe C.: Yeah. Joe V.: Why? Joe C.: Well, it was just to see my family. My mom and dad were here and we were both working and we've had this kind of Air B&B business at the house. We have two dogs and it's just difficult for us to both leave at the same time. She couldn't get the time off work. I wasn't working at the time. Essentially I have my own business so it was just yeah say hi to Mom and Dad, hangout for a few days, go fishing the whole time. Joe V.: Fair enough. Joe C.: She wasn't that into it anyway. Joe V.: All right so that third order, what did you do? Joe C.: That third order I was like, hey, the last order is not going to be enough. We've got to place another order and we're going to have to like triple down. We're going to need to spend like five grand on this next order and we don't have it. So can you call the credit card company and see if you can get our limit raised? And she did. And she got it raised to like 10,000 and so I was able to place that third order; so really having no money coming back in yet. I mean, we're starting to make sales. I don't think I ever got my first payout at this point, though because it's bi-weekly from Amazon. So I went from 1,500 to 7,000, $8,000 in and now I'm thinking, well, I don't know how I'm going to place the next order. And so by this point, I had been communicating a lot with my manufacturer. I placed three orders now and they could see that my orders were growing and so I just called them and I said, look I need to place bigger orders but I'm going to need some sort of terms. I can't operate without terms. You told me that I had to place a few orders before we could talk about that and I will say I planted that seed from day one. So I planned on the product being successful. I didn't just hold and not do anything. So from the very first interaction with the supplier, I asked for terms and they said no. And I said, okay, that's fair but what do I have to do to get terms? And they said, well, you need to place a few more orders, we need to be comfortable with each other and I said, perfect, fine, no problem. So it was a natural process at that point. I placed three orders. Yeah, it was a short period but I placed three orders. I showed that I was serious and so I said, look, I'm going to need new terms or I'm going to have to find another supplier and it really was kind of that. I don't want to be threatening but it was kind of like hey if you're not going to give me terms, I'm going to go somewhere else. And so they came back and gave me 30-day terms. Joe V.: So you were able to actually… Joe C.: Yeah, so it was kind of ridiculous, actually. What they are giving me was 30-day terms and I was able to renegotiate and say, yes, 30 days from the day I received the product. Joe V.: That solves a big cash flow problem right there. Joe C.: Huge. Because most places will give you 30-day terms, but it's from when they shipped the product. Joe V.: Right. Joe C.: So I wanted it from when I received it. And I wanted it from when I received the product in full. And I say that because I was doing air shipping so I would receive shipments in bunches. So I might place one big order and I might receive 10 shipments over two weeks before I get the complete order. So I kind of knew that I was working the system a little bit, but they were happy. I was paying on time and so we were able to kind of grow using that structure. But it was only about a month later before we got into another big cash crunch because the size of the orders were growing, the volume was growing, all the money was going back and inventory as you know and it was to a point where 30 days wasn't enough. I needed to buy more than 30 days' supply to cover everything and it was like round two of the next challenge as the business grew… Joe V.: How did you solve that? Was it just living off your wife's paycheck, doing Air B&B, and scraping dollars together and living a conservative financial life at home? How did you do it? Joe C.: Yeah so I have reached out to friends and family. I asked for money. Everybody told me no. I start reaching out to other investors, people that I knew that would maybe do hard money loans. All of them that agreed, which was I think, one or two said they'd do it but they wanted 50% of the business which I wasn't willing to give up any percentage of the business. And so I just kind of scrambled. I think at one point I sold my car and we just continued to scrounge and scrape. Joe V.: I love that. I love that you sold your car; that you got to do whatever you got to do to feed the business and feed that cash flow problem. That is brilliant. How long was it, Joe, before you were able to take any money out of the business for yourself or did you in that three or four year period? Joe C.: I did and probably looking back, it was one of the biggest mistakes I made. It was siphoning money from this company versus reinvesting. I think we could have been talking about a much larger exit had I reinvested versus taking the money but the bottom line is I needed the money. And my goal still was the hardest thing. So hindsight in 2020 that's fine but at the time my goal was financial security and not to get too far into the story but when my dad sold his business and when we had to basically move on from there, we sort of lost everything. We built our dream home. We had all the toys. Of course like good Americans we had overextended ourselves as well and gone into a bunch of debt to have all of that stuff. But when he said he was selling his business, there were no job opportunities in that area that we lived. We lived at a small northern Michigan town, there were no jobs, and I knew we were going to have to move. So we sold the house. We sold everything we had essentially. We packed up what was left into a moving van and we moved to Raleigh, North Carolina, without having any clue what was in Raleigh other than my wife had lined up a job with one of those suppliers that we had bought from the last business. So we were sort of starting over, but we had sort of lost everything and to be completely honest it wasn't the first time I lost everything. It was the second time that I completely lost everything and went into pretty significant debt so it was a big driver for me; it was to get financially free. And to me at that point, I was also following a guy named Dave Ramsey, I was following his debt snowball and so my number one focus was get out of debt. And so I was pulling money out of the business to pay off cars. I didn't buy myself another car until I could pay cash for one. I didn't buy a house until I could a big down payment down because we were renting at the time. When we bought a house, we bought a five-bedroom house for me and my wife and we rented out three bedrooms. And so we just kind of continued that path of doing whatever we have to do and it was super uncomfortable living with people really sucks and it's really tough on a marriage. And running a business is tough but you just keep working and finding your way through it. Joe V.: Now I understand why the feeling; and this is why I ask about how it felt when you sold the business when it's finally done and you said the weight of the world was lifted off your shoulder because you've gone into debt, the wrong way two times and you've got Air B&B to strangers coming to your house and taking up three bedrooms while trying to run a business and survive a marriage as well. So congratulations on fighting through it all and doing whatever it takes to succeed because that's the bottom line. You know I'm mentoring a couple of entrepreneurs from a local college now and they're 21 and 22 years old. And one of the conversations I had recently was that they need to file for a business and incorporate and one said it's $300 and they don't actually have the money for that and I'm like suck it up. Look around your run and sell something. You can scrape together $300. You're not going to ever become an entrepreneur if you can't do what you did, which is anything you have to do to survive and sell your car and credit card loans and whatever it takes to do it. And you did smart; you had a business that was already taking off so that's good. I want to talk about two things. I want to talk about the first few days of how you put together a launch and how you learned to do that and launched the business but I also want to talk about your goal. So let's talk about the launch first. What marketing techniques did you use or put together and what would you recommend to others in order to put that initial campaign together? Did you spend money on advertising, did you just do organic traffic, did you do outside traffic; what did you do? Joe C.: Yeah. So it wasn't what I would consider very sophisticated. I was, again, kind of fortunate that the market that I went into was not highly competitive. The listings that I was competing against were very poorly created in Amazon so my listing from day one just crushed everybody. And it was just before this particular market got a lot of competition. As a matter of fact, my product is what launched the competition in this category and now there are thousands of competitors that are highly optimized and it's very challenging to get in to. But when I first started it was very easy to beat all of the competitors in that space. And so all I really did was run ads. I ran some Facebook ads, but mostly it was just Amazon ads. Joe V.: Facebook ads to the Amazon store or to a specific keyword or something like that? Joe C.: Yeah, mostly Facebook ads went to my own website. I did have a Shopify store and I had some Google ads that were going directly to my Amazon page and I had the Amazon ad platform and Amazon ad platform was the big driver. The Google ads did a little bit. Number one, what they really did, though, is they helped the page get a ranking for the keywords that I was targeting. Joe V.: Get ranked on Amazon or in Google? Joe C.: In Google. So after we launched that product, it was maybe two months until our Amazon listing was the number one listing for our target keyword. Joe V.: I got you. Joe C.: So there were strategies like that that I learned so that was conscious. I didn't do anything super sophisticated with the launch, though. I didn't have an audience. I didn't build an audience beforehand. All things that I think are necessities now with the competition being so much higher than it was then. Joe V.: Yeah. Joe C.: But yeah, at the time it was not a super sophisticated launch. Essentially what drove the revenue was the Amazon ads in their network just going direct to my page. Joe V.: And in a not necessarily highly competitive space at the time; it is now because you created the niche or the better niche as you will. All right, let's talk about your goal. You and I, I want to say we first chatted in 2018 and you were living not in Raleigh at that time, but you were living on the coast of North Carolina. How important is it in your opinion for an entrepreneur to learn about again, get trained on what it takes to sell your business; that exit path, and to set goals? How important was it for you and how important is it on the priority list of things to do for entrepreneurs, in your opinion? Joe C.: Yeah, so I think the best time to think about when you're going to sell your business is the day you start planning to launch a business. And the second-best time to do that is right now if you haven't done that. So the earlier you can start the better. And a lot of people, in the beginning, it's difficult because you have so many other fears; fears that the business isn't going to be successful, I'm going to launch it, and I'm going to get traffic and so many other things in your mind that's taking up space. It's hard to think about how I am going to sell this business down the road but you don't have to put a lot of time in the beginning, you just have to know that eventually, that's where you want to go. And so when you know that and if you know how to structure that business for sale then you're just going to be starting off on a much better place. So I got the privilege of watching my dad go through a sale and I did get to listen to him complain about all the things that were going on with the sale like oh we had to clean up the books. And that took three months to get the books cleaned before they can even move forward with the due diligence properly. And there were so many aspects that were kind of snags for him to actually get that exit. So I kind of have the benefit of watching what he went through and realized day one, I need a CPA. I need somebody who's going to watch this money because I know I'm not organized enough to do it. So literally, I launched the business within the first couple of weeks when I saw I was going to be a successful product I hired a CPA. Could I afford to? Not really but I knew I had to do and I know I really couldn't afford much. Joe V.: What did the CPA do for you? Because I always say the bookkeeper manages your books on a monthly basis, the CPA files your taxes. In this situation what did the CPA do for you? Joe C.: Yes, so the CPA did a combination. My wife ended up eventually taking over the books when she was able to leave her job. Joe V.: Did you use QuickBooks or Xero? Joe C.: QuickBooks. Joe V.: Okay. Joe C.: Yeah, and we kept pretty simple. So it was the CPA was more important of just setting up QuickBooks for me so when they charged the fee it was ridiculously cheap, really. They charged a fee to just set up QuickBooks and then once it was set up, my wife could do the bookkeeping. So they weren't expensive in the beginning. I still couldn't afford them but it wasn't expensive. And so I remember like literally at that time I was like whoa they're going to charge me 50 bucks a month or something. I don't know if this is a good idea we can't afford that. We have to go elsewhere when I say we can't afford it. That was my mindset, my frame of mind. But I was happy I did it. It helped us get started on the right foot. The QuickBooks was really pretty clean from day one. The business was not complex anyways so it was I think a good move. But the more complex you are the more important that is. And just those small things like planning to be successful is hard when you're not successful yet. But it certainly, I think in my case, paid off to start that way. So a CPA or a bookkeeper or somebody that can help you if you're not good with it was important. If you're great with it, you can do it all yourself. That's fine. But you're going to be doing many other things you got to figure out where it makes sense to spend your time. Joe V.: Yeah, I think it's really important to do that bookkeeping part because like you say it snags at the end. If you wake up one day and decide, okay I'm ready I want to sell my business but you haven't done your bookkeeping, guess what? You're not ready to sell your business. You've got to do that bookkeeping and get it done right in order to exit the business. Joe C.: You might be ready to sell but your business isn't. Joe V.: Right. Yeah, so if you've got a seven-figure business, even if it's six figures, if it's only $100,000, there's someone out there in the world that has worked very hard to save $100,000 and they are going to buy your business. They're not simply going to look at your merchant processing account or your seller account and say okay, yeah, here's the money. You really need to have your financials together; vendor invoices, cost of goods sold, all of this stuff, cost of goods sold on an accrual basis people, really, really important stuff that has to be done in order to exit without those snags. You can always sell, but you're going to be able to sell for more if you do what you did which is 18, 24 months in advance we started having conversations. And each time the value kept going up that we had conversations. Let's talk about that for a minute because I always say let's reverse engineer your path to success. Set a financial goal and a happiness goal; happiness goals and setting financial goals. Thank you, David Wood, for the happiness goal. I think it's really important. Yours, Joe, was a huge burden off your back that made you happy and you go fishing now and enjoy it without thinking about the debt that you had because you don't have any. So happiness goal, financial goal, and then reverse engineer a path to that. Sometimes it's 12 months, sometimes it's 24. You can't do that successfully without knowing the value of your business today. You can't do that without having good financials. So it all is interwoven together. But your financial goal, if I recall, moved. You set that goal and then you moved that goalpost a little higher or further down the road. Can you talk about that path? Because you had I think you said $40,000 in debt when you started this business and then you took more debt out eventually. Did you pay off your debt while the business is growing and that's the money maybe you shouldn't have taken out because you followed Dave Ramsey's program, which I think is brilliant too, by the way, and then what was your mental process for setting that exit financial goal and once the value of the business was there did we list it or did you move that goalpost further down the road? I honestly don't recall the details. Joe C.: Yeah. So starting the business, the goal was man this would be cool if I could pay a car payment or something like that and we got to that part pretty quickly. And then, of course, again, you move the goalposts constantly, right? So, man, it'd be cool if we could make a house payment. And then it became, man, it'd be cool if we could pay these cars off and pay off our credit cards and boy it'd be really cool if we could pay off our mortgage and over that first two-year span, we accomplished that. And so when I started talking to you, I don't think we can quite pay off our mortgage yet but we were debt-free otherwise. We were just working on our mortgage and that is the money that I was pulling out of the business. And so when I started talking to you and started talking about exit, it was actually during the time that we had had a big hiccup in the business, a big stumbling point and I was frustrated and I just wanted to be done and I didn't know how I was going to do it. But after speaking with Mike first, he recommended I speak with you. And so that was kind of our first introduction and you stomped on my heart. You said you're not ready. Your business is in a very bad position right now. Joe V.: It must have been trending down at the time. Joe C.: It was trending way down. This was essentially right when the mass competition came on board. I went from having no competitors to one or two to hundreds. And I've come to find out a big part of the reason for that is that Amazing Selling Machine used my product as an example in their course. Joe V.: Oh wow. Joe C.: And I reached out to them and said, hey, what the hell, guys? You know I'm one of your students, right? And they were like, oh, we didn't have any idea you were a student of ours, sorry, we won't do that in future releases but what's done is done, you know. And so they're like the biggest Amazon selling training course out there. Joe V.: Yeah. Joe C.: Literally overnight we just had hundreds of people copy our product and hit Amazon. And the business started to tank as far as our revenues it really started to go down. I was burned out at this point. I was frustrated. And I was hopeful for whatever reason, I was going to be able to still sell for some big number. And you were like no, it's not going to happen. If you sell right now, you're going to give it to somebody. Joe V.: Yeah. Joe C.: What you told me was you'd be better running it into the ground then you're just not going to get what you want for yourself. Joe V.: That's right. Take as much money out as you can and let it inaudible[00:38:34.4] Yeah, those are hard conversations when I'm telling you that, being relentlessly honest as we say at Quiet Light and not tell you what you want to hear. Joe C.: But you know what if someone was my, I guess, drive that was what I needed to hear because I realized again if I wanted to hit my goals of having that financial security, I couldn't just give up. And so that turned me around. That turned me from being down and being depressed to being pissed off and realizing you know what, you've gotten this far, you can beat these guys that are just starting and you've got two years off. Figure it out, quit worrying about what everybody else is doing, and figure out how you can win. And so, I mean, it was literally I think we hung up the phone and that shift in my mindset happened and I just went right to work on how am I going to fix this, how am I going to beat these guys? I'm very competitive. I played hockey my whole life growing up. I'm just super competitive. So when that shift happened from kind of loser to, hey figure it out; yeah, we were able to turn it around. And so it took about six months to get back to that number one position and back to where the revenue was decent. That took about another six months before we were where I felt we should be in terms of the revenue. And to your credit, you reached out every quarter or so to check in on me and that was always super helpful because it just reminded me of the goal. And so sometimes it's just so easy to get caught up in everything that's going on in your business that it was great to feel like I had some people in my core. Mike was another one that I could reach out to at any time and he would jump on a call and talk me off a ledge or give me some input. So having those resources to be able to reach out to when things aren't going well is just; I don't know how else to put it, it's just super valuable. Yeah, so it took about a full year to really; it took six months to basically turn things around, it took another six months to gain back what we had lost in sales and get back to where it felt like we could potentially exit. Then we had another call and you said okay, good, now you need to run it for another year. Because I was like oh great, we're back, now we can sell it and you're like hey man, you need a trailing 12 months at this level if you really want to sell it. So you crushed my heart again. Joe V.: I am sorry about that. Joe C.: But the reality was; no, it's fine because things were good. And so I was up and I was just like oh yeah okay, fine. I can run it for another year. Maybe I can even grow it a little bit. So that's what we really focused on and pushed through. And so you started that question really with what kind of got you there and what made the decision to actually sell? And that was literally hitting like the 10 month part period where for 10 months nothing went well. That's literally what made me realize we need to list this in because you told me, hey, you need a trailing 12 months of solid numbers and then you're good. At 10 months I was like, holy crap we're two months away from that. There's nothing in the forefront that makes me believe that we won't hit that. Let's call Joe. So I reached out to you and boy, what an interesting time to make that decision, right? Because look what happened just a few months later. Joe V.: Yeah, we closed; we're recording today on April 13th, 2020 folks and we ended up listing the business in mid-November, headed under LOI within two or three weeks, chose to close in January for tax purposes. Good for you, Joe, because you had moved to Florida, partial tax year down there, no taxes on state level and then, a grace period of another 15 months before you had to pay your taxes for the sale. Yeah, and then COVID hit. So I think in your niche sales probably went up though but still, the world is incredibly unstable and maybe better of peace of mind that you sold versus holding on. There are a lot of folks that waited and now have to wait even longer to see relatives come back. It's a tough situation all around. Joe C.: And you know it doesn't matter that your business does well in these times because if you can't get inventory or you can't get inventory on Amazon, you're still not making sales so there are so many challenges. And the other challenge is that I lived with; lived and breathed every day, day and night I mean, so that decision to sell was based on a lot of things. But yeah, it was definitely the right time and it worked out well for me and it gave me the freedom to now look back and say okay, what did I do, what made that successful, how can I repeat that in my next business, and how can I do it even better maybe? For me better means a better lifestyle. I don't want to do it again and work the way that I worked and worry the way that I worried before. And surprisingly when you have some money in the bank, a lot of those worries do go away. A lot of things do get easier and so now the big thing is make sure you don't make a big, stupid mistake because you've got money to spend and go about it like a clean start up again and remember what it takes to do that and then start from that. Joe V.: Great advice all around, I love your story, Joe. What is your next adventure, any clues or hints that you can give us? Because if anybody out there is in the audience that might have an interest in it or can contribute to it in any way maybe they'll reach out. Joe C.: Yeah. So what I kind of took away from my last business is that being passionate about the products for me is important. Some people are just passionate about business and so they don't have to really be passionate about the product so much. In my last business, I was passionate about the business, but I was also passionate about the product. And even more importantly, and this is just through self-reflection that I kind of realized recently I was passionate about my customer and I was passionate about that customer getting success. And so for me, it was realizing that it's not just the business, it's not just the product, and it's not just the customer. It was kind of a combination of those three things that I think helped push me through the hard times. Because there were so many more ups and downs that we didn't even get into that if you're not passionate about something within that, you're going to struggle. And for me, if I wasn't passionate about all three of those things, I might have faltered. So as you said I'm a fisherman and I'm looking in that market and seeing where I can contribute my value. And so I just registered a new trademark last week and we're starting on working on those offers and seeing where we can beat the competition. Joe V.: Excellent. Well, I look forward to having you back on the podcast and telling that story of your next exit although you've just started; you've just begun. Thanks for sharing your story, Joe. It's amazing going from being a dad at the age of 17, 17 in two days, if you will, to a seven-figure exit 24 years later, supporting your family and getting a big burden off your back and living debt-free. Congratulations. It's been a privilege working with you and an honor to know you. I look forward to getting out of Florida and maybe go fishing with you someday personally. Joe C.: Absolutely. Well, I appreciate all your help as well and I look forward to being back. Joe V.: All right man, talk to you soon. Resources:Quiet Light Podcast@quietlightbrokerage.com

On today's episode of Quiet Light, Dan Ashburn joins us to discuss negotiating terms with your suppliers. Dan is the co-founder of Titan Network, the Mastermind for Amazon sellers, the China Magic, the immersive Mastermind discussed in another episode. Tune in to pick up some awesome tips about how to save cash and boost the overall value of your business. Topics: How he came up with this concept. Why face-to-face interaction is important. Forecasting sales, inventory requirements, and pay-out per unit. Using market data to help with forecasting. The formula/numbers Dan uses. Making sure your offer is win-win. Timing your requests. Having perseverance when it comes to your requests. Traveling to China. Transcription: Mark: Shortly after you buy a business, you're obviously looking for any opportunities to increase your return on investment. Sometimes that's through growth, sometimes that's through different ways of cutting expenses. But oftentimes looking at your suppliers and the terms that you have with your suppliers can be an easy way to free up free cash flow or get better terms or be able to even get different rates. But how do you go about actually negotiating those terms? How do you approach the suppliers, especially when the relationship is new? If you're on the sell side, the same sort of questions applies; how do you approach suppliers in a way where you can increase your return on investment by negotiating better terms? Joe, I know you talked to someone about this and have some good tips here. Joe: Yeah, Dan Ashburn from Titan Network. You know what? Just in the podcast, I'll just tell you right now, Dan goes through a step by step process to basically walk people through what to do, how to do it and get better terms with your supplier. And the ultimate result, whether you've got a straight-up e-commerce business, a Shopify store, or an Amazon business, or whatever it might be, even retailers that are out there importing from overseas. I hear it over and over again that when you make the right connection in the right way with your supplier, you can get better terms. The end result is more cash flow. More cash flow means you've got the ability to buy more inventory as you try to keep up with growth, which is often a good problem to have. But Dan talks about it quite a bit in there. And the piece that is forgotten and not all that talked about is people are always trying to drive top-line revenue. But if you can negotiate better terms with your supplier and then get a better reduction in the cost of goods sold, it's going to boost your overall value as well. Joe: Hey, folks, Joe Valley here from Quiet Light Brokerage, and today, I've got Dan Ashburn on the line with me. Dan is the co-founder of Titan Network and I think China Magic as well amongst another a number of other pretty fancy titles and credits to your LinkedIn profile here that I'm looking at, Dan, but that's as far as I get with fancy introductions so why don't you tell the folks that are listening about yourself and about your background and what you do? Dan: Yeah, sure. Thanks for having me, Joe. So, yeah, I'm the co-founder of Titan Network Mastermind for Amazon Sellers, co-founder, and co-organizer of China Magic, which is a trip where we take 100 people twice a year to source products over in China. We've taken over 500 people now and the co-creator more recently of Amazing Selling Machine. And then my team and I are responsible for delivering eight figures in sales on Amazon per year through my brand management agency. Joe: That's an awful lot. How do you do all that and not lose all your hair? You got a nice head of hair there. So this is a prod for people to go to the YouTube channel as well. Dan: Yeah, for sure. So I have a good team around me. I've got a good management team. I've got an executive assistant who makes me look really good. And then, yeah, I just got good people around me so it's pretty cool. Joe: Okay. There are not a whole lot of Amazon sellers that we have on the podcast and that I deal with on a regular basis; I've been doing this for eight years that have a beautiful British accent. So tell me about that aspect of it. You've got; I don't know how many you said in terms of Amazon sellers, 1,600 that you work with or something like that. How many are typically US-based versus Europe based? Dan: Yeah, it's a great question. I'd still say the majority of the market is in the US. I'd probably say it's a 70/30 split right now. However, Europe is growing and it's growing fast as markets like Germany, etcetera pick up. And if you combine the combined sales volume of Europe to the US, then it's a good opportunity. And Europe is definitely picking up. A lot of the Europeans are obviously using US as their main channel as the US seller are then coming out over into the European market to diversify. Joe: Okay. So a quick side note before we get into the meat of this discussion is that Amazon has just made it a whole lot easier to transfer a European seller account. So that's real positive news. It doesn't necessarily have to be a stock sale anymore. It can be an asset sale and it's easy to transfer so positive stuff there. But today we're talking about a little bit of your China Magic experience and your China experience in general and negotiating terms with your suppliers to improve cash flow and to improve your bottom line and boost valuations, which is a breath of fresh air because you can't; you wrote that line when we talked about it because most people don't think about valuations when they're working with suppliers and things of that nature but you do. Dan: Yes. So you've had Scott Dietz on a number of times now. Scott was very much a mentor of mine over the last few years and something Scott really instilled in me is what's good for selling your business is good for building and running your business. So installing that, combined with the challenges that I come across so many sellers have; there's one thing in this business that stops growth and that's cash flow, its cash on hand. We all know there are only three ways really to grow the business, sell more of the same products, sell additional products, or sell the same products in new marketplaces are really only the three ways. All three of those ways take cash and they take cash flow. So we very quickly; my team and I launched this, my team and I really set our minds over the last couple of years to how do we solve this problem for the accounts that we're involved in, the brands that we have stakes in, and the people that we're working with across Titan Network, China Magic, etcetera to really solve this problem. And that's where this working with a supplier to fund that growth, that whole concept really came from. And I'm really proud to say that the last year or so, the last 18 months, we've been getting some pretty impressive results where suppliers are letting us go north percent down, 10% on shipment, 90% two or three months thereafter so it's really positive. Joe: One of the things I hear often is, yeah, I just got back from a trip from China. I was able to do this. I'm getting better terms here. I reduced my cost of goods sold here. I ate way too much and drank way too much and I feel like I'm a member of their family now. Is that what everybody has to do? Do they have to get on a plane and go to China to meet the manufacturer and supplier or is it just something that helps but there are other ways to do it? Dan: Look, there are other ways; there are always other ways to do it. You can get this done over a Skype call or a Zoom chat like we're having now but if you're serious about growing the business and you want to go in and get the times that you want, then every time in every case, physically being there in China in the room, staring the person in the face, building a real relationship with that person gets the better result every time. And where we've had a good result virtually, it's always been as a result of following up physically with someone. So we've already been earlier in the year or we may be met them at the last Canton Fair but there's always been that physical interaction. And I think what people underestimate about China is the business culture out there is relationship-driven. It's all about building that relationship. It's all about going and having that male drink and some of the alcohol stuff that they put in front of you to really build up that relationship. And there's so many benefits to that relationship much further beyond payment terms and cost of goods sold even down to stuff like it's coming up to Chinese New Year that productions run is full. And because you have that relationship, they bump you to the front of the production line, which keeps you in stock. Joe: So let's get to specifics for the audience then. For people that are; and talk to them as if maybe they're your clients, they may be somebody that just bought an Amazon business from Quiet Light Brokerage or they're somebody that listens and is getting expert advice from folks like you. What are the first few steps that somebody should take? And I know this is general information for general people, specific would be if you were talking to one. What do you advise somebody to do? Dan: Okay, cool. So first off, we need to understand what terms do we need to achieve and what are we aiming for? What's our goal? So the first steps or so of executing this process before you got to China or before you attempt to do this virtually is we need to put together a sales forecast. We need to understand what am I expecting to sell over the next 12 months and include uplift for Q4 based on historical dates or if you're selling seasonal products, make sure you're including all of that uptick and then break down what you plan to order. So once you forecasted those sales, understand what inventory requirements you have and what your current order rate would look like with your supplier over the course of that year. Then figure out with that information what is the payout per unit on your sales? So you need to calculate the Amazon payout per unit after all fees and marketing costs. So within our brands, we work to operating 10% advertising contribution or true A-costs whatever you want to call it. And we factor all of that in and we figure out after storage fees and etcetera, what is our P&L per unit? Joe: Did you say 10% advertising; is that what that was? Dan: Yeah. So as a PPC contribution, margin, or a true A-cost; whatever you want to call it. Once we're out of the launch phase and we're in some maintenance we factor in a 10% margin for advertising. Joe: It's great, we do key financial metrics anytime we list a business for sale and typically see the ad cost somewhere in that 8 to 12, 8 to 15% range so 10% is a good number. Before you go on too far, so you've talked about doing a sales forecast and of course, that leads into inventory need forecast. The question often comes up, what's the best software if there is such software for inventory management and sales forecasts? Do you use some or do you create it with Excel spreadsheets? Dan: So we keep it simple. We do all of this in Google Sheets. We have adopted a new inventory management system and I'm pretty impressed with it if you wanted to talk about that. But we do all of this in a basic Google Sheet template. And if you want, Joe, I can have that template sent out to your subscribers. But yeah, we just use a Google template, we use a Google sheet and we just manually plotting in numbers, manually forecasting out. It's nothing fancy. If we want to work with someone at more advanced than we'll offset pull in an accountant or a bookkeeper; someone that's more savvy with the numbers. But we're just using historical data to forecast the future 12 months. Joe: And you're pulling that data from Amazon or from QuickBooks; where are you pulling it from? Dan: Yeah. Typically, depending on the account that we're working with or depending on whether it's an in-house brand or a joint venture type relationship, we will take the initial data from Amazon. So we'll take your initial sales data. And then if we can sanitize that data with actual validated bookkeeping records, then obviously we will do that. But for the sake of this exercise, it doesn't need to be 100% accurate. This is a forecast and everyone knows; I think what everyone gets is they get that analysis paralysis on forecasts. Because I think what if I don't meet the forecast or how do I know what it's going to sell? You've got to take the best guess and if you haven't got 12 months of trailing data, go use tools like Keeper to look at your number one like for like competitors trailing 12 months of data. Just use data in the market to be able to inform your own self forecast. Joe: So doing a cash flow forecast or I'm sorry sales forecast leads into what your inventory needs are. You're doing that in Google Sheets and what's next from there? Dan: So before we can move onto the next stage, we then have to figure out what our payout per unit is, because these three pieces of data, the sales forecast, and the inventory need forecast as you call it, and then the payout per unit factoring in a rough 10% advertising contribution. That gives us all the information that we need to be able to produce an accurate cash flow forecast. So what sellers I find out doing most that aren't taking on external cash or external funding, they're kind of running on this system of hope. They kind of think or hope they'll have the cash in the bank for the next inventory order, but they're not really forecasting enough ahead to say, will I have enough cash on hand to be able to fund my next inventory order to meet demand of growth and not run out our stock at the same time? But without those three data points, without knowing how many you're going to sell, what inventory you need to meet that demand, and what your cash payout per unit is, you can't put together a cash flow forecast. So once you've got those three data points, we then put together our cash flow forecast. So to give you sort of a demonstration of this, we base it on our current term. So let's say typical terms, 30% deposit, and 70% before shipping. That's pretty much most the market. Joe: Pretty standard. Dan: Yeah. So we will forecast our cash flow based on those terms for the products that we want to negotiate. So you might have one product with a supplier or you might have 10 but you just do it for the group of products that you're talking about with the supplier. So we'll have the sales forecast at the top of that cash flow forecast. Then we'll have a payout forecast which is based on sales. It's just that payout per unit multiplied by the number of units we expect to sell in that month. That gives us our total cash pile for that given month. We then factor in some fixed costs. So things like employees, software, training, salaries, costs that we know we're always going to have. And then we might factor in some ad-hoc costs like travel conferences, going to China Magic twice a year. God, I'm plugging that. So we factor in those hard costs and then that gives us a forecast month by month, January through December. If we go for the annual calendar year of what our cash on hand looks like. Then we just have to plugin based on what we know we have to order what cash output; what cash outlay do we need to factor in based on 30/70 payment terms. That then gives us an accurate view of where we're going to have a deficit on cash, where we're going to be up on cash, and what that looks like for the next twelve months. Does that make sense? Joe: It does. You sound like a grown-up here, running a business with real numbers and doing some analysis. Dan: I'm trying to. Joe: Congratulations. And that's what you teach the folks at Titan Network as well. You're going through this with them Dan: Yeah. Joe: And do you produce video walkthroughs on how to do this with examples? Dan: Yeah. So we've got like the whole step by step. Within Titan, we have something called masterclasses and we've got an entire master class on supply payment negotiation with all the templates, negotiation, soft scripts, ways of approaching; I'll give you some secret sauce in a minute but even like a presentation that we use to present this information to the supplier, all of that is all inside of Titan. And our Titan members; I mean, the results that we're getting, someone got a 50 grand credit line off the back of this. Joe: Wow. Dan: I can't count how many now; it's got to be 20, 30 members in the last few months alone that are getting terms, even just improved terms like 20% down because the raw material costs are quite high, but then they're not paying 40% until 30 days after shipping and the remaining 40% until 60 days after shipping, which means they've been selling the product likely for 30 days before that balance is due, which just opens up so much opportunity because you can afford to sell more product cause you can order more inventory. You can afford to expand into new markets because you can afford more inventories. Or you can afford to launch new products. And for anyone that's doing some serious money in this business, they know launching products is the fastest way to grow it. So, yeah, I mean, the results are quite stellar and we're doing some good things in time for sure. Joe: It's all good stuff. Everybody listening certainly needs to do it if they're not doing it now. So once you've got all this information, the forecast and estimates and things of that nature what do you do with it? Dan: So once we've created that cash flow forecast based on our current terms, so 30/70 we then produce a second forecast and we play around with those terms. So the example of I'm looking as a reference in front of me here is 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping. And this is actually a live case study on one of the ASINs that we run. So we will adjust the cash flow to the new terms to then demonstrate what that does for our cash flow. And at this point, this is all internal. This is all internal reporting, preparation to support and enable the negotiation. So I know here, just look, I'll read us some numbers because obviously, I can't cast the screen. On our 30/70 our cash on hand column across the bottom January was in this example 5,000, February is 3,000, March goes into a 2,000 deficit, April goes into a 4,000 deficit because we've paid out that 30% deposit on this inventory order. Joe: Can you just with those numbers do you have a ballpark total revenue figure as well? I'm just curious. Dan: Yeah, we do. So down here we've got a total payout figure in this example because we haven't got the retail cost in here. We just track basically what cash flow we receive from Amazon so it's on the end of the column. But if it scales up; this was an example of a new product launch achieving 300 in the first month to a thousand units in the 12 months; very, very conservative forecast. Joe: Okay, so what happens when you flip this to the new terms that you're trying to achieve? Dan: So interestingly, the cash outcome; so at this point, we're not forecasting what additional inventory we can get so the cash outcome at the end is the same. So December, for instance, in the 30/70 on this example, the cash outcome for December, cash on hand sorry is 79,000. It started at 4,000. In the after states 20/35/45 again it's 79,000 at the end of the year in terms of cash on hand. But the difference is I don't have a single deficit in my 12-month run because I've been able to achieve better payment terms. So that's sort of step one of this process, cash flow forecasting existing terms and saying where your deficits are and then making sure that you can negotiate payment terms that mean you never run out of cash. You never need to go into any credit line, credit cards, any sort of equity or debt financing, because you're always going to have positive cash on hand to fund the growth of your business. Joe: So what do you have to say to those people that are listening saying, okay, I got this, I'm just going to ask for these better terms and they don't do this work and they don't do a presentation the way that you want, what it is their supply going to say? Dan: It's funny, actually, because one of the things we normally go to; this is a typical role play and if I ever talk about this on a stage and you lied and or anything like that, this is how it typically goes. You send an email that goes, hey, I need some better terms. Can I pay you the balance after shipping? The supplier email backs no. You sit there drinking FML like, what am I going to do? Yeah, most people just go give me better terms, a supplier goes no. And if you think about it, these factories; these suppliers, how many brands are asking them daily? How many of their customers because they're supplying hundreds if not thousands of customers. Joe: Yeah. Dan: I'm just saying give me better terms. I hope you sat there as a factory owner going well what's in it for me? Joe: Right. Dan: You have to answer that question of what's in it for me. It's got to be a win-win relationship. Joe: Let's get to it then. The next stage is I mean, obviously, you're seeing so no deficits, which is great. The entrepreneur is sleeping better at night. They've got a little more cash for themselves, but also cash to probably buy more inventories which is what's in it for the vendor, right? Dan: Absolutely. So with everything we do, we have to approach these relationships as a win-win deal. Having been to China more than a dozen times now, I've taken over 500 people. I have been involved in a number of these negotiations at lower levels and much higher levels. It is all about the relationship. It's all about the win-win. And you have to present what's in it for them. Why should they risk that workflow, their cash flow? Because I sense you're asking them to fund your business. Why should they risk that inaudible[00:20:16.2]. So the outcome for everyone has to be a benefit. So the way we do that is there's a five-step process to presenting a win-win. And this is what we break down into a presentation and we've got templates for etcetera. So Step 1 is the opportunity and the conversation that you're trying to get across is there's a big opportunity to make more sales. That's kind of the message you're trying to get across. And the reason it's better to do this in person as well is you can take; if you've got like a logistics manager or sourcing agent on the ground. All of our Titan members benefit from Titan sourcing, so we provide this to them on the fly. But yeah, if you've got that on the ground, you can then have that person translate but also be like an internal ambassador for this process. So step 1, the opportunity. There's a big opportunity to make more sales. Step 2, the challenge. The challenge is I can't order enough inventories to fund and meet the demand of my growth because of cash flow. And that's the challenge that you need to communicate. You can't fund your growth because of cash flow, and that's limiting your ability to grow because your sale is outgrowing your cash impact. I lose sales and as a result, the supplier, the factory that you're dealing with is going to get smaller orders. The solution is better terms so we can order more inventories. The whole objective here is better payment terms, more cash on hand, and allowing you to order more inventory just to grow faster; to compound that growth faster, the benefit, larger orders for the supplier, more sales for us. So that's kind of the five-step story that your supplier, your factory really needs to understand from this process. I'll read… Joe: Read them off. Yeah, you were just going to do it. Yeah, read them off real quick one more time. Dan: Opportunity, challenge, impact, solution, benefits. So they really need to understand each one of those points and then we're going to break down exactly how we do that. Joe: Okay. So look, I haven't been to China before and I want to ask you about that a little bit, but I know that there are benefits for the manufacturer because you're going to be placing more orders. What's their recourse if you don't pay on those notes or is the risk so low because you've been there, you've met with them, didn't rush on building a relationship. Dan: So you're not going to get this sort of payment terms on your first order. We have, however, had a number of success stories on their first order, even just slight movements like 20/80 on the payment terms or a slight reduction in COGS because we're guaranteeing more orders. We are getting some traction on first orders. This is more for sellers who are probably more your audience, Joe, who are sort of gearing towards exit. I've got an established relationship inaudible[00:22:54.8] the second to third order is kind of the sweet spot that you can start bringing this up. And if you bring it on early in the relationship, every time you place a bigger order, you can revisit these terms, you can revisit the relationship. So for the factory, yes, of course, there is risk involved, but they're weighing up the relationship with you and there are other insurances and stuff that you can bring up without getting too technical. You kept their eyes on ways of ensuring the order and stuff which can give a lot more confidence to the supplier but we don't do that most of the time. It's just purely based on the relationship and your order history. Joe: Okay, so any more steps after the 5 that you talked about there? Dan: Yeah there is. So that's the story we've got to present but when it comes to actually presenting that you've got to back that story with data. So they have to believe you and they need to see the numbers for themselves to tick that logical box. You've ticked the emotional box, you've got the relationship. They believed your story. Now you've got to present the data to back your story. So the six-step process to presenting the win-win, one is the growth potential, two is a product by product sales forecast. So that forecast to we produced in the beginning, we're just going to take the sales aspects of it and present that in a nice presentation. We're going to then present the order values to meet that demand and we're going to show them the before and after. We don't get into showing them the internal cash flow or the profit or anything like that. We just show them on the current payment terms this is what we can afford to order, on the new payment terms this is what we can afford to order. And what they're going to say is an order of say, 5,000, 10,000 units but with the new payment terms, I might be able to order 20,000, 25,000 units. So they're going to see a drastic change in the volume of units that you're able to order if they just work with you on the payment terms. Now, once we've done that, there's two other points. We always present what out of stock means. So most factories and suppliers don't really understand what it means when you're out stuck financially from a sales perspective. Sure they're being hammered; you're sort of getting on email, you're getting on Skype, you're doing you thing saying well I need this order, can you push it? Can you put it to the front of your production line and you're sort of pressuring them. But because you're pressuring them so much they're not really thinking about the impact on sales. So you can show the cost of being out of stock from a point of re-launching, lost sales velocity, lost growth. So maybe you've lost a couple of places in rank which has actually brought your growth percentage down, the momentum of growth. And for them, they're not going to be getting as frequent orders because that volume is down, meaning you're not placing as bigger orders. So you can still present the loss to them as well, which is a nice sort of stick to underpin the whole thing. And then finally you go right to solve this problem; this challenge, to order more from you and to recover was it, defend against that potential loss of being out of stock. These are the payment terms I need. And you just present the data to back the story. And it's quite easy, there's a whole template towards it in terms of how we do that. You can use screenshots out of your Amazon seller central accounts to back the data; you can use Keeper screenshots within the presentation as well as just sort of showing screenshots of that spreadsheet you really want to be showing the analytical graphs to back that data because it really gives that visual representation. Joe: I'm sorry so let's just put in the; so for every 10 people that go through this process and try to renegotiate terms to go through the full process, they do it right. They do the projections. They do everything that you've talked about so far, which I think is eleven steps after they're doing the sales forecast, do 9 out of 10 of them get better terms or 10 out of 10 or 2 out of 10; what are the odds? Just put it into a realistic perspective for the audience. Dan: So if you are already working with the supplier, you're already in communication. You're not just… Joe: Yeah, let's assume that somebody has been placing two, three, four, five orders. A lot of people if they hadn't done this, they'd been placing the order for two or three years. Dan: Yeah, so that person I would be as confident to say that eight in 10 people. I am yet to come across a relationship of that stature that's established with good communication where you won't end up better off. Now, you might not get the terms that you want straight out the gate, but I guarantee if they value your business, which they should do by that point you've got a relationship, you will end up off in a better place. So 90 to 100% of people will end up better off. 80% of people will execute to a point where it impacts customer for sure. Joe: And this includes a trip to China because you're presenting it in person? Dan: Yeah, this is like optimum. You've gone to China. Think about how many requests these factories and suppliers get from brands in the west as they say it asking. And then think about the percentage of people that actually get on a flight, fly to China, sit in the office, drink sake and do all that good stuff. That is going to be like 98 and 2%. So who are they going to prioritize? They're going to prioritize those showing real commitment. Business is about commitment. Business is about doing what you said you would do. And I think that's all this is. It's as simple as that. Joe: Yeah, the 80% of people that have established brands can certainly get better terms with these vendors. Are you seeing; obviously they're ordering more and with higher volume orders comes lower cost of goods sold. How do you negotiate a lower cost of goods sold? Is it strictly volume based or do you make that part of this overall presentation that you're looking for terms and lower COGS at certain levels? Dan: Yes. So what we do is we hold that conversation. So in any negotiation, you need the person you're negotiating with to say yes a few times. You need to get them to agree and we need to chip away at the yeses. So what we do is we hold that COGS conversation right until the end. So once we've gone through showing the growth potential, the product by product sales forecasts, showing the order values to meet the demand before and after if they give us these terms, the impacts of being out of stock, and then say this is the payment terms we want and always start higher, by the way. Always start higher than you actually need because there will always be a piece of negotiation. They will turn around and say, yes, hopefully. That's the goal. That's our amount in agreement. It might not be what you want, but they might say, well, on this one, we'll give you this and if you meet the demand, then on the next one we'll give you this. We might be a bit of an up curve. We then turn around and just say so now I'm placing a bigger order, I get a better price, right? And you'll find about half the time they'll smile and laugh at you and say, yes, the other half the time they'll say, let's talk about that in the next order. But yeah, you have to put a bit tongue-in-cheek in whether you have to build the relationship, play on the relationship. Joe: Is this done over dinner or is it done over a desk; how do you see it most often done? Dan: Typically, it would be done; in most cases, it's going to be over some sort of food environment, some suppliers and factories would like to get the business done and then go for dinner. Most likes to get the relationship piece in first. They want to sort of learn about you, your family. They want to give you some food, take you to lunch. And then during that process, we'll then bring it down to the conversation. Now, it's important to say it won't always happen there and then in the room. A lot of the time you'll present this, you'll throw in that thing at the end that says, so now I'm placing a bigger order do I get a better price and be a bit cheeky with it. And a lot of the time they're going to turn around and say well, look, we need to run our raw material costs. We need to look our production workflow. We need to speak to our internal production manager. We'll get back to you within a few days. So depending on how long you're in China, it could be back when you were in America or back in Europe. You'll jump on Skype and they'll go, okay, cool we've run the numbers. It makes sense. Yes, we can do that. So it kind of happens like a bit of a fluid conversation during the social aspects. Sometimes you'll sit in an office and just get it done. But most of the time it would be over some sort of lunch or something like that. Joe: I got you. Okay, any other steps that you want to review? Dan: No, we're good. So really just remember, it's a win-win. Do your internal prep; what they say is the success is in the preparation, success in the planning. Do your planning, and then make sure you're presenting it in a way that presents it as a win to them. And yes, you can achieve this virtually over the internet, but you're going to have 100% better results. And if it's okay, Joe, I've got some examples here, actually. Joe: Yeah. Dan: So Case Study 1, 30% deposit, 70% before shipping, after 0% deposit, 100% percent 60 days after shipping. Joe: That's a beautiful outcome. I can't imagine anybody would be upset about that. Dan: No, it's cool. That was actually inaudible[00:31:13.0] and my business partner and Sarah, who's head of Titan Sourcing that negotiated that one. The next one was 30% deposit, 70% before shipping after we got a 30% deposit because the raw material costs were quite high on this product, which you have to still work with them on, and then it was 20% percent before shipping. So we pay sort of 50% and then we got 50% percent 30 days after arrival at Amazon FBA, which meant we had 30 days of sales before having to pay the remaining 50%. Case Study 30% deposit, 70% on the approved inspection report. That was a bit of a quality assurance thing there. After we got a 20% deposit, 35% 60 days after shipping, 45% 90 days after shipping so that was a nice one. And then finally, the fourth one and I've got some bonus tips at the end if you want them, Joe, 20% deposit, 80% before shipping. That was the terms we had so it was a bit nicer on the frontend. After we got a 10% deposit, 40% on landing in the USA, and 50% 60 days after landing. Joe: Wow. Dan: And these are typical; I can stand there and say now these are just four cases that we've done we've got a whole Titan network full of members that are doing the same. Joe: Yeah. No, I want to hear about the bonus tips. Also want to hear briefly about China Magic and maybe we can have Athena on to talk about it. Just let me ask; go ahead into the bonus tips and then then I want to talk briefly about China Magic. Dan: Yeah, sure. Because there's loads of benefits above and beyond obviously COGS and terms. Joe: Yeah. Dan: Okay, so tips to success face to face always will produce a better result. They often pay for the trip and that's what you got. Think if you're looking at a cost offset, you'll often get to pay for the trip in the renegotiation. Always ask for more than you need; really important. You probably won't shake hands there and then as I said. Make sure if you come to see the boss, you don't want to be waiting on a middle person or a middle man so they then you have to go and sort of do the translation. You want to be in front doing the deal with the boss. Before you go into that environment, before you even head out to China, if you've got a representative from that factory or you've got a sourcing agent that handles that relationship for you, then get them onside. So run through the presentation with them first so that when they're in the room, they've already done the thinking, they're already standing there, and they can get the buy-in of the boss in the room. Consider consolidating your orders to one supplier. It gives you more buying power. And one thing we're a big fan of in Titan and in China Magic is leveraging an outside adviser. Because then you can play the whole good cop bad cop. If you want to maintain a good relationship you can bring in someone that's like an external advisor to crack the weight a little bit and you can call them your finance person. You can call them whatever you want to. That allows you to do that. And remember, every relationship and supplier cash flow is different so you have to really; don't just tell them what you want, understand what they need, and bring the two together. And this is counter-intuitive but it's often being willing to pay more to achieve the terms especially in the beginning. So one thing you can do is if they're not budging, you can afford to give them a dollar bum pull over here now on a product to get them to nudge on the payment terms which is still going to give you more cash on hand and then come back to renegotiating the COGS once you're up at the higher volume because you've been off to some of the growth. Joe: I like it. Dan: And also take gifts as well; take presents. It works. It depends; there are controversial views on this. So Kian Golzari for instance who is a sort of an expert on China Magic everything; he's doing sourcing and product development. Kian loves; he's from Scotland, he's from Edinburgh, he loves taking some Scotch whiskey with him. Other people take chocolate. There's the whole red envelope with some cash in it for the children but that one's a bit more controversial. But yeah, just my advice would be take something that's important; not important but personal to you, and then that creates a talking point and it creates more of a relationship and a bond. Joe: Okay, that sounds great. I think one of the most important things I see people that are running great businesses and eventually sell them, they're great businesses, do great for buyers. They really have been to China and they always wind up with either better terms or better COGS. It sounds like a scary place to me, though. I've never been so is China a scary place? Dan: It really isn't. So when I first got involved in the early days with China Magic I went out there as a guest speaker and then ended up becoming a co-organizer with Athena. I thought the same but when you land; if you think like Guangzhou where the Canton Fair is. That's where we go. It's the biggest product sourcing Fair in the world. I think they start setting up 5 million products on display during the Canton Fair. They're used to receiving hundreds of thousands, if not millions of westerners through that fair over the course of 12 months. The airlines are efficient. The flights are cheap. I mean from the US, the flights are $500 on a good day it's $400. Joe: Wow. Dan: Yes. I mean, it's really cheap. That's for obviously economy. I got a first-class ticket; I mean first-class pod for two grand. Joe: Wow. Dan: So yeah I mean it's cheap. We head out there and we're picked up by a nice comfortable bus and we stay in the Four Seasons Hotel which was rated Forbes Best Business Hotel in the world 2019; the one where we go. So they look after us. We've got five staff service and food, good internet. We then head over to the fair. This isn't a market; there are other markets like Ebru and stuff which are a bit more like rack markets, Canton Fair is a professional establishment. All of the suppliers there are paying serious money to have a booth at this fair. So if they don't speak English themselves, they'll employ English speaking representatives. So you can have a really good conversation there. Sometimes you have to work with a bit of culture and there are definitely cultural barriers that you have to learn, like receiving a business card with two hands and showing that respect. It goes much further and Ken covers all this in China Magic. We go into depth like we spend some of that four hours just going into how to have a conversation with a supplier so that they know you are educated. But yeah I mean, to cut a long story short, it really isn't. Like I walk around in my shorts and my t-shirt, I go down and they've got little smoothie bars now I'm on the streets by the hotel. It's quite a pleasant place. Joe: Fantastic. How do people learn more about Titan Network and then China Magic and again I think we ought to probably have somebody on for China Magic and what that event is all about because it's; I don't know, it's the next step. I don't know if I would want to go on my own and I assume that you would not recommend that. You go with a group that does this on a regular basis. So tell us about how more people learn about Titan Network and in particular this cash flow management renegotiation, all of the different steps that you've talked about. Dan: Yeah, sure. So if you want to know more about Titan Network, we're an invite-only membership organization for Amazon sellers. We're going from strength to strength. And the thing about Titan Network is it's created by sellers for sellers. So it's not about any one person's success. It's not like a guru led thing. You can learn it at TitanNetwork.com. That's where you go and learn about Titan Network. And if you feel like you want to find your tribe and your family, then take a look there and you can apply for Titan Network. If you want to learn more about China Magic go to ChinaMagicTrip.com. It's got the full trip details on it. I'm going to give you access to a little special link. If you go to ChinaMagicTrip.com/masterclass we go into a bit more depth on these payment terms upon negotiation stuff. And it's got off-screen shares. You can actually see some of the slides. And that's all out there free of charge so you can go and take a look at that. Yeah, I'd love to do a follow up about China Magic. I'll bring Kian on, I'll bring Athena on and go into the depths of like not just payment terms and cash flow, but how do you build these relationships and how do you find these factories that you're not going to find in Ali Baba, how do you improve the quality, how do you differentiate products in 2020; yeah, we could talk about a lot. Joe: Well, I think it's a great service to the people that are Amazon sellers or even just not Amazon sellers, other people that sell-off of Amazon need better terms as well. Dan: Yeah. We're seeing Shopify sellers. We're seeing a lot of these influencers on Instagram that are realizing they've got an audience. If they apply a physical product to that audience, they're going to make money. We're seeing all these guys come along now because it doesn't matter whether you're selling on Amazon or Shopify, physical products are physical products. And to your point about going alone, there are seasoned travelers out there that will have no issue in visiting China themselves. But for me, it's about return on my time, a return on investment on my time so if I can go with 75 like-minded sellers at a similar point the journey led by multiple seven and eight-figure sellers, get shown 30 years' worth of sourcing experience across Marcy, Kian, myself and the team in a couple of days; so condense that learning period, get the COGS on payment terms on it and every single evening mastermind for four hours a night on every single area of the business, that to me is a bigger return on my time than just going over to China myself. So that's kind of my view on it. Joe: Yeah, if I was in the e-commerce world myself, I'd be in. I'd want to bring my son though so he enjoys the world travel. Maybe in another life, I'm out of the e-commerce business myself. I'm an entrepreneur at Quiet Light Brokerage only. So listen Dan, I appreciate all the time you spent here. I think its great advice and I know from experience that people that exit their business for the maximum value end up doing a lot of the things you've talked about so thank you. I appreciate it. Dan: Yeah, no there's just a final closing point now. We should tie this back to valuation. So you'd go how does this make my business worth more? Well, I think I'll just spin-off three raises in my head to maybe cut this in. One is it's going to make you more attractive as you've got solid foundation relationships with your supply chain and you're not relying on Alibaba or some sourcing agent. Buyers want to know you've got the full foundation. Two if you've got more margin, you've got more profit, more profit, bigger valuation. And three, if you've got better cash flow and more cash flow on hand, you can compound that freight faster which means you achieve your valuation faster. So that's how they tie it back to valuation. Joe: And again, I say it and I'll stop saying because Mark keeps correcting me there's no fifth pillar. All of the things that you're talking about make you a better business person; somebody that others will trust because you're instilling confidence in them that will bring you better value as well. People if they trust you they're willing to pay more for your business. So Dan, great stuff, thanks so much for coming on the podcast. Dan: I appreciate it, Joe. Thanks for the time. Resources: Titan Network China Magic Masterclass China Magic Trip Quiet Light Podcast@quietlightbrokerage.com

Today, we talk with Jason Yelowitz and his client, David Wolf. David could best be described as a "serial entrepreneur". We discuss the sale of David's business and Jason's role therein. Tune in to hear our discussion about David's successful sale, knowing when it's the right time to sell, and business in the time of the CoronaVirus. Episode Highlights The efficiency of the marketplace. Why cash is king. Incentives for having payroll employees. Why Dave decided to sell. Knowing when it's right to sell. Is selling at a loss the wrong move? If the pandemic has slowed down or changed deals. Is this a good market for first time buyers? How to keep your business stocked and afloat during the pandemic. Transcription Mark: All right this week we don't have Joe with us. We have Jason Yellowitz with us because Jason had one of his previous clients, Dave Wolf, on the podcast to talk about the sale of his business and some of the lessons and looking back on how that sale went. I always find these conversations interesting because after you sell a business, you have the chance to finally be somewhat introspective into what that process was like and maybe what you would do differently. Jason, I know you have Dave Wolf on who you work with for quite a while. You guys had I think two different LOIs that you had to work through in order to get to a closing. How did that conversation go? Jason: Yeah, it was really interesting to catch up with Dave. We got his business sold. I want to say it was around August of 2019, so it's been a while. He feels happy that it was sold. It was a very; at least to me it looked like a very good business. It had a general manager in place that was running the day to day. In his case, it really wasn't taking up his time but there's always that bit of mental focus that you can't let go of. And Dave has his fingers in so many different businesses that I think for him he needed to let up on the mental focus and then I think also he reallocated some of the capital. He really ends up buying a fair number of distressed kind of assets and for that kind of thing, you need cash in your pocket typically. Mark: Yeah, I know. Absolutely. I know you guys went through two different offers on this and I'm sure you'll get into that a little bit on the podcast. Did you guys discuss what happened with that first one that didn't go through? Jason: I don't know if you got that into it on the podcast, but it is an interesting sort of lesson for potential sellers. When we had first listed the business, we got multiple offers. And like most people, the seller gravitated towards the one that had the highest headline price. The challenge that sellers should remember is the market is pretty efficient. A lot of times if someone is bidding more than others, the reason they're doing it is because they're already aware that they are less likely to get the financing necessary to close the deal, and therefore they're willing to bid it up a little bit. Whereas someone that comes in in the middle of the pack might have a much higher chance of closing, but they know it and they're not going to pay up as much. So what it comes down to I think is don't get wooed simply by the headline number. You have to think of it holistically if you're a seller of what's most important to me; hitting a certain dollar amount or walking away versus a higher likelihood of closing. And there's not a right or wrong answer but the lesson is, don't deceive yourself into thinking you can have it all. There's usually some sort of tradeoff. Mark: Absolutely. Now the market is strikingly honest. It's always very, very honest, very direct, and you can't really fool it so I think that's a good lesson. Well, let's get into the episode and I can't wait to listen to this one. Jason: Hey everybody, this is Jason Yellowitz from Quiet Light Brokerage and for today's Quiet Light podcast, our special guest is David Wolfe. David is a serial entrepreneur. He's got his hands in all sorts of businesses. And it was probably about six months ago that I represented him in the sale of an online e-commerce business he had. Dave, welcome, how are you doing? Dave: Hey Jason, how are you doing? I'm pretty good. Jason: Good. So are you sitting there in some tropical location, I can see palm trees blowing in the background. Dave: I wish. I wish I was. Unfortunately, it's just a cool background trick for Zoom video because I'm sitting at my house quarantined like everybody else. Jason: Yeah, well, you mentioned quarantine. Obviously, we are in the heart of the COVID-19 coronavirus situation so if you don't mind, maybe you can just tell viewers just quickly what are the businesses that you're running and what impacts positive, negative, neutral have you seen from the coronavirus? Dave: Well there's definitely a lopsided negative for this; for what we're dealing with right now. I'm in several different industries. So we are in some direct to consumer automotive space online. I have recently, after the purchase that you represented for, I got into some brick and mortar stuff doing fencing installation and some manufacturing of fencing products; vinyl privacy fence. And then we're also in real estate lending and a few other places. And it's pretty drastic across all industries. From what I can tell the online businesses are faring just immensely better than just about anything else. So some of the brick and mortars, we're dealing with a; when I get off this call, I've got to deal with one of my managers needs to self-quarantine. So he's showing symptoms. He's not in a terrible situation. But now we're looking at we're already planning on going down to a minimal staff while this was blowing over. And so now we've got to see okay well, now it's zero because we can't have him at the shop at all. So these are just normal things. On the plus side, I think as most people I've talked to; as I'm sure you have a lot of different business owners in a lot of different industries just because of what I do. And because of the people that weren't in a good position, there is, unfortunately, going to be some business fatalities from this. I talked to a bankruptcy attorney the other day that was representing me in purchasing some assets and he was just the ground is already starting to rumble with the volume of business that's going to be occurring from that. And so I think there's going to be a lot of opportunities for people that; everything is going to work itself out but the reality is if you know how to run a business if you have sound principles in operating businesses, there is going to be a lot of opportunities. It's going to totally switch from a seller's market to a buyer's market. It was basically overnight I feel like. I think you would agree when you were working with me we had talked about it. For the most part, it's kind of a seller's market. There's a lot of capital out there. It's easy to get. And now we had; the institutional lenders aren't even lending on in our hard money lending business, which would be considered about us. We've dabbled and had conversations about that space. It's a very secure asset. Even they're holding off on buying more assets. So what that tells me is cash is king, right? So if you have money to buy a business and I would say you have the bandwidth and you can afford to wait, you don't need the cash flow right away, I think there's going to be some unbelievable opportunities in the next few months. Jason: Okay, that's a pretty interesting perspective. From our end what we've seen is the economic; obviously, there's the human and health toll. And I feel sorry; I've got a lot of empathy for your manager who is showing symptoms. On our end what we're seeing is the economic impact is really hitting different businesses differently. Some of them are way down. Others are way up. We've got a number of online businesses where their sales literally doubled versus the previous year in the past 12 months. What's not clear is whether it's a temporary blip or if there is long term enduring changes in customer behavior. For instance, I've got a client who sells a security device on the internet. His sales have doubled and his theory is more people are staying home and they want to feel safe at home. And without a crystal ball, that sounds as plausible to me as anything. So let me ask you this question. You mentioned that you believe there's going to be some golden opportunities for buyers, especially cash buyers. I think as of about an hour ago, I read a lot of headlines that Congress and the president were very close to passing a historic stimulus bill. And my understanding is that's inaudible[00:09:56.6] to fund a lot of money to the Small Business Administration. Do you think that that money will get to people that want to buy businesses or is it mostly going to be used to shore up existing businesses or do you have no opinion? Dave: Well, one of the things I think is going to happen. I think that you're going to see and I guess you can't quote me on this, but you're recording this so I guess you're going to. So normally and you think; I don't know if you've had this conversation, but typically the kind of par for the course for purchases of at least smaller businesses is an asset purchase agreement where you wipe out and start again. Well, there might be some people willing to take on some of the risks of a previous business if it means that by having the established business in place all of a sudden it makes it tremendously easier to be able to get capital from some of the pipelines that's going to be coming through. I mean, I think they're probably just going to be throwing; it's either they're going to be difficult to get because it gets bogged down in bureaucracy and that's going to be a disaster for the country or it's going to be they're just writing checks and throwing money at people that have a business and primarily a business with payroll employees. I guess that's one of the things that we've kind of; a lot of company shy away from that and try to stay lean and online. But there's going to be a lot more incentives for having a payroll more than likely. Jason: Yeah, that's what it sounds like. It sounds like most of the incidents are tied to maintaining a payroll. So maybe we can; let's go back in time six months, you had sold a business, what month did we close; was it October? Dave: August is when we closed; very end of August I think. Jason: What was going through your mind at the time? Why did you choose to sell and are you happy that you made the decision that you did? Dave: Yeah, well, so I definitely am very happy that I made the decision I did. I wish I would have just had all the money sitting at a bank account. But like an entrepreneur, we put a lot of it back to work afterwards. But, yeah I'm very happy that we sold. We would just kind of look at it as I wasn't focused 100% on that business and I knew that there was some opportunity in it but I needed somebody that looked at it the way that I did when I bought it five years before that could take it to how do I 3x this business and it was. It was a solid business. And I knew it was because you have had several side conversations with me where I was like do I really want to let this go? And in talking with them that business is one that's kind of about where it was, they haven't really been too badly negatively affected by the issues that we're dealing with right now even after a slowdown, which is good for them. But it allowed me to free up my time and focus on new things and kind of you had said like I was able to find plenty of things to focus on to grow. And I was reinvigorated by having that newness to it again where I was kind of tired. It wasn't that there's anything necessarily fundamentally wrong with that business it's just that I was seeing opportunities or make investments to grow it and it just didn't excite me. I wasn't doing it. I wasn't pushing like I was. And so a new owner came in and he has that same; it's new to him so he's making changes and making moves and improving the business and I think they're doing a good job. And I'm taking that renewed energy and I'm putting it toward something totally new and so I think that's a real win. So I'm definitely happy. I have no remorse for selling the business whatsoever. Jason: That's a really interesting point that you bring up, because at this point I've been brokering for 10 years and what I've acknowledged is a lot of times when I meet a seller, their first instinct is how do I get the absolute most money out of the business? And the obvious answer is grow it to its utmost potential and then that'll translate into cash flows and you'll get a multiple on those increased cash flows. The reality I find is usually when people want to sell it's not specifically for the cashout. The cash out most people consider that's the fair market value of what their business is worth today. So the decision comes down a lot more to personal things. Most of my sellers, there's a personal reason; marriage, divorce, buying a house, I have to move, I have to support my in-laws, anything like that. And then on the business front, it usually boils down to some version of what you just said, which is I know how to grow this business I just find that I knew how to grow it six months ago and I didn't. Clearly, I'm lacking the motivation and the sort of excitement that comes from new business ownership so maybe I'll hand it off to someone else who's got that level of motivation and excitement. So the way I think of it is each party takes the business to whatever is the highest level while counterbalancing all the other things going on in their life and how much attention they can put to one versus the other. What would you recommend to someone who wants to sell their business now? We are probably at a peak uncertainty. We don't know if the coronavirus is going to infect millions or hundreds of thousands in the US. We don't know if it's going to make another round around the globe. I mean, the truth is, we just don't know. What we do know with some confidence is the central bank and the US government is putting a lot of firepower into trying to keep the economy going. But we don't know what the facts are so what advice would you have for someone who they had their plan, they were going to sell this year in 2020; maybe in June, maybe in October, and then boom, coronavirus. Dave: Well, I mean first it has to be a scenario where you have a willing and able buyer. So if you don't have a buyer already then it's a totally different story. And it really depends on what your consequences are of not selling I would say. I mean I have a lot of assets that I have for sale in the market right now that aren't business-related. And this could totally be; I mean I don't know when you're going to publish this podcast; a week from now this might be irrelevant. But in this very particular instance while we are quarantined in the house and just I'll give you the; I'll let down my guard here so that you guys, you know, it's a this is just for inaudible[00:16:36.4] the house. Jason: They're not quite as nice as the beach. Dave: Yeah, right. I'll go back to the beach. I think that it's obviously not the best time to be in a transition flow for the assets. Now, that doesn't mean that it's a bad time to sell. It depends on what does not selling mean. I mean in some cases, even selling; I mean I'm going to go to the extreme, even if you had to sell at a 50% discount to what your business would be worth a month from now, if not selling is going to cause you even more financial damage because of the foreclosure on a large property or something like that, it may still be worthwhile. It's kind of the lesser of two evils to sell your business. Jason: You know what's interesting to me about your statement was you said a week from now this might all be irrelevant. It was about a week ago we had an all-hands meeting at Quiet Light to say what are we seeing in the market and I was taking the same point of view that you're taking today, which is the values are going to come down. It's going to be all distressed sales. Strangely, in the last week and a half, we have gotten reports of a number; I think we've closed four deals in the last week. None of them were significantly different to my understanding from what the letters of intent said. And as I mentioned in the beginning, we've seen some businesses that have really; their financials have really gone down. And for those sellers, I would say if that's where it is you need to decide for yourself are sales coming back or are they permanently down? If they're permanently down you need to get very real very quick with what the market will bear. If you think they're going to be back, your best bet is to wait until that happens. But then the other side of the coin which Dave this is really surprising, some of the businesses are going off the hook up and those are the ones where I think the sales are closing and the buyers at least it seems; I've gotten this mostly second hand, it seems to me the buyers are feeling that their golden opportunity is that with behavioral changes worldwide more is shifting possibly to online, possibly to certain sectors and they want to get in on that now so that they want to close. So it feels like the market is changing but not necessarily in the static way that many of us would have predicted. Dave: Yeah, I mean a good example is I think that this is going to accelerate the move from traditional brick and mortar businesses to online. People that have never done insta-corridor like Amazon Prime delivery and stuff like that are now ordering their groceries and they're using Zoom video to chat. I mean this accelerated technology, the adaptation or adoption two, three years easy. I mean the stuff that we're seeing, people that have never used that technology are figuring out how to do those kinds of things. They're ordering food, they're doing; so day to day habits that typically don't change that fast have completely changed. I just bought a set of gymnastic rings to work out at home because I usually go to the gym. I like to go to the gym but I can't go to the gym so I was like, all right, well, I'm going to buy something and my routine just totally changed. I might continue with that. I actually really liked that so I'm looking at doing some other upgrades that go along with that. Maybe like putting some bars up in my back yard and doing a couple of other things. So that's happening across the board and I think I'm starting to see some adaptation from businesses as well changing and pivoting. But I think that's pretty simple as if it's just I guess as a buyer or a seller you really have to categorize yourself in are you a person that buys off of past success or are you comfortable being a little more speculative and focusing on future potential speculation like you said in a sense that I had a letter of intent on a project and I saw the sales skyrocket and because of this I'm more than happy to close. It's obvious that the effect of this has already impacted that business in how it's more than likely going to in the short term so you're not really too concerned about that. And then again the same thing I would be very worried if I was in LOI and the business fell off a cliff in the short term or had to shut down entirely and you have to start with a terrible cash flow. And then how is that going to affect the annual cash flows on the back end of that? I think there's ways around that. I personally; I mean like you said, most of these LOIs fast purchase is 30 to 45 days. I don't necessarily think it's a bad time to be shopping for businesses if you don't have to spend all your time focusing on making sure that yours isn't on fire because if you go into LOI you have plenty of time to do the due diligence on before you have to close to make sure that you do, in fact, want to go through with it. Jason: Do you think this is a market for first-time buyers? Let me give you an example. Let's say we've got somebody in their mid-30s who has worked in corporate America for the last 12 years, risen up the ranks to middle management, is not excited about their day job but as of today, they still have it and they want the excitement of being an entrepreneur but they've never thought or run their own business. They've been part of a much bigger organization. Is this the time for them or do you think it's only the time for more experienced buyers with the larger risk appetite, a larger balance sheet, and a better ability to forecast or better confidence in their ability to forecast? Dave: I actually think it's a great time for a first-time buyer to come into the marketplace. I mean in contrary with the right outlook you have to be able to have a long term outlook and you have to have enough cash to be able to weather an uncertain future for at least a few months, if not a little bit more. Because the reality is that if you can get a good value like I think there's going to be opportunities for lower valuations out there which allows somebody to get into a business that couldn't otherwise get into. I mean people say like, oh, well, it's a bad time to buy a business because this stuff is happening but you could get the same business that potentially four months ago would have cost you 1.5 million. If they have cash flow issues and they have a bunch of other stuff, there might be one out there that is 750. It's really the same business. Maybe it needs $60,000 in cash infusion to survive what's going on or $50,000 in additional cash to survive what's going on for the current process but I think for most businesses, this is a temporary liquidity issue and not necessarily a fundamental the business is just completely destroyed. Jason: So going to your example, I mean, you just gave an example of a business where because of what's happening hopefully temporarily; obviously, none of us has a crystal ball. In your example, the business value dropped in half. It kind of seems to me that if you're going to buy in that environment, you have to kind of know yourself. How did I react in 2008 when I saw my 401k drop in half temporarily that kind of thing? It feels like it's more of a risk tolerance question as opposed to a more simple decision. You have to know yourself, how you react, how you're going to sleep at night. Would you agree with that? Dave: Oh yeah, definitely and that's there's so many caveats. I mean, you'd have to pick a much more specific type of business and I would imagine if I've never been an entrepreneur and I've had a regular middle management or upper management job and I'm just going into entrepreneurship this would be; it's going to take some cohunes to pull the trigger on something right now in this environment just because of how many unknowns we're going into as to if it is in quick recovery, what's the long term economic impacts from a potential but hopefully not recession and some of the other things or we could come out booming. I mean, there's going to be a lot of pent up demand for every service after this is done. Jason: I was thinking there's going to be a line around the block at your barbershop. Dave: That's funny, I actually did; I did okay do I get myself a haircut. Yes. Jason: No, it's nice. Dave: I'm going to show you the back. That's a little; but yeah, I actually talked to a salon owner today that I used to do marketing for and I was telling her; she was like what do I do? She's got a good business but I pay everybody and lose 25,000 and then pay my rent when we're closed. And so she's in a much better position. She's got plenty of money laying around and she had no debt. And we had a conversation and I said look, if I was you, you've got these lines of credit that aren't used, the bank may close those down soon because I have talked to several banks; smaller banks that are concerned about not necessarily lending on new businesses, but really more they're concerned about liquidity without this stuff coming down from the federal government where they can't do; I have a loan for a new primary residence I'm doing and the guy was on it's a portfolio loan, which if you guys don't know what that is, it means that the bank is going to hold the note versus handing it off to Fannie or Freddie Mac because my taxes are very difficult to do because I have seven or eight businesses and all these different things. And they said they're not doing any portfolio loans because they have 60 million dollars in commercial credit lines that have not been pulled down yet that if those were pulled, they have to have enough cash to be able to provide that liquidity to those commercial lines and so that's affecting them. Jason: That's pretty interesting. I was looking at online savings accounts yesterday and I was expecting that the interest that they pay savers would have dropped down to a couple of basis points. In fact, it was still up in the 1 ½ to 1.7 range. Dave: That's the reason why. The reason why is because they need depositors because they were concerned about whatever happens. A lot of commercial credit lines were closed in this type of environment because really the banks aren't afraid of everybody; every customer defaulting. What they're afraid of is every customer maxing out their line at once and taking all the liquidity from the bank. So that's one of those issues and so I personally had some large, large lines that I just pulled out all and put it in a checking account. And I'm happy to pay the interest on the short term so that I have access to capital, particularly because I do plan on; even though I'm pretty busy I do plan on being a buyer of business assets here in the next couple of months. I don't know what they're going to be. I just know that if you do have cash, if you were fortunate enough to have money sitting on the sidelines due to just serendipity or it just being the right time and place, there's just going to be some unbelievable opportunities. And I mean you can see them everywhere. I told my friend that was a salon manager; I said, look there's going to be a lot of salons that are closing down or people that just need cash and they pay their day to day bills with that money. Call them and see if you can buy all their color product that they have sitting in their salon that's not being used for like 10 cents on the dollar. Jason: That's a pretty interesting idea. One thing I've heard with those small local service businesses that have been put into a shock so hard is to reach out to their regular customers and ask if you'd be willing to prepay for the next haircut or the next meal. I think there's a lot of community spirit of none of us wants to see the small businesses in our town collapse so many of us who have the means are willing to prepay just as a sign of good faith. So as always, anytime I talk to you it's a fascinating conversation, as kind of that final piece I would love it if you could give a synopsis right now; let's see today is March 25th, so with the caveat that at today's speed of news cycle. Dave: 1:35 PM. Jason: Yeah, anything can change. So at 1:35 PM Eastern on March 25th, 2020 in the middle of the coronavirus I would love to get just your little quick snippet advice for buyers, advice for sellers, and final thoughts. Dave: Okay, so let's start with the advice. I would say, advice for buyers go ahead and go out and look; I would say go out and look as if nothing has happened. Remember that when you're putting LOIs out, you're doing your underwriting afterwards. So if you're looking at a business, you say I like this business in normal times let me go ahead and look at this and place the offer with a condition of you can stipulate obviously always you understand, hey, I'm kind of concerned about what's currently going on, but let's go ahead and get this going. So remember that doing an LOI doesn't mean that you can't do your due diligence and confirm the underlying fundamentals because this month's cash flow is probably more than likely either going to be significantly better or significantly worse than it was last March or last April. And I suggest you just got to have to understand that. It doesn't mean you got to close right away. As far as sellers are concerned that would be my number one piece of advice is to keep moving forward up to the point where you do have to make the commitments. You can still try to get the SBA financing, get all your ducks in a row, and then once you have everything in place, you can decide to make the final decision based on where things are at that time. Because by the time; like you said in 30 or 45 days we could be in a drastically different economy. But you might have started a deal when nobody else was bold enough to put out the LOI. You might have an exceptional value on a business that's right back to being extremely healthy. And as far as sellers are concerned, it's really just assessing. Maybe it's possible if you have to sell, you really need to determine what your best alternative to a non-agreement is. Are you willing to go back and run this business for a year inaudible[00:31:29.8] or mentally are you done? You don't necessarily have to tell the buyer that. But if mentally you're done and you have an offer that comes to the table that's lower than what you're expecting, you're really going to have to grapple with the decision of are you going to stick this out and do the work to make sure that this business is healthy again so that you can get your higher valuation or is it time to just accept a lower offer and realize that they're not gouging you? That it's just most of the buyers are buying off of the cash flows of that business and significant disruption in cash flow is a very reasonable thing to reduce the purchase price of a business. I mean, I saw that when I sold mine. I won't get in the numbers, but I had a higher number and then we had a small hiccup because we lost one contract and still very healthy business but it had a material impact on what our future cash flows for expected without having to make changes. And I totally understand that. In principle, we agreed to a multiple which just unfortunately for me it's a lower purchase price when you use the same multiple if you lose $5,000 in monthly cash flow. And so it happens but again, on the other side of that, being somebody that had a higher offer that then wasn't able to for whatever reason didn't go through; there's no fault of my own and then going to another offer that was lowered because of something had happened. I think we were dealing with the China tariffs and all that stuff during that time which looks like a child's play now with what we're dealing with. I resulted; I ultimately made the decision to still sell at a lower purchase price and looking at it now, I don't regret the decision. So if you're just looking for what; instead of me giving you empty advice as a seller all I can do is tell you that of what I did and what I decided to do. And now looking forward, I don't regret making the decision to accept an offer that was lower than what I originally wanted for the business. Jason: Are there any brokers and brokerage that you personally recommend? Dave: Anybody with Jason. Jason: Anybody but me, okay I got it. Dave: I'm very happy; I was very happy with Jason's advice. I think it was spot on and yeah he was just a very level head with a lot of experience on how to get a deal done. And really without railroading you, I think one of the really comforting things is Jason is going to be one of those guys that will tell you, look, if this doesn't feel right, just don't do the deal. You probably won't get to pry out his financing, but I can tell you that he does not need the check from your sale to survive. So he's my; yeah, I don't want to like let the cat out of the bag there but he's not going to push you into a sale specifically to get a commission check and that's something that is very nice to see in a broker. He does this because he likes it and because he's very good at it and likes the transactions of the business. And I was very, very happy with the work that I got done at Quiet Light. I can definitely see; from a DIY-er, I have no problems with the commission brokerage that I paid with Quiet Light at the end of the day. I think it was well earned and I would be happy to do it again Jason inaudible[00:34:48.8]. Jason: Wow, well that's ridic; I have to end it with an endorsement so I think with that I'm going to say thank you so much for your time and your thoughts, you're obviously a very experienced entrepreneur. You've bought, you've sold, you've built, you've experienced setbacks, and here you are with the beautiful fake background of a beach. It's phenomenal. So thank you for your time, everyone. This was Dave Wolf. He owns too many businesses to list. But obviously, he knows what he's stocked up. Thank you, Dave. Resources: Quiet Light Podcast@quietlightbrokerage.com

On this episode of Quiet Light, we discuss Athena Severi's immersive Mastermind group, China Magic, and her work as an entrepreneur. Episode Highlights: Being a "connector of people". The roots of China Magic. Why it's important to trust the wisdom of others. The China Magic schedule. Splitting the China Magic Mastermind into smaller groups. The Canton Fair. The percentage of women at Mastermind events. Transcription: Mark: I think one of the interesting things about the online world and online businesses is that online business owners tend to be more inclined to be a part of mastermind groups and to gather together and share information with each other. And these groups tend to range from small and informal; I know I'm part of a small mastermind group that would get together like once every few months for lunch to really evolve even to a point; Joe, I know you talked to Athena Severi is that right? Joe: Yeah. Mark: She takes people to China for 12 days as part of her mastermind group to educate and teach people and have people get comfortable with working in China, direct with Chinese manufacturers and teach them how to go about doing that. How did that conversation go? Joe: Yeah, well, great. Look, two things here, number one, it's so good to have a female entrepreneur on the podcast. There's just not enough in the e-commerce space and Athena is one of them. She's a terrific entrepreneur that connected with Kevin King, who we know, the Titan Network and her group, China Magic. At one point, she had an Amazon business and went over to China through a group thing and found it to be not very helpful, essentially abrasive and going about negotiating in a sort of Wall Street manner; the way that it really doesn't work. So she brought in some experts. She comes from the event planning world and she created China Magic and takes, I think its 50 people over to China for the Canton Fair for a 12-day event. Every night they have a mastermind group where they're talking about selling on Amazon. They have people go into the fair and walk around with you and help you find products, negotiate and talk with people in a way that builds lasting relationships. They travel to different cities. They do so many things and they brought in some amazing people that are mentors that go on the trip as well. And they also build lifelong relationships with the people that go. To top it off they stay at the Ritz-Carlton at like the 90th floor; it's pretty amazing. Mark: That sounds fun. Joe: And it's not unreasonably priced for a trip to China and all you get. I think she should be charging more. But one of the key things that I hear over and over and over again is that for an entrepreneur who has made the trip, made the effort to go to China and meet with their manufacturer, they come out with a better relationship with their manufacturer, better terms that improve cash flow, that allows them to invest more in more SKUs or more marketing. And what Athena does is she takes all the risk and mystery out of booking that trip to China. Personally, I would never want to do it on my own. She takes it all out. I would definitely go if I was an e-commerce entrepreneur through China Magic; I'll definitely do. Mark: Sounds great. Joe: Let's go through it. Joe: Hey, folks. Joe Valley here from Quiet Light Brokerage and today I have Athena Severi with me. She is the founder of China Magic. But I'm not going to say much more than that. Athena, welcome to the Quiet Light Podcast. Athena: Joe, it's an honor to be here. Thanks so much for having me. Joe: I didn't want to say much more because I want you to tell us who the heck you are. That's what we do here. I don't want to read a script. I want you to tell us what your background is, who you are, and then we'll go from there. Athena: Okay, cool. So I am naturally a connector of people. I build communities. And I've always created very unique event experiences where I connect people with people who are very brilliant, intelligent, and successful in their world. And because of that, I created some pretty interesting and unique experiences, including this will be called China Magic. Joe: Yeah, I think Kevin King introduced us for the very first time and he said, Joe, this lady collects people, which is an interesting thing to say. But then we talked about China Magic and you've talked about it and look, I've not run my own e-commerce site since 2010 when I sold. Now it's conflict, in my opinion, to online because I'm a broker, I'm between, in the middle. Even if I had my own e-commerce site I don't know if I'd want to get on a plane and go to China because it's just so overwhelming. But you kind of run this show and help people get over that overwhelming aspect of it. Can you talk about how China Magic started and what you do for people on the way there? Athena: Yeah. Joe: Because the audience is they're SaaS and they're content owners as well but for the e-commerce owners that think and know; we've talked about it, how to get better deals is to get on a plane and go to China and negotiate with the manufacturer, meet with them, becomes friends with them, become part of the family. But nobody really wants to do that. It's a big undertaking. So you help people with that. So tell us about China Magic a little bit. Athena: Sure. So just to kind of backtrack a little bit, I worked for a consulting firm in corporate America for some time and then I got introduced to the Amazon world. And I actually released a couple of products that went well. I actually quit my six-figure job selling on Amazon. So I would struggle quite a bit because I was actually in; I still am in the yoga accessory world and I dealt with fabrics and colors and sizes and different things that communication with China would always just take a long time. I get a sample sent to me if it was a bit off it would take a couple more weeks before they could actually remake it, send it back to me. And I was struggling with my own growth as a business because of that. And also, I always wanted to kind of design things a bit and not be the same as everybody else. So I think because of that, I was actually at a conference and someone mentioned going to China. And I never even thought of going to China before but I realized that's a big part of being in e-com is the quality of your products, the price point that you can get your products, like your supply chain and the suppliers that you deal with is such a huge factor when it comes to your business. And I noticed that there was a lot of Amazon sellers who were like very successfully and done millions of dollars on Amazon, but they weren't experts at sourcing and they had never been to China themselves. So I was actually quite intrigued by the idea of going on my own. Joe: How did you pull it off for the first time if you've never been, did you go with others or did you go by yourself? Athena: I did actually go with others. So the gentleman who is kind of pitching the idea of China, he really sold me on the fact that in order to really grow my brand, it's good to go directly and to meet suppliers. So I signed up for this trip and spent quite a bit of money. It was a three-day trip and we went to a place called Ebru. And even before we got there, I noticed there was a lot missing. Like no one told us what to pack, how to prepare for visa, how to connect with the fellow members; like there was missing a lot of pizzazz and being that I actually have a background in events and then networking and then taking care of people; I worked with celebrities, I've built huge conferences and events like my whole life; that's my background. Joe: Are you counting Kevin King as a celebrity right now? That's obviously… Athena: No. Joe: No? Okay, just checking. Athena: He's his own world but yeah, yeah, yeah. Joe: Okay. Athena: No, I mean like I worked with artists at a place that's called celebrities in revert for years so, like, I know how to red carpet people, how to take care of people, I know the power of connection and community so I was really expecting more of that. I was expecting to be mentored. And what I found when I got there is that they had a different point of view on how to deal with China. The person who was leading was talking about how you present yourself, this is big business and you really talk down the price and you go in there very hardcore, very aggressively, very western and… Joe: The opposite of everything I've ever heard. Athena: Exactly. So I was sitting there and I was not an expert in China whatsoever but I do know human beings and I thought this is very strange. So I actually wanted to do a test and one of the mentors that were on the trip was supposed to go to and source a few products using that method, going in and being the big dog and talking big things and I was like, you know, I'm going to go the other direction, I'm going to go very human being. So I went in, oh, my gosh, is that your daughter? Oh, how lovely. How are you today? Like actually building rapport and then talking about products, talking about the future, building a real relationship. And then towards the end, when things are already being sort of like that connection is there and the creativity and the future is there then I start talking about how can we do this and how could that work and what price point can we get this at? Do you see what I mean? Like a completely different way. They're going in and being like, how much is this and what can you do for me? And I was getting much better pricing. I was getting much better inputs and creativity and they were showing me things that they weren't showing everyone else. They weren't on the shelves and I was like, this is very interesting. So I noticed that also there wasn't much mentoring. They sent us out with these guys who were sort of high school students to translate for us and they didn't have a background in negotiating. They didn't actually understand sourcing so it's like I was brand new to the subject of China, these guys were brand new to the subject of negotiating and the blind is leading the blind. And so that was the trip I went on. And so I thought, you know what, this could be so much better. This could be amazing. And I went to the organizers and said, hey this is my background. And as it was, I was already bringing in the groups with me. I was like mentoring them I was keeping them upbeat, I was creating the networking, I was just that's who I am. So anyway, the point is that I offered to partner with them. I was like let's get together, let's make this beautiful. And they're like, you know what we're happy with the way this trip is. And I'm like, okay, cool. And I was like I'm going to just do my own. I'm going to bring in some friends and they're like yeah, yeah, cool. And so my first China Magic I brought 50 people to China and we extended it to a 12-day experience. Joe: Wow. let's talk about the benefit of going to China for an e-commerce entrepreneur and first, let's define who they are. Is it somebody that already has an e-commerce business that is going to meet with their manufacturer and work on new terms and so, so forth and find new products or is it, somebody that's just beginning, doesn't even have a website yet or a product and they're sourcing it for the first time. Who's the ideal candidate to join and go to China on China Magic's trips? Athena: Sure. So to me, if you want to be professional as an Amazon seller and you want to be able to have that sort of relationship and that creativity, it doesn't matter if you're brand new to Amazon or if you have scaled up to doing seven figures, eight-figures. Because what we've done in China and I can kind of tell you more about that in a bit is we actually cater to every sort of stage that people are in in their journey because you're going to be looking at sourcing in a completely different way. So, I mean, China Magic has progressed tremendously. We've already done six trips at this point. But to kind of backtrack a little bit and to kind of answer that question a little better I brought in people who were doing millions of dollars on Amazon and because they had never met with their manufacturer, they were actually able to get such a reduction on the cost of their products, such better terms, like these are people who've been working with the same supplier for two years, three years, and they would meet with them and by the end, like they were doing, 30% down 70% on shipping and they were able to get that down to like 10%, 20% down and then 30 days after landing, paying another 35% and then the rest 60 days or 90 days after. And what that does for someone's cash flow is amazing, especially when you're doing bigger numbers. And obviously coming from your perspective as a broker, that really helps with cash flow and it really helps growth. Joe: Yeah and it allows them to grow the business for sure. I think it's critically important. I've heard so many times how people go to China and really connect with their manufacturer and come up with better terms and better pricing. And even if it's just a dollar off cost of goods sold that you sell, 2,000 a month of that particular unit, that's $24,000 a year in savings. And then eventually when you do sell the business if it's at a three-time multiple, that's adding nearly $75,000 on the list price of the business. And you can put as many zeros before or after that as you want, it's important to do. All right so let's talk about the logistics of 50 people going to China but it's your first trip? Athena: Yeah, it was my first trip. And because I'm crazy, I booked every single person's flight myself. Joe: Oh my. Athena: Yeah, like I'm just a wild girl. Joe: You don't do that now, though, right? Athena: No, no, no. I don't do that now. Joe: Okay. Athena: Yeah, I mean, I think the thing that was most magic about China Magic is I connected with a gentleman named Marty Sherman who's been going to China for over 20 years. And this guy understands China on a level I'd never even come across before. And he really believes in developing relationships. And so the very first thing that we do in China Magic is we talk about the culture. We talk about how to really navigate the waters and how to actually approach people. And it's amazing, again, like these guys are professional entrepreneurs, they're professional business owners, they think they understand their suppliers, they think they understand how to do business. But then when you actually talk to someone who's been on the ground in China for over 20 years, the lessons he's learned and the things that he's been able to develop is so incredible. So that's really the power of finding amazing mentors and leaders when it comes to their field because they understand it better than any of us do, just the same way that you understand what you do so much better. Like maybe some guy sold his business or a couple of businesses or whatever versus someone who's actually seen the sale of hundreds, do you know what I mean? Like their professionalism that you gain from having done something over and over and over again. So what I was looking for when I started China Magic were people who were just absolute geniuses when it came to sourcing. So I actually met a guy; this is a crazy story but have you heard of Kian Golzari, Joe? Joe: No, I don't think I have. So does that make me uninformed; should I know about this? Athena: No, no, no. You're wonderful. You know, a lot of people. Okay, so one of the mentors that I had on China Magic asked if this guy could come visit and I was like, yeah sure. And he kind of hung out in China Magic and towards the end of our trip, he's like, do you mind if I put a little presentation together for everybody? I'm like yeah sure. So on this presentation, he starts talking; the guy's sources for the NFL, the NBA, Google… Joe: Wow. Athena: Inaudible[00:15:58.3] his own family's company that has at least 2,500 SKUs, I mean, he's literally a sourcing guide, right? And he became one of my closest friends and now he's my other main guys. I have got Marty, the one that's been going for over 20 years. And I've got Kian Golzari because the formula that I always used is like, if you want to fast forward your business a few years then you want to be around people who are extremely knowledgeable and successful because you can't even put a dollar amount on the value of having gone through so many mistakes, made so many bad choices, learn from all those mistakes; the network of these guys had like it's just crazy. So when people come to China Magic, a big part of the magic is connecting with people like Kian and like Marty and I think that makes a massive difference. Joe: Well, I just wrote down networking then you said there was connecting because we've talked about this before. There's a lot of time that 50 or 75 or 100 people that are going on a trip like this spend together. And the connecting of those relationships goes beyond just renegotiating or getting better terms and more SKUs with your manufacturers. A lot of people are making lifelong connections on these trips as well with fellow e-commerce entrepreneurs, right? Athena: Oh, gosh, completely. Like we've got people who met three and a half years ago at my first trip, they're still connected to this day. There's still some of them that have developed partnerships. And one thing that's very interesting is when you connect at that level Joe when you travel to a foreign country when you're with each other for that long, a lot of the social veneer comes off. You cannot get that relationship at like a conference in the hallway having lunch here and there. So because of that, people really start to open up and they start to share and that abundance mindset really clicks and that trust really clicks. And so I've traveled the world for five and a half years to build up this network. When you walk into China Magic like people come in as strangers and they literally leave as family and it's just like that gave me goosebumps. It is literally; you couldn't even; like you have to experience it to see the level of connection people have. And then those relationships are so valuable later on. Like you just see them helping each other and giving each other resources all the time; yeah, so it's a beautiful thing to see. Joe: So someone doesn't have to know anything about China; how to get in and out, you help them with that entire process from the visa to the booking of the hotel. So you may not do that yourself for their airline. Athena: Yeah. Joe: Is it you show up, you give them some guidance and they're off and on their own or is it pretty much they're told where to go and what to do all along the way? Athena: Okay, so we have kind of perfected this world. It's almost an art. We've got several group flights that we organize. We've got one from the UK, we've got one from the US, and we've got one from Australia. And it just depends on where our members are coming from. And so we organize our group flights. Everyone's on the same flight and then we have everyone get picked up in beautiful bus freight and then we get to the Four Seasons who love us to death and we are like their favorite humans. And they're waiting for us with Pellegrino and cappuccinos; they know how to take care of us. And so what we do on our very first day is we go and get everyone to the Canton Fair. We go to the Canton Fair by the way, and we go in there with mentors. I bring a ton of these mentors. And these are multi seven, eight-figure, we even have a nine-figure seller coming on our next China Magic. And so we walk in there with them, show them around; get them what it's like to see what it looks like. And then on the first night, we orient them to China, to negotiation, and then the next day, we actually go into the fair with them. So we are mentoring small groups of them throughout the trip. And then when they kind of graduate out and they feel confident, they kind of go on their own. But I have my guys on the ground constantly; we have a sourcing team of about 100 people. We've got connections to factories that are not on the grid; about 4,000 factories you can't even find in Alibaba or even at Canton. So if people are having trouble finding something, we actually utilize the vast network that we've built. So we really are very present for them the entire time. And a part of China that I didn't even mention is it's not just about China like we actually do content every single night about Amazon; so from A to Z, everything from branding to PPC to marketing to every single topic in Amazon is all covered within those 12 days. And we split everybody up into these itty bitty groups, and this is why we cater to everyone. We actually work with like if you're a top seller, you're going to want to talk to other top sellers about pain points that you're struggling with at that level. If you're new to your journey, you need a lot of hand-holding, you need a lot of help, and also, it's not going to mix them so we never do that. We have different content for different levels. And so you literally go in there and you're just going to be with a group of people that are in a similar part of their journey, being literally walked through the journey with some of the top brains in the entire industry throughout the entire 12 days. Joe: And is it always the Canton Fair? Athena: Yeah, so we always go to the Canton Fair. We go to Phase 2 Canton, which is amazing because you go and you're literally walking through booths and booths and booths of product, you're connecting with factories. Joe: What does Phase 2 mean versus I suppose Phase 1? Athena: Phase 2 is where you find like a lot of beauty products, a lot of kitchen products, a lot of household products, baby products. Phase 3 is more about travel, about sports, about different; so each phase of the Canton Fair has its own products and you can go to CantonFair.net and actually take a look at which phase is most appropriate. Joe: Okay. Athena: So what happens is like let's say most of your products are from Phase 2, you would utilize Phase 3 to go do factory visits which is another thing that we talk a lot about. It's like actually going and visiting with your factory, visiting with your suppliers, and we walk you through an exact way to negotiate and to project the future and create these amazing partnerships. Joe: So Phase 3 is a different China Magic trip where they're going to visit the manufacturers or was that a part of Phase 2? I was confused there. Athena: Oh no, no, I'm sorry. So Canton Fair is the largest fair in the world when it comes to sourcing and it goes through three phases. There's Phase 1, 2 and 3. We go to Phase 2 and then we go to Hong Kong for a few days and we go see global sources and do more sourcing there and we do more content there. Then we come back for Phase 3 of Canton. And so that's just a whole; like basically, they set up, they take away their products, and then a whole new world gets created in that next phase because they just got too many products to be able to do it all at one time. Joe: I got you. What about going out and visiting your manufacturers if they were off the grid or if they're not at the Canton Fair or are they all there? Athena: Oh, well, it just depends. Some people are there, some people aren't. But we highly recommend to go visit your factory and then we do a factory visit for those who don't have a supplier yet. And we actually went to a packaging factory that does packaging for like Adidas, Nike, Nescafe, or they got connections, this amazing world of like factories that we can take people to that we really recommend for people. We actually show them the exact step by step on how to go and visit with your manufacturer, how to go and like see the people that are building your products, how to actually build your products with them so that they can see you on the floors, you get an idea, and then Kian goes into like understanding how to like; let's say you're building a backpack, there's all these components, right? So how to look at each component over the world and there's ways to increase quality, to get innovative, to save money. So we teach people really that understanding of sourcing at a level to where you become an expert even within the first few days of China Magic. And this is stuff that like a lot of people are missing, like really, they're missing this within their business and they're missing a ton of product; I'm sorry, a ton of profit because there might be ways to save a lot of money on their products or there might be ways to innovate them and charge a higher premium for them or because they're not in there on the floor dealing with their products, understanding their supplier, it really might be leaving a lot on the table. Joe: How much time in advance do they have to plan a trip like this? Athena: I've had people sign up as quick as two weeks before but we get sold out so fast; like we're actually already sold out for our next trip months, months in advance. And the amazing thing about it is it's mainly word of mouth. We didn't even do any sort of advertising campaign or anything like that. We literally did a couple of Facebook Lives from China and we got like 90% sold out just from that. Because what we're doing in China Magic it is magic and I think people want to be a part of that. Joe: Are there any resources I assume on your website; what is the URL for China Magic that might be… Athena: They can go to ChinaMagicTrip.com. Joe: Okay, there's a trip in there. Athena: We have a waiting list, you can get on that waiting list. Joe: Do you have resources on the website for people that still are too scared to go to China or not ready or can't afford it yet or just starting out; any information that helps them with negotiation tips and things of that nature and dealing with a manufacturer from afar? Athena: Absolutely. So we do have a webinar series that we put together. So if they go to ChinaMagicTrip.com they can get on our list. And then also if they want to reach out to me, they can just go ahead and AthenaSeveri@gmail.com that's my personal e-mail if they want to. Joe: Oh you did it; you just gave out your personal e-mail address. Athena: I did. I don't mind. I have tons of people reach out to me all the time. They can find me on Facebook; they can find me on Instagram. I make myself very available. I actually talk to almost every single person that's ever been on China Magic. I've had a personal conversation with them before they even get going on our trip because I want to make sure that they're inaudible[00:25:48.6] abundance mindset so yeah. Joe: I don't doubt that for a moment. I can see it happening. Athena: Yeah. Joe: Every single person; just out of curiosity it's a woman, female-run operation, which is wonderful in this e-commerce male-dominated world that we live in. Athena: Yeah. Joe: But when it comes to ratios in terms of male versus female in terms of people that go on the trip, is it still heavily male-oriented or are there plenty of women entrepreneurs that go as well? Athena: I'm so proud of this, the trip I was on out of 60 people, three of them are women; the women that went on that wasn't my own. Joe: Okay. Athena: Today more than 50% of our trip is women. Joe: Beautiful. Athena: Because I take perfect care of them; I princess out the trip for them and they feel confident because they know me. They know I'll take care of them and I do. So, yeah, we've got amazing women on our trip. Joe: Excellent, and you've connected with Titan Network as well, right? And China Magic has kind of flowed into Titan. I had Dan on a podcast a couple of weeks ago talking about negotiating terms with manufacturers. Athena: That's right. Joe: So this is kind of a good evolution too. So what's the connection between Titan and China Magic? Athena: Yeah. Dan Ashburn is my partner with both China and Titan. So what happened was people would go for those 12 days and they would get so spoiled by the mentoring that we do because we do a lot of hands-on mentoring that the quality of our mentors are amazing. And so the only issue we were having with China Magic is that it would end after 12 days and we would see the amount of progress that was made. It's not just the sourcing, but like people that understand the rest of it and how to build a multimillion-dollar business; like you get to spend an hour with them talking about your business, the progress you make in that hour is just amazing. So what we did with Titan Network is we actually created sort of that mentoring and the magic of China but we did it all year long. So we added events and masterminds and weekly coaching and a lot of hands-on mentoring and Dan is just a freaking genius; I could not have built this without him. And we've basically recruited all of our top mentors from over the years and they're now part of Titan as well. Joe: Excellent. Let's answer the question a lot of people are asking; a ballpark, you can't give an exact figure because it's changing all the time but how much is it going to cost somebody to go on a China Magic trip, ballpark range? I'm putting you on the spot here I know. Athena: Yeah, because our pricing is changing. Honestly, we've been under-pricing for way too long. So I'd say a ballpark is around 8, we've done it as low as 6 for our… Joe: I was just going to say, even if it's 10, it seems like an incredible investment for people to make in their business because they're going to make that back in better terms, better cash flow, great knowledge, great friendships. And people go to mastermind events and spend an awful lot of money, here it seems like a 12-day mastermind event where you're really experiencing a completely different part of the world. Athena: 100%. And we also; I didn't even mention this but even before we get to China, we're doing training with them or mentoring them. We've got a Facebook group for connecting everybody so they actually get to know each other before they even head to China. So that's all included as well. So, yeah, I really I believe in what we do 100%, the lives we've changed; I mean, I have people who came on my original trip and they found a product that has been profiting them $30,000 $40,000 a month since inaudible[00:29:19.1] like it's just ridiculous that… Joe: I get the feeling, Athena, that you actually get more joy out of helping people than counting dollars, is that…? Athena: Oh, I'm terrible like Dan has to like keep me on track because I just have like a big heart and I'm always like, oh you want to come okay well let's work it out just because yeah it really is my happiest place. I think my happiest thing ever is seeing these amazing people that are like our mentors leaders, because a lot of them came from my attendees. A lot of these guys were attendees on my trip. They just happened to be more helpful, had bigger hearts, and had amazing success stories. So then I graduate them into being mentors and it's sort of the circle of life that's so pretty. And then they go and help other people and like, oh, man, it's like a dream come true to be in this industry, honestly. Joe: Oh that's fantastic. I'm going to wrap it up here. I'm glad we finally got you on the podcast. We were introduced I want to say three or four years ago and we keep bumping into each other. Athena: I know. Joe: So thank you for coming on. I'm excited here. Tell me again how people find out about China Magic; ChinaMagicTrip.com or net? Athena: Yeah so it's ChinaMagicTrip.com if they want to learn about Titan, if they're too scared to go to China, they can always go to TitanNetwork.com to connect with me there as well. My phone number is out there, like really, I give my heart and soul to my people and make sure that they're super taken care of. So I'm here for you guys and like I mentioned earlier, if you're beginning your journey, we can take care of you, if you're sort of in that intermediate zone looking to scale or even if you're very, very successful, even if you're looking to sell your business in six months you're like coming to China will benefit you in so many ways. Joe: I couldn't agree more. And for those that are wondering, yes, it is an add-back. If you don't know what an add-back is, reach out to us, we can help. You should know in an add-back is at this stage of listening. Athena: Joe, I just want to mention thank you so much for all that you do for the industry. You put your heart out there. I see how much value you add. It's like you could just do the thing that you're there to do but I see how much you help people grow and expand and it's just wonderful. So thanks for all that you do for community as well. Joe: Thank you for saying that. I very much appreciate it. Thanks, Athena. Talk to you soon. Athena: Yeah, thanks for having me. Resources: China Magic AthenaSeveri@gmail.com Titan Network Quiet Light Podcast@quietlightbrokerage.com

Today's episode is going to be a little different than previous ones: We're not going to interview anyone. In lieu of a guest, Joe will be discussing three different levels of add-backs. The three levels of add-backs are various ways to add value to your business. Most of these suggestions are fairly easy to enact, but may not have been things you've previously thought of doing. Tune in to hear about calculating a seller's discretionary earnings, where you will make the majority of your money, and much more. Episode Highlights: Where you make 50% of all your money. Calculating Seller's Discretionary Earnings. Valuation multiples. Making sure the acquirer understands the value of your business. Breaking down expenses. Pros and cons of certain business credit cards. The pitfalls of hiring family and friends. How current tariffs may affect your bottom line. Illegitimate add-backs. Being careful not to erode trust. Transcription: Joe: Hey everyone thanks for joining the Quiet Light Podcast. This is going to be a little bit of a different podcast than some of the others we've done. I'm not interviewing anyone on the podcast with Mark. It's just me. It's just me talking about something that's critically important. As many of you know, I've been doing this for over eight years now, tracking towards personally 100 million in total closed transactions. I've talked to thousands of entrepreneurs over the last eight years. And what I hear more often than not is so the multiple is still around three times and [inaudible 00:01:54.5] is asking me from New England always wants to say it depends upon your definition of three times of what. Most people don't get the "what" correct so I want to focus on that right now; that "what", three times of what. It is a three times multiple or four times or five times or two times depending upon the financial key metrics that Mark and I talked about; the four pillars that have been created, and then these three levels of add-backs. It's a multiple of Seller's Discretionary Earnings and calculating it correctly and getting it right is one of the most important things you can do for your business. So I'm going to talk about it here. I'm also recording a video for those that want to go to the Quiet Light YouTube channel and look at the video as well. From the video there'll be a set of slides that you can download from the show notes from this podcast as well. So on to the three levels of add-backs. First, what we want to do is actually define the reality that if you've got a physical product e-commerce business, more than 50% of all the money you'll ever make from your business comes the day that you actually sell it. That's pretty substantial. And you think about it, we're all trying to drive revenue and make a living as entrepreneurs but in a physical products e-commerce business and many others as well, most of the money you'll ever make comes the day you sell it. So you want to prepare to sell all along the way. I know it makes your eyes bleed but if you do the right thing and focus on running the business like a professional and creating a great opportunity for your buyer; and there's many buyers in this audience that are listening, if you create a great business to hand over to somebody that wants to take it to the next level and do the things that you may not want to because the business has outgrown you, you're going to get more than 50% of all the money you've ever made from the business. Odds are as well that your business is your most valuable asset. And I'd venture to guess that, you know the value of your house within 5 or 10% and your investment portfolio, and your retirement fund, and your car, and your condo, and your townhome, or how much you have in your bank account but you are 30, 40, 50% off in terms of the value of your business. And some of you are running businesses that are completely unsellable even though you're doing great things with driving revenue. And they're unsellable because you're co-mingling too many things with one brand. You've got seven brands in an account, you want to sell off one and you don't use proper accounting software like QuickBooks or Xero. I've seen this too many times. Too many people say, oh, okay three times I've got this. I've got an 18 year old and 16 year old; I hear I got this all the time. Please don't say I've got this. Go through this. Listen to the full podcast. Get these three levels of add-backs right and you will get the real value for your business along with all the other things that you need to do for the four pillars. The real value of your business is important to understand here. We're not talking about maxing out the value of your business and jacking up your Seller's Discretionary Earnings; we're talking about you getting paid for what you've created. It's not boosting or jacking anything, its legitimate black and white add-backs that are owner benefits or one-time expenses. And I'll go through the whole list that you deserve for the value of your business. If you're a buyer out there listening and you're looking at businesses for sale, you can look at some of the add-backs that have been missed by the broker or the individual that's selling the business and calculate your own instant equity when you buy the business. Okay, so in terms of the valuation and the way that it works, it's hard to understand, but simple at the same time. The calculation for the list price of a business; it's the earnings base multiplier approach and you've all heard the term at this point Seller's Discretionary Earnings. Well, the math is simple. The formula is simple but it's hard to remember. Its Seller's Discretionary Earnings times the multiple equals the list price. Again, calculating the Seller's Discretionary Earnings accurately is important and it's hard and then determining the multiple and what range you're going to fall in depending upon the four pillars and financial key metrics is hard. But when you get the two of those right and you've got the right data, it equals the list price. Plus, in a physical products business, the landed cost of goods sellable inventory on hand at the time of closing. Almost everyone does it that way with the exception of one broker in the sub 20 million dollar range. Some of the larger investment banking firms may be doing something totally different in the 50 to 250 million dollar range. Okay, so to calculate Seller's Discretionary Earnings first you have to have a Profit & Loss statement. And that's why I always preach QuickBooks and Xero. I had an email from somebody yesterday and he wrote he doesn't use QuickBooks or Xero and he's using other stuff and he says I don't trust QuickBooks. Well, he doesn't trust himself then or a bookkeeper that he would hire because QuickBooks is just information that's entered or imported from the person doing the work. But you've got to calculate Seller's Discretionary Earnings properly. As I said to get the list price, Seller's Discretionary Earnings times the multiple equals your list price. How do you calculate Seller's Discretionary Earnings? It's your net income on your Profit & Loss statement, plus your add-backs. And again, we've coined the three levels of add-backs here at Quiet Light Brokerage. And under each level there are six different levels. So there's a total of 18 points that we focused on for add-backs. So, net income plus add-backs equals your Seller's Discretionary Earnings or SDE. Now valuation multiples; I'm going to cover them real quickly here because everybody wants to know what multiple ranges are. But that person says so you know the ballpark, multiple ranges three times. Is that right? First question is a multiple of what? Second thing to say is without accurate Seller's Discretionary Earnings your multiple means nothing; absolutely nothing. So you've got to get the discretionary earnings right in order to get the multiple right. Important thing to understand is that the size of the business does impact value. Also, multiple channel revenue versus a single channel of revenue impacts the value. So if you've got a business that is less than $100,000 in Seller's Discretionary Earnings and you are 100% direct consumer brand not selling on third party platforms, let's say you're 100% Shopify. If you've got a business that's got all the four pillars that we talked about and good financial key metrics, you're probably going to be in that three to four time multiple range. That's a pretty good number. But if you are a 100% Amazon brand and by 100%, I really mean 85 to 90%, you are going to be in a drastically different range. You're going to be in two to three times. And this is at sub $100,000 in discretionary earnings. And this is all subject to change. It floats and changes depending upon the economy, the type of business, the recurring revenue aspect of it, B2C versus B2B; all sorts of different variables. So this is just general information. So again sub 100,000 three to four times if you're selling direct to consumers, if you're a 100% third party platform, two to three times; a pretty dramatic difference in value. As low as 200,000 if you're 100% Amazon brand and as high as 400,000 if you're 100% your own you are all selling to the customers. In the $100,000 to $500,000 range, you're pure B2C brand jumps from three to five times multiple of Seller's Discretionary Earnings. The Amazon brand jumps as well, but it's only two to three and a half times. We started at the same floor of two, and then got bumped up to three and a half times. There are exceptions to every rule and it's a very broad range depending upon trends of the business, how much you're spending on advertising as a percent of total revenue, how clean your books are, growth opportunities in the business, the transferability of the business; all these different things. But the multiples will overlap as I go through this. Jumping up to discretionary earnings of 500 to a million, you're looking pure B2C at four to six times Seller's Discretionary Earnings and on 100% Amazon brand you're at three to five times. The five times here has to be really, really solid. It's going to be a great business. But the three times is as low as that sub hundred thousand dollar business because it's just a broad, broad range. If you've got a hero SKU that's doing 70% of your revenue, that's going to bring your multiple down; as simple as that. There's a lot of competition on single channel third party platforms like Amazon that could change your revenue trends overnight. I've seen it many, many times. Okay, so Seller's Discretionary Earnings last level north of a million dollars, you're looking at a pure B2C, you're looking at six times plus. Amazon brand you're at four times plus; a lot of overlap there. Again, because no two businesses are alike and you can't just make the assumption that you're going to be at X if you're doing Y in Seller's Discretionary Earnings. Again, though, size does impact risk. That's what we're talking about here in terms of the multiple ranges and where they go. Okay, so the three different levels of add-backs will be defined clearly; detailed clearly but let's just define what the heck an add-back is. If you think about it as simple as an owner benefit; something that you personally get from the business, they're also one-time accounting expenses, they're one time legal expenses and expenses that don't recur or carry forward to the new owner of the business. That's broad, but very specific. The goal of identifying add-backs again, it's to identify the true baseline earnings for potential acquirers of your business and also for you so you'll understand the value of your most valuable asset. It's not to jack up the price. That's not the point. The point is to make sure you get the true value for your business and so that the acquirer of the business understands the real value of it as well. There are three different levels that we've developed here at Quiet Light. The first one, Level 1, they should be pretty obvious. They're obvious benefits that I think almost anyone could identify. Level 2 are one time and accounting expenses. They get a little bit more complex there. But it's Level 3 that an inexperienced broker or if you are someone that is selling your business directly to a buyer yourself, you could be losing hundreds of thousands of dollars in the overall value of your business if you're not focused on Level 3; if you're not digging deep and I always say using math and logic, it's not magic. It's not gray. It's black and white math and logic in that third level. And we'll go through some of them right now. But there's six different points to each level. So let's talk about this Level 1. I had somebody approach me at a Mastermind event recently and asked me what I thought was a pretty obvious question; Level 1. He said, hey, I don't make a whole lot of net income in the business, but I do take a $250,000 salary, is that an add-back? Yes, that's an add-back, that's an owner benefit; crystal clear owner benefit. So if you're only making your businesses $10,000 net income a year, but you're taking a $250,000 salary, your total owner benefit there with those two things alone would be; or Seller's Discretionary Earnings would be $260,000. The exception here is unless there are two partners that are working well over 40 hours a week combined. We can only add-back one owner payroll in that situation and have to do an adjustment for the second. If you've got two owners that are generalist in terms of their skills working less than 40 hours a week combined, then we could add-back both of them. The second one in Level 1; and by the way, with owner salaries, again, there's little asterisks that I put all over these things. There are exceptions to every rule. You have to talk through each and every one. Estimated income taxes; if you've been in business a long time as an entrepreneur probably making quarterly estimated income taxes payments, that's an obvious owner benefit that goes into the add-backs schedule that your broker or adviser or you if you're selling your business on your own would create. Owner health benefits; pretty obvious, if I sell my business today, I'm not going to pay for the new owners health insurance. They would have their own. Charitable contribution is number three, pretty obvious. Interest expenses, we see a lot of businesses come through for sale that were purchased years ago with an SBA loan and there's expenses there that do not carry forward to the new owner. Or if you were a 100% Amazon business owner and you've taken advantage of the Amazon Lending Program, there are interest expenses in your P&L as well, those do not carry forward and those are an add-back. Retirement contributions are number five; pretty obvious there. And number six has got a lot of them, it's little things that are owner benefits, like your personal meals and entertainment that you run through the business, travel that you run through the business. And we'll get into Level 3, we'll talk about some travel with mastermind groups and events and things of that nature. Vehicles or miles that you write off on the vehicles. This one should be pretty obvious, but it's mobile phones. No one is going to buy your online business that doesn't already have a mobile phone. So if you write off your mobile phone through the business, it is an add-back because it's not an expense that carries forward because the new owner already has a mobile phone. If they don't, they shouldn't be buying an online business. And yes, I've had a conversation with people before, a lot less in recent years than seven or eight years ago. If you've got a home office and you choose to write off tax for tax reduction that expense does not carry forward, nor do the utilities. So those are the first six in Level 1. Those are the more obvious owner benefits. In Level 2 they're a little less obvious so let's go through them again. There are six different levels there. The first one is trademarks, copyrights, patents, logo designs; things of that nature, it's all centered around intellectual property. These are mostly onetime expenses that do not carry forward to the new owner of the business. And I've sold businesses, as many of us have here at Quiet Light where somebody had just gotten a utility patent in the 12 months prior to selling the business and there's 20,000 dollars' worth of legal fees there. That's an amazing thing to have in terms of selling your business; that's defense ability; part of the risk pillar but it's also an add-back. So you can put that $20,000 back into your Profit & Loss statement below the [inaudible 00:17:27.5]. Same with logo design, copyrights, things of that nature. The second point here is these other types of legal expenses like a lawsuit. It happens now and then, but it generally doesn't happen every year so you could do an add-back of that as well. Unless you've got a P&L and you've been sued every year because of the type of business that you have. We may not sell that. Sorry, no one might buy it. Sorry. But if you try to sell it on your own, it would be an add-back. Enforcement letters that someone would write for you, those are generally one time and don't carry forward same with incorporation documents. The third point here in Level 2 is the new bookkeeper setting up books and arrears. You guys have always heard me talk about our book keeper referral list. We don't get paid referral fees from bookkeepers. We keep a list of good qualified bookkeepers because we want you to run a better business and have cleaner books because it's going to help us help you get a better value for your business. It's going to help the buyer take something over that is clean and documented well. So sometimes people will come to me and they need to have their books cleaned up. They would hire an e-commerce bookkeeper that would go through the last 24, 36 months of data and pull it into QuickBooks or Xero. There's generally a one-time fee for that. That expense does not carry forward to the new owner because you've already done it. There is a monthly fee that you would pay a bookkeeper that might charge you $500 a month to do your bookkeeping for you but if they charge you two or three or $4,000 to do your book in arrears, that is absolutely an add-back and its money well spent; well invested. It's fuzzy math to calculate the return on investment on that but you would, in my opinion, get well over 100% ROI if you spent money on hiring a bookkeeper to do your books in arrears. Equipment purchases are generally one-time expenses and often buried in the P&L under office supplies and they're very often personal in nature. Most of these businesses that are run remotely from a solopreneur that has VAs or even if you've got people that work closely and you all go to an office, there's not a lot of physical equipment that is purchased. So personal computers, we often see the office supplies get bumped up a little bit in the fall or in the late summer when kids are going back to school or during the holidays when people are spending money on gifts or just before the New Year when they're getting new products for themselves to reduce their taxes in a sense. Those are buried in the P&L; these are definitely add-backs when they're personal in nature. The last two points here in Level 2, they're kind of obvious as well but sometimes people don't catch them. It's depreciation. It's an accounting expense, it's not an actual cash out expense. And the same goes for amortization. Okay, so Level 3, again, thanks for hanging in here, this is the dig deep most important use math and logic part of the three levels of add-backs. This is where you're going to get the most bang for your buck by taking your time and digging deep and keeping good records so that you can go through these different things. First one is a website redesign. Several years ago, I sold a business that had just spent $20,000 on a website redesign. That business was listed at a 3.5 multiple and the website redesign; the business was maybe seven years old at the time and it had not done a website redesign since the inception of the business. So it's not going to recur every year. In this case, it's not going to recur every five years. So we chose to do a 100% add-back of that. So at three and a half times, that added $70,000 to the Seller's Discretionary Earnings at a 3.5 multiple. It sold at full price and the person that bought that business has been running it since then and is now listing the business for sale in the next few months at a great return on investment. But it's absolutely an add-back. If in the P&L, it shows that you've done this every two and a half years then at the very least, it's a partial add-back. Point number two on Level 3 is something that most people in the e-commerce world are involved with in some way, shape, or form and that's Masterminds, events, and related travel expenses to Mastermind. Sometimes there's a pretty hefty joining fee as well. So if you are part of a Mastermind whether it's; should I name them all? I'm not going to name any today. You've heard me name some of them before. If you're a Mastermind member, you're the member, not your business. When you sell your business, that expense does not carry forward. It helps you personally grow your business and gain business knowledge and the new owner of the business may or may not join that Mastermind as well. They may actually be in their own Mastermind and have their own expense because they're bolting on new businesses to it. So this one is an add-back and it's missed by most people. The same goes for those events that you may go to. You choose to go to those events that are Mastermind related and odds are you checked out a lot of personal benefits there and travel and sightseeing and things of that nature. The exception to this rule is if your business is similar to Quiet Light Brokerage. We sponsor Masterminds, we sponsor events and we go to them to build our network of relationships therefore, it's not an add-back. It's an integral part of our marketing campaign. The other exception is if you brought your CMO; somebody that's on staff. If you the owner of the business goes it's an add-back but if you the owner of your business goes and you choose to bring your CMO, that's a business expense. That CMO is going to move forward and carry forward with the business and would go to that Mastermind every year, so to speak if the new owner of the business joins the Mastermind or has their own CMO because it's a great way to learn new marketing techniques. That part wouldn't be an add-back. So there are again exceptions to almost every single rule. Point number three here is pretty important. Most people listening to this podcast that own any kind of online business or doing some form of advertising. The biggest mistake I see people make is with, let's say, an Amazon FBA businesses, they're allowing Amazon to simply deduct the ad cost from their deposits every couple of weeks. That means that you are not getting the benefit on your spending. You're not getting that cash back and you're not getting the rewards. American Express Gold Card will give you four times the points on advertising spend up to $150,000 and then the levels change. There are cash back cards that you can get 1½, 2% cash back. The IRS hasn't figured out how to tax this. It's really; these are discounts, there's no method for tracking it. So I see a lot of people; it never shows up on their P&L, some people with bookkeeper's do; that's an exception rather than the rule. They do an adjustment in the Profit & Loss statement. They've got the total advertising expense and then they've got an adjustment for it there. But when it's not there at all; and let's talk cash back only for now, people just slide it into their personal income and bank account and they use the money for perks. It's an owner benefit so therefore, if it's an owner benefit, it is an add-back. The key here is to track it and find a way to convey it to your adviser if they don't ask; everybody at Quiet Light will but if they don't ask, convey to them that it is an owner benefit. You do have the data. It's math. It's logic. And your buyer will accept it. I've had situations where we've had $24,000 a year in cash back and tracked it and the business sold for a three time multiple, for instance. So it's almost $75,000 in value to the business when it's being sold; a huge benefit there. When it comes to rewards; this is the tricky part, a lot of people use the rewards instead of the cash back, which is really smart because you can get a lot more bang for your buck with the rewards. But you cannot convert that bang for your buck into actual dollars at that high level. So if you are going to travel internationally and use your points that you've accumulated to buy a $10,000 first class ticket somewhere around the world, you don't then get a $10,000 add-back. What you get instead is a percentage of your points. Most of the cards say you can convert them at 1%, so you would simply take the points that month times 1% and that is you add-back amount. That's a huge one that most people miss and it can add a tremendous value to your business. Now, as entrepreneurs, we first often seek employees that we know and we trust. Those employees are often friends and relatives. First point of advice I'd give you is don't hire somebody that you cannot comfortably fire and those are usually friends or relatives. Second point is, if you go ahead and do that, try not to overpay them. Because if you're overpaying them, you're getting some loyalty there, yes, but when you go to sell your business, you will lose 2, 3, 4, 5 times the value of how much you're overpaying them. But you don't have to fire them. My bad, advocated firing people before for this very situation. But you don't have to be the Grinch if it's around the holidays. Here's what I did in a particular situation. I had a business that was for sale, three and a half time multiple, really strong business, ended up getting multiple full price offers and sold at that level. But the owner of the business paid his brother who he loved dearly $20 an hour to do customer service work. Who wouldn't want to do remote customer services work at $20 an hour? It's a great deal. His brother loved it. It turned out the brother was really working about five hours a week because he was really good at creating canned responses, most of these; 99% of the communications from customers were via email so he just had a canned response. He was open about it, talked about it. There's a lot of logic to saying this brother is loved and overpaid excessively so we did a negative add-back, meaning we adjusted his income and dropped down to the add-back schedule and put an expense in for a virtual assistant to do the customer service work. We bumped the customer service work from what the brother said he worked from five hours to 10 hours. And instead of paying that VA the standard maybe $5 an hour if they're working remotely in the Philippines, for instance, we actually doubled it and made it 10. So we overpaid the VA. We paid them for more hours and this is all on paper, of course, and did an adjustment. We were conservative in our adjustment, but basically it was about a $10,000 add-back at a three and a half time multiple. It boosted the value of business by $35,000. So you've got to think through some of those things when you're making hiring decisions and firing decisions and plan in advance when you're selling your business. We don't want you to wake up some day and just be so tired and frustrated and fearful that you're too overleveraged in your business and decide to sell. We want you to plan it out so we can help you get maximum value for your business, but also have a better business for the buyer so that they can take it on with less risk that they're willing to pay more and they can grow it someday and eventually exit their business. Okay, point number five, most people miss this. If partway through the year, your cost of goods sold go up by $2 a unit and you're selling a thousand units a month, do you think your buyer is going to ask for an adjustment in due diligence? Yes is the only answer. They're smart. They're going to stroke a check for half a million, a million, to five million dollars. They're going to hire somebody to do their due diligence. They're going to pay attention and they're going to dig deep. You need to do the same thing. So last year, I sold Mike Jackness' business. Many of you have heard me talk about it with Mike on this podcast. We've done many presentations together. Halfway through the year Mike renegotiated his cost of goods sold on his one primary SKU. It was doing about; let's just call it a thousand units a month for simple math, he's doing many more than that. And it was more than $2 and a unit that was adjusted, but it happened in the last six months; the most recent six months of his P&L. That savings carries forward to the new owner of the business. So what we did is in the first six months of that year, we took the total number of units that were sold, multiplied it times let's say $2 a unit. That's two thousand dollars a month if a thousand units were sold a month or it's $12,000. And then you multiply that $12,000 times your multiple and you see what added value there is to your business. It's a legitimate black and white add-back. In Mike's situation off the top of my head; I'm guessing at this point, I'm going from memory but I think it was about $54,000 that was added to the list price of this business; true, legitimate black and white value. It's sold. Obviously we know that. The buyer has bought five businesses from Quiet Light Brokerage and multiple others. He's very, very well educated. He's very smart. It's a legitimate add-back. 99% of people that sell the business on their own missed that and I'm sure a lot more with other firms. At Quiet Light Brokerage; and here I am preaching Quiet Light, I'm telling you that you got to dig deep. All right, reduced cost of goods sold. That's what that is, that definitely carry forward. The other part here is that most people that are listening to this that are entrepreneurs bootstrapped their business and they listened to an influencer, an expert in the space, and they gave it a try. And it turns out all the stars were aligned. They worked hard, they got lucky. And they've got a business that is generating revenue for them. And you're just working like crazy on that treadmill, trying to keep up with growth, and inventory, and cash flow management; things of this nature. You didn't slow down yet or haven't had the opportunity to slow down and look at your packaging and maybe working with somebody like Inventus or Gembah to work on repackaging your products and your SKUs. When you do that, if the weight comes down, the pick pack and ship fees at your 3PL or at the FBA comes down and that will carry forward just like reduced cost of goods sold. So think about those aspects of it. They're all really important. When those savings carry forward to the new owner of the business, it's an adjustment or an add-back. We've all heard of the tariff wars in recent years, months, depending upon when you're listening to this. We've had tariffs that have been; first they were doubled; now they've been cut in half. If you're in the middle of this and your tariffs have been reduced by 50%, that savings will carry forward and you can do an adjustment on that as well. But you've got to have the data in order to do it. You can't ballpark these numbers. You've got to have the details and the data and the numbers. You've got to dig deep. You've got to use all of the math and logic that's at your fingertips if you're running your business really well and really focused with data to drive the value where it should be so the buyer can take it over again and do the right thing for the buyer. And that buyer takes it over and again does something great with the business. That's the third point; I'm sorry, sixth point of Level 3. Let's talk briefly about an add-back schedule and what it looks like and what it does for this business. For those that have planned in to jump over to video, they can see this in a P&L format, for those that are listening, I'm going to talk through it. The example I've got here is it's got a lot of add-backs in it. Let me make it crystal clear that this list I've got up in front of me, not every one of them is on every P&L add-back schedule. It's kind of excessive. But the point here is to show you how many there are and what the possibilities are. In this example though, the net income, we've got $297,000 in this add-back example. The Level 1 add-backs between payroll, payroll taxes, health insurance, charitable donation, meals and entertainment added almost $75,000 back to the net income. At a four time multiple that's $299,000 added to the list price. The Level 2 add-backs one time legal and professional fees, depreciation, and interest expenses added almost $21,000 back to the Seller's Discretionary Earnings. At a four time multiple that's $82,000. Level 3, we've got reduced cost of goods sold. You replaced an in-house bookkeeper, you've got a new e-com bookkeeper; a negative adjustment there, Mastermind joining fees, travel to events and Masterminds, and then adjustment on cost of the goods sold, cash back there; oh no this one is a cash back on your credit card. All of those total about $62,000. At a four time multiple it's adding $247,000 to the list price of the business. Between the three different levels of add-backs; $157,000 in add-backs, we started at almost $300,000 in net income and now we're at 157 in total add-backs, it's $455,000. All in at a four time multiple, these add-backs; these three different level of add-backs are adding $629,000 to the list price of the business. The bottom line is when you pay more attention to the details of the business your value is going to be much, much higher. Now, what is not a legitimate add-back? These are things that people have come to the table saying, hey, can I add this back? Hey, this is a one-time expense. It's not going to carry forward or things of this nature. And in most cases, they do carry forward or the math is really fuzzy and we can't do an add-back. The first one is inventory stock outs; lost revenue because of it. I've had people that have tried to talk me into this and in one case he did talk me into it. He was an investment banker, an attorney, an MBA; a really, really bright guy. He showed me the math and the logic behind being out of stock for a particular time in the trailing 12 months and wanted to do an add-back. The reality is that with a rapidly growing business, most people are going to be out of stock at one time or another until we get better at cash flow management. And then you're not going to be and you're going to be able to buy more inventory and you're not going be out of stock. But it occurs in most e-commerce businesses. So it's not an add-back, mostly because it does happen again and because the math is speculative at least. Okay, failed advertising campaign, point number two here, new advertising is something we all do in businesses. It's recurring and it's simply part of doing business and it's definitely not an add-back. The second owner salary that I talked about at level one in this case, it's not an add-back. If combined you're working more than 40 hours or that second owner if you're working less than 40 combined. If they've got some kind of non-transferable skill, let's say that they've developed the backend to your website and that's their primary role and they're only doing it 20 hours a week, but they're really skilled at it. Odds are the generalist buyer is not going to have that skill set. So it's not an add-back. And in fact, that payroll, you can do an adjustment on payroll if they're grossly overpaid, but you're going to have to do an adjustment in an add-back schedule showing the true cost of hiring somebody for that role after the business is sold. Recently fired essential staff is point number five. You want to let 9 to 12 months before adding back essential staff to prove that the business can be operated without them and that the trends and all the work has been separated out between new people that took over their roles. The last is I see this from some people and it's just not the right thing to do. Recent cost cutting is not a legitimate add-back. Cost cutting critical costs to increase your Seller's Discretionary Earnings, it's obvious and it erodes trust. So if you've traditionally spent $10,000 a month on advertising over the last 24 months but in the last three, you've cut it to $2,000 a month and the logic for you is because you got to boost Seller's Discretionary Earnings it's just going to hurt the new owner of the business and that's going to come back and bite them. And it's not the right thing to do but these types of things; other cost cutting is critical costs, just cut them to boost your Seller's Discretionary Earnings is definitely not an add-back. We always talk about black and white math and logic here with add-backs. There's no magic and there's no gray. Pushing too hard on add-backs is going to erode trust. We always talk about, again, the four pillars; the risk, growth, transferability, and documentation. Those are the Quiet Light four pillars. There's a fifth invisible one here and maybe it's the motor that keeps these pillars together, not a fifth pillar and that is you. That's the person behind the business that is running it. And if you push too hard on add-backs it's going to erode trust. And if you erode trust buyers are not going to give you the same value for the business or the deal structure is not going to be one that it could be if they trusted you. The more they trust you, the more they're going to pay for the business and the better deal structure you're going to get. So be a good person. Do the right thing. Run a great business. And you're going to get more value for it. Okay, so just to wrap this up for those that are stuck with me this long, I appreciate it, know your business' value. It's likely your most valuable asset. More than 50% of the money you'll ever make from your business is going to come the day that you sell it. So if you're a buyer of a business and you're on the hunt, these things are really, really important. You haven't bootstrapped, you haven't scrambled, you're coming into the business, it's already established, you could do some of these things and make these things a priority so that when you eventually exit your business; and everybody exits at one time or another, they don't think they will and they say no, I'm never going to sell. You're going to die someday; I'm sorry to tell you. So you're going to exit your business or it's going to exit you, outgrow you and not be sellable because of downward trend. So number one, know your business's value. Number two, know your numbers. Review your P&L monthly; Profit & Loss statement monthly. Get the details. The best thing you can do is outsource to an e-commerce bookkeeper or let them just give you that report every month. It takes two minutes to run the report yourself. Your cost of goods sold must be on an accrual basis. If you can get freight in on an accrual basis as well, please do because the businesses are sold on an accrual basis, not a cash basis. When you spend money on inventory and you do it on a cash basis your COGS will go up and down like a seesaw and the timing of the sale of your business will hurt you or hurt the buyer. And if you're going like crazy and you're putting all sorts of money into inventory, it's depressing your Seller's Discretionary Earnings and that's simply not the right way to do it. Review your key metrics, your churn rate, your average order value, ACOS or TACOS, your monthly recurring revenue, revenue by SKU, your inaudible [00:41:56.5]; all of these are important. Buyers are going to ask about them. The more detail you have about them, the more that knowledge is going to be conveyed, the more confidence you're going to instill in them, and the more value you're going to get for your business. Lastly, number three, track your perks. Personal expenses that are buried in the P&L owner benefits and we want to be able to pull those out of them. It's important because they are legitimate owner benefits and therefore they are add-backs. Track your cash back and travel points. Travel points can be converted. These owner benefits overall can add hundreds, if not thousands of dollars of value to your business. And you've earned it. Get paid for it. Don't take any shortcuts. There are no shortcuts to getting the true value for your business. Take the time and effort to review these and dig deep and by that, it's not an hour phone call with somebody that's trying to sell you on their ability to sell your business. I've got the perfect buyer for you. They just made an offer on another business. And I think they're going to buy your business. Please don't fall for that. You're smarter than that. We're here to help you understand the value of your business first and foremost. If you don't ever sell, that's okay. You're getting benefit from Quiet Light Brokerage, you're building a valuable business, you need to tell other people about it. Someday you will exit. Someday you will have somebody else that will exit and hopefully you'll think of us. But the key here is that you'll have a more valuable business that's better operated. And better for who? Somebody else; the buyer, and they're going to pay you more value for that. And someday oddly enough, I know it all comes back to selfishly Quiet Light Brokerage. Someday that buyer is going to sell their business as well. Maybe they'll think of us. That's our model. We want to help you first. Please take advantage of it and ask for a valuation. It's what we do. Don't say yeah, I'm not ready to sell. We do want to talk to you when you're ready to sell. We want to talk to you 12 to 24 months before you're ready to sell. Even if when you hit your target financial goal and you say you know what, I'm having fun. I want to hold on another year. Hold on to your business. You sell it when you're ready, but plan in advance. The best thing you can do is say, I want to exit; I want to change your mindset here and then I'm going to wrap this up. Change your mindset. Instead of going, how much can I get for my business? Say I want to get X for my business and then reverse engineer your pathway to that number. And the way to do that is a business valuation with a qualified expert at Quiet Light Brokerage. Now I'm pitching, right? I got to stop it. Everything we do is online. Everything we do is in the podcast. It's on YouTube. It's on our website. You could do a lot of this on your own. Go to the website, go to the show notes for this and download this PDF that matches this podcast presentation. And you're going to be able to do a lot of this on your own. If you can't do it and you don't want to do it, we're here to help. There's no cost to it. We're going to help you with it no matter what. So reach out. And don't forget, the most valuable asset is your business and you should pay very, very close attention to it. All right everybody thanks for listening. That wraps up this episode of the Quiet Light Podcast. Resources: Quiet Light Brokerage

One of the biggest challenges we face as business brokers is getting sellers to understand that we too are entrepreneurs. Getting people to do a valuation is one of the biggest hurdles because many think that just staying afloat is the goal, and the rest will come later. Sometimes later is too late. Today Joe and Mark are back sharing how to get valuation right. At Quiet Light we work hard to educate and help people find the growth paths that will get them the most value for their business in the event of a sale. We have a ton of experience in giving valuations and can guide current and future sellers to profit. When you build a great business with buyers in mind it will make the transfer so much easier. Episode Highlights: Why a business owner should plan an exit strategy early in the business building process. The benefits and tradeoffs of entrepreneurship. How long in advance someone should plan their valuation. How much it costs to do a valuation. The threefold beneficiaries of the valuation. The importance of the end goal while building. How the valuation process benefits the potential buyer. Ways selling a cohesively built business creates valuable relationships. The level of detail that is essential to a full valuation. Accounting tips for a better valuation as you go. How the valuation process gives owners paths hidden profits. The other three of a successful business How the invisible fifth pillar makes a difference in the overall value of your business. Mark's quick wrap-up of the importance of a valuation. Transcription: Joe: Mark, one of the biggest challenges that we have as business brokers is conveying to people that we're entrepreneurs first. We've all been in their shoes. We're technically still entrepreneurs, right? We run Quiet Light Brokerage. And getting people to get beyond the mindset of running their business and saying I'm not ready to sell I don't to have a conversation about exiting to actually thinking well in advance of an exit is one of the biggest challenges and honestly, it's frustrating. It's frustrating for me and that's why we work so hard to educate and help and we do this podcast so we can get more people thinking well in advance of their exit. But I want to ask you as the original founder of Quiet Light Brokerage, the man with so many stories to tell, why in your opinion should somebody even plan their exit and give it thought well in advance of selling their business; what are the benefits? Mark: Boy that's a big question and I could actually give you a number of benefits and since you put me on the spot I don't have them in order in terms of what I would think would be the most important. But I'll start with this one which I think might not be the most important reason but I think it might be the most applicable for most people. It will resonate with most people and that's this, having a business that is valuable in an exit usually means you have a very valuable business to own. That's the number one reason in my opinion. So let me explain that and flesh that out a little bit. Obviously, if somebody is willing to buy your business for quite a bit of money; let's say they're willing to pay a four-time or five-time multiple, what they're seeing there as a business that is desirable to own, it is going to grow, and it's going to kick off a lot of cash in the future which obviously if you come to me or come to any entrepreneur and say do you want to own a business that doesn't require a ton of work has a lot of upsides and is consistently throwing off money most people would say yes, right? If we talk about the four pillars which we do so often here, do you want to own a business that has a low-risk profile and good growth prospects as the two first pillars? Yes, most of us want to. So the first reason I would say is when you go through the process of planning to sell even if you decide not to sell your business the result of it is that you have a business which is more stable, you know the growth paths available to your business, and you have great documentation in place for the business. So that'll be my number one reason right out the gate. And I don't know if you want to discuss that or I can give you a couple of others if you want. Joe: Yeah well let's first tell the folks listening that there is no special guest today it's you and me and we're going to talk through… Mark: I'm special Joe. You're special. I am special. Joe: Actually, I just gave you hosting privileges on this. Mark: So we're special. Joe: Technically I'm the guest and then I'm not special. Hey, we're not having anybody on today because Mark and I have a ton of experience at this. We do valuations every day so we want to talk about the reason to have one done and then what we do. We'll talk about what goes into it, and what we discovered, and what we learned along the way. So yes Mark if you want to talk first about that first example that you gave an elaborate on it a little bit we can do that and then go into some details on what it's like to get a valuation and what we do here at Quiet Light Brokerage when we put someone through the process. Mark: Oh sure. Actually, I do want to get to the other reason because these are the two that were kind of vying for my attention when you first asked that question. The second reason is that you just really don't know what the future holds. In the 14 years of doing this; at the time of this podcast almost 14 and a half years that I'm doing this, the number of clients that I've run into that are unprepared for the sale is exceedingly high and the number of clients that are unprepared who wish they had planned in advance is almost universal. So if you find that you're unprepared to sell you you've reached that point where you want to and you realize you aren't there yet there's often some sort of regret. It's kind of like thinking about the person who goes into the dentist for a root canal wishing that they had visited the dentist more frequently before. That inconvenience at the time would have paid off. Or for the person reaching retirement age wishing they had done more to plan their retirement. There are so many of these examples where especially entrepreneurs would get focused on the here and now today which is important. Obviously, we need to take care of that without the eye towards tomorrow that when tomorrow comes it often takes you by surprise. For entrepreneurs, we're in such a really cool spot. We have an opportunity to generate income that frankly people in the regular business world or regular careers don't have the opportunity to make. The tradeoff is some of that stability that you would get in the corporate office world and maybe some of the benefits and everything else that goes along with that. But for us, the benefit; the gain is the income potential but also what most people fail to see is the value of the asset that they are building in and of its own right and that alone can lead to early retirement, that can lead to being able to invest in much larger projects, that can be catapulted into something significantly bigger. But it does not happen if you build an asset which can't be sold. And so not only is it good to own a business like this because it follows basic business principles of having a low-risk profile and high growth opportunities and is usually very well documented which is a good thing; it ties into those two elements but it also gives you financial flexibility for the future and also career flexibility for the future as well. And if you don't do it the flip side is you can build yourself a prison which I'm sure you've seen a few people build prisons for themselves and their businesses. Joe: That's very, very hard. You want the independence and life of an entrepreneur and you've built yourself a business prison that you can't get out of and you just can't get ahead. But let's ask this; people ask me these questions all the time, we have a conversation about exits and valuations all the time so I mean I'd just grow you with a few here. Number one how long in advance should somebody do evaluation and plan their exit? We always hear I'm not ready to sell, why should I talk to you now? Mark: At least 12 months, right? I'm working with a client right now and they wanted to do evaluations, see where they're at financially and I said that's great send me your P&Ls and your balance sheets and they did which is awesome. I had a chance to review them and I had some further questions for them. Nothing came back so I bugged them about it and nothing came back. I finally bugged them again and they said well you know what we're doing is we're actually going through and we're eliminating some of these discretionary expenses, we're going to be doing this, that, the other thing and alarms are going off of my head because I see them taking some tax that they probably shouldn't be, right? Okay, I understand where you're going. For example one of the things that they're doing is they're cutting back on advertising spending in order to grow their bottom-line earnings. Well, let me ask you, Joe, what happens when you cut back on advertising? Joe: That's a big no-no. It's convergent graph lines, right? Discretionary earnings go up and your total revenue goes down. Mark: Right. Yeah. Nobody likes that alligator going to the left. Because if you see a graph where the revenue is going down or earning is going up we know that earning is going to go down in the future or to regain the momentum you have to outspend on advertising in most cases. To make it a more efficient one thing but that's on another. So how long; sorry, you asked me a question and you know me, I won't shut up. 12 months at a minimum? I would recommend 24, even 36 if you can just because if there's big changes that you want to make; let's say that you really want to explore that new product line, give yourself some runway to be able to plan that out. Joe: Okay, how much does it cost to do a valuation? Mark: Well it doesn't cost anything. Joe: Why? If it's free what's it worth. I don't understand. What's the business model? You're doing valuations for nothing. Mark: Oh you convinced me. If somebody wants to do a valuation of myself you're going to be paying a lot of money. So for us, it makes sense, right? I mean the number of times when I've started Quiet Light and was working with clients in the early days so many clients were being turned away because; not in saying I won't work with you but I would do the valuation. They say I'm ready to sell my business and I take a look at it and Joe you know the conversation. You and I had this conversation. And I looked at your business and I said okay right now it's worth X but Joe if you wait a little bit time, do some of the things that you're doing right now, actually, you're doing a lot of good things, just wait a little bit you're going to add this much value to your business. Other people it's a little bit different, right? It's hey you know what you have your name, you are a doctor and you are selling an information guide about how to take care of athlete's foot. And your name is plastered all over this. Well, guess what? That's not a transferable business because everyone's buying it based on your name. So I'm going to have trouble selling your business and if we do sell it it's going to come at a discount. But Mr. Doctor athlete's foot if you take your name off of this and show us that it can run for 12 months just as well if not better than it is right now without your name plastered all over it instead of getting maybe a 1½ multiple you're going to get like a 3.2 or 3.3. Joe: And who does that benefit? Mark: That benefits the client. Joe: There are three parties that it benefits. Mark: I'm being quizzed here. Joe: You are being quizzed. So it benefits the guy who's running the business, it benefits Quiet Light Brokerage which is a weird model, right? We do it for free folks but in the long run, it benefits us because you're going to have a more valuable business. But there's this third party that benefits as well and that third party… Mark: Is the buyer. Joe: Right. They might eventually become our clients as well too. So it's an odd model. As my mentor said, Joe, it seems like you guys are giving things away for free on a hope and a prayer that they'll come back to you someday. And I said exactly Walter that's what we're doing and it works very well. We're building relationships and building trust and we're helping first. And strangely the more people we help the more our business grows and the more valuable their businesses become and the more buyers buy great businesses. And it's an endless positive cycle and works very well. With that said I remember being at eCommerceFuel a few years ago and I came back; I sat at the bar with one of the presenters, I cannot pronounce his name. All I know is he swore a lot on stage but he was really good. He was really good and I had a beer with him afterwards and he said something like well I'd have a valuation done but honestly it's free I'd feel like I'm committed to you. I'm obligated to you because I didn't pay you. If I pay you I can just walk away. And it's an interesting viewpoint but we are all about relationships and we want to help. We want to get it done. And the more conversations we can have well in advance of a sale selfishly it makes it a lot easier for us when it comes to the time to list your business. I'm in the middle of a valuation right now where there are two brands in one seller account and there's a royalty arrangement and they have a coaching business and different LLCs. It's just a mess and the add-back schedule is getting deep and long. It's almost as long as the P&L itself which raises the antenna of the buyers. We don't want that. We want to have this clean business presentation as possible. So I'm with you 12, 24, 36 months in advance. Have the conversation. Get an education on the value and the process of maximizing the value of what is likely your most valuable asset. I was having a conversation with Mike Jackness a few weeks ago and we're doing a presentation it was actually at eCommerceFuel and he said the problem is you can't talk too much about exits and planning with these guys. They're doing all they can just to keep the wheels on the bus, to keep revenue going, and not run out of inventory, and do all these different things. I'm like yes, yes, yes, but when they have a clear vision of the value of the business and the view of an eventual exit when the wheel falls off and they've got to put it back on it's a lot easier because they still know where they're going. Otherwise, they're just wandering aimlessly trying not to run out of inventory; solving problems without an end goal in mind which is it's exhausting sometimes. Mark: Yeah and I want to comment on one aspect here about the idea of benefiting the buyer because if you're a business owner you might be thinking well I don't really care about the buyer at the end of the day. I mean I care but when you talk to entrepreneurs and sellers sometimes the approach they take is yeah I hope that the buyer does well with it but that's definitely a footnote compared to what they get out of the sale and understandably so. I'm not criticizing anyone who has that sort of attitude. But in your opinion, Joe why should the seller care about whether or not the buyer gets a good deal? Not a good deal as far as discounted but a good business that they can make a good return on investment on. Joe: Yeah that's actually not very complicated. It's when you do the right thing you will be rewarded. If you build a great business that checks all of the four pillar boxes, that really highlights all of the financial key metrics in a very, very positive way; and these are things that we do in the valuation folks when all of those things are you know 8s, 9s, 10s or a really solid green light guess what? That buyer is going to pay you more for the business. They're going to pay a higher multiple with better terms and it's going to be an easier transaction for you. Most people that are selling their businesses sometimes it comes down to okay like Quiet Light Brokerage we had 2½ offers for every listing that we put out there in 2019. So buyers are liking our listings, they're liking the way the packages are put together because we work with our clients for a long time and sellers sometimes have a choice. And sometimes they want to choose who is going to be easier in the transition afterwards. When you build a great business and you think of your eventual buyer in mind that transition is going to be easy because you've got SOPs in place, you've got a long communication with your broker advisor here at Quiet Light that's going to talk to you about all of those different things and making that transition easier because that's one of the four pillars; the transferability of the business and all the things that generate revenue for it. So now you're asking a short question and I'm giving you a long answer, it's the buyer will pay you more, as simple as that. Mark: The buyer will pay you more. I would also add on there that I think we are quick to dismiss the power of relationships and the people that you're going to meet when you go to sell your business. These are really important things. I had a situation; as you know I have another business besides Quiet Light Brokerage that doesn't take up a lot of my time but I ran into an issue the other day. It was a really complex difficult issue but the seller and I are friends at this point. We know each other pretty well and I hadn't run into this before. So I sent him an e-mail and said hey how have we dealt with this before he came back with a nice long response and insightful and everything else. It was a really good resource for me to have and he and I are on good terms because he's treated me fairly all along and built a business that was worth buying, to begin with. He's a valuable asset and if I ever want to do new things in this space he would be somebody that I would look to partner with because he's already skilled in this area. And when you're selling your business you're typically selling to somebody who is highly skilled and a successful entrepreneur in their own right. Isn't that a good person to have you in your Rolodex? I don't want to overemphasize this point and say this is the only reason you want to do it. I think what you listed Joe what you explained I think that is really where you want to put the focus and emphasis. But there's a whole host of ancillary benefits to creating a transaction that benefits yourself first, the broker who is going to be working with you and your team your partner with you, and also that buyer making sure that they have a business that they're going to be able to succeed with. Joe: Let's talk about what we actually do in evaluation. Mark: Sure. Joe: I'm going to kick this off. One of the first things that; I've got a call this afternoon at 4:00 today I'm doing an initial valuation call with a couple of very experienced entrepreneurs. The first thing we need are financials. So as an entrepreneur, as a business owner, if you're not able to run a profit loss statement with a monthly view going back more than 12 months we're not going to be able to do a full valuation because the full valuation does a year over year comparison. I'm going to look at January of 2020 versus January of 2019 and hopefully '18 and so on. And that's part of the financial key metrics in terms of where the top-line growth trends are, where the advertising cost as a percentage of revenue is, and where it's trending. Is it seasonal? We're going to talk about the timing of listing a business sale. Even if you're looking three or four years out we're going to talk about some of those things and we're going to see all of that with the detailed financials. Now today Walker wrapped up a long email chain between all of us where he had a client trying to do a valuation and get his business listed for sale and all he had were quarterly P&Ls. What's the problem in your view Mark with quarterly P&Ls versus monthly P&Ls? Mark: It's just the level of detail, right? I mean I can go backwards. I can take monthly P&Ls and go over to quarterly and I didn't comment; we had a discussion about this within the company and I didn't comment on it before everything resolved themselves. There are some businesses frankly that I think quarterlies worked really well for and probably better for; businesses with lumpy income benefit from having a little bit larger of a lens that we're looking through to even that out so we can see what the real trends are. But it's good to have that option to be able to go to monthly because you have more detail. What you pointed out Joe and I think it's a very good point is that when you get into the transaction and let's say a buyer places an offer we get past a quarter and let's say that we're month one into the quarter, most buyers before they close on a transaction want to know what the business has done over the past month and that time that they're doing their due diligence. Did it completely blow up while they were doing that final piece of due diligence? So they're going to ask for these updated numbers along the way as they're going through the process. Well if you have to wait two more months in order to close to be able to get reliable updated numbers that's just going to extend your timeline, introduce further risk that something happens and the buyer has to pull out and will disadvantage you in that way. And again the lack of detail when I'm doing analysis on a business for a valuation I love looking at the trends I like looking at year over year trends and really I start to look at the different months. And it's surprising the number of businesses that obviously November December get a spike are pretty high but let's say like home and garden stores often get a bump right around April or May so that'll be a second quarter. Maybe it spans two different quarters and you really get a sense for how does this business breathe over the course of a year. Right? Joe: So we're going to look in great detail at the financials. So we want you to run a profit and loss statement for me to Quick Books or Xero with a monthly view going back as far as you can up through the most recently reconciled month. If it's an e-commerce business we definitely want to get those P&Ls on an accrual basis. If we can't get them on accrual basis because you do cash accounting at some point we're going to have to find a way to flip the land cost of goods sold to accrual. Why? Because if a business is growing like crazy you're taking a lot of cash flow from the business and putting it right back into more and more inventory and that's going to depress your seller's discretionary earnings. And your business is a multiple of seller's discretionary earnings which is net income plus add-backs equals SDE. Mark: Yeah I want to talk about this accrual basis because I'm seeing this more and more. People are hearing us, they're hearing this message, and I'm seeing more and more books delivered to us on a false accrual basis is what I would call it. So here's the problem, bookkeepers don't like to do accrual basis accounting because it's hard. It takes more work. It takes more reporting on a monthly basis. They need to dig in, see what you sold, tie that back to the cost of goods sold, and record that. What I'm seeing pretty commonly here is accountants who make a year-end adjustments for the cost of goods sold. And so what you end up seeing is cost of goods sold seems kind of flat or kind of lumpy all throughout the year and then in December all of a sudden everythings out of whack. It doesn't match up. Speaking about the monthly one of the elements that a buyer is going to evaluate when looking at your business if you're selling physical products business or even if you're selling; you can do this if you're SaaS business as well it's just a cost of sales numbers out of the cost of goods sold. One of the key metrics we want to look at is your business getting more expensive to run; in other words, if you're consistently bringing in 5 million dollars of revenue what does it cost to generate that 5 million dollars of revenue? Are your products getting more expensive? Have you had a discount on those products over time? Are there periods during the year where you have to do one or the other? If you are in SaaS business are the cost of sales going up; your commissions that you're paying out the salespeople if you're on a commission sales basis. You can't get these numbers unless you're on accrual basis accounting. And a buyer, a smart buyer, if you want to sell to a smart buyer will want to see this information to see is this trending in the right direction and if not then we need to work this into the valuation; so monthly accrual. Joe: When this false accrual practice is done it's generally done by a CPA not a bookkeeper because they're doing some adjustments for the end of the year. Although just to be clear everyone if you've got an e-commerce business with physical products you are going to file your taxes on a cash basis. But when you're looking at the value of your business we need it on an accrual basis. You should have a CPA for your taxes. You should have an e-commerce bookkeeper for your daily, monthly, quarterly profit and loss statements. You should not in my opinion or view do that work yourself anymore if it takes you three or four hours a month you're worth more than the $400, $500, or $600 a month that a really highly qualified e-commerce bookkeeper is going to charge you. Mark: Yeah and we've made this point before but I'll make it again. It all depends on how you enter the information or your bookkeeper how they enter the information into whatever accounting software you're using. If you enter the information as an accrual basis you can flip to cash with a click of a button. It's very easy to do. Joe: Very easy, yeah. Mark: If you enter your information into your books on a cash basis you can't flip it to accrual. I mean you can, you're just going to get the wrong numbers, right? The software is stupid in that way. It's going to try and it's going to calculate it but you've entered the data wrong. So if you entered it in as accrual you can file in cash, that's totally fine. But for the sake of accuracy, you should be entering it or having your bookkeeper enter it in as accrual. And ask your bookkeeper this too, when I hired our bookkeeper I asked them; I sent them an interview, a written interview and I asked them to explain what accrual accounting was. I know what it is but I wanted to see could they explain it. And I was shocked at the number of foot keepers that couldn't explain it in a clear, concise way. Joe: It's not hard guys. Just we'll move beyond this make your eye bleed accounting part of the conversation. Look up cost of goods sold accrual formula. That's all it is. It's beginning inventory plus purchases minus ending inventory on a monthly basis. That's ideal. But the point; one last point is that if you spend a million bucks a year on inventory and you're just doing adjustment or a guess we have to flip things sometimes to accrual. If you're off by 1½%, that's $15,000. If you're spending a million bucks on inventory, you're spending a lot of money; you may be doing 4 million 5 million dollars a year in revenue which probably means you're doing $750,000 in discretionary earnings. You might be at a four-time multiple at that point; four times the $15,000 that you got wrong on the inventory is $60,000 that you're not putting in your pocket in the sale of your business because you wouldn't spend $500 a month on an e-commerce bookkeeper. Or you're overcharging your buyer by that 15,000 times four because you guessed on the wrong side and things are going to fall apart or go off the rails in due diligence. So get it right, build trust, and move on. Okay, so first thing we need is a clean professionally done profit and loss statement with a monthly view. We're going to import that into the Quiet Light Brokerage import system. We're going to normalize the P&L. If you've ever looked at our listings folks you can see they look pretty much the same; our profit and loss statements. We do that because we see them in every shape, size, quantity, format, PDF, Excel. I mean it's crazy I'm surprised somebody hasn't mailed in a napkin at one point or another to Quiet Light. Mark: I had a notepad document once on a 20 million-plus business. Joe: We don't want our buyers to see that so we import it. We have an importing process where we're going to pull it in and we're going to analyze the key metrics; the financial key metrics that buyers over the last 14 years have told us this is what we look at. They're looking at top-line revenue trends. They're looking at gross profit, trends, shrinking or growing, and then they're looking at advertising cost as a percentage of total revenue and how it's trending. As Mark said earlier you could be spending a lot of money on advertising in the last six months to drive top-line revenue or the reverse and it all weaves together in a web, right? I've had a listing for sale last year and the seller said I handed my advertising off to a VA in late spring last year and I let him run it and five months in I realize things got out of hand and I pulled it back and took it over myself. We do a recorded interview just like we're doing right now on Zoom. We do it on video, we do it on audio, that's part of the package when a business is for sale. And that question may come up then it also may come up in the written client interview and then guess what it all weaves into the profit and loss statements and the financial key metrics when then you can go and look at the advertising trends going yeah look at that Joe was right in July, and August and September the numbers were up and advertising was 17% instead of the normalized 12% that it's been for the last three years. So you can see those different types of things. I had a situation just last week where I was looking at a profit loss statement where the ad spend went through the roof in December but revenue went down. That tells a story that he's struggling against competition and it's not really working out. He's spending a lot more money but sales are going down and lo and behold January and February are down as well. The numbers tell a story so the first thing we've got to get are the numbers, right Mark? Mark: Yeah. And I'm going to share something here Joe that I think was last week or maybe the week before, you actually did a valuation on Quiet Light brokerage. Joe: I did. Mark: Which was done not because we're looking for a buyer although if somebody wants to offer us 30 million dollars let's have a conversation. More importantly you wanted to look for areas of wasteful spending on our part and also key trends for the business as well. So let's think about this in terms of not selling our business, let's think about this in terms of business owners who want to run their business efficiently. Let's say you take the last three years' worth of your P&Ls and they're done on a true accrual basis and you take a look and you see that your gross profit margins have gone from 60% and they're dropping down to 52%. Now you might know why that's happening, you might know what's going on there but you can also identify that as a trend that if you were to correct that trend it's going to help the business. I worked with a client; I'm actually in the middle of doing a valuation for them and they keyed in on this on their own. They were very proud of this. They said look our gross profit margins are 42% right now but what we did over the course of the past year our revenue is down because of a very explainable reason but what we did is we found a product line. We found a method here to increase our gross margins from 42% upwards to 54%, 55%. We were able to test this on a singular product and it worked well and we plan to expand this. Well look what happened by looking at their margins and understanding the margins and understanding that's an area of opportunity they've uncovered a huge avenue to growth which is replicable and from a valuation standpoint it's great but from a business ownership standpoint, it's even better for them because now they can charge a charge more, pay less. Who doesn't want that, right? So let's exercise; again you asked why should we do a valuation beyond being prepared to sell should that they arise? It's a valuable exercise to do as business owners. Joe: I got an email the other day and it was from somebody named Anthony; let's leave it at that. And he wrote Joe this is really, really insightful. I had certain financial goals in the business and now I realize I'm that much closer to them than I ever was. This is making it so much more exciting to run my business every day which is exactly what it truly is. In that situation we determined, he determined; he came to the table with they've decided to charge shipping on items over a certain dollar value and that was going to add their estimate was $180,000 in additional discretionary earnings over a 12 month period. And then they had renegotiated cost of goods sold, they were going to save about $2 a unit and that was going to add $200,000 in total discretionary earnings over the next 12 months. That's $380,000 right there and with another $400,000 now they're at $680,000 they expect to be adding 2020. It's getting that much closer to their exit goal and it just defogs their window put your high beams on you can really see that much better when you're running your business it makes it that much more exciting. A lot of the things that we do talk about beyond the financials, Mark; it's not just about the numbers folks, it really starts with them. It's funny that it starts with them but that's pillar number four, documentation. Let's talk about the other three pillars briefly, Mark. Go ahead and tell me what the other three are. Mark: Risk, growth, transferability. Joe: It took me a while to remember what all four those are and I'm going to hold this up everybody; anybody that's on YouTube. I still have this on my desk after eight years. It says what they all are right there. Mark: I didn't make it memorable enough. Joe: Risk, growth, transferability, and documentation. Mark: How are you as a student in school? I'm just curious. Joe: Oh I fell asleep in accounting class I tell that story all the time. And the bottom part of that; oh look at that I forgot to turn my phone off you're hearing my Twitter. Mark: I heard a bird. Joe: The bottom part of that note there was that our business is relational, not transactional. I need reminders every day. Anyway, risk, growth, transferability, and documentation; we've talked about number four, risk. I've got a business that should be closing in the next few days and 70% of their revenue is from one SKU. What is that called? Mark: That's product concentration or a single point of failure. Joe: Or a hero SKU or a bad idea or a unicorn; all sorts of trouble. I had a conversation with somebody; a couple three years ago… Mark: Bad idea. Joe: Actually it's a bad idea. Mark: It's not a bad idea if it's sustainable just to be clear but yeah I get where you're going. Joe: Well here's the sustainable part, so there was a gentleman that I was working on a valuation for and he had one SKU that generated 90% of his revenue. And I'm like this is a bad idea. He's like well it's a lot less work Joe, it's very defensible, look at our reviews. I mean he had me convinced that it was actually a good idea. And then guess what happened? Facebook changed an algorithm and they're their ads that were working with no longer allowed and they never recovered. Their business was worth two million dollars one month and the next month it was worth like one maybe; two million, 50% cut just like that and I haven't heard from him so I'm sure it's gotten worse and worse and worse. It's a single point of failure. It's a hero SKU. It's a risk. So, therefore, buyers are going to decrease the value when it comes to the valuation. We're going to do it for you and we're going to tell you what buyers think but it's a decimal point or two or three. So instead of at a 3.2 multiple; I'm going to do some math for everybody, simple numbers at 3.2 if you've got $100,000 in discretionary earning you're at 320,000 in terms of list price. Two-tenths of a decimal point off because of a risk point you go from 320 down to 300 or 300 down to 280. It changes that quickly because of a single point of failure or because of risk in disregard. So that's part of the risk, it's the hero SKU; things of that nature. But there's also age, there are trends, right? So generally we want to have a business that's about 24 months old at a minimum. We sold them for less. There are exceptions to every single rule we talked about here. But 24 months is when buyers start to have confidence and they don't discount the value of the business because of age. The other thing to talk about is the trends, Mark, right? I just had a valuation call last night with somebody I've been talking to for six months. And I can't seem to get updated financials on a monthly basis. That's the challenge. And finally, I get them and we have a conversation. We're recording this on March 3rd. I don't have January and February's numbers. I finally have Q4 and top-line revenues down 25%, bottom line discretionary earnings down 30%. So the value of that business just went from three-point something based upon the numbers down to easily 2.5 on the top side. So it's risk because it's trending down and somebody has to jump in and fix that downward trend, right? Mark: Mm-hmm that's right; yeah, absolutely. And one thing with these downward trends you talked about how quickly the discount, just an observation multiples go down much more easily than they go up. It's hard to prop the value and that multiple upwards but people would discount much more aggressively when they start to see problems such as the concentration or as you said the bad idea. Joe: So it is a bad idea when somebody calls and says hey I'd like to sell, I'd say hey you really can't nobody else will buy it. Bad idea. So we touch risk, we touched on growth; these are the first two, let's talk about the transferability of the business. What are the key components to this pillar? Mark: Yeah, the transferability; the easiest way in my world to think about this is just can somebody step into your shoes today and run the business without having a significant decline. Or maybe another way to think about it would be what's the learning curve of the business, or do you have documentation in place that will allow people to be replaced if needed? The transferability is just that and it can encompass a number of things first of all that affects all businesses would be procedures. The procedures that you have within your company to run it on a day to day basis; how do you handle returns if you have that sort of business, what are some common customer complaints or concerns or questions and how do you handle those; do you have a process set up for that. If you're an inventory-based business what is your inventory ordering process and your forecasting process? That's something that should be in a standard operating procedure. So there's all sorts of SOPs. Outside of those elements, transferability can come into your customer acquisition process and I brought this example up before during this call. If you're a doctor and your name is all over the website for your great athlete's foot cure now you've set up a barrier to transferability because you're selling off your own personal reputation. And unless you're willing to give your name and reputation to somebody else which most people aren't and understandably so you need to get that off there and no longer be the key method for customer acquisition. And the last thing would be licensing issues or other requirements to run your business. We've seen this before. Joe you had a valuation I remember this clear as day at Rhodium Weekend when they were doing live valuations up onstage and somebody came with a business we were supposed to be working quiet with other advisors, everyone was going to do valuations so we could see what it looked like live on stage and what was the result; it was an e-commerce business, what was the result of that valuation? Joe: It wasn't transferrable because they were sourcing product from the old; it was the old school, they were required to have a retail space so the business was going to be very, very hard to transfer. And I want to comment on that. Mark: It used to very common where wholesalers would require that you have a brick and mortar store because a lot of the legacy brick and mortar stores were telling their suppliers don't let these internet people come in and just start selling this and so they would require that storefront but it still exists out there. The other issues that I've seen with these licensing issues would be not only the storefront issue but maybe if you actually have to have a license to run the business. And you see this like; we had this with somebody that was selling high-end hair products. And you think well, what's the problem there? Well in order to sell these hair products you need to have a cosmetology license. And so that's a transferability issue. It cuts both ways though. Transferability when it comes to licensing and then these hurdles does set you up with some defense ability that can actually help your risk profile be lowered; anytime that there's a hurdle to jump over a business if you jump over it you're leaving some of your competitors on the other side of that hurdle, so that's a good thing. But the element that we started off with the SOPs and the documentation of your procedures, it's something that everybody should be able to do and should have in place. What are your common procedures, how do you do it, let's make it easy? I know you have something to say here on this, the last thing that I would recommend people do and I actually just did this with Quiet Light Brokerage for your sake and for other people within the company, diagram your business. Write out everybody who works for your business. Write it out; you can draw it if you like to draw, you can use a graphing software. I used Lucid Chart; very easy to use Lucid Chart for this or just write it out and see who has what roles within your business and how does that look. I'll tell you what it's an eye-opening experience because what you find especially in small businesses is you have people who wear multiple hats. You might find some crossover there as well. So that's where I would put transferability. Joe: Too many people are focused on the top line and very proud of the total revenues that they're doing. But ultimately we're running these businesses to make money and to be profitable and we can help you hone in on that profitability and what your business is truly worth. So we've touched on what we do when we import and normalize a P&L and look at financial key metrics. We've touched on the four pillars which are risk, growth, transferability, and documentation. Within each pillar, there's five to six different points that we touched on in a valuation process and we really get to know this invisible; I call it a fifth pillar. Mark corrects me every time. You don't need to Mark, people know this. The person behind the business; the trust and credibility that they have is that invisible fifth pillar. It's the mortar holding it all together. Are you a good human? Do people trust you? Do people like you? Believe it or not, if you are people are going to pay more for your business. You do make a difference in the overall value of your business. So we do all of these things and then we create a profit and loss statement with a detailed add-backs schedule. We go through that with you and we firm up your seller's discretionary earnings and apply a multiple range to it. This is where it gets into the weeds and we won't do it today on this podcast. I'm actually going to go ahead and record a podcast following this one on the three levels of add-backs. There are six different points to each level and it's very eye-opening. A lot of people don't understand the importance of detailing the add-backs. A few folks are like why do I need a broker for I'm just going to sell to this consumer group that's buying up FBA businesses. You need to understand the add-back schedules so that if you choose to sell directly to them you're getting maximum value for your business or even better the real value for your business; not maximum, the real value. It's okay, you can choose to sell to whomever you want however you want but make sure you're getting your own numbers right and that's what I'm going to share on the next podcast. Mark: Fantastic. Joe: Okay, one more final thing. Mark: I was going to say we're getting close to time here. People are like my drive is done. I'm at the office. Joe: We are. You're so eloquent Mark with your words and your e-mails and all this. I say this all the time and people hear you speak. You speak very, very well so why don't you do one final wrap up on why you think someone should have a business evaluation done through Quiet Light Brokerage and how it's going to help them in the future and then I'll give my two cents as well. Mark: Flattery is not going to get you anywhere Joe. Joe: Tell them what I want you to tell them. Mark: Well that I don't exactly know, I'll tell them what I think. So the question is why should people get a valuation done to kind of wrap this up. Your business is most likely your most valuable asset and if it isn't yet hopefully it will be someday and you should know what the value of it is. More importantly, you should understand what drives the value of your business and also what's holding it back. My favorite part of evaluation when I'm doing one; and actually I've got a call here in seven minutes to do a valuation, it's going to be coming up soon, somebody is taking us up on this. My favorite part of a valuation isn't telling somebody what their business is worth right now because that's usually somewhat predictable. It's being able to tell them what I love about this business and what buyers are going to salivate over is fill in the blank, and this part you've done a great job here, the areas where you're going to have some friction in your sale and it's going to cause a discount on the business are these elements. Now what I'm doing there is I'm really giving some insight into where the business is today but I'm also laying out a roadmap for everybody that I'm doing that for to say if you want to grow the value of this asset work on these elements and you know what if there's an element of your business that's really good double down on it. One of the areas that we've talked about in the past is this pillar of growth, we want them to have lots of growth potential for the business; lots of growth prospects for that business and they need to be real. However, if you have easy obvious growth within your business take advantage of it because I would rather multiply a larger earnings number and get that going up because it's a lot easier to grow your value that way. Doing a valuation will help identify those aspects of your business; where is it valuable right now, what's holding it back, and what's the plan to be able to make it more valuable. You don't have to sell the business. If you do these things you will have a business that is more valuable and you're going to gain insights that you never really thought about. I will challenge everybody if you don't do anything else on this call we've talked a lot about finances so I'm going to change it up. Diagram your business and then feel free to email me if you thought it was a complete waste of time. Joe: Or you can go at Mark@QuietLightBrokerage.com. Mark: Tell me it's a complete waste of time. Joe: Mark with a K. Mark: Mark with a K. The only way it would be a complete waste of time is if you have like two people in your company. But then you know what? Joe: Send him an email. Mark: Yeah, right. But then if you're going to do that diagram out the other people that are supporting you. Your contractors, the vendors, the people that are key for your business to run and take a look at that and you might not gain a whole lot of new insights but you're going to see your business in a way that you've never seen it before. Joe: What you're hearing here from Mark is that we're here to help. We're sharing information with you and giving you tools to make a better decision for your business and for the future when you are ready. If you are ever ready to sell. In no way shape or form are we ever here to talk you into anything. We're going to share the information with you. And that was the reason I chose Quiet Light Brokerage back in 2010 to sell my own business. I talked to three different firms. Two were trying to get me to sign a contract. The third was giving me helpful information to build a more valuable business to sell when I was ready to sell. And that conversation was with Mark. Lastly, don't be embarrassed by the size of your business. Sometimes we'll go to Mastermind groups and someone will; I can tell they're uncomfortable talking to us because they're only doing $100,000 in profit. Are you kidding me? You're an entrepreneur, you've built your own business, you're doing $100,000 in profit which is 40% higher than the national average; I don't know the numbers, I'm going to get a correction on that Joe@QuietLightBrokerage.com. It's huge compared to the national average. Don't ever be embarrassed by the size of your business. The smallest one we sold in 2019 was $28,000. Yes, it was a pocket deal because Brad had a larger listing and the gentleman had two smaller sites he wanted to sell off. They're all shapes and sizes. Our average transaction size in 2019 was 1.1 million. It grows every single year but we go through all different sizes. We want to help you get from that hundred thousand dollar valuation to a million-dollar valuation. We've had clients where they first sold their business at 7,000 then 20,000 then 220,000 and now nine million and the next exit that that particular individual has set is 100 million. We want you guys to achieve your goals and we're going to help you along the way. But we're not going to talk you into a single thing. So reach out go to the website. It's the valuation form or sell form I think it is or it shoot us an email at inquiries@QuietLightBrokerage.com and we'll hook you up with one of the qualified advisors here who are all entrepreneurs themselves. Links and Resources: Quiet Light Brokerage

Twenty years ago David Wood was ahead of the curve in the coaching space thanks to a workshop that led him to delve into the emotional aspects of business leadership. He is here today to discuss ways owners can use emotional intelligence to overcome the hurdles and valleys of growing a business. David is a high performance life and business coach, working solely with established entrepreneurs. He got his start on Park Avenue at the age of 23 and thought he had it made as a consulting actuary. A mandatory personal growth workshop made him realize that he was clueless about anything emotional in business. Today he uses his knowledge in his own business, Play for Real, to help entrepreneurs and business leaders push through tough scenarios with themselves and others and help them to do great things. David also is a coach trainer, mentor, author, and host of the Tough Conversations podcast. Episode Highlights: Reasons why David is speaking with us today. How he takes surface level goals and delves deeper into them. What questions entrepreneurs should ask themselves in order to get through any growth challenges in their business. David's focus on goal setting. The difference between a coach and a therapist. Why people seem so eager to move to the next thing when a sale is over. Quick coaching tips for business owners. The 4-step approach David suggests for sellers and buyers. How David's techniques can help your business and improve your life. Transcription: Mark: So a few years ago Joe I wrote a blog post on the Quiet Light blog and you can actually look this up and it's called I made a bad website acquisition. It was about a business that I bought and made some mistakes with and subsequently sold later on. At the end of that little ownership period that I had with that; it was a really small acquisition, we're talking a very small five figure level here but at the end of that period I hated that business. I hated it so much because it wasn't making any money. It was taking a bunch of my time. The logistics were a bit of a pain. And I got to the point where frankly I was willing to get rid of it for just about anything. And when we talk about the soft side of a transaction a lot of times people want to talk about the financial side and the metrics and the numbers and the financials; how do you actually juice that multiple, how do you get the value as high as you can? But so much of what we do is on that other side and that is the soft side of the transaction and understanding the arc of an entrepreneur's ownership of the business and how are you going to feel when you sold that business as well. And look before you turn it off and think this is all soft gooey stuff; this has a real impact on valuations. And I know you talked to David Wood about this, he was a business coach, because he really kind of keyed in on that as well. Joe: Yeah I know it has a tremendous impact. I like to say don't let the business outgrow you. That's generally why people sell because they've got a certain capacity and the business outgrows them; they get sick of it, they get frustrated, trends change, and they sell which is exactly what not to do. So working with a business coach like David who spends a lot of time with people in the e-commerce world helps you understand what your own personal goals are in business and in life. They're combined when you're an entrepreneur. And helps you get through those valleys and over those hurdles as you need to. David is a good friend of Ezra Firestone. I met him at Blue Ribbon Mastermind. Brad and I and Chris were there so I heard him do a fantastic presentation and I just had to connect with him afterwards and have him on the podcast. I think he can and will and has through the podcast I listened to he imparted some great wisdom when it comes to operating a business within your own capacity. Mark: Let's hear it. Let's get to it. Joe: Hey folks Joe Valley here from Quiet Light Brokerage and today I've got David Wood from Play for Real with us. David is actually a high performance life and business coach. I met him at Ezra Firestone's Blue Ribbon Mastermind event in; where were we David? St. Petersburg, Florida. David: Yeah. Joe: In January of 2019. I'm sorry 2020. David is a good friend of Ezra's and he did such an amazing presentation I wanted to have him on the podcast. Welcome to the Quiet Light Podcast David. David: Hey thank you. I'm happy to be here. Joe: Well, I'm glad you're here. We don't do fancy introductions so why don't you go ahead and give the people listening a little bit of background on yourself and what you do. David: Sure. Well I thought I was successful and I was at the age of say 23 because I was working on Park Avenue. I grew up in our country town in Australia. And here I am on Park Avenue consulting with Sony Music for the next song and I thought I pretty much got it made. I was a consulting actuary and for people who don't know what that is, we deal with financial projections going say 50 to 100 years into the future. Joe: Wow. David: And so my job was risk assessment but then I lucked into doing a personal growth program and I nearly didn't do it because they were all smiling way too much and they all wore nametags. I'm like this is very cult-y. I don't know about this but I didn't let that stop me and they cracked me open. They had me realize that I'd gotten great at systems and logic and results but I didn't know anything about vulnerability. I knew nothing about deep connection with other people and how to really influence people. Emotional Intelligence was something I hadn't even heard of. So the first half of my life was about business and results and success in that line of work and then the last half of my life has been about researching the more I still call it hippie woo-woo stuff like the touchy feely stuff. How do I make eye contact with someone? How do I be vulnerable? How do I deeply connect? So the people who come to me don't just want their business to be better. You can get a lot of business coaches for that. And they don't just want a part of their life to be better. They want everything to be to be better than it was before. So that's the short version of; oh I didn't say to in that course I got to coach somebody. Someone was really stuck about something that was destroying her marriage and I was able to hold space for her and her life changed and I got hooked. I was like this is amazing. I just spot the patterns and see what's missing and make a suggestion and she ran with it, totally revamped her marriage and her life, and I was like I can do this more than as a hobby? And this is back in '97 and it turned out yes you can. People were just starting to consider coaching as a career. So now I've been doing it for 20 years and I don't see any sign of stopping. Joe: You were ahead of the curve then and you're doing pretty amazing stuff now. You didn't mention that you wrote a book, that you're on stage quite often, you're on 70 podcasts last year, then Loosening Jack Canfield or John Gray did the inside cover of your book or things of that nature. You're pretty well connected with high level people but you deal with a lot of entrepreneurs as well in your coaching business, is that right? David: Yeah I'd coach entrepreneurs mainly for the last 20 years. Now I'm doing more corporate stuff, some vice presidents and also some prison work and working with prison inmates so I'm expanding but I'm an entrepreneur at heart. So I love working with entrepreneurs who are already doing great things. I don't work with just startup. You have to have a track record of success and then let's; how do you go further? Joe: The people listening are probably saying well why are we on the podcast together; why are you here? David: Yes. Joe: And when we list a business for sale oftentimes someone will say; a buyer, well if it's so great why are they selling? Or we always ask the question why they're selling. And more and more often what happens, people, is that a business outgrows the individual. And what we want people to do is understand first and foremost who they are, what they're capable, what their likes are, what their dislikes are, what drives them, what fills the cup and makes them happy. And that's a lot of what you do in your day to day work, David, is that correct? David: Yeah. Joe: Okay. David: Yeah I get people who have got surface level goals. They come to me like they want to be a better leader. They want to learn how to manage their team or something like that. And that's fine. Let's start there. But then I want to know what's really going to have you be happy. And some people know and they just don't think it's possible or they haven't put time and attention on making it happen. Some people haven't really asked themselves the question; how could my life be better? And that's the sum total of my initial sessions with a client; how can your life be better? Sometimes it's a business goal. If my business increased by 30%, that would do a lot for me financially and my family and then my life would be better. Okay maybe I'll buy that. But normally there are other things like what if my relationship with my partner was deeper? What if my kids opened up to me and talked to me about their life? What if I had the health that I wanted? So yeah I like digging into those questions like how could it be better? Joe: How can the people listening today sort of figure out what questions to ask themselves? Imagine we've got an audience that it's got a healthy mix of entrepreneurs that someday may sell their business. They're learning about buying and selling and preparing the business for sale. And then the other half of the audience might be those that are thinking you know what I'm going to buy one of these someday because they're unhappy in the corporate world or they've sold one and they don't want to take the risk of building another so they're choosing to buy. But let's focus first on those people that are struggling with the business that they have; they've grown it, they bootstrapped it, it's growing like crazy, and they're just trying to keep up. How does one identify what their own comfort level is with the size of the business or the staff or the growth? Because a lot of what we deal with are people that wait too long that things get pretty miserable because it's grown to the point where it's beyond their comfort level. They don't want to manage people. Mark and I had this conversation this morning and he's like we're doing an organizational chart here at Quiet Light Brokerage and I'm in a particular place mark and we're all in different places. The key center of our organization is the advisors; our team of advisers. And I'm straddling a couple of areas, Mark is straddling a couple of areas and we said to each other we have the right as entrepreneurs to do what makes us happy. We want to choose that path. How does one identify what it is that makes them happy? Is there a is there a process that that they would go through in terms of goal setting or asking questions of themselves and I will just stop rambling now answer that question help me out. David: So the question is how can people identify how they can be happy; what are the right questions they can ask themselves? And I love this, on 75 interviews last year no one's really asked me this question. So what I did is I went straight to my website and I'll read out some of the questions. I have a life assessment that anyone can take. And if you like we can give it to people at the end of the show. They can go and fill it in but I'll read out some of the questions. I have people in this assessment rate your life areas out of 10; business career fulfillment, wealth and money, your key relationship, health and peace. I even include relationship with yourself; like how much do you like yourself. So these are a few of the areas, there are a few more which I don't want to steal all the thunder. I'll leave some for people to find when they go and fill it in. And I have people rate them out of ten and that helps them look at oh wow this area is really a three; like my health and peace is a three, what's going on there? Or my relationship with my partner is like a six. Is that really okay with me? Like am I really going to leave the rest of my life at a six? So that's the first point and then I have people rate coaching areas; how about how are you doing with real goals? I'd like to talk about; and you heard this in my presentation at Ezra's Blue Ribbon, GPA, goals planning and action. So out of ten how are you doing with setting real goals, having a real plan, and taking real action? A lot of people would like to be more focused. We're kind of like a monkey on crack when it comes to getting work done. How about your daring, your caring, your decisiveness? So you rate these out of 10 and by the way this form doubles as prep if anyone wants to do a session with me. I use this as an intake because I want to go straight to wow you're doing great here, here, here, here, and here are three areas that look like they could be doing better. Which of these do you want to focus on? Joe: I think the real goals thing is amazing and critical and so obvious that everybody should be doing it but I don't think they do. I read decades ago; right David, we both got some gray on the chin that Harvard; I took a little class at Harvard, half the kids wrote down their goals and half didn't. Those that wrote down their goals were something like ten times as wealthy or successful and happy as those that didn't. One of the things that we're trying to do here and having you on is part of that mind shift. I want people to stop asking the question how much is my business worth, how much can I sell my business for, I'm ready to some business how much can I, how much can I? Instead set goals and say in three years I want to sell my business for X and then reverse engineer the pathway to that and understanding, gaining the knowledge on valuations and setting goals to that pathway exit. Are you working with people in terms of that goal section of their life whether it's personal, with their partner, with their business, with whatever it is that is weak on that scale and helping them with goals or do you just sort of act in a way almost, and what's the difference between a therapist and a life coach and a business coach in this situation? David: All right we've got three areas I want to address here. We'll see if I can track and remember all of them. The first one… Joe: I won't remember them all so don't worry about it. David: The first one is for me I like your process in this many years I want to sell my business for X. I think that's missing a key step. I would say firstly how do you want to feel in three years? It's incredible; and you can do this when you're doing a New Year's visioning session if you ever do that kind of thing. Like don't set goals first, set feeling goals. I want to feel this. And then you can set some goals that will help you feel that. I want to feel at peace. I want to feel deeply in love with my partner. I want to feel joy as I walk down the street and look at strangers. Those aren't some bad goals; actually this came off the top of my head. And then all right to feel like that what would I need to be doing? And I looked at well I love coaching. I've wrote this down; it was three or four years ago, I need to be more coaching and training because I'm inspired when that happens and I want to feel inspired. It's like oh wow I didn't know that. So it is a goal. So first step, how do I want to feel, secondly what do you need in your life to feel that and there might be a financial component to that. All right I need at minimum this amount of money to support these goals that are going to have me feel good. And you probably found this when you coach your clients, it might be less money than you thought the minimum. They have done some studies that show that first; I don't know how much it is 50 or 60 grand can really do a lot to provide happiness in the year and after that it drops way off because you need your own food and you want shelter and you want some basic peace. But after that that poor show that extra trip or vacation isn't going to do that much at all. So that's the first thing. And then there was a second component. I know I remember the therapy component but what was the other component to your question? Joe: I told you I wouldn't remember David. Come on, I'm serious. I meant it. David: Oh that's right. I wanted to say some people come to me ready with goals. They're like I know what I want I'm just not getting there fast enough. So we might do brainstorming or we might have to strategize a plan and they might just need some accountability to put attention on it. All right every week I'm going to do it. Other people it might take three to six sessions to peel the onion and to just uncover. They may not know yet. Like people would come to me with I want this this and this, six months later we've uncovered that; I'm working with an executive right now who finally has seen that he's really arrogant and he thinks he's smarter than everybody else which may be true but it's not serving him. He didn't come to me with that but it's a merge and it's impacting all of his relationships not just at work. Joe: Did he come to that realization and share it with you or did you go you know you think you're; how do you come about that realization? David: Well, sometimes I might gently point it out and I have that privilege because they're paying me. So I can say you know I think I have some feedback that might not be easy to hear but it might be very valuable, would you like to hear it? You're never going to get a no from someone who's paying you to hear your idea. But he came to me. He said you know what I think I can be a bit of a jerk and we; actually this was really fun. Sometimes you get to have fun in coaching. I said to him there's a chance. I know this is hippie woo-woo but I think you could really make a big difference for you if you're willing. It comes from the Himalayas and you're willing to trust me on this. He said all right. So I took him through this Himalayan chant. It starts with; maybe you've heard it, it starts with Owa Tajer Kiam and we did this and we kept on going and he got faster and faster saying it with me until he realized he was saying oh what a jerk I am, oh what a jerk I am, oh what a jerk I am. And when he finally got it he laughed so hard and that's part of my style is let's bring some humor to it. Yeah, you can be a jerk, so can I. When I'm frustrated I'll use my intelligence to belittle the waiter and they may not even know. And then I'll feel bad about it. But we're getting off track. So some people have a sense of what they want, other people it's going to take some time to uncover and I find that really fun and fascinating. And then you said how is coaching different from therapy. It's very contentious. A therapist will argue about this but once I heard this metaphor a therapist will help a man with a broken leg to walk again and a coach will help that man to run the four minute mile. Joe: Okay. That's not mental therapy though that's physical therapy. How do you differ from somebody sitting down and saying I'm unhappy with my life? David: Well the metaphor is more about someone who's really, really struggling to go from bad to okay versus helping someone to go from okay to good or from good to great. Joe: Okay. And you're the okay to good or good to great. David: Yeah, that's my target market. Now there are coaches who might be willing to work with someone who's really struggling financially. For example if someone's got a lot of historical stuff trauma and baggage from that; and I'm one of them, I have no judgment about that. That's not me. I would say a therapist could spend time with you to help you unpack and bring up all those feelings from the past and like that. I'm more interested in what do you want and what are you going to do about it and there is some overlap because sometimes people have limiting beliefs. And I've got one vice president who said I think I've got some limiting beliefs that are holding me back, can you help me with those? I'm like yeah we can bust those open. But I'm not going to do a lot of how was it when your father treated you this way and whatever; that's not my style. I'll refer someone to a therapist if it looks like there's some old stuff that's really holding them back. And a disclaimer and a plug for therapists there are some therapists who will work with people who are doing just fine and help them go to great. So it's a broad brush painting with right now. Joe: But I got to tell you in the future audience you may hear me say how do you want to feel in three years when you sell your business instead of what's your financial goal. What do you want to exit for? Inaudible[00:21:40.0] a combination of both. Because I've got to tell you people are this is their baby they've built it up and sometimes they're sad to sell it. But I'm interviewing people right now for the purposes of writing a book. Yes this is the second time I've mentioned this on the podcast and I will not be obnoxious and plug it all the time but it's fascinating. The idea is when that wire hits your account and you can do it with your phone now and you see all of those zeros in your bank account for the first time, what was that feeling like is the question that I asked. And the feeling was okay, that's good. Now I've got to get to work and helping with the transition of the business and keep going. It wasn't champagne popping and jubilation and things of that nature. And do you think that's because; and I heard this literally at three out of the five interviews that I've done so far. Do you think that is just because they're caught up in time focused on the work at hand versus setting a financial and feeling goal when someone exits their business? David: I think the question is why are people so quick to move on to the next thing and they're not celebrating and enjoying? Joe: Yeah I guess so. Thank you. You do a better job of reframing my questions than I do. Thank you. David: My pleasure. Firstly tell me do you have a working title for your book? Joe: I do. We talked about it. That's right. David: I think there was one line you said and like oh you got to hold on to that line. I can't remember what it was. Joe: We did. I've settled on; and this is the part where I'm either an idiot or brilliant. I sent out two title options; I already said it to everybody here, one was Incredible Exits which is a series we use here on the podcast for people who have sold their businesses. And the other was Exitpreneur. David: That's the one I remember, yeah. Joe: That's the one that stuck. Right. So I think probably 24 out of 25 people said Incredible Exits, go with it, it's just that. David: Do you remember the book title that I suggested? Joe: Yes Making Exit Sexy Again or something along that lines. David: No, that might be the subtitle but you said to me something like the real money is in the something. Joe: It's when you exit the business. Yeah the real money is when you exit. And then yes… David: It was nothing like where the real money is. I forgot what it was but I was very excited about it at the time. I really am. Joe: We're Making Financial Sexy Again that was the subtitle that you suggested. David: Your financials; because you said the real money is in the financials and people might get that and so you can make it sexy. Joe: Or eyes bleed. Well I ended up settling on The Exitpreneurs Playbook with the whole goal of setting a goal and reverse engineering your pathway to that. But we might add some feelings in that goal. David: Yeah. So speaking about reverse engineering I'll comment on why I think we're so quick to skip over the celebration but firstly I want to tweak or reframe something you said. I agree with you it would be good to ask them how do you want to feel when you sell the business. So that's great. I think that would be a good move. And what I'm talking about that I want to clarify it is much broader than that. I'm saying how do you want to feel in your life generally. Joe: Yeah. David: And so just for listeners to make sure that that's clear; how do you want to feel generally when you wake up, as you go about the day, when you go to bed. How do you want to feel and what kind of activities and things actually have you feel that and then reverse engineer the life of that. And you may find that money would be a component and that's where Joe can come in and help you maximize what you get for your business to support what you've already created in terms of your life goals. Now why I think we're so quick to skip and I'm one of them once a while this is I say why we are quick to skip the celebration and I got this from Dan Sullivan I think; a Strategic Coach. So we're looking forward, that's how we're oriented. We're looking forward and we constantly see the gap between where we are and where we want to be. And that's great that's the ego's job because it wants to put food on the table. But when we do that all we're going to see constantly are gaps. We're constantly going to see what there is to do and it can be overwhelming and we miss the celebration. If we want to feel good and acknowledge ourselves for how far we've come we have to turn around. Metaphorically look backwards and see how far we've come and that's the gain. So he talks about Gain and Gap and I'm always like all right that was good. Now what's next? And I have to slow down and even say to people we're celebrating or I'm going to pop some champagne or we're going to dinner or dinner's on me because I want to really acknowledge this win in my life that for example my health has been pretty rough for quite a while and I went out three times last week to go and be with people and get limbic connection and that's a win. So we can slow down and celebrate that and say wow look how great that is instead of looking forward to go there's still so much to do health wise to heal. So does that answer your question? Joe: It does. Thank you. Have you got any quick tips for those that are too afraid to hire a personal and business and life coach; have you got any quick tips in terms of somebody that's caught up in that grind every single day just trying to keep the wheels on the bus and not run out of inventory and deal with the coronavirus now and tariffs and so on and so forth? How do they kind of slow down and focus and appreciate what it is that they've got so that they can look forward with a clear vision? David: Yeah well I would recommend filling in the life assessment at PlayforReal.life. It'd take you five or 10 minutes and it's great information to have about your life. And then you can see oh maybe I want to work on the real goals, I'm going to sit down and do an hour session with myself and set some specific measurable targets that will have me feel great. So that's one thing. I like to talk about truth and daring in particular. Joe: I played that as a kid. David: Yeah well that's Truth or Dare. Joe: I know, I know. David: I like truth and dare. I don't know if those are quick tips but I think the more we speak out truth the better life gets the more attractive we get. We might rock the boat a few times and have some teething pains but I think… Joe: So speaking the truth to those around you, to yourself, is a daring thing to do? David: Most of us have grown up learning to hide things. We learn it covertly and subconsciously. We're like I'm just going to keep all this stuff in here and I'll show the world what's safe. And I get that and sometimes that's appropriate. But nine out of 10 times I think it separates us and a great leadership move and personal growth move is to share the things that are a little edgy. Hey when you said that I felt disappointed or I notice I want us to feel better working together and it feels strange and I don't know what it is to talk about it. Joe: It's hard to initiate that. David: Yeah. Joe: How do you initiate that? I remember I was a kid; I was in my 20s and I was volunteering at this theater in Portland, Maine and doing a massive renovation. It was going to end up being a concert venue and I volunteered to work my tail off so that I could become an employee of the company when it finally opened. And I got that opportunity and it really pissed off somebody else and we weren't done yet. We still had another three or four weeks and that person he could have been bumping into me with his shoulder because he was so upset he would have. It was that kind of you know mental stare and whatnot and finally I just said hey what have I done to upset and offend you? And it was hard for me to figure out what to say but it worked and we became friends afterwards oddly enough. And so I did; I was truthful and confronted him I dared to and it worked out very well but it's very hard to do. David: Yeah. Joe: How do you bridge that gap and say it? David: Well the biggest obstacle is most people aren't even aware of those troops that are swimming around in their subconscious. They're just like that guy's a dick. Or that I don't like her or I'm just not going to work with him again. He's unreliable, right? We don't even see that I could speak up and possibly change this. So that's the first thing is become aware of it. And I'm working on an app called it; that will help you do a true thought to try and work out oh what are the truths that I could say if I felt courageous? Secondly once you work it out say it's like that guy and you're feeling like things are strained and you want to bring up the conversation, the thing that gets in the way is lack of clarity. You're not aware yet what your hope or intention is like what's the good that could come out of it? You haven't generated that yet. So it's a bit murky. You're not totally clear what you're afraid of. It's probably something like he might get defensive or it might be really awkward and might make things worse. But that's not clear in the mind. So I have a free download on the on the website. It's called A Four Step Tough Conversations Blueprint and the worksheet will help you get clear, it'll even ask you is there a request you could make; something they could do that would improve the situation? so you get clarity then you're going to be much more likely to have the conversation because like oh now I know what's going on. Before I was just this jumble of I just didn't like what was happening. Then once you got the clarity you can follow the four steps which give you to them in a nutshell. You asked permission, don't just dump the conversation; can I talk to you about something for a few minutes? You share one hope and one fear. My hope is that we'll feel more connected after it because I'm feeling like things are a little strange now my hesitation is I might make it worse. But are you willing; can I share the issue? And then three you share the issue and make your request. My request would be just that you let me know what's going on or if there's any way I can improve the situation. Joe: You make it sound very easy. David: Well I've had a lot of practice doing them and talking about it and the worksheet really does make it a lot easier. I'm not saying you're not going to feel uncomfortable and I'm not saying there isn't risk. That's what makes it a little bit exciting but your chances of it going better are much clearer because you'll have the steps. You can even take a printout with you and say I wrote down some talking points because I wanted to do a good job at this. And then the step four; super important, is get curious and listen. How is this from your side? What are you experiencing? Do you have a better idea than what I do? And then you shut up and you listen and then you'll work it out together. Joe: I love it. Can you summarize for us as we're wrapping up and running out of time how is it David that this is helpful for people in business; the entrepreneurs that are here in the audience? David: Oh my God. It's helpful for everyone but specifically in business you want your staff to be motivated and empowered. I had my assistant quit out of nowhere. She did only three things that weren't working for her and she didn't have the training as most people don't know how to speak up. She didn't even consider a conversation was possible. So by you learning these techniques and practicing it you can model it for others so that you can have more communication among your team. You become more attractive as a leader. You're going to build more loyalty that people want to work with you. They will have a sense that they can trust you. You'll have more customers because your energy is going to shift. And they'll be like oh wow; like Ezra, right? I say one of the reasons that people go and pay and be part of Blue Ribbon Mastermind is because of who Ezra is and how he shows up. And he's learned how to have these conversations and speak truth. So if we had more time I could probably go into 10 more benefits but here's one final benefit. You will feel better and you will like yourself more if you're speaking truth. Joe: Yeah that's a pretty huge benefit, that's called being happy. So I'm going to go ahead and download it myself. I know you and I are going to chat personally next week and I'm very confident that I will actually become one of your clients and maybe we'll have you back on and talk about my personal experience and how we went through that process and what it's made; a difference for me, in my life here at Quiet Light Brokerage. All right. Any last minute thoughts and then of course again the URL at how people reach you if they want to touch base and possibly have a coaching session or just learn more from what you do on the website. David: Yeah. Thank you. So my last thoughts are you're doing great; wherever you are, whatever you're doing, life is incredibly complex. I'm going to do a rant sometime on this. Things are designed to break down. That's how it's going to work. And you made it this far. You're doing great. You don't need anything else. That's the number one thing. Secondly there's always room for more; for things to be better. That's the game I'm playing. How I do better and get the most out of this this life. And so if you want to practice speaking a truth more maybe having a few tough conversations I think that'll help. Setting goals and really we didn't talk about laser focused action but those are some things that can help. My invitation, if people want to find out more or get in touch with me PlayforReal.life is my website and there are three cool things you can do at that site all at the same link. One you can download this blueprint if you want to have a blueprint; a roadmap for your tough conversations. Secondly I have my own podcast if you want to listen to me as well as Joe. I've got Tough Conversations with David Wood, you can subscribe at the website. And the third thing if something resonated for you on this call and you'll like I want life to be better. I want business to be better and if you think you might be coachable like you're open to input see if you qualify for a discovery session. If you qualify I don't charge for that one because it's fun and too because it's how I find the right people to work with long term. We'll actually dive into your life and business and create a plan. And if you want to implement it on your own, keep me posted. Let me know how it goes and if we both believe that coaching can have a big impact we'll talk about setting up coaching and that's all at PlayforReal.life. Joe: All right. Well I'm looking forward to it myself David. Thanks for coming on the show I appreciate it. And I hope you can help a lot of people in the audience just be happier in life and happier and more successful in business. Thank you very much. David: My pleasure Joe. Thank you. Links and Resources: Play For Real David's Podcast

What is one of the surest paths to substantial wealth? Grow and sell a business. Today's episode is all about Joe's book project, "The Exitpreneurs Playbook." Joe has over 8000 stories to tell about what it's like to buy, what it is like to sell, and ways to outsmart the typical entrepreneur process. Mark is interviewing Joe about this upcoming project, his motivations behind creating it, and how getting to the writing process carried its share of challenges. Joe believes that an exitpreneur should have the tools in hand to start, run, and grow their business for better decision making later on. He is not telling anyone to sell, he is offering them the strategies they need in order to be ready if they do. Episode Highlights: Joe's idea and the process of putting it into book format. Why he wanted to write the book. Reasons exit planning can be challenging for the business owner. The differences between an entrepreneur who is considering a sale versus one who has actually prepared an exit. How businesses often outgrow the founder and smart moves to make before that happens. The importance of reverse engineering to the goal for a better exit strategy. The difference between the entrepreneur and an exitpreneur. How Joe came up with the book title. Transcription: Mark: So Joe I was at an event recently in Salt Lake City and it was in just general kind of a conference meeting room for about 50 people or so and they had a lot of books in this place. And I was intrigued to just kind of look around and see what was there and you'll never guess what book was up on the shelf. Actually, do you want to guess? Joe: Yeah I want to guess. I'm looking around my office, Tools of Titans by Tim Ferriss? Mark: You know what? It actually was in there. Joe: It was in there. Mark: Not the one I'm referring to. Joe: The ONE Thing by John Keller? Now, wait let's call out one of our friends; Superfans by Pat Flynn? Mark: You know I don't know. There were a lot of entrepreneurial focused books so maybe that one was there; I don't know. Joe: Okay. Buy Then Build by Walker Deibel? Mark: Buy Then Build by Walker Deibel; yeah absolutely, that was on the shelf. In fact, they had multiple copies of it. They were giving that book away. And today; what is it? It's February 11th so we're a little bit past a year since Walker launched that book and it spent a year as number one on Amazon Bestseller in this category which is pretty fantastic. I mean obviously, we're super happy for Walker. He won an award for being the thought leader of the year through a major alliance of mergers and acquisition advisors. Joe: Huge. Mark: That is huge. He's had professors from Ivy League colleges come up and talk to him about the book. All of this leads me to something beyond just the accolades and that is the information that's out there in this space about what it's like to sell, what it's like to buy. Walker is talking on specifically which is the buy-side and how to use this as an investment vehicle, how to outsmart the Startup Game as he says and reduce some of that risk. But there's also a whole on the sell-side as well where people don't really know that their business is sellable or they don't think about it. But just yesterday I was reading something on the fastest way to build wealth; what is the fastest way to build wealth? And the conclusion that they had is the fastest way to build wealth is through building a business and selling it. This is one of the quickest ways to actually building wealth. And I know you've had guests on the podcast here who have talked about this process or you call it your Incredible Exits series. I'm really, really excited that you're writing a book on this and you're not calling it Incredible Exits despite everybody else's opinions that you should but it's these stories behind the scenes. Joe: Yeah I'm excited to be writing it finally. I sat down with some friends a year ago probably around a fire pit; maybe a year and a half ago because it was summertime. We're recording this in February of 2020 and I said look I'm making an announcement, I'm writing a book, I'm telling you guys to call me out on it and then I didn't do anything but I tried. I tried to write it. I tried to outline chapters. I tried to follow up… Mark: Hold on one second. You made this promise right on a fire pit with friends? Joe: Yes. Mark: How much did you consume before you made this promise? Joe: I'm a 2-drink maximum kind of guy, that's just the way I am. Mark: Okay. Joe: It's like giving myself an injection of the flu when I have more so it wasn't much. But I didn't get it done. It's a lot of work. So I followed the original book in a box method and didn't get it done at the scheduled time. I was at Brand Accelerator Live with our friend Scott Voelker last September and one of big Scott's announcements was that he actually wrote a book. And it is also here on my desk somewhere; where is it Scott? It's the Take Action Effect. I just turned my head away from the microphone, sorry folks. And I met his scribe; a young lady by the name of Brennan and I connected with her during the event and talked with her and said okay this is it I'm done. I'm hiring a scribe and I'm going to write the book. And I've talked to a number of people about it and let me just cover the process and then answer the question as to why the heck I'm doing this because it's a massive undertaking. The process is instead of actually writing a book myself with written words and a keyboard I get interviewed for I think it was 8 2-hour sessions; so 16 hours in interviews. First, we outlined the chapters and go through the whole process and instead of talking about; I mean writing an article or a chapter on seller's discretionary earnings and add-backs and the three levels of add-backs and all the different things that we talk about on a regular basis Brennan interviewed me. She transcribes the entire interview through UberConference and Rev.com for those that really want great transcription services. And now we're in the sort of lull between all of those interviews and me getting my first draft. They're going to give it to me in thirds. So the first one I will get will probably be I want to say mid to late March and then they'll drip it out in thirds every week for 3 weeks. They want to overwhelm me in terms of reviewing and editing. I still have a lot of technical stuff to add to it but it's really kicked the process into high gear. It's not cheap, let me tell you that. It's an expensive undertaking but I think given what we do for a living and how many people we're trying to help I think it's well worth it. Why am I writing a book? Walker's been an inspiration, very successful with Buy Then Build and the amount of people that he's been able to reach and help on the buy-side. We work with sell-side brokers or sell-side clients for the most part and I've done the math Mark, does it sound inconceivable that I've talked to 8,000 entrepreneurs over the last 8 years? Mark: Not at all. Joe: Yeah and that's probably a conservative number. I'm not saying I've had an in-depth evaluation with 8,000 of them but I have without a doubt talked to 8,000 and that does not count standing in front of a room with 3, 4, 500 people. And the challenge has been we've got to reach them one by one and I know that Walker's book has been as you said best seller. I think it's probably sold over 10,000 copies at this point. Mark: It's over 15 at least. Joe: 15,000 copies? Mark: Yeah, I actually talked to Walker about it a while ago. Joe: I think he told me something like 99% of books sells less than a hundred copies that are published. Now Walker, correct me if I'm wrong but it's pretty impressive. So to get what we share on those valuation calls into somebodies hands before, during, and after they have a valuation call and when they're in an audience that will give them every possible detail that we've developed over the last 8 plus years of doing what we do and sharing that in writing so that they can essentially change their mindset. And that's the goal of the book, it's to change their mindset from reaching out to us when they're sick and tired of running their business or they've had a bump where things get tougher and they say Gosh how can I sell this business? A buddy of mine told me I can get X multiple. I'm going to call Mark and say Mark how much can I sell my business for? I want to change people's mindsets. Instead of saying how much can I sell my business or more often they say how much is my business worth, I want them to say I want to build wealth like you said at the beginning and I want to sell my business for X dollars. I want to do that in 4 years. In order to do that, they need to understand where they are today. And the book is going to help them reverse engineer the path from where they are today to that exit so that they can do a partial valuation, get comfortable with brokers, and drive that path. I had a conversation with Mike Jackness recently and Mike talked about the fact that about what we do sometimes entrepreneurs just don't want to hear it because the idea of exit planning is so beyond what they're trying to do when they're just trying to keep the wheels on the bus, right? They're running out of inventory, they've got competitors coming at them from every angle, they're trying to do cash flow planning and it's just so hard that they can't see out the front window. The objective of the book is to sort of clear that window, have a clear path to an exit that they understand and it's a much better ride. I've been through it myself personally. You did it for me back in 2010. I could see nothing, understood nothing, we had a call, we had several calls and the light bulbs went off and I knew exactly the path to take and I'll tell you what operating my business became a lot more fun and exciting even though I was sick and tired of it after 5 years. Mark: You know the more I experience the business and grow as an entrepreneur the more I'm learning. With anything dealing with a goal really the best way to achieve these things is what you've said, reverse engineer it. Rather than just kind of impulsively decide that I'm going to do something figure out where you want to be and then reverse engineer. But in order to reverse engineer it, you need to understand the mechanisms that are going on to create that value. You're trying with this book to create a shift in the mindset of entrepreneurs, right? By the way, folks if you haven't figured this out we don't have a guest; Joe is the guest. I'm going to interview Joe about the book and maybe we'll talk a little bit about what it is like to do what Joe and I've been doing and everyone else at Quiet Light. Joe: Right, we're co-guests. We're co-hosts and co-guests today because I want to grill you too. Mark: Very good. Alright, I want to start out by saying okay let's talk about your experience. You've been doing this for 8 years. You've done literally tens of millions of dollars of transactions on your own within Quiet Light Brokerage. Joe: I'm fastly closing in on 100 million. Mark: That's right you are. You are; absolutely. Joe: Inaudible[0:11:17.8] 12 to 18 months; pretty shocking. That's amazing. Mark: Absolutely amazing. Talk to me about the mindset that you often see or most naturally see in an entrepreneur that comes to us to sell versus those rare cases of somebody who has planned to sell and what is the difference in the actual process value and stress levels I would say for everyone involved. Joe: Yeah. Look all the success stories that you guys hear about on the Incredible Exits for the most part those are people that had the mindset that they wanted to determine and plan out their exit. They got an education, they figured out what their exit goal was and they called Mark, myself, Jason, Amanda, Chuck, anyone of us and reverse engineer the path to that. They didn't call and say what's your fee, okay I want to list. It was this how does this whole thing work and then we worked with them over a 6, 12, or 18 month period sometimes even more. Those are the success stories that you're hearing about. The people you're not hearing about never sell their business because they call. They might have a call like this or I was just at eCommerceFuel last week as an event and kudos to Andrew Youderian and all the guests and all the people that are there; brilliant, so many smart folks. But even with that high level of entrepreneurial success and drive I still get e-mails like I've gotten this week which is a great chat last week, great presentation. I did a presentation with Mike about the sales of ColorIt. You've really inspired me to sort of try this path to an exit. And then I said okay well this is what I need. Yeah, I don't know I'm so busy with adding SKUs and I'm not really there yet. I'm not ready to sell yet. I'm not ready to think about selling yet. Whereas the yet it should be now regardless of where you are in the business. These people are already doing; the 2 that I'm thinking about where I got the e-mails like the one I don't know his growth. Well, I could do the math on his growth but the discretionary stands out that he's close to 600,000 in discretionary earnings and it is 5 to 6 times more than he ever made in his prior day job. And so he's trying to work towards an exit and retirement. The other was doing nearly 10 million in revenue and had a 25% decline. He's young, he's under 30 years old. And neither of these guys are really ready to exit. Of course, they're not ready to exit but I want them to set a financial goal. I don't care if it's 3 to 5 years from now. Set that goal. I need to exit for X in order to exit. And then figure out where they are, get the education, and work towards that. In 5 years if they're not ready to sell then move the goal post, move it 6 years down the road or 7 years down the road. That is as you said at the beginning the surest way to real financial wealth. But we're not talking about them yet because they're pausing, they're hesitating, they're not going to do it. Those are the stories that I talk about a little bit in the book. There's somebody that was my first million-dollar listing back in the day at Quiet Light. I remember it well. I'm not going to name names. We'll call him Big Mike. That's not his name but we'll call him Big Mike. He had no financials; none whatsoever. And I remember sitting over Christmas break taking all of his bank statements and I actually created the profit and loss statement myself. That is a no-no. We do not do that anymore. No. But I did it. I got it all detailed and accurate and listed the business for 1.1 million. I got an offer for 800 from the gentleman that you sold his business once upon a time. It was actually a good offer because the revenue trends were in decline. And Big Mike said to me well why would I accept it all I have to do is XYZ over the next 12 months and I'll make a quarter of a million dollars and then we can sell the business for 1.2, 1.3 million. And I had a great deal of experience in paid advertising at the time as you know because I just sold my business. This was probably 2012 or early '13. And so we walked through all the possibilities, what to do and how to do it and off he went. The problem was that Big Mike's heart was not in it anymore. He had run up all of his personal debt and personal expenses; his overhead was very high. He lived the life of a very, very successful entrepreneur and his business was no longer trending that way so money was getting tight. He didn't have the ability to pull money from the business and put it into the ad spend that he needed to to reverse it. And so every year for the following 3 years I got any mail from Big Mike that said something along the lines of hey my revenue and profit is at XYZ, can we sell the business for this? And each year it went from that offer from Tony of 800 to the value really was in about 600 the next year. And then the next year he sent me an e-mail it was really based upon what he had given me, about 500. The last time he sent me an e-mail it was about 400. Every single time I replied with based upon what you've given me which is just an email with numbers and I'd say your business value was probably X. Please run a profit and loss statement out of Quickbooks or Xero and export it to Excel with a monthly view. Silence, nothing for 12 more months because he didn't take the necessary steps to do what you have to do in protecting your most valuable asset, in his case his business. And so he's probably got a job, unfortunately. And that's the path unfortunately too many people go down or they learn from the mistakes and they hang up their hat on this particular business. They can't sell it and they move on to another one and hopefully learn from that mistake but it's a painful one. I just want to see people learn from that and therefore the painful process of writing a book. Mark: You know it's great to focus on the success stories. We like success stories. I like talking about success stories that make me happy. But for all these success stories that you have shared so far through the podcast that you'll be sharing through this book we also have the stories like that. And I could probably rattle off a number as well. Maybe I'll start a new podcast or write a book called Unincredible Exits or Nasty Exits or something like that. It will be real depressing and no one will ever want to read it. But you're absolutely right in; that example is really good. That example shows what we see so often from entrepreneurs where they're running; they're used to the hustle, they're used to the grind, they're used to being able to pull themselves up by their bootstraps to be able to correct something but sometimes when a business gets mature especially after you've run it for a while doing that can be really, really difficult. I also think it's; I want to re-emphasize something you said which is the picking number, reverse engineering, and getting to that number doesn't mean that you have to sell at that point. We've been pretty public and I will continue to be public by saying that the best scenario for you is to create a business that you can own for your life, right? Because it's difficult to start a business; the cash flow that they build is great, the value that is in them as assets is also fantastic. So I'm a big believer in building and holding or buying and holding and growing but that doesn't mean that exiting shouldn't be an option. And so when you hit that number, if you're not ready to sell you can always move the goalposts as you suggested or create a new goal. But something that I know you've told me in an email where we were discussing this book is you said one of the goals is to not allow the business to outgrow its founder. And boy this is an issue that comes up time and time again that we see and that is business owners were really good at starting, really good at founding something and even growing it to a certain extent getting to a point where making that next shift is difficult. I always describe that the growth path of a business is a series of climbs and plateaus. You climb to a point and it starts to plateau and then you have to change the business a little bit. Maybe you have to add new people; maybe you have to add a different structure to the business. And once you do then hopefully you start climbing again and then you hit another plateau and then it's another shift or another restructuring of the company or maybe a new initiative. What point and is there any examples that you've seen where somebody has hit that point where business is just about to outgrow them and they were smart enough to be able to not let it do that? Joe: Yeah the climbing the plateaus, by the way, let's not forget the valleys, right? Yes, my name is Joe Valley but… Mark: Don't forget the valley. Joe: There are two valleys here, right? It's a climb, it's a plateau, and then boom there's a really nasty valley right there and you're in it. You got to climb out of it. That's why I think it's important to actually do something that you like; something that you enjoy a little bit. It could be something that you're passionate about because when those tough times come and as an entrepreneur they will unless I'm unique and nobody else has tough times. I don't think I'm unique. You're going to have to fight and climb back out of that valley and on the other side there's a mountain, a peak; not a plateau hopefully. And those are great success stories to tell and very sellable businesses. But the idea of a business outgrowing the founder is not original, right? I mean this is something I've seen throughout my own entrepreneurial life where I used to do radio advertising. I owned a radio direct response media buying agency back when there were 800 numbers associated with 60-second spot ads. I could have held that business and grown it but it would have required more and more overhead in terms of people. I don't like managing a lot of people. I tell you what your job is and how to do it and I expect that you're going to work hard and do the best you can. If you don't I'm kind of blunt unfortunately and fortunately in some ways. So if you're in a situation and I see this a lot where buyers sometimes naively say well if it's so great why are they selling it? And it is because the business more often than not has outgrown them. They wanted to live the 4-hour workweek. It turned into 30 and that's okay. And they've got 5 VA's and that's okay. But in order to take it beyond just a SaaS business that's doing 2 million in revenue, they need to hire 3 more developers. They don't want to go through the headache and hassle of that. Or to take it off of Amazon they need to learn SEO offline or email marketing or whatever it might be and that's not their skill set. Or it's hiring people and that's not their skill set. And they learned that one of the greatest ways to earn wealth is to sell a business. Now people that buy Walker's book have learned that they can; a different breed, a different mentality of an entrepreneur comes in. They're not the startup entrepreneurs. They come in and they take over where that startup entrepreneur left off. The business has outgrown them and they hand it off to somebody like Matt Howeth who can. He comes from the corporate world. He's always had lots of travel, lots of staff, and lots of hours. He gets it. He can take it and bring that business in and have a team of employees, a team of VA's and manage it and take it up to the next level because that's his passion. That's what he does. He gets it. The startup is not his passion. It's not his skill set. So one of the things that I think is critically important and sometimes this only comes with age and mistakes and failures and successes and that is to figure out who the hell you are. What kind of entrepreneur are you? Mark: That brings in mind 2 clients I've worked with in the past 14 years now. And one of them; I've quoted this story before but he came to me with a business, I've never talked to him about sharing his story so I won't say what he was selling. But he was selling a physical product. He had initially acquired this business for 5 figures, like a mid-5 figure level and immediately grew the business significantly to the point where it was doing 7 figures in top-line revenue, mid-6 figures in discretionary earnings and so when he gave it to me to sell one of my very first questions was why are you selling? You've been growing year over year, you're only adding value to the business, this looks like a fantastic business, you've got great rankings, great positioning great pricing; all these things working in your favor and he said well right now I store all of the inventory in an external garage on my property. On Tuesdays and Thursdays, my son and I go out and we fill orders. It's really nice. It's like I don't have any more room for inventory and if I wanted to get another space I'm going to have to hire somebody and then I'm going to have to hire more people to handle the marketing. I just don't want to do that. I would rather cash out and move on. Meanwhile, another entrepreneur that I've dealt with, he was a CPA by trade and loved being on the buy-side and what he really, really enjoyed was taking a business that was somewhat complex, somewhat messy, somewhat inefficient in the way it was run and simplifying it. And I love; I've sold a couple of businesses for him, I love taking a look at where his businesses started. Their P&Ls were these super long crazy messes and by the time that he was ready to sell they were consolidated down into less than 30 lines because he simplified these businesses, really focused on this principle of 80:20 and said I'm going to just focus on what really makes sense and I'm going to get rid of all the rest of it. For him the act of cleaning it up was great but he would; unlike with Walker's book which is a lot of buy, build, and grow, his was I'm going to buy make more efficient and then I'm going to sell. And he did this several times and it was really fun to watch because he knew who he was. That first seller that I had, he knew who he was. He knew he didn't want to have a staff he had done that and didn't want to do it again. He loved running the business with his son. The second entrepreneur, he was a buyer, he knew what he liked, he also didn't want to have a large staff. There are other people out there that do want to build that team. There are people out there that say I want to have 100 million dollar exit so I'm going to buy a bunch of these businesses and build something or I'm going to acquire 15. They're all different types of entrepreneurs and everyone has different skill sets. Knowing who you are I think that right there is a great bit of advice but going back to what you were saying earlier Joe if you're so busy and in the weeds constantly and just running and hustling and hustling and hustling and never taking a moment to step back and to think about either the exit or about maybe this topic here of what type of entrepreneur are you, where do you want to see yourself in the next 5 years, what type of business operation do you want to have it's really hard to know where you're going and then your business drives you instead of driving your business and your career drives you instead of you driving your career. Joe: Yeah. Walker's book takes the mystery out of buying a business and the how-to and building it beyond that hence the title Buy Then Build or what he coined as acquisition entrepreneurship. My book The Exitpreneurs Playbook is going to take the mystery out of selling your business and setting those goals on what your exit is and reverse engineering a path to that. Now that I've said the title can we make fun of me in terms of predicting I don't know the future doom and gloom of this title because I did the opposite of what everybody told me to do? Mark: You know what? I like it. I remember doing this when I picked the Quiet Light Brokerage logo. I did 99 designs and I had everyone vote on different types and I hated what everybody chose. So I'm like well it's my business so I'm going to do my own thing. Joe: And you know it's a check, check, send something; I don't know, it must've been fall of last year and email out something about the Quiet Light logo and how it has stood the test of time so kudos to you. Yeah so I sent an e-mail out to a couple of dozen past clients that I sold their businesses and they're going to be part of the book. So part of the book is education and part inspiration; inspiration with them sharing some golden nuggets, wisdom, experience things that they wish they did differently. So I sent it out to them and then another say dozen of influencers that are in the space. People that we know well like Mike Jackness, Greg Mercer, Andrew Youderian, Ezra Firestone, things of that nature; people of that nature. And I think out of roughly 25 people Jason Yellowitz is the only one who said he liked Exitpreneur. Everyone else said Incredible Exits, Joe, it just rings, it rings. And there's been something about the term Exitpreneur that has stuck with me during the interview process and the more I said it out loud the more Brennan and I, and again she's my scribe, the more it just felt natural. Because that's what people are becoming when they sell their business, they're exitpreneurs. The difference between an entrepreneur and an exitpreneur is an entrepreneur is somebody that runs their own business but an exitpreneur is somebody that runs their own business and they have the knowledge and a plan. And I want to give them that knowledge in order to devise a plan and become one of those people that generate most of their wealth from an exit. So fingers crossed on that. Can I do a shameless plug right now for the Quiet Light Podcast where I think we're about 25 minutes in and just a little bit of a shameless plug? I have to tell you… Mark: I felt like this whole thing was a shameless plug for your upcoming book. Joe: I know but I don't even; I haven't even put up a website yet. There's no Facebook group. Really what it is, is a plug for education because part; in truth, I've said the same thing 8,000 times over and over. Maybe I'm just tired of saying it so I'm… Mark: With that Joe when I was on this trip recently I was in the airport and thinking about Mission, Vision, Values for Quiet Light Brokerage and I don't have the vision statement out yet but this component of education, if it's not part of our main vision it's definitely one of our core values and really something that I've built up. I was speaking to somebody just this morning before we recorded this about one of the goals or one of the mission; I'm sorry one of the core values of Quiet Light is to give entrepreneurs the right education and the right set of tools to be able to make good informed decisions. Because when I sold my business I didn't feel like I had that. I felt like I was misled. I felt like I was put in a position where somebody wanted to get me in an exclusive contract, promised me big bucks, and then when I went to go sell I was completely unprepared. I didn't know what was happening and so when I started Quiet Light the goal has been from day one not to tell anyone to sell but to give them the tools so that they know what their business is worth today, what it could be worth in the future, what's driving its value so that you can just make a good decision. That's your decision. So the education piece and I joke about this being a shameless plug; the reason that I'm excited about this, and I genuinely am excited that you're writing this book is because that education piece needs to be out there. And I love the idea; more than the idea, love the opportunity that we have to educate entrepreneurs of what's available to them if they transition from an entrepreneur to exitpreneur, understanding that, the bulk of the wealth that you build in your lifetime for most entrepreneurs will be at that exit. That might be 2 years from now, that might be 20 years from now, either case it's fine but having that plan to maximize that value and keeping the process smooth is important. Sorry, I totally cut you off of that but I want to emphasize that the education piece is really what I'm super excited about. Joe: Now we were going to do 2 parts of this podcast, a little bit on the book and a little bit about the philosophy behind Quiet Light's foundation and how you built the company and the entrepreneurial approach. So let's do a; I think we should do an entire podcast on this business and how it's built with entrepreneurs helping entrepreneurs just to educate people more about who we are, what we do, and why we do it because I think it's necessary and you've done an incredible job with the model. But in terms of the education, I got a voicemail yesterday and this is the type of thing I want everybody out there that thinks they don't have time to do it and they're just keeping the wheels on the bus so to speak, take the time to make time for planning your exit using the educational tools that we provide whether it's this podcast or articles or Walker's book on my eventual book or having a conversation because that's an education tool. Have a conversation with an adviser at Quiet Light. Really do it. But I got a voicemail from somebody who I sold businesses for, very, very well off financially, runs a family office now, bought a business from Walker for around 8 million dollars in 2019. And he heard the podcast on product innovation, product development with Zack at Gembah. And he just left a voicemail yesterday saying hey man I just want to let you know on the way back home from Austin I got a chance to meet with Zack and we're going to go ahead and do some product innovation, product expansion, adding a number of new SKUs and accessories to the brand. I really appreciate it. I don't know if enough people tell you that we actually use the tools that you share so thank you. It's great to hear that. So thank you sir; I'm not going to say your first name, for reaching out and letting us know. For the rest of us this is the shameless plug part and I've said this, I said this at Blue Ribbon Mastermind and I said it in eCommerceFuel, Mark you and I have done now I think it was 114; I checked this morning, podcasts. So that's how many are up on iTunes. We've got a total of 31 reviews. They're all huge close to 5-star reviews. Thank you, everyone, who has given us reviews. I wasn't aware that we had any at all because we hardly ever plug it. And so I was at Blue Ribbon Mastermind talking to David Wood who will be a guest on the podcast in a few weeks. He's a personal coach and a good friend of Ezra's and he said something about he was on 70 podcasts last year and he chose which ones to go on based upon the number of reviews. So I checked ours. We have 31; pleasantly surprised. I checked the EcomCrew, Mike Jackness and he's got 81. So I stood on stage at Blue Ribbon Mastermind and I said everybody come on now Mike's not here, I want one more reviews than Mike has. He's been doing; I think he's done 3 times as many podcasts as us so we're doing okay. But please if you enjoy the podcast, if you like the podcast take a minute and go to iTunes or Stitcher or wherever you're listening and pop in a review. We greatly appreciate it and share the information and wealth with all the others that need it. Mark: Yeah. There's a video out there and I don't know if we're going to be posting it on our YouTube channel but there's a video out there of you making this plug at Blue Ribbon Mastermind and Ezra is standing there with you and he's thinking this is what you're using the stage time for? Like you have the opportunity to talk about what Quiet Light does and all you're doing is trying to beat Mike Jackness and like absolutely I'm trying to beat Mike Jackness that's it. Joe: We won't be sharing that video. That's not ours to share but I shared it with the team and had a good laugh at myself because of it so no doubt about it. Mike's a great guy. Ezra is a great guy. We don't mention people that we don't like obviously so if we've never mentioned you oh boy that's a long list; oh no, I can't say that. Let's just say thanks; final thanks, Mike Nuñez. Thank you, Mike. Mark: Yeah, Mike Nuñez, absolutely. I think that's a great way to end up this episode here. Let's do one in the future about the building of Quiet Light Brokerage and I'd also love to get feedback from people that have listened this far through this episode and are listening right now. Are there topics that you'd like to hear us talk about outside of bringing guests in? And we can bring on people within Quiet Light Brokerage, bring in Walker on the podcast again or Chuck or Brad or any of the many entrepreneurs that are working with Quiet Light Brokerage. Anything you want us to talk about specifically when it comes to buying or selling? We'd love to know, we want to produce content that you guys wanted to hear so feel free to hit me up Mark@QuietLightBrokerage or Inquiries@QuietLightBrokerage as well. Joe: Awesome. Thanks, everyone. Links and Resources: Quiet Light Brokerage

In today's part two of two Chuck is talking once again to Mike Nunez about his tips for being a successful buyer. We first heard about Mike's nine tips for a successful acquisition, and today he delves into the types of things he looks for in a business he is considering for purchase. We're also diving deep into one tip that Mike shared on part one of this two-part series. Finally, Mike also shares some great efficiency tools he's loving these days. Episode Highlights: What Mike looks for when buying a business. What he brings to the business with his own expertise. Examples of things that stand out to Mike in a listing. Advertising account criteria he checks for in a potential new business. Goals and intentions he has and the opportunities he looks for when on the hunt for a business. The importance of keeping criteria lists. Tips for content sites looking for affiliates. Certain synergies to look for in a search. Lessons Mike has learned through his acquisitions. Tools Mike is using and recommending these days. Transcription: Mark: Chuck in the last podcast episode that we had we had Mike Nuñez on. He offered nine very actionable tips on how to be a very good buyer; how to be a buyer that can win deals by having the right disposition. And I know you guys talked; you guys are friends, you live close to each other there in Florida and all that. So you guys are friends and naturally, your conversations are long but also Mike's got a ton of content to share with us and you guys got into a second episode. What can we expect from the second episode with Mike Nuñez? Chuck: Yeah, so let's start off by saying if you haven't watched the first one or listen to it make sure you do because it kind of leads into this. On this one, we talked about what are the types of things that he's looking for as a buyer and you should be able to get some stuff out of that to help you figure out maybe some ideas for the types of things you're looking for. We also talked about; there was like one tip that we gave that he gave us somebody at Rhodium conference a year or two ago and it gave that guy a 25% boost in his revenue like overnight. So that was a nice little take away there and then at the end of the call, one of the things I always like to do is just ask for any special tools or things that he uses so he gives us a list of additional tools he uses so a pretty little bonus at the end. Mark: Fantastic. Mike is a great guy. I'm super glad that he was able to come back on the podcast. Let's get right into it. Chuck: All right welcome back everybody this is Chuck Mullins here with Quiet Light Brokerage and this is part two of a two-part segment with Mike Nuñez. Welcome, Mike; welcome back. Mike: Thank you, Chuck. Thanks for being accepting of my long-windedness. Chuck: No, I think we had a lot of great stuff in the last one. If anybody didn't get a chance to watch it you might want to go back and watch that one first. What did we end up on; nine super-secret tips? Mike: They go to 9, yeah 9 super-secrets. Chuck: 8 or 9 super-secret tips of how to be a great buyer which Mike Nuñez is a great buyer. Now we wanted to segway in and Mike wanted to make sure that everybody know that he's not wearing, or he is wearing the same suit but only because we're recording these back to back because the last one went pretty long. So you still look great Mike. For anybody who didn't watch the last one, Mike purchased a custom-tailored suit business from us so this is probably why he's wearing the suit because I've never seen him wear a suit before he had purchased that business. So he's definitely stepped up his wardrobe game since then. So today we wanted to talk about what you're looking for when you buy a business and maybe some of the lessons you've learned along the way. So again maybe let's start off; before we jump into that just give a brief introduction for anybody who didn't watch the first part of the series about you. Mike: Well, so I think it's important if you're listening to this one you probably should listen to the first one first because it does set up a lot of the things that we're going to talk about here. But for those that just don't listen, I've been in internet marketing for about 20 years now. I spent most of it working for an agency or owning an agency. I worked for Google for four years in their paid, search division. And so today I own a company called AffiliateManager.com that manages affiliate programs as well as the performance company which manages paid search for companies as well. So that's the super brief synopsis. Chuck: Perfect. So let's jump into what is it that you look for when you're buying a business? Always people come to me and they; Chuck what kind of business should I buy? And I say okay well what are your interests, what are you good at? So I think you probably you're looking…well, let me just let you tell what are you looking for. Mike: Yeah, so I think it's important to say what I look for or what we look for; so I do have a pretty solid team around me but what we look for is going to be very different than what somebody else looks for. And so please take that with a grain of salt; everything that I'm going to say today and I think is important for everyone to just recognize, just be self-aware what is it that you are incredibly good at? If you're good at sales go find a company that has an incredible product and but they're bad at sales and you plug yourself in and you now have an incredible business overall. Or if you're fantastic at operations go find a company that's selling like crazy but their operations just can't keep up with all the offers and plug yourself in there and that's going to work. I like to say that real opportunity is at the intersection of two different expertise or two different types of expertise. So for me, it's online business and online marketing and I'm not so great at everything else. So I'm not an operations person, I'm not a finance person so I don't look for companies that are lacking in those areas. I look for companies that are strong in those areas and that are; I don't want to say lacking because I think that's potentially disrespectful to either the people that I purchased businesses from or will in the future but it's more where I see opportunity where they wouldn't know unless they worked at Google for several years or they wouldn't know unless they've been in online marketing for 20 years or they never had an affiliate program. They never thought about it and we're incredible at it. So plugging what we are really good at into things that maybe they've tried that they're above average at because you have to be above average if you're going to own an online business but they've spread themselves so thin that they couldn't be an expert at just one thing. Another nice side effect that I've seen with buying these businesses, some of the previous owners they just worked so long and hard in the business that when you're so down in the weeds like that it's hard to pull yourself out and kind of take a 40,000-foot view picture. When acquiring a company it's almost a natural thing that happens along the way and you start to say okay let me take a step back and look at this not so closely; so close I can't tell exactly what this is and what's going on. And then as you start to peel that back and say okay this is something that the previous owner did, is this something that I need to take over, do I bring the value? The previous owner either maybe they enjoyed it, maybe they liked it, or maybe they were really good at it but I'm not and so the answer there is who else within the company can take that over. And I got to say that's probably one of the biggest benefits of purchasing an online company not only for the buyer but for the seller that they're able to peel themselves out and all the while that's the transition of okay these are the daily duties that this person does and this is who can take that over. So the new buyer; so myself as an example can go focus on what we're good at. So with that caveat to what it is that you're asking some of the things that I look for and I think just another quick note on this; this is an ever-evolving list, just because I've written this today doesn't mean that there's not more to come. Every time we go through a business or every time actually we have a call we run into an issue with the current business. I say okay that sounds like an opportunity that when we purchase the next business that we need to look at and say can we help there. So some of these are super simple and most listeners might say oh well that that's kind of common sense. Well, it's not always common sense. Somebody on this call is going to really or somebody listening to this podcast is going to really benefit from it but I listed because it's things that I want to make sure that I go and check every time that we're looking at a business. So, for example, we are like I said really good at online marketing specifically affiliate marketing and paid search. So we'll go look do they have an affiliate program? Are they overpaying? Are they not paying out commission based off of the influence that each affiliate had on that actual transaction? It's actually super interesting to see how much people overpay for things. And even more interesting to see when they're underpaying affiliate. So for example affiliates, they are business just like you, just like me and they want to maximize their revenue for their inventory. A lot of people get stuck and they look oh my competitor pays 5% commission, that's what I'm going to go pay. But a really good affiliate is equivalent to an upper-funnel page search keyword. And if you're paying a two to one for an upper funnel page search keyword; let's use my custom suit business, if I'm willing to get a two to one for the keyword custom suits or men's custom suits, if I'm willing to take a two to one return on ad spend for that I should be willing to pay an affiliate who is upper funnel; who's educating customers about me, I should be willing to pay them a 50% commission because they're upper funnel. Chuck: Alright so that makes a lot of sense to use something that you do on a day to day basis with your main business to look to acquire a company. So can you give some examples of specifically what something you might look for is? Mike: Sure. I'll give two examples one of where we succeeded at this and one where we failed but then you use that failure to learn and regroup. So the first business that we acquired we identified that there was a significant amount of overspent. It wasn't the previous owner's fault. They had hired an agency who was just; they were doing good. I would give them a six out of 10. But within 20, 30 minutes we can evaluate a Google Ads account and say we can save this account 10, $15,000 a month. Chuck: And you were talking about like an Ad Words account as opposed to affiliate stuff? Mike: Correct. Yeah, a Google Ads account that maybe this ad, the Google Ads accounts is spending 50, 60, $70,000 a month and if we can look in there and say we can save 10, 15, 20,000 on this and still get the same level of sales based off of our expertise we're adding 1 to $200,000 straight to the bottom line; straight to EBITDA and we did exactly that. We actually just finished reviewing January through October and we actually generated more sales than the same period last year and we spent I think it was $160,000 less to do so in that period. Chuck: It kind of goes against the thought of ad expenses are going up, right? There's more and more competition every day for ads so people think that but yet you're able to cut ad spend and make more money with it. Mike: That's 100% correct. You have to know what you're doing. There are very, very few good paid search companies out there. And I know because I used to work with a lot of them when I was at Google. Kevin who's on our team; his job was to go out and train agencies on how to appropriately use Google Ad Words. Pat who's the mastermind on our team has been doing Google paid search since Yahoo or as Yahoo started before Google was in existence. So it's just such a level of expertise that we have on our team overall that we can go and then apply and get these level of savings overall. And again it's straight to the bottom line and we take that money; the first acquisition was partly done via an SBA loan and the savings that we've got doesn't quite cover the SBA loan but it's about 75% of it. It's almost like we acquired the company for the price of the down payment and a much smaller SBA loan so to speak. So that's got to be our number one criteria; same thing with an affiliate program again with the first acquisition they weren't doing attribution based commissioning. It was a smaller effect on the overall business. We probably saved somewhere between 30 and 40,000 for the entire year on that one. So it's again a much smaller effect but that's a part-time person. That's an initiative that we can go fund now because we're saving 30 to 40 grand that we wouldn't have to spend otherwise. Chuck: So let's call out specifically there what it is you're looking for. So Mike looks at a company, requests access to their ad account, and then Mike looks for what? Mike: So in their ad account I'm looking at are they using negative keywords appropriately, what bidding algorithm are they using on Google, what matching types are they using, are they using segmentation correctly. And this is all super 40,000-foot level things but as Pat, our behind the scenes masterminds like to say, a poorly run paid search program is typically death by a thousand paper cuts. It's not one of these things. It's a thousand of these things that we meticulously go and identify, find, correct, and improve. Chuck: Alright so you will go into an account, you see all these things and they're doing everything right does that mean okay it's a great company I'm not looking to buy this one; like are you specifically, if there's not something you can fix you're not going to acquire it? Mike: Yeah, that's a fun question. The good news is for me at least I've never seen one. That's good. And to be fair I've seen; when we are getting an RFPN for the agency business I've seen two or three that were so well run that we tell them we can't help, they're doing an amazing job. You're going to look to us for growth in three or four months and we're not going to deliver because your current company is doing fantastic so don't leave them. But when acquiring a business and the research that I do before making an offer I have not yet come across that. If that were the case yes it's not a kiss of death but it is a factor in whether or not we feel like we should purchase the business because we know that there's so many out there that do it so poorly. Investing; I know I'm not teaching anybody on the call anything new with this but investing is where's the next best place to spend your dollar? And if they're doing a bad job with paid search that's a good place for me to spend my dollar because I know we can fix that. If they're doing an incredible job well there's probably a better place for me to go spend my dollar. Chuck: Sure. And I don't think it's a negative thing for you to say nope I'm just going to move on to the next one they're doing everything right. Like you're looking for specific things in order to want to acquire and like you said you've only got so many dollars to spend. You need to place it where it's going to do the most good for you. And if somebody else is doing everything right like that's not your area of expertise to grow the business. Maybe again they're not doing sales well and that's not what you're specifically looking at so sales is where the person that is going to end up ultimately acquiring the business is good at. And there's also people who maybe they don't have necessarily an expertise at something and they're just looking for an overall good run business that can keep chugging away for the years to come. And that's not a negative like just because you don't have some really specialized thing that you're good it doesn't mean that buying a business would necessarily be a bad idea for you. Mike: Yeah it's one of those things begin with the end in mind, right? And if the if your end goal is that you want a super stable business but it's not going to grow because everything is so well optimized and you're willing to pay the same multiple for it and you just want to kind of run that business day to day as is without expectation of growth then that's it. And there are people that want that. I would even consider a business like that if it was strictly almost a lifestyle business. But the businesses that we're buying; our goal, our intention is to take this 15 million dollar company and turn it into a 25, 50, 100 million dollar company and so there has to be opportunity when we're purchasing and the bigger the opportunity that we identify that we can do so fairly quickly with what we have the more we're willing to pay for it and the more we're willing to compete for it overall. Chuck: So we were talking recently we had lunch and you said that you recently discovered something with one of your businesses that was something you know I'm going to start looking for that and it revolved around shipping. Do you remember what we were talking about? Mike: Oh yes I have it. It's on my list. And that's funny and that's yet another reason to have a list right, right? Chuck: Right. Mike: And so as we're talking like; I know I'm not alone in this, right? I know you're like this Chuck. I'm sure you, the person listening to this right now is the same way. And I'll wake up in the middle of night and I feel like sometimes not thinking about things or telling yourself think about this in the back of my mind and you'll solve problems; like I'll get things out there just to solve them. I'll wake up in the middle and be like that's the answer to this and literally I'll roll over, I'll pick up my phone, and I'll just type a note to myself and say this is the answer and I'll go back to sleep. And the one that you're talking about is we have a warehouse for both of the business but the one that we're talking about now has a warehouse, a large warehouse; tens of thousands of square feet, I'm not sure exactly how big it is but we were getting fined by the shipping company because the dimensions of our packaging was incorrect. And so as we printed out the shipping labels for it, it was off maybe by an inch or whatever it was. And so when we send it to FedEx who was our shipping carrier and they would measure it we would be off by however much and they would actually fine us and so it added to tens of thousands of dollars in fines that we are receiving; not shipping costs, fines because our dimensions were wrong. And so for less than $10,000, we purchased a dim scanner and basically eliminated that. That dim scanner pays itself in one to two months and then from that point forward we now recovered yet another 20, $30,000 back. So you see the recurring theme here; paid search, this is how much we can save by doing it better, affiliate, this is how much we can save by doing it better, shipping, this is how much we can save by doing it better and then here's the freaking key. Like this is the thing though; don't just sit on that. And again I guess this depends on your goal. If your goal is to just absolute squeeze every penny out of these companies that you want then go and do it. My goal is growth and to turn these companies into large companies so that one day I may list with Chuck and get a great multiple on these companies. But take those dollars that you're taking and now do all of the things on the list; in that plan and the things that the previous owner said I could never afford, I could never get to, I can never pay somebody to do it. Now you found the funds to go and actually do those things. Use that money to fund that growth. Again I'll refer to Pat who runs our paid search; he calls that feed the winners starve the losers, so just taking the wasted money and putting it back into reinvest on growth and winning. Chuck: So with the shipping fines that you discovered how long have you been running this business; it's been a year and a half? Mike: A year and a half, yeah. Chuck: And you just discovered it now. Is there something that you are having; we don't know what we don't know, right? So we don't know what to look for. Is this something that you could have identified on day one to have seen even more value? Mike: Yeah, thanks for pointing it out Chuck. It's always painful to look back and say oh we could have made an additional 30 to 50 grand in the last 12 months if we just would have found this. Chuck: And this is probably not a common problem, right? But it's something you're going to look for in the future. Where would they have identified that; what due diligence would you have done in order to have seen that? Mike: Yeah, looking at the shipping invoices and seeing exactly what those are. And there are some pretty cool companies out there that will A) look at that for you and B) they'll actually monitor your shipping and make sure that it arrives on time. There's one called Late Shipment it's I think the one that we use; LateShipment.com and if FedEx doesn't deliver within the agreed-upon time; the one to two days, they'll actually refund; we get a refund on that shipping cost. So that's another example if they're not using; if you send out a million dollars or if you pay a million dollars in shipping costs every year and I think I know ours is above a million but I'll just use that, so a million dollars, if you can recoup 2, 3, 4% that's 20, 30, $40,000 back in your pocket that just appeared out of nowhere. So that's another one on my list. So are they using a dim scanner? Are they getting fined for this? Are they using LateShipment.com and getting a refund on anything that's late? Again stacking up this $160,000 in savings in paid search, $40,000 in savings in affiliate, 30 to 50,000 in dim scanner, late shipment another 30 to $40,000 just stacking and stacking and stacking. Another one is credit card fees; are they using a good credit card process? Have they negotiated their rates since they grew from zero to 15 million dollars in sales? And if they haven't that's an opportunity like just a one or two; what do they call them? Bits I think is what they call it but it could mean a huge difference in your overall company. Just one or two bits is 15 to $30,000 on a 15 million dollar business. Chuck: And so in your defense, I think on the shipping thing the company that you purchased did have one of those companies in place that were looking at the delayed shipments but that company wasn't looking at the penalties you were receiving. Mike: That's right. Chuck: So even if somebody is using a company that is monitoring the late shipping and getting those refunds they may not be looking at the fees which is strange. You think they'd be doing it but they weren't. Something I've heard you say at conferences when looking at it from a different type of business, so right now we're kind of talking about e-commerce but you also work with people who are doing content sites and their affiliates with other people. So what's your number one tip if you purchased a content site that makes money off affiliates; what's your number one tip for those people? Mike: Go ask for a raise. Chuck: What does that mean? Mike: Go to the affiliate management; either the advertiser or the affiliate management company who's managing them and say I want to make more. And there's many ways that you can position that. One is if you're a content site just know that my affiliate company, AffiliateManager.com is always looking for more content sites. We want to bring that value to our clients and you are in a position; it's a content site's market, let me put it that way. We all want what you have and some make the mistake of because they've been beat down and offered 1, 2, 3, 5, 10% commissions in the past day they just turn away affiliate marketing. Don't do that. You're leaving money on the table. If you find a good advertiser or a good affiliate management company that knows what they're doing and they know that this content site is upper funnel and bringing incremental business to the table they're going to be willing to pay for that and they might pay 20%, 25%, 30%. One of our clients pays 100%. Another one pays up to $150 for an acquisition and they might make zero on it. So it's just one of those things where you have to go and be willing to ask for a raise. And again a good affiliate management company they're going to look at the incremental value, we; not to get too much into us because I know this is more about acquisition but we actually have an attribution tool that we built because it didn't exist that shows where in the clickstream each of these sites are. And if it's a content site going back to your point and we look at their overall numbers and 70% of the time they're the first touch for anybody who's making a purchase on your site, yes we want that incremental traffic and sales coming from that content site. So to you content sites out there you are in a position of desire. We all want to work with you more and go and ask for raises. Somebody who recognizes your value is going to very much be willing to pay it. And if they're not go find somebody else; they're going to be willing to pay it. You are valuable. Chuck: And just to give an example of something like that. I've got a number of content sites and one of them the affiliates that I was getting paid from is a Canadian company and they send me a Canadian check. So every time I cash the Canadian check I get hit with like a 10 or $20 cashing fee. And it's just like annoying and it's small amount of money but it's annoying so I emailed them and I said hey can you just like PayPal me the money or wire me the money or do something else because I want to get ahold of the $10 fee every time I cash your check and they go oh how about we just double what we pay you? Okay, that'll work. So they really are willing; if they see the value in what you're providing them they are willing to pay more, so just a nice little tip there from Mike Nuñez. Mike: Yeah. And there was a guy Greg; I won't say his last name at Rhodium one year and I said that at a table and one year later he came back and said by that one tip that you just said because he was a content site or is a content site, I have grown my revenue by 25%. All I did; I didn't do anything else but go back and ask for a raise and the revenue on my site grew 25%. Chuck: Amazing. Mike: Free, yeah. Chuck: Alright, so we've talked about shipping, we've talked about affiliate, we've talked about ads, is there anything else specifically that you're looking for when you're acquiring? Mike: Yeah if they're not on Amazon I think that's a pretty obvious one. If they are on Amazon and either doing a poor job or no job at Amazon ads; Amazon ads I probably the biggest opportunity right now for everyone that sells on Amazon. Chuck: And this is kind of new to you in the last couple of years, right? Mike: Yeah. Well, I mean it didn't really exist a couple of years ago or it was very nascent. So it's still one of those things like if you remember Google back in the day when clicks used to be available for a penny or five cents and such. Chuck: Yeah man they sent me a refrigerator. I had spent so much money I got a Google refrigerator. Mike: So I'm not saying that pen that clicks are available for a penny on Amazon but if you incorporate the right system and how to manage it you can gross it; like I'll give you physical numbers year over year in November even those Cyber Monday fell outside of November this year. We grew Amazon sales on that outdoor brand by 50% using Amazon ads. So it's another example of having expertise in this paid search world and finding opportunities within it. Amazon ads; I think maybe that's super-secret number 10. I think we've gotten away from the super secrets but maybe super-secret number 10 and it's probably one of the most powerful ones I see right now available for people. Chuck: So what else are you looking for? Mike: So besides being on Amazon and Amazon ads, me personally I'm looking for a strong operational foundation because I'm not an expert at that. I'm not good at that but thankfully the businesses that I purchase have that. I'm looking for a barrier to entry like how replicatable is this business and what is the barrier that people have to get through? And this is a little bit less quantifiable but this is just a general do I want to be involved in this business; how hard is it for somebody who's just as good at paid search as me or Amazon or whatever, if they just got a hold of my supplier could they replicate this and do I want that? And if the answer is it's too easy then I move on. Is it a learnable industry? One of the things I was worried about with the custom suit company was maybe before purchasing it I wasn't as sharp a dresser, Chuck. Maybe my wardrobe might have consisted of free conference t-shirts but I was worried about that and… Chuck: You're pulling it off still. Mike: Thank you. And once I got into it I learned no this is a learnable industry. I can do this and it's worked great since then. Is it Amazon resistant? And I know that's a little counter to saying are they on Amazon. Is Amazon going to move into that space? Are they going to want to replicate what it is that you're doing? And on the outdoor brand, it's more of we joined to them; we couldn't beat them so we joined them and a good 50, 60% of our sales are on Amazon on that brand. On the suit brand, we're looking to sell accessories; expand our brand awareness because you can't sell custom suits on Amazon and it's unlikely that Amazon is going to get into that realm. So we're thinking how can we use Amazon to expand our brand awareness, generate some confidence in the brand, and yet not have to; since we're not able to send custom suits and sell custom suits on Amazon directly so is Amazon a threat to the business is something that we look at overall. Inventory management optimization; so leveraging just in time inventory because anybody that's involved in an inventory-based business knows that a lot of times your profit can go straight back into purchasing additional inventory. And if you want to realize any profits before you sell the business you've got have inventory optimization. Is the current ownership leveraging that inventory optimization? Are there conversion rate optimization opportunities; have they ever even tried it before? I just had a call today for the suit company and this is going to be ultra-specific but it is an indicator of what we've done. We launched a new cart in early November and we just ran the numbers and today on desktop for new customers we have doubled our conversion rate which anybody knows that the lifeblood of a business is acquiring new customers. So to do that is pretty amazing. Now on mobile, it was pretty static but we've also generated significant amounts of more traffic on mobile to the suit company. So that's a little bit misleading to say that it's exactly the same. Well anybody who knows conversion rate optimization and knows how traffic works; if you increase traffic the quality is potentially a little bit lower and so the fact that we slightly beat our previous conversion rate on mobile is a huge win. So are there conversion rate optimization to opportunities in the acquisition? Here's one that you know is near and dear to my heart, Chuck. What is the current platform; are they on Net Suite, on Shopify, on Magento? Because the one thing I never ever recommend is changing platforms. So can you accomplish all of the things on your list that you want to do on the platform? We use Net Suite as one of them and it is extremely difficult to get changes done but we are not moving. So it's just something that I think everybody should really consider. Or are you on an archaic platform like at Yahoo stores; something that's not being updated anymore and there's seven people in the world that can code to Yahoo stores? Now you're beholden to them. You have to pay exorbitant rates for their development because they're the only one that knows it as opposed to a Shopify or a Magento that developers are plenty. Chuck: If you're on Yahoo shout out to Rob Snell, look him up if you need help with your Yahoo business. Mike: There you go. See I didn't even mean that. That helps. And I think the last thing; us particularly we enjoy custom products, so custom made suits is a really good example or even for the branded products; things that other people makes, turning them into custom products. We really think that that's a good market to be and again slightly more defensible against an Amazon. And then finally this is my last on my company acquisition algorithm that I'll share today just I know we're limited on time is what synergies can you participate in? So if you listen to the last call you heard me talking about a brand that we made an offer on that it was a full price offer, quick close, no due diligence because it was a trusted brand. And before Chuck chimes in, he recommends that you never do that but the reason why we wanted that brand is because it was geared towards outdoor enthusiasts and we have tens of thousands if not hundreds of thousands of outdoor enthusiasts that come to our website every day. So looking for synergistic brands that are out there to acquire and diversify the income and now not only sell other people's brands but also sell your own brand; white labeling things like that, finding things with opportunities like that, that's the last opportunity that we're looking for in our algorithm. Chuck: Awesome. Alright, so now let's maybe move into what some of the lessons you've learned from the various acquisitions you've done. And you had acquired some stuff before Quiet Light as well. Mike: Yeah. So I think a lot of them are listed on what I just said but I will say there's; because every time I learn a lesson to me it's an opportunity for the next acquisition. So again I will buy another business on Net Suite but I wouldn't have bought the first one knowing what I know now about Net Suite. But now that we've had to learn it, now that we've had to; our developer is familiar with it now and can make the changes that we need and want, now I'll buy another one. And so to me there's an opportunity there, right? It's harder for people to do that than it is for me. It's yet another level of expertise. So that's one thing is a lot of the lessons are kind of listed already in that but there's one I would say recently and again it's with the custom suit business, don't get so caught up in your own expertise. Again we are really, really good at paid search and one of the reasons why is because we're so return focused. A mistake that we made with the custom suit business is we went straight for a return. If a dollar didn't turn into five; I'll just use that as an example, we didn't spend it. And because of that, we saw sales drop. And I talked to the previous owner about it and said hey we're seeing this, why? And he's like well yes cross-device tracking is good however it doesn't capture everything. And mobile devices; think about who buys suits these days, and it's somebody with a mobile life. It's a lawyer that's always in the courtroom. It's a doctor that's always walking about. It's a financial person that's not necessarily sitting at their desk, they're going to meeting after meeting after meeting and where are they searching up for their next suit? Well, it's probably their mobile device. They find it and then they go on the desktop and they go on and they purchase it. And we had pulled back pretty significantly on the mobile spend because the conversion rate just wasn't as good. And so that's one example of us kind of getting in our own way. But to our credit, we were able to kind of step back and say okay we learned a lesson here, let's get better at it and change our approach. And since then that's when we now had some of our best days that we've ever had. So I like to think of it as a lot of these owners or the previous owners they had levels of expertise; they were doing something right and so it's our job as experts that are better at it to take the lessons that they've learned and apply our expertise to it to just throw some gasoline on it. Chuck: Alright Mike so one of the ways I like to usually end these things is just to ask if you have any kind of tools that you use on a regular basis; just some things that can either help with productivity, it could even be outside of work. One example the other day I was kind of upset about it because you ordered the chicken sandwich from Popeye's through Uber Eats so that you didn't have to wait in line and you didn't bother sending me one. That's a great little life hack. So what else do you have? Do you have any tools that you might recommend or any other little things? Mike: I did the same thing with Amazon two years ago when they were operating like the one-hour delivery and we had a hurricane coming to Florida and I just ordered all the bottled water and had it delivered while everybody else is fighting each other at the store. But now that secret's out. That's no longer an advantage but yeah some tools that I like that we use; so for Google Ads, I'll say if you're using things like maximize for clicks run we prefer an enhanced CPC bidding algorithm or a target CPA. We always test to see which one's better. Prioritization, I love Air Table. I got to give a shout out to my business partner Daniel for that. Air Table is a prioritization tool and basically, it can help identify what is the easiest to implement to get the most impactful change that you can make. And so it just really helps to prioritize what it is that you're doing and the changes that you're making to the company because obviously, we all want to make the biggest impact as quickly as possible. I love Grammarly for sending emails so that I don't sound silly. Chuck: That one saves me all the time. Mike: It's so good. I haven't used their pro version but even just the regular version is fantastic. For the affiliate management company, I got to give a shout out to Mail Shake. We love Mail Shake. We use that very often. It's a terrific tool. I love Moz. So the Moz toolbar is something that I use a lot. And then I think we use a lot of the things everybody else uses like the Evernotes and Google apps and things like that. So I think the first ones that were probably some of the others may not have heard them. Chuck: Awesome. Well, I think everybody who's been listening appreciates your time. I'd love to have you back at another time. We can talk about some more stuff once you've hit that next goal of purchase through us we'll talk about that one. But again thank you for the time today and we'll talk to you again soon. Mike: Thanks, Chuck. Links and Resources: Affiliate Manager

Some of the most popular episodes we've aired have been with guests who have experienced the buying or selling process firsthand. Today's guest has acquired several businesses and is genuinely good at the acquisition process. In part one of a two-part series, Chuck is talking to Mike Nunez about his various acquisitions and his 9 super secret to tips to being a great buyer. Mike has been in the online marketing space since 1999. After gaining experience in affiliate marketing, he launched Affiliate Manager with his brother while he continued to work full time for Google. More recently, Mike has purchased several e-commerce businesses from Quiet Light. We'll hear about how Mike is becoming one of our top buyers, how he's realizing his dreams, and that one last goal he may just reach. Episode Highlights: What it means to be a good buyer. What values the seller looks for aside from the monetary value. Ways to put the seller at ease by focusing on what is important to them. The importance of having a plan in your approach to the seller. How to accept and value of the previous owner's advice during the transition. Why you should avoid poor positioned questions when working with the seller. The buyer needs to find what he wants – the fit has to be right for the buyer too. Finding the component that will help make the business yours and not focus solely on the money piece. The relationship of trust in your broker is also a key factor in being a good buyer or seller. Transcription: Mark: Some of the most popular podcasts that we've put out here at Quiet Light Brokerage are the episodes where we get the chance to interview either a seller or a buyer on their background or their journey of going through a buying an online business. And Chuck I know you had a good friend of ours, a good friend of Quiet Light Brokerage's and a previous podcast guest as well, Mike Nuñez on because he's acquired a couple of businesses from us and more specifically from you in the recent months. How did that discussion go? Chuck: Yeah it went great. Mike is what I would consider probably one of our best buyers. The way he's able to get on a phone call and just talk to people, and sometimes I use the word tactics throughout the call. I don't feel like when he's doing it he's being tactical, I feel like he's just a very genuinely friendly guy who is just really good. His experience is that he's been in internet marketing for 20 years I've been in it for 24 so he's almost up there with me. Mark: He worked at Google so he's got that on you. Chuck: Yeah, he worked at Google for four years in the paid search department. So he talks a lot about on this one so I ended up having to split this up into two podcasts because it was just going so long. So the first one we talked about his nine super-secret tips to being a great buyer and there was a lot of really actionable stuff in there that I think everybody is going to be able to get a lot out of. Mark: Guys that's awesome and you talk about the difference between tactics and just being a good guy and look they can blend together, right? I mean Mike isn't the type of conniving guy saying here's what I'm going to do, I'm going to say this phrase and that phrase to make sure somebody absolutely loves me and then I'm going to be able to get an additional 20% off. That's not the way he works. He is just generally a good guy. He helps a lot. He's got that help first mentality. We preach this all the time and Joe is the one that coined a lot of these phrases which is nice buyers tend to do better. And it's just really, really true that sometimes we need tips on how to do it. This is why Dale Carnegie wrote the famous book How to Win Friends and Influence People just to give us some actionable tips to be like how do you actually encounter people in a business environment in a way that will benefit you. And if you read the book you find out that a lot of it is; well it starts with that right disposition and who you are. And Mike is a good person. I love that you broke this out into nine tips. Are you able to give me any preview of any of the nine tips or do you not remember them offhand? Chuck: Yeah. So one of the questions is around positioning the way you ask questions I think it's a really good tip. I won't get into all the details but you'll see it in the video. Mark: Okay, so not just going out there and hammering people with questions in a very kind of combatant way but I'm sure Mike has a very unique approach to that. Chuck: Well, Mark I just said I'm not going to get into the details. Don't try to pressure me. Mark: Alright. You know what I was talking to Joe the other day and he's like do you listen to the podcasts, Mark? And I said no, I don't because I hear enough of you Joe I don't want to hear more of you and he records all the episodes. So he said your intros are getting to be too long so let's cut it out. Let's get to it. Chuck: Hey everybody today on the call we have Mike Nuñez. Welcome, Mike. Mike: Thank you, Chuck, it's great to be here. Chuck: So people may have heard your name before because we mentioned you quite frequently on the podcast. And the reason we mentioned you so frequently is because you're what I would consider my number one buyer. I think probably one of Quiet Light's top buyers and not from a monetary perspective. You do purchase a lot of businesses, you purchase a lot of large businesses from us but more so just from your personality; the way you interact with clients on phone calls like whenever I'm telling somebody how to be a good buyer I'm always in my head thinking what does Mike do and then I'm telling them what Mike does in order to be a good buyer. Because we're friends and I know you outside of Quiet Light but like I really do mean that. Like you are really a great buyer and you're easy to talk to. And if anybody's watching the video today they're going to notice that you look somewhat like a sports commentator with that headset on and you've got a suit and tie and the suit and tie isn't the normal way I see Mike but one of the businesses he purchased was a custom-tailored suit business so I guess he's got to rep that brand now. Mike: That's right. Chuck: But maybe you could tell everybody a little bit about yourself. Mike: Oh great. I'm happy to. And first, let me say thank you. That was super just kind of you to say. I always whenever I have any of these phone calls I just take an approach of what I want to hear and recognizing that these business owners have been working on this; their babies, right? And you just have to be careful as you ask questions because we all want to know where the opportunity is and I'm sure we'll talk much more about that here but we want to know where the opportunity is and the way that you find that is by asking questions. But it's a very fine line between asking questions and becoming insulting and so you just have to walk that fine line. But there's absolutely a way to do it and there's a way to lead these sellers into that and realizing that you're both kind of on the same team. But again; well I think we're getting ahead of ourselves or at least I am so I'll tell you a little bit about me to start this off. I've been in online marketing since 1999, I was in college at the time and I know that dates myself a little bit. The first job was in lead generation, online marketing. I moved in to travel doing affiliate marketing and travel. I eventually launched my own affiliate marketing business along with my brother that's still going today so its AffiliateManager.com. Last year we merged with a company called Rhino Fish to create the performance company which is our page search division. Overall that marketing company is about 22 people. We have 3 former Googlers myself included on that staff. So we're quite good at both affiliate marketing and paid search. I like to say so. We also have two other businesses or I have two other businesses; one is an outdoor equipment seller that I purchased from Quiet Light, another is a custom made to measure suit company that I purchased from Quiet Light as well. So overall I'm about 20 years down it hurts to say experience in online marketing and business and online businesses in general and it's been a really fun journey. I always like to say Chuck my dream used to be I want to be able to work from anywhere and now I'm there. The new dream is that I want to not have to work. So someday I'll realize that second dream. Chuck: I don't like to hear that because I think the term not working would be not buying additional businesses and you're one short away from a special goal that I; I told him if you bought a certain number that I would buy him a specific thing. So he's just shy of that goal. Mike: Yeah it's just without getting into too many details like we're talking about less than what is it 4% on millions of dollars that I'm short. Chuck: But I set this goal early on, right? So it's your fault that you haven't reached it. If you have just paid a little bit more in that last acquisition you would have hit that goal. Mike: We need to round up Chuck. That's what I'm saying. We need to just round up and I should hit that threshold. Chuck: I'll remember that on the next acquisition. We'll just round up. Mike: Right. Yeah. Only when it's in my favor, please. Chuck: So part of the reason I wanted to have you on the call today was one just to talk about maybe some tips or just maybe even not tips but just discussing what it is to be a good buyer. But then also from your perspective what it is you're looking at when you're looking to buy businesses. I know you have a specific criteria that you're looking for and your criteria is different than other people's. And I wanted to also maybe talk about some lessons you've learned along the way. So I guess to kick it off maybe let's just dive in a little bit about being a good buyer. So I would start off just by saying that you know I talked to a lot of people; constantly I'm on the phone and people are always asking me what it is to be a good buyer? And some people I talked to think that in order to be a good buyer it's about being aggressive in trying to negotiate. And maybe they're not thinking that as being a good buyer but they want to try to get the best deal by doing that and they'll say negative things about people's businesses. And you take a very different approach than that. So I think you already addressed it a little bit but maybe you want to dive into maybe the approach you take to negotiating and to speaking with others. Mike: Sure. I think it's important context to say both of the businesses that I've purchased from you Chuck and Quiet Light had multiple offers, were very much generating a lot of interest and so there were multiple potential buyers. And I don't want to say we were the lowest offer. I don't think we were. I know in both cases we weren't the highest offer either. Chuck: Yeah just maybe to add a little context before you dive into further, one of the; I think actually both of them said I wanted to sell to Mike. So they're talking to multiple people and they said get Mike up to this number I want to sell to him. Even though that number was lower than what some of the other potential buyers were offering. Mike: Yeah. Chuck: So I think that speaks a lot to you. Mike: Thank you again, Chuck. But I would say that therein lies the quote-unquote the secret which is money is valuable, right? They want money. If you're nowhere near what they're asking or if you're nowhere near what their magic number is, the rest of this conversation goes away. Let's put that aside. I think Quiet Light does an incredible job overall of valuing companies fairly and appropriately. And you know that walking in. So if you know that walking in okay this is a fairly and appropriately valued business now it's a matter of percentage points maybe either way and in either direction of that. The purpose of the call, at least the initial call is to identify; one of the purposes of the call is to identify what value is this seller seeking beyond the dollars because the dollars are going to fall within a certain range. So a good example for the suit business is the seller really cared about his people. He really cared about his co-workers that he's had for the last however many years; almost 10 years that have put in their blood, their sweat, their tears into this. And he wanted to know that they were going to be okay. And I think actually in the ranking of why I won the business even though I had a lower offer than other people had, that's probably number one is just feeling comfortable about that the new owner is going to come in and take care of the people that were there. And I made no promises. Let me say that. I didn't say I promise I'm not going to let anybody go or I promise; I said no, I promise I'm going to be fair and appropriate with everybody and evaluate everybody based on performance. And he was confident knowing that he had hired stellar people. And it was part of what was so attractive about the business is he had incredible people that were already working there so it made it even more attractive for us. So I think that was number one for him. Second I think there was a sense of patriotism maybe. So this is a European company. It was based in Europe. It's in a European country. And this European country is kind of known for textiles and for creating things and such. And so I think one of the other buyers; and again there's multiple people in here that you're kind of competing against and so you got to think of like a pros and cons checklist and I'm being compared to each one of these other potential buyers in their pros and cons checklist. One of the other potential buyers wanted to move the production out of Europe and into China. There's nothing wrong with that if that's where their connections are if that's where their factories are and such; great. That's where they want to move their production, good for them. However this particular seller wanted to keep production because of his pride for his country, because of his desire to benefit his country, he wanted to keep production in his home country. I didn't have any alternative contacts in China or in any other potential production areas and so I felt like that was important to them and so I made it known. And I think a lot of, and I think it's the second thing is kind of just listening on the calls. Maybe that's super-secret number two is listening and hearing what's important to them and asking that question okay let's move money aside what's important to you in the future of this company? And another good example of that is potential branding or taking care of the customers. I know this may sound a little bit cliché but this is their baby, right? They've grown this baby. They've watched this baby grow. They've poured their love, their sweat, their tears, their hours. The seller of the custom suit company is an example. I remember him saying like I can't remember the last time I took a vacation. He just poured everything he possibly had into this company. And so when you're that invested overall they just kind of feel a comfort level that the new owner is going to come in and do right by what they've built. They just don't want to see it go away and it's they've already got their cash at that point and they still care. And I will say one positive side effect and please know that this is partly or mostly; not even partly, mostly because of the owner and this is one of the criteria; we can talk more about this later, but one of the criteria that I look at is an owner that cares and they're selling for potentially a different reason other than they don't care about the business anymore. I think those are the ones that kind of phone it in afterwards. The two owners of the businesses that I've purchased are still very much invested. One of them still works full time in the company and works as hard today as when he owned it. And I am very appreciative for that. Same thing for the custom suit company, he chimes in all the time. Like hey, this is how we did things, this is how we did it. It's so helpful in the transition of a company to have the context of somebody who built this business from the ground up. And I think the super-secret number three there is when somebody is on your side, let them be. Both of their intentions aren't to harm the business in any way. They want to see it grow. And even though in both instances there's been times where we didn't quite agree on how to take things to the next level, we absolutely welcomed their feedback and sometimes they were right. Sometimes we were right. Kind of checking your pride and moving it to the side for a second when you're good at something and allowing them to tell you, yes I know you're good at this, let me tell you how what you're doing applies specifically to the business that you're purchasing from me. It's a really important lesson in the growth of the business which might be a good segway Chuck if it's okay with you to start talking about the lessons learned for some of the businesses or did you want more on…? Chuck: Before we move on you mentioned that both of the owners of the businesses were kind of still somewhat involved in the company. Is that something you're specifically looking for or was that just a happenstance of you buying a good quality business that had an owner that actually cared about the business? Mike: So in neither instance was it a requirement beforehand that the owner would stay on with the business post-acquisition. The first acquisition, the owner requested it. They said hey I see the plan and I didn't intend to call out these super-secrets but let's call it the super-secret number four is have a plan. Don't just walk in and say hey I'd like to buy your business. In that instance, I just so happened to be in London and as I'm trying to buy this business the owner of the business lived in an island off of the coast of Morocco. I had a free weekend while I was in London and I flew over and met with him and his wonderful wife and they were gracious. They took me to dinner. I insisted but they wouldn't let me treat for dinner. I think they were just thankful that I flew to go visit them and talk about the business; so just again that personal connection there. So while it wasn't a requirement that they stay with the business post-acquisition I'm always open to it if they're open to it. And I started talking about the plan; having the plan and being able to approach them. In both instances they got excited. One of them and I'll try to talk vague because I don't want to say anything about either one of them that they wouldn't want me to share. But one of them said when I said why are you selling it they said well I'm almost running out of ideas. Like I don't know what the next thing to do is. I don't know where to take this next and how to make it grow. And so for me, it's a choice of whether we stay at the level that we are now and continue happily down that path. Or do I allow my baby to grow by giving it to somebody who's going to take it to that next level? And so to be able to show them okay not only can we take it to next level here's how; yes, you recognize we have the experience before this on how to get this to that next level but here let me lay out the plan in front of you. And all throughout the while of reviewing the business and going to the website I have a checklist and I'll go over some of the points with you later today, here's all the opportunities that we think that we can have. And based off of those opportunities that's how we create the plan. And then we plug that into our for lack of a better word, our company acquisition algorithm to say okay is this worthwhile? And based off of the competitive advantages that we have with this business can we offer a little more? Do we need to offer a little less? Like where do we think that we're going to fit into this overall picture? So I feel like I didn't fully answer your question. The answer is no we don't require the owners to stay on post-acquisition. We are completely open to it. We prefer it. In both instances, they're both quite engaged overall. And just to reiterate the point maybe super-secret number five is if somebody wants to be on your side let them be. And in this instance, both the previous owners want to be on our side. They want to give us the feedback. We 100% remain open to receiving that feedback even if it's counter to what we want to achieve we'll at least receive it. I have a philosophy that you're not entitled to have a point if you can't justify it. And so if they come to me and say hey I think you're doing this incorrectly or I don't think you're doing this right. I tell myself okay, here's an expert that's owned this business for a long time, they feel strongly enough to come to me and say I think you're doing this incorrectly. I feel strongly that I'm doing it this way. But feeling trolling isn't good enough. I need to go pull data, go look at numbers, go say why are we doing it this way. And then I go back to them and say okay here's the reason why we're doing this way and they can poke holes in it or say no you know what that looks good. I wish I would have known that when I had the business. So I think that answers your question, Chuck. Chuck: Yeah I think so. And maybe secret; what number are we on, number six? Mike: I think we're on number six now. Chuck: Okay, so I would say super-secret number six, what you kind of just alluded to and what you didn't is you know when in school like high school or whatever and the teacher is like oh there's no such thing as a dumb question. There 100% is such a thing as a dumb question when you're talking to a seller. I would say super-secret number six is be prepared when you get on a call, be dedicated to the call that you're on, don't be in a car with a lot of background noise. Be at a desk, be in one place, do some research, if there's an interview to watch, watch the interview with the seller, read the package, ask intelligent questions about the business. It's okay to ask something that's already been addressed in the package if you want some additional information but show that you've actually researched the business because constantly when I'm talking to my sellers and we get off a phone call they're like that guy is not serious, don't connect me with him again. They want to know that you're serious and a way to show that you're serious is to have done some research ahead of time and ask intelligent questions about the business. And that's something that you definitely do. Mike: Thanks, Chuck. And I think that goes with having a plan. Like I don't have the time, I know you don't have the time, I don't have the time, I'm sure the sellers don't have the time to just sit there and answer questions that for somebody who clearly isn't prepared for the call it's a horrible signal to the seller that you're not serious about this that even if you do have the cash, even if all other things fall into place you're not going to be an organized person handling their business moving forward. So it's just an awful signal to send upfront. And I think one of the other things that you said; I don't want to say that there's bad questions, there's unprepared questions. Chuck: There are bad questions. I've had them on my calls. Mike: Okay. Chuck: And I know you're; Mike again this gets back to Mike being a super nice guy and doesn't want to; there are dumb questions and I've had many of them on my calls. Mike: I'm still going to stay that there's poorly positioned questions. And one of them might be hey Chuck I feel like this is a really dumb question and so forgive me for asking what's going to seem like a dumb question but it's just weighing on me and I need to ask it. That's a well-positioned dumb question. Another really good example of that is starting a call. I have a big belief and maybe this might be in one of the other super- secrets but we'll call it super-secret number seven, are we on seven now? So super-secret number seven, figure out what they want and give it to them. And again part of that is money but that's the beauty of working with a broker especially Quiet Light, that part's already figured out. That's almost done. They've declared that this is the multiple that they want now it's up to you to figure out does that fit within your company acquisition algorithm. Can I afford this based off of all of these criteria? And again I'll go through some of those in a little bit. Move that aside and now figure out what do they want. Do they want to stay on with the business? Do they want to hand it over to somebody who's going to keep the work within their country or somebody who isn't going to start selling poorly made products to their customer base that they've built up over time? Figure out what they want and give it to them. It's the best negotiation technique. If you walk into a call or a negotiation and you're trying to think how can I squeeze every dime out of this person on the other side of this phone call; I mean good luck to you, you may win or you may not. I have the philosophy of; I took a course from the Wharton School of Business one time and we talked about negotiation and one of the things we talked about was the difference between an average hitter in baseball and a Hall of Fame hitter in baseball is one in nine hits. If you can get one more hit in nine at-bats, that's the difference between average and Hall of Fame. The same thing with negotiation, if you can get one more hit in nine at-bats it's potentially a huge difference in the overall success that you're going to have. So same thing here, and so I approach the call as hey let's figure this out together and I'm listening the entire time trying to figure out what's important to the person on the other side of the call. Also, another; super-secret number eight is going to be disarming the call. It doesn't have to be this contentious conversation where I'm battling you for information. That's not the case. I start out almost every call and you can attest to this Chuck, and by the way, I've purchased a couple. I've probably had maybe less than 10 but several phone calls with people. Some of them after the call I decide this is not the right fit for me. I can't give them what they want so I just walk away and I go on to the next business. Other ones I've made offers for and maybe somebody else was giving something that they wanted and I didn't get that. But the two that I've got I'm very happy with thus far. But when I start the call I say hey I need to ask some questions and some of these questions might come across the wrong way. They may seem offensive or it may seem like I'm trying to prod or I'm trying to poke, all I'm looking for is opportunity. What opportunity exists in your business? And I'm trying to use it to go justify pulling this money out of other places and spending it and handing it over to you. So I'm looking for your help in bridging that gap here. And so when you position it that way and say help me get there it's amazing how they almost start to fall over themselves to tell you all of the potential opportunities in the business beyond what they've already written into the marketing package. And I'll even call that out. I've read the marketing package. I see that you see that this is an opportunity, this is an opportunity, this is an opportunity, based off of some research that I've done I think that this might be an opportunity. Is there a reason why you haven't attacked that market? Is there a reason why you haven't advertised on this channel? Is there a reason why this or this or that? And after you've position that I'm looking for opportunity, I want to make this happen, help me get there, usually they're quite open and willing to volunteer that information. So I'll call that super-secret number eight. Chuck: Yup, number eight. I can see the headline of this interview now; eight super-secrets of Mike Nuñez. We've got to get it to like 9 or 10 maybe. So yeah I think that those are some really good tactics. And I hate to use the word tactic because I don't feel like it's a tactic. I guess it is but like that's just your normal personality and maybe some people don't have it. But I think one of the major takeaways there is don't be super aggressive with a seller. Like the businesses we sell at Quiet Light, they're generally speaking super high quality with owners that care. It's not we generally; like sometimes we do but often it's not people that are just starting a business to flip, to flip, to flip. These are people who started a business because it's something they're passionate about and they're ready to move on for one reason or another and they want to pass on the torch to somebody who cares. And when you come in aggressive and if you try to beat down their business or things like that, that doesn't work. Maybe if you're working on a 100 million dollar deal and you got to like get in there and be super aggressive like that doesn't work with what we're doing at all. Mike: I just have to add to that Chuck because I think it's like if it works you should be worried. If it works it's probably not the right business. Like that's not; feel free to take this out Chuck if I shouldn't or can't talk about this but in the last offer I made I did not get the business. I made an offer but in our call, I recognized that what they were looking for was a quick close and a short close. They wanted to make sure that it closed. They wanted to do it quickly. And that was beyond the dollars and it was very fairly priced already, beyond the dollars that's what was important to them. And so for the caller just to give you an example of how much I personally trust after physically spending millions of dollars with Quiet Light already I made an offer, all cash so that they knew that this was going to close. I offered close at your convenience. And third I offered no due diligence. Now I wouldn't recommend that for everybody and all things. Chuck: I don't recommend that either. Do not offer to close. This is a certain special deal with a person that is a known entity that was trusted. You should always do your due diligence. Don't listen to Mike. Don't rely on us to do due diligence. It is your job to do the due diligence. Mike: 100% that was my decision that I was aware of this company, the numbers were small enough where even if this was a complete disaster it wouldn't be a disaster for me. But it was a complete cash offer, it was a complete quick close and I offer that with the hope that that was the value that they were looking for that was not a cash value that would allow them to choose me because they had; I mean I don't even know how many Chuck. Chuck: There were nine offers on the deal and you were; because of that they wanted to sell that component to you but the other offer was just so much; it was more money, the guy was willing to do a quick close as well so it just beats you out. They wanted to sell it to you. The other guy was just; it was a better offer with the other person. Mike: Understood. And so I got close right with the untangible non-monetary aspects of the offer.; it got me super close, right? I almost got that extra hit and that nine tenth bat. So just a good example of listening to what they want, trying to give it to them, and it's going to save you dollars in the long run. And the fact that they were considering me sounds like even though my offer was lower; yet again that seems to be the MO here overall. And by the way, I made a full price offer so it wasn't even like I made an under offer. I made a full price offer but somebody beat the full price offer and I'm still under consideration. Chuck: And just to let maybe another super-secret number nine; this isn't Mike's this is mine so I think that's like two of the nine. Listen to the broker. If I'm telling you something there's a reason I'm telling you it. Like when I say this is going to sell for at or above asking, it's probably going to sell for at or above asking. I'm not just trying to increase the price, right? I do represent the seller and I'm trying to do my best to get as much value for the seller but I'm not going to do that by lying. I'm going, to be honest. There's things I can't say to you. If you say well what's the other asking price is or what's the other offers, I can't tell you that but I will try to lead you in the direction of making an offer that's going to be accepted. Don't think that we're just; if I tell you there's multiple offers, there are multiple offers. I'm not just B-S-ing you. And we get it all the time where I tell people there's multiple offers put your best highest final offer in and then yeah okay asking price and I'm like put your best offer like I'm just telling you and then it goes for above asking and then the person is mad oh why didn't you tell me? I would've put a higher offer. And it's like I did tell you; I told you to put your best offer in. Like I don't want you to stretch, I don't want you to put an offer that makes you uncomfortable but you need to put your best offer in if you want to win this business. Mike: So I just want to say to that people have been kind of beat down and trained to not be trusting especially to brokerages. And at the risk of sounding like a Quiet Light commercial, it's just not the case with Quiet Light. And is it okay with you if I tell the story of how I found Quiet Light and why I just trust you guys implicitly? Chuck: I'm not sure of the story but please do tell it. Mike: I've had the affiliate manager and the performance company; the affiliate managed business overall since 2002. I started it with my brother and we built up the business. And in 2015 my brother passed away. He passed away fairly unexpectedly. And I was working at Google at the time and I had a decision to make; do I leave Google and come back to Affiliate Manager or do I sell the company? And so through some mutual contacts, I was referred over to Mark and Joe. This was before Chuck was there so I totally would've went to Chuck. But I went to Mark and Joe and just talked about the business and they asked me just great questions and they asked me for the P&L and they asked me what does the growth rate look like over the last few years. And we had been growing at like a 50%; no I'm sorry 100% rate year over year. We had doubled every year for the previous three years from '13, '14, and '15. And this is in January 2016 that I'm talking to Mark and Joe. And they even though this would have been a multimillion-dollar deal to sell that company; and I'm sure they do many, many multimillion-dollar deals which makes it easier to; I don't want to say turn it away but to give this advice. Chuck: So I will stop you there before I was with Quiet Light which was I've been about three years they weren't doing a lot of multimillion-dollar deals. So at that time a million, two, or three million dollars was a lot. It's just been in the last few years that we've really got up to where we're selling some of these really large businesses. Mike: So that makes it even more impressive, right? And I just remember this phone call with Mark and Joe so clearly where they said Mike when you sell this we'd love to be the brokerage for you. This is the wrong decision to sell right now. If you keep growing at this rate you will get what you want. Because of that conversation; I talked to other brokers who are ready to list my business or promising me the world and because of that especially now knowing that it would have been a very high multimillion-dollar deal for them and that they weren't doing as many at that time, for them to turn away that commission just gave me a level of trust with them that this is the company that I'm going to do business with. I am not comparing myself to Warren Buffett, Chuck. Not in the least. But one thing that he does that I love is he makes things easy and he; I don't want to say he takes shortcuts but he has built-in shortcuts. He can go from looking at a potential deal to executing a deal very quickly. And I don't know how he does it but my interpretation of how he does it is he identifies businesses and companies that he feels confident and he trusts. And so to me the implicit trust that I get from working with Quiet Light is a shortcut. To me, it gets me from here to this point. My comfort level right off the bat knowing that Quiet Light is not going to take a company that's shady or take a company that doesn't have solid P&L numbers or things of that effect, it's just such a comfort level. And if my comfort level was at a 90 pre these two deals because of what Mark and Joe did when they told me go continue to grow your business. It's at 100 now that I've actually purchased two companies and both of them are better than what I had expected. Now granted I'll take some credit for that that I've done the due diligence on it; I hired Centurica actually for both due diligences. We did the due diligence and we got into the company. Both of them feel; were over a year in on the first one, we're almost a year on the second one and both are solid. Both are growing. We just ran the numbers and after a little bit of a rocky start with the suit one because of some of the changes that we were making and that's what happens but we are now; November is our biggest month and we were up 30%. If you shift to include cyber Monday because everybody is obviously one of our biggest days. Chuck: How long have you owned that company? Mike: Since April of this year. So to go from there we beat our biggest day previously in the company not once, not twice, but three times by over 25%. So to beat your previous biggest day which was Black Friday; I'm sorry Cyber Monday last year, we beat it Black Friday this year, we beat it the Sunday after Black Friday this year, and we beat it again on Cyber Monday this year. So we literally doubled Black Friday. So it's been amazing. And again if my comfort level was a 90, it's 100 because of that. Like I'm not walking into a business that's a money pit or that has craters I didn't expect or potholes that I didn't expect. So I think that's just super important overall. Chuck: Awesome. So we're running a little long on this call, we've got a ton to talk about. So would you be interested in having this become a two-part segment where we'll end it here and then we'll keep going but we'll put that as a part two, to be continued? Mike: Yeah. But in case people are watching this on video just know that we cut it into two parts. I didn't wear the same suit on two different days. Chuck: We'll make a quick wardrobe change. Mike: Okay, I'll go change my jacket. Chuck: No. Mike: But that's fine. Yes, I'm happy to do that. Chuck: Alright. So, everybody, Mike Nuñez thank you for the interview today. And for everybody watching stay tuned. Next, we will discuss some of the lessons you've learned and what you're looking for when you purchase a business. So, for now, bye everybody and thank you, Mike, for joining us. Mike: Thanks for having me. Links and Resources: Affiliate Manager

We often discuss is the importance of the person behind the business. When leaders learn the value of their business and set goals for success they are positioning themselves to profit, whether they plan to stay in or sell. Today we are discussing standard operating procedures for leaders that run different types of ecommerce businesses. Our guest realized from day zero of being in business that creating SOPs helps business owners stay in the game longer with a focus on working on the business rather than in it. Trent Dyrsmid is the founder of BrightIdeas.co and host of the BrightIdeas podcast, where he has interviewed numerous CEOs, marketers, and entrepreneurs and has gotten them to share the processes they use to achieve results. Trent is also the owner of an Amazon ecommerce business and creator of a SAAS tool called Flowster, an app that helps business owners track, manage, and delegate business processes. Episode Highlights: How Trent got his start and how Bright Ideas got an INC 5000 254th fastest growing business ranking. The Amazon reseller model and how Trent makes it work via SOP. Trent's mantra of "document and delegate" and when he realized this was the key to success. Feedback loops he employs to optimize the procedures. Hiring challenges and how he's affronted them. How Trent's app Flowster was born and how it works. Ways to introduce new elements in the existing SOP for any workflow. Flexibility in the SOP templates. Implementing SOP with a team not accustomed to this type of work culture. Advantages of SOPs for sellers and buyers Transcription: Joe: So Mark one of the things we always talk about is how important the person behind the business is when they do eventually sell. And the fact that when they learn to value their business it actually becomes much more fun to operate and run because they've got some goals set out in the future. And one of the things that helps them are SOPs and above that, we had Norm for our own podcast, it was quickly shot up to the top 10 podcasts that we've done. And I understand you've got back to that and had Trent, and I'm going to get his name wrong, Trent Dyrsmid, is that how you pronounce it? Mark: Dyrsmid; yeah. Joe: On the podcast and he's got some great SOP stuff both for people that run SaaS, content, Amazon businesses, all sorts of different aspects. What was the general call about? Mark: Yeah. I saw the Norm for our episode and that was one of the ones that we did early on that really took off because Norm was running an eight-figure business largely on the backs of SOPs and virtual assistants; VAs which is really cool to see somebody be able to do that. Well, Trent Dyrsmid is very similar in that regard. His company was ranked on Forbes 5000 as the 254th fastest-growing company in the US. Joe: Wow. Mark: Amazon based business, reselling other people's products and just exploded and I asked him and I said when did you start to realize that you need to put SOPs in place? Day 0; it's like I don't have any special talents other than being the big idea guy and picking the direction but as far as executing those things that's on my team to do and my job is to give them the processes to be able to do that and to give them the tools to be able to execute on these ideas and this general direction. A really, really disciplined entrepreneur in this regard. He's not just an Amazon seller either he's got his own podcast. I was actually a guest on his podcast BrightIdeas.co. He's got a SaaS company Flowster.app which is an SOP software. I've played around with Flowster, a pretty cool SaaS product here where you can develop and roll out to your team a complete operating procedure for pretty much anything. So you can create this nice collaboration but what really sets it apart is there's this entire marketplace what he found was happening among both when he started his company and also once he started coaching some other people is they're asking how do you do this part of your business? What's the process that you use here? And instead of writing it down in word and all that sort of thing and trying to transport over he said well there should actually be a marketplace where people can collaborate and sell their best processes to each other or give them away for free. Most of the stuff in this marketplace is free so it's kind of cool on that. But what we focused on Joe is not a pitch for a Flowster; I think there's a lot of ways, you and I talked about just put a video together as just kind of a minimum type of SOP. We talked a lot about how do you write an SOP that is specific enough to really tell people how to do things, will be adopted by your team. How do you make it adopted by your team, and how do you create it general enough so that it can absorb differences when people are seeing maybe exceptions to what the standard process would be. Why is this so important in the process of building a company and can you actually scale a business to eight figures like he did very quickly without them and the answer is no. Joe: Yeah, and that's why so many people sell because they take it as far as they can and then they have to bring on staff and get into areas they're not as comfortable with and I think these SOPs will help those folks hold on longer and get a higher value. I think SOPs will help buyers as well when they buy a business and take it over and if there's no SOPs in place they can do that and instill more confidence in the next buyer and grow that business to the next level. So let's get to it. Mark: Trent, thank you so much for coming on the Quiet Light Podcast. I'm super excited to have you on. I recently appeared on your podcast. Somebody actually reached out to me recently about that episode as well so that's always an encouraging sign when people contact you after appearing on some of these podcasts. But I'm excited to have you on today because you've got so much experience in the world of online business and you cover a lot of materials. We're going to be looking at just one area that you covered pretty heavily and that would be SOPs; procedures and operating procedures to implement things. But you cover a ton of territory and a lot of the bases of what you do is based on your success with your company. And congratulations on Inc 5000 ranking that you had recently. Why don't we start; just give us a little bit of background on yourself and also where your company was ranked recently in Inc 5000? Trent: Sure. So the company was ranked number 254 which was a very pleasant surprise. And as you might guess it's a wonderful bit of social proof to kind of reinforce what my whole brand message is about which is systematizing your business so that you can delegate a lot of the work that you really shouldn't be doing to other people on your team. And the net result of that, of course, is an accelerating growth rate. So how did all this start for me? I've been an entrepreneur for two years now. When I started my first company back in '01 I really had no idea what I was doing. I knew how to sell but that was it. And I figured everything else out over an eight-year period. And it was pretty painful but thankfully I was able to get a seven-figure exit out of that business. And that put me on a track to have a bit of time and bandwidth and so forth to figure out this online business thing and I've been making my living online now for about nine years and roughly just over three years ago I switched from being a service business; I'd been running a digital agency for a number of years because my podcast built an audience and people would reach out and can you help me with this and can you help me with that and we were making a decent living doing that. But the last couple of years have been just a stratospheric kind of change up the hockey stick and it started with this e-commerce business. So we started a business three years ago where we would partner with US manufacturers to sell their products on Amazon ideally as one of their exclusive sellers. So in doing so, we were able to avoid all of the risk of launching our own brands and the time that it takes to do that and I like low risk. I love Warren Buffet's number one rule Don't lose the money and rule number two is see rule number one. And so the reseller model is a very, very low-risk model because you're buying proven products. But the problem with the reseller model is there's lots of sellers on each product and so oftentimes the margin can go away. So instead of making money you just end up kind of getting your money back which is pointless, so by forming these relationships with the brands directly and getting them to kick off all the other sellers or having a very small list of approved sellers that actually can be a very profitable model. The challenge is finding these suppliers require a great deal of grunt work; massive, like you, can't automate it all. There's just a bunch of labor because you need to send hundreds of emails a week to hundreds of suppliers. And what made me a little bit for lack of a better word famous in this particular industry was just how quickly we were able to scale the business. We went from doing 0 to over $100,000 a month in five months. We did at one point one million in the first year and we grew at 20% per quarter for eight consecutive quarters which was a huge contributing factor obviously to being 5000 at Ford. And how did I do all that? Well, that's the secret sauce. And essentially what I did was I realized I can't be the one doing all this labor. So when I launched the business rather than sitting down to do I sit down to document. And as soon as I'd created documents for all these; like I would do it one time or maybe two times and I would make my operating procedure while I was doing the thing and we would delegate the thing and never ever do it again. And that was a huge, huge advantage over everyone else in the space who was really kind of trying to do it all themselves. Mark: Yeah and I know we've got an episode a while ago with Norm Farrar. I don't know if you know Norm but the entire episode was how he grew an e-commerce business to over 10 million dollars on the strength of doing exactly what you're talking about; hiring the VA's and putting in strong SOPs in place so that the procedures are what you're working on rather than trying to master every little aspect of your business yourself and run the day-to-day. And I think procedures; in my world, in my opinion, I think a lot of entrepreneurs see procedures as important but they don't necessarily put the time into the procedures with a business so I want to delve into that a little bit. When you're growing this business when was the moment where you switched over and thought I should really be putting my time into writing awesome procedures for people to follow? Trent: Day 0 because I'm not a first time CEO, I had started to drink the Kool-Aid back in my very first business that I started in '01, somewhere in maybe '03 or '04 or it could have been '05, somewhere in that period of time I read E-Myth by Michael Gerber and my life as an entrepreneur was transformed at that moment. And I said to my co-founder at the time; I said I want a written procedure for absolutely everything our engineering team does. And then I handled writing procedures for what I was doing on the sales and marketing side and that business was twice ranked as a Profit 100 fastest growing company in Canada. And so I got a decent exit out of it for a relatively small business. And so for me having documented procedures was just kind of normal. So when I started my business on Amazon I never thought well I'm just going to go and do this and get really proficient at it and then maybe I'll make a training video or maybe I'll have a training session for somebody else. I don't think that's an efficient way to eliminate and delegate it all for a whole bunch of different reasons and so procedures were written literally from Day 1. Mark: So tell me how you go about writing your procedures and starting this and my first question is if you're not proficient in it how do you write it? Trent: So thankfully I did have a bit of a mentor in really a bit of a mentor; not really a bit of a mentor, I had a mentor in that business. I'd interviewed a guy by the name of named Dan Matters on my show and that's how I discovered this whole wholesale model and he has a training course which is a really high-quality course for me. So I had access to his material and I also had access to Dan because he'd been a guest on the show. And so I foundationally understood what I needed to do. And so as I mentioned before I would just start doing what his training told me to do and then I would document it as I was doing it. Mark: So when you're developing a procedure for a new task I mean you obviously we're staying off somebody else's work to some extent; I mean you were taking some inspiration but if you come across something that you haven't dealt with before especially like in the Amazon world I'm sure there are elements there that you needed to come up with, what sort of feedback loops do you employ or do you employ feedback loops to be able to maximize and optimize some procedures? Trent: Yeah absolutely we do. So a perfect example of that is I recently for my software company, a content marketing SEO is a huge focus as a part of our growth. And I've never been an SEO expert and so I wasn't really a keyword research expert and I had never used this tool called Ahrefs before; Ahrefs is a wonderful tool. And they provide training videos. So I would watch these videos but rather than just kind of sit and consume it and take sort of random notes over the period of the video I kept hitting the pause button, pause button, pause button and I would take screenshots of what they were explaining in the video. And at the same time in my Flowster software which is where I create all my standard operating procedures, I'm literally typing out the instructions that they're giving me and then I'm taking screenshots from the videos. Because my goal is this I want to; I don't about you but I can't watch a ten-minute training video and remember all the details, it's just too much. Not only that I only want to do it once or maybe twice and then I want to delegate it. So what am I going to do; ask somebody else to watch the training video and they have the same problem as me and what if they interpret the video differently than me? Because the training videos they kind of give you guidelines and I have to choose of those guidelines well how exactly do we want to do it? So by the time; a 10-minute training video would probably take me an hour and a half to turn that, to repurpose that content into my standard operating procedure which is a checklist essentially, it's a step by step by step do this, here's how you do this and do this, here's how you do that, do this, here's how you do that. And by the time I was done now I had a way that I never had to watch the training video again. Anyone that I was going to delegate that task to never has to watch the training video because the procedure is broken out so clearly in the document. And so that's how you can create a standard operating procedure for something you've literally never done before. Mark: Right. So you would start with somebody else's training video. Break that up into basically an outline and a step by step process in order to do that. When you're delegating procedures how do you identify who you're delegating something to? For example, I've talked to entrepreneurs who want to delegate a task but it just doesn't seem to fit the current team member and hiring somebody new for that doesn't really make sense. What have you done in the past when you've run into these smaller jobs and tasks that should be delegated but maybe they don't have a great home? Trent: It's an interesting question and I don't know that I've really run into that scenario because I live my life every single day thinking about what can I eliminate from my workflow and in order to eliminate it I need to document it and delegate it so I don't really think; I don't see anything in my business aside from; so as a CEO I see my job as working on the business. I'm the one who's supposed to go get the Big Ideas. I'm supposed to come up with the big vision. I'm supposed to build the team and help them to define and execute on a strategy. So that's the high-value activity and the minute I get sucked down into working in the business that high-value activity suffers. So I'm a delegating theme. So you said well what happens if I can't find somebody? I'll find somebody. I'll hire another virtual assistant or I'll hire an employee or I'll give it to an existing employee; like for most of the day to day, repetitive processes that are part of working in the business somebody else can do it. Like I'm not the genius of the universe that oh I'm the only guy that can do this; I don't really see it that way. Now, are there occasionally tasks that are somewhat non-repetitive, like they only happen every once in a while and they require judgment that comes from experience in addition to following a process? Well, I'm less likely to delegate those to somebody else because the return on investment of doing so is going to be slim. But for those highly repetitive tasks that are every day or every week if you spend that; in my case, I spend an hour and a half making a video for how to use and do keyword research on Ahrefs, well guess what? How many times is that going to get done for every single blog post that my software company publishes which is three a week? Just think of how much time I saved myself. Mark: Yeah. Oh absolutely. I mean that makes a lot of sense. That makes complete sense. You mentioned earlier; I want to go back a little bit to what you mentioned with Flowster and also how you got started. You leveraged knowledge of your mentor and some of the procedures that he put together to be able to scale up pretty quickly. And this is kind of the idea behind Flowster and I know this is a full disclosure, this is your business, this is something that you're growing right now a really cool software that really focuses on workflow especially in the e-commerce realm. Can you tell us a little bit about Flowster and how you can use Flowster to be able to leverage other people's experience? Trent: Sure. So the thing about like when I very first started out to create my procedures they were in a Google Doc because I didn't know any better. I thought well that would be a great place for them. They're easy to update and I can share them and so forth. And then over time we realized that that wasn't terribly efficient and so we moved our content into a competitor software application. And then as a result of speaking at an event I ended up becoming someone that sells SOPs. I was speaking to one of Dan's events and there was hundreds of people in the audience and I'm talking about SOPs and they all say hey I love it, I don't want to make them though can I buy yours? So we started selling ours and that's why Flowster got created. And the functionality of the software is really; because really you have two pieces when it comes to workflow process management. You have your content which is the set of instructions. Think of it like the recipe book. You want to bake a chocolate cake it's on page 68, flip to page 68, bake the cake. But what happens when you have multiple cake bakers baking cakes and they all have different due dates and they all work in different places so you have some issues about workflow management. And so what the software does is it allows you to say; so we have in our vernacular we have what we call an SOP template and then we have a [inaudible 00:19:02.3]. So the SOP template is like the master copy of how to do the thing. So we'll call it in my world one of the things I produce a lot of these podcast episodes; like this SOP template for podcast episodes well in the week that I recorded episodes, I might record 4 or 6ix episodes. So now that's 4 or 6 workflows each workflow being for one episode. Well if I have; and I have various people on my team who are involved in the post-production process of taking those raw recordings like you and I are doing right now and then turning it into an episode and then getting it on social media and running ads for it and do all of the things that we've got to do. So that's all defined in the workflow and then various portions of that workflow get assigned out to various people on my team with differing due dates. So the software provides you the ability to do all of that delegation and give deadlines and so forth and everybody gets notifications in their inbox or they can just look at the calendar and see what to do. Because the more people that you have on your team and the more concurrent workflows that you have going like how do you manage all that? How do I know Mark if I've delegated something to you and I've told you I need it done by Thursday; if I just sent you an email saying hey reference the Google Doc, see the instructions, make sure it's done by Thursday if you don't finish it by Thursday I'm not going to remember that by any stretch of the imagination. So I need us closing the loop system. So that is one of the primary pieces of value that the software does. But aside from that I actually have one thing that I like even better and I call it the magic button but it's really the edit button. So remember I mentioned how my job's to go and get the big ideas etcetera, etcetera? So I'm not a mastermind weekend this past weekend in San Diego and I'm getting a lot of big ideas and some of those ideas I realized I need to implement those in my workflow because they're really great ideas. I don't want to forget them. Without the software and without the standard operating procedures I would be faced with the challenge of having to change the hardest thing in the world and that's people's habits. I'd have to sit down. I'd have to explain to them and have meetings and tell people that this is the way they need to do it now and then hope and pray that they actually make that happen which as you well know the human habit is really hard to change; that would be difficult. Thankfully in the software so I learned that I wanted to create; I'll give you a specific example, for my podcast I want to now create a little 1-minute ad and I want to retarget my audience on Facebook to say hey I just recorded this episode with Mark and it was really awesome because of this, this, this, this, and this. So I fire up my SOP template for producing a podcast, I hit the edit button, I go and I make those changes, I hit save, the software says would you like to update all the active workflows based upon this change? I say yes. Well, guess what? That new idea is now going to get implemented in every single workflow that is active at that point in time. So with essentially no effort on my part this new idea or the strategy of this process has literally been pushed out to everybody in my organization just like that. And for me, it's the best part of the software because you're able to have your team collectively get more efficient, smarter, and more effective over time. Those ideas that you pick up don't get lost. They don't just stay in the notebook they actually become reality. Mark: When implementing a new idea like that do you find it ever causes confusion among your team? Or let's say that they've been doing the blog production workflow for the past two years and they know the steps that they may not even need to consult the software because they've done it. They know that I do keyword research and then I do this and then I do step 3 and step 4 and so maybe they're doing this independent of the software. Have you ever run into a situation where your team trips up on something like that? Trent: They're going to have questions. So it's a part of our culture and it's a part of our DNA. People know that the workflows are always changing and they're always being updated and it's just like in our company no one would go and try and drink a glass of water without a cup of water. You'd just be weird. The same thing with our workflows; everybody understands that everything happens by logging into the software first. Looking at the workflow, following the workflow, you're not supposed to do anything by memory. Now does that mean that you're not going to get questions? No, you're absolutely going to get questions. And all questions means that you didn't provide clear enough instructions. So when I get questions I then think okay well how can I update my workflow or my SOP template and in turn the workflows so that that particular question doesn't get asked again. And if you've written great procedures and you've provided enough detail you really won't get very many questions. I like to think of it like the mom tests or all of our moms are not particularly tech-savvy when I'm writing workflow I think to myself is there sufficient detail not only in the what to do but how to do each of those what's that my mom go through this and probably get it all right without asking me any questions. Mark: You answered my next question a little bit here but maybe we can expand in that a little bit. In the world of programming there is this idea of coupling, right? You can be either loosely coupled or tightly coupled. And what it basically means is a program can either be loosely coupled; it's very broad and allows for a lot of different possibilities and tight coupling is very specific as to how you do things. And there's benefits and drawbacks to both. You want to be somewhere in the middle in the world of programming probably my old days when I used to write code here. But I love these kinds of; writing and SOP I would imagine that there's something similar there, right? If you're too specific and they run across an exception they're going to wonder what should happen here because the SOP is specific. If it's too broad then you end up getting people doing things all sorts of different ways. Do you have any tips to find that sweet spot in the middle of where you can be nicely of both sides there? Trent: So the SOPs themselves are pretty tightly coupled. However now we go back to the whole hiring aspect. Ideally, I'm looking to hire people especially in the more senior roles who have a higher level of expertise in a given topic than I do. And the loose coupling as I say to them look you now own these SOP templates in your department. It is your job to improve them over time so that the people who report to you when they are doing these workflows that they're able to follow them and you're able to improve them over time and that has worked very well for us. And it also, of course, frees me up from having to be the guy that writes every single SOP. Because there's lots of stuff like for example in my e-commerce business that my wife runs on a day to day basis, there's lots of stuff I've never done but we have SOPs for it all because somebody else wrote them. Mark: Yeah well on that one of the things; so I've played around with Flowster app and one of the things I love about it is the marketplace that you have. The ability for people to contribute in SOPs that have worked well and for somebody else to come in and say you know what I really need right now what I could really use well right now but let's go use an example, how to use Ahrefs for keyword research. This is one of the SOPs with new marketplace. So if you've never done this before and don't want to sit there and write your own procedure or you don't know where to start you can use this marketplace. In your past, growing the businesses that you've grown; I mean you've grown e-commerce businesses, Amazon businesses, SaaS businesses, a podcast, I mean you've got a really wide range of online experience here, how much have you been able to draw on other people's materials? What role has that played would you say in the growth of some of these properties? Trent: Oh massive. Honestly, my secret of being a podcaster is yes it is nice to have an audience and as I'm sure you're already well aware it's the world's best networking tool and it also allows me to get free advice from really smart people in other areas. So yesterday was a perfect example. Yesterday I interviewed a woman by the name of Erin Corn. Erin worked for Facebook. She worked for Instagram and she worked for Amazon. So do you think she's got some skills? Absolutely she does. And particularly in the area of online advertising which is one of my big focuses for 2020. So at the end of that interview, I'm saying to Erin, hey Erin I think we should collaborate. And I think you should develop a whole bunch of SOPs around advertising on Facebook and Instagram; something I am not an expert in. We'll figure out how we can monetize that knowledge to your benefit and to my benefit going forward. So the whole idea of the marketplace is when people come to Flowster nobody wants to build an SOP from scratch. It's just a lot of work. And I was willing to suffer through it but not too many other people are. So the marketplace allows to come in to buy; so there's free ones you can download and then you can edit them to your heart's content. If you're a creator like me you can put your own in the marketplace and you can sell them to other people. And I've generated millions of dollars in the last two years in sales of SOPs for Amazon sellers. So there is a huge market for pre-made standard operating procedures and that's the big reason why we created the marketplace. I thought to myself there's all these other experts, there's all these other companies who would benefit from having SOPs that they could either give away or sell to their audience like a software company. We've formed partnerships with software companies for example. We've got one happening with a major player in the Amazon space by the name of Viral Launch because I said to them; I said look if you're only providing training videos to your new users you're putting a pretty significant burden on them because much like me with Ahrefs I had to watch the videos over and over again and I got to take notes and it just sucks. It's not an efficient way to learn highly detailed processes. So we're now collaborating with them to create standard operating procedures for how to get the most out of their software. And they're going to tell their 200,000 email subscribers about those. So how does that benefit us? Well it benefits their users, it benefits them as a company, and it benefits me as a platform. And so if anyone is listening to this who runs or owns a software company or you're an expert in a particular niche I definitely invite you to reach out and talk to me about some type of collaboration because that's a huge part of our growth strategy going forward. And for everyone who comes to Flowster the more and more content that's there; think of it a few years down the road like the Amazon of SOPs. No matter what business that you're in you can come there and you could SOPs that they might not be perfect but they're 80% good enough and you can hit the edit button and tweak the areas that aren't exactly the way you want and you're off to the races and it's so much better than creating it from scratch. Mark: Yeah I mean especially if you've never written it before and don't know. We talked about the idea of this loose and tight coupling; how do you find that sweet spot, well, follow somebody else's lead like somebody who's written one that's really successful. And I think for the audience listening here I know a lot of you guys have SOPs in place, why not share some of these and also use it as a revenue-generating aspect to your business especially if it's something that's tried and true. Of course, unless you think the SOP is something where you want to keep it proprietary but there's a lot of common SOPs that would be really good to share. Trent: There really is and if someone's running an agency as an example let's say your minimum retainer is $5,000 a month and you're on a classic line or like well we can't really afford that. Well if you don't have a down-sell they're gone; you generated zero. But if you say well you can't really afford that I'll tell you what we have a collection of SOPs and you can buy those for 2,500 bucks or we'll pick a number out of the air. At least you're giving the opportunity for A. to capture some revenue that's going to be 100% gross margin because it's kind of like selling software, build it once sell it a thousand times and B. more than likely as that buyer or that customer starts using your stuff you're at least giving them the opportunity to come back to the trough later on and say well actually now we're ready to put you on retainer because these are great but I don't actually want to do all this work and I want to hire people to do this work and you're opening a door that wasn't necessarily previously open to you. Mark: Right. Just a couple more questions for you. And this one here I think would apply to a lot of the people that are listening. You said that you were SOP heavy from Day 0; I'm sorry not Day 1, Day 0. How do you implement in your experience and maybe you haven't had to do this; maybe this can be difficult to answer but how would you implement SOPs with a team that is not used to following SOPs especially when you have a step by step software and you want them to live in that SOP on a day to day basis? Trent: So yes that will be more of a challenge because there is a cultural shift and I think the way to do that; there's a couple of ways, first and most when the SOPs, so you got to get the SOPs created. So as the boss I mean maybe you could create them all yourself but that wouldn't necessarily be the most efficient. But you might start off with creating SOPs for your direct reports and you're just saying hey look this is how it's done. I'm going to start assigning you these things; this weekly recurring thing or whatever and you're ingraining your direct reports into using and becoming dependent upon the software. And then you tell them alright so now for your subordinates who have to do this, this, and this over the next 30 days you have to develop 8 SOPs or 10 SOPs and if you don't you're just not going to fit in the company and you're going to get fired. That would be the way I would do it because I'm a pretty direct leader. If I have my culture and you're not in my culture then you're not on my team. Other folks are probably going to take maybe a softer approach to it and I don't know that I'm the best; I know then I am not the best expert on leading cultural change because I didn't do this with 50 people on staff already and then saying okay guys we're going to start drinking this SOP Kool-Aid. Mark: Yeah I just like to wrap up here and then ask you one final question but you mentioned early on that a big influence for you was Michael Gerber's book E-myth and I read that book and I can; everything you're talking about stems from what he wrote in that book and so it makes complete sense. So if you want to delve deeper into why SOPs and really I think sort of a philosophical look at how you build and scale a business and the hiring models that you would follow there, that would be a good foundation for anyone that's really going into this world. I think the product itself is fantastic. We preach a lot at Quiet Light Brokerage when talking about building value in an online business. One of the key pillars that we talk about is transferability. What's really important with transferability? Well having procedures written out. And for a lot of people it's intimidating so we just say just do a video recording if nothing else; just kind of a minimum [inaudible 00:34:21.6] product but how much greater would it be if you actually had everything written down in steps with timelines, with due dates and you could apply it to a team and literally just plug and play. A fantastic product and something that would really increase the value of a business just based on the fact that that you have all these procedures written and a buyer doesn't have to come in and try and figure out processes on their own. They already exist. If somebody wants to check out Flowster what recommendations or do you have anything for them to check out first? Trent: I do. I put together a page just for your audience. They can get to it at BrightIdeas.co/quietlight and on that page, I will put a promotional code and along with a couple of links. So there's one of our products that we sell in the marketplace, we sell it for $299 and it's what I call it the blogger content production pack. So any company that is producing blog content or video content or podcast content would highly value this collection of SOPs because there's my SOP for podcast production, there's my SOP for video production, there's my SOP for text blog post-production, for webinars and for email and obviously, the email is specific to one particular application. So if you don't use that same application you would obviously have to make some edits and so forth. But if you go to BrightIdeas.co/quietlight all that good free stuff which we normally sell for 300 bucks we'll be there for you. Mark: Yeah and just disclosure I actually have that workflow because I was checking out Flowster. It is so detailed. Like the SOP that you have here is great. It really does; when you're talking about being a little bit more towards the tightly coupled sort of SOPs, it is. I mean there's just on the weekly broadcast email I'm seeing 29 steps here labeled out which is fantastic. I mean that that level of detail makes sure that nothing is getting dropped. Trent, thank you so much for coming on. It's definitely a pleasure to have you on the podcast here and thank you for the offer. That's really really generous for our clients. I appreciate you offering that over to them. So we'll link to that in the show notes everybody so that you can take a look at it. I'd highly recommend you check out the app, it's really cool. And if you haven't implemented SOPs now's the time to do it. If you don't know whether or not you want to, read E-myth by Michael Gerber first and then you can build up from there and start implementing some SOPs. Trent: Yeah and I think mentioning the E-myth you asked me how would I transform the culture? I would hand E-myth to everybody on my management team and I would say you got two weeks to read this thing and we're going to sit down on our future. I think that because that way you're using that third party reference. You're not saying hey I'm the expert. I'm saying this has been proven to work in every industry on planet Earth. This book has been a bestseller for years etcetera, etcetera. Mark: Absolutely. Okay Trent, thanks for coming on. Trent: Thanks very much for having me, Mark. Links and Resources: Bright Ideas Flowster QL Listener Offer The E Myth by Michael Gerber

There is always a recession coming, we just don't know when. The US is in one of the longest expansion periods ever known but many predict a recession in the next twelve to twenty-four months. Business owners can make money in a growing economy and they can make also money in an economy that is pulling back. Today we are talking to Jonathan Slain, founder of Recession.com – a company he started in 2008 when he lost his fitness-based business. He saw an opening and borrowed the money to launch his successful recession-proof consulting business. In his new book, Rock the Recession, Jonathan and his co-author highlight ways savvy entrepreneurs can bounce back from internal recession and make plans to be buyers when opportunity knocks. Episode Highlights: Jonathan's recommendations for owners of online businesses to start assessing themselves as recession ready. How to benchmark a small online business with smaller revenues. Importance of board of advisors and mentors and how to find them. The cost and time involved in choosing advisors and mentors. Other actionable advice for someone running an online business to prepare for economic downturn. The importance of having access to capital and credit now rather than waiting for the pull back. Why Jonathan wrote his book. Internal recessions and how to avoid or rectify them. How to research whether what you're selling will survive or thrive. Advice for the business hunter in pre-recession times. Some final tips in Jonathan's own words. Hint; plan now. Transcription: Mark: Joe there's a recession coming. Joe: Is it? I'm not sure I thought it was here 18 months ago or was coming 18 months ago and now it's going to be fall of 2020. What's the story? How do you know this? Mark: Well there's always a recession coming, right? Joe: Oh, yeah. Mark: I mean we know we just don't know when but if you look at; I would encourage people listening; when you're in your car don't pick up your phone but when you get back to your office or get back to in front of a computer do a search for a graph of recession gaps and you'll get to see from 1900 until present when the recessionary periods were and when the non-recessionary periods were. And we are in a period of time right now, one of the longest expansion periods in our economy and so it's not really soot saying or you know looking in a crystal ball to see that there's a recession coming. We know it's going to happen, we don't know how bad, we don't know when exactly but we do know it is. And I had an investment professor in college who would say all the time bears get rich, bulls get rich, pigs get slaughtered and I always thought well bears get rich too but you need to actually plan for; I screwed that up, it's bulls and bears and pigs but whatever you need to plan for this… Joe: I'm just trying to think through what you just said so thank you I thought I was not keeping up with you. Mark: Well you know what I failed that class so maybe that's why I don't know the right answer. But bulls get rich, bears get rich, pigs get slaughtered. And the point was you can make money in a growing economy, you can make money in a declining economy don't get greedy; that's the lesson but there is an in lesson in there, you can make money in a down economy but how many of those listening right now are just looking at their last year being like that was awesome without any idea of what they're going to do when; not if but when the economy pulls back or they haven't pull backed within their own company. And I know you talked to somebody who specializes in this; he owns recession.com for goodness sake. Joe: I know what a great URL, Recession.com, it's Jonathan Slain and he's been through this. He started his own company in 2008 and just had to fight through meeting payroll and all these different things and learned so much in terms of being ready for the next recession and preparing for the next recession. And he's expanded beyond the actual economic recessions that we're talking about and focuses a little bit in helping companies with internal recessions so that if they had a client that had a subscription or SaaS business but only had 10 major clients and they lost two or three within a month or two that's an internal recession. If you've got a hero SKU that you're selling and 70% of your revenue is from that hero SKU you are setting yourself up for an internal financial recession with your business if competition comes in and hurts that. So he has a readiness assessment test; a recession readiness assessment test on his website and it goes through and compares how you are prepared compared to others and helps people take advantage of upcoming recessions and avoid the major pitfalls in being one of those pigs that get slaughtered. Mark: Well let's get right to it because I think this is an important topic for anyone. Anyone out there that has an online business, don't get too fat on your current earnings. Understand that businesses go through cycles, economies go through cycles, let's all survive this next cycle and thrive in the next cycle and it sounds like that's what we're going to learn here. Joe: Hey folks Joe here from Quiet Light Brokerage and today I've got Jonathan Slain with us. Jonathan is the author of Rock the Recession and is an expert in preparing for an economic downturn either in a worldwide situation or a nationwide situation or possibly in your own business. Jonathan welcome to the podcast. Jonathan: Let's rock. Good to be here. Joe: Can you expand on that background a little bit? We don't do any fancy introductions here. Can you tell the audience who you are what you're all about and where you come from? Jonathan: Yeah, so I come to you today from my home in Cleveland, Ohio but I really started my career; I have to disclose that I'm a recovering investment banker. And so that's where I started. From there I went on to own my own business which was five gyms all located in Cleveland. I think you mentioned earlier that I borrowed some money from my mother in law in the Great Recession so we can talk about that. And since then now I am full time doing consulting for large companies looking to grow revenue in or profit and that is what brought me to writing the book. And then when we were talking before we started the show getting me on Fox News lately. So we can talk about any or all of that but that's my story. Joe: Well congratulations on stepping up to the Quiet Light Brokerage podcast from Fox, it's a big show you're on now. Jonathan: Understood. Joe: Are you nervous? Jonathan: A little bit. Joe: We've got some pretty impressive people in the audience believe it or not; they're both buyers and sellers of online businesses, entrepreneurs that are building businesses that they're solopreneurs in some case sometimes they have remote VAs working for them sometimes they have staff. But what would your recommendations be for those that are; first we'll talk about the owners of online businesses and how they prepare for a potential economic recession. Jonathan: Yes. So the first thing that I would do is to assess where you are. So as a business owner it's really to benchmark how you're doing compared to where everybody else is in the market. So if you don't know where you stand then you can't figure out what you should do first to start to get better and improve. When it comes to benchmarking that was where my business partner and the co-author of the book; that's where we started. And so we put up a free tool. It's on our website so if the audience wants to go to recession.com they can go there. It's 20 questions. It only takes about 5 to 10 minutes Joe and you'll get a score from 0 to 100. If you're a zero then it's likely that you're going to go bankrupt in the next recession, if you're a hundred then you're licking your chops; can't wait to pounce when we hit the next downturn. So that's where I'd start. Joe: How do you benchmark in an industry like the online business with a lot of smaller businesses doing less than 10 million in revenue when none of the information is public? Jonathan: Yeah. So what I can tell you is that from all of the responses we've received to the recession readiness assessment, the average score right now is a 37. So I think for people looking to benchmark themselves with other private companies 37 is where we're seeing the mark. If you're above that score that relative to we've got a thousand plus responses you're probably doing better than the average and below that can be nervous. So I think that's one piece but it brings up a good point and I think part of what I was listening to on some of your other episodes is that private businesses, small businesses need to have their own board of advisors. And so that's one of the questions actually on our assessment is do you have a board of advisors? And I'm not talking about your lawyer, I'm not talking about your accountant, I'm talking about people that have a proven track record of making money in business preferably in a similar business to what you're doing to your online business and that will just give you straight feedback. Again I know that some people bristle when I say don't have your accountant or lawyer on the team. My issue is that your paid professionals may not want to tell you what you need to hear all the time for fear of losing your business. Joe: And I think that's a great idea. I call them mentors or board advisers whatever it might be. The question is I saw something on the hustle the other day, we focus on or I watched that and I know Sam and that was a question that someone came up with so like look I'm trying to find a local mentor or board of advisors; how do you find them? A lot of people gave a lot of different responses but what would your advice be in terms of trying to find the right type of mentor or board of advisor and is there a cost associated with it? Jonathan: So I always have a list. I call it the list. I keep it with me at all times. It's the 10 people I'd love to have on my board of advisors; the people I'd love to have as a mentor or a coach. And the issue is that most of them are not going to work with me right now. These are all folks that are super busy; they're overcommitted, and so they're on my list because once a quarter I bug them. I send them an email, I text them, I give them a phone call, I just drip on them and I try to wear them down until they finally get to the point where they're like fine I'll coach you; I'll mentor you. And that's literally I think how I've gotten a lot of my mentors because the people that I'm chasing don't have discretionary time. And so I don't think it's as simple as we listen to the podcast and we decide I'm going to do this thing and you just all of a sudden have a board. It's going to be a process that takes some time. In terms of the cost associated with it, I do think it depends on who you're working with. But I would think an honorarium of 500 to $1,000 per board member per quarter is fair. And I'll tell you that they shouldn't need the money. If the reason they're doing this is turning a little bit extra money I don't think you have the right person on your board. I think that in most cases they should be donating whatever you are giving them to their favorite nonprofit. And I think they should want you to pay them the 500 just to keep you honest and actually listening to their counsel and to keep them honest so that they feel like they have some skin in the game that they need to do some research; they need to read your financials before they get to the meeting. Joe: And how much time a quarter do you take up with someone like that? Jonathan: Yes. So my thought would be a four-hour meeting once a quarter and that they should do anywhere between two and four hours of prep of reading whatever packet that you send to them before the meeting. Joe: Okay, not too bad. What actionable advice can you give people that are running online businesses now in addition to the board members what could someone do now thinking okay, if there is an economic recession I want to do everything I can to prepare over the next 6 to 12 months. What can they do now? Jonathan: Yes. So the second step in the whole process would be to tune yourself and your business up. And by tune up I mean you're going to be doing things like looking at your line of credit. So do you have the right line of credit to be able to grow in a recession? Joe: Why do they need a line of credit? Jonathan: So by that, I simply mean capital access to cash if we get into a downturn and you see an awesome opportunity to buy assets to buy inventory for cheap, to be able to afford talent that you couldn't get access to during the recession or maybe they find a bolt-on opportunity for their business to purchase another business then you're going to need access to capital in order to make all those things happen. Joe: And what forms of credit would you advise someone seek? Jonathan: Yes. So I think that the best would probably be a line of credit that isn't secured by personal assets. If you can't get that done then look at a home equity line of credit and if you can't get that done then look at credit cards. The thing is to have access to capital; you don't have to use it. But here's the deal like right now when the economy is good this is the best possible time to go to your bank and ask for credits. When we're in a recession, when we're in a downturn the banks are not going to loan you money. They're going to laugh at you if you come and you try to borrow from them. I mean one of my favorite sayings is that you can go to a bank; it's like asking for an umbrella except when it's raining. So banks operate in the same way. They want to extend credit now because all the banks are competing for your business. When we're in a recession, when we're in a downturn they're going to start to contract their portfolios. They're going to start to mitigate risk. They're not going to want to open up new lines of credit especially for online businesses; especially for newer online businesses that they see as riskier and not asset-backed. Joe: I'm going to back that up, folks. I sold my business as you all know in November of 2010. I bought a house in June of 2010. I paid mostly cash for it. I sold my business in November and then got busy got delayed and didn't apply for that home equity line of credit until sometime in May the following year. Well, guess what? I had filed my tax returns. I didn't have employment. I had a ridiculous amount of equity in my home and I got declined for a home equity line of credit because of timing. It was ridiculous. It was 2011 at that point as well. So the economy was just coming back and I had a ridiculous amount of credit but because I didn't have a quote-unquote job or income at the time I got turned out for hillock. And I had been given previous advice exactly like this and this is from my mentor; a business person, a business advisor, always have some sort of line of credit available to you. Jonathan is right. Make sure if you can it's not tied to personal assets but the reality in this solopreneur world that we live in for the most part that's really hard to do. If you can't get that non-secured get secured and get it backed up as a credit line with your investment advisors or on your home equity line of credit or any other way that you can. What about credit cards and revolving credit cards; do you advise people to mess around with that at all or is that something that they should avoid? Jonathan: Well I would as a last resort. Again for me, you don't have to use them. But I'm a business owner too; I'm an entrepreneur I always want to have a backup in case things don't go as planned and so part of this is that I want everyone to look forward to the next recession. I know that's weird but that was the idea behind why we wrote the book. I mean the traditional plan for a recession is fire people and cut overhead and just survive and that book's already been written many times over. The idea here was what if we studied people that leverage recessions and use them as a way to hack the system to escape the usual need to hustle and grind to be able to grow your business and then sell it for a dream outcome. And so I'm always thinking of how can we use credit in downtimes to be able to buy assets to buy businesses from other people that weren't smart enough to listen to our podcast; from everybody that didn't prepare. And at the same time if all the stuff we're talking about isn't working; Joe, if people are listening and they're like look my business isn't growing and I'm in a recession myself then you need access to that capital just to survive. I mean at the end of the day we all need to protect the beehive as entrepreneurs because if the business doesn't survive then none of the rest of this matters. Joe: And that's almost moving into the second type of recession and that's just an internal business recession when someone has key employees that leave or hero SKUs where competition comes in. How do you help people in that regard or what actionable steps can you recommend to them that they take to avoid a situation like that or rectify it if it happens? Jonathan: Perfect. I mean I know a lot of people don't always agree with my predictions. I do think that we're going to have some sort of a downturn in the US economy towards the end of 2020. I don't think it'll be a full-blown recession but I do think as we get closer to the election that consumers and businesses will hold up in terms of spending and that will slow our economy down. But if you're rolling your eyes right now, if you're saying I don't agree with this guy I don't think the next recession still 2021 or 2022 and you're about to tune us out then just wait one sec. The idea here is that you brought up non-economic recessions so if your biggest customer leaves that would usually put most businesses into a recession. It could apply to a hero SKU in our case. If you have a competitor come in and attack your hero SKU; same difference, you're in a recession. If your best one or two employees leave and they go start a competing business, you are in a recession. The other one that has recently come up is what about government and regulatory changes? I mean I know the audience understands that vaping is a huge new business and everybody wants to get into marijuana, get into vaping well in New England they recently passed a law putting a moratorium on vaping while they studied the after-effects of it after there were several deaths. All of a sudden all those online businesses that were selling vaping cartridges were vaporized. And that happened overnight. It happened very quickly. So I want everybody listening to have a plan for how they can leverage those opportunities. Joe: Well the tariffs I guess could be considered a recession for some businesses. I've got a client who's tariffs are 42.6% on top of his cost of goods sold; a pretty big impact. Jonathan: They sell online? Joe: No, they don't. Jonathan: Okay. Well so it's thinking through if you're in one of those businesses what can you do? So the question then becomes you want to start to think about how you can diversify. And I know that the more practical tips for this are that I like to use online research. There's a site called Ibis World and it's a paid site. Joe: Is that I-B-I-S? Jonathan: I-B-I-S. Ibis World. You would have to make an investment but they provide industry reports on where they believe the future of different industries are going. So if you're selling line online they've got a report for that. If you're selling widgets online they've got a report for that. And the idea there is that you want to think about industries that will do better in the downturn and industries that will do worse. So in the book, we write about some of our favorite; some of the ones that got pummeled in the last recession, in the Great Recession and the ones that did well. The ones that got pummeled think like jewelry stores not good in a recession. If you're selling high-end jewelry online or in a store; not good, same thing with things like travel and tourism, discretionary goods. That's why I was selling personal training services in the Great Recession; not good. We all know that insurance and finance got hit especially hard in the Great Recession. Not good. So the ones that did well would be things like consumer staples; so if you're selling consumer staples like toothpaste, people are still going to need to brush their teeth in a downturn. If you start to get more exotic with your thinking; think about like veterinary clinics and veterinary supplies, people still spend money and take care of their pets in a downturn. And people don't care; if their dog is sick they'll put it on a credit card, if their dog likes Eukanuba and that's one of the most expensive brands, people will not change their dog food brand if we're in a recession. So if you're an online seller of those high-end pet products; I actually like that market. I think it will continue moving forward. My point just to answer your question though is that if you slow down, if you do some of the deep work of thinking instead of just being busy then I think all the answers are actually out there for how I will position myself, how I would start to diversify if I am in that hero SKU situation. Joe: In other words I had a neighbor tell me once; I was asking him, he was a bit of a mentor as well, he said Joe, you know exactly what to do. You just need somebody else to tell you to reinforce it. Same thing here folks; you've heard Mark and I say it and almost every guest that's ever been on the podcast, focus on the business. It's not about driving top-line revenue only, focus on the nuts and bolts of the bottom line part of the business and that's going to bring value; improve transferability, the documentation, the growth trends, the data behind the business and that's going to bring you more value in the short run and in the long run if you eventually do sell your business. And that leads Jonathan to talking about the other half of the audience; the people that are buying online businesses, those people that tune in week after week as they're on the hunt for that next business that they want to buy and they listen to us. What advice can you give to someone if they're out there hunting for a business in terms of looking for that business with a potential forthcoming recession? Jonathan: Yeah. So I want to start with the story and that's that Paul Belair who I wrote the book with; right before the Great Recession started Paul bought a business. He invested a million dollars with his management team to purchase the business and they grew it during the Great Recession. It was an HVAC business, so a business that helped out with heating, ventilation, and air conditioning; not a sexy business. And they sold it 63 months later. They sold it for over 70 million. Joe: He bought it for a million and sold it for over 70. Jonathan: So the purchase price was higher than a million but they put in a million in cash. Joe: I got you. Jonathan: And then they had some debt to fund the rest of it. Joe: Fair enough. That still sounds like a hell of a return on investment. Jonathan: Yeah well it's 70X on your cash plus; I can't tell you the exact number. He's under an NDA but in any case, it's even over 70 million. So that's why Paul writes the book with me but in terms of being on podcasts, you would prefer to be off playing pick-up ball in Florida. Joe: So hopefully he's using Amazing Aces. We've got a client that bought that business and it's a great brand. Jonathan: Really? Joe: Yeah. Joe: Jonathan: I love it. Well, it's Amazing Aces? Joe: Absolutely. Jonathan: All right I'm making; you know what? I'm still Christmas shopping for him. Joe: There you go. Jonathan: So I tell you that story because part of the way that they did that huge one million to 70 million dollar exit is that they picked a business and then they moved it such that it would have a tailwind in a downturn. And so if you're a buyer right now it's thinking about what kinds of businesses would get an economic tailwind if we were in a downturn and then like my mom says you've got to put yourself in the middle of the street if you want to get run over. So Paul… Joe: Very bad parenting; I don't know what the deal is with your mom but I got to say that's not very good advice. Alright. Jonathan: Paul put himself in the middle of the street because what he did was when he bought that HVAC business they moved it from doing mostly construction; so by construction I just mean when you buy a new HVAC system and they install it on the roof of your building that's a construction project. Joe: Yeah. Jonathan: Those units cost 5 to 20,000; that's a big project, a big investment. They moved it to doing service. So how could they take the equipment that was existing for a business owner and repair it because in a downturn; in a recession, people would rather repair their equipment than replace it. And so Paul saw that trend coming with his management team and totally changed the business to really capitalize on that. And that's how they were able to grow it into this recurring revenue business which again is another big thing I'd be looking out for your buyers. Joe: Yeah. Jonathan: Yeah. How do we get into a business that has recurring revenue? How can we be selling the razor cartridges instead of that one-time transaction? Joe: So find a business in a niche that's not going to be impacted by a downturn whether it's a critical service business or something like the pet space where people will spend money on their pets no matter what and adding some sort of recurring revenue aspect to it. Beyond that any thoughts in terms of their own personal financials and how to prepare for it in terms of buying; is it the same thing lining up as much line of credit and purchasing power as possible? Jonathan: Yeah well actually my favorite tip there is on the personal guarantee side. So I know right now with the economy booming; I mean consumer confidence is at record highs, unemployment is at record lows, the economy is still booming so banks are still willing to do more than they will at any other point in our economic cycle. I love the idea of capping, reducing, or eliminating personal guarantees especially for your buyers. So what does that look like to go to the bank and ask them to do the deal but to do it without a personal guarantee or to put a cap on that personal guarantee? Right now I think bankers are willing to have that conversation. You don't have to give up a blanket personal guarantee on all of your stuff. So this isn't possible generally with an SBA loan so don't worry about writing to me about that because I get it. But if you can do a conventional loan product can you get it so that you can cap those personal guarantees or reduce them? And it may mean that you have to shop banks, maybe you have to go to four or five banks, maybe you have to talk to your local credit union to make that possible. I just think it's worth having that conversation so that if we get into a downturn; if your business does go sideways that you've mitigated some of the risks that you would otherwise have. And it's free to ask. Joe: And on that aspect folks we've had Shakil Prasla on the podcast and Shakil has bought half a dozen businesses and he's done it mostly with non-SBA money and building up credit with banks and probably is avoiding that personal guarantee as well. So Google Shakil Prasla and Quiet Light Podcast and you'll find that episode. In fact, I think if you Google Shakil he's got a new course on how to purchase an online business as well so check that out. Jonathan before we go any last-minute thoughts or advice for anybody listening in terms of rocking the recession that may be coming in like 2020 in your words? Jonathan: Yes. The main thing is to put together the recession plan in the cool rational light of day as opposed to the emotional heat of the night. I want the audience to be thinking about putting together a plan now and then putting it under glass and then if you do have a recession in your business or you see on Fox or CNN that they're announcing that the economy's in a recession you can go over the glass break the glass take out your plan and start to execute it. The issue most of the time is that we don't have a plan and so when we get into a recession whether it's personal or affecting the entire country you're huddled in the fetal position in the corner of your office like I was when the Great Recession hit. I didn't have a plan. I had people knocking on my office door asking me what was going to happen with the business. And I just spent months trying to figure out what the plan was while all my competitors were executing and taking the best opportunities off the shelf. Well if you're still graciously listening to us that's what I really want for you is to be one of the people that can actually be looking forward to the recession and that can just move into execution mode when the next recession is announced. Joe: That's great advice. Thank you, Jonathan. How do the audience find out about more about what you do online and helping them rocking the recession? How can they find you? Jonathan: Sure. Recession.com is the website and yes we really do own recession.com. All my contact information is on there. They can get me at Jonathan@Recession.com or all the infos are on the site if they want to go do that. Recession Readiness Assessment. They'll see all my contact info right at the site. Joe: Excellent. Thanks for your time today Jonathan. I appreciate it. Jonathan: Alright. Rock on. Links and Resources: Recession.com Free Assessment Tool Rock the Recession Ibis World

Cash-flow forecasting can be the key to running, building, and eventually selling your e-commerce business. Today's guest is an accountant and successful business builder who helps owners run their businesses with successful financial results. Aside from traditional accounting, his firm offers fractional CFO services to his clients. As we have said many times here on the podcast, bookkeeping is not something business owners should do without an expert. Today we are talking to accounting expert Tyler Jeffcoat. Tyler built and sold a healthcare company and has experienced the acquisition process firsthand. In building his current business, Seller Accountant, he made sure that his focus was razor sharp on what he could offer to clients in order to deliver top results. Episode Highlights: How Tyler's fractional services work for the clients. How his service cost is offset by the value why it's less expensive than inhouse. Cash-flow forecasting and how it helps owners with profitability Ways operation data plays into the full forecast. The impact of not forecasting. Refinancing and SBA lending as an option in a moment of need. The importance of SKU grading to keep on top of product performance. The difference between cash and accrual accounting Tools that can help the layman forecast on his own. Why you need to track your numbers on an inventory value. The benefit of outsourcing while focusing on core expertise. Transcription: Mark: So Joe I'm normally not a big advocate of business but I'm becoming more and more of one and in the entrepreneurial community people always ask what book are you reading now and I'm usually thinking well it was actually on World War II or some other kind of obscure topic. Because when I'm off of work I like to be off of work. But this past year I picked up a few different business books based on some recommendations. And one that I read that I would recommend to anybody is Shoe Dog by Phil Knight; the founder of Nike. And I don't want to give away a lot of secrets with this book because honestly, it's a great read; it reads more of like just a novel or story of how he started Nike but one of the things that really resonated with me specifically because we deal with so many people that have Amazon businesses was how long Nike had problems with cash flow and how long that they were living on the float. And they were living on a very large float where they were writing checks that weren't in the bank account yet and they were counting on that money being in there. It's the nature of any growing business especially a physical product business is that the cash flow comes in, you reinvest in the product, you keep growing at a rapid rate. It can be really hard to manage that cash flow. And I know that we talked to Scott Dietz a few weeks ago on forecasting but forecasting doesn't really matter if you don't have any cash in the bank and you're closing the loop on this or kind of continuing this conversation today with Tyler Jefcoat about cash flow forecasting. Joe: Yeah Tyler and I have been working together off and on with a variety of different clients. Tyler owns Seller Accountant and he's just a smart guy. He's built his own company, sold it, and then started any commerce bookkeeping company specifically focused for the most part on his own businesses. Mark: Is that a phone I hear in the background? Joe: No, that was not a phone at all. No. Mark: I figured that you're so busy people are calling you all the time. Joe: No, that's my wife actually. Sorry folks. Sorry. Tyler, yes but the really cool thing about what Tyler does is cash flow forecasting, right? So he does fractional CFO services on top of is bookkeeping services and only for his own clients. And he does in the different levels. He does monthly reviews with some, quarterly reviews of some, and then gets into deeper reviews with others. But the cash flow forecasting model that he went over and shared with me I saw it on another video in a webinar that he did and then I had him show it to me and then he's sharing it in the show notes of this podcast. It's a cash flow model along with the video that talks about it and I know going back to my e-commerce days before I sold I did that; I did the float just like Phil Knight, a little smaller level of course. Mark: But just like Phil Knight. Joe: Just like Phil Knight, but it was the same thing. You are paying for that inventory with a credit card or you're just playing the flow and it's ridiculous. Fortunately for me, I didn't have a big staff but those that are growing beyond that solopreneur aspect and they have to worry about payroll and things of that nature I think it's really, really important to focus on cash flow. So Tyler goes over that quite a bit here and the links in the show notes will help anybody that's having issues in that area. Mark: These are fantastic tools to put in our war chest of things that we can use as business owners to be able to plan the growth of our businesses. So forecasting is something I've been skeptical in the past. Again the conversation with Scott Dietz and my experience with forecasting through his company has really turned me around to this and now I'm super excited to see this because again cash flow forecasting might be one of the most important things in a business as it's growing. Joe: It's important but what else is important? I've got to call my wife back so let's go to the podcast. Joe: Hey folks Joe Valley here from Quiet Light Brokerage and today well I ranted in the intro with Mark about bookkeeping. I've talked to at least 5,000 entrepreneurs over the last seven years and the vast majority of those when it comes to bookkeeping they say I got this and the reality is they don't. So we've got an expert on the podcast here, Tyler Jefcoat from the Seller Accountant. Tyler, welcome to the Quiet Light Podcast. Tyler: Thanks, Joe. Thanks for having me. Joe: I could rant and rave for hours on time about this because it's the number one reason people don't sell their businesses or sell them for a heck of a lot less. Somebody said to me the other day Tyler that when they think about their P&Ls they bleed from their eyeballs and I think that sums it up for how a lot of people feel. Alright so as you know on this podcast we don't do fancy intros, we want to hear from you so tell us about yourself and your business. Tyler: Yeah, well thanks again for having me. My company is Seller Accountant. I'm coming at this as a guy who sold a health care company about two years ago. We had a good run; zero to a hundred employees in about four years and I was a minority guy and I went through the M&A process and it was interesting. So as we built this accounting firm; I'm an accountant, we really built it around two ideas, Joe. One was we wanted to have a very vertical focus so we only do e-commerce and the second thing is that we want to focus on not just the price of admission of just having clean books but having the ability to use data to drive profitability. So I think that's why you and I have resonated with each other so well was I want to partner with brokers that really have the best interest of clients at heart and your clients all have the same issues which is we got to have investor great books so we can go to market and so yeah man it's great to be here. Joe: Cool. Everybody that's listening knows how I do feel about the books but I want to go beyond what you do at Seller Accountant. You manage people's books, you do an incredible job with that, do you streamline it? It's not expensive. It's much better for their bottom line than if they had an in-house bookkeeper. There's no question that that math works but let's talk about some of the additional services you do. I saw a video where you talked about your fractional CFO services, where you talked about cash flow analysis, Cost of Goods Sold analysis and some of those things. What are the top two or three things that you focus on with clients on I guess is your fractional CFO services that you do that for? Tyler: It is and is still part of Seller Accountant but in addition to just doing the bookkeeping each month for a bunch of Amazon and other e-commerce sellers we provide a fractional CFO service. And so I think what makes it powerful Joe is that we're just crazy focused; again we're crazy focused, my eyes don't blink when I look at a P&L for e-commerce but I do it all day long. And so our ability to step into somebody's business and see things differently because we look at it kind of like you do Joe honestly; you're looking at P&Ls constantly also but then focus on kind of the big things on a macro level. How does a seller really understand how their sales channels are performing over time? So that kind of goes back to the visibility of the book but it's more important than that, it's understanding okay, is Amazon the right channel for me to focus on versus Shopify? That's kind of one of the big discussions. And then we tend to the other kind of macro discussion as you allude to is around cash flow. This is a cash hungry business that we run; this e-commerce retail and a lot of the sellers tend to be undercapitalized meaning they're not coming to the table with 2 million dollars in free cash to just dump in inventory. And so our ability to understand not just what we think our sales are going to be next year but what we think our actual cost are going to be related to inventory when we're going to have to spend that money, that's critical. And so that's a discussion we have with our clients and then honestly just understand the profitability of our different product lines and SKUs. Those are areas where we can really help our clients not just know what the bottom line is for a given month but help them get the data they need to make better decisions as a CEO. Joe: And you do this as part of the fractional CFO services. You meet with these clients once a month after you review their P&Ls and you do a deeper dive. Are there other different levels of fractional CFO services where you're spending more time with some than others; how does it work? Tyler: Yeah there are and at this point, most of our CFO clients are bookkeeping clients that have chosen to layer on the CFO service. The reason for that is it is very challenging for me to add a lot of value efficiently for you if I don't understand your books and you just have a really nice way of doing the books. So yes they can choose to have quarterly calls. We have some that will meet even less frequently but it's basically normally quarterly or monthly. And we have some things in the pipeline that may allow us to just generate some value and it'd be a little bit less can you get on Tyler's calendar because I think that can be something that can be prohibitive. But at this point, we've got a great monthly service, a great quarterly service, and I think maybe it'll be somewhere around the neighborhood of 70 million dollars in e-commerce sales that I'm responsible for; me and my team for just the CFO side of it this year. And so it gives us an update that we can speak intelligently about what's happening in the business. Joe: You must be very expensive then, yes? Tyler: Oh man we're so expensive, yeah. No, you know what I mean. I would say we provide extreme value to our clients. And I would just say this we're not cheap; I don't want to be cheap, you want the provider that you can partner with us providing superior value. But I will say this we are way less expensive than actually trying to hire somebody. And if we can generate the kind of value that makes your business grow or allows you to get maybe a better multiple when you go to market in a year I don't think we're charging nearly enough for that to be honest with you and I love it, man. This is the fun part of the business; it's really understanding how to help business owners make money. How do we actually turn this pile of work into a profitable business? And so for me, this is kind of what gets me out of bed. So it's really I'm an accountant, of course, it's about money; we want to make a living but this is a part of the business I'm passionate about. Joe: Well let's talk about some of those individual things you do as the fractional CFO provider. I saw a cash flow forecasting video that you did. This is an enormous problem for e-commerce business owners and a lot of will just go the way of an Amazon loan at 14, 15%. I guess it's lower when you do the math. But talk to us about the cash flow forecasting that you do for these clients and how that helps them in terms of profitability. Tyler: Yeah. So when it comes to cash flow forecasting I think where most entrepreneurs stop is they take the time to open a spreadsheet and say what do I think my sales are going to be in the next six months? By the way, I would caution you there, if you ever run a forecast in the future of your business and every month in the future is way more profitable than your last six months of them, there's a good chance that you are kind of suffering from optimism that happens. All of us entrepreneurs we love running our businesses and we're like just tomorrow we're going to make money, now next month that's going to be wildly profitable. Joe: You're delusional. We know that after doing this for so long that there is great years and bad years. Tyler: You may run into a P&L and somebody hasn't made money in a year and they're like but guess what Joe tomorrow we're going to make money. And so my encouragement is to go ahead and be honest with yourself about how your business is performing and take a minute to say okay based on our seasonality, based on the products we're going to launch; as the actual owner of these e-commerce businesses you guys are in the best position to guess what your sales are going to be next year and put them in a spreadsheet Expected Sales, ding, ding, ding, ding, ding. And then if you look at your historical data you can say okay our cost of goods sold, our margins have tended to be at a certain level. And so most entrepreneurs are pretty good at building a forecast around what their operation is going to generate. We kind of know what our overhead is. We kind of know what our advertising budget is going to be. We know if our rent's going to go up next year. And so you got to do that work but a lot of entrepreneurs stop there and you can't stop there. Because of the impact of debt and the impact of inventory and the impact frankly of taxes you need to take that operational data and then work it into a full cash flow forecast for maybe the next year or the next six months. And so the way we do it is we take that baseline info that I just mentioned; how much profit are you expecting your operation to generate each month over the next six months or a year. Okay, great, now tell us what your loan payments are going to be, what's the cash coming out of your business for; for that Amazon loan or for your SBA loan or for your line of credit. Okay great, let's take that into account each month and then inventory forecasting can be kind of tricky. The more I thought about this I think it just needs to be simple. You have an average amount of days that it takes you to; you're going to issue a PO and you're going to get your container sent from China or wherever you're getting your goods. And so if I have forecasted that in April I'm going to have $30,000 in cost of goods sold then I'm going to have to pay for that $30,000 in inventory probably about 90 days before that. And so if you know what the waiting times are in your inventory you can use your forecast that you just did for your quote-unquote P&L; your profit and loss to basically guess okay I'm going to need to have that 30 grand in the bank in January so that it's ready to sell in April. And I mean they're going to have to fund that inventory purchase with some kind of great terms with the supplier or I'm going to have to have a loan, I'm going to have cash in the bank. And so what I advise the clients to do is to kind of what are my inventory purchases going to be? This is not a surprise. It's going to take a few months to fulfill it. Let's get that on this cash flow picture and then the other thing that you might consider is if there's going to be any owner distributions including your CPA may have you take a tax distribution once a quarter to keep Uncle Sam happy. And so this all goes together; your operations, your financing activities, your inventory, and then lastly the investing kind of from your owners and it's going to give you; it's not uncommon to have a picture where you expected to make money in the month of January, on paper you have profit but because of your debt payments or because of your purchases of future inventory your cash flow is actually negative for that same month. And so we just blew a spreadsheet; in fact, I'm glad to share it with you. I just have it in a Google Sheet here where we try to understand the impact of all of those factors on cash flow. So if there's going to be a negative on the sheet I knew it now instead of it being an emergency. Joe: We'll link that up so people can use it and try it themselves and then reach out to you for help if they need it. But what's the impact? You talked about good money at good rates versus bad money at bad rates. So what's the negative impact if they didn't do the forecasts and they come up against the month of January and they need to get a loan somewhere; what do you see people do and what's the drawback of having little to no notice of it? Tyler: Yeah. So there's two major impacts. One is if I know that I'm going to run out of cash in six months I can make two important adjustments that I don't have the luxury of making if I'm right on top of that shortfall. So if I've got six months I can cut expenses. If I need to actually lower some overhead if I need to renegotiate my rent if I need to do anything if I need to slow down if I need to go to my suppliers and renegotiate those payment terms. I've got some internal leverage. In other words, I know how important it is to me because I know I'm out of money say in April if I don't figure this out now. The second thing is if I know I'm going to run out of cash in four to six months I've bought myself a bunch of time to go find the right kind of loan if I have to pick up some debt on the balance sheet. And just as you alluded to I've got six months and have a pretty good business I might be able to get through SBA underwriting, I might be able to get all sorts of favorable lending options but if I wake up and realize oh crud tomorrow I'm out of money I don't have a lot of options. I'm going to take whatever money is going to fund me in the next week. And I would say that's where a lot of sellers get in trouble. They haven't forecasted effectively and so now they're out of money. They've got to fulfill that PO tomorrow and so now they're in a bind where how are they going to get stuff on the shelves to be able to sell it. And so yeah that's what I would say to that. Joe: So on the SBA underwriting, if somebody owns an e-commerce business and they've got good financials, they've owned it for a while and they use services like yours you're seeing them able to go out and get SBA financing to help with cash flow of their current business. Tyler: Yeah I think there's; I don't know that I've seen; I've seen more SBA lending when the deals come together for an actual exit but I will say this if you have a couple of years of good financials and you're carrying some debt I've definitely seen some of our clients refinance other lines of credit using SBA lending once they have a couple of years of good financial history. Joe: That makes sense. Tyler: You can go through the underwriting and what ends up happening is the bank has a much lower risk profile because the SBA; the government is going to back a certain percentage of that loan. And so it's always going to be your best terms, your best interest rate; the underwriting is a bit of a pain but again if you have six months you can get through that process and explore that as an option instead of having to take whatever emergency lending process. Joe: Yeah for those that don't understand the terms on the SBA lending it's generally 10 years and the interest rate is somewhere between 5 ½ to 8 ½%. Compare that to an Amazon loan where the term is somewhere between 14 and 15%; I'm sorry the interest rate and the term is generally 12 months. They take it out of your account as they make deposits. Tyler: And I've seen Amazon be as high as 19, 20 percent and they will underwrite it down to 11 but it never gets anywhere close to touching the SBA. Joe: Yeah, it's incredibly convenient. There's no question about it but there's a pretty steep cost that comes along with it. Tyler: The only one that steeper is when you have to get more of what's called like a payday funding option maybe like a Payability; nothing wrong. It's a good service in the right context but those cost capital numbers end up getting up in the 25, 30% range if you're not careful and that can really crush your business. Joe: Okay, cash flow taking, money off the table, these things are what keep entrepreneurs up at night so I love the fact that you help them with that and we'll share that in the show notes. Let's jump on to something that I think is incredibly important when we talk to people about selling their business. Well ultimately we're going to help them when they're ready but we'd prefer to talk to them 12 to 18 months in advance so that they're working with someone like you in order to prepare the best exit possible. And we often talk to them about renegotiating their cost of goods sold, focusing in on those inventories that are hero SKUs and those that are just okay. We always say you can break even doing nothing so why bother but often when it looks like they're breaking even they lose money. You help them focus in through your fractional CFO services on hero SKUs, cost of goods sold, things of that nature; yes? Tyler: Yeah I think something that's really important whether you have a fractional CFO or you do it yourself, it's extremely important to do a SKU grading. So I don't even care if you have a thousand skews you have to have some kind of a system for understanding which product lines are successful and which ones are losers. Which ones are the heroes like you said Joe, which ones are duds? And I have been shocked; I've been continually shocked as we do these analyses for clients to see that a guy's favorite SKU is taking them like an 80% advertising budget to move the SKU. Joe: That doesn't sound profitable. Yeah. Tyler: No, that's bad. Yeah. And just in case you're wondering, an 80% advertising budget is terrible. But they didn't know that because it's buried in this entire pile of SKUs and so it's extremely important to understand at least occasionally how each of your products is performing so that you can support the good ones, renegotiate the bad ones, or kill them. Joe: Yeah. So revenue insanity profit; no revenue is vanity, profit is sanity. So it gets down to understanding your profit and loss statements, digging into revenue by SKU, profit by SKU. I get most people don't get this. A lot of people that I work with that come across like I did early on I tell people openly I fell asleep in accounting class in college. I've since had to adapt and learn and now I understand it very, very well. But most people don't understand the simple difference between cash and accrual accounting and that when you're selling a business the books need to be presented on an accrual basis. Can you describe the difference between the two in layman's terms? That's the challenge; layman's terms. Tyler: Sure. So simply put if you have cash going out of your business, say you're buying inventory to actually stroke the check and you have a deposit coming into your business say the deposit from Amazon and you book that sale when the cash hits your account and you book that expense when you pay the money that's called cash basis accounting. And from a compliance tax standpoint, for most small businesses that is acceptable. But here's the problem and you got anyone who's looked at their P&L and saw a negative gross profit for a month. When you look at there and say why did I sell $100,00 this month but all of a sudden had $200,000 of inventory expenses? That doesn't make any rational sense. The reason is that you book the entire inventory the day you stroke the check instead of having the inventory asset and expensing it slowly as you sell the goods. And so in an accrual accounting method, you are on a quest to attach the sales dollar to the expenses that are associated with that dollar. So if I sold; let's just use that same number, if I sold $100,000 on Amazon in November I want to know how much it actually cost me; what the actual inventory expense for those units were that I sold in that month. And so you can kind of tell me and hear me say it's a little more difficult. Getting good accrual books takes a little bit more work. You have to deal with receivables. You've got to book things a little bit more sophisticatedly but it's the only way to be able to answer the question Joe did I make money last month? Because if you're doing it on a cash basis you really have no idea. You know when you've made your investments but you don't actually know whether your business is profitable unless you have an accrual system. Joe: And is that something that; I know it's hard to set up in Quick Books online but what do people have to have? Their landed cost of goods sold or their cost of goods sold the freight might be separate in your P&Ls; is it something that a layman could set up and figure out and flip to or does it really take a tremendous amount of experience like you have? Tyler: Well it could. I mean I don't want to; let me just say it's worth the effort. I will say this for everyone who's listening to this to this podcast if you haven't explored a tool called A2A accounting; literally the letter A, the number 2, the letter A. So A2A Accounting, I think it's A2Aaccounting.com that is a tool that lets you kind of pre map Amazon journal entries and it makes doing the accruals a lot easier. Well, what makes e-commerce so challenging is that Amazon pays us every 14 days normally and some of those sales might have happened in one month but I'm getting the entire paycheck from Amazon in the next month. And so I would say Joe yes normally having somebody that really understands e-commerce accounting is very helpful but for smaller sellers or sellers who don't have the budget to hire a team like mine it's worth learning how to do it and it's worth trying to understand; you mentioned the term landed cost of goods sold if I spend $100,000 on inventory, I've stroke the check, I've sent the wire, I have that inventory now, it's really important that I try to understand what that fully landed value is per unit. So let's say I bought a thousand of a particular SKU I can't just say I spent $100,000 divided by 1,000 so I've got basically was that a dollar SKU, right? It doesn't work that way. Joe: Because you pay the extra 10 cents to ship each individual unit; yeah. Tyler: Yeah you got shipping, tariffs, duties, everything else you need to just do the math. Make sure you have a spreadsheet; call it kind of a Master SKU Spreadsheet and understand what it really costs you per unit to get your product to the customer. And that's probably one of the biggest keys to understand. Joe: And let me just put some reality to this in terms of the why. Look anybody out there listening is like why the hell do I need to do that? The reason is because eventually, you're going to sell your business. You're going to get bought out. You're going to sell it to a partner. You and your partner are going to get in a fight and you're going to want to move in different directions. Or you own it with your wife or husband and you're going to get a divorce or at least half of you are. Or you're going to die. It's all going to happen eventually so you need to have your numbers on an accrual basis because when you sell your physical products e-commerce business you're going to get paid a multiple of your seller's discretionary earnings plus the landed cost of good sellable inventory on hand at the time of closing. Landed. If you're not tracking that landed figure and you're paying an extra 50 cents per unit you could be losing tens of thousands of dollars in inventory value at the sale. The other thing in terms of cash versus accrual and doing it yourself versus hiring somebody like Tyler is that if you're off by a couple of percentage points; let's just say that you're spending a million dollars a year in revenue. It's not a small business, it's a sizable one. And I've talked to these people that do this and have in-house bookkeepers and I'll give you some math on why you shouldn't admit it but if you're off by 2% on a million bucks that's $2,000 right? That's not right; that's $20,000 that you're off by. Your business is probably sizable selling it 4, 4 ½ times that would mean that your numbers; your profit, your discretionary earnings are off by $20,000. The value of your business is $80,000 off if you're a four-time multiple. So you're either overpricing the business by 80,000 because you overestimated or underestimated your cost of goods sold or worse yet you're undervaluing your business because you're off by 2% and your business is worth $80,000 more than you've got it listed for. These things matter. You worked so damn hard on driving more revenue and looking at your bottom line. But if you don't get the details right like this you're just wasting a whole bunch of money. Okay, that's my momentary rant now I'm going to go into another one. The services that you provide Tyler and there are others out there like you that's just like there's other brokers out there besides Quiet Light; it is what it is but I talked to somebody last week, they spent $24,000 a year on an in-house bookkeeper just out of college that does everything the CPA tells her to do. The numbers are all wrong. They're recording deposits; it was on a cash basis, it was completely and utterly incorrect. And this person thought they were doing something like 1.2 million in discretionary earnings, it really was about 800,000. If they fired the bookkeeper; we'll do the quick math for everybody, fire your bookkeeper is my message, $24,000 a year, hire somebody that does the e-commerce bookkeeping like Tyler and Seller Accountant, even if it's let's call it 600 bucks a month and you're doing an all-encompassing service it's only $7,200 a year, right? So 24,000 minus the 7,200, it's $16,800 in annual savings to the bottom line numbers of your business. If your business is worth four times that adds $67,000 to the list price of your business when you eventually sell it. It's simple and logical math and you don't have an HR problem anymore; you don't have that bookkeeper in-house, you've got somebody like Tyler helping you who's a Bulldogs fan by the way. For those watching the video, stand up just a little bit; what's that logo on your shirt say? Tyler: Man I'm a University of Georgia guy. I'm across the street from the campus here in Athens and Double Dog. I have my MBA and accounting degree here. Joe, I will say this it really is it's not even so much what you could pay per hour because, to be honest with you the client that's doing a million in discretionary earnings is unlikely to be 600 bucks a month for any service even me if we're getting it done right. But the reality is that if you're paying someone your full-time salary; I know this when I had a company with 100 employees. We always had somebody sitting around. If you're going to carry someone you're always having to get them at a rate where you can't use their full capacity or frankly if you're using your full capacity you got to hire somebody else. And so it's inefficient because; and there are some businesses that need to have a full-time controller. I think if you're doing 15 million a year in revenue you probably need to have a high-end controller on your staff. At that point, that's a six-figure job you're looking to hire for. I think the issue that the seller may be that you're describing would come across is not only are they spending the 24,000; even if they paid me the same amount to do it it's actually going to be done correct and when I go to market those books are going to be stated in accrual basis and they're going to have everything the way they want it. And we can scale with them without them having to hire an entire new employee. So I think that really is a big benefit unless you are; this is what I've learned in general. And this is every business I've worked in or own, I want to make sure that I inhouse my core competency; whatever my competitive advantage is I'm going to make sure that I have teammates that allow me to perpetuate that competitive advantage. Anything that isn't my strength I want to find someone that that is their strength; someone that can do it more efficiently and can do it better than I can. I'm not a broker if I need a broker I want to go to someone like Joe that gets the broker business and can do it more efficiently I'm going to pay Joe but I'm going to make a lot of mistakes and lose a lot more money if I try to do it myself. It's really the same with accounting or PPC or anything else. I'm a big believer. That's what my dad always told me. It's just spend your time where you're making your money. I want to get so focused that I can be the best in the world at something and then I want to outsource as much as I can so that I can be better at my core rather than trying to fix my errors all the time and fix my screw-ups and that kind of thing. Joe: I think that's incredibly well said. I don't have a whole lot to add to that. I think it's just brilliant. I think it's a great business methodology and mindset and it's what everybody should be adopting. Tyler, how do the audience members learn more about your services? Tyler: Yeah so thanks again for having me, Joe. So SellerAccountant.com is our website. You can learn more about our services there. Feel free to reach out to us. We'd love to have a discussion with you. And yes it's been a pleasure to being on the show. Joe: And you're going to share that cash flow forecasting spreadsheet. We'll put that in the show notes so everybody can do their own numbers and if it's confusing reach out to Tyler he'd be there to help you. Thanks for the honor man, I appreciate it. Tyler: You got it. Links and Resources: Tyler's Wedsite A2X Accounting Cash flow forecasting spreadsheet

Welcome to episode 2 of this 4-part series where I talk about the sale of one of our most profitable brands - ColorIt.com. In episode 246, I discussed the motivation behind this particular move - from the reason behind the sale down to the brand's new owners. A major cog in the wheel with this sale is a man called Joe Valley of Quiet Light Brokerage. Joe has been instrumental in making sure that I was able to pick the right brand to put up for sale (at one point, I wanted to do away with all of them). His insights and advice helped us boost ColorIt's saleability even before we put it up on the market. All the specifics of that are discussed in this episode. If you're planning to sell one of your businesses at some point in the future, give this one a listen. And tune in to the next episode as Joe and I go into more detail about the preparations involved in the sale. If you're interested in getting onsite advice from Mike and have your business featured on a podcast, sign up for the EcomCrew Roadshow today! Catch the latest episodes of the 5 Minute Pitch on YouTube. Join season two by filling out and submitting the application form. Finally, if you enjoyed listening and think this episode has been useful to you, please take a moment to leave us a review on iTunes. If you have any questions or comments, feel free to leave them below. Happy selling!