How to Sell a Business That Won’t Sell

[Music] hello everyone welcome to the 21 hats podcast I'm your host Lauren Feldman this week we discuss what we're calling a weop the term coined by Jay goz refers to a business transition that is something of a do it-yourself ESOP or Employee Stock ownership plan but without the expense and complication and debt of a full ESOP it's a transition that lets owners get money out of what has been their life's work it's a transition that lets loyal employees keep their jobs and preserve the company's culture and it's a promising solution for the silver tsunami of retiring Baby Boomers because it can provide a sales path even for owners who have never managed to extricate themselves from their day-to-day operations and in this week's episode we take you through an example of how it can work Jay introduces us to Jill and Paul choma co-owners of a business gilded Moon framing that Jay recently guided through the weop process as you'll hear all three believe that what has worked at least so far for Jill and Paul could also work for many other business owners even in Good Times owning and running a business can be a lonely Pursuit our hope is that these weekly conversations brought to you by our principal sponsor the great game of business will let owners know they are not alone in facing challenges same thing with their daily newsletter the 21 hats Morning Report when Jake magazine named the best newsletter for business owners and which you can subscribe to for free at 21h hats.com where you can also find transcripts of our podcast episodes and lots of other articles and interviews joining me this week on the podcast are Jill and Paul cha co-owners of gilded Moon framing which is located in Millerton New York and Jay goz CEO of the gos group whose companies in Chicago include a picture frame business artist frame service and a home furnishing store Jason home the episode is titled how to sell a business that won't sell welcome Jill Paul and Jay it's great to have you here Jill and Paul maybe you could start by giving us a quick overview uh of your framing business uh first of all where is it so our business is located in Upstate New York about 2 hours north of Manhattan we're in a really affluent area where um people have their second homes and uh it's a it's a great place to live it's a great place to own a business how did did you get into the framing business about 25 years ago I was a computer software instructor and Paul was a um computer analyst programmer analyst and that was right around Y2K when things were changing and evolving very quickly and we felt that we wanted to be in a business that was more stable and we looked at something where we could be handson and after looking at a couple of different businesses we settled on picture framing because we were both involved with building houses we were both involved with computers and with that architectural interest we thought picture framing was the perfect way to blend all of our skills together so we started out small in our house and then we looked kind of all over the East Coast for a place to open up a shop and we finally uh settled in a little over 20 years ago into the town that we are in right now and we started out very small and we've grown the business nicely over the past 20 years and when we first got started in the business we happened to read this book called the street smart entrepreneur I think I know that book yeah who's it by again it's a great book it's by Jay goz 133 tough lessons I learned the hard way I'm glad Jay learned them because he taught us and we avoided a lot of the things that uh uh really he saved us he saved us a lot of mistakes tell us a little bit about building the business did it did it go smoothly or did you learned some big lessons along the way I think we've learned a lot of lessons along the way uh while we were in the early stages what area were we going to focus in on were we going to try to be like a fast frame or one of the these places where they turn around work and where it's inexpensive you know Jay had uh picked two uh price quality service you can only pick two we really focused in on quality and we really wanted to focus in on service 20 years ago it was when there were self checkouts that that was the new thing 20 years ago and we said we really want to be focused on service where we're going to we're going to carry out the artwork to people's cars or we're going to uh deliver them to their houses we're going to make their life as easy as possible we're going to take the pain away we're going to make it easy for them to do business with us Jay in his book one of the points that he makes is have systems in place so we put a a a POS system uh along the way we Revisited the book he talks about having procedures we wrote a shop manual we wrote an employee manual and as things evolved over time we started getting more business uh we grew the business and we eventually needed to buy a building Jay wrote an article and it said retire a millionaire buy a building we took that advice I guess that was probably about 14 years ago and uh and it's worked out pretty well for us J you always complained nobody listens to you no no picture framers listen to me everyone else I you know you left one part out you both have an innate ability to design beautiful framing you were you're you're doing beautiful above average framing that's clearly part of the formula here it's not just helping him to the car you Embrace doing better framing um that's clearly part of the formula that worked when we started growing the business we realized we had to bring more people onto team and we're small business we're five people soon to be six and the other thing that we had to do was learn how to hire people properly and we definitely made our mistakes along the way but you need a certain skill set in this business where you need to be able to design you need to understand how to use the computers and then you also need to understand how to assemble everything because we do it all right on our site so it's a little bit of everything and one of the things we did was do some simple interview tests and those tests have really shown us that you know if if someone is going to be able to use a tape measure they're going to be able to use it right off the bat from day one people that can't read the measurements it's a hard skill to teach someone so you know just these little tests to find a good candidate to bring on to our very small team team have been important in growing the business as well having the right people as our team players how did you pick the location that you settled on I assume the demographics that you described had something to do with it so I taught skiing as a hobby uh part-time and I was on a chairlift ride and chairlift is a great place to just talk you're stuck on a chair for 10 minutes with nothing to do and I was talking to some another coach and uh I said you know we're looking for a small town in New England where we can open up a framing business and uh he said you know you ought to consider the town that we're in it's called Millerton it's milleron New York as I said it's probably about 2 hours north of Manhattan and Millerton had gone through a little bit of a rough patch probably in the 70s in the late 80s and '90s it started come around and uh it was probably within an hour's Drive of where we did live at the time so we looked into it I guess we had this conversation on a Saturday and on Monday I said Jill this is where we should look Jill being um I'm the type of person to jump in with both feet and then think about it on my you know maybe three days later Jill on the other hand is much more methodical she drove around the area she went to different um businesses she did months of marketing research to see if the town that we're in could support the business that we wanted to develop and uh she wrote a whole business plan came up with a whole strategy and that's how we picked Millerton bring us up to date can you give us a sense of uh the size of the business today yeah so as Jill mentioned we're a staff of five uh soon to be six we do just under a million dollars worth of business a year again we focus in on high-end framing our average ticket price is somewhere around uh $91 per piece which is you know some pieces are $112,000 and we do have like the you know the $200 pieces as well but we really focused in on the higher end uh of framing just for context that's very that's a big number that's over twice what the average is in the industry probably so for even mine I mine's nowhere near that so there there's and I'm selling to a bigger audience but it's a higher end play selling better Framing and when did you guys start thinking about succession or what you were going to end up doing with the business well I've been thinking about it since day one you're the methodical one yes I've always you know coming from a computer software training I always thought about training the new owners um as we retired and we have kids that live out on the west coast uh they're in completely different fields so they have no interest in taking over the business so you know I'd also had wanted to retire I'm in my early 60s so is Paul and um I had watched my parents my father in particular he retired in his 60s and he had some health issues that kind of took away his freedoms to do the things that he loved so I always felt like I wanted to retire uh before that could happen to me so with that in mind um we've kind of watched our retirement accounts and things and we finally just said you know about a year or two ago okay it's we're we're really close let's do this let's see if we can figure out our exit plan and it just so happened that uh when we when we were thinking about this we were actually on the first day of vacation and uh I get a text uh I was at a rest area about an hour outside of our business and uh I get a text that somebody who's on this podcast right now was in our shop wasn't me a complete Luke I have a nephew that got married his wife is from New York the wedding happened to be in the middle of nowhere they said oh you got to go to this coffee shop okay so I'm sitting there with my wife at the coffee shop I look up and there's their frame shop and I recognize the name and I go wait a second I know who who those people are and I walked up there to say hello to them and they weren't there so it was a complete fluke that uh ran into each other at that point did you give up your vacation then drive right back to CJ no but we had a conversation and I said Jay you know actually um we're thinking about selling our business and uh we we spoke about it a little bit uh more Jay suggested that um there be an article written in picture framing magazine about us for right for the uh framing industry trade publication correct yep and I naively thought oh we're going to do a great article and the phone's going to ring off the hook and in fact we wrote a really nice article with great pictures in it and Paul tell us the rest so we employed a business broker and here Jay writes this incredible article about us and our our building our business it it's a it's a nice place to walk into we have um an old Bank building it's about 115 years old and uh it's in really good condition so here we hand this broker on a silver platter this great description of our business Jay uh wrote a strong article about how we're doing things right and um the broker just really didn't understand our Market our business model the broker brought in people that I I don't know how they screen these people but they they were just I'll give you an example there was a guy his name was Ace I I don't think I need to say anymore I you know somebody who just introduces themselves as Ace it's probably not going to work out it's probably not going to be a good fit and we felt like we were spinning our wheels and wasting our time with this business broker how did you go about finding a broker we wanted to find a broker that was not um right in the area we wanted to find a broker that had a broad net um so we brought somebody in from from a distance away we didn't want to we didn't want to put a big sign out front business for sale or you know uh TurnKey business for sale we didn't want to hurt our business we didn't want our customers to jump ship that's what we were afraid of or your employees we didn't want our employees to jump ship either and when we first started to talk about um selling the business we knew that the that two key employees would be uh a tremendous asset for the new owners and you know we would have negotiated that they bring them on and give them a substantial raise that it would only make sense we wanted to protect the employees the best we could in the negotiation of the sale of the business and we just felt that uh it would be best to bring a broker in from from a a a short distance away but a distance away it sounds like you're both very Hands-On very involved that's always a challenge for a business owner who's trying to sell the more involved you are in the dayto day the harder it is uh to make a sale to imagine the business with without your ownership were you conscious of that as you were hiring a broker and thinking about selling yes we were very conscious of that which is why we really beefed up our procedures and our employees manuals and we've always had procedures in place so that when customers come in they get a consistent design session and really were all interchangeable as far as helping the customers and designing their artwork but um when we were looking at the broker we we had some we had a couple that we kind of spoke with and they were recommended To Us by word of M MTH and we were very aware that we were the face of the business and we did everything in our power to have our managers trained so that they could understand how the business the day-to-day operations are run so that Paul and I didn't have to be the ones running everything we kind of oversee everything and we still are involved uh we do design work and we do some of the production work but for the most part we were trying to take ourselves out of the day-to-day operations for that reason so it could potentially be a turnkey business wait I have to stop both of you you both use that phrase TurnKey business this is absolutely the opposite of a turnkey business a turnkey business is any could run it that's why to TurnKey business a laundr mat maybe an ice cream shop this takes skill this takes having a ability to deal with customers it is not a turnkey business now if those two people stayed there and were running it bys okay but you never know if someone's going to stay so that's really the issue here it's and that's why maybe you got not not such a great response because it's a difficult business am I wrong no you're absolutely right and Jay I think this is about the time when I gave you a call because I was like when we bought the building we were given a gift uh we were given this tremendous opportunity to buy a pretty stately building as as um we said it was an old Bank building it had been a bank uh for about 115 years and um the branch closed down and when the building went up for sale they didn't want to sell it to just anybody they wanted to sell it to a business that wouldn't cause their reputation any harm and they knew of us they knew that we had a good reputation we were literally across the street um at at a shop across the street and we were losing our lease the bank manager knew us very well she put a good word in and we got an incredible deal on buying this building well anyway you know it didn't sit right with me that we were going to sell the business and have these two key employees you know that maybe they would get a little bit of a bump but they really stepped up to the plate once the article was was out we let them know and we told them that they were going to be uh more valuable once um the new owners uh owned the business that they would be more valuable and one of them at one point um had uh said that her goal her you know we always ask people what their Five-Year Plan is and her goal was to open her own business that that's what she really wanted to do and uh I approached Jay and I said Gee you know is is there a way can you see a way that we can make this kind of happen where where you know maybe they they should buy the business they ran it like it was their own they treated it like it was their own and if if there's two people that really deserved it they did this goes right back to 21 hats because of 21 hats because of you introd ucing me to if you recall I was totally looking at esops for the whole year that year I was I've gone to two seminars and I it was perfect timing for this this situation to come up because I had just figured some things out about esops that are great but on the other hand for a smaller company the math won't work beyond that here's the Revelation I had talking to him I realized it's always a great thing if you can sell it to your employees there's no question if you can do that and not lose money that's a great thing and after looking into the esops for the last year or so I realized that when you sell a small business you usually get in general unless you're a computer business I don't think anyone would argue with this you get three and a half four times e or you know which is very similar to profit okay so I realized boy if you could just hold on to the company for a couple more years if if you've got that luxury you could get some of your money out just by holding on to it Jay I think you need to explain that you could get some of your money out just by holding on to it if you for instance if you own a business and you sell it let's just say you get four times earnings okay well if you could get someone to run the business and you could go on vacation for four years and keep it going for four more years you've got the earnings you basically got your money out which is why I I threw it it's like a sale price you you still own it right but you're not there every day and you you collect the profit and that's the sale price the reason why I stopped looking at the esops is I was never planning on retiring at this point I was going to maybe sell 30% of it and I finally realized wait a second all I'm doing is giving the earnings to them to give back to me it makes no sense to me unless you're leaving if you're leaving whole different story I know esops work wonderfully a lot of times but if you plan on continuing to work you're basically just giving the money to your employees to give back to you it didn't make any sense and I had just come to that Revelation so I I said to to Paul and Jill can you sell it to your employees and they said you know we'd love to but they don't have any money and I looked into an SBA loan and that's when the light bulb clicked on and I said you know what it's hard enough to take a civilian and turn him into a business person like that takes some work but it's really hard to to take somebody that's a civilian and turn them into an entrepreneur because that's the whole definition of entrepreneurs taking risk if they went out and got a SBA loan for hundreds of thousands of dollars I've seen this happen they're going to be real nervous they're going to go to Thanksgiving dinner they're going to tell their Uncle Bob and Uncle Bob's gonna go oh no you can't do that remember what happened to my friend so and so people are GNA freak out we don't need to do that so that's when I came up with I'm calling it a weop it's very similar you sell it to the employee except you stay around for for a couple maybe three years and you give them a little raise maybe you put that money on the side and then after two or three years you've already gotten most of your money out like I said because you're still getting the profits and then you can sell it to them and there's no bank loan there's no SBA loan no one's got the risk and then after two or three years maybe it doesn't work for them maybe they decided they don't want to do this maybe they got divorced maybe their mother um left $300 million there's lots of reasons you're still okay because you still own it and you don't have any lawsuits so I proposed that and they made it work yeah it it was uh it was it was genius it really worked out well for us what happened with the broker how did that end we terminated the the agreement we had an agreement for I believe it was a year we let the agreement expire uh at the year and we didn't renew we said we're g to we just weren't happy with them did that expire before or after uh Jay threw this idea at you it was at about the same time the expiration date was was coming up when Jay uh proposed this so we just let it expire wait I left that part out so my article that look great read great great pictures buas nothing nothing nothing and and in that article you you fully disclose that this is a business that is up for sale absolutely you have to remember the people reading the magazine they would have to move to Upstate New York you know it it just it didn't work I thought oh well someone's going to read this and they're going to think oh my God this is a great opportunity and like I don't have to figure out why it didn't work but it didn't work did you put a price on the business in the in the article yeah we get we we put the broker's information in the article so the broker had something handed like for marketing material it was the greatest thing you know it was a very well-written article and it was uh a great marketing tool that they could uh republish and send it out to their list we just felt that we were we were on two completely different um planets when the broker in their um marketing material mentioned you can attend a square dance I I where she got that from is beyond me but we we just said this is not working this is this is clearly not working keep in mind I thought this would work because not only was it a great article in a trade publication it wasn't written by a writer it was written by the guy that owns the largest Fring place in the country who knows what he's talking about and is saying this is a great business I mean it was a third-party endorsement so I thought naively well there's 6,000 people reading this magazine there certainly going to be a few they're going to think oh my God what a great yeah but it didn't work for whatever reason were you at all concerned that you were asking too much for the business no no the math clearly works they were right in the neighborhood of what business to sell for I mean we weren't trying to get 10 times earnings or something it was a very reason the fact is it was a really good deal for someone if they want to bought the business why was there not more interest um oh I got two overall reasons one is somebody would have to move to Upstate New York okay maybe they didn't want to two it was going to picture framers I don't know I mean the average picture framers grossing $300,000 a year making I don't know 50 to $100,000 I it just maybe the the best people for this are people that were not in the industry already um I I can't actually explain it all the way because you'd think out of 6,000 people there'd be three but there wasn't well also it wasn't just the people who normally read the trade publication as I think Paul and Jill said it was also marketing material for the broker presumably it was uh shown to a lot of other people my guess is they didn't nothing my guess is they throw it out on the listings and they wait for the phone to ring I I have a hard time believing these people really went out there and hustled yeah I think Jay's right I think you know handing this uh article to somebody and again we met with a couple of the people uh that were interested and our business would have been it would have been destroyed and we created this business from nothing from an idea you know sitting around the kitchen hey let's consider opening up this type of business a picture framing business we want to see it Thrive long after we own it you know a lot of our customers are friends uh we we've created relationships in the town in the we're we're really a staple in the town and we didn't want to see it destroyed we wanted to see it Thrive uh long after we're gone uh we still live in this community so tell us about the reaction of your two key employees when you threw the weap idea uh uh at them what did they think they're very smart young women and I think it took them slightly by surprise that they hadn't considered it but once we kind of laid out a road map on what we were thinking and let them have some time to talk amongst themselves I know uh one of them is married and and she spoke with her husband and his comment was this is a gift because we did give them a very attractive price uh we when we bought our building we had as Paul said it was a gift to us because it was such a good price we figured okay let's pay it forward and let's give these guys a gift because they're smart young women they're creative and they'll be able to take this business and run with it and take it into the next decade and Beyond so once they spoke about it and came back to us and said yes we're interested then it became time to really put a plan together and uh we worked out a deal with them where we would hold the note and they would pay us for the sale of the business we we charged them a you know a fair amount but it was a lot less than what we were um asking through the broker wait wait you got to qualify that which you could do because you're getting the income for the next couple years so you didn't need to get four times earnings all you needed to get was two times earnings because you got two more years out of it and they were running it that's the key to the whole thing you didn't lose any this was a win-win if there's ever been a win-win in the world this is a win-win everybody came out great Jay we put so much effort into training and them running a lot of the day-to-day operations one of the things that we were able able to do right from the get-go is Jill has always wanted to travel extensively we started traveling immediately and uh we cut our hours way back we're part-time in the business one of the things that um we also have been doing and and will continue to do right through them taking ownership is uh uh weekly uh training sessions about not just just running the day-to-day operations but the big picture we're teaching them how to be entrepreneurs no no no no no you're teaching them how to be business people you don't teach Entre entrepreneurship means they went to the bank and borrowed the money and took the risk you're teaching them how to be business people big difference we need to understand the road map that Jill referred to a moment ago exactly how this unfolded because I'm not sure it's it's clear uh how much risk those two employees are taking how exactly does this work for them you know they're they're fairly young and we tried to take um some pain away uh one of the things in negotiating with them was we said okay you're going to be running the day-to-day operations and we're going to start that right away in exchange for that we're going to we're going to bring you both up to the same salary so both of you are going to get a bump so so we wanted them to take on more responsibility so that they can earn more money so that they had money to put into the business money to or to put down on the uh purchase price of the business and their risk is um really their time invested in learning all the skills uh required to run a successful business a lot of it is on their time so they they had some skin in the game and um also they're going to be giving us we're holding the note but they're also um paying some of the closing costs the other thing is um receivable schedule whatever money is due which is pretty substantial on the day that they close they have to pay us that money so so for jobs for instance that are half paid or whatever that's some skin in the game we wanted to make it so that they had a way to own the business you use the right word this time they took more responsibility yes business person they took more responsibility but I'm suggesting the amount of risk they're taking is almost nil all that time they're investing they're becoming business people they're getting better skill sets this is almost riskless for them is that because you hold a note uh uh Jill and Paul they promis to pay you at closing for the business and you're anticipating they will be able to pay you that money out of the salary bump that you gave them that they're saving on the side to pay you no no not at all that's how they're able to come up with part of the money but we're holding a note over uh over five years and there's an incentive that if they prepay or if they make every payment on time will discount the purchase price they're paying them out of the profits yes they got a bump but all that profit and the salaries that Paul and Jill have been taking out is all free cash flow they're going to have plenty of profits to pay back the note probably early so that's why I say this is a great win-win for everybody so Jay just to be clear when you say they're not taking risk it's because they didn't borrow money they're not ponying up their savings they're doing this out of the increased salary and of the profits that they mostly the profits it's the increased salaries add up to Jack it's it's the profit of the company is going to be substantial and they can pay it back out of that it's paying it back through earnings and Jill and Paul how does it I assume you were both taking salaries uh previously uh did you stop taking those salaries no no no we have not stopped um we have cut back a little bit but we're still you know for this time period before the the new owners take it over we're still on salary and that's how they're getting part of the purchase price that's the whole idea they've got a couple of year Runway to continue pulling their salaries out continue getting profits are those two different things or do the salaries represent the profit uh pretty much it's there's either way whether you call it salary whether you call it profit it's their money the point being when they go to actually close they'll have already gotten half of their money out the business all right here here's what I ask I'm trying to understand the economics of this business going forward and if Jill and Paul aren't working in the dayto day but they're still taking their salary plus they're getting the profits of the business how does that leave money for the two key employees to uh pay the note eventually so once they take over the business we won't be taking a salary anymore they'll just be paying us back uh over the next five years for the the price of the business and we uh gave them a very good price on the business and we also agreed that they'll have the the right of first offer when we're ready to sell the building we gave them a five-year lease and I think it is their goal to take over the building the building will sell at fair market value whatever that is at the time uh but in the meantime why while we own the business we are taking a salary but once they take over we will step out and we've um worked up a contract where if we do still come back and help them out and work we'll become hourly employees after that but the key is they're getting half of their money by holding on to the business and its profits for two years and then they're getting the other half being paid out but can easily pay that out of profits um in the salary they're no longer polling the question I have which I haven't asked you which I find interesting so two lawyers got involved did that go well or they try to screw it up and make it more complicated we told them early on listen lawyers will muck this up they'll over complicate this they're not family but they're very close to family we said let's hash out all these details first before we go to the attorneys and we also said we've worked with some attorneys over the years with uh Jill and I have bought uh and sold many houses over the years and we said attorneys can make a deal go smoothly or or it could be a living hell we said you have to pick an attorney and will pick an attorney where the attorneys are going to be on the same page if it's a combative attorney we don't want to have anything to do with it and the deals off because the potential if you get the wrong attorney the they what if you to death well what if and like yeah there's 8 million wh ifs if you want to totally protect yourself legally you'll lock the door in your house and never leave the house so that's that's that's the way it works you need an attorney that understands certainly protect you but be reasonable with it so you found the right attorneys and I so okay good great so it went smoothly sounds I take your point Jay on uh the wha ifs there is one big wh if that I'm sure you all thought about which is what if the business doesn't hold up it doesn't do well for whatever reason they struggle as owners the economy turns any number of possibilities what would happen to this deal if if something like that did occur I assume you get the business back right if they don't pay the note yeah if they don't pay the note there's clearly uh very strong language that that we just take it back we don't want to take it yeah no no but I thought about so here's the point of theory they've already got half their money out okay and I'm not arguing that could happen okay they already got half their money out and now after 2 years they would already get their money out right right and now if it's six months after that okay they even got more than that the worst case scenario in this is they got half their money for the business and they own it again and now they have to sell it or do a fire sale whatever there's no perfect anything I'm not saying this is absolutely forur me perfect but boy this this certainly is a good shot at having the perfect thing you end up with your money out you end up with two happy employees happy customers it's got the potential the probability to work out beautifully could something go wrong here let's give the other scenario someone shows up and says I will give you X dollar I'll give you asking price okay would they be better off well they'd have the cash so that's certainly better off but it wouldn't be better off that they didn't take care of their employees they wanted to take care of and it certainly didn't take care of the customers so there's no scenario that is perfect this one has the potential to be perfect at least and I just know from owning my own business the idea of handing the keys over to a complete stranger and say okay here you go is UN is just I can't fathom that I'm not going to I I'd rather give it a shot and I'm not at all making judgments on anyone if somebody needs the money or they they can't afford to wait I'm not at all preaching that oh no you should always do this I'm just saying if you want to if you can what a great option if you want to and you can some people can't they need the money right away and some people don't care about their employees and okay I you know that's how you feel about it I I'm not preaching to them so um but you're right something could go wrong clearly here's the leadup right now so they're running the day-to-day operations we're there uh we're a phone call away or we're an email away but they're running things right now they're running the show while we still own it they're learning lots and lots of lessons during this time we're still available and we're not leaving the planet once we retire once they take ownership we'll still be there um we want them to thrive so if they have questions of course we're going to answer them and we put in if they need us to come in we've put in an agreed upon rate where where we can come in we're not leaving the state uh we you know we live close by and uh we can we can be there as a mentor if we need to we've provided them with tons of training and we'll continue to support them in any way we can I don't think they're going to fail I think this is a a great option and uh I think they're going to have many many years of success the other possibility to to the what if uh it's all going fine except one of them decides I'm moving I don't want to do this anymore the second scenario Which is less bad than the first things go bad is okay they say you know what we've changed our mind here's your business back okay well they got half their money out of it already so you know they could sell it for a discount price and still come out fine so there's great there's good and there's less than good great as everything goes as planned I think that's probably was what's going to happen most likely good is they decide they don't want to do it anymore they have to go out and sell it again all right they should still come out fine and the wor worst case scenario is you know things don't go well but you know like I said there's no guarantee in any of these situations so the key is there's some flexibility to this whole thing and I can also tell you if you were thinking about an ESOP esops cost hundreds of thousands of dollars that really isn't an option for a small business owner you'd have to just do an outright sale to them which most people can't do because they n of the money so this is T I called it the weop you work together with people to make the thing work and there are a ton of businesses in this situation Jill and Paul I'm sure you've thought about this a little bit I mean we've all heard of the silver tsunami there are lots of businesses that uh are struggling to the owners are struggling to figure out what to do with them have you thought at all about whether this might be a solution for other businesses and other Industries we have a national trade show uh that finally um we had one this year after it uh being held off due to covid and what was really at that trade show is we met other young business owners that had just purchased their um employers businesses so there's a whole network that our employees can contact and discuss things that maybe come up and I I feel like there's a lot of help out there in our industry if they need it and I think that it is the best situation for us it's a great situation for them and sometimes you know what if it all just worked out Jay was the keynote speaker at the uh conference and we introduced them to Jay they took Jay's courses and uh Jay has been a great mentor to us over the years will Mentor them it's just going to work I'm skeptical and I'm not skeptical of this I'm very confident that they're going to be successful the fact is many of the businesses that are going up for sale they don't make enough money to sell somebody would be basically buying a job and that's frequently that's a FR in the frame business trust me other people come up to me and ask me and I'd say how much money did you make he said 60 Grand I go why would someone pay you A1 $200,000 to get a $60,000 job and it's a problem you have to make enough money that there's actually profit left meaning you paid yourself the market wage and there's enough profit left to actually have a business to sell and that is a problem not just in picture frame but lots of businesses the owner doesn't make enough money to sell it is there any reason this couldn't work in other Industries Jay absolutely not it I think it could work for most businesses um assuming you have competent people that you know they can take it over I mean if you don't that's another story but I don't know if Paul and Jill give the enough credit they hired the right people they kept them around they trained them well and you know they're doing a good job running the business and they managed to get to a critical mass size where they had a business to sell which is why I was surprised we didn't get any it was it was a very viable business to sell to a third party I don't think that the broker worked hard and maybe the math doesn't work maybe they couldn't make enough money on this deal to be worth their time to go ahead and that certainly could be the case maybe they're chasing deals that are three four times the size I don't know I don't care all I know is what a lovely world two lovely hardworking dedicated employees ended up being able to take over the company and not lose sleep over getting Bank pressure and having the money thing and Paul and Jill get to travel and you know business can be beautiful this is one of those cases Jay could something like this work for your business um sure it's much bigger but I could pick I mean I got 130 employees I could certainly pick two or three or four of them and and do it if it got to that but maybe that certainly is an option at the moment I not going anywhere that I know of uh no I yeah absolutely I think um like I said it took me over a year to finally realize that here's a do-it-yourself ESOP they've moved responsibility to the employees not the risk that's the key to this whole thing they're now taking more responsibility but like I said it's the difference between making people business people or entrepreneurs if they were entrepreneurial they would have gone out and borrowed money somewhere and figure how to do it and it would have just added to the whole stress so that's why love this whole thing everybody wins keep in mind if you don't have that key employee that doesn't mean you can't go out and hire someone and look for that person and plan this out and and it's never too late unless for some reason you can't keep working all right my thanks to Jill choma Paul choma and Jay gz and to our sponsor the great game of business which helps businesses use an open book management system to build healthier companies you can learn more at Great game.com thanks everybody wait wait don't leave yet if you have a question or a comment that you'd like the 21 hats owners to address send it to me by replying to your Morning Report or by email at Lauren 21h hats.com that's l r n at21 hats.com do it now before you forget and don't be afraid to tell Jay what you really think you can take it and if you got something out of this conversation help us reach more business owners tell a friend subscribe and review us wherever you get your podcasts follow us on Twitter subscribe to the morning report at 21h hats.com this episode was produced by Jess Theron founder of blank word Productions okay now you can leave thanks for listening everyone [Music]