Michelle Seiler Tucker - Exit Rich

It's true that some things change as we get older, but if you're a woman over 40 and you're dealing with insomnia, brain fog, moodiness, and weight gain, you don't have to accept it as just another part of aging. And with Miti Health, you can get help and stop pushing through it alone. The experts at Mitty understand that all these symptoms can be connected to the hormonal changes that happen around menopause, and Mitie can help you feel more like yourself again. Many healthcare providers aren't trained to treat or even recognize menopause symptoms. MIDI clinicians are menopause experts. They're dedicated to providing safe, effective, FDA approved solutions for dozens of hormonal symptoms, not just hot flashes. Most Importantly, they're covered by insurance. 91% of MIDI patients get relief from symptoms within just two months. You deserve to feel great. Book your virtual visit today at joinmidi.com. That's join MIDI.com. Hi everyone, it's Bill Black, the exit coach from the Exit Coach Radio show. You know, one of the biggest questions I get on the show is what exactly goes into a business exit plan and when should I start creating mine? Well, I always tell people that the best time to start was 5 years ago, but the next best time is now because you never know when you might need it. So we put together a free report that describes what an exit plan is and what you should know. You can get it free by texting exit plan with no spaces to 442-22. That's exit plan to 44222. Again, text exit plan to 44222. Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions so you can be well planned. And now here's your host, the exit coach Bill Black. Well, hey everyone, thanks so much for joining me today. It's always a pleasure. I think you're going to really enjoy today's show. We have some great guests lined up, and my first guest has written a new book we're going to talk about, Michelle Siiller Tucker. She's the founder and CEO of Siler Tucker Incorporated, and we're going to talk about how to build a sustainable, scalable, and sellable business utilizing her proven techniques outlined in her newest book called Exit Rich. And the interesting thing about Michelle is she's been in business for 20 years out of New Orleans, Louisiana helping business owners sell their businesses. So she has a lot of great experience when it comes to helping business owners get ready for the sale, and we're really looking forward to having her comments in just a few minutes. Now the other thing I wanted to tell you is that we've now interviewed close to 600. advisers over the last several years and if you haven't caught any of our past episodes, you can go to exaoachradio.com and check out all the great content there. Just dig around, find something to listen to 20 minute interviews while you're driving or exercising or just hanging around these days to help you learn how to have a better and stronger business. Uh, again, for that day when you're thinking about selling your business. So I'm going to bring Michelle on right now and and we'll get to talking about her and her practice and her business. Michelle, welcome. Thanks so much for joining me today. Hi Bill, how are you? Thanks for having me. I am good. I'm good, thank you. Yeah, pleasure to have you. I was telling our listeners that you've been in business for over 20 years and you help business owners sell their businesses with a very high success rate and that you've written this new book Exit Rich, that we're going to talk about. Fill in the gaps. Tell us more. Tell us more about Michel and and what you and your your firm have done over the last several years and how you help folks. Sure, so I, you know, before I got into, um, selling businesses, I did franchise sales, franchise consulting, and franchise development and sold hundreds and hundreds of franchises, and then I transitioned into selling companies first small businesses, but then very quickly transitioned into selling businesses, uh, for $10 million and up. And then I also learned very quickly though that what Steve Forbes says is true. 8 out of 10 businesses don't sell, so I started really specializing in fixing businesses, growing businesses and putting business owners on a build to sell program because if I didn't do that, I would probably starve to death. So we really, really specialize in buying, selling, fixing, growing businesses. Sometimes I buy businesses and flip them. I also partner with business owners investing my money, my expertise, my resources, and put them on a 3 to 5 year build to sell exit strategy and we've sold over 1000 businesses. And so we have a new book out called Exit Rich, and Exit Rich is all about the blueprint of how to plan your exit from day one of starting your business and how to build the infrastructure using the six speeds. That's a very interesting background and really one thing that I talk about a lot, Michel, is how important it is, even if you're not a franchise to have your business in ready for sale shape so it kind of looks like a franchise if you will, you know, all of your all of your information in one place, well organized. Tell, talk to us a little bit about the biggest things, obstacles you found when you switched from the franchise world to the this the general business world. That'd be very interesting. I mean, it's, it's a really, it's, it's a completely different world because selling franchises, I was doing franchise sales, new franchises, not existing franchises. So when I transitioned from selling franchises to existing businesses, everything was different because when you're selling new franchises, you're not dealing with financials. You're not dealing with existing employees. You're not dealing with existing customer base inventory, etc. You're dealing with a new franchises. You're dealing with demographics, making sure you do your due diligence, find the right locations, making sure, you know, that the build out, working with the contractors on the build out, working with the franchise in order to get the equipment in, the inventory, etc. Dealing with an existing business, you're dealing with everything from people to processors to their inventory, their assets, you know, and and environmental issues. The list goes on and on. So it's really not even apples to apples, it's apples to oranges. That makes sense. That makes a lot of sense. So what are some of the biggest mistakes that you see business owners make? So first and foremost, it's business owners don't think about selling until they have to due to an internal or external catastrophic event. You know, meaning health issues, death, partner disputes, divorce, external COVID, and when you're trying to sell during a catastrophic event, your business is typically not doing well. It's typically turning downward, and that's the worst time to sell your business because your business is not going to be worth what you want. Many sellers will come to me and say, Hey, I want $10 million from my company, and their EBITA earnings for interest taxes depreciation amortization is all of $100,000. So business owners think, think about the value of their business based upon what they need in which to retire or buy another business or whatever, you know, their beginning strategy is. Buyers don't care about what sellers need. Buyers care about what the value is to them. So that's one of the biggest mistakes. The other big mistake is that Business owners don't really build a business that someone wants to buy. Most business owners have created a glorified job in which they go to work at every day versus a business that actually works for them, and they haven't built a business like I said that a buyer wants to buy. Buyers don't want to buy a job. They want to buy a business that functions in all 6 cylinders, all six speeds. Those are those are two really big areas and of course you mentioned the statistic that we we hear about all the time that 8 out of 10 businesses, business owners that go to say, hey, I want to sell my business, walk away. I call it dejected and rejected, either rejected because they're they they're not attractive like you said to a potential buyer. So the intermediary, whether it's a business broker or M&A advisor says, hey. Uh, no, we're not going to take you on, or the business owner finds out, like you said, the value's so low because of their lack of preparation perhaps and good financial strategies that they're just not going to get what they want out of it. So what are some of the other reasons that you found that businesses don't sell in that 8 of 10 category where they just don't end up going to market? So I'll take you through the 6 Ps because the 6 Ps will help illustrate why businesses don't sell. So the first P is people. Um, most, most business owners have, like I said, created a job, not a business, and most owners work in their business, not on their business. Buyers do not want to buy a job unless you have a healthy staff, unless you have the right people in the right positions, unless the business owner has answered the who question, who opens the doors, who deals with marketing, who deals with client service. who deals with legal accounting, logistics, transportation, manufacturing, etc. they don't want to buy the business, and the bottom line is you should never be next to the who. So we really work with our business owners to create a business that can run without them, not be dependent upon them, make sure that they have the right people in the right position. We work with our entrepreneurs to make sure they focus on their strengths, higher their weaknesses so that they have the staff in place because you really, you don't build a. You build people and people build a business, so that's the number one reason why businesses don't sell is because when I take the owner out of the business there is no business, you know, we have a dentist that came to us, been in business 45 years, and it's one dentist, two dental hygienists. His business is not sellable or if we do sell it, he's going to have to stay on for 2 to 3 years and the price will be attached to how long he's willing to stay on. So that's the number one reason they don't sell. Then the second reason is product. You know, a lot of businesses are in a dying industry, especially now because of the pandemic, so you really have to look at your industry and, you know, ask yourself, are you on the way up or on the way out? Is your product an Amazon or is your product a Blockbuster? And if, you know, a lot of buyers are not going to buy businesses that are in dying industries. And then the third, you know, issue is, is, or the third key is processes and processes are really big and a lot of companies are not efficient, not productive because they don't have processes in place. They're not systematic. And so we really work with our clients to make sure that they design those processes with the customer experience in mind, that they're productive, they're efficient, and most importantly, that the employees are well trained on such processes and that they have the policy and procedure manuals and the SOPs. We're literally selling a $60 million company right now that does not have policy and procedure manuals. And they really do not have systematic policies and procedures, so that's huge. And then the other key is proprietary, you know, our buyers want to buy a business that has proprietary assets. There's 5 different types of buyers and buyers will pay more money for intellectual property than anything else, you know. The more branded a company is, the more I can sell the business for. It's just like, as long as that brand is relevant in the mind of the consumers, nobody's paying any money for Blockbuster. But Apple is the biggest brand in the world, the most valuable brand in the world. Their brand alone is worth $249 billion. That's just a brand. Trademarks are extremely valuable. We're selling another company that has products in several different grocery retail retail stores, chain stores, and they each, each one of their retail chains has an exclusive product and it has a trademark. So that's huge, you know, clients will pay a lot of money for that. And then the other thing is patents. Patents are big. And do you have a watchdog tank? All the time. So what, what's the question that every single investor always asks every single inventor, do you have a patent on that? Do you have a patent pending? Do you have a utility patent? So patents are huge. Contracts, this is another, you know, another big thing. Contracts are very valuable manufacturing contracts, distribution contracts, franchisor that has franchisees, any type of exclusive contracts, the most valuable of all are the client contracts. But the biggest issue with contracts and the reason deals. Apart is because most owners don't have the two cents transferability clause in their contract that says that this contract will transfer over to the new entity, so 99.9% of all deals are asset sales, not stock sales, and the buyer's not willing to do a stock sale, and the clients are not willing to sign transfers. then a deal can fall dead in its tracks. Another thing that's very valuable, I mean your business could be losing money, and I could still sell your business for millions if you have a database. And if that database has, has, you know, hundreds of thousands of users, it can be repurposed or retargeted. Facebook paid $19 billion for WhatsApp, and WhatsApp was hemorrhaging, hemorrhaging money. Celebrity endorsements are big. Um, any type of e-commerce businesses, if they have the top three positions on Wayfair, Etsy, Amazon, this is all IP real estate. They can take your business from a 5 multiple to a 10 multiple of even. And then the last, the 5th piece is go ahead. No, no, please, please finish up with that. That's great. That's great information. The 50 is patrons, and this is also where a lot of business owners fall short because most businesses follow the 80/20 rule where 80% of your revenue comes from 20% of your clients and if you lose a client you could be in big trouble. So customer concentration is the kiss of death, you know, we have, we have one business we're trying to sell right now for the in the $70 to $80 million dollar range, and they have 70% customer concentration. We have another business that we sold not that long ago that a price for $9.8 million. They have 65% of their revenue tied up in BP contracts. We have 550 buyers, 12 letter of intents, but we found a strategic that had similar products and services. They, everybody else was petrified about the 65% customer concentration except for them. So they wanted to outbid everybody else because they had been trying to get their products and services in the BP for years and was never successful, so they ended up outbidding everybody else and paying $15 million or 70% of the company, which is 126, 126% more than what the business appraises for. Incredible. One more P we got one more to this number 6, right? Profits, profit is number 6. The most important thing to all entrepreneurs is profits. But here's the thing about profits. Profits is never the problem. It's always the symptom of not operating on one of the other 5 pieces. I have clients that come to me all the time and say, Well, sure, I have a profit problem. I'm like, No, you have a people problem or not you have a process issue. So profits are never the problem, always the symptom. Excellent overview, very noteworthy. I hope our listeners have been taking notes like I have. Great information. Now you have a book out and you have, it's called Exit Rich, and you know, one of the things you talk about is using the STGPS exit model. Can you tell us a little bit more about that and why it's important to plan your exit strategy from day one using the GPS exit model from Siler Tucker? Absolutely Bill. So the number one reason it's imperative that you plan your exit from day one of starting or buying a business is because you want to, you want to build a sellable asset. When you're ready to look, I just talked to, I just hung up with a client who's been in business for 40 years, and he said, Michelle, I can't do it anymore. I am so burned out I just can't do it one more day. You don't want to get to that point, and even if you think I'm never going to sell my business, if you build your business with the end in mind. That you want to sell your business then you're going to have a much more sustainable, scalable, and when you're ready sellable asset. So here's what I tell clients to do is follow the GPS exit model. Whenever you want to drive somewhere, Bill, what's the first thing we all do? We pull out our phone, we go to Google Maps, and we plug in our. Destination. Yeah, we're plug in our destination. The problem with business owners is they don't, they don't plan to fail. They fail to plan. So therefore they have no destination, no destination in mind whatsoever. They're driving around in circles. They're driving up and down the financial hills to end up nowhere and end up having to sell for pennies on the dollar, close their business, or even worse, file bankruptcy. So I want all business owners to sit down and figure out your end game, your destination. Where do you want to end up at? Let's say and pick your desired sales price. Let's say you want to sell your business for $20 million. Great, now we have a number. You might not hit it. You might hit it. You might exceed it, but it's a start. Business owners need to start a plan. So let's say it's $20 million. Now the next thing you need to know in your GPS exit model is where you're starting. From what's your current location? What's your current evaluation? What is your business worth? And the problem with most business owners is they never get a, a business evaluation, you know, as humans go to the doctor and get an annual checkup to make sure our body is in good health. We drive our car to the shop to make sure our car gets an annual checkup tune up, but we never. Get a business evaluation. All business owners should have an annual valuation checkup. There are events that can increase your valuation. There are events such as COVID that can decrease your evaluation. So every year you need to know what your business is worth. So let's say you're starting from $5 million. You want to sell for $20 million your current evaluation is $5 million. Now you need to know the time frame. Let's say you want to do this in 10 years. Now the next thing you need to know, well, who's my buyers going to be now, Bill, you notice how I say buyers and not buyer. You can never just have buyers. You can never just have one buyer because #1, that buyer will probably never come to fruition and will never close on the sale of your business, and number 2, you can never maximize value with one buyer. You need multiple buyers creating a bidding war, creating, you know, scarcity, creating competition. So buyers, there's 5 different types of buyers. Let me tell you who your buyer's not going to be. It's not going to be a first time buyer because they buy smaller businesses. It's not going to be a turnaround specialist because they buy distressed assets. So it's going to be a peg, a private equity group, a strategic or a competitor strategic slash competitor, or a serial entrepreneur who buys. Who chases cash flow in the tri agnostic. Those are your five types of buyers. Then you have to figure out, OK, well, what's the financial, where does the financials need to be in order to sell for $20 million? Where's the top line revenue need to be? The gloss profit margin, most importantly, they even it up. Earnings before interest taxes depreciation amortization has to be if you want to sell for $20 million it needs to be between $3 million.04 million dollars or 3 million and $5 million depending upon the synergies. Then you have to ask yourself, OK, if my buyers are going to be a private equity group, strategic and competitor, then what are the characteristics that they're looking for? What synergies do they buy? What are they willing to pay more money for? And then that's when you build your business based upon the infrastructure that we talked about with the 6 fees and you build to meet these buyer specific criteria. I can tell you almost any single buyer what they're looking for, what their negotiating points are, what their non-negotiating points are, and who will pay what for what synergies. And then the last step in that motto is the why. If it was easy to sell a business for $20 million Bill, everyone would be doing it. Obviously not easy, but you have a powerful why to keep you in the game, to keep you motivated to keep you weathering all the different financial storms and, and, you know, the different catastrophic events. So that's the GPS exit model. It works if it's followed. Excellent, excellent. And uh, you know, we've uh we've covered, you have covered a lot of crowd. I didn't do much. You did, you did all the work in this interview. I really appreciate it, Michelle. The name of the book is Exit Rich and uh listeners, you can find it. By simply putting in Exitrichbook.com, you can tell it's going to be an interesting read from this interview, Michel, you, you covered so much terrific ground so effectively. I took a page full of notes and I hope our listeners did too. And I hope your book does really well and that you'll come back and share some more information with us because I think this is exactly the type of information our listeners love to listen to. Thank you so much for joining me today. It's been a real pleasure. Hey, thanks, Bill. Um, everyone can, can I tell everyone what they what they get when they go to Extrovertsbook.com? or do you have time? Yeah, absolutely, absolutely. Go.com. We're in the middle of pre-sales for $24.79. We'll email you the digital download immediately so you can start reading it today. We will also send a hardcover to your doorstep upon launch date. We will give you a lifetime membership to the Exit Rich Book Club. There we have video content. If you like what you hear here, there's more video content there plus documents. All the documents you need to run your business and sell your business sample employee handbooks, non-compete, organizational charts, sample letter of intent agreements, sample. Purchase agreements, sample due diligence checklists and purchase agreements. These documents alone, Bill, are worth over $25,000 if you had your attorney create everything. They're there for your review and your download. Plus we're also giving everyone that buys the book now a 30 day membership, free membership in the club's CEOs, which is an entrepreneurial group that I started where we do masterminds, hot seats, Q&As so we can help business owners exit rich. That's terrific. That's a great bargain. Thanks so much once again, Michell, it's been a real pleasure. I look forward to the next time we speak. Thank you, Bill. Thank you for listening to Exit Coach Radio. It's true that some things change as we get older, but if you're a woman over 40 and you're dealing with insomnia, brain fog, moodiness, and weight gain, you don't have to accept it as just another part of aging. And with Miti Health, you can get help and stop pushing through it alone. The experts at Mitty understand that all these symptoms can be connected to the hormonal changes that happen around menopause, and Mitt can help you feel more like yourself again. Many healthcare providers aren't trained to treat or even recognize menopause symptoms. MIDI clinicians are menopause experts. They're dedicated to providing safe, effective, FDA approved solutions for dozens of hormonal symptoms, not just hot flashes. Most Importantly, they're covered by insurance. 91% of MIDI patients get relief from symptoms within just two months. You deserve to feel great. Book your virtual visit today at joinmidi.com. That's join MIDI.com.