<img alt="" src="https://secure.leadforensics.com/146009.png" style="display:none;">

CEO Michelle Seiler Tucker on Buying, Selling, or Growing Businesses: The ROI Online Podcast Ep. 83

Find me on:

Are you looking to buy, sell or grow your business?

In this episode of the ROI Online Podcast, CEO and author Michelle Seiler Tucker talks about the foundations you need to build a sustainable, scalable, and saleable asset.

Watch This Episode ⬇️

 

Michelle has over 20 years of professional experience and over thousands of businesses bought and sold, she is the CEO & founder of Seiler Tucker—The Business Authorities where Michelle and her team focus on helping fix, sell, grow, or buy a business. She’s also the author of Exit Rich, The 6P Method To Sell Your Business For Huge Profit.

Listen To This Episode ⬇️

 

 

As an entrepreneur, you don’t want to build just a business, but a legacy for you and your family now and in the future. And if you do it right from the start, down the road you’ll have a successful and saleable asset.


Among other things, Michelle and Steve discussed:

  • Whether you should sell your business or keep it
  • How to prepare to sell your business
  • How to value a business in order to sell it
  • Why you shouldn’t sell your business without a broker
  • Whether it’s possible to sell a business that is not profitable

Listen on your favorite podcast network:

Also available on all other podcast streaming services!

You can learn more about Michelle here:

https://seilertucker.com/

Follow Michelle on LinkedIn


Read the books mentioned in this podcast:

The Golden Toilet by Steve Brown

Sell Your Business for More than It’s Worth by Michelle Seiler Tucker

Exit Rich by Michelle Seiler Tucker

Thinking of starting your own podcast? Buzzsprout’s secure and reliable posting allows you to publish podcasts online. Buzzsprout also includes full iTunes support, HTML5 players, show statistics, and WordPress plugins. Get started using this link to receive a $20 Amazon gift card and to help support our show!

Support the show 

(https://cash.app/$stevemfbrown) 

Topics: Small Business Marketing, Podcast, Business Tips

Steve Brown 0:00
Michelle Seiler Tucker Welcome to the ROI online podcast. Thank you, Steve. Thanks for having me. It's a pleasure to be here. So I'm excited to have you. I don't know if you knew this, but I believe that entrepreneurs and business owners are like the invisible heroes of the American economy. You think about, you know, most 98% of the businesses, I was blown away by this fact that 98% of the businesses in the US have 20 or less employees. And that means that the owner is like wearing all these different hats, and yet they risked their future, they risk their family's future, and what do they do they bring us these products and services that improve our lives. And in aggregate, they employ almost half the workforce in the US. And these are very important people. And, and I love the name of your book, your your book is exit rich, the six p method to sell your business for a huge profit. Your what your team is the leading authorities on buying, selling, fixing and growing businesses, what in the world, Michelle did why did you plant your flag right in the middle of this big, ambitious area that makes such a big difference?

Michelle Seiler Tucker 1:15
Well, I've I've planted my flag here because I've been in this industry for 20 years, selling over 1000 businesses. And I'm an entrepreneur, I'm unlike most brokers or advisors, m&a advisors, I actually own businesses, I've actually been a you know, I actually am an entrepreneur, I've been on the other side of the desk making all the tough decisions. And I still am on the other side of desk making a lot of tough decisions, because all multiple companies, and I just realized, you know, when I when I wrote my, my first book in 2013, which was sell your business for more than it's worth, I did the research and realize that 95% of all startups one to five years is that the most risk would go out of business, right. And then I wrote exit rich in 2019 2020, and did the exact same research and found out that the business landscape has really flipped flopped, it's changed dramatically. So where it used to be that that 95% of startups will go out of business now. It's only 30%. So those those startups from those one to five years, only 30% will go out of business. Now. However, listen to this statistic. There's 30 point 2 million businesses in the United States, which employs over half the US workforcLike you said, 90% of them have less than 20 employees. But when we lose small business, we lose jobs. When you lose jobs, you lose spending power, when you lose spending power, more small businesses will close. So back to the business flip flop 30% of startups will go out of business, which it used to be 95%. However, other 27 point 6 million companies,cthose businesses have been in business 10 years or longer. 70 70% of those businesses will go out of business. So you see how it flip flopped, right? And it used to be Gosh, if you've been in business, eight 910 years, you're golden, you're going to be in business for decades. You hear about the big public companies all the time like toys r us in business, 75 years goes out of business, Kmart, Kmart, Montgomery Ward Pier, one jeans, GNC closing down 900 locations, Godiva, our very favorite chocolate is closing down 1500 stores. So this is a huge, huge, huge problem. Because these baby boomers, these business owners are exiting poor, they're selling for pennies on the dollar to closing a business or even worse or falling bankruptcy. And the media doesn't talk about that the media only wants to talk about the public companies, they don't want to talk about all the private companies on every street corner in every town, right? Every state across our great nation. And like I said, these business owners are losing everything. So that's why I stuck my flag here.

I'm so passionate about entrepreneurship. You know, I feel like baby boomers, business owners, you know, Generation X has poured their hearts or saw their money, you know, into their businesses growing them for for years and years and years. And they've made huge sacrifices along the way I talked to a business owner told me he hasn't taken a vacation in nine years. Right. You know, I talked to another business owner, he says I've never been to my my kids plays or sporting events, etc. So it's really sad that this is how their legacy ends up in the ground, and then they lose everything and they can't really retire and enjoy the fruits of their labor. So this is my mission. This is my passion. Exit rich is not just about selling your business exit rich is about building a sustainable, scalable asset. So when you're ready, you actually have something that sellable. I mean, there's a reason that 80% of businesses don't sell, they don't sell because number one business owners never ever think about their exit until a catastrophic event occurs. internal or external internals health issues. As part of the spheres divorce death, externals, COVID, you're in it, you know, and that's the worst time to sell your business because your business is going down, that's time to sell your business is when you're in your prime and your business is booming. So that's why we talk about the SP GPS exit model in my book exit rich. And then we work with clients to really build their foundation on what I call the six P's. So they do have a sellable asset. Yeah,

Steve Brown 5:25
so I have, here's the thing that really hit me is like, you get into this mode, starting a business and you're like, Okay, I need to make it three years, I need to make it five years. And so you start to like, I think I made it, but I think there's this point where you go, Wait a minute, I'm doing all this hard work? What am I going to have to show for all this hard work later on? And so it's like, can you think about it means I'm gonna have to sell my business, or I'm gonna need someone to kind of take over after this. So there's some questions I want to ask you. And dislike. So what do you how do you prepare to sell? My business? Right?

Michelle Seiler Tucker 6:08
Yeah, so this is how we do it. Number one, number one, you really should plan your exit from the start, right? You shouldn't plan your exit strategy from day one, buying or are starting a business you don't wait until you're tired. You don't wait till you're burned out, you know, wait till you're diagnosed with with, you know, cancer or something. And it's unfortunate, because, you know, I had a sweet little lady called me the other day, and she's like, my husband just dropped out of a heart attack. And I've been told there's a lot of debt. Can you sell his business? And so I start asking her questions, and she knows nothing about his business. But he had a construction company had no employees had all subcontractors, all the data was in his head. So when he died, the business dies. So he does not have a sellable business. So business owners really should be thinking about not only themselves, not only their business, only their employees, but their family, and their families and setting their families up for success, because this little lady who's probably in her 70s has no idea what to do. And now she might have to file bankruptcy. Because he didn't have an exit plan.

Steve Brown 7:21
Yeah, that's sorry.

Michelle Seiler Tucker 7:24
So I fall I tell my class apologia the SP GPS X amount. I'll take you through that real quick if you want to. Yes. So number one, is when you want to drive somewhere, you pull out your phone, you've gone to Google Maps, most of us use Google Maps. And you plug in your What do you plug in, you plug in your GPS,

Steve Brown 7:43
you plug it into the destination

Michelle Seiler Tucker 7:46
destination, you know where you're driving to, if you don't plug in your destination, what's gonna happen,

Steve Brown 7:52
it's gonna wander around,

Michelle Seiler Tucker 7:54
you're just gonna wander around. And that's what business owners are doing. Unfortunately, business owners don't plan to fail, they fail to plan and business owners are wandering around, driving in circles driving up and down to financial hills to end up nowhere to end up broke, you know, to end up axiom poor. So I tell my clients, you got to start somewhere. First thing you do is you pick a number. So you need to figure out what your destination, what's your, what's your endgame? What's your desired sells price, pick a number doesn't matter what it is just pick a number. So let's say you want to sell it for $20 million, right? There's a number, then what does the GPS model need to know? Where you're starting from? What's your current location? In other words, what's your current business worth your current business valuation? Now, I don't know if you'll be surprised about this, but most business owners never ever get a valuation on their business. Well, I talked to a business owner the other day been in business 50 years never had a business valuation. We know we go to the doctor once a year to make sure our hearts still ticking, and we're still kicking. We have our car to the shop to make sure that we get a tune up and check up on our car. But we don't get an annual business valuation checkup. That's financial suicide. We a lot of a lot of people spend more time you know, taking care of the car, take care, you know, making sure that our business is in good health. So you need to know where you're starting from. So if you want to sell for 20 million know what your worth today, let's say you're worth $5 million today. Now, what do you need to know? You need to know timeframe. Let's say you want to do it in 10 years. So now you have a sort of a plan 20 $20 million, or 5 million, I'm gonna do this in 10 years, okay. Then he didn't know who's my buyers going to be. Notice how I said buyers and not buyer. Sellers come to me all the time and say, Michelle, Michelle, I just need you to represent me with this one buyer and I'm like, big mistake and they're like Why? And I said because that buyer falls apart in all likelihood you got about a 98% chance that that buyers Not gonna buy your business, the 2% chance that they will wear your backup buyers and don't have any. So you never want to put all your eggs in one basket one buyers basket Plus if you want to get the highest possible price, you need competition. So you need more, the more you need more buyers looking at it, so they will bid against each other and pay you a higher price. So there are five types of buyers. Number one is turnaround specialist 90% of buyers and turnaround specialist turnaround specialist. I'm sorry, let me start that over 90% of buyers are first time buyers first time, first time buyers first time buyers, by small companies, I buy coffee shops, I buy laundry basket by Dry Cleaners restaurants, because they're leaving corporate america they don't have a lot of money to invest. So second type of buyers turnaround specialist, they're not going to buy your $20 million company because they buy distressed assets, third type of buyers private equity groups, and they buy based on platforms and add ons, they will look at your business if you have over, you know two $3 million in EBIT da even as earnings before interest, taxes, depreciation, amortization. And then you have strategic competitors, not strategic competitors do vertical, typically the best type of buyers, because they buy synergies. They're taking advantage of economies of scales. They're looking at what overhead they can cut so that they can increase Eva from day one of closing. So they'll pay a higher multiple than most other buyers. And then you have sophisticated buyers is a fifth type of buyer serial entrepreneurs. They're industry agnostic, they Traci butter. So there's your five types of buyers. Now you need to know what was my financial criteria have to be if I want to sell for $20 million was the gross revenue and gross profit margin need to be, where's the Ybarra need to be? I'm gonna tell you if you want to sell for $5 million, you even need to be between 3 million to 5 million depending upon your synergies, then you need to know what what synergies are they looking for, you know what characteristics is as far looking for. And then you need to build your business based upon those characteristics based upon those six P's that I outlined and exit rich, the last step in the exit model is Why? What's your why we all have to have a powerful, powerful, why a powerful, powerful reason to keep us motivated to keep us in the game that keep us you know, weathering financial storms and all the catastrophic events that occur. So because if it was easy to sell a $20 million company, Steve, everybody would be doing that. So you really have to have a powerful why. So that's the GPS exit model. Now what I do is I work with my clients on building a business on what I call that six P's.

Steve Brown 12:38
Excellent. So if I'm in a place of maybe I'm following your model, and I'm in a good strong position, then I'm sure that I would waver on whether Should I sell my business or keep it.

Michelle Seiler Tucker 12:53
So here's the deal, you should always build your business as if you're going to sell at one day because nothing lasts forever. We don't last forever, unfortunately. You know there's a cycle, there's a cycle, a human cycle and a business cycle. Businesses follow the same cycles a human you're born, you're an incubator, you go from incubator, to an infant to a toddler to a teenager to an adult, which is in your prime to senior citizen to death. So what goes up must come down. And the bottom line is you don't last you don't live forever. Look, look at the little old lady to call me and her husband died from a heart attack, you always build the business. So it's sellable. If you get in a position where you need to sell because you had a heart attack and you want to make sure your family is taken care of, or you're just diagnosed with cancer or something happens. So also things don't last forever. Remember 70% of businesses are going out of business a better business over 10 years. Wow. And they're not sellable. Because business owners have the wrong mindset Should I sell my business, you should build your business as if it will be sellable. Just like you know your house, right? One day, you might want to sell your house and downsize when your kids go to college. Nobody wants to buy a dump of a house. Nobody wants to buy a dump of a business. So you should always build it with the end in mind. And if you can keep on to on it, if you can keep it and you want to that's fine. At least you have a sustainable business that's scalable, is profitable, and you can stay in business or maybe your children will take it over, but you always should build it to sell. Does that make sense? Absolutely. That's why 70% of business owners that's why there's so many bankruptcies right now because business owners are thinking the wrong way. I mean never want to sell it. It doesn't matter if you never want to sell it What matters is you build it to sell. So if you ever get in a position where you want to sell it one day or you need to sell it one day, then you need to make sure it's sellable. Because here's the deal. There's five ways sex, the company one Way is legacy, transferring your legacy. Guess what your kids don't want your business anymore. I'm sorry to break this to you. But it used to be that businesses were handed from generation to generation to generation. But now the kids don't want their parents business. They want to go, you know, create their own masterpiece. They don't want to walk in mommy and daddy's footprints, or any sob, which is selling to employees, you know, and that's a slippery slope, you have to be very careful about Aesop. And less than less than 10% of business transactions are done from Aesop's. You know, you could hire a manager to run the company, but then really still tied to it. So that's not really working. Or you can sell a percentage of it, or you can sell 100% those are the five ways to really exit. The other ways is to sell for pennies on the dollar, close your business and file bankruptcy. So what's your choice? What would you prefer?

Steve Brown 15:45
Yeah. So can can you sell them business that isn't profitable?

Michelle Seiler Tucker 15:51
Yes, if they have the right synergies, Facebook paid $19 billion for WhatsApp and WhatsApp was hemorrhaging. But WhatsApp had a synergy that Facebook wanted, they had over a billion users. And Facebook knew that they could all lie and they can monetize on the cell on buying Facebook. So if you're losing money, you have to have some good synergy SAS businesses trying to sell all the time, and are not making a profit. You know, but they have the synergies, they have the synergies that other buyers want. So you have to have the synergies. If you don't have to have if you don't have the synergies, then no, it's not gonna, it's not gonna, you might be able to still sell but it's not going to maximize value.

Steve Brown 16:32
So you're listening to Michelle Siler Tucker, on the ROI online podcast, you may be watching as well, here's a teaser, we're going to have a special exclusive piece on our YouTube channel. And we're going to talk about that WhatsApp case because there's a secret thing called databases that you're going to want to know about. So can I sell my business without a broker? Michelle?

Michelle Seiler Tucker 16:59
So if you need heart surgery, are you going to cut your heart out? Are you going to cut your chest up and pull out your heart and operate on yourself? So why would you? Why would you try to sell your most valuable asset when you have zero experience in selling businesses? zero experience and how to do evaluations zero experience and how to find buyers zero experience and how to keep things confidential. And confidentiality is typically the number one priority to business owners. You know, how are you going to market the business? How are you going to get multiple buyers? How are you going to create a bidding war Hagan identify those synergies, how you're going to be able to build economies of scale for for the buyer so that they can decrease overhead and increase Eva, how you're going to get how you're going to get 65% higher sales price on your business, versus what it was appraised for all by yourself? So the answer is no. That's financial suicide.

Steve Brown 17:52
I love that answer. When you when you talk about starting to just look at your business as if you're going to sell it, you think about all the things that changes in your mind and what you need to put in place and make it more valuable later on. Those would be systems and processes that remove you from needing to be there. What's up, it's like, if you're the only if you have to be there to run it. If the all the values on you, then you, they're gonna want you to hang around even though you sold it. So you're still going to be working.

Michelle Seiler Tucker 18:33
So well. Here's the thing. This is what we're gonna talk about the six fees, because the six fees are really crucial for your audience to hear six pieces of infrastructure to build a sustainable, scalable asset. So when you're ready to actually have something that people want to buy, the problem is most business owners never build their business, to something that a buyer actually wants to buy. That's why 80% of businesses don't sell. So number one is people. If you are the owner, and you're tied to the business, and the business cannot operate without you, then you have you don't have a business, you have a glorified job and what you got to work out every day, versus a business that works for you. Buyers don't want to buy a job, they want to buy a business. So entrepreneurs Listen up high, you got to stop wanting to do everything yourself. You know, you'll never grow unless you let go of the control. You can't control everything. You need to focus on your strengths because you're not good at everything. I'm not good at everything. Nobody's good at everything. Figure out your strengths, focus on your strengths, hire weaknesses, get the right people in the right positions, people as a first p you don't build a business, you build people and they build the business. So you need to get the right people in the right seats and you need to ask the who question Steve, who opens the doors who handles customer service? who handles legal who handles accounting who has marketing who handles manufacturing transportation logistics and by Mental etc. The list goes on and on. All entrepreneurs should stop right now. Pause this podcast, and write down your list of all the who's in your company, and put down the names next to each who, here's a clue. You should never be next to a man, you shouldn't ever be next to him. Because if you are, then the business can't run without you. And you will never maximize value. I have a dentist, they call me to sell his business, but in practice 45 years, one dentist, one dentist, and three dental hygienist. He said, Michelle, I can't stay I'm exhausted is 45 years and I'm like, you know what? Too bad. You should have figured about this a long time ago. You know, you they're gonna have to stay for two or three years and the purchase price will be dependent upon your status can be tied to stain or get an associate, but you have nothing to sell because the business is you and when you leave there patiently. Alright, so people's is very important. A second P is product, you got to ask yourself, is your product thriving or dying? Is it on the way up? On the way out? Do you have an Amazon way up here? Or do you have a blockbuster? And let me tell you, because you did ask me. Michelle? Why are 70% of these businesses going out of business? I've been in business 10 years longer? Well, here's the answer, Steve. It's because these businesses that are going out of business, it's because they stopped doing one thing. And one thing only, they stopped doing what I call aim. A I am aim. Always innovate and market. Always innovate. Okay, product is innovation. Innovation. So blockbuster saw Netflix, they do nothing about it. They had the opportunity to buy Netflix, I sat back and fat and happy and out of business, Toys R Us and business 70 years did nothing different, zero innovation and wonder why they went out of business. So innovation is key, especially with this pandemic right now. So here's three great questions for you to ask yourself, write them down. Write them down. And you know what, you probably have to hire an expert, get a mentor or get get Steve, get somebody to help you figure this out. Because when you're in your fog, guess what, Steve? it's foggy. So you need an outsider's perspective to help you really see things that you're not seeing clearly because you're in the middle of your chaos. So three questions Amazon did this in the 90s. Ask yourself, What business? Are you in? Amazon ask themselves what business are we in?

Steve Brown 22:40
Well, they were in the book business, but they

Michelle Seiler Tucker 22:42
actually go bingo, we'll stop right there stay because you can't give me the answers. They were in a book selling business, right?

Steve Brown 22:52
Yes.

Michelle Seiler Tucker 22:53
What was the next question to ask themselves? What do we do better? What What do we do better than anybody else? Anybody else? And they said, fulfillment, we get fulfillment better. Anybody else? The last most important question is, what business should we be in? Now goes Steve,

Steve Brown 23:10
logistics, they shouldn't be shipping all the products to you?

Michelle Seiler Tucker 23:15
Absolutely. They should be in a fulfillment business. I'm like, dang, dang, dang, dang, dang, dang, we should fulfill my business, those three questions right there and transform Amazon from a small bookseller to a multi billion dollar worldwide conglomerate that they are today. And so Steve, you do consulting, right? You do coaching you do mentoring? So you work with your clients on those questions, you know, because it's hard for business owners to say, Well, I we know what we do, what do we do really, really well. And then it's hard for them to say, what should we do what we do, right? So that's product, you have to pivot you have to innovate. Let me tell you why so many business owners are in trouble right now. Because of COVID. It's because they never diversified to have one revenue center. And they have about one to three months of working capital and then they wonder why they're out of business. You got to be diversified. I have multiple companies. So if one business is bad, or one business does not do good this year, I've got other businesses that pay me. Right. And you should have a year's worth of Working Capital One year or at least one year's worth of working capital.

Steve Brown 24:18
That's easy. That's hard to do.

Michelle Seiler Tucker 24:22
Easy said hard to do. Yeah, never. Nobody ever said business was easy. No, but you know, what, do what's easy and life becomes hard. It was hard and life becomes easy.

Steve Brown 24:32
Love that. Number three p

Michelle Seiler Tucker 24:35
processes. So processes is number three. And let me just and you probably already know this because you work with business owners. most business owners don't think about processes. It's kind of like exit strategy. They don't think about processes until something bad happens. company then like, Oh, we need a process for that. You know, I was selling a manufacturing company and they had a catastrophic event occur on the manufacturing floor. And you're gonna get sued from everybody. And you'll probably end up out of business filing bankruptcy, unfortunately. And the owner says to me, you know, we really need to help the unsexy process for that and like, you needed it before this. So you really should think about your processes early on, tweak them as you go, because of course, you're going to enhance your processes, you're going to tweak your processes. But but here's where most business owners get it wrong. Steve, I think this is very important. most business owners design the processes around their agenda. I will tell you, there's different service industries, like chiropractors, doctors, you know, sometimes dentist, you know, they base their process around when they're open is based upon their agenda. You know, they're open, okay? Monday, Wednesday, Friday, from nine to 12, and three to six, and then, and then Tuesdays and Thursdays a half a day. And you know what I mean, that's based upon our agenda is not based upon the client experience. So you really need to design your processes based upon the client experience. And I work with a lot of chiropractors. So Capra just can't get mad at me because my husband's account. But we have to multi discipline, multidisciplinary clinics, and he knows not to do that. So you need to design your customer experience your processes around customer experience. And mine, McDonald's did this in the 40s. Did you ever watch a movie The founder? Yes. And then best movie ever, right? Such a great movie. So remember, back in the 40s, McDonald's said, we want to develop a fast food restaurant. This was McDonald brothers, not Ray Kroc, we want to develop a fast food restaurant, around our customer experience. We want to design the processes around the customer experience. We want the customer to experience great tasting food. That's hot. That's fast. How do we do that? Do you remember Steve when they went to the tennis courts,

Steve Brown 26:51
every day, everywhere they was chalk, and they they drew their kitchen and worked on the flow, the price

Michelle Seiler Tucker 26:59
is gonna flow. Remember, they kept bumping into each other? Yeah. until they finally figured out who chose who takes a customer's order who toasted mines, who was the brokers? Who was a big advance it gives it to the client and you know, fast, right? So even though that was done so long ago, and tweaked and enhance along the way, that's that those processes does design around the customer experience is why you can eat at McDonald's anywhere in the road and still get the same experience. Right? They never said it's gonna be healthy for you. They never said it's gonna be a garganega. They said it's gonna be great tasting food faster. That's what it is. They never said our customer service is gonna be great because of customer service is not great. And most locations. Now it's not like chick fil a chick fil a built their processes around customer experience, just examples, built their processes around. You know, their slogan was happiness, we create happiness, happy, happy employees, happy customers, happy employees, happy clients. So you really got to think about that. Because Have you ever dealt with a business, Steve, where, oh my gosh, you're on your phone pushing this number and this number, this number and this number to get a live person. Or you have to tell your story to five, six different people to get some resolve on your problem. Right. All right. They did it backwards. They designed the processes around their own agenda, not the customer experience.

Steve Brown 28:16
Number four, the fourth p

Michelle Seiler Tucker 28:18
i want to say one more thing about processes. I have to say one more thing about POS I'm ready. We have to have policy and procedure manuals, we have to have SLP checklist. employee handbooks

Steve Brown 28:31
and non compete work. Michelle, come on, this is so much work.

Michelle Seiler Tucker 28:36
Well, you're not going to sell your business for $20 million. Because the first time that that buyer walks in, ask you for all of this.

Steve Brown 28:42
This is why it can grow the value of your business exponentially to pay attention to these details right

Michelle Seiler Tucker 28:50
and then hire Steve to come in and do your processes and policy and procedure manuals. And as we know it's for you. So number four proprietary is the highest value driver of all the PS and here's the keyzer.

Steve Brown 29:06
Michelle, I want to stop here and tease everybody we're going to talk about this a little more in depth on YouTube channel and our exclusive about databases and how they can be an example of this proprietary process that Michelle was talking to us about

Michelle Seiler Tucker 29:22
Yeah, so just to give you guys a crash quick crash course on valuation I'm gonna be very quick here. So So businesses that are out what's important for people to know this businesses are under a million dollars in EBITDA Earnings Before Interest taxes, depreciation. amortization was typically trade for multiple of under five times zebra businesses are over $9 and Ybarra was heavily trade for a multiple of over five times the Ebola. You're never going to get a multiple of gross revenues unless you're a SaaS company SAS companies trade for multiple of gross everything else is a multiple of Ebola. Okay, adjusted EBIT ourselves discussion earnings But here's what's important. I can take you from a five module to maybe a 789 10. With proprietary assets, some proprietary assets are the number one value driver. There are six pillars to proprietary. I'll be very quick. I'll try to be quick. The last piece are quick. So brandy, I don't want to shortchange people on proprietary branding, the more well branded you are Steve, the more I can sell your company for as long as your brand is relevant in the mind to consumers. Is anybody paying any money for propriety for for blockbuster? Now, so the largest brand in the world, the most valuable brand in the world? Do you know who it is? Apple? Apple. That's right. Ding ding ding you man.

Steve Brown 30:48
I'm just having you on the podcast. Michelle. This is a big win.

Michelle Seiler Tucker 30:53
$249 billion is the apple brand. 249 billion. That's without eba assets, inventory accounts, receivables, real estate, anything else just shown and 49 billion for just a brand trademarks valuable. trademarks are huge. Here's the biggest mistake that business owners make surrounding trademarks is they'll go to the state the doubling of their business and I'll go get a state trademark but they never checked the federal database to make sure that that company name is available. So I've seen business owners be in business 510 15 years to receive a system desist letter in the mail that they have to stop using that company name or an attorney they throw cash at it is but you're still gonna in all likelihood lose and then you have to start the writing process all over again. So it goes from 1500 to $2,000 and get a federal trademark filed your trademark your company name federal trademark your podcast is your podcast federally trademark Steve

Steve Brown 31:55
it's in the process

Michelle Seiler Tucker 31:59
because you just found out

Steve Brown 32:00
Oh is it really a company name is I've got I did that but yes in the in the

Michelle Seiler Tucker 32:06
process. Okay so I so same thing with expert rich or trademark Texan rich I trademark st six fees as T GPS X amount of trademark everything that is your USP, your unique selling proposition. Right. All right, very important. Then also, patents. You ever watched Shark Tank?

Steve Brown 32:24
Yes.

Michelle Seiler Tucker 32:25
What's every investor ask every single inventor?

Steve Brown 32:28
You have a patented?

Michelle Seiler Tucker 32:30
Do you have a patent on that? Do you have utility patent you have a patent pending contracts very valuable Steve, manufacturing contracts, distribution contracts, franchise or contracts for franchisees exclusivity contracts. The most valuable of all contracts here are client contracts, especially if they have reoccurring revenue, or subscription model. Buyers love reoccurring revenue, they love subscription models, and they will pay a much higher multiple. for that. Here's a caveat. And here's a mistake that every single business owner I've ever met in my 20 years makes this mistake this half hour to two sentence transferability clause in your contracts. Because 99.9% 99.8% of all sales are asset sales, not stock sells. And if your buyer doesn't agree to do a stock sell, and the clients don't agree to consent to transfer, your Joker fall apart. So exit rich is all about cross your T's dotting your eyes and my shirt is no surprise when you get ready to sell your biggest asset your business. So you want to make sure you have that two sentence transferability clause databases, which which you keep bringing up databases are huge, especially if you have a million users a million users repurpose, they can be repurposed that can be retargeted. Facebook, we talked about this in the beginning that Facebook tech pay $19 billion for Facebook that was lose not just losing money hemorrhaging hemorrhaging, but they had a billion users. So you can lose money, Steve, as long as you have some of these proprietary assets, and I could still sell your business for a profit. Here's the other thing. And proprietary celebrity endorsements. We have a client that has Oprah endorsing our products. A strategic competitor will pay top dollar for this business because they want to get their other products in front of Oprah radio personalities who are endorsing your skincare, your diet company, they can only endorse one vertical because they lose credibility. So that's prime real estate. Do you know how hard it is to get on some of these huge radio talk shows with ISIS or rush lumbar, unfortunately, he passed away but glenn beck you know, the chaotic show when you have these big celebrities. That's huge prime IP real estate. My ecommerce clients. If you You can get any of those top positions on wayfair, Etsy, Amazon, and your niche market, huge, I can get you a much higher multiple for any of these proprietary assets that we just talked about. That's so the 50 as patrons patrons is your customer database, you can't have a business without customers. You know, most businesses follow the 8020 rule where 80% of your clients comes from 20%. I mean, 80% of revenue comes from 20% of your clients. If you lose a few clients, you can be out of business, we were one selling an advertising business that specialized in casinos. And casinos were their clients. were selling them in a $10 million range, they have five clients and the process they lost to decrease or Ebola and the revenues in half. So they weren't sellable anymore. Now for the price they wanted. So we ended up having to merge them. So this is very important that you want customer diversification, not customer concentration. However, if you have customer concentration doesn't mean we can't sell it. It means Steve that we have to find that needle in the haystack of a buyer. Because we were sold a manufacturing company or manufacturing company, they have constant customer concentration with BP that 65% of their revenue tied up in the BP contract. And we appraise them for 9.8 million, we have 550 buyers, we had 12 ello eyes, let them intense. But most buyers were scared of the customer concentration. But we found a strategic that had summer products and similar services. They've been trying to get MVP for years and can never get in, they paid $15 million, or 70% of the company, which was 126% more than the business was appraised for. This is how we do our job

Steve Brown 36:50
way better and you want to go out on a shark tank.

Michelle Seiler Tucker 36:54
That's right. And then so the last fee and the most important piece to all of your listeners, all of your followers is profits. Everybody's in business to make money. You know, people say Well, sure, why do you put profits last? I'm like, because profits is never the problem. Like profits is never the problem. It's a symptom of not operating on the other five PS I have clients that come to me as I'm sure I'll have a profit problem. I'm like, No, you have a people problem or no, you have a process problem. profits are not the problem if you are losing money. Go back and look at your other five PS.

Steve Brown 37:30
limit. We've been listening to Michelle Siler Tucker, She's the author of exit rich, the six p method to sell your business for huge profit on the ROI online podcast. So Michelle, I like to ask, what's one question that nobody ever asked you that you'd love to talk about?

Michelle Seiler Tucker 37:52
Hmm, gosh, I don't know. Because I felt like I get asked everything. I'm probably one of my hobbies. You know, we've asked me What's my hobbies?

Steve Brown 38:01
Well, what's your hobbies besides blowing up people's businesses,

Michelle Seiler Tucker 38:05
work, work and work. I mean, my hobbies are writing. I love to write. I like to write poems. I write books. Obviously. I have three books out. I write poems. I write lyrics. You know, I just love to ride I've always loved riding. My other hobbies. Obviously, I work out. I don't know if that's really a hobby. I don't do because I need to. And I travel hanging out with friends spending time with my 10 year old daughter. You know that that's those are all my passions.

Steve Brown 38:35
I love it. Michelle, you've been an awesome guest on the ROI online podcast. And for those that want to hear about our exclusive discussion on databases on the YouTube channel. Be sure to follow us over there. Michelle, what's the best way for folks to get in touch with you?

Michelle Seiler Tucker 38:54
Well, first and foremost, let me tell your followers how to get exit rich.

Steve Brown 38:59
Let's do that.

Michelle Seiler Tucker 39:00
So just I just want to tell you a couple things about exit rich real quick. Yes. Number one is my co author. My co author Sharon lechter. She wrote Rich Dad Poor Dad with Robert Kiyosaki when a New York Times bestselling author of five times nice and she is a CPA, financial literacy expert, the adviser to many different presidents. So rich was endorsed by Steve for saying the accelerator is a goldmine for entrepreneurs, entrepreneurs leave way too much money on the table. And it was also a foreword was written by Kevin Harrington the original shark on Shark Tank. So we had Brian Tracy Tom Hopkins jack Canfield Mark Victor Hansen, all giving us glowing recommendations Les Brown, so we are in the middle of pre sales exit which comes out in June. You can go to exit Rich book.com right now exit rich book calm by $24.79 the order extrovert book calm we will email you the digital download with an minutes. So you can start reading. You don't have to wait till June plus, which will ship the hardcover to your doorstep upon launch date. In addition, we will give you a lifetime membership into the exit rich book club, where if you like what you're hearing here, there's a lot more video content there. Plus documents, documents to run your business is a sample employee handbook, sample noncompetes, sample organized organizational charts, policy and procedure manuals, documents, sell your business sample Letter of Intent agreement, sample purchase agreement, sample, to diligence, checklists, closing docs, everything, all the documents you need to run and sell your business are they're not only three reviews deep. But for your download this if you went to an attorney to recreate these documents, it would be probably over $30,000 to recreate all these documents or more. And so they're all there for your download. Plus, we're given a 30 minute live I'm sorry, 30 day membership over into our C club CEOs. And this is a club where we have like minded entrepreneurs where we ask those transformational questions where we help business owners plan that sustainable, scalable, sellable business. So go get your copy of exit rich book,

Steve Brown 41:15
do it do it now.

Michelle Seiler Tucker 41:17
Today an extra

Steve Brown 41:18
calm just listening to this podcast has been valuable and all of those assets, they will revolutionize your business.

Michelle Seiler Tucker 41:27
Right and then also one more way you can get a hold of me or two more ways. My other website is solid talker calm. You can also text Michelle to 888-526-5750 all of my websites will pop up all of our social media cut you know, follow me on social media and connect with me on LinkedIn.

Steve Brown 41:46
That's Seiler Tucker, calm, it's SCI l e. r tucker.com. Michelle, what an awesome guest, you've been on the ROI online podcast.

Michelle Seiler Tucker 41:56
Thank you, Steve. It is a pleasure being here. Thank you for having me.

Steve Brown 42:00
And that's a wrap. Okay. Now this, here's the thing that I was really excited to listen to one of your podcasts and I tried to get it across. We help our clients not only get their act together, but we help them implement a CRM and a database. In a mall, the reason you would do any marketing online is to collect a name and an email address, because that's the gold of our day. And so I would love for you to kind of talk about this X on this exclusive topic about databases and how valuable they can be and grow the exponential value of your business.

Michelle Seiler Tucker 42:43
So you want to do another one?

Steve Brown 42:45
Well, we're just tuned in the exclusive wrap up for my YouTube channel. Okay. Five or 10 minutes, just, let's just nail this right here.

Michelle Seiler Tucker 42:57
So I said that kind of a little bit in proprietary right? databases.

Steve Brown 43:00
But I want to want to really run make it super clear. That's why I'm asking this right now. It's a piece that I wanted to have and is exclusive. Let's just talk a little bit about databases and why they're so valuable.

Michelle Seiler Tucker 43:17
Get a drink of water. Okay. I'm ready when you are.

Steve Brown 43:26
Alright. So Michelle, we've had an awesome conversation, and we've discussed your six P's. And one of the things that is proprietary value to a business, you know, we work with our business owners, and we help them get moved into a CRM, a customer relationship management system. And I'm surprised at how many businesses just don't have those. They've got business cards and Tupperware boxes and shoved in files and then in the back seats of cards, but they don't realize the true value of a database. And when I heard you talking about it, I really was like, This is excellent. I wanted to talk a little bit further about how valuable that is.

Michelle Seiler Tucker 44:12
It really is extremely valuable. And you kind of got you know, I kind of started chuckling when you mentioned about business owners having cards and containers and Tupperware and you know, you forgot to mention shoe boxes. But you know, we we once had a business owner, we were trying to a business that we were trying to sell if it was a distribution company that extremely profitable. And the owner was in his late 70s. And the problem was, everything was on paper. They had everything they had no computers talked about no databases, database, no computers. They had everything a Rolodexes, Rolodexes paperwork. You know, Rolodex is the whole contact list and now lots and lots and lots of customers are all are rolling That's so old school, all their inventory system, everything was on paper, and oh my god, heaven forbid if this place ever catches on fire, right because, or a hurricane. I mean, we had a hurricane in New Orleans called Hurricane Katrina. We heard of it. And he was almost completely wiped out, he wasn't even able to, to work and get back in his office and get that database, you know, you have to have a CRM, you have 1,000% cannot run your company without a CRM, you have to have that customer relationship management company. And let me tell you something, when buyers go to buy a business, one thing they want to do is look at that CRM, look at how many clients you have, look at how many active, how much you know, how active they are, how many touch points you have. And that's everything. Because a lot of times those, those clients can be repurposed, they can be retargeted. You know, if you've got a competitor or strategic looking to buy your business, and you have 100,000 clients in your CRM, you're going to get a much higher multiple for that. I mean, we have 28,000 buyers in our CRM that we nurture, on a regular basis. And so when I, when I go to sell my company one day, you know, that's going to be extremely valuable. But not only is it valuable, it makes you more efficient and makes you more productive. You know, if you want to be profitable, you have to streamline, you have to get your processes together. And the most important part of the process is your CRM. You cannot live without it. You cannot run a business without it. I have several CRM, I don't have one. I have several, you know, it's funny because I partnered with a graphics company. A while back, they called me about selling your business. And it was two owners, husband and wife and one employee. And it was especially graphics got made they they place graphics on all first responders, so the ambulances, fire trucks, police cars, etc. The owner called me in a panic. He's like, I gotta sell this business. I'm like, why do you have to sell this business and he's, my wife and I are about to kill each other. We're working 1416 hours a day. And he says, I have one employee, he says, Michelle, I don't have the business acumen to grow this business. to the next level. I can't do it anymore. Plus, we took out a mortgage on our family home and I said, Okay, and then he says, but we're not we have the best product, the best product and in the in the country. And he says it's so good. We're turning down 6000 clients a year. And when he said we're turning out 6000 clients a year I'm like, Oh my gosh, Dean, Dean, Dean, Dean, Dean, I go, where are you putting these clients? I said, Do you have a CRM? Because no, we don't have a CRM. I go What? How do you know how CRM. And so then at that point, I said, Well, your business is not sellable. But today, you can consider yourself lucky that you just won the lottery, because you got me. If you would have got anybody else they would have put your business on the market, your business is not sellable. Because it's all you it's all you and your wife. So anyway, I invested in your business. And that's your money, take them out of their garage, they had an office garage on property, take them out of their Lisa 6000 square foot building, hired 2025 employees got to see Oh, and guess what we did Steve, we got a C r m, oh my gosh. And it completely was a game changer. The first one we got was the wrong one. So you got to align yourself with somebody like Steve to make sure that he knows your business inside and out. And he can make sure that you have the right database, right CRM, and it really was wrong once then we got another one is a game changer. There was no guessing, no more guessing on jobs, no more losing money on waste, because they don't know how to price a job. You know, now when I asked him for a number before, I would ask him for the number now like and are trying to figure it out. There is no finger now because everything is in a CRM, all the clients are in there. They're not losing clients anymore. They're they improved efficiencies, they improve productivity. And like I said, they don't lose clients anymore. Before they were like how cards everywhere had Rolodexes everywhere had everything on paper. Now it's all in a CRM all in a database. You cannot have a successful business without a CRM without a database.

Steve Brown 49:13
And I loved the way that you package that with the perspective that this is a proprietary piece of your business that CRM is so valuable, and people just overlook that. So I really appreciate that

Michelle Seiler Tucker 49:28
most advisors overlook it to Steve, most advisors don't know how to value databases. So, which is why you should always come to Soller, Tucker, because we're not a value. We know how to evaluate proprietary especially databases. So databases are huge. And let me tell you something, once he once we got you know all the six P's in place because the piece they were missing was was people that and the people that didn't have the processes. But they had you know they had a great product they didn't really have anything proprietary because they databases for proprietary, I mean, that's a huge value driver. That's one of the number one value drivers of anything. Once they got all that, you know, he is coming up with the best ideas ever. He's so innovative. He comes up with all these inventions him and his wife. This is the same gentleman that told me I know, he didn't have the business acumen to grow the business to the next level. Right? He didn't have he has a business document. But he was stuck in the chaos. He was stuck in the day to day he was talking to transactional versus or transformational. And he wasn't, you know, the company wasn't organized. So when we got that, and I will tell you out of all the changes that we've done for this company, getting this the CRM was the biggest change, complete game changer, because you're not hiding anything anymore. The numbers are there. You know, the cost is there, what it costs, you know, people are like saying, Oh, well, we didn't make an error there. Well, yeah, you did. It's just so valuable in so many different ways. That number one, you'll never, you'll never have a sustainable company that scalable without a CRM, and you'll never maximize value without that CRM without that database.

Steve Brown 51:09
boom mic. Michelle Siler Tucker, you've been such a wonderful guest on the ROI, ROI online podcast. I've just really enjoyed it.

Michelle Seiler Tucker 51:19
Thank you. Well, thank you so much for having me. It's been an absolute pleasure to be here and hopefully we can reconnect again.

Transcribed by https://otter.ai