Join Michelle Seiler-Tucker of Seiler Tucker and me, the leading authority on buying, selling, and improving businesses!
Listen to the podcast here
An Interview With Michelle Seiler-Tucker
I have been knocking your socks off with some powerhouses of entrepreneur excellence. We’re going to blow your minds. In this episode, I’ve got Michelle Seiler-Tucker. If you have not heard her name yet, you will. We will be talking about turning your hobby into a business and creating an amazing exit value.
I’ve got an episode for you. I want to introduce to you my benefactor. How many times have I told you about the Board of Advisors that I spent a week per quarter getting downloads from brilliant individuals who are far better at running a business than I’ve ever been? They’re teaching me how to prepare my business for an amazing exit. Guess who I have on our podcast. Michelle is a genius at not just creating value in a business but showing you how to exit. This is not all. She’s been featured in Inc, Forbes, USA Magazine, Fox Business News, and CNBC.
She has shared the stage with Eric Trump, Kathy Ireland, Rudy Giuliani, Donna Karan, Steve Wozniak, and Zuckerberg. I don’t even know how to pronounce these guys’ names, much as I share a stage with them. She is in these stages because she brings a powerful and unique view of how to create value in people’s lives and monetize it so that you can either have an amazing cash cow of a business or prepare it to exit rich. We’re also going to be talking about her book, Exit Rich.
Michelle, how are you?
I’m good, Merrill. How are you?
Congratulations on getting the first advance copy of Exit Rich.
We’ll be talking about how to get your copy, but this is on deck for me. This is the next book I’m reading because I won a contest. She only had three advance copies, and I got one of them. You’re welcome. Thank you. I’m going to be able to continue after Michelle has departed. We’re going to give you information about how she can create more value for you if you’re interested in becoming a professional business person and not just a professional entrepreneur, fix and flipper, note buyer, etc. Michelle, give us a little bit about how you got into this position where hundreds of thousands of people are waiting for your next book.
The funny thing is I already have the next book written. Writing books is the easy part. The publishing, marketing, and all of the other stuff are difficult but the writing piece is easy for me. How did I get here? I’ve always been interested in entrepreneurship. I’ve always been interested in writing. Even as a little girl, I would walk around with notebooks, I walk up to a complete stranger, and start asking them questions like, “Who are you? What do you do? How do you do it?”
My mom is like, “She is going to be the next Barbara Walters.” I’ve always been a people-person. Writing is my passion. I love to write. I write poems, lyrics, and books. I’ve always been interested in entrepreneurship. Entrepreneurship is my lifeblood. I’m passionate about entrepreneurs. I’m like a kid in a candy store. I can’t wait to find out how somebody built a multi-million dollar company from their kitchen table, garage, or selling a $70 million company. The owner has an 8th-grade education and he started off his pickup truck.
I’ve always been interested in entrepreneurship. I did work in Corporate America. I went to work for Xerox. Xerox recruited me. I worked there for six months and quickly, my nickname became The Closer because every time somebody couldn’t close a deal, they’re like, “Call Michelle. She’ll close it. She closes everything.” I was the closer at Xerox, and then my supervisor came to me and said, “You should interview for the regional vice president position.” She said, “You’ll never get it because you’ve only been here for six months and you’re going to be interviewing against people who’ve been here for years.”
I said, “Why should I interview for something I’m never going to get it?” She said, “Because of the experience.” She says it’s a three-month process and it was. I said, “I’ll do it.” She said, “You’ll learn more doing this than anything else at Xerox,” and she was right. I met with all the high-level executives and I had to do all these presentations, demonstrations, Q&As, etc. I ended up getting it even though they tell me I never would.
You’re the young buck on the block and all of a sudden, you leapfrogged over all the other applicants.
I sure did. It was against Xerox’s policy to promote somebody who’s been there under two years. I ended up getting it, and then, of course, all my friends at Xerox hated me because I beat them. I moved up into corporate management, which I hated. No corporation should take their number one salesperson, who they nicknamed The Closer and promote them into upper management. I like the management and leadership. I didn’t like it in Corporate America because you can’t get anything done. You have meetings to have follow-up meetings and I wasn’t meeting with my clients, solving problems, and finding solutions. I was just stuck in meetings all day long. I end up leaving Xerox and going into franchise sales, franchise development, and franchise consulting. I was a partnership in one franchise that I’m not going to mention here.
I ended up doing hundreds of franchises for multiple franchisors and then the client’s kept asking me, “Do you have an existing business?” They didn’t want to buy a franchise. Franchising is not for everyone. I’m like, “I’m going to start selling a company.” That’s when I started my mergers and acquisitions firm. At first, I started selling smaller businesses but then quickly, I started selling businesses of $10 million and up.
I learned that what Steve Forbes says is true. Steve Forbes endorsed my book, Exit Rich. He says 8 out of 10 businesses don’t sell. M&A Source says 90%, 9 out of 10 don’t sell, and it’s true. I’m going to listen to Steve Forbes since he endorsed Exit Rich that 8 out of 10 businesses don’t sell. That’s when I started transitioning and saying, “Let me fix these businesses.” I’ve owned many different businesses along the way and several businesses that I’m building to sell.
There’s a formula, and you’re saying that 8 out of 10 don’t sell, so that leaves a huge market for you as a company fixer to come in and make them sellable and available to attractive for purchase.
That’s what I started specializing in. It’s fixing businesses, growing them, and putting them on the Build-To-Sell plan. That’s what we do. We specialize in buying, selling, fixing, and growing. I will buy businesses and flip them. I’ve partnered with business owners investing my money, time, energy, effort, resources, and expertise. Sometimes, I’ll bring other partners in. Plus, with management systems and sell businesses. That’s my journey.
You guys are sensitized to this. She fixes and flips businesses. Fixing and flipping anything probably has some corollaries, some standard features you have to do no matter what, whether you’re fixing or flipping houses or cars. I know a guy who flips cars. Fixing and flipping a business has to have some of the same tasks to accomplish to make it sellable.
It’s all the same infrastructure. First, you have to look at, why are 80% of businesses not selling? You then have to look at the other problem and I don’t know if you’re aware of this. I talk about this at BA and you might have heard me mentioned this. When I wrote my first book, Sell Your Business for More Than It’s Worth in 2013, I did the research. I learned that 95% of startups within that first 1 to 5 years would go out of business.
When I wrote Exit Rich in 2019 and 2020, I did the exact same research. The business landscape has flipped flopped. It’s only 30% of startups that are at risk and out of the 27.6 million companies, those businesses whose been in business in ten years or more, 70% will go out of business. You hear about the public companies like Toys “R” Us, who are in business for 75 years goes out of business. Also, JCPenney, Kmart, Stein Mart, Pier 1, and Godiva chocolate is closing down on 1,500 locations. GNC is closing down on 100 locations. All these businesses are going out of business. It doesn’t matter what the industry is. The way that we fix and I look at businesses is the same. The infrastructure is the same.
Give us an example just like that. For the people who are trying to stay in business, some of them have made a business out of the real estate or their vocation. Some of them are still hobbyists and they don’t know how to make it a real business. What do they need to know in order to have the best chance at staying in business and knowing when to pivot, etc.?
First and foremost, they need to build solid infrastructure. I call this infrastructure of the 6 P’s. The 6 P’s to sell your business for huge profits. The 6 P’s are the same no matter what the industry is. The cylinders are the same. Number one, you don’t build a business. You build people and people build the business. There are two issues why businesses are not sellable. Number one is because business owners never think about planning their exit. They never think about selling their business until a catastrophic event has occurred. In turn, it could be health issues, partner disputes, divorce, death, and then external COVID.
Here’s a perfect example for you. When you’re trying to sell your business during a catastrophic event, your numbers are typically going down and your business is not going to be worth much. Many of those business owners are unfortunately selling for pennies on the dollar, close your business, or even worse, bankruptcy. The best time to sell your business is when your business is in its prime, heyday, and is booming. Business owners never want to sell when a business is booming because they’re like, “This is so great.” That’s the time you should be selling a business.
If you want the number one, follow the GPS EXIT Model. Once you build what I call the EXIT Model for your exit strategy then you want to build the infrastructure and synergies that buyers are looking for. Number one is people. The number two reason that businesses don’t sell is because the owner is the business. The owner has created a glorified job and wishes they go to work to him every day versus a business that works for them.
That’s the transition that I’ve been in since I joined BA and got schooled by all of these badasses who have $10 million, $20 million, $50 million companies or have sold a dozen or more of them. I prided myself on being a subject matter expert but not being an awesome CEO. I didn’t know how to be in the business of being in a business. When you say it’s all about the guy, the cult of personality, I’m stuck with this mess until I create an infrastructure. I can’t do anything until somebody can preach it as well as I can.
Unfortunately, people don’t want to buy you. They want to buy your company and they will run without you. Entrepreneurs have to focus on their strengths and hire their weaknesses. I always say if you don’t have an assistant, you are the assistant, so you need to put the right people in the right spot. Merrill, you have to ask the who question. Who opens the door? Who does with clients? Who does the marketing? Who does the accounting? Who does the legal? Who deals with environmental? Who deals with manufacturing, transportation, logistics? Whatever it is. The clue is you should never be next to the who.People don't want to buy you. They want to buy your company, and they'll run without you. Click To Tweet
I should never tell me ever.
Every entrepreneur should go home, write down every single task that has to be done in your company, and assign that to a person in your business. If your name is next to every task, you got a lot of work to do.
Michelle, this is brilliant because, in my coaching, one of my teammates at the Board of Advisors said, “You need to build out the exit version of your accountability chart of the end game and then you put in the title. It doesn’t matter if you have 30 vacancies or 3, you got to make sure that you’re not that thing.” I relate to what you’re saying. You can be CEO but you got to be able to replace you as CEO. Every other one of those slots has to have a different title and a different name. You guys, do the homework Michelle is assigning you. Go home. Make the org chart of all the things that you do in your business. Here’s the clue. If your name is next to the who, you got some work to do.
You want to make sure you have that layer of management. You’re not going to be able to sell a $5 million, $10 million, $20 million company unless you have that CFO and COO and all that layers of management. You want to make sure that you have your key people on noncompetes and employee handbooks, etc. It’s important. The second P and is another reason that a lot of businesses are not sellable is product. Product is your industry and your service. You have to ask yourself, is your product on the way up or on the way out? Is that thriving or dying? Do you have an Amazon appear or do you have a Blockbuster about to bust?
A lot of industries that were once thriving before COVID are dying and vice versa. Just because you have a blockbuster and your industry is a bust, that doesn’t mean that you call it quits. That means that you need to align yourself with an expert, somebody who can see a different perspective that you’re not seeing because when you’re in the middle of your fog, it’s foggy. You need somebody to consider blind spots and ask these three transformational questions. This is extremely important. Even Amazon did this back in the ‘90s. Ask yourself, what business are you in? Merrill, if you asked what business is McDonald’s in, what would you say?
I know the trick answer. They’re in the hamburger business.
No, they’re not. McDonald’s is in the real estate business. McDonald’s is the largest real estate holder in the world. Did you ever watch the movie, The Founder, based upon the McDonald brothers and the Ray Kroc story?
No, I have not.
Watch that movie.
Homework guys, The Founder.
I want to give you all so much homework.
I was told offline that The Founder is a brilliant movie. One of my team walked by going, “It’s awesome.”
It’s a brilliant movie because here’s the deal, the McDonald’s brothers started McDonald’s restaurant back in the ‘40s when they had Sonic-type drive-ups and they never perfected a concept back then so the order was always wrong. The food was always cold and always took so long. The McDonald brothers said, “We’re going to start a fast-food restaurant but we’re going to create it around the customer’s experience.” This is important. “We want the customers to get great-tasting food that’s hot in two minutes or less.” I’m getting back into processes, so let me go back really quick.
Ray Kroc came in and took over McDonald’s and started franchising McDonald’s because the McDonald’s brothers had a few locations that didn’t work out, so they didn’t think it was a good idea. Ray Kroc comes in there and he started franchising. He’s in the bank one day trying to borrow more money because he’s upside down as he took out a loan on his house. He’s trying to get more money because the franchisees are not paying him. The banker is like, “You’re already extended. I’m not lending any more money.” He walks out of the bank and this gentleman follows him out.
He goes, “I’m sorry. I overheard your conversation. Can I ask you a few questions?” Ray said, “Of course.” He goes, “What business are you in?” Ray goes, “I’m in the hamburger business. I’m in the restaurant business.” He said, “No, that’s not the business you’re in. What business are you in?” Ray goes, “I’m in the restaurant business.” He goes, “What business should you be in?” Ray goes, “I have no idea what you’re talking about.” He said, “You need to be in the real estate business. You need to buy a land, build the buildings, set up your separate corporation, McDonald’s Realty, and then you lease it to the franchisees.
When franchisees are not compliant and they’re not paying their bills, then you void their contract and you get another franchisee in there.” Because of those two questions, what business are you in? What business should you be in? Ray Kroc has so much leverage because he owned all the real estate that he was able to take McDonald’s away from the McDonald’s brothers. McDonald’s is still the largest real estate holding company in the world. They’re in a real estate business. They are not in the restaurant business.
You have ultimate leverage when you own the land upon which the restaurant is built, manufactured, and constructed.
Back to what questions should you ask yourself. Amazon did this in the ‘90s. They ask themselves, “What business are we in?” They said, “We’re in a bookselling business,” then they ask themselves, “What do we do well better than anyone else? We do fulfillment better than anyone else.” They then said, “What business should we be in?” They said, “We should be in the fulfillment business selling everybody’s products, not just books.” Those three questions transformed Amazon into the multibillion-dollar worldwide conglomerate that they are now. Everyone needs to ask themselves those three questions. You got to stop being transactional and start becoming transformational.
See why she’s here? This is golden nuggets. They’re flying.
You have to pivot in a product. There’s another P for you. You’ve got to do something different. The reason that 70% of businesses are going out of business is because they stopped AIM. AIM is Always Innovate and Market. Business owners get complacent. They’re married to their concepts and their ideas. They keep doing things the way they’ve always done them and you’re not going to stay in business like that.
Blockbuster did that. They saw the writing on the wall with Netflix and had the opportunity to buy Netflix. They sat back fat and happy and did nothing. You have to be innovative now more than ever before because the companies that make it easiest for the consumers to purchase products is a company that’s going to win. Amazon is winning because they make it so easy for you to do business with them.
The third P is Processes. Processes are like an exit strategy. Most business owners don’t think about an exit strategy and processes until something bad happens in your company. We’re working with a manufacturing company where one of the workers had a catastrophic event on the manufacturing floor and the owner goes, “We need a process for that.” You needed the process before that happened. Every business owner should design processes from the beginning in mind like the McDonald’s brothers did.
Back to the story of the McDonald’s brothers, you’ve got to design your processes with a customer experience in mind. McDonald’s knew that they wanted the food to taste great, come out hot, two minutes or less fast. McDonald’s never said, “We’re going to have good quality.” They never said it’s going to be organic or healthy. They designed the processes around the customer experience in mind.
When you watched the movie, you’ll see that they took all their employees to an empty tennis court and drew out the processes. They did this all day long until they figured out who’s going to take the customer’s orders, toast the buns, cook the burgers, put the pickles on the buns, and give it to the client. Have you ever dealt with a company where the processes are not designed with the customer experience in mind and they’re designed to irritate and infuriate you?
The point you’re making is not that they intentionally do it, but they do it to take care of the people offering the service and not the client who’s buying the service. “What’s easy for me to give this service rather than what’s easiest for the client.” I totally get it.
They are designing processes to serve their agenda and not to serve the clients. Perfect examples of that without me naming names are social media companies and some retailers. I won’t name names about who created happy experiences like Apple’s. Apple’s processes are all designed for great, happy experiences. Your processes should always be designed with the customer experience in mind, number one. Number two, it needs to be productive and efficient. Otherwise, it’s going to cost you money. It needs to be well documented in the SOP checklist, Standard Operating Procedure checklist, operating manuals, and your employees need to be well trained on all.
Are you guys getting this? I don’t promote anything unless I’m eyeball deep and drinking the Kool-Aid. She is on my show because the relationship we developed while we were at BA is extremely target-rich information. That’s why I’m telling you to take notes or come back while you can because this is so important to set these up and make sure that you have your people, product, and process in play. It’s only the first three. Thank you, Michelle. We’re only halfway there, but you’re outlining the things that we need to do and make sure that we’ve got this dialed in.
Thank you. The fourth P is the highest value driver. Most businesses are evaluated on either a small percentage of revenues, but most businesses are evaluated on a multiple of EBITDA. EBITDA is Earnings Before Interest, Taxes, Depreciation, and Amortization. Companies under $1 million in EBITDA are typically under five multiple. Companies over $1 million in EBITDA are over a five multiple. When you start building this fourth P, which is Proprietary assets, that’s when I can take your company to 6, 7, 8, 9, even 10 multiple.
Proprietary is a number one value driver. There are six pillars to Proprietary. I’ll go through all six quickly. Most importantly in proprietary is branding. The more well-branded you are and the more well-branded your business is, the more I can sell your company for as long as your brand is relevant in the minds of the consumers. Does anybody want to pay any money for blockbuster? No. Your brand has to be relevant. Trademarks are another thing that the buyers will pay money for. Trademark your company name, slogans, and logos. I’m trademarked Exit Rich. Your podcast name should be trademarked.Trademarks are another thing that buyers will pay money for. Click To Tweet
Here’s a mistake that business owners make. They go in and start up a business in Texas, California, New York, or wherever and they get a state trademark but they never checked the federal database to make sure that name is available. I’ve seen it happen time and time again with business owners operating for several years. I receive a cease and desist letter because somebody else has that company. It has a federal trademark on your name.
You want to make sure you spend $1,500 or $2,000 and protect those trademarks. We’re selling a company in the $50 million to $60 million range and have a lot of products, and our products are at retail grocery stores. They have trademark products and somebody’s grocery stores have exclusivity on that trademark product. Trademark is extremely valuable. Patents are valuable. If you have anything you’ve invented, make sure you have a patent on it. Do you ever watch Shark Tank?
All investors ask the same question. “Do you have a patent on that? Do you have a utility patent?” Get patents. We went to a soda company that wasn’t making that much money, but they had eighteen patents and we sold it for $18 million. $1 million a patent.
This is valuable. All of you aren’t real estate investors. We have entrepreneurs but some of you have a hobby on the side of your hobby of flipping houses. Whatever it is, make sure you are documenting everything and getting the patents, copyrights, and trademarks necessary to claim ownership because they are insanely valuable.
Contracts are extremely valuable. Manufacturing contracts, distribution contracts, vendor contracts, franchisor contracts that have franchisees, and anything that has exclusivity. The most valuable contracts of all are client contracts because buyers want to buy businesses that are making money. They want to buy businesses that have cashflow coming in. Contracts are huge. We talked to an HVAC company that we’re selling and they have 350 commercial contracts and 800 residential contracts or something like that.
They’re buying revenue stream.
If you can figure out a way to have reoccurring revenue in your business, and this HVAC company does because they have maintenance agreements and/or subscription models, that’s extremely valuable. There are five different types of buyers. Strategics and competitors will pay a lot of money for these proprietary assets that we’re talking about. Here’s a caveat with contracts that you must know. I’ve never met a business owner that has this in their contract and I’ve been doing this for many years. You have to have the transferability clause in your contract that this contract is transferable to the new entity.You have to have the transferability clause in your contract. Click To Tweet
99.9% of all sales or asset sells and if your contracts won’t transfer and we can’t get the clients to agree to a sense of transfer, then the deal could fall apart. Why not be proactive and put this language in your contract from the beginning? Databases are huge. Databases are usually overlooked because most advisors don’t know how to value them. You have to look at your database and ask, “How many clients do you have in there? Can it be retargeted? Can it be repurposed?” Facebook pays $19 billion for WhatsApp. Guess how much money WhatsApp was making? They’re hemorrhaging money, but they had a synergy.
They had the install base.
They had a billion users and Facebook knew that they could monetize online that. Yes, even as important, but it’s also about the synergies because if you can build these synergies, even if you don’t have high EBITDA, we can get you millions for your company by identifying these synergies and bringing the right buyers that are willing to outbid everybody else and pay for them.
This is genius. I’ve already been sitting at the feet of the master for a while. We met in Q4. You didn’t say that Q4, so I just have four more months of clients without transferability clauses in their agreements. If you’re a construction company, gym owner, or whoever you are, make sure that your contracts can be transferred because that way, that is a highly leverageable and movable asset.
Do you know how many franchisors do not have the transferability clause in their franchise agreements? I once witnessed a transaction. I was not the broker and I was not the advisor on this transaction, but there was a franchisor that had a couple of thousand franchisees. They sold to a private equity group for millions. The private equity group hired a legal team to do the due diligence. Nobody checked the contracts or transferability. They had a big hoopla party to introduce themselves to all the franchisees. Franchisees didn’t like them, so they didn’t transfer. Only two people out of thousands transferred over and it ended up falling bankruptcy. They end up suing a legal team. It was a mess. Transferability is huge.
The last thing I want to talk to you quickly about in proprietary is what I call IP real estate. IP real estate is this intangible stuff that you can get to build the value of your company. Number one is celebrity endorsements. If you have a skincare line and you’re on Oprah’s favorite things or Oprah Winfrey has endorsed you, strategics and competitors will pay a tremendous amount of money for celebrity endorsements because they want to get their products in front of Oprah. If you are one of the big radio shows and you have a diet company, they’re only going to promote one diet company.
That’s prime real estate that’s hard to get on TV and some commercial space, especially on the radio. For all my eCommerce clients, positioning as everything. When you can get number one on Wayfair or in the top three spots of Wayfair, Etsy, or Amazon for your particular niche product, that is gold. Competitors and strategics are paying for these synergies. Build your synergies and you will build your value.
I don’t care if anybody else reads this episode. I’m all in. This is you and me, Michelle. We have 70,000 downloads, and I don’t care if it’s full. Michelle, this is awesome. I love what you’re saying.
Thank you. Patrons is number five. This is your client base. I will tell you that most businesses follow the 80/20 rule. 80% of the revenue comes from 20% of their clients. Most business owners have customer concentration. Customer concentration is the kiss of death. We’re once selling a media advertising business that was in a $10 million range and they had talented media people. They service casinos, so they only have five players because they have five of the largest casinos. Here’s the problem. They lost 2 of the 5 casinos when we’re trying to sell them, which cut overhead in half.
Customer concentration is a big problem. That doesn’t mean we can’t sell the business with customer concentration. What it means is we have to search for that needle in the haystack and find the right buyer. We sold a manufacturing business that had a couple of patents. We appraised in the $9.8 million range and had light at $2 million in EBITDA. We have 550 buyers in this business and we had 12 LOIs. The owner had an issue because the owner had customer concentration as 65% of their revenues are tied up in the BP contracts. That scare most of my buyers.
I found that one needle in that haystack and that buyer was a strategic that has some more products and services. He loves the fact that this owner had customer concentration because he’d been trying to get in front of BP for years with their own products and services. They wanted to outbid everybody else. For a business that was appraised for $9.8 million, they paid $15 million for 70% of the company, which is 126% more than what the value was.
You found, as you say, the needle in the haystack, the perfect marriage of the buyer who wanted access to BP.
That’s what valuations are about. People ask me all the time, “Michelle, how do you evaluate a business?” Valuations aren’t more than a science, but the key to valuations is identifying the synergies that business has and identifying the buyers who are willing to pay top dollar for those synergies because it puts their business to the next level. Looking at that buyer and their business and seeing how they can take advantage of economy of scales and maybe even cut cost because they might not need that distribution center because they have distribution all over the country. They can double the EBITDA from day one and close it on the business. Value is what a buyer is willing to pay for what it means to that buyer.
We’re not calling them customers. They’re patrons. Raving fans to use somebody else’s language. Somebody who buys almost everything you offer. They’re like, “I know this is good. I want it.”
The last P is the most important P for all entrepreneurs and why we’re in this is profits. The reason I put profits last is because lack of profits is never the problem. They’re always a symptom of not operating on one of the other five P’s. Clients come to me all the time and say, “Michelle, I have a profit problem.” I’m like, “No, you have a people problem. You have a process problem.”
This is intuitive. I totally get this.
Those are your 6 P’s. I is the infrastructure. You build your business on a simple structure then you will build a sustainable, scalable business that when you’re ready, will be sellable. I will tell you most businesses never run on all 6 P’s, even businesses that were selling in the $50 million to $60 million range. I have one business that doesn’t even have all the policy and procedure manuals together and financials together. Financials are a disaster.
This is brilliant because I totally get what you’re saying about profits being a function of success in all the other five. Nobody is not profitable. They’re a socket of one or more of the other five P’s.
Most business owners only run on 2 or 3 of the 6 P’s. Most of them don’t have the right people in the right place. They don’t have the people in the who position so they’re doing everything, but that’s it. Profits is never the problem, it’s always a symptom. If you’re not profitable, you have to go back to 1 of these 5 P’s.Profits are never the problem. It's always a symptom. Click To Tweet
I feel like Colbert Report. Remember when it’s like, “This is the book. That’s the woman. Make sure you get yourself.” No joke. This has been a revelation and I’ve heard your presentations. As I thumb through this book, this is all laid out. It’s on deck. I’m finishing one book and I am all over this because I want to do it right because whether or not I exit, I want my company to be valuable.
You want it to be profitable.
I like asking this to all my guests. If there was one thing that you could tell someone who was making the leap from W-2, and I don’t care if they’re 19 or they’re 90, into becoming an entrepreneur, what is the core thing they always need to remember to be successful?
Other than reading Exit Rich?
It’s after reading Exit Rich.
There are many things, but I would say the number one thing is getting an expert, get a mentor, get somebody who’s been down that road, the same road you’re trying to travel. Get that person because they will shorten your learning curve dramatically. Why not learn from somebody else’s mistake? Somebody else has already been there.
We’re going to do a book club, and we’re going to start reading on Zoom together so we can talk about this stuff. How do they get a copy of Exit Rich besides googling Exit Rich?
I’m going to tell you exactly how to get a copy of Exit Rich. I do want to tell you a couple of things about Exit Rich if that’s okay. Sharon Lechter is my co-author so it’s important to mention her. Sharon Lechter was the co-author with Robert Kiyosaki in Rich Dad Poor Dad. She is a New York Times bestselling author five times. She also has written several books like Think and Grow Rich by Napoleon Hill Foundation. Plus, she’s a CPA. She’s a financial literacy expert and she’s been an advisor to many different presidents. Sharon Lechter writes and mentors corner after every one of my chapters and her husband as an intellectual property attorney.
This book has been endorsed by Steve Forbes. Kevin Harrington, the original shark on Shark Tank wrote the foreword, plus has been endorsed by Jack Canfield, Brian Tracy, Tom Hopkins, Les Brown, etc. I just wanted to mention that. We are in the middle of pre-sells, so you can buy the book on Amazon. However, I encourage you to buy the book at ExitRichBook.com because the book is less expensive there for $24.79. We will also email you the digital download immediately so you can start reading it. When the book launches in June of 2021, you have 1 of 3 event copies.
No joke. I’ve got one of the few. She was at BA. I don’t even remember how I got it. I just raised my hand and said, “Michelle, I need this book.” She had compassion on me seeing that I’m going to be a $500 million company in the next five years. She’s like, “You. I’ll give it to you.”
Go to ExitRichBook.com for $24.79. We’ll email you a digital download. We’ll send a hardcopy to your doorstep when it comes out, but this is what’s also so valuable. You will get a lifetime membership at Exit Rich book club where there’s lots of video content about me talking about all these different strategies and techniques. Even more important than that, all the documents you need to run your business and sell your business are in the Exit Rich book club.
Am I part of that or I need to buy another book?
You bought a book, so you’re in. These documents, employee handbooks, organizational charts, if you want to sell your business, sample letter of intent, sample purchase agreements, sample due diligence requests, and purchase agreements are all there not only for your review but also for your download. If you went to an attorney to recreate all these documents, it will cost you over $25,000.
Get this done. That’s ExitRichBook.com.
Guess what else you get? You get a 30-day membership in Club CEOs, which is a mastermind that I started of like-minded entrepreneurs where we do the hot seats and Q&A’s and help entrepreneurs survive and thrive so they too can exit rich.
Thank you, Michelle, for being here. This is genius, especially for me. This was a massive win for my tribe and for me, personally. If someone is looking to sell a business, do you do business valuations?
We’ve done thousands of valuations.
That’s the level I’m looking at. Is there an email where we send something and say, “I want to talk to you about business valuations?”
My main website is SeilerTucker.com. Also, you can text Michelle at (888) 526-5750. All my websites, all my social media, and everything will pop up there. My number is (504) 525-1717 in my office. Give us a call. This is the only show I’ve ever given my phone number.
Thank you for that. Do you do valuations with a checklist?
Is there a before and after? “This is what you are now. Do these things and this is what you likely to be then.”
I call it the annual valuation checkup. One of the things I talk about is the GPS EXIT Model. I take my clients through what I call a GPS EXIT Model because most business owners fail the plan. They don’t plan the failure. They never think about their exit, so they have to do a catastrophic event. I’ll run you through the GPS EXIT Model. Everyone who starts a business or buys a business needs to have a plan. When you want to drive somewhere, you take out your phone, go to Google Maps, and what’s the first thing you plug in?
Address. Your destination.
Business owners need a destination to drive their business to. Otherwise, they’re driving around.
That can’t be. That’s too easy.
You need a destination. Otherwise, business owners are just driving around in circles, driving up and down the financial hills to wind up nowhere. You need to figure out your destination, endgame, and desire sells price. Pick a number. Let’s say you want to sell for $20 million. Maybe you hit it or maybe you don’t, but let’s have a target. What does the GPS EXIT Model need to know? It needs to know where you’re starting from. It needs to know your current evaluation.
Here’s the deal, Merrill. This is what shocks me. We humans will go and get a physical checkup to make sure our health is in good condition. We drive our cars into the shop to get an annual checkup, tune-up to make sure our cars get serviced. Business owners never ever get a valuation and they don’t get a valuation checkup. I met with a business owner. He has been in business for 50 years and has never had his company evaluated. That is shocking to me.
Your business is your most valuable asset. We have to change the mindset of business owners, stop treating your business like your baby, and start treating it like the asset that it is. Get that valuation checkup every single year because there are events that happen that can increase your valuation. There are events that happen that can decrease your evaluation. We do annual valuation checkups for our clients. Let’s say you want to sell for $20 million and you’re currently worth $5 million. Now we have a start of a plan.We have to change the mindset of business owners, stop treating our businesses like our babies and start treating them like the asset that it is, and get that valuation checkup every year because there are events that can increase your valuation. Click To Tweet
The next thing you need to know is the timeframe. When do I want to sell my business for $20 million? Let’s say fifteen years, so now you have a plan. “$20 million is my desired sales price and I’m worth $5 million now. I want to sell in fifteen years.” Now you need to know who’s your buyers going to be. Buyers, not buyer. If you have one buyer, you will never get massive value. You will never get the biggest value for your business. I want auctions and bidding wars. I want to create scarcity. I want some competition.
Who are your buyers going to be? There are five different types of buyers. Let me tell you who your buyers are not going to be. It’s not going to be a first-time buyer because they don’t buy $20 million companies and 90% of buyers are first-time buyers. It’s not going to be a turnaround specialist because they buy distressed assets. It’s probably going to be a private equity group, a strategic/competitor, or a serial entrepreneur then you need to know, “What’s the financial requirements to sell my business for $20 million? What are the gross revenues have to be? Profit margins? Where does the EBITDA have to be to sell for $20 million?”
Your EBITDA is going to have to be between $3 million to $5 million depending upon your synergies and then you need to find out, “The buyers that buy $20 million companies, what synergies are they looking for?” That’s how you build a business on the 6 P’s to suit their criteria. The last step in the GPS EXIT Model is why? Why do you want to sell your business for $20 million? If you don’t have a strong enough why, you’ll never have stickability. You’re not motivated. If it was easy to sell a business for $20 million, everyone would be doing it.
“Why am I working this hard to do this thing?”
You got to have a powerful why that keeps you motivated, hungry, in the game, and weathering the financial storms. Your why is your everything and if you’re not hungry enough, you’re not going to do it, so get hungry.
Michelle, this is amazing. Thank you for pixie dust on my tribe to give us a perspective that there is a game plan and there is a way. By purchasing the book, I love that we can get access to the planning, tools, paperwork, and assessment. Thank you.
Everything is at your fingertips.
This has been brilliant. This was amazing. I love the quality. I go back to BA because I’ve never been a joiner, but I was introduced.
He’s a friend of both of ours, Tracy.
If this were multi-level, Michelle would be in my upline for bringing us into BA. She brought in Tracy Hazzard, who produces all of our shows. I’m her grandbaby when it came to owning the value of your business is contributed by increasing the value of your own personal value. I’ve learned so much from my association there. I have insanely soul-rich coaches. This is who I get to hang out with one week per quarter and this is why I’m doing better at serving you and our tribe. Protecting you from the predatory lending that goes on out there and from the ignorance that is replete everywhere through our financial markets. It is my pleasure to have had you Michelle, here with us. Thank you, Michelle, for absolutely everything that you have shared with my tribe. We are all exiting richer as a result of it. Thank you.
Welcome, Merrill. Thank you for having me. It’s been an absolute pleasure. I’m looking forward to seeing you at BA.
Tribe, this is Merrill Chandler, your host of the Get Fundable Podcast. Thank you for joining me. I know you guys binge like mad people, so keep coming back for more because we will continue to knock it out of the park. You have a blessed morning, afternoon, or evening. However, it is that you’re reading this, you be well and take care.
- Michelle Seiler-Tucker
- Exit Rich
- Sell Your Business for More Than It’s Worth
- 6 P’s
- GPS EXIT Model
- Board of Advisors
- Rich Dad Poor Dad
- Think and Grow Rich
- Club CEOs
- Tracy Hazzard
Love the show? Subscribe, rate, review, and share! https://www.seilertucker.com/podcast