FYE 8 | Exit Strategy

 

Whatever industry you’re working in, as a business owner, you have to have an acute awareness of every step you’re going to take next, but most especially your exit strategy. Your exit strategy has to be ready even before the business peaks so that when the going gets good, you can maximize what you’re going to get out of it. Michelle Seiler Tucker is joined by Robert Ramey, the CEO of Scanscapes Technologies LLC. Together, Robert and Michelle talk about when and how a business owner should determine their exit strategy. With the way the business landscape is changing today, you always have to be ready, so let Robert and Michelle share with you what they know from their own experiences!

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Planning For The Big Exit With Robert Ramey

I’m excited to have my very good friend, Robert Ramey, on the show. He is quite an entrepreneur who has owned six different businesses. He has sold one business through us. He owns a few businesses right now. We’re excited, Robert, to have you on the show. We want to hear about the latest and greatest of what you’re doing. Tell us a little bit about yourself and how did you become an entrepreneur.

First of all, you’re one of my favorite people in the world, and not just because you sold my business for more than it was worth, but we stayed friends. All the years have gone by and here we are, trying to line up something else. I’m Robert Ramey. I live in New Orleans and my business is located in New Orleans. Even though we’re all working from home, we continue to do things that can be expanded. Although we may have to change some of those things, the online element of what we’re doing is going well. Having said that, I’ve owned personalized product companies. I own a magazine company and we have since started an augmented reality company and a technology company that we’re very excited about.

Let’s talk about the company that you own that we sold because that was one of your biggest companies. We don’t have to get into the nuts and bolts of it and disclose any names or anything, but it was a personalized business where you had 3,000 distributors throughout the United States if I remember correctly.

We’ve done well in the consumer-facing type products. We do services well in the magazine as an advertising vehicle. That particular company was in the right place at the right time because it was a personalized product and anything personalized is always going to do well. In the late ‘90s, when we started that, we decided to do the traditional advertising, wait for the feedback and leads to come in, follow up on the leads and then obtain distributors a deck at that time was home-based distributors. It was exactly the right products at the right time. When we decided to sell that, it wasn’t in the plans to do that, but it happened that you fell onto our lap and the rest is history.

You never planned to sell the business at that time, but when my company contacted you, you thought, “Why not?”

I think that any business owner thinks, in the back of their mind, sooner or later they will sell it. I’m not sure the exit strategy is a target date, as much as it is. You know you’re going to do it. You should know when the time is right and when the time is right. Usually, it is not when it’s broken or needs to be fixed, which is what the mistake people make. They wait until it’s going down. When you feel that the time is right, when you’re ready to move on to the next challenge, when it’s peaked, when it’s worth the most it can possibly be worth, then you start at least exploring those options. If somebody is in the right neighborhood that does that for a living as you did, then you at least have to explore it. In our case, we got lucky.

I think you did get lucky and you have a great M&A advisor. The reason for that is because 8 out of 10 businesses do not sell. When we started the company in 2006, the landscape has changed dramatically back then. It was typically 80% to 95% of businesses for the first five years would go out of business. When I wrote Exit Rich in 2019, and I did that research over that landscape has changed dramatically. Now it’s not 85% or 95% of businesses go out of business. It’s only 30% of businesses will go out of business in those first five years. Out of 27 million businesses, 70% of business owners will go out of business after being in business for ten years.

It’s changed dramatically and that has a lot to do with Amazon. It has a lot to do with that business owners don’t innovate. They stop innovating and marketing. One of your core competencies, in my opinion, has always been innovating and marketing. You’re good at innovating. You’re good at finding out what the market needs, what clients need, what their number one problem is, and then becoming a solutions expert. You’re great at marketing. You did get lucky because the biggest mistake that business owners make is they don’t plan their exit. They don’t think about selling until they have to because they’re burned out or a catastrophic event has occurred internal or external like COVID, a hurricane or something like that. We sold your business right after Hurricane Katrina.

I think it was 2006 or 2007. It took about a year to go through the buyers and the people falling off and couldn’t get the financing

Sellers have struggled with selling their business because it’s their baby. They grew it up from nothing from the incubator stage. You didn’t buy it. A lot of business owners will buy the business, but you start it from the ground up and it was your baby. You’re the proud father of beautiful twins who are successful, but that was your baby. Walk us through the emotional rollercoaster that sellers go through when they’re selling their business and how you were able to move forward and close on the sale of your business.

Like any other possession or asset, you put that much work into something and that much of your time and blood, sweat, and tears and to let that go even for any price has a psychological effect. You have to disconnect yourself from that and look at what’s good for yourself, your business or your family. What’s the smart business move to do and then move on from there? In this case, it was the right time and you have to let those things go. If you have a good representative, like you were, you were able to hold my hand through that, deal with the anxiety, the second thoughts, and the Monday morning quarterbacking and all that. You then had the buyers and the negotiation. It’s a whole another level of frustration. You had to keep them calm. I know you’ve done that many times, but I’m sure you haven’t met too many as crazy as I was.

No. Believe it or not, you’re pretty sane. I’m a lot crazier. It is an emotional rollercoaster on the sell-side because of the seller’s remorse, but it’s also an emotional roller coaster on the buyer side because of the buyer’s remorse.

I’m sure on their side, they’re wondering, “Why do they want to sell their business? What’s wrong with it?” They’re always looking for that red flag or that shoe to drop. They’re going to an a-ha moment where, “This is why he’s selling on it because of this or that.” I’m sure it’s the same.

That’s a good point that you made because that’s usually the buyer’s number one question is, “If the business is good, why are you selling right?” That’s why I always say that when we put together the paper, the perspective’s on seller’s businesses. We want to identify the good, the bad, and the ugly. If there’s anything in the closet, we want to get that out front and center so it’s not a surprise later. You don’t have any ugly things. You didn’t have anything in the closet. Your business was pretty good.

The question is, “Is the business only as good as the business owner?” He was going to get past that first. It can be replicated or duplicated or you can have employees do whatever the owner was doing. We got passed every test and then it was transparency after that. The numbers didn’t lie. In the end, it was what we said it was, and they were willing to pay the fair price for that.

What was great about your business is it was a small business. It was a family business, you and your wife, and you have some employees. With your business, it was quite different than most businesses as to where the buyers have located your company to a whole another state. Sometimes it happens, but not very often. They kept your general manager and relocated her to that state.

I wanted to do that. I was loyal to the one buyer that we had. It was going to break the company apart and sell it in pieces, whatever they call those kinds of buyers. We didn’t want that. We want to be able to see it kept intact. The business, the office manager was willing to relocate and she was a carbon copy of me at that point because I trained her so well. She would make the decisions I would make. They made the right decision by moving her, but having distributors in different states didn’t hurt that we didn’t have a business that was based in New Orleans with New Orleans clients that we had and people all of the country and several other countries.

That was crucial because you went through Hurricane Katrina. I went through Hurricane Katrina and about 95% of my clients were underwater. You are one of my saving graces. What was good about your company is you have 3,000 distributors across the country. That’s why I always tell my clients is you need to diversify. Don’t put all your eggs in one basket. Don’t have clients in one state. Diversify and only have clients in different locations, but also have additional revenue streams because if one revenue stream dies, you have other revenue streams that you still do. Even at that time, you had other businesses and you still do, which is good.

You have to have different revenue streams in case one distribution channel dries up or one product dries up. In my case, I always liked to have juggling two companies at the same time. It’s built that way, but it’s not for everybody. I can tell you that. Maybe one at a time is a better approach, but you’re certainly right about not putting all your eggs in one basket or even one market if you have a business that can do that.

I don’t think so much to have multiple companies as I do or you do because I have multiple companies. If you have a company that has multiple congruent revenue streams, that way, if one product dies, then you have another product that you can take advantage of. That’s the biggest mistake that owners make is they don’t innovate and they don’t market.

A perfect example is my magazine company. We switched to a digital bundled approach years ago, where we have a website and we have enough impressions there. We can charge people to have banners and advertising on our website. We have an app for the magazine, which is localized. We have the social media side and email marketing side. We have maybe 6,000 or 7,000 emails in each market or maybe more. Having those revenue streams at a time like this when we couldn’t print for a couple of months, we’re going back to printing even a partial printing. If we hadn’t had that digital side to fall back on and the rate card would have been dead. We were able to fall back on that and keep our advertisers calm and let them know that we’re going to communicate our reopening plan. We’re going to keep your name out there. We’re going to help you through that process. The same thing with the community, we were able to mail some magazines and do some different things creatively with the print side and also use that print to get people to the digital side.

You had to pivot quickly. I call it the 6 Ps. In my book, Exit Rich, it’s all about the 6 Ps. The 6 Ps are People. Do you have enough people in your business? Do you have the right people? Do you have a management team? Product. Is your product thriving or is it product dying? Processes. Are your processes efficient? Productive. Is it well-documented or is everybody trained on it? Does it make you money or is it losing you money? Proprietary is number four. Are you well branded? The Coca-Cola brand alone is worth $79 billion. That’s just a brand. It’s not assets, inventory, real estate or anything else. Do you have patents in place? Do you have transferable contracts? Do you have databases? The fifth P is Patriots and then the six P is Profits. My seventh P is Pivot. You named a bunch of revenue streams. How many revenue streams do you have?

The ones I mentioned, but we bundled it in. We do have a la carte stuff, but if somebody buys a print ad, they pretty much figured some exposure in those other distribution channels. We certainly have customers who only pay for the digital side and we’ve been doing that transition for a while, knowing that the print has gone down. Everybody’s got a computer in their pocket has for many years. The print models did not do that. We know what happened to those and it’s not an easy thing to do to get somebody from print to the digital side. Training even helps them learn how important that is. Even on social media where they don’t need this as much as they used to. We help with that.

In your company and selling your business, we bought you lots of buyers, but we bought you two offers. Do you remember that?

In the end, yes.

We buy you more than two offers. In the end, we bought you two offers. One was with another broker out of state and then one was with me. What did I tell you?

“30% of companies will go out of business within their first five years.”

Go with the one you’re most comfortable with.

Not the one that will make the most offer, but the one you’re most comfortable with.

We even walked away from the first offer. When you said that, that meant a lot because it was such an emotional attachment and I didn’t want to let it go to just anybody. You will lose a big commission if we didn’t make that sale and when I decided not to pull that trigger on that day with that buyer, you didn’t flinch. You were there supporting me, “We’re going to get through it. We’re going to go to the next guy. We’re going to find a new buyer. If you’re not comfortable, we’ll walk away.” I respected that.

In the end, it’s not about selling their business and making a commission. It’s about making the right fit because the most important thing to sell is they want to cash out. They like to exit rich. They like to sell their business for more is worth, but most importantly, they want to leave their legacy. They want to transfer their legacy in good hands. They want to make sure their customers are taken care of, their employees are taken care of, and that the legacy continues to grow.

For you, understanding that any business owner that we’re customers, not one time, but for a lifetime. Going the business for somebody, who’s probably going to start another business and sell it down the road and here we are, all these years later, still talking about it.

There are entrepreneurs and there are serial entrepreneurs. A lot of people ask me, “Michelle, why do businesses sell? Why don’t we want to sell?” Number one is retirement. There are 30.2 million businesses out there and 99% of them are small business owners. We have creators like you who want to go out and create their next masterpiece. They want to do something different because they get that seven-year itch. Why don’t we talk about what’s next for Robert Rameyand what you’re working on and your future?

The entrepreneur always wants to create something new. You can’t be unwilling to take a risk, even if it’s a small risk. The brand building, I do love that part as much as it can be infuriating to be thinking about the next thing before you’ve finished the first thing. You always got to be willing to take those risks, go with your heart, go with the things you believe in, follow your dream, and all those things that we would recommend anybody that was thinking of starting their own business. Also, understand that the failures are going to come and there’s nothing easy about it. The challenges and the adversities there, and you got to be willing to put the fires out. I have a thing where I’m going to put on all my fires by noon and the afternoon is reserved for profit. That’s my thing is I’m going to put all the fires by noon and then the afternoons for fun, profit, and creating.

That is so true because the problem is I call most entrepreneurs firefighters. They’re putting out fires all day long, but that’s a great tip. Put out all your fires before noon and then focus on creativity afterward. How long have you been doing that?

Forever. Some days you wake up and there are more fires than you want. Sometimes it takes past noon and then you get the ones that come up in the afternoon, but that’s the whole thing. You have to understand that that’s going to happen and you’re going to have challenges. That’s the nature of owning a business. You’re not punching it, you’re punching out. You’re not punching out 24/7, and you have to be that type of person, but the benefits and the payoff is good because you get to set your hours. I feel good about having achieved that.

I see this beautiful piece of artwork sitting behind you that is hanging up in my house from you and an art gallery. Why don’t you tell us about this business real quick?

We sold the other company, the personalized product company with you and then it was about shoring up the magazine and spending time rebranding that and create all the digital assets for the magazine company that would keep that fortune hopefully in the next ten years until we sell that. I don’t like having one company. We started Scanscapes Technologies. The primary technology is augmented reality. We look at what’s up and coming with the next evolution of tech is going to be and what are the consumers and businesses are going to be using as years go by. This is the technology we decided upon, you have virtual reality. You understand virtual realities where you wear the headset and you bump into the furniture.

It’s cool and you’re completely immersed in a 3D world. It’s important nowadays and it’s doing extremely well. All the headsets, HTCs, Oculus, and all of those companies you hear about are selling out headsets like crazy. VR is prominent and doing well, not just in gaming, and it’s not going anywhere, especially in this climate where you have to be home, but all my realities where you can place digital things in the real world. You don’t have to have a headset on and you can use your device to scan things in your real world and see things on top of the real environment. That’s the technology. Everybody’s sort of heard Pokémon Go, but you also seem to know the places you don’t know it. It’s an upcoming technology that we got involved in. In Scanscapes, we have products division and a services division. The first product of Scanscapes was ARtscapes. This is what worked that comes alive when using our app on your device.

How is this working? Where are you selling it? Is it primarily in galleries? Tell me the usage of it.

The distribution plan for this is direct sales. The revenue streams would be direct sales of the art. We sell the order directly online and we ship that all over the world. It’s canvas art and art prints, which is MADEC product. We ship those all over the world. We sell those by advertising online. That’s direct sales. We also sell through galleries. They’re considered partners of ours. There are retail partners and then we have home-based partners similar to what we did in the personalized product company. We have a home-based partner division. We also have an affiliate division, which is caught on with Amazon people, affiliates networks, and marketers. They sit at home or wherever they are and all they do is promote other products and companies with affiliate links, and they make 10% 20%, 30% by sharing that link on their website or whatever their channel is. You have 4 or 5 revenue streams for this consumer-facing product and that’s the augmented reality side of the art world. It’s where the arts is heading, in our opinion.

Who creates the arts?

We license our art from artists all around the world. We do have some local artists as well. It takes maybe 5 or 6 other people that are also artists and programmers and augmented reality people and add people to make each one of these animations work.

Are they creating that art for your company?

Yes, sometimes we’re licensing our work that they already have. It’s a variety of different relationships we have there.

How many different pieces of artwork do you have?

We have 300, but only 25 of those are created. It takes an army and a lot of work to animate each one of these. Maybe seven people worked on this one and took two months to make it good art. It has to be good and looks great on your wall like the one you have. From there, they’re able to scan that or bring that new life out of it, that new experience. Over time, we will add experiences so you buy it once, but it lives forever. Later on, we will add another experience. You might have 2, 3 or 4 different experiences for the same painting.

I did not know that. My painting that’s hanging in my house. You’re going to have multiple experiences for that? I bought an art gallery with you then.

With that point, you’ll be able to interact with that art with your finger. You will be able to change the art yourself, personalize it even. There are things coming with this technology that aren’t even possible yet, but eventually, it will be in our glasses. Apple will be coming out with a set of headsets. It looks very similar to the glasses you have that will do the same thing that your device does. That’s in the future.

That’s even better than holding up the device.

Ultimately, you’d want to have it on your face.

The app is free.

It is called ARtscapes and it is a free app.

“As a business owner, you don’t want to sell your business to just anybody.”

The revenue comes off of buying the art for you. How can this be expanded for you? How can this become bigger for you in addition to the art and the multiple experiences because you’re getting paid? You got one revenue stream off the art, is that correct?

We’ve been hired by different companies to do different things so we can create an art experience where somebody can walk through a gallery, scan different things on the wall, and see different animations and information about the artist or videos. There are different services that we’ve done for different types of businesses that are art-related. They go beyond us, direct sales, to consumers type thing or through our partners. There are other things we can do on the services side that we’ve done, not only with art, we’ve done sporting events, music festivals, scavenger hunts, things pop up in front of stages on music festivals, album covers, and magazine covers.

What can you do with that with my book, Exit Rich?

We can do a lot with that book. We can have the cover of your book and a nice video of you comes up. It does an intro to the book.

For the people who don’t know a lot about this, what can you make pop up like at a football game or at a concert or something like that? Give us a little bit more insight into that.

Augmented reality is already out there. It’s already in the sports world. The NFL spent probably millions of dollars doing an experience where you could see things in the stadium where you can take the app and scan it over the field. The stats of the players would come up hanging over the field like a scoreboard almost would in augmented reality. It’s not there, but on your phone, it’s like it is and sees the last play. You could see the stats of what’s happening in the game real-time, geo-locating things in the stadium as we did at the baseball tournament, where we could place things on the ground that could scan it. It was a scavenger hunt. We had arrows pointing down to different things, all hanging in the air, but on the digital side, on your device. Also, we can digitally map stadiums and digitally map locations so you have experience going in.

The person who wants to map that out, they could use this for an advertising campaign and all different kinds of promotional products and things like that. What about if I see something on TV and I go, “I like her outfit?” What’s augmented reality for that? I think that’s up and coming.

We have apps out there that you can try things on first before you buy. Amazon has augmented reality already and Google’s embraced that. You can certainly try on sunglasses. You can put a tattoo on your arm with augmented reality. There are all sorts of companies doing creative and innovative things with augmented reality.

What other sectors are you going to expand into?

They’ll be launching some gift products. We’re going to be launching a line of facemask soon that is art-related, but also that they are activated in Snapchat and Instagram, which is extremely popular. The number one revenue producer and the augmented reality is Snapchat. They have hundreds of millions of dollars in ad revenue as it relates to augmented reality already.

Can you create a face mask for me for Exit Rich? You can come up with something creative for me.

We’re only limited by above the imagination, the time, the skill and the budget. We’ve done all sorts of things for people who ask questions. They said, “I’m sure it’s a stupid question. I’m sure you can’t make my wedding come alive or my wedding invitation birds fly out of it.” We said, “We can do it. We’ve done some amazing things.”

You can make birds fly out of a wedding invitation?

We’ve had walls come upon a Greek City on the outside of a Greek invitation and birds and flowers are falling down on the invitation and the girls coming up.

How big is your team? I know you’re the creative genius behind the business.

That’s the good thing is that all you have to do is get people that are smarter than you. I have a lot of very smart people on the team around the world. We probably have 30 or 40 people working on and off around the world in places as far as Israel, Egypt, India, and Ukraine. We have people all over the place. We have local people staff here, but 30 or 40 people at any given time are working on various projects.

What’s your exit?

We are excited about building these new brands up because we are just beginning. We have other brands coming. The 5 to 7 years, usually, something that I look at when I probably I get bored with it and then it’ll probably peak at about that time.

Some entrepreneurs will grow a business and hold onto it for decades. They’re trying to pass it on to their children and the children don’t want their parents’ business anymore as they used to. They either pass it to their children who are still up, but then there are people like you and me who are true serial entrepreneurs who build a masterpiece, sell it, and build our next masterpiece. How many more masterpieces do you have in you?

You can always do one better. I probably wouldn’t know what to do with myself when you retire, you expire kind of thing.

What motivates you?

To achieve things and to do things that help. The face mask company, we are going to be given a mask away. Even though it may be short-term or it may not be, we want to make wearing a face mask socially acceptable, fun, entertaining, and engaging because we think that would help. If more people would wear a mask, that would probably help. This is my opinion, but we’re going to try that out for a while and we’re going to give some mask away. You always want to do something that could help.

I say that too. I started a nonprofit called Tucker Teen & Tots and the basis of it is to provide entrepreneurial skillsets, mentorships, job placement, partnership placement, even business ownership, because the more successful you are, the more you can give back. The more you can give back money and time. I’m starting that nonprofit. A percentage of all transactions that Seiler Tucker does will go to Tucker Teen & Tots. Everybody should give back to their community and either start a nonprofit or give back to nonprofit that you’re in love with that you feel is a great nonprofit. I do a lot of things with Frank Shankwitz who is a Founder of the Make-A-Wish Foundation. He’s going to be on finding his exit soon as well. I don’t know if you saw his movie, Wishman, but you should go watch that on Netflix. Robert, what were you like as a little boy?

I would say I was one of those inquisitive kids. I asked my mom, “How was I as a kid? Am I well-behaved?” She said, “No, you would always go to people’s houses and you would go take the pots and pans out of the cabs and stolen everywhere. Once they pick that up, that would be somewhere taken apart the doorknob or trying to take apart the TV.” It was always the next thing that inquisitive like, “How does that work?”

You are like Steve Wozniak, the Founder of Apple, because that’s what he used to do.

He’s smart. I’m just curious.

You are smart too.

“The nature of owning a business is such that you don’t have to punch in 24/7.”

I’m very curious about things. I was a bundle of energy and probably at 16 or 17 is when I knew I would be a business owner because the one job I did have, the boss asked me to wear his uniform sarcastically. He asked me, “If I got paid extra for advertising, so I might’ve lasted maybe one or two days after that.” I got fired. It was at that point, I knew that I had to find a way to feed myself and I couldn’t work for somebody else. I had to go find something to do. I started my first company at eighteen and never looked back.

I heard a lot of entrepreneurs tell me that they got fired over and over again. What else would you like to share with our readers that I haven’t asked?

I would like to say that I respect and I appreciate you for all you’ve done for me over the years as a friend. You did a wonderful job of selling my company. I wouldn’t be here if you didn’t. I would use you again and we will do something together. I don’t know what that is. I’m sure it’ll be selling the next company. When this one is formally. That’s pretty much all. We’re here and we’re trying to innovate. We’re trying to make new things with ARtscapes. If somebody wants to go the website, it is Artscapes.co. They’ll see the line of artwork there. If they want to go to Scanscapes.com or contact information there, we can do anything with the documentary that your business might need. There’s no limit to the things and exhibits we can do and the ways we can help companies innovate.

Can you do a quick demonstration for our readers?

I’ll try it out. Go to the app, that’s ARtscapes. You’ll see scans there and places. This is part of where you can go view different events that we’ve done and different places of business to carry our products. Eventually, we’ll be able to tour museums and galleries right there. We then go to scan. This is where you would scan the printed piece in this case, this artwork.

Thank you to all of our readers for joining us on the show. Thank you so much, Robert Ramey, for joining us again. If you want to find Robert Ramey go to ARtscapes.co. It was wonderful having you, Robert. Follow your words of wisdom.

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