Leveling Up with a Peer Advisory Group

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One thing all business owners can use is a forum to solve problems or think strategically. In the early years of building a business there’s more of a focus on building the business and getting to sustainable growth. That experience prepares you for the next level, and that’s where peer advisory groups can be a real help.

Not Really Networking

Networking is important and all business owners should engage with it in some way. This could be joining a local Chamber of Commerce and helping with committee work there, or joining a BNI or ACA. The connections you make here will often be helpful and some of those connections may also introduce you to how peer advisory groups (they can also be called advisory boards) work.

Collective Experience Wins

There are so many ways an advisory board can help a business owner. Here are a few examples we can share:

  • An employee has been found to have stolen $20,000. The business owner had never been in such a situation before and was furious and wanted to withhold the final paycheck. A lawyer in the group reminded him that there wasn’t a legal method by which he could withhold that final paycheck and that if he did want to get that money, he would have to go through a legal process which in the end might not be worth the time or money. Other members chimed in to suggest that maybe another team member, not so emotionally tied to the situation, handle the firing, along with another witness, so that everything could be documented.
  • An owner was unsure about his pricing strategy. He had originally presented the business as a “more for less” proposition, but he realized that wasn’t bringing in enough revenue even though his customers were raving fans. One of the group suggested a price increase and gave metrics for how we could know that the price was right. He kept bringing the increases back to the board and over a period of a year he increased prices 300% until they were finally at around the correct price.
  • A business owner was unclear about what new marketing strategies he could try and whether he needed to engage a firm. One of the firms he had spoken to had offered some interesting ideas, but the price point scared the owner. The conversation got to what the real issue was, which wasn’t really the price of hiring the firm, but about the medium and long-term future of the business. The owner had not admitted to himself that he was tired and wanted to sell the business, and so he didn’t necessarily have the stomach to start an entirely new type of marketing. This allowed the owner to speak with one of our advisors to start thinking through the process of listing the business for sale.

Business owners often have “no one to talk to” as they may not want to burden their spouse with operational issues or can’t talk about employee matters with employees. At base, a peer advisory group is a place where everyone knows what you’re going through, and often someone can offer helpful guidance. They are also in a position to hold you accountable, like if you say you’re going to fire someone and you come back the following month and you haven’t.

Some General Guidelines

You don’t only have to belong to one group. In a podcast episode on the subject, Jason Terry of Blue Gurus shared that he belonged to three, each offering different value.

  • Meet regularly, at least once a quarter, but perhaps once a month. Try to have a basic agenda for each meeting so that people can better prepare and not just be “surprised” by what they hear at meetings.
  • Try to be category exclusive. It’s hard to be vulnerable and share business challenges if you have a direct competitor in the room. This isn’t a policy of “exclusion,” it’s more about being practical about what can be shared if there’s a non-allied counterparty in the room.
  • Try to limit the number of people in the group. Some groups are as small as 5 and some as large as 15 but larger than 15 can make the format a bit unwieldy and not give everyone enough time to get help for their needs.
  • Have a designated facilitator. These people tend to nominate themselves (they are the people who throw dinner parties in our friend groups) or get nominated but they don’t necessarily have to carry the burden all the time. The position could be rotated annually.
  • Don’t set limits. This isn’t just a “business-only” setting. Your spouse may start to be unsupportive of the business and you want to know how to handle that. Or you may have just lost a parent and are worried it’s affecting how you’re running your business. Very often there will be someone in the group who has gone through a similar problem who can share strategies to help you.

Would you like to join a peer advisory group but don’t know where to start? We might have some leads for you. Give us a call.

Episode 165 – A changing business landscape

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Andy and Doug dive into the complexities of deal closings, discussing the dynamics and challenges that come with the territory. Listeners are taken through the journey of recent closings, including a rapid cash deal that concluded in under two weeks and the hurdles associated with a protracted six-month deal.

We explore the role of cash buyers in the current marketplace and the speed and efficiency they bring to transactions. Mainly, we delve into the shifting economic landscape and its influence on business sales, examining how tariffs and SBA loan changes are affecting buying and selling decisions.

With a reflective look at the past, including the 2009 financial crisis and the COVID-19 pandemic, Doug and Andy share insights into how businesses have adapted to challenging times. They also discuss current trends, such as the strong demand for business services and the evolving landscape concerning lending practices and governmental regulations.

Whether you’re a seasoned investor or new to the world of business transactions, this episode provides valuable insights and updates on the latest in deal-making and the business brokerage world.

Goldilocks Status: Getting Everything “Just Right” to Sell Your Business

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Goldilocks Status: Getting Everything "Just Right" to Sell Your Business

Photo by Ioana Motoc

When we check in with business owners who have short to medium-term plans to sell, we might get a variation of, “call me back in three months.” We’re always happy to do that, but what we hate to see is nothing being done in that interval, be it three, six, or even nine months before we talk again. There are three things you want to “get right” before listing your business, and you should always be working on at least one of them, if not all three.

The Business Has to be Ready

Can your business survive your being gone? Have you tested this out by taking extended vacations out of the area? Do you have SOPs written or Loom-recorded in every aspect of your business? What about key employees? Are you certain about their willingness to stay long-term, because you have taken the time to get to know them well enough? Are you certain they are attached to the business, not just to you as a person?

Note: If the answer to any of these questions is no, you’ve got work to do to turn all of them into Yeses. A no answer to any of these means your business is not yet ready for sale.

The Owner Has to be Ready

There are some questions we often ask business owners to find out if they are “ready” to sell:

  1. If you were to celebrate a big event, who would you invite? How many of those people are related to your business?
  2. What do you do for fun?
  3. What would you do if you sold this?

There are no “correct” answers to these questions, but blank stares, particularly on questions 2 and 3, are troubling.

The first question is there to help illustrate how much the business is tied up with someone’s life. It helps remind them that when a sale happens, many of these “friends” may disappear, not for any malicious reason, but primarily because the main reason for the friendship is tied to operating the business.

The second and third questions look beyond the sale: what will you do with your time?

Note: As with the first set of questions, there isn’t a right answer, but an inability to answer these questions indicates that someone is not yet ready to close this chapter of his/her life. That’s something each person is going to have to tackle on his/her own.

Proceeds Have to Fund What is Next

For our clients who have been working hard in an industry or business for 30-40-50 years, “what’s next” is pretty easy: retirement. For younger sellers, “next” could mean a new business venture or even a job. What these sellers have in common is the need to match the proceeds of the sale to that next step.

Too often sellers primarily focus on the sale price of the business, but that number is only helpful in knowing that you are definitely not going to get to keep that number. You can start with settling your business debts, then your attorneys and adviser commissions, and then Uncle Sam is waiting to take his cut. What about if you pledged seller financing? Carve that out for now…it may be 2-3-5 years before you get to collect that. Earnout? Same thing. What you’re left with after all these deductions is “walk away” money.

Will that “walk away” money fund what’s next for you? If you wait until closing to consult your accountant or financial advisor for the answer to the question, the answer may be very unpleasant. In fact, it’s the main answer you need when you’re starting the whole process of selling a business.

Note: It’s not the end of the world if your business can’t generate your necessary “walk away” number right now. It’s important that we find out what the gap is and how we can bridge it.

Want to get your business to Goldilocks status? Give us a call so we can help with that process starting today.

Episode 164 – Unlocking the Power of Client Success Stories with John Stevenson

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Andy and Doug are joined by special guest John Stevenson from Client Kudos. In this episode, John shares his journey from a high-stakes sales career to founding a company focused on helping businesses tell their client success stories effectively. With insights from his extensive experience, John discusses the critical role these narratives play in sales and marketing strategies across various industries.

John explains the importance of storytelling in making personal connections and gaining trust. He details how his company aids businesses in capturing and utilizing client stories for increased engagement and credibility.

Listeners interested in understanding the impact of third-party testimonials on decision-making and sales closure will gain valuable insights. Dive into this engaging discussion that uncovers strategies to attract, retain, and grow clients using powerful storytelling techniques.

Common Misperceptions in Business Sales

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Common Misperceptions in Business Sales

Photo By: Kaboompics.com

While we do sometimes deal with repeat buyers and sellers, most of our clients are either selling one business and will not sell another, or buying one business and will not buy another. That means we’re always revisiting common — and understandable — misconceptions from buyers and sellers. In this article, we’ll share some of the ones we hear most frequently.

Seller Side

“I heard I can get 2-3 times revenue for my business.”

We’re polite, so we don’t lead with, “Who told you that?” What we’re more likely to do is say that we have different valuation methods we can use to find out what your business is worth, but ultimately, the true decider is the marketplace, and we won’t know what it thinks until we list.

Answer: Your business is worth what the market is willing to pay.

“So, I can get all cash at closing, right?”

If you have a cash buyer, yes. However, many of our deals are done with the help of the SBA, and banks often ask for some kind of seller financing. Sometimes, you might have a portion of the sale subject to an earnout. Whatever the case may be, what’s more important is that you have a handle on the tax strategy you’re going to use for the liquidity event itself.

Answer: Possibly.

Buyer Side

“I’m going to have access to the seller for at least six months, right?”

Sellers are often out of the business within months, but in a few cases, a transition could stretch to a year or more. Buyers underestimate how much a company has been systematized and owner-proofed to be worth selling, so they often overestimate how much they need access to a seller post-sale.

Sometimes the seller becomes an employee of the buyer, working in some specialized part of the business, but this is rare.

Answer: You’re going to get him/her for at least 60 days, but you won’t need that access as much as you think you do.

“Do I need expertise in the industry?”

We’re never going to tell you that expertise is a bad thing. Sometimes a particular license or certification has to be obtained, which may require additional money or training. But often it’s not expertise in an industry that is required, but a passion to grow the business in general. Let’s be clear, if you don’t like being outdoors, buying a landscaping business is a bad idea. But don’t fall into the trap of needing to be “passionate” about the industry you’re buying into. What you’re looking for is an opportunity that’s exciting and fits your skills and situation.

Answer: No.

Both Buyers and Sellers

“So can we get this done in a couple of weeks?”

This is only slightly kidding. Let’s just say that buyers and sellers often have unreasonable expectations when it comes to how long it takes to close a deal. What we usually say around the office (because it’s true) is that an average deal can get done in three months from an accepted LOI,  start to finish.  We’ve seen deals close faster and sometimes take much longer. But what else is true is that there isn’t a shortage of qualified buyers. We have, thankfully, a ton of those here at Apex whose trust we have earned over the years. What we love, and what we’re always looking for, are qualified sellers. If you’re one of those, we’d love to look at your business and see if we can help.

Answer: Probably not.

What are some things you are thinking about that might be misperceptions? Give us a call so we can tell you.

Episode 163 – Navigating the Shift from Corporate to Entrepreneurial Buying

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Discover the differences between corporate-led acquisitions and buying a business on a personal level. Andy and Doug highlight the challenges faced by individuals used to having large teams and resources at their disposal as they venture into entrepreneurship. The conversation sheds light on the nuances of due diligence, asset versus stock purchases, and the critical mindset shift required to succeed in this new, competitive landscape.

Listeners will gain valuable insights into the strategic approach necessary for evaluating smaller acquisitions, the importance of adapting one’s expectations, and the reality of building a support network when corporate safety nets are absent. Whether you’re an experienced professional looking to own your venture or someone interested in the intricacies of business acquisition, this episode provides a roadmap to navigating the complexities of buying and running your own business.

Upgrade Your Marketing

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Upgrade Your Marketing

Photo by Merakist on Unsplash

We normally work with business owners over a 3-5 year window. During this time, we look at what their business is worth, suggest how to increase the value, and then take it to market when everything is ready. One of the easiest ways to increase the value of your business is to engage in marketing you may not have done before.

Word of Mouth Matters

We run into business owners of all ages from every type of industry who are very proud of the word-of-mouth marketing that they receive. Such marketing is very valuable not just to the seller but to the incoming buyer. But if it’s the only “marketing” you are doing, you are very likely leaving money on the table.

This is most often because marketing these days is moving close to the speed of technology. At that speed, it’s difficult to ask your internal team, who have other concerns, to research:

  • The latest changes in SEO (Google changes things regularly)
  • Optimizing Facebook ads (an art in itself)
  • SMS and cold email campaigns
  • Which emerging platforms might make sense for your business

We practice what we preach here at Apex and rather than hope for a marketing unicorn that does everything well, we work with EAG and we not too long ago welcomed Jeff Randolph on our podcast to offer some tips.

Level Up

“Not everyone can afford to hire a full-service agency for marketing, but everyone can afford some level of marketing…what makes sense for your business?” Jeff asks.

There really are so many ways of marketing that business owners are not aware of that might work really well for their businesses. Marketing agencies can highlight these possibilities and either push you in a direction to learn more about them or actually help you execute. Examples include:

  • Geotargeting: This uses location data to reach consumers at the time they are looking for a service/product you might offer. You’ve probably used this as a consumer but might not have thought about the value it could have for your own business. A subset of geotargeting would be users of any free wi-fi your customer-facing storefront might offer. Depending on the opt-in agreement you offer to those using that free wi-fi, you may have an ongoing opportunity to market to people who have already physically set foot in your space (and probably have done business with you).
  • Conversational marketing: We have talked about the value of chatbots before, and almost certainly you’ve been to a website where something pops up and asks, “Can I help you with anything today?” While AI may lead the way in starting the conversation, often at some point, that AI will hand you off to a human to close a sale. Have you implemented something like this that can turn someone who’s “just looking” into a customer today?
  • Local influencers: We all know about the famous influencers with millions of followers who charge a lot of money for sponsored posts. But did you know there are probably dozens of influencers in your area, with followings in the thousands or tens of thousands, who can move the needle for your business, and can do so often for a very reasonable price? Do you know where to find these people and how to reach out to them?
  • Storytelling: This is another topic we have spoken about in the past. Business owners who created their companies a couple of decades ago, or even just one decade ago, would have never imagined that there were potential customers who were interested in how the sausage was made. But things have evolved so much that videos of packing orders for clients are now part of advertising…and people buy from ads based on videos like this.

Those are just a few of the ideas that a marketing agency can open your business to executing. And the new customers and increased profitability that come with that? That goes straight into a narrative of a business on the grow, not on a plateau.

We’re happy to make an introduction to Jeff and others who can help you with your marketing and increase the value of your business prior to sale. Give us a call today.

Episode 162 – Corporate Governance with Matt Bock

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Matt Bock, an attorney specializing in mergers and acquisitions (M&A) and tax law from Swanson Bernard, joins us to talk about Corporate Governance.

Matt emphasizes the need for both buyers and sellers to be cautious and prepared, explaining how thorough corporate documentation can prevent deal delays or failures. He covers key topics such as ownership authorization, potential family business challenges, and common pitfalls like outdated or missing legal documents that can complicate or even derail a transaction.