Archive for category: Book Club

Ed Pendarvis founded Sunbelt Business Brokers in 1979 and grew it into a company with over 300 offices in the US and 30 offices in foreign countries. BizBuySell tapped Ed to write a book distilling some key ideas for buyers and sellers to consider in a transaction and that 100-page text is The BizBuySell Guide to Buying a Small Business. It’s available for $.99 in Kindle format, or you can get it for free if you’re willing to give some information to BizBuySell.

The book is chock-full of solid information for first-time buyers and sellers. Chapter titles include:

• Value Drivers of a Business
• How Much Can I Make?
• Financing, the Key to Success When Buying and Selling
• Due Diligence (Never Fun and Easy)

Three Key Ideas

As we said the book is only 100 pages so it’s an easy and worthwhile read. But we chose three ideas that you should take to heart right away.

Business Owners and Decisions

Early in the book Ed talks about business owners and how they make decisions. They have to make the best decision (which is sometimes a guess) based on the data available to them (which is sometimes incomplete or even nonexistent). Add common sense and your gut and you’ve got a complete decision.

If that is what the entirety of what decisions in your business life will look like, you should realize that this is already in effect when you are buying or selling a business. A transaction is never going to be a straightforward slam-dunk. Do what you can to mitigate risk, then make the best decision you can. Whatever challenges you face can be chalked up as tuition for continuing to build that business and what you can inform a future owner about.

The Basic Purpose of a Business

Ed is insistent that the basic purpose of a business is to make a living for the owner. If it is not consistently doing that, it’s failing as a business and if it’s failing in that purpose for long enough, it might be time to call it.

He also gives three years as a benchmark for survival. He says that a business is on the way to saleability if it’s lasted at least three years. There’s a certain momentum that comes with longevity. But remember that without systems in place, a business can’t sell.

Focus On What You Would Do

While buyers might be focused on what the seller has done in the past or is doing now, Ed encourages them to consider instead what they would do if they took over. If they take the time to think through ideas and possibilities for new products and services and/or revamping the company as it is now, you can solicit the current owner during the transaction to get his/her perspective.

Now keep in mind that if you want to add social media to the business and the previous owner doesn’t even know what social media is, he/she might not have too much to share. But perhaps you want to expand into a different market or cut a cost or even fire a vendor: the previous owner might have experience to share. 

Or the owner might tell you that those were things he/she would have loved to get to but never did and has some encouragement and contacts for you to leverage your ideas. Don’t count on having an unlimited open line to the seller forever. Utilize the period from the Offer to Purchase all the way to closing to get as much information from them as you can.

Apex is part of the legacy of Ed Pendarvis, so you can imagine we are fans of his ideas. If you have questions about parts of the book, we’d love to talk with you about them. Give us a call!

Let’s face it, a lot of business books are pretty boring and can be a lot shorter.  Part of why we have this book club series of articles is to steer you away from those (Good to Great, anyone?) and towards books that won’t feel like a college assignment and offer thoughtful reflections and sometimes, good advice.  The Barstool MBA: Why Running a Bar Beats Running to Business School is one of those books.  Co-authored by successful bar owner Dan Maccarone and best-selling author Bob Sullivan, this book is unconventional from the start: it’s only available in audio format.

A business-oriented title from the Audible Originals series, this 8.5 hour listen features both authors reading, as well as a “tip jar” section at the end of each chapter offering summary and a few “tips” to crystallize what you’ve just heard into ideas you might implement or try.

If you’ve ever worked in a bar, you’re going to enjoy some of the stories that are shared.  If you’ve never worked in a bar, you’re going to get a much better appreciation for all that goes into making your time at one enjoyable.

The book takes us from pre-opening, to opening, to closing and/or selling a bar.  While we follow one particular project of Maccarone’s, a NYC bar named Destination, the authors have correlating stories of other NYC bars to offer context to their lessons, as well as stories of other tech startups and exits to help you see the through line of their “earned at the bar” lessons running all the way to Silicon Valley.

So, here are a few bar snacks to get you interested in giving this book a listen:

Chapters 1 and 2 are very much about beginning with the end in mind.  While we may think of a bar as just a place to relax with some friends, the best ones are memorable to you, ones that you describe to others, as a place “you just have to go” to.  Those places have applied a forensic level of intentionality to what the bar will be and how customers will feel inside it, in other words, the customer journey.  This can include:

• What will happen on slow nights?  Will there be live music, games, food promotions?  Each of those possibilities brings a different kind of crowd that may or may not mesh with what the bar is and stands for.
• What sort of drinks are you serving?  If you’re trying to hawk independent beers, carrying any of the major brands can undermine your legitimacy.  If you’re serving high end cocktails, how competent are your bartenders with those drinks?  The bartenders themselves — are they the type that not only get you regulars but have those regulars tell their friends?

Chapters 5-15 are the heart of the book and discuss everything from employee theft (it happens very often) to “not drinking at your own bar” (which is less about getting drunk and more about remembering that you may not be your own customer) to getting one-star reviews (as we have said, how you respond is almost as important as what the original reviewer said).  A couple highlights include:

• Buyback analysis.  Regulars and good customers get “buybacks,” or free drinks or food at some point.  What you might not know is that this isn’t random.  A great example that is shared is of the customer who is, without fanfare, getting up and putting a jacket on, but suddenly finds a fresh drink or an unexpected snack delivered to them.  He/she shrugs his shoulders and, not in a rush, sits down to the buyback, which inevitably leads to another purchase of food or drink.  The best bartenders are always observing when a strategic buyback makes sense for someone they’ve never seen before, and the best bar owners make sure that there’s a coherent buyback policy for regulars that everyone is on the same page about.
• 86ing customers.  One of the great satisfactions of owning a business is being able to fire customers who are rude or who don’t seem to understand boundaries.  Alas, this is a regular occurrence at a place that serves alcohol.  The various situations the authors share only serve to underline the poisonous effect that bad customers can have not just on other customers, but on employee morale.  Traditional businesses can really learn something from bar owners here.

Chapters 16 and 17 deal with closing a bar, and as business brokers, we’re obviously interested in exits and how those come together.  You get insight into the end of the bar Destination, which you’ve followed throughout the book, but you also learn that business cycles and trends also affect the value and saleability of bars.  If you’re the last Irish pub for sale when Irish pubs are on a downtrend, unsurprisingly your valuation will be lower, even if your numbers are great.

We think you’ll enjoy this unconventional business book, and if you want a sneak preview via a short video of the authors, you can find one from Audible here.

Need other recommendations for books?  Check out our Book Club series.  Got one for us?  Give us a call and we might add it to this series.

Image Courtesy of Gary Vee IP, LLC

If you haven’t heard about Gary Vaynerchuk, here’s the short version: immigrant from Belarus who started in entrepreneurship while he was in grade school in lemonade stands and baseball cards and graduated to growing his family’s liquor store business from a 7 figure business to an 8 figure one by being one of the early YouTube personalities; Gary now runs a social media empire and has multiple business investments, including being one of the early investors in Twitter and Uber, with sizeable holdings in Facebook.  His (current) life aspiration is to own the New York Jets.

You could get all that information from reading this book, but you’re just as likely to have gotten it from all the social media platforms Gary and his team have a presence on.  Before he wrote Crushing It!, he wrote a book way back in 2009 called Crush It! which detailed exactly how to excel on social media and why it is so important in the first place.  Crushing It! is an updated form of that book packed with case studies of people who read the first book, applied what Gary taught, and built everything from fun side hustles to enormous businesses.

Social Media Bewilderment

A lot of our sellers here at Apex are a bit bewildered by social media.  We get it.  Many of our team of brokers came up in business when your Yellow Pages spend was always a big part of the marketing discussion.  Obviously times have changed but many people seem not to understand what social media can do for their businesses.

In this book, as he did in the first version of the book, Gary explains what social media is at a granular level.  Yes, there are cat videos and celebrity photos.  But there are also people asking, “who knows a good plumber?” on Facebook and people asking, “how do you buy a business?” on places like Twitter and Quora.  There are people sharing their thoughts and advocating for ideas on LinkedIn.  There are companies showing off their work for clients and sharing fun on Instagram and TikTok.  

What do all of these interactions have in common?
They scale human interactions.  

Many people think of “doing business” as going to a networking event or having one-on-one coffees, and for sure, those will always be opportunities for “retail business.”  But there is a limit to the hours of your day and there’s also a limit to how many people you want to meet and interact with in a given week.  Everyone needs private time not just to relax but to get work done.

Social media works while you’re asleep.  It works on your behalf.  It brings people to you that could never have met you otherwise.  But just like going out to networking events or having one-on-one coffees, it requires work.  You have to be willing to put in the time on social media in order to get social media results.  

Just a few examples Gary shares in the book include:

• Interacting with people on Twitter: answering questions, posing them.  Staking out business positions you believe in strongly but aren’t necessarily popular.
• Sharing on LinkedIn: all things considered, people prefer to do business with people they know and trust.  A way that people can get to know and trust you is by your interacting on LinkedIn by adding value: share links to articles and podcasts you really enjoyed and give a one paragraph summary of why someone would find this content valuable.
• Creating articles on platforms like Medium or answering questions on Quora.  People are always looking for good content and taking the time to share your knowledge will pay dividends.

In all these cases Gary is pointing out that social media, like business (and often, life), is about leading with value.  If your social media strategy to this point has consisted of “hey look at me” or “hey buy my product” or “hey use my services” and you’re bewildered as to why “social media” “doesn’t work” “for you” it’s because you’re doing it wrong.  

Social media is not a digital version of the Yellow Pages, where you unabashedly list your business and wait for the leads to roll in.

Social media is your business, digital and at scale, for the entire world to come and learn about and interact with.  It’s your opportunity to earn business.  That’s going to take effort on your part.  This book not only shows you how, it also shows you people who’ve done it and continue to do it.

Would you like some help with your social media?  We aren’t gurus but we know people who are and would be happy to refer you.  Give us a call!

Tim Ferriss is most known for his bestselling The Four Hour Work Week, but most recently has been compiling books that have been enabled by his top-rated podcast. The newest one is Tribe of Mentors, which has the subtitle of “Short Life Advice from the Best in the World.” At almost 600 pages, the book is not meant to be read straight through, but in 4-5 page increments as you peruse the answers to a set of questions Tim posed to one hundred different high achievers.

The Questions

Not every person answers every question listed below, and some bend and re-frame the question to go down a more interesting path, but to give you a frame of reference, here they are:

• What is the book (or books) you’ve given most as a gift, and why? Or what are one to three books that have greatly influenced your life?
• What purchase of $100 or less has most positively impacted your life in the last six months (or in recent memory)? 
• How has a failure, or apparent failure, set you up for later success? Do you have a “favorite failure” of yours?
• If you could have a gigantic billboard anywhere with anything on it — metaphorically speaking, getting a message out to millions or billions — what would it say and why? It could be a few words or a paragraph. 
• What is one of the best or most worthwhile investments you’ve ever made? (Could be an investment of money, time, energy, etc.)
• What is an unusual habit or an absurd thing that you love?
• In the last five years, what new belief, behavior, or habit has most improved your life?
• What advice would you give to a smart, driven college student about to enter the “real world”? What advice should they ignore?
• What are bad recommendations you hear in your profession or area of expertise?
• In the last five years, what have you become better at saying ‘no’ to?
• When you feel overwhelmed or unfocused, or have lost your focus temporarily, what do you do? (If helpful: What questions do you ask yourself?)

The Answers

We obviously can’t go through all the many answers that were given in the book, but here are a few.

On Advice to Recent Grads

Developer of “smart contracts” and the precursor to Bitcoin, Bit Gold, Nick Szabo offers the following: “The less you need positive feedback on your ideas, the more original design regions you can explore, and the more creative and, in the long term, useful to society you will be.” Unlike the “plastics!” advice of previous generations, this challenges those coming up in society to be willing to take more risks.

Ben Silbermann, CEO and co-founder of Pinterest, adds: “I feel like a lot of people in Silicon Valley serialize their lives. They think, ‘First I’ll do college. Then I’ll do a startup. Then I’ll make money. Then I’ll do X.’ There’s some truth in that approach, but most of the most important stuff has to be parallel-processed, like your relationships and your health, because you can’t make up the time by doing more of it later. You can’t neglect your wife for four years and then say, ‘Okay, now it’s my wife years.’

Relationships don’t work that way, and neither does your health or your fitness…Figuring out a system, so that the stuff you need to do all the time happens, even while you might be placing disproportionate focus on one thing, is pretty important. Otherwise, you’ll be setting yourself up to be lonely and unhealthy in your future.”

On New Beliefs

Arianna Huffington became more intentional with her time: “Before, I separated time into work time and non-work time, and I always wanted to maximize work time. Now I realize that you can’t separate the two — time spent taking breaks, taking a walk, unplugging, meditating — that’s all work time, too, in the sense that time spent unplugging and recharging makes me better, more effective, and happier in my work and in my life.” 

Saying No

Josh Waitzkin, a chess prodigy whose life was the basis for the film Searching for Bobby Fischer, has an extreme take on saying “no” more often: “I say no to just about everything public. I say no to more than 99 percent of professional opportunities that people approach me with.” This is echoed by tech founder Muneeb Ali later in the book: “External meetings should be initiated by me…and not initiated by others.” Now, not all of us are as busy as these people might be, but surely we could audit how and where we are spending our time to be of greater personal benefit to ourselves and those we love.

Regaining Focus when Overwhelmed

Maria Sharapova shared a quote of Hal Boyle’s to help her when she’s feeling lost or unfocused: “What makes a river so restful to people is that it doesn’t have any doubt – it is sure to get where it is going, and it doesn’t want to go anywhere else.”  

Of course there are literally hundreds more answers in the book, and if you’d like to listen to some of them free, you can check some of them out in the short audio series Tim released just for the book. 

In the meantime, it might be a fun exercise to do these questions yourself and share them with your friends and colleagues.  You’ll learn plenty about yourself and them in doing so.

We’ve run into Bo Burlingham here on Book Club before. We’ve reviewed his groundbreaking Small Giants book and he was seen as a major source for Dan Andrews’ Before the Exit as well.

Burlingham characterizes this as an “end-up” book as opposed to a “start-up” book. Fascinatingly, there’s so much literature about starting up, but not too many at all, like Finish Big, about “ending up.” Yet it is true that all businesses at some point, must end for the owner, and the most successful ones end in an exit.

Key Lessons of Finish Big

The book is chock full of lessons for anyone even remotely interesting in building, running, and exiting businesses, but they can be divided into several large categories:

• Case Studies – actual stories of how businesses started and exited, sometimes with the names changed. These can either be major successes or catastrophic failures. In either case you often have the entrepreneur him/herself describing, through the author, each step in the process.
• Education – if you didn’t know about due diligence, financial ratios, stock vs. equity purchase and other vocabulary that surrounds a business transaction, Bo does an excellent job of weaving short explanations of these throughout the text. He assumes that you have some basic familiarity with business in general, but assumes a zero starting point for familiarity with the ins and outs of transactions.
• Choosing a successor and managing your people – one of the trickiest parts of a transaction is keeping confidentiality so that your staff can stay on task.  Perhaps even trickier is to find a successor to you so that a buyer can have confidence the company will not just survive, but thrive. Burlingham takes us through several scenarios, extracting key steps you should take along the way.
• End in Mind – a theme Burlingham keeps hammering home in the book is the idea of “think about your exit before it’s time.” The best time to think about your exit is during the time you start up. The next best time is at least 18-24 months before you list your business for sale. Here at Apex we’ve often maintained good relations with our clients for years before they listed their businesses, mostly because they wanted someone to keep them grounded in the realities of the market, and because they wanted to make the changes necessary to exit at a level they preferred.
• Mentorship – we may start the journey of entrepreneurship alone, but very rarely is the journey completed alone. Burlingham highlights the many ways that entrepreneurs can find mentorship, coaching, and help in their journeys.
• What happens next – by speaking with many entrepreneurs about the pitfalls of an exit – successful or otherwise – Burlingham challenges readers to think ahead to what happens after the sale too, not just focus on the numbers and delight of the exit.

There’s really no other book like Finish Big in the market. Only read it if you’re interested in learning about the right mindsets you should have in order to have a successful exit, which may very well be the most important financial event of your life. If you want to shortcut the reading, give us a call! We’ve got plenty of those stories amongst our treasure trove of brokers!