Joshua Chin 5:34
Joe, it’s, it sounds like, to some degree, that’s also admitting that we as entrepreneurs are not as incredible as we think we are. And at some point in time, we are the business outgrows what we are, who we are, and how do you how do you reconcile that fact that it takes a ton of guts and a ton of courage and, and I guess, some arrogance to grow business to whatever size and it is. But at the same time, you need that humility too.
Joe Valley 5:35
It’s it’s a little arrogance, it’s a little fear, right. So the last job that I had Josh, I, I resigned from it. But you know, really, I resigned because I was probably going to get fired. Because I was, it was an entrepreneur world that I lived in, because it was a small startup that was you know, I was employee number 34. And then, by the time I left, three years later, we had over 1000. And it was amazing, and awesome and great. And I’d be the first one in the last one to leave early on. And then at the end, it was like I was a worker ant, which is going into the business and working. And, you know, people were being promoted to their level of incompetence, and I was vocal about it, then that kind of got me in hot water. So I resigned before I left, I think that the entrepreneur, entrepreneurial affliction that we have it’s talking about is, you know, this thing called I can do that, or shiny object syndrome. We all think we’re capable of just about everything. But what we have to realize is that we’re capable up to a certain level, like, I’m a bit older than you twice your age trying to get some I got some hair on the chin, got some gray hair. Yeah, so I’ve been there, I’ve done it. I’ve learned from my mistakes and others, and I know what I’m good at. And I also know what I’m not good at what doesn’t interest me what is challenging, and what I put off, because it’s not exciting. You know, you’re building an agency with a big staff of lots of people, and you’re finding that that’s in your wheelhouse. I know that our agency Quiet like that. The talent that we bring in has to be successful entrepreneurs that are really, you know, great on their own, because I’m not great at managing people. And so I’ve got to hire people that are great at doing what they do, and don’t need oversight. The the affliction of I can do that is good, and it’s bad. I’ve got a phrase in my home, and I put it in the book as well. And it’s it’s Don’t be a Jackie. And Jackie is really just short for jackass, right. So if you say something or do something stupid in our house, it’s Hey, Jackie, stop it, it’s that kind of thing. We’re gonna think about that in our business as well, you got to figure out what you’re good at, what your strengths are, what your weaknesses are. And to a certain level, you can improve your weaknesses, but not to the point where if you just hate it, you can’t you can’t change that at a certain point, you can outsource right? If you’re terrible at accounting, outsource to an ecommerce bookkeeper, that’s, that’s a no brainer, you should be doing that anyway. But if if, you know running a business with, you know, 50 people is not in your wheelhouse. Don’t go that way, just because you think you can or think you should write Don’t, don’t say I got this, find a way to, to move to sell your business and move on to your next adventure and be happy, right? This dislike is short, you need to be happy in what you’re doing.
Joshua Chin 9:00
I think a lot of people kind of overlooked at the value of, of happiness that no, no amount of risk is worth. And we talked a little bit about peace of mind as well.
Joe Valley 9:13
Yeah, we did earlier before we hit the record button. And you know, what I what I do, I’m one of the chapters I forget what the chapter is Josh, but it’s it’s goal setting, and we’re talking about a dollar value, exit, and also a happiness exit, right. It’s, you know, oftentimes when I, we’ve we’ve sold the business and we close the transaction, and I am talking to the owner of the business that no longer owns it, and I say, How do you feel? And they’re not like saying, I have so much money in the bank. It’s amazing. More often than not, they’re saying, I feel like an incredible burden has been lifted off my shoulders. Now that’s a combination of they’re not stressed anymore. They’re happier. They can spend more time with their family. They’ve got money in the bank. All of it together is not just, I’m rich, it’s, I’m content, I’m happy, I’ve got that peace of mind. I’m not done, folks, I’m going to go ahead and start another business, I’m going to do this again. And often what they do is they, they, they start another one, but with more experience and knowledge under their belt, and the next one that they build is actually more valuable than the one that they just sold. It’s it’s an interesting process, the more the more experience you gain, the more valuable the business becomes. Or the better lifestyle you live, you’re not stressed out as much.
Joshua Chin 10:35
That’s that’s what you mentioned in the book Training For an Exit. Yeah, having your multiple exits under the belt and getting better at it. You mentioned, you brought up a really interesting story of I can’t remember the name of the example that he gave, but he sold he went from being homeless to selling a business for just under eight figures.
Joe Valley 11:01
Yes, Victor? Yeah, yes, this is someone that was invited not to graduate from high school in, in the, in the in the country that he lived in, I won’t say the name of the country, it might give away what his real name, his name is not Victor, and to change the name. But yeah, so in that particular country, it’s required you, you you graduate, 12 years of, of schooling. And yeah, he was kicked out of so many schools that they said, Look, we’ll just give you the equivalent get out, we don’t want you in anymore. And he had been homeless at one point a single father bootstrapped his first business through actually he bought his first business for something like $7,000 and sold it or, you know, twice as much, six months later, because he tweaked it a little bit. And he thought, Okay, this is, this is interesting. The next one he sold for 20,000, the next one, he sold for 200,000 400,000. And then he kind of hit the jackpot, initially, with, you know, a sale that we did form just under $9 million. And each of those he actually bought, he bought them and then built them up, he didn’t bootstrap them as an initial business. And if I think about it, now that he’s, he’s his next exit goal is, you know, to be a unicorn valuation, which is a billion dollar billion dollars. Yeah, yeah. And I think he’ll get there. Sometimes we set these goals that are just for our egos instead of for other reasons, I guess. It doesn’t matter if he gets there or not, he’s a huge success. He’s just worked hard. And I call him the original zip runner, because he’s, he learned from that first sale, that he’s making more money on the asset than he is because the businesses that he’s had have always been growing so fast, he’s making much more money in the exit. So this last one that he has, he’s in the pet space, he’s growing like crazy, and he’s buying more businesses and bolting them on and the valuations keep getting bigger and bigger, there’s more diversity, there’s more lower risk, and therefore the value and the multiples get higher, and he will eventually exit I’m gonna say for at least nine figures, probably multiple nine figures, I don’t know if it get to the billion dollar exit. But either way, that’s not what I’m going to be handling, there’ll be doing that with, with a much larger institution than Quiet Light.
Joshua Chin 13:25
And every time that he repeats this, this process of buying a new business and growing it again, he’s not starting from scratch. And although it might seem so it’s it’s starting with a whole new level of understanding what business is all about the skills that come with it, the connections that the assets, the network. And I think that’s a great story. mindset, when when it comes to kind of thinking about a life after and after an exit or after an endpoint. I personally struggle with that. I cannot imagine my life beyond what I’m doing right now. I suspect a lot of people feel the same way. What’s life like after an exit? And you’ve done a couple of those?
Joe Valley 14:13
Yeah, so you know, for you, that’s because you love what you’re doing. Right? You love what you’re doing. It’s so exciting, and you’re passionate about it, and you can’t imagine doing anything else. And I’ve been there as well. And then eventually, because we’re entrepreneurs, we get to the point where we’re like, Okay, this I’m dealing with stuff I really don’t want to deal with here. I’d like to move on in life after the exit is it’s kind of weird to be honest with you, you know, you’ve got money in the bank, you wake up. Here’s what happened. I was talking to somebody last week. She just sold her business for about five and a half million dollars. And she said she’s she’s, she’s laughing when she says it but she’s like Joe, I’m kind of lost. I don’t know what to do. I woke up in the morning and I went to check my stats and I don’t have access to my seller account any it’s called have interesting and weird, she’s gone ahead and already is looking to buy another business, my biggest recommendation is to take some time off for you and your family, reward yourself, you’ve done something incredible whether it’s $100,000 exit a million or $10 million exit, you’ve done something that’s so few people in this world do, you’ve built a business, you’ve grown it, you did it for nothing. And now you’ve sold it. It’s, it’s it’s a, it’s a huge success. And you should reward yourself, don’t spend all your money. That’s not what I’m talking about. Have a plan for what you’re going to do with that, set some aside. But take a vacation, have a drink, go out to dinner, I mean, really make it special and reward yourself. For me, Josh, you know, the last one I sold was in 2010. And, and I did that I rewarded myself, I definitely took some time off, I played around for about a year with different things. I like to get my hands dirty, I like to work in the yard and whatnot. I grew up in a small town in the state of Maine, in the northeast part of the US and was always out there working with my dad working with my hands, that’s some, you know, for me, I sometimes do my best mental work. When I’m out there swinging an axe or mowing the lawn or got a shovel in my hand, though, you got to take some time off, reward yourself, spend some time with your family and set some new goals that are achievable. But that you can get to with a lot less stress and anxiety in your life.
Joshua Chin 16:27
And now we’re moving back a little bit here. But when planning for an exit I, you know, as
Joe Valley 16:35
let’s call it training, right, everybody hates exit planning. That’s what the book is all about training for your exit and training for anything. Yeah, it’s funny because I didn’t even want to use the word exit in the title yet. Here it is. Funny story. I actually surveyed about 10 influencers in the industry. Yeah, two titles, two titles for the book. One was incredible exits. And the other one is EXITpreneur, just one word exitpreneur. I think eight out of 10 loved incredible exits, two out of 10 loved exitpreneur and like a full I went with the exitpreneur, it’s it’s much harder to pronounce. But the word exit is still there. But it’s The EXITpreneur’s Playbook so that people can get trained, but their their exit, it’s all about training for it. You know, if you’re if you go out and run a 5k, you just can’t, can’t do it. Well, if you just wake up Sunday and decide to do that, you could probably finish it not a big race, but it will be painful. And the recovery afterwards will be more difficult. It’s the same thing. If you’re going to sell your business, you just wake up and decide to sell it, you’re not going to get maximum value for it, it’s going to be a rough ride along the way, it’s going to be emotional. And then you know, the the after effect of it is going to be harder because you’re not going to have a business that’s easy to take over for a new owner. You’re not going to have so much money in the bank that you can kick back and relax for a little while. You get a train for the exit, right.
Joshua Chin 17:59
You get to train. I love that that’s such a great analogy. And the biggest the biggest hurdle that I see kind of, at least in my circle of people I speak to when it comes to like well planning for an exit or approaching an exit is the idea of leaving money on the table. I think as entrepreneurs we’re geared especially in a direct response, ecommerce space, DTC space, we’re geared to maximize kind of capture as much money as we can off the table and leave nothing for anyone else. Yeah. And I find that that’s such a difficult mindset to have when thinking about selling so it’s my question to you is what’s what’s the healthiest mindset that you suggest a seller adopt before going into valuation discussions and you find time to
Joe Valley 18:52
be open minded and learn, right? You know, people in my field and again, I’ve been self employed since 97. Yeah, nice. Yeah. We we have an expertise in certain areas. Right now. I’m not an expert in ecommerce. It’s been a long time since I sold my last ecommerce business. But I am an expert in understanding exits and valuations and what buyers want, what they fear how to calculate sellers, discretionary earnings, what’s an add back making sure you don’t leave any money on the table. So be open minded and talk to experts in the field and learn, right? Learn. Yeah, the problem is, though, Josh, that people are fearful or historically have been fearful of talking to quote unquote, brokers, because brokers, some of them have a tendency to try to talk you into signing an engagement letter, and over promise and under deliver. So I had to write the book. I had to put it all there to, you know, talk to the hundreds of 1000s people that I can’t talk to one on one, right, I’ve talked to over 5000 entrepreneurs online. 10 years. But that’s not enough. There’s so many more to reach. And it’s, it’s, it’s like drinking through a firehose, in terms of training for your exit, you do that. And you know what you do. And you tell people how they’re going to get better rankings and get that 3500% ROI. That’s like drinking through a firehose for them, so they just hire you for it. Same thing with an advisor, be open mind and talk to them, and learn from them. And then you know, what you’ll find is that you become more motivated, you starting to understand what the dollars will actually look like, you’ll set a financial goal, this is what I want to exit for. And then you have to reverse engineer a path through that the only way to be able to reverse engineer a path to that is knowing where you are today. It’s the old saying, you can’t get where you want to be. If you don’t know where you are, right now. You can, but you’re going to be tacking back and forth in that sailboat along the way, if you want to go a direct path to your exit, you got to figure out what that goal is. And then you have to know where you are today. And the only way to know that is to learn. And that’s a conversation with a broker or advisor. And reading the book. Look, I wrote the book because it had to be written because there’s so much misinformation out there. We cover everything from valuations, to what buyers want, but they feared deal structures, right? There’s kind of 12 total deal structures that we talked about in the book, Josh, is six of them are cash plus, right? There’s always cash, right? Everybody wants all cash, but it’s Yeah, you know, plus stability, payments, earnouts, all these different things, in trying to help sellers entrepreneurs understand what they all are, so they don’t have to be fearful of some of them, right? A confused mind always says no, right? So then try to eliminate some of that confusion. So you, you can start to say, Well, you know what, maybe an urn out a partial earnout might be good, I could get much more upside with a second exit on a on an equity role someday, being open to some of those things, I think, is why I wrote the book so that people can understand all of them and go into the, you know, the valuation process with an advisor with a really, really good education at their own pace to write, they can just pick up and read a chapter here and there.
Joshua Chin 22:20
And it’s such an easy read, I just can’t emphasize that enough. Because I I try to read books as much as I can. But I’m a slow reader. So when a book gets too heavy, it drains me, and I kind of lose interest pretty quickly.
Joe Valley 22:34
It’s that was that was the hardest part of this, right? It’s, it’s it’s a subject that could just make your eyes bleed and be traveling, you know, tragically boring. And so I appreciate you saying that, because it was a big goal of the book, I needed to make it readable. And we, you know, I interviewed a lot of entrepreneurs that had sold their business, the original plan was that every other chapter was going to be a full story on someone’s exit, but it was going to be, you know, 1000 pages long if I did, though, yeah. So, so I had to just, you know, put some stories in there. Real life stories, some, as you said, at the beginning, some really great success stories like Victor, and then and then some epic failures, some of my own. And, and, and some others that I’ve worked with over the years. And of course, I’ve changed all of their names, folks. And I’ve given first names only, and their fake names. He cannot, you know, talk about epic failures and you know, file names, they’re protecting the innocent.
Joshua Chin 23:36
Talking about mistakes and failures. What is one mistake or regret that you would change? If you go back in time? Like, knowing what you know now?
Joe Valley 23:47
Yeah, it’s a great question. And I’ll pick one for you. But let me say that I’m really happy and satisfied with my career and where I am today. And if I go back, and you know, if I could pick a mistake or something and change it, it would have changed the course and trajectory of my career. And I’m real happy with where I am it because I’m helping a lot of people and I really, that fills my cup, if you will. So I think with the helping mentality, if I could change something not one specific day or moment in my career, but and then a mentality in my career. And that is as a business owner as an entrepreneur. If I could have changed my mindset early on as young man and said, just help as many people as you can, and trust that that’s going to come back around to you that’s what I would have changed, right? Because early on you’re just you know, oftentimes out for yourself and just try to make money and have that have that mindset of I’m just going to make as much money as I could possibly make. I’m gonna make more money and make more money and maybe what can I get out of this Right, yeah, right. Right. And that and that caused some problems for me. I, you know, had that mindset and didn’t really focus on some details. And I, I guess I’m gonna get into a specific moment and day here, I got a letter from her merchant provider. At one point, I think I detail this in the book. And it basically said, Hey, Mr. Valley, you’re doing great. But based upon the the volume of chargebacks, that you have, we estimate that you’re going to owe us a quarter of a million dollars. So therefore, start effective immediately, we’re going to start withholding all of your earnings until you’ve got a reserve of a quarter of a million dollars, and then we’ll start releasing money to you. So you know, I had I had a team and a staff. And I thought, what the hell am I going to do here. And the problem was, the mistake that I made was that I didn’t keep my eye on the ball, I got lazy, I grew the business to the point where I was really interested in it. And I just let things run. And I was doing a free offer campaign with a call center out of New York. And it was a it was a radio campaign. And there was a really clear script, and I paid a commission to the people at the call center, every time they sold something, you know, sold something, sign somebody up for the free offer, they would get something like a $4 Commission, you know, that they were deviating from the script. And I was not monitoring the script, all calls were recorded, but I wasn’t monitoring the script. Turns out that, you know, about 65% of the time, they were straight up lying to the customer that no, it’s a free shipment, all you do is pay the shipping charge, and then we’ll never charge you anything. Again, that wasn’t the case, they were going to get charged $159 three weeks after the initial sale, if they didn’t call to cancel. And the the merchant provider was right, I ended up paying about a quarter of a million dollars, I had to, I negotiated with them, I negotiated with them. I pre funded it, you know, each each week, I pre funded a certain amount. And we were able to, you know, keep the business running and keep cash flow going. But huge mistake in that part. And it’s because of that mentality of not helping people first, I was not worried about helping the customer, you know, get a good experience I was more focused on Wow, look at the sales volume. Look at my top line revenue. This is amazing. Me Me, me, me, me. Yeah, I totally, I totally screwed myself.
Joshua Chin 27:31
What? What should people expect when they work with within the advisor in the process of selling? And I understand from from your book that the process of selling isn’t, and we talked about this, it’s not something you decide and complete in a day’s notice. It’s like a 12 legged more like a 12 month process of?
Joe Valley 27:55
Yeah, exactly, you’ve got to my advice is, you know, the sooner you can start to learn about the value of your business and eventual exit, the better off you’re going to be. I know it’s not going to be on day one when you start your business. But at some point when you come up for some air, and that’s why it’s in a book format, so that you can come up for air and grab the book and review a chapter and go back and do that, and learn along the way. Ideally, though, you know, 12 to 18 months in advance, I think is brilliant, right? That way, you can really focus on things that help you, you know, achieve your goals. But you 12 to 18 months in advance may not be enough, right? So if you’ve got a $5 million exit in mind, and you’re only doing $500,000 in revenue, you’re not going to sell your business for $5 million in 12 months. So you’ve got to set that exit goal, figure out exactly where you are today in terms of discretionary earnings, and then and then grow from it. So what you should expect from an advisor is that they’re going to do just that you go to them, you’ll be better educated because of the book it’s going to give you I think I talked about, you know, it gets you an orange belt, right, I took one day, I think I got to do an orange. I thought it was pretty tough. I got a yellow belt. So I’m a little tougher than you are. But I was I was bigger and more fit than this, you know, this, this was like 15 years ago. So the guy was much older than I am. He had a brown belt. He was tiny, you know, short in stature and kind of chubby that I got, yes, no problem. He put me on the floor. So fast kick my ass. And it really showed me that, you know, I had just enough information to be dangerous. And that’s kind of what I’m giving you in the book. I’m giving you just enough information to be dangerous. You don’t have enough to go out there and do it on your own because you don’t have that experience in terms of being a broker. So the broker advisor should help you understand exactly where you are today because there’s a lot of nuances and every business is different that couldn’t cover that in In the book, yeah. And then they can sort of say, look, here’s where you are, you keep going on this path. And it looks like about a year and a half, two years, five years, you should be able to hit your exit, where they may tell you, look, you’re doing great. But you’ve got what’s called a hero skew. And that heroes skew is that one skew that’s doing 70% of your revenue, and that increases your risk. So your multiple is going to go down. And that can happen in an agency as well or a sass company, right, you could have one client that is producing 50% of the revenue or one company that’s, you know, got 500 customers that are individual customers using your sass product, but it’s really that one company, you’ve got to, you know, balance those things out and learn along the way. But I would, I would expect, and I would hope that what you’re going to get from that advisor is knowledge, experience a relationship, you’re going to ask some questions that can’t be answered in a book, they’re going to be answered verbally, because it’s specifically for your business, and you’re going to hopefully build a relationship with them. Because they should be there to help you. Right, they’re not charging you a fee up front, they’re building relationship. At Quiet Light You know, our motto is, the more conversations we have, the more people we can help, period, period, it comes back around to help us but the more conversations we can have, the more people we can help. That’s what the advisors should be doing helping you understand the value of your business, and how close or how far you are to your eventual exit.
Joshua Chin 31:30
You know Joe, that means a lot because as a, you know, for me, and I think this is the same with a lot of people, as an agency that also works with partners and vendors and, and brokers, it’s, you know, it’s often daunting to think about the fact that, you know, what, I’m probably not going to exit my business, I’m not going to sell my business in the next like, six months, 12 months. And I’m having this conversation, and I’m afraid of setting expectations that I’m going to be like a potential lead for the next couple of months. for, you know, for the vendor of broker, whoever I’m speaking to, and I feel bad for, you know, ghosting them or just telling them, hey, now’s not a good time, because I’ve, you know, I’m on the other side of that coin as well. When I’m following up with leads and prospects, it’s it’s not a good feeling. So that that’s, that means a lot. The more conversations you have, the more you can help.
Joe Valley 32:32
Yeah, more. Yeah. And it’s, and again, that’s that’s the the old guy experience or not not that old. It’s just it comes, it comes with experience, experience, period. Yeah, it’s the hardest thing to convey, right? It’s the hardest thing to convey and get people to understand. And that’s why they’re afraid to talk to a broker or advisor. And that’s why I had to write the exit printers playbook not only because there’s so much misinformation out there, but because so many people don’t want to pick up the phone and have a conversation with a broker or advisor. Unfortunately, there’s some bad ones out there that are just going to try to get their hooks into your commission. And if that’s the feeling you get, if that’s, you know, the experience and say, Listen, this isn’t for me, I appreciate your time and move on. But don’t eliminate ever talking to them. Because if they’re good, it’s like dating, right? Yeah, you’re not going to, you’re probably not going to marry the first person you ever date. You’ve got to, you’ve got to get some experience under your belt. And and unfortunately, that may be the case with some brokers and advisors as well.
Joshua Chin 33:35
Are there questions? Or is that one question that you would ask a broker or potential advisor that would kind of set them apart that this is a good potential advisor for my business? And for me, and this is probably someone who I shouldn’t be working with?
Joe Valley 33:52
Yeah. So they, here’s some things that they should never do. Right? They should never tell you the exact value of your business after a phone call. Because they haven’t looked at the p&l, and they haven’t done you a service by doing an add back schedule. And making sure your discretionary earnings is as solid as it should be. And that takes more than one phone call. It takes looking at a detailed profit, profit and loss statement with a monthly view and multiple emails and conversations because you got to dig deep on some of those things. So if someone says, You know what I tell you, I just had, I just had a buyer that made an offer on a business exactly like yours, and he’s willing to pay $5 million, and he’ll buy your business. Let’s sign an engagement letter today. I’ll make an introduction. That’s just sounds too good to be true. Yeah, that I don’t I don’t. Yeah, I don’t know enough about your business. In order to say, you know, this is exactly what it’s worth. I may say, look, we’ve got plenty of buyers that will be interested in this. That’s the reality. That’s the truth. We’ve had an average of four and a half offers on every listing So far in 2021, and 62% of them have gone at or over asking price. So there are plenty of buyers is actually more buyers than there are sellers at this point. But nobody should be trying to, if you get the feeling of them reaching through the phone and get their hooks into you just for a commission, then just hang up the phone. The the simple things that you can do is, you know, just Be kind, be professional, and ask questions, because these advisors are busy. And they do want to make sure that they can help you, but they want to help you in a way that’s going to benefit you and be pleasant, right? So we we are people and we do have choices of who we get to work with. And we don’t have to take you on as a client. And if you are, you know, in a hole, right, I’m not going to swear he or Jackie, if you’re Jackie, thank you, if you’re if you’re being a Jackie, then you know it doesn’t work, we might be too busy, we might not be able to talk to you for another six months. So and that and that goes for buyers as well, right? And I often gets questions for buyers, how do I get an edge over all cash buyers, and so just don’t be a Jackie? Don’t be a Jackie, that’s, that’s, you know, I want to help you as much as possible. Be kind be nice to me be professional, let’s build a relationship. One of the worst things you as a buyer can ask a broker is, you know, in the first two minutes of the conversation, what’s your fee? How much you guys charge? Don’t ask that question. Because when you ask that, you’re telling the broker, you don’t understand the value of what they bring to the table. And that’s okay, some of some, some sellers are not going to understand the value of what an advisor brings to the table. And that’s okay. There may be just enough information in the book for you to be dangerous and sell your business on your own. And that’s okay, but I’m pretty sure you won’t, you won’t get the nuances of of the toughest part, though. You know, I, I’ve been doing this for about a decade, as you know, and I’ve had a lot of conversations, as you know, I’ve touched about a half a billion in transactions through quiet light 100 million. And the toughest part of what I do is managing my clients emotions and expectations. That’s the toughest part. Because when you as a business owner, or as a buyer, are a week or two or three weeks away from a life changing event, as a seller, maybe you’re going to get a half a million dollars deposited to your account, or 1,000,005 or 10. You are going to be very emotional Victor in the book had promised, had promised his top employee that when the business closed, he would buy her a house. She was a single mother and Victor’s a rockstar human being. Right? So he was buying her a house. The deal fell off the rails multiple times three weeks before a closing. Talk about stress. He made some serious promises to her. And he’s like, I can’t do it. And he was so stressed. And his emotions were all over the place for SBA buyers, Small Business Administration buyers, yeah, you know, managing expectations, managing your the sellers expectations in terms of timelines, you really want to be clear with that kind of stuff, because something’s out of your control attorneys actually are humans and they really actually do go on vacations, bankers, same thing. There are holidays, they take them all the best. Yes. So yeah, expectations and things of that nature, you know, emotions, expectations, to actually actually the toughest part of what I do the rest of it, you know, you learn it, you become very good at it, and you know what to look for. And that’s the least challenging part of what we do. But the toughest is expectations and emotions. And that’s the part that sellers are never prepared for when they sell on their own. There’s just nobody there to help you. or help you keep in check emotionally. Because when you get when you’re so close, and something falls off the rails, you’re willing to willing to drop the price just to get the deal done. And that’s, that’s what you need to do most often.
Joshua Chin 39:19
Often on the backs, not best move. And I think this is on a lot of people’s minds. valuations. And you talked about the four or five pillars to valuations and risk being one of them. I’m not gonna go into spoiler here, but I’m curious just personally, the role of email, SMS and these own marketing channels that that’s that’s our jam. Where do they play in a part in the valuation of a business?
Joe Valley 39:50
Well they’re huge in in your jam, as you say, because you help customers or you help business owners own the customer, right? Not SBA businesses. businesses don’t Don’t you know, they don’t own the customer. But if you’ve got the the customers contact information and you’re able to reach out to them, and create repeat sales, or upsells, it’s more valuable, and historically has been more valuable than someone selling the same or similar products on a third party platform. It is changing a little bit because of the aggregators, the third party platform sellers are seeing valuations equal to, you know, DTC where they own the customer. Historically, though, it’s there’s been a 1510, that’s called 10 to 20% bump in valuations, because of, you know, a Shopify store where they own the customer. And using an agency like yours is very, it’s valuable too right because sometimes people that do all of what you do on their own, they’re the experts in the business. And that expertise is goes to one of the pillars is not as transferable. Because it’s them, it’s in their head, it’s their knowledge and expertise, as opposed to outsourcing it to an agency like yours, where that’s totally transferable, right, I want you to stick with me, when I’m the new owner of the business, I need you, I want you you guys are doing a great job, nothing changes, all I have to do is continue to work with you that that really increases buyers confidence instills confidence in them, and decreases the risk of stuff going off the rails after closing. And that increases the likelihood of getting full ask for a higher multiple.
Joshua Chin 41:31
I love that, that’s a good, that’s such a good news. You’re thinking that it’s just a cash flow thing. It’s just, you know, in all these email, SMS stuff, it just allows her clients to spend more money on ads. And that’s the end. We don’t think about, of like, you know, what the first question that I asked every, every, in every conversation that that I have is, What’s your goal? Is the business do you? Are you building to sell? Or are you building to scale and what timeline? And because that kind of frames on mindset and how we position the marketing channels. So this, this really helps with that?
Joe Valley 42:14
That’s a really, really smart question, Josh. Because if they, you know, come to you and say, yeah, we’re planning to exit in 12 months, you have to make different advertising decisions. Mm hmm. Right, you need to at least break even. You know, you don’t want to lose 20, 30, 40 $50,000 in that 12 months, because that’s gonna, if you lose $50,000 on a new campaign and a new skew or new brand, even though you’re selling it in 12 months, $50,000 times a four time multiplus $200,000 off the face of your business.
Joshua Chin 42:46
That’s that’s definitely a bad idea. Very bad idea. Everything, all these investments that they were making now.
Joe Valley 42:52
Yeah, I think that’s a brilliant question. And good for you for asking.
Joshua Chin 42:56
Thank you. And then Joe, the book. I know, it’s available on Amazon. on Kindle. There’s a hardcopy available a hard cover, Yeah,
Joe Valley 43:07
yeah, hardcover, paperback and Kindle. Because of COVID. The, the audio audio version is not available yet. We’re working on it, you may just get my smooth, sexy voice. I had somebody offer me the other day that, that he’d do it and he’s silky. I don’t know, it would be distracting if he read it. But the audio version will be coming. And you can get it either at exitpreneur.io where we also have resources partners, you know, ecommerce, bookkeepers, tax advisors, things of that nature, there’s a partners page, there are some resources that will help you where you can go straight to Amazon and buy it on Amazon as well.
Joshua Chin 43:47
Also, and Joe, if people are interested in having conversation with you, one on one, or with one of your advisors on your firm, what should they do?
Joe Valley 43:56
Yeah, they can go to exitpreneur.io and reached out to me through that or just go to quietlight.com and take a look at our packages. Take a look at our listings. Take a look at the content and information that we have. Listen to our podcast, Quiet Light Podcast. We’re always talking about exits and what you can do to prepare and how people are helping each other with with different exits.
Joshua Chin 44:19
Awesome, Joe, this has been great. Thank you so much for being on the show.
Joe Valley 44:23
Thanks for having me, Josh. I appreciate it.
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