E126: Business Coach Wendy Dickinson Discusses The Process Of Selling A Business

[00:00:00] Ronald Skelton: Today I'm here with Wendy Dickinson. She is a business coach, and we're gonna talk about, businesses and what it takes to sell one. And, thank you for being on the show today. 

[00:00:10] Wendy Dickinson: Thanks so much for having me, Ron. I'm really excited to be here. This is a topic that I am very passionate about. So I'm glad to have the opportunity and welcome any questions or contact from your listeners.

[00:00:23] Ronald Skelton: Awesome, awesome. So I was looking you up a little bit this morning and going through some stuff. You've been, in this space for a while and you got a lot of cool experience inside of there. So sounds like, one of the things I did notice you started off or have some experiences as a therapist. Let's just do this, let's do way we do on all the shows.

[00:00:38] I always jokingly say, you were born and now you ended up on a show about mergers and acquisitions. Can you fill out the gap in between? We don't have to start off with I was a baby. But could you give us a, like, how did you end up in the mergers and acquisition space. And let's look at your origin story.

[00:00:54] Wendy Dickinson: Sure. And I have to tell you, that would be a lot to fill in if I went from day one to today. However, there are a couple of things that contributed to being here now. First of all, my dad was an iron worker. He was a high rise steel worker and found when, after he had four kids, that he was spending more time on strike, than he was actually spending working.

[00:01:14] So he was one of those guys that could do just about anything. If he wanted to build something, he figured it out. He made it happen. So when that, in his iron work career, when he reached that point where, he was seriously financially strapped with being on strike so much. He started his own construction company. It was a lot of fun for him. He was one of those people that was a natural leader. He enjoyed people, enjoyed being around the guys that he worked with and for. And, the problem was he really didn't have anybody in his life, Ron, that had ever had their own business. And he didn't know what he didn't know.

[00:01:58] It was one of those situations that unfortunately came back to bite him in the rear end. He was building the biggest house he had ever built, and, the prospective owner came through, made a bunch of changes. They did not put anything in writing. They just put a handshake on it. And then when it came to closing the owner, refused to pay. And so unfortunately, that was the beginning of a chain of events that, my dad ended up losing our home. He lost his marriage. It had a devastating impact on his kids. So, just to give your listeners an idea of what happened from there, he was one of those people that really could land on his feet and he ended up, he'd also taught himself to fly.

[00:02:44] He had traded jobs for flying lessons and by the time he died, he was flying freight for DHL race horses and all kinds of crazy stuff all over the place. But that experience of seeing what my dad didn't know and how it not only hurt him, but it hurt all of us was made quite an impression on me. So then fast forward, I trained to become a therapist. I really enjoyed the work, loved the people, and was in an interesting area because at the time there weren't a lot of therapists in private practice. So I worked for a community organization and we had the opportunity to see people from across the spectrum as far as socioeconomic groups were concerned.

[00:03:31] And then my husband and I with another couple, had the opportunity to start a company. And they had the idea, we had some capital and so we pulled all of our resources. And from day one, I mean the first moment, Ron, we sat down at that kitchen table and said We wanted to do this. We knew that we wanted to grow the business to sell it, and it was not about reaching a particular revenue stream. It was about when would it be ready to sell? When it reached a certain stage of growth, how would we know? We were looking for those signposts. And the other thing we decided when we committed to one another, that's what we were gonna do, is that we wanted to be friends even when the business was over with.

[00:04:27] And I can tell you that's a tricky thing. So we, from the very beginning said that we wanted to start this business, to grow it, to sell it. We wanted to walk away friends, and we looked for a way to make both of those things happen. And what we did was we chose our target acquirer. So everything we did was based on what we thought. That perspective buyer would want. So those are the two things that I believe contributed a great deal to becoming a business coach. And I got out of becoming, being a therapist because I did not appreciate how much and how often insurance companies dictated the treatment and the course of treatment a client was gonna get.

[00:05:14] Ronald Skelton: Yeah. I looked into, you can buy certain things, but you can't buy others, right? So you cannot buy a medical organization or a chiropractic organization, or a dental, or even a veterinarian organization unless you're a licensed professional. But you can set up, what's called an MSO, a medical service organization.

[00:05:31] And I like the rules, but if you really look into that, it's a shame that they don't apply the same rules that they would apply to me as an owner of a medical organization and what's called an MSO. That to the insurance companies. Right? Because they basically in inside of there, what it says is you can own the building. You can own the facility, you can hire the doctors and stuff, but you can never tell them how to treat their patients. You can't tell 'em what medicines, the tools. You can say what equipment you're gonna buy, but other than that, you have no say over what they do in that, in their licensed profession.

[00:06:04] And I think insurance companies should be the same way. They should have no say of what a licensed professional does, cuz they're just not licensed professionals in that realm. It's a shame that really happens. What kind of business was it?

[00:06:14] Wendy Dickinson: It was at that time when people were transitioning from hard copy documents to digital. And so the business was called Document Warehouse. And we were really fortunate because we chose Iron Mountain as our target acquirer, and they were the ones who bought us. 

[00:06:31] Ronald Skelton: Oh, that's cool. So you did document scanning or storage?

[00:06:34] Wendy Dickinson: Both. 

[00:06:35] Ronald Skelton: Both the scan and store. Okay. That's a cool business. It's kind of a advanced version of, storage and, with the digital aspect to it. I like the business model because, the recurring model of it, of the storage side of it. You get a little bit of recurring revenue. So Iron Mountain was the acquirer.

[00:06:50] That's awesome. So, a lot of times it's good, it's almost always good to kind of pick an ideal. Like this is the company that would acquire me. it gives you guidance, right? I think everybody, I think all businesses should do have two things. One is like, this is the business I think will acquire me when I'm done doing what I'm doing here. So they know what to grow to. It kind of helps a lot of the decisions, what software to choose, what accounting programs you should have. You try to figure out what the big guys are using, the ones that will acquire you. So it's a less of an impact when you do decide to exit.

[00:07:17] And the second thing I think everybody needs is the arch enemy. They need to know that like they're trying to be x, y, and Z company at this or that. Cuz it gives them a sense of competition. It gives people, like, back when I was at excite.com and,we were head to head with Yahoo, and Google was still a college kids dream. There was this friendly rivalry. We stole employees from each other. There were people that worked for us that had, license plate that said Yahoo sucked. It was kind of this thing that went back and forth. It causes a little bit of drive.

[00:07:43] But I think that knowing your acquirer,is a great idea. But most of the time, I'll be honest, I don't think most of the time that businesses end up selling to their desired acquire. So you did a good job. You built, you really built something they wanted. 

[00:07:56] Wendy Dickinson: Yeah. And I agree with you that a lot of people don't do that. And then second of all, the chances of actually selling to the target acquirer are pretty low. But overall, at least here in Virginia, it's the statistics for businesses that go up for sale, only about 18% actually succeed. And from there you've got about another 20 that might be considered successful.

[00:08:24] So I feel like those stats and others, really contribute to making the case for, figure out who would be the perfect buyer. Would it be a private equity investor? Would it be, as someone else, a competitor perhaps? Would it be someone who is, has a particular area of knowledge or passion for what your business happens to be? But whatever that is, create as many scenarios as you can so that your business will appeal to as many buyers as possible. 

[00:08:59] Ronald Skelton: It's interesting, I know a couple people who really subscribe to the model of, run your business as if it's for sale, from day one. And they keep a deal room available where they have all the, like the documents and everything. they keep 'em updated, they update 'em. one of the guy does it monthly. The other guy does it quarterly. But their whole point is any given time, if something happened to one of 'em, you can go into his deal room and learn everything you needed to learn about that business to keep it running.

[00:09:22] Because he built it as if he was gonna sell it. Even though it's in year two of something, it'll probably be a seven years or five to seven years I think, before he can really sell it. It wasn't something he acquired to grow. It's something he's building it to, from scratch. And, to acquire the customer base is going slower than he expected. So that said, what else is inside of this realm of structuring a business that it can sell. What were your daily activities like that, when you know you're gonna sell that at the other end? How did it change things, I guess is the word I'm looking for. 

[00:09:54] Wendy Dickinson: Well, I think probably with a partnership in particular. It helped so much in decision making. So it was not about who was right or wrong, it was about what would Iron Mountain want. and so you're going back to your point about the acquaintance that you have, who you know has built their, his business as though it's for sale every day. I think that the value in that is the discipline that it takes. To continually update to make sure that your personal finances and your business finances are separate. 

[00:10:27] That you are following certain accounting practices like an annual review and a compilation and that kind of thing. As well as that, the data collection. I don't think that we understand how important it is to document the ups and downs in our business cycle. So, for example, if you know that in seven years you'd like to sell your business, which by the way, five to seven years is about the period of time that a private equity group holds their investment, in a company. So if you're in that habit of creating not only, the data room as you said, but the documentation, updating the metrics.

[00:11:11] You could also add documentation about what's contributed to the various, increases and decreases in revenue. Is it cyclical? Is it across the industry? Is it something like the pandemic that hit? And then what are the steps that you took to come out of it? All of those things contribute to the story of your business. And it gives a perspective buyer the sense of the history of that business, not because they're gonna do it the same way that you did it, right? But because it allows them to see how resilient the business is. And what to expect, right?

[00:11:49] So if, for example, you know that your business, because you have the data. Not because it's just something, an idea that you have in your head, but if you know that your quote unquote slow time is, July and August well, and you're outgrowing, your growing your space, then maybe it makes sense to move in July and August. So, it's interesting. I had a client who was really interested in trying to grow their business to increase revenue. And the client told me when this person felt like the highs and lows of the business are throughout a calendar year. Okay. So she began to design this entire calendar of events and things that she was gonna do based on what she had said to me.

[00:12:39] And then as part of the growth, she hired someone who was able to assemble her data. We took a look at the data, analyzed it. And I gotta tell you, Ron, she managed to hit one high in the business cycle correctly in a calendar year. All the rest, she was off about a month, which meant that entire calendar of events that she had designed for the upcoming year was off.

[00:13:07] Ronald Skelton: Yeah. I used to have a real estate investment group and we bought bank foreclosures. We bought 'em from the bank. We negotiated short sales. We had a couple different companies we worked with that we bought houses from companies that negotiated short sales. And there were two times in the year we knew that we just probably wouldn't get a yes or a closing.

[00:13:23] From about November, I wanna say about the, after the first week of November, so after the seventh until about Christmas. And then usually we'd get crazy business, like we'd go out and raise money during that time. Because we knew around Christmas Eve or Christmas, we'd get about six or seven Yes, if you can close before the end of the year. Cause they wanted them off their books. So the, the banks wanted certain houses off the books. So we'd go out and raise money and we just knew we, we could take our vacations during that time. We just knew we wouldn't get anything, nothing was happening during that timeframe. And then when we were buying houses from individuals, nobody wants to move during that timeframe either.

[00:13:58] So you just know like you, I think if we'd had, just had to, if you'd asked either one of us what the exact dates were, we'd been real fuzzy. I put on a calendar every day. Every time we got an approval, it went on the calendar. So I know what days we were getting approvals. And you could track that over a couple years of doing it. You can go, okay, well it seems to be this weird lull between these days, especially on the banking side. When I first got into this space, I was doing a lot of evaluations and I used to ask all these small business owners, when I say small business, I'm not talking about the, big world PE version of small business, which is anything under, a half a billion dollars or anything.

[00:14:31] When I say small business, I'm talking about 20 million in revenue and below. So mostly $5 million purchase pricing and below, because I was looking at SBA loan type of stuff. And I quit asking business owners about cashflow analysis because most of them didn't even know what it was. Even their CPAs be honest, I had a lot of CPAs were like, oh, just ask my CPA for everything you need. And once I started talking to him like, how do you have a cashflow analysis? They're like, what exactly you looking for? I'm looking for the cyclical cash flow of your business. I wanna know when the highs and lows are. In all honesty, I kind of wanna see how they manage their inventory based on how they manage their cashflow.

[00:15:10] Different things inside of the data, and that's just me being a nerd to some extent, but. 

[00:15:15] Wendy Dickinson: I think that's you doing your due diligence, frankly. 

[00:15:18] Ronald Skelton: Well, a lot of businesses just don't have it. You can build it from their data. We ask for bank statements and other stuff. You can build it. you can build your own. Just, it's not easy cuz it's not yours. So you're missing things. I don't think I've seen and we evaluated a lot cause I was in part of a big roll up.

[00:15:34] Wendy Dickinson: Yeah. And that goes back to looking at when to sell. Right? When does it make sense, to sell your company, and I have to encourage your listeners to understand that it's not like a real estate closing. Where you put your house on the market and in a hot market, you've got, five offers in 12 hours, and you're gonna decide who you're gonna choose the next day, and then bam.

[00:16:00] It's done. I really liken it. Instead of a race, it's more like a marathon. and it's incredibly important that you put certain things in place that your people are up to speed, that everybody knows in what direction and at what pace they need to be, making decisions and moving so that the owner can focus on whatever is involved in the transaction. Looking for prospective buyers, working with intermediaries, working with their advisors. While the management team is back, making sure the business hits its numbers.

[00:16:39] And so when is it good to sell? Again, look at your timeline, look at your cashflow analysis. Figure out. If your business is tanking, that's not the time to sell. It's gonna be a fire sale. On the other hand, if your business is on this trajectory, and you happen to know that in the beginning stages, I'm gonna go back to that July, August, slow down period for any business. So if we know here it is June next month and the month after my slow times, maybe this is when I'm gonna hire a business broker to begin to look at selling my company. So I might spend July choosing my business broker. Letting my accountant know that, I'm going to look move forward to sell the business.

[00:17:28] This is what a prospective buyer's likely to need. I might get in touch with my business attorney, right? So this is gonna happen. So I can spend July and August doing the things that I need to do to be ready. And so that when September hits and my business is picking back up again, I'm able to turn a lot of the day-to-day things over to my broker or to my investment banker, depending on how big my company is. So if that's the case, then use the slow time to, to get set up and to do the things that you need to do to successfully manage the transaction, but also to make sure that your business continues to run. 

[00:18:11] Ronald Skelton: Yeah. A lot of times, a lot of people think that there's gonna be this, like you were saying, this hot market, and there's gonna be 10 offers, and they're gonna get to select the best one.

[00:18:19] If your business is under probably 10 to $20 million, if you can't get a investment banker to sell your business, you're probably not gonna get to do the auction process. I see that happening a lot for businesses big enough that they have an investment banker, they're doing 10 million revenue, 20 million in revenue, or somewhere in that realm or above. The investment banker, they love that. They love, doing the auction process. That's their game. they'll actually spend money and time and effort to go out and reach out, to cold reach out to potential buyers. Line a bunch of 'em up. But you, a lot of small business owners just, they don't qualify for that amount of tension cuz it's time consuming.

[00:18:53] And to be honest, I don't know if you want it. If you're a small business owner, It's a lot of work to have that. I mean, you really have to have your ducks in a row when five people are evaluating cuz they're gonna beat you up if one thing's out of whack. 

[00:19:04] Wendy Dickinson: Well. I'll tell you the truth. I think that in most cases people can benefit from having a business broker if they're in the small scale. Just because the business broker handles the tire kickers, you don't get people who are wasting your time. You don't get people who will never in a million years line up the financing to buy the business anyway. And so I think the business broker. Has the best opportunity to at least get you more than one buyer. And again, I'm just shocked by the number of people who decide that they're gonna DIY that whole process.

[00:19:39] And it's, it is a specialization. It is something that people train to do. It is something that, you as a business owner don't know what you don't know. I'm gonna go back to my dad who didn't understand about what he needed to do and how he needed to have a codicil or something to the addendum, to the contract that he had with that client. I think that if you're going to sell your company, and you are serious about it, and especially if you are hoping to fund your retirement or have some other idea of what you wanna do with the proceeds. In other words, your business is something more than just pocket change to you. I think you ought to take it seriously.

[00:20:23] I think you ought to get that help. And you ought to talk to more than one. Don't base it on whether you like the person. Base it on you like them, and they have a long line of very satisfied clients.

[00:20:36] Ronald Skelton: It takes something to sell the business. Like you were talking earlier, less than 20% of all businesses ever listed even sell. And a lot of that, I'm not being mean here. A lot of it's on the broker. It just absolutely is, for a multitude of reasons they might be taking on businesses that are just not quite ready and not sellable. They haven't put in the groundwork, to two to three years of, prep minimum four to five, like we were talking earlier, probable, and six or seven likely, of years making that business sellable.

[00:21:05] The other thing is a lot of times the business owners business brokers aren't strong enough. Meaning they're not willing to tell a business owner, I know you want 2 million for your business. It just isn't worth that. Here's the current valuation. So they'll list things way above. Thinking the owner will coming down, instead of just standing up to 'em and saying, Hey, in the current status of your business, it's worth X. But there's a multitude of different reasons. So as the business owner, you're looking for a broker. The chance, will he be honest with you and tell you if you're outta line.

[00:21:32] Does he have the experience in the database and the track record to get it done? And, does he have the team, right? Because it takes a little bit of a team, somebody on their team needs to look at your financials and understand your financials and make recommendations, whether you're doing your own books or you have an accountant. Like, Hey, here's the changes we need to make over this listing period, to make it more valuable, make it more in line with what sellers are looking for or buyers are looking for.

[00:21:58] Wendy Dickinson: I think that we can actually spread it around because I think that the onus for that starts with the business owner. If the business owner has not put a system into place where someone else could step in and run it, then that's on the business owner. If the business owner has not managed to maintain, books that are separate from their personal finances. That's on the business owner. 

[00:22:24] Now, here we go again. If the business owner is ready to sell, they feel like their books are clean, they have a good idea of what their business is worth, then it's time to interview brokers. It's not time just to hire whichever one, right? And many of the points you brought up are correct. There is a school of thought where business brokers will tell the owner an elevated valuation just because they know that's what the owner wants to hear. Thinking that once they get into the process and they see that there are three offers that are much less than what the owner had hoped for, then oh, well, that's taken care of.

[00:23:05] If on the other hand you have a broker who says, I respect that. That's what you would like to have, but here's what you can reasonably expect. That is a much, to me, a much more comfortable relationship. From there, you have to look at your attorney. Has your attorney ever sold a business before? do they, as part of their practice, help with those things? Because I've seen attorneys kill deals. I mean, a small deal you do not need a 20 or 25 page purchase of sale. That's crazy. 

[00:23:39] Ronald Skelton: Yeah. The difference between your average, purchase and sales contract, can really vary, right? For instance,for one of the things we were looking for, we put one forward. It was probably five, six pages deep. It was pretty adequate, for the roll up that we were doing for marketing agencies because it was very complicated. And, we were doing, like, we were only getting paid on the uplift. I'm gonna say terms that most of these guys don't understand, but I'm not gonna go into explaining them.

[00:24:04] But we were only getting paid on the uplift. So we had a waterfall, waterfall accounting mechanism inside of there. So our persons of sales agreements were, I wanna say, I think at one point it was 68 to 80 pages.

[00:24:15] Wendy Dickinson: Yeah, that can be really long. and again, as you said, it depends on the business, but for the most part, you have to make sure that your attorney has the experience. Because otherwise I think you, it kills the deal when you are just wading through these revision after revision, after revision. 

[00:24:33] Ronald Skelton: Right. And then it kills the deal. Like I love that you said not all attorneys are mergers and acquisitions attorneys. The guy that set up your LLC had you, set up your family trust and all the other stuff you have your family attorney do, is not the guy that should be selling your business. They don't even understand reps and warranties. If they're in a bigger firm and they have somebody in house that does that stuff, that's great. But every community, I mean businesses have been around since the dawn of time, since we were, cave in rolling stones and trading seashells for something.

[00:25:01] Business has been around long enough. There's an established, mergers and acquisition attorney in every community. There's somebody in your town that helps with the purchase and sales of businesses. So a lot of times that call you see when you, like, when do I call my attorney? Or on, one of the calls that's call the attorney. That first call to your attorney is, Hey, do you have anybody on your team that specializes in mergers and acquisitions? Or can you gimme a referral to someone who does? 

[00:25:26] Wendy Dickinson: Right. Right. Yeah. The other thing I wanna point out as far as when you are gonna sell your business, that I think is super important is don't just keep it to yourself. Have a chat with your partner. Whether it's a life partner or a business partner, or both, right? You also wanna probably have a chat with your kids. You and I were talking in a previous conversation about how important it is for an owner to prepare themselves by separating their identity from their business.

[00:25:56] But a lot of times that's true for the person's spouse as or partner and also true for their kids. So I think it needs to be a conversation. And I will tell you that I've seen owners who, decide they've had enough, they can't do anymore. Their last kid is graduating from college. They're about to be an empty nester. They've got another kid that's getting ready to get married. So they've got that going on. Oh, by the way, and their spouse is retiring and they're taking care of a whatever or whomever. And, it's just like the perfect storm. Every single stressful thing that could be happening in this person's life is about to happen, and they wanna sell you their business. And it's like, whoa, whoa, whoa. Let's wait. Let's get you through some of that. 

[00:26:46] Ronald Skelton: I love that you said you've gonna talk to your significant other and your partner and stuff. There's an identity crisis for most people. It really is. I know when I got, when I walked away from the, I sold or walked away. I transferred half the assets to my business partner, the real estate thing. We did it because the market was shutting down and,market was getting super hot. 

[00:27:04] Foreclosures are going away, and we specialize, our business was called Tulsa Foreclosure Center. We specialize in stopping short sales and foreclosures, and from the 2008 crash all the way until 2017. And the market got so hot, we just, there wasn't enough business and the banks had negotiated. The banks knew it was hot and they just quit giving us deals on houses. So when we first started the business, we'd averaged, 10, $14,000 per transaction just to whole sell 'em off to somebody else or clean 'em up a little bit and sell 'em. That was our minimum. 

[00:27:34] At the end of the business we'd be lucky after working for six months, 12 months, 18 months, negotiating to purchase a house and putting all that time and effort in to make three or four grand. You start doing the number of hours and the math on it, it was like, okay, we're averaging about 20, $20 per man hour on these deals. I can make more money, being a door greeter at Home Depot in a good city, and pink a lot less risk. But, when I left there, it wasn't identity thing cuz I've been doing that, for a long, long time. And, I knew I wasn't going back into it because there's also a weight, that goes along with constantly being around people who are extremely distressed, losing their homes.

[00:28:12] We were counselors more than anything, a lot of times. We were advocates for them. We would help them fill out complaints, the Consumer Financial Protection Bureau, and fight it. A lot of times we got to help 'em keep their houses. Those were just beautiful location. But for every a hundred houses we came across, we might get help. Two people were capable of keeping it. But, when you move on from one thing to another that you know that's your lifestyle. I'll be honest, I was kind of lost for a little while there. I spent a year or two just doing, exploration into self-help. Things like going to Tony Robbins courses, going to the other ones, and just like working on me for a while.

[00:28:48] Like, okay, let's just work on me for a little while. But, how do you say people should prepare themselves for that? Like, this is gonna be a lot more disruptive than you're imagining. And you should have a plan for that and know what you're doing next and really have a lot of activities. Especially in the first few weeks of going from one to the next, really have a lot of activities planned out and things that are going on that you can build a new identity upon.

[00:29:13] Wendy Dickinson: Well, I'll tell you the ideal scenario, and I will also admit that it never works this way. Almost. So I really, when I work with people, and again, it's partly it's my therapist background, right? I'm not a therapist any longer. I've given up those credentials, but I mean, it's part of who I am. I bring that training and what I know is that it's really hard to make those identity changes.

[00:29:38] And so in an ideal world, when I start working with someone, we create an operating system for that company. We look at what's the vision and do they have the right people in the right seats? And what are the KPIs and are all of the processes documented? And what are the issues that are part of the industry? What are the issues that are part of this particular group of people who are working together? And through that, Ron, we're looking to create and empower a management team. And I use that loosely, right? Cuz we can have a small company that's family owned and the management team are people in the family, right?

[00:30:21] But it's still a management team. And so what we look at is how can we empower those people? How can the people who are in charge of different decisions or different areas of the company also be in charge of the decisions around that? And how can they make sure that those decisions are in support of the ultimate vision for the company. And what I do is when I, or my, my team are working with this group of people, we are looking at the ways that the owner can begin to separate themselves. So if that means we have a meeting once a week, and the team goes around and everybody's looking at their goals and they're looking at the to-do list from last week and any issues that came up.

[00:31:07] And by the way, let's look at the company dashboard, and is this all you know again in support of the ultimate goal or vision? And then where are the places that the owner just couldn't resist jumping in again. And then we get to pull them back like, alright, yes, you are really good at X and someone else is making a lot of mistakes, but this is their opportunity to learn and your opportunity to go and explore a new hobby or a new passion. It's part of let's all agree on the vision, create this operating system that will allow the company to operate independently of the owners. And in some cases I have several clients that they particularly like a couple of things. And so, yeah, by all means, let's keep doing those things. But in the meantime, you don't have to do everything. 

[00:32:08] Ronald Skelton: I'm curious how many times you see the same thing I see. I see cases where people do all this. they know they're done, they're burn out. The reason they're selling is cuz they're burn out. usually they're in their, the forties or fifties or younger. So they're not retiring out. They're just like, I'm done. I'm burned out with this. They go through this process. The process you're talking about. They're documenting. Farming off everything they don't like first. Farming off some of the stuff they do like to free up time to explore new opportunities and stuff.

[00:32:33] And then now this thing is running smooth and they do the, I always say it, the two day, two week, two month process. Take two days off in the middle of the week, Thursday, Friday, and give yourself a four day weekend. How did the company go? What got done? Empower people to make things, decisions without you. How did it go? Then do two weeks, right? A month or two later and you tell everybody in two months from now, I'm taking these two weeks off so everybody can ramp up and get done. And then when I say two months, it's 2, two 1 month period in the same year. Look, I'm taking the month of December off, this is yours. 

[00:33:02] And choose a medium month. I wouldn't say if you're dead still in December, that's not the month. That's not fair to them, it's not fair to you, it's not a growth opportunity. But don't pick your peak month either when it's all hands on deck. Pick two medium months where you know, you think they can make it without you. And literally it's like, hey, if the place isn't burning down, you can't call me.

[00:33:19] Wendy Dickinson: Yeah, and I wanna, I just wanna jump in and say that you're spot on there. And what I tell my clients is, you wanna welcome whatever comes up because that's gonna tell us what else needs to be done before your time with the company is over with.

[00:33:37] Ronald Skelton: Yeah. After all that, the point I was gonna get to is after all that, they step back and go. It's kind of the used car mentality. The new car mentality. You go out and have your, right before you sell your car, you go get your car detailed in service cuz you want the highest retail or trade-in value.

[00:33:50] So you get your car detailed, you have it cleaned, you have all the little minor ticks and clicks, fixed. And you're driving around the, in the car waiting and taking it to the dealership go, wait a second. This isn't so bad right now. I don't have a payment on it. And I joke around cuz I drive beaters. Everybody's asking me if you know with what you do and what you make. Why don't you drive nicer cars? I said, cause cars are a horrible investment. But there's this new car, new old car mentality that can happen inside of these business owners. They fix all these things.

[00:34:15] They're not pulling 80 hour weeks anymore. They only needed a couple hour a weeks for advisement and they may not need to sell. They may be able to go into retirement and have a little bit of that identity and fulfillment still there because they stop by once a week and sign a few checks and play the chairman of the board. As opposed to the daily, operator. 

[00:34:37] Wendy Dickinson: I completely agree with you. I think still often in our society, not only are we driven to equate our self worth with whatever, number of hours or tasks we have on our to-do list, but also we tend to engage in either or thinking. Like, I've either gotta sell it or I'm gonna drop dead in it, and what you just said is the end. You can create a business or get your business to the point where it is able to be fairly self-sustaining. And you can then choose when and if you will exit.

[00:35:16] Ronald Skelton: I thought about doing a little segment on this show because,you're talking about their personal identities and stuff. I thought about doing a segment of the show, right? I fire up a portable mic, and I just walk up to people on the street and I say, who are you?

[00:35:26] I'm Ronald Skelton. Who are you? My current gut feeling is that I would say nine out of 10 people, 90% of the people will tell you what they do. I'm John. I'm an accountant. When you ask somebody who they are, most people will respond with what they do. And we all do it. We all tie our identities to, if I said, what's your name? They're gonna say, it's John or Wendy. If I say, what's your name? You'll say, Wendy. And if I say, Hey, Wendy, who are you? Tell me about yourself. Almost, always it's gonna go straight to what you do is, maybe because, maybe I'm a little biased cuz I'm on the business side.

[00:35:58] People think I wanna know about business. But, I would think more often than not. I think I could do it in a t-shirt and shorts. In the most on business professional setting I can. Pair of, joggers, sweats in a hoodie. And walk up and say, Hey, who are you? And they wouldn't tell me that they are a mother or wife,a grandmother. All the really cool things that people are. And they would tell us, oh, I'm an accountant, or I'm a retired accountant. And, I think it's part of a, the society. Maybe it's a US thing. I think it's part of our society to tie what we do as part of who we are. 

[00:36:31] Wendy Dickinson: I agree. And I'm not sure that is really the healthiest thing for us. I also don't think it's necessarily the healthiest thing for our businesses. I think our businesses need to have an identity that's separate from us. 

[00:36:45] Ronald Skelton: Absolutely. And a lot of cases, I don't know how possible it is, like for a podcast. There's a podcast right now that I really, I buy newsletters and, I would buy other podcasts if I could make them work. There's one I'm really looking at. He is a little overpriced. He's like a seven x. But, one $15 million for a company that does, two point something a year in revenue or profit, EBITDA. But, that said, some businesses you just gotta really be careful. If I ever wanted to sell this, I'd really have to bring in secondary host and and prove to the audience is more interested in the story than they are the host. Right? 

[00:37:18] Wendy Dickinson: Yes. Yes. Absolutely. Well, I do think that's an interesting point. And I will say that I'm in a networking group and some of the people have been in the group for, I don't know, 20 years or something. And it's interesting how difficult it is when we know someone, if we're gonna refer to them, we wanna refer to that owner as opposed to the owner's company.

[00:37:41] And so that's why I feel like, and now we're kind of going full circle back to your acquaintance who runs his business as though it's for sale every day. I think that's a really smart way to do it. Because you're building a company and then hopefully when you get to the point where you're large enough, It will be just an everyday matter to have people to refer to the business as opposed to you as the owner.

[00:38:09] Ronald Skelton: Yeah. The business networking ones an interesting thing. You don't usually see, bigger businesses inside of, I played that role for a long time. I was a marketing coach, a business coach myself for a long time. I was actually the one at Jay Conrad Levinson's, Guerilla Marketing author. I was one of his coaches for a while.

[00:38:25] So I was a, I have a master's degree in MBA in marketing. I was a certified Guerilla marketing coach for his program and do seminars and stuff for him. That said, I did a lot of business networking then. You don't see the 10, 20, $30 million revenue companies in those, just because the way they're set up. It's usually the business owner in there at meet and every week. I tried the other way. I have a little pest control company I own. I hired a VA just for the purpose of going to all my networking meetings. Cuz they, especially during Covid, they're like, they're all online. Right? So I just hired somebody over there and the referrals just dropped way off, almost completely. Because they're like, oh, this is just somebody that works there. I don't know what the problem was. Maybe they thought they couldn't reciprocate. She did a really good job of telling me what my people, what the people in the room needed. And I still went out and looked to fulfill those needs. But, I don't know how business networking would play into, if you're trying to sell it and you gotta move yourself out of it, and you're still using that. The small networking events, the BNIs and the, different clubs out there to grow your business.

[00:39:27] Wendy Dickinson: Yeah. It's definitely one of those things where you've got to adjust your tactics as your business grows, For sure. I do think though, that from the very beginning, it's a good idea to create an operating system where the business, it create you, you create an identity for the business that's separate from you. Even in the beginning. Yeah. 

[00:39:49] Ronald Skelton: So what are the key elements? What do you think, you've been a probably, you've been in the business coaching world as long as, I've been in, this space. What do you think the qualification, like what are the key elements of you need X, y, and Z in place before you consider, any type of succession?

[00:40:06] Selling it to, I think you're doing to somebody a disservice if you leave him business. You don't go through the same process, right? If you leave your son, your landscaping business, doing two and a half million dollars a year. And you don't go through this process as if you were selling it, you're not doing it any favors.

[00:40:20] Wendy Dickinson: I completely agree with that. Yeah. I completely agree with that. And I actually do work with family businesses as well. It's a huge source of conflict for a family business when there isn't an operating system. When you don't have a business that is,is sustainable. That it empowers the decision makers and for that authority to be shared amongst, the people who are in key positions.

[00:40:46] I feel like, there are things that business owners can do to ready that next generation should you decide that you're gonna pass the business on. But I agree with you. I really believe that an owner does the business a disservice if it does not create a sustainable entity that can operate independently of the owner.

[00:41:09] Ronald Skelton: Yeah. So, I've been an entrepreneur for a long as I can remember. I was a kid I mowed lawns. when my dad was a painter and he worked at a paint manufacturing company, my mom was absolutely a genius. She could do anything. I remember at one point in her time in her life, she was, an accountant. In another part of the time of her life, she was working for a place called Nelson Marine Products, and she was doing the wiring harnesses, for inside of breaker boxes for nuclear powered submarines.

[00:41:34] But, my dad was the entrepreneurial one. If he wanted something, he'd go paint a few houses and make the money to get it. But, At 16, he turned that business over to me with a painting company. So he realized I was old enough to work. If I could get bit by dogs and go back to work, I could climb a ladder. So anyway, I ran that until the time I was 20. And we had no systems and processes. We had no accounting, not that I can remember, right? Money went into the bank account, it came in, we spent it. We had a CPA that would fix everything about once every six months he would argue with us and tell us quit doing this or do this differently, and then he would do our taxes at of year. And that's how we ran the thing. It wasn't until I got out.

[00:42:09] And, started going to college and doing some other stuff to realize that there was anything else. And a lot of these business owners, that's what they've, that's what they've done. They went out and did something on the side as a necessity to make some money. And then they never were taught accounting proper practices. Hell, a lot of professionals, chiropractors come out of college a lot. I mean, as licensed professionals, doctors come out as licensed professionals. Never been taught a single thing about running a business. So I don't expect small business owners to have their ducks in a row if they don't already have an advisor or broker or somebody helping them. 

[00:42:39] Wendy Dickinson: Well, I'm gonna make a recommendation that for those people, It wouldn't hurt to read a couple of books or even listen to them on Audible. And I'm gonna suggest Traction and the E-Myth revisited. And even if you just do those two, I'm gonna throw in the 12 week year as well. Those three have a great handle. 

[00:43:03] Ronald Skelton: I'm a big fan of EOS and Traction. I've actually had the, their CEO here on the show. The other one I would throw on top of that is The Great Game of Business. There's a book called The Great Game of Business. I've had them on here too. Brilliant.

[00:43:13] They compliment each other too to some extent. So The Great Game of business and the EOS, the Traction book, our business operating systems, compliment each other. So the great game of business is about employing every, empowering every single employee to know their absolute value and role in the company and how it contributes to the underlying bottom line. So you teach everybody financials. And, to the higher, to a high level financials, not like in the grain of things. But everybody understands that, what their widget, they're producing impacts in the company and they make a game out of it. They call it the great game of business cuz they game high the whole process.

[00:43:48] That's been around for many and many years, very popular. And they've rolled up, I think they are about 60 something acquisitions.the foundries of that have their own holding company where they've acquired companies and they turn 'em around. And, in one of the toughest industries, I think they have a two and a half percent profit margin. They do remanufactured hardware rebuild tractors. They, basically in automotive and tractors and stuff, they refurbished parts and sell them. Low profit margin high competition. They managed it to get it done because of the way they run their operating system. 

[00:44:18] Wendy Dickinson: Yeah. Yeah, exactly. And I will say the other one that I really like is Pinnacle, and that's by Greg Cleary and, Steve Prada, who used to be EOS implementers and then developed, took that system in another direction. 

[00:44:32] Ronald Skelton: I'll check that one out. That's the one I haven't read. The Pinnacle. Okay. So how people get ahold of you. We're getting close to the top of the hour. Let's talk about, how do people reach out to you? What services do you provide? And, let's make sure everybody knows how to work with Wendy. 

[00:44:45] Wendy Dickinson: Yes. Well, thank you. So email Wendy at Ascend Coaching Solutions with an S on the end.com. And then my number, 8 0 4 3 7 2 7 5 7 5. I'm on Eastern Time. And At Ascend, we provide executive coaching, team coaching, leadership training and development, and those services center around succession planning, strategic planning, but then also implementing business operating systems. 

[00:45:16] Ronald Skelton: Awesome, awesome. So, if somebody can remember like three key takeaways from today's show, what would you want 'em to remember? Remember of you and your key lessons for them? 

[00:45:27] Wendy Dickinson: Decide how you wanna exit your business. That's number one. And number two, create a business operating system within your company. And number three, keep your life partner up to date. Let them know what you're doing, what you're going through. Make sure that those lines of communication are open because it helps so much in planning your exit. 

[00:45:52] Ronald Skelton: Awesome. Well, I thank you for being here on the show today. It was a pleasure, getting to know you, getting to, to learn from you a little bit here. And, is there any last things you wanna say before we call it a show?

[00:46:04] Wendy Dickinson: No, but Ronald, thanks so much for the invitation. I've enjoyed our conversation and I'm really so grateful that you are able to provide this opportunity for your listeners so that they can start to think about their exits. 

[00:46:16] Ronald Skelton: Awesome. Well, thank you for being on show. We'll call that a show. 

[00:46:19] Wendy Dickinson: Great. Thanks so much. Bye-bye.