E138: Seasoned M&A Professional Jay Rodgers Shares Insights on Buying and Selling Businesses

[00:00:00] Ronald Skelton: Welcome to the How2Exit Podcast. Today I'm here with Jay Rodgers. He's the Entrepreneur's mentor, the author of the Vet, and a seasoned mergers and acquisitions professional entrepreneur. Started many companies, sold just as many, and I'm really looking forward to having a conversation with you today, learning from your experience. Thank you for being on the show. 

[00:00:19] Jay D. Rodgers: Thank you and I appreciate it because, my whole life at this point is dedicated to trying to help other entrepreneurs grow their companies, create jobs, and strengthen the foundations of this great country. 

[00:00:33] Ronald Skelton: It's important. Right. I was reading some of the stuff you had in your show notes, and I agree not nearly as many companies are starting as they were in previous decades. 

[00:00:43] We have fewer startups. And on top of that, we have a lot of business owners that are aging out of the market. We have business owners who are in their seventies and, they still own businesses and they don't have a succession plan. Those have to go somewhere. A large percentage of our economy is based off of these small to medium sized businesses owned by, I guess what they call 'em the baby boomers of these days, or whatever the nickname is they have, but. 

[00:01:08] Jay D. Rodgers: Well, Craig, you've nailed it. Craig Hall and his, many of your people I think will know Craig Hall.

[00:01:15] Craig, was a self-made millionaire in his twenties. In his thirties, he was a billion dollars in debt and got out of it without bankruptcy. Today I think he owns a hundred thousand apartments and, but he has written two books on entrepreneurialism. And one of 'em I have here on my desk, Boom. What you just said is, so there are right now over 3,200 counties or state divisions of parish, whatever it might be in our country. How many of those do you think account for a half of our startups? 

[00:01:50] Ronald Skelton: Probably about 10 of 'em, right? 

[00:01:52] Jay D. Rodgers: 20 out of 3200. 006%. I'm proud to say five of those 20 are in Texas. And we've got about a half the number of startups and Ronald Reagan said it real well when he said that, entrepreneurs and their small enterprises that account for virtually all the employment growth in the country.

[00:02:14] Ronald Skelton: Right before Covid hit, I think you live in Flower Mount or in that area? Like according to your LinkedIn profile. 

[00:02:19] Jay D. Rodgers: Well, yeah. I had, my ranch was in Flower Mount and I still keep my office out here. I'm at 83. I've now moved in to Fort Worth and live in a condo above the Omni Hotel, but I still spend two or three nights a week out here still.

[00:02:33] Ronald Skelton: So let's talk about your journey. Let's talk about, like I jokingly say, on the show all the time, you were born and then you ended up on a show about mergers and acquisitions. Could you fill out the gap in between? We could probably spend a day or two talking about your life story, but tell us how kind of become an entrepreneur and then some of your, the highlights of your adventures in life so that we can learn from 'em.

[00:02:53] Jay D. Rodgers: Thank you. And you say become an entrepreneur. The fact is, I sincerely believe, that entrepreneurs aren't, trained or taught, they're born. And, I'm sure you're acquainted with Gino Wickman. One of the things I recommend to people and Gino's book, this is he's got a newer version now.

[00:03:14] But Entrepreneurial Leap, chapter five in this and the newer version, is a self-assessment to see if you are an entrepreneur. And I think it's well worth taking people that are thinking about getting in. You don't have to be to have a small business, but if you're not, you need to surround yourself with the right type of people to support your efforts.

[00:03:35] Ronald Skelton: Yeah, I think it takes an entrepreneur to start wanting an operator. What I call an operator to run one. You're entrepreneur is like, I'm an entrepreneur. I've been one since I was a kid. We were doing lemonade stands and whatever selling. Whatever I could sell, I always won the sales contest whenever they had fundraisers at the, at the school or whatever.

[00:03:51] And, I would sell so much on some of those things. It was like they, they would ask me how I did it. And it was like I would go into town with my father and there's, he worked in a factory and I'd go to all the different factories around town and, go talk to the owners and convince the owner to walk me around and let me sell to his employees. So, I'd be doing 30, 40 sales at a time when I would do 'em. Like I walk into a factory, I had to 150 employees, I'd make 30 closings.

[00:04:13] Jay D. Rodgers: And again, I think entrepreneurs are born for the most part. Straight out of college, undergraduate, I was with Kodak for a few years, but I always knew I was gonna get out on my own.

[00:04:25] And, I've now, started and sold about 20 companies. My m and a attorney has handled the last 14 of those sales and one of 'em that I always like to refer to is SmartStart. SmartStart the first month we were in business putting a device on cars that if you'd been convicted of a DWI or a DUI, you had to blow in and pass a breath alcohol test before you could start the car. The first month we had one customer and $60 revenue. Today, that company is in 18 countries, is the world's largest, has 1,800,000 customers and is a billion dollar plus company. And along those same lines, a lot of people, I think I'm a great starter. But when they get up to where they need professional management and what I call the button boys, it's time for me to get out.

[00:05:22] Now, Craig Hall's a good example of an entrepreneur that, not only has the talent of starting companies, but he also knows how to take 'em to the big time and stay aboard. I don't do that. I kind of try to get out once it knows it's on its way to the moon. 

[00:05:41] Ronald Skelton: It's interesting as a lot of entrepreneurs have to do the, it's a downfall of many entrepreneurs that they don't step out of their own way.

[00:05:47] I know I'm really good at starting things, coming up with ideas. I know I'm not a great operator. A good sign that you're not a great operator, if you hate doing the same thing over and over again, you're probably not a great operator. And if I have to do the same thing more than two or three times, I try to figure out if I can assign it to one of my assistants or if I can have a piece of software written to do it for me because just that's not my nature.

[00:06:08] I want new fresh problems. I want new different things to do. If I have to crank the gears to get the widgets to come out and I have to turn that crank every day the same way, I'll find somebody else to do it. Just not me. 

[00:06:19] Jay D. Rodgers: I hear you. What you talk about small and mid-market companies, what do you think most of your audience, what size companies do they have? 

[00:06:29] Ronald Skelton: That's a great question. They're looking to buy and grow companies right underneath the private equity radar. And that depends on the industry. So in most industries, they're at, $10 million and less. Some of the bigger industries where it just takes a lot of capital to get going and stuff like big manufacturing companies. PE won't touch 'em under 20, $25 million.

[00:06:47] So most of the people listening to this show are playing what we call the, multiple arbitrage. So they'll buy companies from mom and pops that are doing, most of these guys are using SBA loans. So they're buying companies where the total purchase price is less than 5 million. So they can get an SBA loan on it. 

[00:07:04] And their goal is to buy 1, 2, 3 of those, put 'em together, or to just simply grow that company to the point where it crosses that threshold. And is interested, to the private equities or to the strategic buyers. Because while we can buy these companies at two x and three x seller's discretionary earnings, when we go to sell it to private equity, it's not uncommon for them to get, seven or more x out of 'em.

[00:07:29] Jay D. Rodgers: Absolutely. And the million dollar on the bottom line number is kind of a significant number. I'm glad your companies or that your audience is above the needing to use a local broker, as opposed to getting an investment banker. It's two different worlds and I encourage people to get their company up to where it's attracted, attractive to the people purchasing as you're speaking of. 

[00:07:55] The last company was a GPS tracking company. And at 80 years at that time when we sold it, with all the deals I've done, I had never really had a true SaaS company and it was an education. I thought this company would bring 10 or 12 million. AKKR bought it for 25 million cash. And it was absolutely because, they look at reoccurring revenue as a multiple rather than EBITDA. 

[00:08:28] Ronald Skelton: Or they'll do a hybrid. If you've got blended income, they give you a different multiple on your, recurring revenue than they do on your, like one time service contract revenue.

[00:08:37] And two, three years ago it was insane. The multiple they give you now, it's come down a little bit in the last year 'cause the economy's messed with them. But, when I first got in this two or three years ago, I'm a computer nerd by previous training. I wouldn't even touch SaaS because I couldn't compete with the guys that are buying 'em.

[00:08:52] These guys expected, the SaaS companies expected 10 x, 12 x, 13 x or more of revenue. Some of them are like, I've had phone calls from people where they thought they were getting 30 x. 

[00:09:02] Jay D. Rodgers: It might be appropriate to talk about the rule of 40. Does that come up often in your?

[00:09:08] Ronald Skelton: No,I have not heard the rule of 40. So what is that? 

[00:09:10] Jay D. Rodgers: Well, particularly in SaaS companies, but it applies pretty much across the board. The rule of 40 simply says, that if your percent of annual growth, plus or minus your percent of profit equals 40 or more, you're in great shape. The last company we sold at a very interesting, the two fellows that ran the company for us came to the board meeting in December, a year before we sold it and said, next year we can grow the company a million dollar, put a million dollars on the bottom line and grow 5%.

[00:09:57] Or we can, grow 40% and put 300,000 on the bottom line and it's the board's choice. Where do you want us on this line between five and 40% growth? And the board said, we're a SaaS company, let's go for the 40% growth. They did grow a little over 40% and they put actually 330,000 on the bottom line. So they had it pretty well nailed. 

[00:10:23] Ronald Skelton: That's a great job predicting. I find that most operators are really good at predicting what's gonna happen. Most entrepreneurs are, either way over or way under. Depending on the entrepreneur, right? They're either pie in the sky, I'm gonna do 10 x by next year, and they're way off.

[00:10:39] Or they're like, Hey, we're only gonna hit this number. And they blow through it, they pass that number in the first quarter.

[00:10:44] Jay D. Rodgers: Well put. And I see that same, when people, to me you typically follow a pretty much a regular curve and when you start up the side of the mountain, after you maybe had losses the first year or so, and then start up. When you're at that point where you're going almost straight up.

[00:11:04] And I'd say that's the period where the owner said, to get the bad habit of smoking their own dope. To me, that is the time to sell because, it doesn't last forever. And so I always, I've always told people I've made all my money selling too soon and too cheap. 

[00:11:25] Ronald Skelton: But that's the way it has to happen because it's just like, I used to do a little bit of day trading until I got burned really bad and like, okay, I don't need to be in this.

[00:11:32] I had the four monitors. I had two workstations. This is back when you didn't have flat monitors, right? There were big chunky CRTs. I had four of 'em on one desk and then on L-shape I could turn and do four. I had two different power systems, uninterrupted power systems, two different internet providers. I was in the middle of trades, I could turn if one system went down and pick up my trades. I had software that would sync them together. So I'm not saying we, this wasn't a small operation. I was playing with less than a million bucks. For me, it was significant. And,you can't time those peaks. You lose a lot of money trying to like, okay, I hear entrepreneurs all the time, yeah, I'm gonna sell it.

[00:12:03] But we're climbing, we're growing so fast, I'm gonna sell it when we, right before we get to the peak. I said, well, don't ever tell a buyer that it's at its peak. You wanna sell it like well into that growth cycle. So they see some of the up cycle. So they see some of the, ways that it's gonna grow and that they can, the story that they see isn't this is at it's peak and it's gonna decline from here.

[00:12:21] The story that they have to see the story of increasing. I know people that do apartment complexes and they leave five or six units untouched. And I asked him one day, I said, why do you do that? You can increase the value of this when you're gonna sell it. And then he goes, I gotta leave something for the other guy to see that he can improve the value of the property. If I don't, then it looks like it's maxed out.

[00:12:39] Jay D. Rodgers: Well, that's a very interesting observation. I like that.

[00:12:44] Ronald Skelton: You're not gonna time the top of that mark. I think you made a lot more money selling on the way up, knowing it's still got some room. You're like, you built it, you see it, it is kinda like turning your kids loose.

[00:12:53] Like, okay, I did a good job. This is gonna grow. It ain't gonna die next week. I'm gonna hand it to somebody that and just watch it flourish. Right? As opposed to, Hey, I've ridden this, this ride until it's become uncomfortable. And a lot of entrepreneurs do that. They'll ride that ride right up until the second. Like, Hey, this isn't growing anymore. I don't know why. I guess I'm out of my class. I should sell it now. And I was like, no, you should've sold it six months ago.

[00:13:16] Jay D. Rodgers: Absolutely. Another subject I might mention that I find helpful to, when I'm mentoring people. And that is years ago, I used to always try to have three years of audited financials before I sold the company.

[00:13:31] And, I think that's still a great thing to do if it works for you. But nowadays, the quality of earnings audit that you can have done, can really allow you to replace three years of financial audits, when we sold our GPS tracking company. Well, it's been two and a half years ago. So, as you talked to your two to three year period, we were at the top of the mountain and it was a great time to sell. But, we got a quality of earnings and as a result, the investment, what that does among other things. Remember, ours happened to show that they thought our revenue or, and our true profit might even be bigger than what we reported because I'm a very conservative in my accounting.

[00:14:17] But, so that was a positive. But the big thing it does, when people are looking at you as a purchase, they have to spend a lot of time and money. And that quality of earnings report allows them to say, this is a for real company that we can afford to spend that time on. We had 67, non-disclosures signed by prospective buyers before we sold that company we in. And I just think that quality of earnings report is worth people thinking about and considering. 

[00:14:52] Ronald Skelton: Yeah. And depending on the company, a lot of people think that's gonna be outrageous. It depends on how complex your company is and how much time it takes 'em to do it.

[00:14:59] But, I have a, I just interviewed a guy, actually the show went out this week, who does quality earnings report. He's a Harvard grad. Did quality earnings report for big firms. Now he's doing it on his own. And I think his start off in, in the range where we're buying companies and looking at companies. I think they're run around 20, $25,000 to have it done. And in the grand scheme of selling a multimillion dollar business, that's a pretty good investment to make. 

[00:15:24] Jay D. Rodgers: Absolutely. You say, that's one I can pull up on your website?

[00:15:28] Ronald Skelton: Yeah, it's Elliot. I think it's his last name. Elliot Holland. Elliot Holland is the guy you wanna look for. 

[00:15:34] Jay D. Rodgers: I read a little about him. Well, I'll be darned. I may contact him because I may be able to refer some business.

[00:15:39] Ronald Skelton: Yeah. He's sharp. He's a Harvard grad. He passionate about this. He's in our area, these small to medium businesses, 10 million and below, just 'cause he sees nobody's doing QoE, quality of earnings reports for 'em and doing 'em right. I have faith that he's in it for the right reason and he is passionate about giving quality work.

[00:15:57] Jay D. Rodgers: In that same vein, I think it's awful important for people to understand how, how critical it is that they keep their books clean, clean, clean. So many people try to live off of their companies and their personal expenses or cars or insurance or fuel, you name it, and they're really cheating themselves because when it comes time to sell, If they've hidden those real well, they won't get recast.

[00:16:28] If they haven't, the IRS may want to talk to 'em and it just, clean books add so much value, in the buyer's eyes. I just think there's nothing better than being able to have. And the other thing a lot of people do is they start overpaying themselves grossly. And that's a terrible mistake because when you do, number one you're paying ordinary income on all that money. Number two, you make it harder to justify a recast because the buyer's happy to say, well, that's what that position ought to get. And even more important, you should, if you need more money to live on or want more money to live on. You can borrow it from the company at the lowest legal interest rate, which is not much.

[00:17:18] And having done that, pay it off at the sale. That way all your money is capital gains instead of ordinary income. 

[00:17:27] Ronald Skelton: A lot of people don't know they can do that actually. I asked somebody, I said, why don't you just take a loan against the company? Instead of a dividend, you're gonna sell it in two years.

[00:17:33] 'Cause he had a bunch of cash sitting in there. And, I seen he withdrew the cash, he did a big dividend when he, a year or two ago, where he took money out owner's distribution. And it's like, why did you, you had to pay taxes on that, right? He goes, yeah. I said, why didn't you borrow the money from the company? Pay it back interest. And we could have wrote that all off when we sold it or when I bought it or somebody else bought it. He goes, you can't do that. I was like, no, you can do that. Apparently it's done all the time.

[00:17:57] You can't do that. Like, no, apparently you can't. Other people do it all the time. So, let's talk about the, I do wanna talk about the book. 'Cause you got a new book out. You've contributed to one. You've written another one prior to that. You've got a lot of knowledge. Let's talk about the bet. What is the bet and, why did you write it? What's inside of it? 

[00:18:13] Jay D. Rodgers: Well, let me back up a little. The book I had wrote ahead of The Bet both on Audible and on Amazon, never got a review that wasn't five star. (Awesome.) Because it didn't get a huge amount of exposure but, I think I had, well there was several dozen reviews, all of 'em, five star. I'm very proud of it. 

[00:18:37] Ronald Skelton: I see 39 on there right now. They are all a hundred percent five stars. 

[00:18:42] Jay D. Rodgers: So well, great. And The Bet is even, number one the title of the book is because, Brown Publishing in Dallas, been in business 27 years. And Millie Brown, the owner and founder, is a good friend.

[00:18:57] We were in Joe Mancuso's CEO club together and other functions. So I've known her a long time. When I talked to her about publishing my book, she gave me an estimate and I said, Millie, if I'm gonna sign a contract with you, there's a couple of things I want to do different. One, I don't want an estimate. I want this to be a firm price. If it costs you more tough, if you do it for less, great. So I'll write you an upfront check for the publishing cost here. And number two, if we're gonna do this, I wanna bet you $10,000 that you won't sell out the first printing in a year. And Millie looked at me and said, Jay, are you betting against yourself?

[00:19:43] And I said, absolutely, Millie. She thought another moment stuck her hand out and we have a $10,000 bet. But it's a bet I can't lose. She's the only one that could lose it. There've been many great things that happened because of the bet. She started out by flying a photographer into Texas from LA to shoot the cover of her and I shaking hands on.

[00:20:06] Ronald Skelton: I'll say, is that Millie on the cover?

[00:20:07] Jay D. Rodgers: Right. 

[00:20:08] Ronald Skelton: Cool. 

[00:20:09] Jay D. Rodgers: That's the agreeing to the bet. And she assigned a gal that is the world's greatest, support. I write my own stuff, but this gal is a good shoulder to cry on and listen to. In fact, the lady, her name is Bonnie Hearn Hill. And Bonnie, has just finished writing a book for the, and she totally ghost wrote this one for the, I think the richest lady in China.

[00:20:36] She's got all kinds of awards, is written many of her own books. But, just because of the bet, Millie is watching over it like a mother hen and wants to make sure. And, the other thing I'm very proud of is, let me see where I've got, oh, here's one. I have worked closely with and they work, and I should mention in addition to the book. About 13 years ago, I had a vision for a great program to help entrepreneurs and it's called Biz Owners Ed. We now have a couple hundred people attend each of the 10 sessions each year. They run from four in the afternoon to eight at night, every Tuesday for 10 consecutive weeks. And, that, has been a great way for me to, like I say, my only goal at this point in life is to help entrepreneurs, keep our company full of small business.

[00:21:31] But in my acknowledgements in The Bet, I started out, it is with a great deal of pride that I recognize the personal assistance and support I received from four of the world's top entrepreneurial leader teachers. Listed alphabetically, Norm Brodsky, Verne Harnish, Carrie Santos, and Gene Wickman. I am very, very proud of that. They have all been to our Biz Owner Ed program in Dallas.

[00:21:57] Ronald Skelton: I reached out to Gene Wickman to have him on the show and unfortunately, I didn't know this, but he had sold the, basically has another CEO running EOS now. So I had, this current CEO of EOS on here, but, no Gino Wickman.

[00:22:10] He responded me personally himself and we chatted back and forth online and, I don't remember if we got on a real quick call or anything, but he's like, nah, for this purpose, for what you wanna do, you need this other guy. But he was very personable.

[00:22:20] Jay D. Rodgers: Oh, he's great. I'll tell you, Gino during Covid, he went a year and a half only on Zoom and virtual presentations.

[00:22:28] His first live presentation after a year and a half was to our group in Texas. And, had occasion spend a half a day with him in Detroit the other day. And Verne Harnish, of course, started EO, wrote scaling up and so, and I might add that of course you're not directing to, start up first time business owners, but Norm Brodsky's book Street Smarts, I think is one of the greatest books ever read for someone in their first entrepreneurial venture.

[00:22:58] Ronald Skelton: Yeah. Funny is, I've started a few. I failed miserably at some of them. Did okay on others. But, once you hit a certain age, it's like, okay, I don't know if I wanna go through that. The win loss rate for starting businesses, statistically is not very good. You can beat that if you got a lot of experience and really selective what you start.

[00:23:16] But statistically it's like, one in or 5% of 'em make it past the first 10 years and the, only so many percentage of those ever hit a million dollars in revenue. And I discovered this world of mergers and acquisitions where I could step in and for a decent down payment and some commitment. Buy something that's already passed all those hurdles, right? It's got product market fit. People are using it. And it's still on that ride up. I don't look for anything that's declining. I'm not interested in anything that's a, turnaround.

[00:23:44] That's a skillset left for other people. The audience here, we're looking, that's what we're looking for. It's well run. It's growing. We see rooms for expansions. We see things that, the current owner didn't do that we could do. And we can contribute to the growth of the company.

[00:23:59] Jay D. Rodgers: I've gotta tell a story after those comments of yours. One of the companies that we started, it was called Healthcare Staff Resources. We staffed a physical therapist, occupational therapists, and pharmacists. It was, in my mind, Hooper Holmes, a big company, was the perfect buyer. So I contacted Hooper Holmes and this was early in my career, I guess.

[00:24:27] And they sent a Vice President, a lady that was been an RN with them and is was now a Vice President, to look us over for purchase. Well, she came and I spent the day telling her how incredibly well run our company was, and, all the good things. If I had been listening instead of talking, or had I done my due diligence before she got there, instead of after. I found out after, when I got a letter saying they would not be pursuing the purchase. And I just knew they should have bought us. When I got that letter, I did the due diligence I should have done on the front end, and I should have listened to her because she told me part of it. It turns out she had been an RN with the company and had recommended to them that they buy a particular company in her area of expertise.

[00:25:19] They put her in charge of that company and in about a year and a half, she doubled their revenue and tripled their profit. When she came to look at me, she was looking for another way to win. And instead of talking about the things I hadn't taken advantage of and the mistakes I been making, and I was shooting off my mouth the whole way. That happened many, many years ago. I haven't done that since. 

[00:25:42] Ronald Skelton: So, one of the favorite questions I always ask sellers, people are selling their businesses. What are we looking to accomplish here? And that's the same thing if you're on the selling side and you're like, your buyer comes in and is like, what are you looking to accomplish?

[00:25:54] Like, what are you wanting to do when you buy a company? And if you would've took a, took just a second and said, What is it you're looking for? What are you looking for in a company so I can give you the right information? She probably just said, she probably have told you her story. She probably would've just come out and said, I turned the last one around. I did this and this. Then you know what to do, right? You're a natural born entrepreneur. You can't be a natural born entrepreneur without having a little bit of salesman in you. So you just gear the conversation honestly, of course. But you gear the conversation to what they want to hear, right? 

[00:26:23] Jay D. Rodgers: A couple of stories that, that fit all that. I learned, like I say, that was one of my big mistakes, but I learned a lot from it. I tell people when you're showing a perspective buyer through the company, you go by a department, you call over the supervisor and say, George, who's that in that corner office and what does he do? 

[00:26:42] Buyers want to be sure that the person that's walking away with the check isn't walking away with any value in the company. In fact, when we sold AKKR, our GPS Tracking company, I gathered the board together and I said, now that we've done our bet, have our investment banker hired and all, none of us will ever, including myself, communicate in any way with any prospective buyer. And they all kinda looked, well what do you mean? Said we will email, we will write, we will talk, we will get on the phone, period. And the whole thought is, we presented our company and in truth too, we're all a bunch of old farts that, are trying to get liquid and make sure our wives don't have a problem after we kick off.

[00:27:33] But as a result, we had the two guys that were great. I told you earlier about the one that put the graph up. They met with all the prospective buyers. All the way to the finish line and we never showed up except closing. And I think it added value to the company. 

[00:27:54] Ronald Skelton: It also helped that, that you didn't end up with a set of golden handcuffs. You show up to all those meetings and you show up and present yourself as an integral part of how this thing works. A lot of these strategic purchasers and even like private equity and stuff like that, they're gonna want you to hang around. 

[00:28:10] Very strategically, what you did, and whether you knew it or not at the time you probably did is, you showed that the two younger guys that were presenting throughout the process, that's a capable and ready set of hands. If they need the golden handcuffs on anybody, here's your two guys that shackled of this business after it's sold. As opposed to, all you did is show up at closing. You never seen me and never talked to me before, why would you need me around afterwards? Right? 

[00:28:35] Jay D. Rodgers: Well done. And as a matter of fact, just before we sold, I made sure the boys each had the 20% ownership. So each of them walked away with 5 million and they put part of that money with the buyer, which adds more emphasis to the point that they can run it. 

[00:28:54] Ronald Skelton: Oh yeah. They probably did an earn out for those guys.

[00:28:57] Jay D. Rodgers: Yes.

[00:28:58] Ronald Skelton: And then both sides get what they need, right? The buyer gets somebody can stay there and confidently run the company. You as the seller get to, to leave.

[00:29:05] It wasn't your first dog and pony show. You've done this before. You know what people are looking for. So many small business owners are surprised that they're like, I'm gonna sell this and run this other project. I was like, You're not prepared to do that. He's like, why? 'Cause you are too integrated into this business and anybody that buys, it's gonna have you stay around.

[00:29:21] Jay D. Rodgers: I tell everybody I met through that's preparing to sell. The more vacations you take the last year or two, and the longer they are, the more your company will bring.

[00:29:33] Ronald Skelton: Yeah, we've had a quite a few guys on the show that teach us stair stepping vacation. And what that is, is, okay you decide you wanna sell. Tell everybody at your company you're taking a two week or at least a week vacation next month. And they're not allowed to call you unless it's an emergency.

[00:29:46] And then, four months later, you tell 'em you're taking a two, you double it. Take a two week vacation. And then by the second year, because you need three years of earnings and tax returns and all that stuff anyway. By the second year, you're up to, I'm taking December off. You're running this on your own. Right. And then, I'm taking December and July off. By the year you're selling, if you can be gone for two months out of the year and it comes back stronger, like you come back to a business that's running as well or stronger than it was when you're gone, now you're ready to exit and, or sell. And there's a good chance you can prove to a potential buyer, you don't need to be there.

[00:30:21] Jay D. Rodgers: Absolutely. And it's so true. Your first job as the owner is to work yourself out of any reoccurring job. 

[00:30:29] Ronald Skelton: So we talked a little bit before the show started about, when you start a business, you start with the, I'm gonna exit this at some point. So many business owners, especially your mom and pop, brick and mortars type of businesses, they just don't think that way, right?

[00:30:42] They got sick of their last job. I call 'em accidental entrepreneurs. A lot of these guys are truly accidental entrepreneurs. They have the entrepreneur spirit maybe, but they were working from someplace. They realized they're not a great employee. They think they can do it better. Especially like the trades. Heat and air companies, pest control, brick and mortar, small manufacturing, that type of stuff. They were doing something somewhere and they seen a need that wasn't being fulfilled and they said, I'll step out on my own and do it. Or they started running something as a side project and then a buddy wanted one. 

[00:31:12] Like, Hey, can you make me one of these or can you fix my issues? He's like, yeah. And the next thing you know, two buddies want it. And the three of like, you're making more money on the side than you are at work, and you own this company you accidentally got into. That's where these lifestyle businesses, I think build up because nobody trained them to be an entrepreneur. Nobody trained them how to run a good business. Same thing goes with doctors and dentists and stuff. They don't teach business, school. Maybe they do now, but my generation, your generations, when you went to dental school, you didn't learn anything about accounting or finances or running a business.

[00:31:40] You learn to fix teeth. You learn how to heal people or how to give 'em medicines. I don't think that most doctors don't heal anymore. They just write prescriptions. That said, I'm looking for your, my notes here, your education company, that's a huge win. I mean, I think somehow you gotta convince these business owners like, yeah, you've been running it for 10 years or five years, but why don't you come and visit this thing that shows you how it needs to be run if you ever wanna sell it. 

[00:32:06] Jay D. Rodgers: Well done. And get back momentarily, we were talking earlier that some books could have been written in 10 pages, but The Bet I think every page or every part of the audible provides value to someone that's building their business. And, just like our Biz Owner Ed program in DFW, my only goal in life is, at this point to help as many people as possible grow their companies so they can hire and strengthen the world and the economy.

[00:32:38] I've been real disappointed in some of the governmental moves that have weakened, in my opinion, the small business and entrepreneurial world. 

[00:32:47] Ronald Skelton: So what's the concept behind The Bet? I mean, I know it's an entrepreneur, like you said, all in strategy to win in business. Are you, is it- 

[00:32:55] Jay D. Rodgers: I would say that there are at least 50 serious lessons that are well explained, that the reader can apply to his world.

[00:33:10] And so, it's all stories of entrepreneurial settings I've been in. I maintain that the best deals you'll ever make, whether it's buying or selling or whether it's building the company, the best deals you'll ever make as an entrepreneur will be made with smart people. And I say that and someone says, well, what do you mean? You can win a deal 51% to 49. But I find that if you deal with really smart people, you can add 20% value and you're much better off losing 59 to 61, than you were winning 51 to 49. 

[00:33:52] Ronald Skelton: Right. And like in business, other people don't get it, but one plus one doesn't always equal two, right?

[00:33:57] When you put two great entrepreneurial minds together, it's exponential, not linear. So, selling to somebody really smart or buying from somebody that was really smart, as long as both people have great intentions for the other, it's incredibly different than just, A plus B, right? It's not as simple as, a lot of people make it as, okay, he has a widget. I bought the widget and widget's mine. Like, no, not only did he have a widget he created, but he has industry knowledge and experience. And a vested interest if nothing else psychologically, to see this thing not die on the vine after you have it.

[00:34:31] So he's willing to take those calls. That's why the PE firms and a lot of these guys leave some skin on the game, on the table for the previous owner. A lot of times if I'm looking at something, I want the previous owner involved to some extent. So, I leave something, I wanna buy 80% of it, or 90% of it.

[00:34:46] Jay D. Rodgers: I love all that, and it's so important. And many of the people that have bought companies from me are good personal friends today because I just, I'm not into a win-lose and I want both sides to walk away better off than they were when they sit down. And you can make that happen if you're, I've had many of the people that have bought companies, I cruise a lot, and a lot of 'em have joined us on cruises and, it just makes life's short. You better have fun while you're doing it. 

[00:35:17] Ronald Skelton: I have never cruised. I have to try that. I travel a little bit, but I, I just never been on a cruise. I don't know why I haven't. 

[00:35:25] Before my mother-in-law passed away, they went on one and they just loved it. And some other friends of mine went on one recently and they've loved it. I've even been offered one where, they asked me to speak on one and they were gonna paid my way and go for free. Lot's changed since I've had little ones. I'm 51 and, I have a seven year old and a 12 year old. So I started a little later than most. But, when I was young, I didn't really get to know my father until I was old enough to work for him. 

[00:35:48] 'Cause he was a workaholic. He, worked in a paint factory, then the day painted houses on the side, until I could wield a paintbrush and climb a ladder. 11, 12, 13 years old, I worked full-time for my father. Whenever I wasn't at school, I was working for him 'cause I got to hang out with him. He told me no at first. My dad's like, you're not old enough to work for me. So he went to work. We lived, five and a half miles from town. I grabbed a push mower, started walking and push my dad's push mower all the way into town, five miles one way, and mow lawns all day.

[00:36:13] And I'd been doing it for weeks. Mowing lawns to make money 'cause he told me I wasn't old enough to paint for him. Talked to this guy, he was gonna gimme 30 bucks, his yard it was really overgrown. This time, I had a weeded eater with me. Back then it was there, there was electric weed eaters. And, eventually figured out how to strap it to my bicycle, and drag it in.

[00:36:29] But, now I got bit. And the police got called and the cops were talking to my dadon the radio through the phone. And they said, let me talk to my son. And the cop had to tell him, well, he is over there, finish mowing that lawn. When they were looking for me to talk to my dad to see if I was okay, if I needed to go to hospital, he is like, he's over there finished mowing the lawn. And the first thing my dad is like, why are you in town mowing somebody else's lawn? Like, mom knows, ask mom, I'm busy. I gotta finish this real quick. So he found out and I got to go work for him after that. 'Cause he realized, if you're gonna work that hard,I'll figure out how to make it work for us.

[00:36:57] But yeah, so we all have our determination. That's one of the things you'll find in entrepreneurs. I see that with all the, you didn't just start one, sell it, make some money and go into retirement and hang out on your cruises. You have that spirit, you have that fire. 'Cause anybody who started and built as many businesses and I'm, I'm gonna make a gamble here and say you've started in more businesses than you have on your spreadsheet here. These are the ones you want at. You probably started some that didn't go too well and you. 

[00:37:21] Jay D. Rodgers: And allow me to say, even in my book, I talk about a couple of my failures. And I think the subtitle in the book, one of them is my most successful failure. And the truth is, if you're an entrepreneur you should be focused on what is the lesson, and if a failure can be worth more money than a success.

[00:37:48] I went to the Harvard OPM program, three weeks each year. I probably learned more from the fellows, members in the class. At that time, there were 86 of us, 20 some companies or countries represented. But Marty Marshall ran the program at that time. One of the lessons that I took away and I think is very valuable, is that you cannot create a business. And the entrepreneurs find a business that not served or underserved. And that's where opportunity lays. The Ford Motor, if you'll remember, spent billions trying to put the Edsel on the market.

[00:38:31] And there wasn't a market for it, and it was a world's most expensive flop. And if you just keep that in mind and remember you're trying to serve an underserved or serve a unserved market, you'll do a lot better.

[00:38:48] Ronald Skelton: Yeah. Some of us have actually created business where you want something or you think you want something. So you go out and it's not out there. So you go out and create it only to learn the only person on the freaking planet that want it. Right? 

[00:38:59] Jay D. Rodgers: At one point when we just finished some major projects, I started a business just for fun.

[00:39:05] And that was, selling handmade, made to measure cowboy boots in West Texas and elsewhere. It's a lot of great stories from that, but the one I think of from your comments is,Katie Barkley, who was my assistant in that company. Did the measuring and had studied with the handmade boot company. We're out in West Texas and, she's talking to a rancher and he says, honey, I don't need no boots. I got 36 pair of boots. And she looked him right in the eye and said, sir, we're not discussing need. Sold 'em a pair of white ostrich quilt boots. 

[00:39:43] Ronald Skelton: I wore boots for years and years. I still have a pair of alligator skin. Boots in there right now they're probably, I think the cheapest pair of boots just catch me in, or a few hundred dollars. And those were probably close to 1200.

[00:39:53] Jay D. Rodgers: I'm sure they were back in the seventies when I had that boot operation. Our average ticket was 500.

[00:40:01] Ronald Skelton: The one thing I'd always wanted to do is the like, there's towns in, in Mexico and stuff where they have really good boot smiths and stuff, and you can get things done fairly reasonable.

[00:40:09] I've always wanted to go down and have a pair made. I have awkward feet. So one of those like really wide. So it takes a lot to find boots that are wide enough at one side and not have really high arch. They're all the weird stuff that you can put on a pair of boots. Like, I'm just not wearing these on day. Like I don't ride riding boots at all. They hurt my, the arches of my feet. The ones with the higher heels. A lot of people wear those. I just, I can't. 

[00:40:30] Jay D. Rodgers: Yes. We, too bad I didn't run onto you when we were selling the handmade made to measure. We took care of a lot of problem feet. 

[00:40:37] Ronald Skelton: Yeah. That's an interesting concept. These days there's still, that's such a, it's even smaller of a niche market now just because, just so many fewer people are wearing them. Right?

[00:40:47] Jay D. Rodgers: They're still pretty popular in Texas. 

[00:40:49] Ronald Skelton: So let's go back to the book and in, in your entrepreneurial side. What is it you're looking to do right now? You got the book out that was just out last month. You're helping entrepreneurs. Is the education company still around? 

[00:41:02] Jay D. Rodgers: Oh, our Biz Owners Ed program? Absolutely. That's a year round program and we have special events throughout the year. But the 10 weeks it starts, next year will start the second Tuesday of January and runs every Tuesday.

[00:41:18] And we have a couple hundred people at that event at. We just have some incredible speakers and Craig Hall is going to be speaking and he's, our mentors have to be invited. They have to have taken a startup or a stagnant company to mega millions. Then to top it off, unlike any other volunteer program, they have to write a $5,000 check to the nonprofit.

[00:41:42] To prove they're serious about giving back and helping and Craig signed up and he will be with us as a speaker next year, and we're looking forward to that.

[00:41:51] Ronald Skelton: I was gonna ask if it's in person or is there a zoom version of this? Or do you have to go to take this?

[00:41:55] Jay D. Rodgers: Well, we worked closely with Carrie Santos, who was the CEO of Entrepreneurs Organization International. And we're putting together a program on a test basis to stream the program into several EO chapters. And they just didn't have enough staff dedicated to making it work.

[00:42:19] I pulled the plug on that, but the door's open. So, we're doing all we can. My wife and I don't have children and, all of our estate will be left for the benefit of serious committed entrepreneurs. We just believe that it's critical to our country and it's, as you pointed out on the front end, there are about half as many, and Craig Hall points that out in his book, startups as there was a generation ago. 

[00:42:47] Ronald Skelton: There's a lot of really cool tools out there right now that take that technology and put it out there. There's one actually that's going on right as we speak. When soon as we get off here, I'll jump right back on. It's there are about 20 speakers involved in it.

[00:42:57] It's just a three day event some friends of mine put on. But yeah, there's cool tools like this tool we're using right here to record. But, these days, taking it online, it's a little bit more if it's live just because of the setting, right? But,you have the right techs in place. You can actually be live in person and live online and have, if it's a paid for event where people pay to attend, same thing.

[00:43:20] You can take the payments online. You can even, like some of the tools and stuff will even have attendance requirements where they'll tell you if people are not attending and showing up and that type of stuff. So we're about at the end of this. So let's talk about, how do people get your book? I see it's on Amazon, it's on Audible. How do people read?

[00:43:37] Jay D. Rodgers: I have a website that is jayrodgersauthor.com. And there they can get either the audible or the book from half a dozen different. We had the book launch, Brown Books, on book launches, the biggest book launch they ever had.

[00:43:52] Where you have a big gathering and signed books. They had put out 300 and some books at the launch. At our launch here about six weeks ago, we broke 900. So we had a real good following. 

[00:44:07] Ronald Skelton: Awesome. Well, I'll make sure we put that at link in the show notes for everybody out there who is looking for that.

[00:44:13] And I want to thank you for being here today. I learned a lot from you. Enjoyed having this conversation. If you ever need anything from me, reach out. You got my email address now. I think my cell phone, that's actually attached to the bottom of my email address. If you ever need anything from me, like see somebody on the show that you'd like to talk to, I'll make a personal introduction. I'll three-way call 'em for you if you want. All right. 

[00:44:33] Jay D. Rodgers: I appreciate that. I appreciate having Elliot's name and I'm going to contact him as a result of our conversation.

[00:44:39] Ronald Skelton: Yeah. I think his company's Guardian something, but they, some people you interview and you're like, eh. Some people you interview and like, man, that guy's really got his heart in this.

[00:44:46] And I think Elliot's got his heart in this for a, for accounting. I've got a master's degree in marketing. They made me take a few accounting classes as an MBA. And to know somebody has their heart in accounting is special to me 'cause I didn't like it much. So I know for a fact that it takes a special person to have your heart in this and to really wanna look at that and help people get through the numbers. That's a high level quality for me.

[00:45:07] Jay D. Rodgers: Great to talk to you. I appreciate it very much. 

[00:45:09] Ronald Skelton: All right. You have a wonderful day and thank you. We'll call that a show.