Incorporating Your Business Exit Strategy Early

In this The Faces of Business, Devin W. Craig, Partner, Broker, & Investor, Peterson Acquisitions, discusses the importance of incorporating your business exit strategy early so you can fully prepare your business for the exit and maximize your exist success.

In this The Faces of Business, Devin W. Craig, Partner, Broker, & Investor, Peterson Acquisitions, discusses the importance of incorporating your business exit strategy early so you can fully prepare your business for the exit and maximize your exist success.

Devin stands out in the business brokerage industry with a 90%+ sale closing rate compared to the industry average of 10-20%. His eight years of extensive experience in business brokerage, investment, consulting, and multiple business ownership equip him with the unique ability to guide business owners through the good process of selling their business, from initial valuation to the final handshake.

Peterson Acquisitions is not your ordinary business brokerage. They achieve a 90% success rate in closing deals. They understand the hard-earned value of your business and the complexity of selling a business.

Download our free business valuation guide here to understand more about business valuations and view our business valuation FAQs to answer the most common valuation questions.

Damon welcomes Devin to his show and assures an engaging discussion on the business brokerage space. He requests Devin to share his journey leading up to his current position.

Devin recalls his journey into entrepreneurship, driven by the desire to escape the constraints of working for others. Inspired by his wife’s (a marriage and family therapist) success in starting her own business, Devin started exploring self-employment opportunities, initially exploring coaching and public speaking ventures. Facing challenges including adoption expenses and limited time, he eventually pursued business ownership as a means to transition fully into entrepreneurship.

After extensive self-education and overcoming fears, Devin successfully acquired a shipping and logistics company in Washington. Enamored with the deal-making process, he continued acquiring businesses while investing in further education. Encouraged to specialize within a particular sector, Devin adapted his approach to include deal sourcing and eventually ventured into business brokerage, initially reluctant due to negative perceptions but later influenced by mentorship and personal experiences.

Do you want to know if your business is ready for your exit or what you should do to prepare? Learn this and more with our business exit assessment here.

Moreover, Devin acknowledges Aaron as a consistent mentor throughout his entrepreneurial journey, especially regarding business brokering. Learning about Peterson Acquisitions, Devin was drawn to their approach and effectiveness, recognizing the value of mentorship in his career trajectory.

Appreciating the guest’s professional journey, Damon seeks insight into the difficulties encountered during business acquisitions.

Devin shares his experience of balancing between fear and excitement while pursuing entrepreneurship. Motivated by an entrepreneurial spirit and a desire for autonomy, Devin embraced each new challenge and sought guidance from experts.

Get the most value for your business by understanding the process and preparing for the sale with information here on our Selling a Business page.

Similarly, Devin recounts his extensive involvement in the business acquisition process, sharing an anecdote about setting a record for the number of non-disclosure agreements (NDAs) signed with a local broker. His prolific engagement led to brokers recognizing him by name and even expressing frustration at his relentless pursuit of opportunities.

Damon brings into discussion the frustration many buyers experience in finding the right business. He invites Devin’s observations on this common issue.

Devin reflects on the lack of preparedness among business owners when it comes to their exit strategies, estimating that only a minuscule fraction have given it proper consideration. He shares a moving story about a business seller who, after selling his business, discovered he had a terminal illness. Devin believes business owners need to take control of their exit strategies rather than waiting until they’re burnt out or facing unforeseen circumstances.

Agreeing with the guest, Damon inquires about the potential impact on business owners if they were to incorporate their exit strategy earlier.

Devin says by envisioning their future goals and making proactive changes, owners can transition more smoothly and on their terms, rather than waiting until circumstances force their hand. Devin advises them to live life to the fullest and reject the traditional notion of retirement, noting that most entrepreneurs have a continual drive to stay active.

The exit guru shares a real-life example of a business owner facing an identity crisis when approached by a potential successor. Business owners should embrace the idea of their business as an asset that can adapt to their evolving needs, allowing them to plan for their next phase of life with greater freedom and flexibility.

Moreover, Devin discusses that many small business owners and even buyers fail to consider the broader implications and long-term objectives of their endeavors. He advocates for adopting a mindset that views the business as a wealth-building asset, a perspective often overlooked in privately held and family-owned businesses.

Damon recalls a pivotal moment during a board meeting where he learned about the investor’s perspective on businesses and their focus on returns. This enables him to learn more about deal structuring and understanding businesses as wealth-building assets rather than solely operational entities.

In response, Devin mentions buyers seeking businesses that aren’t solely dependent on the owner’s involvement. People, especially those with huge sums of money, prefer businesses with well-built systems and teams, rather than ones where the owner is central to operations.

Damon asks Devin to talk about the significance of intentionally building a high-quality team for businesses, regardless of whether the owner plans to remain in the business long-term or exit.

Devin explains that a strong team not only frees the owner from the critical success of the business but also promotes accountability, systematization, and revenue growth. Decoupling the owner from the business’s operations makes the business more appealing to potential buyers, broadening the pool of prospective purchasers and increasing the likelihood of a successful sale.

Damon seeks Devin’s opinion on the success rate of businesses that have invested time in developing these systems, expressing confidence in their ability to attract people into buying business.

Devin says that the percentage of businesses with well-developed systems and preparedness for sale is likely minimal, around 0.1%. Even among those accidentally prepared, the full impact may not be realized without intentional foresight. Conversely, many businesses, including larger family-run ones, lack organization, relying on personalities rather than systems. This complexity hinders the selling process, requiring significant untangling.

The guest advocates for proactive valuation assessments, suggesting regular consultations with experts to inform decision-making. He stresses the need for owners to take control of their understanding of their business’s value to make informed decisions about its future.

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47:25
SUMMARY KEYWORDS
business, talk, working, business owners, sell, buy, people, buyers, owner, money, peterson, built, started, learn, process, good, asset, number, broker, buying
SPEAKERS
Damon Pistulka, Devin W. Craig

Damon Pistulka 00:02
All right, everyone, welcome once again, the faces of business. I’m your host, Damon Pistulka. And I am excited for our guests today, because I got Devin Craig in the house today from Peterson acquisitions. And we’re gonna be talking about incorporating your business exit strategy early. Devin, thanks for being here today, man.

Devin W. Craig 00:25
Yes, sir. Good to be here. Thanks for having me.

Damon Pistulka 00:27
Yeah. So Devin, it’s great having you here. I just want to say that I want to, first of all, promise that we are not going to get too too rough on on the business brokerage world, but we’re going to probably talk a little bit about the business brokerage world and some of the things that are work or don’t work in it. But before we go there, and we’re talking about incorporating your business exit strategy early. Let’s talk about your history and how you got into where you are today and a little bit about Peterson acquisitions.

Devin W. Craig 01:05
Yeah, absolutely. Yeah, I guess I mean, the way I got into all of this all started with and continues to be some pain, I guess you would say, the pain of working for someone else was just too much to bear years ago. And so my wife actually went off on her own, gosh, probably 10 years ago. She’s a marriage and family therapist, and she’s here in the south end where we live. And she’s been doing a great job just killing it. So I was super proud of her. And I’m like, Honey, I want to do what you’re doing. I want to I want to do my own thing, you know, and I was working in corporate for a good long time. And it was it was goes fine. But I mean, when you have that entrepreneurial, bug, man, it’s so hard to work for someone else, you know. So I did and just kept growing and growing. And so finally started trying to build something on the side, you know, kind of a little coaching, public speaking thing. And it was going fine, it was good. But then we started getting a little busier, we adopted a couple of kids. And that was expensive and busy. And so I never really had that chance to kind of really try to build that up to something super big until now. I mean, essentially now I’m kind of doing that again, in this iteration. But I got the idea through that process, I got the idea to maybe go buy a business as a way to just Springboard full time into entrepreneurship. And so that’s what I did. I just started shopping and it took me God took me like two years and I did just kind of a YouTube education of fallen all the the gurus out there that my now partner you know, lovingly calls the, the gurus of the road. What does it say the gurus of the road of building the path of Broken Dreams or something like that. He says, basically, there’s no money down business buying gurus. But I think Richard Parker’s calls them the same thing, man, he they just yeah, they don’t love those guys, but I learned something from them enough to get some confidence to go do something, you know. Yeah. So that’s what he did. Yeah, just on my own, started seeking things out. And, you know, started I was I was scared like crazy to just took that first step of sign the NDA and then talk to the broker then take the next step of going to have the seller meetings, right. And so yeah, it was a fun process, I learned a ton just through that process alone. And then eventually did find landed on a business to buy it took me about two years to finally landed on a little, like shipping logistics mailing type company, here in Washington. So bought that, and then just love that entire process, the deal making process and getting in and just trying to, you know, get get it fixed up and which is what I was consulting other people on doing too, which was, you know, running a good team and run a good culture and a good operation. So here, I got a chance to do it myself personally firsthand, you know, up close and personal in a business, and did that for a little while. And I don’t know, I just love that the lawmaking process so much, I wanted to keep going on that. So I started shopping around for more businesses to buy bought a second one, through brokers on market. And then I then also started going getting more education about this process. So I went back to those bureaus, I was learning from online and started to take their courses, which were pretty expensive. To be honest, it’s been a lot of money with those guys, man. And there was good info in there good content, but I think the statistics is something like 90% of people who take those things don’t do squat. Yeah, and it’s pretty sad, but I had already up to that point, you know, bought a business or whatever. So it was kind of more closing the gaps and helped me learn more about deal structuring and deal making and helped me to realize all the mistakes I made in buying that first business and so it was helpful on that front, but it did pique my interest in more of the deal making side of things. So I kept going with that. Bought a second business by the third business and then eventually I got kind of, you know, pigeonholed a little bit into a sector it was not a bad thing. It just Now, you know, if you want to continue going, you know, if you want banks to back you or whatever, to keep buying deals, they will really like to see you stay in that sector. And so that was the feedback I was getting. And so I said, Okay, fine, I’ll go, I’ll go try to find or do more deals in that sector. But you know, waiting for something to get listed on market that’s in a specific sector of a specific size or whatever, I’m, you’ll be waiting a while, right. Yeah, I started actually to go out and do my own deal sourcing and finding deals of my own. And that was fun, too, and eventually started coming across people who are willing to sell their businesses. But I didn’t want to buy them at that time, for whatever reason, right now, geography, your size, whatever numbers. And so they started asking for my help to broker. And my first reaction to that was hell, no, you know, I’m like, I’m not doing that. And mostly because a couple different reasons, because my personal experiences that coincided with all of the gurus I was learning from, all of them were generally kind of negative about business brokers. Right. And so when someone asked me to do that, I’m like, Absolutely not. You know, so. Yeah, at first was that but I gave more thought. I talked to a friend and a mentor who does some brokering here in Washington State, he owns a bunch of businesses. Super good, dude. His name is Aaron molar. I don’t know if you’ve ever met him before. But he also wrote a book to highly recommend called lifestyle business owner. And he does.

Damon Pistulka 06:35
Oh, dropped out for a second there. There we go. There we go. Sorry about that.

Devin W. Craig 06:43
Yeah, so Aaron’s great dude, I started chatting him up a little bit. He was actually probably the most consistent mentor through this process of getting into this, buying businesses and whatnot, and chatted with him a little bit about getting into brokering. And then through that process is where I kind of found out through my research about Peterson. And when I found Peterson, and I learn more about what they’re doing and how they do it, and how effective they are no more about Chad Peter said, I was like, I’m not. If I’m doing this, I’m only doing this with someone like Aaron or someone like Peterson because what Peterson is playing we’re very big plants, we have some very big plans for what we’re doing. And so yeah, I’m like, I’m only doing this with someone else like this or on my own, basically. But I knew I was gonna go a lot further faster, getting mentored by people who are really good at this kind of thing. But even Aaron told me the same thing about you know, business brokering world is like you got to, you got to really it doesn’t not that hard to stand out. But you got to make sure you got a good process and you toe the line. And so he taught me a lot really early on about that. But plugging into Peterson has been phenomenal experience spent about a year and a half with them. I still own some of those, those businesses I originally bought. But you know, Chad’s really kind of taught me a lot of great things about other ways to look at those businesses as assets, and how to use them and look at them accordingly, basically. So yeah, he’s taught me a ton about that. But it’s been a fun fun ride. Now I’ve got a bunch of business owners, I’m not helping to sell their businesses, a bunch of buyers, I’ve had a chance to coach and mentor and share my personal experience with and yeah, my wife just said the other day, she’s like, man, that I think this is the most fun. you’ve ever had a job before a gig before. And it’s true. I’ve just absolute love what I’m doing right now. It’s a perfect combination of all the things I’ve kind of enjoyed about the other pieces of things I’ve done before. Yeah,

Damon Pistulka 08:28
yeah, this Oh, man, we got so much to talk about here. A few other times that it just goes goes nuts. But so I love this, because we’re going to talk about incorporating your business exit strategy early in a moment. But one of the things you said you’ve bought two or three businesses now yourself, you multiple businesses purchases. How many times do you really? Are you approached by business buyers out of 10? So say you get 10 business buyers that approach you? How many of them have the have the drive to get to purchasing a business out of 10? Do you think maybe

Devin W. Craig 09:14
half of the one? Basically, one?

Damon Pistulka 09:18
Yeah. Like point five of 10 Yeah, maybe? Yeah.

09:24
So few. So yeah, yeah.

Damon Pistulka 09:27
Because we were just we’re actually talking about that today with my partner and I someone had said business talking about business buyers, and someone was brought it up to us and, and we said to say things like, Man, I don’t know, out of 10 if you can even get one out of 10 because the process is hard. It is hard. Yeah. And I like you I’m sure business buyers approach us every single day multiple times a day, whether it’s someone that’s investor size, or just individuals that are looking for him and just don’t real As the obviously if you’re buying a bigger business and you’re an investor, you’ve you’ve done it but down the road before, but most people don’t realize how hard it is to buy a business. What do you think was the hardest thing because you, you did a lot of alert, you did a lot of studying and working on it. Because most people just wake up and go, I’m gonna buy a business. And think it’s like walking down the street and buying a car from the car lot. Yeah. So what were the things that you going into that first visit to try to find it in and then actually get the deal done, where were some of the things that just stick out in your mind from doing that. Just

Devin W. Craig 10:35
being like, simultaneously, friggin scared out of my mind. And also just having this internal drive and fire was like, This is what I’m gonna do, because I know I want to go do my own thing. You know, I knew it was that entrepreneurial spirit and drive that every new thing that I learned got me more and more excited, right, every next new step I took, got over the fear of that next step, I just did it. Or went to someone like an Aaron and said, Hey, and what do you think, you know, got, like, took off our mentors. You know, paid for education, whatever. Like all those things that got me more and more invested in like, I’m gonna, I’m going to do this, you know, like, there’s no damn way I’m not going to do this. So yeah, I just had to take each next step, I had to invest in myself and put some skin in the game, I had to, you know, commit to myself that I was going to be done. And, yeah, no, you’re exactly right. Because there are so many steps, there’s so many like, nuances. So much stuff is so much more complex than going and buying almost anything else you could ever buy in your lifetime, honestly, you know, like, and so it just required a lot interest required that like that sense of like drive and why and mission. And like I said, I had to just make sure I was actually invested in the process through myself and the learning and the education. But a lot of that came after I already bought the first one too, honestly. So a lot of the rest of it was just that internal drive, like I was more, more excited to get it done than I was scared of all the things that could go wrong, you know, like, the pain of being in the situation that I was in at the time working for someone else. And all that was a very big motivating factor, you know, like, just want to poke my eyes out every day go into that job, you know, like, yeah, I gotta get the hell out of here. And I just got to do it. So I don’t know if it was sheer dumb luck, or just this Yeah, like, blind determination, or I don’t know what it was, but I just knew I wanted to get it done. I was,

Damon Pistulka 12:32
yeah, yeah. I it’s, it’s, you hit on one thing. I mean, if you’re gonna buy a business, you better be committed to doing it because it is it is a grind. And, and even if you find the right business, I tell people that that come to us are going and why I want to buy a business. Can you help us buy a business, we don’t help you find the business. That because finding the business that you want to buy is like finding a wife or a spouse. It’s that hard. You can find all kinds of people that will help you try to do it. But we don’t feel good doing that and charging people to do it because it is so hard and in and we can show people the ways to do it. I mean, you you you probably had a ground and pound a long time to find the businesses that you wanted to buy. Oh, yeah.

Devin W. Craig 13:24
One local one local broker said that I broke the record for number of NDA signed with them. I think so. Yeah. Yeah. And eventually they started they were calling me and saying like the no new me to my name. They now know me and I met him for sure. But yeah, they knew me by name. At that point, they would call me like Devin, are you ever gonna buy a business? And like I did. I’m just looking for more and they’re like, Okay, just want to make sure but yeah, they were getting kind of frustrated to be honest. Yeah. But um, yeah. Because I did I’d signed so many freakin NDA so many seller meetings, it was dozens and dozens and dozens. It was crazy.

Damon Pistulka 13:56
Yeah. And that’s where people get get frustrated right there is like they can’t find the right business. And, you know, you talk to search fund buyers. And for those who don’t know, those are, you know, MBA graduates or people with experience that are going out on their own with an investor backer group back and um, you know, they they talk a lot about one to two years minimum, to find a business. And it’s, it literally takes that long and that’s full time for them. That’s them, having marketing people trying to reach out and find businesses for them, and do those kind of things and most buyers don’t don’t realize that the difficulty in just finding one that just that you could say it’s worth $5 Does that sound reasonable to you? First of all, just the $5 part, not even worry about the terms and all and getting through diligence and everything else. So, yeah, good stuff. could talk a lot more about that. But, you know, we’re talking about incorporating your business exit strategy early. And the challenge I think a lot of business owners really run into is they don’t think about their business exit strategy. Do you find that that’s a common thing among among the people that you’re talking with? We

Devin W. Craig 15:21
talked about the number of buyers who are really driven ready, like hungry, right. Like, I think there’s even fewer business owners that have actually prepared a properly who the process of getting the sell. It’s probably point 1%. I mean, it’s, it’s even less, I mean, it’s a tiny fraction, so few are given any thought, let alone done anything about it. You know, I mean, like, so few. It’s so sad to me, I, and or they wait too late, or, I mean, there’s this a number of factors, they just long story short, they just don’t give it that full thought. And this is a true story. By the way. I’m gonna tell us real quick, it’s related to this. But there’s a lot of other nuances within here. But yeah, I just, I just got this news two days ago. It’s actually really sad story. But I mean, to me, there’s a lot of opportunity here, and this is why we’re talking today. But one of the businesses that I bought smaller business, kind of in shipping and logistics, I just got the news two days ago, that that seller, he has six months to live. And he sold this thing to me, you know, handful of years ago, and when I bought it from him, super nice guy really literally liked the guy, but you could tell he was really not happy. You know, he was bored. Burnout in this business didn’t give a lot of thought to this, he just finally decided one day, when he’s old enough, decided I’m done basically, right, and sold it for what he could and was ready to move on and was ready to start living only after he sold this thing basically is kind of how I interpreted that situation. And so here it is just a couple years later, and he’s got this terminal illness, you know, just he just found out about basically, and now he’s finally ready for that. So, I mean, most business owners, that’s kind of how they treat it like, Okay, I’m more than burnout. I’ve done this long enough. And now I’m going to decide that it’s the right transition time. And it doesn’t have to be only that way. But I would just want to just encourage business owners not to wait till that time and to decide to start living or to decide that they’re going to do what they want with this business on their terms. Right. Yeah. And that’s mostly what I mean, it’s like most of them are not doing this on their terms. They’re not deciding when this should happen. They’re not deciding how this should happen. They’re not deciding to make those changes necessary in their businesses, to help give them some more freedom, which by the way, I mean, everything we’re going to talk about, if you if you make your business more sellable, you’re ultimately also giving yourself more freedom, more independence, from the business, more time to take a vacation, this guy hadn’t taken a vacation until he retired, basically. And all those things that does not have to be that way. You know, like if you use the methodology we talked about, like just doing a loan exactly what we just talked about, or working with someone like you either way, you’re being more intentional with what your business is doing for you today, and therefore making it more sellable. And then you’re also even thinking about specifically Hey, when do we want to transition this thing? And why would we want to do that? Right? I have buyers regularly. One of the most common questions buyers ask me is like, why would the seller wants to sell this business? He’s making so much stupid money. And my response is always the same. It’s like, well, why are you calling me if you’ve got such a great job making so much great money. Because you’re born brown on you need to change, like you’ve gone through that passion cycle. Now it’s time to move on to the next phase of life. And so what’s wrong with that? You know what I mean? So, nothing wrong with that. It’s just more important that we actually think about that more proactively, because most of these guys and girls are not at all. Yeah, they’re not letting themselves dream and kind of imagine what could be next. You know, they’re just not doing it.

Damon Pistulka 18:57
Yeah, that’s a great point. Just want to say real quick. We got to have on here, Robin, thanks for being here today. And we got Riley, thanks for stopping by. And I think yeah, the second one second life starts when you realize you only have one, that’s a good so there’s a wise comment there. Because this this is one of the things that I you know, before I got into investor owned businesses years ago, and and really, I was in family businesses up until then, basically, and they don’t operate like like you’re talking about or like we teach our owners to do exactly what you’re saying is that business? Yes, it says where you are working, it’s how you generate money. It’s all those kinds of things. But it’s just for one phase of your life, not your life. And getting your business set up. Right, like you said, gives you more freedom makes it more valuable, easier to sell all those things, but really What I learned the biggest thing I learned at work and foreign investors is that that’s an asset. It’s worth dollars if you do it right. And if I take the dollars from A to B, which B is higher, I might have enough that I don’t need to worry about what I do next, or I can do whatever I want next. And that’s really how when we’re talking to clients, it’s like, Listen, how much do you need to do what you want? Not? When do you want to retire? Because it’s a different mindset. When you step into a business and say, I’m growing value, because I want to generate this kind of wealth for my next phase,

Devin W. Craig 20:45
spot on.

Damon Pistulka 20:47
And, you know, when they do that, that business is no longer tied to them too. Because it can’t be you can’t make enough it doesn’t run well enough without you and blah, blah, blah, blah, blah, the things you have to do. So, when we’re looking at that, how do you think it would affect these business owners that you’re talking to if they incorporated their business exit strategy earlier?

Devin W. Craig 21:12
Well, obviously, they would, I mean, allow themselves to dream a little bit more, they would probably, they probably make transitions and changes in their businesses more proactively and when they want versus, I don’t know when it’s too late, or when they’re forced to or whatever, right, they can get busy living sooner in their life, just like that comment we just got, right. I mean, everything gets better if they just can’t actually think with the end in mind, which is not necessarily to your point. I love I said that it’s not the end of like, when you’re done working or whatever. Which by the way, I’ve not met one entrepreneur, who has ever said, I just want to go sit on my behind for the next 15 years. Not one. Yeah. So why are they pretending like retirements is gonna be this thing? Like, most entrepreneurs are retired for like 10 minutes, you know, then you got to do something else. Again, itchy. So if anything, like just knowing that and just thinking about that proactively, like right now I’m working with. So we have a capital company, and Peterson so we’re buying businesses to Yeah, and I’ve got right now someone who is really interested in being an operator for us. And so he’s, he’s out there on the hunt, looking for oil, you found a deal right now. And it’s out in the Midwest. And so he’s just starting to talk to this, this owner and seller, and the seller and seller just like got a really good business. But he’s working like crazy in this business. And it just because that it’s a second generation. And that’s just how it’s always been done kind of thing, right? Yeah. And I think when this younger guy approaches me started chatting with me about this, like, there’s this identity crisis thing. And so he’s he knows he needs to do it. His kids don’t want to take this thing over. And he’s got this young, smart hungry guy approaching them and saying, like, Hey, I’m we’re safe, trusted pair of hands, let’s do this. And, yeah, he just can’t wrap his mind around it. But guaranteed he’s not going to be done. He’s only been 60s. He’s an entrepreneur likes working hard. But we could do instead is maybe get something with a little bit less demand. You know, go buy an ice cream shop, and you may not need money anymore, especially now we pay you. So fine, go do something you want to do. If you always want to own Italian restaurant, great, go do that. You know, do you want to move to Florida? Do you want to move somewhere Sunny, or like, let yourself dream? And imagine a little bit about what what could this be like? And to your point is just the it’s just the asset at that time based on what the needs of your life are at that time? Yeah, so embrace that. And you can even think about that even years in advance. Even Yeah, you don’t have to wait until you’re like done done, you know, not burned out. Yeah,

Damon Pistulka 23:38
it’s exactly I mean, we’ve got a client right now that we work with that actually sold their business, it was a relatively large business, in the small business world. And plenty, don’t don’t need to worry about money anymore, is opening other businesses now just to fund his philanthropic causes that he wants to support. So he’s gonna do you know, so, I mean, you can still be a business owner, it’s just a different deal, right? Because once you’ve taken that money off the table, it gives you the opportunity to do so much more. As you know, we had a client a couple years ago that was able to, to exit for a nice amount of money. He was like, Oh, I’m just right now, but he’s got a little younger kids. And, and it’s like, I decided I’m not going to, I’m going to invest in something that’s a little bit more easier. I’m gonna spend more time with my kids, you know, because you can watch him grow up. I mean, there’s just some things that you can really do if you think about that asset as a wealth generation tool to really power you in the next next phase of your life. Exactly.

Devin W. Craig 24:47
Right. Yeah, exactly. Right. I was done. That’s essentially what you just described as our methodology that Chad put into an awesome book called que si. But there’s no real name for it. You know, no one’s really talking about this concept. And so many smaller business owners, this is not even going to their brand. Matter of fact, so many business buyers when they’re first buying this business like me, when I first bought it, I didn’t think to myself, Okay, now what I just got my head down and started working, you know? Yeah. And I didn’t really think to myself, like, how am I going to do this? For what, you know, to what end? Am I doing this? You know why? And most of them don’t, you know, they absolutely just do not think with the end in mind. And I think they’re just hurting themselves, because you’re exactly right. They’re missing out on a wealth building asset, if they look at it accordingly. And to your point, I mean, you’ve got that blessing from those investment companies that own those businesses, right. Like, there’s a lot of other things that they do well, and not so well, too, right. But that that lesson you learn from them is incredible, because most business owners of privately held companies, family owned businesses will never learn that lesson until it’s Yeah, potentially, right? Yeah,

Damon Pistulka 25:51
it was the first time when I started working on my I can still remember I was at a board meeting and they’re talking about, you know, we gotta go to this value, blah, blah, blah, to get our rate of return, blah, blah, blah, because you know, it’s all about that we’re the investors we have to buy for this, we have to sell it this to get our rate of return for our investors on it. I had no idea what the hell that was. And so my mentor that at the time, I didn’t ask it right at the board meeting. But afterwards, I was like, Okay, explain all this to me. And he’s like, went through it, then I’m like, God, that makes so much sense. Because all I had heard before for the 10 years or so I’ve worked on before that was, you know, we’re just running our business. It’s a family business, running the business family, visitors run the business and making money from it. Even when they’re big family businesses, they’re treated like that a lot of times and, and it is powerful when a when an entrepreneur can look at it as a tool to help them do whatever they want to do in their line. And really feel that. And that’s where I think we come back again, to incorporate in your business strike exit strategy early, is that if you’re thinking about that end in mind, like you say, I believe you’re going to look at your business a little differently, and how you, the team you build and the structure of your business? Because you just you just understand that I can’t do it all anymore, if I’m really trying to create a valuable asset. Yeah,

Devin W. Craig 27:17
exactly. Yeah. Because buyers don’t want that buyers do not want to ideally buy a job. Most all of the 50 to 100 buyers I interact with per business listing. That’s one of the other next questions they asked me after, how much is it worth? They also asked me How involved was the owner? Yeah, what does that structure look like? What does that team look like? What does that system look like? Because they don’t want to do that, especially if they got a chunk of money. They’re smart people, they obviously if they, if they earn a cumulative chunk of money from working for someone else, they’re obviously smart. And they obviously, but you know, and, and prudent and thoughtful. And so they built up this little pile of money, they’re gonna go use an SBA loan, they’re gonna buy this, you know, filming dollar business or whatever. And so they want to especially know that that business owner is not built everything exactly around them. But that’s far too common than not, that that’s exactly the case that not only was the system not built, but the owner is a large part of that system, or is that name of the or the name or the face or the whatever, they play some massively integral role in the success of that business. And so it’s like, so hard to decouple from that. And that’s all built those other two business, the first three, the business, I bought all that way, and I will never do it again, I learned my lesson, man, I will never do it again. Unless I know I’m going in with a team and a structure and an operator already baked in queued up. But most business buyers don’t come in with that unless your investment bank, back search funder or whatever, you know, all the rest of us are not that sophisticated.

Damon Pistulka 28:47
Well, and even in the search fund area where you do have somebody that’s going to be coming on to MBA school or something, they have limitations. I mean, they have limitations, they their businesses that they buy, are going to have to at least be so far down the road because the investors got to sign off on them buying it you know, they can’t pull something with with no team in the system or systems. They still have to have some sort of structure just not as as much as the next level up kind of business would need. But you talked about team and systems. I think that’s that’s one of the things that I talk about a lot because that is an was referring to before What do you think? The advantage for someone that’s just gonna stay in their business long term or someone that’s planning on their exit? If they would intentionally focus on creating a team that’s really a high class team or a quality team, I should say? How much does that affect the value of the businesses and the saleability of the businesses that you are representing

Devin W. Craig 30:01
immensely. So I mean, its effects in a multiple different ways, right? So first of all, you are decoupling the owner from the critical success of the business because now you’ve got people who are experts in things and knowledgeable and things and they’re providing also their own value, right? And if they truly are excellent team members, it forces it forces that owner to really think to themselves, Am I really a really effectual leader, and am I actually delegating properly, it might actually, you know, building a system that holds people naturally accountable, and that they want to be a part of, and they want to show up to every day, and they produce their own results without my direct constant interference, because if they aren’t there, then also providing value in their business. So that happened, again, gotcha. That team is then creating value and the business as well. Yeah. And is basically generating more revenue Jenny more more profit, like beyond what you’re capable of doing. So that naturally by itself, if it’s a good team, you’ve been a good leader to them built some accountability, some structure, some support in that system. Now, all of a sudden, this is growing well beyond what you could do in your own individual capacity. And now all of a sudden, you can work on other stuff within the business or what your strengths are within the business. And your your one plus one equals three, right? Because it’s not so much that you guys all have to be working on the same thing, you’re working on different things that positively affect the business. So yeah, it’s both the scale that it brings with the business, it’s the decoupling from the owner that it brings. And it’s, it’s just that much more appealing. So it’s gonna naturally grow and get bigger and better. And now you’re decoupling it from the owner, so they’re more easily replaceable. So now, you’re also opening it up to more types of buyers to be able to purchase you, even ones who want to buy it and operate within it. Now they get to buy it, and they get to choose where they spend their time, not being forced to spend it where the owner was spending their time before. Or if it’s investment backed, whatever, you know, sort of fonder, same thing, like then they can come in and they play more CEO, CEO and president focus on other aspects of growth or whatever. So if you’re giving yourself more options, you’re giving more buyers more options and giving more types of buyers an option to come in and purchase you because they don’t have to be a certain type of operator, I can’t tell you how many times I’ve looked at businesses where the broker specifically positioned it to me as like, this is a perfect owner operator business. And what I translate from that as like, okay, like I will make no money. If I don’t go in there and be hands on every day, yeah, limiting the number of buyers to only that type of buyer to. So when you sell a business, you really want to expand and give yourself as many options as possible types of buyers will approach you. And you know, if you limit yourself too much, then you’re just gonna take that much longer or never potentially sell.

Damon Pistulka 32:51
Yeah, yeah, that team is critical. And you you hit so many good points about it, you know, they can scale beyond you as the owner, if you have the right team, they’re going to, they’re going to do things better than you and specialize a bit more and get that and then they’re going to decouple you like you said, because they shouldn’t have to be in that business all the time, he should be able to, to, you know, let the business run with them taking it in farther than you could and you’re just making sure that they’ve got the tools they need to do it. And yeah, that’s good stuff. And also, like, it’s a perfect owner operator business. You’re right. It’s like, all right, that means that means Damien’s in the truck going out and doing the filming himself, you know, or something like that. That’s a that that is something that that I don’t think many buyers you’ll run into want to do?

Devin W. Craig 33:44
No, and it’s not, there’s nothing wrong with it. But you’re just limiting yourself to what type of buyer could do it. Or I mean, ideally, maybe if you ran it that way, because you chose to, that’s fine, and then you could back up, and then it’s not going to skip a beat, that’s great, then you could sell to that exact kind of buyer. And then then come in or a different type of buyer who maybe doesn’t have that license or that skill set or whatever. And they can work on some other portion of the business and I’m selling a plumbing company right now or that’s the case, instead of Okay, ma’am, there we go. Got it, man, America is the current owners not, then what they could do is just come in and get hands on with it they chose and they could kind of build out some capacity or build up the team a little bit more whatever. But current owner is not set up that way. And has we set it up to where she’s choosing to work on what Park she wants to work on. Right? And so now either kind of buyer can come in now a technician or a manager, right? So by her doing what she’s done, like she’s now just giving herself more options of types of people that can approach her. But when you limit the options because of how you unintentionally chose to run the business. Well then yeah, because you didn’t start with the end in mind. You didn’t even think about all that stuff. But it doesn’t mean you as the owner can never be hands on They’re all of a sudden you need to, like pretend like you’re not a part of the business at all, necessarily, like just just do with intentionality. Right do with intentionality. And, and I think it’s really smart. When I see some owners, they’re not playing kind of the chief cook in all capacities, but instead they maybe they play a role that plays to their strengths. That is like they have a GM in place or something. And they just go work on sales, for example. Yeah, like, I love seeing that. So yeah, they are, they’re an important part of the business. But they are replaceable, essentially, because they built the system around the business, not the business around the owner. Yeah, there’s a difference. So the owner can still play a role in the business, by all means, you know,

Damon Pistulka 35:34
yeah, a system for the business, not a not a business around the owner. Yeah. That’s, that’s great. And that, you know, the importance of those systems to are pretty. It’s remarkable the difference when you when you go into a business, that’s, you know, they’ve taken the time to actually say, this is how we do business. Here, if you’re in this role, this is what you do, or that roll, or they they’ve taken something like Eos, or predictive, predictable success or something like that, and really put the pieces in place, because it makes it easier for the team to cohesively work together. And the owner actually did a couple themselves. So when you find these businesses that have taken the time to, you know, they put their they put their work in ahead of time. How how, what do you really think, overall, just a guess, is their kind of success rate to sell if they’ve taken the time to do it? Pretty darn good. If you had to look across the board out of 10 businesses, how many of those you think it sold?

Devin W. Craig 36:42
Well, the percentage of those businesses is probably back to that like, point 1%. Because again, like these are the ones who kind of basically been more proactive about this, right? Yeah. And so if we’re saying, and if we believe that so few owners have actually been really prepared for this, then that’s probably the equal percentage, right? Sometimes they accidentally got there, you know, potentially, where they weren’t thinking with the end in mind, necessarily, but they were wanting to try to scale more, they were wanting to try to be more systematic, they were wanting to try to give themself time that they could step away or whatever. So if they did that with the intention to give them some more freedom, or whatever, then the natural consequence of that is, it could be more sellable. But yeah, if they weren’t also specifically thinking, Okay, what would a buyer want? Or how can I get highest liquidity? If they weren’t thinking without intention, there’s still probably other things other pieces missing, most likely, right? So you could still accidentally get there, but you still may not get the full impact unless you’re actually thinking about this proactively. But then there’s the rest of them who really haven’t thought about this proactively. And even if the businesses are a little bigger, to your point, the family run ones where their pan cousin Bobby, a little bit of something to do hardly nothing in the business. And they’re doing this and they’re doing that and like doing all these other things where the books aren’t run clean, and well, the operation isn’t really organized, you know, super well, or it’s built around personalities, and that around the system, or even other family member personalities or whatever, have you right, yep, even the bigger ones still make it really hard to decouple all that and pull that all apart, and make it really clear for someone externally to see how that all works are how that’s all put together, then all of a sudden, now my job gets really hard, because now I gotta go untangle all that. And like, help me understand this, let me understand that. So it’s unfortunately too few owners that are really in that position where they’ve really done that, intentionally or unintentionally, but when they are, oh, my gosh, like, it makes my job so easy. Yeah, then go to market because it’s clear, it’s simple. The books are clear and simple. The operations clear and simple. They actually have things documented about how the process works, you know? Yeah. And no, it’s, it’s a beautiful, beautiful thing, all those things go. Not only do they not only do they sell, and they have a 90 plus percent chance of selling, potentially upwards 100 I hate say 100% on anything, but yeah, pretty, pretty strong likelihood, first of all, but second of all, they probably won’t even be on the market that long. Yeah, I’m gonna take that long to sell. So it’s both because sometimes businesses are a overall good business, but how things they need to fix or whatever, or for some, or the or whatever other factors that might just take them they may most likely sell, you know, like, with us, even the business we take on, rarely are any of them perfect, and, but we’ll still take them on if we can, you know, we can look at it through the lens of a buyer and say I can see the potential here or the value here. And we’ll still take them on and make sure they’re really prepped ahead of time. But oftentimes, they take a while to sell Yeah, so it might take a year or two because it isn’t that attractive for whatever reason it does have a big blemish on it or whatever, you know, it’s got some hair on the on the fraud or whatever the term is, but yeah, so it’s both it’s both the likelihood of sale and the speed of sale are ultimately contingent on that but I mean, the average business takes what a year or two to sell or something. Yeah, when they when they find Don’t we pull the trigger to the side? Because part of that reason they just hadn’t prepared up to that point? Yeah, yeah.

Damon Pistulka 40:04
Yeah, it’s easily a year. And we’ve seen some where it takes, you know, it takes almost two years for them to have it. And those are even that were fairly well prepared, you know, because you can get down to the end. And people think, Oh, I got got an offer. Oh, yeah. Offers like, I mean, thinking you’re gonna marry somebody because you had a date. Yeah. Good analogy, you know, so it takes a lot to get to the end, you know, you can get right to the end last day ready to sign money going to negative change, and someone just say, Nope, I’m done. And, but you bring up a good point, because speed to get sold is, is really something and if someone’s preparing for their business exit early, they’re going to be hopefully, they’re really cognizant and informed on the value of their business, the market value of their business, because that impacts it greatly. Because it’s, at the end of the day, it’s math, right? It’s math, there’s only so much money, someone can pay for your business. And, and if they, if they’ve taken the time to get the business to the value, that’s about what the market value is, and that’s fine with them. If they sell it for that, you got a lot better chance to try and to get it sold in a reasonable amount of time.

Devin W. Craig 41:26
Exactly. Yeah. And not to be so married to that number. That’s where, like people thinking about it as an asset, that they’re going to be more decoupled from that. Because when your identity is so built into your business, like I, this happens to me literally every day like Devin, no, no, this it’s worth, whatever kajillion dollars, like, No, not really, you know what, and ultimately what I try to explain, but it’s so hard when you have so much psychology of so much blood, sweat and tears in this, I get it right. But at the same time, you have to think more objectively, because it is just math, and it’s just also market. You know, it’s just what people are willing to pay for it, what banks are willing to lend on it. Yeah. And that’s really kind of it. And so just is owning that fact. And then instead just using that liquidity to then to think about what am I going to do with that liquidity? Yeah, it’s less about the number you get and more about what you do with it next, that’s a really big deal, right? And because most business owners aren’t going to get most likely that major life changing amount of money, most likely, you know, and that’s okay, then just plan for that sooner, and then move that money forward into the next asset that could do that for you. Yeah, right, or whatever. And that’s what we teach. But yeah, if they just decoupled themselves a little bit from that just psychologically a little bit more than they’d be a little less married to that number. But even if they just Chad Peterson, my partner have started the company, he’s about to go kind of on a speaking tour this year. And he’s going to do one of the TED Talks. And he let me look at a script and like what he’s planning on talking about, and it’s like, only call to action out of the whole thing, a whole conversation, the whole talk, his last call to action is just business owner, please go like know what the value of your businesses, please don’t wait till the end to finally decide to then learn when you’re already kind of beyond the point of where you probably should have been in terms of your passion cycle. And then now you decide to figure out what that number is, you know, and don’t listen to, you know, Bob down the street who heard someone who thought he heard or knew someone who sold something like that’s not a valuation, that’s just in the ether. Don’t watch Shark Tank and try to run your valuation based on Shark Tank, right? Yeah. Like, go to someone who does this, and chat with him about it. And make sure you have a good clear idea. And then just own number and then decide based on that, where you’re gonna go and ideally, do it. I mean, I try to encourage everyone to do it as if it was like your tax returns basically, right? Just at the after your tax returns are done. Yeah, you then go turn right around and you go speak to an expert that does this, right, and just get their take on it every single year. And that’s part of your decision making process at that. Yeah.

Damon Pistulka 44:03
Yep. As we’re going through it with clients, we we look at it oftentimes we look at it quarterly or monthly, at the trailing value of the business just to see what we’re doing with it over time as we’re gone. Because, you know, when in our process, we get to a certain point, and we go okay, it’s time to start thinking about marketing and business because we’re getting near past the value. Net Value, because we always had a very about that is because there are significant fees and so on the business. You got to make sure that you’re What the You’re gonna take out of it or what you need after that, but yeah, that valuation is is key because it is math, and I know the blood, sweat and tears. You’d like to get paid for all of it. But honestly, sometimes you don’t know. Yeah, exactly. So well, Devin, it’s been awesome talking to you today, man. And I just want to say one thing, Ronald, thanks for showing up today. Man. I appreciate you stopping by and drop Going to comments. I want to also say thanks for Michael paronto. That’s the joining us there on Instagram and Bob feathers, my friend from Boston, thanks for dropping in there as well. But you got some stuff coming up this summer, we were talking about before we get on, I want you to have a chance to say you got a local event coming up here in Seattle in June. What’s going on with that so that people can be following you, Devin and getting ready for that?

Devin W. Craig 45:29
Yeah, yeah, no, thanks for bringing that back up. Yeah. So June 1, we’re still kind of working out some of the details. But here in the Seattle area, we’re gonna host a business owner event, where we’re basically going to go into detail about all these things we just talked about of like, plan your exit strategy. Now, essentially, we’re going to talk about business valuation. We’re going to talk about if you don’t like that number, okay, what are some avenues are passing go down to fix those things. We’re going to talk a little more about this concept USI? And how to look at your business more as an asset? And what do you do with that asset? And what choices do you have to do with that asset? And then just yeah, just have a good day of just networking and fun and get business owners just thinking about this, trying to shake them a little bit and say, Come on, let’s give some thought to this, please, ahead of time. So yeah, yeah, June 1, still got to determine some information, but on when and how some of the logistics there. But that’s for sure. gonna happen in the Seattle area. And so if people want to learn about all the specifics of that, they can just follow me and I’ll post about it regularly once we start, you know, unfolding some of the details.

Damon Pistulka 46:29
Yeah. Awesome. Awesome. And on LinkedIn, it’s Devin W. Craig, if you you’re gonna get out there and follow Devin do that. He’s got drops a lot of good comment, or content. Excuse me. I put his name up there. So you can see it on the screen now, and do that. But thanks so much for being here today, man. Oh, yeah. My pleasure. And thanks so much, Damon. You bet. Well hang out just a minute, Devin. We’ll wrap up after off the air. But I want to thank everyone else for showing up today. Thanks. We love you out there in the comments. Love you listening. Thanks for all you do. And if you know somebody that would benefit from this, drop the link to them, have them come in and listen next time. And if you got in this late, go back to the beginning, if you’re interested in because Devin had a lot of incredible information for business people. We’re out for now. We’ll see you again next week.

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